EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, effective December 1, 2000, by and between
SPORT-XXXXX, INC., a Colorado corporation (the "Company") and XXXXXXX X. XXXXXX
(the "Executive").
WHEREAS, the Company desires 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. 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 Chief Executive Officer,
the Chief Operating Officer or 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 the Executive's duties under this Agreement.
SECTION 1.4 VACATIONS. The Executive shall be entitled each year to a
reasonable vacation of not less than three 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.
Page 1 of 9
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.
SECTION 1.6 BENEFIT PLANS. From the effective date of this Agreement, the
Executive shall be entitled to participate in all existing benefit plans
provided to the Company's executive employees including, to the extent now or
hereafter in effect, medical, health, dental, vision, disability, life insurance
and death benefit plans, in accordance with the terms of such plans.
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, subject to annual
review and raises in such base salary. The base salary may be raised 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 30% 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
Page 2 of 9
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. If the Company gives such written notice of non-renewal, the
provisions of Section 3.3 shall apply; if the Executive gives such written
notice of non-renewal, the provisions of Section 3.5 shall apply. 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 COMPANY WITH CAUSE. The Company may
terminate the Executive, at any time, upon ten days' written notice and
opportunity for the Executive to remedy any non-compliance with the terms of
this Agreement (if such non-compliance can be remedied), by reason of fraud or
gross negligence of the Executive or the conviction of the Executive of a felony
which is not appealed and subsequently reversed or vacated. In such event, the
Board of Directors shall provide in writing to the Executive an opinion of the
Board of Directors, which shall specify with particularity the basis for such
termination. Upon the date of termination of this Agreement pursuant to this
Section 3.2, the Company's obligation to pay any compensation shall terminate,
at which time the Company shall be responsible for compensating the Executive
for any vacation time not taken. Subject to this exception and the obligation of
the Company to compensate the Executive through the notice period, no other
compensation shall be payable to the Executive should this Agreement be
terminated pursuant to this Section 3.2.
SECTION 3.3 TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate the Executive's services without cause at any time upon 90 days'
written notice. In such event, in addition to compensating the Executive during
such 90-day notice period, the Company shall be obligated to compensate the
Executive with severance pay equal to 90 additional days' compensation as of the
date of such termination. Accordingly, in the event the Company terminates this
Agreement without cause or chooses not to renew this Agreement upon its
expiration, the Executive shall receive an aggregate of six months' salary from
and after the date of the Executive's receipt of a notice of termination through
and including the date of termination. In addition to the foregoing, the
Executive shall receive a bonus which shall be equivalent to 50% of the annual
bonus last received by the Executive. Such bonus provision shall be in addition
to the compensation and severance package hereinabove specified.
SECTION 3.4 TERMINATION BY THE EXECUTIVE WITH CAUSE. The Executive may
terminate his employment with the Company at any time, upon ten days' written
notice and opportunity for
Page 3 of 9
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 not be
entitled to the severance compensation and other benefits described in Section
3.7 below in the event of termination of this Agreement pursuant to this Section
3.4, except as otherwise provided in Section 3.7(a), but shall be entitled to
the compensation provided in Section 3.3 upon a determination that the Company
has failed to perform its duties pursuant to this Agreement and that such
failure is material or a determination that the duties and responsibilities,
working facilities, or benefits as described herein have been materially
diminished. Such determination shall be made by the Board of Directors in their
best good faith.
SECTION 3.5 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 render the
services required under this Agreement following such 90-day period.
Compensation for vacation time not taken by the Executive shall be paid to the
Executive at the date of termination. The Executive shall not be entitled to the
severance compensation and other benefits described in Section 3.7 below in the
event of termination of this Agreement pursuant to this Section 3.5, except as
described in Section 3.7(a), and shall not be entitled to the compensation
provided in Section 3.3.
SECTION 3.6 TERMINATION UPON DEATH OF THE EXECUTIVE. In addition to any
other provision relating to termination, this Agreement shall terminate upon the
Executive's death. In such event, all unpaid compensation and bonuses,
compensation for vacation time not taken by the Executive and all expense
reimbursements due to the Executive shall be paid to the Executive's estate.
SECTION 3.7 SEVERANCE COMPENSATION AND CONTINUATION OF BENEFITS.
(a) Notwithstanding any other provisions hereof, in the event of a
non-negotiated change in control of the Company and either the Executive or the
Company terminate this Agreement within 60 days of such non-negotiated change in
control, the Executive shall receive severance compensation, payable in a lump
sum within 30 days of such non-negotiated change in control, equal to three
times his annual salary and incentive or bonus payments, if any, as shall have
been paid to the Executive during the most recent 12-month period concluded
prior to the date of his termination or resignation. If the total amount of the
non-negotiated change of control compensation were to exceed three times the
Executive's base compensation (the average annual taxable compensation of the
Executive for the five years preceding the year in
Page 4 of 9
which the change of control occurs), the Company and the Executive will reduce
the lump sum compensation to be received by the 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. The foregoing provisions shall
not apply in the event of a negotiated change in control of the Company.
(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. Such invoices may be redacted to preserve the attorney-client privilege
or attorney-client confidentiality.
(c) So long as the Executive is receiving severance compensation pursuant
to this Section 3.7, 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.
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. In the event of a non-negotiated change in control of
the Company and either the Executive or the Company terminate this Agreement
within 60 days of such non-negotiated change in control as provided in Section
3.7(a) of this Agreement, any and all options granted to the Executive to
purchase Common Stock of the Company shall become fully vested and exercisable
on the date of termination of this Agreement. In the event of termination or
non-renewal by either party without cause in accordance with Sections 3.3 or 3.5
Page 5 of 9
of this Agreement, any and all vested options pursuant to the terms of the
option agreements are exercisable in accordance with the Company's Amended and
Restated 1993 Stock Option Plan or any successor plan under which such options
are granted. In the event this Agreement is terminated by the Company for cause,
options will vest and be exercisable pursuant to the terms of the Plan regarding
termination of employment for cause. This provision shall serve as a contractual
modification of any option grants or agreements between the Executive and the
Company and is hereby incorporated by reference into each such option grant or
agreement.
ARTICLE IV
CONFIDENTIALITY AND COMPETITION
SECTION 4.1 FURTHER OBLIGATIONS OF THE 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 of the Company.
(b) The Executive realizes that during the course of his employment, the
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 the like,
or copies thereof, relating to Company's business, or the business of an
affiliated company, which the 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) 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
Page 6 of 9
broadest protection possible against harmful disclosure of confidential
information and trade secrets.
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.
(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, but in no event
for a period exceeding one year.
ARTICLE VI
GENERAL MATTERS
SECTION 6.1 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Colorado and shall be construed in accordance therewith.
SECTION 6.2 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.
Page 7 of 9
SECTION 6.3 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 6.4 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 6.5 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 6.6 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 6.7 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 6.8 AUTHORITY. The officer executing this Agreement on behalf of
the Company has been empowered and directed to do so by the Board of Directors
of the Company.
SECTION 6.9 EFFECTIVE DATE. The effective date of this Agreement shall be
December 1, 2000.
SPORT-XXXXX, INC.
By:
-----------------------------------
Xxxxxx X. Xxxxxxxxx,
Chief Executive Officer
EXECUTIVE:
--------------------------------------
Xxxxxxx X. Xxxxxx
Page 8 of 9
SPORT-XXXXX, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
SCHEDULE 1
DUTIES AND COMPENSATION
Executive: Xxxxxxx X. Xxxxxx
Position: Chief Financial Officer, Controller, Secretary and Treasurer
Base Salary: $80,000 per year, payable bi-weekly
Bonus: Participation in executive level of Company-wide bonus plan
Term: December 1, 2000 through November 30, 2001, subject to
automatic one (1) year extensions described in Section 3.1
of the Executive Employment Agreement
Stock Options: To be determined by the Compensation Committee in its
discretion
Duties and
Responsibilities: Preparation of the Company's financial statements, oversight
and supervison of the Company's accounting function and
accounting department and those tasks and duties assigned by
the Chief Executive Officer, the Chief Operating Officer or
the Board of Directors
APPROVED:
THE COMPANY: EXECUTIVE:
By:
------------------------------ -----------------------------------
Xxxxxx X. Xxxxxxxxx, Chief Xxxxxxx X. Xxxxxx
Executive Officer
Date: February __, 2001 Date: February __, 2001
Page 9 of 9
