1
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 Xxxxxxx
X. Xxxxxxxxx (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.
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
2
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
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 $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.
4
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 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
5
6
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.
6
7
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.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Cybex: Cybex Computer Products Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Employee: Xx. Xxxxxxx X. Xxxxxxxxx
724 Xxxxxxx Hill Circle
7
8
Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
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
8
9
disposition of such action, suit, or proceeding, to the maximum extent permitted
under such applicable state laws.
(Signature Page Follows)
9
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 CO.
By /s/ XXXXX XXXXXXXXX
-----------------------------------------
Its: President
CYBEX COMPUTER PRODUCTS
CORPORATION
By /s/ XXXXXXX X. XXXXXXXX
-----------------------------------------
Its: President and Chief Executive Officer
EMPLOYEE
/s/ XXXXXXX X. XXXXXXXXX
------------------------------------------
Xxxxxxx X. Xxxxxxxxx
10
