AGREEMENT
THIS AGREEMENT is made as of the 12th day of March, 1999, between
Sport Supply Group, Inc., a Delaware corporation (the "Company"), and
Xxxx X. Xxxxxx (the "Employee").
WHEREAS, the Board of Directors of the Company (the "Board")
desires to offer an inducement to the Employee to remain an employee of
the Company;
WHEREAS, the Employee is willing to and does hereby release the Company
from any liabilities to Employee under the Severance Agreement dated as
of January 14, 1998;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained,
this Agreement sets forth benefits which the Company will pay to
Employee in the event a "Change in Control" of the Company.
1. Definitions.
(a) Acquiring Person: An "Acquiring Person" shall mean any person
(as defined in Section 1(c)(iii) of this Agreement) that, together with
all Affiliates and Associates of such person, is the beneficial owner of
15% or more of the outstanding common stock of the Company (the "Common
Stock"). The term "Acquiring Person" shall not include the Company, any
subsidiary of the Company, any employee benefit plan of the Company or
subsidiary of the Company, or any person holding Common Stock for or
pursuant to the terms of any such plan. For the purposes of this
Agreement, a person who becomes an Acquiring Person by acquiring
beneficial ownership of 15% or more of the Common Stock at any time
after the date of this Agreement shall continue to be an Acquiring
Person whether or not such person continues to be the beneficial owner
of 15% or more of the outstanding Common Stock.
(b) Affiliate and Associate. "Affiliate" and "Associate"
shall have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") in effect on the date of this
Agreement.
(c) Change in Control. A "Change in Control" of the Company
shall have occurred if at any time during the term of this Agreement any
of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person and as a result of
such merger, consolidation or reorganization less than 60% of the
combined voting power to elect each class of Directors of the then
outstanding securities of the remaining corporation or legal person or
its ultimate parent immediately after such transaction is available to
be received by all of the Company's stockholders (who were stockholders
immediately prior to the merger, consolidation or reorganization) on a
pro rata basis and is actually received in respect of or exchange for
voting securities of the Company pursuant to such transaction;
(ii) The Company sells all or substantially all of its assets
to any other corporation or other legal person and as a result of such
sale less than 60% of the combined voting power to elect each class of
Directors of the then outstanding securities of such corporation or
legal person or its ultimate parent immediately after such transaction
is available to be received by all of the Company's stockholders (who
were stockholders immediately prior to the merger, consolidation or
reorganization) on a pro rata basis and is actually received in exchange
for the assets of the Company pursuant to such sale (provided that this
provision shall not apply to a registered public offering of securities
of a subsidiary of the Company, which offering is not part of a
transaction otherwise a part of or related to a Change in Control);
(iii) Any person (including any "person" as such term is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities which when added to any securities
already owned by such person would represent in the aggregate 20% or
more of the then outstanding securities of the Company which are
entitled to vote to elect any class of Directors;
(iv) If at any time, the Continuing Directors then serving on
the Board cease for any reason to constitute at least a majority
thereof;
(v) Any occurrence that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A or any successor
rule or regulation promulgated under the Exchange Act; or
(vi) Such other events that cause a change in control of the
Company, as determined by the Board in its sole discretion; provided,
however, that a Change in Control of the Company shall not be deemed to
have occurred as the result of any transaction having one or more of the
foregoing effects if such transaction is proposed by, and includes a
significant equity participation (i.e., an aggregate of at least 20% of
the then outstanding common equity securities of the Company immediately
after such transaction which are entitled to vote to elect any class of
Directors) of executive officers of the Company as constituted
immediately prior to the occurrence of such transaction or any Company
employee stock ownership plan or pension plan.
Notwithstanding anything herein to the contrary, no beneficial
ownership of or other event with respect to Xxxxxxx Radio Corp, a
Delaware corporation ("Xxxxxxx"), shall cause a Change in Control of the
Company unless and until there is an Xxxxxxx Disqualifying Action.
(d) Code. The "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Continuing Director. A "Continuing Director" shall mean
a Director of the Company who (i) is a Director of the Company on the
date hereof or (ii) (A) is not an Acquiring Person, an Affiliate or
Associate, or a representative of an Acquiring Person or nominated for
election by an Acquiring Person, and (B) whose initial election or
initial nomination for election by the Company's stockholders was
approved by a majority of the Continuing Directors then on the Board of
Directors of the Company.
(f) "Xxxxxxx Change of Control" means the occurrence of any
of the events set forth in clauses (i) through (vi) of Section 1(c)
except that the term "Company" for this purpose shall mean Xxxxxxx.
(g) "Xxxxxxx Disqualifying Action" means the occurrence of
any of the events set forth below on or after, or within 90 days before,
an Xxxxxxx Change of Control:
(i) Xxxxxxx or any of its Affiliates or Associates or any
group (as such term is used in Section 13(d)(3) the Exchange Act)
including any of such persons shall acquire beneficial ownership of more
than 1,000 additional shares of Common Stock (other than as a result of
a stock split or a stock dividend);
(ii) Xxxxxxx or any of its Affiliates or Associates or any
group (as such term is used in Section 14(d)(2) of the Exchange Act)
including any of such persons shall commence a tender offer or exchange
offer for the Common Stock; or
(iii) Xxxxxxx or any of its Affiliates or Associates or
any group (as such term is used in Section 13(d)(3) of the Exchange Act)
including any of such persons shall (A) solicit or grant proxies or
consents to elect any directors of the Company not nominated by a
majority of the Continuing Directors or to remove any directors of the
Company or (B) solicit or grant proxies or consents or make, vote in
favor of or support or participate in any shareholder proposals with
respect to any matter to be voted on by the holders of the Common Stock
unless the approval of such proposal has been recommended by a majority
of the Continuing Directors.
(h) Special Compensation. The "Special Compensation" shall
be a lump sum amount equal to 299% of the sum of (A) the highest annual
salary of the Employee in effect at any time during the 36 months prior
to the Change in Control, plus (B) the bonus or incentive compensation
of the Employee, based upon the highest dollar amount of bonus or
incentive compensation that the Employee received from the Company for
any of the last three fiscal years preceding the year in which the
Change in Control occurred.
2. Rights of Employee Upon Change in Control; Noncompetition.
(a) For a period of 180 days following a Change of Control,
Employee has the right to elect to receive the Special Compensation.
(b) Immediately upon Employee's election to receive the
Special Compensation, the Company will, subject to any prior notice from
Employee under Section 2(c), pay such amount in full to Employee.
(c) Upon written notice given by the Employee to the Company
prior to the receipt of Special Compensation, the Employee, at his sole
option, may elect to have all or any part of any such amount paid to
him, without interest, on an installment basis selected by him.
(d) The payment of Special Compensation by the Company to the
Employee shall not affect any rights and benefits which the Employee may
have pursuant to any other agreement, policy, plan, program or
arrangement of the Company providing benefits to the Employee prior to
or after the Change of Control, which rights shall be governed by the
terms thereof, except that the payment of Special Compensation hereunder
shall be in exchange for Employee releasing all of his rights under the
Employment Agreement dated as of January 14, 1998, as amended, by and
between the Company and the Employee (the "Employment Agreement").
Notwithstanding the foregoing, in addition to the Special Compensation,
the Company shall provide or cause to be provided to Employee for 36
months after the Change in Control, health and dental insurance benefits
required by Section 4 of the Employment Agreement except to the extent
comparable benefits are actually received by the Employee during such
36-month period as a result of employment other than with the Company.
(e) The Company shall pay to the Employee all reasonable
legal fees and expenses incurred by him as a result of the enforcement
of any of Employee's rights hereunder within ten business days of the
date such expenses are incurred (including without limitation all such
fees and expenses, if any, incurred in seeking to obtain or enforce any
right or benefit provided by this Agreement in accordance with Section
11 hereof).
(f) The Company shall have no right of set-off or
counterclaim in respect of any claim, debt or obligation against any
payment or benefit to or for the benefit of the Employee provided for in
this Agreement.
(g) Without limiting the rights of the Employee at
law or in equity, if the Company fails to make any payment required to be
made hereunder on a timely basis, the Company shall pay interest on the
amount thereof on demand at an annualized rate of interest equal to 120%
of the then applicable Federal rate determined under Section 1274(d) of
the Code, compounded semi-annually (but in no event shall such interest
exceed the highest lawful rate).
(h) Employee covenants and agrees that in the event the
Special Compensation is paid to Employee pursuant hereto, Employee shall
be bound by the noncompetition provisions set forth in Section 6 of the
Employment Agreement, which are incorporated by reference herein, except
that the words "Employee covenants and agrees that for a period equal to
the longer of (i) 36 months after the Change in Control or (ii) so long
as Employee is employed by the Company and one year after Employee's
employment with the Company is terminated," shall be substituted for the
first three lines thereof.
3. No Mitigation Required. In the event that this Agreement or
the employment of the Employee hereunder is terminated, the Employee
shall 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 except for the termination or reduction of benefits
pursuant to Section 2(d), the acceptance of employment elsewhere after
termination shall in no way reduce the amount of Special Compensation
payable hereunder.
4. Successors; Binding Agreement.
(a) The Company will require any successor and any
corporation or other legal person (including any "person" as defined in
Section 1(c)(iii) of this Agreement) 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 the Company (by purchase, merger, consolidation or otherwise),
by agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession shall
be a material breach of this Agreement by the Company. Notwithstanding
the foregoing, any such assumption shall not, in any way, affect or
limit the liability of the Company under the terms of this Agreement or
release the Company from any obligation hereunder. As used in this
Agreement, "Company" shall mean the Company as herein before 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 4 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
5. Notice. The Company shall give written notice to Employee
within ten days after any Change in Control. Failure to give such
notice shall constitute a material breach of this Agreement. For
purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or received after being mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Employee:
Xxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
If to the Company:
Sport Supply Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Attention: Chairman of the Board
or to such other address as any 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.
6. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such
officer as may be specifically designated by the Board. No waiver by
either party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, unless specifically referred to
herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the substantive laws of the State of Delaware,
without regard to principles of conflicts of law.
7. Validity. The invalidity or unenforceability of any provision
or 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.
8. 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.
9. Employment Rights. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or
the Employee to have the Employee remain in the employment of the
Company prior to any Change in Control; provided, however, that any
termination of employment of the Employee or removal of the Employee as
an elected officer of the Company following the commencement of any
discussion authorized by the Board of Directors of the Company with a
third person that ultimately results in a Change in Control shall be
deemed to be a termination or removal of the Employee after a Change in
Control for purposes of this Agreement and shall entitle the Employee to
elect to receive all Special Compensation. Notwithstanding any other
provision hereof to the contrary, the Employee may, at any time, upon
the giving of 30 days prior written notice, terminate his employment
with the Company. If this Agreement or the employment of the Employee
is terminated under circumstances in which the Employee is not entitled
to any Special Compensation, the Employee shall have no further
obligation or liability to the Company hereunder or otherwise with
respect to his prior or any future employment by the Company.
10. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other
taxes as shall be required pursuant to any law or government regulation
or ruling; provided, however, that no withholding pursuant to Section
4999 of the Code shall be made unless, in the opinion of tax counsel
selected by the Company's independent accountants and acceptable to the
Employee, such withholding relates to payments which result in the
imposition of an excise tax pursuant to Section 4999 of the Code.
11. Legal Fees and Expenses. It is the intent of the Company that
the Employee not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation or other
legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Employee
hereunder. Accordingly, if it should appear to the Employee that the
Company has failed to comply with any of its obligations under the
Agreement or in the event that the Company or any other person takes any
action to declare the Agreement void or unenforceable, or institutes any
litigation designed to deny, or to recover from, the Employee the
benefits intended to be provided to the Employee hereunder, the Company
irrevocably authorizes the Employee from time to time to retain counsel
of his choice, at the expense of the Company as hereafter provided, to
represent the Employee in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company
or any director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Employee's entering into an
attorney-client relationship with such counsel, and in that connection
the Company and the Employee agree that a confidential relationship
shall exist between the Employee and such counsel. The Company shall
pay and be solely responsible for any and all attorneys' and related
fees and expenses incurred by the Employee as a result of the Company's
failure to perform this Agreement or any provision thereof or as a
result of the Company or any person contesting the validity or
enforceability of this Agreement or any provision thereof as aforesaid.
12. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Employee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective on the date and year first above written.
SPORT SUPPLY GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx,
Chairman of the Board and
Chief Executive Officer
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
