EXHIBIT 10.15
SEVERANCE AGREEMENT - 73+
January __, 2000
Dear _______________:
This letter will confirm our understanding on the matters set forth
below, and supersedes the letter agreement between us on the same subject dated
______, 199_.
1. If your employment with The Sports Authority, Inc. (the "Company")
is terminated by the Company other than for Cause and paragraph 2 does not
apply, the Company will pay to you your base salary through the date termination
occurs, plus any other amount due you at the time of termination under any bonus
plan of the Company, and thereafter the Company will pay you twenty-six (26)
bi-weekly severance payments equal to your bi-weekly base salary at the time of
termination. In addition, on the next ensuing date when bonuses are paid under
the bonus plan of the Company in which you are a participant at the time of your
termination, the Company will pay you in a lump sum an amount equal to the bonus
you would have received if you had remained employed by the Company through that
date.
2. Notwithstanding paragraph 1, if there is a Change in Control of the
Company while you are employed by the Company and if your employment with the
Company is terminated by the Company other than for Cause or if you terminate
your employment with the Company for Good Reason, in either case within a
two-year period following such a Change in Control, the Company will pay to you
an amount equal to two times the sum of (i) your annual rate of base salary at
the time of termination or immediately prior to the Change in Control, whichever
base salary amount is greater, and (ii) the "on plan" bonus amount targeted for
you for the fiscal year in which termination occurs or the fiscal year
immediately prior to the Change in Control, whichever bonus amount is greater.
Such payment shall be made within fifteen days after your termination.
3. (a) Termination by the Company for "Cause" means termination based
on (i) conduct which is a material violation of Company policy (as in effect on
the date your employment is terminated, if it is terminated under paragraph 1,
and as in effect immediately before the Change in Control, if your employment is
terminated under paragraph 2), or which is fraudulent or unlawful or which
materially interferes with your ability to perform your duties, (ii) misconduct
which damages or injures the Company or substantially damages the Company's
reputation, or (iii) gross negligence in the performance of, or willful failure
to perform, your duties and responsibilities.
(b) Termination by you for "Good Reason" means termination based on
the occurrence without your express written consent of any of the following: (i)
a significant diminution by the Company of your role with the Company or a
significant detrimental change in the nature and/or scope of your status with
the Company, other than for Cause, (ii) a reduction in your base salary, other
than for Cause and other than as part of an across-the-board reduction in
salaries of management personnel (including all Vice Presidents and above) of
less than 20%, (iii) a material diminution by the Company of benefits (taken as
a whole) provided to you immediately prior to the Change in Control, or (iv) the
relocation of the Company's principal executive offices to a location outside of
Broward County, Palm Beach County or Dade County, Florida or any requirement
that you be based anywhere other than the Company's principal executive offices.
(c) A "Change in Control" shall be deemed to have occurred if:
(i) the "beneficial ownership" (as defined in Rule
l3d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of securities representing more than 50% of the combined voting power of
the Company is acquired by any "person" as defined in sections 13(d) and 14(d)
of the Exchange Act (other than the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company), or
(ii) the shareholders of the Company approve a
definitive agreement to merge or consolidate the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all of its
assets, or
(iii) during any period of three consecutive years,
individuals who at the beginning of such period were members of the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof (unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of
such period).
4. (a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for your benefit, whether paid or payable or distributed or
distributable pursuant to the terms of this agreement or otherwise (the
"Payment"), would constitute an "excess parachute payment" within the meaning of
Section 280G of the Code, you shall be paid an additional amount (the "Gross-Up
Payment") such that the net amount retained by you after deduction of any excise
tax imposed on you under Section 4999 of the Code , and any federal, state and
local income and employment tax and excise tax imposed upon the Gross-Up Payment
shall be equal to the Payment. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income tax and employment
taxes at the highest marginal rate of federal income and employment taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of your residence (or, if greater, the state and locality in which you
are required to file a nonresident income tax return with respect to the
Payment) on the Termination Date, net of the maximum reduction in federal income
taxes that may be obtained by you from the deduction of such state and local
taxes.
(b) All determinations to be made under this paragraph 4 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and you
within 10 days of your termination. Any such determination by the Accounting
Firm shall be binding upon the Company and you. Within five days after the
Accounting Firm's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to you, or for your benefit, such
amounts as are then due to you under this agreement.
(c) You shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after you know of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. You shall not pay such claim prior to the
expiration of the thirty day period following the date on which you give such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies you
in writing prior to the expiration of such period that it desires to contest
such claim, you shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold you harmless, on an after-tax
basis, for any excise tax, income tax or employment tax, including interest and
penalties, with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on
the foregoing provisions of this paragraph 4, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearing and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct you to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and you agree to prosecute such
contest to a termination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, however, that if the Company directs you to pay
such claim and xxx for a refund the Company shall advance the amount of such
payment to you, on an interest-free basis and shall indemnify and hold you
harmless, on an after-tax basis, from any excise tax, income tax or employment
tax, including interest or penalties with respect thereto, imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and provided further that any extension of the statute of limitations
relating to payment of taxes for your taxable year with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
you shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by you of an amount advanced by the
Company pursuant to this Section, you become entitled to receive any refund with
respect to such claim, you shall (subject to the Company's complying with the
requirements of this paragraph) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by you of an amount advanced by the
Company pursuant to this Section, a determination is made that you shall not be
entitled to any refund with respect to such claim and the Company does not
notify you in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
(e) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in this paragraph shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses resulting
from or relating to its determinations pursuant to this paragraph, except for
claims, damages or expenses resulting from the gross negligence or willful
misconduct of the Accounting Firm.
5. The payments provided hereunder shall constitute the exclusive
payments due you from, and the exclusive obligation of, the Company in the event
of any termination of your employment, except for any benefits which may be due
you in normal course under any employee or executive benefit plan of the Company
which provides benefits after termination of employment, other than a severance
pay plan. You shall not be required to mitigate the amount of any payment or
benefit provided for in this
agreement by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for herein be reduced by any compensation earned by
other employment or otherwise. The payments hereunder may not be transferred,
assigned or encumbered in any manner, either voluntarily or involuntarily. In
the event of your death, any payments then or thereafter due hereunder will be
made to your estate.
6. In consideration of the obligations of the Company hereunder, you
agree that you shall not, for a period of (i) one year from the date of any
termination of your employment by the Company other than for Cause and other
than under paragraph 2, and (ii) two years from the date of any other
termination of your employment other than under paragraph 2, (a) directly or
indirectly become an employee, director, consultant or advisor of, or otherwise
affiliated with, any retailer of sporting goods, footwear or apparel with retail
outlets in the United States (unless the classes of products sold by such
retailer constitute less than 10% of the total sales by the Company and its
licensees in the United States during the fiscal year of the Company immediately
preceding the year of such termination), (b) directly or indirectly solicit or
hire, or encourage the solicitation or hiring of, any person who was an employee
of the Company at any time on or after the date of such termination (unless more
than six months shall have elapsed between the last day of such person's
employment by the Company and the first date of such solicitation or hiring),
(c) disparage the name, business reputation or business practices of the Company
or any of its officers or directors, or interfere with the Company's existing or
prospective business relationships, or (d) without the written consent of the
Chief Executive Officer of the Company, disclose to any person other than as
required by law or court order, any confidential information obtained by you
while in the employ of the Company, provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by you) or any specific
information or type of information generally not considered confidential by
persons engaged in the same business as the Company, or information disclosed by
the Company by any member of its Board of Directors or any other officer thereof
to a third party without restrictions on the disclosure of such information.
You acknowledge that these restrictions are reasonable and necessary to
protect the Company's legitimate interests, that the Company would not have
entered into this agreement in the absence of such restrictions, and that any
violation of these restrictions will result in irreparable harm to the Company.
You agree that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as
an equitable accounting of all earnings, profits and other benefits arising from
any violation hereof, which rights shall be cumulative and in addition to any
other rights or remedies to which the Company may be entitled. You irrevocably
and unconditionally (i) agree that any legal proceeding arising out of this
paragraph may be brought in the United States District Court for the Southern
District of Florida, or if such court does not have jurisdiction or will not
accept jurisdiction, in any court of general jurisdiction in Broward County,
Florida, (ii) consent to the non-exclusive jurisdiction of such court in any
such proceeding, and (iii) waive any objection to the
laying of venue of any such proceeding in any such court. You also irrevocably
and unconditionally consent to the service of any process, pleadings, notices or
other papers.
7. In the event you initiate legal action against the Company to
enforce your rights under this agreement, the party which prevails in such
litigation shall be entitled to full reimbursement by the other party for all
reasonable expenses (including reasonable attorneys' fees and expenses) incurred
in connection with such action.
8. This agreement shall terminate on November 30, 2001 and shall be
automatically renewed for successive one-year periods unless the Company
notifies you or you notify the Company in writing that this agreement will not
be renewed at least sixty days prior to the end of the current term, provided,
however, that (i) after a Change in Control during the term of this agreement,
this agreement shall remain in effect until all of the obligations of the
parties hereunder are satisfied, and (ii) this agreement shall terminate if,
prior to a Change in Control, your employment with the Company shall terminate
for any reason other than as provided herein.
9. The obligation to make the payments hereunder is conditioned upon
your execution and delivery to the Company at the time of the termination of
your employment of a release, in form satisfactory to the Company, of any claims
you may have as a result of your employment or termination of employment under
any federal, state or local law, excluding any claim for benefits which may be
due you in normal course under any employee or executive benefit plan of the
Company which provides benefits after termination of employment, other than a
severance pay plan, and excluding any claims for reimbursement for liabilities,
costs or expenses incurred in any action against you within the scope of your
employment by the Company and for which you would have been indemnified pursuant
to the bylaws of the Company as of the date hereof (in which case you shall
notify the Company in writing within ten days after receiving service of process
as to the commencement of the action and give the Company the right to control
the defense of any such action), unless later limited in accordance with
applicable law.
10. The Company shall require any successor or successors (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to you, to acknowledge expressly that this
agreement is binding upon and enforceable against the Company in accordance with
the terms hereof, and in the same manner and to the same extent that the Company
would be required to perform if no such succession or successions had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this agreement. As
used in this agreement, the Company shall mean the Company as hereinbefore
defined and any such successor or successors to its business and/or assets,
jointly and severally.
11. All payments hereunder shall be subject to applicable tax
withholding and deductions.
12. Nothing in this agreement shall be construed as giving you any
right to be retained in the employ of the Company.
13. This agreement shall be governed by and interpreted under the laws
of the State of Delaware without giving effect to any conflict of laws
provisions.
14. This agreement sets forth the entire understanding with respect to
the subject matter hereof and supersedes all prior agreements, written or oral
or express or implied, between you and the Company as to such subject matter.
This agreement may not be amended, nor may any provision hereof be modified or
waived, except by an instrument in writing duly signed by you and the Company.
15. If any provision of this agreement, or any application thereof to
any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this agreement.
Please indicate your agreement by signing below and retain one copy for
you records.
Sincerely,
THE SPORTS AUTHORITY, INC.
By:
-----------------------------
Agreed:
-----------------------------
Date:
------------------------
