Exhibit 10.3

 

THIS WARRANT AND THE SHARES OF VOTING COMMON STOCK PURCHASABLE HEREUNDER HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
WARRANT AND THE SHARES OF VOTING COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT
TO AND HAVE THE BENEFIT OF A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF JULY
16, 2003, AMONG CYBEX INTERNATIONAL, INC. AND THE STOCKHOLDERS AND
WARRANTHOLDERS LISTED ON THE SIGNATURE PAGES THEREOF, A COPY OF WHICH IS ON FILE
WITH CYBEX INTERNATIONAL, INC.

 

Dated: July 16, 2003

 

WARRANT

 

To Purchase 176,619 Shares of Voting Common Stock of

 

CYBEX INTERNATIONAL, INC.

 

Expiring July 16, 2008

 

THIS IS TO CERTIFY THAT, for value received, THE CIT GROUP / BUSINESS CREDIT,
INC. or registered assigns (“Holder”) is entitled to purchase from CYBEX
INTERNATIONAL, INC., a New York corporation (“Cybex”), at any time or from time
to time after 9:00 a.m., Charlotte, North Carolina time, on the date hereof and
prior to 5:00 p.m., Charlotte, North Carolina time, on the earlier of July 16,
2008, and the Business Day preceding the date of redemption of this Warrant (the
“Exercise Period”), at the place where the Warrant Agency is located, at the
Exercise Price, the number of shares of voting common stock, par value $0.10 per
share (the “Voting Common Stock”) of Cybex shown above, all subject to
adjustment to make accurate and upon the terms and conditions hereinafter
provided, and is entitled also to exercise the other appurtenant rights, powers
and privileges hereinafter described.

 

This Warrant is one of one or more warrants (the “Warrants”) of the same form
and having the same terms as this Warrant, entitling the holders initially to
purchase an aggregate of 176,619 shares of Voting Common Stock. The Warrant
Shares following the closing of the transactions contemplated by the Financing
Agreement, will constitute two percent (2%) of the Voting Common Stock of Cybex
outstanding on the date of such closing. The Warrants have been issued pursuant
to the Financing Agreement dated as of July 16, 2003 (as amended from time to
time, the “Financing Agreement”), between Cybex and The CIT Group / Business
Credit, Inc. (“CIT”), as lender, and the Holder is entitled to certain benefits
as set forth therein and to

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certain benefits described in the Warrantholders Rights Agreement. Cybex shall
keep a copy of the Financing Agreement and the Warrantholders Rights Agreement,
and any amendments thereto, at the Warrant Agency and shall furnish, without
charge, copies thereof to the Holder upon request.

 

Certain terms used in this Warrant are defined in Article VI.

 

1. ARTICLE I

 

EXERCISE OF WARRANTS

 

2.

 

a. Section 1.1. Method of Exercise.

 

b.

 

To exercise this Warrant in whole or in part, the Holder shall deliver on any
Business Day to Cybex, at the Warrant Agency, (a) this Warrant, (b) a written
notice of such Holder’s election to exercise this Warrant, which notice shall
specify the number of shares of Voting Common Stock to be purchased (which shall
be a whole number of shares if for less than all the shares then issuable
hereunder), the denominations of the share certificate or certificates desired
and the name or names in which such certificates are to be registered, and (c)
payment of the Exercise Price with respect to such shares. Such payment may be
made, at the option of the Holder, either (a) by cash, certified or bank
cashier’s check or wire transfer in an amount equal to the product of (i) the
Exercise Price times (ii) the number of Warrant Shares as to which this Warrant
is being exercised or (b) by receiving from Cybex the number of Warrant Shares
equal to (i) the number of Warrant Shares as to which this Warrant is being
exercised minus (ii) the number of Warrant Shares having a value, based on the
Closing Price on the trading day immediately prior to the date of such exercise,
equal to the product of (x) the Exercise Price times (y) the number of Warrant
Shares as to which this Warrant is being exercised.

 

Cybex shall, as promptly as practicable and in any event within seven (7)
Business Days after receipt of such notice and payment, execute and deliver or
cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of shares of
Voting Common Stock specified in said notice together with cash in lieu of any
fractions of a share as provided in Section 1.3. The share certificate or
certificates so delivered shall be in such denominations as may be specified in
such notice, and shall be issued in the name of the Holder or such other name or
names as shall be designated in such notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to have
been issued, and such Holder or any other Person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
shares, as of the date the aforementioned notice and payment is received by
Cybex. If this Warrant shall have been exercised only in part, Cybex shall, at
the time of delivery of such certificate or certificates, deliver to the Holder
a new Warrant evidencing the rights to purchase the remaining shares of Voting
Common Stock called for by this Warrant, which new Warrant shall in all other
respects

 

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be identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the Holder.
Cybex shall pay all expenses, taxes and other charges payable in connection with
the preparation, issuance and delivery of share certificates and new Warrants,
except that, if share certificates or new Warrants shall be registered in a name
or names other than the name of the Holder, funds sufficient to pay all transfer
taxes payable as a result of such transfer shall be paid by the Holder at the
time of delivery of the aforementioned notice of exercise or promptly upon
receipt of a written request of Cybex for payment.

 

c. Section 1.2. Shares to Be Fully Paid and Nonassessable.

 

d.

 

All shares of Voting Common Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and nonassessable and, if such class of Common
Stock is then listed on the American Stock Exchange or any other national
securities exchange (as defined in the Exchange Act) or quoted on Nasdaq, shall
be duly listed or quoted thereon, as the case may be.

 

e. Section 1.3. No Fractional Shares Required to Be Issued.

 

f.

 

Cybex shall not be required to issue fractions of shares of Voting Common Stock
upon exercise of this Warrant. If any fraction of a share would, but for this
Section, be issuable upon final exercise of this Warrant, in lieu of such
fractional share Cybex shall pay to the Holder, in cash, an amount equal to the
same fraction of the Market Price.

 

g. Section 1.4. Share Legend.

 

h.

 

Each certificate for shares of Voting Common Stock issued upon exercise of this
Warrant, unless at the time of exercise such shares are registered under the
Securities Act, shall bear the following legend:

 

“This security has not been registered under the Securities Act of 1933 and may
not be sold or offered for sale unless registered under said Act and any
applicable state securities laws or unless an exemption from such registration
is available. This security is also subject to and has the benefit of a
Warrantholders Rights Agreement dated as of July 16, 2003, among Cybex
International, Inc. and the Stockholders and Warrantholders listed on the
signature pages thereof, copies of which are on file with Cybex International,
Inc.”

 

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public offering pursuant to a registration statement under the Securities
Act) shall also bear such legend unless, in the opinion of counsel selected by
the holder of such certificate (who may be an employee of such holder)

 

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and reasonably acceptable to Cybex, the securities represented thereby need no
longer be subject to restrictions on resale under the Securities Act.

 

i. Section 1.5. Reservation.

 

j.

 

Cybex has duly reserved and will keep available for issuance upon exercise of
the Warrants the total number of Warrant Shares deliverable from time to time
upon exercise of all Warrants from time to time outstanding. Cybex will not
change the Voting Common Stock from par value $.10 per share to any higher par
value which exceeds the Exercise Price then in effect, and will, as promptly as
practicable, reduce the par value of the Voting Common Stock upon any event
described in Article IV that causes the Exercise Price then in effect to be
lower than the then-current par value of the Voting Common Stock.

 

3. ARTICLE II

 

WARRANT AGENCY;

TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS

 

4.

 

a. Section 2.1. Warrant Agency.

 

b.

 

As long as any of the Warrants remain outstanding, Cybex shall perform the
obligations of and be the warrant agency with respect to the Warrants (the
“Warrant Agency”) at its address set forth in the Financing Agreement or at such
other address as Cybex shall specify by notice to all Warrantholders.

 

c. Section 2.2. Ownership of Warrant.

 

d.

 

Cybex may deem and treat the person in whose name this Warrant is registered as
the holder and owner hereof (notwithstanding any notations of ownership or
writing hereon made by any person other than Cybex) for all purposes and shall
not be affected by any notice to the contrary, until due presentment of this
Warrant for registration of transfer as provided in this Article II.

 

e. Section 2.3. Transfer of Warrant.

 

f.

 

Cybex agrees to maintain at the Warrant Agency books for the registration of
transfers of the Warrants, and transfer of this Warrant and all rights hereunder
shall be registered, in whole or

 

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in part, on such books, upon surrender of this Warrant at the Warrant Agency,
together with a written assignment of this Warrant duly executed by the Holder
or its duly authorized agent or attorney, with (if the Holder is a natural
person) signatures guaranteed by a bank or trust company or a broker or dealer
registered with the NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender and, if required, such payment, Cybex shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denominations specified in the instrument of assignment
(which shall be whole numbers of shares only) and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled.

 

g. Section 2.4. Division or Combination of Warrants.

 

h.

 

This Warrant may be divided or combined with other Warrants upon presentment
hereof and of any Warrant or Warrants with which this Warrant is to be combined
at the Warrant Agency, together with a written notice specifying the names and
denominations (which shall be whole numbers of shares only) in which the new
Warrant or Warrants are to be issued, signed by the holders hereof and thereof
or their respective duly authorized agents or attorneys. Subject to compliance
with Section 2.3 as to any transfer or assignment which may be involved in the
division or combination, Cybex shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

 

i. Section 2.5. Loss, Theft, Destruction of Warrant Certificates.

 

j.

 

Upon receipt of evidence satisfactory to Cybex of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security satisfactory
to Cybex (it being understood and agreed that if the holder of such Warrant is
CIT, then a written agreement of indemnity given by CIT alone shall be
satisfactory to Cybex and no further security shall be required) or, in the case
of any such mutilation, upon surrender and cancellation of such Warrant, Cybex
will make and deliver, in lieu of such lost, stolen, destroyed or mutilated
Warrant, a new Warrant of like tenor and representing the right to purchase the
same aggregate number of shares of Voting Common Stock.

 

k. Section 2.6. Expenses of Delivery of Warrants.

 

l.

 

Cybex shall pay all expenses, taxes (other than transfer taxes) and other
charges payable in connection with the preparation, issuance and delivery of
Warrants hereunder.

 

5. ARTICLE III

 

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6.

 

CERTAIN RIGHTS

 

7.

 

a. Section 3.1. Rights and Obligations under the Warrantholders Rights
Agreement.

 

b.

 

This Warrant is entitled to the benefits and subject to the terms of the
Warrantholders Rights Agreement dated as of July 16, 2003, among Cybex and the
Stockholders and Warrantholders listed on the signature pages thereof (as
amended from time to time, the “Warrantholders Rights Agreement”). Cybex shall
keep or cause to be kept a copy of the Warrantholders Rights Agreement, and any
amendments thereto, at the Warrant Agency and shall furnish, without charge,
copies thereof to the Holder upon request.

 

8. ARTICLE IV

 

ANTIDILUTION PROVISIONS

 

a. Section 4.1. Adjustment Generally.

 

b.

 

The Exercise Price and the number of shares of Voting Common Stock (or other
securities or property) issuable upon exercise of this Warrant shall be subject
to adjustment from time to time upon the occurrence of certain events as
provided in this Article IV; provided that notwithstanding anything to the
contrary contained herein, the Exercise Price shall not be less than the par
value of the Voting Common Stock, as such par value is reduced from time to time
in accordance with Section 1.5.

 

c. Section 4.2. Common Stock Reorganization.

 

d.

 

If Cybex shall subdivide its outstanding shares of Common Stock (or any class
thereof) into a greater number of shares or consolidate its outstanding shares
of Common Stock (or any class thereof) into a smaller number of shares (any such
event being called a “Common Stock Reorganization”), then (a) the Exercise Price
shall be adjusted, effective immediately after the effective date of such Common
Stock Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such
effective date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization, and (b) the number of
shares of Voting Common Stock subject to purchase upon exercise of this Warrant
shall be adjusted, effective at such time, to a number determined by

 

6

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multiplying the number of shares of Voting Common Stock subject to purchase
immediately before such Common Stock Reorganization by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding after giving
effect to such Common Stock Reorganization and the denominator of which shall be
the number of shares of Common Stock outstanding immediately before such Common
Stock Reorganization. The provisions of this Section 4.2 shall not operate to
cause the aggregate Exercise Price of all Warrants (without giving effect to any
exercise or redemption thereof) to be greater than $238,435.65.

 

e. Section 4.3. Common Stock Distribution.

 

f.

 

(a) If Cybex shall issue, sell or otherwise distribute any shares of Common
Stock, other than pursuant to a Common Stock Reorganization (which is governed
by Section 4.2 hereof) (any such event, including any event described in
paragraphs (b) and (c) below, being herein called a “Common Stock
Distribution”), for a consideration per share less than the Exercise Price then
in effect or less than the Market Price (calculated with a Time of Determination
of the date of such Common Stock Distribution before giving effect to such
Common Stock Distribution), then, effective upon such Common Stock Distribution,
the Exercise Price shall be reduced, if such consideration per share shall be
less than the Exercise Price then in effect but not less than such Market Price,
to the lower of the prices (calculated to the nearest one-thousandth of one
cent) determined as provided in clauses (i) and (ii) below or, if such
consideration per share shall be less than such Market Price, to the lowest of
the prices (calculated to the nearest one-thousandth of one cent) determined as
provided in clauses (i) and (ii) below:

 

(i) by dividing (A) an amount equal to the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such Common Stock Distribution
multiplied by the then-existing Exercise Price, plus (2) the consideration, if
any, received by Cybex upon such Common Stock Distribution by (B) the total
number of shares of Common Stock outstanding immediately after such Common Stock
Distribution; and

 

(ii) by multiplying the Exercise Price in effect immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock outstanding immediately prior to
such Common Stock Distribution multiplied by such Market Price (calculated with
a Time of Determination of the date of such Common Stock Distribution), plus (B)
the consideration, if any, received by Cybex upon such Common Stock
Distribution, and the denominator of which shall be the product of (1) the total
number of shares of Common Stock outstanding immediately after such Common Stock
Distribution multiplied by (2) such Market Price.

 

If any Common Stock Distribution shall require an adjustment to the Exercise
Price pursuant to the foregoing provisions of this paragraph (a), including by
operation of paragraph (b) or (c) below, then, effective at the time such
adjustment is made, the number of shares of Voting Common Stock subject to
purchase upon exercise of this Warrant shall be increased to a number determined
by multiplying the number of shares of Voting Common Stock subject to

 

7

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purchase immediately before such Common Stock Distribution by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after giving effect to such Common Stock Distribution and the
denominator of which shall be the sum of the number of shares outstanding
immediately before giving effect to such Common Stock Distribution (both
calculated on a Fully Diluted Basis) plus the number of shares of Common Stock
which the aggregate consideration received by Cybex with respect to such Common
Stock Distribution would purchase at the Market Price (calculated with a Time of
Determination of the date of such Common Stock Distribution before giving effect
to such Common Stock Distribution). In computing adjustments under this
paragraph, fractional interests in Common Stock shall be taken into account to
the nearest one-thousandth of a share.

 

The provisions of this paragraph (a), including by operation of paragraph (b) or
(c) below, shall not operate to increase the Exercise Price or reduce the number
of shares of Voting Common Stock subject to purchase upon exercise of this
Warrant.

 

(b) If Cybex shall issue, sell, distribute or otherwise grant in any manner
(including by assumption) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such rights, warrants or
options being herein called “Options” and such convertible or exchangeable stock
or securities being herein called “Convertible Securities”), whether or not such
Options or the rights to convert or exchange any such Convertible Securities in
respect of such Options are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities in respect of such Options
(determined by dividing (i) the aggregate amount, if any, received or receivable
by Cybex as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to Cybex upon the exercise
of all such Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the issuance or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Exercise Price then in effect or less than
the Market Price (calculated with a Time of Determination of the date of
granting such Options before giving effect to such grant), then, for purposes of
paragraph (a) above, the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued as of the date of granting of such
Options and thereafter shall be deemed to be outstanding and Cybex shall be
deemed to have received as consideration such price per share, determined as
provided above, therefor. Except as otherwise provided in paragraph (d) below,
no additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of such Convertible
Securities.

 

(c) If Cybex shall issue, sell or otherwise distribute (including by assumption)
any Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon such

 

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conversion or exchange (determined by dividing (i) the aggregate amount received
or receivable by Cybex as consideration for the issuance, sale or distribution
of such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to Cybex upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less than
the Exercise Price then in effect or less than the Market Price (calculated with
a Time of Determination of the date of such issuance, sale or distribution
before giving effect to such issuance, sale or distribution), then, for purposes
of paragraph (a) above, the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the date of the issuance, sale or distribution
of such Convertible Securities and thereafter shall be deemed to be outstanding
and Cybex shall be deemed to have received as consideration such price per
share, determined as provided above, therefor. Except as otherwise provided in
paragraph (d) below, no additional adjustment of the Exercise Price shall be
made upon the actual conversion or exchange of such Convertible Securities.

 

(d) If (i) the purchase price provided for in any Option referred to in
paragraph (b) above or the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in paragraph
(b) or (c) above or the rate at which any Convertible Securities referred to in
paragraph (b) or (c) above are convertible into or exchangeable for Common Stock
shall change at any time (other than under or by reason of provisions designed
to protect against dilution upon an event which results in a related adjustment
pursuant to this Article IV), or (ii) any of such Options or Convertible
Securities shall have terminated, lapsed or expired, the Exercise Price then in
effect shall forthwith be readjusted (effective only with respect to any
exercise of this Warrant after such readjustment) to the Exercise Price which
would then be in effect had the adjustment made upon the issuance, sale,
distribution or grant of such Options or Convertible Securities been made based
upon such changed purchase price, additional consideration or conversion rate,
as the case may be (in the case of any event referred to in clause (i) of this
paragraph (d)) or had such adjustment not been made (in the case of any event
referred to in clause (ii) of this paragraph (d)).

 

(e) If Cybex shall pay a dividend or make any other distribution upon any
capital stock of Cybex payable in Common Stock, Options or Convertible
Securities, then, for purposes of paragraph (a) above, such Common Stock,
Options or Convertible Securities shall be deemed to have been issued or sold
without consideration.

 

(f) If any shares of Common Stock, Options or Convertible Securities shall be
issued, sold or distributed for cash, the consideration received therefor shall
be deemed to be the amount received by Cybex therefor. If any shares of Common
Stock, Options or Convertible Securities shall be issued sold or distributed for
a consideration other than cash, the amount of the consideration other than cash
received by Cybex shall be deemed to be the fair market value (as determined in
good faith by the Board of Directors of Cybex) of such consideration. If any
shares of Common Stock, Options or Convertible Securities shall be issued in
connection with any merger in which Cybex is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair market value (as
determined in good faith by the Board of Directors of Cybex) of such portion of
the assets and business of the non-surviving corporation

 

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as shall be attributable to such Common Stock, Options or Convertible
Securities, as the case may be. If any Options shall be issued in connection
with the issuance and sale of other securities of Cybex, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration.

 

g. Section 4.4. Special Dividends.

 

h.

 

If Cybex shall issue or distribute to any holder or holders of shares of Common
Stock evidences of indebtedness, any other securities of Cybex or any cash,
property or other assets (excluding a Common Stock Reorganization or a Common
Stock Distribution), whether or not accompanied by a purchase, redemption or
other acquisition of shares of Common Stock (any such nonexcluded event being
herein called a “Special Dividend”), (a) the Exercise Price shall be decreased,
effective immediately after the effective date of such Special Dividend, to a
price determined by multiplying the Exercise Price then in effect by a fraction,
the numerator of which shall be the Market Price (calculated with a Time of
Determination of the date of such effective date) less any cash and the then
fair market value of any evidences of indebtedness, securities or property or
other assets issued or distributed in such Special Dividend with respect to one
share of Common Stock, and the denominator of which shall be such Market Price
and (b) the number of shares of Voting Common Stock subject to purchase upon
exercise of this Warrant shall be increased to a number determined by
multiplying the number of shares of Voting Common Stock subject to purchase
immediately before such Special Dividend by a fraction, the numerator of which
shall be the Exercise Price in effect immediately before such Special Dividend
and the denominator of which shall be the Exercise Price in effect immediately
after such Special Dividend. A reclassification of Common Stock (other than a
change in par value, or from par value to no par value or from no par value to
par value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by Cybex to the holders of such Common Stock of
such shares of such other class of stock and, if the outstanding shares of
Common Stock shall be changed into a larger or smaller number of shares of
Common Stock as part of such reclassification, a Common Stock Reorganization.

 

i. Section 4.5. Capital Reorganizations.

 

j.

 

If there shall be (i) any consolidation or merger to which Cybex is a party,
other than a consolidation or a merger of which Cybex is the continuing
corporation and which does not result in any reclassification of, or change
(other than a Common Stock Reorganization) in, outstanding shares of Common
Stock, or (ii) any sale or conveyance of the property of Cybex as an entirety or
substantially as an entirety, or (iii) any recapitalization of Cybex (any such
event being called a “Capital Reorganization”), then, effective upon the
effective date of such Capital Reorganization, the Holder shall no longer have
the right to purchase Voting Common Stock, but shall have instead the right to
purchase, upon exercise of this Warrant, the kind and amount of shares of stock
and other securities and property (including cash) which the Holder would have
owned or have been entitled to receive pursuant to such Capital Reorganization
if this Warrant

 

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had been exercised immediately prior to the effective date of such Capital
Reorganization. As a condition to effecting any Capital Reorganization, Cybex or
the successor or surviving corporation, as the case may be, shall (a) execute
and deliver to each Warrantholder and to the Warrant Agency an agreement as to
the Warrantholders’ rights in accordance with this Section 4.5, providing, to
the extent of any right to purchase equity securities hereunder, for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article IV and (b) provide each Regulated Holder with an
opinion of counsel reasonably satisfactory to such Regulated Holder and such
other assurances as any Regulated Holder may reasonably request to the effect
that the ownership and exercise by any Regulated Holder of this Warrant after
giving effect to such Capital Reorganization shall not be prohibited by the BHC
Act or the regulations thereunder. The provisions of this Section 4.5 shall
similarly apply to successive Capital Reorganizations.

 

k. Section 4.6. Adjustment Rules.

 

l.

 

Any adjustments pursuant to this Article IV shall be made successively whenever
an event referred to herein shall occur, except that, notwithstanding any other
provision of this Article IV, no adjustment shall be made to the number of
shares of Voting Common Stock to be delivered to each Holder (or to the Exercise
Price) if such adjustment represents less than 1% of the number of shares
previously required to be so delivered, but any lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
shall amount to 1% or more of the number of shares to be so delivered. No
adjustment shall be made pursuant to this Article IV in respect of (x) the
issuance of stock options or Common Stock to employees, officers or directors of
Cybex pursuant to employee stock ownership plans or otherwise, including without
limitation the Cybex 1995 Stock Incentive Plan and the Cybex Non-Employee
Directors Stock Retainer Plan, or the exercise of any such options, provided
that the aggregate amount of all such Common Stock and Common Stock for which
such options are exercisable does not exceed fifteen percent (15%) of the Common
Stock on a Fully Diluted Basis on the date hereof and (y) the issuance from time
to time of shares of Common Stock upon the exercise of (1) any of the Warrants
or (2) convertible securities outstanding on the date hereof. If Cybex shall
take a record of the holders of its Common Stock for any purpose referred to in
this Article IV, then (i) such record date shall be deemed to be the date of the
issuance, sale, distribution or grant in question and (ii) if Cybex shall
legally abandon such action prior to effecting such action, no adjustment shall
be made pursuant to this Article IV in respect of such action.

 

m. Section 4.7. Proceedings Prior to Any Action Requiring Adjustment.

 

n.

 

As a condition precedent to the taking of any action which would require an
adjustment pursuant to this Article IV, Cybex shall take any action which may be
necessary, including obtaining regulatory approvals or exemptions, in order that
(a) Cybex may thereafter validly and legally issue as fully paid and
nonassessable all shares of Voting Common Stock which the

 

11

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holders of Warrants are entitled to receive upon exercise thereof and (b) the
ownership and exercise of any Warrant by any Regulated Holder shall not be
prohibited by any Regulatory Requirement.

 

o. Section 4.8. Notice of Adjustment.

 

p.

 

Not less than 10 nor more than 30 days prior to the record date or effective
date, as the case may be, of any action which requires or might require an
adjustment or readjustment pursuant to this Article IV, Cybex shall give notice
to each Warrantholder of such event, describing such event in reasonable detail
and specifying the record date or effective date, as the case may be, and, if
determinable, the required adjustment and the computation thereof. If the
required adjustment is not determinable at the time of such notice, Cybex shall
give notice to each Warrantholder of such adjustment and computation promptly
after such adjustment becomes determinable.

 

9. ARTICLE V

 

PURCHASE, REDEMPTION AND CANCELLATION OF WARRANTS

 

10.

 

a. Section 5.1. Purchase of Warrants by Cybex.

 

b.

 

Cybex shall have the obligation to purchase or otherwise acquire Warrants at
such times, in such manner and for such consideration as set forth below.

 

c. Section 5.2. Mandatory Redemption of Warrants.

 

d.

 

The Holder may at the earlier to occur of (a) on or within 30 days after the
date on which Cybex shall have delivered a Refinancing Notice (any such
redemption pursuant to this clause (a) a “Refinancing Redemption”), (b) on or
within 30 days after the repayment in full of all principal of and premium and
interest on the Notes (as defined in the Financing Agreement) and the
termination of the Commitments under the Financing Agreement (any such
redemption pursuant to this clause (b) a “Repayment Redemption”) or (c) within
10 days of the date on which Cybex shall have delivered a Company Sale Notice or
a Going Private Notice to the Holder (any such redemption pursuant to this
clause (c) a “Restructuring Redemption”), by notice to Cybex, demand a
determination of the Redemption Price (a “Determination Notice”) for purposes of
this Section 5.2. Within 10 days after the receipt of any Determination Notice
from the Holder, Cybex shall give to the Holder notice of the Redemption Price,
including a reasonably detailed description of the method of calculation
thereof, determined as of the day preceding such notice of the Redemption Price.
At any time within 15 days after receipt of

 

12

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notice of the Redemption Price, the Holder may demand redemption of this
Warrant, in whole or in part, at the Redemption Price by notice to Cybex,
payable on the closing date (or the third Business Day after receipt of notice
of such demand in the case of a Repayment Redemption) of any such Refinancing,
Company Sale or Going Private Transaction (such date, the “Redemption Due Date”)
in immediately available funds to the Holder upon surrender of this Warrant at
the Warrant Agency Redemption, or, if requested by the Holder, without surrender
of this Warrant, by wire transfer to any account in Charlotte, North Carolina,
specified by notice to Cybex. Thereupon, the right to purchase shares of Voting
Common Stock theretofore represented by this Warrant as to which the Holder has
demanded (and Cybex may effect) redemption shall terminate, and this Warrant
shall represent the right of the Holder to receive the full Redemption Price
from Cybex in accordance with this Section. If, however, any Refinancing,
Company Sale or Going Private Transaction does not close, Cybex shall not have
an obligation to redeem the Holder’s Warrants. Notwithstanding anything to the
contrary stated above, in the event of a Refinancing Redemption or a Repayment
Redemption, Cybex shall not be required to redeem Warrants for shares of Voting
Common Stock to the extent, and only to the extent, that the Redemption Price
for all Warrants to be redeemed exceeds, in the aggregate, $300,000. The
Holder’s right to demand redemption of this Warrant pursuant to this Section 5.2
shall be referred to hereinafter as the Holder’s “Mandatory Redemption Right”.

 

e. Section 5.3. Cancellation of Warrants.

 

f.

 

All Warrants purchased, redeemed or otherwise acquired by Cybex shall thereupon
be canceled and retired. The Warrant Agency shall cancel any Warrant surrendered
for exercise or registration of transfer or exchange and deliver such canceled
Warrants to Cybex.

 

g. Section 5.4. Notice of Company Sale or Going Private Transaction.

 

h.

 

Cybex shall give notice to each of the Warrantholders of any intent by Cybex to
enter into a transaction that would result in a refinancing in the entirety of
the Notes (as defined in the Financing Agreement) (such notice, the “Refinancing
Notice”), a Company Sale of Cybex or a Going Private Transaction (such notice,
the “Company Sale Notice” or the “Going Private Notice,” as the case may be),
not less than 30 days prior to the proposed closing date of such transaction,
setting forth such proposed closing date and notifying each Warrantholder of its
rights under Section 5.2.

 

11. ARTICLE VI

 

DEFINITIONS

 

12.

 

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The following terms, as used in this Warrant, have the following meanings:

 

“BHC Act” means the Bank Holding Company Act of 1956, as amended.

 

“Business Day” means any day excluding Saturday, Sunday and any day on which
banking institutions located in Charlotte, North Carolina are authorized by law
or other governmental action to be closed, unless there shall have been an
offering of Common Stock registered under the Securities Act, in which case
“Business Day” means (a) if Common Stock is listed or admitted to trading on a
national securities exchange, a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
business or (b) if Common Stock is not so listed or admitted to trading, a day
on which the New York Stock Exchange is open for business.

 

“Capital Reorganization” has the meaning set forth in Section 4.5.

 

“CIT” has the meaning set forth in the second paragraph of this Warrant.

 

“Closing Price” on any day means (a) if Common Stock is listed or admitted for
trading on a national securities exchange, the reported last sales price regular
way or, if no such reported sale occurs on such day, the average of the closing
bid and asked prices regular way on such day, in each case on the principal
national securities exchange on which Common Stock is listed or admitted to
trading, or (b) if Common Stock is not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices in
the over-the-counter market on such day as reported by Nasdaq or any comparable
system or, if not so reported, as reported by any New York Stock Exchange member
firm selected by Cybex for such purpose.

 

“Common Stock” means the Voting Common Stock.

 

“Common Stock Distribution” has the meaning set forth in Section 4.3(a).

 

“Common Stock Reorganization” has the meaning set forth in Section 4.2.

 

“Company Sale” means the occurrence of any of the following: (i) any person or
group of persons (within the meaning of Section 13 or 14 of the Exchange Act),
other than Holdings and the Principal Investors, shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act), directly or indirectly, of at least 50.1%
or (ii) Cybex shall agree to sell, lease or otherwise dispose of all or
substantially all of its assets (other than sales of inventory in the ordinary
course of business) or to merge or consolidate Cybex with another entity other
than a wholly owned subsidiary of Cybex where Cybex is the survivor.

 

“Convertible Securities” has the meaning set forth in Section 4.3(b).

 

“Cybex” has the meaning set forth in the first paragraph of this Warrant.

 

“Determination Notice” has the meaning set forth in Section 5.2.

 

14

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission (or its successor) thereunder, all as the same shall be in
effect at the time.

 

“Exercise Price” means $1.35, which is an amount equal to the average of the
market closing price per share of the Voting Common Stock for the 30 day period
ending on the day before the date hereof, subject to adjustment pursuant to
Article IV.

 

“Financing Agreement” has the meaning set forth in the second paragraph of this
Warrant.

 

“Fully Diluted Basis” means, with respect to any determination or calculation,
that such determination or calculation is performed on a fully diluted basis
determined in accordance with generally accepted accounting principles as in
effect from time to time.

 

“Going Private Transaction” means a “Rule 13e-3 transaction” (as defined in the
Exchange Act) with respect to Cybex as issuer.

 

“Holder” has the meaning set forth in the first paragraph of this Warrant.

 

“Mandatory Redemption Right” has the meaning set forth in Section 5.2.

 

“Market Price” as at any date of determination means the average of the daily
Closing Prices of a share of Common Stock for the 30 consecutive days ending on
the most recent day prior to the Time of Determination. “Time of Determination”
means the time and date of the earliest of (x) the determination of the
stockholders entitled to receive such issuance, sale, distribution or grant, (y)
the determination of the Holders to exercise their rights set forth in Sections
5.2 hereof and (z) the commencement of “ex-dividend” trading in respect thereof.

 

“NASD” means the National Association of Securities Dealers, Inc.

 

“Nasdaq” means the National Association of Securities Dealers, Inc. Automated
Quotation System.

 

“Options” has the meaning set forth in Section 4.3(b).

 

“Person” means any natural person, corporation, limited partnership, general
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other organization, whether
or not a legal entity, and any government agency or political subdivision
thereof.

 

“Redemption Due Date” has the meaning set forth in Section 5.2 hereof.

 

15

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“Redemption Price” means, as of any date of determination, a price for each
share of Voting Common Stock issuable upon exercise of the Warrants equal to the
excess of (a) the Market Price over (b) the Exercise Price then in effect.

 

“Regulated Holder” means the Holder or a holder of Warrant Shares, if such
Holder or holder of Warrant Shares is effectively restricted or prohibited from
holding, exercising or transferring, in whole or in part, this Warrant or
Warrant Shares by reason of any Regulatory Requirement, including without
limitation if such Holder or holder of Warrant Shares is a bank holding company
within the meaning of the BHC Act or a subsidiary thereof subject to Regulation
Y under the BHC Act.

 

“Regulatory Requirement” means any existing or future Federal or state statute,
rule, regulation, guideline, order, request or directive (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful), including without limitation, the BHC Act and the regulations
thereunder.

 

“Securities Act” means the Securities Act of 1933, as amended, and rules and
regulations of the Securities and Exchange Commission thereunder.

 

“Special Dividend” has the meaning set forth in Section 4.4.

 

“Subsidiary” of any Person means any corporation, partnership, joint venture,
association, limited liability company or other business entity of which more
than 50% of the total voting power of shares of stock or other interests therein
entitled to vote in the election of members of the board of directors,
partnership committee, board of managers or trustees or other managerial body
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof. Unless otherwise specified, “Subsidiary” means a Subsidiary of Cybex
and “Subsidiaries” means all Subsidiaries of Cybex.

 

“Voting Common Stock” has the meaning set forth in the first paragraph of this
Warrant, subject to change pursuant to Article IV.

 

“Warrant Agency” has the meaning set forth in Section 2.1.

 

“Warrant Shares” means the shares of Voting Common Stock issuable upon the
exercise of the Warrants.

 

“Warrantholder” means a holder of a Warrant.

 

“Warrantholders Rights Agreement” has the meaning set forth in Section 3.1.

 

“Warrants” has the meaning set forth in the second paragraph of this Warrant.

 

All references herein to “days” shall mean calendar days unless otherwise
specified.

 

16

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13. ARTICLE VII

 

MISCELLANEOUS

 

14.

 

a. Section 7.1. Notices.

 

b.

 

Notices and other communications provided for herein shall be in writing and may
be given by mail, courier, confirmed telex or facsimile transmission and shall,
unless otherwise expressly required, be deemed given when received or, if
mailed, four Business Days after being deposited in the United States mail with
postage prepaid and properly addressed. In the case of the Holder, such notices
and communications shall be addressed to its address as shown on the books
maintained by the Warrant Agency, unless the Holder shall notify the Warrant
Agency that notices and communications should be sent to a different address (or
telex or facsimile number), in which case such notices and communications shall
be sent to the address (or telex or facsimile number) specified by the Holder.
In the case of Cybex, such notices and communications shall be addressed to its
address as shown in the Financing Agreement.

 

c. Section 7.2. Waivers; Amendments.

 

d.

 

No failure or delay of the Holder in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. No notice or demand on Cybex in any
case shall entitle Cybex to any other or future notice or demand in similar or
other circumstances. The rights and remedies of the Holder are cumulative and
not exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of Cybex and Holder. The provisions of the Financing
Agreement and the Warrantholders Rights Agreement may be amended, modified or
waived only in accordance with the respective provisions thereof.

 

Any such amendment, modification or waiver effected pursuant to and in
accordance with the provisions of this Section or the applicable provisions of
the Financing Agreement or the Warrantholders Rights Agreement shall be binding
upon the holders of all Warrants and Warrant Shares, upon each future holder
thereof and upon Cybex. In the event of any such amendment, modification or
waiver Cybex shall give prompt notice thereof to all holders of Warrants and
Warrant Shares and, if appropriate, notation thereof shall be made on all
Warrants thereafter surrendered for registration of transfer or exchange.

 

e. Section 7.3. GOVERNING LAW.

 

17

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f.

 

THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO RULES OF CHOICE OF LAW.

 

g. Section 7.4. Transfer; Covenants to Bind Successor and Assigns.

 

h.

 

All covenants, stipulations, promises and agreements in this Warrant contained
by or on behalf of Cybex or the Holder shall bind its successors and assigns,
whether so expressed or not. This Warrant shall be transferable and assignable
by the Holder hereof in whole or from time to time in part to any other Person
and the provisions of this Warrant shall be binding upon and inure to the
benefit of the Holder hereof and its successors and assigns.

 

i. Section 7.5. Severability.

 

j.

 

In case any one or more of the provisions contained in this Warrant shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

 

k. Section 7.6. Section Headings.

 

l.

 

The section headings used herein are for convenience of reference only, are not
part of this Warrant and are not to affect the construction of or be taken into
consideration in interpreting this Warrant.

 

m.

 

n. Section 7.7. Tax Basis.

 

o.

 

Cybex and the Holder agree pursuant to Treasury Regulation Section 1.1273-2
that, for Federal income tax purposes, the aggregate purchase price for the
Warrants is $0.00. Neither Cybex nor the Holder hereof shall voluntarily take
any action inconsistent with the agreement set forth in this Section 7.7.

 

p.

 

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19

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IN WITNESS WHEREOF, Cybex has caused this Warrant to be executed in its
corporate name by one of its officers thereunto duly authorized, and its
corporate seal to be hereunto affixed, attested by its Secretary or an Assistant
Secretary, all as of the day and year first above written.

 

CYBEX INTERNATIONAL, INC.

By:

 

/s/ Arthur W. Hicks, Jr.

--------------------------------------------------------------------------------

Name:

 

Arthur W. Hicks, Jr.

Title:

 

Chief Financial Officer

 

[Corporate Seal]

 

ATTEST:

 

/s/ James H. Carll

--------------------------------------------------------------------------------

Name: James H. Carll

Title: Secretary