EXHIBIT 10.14
EMPLOYMENT AGREEMENT
January 11, 2000
Xx. Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
The Sports Authority, Inc.
0000 Xxxxx Xxxxx Xxxx 0
Xx. Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter will confirm our understanding concerning your continued employment
with The Sports Authority, Inc. (the "Company").
1. The Company agrees to employ you as, and you agree to serve as, the Company's
Chief Executive Officer through December 31, 2001, subject to the terms of this
agreement.
2. If your employment with the Company is terminated by the Company other than
for Cause, or if your employment is terminated by death, and if paragraph 3 does
not apply, the Company will pay to you (or, in the case of death, your estate)
through December 31, 2001, a monthly fee equal to (a) one-twelfth of your
annualized base salary in effect on the date your employment is terminated, plus
(b) one-twelfth of the "on plan" bonus amount targeted for you for the fiscal
year during which your employment is terminated (to be paid on or about the 15th
day of each month). In addition, all of your unvested options to purchase
Company stock under the Company's stock option plans will vest upon the
termination of your employment.
3. If there is a Change in Control of the Company while you are employed by the
Company and if (i) your employment with the Company is terminated by the Company
other than for Cause, (ii) you terminate your employment with the Company for
Good Reason, or (iii) your employment is terminated by death, in any case within
a two-year period following such a Change in Control, the Company will pay to
you an amount equal to 2.99 times the sum of (i) your annual rate of base salary
at the time of termination or immediately prior to the Change in Control,
whichever base salary amount
is greater, and (ii) the "on plan" bonus amount targeted for you for the fiscal
year in which termination occurs or the fiscal year immediately prior to the
Change in Control, whichever bonus amount is greater. Such payment shall be made
within fifteen days after your termination.
4. If there is a Change in Control of the Company while you are employed by the
Company and if, at any time after one year after the Change in Control and
before December 31, 2001, (i) you are not the chief executive officer of (A) the
corporation or other entity (whether or not it is the Company) which is the
survivor of any merger or consolidation resulting from the Change in Control, if
such surviving corporation or entity is not more than 50% owned by any other
corporation or entity, or (B) the corporation or other entity which, as a result
of the Change in Control, owns more than 50% of the stock of the Company or the
corporation or entity which is the survivor of any merger or consolidation
resulting from the Change in Control, other than due to your resignation from
such position or your refusal to serve in such position, and (ii) you terminate
your employment with the Company or such other entity (other than under the
circumstances described in paragraph 3), the Company will pay to you through one
year after the last day of your employment a monthly fee equal to (a)
one-twelfth of your annualized base salary in effect on the date your employment
is terminated, plus (b) one-twelfth of the "on plan" bonus amount targeted for
the fiscal year in which termination occurs or the fiscal year immediately prior
to the Change in Control, whichever bonus amount is greater (to be paid on or
about the 15th day of each month).
5. (a) Termination by the Company for "Cause" means termination based on
(i) conduct which is a material violation of Company policy, as in effect
immediately before any Change in Control, or which is fraudulent or unlawful or
which materially interferes with your ability to perform your duties, (ii)
misconduct which damages or injures the Company or substantially damages the
Company's reputation, or (iii) gross negligence in the performance of, or
willful failure to perform, your duties and responsibilities.
(b) Termination by you for "Good Reason" means termination based on the
occurrence without your express written consent of any of the following: (i) a
significant diminution by the Company of your role with the Company or a
significant detrimental change in the nature and/or scope of your status with
the Company, other than for Cause, (ii) a reduction in your base salary, other
than for Cause and other than as part of an across-the-board reduction in
salaries of management personnel (including all Vice Presidents and above) of
less than 20%, (iii) a material diminution by the Company of benefits (taken as
a whole) provided to you immediately prior to the Change in Control, or (iv) the
relocation of the Company's principal executive offices to a location outside of
Broward County, Palm Beach County or Dade County, Florida or any requirement
that you be based anywhere other than the Company's principal executive offices.
(c) A "Change in Control" shall be deemed to have occurred if:
(i) the "beneficial ownership" (as defined in Rule l3d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
securities representing more than 50% of the combined voting power of the
Company is acquired by any "person" as defined in sections 13(d) and 14(d) of
the Exchange Act (other than the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company), or
(ii) the shareholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another corporation
or to sell or otherwise dispose of all or substantially all of its assets, or
(iii) during any period of three consecutive years,
individuals who at the beginning of such period were members of the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof (unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of
such period).
6. (a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for your benefit, whether paid or payable or distributed or
distributable pursuant to the terms of this agreement or otherwise (the
"Payment"), would constitute an "excess parachute payment" within the meaning of
Section 280G of the Code, you shall be paid an additional amount (the "Gross-Up
Payment") such that the net amount retained by you after deduction of any excise
tax imposed on you under Section 4999 of the Code , and any federal, state and
local income and employment tax and excise tax imposed upon the Gross-Up Payment
shall be equal to the Payment. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income tax and employment
taxes at the highest marginal rate of federal income and employment taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of your residence (or, if greater, the state and locality in which you
are required to file a nonresident income tax return with respect to the
Payment) on the Termination Date, net of the maximum reduction in federal income
taxes that may be obtained by you from the deduction of such state and local
taxes.
(b) All determinations to be made under this paragraph 6 shall be made
by the Company's independent public accountant immediately prior to the Change
of Control (the "Accounting Firm"), which firm shall provide its determinations
and any supporting calculations both to the Company and you within 10 days of
your termination. Any such determination by the Accounting Firm shall be binding
upon the Company and you. Within five days after the Accounting Firm's
determination, the Company shall pay (or cause to be paid) or distribute (or
cause to be distributed) to you, or for your benefit, such amounts as are then
due to you under this agreement.
(c) You shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after you know of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the thirty day period following the date on which you give such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies you
in writing prior to the expiration of such period that it desires to contest
such claim, you shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold you harmless, on an after-tax
basis, for any excise tax, income tax or employment tax, including interest and
penalties, with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this paragraph 6, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearing and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
you to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and you agree to prosecute such contest to a termination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided further,
however, that if the Company directs you to pay such claim and xxx for a refund
the Company shall advance the amount of such payment to you, on an interest-free
basis and shall indemnify and hold you harmless, on an after-tax basis, from any
excise tax, income tax or employment tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and provided further that any
extension of the statute of limitations relating to payment of taxes for your
taxable year with respect to which such contested amount is claimed to be due is
limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
you shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by you of an amount advanced by the Company
pursuant to this Section, you become entitled to receive any refund with respect
to such claim, you shall (subject to the Company's complying with the
requirements of this paragraph) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by you of an amount advanced by the
Company pursuant to this Section, a determination is made that you shall not be
entitled to any refund with respect to such claim and the Company does not
notify you in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
(e) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in this paragraph shall be borne solely by the
Company. The Company agrees to indemnify and hold harmless the Accounting Firm
of and from any and all claims, damages and expenses resulting from or relating
to its determinations pursuant to this paragraph, except for claims, damages or
expenses resulting from the gross negligence or willful misconduct of the
Accounting Firm.
7. In consideration of the obligations of the Company hereunder, you agree that
you shall not, for a period of one year from the termination of your employment
by you or the Company for any reason (or the later of one year from the
termination of your employment or December 31, 2001, if your employment is
terminated under paragraph 2), (a) directly or indirectly become an employee,
director, consultant or advisor of, or otherwise affiliated with, any retailer
of sporting goods, footwear or apparel with retail outlets in the United States
(unless the classes of products sold by such retailer constitute less than 10%
of the total sales by the Company and its licensees in the United States during
the fiscal year of the Company immediately preceding the year of such
termination), (b) directly or indirectly solicit or hire, or encourage the
solicitation or hiring of, any person who was an employee of the Company at any
time on or after the date of such termination (unless more than six months shall
have elapsed between the last day of such person's employment by the Company and
the first date of such solicitation or hiring), (c) disparage the name, business
reputation or business practices of the Company or any of its officers or
directors, or interfere with the Company's existing or prospective business
relationships, or (d) without the written consent of the Chief Executive Officer
of the Company, disclose to any person other than as required by law or court
order, any confidential information obtained by you while in the employ of the
Company, provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by you) or any specific information or type of
information generally not
considered confidential by persons engaged in the same business as the Company,
or information disclosed by the Company by any member of its Board of Directors
or any other officer thereof to a third party without restrictions on the
disclosure of such information.
You acknowledge that these restrictions are reasonable and necessary to protect
the Company's legitimate interests, that the Company would not have entered into
this agreement in the absence of such restrictions, and that any violation of
these restrictions will result in irreparable harm to the Company. You agree
that the Company shall be entitled to preliminary and permanent injunctive
relief, without the necessity of proving actual damages, as well as an equitable
accounting of all earnings, profits and other benefits arising from any
violation hereof, which rights shall be cumulative and in addition to any other
rights or remedies to which the Company may be entitled. You irrevocably and
unconditionally (i) agree that any legal proceeding arising out of this
paragraph may be brought in the United States District Court for the Southern
District of Florida, or if such court does not have jurisdiction or will not
accept jurisdiction, in any court of general jurisdiction in Broward County,
Florida, (ii) consent to the non-exclusive jurisdiction of such court in any
such proceeding, and (iii) waive any objection to the laying of venue of any
such proceeding in any such court. You also irrevocably and unconditionally
consent to the service of any process, pleadings, notices or other papers.
8. The payments provided hereunder shall constitute the exclusive payments due
you from, and the exclusive obligation of, the Company in the event of any
termination of your employment, except for any benefits which may be due you in
normal course under any employee or executive benefit plan of the Company which
provides benefits after termination of employment, other than a severance pay
plan. You shall not be required to mitigate the amount of any payment or benefit
provided for in this agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for herein be reduced by any
compensation earned by other employment or otherwise. The payments hereunder may
not be transferred, assigned or encumbered in any manner, either voluntarily or
involuntarily. In the event of your death, any payments then or thereafter due
hereunder will be made to your estate.
9. It is the intent of the parties that you not be required to incur any
expenses associated with the enforcement of your right to receive payments due
under paragraph 3 or paragraph 4 of this agreement by arbitration, litigation or
other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to you. Accordingly, the
Company shall pay you on demand the amount necessary to reimburse you in full
for all reasonable expenses (including all attorneys' fees and legal expenses)
incurred by you in enforcing the obligations of the Company to make the payments
due under paragraph 3 or paragraph 4 of this agreement.
10. The obligation to make the payments hereunder is conditioned upon your
execution and delivery to the Company at the time of the termination of your
employment of a release, in form satisfactory to the Company, of any claims you
may
have as a result of your employment or termination of employment under any
federal, state or local law, excluding any claim for benefits which may be due
you in normal course under any employee or executive benefit plan of the Company
which provides benefits after termination of employment, other than a severance
pay plan, and excluding any claims for reimbursement for liabilities, costs or
expenses incurred in any action against you within the scope of your employment
by the Company and for which you would have been indemnified pursuant to the
bylaws of the Company as of the date hereof (in which case you shall notify the
Company in writing within ten days after receiving service of process as to the
commencement of the action and give the Company the right to control the defense
of any such action), unless later limited in accordance with applicable law.
11. The Company shall require any successor or successors (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to you, to acknowledge expressly that this
agreement is binding upon and enforceable against the Company in accordance with
the terms hereof, and in the same manner and to the same extent that the Company
would be required to perform if no such succession or successions had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this agreement. As
used in this agreement, the Company shall mean the Company as hereinbefore
defined and any such successor or successors to its business and/or assets,
jointly and severally.
12. All payments hereunder shall be subject to applicable tax withholding and
deductions.
13. This agreement sets forth the entire understanding between you and the
Company concerning your relationship with the Company and supersedes all prior
agreements, written or oral, express or implied, between you and the Company as
to such subject matter. This agreement may not be amended, nor may any provision
hereof be modified or waived, except by an instrument in writing duly signed by
you and the Company.
14. If any provision of this agreement, or any application thereof to any
circumstances, is invalid, in whole or in part, such provision or application
shall to that extent be severable and shall not affect other provisions or
applications of this agreement.
15. This agreement shall be governed by and interpreted under the laws of the
State of Delaware without giving effect to any conflict of laws provisions.
Please indicate your agreement by signing below and retain one copy for you
records.
Sincerely,
THE SPORTS AUTHORITY, INC.
By:
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Xxxxxxx Xxxxx
Chair, Compensation Committee
Agreed:
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Xxxxxx X. Xxxxxx
