Form of Amended and Restated Executive Officer Change in Control Agreement
Exhibit
10.5
Form of Amended and Restated Executive Officer
Change in Control Agreement
Change in Control Agreement
This Amended and Restated Change in Control Agreement (the “Agreement”) is dated as of
February ___, 2007, by and among Collegiate Pacific Inc. (the “Company”) and ___(the
“Executive”).
The following recitals are true and constitute the basis for this Agreement:
| A. | The Company recognizes that the current business environment makes it difficult to attract and retain highly-qualified executives unless a certain degree of security can be offered to such executives against organizational and personnel changes which frequently follow a Change in Control (as defined below) of a corporation; | ||
| B. | The Board of Directors of the Company (the “Board”) recognizes the long and valued service the Executive has provided as an officer of the Company and/or its subsidiaries and considers the Executive to be an important resource the Company desires to retain; | ||
| C. | The Company desires to assure fair treatment of its key executives in the event of a Change in Control and to allow them to make critical career decisions without undue time pressure and financial uncertainty, thereby increasing their willingness to remain with the Company notwithstanding the outcome of a possible Change in Control of the Company; | ||
| D. | The Company recognizes its key executives will be involved in evaluating or negotiating any offers, proposals or other transactions that could result in a Change in Control of the Company and believes that it is in the best interests of the Company and its stockholders that such key executives be in a position, free from personal financial and employment consideration, to be able to assess objectively and pursue aggressively the interests of the Company’s stockholders in making these evaluations and carrying on such negotiations; | ||
| E. | The Board believes it is essential to provide the Executive with compensation arrangements upon a Change in Control that provide the Executive with individual financial security and which are competitive with those of other corporations, and in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement; and | ||
| F. | The Company and the Executive are parties to the Change in Control Agreement, dated June 16, 2006 (the “Original Agreement”) and the Company and the Executive now wish to |
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| amend and restate the Original Agreement in its entirety by this Agreement. |
NOW THEREFORE in consideration of the Executive’s willingness to continue working as an
employee of the Company or any of its subsidiaries and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions. In addition to the terms that are defined in other parts of
this Agreement, the following terms shall have the specified meanings set forth below:
(a) “Cause” for purposes of this Agreement shall mean (i) the conviction of the Executive of a
felony, (ii) an act or acts of personal dishonesty taken by the Executive and intended to result in
substantial personal enrichment of the Executive at the expense of the Company or (iii) repeated
violations by the Executive of the Executive’s obligations under Sections 5, 16 and 18 of this
Agreement that are demonstrably willful and deliberate on the Executive’s part and that are not
remedied in a reasonable period of time after receipt of written notice from the Company.
(b) “Code” for purposes of this Agreement shall mean the Internal Revenue Code of 1986, as
amended, and any reference to any subsection thereof shall be construed to incorporate reference to
any section or subsection of the Code enacted as a successor thereto, any applicable proposed,
temporary or final regulations promulgated pursuant to such sections and any applicable
interpretation thereof by the Internal Revenue Service.
(c) “Competes” for purposes of this Agreement shall mean any one or more of the following
activities:
(i) manufacturing, distributing, designing, selling or
installing sports equipment and supplies (the “Sports Distribution
Business”) to any Person within any industry segment for which the
Company has either offered to provide or conduct, or actually
provided or conducted the Sports Distribution Business; or
(ii) engaging in any other business activities (other than
those described in (c)(i) above) which are conducted, offered or
provided by the Company while the Executive is employed by the
Company and as to which Executive is involved, if those activities
are in the same markets or states as the Company engaged in during
Executive’s employment with the Company.
(d) “Disability” for purposes of this Agreement shall mean Executive’s incapacity due to
physical or mental illness that prevents Executive from engaging in the full-time performance of
Executive’s duties with Company for a period of 60 consecutive days or for 90 days, whether or not
consecutive, in any 360 day period and, within 30 days after
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written notice is provided to Executive by Company, Executive shall not have returned to the
full-time performance of Executive’s duties.
(e) “Good Reason” for purposes of this Agreement shall mean any of the following acts by the
Company (or any of its affiliates) following a Change in Control, without the consent of the
Executive (in each case, other than an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company (or an affiliate) promptly after receipt of notice
thereof given by the Executive): (a) a material diminution in the Executive’s position, authority,
duties or responsibilities as in effect immediately prior to the Change in Control, (b) a reduction
of the Executive’s base salary from his or her highest base salary in effect at any time within 12
months preceding the Change in Control; (c) the failure by the Company (or an affiliate) to
continue the Executive’s participation in any compensation plan in which he or she participated
immediately prior to the Change in Control (or in a substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and the level of the
Executive’s participation relative to similarly situated employees or (d) the relocation of the
Executive, without his or her consent, to an office or location more than 50 miles from the
location at which the Executive was stationed immediately prior to the Change in Control.
(f) “Person” for purposes of this Agreement shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, trust, unincorporated organization or
other entity.
(g) “Present Value” for purposes of this Agreement shall mean the amount determined in
accordance with Section 280G(d)(4) of the Code as of the date specified for such determination,
applying a discount rate, compounded no less frequently than monthly, that is equivalent to the
rate specified for such determination.
(h) “Principal Obligations” for purposes of this Agreement shall mean either (i) the
principal, premium, interest, fees, costs, expenses and other amounts accrued or due on the
Company’s existing or future credit facilities, term loans or revolving credit or commercial paper
facilities (including any related hedging obligations or letter of credit subfacilities) entered
into with commercial banks or financial institutions and guarantees thereof or (ii) the Company’s
5.75% convertible senior subordinated notes due 2009 or any future senior subordinated notes.
2. Term. This Agreement shall commence on the date hereof and shall terminate upon
the earlier of (a) the termination of Executive’s employment with the Company or any of its
subsidiaries for any reason (by either the Company or the Executive) at any time more than 6 months
prior to a Change in Control, (b) the termination of Executive’s employment with the Company or any
of its subsidiaries either by the Company for Cause or the Executive without Good Reason at any
time either before or after a Change in Control, (c) the termination of the Executive’s employment
with the Company or any of its subsidiaries either by the Company without Cause, by the Executive
for Good Reason, or upon the death or Disability of Executive at any time within the 6 month period
before or the 6 month period after a Change in Control and the payment by the Company of all
obligations to the Executive under Section 6 of this Agreement or (d) upon the 6 month anniversary
of a Change in Control and the payment by the Company of all obligations to the Executive under
Section 6 of this Agreement (the “Term”).
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3. Change in Control. For the purpose of this Agreement, a “Change in Control” of the
Company shall mean the occurrence of any of the following events at any time during the Term:
(a) the acquisition by any person of beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or series of transactions, of
shares of capital stock of the Company entitling such person to exercise 40% or more of the
total voting power of all shares of capital stock of the Company entitled to vote generally
in the elections of directors, other than any such acquisition by either (i) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ or any other syndicate or group that includes ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as a member,
(ii) the Company or (iii) any subsidiary or any employee benefit plan of the Company, and
during any period of two consecutive years, individuals who at the beginning of such period
constituted the board of directors (together with any new directors whose election to the
board of directors, or whose nomination for election by the stockholders of the Company, was
approved by a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for election was
previously approved) cease for any reason to constitute a majority of the board of directors
then in office; or
(b) the acquisition by any person of beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or series of transactions, of
shares of capital stock of the Company entitling such person to exercise 50% or more of the
total voting power of all shares of capital stock of the Company entitled to vote generally
in the elections of directors, other than any such acquisition by either (i) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ or any other syndicate or group that includes ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as a member,
(ii) the Company or (iii) any subsidiary or any employee benefit plan of the Company; or
(c) any consolidation of the Company with, or merger of the Company into, any other
person, any merger of another person into the Company, or any conveyance, sale, transfer or
lease or disposal of all or substantially all of the assets of the Company to another person
(other than (a) any such transaction (x) involving a merger or consolidation that does not
result in any reclassification, conversion, exchange or cancellation of outstanding shares
of capital stock of the Company (other than any reclassification, conversion, exchange or
cancellation of outstanding shares of capital stock of the Company solely for shares of
publicly traded common stock listed on the American Stock Exchange or on an established
national securities exchange or automated over-the-counter trading market in the United
States) and (y) pursuant to which the holders of 50% or more of the total voting power of
all shares of the Company’s capital stock entitled to vote generally in the election of
directors immediately prior to such transaction have the entitlement to exercise, directly
or indirectly, more than 50% of the total voting power of all shares of capital stock
entitled to vote generally in the election of directors of the continuing or surviving
corporation immediately after such transaction or (b) any transaction which is effected
solely to change the jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of common stock into solely
shares of common stock).
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For purposes of this Section 3, whether a person is a “beneficial owner” will be determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and “person” includes any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.
4. The Company’s Covenants. In order to induce the Executive to remain in the employ
of the Company and in consideration of the Executive’s covenants set forth in Sections 5, 16 and 18
of this Agreement, the Company agrees, under the conditions described herein, to pay the Executive
the Severance Payment (as defined in Section 6 below) and the other payments and benefits described
herein. This Agreement shall not be construed as creating an express or implied contract of
employment, and except as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.
5. The Executive’s Covenants. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control while the Executive is employed
by the Company, the Executive will remain in the employ of the Company until the earliest of (a)
the date which is 6 months following the date of a Change in Control, (b) the date of termination
by the Executive of the Executive’s employment for Good Reason or (c) the termination by the
Company of the Executive’s employment either with or without Cause, or due to Executive’s death or
disability.
6. Severance Payment.
(a) If at any time during the 6 month period prior to a Change in Control, the Company
shall terminate the Executive’s employment without Cause, the Executive’s employment shall
terminate due to his death or Disability, or the Executive shall terminate his employment
for Good Reason, then the Company shall be obligated to pay the Executive in a lump sum in
cash on the next business day following the Change in Control an amount (subject to all
withholding and applicable deductions) equal to 2.99 times the sum of (1) the highest of (A)
the Executive’s then current base salary on an annualized basis as in effect immediately
prior to the Change in Control or (B) the Executive’s highest annualized base salary (with
the Company or any of its subsidiaries) in effect during the 1 year period before such
Change in Control and (2) the actual bonus paid to the Executive by the Company or any of
its subsidiaries for the most recent fiscal year ended prior to the occurrence of the Change
in Control (the “Severance Payment”); provided, however, that the amount of the Severance
Payment shall be subject to being delayed and/or reduced in accordance with either Section 7
or Section 8 below.
(b) If a Change in Control shall occur while the Executive is employed by the Company
and the Executive shall not have prior to the 6 month anniversary of the Change in Control
been terminated by the Company for Cause or resigned from the employ of the Company without
Good Reason, then the Company shall be obligated to pay the Executive in a lump sum in cash
on the next business day following the 6 month anniversary of the Change in Control an
amount (subject to all withholding and applicable deductions) equal to the Severance Payment
(calculated as described in subsection (a) above); provided, however, that the amount of the
Severance Payment
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shall be subject to being delayed and/or reduced in accordance with either Section 7 or
Section 8 below.
(c) If, however, on or after the Change in Control and prior to the 6 month anniversary
of the Change in Control either the Company shall terminate the Executive’s employment
without Cause, the Executive’s employment shall terminate due to his death or Disability, or
the Executive shall terminate his employment for Good Reason, the Severance Payment
(calculated as described in subsection (a) above) shall be due and payable by the Company as
of the effective date of the termination of the Executive’s employment with the Company and
shall be subject to being delayed and/or reduced in accordance with either Section 7 or
Section 8 below.
(d) Notwithstanding any other term or provision of this Agreement to the contrary, no
Severance Payment shall become due and payable by the Company to the Executive under the
terms of this Agreement if at the effective time of any Change in Control the Company is
then in default of any of its payment obligations under the terms of its Principal
Obligations or if any dissolution, assignment for the benefit of creditors or reorganization
under any chapter of Title 11 of the United States Code shall have caused a Change in
Control of the Company.
7. Reduction of Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise) (a “Payment”) would be nondeductible by the Company for Federal
income tax purposes because of Section 280G of the Code, then the Severance Payment shall be
reduced in such a manner that its aggregate Present Value shall be equal to the Reduced
Amount. The “Reduced Amount” shall mean an amount expressed in Present Value that maximizes
the aggregate present value of the Severance Payment without causing any Payment to be
nondeductible by the Company because of Section 280G of the Code.
(b) All determinations required to be made under this Section 7 shall be made by an
independent accounting firm selected by the Company (the “Accounting Firm”) and the
Accounting Firm shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the payment date or such earlier time as is requested
by the Company. Any such determination by the Accounting Firm shall be binding upon the
Company and the Executive. The Executive shall determine which and how much of the
Severance Payment shall be eliminated or reduced consistent with the requirements of this
Section 7; provided, that, if the Executive does not make such determination within 10
business days of the receipt of the calculations made by the Accounting Firm, the Company
shall elect which and how much of the Severance Payment shall be eliminated or reduced
consistent with the requirements of this Section 7 and shall notify the Executive promptly
of such election. Within 5 business days thereafter, the Company shall pay to or distribute
to or for the benefit of the Executive such amounts as are then due to the Executive under
this Agreement.
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(c) As a result of the uncertainty in the application of Section 280G of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is possible that
the Severance Payment will have been made by the Company which should not have been made (an
“Overpayment”) or that an amount of the Severance Payment which will not have been made by
the Company could have been made (an “Underpayment”), in each case, consistent with the
calculations required to be made hereunder. In the event that the Accounting Firm, based
upon the assertion of a deficiency by the Internal Revenue Service against the Executive
that the Accounting Firm believes has a high probability of success determines an
Overpayment has been made, any such Overpayment paid or distributed by the Company to or for
the benefit of the Executive shall be repaid by the Executive to the Company together with
interest at the applicable Federal rate provided in Section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the Executive to the Company if and to
the extent such deemed payment would not either reduce the amount on which the Executive is
subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such
taxes. In the event that the Accounting Firm, based upon controlling precedent or other
substantial authority, determines that an Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive together with
interest at the applicable Federal rate provided in Section 7872(f)(2) of the Code.
8. Compliance with Section 409A of the Code. To the extent applicable, it is intended
that this Agreement comply with the provisions of Section 409A of the Code. This Agreement shall
be administered in a manner consistent with this intent, and any provision that would cause this
Agreement to fail to satisfy Section 409A of the Code shall have no force and effect until amended
to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted
by Section 409A of the Code and may be made by the Company without the consent of the Executive).
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any benefit, bonus, incentive or other plans,
programs, policies or practices provided by the Company or any of its subsidiaries and for which
the Executive may qualify, nor shall anything herein limit or otherwise affect such rights the
Executive may have under any stock option or other agreements with the Company or any of its
subsidiaries. Amounts that are vested benefits or that the Executive is otherwise entitled to
receive under any plan, policy, practice or program of the Company or any of its subsidiaries at or
subsequent to the termination of Executive’s employment shall be payable in accordance with such
plan, policy, practice or program.
10. Successor to the Company.
(a) The Company will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. Any failure of the Company
to obtain such agreement prior to the effectiveness of any such succession or assignment
shall be a material breach of this
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Agreement. As used in this Agreement, “Company” shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 10 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of law. If at
any time during the term of this Agreement the Executive is employed by any corporation a
majority of the voting securities of which is then owned by the Company, “Company” as used
in Section 1, 2, 3, 4, 5, 6, 7, 8, 16 and 18 hereof shall in addition include such employer.
In such event, the Company agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to Section 6 hereof.
(b) This Agreement shall inure to the benefit of and be enforceable by the Executive,
and the Executive’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive should die while
any amounts are still payable to him or her hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee, or other designee or, if there be no such designee, to the
Executive’s estate.
11. Notice. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid, to
the party entitled to receive such notice at the address shown on the signature page hereof, or to
such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
12. Miscellaneous. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without regard to the choice of law provisions,
statutes, regulations or principles of this or any other jurisdiction.
13. Validity. The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.
15. Legal Fees and Expenses. The Company shall be obligated to pay all legal fees and
expenses that the Executive may incur as a result of the Company contesting the
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validity, enforceability, or the Executive’s interpretation of, or determinations under, this
Agreement.
16. Confidentiality. As an employee of the Company, the Executive shall have access
to the Company’s confidential information and the Company shall be unconditionally obligated to,
and hereby agrees to, provide Executive with access to new and additional elements of the Company’s
confidential information so long as Executive is employed by the Company. The Executive shall
retain in confidence any and all confidential information known to the Executive concerning the
Company and its businesses so long as such information is not otherwise publicly disclosed.
17. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto relating to the matters encompassed hereby and supersedes any prior oral or written
agreements relating thereto.
18. Noncompete. If the Executive receives the Severance Payment from the Company, the
Executive agrees that for a period of 1 year immediately following the termination of the
Executive’s employment with the Company for any reason (either by the Company or the Executive)
Executive shall not, without the prior written consent of the Company, directly or indirectly by
assisting others, engage in, solicit on behalf of, render any services to, guaranty any obligations
of, extend credit to, or have any ownership interest in, or other affiliation in, any business or
other endeavor that Competes with the Company in the United States. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall prevent or prohibit Executive from owning
not more than 5% of a class of equity securities issued by any Person listed on any national
securities exchange or interdealer quotation system.
19. Amendment and Restatement of Original Agreement. The Original Agreement is hereby
amended and restated in its entirety. Such amendment and restatement is effective upon execution
of this Agreement by the Company and the Executive. Upon such execution, all provisions of, rights
granted and covenants made in the Original Agreement are hereby waived, released and superseded in
their entirety and shall have no further force or effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| Collegiate Pacific Inc. | Executive: | |||||||
By: |
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| ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer |
(Signature) | |||||||
| Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
Address: | |||||||
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