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EXHIBIT 10.10
CYBEX CORPORATION
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement")
is made and entered into as of the Effective Date (as defined below), by and
between Cybex Corporation, an Alabama corporation (the "Company"), and Xxxxxxx
X. Xxxxxxxxx (the "Employee").
RECITAL
WHEREAS, the Company and the Employee desire that the term of
this Agreement begin on the first day of employment with the Company;
WHEREAS, the Company desires to employ the Employee as its
Senior Vice President-Finance, Chief Financial Officer and Treasurer and the
Employee is willing to accept such employment by the Company, 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 Company as its Senior Vice
President-Finance, Chief Financial Officer and Treasurer and the Company 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 Company as
shall be necessary to perform the duties of such position. The Employee shall
report only to the Company's Board of Directors and/or President 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 and Treasurer.
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 Company of the Employee's employment by the Company by reason
of the Employee's willful dishonesty towards, fraud upon, or deliberate injury
or attempted injury to, the Company or by reason of the Employee's willful
material breach of this Agreement which has resulted in material injury to the
Company.
(b) "TERMINATIONS OTHER THAN FOR CAUSE"
shall mean termination by the Company of the Employee's employment by the
Company (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 Company, such constructive termination to be effective upon
notice from the Employee to the Company of such constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Company 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 death, or disability 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 Company following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean (i)
the time that the Company first determines that any person and all other persons
who constitute a group (within the meaning of Section 12(d)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act")) have acquired direct or indirect
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of twenty percent (20%) or more of the Company's outstanding
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securities, unless a majority of the "Continuing Directors" approves the
acquisition not later than ten (10) business days after the Company makes that
determination, or (ii) the first day on which a majority of the members of the
Company's Board of Directors are not "Continuing Directors."
(f) "CONTINUING DIRECTORS" shall mean,
as of any date of determination, any member of the Board of Directors of the
Company who (i) was a member of that Board of Directors on April 1, of that
year, (ii) has been a member of that Board of Directors for the two years
immediately preceding such date of determination, or (iii) was nominated for
election or elected to the Board of Directors with the affirmative vote of the
greater of (x) a majority of Continuing Directors who were members of the Board
at the time of such nomination or election or (y) at least three Continuing
Directors.
2.2 BASIC TERM. The term of employment of the
Employee by the Company shall be for a period of five (5) years beginning
September 10, 1998, the first day of employment, the "Effective Date", unless
terminated earlier pursuant to this Section 2. Commencing in 1999, on the first
day of April of each year, the first sentence of this Section 2.2 shall be
amended as follows: the Effective Date shall be April 1 of that year. At any
time before March 31, 2004, the Company 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 Company at any time during the term of this
Agreement and shall be effected by written notification to the Employee from the
Board of Directors stating the reason for termination. Upon Termination For
Cause, the Employee immediately shall 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
Company 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 Company may effect a
Termination Other Than For Cause at any time upon giving 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 Company 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 Company, 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 twelve (12)
consecutive months, the Company shall have the right to terminate the Employee's
employment hereunder by written notification to the Employee and payment to the
Employee of 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 Company 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 Company's
Employee 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 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 Company 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 Company 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 Company's Employee Stock Option
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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. In the event of a
Voluntary Termination, the Company 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
Company 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 of 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 Company 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 Company's
Employee 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.
2.9 NOTICE OF TERMINATION. The Company may
effect a termination of this Agreement pursuant to the provisions of this
Section 2 upon giving thirty (30) days' written notice to the Employee of such
termination. The Employee may effect a termination of this Agreement pursuant to
the provisions of this Section 2 upon giving sixty (60) days' written notice to
the Company of such termination.
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 Company agrees to pay to the Employee a "Base
Salary" for the twelve (12) calendar months beginning the Effective Date at the
rate of $135,000 per annum. The Base Salary for each year (or proration thereof)
beginning April 1, 1999, shall be determined by the Compensation Committee of
the Board of Directors (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, 1998, as the base
date for computation). The Employee's Base Salary shall be reviewed annually by
the Compensation Committee of the Board of Directors.
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:
3.31 THE EMPLOYEE BENEFITS. The
Employee shall be eligible to participate in such of the Company's benefits and
deferred compensation plans as are now generally available or later made
generally available to executive officers of the Company, including, without
limitation, the Company's Employee 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 the Company, the
Employee's employment with the Company will be deemed to have commenced on the
date that Employee first commenced employment with the Company.
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3.32 VACATION. the Employee shall be
entitled to three (3) weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
3.33 LIFE INSURANCE. For the term of
this Agreement and any extensions thereof, the Company 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 the aggregate amount of two times the Employee's Base Salary. Such policy
shall be owned by the Employee or by a member of his immediate family.
3.34 REIMBURSEMENT FOR EXPENSES.
During the term of this Agreement, the Company 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 six (6) months from the date of termination
of this Agreement on the dates specified in Section 3.1. 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 Company within thirty (30) days
following a Termination Upon a Change in Control, elect to receive from the
Company 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 Company shall make such payment to the Employee
within ten (10) days following the date on which officer notifies the Company of
the Employee's election. In addition to the severance payment payable under this
Section 4.1, the Employee shall be paid an amount equal to one-half of the
average annual bonus earned by the Employee in the two (2) years immediately
preceding the date of termination. The Employee shall also be entitled to an
accelerated vesting of any awards granted to the Employee under the Company's
Employee Stock Option Plans. The Employee shall continue to accrue retirement
benefits and shall continue to enjoy any benefits under any plans of the Company
in which the Employee is a participant to the full extent of the Employee's
rights under such plans, including any perquisites provided under this
Agreement, through the period of payment of severance compensation under this
Agreement; provided, however, that the benefits under any such plans of the
Company in which the Employee is a participant, including any such perquisites,
shall cease upon re-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 six (6) months from the date of such termination,
on the dates specified in Section 3.1. 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 Company within thirty (30) days following a
Termination Other Than for Cause, elect to receive from the Company 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 Company shall make such payment to the Employee within ten (10) days
following the date on which the Employee notifies the Company of the Employee's
election. In addition to the severance payment payable under this Section 4.2,
the Employee shall be paid an amount equal to one-half of the average annual
bonus earned by the Employee in the two (2) years immediately preceding the date
of termination. The Employee shall also be entitled to an accelerated vesting of
any awards granted to the Employee under the Company's Employee 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.
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4.4 LIMIT ON AGGREGATE COMPENSATION UPON A
CHANGE IN CONTROL. Notwithstanding anything else in this Agreement, solely in
the event of a Termination Upon a Change in Control pursuant to Section 2.8, the
amount of severance compensation paid to the Employee under Sections 2 and 4 or
otherwise, but exclusive of any payments to the Employee in respect of any stock
options then held by the Employee (or any compensation deemed to be received by
the Employee in connection with the exercise of any stock options at any time)
or by virtue of the Employee's exercise of stock options under the Company's
1995 Employee Stock Option Plan upon a Change in Control, shall not include any
amount that the Company is prohibited from deducting for federal income tax
purposes by virtue of Section 280G of the Internal Revenue Code of 1986, as
amended, or any successor provision.
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 Company'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
which is substantially similar to or in direct competition with any of the
business activities of or services provided by the Company at such time. The
ownership by Employee of not more than one percent of the shares of stock of any
corporation having a class of equity securities actively traded on a national
securities exchange or on Nasdaq shall not be deemed, in and of itself, to
violate the prohibitions of this Section 5.
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. The Company's
obligation to pay the Employee the compensation and to make the arrangements
provided herein shall be unconditional, and the Employee shall have no
obligation whatsoever to mitigate damages hereunder. If litigation after a
change in control shall be brought to enforce or interpret any provision
contained herein, the Company, to the extent permitted by applicable law and the
Company'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 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.
6.3 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 Company. All modifications to the Agreement must be in writing
and signed by the party against whom enforcement of such modification is sought.
6.4 NOTICES. All notices and other
communications under this Agreement shall be in writing and shall be given by
telegraph or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given three (3) days after
mailing or twelve (12) hours after transmission of a telegram to the respective
persons named below:
If to the Company: Cybex Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Employee: Xxxxxxx X. "Xxxxx" Xxxxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx
Phone: (000) 000-0000
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.4.
6.5 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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6.6 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Alabama.
6.7 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.
6.8 SEVERABILITY. Should a court or other body
of competent jurisdiction determine 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.
6.9 SURVIVAL OF THE COMPANY'S OBLIGATIONS. The
Company's obligations hereunder shall not be terminated by reason of any
liquidation, dissolution, bankruptcy, cessation of business, or similar event
relating to the Company. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of the Company. 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 Company (except to an affiliate
of the Company in which event the Company shall remain liable if the affiliate
fails to meet any obligations to make payments or provide benefits or otherwise)
or by the Employee.
6.10 COUNTERPARTS. This Agreement may be
executed in one or more counterparts, all of which taken together shall
constitute one and the same Agreement.
6.11 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.
6.12 INDEMNIFICATIONS. In addition to any rights
to indemnification to which the Employee is entitled to under the Company's
Amended and Restated Articles of Incorporation and Amended and Restated Bylaws,
the Company 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.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
THE COMPANY:
Cybex Corporation, an Alabama Corporation
By /s/ Xxxxx X. Xxxxx
--------------------------------------------
Its Executive Vice President and Asst. Sec.
Date: September 10, 1998
THE EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxxxx
Date: September 10, 1998
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