EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, effective January 1, 1997, by and between
SPORT-XXXXX, INC., a Colorado corporation (the "Company") and XXXXXX X.
XXXXXXXXX (the "Executive").
WHEREAS, the Company has, prior to the date of this Agreement, employed
the Executive as the Company's Chief Executive Officer and Chairman of the
Board; and
WHEREAS, the Company desires to continue to employ the Executive on a
full-time basis, and the Executive desires to be so employed by the Company,
from and after the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
ARTICLE I
EMPLOYMENT DUTIES AND BENEFITS
SECTION 1.1 EMPLOYMENT. The Company hereby employs the Executive in the
position described on Schedule 1 hereto as an executive officer of the Company.
The Executive accepts such employment and agrees to perform the duties and
responsibilities assigned to him pursuant to this Agreement.
SECTION 1.2 DUTIES AND RESPONSIBILITIES. The Executive shall hold the
position with the Company which is specified on Schedule 1, which is attached
hereto and incorporated herein by reference. The Executive is employed pursuant
to the terms of this Agreement and agrees to devote full-time to the business of
the Company, except as otherwise provided in Article VI herein. The Executive
shall perform the duties set forth on Schedule 1 while employed as an executive
officer, and such further duties as may be determined and assigned to him from
time-to-time by the Board of Directors of the Company.
SECTION 1.3 WORKING FACILITIES. The Executive shall be furnished with
facilities and services suitable to the position and adequate for the
performance of Executive's duties under this Agreement. The Company shall
furnish the Executive an automobile for the Executive's use during the term of
this Agreement.
SECTION 1.4 VACATIONS. The Executive shall be entitled each year to a
reasonable vacation of not less than five weeks in accordance with the
established practices of the Company now or hereafter in effect for executive
personnel, during which time the Executive's compensation shall be paid in full.
SECTION 1.5 EXPENSES. The Executive is authorized to incur reasonable
expenses for promoting the domestic and international business of the Company in
all respects, including expenses for entertainment, travel and similar items.
The Company will reimburse the Executive for all such expenses upon the
presentation by the Executive, from time-to-time, of an itemized account of such
expenditures.
ARTICLE II
COMPENSATION
SECTION 2.1 BASE SALARY. The Company shall pay to the Executive a base
salary of not less than the amount specified on Schedule 1. This amount may be
adjusted for raises in salary by action of the Board of Directors, and such
raises shall thereafter be included in the Executive's base salary as defined
for purposes of this Agreement and the Company's bonus plan.
SECTION 2.2 BONUS AND BONUS PLAN PARTICIPATION. The Executive shall be
entitled to receive a bonus at such time or times as may be determined by the
Board of Directors of the Company. The Executive shall also be entitled to
receive bonuses of up to 50% of the Executive's base salary in accordance with
the provisions of the Company-wide bonus plan as in effect from time to time.
ARTICLE III
TERM OF EMPLOYMENT AND TERMINATION
SECTION 3.1 TERM. This Agreement shall be for a term which is specified
on Schedule 1, commencing on its effective date, subject, however, to
termination during such period as provided in this Article. Provided that the
Executive is in compliance with all of his obligations hereunder, the term of
the Executive's employment shall be extended automatically for one additional
year at the end of each year of the term or extended term of this Agreement on
the same terms and conditions as contained in this Agreement, unless either the
Company or the Executive shall, at least 90 days prior to the expiration of the
initial term or of any renewal term, give written notice of the intention not to
renew this Agreement. Such automatic renewals shall be effective in subsequent
years on the same day of the same month as the original effective day and month
of this Agreement.
SECTION 3.2 TERMINATION BY THE EXECUTIVE WITHOUT CAUSE. The Executive,
without cause, may terminate this Agreement upon 90 days' written notice to the
Company. In such event, the Executive shall not be required to thereafter
render the services required under this Agreement.
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Compensation for vacation time not taken by Executive shall be paid to the
Executive at the date of termination.
SECTION 3.3 TERMINATION BY THE COMPANY WITH CAUSE. The Company may
terminate the Executive, at any time, upon ten days' written notice and
opportunity for Executive to remedy any non-compliance with the terms of this
Agreement, by reason of fraud or gross negligence of the Executive. In such
event, the Board of Directors shall provide in writing to the Executive an
opinion of the Board of Directors, signed by each member voting in favor of
termination of the Executive, which shall specify with particularity the basis
for such termination by reason of fraud or gross negligence. Upon the date of
such termination, the Company's obligation to pay compensation shall terminate.
SECTION 3.4 TERMINATION BY THE EXECUTIVE WITH CAUSE. The Executive may
terminate his employment with the Company at any time, upon five days' written
notice and opportunity for the Company to remedy any non-compliance, by reason
of (i) the Company's material failure to perform its duties pursuant to this
Agreement, or (ii) any material diminishment in the duties and responsibilities,
working facilities, or benefits as described in Article I of this Agreement.
The Executive shall be entitled to the severance compensation and other benefits
described in Section 3.6 below in the event of termination of this Agreement
pursuant to this Section 3.4.
SECTION 3.5 TERMINATION UPON DEATH OF EXECUTIVE. In addition to any other
provision relating to termination, this Agreement shall terminate upon the
Executive's death. In such event, the severance compensation as set forth in
Section 3.6 of this Agreement (paid as if there was a non-negotiated change in
control of the Company) and compensation for vacation time not taken by
Executive shall be paid to the Executive's estate.
SECTION 3.6 SEVERANCE COMPENSATION AND CONTINUATION OF BENEFITS. In the
event (i) the Executive shall terminate this Agreement pursuant to Section 3.4
of this Agreement, (ii) the Company shall terminate this Agreement for reasons
other than those specified in Section 3.3 of this Agreement, or (iii) of a
change in control of the Company, then, in any of such events, the Executive
shall be entitled to receive the following, subject to Section 3.7 of this
Agreement:
(a) The Executive shall receive severance compensation for a term of three
(3) years from the date of termination or change in control equal to his annual
salary and incentive or bonus payments, if any, payable biweekly, as shall have
been paid to the Executive during the most recent 12-month period concluded
prior to the date of termination or change in control. In the event that the
severance payments provided for in this Section 3.6 shall be made in connection
with a change of control of the Company, and if the total amount of the change
of control compensation were to
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exceed three times the Executive's base compensation (the average annual
taxable compensation of the Executive for the five years preceding the year
in which the change of control occurs), the Company and the Executive may
agree to reduce the lump sum compensation to be received by Executive in
order to avoid the imposition of the golden parachute tax as provided in the
Tax Reform Act of 1984, as amended by the Tax Reform Act of 1986.
Notwithstanding any provisions to the contrary herein, in the event of a
non-negotiated change in control of the Company, the severance compensation
to be paid to the Executive shall be paid by the Company in a lump sum within
30 days of the non-negotiated change in control.
(b) In the event the Executive is required to hire counsel to negotiate on
his behalf in connection with his termination or a change in control of the
Company, or in order to enforce the rights and obligations as provided herein,
the Company shall reimburse to the Executive all reasonable attorney's fees
which may be expended by the Executive in seeking to enforce the terms hereof.
Such reimbursement shall be paid by the Company every 30 days after the
Executive provides to the Company copies of invoices from the Executive's
counsel.
(c) So long as the Executive is receiving severance compensation pursuant
to this Section 3.6 or consulting fees pursuant to Section 6.2 of this
Agreement, the Executive shall be entitled to continue to participate, at the
Company's cost, in all existing benefit plans provided to the Company's
executive employees at the time of the Executive's termination or resignation.
Such plans shall include, but are not limited to, then-existing medical, health,
dental, vision, disability, life insurance and death benefit plans. If the
terms of such plans expressly prohibit the Executive from continuing as a
participant in such plans following the date of resignation or termination, the
Company will provide the Executive with benefits equivalent to, or exceeding,
those offered by the then-existing benefit plans offered to the Company's
executive employees, all at the Company's cost, for the duration of the
Executive's right to severance compensation hereunder or consulting fees
pursuant to Section 6.2 of this Agreement.
SECTION 3.7 REMUNERATION UPON OTHER EMPLOYMENT OR CONSULTATION. The
following provisions will apply, notwithstanding any language to the contrary
elsewhere herein, in the event this Agreement is terminated by the Executive
under Section 3.4, is terminated by the Company for reasons other than those
specified in Section 3.3, or in the event of a negotiated change in control of
the Company.
(a) If after one year from the termination of his employment with the
Company or a change in control the Executive consults with, or is employed by, a
company or other entity which competes with the Company in the golf apparel
industry, then the Executive will no longer be
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entitled to the payment of consulting fees described in Section 6.2 of this
Agreement by the Company commencing on the date of such consulting or
employment.
(b) If after one year from the termination of his employment with the
Company or a negotiated change in control the Executive consults with a company
or other entity that does not compete with the Company in the golf apparel
industry, then the Executive shall be paid all consulting fees to which he is
entitled under Section 6.2 of this Agreement.
Any compensation to be paid to the Executive under the foregoing provisions
of this Section 3.7 shall be subject to the Executive complying with the
non-compete provisions of Section 4.1(c) below. In the event the Executive
does not so comply, the Company shall be released from any obligations to the
Executive under this Section 3.7.
SECTION 3.8 OPTIONS. Any options granted to the Executive to purchase
stock of the Company ("Options") shall become fully vested on the date of
termination of this Agreement except if termination is for the reasons specified
in Section 3.3 of this Agreement. Moreover, if the Executive resigns his
position as Chairman of the Board of the Company, any and all Options shall vest
on the date of such resignation. This provision shall serve as a contractual
modification of any option grants or agreements between the Executive and the
Company, whether such grants or agreements shall pre-date or postdate this
Agreement, and is hereby incorporated by reference into each such option grant
or agreement.
ARTICLE IV
CONFIDENTIALITY AND COMPETITION
SECTION 4.1 FURTHER OBLIGATIONS OF EXECUTIVE DURING AND AFTER EMPLOYMENT.
(a) The Executive agrees that during the term of his employment under this
Agreement, he will engage in no other business activities which are or may be
competitive with, or which might place him in a competing position to that of,
the Company or any subsidiary or joint venture of the Company.
(b) The Executive realizes that during the course of his employment,
Executive will have produced and/or have access to confidential business plans,
information, business opportunity records, notebooks, data, formula,
specifications, trade secrets, customer lists, account lists and inventions of
the Company and its affiliates. Therefore, during or subsequent to his
employment by the Company, or by an affiliate, the Executive agrees to hold in
confidence and not to directly or indirectly disclose or use or copy or make
lists of any such information, except to the extent authorized by the Company in
writing. All records, files, business plans, documents, equipment and
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the like, or copies thereof, relating to Company's business, or the business
of an affiliated company, which Executive shall prepare, or use, or come into
contact with, shall remain the sole property of the Company, or of an
affiliated company, and shall not be removed from the Company's or the
affiliated company's premises without its written consent, and shall be
promptly returned to the Company upon termination or resignation of
employment with the Company or its affiliated companies.
(c) Because of his employment by the Company, Executive will have access
to trade secrets and confidential information about the Company, its business
plans, its business accounts, its business opportunities, its expansion plans
into other geographic areas and its methods of doing business. Executive agrees
that for a period of one (1) year after termination or resignation of his
employment, he will not, directly or indirectly, compete with the Company or its
affiliates in the business of designing, marketing or contracting for the
manufacture of men's and women's golf apparel, outerwear or headwear within the
United States. This non-compete agreement shall be void and of no further force
or effect in the event the Company fails to pay the Executive amounts required
under either Section 3.6 or Section 6.2 hereof.
(d) In the event a court of competent jurisdiction finds any provision of
this Section 4.1 to be so overbroad as to be unenforceable, then such provision
shall be reduced in scope by the court, but only to the extent deemed necessary
by the court to render the provision reasonable and enforceable, it being the
Executive's intention to provide the Company with the broadest protection
possible against harmful competition.
ARTICLE V
DISABILITY AND ILLNESS
SECTION 5.1 DISABILITY AND SALARY CONTINUATION.
A. DEFINITION OF TOTAL DISABILITY. For purposes of this Agreement, the
terms "totally disabled" and "total disability" shall mean disability as defined
in any total disability insurance policy or policies, if any, in effect with
respect to the Executive. If no insurance policy is in effect, "total
disability" shall mean a medically determinable physical or mental condition
which in the opinion of two independent physicians renders the Executive unable
to perform substantially all of the duties required pursuant to this Agreement.
Total disability shall be deemed to have occurred on the date of the disabling
injury or onset of the disabling illness, as determined by the two independent
physicians.
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B. SALARY CONTINUATION. If the Executive becomes totally disabled during
the term of this Agreement, his full salary shall be continued for 360 days from
the date of the disabling injury or onset of the disability illness.
SECTION 5.2 ILLNESS. If the Executive is unable to perform the services
required under this Agreement by reason of illness or physical injury not
amounting to total disability, as defined in this Article, the compensation
otherwise payable to the Executive under this Agreement shall be continued in
full for the remaining term or renewed term of this Agreement.
ARTICLE VI
CONVERSION TO CONSULTING AGREEMENT
SECTION 6.1 CHANGE IN CONTROL AND/OR RESIGNATION. In the event of a
non-negotiated change in control of the Company, a negotiated change in
control of the Company, or in the event the Executive tenders his resignation
as an employee of the Company, the Company and the Executive agree that the
Executive may elect to continue to render consulting services to the Company
under this Agreement for the duration of the term of this Agreement as
outlined on Schedule 1 hereto, but in no event for a period exceeding three
years. The Executive shall advise the Company in writing within 30 days of
the occurrence of any of the events specified above of his desire to continue
as a consultant to the Company, in which event the Executive shall be
compensated, and shall render services, as described below.
SECTION 6.2 DUTIES AND COMPENSATION. In the event the Executive elects to
serve as a consultant to the Company as described in Section 6.1 above, the
Executive shall consult with the Company concerning matters including, but not
limited to, management organizational issues, manufacturing, pricing, marketing
and the business policies and procedures of the Company. In his capacity as a
consultant to the Company, the Executive shall be obligated to devote not less
than 100 hours, nor more than 200 hours, to the Company as a consultant during
each year in which this Agreement remains in effect as a consulting agreement.
Notwithstanding any language to the contrary set forth herein, the Company shall
not have the right to terminate the services of the Executive as a consultant to
the Company except in the event the Executive commits fraud or is grossly
negligent, in either his capacity as an employee or consultant. For such time
as this Agreement shall remain in effect as a consulting, as opposed to an
employment, agreement, the Company shall compensate the Executive, in his
capacity as a consultant, in the amount of 60% of the Executive's base salary as
set forth in Schedule 1 hereto, payable quarterly in advance, and the
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Executive shall be entitled to continue to participate, at the Company's
cost, in all plans provided to the Company's executive employees, including,
but not limited to, then-existing medical, health, dental vision, disability,
life insurance and death benefit plans; provided, however, that the
provisions of Section 3.7 shall prevail in the event of any conflict between
the provisions of this Section 6.2 and Section 3.7.
ARTICLE VII
GENERAL MATTERS
SECTION 7.1 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Colorado and shall be construed in accordance therewith.
SECTION 7.2 NO WAIVER. No provision of this Agreement may be waived
except by an agreement in writing signed by the waiving party. A waiver of any
term or provision shall not be construed as a waiver of any other term or
provision.
SECTION 7.3 AMENDMENT. This Agreement may be amended, altered or revoked
at any time, in whole or in part, by filing with this Agreement a written
instrument setting forth such changes, signed by each of the parties.
SECTION 7.4 BENEFIT. This Agreement shall be binding upon the Executive
and the Company, and shall not be assignable by the Company without the
Executive's written consent.
SECTION 7.5 CONSTRUCTION. Throughout this Agreement the singular shall
include the plural, and the plural shall income the singular, and the masculine
and neuter shall include the feminine, wherever the context so requires.
SECTION 7.6 TEXT TO CONTROL. The headings of articles and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
SECTION 7.7 SEVERABILITY. If any provision of this Agreement is declared
by any court of competent jurisdiction to be invalid for any reason, such
invalidity shall not affect the remaining provisions. On the contrary, such
remaining provisions shall be fully severable, and this Agreement shall be
construed and enforced as if such invalid provisions had not been included in
the Agreement.
SECTION 7.8 AUTHORITY. The officer executing this Agreement on behalf of
the Company has been empowered and directed to do so by the Board of Directors
or the Compensation Committee of the Board of Directors of the Company.
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SECTION 7.9 EFFECTIVE DATE. The effective date of this Agreement shall be
January 1, 1997.
SPORT-XXXXX, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, Authorized Member
of the Compensation Committee
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxx
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SPORT-XXXXX, INC.
EMPLOYMENT AGREEMENT
SCHEDULE 1
DUTIES AND COMPENSATION
Executive: Xxxxxx X. Xxxxxxxxx
Positions: Chief Executive Officer and/or Chairman of the Board
Base Salary: $200,000 per year, payable bi-weekly
Bonus: As determined by the Board of Directors and in accordance with
Company-wide bonus plan.
Term: Three (3) year term so long as the Executive is Chief Executive
Officer or Chairman of the Board of the Company, and subject to
automatic one (1) year extensions as described in Section 3.1 of
the Executive Employment Agreement.
Duties and
Responsibilities: Supervision and coordination of all operations of the
Company; supervision of all other executive and operating
officers of the Company.
APPROVED:
THE COMPANY: EXECUTIVE:
By: /s/ Xxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, Authorized Member Xxxxxx X. Xxxxxxxxx
of the Compensation Committee
Date: January 1, 1997 Date: January 1, 1997
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