EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of
January 14, 1998 by and between Sport Supply Group, Inc., a Delaware
corporation ("Employer"), and Xxxxxxxx X. Xxxxxxx ("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
WHEREAS, Employer and Employee desire to terminate that certain
Employment Agreement dated February 2, 1995 and replace it with 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 period commencing on January 14,
1998 (the "Effective Date") and expiring on January 13, 2001, except as
otherwise provided herein.
2. Duties. Employee will be employed as an Executive Vice
President, General Counsel and Secretary 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 an Executive
Vice President or a General Counsel and Secretary. Employer
acknowledges that Employee currently is serving as an employee of
Xxxxxxx Radio Corp. ("Xxxxxxx"), and that Employee will devote certain
of his time, attention, and energies, not to exceed 10% 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. Employee shall report solely to the Board of Directors,
Chairman, and Chief Executive Officer 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 $220,000 (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, at Employee's option,
Employer shall either pay Employee an automobile allowance of $1,000 per
month and reimburse Employee for the cost of liability and collision
insurance on such automobile and all maintenance and gasoline purchases,
or lease a new automobile of Lexus quality for Employee in lieu of
receiving an automobile allowance (such lease not to exceed the
automobile allowance described above grossed up for taxes); provided,
however, so long as Employee is driving the Lexus LS400 currently leased
by Employer for the benefit of Employee, Employer will continue to
provide liability and collision insurance, gasoline and maintenance for
such automobile in lieu of an automobile allowance. Employer will also
pay for the costs of initiation fees, not to exceed a total of $30,000,
for a resident member of a country club selected by Employee in the
Dallas/Ft. Worth metropolitan area as well as pay or reimburse Employee
for all monthly dues, not to exceed $500 per month, and other
assessments generally charged to the resident members at such country
club during the term of this Agreement. 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.
(d) Notwithstanding anything to the contrary contained in
this Section or elsewhere in this Agreement, Employee shall not be
precluded or otherwise restricted from practicing law for any law
firm, business or other entity.
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 (A) through the stated term of this Agreement,
if such termination or Constructive Discharge occurs prior to June
30, 1999 , or (B) through a period of 18 months from the date of
such termination or Constructive Discharge, if such termination or
Constructive Discharge occurs on or after June 30, 1999 (in either
event 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. Notwithstanding anything
to the contrary contained herein, if Employee is paid in full
pursuant to the terms of that certain Severance Agreement by and
between Employer and Employee on or before December 10, 1999, then
Employee will not be entitled to receive any severance payment
under this Section 8(b). Section 8(b)(i)(B) of this Agreement
shall survive even if this Agreement expires by its own terms
unless Employer and Employee agree in writing to mutually terminate
this Agreement or amend this provision or if Employer and Employee
enter into a new Employment Agreement.
(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, subject to Section 8(b), 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) or such longer period
as he is entitled pursuant to the provisions of Section 8(b) and/or
9.
(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 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 Executive Vice President, General Counsel and
Secretary (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 an Executive Vice President, General Counsel and
Secretary, other than a promotion; a change in reporting of Employee
to any person other than the Chairman, Chief Executive Officer, or the
Board of Directors of Employer; a required relocation to a location in
excess of thirty (30) miles of Employer's current principal location;
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. Xxxxxxx
0000 Xxxxx Xxxxxx
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.
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 and the Severance 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 which are not
fully expressed in this Agreement (other than the Severance Agreement).
All prior agreements between the parties with respect to the subject
matter of this Agreement (other than the Severance 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 (other than the Severance 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. The Xxxxxxxxx Agreement is not
modified in any way by this Agreement and shall remain in full force and
effect in accordance with the terms thereof.
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/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx,
Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
