EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of
March 24, 1998, by and between Athletic Training Equipment Company, Inc.,
a Delaware corporation ("Employer") and ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇ ("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;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Term. Subject to the terms and conditions set forth in this
Agreement, Employer hereby employs Employee, and Employee hereby accepts
such employment from Employer, for a three year period commencing on
March 24, 1998 (the "Effective Date") and expiring on March 23, 2001,
except as otherwise provided herein.
2. Duties. Employee will be employed as the President of
Employer, and in such capacity will perform the normal duties associated
with such position and/or such other reasonable duties as may be
assigned from time to time by the Board of Directors or Chairman of the
Board of Employer. During the term of this Agreement, Employee shall
devote his full time, attention, and energies to the business of
Employer in order to discharge his duties faithfully, diligently, to the
best of his abilities, and in a manner consistent with any and all
policies and guidelines as may be established by Employer from time to
time. Employee shall report to the Chairman of the Board and to the
Board of Directors of Employer.
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 $127,500
(such rate is referred to herein as "Salary"). Employee's Salary will
accrue and be payable to Employee in accordance with the payroll
practices of Employer in effect from time to time during the term of
this Agreement.
(b) Employer will pay Employee a $500 per month allowance for
car and car related expenses payable in accordance with the payroll
practices of Employer in effect from time to time during the term of
this Agreement.
(c) Subject to the terms and provisions of this Agreement,
Employee shall be entitled to earn an annual cash bonus in an amount up
to sixty percent (60%) of his Salary ("Performance Bonus") based upon
the performance of Employer against specified performance criteria set
forth in a Business Plan as agreed to in writing by Employee and
Employer's Chairman of the Board of Directors and Chief Executive
Officer; provided, however, the actual results of operations as compared
to the Business Plan shall be calculated to exclude all revenues and
expenses attributable to operations acquired by Employer or its
affiliates after the Effective Date unless provided for in the
Business Plan. The amount of the Performance Bonus, if any, shall be
determined by the Chairman of the Board in his sole discretion. The
parties shall use commercially reasonable efforts to agree upon a
Business Plan by May 1, 1998 and 1999 for the fiscal years ended
September 30, 1999 and 2000, respectively.
Employer shall pay Employee any Performance Bonus earned with
respect to a fiscal year within 90 days of the end of such fiscal year.
(d) At its sole discretion, the Board of Directors of
Employer may give additional bonuses to Employee, but is not required to
do so under any circumstances. Employee is not entitled to participate
in any bonus plan (other than receiving his Performance Bonus, if any,
as described above) offered by Employer to its employees unless
expressly provided for in writing.
(e) Employer agrees to execute and deliver to Employee that
certain Stock Option Agreement, a copy of which is attached hereto as
Exhibit A (the "Option Agreement").
(f) All payments to Employee pursuant to this Agreement will
be subject to deduction and withholding authorized or required by
applicable law.
4. Confidentiality
(a) In exchange for and in consideration for the promises made by
Employee herein, including promises made by Employee regarding
noncompetition in Section 5 herein, Employer promises and agrees to
provide Employee with confidential, nonpublic information (in addition
to any such information previously obtained by Employee in the course of
his employment) consistent with the duties of an individual in
Employee's position, including but not limited to Employer's customer,
supplier, and distributor lists, trade secrets, plans, manufacturing
techniques, sales, marketing and expansion strategies, and technology
and processes of Employer and/or its affiliates, as they may exist from
time to time, and information concerning the products, services,
production, development, technology and all technical information,
procurement and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers of, and
suppliers to, Employer and/or its affiliates (referred to hereinafter as
"Confidential Information"). Employee acknowledges that such
Confidential Information constitutes valuable, special and unique assets
of the Employer and that his access to and knowledge of the
Confidential Information is essential to the performance of his duties
under this Agreement. In consideration for Employer's promises herein,
Employee agrees that all Confidential Information previously provided or
known to Employee in the course of his employment with Employer and all
such Confidential Information made available and provided to Employee
pursuant to the terms of this Agreement will be considered Confidential
Information owned by Employer and Employee agrees that Employee will not
(i) disclose any Confidential Information to any person or entity other
than in connection with his employment for Employer in accordance with
Employer's policy, or (ii) make use of any Confidential Information for
his own purposes or for the benefit of any other person or entity, other
than Employer. Employee further represents and warrants that, on or
prior to the date of this Agreement, he has not (i) disclosed any
Confidential Information to any person or entity other than in
connection with his employment for Employer in accordance with
Employer's policy or (ii) made use of any Confidential Information for
his own purposes or for the benefit of any other person or entity, other
than Employer.
(b) Employee acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, reports, financial records
(including, without limitation, budgets, business plans and financial
statements), computers, computer equipment, computer disks, hard drives,
electronic storage devices, books, procedures, forms, documents, records
or paper, or copies thereof, pertaining to the operations or business of
Employer made or received by Employee or made known to him in any way in
connection with his employment and any other Confidential Information
are and will be the exclusive property of Employer. Employee agrees not
to copy or remove any of the above from the premises and custody of
Employer, or disclose the contents thereof to any other person or entity
except in the ordinary course of business consistent with Employer's
policies. Employee acknowledges that all such papers and records will
at all times be subject to the control of Employer, and Employee agrees
to surrender the same upon request of Employer, and will surrender such
no later than any termination of his employment with Employer, whether
voluntary of involuntary.
5. Non-Compete Covenant. Employee acknowledges that the
Confidential Information specified above is valuable to the Employer and
that, therefore, its protection and maintenance constitutes a legitimate
interest to be protected by the Employer by the enforcement of this
covenant not to compete. Therefore, in consideration for the promises
made by Employer herein, including but not limited to the provision of
Confidential Information set forth in Section 4 herein, Employee
covenants and agrees that, (i) during the term of his employment by the
Employer (or an affiliate of Employer) and (ii) for a period commencing
upon the termination of Employee's employment by Employer (or an
affiliate of Employer) and ending upon the first anniversary thereof,
Employee will not, directly or indirectly, either as an individual or as
an employer, employee, consultant, partner, officer, director,
shareholder, substantial investor, trustee, agent, advisor, or
consultant or in any other capacity whatsoever, of any person or entity
(other than the Employer):
(a) conduct or assist others in conducting any business in
any market area in the United States related to (i) the promotion,
marketing, distribution, manufacturing, sourcing, importing and/or sale
of (A) sports related equipment and/or supplies marketed to
institutional customers through direct mail catalogs,
(B) baseball/softball pitching machines, or (ii) any other business
that generates more than 10% of Employer's revenues at the time
of termination (the "Employer's Business");
(b) recruit, hire, assist others in recruiting or hiring,
discuss employment with or refer to others for employment (collectively
referred to as "Recruiting Activity") any person who is, or within the
24 month period immediately preceding the date of any such Recruiting
Activity was, at any time, an employee of the Employer or its
affiliates; or
(c) (i) communicate to any competing entity or enterprise any
competitive non-public information concerning any past, present or
identified prospective client or customer of, or supplier to, Employer;
or (ii) call on, solicit or take away or attempt to call on, solicit or
take away any of the customers, suppliers, clients, licensors,
licensees, manufacturers, distributors, dealers or independent
salespersons of the Employer or any of its affiliates that are engaged
in the Employer's Business or that conduct business with Employer in the
United States; or induce, attempt to induce or assist any other person
or entity in inducing or attempting to induce, directly or indirectly,
any such customer, supplier, client, licensor, licensee, manufacturer,
dealer, distributor or independent salesperson to discontinue their
relationship with the Employer or its affiliates.
The existence of any claim or cause of action of Employee against
Employer, or any officer, director, or shareholder of Employer, whether
predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Employer of the covenants of Employee
contained in this Section 5.
If Employee violates any covenant contained in this Section 5 and
Employer brings legal action for injunctive or other relief, Employer
shall not, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full period of any such covenant.
Accordingly, the covenants of Employee contained in this Section 5 shall
be deemed to have durations as specified above, which periods shall
commence upon the later of (i) the termination of Employee's employment
with Employer, and (ii) the date of entry by a court of competent
jurisdiction of a final, non-appealable judgment enforcing the covenants
of Employee in this Section 5. During any period of time in which
Employee is in breach of this covenant not to compete, the parties agree
that the time period of this covenant shall be extended for an amount of
time that Employee is in breach hereof.
Employee understands and agrees that the scope of this covenant
contained in this Section 5 is reasonable as to time, area, and persons
and is necessary to protect the proprietary and legitimate business
interests of the Employer, and but for such covenant the Employer would
not have agreed to enter into the transactions contemplated by this
Agreement. Employee agrees that this covenant is reasonable in light of
the compensation and other benefits Employee has accepted pursuant to
this Agreement. It is further agreed that such covenant will be
regarded as divisible and will be operative as to time, area, and
persons to the extent that it may be so operative. If any part of this
Section is declared invalid, unenforceable, or void as to time, area, or
persons, the validity and enforceability of the remainder will not be
affected. Should a court of competent jurisdiction determine this
covenant unenforceable as written, the parties agree that the court
shall modify this covenant to the extent necessary to make it
enforceable. The alleged breach of any other provision of this
Agreement asserted by Employee shall not be a defense to claims arising
from Employer's enforcement of this covenant.
6. Proprietary Information. Employee hereby assigns to
Employer all of Employee's right, title and interest to, and shall
promptly disclose to Employer, all ideas, inventions, products,
services, discoveries or improvements (whether or not patentable)
conceived or developed solely or jointly by Employee during the term of
this Agreement (a) that relate to the Employer's Business or the actual
or anticipated research or development of Employer, (b) that result from
any work performed by Employee for Employer, or (c) for which equipment,
supplies, facilities or Confidential Information of Employer was used.
Employee agrees to execute any further documents and/or patents that
Employer requests and will otherwise assist Employer (at Employer's
expense) in protecting Employer's rights to such ideas, inventions,
products, services, discoveries or improvements. Employee hereby
appoints Employer as his attorney-in-fact, with full power of
substitution, to execute and deliver such documents or patents on behalf
of Employee. This appointment is coupled with an interest in and to the
ideas, inventions, products, services, discoveries and improvements
conceived or developed by Employee and shall survive Employee's death or
disability. Employee hereby waives and quitclaims to Employer any and
all claims of any nature whatsoever that Employee may now or may
hereafter have for infringement of any patents or copyrights resulting
from or relating to any applications for any United States or foreign
letters, patent or copyright registrations assigned hereunder to
Employer. Employee represents to Employer that Employee has not
conceived or reduced to practice any ideas, inventions, products,
services, discoveries or improvements at the time of signing this
Agreement.
7. Termination
(a) Employer's obligations under this Agreement shall be
terminated if Employee is discharged by Employer for cause. For the
purposes of this Agreement, a discharge for cause shall mean a discharge
resulting from a determination by the Chairman of the Board of Employer
that Employee: (i) has been convicted of a crime involving fraud, theft
or embezzlement; (ii) has failed and/or refused to follo w the written
policies, practices, directives, or orders established by Employer's
Board of Directors and such failure or refusal is not cured within
fifteen (15) days of the date Employer sends a written notice to
Employee requesting that Employee cure such failure or refusal;
(iii) has committed acts of gross negligence to the detriment of
Employer; (iv) has persistently failed or refused to perform his duties
hereunder and such failure or refusal is not cured within fifteen (15)
days of the date Employer sends a written notice to Employee requesting
that Employee cure such failure or refusal; (v) has been insubordinate;
or (vi) has breached any of the material terms or provisions of this
Agreement (including, but not limited to, a breach of Section 4, 5 or 6
hereof). Notwithstanding anything to the contrary contained herein, the
15-day cure period referenced in subsections (ii) and (iv) of this
Section shall not apply if Employee has been given the opportunity to
cure an alleged default under either of these subsections on a prior
occasion. Any termination for cause shall be appealable to the Board of
Directors of the Company.
(b) If Employee is absent from employment, or unable to
render services herein, by reason of physical or mental illness or
disability for more than three (3) months in the aggregate in any twelve
(12) month period, and the Employee is unable to perform his essential
job functions with or without reasonable accommodation, then Employee
shall be considered permanently disabled, and this Agreement may be
immediately terminated by Employer without any further obligation to
Employee.
(c) If Employee dies, this Agreement shall immediately and
automatically terminate, without further obligation to Employee or
Employee's estate.
(d) In the event Employee resigns from the employ of
Employer, all of Employer's obligations under this Agreement shall be
terminated.
(e) If Employee is terminated without cause prior to
March , 2001 (and so long as Employee continues to abide by the Sections
of this Agreement that survive after such termination), then Employer will
continue to pay Employee his Salary through March , 2001 as if the
Employee was not terminated and after the end of the fiscal year during
which such termination occurs, the amount of the Performance Bonus
payable to Employee for such fiscal year, if any, pursuant to Section
3(c) of this Agreement (such amount to be reduced proportionately for
any period of less than 12 months in which the Employee was employed).
Except as set forth in the immediately preceding sentences, Employer
will have no other obligations to Employee if Employee is terminated
without cause. However, in the event Employee is terminated without
cause in the last twelve (12) months of employment, the provisions of
Section 5 shall continue only so long as Employer continues to pay
Employee his Salary in accordance with Employer's payroll practices in
effect at such time.
(f) The provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14, 17, 18 and 19 shall survive any termination or expiration of
this Agreement.
8. Injunctive Relief. Each party acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each party will be entitled to specific
performance and injunctive and other equitable relief in case of any
breach or attempted breach and agrees not to use as a defense that any
party has an adequate remedy at law. This Agreement shall be
enforceable in a court of equity, or other tribunal with jurisdiction,
by a decree of specific performance, and appropriate injunctive relief
may be applied for and granted in connection herewith. Such remedy
shall not be exclusive and shall be in addition to any other remedies
now or hereafter existing at law or in equity, by statute or otherwise.
No delay or omission in exercising any right or remedy set forth in this
Agreement shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right or
remedy.
9. Binding Nature. The rights and obligations of Employer
under this Agreement will inure to the benefit of and will be binding
upon the successors and assigns of Employer.
10. Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, in whole or in part, then
both parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable or void.
The intent and agreement of the parties to this Agreement is that this
Agreement will be deemed amended by modifying any such illegal,
unenforceable or void provision to the extent necessary to make it legal
and enforceable while preserving its intent, or if such is not possible,
by substituting therefor another provision that is legal and enforceable
and achieves the same objectives. Notwithstanding the foregoing, if the
remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision
not so affected will be enforced to the extent permitted by law.
11. Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
12. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Texas without
giving effect to any principle of conflict-of-laws that would require
the application of the law of any other jurisdiction.
13. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: If to Employer:
▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇ Athletic Training Equipment Company, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Attention: Chief Executive Officer
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
14. Submission to Jurisdiction. All parties hereto hereby
irrevocably submit to the jurisdiction of the state and federal courts
of the State of Texas and agree and consent that service of process may
be made upon it in any proceeding arising out of this Agreement by
service of process as provided by Texas law. All parties hereto hereby
irrevocably waive, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement
brought in the District Court of Dallas County, State of Texas, or in
the United States District Court for the Northern District of Texas, and
hereby further irrevocably waive any claims that any such suit, action
or proceeding brought in any such court has been brought in an
inconvenient forum.
15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
16. Assignment. The rights and obligations of Employer may,
without the consent of Employee, be assigned by Employer to any parent,
subsidiary, affiliate, or successor of Employer. Employee may not
assign any of his rights or obligations under this Agreement.
17. Entire Agreement. This Agreement and the Option Agreement
constitute 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 (other than the
Option Agreement) which are not fully expressed in this Agreement. All
prior or contemporaneous agreements between the parties with respect to
the subject matter of this Agreement (other than the Option Agreement)
being 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.
18. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to receive from the other its
reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
19. Representations, Warranties and Covenants. Employee
understands as part of the consideration for the offer of employment
extended to Employee by Employer and of his employment or continued
employment by Employer, that Employee has not brought and will not bring
with him to Employer or use in the performance of his responsibilities
at Employer any materials or documents of a former employer (other than
Athletic Training Equipment Company, Inc., a Nevada corporation) that
are not generally available to the public, unless Employee has obtained
express written authorization from the former employer for their
possession and use. Employee represents and warrants to Employer that
the execution, delivery, and performance of Employee of and under this
Agreement does not and will not with the passage of time or the giving
of notice or both violate the terms and conditions of any other written
or oral agreement to which Employee is a party or by which Employee is
bound. Employee represents and warrants that he is not a party to any
employment, non-competition, proprietary information or confidentiality
agreement with any former employer that remains or may remain in effect
as of the date hereof. Employee has not entered into, and Employee
agrees not to enter into, any oral or written agreement that is in any
way inconsistent with the terms of this Agreement. Employee also
understands that, in his employment with Employer, Employee is not to
breach any obligation of confidentiality that Employee has to former
employers.
Employee further represents and warrants that he has never been:
(i) convicted or indicted in a criminal proceeding and is not a named
subject of a pending criminal proceeding (excluding minor traffic
violations); (ii) the subject of any investigation, order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court,
permanently or temporarily enjoining him from, or otherwise limiting,
Employee's engagement in any (A) activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal or State securities laws or (B) type of business
practice; or (iii) found, whether formally or informally, by a court in
a civil action or by the Securities and Exchange Commission to have
violated any Federal or State securities laws.
IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
ATHLETIC TRAINING EQUIPMENT COMPANY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
EMPLOYEE:
/s/ ▇▇▇▇▇▇ J. P. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
