AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AND SEVERANCE AGREEMENT
This Amendment No. 1 to Employment Agreement and Severance
Agreement (this "Amendment"), dated January 23, 1997 to be effective
as of December 11, 1996 (the "Effective Date"), is by and between
Sport Supply Group, Inc., a Delaware corporation ("Employer") and
Xxxxx X. Xxxxxxxxxx ("Employee").
WHEREAS, Employer and Employee entered into (i) an Employment
Agreement dated as of February 28, 1991 ("the "Employment
Agreement") and (ii) a Severance Agreement dated as of February 28,
1991 (the "Severance Agreement").
WHEREAS, a Change in Control (as defined in the Severance
Agreement) occurred on or about December 10, 1996 when Xxxxxxx Radio
Corp. acquired (i) 1,600,000 shares of Employer's common stock, par
value $.01 per share (the "Common Stock") and (ii) warrants to
acquire up to 1,000,000 shares of Employer's Common Stock for $7.50
per share.
WHEREAS, Employer and Employee desire to amend the terms of the
Employment Agreement and Severance Agreement in accordance with the
terms and provisions of this Amendment.
NOW, THEREFORE, in consideration of the covenants and agreements
of the parties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
I. Employment Agreement
1.The last two (2) sentences of Section 1 of the Employment
Agreement relating to the "Term" are deleted in their
entirety. Consequently, the Employment Agreement is
scheduled to expire on February 28, 1998.
2.The following sentence shall be added to the end of Section 2
of the Employment Agreement relating to the "Duties":
"Employee shall report solely to
the Board of Directors, Chairman of
the Board and Chief Executive
Officer of Employer."
3.The reference to $151,500 in Section 3 of the Employment
Agreement relating to "Compensation" is deleted in its
entirety and replaced with $250,000.
4.Section 4 of the Employment Agreement relating to "Employee
Benefits; Reimbursement of Expenses" is hereby amended as
follows:
(a) The reference to "three weeks of paid vacation" in
the second sentence of Section 4 is deleted and replaced with
"four weeks of paid vacation."
(b) The following sentence is hereby added to the end of
Section 4 of the Employment Agreement:
"Employer will pay or reimburse Employee
$500 per month for monthly country club dues."
5.The following words shall be added to the end of the first
sentence of Section 6 regarding "Non competition": "in the
United States and/or Asia." The following paragraphs are
hereby added to Section 6 of the Employment Agreement
relating to "Noncompetition":
"(d) If Employer terminates Employee other than for Cause
(as defined below) on or prior to December 10, 1999 and
Employee is paid pursuant to the terms of the Severance
Agreement (as defined in Section 8(f)), then Employee
covenants and agrees not to directly or indirectly compete
with Employer in the United States and/or Asia for a period
of three (3) years from the date Employee is paid pursuant to
the Severance Agreement. If, on the other hand, Employer
terminates Employee other than for Cause after December 10,
1999 and Employer continues to pay Employee his monthly
Salary at the time of termination for a period of 18 months,
then Employee covenants and agrees not to directly or
indirectly compete with Employee in the United States and/or
Asia for a period of 18 months from the date of termination.
(e) The provisions of Sections 5, 6, 7, 8(b) and (g), 11,
13 and 16 shall survive termination or expiration of this
Agreement."
6.Section 8(b) of the Employment Agreement is hereby deleted in
its entirety and replaced with the following:
"(b) In the event Employer terminates Employee other than
for Cause on or prior to December 10, 1999, Employer shall be
relieved of any and all of its obligations under this
Agreement so long as Employer pays Employee all amounts owing
to Employee under the Severance Agreement. In the event
Employer terminates Employee other than for Cause after
December 10, 1999, Employer shall pay Salary to Employee for
a period of 18 months (less all amounts required to be
withheld or deducted therefrom and all undisputed amounts
owed or due by Employee to Employer). In the event Employer
terminates Employee other than for Cause at any time prior to
February 28, 1998, Employer shall continue to provide
Employee, for a period of 18 months, health insurance with
coverage no less than coverage available during such period
to Employer's senior executive officers, and Employer shall
have no other obligation hereunder."
II. SEVERANCE AGREEMENT
7.The following language in Section 1 of the Severance
Agreement relating to "Term" is hereby deleted in its
entirety:
"; provided, however, that on each anniversary of the
Change in Control, the period referenced in Section (i) above
shall automatically be extended for an additional year
unless, not later than 90 calendar days prior to such
anniversary date, the Company shall have given written notice
to the Executive that it does not wish to have the term
extended."
8.The following language shall be added to the end of Section
3(a)(2) of the Severance Agreement regarding "Rights of
Executive Upon Change in Control or Termination":
"Notwithstanding anything herein to the contrary, if all or
substantially all of the assets of the Company's primary
institutional business are transferred, sold or assigned to a
subsidiary or division of the Company and Executive is
elected as President of the subsidiary or division, then the
Executive will not be entitled to any payments under this
Severance Agreement as a result of such transfer, sale or
assignment.
9.The following language shall be added at the end of Section
10 of the Severance Agreement:
"Notwithstanding anything to the contrary contained herein,
Executive covenants and agrees that if Executive is paid
pursuant to the terms of this Severance Agreement, Executive
will not directly or indirectly compete with Employer in the
United States or Asia for a period of 3 years from the date
Executive is paid. For the purposes of this Section, the
following terms shall have the meanings indicated below:
(a) The term "compete" shall mean, with respect to the
business of the Company, engaging in or attempting to engage
in the direct mail marketing of sports related equipment to
institutional customers or any other business which generates
more than 10% of the Company'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) with the business of the Company; (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, the Company; (iv) soliciting the customers,
distributors, dealers, or independent sales persons of the
Company or its Affiliates (as defined below) as of the date
the Executive is paid pursuant to the terms of this Severance
Agreement; 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 the Company or its Affiliates.
For the purposes of this Agreement, the term "Affiliates"
shall mean all subsidiaries of the Company and each entity in
which the Company 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 the Company.
(c) It is the desire and intent of the parties to this
Severance Agreement that the provisions of this Section shall
be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which
enforcement is sought. It is understood and agreed that the
scope of this covenant 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 Company, and but for such covenant the Company would be
unwilling to enter into the transactions contemplated by this
Severance Agreement. Executive agrees that this covenant is
reasonable in light of the compensation and other benefits
Executive has accepted pursuant to this Severance Agreement,
as amended. 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 court shall modify this
covenant to the extent necessary to make it enforceable. The
alleged breach of any other provision of this Severance
Agreement asserted by Executive shall not be a defense to
claims arising from the Company's enforcement of this
covenant."
III. MISCELLANEOUS
10.Bonus. In the event Employee continues to serve as a full-
time employee of the Employer from the date hereof through
December 10, 1997, the Employer will pay Employee a bonus of
$60,000. The bonus will be subject to deduction and
withholding required by applicable law. Prior to December
10, 1997, the Employee may borrow up to $45,000 as an advance
against this bonus on an interest free basis so long as the
Employee signs a mutually satisfactory promissory note.
Employee agrees that he shall be solely responsible for the
payment of all his federal, state and local taxes, interest
and penalties, if any, which are or may become due as a
result of the bonus and/or loan, and agrees to defend,
indemnify and hold Employer harmless from and against any tax
claims on such bonus and/or loan.
11.Waiver. No delay or omission by either party to this
Amendment to exercise any right or power under this Amendment
will impair such right or power or be construed as a waiver
thereof. A waiver by either of the parties to this Amendment
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 Amendment. All remedies provided for in this
Amendment 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 Amendment 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 Amendment 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
Amendment 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.
13.Notices. For purposes of this Amendment, notices and all
other communications provided for in this Amendment 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: Sport Supply Group, Inc.
Attention: Xxxxx X. Xxxxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
If to Employer: Sport Supply Group, Inc.
Attention: Chief Executive Officer
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.
14.Counterparts. This Amendment 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.
15.Entire Agreement. This Amendment (and the Employment Agreement
and Severance Agreement) constitutes the entire agreement
between the parties to this Amendment with respect to the
subject matter of this Amendment and there are no understandings
or agreements relative to this Amendment which are not fully
expressed in this Amendment and the Employment Agreement and
Severance Agreement. All prior agreements between the parties
with respect to the subject matter of this Amendment, whether
oral or written, are expressly superseded by this Amendment. No
change, waiver, or discharge of this Amendment 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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties to this Amendment have executed
and delivered this Amendment on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx,
Chief Executive Officer
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
