<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD 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 0-26496
CYBEX COMPUTER PRODUCTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALABAMA 63-0801728
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4991 CORPORATE DRIVE
HUNTSVILLE, ALABAMA 35805
(Address of principal executive offices)
(256) 430-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
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 Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
As of February 14, 2000, 12,838,289 shares of the Registrant's Common Stock
$.001 par value, were outstanding.
<PAGE> 2
CYBEX COMPUTER PRODUCTS CORPORATION
FORM 10-Q
DECEMBER 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
Part I - FINANCIAL INFORMATION NUMBER
------
<S> <C> <C> <C>
Item 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1999 ......................................................... 3
Condensed Consolidated Statements of Income for the three and nine
months ended January 1, 1999 and December 31, 1999........................ 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended January 1, 1999 and December 31, 1999......................... 5
Notes to Condensed Consolidated Financial Statements ...................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................. 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk ................ 19
Part II - OTHER INFORMATION
Item 6. Exhibits .................................................................. 20
SIGNATURES ............................................................................. 21
INDEX OF EXHIBITS ...................................................................... 22
</TABLE>
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
CYBEX COMPUTER PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1999
------------ ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents .......................................... $ 4,060,565 $ 31,306,485
Short-term investments ............................................. 26,000,778 5,784,078
Short-term investments, pledged as collateral for note payable ..... 16,000,000
Accounts receivable - trade, less allowance for doubtful accounts
of $1,338,863 and $2,284,395, respectively ....................... 15,948,952 22,791,207
Inventories ........................................................ 7,447,252 9,715,101
Other current assets ............................................... 1,209,852 2,033,708
Deferred income taxes .............................................. 1,838,300 1,838,300
------------ ------------
Total current assets ........................................ 72,505,699 73,468,879
Investments available for sale, at market .......................... 2,930,404 3,144,597
Property and equipment, net of accumulated depreciation ............ 12,552,112 12,448,628
Intangibles, net ................................................... 3,709,712 6,858,964
Deferred income taxes .............................................. 832,224 831,351
Other assets ........................................................ 320,270 232,650
------------ ------------
$ 92,850,421 $ 96,985,069
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable ....................................................... $ 16,000,000 $ --
Accounts payable and accrued expenses .............................. 5,256,745 9,005,907
Income taxes payable ............................................... 1,617,471 1,639,239
Other current liabilities .......................................... 5,780,231 7,715,039
------------ ------------
Total current liabilities ................................... 28,654,447 18,360,185
Shareholders' equity:
Preferred stock, par value $.001 per share; 5,000,000 shares
authorized; no shares issued.......................................
Common stock, par value $.001 per share; 50,000,000 shares
authorized; March 31, 1999 -- 14,173,281 shares issued,
12,682,877 shares outstanding; December 31, 1999 -- 14,281,910
shares issued, 12,789,204 shares outstanding ...................... 14,173 14,282
Additional paid in capital .......................................... 37,500,614 38,496,271
Accumulated other comprehensive income .............................. (231,208) (332,329)
Retained earnings ................................................... 32,212,948 45,810,230
Treasury stock, at cost; 1,490,404 and 1,492,706 shares ............. (5,300,553) (5,363,570)
------------ ------------
Total shareholders' equity .................................. 64,195,974 78,624,884
------------ ------------
$ 92,850,421 $ 96,985,069
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
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CYBEX COMPUTER PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 1, DECEMBER 31, JANUARY 1, DECEMBER 31,
1999 1999 1999 1999
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Net sales, switch and extension products ......... $20,496,554 $28,353,099 $58,661,778 $80,153,007
Net sales, display products ...................... -- 5,695,306 -- 5,695,306
----------- ----------- ----------- -----------
Net sales ........................................ 20,496,554 34,048,405 58,661,778 85,848,313
Cost of sales, switch and extension products ..... 9,514,329 12,458,521 27,371,283 35,749,409
Cost of sales, display products .................. -- 4,029,460 -- 4,029,460
----------- ----------- ----------- -----------
Cost of sales .................................... 9,514,329 16,487,981 27,371,283 39,778,869
----------- ----------- ----------- -----------
Gross profit ................................. 10,982,225 17,560,424 31,290,495 46,069,444
----------- ----------- ----------- -----------
Selling, general and administrative expenses ..... 5,386,269 7,304,158 14,651,215 19,352,859
Acquired research and development expenses
and other acquisition expenses ................. -- 2,461,915 -- 2,461,915
Research and development expenses ................ 1,231,825 1,812,075 3,858,859 5,109,720
----------- ----------- ----------- -----------
Operating income ............................. 4,364,131 5,982,276 12,780,421 19,144,950
Other income ..................................... 514,814 589,319 1,294,222 1,358,086
----------- ----------- ----------- -----------
Income before provision for income taxes ..... 4,878,945 6,571,595 14,074,643 20,503,036
Provision for income taxes ....................... 1,346,202 2,245,134 4,505,086 6,905,754
----------- ----------- ----------- -----------
Net income ....................................... $ 3,532,743 $ 4,326,461 $ 9,569,557 $13,597,282
=========== =========== =========== ===========
Net income per common and common
equivalent share
Basic ....................................... $ .28 $ .34 $ .77 $ 1.07
=========== =========== =========== ===========
Diluted ..................................... $ .27 $ .31 $ .73 $ 1.00
=========== =========== =========== ===========
Weighted average common and common
equivalent shares outstanding:
Basic ....................................... 12,513,986 12,778,876 12,449,022 12,752,049
=========== =========== =========== ===========
Diluted ..................................... 13,260,517 13,758,260 13,062,172 13,571,962
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 5
CYBEX COMPUTER PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JANUARY 1, DECEMBER 31,
1999 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................... $ 9,569,557 $ 13,597,282
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ............................... 1,222,455 1,868,399
Amortization of discount on investments ..................... (389,305) (262,761)
Provision for losses on accounts receivable ................. 486,129 578,900
(Gain) loss on sale of property and equipment ............... (1,355) 114,845
(Gain) loss on sale of investments .......................... (50,411) (324,516)
Acquired research and development ........................... -- 2,190,000
Changes in operating assets and liabilities:
Accounts receivable-trade ................................. (3,427,957) (6,428,436)
Inventories ............................................... 210,955 (690,605)
Accounts payable and accrued expenses ..................... (24,356) 2,234,269
Other ..................................................... 780,684 (161,198)
Income taxes payable ...................................... (771,051) 22,641
------------ ------------
Net cash provided by operating activities ................ $ 7,605,345 $ 12,738,820
Cash flows from investing activities:
Purchase of net assets of PixelVision, net of cash received ... -- (5,621,512)
Purchases of property and equipment ........................... (6,223,798) (1,332,292)
Proceeds from the sale of property and equipment .............. 150,579 --
Purchases of investments available for sale ................... (31,565,890) (29,420,844)
Proceeds from the sale of investments ......................... 11,264,681 20,969,289
Proceeds from maturities of investments ....................... 47,468,000 45,139,000
------------ ------------
Net cash provided by investing activities ................. 21,093,572 29,733,641
Cash flows from financing activities:
Repayment of note payable ..................................... (12,133,912) (16,000,000)
Proceeds from issuance of common stock ........................ 1,487,479 995,766
Purchase of treasury stock ...................................... -- (63,017)
------------ ------------
Net cash used in financing activities ..................... (10,646,433) (15,067,251)
------------ ------------
Effect of exchange rate changes ............................. 94,921 (159,290)
------------ ------------
Net increase in cash and cash equivalents .................... 18,147,405 27,245,920
Cash and cash equivalents, beginning of period .................. 2,411,085 4,060,565
------------ ------------
Cash and cash equivalents, end of period ........................ $ 20,558,490 $ 31,306,485
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest ...................... $ 37,770 $ 18,053
============ ============
Cash paid during the period for taxes ......................... $ 4,949,627 $ 6,939,705
============ ============
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 6
CYBEX COMPUTER PRODUCTS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Cybex Computer Products Corporation (the Company) have been prepared by
management in accordance with generally accepted accounting principles for
interim financial information and in conjunction with the rules and regulations
of the Securities and Exchange Commission. In the opinion of management, all
adjustments necessary for a fair presentation of the interim condensed
consolidated financial statements have been included, and all adjustments are of
a normal and recurring nature. The condensed consolidated financial statements
as of and for the interim period ended December 31, 1999 should be read in
conjunction with the Company's consolidated financial statements as of and for
the year ended March 31, 1999 included in the Company's Form 10-K filed June 23,
1999. Operating results for the three and nine months ended December 31, 1999
are not necessarily indicative of the results that may be expected for the year
ended March 31, 2000. The March 31, 1999 balance sheet data presented herein was
derived from audited financial statements but does not include all disclosures
required by generally accepted accounting principles.
Beginning in the first quarter of Fiscal 1999, the Company elected to
report quarterly results based on a 13 week quarter. The change was made to
reflect the results of operations and financial position of the Company and its
subsidiaries on a more timely basis and to increase operating and financial
reporting efficiency.
Certain reclassifications have been made to the Fiscal 1999
consolidated financial statements in order to conform to the Fiscal 2000
presentation. These reclassifications had no effect on previously reported net
income, operating cash flows, or total shareholder's equity.
2. LINE OF CREDIT
The Company has a line of credit to provide borrowings of up to $7.5
million at LIBOR plus 2.5%. The line of credit expires in August, 2000. There
were no borrowings outstanding under the Company's line of credit as of December
31, 1999, or March 31, 1999.
3. COMPREHENSIVE INCOME
The Company records unrealized gains or losses on the Company's foreign
currency translation adjustments and unrealized holding gains or losses as
accumulated other comprehensive income which is included in shareholders'
equity. During the third quarter of Fiscal 2000 and Fiscal 1999, total
comprehensive income amounted to $4,484,933 and $3,725,852, respectively. For
the first nine months of Fiscal 2000 and Fiscal 1999, total comprehensive income
amounted to $13,496,162 and $9,421,684 respectively.
4. EARNINGS PER SHARE
A summary of the calculation of basic and diluted earnings per share
("EPS") for the three months and nine months ended January 1, 1999, and December
31, 1999, is as follows:
6
<PAGE> 7
4. EARNINGS PER SHARE (CONTINUED)
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
For the three months ended January 1, 1999
Basic EPS
Income available to common shareholders $ 3,532,743 12,513,986 $ 0.28
Effect of Dilutive Securities
Stock Options 746,531
Diluted EPS
Income available to common shareholders
and assumed conversions $ 3,532,743 13,260,517 $ 0.27
For the nine months ended January 1, 1999
Basic EPS
Income available to common shareholders $ 9,569,557 12,449,022 $ 0.77
Effect of Dilutive Securities
Stock Options 613,150
Diluted EPS
Income available to common shareholders
and assumed conversions $ 9,569,557 13,062,172 $ 0.73
For the three months ended December 31, 1999
Basic EPS
Income available to common shareholders $ 4,326,461 12,778,876 $ 0.34
Effect of Dilutive Securities
Stock Options 979,384
Diluted EPS
Income available to common shareholders
and assumed conversions $ 4,326,461 13,758,260 $ 0.31
For the nine months ended December 31, 1999
Basic EPS
Income available to common shareholders $13,597,282 12,752,049 $ 1.07
Effect of Dilutive Securities
Stock Options 819,913
Diluted EPS
Income available to common shareholders
and assumed conversions $13,597,282 13,571,962 $ 1.00
</TABLE>
5. SEGMENT REPORTING
The Company's reportable segments are based on the Company's method of
internal reporting which is disaggregated operationally. The two reportable
segments, U.S. and International, are evaluated based on gross profit;
therefore, selling, general, and administrative costs, as well as research and
development, interest income/expense, and provision for taxes, is reported on
an entity-wide basis only.
The accounting policies of the segments are the same as those described
in the Summary of Significant Accounting Policies included in the Company's
Annual Report to the extent such policies affect the reported segment
information. The operational distributions of the Company's revenues and gross
margin for the three and nine months ended January 1, 1999, and December 31,
1999, are as follows:
7
<PAGE> 8
5. SEGMENT REPORTING (CONTINUED)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
(In Thousands) January 1, December 31, January 1, December 31,
1999 1999 1999 1999
--------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Total sales:
Cybex - U.S. $ 13,620 $ 26,337 $ 40,910 $ 63,215
Cybex - International 7,303 8,924 18,413 25,139
Less Intercompany (426) (1,213) (661) (2,506)
-------- -------- -------- --------
$ 20,497 $ 34,048 $ 58,662 $ 85,848
======== ======== ======== ========
Gross Profit:
Cybex - U.S. $ 7,036 $ 13,417 $ 21,607 $ 33,957
Cybex - International 3,947 4,229 9,699 12,174
Less Intercompany (1) (86) (16) (62)
-------- -------- -------- --------
$ 10,982 $ 17,560 $ 31,290 $ 46,069
======== ======== ======== ========
</TABLE>
The operational distribution of the Company's identifiable assets as of March
31, 1999 and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
(In Thousands) March 31, December 31,
1999 1999
------------- -----------------
<S> <C> <C>
Assets:
Cybex - U.S. $ 88,815 $ 88,947
Cybex - International 16,678 20,074
-------- --------
Total identifiable assets 105,493 109,021
Eliminations (12,643) (12,036)
-------- --------
Total Assets $ 92,850 $ 96,985
======== ========
</TABLE>
6. CHANGE IN CAPITALIZATION
In July 1999, the shareholders of the Company approved a resolution to amend the
Amended and Restated Articles of Incorporation to increase authorized common
stock from 25,000,000 shares to 50,000,000 shares.
7. ACQUISITION
On October 5, 1999 the Company acquired substantially all the assets, including
the related intellectual property and patents, of PixelVision Technology,
Inc. (PixelVision) for $6,744,958, including transaction fees. The acquisition
was recorded under the purchase method of accounting, and the purchase price has
been allocated based on the fair market values of the assets purchased as
follows:
8
<PAGE> 9
7. ACQUISITION (CONTINUED)
<TABLE>
<S> <C>
Cash $1,123,446
Accounts receivable, net 992,719
Inventory 1,577,244
Other assets 48,319
Property and equipment 134,009
Acquired in-process research and development 2,190,000
Goodwill and intangibles 3,033,093
Fair value of liabilities assumed:
Accounts payable 1,496,159
Accrued expenses and other 857,713
----------
Cash paid $6,744,958
==========
</TABLE>
As indicated above, the acquired research and development expenses were
expensed on the date of acquisition. The goodwill will be amortized over a seven
year period.
The following unaudited pro forma summary combines the results of
operations of the Company with the acquisition of PixelVision as if the
acquisition had occurred at April 1, 1998. Certain adjustments have been made to
reflect the impact of the purchase transaction. These pro forma results have
been prepared for comparative purposes only and do not purport to be indicative
of what would have occurred had the acquisition been made at the beginning of
the respective fiscal years, or of results which may occur in the future.
<TABLE>
<CAPTION>
Nine months ended Nine months ended
(In Thousands) January 1, 1999 December 31, 1999
--------------- -----------------
<S> <C> <C>
Net sales $63,534 $93,939
Net income $10,106 $14,487
Earnings per share - diluted $ 0.77 $ 1.07
</TABLE>
8. SUBSEQUENT EVENT
On January 20, 2000, the Company announced a 3 for 2 stock split,
effected as a 50% stock dividend. The new shares will be distributed on or about
February 18, 2000, for shareholders of record as of January 31, 2000. The
financial statements presented herein do not reflect the effect of the stock
split. The proforma calculation of basic and diluted earnings per share ("EPS")
giving effect to the stock split for the three months and nine months ended
January 1, 1999, and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
For the three months ended January 1, 1999
Basic EPS
Income available to common shareholders $3,532,743 18,770,979 $0.19
Effect of Dilutive Securities
Stock Options 1,119,796
Diluted EPS
Income available to common shareholders
and assumed conversions $3,532,743 19,890,775 $0.18
</TABLE>
9
<PAGE> 10
8. SUBSEQUENT EVENT (CONTINUED)
<TABLE>
<S> <C> <C> <C>
For the nine months ended January 1, 1999
Basic EPS
Income available to common shareholders $ 9,569,557 18,673,533 $0.51
Effect of Dilutive Securities
Stock Options 919,725
Diluted EPS
Income available to common shareholders
and assumed conversions $ 9,569,557 19,593,258 $0.49
For the three months ended December 31, 1999
Basic EPS
Income available to common shareholders $ 4,326,461 19,168,314 $0.23
Effect of Dilutive Securities
Stock Options 1,469,076
Diluted EPS
Income available to common shareholders
and assumed conversions $ 4,326,461 20,637,390 $0.21
For the nine months ended December 31, 1999
Basic EPS
Income available to common shareholders $13,597,282 19,128,073 $0.71
Effect of Dilutive Securities
Stock Options 1,229,869
Diluted EPS
Income available to common shareholders
and assumed conversions $13,597,282 20,357,942 $0.66
</TABLE>
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE INFORMATION IN THIS ITEM 2 - "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" CONTAINS FORWARD-LOOKING
STATEMENTS, INCLUDING, WITHOUT LIMITATION, STATEMENTS RELATING TO THE COMPANY'S
REVENUES, EXPENSES, MARGINS, LIQUIDITY AND CAPITAL NEEDS. SUCH FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "BUSINESS - FACTORS AFFECTING THE
COMPANY'S BUSINESS AND PROSPECTS" CONTAINED IN THE COMPANY'S FORM 10-K FOR THE
YEAR ENDED MARCH 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON JUNE 23, 1999.
The following discussion of the results of operations and financial condition of
the Company should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto included in the Company's Form 10-K for
the year ended March 31, 1999, as filed with the Securities and Exchange
Commission on June 23, 1999.
GENERAL
The Company develops, produces and markets keyboard, video monitor and
mouse ("KVM") switch and extension products for use in the computer industry.
The Company's KVM switch products ("KVM Switch Products") provide multiple
users, each with a separate keyboard, video monitor and mouse, with the
capability to control over 2,000 personal computers ("PCs"), thereby eliminating
the need for individual keyboards, video monitors or mice ("KVM Peripherals")
for the controlled PCs. Elimination of KVM Peripherals can provide significant
cost reduction (lower initial investment and ongoing utility costs) and space
savings as well as more efficient technical support capabilities. The Company's
KVM Switch Products allow users to control IBM-compatible and Macintosh PCs and
many Sun, Hewlett Packard, Digital Equipment Corporation (DEC), IBM and Silicon
Graphics workstations functioning either as stand-alone systems or as file,
communications or print servers ("Servers") operating within a local area
network ("LAN").
The Company also has computer interfaces for its XP4040 (formerly known
as the Autoboot Commander 4xPTM/1xP(TM), which operate with models of IBM
RS/6000, Hewlett Packard, DEC's Alpha, and Silicon Graphic's Indigo
workstations. The Company's AutoView Commander(TM) utilizes a cost reduced
design that continues to provide the architecture for mid-range and entry-level
products. SwitchView(TM), a two and four port KVM Switch Product, is the
Company's first product designed to be mass marketed. The Company completed its
first full quarter of shipping AutoView(TM) 200 during the second quarter of
Fiscal 2000. AutoView(TM) 200 extends the capabilities of KVM Switching
technology by allowing two users independent and simultaneous access to any of
eight attached servers. The Company also markets several mid-range to high-end
switching solutions including the PolyCon/S, a single user console switching
hub, and the PolyCon/XS, a multi-user matrix console switching hub.
Certain KVM Switch Products are certified by Novell Corporation for use
with its network operating system software Netware 4.1. Also, Microsoft
Corporation certified certain KVM Switch Products for use with its Windows NT
and Windows 98 operating systems. The Company's KVM Switch Products are
particularly useful in networking environments where multiple computers are
dedicated as Servers and in situations where multiple computers need to be
controlled from one location to facilitate network management.
Certain products within the Company's family of KVM extension and
remote access products (collectively, "KVM Extension Products") allow users to
separate the KVM Peripherals up to 600 feet from the PC. In addition, certain
KVM Extension Products allow multiple users shared access to the same PC from
different KVM Peripherals. During the third quarter of Fiscal 1999, the Company
introduced LongView(TM), which allows the extension of KVM Peripherals and
multimedia functions up to 500 feet using a single Category 5 cable. KVM
Extension Products are particularly useful in congested work areas or where
working conditions may be hazardous to the function of the computer. The
Company's remote access line of KVM Extension Products allows users to control
Servers from remote locations using a standard modem, the Internet or a network
connection, without the necessity of remote
11
<PAGE> 12
access hardware or software on the PCs or Servers being accessed. The Company
began shipping Key-View(TM) II, its second generation and newest remote access
solution, during the first quarter of Fiscal 2000. When used in conjunction with
a KVM Switch Product, the Company's remote access KVM Extension Products permits
users to control attached PCs remotely.
As a result of the PixelVision acquisition, the Company now offers
display products related to high information content digital display solutions.
The SMARTGLAS(TM) technology offers users working in time or mission critical
environments simultaneous access to large amounts of information. This
technology permits the consolidation of information from multiple sources to be
displayed on single or multiple flat panel displays, forming a "tiled" display
solution.
The Company's net sales have increased in each fiscal year due
primarily to increases in the number of units sold to both new and existing
customers as well as sales to customers of the PolyCon Companies and customers
of PixelVision, discussed later herein. The increases in annual net sales
reflects the Company's strategy of increasing unit volume and market share
through the introduction of new products as well as increasingly enhanced
generations of already accepted products with increased functionality which are
price competitive as compared to prior generations of the Company's products and
to the products of competitors. As a part of this strategy, the Company seeks to
be price competitive and to be the high quality provider of products in its
markets. This strategy has enabled the Company to sell succeeding generations of
products to existing customers as well as to increase its market share by
selling products to new customers.
The Company markets its products to a diversified group of dealers,
distributors, original equipment manufacturers ("OEMs") and end users, primarily
through its inside and outside sales and customer support staff, advertisements
in trade publications, and participation in major industry trade shows. The
Company has broadened its marketing strategy of expanding channels of
distribution by increased penetration in the OEM market, major distribution and
catalog markets. In the third quarter of Fiscal 2000, the Company completed the
final stages of product testing and certification with a major U.S. computer
manufacturer. Shipments of an OEM product to this customer began in mid
November, 1999.
The Company expanded its marketing strategy to include the retail
channel of distribution with the introduction of SwitchView(TM), which targets
the desktop market. SwitchView(TM) was designed to address the high volume sales
channels and is the Company's first product targeted to the mass market. The
Company believes it is the only KVM Switch Product manufacturer offering
products ranging from the entry level PC single user switch to multi-user,
multiplatform switches and console switching solutions that can control
thousands of computers in data centers and server farms.
The Company contracts with third parties to provide completed
subassemblies of its products. The Company outsources entire products (turnkey)
for certain stable high volume products. The Company believes that outsourcing
manufacturing generally enables the Company to control product costs more
effectively.
The Company continually evaluates new product opportunities and engages
in substantial research and product development efforts. The Company expenses
all product research and development costs as incurred. Additionally, the
Company also incurs substantial expenses related to advertising, participation
in trade shows and other sales promotions.
Another important part of the Company's strategy is to emphasize
customer service and support. The Company offers a 30-day money back guarantee
for all of its products, a one year warranty on parts and allows additional
rights of return to certain of its customers. The Company estimates and accrues
a liability for sales and warranty returns and offers sales discounts to its
customers based on the level of sales.
The Company believes that increasing its international sales is an
important element in the overall strategy of future revenue growth.
International sales comprised 28% of the Company's sales for the nine months
ended December 31, 1999 and 35% and 26% of the Company's total sales in Fiscal
1999 and Fiscal 1998, respectively.
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<PAGE> 13
STRATEGIC ACQUISITIONS
The Company evaluates its products and its customer needs on an ongoing
basis to advance its competitive position in the marketplace. As part of this
process, the Company seeks expansion not only through new and enhanced product
development, but through strategic acquisition and expansion efforts. Consistent
with this philosophy, on October 5, 1999 the Company acquired substantially all
the assets, including the related intellectual property and patents, of
PixelVision Technology, Inc.(PixelVision), pursuant to an Asset Purchase
Agreement dated October 5, 1999 between the Company and PixelVision.
PixelVision, a privately held company, designs, manufactures and markets
products and services related to high-information content digital display
solutions. The Company paid approximately $6.7 million including acquisition
related expenses to acquire PixelVision. The acquisition, which was funded from
available cash, was accounted for using the purchase method of accounting. In
accordance with generally accepted accounting principles, costs allocated to
research and development assets with alternative future uses were capitalized
and the remaining $2.2 million of purchased research and development were
expensed as a one-time charge during the third quarter of Fiscal 2000. An
additional $271,000 of acquisition related costs were expensed during the
period. These additional costs include severance package expenses, as well as
relocation expenses.
The Company obtained an outside valuation of PixelVision and values
were assigned to developed technology, in-process research and development
("in-process R&D"), assembled workforce, customer base and patents. The
valuations of developed technology, in-process R&D and patents were established
using an income-based approach. The valuation of the assembled workforce and
customer base were valued using a cost-based approach. Revenue estimates for the
technology under development were based on discussions with management,
anticipated product development schedules, product sales cycles and estimated
life of the technology. Revenues for the products under development were
estimated beginning in the fourth quarter of calendar 1999 and through the years
ended December 31, 2000 through 2004. Projected expenses were based on
historical selling, general and administrative expenses and maintenance research
and development expenses of both the Company and PixelVision. It is anticipated
that future profit margins and growth will vary significantly from the
historical operating results of PixelVision. The resulting operating income was
adjusted for income tax expense using the Company's tax rate. In addition,
estimated required returns on beginning net working capital, assembled
workforce, customer base, patents, other assets and developed technologies,
along with a deduction for cash flow attributable to the assembled workforce,
other assets, customer base, patents, developed technologies, were considered
in the discounted cash flow analysis. The risk-adjusted discount rate applied to
after-tax cash flow was 25% for completed technology and 35% for in-process
technology, compared to an estimated weighted-average cost of capital for
PixelVision of approximately 38%.
The total value of in-process R&D was estimated to be approximately
$2.2 million. The estimated in-process research and development was attributable
to certain specific component technologies within PixelVision's products that
were still in development at the time of the acquisition. The products under
development were at various stages of completion and include; new circuit cards
for digitizing and displaying images (Pearl, Super B-Video), monitors that
incorporate the new cards (18QX, 20MC and 15"SG3 monitor), a real time operating
system contained within the Video Processor (Hub Software) and application
software that is used to manage and adjust SMARTGLAS hardware (Commander).
On February 1, 1999, the Company acquired substantially all of the
assets, including the related intellectual property and patents, of Fox Network
Systems Corporation ("Fox"). The Company paid approximately $2.5 million at
closing and may pay an additional amount of up to $2.5 million in future
payments based on future sales of Fox's products over a maximum period of five
years. Fox technology and products include remote access and power control
products solutions for management of PCs and Servers. Fox's major development
project was a Windows(TM)-based remote access device that allows control of
servers over ordinary telephone lines and the Internet from a remote location
("Key-View(TM) II"). The acquisition, which was funded from available cash, was
accounted for using the purchase method of accounting. In accordance with
generally accepted accounting principles, costs allocated to research and
development assets with alternative future uses were capitalized and the
remaining $1.85 million of purchased research and development were expensed as a
one-time charge during the fourth quarter of Fiscal 1999.
The Company obtained an outside valuation of Fox and values were
assigned to developed technology, in-process research and development
("in-process R&D"), employment and consulting agreements, and customer base. The
valuations of developed technology, in-process R&D and customer base were
established using an income-based
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<PAGE> 14
approach. The valuation of the employment and consulting agreements were valued
using a cost-based approach. The total value of in-process R&D was estimated to
be approximately $1.85 million. All of the estimated in-process research and
development was attributable to the development of Key-View(TM) II. The
development of Key-View(TM) II was estimated to be 90% complete and was
completed on time with initial shipments in the first quarter of Fiscal 2000.
In December 1997, the Company acquired the PolyCon Companies for a
combined purchase price of $8.8 million including acquisition-related expenses.
The acquisition of the PolyCon Companies included intellectual property that the
Company is integrating with its research and development resources worldwide to
expand the Company's high-end console switching products for mid-and
large-scale networks.
The Company obtained an outside valuation of the PolyCon Companies and
values were assigned to completed technology, in-process R&D, in-process R&D
with alternative future uses and trade names. The valuations of developed
technology and in-process R&D were established using an income-based approach.
The total value of in-process R&D was estimated to be approximately $4.7
million. Approximately 90% of the estimated in-process research and development
were attributable to the fiber-optics solution technology, the console switch
technology and the digital switching technology. The development of the console
switch technology was completed on time in Fiscal 1999 and is currently
available to ship in certain PolyCon products. The development of fiber-optic
solution technology was completed on time and began shipping in early Fiscal
2000. The development of the digital switching technology was expected to take a
minimum of two years to complete. Some digital technology is included in certain
products within the XP4000 series. This XP4000 series began shipping in the
third quarter of Fiscal 2000.
RECENT STOCK SPLITS
On November 13, 1998, the Company announced a 3-for-2 stock split,
effected as a 50% stock dividend. The additional shares were distributed to
shareholders on December 15, 1998. All capital stock information included in the
condensed consolidated financial statements and notes thereto gives retroactive
effect to the splits.
On January 20, 2000, the Company announced a 3-for-2 stock split,
effected as a 50% stock dividend. The additional shares will be distributed to
shareholders on or about February 18, 2000, for all shareholders of record as of
January 31, 2000. No capital stock information included in the condensed
consolidated financial statements and no notes (except Note 8 subsequent event)
give retroactive effect to the splits.
RESULTS OF OPERATIONS
The following table presents selected financial information derived
from the Company's statements of income expressed as a percentage of net sales
for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JAN. 1, DEC. 31, JAN. 1, DEC. 31,
1999 1999 1999 1999
------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales................................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales........................................... 46.4 48.4 46.7 46.3
------- ------- ------- -------
Gross profit.............................................. 53.6 51.6 53.3 53.7
Research and development expenses....................... 6.0 5.4 6.6 6.0
Acquired research and development expense and
acquisition expenses.................................. - 7.2 - 2.9
Selling, general and administrative expenses............ 26.3 21.4 25.0 22.5
------- ------- ------- -------
Operating income.......................................... 21.3 17.6 21.7 22.3
Other income ........................................... 2.5 1.7 2.3 1.6
------- ------- ------- -------
Income before income taxes................................ 23.8 19.3 24.0 23.9
Provision for income taxes.............................. 6.6 6.6 7.7 8.0
------- ------- ------- -------
Net income 17.2% 12.7% 16.3% 15.9%
======= ======= ======= =======
</TABLE>
The Company operates predominantly in one industry: the design,
production, marketing, and selling of keyboard, video monitor and mouse switch,
extension and remote access products. The Company's method of internal reporting
is disaggregated operationally, however. The two reportable segments, Cybex -
U.S. and Cybex - International, are evaluated based on gross profit; therefore
selling, general and administrative costs, as well as research and development,
interest income/expense, provision for taxes, is reported on an entity-wide
basis only. Reference is
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<PAGE> 15
made to the information regarding operational distribution of the Company's
revenues and gross margin, and to the operational distribution of the Company's
identifiable assets, in Note 5 to the Condensed Consolidated Financial
Statements set forth on pages 7 and 8 of this Quarterly Report on Form 10-Q.
Three Months Ended December 31, 1999 Compared to the Three Months Ended
January 1, 1999
Net sales increased 66.1% to $34.0 million in the three months ended
December 31, 1999 from $20.5 million in the three months ended January 1, 1999.
Additionally, sales for the reportable segment Cybex - U.S. increased 93.4% from
$13.6 million in the third quarter of Fiscal 1999 to $26.3 million in Fiscal
2000, while sales for the reportable segment Cybex - International increased
22.2% from $7.3 million in the third quarter of Fiscal 1999 to $8.9 million in
Fiscal 2000. Almost $5.7 million of the increase in sales was attributed to the
display product line, obtained as a result of the PixelVision acquisition in
October 1999. The display product sales included a large order that accounted
for almost 60% of display product sales. As these large orders follow a long
sales cycle, quarter to quarter revenues for display products are expected to
fluctuate. The increased sales also resulted from increased sales volume of the
Company's KVM Switch Products and Extension Products. Sales of KVM Switch
Products increased 35.7% to $24.7 million in the three months ended December 31,
1999 from $18.2 million in the three months ended January 1, 1999. Sales of KVM
Extension Products increased 79.9% to $3.4 million in the three months ended
December 31, 1999 from $1.9 million in the three months ended January 1, 1999.
LongView(TM) and Key-View(TM) II, a remote access solution, accounted primarily
for the growth in KVM Extension Product sales.
The Company's international sales (sales to any location outside the
U.S.) increased 23.0% to $9.6 million in the three months ended December 31,
1999 from $7.8 million in the three months ended January 1, 1999 and accounted
for over 28% of total revenues. Sales in the European Community accounted for
approximately $7.2 million of total revenues for the quarter.
Gross profit is affected by many factors including: product mix,
discounts, price competition, new product introductions and startup costs,
increases in material and labor costs and the levels of outsourcing of
manufacturing and assembly services. Gross profit increased 59.9% to $17.6
million in three months ended December 31, 1999 from $11.0 million in the three
months ended January 1, 1999. Gross profit for Cybex - U.S. increased 90.7% from
$7.0 million in the three months ended January 1, 1999 to $13.4 million in the
three months ended December 31, 1999, while the gross profit for Cybex -
International increased 7.1% from $3.9 million in the third quarter of Fiscal
1999 to $4.2 million in the third quarter of Fiscal 2000. Gross profit as a
percentage of net sales decreased from 53.6% to 51.6% due to the diluting effect
of display product sales during the quarter. Display product gross margin was
29.1% versus Switch and Extension gross margin of 56.1%. The display product
line operates on a different business model than that of the Company's Switch
and Extension business. The PixelVision product sales are typically for large
installations sold directly to the financial services industry. The Company
intends to discontinue selling the flat panel display units and transition its
customers to source the units directly from its outsource manufacturers or from
a distributor. The Company would retain the ownership of the technology and
receive a royalty for every unit sold. When this transition is accomplished,
revenues will be reduced, however both cost of sales and selling expenses will
also be lower. This transition could take a minimum of 6 months and as long as
12 months to complete.
Selling, general and administrative (SG&A) expenses increased 35.6% to
$7.3 million (21.4% of net sales) in the three months ended December 31, 1999,
from $5.4 million (26.3% of net sales) in the three months ended January 1,
1999. The increase in SG&A expenses reflects the increased level of expenditures
in administration, sales, customer support, advertising, and marketing
activities required to support the Company's expanded sales base domestically
and abroad, as well as additional SG&A costs from PixelVision. The increase was
offset somewhat by a reduction in expenses incurred for legal costs associated
with the defense of a patent infringement claim, which was dismissed without
prejudice by mutual agreement of both parties in February 1999 (see
Contingencies). The percentage of sales decline was primarily attributable to
the volume of display product sales with relatively low selling expenses.
Management anticipates that the dollar amount of selling, general and
administrative expense will continue to increase.
Research and development (R&D) expense, exclusive of the write-off for
purchased research and development expense, grew 47.1% to $1.8 million or 5.4%
of net sales in the three months ended December 31, 1999, from $1.2 million or
6.0% of net sales in the three months ended January 1, 1999. The increase in R&D
expense can be attributed to several factors; continued focus on new product and
technology development; product integration and
15
<PAGE> 16
product cost reduction efforts through improved product design; and additional
R&D costs from PixelVision. Management anticipates that the dollar amount of
research and development expenses will increase and as a percentage of net sales
will increase slightly.
As a result of the factors discussed above, operating income before
acquisition related write-offs of $2.5 million, increased 93.5% to $8.4 million
(24.8% of net sales) in the three months ended December 31, 1999, from $4.4
million (21.3% of net sales) in the three months ended January 1, 1999.
Other income increased 14.5% to approximately $589,000 (1.7% of net
sales) in the three months ended December 31, 1999, compared to approximately
$515,000 in the three months ended January 1, 1999. Other income includes
realized gains and losses on the sale of certain investments, interest income
and expense and the accretion of U.S. Treasury Bill discounts.
Income, before the acquisition related write-offs in the third quarter
of fiscal 2000, increased 66.7% to $5.9 million (17.3% of net sales) in the
three months ended December 31, 1999, from $3.5 million (17.2% of net sales) in
the three months ended January 1, 1999, as a result of the factors discussed
above.
Nine Months Ended December 31, 1999 Compared to the Nine Months Ended January 1,
1999.
Net sales increased 46.3% to $85.8 million for the nine months ended
December 31, 1999 from $58.7 million in the nine months ended January 1, 1999.
Additionally, sales for Cybex - U.S. increased 54.5% from $40.9 million in the
first nine months of Fiscal 1999 to $63.2 million in Fiscal 2000, while sales
for Cybex - International increased 36.5% from $18.4 million in the first nine
months of Fiscal 1999 to $25.1 million in Fiscal 2000. Almost $5.7 million of
the increase in sales was attributed to the display product line, obtained as a
result of the PixelVision acquisition in October 1999. The increase in net sales
was also attributed to increased sales of the Company's KVM Switch and KVM
Extension Products. Sales of KVM Switch Products increased 34.5% to $70.2
million in the nine months ended December 31, 1999 from $52.2 million in the
nine months ended January 1, 1999. Sales of KVM Extension Products increased
68.8% to $9.1 million in the nine months ended December 31, 1999 from $5.4
million in the nine months ended January 1, 1999. LongView(TM) and
Key-View(TM) II, a remote access solution, accounted primarily for the growth
in KVM Extension Product sales. International sales increased 36.5% to $27.1
million or 31.9% of net sales in the nine months ended December 31, 1999 as
compared to $19.8 million or 34.3% of net sales in the nine months ended
January 1, 1999.
Gross profit increased 47.2% to $46.1 million in the nine months ended
December 31, 1999 from $31.3 million in the nine months ended January 1, 1999.
Gross profit for Cybex - U.S. increased 57.2% from $21.6 million in the nine
months ended January 1, 1999 to $34.0 million in the nine months ended December
31, 1999, while the gross profit for Cybex - International increased 25.5% from
$9.7 million in the first nine months of Fiscal 1999 to $12.2 million in the
first nine months of Fiscal 2000. Gross profit as a percentage of net sales
increased from 53.3% to 53.7% due to increased volume of newer products designed
for margin retention while being discounted for volume distributions, cost
reductions due to volume efficiencies and increased outsourcing, and design
changes. These efficiencies achieved were offset by the diluting effect of
display product sales during the final three months of the period. The display
product line operates on a different business model than that of our Switch and
Extension business and produces significantly lower margins.
Selling, general and administrative (SG&A) expenses increased 32.1% to
$19.4 million or 22.5% of net sales in the nine months ended December 31, 1999
from $14.7 million or 25.0% of net sales in the nine months ended January 1,
1999. The increase in SG&A expense reflects the increased level of expenditures
in administration, sales, customer support, advertising, and marketing
activities required to support the Company's expanded sales base domestically
and abroad as well as additional SG&A costs from PixelVision.
Research and development (R&D) expense, exclusive of the write-off for
purchased research and development expense, was $5.1 million or 6.0% of net
sales in the nine months ended December 31, 1999 as compared to $3.9 million or
6.6% of net sales for the nine months ended January 1, 1999. The increase in R&D
expense reflects the Company's continued focus on new product and technology
development as well as product integration, product cost reduction efforts
through improved product design and the additional R&D costs from PixelVision.
Management anticipates that R&D expenses in dollars spent will continue to
increase.
16
<PAGE> 17
As a result of the factors discussed above, operating income before
acquisition related write-offs of $2.5 million increased 40.9% to $21.6 million
or 25.2% of net sales for the nine months ended December 31, 1999 as compared to
$12.8 million or 21.7% of net sales for the nine months ended January 1, 1999.
Other income increased slightly to $1.4 million or 1.6% of net sales in
the nine months ended December 31, 1999 from $1.3 million or 2.3% of net sales
in the nine months ended January 1, 1999. Interest and other income includes
realized gains and losses on the sale of certain investments, interest income
and expense and the accretion of U.S. Treasury Bill discounts.
Income, before the acquisition related write-offs in the third quarter
fiscal 2000, increased 58.4% to $15.2 million or 17.7% of net sales for the nine
months ended December 31, 1999 from $9.6 million or 16.3% of net sales for the
nine months ended January 1, 1999 due to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations primarily through cash flow from
operations and cash reserves as needed. As of December 31, 1999, and for the
nine months then ended, the Company had an available line of credit of $7.5
million with an interest rate of LIBOR plus 2.5%. The Company had no amounts
outstanding under the line of credit at December 31, 1999.
The Company's working capital position improved from $46.8 million as
of March 31, 1999 to $58.2 million as of December 31, 1999 (adjusted to include
$2.9 million and $3.1 million of long term-investments, respectively). This
improvement in the Company's working capital position was due primarily to
increased earnings during the nine months ended December 31, 1999. The
improvement due to increased earnings was offset somewhat by the acquisition of
PixelVision (see additional discussion in Note 7 to the Condensed Consolidated
Financial Statements).
Cash flow provided from operating activities increased from
approximately $7.6 million for the nine months ended January 1, 1999 to $12.7
million for the nine months ended December 31, 1999. This increase was
attributed primarily to an increase in net income. The increase in net income
was attributed to the increase in sales and was offset by an increase in
accounts receivable. The increase in accounts receivable is also attributed to
the increase in sales and the timing of certain sales. A large portion of
display product revenue was shipped in the latter part of the period and had yet
to be collected at December 31, 1999. Inventory levels increased slightly,
decreasing cash provided by operating activities. The increase in inventory is
attributed to the addition of PixelVision. The Company will decrease the levels
of display product inventory as the Company transitions display product sales to
the outsource manufacturers. Also, the Company will continue to increase the
level of turnkey manufacturing of products as they mature and designs stabilize,
thereby reducing the level of inventory relative to those products that the
Company must maintain.
Capital expenditures totaled approximately $1.3 million in the first
nine months of Fiscal 2000. These capital expenditures related to purchases of
shop equipment and office furniture for the Company's Huntsville facility and
purchases of equipment for the Company and its subsidiaries. A minor portion of
the computer purchases related to the Year 2000 readiness program (see Year 2000
Readiness Disclosure).
The Company believes that its current financial position and existing
cash and investments along with earnings and amounts available under its line of
credit will be sufficient to meet its cash requirements over the next twelve
months.
FINANCIAL ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
requires all derivatives to be measured at fair value and recognized as either
assets or liabilities on the balance sheet. Changes in such fair value are
required to be recognized immediately in net income (loss) to the extent the
derivatives are not effective as hedges. SFAS No. 133 is effective for fiscal
years beginning after June 15, 2000, and is effective for interim periods in the
initial year of adoption.
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<PAGE> 18
YEAR 2000 READINESS DISCLOSURE
The "Year 2000 Issue" is the result of computer programs that were
written using two digits rather than four to define the applicable year. If the
Company's computer programs with date-sensitive functions were not Year 2000
compliant, they may have recognized a date using "00" as the Year 1900 rather
than the Year 2000. This could have resulted in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities. As part of a Year 2000 project to
evaluate and determine the areas of risk, as well as to provide assurance that
the Year 2000 issue was adequately addressed, the Company identified its Year
2000 risk in four categories: products; internal business software; internal
non-financial software and manufacturing equipment; and external noncompliance
by customers and suppliers. All phases of the Year 2000 compliance program have
been completed on time and within budget.
The total costs associated with becoming Year 2000 compliant are not
expected to be material to the Company's financial position. The estimated total
cost of the Year 2000 project was approximately $1.2 million. The total amount
expended on the project through December 31, 1999, was almost $1.2 million, of
which $900,000 related to the purchase and installation of the Enterprise
Resource Planning System ("ERP"), which have been capitalized. All remaining
costs were expensed as incurred. The remaining amount related to replacement of
non-compliant software and hardware and related to costs associated with
evaluating and communicating with significant customers and suppliers. Funds for
the ERP System purchase and installation were included in the Company's capital
expenditure budget. The remaining costs were funded by cash flows from
operations and were expensed as incurred.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. However, as of the
date of this filing there were no known reported failings as a result of the
Year 2000 and therefore no material impact to the Company. The Year 2000 project
did reduce the Company's level of uncertainty about the Year 2000 problem and,
in particular, about the Year 2000 readiness and compliance of its significant
customers and suppliers.
THE ESTIMATES AND CONCLUSIONS CONTAINED IN THIS SECTION ARE
FORWARD-LOOKING STATEMENTS, AND ARE BASED ON MANAGEMENT'S BEST ESTIMATES OF
FUTURE EVENTS. RISKS TO COMPLETING THE PLAN INCLUDE THE AVAILABILITY OF
RESOURCES, THE COMPANY'S ABILITY TO DISCOVER AND CORRECT THE POTENTIAL YEAR 2000
SENSITIVE PROBLEMS WHICH COULD HAVE A SERIOUS IMPACT ON SPECIFIC FACILITIES, AND
THE ABILITY OF CUSTOMERS, SUPPLIERS, VENDORS, AND SERVICE PROVIDERS TO BRING
THEIR SYSTEMS INTO YEAR 2000 COMPLIANCE.
CONTINGENCIES
The Company has certain contingent liabilities resulting from
litigation initiated by Apex, Inc. Apex contended in a patent lawsuit filed in
February 1998 against the Company and others in the United States District Court
in Seattle, Washington, that the Company has infringed Patent No. 5,721,842. By
mutual agreement and stipulation of Apex and the Company, the patent lawsuit was
dismissed without prejudice. Patent validity and ownership issues raised in
connection with the District Court lawsuit will now be heard before the United
States Patent and Trademark Office. The parties jointly requested the District
Court to urge accelerated consideration of these issues by the United States
Patent and Trademark Office. At the conclusion of the United States Patent and
Trademark Office proceeding, the lawsuit can be reinstated upon the request of
either party. After extensive review of the claims at issue, management does not
believe any of its products are covered by any valid claim of Apex's patent. As
a result, it is management's opinion that the probable resolution of such
contingencies will not have a material adverse affect on the financial position,
results of operations, or cash flows of the Company.
The Company has been involved from time to time in litigation in the
normal course of its business. In the opinion of management, the Company is not
aware of any other pending or threatened litigation matter that will have a
material adverse affect on the financial position, results of operations, or
cash flows of the Company.
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<PAGE> 19
FORWARD LOOKING STATEMENTS AND FACTORS AFFECTING FUTURE RESULTS
Any statement contained in this Quarterly Report on Form 10-Q that is
not a historical fact, or that might otherwise be considered an opinion or
projection concerning the Company or its business, whether express or implied,
is meant as and should be considered a forward-looking statement as such term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
represent management's opinions concerning future operations, strategies,
financial results or other developments and are based upon estimates and
assumptions that are subject to significant business, economic and competitive
risks and uncertainties, many of which are beyond the control of management.
Such statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected.
Risks and uncertainties that could cause actual results to differ
materially from those projected or implied include, but are not necessarily
limited to, rapid technological change and the need to continue to develop new
products; potential reductions or delays in orders from new or existing
customers; potential fluctuations in quarterly results; product returns;
dependence on limited product lines and technological obsolescence; intensely
competitive industry with increasing price competition; development of
international distribution networks and sales; dependence on key personnel;
dependence upon suppliers and outsourced manufacturing; ability to manage
growth; reliance on the PC/Server market; improved reliability of networks;
ability to obtain and protect proprietary rights; expansion of distribution
channels; increased demands on customer support operations; ability to grow new
businesses and successfully integrate and operate any acquired businesses;
insufficient, excess or obsolete inventory; ability to develop and introduce new
products on a timely basis; impact on the Company's business due to internal
systems or systems of suppliers and other third parties adversely affected by
year 2000 problems; general business and economic conditions; and other factors
described from time to time in the Securities and Exchange Commission filings of
the Company.
Readers are cautioned not to place undue reliance on these forward
looking statements which speak only as of the date hereof. The Company
undertakes no obligation to update or revise forward-looking statements to
reflect subsequent events or circumstances. Readers are also urged to carefully
review and consider the various disclosures made by the Company which attempt to
advise interested parties of the factors which affect the Company's business,
including the disclosures made in other periodic reports on Forms 10-K, 10-Q and
8-K filed with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The market risk inherent in the Company's financial instruments
represents the potential loss arising from adverse changes in interest rates.
The Company is exposed to market risk in the area of interest rate changes
impacting the fair value of its investment securities. The Company's investment
policy is to manage its investment portfolio to preserve principal and liquidity
while maximizing the return on the investment portfolio through the investment
of available funds. The Company diversifies the investment portfolio by
investing in a variety of highly rated investment grade securities and through
the use of different investment managers. The Company's marketable securities
portfolio is primarily invested in short-term securities with at least an
investment grade rating to minimize interest rate and credit risk as well as to
provide for an immediate source of funds. Market risk is estimated as the
potential change in fair value in the investment portfolio resulting from a
hypothetical 10 percent change in interest rates, which is not material at
December 31, 1999. The Company generally holds investments until maturity and
carries the securities at amortized cost, which approximates fair market value.
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<PAGE> 20
PART II - OTHER INFORMATION
Item 6. Exhibits
(a) The following exhibits are being filed with this report:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.1 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Stephen F.
Thornton.
10.2 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Doyle C. Weeks.
10.3 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Douglas E.
Pritchett.
10.4 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and R. Byron Driver.
10.5 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Gary R. Johnson.
10.6 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Christopher Thomas.
10.7 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among the Company and
Kieran MacSweeney.
27 Financial Data Schedule (For SEC use only)
</TABLE>
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter
ended December 31, 1999.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CYBEX COMPUTER PRODUCTS CORPORATION
/s/ Douglas E. Pritchett
-------------------------------------
Douglas E. Pritchett
Senior Vice President - Finance and
Chief Financial Officer and Treasurer
Date: February 14, 2000
21
<PAGE> 22
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
<S> <C> <C>
10.1 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Stephen F.
Thornton.
10.2 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a CybexEmployment
Services Co., the Company, and Doyle C. Weeks.
10.3 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Douglas E.
Pritchett.
10.4 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and R. Byron Driver.
10.5 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Gary R. Johnson.
10.6 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among PolyCon Investments,
Inc., a Texas corporation d/b/a Cybex Employment
Services Co., the Company, and Christopher Thomas.
10.7 Employment and Noncompetition Agreement dated as
of July 1, 1999 by and among the Company and
Kieran MacSweeney.
27 Financial Data Schedule (For SEC use only)
</TABLE>
22
<PAGE> 1
EXHIBIT 10.1
POLYCON INVESTMENTS, INC. D/B/A CYBEX EMPLOYMENT SERVICES CO.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among PolyCon Investments, Inc., a
Texas corporation d/b/a Cybex Employment Services Co. (the "Employer"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and Stephen
F. Thornton (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of leasing employees to Cybex;
WHEREAS, Cybex is engaged in the business of developing, producing, and
marketing keyboard, video monitor, and mouse switch and extension products for
use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by the Employer and agrees to serve Cybex as its Chairman of the
Board, President and Chief Executive Officer, and the Employer agrees to employ
the Employee and to lease the Employee to Cybex to serve Cybex in such
capacities. The Employee shall devote such of his business time, energy and
skill to the affairs of the Employer and Cybex as shall be necessary to perform
the duties of the Chairman of the Board, President and Chief Executive Officer
of Cybex. The Employee shall report only to the Boards of Directors of the
Employer and Cybex and at all times during the term of this Agreement shall have
powers and duties at least commensurate with his position as Chairman of the
Board, President and Chief Executive Officer of Cybex. The Employee's principal
place of business with respect to his services to the Employer and Cybex shall
be within the proximity of Huntsville, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or Cybex or by reason of the
Employee's willful material breach of this Agreement which has resulted in
material injury to the Employer or Cybex.
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall
mean termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause)
<PAGE> 2
and shall include constructive termination of the Employee's employment by
reason of material breach of this Agreement by the Employer, such constructive
termination to be effective upon thirty (30) days written notice from the
Employee to the Employer of such constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Employer other
than (i) constructive termination as described in subsection 2.1(b), (ii)
"Termination Upon a Change in Control," and (iii) termination by reason of the
Employee's disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall
mean a termination by the Employee of the Employee's employment with the
Employer or services to Cybex following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any one of
the following events:
(i) Any person (other than an existing
member of the Board of Directors of Cybex) acquires beneficial ownership of
Cybex securities and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%) or more of the
combined voting power of Cybex then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Cybex securities would be required to be
reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Cybex at the beginning of such period,
together with any other Directors first elected as directors of Cybex pursuant
to nominations approved or ratified by at least two-thirds (2/3) of the
Directors in office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors of Cybex.
(iii) Cybex's stockholders approve:
(1) any consolidation or
merger of Cybex in which Cybex is not the continuing or surviving corporation or
pursuant to which shares of Cybex common stock would be converted into cash,
securities or other property, other than a merger or consolidation of Cybex in
which the holders of Cybex's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a holding company,
and the holders
2
<PAGE> 3
of Cybex's common stock immediately prior to the transaction have substantially
the same proportionate ownership and voting control of the holding company.
2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning on July 1, 1999 and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual written
agreement extend the Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and shall
be effected by thirty (30) days written notification to the Employee from the
Board of Directors of the Employer stating the reason for termination. Upon
Termination For Cause, the Employee immediately shall be paid all accrued
salary, vested deferred compensation, if any, (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Cybex or the Employer in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Cybex or the Employer in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of the Employer, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months, the
Employer shall have the right to terminate the Employee's employment hereunder
by delivery of written notice to the Employee at any time after such six month
period and payment to the Employee of all accrued salary, bonus compensation in
an amount equal to the average annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
3
<PAGE> 4
2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during
which his death occurs and the Employer shall pay to his estate or such
beneficiaries as the Employee may from time to time designate all accrued
salary, bonus compensation to the extent earned, vested deferred compensation,
if any, (other than pension plan or profit sharing plan benefits which will be
paid in accordance with the applicable plan), any benefits under any plans of
Cybex or the Employer in which the Employee is a participant to the full extent
of the Employee's rights under such plans (including accelerated vesting of any
awards granted to the Employee under Cybex's stock option plans), accrued
vacation pay and any appropriate business expenses incurred by the Employee in
connection with his duties hereunder, all to the date of termination, but the
Employee's estate shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such termination.
In the event of a Voluntary Termination, the Employer shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans, accrued vacation pay and
any appropriate business expenses incurred by the Employee in connection with
his duties hereunder, all to the date of termination, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be
rendered by the Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of $250,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year (or proration thereof) beginning
April 1, 2000, shall be determined by the Board of Directors of Employer upon a
recommendation from the Compensation Committee of Cybex (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Huntsville, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Board of Directors and the Compensation
Committee.
4
<PAGE> 5
3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of the Employee's performance during such year. All such bonuses
shall be payable during the last month of the fiscal year or within forty-five
(45) days after the end of the fiscal year to which such bonus relates. All such
bonuses shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Cybex's and the Employer's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of Cybex or the Employer, including,
without limitation, Cybex's stock option plans, Section 401(k) plan, profit
sharing plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length of
service under any benefit plans or programs of Cybex or the Employer, the
Employee's employment with the Employer will be deemed to have commenced on the
date that Employee first commenced employment with Cybex.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event less
than four weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 18 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to fifty
percent (50%) of the average annual bonus earned by the Employee in the two (2)
years immediately preceding the date of termination; provided, however, that in
the event the Employee votes his shares of the common stock of Cybex in favor
the Change in Control, the prior sentence shall be deemed to be amended to
substitute "9 months" for "18 months." Notwithstanding anything in this Section
4.1 to the contrary, the Employee may in the Employee's sole discretion, by
delivery of a notice to the Employer within thirty (30) days following a
Termination Upon a Change in Control, elect to receive from the Employer a lump
sum severance payment by bank cashier's check equal to the present value of the
flow of cash payments that would otherwise be paid to the Employee
5
<PAGE> 6
pursuant to this Section 4.1. Such present value shall be determined as of the
date of delivery of the notice of election by the Employee and shall be based on
a discount rate equal to the interest rate of 90-day U.S. Treasury bills, as
reported in the Wall Street Journal (or similar publication), on the date of
delivery of the election notice. If the Employee elects to receive a lump sum
severance payment, the Employer shall make such payment to the Employee within
ten (10) days following the date on which the Employee notifies the Employer of
the Employee's election. The Employee shall also be entitled to an accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans.
The Employee shall be provided with medical plan benefits under any health plans
of Cybex or the Employer in which the Employee is a participant to the full
extent of the Employee's rights under such plans for a period of 18 months from
the date of termination of this Agreement; provided, however, that the benefits
under any such plans of Cybex or the Employer in which the Employee is a
participant, including any such perquisites, shall cease upon employment by a
new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 18 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to fifty percent (50%) of
the average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.2
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination
Other Than for Cause, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.2. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be based on a discount rate equal
to the interest rate on 90-day U.S. Treasury bills, as reported in the Wall
Street Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. In consideration of the payment
set forth on Exhibit A to this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
during the term of this Agreement and for a period of 36 months thereafter,
Employee will not, without the Employer's and Cybex's prior written consent,
directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer or Cybex
at such time; provided, however, that the Employee shall not be entitled to any
payment under this Section 5 upon a termination of employment under Section 2.5
or Section 2.6 of this Agreement. Notwithstanding the foregoing, the ownership
by the Employee of not more than five percent (5%) of the shares of stock of any
corporation having a class of equity securities actively traded on a national
6
<PAGE> 7
securities exchange or on The Nasdaq Stock Market shall not be deemed, in and of
itself, to violate the prohibitions of this Section 5. Payments by the Employer
to the Employee under this Section 5 shall be made within thirty (30) days
following a termination of Employee's employment with the Employer by delivery
of a bank cashier's check to the Employee at the address set forth in Section
6.5 hereof.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Articles of Incorporation and Bylaws, hereby indemnifies the Employee for the
Employee's reasonable attorneys' fees and disbursements incurred in such
litigation.
6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to the
respective persons named below:
If to the Employer: PolyCon Investments, Inc. d/b/a/ Cybex
Employment Services, Inc.
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
7
<PAGE> 8
If to the Employee: Mr. Stephen F. Thornton
101 Calhoun Street
Huntsville, Alabama 35801
Phone: (256) 534-6123
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
8
<PAGE> 9
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the Employee
at all times during and after the term of this Agreement to the maximum extent
permitted under the corporation laws of the State of Texas and any other
applicable state law, and shall pay the Employee's expenses in defending any
civil or criminal action, suit, or proceeding in advance of the final
disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
(Signature Page Follows)
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
POLYCON INVESTMENTS, INC. D/B/A
CYBEX EMPLOYMENT SERVICES, INC.
By /s/ JULIE YARBROUGH
--------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ DOYLE C. WEEKS
--------------------------------------
Its: Executive Vice President
EMPLOYEE
/s/ STEPHEN F. THORNTON
----------------------------------------
Stephen F. Thornton
10
<PAGE> 11
EXHIBIT A
PolyCon Investments, Inc., a Texas corporation d/b/a Cybex Employment Services,
Inc. (the "Employer"), Cybex Computer Products Corporation, an Alabama
corporation ("Cybex"), and Stephen F. Thornton, a resident of the State of
Alabama (the "Employee"), hereby agree that the payment required to be paid by
Cybex to the Employee pursuant to Section 5 of that certain Employment and
Noncompetition Agreement dated July 1, 1999 between the Employer, Cybex and the
Employee shall be $400,000.
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EXHIBIT 10.2
POLYCON INVESTMENTS, INC. D/B/A CYBEX EMPLOYMENT SERVICES CO.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among PolyCon Investments, Inc., a
Texas corporation d/b/a Cybex Employment Services Co. (the "Employer"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and Doyle
C. Weeks (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of leasing employees to Cybex;
WHEREAS, Cybex is engaged in the business of developing, producing, and
marketing keyboard, video monitor, and mouse switch and extension products for
use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by the Employer and agrees to serve Cybex as its Executive Vice
President B Group Operations and Business Development, and the Employer agrees
to employ the Employee and to lease the Employee to Cybex to serve Cybex in such
capacities. The Employee shall devote such of his business time, energy and
skill to the affairs of the Employer and Cybex as shall be necessary to perform
the duties of the Executive Vice President B Group Operations and Business
Development of Cybex. The Employee shall report to the President of the Employer
and of Cybex and to the Boards of Directors of the Employer and Cybex and at all
times during the term of this Agreement shall have powers and duties at least
commensurate with his position as Executive Vice President B Group Operations
and Business Development of Cybex. The Employee's principal place of business
with respect to his services to the Employer and Cybex shall be within the
proximity of Huntsville, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or Cybex or by reason of the
Employee's willful material breach of this Agreement which has resulted in
material injury to the Employer or Cybex.
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(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall
mean termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause) and shall include constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Employer other
than (i) constructive termination as described in subsection 2.1(b), (ii)
"Termination Upon a Change in Control," and (iii) termination by reason of the
Employee's disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall
mean a termination by the Employee of the Employee's employment with the
Employer or services to Cybex following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any one of
the following events:
(i) Any person (other than an existing
member of the Board of Directors of Cybex) acquires beneficial ownership of
Cybex securities and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%) or more of the
combined voting power of Cybex then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Cybex securities would be required to be
reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Cybex at the beginning of such period,
together with any other Directors first elected as directors of Cybex pursuant
to nominations approved or ratified by at least two-thirds (2/3) of the
Directors in office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors of Cybex.
(iii) Cybex's stockholders approve:
(1) any consolidation or merger of
Cybex in which Cybex is not the continuing or surviving corporation or pursuant
to which shares of Cybex common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Cybex in which the
holders of Cybex's common stock immediately prior to the merger or consolidation
have substantially the same proportionate ownership and voting control of the
surviving corporation immediately after the merger or consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a holding company,
and the holders
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of Cybex's common stock immediately prior to the transaction have substantially
the same proportionate ownership and voting control of the holding company.
2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning on July 1, 1999 and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual written
agreement extend the Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and shall
be effected by thirty (30) days written notification to the Employee from the
Board of Directors of the Employer stating the reason for termination. Upon
Termination For Cause, the Employee immediately shall be paid all accrued
salary, vested deferred compensation, if any, (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Cybex or the Employer in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Cybex or the Employer in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of the Employer, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months, the
Employer shall have the right to terminate the Employee's employment hereunder
by delivery of written notice to the Employee at any time after such six month
period and payment to the Employee of all accrued salary, bonus compensation in
an amount equal to the average annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
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2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during which
his death occurs and the Employer shall pay to his estate or such beneficiaries
as the Employee may from time to time designate all accrued salary, bonus
compensation to the extent earned, vested deferred compensation, if any, (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of Cybex or
the Employer in which the Employee is a participant to the full extent of the
Employee's rights under such plans (including accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans), accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, but the Employee's
estate shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such termination.
In the event of a Voluntary Termination, the Employer shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans, accrued vacation pay and
any appropriate business expenses incurred by the Employee in connection with
his duties hereunder, all to the date of termination, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be
rendered by the Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of $175,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year (or proration thereof) beginning
April 1, 2000, shall be determined by the Board of Directors of Employer upon a
recommendation from the Compensation Committee of Cybex (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Huntsville, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Board of Directors and the Compensation
Committee.
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3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of the Employee's performance during such year. All such bonuses
shall be payable during the last month of the fiscal year or within forty-five
(45) days after the end of the fiscal year to which such bonus relates. All such
bonuses shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Cybex's and the Employer's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of Cybex or the Employer, including,
without limitation, Cybex's stock option plans, Section 401(k) plan, profit
sharing plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length of
service under any benefit plans or programs of Cybex or the Employer, the
Employee's employment with the Employer will be deemed to have commenced on the
date that Employee first commenced employment with Cybex.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event less
than three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 18 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.1
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination Upon
a Change in Control, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.1. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be
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based on a discount rate equal to the interest rate of 90-day U.S. Treasury
bills, as reported in the Wall Street Journal (or similar publication), on the
date of delivery of the election notice. If the Employee elects to receive a
lump sum severance payment, the Employer shall make such payment to the Employee
within ten (10) days following the date on which the Employee notifies the
Employer of the Employee's election. The Employee shall also be entitled to an
accelerated vesting of any awards granted to the Employee under Cybex's stock
option plans. The Employee shall be provided with medical plan benefits under
any health plans of Cybex or the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans for a period of 18
months from the date of termination of this Agreement; provided, however, that
the benefits under any such plans of Cybex or the Employer in which the Employee
is a participant, including any such perquisites, shall cease upon employment by
a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 18 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to the average annual bonus
earned by the Employee in the two (2) years immediately preceding the date of
termination. Notwithstanding anything in this Section 4.2 to the contrary, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
Employer within thirty (30) days following a Termination Other Than for Cause,
elect to receive from the Employer a lump sum severance payment by bank
cashier's check equal to the present value of the flow of cash payments that
would otherwise be paid to the Employee pursuant to this Section 4.2. Such
present value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street
Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Company, during the term of this Agreement and for a period of 18 months
thereafter, Employee will not, without the Employer's and Cybex's prior written
consent, directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer or Cybex
at such time. Notwithstanding the foregoing, the ownership by the Employee of
not more than five percent (5%) of the shares of stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to violate
the prohibitions of this Section 5.
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6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Articles of Incorporation and Bylaws, hereby indemnifies the Employee for the
Employee's reasonable attorneys' fees and disbursements incurred in such
litigation.
6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to the
respective persons named below:
If to the Employer: PolyCon Investments, Inc. d/b/a/ Cybex
Employment Services Co.
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
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If to the Employee: Mr. Doyle C. Weeks
1117 East Prior
Athens, Alabama 35611
Phone: (256) 233-2522
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the Employee
at all times during and after the term of this Agreement to the maximum extent
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permitted under the corporation laws of the State of Texas and any other
applicable state law, and shall pay the Employee's expenses in defending any
civil or criminal action, suit, or proceeding in advance of the final
disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
POLYCON INVESTMENTS, INC. D/B/A
CYBEX EMPLOYMENT SERVICES CO.
By /s/ JULIE YARBROUGH
-------------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ STEPHEN F. THORNTON
-------------------------------------------
Its: President and Chief Executive Officer
EMPLOYEE
/s/ DOYLE C. WEEKS
---------------------------------------------
Doyle C. Weeks
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EXHIBIT 10.3
POLYCON INVESTMENTS, INC. D/B/A CYBEX EMPLOYMENT SERVICES CO.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among PolyCon Investments, Inc., a
Texas corporation d/b/a Cybex Employment Services Co. (the "Employer"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and Douglas
E. Pritchett (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of leasing employees to Cybex;
WHEREAS, Cybex is engaged in the business of developing, producing, and
marketing keyboard, video monitor, and mouse switch and extension products for
use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by the Employer and agrees to serve Cybex as its Senior Vice
President - Finance, Chief Financial Officer, Treasurer and Assistant Secretary,
and the Employer agrees to employ the Employee and to lease the Employee to
Cybex to serve Cybex in such capacities. The Employee shall devote such of his
business time, energy and skill to the affairs of the Employer and Cybex as
shall be necessary to perform the duties of the Senior Vice President - Finance,
Chief Financial Officer, Treasurer and Assistant Secretary of Cybex. The
Employee shall report to the President of the Employer and of Cybex and to the
Boards of Directors of the Employer and Cybex and at all times during the term
of this Agreement shall have powers and duties at least commensurate with his
position as Senior Vice President - Finance, Chief Financial Officer, Treasurer
and Assistant Secretary of Cybex. The Employee's principal place of business
with respect to his services to the Employer and Cybex shall be within the
proximity of Huntsville, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or Cybex or by reason of the
Employee's willful material breach of this Agreement which has resulted in
material injury to the Employer or Cybex.
<PAGE> 2
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall
mean termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause) and shall include constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Employer other
than (i) constructive termination as described in subsection 2.1(b), (ii)
"Termination Upon a Change in Control," and (iii) termination by reason of the
Employee's disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall
mean a termination by the Employee of the Employee's employment with the
Employer or services to Cybex following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any one of
the following events:
(i) Any person (other than an existing
member of the Board of Directors of Cybex) acquires beneficial ownership of
Cybex securities and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%) or more of the
combined voting power of Cybex then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Cybex securities would be required to be
reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Cybex at the beginning of such period,
together with any other Directors first elected as directors of Cybex pursuant
to nominations approved or ratified by at least two-thirds (2/3) of the
Directors in office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors of Cybex.
(iii) Cybex's stockholders approve:
(1) any consolidation or merger of
Cybex in which Cybex is not the continuing or surviving corporation or pursuant
to which shares of Cybex common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Cybex in which the
holders of Cybex's common stock immediately prior to the merger or consolidation
have substantially the same proportionate ownership and voting control of the
surviving corporation immediately after the merger or consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a holding company,
and the holders
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of Cybex's common stock immediately prior to the transaction have substantially
the same proportionate ownership and voting control of the holding company.
2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning on July 1, 1999 and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual written
agreement extend the Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and shall
be effected by thirty (30) days written notification to the Employee from the
Board of Directors of the Employer stating the reason for termination. Upon
Termination For Cause, the Employee immediately shall be paid all accrued
salary, vested deferred compensation, if any, (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Cybex or the Employer in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Cybex or the Employer in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of the Employer, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months, the
Employer shall have the right to terminate the Employee's employment hereunder
by delivery of written notice to the Employee at any time after such six month
period and payment to the Employee of all accrued salary, bonus compensation in
an amount equal to the average annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
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2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during which
his death occurs and the Employer shall pay to his estate or such beneficiaries
as the Employee may from time to time designate all accrued salary, bonus
compensation to the extent earned, vested deferred compensation, if any, (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of Cybex or
the Employer in which the Employee is a participant to the full extent of the
Employee's rights under such plans (including accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans), accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, but the Employee's
estate shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such termination.
In the event of a Voluntary Termination, the Employer shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans, accrued vacation pay and
any appropriate business expenses incurred by the Employee in connection with
his duties hereunder, all to the date of termination, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be
rendered by the Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of $150,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year (or proration thereof) beginning
April 1, 2000, shall be determined by the Board of Directors of Employer upon a
recommendation from the Compensation Committee of Cybex (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Huntsville, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Board of Directors and the Compensation
Committee.
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3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of the Employee's performance during such year. All such bonuses
shall be payable during the last month of the fiscal year or within forty-five
(45) days after the end of the fiscal year to which such bonus relates. All such
bonuses shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Cybex's and the Employer's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of Cybex or the Employer, including,
without limitation, Cybex's stock option plans, Section 401(k) plan, profit
sharing plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length of
service under any benefit plans or programs of Cybex or the Employer, the
Employee's employment with the Employer will be deemed to have commenced on the
date that Employee first commenced employment with Cybex.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event less
than three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.1
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination Upon
a Change in Control, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.1. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be
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based on a discount rate equal to the interest rate of 90-day U.S. Treasury
bills, as reported in the Wall Street Journal (or similar publication), on the
date of delivery of the election notice. If the Employee elects to receive a
lump sum severance payment, the Employer shall make such payment to the Employee
within ten (10) days following the date on which the Employee notifies the
Employer of the Employee's election. The Employee shall also be entitled to an
accelerated vesting of any awards granted to the Employee under Cybex's stock
option plans. The Employee shall be provided with medical plan benefits under
any health plans of Cybex or the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans for a period of 12
months from the date of termination of this Agreement; provided, however, that
the benefits under any such plans of Cybex or the Employer in which the Employee
is a participant, including any such perquisites, shall cease upon employment by
a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to the average annual bonus
earned by the Employee in the two (2) years immediately preceding the date of
termination. Notwithstanding anything in this Section 4.2 to the contrary, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
Employer within thirty (30) days following a Termination Other Than for Cause,
elect to receive from the Employer a lump sum severance payment by bank
cashier's check equal to the present value of the flow of cash payments that
would otherwise be paid to the Employee pursuant to this Section 4.2. Such
present value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street
Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Company, during the term of this Agreement and for a period of 12 months
thereafter, Employee will not, without the Employer's and Cybex's prior written
consent, directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer or Cybex
at such time. Notwithstanding the foregoing, the ownership by the Employee of
not more than five percent (5%) of the shares of stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to violate
the prohibitions of this Section 5.
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6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Articles of Incorporation and Bylaws, hereby indemnifies the Employee for the
Employee's reasonable attorneys' fees and disbursements incurred in such
litigation.
6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to the
respective persons named below:
If to the Employer: PolyCon Investments, Inc. d/b/a/ Cybex
Employment Services Co.
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to the Employee: Mr. Douglas E. Pritchett
724 Mullins Hill Circle
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Huntsville, Alabama 35802
Phone: (256) 650-2304
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the Employee
at all times during and after the term of this Agreement to the maximum extent
permitted under the corporation laws of the State of Texas and any other
applicable state law, and shall pay the Employee's expenses in defending any
civil or criminal action, suit, or proceeding in advance of the final
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disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
POLYCON INVESTMENTS, INC. D/B/A
CYBEX EMPLOYMENT SERVICES CO.
By /s/ JULIE YARBROUGH
-----------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ STEPHEN F. THORNTON
-----------------------------------------
Its: President and Chief Executive Officer
EMPLOYEE
/s/ DOUGLAS E. PRITCHETT
------------------------------------------
Douglas E. Pritchett
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EXHIBIT 10.4
POLYCON INVESTMENTS, INC. D/B/A CYBEX EMPLOYMENT SERVICES CO.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among PolyCon Investments, Inc., a
Texas corporation d/b/a Cybex Employment Services Co. (the "Employer"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and R.
Byron Driver (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of leasing employees to Cybex;
WHEREAS, Cybex is engaged in the business of developing, producing, and
marketing keyboard, video monitor, and mouse switch and extension products for
use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by the Employer and agrees to serve Cybex as its Senior Vice
President - Operations and Chief Operating Officer, and the Employer agrees to
employ the Employee and to lease the Employee to Cybex to serve Cybex in such
capacities. The Employee shall devote such of his business time, energy and
skill to the affairs of the Employer and Cybex as shall be necessary to perform
the duties of the Senior Vice President - Operations and Chief Operating Officer
of Cybex. The Employee shall report to the President of the Employer and of
Cybex and to the Boards of Directors of the Employer and Cybex and at all times
during the term of this Agreement shall have powers and duties at least
commensurate with his position as Senior Vice President - Operations and Chief
Operating Officer of Cybex. The Employee's principal place of business with
respect to his services to the Employer and Cybex shall be within the proximity
of Huntsville, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or Cybex or by reason of the
Employee's willful material breach of this Agreement which has resulted in
material injury to the Employer or Cybex.
<PAGE> 2
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall
mean termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause) and shall include constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Employer other
than (i) constructive termination as described in subsection 2.1(b), (ii)
"Termination Upon a Change in Control," and (iii) termination by reason of the
Employee's disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall
mean a termination by the Employee of the Employee's employment with the
Employer or services to Cybex following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any one of
the following events:
(i) Any person (other than an existing
member of the Board of Directors of Cybex) acquires beneficial ownership of
Cybex securities and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%) or more of the
combined voting power of Cybex then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Cybex securities would be required to be
reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Cybex at the beginning of such period,
together with any other Directors first elected as directors of Cybex pursuant
to nominations approved or ratified by at least two-thirds (2/3) of the
Directors in office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors of Cybex.
(iii) Cybex's stockholders approve:
(1) any consolidation or
merger of Cybex in which Cybex is not the continuing or surviving corporation or
pursuant to which shares of Cybex common stock would be converted into cash,
securities or other property, other than a merger or consolidation of Cybex in
which the holders of Cybex's common stock immediately prior to the merger or
consolidation have substantially the same proportionate ownership and voting
control of the surviving corporation immediately after the merger or
consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a holding company,
and the holders
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of Cybex's common stock immediately prior to the transaction have substantially
the same proportionate ownership and voting control of the holding company.
2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning on July 1, 1999 and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual written
agreement extend the Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and shall
be effected by thirty (30) days written notification to the Employee from the
Board of Directors of the Employer stating the reason for termination. Upon
Termination For Cause, the Employee immediately shall be paid all accrued
salary, vested deferred compensation, if any, (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Cybex or the Employer in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Cybex or the Employer in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of the Employer, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months, the
Employer shall have the right to terminate the Employee's employment hereunder
by delivery of written notice to the Employee at any time after such six month
period and payment to the Employee of all accrued salary, bonus compensation in
an amount equal to the average annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
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2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the last day of the month during which
his death occurs and the Employer shall pay to his estate or such beneficiaries
as the Employee may from time to time designate all accrued salary, bonus
compensation to the extent earned, vested deferred compensation, if any, (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of Cybex or
the Employer in which the Employee is a participant to the full extent of the
Employee's rights under such plans (including accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans), accrued vacation pay
and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, but the Employee's
estate shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such termination.
In the event of a Voluntary Termination, the Employer shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans, accrued vacation pay and
any appropriate business expenses incurred by the Employee in connection with
his duties hereunder, all to the date of termination, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be
rendered by the Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of $135,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year (or proration thereof) beginning
April 1, 2000, shall be determined by the Board of Directors of Employer upon a
recommendation from the Compensation Committee of Cybex (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Huntsville, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Board of Directors and the Compensation
Committee.
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3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of the Employee's performance during such year. All such bonuses
shall be payable during the last month of the fiscal year or within forty-five
(45) days after the end of the fiscal year to which such bonus relates. All such
bonuses shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Cybex's and the Employer's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of Cybex or the Employer, including,
without limitation, Cybex's stock option plans, Section 401(k) plan, profit
sharing plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length of
service under any benefit plans or programs of Cybex or the Employer, the
Employee's employment with the Employer will be deemed to have commenced on the
date that Employee first commenced employment with Cybex.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event less
than three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.1
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination Upon
a Change in Control, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.1. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be
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based on a discount rate equal to the interest rate of 90-day U.S. Treasury
bills, as reported in the Wall Street Journal (or similar publication), on the
date of delivery of the election notice. If the Employee elects to receive a
lump sum severance payment, the Employer shall make such payment to the Employee
within ten (10) days following the date on which the Employee notifies the
Employer of the Employee's election. The Employee shall also be entitled to an
accelerated vesting of any awards granted to the Employee under Cybex's stock
option plans. The Employee shall be provided with medical plan benefits under
any health plans of Cybex or the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans for a period of 12
months from the date of termination of this Agreement; provided, however, that
the benefits under any such plans of Cybex or the Employer in which the Employee
is a participant, including any such perquisites, shall cease upon employment by
a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to the average annual bonus
earned by the Employee in the two (2) years immediately preceding the date of
termination. Notwithstanding anything in this Section 4.2 to the contrary, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
Employer within thirty (30) days following a Termination Other Than for Cause,
elect to receive from the Employer a lump sum severance payment by bank
cashier's check equal to the present value of the flow of cash payments that
would otherwise be paid to the Employee pursuant to this Section 4.2. Such
present value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street
Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Company, during the term of this Agreement and for a period of 12 months
thereafter, Employee will not, without the Employer's and Cybex's prior written
consent, directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer or Cybex
at such time. Notwithstanding the foregoing, the ownership by the Employee of
not more than five percent (5%) of the shares of stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to violate
the prohibitions of this Section 5.
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6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Articles of Incorporation and Bylaws, hereby indemnifies the Employee for the
Employee's reasonable attorneys' fees and disbursements incurred in such
litigation.
6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to the
respective persons named below:
If to the Employer: PolyCon Investments, Inc. d/b/a/ Cybex
Employment Services Co.
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to the Employee: Mr. R. Byron Driver
1912 Chippendale Drive
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Huntsville, Alabama 35801
Phone: (256) 534-3222
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the Employee
at all times during and after the term of this Agreement to the maximum extent
permitted under the corporation laws of the State of Texas and any other
applicable state law, and shall pay the Employee's expenses in defending any
civil or criminal action, suit, or proceeding in advance of the final
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disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
POLYCON INVESTMENTS, INC. D/B/A
CYBEX EMPLOYMENT SERVICES CO.
By /s/ JULIE YARBROUGH
----------------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ STEPHEN F. THORNTON
----------------------------------------------
Its: President and Chief Executive Officer
EMPLOYEE
/s/ R. BYRON DRIVER
------------------------------------------------
R. Byron Driver
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<PAGE> 1
EXHIBIT 10.5
POLYCON INVESTMENTS, INC. D/B/A CYBEX EMPLOYMENT SERVICES CO.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among PolyCon Investments, Inc., a
Texas corporation d/b/a Cybex Employment Services Co. (the "Employer"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and Gary R.
Johnson (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of leasing employees to Cybex;
WHEREAS, Cybex is engaged in the business of developing, producing, and
marketing keyboard, video monitor, and mouse switch and extension products for
use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by the Employer and agrees to serve Cybex as its Senior Vice
President - Sales and Marketing, and the Employer agrees to employ the Employee
and to lease the Employee to Cybex to serve Cybex in such capacities. The
Employee shall devote such of his business time, energy and skill to the affairs
of the Employer and Cybex as shall be necessary to perform the duties of the
Senior Vice President - Sales and Marketing of Cybex. The Employee shall report
to the President of the Employer and of Cybex and to the Boards of Directors of
the Employer and Cybex and at all times during the term of this Agreement shall
have powers and duties at least commensurate with his position as Senior Vice
President - Sales and Marketing of Cybex. The Employee's principal place of
business with respect to his services to the Employer and Cybex shall be within
the proximity of Huntsville, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or Cybex or by reason of the
Employee's willful material breach of this Agreement which has resulted in
material injury to the Employer or Cybex.
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall
mean termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause)
<PAGE> 2
and shall include constructive termination of the Employee's employment by
reason of material breach of this Agreement by the Employer, such constructive
termination to be effective upon thirty (30) days written notice from the
Employee to the Employer of such constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Employer other
than (i) constructive termination as described in subsection 2.1(b), (ii)
"Termination Upon a Change in Control," and (iii) termination by reason of the
Employee's disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall
mean a termination by the Employee of the Employee's employment with the
Employer or services to Cybex following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any one of
the following events:
(i) Any person (other than an existing
member of the Board of Directors of Cybex) acquires beneficial ownership of
Cybex securities and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%) or more of the
combined voting power of Cybex then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Cybex securities would be required to be
reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Cybex at the beginning of such period,
together with any other Directors first elected as directors of Cybex pursuant
to nominations approved or ratified by at least two-thirds (2/3) of the
Directors in office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors of Cybex.
(iii) Cybex's stockholders approve:
(1) any consolidation or merger of
Cybex in which Cybex is not the continuing or surviving corporation or pursuant
to which shares of Cybex common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Cybex in which the
holders of Cybex's common stock immediately prior to the merger or consolidation
have substantially the same proportionate ownership and voting control of the
surviving corporation immediately after the merger or consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a holding company,
and the holders of Cybex's common stock immediately prior to the transaction
have substantially the same proportionate ownership and voting control of the
holding company.
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<PAGE> 3
2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning on July 1, 1999 and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual written
agreement extend the Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and shall
be effected by thirty (30) days written notification to the Employee from the
Board of Directors of the Employer stating the reason for termination. Upon
Termination For Cause, the Employee immediately shall be paid all accrued
salary, vested deferred compensation, if any, (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Cybex or the Employer in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Cybex or the Employer in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of the Employer, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months, the
Employer shall have the right to terminate the Employee's employment hereunder
by delivery of written notice to the Employee at any time after such six month
period and payment to the Employee of all accrued salary, bonus compensation in
an amount equal to the average annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the
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last day of the month during which his death occurs and the Employer shall pay
to his estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation, if any, (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Cybex or the Employer in which the Employee is a
participant to the full extent of the Employee's rights under such plans
(including accelerated vesting of any awards granted to the Employee under
Cybex's stock option plans), accrued vacation pay and any appropriate business
expenses incurred by the Employee in connection with his duties hereunder, all
to the date of termination, but the Employee's estate shall not be paid any
other compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such termination.
In the event of a Voluntary Termination, the Employer shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans, accrued vacation pay and
any appropriate business expenses incurred by the Employee in connection with
his duties hereunder, all to the date of termination, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be
rendered by the Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of $136,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year (or proration thereof) beginning
April 1, 2000, shall be determined by the Board of Directors of Employer upon a
recommendation from the Compensation Committee of Cybex (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Huntsville, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Board of Directors and the Compensation
Committee.
3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation
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of the Employee's performance during such year. All such bonuses shall be
payable during the last month of the fiscal year or within forty-five (45) days
after the end of the fiscal year to which such bonus relates.
All such bonuses shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Cybex's and the Employer's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of Cybex or the Employer, including,
without limitation, Cybex's stock option plans, Section 401(k) plan, profit
sharing plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length of
service under any benefit plans or programs of Cybex or the Employer, the
Employee's employment with the Employer will be deemed to have commenced on the
date that Employee first commenced employment with Cybex.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event less
than two weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.1
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination Upon
a Change in Control, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.1. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be based on a discount rate equal
to the interest rate of 90-day U.S. Treasury bills, as reported in the Wall
Street Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The
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Employee shall also be entitled to an accelerated vesting of any awards granted
to the Employee under Cybex's stock option plans. The Employee shall be provided
with medical plan benefits under any health plans of Cybex or the Employer in
which the Employee is a participant to the full extent of the Employee's rights
under such plans for a period of 12 months from the date of termination of this
Agreement; provided, however, that the benefits under any such plans of Cybex or
the Employer in which the Employee is a participant, including any such
perquisites, shall cease upon employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to the average annual bonus
earned by the Employee in the two (2) years immediately preceding the date of
termination. Notwithstanding anything in this Section 4.2 to the contrary, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
Employer within thirty (30) days following a Termination Other Than for Cause,
elect to receive from the Employer a lump sum severance payment by bank
cashier's check equal to the present value of the flow of cash payments that
would otherwise be paid to the Employee pursuant to this Section 4.2. Such
present value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street
Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Company, during the term of this Agreement and for a period of 12 months
thereafter, Employee will not, without the Employer's and Cybex's prior written
consent, directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer or Cybex
at such time. Notwithstanding the foregoing, the ownership by the Employee of
not more than five percent (5%) of the shares of stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to violate
the prohibitions of this Section 5.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Articles of Incorporation and Bylaws, hereby indemnifies the Employee for the
Employee's reasonable attorneys' fees and disbursements incurred in such
litigation.
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6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to the
respective persons named below:
If to the Employer: PolyCon Investments, Inc. d/b/a/ Cybex
Employment Services Co.
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to the Employee: Mr. Gary R. Johnson
6929 Steeplechase Drive
Huntsville, Alabama 35806
Phone: (256) 830-2763
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
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6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the Employee
at all times during and after the term of this Agreement to the maximum extent
permitted under the corporation laws of the State of Texas and any other
applicable state law, and shall pay the Employee's expenses in defending any
civil or criminal action, suit, or proceeding in advance of the final
disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
POLYCON INVESTMENTS, INC. D/B/A
CYBEX EMPLOYMENT SERVICES CO.
By /s/ ERNIE DUFFEY
---------------------------------------
Its: Vice President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ STEPHEN F. THORNTON
---------------------------------------
Its: President and Chief Executive Officer
EMPLOYEE
/s/ GARY R. JOHNSON
------------------------------------------
Gary R. Johnson
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EXHIBIT 10.6
POLYCON INVESTMENTS, INC. D/B/A CYBEX EMPLOYMENT SERVICES CO.
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among PolyCon Investments, Inc., a
Texas corporation d/b/a Cybex Employment Services Co. (the "Employer"), Cybex
Computer Products Corporation, an Alabama corporation (the "Cybex"), and
Christopher Thomas (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of leasing employees to Cybex;
WHEREAS, Cybex is engaged in the business of developing, producing, and
marketing keyboard, video monitor, and mouse switch and extension products for
use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by the Employer and agrees to serve Cybex as its Senior Vice
President - Engineering, and the Employer agrees to employ the Employee and to
lease the Employee to Cybex to serve Cybex in such capacities. The Employee
shall devote such of his business time, energy and skill to the affairs of the
Employer and Cybex as shall be necessary to perform the duties of the Senior
Vice President - Engineering of Cybex. The Employee shall report to the
President of the Employer and of Cybex and to the Boards of Directors of the
Employer and Cybex and at all times during the term of this Agreement shall have
powers and duties at least commensurate with his position as Senior Vice
President - Engineering of Cybex. The Employee's principal place of business
with respect to his services to the Employer and Cybex shall be within the
proximity of Huntsville, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or Cybex or by reason of the
Employee's willful material breach of this Agreement which has resulted in
material injury to the Employer or Cybex.
(b) "TERMINATIONS OTHER THAN FOR CAUSE" shall
mean termination by the Employer of the Employee's employment by the Employer
(other than in a Termination for Cause)
<PAGE> 2
and shall include constructive termination of the Employee's employment by
reason of material breach of this Agreement by the Employer, such constructive
termination to be effective upon thirty (30) days written notice from the
Employee to the Employer of such constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Employer other
than (i) constructive termination as described in subsection 2.1(b), (ii)
"Termination Upon a Change in Control," and (iii) termination by reason of the
Employee's disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN CONTROL" shall
mean a termination by the Employee of the Employee's employment with the
Employer or services to Cybex following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any one of
the following events:
(i) Any person (other than an existing
member of the Board of Directors of Cybex) acquires beneficial ownership of
Cybex securities and is or thereby becomes a beneficial owner of securities
entitling such person to exercise twenty-five percent (25%) or more of the
combined voting power of Cybex then outstanding stock. For purposes of this
Agreement, "beneficial ownership" shall be determined in accordance with
Regulation 13D under the Securities Exchange Act of 1934, or any similar
successor regulation or rule; and the term "person" shall include any natural
person, corporation, partnership, trust or association, or any group or
combination thereof, whose ownership of Cybex securities would be required to be
reported under such Regulation 13D, or any similar successor regulation or rule.
(ii) Within any twenty-four (24) month
period, individuals who were Directors of Cybex at the beginning of such period,
together with any other Directors first elected as directors of Cybex pursuant
to nominations approved or ratified by at least two-thirds (2/3) of the
Directors in office immediately prior to such respective elections, cease to
constitute a majority of the Board of Directors of Cybex.
(iii) Cybex's stockholders approve:
(1) any consolidation or merger of
Cybex in which Cybex is not the continuing or surviving corporation or pursuant
to which shares of Cybex common stock would be converted into cash, securities
or other property, other than a merger or consolidation of Cybex in which the
holders of Cybex's common stock immediately prior to the merger or consolidation
have substantially the same proportionate ownership and voting control of the
surviving corporation immediately after the merger or consolidation; or
(2) any sale, lease, exchange,
liquidation or other transfer (in one transaction or a series of transactions)
of all or substantially all of the assets of Cybex.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Cybex is owned, directly or indirectly, by a holding company,
and the holders of Cybex's common stock immediately prior to the transaction
have substantially the same proportionate ownership and voting control of the
holding company.
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2.2 BASIC TERM. The term of employment of the Employee by
the Employer shall be for the period beginning on July 1, 1999 and ending on
March 31, 2004, unless terminated earlier pursuant to this Section 2. At any
time before March 31, 2004, the Employer and the Employee may by mutual written
agreement extend the Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause may be
effected by the Employer at any time during the term of this Agreement and shall
be effected by thirty (30) days written notification to the Employee from the
Board of Directors of the Employer stating the reason for termination. Upon
Termination For Cause, the Employee immediately shall be paid all accrued
salary, vested deferred compensation, if any, (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Cybex or the Employer in which the
Employee is a participant to the full extent of the Employee's rights under such
plans, accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding
anything else in this Agreement, the Employer may effect a Termination Other
Than For Cause at any time upon giving thirty (30) days written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of Cybex or the Employer in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.2, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If, during the
term of this Agreement, the Employee, in the reasonable judgment of the Board of
Directors of the Employer, has failed to perform his duties under this Agreement
on account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than six (6) consecutive months, the
Employer shall have the right to terminate the Employee's employment hereunder
by delivery of written notice to the Employee at any time after such six month
period and payment to the Employee of all accrued salary, bonus compensation in
an amount equal to the average annual bonus earned by the Employee in the two
(2) years immediately preceding the date of termination, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but the Employee shall not be
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
2.6 TERMINATION BY REASON OF DEATH. In the event of the
Employee's death during the term of this Agreement, the Employee's employment
shall be deemed to have terminated as of the
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last day of the month during which his death occurs and the Employer shall pay
to his estate or such beneficiaries as the Employee may from time to time
designate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation, if any, (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of Cybex or the Employer in which the Employee is a
participant to the full extent of the Employee's rights under such plans
(including accelerated vesting of any awards granted to the Employee under
Cybex's stock option plans), accrued vacation pay and any appropriate business
expenses incurred by the Employee in connection with his duties hereunder, all
to the date of termination, but the Employee's estate shall not be paid any
other compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding anything else
in this Agreement, the Employee may effect a Voluntary Termination at any time
upon giving thirty (30) days written notice to the Employer of such termination.
In the event of a Voluntary Termination, the Employer shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans, accrued vacation pay and
any appropriate business expenses incurred by the Employee in connection with
his duties hereunder, all to the date of termination, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the event of
a Termination Upon a Change in Control, the Employee shall immediately be paid
all accrued salary, bonus compensation to the extent earned, vested deferred
compensation, if any, (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of Cybex or the Employer in which the Employee is a participant to the
full extent of the Employee's rights under such plans (including accelerated
vesting of any awards granted to the Employee under Cybex's stock option plans),
accrued vacation pay and any appropriate business expenses incurred by the
Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to be
rendered by the Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of $130,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year (or proration thereof) beginning
April 1, 2000, shall be determined by the Board of Directors of Employer upon a
recommendation from the Compensation Committee of Cybex (the "Compensation
Committee"), which shall authorize an increase in the Employee's Base Salary in
an amount which, at a minimum, shall be equal to the cumulative cost-of-living
increment on the Base Salary as reported in the "Consumer Price Index,
Huntsville, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1999, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Board of Directors and the Compensation
Committee.
3.2 BONUSES. The Employee shall be eligible to receive a
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation
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of the Employee's performance during such year. All such bonuses shall be
payable during the last month of the fiscal year or within forty-five (45) days
after the end of the fiscal year to which such bonus relates. All such bonuses
shall be reviewed annually by the Compensation Committee.
3.3 ADDITIONAL BENEFITS. During the term of this
Agreement, the Employee shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of Cybex's and the Employer's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of Cybex or the Employer, including,
without limitation, Cybex's stock option plans, Section 401(k) plan, profit
sharing plans, annual physical examinations, dental and medical plans, personal
catastrophe and disability insurance, retirement plans and supplementary
executive retirement plans, if any. For purposes of establishing the length of
service under any benefit plans or programs of Cybex or the Employer, the
Employee's employment with the Employer will be deemed to have commenced on the
date that Employee first commenced employment with Cybex.
(b) VACATION. The Employee shall be entitled to
vacation in accordance with the Employer's vacation policy but in no event less
than two weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Employer shall at its expense procure
and keep in effect term life insurance on the life of the Employee, payable to
such beneficiaries as the Employee may from time to time designate, in an
aggregate amount equal to the lesser of (i) three times the Employee's Base
Salary or (ii) $500,000. Such policy shall be owned by the Employee or by any
person or entity with an insurable interest in the life of the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Employer shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.1
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination Upon
a Change in Control, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.1. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be based on a discount rate equal
to the interest rate of 90-day U.S. Treasury bills, as reported in the Wall
Street Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The
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Employee shall also be entitled to an accelerated vesting of any awards granted
to the Employee under Cybex's stock option plans. The Employee shall be provided
with medical plan benefits under any health plans of Cybex or the Employer in
which the Employee is a participant to the full extent of the Employee's rights
under such plans for a period of 12 months from the date of termination of this
Agreement; provided, however, that the benefits under any such plans of Cybex or
the Employer in which the Employee is a participant, including any such
perquisites, shall cease upon employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to the average annual bonus
earned by the Employee in the two (2) years immediately preceding the date of
termination. Notwithstanding anything in this Section 4.2 to the contrary, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
Employer within thirty (30) days following a Termination Other Than for Cause,
elect to receive from the Employer a lump sum severance payment by bank
cashier's check equal to the present value of the flow of cash payments that
would otherwise be paid to the Employee pursuant to this Section 4.2. Such
present value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street
Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Cybex's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Company, during the term of this Agreement and for a period of 12 months
thereafter, Employee will not, without the Employer's and Cybex's prior written
consent, directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer or Cybex
at such time. Notwithstanding the foregoing, the ownership by the Employee of
not more than five percent (5%) of the shares of stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or on The Nasdaq Stock Market shall not be deemed, in and of itself, to violate
the prohibitions of this Section 5.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Articles of Incorporation and Bylaws, hereby indemnifies the Employee for the
Employee's reasonable attorneys' fees and disbursements incurred in such
litigation.
6
<PAGE> 7
6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of the Employer
or the Employee, as the case may be, or upon three (3) days after mailing to the
respective persons named below:
If to the Employer: PolyCon Investments, Inc. d/b/a/ Cybex
Employment Services Co.
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to the Employee: Mr. Christopher Thomas
137 Lakeshore Drive
Madison, Alabama 35758
Phone: (256) 772-7054
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.6.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
7
<PAGE> 8
6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Articles of Incorporation and Bylaws, the Employer shall indemnify the Employee
at all times during and after the term of this Agreement to the maximum extent
permitted under the corporation laws of the State of Texas and any other
applicable state law, and shall pay the Employee's expenses in defending any
civil or criminal action, suit, or proceeding in advance of the final
disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
POLYCON INVESTMENTS, INC. D/B/A
CYBEX EMPLOYMENT SERVICES CO.
By /s/ JULIE YARBROUGH
---------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ STEPHEN F. THORNTON
---------------------------------------
Its: President and Chief Executive Officer
EMPLOYEE
/s/ CHRISTOPHER THOMAS
------------------------------------------
Christopher Thomas
9
<PAGE> 1
EXHIBIT 10.7
CYBEX COMPUTER PRODUCTS CORPORATION
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made
and entered into as of July 1, 1999, by and among Cybex Computer Products
International, LTD, an Irish Single Member Company (the "Employer"); Cybex
Computer Products Corporation, an Alabama corporation (the "Employer"); and
Kieran MacSweeney (the "Employee").
RECITALS
WHEREAS, the Employer is a wholly owned subsidiary of Cybex engaged in
the business of developing, producing, and marketing keyboard, video monitor,
and mouse switch and extension products for use in the computer industry; and
WHEREAS, the Employer desires to employ the Employee and the Employee
is willing to accept such employment by the Employer, on the terms and subject
to the conditions set forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the Employee agrees
to be employed by and to serve the Employer as President of Cybex Computer
Products International, Ltd., and the Employer agrees to employ and retain the
Employee in such capacities. The Employee shall devote such of his business
time, energy and skill to the affairs of the Employer as shall be necessary to
perform the duties of the President of Cybex Computer Products International,
Ltd.. The Employee shall report to the President of Cybex Computer Products
Corporation and to the Board of Directors of Cybex and at all times during the
term of this Agreement shall have powers and duties at least commensurate with
his position as President of Cybex Computer Products International, Ltd.. The
Employee's principal place of business with respect to his services to the
Employer shall be within the proximity of Shannon, Ireland.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement
the following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Employer of the Employee's employment by the Employer by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Employer or by reason of the Employee's
willful material breach of this Agreement which has resulted in material injury
to the Employer.
(b) "TERMINATIONS OTHER THAN FOR CAUSE"
shall mean termination by the Employer of the Employee's employment by the
Employer (other than in a Termination for Cause) and shall include constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Employer, such constructive termination to be effective upon
thirty (30) days written notice from the Employee to the Employer of such
constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the
<PAGE> 2
Employee of the Employee's employment by the Employer other than (i)
constructive termination as described in subsection 2.1(b), (ii) "Termination
Upon a Change in Control," and (iii) termination by reason of the Employee's
disability or death as described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN
CONTROL" shall mean a termination by the Employee of the Employee's employment
with the Employer following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean any
one of the following events:
(i) Any person (other than an existing member of the Board of Directors of
Employer) acquires beneficial ownership of Employer securities and is or thereby
becomes a beneficial owner of securities entitling such person to exercise
twenty-five percent (25%) or more of the combined voting power of Employer then
outstanding stock. For purposes of this Agreement, "beneficial ownership" shall
be determined in accordance with Regulation 13D under the Securities Exchange
Act of 1934, or any similar successor regulation or rule; and the term "person"
shall include any natural person, corporation, partnership, trust or
association, or any group or combination thereof, whose ownership of Employer
securities would be required to be reported under such Regulation 13D, or any
similar successor regulation or rule.
(ii) Within any twenty-four (24) month period, individuals who were Directors of
Employer at the beginning of such period, together with any other Directors
first elected as directors of Employer pursuant to nominations approved or
ratified by at least two-thirds (2/3) of the Directors in office immediately
prior to such respective elections, cease to constitute a majority of the Board
of Directors of Employer.
(iii) Employer's stockholders approve:
(1) any consolidation or merger of Employer in which Employer is not the
continuing or surviving corporation or pursuant to which shares of Employer
common stock would be converted into cash, securities or other property, other
than a merger or consolidation of Employer in which the holders of Employer's
common stock immediately prior to the merger or consolidation have substantially
the same proportionate ownership and voting control of the surviving corporation
immediately after the merger or consolidation; or
(2.) any sale, lease, exchange, liquidation or other transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of Employer.
Notwithstanding subparagraphs (e)(iii)(1) and (e)(iii)(2) above, the term
"Change in Control" shall not include a consolidation, merger, or other
reorganization if upon consummation of such transaction all of the outstanding
voting stock of Employer is owned, directly or indirectly, by a holding company,
and the holders of Employer's common stock immediately prior to the transaction
have substantially the same proportionate ownership and voting control of the
holding company.
2.2 BASIC TERM. The term of employment of the
Employee by the Employer shall be for the period beginning on July 1, 1999 and
ending on March 31, 2004, unless terminated earlier pursuant to this Section 2.
At any time before March 31, 2004, the Employer and the Employee may by mutual
written agreement extend the Employee's employment under the terms of this
Agreement for such additional periods as they may agree.
2.3 TERMINATION FOR CAUSE. Termination For Cause
may be effected by the
<PAGE> 3
Employer at any time during the term of this Agreement and shall be effected by
thirty (30) days written notification to the Employee from the Board of
Directors of the Employer stating the reason for termination. Upon Termination
For Cause, the Employee immediately shall be paid all accrued salary, vested
deferred compensation, if any, (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans, accrued vacation
pay and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, but the Employee
shall not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE.
Notwithstanding anything else in this Agreement, the Employer may effect a
Termination Other Than For Cause at any time upon giving thirty (30) days
written notice to the Employee of such termination. Upon any Termination Other
Than For Cause, the Employee shall immediately be paid all accrued salary, bonus
compensation to the extent earned, vested deferred compensation, if any, (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of the
Employer in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, and all severance compensation
provided in Section 4.2, but no other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If,
during the term of this Agreement, the Employee, in the reasonable judgment of
the Board of Directors of the Employer, has failed to perform his duties under
this Agreement on account of illness or physical or mental incapacity, and such
illness or incapacity continues for a period of more than six (6) consecutive
months, the Employer shall have the right to terminate the Employee's employment
hereunder by delivery of written notice to the Employee at any time after such
six month period and payment to the Employee of all accrued salary, bonus
compensation in an amount equal to the average annual bonus earned by the
Employee in the two (2) years immediately preceding the date of termination,
vested deferred compensation, if any, (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans (including
accelerated vesting of any awards granted to the Employee under Employer's stock
option plans), accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, with the exception of medical and dental benefits which
shall continue through the expiration of this Agreement, but the Employee shall
not be paid any other compensation or reimbursement of any kind, including
without limitation, severance compensation.
2.6 TERMINATION BY REASON OF DEATH. In the
event of the Employee's death during the term of this Agreement, the Employee's
employment shall be deemed to have terminated as of the last day of the month
during which his death occurs and the Employer shall pay to his estate or such
beneficiaries as the Employee may from time to time designate all accrued
salary, bonus compensation to the extent earned, vested deferred compensation,
if any, (other than pension plan or profit sharing plan benefits which will be
paid in accordance with the applicable plan), any benefits under any plans of
the Employer in which the Employee is a participant to the full extent of the
Employee's rights under such plans (including accelerated vesting of any awards
granted to the Employee under Employer's stock option plans), accrued vacation
pay and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, but the Employee's
estate shall not be
<PAGE> 4
paid any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
2.7 VOLUNTARY TERMINATION. Notwithstanding
anything else in this Agreement, the Employee may effect a Voluntary Termination
at any time upon giving thirty (30) days written notice to the Employer of such
termination. In the event of a Voluntary Termination, the Employer shall
immediately pay all accrued salary, bonus compensation to the extent earned,
vested deferred compensation, if any, (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans, accrued vacation
pay and any appropriate business expenses incurred by the Employee in connection
with his duties hereunder, all to the date of termination, but no other
compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In
the event of a Termination Upon a Change in Control, the Employee shall
immediately be paid all accrued salary, bonus compensation to the extent earned,
vested deferred compensation, if any, (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Employer in which the Employee is a participant
to the full extent of the Employee's rights under such plans (including
accelerated vesting of any awards granted to the Employee under the Employer's
stock option plans), accrued vacation pay and any appropriate business expenses
incurred by the Employee in connection with his duties hereunder, all to the
date of termination, and all severance compensation provided in Section 4.1, but
no other compensation or reimbursement of any kind.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to
be rendered by the Employee as provided in Section 1 and subject to the terms
and conditions of Section 2, the Employer agrees to pay to the Employee a "Base
Salary" at the rate of US$125,000.00 per annum, payable in equal bi-weekly
installments. The Base Salary for each year will be converted, on the
anniversary date each year, to Irish Pounds based on the existing US$/IEP
exchange rate on that date. The exchange rate on July 1, 1999 is .759071 IEP to
the Dollar. Therefore, the base salary for year one shall be IEP 94,883.88. It
is intended that the base salary will not be adversely affected from year to
year due to the exchange rates. The Base Salary for each year (or proration
thereof) beginning April 1, 2000, shall be determined by the Compensation
Committee of Cybex, which shall authorize an increase in the Employee's Base
Salary in an amount which, at a minimum, shall be equal to the cumulative
cost-of-living increment on the Base Salary as reported in the "Consumer Price
Index, Huntsville, Alabama, All Items," published by the U.S. Department of
Labor (using January 1, 1999, as the base date for computation). The Employee's
Base Salary shall be reviewed annually by the Compensation Committee of Cybex.
3.2 BONUSES. The Employee shall be eligible to
receive a bonus for each year (or portion thereof) during the term of this
Agreement and any extensions thereof, with the actual amount of any such bonus
to be determined in the sole discretion of the Board of Directors of Cybex based
upon its evaluation of the Employee's performance during such year. All such
bonuses shall be payable during the last month of the fiscal year or within
forty-five (45) days after the end of the fiscal year to which such bonus
relates. All such bonuses shall be reviewed annually by the Compensation
Committee of Cybex.
3.3 ADDITIONAL BENEFITS. During the term of
this Agreement, the Employee
<PAGE> 5
shall be entitled to the following fringe benefits:
(a) THE EMPLOYEE BENEFITS. The Employee
shall be eligible to participate in such of the Employer's benefits and deferred
compensation plans as are now generally available or later made generally
available to executive officers of the Employer, including, without limitation,
Employer's stock option plans, pension schemes, profit sharing plans, annual
physical examinations, dental and medical plans, personal catastrophe and
disability insurance, retirement plans and supplementary executive retirement
plans, if any. For purposes of establishing the length of service under any
benefit plans or programs of the Employer, the Employee's employment with the
Employer will be deemed to have commenced on the date that Employee first
commenced employment with the Employer.
(b) VACATION. The Employee shall be
entitled to vacation in accordance with the Employer's vacation policy but in no
event less than three weeks during each year of this Agreement.
(c) LIFE INSURANCE. For the term of
this Agreement and any extensions thereof, the Employer shall at its expense
procure and keep in effect term life insurance on the life of the Employee,
payable to such beneficiaries as the Employee may from time to time designate,
in an aggregate amount equal to the lesser of (i) four times the Employee's Base
Salary or (ii) a maximum amount of $500,000. Such policy shall be owned by the
Employee or by any person or entity with an insurable interest in the life of
the Employee.
(d) REIMBURSEMENT FOR EXPENSES. During
the term of this Agreement, the Employer shall reimburse the Employee for
reasonable and properly documented out-of-pocket business and/or entertainment
expenses incurred by the Employee in connection with his duties under this
Agreement.
(e) AUTO ALLOWANCE. The employee shall
be provided an auto allowance in the amount of IEP 12,000, annually. This amount
will be paid in equal installments. The auto allowance for each year (or
proration thereof), beginning April 1,2000, shall be determined in similar
manner to that of the Base Salary.
(f) PENSION SCHEME, EMPLOYER CONTRIBUTION.
In addition to the benefits of the Employee contribution to the Employer pension
scheme, the Employer shall contribute a percentage of the Employee's salary to
the pension scheme. For the first year the percentage contribution is ten
percent. Beginning April 1, 2000, the contribution shall be determined in
similar manner to that of the Base Salary.
<PAGE> 6
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
UPON A CHANGE IN CONTROL. In the event the Employee's employment is terminated
in a Termination Upon a Change in Control, the Employee shall be paid as
severance compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of termination of this
Agreement, on the dates specified in Section 3.1, and an amount equal to the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. Notwithstanding anything in this Section 4.1
to the contrary, the Employee may in the Employee's sole discretion, by delivery
of a notice to the Employer within thirty (30) days following a Termination Upon
a Change in Control, elect to receive from the Employer a lump sum severance
payment by bank cashier's check equal to the present value of the flow of cash
payments that would otherwise be paid to the Employee pursuant to this Section
4.1. Such present value shall be determined as of the date of delivery of the
notice of election by the Employee and shall be based on a discount rate equal
to the interest rate of 90-day U.S. Treasury bills, as reported in the Wall
Street Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Employer's stock option plans. The Employee shall
be provided with medical plan benefits under any health plans of the Employer in
which the Employee is a participant to the full extent of the Employee's rights
under such plans for a period of 12 months from the date of termination of this
Agreement; provided, however, that the benefits under any such plans of the
Employer in which the Employee is a participant, including any such perquisites,
shall cease upon employment by a new employer.
4.2 SEVERANCE COMPENSATION IN THE EVENT OF A TERMINATION
OTHER THAN FOR CAUSE. In the event the Employee's employment is terminated in a
Termination Other Than for Cause, the Employee shall be paid as severance
compensation his Base Salary (at the rate payable at the time of such
termination) for a period of 12 months from the date of such termination, on the
dates specified in Section 3.1, and an amount equal to the average annual bonus
earned by the Employee in the two (2) years immediately preceding the date of
termination. Notwithstanding anything in this Section 4.2 to the contrary, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
Employer within thirty (30) days following a Termination Other Than for Cause,
elect to receive from the Employer a lump sum severance payment by bank
cashier's check equal to the present value of the flow of cash payments that
would otherwise be paid to the Employee pursuant to this Section 4.2. Such
present value shall be determined as of the date of delivery of the notice of
election by the Employee and shall be based on a discount rate equal to the
interest rate on 90-day U.S. Treasury bills, as reported in the Wall Street
Journal (or similar publication), on the date of delivery of the election
notice. If the Employee elects to receive a lump sum severance payment, the
Employer shall make such payment to the Employee within ten (10) days following
the date on which the Employee notifies the Employer of the Employee's election.
The Employee shall also be entitled to an accelerated vesting of any awards
granted to the Employee under Employer's stock option plans.
4.3 NO SEVERANCE COMPENSATION UNDER OTHER TERMINATION. In
the event of a Voluntary Termination, Termination For Cause, termination by
reason of the Employee's disability pursuant to Section 2.5, or termination by
reason of the Employee's death pursuant to Section 2.6, the Employee or his
estate shall not be paid any severance compensation.
<PAGE> 7
5. NON-COMPETITION OBLIGATIONS. Unless waived or reduced by the
Company, during the term of this Agreement and for a period of 12 months
thereafter, Employee will not, without the Employer's prior written consent,
directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder of
any company or business, engage in any business activity in the United States,
Canada or Europe which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Employer at such
time. Notwithstanding the foregoing, the ownership by the Employee of not more
than five percent (5%) of the shares of stock of any corporation having a class
of equity securities actively traded on a national securities exchange or on The
Nasdaq Stock Market shall not be deemed, in and of itself, to violate the
prohibitions of this Section 5.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. If litigation after a Change in
Control shall be brought to enforce or interpret any provision contained herein,
the Employer, to the extent permitted by applicable law and the Employer's
Amended and Restated Articles of Incorporation and Amended and Restated Bylaws,
hereby indemnifies the Employee for the Employee's reasonable attorneys' fees
and disbursements incurred in such litigation.
6.2 GUARANTEE. Cybex hereby unconditionally and
irrevocably guarantees the payment obligations of the Employer under this
Agreement, including, without limitation, the Employer's obligations under
Section 6.1 hereof.
6.3 WITHHOLDINGS. All compensation and benefits to the
Employee hereunder shall be reduced by all government and other withholdings and
similar taxes and payments required by applicable law.
6.4 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
6.5 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, whether
written or oral with respect to the subject matter hereof including without
limitation, any understandings, agreements or obligations respecting any past or
future compensation, bonuses, reimbursements or other payments to the Employee
from the Employer. All modifications to the Agreement must be in writing and
signed by the party against whom enforcement of such modification is sought.
6.6 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given upon hand delivery to an officer of Cybex or the
Employer (other than the employee) or the Employee, as the case may be, or upon
three (3) days after mailing to the respective persons named below:
<PAGE> 8
If to the Employer: Cybex Computer Products International, Ltd.
Cybex House
Shannon Free Zone
Shannon, County Clare
Ireland
Phone: 353 61 471 877
Fax: 353 61 471 871
If to Cybex: Cybex Computer Products Corporation
4991 Corporate Drive
Huntsville, Alabama 35805
Phone: (256) 430-4000
Fax: (256) 430-4017
If to the Employee: Mr. Kieran MacSweeney
"Hazel Hatch"
Clonmacken
Ennis Road
Limerick, Ireland
Phone: 353-61-326280
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.5.
6.7 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alabama.
6.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Huntsville, Alabama, in accordance with the Rules of the American
Arbitration Association, and judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three (3) arbitrators, one (1) to be chosen directly by each party at will,
and the third arbitrator to be selected by the two (2) arbitrators so chosen. To
the extent permitted by the Rules of the American Arbitration Association, the
selected arbitrators may grant equitable relief. Each party shall pay the fees
of the arbitrator selected by him and of his own attorneys, and the expenses of
his witnesses and all other expenses connected with the presentation of his
case. The cost of the arbitration including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
6.10 SEVERABILITY. If a court or other body of competent
jurisdiction determines that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, and all other provisions of this Agreement
shall be deemed valid and enforceable to the extent possible.
6.11 SURVIVAL OF EMPLOYER'S OBLIGATIONS. The Employer's
<PAGE> 9
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to the
Employer. This Agreement shall not be terminated by any merger or consolidation
or other reorganization of the Employer. In the event any such merger,
consolidation or reorganization shall be accomplished by transfer of stock or by
transfer of assets or otherwise, the provisions of this Agreement shall be
binding upon and inure to the benefit of the surviving or resulting corporation
or person. This Agreement shall be binding upon and inure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties;
provided, however, that except as herein expressly provided, this Agreement
shall not be assignable either by the Employer (except to an affiliate of the
Employer in which event the Employer shall remain liable if the affiliate fails
to meet any obligations to make payments or provide benefits or otherwise) or by
the Employee.
6.12 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
6.13 INDEMNIFICATION. In addition to any rights to
indemnification to which the Employee is entitled to under the Employer's
Amended and Restated Articles of Incorporation and Amended and Restated Bylaws,
the Employer shall indemnify the Employee at all times during and after the term
of this Agreement to the maximum extent permitted under Sections 10-2B-8.51 and
10-2B-8.56 of the Alabama Business Corporation Act or any successor provision
thereof and any other applicable state law, and shall pay the Employee's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit, or proceeding, to the
maximum extent permitted under such applicable state laws.
(Signature Page Follows)
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
CYBEX COMPUTER PRODUCTS INTERNATIONAL, LTD.
By /s/ STEPHEN F. THORNTON
---------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS CORPORATION
By /s/ DOYLE C. WEEKS
---------------------------------------
Its: Executive Vice President
EMPLOYEE
/s/ KIERAN MACSWEENEY
------------------------------------------
Kieran MacSweeney
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CYBEX COMPUTER PRODUCTS CORPORATION FOR THE NINE MONTHS
ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-1-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 31,306
<SECURITIES> 5,784
<RECEIVABLES> 25,076
<ALLOWANCES> 2,284
<INVENTORY> 9,715
<CURRENT-ASSETS> 73,469
<PP&E> 16,413
<DEPRECIATION> 3,964
<TOTAL-ASSETS> 96,985
<CURRENT-LIABILITIES> 18,360
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 83,974
<TOTAL-LIABILITY-AND-EQUITY> 96,985
<SALES> 34,048
<TOTAL-REVENUES> 34,048
<CGS> 17,560
<TOTAL-COSTS> 17,560
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 579
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> 20,503
<INCOME-TAX> 6,906
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,597
<EPS-BASIC> 1.07
<EPS-DILUTED> 1.00
</TABLE>
