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EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective October 3, 1997 (the
"Agreement") by and between WHEELS SPORTS GROUP, INC. (the "Company") with
principal offices located at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx
00000 and XXXXX X. XXXXX, (the "Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
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. The Company will
also appoint the Executive to serve on the Company's Board of Directors
effective as of the date of this Agreement, and during the term of this
Agreement the Board of Directors will use its best efforts (consistent with
their fiduciary duties) to cause Executive to be retained on the Board.
2. Position 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 shall exert his best
efforts and devote such time and attention to the affairs of the Company as
necessary to fulfill his responsibilities hereunder. 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 or the Board of Directors of the
Company, and shall have full authority and responsibility with respect thereto,
subject to the general direction, approval and control of the Board of
Directors and to the restrictions, limitations and guidelines set forth by the
Board of Directors in resolutions adopted in the minutes of the Board of
Directors meetings, copies of which will be provided to the Executive from time
to time and will be incorporated herein by reference.
3. Board of Directors. The Executive shall at all times discharge his
duties in consultation with and under the supervision of the Board of Directors
of the Corporation. The Executive shall make his principal office at the
corporate headquarters of the Company in Mocksville, North Carolina, or at such
other place or places as the Executive may designate with the Company's
approval, which shall not be unreasonably withheld.
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4. Term of Employment. The term of the Executive's employment under
this Agreement shall be deemed to have commenced on October 3, 1997 and shall
continue for a three-year period until October 3, 2000, subject to extension as
hereinafter provided or termination pursuant to the provisions set forth
hereafter. Provided that Executive is in compliance with all of his obligations
hereunder, the term of Executive's employment shall be automatically extended
for an additional one-year terms upon expiration of the initial three-year term
unless either party hereto receives 90 days' prior written notice from the
other electing not to extend the Executive's employment.
5. Compensation. Commencing on October 3, 1997, the Company shall pay
to the Executive as compensation for his services a base salary of not less
than the amount specified on Schedule 1, payable semi-monthly, or such higher
salary as may be from time to time approved by the Board of Directors. Upon the
parties' execution of this Agreement, the Executive shall be entitled to
receive options granted under the Company's 1996 Omnibus Stock Option Plan in
accordance with the terms of Schedule 1 hereto. The Executive shall receive
such additional compensation and/or bonuses or stock options as may be voted to
him at the sole discretion of the Compensation Committee of the Board of
Directors.
6. Expense Reimbursement. The Company will reimburse the Executive,
at least monthly, for all reasonable and necessary expenses incurred by him in
carrying out his duties under this Agreement. The Executive shall present to
the Treasurer each month an account of such expenses in such form as is
reasonably required by the Board of Directors. Such expenses shall include
attorneys' fees and disbursements of Executive in connection with any legal
proceedings (including, but not limited to, arbitration), whether or not
instituted by the Company or Executive, relating to the interpretation or
enforcement of any provision of this Agreement; provided, however, that in the
case of any such proceeding to which the Company and the Executive are adverse
parties, the losing party shall reimburse the prevailing party for all costs
and expenses, including attorneys' fees and disbursements, incurred by the
prevailing party in defense or prosecution of any such proceeding. Prior to
advancing costs and expenses to Executive, the Board of Directors shall have
the right to obtain an agreement, and to require acceptable security therefor,
from Executive requiring him to repay Company for the same should it be
determined that Executive is not entitled to payment of such costs and
expenses.
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7. Medical and Dental Coverage. The Executive, his wife, and those
children who qualify will be entitled to participate in the Company's employee
group medical and other group insurance programs on the same basis as other
executives of the Company.
8. Medical Examination. The Executive agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Executive for the benefit of the Company; provided, however, that the Company
shall bear the entire cost of such examinations and shall pay all premiums on
any key man life insurance obtained for the benefit of the Company as
beneficiary or with respect to any other designated beneficiary.
9. Automobile or Automobile Allowance. The Company will provide the
Executive with an automobile or with an automobile allowance in the amount of
$10,000 for the duration of his employment with the Company under this
Agreement.
10. Vacation Time. The Executive shall be entitled to take four (4)
weeks paid vacation per calendar year. Such vacation may not be taken in any
greater than consecutive two (2) week increments. Vacation not used by the
Executive during the calendar year will be carried forward up to a maximum of
eight (8) weeks accrual going forward.
11. Benefits Payable on Disability. If the Executive becomes disabled
from properly performing services hereunder by reason of illness or other
physical or mental incapacity, the Company shall continue to pay the Executive
his then current salary hereunder for the first twelve (12) months of such
continuous disability commencing with the first date of such disability.
If the Executive qualifies for coverage, during the term of this
Agreement, the Company shall purchase and maintain a policy of Disability
Insurance which, after twelve (12) continuous months of disability, will pay up
to $10,000 per month of the Executive's salary until Executive reaches the age
of 65. The Company has no obligation to supplement or augment disability
payments made under any such disability policy or plan or make any other
payment in connection with such disability.
If the Company is unable to obtain a policy of Disability Insurance, the
Company shall pay up to $8,000 per month to the Executive for a twelve (12)
month period from the twelfth to the twenty-fourth month from the first date of
such disability.
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12. Obligations of Executive During and After Employment.
(a) The Executive agrees that during the terms of his employment
under this Agreement, he will engage in no other business activities
directly or indirectly, which are competitive with or which might place
him in a competing position to that of the Company, or any affiliated
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 secret inventions and processes of the Company and its
affiliated companies. Therefore, during or subsequent to his employment
by the Company, or by an affiliated company, 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 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 of employment with the Company and its affiliated companies.
The restrictions and obligations of Executive set forth in this Section
12(b) shall not apply to (i) information that is or becomes generally
available and known to the sports trading card industry or the fantasy
game industry (other than as a result of a disclosure directly or
indirectly by Executive); or (ii) information that was known to Executive
prior to Executive's employment by the Company or its predecessor.
(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 geographical areas and its
methods of doing business. Executive agrees that for a period of one (1)
year after termination or expiration of his employment (except if
termination is as a result of termination by Executive with cause under
Section 16), he will not, directly or indirectly, compete with the
Company in the business of designing, marketing and/or distributing
NASCAR merchandise, collectible NASCAR-related sports trading cards and
fantasy race games within the United States.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 12 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
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enforceable, it being the Executive's intention to provide the Company
with the broadest protection possible against harmful competition.
13. Termination for Cause by the Company. During the term of this
Agreement there can be no termination of the Executive by the Company except
for "Termination for Cause" as outlined below:
(a) Notwithstanding anything herein to the contrary the Company
may, without liability, terminate the Executive's employment hereunder
for cause at any time upon written notice from the Board of Directors
specifying such cause, and thereafter the Company's obligations hereunder
shall cease and terminate; provided, however, that the Company shall pay
the Executive two (2) weeks pay and that such written notice shall not be
delivered until after the Board of Directors shall have given the
Executive written notice specifying the conduct alleged to have
constituted such cause and the Executive has failed to cure such conduct,
if curable, within fifteen (15) days following receipt of such notice.
(b) "Termination for Cause" consists of one or more of the
following:
i) A willful breach of duty by the Executive during the
course of his employment;
ii) Habitual neglect of duty by the Executive;
iii) The Executive's material failure to perform and/or
meet objective and measurable financial standards set by the Board
of Directors and agreed upon by the Executive in advance; and
iv) Disloyal, dishonest or illegal conduct of the
Executive.
14. Termination by the Executive without Cause. The Executive, without
cause, may terminate this Agreement upon 90 days' prior written notice to the
Company. In such event, the Executive shall be required to render the services
required under this Agreement during such 90-day period unless otherwise
directed by the Board of Directors. Compensation for vacation time not taken
by Executive shall be paid to the Executive at the date of termination.
15. Termination by the Executive with Cause. The Executive may
terminate his employment with the Company at any time, upon 30-days' prior
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, (ii) any material diminishment in the duties and
responsibilities, working facilities, or compensation as described in
Paragraphs 2, 5 and 6 of this Agreement, or (iii) Executive's location of
employment is moved more than 60 miles from where it is on the date of this
Agreement; provided that
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such termination takes place within 90 days after receipt by Executive of
written notice of such relocation. Executive shall be entitled to all base
salary specified herein for the remaining term of this Agreement.
16. 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 Company shall pay a severance allowance
equal to six months' salary to the Executive's estate.
17. Lump Sum Compensation. In the event of the occurrence of a
"Triggering Event" which shall be defined to include a non-negotiated (i)
change in ownership of 50% or more of the outstanding shares of the Company
subsequent to the Company's initial public offering, or (ii) merger,
consolidation, reorganization or liquidation of the Company, the Executive
shall receive lump sum compensation equal to 2.9 times his annual salary and
incentive or bonus payments, if any, as shall have been paid to the Executive
during the Company's most recent 12-month period within 30 days of the
Triggering Event. If the total amount of the change of control compensation
were to exceed three (3) times the Executive's base amount (the average annual
taxable compensation of the Executive for the five (5) 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.
In the event the Executive is required to hire counsel to negotiate on
his behalf in connection with his termination or resignation from the Company
upon the occurrence of a Triggering Event, or in order to enforce the
obligations of the Company as provided in this Paragraph, the Company shall
reimburse to the Executive all reasonable attorneys' fees which may be expended
by the Executive in seeking to enforce the terms hereof. Such reimbursement
shall be paid every 30 days after the Executive provides copies of invoices
from the Executive's counsel to the Company. However, such invoices may be
redacted to preserve the attorney-client privilege, client confidentiality or
work product.
18. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Charlotte, North
Carolina in accordance with the Rules of the American Arbitration Association
then existing. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law of the State of North Carolina. The award
rendered by the arbitrators shall be final and judgment may be entered upon the
award in any court of the State of North Carolina having jurisdiction of the
matter.
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19. General Provisions.
(a) The Executive's rights and obligations under this Agreement
shall not be transferrable by assignment or otherwise, nor shall
Executive's rights be subject to encumbrance or to the claims of the
Company's creditors. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of
its property or assets.
(b) This Agreement constitutes the entire agreement between the
parties hereto in respect of the employment of the Executive by the
Company and supersedes any and all other agreements either oral or in
writing between the parties hereto with respect to the employment of the
Executive.
(c) Executive shall have no duty to mitigate the payment due him
from Company pursuant to this Agreement and any money earned by Executive
from other sources after his employment with the Company terminates shall
not reduce the amount owed him by the Company pursuant to this Agreement.
(d) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part thereof are declared
invalid or unenforceable by a court of competent jurisdiction or in an
arbitration proceeding, the validity and enforceability of the remainder
of such provisions or parts thereof and the applicability thereof shall
not be affected thereby.
(e) This Agreement may not be amended or modified except by a
written instrument executed by Company and Executive.
(f) This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the
State of North Carolina.
(g) Any notice required or permitted by this Agreement shall be
in writing and shall be sufficient if sent by registered mail, return
receipt requested, to the last known address of the party to whom such
notice is to be given. Any notice may be waived in writing by the party
entitled to receive it.
(h) This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
heirs, representatives, successors and permitted assigns.
20. Construction. Throughout this Agreement the singular shall include
the plural, and the plural shall include the singular, and the masculine and
neuter shall include the feminine, wherever the context so requires.
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21. Text to Control. The headings of paragraphs 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.
22. 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.
23. Effective Date. This Agreement may be executed on the dates noted
below but shall only be effective on October 3, 1997.
FOR THE COMPANY: WHEELS SPORTS GROUP, INC.
DATED: October 3, 1997 By: /s/ Xxxxxx X. Xxxxxxx
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FOR THE EXECUTIVE: Xxxxxx X. Xxxxxxx
DATED: October 3, 1997 By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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WHEELS SPORTS GROUP, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
SCHEDULE 1
DUTIES AND COMPENSATION
Executive: Xxxxx X. Xxxxx
Position: Chief Operating Officer
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: October 3, 2000, subject to automatic one (1) year
extensions.
Options: Upon execution of this Agreement, the Executive shall be
entitled to receive options granted under the Company's
1996 Omnibus Stock Option Plan to purchase 50,000 shares
of Common Stock at an exercise price of $8.25 per share.
Duties and
Responsibilities: Management and supervision of the Company's operations.
APPROVED:
THE COMPANY: EXECUTIVE:
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxx
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Xxxxxx X. Xxxxxxx, Xx., Chief Executive Xxxxx X. Xxxxx
Officer
Date: October 3, 1997 Date: October 3, 1997
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