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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] 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 0-28274
SYKES ENTERPRISES, INCORPORATED
(Exact name of registrant as specified in its charter)
Florida 56-1383460
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 N. Tampa Street, Suite 3900, Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
(813) 274-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section
12(g) of the Act:
Title of Each Class
-------------------
Voting Common Stock $.0l Par Value
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
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
As of March 21, 2000, there were 42,074,008 shares of Common Stock
outstanding. The aggregate market value of the voting stock held by
non-affiliates of the registrant based on the last sale price reported on the
Nasdaq National Market as of March 21, 2000 was $410,939,912.
DOCUMENTS INCORPORATED BY REFERENCE:
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Documents
Portions of the 1999 Sykes Enterprises,
Incorporated Annual Report..................... Part II Items 5-8
Portions of the Proxy Statement
dated April 1, 2000............................ Part III Items 10-13
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Page 1 of 34 Pages
Exhibit Index is on Page 31.
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Sykes Enterprises, Incorporated
Form 10-K Annual Report
TABLE OF CONTENTS
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Page No.
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Cautionary Statements of Forward Looking Information
PART I
Item 1 Business............................................................... 1
Item 2 Properties.............................................................20
Item 3 Legal Proceedings......................................................22
Item 4 Submission of Matters to a Vote of Security Holders....................22
PART II
Item 5 Market for Registrant's Common Equity and
Related Stockholder Matters...........................................22
Item 6 Selected Financial Data................................................22
Item 7 Management's Discussion and Analysis of Financial Conditions and
Results of Operations.................................................22
Item 7a Qualitative and Quantitative Disclosures About Market Risk.............23
Item 8 Financial Statements and Supplementary Data............................23
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..............................................23
PART III
Item 10 Directors and Executive Officers of the Registrant.....................23
Item 11 Executive Compensation.................................................23
Item 12 Security Ownership of Certain Beneficial
Owners and Management.................................................23
Item 13 Certain Relationships and Related Transactions.........................23
PART IV
Item 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K...............................................23
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Certain matters discussed or incorporated by reference in this report are
forward-looking statements within the meaning of the federal securities laws.
Words such as "may," "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," variations of such words, and similar expressions are
intended to identify forward-looking statements. Similarly, statements that
describe the Company's future plans, objectives, or goals also are
forward-looking statements. These statements are not guarantees of future
performance and are subject to a number of risks and uncertainties, including
those discussed below and elsewhere in this report. The Company's actual
results may differ materially from what is expressed or forecasted in such
forward-looking statements.
Factors that could cause actual results to differ materially from what is
expressed or forecasted in such forward-looking statements include, but are not
limited to, the marketplace's continued receptivity to the Company's bundled
service offering; the Company's ability to continue the growth of its support
service revenues through additional technical support centers; the Company's
ability to further penetrate into vertically integrated markets; the Company's
ability to expand its e-commerce service platform revenues; the Company's
ability to continue to establish a competitive advantage through sophisticated
technological capabilities; the outcome of pending litigation against the
Company; the Company's ability to continue growth through acquisitions or
expansion of its existing operations; the Company's ability to manage growth;
the Company's ability to complete any recommended alternatives with respect to
SHPS; the loss of a significant customer; technological change; the Company's
ability to integrate the operations of acquisitions; risks associated with the
Company's international operations and expansion; the Company's ability to
attract and retain experienced personnel; the continuance of the industry trend
toward outsourcing of information technology services; the emergency
interruption of technical support center operations; the loss of any senior
management or key personnel; risks associated with of SHPS' care management
contracts; potential legal liability for SHPS' care management services;
potential legal liability of SHPS as a benefits administrator under ERISA and
COBRA; risks on SHPS relating to laws governing the corporate practice of
medicine; risks on SHPS relating to telemedicine; possible adverse effect on
SHPS of national and state healthcare reform proposals, and other risks
discussed elsewhere in this report and in other filings of the Company with the
Securities Exchange Commission.
PART I
Item 1 Business
GENERAL
Sykes Enterprises, Incorporated ("Sykes" or the "Company") is a global
leader in providing vertically integrated technology-based solutions through an
integrated strategy combining its information technology services with an
emerging e-commerce platform. Sykes' continues to leverage its position as a
leading provider of information technology services by assisting its clients in
capitalizing on the growth of e-commerce over the Internet. Sykes' e-commerce
service platform enables it to comprehensively continue to expand by serving as
a single-source provider of Internet-based technology solutions throughout the
life cycle of a customer's e-commerce needs. Through its 38 technical call
centers and other offices and e-commerce distribution centers located in the
United States, Canada, Latin America, Europe, Africa, China, and The
Philippines, Sykes' provides services to leading computer hardware and software
companies by providing technical support to end users of their products and to
major companies by providing corporate help desk and additional business
services. Through SHPS, Incorporated ("SHPS"), a wholly-owned subsidiary,
Sykes' can also provide on-line clinical managed care services, medical
protocol products, and employee benefit administration and support services.
The integration of its existing technology services with its emerging global
e-commerce platform enables Sykes' customers to take full advantage of
increasing customer loyalty, business expansion and effectiveness, all while
lowering their total costs.
Through its state-of-the-art technical support centers, Sykes provides
traditional and web-enabled information technology support services (i) to
leading computer hardware and software companies by providing technical product
support services to end users of their products and (ii) to major companies by
providing help desk services to their employees. The Company also provides
outsourced care management services, products, and employee benefit
administration services through SHPS. In addition, through its staff of
technical professionals, Sykes provides information technology development
services and solutions to large corporations, on a contract or temporary
staffing basis, including web-site and software design, development,
integration and implementation; systems support and maintenance; and
documentation, foreign language translation and software localization. Sykes
also provides e-commerce distribution services to computer hardware and
software companies including design, replication, material integration,
packaging and distribution. The integration of these services provides Sykes'
customers the opportunity to outsource a broad range of their information
technology services needs to the Company.
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The Company believes that outsourcing by information technology
companies, internet "virtual" companies and companies with information
technology needs will continue to grow as increasing competition encourages
businesses to focus on their core competencies rather than non-revenue
producing activities or infrastructure. Rapid technological changes,
significant capital requirements for state-of-the-art technology, and the need
to integrate and update complex information technology systems spanning
multiple generations of hardware and software components make it increasingly
difficult for businesses to cost-effectively maintain quality information
technology services in-house.
Sykes was founded in 1977 in North Carolina and moved its headquarters
to Florida in 1993. In March 1996, Sykes changed its state of incorporation
from North Carolina to Florida. Sykes headquarters are located at 100 North
Tampa Street, Suite 3900, Tampa, Florida 33602, and its telephone number is
(813) 274-1000.
RECENT DEVELOPMENTS
On January 25, 2000, Sykes announced that it had lowered its expected
earnings per share for the fourth quarter of 1999. On January 31, 2000, Sykes
announced that the release of its fourth quarter and year end results for 1999
would be delayed for approximately seven days. On February 7, 2000, Sykes
announced that it had lowered its expected revenues and earnings per share for
the year 2000. Sykes also announced on February 7, 2000, that it would restate
its previously reported financial results for the second and third quarters of
1999. The restatement stemmed from the application of revenue recognition
accounting rules and delaying the recognition of revenues in connection with
fees associated with Sykes' AnswerTeam(TM), a diagnostic desktop tool.
Since February 1, 2000, 12 lawsuits that purport to be class actions
based on one or more of these announcements and other announcements relating to
Sykes' financial condition and future prospects have been filed against Sykes
and certain of its officers. These lawsuits assert, among other things, various
claims under the federal securities laws including claims under sections 10(b)
and 20(a) under the Securities Exchange Act of 1934. See "Item 3. Legal
Proceedings."
On February 29, 2000, Sykes announced that it had engaged Donaldson,
Lufkin & Jenrette Securities Corporation as Sykes' financial advisor to assist
Sykes in identifying and exploring alternatives to enhancing shareholder value
with respect to SHPS. SHPS was formed through the establishment of a joint
venture in December, 1997, to focus integrated services in the healthcare
market. Sykes acquired the remaining interest in SHPS in September, 1998.
On March 3, 2000, Sykes announced a series of senior management
appointments. James E. Lamar was appointed Group Executive and Senior Vice
President - International. Mr. Lamar had been Sykes Vice President and Managing
Director of Europe, Middle East, Africa (EMEA). Mr. Lamar is headquartered in
Amsterdam, the Netherlands at Sykes International Headquarters Facility. In
this Group Executive position, Mr. Lamar will be responsible for all
international operations and the strategy and tactics necessary to expand
Sykes' relationships as well as its global e-services platform.
Scott J. Bendert was appointed Group Executive and Senior Vice
President - Operations Performance and Administration. Mr. Bendert's knowledge
and financial expertise will be utilized to focus and enhance operations in the
areas of localization, distribution, fulfillment, technical support, and
professional services in conjunction with the Americas and International
groups. Mr. Bendert joined Sykes in 1993 as Chief Financial Officer, was named
Treasurer in 1994, and was named Senior Vice President in 1995.
Gerry L. Rogers was appointed Group Executive and Senior Vice
President - The Americas. Mr. Rogers joined Sykes in January 1999 as the Group
Vice President - The Americas. As the Group Executive for the Americas, he will
have total responsibility of operations, service support, professional services
and distribution and fulfillment delivery for Canada, Latin America and the
United States.
W. Michael Kipphut joined Sykes as its Vice President and Chief
Financial Officer on March 6, 2000. Mr. Kipphut joined Sykes from USA Floral
Products, Inc., a publicly held worldwide perishable products distributor,
where he was Chief Financial Officer. Prior to USA Floral Products, Inc., Mr.
Kipphut held the position of Vice President and Treasurer for Spalding &
Evenflo Companies, Inc., a global manufacturer of consumer products.
Chad Carlson was appointed Vice President and General Manager for
Operations - the Americas. Mr. Carlson had been the Vice President for Customer
Service and Support for the Americas. Mr. Carlson will be responsible for
e-commerce distribution and fulfillment in addition to customer service and
support for the Americas.
Dale W. Saville was appointed Senior Vice President and Chief
Technology Officer. Mr. Saville had been Sykes' Vice President Technology
Development. Mr. Saville will be responsible for the evaluation and development
of new
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product and service offerings as well as establishing a consistent deployment
schedule to enhance our value added services platform to our clients worldwide.
Charles E. Sykes was appointed Senior Vice President Marketing and
Global Alliances. Mr. Sykes had been the Vice President Sales - Americas for
the past two years. Prior to his sales assignment, Mr. Sykes held several
positions in operations, accounting, professional services and recruitment. In
this newly created position, Mr. Sykes will assist in the development of
branding, internal and external communications, web consultation, marketing
strategy as well as continuing to manage our global strategic accounts.
ACQUISITION AND DIVESTITURE ACTIVITY IN 1999
Effective April 1, 1999, the Company sold its manufacturing solutions unit to
CIStech, Inc. for approximately $2.5 million. The manufacturing solutions unit
provided software development, systems integration and equipment sales
primarily for the manufacturing industry. The decision to sell this unit was
based on a determination that the unit did not meet Sykes' business focus
towards technical support and e-commerce services.
On August 20, 1999, the Company acquired all of the common stock of
CompuHelpline, Inc., (doing business as PC Answer) for approximately $340,000
consisting of $40,000 of cash and 11,594 shares of the Company's common stock.
PC Answer was engaged in developing, marketing and selling prepaid technical
computer support cards and services under the trademark names of PC Answer and
MAC Answer. The transaction was accounted for under the purchase method of
accounting with resulting goodwill being amortized over a ten-year life.
Effective August 31, 1999, the company acquired all of the common stock of Acer
Servicios de Informacion Sociedad Anonima ("AIS") of Heredia, Costa Rica for
$6.0 million in cash. AIS operated an information technology call center that
provided technical support and services to customers in North America and
Central America. The transaction was accounted for under the purchase method of
accounting with resulting goodwill being amortized over a ten-year life.
Effective October 12, 1999, the Company acquired the AnswerExpress Support
Suite for $2.5 million in cash. The AnswerExpress Support Suite expanded the
Company's diagnostic capabilities by providing its customers with access to
both technical support and a set of support tools. The AnswerExpress product
includes virus protection, Internet data storage and retrieval, and access to a
technical support agent. The transaction was accounted for under the purchase
method of accounting with resulting goodwill being amortized over a ten-year
life.
INDUSTRY BACKGROUND
In today's rapidly changing technological environment, consumers and
businesses require a variety of information technology services in order to
effectively use and manage their complex information technology systems,
including technical support, e-commerce solutions, software development and
information systems integration and management. Information technology services
have become much more important in this environment as Information Technology
departments strive to integrate a company's information processing capabilities
into a single system while providing the flexibility to change with
technological innovations.
Technological changes are making it increasingly difficult and
expensive for companies to maintain in-house the necessary personnel to handle
all of their information technology and e-commerce needs. Hardware and software
companies, as well as businesses utilizing their products, are increasingly
turning to third party vendors to perform specialized functions and services.
Outsourcing of (i) product support functions by leading hardware and software
companies, (ii) employee help desk functions by major companies, and (iii)
other information technology services such as software design and systems
integration and management, is growing rapidly because of the following
factors:
o Increasing need for companies to focus on core competencies rather
than non-revenue producing activities;
o Rapid technological changes requiring personnel with specialized
technical expertise;
o Growing capital requirements for sophisticated technology necessary to
provide timely product support and help desk functions;
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o Increasing need to integrate and continually update complex systems
incorporating a variety of hardware and software components spanning a
number of technology generations;
o Extensive and ongoing staff training and associated costs required to
maintain responsive, up-to-date in-house technical support and
information technology services; and
o Cost savings from converting fixed employee costs to flexible,
variable costs.
As the outsourcing of technical product support, help desk and other
information technology services has gained acceptance, many companies also are
seeking to consolidate the number of vendors which provide them with these
services. Accordingly, providers of information technology outsourcing services
must offer a wide array of services to maintain a preferred vendor relationship
with their customers. Sykes believes its broad range of services will allow it
to be competitive in this environment.
STRATEGY
The Company's objective is to continue its growth and to become a
leading provider of a wide variety of information technology outsourcing
services by being responsive to and providing skilled personnel for its
clients' long-term outsourcing needs. The Company's principal strategies for
achieving this objective are as follows:
Continue The Significant Growth of the Company's Support Service
Revenue Through Additional Technical Support Centers on a Global Basis. Sykes
has grown utilizing a strategy of both internal growth and external
acquisitions. This plan has resulted in an increase from three technical
support centers in 1994 to 38 technical support centers as of February 15,
2000, with three additional facilities under construction. The Company's
technical support centers currently have the capacity to handle up to
approximately 85 million calls per year. Sykes has systematized the
establishment and ongoing operation of its domestic technical support centers
by: (i) locating the centers in smaller communities, near a college or
university, with a relatively low cost structure and a technically proficient,
stable work force; (ii) constructing the technical support centers modeled
after the same prototype; (iii) utilizing standardized procedures to hire and
train technicians; and (iv) maintaining consistently responsive, high quality
services through call monitoring and tracking technology and other quality
assurance procedures. The Company's systematic approach and procedures are part
of its strategy of providing responsive, high quality support at a lower cost
than the Company's competitors.
Continue to Expand the Company's E-Commerce Service Platform by
Serving as a Single-Source Provider of Solutions Throughout The Lifecyle of a
Customer's E-Commerce Needs. Sykes' has created a E-commerce service platform
that provides for a single-source provider of services for its customers. The
basis for this platform is a sophisticated infrastructure that facilitiates
integrated "front-end" e-services such as web design, sales order processing,
financial transaction management and customer support. In addition, Sykes'
offers to its clients "back-end" processes that include material integration
and packaging, pre-press and print production, and comprehensive fulfillment
services.
Market the Company's Array of Services to Existing Customers to
Position Sykes as a Preferred Vendor. The Company intends to cross-market its
expanded array of information technology services to existing customers and to
continue to provide consistently high quality services to new and existing
customers in order to position the Company as a preferred vendor of outsourced
services. Sykes believes that its ability to work in partnership with its
customers during the life cycle of their information technology products and
systems, from software design and systems implementation, through technical
documentation and foreign language translation, to product packaging and
distribution, to end user technical product support and other telephonic
services, gives it a competitive advantage to become the provider of choice to
its customers. Sykes has expanded the services it provides, such as help desk
and diagnostic support services through its existing relationships with Fortune
500 companies, particularly those customers using the Company's services to
satisfy all or part of their information technology development services and
solutions needs.
Establish a Competitive Advantage Through Sophisticated Technology.
The Company seeks to establish a competitive advantage by continuing to
capitalize on its sophisticated and specialized technological capabilities,
including its current private ATM network that provides the Company the ability
to redirect inquiries and to also carry voice and data over the same network.
Additional technological capabilities include automatic call distributors, call
tracking software and computer-telephone integration that allow Sykes"s
technical support centers to serve as the transparent extension of the
Company's customers, receive telephone calls and data directly from its
customers' systems, and report detailed information
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concerning the status and results of the Company's services on a daily basis.
The Company's sophisticated technology and systems, which the Company is able
to upgrade periodically because of their open architecture, enable the Company
to provide high response rates at a low cost per transaction.
The Company's strategy is to continue to develop or acquire other
technologies that complement its call center activity functions. For example,
the Company intends to integrate the capabilities of its sophisticated
diagnostic proprietary software with Sykes' technical support centers to
further enhance the efficiency and quality of the Company's information
technology support services, and believes that enhancements to this software
will enable it to access and offer information technology support services
directly to the home and small business markets.
Further Growth Through Vertically Integrated Markets. The Company
believes that numerous industries such as retail, telecommunications, financial
services, healthcare and education will expand their usage of outsourcing
vendors from the significant usage of emerging technologies. The Company's
strategy is to aggressively market itself to new and existing customers as a
single-source provider of comprehensive and clinically sophisticated care
management and employee benefit services. In addition, the Company intends to
continue to expand its service offerings to meet its customers' existing needs
as well as future needs created by regulatory and other charges.
Growth Through Strategic Alliances. The Company intends to expand its
customer base, geographic presence and the information technology services by
forming strategic alliances with other information technology service
providers, particularly those who do not provide labor intensive technical
support. Sykes' has entered into two such strategic alliances during 1999. The
first of these alliances was with Support.Com, a provider of internet support
services and solutions. The second of the alliances announced by the Company
was with Perot Systems Corporation, a global information technology services
and business solutions company. The Company continues to actively seek support
and e-commerce contracts with such strategic partners.
Growth Through Selective Acquisitions and Mergers. Subject to market
conditions, the Company intends to continue to acquire or combine with
complementary businesses to increase market share, expand its services, enter
key industry sectors and expand its geographic presence when such transactions
can be effected on favorable terms. Through December 31, 1999 the Company has
completed 14 such strategic combinations since its initial public offering in
April 1996. The Company believes it can expand the scope and quality of its
information technology support services by acquiring or combining with
companies with technical support centers in international markets which provide
quality call center activities for leading computer hardware and software
companies, as well as companies which enhance its ability to provide such
services. The Company further believes that significant opportunities exist to
acquire or combine with organizations which provide information technology
services within the Company's strategic focus of emerging technology
industries, such as the banking and telecommunications industries in which the
Company competes on a limited basis. The information technology services
industry is highly fragmented. Many of these firms may be attractive
acquisition or merger candidates because they would enable Sykes to expand
existing service offerings or open new geographic offices.
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SERVICES
The Company provides a wide array of information technology
outsourcing services, including information technology support services and
information technology development services and solutions. The following is a
description of Sykes' outsourcing services:
Technical Product Support. Sykes provides technical product support
services by e-mail, web-based bulletin boards and telephone (24 hours a day, 7
days a week) to end users of the products of hardware and software companies
through its 17 stand-alone technical support centers in the United States,
three centers in Canada, two centers in Costa Rica, and 16 international
technical support centers located in Europe, South Africa, China and The
Philippines. Consumers of hardware or software products of Sykes' customers
dial a technical support number listed in their product manuals and are
automatically connected to a Sykes' technical support technician who is
specially trained in the applicable product and acts as a transparent extension
of the client hardware or software company in diagnosing problems and answering
technical questions. The centers also provide technical product support by
electronic mail and electronic bulletin boards. The technical support centers
in Europe and Asia provide support in 16 languages to 20 European and Asian
countries.
Technical product support services provided through technical support
centers generally are billed to the client based on a fee per e-mail or call,
rate per minute or time and material basis. As a result of the significant
infrastructure costs required for each technical support center, the Company
requires a minimum billing amount to facilitate planning and capital needs.
Help desk services usually are billed at a flat rate per employee per month,
with the per employee charge varying depending on the customer's total number
of employees and the complexity of its information systems.
The Company provides a technical support proprietary diagnostic
service tool (AnswerTeam(TM) ), capable of being included on the hard drive of
a personal computer, that integrates communication and remote control
technology with hardware and software diagnostic tools to provide end users a
total support solution. This technology capability allows a user, with
AnswerTeam(TM) loaded on their computer, to connect to a technical support
technician located in a Sykes center at the mouse click of an icon. Once
connected the end user can receive support from traditional voice response
means or the technician, with the user's authorization, can remotely fix the
computer system directly from the call center. The end user can also receive
support through the Internet or via E-mail.
The Company also develops and markets the proprietary hardware
diagnostic software for use by manufacturers, professional service personnel
and end users. Proprietary diagnostic products are developed and marketed for
use with a variety of operating systems which include software used by personal
computer manufacturers for quality assurance and pre-installed or bundled
software used by professional service personnel and end users for verifying
component functionality, troubleshooting, resolving hardware and software
conflicts and hardware repairs.
Help Desk Services. The Company provides help desk services to major
companies, at their facilities or through the technical support centers, that
have outsourced technical support for their internal information technology
systems. Employees of Sykes' customers telephone the help desk number provided
to them by their employer for technical assistance. Trained technicians
dedicated to a specific customer answer questions and diagnose and resolve
technical problems ranging from a simplistic error message to a wide area
network failure.
Software Design, Development, Integration and Implementation. Sykes'
professional personnel provide software application design services geared
toward the development of a functional and technical blueprint for a client's
desired software application. These professionals identify applicable business
processes supported by an application and its related functions, determine end
user requirements and prepare a comprehensive plan for developing and
implementing the application. Additional services provided could also include
on an independent program basis development of custom software necessary to
operate a desired application, integration of the application into the
customer's existing information processing architecture, the testing of the
functionality of the application and assisting the customer in training its
personnel to use the application.
Software Localization and Documentation Development. Sykes also
specializes in the development of product information for high-tech companies
worldwide. Through its software localization, translation, technical
documentation, and on-line information development services, Sykes provides
turnkey solutions to help customers deliver their products to worldwide
markets. Localization services include cultural adaptation, language
translation, interface modification and international testing in over 30
languages. Technical documentation and on-line development services are
provided in many leading formats (DOC, RTF, HTML, SGML) and a variety of
platforms (Windows, Mac, Unix).
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E-Commerce Distribution Services. The Company provides e-commerce
distribution services to computer hardware and software organizations as well
as other technology companies. These services include design, replication,
printing documentation, material integration, packaging and distribution. The
products are distributed to various levels of the distribution chain as
directed by the customer.
Systems Specialization and Maintenance. Sykes' professional personnel
provide a variety of services designed to support and maintain client/server
systems and mainframe and midrange platforms. These services include systems
administration, maintenance and management support, applications enhancement
and training services. Information technology development services and
solutions engagements generally are billed on a time and material basis.
Care Management. The Company's care management services and products
assist customers in improving the quality of healthcare services provided to
plan participants and monitor patients' compliance with their prescribed course
of treatment, while simultaneously reducing unnecessary medical costs. The
Company's care management services are designed to prospectively assist in
determining an individual's healthcare needs and monitor and evaluate the
delivery of clinical care provided. The Company's clinical staff, comprised of
registered nurses and physicians, interacts with patients, providers and payors
to assist in determining, implementing and monitoring an effective and
efficient customized care management program based on each patient's medical
profile. The Company's care management services include demand, utilization,
care disease and disability management. In addition, for providers and payors
that wish to perform their own utilization management or quality assurance
functions, the Company provides quality and utilization managed care software
solutions through its Optimed software products and related services. These
products are based on Optimed protocols developed and reviewed by the Company's
medical panel of approximately 250 board certified physicians.
Employee Benefit Administration and Support Services. The Company's
Employee Benefit Services allow its customers to outsource the administration
of their employee benefit plans, including enrolling new plan participants,
developing and maintaining records, verifying or paying claims and producing
management reports. The Company provides a broad range of Employee Benefit
Services, including benefit plan administration ("BPA"), flexible spending
account ("FSA") administration, COBRA administration, retiree benefits services
and other ancillary services.
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OPERATIONS
Technical support centers. The Company's strategy in the United States
is to locate its technical support centers in smaller communities with similar
demographic characteristics, typically near a college or university. The
Company believes these characteristics tend to provide a well-educated,
technically proficient employee pool from which to attract qualified
candidates. These locations also tend to have lower labor and infrastructure
costs than large metropolitan areas.
New technical support centers are established to accommodate
anticipated growth in the Company's business or in response to a specific
customer need. The Company believes that additional technical support centers
will be established in the United States and Europe and potentially in Asia,
the Pacific Rim region and South America.
A typical domestic technical support center is approximately 42,000
square feet, has 425 work stations and can handle in excess of 12,000 user
transactions per day. The technical support centers employ current technology
in PBX switches, call tracking software, telephone-computer integration,
interactive voice response and relational database management systems that are
integrated into centrally managed local area networks and wide area networks.
The Company's sophisticated equipment and technology enable it to serve as the
transparent extension of its customers at a low cost per transaction and
provide its customers with immediate access to the status and results of the
Company's services. Due to its modular, open system architecture, the Company's
computer system allows timely system updates and modifications.
The Company utilizes sophisticated call tracking software and systems
to provide efficient scheduling of personnel to accommodate fluctuations in
call volume. Automated call distributors and digital switches identify each
call by the number dialed and automatically route the call to a technician with
the applicable knowledge and training. The technical product support calls are
routed directly from the end user to the technical support center or are
overflow calls routed from the client's place of business.
Technical support center systems capture and download to permanent
databases a variety of information concerning each call for reporting on a
daily basis to customers, including number and duration of calls (which are
important for billing purposes), response time and results of the call. Summary
data and complete databases are made available to the customer to enable it to
monitor the level of service provided by the Company, as well as to determine
whether end users of its products are encountering recurring problems that
require modification. The databases also provide Sykes' customers with
considerable marketing information concerning end users, such as whether the
user is a home or business user and regional differences in purchasing patterns
or usage. The Company maintains tape backups and offsite storage to assure the
integrity of its reporting systems and databases.
The technical support centers are protected by a fire extinguishing
system and backup generators and short-term battery backup in the event of a
power outage, reduced voltage or power surge. Rerouting of telephone calls to
one of the other technical support centers is also available in the event of a
telecommunications failure, natural disaster or other emergency. Security
measures are imposed to prevent unauthorized access. Software and related data
files are backed up daily and stored off site at multiple locations. The
Company carries business interruption insurance covering interruptions that
might occur as a result of damage to its business. In addition, the Company
believes that it has adequate arrangements with its equipment vendors pursuant
to which damaged equipment can be replaced promptly.
E-commerce Distribution Centers. Sykes has expanded its e-commerce
distribution services during 1997 and 1998 through acquisitions, and through
its ability to utilize the Internet. Sykes has three distribution centers
located in the United States and six distribution centers located in Europe.
Each of these centers have e-commerce capabilities through which the Company
offers a broad range of brands in each of the product categories it covers, and
meets the needs of customers who prefer to deal with a single source for many
of their product needs. Sykes is continually evaluating new products, the
demand for current products, and its overall product mix.
Service and Solution Offices. Sykes' professional personnel are
assigned to one of the Company's 24 offices, which are located in metropolitan
areas throughout the United States, Canada, Europe and Singapore in order to be
closer to their major customers. Each office is responsible for staffing the
professional personnel needs of customers within its geographic region and
customers referred from other offices based on specialized needs. These offices
give Sykes the ability to (i) offer a broad range of professional services on a
local basis, and (ii) respond to changing market demands in each geographical
area served. The number of professionals assigned to each office ranges from 3
to 150.
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Each office is staffed with one or more account executives whose goal
is to become the client's partner in evaluating and meeting the client's
information technology needs. The account executive's primary responsibilities
include: client development; understanding and identifying clients' information
technology service needs; working closely with recruiters to staff assignments
appropriately; setting billing rates for each assignment; and monitoring
ongoing assignments. Each account executive is responsible for between four and
ten active corporate accounts, some of which may involve several projects with
multiple operating units of a particular company. The account executive
cultivates and maintains relationships with the client's chief information
officer and numerous department and project managers within the client's
organization.
The account executive has responsibility for staffing an assignment on
a timely basis. Upon receiving a new assignment, the account executive prepares
a proposal with assignment specifications and distributes the proposal to a
recruiter who is familiar with the professionals who have the expertise
required for the assignment. The account executive reviews the recruiter's
recommended candidates, submits the resumes of qualified employees and other
available candidates to the client and schedules client interviews of the
candidates. Typically, an assignment is staffed within five working days.
QUALITY ASSURANCE
Sykes carefully trains, monitors and supervises its employees to
enhance the efficiency and the quality of its services. The training of new
technicians at the technical support centers is conducted in-house through
certified trainers or by professionals supplied by the Company's customers.
Sykes actively recruits highly skilled professionals to staff specific
assignment needs of its information technology development services and
solutions customers. Generally, employees also receive ongoing training
throughout the year to respond to changes in technology.
A technical support center manager supervises project leaders, team
leaders and technicians dedicated to individual customer accounts. Each team
leader at the technical support centers monitors approximately ten technicians.
A project leader supervises a particular customer's account by monitoring calls
and reviewing quality standards. Using the Company's proprietary, sophisticated
call tracking software, the project leader monitors the number of calls each
technician handles, the duration of each call, time between calls, response
time, number of queries resolved after the first call and other statistics
important in measuring and enhancing productivity and service levels. Remote
and on-site call monitoring systems and on-line performance tracking are used
to enhance high quality services. Customers have daily access to a variety of
measures of service performance tracked by the Company's technology and can
monitor calls directly through the Company's remote call monitoring systems.
The Company emphasizes a team approach in order to provide high
quality, customized solutions to meet its clients' information technology
development services and solutions needs. The central role in this team
approach is provided by the Company's account executives and recruiters who
work together to achieve a successful relationship between the client and the
Company's professional staff. The team shares information on active and
prospective clients, reviews the availability of professionals and discusses
general market conditions. Such forums enable the teams to remain informed and
knowledgeable on the latest technologies and to identify business development
opportunities as they emerge.
The Company is committed to providing its customers with the highest
quality services. To that end, the Company's technical support center in
Sterling, Colorado has received ISO 9002 certification, an international
standard for quality assurance and consistency in operating procedures. The
Company's other locations are ISO 9002 compliant, but not certified. The
Company anticipates that ISO 9002 certification may become a factor to
organizations outsourcing their technical product support or help desk
functions. Consequently, the Company has modeled each technical support center
after ISO 9002 procedures to achieve consistency and quality. In addition, the
Company received the STAR Award for the years 1995 through 1999 in the highest
call volume category. This award has been presented annually since 1988 by the
Software Support Professionals Association (SSPA) to the software support
company that achieves superior customer satisfaction and call metrics.
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SALES AND MARKETING
The Company's marketing objective is to develop long-term
relationships with existing and potential clients to become the preferred
vendor of their information technology outsourcing services. Sykes believes
that its significant client base provides excellent opportunities for further
marketing and cross selling of its broad range of capabilities. The Company
markets its information technology services through a variety of methods,
including client referrals, personal sales calls, advertising in industry
publications, attending trade shows, direct mailings to targeted customers,
telemarketing and cross selling additional services to existing clients. The
Company currently employs 95 people in its direct sales force.
As part of its marketing efforts, the Company invites potential and
existing customers to visit the technical support centers, where the Company
demonstrates its sophisticated telecommunications and call tracking technology,
quality procedures and the knowledge of its technicians. The company also
demonstrates its ability to quickly accommodate a new customer or a significant
increase in business from an existing customer by emphasizing its systematic
approach to establishing and managing technical support centers.
The Company emphasizes account development to strengthen its
relationships with its customers. Sales representatives and account executives
are assigned to a limited number of accounts in order to develop a complete
understanding of each customer's particular needs, to form strong customer
relationships and encourage cross selling of other services offered by the
Company. Account executives also receive incentives for cross selling the
Company's services.
The Company's customer product services sales force is composed of
field sales representatives who manage relationships with the accounts. In
addition, the Company has inside customer sales representatives who receive
product orders and answer customer inquiries. The Company will process the
order and ship the product from the appropriate distribution center. Customer
product services are generally billed to the client based on a per unit basis.
Sykes is expanding its efforts to obtain contracts with customers
lasting six months or longer to increase recurring revenues, maximize
utilization of professional personnel and enhance long-term relationships. The
Company also is attempting to obtain contracts to provide for the management of
specific information technology projects, rather than providing professionals
to staff client-managed projects. This activity is directed towards a view of
enhancing profit margins through the provision of value-added management
services.
CUSTOMERS
The Company has customers in the United States, Canada, Latin America,
Europe, the Phillippines, and South Africa. The Company's customers include
Fortune 500 corporations and leading hardware and software companies. The
Company believes its nationally recognized customer base presents opportunities
for further cross-marketing of its services.
Adobe Systems Incorporated, which became the Company's largest
customer as a result of a business combination during 1997, accounted for 10%
of the Company's consolidated revenues for the year ended December 31, 1997.
Although Adobe continued to expand its business relationship and revenues with
Sykes, neither it nor any other single customer accounted for 10% of revenues
for the years ended December 31, 1998 and 1999, respectively. The Company's
loss of (or the failure to retain a significant amount of business with) its
key customers could have a material adverse effect on the Company. The
Company's largest ten customers accounted for approximately 45% of the
consolidated revenues in 1999. Generally, the Company's contracts are
cancelable by each customer at any time or on short-term notice, and customers
may unilaterally reduce their use of the Company's services under such
contracts without penalty. Sykes provided services to approximately 1,500
customers during 1999.
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COMPETITION
The industry in which the Company competes is extremely competitive
and highly fragmented. While many companies provide information technology
services, management believes no one company is dominant. There are numerous
and varied providers of such services, including firms specializing in various
call center operations, product distribution, temporary staffing and personnel
placement companies, language translation companies, developers of software
diagnostic tools, general management consulting firms, major accounting firms,
divisions of large hardware and software companies and niche providers of
information technology services, many of whom compete in only certain markets.
The Company's competitors include many companies who may possess substantially
greater resources, greater name recognition and a more established customer
base than the Company. In addition, the services offered by the Company
historically have been provided by in-house personnel.
The Company believes that the most significant competitive factors in
the sale of its services include quality and reliability of services,
flexibility in tailoring services to customer needs, price, experience,
reputation and comprehensive and integrated services. As a result of intense
competition, information technology development services and solutions
engagements frequently are subject to pricing pressure. Customers also require
vendors to be able to provide services in multiple locations. Competition for
contracts for many of Sykes' services takes the form of competitive bidding in
response to requests for proposals.
INTELLECTUAL PROPERTY
The Company relies upon a combination of contract provisions and trade
secret laws to protect the proprietary technology it uses at its technical
support centers and facilities, and relies on a combination of copyright,
trademark and trade secret laws to protect its proprietary software. The
Company attempts to further protect its trade secrets and other proprietary
information through agreements with employees and consultants. The Company does
not hold any patents and does not have any patent applications pending. There
can be no assurance that the steps taken by the Company to protect its
proprietary technology will be adequate to deter misappropriation of its
proprietary rights or third party development of similar proprietary software.
Sykes(R), REAL PEOPLE, REAL SOLUTIONS(R), and SHPS(R) are registered
servicemarks of the Company. Sykes holds a number of registered trademarks,
including DIAGSOFT(R), QAPLUS/WIN(R), PC Builder(R), ETSC(R), FS PRO(R) and FS
PRO MARKETPLACE(R), Sykes AnswerTeam(R), Sykes AnswerExpress(R), and
OPTIMED(R). In addition, the Company owns all copyrights to HI CARES.
EMPLOYEES
As of February 18, 2000, the Company had 14,004 full-time employees,
consisting of 95 in sales and marketing, 10,803 customer support technicians at
the technical support centers, 1,217 technical professionals, 900 in e-commerce
and distribution services and 989 in management, administration and finance.
The technical and service nature of the Company's business makes its
employees an important corporate asset. While the market for qualified
personnel is extremely competitive, the Company believes its relationship with
its employees is good. The Company's employees with the exception of three
employees in Scotland, are not represented by any labor union.
The Company recruits its professional personnel through a continually
updated recruiting network. This network includes a seasoned team of technical
recruiters, a Company-wide candidate database, internet/newspaper advertising,
candidate referral programs and job fairs. However, demand for qualified
professionals conversant with certain technologies may outstrip supply as new
skills are needed to keep pace with the requirements of customer engagements.
Competition for such personnel is intense and employee turnover in this
industry is high.
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FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are based on
current expectations, estimates, forecasts, and projections about the Company,
management's beliefs, and assumptions made by management. In addition, other
written or oral statements which constitute forward-looking statements may be
made from time to time by or on behalf of Sykes. Words such as "may,"
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
variations of such words, and similar expressions are intended to identify such
forward-looking statements. Similarly, statements that describe the Company's
future plans, objectives, or goals also are forward-looking statements. These
statements are not guarantees of future performance and are subject to a number
of risks and uncertainties, including those discussed below and elsewhere in
this report. The Company's actual results may differ materially from what is
expressed or forecasted in such forward-looking statements. The Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
Factors that could cause actual results to differ materially from what
is expressed or forecasted in such forward-looking statements include, but are
not limited to: the marketplace's continued receptivity to Sykes bundled
service offering; Sykes' ability to continue the growth of its support service
revenues through additional technical support centers; Sykes' ability to
further penetrate into vertically integrated markets; Sykes' ability to expand
its e-commerce service platform revenues; Sykes' ability to continue to
establish a competitive advantage through sophisticated technological
capabilities, and the following risk factors:
RISKS ASSOCIATED WITH SYKES
The Company Faces Uncertainties Relating To Pending Litigation
Sykes' faces uncertainties relating to the pending litigation
described in "Item 1. Business - Recent Developments" and "Item 3. Pending
Litigation." Sykes cannot predict the outcome of these lawsuits or the impact
that they may have on the Company. Sykes also cannot predict whether any other
suits, claims, or investigations may arise in the future based on the same
claims. The outcome of any of these lawsuits or any future lawsuits, claims, or
investigations relating to the same subject matter may have a material adverse
impact on the Company's financial condition and results of operations.
The Company Faces Potential Difficulties In Continuing To Expand And Manage
Growth
Sykes has grown rapidly and its future growth may depend to some
extent on its ability to successfully complete strategic acquisitions to expand
or complement its existing operations. The Company cannot guarantee that it
will be able to continue to expand or successfully manage its growth. The
Company also cannot guarantee that acquired entities will achieve levels of
revenue and profitability or otherwise perform as expected, or be consummated
on acceptable terms to enhance shareholder value. This growth has placed, and
is expected to continue to place, significant demands on Sykes' management.
The Company's Strategy of Growing through Selective Acquisitions and Strategic
Alliances Involves Potential Risks
The Company pursues opportunities to expand through acquisitions and
strategic alliances. The Company may be unable to identify companies that
complement its strategy, and even if it identifies a company that complements
its strategy, Sykes may be unable to acquire or enter into a strategic alliance
with the company. In addition, the recent decrease in the price of the
Company's common stock could hinder Sykes' growth strategy, including growth
through acquisitions.
The Company's acquisition strategy involves other potential risks.
These risks include:
o the inability to obtain the capital required to finance potential
acquisitions on satisfactory terms; and
o the diversion of management's attention to the integration of the
businesses to be acquired;
o the risk that the acquired businesses will fail to maintain the
quality of services that Sykes has historically provided;
o the need to implement financial and other systems and add management
resources;
o the risk that key employees of the acquired business will leave after
the acquisition;
o potential liabilities of the acquired business;
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o unforeseen difficulties in the acquired operations;
o adverse short-term effects on Sykes' operating results;
o lack of success in assimilating or integrating the operations of
acquired businesses with those of Sykes;
o the dilutive effect of the issuance of additional equity securities;
o the incurrence of additional debt or issuing additional equity
securities as a result of future acquisitions;
o the amortization of goodwill and other intangible assets involved in
any acquisitions that are accounted for using the purchase method of
accounting;
o the businesses we acquire not proving profitable; and incurring
additional indebtedness.
The Company may Encounter Difficulties in Implementing its Proposed Strategic
Initiative
The Company engaged Donaldson, Lufkin & Jenrette Securities
Corporation as its financial advisor to assist Sykes in identifying and
exploring alternatives to enhancing shareholder value with respect to SHPS. The
Company may not be able to complete any recommended alternatives with respect
to SHPS on terms the Company finds acceptable.
Rapid Technological Change
The market for information technology services is characterized by
rapid technological advances, frequent new product introductions and
enhancements, and changes in customer requirements. Sykes' future success will
depend in large part on its ability to service new products, platforms, and
rapidly changing technology. These factors will require Sykes to provide
adequately trained personnel to address the increasingly sophisticated, complex
and evolving needs of its customers. In addition, Sykes' ability to capitalize
on its acquisitions will depend on its ability to continually enhance software
and services and adapt such software to new hardware and operating system
requirements. Any failure by Sykes to anticipate or respond rapidly to
technological advances, new products and enhancements, or changes in customer
requirements could have a material adverse effect on Sykes' business, financial
condition and results of operations.
Dependence on Key Customers
Sykes derives a substantial portion of its revenues from a few
clients. Sykes' largest ten customers accounted for approximately 40%, 41%, and
45% of its consolidated revenue for the years ended December 31, 1997, 1998,
and 1999, respectively. Revenue from a single customer comprised 10% of Sykes'
consolidated revenues for the year ended December 31, 1997. No single customer
accounted for 10% of revenues for the years ended December 31, 1998 and 1999,
respectively. Sykes' loss of, or the failure to retain a significant amount of
business with, any of its key customers could have a material adverse effect on
Sykes' business, financial condition and results of operations. Generally,
Sykes' contracts with its customers are cancelable by the customer at any time
or on short-term notice, and customers may unilaterally reduce their use of
Sykes' services under such contracts without penalty. Thus, Sykes' contracts
with its customers do not ensure that Sykes will generate a minimum level of
revenues.
Inability to Attract and Retain Experienced Personnel May Adversely Impact
Sykes' Business
Sykes' business is labor intensive and places significant importance
on its ability to recruit, train, and retain qualified technical and
professional personnel. Sykes generally experiences high turnover of its
personnel and is continuously required to recruit and train replacement
personnel as a result of a changing and expanding work force. Additionally,
demand for qualified professionals conversant with certain technologies is
intense and may outstrip supply, as new and additional skills are required to
keep pace with evolving computer technology. Sykes' ability to locate and train
employees is critical to Sykes' achieving its growth objective. Sykes'
inability to attract and retain qualified personnel or an increase in wages or
other costs of attracting, training, or retaining qualified personnel could
have a material adverse effect on Sykes' business, financial condition and
results of operations.
Reliance on Technology and Computer Systems
Sykes has invested significantly in sophisticated and specialized
telecommunications and computer technology and has focused on the application
of this technology to meet its clients' needs. Sykes anticipates that it will
be necessary
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to continue to invest in and develop new and enhanced technology on a timely
basis to maintain its competitiveness. Significant capital expenditures may be
required to keep Sykes' technology up-to-date. There can be no assurance that
any of Sykes' information systems will be adequate to meet its future needs or
that Sykes will be able to incorporate new technology to enhance and develop
its existing services. Moreover, investments in technology, including future
investments in upgrades and enhancements to software, may not necessarily
maintain Sykes' competitiveness. Sykes' future success will also depend in part
on its ability to anticipate and develop information technology solutions that
keep pace with evolving industry standards and changing client demands.
Dependence on Trend Toward Outsourcing
Sykes' business and growth depend in large part on the industry trend
toward outsourcing information technology services. Outsourcing means that an
entity contracts with a third party, such as Sykes, to provide support services
rather than perform such services in house. There can be no assurance that this
trend will continue, as organizations may elect to perform such services
themselves. A significant change in this trend could have a material adverse
effect on Sykes' business, financial condition and results of operations.
Additionally, there can be no assurance that Sykes' cross-selling efforts will
cause its customers to purchase additional services from Sykes or adopt a
single-source outsourcing approach.
Risk of Emergency Interruption of Technical Support Center Operations
Sykes' operations are dependent upon its ability to protect its
technical support centers and its information databases against damages that
may be caused by fire and other disasters, power failure, telecommunications
failures, unauthorized intrusion, computer viruses and other emergencies. The
temporary or permanent loss of such systems could have a material adverse
effect on Sykes' business, financial condition, and results of operations.
Notwithstanding precautions taken by the Company to protect itself and its
customers from events that could interrupt delivery of its services, there can
be no assurance that a fire, natural disaster, human error, equipment
malfunction or inadequacy, or other event would not result in a prolonged
interruption in Sykes' ability to provide support services to its customers.
Such an event could have a material adverse effect on Sykes' business,
financial condition and results of operations.
Risks Associated with International Operations and Expansion
The Company intends to continue to pursue growth opportunities in
markets outside the United States. At December 31, 1999, Sykes' international
operations were conducted from 18 technical support centers located in Sweden,
The Netherlands, France, Germany, South Africa, Scotland, Ireland, Hungary,
Turkey, China, Costa Rica and The Philippines. Revenues from foreign operations
for the years ended December 31, 1997, 1998, and 1999, were 36.3%, 35.6% and
32.0% of consolidated revenues, respectively. International operations are
subject to certain risks common to international activities, such as changes in
foreign governmental regulations, tariffs and taxes, import/export license
requirements, the imposition of trade barriers, difficulties in staffing and
managing foreign operations, political uncertainties, longer payment cycles,
foreign exchange restrictions that could limit the repatriation of earnings,
possible greater difficulties in accounts receivable collection, potentially
adverse tax consequences, and economic instability.
Sykes conducts business in various foreign currencies and is therefore
exposed to market risk from changes in foreign currency exchange rates and
interest rates, which could impact its results of operations and financial
condition. Sykes is also subject to certain exposures arising from the
translation and consolidation of the financial results of its foreign
subsidiaries. Sykes has from time to time taken limited actions to attempt to
mitigate Sykes' foreign transaction exposure. However, there can be no
assurance that the Company will take any actions to mitigate such exposure in
the future, and if taken that such actions taken will be successful or that
future changes in currency exchange rates will not have a material impact on
Sykes' future operating results. A significant change in the value of the
dollar against the currency of one or more countries where Sykes operates may
materially adversely affect Sykes' results. Sykes has historically not entered
into a hedge contract for either its translation risk or its economic risk.
Existence of Substantial Competition
The markets for Sykes' services are highly competitive, subject to rapid
change, and highly fragmented. While many companies provide information
technology services, Sykes believes no one company is dominant. There are
numerous and varied providers of such services, including firms specializing in
call center operations, temporary staffing and personnel placement companies,
general management consulting firms, divisions of large hardware and software
companies and niche providers of information technology services, many of whom
compete in only certain markets. Sykes' competitors include many companies who
may possess substantially greater resources, greater name recognition and a
more established
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customer base than it does. In addition to Sykes' competitors, the services
offered by Sykes are often provided by in-house personnel. Increased
competition, the failure of Sykes to compete successfully, pricing pressures,
loss of market share and loss of clients could have a material adverse effect
on Sykes' business, financial condition, and results of operation.
Many of Sykes' large customers purchase information technology services
primarily from a limited number of preferred vendors. Sykes has experienced and
continues to anticipate significant pricing pressure from these customers in
order to remain a preferred vendor. These companies also require vendors to be
able to provide services in multiple locations. Although Sykes believes it can
effectively meet its customers' demands, there can be no assurance that it will
be able to compete effectively with other information technology services
companies. Sykes believes that the most significant competitive factors in the
sale of its services include quality, reliability of services, flexibility in
tailoring services to client needs, experience, reputation, comprehensive
services, integrated services and price.
Dependence on Senior Management
The success of Sykes is largely dependent upon the efforts, direction and
guidance of its senior management. Sykes' continued growth and success also
depend in part on its ability to attract and retain skilled employees and
managers and on the ability of its executive officers and key employees to
manage its operations successfully. Sykes has entered into employment and
non-competition agreements with its executive officers. The loss of any of
Sykes' senior management or key personnel, or its inability to attract, retain
or replace key management personnel in the future, could have a material
adverse effect on Sykes' business, financial condition and results of
operations.
Control by Principal Shareholder and Anti-Takeover Considerations
As of the date of this report, John H. Sykes, Sykes' Chairman of the Board and
Chief Executive Officer, beneficially owned more than 40% of Sykes' outstanding
common stock. As a result, Mr. Sykes will have substantial influence in the
election of the Company's directors and in determining the outcome of other
matters requiring shareholder approval.
Sykes' Board of Directors is divided into three classes serving staggered
three-year terms. The staggered Board of Directors and the anti-takeover
effects of certain provisions contained in the Florida Business Corporation Act
and in Sykes' Articles of Incorporation and Bylaws, including the ability of
the Board of Directors of Sykes to issue shares of preferred stock and to fix
the rights and preferences of those shares without shareholder approval, may
have the effect of delaying, deferring or preventing an unsolicited change in
the control of Sykes. This may adversely affect the market price of Sykes'
common stock or the ability of shareholders to participate in a transaction in
which they might otherwise receive a premium for their shares.
Volatility of Stock Price May Result in Loss of Investment
The trading price of Sykes' common stock has been and may continue to be
subject to wide fluctuations over short and long periods of time. Sykes
believes that market prices of information technology stocks in general have
experienced volatility, which could affect the market price of Sykes' common
stock regardless of Sykes' financial results or performance. Sykes further
believes that various factors such as general economic conditions, changes or
volatility in the financial markets, changing market conditions in the
information technology industry, quarterly variations in Sykes' financial
results, the announcement of acquisitions, strategic partnerships, or new
product offerings, and changes in financial estimates and recommendations by
securities analysts could cause the market price of Sykes' common stock to
fluctuate substantially in the future.
RISKS ASSOCIATED WITH SHPS' CARE MANAGEMENT SERVICES AND EMPLOYEE BENEFITS
SERVICES
SHPS, a wholly owned subsidiary of Sykes, is a provider of care management
services and products and employee benefits administration and support
services. In addition to the risks described above, SHPS is subject to the
following specific risks:
Potential Risks of Care Management Contracts
Some of SHPS' care management contracts contain "shared risk" provisions under
which SHPS may be required to bear a portion of any loss in connection with
such provisions. To the extent healthcare participants covered by such
contracts require more frequent or extensive care than anticipated, SHPS would
incur unexpected costs not offset by additional revenue, which would reduce
operating margins. In the worst case, the revenue derived from such contracts
may be insufficient to cover the cost of the services provided. Any such
reduction or elimination of earnings could have a material adverse effect on
SHPS' business, financial condition and results of operations.
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Potential Legal Liability for Care Management
Participants in the healthcare industry have become subject to an increasing
number of lawsuits alleging malpractice, product liability, bad faith, ERISA
liability and other legal theories, including negligence in credentialing and
utilization management, many of which involve large claims and significant
legal costs. SHPS, through its utilization review services, makes
recommendations concerning the appropriateness of providers' proposed medical
treatment of patients and, as a result, it could be subject to liability
arising from any adverse medical consequences. SHPS does not grant or deny
claims for payment of benefits, and SHPS does not believe that it engages in
the practice of medicine or the delivery of medical services. There can be no
assurance, however, that SHPS will not be subject to claims or litigation
related to granting or denying claims for payment of benefits or allegations
that SHPS engages in the practice of medicine or the delivery of medical
services.
When a patient requires guidance in retaining physician services in their area,
SHPS assists them in identifying appropriate providers. To the extent that
those providers are deemed to be agents of SHPS, SHPS could be subject to
liability regarding adverse medical consequences or inappropriate provider
selection. Additionally, due to the nature of its business, SHPS could become
involved in litigation regarding the information provided telephonically by its
clinical service staff, particularly in light of the emerging laws relating to
telemedicine, which is the practice of performing medical diagnoses and
treatment via telecommunications devices. See "Risks Relating to Telemedicine."
Additionally, to the extent that SHPS' clinical service staff could be deemed a
provider of medical or clinical services, SHPS could be subject to claims of
licensure violations, which could result in fines, suspension or loss of the
right to do business in a particular state. The physicians and nurses employed
by SHPS do not make final decisions regarding the authorization or denial of
medical treatment. However, the physicians and nurses employed by SHPS could be
deemed to be engaged in the corporate practice of medicine and subject to
discipline by the state boards of medicine and nursing through which they are
licensed, which could result in substantial penalties to SHPS, including
administrative penalties such as fines, reprimands, criminal penalties, or an
order to cease doing business, any of which could have a material adverse
effect on SHPS.
SHPS also could incur liability as a fiduciary in respect of certain of the
disability management services it provides. To reduce its exposure, SHPS
maintains general liability insurance coverage, product liability insurance
coverage, umbrella liability insurance coverage, primary occurrence errors and
omissions insurance coverage, and excess occurrence errors and omissions
insurance coverage. There can be no assurance, however, that such insurance
will be sufficient or available at a reasonable cost to protect SHPS from
liability. To the extent that such insurance is insufficient or unavailable to
cover the costs associated with these potential liabilities, SHPS' business or
results of operations could be materially adversely affected.
Potential Legal Liability as a Benefits Administrator
As an administrator of benefits, SHPS provides services to employers that are
subject to the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which may prevent the imposition of liability in
state law claims such as malpractice or bad faith. The possibility exists that
SHPS could be subject to state law claims for services provided to plans not
covered by ERISA and liability for these claims could be substantial.
Additionally, there can be no assurance that ERISA will not be further eroded
by legal precedent or amended to modify or repeal the current limitations on
liability.
As a provider of COBRA compliance and administration services, SHPS is subject
to excise taxes for noncompliance with certain provisions of COBRA. In addition
to the excise tax liability that may be imposed on SHPS, substantial excise
taxes may be imposed on SHPS' customers under COBRA. Under many of SHPS'
service agreements, SHPS assumes financial responsibility for the payment of
such taxes or penalties assessed against a customer arising out of SHPS'
failure to comply with COBRA, unless such taxes or penalties are attributable
to the customer's failure to comply with the terms of its agreement with SHPS.
In addition to liability for excise taxes for noncompliance with COBRA, SHPS
accepts financial responsibility for certain civil and other liabilities
incurred by its customers that are attributable to SHPS' failure to fulfill its
obligations to its customers under its agreements. These liabilities could, in
certain cases, be substantial. There can be no assurance that SHPS will not
incur material liability for noncompliance with COBRA or for its failure to
comply with its agreement with any customer in the future.
16
<PAGE> 19
Governmental Regulation
The healthcare and employee benefit industries are subject to extensive and
evolving regulation, both at the federal and state levels. The benefit plans
administered by SHPS and its Care Management programs are subject to a variety
of laws and regulations, including ERISA, COBRA, the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"), federal and state
confidentiality laws, Medicare as secondary payor laws and regulations,
telemedicine laws, the Public Health Service Act, a number of state third party
administrative laws, and state laws involving the provision of healthcare
services. These laws and regulations are administered by numerous agencies,
including the Department of Labor, the Department of Commerce, the Department
of Health and Human Services, the Internal Revenue Service (the "IRS") and
state insurance and health regulation departments.
Where a patient requires a second opinion, one of SHPS' physician medical
directors provides the patient with the names of physicians in the patient's
area. The patient selects a physician and SHPS makes an appointment for the
patient with the physician, and this physician evaluates the appropriateness of
the care being recommended by the patient's attending physician. In doing so,
the physician may order designated healthcare services which in turn must be a
covered service approved by SHPS for payment. Whether such services are covered
benefits is determined by the terms of the customer's benefit plan, not by
SHPS. SHPS reviews the terms of its customers' benefit plans, each of which
includes a process to determine which healthcare services are covered. If the
ordered designated healthcare services are covered under the Medicare or
Medicaid programs, the provision of the list of names of physicians or the
making of a patient appointment by the medical director could be deemed a
referral subject to the prohibitions against referrals to entities performing
designated healthcare services in which the referring physician has a financial
interest as defined in the Stark I and Stark II statutes, resulting in fines or
criminal penalties, which could have a material adverse effect on SHPS.
SHPS' customers, and not SHPS, generally pay the physicians who perform the
second opinion and related services, including designated healthcare services.
SHPS does not believe that under these circumstances it has a financial
relationship in any entity that provides designated healthcare services which
are reimbursed under the Medicare or Medicaid programs. Therefore, SHPS does
not believe that the Stark II statute impacts referrals made by SHPS' medical
directors in these instances.
Occasionally, SHPS may advance payments to physicians, laboratories and x-ray
facilities, which may include payment for designated healthcare services, on
behalf of SHPS' customers. SHPS' customers reimburse SHPS in total for these
advances. These advances may constitute a financial interest as that term is
defined in Stark I and in the proposed regulations to the Stark II laws.
However, SHPS believes that the advance payments to physicians do not violate
the Stark I and Stark II prohibition against referrals, as the advance payments
meet the proposed exception for physician services under the proposed Stark II
regulations. SHPS also believes that these payments, which are authorized by
SHPS' medical director, to laboratories and x-ray facilities do not violate
Stark I and the Stark II proposed regulations as these advance payments meet
the proposed exception for payments by physicians for items and services under
the proposed Stark II regulations. However, there are, to date, no final
regulations promulgated under the Stark II statute. To the extent that these
actions by the medical directors could later be found to be subject to and in
violation of the Stark II statute, the medical directors and SHPS could be
subject to fines or criminal penalties, which could have a material adverse
effect on SHPS.
Many of these statutes and regulations impact the development of healthcare
information services and interstate transmission of medical information and
services. Some of the statutes and regulations governing the provision of
healthcare services as well as laws relating to telemedicine and corporate
practice of medicine doctrines could be construed by regulatory authorities to
apply to certain of SHPS' activities. See "Risks Relating to Laws Governing
Corporate Practice of Medicine." To the extent these statutes and regulations
could be deemed applicable to SHPS, SHPS and its employees could be required to
obtain additional licenses or registrations or to modify or curtail SHPS'
activities, or SHPS could be subject to revocation or suspension of existing
licenses or registrations or civil or criminal penalties or fines, any of which
could have a material adverse effect on SHPS.
The majority of states require licensure or registration of entities deemed to
be private utilization review agents. Frequently, these states exempt entities
providing services to ERISA plans. SHPS' current clients for these services are
primarily but not exclusively ERISA plans. To the extent that SHPS provides
services only to ERISA plans in any given state, SHPS may be exempt from these
licensure requirements. Although SHPS has voluntarily achieved licensure in the
states in which SHPS has determined licensure is required, penalties for
failure to achieve licensure in additional states could result in the loss of
SHPS' licenses or substantial penalties to SHPS, which could have a material
adverse effect on SHPS.
17
<PAGE> 20
Risks Relating to Laws Governing Corporate Practice of Medicine
The laws of certain states in which SHPS operates or may operate in the future
do not permit business corporations to practice medicine or exercise control
over physicians who practice medicine. Although SHPS does not believe that the
services it provides constitute the corporate practice of medicine, a finding
that SHPS is engaged in the corporate practice of medicine in any of the
foregoing states could result in loss of licensing, the need to develop
relationships with physicians licensed in the states having corporate practice
of medicine statutes, and civil and criminal fines, any of which could require
SHPS to modify its techniques of doing business, withdraw from certain states
or otherwise curtail its activities, and could have a material adverse effect
on SHPS.
Risks Relating to Telemedicine
Telemedicine is the practice of performing medial diagnosis and treatment via
telecommunications devices. These technologies range from providing clinical
advice over the telephone, the transmission of high resolution images (e.g.,
x-rays, sonograms) and the remote performance of clinical evaluations using
interactive teleconferencing. As advanced telecommunications technology has
become more widely available, the legal issues associated with telemedicine
have become the subject of new legislation. In various states, legislation has
been introduced to amend licensure laws related to the out of state practice of
medicine and consultation. Various states have introduced or passed bills
related to telemedicine, primarily regarding the licensure of out-of-state
physicians and the coverage of telemedicine procedures by third party payer
plans.
Although SHPS does not believe that these laws currently impact SHPS'
operations because it does not believe it engages in medical diagnosis or
treatment via telecommunication devices, to the extent SHPS' services could be
deemed to be telemedicine, SHPS could be subject to liability for licensure
violations, violations of third party payer requirements or violations of the
laws relating to the confidentiality of patient medical records, any of which
could have a material adverse effect on SHPS.
Possible Adverse Effect of National and State Healthcare Reform Proposals
The extent and type of government support for and oversight of the delivery of
healthcare services, as well as the extent and type of health insurance
benefits that employers are required to provide employees, have been the
subject of close scrutiny and debate in recent years, both at the national and
state levels, resulting in such legislation as HIPAA. Additional changes in the
government programs and regulations, including requirements governing the
manner by which services are delivered, and the premiums for services, the
reimbursement of fees, benefits packages, parity for particular health
conditions, access to particular types of healthcare providers, or the
development of a modified healthcare purchasing system could have a material
adverse effect on SHPS.
Reliance on Information Processing Systems and Proprietary Technology
SHPS' business is dependent on its ability to store, retrieve, process and
manage significant databases, and to periodically expand and upgrade its
information processing capabilities. SHPS intends to develop additional
proprietary applications software and databases and to use commercially
available database management software and computer hardware that are not
currently being used by SHPS. SHPS is currently in the process of migrating its
information systems from a mainframe platform to a proprietary, client server
platform. Any delay in such migration or the failure of the new systems to
adequately support SHPS' operations, could materially adversely affect SHPS'
business and financial results. In addition, there can be no assurance that
SHPS will be able to incorporate new technology to enhance and develop its
existing services.
Interruption or loss of SHPS' information processing capabilities through loss
of stored data, breakdown or malfunction of computer equipment and software
systems, telecommunications failure or damage to SHPS' systems caused by fire,
hurricane, tornado, flood, lightning, electrical power outage or other
disruption could have a material adverse effect on SHPS.
SHPS' business is dependent on its continued use of proprietary software,
databases and processing techniques. SHPS attempts to protect its trade secrets
and other proprietary information through agreements with customers, employees
and consultants. There can be no assurance that these precautions will be
adequate to deter misappropriation of SHPS' proprietary software and healthcare
information processing techniques.
18
<PAGE> 21
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table provides the names and ages of the Company's executive
officers, and the positions and offices with the Company currently held by each
of them:
<TABLE>
<CAPTION>
Name Age Principal Position
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
John H. Sykes 63 Chairman and Chief Executive Officer
David L. Grimes 52 President and Chief Operating Officer
Scott J. Bendert 43 Group Executive and Senior Vice President - Operations
James E. Lamar 52 Group Executive and Senior Vice President - International
Gerry L. Rogers 54 Group Executive and Senior Vice President - The Americas
Dale W. Saville 55 Senior Vice President and Chief Technology Officer
Charles E. Sykes 37 Senior Vice President - Marketing and Global Alliances
W. Michael Kipphut 46 Vice President and Chief Financial Officer
</TABLE>
John H. Sykes has held the titles and responsibilities of Chairman and
Chief Executive Officer since December 1998. Mr. Sykes has been President and
Chief Executive Officer of the Company from inception in 1977 until December
1998. Previously, Mr. Sykes was Senior Vice President of CDI Corporation, a
publicly-held technical services firm.
David L. Grimes joined the Company in December 1998 as President and
was named Chief Operating Officer during February 1999. From 1984 to 1998, Mr.
Grimes held various management positions with AT&T, a publicly-held
telecommunications firm, most recently as Region Vice President.
Scott J. Bendert joined the Company in 1993 as Chief Financial Officer
and was named Group Executive and Senior Vice President - Operations during
March 2000. In October 1997, Mr. Bendert was appointed Senior Vice
President-Finance and Chief Financial Officer, and held the title of Vice
President - Finance and Chief Financial Officer from 1995 until 1997. In
addition, from 1994 to 1999, Mr. Bendert held the title of Treasurer.
Gerry L. Rogers joined the Company in February 1999 as Group Vice
President, North America and was named Group Executive and Senior Vice
President - The Americas, during March 2000. From 1968 to 1999, Mr. Rogers held
various management positions with AT&T, a publicly-held telecommunications
firm, most recently as General Manager for the Business Growth Markets.
James E. Lamar joined the Company in May 1999 as Vice President and
Managing Director of EMEA and was named Group Executive and Senior Vice
President - International during March 2000. From 1994 to 1999, Mr. Lamar held
various management positions with Lucent Technologies, a publicly-held
telecommunications firm, most recently as managing Director of Licensing.
Dale W. Saville joined the Company in January 1995 and was named
Senior Vice President and Chief Technology Officer during March 2000. In August
1998, Mr. Saville was appointed Vice President Product Development and from
July 1997 until August 1998, held the title of Vice President Customer Service
and Support - EMEA.
Charles E. Sykes joined the Company in 1986 and was named Senior Vice
President - Marketing and Global Alliances during March 2000. In December 1996,
Mr. Sykes was appointed Vice President Sales and held the position of Regional
Manager of the Midwest Region for Professional Services from 1992 until 1996.
Mr. Charles E. Sykes is the son of Mr. John H. Sykes.
W. Michael Kipphut joined the Company as Vice President and Chief
Financial Officer in March 2000. From September 1998 to February 2000, Mr.
Kipphut held the position of Chief Financial Officer for USA Floral Products,
Inc., a publicly held worldwide perishable products distributor. From September
1994 until September 1998, Mr. Kipphut held the position of Vice President and
Treasurer for Spalding & Evenflo Companies, Inc., a global manufacturer of
consumer products.
19
<PAGE> 22
ITEM 2 PROPERTIES
The Company's principal executive offices are located in Tampa,
Florida. This facility currently serves as the headquarters for senior
management, the financial and administrative departments and the Tampa office.
The following table sets forth additional information concerning the Company's
facilities:
<TABLE>
<CAPTION>
Lease
Properties General Usage Square Feet Expiration
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES LOCATIONS
Tampa, Florida Corporate headquarters 18,000 December 2002
Tampa, Florida Technical support center/office 56,900 June 2002
Ada, Oklahoma Technical support center 42,000 Company owned
Bismarck, North Dakota Technical support centers 84,000 Company owned
Charlotte, North Carolina Technical support center 56,800 October 2000
Greeley, Colorado Technical support center 42,000 Company owned
Hays, Kansas Technical support center 42,000 Company owned
Klamath Falls, Oregon Technical support center 42,000 Company owned
Louisville, Kentucky Technical support center/office 60,700 July 2005
Manhattan, Kansas Technical support center 42,000 Company owned
Milton-Freewater, Oregon Technical support center 42,000 Company owned
Minot, North Dakota Technical support center 42,000 Company owned
Pikesville, Kentucky Technical support center 42,000 Company owned
Ponca City, Oklahoma Technical support center 42,000 Company owned
Scottsbluff, Nebraska Technical support center 42,000 Company owned
Scottsdale, Arizona Technical support center 39,100 June 2002
Sterling, Colorado Technical support center 34,000 Company owned
Fremont, California Distribution center 55,000 October 2002
Nashville, Tennessee Distribution center 91,200 January 2001
Louisville, Kentucky Distribution center 78,750 June 2001
Atlanta, Georgia Office 2,000 May 2000
Boise, Idaho Office 2,400 January 2001
Boston, Massachusetts Office 26,000 September 2000
Boulder, Colorado Office 13,000 March 2000
Cary, North Carolina Office 3,700 March 2003
Charlotte, North Carolina Office 2,900 June 2000
Charlotte, North Carolina Office 37,800 October 2003
Dallas, Texas Office 3,000 June 2003
Denver, Colorado Office 2,000 January 2001
Jacksonville, Florida Office 1,800 November 2001
Lexington, Kentucky Office 1,600 June 2000
Lexington, Massachusetts Office 12,200 October 2002
Poughkeepsie, New York Office 1,000 January 2001
St. Louis, Missouri Office 5,700 September 2001
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
Lease
Properties General Usage Square Feet Expiration
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTERNATIONAL LOCATIONS
Amsterdam, The Netherlands Technical support center/
International headquarters 70,500 July 2004
Budapest, Hungary Technical support center 15,700 June 2002
Edinburgh, Scotland Technical support center/office 36,000 September 2019
Heredia, Costa Rica Technical support centers 23,800 February 2001
London, Ontario, Canada Technical support center 40,000 Company owned
Toronto, Ontario, Canada Technical support center 8,200 December 2001
Moncton, New Brunswick Technical support center 1,700 June 2000
Les Ulis, France Technical support center 36,200 January 2007
Bochum, Germany Technical support center 29,100 October 2000
Hannover, Germany Technical support center 12,500 November 2008
Hamburg, Germany Technical support center 6,400 June 2001
Esslingen, Germany Technical support center 9,200 December 2005
Wilhelmshaven, Germany Technical support center 36,800 March 2003
Manila, The Philippines Technical support center 26,100 June 2000
Sunninghill, South Africa Technical support center 12,500 June 2001
Ed, Sweden Technical support center 44,000 November 2002
Sveg, Sweden Technical support center 35,100 June 2001
Shannon, Ireland Technical support and
distribution center 66,000 April 2013
Hoofddorp, The Netherlands Distribution center 14,200 July 2001
Sevran, France Distribution center 19,400 August 2002
Galashiels, Scotland Distribution center 126,700 Company owned
Upplands Vasby, Sweden Distribution center 21,300 December 2001
Brentford, England Sales office 1600 December 2005
Stockholm, Sweden Sales office 5,000 December 2001
London, Ontario Sales office 2,800 May 2002
Ottawa, Ontario Sales office 500 June 2000
Singapore Sales office 500 December 2000
Vancouver, British Columbia Sales office 1,000 June 2000
Leuven, Belgium Office and distribution center 21,000 January 2001
</TABLE>
21
<PAGE> 24
The Company owns each of its domestic technical support centers as
identified and anticipates that additional technical support centers will be
required due to growth and expansion. In addition to the above list, the
Company has established technical support centers at its customers production
facilities in Beijing, China and Istsanbul, Turkey.
The Company currently has three technical call centers under
construction and may operate from time-to-time in temporary facilities to
accommodate growth before new centers are available. The Company is currently
utilizing two such temporary facilities totaling 20,000 square feet.
ITEM 3 LEGAL PROCEEDINGS
A. Class Action Litigation
As of March 17, 2000, the Company is aware of 12 purported class
action lawsuits that have been filed against Sykes and certain of its officers
alleging violations of federal securities laws. All of the actions were filed
in the United States District Court for the Middle District of Florida, and the
Company expects that all of the actions will be consolidated into one action.
The plaintiffs of these lawsuits purport to assert claims on behalf of a class
of purchasers of Sykes common stock during 1999 and through February 4, 2000.
The actions claim violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Among other things,
the actions allege that during 1999 and 2000, the Company and certain of its
officers made materially false statements concerning the Company's financial
condition and its future prospects. The complaints also claim that the certain
of the Company's financial statements during 1999 were not prepared in
accordance with generally accepted accounting principles. The actions seek
compensatory and other damages, and costs and expenses associated with the
litigation.
The Company intends to defend the actions vigorously. However, the
Company cannot predict the outcome of these lawsuits or the impact that they
may have on the Company. The Company also cannot predict whether any other
suits, claims, or investigations may arise in the future based on the same
claims. The outcome of any of these lawsuits or any future lawsuits, claims, or
investigations relating to the same subject matter may have a material adverse
impact on the Company's financial condition and results of operations.
B. Other Litigation
From time to time, the Company is involved in other litigation
incidental to its business. In the opinion of management, no litigation to
which the Company currently is a party is likely to have a materially adverse
effect on the Company's results of operations or financial condition, if
decided adversely to the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security-holders during the
fourth quarter of the year covered by this report.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The information called for by this item is contained on page 26 of the
Company's Annual Report and is incorporated herein by reference.
ITEM 6 SELECTED FINANCIAL DATA
The information called for by this item is contained in page 25 of the
Company's Annual Report and is incorporated herein by reference.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information called for by this Item is contained in pages 27
through 32 of the Company's Annual Report and is incorporated herein by
reference.
22
<PAGE> 25
ITEM 7a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this Item is contained in page 32 of the
Company's Annual Report and is incorporated herein by reference.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item is contained in pages 33
through 56 of the Company's Annual Report and is incorporated herein by
reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEMS 10. THROUGH 13. All information required by Items 10 through 13, with the
exception of information on Executive Officers which appears in the report
under the caption "Executive Officers of the Registrant," is incorporated by
reference to the Company's Proxy Statement for its Year 2000 Annual Meeting of
Shareholders.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Consolidated Financial Statements
Reports of Independent Auditors.
The following information is contained in pages 33 through 56 of the Company's
Annual Report, and is incorporated herein by reference:
Consolidated Balance Sheets as of December 31, 1998 and 1999.
Consolidated Statements of Income for the years ended December 31,
1997, 1998 and 1999.
Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 1997, 1998 and 1999.
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1998 and 1999.
Notes to Consolidated Financial Statements.
(a)(2) Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
(a)(3) Exhibits
The following documents are filed as exhibits to this report:
23
<PAGE> 26
Exhibit
Number Exhibit Description
2.1 Articles of Merger between Sykes Enterprises, Incorporated, a North
Carolina Corporation, and Sykes Enterprises, Incorporated, a Florida
Corporation, dated March 1, 1996. (1)
2.2 Articles of Merger between Sykes Enterprises, Incorporated and Sykes
Realty, Inc. (1)
2.3 Stock Purchase Agreement dated July 1, 1996 among Sykes Enterprises,
Incorporated and Johan Holm, Arne Weinz and Norhold Invest AB. (2)
2.4 Stock Purchase Agreement dated August 30, 1996 among Sykes
Enterprises, Incorporated and Gordon H. Kraft. (3)
2.5 Merger Agreement dated as of January 10, 1997 among Sykes Enterprises,
Incorporated, Info Systems of North Carolina, Inc. and ISNC
Acquisition Co. (4)
2.6 Stock Purchase Agreement date March 28, 1997 among Sykes Enterprises,
Incorporated, Sykes Holdings of Belgium, B.V.B.A., Cycle B.V.B.A. and
Michael McMahon. (5)
2.7 Joint Marketing and Distribution Agreement dated April 30, 1997 by and
between Sykes Enterprises, Incorporated and SystemSoft Corporation.
(10)
2.8 Common Stock Purchase Agreement dated May 6, 1997 by and between Sykes
Enterprises, Incorporated and SystemSoft Corporation. (10)
2.9 Acquisition Agreement, dated May 30, 1997, by and among the holders of
all of the capital interests of Telcare Gesellschaft fur
Telekommunikations-Mehrwertdienste mbH, Sykes Enterprises GmbH, and
Sykes Enterprises, Incorporated. (7)
2.10 Acquisition Agreement, dated September 19, 1997, by and among the
holders of all of the capital interests of TAS Telemarketing
Gesellschaft fur Kommunikation und Dialog mbH, Sykes Enterprises,
GmbH, and Sykes Enterprises, Incorporated. (8)
2.11 Acquisition Agreement, dated September 25, 1997, by and among the
holders of all of the capital interests of TAS Hedi Fabinyi GmbH,
Sykes Enterprises, GmbH, and Sykes Enterprises, Incorporated. (8)
2.12 Shareholder Agreement dated December 18, 1997, by and among Sykes
Enterprises, Incorporated and HealthPlan Services Corporation. (14)
2.13 Acquisition Agreement, dated December 31, 1997, by and among the
holders of all of the capital interests of McQueen International
Limited and Sykes Enterprises, Incorporated. (11)
2.14 Stock Purchase Agreement, dated September 11, 1998, between HealthPlan
Services Corporation and Sykes Enterprises, Incorporated. (17)
2.15 Acquisition Agreement, dated November 23, 1998, by and among the
holders of all of the capital interests of TAS GmbH Nord Telemarketing
und Vertriebsberatung, Sykes Enterprises, GmbH, and Sykes Enterprises,
Incorporated (19).
2.16 Combination Agreement, dated December 29, 1998, by and among the
holders of all of the capital interests of Oracle Service Networks
Corporation and Sykes Enterprises, Incorporated. (18)
3.1 Articles of Incorporation of Sykes Enterprises, Incorporated, as
amended. (19)
24
<PAGE> 27
3.2 Bylaws of Sykes Enterprises, Incorporated, as amended. (19)
4.1 Specimen certificate for the Common Stock of Sykes Enterprises,
Incorporated. (1)
4.2 Credit Agreement between NationsBank N.A. and Sykes Enterprises,
Incorporated dated as of February 27, 1998. (16)
4.3 Amendment No. 1 to Credit Agreement between NationsBank N.A. and Sykes
Enterprises, Incorporated dated as of March 20, 1998. (16)
4.4 Guaranty Agreement between Sykes Enterprises, Incorporated and
HealthPlan Services Corp. to NationsBank N.A. dated March 16, 1998.
(16)
10.1 Loan Agreement between NationsBank, N.A. and Sykes Enterprises,
Incorporated dated as of December 31, 1996. (6)
10.2 Employment Agreement dated as of March 6, 2000 between John H. Sykes
and Sykes Enterprises, Incorporated (filed herewith).
10.3 Employment Agreement dated as of March 6, 2000 between David L. Grimes
and Sykes Enterprises, Incorporated (filed herewith).
10.4 Employment Agreement dated as of March 6, 2000 between Scott J.
Bendert and Sykes Enterprises, Incorporated (filed herewith).
10.5 Employment Agreement dated as of March 6, 2000 between W. Michael
Kipphut and Sykes Enterprises, Incorporated (filed herewith).
10.6 Employment Agreement dated as of March 6, 2000 between Dale W. Saville
and Sykes Enterprises, Incorporated (filed herewith).
10.7 Employment Agreement dated as of March 6, 2000 between Gerry L. Rogers
and Sykes Enterprises, Incorporated (filed herewith).
10.8 Employment Agreement dated as of March 6, 2000 between James E. Lamar
and Sykes Enterprises, Incorporated (filed herewith).
10.9 Employment Agreement dated as of March 6, 2000 between Charles E.
Sykes and Sykes Enterprises, Incorporated (filed herewith).
10.10 Stock Option Agreement between Sykes Enterprises, Incorporated and
David E. Garner dated as of December 31, 1995. (1)
10.11 1996 Employee Stock Option Plan. (1)
10.12 1996 Non-Employee Director Stock Option Plan. (1)
10.13 1996 Non-Employee Directors' Fee Plan. (1)
10.14 Form of Split Dollar Plan Documents. (1)
25
<PAGE> 28
10.15 Form of Split Dollar Agreement. (1)
10.16 Form of Indemnity Agreement between directors and executive officers
and Sykes Enterprises, Incorporated. (1)
10.17 Aircraft Lease Agreement between JHS Leasing of Tampa, Inc. as lessor
and Sykes Enterprises, Incorporated as lessee, dated December 1, 1995.
(1)
10.18 Single Tenant Property Lease Agreement between Sykes Investments as
landlord and Sykes Enterprises, Incorporated as tenant dated October
31, 1989, for building in Charlotte, North Carolina. (1)
10.19 Tax Indemnification Agreement between Sykes Enterprises, Incorporated
and John H. Sykes. (1)
10.20 Consultant Agreement between Sykes Enterprises, Incorporated and E.J.
Milani Consulting Corp. dated April 1, 1996. (1)
10.21 1997 Management Stock Incentive Plan. (15)
10.22 1999 Employees' Stock Purchase Plan. (19)
10.23 2000 Stock Option Plan (filed herewith).
13.1 1999 Sykes Enterprises, Incorporated Annual Report (incorporates
sections only in electronic filing).
21.1 List of subsidiaries of Sykes Enterprises, Incorporated (filed
herewith).
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney relating to subsequent amendments (included on the
signature page of this report).
27.1 Financial Data Schedule (for SEC use only)(filed herewith).
- ---------------
(1) Filed as the same numbered Exhibit to the Registrant's Registration
Statement on Form S-1 (Registration No. 333-2324) and incorporated herein
by reference.
(2) Filed as an Exhibit to the Registrant's Form 8-K dated July 31, 1996, and
incorporated herein by reference.
(3) Filed as an Exhibit to the Registrant's Form 8-K dated September 16,
1996, and incorporated herein by reference.
(4) Included as Appendix A to the Proxy Statement/Prospectus contained in the
Registrant's Registration Statement on Form S-4 (Registration No.
333-20465) and incorporated herein by reference.
(5) Filed as an Exhibit to the Registrant's Form 10-K dated March 30, 1997,
and incorporated herein by reference.
(6) Filed as Exhibit 2.5 to the Registrant's Registration Statement on Form
S-4 (Registration No. 333-20465) and incorporated herein by reference.
(7) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
June 16, 1997, and incorporated herein by reference.
(8) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
September 26, 1997, and incorporated herein by reference.
(9) Filed as the same numbered Exhibit to the Registrant's Registration
Statement on Form S-3 (Registration No. 333-38513) and incorporated
herein by reference.
26
<PAGE> 29
(10) Filed as an Exhibit to the Registrant's Form 10-Q dated June 29, 1997,
and incorporated herein by reference.
(11) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
January 15, 1998, and incorporated herein by reference.
(12) Filed as an Exhibit to the Registrant's Registration Statement on Form
S-3 (Registration No. 333-38513) and incorporated herein by reference.
(13) Filed as an Exhibit to the Registrant's Registration Statement on Form
S-3 (Registration No. 333-46569) and incorporated herein by reference.
(14) Filed as an Exhibit to the Registrant's Form 10-K dated December 31,
1997, and incorporated herein by reference.
(15) Filed as an Exhibit to the Registrant's Proxy Statement on Form 14A,
dated April 1, 1998, and incorporated herein by reference.
(16) Filed as an Exhibit to the Registrant's Form 10-Q dated March 31, 1998,
and incorporated herein by reference.
(17) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
September 11, 1998, and incorporated herein by reference.
(18) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
December 29, 1998, and incorporated herein by reference.
(19) Filed as an Exhibit to the Registrant's Form 10-K dated December 31,
1998, and incorporated herein by reference.
(b) Reports on Form 8-K
27
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Tampa, and State of Florida, on this 24th day of March, 2000.
SYKES ENTERPRISES, INCORPORATED
(Registrant)
By: /s/ Scott J. Bendert
-----------------------------------------
Scott J. Bendert,
Group Executive and Senior Vice
President - Operations Performance
and Administration
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons in the capacities
and on the dates indicated. Each person whose signature appears below
constitutes and appoints Scott Bendert his true and lawful attorney-in-fact and
agent, with full power of substitution and revocation, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this report and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or either of them, may lawfully do or
cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ John H. Sykes Chairman of the Board, Chief Executive March 27, 2000
- -------------------- Officer and Director (Principal Executive
John H. Sykes Officer)
/s/ David L. Grimes President and Chief Operating Officer March 27, 2000
- --------------------
David L. Grimes
/s/ Scott J. Bendert Group Executive and Senior Vice President - March 27, 2000
- -------------------- Operations Performance and Administration
Scott J. Bendert and former Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Gordon H. Loetz Vice Chairman of the Board and Director March 27, 2000
- --------------------
Gordon H. Loetz
</TABLE>
28
<PAGE> 31
<TABLE>
<S> <C> <C>
/s/ Furman P. Bodenheimer, Jr. Director March 27, 2000
- ------------------------------
Furman P. Bodenheimer, Jr.
/s/ H. Parks Helms Director March 27, 2000
- ------------------------------
H. Parks Helms
/s/ Ernest J. Milani Director March 27, 2000
- ------------------------------
Ernest J. Milani
/s/ Adelaide A. Sink Director March 27, 2000
- ------------------------------
Adelaide A. Sink
/s/ R. James Stroker Director March 27, 2000
- ------------------------------
R. James Stroker
/s/ Iain A. Macdonald Director March 27, 2000
- ------------------------------
Iain A. Macdonald
/s/ Linda McClintock-Greco Director March 27, 2000
- ------------------------------
Linda McClintock-Greco
</TABLE>
29
<PAGE> 32
SYKES ENTERPRISES, INCORPORATED
SCHEDULE II - VALUATION AND
QUALIFYING ACCOUNTS Years ended
December 31, 1997, 1998 and 1999
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and Reclassifications End
Of Period Expenses (1) Deductions(2) Of Period
----------- -------------- ------------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1997 $ 498,129 $ 167,396 $ - $128,130 $ 537,395
Year ended December 31, 1998 537,395 261,599 - 2,823 796,171
Year ended December 31, 1999 796,171 2,201,581 - 557,208 2,440,544
Foreign current deferred tax asset
valuation allowance:
Year ended December 31, 1997 $ 571,000 $ - $ - $436,000 $ 135,000
Year ended December 31, 1998 135,000 - - 135,000 -
Year ended December 31, 1999 - 626,000 704,000 90,000 1,240,000
Domestic non-current deferred tax
asset valuation allowance:
Year ended December 31, 1997 $ - $ - $ - $ - $ -
Year ended December 31, 1998 - 3,000,000 - - 3,000,000
Year ended December 31, 1999 3,000,000 - - 106,000 2,894,000
Foreign non-current deferred tax
valuation allowance:
Year ended December 31, 1997 $ - $ - $ - $ - $ -
Year ended December 31, 1998 - 704,000 - - 704,000
Year ended December 31, 1999 704,000 - (704,000) - -
</TABLE>
- --------------------------
(1) Amounts have been reclassified for reporting purposes.
(2) Write-offs and recoveries
<PAGE> 33
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------- -------------------
2.1 Articles of Merger between Sykes Enterprises, Incorporated, a North
Carolina Corporation, and Sykes Enterprises, Incorporated, a Florida
Corporation, dated March 1, 1996. (1)
2.2 Articles of Merger between Sykes Enterprises, Incorporated and Sykes
Realty, Inc. (1)
2.3 Stock Purchase Agreement dated July 1, 1996 among Sykes Enterprises,
Incorporated and Johan Holm, Arne Weinz and Norhold Invest AB. (2)
2.4 Stock Purchase Agreement dated August 30, 1996 among Sykes
Enterprises, Incorporated and Gordon H. Kraft. (3)
2.5 Merger Agreement dated as of January 10, 1997 among Sykes Enterprises,
Incorporated, Info Systems of North Carolina, Inc. and ISNC
Acquisition Co. (4)
2.6 Stock Purchase Agreement date March 28, 19997 among Sykes Enterprises,
Incorporated, Sykes Holdings of Belgium, B.V.B.A., Cycle B.V.B.A. and
Michael McMahon. (5)
2.7 Joint Marketing and Distribution Agreement dated April 30, 1997 by and
between Sykes Enterprises, Incorporated and SystemSoft Corporation.
(10)
2.8 Common Stock Purchase Agreement dated May 6, 1997 by and between Sykes
Enterprises, Incorporated and SystemSoft Corporation. (10)
2.9 Acquisition Agreement, dated May 30, 1997, by and among the holders of
all of the capital interests of Telcare Gesellschaft fur
Telekommunikations-Mehrwertdienste mbH, Sykes Enterprises GmbH, and
Sykes Enterprises, Incorporated. (7)
2.10 Acquisition Agreement, dated September 19, 1997, by and among the
holders of all of the capital interests of TAS Telemarketing
Gesellschaft fur Kommunikation und Dialog mbH, Sykes Enterprises,
GmbH, and Sykes Enterprises, Incorporated. (8)
2.11 Acquisition Agreement dated September 25, 1997, by and among the
holders of all of the capital interests of TAS Hedi Fabinyi GmbH,
Sykes Enterprises, GmbH, and Sykes Enterprises, Incorporated. (8)
2.12 Shareholder Agreement dated December 18, 1997, by and among Sykes
Enterprises, Incorporated and HealthPlan Services Corporation. (14)
2.13 Acquisition Agreement, dated December 31, 1997, by and among the
holders of all of the capital interests of McQueen International
Limited and Sykes Enterprises, Incorporated. (11)
2.14 Stock Purchase Agreement, dated September 11, 1998, between HealthPlan
Services Corporation and Sykes Enterprises, Incorporated. (17)
<PAGE> 34
2.15 Acquisition Agreement, dated November 27, 1998, by and among the
holders of all of the capital interests of TAS GmbH Nord Telemarketing
und Vertriebsberatung, Sykes Enterprises, GmbH, and Sykes Enterprises,
Incorporated. (19)
2.16 Combination Agreement, dated December 29, 1998, by and among the
holders of all of the capital interests of Oracle Service Networks
Corporation and Sykes Enterprises, Incorporated. (18)
3.1 Articles of Incorporation of Sykes Enterprises, Incorporated, as
amended. (12)
3.2 Bylaws of Sykes Enterprises, Incorporated, as amended. (12)
4.1 Specimen certificate for the Common Stock of Sykes Enterprises,
Incorporated. (1)
4.2 Credit Agreement between NationsBank N.A. and Sykes Enterprises,
Incorporated dated as of February 27, 1998. (16)
4.3 Amendment No. 1 to Credit Agreement between NationsBank N.A. and Sykes
Enterprises, Incorporated dated as of March 20, 1998. (16)
4.4 Guaranty Agreement between Sykes Enterprises, Incorporated and
HealthPlan Services Corp. to NationsBank N.A. dated March 16, 1998.
(16)
10.1 Loan Agreement between NationsBank, N.A. and Sykes Enterprises,
Incorporated dated as of December 31, 1996. (6)
10.2 Employment Agreement dated as of March 6, 2000 between John H. Sykes
and Sykes Enterprises, Incorporated (filed herewith).
10.3 Employment Agreement dated as of March 6, 2000 between David L. Grimes
and Sykes Enterprises, Incorporated (filed herewith).
10.4 Employment Agreement dated as of March 6, 2000 between Scott J.
Bendert and Sykes Enterprises, Incorporated (filed herewith).
10.5 Employment Agreement dated as of March 6, 2000 between W. Michael
Kipphut and Sykes Enterprises, Incorporated (filed herewith).
10.6 Employment Agreement dated as of March 6, 2000 between Dale W. Saville
and Sykes Enterprises, Incorporated (filed herewith).
10.7 Employment Agreement dated as of March 6, 2000 between Gerry L. Rogers
and Sykes Enterprises, Incorporated (filed herewith).
10.8 Employment Agreement dated as of March 6, 2000 between James E. Lamar
and Sykes Enterprises, Incorporated (filed herewith).
10.9 Employment Agreement dated as of March 6, 2000 between Charles E.
Sykes and Sykes Enterprises, Incorporated (filed herewith).
<PAGE> 35
10.10 Stock Option Agreement between Sykes Enterprises, Incorporated and
David E. Garner dated as of December 31, 1995. (1)
10.11 1996 Employee Stock Option Plan. (1)
10.12 1996 Non-Employee Director Stock Option Plan. (1)
10.13 1996 Non-Employee Directors' Fee Plan. (1)
10.14 Form of Split Dollar Plan Documents. (1)
10.15 Form of Split Dollar Agreement. (1)
10.16 Form of Indemnity Agreement between directors and executive officers
and Sykes Enterprises, Incorporated. (1)
10.17 Aircraft Lease Agreement between JHS Leasing of Tampa, Inc. as lessor
and Sykes Enterprises, Incorporated as lessee, dated December 1, 1995.
(1)
10.18 Single Tenant Property Lease Agreement between Sykes Investments as
landlord and Sykes Enterprises, Incorporated as tenant dated October
31, 1989, for building in Charlotte, North Carolina. (1)
10.19 Tax Indemnification Agreement between Sykes Enterprises, Incorporated
and John H. Sykes. (1)
10.20 Consultant Agreement between Sykes Enterprises, Incorporated and E.J.
Milani Consulting Corp. dated April 1, 1996. (1)
10.21 1997 Management Stock Incentive Plan. (15)
10.22 1999 Employees' Stock Purchase Plan. (19)
10.23 2000 Stock Option Plan (filed herewith).
13.1 1999 Sykes Enterprises, Incorporated Annual Report (incorporates
sections only in electronic filing).
21.1 List of subsidiaries of Sykes Enterprises, Incorporated (filed
herewith).
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney relating to subsequent amendments (included on the
signature page of this report).
27.1 Financial Data Schedule (for SEC use only)(filed herewith).
- ---------------
<PAGE> 36
(1) Filed as the same numbered Exhibit to the Registrant's Registration
Statement on Form S-1 (Registration No. 333-2324) and incorporated herein
by reference.
(2) Filed as an Exhibit to the Registrant's Form 8-K dated July 31, 1996, and
incorporated herein by reference.
(3) Filed as an Exhibit to the Registrant's Form 8-K dated September 16,
1996, and incorporated herein by reference.
(4) Included as Appendix A to the Proxy Statement/Prospectus contained in the
Registrant's Registration Statement on Form S-4 (Registration No.
333-20465) and incorporated herein by reference.
(5) Filed as an Exhibit to the Registrant's Form 10-K dated March 30, 1997,
and incorporated herein by reference.
(6) Filed as Exhibit 2.5 to the Registrant's Registration Statement on Form
S-4 (Registration No. 333-20465) and incorporated herein by reference.
(7) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
June 16, 1997, and incorporated herein by reference.
(8) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
September 26, 1997, and incorporated herein by reference.
(9) Filed as the same numbered Exhibit to the Registrant's Registration
Statement on Form S-3 (Registration No. 333-38513) and incorporated
herein by reference.
(10) Filed as an Exhibit to the Registrant's Form 10-Q dated June 29, 1997,
and incorporated herein by reference.
(11) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
January 15, 1998, and incorporated herein by reference.
(12) Filed as an Exhibit to the Registrant's Registration Statement on Form
S-3 (Registration No. 333-38513) and incorporated herein by reference.
(13) Filed as an Exhibit to the Registrant's Registration Statement on Form
S-3 (Registration No. 333-46569) and incorporated herein by reference.
(14) Filed as an Exhibit to the Registrant's Form 10-K dated December 31,
1997, and incorporated herein by reference.
(15) Filed as an Exhibit to the Registrant's Proxy Statement on Form 14A dated
April 1, 1998, and incorporated herein by reference.
(16) Filed as an Exhibit to the Registrant's Form 10-Q dated March 31, 1998,
and incorporated herein by reference.
(17) Filed as an Exhibit to Registrant's Current Report on Form 8-K dated
September 11, 1998, and incorporated herein by reference.
(18) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated
December 29, 1998, and incorporated herein by reference.
(19) Filed as an Exhibit to the Registrant's Form 10-K dated December 31,
1998, and incorporated herein by reference.
<PAGE> 1
Exhibit 10.2
Employment Agreement Dated as of March 6, 2000 between John H. Sykes and Sykes
Enterprises, Incorporated.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 6th day of March, 2000, by and
between SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"),
and JOHN H. SYKES (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to assure itself of the Executive's continued
employment in an executive capacity;
WHEREAS, the Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, thereby
causing uncertainty about the Executive's future employment with the Company
without regard to the Executive's competence or past contributions, which
uncertainty may result in the loss of valuable services of the Executive to the
detriment of the Company and its shareholders, and the Company and the
Executive wish to provide reasonable security to the Executive against changes
in the Executive's relationship with the Company in the event of any such
change in control;
WHEREAS, the Company and the Executive are desirous that any proposal for a
change in control or acquisition of the Company will be considered by the
Executive objectively and with reference only to the best interests of the
Company and its shareholders;
WHEREAS, the Executive will be in a better position to consider the Company's
best interests if the Executive is afforded reasonable security, as provided in
this Agreement, against altered conditions of employment which could result
from any such change in control or acquisition;
WHEREAS, the Executive desires to be employed by the Company on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company agrees to employ the Executive, and the Executive hereby
agrees to serve the Company in two separate capacities: 1) as Chairman of the
Board ("Chairman") and 2) as Chief Executive Officer ("CEO"). As Chairman, the
Executive shall render to the Company such management and policy-making
services of the type customarily performed by persons serving in similar
capacities with other employers that are similar to the Company, together with
such other duties with which he is charged by the Company's By-laws. As CEO,
the Executive shall report directly to the Company's Board of Directors and
shall render to the Company such management and policy-making services of the
type customarily performed by persons serving in similar capacities with other
employers that are similar to the Company, together with such other duties with
which he is charged by the Company's By-laws and subject to the overall
direction And control of the Company's Board of Directors. The Executive
accepts such employment and agrees to devote his best efforts and substantially
all of his business time, skill, labor and attention to the performance of such
duties. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such
benefits and additional compensation, if any, that is paid to executive
officers of the Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement, including
but not limited to the provisions for termination set forth in Section 5
hereof, the employment of the Executive under this Agreement shall commence on
the date hereof and shall continue through and including the close of business
on the fifth anniversary of the date hereof (the "Initial Term"); provided,
however, that this Agreement shall renew automatically on the anniversary of
such termination date for successive two-year terms unless terminated as set
forth in Section 5 hereof (such term, including any such two-year extension
thereof, shall herein be defined as the "Term").
<PAGE> 2
3. COMPENSATION.
(a) Annual Base Salary and Bonus. As compensation for his
services under this Agreement, the Executive shall receive,
and the Company shall pay, an annual base salary of such
amount as shall be determined by the Company's Board of
Directors not less than Five Hundred Fifty Thousand Dollars
($550,000) for the first year of the Term, and thereafter
during the Term at such annual base salary as shall be
determined by the Company's Board of Directors; provided,
however, the annual base salary shall be increased by at
least thirty percent (30%) at the expiration of the Initial
Term and shall be increased by at least fifteen percent (15%)
at the expiration of each two-year automatic renewal term.
Such annual base salary shall be payable in equal
installments in accordance with the policy then prevailing
for the Company's executives. In addition to such annual base
salary, the Executive shall be entitled, during the Term, to
a performance bonus as determined by the Compensation
Committee of the Board of Directors (or other committee
performing similar functions), and to participate in and
receive payments from all other bonus and other incentive
compensation plans as may be adopted by the Company as are
made available to other executive officers of the Company.
(b) Payments. All amounts paid pursuant to this Agreement shall
be subject to withholding or deduction by reason of the
Federal Insurance Contribution Act, Federal income tax, state
and local income tax, if any, and comparable laws and
regulations.
(c) Other Benefits. The Executive shall be reimbursed by the
Company for all reasonable and customary travel and other
business expenses incurred by him in the performance of his
duties hereunder in accordance with the Company's standard
policy regarding expense verification practices. The
Executive shall be entitled to the fringe benefits described
in Exhibit A hereto, that number of weeks paid vacation per
year that is available to other executive officers of the
Company, and shall be eligible to participate in such
pension, life insurance, health insurance, disability
insurance and other employee benefits plans, if any, which
the Company may from time to time make available to its
executive officers generally.
4. COVENANT NOT TO COMPETE.
(a) The Executive covenants and agrees that during his employment
by the Company (whether during the Term hereof or otherwise), and thereafter
for a period of two (2) years following the termination of the Executive's
employment with the Company, he will not:
(i) directly or indirectly engage in, continue in or
carry on the business of the Company, or any
business substantially similar thereto, including
owning or controlling any financial interest in, any
corporation, partnership, firm or other form of
business organization which competes with or is
engaged in or carries on any aspect of such business
or any business substantially similar thereto;
(ii) consult with, advise or assist in any way, whether
or not for consideration, any corporation,
partnership, firm or other business organization
which is now, becomes or may become a competitor of
the Company in any aspect of the Company's business
during the Executive's employment with the Company,
including, but not limited to: advertising or
otherwise endorsing the products of any such
competitor; soliciting customers or otherwise
serving as an intermediary for any such competitor;
or loaning money or rendering any other form of
financial assistance to or engaging in any form of
business transaction whether or not on an arms'
length basis with any such competitor; or
(iii) engage in any practice the purpose of which is to
evade the provisions of this Agreement or to commit
any act which is detrimental to the successful
continuation of, or which adversely affects, the
business or the Company;
provided, however, that the foregoing shall not preclude the Executive's
ownership of not more than 5 % of the equity securities of a corporation which
has such securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
<PAGE> 3
(b) The Executive agrees that the geographic scope of this
covenant not to compete shall extend to (i) the entire United
States, which is the geographic area in which the Company has
operated its business at some time during the two years
preceding the date of this Agreement; or (ii) such broader
geographic area where the Company conducts business at any
time during the Term of this Agreement.
(c) In the event of any breach of this covenant not to compete,
the Executive recognizes that the remedies at law will be
inadequate and that in addition to any relief at law which
may be available to the Company for such violation or breach
and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable
remedies (including an injunction) and such other relief as a
court may grant after considering the intent of this Section
4.
(d) In the event a court of competent jurisdiction determines
that the provisions of this covenant not to compete are
excessively broad as to duration, geographic scope,
prohibited activities or otherwise, the parties agree that
this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
5. TERMINATION.
(a) Death. The Executive's employment hereunder shall terminate
upon his death.
(b) Disability. If, during the Term, the Executive becomes
physically or mentally disabled in accordance with the terms
and conditions of any disability insurance policy covering
the Executive or, if due to such physical or mental
disability, the Executive becomes unable for a period of more
than twelve (12) consecutive months to perform his duties
hereunder on substantially a full-time basis as determined by
the Company in its sole reasonable discretion, the Company
may, at its option, terminate the Executive's employment
hereunder upon not less than thirty (30) days' written notice
of termination.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon written notice
of termination. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment
hereunder: (i) if the Executive engages in conduct which has
caused, or is reasonably likely to cause, demonstrable and
serious injury to the Company; (ii) if the Executive is
convicted of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent
jurisdiction, which substantially impairs the Executive's
ability to perform his duties hereunder; or (iii) for the
Executive's material violation of this Agreement, including
without limitation, Section 4 hereof.
(d) Voluntary Termination by Executive. The Executive may
terminate his employment hereunder upon (i) a Change of
Control of the Company (as defined in Appendix A), (ii) a
good faith determination by the Executive that there has been
a breach of the Agreement by the Company (iii) a material
adverse change in the Executive's working conditions or
status, (iv) a significant relocation of the Executive's
principal office, (v) a significant increase in travel
requirements, or (vi) an impairment of the Executive's health
to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health
or his life (any one of the preceding constituting "Good
Reason"), by delivering written notice of termination to the
Company indicating in reasonable detail the facts and
circumstances alleged to provide a basis for such termination
and shall cease performing the Executive's duties hereunder
on the date which is ten (10) days after delivery of the
notice, which date shall also be the date of termination of
the Executive's employment.
(e) Severance Payment. In the event of a termination of the
Executive's employment other than by the Company for Cause or
by the Executive in a manner which does not satisfy Section
5(d) the Company shall pay the Executive (subject to the
provisions of Section 6 of this Agreement) a one-time,
lump-sum severance payment equal to the product of three (3)
times the sum of (i) the Executive's annual base salary in
effect at the time of such termination and (ii) the
Executive's average annual bonus and other compensation for
the three (3) full calendar years immediately preceding such
termination ("Severance Payment"). The Severance Payment
shall be paid to the Executive in cash equivalent not later
than ten (10) business days after the date of termination of
the Executive's employment, subject to the provisions of
Section 6 of this Agreement.
<PAGE> 4
(f) Benefits. The following shall apply upon termination of the
Executive's employment for any reason:
(i) Notwithstanding anything to the contrary herein
contained, the Executive shall receive all
compensation and other benefits to which he was
entitled under this Agreement or otherwise as an
employee of the Company through the termination
date, including payments of base salary accrued
hereunder through the calendar month in which such
termination occurs.
(ii) The Company shall maintain in full force and effect,
for the continued benefit of the Executive during
his lifetime and if Executive is married at his time
of death, for his then spouse during her lifetime,
all employee benefit plans and programs in which the
Executive was entitled to participate immediately
prior to the date of termination of the Executive's
employment provided that the Executive's (or his
spouse) continued participation is possible under
the general terms and provisions of such plans and
programs. In the event that the Executive's (or his
spouse) participation in any such plan or program is
barred as a result of a disability, the Executive
shall be entitled to receive an amount equal to the
annual contributions, payments, credits or
allocations which would have been made by the
Company to him, to his account or on his behalf
under such plans and programs from which his
continued participation is barred.
(iii) At the Executive's option, the Company shall either
make available an office to the Executive, or
reimburse the Executive for any fees and lease
payments incurred in connection with occupying an
off-site office. Also, the Company shall reimburse
the Executive for any and all wages paid to a
secretary hired to assist the Executive and for
one-third (1/3rd) of the costs of maintaining any
health care, dental, life insurance or disability
benefit plans for such a secretary. The benefits
under this Section 5(f)(iii) shall continue so long
as the Executive elects to receive the same for his
benefit.
6. TAX PROVISIONS.
(a) No Excess Parachute Payment. It is the intention of the
Company and the Executive that no portion of the Severance
Payment or any other payment or benefit under this Agreement,
or payments to or for the benefit of the Executive under any
other agreement or plan (collectively, the "Severance
Benefits") be deemed to be an excess parachute payment as
defined in Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto.
Notwithstanding any other provision of this Agreement, if any
portion of the Severance Benefits would constitute a
parachute payment within the meaning of Section 280G of the
Code, such Severance Benefits shall be reduced to an amount
equal to One Dollar ($1.00) less than the maximum amount
which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor
provision) or which the Company may pay without loss of
deduction under Section 280G(a) of the Code (or any successor
provision).
(b) Opinion. For purposes of this Section, within sixty (60) days
after delivery of a written notice of termination by the
Executive or by the Company pursuant to this Agreement or
written notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which
will result in an excess parachute payment as defined in
Section 280G of the Code or any successor provision thereto,
the Executive and the Company shall obtain, at the Company's
expense, the opinion (which need not be unqualified) of
nationally recognized tax counsel ("Tax Counsel") selected by
the Company's independent auditors and acceptable to the
Executive in the Executive's sole discretion, which sets
forth (A) the "base amount" within the meaning of Section
280G; (B) the aggregate present value of the payments in the
nature of compensation to the Executive as prescribed in
Section 280G(b)(2)(A)(ii); and (C) the amount and present
value of any "excess parachute payment" within the meaning of
Section 280G(b)(1). If such an opinion of Tax Counsel is
sought, no portion of the Severance Payment shall be paid to
the Executive by the Company until ten (10) days after the
opinion is obtained.
In the event that such opinion determines that there would be an
excess parachute payment, the Severance
<PAGE> 5
Benefits shall be reduced or eliminated as specified by the Executive in a
written notice delivered to the Company within thirty (30) days of his receipt
of such opinion or, if the Executive fails to so notify the Company then as the
Company shall reasonably determine, so that under the bases of calculation set
forth in such opinion there will be no excess parachute payment. For purposes
of such opinion, the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in accordance
with the principles of Sections 280G, which determination shall be evidenced in
a certificate of such auditors addressed to the Company and the Executive. Such
opinion shall be dated as of the date of termination of the Executive's
employment and addressed to the Company and the Executive and shall be binding
upon the Company and the Executive.
The provisions of this Section 6(b), including the calculations,
notices and opinions provided for herein shall be based upon the conclusive
presumption that the compensation earned by the Executive pursuant to the
Company's compensation programs prior to a change of control is reasonable,
provided, however, that in the event such Tax Counsel so requests in connection
with the opinion required by this Section 6(b), the Company shall obtain at its
expense, and Tax Counsel may rely on in providing the opinion, the advice of a
firm of recognized executive compensation consultants as to the reasonableness
of any item of compensation to be received by the Executive.
(c) Ruling. The Executive shall have the right to request that
the Company obtain a ruling from the Internal Revenue Service
("IRS") as to whether any or all payments or benefits
determined by such Tax Counsel are, in the view of the IRS,
"parachute payments" under Section 280G. If a ruling is
sought pursuant to the Executive's request, no Severance
Benefits payable under this Agreement in excess of the
Section 280G limitation shall be made to the Executive until
after fifteen (15) days from the date of such ruling;
however, Severance Benefits shall continue to be paid during
the time up to the amount of that limitation. For purposes of
this Section 6, the Executive and the Company shall agree to
be bound by the IRS's ruling as to whether payments
constitute "parachute payments" under Section 280G. If the
IRS declines, for any reason, to provide the ruling
requested, the Tax Counsel's opinion shall control and the
period during which the Severance Benefits may be deferred
shall be extended to a date fifteen (15) days from the date
of the IRS's notice indicating that no ruling would be
forthcoming.
(d) Effect of Change in Law. In the event that the provisions of
Sections 280G and 4999 of the Code (or any successor
provisions) are repealed, this Section 6 shall cease to be
effective on the effective date of such repeal. The parties
to this Agreement recognize that final regulations
promulgated under Section 280G of the Code may affect the
amounts that may be paid under this Agreement and agree that,
upon issuance of such final regulations, this Agreement may
be modified as the parties hereto may in good faith deem
necessary in light of the provisions of such regulations to
achieve the purposes of this Agreement, and that consent to
such modification shall not be unreasonably withheld.
7. ADDITIONAL PAYMENT.
(a) If, notwithstanding the provisions of Section 6 of this
Agreement, it is ultimately determined by a court or pursuant
to a final determination by the IRS that any portion of the
Severance Benefits is subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any successor
provision), then the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of (i) any
Excise Tax; (ii) any federal, state or local income tax,
interest charges or penalties arising in respect of the
imposition of such Excise Tax; and (iii) any federal, state
or local income tax or Excise Tax imposed upon the payment
provided for by this Section 7, shall be equal to the
Severance Benefits. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality
of the Executive's domicile for income tax purposes on the
date the Gross-Up Payment is made, net of the maximum
reduction in federal income taxes that could be obtained from
deduction of such state and local taxes.
(b) If legislation is enacted that would require the Company's
stockholders to approve this Agreement, prior to a Change in
Control, due solely to the provision contained in subsection
(a) of this Section 7, then (i) from and after such time as
stockholder approval would be required, until stockholder
approval is obtained
<PAGE> 6
as required by such legislation, subsection (a) shall be of
no force and effect; (ii) if the Company seeks stockholder
approval of any other agreement providing similar benefits to
any other executive of the Company, the Company shall seek
stockholder approval of this Agreement at the same
stockholders meeting or meetings at which the stockholders
consider any such other agreement; and (iii) the Company and
the Executive shall use their best efforts to consider and
agree in writing upon an amendment to this Section 7 such
that, as amended, such Section would provide the Executive
with the benefits intended to be afforded to the Executive by
subsection (a) without requiring stockholder approval.
8. SUCCESSORS.
(a) If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or
if the Company merges into or consolidates or otherwise
combines (where the Company does not survive such
combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right,
title and interest in this Agreement as of the date of such
event to such Person, and the Company shall cause such
Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree
to perform from and after the date of such assignment all of
the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of
Business shall be a breach of this Agreement. In case of such
assignment by the Company and of assumption and agreement by
such Person, as used in this Agreement, "Company" shall
thereafter mean such Person which executes and delivers the
agreement provided for in this Section 8 or which otherwise
becomes bound by all the terms and provisions of this
Agreement by operation of law, and this Agreement shall inure
to the benefit of, and be enforceable by, such Person. The
Executive shall, in the Executive's discretion, be entitled
to proceed against any or all of such Persons, any Person
which theretofore was such a successor to the Company (as
defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights
of the Executive hereunder. Except as provided in this
Subsection, this Agreement shall not be assignable by the
Company. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Executive shall inure to
the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators, heirs
and beneficiaries. All amounts payable to the Executive under
Sections 3, 5, and 7 of this Agreement if the Executive had
lived shall be paid, in the event of the Executive's death,
to the Executive's estate, heirs and representatives;
provided, however, that the foregoing shall not be construed
to modify any terms of any benefit plan of the Company, as
such terms are in effect on the date of the Executive's
death, that expressly govern benefits under such plan in the
event of the Executive's death.
9. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are
declared invalid or unenforceable by a court of competent
jurisdiction, then the validity and enforceability of the remainder of
such provisions or parts hereof and the applicability thereof shall
not be affected thereby.
10. AMENDMENT. This Agreement may not be amended or modified at any time
except by written instrument executed by the Company and the
Executive.
11. WITHHOLDING. The Company shall be entitled to withhold from amounts to
be paid to the Executive hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not
exceed the minimum amount required to be withheld by law (unless the
Executive has otherwise indicated in writing). The Company shall be
entitled to rely on an opinion of nationally recognized tax counsel if
any question as to the amount or requirement of any such withholding
shall arise.
12. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be
deemed to have been duly given when actually received, whether
hand-delivered (as long as receipt is acknowledged), sent by
telecopier, facsimile transmission or other electronic means of
transmitting
<PAGE> 7
written documents (as long as receipt is acknowledged) or mailed by
United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
John H. Sykes
901 South Newport Avenue
Tampa, Florida 33606
If to the Company:
Sykes Enterprises, Incorporated
100 North Tampa Street
Suite 3900
Tampa, Florida 33602
Attn: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
13. NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any
breach of this Agreement by any other party hereto shall be deemed a
waiver of any similar or dissimilar term or condition at the same or
at any prior or subsequent time. This Agreement is the entire
agreement between the parties hereto with respect to the Executive's
employment by the Company and there are no agreements or
representations, oral or otherwise, expressed or implied, with respect
to or related to the employment of the Executive which are not set
forth in this Agreement.
14. NO ASSIGNMENT. Except as expressly set forth herein, no party shall
assign any of his or its rights under this Agreement without the prior
written consent of the other party and any attempted assignment
without such prior written consent shall be null and void and without
legal effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute but one and the same instrument.
16. GOVERNING LAW.
(a) The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the
State of Florida, except that Section 16(b) shall be
construed in accordance with the Federal Arbitration Act if
arbitration is chosen by the Executive as the method of
dispute resolution.
(b) Any dispute arising out of this Agreement shall, at the
Executive's election, be determined by either (i) arbitration
under the rules of the American Arbitration Association then
in effect (but subject to any evidentiary standards set forth
in this Agreement), in which both parties shall be bound by
the arbitration award, or (ii) by litigation. Whether the
dispute is to be settled by arbitration or litigation, the
venue for the arbitration or litigation shall be Tampa,
Florida or, at the Executive's election, if the Executive is
no longer residing or working in the Tampa, Florida
metropolitan area, in the judicial district encompassing the
city in which the Executive resides; provided, that, if the
Executive is not then residing in the United States, the
election of the Executive with respect to such venue shall be
either Tampa, Florida or in the judicial district
encompassing that city in the United States among the thirty
cities having the largest population (as determined by the
most recent United States Census data available at that time)
that is closest to the Executive's residence. The parties
consent to personal jurisdiction in each trial court in the
selected venue having subject matter jurisdiction
notwithstanding their residence or situs, and each party
irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
17. CERTAIN RULES OF CONSTRUCTION. No party shall be considered as being
responsible for the drafting of this Agreement for the purpose of
applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in
construing this Agreement. Any provision of this Agreement which
requires an agreement in writing shall be deemed to require that the
writing in question be signed by the Executive and an authorized
representative of the Company.
<PAGE> 8
18. HEADINGS. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of
this Agreement.
APPENDIX A
For purposes of Section 5(d) of this Agreement, a Change of Control shall be
deemed to have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any person or entity, or group thereof acting in concert (a
"Person") (other than (A) the Company or any of its
subsidiaries, (B) a trustee or other fiduciary holding
securities under any employee benefit plan of the Company or
any of its subsidiaries, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities
or (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock in the Company),
being or becoming the "beneficial owner" (as such term is
defined in Securities and Exchange Commission ("SEC") Rule
13d-3 under the Exchange Act) of securities of the Company
which, together with securities previously owned, confer upon
such person, entity or group the combined voting power, on
any matters brought to a vote of shareholders, of twenty
percent (20%) or more of the then outstanding shares of
voting securities of the Company; or
(ii) the sale, assignment or transfer of assets of the Company or
any subsidiary or subsidiaries, in a transaction or series of
transactions, if the aggregate consideration received or to
be received by the Company or any such subsidiary in
connection with such sale, assignment or transfer is greater
than fifty percent (50%) of the book value, determined by the
Company in accordance with generally accepted accounting
principles, of the Company's assets determined on a
consolidated basis immediately before such transaction or the
first of such transactions; or
(iii) the merger, consolidation, share exchange or reorganization
of the Company (or one or more direct or indirect
subsidiaries of the Company) as a result of which the holders
of all of the shares of capital stock of the Company as a
group would receive less than fifty percent (50%) of the
combined voting power of the voting securities of the Company
or such surviving or resulting entity or any parent thereof
immediately after such merger, consolidation, share exchange
or reorganization; or
(iv) the adoption of a plan of complete liquidation or the
approval of the dissolution of the Company; or
(v) the commencement (within the meaning of SEC Rule 13e-4 under
the Exchange Act) of a tender or exchange offer which, if
successful, would result in a Change of Control of the
Company; or
(vi) a determination by the Board of Directors of the Company, in
view of the then current circumstances or impending events,
that a Change of Control of the Company has occurred or is
imminent, which determination shall be made for the specific
purpose of triggering the operative provisions of this
Agreement.
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
SYKES ENTERPRISES, INCORPORATED
Dated: March 6, 2000 By:
----------------------- --------------------------------------
David L. Grimes, President
EXECUTIVE
Dated: March 6, 2000
----------------------- --------------------------------------
John H. Sykes
<PAGE> 10
EXHIBIT A TO EMPLOYMENT AGREEMENT
Performance Bonus: up to 100% Base Salary as determined by the Board of
Directors of the Company, payable at the time during the year that the Company
customarily pays bonuses. The annual performance Bonus will be based upon the
following factors, weighted in the manner below indicated, unless otherwise
agreed by the Company and the Executive:
50% Achieving all street expectations for the quarters and
the relevant year
30% Achieving the Operating Plan for the relevant year
20% Personal effectiveness of the Executive in his assigned role
Performance Options: For each calendar year in which this Exhibit A shall be in
effect, the Executive shall be granted options to acquire 720,000 shares at an
exercise price determined in accordance with the terms of the 1997 Management
Stock Incentive Plan. The exercise price per share effective for grants under
the 1997 Management Stock Incentive Plan for 2000 is $18. The Performance
Options shall vest quarterly in accordance with the following Schedule upon
meeting the financial performance standards stated below:
Standard Q1 Q2 Q3 Q4
-------- -- -- -- --
Revenues at street level 60,000 60,000 60,000 60,000
Gross Profit Margin at
street level 60,000 60,000 60,000 60,000
Operating Net Profit at
street level 60,000 60,000 60,000 60,000
An additional award of 100,000 options shall be made for each of the foregoing
financial performance standards which are met for all 4 quarters.
IN WITNESS WHEREOF, the parties have executed this Exhibit A as of the 6th day
of March, 2000.
SYKES ENTERPRISES, INCORPORATED
By:
--------------------------------------
David Grimes, President
--------------------------------------
JOHN H. SYKES
<PAGE> 1
Exhibit 10.3
Employment Agreement Dated as of March 6, 2000 between David L. Grimes and
Sykes Enterprises, Incorporated.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into as of March 6,
2000 (the "Effective Date") by and between SYKES ENTERPRISES, INCORPORATED, a
Florida corporation (the "Company"), and DAVID L. GRIMES (the "Executive").
W I T N E S S E T H :
WHEREAS, on or about November 17, 1998, the Company and the Executive entered
into an Employment Agreement (the "Prior Employment Agreement") pursuant to
which the Company employed the Executive as its President and the Executive
commenced his service to the Company in such capacity; and
WHEREAS, the Company and the Executive desire to amend and restate such
Employment Agreement to set forth certain additional and supplement of terms to
apply if, but only if, the Executive is promoted to Chairman and/or Chief
Executive Officer of the Company, which appointment is subject to the exercise
of discretion by the Board of Directors; and
WHEREAS, the Company and the Executive intend that this Agreement shall
supercede the Prior Employment Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
<PAGE> 2
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) as the President and Chief Operating Officer of the
Company. The Executive accepts such employment and agrees to devote his best
efforts and entire business time, skill, labor and attention to the performance
of such duties. The Executive agrees to provide promptly a description of any
other commercial duties or pursuits engaged in by the Executive to the
Company's Board of Directors. If the Board of Directors determines, in good
faith, that such activities conflict with the Executive's performance of his
duties hereunder, the Executive shall promptly cease such activities to the
extent as directed by the Board of Directors. It is acknowledged and agreed
that such description shall be made regarding any such activities in which the
Executive owns more than 10% of the ownership of the organization or which may
be in violation of Section 5 hereof, and that the failure of the Executive to
provide any such description shall enable the Company to terminate the
Executive for Cause (as provided in Section 6(c) hereof). The Company agrees to
hold any such information provided by the Executive confidential and not
disclose the same to any person other than a person to whom disclosure is
reasonably necessary or appropriate in light of the circumstances. In addition,
the Executive agrees to serve without additional compensation if elected or
appointed to any additional office or position, including as a director, of the
Company or any subsidiary or affiliate of the Company; provided, however, that
the Executive shall be entitled to receive such benefits and additional
compensation, if any, that is paid to executive officers of the Company in
connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement, including
but not limited to the provisions for termination set forth in Section 6
hereof, the employment of the Executive under this Agreement shall commence on
March 6, 2000 and shall continue through and including the close of business on
the second annual anniversary date thereof as set forth on Exhibit A attached
hereto and incorporated herein, or, if Executive during the term described in
Exhibit A is promoted to Chairman and/or Chief Executive Officer, the
additional term set forth on Exhibit B (such term shall herein be defined as
the "Term").
3. COMPENSATION.
(a) BASE SALARY AND BONUS.
(1) For Services As President and Chief Operating
Officer. As compensation for the Executive's
services under this Agreement as President and Chief
Operating Officer, the Executive shall receive, and
the Company shall pay, a weekly base salary set
forth on Exhibit A. Such base salary may be
increased, but not decreased, during the Term, in
the Company's discretion, based upon the Executive's
performance and any other factors the Company deems
relevant. Such base salary shall be payable in
accordance with the policy then prevailing for the
Company's executives. In addition to such base
salary, the Executive shall be entitled, during the
Term of his employment as President and Chief
Operating Officer, to a performance bonus as set
forth on Exhibit A and to participate in and receive
payments from all other bonus and other incentive
compensation plans as may be adopted by the Company
on the same basis as other executive officers of the
Company.
<PAGE> 3
(2) Upon Promotion. If, in the sole discretion of the
Company, the Executive is promoted to Chairman
and/or Chief Executive Officer, as compensation for
the Executive's services in such position under this
Agreement, the Executive shall receive, and the
Company shall pay, a weekly base salary set forth on
Exhibit B. Such base salary may be increased, but
not decreased, during the Term, in the Company's
discretion, based upon the Executive's performance
and any other factors the Company deems relevant.
Such base salary shall be payable in accordance with
the policy then prevailing for the Company's
executives. In addition to such base salary, the
Executive shall be entitled, during the portion of
the Term in which the Executive is employed as
Chairman and/or Chief Executive Officer, to a
performance bonus as set forth on Exhibit B and to
participate in and receive payments from all other
bonus and other incentive compensation plans as may
be adopted by the Company on the same basis as other
executive officers of the Company.
(b) PAYMENTS.
All amounts paid pursuant to this Agreement shall be subject to
withholding or deduction by reason of the Federal Insurance
Contribution Act, Federal income tax, state and local income tax, if
any, and comparable laws and regulations.
(c) OTHER BENEFITS.
The Executive shall be reimbursed by the Company for all reasonable
and customary travel and other business expenses incurred by the
Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense
verification practices. The Executive shall be entitled to that number
of weeks paid vacation per year that is available to other executive
officers of the Company in accordance with the Company's standard
policy regarding vacations and such other fringe benefits as are set
forth on Exhibit A and, to the extent applicable, Exhibit B and shall
be eligible to participate in such pension, life insurance, health
insurance, disability insurance and other employee benefits plans, if
any, which the Company may from time to time make available to its
executive officers generally.
<PAGE> 4
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of
the Company (for this purpose including all subsidiaries and
affiliates, including without limitation confidential
information with respect to the Company's customer lists,
business methodology, processes, production methods and
techniques, promotional materials and information, and other
similar matters treated by the Company as confidential (the
"Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment
by the Company (whether during the Term hereof or otherwise)
and thereafter, the Executive shall not, without the prior
written consent of the Company, disclose to any person, other
than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the
Executive of the Executive's duties hereunder, any
Confidential Information obtained by the Executive while in
the employ of the Company.
(b) The Executive agrees that all memoranda, notes, records,
papers or other documents and all copies thereof relating to
the Company's operations or business, some of which may be
prepared by the Executive, and all objects associated
therewith in any way obtained by the Executive shall be the
Company's property. This shall include, but is not limited
to, documents and objects concerning any customer lists,
contracts, price lists, manuals, mailing lists, advertising
materials, and all other materials and records of any kind
that may be in the Executive's possession or under the
Executive's control. The Executive shall not, except for the
Company's use, copy or duplicate any of the aforementioned
documents or objects (except for the purpose of performing
Executive's duties) nor remove them from the Company's
facilities, nor use any information concerning them except
for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees
that the Executive will deliver all of the aforementioned
documents and objects, if any, that may be in the Executive's
possession to the Company upon termination of the Executive's
employment, or at any other time at the Company's request.
5. COVENANT NOT TO COMPETE.
(a) Subject to the payment provisions set forth in (g) below, the
Executive covenants and agrees that during the Executive's
employment by the Company (whether during the Term hereof or
otherwise), and thereafter for a period of time set forth on
Exhibit A or Exhibit B, as applicable, following the
termination of the Executive's employment with the Company,
the Executive will not:
(i) directly or indirectly engage in, continue in or
carry on the business of any corporation,
partnership, firm or other business organization
which is now, becomes or may become a competitor of
the Company or any business substantially similar
thereto, including owning or controlling any
financial interest in, any corporation, partnership,
firm or other form of business organization which
competes with or is engaged in or carries on any
aspect of such business or any business
substantially similar thereto;
(ii) consult with, advise or assist in any way, whether
or not for consideration, any corporation,
partnership, firm or other business organization
which is now, becomes or may become a competitor of
the Company in any aspect of the Company's business
during the Executive's employment with the Company,
including, but not limited to: advertising or
otherwise endorsing the products of any such
competitor; soliciting customers or otherwise
serving as an intermediary for any such competitor;
or loaning money or rendering any other form of
financial assistance to or engaging in any form of
business transaction whether or not on an arms'
length basis with any such competitor; or
(iii) engage in any practice the purpose of which is to
evade the provisions of this Agreement or to commit
any act which is detrimental to the successful
continuation of, or which adversely affects, the
business or the Company;
provided, however, that the foregoing shall not preclude the
Executive's ownership of not more than 2% of the equity
securities of a corporation which has such securities
registered under Section 12 of the Securities Exchange Act of
1934, as amended.
<PAGE> 5
(b) The Executive agrees that the geographic scope of this
covenant not to compete shall extend to the geographic area
where the Company's customers conduct business at any time
during the Term of this Agreement. For purposes of this
Agreement, "customers" means any person or entity to which
the Company provides or has provided within a period of one
(1) year prior to the Executive's termination of employment
labor, materials or services for the furtherance of such
entity or person's business or any person or entity that
within such period of one (1) year the Company has pursued or
communicated with for the purposes of obtaining business for
the Company.
(c) In the event of any breach of this covenant not to compete,
the Executive recognizes that the remedies at law will be
inadequate and that in addition to any relief at law which
may be available to the Company for such violation or breach
and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable
remedies (including an injunction) and such other relief as a
court may grant after considering the intent of this Section
5. It is further acknowledged and agreed that the existence
of any claim or cause of action on the part of the Executive
against the Company, whether arising from this Agreement or
otherwise, shall in no way constitute a defense to the
enforcement of this covenant not to compete, and the duration
of this covenant not to compete shall be extended in an
amount which equals the time period during which the
Executive is or has been in violation of this covenant not to
compete. Further, the Executive acknowledges and agrees that
the Company shall be entitled to liquidated damages in the
amount of $500 per day for each day during which the
Executive is in violation of this covenant not to compete,
and the Executive does specifically acknowledge and agree
that the liquidated damages in such amount are fair and
reasonable, in that it may be difficult for the Company to
determine the extent of the damages actually incurred in the
event of the breach of this covenant not to compete by the
Executive.
(d) In the event a court of competent jurisdiction determines
that the provisions of this covenant not to compete are
excessively broad as to duration, geographic scope,
prohibited activities or otherwise, the parties agree that
this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
(e) For the purposes of this Section 5, Company shall be deemed
to include the Company, as well as its subsidiaries and
affiliates.
(f) The parties hereto expressly acknowledge and agree that any
provision of this Section 5 may be amended or waived by the
mutual written agreement of both parties.
(g) In addition to complying with the notice requirements of
Section 6, in order for the covenant not to compete set forth
in this Section 5 to be binding upon the Executive, the
Company must comply with the following provisions:
(i) If the Company should terminate the Executive's
employment for any reason other than pursuant to
Section 6 prior to the end of the Term (or if the
Executive should terminate his employment for Good
Reason after a Change of Control), then the Company
must pay the Executive both the applicable Severance
Payment for the balance of the Term (or in the event
of a Change of Control, the Change of Control
Termination Payment) and an annual amount equal to
the Severance Payment for such period as the
covenant not to compete is to remain in effect at
the election of the Company after the end of the
Term (with such 12-month or 24-month period to be
noticed by the Company pursuant to Section 6).
(ii) If the Executive remains in the employ of the
Company pursuant to the terms of this Agreement for
the full Term, and the employment of the Executive
is not renewed at such time, then the Company must
pay the Executive an annual amount equal to the
Severance Payment for such period as the covenant
not to compete is to remain in effect at the
election of the Company after the end of the Term
(with such 12-month or 24-month period to be noticed
by the Company pursuant to Section 6).
(iii) If the Executive should terminate his employment
prior to the end of the Term (for other than Good
Reason in the event of a Change of Control), then
after the Company has given notice pursuant to
Section 6, the Company will not be required to make
any payment to the Executive for
<PAGE> 6
the covenant not to compete to be effective for the
12-month or 24-month period noticed by the Company
pursuant to Section 6.
6. TERMINATION.
a. DEATH. The Executive's employment hereunder shall terminate
upon his death.
b. DISABILITY. If, during the Term, the Executive becomes
physically or mentally disabled in accordance with the terms
and conditions of any disability insurance policy covering
the Executive or, if due to such physical or mental
disability, the Executive becomes unable for a period of more
than six (6) consecutive months to perform his duties
hereunder on substantially a full-time basis as determined by
the Company in its sole reasonable discretion, the Company
may, at its option, terminate the Executive's employment
hereunder upon the termination of the six (6) month period
referenced in this Section 6(b).
c. CAUSE. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For
purposes of this Agreement, the Company shall have "Cause" to
terminate the Executive's employment hereunder: (i) if the
Executive engages in conduct which has caused, or is
reasonably likely to cause, substantial and serious injury to
Company; (ii) if the Executive is convicted of a felony, as
evidenced by a binding and final judgment, order or decree of
a court of competent jurisdiction; (iii) for the Executive's
repeated neglect of his duties hereunder or the Executive's
refusal to perform his duties or responsibilities hereunder,
as determined by the Company's Board of Directors in good
faith; (iv) for the Executive's violation of this Agreement,
including without limitation Section 5 hereof; (v) chronic
absenteeism; (vi) use of illegal drugs or addiction to habit
forming drugs; (vii) insobriety by the Executive while
performing his or her duties hereunder; and (viii) any act of
dishonesty or falsification of reports, records or
information submitted by the Executive to the Company. Prior
to any termination for Cause by the Company of the
Executive's employment hereunder (other than for Cause which
is not reasonably curable by the Executive), the Company
shall provide the Executive with written notice of its
intention so to terminate (the "Termination Notice"). The
Termination Notice shall set forth in reasonable detail the
grounds for the termination for Cause. The Company hereby
expressly acknowledges and agrees that the Executive shall be
granted a period of thirty (30) days from the date of the
receipt by the Executive of the Termination Notice, in order
to remedy any act or omission of the Executive which
constitutes the grounds for Cause hereunder.
d. SEVERANCE PAYMENT. In the event of a termination of the
Executive's employment pursuant to this Section 6, or by the
Executive, prior to the end of the Term, all payments to the
Executive hereunder shall immediately cease and terminate. In
the event of a termination by the Company of the Executive's
employment with the Company for any reason other than
pursuant to this Section 6, then the Company shall pay the
Executive severance pay for the balance of the Term (in equal
installments in accordance with Company policy immediately
prior to such termination) in the amount set forth on Exhibit
A or Exhibit B, as applicable ("Severance Payment").
If the Company terminates the Executive's employment pursuant to this
Section 6 or the Executive terminates such employment, prior to the end of the
Term, the Executive shall not be entitled to the Severance Payment and the
covenant not to compete set forth in Section 5 hereof shall remain in full
force and effect for either a 12 or 24 month period noticed by the Company
pursuant to this Section 6. Notwithstanding anything to the contrary herein
contained, the Executive shall receive all compensation and other benefits to
which he was entitled under this Agreement or otherwise as an employee of the
Company through the termination date.
In all events where the Company elects to enforce the covenant not to
compete set forth in Section 5 hereof after Executive is no longer in the
employment of the Company it shall notify Executive in writing as follows:
(i) Prior to the end of the Term, if Executive's employment has
not been terminated prior to the end of the Term;
(ii) Within ten (10) days of the Company's receipt of Executive's
resignation if termination is by the Executive; and
<PAGE> 7
(iii) If termination is for Cause at the time Company notifies
Executive if Termination for Cause.
7. TERMINATION AFTER CHANGE OF CONTROL. In the event Executive's
employment hereunder is terminated for any of the reasons set forth in Section
6a, b or c, or by the Executive (other than for Good Reason, defined herein
below), then this Section 7, dealing with Change of Control, shall have no
effect. If, however, Executive's employment hereunder is terminated (i) by the
Executive for Good Reason; (ii) other than by the Executive and (iii) other
than as set forth in Section 6a, b or c, then, in that event, Executive shall
receive (in equal installments and in accordance with company policy
immediately prior to such termination) an amount to be determined by
multiplying by two (2) Executive's base salary and actual bonus for the
calendar year immediately prior to such termination ("Change of Control
Termination Payment"). A "Change in Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
a. the following individuals cease for any reason to constitute
a majority of the number of directors then serving:
individuals who, after the annual meeting of shareholders of
the Company held in 2000, constituted the Board of Directors
and any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors
of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Act) whose appointment or election
by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors after the annual meeting of shareholders of the
Company held in 2000 or whose appointment, election or
nomination for election was previously so approved; or
b. the stockholders of the Company approve a merger,
consolidation or share exchange of the Company with any other
corporation or approve the issuance of voting securities of
the Company in connection with a merger, consolidation or
share exchange of the Company (or any direct or indirect
subsidiary of the Company) pursuant to applicable stock
exchange requirements, other than (A) a merger, consolidation
or share exchange which would result in the voting securities
of the Company outstanding immediately prior to such merger,
consolidation or share exchange continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity or
any parent thereof outstanding immediately after such merger,
consolidation or share exchange, or (B) a merger,
consolidation or share exchange effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person (other than John H. Sykes) is or becomes the
beneficial owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from
the Company or its Affiliates after the annual meeting of
shareholders of the Company held in 2000 pursuant to express
authorization by the Board that refers to this exception)
representing 45% or more of either the then outstanding
shares of common stock of the Company or the combined voting
power of the Company's then outstanding voting securities; or
c. The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets (in one transaction
or a series of related transactions within any period of 24
consecutive months), other than a sale or disposition by the
Company of all or substantially all of the Company's assets
to an entity at least 75% of the combined voting power of the
voting securities of which are owned by Persons in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
d. Notwithstanding the foregoing, no "Change in Control" shall
be deemed to have occurred if there is
<PAGE> 8
consummated any transaction or series of integrated
transactions immediately following which the record holders
of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity
that owns all or substantially all of the assets of the
Company immediately following such transaction or series of
transactions.
The Executive may terminate his employment pursuant to and only after
the condition of this Section 7 has occurred for Good Reason; and the Company
expressly acknowledges and agrees that, upon such termination, the Executive
shall be entitled to the Change of Control Termination Payment, as hereinafter
defined, to which the Executive, but for such termination, would otherwise be
entitled. For purposes of this Agreement, "Good Reason" shall mean: (i) any
reduction of the Base Salary or any other compensation or benefits (other than
the Performance Bonus); and (ii) any other material adverse change to the terms
and conditions of the Executive's employment, including but not limited to any
diminution of the Customary Duties (as here below defined), or the title of
President of the Company.
Subsequent to a Change of Control, the Executive shall continue to
hold such office and such level of authority and responsibility within the
Company either (a) as was held immediately prior to such Change of Control or
(b) of such scope, importance and influence as is customarily associated with
the office of president of a company similar to the Company (hereinafter
collectively referred to as the "Customary Duties").
8. TAX PROVISIONS.
a. No Excess Parachute Payment. It is the intention of the
Company and the Executive that no portion of the Severance
Payment or any other payment or benefit under this Agreement,
or payments to or for the benefit of the Executive under any
other agreement or plan (collectively, the "Severance
Benefits") be deemed to be an excess parachute payment as
defined in Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto.
Notwithstanding any other provision of this Agreement, if any
portion of the Severance Benefits would constitute a
parachute payment within the meaning of Section 280G of the
Code, such Severance Benefits shall be reduced to an amount
equal to One Dollar ($1.00) less than the maximum amount
which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor
provision) or which the Company may pay without loss of
deduction under Section 280G(a) of the Code (or any successor
provision).
b. Opinion. For purposes of this Section, within sixty (60) days
after delivery of a written notice of termination by the
Executive or by the Company pursuant to this Agreement or
written notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which
will result in an excess parachute payment as defined in
Section 280G of the Code or any successor provision thereto,
the Executive and the Company shall obtain, at the Company's
expense, the opinion (which need not be unqualified) of
nationally recognized tax counsel ("Tax Counsel") selected by
the Company's independent auditors and acceptable to the
Executive in the Executive's sole discretion, which sets
forth (A) the "base amount" within the meaning of Section
280G; (B) the aggregate present value of the payments in the
nature of compensation to the Executive as prescribed in
Section 280G(b)(2)(A)(ii); and (C) the amount and present
value of any "excess parachute payment" within the meaning of
Section 280G(b)(1). If such an opinion of Tax Counsel is
sought, no portion of the Severance Payment shall be paid to
the Executive by the Company until ten (10) days after the
opinion is obtained.
In the event that such opinion determines that there would be an
excess parachute payment, the Severance Benefits shall be reduced or eliminated
as specified by the Executive in a written notice delivered to the Company
within thirty (30) days of his receipt of such opinion or, if the Executive
fails to so notify the Company then as the Company shall reasonably determine,
so that under the bases of calculation set forth in such opinion there will be
no excess parachute payment. For purposes of such opinion, the value of any
non-cash benefits or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles of Sections
280G, which determination shall be evidenced in a certificate of such auditors
addressed to the Company and the Executive. Such opinion shall be dated as of
the date of termination of the Executive's employment and addressed to the
Company
<PAGE> 9
and the Executive and shall be binding upon the Company and the Executive.
The provisions of this Section 8(b), including the calculations,
notices and opinions provided for herein shall be based upon the conclusive
presumption that the compensation earned by the Executive pursuant to the
Company's compensation programs prior to a change of control is reasonable,
provided, however, that in the event such Tax Counsel so requests in connection
with the opinion required by this Section 8(b), the Company shall obtain at its
expense, and Tax Counsel may rely on in providing the opinion, the advice of a
firm of recognized executive compensation consultants as to the reasonableness
of any item of compensation to be received by the Executive.
c. Ruling. The Executive shall have the right to request that
the Company obtain a ruling from the Internal Revenue Service ("IRS") as to
whether any or all payments or benefits determined by such Tax Counsel are, in
the view of the IRS, "parachute payments" under Section 280G. If a ruling is
sought pursuant to the Executive's request, no Severance Benefits payable under
this Agreement in excess of the Section 280G limitation shall be made to the
Executive until after fifteen (15) days from the date of such ruling; however,
Severance Benefits shall continue to be paid during the time up to the amount
of that limitation. For purposes of this Section 6, the Executive and the
Company shall agree to be bound by the IRS's ruling as to whether payments
constitute "parachute payments" under Section 280G. If the IRS declines, for
any reason, to provide the ruling requested, the Tax Counsel's opinion shall
control and the period during which the Severance Benefits may be deferred
shall be extended to a date fifteen (15) days from the date of the IRS's notice
indicating that no ruling would be forthcoming.
9. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page
If to the Company:
Sykes Enterprises, Incorporated
100 North Tampa Street
Suite 3900
Tampa, Florida 33602
Attn: Chief Executive Officer
CC: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
10. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, Exhibit A may be amended by the Company in
its discretion without the Executive's consent to the extent provided therein.
No waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or
at any prior or subsequent time. This Agreement is the entire agreement between
the parties hereto with respect to the Executive's employment by the Company
and there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which
are not set forth in this Agreement. Any prior agreement relating to the
Executive's employment with the Company is hereby superceded and void, and is
no longer in effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its respective successors and assigns, and the
Executive and his heirs, executors, administrators and legal representatives.
Except as expressly set forth herein, no party shall assign any of his or its
rights under this Agreement without the prior written consent of the other
party and any attempted assignment without such prior written consent shall be
null and void and without legal effect. The parties agree that if any provision
of this Agreement shall under any circumstances be
<PAGE> 10
deemed invalid or inoperative, the Agreement shall be construed with the
invalid or inoperative provision deleted and the rights and obligations of the
parties shall be construed and enforced accordingly. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the internal laws of the State of Florida. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute but one and the same
instrument. This Agreement has been jointly drafted by the respective
representatives of the parties and no party shall be considered as being
responsible for such drafting for the purpose of applying any rule constituting
ambiguities against the drafter or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
SYKES ENTERPRISES, INCORPORATED
Dated: March 6, 2000 By:
---------------------------- -----------------------------------
John H. Sykes, Chief Executive
Officer
EXECUTIVE
Dated: March 6, 2000
---------------------------- -----------------------------------
DAVID L. GRIMES
<PAGE> 11
EXHIBIT A TO EMPLOYMENT AGREEMENT
This Exhibit A shall be effective from the Effective Date of this Agreement,
through the date on which Exhibit B shall become effective in accordance with
its terms. In the event that Exhibit C shall become effective, this Exhibit A
shall continue to be effective, except as modified in the manner described in
Exhibit C.
Term: Five (5) years from the Effective Date (March 6, 2000).
Base Salary: $8,173.08 per week, effective March 6, 2000.
Performance Bonus: up to 50% Base Salary as determined by the Chairman of the
Company, payable at the time during the year that the Company customarily pays
bonuses. The annual performance Bonus will be based upon the following factors,
weighted in the manner below indicated, unless otherwise agreed by the Company
and the Executive:
50% Achieving all street expectations for the quarters and the
relevant year
30% Achieving the Operating Plan for the relevant year
20% Personal effectiveness of the Executive in his assigned role
Performance Options: For each calendar year in which this Exhibit A shall be in
effect, the Executive shall be granted options to acquire 100,000 shares at an
exercise price determined in accordance with the terms of the 1997 Management
Stock Incentive Plan which, for grants under the 1997 Management Stock
Inventive Plan for 2000, is $18. The Performance Options shall be awarded with
reference to the following standards.
1. Financial Performance. For each calendar year in which this
Exhibit A shall be in effect, the Executive shall be granted options to acquire
30,000 shares which shall vest quarterly in accordance with the following
Schedule upon meeting the financial performance standards stated below:
<TABLE>
<CAPTION>
Standard Q1 Q2 Q3 Q4
-------- -- -- -- --
<S> <C> <C> <C> <C>
Revenues at street level 2,500 2,500 2,500 2,500
Gross Profit Margin at
street level 2,500 2,500 2,500 2,500
Operating Net Profit at
street level 2,500 2,500 2,500 2,500
</TABLE>
In the event that each of the foregoing financial performance standards are met
for each quarter, an additional award of 20,000 options shall be made.
<PAGE> 12
2. Operating Plan. In addition to the foregoing, an award of up
to 50,000 options shall be made based upon meeting the Company's Operating
Plan, as follows:
<TABLE>
<CAPTION>
Percent of Operating
Plan Options
---- -------
<S> <C>
80% 10,000
85% 20,000
90% 30,000
95% 40,000
100% 50,000
</TABLE>
Award of Stock Options On Effective Date of Agreement. On the Effective Date of
this Agreement, the Executive shall be awarded 75,000 options at an exercise
price of $18 per share under the Sykes Enterprises, Incorporated Employee Stock
Option Plan of 1996, which shall vest in equal installments of 25,000 shares on
the first, second and third anniversaries of this Agreement.
Fringe Benefits: The Company will reimburse you, both the initiation and
monthly membership dues for Palma Ceia Country Club, Avila Country Club and a
downtown luncheon club or a luncheon club in the Tampa area of a similar
quality and reputation.
Covenant Not to Compete: 24 months or 12 months as noticed by the Company.
Severance Payment: $425,000 per year.
IN WITNESS WHEREOF, the parties have executed this Exhibit A as of the 6th day
of March, 2000.
SYKES ENTERPRISES, INCORPORATED
By:
-------------------------------------
John H. Sykes, Chief Executive
Officer
----------------------------------------
DAVID L. GRIMES
<PAGE> 13
EXHIBIT B TO EMPLOYMENT AGREEMENT
Upon the appointment by the Board of Directors of the Company of the Executive
as the Chairman and/or Chief Executive Officer of the Company (which
appointment is subject to the exercise of the Board's discretion, and is not
assured), the terms of this Exhibit B shall become immediately effective.
Term: Commencing upon appointment of the Executive by the Board of Directors of
the Company as the Chairman and/or Chief Executive Officer of the Company, a
term ending on the fifth anniversary of the effective Date of this Agreement,
with no provision for any automatic renewal.
Base Salary: $10,096.16 per week.
Performance Bonus: up to 75% Base Salary as determined by the Board of
Directors of the Company, payable at the time during the year that the Company
customarily pays bonuses. The annual performance Bonus will be based upon the
following weighted factors, unless otherwise agreed by the Company and the
Executive:
50% Achieving all street expectations for the quarters and the
relevant year
30% Achieving the Operating Plan for the relevant year
20% Personal effectiveness of the Executive in his assigned role.
Performance Options: For each calendar year in which this Exhibit B shall be in
effect, the Executive shall be granted options to acquire 160,000 shares at an
exercise price determined in accordance with the terms of the 1997 Management
Stock Incentive Plan. The Performance Options shall be awarded with reference
to the following standards.
1. Financial Performance. For each calendar year in which this
Exhibit B shall be in effect, the Executive shall be granted options to acquire
60,000 shares which shall vest quarterly in accordance with the following
Schedule upon meeting the financial performance standards stated below:
<TABLE>
<CAPTION>
Standard Q1 Q2 Q3 Q4
-------- -- -- -- --
<S> <C> <C> <C> <C>
Revenues at street level 5,000 5,000 5,000 5,000
Gross Profit Margin at
street level 5,000 5,000 5,000 5,000
Operating Net Profit at
street level 5,000 5,000 5,000 5,000
</TABLE>
In the event that each of the foregoing financial performance standards are met
for each quarter, an additional award of 20,000 options shall be made.
<PAGE> 14
2. Operating Plan. In addition to the foregoing, an award of up to 80,000
options shall be made based upon meeting the Company's Operating Plan, as
follows:
<TABLE>
<CAPTION>
Percent of Operating
Plan Options
---- -------
<S> <C>
80% 16,000
85% 32,000
90% 48,000
95% 64,000
100% 80,000
</TABLE>
Additional Award of Stock Options On Date Exhibit B Becomes Effective. Upon
becoming Chairman and/or Chief Executive Officer, the Executive shall be
awarded 100,000 options under the Sykes Enterprises, Incorporated Employee
Stock Option Plan of 1996, which shall vest in equal installments on the first,
second and third anniversaries of the date that this Exhibit B becomes
effective.
Fringe Benefits: The Company will reimburse you, both the initiation and
monthly membership dues for Palma Ceia Country Club, Avila Country Club and a
downtown luncheon club or a luncheon club in the Tampa area of a similar
quality and reputation.
Covenant Not to Compete: 24 months.
Severance Payment: $525,000 per year
IN WITNESS WHEREOF, the parties have executed this Exhibit B as of the 6th day
of March, 2000.
SYKES ENTERPRISES, INCORPORATED
By:
-------------------------------------
John H. Sykes, Chief Executive
Officer
----------------------------------------
DAVID L. GRIMES
<PAGE> 15
EXHIBIT C TO EMPLOYMENT AGREEMENT
In the event that the Executive shall not have been appointed Chairman and/or
Chief Executive Officer by May 6, 2001, then, effective on May 6, 2001, the
provisions of Exhibit B relating to awards of stock options under the captions
"Performance Options" and the "Additional Award of Stock Options on Date that
Exhibit B Becomes Effective" shall become effective.
Furthermore, upon a Change in Control, as defined in this Agreement (i) the
provisions of Exhibit B relating to awards of stock options under the captions
"Performance Options" and the "Additional Award of Stock Options on Date
Exhibit B Becomes Effective" shall become effective, in lieu of the applicable
provisions of Exhibit A, and (ii) all options previously awarded to the
Executive shall immediately vest.
IN WITNESS WHEREOF, the parties have executed this Exhibit C as of the 6th day
of March, 2000.
SYKES ENTERPRISES, INCORPORATED
By:
-------------------------------------
John H. Sykes, Chief Executive
Officer
----------------------------------------
DAVID L. GRIMES
<PAGE> 1
Exhibit 10.4
Employment Agreement Dated as of March 6, 2000 between Scott J. Bendert and
Sykes Enterprises, Incorporated.
EMPLOYMENT AGREEMENT
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT DESCRIBES THE BASIC LEGAL
AND ETHICAL RESPONSIBILITIES THAT YOU ARE REQUIRED TO OBSERVE AS AN EXECUTIVE
EXPOSED TO HIGHLY SENSITIVE TECHNOLOGY AND STRATEGIC INFORMATION. CONSULT WITH
YOUR LEGAL COUNSEL IF ALL THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE NOT
FULLY UNDERSTOOD BY YOU.
THIS AGREEMENT is made as of the 1st day of March, 2000, by and
between SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"),
and SCOTT J. BENDERT (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of
this Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) in such management capacities as may be assigned from time
to time by the Company. The Executive accepts such employment and agrees to
devote his best efforts and entire business time, skill, labor, and attention
to the performance of such duties. The Executive agrees to promptly provide a
description of any other commercial duties or pursuits engaged in by the
Executive to the Company's Board of Directors. If the Board of Directors
determines in good faith that such activities conflict with the Executive's
performance of his duties hereunder, the Executive shall promptly cease such
activities to the extent as directed by the Board of Directors. It is
acknowledged and agreed that such description shall be made regarding any such
activities in which the Executive owns more than 5% of the ownership of the
organization or which may be in violation of Section 5 hereof, and that the
failure of the Executive to provide any such description shall enable the
Company to terminate the Executive for Cause (as provided in Section 6(c)
hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of
the circumstances. In addition, the Executive agrees to serve without
additional compensation if elected or appointed to any office or position,
including as a director, of the Company or any subsidiary or affiliate of the
Company; provided, however, that the Executive shall be entitled to receive
such benefits and additional compensation, if any, that is paid to executive
officers of the Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions for termination set forth in
Section 6 hereof, the employment of the Executive under this Agreement shall
commence on the effective date hereof and shall continue through and including
the close of business on the date hereof as set forth on Exhibit A attached
hereto and incorporated herein (such term shall herein be defined as the
"Term"). The Executive agrees that some portions of this Agreement, including
Sections 4, 5, and 6 hereof, will remain in force after the termination of this
Agreement.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the
Executive's services under this Agreement, the Executive shall receive and the
Company shall pay a weekly base salary set forth on Exhibit A. Such base salary
may be increased but not decreased during the Term in the Company's discretion
based upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives. In addition to such base salary, the
Executive shall be entitled during the Term to a performance bonus set forth on
Exhibit A and to participate in and receive payments from, at the Company's
election, other bonus and other incentive compensation plans, if any, as may be
adopted by the Company.
(b) Payments. All amounts paid pursuant to this
Agreement shall be subject to withholding or deduction by reason of the Federal
Insurance Contribution Act, federal income tax, state and local income tax, if
any, and comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by
the Company for all reasonable and customary travel and other business expenses
incurred by the Executive in the performance of the Executive's duties
hereunder in accordance with the Company's standard policy regarding expense
verification practices. The Executive shall be entitled to that number of weeks
paid vacation per year that is available to other executive officers of the
Company in accordance with the Company's standard policy regarding vacations
and such other fringe benefits as may be set forth on Exhibit A and shall be
eligible to participate in such pension, life insurance, health insurance,
disability insurance, and other executive benefits plans, if any, which the
Company may from time to time make available to its executive officers
generally.
<PAGE> 2
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information
and knowledge respecting the intimate and confidential affairs of the Company,
including, without limitation, confidential information with respect to the
Company's technical data, research and development projects, methods, products,
software, financial data, business plans, financial plans, customer lists,
business methodology, processes, production methods and techniques, promotional
materials and information, and other similar matters treated by the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any Confidential Information obtained by the
Executive while in the employ of the Company.
(b) The Executive agrees that all memoranda; notes; records;
papers or other documents; computer disks; computer, video or audio tapes;
CD-ROMs; all other media and all copies thereof relating to the Company's
operations or business, some of which may be prepared by the Executive; and all
objects associated therewith in any way obtained by the Executive shall be the
Company's property. This shall include, but is not limited to, documents;
computer disks; computer, video and audio tapes; CD-ROMs; all other media and
objects concerning any technical data, methods, products, software, research
and development projects, financial data, financial plans, business plans,
customer lists, contracts, price lists, manuals, mailing lists, advertising
materials; and all other materials and records of any kind that may be in the
Executive's possession or under the Executive's control. The Executive shall
not, except for the Company's use, copy or duplicate any of the aforementioned
documents or objects, nor remove them from the Company's facilities, nor use
any information concerning them except for the Company's benefit, either during
the Executive's employment or thereafter. The Executive covenants and agrees
that the Executive will deliver all of the aforementioned documents and
objects, if any, that may be in the Executive's possession to the Company upon
termination of the Executive's employment, or at any other time at the
Company's request.
(c) In any action to enforce or challenge these Confidential
Information provisions, the prevailing party is entitled to recover its
attorney's fees and costs.
5. COVENANT NOT-TO-COMPETE AND NO SOLICITATION. Executive
recognizes that the Company is in the business of employing individuals to
provide specialized and technical services to the Company's Clients. The
purpose of these Covenant Not-to-Compete and No Solicitation provisions are to
protect the relationship which exists between the Company and its Client while
Executive is employed and after Executive leaves the employ of the Company. The
consideration for these Covenant Not-to-Compete and No Solicitation provisions
is the Executive's employment with the Company.
(a) Executive acknowledges the following:
(1) The Company expended considerable resources in
obtaining contracts with its Clients;
(2) The Company expended considerable resources to
recruit and hire employees who could perform
services for its Clients;
(3) Through his/her employ with the Company,
Executive will develop a substantial
relationship with the Company's existing or
potential Clients, including, but not limited
to, being the sole or primary contact between
the Client and the Company;
(4) Executive will be exposed to valuable
confidential business information about the
Company, its Clients, and the Company's
relationship with its Client;
(5) By providing services on behalf of the Company,
Executive will develop and enhance the valuable
business relationship between the Company and
its Client;
(6) The relationship between the Company and its
Clients depends on the quality and quantity of
the services Executive performs;
(7) Through employment with the Company, Executive
will increase his/her opportunity to work
directly for the Clients or for a competitor of
the Company; and
(8) The Company will suffer irreparable harm if
Executive breaches these Covenant Not-to-Compete
and No Solicitation provisions of this
Agreement.
<PAGE> 3
(b) Executive agrees that:
(1) The relationship between the Company and its
Client (developed and enhanced when the
Executive performs services on behalf of the
Company) is a legitimate business interest for
the Company to protect;
(2) The Company's legitimate business interest is
protected by the existence and enforcement of
these Covenant Not-to-Compete and No
Solicitation provisions;
(3) The business relationship which is created or
exists between the Company and its Client, or
the goodwill resulting from it, is a business
asset of the Company and not the Executive; and
(4) Executive will not seek to take advantage of
opportunities which result from his/her
employment with the Company and that entering
into the Agreement containing Covenant
Not-to-Compete and No Solicitation provisions is
reasonable to protect the Company's business
relationship with its Clients.
(c) Restrictions on Executive. During the term of this
Agreement and for a period of time set forth on Exhibit A after the termination
of this Agreement, for whatever reason, whether such termination was by the
Company or the Executive, voluntarily or involuntarily, and whether with or
without cause, Executive agrees that he/she shall not, as a principal,
employer, stockholder, partner, agent, consultant, independent contractor,
employee, or in any other individual or representative capacity:
(1) Directly or indirectly engage in, continue in,
or carry on the business of the Company or any
business substantially similar thereto,
including owning or controlling any financial
interest in any corporation, partnership, firm,
or other form of business organization which
competes with or is engaged in or carries on any
aspect of such business or any business
substantially similar thereto;
(2) Consult with, advise, or assist in any way,
whether or not for consideration, any
corporation, partnership, firm, or other
business organization which is now, becomes, or
may become a competitor of the Company in any
aspect of the Company's business during the
Executive's employment with the Company,
including, but not limited to, advertising or
otherwise endorsing the products of any such
competitor or loaning money or rendering any
other form of financial assistance to or
engaging in any form of transaction whether or
not on an arm's length basis with any such
competitor;
(3) Provide or attempt to provide or solicit the
opportunity to provide or advise others of the
opportunity to provide any services of the type
Executive performed for the Company or the
Company's Clients (regardless of whether and how
such services are to be compensated, whether on
a salaried, time and materials, contingent
compensation, or other basis) to or for the
benefit of any Client (i) to which Executive has
provided services in any capacity on behalf of
the Company, or (ii) to which Executive has been
introduced to or about which the Executive has
received information through the Company or
through any Client from which Executive has
performed services in any capacity on behalf of
the Company;
(4) Retain or attempt to retain, directly or
indirectly, for itself or any other party, the
services of any person, including any of the
Company's employees, who were providing services
to or on behalf of the Company while Executive
was employed by the Company and to whom
Executive has been introduced or about whom
Executive has received information through
Employer or through any Client for which
Executive has performed services in any capacity
on behalf of the Company;
(5) Engage in any practice, the purpose of which is
to evade the provisions of this Agreement or to
commit any act which is detrimental to the
successful continuation of or which adversely
affects the business or the Company; provided,
however, that the foregoing shall not preclude
the Executive's ownership of not more than 2% of
the equity securities registered under Section
12 of the Securities Exchange Act of 1934, as
amended; or
(6) For purpose of these Covenant Not-to-Compete and
No Solicitation provisions, Client includes any
subsidiaries, affiliates, customers, and clients
of the Company's Clients. The Executive agrees
that the geographic scope of this Covenant
Not-to-Compete shall extend to the geographic
area where the Company's Clients conduct
business at any time during the Term of this
Agreement. For purposes of this Agreement,
"Clients" means any person or entity to which
the Company provides or has provided within a
period of one (1) year prior to the Executive's
termination of employment labor, materials or
services for the furtherance of such entity's or
person's business or any person or entity that
within such period of one (1) year the Company
has pursued or communicated with for the purpose
of obtaining business for the Company.
<PAGE> 4
(d) Enforcement. These Covenant Not-to-Compete and
No Solicitation provisions shall be construed
and enforced under the laws of the State of
Florida. In the event of any breach of this
Covenant Not-to-Compete, the Executive
recognizes that the remedies at law will be
inadequate, and that in addition to any relief
at law which may be available to the Company for
such violation or breach and regardless of any
other provision contained in this Agreement, the
Company shall be entitled to equitable remedies
(including an injunction) and such other relief
as a court may grant after considering the
intent of this Section 5. It is further
acknowledged and agreed that the existence of
any claim or cause of action on the part of the
Executive against the Company, whether arising
from this Agreement or otherwise, shall in no
way constitute a defense to the enforcement of
this Covenant Not-to-Compete, and the duration
of this Covenant Not-to-Compete shall be
extended in an amount which equals the time
period during which the Executive is or has been
in violation of this Covenant Not-to-Compete. In
the event a court of competent jurisdiction
determines that the provisions of this Covenant
Not-to-Compete are excessively broad as to
duration, geographic scope, prohibited
activities or otherwise, the parties agree that
this covenant shall be reduced or curtailed to
the extent necessary to render it enforceable.
(e) In an action to enforce or challenge these
Covenant Not-to-Compete and No Solicitation
provisions, the prevailing party is entitled to
recover its attorney's fees and costs.
(f) By signing this Agreement, the Executive
acknowledges that he/she understands the effects
of these Covenant Not-to-Compete and No
Solicitation provisions and agrees to abide by
them.
6. TERMINATION
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If during the Term the Executive becomes
physically or mentally disabled in accordance with
the terms and conditions of any disability insurance
policy covering the Executive, or, if due to such
physical or mental disability the Executive becomes
unable for a period of more than six (6) consecutive
months to perform his duties hereunder on
substantially a full-time basis as determined by the
Company in its sole reasonable discretion, the
Company may, at its option, terminate the
Executive's employment hereunder upon not less than
thirty (30) days' written notice.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause effective immediately
upon notice. For purposes of this Agreement, the
Company shall have "Cause" to terminate the
Executive's employment hereunder: (i) if the
Executive engages in conduct which has caused or is
reasonably likely to cause demonstrable and serious
injury to Company; (ii) if the Executive is
convicted of a felony as evidenced by a binding and
final judgment, order, or decree of a court of
competent jurisdiction; (iii) for the Executive's
neglect of his duties hereunder or the Executive's
refusal to perform his duties or responsibilities
hereunder as determined by the Company's Board of
Directors in good faith; (iv) consistent failure to
achieve goals established by the Board of Directors
or their designate; (v) gross incompetence; (vi) for
the Executive's violation of this Agreement,
including, without limitation, Section 5 hereof;
(vii) chronic absenteeism; (viii) for use of illegal
drugs; (ix) insobriety by the Executive while
performing his or her duties hereunder; and (x) for
any act of dishonesty or falsification of reports,
records, or information submitted by the Executive
to the Company.
(d) Non-Compete Payment and Liquidated Damages. In the
event of a termination of the Executive's employment
pursuant to Section 6 or by the Executive, all
payments and Company benefits to the Executive
hereunder, except the payments (if any) provided
below, shall immediately cease and terminate. In the
event of a termination by the Company of the
Executive's employment with the Company for any
reason other than pursuant to Section 6(c), the
Company shall pay the Executive Liquidated Damages
as defined in (e) below for early termination of his
employment and the Covenant Not-to-Compete set forth
in Section 5 hereof shall remain in full force and
effect through the full stated Term of this
Agreement; and additionally, from the end of the
Term of this Agreement through the non-compete
period stated on Exhibit "A", the Company shall pay
the Executive Not-to-Compete pay in equal biweekly
installments ("Non-Compete Payment Installments") in
the amount set forth on Exhibit A ("Non-Compete
Payment"). Such Non-Compete Payment, however, shall
not be required to be paid by the Company if the
Company elects, in its sole discretion, to release
the Executive from the Covenant Not-to-Compete set
forth in Section 5 hereof. Additionally, if the
Company commences paying Executive Non-Compete
Payment Installments and subsequently elects in the
future, in its sole discretion, to release Executive
from the Covenant Not-to-Compete and gives notice to
Executive, then, at the effective date of such
notice, Executive shall no longer be subject to the
Covenant Not-to-Compete, and no further Non-Compete
Payment Installments shall be due or payable to
Executive. If the Company terminates the Executive's
employment pursuant to Section 6(c) or the Executive
terminates such employment, the Executive shall not
be entitled to the Non-Compete Payment, and the
Covenant Not-to-Compete set forth in Section 5
hereof shall remain in full force and effect.
Notwithstanding anything to the contrary herein
contained, the Executive shall receive all
compensation and other benefits to which he was
entitled under this Agreement or otherwise as an
executive of the Company through the termination
date.
(e) The Liquidated Damages amount, if due as provided
above, shall be equal to the weekly amount stated on
Exhibit A times the number of weeks remaining
between the early termination date and the end of
Term as stated on Exhibit A ("Liquidated Damages").
This amount shall be paid biweekly in equal
installments over such period.
<PAGE> 5
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission, or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the
signature page.
If to the Company: Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. ENFORCEMENT, GOVERNING LAW, AND ATTORNEY'S FEES. It is
stipulated that a breach by Executive of the restrictive covenants set forth in
Sections 4 and 5 of this Agreement will cause irreparable damage to Company or
its Clients, and that in the event of any breach of those provisions, Company
is entitled to injunctive relief restraining Executive from violating or
continuing a violation of the restrictive covenants as well as other remedies
it may have. Additionally, such covenants shall be enforceable against the
Executive's successors or assigns or by successor assigns.
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Florida. Any
litigation to enforce this Agreement shall be brought in the state or federal
courts of Hillsborough County, Florida, which is the principal place of
business for Company and which is considered to be the place where this
Agreement is made. Both parties hereby consent to such courts' exercise of
personal jurisdiction over them.
Except where required, to enforce the restrictive covenants regarding
Not-to-Compete, No Solicitation, and Confidential Information, as provided in
Sections 4 and 5 of this Agreement, Company and the Executive will each pay
their own attorney's fees and costs in the event Company or the Executive must
enforce any of the other rights granted to them, regardless of the outcome of
any action seeking to enforce rights under this Agreement.
9. MISCELLANEOUS. No provision of this Agreement may be modified
or waived unless such waiver or modification is agreed to in writing signed by
the parties hereto; provided, however, that the terms of the performance bonus
and fringe benefits set forth or Exhibit A may be amended by the Company in its
discretion without the Executive's consent to the extent provided therein. No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or
at any prior or subsequent time. This Agreement is the entire agreement between
the parties hereto with respect to the Executive's employment by the Company
and there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which
are not set forth in this Agreement. Any prior agreement relating to the
Executive's employment with the Company is hereby superseded and void, and is
no longer in effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its respective successors and assigns, and the
Executive and his heirs, executors, administrators and legal representatives.
Except as expressly set forth herein, no party shall assign any of his or its
rights under this Agreement without the prior written consent of the other
party and any attempted assignment without such prior written consent shall be
null and void and without legal effect. The parties agree that if any provision
of this Agreement shall under any circumstances be deemed invalid or
inoperative, the Agreement shall be construed with the invalid or inoperative
provision deleted and the rights and obligations of the parties shall be
construed and enforced accordingly. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute but one and the same instrument. This Agreement
has been negotiated and no party shall be considered as being responsible for
such drafting for the purpose of applying any rule construing ambiguities
against the drafter or otherwise.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By:
---------------------------------- -------------------------------------
Scott J. Bendert
Address:
---------------------------------- -------------------------------------
<PAGE> 7
Scott J. Bendert
Group Executive
Senior Vice President
Performance Management and
Administration
EXHIBIT A TO EMPLOYMENT AGREEMENT
This Exhibit A is attached to and made a part of that certain
Employment Agreement dated effective March 1, 2000, entered into by and between
Sykes Enterprises, Incorporated (the "Company") and Scott J. Bendert (the
"Executive," which supercedes and replaces that certain Employment Agreement
dated April 5, 1999 entered into by and between the Company and the Executive.
TERM: Two (2) Years, commencing March 1, 2000.
BASE SALARY $4,326.92 per week
PERFORMANCE BONUS: 0% to 50% of annual Base Salary (See Attachment I)
FRINGE BENEFITS: Standard fringe benefits for executives
TERM OF COVENANT
NOT TO COMPETE: 12 months
NON-COMPETE PAYMENT: $4,326.92 per week for 52 weeks
LIQUIDATED DAMAGES $4,326.92 per week
THE COMPANY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, AT SUCH TIME OR TIMES
AS IT ELECTS, TO CHANGE OR ELIMINATE BONUSES OR OTHER BENEFITS.
IN WITNESS WHEREOF, the parties have executed this Exhibit A to the
Employment Agreement as of the ___ day of _____________, 2000.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By:
---------------------------------- -------------------------------------
<PAGE> 1
Exhibit 10.5
EMPLOYMENT AGREEMENT
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT DESCRIBES THE BASIC LEGAL
AND ETHICAL RESPONSIBILITIES THAT YOU ARE REQUIRED TO OBSERVE AS AN EXECUTIVE
EXPOSED TO HIGHLY SENSITIVE TECHNOLOGY AND STRATEGIC INFORMATION. CONSULT WITH
YOUR LEGAL COUNSEL IF ALL THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE NOT
FULLY UNDERSTOOD BY YOU.
THIS AGREEMENT is made as of the 6th day of March, 2000, by and between
SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"), and W.
MICHAEL KIPPHUT (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity and the Company's Vice President
and Chief Financial Officer; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) as its Vice President and Chief Financial Officer. The
executive shall report to the Office of the Chairman, which will comprise the
Chairman of the Board of Directors, the Chief Executive Officer, and the
President of the Company. The Executive accepts such employment and agrees to
devote his best efforts and entire business time, skill, labor, and attention to
the performance of such duties. During the term, the Executive agrees to
promptly provide a description of any other commercial duties or pursuits
engaged in by the Executive to the Company's Board of Directors. If the Board of
Directors determines in good faith that such activities conflict with the
Executive's performance of his duties hereunder, the Executive shall promptly
cease such activities to the extent as directed by the Board of Directors. It is
acknowledged and agreed that such description shall be made regarding any such
activities in which the Executive owns more than 5% of the ownership of the
organization or which may be in violation of Section 5 hereof, and that the
failure of the Executive to provide any such description shall enable the
Company to terminate the Executive for Cause (as provided in Section 6(c)
hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such benefits
and additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions for termination set forth in
Section 6 hereof, the employment of the Executive under this Agreement shall
commence on the effective date hereof and shall continue through and including
the close of business on the date hereof as set forth on Exhibit A attached
hereto and incorporated herein (such term shall herein be defined as the
"Term"). The Executive agrees that some portions of this Agreement, including
Sections 4, 5, and 6 hereof, will remain in force after the termination of this
Agreement.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's services
under this Agreement, the Executive shall receive and the Company shall pay a
weekly base salary set forth on Exhibit A. Such base salary may be increased but
not decreased during the Term in the Company's discretion based upon the
Executive's performance and any other factors the Company deems relevant. Such
base salary shall be payable in accordance with the policy then prevailing for
the Company's executives. In addition to such base salary, the Executive shall
be entitled during the Term to a performance bonus set forth on Exhibit A and to
participate in and receive payments from, at the Company's election, other bonus
and other incentive compensation plans, if any, as may be adopted by the
Company.
(b) Payments. All amounts paid pursuant to this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the Company
for all reasonable and customary travel and other business expenses incurred by
the Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as may be set forth on Exhibit A and shall be eligible to
participate in such pension, life insurance, health insurance,
<PAGE> 2
disability insurance, and other executive benefits plans, if any, which the
Company may from time to time make available to its executive officers
generally.
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of the Company,
including, without limitation, confidential information with respect to the
Company's technical data, research and development projects, methods, products,
software, financial data, business plans, financial plans, customer lists,
business methodology, processes, production methods and techniques, promotional
materials and information, and other similar matters treated by the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any Confidential Information obtained by the
Executive while in the employ of the Company.
(b) The Executive agrees that all memoranda; notes; records; papers or
other documents; computer disks; computer, video or audio tapes; CD-ROMs; all
other media and all copies thereof relating to the Company's operations or
business, some of which may be prepared by the Executive; and all objects
associated therewith in any way obtained by the Executive shall be the Company's
property. This shall include, but is not limited to, documents; computer disks;
computer, video and audio tapes; CD-ROMs; all other media and objects concerning
any technical data, methods, products, software, research and development
projects, financial data, financial plans, business plans, customer lists,
contracts, price lists, manuals, mailing lists, advertising materials; and all
other materials and records of any kind that may be in the Executive's
possession or under the Executive's control. The Executive shall not, except for
the Company's use, copy or duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities, nor use any information
concerning them except for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees that the Executive
will deliver all of the aforementioned documents and objects, if any, that may
be in the Executive's possession to the Company upon termination of the
Executive's employment, or at any other time at the Company's request.
(c) In any action to enforce or challenge these Confidential
Information provisions, the prevailing party is entitled to recover its
attorney's fees and costs.
5. COVENANT NOT-TO-COMPETE AND NO SOLICITATION. Executive recognizes
that the Company is in the business of employing individuals to provide
specialized and technical services to the Company's Clients. The purpose of
these Covenant Not-to-Compete and No Solicitation provisions are to protect the
relationship which exists between the Company and its Client while Executive is
employed and after Executive leaves the employ of the Company. The consideration
for these Covenant Not-to-Compete and No Solicitation provisions is the
Executive's employment with the Company.
(a) Executive acknowledges the following:
(1) The Company expended considerable resources in obtaining
contracts with its Clients;
(2) The Company expended considerable resources to recruit and
hire employees who could perform services for its Clients;
(3) Through his/her employ with the Company, Executive will
develop a substantial relationship with the Company's existing or
potential Clients, including, but not limited to, being the sole or
primary contact between the Client and the Company;
(4) Executive will be exposed to valuable confidential
business information about the Company, its Clients, and the Company's
relationship with its Client;
(5) By providing services on behalf of the Company, Executive
will develop and enhance the valuable business relationship between the
Company and its Client;
(6) The relationship between the Company and its Client
depends on the quality and quantity of the services Executive performs;
(7) Through employment with the Company, Executive will
increase his/her opportunity to work directly for the Client or for a
competitor of the Company; and
<PAGE> 3
(8) The Company will suffer irreparable harm if Executive
breaches these Covenant Not-to-Compete and No Solicitation provisions
of this Agreement.
(b) Executive agrees that:
(1) The relationship between the Company and its Client
(developed and enhanced when the Executive performs services on behalf
of the Company) is a legitimate business interest for the Company to
protect;
(2) The Company's legitimate business interest is protected by
the existence and enforcement of these Covenant Not-to-Compete and No
Solicitation provisions;
(3) The business relationship which is created or exists
between the Company and its Client, or the goodwill resulting from it,
is a business asset of the Company and not the Executive; and
(4) Executive will not seek to take advantage of opportunities
which result from his/her employment with the Company and that entering
into the Agreement containing Covenant Not-to-Compete and No
Solicitation provisions is reasonable to protect the Company's business
relationship with its Clients.
(c) Restrictions on Executive. During the term of this Agreement and
for a period of time set forth on Exhibit A after the termination of this
Agreement, for whatever reason, whether such termination was by the Company or
the Executive, voluntarily or involuntarily, and whether with or without cause,
Executive agrees that he/she shall not, as a principal, employer, stockholder,
partner, agent, consultant, independent contractor, employee, or in any other
individual or representative capacity:
(1) Directly or indirectly engage in, continue in, or carry on
the business of the Company or any business substantially similar
thereto, including owning or controlling any financial interest in any
corporation, partnership, firm, or other form of business organization
which competes with or is engaged in or carries on any aspect of such
business or any business substantially similar thereto;
(2) Consult with, advise, or assist in any way, whether or not
for consideration, any corporation, partnership, firm, or other
business organization which is now, becomes, or may become a competitor
of the Company in any aspect of the Company's business during the
Executive's employment with the Company, including, but not limited to,
advertising or otherwise endorsing the products of any such competitor
or loaning money or rendering any other form of financial assistance to
or engaging in any form of transaction whether or not on an arm's
length basis with any such competitor;
(3) Provide or attempt to provide or solicit the opportunity
to provide or advise others of the opportunity to provide any services
of the type Executive performed for the Company or the Company's
Clients (regardless of whether and how such services are to be
compensated, whether on a salaried, time and materials, contingent
compensation, or other basis) to or for the benefit of any Client (i)
to which Executive has provided services in any capacity on behalf of
the Company, or (ii) to which Executive has been introduced to or about
which the Executive has received information through the Company or
through any Client from which Executive has performed services in any
capacity on behalf of the Company;
(4) Retain or attempt to retain, directly or indirectly, for
itself or any other party, the services of any person, including any of
the Company's employees, who were providing services to or on behalf of
the Company while Executive was employed by the Company and to whom
Executive has been introduced or about whom Executive has received
information through Employer or through any Client for which Executive
has performed services in any capacity on behalf of the Company;
(5) Engage in any practice, the purpose of which is to evade
the provisions of this Agreement or to commit any act which is
detrimental to the successful continuation of or which adversely
affects the business or the Company; provided, however, that the
foregoing shall not preclude the Executive's ownership of not more than
2% of the equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended; or
(6) For purpose of these Covenant Not-to-Compete and No
Solicitation provisions, Client includes any subsidiaries, affiliates,
customers, and clients of the Company's Clients. The Executive agrees
that the geographic scope of this Covenant Not-to-Compete shall extend
to the geographic area where the Company's Clients conduct business at
any time during the Term of this Agreement. For purposes of this
Agreement, "Clients" means any person or entity to which the Company
provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for
the furtherance of such entity's or person's business or any person or
entity
<PAGE> 4
that within such period of one (1) year the Company has pursued or
communicated with for the purpose of obtaining business for the
Company.
(d) Enforcement. These Covenant Not-to-Compete and No Solicitation
provisions shall be construed and enforced under the laws of the State of
Florida. In the event of any breach of this Covenant Not-to-Compete, the
Executive recognizes that the remedies at law will be inadequate, and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this Covenant Not-to-Compete, and the
duration of this Covenant Not-to-Compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this Covenant Not-to-Compete. In the event a court of competent jurisdiction
determines that the provisions of this Covenant Not-to-Compete are excessively
broad as to duration, geographic scope, prohibited activities or otherwise, the
parties agree that this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
(e) In an action to enforce or challenge these Covenant
Not-to-Compete and No Solicitation provisions, the prevailing party is entitled
to recover its attorney's fees and costs.
(f) By signing this Agreement, the Executive acknowledges that
he/she understands the effects of these Covenant Not-to-Compete and No
Solicitation provisions and agrees to abide by them.
6. TERMINATION
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If during the Term the Executive becomes physically
or mentally disabled in accordance with the terms and conditions of any
disability insurance policy covering the Executive, or, if due to such physical
or mental disability the Executive becomes unable for a period of more than six
(6) consecutive months to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Executive's employment hereunder
upon not less than thirty (30) days' written notice.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive engages in conduct which has caused
or is reasonably likely to cause demonstrable and serious injury to Company;
(ii) if the Executive is convicted of a felony as evidenced by a binding and
final judgment, order, or decree of a court of competent jurisdiction; (iii) for
the Executive's neglect of his duties hereunder or the Executive's refusal to
perform his duties or responsibilities hereunder as determined by the Company's
Board of Directors in good faith; (iv) consistent failure to achieve goals
established by the Board of Directors or their designate; (v) gross
incompetence; (vi) for the Executive's violation of this Agreement, including,
without limitation, Section 5 hereof; (vii) chronic absenteeism; (viii) for use
of illegal drugs; (ix) insobriety by the Executive while performing his or her
duties hereunder; and (x) for any act of dishonesty or falsification of reports,
records, or information submitted by the Executive to the Company.
(d) Non-Compete Payment. In the event of a termination of the
Executive's employment pursuant to Section 6 or by the Executive, all payments
and Company benefits to the Executive hereunder, except the payments (if any)
specified in Section 6(a) above or provided for below, shall immediately cease
and terminate. In the event of a termination by the Company of the Executive's
employment with the Company for any reason other than pursuant to Section 6(c),
the Covenant Not-to-Compete set forth in Section 5 hereof shall remain in full
force and effect through the full stated Term of this Agreement; and
additionally, from the end of the Term of this Agreement through the non-compete
period stated on Exhibit "A", the Company shall pay the Executive Not-to-Compete
pay in equal biweekly installments ("Non-Compete Payment Installments") in the
amount set forth on Exhibit A ("Non-Compete Payment"). Such Non-Compete Payment,
however, shall not be required to be paid by the Company if the Company elects,
in its sole discretion, to release the Executive from the Covenant
Not-to-Compete set forth in Section 5 hereof. Additionally, if the Company
commences paying Executive Non-Compete Payment Installments and subsequently
elects in the future, in its sole discretion, to release Executive from the
Covenant Not-to-Compete and gives notice to Executive, then, at the effective
date of such notice, Executive shall no longer be subject to the Covenant
Not-to-Compete, and no further Non-Compete Payment Installments shall be due or
payable to Executive. If the Company terminates the Executive's employment
pursuant to Section 6(c) or the Executive terminates such employment, the
Executive shall not be entitled to the Non-Compete Payment, and the Covenant
Not-to-Compete set forth in Section 5 hereof shall remain in full force and
effect. Notwithstanding anything to the contrary herein contained, the Executive
shall receive all compensation and other benefits to which he was entitled under
this Agreement or otherwise as an executive of the Company through the
termination date.
<PAGE> 5
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission, or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page.
If to the Company: Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: VP Human Resources
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. ENFORCEMENT, GOVERNING LAW, AND ATTORNEY'S FEES. It is stipulated
that a breach by Executive of the restrictive covenants set forth in Sections 4
and 5 of this Agreement will cause irreparable damage to Company or its Clients,
and that in the event of any breach of those provisions, Company is entitled to
injunctive relief restraining Executive from violating or continuing a violation
of the restrictive covenants as well as other remedies it may have.
Additionally, such covenants shall be enforceable against the Executive's
successors or assigns or by successor assigns.
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Florida. Any
litigation to enforce this Agreement shall be brought in the state or federal
courts of Hillsborough County, Florida, which is the principal place of business
for Company and which is considered to be the place where this Agreement is
made. Both parties hereby consent to such courts' exercise of personal
jurisdiction over them.
In the event action is brought by either party to enforce any of the
terms and conditions set forth herein, the prevailing party is entitled to
recover its reasonable attorney's fees and costs.
9. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, that the terms of the performance bonus and
fringe benefits set forth or Exhibit A may be amended by the Company in its
discretion without the Executive's consent to the extent provided therein. No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or at
any prior or subsequent time. This Agreement is the entire agreement between the
parties hereto with respect to the Executive's employment by the Company and
there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which are
not set forth in this Agreement. Any prior agreement relating to the Executive's
employment with the Company is hereby superseded and void, and is no longer in
effect. This Agreement shall be binding upon and inure to the benefit of the
Company, its respective successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives. Except as expressly set
forth herein, no party shall assign any of his or its rights under this
Agreement without the prior written consent of the other party and any attempted
assignment without such prior written consent shall be null and void and without
legal effect. The parties agree that if any provision of this Agreement shall
under any circumstances be deemed invalid or inoperative, the Agreement shall be
construed with the invalid or inoperative provision deleted and the rights and
obligations of the parties shall be construed and enforced accordingly. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute but one and
the same instrument. This Agreement has been negotiated and no party shall be
considered as being responsible for such drafting for the purpose of applying
any rule construing ambiguities against the drafter or otherwise.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By: __________________________________ _____________________________________
W. Michael Kipphut
Address:
_____________________________________
_____________________________________
<PAGE> 7
W. Michael Kipphut
EXHIBIT A TO EMPLOYMENT AGREEMENT
TERM: Two (2) Years
BASE SALARY $3,846.15 per week
PERFORMANCE BONUS: Eligible for 0% to 100% of base compensation
based on Performance Bonus Plan for Vice
President & Chief Financial Officer to be
developed.
FRINGE BENEFITS: Eligible for standard fringe benefits for
Executives
STOCK OPTIONS: 50,000 1996 options, vesting 1/3 per year 3
years; 60,000 1997 performance options,
vesting based on goal achievement.
COVENANT NOT TO COMPETE: Twelve (12) months
NON-COMPETE PAYMENT: $3,846.15 per week for 52 weeks
THE COMPANY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, AT SUCH TIME OR TIMES AS
IT ELECTS, TO CHANGE OR ELIMINATE BONUSES OR OTHER BENEFITS, EXCEPT FOR THOSE
BONUSES AND OTHER BENEFITS SET FORTH IN THE EMPLOYMENT AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Exhibit A to the
Employment Agreement as of the ___ day of _____________, 2000.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By: __________________________________ _____________________________________
<PAGE> 1
Exhibit 10.6
EMPLOYMENT AGREEMENT
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT DESCRIBES THE BASIC LEGAL
AND ETHICAL RESPONSIBILITIES THAT YOU ARE REQUIRED TO OBSERVE AS AN EXECUTIVE
EXPOSED TO HIGHLY SENSITIVE TECHNOLOGY AND STRATEGIC INFORMATION. CONSULT WITH
YOUR LEGAL COUNSEL IF ALL THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE NOT
FULLY UNDERSTOOD BY YOU.
THIS AGREEMENT is made as of the 1st day of March, 2000, by and between
SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"), and DALE
W. SAVILLE (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) in such management capacities as may be assigned from time
to time by the Company. The Executive accepts such employment and agrees to
devote his best efforts and entire business time, skill, labor, and attention to
the performance of such duties. The Executive agrees to promptly provide a
description of any other commercial duties or pursuits engaged in by the
Executive to the Company's Board of Directors. If the Board of Directors
determines in good faith that such activities conflict with the Executive's
performance of his duties hereunder, the Executive shall promptly cease such
activities to the extent as directed by the Board of Directors. It is
acknowledged and agreed that such description shall be made regarding any such
activities in which the Executive owns more than 5% of the ownership of the
organization or which may be in violation of Section 5 hereof, and that the
failure of the Executive to provide any such description shall enable the
Company to terminate the Executive for Cause (as provided in Section 6(c)
hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such benefits
and additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions for termination set forth in
Section 6 hereof, the employment of the Executive under this Agreement shall
commence on the effective date hereof and shall continue through and including
the close of business on the date hereof as set forth on Exhibit A attached
hereto and incorporated herein (such term shall herein be defined as the
"Term"). The Executive agrees that some portions of this Agreement, including
Sections 4, 5, and 6 hereof, will remain in force after the termination of this
Agreement.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Agreement, the Executive shall receive and the Company shall
pay a weekly base salary set forth on Exhibit A. Such base salary may be
increased but not decreased during the Term in the Company's discretion based
upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives. In addition to such base salary, the
Executive shall be entitled during the Term to a performance bonus set forth on
Exhibit A and to participate in and receive payments from, at the Company's
election, other bonus and other incentive compensation plans, if any, as may be
adopted by the Company.
(b) Payments. All amounts paid pursuant to this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the Company
for all reasonable and customary travel and other business expenses incurred by
the Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as may be set forth on Exhibit A and shall be eligible to
participate in such pension, life insurance, health insurance, disability
insurance, and other executive benefits plans, if any, which the Company may
from time to time make available to its executive officers generally.
<PAGE> 2
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of the Company,
including, without limitation, confidential information with respect to the
Company's technical data, research and development projects, methods, products,
software, financial data, business plans, financial plans, customer lists,
business methodology, processes, production methods and techniques, promotional
materials and information, and other similar matters treated by the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any Confidential Information obtained by the
Executive while in the employ of the Company.
(b) The Executive agrees that all memoranda; notes; records; papers
or other documents; computer disks; computer, video or audio tapes; CD-ROMs; all
other media and all copies thereof relating to the Company's operations or
business, some of which may be prepared by the Executive; and all objects
associated therewith in any way obtained by the Executive shall be the Company's
property. This shall include, but is not limited to, documents; computer disks;
computer, video and audio tapes; CD-ROMs; all other media and objects concerning
any technical data, methods, products, software, research and development
projects, financial data, financial plans, business plans, customer lists,
contracts, price lists, manuals, mailing lists, advertising materials; and all
other materials and records of any kind that may be in the Executive's
possession or under the Executive's control. The Executive shall not, except for
the Company's use, copy or duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities, nor use any information
concerning them except for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees that the Executive
will deliver all of the aforementioned documents and objects, if any, that may
be in the Executive's possession to the Company upon termination of the
Executive's employment, or at any other time at the Company's request.
(c) In any action to enforce or challenge these Confidential
Information provisions, the prevailing party is entitled to recover its
attorney's fees and costs.
5. COVENANT NOT-TO-COMPETE AND NO SOLICITATION. Executive recognizes
that the Company is in the business of employing individuals to provide
specialized and technical services to the Company's Clients. The purpose of
these Covenant Not-to-Compete and No Solicitation provisions are to protect the
relationship which exists between the Company and its Client while Executive is
employed and after Executive leaves the employ of the Company. The consideration
for these Covenant Not-to-Compete and No Solicitation provisions is the
Executive's employment with the Company.
(a) Executive acknowledges the following:
(1) The Company expended considerable resources in obtaining
contracts with its Clients;
(2) The Company expended considerable resources to recruit and
hire employees who could perform services for its Clients;
(3) Through his/her employ with the Company, Executive will
develop a substantial relationship with the Company's existing or
potential Clients, including, but not limited to, being the sole or
primary contact between the Client and the Company;
(4) Executive will be exposed to valuable confidential
business information about the Company, its Clients, and the Company's
relationship with its Client;
(5) By providing services on behalf of the Company, Executive
will develop and enhance the valuable business relationship between the
Company and its Client;
(6) The relationship between the Company and its Client
depends on the quality and quantity of the services Executive performs;
(7) Through employment with the Company, Executive will
increase his/her opportunity to work directly for the Client or for a
competitor of the Company; and
(8) The Company will suffer irreparable harm if Executive
breaches these Covenant Not-to-Compete and No Solicitation provisions
of this Agreement.
<PAGE> 3
(b) Executive agrees that:
(1) The relationship between the Company and its Client
(developed and enhanced when the Executive performs services on behalf
of the Company) is a legitimate business interest for the Company to
protect;
(2) The Company's legitimate business interest is protected by
the existence and enforcement of these Covenant Not-to-Compete and No
Solicitation provisions;
(3) The business relationship which is created or exists
between the Company and its Client, or the goodwill resulting from it,
is a business asset of the Company and not the Executive; and
(4) Executive will not seek to take advantage of opportunities
which result from his/her employment with the Company and that entering
into the Agreement containing Covenant Not-to-Compete and No
Solicitation provisions is reasonable to protect the Company's business
relationship with its Clients.
(c) Restrictions on Executive. During the term of this Agreement and
for a period of time set forth on Exhibit A after the termination of this
Agreement, for whatever reason, whether such termination was by the Company or
the Executive, voluntarily or involuntarily, and whether with or without cause,
Executive agrees that he/she shall not, as a principal, employer, stockholder,
partner, agent, consultant, independent contractor, employee, or in any other
individual or representative capacity:
(1) Directly or indirectly engage in, continue in, or carry on
the business of the Company or any business substantially similar
thereto, including owning or controlling any financial interest in any
corporation, partnership, firm, or other form of business organization
which competes with or is engaged in or carries on any aspect of such
business or any business substantially similar thereto;
(2) Consult with, advise, or assist in any way, whether or not
for consideration, any corporation, partnership, firm, or other
business organization which is now, becomes, or may become a competitor
of the Company in any aspect of the Company's business during the
Executive's employment with the Company, including, but not limited to,
advertising or otherwise endorsing the products of any such competitor
or loaning money or rendering any other form of financial assistance to
or engaging in any form of transaction whether or not on an arm's
length basis with any such competitor;
(3) Provide or attempt to provide or solicit the opportunity
to provide or advise others of the opportunity to provide any services
of the type Executive performed for the Company or the Company's
Clients (regardless of whether and how such services are to be
compensated, whether on a salaried, time and materials, contingent
compensation, or other basis) to or for the benefit of any Client (i)
to which Executive has provided services in any capacity on behalf of
the Company, or (ii) to which Executive has been introduced to or about
which the Executive has received information through the Company or
through any Client from which Executive has performed services in any
capacity on behalf of the Company;
(4) Retain or attempt to retain, directly or indirectly, for
itself or any other party, the services of any person, including any of
the Company's employees, who were providing services to or on behalf of
the Company while Executive was employed by the Company and to whom
Executive has been introduced or about whom Executive has received
information through Employer or through any Client for which Executive
has performed services in any capacity on behalf of the Company;
(5) Engage in any practice, the purpose of which is to evade
the provisions of this Agreement or to commit any act which is
detrimental to the successful continuation of or which adversely
affects the business or the Company; provided, however, that the
foregoing shall not preclude the Executive's ownership of not more than
2% of the equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended; or
(6) For purpose of these Covenant Not-to-Compete and No
Solicitation provisions, Client includes any subsidiaries, affiliates,
customers, and clients of the Company's Clients. The Executive agrees
that the geographic scope of this Covenant Not-to-Compete shall extend
to the geographic area where the Company's Clients conduct business at
any time during the Term of this Agreement. For purposes of this
Agreement, "Clients" means any person or entity to which the Company
provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for
the furtherance of such entity's or person's business or any person or
entity that within such period of one (1) year the Company has pursued
or communicated with for the purpose of obtaining business for the
Company.
<PAGE> 4
(d) Enforcement. These Covenant Not-to-Compete and No Solicitation
provisions shall be construed and enforced under the laws of the State of
Florida. In the event of any breach of this Covenant Not-to-Compete, the
Executive recognizes that the remedies at law will be inadequate, and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this Covenant Not-to-Compete, and the
duration of this Covenant Not-to-Compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this Covenant Not-to-Compete. In the event a court of competent jurisdiction
determines that the provisions of this Covenant Not-to-Compete are excessively
broad as to duration, geographic scope, prohibited activities or otherwise, the
parties agree that this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
(e) In an action to enforce or challenge these Covenant
Not-to-Compete and No Solicitation provisions, the prevailing party is entitled
to recover its attorney's fees and costs.
(f) By signing this Agreement, the Executive acknowledges that
he/she understands the effects of these Covenant Not-to-Compete and No
Solicitation provisions and agrees to abide by them.
6. TERMINATION
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If during the Term the Executive becomes physically
or mentally disabled in accordance with the terms and conditions of any
disability insurance policy covering the Executive, or, if due to such physical
or mental disability the Executive becomes unable for a period of more than six
(6) consecutive months to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Executive's employment hereunder
upon not less than thirty (30) days' written notice.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive engages in conduct which has caused
or is reasonably likely to cause demonstrable and serious injury to Company;
(ii) if the Executive is convicted of a felony as evidenced by a binding and
final judgment, order, or decree of a court of competent jurisdiction; (iii) for
the Executive's neglect of his duties hereunder or the Executive's refusal to
perform his duties or responsibilities hereunder as determined by the Company's
Board of Directors in good faith; (iv) consistent failure to achieve goals
established by the Board of Directors or their designate; (v) gross
incompetence; (vi) for the Executive's violation of this Agreement, including,
without limitation, Section 5 hereof; (vii) chronic absenteeism; (viii) for use
of illegal drugs; (ix) insobriety by the Executive while performing his or her
duties hereunder; and (x) for any act of dishonesty or falsification of reports,
records, or information submitted by the Executive to the Company.
(d) Non-Compete Payment and Liquidated Damages. In the event of a
termination of the Executive's employment pursuant to Section 6 or by the
Executive, all payments and Company benefits to the Executive hereunder, except
the payments (if any) provided below, shall immediately cease and terminate. In
the event of a termination by the Company of the Executive's employment with the
Company for any reason other than pursuant to Section 6(c), the Company shall
pay the Executive Liquidated Damages as defined in (e) below for early
termination of his employment and the Covenant Not-to-Compete set forth in
Section 5 hereof shall remain in full force and effect through the full stated
Term of this Agreement; and additionally, from the end of the Term of this
Agreement through the non-compete period stated on Exhibit "A", the Company
shall pay the Executive Not-to-Compete pay in equal biweekly installments
("Non-Compete Payment Installments") in the amount set forth on Exhibit A
("Non-Compete Payment"). Such Non-Compete Payment, however, shall not be
required to be paid by the Company if the Company elects, in its sole
discretion, to release the Executive from the Covenant Not-to-Compete set forth
in Section 5 hereof. Additionally, if the Company commences paying Executive
Non-Compete Payment Installments and subsequently elects in the future, in its
sole discretion, to release Executive from the Covenant Not-to-Compete and gives
notice to Executive, then, at the effective date of such notice, Executive shall
no longer be subject to the Covenant Not-to-Compete, and no further Non-Compete
Payment Installments shall be due or payable to Executive. If the Company
terminates the Executive's employment pursuant to Section 6(c) or the Executive
terminates such employment, the Executive shall not be entitled to the
Non-Compete Payment, and the Covenant Not-to-Compete set forth in Section 5
hereof shall remain in full force and effect. Notwithstanding anything to the
contrary herein contained, the Executive shall receive all compensation and
other benefits to which he was entitled under this Agreement or otherwise as an
executive of the Company through the termination date.
(e) The Liquidated Damages amount, if due as provided above, shall
be equal to the weekly amount stated on Exhibit A times the number of weeks
remaining between the early termination date and the end of Term as stated on
Exhibit A ("Liquidated Damages"). This amount shall be paid biweekly in equal
installments over such period.
<PAGE> 5
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission, or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature
page.
If to the Company: Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. ENFORCEMENT, GOVERNING LAW, AND ATTORNEY'S FEES. It is stipulated
that a breach by Executive of the restrictive covenants set forth in Sections 4
and 5 of this Agreement will cause irreparable damage to Company or its Clients,
and that in the event of any breach of those provisions, Company is entitled to
injunctive relief restraining Executive from violating or continuing a violation
of the restrictive covenants as well as other remedies it may have.
Additionally, such covenants shall be enforceable against the Executive's
successors or assigns or by successor assigns.
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Florida. Any
litigation to enforce this Agreement shall be brought in the state or federal
courts of Hillsborough County, Florida, which is the principal place of business
for Company and which is considered to be the place where this Agreement is
made. Both parties hereby consent to such courts' exercise of personal
jurisdiction over them.
Except where required, to enforce the restrictive covenants
regarding Not-to-Compete, No Solicitation, and Confidential Information, as
provided in Sections 4 and 5 of this Agreement, Company and the Executive will
each pay their own attorney's fees and costs in the event Company or the
Executive must enforce any of the other rights granted to them, regardless of
the outcome of any action seeking to enforce rights under this Agreement.
9. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, that the terms of the performance bonus and
fringe benefits set forth or Exhibit A may be amended by the Company in its
discretion without the Executive's consent to the extent provided therein. No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or at
any prior or subsequent time. This Agreement is the entire agreement between the
parties hereto with respect to the Executive's employment by the Company and
there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which are
not set forth in this Agreement. Any prior agreement relating to the Executive's
employment with the Company is hereby superseded and void, and is no longer in
effect. This Agreement shall be binding upon and inure to the benefit of the
Company, its respective successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives. Except as expressly set
forth herein, no party shall assign any of his or its rights under this
Agreement without the prior written consent of the other party and any attempted
assignment without such prior written consent shall be null and void and without
legal effect. The parties agree that if any provision of this Agreement shall
under any circumstances be deemed invalid or inoperative, the Agreement shall be
construed with the invalid or inoperative provision deleted and the rights and
obligations of the parties shall be construed and enforced accordingly. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute but one and
the same instrument. This Agreement has been negotiated and no party shall be
considered as being responsible for such drafting for the purpose of applying
any rule construing ambiguities against the drafter or otherwise.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By: _________________________________ _____________________________________
Dale W. Saville
Address:
_____________________________________
_____________________________________
<PAGE> 7
Dale W. Saville
Senior Vice President
Chief Technology Officer
EXHIBIT A TO EMPLOYMENT AGREEMENT
This Exhibit A is attached to and made a part of that certain
Employment Agreement dated effective March 1, 2000, entered into by and between
Sykes Enterprises, Incorporated (the "Company") and Dale W. Saville (the
"Executive," which supercedes and replaces that certain Employment Agreement
dated August 15, 1997 entered into by and between the Company and the Executive.
TERM: Two (2) Years, commencing March 1, 2000.
BASE SALARY $3,049.92 per week
PERFORMANCE BONUS: 0% to 50% of annual Base Salary (See Attachment I)
FRINGE BENEFITS: Standard fringe benefits for executives
TERM OF COVENANT
NOT TO COMPETE: 12 months
NON-COMPETE PAYMENT: $1,520.00 per week for 52 weeks
LIQUIDATED DAMAGES $1,520.00 per week
THE COMPANY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, AT SUCH TIME OR TIMES AS
IT ELECTS, TO CHANGE OR ELIMINATE BONUSES OR OTHER BENEFITS.
IN WITNESS WHEREOF, the parties have executed this Exhibit A to the
Employment Agreement as of the ___ day of _____________, 2000.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By:________________________________ ____________________________________
<PAGE> 1
Exhibit 10.7
EMPLOYMENT AGREEMENT
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT DESCRIBES THE BASIC LEGAL
AND ETHICAL RESPONSIBILITIES THAT YOU ARE REQUIRED TO OBSERVE AS AN EXECUTIVE
EXPOSED TO HIGHLY SENSITIVE TECHNOLOGY AND STRATEGIC INFORMATION. CONSULT WITH
YOUR LEGAL COUNSEL IF ALL THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE NOT
FULLY UNDERSTOOD BY YOU.
THIS AGREEMENT is made as of the 1st day of March, 2000, by and between
SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"), and
GERRY L. ROGERS (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) in such management capacities as may be assigned from time
to time by the Company. The Executive accepts such employment and agrees to
devote his best efforts and entire business time, skill, labor, and attention to
the performance of such duties. The Executive agrees to promptly provide a
description of any other commercial duties or pursuits engaged in by the
Executive to the Company's Board of Directors. If the Board of Directors
determines in good faith that such activities conflict with the Executive's
performance of his duties hereunder, the Executive shall promptly cease such
activities to the extent as directed by the Board of Directors. It is
acknowledged and agreed that such description shall be made regarding any such
activities in which the Executive owns more than 5% of the ownership of the
organization or which may be in violation of Section 5 hereof, and that the
failure of the Executive to provide any such description shall enable the
Company to terminate the Executive for Cause (as provided in Section 6(c)
hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such benefits
and additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions for termination set forth in
Section 6 hereof, the employment of the Executive under this Agreement shall
commence on the effective date hereof and shall continue through and including
the close of business on the date hereof as set forth on Exhibit A attached
hereto and incorporated herein (such term shall herein be defined as the
"Term"). The Executive agrees that some portions of this Agreement, including
Sections 4, 5, and 6 hereof, will remain in force after the termination of this
Agreement.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Agreement, the Executive shall receive and the Company shall
pay a weekly base salary set forth on Exhibit A. Such base salary may be
increased but not decreased during the Term in the Company's discretion based
upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives. In addition to such base salary, the
Executive shall be entitled during the Term to a performance bonus set forth on
Exhibit A and to participate in and receive payments from, at the Company's
election, other bonus and other incentive compensation plans, if any, as may be
adopted by the Company.
(b) Payments. All amounts paid pursuant to this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the Company
for all reasonable and customary travel and other business expenses incurred by
the Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as may be set forth on Exhibit A and shall be eligible to
participate in such pension, life insurance, health insurance, disability
insurance, and other executive benefits plans, if any, which the Company may
from time to time make available to its executive officers generally.
<PAGE> 2
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of the Company,
including, without limitation, confidential information with respect to the
Company's technical data, research and development projects, methods, products,
software, financial data, business plans, financial plans, customer lists,
business methodology, processes, production methods and techniques, promotional
materials and information, and other similar matters treated by the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any Confidential Information obtained by the
Executive while in the employ of the Company.
(b) The Executive agrees that all memoranda; notes; records; papers
or other documents; computer disks; computer, video or audio tapes; CD-ROMs; all
other media and all copies thereof relating to the Company's operations or
business, some of which may be prepared by the Executive; and all objects
associated therewith in any way obtained by the Executive shall be the Company's
property. This shall include, but is not limited to, documents; computer disks;
computer, video and audio tapes; CD-ROMs; all other media and objects concerning
any technical data, methods, products, software, research and development
projects, financial data, financial plans, business plans, customer lists,
contracts, price lists, manuals, mailing lists, advertising materials; and all
other materials and records of any kind that may be in the Executive's
possession or under the Executive's control. The Executive shall not, except for
the Company's use, copy or duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities, nor use any information
concerning them except for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees that the Executive
will deliver all of the aforementioned documents and objects, if any, that may
be in the Executive's possession to the Company upon termination of the
Executive's employment, or at any other time at the Company's request.
(c) In any action to enforce or challenge these Confidential
Information provisions, the prevailing party is entitled to recover its
attorney's fees and costs.
5. COVENANT NOT-TO-COMPETE AND NO SOLICITATION. Executive recognizes
that the Company is in the business of employing individuals to provide
specialized and technical services to the Company's Clients. The purpose of
these Covenant Not-to-Compete and No Solicitation provisions are to protect the
relationship which exists between the Company and its Client while Executive is
employed and after Executive leaves the employ of the Company. The consideration
for these Covenant Not-to-Compete and No Solicitation provisions is the
Executive's employment with the Company.
(a) Executive acknowledges the following:
(1) The Company expended considerable resources in obtaining
contracts with its Clients;
(2) The Company expended considerable resources to recruit and
hire employees who could perform services for its Clients;
(3) Through his/her employ with the Company, Executive will
develop a substantial relationship with the Company's existing or
potential Clients, including, but not limited to, being the sole or
primary contact between the Client and the Company;
(4) Executive will be exposed to valuable confidential
business information about the Company, its Clients, and the Company's
relationship with its Clients;
(5) By providing services on behalf of the Company, Executive
will develop and enhance the valuable business relationship between the
Company and its Clients;
(6) The relationship between the Company and its Clients
depends on the quality and quantity of the services Executive performs;
(7) Through employment with the Company, Executive will
increase his/her opportunity to work directly for the Client or for a
competitor of the Company; and
(8) The Company will suffer irreparable harm if Executive
breaches these Covenant Not-to-Compete and No Solicitation provisions
of this Agreement.
<PAGE> 3
(b) Executive agrees that:
(1) The relationship between the Company and its Client
(developed and enhanced when the Executive performs services on behalf
of the Company) is a legitimate business interest for the Company to
protect;
(2) The Company's legitimate business interest is protected by
the existence and enforcement of these Covenant Not-to-Compete and No
Solicitation provisions;
(3) The business relationship which is created or exists
between the Company and its Client, or the goodwill resulting from it,
is a business asset of the Company and not the Executive; and
(4) Executive will not seek to take advantage of opportunities
which result from his/her employment with the Company and that entering
into the Agreement containing Covenant Not-to-Compete and No
Solicitation provisions is reasonable to protect the Company's business
relationship with its Clients.
(c) Restrictions on Executive. During the term of this Agreement and
for a period of time set forth on Exhibit A after the termination of this
Agreement, for whatever reason, whether such termination was by the Company or
the Executive, voluntarily or involuntarily, and whether with or without cause,
Executive agrees that he/she shall not, as a principal, employer, stockholder,
partner, agent, consultant, independent contractor, employee, or in any other
individual or representative capacity:
(1) Directly or indirectly engage in, continue in, or carry on
the business of the Company or any business substantially similar
thereto, including owning or controlling any financial interest in any
corporation, partnership, firm, or other form of business organization
which competes with or is engaged in or carries on any aspect of such
business or any business substantially similar thereto;
(2) Consult with, advise, or assist in any way, whether or not
for consideration, any corporation, partnership, firm, or other
business organization which is now, becomes, or may become a competitor
of the Company in any aspect of the Company's business during the
Executive's employment with the Company, including, but not limited to,
advertising or otherwise endorsing the products of any such competitor
or loaning money or rendering any other form of financial assistance to
or engaging in any form of transaction whether or not on an arm's
length basis with any such competitor;
(3) Provide or attempt to provide or solicit the opportunity
to provide or advise others of the opportunity to provide any services
of the type Executive performed for the Company or the Company's
Clients (regardless of whether and how such services are to be
compensated, whether on a salaried, time and materials, contingent
compensation, or other basis) to or for the benefit of any Client (i)
to which Executive has provided services in any capacity on behalf of
the Company, or (ii) to which Executive has been introduced to or about
which the Executive has received information through the Company or
through any Client from which Executive has performed services in any
capacity on behalf of the Company;
(4) Retain or attempt to retain, directly or indirectly, for
itself or any other party, the services of any person, including any of
the Company's employees, who were providing services to or on behalf of
the Company while Executive was employed by the Company and to whom
Executive has been introduced or about whom Executive has received
information through Employer or through any Client for which Executive
has performed services in any capacity on behalf of the Company;
(5) Engage in any practice, the purpose of which is to evade
the provisions of this Agreement or to commit any act which is
detrimental to the successful continuation of or which adversely
affects the business or the Company; provided, however, that the
foregoing shall not preclude the Executive's ownership of not more than
2% of the equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended; or
(6) For purpose of these Covenant Not-to-Compete and No
Solicitation provisions, Client includes any subsidiaries, affiliates,
customers, and clients of the Company's Clients. The Executive agrees
that the geographic scope of this Covenant Not-to-Compete shall extend
to the geographic area where the Company's Clients conduct business at
any time during the Term of this Agreement. For purposes of this
Agreement, "Clients" means any person or entity to which the Company
provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for
the furtherance of such entity's or person's business or any person or
entity that within such period of one (1) year the Company has pursued
or communicated with for the purpose of obtaining business for the
Company.
<PAGE> 4
(d) Enforcement. These Covenant Not-to-Compete and No Solicitation
provisions shall be construed and enforced under the laws of the State of
Florida. In the event of any breach of this Covenant Not-to-Compete, the
Executive recognizes that the remedies at law will be inadequate, and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this Covenant Not-to-Compete, and the
duration of this Covenant Not-to-Compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this Covenant Not-to-Compete. In the event a court of competent jurisdiction
determines that the provisions of this Covenant Not-to-Compete are excessively
broad as to duration, geographic scope, prohibited activities or otherwise, the
parties agree that this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
(e) In an action to enforce or challenge these Covenant
Not-to-Compete and No Solicitation provisions, the prevailing party is entitled
to recover its attorney's fees and costs.
(f) By signing this Agreement, the Executive acknowledges that
he/she understands the effects of these Covenant Not-to-Compete and No
Solicitation provisions and agrees to abide by them.
6. TERMINATION
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If during the Term the Executive becomes physically
or mentally disabled in accordance with the terms and conditions of any
disability insurance policy covering the Executive, or, if due to such physical
or mental disability the Executive becomes unable for a period of more than six
(6) consecutive months to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Executive's employment hereunder
upon not less than thirty (30) days' written notice.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive engages in conduct which has caused
or is reasonably likely to cause demonstrable and serious injury to Company;
(ii) if the Executive is convicted of a felony as evidenced by a binding and
final judgment, order, or decree of a court of competent jurisdiction; (iii) for
the Executive's neglect of his duties hereunder or the Executive's refusal to
perform his duties or responsibilities hereunder as determined by the Company's
Board of Directors in good faith; (iv) consistent failure to achieve goals
established by the Board of Directors or their designate; (v) gross
incompetence; (vi) for the Executive's violation of this Agreement, including,
without limitation, Section 5 hereof; (vii) chronic absenteeism; (viii) for use
of illegal drugs; (ix) insobriety by the Executive while performing his or her
duties hereunder; and (x) for any act of dishonesty or falsification of reports,
records, or information submitted by the Executive to the Company.
(d) Non-Compete Payment and Liquidated Damages. In the event of a
termination of the Executive's employment pursuant to Section 6 or by the
Executive, all payments and Company benefits to the Executive hereunder, except
the payments (if any) provided below, shall immediately cease and terminate. In
the event of a termination by the Company of the Executive's employment with the
Company for any reason other than pursuant to Section 6(c), the Company shall
pay the Executive Liquidated Damages as defined in (e) below for early
termination of his employment and the Covenant Not-to-Compete set forth in
Section 5 hereof shall remain in full force and effect through the full stated
Term of this Agreement; and additionally, from the end of the Term of this
Agreement through the non-compete period stated on Exhibit "A", the Company
shall pay the Executive Not-to-Compete pay in equal biweekly installments
("Non-Compete Payment Installments") in the amount set forth on Exhibit A
("Non-Compete Payment"). Such Non-Compete Payment, however, shall not be
required to be paid by the Company if the Company elects, in its sole
discretion, to release the Executive from the Covenant Not-to-Compete set forth
in Section 5 hereof. Additionally, if the Company commences paying Executive
Non-Compete Payment Installments and subsequently elects in the future, in its
sole discretion, to release Executive from the Covenant Not-to-Compete and gives
notice to Executive, then, at the effective date of such notice, Executive shall
no longer be subject to the Covenant Not-to-Compete, and no further Non-Compete
Payment Installments shall be due or payable to Executive. If the Company
terminates the Executive's employment pursuant to Section 6(c) or the Executive
terminates such employment, the Executive shall not be entitled to the
Non-Compete Payment, and the Covenant Not-to-Compete set forth in Section 5
hereof shall remain in full force and effect. Notwithstanding anything to the
contrary herein contained, the Executive shall receive all compensation and
other benefits to which he was entitled under this Agreement or otherwise as an
executive of the Company through the termination date.
(e) The Liquidated Damages amount, if due as provided above, shall
be equal to the weekly amount stated on Exhibit A times the number of weeks
remaining between the early termination date and the end of Term as stated on
Exhibit A ("Liquidated Damages"). This amount shall be paid biweekly in equal
installments over such period.
<PAGE> 5
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission, or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page.
If to the Company: Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. ENFORCEMENT, GOVERNING LAW, AND ATTORNEY'S FEES. It is stipulated
that a breach by Executive of the restrictive covenants set forth in Sections 4
and 5 of this Agreement will cause irreparable damage to Company or its Clients,
and that in the event of any breach of those provisions, Company is entitled to
injunctive relief restraining Executive from violating or continuing a violation
of the restrictive covenants as well as other remedies it may have.
Additionally, such covenants shall be enforceable against the Executive's
successors or assigns or by successor assigns.
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Florida. Any
litigation to enforce this Agreement shall be brought in the state or federal
courts of Hillsborough County, Florida, which is the principal place of business
for Company and which is considered to be the place where this Agreement is
made. Both parties hereby consent to such courts' exercise of personal
jurisdiction over them.
Except where required, to enforce the restrictive covenants
regarding Not-to-Compete, No Solicitation, and Confidential Information, as
provided in Sections 4 and 5 of this Agreement, Company and the Executive will
each pay their own attorney's fees and costs in the event Company or the
Executive must enforce any of the other rights granted to them, regardless of
the outcome of any action seeking to enforce rights under this Agreement.
9. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, that the terms of the performance bonus and
fringe benefits set forth or Exhibit A may be amended by the Company in its
discretion without the Executive's consent to the extent provided therein. No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or at
any prior or subsequent time. This Agreement is the entire agreement between the
parties hereto with respect to the Executive's employment by the Company and
there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which are
not set forth in this Agreement. Any prior agreement relating to the Executive's
employment with the Company is hereby superseded and void, and is no longer in
effect. This Agreement shall be binding upon and inure to the benefit of the
Company, its respective successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives. Except as expressly set
forth herein, no party shall assign any of his or its rights under this
Agreement without the prior written consent of the other party and any attempted
assignment without such prior written consent shall be null and void and without
legal effect. The parties agree that if any provision of this Agreement shall
under any circumstances be deemed invalid or inoperative, the Agreement shall be
construed with the invalid or inoperative provision deleted and the rights and
obligations of the parties shall be construed and enforced accordingly. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute but one and
the same instrument. This Agreement has been negotiated and no party shall be
considered as being responsible for such drafting for the purpose of applying
any rule construing ambiguities against the drafter or otherwise.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By: _________________________________ ______________________________________
Gerry L. Rogers
Address:
______________________________________
______________________________________
<PAGE> 7
Gerry L Rogers
Group Executive
Senior Vice President
Americas
EXHIBIT A TO EMPLOYMENT AGREEMENT
This Exhibit A is attached to and made a part of that certain
Employment Agreement dated effective March 1, 2000, entered into by and between
Sykes Enterprises, Incorporated (the "Company") and Gerry L. Rogers (the
"Executive," which supercedes and replaces that certain Employment Agreement
dated January 21, 1999 entered into by and between the Company and the
Executive.
TERM: Two (2) Years, commencing March 1, 2000.
BASE SALARY $3,728.02 per week
PERFORMANCE BONUS: 0% to 50% of annual Base Salary (See Attachment I)
FRINGE BENEFITS: Standard fringe benefits for executives
TERM OF COVENANT
NOT TO COMPETE: 12 months
NON-COMPETE PAYMENT: $1,800.00 per week for 52 weeks
LIQUIDATED DAMAGES $1,800.00 per week
THE COMPANY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, AT SUCH TIME OR TIMES AS
IT ELECTS, TO CHANGE OR ELIMINATE BONUSES OR OTHER BENEFITS.
IN WITNESS WHEREOF, the parties have executed this Exhibit A to the
Employment Agreement as of the ___ day of _____________, 2000.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By:________________________________ ___________________________________
<PAGE> 1
Exhibit 10.8
EMPLOYMENT AGREEMENT
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT DESCRIBES THE BASIC LEGAL
AND ETHICAL RESPONSIBILITIES THAT YOU ARE REQUIRED TO OBSERVE AS AN EXECUTIVE
EXPOSED TO HIGHLY SENSITIVE TECHNOLOGY AND STRATEGIC INFORMATION. CONSULT WITH
YOUR LEGAL COUNSEL IF ALL THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE NOT
FULLY UNDERSTOOD BY YOU.
THIS AGREEMENT is made as of the 1st day of March, 2000, by and between
SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"), and
JAMES E. LAMAR (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) in such management capacities as may be assigned from time
to time by the Company. The Executive accepts such employment and agrees to
devote his best efforts and entire business time, skill, labor, and attention to
the performance of such duties. The Executive agrees to promptly provide a
description of any other commercial duties or pursuits engaged in by the
Executive to the Company's Board of Directors. If the Board of Directors
determines in good faith that such activities conflict with the Executive's
performance of his duties hereunder, the Executive shall promptly cease such
activities to the extent as directed by the Board of Directors. It is
acknowledged and agreed that such description shall be made regarding any such
activities in which the Executive owns more than 5% of the ownership of the
organization or which may be in violation of Section 5 hereof, and that the
failure of the Executive to provide any such description shall enable the
Company to terminate the Executive for Cause (as provided in Section 6(c)
hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such benefits
and additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions for termination set forth in
Section 6 hereof, the employment of the Executive under this Agreement shall
commence on the effective date hereof and shall continue through and including
the close of business on the date hereof as set forth on Exhibit A attached
hereto and incorporated herein (such term shall herein be defined as the
"Term"). The Executive agrees that some portions of this Agreement, including
Sections 4, 5, and 6 hereof, will remain in force after the termination of this
Agreement.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Agreement, the Executive shall receive and the Company shall
pay a weekly base salary set forth on Exhibit A. Such base salary may be
increased but not decreased during the Term in the Company's discretion based
upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives. In addition to such base salary, the
Executive shall be entitled during the Term to a performance bonus set forth on
Exhibit A and to participate in and receive payments from, at the Company's
election, other bonus and other incentive compensation plans, if any, as may be
adopted by the Company.
(b) Payments. All amounts paid pursuant to this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the Company
for all reasonable and customary travel and other business expenses incurred by
the Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as may be set forth on Exhibit A and shall be eligible to
participate in such pension, life insurance, health insurance, disability
insurance, and other executive benefits plans, if any, which the Company may
from time to time make available to its executive officers generally.
<PAGE> 2
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of the Company,
including, without limitation, confidential information with respect to the
Company's technical data, research and development projects, methods, products,
software, financial data, business plans, financial plans, customer lists,
business methodology, processes, production methods and techniques, promotional
materials and information, and other similar matters treated by the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any Confidential Information obtained by the
Executive while in the employ of the Company.
(b) The Executive agrees that all memoranda; notes; records; papers
or other documents; computer disks; computer, video or audio tapes; CD-ROMs; all
other media and all copies thereof relating to the Company's operations or
business, some of which may be prepared by the Executive; and all objects
associated therewith in any way obtained by the Executive shall be the Company's
property. This shall include, but is not limited to, documents; computer disks;
computer, video and audio tapes; CD-ROMs; all other media and objects concerning
any technical data, methods, products, software, research and development
projects, financial data, financial plans, business plans, customer lists,
contracts, price lists, manuals, mailing lists, advertising materials; and all
other materials and records of any kind that may be in the Executive's
possession or under the Executive's control. The Executive shall not, except for
the Company's use, copy or duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities, nor use any information
concerning them except for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees that the Executive
will deliver all of the aforementioned documents and objects, if any, that may
be in the Executive's possession to the Company upon termination of the
Executive's employment, or at any other time at the Company's request.
(c) In any action to enforce or challenge these Confidential
Information provisions, the prevailing party is entitled to recover its
attorney's fees and costs.
5. COVENANT NOT-TO-COMPETE AND NO SOLICITATION. Executive recognizes
that the Company is in the business of employing individuals to provide
specialized and technical services to the Company's Clients. The purpose of
these Covenant Not-to-Compete and No Solicitation provisions are to protect the
relationship which exists between the Company and its Client while Executive is
employed and after Executive leaves the employ of the Company. The consideration
for these Covenant Not-to-Compete and No Solicitation provisions is the
Executive's employment with the Company.
(a) Executive acknowledges the following:
(1) The Company expended considerable resources in obtaining
contracts with its Clients;
(2) The Company expended considerable resources to recruit and
hire employees who could perform services for its Clients;
(3) Through his/her employ with the Company, Executive will
develop a substantial relationship with the Company's existing or
potential Clients, including, but not limited to, being the sole or
primary contact between the Client and the Company;
(4) Executive will be exposed to valuable confidential
business information about the Company, its Clients, and the Company's
relationship with its Client;
(5) By providing services on behalf of the Company, Executive
will develop and enhance the valuable business relationship between the
Company and its Client;
(6) The relationship between the Company and its Clients
depends on the quality and quantity of the services Executive performs;
(7) Through employment with the Company, Executive will
increase his/her opportunity to work directly for the Clients or for a
competitor of the Company; and
(8) The Company will suffer irreparable harm if Executive
breaches these Covenant Not-to-Compete and No Solicitation provisions
of this Agreement.
<PAGE> 3
(b) Executive agrees that:
(1) The relationship between the Company and its Client
(developed and enhanced when the Executive performs services on behalf
of the Company) is a legitimate business interest for the Company to
protect;
(2) The Company's legitimate business interest is protected by
the existence and enforcement of these Covenant Not-to-Compete and No
Solicitation provisions;
(3) The business relationship which is created or exists
between the Company and its Client, or the goodwill resulting from it,
is a business asset of the Company and not the Executive; and
(4) Executive will not seek to take advantage of opportunities
which result from his/her employment with the Company and that entering
into the Agreement containing Covenant Not-to-Compete and No
Solicitation provisions is reasonable to protect the Company's business
relationship with its Clients.
(c) Restrictions on Executive. During the term of this Agreement and
for a period of time set forth on Exhibit A after the termination of this
Agreement, for whatever reason, whether such termination was by the Company or
the Executive, voluntarily or involuntarily, and whether with or without cause,
Executive agrees that he/she shall not, as a principal, employer, stockholder,
partner, agent, consultant, independent contractor, employee, or in any other
individual or representative capacity:
(1) Directly or indirectly engage in, continue in, or carry on
the business of the Company or any business substantially similar
thereto, including owning or controlling any financial interest in any
corporation, partnership, firm, or other form of business organization
which competes with or is engaged in or carries on any aspect of such
business or any business substantially similar thereto;
(2) Consult with, advise, or assist in any way, whether or not
for consideration, any corporation, partnership, firm, or other
business organization which is now, becomes, or may become a competitor
of the Company in any aspect of the Company's business during the
Executive's employment with the Company, including, but not limited to,
advertising or otherwise endorsing the products of any such competitor
or loaning money or rendering any other form of financial assistance to
or engaging in any form of transaction whether or not on an arm's
length basis with any such competitor;
(3) Provide or attempt to provide or solicit the opportunity
to provide or advise others of the opportunity to provide any services
of the type Executive performed for the Company or the Company's
Clients (regardless of whether and how such services are to be
compensated, whether on a salaried, time and materials, contingent
compensation, or other basis) to or for the benefit of any Client (i)
to which Executive has provided services in any capacity on behalf of
the Company, or (ii) to which Executive has been introduced to or about
which the Executive has received information through the Company or
through any Client from which Executive has performed services in any
capacity on behalf of the Company;
(4) Retain or attempt to retain, directly or indirectly, for
itself or any other party, the services of any person, including any of
the Company's employees, who were providing services to or on behalf of
the Company while Executive was employed by the Company and to whom
Executive has been introduced or about whom Executive has received
information through Employer or through any Client for which Executive
has performed services in any capacity on behalf of the Company;
(5) Engage in any practice, the purpose of which is to evade
the provisions of this Agreement or to commit any act which is
detrimental to the successful continuation of or which adversely
affects the business or the Company; provided, however, that the
foregoing shall not preclude the Executive's ownership of not more than
2% of the equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended; or
(6) For purpose of these Covenant Not-to-Compete and No
Solicitation provisions, Client includes any subsidiaries, affiliates,
customers, and clients of the Company's Clients. The Executive agrees
that the geographic scope of this Covenant Not-to-Compete shall extend
to the geographic area where the Company's Clients conduct business at
any time during the Term of this Agreement. For purposes of this
Agreement, "Clients" means any person or entity to which the Company
provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for
the furtherance of such entity's or person's business or any person or
entity that within such period of one (1) year the Company has pursued
or communicated with for the purpose of obtaining business for the
Company.
<PAGE> 4
(d) Enforcement. These Covenant Not-to-Compete and No Solicitation
provisions shall be construed and enforced under the laws of the State of
Florida. In the event of any breach of this Covenant Not-to-Compete, the
Executive recognizes that the remedies at law will be inadequate, and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this Covenant Not-to-Compete, and the
duration of this Covenant Not-to-Compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this Covenant Not-to-Compete. In the event a court of competent jurisdiction
determines that the provisions of this Covenant Not-to-Compete are excessively
broad as to duration, geographic scope, prohibited activities or otherwise, the
parties agree that this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
(e) In an action to enforce or challenge these Covenant
Not-to-Compete and No Solicitation provisions, the prevailing party is entitled
to recover its attorney's fees and costs.
(f) By signing this Agreement, the Executive acknowledges that
he/she understands the effects of these Covenant Not-to-Compete and No
Solicitation provisions and agrees to abide by them.
6. TERMINATION
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If during the Term the Executive becomes physically
or mentally disabled in accordance with the terms and conditions of any
disability insurance policy covering the Executive, or, if due to such physical
or mental disability the Executive becomes unable for a period of more than six
(6) consecutive months to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Executive's employment hereunder
upon not less than thirty (30) days' written notice.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive engages in conduct which has caused
or is reasonably likely to cause demonstrable and serious injury to Company;
(ii) if the Executive is convicted of a felony as evidenced by a binding and
final judgment, order, or decree of a court of competent jurisdiction; (iii) for
the Executive's neglect of his duties hereunder or the Executive's refusal to
perform his duties or responsibilities hereunder as determined by the Company's
Board of Directors in good faith; (iv) consistent failure to achieve goals
established by the Board of Directors or their designate; (v) gross
incompetence; (vi) for the Executive's violation of this Agreement, including,
without limitation, Section 5 hereof; (vii) chronic absenteeism; (viii) for use
of illegal drugs; (ix) insobriety by the Executive while performing his or her
duties hereunder; and (x) for any act of dishonesty or falsification of reports,
records, or information submitted by the Executive to the Company.
(d) Non-Compete Payment and Liquidated Damages. In the event of a
termination of the Executive's employment pursuant to Section 6 or by the
Executive, all payments and Company benefits to the Executive hereunder, except
the payments (if any) provided below, shall immediately cease and terminate. In
the event of a termination by the Company of the Executive's employment with the
Company for any reason other than pursuant to Section 6(c), the Company shall
pay the Executive Liquidated Damages as defined in (e) below for early
termination of his employment and the Covenant Not-to-Compete set forth in
Section 5 hereof shall remain in full force and effect through the full stated
Term of this Agreement; and additionally, from the end of the Term of this
Agreement through the non-compete period stated on Exhibit "A", the Company
shall pay the Executive Not-to-Compete pay in equal biweekly installments
("Non-Compete Payment Installments") in the amount set forth on Exhibit A
("Non-Compete Payment"). Such Non-Compete Payment, however, shall not be
required to be paid by the Company if the Company elects, in its sole
discretion, to release the Executive from the Covenant Not-to-Compete set forth
in Section 5 hereof. Additionally, if the Company commences paying Executive
Non-Compete Payment Installments and subsequently elects in the future, in its
sole discretion, to release Executive from the Covenant Not-to-Compete and gives
notice to Executive, then, at the effective date of such notice, Executive shall
no longer be subject to the Covenant Not-to-Compete, and no further Non-Compete
Payment Installments shall be due or payable to Executive. If the Company
terminates the Executive's employment pursuant to Section 6(c) or the Executive
terminates such employment, the Executive shall not be entitled to the
Non-Compete Payment, and the Covenant Not-to-Compete set forth in Section 5
hereof shall remain in full force and effect. Notwithstanding anything to the
contrary herein contained, the Executive shall receive all compensation and
other benefits to which he was entitled under this Agreement or otherwise as an
executive of the Company through the termination date.
(e) The Liquidated Damages amount, if due as provided above, shall
be equal to the weekly amount stated on Exhibit A times the number of weeks
remaining between the early termination date and the end of Term as stated on
Exhibit A ("Liquidated Damages"). This amount shall be paid biweekly in equal
installments over such period.
<PAGE> 5
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission, or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page.
If to the Company: Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. ENFORCEMENT, GOVERNING LAW, AND ATTORNEY'S FEES. It is stipulated
that a breach by Executive of the restrictive covenants set forth in Sections 4
and 5 of this Agreement will cause irreparable damage to Company or its Clients,
and that in the event of any breach of those provisions, Company is entitled to
injunctive relief restraining Executive from violating or continuing a violation
of the restrictive covenants as well as other remedies it may have.
Additionally, such covenants shall be enforceable against the Executive's
successors or assigns or by successor assigns.
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Florida. Any
litigation to enforce this Agreement shall be brought in the state or federal
courts of Hillsborough County, Florida, which is the principal place of business
for Company and which is considered to be the place where this Agreement is
made. Both parties hereby consent to such courts' exercise of personal
jurisdiction over them.
Except where required, to enforce the restrictive covenants
regarding Not-to-Compete, No Solicitation, and Confidential Information, as
provided in Sections 4 and 5 of this Agreement, Company and the Executive will
each pay their own attorney's fees and costs in the event Company or the
Executive must enforce any of the other rights granted to them, regardless of
the outcome of any action seeking to enforce rights under this Agreement.
9. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, that the terms of the performance bonus and
fringe benefits set forth or Exhibit A may be amended by the Company in its
discretion without the Executive's consent to the extent provided therein. No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or at
any prior or subsequent time. This Agreement is the entire agreement between the
parties hereto with respect to the Executive's employment by the Company and
there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which are
not set forth in this Agreement. Any prior agreement relating to the Executive's
employment with the Company is hereby superseded and void, and is no longer in
effect. This Agreement shall be binding upon and inure to the benefit of the
Company, its respective successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives. Except as expressly set
forth herein, no party shall assign any of his or its rights under this
Agreement without the prior written consent of the other party and any attempted
assignment without such prior written consent shall be null and void and without
legal effect. The parties agree that if any provision of this Agreement shall
under any circumstances be deemed invalid or inoperative, the Agreement shall be
construed with the invalid or inoperative provision deleted and the rights and
obligations of the parties shall be construed and enforced accordingly. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute but one and
the same instrument. This Agreement has been negotiated and no party shall be
considered as being responsible for such drafting for the purpose of applying
any rule construing ambiguities against the drafter or otherwise.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By: _________________________________ ______________________________________
James A. Lamar
Address:
______________________________________
______________________________________
<PAGE> 7
James E. Lamar
Group Executive
Senior Vice President
International
EXHIBIT A TO EMPLOYMENT AGREEMENT
This Exhibit A is attached to and made a part of that certain
Employment Agreement dated effective March 1, 2000, entered into by and between
Sykes Enterprises, Incorporated (the "Company") and James E. Lamar (the
"Executive," which supercedes and replaces that certain Employment Agreement
dated April 20, 1999 entered into by and between the Company and the Executive.
TERM: Two (2) Years, commencing March 1, 2000.
BASE SALARY $4,070.79 per week
PERFORMANCE BONUS: 0% to 50% of annual Base Salary (See Attachment I)
FRINGE BENEFITS: Standard fringe benefits for executives
TERM OF COVENANT
NOT TO COMPETE: 12 months
NON-COMPETE PAYMENT: $2,035.00 per week for 52 weeks
LIQUIDATED DAMAGES $2,035.00 per week
THE COMPANY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, AT SUCH TIME OR TIMES AS
IT ELECTS, TO CHANGE OR ELIMINATE BONUSES OR OTHER BENEFITS.
IN WITNESS WHEREOF, the parties have executed this Exhibit A to the
Employment Agreement as of the ___ day of _____________, 2000.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By:________________________________ ___________________________________
<PAGE> 1
Exhibit 10.9
EMPLOYMENT AGREEMENT
PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT DESCRIBES THE BASIC LEGAL
AND ETHICAL RESPONSIBILITIES THAT YOU ARE REQUIRED TO OBSERVE AS AN EXECUTIVE
EXPOSED TO HIGHLY SENSITIVE TECHNOLOGY AND STRATEGIC INFORMATION. CONSULT WITH
YOUR LEGAL COUNSEL IF ALL THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE NOT
FULLY UNDERSTOOD BY YOU.
THIS AGREEMENT is made as of the 1st day of March, 2000, by and between
SYKES ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"), and
CHARLES E. SYKES (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) in such management capacities as may be assigned from time
to time by the Company. The Executive accepts such employment and agrees to
devote his best efforts and entire business time, skill, labor, and attention to
the performance of such duties. The Executive agrees to promptly provide a
description of any other commercial duties or pursuits engaged in by the
Executive to the Company's Board of Directors. If the Board of Directors
determines in good faith that such activities conflict with the Executive's
performance of his duties hereunder, the Executive shall promptly cease such
activities to the extent as directed by the Board of Directors. It is
acknowledged and agreed that such description shall be made regarding any such
activities in which the Executive owns more than 5% of the ownership of the
organization or which may be in violation of Section 5 hereof, and that the
failure of the Executive to provide any such description shall enable the
Company to terminate the Executive for Cause (as provided in Section 6(c)
hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such benefits
and additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions for termination set forth in
Section 6 hereof, the employment of the Executive under this Agreement shall
commence on the effective date hereof and shall continue through and including
the close of business on the date hereof as set forth on Exhibit A attached
hereto and incorporated herein (such term shall herein be defined as the
"Term"). The Executive agrees that some portions of this Agreement, including
Sections 4, 5, and 6 hereof, will remain in force after the termination of this
Agreement.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Agreement, the Executive shall receive and the Company shall
pay a weekly base salary set forth on Exhibit A. Such base salary may be
increased but not decreased during the Term in the Company's discretion based
upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives. In addition to such base salary, the
Executive shall be entitled during the Term to a performance bonus set forth on
Exhibit A and to participate in and receive payments from, at the Company's
election, other bonus and other incentive compensation plans, if any, as may be
adopted by the Company.
(b) Payments. All amounts paid pursuant to this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the Company
for all reasonable and customary travel and other business expenses incurred by
the Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as may be set forth on Exhibit A and shall be eligible to
participate in such pension, life insurance, health insurance, disability
insurance, and other executive benefits plans, if any, which the Company may
from time to time make available to its executive officers generally.
<PAGE> 2
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of the Company,
including, without limitation, confidential information with respect to the
Company's technical data, research and development projects, methods, products,
software, financial data, business plans, financial plans, customer lists,
business methodology, processes, production methods and techniques, promotional
materials and information, and other similar matters treated by the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any Confidential Information obtained by the
Executive while in the employ of the Company.
(b) The Executive agrees that all memoranda; notes; records; papers
or other documents; computer disks; computer, video or audio tapes; CD-ROMs; all
other media and all copies thereof relating to the Company's operations or
business, some of which may be prepared by the Executive; and all objects
associated therewith in any way obtained by the Executive shall be the Company's
property. This shall include, but is not limited to, documents; computer disks;
computer, video and audio tapes; CD-ROMs; all other media and objects concerning
any technical data, methods, products, software, research and development
projects, financial data, financial plans, business plans, customer lists,
contracts, price lists, manuals, mailing lists, advertising materials; and all
other materials and records of any kind that may be in the Executive's
possession or under the Executive's control. The Executive shall not, except for
the Company's use, copy or duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities, nor use any information
concerning them except for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees that the Executive
will deliver all of the aforementioned documents and objects, if any, that may
be in the Executive's possession to the Company upon termination of the
Executive's employment, or at any other time at the Company's request.
(c) In any action to enforce or challenge these Confidential
Information provisions, the prevailing party is entitled to recover its
attorney's fees and costs.
5. COVENANT NOT-TO-COMPETE AND NO SOLICITATION. Executive recognizes
that the Company is in the business of employing individuals to provide
specialized and technical services to the Company's Clients. The purpose of
these Covenant Not-to-Compete and No Solicitation provisions are to protect the
relationship which exists between the Company and its Client while Executive is
employed and after Executive leaves the employ of the Company. The consideration
for these Covenant Not-to-Compete and No Solicitation provisions is the
Executive's employment with the Company.
(a) Executive acknowledges the following:
(1) The Company expended considerable resources in obtaining
contracts with its Clients;
(2) The Company expended considerable resources to recruit and
hire employees who could perform services for its Clients;
(3) Through his/her employ with the Company, Executive will
develop a substantial relationship with the Company's existing or
potential Clients, including, but not limited to, being the sole or
primary contact between the Client and the Company;
(4) Executive will be exposed to valuable confidential
business information about the Company, its Clients, and the Company's
relationship with its Client;
(5) By providing services on behalf of the Company, Executive
will develop and enhance the valuable business relationship between the
Company and its Client;
(6) The relationship between the Company and its Client
depends on the quality and quantity of the services Executive performs;
(7) Through employment with the Company, Executive will
increase his/her opportunity to work directly for the Client or for a
competitor of the Company; and
(8) The Company will suffer irreparable harm if Executive
breaches these Covenant Not-to-Compete and No Solicitation provisions
of this Agreement.
<PAGE> 3
(b) Executive agrees that:
(1) The relationship between the Company and its Client
(developed and enhanced when the Executive performs services on behalf
of the Company) is a legitimate business interest for the Company to
protect;
(2) The Company's legitimate business interest is protected by
the existence and enforcement of these Covenant Not-to-Compete and No
Solicitation provisions;
(3) The business relationship which is created or exists
between the Company and its Client, or the goodwill resulting from it,
is a business asset of the Company and not the Executive; and
(4) Executive will not seek to take advantage of opportunities
which result from his/her employment with the Company and that entering
into the Agreement containing Covenant Not-to-Compete and No
Solicitation provisions is reasonable to protect the Company's business
relationship with its Clients.
(c) Restrictions on Executive. During the term of this Agreement and
for a period of time set forth on Exhibit A after the termination of this
Agreement, for whatever reason, whether such termination was by the Company or
the Executive, voluntarily or involuntarily, and whether with or without cause,
Executive agrees that he/she shall not, as a principal, employer, stockholder,
partner, agent, consultant, independent contractor, employee, or in any other
individual or representative capacity:
(1) Directly or indirectly engage in, continue in, or carry on
the business of the Company or any business substantially similar
thereto, including owning or controlling any financial interest in any
corporation, partnership, firm, or other form of business organization
which competes with or is engaged in or carries on any aspect of such
business or any business substantially similar thereto;
(2) Consult with, advise, or assist in any way, whether or not
for consideration, any corporation, partnership, firm, or other
business organization which is now, becomes, or may become a competitor
of the Company in any aspect of the Company's business during the
Executive's employment with the Company, including, but not limited to,
advertising or otherwise endorsing the products of any such competitor
or loaning money or rendering any other form of financial assistance to
or engaging in any form of transaction whether or not on an arm's
length basis with any such competitor;
(3) Provide or attempt to provide or solicit the opportunity
to provide or advise others of the opportunity to provide any services
of the type Executive performed for the Company or the Company's
Clients (regardless of whether and how such services are to be
compensated, whether on a salaried, time and materials, contingent
compensation, or other basis) to or for the benefit of any Client (i)
to which Executive has provided services in any capacity on behalf of
the Company, or (ii) to which Executive has been introduced to or about
which the Executive has received information through the Company or
through any Client from which Executive has performed services in any
capacity on behalf of the Company;
(4) Retain or attempt to retain, directly or indirectly, for
itself or any other party, the services of any person, including any of
the Company's employees, who were providing services to or on behalf of
the Company while Executive was employed by the Company and to whom
Executive has been introduced or about whom Executive has received
information through Employer or through any Client for which Executive
has performed services in any capacity on behalf of the Company;
(5) Engage in any practice, the purpose of which is to evade
the provisions of this Agreement or to commit any act which is
detrimental to the successful continuation of or which adversely
affects the business or the Company; provided, however, that the
foregoing shall not preclude the Executive's ownership of not more than
2% of the equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended; or
(6) For purpose of these Covenant Not-to-Compete and No
Solicitation provisions, Client includes any subsidiaries, affiliates,
customers, and clients of the Company's Clients. The Executive agrees
that the geographic scope of this Covenant Not-to-Compete shall extend
to the geographic area where the Company's Clients conduct business at
any time during the Term of this Agreement. For purposes of this
Agreement, "Clients" means any person or entity to which the Company
provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for
the furtherance of such entity's or person's business or any person or
entity that within such period of one (1) year the Company has pursued
or communicated with for the purpose of obtaining business for the
Company.
<PAGE> 4
(d) Enforcement. These Covenant Not-to-Compete and No Solicitation
provisions shall be construed and enforced under the laws of the State of
Florida. In the event of any breach of this Covenant Not-to-Compete, the
Executive recognizes that the remedies at law will be inadequate, and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this Covenant Not-to-Compete, and the
duration of this Covenant Not-to-Compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this Covenant Not-to-Compete. In the event a court of competent jurisdiction
determines that the provisions of this Covenant Not-to-Compete are excessively
broad as to duration, geographic scope, prohibited activities or otherwise, the
parties agree that this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
(e) In an action to enforce or challenge these Covenant
Not-to-Compete and No Solicitation provisions, the prevailing party is entitled
to recover its attorney's fees and costs.
(f) By signing this Agreement, the Executive acknowledges that
he/she understands the effects of these Covenant Not-to-Compete and No
Solicitation provisions and agrees to abide by them.
6. TERMINATION
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If during the Term the Executive becomes physically
or mentally disabled in accordance with the terms and conditions of any
disability insurance policy covering the Executive, or, if due to such physical
or mental disability the Executive becomes unable for a period of more than six
(6) consecutive months to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Executive's employment hereunder
upon not less than thirty (30) days' written notice.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive engages in conduct which has caused
or is reasonably likely to cause demonstrable and serious injury to Company;
(ii) if the Executive is convicted of a felony as evidenced by a binding and
final judgment, order, or decree of a court of competent jurisdiction; (iii) for
the Executive's neglect of his duties hereunder or the Executive's refusal to
perform his duties or responsibilities hereunder as determined by the Company's
Board of Directors in good faith; (iv) consistent failure to achieve goals
established by the Board of Directors or their designate; (v) gross
incompetence; (vi) for the Executive's violation of this Agreement, including,
without limitation, Section 5 hereof; (vii) chronic absenteeism; (viii) for use
of illegal drugs; (ix) insobriety by the Executive while performing his or her
duties hereunder; and (x) for any act of dishonesty or falsification of reports,
records, or information submitted by the Executive to the Company.
(d) Non-Compete Payment and Liquidated Damages. In the event of a
termination of the Executive's employment pursuant to Section 6 or by the
Executive, all payments and Company benefits to the Executive hereunder, except
the payments (if any) provided below, shall immediately cease and terminate. In
the event of a termination by the Company of the Executive's employment with the
Company for any reason other than pursuant to Section 6(c), the Company shall
pay the Executive Liquidated Damages as defined in (e) below for early
termination of his employment and the Covenant Not-to-Compete set forth in
Section 5 hereof shall remain in full force and effect through the full stated
Term of this Agreement; and additionally, from the end of the Term of this
Agreement through the non-compete period stated on Exhibit "A", the Company
shall pay the Executive Not-to-Compete pay in equal biweekly installments
("Non-Compete Payment Installments") in the amount set forth on Exhibit A
("Non-Compete Payment"). Such Non-Compete Payment, however, shall not be
required to be paid by the Company if the Company elects, in its sole
discretion, to release the Executive from the Covenant Not-to-Compete set forth
in Section 5 hereof. Additionally, if the Company commences paying Executive
Non-Compete Payment Installments and subsequently elects in the future, in its
sole discretion, to release Executive from the Covenant Not-to-Compete and gives
notice to Executive, then, at the effective date of such notice, Executive shall
no longer be subject to the Covenant Not-to-Compete, and no further Non-Compete
Payment Installments shall be due or payable to Executive. If the Company
terminates the Executive's employment pursuant to Section 6(c) or the Executive
terminates such employment, the Executive shall not be entitled to the
Non-Compete Payment, and the Covenant Not-to-Compete set forth in Section 5
hereof shall remain in full force and effect. Notwithstanding anything to the
contrary herein contained, the Executive shall receive all compensation and
other benefits to which he was entitled under this Agreement or otherwise as an
executive of the Company through the termination date.
(e) The Liquidated Damages amount, if due as provided above, shall
be equal to the weekly amount stated on Exhibit A times the number of weeks
remaining between the early termination date and the end of Term as stated on
Exhibit A ("Liquidated Damages"). This amount shall be paid biweekly in equal
installments over such period.
<PAGE> 5
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission, or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page.
If to the Company: Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, Florida 33602
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. ENFORCEMENT, GOVERNING LAW, AND ATTORNEY'S FEES. It is stipulated
that a breach by Executive of the restrictive covenants set forth in Sections 4
and 5 of this Agreement will cause irreparable damage to Company or its Clients,
and that in the event of any breach of those provisions, Company is entitled to
injunctive relief restraining Executive from violating or continuing a violation
of the restrictive covenants as well as other remedies it may have.
Additionally, such covenants shall be enforceable against the Executive's
successors or assigns or by successor assigns.
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the internal laws of the State of Florida. Any
litigation to enforce this Agreement shall be brought in the state or federal
courts of Hillsborough County, Florida, which is the principal place of business
for Company and which is considered to be the place where this Agreement is
made. Both parties hereby consent to such courts' exercise of personal
jurisdiction over them.
Except where required, to enforce the restrictive covenants
regarding Not-to-Compete, No Solicitation, and Confidential Information, as
provided in Sections 4 and 5 of this Agreement, Company and the Executive will
each pay their own attorney's fees and costs in the event Company or the
Executive must enforce any of the other rights granted to them, regardless of
the outcome of any action seeking to enforce rights under this Agreement.
9. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, that the terms of the performance bonus and
fringe benefits set forth or Exhibit A may be amended by the Company in its
discretion without the Executive's consent to the extent provided therein. No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or at
any prior or subsequent time. This Agreement is the entire agreement between the
parties hereto with respect to the Executive's employment by the Company and
there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which are
not set forth in this Agreement. Any prior agreement relating to the Executive's
employment with the Company is hereby superseded and void, and is no longer in
effect. This Agreement shall be binding upon and inure to the benefit of the
Company, its respective successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives. Except as expressly set
forth herein, no party shall assign any of his or its rights under this
Agreement without the prior written consent of the other party and any attempted
assignment without such prior written consent shall be null and void and without
legal effect. The parties agree that if any provision of this Agreement shall
under any circumstances be deemed invalid or inoperative, the Agreement shall be
construed with the invalid or inoperative provision deleted and the rights and
obligations of the parties shall be construed and enforced accordingly. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute but one and
the same instrument. This Agreement has been negotiated and no party shall be
considered as being responsible for such drafting for the purpose of applying
any rule construing ambiguities against the drafter or otherwise.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By: ___________________________________ _____________________________________
Charles E. Sykes
Address:
_____________________________________
_____________________________________
<PAGE> 7
Charles E. Sykes
Senior Vice President
Marketing and Global Alliances
EXHIBIT A TO EMPLOYMENT AGREEMENT
This Exhibit A is attached to and made a part of that certain
Employment Agreement dated effective March 1, 2000, entered into by and between
Sykes Enterprises, Incorporated (the "Company") and Charles E. Sykes (the
"Executive," which supercedes and replaces that certain Employment Agreement
dated October 6, 1998 entered into by and between the Company and the Executive.
TERM: Two (2) Years, commencing March 1, 2000.
BASE SALARY $2,752.98 per week
PERFORMANCE BONUS: 0% to 50% of annual Base Salary (See Attachment I)
FRINGE BENEFITS: Standard fringe benefits for executives
TERM OF COVENANT
NOT TO COMPETE: 12 months
NON-COMPETE PAYMENT: $1,350.00 per week for 52 weeks
LIQUIDATED DAMAGES $1,350.00 per week
THE COMPANY RESERVES THE RIGHT, AT ITS SOLE DISCRETION, AT SUCH TIME OR TIMES AS
IT ELECTS, TO CHANGE OR ELIMINATE BONUSES OR OTHER BENEFITS.
IN WITNESS WHEREOF, the parties have executed this Exhibit A to the
Employment Agreement as of the ___ day of _____________, 2000.
SYKES ENTERPRISES, INCORPORATED EXECUTIVE
By:________________________________ ___________________________________
<PAGE> 1
Exhibit 10.23
SYKES ENTERPRISES, INCORPORATED
2000 STOCK OPTION PLAN
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
1. PURPOSE OF PLAN...................................................2
2. EFFECTIVE DATE....................................................2
3. DEFINITIONS.......................................................2
4. LIMITS ON OPTIONS.................................................4
5. GRANTING OF OPTIONS...............................................5
6. TERMS OF STOCK OPTIONS............................................5
7. EFFECT OF CHANGES IN CAPITALIZATION...............................7
8. DELIVERY AND PAYMENT FOR SHARES; REPLACEMENT OPTIONS..............8
9. NO CONTINUATION OF EMPLOYMENT AND DISCLAIMER OF RIGHTS............9
10. ADMINISTRATION....................................................9
11. NO RESERVATION OF SHARES.........................................10
12. AMENDMENT OF PLAN................................................10
13. TERMINATION OF PLAN..............................................11
14. LEGAL CONSTRUCTION...............................................11
</TABLE>
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<PAGE> 3
SYKES ENTERPRISES, INCORPORATED
2000 STOCK OPTION PLAN
1. PURPOSE OF PLAN
The purpose of this Plan is to enable Sykes Enterprises, Incorporated
(the "Company") and its Subsidiaries to compete successfully in attracting,
motivating and retaining Employees with outstanding abilities by making it
possible for them to purchase Shares on terms that will give them a direct and
continuing interest in the future success of the businesses of the Company and
its Subsidiaries and encourage them to remain in the employ of the Company or
one or more of its Subsidiaries. Each Option is intended to be an Incentive
Stock Option, except to the extent that (a) any such Option would exceed the
limitations set forth in Section 4.(c) hereof, and (b) for Options specifically
designated at the time of grant as not being Incentive Stock Options.
2. EFFECTIVE DATE
The Plan shall become effective on March 2, 2000, subject to approval
of the Plan by the Company's shareholders within twelve (12) months thereafter.
The grant of any Options under the Plan prior to such shareholder approval
shall be contingent upon such approval.
3. DEFINITIONS
For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means (i) the adoption of a plan of
reorganization, merger, share exchange or consolidation of
the Company with one or more other corporations or other
entities as a result of which the holders of the Shares as a
group would receive less than fifty percent (50%) of the
voting power of the capital stock or other interests of the
surviving or resulting corporation or entity; (ii) the
adoption of a plan of liquidation or the approval of the
dissolution of the Company; (iii) the approval by the Board
of an agreement providing for the sale or transfer (other
than as a security for obligations of the Company or any
Subsidiary) of substantially all of the assets of the
Company, other than a sale or transfer to an entity at least
seventy-five percent (75%) of the combined voting power of
the voting securities of which are owned by persons in
substantially the same proportions as their ownership of the
Company immediately prior to such sale; or (iv) the
acquisition of more than fifty percent (50%) of the
outstanding Shares by any person within the meaning of Rule
- 2-
<PAGE> 4
13(d)(3) under the Exchange Act, if such acquisition is not
preceded by a prior expression of approval by the Board,
provided that the term "person" shall not include (A) the
Company or any of its Subsidiaries, (B) a trustee or other
fiduciary holding securities under an employee benefit plan
of the Company or a Subsidiary, (C) an underwriter
temporarily holding securities pursuant to an offering of
such securities, or (D) a corporation owned directly or
indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of
stock in the Company.
(c) "Code" means the United States Internal Revenue Code of 1986,
as amended, or any successor statute thereto.
(d) "Committee" means the Committee described in Section 9
hereof.
(e) "Employee" means a person who is regularly employed on a
salary basis by the Company or any Subsidiary, including an
officer or director of the Company or any Subsidiary who is
also an employee of the Company or a Subsidiary.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute thereto.
(g) "Fair Market Value" means, with respect to a Share, if the
Shares are then listed and traded on a registered national or
regional securities exchange, or quoted on The National
Association of Securities Dealers' Automated Quotation System
(including The Nasdaq Stock Market's National Market), the
average closing price of a Share on such exchange or
quotation system for the five trading days immediately
preceding the date of grant of an Option, or, if Fair Market
Value is used herein in connection with any event other than
the grant of an Option, then such average closing price for
the five trading days immediately preceding the date of such
event. If the Shares are not traded on a registered
securities exchange or quoted in such a quotation system, the
Committee shall determine the Fair Market Value of a Share.
(h) "Incentive Stock Option" means an option granted under this
Plan and which is an incentive stock option within the
meaning of section 422 of the Code, or the corresponding
provision of any subsequently enacted tax statute.
(i) "Option" means an option granted under this Plan, whether or
not such option is an Incentive Stock Option.
(j) "Optionee" means any person who has been granted an Option
which Option has not expired or been fully exercised or
surrendered.
(k) "Plan" means the Company's 2000 Stock Option Plan.
- 3-
<PAGE> 5
(l) "Rule 16b-3" means Rule 16b-3 promulgated pursuant to Section
16(b) of the Exchange Act, or any successor rule.
(m) "Share" means one share of voting common stock, par value
$.01 per share, of the Company, and such other stock or
securities that may be substituted therefor pursuant to
Section 6 hereof.
(n) "Subsidiary" means any "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
4. LIMITS ON OPTIONS
(a) The total number of Shares with respect to which Options may
be granted under the Plan shall not exceed in the aggregate
4,000,000 Shares, subject to adjustment as provided in
Section 7 hereof. If any Option expires, terminates or is
terminated for any reason prior to its exercise in full, the
Shares that were subject to the unexercised portion of such
Option shall be available for future grants under the Plan.
The Shares to be delivered under the Plan may consist in
whole or in part of authorized but unissued Shares or
treasury Shares.
(b) No Incentive Stock Option shall be granted to any Employee
who at the time such Option is granted, owns capital stock of
the Company possessing more than 10% of the total combined
voting power or value of all classes of capital stock of the
Company or any Subsidiary, determined in accordance with the
provisions of Section 422(b)(6) and 424(d) of the Code,
unless the option price at the time such Incentive Stock
Option is granted is at least 110 percent (110%) of the Fair
Market Value of the Shares subject to the Incentive Stock
Option and such Incentive Stock Option is not exercisable by
its terms after the expiration of five (5) years from the
date of grant.
(c) An Incentive Stock Option shall be granted hereunder only to
the extent that the aggregate Fair Market Value (determined
at the time the Incentive Stock Option is granted) of the
Shares with respect to which such Incentive Stock Option and
any other "incentive stock option" (within the meaning of
Section 422 of the Code) are exercisable for the first time
by any Optionee during any calendar year (under the Plan and
all other plans of the Optionee's employer corporation and
its parent and subsidiary corporations within the meaning of
Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Incentive Stock Options
and any such other "incentive stock options" into account in
the order in which such Incentive Stock Options and any such
other "incentive stock options" were granted.
(d) Except as otherwise determined by the Committee, no Optionee
shall, in any calendar year, be granted Options to purchase
more than 100,000 Shares. Options granted to the Optionee and
cancelled during the same calendar year
- 4-
<PAGE> 6
shall continue to be counted against such maximum number of
Shares. In the event that the number of Options which may be
granted under the Plan is adjusted as provided in Section
7.(a), the above limit shall automatically be adjusted in the
same ratio.
5. GRANTING OF OPTIONS
The Committee is authorized to grant Options to Employees selected by
the Committee pursuant to the Plan beginning on the effective date. Subject to
the provisions of the Plan, the Committee shall have exclusive authority to
select the Employees to whom Options will be awarded under the Plan, to
determine the number of Shares to be included in such Options, to determine the
type of Option, and to determine such other terms and conditions of Options,
including terms and conditions which may be necessary to qualify Incentive
Stock Options as "incentive stock options" under Section 422 of the Code. The
date on which the Committee approves the grant of an Option shall be considered
the date on which such Option is granted, unless the Committee provides for a
specific date of grant which is subsequent to the date of such approval.
6. TERMS OF STOCK OPTIONS
Subject to Section 4 hereof and except as otherwise determined by the
Committee, the terms of Options granted under this Plan shall be as follows:
(a) The exercise price of each Share subject to an Option shall
be fixed by the Committee. Notwithstanding the prior
sentence, the option price of an Incentive Stock Option shall
be fixed by the Committee but shall in no event be less than
100% of the Fair Market Value of the Shares subject to such
Option.
(b) Options shall not be assignable or transferable by the
Optionee other than by will or by the laws of descent and
distribution except that the Optionee may, with the consent
of the Committee, transfer without consideration Options that
do not constitute Incentive Stock Options to the Optionee's
spouse, children or grandchildren (or to one or more trusts
for the benefit of any such family members or to one or more
partnerships in which any such family members are the only
partners). Except as provided herein, no Option, and no right
under any such Option, may be pledged, alienated, attached,
or otherwise encumbered, and any purported pledge,
alienation, attachment, or encumbrance thereof shall be void
and unenforceable against the Company.
(c) Each Option shall expire and all rights thereunder shall end
at the expiration of such period (which shall not be more
than ten (10) years) after the date on which it was granted
as shall be fixed by the Committee, subject in all cases to
earlier expiration as provided in subsections (d) and (e) of
this Section 6.
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<PAGE> 7
(d) During the life of an Optionee, an Option shall be
exercisable only by such Optionee (or Optionee's permitted
assignee in the case of Options that do not constitute
Incentive Stock Options) and only within one (1) month after
the termination of the Optionee's employment with the Company
or a Subsidiary, other than by reason of the Optionee's
death, permanent disability or retirement with the consent of
the Company or a Subsidiary as provided in subsection (e) of
this Section 6, but only if and to the extent the Option was
exercisable immediately prior to such termination, and
subject to the provisions of subsection (c) of this Section
6. If the Optionee's employment is terminated for cause, or
the Optionee terminates his employment with the Company, all
Options theretofore granted and not yet exercised (whether or
not vested) shall terminate immediately on the date of
termination of employment. Cause shall have the meaning set
forth in any employment agreement then in effect between the
Optionee and the Company or any of its Subsidiaries, or if
the Optionee does not have any employment agreement, cause
shall mean (i) if the Optionee engages in conduct which has
caused, or is reasonably likely to cause, demonstrable and
serious injury to the Company, (ii) the material negligence
of, or failure to perform, the Optionee's duties to the
Company or (iii) if the Optionee is convicted of a felony or
a misdemeanor which substantially impairs the Optionee's
ability to perform his or her duties to the Company.
(e) If an Optionee: (i) dies while employed by the Company or a
Subsidiary or within the period when an Option could have
otherwise been exercised by the Optionee; (ii) terminates
employment with the Company or a Subsidiary by reason of the
"permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) of such Optionee; or (iii)
terminates employment with the Company or a Subsidiary as a
result of such Optionee's retirement, provided that the
Company or such Subsidiary has consented in writing to such
Optionee's retirement, then, in each such case, such
Optionee, or the duly authorized representatives of such
Optionee (or Optionee's permitted assignee in the case of
Options that do not constitute Incentive Stock Options),
shall have the right, at any time within three (3) months
after the death, disability or retirement of the Optionee, as
the case may be, and prior to the termination of the Option
pursuant to subsection (c) of this Section 6, to exercise any
Option to the extent such Option was exercisable by the
Optionee immediately prior to such Optionee's death,
disability or retirement. In the discretion of the Committee,
the three-month period referenced in the immediately
preceding sentence may be extended for a period of up to one
year.
(f) Subject to the foregoing terms and to such additional terms
regarding the exercise of an Option as the Committee may fix
at the time of grant, an Option may be exercised in whole at
one time or in part from time to time.
(g) Options granted pursuant to the Plan shall be evidenced by an
agreement in writing setting forth the material terms and
conditions of the grant, including,
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<PAGE> 8
but not limited to, the number of Shares subject to options.
Option agreements covering Options need not contain similar
provisions; provided, however, that all such option
agreements shall comply with the terms of the Plan. No person
shall have any rights under any Option granted under the Plan
unless and until the Company and the Optionee to whom such
Option shall have been granted shall have executed and
delivered an option agreement. If there is any conflict
between the provisions of an option agreement and the terms
of the Plan, the terms of the Plan shall control.
(h) The Committee is authorized to modify, amend or waive any
conditions or other restrictions with respect to Options,
including conditions regarding the exercise of Options.
7. EFFECT OF CHANGES IN CAPITALIZATION
(a) If the number of outstanding Shares is increased or decreased
or changed into or exchanged for a different number or kind
of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split, combination
of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of
consideration by the Company, a proportionate and appropriate
adjustment shall be made by the Committee in (i) the
aggregate number of Shares subject to the Plan, (ii) the
maximum number of Shares for which Options may be granted to
any Employee during any calendar year, and (iii) the number
and kind of shares for which Options are outstanding, so that
the proportionate interest of the Optionee immediately
following such event shall, to the extent practicable, be the
same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate option
price payable with respect to Shares subject to the
unexercised portion of the Options outstanding but shall
include a corresponding proportionate adjustment in the
option price per Share.
(b) Subject to Section 7.(c) hereof, if the Company shall be the
surviving corporation in any reorganization, merger, share
exchange or consolidation of the Company with one or more
other corporations or other entities, any Option theretofore
granted shall pertain to and apply to the securities to which
a holder of the number of Shares subject to such Option would
have been entitled immediately following such reorganization,
merger, share exchange or consolidation, with a corresponding
proportionate adjustment of the option price per Share so
that the aggregate option price thereafter shall be the same
as the aggregate option price of the Shares remaining subject
to the Option immediately prior to such reorganization,
merger, share exchange or consolidation.
- 7-
<PAGE> 9
(c) In the event of a Change of Control, any Option granted
hereunder shall become immediately exercisable in full,
subject to any appropriate adjustments in the number of
Shares subject to such Option and the option price,
regardless of any provision contained in the Plan or any
option agreement with respect thereto limiting the
exercisability of the Option for any length of time.
Notwithstanding the foregoing, if a successor corporation or
other entity as contemplated in clause (i) or (ii) of Section
3.(b) agrees to assume the outstanding Options or to
substitute substantially equivalent options, then the
outstanding Options issued hereunder shall not be immediately
exercisable, but shall remain exercisable in accordance with
the terms of the Plan and the applicable stock option
agreements.
(d) Adjustments under this Section 7 relating to Shares or
securities of the Company shall be made by the Committee,
whose determination in that respect shall be final and
conclusive. Options subject to grant or previously granted
under the Plan at the time of any event described in this
Section 7 shall be subject to only such adjustments as shall
be necessary to maintain the proportionate interest of the
options and preserve, without exceeding, the value of such
options. No fractional Shares or units of other securities
shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be
eliminated in each case by rounding upward to the nearest
whole Share.
(e) The grant of an Option pursuant to the Plan shall not affect
or limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, consolidate,
dissolve or liquidate, or to sell or transfer all or any part
of its business or assets.
8. DELIVERY AND PAYMENT FOR SHARES; REPLACEMENT OPTIONS
(a) No Shares shall be delivered upon the exercise of an Option
until the option price for the Shares acquired has been paid
in full. No Shares shall be issued or transferred under the
Plan unless and until all legal requirements applicable to
the issuance or transfer of such Shares have been complied
with to the satisfaction of the Committee and adequate
provision has been made by the Optionee for satisfying any
applicable federal, state or local income or other taxes
incurred by reason of the exercise of the Option. Any Shares
issued by the Company to an Optionee upon exercise of an
Option may be made only in strict compliance with and in
accordance with applicable state and federal securities laws.
(b) Payment of the option price for the Shares purchased pursuant
to the exercise of an Option and of any applicable
withholding taxes shall be made, as determined by the
Committee and set forth in the option agreement pertaining to
such
- 8-
<PAGE> 10
Option: (i) in cash or by check payable to the order of the
Company; (ii) through the tender to the Company of Shares,
which Shares shall be valued, for purposes of determining the
extent to which the option price has been paid thereby, at
their Fair Market Value on the date of exercise; or (iii) by
a combination of the methods described in (a) and (b) hereof;
provided, however, that the Committee may in its discretion
impose and set forth in the option agreement pertaining to an
Option such limitations or prohibitions on the use of Shares
to exercise Options as it deems appropriate. The Committee
also may authorize payment in accordance with a cashless
exercise program under which, if so instructed by the
Optionee, Shares may be issued directly to the Optionee's
broker upon receipt of the option price in cash from the
broker.
(c) To the extent that the payment of the exercise price for the
Shares purchased pursuant to the exercise of an Option is
made with Shares as provided in Section 8.(b) hereof, then,
at the discretion of the Committee, the Optionee may be
granted a replacement Option under the Plan to purchase a
number of Shares equal to the number of Shares tendered as
permitted in Section 8.(b) hereof, with an exercise price per
Share equal to the Fair Market Value on the date of grant of
such replacement Option and with a term extending to the
expiration date of the original Option.
9. NO CONTINUATION OF EMPLOYMENT AND DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or option agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Company or any Subsidiary,
or to interfere in any way with the right and authority of the Company or any
Subsidiary either to increase or decrease the compensation of any individual at
any time, or to terminate any employment or other relationship between any
individual and the Company or any Subsidiary. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Optionee or beneficiary under the terms of the Plan. An Optionee shall have
none of the rights of a shareholder of the Company until all or some of the
Shares covered by an Option are fully paid and issued to such Optionee.
10. ADMINISTRATION
(a) The Plan is intended to comply with Rule 16b-3 and Code
Section 162(m). Subject to the provisions of subsection (b)
of this Section 9, the Plan shall be administered by the
Committee which shall interpret the Plan and any option
agreements, and make all other determinations necessary or
advisable for the Plan's administration, including such rules
and regulations and procedures as it deems appropriate. The
Committee shall consist of not fewer than two members of the
Board each of whom shall qualify (at the time of appointment
to the Committee and during all periods of service on the
Committee) in all respects as a "non-employee director" as
defined in Rule 16b-3 and as an
- 9-
<PAGE> 11
outside director as defined in Section 162(m) of the Code and
regulations thereunder. In the event of a disagreement as to
the interpretation of the Plan or any amendment hereto, any
option agreement or any rule, regulation or procedure
hereunder or as to any right or obligation arising from or
related to the Plan or any option agreement, the decision of
the Committee shall be final and binding upon all persons in
interest, including the Company, the Optionee and the
Company's shareholders. If at any time the Committee shall
not be in existence, the Plan shall be administered by the
Board and all references to the Committee herein shall be
deemed to include the Board.
(b) To the extent permitted by applicable law, the Committee may
delegate to one or more senior officers of the Company any or
all of the authority and responsibility of the Committee with
respect to the Plan, other than with respect to Optionees who
are subject to Section 16 of the Exchange Act. To the extent
that the Committee has delegated to one or more officers the
authority and responsibility of the Committee, all references
to the Committee herein shall include such one or more
officers.
(c) No member of the Committee or the Board, or any officer to
whom any authority or responsibility of the Committee has
been delegated, shall be liable for any action taken or
decision made, or any failure to take any action, in good
faith with respect to the Plan or any Option granted or
option agreement entered into hereunder.
11. NO RESERVATION OF SHARES
The Company shall be under no obligation to reserve or to retain in
its treasury any particular number of Shares in connection with its obligations
hereunder.
12. AMENDMENT OF PLAN
The Board, without further action by the shareholders, may amend this
Plan from time to time as it deems desirable and shall make any amendments
which may be required so that Options intended to be Incentive Stock Options
shall at all times continue to be Incentive Stock Options for purpose of the
Code; provided, however, that no amendment shall be made without shareholder
approval if such approval would be required to comply with Rule 16b-3 or the
Code.
- 10-
<PAGE> 12
13. TERMINATION OF PLAN
This Plan shall terminate on March 2, 2010. The Board may, in its
discretion, suspend or terminate the Plan at any time prior to such date, but
such termination or suspension shall not adversely affect any right or
obligation with respect to any outstanding Option. Notwithstanding the
foregoing, to the extent set forth in the Plan, the authority of the Committee
to administer the Plan and option agreements, to amend any provision of an
option agreement and to waive any conditions or restrictions of any Option, and
the authority of the Board to amend the Plan, shall survive the termination of
the Plan.
14. LEGAL CONSTRUCTION
(a) Requirements of Law. The granting of Options under the Plan
and the issuance of Shares in connection with an Option shall
be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national
securities exchanges as may be required.
(b) Governing Law. The Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of
the State of Florida.
(c) Severability. If any provision of the Plan or any option
agreement or any Option (i) is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction, or as
to any person or award, or (ii) would disqualify the Plan,
any option agreement or any Option under any law deemed
applicable by the Committee, then such provision shall be
construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the
intent of the Plan, any option agreement or the Option, such
provision shall be stricken as to such jurisdiction, person
or Option, and the remainder of the Plan, any such option
agreement and any such Option shall remain in full force and
effect.
- 11-
<PAGE> 1
Exhibit 13.1
Selected Financial Data
The following selected financial data has been derived from the
Company's consolidated financial statements. The information below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the Company's Consolidated Financial
Statements and related notes.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
(In thousands, except per share data) 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues $197,334 $248,699 $351,593 $469,462 $575,040
Income from operations 9,527 21,611 24.392 42,031 39,484
Net income 3,531 11,685 7,631 8,278 22,031
PER SHARE DATA:
Basic $0.09 $0.32 $0.19 $0.20 $0.52
Diluted $0.09 $0.31 $0.18 $0.20 $0.51
PRO FORMA INCOME STATEMENT DATA:
Revenues $197,334 $248,699 $351,593 $469,462 $575,040
Income from operations (1)(2)(3) 9,527 21,611 36,605 58,378 45,462
Net income (3)(4)(5) 3,531 11,685 23,877 35,824 25,696
PRO FORMA PER SHARE DATA: (1)(2)(3)(4)(5)(6)
Basic $0.09 $0.32 $0.58 $0.87 $0.61
Diluted $0.09 $0.31 $0.56 $0.85 $0.60
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31,
(In thousands) 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $ 8,138 $116,687 $116,661 $ 85,204 $ 94,544
Total assets 72,108 238,318 268,197 365,134 427,586
Long-term debt, less current installments 9,584 8,571 35,990 75,448 80,053
Shareholders' equity 20,436 147,402 152,560 164,937 201,352
</TABLE>
(1) The balance for 1997 is exclusive of approximately $12.2 million of
charges associated with the impairment of long-lived assets pursuant to
Statement of Financial Accounting Standards ("SFAS") No. 121 and
one-time merger and related charges associated with an acquisition.
(2) The balance for 1998 is exclusive of approximately $0.5 million of
expense associated with accrued severance costs, approximately $1.4
million of one-time merger and related charges associated with
acquisitions and approximately $14.5 million of acquisition related
in-process research and development costs.
(3) The balance for 1999 is exclusive of approximately $6.0 million of
charges associated with the impairment of long-lived assets pursuant to
SFAS No. 121.
<PAGE> 2
(4) The balance for 1997 is exclusive of approximately $2.8 million of
expense associated with acquisition related in-process research and
development costs incurred by a joint venture entity, approximately
$1.2 million of one-time merger and related charges associated with an
acquisition and approximately $12.2 million of one-time charges as
identified in Item (1) above.
(5) The balance for 1998 is exclusive of approximately $3.9 million of
acquisition related in-process research and development costs incurred
by a joint venture entity, approximately $7.3 million of charges
associated with the write-down of marketable securities, and
approximately $16.4 million of one-time charges as identified in Item
(2) above.
(6) Adjusted as if an affiliate of the Company included in the consolidated
financial statements, which was a S corporation for federal income tax
purposes, were subject to income taxes for all periods presented, based
on the tax laws in effect during the respective periods.
MARKET SHAREHOLDER DATA
Sykes common stock has been quoted on the NASDAQ National Market under the
symbol SYKE since Sykes' initial public offering in April 1996. The following
table sets forth, for the periods indicated, certain information as to the high
and low sale prices per share of Sykes common stock as quoted on the NASDAQ
National Market.
<TABLE>
<CAPTION>
Year ending December 31, 1999: High Low
<S> <C> <C>
First Quarter $32.875 $24.250
Second Quarter 34.750 20.438
Third Quarter 33.750 21.625
Fourth Quarter 51.500 22.750
Year ending December 31, 1998: High Low
First Quarter $25.250 $17.000
Second Quarter 22.500 17.125
Third Quarter 20.750 12.563
Fourth Quarter 30.500 13.500
</TABLE>
Holders of Sykes common stock are entitled to receive dividends out of the funds
legally available when and if declared by the Board of Directors. Sykes has not
declared or paid any cash dividends on its common stock in the past. Sykes
currently anticipates that all of its earnings will be retained for development
and expansion of the Company's business and does not anticipate paying any cash
dividends in the foreseeable future.
As of March 9, 2000, the last sale price of the registrant's common stock was
$20.75 on the NASDAQ National Market, and there were approximately 245 holders
of record of the common stock. The Company believes that there are approximately
10,000 beneficial owners of its common stock.
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with the Consolidated
Financial Statements, including the notes thereto. The following discussion
compares the year ended December 31, 1999 ("1999") to the year ended December
31, 1998 ("1998"), and 1998 to the year ended December 31, 1997 ("1997"). The
following discussion and analysis and other sections of this report contain
forward-looking statements that involve risks and uncertainties. Words such as
"may," "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," variations of such words, and similar expressions are intended to
identify such forward-looking statements. Similarly, statements that describe
the Company's future plans, objectives, or goals also are forward-looking
statements. Future events and the Company's actual results could differ
materially from the results reflected in these forward-looking statements, as a
result of certain of the factors set forth below and elsewhere in this analysis
and in the Company's Form 10-K for the year ended December 31, 1999 in Item 1 in
the section entitled "Factors Influencing Future Results And Accuracy Of
Forward-Looking Statements."
OVERVIEW
The Company derives its revenue from providing information technology
support services, information technology development services and solutions,
on-line clinical managed care services, medical protocol products, employee
benefit administration and support services, and e-commerce services. Revenue
from technical support services provided through the technical support centers
are recognized as services are rendered. These services are billed on an amount
per e-mail, a fee per call, a rate per minute or on a time and material basis.
Information technology development services and solutions, including e-commerce
consulting, web-design and maintenance, usually are billed on a time and
material basis, generally by the hour, and revenues generally are recognized as
the services are provided. Revenues from on-line clinical managed care services
are generated on a per participant, per month rate basis. Revenues from medical
protocol products are generated from the use of such software products and from
support and consulting services. Revenues from employee benefit administration
and support services are primarily derived from (i) a recurring monthly fee per
eligible employee or participant; (ii) a one-time implementation fee to cover
programming costs; (iii) a COBRA administration fee of 2% of the participant's
premium, as allowed under COBRA regulations; and (iv) fees for interactive voice
response services, optical character recognition services, distribution services
and other ancillary services on a per job or per item basis. Revenue is
recognized from licenses of the Company's software products and contractually
provided rights when the agreement has been executed, the product or right has
been delivered or provided, collectibility is probable and the software license
fees or rights are fixed and determinable. E-commerce distribution services are
generally billed on a per unit basis. Revenues from fixed price contracts,
generally with terms of less than one year, are recognized using the
percentage-of-completion method. A significant majority of the Company's revenue
is derived from non-fixed price contracts. The Company has not experienced
material losses due to fixed price contracts and does not anticipate a
significant increase in revenue derived from such contracts in the future.
Direct salaries and related costs include direct personnel
compensation, statutory and other benefits associated with such personnel and
other direct costs associated with providing services to customers. General and
administrative expenses include administrative, sales and marketing, occupancy,
depreciation and amortization, and other indirect costs.
Other expense consists primarily of interest expense, net of interest
income and foreign currency transaction gains and losses. Foreign currency
transaction gains and losses generally result from exchange rate fluctuations on
intercompany transactions. During 1997, the Company entered into a joint venture
and the results of this entity are included in the other income (expense)
section of the Consolidated Statements of Income for the time period the entity
operated as a 50% joint venture. Effective September 1, 1998, the Company
acquired the remaining portion of this joint venture.
Grants from local or state governments for the acquisition of property
and equipment are deferred and recognized as income over the corresponding
useful lives of the related property and equipment. Deferred property and
equipment grants, net of amortization, totaled $15.4 million and $21.2 million
at December 31, 1998 and 1999, respectively. Grants received in excess of
property and equipment costs are recognized in the year executed, and that
amount approximated $1.3 million and $2.5 million for the years ended December
31, 1998 and 1999, respectively (none for 1997).
The Company's effective tax rate for the periods presented reflects the
effects of foreign taxes, net of foreign income not taxed in the United States,
nondeductible expenses for income tax purposes and a provision for potential
additional income tax liability resulting from an Internal Revenue Service
examination currently being conducted. The Company believes its reserves for any
liability that may result from this examination are adequate.
<PAGE> 4
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
of revenues represented by certain items reflected in the Company's statements
of income:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
PERCENTAGES OF REVENUES:
Revenues 100.0% 100.0% 100.0%
Direct salaries and related costs 62.5 61.7 64.7
General and administrative (1)(2)(3) 30.6 26.2 28.4
Acquired in-process research
and development (4) -- 3.1 --
----- ----- -----
Income from operations 6.9 9.0 6.9
Other expense (5)(6) 1.0 2.6 0.6
----- ----- -----
Income before provision for income taxes 5.9 6.4 6.3
Provision for income taxes 3.7 4.6 2.5
----- ----- -----
Net income (1)(2)(3)(4)(5)(6) 2.2% 1.8% 3.8%
===== ===== =====
</TABLE>
(1) Includes charges associated with the impairment of long-lived assets
pursuant to SFAS No. 121 and one-time merger and related charges of
3.5% related to an acquisition completed in 1997.
(2) Includes charges associated with accrued severance pay and one-time
merger and related charges of 0.4% related to the acquisitions
completed in 1998.
(3) Includes charges associated with the impairment of long-lived assets
pursuant to SFAS No. 121 of 1.0% in 1999.
(4) Includes expense associated with the write-off of acquisition related
in-process research and development costs of 3.1% related to the
Company's original ownership and subsequent acquisition of the
remaining outstanding shares of SHPS, Incorporated ("SHPS").
(5) Includes expense associated with the write-off of acquisition related,
in-process research and development costs of 0.8% related to
acquisitions completed by SHPS in 1997 and 1998.
(6) Includes expense associated with the write-down of marketable
securities of 1.6% in 1998.
1999 COMPARED TO 1998
Revenues. Revenues increased $105.5 million, or 22.5%, to $575.0
million in 1999 from $469.5 million in 1998. These results reflect an increase
in revenues of $138.2 million from information technology support services
provided through technical support centers, an increase in revenues of $3.9
million from e-commerce distribution services, and a decrease in revenues of
$36.6 million from information technology services and solutions. At the
completion of 1999, information technology support services, information
technology services and solutions, and e-commerce distribution services
accounted for 73.9%, 9.6% and 16.5%, respectively, of the Company's consolidated
revenues, as compared to 61.2%, 19.8% and 19.0%, respectively in 1998.
<PAGE> 5
The increase in information technology support services revenues was
primarily attributable to an increase in the number of technical support centers
providing services throughout the period and the resultant increase in e-mail
requests and call volumes from clients, and the inclusion of SHPS' revenue
generated for the entire year. The new technical support centers were required
as a result of continued growth of technical support services from both
e-commerce and traditional telephone support services. During 1999, the Company
opened three domestic and four international technical support centers,
significantly expanded an additional four international centers and announced
the construction of an additional five domestic centers. The increase in
e-commerce distribution services revenue was also attributable to the Company's
e-commerce initiatives. The decrease in revenues for information technology
services and solutions was attributable to a decline in hours billed to
customers for consulting services, partially offset by an increase in the
average bill rate, the sale of the Company's Manufacturing and Distribution
operation, and to a decline in language translation and localization services
due to a delay in the commencement of certain projects when compared to the
prior period.
Direct Salaries and Related Costs. Direct salaries and related costs
increased $82.1 million, or 28.3%, to $371.9 million in 1999 from $289.8 million
in 1998. As a percentage of revenues, direct salaries and related costs
increased to 64.7% in 1999 from 61.7% in the comparable 1998 year. The increase
in both the dollar amount and percentage of direct salaries and related costs as
a percentage of revenue was primarily attributable to the addition of personnel
to support revenue growth and associated employee benefit and training costs.
General and Administrative. General and administrative expenses
increased $40.5 million, or 32.9%, to $163.6 million in 1999, inclusive of a
$6.0 million one-time charge associated with the impairment of long-lived assets
pursuant to SFAS No. 121. As a percentage of revenues and inclusive of the
one-time charge, general and administrative expenses increased to 28.5% in 1999
from 26.2% in 1998. The increase in the amount of general and administrative
expenses was primarily attributable to a $17.7 million increase in salaries and
benefits, a $9.6 million increase in depreciation expenses associated with
facility and capital equipment expenditures incurred in connection with the
integration and expansion of the Company's technical support and e-commerce
services, the $6.0 million one-time charge associated with the impairment of
long-lived assets pusuant to SFAS No. 121, and to a $4.3 million increase in
amortization expense, primarily associated with goodwill incurred as part of the
SHPS acquisition General and administrative expenses, exclusive of the $6.0
million charge associated with the impairment of long-lived assets pursuant to
SFAS No. 121, increased $34.5 million, or 28.0%, to $157.6 million in 1999, or
27.4% of revenue.
As part of the original ownership and subsequent acquisition of the
remaining outstanding shares of SHPS, the Company determined that the technical
feasibility of SHPS' in-process technology had not been established and a
portion of the technology had no alternative use. Therefore, the Company
recorded a charge of approximately $14.5 million related to the write-off of the
acquired in-process research and development during 1998.
Other Expense. Other expense was $3.5 million during 1999 compared to
$12.3 million during 1998. The other expense balance for 1998 is inclusive of a
$3.9 million loss from joint venture and a $7.3 million write-down of a
marketable security. The net loss from the joint venture was attributable to
acquisition-related in-process research and development costs associated with
acquisitions completed by the joint venture, which were recorded as other
expense. The increase in other expense for 1999 exclusive of the loss from joint
venture and the write-down of a marketable security was primarily attributable
to an increase in the Company's debt position as a result of the acquisition of
SHPS completed during 1998.
Income Taxes. The provision for income taxes decreased $7.5 million, or
35.1%, to $13.9 million during 1999 from $21.5 million during 1998. As a
percentage of revenues, the provision for income taxes decreased to 2.4% from
4.6% for the comparable period in 1998. The dollar decrease was attributable to
a lower amount of income before income taxes, exclusive of one-time charges.
Sykes' effective tax rate decreased to 38.7% during 1999, versus 72.2% for 1998.
The effective tax rate for 1998 was effected by approximately $14.5 million of
non-deductible charges associated with the write-off of in-process research and
development costs.
Net Income. As a result of the foregoing, net income inclusive of the
one-time charge identified above increased to $22.0 million in 1999 from $8.3
million in 1998. Net income for 1999, exclusive of the $6.0 million charge
associated with the impairment of long-lived assets pursuant to SFAS No. 121
would have been $25.7 million.
<PAGE> 6
1998 COMPARED TO 1997
Revenues. Revenues increased $117.9 million, or 33.5%, to $469.5
million in 1998 from $351.6 million in 1997. These results reflect an increase
in revenues of $106.2 million from technical support services provided through
technical support centers, an increase in revenues of $7.9 million from
information technology services and solutions, and an increase in revenues of
$3.8 million from customer product services. At the completion of 1998,
information technology support services, information technology services and
solutions, and customer product services accounted for 61.2%, 19.8%, and 19.0%,
respectively, of the Company's consolidated revenues, as compared to 51.5%,
24.2% and 24.3%, respectively, in 1997.
The increase in information technology support services revenues was
primarily attributable to an increase in the number of technical support centers
providing services throughout the period and the resultant increase in call
volumes from clients, and the inclusion of SHPS' revenue generated since the
date of acquisition. During 1997, the Company opened three new technical support
centers which were fully operational throughout 1998 and opened two additional
centers in 1998. The increase in revenues for information technology services
and solutions was primarily attributable to an increase in the average bill rate
and to an increase in hours billed to customers for professional services when
compared to 1997. The increase in e-commerce distribution services revenue is
primarily associated with an acquisition completed in 1997 by a company
subsequently acquired by Sykes which was accounted for under the purchase method
of accounting. Sykes acquired this entity in the fourth quarter of 1997 through
a transaction accounted for as a pooling-of-interests.
Direct Salaries and Related Costs. Direct salaries and related costs
increased $70.2 million, or 32.0%, to $289.8 million in 1998 from $219.6 million
in 1997. As a percentage of revenues, direct salaries and related costs
decreased to 61.7% in 1998 from 62.5% in the comparable 1997 year. The increase
in the amount of direct salaries and related costs was primarily attributable to
the addition of personnel to support revenue growth. The decrease as a
percentage of revenue resulted from economies of scale associated with spreading
costs over a larger revenue base and the continued change in the Company's mix
of business reflecting the growth of technical support services as a percentage
of consolidated results.
General and Administrative. General and administrative expenses
increased $25.9 million, or 26.7%, to $123.2 million in 1998, inclusive of
special one-time charges, from $97.2 million in 1997. As a percentage of
revenues, and inclusive of special one-time charges, general and administrative
expenses decreased to 26.2% in 1998 from 27.7% in the comparable 1997 year. The
increase in the amount of general and administrative expenses was attributable
to the addition of personnel to support the revenue growth. General and
administrative expenses exclusive of $1.9 million of charges associated with
accrued severance costs and one-time merger and related charges associated with
the Company's acquisitions, increased $24.1 million, or 24.8%, to $121.3
million, or 25.8% of revenue. The decrease as a percentage of revenues resulted
from economies of scale associated with spreading costs over a larger revenue
base.
As part of the original ownership and subsequent acquisition of the
remaining outstanding shares of SHPS, the Company determined that the technical
feasibility of SHPS' in-process technology had not been established and a
portion of the technology had no alternative use. Therefore, the Company
recorded a charge of approximately $14.5 million related to the write-off of the
acquired in-process research and development during 1998.
Other Income (Expense). Other expense increased to $12.3 million during
1998 from $3.6 million during 1997. As a percentage of revenues, other expense
was 2.6% in 1998 compared to 1.0% in 1997. The increase in other expense was
primarily attributable to approximately $7.3 million of charges associated with
the write-down of marketable securities and an increase in the Company's debt
position as a result of the acquisition of SHPS completed during 1998.
Income Taxes. The provision for income taxes increased $8.3 million, or
63.0%, to $21.5 million during 1998 from $13.2 million during 1997, and
increased as a percentage of revenues to 4.6% from 3.7%, respectively. This
increase was attributable to the increase of income before income taxes and to
an increase in income before income taxes as a percentage of revenues. However,
the Company's effective tax rate increased to 72.2% during 1998 versus 63.3% for
1997, primarily as a result of nondeductible expenses which consisted primarily
of goodwill amortization and the write-off of in-process research and
development costs.
Net Income. As a result of the foregoing, net income inclusive of
special one-time charges increased to $8.3 million in 1998 from $7.6 million in
1997. Net income for 1998 exclusive of the $1.9 million of one-time merger and
related charges, exclusive of $7.3 million of charges associated with the
write-down of marketable securities, exclusive of the $14.5 million associated
with the acquisition and subsequent write-off of in-process research and
development and exclusive of the $3.8 million of acquired in-process research
and development charges incurred by the joint venture entity would have been
$35.8 million.
<PAGE> 7
QUARTERLY RESULTS
The following information presents unaudited quarterly operating
results for the Company for 1998 and 1999. The data has been prepared by the
Company on a basis consistent with the Consolidated Financial Statements
included elsewhere in this Form 10-K, and include all adjustments, consisting of
normal recurring accruals, that the Company considers necessary for a fair
presentation thereof. The quarterly operating results for the quarter ended June
30, 1999 and the quarter ended September 30, 1999 have been restated to reflect
the adjustment of revenue recognized related to the licensing of software under
two arrangements to periods subsequent to 1999. These operating results are not
necessarily indicative of the Company's future performance.
(In thousands, except per share data)
<TABLE>
<CAPTION>
3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $98,088 $110,667 $118,316 $142,391 $136,378 $134,108 $140,967 $163,588
Direct salaries
and related costs 61,160 68,768 72,806 87,068 83,247 88,938 92,523 107,227
General and
administrative (2)(3)(4) 26,319 28,789 31,316 36,736 36,277 37,767 40,350 49,229
Acquired in-process research
and development (2) -- -- 14,469 -- -- -- -- --
------ -------- -------- -------- -------- -------- -------- --------
Income from operations 10,609 13,110 (275) 18,587 16,854 7,403 8,094 7,132
Other expense (1)(5) (3,839) 188 (504) (8,115) (575) (863) (987) (1,092)
------ -------- -------- -------- -------- -------- -------- --------
Income before income
taxes (1)(2)(3) 6,770 13,298 (779) 10,472 16,279 6,540 7,107 6,040
Provision for income taxes 3,867 4,997 5,333 7,286 6,300 2,531 2,761 2,344
------ -------- -------- -------- -------- -------- -------- --------
Net income (loss)
(1)(2)(3)(4)(5) $2,903 $ 8,301 $ (6,112) $ 3,186 $ 9,979 $ 4,009 $ 4,347 $ 3,696
====== ======== ======== ======== ======== ======== ======== ========
Net income (loss) per
diluted share
(1)(2)(3)(4)(5) $ 0.07 $ 0.20 $ (0.15) $ 0.07 $ 0.23 $ 0.09 $ 0.10 $ 0.09
====== ======== ======== ======== ======== ======== ======== ========
Total diluted shares 42,219 42,220 41,337 42,497 42,824 43,097 43,032 43,063
====== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(1) The quarter ended March 31, 1998, includes approximately $3.8 million of
expense associated with the write-off of acquisition related in-process
research and development by the joint venture entity. Exclusive of such
charge, income before income taxes, net income, and net income per diluted
share would have been approximately $10.6 million, $6.8 million and $0.16,
respectively. The Company adjusted the amount originally allocated to loss
from joint venture to reflect the new methodology set forth in the
September 15, 1998 letter from the SEC Staff to the American Institute of
Certified Public Accountants ("AICPA") regarding acquired in-process
research and development.
(2) The quarter ended September 30, 1998, includes approximately $0.5 million
of expense associated with accrued severance costs and approximately $14.5
million of expense associated with the write-off of acquisition related
in-process research and development cost. Exclusive of such charges, income
from operations, income before income taxes, net income, and net income per
diluted share would have been approximately $14.6 million, $14.1 million,
$8.8 million and $0.21, respectively. The Company adjusted the amounts
originally allocated to acquired in-process research and development to
reflect the new methodology set forth in the September 15, 1998 letter from
the SEC Staff to the AICPA.
(3) The quarter ended December 31, 1998, includes approximately $1.4 million of
one-time merger and related charges associated with acquisitions. Exclusive
of such charge and the expense referenced in (5) below, income from
operations, income before income taxes, net income, and net income per
diluted share would have been approximately $20.0 million, $19.2 million,
$11.9 million and $0.28, respectively.
(4) The quarter ended December 31, 1999, includes approximately $6.0 million of
charges associated with the write-down of software and computer equipment.
(5) The quarter ended December 31, 1998, includes approximately $7.3 million of
charges associated with the write-down of marketable securities.
<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash flows from
operations and available borrowings under its credit facilities. The Company has
utilized its capital resources to make capital expenditures associated primarily
with its technical support services as identified above, to repay debt
associated with entities it has acquired, to acquire interest in and provide
capitalization to its entry into the healthcare service industry, invest in
technology applications and tools to further and transition the Company's
service offerings and for working capital and general corporate purposes. In
addition, the Company intends similar uses of any such funds, including possible
additional acquisitions. Pending such use, the Company will invest the balance
of its available funds in short-term, investment grade securities or money
market instruments.
During 1999, the Company generated approximately $51.3 million in cash,
net from operating activities. The combination of these funds with the $11.1
million received from the issuance of common stock, $7.7 million received from
grants associated with the construction of domestic technical support centers
and available cash and cash equivalents, were used in 1999 to fund $66.7 million
of capital expenditures and $8.3 million in acquisitions. The capital equipment
expenditures were predominantly the result of the Company's enhancement of its
e-commerce initiatives including the integration of its e-commerce distribution
centers with its technical support centers. In addition, the Company enhanced
its support systems associated with SHPS and continued expansion, both
domestically and internationally, in providing technical product support
services. During 1999, the Company constructed three domestic technical support
centers and funded the expansion and enhancing of the technology base from which
services are provided. Internationally, the Company opened four new technical
support centers, expanded four other call centers and also enhanced its
technology base. As a result of the Company's expansion and continued
integration of its acquisitions, it is anticipated that capital expenditures for
the year 2000 will approximate $48.0 million.
During 1999, the Company completed three business acquisitions for the
aggregate purchase price of approximately $8.4 million and 11,594 shares of the
Company's common stock. These business combinations were accounted for using the
purchase method of accounting. In the aggregate, these acquisitions established
the Company's geographical presence in Central America, and expanded the
vertical market service offerings that the Company provides.
During February and March 2000, the Company acquired 935,000 shares of
its common stock for approximately $15.1 million. The repurchase of these shares
was in connection with a stock repurchase program announced in February 2000, in
which up to 1.0 million shares of the Company's common stock may be acquired in
the open market. The purpose of the stock repurchase program is to enhance
shareholder value.
The Company believes that its current cash levels, accessible funds
under its credit facilities and cash flows from future operations, will be
adequate to meet its debt repayment requirements, continued expansion objectives
and anticipated levels of capital expenditures, including those that may be
required pursuant to the integration of its acquisitions, for the foreseeable
future.
QUANTITATIVE AND QUALITATIVE DISCLOSURE
The Company's earnings and cash flow are subject to fluctuations due to
changes in foreign currency exchange rates. Movements in foreign currency
exchange rates may affect the Company's competitive position, as exchange rate
changes may affect business practices and/or pricing strategies of non-United
States based competitors. Under its current policy, the Company does not use
foreign exchange derivative instruments to manage its exposure to changes in
foreign currency exchange rates. The Company is also exposed to changes in
interest rates primarily from its long-term debt arrangements. Under its current
policy, the Company does not use interest rate derivative instruments to manage
exposure to interest rate changes.
IMPACT OF YEAR 2000
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 compliant. During September 1999, the Company completed its
remediation and testing of its systems. As a result of those planning and
implementation efforts, the Company experienced no significant disruptions in
critical information technology and non-information technology systems and
believes those systems successfully responded to the Year 2000 date change.
Sykes' expensed approximately $0.8 million during 1999 in connection with
remediating its systems. Sykes' is not aware of any material problems resulting
from Year 2000 issues, either with its products and services, its internal
systems, or the products and services of third parties. Sykes' will continue to
monitor its critical computer applications and those of its suppliers and
vendors throughout the year 2000 to ensure that any delayed Year 2000 matters
that may arise are addressed promptly.
<PAGE> 9
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Sykes Enterprises, Incorporated
We have audited the accompanying consolidated balance sheets of Sykes
Enterprises, Incorporated as of December 31, 1998 and 1999, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Sykes
Enterprises, Incorporated as of December 31, 1998 and 1999, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Tampa, Florida
February 7, 2000
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Sykes Enterprises, Incorporated
We have audited the consolidated statements of income, changes in shareholders'
equity and cash flows of Sykes Enterprises, Incorporated and subsidiaries for
the year ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinions.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated consolidated results of
operations and cash flows of Sykes Enterprises, Incorporated and subsidiaries
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles. We have not audited the consolidated financial statements
of Sykes Enterprises, Incorporated and subsidiaries for any period subsequent to
December 31, 1997.
PricewaterhouseCoopers LLP
Tampa, Florida
March 6, 1998
<PAGE> 11
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
1998 1999
------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ..................................................... $ 36,348,863 $ 31,001,354
Restricted cash ............................................................... 11,090,890 15,108,523
Receivables ................................................................... 113,840,262 131,903,360
Prepaid expenses and other current assets ..................................... 15,861,742 15,252,307
------------- -------------
Total current assets.......................................................... 177,141,757 193,265,544
Property and equipment, net .................................................... 99,176,512 134,755,878
Marketable securities .......................................................... 199,875 199,875
Intangible assets, net ......................................................... 75,132,011 76,830,977
Deferred charges and other assets.............................................. 13,484,146 22,533,880
------------- -------------
$ 365,134,301 $ 427,586,154
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments of long-term debt ........................................ $ 3,983,239 $ 3,236,451
Accounts payable .............................................................. 30,086,549 39,494,955
Income taxes payable .......................................................... 10,549,623 2,804,155
Accrued employee compensation and benefits .................................... 19,144,242 24,205,591
Customer deposits ............................................................. 10,978,868 11,820,739
Other accrued expenses and current liabilities ................................ 17,194,752 17,159,191
------------- -------------
Total current liabilities .................................................... 91,937,273 98,721,082
Long-term debt ................................................................. 75,448,202 80,052,717
Deferred grants ................................................................ 15,434,676 21,198,709
Deferred revenue ............................................................... 14,707,773 24,861,639
Other long-term liabilities .................................................... 2,668,895 1,400,466
------------- -------------
Total liabilities ............................................................ 200,196,819 226,234,613
------------- -------------
Commitments and contingencies (Notes 10 and 14)
Shareholders' equity
Preferred stock, $0.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding ................................. -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
41,451,905 and 42,734,284 issued and oustanding............................... 414,519 427,343
Additional paid-in capital .................................................... 136,199,748 155,022,390
Retained earnings ............................................................. 29,730,975 51,762,003
Accumulated other comprehensive income ........................................ (1,407,760) (5,860,195)
------------- -------------
Total shareholders' equity ................................................... 164,937,482 201,351,541
------------- -------------
$ 365,134,301 $ 427,586,154
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
35
<PAGE> 12
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
-------------------------------------------------------------
December 31, December 31, December 31,
1997 1998 1999
------------- ------------- -------------
<S> <C> <C> <C>
Revenues .................................... $ 351,593,110 $ 469,461,520 $ 575,039,890
------------- ------------- -------------
Operating expenses
Direct salaries and related costs .......... 219,584,550 289,801,769 371,934,565
General and administrative ................. 97,216,636 123,159,492 157,643,213
Impairment of long-lived assets ............ 10,400,000 -- 5,978,560
Acquired in-process research and development -- 14,468,907 --
------------- ------------- -------------
Total operating expenses .................. 327,201,186 427,430,168 535,556,338
------------- ------------- -------------
Income from operations ...................... 24,391,924 42,031,352 39,483,552
Other expense
Interest, net .............................. 518,968 (959,152) (3,669,327)
Loss from joint venture .................... (2,828,000) (3,947,380) --
Write-down of marketable securities ........ -- (7,334,645) --
Other ...................................... (1,270,450) (29,176) 151,803
------------- ------------- -------------
Total other expense ....................... (3,579,482) (12,270,353) (3,517,524)
------------- ------------- -------------
Income before income taxes .................. 20,812,442 29,760,999 35,966,028
Provision for income taxes
Current .................................... 13,492,156 25,592,000 22,259,000
Deferred ................................... (311,160) (4,109,000) (8,324,000)
------------- ------------- -------------
Total provision for income taxes .......... 13,180,996 21,483,000 13,935,000
------------- ------------- -------------
Net income .................................. $ 7,631,446 $ 8,277,999 $ 22,031,028
============= ============= =============
Net income per share
Basic ....................................... $ 0.19 $ 0.20 $ 0.52
============= ============= =============
Diluted ..................................... $ 0.18 $ 0.20 $ 0.51
============= ============= =============
Shares outstanding
Basic ...................................... 41,044,002 41,257,623 42,044,574
Diluted .................................... 42,315,046 42,288,425 42,995,415
</TABLE>
See accompanying notes to consolidated financial statements.
36
<PAGE> 13
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other
------------------------ Paid-In Retained Comprehensive
Shares Amount Capital Earnings Income Total
---------- -------- ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 40,920,274 $409,203 $131,027,020 $16,091,230 $ (125,007) $147,402,446
Issuance of common stock 199,352 1,993 3,037,968 - - 3,039,961
Capital contribution - - 1,237,000 - - 1,237,000
Repurchase of common stock - - (2,623,651) - - (2,623,651)
Tax effect of non-qualified
exercise of stock options - - 914,000 - - 914,000
Distributions - - - (496,972) - (496,972)
Net income - - - 7,631,446 - 7,631,446
Unrealized loss on securities,
net of income taxes - - - - (734,518) (734,518)
Foreign currency translation
adjustment - - - - (2,735,140) (2,735,140)
------------
Comprehensive income 4,161,788
------------
Adjustments to conform fisca
year of McQueen International
Limited (Note 2) - - - (1,074,352) - (1,074,352)
---------- -------- ------------ ----------- ----------- ------------
Balance at December 31, 1997 41,119,626 411,196 133,592,337 22,151,352 (3,594,665) 152,560,220
Issuance of common stock 332,279 3,323 1,073,411 - - 1,076,734
Tax effect of non-qualified
exercise of stock options - - 1,534,000 - - 1,534,000
Distributions - - - (698,376) - (698,376)
Net income - - - 8,277,999 - 8,277,999
Recognition of write-down
on marketable securities - - - - 734,518 734,518
Foreign currency translation
adjustment - - - - 1,452,387 1,452,387
------------
Comprehensive income 10,464,904
---------- -------- ------------ ----------- ----------- ------------
Balance at December 31, 1998 41,451,905 414,519 136,199,748 29,730,975 (1,407,760) 164,937,482
Issuance of common stock 1,282,379 12,824 11,371,319 - - 11,384,143
Tax effect of non-qualified
exercise of stock options - - 7,451,323 - - 7,451,323
Net income - - - 22,031,028 - 22,031,028
Foreign currency translation
adjustment - - - - (4,452,435) (4,452,435)
------------
Compehensive income 17,578,593
---------- -------- ------------ ----------- ----------- ------------
Balance at December 31, 1999 42,734,284 $427,343 $155,022,390 $51,762,003 $(5,860,195) $201,351,541
========== ======== ============ =========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
37
<PAGE> 14
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ............................................................ $ 7,631,446 $ 8,277,999 $ 22,031,028
Depreciation and amortization ......................................... 15,245,917 21,831,091 35,338,494
Impairment of long-lived assets ....................................... 10,400,000 -- 5,978,560
Acquired in-process research and development costs .................... 2,795,000 14,468,907 --
Write-down of marketable securities ................................... -- 7,334,645 --
Deferred income taxes ................................................. (311,160) (4,109,000) (8,324,000)
(Gain)loss on disposal of property and equipment ...................... (105,416) (524,762) 14,663
Changes in assets and liabilities
Receivables .......................................................... (6,073,933) (27,948,284) (19,828,608)
Prepaid expenses and other current assets ............................ (783,295) (2,911,635) 1,598,813
Intangible assets .................................................... -- (737,708) (1,113,326)
Deferred charges and other assets .................................... (1,035,841) (5,532,766) (1,638,087)
Accounts payable ..................................................... (714,315) 2,840,802 7,331,065
Customer deposits .................................................... 1,056,946 11,373,150 (3,175,762)
Income taxes payable ................................................. -- -- (293,871)
Accrued employee compensation and benefits ........................... (355,586) 7,270,284 4,508,377
Other accrued expenses and current liabilities ....................... (4,286,603) 6,090,194 (35,561)
Deferred revenue ..................................................... -- 3,453,788 10,153,866
Other long-term liabilities .......................................... -- (48,169) (1,268,423)
------------ ------------ ------------
Net cash provided by operating activities ......................... 23,463,160 41,128,536 51,277,228
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures .................................................. (25,654,336) (37,292,551) (66,656,704)
Investment in marketable securities ................................... (8,000,000) -- --
Investment in joint venture ........................................... (5,080,142) (10,723,040) --
Acquisition of business ............................................... (1,800,000) (28,131,282) (8,346,289)
Proceeds from sale of marketable securities ........................... -- 1,000,000 --
Proceeds from sale of property and equipment .......................... 208,351 3,462,149 190,485
------------ ------------ ------------
Net cash used for investing activities ............................. (40,326,127) (71,684,724) (74,812,508)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Paydowns under revolving line of credit agreements .................... (72,441,000) (16,932,339) (84,539,920)
Borrowings under revolving line of credit agreements .................. 72,441,000 93,809,851 88,397,648
Proceeds from issuance of stock ....................................... 3,039,961 1,076,734 11,084,143
Proceeds from grants .................................................. 2,000,000 2,575,000 7,698,335
Proceeds from issuance of long-term debt .............................. 350,467 -- --
Proceeds from issuance of convertible debenture ....................... 1,399,000 -- --
Capital contributions ................................................. 1,237,000 -- --
Subsidiary stock redemption ........................................... (2,623,651) -- --
Payment of long-term debt ............................................. (6,238,862) (89,686,711) --
Distributions ......................................................... (496,972) (698,376) --
------------ ------------ ------------
Net cash provided by (used for)
financing activities .............................................. (1,333,057) (9,855,841) 22,640,206
------------ ------------ ------------
Adjustment for foreign currency translation ............................ (2,735,140) 1,452,387 (4,452,435)
------------ ------------ ------------
Net decrease in cash and cash equivalents .............................. (20,931,164) (38,959,642) (5,347,509)
CASH AND CASH EQUIVALENTS - BEGINNING .................................. 96,239,669 75,308,505 36,348,863
------------ ------------ ------------
CASH AND CASH EQUIVALENTS - ENDING ..................................... $ 75,308,505 $ 36,348,863 $ 31,001,354
============ ============ ============
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest ............................................................ $ 2,883,827 $ 1,553,386 $ 6,808,743
Income taxes ........................................................ $ 8,562,981 $ 13,401,881 $ 22,425,941
</TABLE>
See accompanying notes to consolidated financial statements.
38
<PAGE> 15
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sykes Enterprises, Incorporated and consolidated subsidiaries (the "Company" or
"Sykes") provides vertically integrated technology-based solutions to customers
on a worldwide basis. By utilizing its information technology support centers
and e-commerce platform, Sykes is able to provide traditional and e-commerce
services at all stages in the life cycle of its clients' products and services,
including initial development documentation and localization, customer product
services, and end-user support. The Company's services are provided to customers
throughout a wide variety of industries.
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements include the
accounts of Sykes and its wholly-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates - The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates;
however, management does not believe these differences would have a material
effect on operating results.
Recognition of Revenue - The Company primarily recognizes its revenue from
services as those services are performed. Royalty revenue is recognized at the
time royalties are earned and the remaining revenue is recognized on fixed price
contracts using the percentage-of-completion method of accounting. Adjustments
to fixed price contracts and estimated losses, if any, are recorded in the
period when such adjustments or losses are known. Product sales are recognized
upon shipment.
Sykes' recognizes revenue from software and contractually provided rights in
accordance with the American Institute of Certified Public Accountants ("AICPA")
Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2"), as
amended by Statement of Position 98-4, "Deferral of the Effective Date of a
Provision of SOP 97-2" ("SOP 98-4"), Statement of Position 98-9, "Modification
of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions"
("SOP 98-9"), as well as Staff Accounting Bulletin No. 101, "Revenue Recognition
in Financial Statements" ("SAB 101"). SAB 101 is to be applied no later than the
first quarter after December 15, 1999. Revenue is recognized from licenses of
the Company's software products and rights when the agreement has been executed,
the product or right has been delivered or provided, collectibility is probable
and the software license fees or rights are fixed and determinable. Contracts
that provide for multiple elements are accounted for pursuant to the above
standards. If any portion of the license fees or rights is subject to
forfeiture, refund or other contractual contingencies, the Company will postpone
revenue recognition until these contingencies have been removed. Sykes'
generally accounts for consulting services separate from software license fees
for those multi-element arrangements where consulting services are a separate
element and are not essential to the customer's functionality requirements and
there is vendor-specific objective evidence of fair value for these services.
Consulting revenue is recognized as the services are performed. Revenue from
support and maintenance activities is recognized ratably over the term of the
maintenance period and the unrecognized portion is recorded as deferred revenue.
Cash and Cash Equivalents - Cash and cash equivalents consist of highly liquid
short-term investments classified as available for sale as defined under
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Cash in the amount of approximately
$8.1 million and $7.3 million was held in taxable interest bearing investments
at December 31, 1998, and 1999, respectively, which are classified as available
for sale and have an average maturity of approximately 30 days.
Restricted Cash - The financial statements include restricted cash, which is
held in conjunction with deposits by customers at December 31, 1998 and 1999,
respectively. Included in current liabilities at December 31, 1998 and 1999,
respectively is the related payable.
Property and Equipment - Property and equipment is recorded at cost and
depreciated using the straight-line method over the estimated useful lives of
the respective assets. Improvements to leased premises are amortized over the
shorter of the related lease term or the useful lives of the improvements. Cost
and related accumulated depreciation on assets retired or disposed of are
removed from the accounts and any gains or losses resulting therefrom are
credited or charged to income. Depreciation expense was approximately $14.8
million, $21.0 million and $30.6 million for the years ended December 31, 1997,
1998 and 1999, respectively. Property and equipment includes approximately $0.9
million and $2.0 million of additions included in accounts payable at December
31, 1998 and 1999, respectively. Accordingly, these non-cash transactions have
been excluded from the accompanying consolidated statements of cash flows for
the years ended December 31, 1998 and 1999, respectively.
1
<PAGE> 16
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES, continued
During 1998 and 1999, the Company capitalized certain costs incurred to
internally develop software upon the establishment of technological feasibility.
Costs incurred prior to the establishment of technological feasibility were
expensed as incurred. Capitalized internally developed software costs, net of
accumulated amortization, were approximately $2.2 million and $2.6 million at
December 31, 1998 and 1999, respectively.
Land received from various governmental agencies under grants is recorded at
fair value at date of grant. During the years ended December 31, 1997, 1998 and
1999, the Company recorded approximately $430,000, $280,000 and $1,056,000,
respectively, in land acquisitions as a result of such grants. Accordingly,
these non-cash transactions have been excluded from the accompanying
consolidated statements of cash flows for the years ended December 31, 1997,
1998 and 1999.
Investment in Joint Venture - The Company had a 50% interest in a joint venture
that was accounted for using the equity method of accounting. Accordingly, the
Company recorded its proportionate share of the gains and losses of the joint
venture in the consolidated statements of income for 1997 and the first eight
months of 1998. Effective September 1, 1998, the Company acquired the remaining
50% equity interest in this joint venture (See Note 2).
Intangible Assets - Intangible assets consist of the excess of costs over fair
market value of the net assets of the acquired business of $67.1 million and
$74.3 million at December 31, 1998 and 1999, respectively, net of accumulated
amortization of $6.2 million and $8.8 million, respectively. Also included in
intangible assets are existing technologies and covenants not to compete arising
from business acquisitions of $15.7 million and $16.5 million at December 31,
1998 and 1999, respectively, net of accumulated amortization of $1.5 million and
$5.2 million, respectively. The intangible assets are stated at cost and are
being amortized on a straight-line basis over periods ranging from 10 to 20
years for the excess of costs over fair value of the net assets of the acquired
business, and two to five years for the existing technologies and covenants not
to compete. Amortization expense was approximately $0.9 million, $1.7 million
and $6.0 million for the years ended December 31, 1997, 1998 and 1999,
respectively.
Impairment of Long-Lived Assets - The Company reviews long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Recoverability of property and equipment is measured by comparison
of its carrying amount to undiscounted future net cash flows the property and
equipment are expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount that the
carrying amount of the property and equipment exceeds its fair market value, as
determined by discounted cash flows. Sykes' assesses the recoverability of
goodwill by determining whether the unamortized goodwill balance can be
recovered through undiscounted future results of the acquired operation. The
amount of goodwill impairment, if any, is measured based on projected discounted
future results using a discount rate reflecting the Company's average cost of
funds. During 1997, the Company recorded an impairment loss of $10.4 million
related to an acquisition made during that year. During 1999, the Company
recorded an impairment loss of approximately $6.0 million related to software
and computer equipment.
Income Taxes - Sykes' uses the asset and liability method of accounting for
income taxes. Deferred income taxes are recorded to reflect the tax consequences
on future years of differences between the tax basis of assets and liabilities
and their financial reporting amounts at each year end based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income.
Deferred Grants - Grants for land and the acquisition of buildings, property and
equipment are deferred and recognized in income over the corresponding useful
lives of the related assets. Amortization of the property and equipment grants
that is included in income was approximately $0.5 million, $0.9 million and $1.3
million for the years ended December 31, 1997, 1998 and 1999, respectively.
There are no significant contingencies associated with the grants that would
impact the Company's ability to utilize assets received in association with the
grants. Grants received in excess of property and equipment costs are recognized
in the year executed, and that amount approximated $1.3 million and $2.5 million
for the years ended December 31, 1998 and 1999, respectively, (none for 1997).
Segment Reporting - In June 1997, the Financial Accounting Standards Board (the
FASB) issued Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS 131). SFAS 131
uses a management approach to report financial and descriptive information about
a Company's operating segments. Operating segments are revenue-producing
components of the enterprise for which separate financial information is
produced internally for the Company's management. Under this definition, the
Company operated, for all periods presented, as a single segment.
2
<PAGE> 17
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES, continued
Deferred Revenue - The Company invoices certain contracts in advance. The
deferred revenue is earned over the life of the respective contract, which range
from six months to two years.
Comprehensive Income - Effective January 1, 1998, the Company adopted Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income",
("SFAS No 130"), which requires all items that are required to be recognized
under accounting standards as components of other comprehensive income be
reported in the financial statements.
Fair Value of Financial Instruments - The following methods and assumptions were
used to estimate the fair value of each class of financial instruments for which
it is practicable to estimate that value:
o Cash, accounts receivable and accounts payable. The carrying amount
reported in the balance sheet for cash, accounts receivable and
accounts payable approximates their fair value.
o Long-Term Debt. The fair value of the Company's long-term debt,
including the current portion thereof, is estimated based on the
quoted market price for the same or similar types of borrowing
arrangements. The carrying value of the Company's long-term debt
approximates fair value because the debt bears variable interest
rates.
Non-monetary Transaction - During 1998, the Company sold a software license in
exchange for convertible preferred stock in a privately held corporation. The
convertible preferred stock has a fair market value of $10.0 million, which
represents the sales price recorded by the Company. The cost of this security is
included in the consolidated balance sheet under the caption "Deferred charges
and other assets" at December 31, 1998 and 1999, respectively.
Foreign Currency Translation - The assets and liabilities of the Company's
foreign subsidiaries, whose functional currency is other than the U.S. Dollar,
are translated at the exchange rates in effect on the reporting date, and income
and expenses are translated at the weighted average exchange rate during the
period. The net effect of translation gains and losses is not included in
determining net income, but is included in accumulated other comprehensive
income, which is reflected as a separate component of shareholders' equity.
Foreign currency transactional gains and losses are included in determining net
income. Such gains and losses are not material for any period presented.
Recent Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board (the "FASB") issued Statement of Financial Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 establishes accounting and reporting standards for derivative financial
instruments and hedging activities and requires the Company to recognize all
derivatives as either assets or liabilities on the balance sheet and measure
them at fair value. Gains and losses resulting from changes in fair value would
be accounted for depending on the use of the derivative and whether it is
designated and qualifies for hedge accounting. In June 1999, the FASB issued
SFAS No. 137, which defers the implementation of SFAS No. 133 until years
beginning after June 15, 2000. Sykes' does not anticipate that the adoption of
this SFAS No. 133 will have a significant effect on its results of operations or
financial position.
NOTE 2 - ACQUISITIONS AND MERGERS
On August 20, 1999, the Company acquired all of the common stock of
CompuHelpline, Inc., (d/b/a PC Answer) for approximately $340,000 consisting of
$40,000 of cash and 11,594 shares of the Company's common stock. PC Answer was
engaged in developing, marketing and selling prepaid technical computer support
cards and services under the trademark names of PC Answer and MAC Answer. The
transaction was accounted for under the purchase method of accounting with
resulting goodwill being amortized over a ten-year life. Pro forma information
is not presented as the operating results of PC Answer are not material to the
Company's consolidated operations.
Effective August 31, 1999, the company acquired all of the common stock of Acer
Servicios de Informacion Sociedad Anonima ("AIS") of Heredia, Costa Rica for
$6.0 million in cash. AIS operated an information technology call center that
provided technical support and services to customers in North America and
Central America. The transaction was accounted for under the purchase method of
accounting with resulting goodwill being amortized over a ten-year life. Pro
forma information is not presented as the operating results of AIS are not
material to the Company's consolidated operations.
3
<PAGE> 18
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - ACQUISITIONS AND MERGERS, continued
Effective October 12, 1999, the Company acquired the AnswerExpress Support Suite
for $2.5 million in cash. The transaction was accounted for under the purchase
method of accounting with resulting goodwill being amortized over a ten-year
life. Pro forma information is not presented as the operating results of
AnswerExpress are not material to the Company's consolidated operations.
Effective September 1, 1998 the Company acquired the remaining 50% of
outstanding common stock of SHPS, Incorporated ("SHPS") for approximately $28.1
million plus the assumption of SHPS' debt. This purchase price was primarily
financed through borrowings under the Company's credit facility. The SHPS
acquisition was accounted for using the purchase method of accounting and
accordingly, the results of operations for the period September 1, 1998 to
December 31, 1998, have been included in the accompanying financial statements.
The purchase price has been allocated to the assets and liabilities of SHPS
based upon fair values at the date of acquisition. The allocations were based on
appraisals, evaluations, estimations and other studies.
Sykes' adjusted the amounts originally allocated to acquired in-process research
and development to reflect the new methodology set forth in the September 30,
1998 letter from the SEC Staff to the American Institute of Certified Public
Accountants. The revised allocation resulted in goodwill recognized of
approximately $11.9 million, representing the excess of the purchase price over
the fair value of the net assets acquired, as follows:
<TABLE>
<S> <C>
Goodwill $11,923,929
Fair value of assets acquired (inclusive of $38,588,462 of goodwill) 83,587,143
Acquired in-process research and development 14,468,907
Liabilities assumed (81,848,697)
-----------
Cash paid, net of cash acquired $28,131,282
===========
</TABLE>
Pursuant to acquisitions completed by SHPS, acquired in-process technology was
initially reviewed utilizing methodologies consistent with those stated below.
Sykes' determined that this analysis provided no establishment of technological
feasibility. As of the date of Sykes' acquisition of SHPS, technological
feasibility of the in-process technology was reviewed again and had not been
established. Further analysis by the Company has indicated the technology has no
alternate future use; therefore, the Company has recorded a charge for the
amount of the purchase price allocated to acquired in-process research and
development of approximately $14.5 million. This charge is reflected in the
accompanying consolidated statement of income for the year ended December 31,
1998.
The amount of purchase price allocated to acquired in-process research and
development was determined by estimating the stage of development of each
in-process research and development project at the date of acquisition,
estimating cash flows resulting from the expected revenues generated from such
projects, and discounting the net cash flows back to their present value using a
discount rate of 15% for the existing technology and 25% for in-process
technology, which represents a premium to the Company's cost of capital. The
spread over the existing technology discount rate reflects the inherently
greater risk of the research and development efforts. These projections were
based on management's estimates of market share and growth, expected trends in
technology and the expected timing of new product introductions. As a part of
the transaction, the Company recorded approximately $7.3 million in capitalized
software costs and rights, which are being amortized over five years, and
approximately $50.5 million of goodwill, which is being amortized over 20 years.
The unaudited pro forma combined historical results, as if SHPS had been
acquired on January 1, 1997 are estimated to be revenues of $351.6 million, net
income of $6.6 million, and basic and diluted net income per share of $0.16 for
the year ended December 31, 1997, and revenues of $501.2 million, net loss of
$5.6 million, and basic and diluted loss per share of $0.14 for the year ended
December 31, 1998. The pro forma results include amortization of the intangibles
noted above and interest expense on the debt assumed to finance the purchase.
The pro forma results are not necessarily indicative of what actually would have
occurred if the acquisition had been completed as of the beginning of 1997, nor
are they indicative of future consolidated results.
During 1997, the Company acquired all of the stock of McQueen International,
Limited ("McQueen") of Galashiels, Scotland. The Company accounted for the
acquisition utilizing the pooling-of-interests method of accounting. McQueen had
a February 28 fiscal year end and, accordingly, the McQueen statement of income
for the year ended February 28, 1997, has been combined with the Sykes'
statement of income for the year ended December 31, 1996. In order to conform
McQueen's fiscal year end to Sykes' calendar year end, the Consolidated
Statement of Income for 1997 includes two months (January and February 1997) for
McQueen which are also included in the Consolidated Statements of Income for the
year ended December 31, 1996. Accordingly, an adjustment has been made during
1997 to retained earnings for the duplication of net income of approximately
$1.1 million for such two-month period. McQueen's revenue for the two months
(January and February 1997) was approximately $12.3 million.
4
<PAGE> 19
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - ACQUISITIONS AND MERGERS, continued
On April 7, 1997, McQueen acquired the Media Services divisions of Rand McNally
& Company, comprising the US Division, Rand McNally Media Services Inc. and Rand
McNally International Business Services BV, a Netherlands division with an
operational branch in Ireland, for approximately $30.0 million, including
acquisition costs. This purchase price was entirely financed through the
issuance of notes to the seller. Accordingly, this non-cash transaction has been
excluded from the accompanying Consolidated Statement of Cash Flows for the year
ended December 31, 1997. The excess of the total acquisition cost over the fair
value of net assets acquired in the amount of $6.9 million after an impairment
of $10.4 million is being amortized on a straight-line basis over 15 years. The
unaudited pro forma combined historical results, as if the Media Services
division of Rand McNally & Company had been acquired on January 1, 1997, are
estimated to be revenues of $368.2 million, net income of $7.8 million, and
basic and diluted earnings per share of $0.19 and $0.18, respectively, for 1997.
The pro forma results include amortization of the intangibles noted above and
interest expense on the debt assumed to finance the purchase. The pro forma
results are not necessarily indicative of what actually would have occurred if
the acquisition had been completed as of the beginning of 1997, nor are they
necessarily indicative of future consolidated results.
NOTE 3 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of trade receivables. With the exception of
$10.0 million of convertible preferred stock held, the Company's credit
concentrations are limited due to the wide variety of customers and markets in
which the Company's services are sold.
NOTE 4 - RECEIVABLES
Receivables consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Trade accounts receivable ............................................................ $100,966,473 $110,846,842
Unbilled accounts receivable ......................................................... 5,326,607 14,600,950
Notes from officers .................................................................. 470,122 542,224
Other ................................................................................ 7,873,231 8,353,888
------------ ------------
114,636,433 134,343,904
Less allowance for doubtful accounts ................................................. 796,171 2,440,544
------------ ------------
$113,840,262 $131,903,360
============ ============
</TABLE>
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Land ................................................................................. $ 4,014,119 $ 5,114,051
Buildings and leasehold improvements ................................................. 30,661,019 41,171,099
Equipment, furniture and fixtures .................................................... 130,956,959 172,270,235
Capitalized software development costs ............................................... 2,217,529 2,895,739
Transportation equipment ............................................................. 259,700 447,916
Construction in progress ............................................................. 3,381,020 16,290,770
------------ ------------
171,490,346 238,189,810
Less accumulated depreciation ........................................................ 72,313,834 103,433,932
------------ ------------
$ 99,176,512 $134,755,878
============ ============
</TABLE>
5
<PAGE> 20
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - MARKETABLE SECURITIES
During 1997, the Company purchased SystemSoft Corp. common stock in conjunction
with a strategic technology exchange agreement between the parties that had an
original cost basis of $8.0 million. In accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," the investment is classified as available-for-sale
securities. During the fourth quarter of 1998, the Company wrote down its
investment in SystemSoft Corp. by approximately $7.3 million due to a
significant reduction in its market value, which was determined to be other than
temporary. As such, the investment is carried at an aggregate market value of
approximately $0.2 million as of December 31, 1998 and 1999, respectively.
NOTE 7 - DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Convertible preferred stock ...................................................................... $10,000,000 $10,000,000
Non-current deferred tax asset, net .............................................................. 1,249,470 8,616,227
Other ............................................................................................ 2,234,676 3,917,653
----------- -----------
$13,484,146 $22,533,880
=========== ===========
</TABLE>
NOTE 8 - ACCRUED EMPLOYEE COMPENSATION AND BENEFITS
Accrued employee compensation and benefits consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Accrued compensation ............................................................................. $10,907,243 $12,762,423
Accrued employment taxes ......................................................................... 3,574,422 7,229,210
Accrued vacation ................................................................................. 2,224,829 2,742,426
Other ............................................................................................ 2,437,748 1,471,532
----------- -----------
$19,144,242 $24,205,591
=========== ===========
</TABLE>
NOTE 9 - OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES
Other accrued expenses and current liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Deferred revenue ................................................................................. $ 5,961,591 $ 6,375,510
Accrued telephone charges ........................................................................ 2,349,844 2,213,207
Accrued interest ................................................................................. 1,329,586 213,467
Other ............................................................................................ 7,553,731 8,357,007
----------- -----------
$17,194,752 $17,159,191
=========== ===========
</TABLE>
6
<PAGE> 21
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Syndicated credit facility, $150.0 million maximum, due February 2001, interest
payable quarterly at tiered levels between 75 and 175 basis points above listed
LIBOR, the facility is unsecured ................................................................. $75,000,000 $80,000,000
Syndicated credit facility, $15.0 million maximum, due in installments through
February 2001, interest payable monthly at tiered levels between 75 and 175
basis points above listed LIBOR, the facility is unsecured ....................................... 2,659,850 2,284,500
Notes payable and capital leases, principal and interest payable in monthly
installments through December 2002, interest at varying rates up to prime
plus 1 percent, collateralized by certain receivables and equipment ............................. 1,771,591 1,004,668
----------- -----------
79,431,441 83,289,168
Less current portion ............................................................................. 3,983,239 3,236,451
----------- -----------
$75,448,202 $80,052,717
=========== ===========
</TABLE>
Principal maturities subsequent to December 31, 2000 are as follows:
<TABLE>
<S> <C>
2001 ....................................................... $80,026,358
2002 ....................................................... 26,359
-----------
$80,052,717
===========
</TABLE>
Effective February 1998, the Company entered into a $150.0 million syndicated
credit facility and a $15.0 million swingline facility that provides for
multi-currency lending. These facilities accrue interest at tiered levels
between 75 and 175 basis points above listed LIBOR pursuant to a defined ratio
calculation within the agreement, and accrues an unused commitment fee at tiered
levels between 15 and 37.5 basis points above listed LIBOR. The Company was also
contingently liable for letters of credit in the amount of approximately $5.0
million at December 31, 1999 ($5.0 million at December 31, 1998). The $150.0
million facility contains certain financial covenants associated with debt
ratios, leverage, coverage and capital expenditures and acquisitions as defined
by the agreement. At December 31, 1999, the Company was in compliance with all
loan covenants.
During January 2000, the Company became contingently liable for an additional
letter of credit in the amount of $30.0 million, that guaranteed performance of
a contractual obligation.
7
<PAGE> 22
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Sykes' presents data in the Consolidated Statements of Changes in Shareholders'
Equity in accordance with SFAS No. 130. This statement establishes rules for the
reporting of comprehensive income and its components. The components of other
accumulated comprehensive income are as follows:
<TABLE>
<CAPTION>
Accumulated
Unrealized Foreign Other
Loss on Currency Comprehensive
Securities Translation Income (Loss)
----------- ----------- -------------
<S> <C> <C> <C>
Balance at January 1, 1997 ...................................... $ -- $ (125,007) $ (125,007)
Foreign currency translation adjustment ......................... -- (2,735,140) (2,735,140)
Unrealized loss on securities, net of income taxes .............. (734,518) -- (734,518)
----------- ----------- -----------
Balance at December 31, 1997 .................................... (734,518) (2,860,147) (3,594,665)
Foreign currency translation adjustment ......................... -- 1,452,387 1,452,387
Unrealized loss on securities ................................... (6,600,127) -- (6,600,127)
Less: Reclassification adjustment for loss realized in net income 7,334,645 -- 7,334,645
----------- ----------- -----------
Balance at December 31, 1998 .................................... -- (1,407,760) (1,407,760)
Foreign currency translation adjustment ......................... -- (4,452,435) (4,452,435)
----------- ----------- -----------
Balance at December 31, 1999 .................................... $ -- $(5,860,195) $(5,860,195)
=========== =========== ===========
</TABLE>
Earnings associated with the Company's investment in its foreign subsidiaries
are considered to be permanently invested and no provision for United States
federal and state income taxes on those earnings or translation adjustments has
been provided.
NOTE 12 - INCOME TAXES
The components of income before income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Domestic ............................................................ $ 8,551,740 $13,368,121 $17,261,008
Foreign ............................................................. 12,260,702 16,392,878 18,705,020
----------- ----------- -----------
Total income before income taxes ................................. $20,812,442 $29,760,999 $35,966,028
=========== =========== ===========
</TABLE>
Provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal ............................................................... $ 6,906,000 $14,365,000 $ 8,534,000
State ................................................................. 1,229,000 2,338,000 1,419,000
Foreign ............................................................... 5,357,156 8,889,000 12,306,000
----------- ----------- -----------
Total current provision for income taxes .............................. 13,492,156 25,592,000 22,259,000
----------- ----------- -----------
Deferred:
Federal ............................................................... (99,000) (2,112,000) (1,952,000)
State ................................................................. (25,000) (340,000) (479,000)
Foreign ............................................................... (187,160) (1,657,000) (5,893,000)
----------- ----------- -----------
Total deferred provision for income taxes ........................... (311,160) (4,109,000) (8,324,000)
----------- ----------- -----------
Total provision for income taxes ................................ $13,180,996 $21,483,000 $13,935,000
=========== =========== ===========
</TABLE>
8
<PAGE> 23
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - INCOME TAXES, continued
The components of the net deferred tax asset (liability) are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1998 1999
----------- -----------
<S> <C> <C>
Domestic current:
Deferred tax asset:
Accrued expenses .................................................................... $ 889,000 $ 1,589,000
Deferred compensation ............................................................... 244,000 96,000
Bad debt reserve .................................................................... 346,000 700,000
Other ............................................................................... 6,000 8,000
----------- -----------
Total current deferred tax asset .................................................. $ 1,485,000 $ 2,393,000
----------- -----------
Deferred tax liability:
Prepaid expenses .................................................................... $ (462,000) $ (290,000)
Cash to accrual-Section 481 adjustment .............................................. (5,000) --
Other ............................................................................... (798,904) (925,000)
----------- -----------
Total current deferred tax liability .............................................. (1,265,904) (1,215,000)
----------- -----------
Net domestic current deferred tax asset ......................................... $ 219,096 $ 1,178,000
----------- -----------
Foreign current:
Deferred tax asset:
Deferred commissions ................................................................ $ 232,000 $ --
Net operating loss carry-forward .................................................... -- 1,470,064
Valuation allowance ................................................................. -- (1,240,000)
----------- -----------
Total foreign current deferred tax asset .......................................... $ 232,000 $ 230,064
----------- -----------
Net current deferred asset ............................................................. $ 451,096 $ 1,408,064
=========== ===========
</TABLE>
9
<PAGE> 24
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - INCOME TAXES, continued
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1998 1999
----------- -----------
<S> <C> <C>
Domestic non-current:
Deferred tax asset:
Unrealized loss on security .......................................................... $ 3,009,000 $ 3,009,000
Intangible assets .................................................................... 3,457,000 5,171,000
Net operating loss carry-forward ..................................................... 454,000 83,000
Valuation allowance .................................................................. (3,000,000) (2,894,000)
Other ................................................................................ -- 265,000
----------- -----------
Total non-current deferred tax asset ................................................ $ 3,920,000 $ 5,634,000
----------- -----------
Deferred tax liability:
Property and equipment ............................................................... $ (710,000) $(1,188,000)
Intangible assets .................................................................... (2,155,000) (1,919,000)
Other ................................................................................ -- --
----------- -----------
Total non-current deferred tax liability ........................................... (2,865,000) (3,107,000)
----------- -----------
Net domestic non-current deferred tax asset ...................................... $ 1,055,000 $ 2,527,000
----------- -----------
Foreign non-current:
Deferred tax asset:
Intangible assets .................................................................... $ 1,571,470 $ 4,058,000
Deferred revenue ..................................................................... -- 3,391,000
Net operating loss carry-forward ..................................................... 704,000 --
Valuation allowance .................................................................. (704,000) --
----------- -----------
Total non-current deferred tax asset ............................................... $ 1,571,470 $ 7,449,000
----------- -----------
Deferred tax liability:
Property and equipment ............................................................... $(1,377,000) $ (865,773)
Untaxed reserve ...................................................................... -- (494,000)
----------- -----------
Total non-current deferred tax liability ........................................... (1,377,000) (1,359,773)
----------- -----------
Net foreign non-current deferred tax asset ....................................... 194,470 6,089,227
----------- -----------
Net non-current deferred tax asset ..................................................... $ 1,249,470 $ 8,616,227
=========== ===========
</TABLE>
The Company has not recorded deferred income taxes applicable to undistributed
earnings of foreign subsidiaries that are indefinitely reinvested in foreign
operations. Undistributed earnings amounted to approximately $38.3 million at
December 31, 1999, excluding amounts which, if remitted, generally would result
in minimal additional U.S. income taxes because of available foreign tax
credits. If the earnings of such foreign subsidiaries were not indefinitely
reinvested, a deferred tax liability of approximately $5.0 million would have
been required.
At December 31, 1999, the Company's French subsidiary had an operating loss
carryforward of approximately $2.9 million that expires through the year 2005.
In addition, the Company's Belgian subsidiary had an operating loss carryforward
of approximately $575,000 that does not expire.
10
<PAGE> 25
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - INCOME TAXES, continued
The following summarizes the principal differences between income taxes at the
federal statutory rate and the effective income tax amounts reflected in the
financial statements:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Statutory tax ............................................................. $ 7,284,233 $ 10,416,000 $ 12,588,000
State income taxes, net of federal tax benefit ............................ 759,000 1,015,000 611,000
Effect of income not subject to federal and state income tax .............. (1,015,000) (162,000) 9,000
In-process research and development ....................................... -- 5,064,000 --
Valuation on unrealized loss on marketable security ....................... -- 3,000,000 --
Valuation on net operating loss carry-forward ............................. -- 704,000 430,000
Non-deductible amortization ............................................... 3,640,000 63,000 514,000
Loss from joint venture ................................................... 990,000 1,382,000 --
Foreign taxes, net of foreign income not taxed in the
United States ........................................................ 971,763 (565,000) (1,468,000)
Permanent differences ..................................................... 582,000 359,000 440,000
Other ..................................................................... (31,000) 207,000 811,000
------------ ------------ ------------
Total provision for income taxes ....................................... $ 13,180,996 $ 21,483,000 $ 13,935,000
============ ============ ============
</TABLE>
The Company is currently under examination by the Internal Revenue Service for
the tax year ended July 31, 1997. The Company has reviewed various matters that
are under consideration and believes that it has adequately provided for any
liability that may result from this examination. In the opinion of management,
any liability that may arise from the prior period as a result of the
examination will not have a material effect on the Company's financial
condition, results of operations, or cash flows.
NOTE 13 - EARNINGS PER SHARE
Basic earnings per share are based on the weighted average number of common
shares outstanding during the periods. Diluted earnings per share includes the
weighted average number of common shares outstanding during the respective
periods and the further dilutive effect, if any, from stock options using the
treasury stock method.
The numbers of shares used in the earnings per share computation are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Basic:
Weighted average common shares outstanding .................... 41,044,002 41,257,623 42,044,574
---------- ---------- ----------
Total basic shares outstanding ............................. 41,044,002 41,257,623 42,044,574
Diluted:
Dilutive effect of stock options .............................. 1,271,044 1,030,802 950,841
---------- ---------- ----------
Total diluted shares outstanding ........................... 42,315,046 42,288,425 42,995,415
========== ========== ==========
</TABLE>
11
<PAGE> 26
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - COMMITMENTS AND CONTINGENCIES
The Company leases certain equipment and buildings under operating leases having
terms ranging from one to twenty-two years. The building leases contain up to
two five-year renewal options. Rental expense under operating leases for the
years ended December 31, 1997, 1998 and 1999 was approximately $6.1 million,
$11.2 million and $16.7 million, respectively.
The Company has a ten-year operating lease agreement, signed in 1995, with the
Company's majority shareholder for its corporate aircraft. The lease expense for
each of the years ended December 31, 1997, 1998 and 1999 was approximately
$618,000, $618,000 and $613,000 respectively.
The following is a schedule of future minimum rental payments under operating
leases having a remaining non-cancelable term in excess of one year subsequent
to December 31, 1999:
<TABLE>
<CAPTION>
RELATED NON-RELATED TOTAL
YEAR PARTY PARTY AMOUNT
- ---------------------------------------------------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
2000 ................................................................. $ 613,000 $11,318,000 $11,931,000
2001 ................................................................. 613,000 8,965,000 9,578,000
2002 ................................................................. 613,000 7,366,000 7,979,000
2003 ................................................................. 613,000 5,175,000 5,788,000
2004 ................................................................. 613,000 4,234,000 4,847,000
Thereafter ........................................................... 562,000 11,873,000 12,435,000
---------- ----------- -----------
Total minimum payments required ................................. $3,627,000 $48,931,000 $52,558,000
========== =========== ===========
</TABLE>
As of March 7, 2000, the Company is aware of twelve purported class action
lawsuits that have been filed against Sykes and certain of its officers alleging
violations of federal securities laws. All of the actions were filed in the
United States District Court for the Middle District of Florida. The plaintiffs
of these lawsuits purport to assert claims on behalf of a class of purchasers of
Sykes common stock between April 26, 1999 and February 4, 2000. The actions
essentially duplicate one another and plead substantially the same allegations,
claiming violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder. Among other things, the actions
allege that beginning in April 1999, the Company and certain of its officers
made materially false statements concerning the Company's financial condition.
The complaints also claim that the Company's financial statements were not
prepared in accordance with generally accepted accounting principles. The
actions seek compensatory and other damages, and costs and expenses associated
with the litigation.
The Company believes these complaints are without merit and intends to defend
the actions vigorously. However, the Company cannot predict the outcome of these
lawsuits or the impact that they may have on the Company. The Company also
cannot predict whether any other suits, claims, or investigations may arise in
the future based on the same claims. The outcome of any of these lawsuits or any
future lawsuits, claims, or investigations relating to the same subject matter
may have a material adverse impact on the Company's financial condition and
results of operations.
The Company from time to time is involved in legal actions arising in the
ordinary course of business. With respect to these matters, management believes
that it has adequate legal defenses and/or provided adequate accruals for
related costs such that the ultimate outcome will not have a material adverse
effect on the Company's future financial position.
NOTE 15 - EMPLOYEE BENEFIT PLAN
The Company maintains a 401(k) plan covering defined employees who meet
established eligibility requirements. Under the original plan provisions, the
Company matched 25% of participant contributions to a maximum matching amount of
1% of participant compensation. During 1997, the Company increased the 401(k)
matching provision to 50% of participating contributions to a maximum matching
amount of 2% of participant compensation. The Company contribution was
approximately $352,000, $601,000 and $753,000 for the years ended December 31,
1997, 1998 and 1999, respectively. In addition, two of the Company's
subsidiaries maintained separate defined contribution plans, one of which was
merged into the Company's 401(k) plan effective January 1, 1998. The combined
contributions made to these plans were approximately $244,000, $149,000 and
$233,000 for the years ended December 31, 1997, 1998 and 1999, respectively.
12
<PAGE> 27
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - STOCK OPTIONS
In 1995, the Company granted options to an executive officer to purchase
1,143,000 shares of common stock. The options became exercisable three years
from the date of grant, except that one-third were exercisable to the extent
that the underlying shares were permitted to be included by the underwriters in
an underwritten public offering. In November 1996 the Company completed a public
offering and 381,000 of the options granted to the executive officer were
exercised and sold in the offering. Of the remaining 762,000 options, 200,000
options are outstanding as of December 31, 1999. These options expire if not
exercised by the tenth anniversary of their grant date.
Another executive officer was granted options under the Company's 1996 Employee
Stock Option Plan to purchase 209,841 shares of the Company's common stock with
an exercisable price of (i) 33 1/3% of such shares at $8.00 per share, (ii) 33
1/3% at $7.55 per share, and (iii) 33 1/3% at $6.67 per share. Compensation
expense of approximately $42,000, $42,000 and $12,000 is recognized in the
general and administrative expenses in the accompanying consolidated statements
of operations for the years ended December 31, 1997, 1998 and 1999,
respectively.
1996 Employee Stock Option Plan - The Company's 1996 Employee Stock Option Plan
(the "Employee Plan") permits the granting of incentive or nonqualified stock
options to purchase up to approximately 2,625,000 shares of the Company's common
stock at not less than the fair value at the time the options are granted. All
options granted under the Employee Plan expire if not exercised by the tenth
anniversary of their grant date with the exception of outstanding options
converted pursuant to the acquisition of McQueen consistent with
pooling-of-interests rules and expire five years from grant date. Certain other
officers and employees hold options to purchase additional shares of common
stock at a range of $0.03 to $31.27 per share that vest ratably over the
three-year period following the date of grant, except for approximately 360,000
options associated with the outstanding options from the acquisition of McQueen
which are immediately exercisable. Transactions related to the 1996 Employee
Stock Option Plan are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Outstanding at January 1, 1997.......................................................... 901,792 $ 15.22
(Exercisable: 180,000 at $27.67)
Granted............................................................................. 893,816 $ 19.86
Exercised........................................................................... (190,322) $ 8.00
Expired or terminated............................................................... (231,300) $ 19.38
---------
Outstanding at December 31, 1997........................................................ 1,373,986 $ 16.67
(Exercisable: 390,966 at $11.02)
Granted............................................................................. 681,750 $ 21.46
Exercised........................................................................... (329,478) $ 3.14
Expired or terminated............................................................... (312,656) $ 23.91
---------
Outstanding at December 31, 1998........................................................ 1,413,602 $ 20.05
(Exercisable: 344,053 at $19.49)
Granted............................................................................. 860,421 $ 23.50
Exercised........................................................................... (676,799) $ 17.71
Expired or terminated............................................................... (320,086) $ 22.70
---------
Outstanding at December 31, 1999........................................................ 1,277,138 $ 22.90
=========
(Exercisable: 364,833 at $20.99)
Options available for future grant ..................................................... 151,263
=========
</TABLE>
13
<PAGE> 28
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - STOCK OPTIONS, continued
The following table further summarizes information about the 1996 Employee Stock
Option Plan at December 31, 1999:
<TABLE>
<CAPTION>
NUMBER WEIGHTED WEIGHTED NUMBER WEIGHTED
OUTSTANDING AVERAGE AVERAGE EXERCISABLE AVERAGE
RANGE OF AT REMAINING EXERCISE AT EXERCISE
EXERCISE PRICES DEC. 31, 1999 LIFE PRICE DEC. 31, 1999 PRICE
- ------------------------- -------------- --------- --------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ 0.03 to $ 1.24 1,667 3.0 $ 1.01 1,667 $ 1.01
$ 8.00 42,551 6.3 $ 8.00 42,551 $ 8.00
$13.91 to $30.76 1,232,920 8.8 $23.44 320,615 $22.82
--------- -------
Total 1,277,138 8.8 $22.90 364,833 $20.99
========= =======
</TABLE>
1996 Non-Employee Director Stock Option Plan - The Company's 1996 Non-Employee
Director Stock Option Plan (the "Non-Employee Plan") permits the granting of
nonqualified stock options to purchase up to 431,000 shares of the Company's
common stock to members of the Board of Directors who are not employees of the
Company. Each outside director will receive options to purchase 5,000 shares of
common stock on the day following each annual meeting of shareholders. Also, on
the date on which a new outside director is first elected or appointed, he or
she automatically will be granted options to purchase 5,000 shares of common
stock. All options granted will have an exercise price equal to the then fair
market value of the common stock. All options granted under the Non-Employee
Plan expire if not exercised by the tenth anniversary of their grant date.
Transactions related to the 1996 Non-Employee Director Stock Option Plan are
summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
------- --------
<S> <C> <C>
Outstanding at January 1, 1997..................................................... 56,250 $ 8.00
(Exercisable: none)
Granted........................................................................ 42,500 $22.61
Exercised.......................................................................... (26,250) $ 8.00
Expired or terminated.......................................................... -- $ --
-------
Outstanding at December 31, 1997................................................... 72,500 $16.56
(Exercisable: none)
Granted........................................................................ 40,000 $20.44
Exercised...................................................................... (6,250) $ 8.00
Expired or terminated.......................................................... -- $ --
-------
Outstanding at December 31, 1998................................................... 106,250 $18.53
(Exercisable: 38,750 at $16.67)
Granted........................................................................ 35,000 $23.81
Exercised...................................................................... (8,300) $ 8.00
Expired or terminated.......................................................... -- $ --
-------
Outstanding at December 31, 1999................................................... 132,950 $20.58
=======
(Exercisable: 66,286 at $18.79)
Options available for future grant................................................. 257,250
=======
</TABLE>
14
<PAGE> 29
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - STOCK OPTIONS, continued
The following table further summarizes information about the 1996 Non-Employee
Director Stock Option Plan at December 31, 1999:
<TABLE>
<CAPTION>
NUMBER WEIGHTED WEIGHTED NUMBER WEIGHTED
OUTSTANDING AVERAGE AVERAGE EXERCISABLE AVERAGE
RANGE OF AT REMAINING EXERCISE AT EXERCISE
EXERCISE PRICES DEC. 31, 1999 LIFE PRICE DEC. 31, 1999 PRICE
- --------------- ------------- --------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ 8.00 15,450 6.3 $ 8.00 15,450 $ 8.00
$18.39 5,000 8.2 $ 18.39 1,667 $ 18.39
$20.74 35,000 8.3 $ 20.74 11,669 $ 20.74
$22.23 37,500 7.4 $ 22.23 32,500 $ 22.23
$23.81 35,000 9.3 $ 23.81 -- $ --
$25.42 5,000 7.4 $ 25.42 5,000 $ 25.42
------- ------
Total 132,950 8.0 $ 20.58 66,286 $ 18.79
======= ======
</TABLE>
1997 Management Incentive Stock Option Plan - The Company's 1997 Management
Incentive Stock Option Plan (the "Management Incentive Plan") permits the
granting of nonqualified stock options to purchase up to approximately 4,000,000
shares of the Company's common stock at not less than the fair value at the time
the options are granted. At December 31, 1998 and 1999, no options granted were
exercisable. All options granted under the Management Incentive Plan expire if
not exercised by the tenth anniversary of their grant date.
Transactions related to the 1997 Management Incentive Stock Option Plan are
summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Outstanding at December 31, 1997.................................................... -- $ --
Granted.......................................................................... 770,000 $ 21.19
Exercised........................................................................ -- $ --
Expired or terminated............................................................ -- $ --
---------
Outstanding at December 31, 1998.................................................... 770,000 $ 21.19
Granted.......................................................................... 155,000 $ 29.96
Exercised........................................................................ -- --
Expired or terminated............................................................ (405,000) $ 20.00
---------
Outstanding at December 31, 1999.................................................... 520,000 $ 24.73
=========
Options available for future grant.................................................. 3,480,000
=========
</TABLE>
The following table further summarizes information about the 1997 Management
Incentive Stock Option Plan at December 31, 1999:
<TABLE>
<CAPTION>
NUMBER WEIGHTED WEIGHTED NUMBER WEIGHTED
OUTSTANDING AVERAGE AVERAGE EXERCISABLE AVERAGE
RANGE OF AT REMAINING EXERCISE AT EXERCISE
EXERCISE PRICES DEC. 31, 1999 LIFE PRICE DEC. 31, 1999 PRICE
- --------------- -------------- --------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
$18.93 20,000 8.7 $ 18.93 -- $ --
$20.00 220,000 8.3 $ 20.00 -- $ --
$27.49 125,000 9.0 $ 27.49 -- $ --
$29.21 80,000 9.4 $ 29.21 -- $ --
$30.76 75,000 9.1 $ 30.76 -- $ --
------- ------
Total 520,000 8.8 $ 24.73 -- $ --
======= ======
</TABLE>
15
<PAGE> 30
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - STOCK OPTIONS, continued
Employee Stock Purchase Plan - Sykes' Employee Stock Purchase Plan (the "ESPP")
allows eligible employee participants to purchase shares of the Company's common
stock at a discount through payroll deductions. The ESPP, which qualifies under
Code Section 423 of the Internal Revenue Code of 1986, was adopted by the
Company's Board of Directors on April 1, 1999 and approved by the shareholders.
Pursuant to the ESPP, Sykes' reserved 1.0 million shares of its common stock for
issuance.
Under the ESPP, eligible employees may purchase the Company common stock at
87.5% of the market price on the last day of the offering period. The maximum
each employee may purchase within an offering period shall not exceed $6,250 in
market value of Company common stock. The Company will typically have four
three-month offering periods each year.
The weighted average fair value of the purchase rights granted during the year
ended December 31, 1999 was $28.09. For the year ended December 31, 1999,
approximately 16,100 of such shares were purchased and approximately 983,900
remain available for future issuance.
The Company has adopted the disclosure only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation", but
applies Accounting Principles Board Opinion No. 25 and related interpretations
in accounting for its plans. Therefore, no compensation expense has been
recognized for stock options granted at fair market value under its plans. If
the Company had elected to recognize compensation expense for stock options
based on the fair value at grant date, consistent with the method prescribed by
SFAS No. 123, net income and earnings per share would have been reduced to the
pro forma amounts as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1997 1998 1999
---------- ---------- ----------
($ in thousands, except per share amounts)
<S> <C> <C> <C>
Net income as reported.............................................. $ 7,631 $ 8,278 $ 22,031
Pro forma net income as prescribed by SFAS 123...................... $ 1,584 $ 2,497 $ 14,588
Net income per diluted share as reported............................ $ 0.18 $ 0.20 $ 0.51
Pro forma net income per diluted share as prescribed by
SFAS 123....................................................... $ 0.04 $ 0.06 $ 0.34
</TABLE>
The pro forma amounts were determined using the Black-Scholes valuation model
with the following key assumptions: (i) a discount rate of 6.05 percent for
1997, a discount rate of 6.0 percent for 1998, and a discount rate of 6.1
percent for 1999; (ii) a volatility factor of 64.19 percent based upon the
average trading price of the Company's common stock since it began trading on
the Nasdaq National Market; (iii) no dividend yield; and (iv) an average
expected option life of approximately four years and approximately 2 years for
the ESPP, for each year presented. In addition, the pro forma amount for 1999
includes approximately $88,000 related to purchase discounts offered under the
ESPP (none for 1997 and 1998).
16
<PAGE> 31
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - GEOGRAPHIC INFORMATION
Information about the Company's operations by geographic location is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
North America ................................................. $223,970,601 $304,588,695 $391,944,231
International ................................................. 127,622,509 164,872,825 183,095,659
------------ ------------ ------------
$351,593,110 $469,461,520 $575,039,890
============ ============ ============
Income before income taxes:
North America ................................................. $ 11,496,208 $ 15,365,353 $ 22,061,814
International ................................................. 9,316,234 14,395,646 13,904,214
------------ ------------ ------------
$ 20,812,442 $ 29,760,999 $ 35,966,028
============ ============ ============
Total assets:
North America ................................................. $198,328,992 $262,378,945 $310,195,876
International ................................................. 69,867,748 102,755,356 121,485,035
------------ ------------ ------------
$268,196,740 $365,134,301 $431,680,911
============ ============ ============
</TABLE>
NOTE 18 - SIGNIFICANT CUSTOMER
Revenue from one customer amounted to 10% of revenues for the year ended
December 31, 1997. No single customer accounted for 10% of revenues for the
years ended December 31, 1998 and 1999, respectively.
NOTE 19 - SUBSEQUENT EVENTS (UNAUDITED)
During February and March 2000, the Company acquired 935,000 shares of its
common stock for approximately $15.1 million. The repurchase of these shares was
in connection with a stock repurchase program announced in February 2000 in
which up to 1.0 million shares of the Company's common stock may be acquired in
the open market. The purpose of the stock repurchase program is to enhance
shareholder value.
17
<PAGE> 1
Exhibit Number - 21.1
Sykes Enterprises, Incorporated
List of Subsidiaries
<TABLE>
<S> <C>
Sykes Enterprises Incorporated of Canada Canada
Sykes Enterprises Incorporated Holdings B.V. The Netherlands
Sykes Enterprises Incorporated, B.V. The Netherlands
Sykes Realty, Inc. Florida
Sykes Enterprises-South Africa, Inc. Florida
Sykes Datasvar Support AB Sweden
Sykes Holdings of Belgium B.V.B.A. Belgium
Translation, Fulfillment & Communication, N.V. ("Traffic") Belgium
Sykes Enterprises GmbH Germany
Telcare Gesellschaft fur Telekommunikations-Mehrwertdieste mbH ("Telcare") Germany
TAS Telemarketing Gesellschaft fur Kommunikations und Dialog mbH ("TAS I") Germany
Sykes Verwaltungrgesellschaft mbH, f/k/a TAS Hedi Fabinyi GmbH ("TAS II") Germany
TAS GmbH Nord Telemarketing und Vertriebsberatung ("TAS III") Germany
McQueen Limited Scotland
McQueen International Limited Scotland
McQueen Integrated Manufacturing Services Ltd. Scotland
McQueen Graphics Ltd. Scotland
McQueen Europe Ltd. Scotland
Link Network Ltd. Scotland
McQueen Benelux BV The Netherlands
McQueen France SA France
McQueen Inc. Delaware
McQueen Skandinavian AB Sweden
Oracle Service Networks Corporation Canada
NAL Path Inc. Canada
248 Pall Mall Inc. Canada
Clinidata Corporate Canada
CompuHelpLine, Inc. Florida
Sykes Costa Rica, Inc. Costa Rica
Ascende Information Services, S.A. Costa Rica
</TABLE>
<PAGE> 1
Exhibit Number - 23.1
CONSENT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Sykes Enterprises, Incorporated
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Sykes Enterprises, Incorporated of our report dated February 7, 2000,
included in the 1999 Annual Report to Shareholders of Sykes Enterprises,
Incorporated.
Our audits also included the financial statement schedule of Sykes Enterprises,
Incorporated listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein
for the years ended December 31, 1998 and 1999.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-23681) pertaining to the Sykes Enterprises, Incorporated,
Non-Qualified Incentive Stock Option Plan and in the Registration Statement
(Form S-8 No. 333-88359) pertaining to the Sykes Enterprises, Incorporated 1999
Employee' Stock Purchase Plan of our report dated February 7, 2000, with respect
to the consolidated financial statements incorporated herein by reference, and
our report included in the preceding paragraph with respect to the financial
statement schedule included in this Form 10-K of Sykes Enterprises,
Incorporated.
Ernst & Young LLP
Tampa, Florida
March 27, 2000
<PAGE> 1
Exhibit Number - 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 333-23681 and No. 333-88359) of Sykes Enterprises,
Incorporated of our report dated March 6, 1998 relating to the consolidated
financial statements for the year ended December 31, 1997 which appears in the
Annual Report to Shareholders, which is incorporated in this Annual Report on
Form 10-K. We also consent to the incorporation by reference of our report dated
March 6, 1998 related to the financial statement schedule for the year ended
December 31, 1997, which appears below.
Our audit included the financial statement schedule for the year ended December
31, 1997 of Sykes Enterprises, Incorporated listed in Item 14(a). This schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audit. In our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein for the year ended December 31, 1997.
PricewaterhouseCoopers LLP
Tampa, Florida
March 27, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-K
for the year ended December 31, 1999, and is qualified in its entirety by
reference to such Form 10-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 31,001,354
<SECURITIES> 0
<RECEIVABLES> 134,343,904
<ALLOWANCES> 2,440,544
<INVENTORY> 0
<CURRENT-ASSETS> 193,265,544
<PP&E> 238,189,810
<DEPRECIATION> 103,433,932
<TOTAL-ASSETS> 427,586,154
<CURRENT-LIABILITIES> 98,721,082
<BONDS> 0
0
0
<COMMON> 427,343
<OTHER-SE> 200,924,198
<TOTAL-LIABILITY-AND-EQUITY> 427,586,154
<SALES> 575,039,890
<TOTAL-REVENUES> 575,039,890
<CGS> 0
<TOTAL-COSTS> 371,934,565
<OTHER-EXPENSES> 163,621,773
<LOSS-PROVISION> 151,803
<INTEREST-EXPENSE> 3,669,327
<INCOME-PRETAX> 35,966,028
<INCOME-TAX> 13,935,000
<INCOME-CONTINUING> 22,031,028
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,031,028
<EPS-BASIC> 0.52
<EPS-DILUTED> 0.51
</TABLE>
