EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") dated October 18, 1997
is by and between Sport Supply Group, Inc., a Delaware corporation
("Employer"), and Xxxxxxxx X. Xxxxxx ("Employee").
RECITALS:
WHEREAS, Employer desires to retain the services of Employee, and
Employee desires to provide services to Employer in accordance with the
terms, conditions, and provisions of this Agreement; and
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 period commencing on October 18,
1997 (the "Effective Date") and expiring on March 31, 2000, except as
otherwise provided herein.
2. Duties. Employee will be employed as Chairman of the Board
and Chief Executive Officer of Employer, and in such capacity will
perform the normal duties associated with such positions and such other
reasonable duties as may be assigned from time to time by the Board of
Directors of Employer consistent with that of a Chairman of the Board
and Chief Executive Officer. Employer acknowledges that Employee
currently is serving as Chairman of the Board and Chief Executive
Officer to Xxxxxxx Radio Corp. ("Xxxxxxx"), and that Employee will
devote certain of his time, attention, and energies, not to exceed 50%
of his working time during the term of this Agreement, to such
responsibilities. During the term of this Agreement, Employee shall
devote his full time, attention, and energies (except for those devoted
to the business of Xxxxxxx as contemplated in the immediately preceding
sentence hereto) to the business of Employer 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 $250,000 (such initial rate as it may be adjusted upward from
time to time as provided by the Board of Directors of Employer, is
referred to herein as "Salary"). Employee's Salary will accrue and
be payable to Employee in accordance with the payroll practices of
Employer for senior executives in effect from time to time during
the term of this Agreement.
(b) Employee shall be entitled to receive an annual formula
bonus equal to an amount up to thirty percent (30%) of the Salary
based upon attainment of objectives identified in a business plan
for Employer adopted by the Board of Employer. At its sole
discretion the Board of Directors of Employer may develop such
other incentive compensation arrangements, including but not
limited to additional bonus incentives, as may be determined to be
appropriate for the conduct of Employer's business and Employee's
duties in connection therewith.
(c) All payments to Employee pursuant to this Agreement
will be subject to deduction and withholding authorized or required
by applicable law. Employee shall also be paid amounts as shall
equal the federal and state, if applicable, income taxes (i.e.,
gross-up for income taxes) which will be payable by Employee
relating to the reimbursement of expenses as set forth in Section 4
hereof.
4. Employee Benefits; Reimbursement of Expenses. During the term
of this Agreement, Employer shall provide such fringe benefits,
including paid sick leave, paid holidays, participation in health,
dental, and life insurance plans, and other employee benefit plans which
are regularly maintained by Employer for its senior executive officers
in accordance with the policies of Employer in effect from time to time.
Notwithstanding the foregoing, Employee shall be entitled to a minimum
of four (4) weeks of paid vacation each year of this Agreement. In
addition, during the term of this Agreement, Employer shall provide an
automobile to Employee while he is in Dallas, Texas and reimburse
Employee for the cost of liability and collision insurance on such
automobile and all gasoline purchases. Employer will also reimburse
Employee for his travel , entertainment, and other business expenses
incurred in connection with his employment under this Agreement in
accordance with the policies of Employer in effect from time to time.
5. Confidentiality.
(a) From the Effective Date of this Agreement and in
consideration for the promises made by Employee herein, including
promises made by Employee in Section 6 below, Employer promises and
agrees to provide Employee certain confidential information
consistent with the job duties of an individual in his position
including, without limitation, customer, supplier, product and
distributor lists, trade secrets, plans, manufacturing techniques,
sales, marketing and expansion strategies, financial records
(including business plans, financial statements, etc.), 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 (collectively ``Confidential Information '').
In consideration for Employer's promises herein, Employee
acknowledges and 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 received in strict confidence and will be
used only for the purposes of performing his duties pursuant to
this Agreement and that no such Confidential Information will
otherwise be used or disclosed by Employee during or after the term
of this Agreement without the prior written consent of Employer.
Employee acknowledges and agrees that upon termination of
Employee's employment hereunder for any reason, Employee will leave
and/or return all Confidential Information and other documents,
records, notebooks, customer lists, mailing lists, business
proposals, contracts, agreements, and other repositories containing
information concerning Employer or its financial condition or
business (including all copies thereof) in Employee's possession,
whether prepared by Employee or others, will remain with or be
returned to Employer. Notwithstanding the foregoing, this Section
shall be inoperative as to any portion of the Confidential
Information which (i) is or becomes generally available to the
public other than as a result of a disclosure by Employee or (ii)
becomes available to Employee on a non-confidential basis and not
in contravention of Employer's rights or applicable law from a
source (other than Employer) which Employee reasonably believes is
entitled to possess and disclose it.
(b) Employee acknowledges and agrees that all manuals,
drawings, blueprints, letters, notes, notebooks, financial records
(including, without limitation, budgets, business plans and
financial statements), reports, 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 activities or otherwise 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 or expiration of this Agreement.
6. Noncompetition. Employee covenants and agrees that, during
the period Employee is employed by Employer, and if Employee's
employment is terminated pursuant to Section 8(a) or Employee resigns
for any reason (other than as a result of a Constructive Discharge), for
a period of one year thereafter, Employee will not directly or
indirectly compete with Employer in the United States . For the purposes
of this Section 6, the following terms shall have the meanings indicated
below:
(a) The term "compete" shall mean, with respect to the
business of Employer, engaging in or attempting to engage in the
direct mail marketing with the use of a catalog of sports related
equipment to institutional customers or any other business which
generates more than 10% of Employer's revenues at the time of
termination, either alone or with any individual, partnership,
corporation, or association.
(b) The words "directly or indirectly" as they modify the
word "compete" shall mean: (i) acting as an agent,
representative, consultant, officer, director, or employee of any
entity or enterprise which is competing (as defined in this
Section 6) with the business of Employer; (ii)
participating in any such competing entity or enterprise as an
owner, partner, limited partner, joint venturer, creditor, or
stockholder (except as a stockholder holding less than a five
percent (5%) interest in a corporation whose shares are actively
traded on a regional or national securities exchange or in the
over-the-counter market); (iii) communicating to any such competing
entity or enterprise any competitive non-public information
concerning any past, present, or identified prospective client or
customer of, or supplier to, Employer; (iv) soliciting the
customers, distributors, dealers, or independent sales persons of
Employer or its Affiliates (as defined below) as of Employee's
termination date; or (v) recruiting, hiring, or assisting others in
recruiting or hiring (collectively referred to as "Recruiting
Activity") any person who is, or within the 12-month period
immediately preceding the date of any such Recruiting Activity was,
an employee of Employer or its Affiliates. For the purposes of
this Agreement, the term "Affiliates" shall mean all subsidiaries
of Employer and each entity in which Employer is an equity investor
(or was an equity investor within the 12-month period preceding the
date Affiliate status is determined) which controls, is controlled
by, or under common control with Employer.
(c) Employee understands and agrees that the scope of
this covenant by Employee contained in this Section is reasonable
as to time, area, and persons and is necessary to protect the
proprietary and legitimate business interest of the Employer, and
but for such covenant by Employee 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 consideration Employer has
agreed to provide Employee 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.
7. Injunctive Relief. If Employee breaches any of the provisions
of Sections 5 or 6 hereof, Employer shall be entitled to specific
performance, injunctive relief, or such other legal and/or equitable
remedies as may be appropriate. Nothing contained herein shall be
construed as prohibiting Employer from pursuing any other remedies
available to it for such breach of any of the terms and provisions of
this Agreement, nor limiting its right to the recovery of damages from
Employee or any other person or entity for the breach or violation of
any provision of this Agreement, whether such remedy be at law or in
equity.
8. Termination.
(a) Employer may terminate Employee's employment for Cause
(as defined herein). Notwithstanding the foregoing and with
respect to Section 8(g)(iv), Employer may terminate Employee's
employment for Cause only if such Cause is not cured within 10 days
following Employee's receipt of written notice thereof by Employer
to Employee. If Employee's employment is terminated for Cause,
Employee will be paid Salary to the date of such termination notice
and shall be paid Salary for all accrued but unused personal,
vacation, and sick days (less all amounts required to be withheld
or deducted therefrom and all undisputed amounts owed or due by
Employee to Employer).
(b) If Employer terminates Employee other than for Cause or
in the event of a Constructive Discharge of Employee (as
hereinafter defined) during the term hereof, Employer shall (i) pay
Employee his Salary through the stated term of this Agreement
(Employee shall also receive all accrued but unused personal,
vacation, and sick days and less all amounts required to be
withheld or deducted therefrom and all amounts owed or due by
Employee to Employer), and (ii) continue to provide Employee,
during the period through which his Salary will be paid, health
insurance with coverage no less than the coverage available during
such period to Employer's senior executive officers, and Employer
shall have no other obligation hereunder.
(c) If Employee terminates his employment with Employer other
than as a result of a Constructive Discharge and, if during the
term of this Agreement set forth in Section 1 Employer has not
materially breached any provision of this Agreement, Employee will
be paid only Salary as has been earned to the date of termination
and for all accrued but unused personal, vacation, and sick days
(less all amounts required to be withheld or deducted therefrom and
all amounts owed or due by Employee to Employer).
(d) If no other provision in this Section 8 is applicable and
if this Agreement terminates pursuant to the expiration of the term
set forth in Section 1, Employee will be paid only Salary as has
been earned to the date of termination and for all accrued but
unused personal, vacation, and sick days (less all amounts required
to be withheld or deducted therefrom and all amounts owed or due by
Employee to Employer).
(e) If Employee dies or is disabled, as determined by his
physician, so that he is unable to work for six consecutive months
during the term hereof, this Agreement will terminate, and Employer
will (i) pay to the estate of Employee, or Employee, as the case
may be, the Salary which would otherwise be payable to Employee up
to the end of the month in which his death or such six-month period
occurs and for all accrued but unused personal, vacation, and sick
days (less all amounts required to be withheld or deducted
therefrom and all amounts owed or due by Employee to Employer), and
(ii) provide to Employee's legal dependents (including his spouse)
and to Employee, in the case of such a disability, for a period of
at least two years after Employee's death or disability and at no
charge to such dependents or Employee, health and accident
insurance with coverage no less than the coverage available during
such time to Employer's senior executive officers. Notwithstanding
the foregoing, Employer's obligations under this Section shall be
reduced by the amounts obtained by Employee under any applicable
disability insurance policy.
(f) If this Agreement or the employment of Employee is
terminated, except as otherwise specifically set forth herein,
Employee will not be obligated to mitigate his damages nor the
amount of any payment provided for in this Agreement by seeking
other employment or otherwise, and the acceptance of employment
elsewhere after termination shall in no way reduce the amount of
Salary due hereunder.
(g) For the purposes of this Agreement, "Cause" shall mean
that Employee shall have committed:
(i) an intentional material act of fraud or embezzlement
in connection with his duties or in the course of his
employment with Employer;
(ii) an intentional wrongful material damage to property
of Employer;
(iii) an intentional wrongful disclosure of material
secret processes or material confidential information of
Employer; or
(iv) an intentional and continued failure to perform his
duties as Chairman of the Board and Chief Executive Officer
(other than any such failure resulting from incapacity due to
physical injury or illness or mental illness as such is
provided for in Section 9).
For purposes of this Agreement, no act or failure to act, on
the part of Employee, shall be deemed ``intentional'' unless
done, or omitted to be done, by the Employee in bad faith and
without reasonable belief that his action or omission was in
the best interest of the Employer.
(h) For the purposes of this Agreement, "Constructive
Discharge" means a change in office, title, or position from that
reasonably associated with being a Chief Executive Officer and
Chairman of the Board, other than a promotion; a change in
reporting of Employee to any person other than the Board of
Directors of Employer; a reduced Salary; a material diminution in
responsibilities; or any other material breach of this Agreement by
Employer.
(i) The provisions of this Section 8 shall survive the
termination of this Agreement.
9. Disability. If Employee is unable to perform his assigned
duties by reason of illness, injury, or incapacity (other than as a
result of abuse of drugs, alcohol, or other substances), he will be
entitled to receive such disability benefits as are provided by
Employer's disability policies for its other senior executive officers.
10. Binding Nature.
(a) Employer will require any successor and any corporation
or other legal person which is in control of such successor (as
"control" is defined in Regulation 230.405 or any successor rule or
regulation promulgated under the Securities Act of 1933, as
amended) to all or substantially all of the business and/or assets
of Employer (by purchase, merger, consolidation, or otherwise), by
agreement in form and substance reasonably satisfactory to
Employee, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that Employer would be
required to perform it if no such succession had taken place.
Failure of Employer to obtain such agreement prior to the
effectiveness of any such succession will be a material breach of
this Agreement by Employer. Notwithstanding the foregoing, any
such assumption shall not, in any way, affect or limit the
liability of the Employer under the terms of this Agreement or
release the Employer from any obligations hereunder. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or all or part of its
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.
(b) This Agreement and all the rights of Employee under this
Agreement will inure to the benefit of and will be enforceable by
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and
legatees.
(c) Except as set forth above, neither this Agreement, nor
any of the rights, interests or obligations hereunder shall be
assigned by either party hereto, whether by operation of law or
otherwise, without the prior written consent of the other party,
nor is this Agreement intended to confer upon any other person
other than the parties hereto any rights or remedies hereunder.
11 . 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 of the portion of the provision which
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 and/or reforming 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 which 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.
12 . 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.
13 . 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 which would require
the application of the law of any other 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 agree that the venue for any and all suits, actions
or proceedings arising out of or relating to this Agreement shall be
brought solely in a Court of competent jurisdiction sitting in Dallas,
Dallas County, Texas. All parties hereto hereby irrevocably waive, to
the fullest extent permitted by law, any objection which such party 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.
14 . 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: Xxxxxxxx X. Xxxxxx
20 Salisbury Road
Apt. A 0000
Xxxxxxx, XXX, Xxxx Xxxx
If to Employer: Sport Supply Group, Inc.
Attention: President
0000 Xxxxxxxx Xxxxx
Xxxxxxx 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.
15 . Attorneys' Fees. If any arbitration or civil action, whether
at law or in equity, is necessary to enforce or interpret any of the
terms of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, court costs, and other reasonable expenses
of litigation, in addition to any other relief to which such party may
be entitled.
16 . Arbitration. Any dispute arising under this Agreement shall
be submitted to arbitration in Dallas, Texas, in accordance with the
rules of the American Arbitration Association. The decision of the
arbitrator(s) will be binding, conclusive, and nonappealable.
17 . 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.
18 . Entire Agreement. This Agreement 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. All prior agreements between the parties with respect
to the subject matter of this Agreement, whether oral or written, are
expressly superseded by this Agreement. 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.
In addition, the parties hereto expressly acknowledge and agree that no
other agreement nor any breach of or default under any other agreement
shall have any effect on the rights and obligations of the parties
hereto, including, without limitation, under any employment or other
agreement between Employee and Xxxxxxx.
IN WITNESS WHEREOF, the parties of this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx,
President and
Chief Operating Officer
EMPLOYEE:
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
