EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made January 27,
1998 to be effective as of January 16, 1998, by and between Sport Supply
Group, Inc., a Delaware corporation ("Employer"), and Xxxx Xxxxxxxxxx
("Employee").
RECITALS:
WHEREAS, Employer desires to retain the services of Employee, and
Employee desires to continue providing services to Employer in
accordance with the terms, conditions, and provisions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Term. Subject to the terms and conditions set forth in this
Agreement, Employer hereby employs Employee, and Employee hereby accepts
such employment from Employer, for a three year period commencing on
January 16, 1998 (the "Effective Date") and expiring on January 16,
2001, except as otherwise provided herein.
2. Duties. Employee will be employed as the Vice President-
Marketing and Sales Related Operations, and in such capacity will
perform the normal duties associated with such position and/or such
other reasonable duties as may be assigned from time to time by the
Chairman of the Board or the Board of Directors of Employer. During the
term of this Agreement, Employee shall devote his full time, attention,
and energies to the business of Employer in order to discharge his
duties faithfully, diligently, to the best of his abilities, and in a
manner consistent with any and all policies and guidelines as may be
established by Employer from time to time.
3. Compensation.
(a) Subject to the terms and conditions of this Agreement and
as compensation for the performance of his services hereunder, Employer
will pay Employee a fixed salary at a minimum annual rate of $125,000
(such rate is referred to herein as "Salary"). If Employer's
consolidated Pretax Earnings from continuing operations (as set forth on
the Employer's audited Consolidated Statement of Operations) for any
Fiscal Year (excluding any revenues and expenses attributable to
operations acquired by Employer during such Fiscal Year, such as the
ATEC acquisition as it relates to Fiscal 1998) equal or exceed such
consolidated Pretax Earnings from continuing operations as projected in
the Employer's Business Plan that is approved by the Board of Directors,
Employee's Salary will be increased by at least seven percent (7%) for
the following Fiscal Year. For purposes of this Agreement, "Pretax
Earnings" is defined as Net Revenues less Cost of Sales less Selling,
General and Administrative Expenses (which include freight) less
Nonrecurring Charges less Interest Expense plus/minus Other Income and
Other Expense. Employee's Salary will accrue and be payable to Employee
in accordance with the payroll practices of Employer in effect from time
to time during the term of this Agreement.
(b) Employer will pay Employee a $500 per month allowance for
car and car related expenses payable on the 15th day of each month in
accordance with the payroll practices of Employer in effect from time to
time during the term of this Agreement.
(c) If Pretax Earnings for the Employer's Youth Division
equal or exceed $2,777,145 for the Fiscal Year ending October 2, 1998,
then Employer will pay Employee a $27,000 bonus. Employer will pay
Employee an additional $10,000 bonus if the Employer's audited
consolidated Pretax Earnings from continuing operations (exclusive of
all earnings attributable to (1) sales from ATEC related products or (2)
acquisitions of companies or other entities during said Fiscal Year)
equal or exceed $8,907,145 for the Fiscal Year ending October 2, 1998.
(d) If Employer's audited consolidated Pretax Earnings from
continuing operations for the Fiscal Years ending October 1, 1999 and/or
September 29, 2000 (excluding any revenues and expenses attributable to
operations acquired by Employer during such Fiscal Years) equal or
exceed such consolidated Pretax Earnings from continuing operations as
projected in the Employer's Business Plan that is approved by the Board
of Directors for each such Fiscal Year, then Employer will pay Employee
a performance bonus equal to thirty percent (30%) times the Employee's
base Salary in effect on the last day of each such Fiscal Year. No
bonus shall be due and payable for a Fiscal year if the Pretax Earnings
from continuing operations (as set forth on the Employer's audited
Consolidated Statement of Operations for such Fiscal Year) for such
Fiscal Year is less than the projected consolidated Pretax Earnings from
continuing operations for such Fiscal Year as set forth in the
Employer's Business Plan.
Employer shall pay Employee any performance bonus earned with
respect to a Fiscal Year within 90 days of the end of such Fiscal Year,
provided the audit is completed by such date. Notwithstanding the
foregoing, the performance bonus (if any) shall be paid within 135 days
of the end of the Fiscal Year.
(e) At its sole discretion, the Board of Directors of
Employer may give additional bonuses to Employee, but is not required to
do so under any circumstances. Employee is not entitled to participate
in any bonus plan (other than receiving his performance bonus, if any,
as described above) offered by Employer to its employees unless
expressly provided for in writing.
(f) Employer agrees to execute and deliver to Employee that
certain Stock Option Agreement, a copy of which is attached hereto as
Exhibit A and that certain Amendment No. 1 to Stock Option Agreement, a
copy of which is attached hereto as Exhibit B.
(g) All payments to Employee pursuant to this Agreement will
be subject to deduction and withholding authorized or required by
applicable law.
4. Confidentiality
(a) In exchange for and in consideration for the promises made by
Employee herein, including promises made by Employee regarding
noncompetition and nonsolicitation in Section 5 herein, Employer
promises and agrees to provide Employee with confidential, nonpublic
information (in addition to any such information previously obtained by
Employee in the course of his employment) consistent with the duties of
an individual in Employee's position, including but not limited to
Employer's customer, supplier, and distributor lists, trade secrets,
plans, manufacturing techniques, sales, marketing and expansion
strategies, and technology and processes of Employer and/or its
affiliates, as they may exist from time to time, and information
concerning the products, services, production, development, technology
and all technical information, procurement and sales activities and
procedures, promotion and pricing techniques and credit and financial
data concerning customers of, and suppliers to, Employer and/or its
affiliates (referred to hereinafter as ``Confidential Information").
Employee acknowledges that such Confidential Information constitutes
valuable, special and unique assets of the Employer and that his access
to and knowledge of the Confidential Information is essential to the
performance of his duties under this Agreement. In consideration for
Employer's promises herein, Employee agrees that all Confidential
Information previously provided or known to Employee in the course of
his employment with Employer and all such Confidential Information made
available and provided to Employee pursuant to the terms of this
Agreement will be considered Confidential Information owned by Employer
and Employee agrees that Employee will not (i) disclose any Confidential
Information to any person or entity other than in connection with his
employment for Employer in accordance with Employer's policy, or
(ii) make use of any Confidential Information for his own purposes or
for the benefit of any other person or entity, other than Employer.
Employee further represents and warrants that, on or prior to the date
of this Agreement, he has not (i) disclosed any Confidential Information
to any person or entity other than in connection with his employment for
Employer in accordance with Employer's policy or (ii) made use of any
Confidential Information for his own purposes or for the benefit of any
other person or entity, other than Employer.
(b) Employee acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, reports, financial records
(including, without limitation, budgets, business plans and financial
statements), computers, computer equipment, computer disks, hard drives,
electronic storage devices, books, procedures, forms, documents, records
or paper, or copies thereof, pertaining to the operations or business of
Employer made or received by Employee or made known to him in any way in
connection with his employment and any other Confidential Information
are and will be the exclusive property of Employer. Employee agrees not
to copy or remove any of the above from the premises and custody of
Employer, or disclose the contents thereof to any other person or entity
except in the ordinary course of business consistent with Employer's
policies. Employee acknowledges that all such papers and records will
at all times be subject to the control of Employer, and Employee agrees
to surrender the same upon request of Employer, and will surrender such
no later than any termination of his employment with Employer, whether
voluntary of involuntary.
5. Non-Compete Covenant. Employee acknowledges that the
Confidential Information specified above is extremely valuable to the
Employer and that, therefore, its protection and maintenance constitute
a legitimate interest to be protected by the Employer by the enforcement
of this covenant not to compete. Therefore, in consideration for the
promises made by Employer herein, including but not limited to the
provision of Confidential Information set forth in Section 4 herein,
Employee covenants and agrees that Employee will not, directly or
indirectly, either as an individual or as an employer, employee,
consultant, partner, officer, director, shareholder, substantial
investor, trustee, agent, advisor, or consultant or in any other
capacity whatsoever, of any person or entity (other than the Employer):
(a) from the effective date through January 16, 2001, conduct
or assist others in conducting any business in any market area in the
United States related to the promotion, marketing, distribution,
manufacturing, sourcing, importing and/or sale of sports related
equipment and/or supplies of the type sold by Employer at the time of
termination, or any other business that generates more than 10% of
Employer's revenues at the time of termination (the "Employer's
Business");
(b) from the effective date through January 16, 2002,
recruit, hire, assist others in recruiting or hiring, discuss employment
with or refer to others for employment (collectively referred to as
"Recruiting Activity") any person who is, or within the 24 month period
immediately preceding the date of any such Recruiting Activity was, at
any time, an employee of the Employer or its affiliates; or
(c) from the effective date through January 16, 2002, (i)
communicate to any competing entity or enterprise any competitive non-
public information concerning any past, present or identified
prospective client or customer of, or supplier to, Employer; or (ii)
call on, solicit or take away or attempt to call on, solicit or take
away any of the customers, suppliers, clients, licensors, licensees,
manufacturers, distributors, dealers or independent salespersons of the
Employer or any of its affiliates that are engaged in the Employer's
Business or that conduct business with Employer in the United States; or
induce, attempt to induce or assist any other person or entity in
inducing or attempting to induce, directly or indirectly, any such
customer, supplier, client, licensor, licensee, manufacturer, dealer,
distributor or independent salesperson to discontinue their relationship
with the Employer or its affiliates.
The alleged breach of any other provision of this Agreement
asserted by Employee or the existence of any claim or cause of action of
Employee against Employer, or any officer, director, or shareholder of
Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the covenants of
Employee contained in this Section 5; provided, however, an actual
breach of any material provision of this Agreement by Employer will be a
defense to claims arising from Employer's enforcement of this covenant
if a court of competent jurisdiction shall have determined that Employer
committed such breach.
If Employee violates any covenant contained in this Section 5 and
Employer brings legal action for injunctive or other relief, Employer
shall not, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full period of any such covenant. During
any period of time in which Employee is in breach of this covenant not
to compete, the parties agree that the time period of this covenant
shall be extended for an amount of time that Employee is in breach
hereof.
Employee understands and agrees that the scope of this covenant
contained in this Section 5 is reasonable as to time, area, and persons
and is necessary to protect the proprietary and legitimate business
interests of the Employer, and but for such covenant the Employer would
not have agreed to enter into the transactions contemplated by this
Agreement. Employee agrees that this covenant is reasonable in light of
the compensation and other benefits Employee has accepted pursuant to
this Agreement. It is further agreed that such covenant will be
regarded as divisible and will be operative as to time, area, and
persons to the extent that it may be so operative. If any part of this
Section is declared invalid, unenforceable, or void as to time, area, or
persons, the validity and enforceability of the remainder will not be
affected. Should a court of competent jurisdiction determine this
covenant unenforceable as written, the parties agree that the court
shall modify this covenant to the extent necessary to make it
enforceable.
6. Proprietary Information. Employee hereby assigns to
Employer all of Employee's right, title and interest to, and shall
promptly disclose to Employer, all ideas, inventions, products,
services, discoveries or improvements (whether or not patentable)
conceived or developed solely or jointly by Employee during the term of
this Agreement (a) that relate to the Employer's Business or the actual
or anticipated research or development of Employer, (b) that result from
any work performed by Employee for Employer, or (c) for which equipment,
supplies, facilities or Confidential Information of Employer was used.
Employee agrees to execute any further documents and/or patents that
Employer requests and will otherwise assist Employer (at Employer's
expense) in protecting Employer's rights to such ideas, inventions,
products, services, discoveries or improvements. Employee hereby
appoints Employer as his attorney-in-fact, with full power of
substitution, to execute and deliver such documents or patents on behalf
of Employee. This appointment is coupled with an interest in and to the
ideas, inventions, products, services, discoveries and improvements
conceived or developed by Employee and shall survive Employee's death or
disability. Employee hereby waives and quitclaims to Employer any and
all claims of any nature whatsoever that Employee may now or may
hereafter have for infringement of any patents or copyrights resulting
from or relating to any applications for any United States or foreign
letters, patent or copyright registrations assigned hereunder to
Employer. Employee represents to Employer that Employee has not
conceived or reduced to practice any ideas, inventions, products,
services, discoveries or improvements at the time of signing this
Agreement.
7. Termination
(a) Employer's obligations under this Agreement shall be
terminated if Employee is discharged by Employer for cause. For the
purposes of this Agreement, a discharge for cause shall mean a discharge
resulting from a determination by Employer that Employee: (i) has been
convicted of a crime involving moral turpitude, including fraud, theft
or embezzlement; (ii) has failed and/or refused to follow the policies,
practices, directives, or orders established by Employer's Board of
Directors; (iii) has committed acts of gross negligence or misconduct to
the detriment of Employer; (iv) has been insubor dinate and/or has
persistently failed to perform his duties hereunder; or (v) has breached
any of the material terms or provisions of this Agreement (including,
but not limited to, a breach of Section 4, 5 or 6 hereof).
(b) If Employee is absent from employment, or unable to
render services herein, by reason of physical or mental illness or
disability (as determined by a mutually agreeable physician) for more
than three (3) months in the aggregate in any twelve (12) month period,
and the Employee is unable to perform his essential job functions with
or without reasonable accommodation, then Employee shall be considered
permanently disabled, and this Agreement may be immediately terminated
by Employer without any further obligation to Employee. In the event
Employee is terminated pursuant to this Section 7(b), the provisions of
Section 5 hereof will not apply to Employee unless Employer continues to
pay Employee his salary (calculated as of the date of termination) less
any amounts paid to Employee pursuant to disability insurance, through
January 16, 2001.
(c) If Employee dies, this Agreement shall immediately and
automatically terminate, without further obligation to Employee or
Employee's estate.
(d) In the event Employee resigns from the employ of
Employer, all of Employer's obligations under this Agreement shall be
terminated.
(e) If Employee is terminated without cause, or in the event
of a Constructive Discharge (as defined below) of Employee prior to
January 16, 2001 (and so long as Employee continues to abide by Sections
4, 5 and 6 hereof after such termination), then Employer will continue
to pay Employee his Salary (calculated as of the date of
termination/discharge) through January 16, 2001 as if the Employee was
not terminated or discharged and after the end of the Fiscal Year during
which such termination occurs, the amount of the performance bonus
payable to Employee for such Fiscal Year, if any, pursuant to Section
3(c) or 3(d) of this Agreement (such amount to be reduced
proportionately for any period of less than 12 months in which the
Employee was employed). Except as set forth in the immediately preceding
sentences, Employer will have no other obligations to Employee if
Employee is terminated without cause.
(f) For the purposes of this Agreement, "Constructive
Discharge" means a change in office, title or position from that
reasonably associated with being Vice President-Marketing and Sales
Related Operations, other than a promotion; a change in reporting of
Employee to any person other than the Chairman, Chief Executive Officer,
President, Executive Vice President, or the Board of Directors of
Employer; a required relocation to a location in excess of thirty (30)
miles of Employer's current principal location; a reduced Salary; a
material diminution in responsibilities, or any other material breach of
this Agreement by Employer, so long as Employee gives Employer ten (10)
days written notice and an opportunity to cure such diminution in
responsibilities or other material breach.
(g) The provisions of Sections 4, 5 6, 7 and 8 shall survive
any termination or expiration of this Agreement without the payment of
any additional consideration by the Employer; provided, however, the
provisions of Section 5 shall not survive if the Employee is terminated
without cause (as described in Section 7(a) hereof) or Constructively
Discharged (as described in Section 7(f) hereof) and Employer does not
honor its obligations in Section 7(e) hereof. So long as the Employer
continues to pay the Employee the compensation set forth in Section 7,
the restrictive covenants set forth in Section 5 will apply to the
Employee through the scheduled duration, even if employee is terminated
without cause or Constructively Discharged.
8. Injunctive Relief. Each party acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each party will be entitled to specific
performance and injunctive and other equitable relief in case of any
breach or attempted breach and agrees not to use as a defense that any
party has an adequate remedy at law. This Agreement shall be
enforceable in a court of equity, or other tribunal with jurisdiction,
by a decree of specific performance, and appropriate injunctive relief
may be applied for and granted in connection herewith. Such remedy
shall not be exclusive and shall be in addition to any other remedies
now or hereafter existing at law or in equity, by statute or otherwise.
No delay or omission in exercising any right or remedy set forth in this
Agreement shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right or
remedy.
9. Binding Nature. The rights and obligations of Employer
under this Agreement will inure to the benefit of and will be binding
upon the successors and assigns of Employer.
10. Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, in whole or in part, then
both parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable or void.
The intent and agreement of the parties to this Agreement is that this
Agreement will be deemed amended by modifying any such illegal,
unenforceable or void provision to the extent necessary to make it legal
and enforceable while preserving its intent, or if such is not possible,
by substituting therefor another provision that is legal and enforceable
and achieves the same objectives. Notwithstanding the foregoing, if the
remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision
not so affected will be enforced to the extent permitted by law.
11. Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
12. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Texas without
giving effect to any principle of conflict-of-laws that would require
the application of the law of any other jurisdiction.
13. Notices. 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, addressed as follows:
If to Employee: If to Employer:
Sport Supply Group, Inc. Sport Supply Group, Inc.
Attention: Xxxx Xxxxxxxxxx Attention: Chief Executive Officer
0000 Xxxxxxxx Xxxxx 0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000 Farmers Xxxxxx, Xxxxx 00000
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.
14. Submission to Jurisdiction. All parties hereto hereby
irrevocably submit to the nonexclusive jurisdiction of the state and
federal courts of the State of Texas and agree and consent that service
of process may be made upon it in any proceeding arising out of this
Agreement by service of process as provided by Texas law. All parties
hereto hereby irrevocably waive, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this
Agreement brought in the District Court of Dallas County, State of
Texas, or in the United States District Court for the Northern District
of Texas, and hereby further irrevocably waive any claims that any such
suit, action or proceeding brought in any such court has been brought in
an inconvenient forum.
15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
16. Assignment. The rights and obligations of Employer may,
without the consent of Employee, be assigned by Employer to any parent,
subsidiary, Affiliate, or successor of Employer. Employee may not
assign any of his rights or obligations under this Agreement.
17. Entire Agreement. This Agreement (along with the Exhibits)
constitutes the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement and there are no
understandings or agreements relative to this Agreement which are not
fully expressed in this Agreement and the Exhibits. All prior or
contemporaneous agreements between the parties with respect to the
subject matter of this Agreement (including, without limitation, that
certain Employment Agreement dated as of January 1, 1997 by and between
Employer and Employee) being expressly superseded by this Agreement and
the Exhibits. No change, waiver, or discharge of this Agreement will be
valid unless in writing and signed by the party against which such
change, waiver, or discharge is to be enforced.
18. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to receive from the other its
reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Chairman of the Board
and Chief ExecutiveOfficer
EMPLOYEE:
/s/ Xxxx Xxxxxxxxxx
Xxxx Xxxxxxxxxx
