EXHIBIT 10.17
KEY EMPLOYEE AGREEMENT
To: Xxxxxx Xxxxxx
00 Xxxxxxxx Xxxx
Xxxxxx, Xxxx., 00000
The undersigned, Global Sports, Inc., a Delaware corporation (the
"Company"), with its principal place of business located at 000 X. Xxxxxxxxx
Xxxx, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000, hereby agrees with you as follows:
1. Position and Responsibilities.
1.1 You shall serve as Executive Vice President (or in such other executive
capacity as shall be designated by the Board of Directors or Executive Committee
of the Company and reasonably acceptable to you) and shall perform the duties
customarily associated with such capacity from time to time. In such capacity,
you will have direct responsibility for the sourcing, development, and
production of branded footwear merchandise produced under any trademarks owned
or licensed to the Company or any of its subsidiaries, as well as direct
responsibility for the Company's and its subsidiaries' distribution, operations
and customer service relating to branded footwear manufactured or licensed by
the Company or any of its subsidiaries.
1.2 You will devote your full time and your best efforts to the performance
of your duties hereunder and the business and affairs of the Company. You agree
to perform such executive duties as may be assigned to you by or on authority of
the Company's Board of Directors or Executive Committee from time to time. You
will report directly to the Company's Chief Executive Officer.
1.3 You will duly, punctually, and faithfully perform and observe any and
all rules and regulations which the Company may
or shall hereafter reasonably establish governing your conduct as an employee
and the conduct of its business.
2. Term of Employment.
2.1 The initial term of this Agreement shall be for the period of years set
forth on Exhibit A annexed hereto commencing with the date hereof. Thereafter,
this Agreement shall be automatically renewed for successive periods of one (1)
year, unless you or the Company shall give the other party not less than three
(3) months prior written notice of non-renewal. Your employment with the Company
may be terminated as provided in Sections 2.2 or 2.3.
2.2 The Company shall have the right to terminate your employment at any
time under this Agreement prior to the stated term in any of the following ways:
(a) on thirty (30) days prior written notice to you upon your disability
(disability shall be defined as your inability to perform duties under
this Agreement for an aggregate of ninety (90) days out of any one
hundred eighty (180) day period due to mental or physical disability);
(b) immediately without prior notice to you by the Company for "Cause", as
hereinafter defined;
(c) immediately without prior notice to you, upon your death or in the
event of the liquidation or reorganization of the Company under the
federal Bankruptcy Code or any state insolvency or bankruptcy law;
(d) at any time, without Cause, through December 31, 1999, provided the
Company shall be obligated to continue to pay you as severance pay for
six months after the effective date of your termination, a monthly
amount equal to your monthly Base Salary (the "Severance Payments").
For each year of employment after December 31, 1999, you shall be
entitled to an additional month of Severance Payments.
2.3 "Cause" for the purpose of Section 2 of this Agreement shall mean: (i)
the falseness or material inaccuracy of any of your warranties or
representations herein; (ii) your willful failure or refusal to comply with
explicit directives of the Board of Directors or Executive Committee or to
render the
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services required herein; (iii) fraud or embezzlement involving assets of the
Company, its customers, suppliers or affiliates or other misappropriation of the
Company's assets or funds; (iv) your conviction of a criminal felony offense;
(v) the willful breach or habitual neglect of your obligations under this
Agreement or your duties as an employee of the Company; (vi) habitual use of
drugs. The existence of Cause for termination of your employment by the Company
shall be subject, upon the written election by you or the Company, to binding
arbitration as provided in Section 9 hereof. The cost of arbitration, exclusive
of the cost of each party's legal representation (which, except as hereinafter
otherwise provided, shall be borne by the party incurring the expense), shall be
borne by the instigating party; provided, however, that the arbitrators' award
may require either party to reimburse the other for the reasonable cost of legal
representation in the arbitration proceedings.
Further, any dispute, controversy, or claim arising out of, in connection
with, or in relation to this definition of "Cause" shall be settled by
arbitration as provided in Section 9 hereof. Any award or determination shall be
final, binding, and conclusive upon the parties, and a judgment rendered may be
entered in any court having jurisdiction thereof.
2.4 If your employment is terminated because of your death, all obligations
of the Company hereunder shall cease, except with respect to amounts and
obligations accrued to you through the thirtieth day after which your death has
occurred.
If your employment is terminated by the Company for any other reason, all
obligations of the Company (except with respect to amounts and obligations
accrued to you prior to the date of termination) shall cease.
3. Compensation.
You shall receive the compensation and benefits set forth on Exhibit "A"
attached hereto ("Compensation") for all services to be rendered by you
hereunder and for your transfer of property rights, if any, pursuant to an
agreement relating to proprietary information and inventions of even date
herewith attached hereto as Exhibit "C" between you and the Company (the
"Proprietary Information Agreement").
4. Other Activities During Employment.
4.1 Except for any outside directorships currently held by you as listed on
Exhibit "B" attached hereto, and except with the prior written consent of a
disinterested majority of the Company's Board of Directors, which consent will
not be unreasonably withheld, you will not, during the term of this Agreement,
undertake or engage in any other employment,
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occupation or business enterprise other than one in which you are an inactive
investor.
4.2 You hereby agree that, except as disclosed on Exhibit "B" attached
hereto, during your employment hereunder, you will not, directly or indirectly,
engage (i) individually, (ii) as an officer, (iii) as a director, (iv) as an
employee, (v) as a consultant, (vi) as an advisor, (vii) as an agent (whether a
salesperson or otherwise), (viii) as a broker, or (ix) as a partner,
co-venturer, stockholder, or other proprietor owning directly or indirectly more
than five percent (5%) interest in any firm, corporation, partnership, trust,
association, or other organization which is engaged in the planning, research,
development, production, manufacture, marketing, sales, or distribution of
athletic footwear, rugged outdoor footwear, sportswear, licensed products,
related products, equipment, or services or any other line of business engaged
in or under demonstrable development by the Company (such firm, corporation,
partnership, trust, association, or other organization being hereinafter
referred to as a "Prohibited Enterprise"). Except as may be shown on Exhibit "B"
attached hereto, you hereby represent that you are not engaged in any of the
foregoing capacities (i) through (ix) in any Prohibited Enterprise.
5. Former Employers.
5.1 You represent and warrant that your employment by the Company will not
conflict with and will not be constrained by any prior or current employment,
consulting agreement or relationship whether oral or written. You represent and
warrant that you do not possess confidential information arising out of any such
employment, consulting agreement or relationship which, in your best judgment,
would be utilized in connection with your employment by the Company in the
absence of Section 5.2.
5.2 If, in spite of the second sentence of Section 5.1, you should find
that confidential information belonging to any other person or entity might be
usable in connection with the Company's business, you will not intentionally
disclose to the Company or use on behalf of the Company any confidential
information belonging to any of your former employers; but during your
employment by the Company you will use in the performance of your duties all
information which is generally known and used by persons with training and
experience comparable to your own all information which is common knowledge in
the industry or otherwise legally in the public domain.
6. Proprietary Information.
You agree to execute, deliver and be bound by the provisions of the
Proprietary Information Agreement attached hereto as Exhibit "C".
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7. Post-Employment Activities.
7.1 For a period of six (6) months after the termination or expiration, for
any reason, of your employment with the Company hereunder, absent the Board of
Directors' prior written approval, you will not directly or indirectly engage in
activities similar to those described in Section 4.2, nor render services
similar or reasonably related to those which you shall have rendered hereunder
to, any person or entity whether now existing or hereafter established which
directly or indirectly competes with (or proposes or plans to compete with) the
Company ("Direct Competitor") in the sale of athletic footwear, rugged outdoor
footwear, sportswear, licensed products, and related products and services,
whether with respect to merchandise manufactured by the Company for resale or
purchased by the Company as "closeout" merchandise for resale. Nor shall you
entice, induce or encourage any of the Company's other employees to engage in
any activity which, were it done by you, would violate any provision of the
Proprietary Information Agreement and nor shall you entice, induce or encourage
any of the Company's other employees to engage in any activity which, were it
done by you, would violate any provision of the Proprietary Information
Agreement or this Section 7. As used in this Agreement, the term "any line of
business engaged in or under demonstrable development by the Company" shall be
applied as at the date of termination of your employment, or, if later, as at
the date of termination of any post-employment consultation.
7.2 For a period of six (6) months after the termination of your employment
with the Company, the provisions of Section 4.2 shall be applicable to you and
you shall comply therewith.
7.3 No provision of this Agreement shall be construed to preclude you from
performing the same services which the Company hereby retains you to perform for
any person or entity which is not a Direct Competitor of the Company upon the
expiration or termination of your employment (or any post-employment
consultation) so long as you do not thereby violate any term of this Agreement
or the Proprietary Information Agreement.
8. Remedies.
Your obligations under the Proprietary Information Agreement and the
provisions of Sections 4.2, 7, 8, 9 and 11 of this Agreement shall survive the
expiration or termination of your employment (whether through your resignation
or otherwise) with the Company. You acknowledge that a remedy at law for any
reach or threatened breach by you of the provisions of the Proprietary
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Information Agreement or Section 4 or 7 hereof would be inadequate and you
therefore agree that the Company shall be entitled to such injunctive relief in
case of any such breach or threatened breach.
9. Arbitration.
Any dispute concerning this Agreement including, but not limited to, its
existence, validity, interpretation, performance or non-performance, arising
before or after termination or expiration of this Agreement, shall be settled by
a single arbitrator in Philadelphia, Pennsylvania, in accordance with the
expedited procedures of the commercial rules then in effect of the American
Arbitration Association. Judgment upon any award may be entered in the highest
court, state or federal, having jurisdiction. The cost of such arbitration shall
be borne equally between the parties thereto unless otherwise determined by such
arbitration panel.
10. Assignment.
This Agreement and the rights and obligations of the parties hereto shall
bind and inure to the benefit of any successor or successors of the Company by
reorganization, merger or consolidation and any assignee of all or substantially
all of its business and properties, but, except as to any such successor or
assignee of the Company, neither this Agreement nor any rights or benefits
hereunder may be assigned by the Company or by you, except by operation of law
or by a further written agreement by the parties hereto.
11. Interpretation.
IT IS THE INTENT OF THE PARTIES THAT in case any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. MOREOVER, IT IS THE INTENT OF THE
PARTIES THAT if any one or more of the provisions contained in this Agreement is
or becomes or is deemed invalid, illegal or unenforceable or in case any shall
for any reason be held to be excessively broad as to duration, geographical
scope, activity or subject, such provision shall be construed by amending,
limiting and/or reducing it to conform to applicable laws so as to be valid and
enforceable or, if it cannot be so amended without materially altering the
intention of the parties, it shall be stricken and the remainder of this
Agreement shall remain in full force and effect.
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12. Notices.
Any notice which the Company is required to or may desire to give you shall
be given by registered or certified mail, return receipt requested, addressed to
you at your address of record with the Company, or at such other place as you
may from time to time designate in writing. Any notice which you are required or
may desire to give to the Company hereunder shall be given by registered or
certified mail, return receipt requested, addressed to the Company at its
principal office, or at such other office as the Company may from time to time
designate in writing with a copy to Xxxxx X. Xxxxxx, Esquire, Xxxxx Xxxxx Xxxxxx
& Xxxxxxxxx, The Bellevue, Sixth Floor, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000.
13. Waivers.
No waiver of any right under this Agreement shall be deemed effective
unless contained in a writing signed by the party charged with such waiver, and
no waiver of any right arising from any reach or failure to perform shall be
deemed to be a waiver of any future such right or of any other right arising
under this Agreement.
14. Complete Agreement; Amendments.
The foregoing, including Exhibits "A", "B", "C" and "D" attached hereto, is
the entire agreement of the parties with respect to the subject matter hereof,
superseding any previous oral or written communications, representations,
understandings, or agreements with the Company or any officer or representative
thereof. This Agreement may be amended or modified or certain provisions waived
only by a written instrument signed by the parties hereto, upon authorization of
the Company's Board of Directors.
15. Headings.
The headings of the Sections contained in this Agreement are inserted for
convenience and reference only and in no way define, limit, extend or describe
the scope of this Agreement, the intent of any provisions hereof, and shall not
be deemed to constitute a part hereof nor to affect the meaning of this
Agreement in any way.
16. Counterparts.
This Agreement may be signed in two counterparts, each of which shall be
deemed an original and both of which shall together constitute one agreement.
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17. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
If you are in agreement with the foregoing, please sign your name below and also
at the bottom of the Proprietary Information Agreement, whereupon both
Agreements shall become binding in accordance with their terms. Please then
return this Agreement to the Company. (You may retain for your records the
accompanying counterpart of this Agreement enclosed herewith).
Very truly yours,
GLOBAL SPORTS, INC.
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
Accepted and Agreed:
/s/ Xxxxxx Xxxxxx
-----------------------
Xxxxxx Xxxxxx
January 1, 1999 - DATE
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EXHIBIT "A"
EMPLOYMENT TERM, COMPENSATION AND BENEFITS
OF
XXXXXX XXXXXX, EXECUTIVE VICE PRESIDENT
1. Term.
The term of this Agreement to which this Exhibit "A" is annexed and
incorporated shall commence on January 4, 1999 and terminate on December 31,
2003, unless renewed in accordance with Section 2.1 of the agreement or
terminated prior thereto in accordance with Section 2.2 or 2.3 of the Agreement.
2. Compensation.
a. Base Salary. During the term of this Agreement you will be paid an
annual Base Salary based upon the following schedule:
PERIOD ANNUAL BASE SALARY
------ ------------------
Execution of Agreement through
December 31, 1999 $200,000.00*
January 1, 2000 through
December 31, 2000 $250,000.00
January 1, 2001 through
December 31, 2001 $250,000.00
January 1, 2002 through
December 31, 2002 $250,000.00
January 1, 2003 through
December 31, 2003 $250,000.00
b. Bonuses.
1) Execution Bonus- In consideration for your entering into this
agreement and commencing work hereunder, the Company shall pay
you a bonus during 1999 of fifty thousand dollars ($50,000.00).
This bonus shall be earned upon your commencement of employment
hereunder and shall be paid to you bi-weekly in equal
installments in 1999.
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2) Additional Bonus- Commencing with the Company's performance in
the year 2000, and continuing through the remaining term of this
Agreement, you will have an opportunity to earn bonuses through
each of the following programs:
a) Up to 15% of your Base Salary through the Company achieving
predetermined goals; and
b) up to an additional 15% of your Base Salary through you,
individually, achieving predetermined mutually agreed upon
objective goals.
Both the Company goals and your personal goals will be established by the
Company's Compensation Committee three months prior to the commencement of the
applicable bonus period.
3) Bonus Based Upon Acquisition - If the Company in 1999 acquires an
existing business which adds at least $50,000,000.00 to the
Company's 1999 annual revenues, you will have an opportunity to
earn an additional bonus based upon achievement of the following
objectives:
a) Up to 15% of your 1999 Base Salary & Executive bonus total
based upon (1) the Company meeting or exceeding its internal
finalized business plan for the year, and (2) meeting or
exceeding analysts' consensus quarterly and annual estimates
for the Company's 1999 sales and net profits; and
b) Up to 15% of your 1999 Base Salary & Executive bonus total
based upon personal objectives for you as determined by the
Company's chief executive officer predicated on the creation
and functionality of the total product development, sourcing
and production area as well as all other contributions to
the Company and its senior management. Such additional
objectives will be established by the Company's chief
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executive officer within thirty days after completion of
such an acquisition.
All determinations as to meeting objective standards for bonuses shall be
made solely by the Company's regularly retained certified public accountants
whose determinations shall be final, binding upon all parties and not subject to
any appeal.
c. All Base Salary shall be payable in accordance with the Company's
payroll policies provided that upon execution of this Agreement.
3. Vacation.
You shall be paid for and be entitled to all legal and religious holidays,
and two (2) weeks paid vacation per annum commencing in the first year of this
Agreement; provided however, you shall not take two weeks vacation
consecutively. All vacation time shall be earned on a quarterly basis. You shall
arrange for vacations in advance at such time or times as shall be mutually
agreeable to you and the Company. You shall be entitled to carry forward into
the subsequent year up to one (1) week of unused vacation time. You may not
receive pay in lieu of vacation.
4. Insurance and Benefits.
The Company, at its expense, shall provide you with the following benefits
in the same amounts and manner as provided to the members of the Company's
senior management:
- health insurance for you and your dependents
- long term disability insurance
- term life insurance
- participation in the Company's 401K Plan
In addition, the Company shall provide you with the following other
benefits at the Company's expense:
- $1000.00 monthly automobile allowance which includes your
automobile insurance and maintenance/repair expenses
- cell phone and cell phone account
- standard health club membership
- travel to the Far East in business class
- memberships, publications and conferences directly related to
your expertise
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5. Expenses
The Company shall reimburse you promptly for all reasonable and ordinary
business and out-of-pocket expenses incurred by you in connection with the
Company's business and in the scope of your employment hereunder, as approved by
the Company, including, without limitation, reasonable and necessary travel,
lodging, entertainment and meals incurred by you during the term of this
Agreement, provided the expenses are incurred in furtherance of the Company's
business and at the request of the Company. You agree to keep and maintain
records of the aforesaid expenses as may be requested by the Company and to
account to the Company for the expenses prior to reimbursement.
6. Stock Options and Stock Awards
Pursuant to the terms of the Company's 1996 Equity Incentive Plan ("Plan"),
you will be granted the following awards:
6.1 You will be granted five year options (such options are intended to be
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended) to purchase eighty thousand (80,000) shares of the
Company's common stock at an exercise price equal to the fair market value of
the underlying common stock on the date of the commencement of your employment,
of which sixteen thousand (16,000) shares shall vest on each of December 31,
1999, December 31, 2000, December 31, 2001, December 31, 2002 and December 31,
2003.
6.2 Simultaneous herewith, the Company shall issue to you a Restricted
Stock Award to purchase ten thousand (10,000) shares of the Company's common
stock at a price of one cent per share ($.01). Such stock shall be issued
pursuant to Rule 144 and may only be sold or transferred by you in accordance
therewith and in no event prior to two years from the date hereof. In addition,
should your employment be terminated, voluntarily prior to January 4, 2001, then
you shall resell the stock to the Company at the price paid by you therefor.
6.3 Simultaneous herewith, the Company also grants to you a Deferred Stock
Award to purchase an additional ten thousand (10,000) shares of the Company's
common stock, at a price of $3.58 per share for a period of thirty days after
the complete execution of this Agreement by both parties. Such stock shall also
be subject to Rule 144 and may only be sold or transferred in accordance
therewith. If you shall exercise this option, such stock shall not be subject to
any repurchase rights by the Company.
The complete terms and conditions of these Awards shall be set forth in an
Option Grant Letter ("Option Grant Letter") to be
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delivered to you simultaneous herewith. Any conflict between the terms of the
Option Grant Letter and this Agreement, shall be governed by the Option Grant
Letter.
In the event of the termination of your employment caused by your resignation,
your dismissal for cause or without cause, your disability or your death, or in
the event of a change in control as defined in Section 6.3 (b) of the Plan, your
rights in the options, Restricted Stock Award and Deferred Stock Award shall be
as set forth in Article 6 of the Plan.
7. Relocation and Interim Housing Allowance
You agree to establish your residency in the metropolitan Philadelphia,
Pennsylvania area within six months of the date hereof. Upon presentation of
acceptable proof of payment, the Company will reimburse you for the following
costs associated with your relocation, not to exceed $60,000.00 ("Relocation
Allowance"):
a) interim housing; and
b) commission on the sale of your present home in
Massachusetts; and
c) moving expenses; and
d) interim personal travel to and from Massachusetts, including
your wife's travel to look for housing;and
e) transfer tax on the sale of your present home and
acquisition of your new home.
If you are required by the Internal Revenue Code to report any portion of the
Relocation Allocation as income, the Company will, prior to the date on which
any such tax must be paid or withheld, make an additional lump-sum payment (the
"gross-up payment") to you. The gross-up payment will be sufficient, after
giving effect to all federal, state and other taxes and charges (including
interest and penalties, if any) due as a result of the gross-up payment, to make
Employee whole for all taxes (including withholding taxes) and any associated
interest and penalties imposed.
8. Change of Control Agreement
Simultaneous herewith, the parties shall enter into the Change of Control
Agreement in the form attached hereto as Exhibit "D".
(THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK)
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EXHIBIT"B"
OUTSIDE EMPLOYMENTS AND DIRECTORSHIPS
OF
XXXXXX XXXXXX
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EXHIBIT "C"
--------------------------------------------------------------------------------
PROPRIETARY INFORMATION AGREEMENT
--------------------------------------------------------------------------------
To: Global Sports, Inc.
000 Xxxxx Xxxxxxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
The undersigned, in consideration of and as a condition of my employment or
continued employment by you and/or by companies which you own, control, or are
affiliated with or their successors in business (collectively, the "Company"),
hereby agrees as follows:
1. Confidentiality.
I agree to keep confidential, except as the Company may otherwise consent
in writing, and, except for the Company's benefit, not to disclose or make any
use of at any time either during or subsequent to my employment, trade secrets
and confidential information, knowledge, data or other information of the
Company relating to products, processes, know-how, techniques, methods, designs,
formulas, test data, customer lists, business plans, marketing plans and
strategies, pricing strategies, or other subject matter pertaining to any
business of the Company or any of its affiliates, which I may produce, obtain,
or otherwise acquire during the course of my employment, except as herein
provided. I further agree not to deliver, reproduce or in any way allow any such
trade secrets, confidential information, knowledge, data or other information,
or any documentation relating thereto, to be delivered to or used by any third
parties without specific direction or consent of a duly authorized
representative of the Company.
2. Conflicting Employment; Return of Confidential Material.
I agree that during my employment with the Company I will not engage in any
other employment, occupation, consulting or other activity relating to the
business in which the Company is now or may hereafter become engaged, or which
would otherwise conflict with my obligations to the Company. In the event my
employment with the Company terminates for any reason whatsoever, I agree to
promptly surrender and deliver to the Company all records, materials, equipment,
drawings, computer disks,
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documents and data of which I may obtain or produce during the course of my
employment, and I will not take with me any description containing or pertaining
to any confidential information, knowledge or data of the Company which I may
produce or obtain during the course of my employment.
3. Trade Secrets of Others.
I represent that my performance of all the terms of this Agreement and as
an employee of the Company does not and will not breach any agreement to keep
confidential proprietary information, knowledge or data acquired by me in
confidence or in trust prior to my employment with the Company, and I will not
disclose to the Company, or induce the Company to use, any confidential or
proprietary information or material belonging to any previous employer or
others. I agree not to enter into any agreement either written or oral in
conflict herewith.
4. Modification.
I agree that any subsequent change or changes in my employment duties,
salary or compensation or, if applicable, in any Employment Agreement between
the Company and me, shall not affect the validity or scope of this Agreement.
5. Arbitration.
Any dispute concerning this Agreement including, but not limited to, its
existence, validity, interpretation, performance or non-performance, arising
before or after termination or expiration of this Agreement, shall be settled by
a single arbitrator in Philadelphia, Pennsylvania, in accordance with the
expedited procedures of the commercial rules then in effect of the American
Arbitration Association. Judgment upon any award may be entered in the highest
court, state or federal, having jurisdiction. The cost of such arbitration shall
be borne equally between the parties thereto unless otherwise determined by such
arbitration panel.
6. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives and successors.
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7. Interpretation.
IT IS THE INTENT OF THE PARTIES THAT in case any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. MOREOVER, IT IS THE INTENT OF THE
PARTIES THAT if any provision of this Agreement is or becomes or is deemed
invalid, illegal or unenforceable or in case any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, such provision shall be
construed by amending, limiting and/or reducing it to conform to applicable laws
so as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken and the
remainder of this Agreement shall remain in full force and effect.
8. Waivers.
No waiver of any right under this Agreement shall be deemed effective
unless contained in a writing signed by the party charged with such waiver, and
no waiver of any right arising from any breach or failure to perform shall be
deemed to be a waiver of any future such right or of any other right arising
under this Agreement.
9. Entire Agreement; Modification.
This Agreement constitutes the entire agreement between the parties and
supersedes any prior oral or written communications, representations,
understandings or agreements concerning the subject matter hereof with the
Company or any officer or representative thereof. This Agreement may be amended,
modified, or certain provisions waived only by a written instrument signed by
the parties hereto, upon authorization of the Company's Board of Directors.
10. Headings.
The headings of the Sections contained in this Agreement are inserted for
convenience and reference only and in no way define, limit, extend or describe
the scope of this Agreement, the intent of any provisions hereof, and shall not
be deemed to constitute a part hereof nor to affect the meaning of this
Agreement in any way.
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11. Counterparts.
This Agreement may be signed in two counterparts, each of which shall be
deemed an original and both of which shall together constitute one agreement.
12. Governing Law.
This Agreement shall be governed and construed in accordance with the laws
of the Commonwealth of Pennsylvania.
13. Notices.
All notices, requests, demands and communications which are or may be
required to be given hereunder shall be deemed given if and when sent by
registered or certified mail, return receipt requested, postage prepaid, to the
following addresses:
If to the Company: GLOBAL SPORTS, INC.
000 Xxxxx Xxxxxxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
Attention: President
With a copy to: Xxxxx X. Xxxxxx, Esquire
Xxxxx Xxxxx Xxxxxx & Xxxxxxxxx
The Bellevue, Sixth Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to Employee: Xxxxxx Xxxxxx
00 Xxxxxxxx Xxxx
Xxxxxx, Xxxx.,00000
EMPLOYEE:
January 1, 1999 /s/ Xxxxxx Xxxxxx
----------------------- ------------------------------
DATE Xxxxxx Xxxxxx
Accepted and Agreed:
GLOBAL SPORTS, INC.
By: /s/ Xxxxxxx Xxxxx 1/9/99
------------------------------ -----------------------
Xxxxxxx Xxxxx DATE
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EXHIBIT"D"
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made this 1st day of January, 1999, by and between Xxxxxx Xxxxxx
("Executive") and Global Sports, Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders for the
Company to agree to provide benefits under circumstances described below to
Executive; and
WHEREAS, the Board recognizes that the possibility of a change of control
of the Company, followed by a termination of the Executive's employment or a
reduction in his responsibility or compensation, is unsettling to the Executive
and wishes to make arrangements at this time to help assure his continuing
dedication to his duties to the Company and its shareholders notwithstanding any
attempts by outside parties to gain control of the Company; and
WHEREAS, the Board believes it important, should the Company receive
proposals from outside parties, to enable the Executive, without being
distracted by the uncertainties of his own employment situation, to perform his
regular duties.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. In the event that any individual, corporation, partnership, company, or
other entity (a "Person"), which term shall include a "group" (within the
meaning of section 13(d) of the Securities Exchange Act of 1934 (the
"Act")), begins a tender or exchange offer, circulates a proxy to the
Company's shareholders, or takes other steps to effect a "Change of
Control" (as defined in paragraph 3 below), Executive agrees that he will
not voluntarily leave the employ of the Company and will render the
services contemplated in the recitals to this Agreement until such Person
has terminated the efforts to effect a Change of Control or until a Change
of Control has occurred.
2. If, within twenty-four (24) months following a Change of Control,
Executive's employment with the Company terminates
D - 1
other than as a result of the death, total disability or retirement of the
Executive at or after his normal retirement date, (i) by the Company other
than the "Cause" (as defined in paragraph 4 below), or (ii) by Executive
for "Good Reason" (as defined in paragraph 4 below), then:
a. The Company will pay to Executive within thirty (30) days of such
termination of employment a lump-sum cash payment equal to 300% of the
aggregate of (i) his then-current annual base salary (or, if his base
salary has been reduced at any time after the Change of Control, his
base salary in effect prior to the reduction), (ii) his target bonus
for the then-current year or, if higher, his bonus for the most recent
calendar year ended before the Change of Control, (iii) the amount of
his then-current annual automobile allowance and (iv) the annual cost
of life insurance then furnished to him by the Company.
b. All of Executive's outstanding stock options, restricted shares and
other similar incentive interests and rights will become immediately
and fully vested and exercisable.
c. Executive will be treated for purposes of the Company's Supplemental
Executive Retirement Plan (the "SERP"), but only if a SERP should
exist at the time of the termination of the Executive's employment, as
having three additional Years of Continuous Service. The Company will,
within thirty (30) days of his termination, pay to him, in a single
lump-sum cash payment, the present value of his benefit under the
SERP. Present value will be determined by applying the "applicable
mortality table" and "applicable interest rate" then in effect for
purposes of section 417(e)(3)(A) of the Internal Revenue Code or any
successor provision.
d. If, at the time of the termination of the Company's employment, the
Company then has in existence a Profit-Sharing and Retirement Plan and
an Excess Benefits Plan, the Company will pay to Executive, in a
single lump-sum cash payment, an amount equal to the difference, if
any, between (i) the total distribution that he receives following his
termination under the Company's Profit-Sharing and Retirement Plan and
its Excess Benefits Plan and (ii) the total distribution that he would
have received under such plans had he accumulated three (3) additional
Years of Service for Vesting prior to termination. The payment will be
made at the same time that he receives his distribution from those
plans.
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e. Executive, together with his dependents, will continue following such
termination of employment to participate fully, with no contribution
to the cost required of him or them, in all accident and health plans
maintained or sponsored by the Company immediately prior to the Change
of Control, or receive substantially the equivalent coverage (or the
full value thereof in cash) from the Company, until the third
anniversary of such termination.
f. The Company will promptly reimburse Executive for any and all legal
fees and expenses incurred by him as a result of such termination of
employment, including without limitation, all fees and expenses
incurred in connection with efforts to enforce the provisions of this
Agreement (provided such efforts result in Executive's recovery of any
sum from the Company, whether through court award or settlement).
3. A Change of Control will occur for purposes of this Agreement if (i) any
Person who does not currently own directly or indirectly ten (10%) percent
or more of the combined voting power of the Company's outstanding
securities becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act) of securities of the Company representing more than thirty (30%)
percent (or, if higher, the aggregate percentage of the combined voting
power of the Company's then-outstanding securities held by or for the
benefit of Xxxxxxx Xxxxx and his family) of the combined voting power of
the Company's then-outstanding securities, (ii) there is a change of
control of the Company of a kind which would be required to be reported
under Item 6(e) of Schedule 14 of Regulation 14 promulgated under the Act
(or a similar item in a similar schedule or form), whether or not the
Company is then subject to such reporting requirement, (iii) the Company is
a party to a merger, consolidation, sale of assets or other reorganization,
or a proxy contest, as a consequence of which members of the Board in
office immediately prior to such transaction or event constitute less than
a majority of the Board thereafter, or (iv) individuals who, at the date
hereof, constitute the Board (the "Continuing Directors") cease for any
reason to constitute a majority thereof, provided, however, that any
director who is not in office at the date hereof but whose election by the
Board or whose nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the date hereof or whose election or
nomination for election was previously so approved shall be deemed to be a
Continuing Director for purposes of this Agreement.
D - 3
Notwithstanding the foregoing provisions of this paragraph 3, a "Change of
Control" will not be deemed to have occurred solely because of (i) the
acquisition of securities of the Company (or any reporting requirement
under the Act relating thereto) by an employment benefit plan maintained by
the Company for its employees or (ii) the occurrence of a leveraged buy-out
or recapitalization of the Company in which Executive participates as an
equity investor.
4. a. "Cause" means only: conviction of the Executive for a felony or a
crime involving moral turpitude.
b. "Good Reason" means any one or more of the following:
i. Failure by the Company to maintain Executive in the
positions, with the titles, that he held immediately prior
or the Change of Control or downgrading of his
responsibilities or authority. If, following the Change of
Control, the Company is part of a controlled group of
entities, Executive's responsibilities and authority will be
deemed for this purpose to have been reduced unless he is
given and retains the same responsibilities and authority
with the entity that controls the group as he held with the
Company immediately prior to the Change of Control.
ii. Reduction of Executive's base salary or failure in any year
to pay to him a bonus at least equal to his target bonus for
the year in which the Change of Control occurs.
iii. Material reduction in the health, disability or life
insurance benefits that the Company was providing Executive
immediately prior to the Change of Control.
iv. Failure by the Company to provide Executive with the
opportunity to participate in any executive compensation or
benefit plan or program that is then generally available to
other senior executives of the Company.
v. Relocation of Executive's principal place of business more
than 30 miles from its location immediately prior to the
Change of Control.
5. In the event that it is determined that any payment or benefit provided by
the Company to or for the benefit of
D - 4
Executive, either under this Agreement or otherwise, will be subject to the
excise tax imposed by section 4999 of the Internal Revenue Code or any
successor provision ("Section 4999"), the Company will, prior to the date
on which any amount of the excise tax must be paid or withheld, make an
additional lump-sum payment (the "gross-up payment") to Executive. The
gross-up payment will be sufficient, after giving effect to all federal,
state and other taxes and charges (including interest and penalties, if
any) with respect to the gross-up payment, to make Executive whole for all
taxes (including withholding taxes) and any associated interest and
penalties, imposed under or as a result of Section 4999.
Determinations under this Section 5 will be made by the Company's auditors
unless Executive has reasonable objections to the use of that firm, in
which case the determinations will be made by a comparable firm chosen by
Executive after consultation with the Company (the firm making the
determinations to be referred to as the "Firm"). The determinations of the
Firm will be binding upon the Company and Executive except as the
determinations are established in resolution (including by settlement) of a
controversy with the Internal Revenue Service to have been incorrect. All
fees and expenses of the Firm will be paid by the Company.
If the Internal Revenue Service asserts a claim that, if successful, would
require the Company to make a gross-up payment or an additional gross-up
payment, the Company and Executive will cooperate fully in resolving the
controversy with the Internal Revenue Service. The Company will make or
advance such gross-up payments as are necessary to prevent Executive from
having to bear the cost of payments made to the Internal Revenue Service in
the course of, or as a result of, the controversy. The Firm will determine
the amount of such gross-up payments or advances and will determine after
final resolution of the controversy whether any advances must be returned
by Executive to the Company. The Company will bear all expenses of the
controversy and will gross Executive up for any additional taxes that may
be imposed upon Executive as a result of its payment of such expenses.
6. If the Company is at any time before or after a Change of Control merged or
consolidated into or with any other corporation or other entity (whether or
not the Company is the surviving entity), or if substantially all of the
assets thereof are transferred to another corporation or other entity, the
provisions of this Agreement will be binding upon and inure to the benefit
of the corporation or other entity resulting from such merger or
consolidation or the
D - 5
acquirer of such assets, and this paragraph 6 will apply in the event of
any subsequent merger or consolidation or transfer of assets.
In the event of any merger, consolidation, or sale of assets described
above, nothing contained in this Agreement will detract from or otherwise
limit Executive's right to participate or privilege of participation in any
stock option or purchase plan or any bonus, profit sharing, pension, group
insurance, hospitalization, or other incentive or benefit plan or
arrangement which may be or become applicable to executives of the
corporation resulting from such merger or consolidation or the corporation
acquiring such assets of the Company.
In the event of any merger, consolidation or sale of assets described
above, references to the Company in this Agreement shall unless the context
suggests otherwise be deemed to include the entity resulting from such
merger or consolidation or the acquirer of such assets of the Company.
7. All payments required to be made by the Company hereunder to Executive or
his dependents, beneficiaries, or estate will be subject to the withholding
of such amounts relating to tax and/or other payroll deductions as may be
required by law.
8. There shall be no requirement on the part of the Executive to seek other
employment or otherwise mitigate damages in order to be entitled to the
full amount of any payments and benefits to which Executive is entitled
under this Agreement, and the amount of such payments and benefits shall
not be reduced by any compensation or benefits received by Executive from
other employment.
9. Nothing contained in this Agreement shall be construed as a contract of
employment between the Company and the Executive, or as a right of the
Executive to continue in the employ of the Company, or as a limitation of
the right of the Company to discharge the Executive with or without Cause;
the Executive may, subject to the terms and conditions of this Agreement,
have the right to receive upon termination of his employment the payments
and benefits provided in this Agreement and shall not be deemed to have
waived any rights he may have either at law or in equity in respect of such
discharge.
10. No amendment, change, or modification of this Agreement may be made except
in writing, signed by both parties. Payments made by the Company pursuant
to this Agreement shall be in lieu of payments and other benefits, if any,
to
D - 6
which Executive may be entitled under any other severance agreement or
severance plan of the Company.
The provisions of this Agreement shall be binding upon and shall inure to
the benefit of Executive, his executors, administrators, legal
representatives and assigns, and the Company and its successors.
The validity, interpretation, and effect of this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania.
The Company shall have no right of set-off or counterclaims, in respect of
any claim, debt, or obligation, against any payments to Executive, his
dependents, beneficiaries or estate provided for in this Agreement.
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.
No right or interest to or in any payments or benefits hereunder shall be
assignable by the Executive; provided, however, that this provision shall
no preclude him from designating one or more beneficiaries to receive any
amount that may be payable after his death and shall not preclude the legal
representative of his estate from assigning any right hereunder to the
person or persons entitled thereto under his will or, in the case of
intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate. The term "beneficiaries" as used in
this Agreement shall mean a beneficiary or beneficiaries so designated to
receive any such amount, or if no beneficiary has been so designated, the
legal representative of the Executive's estate.
No right, benefit, or interest hereunder, shall be subject to anticipation,
alienation, sale, assignment, encumbrance, charge, pledge, hypothecation,
or set-off in respect of any claim, debt, or obligation, or to execution,
attachment, levy, or similar process, or assignment by operation of law.
Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to
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D - 7
the full extent permitted by law, be null, void, and of no effect.
IN WITNESS WHEREOF, Global Sports, Inc. and Executive have each caused this
Agreement to be duly executed and delivered as of the date set forth above.
GLOBAL SPORTS, INC.
BY: /s/ Xxxxxxx Xxxxx
------------------------------------
Agreed: Xxxxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
----------------------------
XXXXXX XXXXXX
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