Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 1, 2001 (the "Start Date"), by
and between Paragon Sports Group, Inc., a Delaware corporation with its
principal office located at 0000 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (the
"Company"), and Xxxx Xxxxxxx, an individual residing at 0 Xxxxxxxxxxx Xxxx, Xxx
Xxxxxxxx, Xxx Xxxx 00000 (the "Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to secure the services of the Executive
upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive desires to render services to the Company upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties mutually agree as follows:
1. Employment. The Company hereby employs Executive and the
Executive hereby accepts such employment, as Chairman of the Board of Directors
and Chief Executive Officer, subject to the terms and conditions set forth in
this Agreement.
2. Duties. The Executive shall serve as Chairman of the Board
of the Board of Directors and Chief Executive Officer of the Company. During the
term of this Agreement, the Executive shall properly perform all duties incident
to the position of Chairman of the Board and Chief Executive Officer and such
duties as may be assigned to him from time to time by the Board of Directors of
the Company (the "Board"), and the Executive agrees to abide by all By-laws,
policies, practices, procedures or rules of the Company. The Executive agrees to
devote his best efforts, energies and skill to the discharge of the duties and
responsibilities attributable to his position, and to this end, he will devote
his full business time and attention exclusively to the business and affairs of
the Company. Nothing in this Agreement shall preclude Employee from entering
into written contracts or oral agreements for his own benefit unrelated to the
business of the Company and/or related to the business of the Company in the
form of speaking engagements or broadcasting ("Individual Agreements"). Any
income, benefits, commissions and proceeds shall be for the benefit of Employee
only. Notwithstanding the foregoing, the Executive may donate his time and
efforts to charitable causes so long as such endeavors do not effect his ability
to perform his duties under this Agreement.
3. Term of Employment.
(a) The term of the Executive's employment shall be for a
period of three (3) years commencing on the Start Date, subject to earlier
termination by the parties pursuant to Sections 5 and 6 hereof (the "Term").
4. Compensation of Executive.
4.1 Salary. The Company shall pay to Executive a base salary
of Two Hundred Thousand Dollars ($200,000) per annum, subject to increases in
accordance with the terms of the last sentence of this Section 4.1 (the "Base
Salary"), less such deductions as shall be required to be withheld by applicable
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law and regulations. The Base Salary payable to Executive shall be paid at such
regular weekly, biweekly or semi-monthly time or times as the Company makes
payment of its regular payroll in the regular course of business. Commencing on
the first anniversary of the date hereof, and on each anniversary thereafter
during the Term, the Base Salary shall be increased by Twenty Five Thousand
Dollars ($25,000) of the then Base Salary.
4.2 Expenses. During the Term, the Company shall promptly
reimburse the Executive for all reasonable and necessary travel expenses and
other disbursements (not including travel to and from the Company's office, if
any, located in the New York City metropolitan area, including Long Island)
incurred by the Executive on behalf of the Company in the performance of the
Executive's duties hereunder, assuming Executive has received prior approval for
such travel expenses and disbursements by the Company to the extent possible
consistent with corporate practices with respect to the reimbursement of
expenses incurred by the Company's Executives. The Executive shall present all
appropriate vouchers and receipts for such expenses. During the term of
Employee's employment, the Company shall provide Employee with a leased
automobile and reimburse Employee for any expenses incurred in connection with
the leasing of the automobile, including, but not limited to, any fees for
leasing and insurance.
4.3 Benefits. The Company shall provide the Executive and his
family with full health insurance, and the Executive shall be permitted during
the Term to participate in any other hospitalization or disability insurance
plans, health programs, pension plans, bonus plans or similar benefits that may
be available to other executives of the Company (including coverage under any
officers and directors liability insurance policy), subject to such eligibility
rules as are applied to senior managers generally.
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4.4 Vacation. The Executive shall be entitled to four (4)
weeks paid vacation per year.
4.5 Issuance of Stock. (a) Upon execution of this Agreement,
the Company shall issue to the Eight Hundred Thousand (800,000) shares of its
common stock, par value $.01 per share (the "Shares"). The Executive understands
that the Shares have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and that the Shares may not be resold or
transferred unless they are registered under the Securities Act and all
applicable state securities laws, or unless an exemption from registration is
available. A legend to this effect will be contained on the Shares.
(b) If the Executive's employment under this Agreement is
terminated for Company Termination for Cause (as defined in Section 6(a) below)
prior to the expiration of the Term, then a pro rata amount of the Shares shall
be forfeited. Thus, for example, if the date of termination is twelve (12)
months after the Start Date, two-thirds (2/3) of the Shares shall be cancelled.
4.6 Piggyback Registration Rights. Commencing twelve (12)
months from the Start Date, Executive shall have piggyback registration rights
for the Shares, subject to underwriter cut-back in the case of an underwritten
offering. In the event the Company, on behalf of any selling shareholder (other
than selling shareholders who purchased stock in a private placement offering
who were granted registration rights) proposes to file a registration statement
for the registration of the sale of common stock (other than a registration
statement on Form S-4 or S-8), the Company shall include the Shares in such
registration statement.
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4.7 Incentive Compensation. Executive shall be entitled to
receive a bonus and/or other incentive compensation in an amount to be
determined by the Company; provided, however, that the failure of the Company to
award any such bonus and/or other incentive compensation shall not give rise to
any claim against the Company. The amount, if any, and timing of such bonus
shall be determined by the Company in its discretion.
5. Disability of the Executive. If the Executive is
incapacitated or disabled by accident, sickness or otherwise so as to render the
Executive mentally or physically incapable of performing the services required
to be performed under this Agreement for a period of five (5) consecutive months
or six (6) months in any period of 360 consecutive days (a "Disability"), the
Company may, at the time or during the period of such Disability, at its option,
terminate the employment of the Executive under this Agreement immediately upon
giving the Executive written notice to that effect.
6. Termination.
(a) The Company may terminate the employment of the Executive
and all of the Company's obligations under this Agreement at any time for
Company Termination For Cause (as hereinafter defined) by giving the Executive
written notice of such termination, with reasonable specificity of the details
thereof. "Company Termination For Cause" shall mean (i) the Executive's willful
misconduct which could reasonably be expected to have a material adverse effect
on the business and affairs of the Company, (ii) the Executive's willful
disregard of lawful instructions of the Company's Board of Directors consistent
with the Executive's responsibilities under this Agreement relating to the
business of the Company, (iii) the Executive's neglect of duties or failure to
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act, which, in each case, could reasonably be expected to have a material
adverse effect on the business and affairs of the Company, (iv) the commission
by the Executive of an act constituting common law fraud, or a felony, or
criminal act against the Company or any affiliate thereof or any of the assets
of any of them, (v) the Executive's abuse of alcohol or other drugs or
controlled substances, or conviction of a crime involving moral turpitude, (vi)
the Executive's material breach of any of the agreements contained herein, or
(vii) the Executive's death or resignation without Executive Termination For
Cause (as defined in Section 6(c) below). A termination pursuant to Section
6(a)(i), (ii), (iii), (iv), (v) (other than as a result of a conviction of a
crime involving moral turpitude) or (vi) shall take effect thirty (30) days
after the giving of the notice contemplated hereby unless the Executive shall,
during such 30-day period, remedy to the reasonable satisfaction of the Board of
Directors of the Company the misconduct, disregard, abuse or breach specified in
such notice; provided, however, that such termination shall take effect
immediately upon the giving of such notice if the Board of Directors of the
Company shall, in its reasonable discretion, have determined that such
misconduct, disregard, abuse or breach is not remediable (which determination
shall be stated in such notice). A termination pursuant to Section 6(a)(v) (as a
result of a conviction of a crime involving moral turpitude) or (vii) shall take
effect immediately upon the giving of the notice contemplated hereby.
(b) The Company may terminate Executive's employment at any
time without Cause, subject to the provisions of Section 7(b) below.
(c) The Executive may terminate this Agreement and his
employment with the Company for Executive Termination For Cause (as hereinafter
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defined) by giving written notice to the Chairman of the Board of Directors of
the Company, with reasonable specificity of the details thereof. "Executive
Termination For Cause" shall mean (i) the Company's material breach of any of
the agreements contained herein, (ii) a material reduction in the scope of the
Executive's responsibilities and duties and (iii) a Change in Control (as
defined below). A termination pursuant to this Section 6(c) shall take effect
thirty (30) days after the giving of the notice contemplated hereby unless the
Company shall, during such thirty (30) day period, remedy to the reasonable
satisfaction of the Executive the misconduct, disregard, abuse, or breach
specific in such notice; provided, however, that such termination shall take
effect immediately upon the giving of such notice if the Executive shall, in his
reasonable discretion, have determined that such misconduct, disregard, abuse or
breach is not remediable (which determination shall be stated in such notice).
(d) For purposes of this Agreement, a "Change in Control"
shall mean (i) the dissolution or liquidation of the Company or a merger,
consolidation or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, (ii) a sale of substantially
all of the assets of the Company to another person or entity, or (iii) any
transaction (including without limitation a merger or reorganization in which
the Company is the surviving entity) that results in any person or entity, which
is not a shareholder on the date of this Agreement, owning fifty percent (50%)
or more of the combined voting power of all classes of stock of the Company.
7. Effect of Termination of Employment.
(a) Upon the termination of the Executive's employment by the
Company for Company Termination For Cause or a Disability, neither the Executive
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nor the Executive's beneficiaries or estate shall have any further rights to
compensation under this Agreement or any claims against the Company arising out
of this Agreement, except the right to receive (i) the unpaid portion of the
then Base Salary provided for in Section 4.1, earned through the date of
termination (the "Unpaid Salary Amount") and (ii) reimbursement for any expenses
for which the Executive shall not have theretofore been reimbursed, as provided
in Section 4.2 (the "Expense Reimbursement Amount").
(b) Upon the termination of the Executive's employment by (i)
the Company for other than Company Termination For Cause or a Disability or (ii)
the Executive for Executive Termination For Cause, neither the Executive nor the
Executive's beneficiaries or estate shall have any further rights to
compensation under this Agreement or any claims against the Company arising out
of this Agreement, except that the Company shall pay as severance pay to the
Executive, an amount equal to the sum of (i) the Unpaid Salary Amount, (ii) the
Expense Reimbursement Amount, (iii) severance compensation equal to the then
Base Salary for six (6) months and (iv) the right and option to sell to the
Company any Shares on the terms and subject to the conditions set forth in
Section 7(d) below.
(c) The forfeiture of the Shares shall be subject to the
provisions of Section 4.5(b) above.
(d) Upon the termination of (i) the Executive by the Company
for Company Termination For Cause or a Disability or (ii) this Agreement by the
Executive for Executive Termination For Cause, the Company shall have the right
and option to buy from the Executive upon a Company Termination For Cause, or
the Executive shall have the right and option to sell to the Company upon and
Executive Termination For Cause, as applicable, any Shares (collectively, the
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"Restricted Shares") at the lesser of four dollars ($4.00) per Restricted Share,
or if applicable, the public share price of the Shares as of the date the party
terminating this Agreement provides notice of said termination. Each party shall
exercise its rights under this Section 7(d) by stating its desire to exercise
such rights in the notice of termination required under Section 6 above. Any
amount to be paid to the Executive hereunder shall be paid by the Company in
cash within thirty (30) days of the effective date of the Executive's
termination.
8. Disclosure of Confidential Information. Executive
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Company, including but not limited to its
customer list, products, know-how, and business plans. Executive acknowledges
that such information is of great value to the Company, is the sole property of
the Company, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Company herein, Executive
will not during the term of this Agreement and for the twenty-four (24) month
period following his employment hereunder, reveal, divulge or make known to any
person (except counsel or as may be required by law or, if necessary, in a
litigation), any information acquired by Executive during the course of his
employment (including employment prior to the date hereof), which is treated as
confidential by the Company, including but not limited to its customer list, not
otherwise in the public domain, other than in the ordinary of business during
his employment hereunder. The provisions of this Section 8 shall survive
Executive's employment hereunder.
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9. Covenant Not To Compete.
(a) Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary. The parties confirm that it
is reasonably necessary for the protection of Company that Executive agree, and
accordingly, Executive does hereby agree, that he shall not, directly or
indirectly, at any time during the term of the Agreement and the "Restricted
Period" (as defined in Section 9(e) below):
(i) except as provided in Subsection (d) below, be
engaged in the representation of professional soccer athletes in their
negotiation of player and endorsement contracts as well as representation of
soccer clubs to procure players, either on his own behalf or as an officer,
director, stockholder, partner, consultant, associate, Executive, owner, agent,
creditor, independent contractor, or co-venturer of any third party; or
(ii) employ or engage, or cause or authorize,
directly or indirectly, to be employed or engaged, for or on behalf of himself
or any third party, any Executive or agent of Company or any affiliate thereof.
(b) Executive hereby agrees that he will not, directly or
indirectly, for or on behalf of himself or any third party, at any time during
the term of the Agreement and during the Restricted Period solicit any customers
of the Company or any affiliate thereof (including those procured or indirectly
by the Executive) in a manner which directly or indirectly competes with the
Company.
(c) If any of the restrictions contained in this Section 9
shall be deemed to be unenforceable by reason of the extent, duration or
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geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Section shall
then be enforceable in the manner contemplated hereby.
(d) This Section 9 shall not be construed to prevent Executive
from owning, directly or indirectly, in the aggregate, an amount not exceeding
two percent (2%) of the issued and outstanding voting securities of any class of
any company whose voting capital stock is traded on a national securities
exchange or on the over-the-counter market other than securities of the Company.
(e) The term "Restricted Period," as used in this Section 9,
shall mean the period of Executive's actual employment hereunder plus in the
event the Executive's employment is terminated for Company Termination for Cause
for a period of twelve (12) months thereafter.
(f) The provisions of this Section 9 shall survive the end of
the Term as provided in Section 9(e) hereof.
10. Miscellaneous.
10.1 Injunctive Relief. Executive acknowledges that the
services to be rendered under the provisions of this Agreement are of a special,
unique and extraordinary character and that it would be difficult or impossible
to replace such services. Accordingly, Executive agrees that any breach or
threatened breach by him of Section 8 or 9 of this Agreement shall entitle
Company, in addition to all other legal remedies available to it, to apply to
any court of competent jurisdiction to seek to enjoin such breach or threatened
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breach. The parties understand and intend that each restriction agreed to by
Executive hereinabove shall be construed as separable and divisible from every
other restriction, that the unenforceability of any restriction shall not limit
the enforceability, in whole or in part, of any other restriction, and that one
or more or all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement is
more restrictive than permitted by law in the jurisdiction in which Company
seeks enforcement thereof, such restriction shall be limited to the extent
permitted by law.
10.2 Assignments. Neither Executive nor the Company may assign
or delegate any of their rights or duties under this Agreement without the
express written consent of the other.
10.3 Entire Agreement. This Agreement constitutes and embodies
the full and complete understanding and agreement of the parties with respect to
Executive's employment by Company, supersedes all prior understandings and
agreements, whether oral or written, between Executive and Company, and shall
not be amended, modified or changed except by an instrument in writing executed
by the party to be charged. The invalidity or partial invalidity of one or more
provisions of this Agreement shall not invalidate any other provision of this
Agreement. No waiver by either party of any provision or condition to be
performed shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.
10.4 Binding Effect. This Agreement shall inure to the benefit
of, be binding upon and enforceable against, the parties hereto and their
respective successors, heirs, beneficiaries and permitted assigns.
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10.5 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.6 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage prepaid, or by
private overnight mail service (e.g. Federal Express) to the party at the
address set forth above or to such other address as either party may hereafter
give notice of in accordance with the provisions hereof. Notices shall be deemed
given on the sooner of the date actually received or the third business day
after sending.
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions. Except as provided for in
Section 10.1 above, any controversy or claim arising out of or relating to this
Agreement shall be settled by binding arbitration in accordance with the
then-current Commercial Arbitration Rules (the "Rules") of the American
Arbitration Association (the "Association") to the extent that such Rules do not
conflict with any provision of this Section 10.7. The arbitration shall be held
at a mutually acceptable location in New York and shall be held before one (1)
arbitrator (unless otherwise agreed by the parties) who shall be either a
retired judge or an attorney with greater than ten (10) years of relevant
practice. Neither party shall institute an arbitration proceeding hereunder
unless, at least thirty (30) days prior thereto, such party shall have furnished
to the other written notice of its intent to do so and the basis thereof in
detail. Any award, order or judgment pursuant to such arbitration shall be
deemed final and may be entered and enforced in any state or federal court in
New York.
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10.8 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.9 Separability. If any of the restrictions contained in
this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Agreement shall
then be enforceable in the manner contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
PARAGON SPORTS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer and Director
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
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