Exhibit 10.28
EMPLOYMENT AGREEMENT
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This Agreement ("Agreement") is made and entered into as of
the 28th day of March, 2004, between Xxxxx X. Xxxxxxxxx ("Employee") and
Xxxxxx'x Trading Company, Inc., an Indiana corporation ("Company").
1. TERM OF EMPLOYMENT: Subject to the terms of this Agreement,
Company hereby agrees to employ Employee, and Employee hereby agrees to accept
such employment, for the period beginning on the date hereof and ending at the
close of business on the second anniversary of the date hereof or on such
earlier date upon which this Agreement is terminated in accordance with the
provisions set forth herein (the "Initial Term"). Commencing on the first
anniversary of the Commencement Date, the term of this Agreement shall
automatically be extended each day by one day, until a date (the "Termination
Date") which is one (1) year following the first date on which either party
delivers written notice of termination to the other. The "Term" of this
Agreement shall include any automatic extensions pursuant to the preceding
sentence.
2. POSITION AND DUTIES:
(a) General Duties; Performance: At all times during the Term,
Employee shall (i) serve as Senior Vice President-Store Operations, and, in such
capacity, shall perform such duties and have such responsibilities not
materially inconsistent with the foregoing as may from time to time be assigned
or delegated to him by the Chief Executive Officer of the Company (the "CEO").
During this period, Employee shall diligently and conscientiously devote his
full and exclusive business time, energy, and ability to his duties and the
business of Company. At all times during the Term, Employee shall (i) perform
his duties faithfully and efficiently, subject to the direction of the CEO, and
(ii) observe and comply with all directions, policies, and regulations given or
promulgated by the CEO.
(b) Non-Contravention: Employee represents and warrants that
(i) he has the full right and authority to enter into this Agreement and to
render the services as required under this Agreement, (ii) by signing this
Agreement he is not breaching any contract or legal obligation he owes to any
third party, and (iii) he is not party to any other agreement with Company or
any other party providing for the performance by him of services or, in the case
of Company and its subsidiaries, for any compensation to be paid to him.
3. COMPENSATION, BENEFITS, AND EXPENSES: During the Term, Company
shall compensate Employee for his services as follows:
(a) Salary and Expenses: Company shall pay Employee a base
salary at an annual rate of not less than $200,000.00, as adjusted from time to
time under Company's salary review procedures, in each case less standard income
and payroll tax withholding and other authorized deductions. Such salary shall
be earned and shall be payable in regular installments in accordance with
Company's normal payroll practices. Employee shall also be entitled to
reimbursement for reasonable business expenses in accordance with Company
policy.
(b) Health Insurance: Employee and his dependents shall be
eligible to participate in Company's group health plan as in effect from time to
time for employees of Company.
(c) Bonus: Employee shall be eligible to receive an annual
bonus in accordance with the Company's existing bonus program, with such bonus
to be determined based on Company achieving its targeted operating income for
the applicable fiscal year (the "Target Income") as set forth in Company's
annual budget for such fiscal year prepared by management and approved by the
Board. The "Target Bonus" shall be equal to 35% of base salary in each fiscal
year beginning with fiscal year 2004 and may be increased by an additional
amount of Target Bonus pursuant to the schedule for incremental Target Bonus
increases approved by the Board from time to time.
(d) Vacation: Employee shall be entitled to annual paid
vacation in accordance with Company's policies as in effect from time to time
for similarly situated management employees of Company, but not less than four
weeks of paid vacation per year.
(e) Retirement Plan: Employee shall be eligible to participate
in Company's retirement plans applicable to Employee, in accordance with the
terms of such plans. Employee understands that the Board monitors such plans or
arrangements and may, from time to time, add benefits to or delete benefits from
the plans or arrangements, or modify or terminate existing plans or
arrangements, provided that no such modification or termination shall decrease
the retirement benefits accrued by the Employee prior to the modification or
termination without the written consent of the Employee.
(f) Company Stock/Options. Employee shall be eligible to
receive an annual grant of options commensurate with Employee's position and
responsibilities (the "Annual Options"), pursuant to the Company's 1999 Stock
Option Plan, as amended (the "Option Plan"), with an exercise price equal to the
closing price of the Common Stock on the grant date; provided, however, Company
shall not be required to issue Annual Options to Employee after such time as it
has discontinued the issuance of options to other senior management employees,
using instead another form of incentive compensation, provided that Employee
receives incentive compensation in the same form as other senior management
employees. The Annual Options shall be governed by and subject to the terms and
conditions of the Option Plan.
4. TERMINATION: Employee's employment with Company during the
Term may be terminated by Company under the circumstances described in this
Section 4, and subject to the provisions of Section 5:
(a) Termination by Company for Cause: Company may immediately
terminate Employee's employment for Cause by giving written notice to Employee
identifying in reasonable detail the act or acts said to constitute "Cause." For
purposes of this Agreement, "Cause" means Employee's (i) act of fraud,
embezzlement, theft, or other material violation of the law in connection with
or in the course of his employment, (ii) illegal act that is likely to
materially injure the reputation, business, or a business relationship of
Company; (iii) wrongful damage to material assets of Company; (iv) wrongful
disclosure of material confidential information of Company; (v) wrongful
competitive activity in material breach of Employee's duty of loyalty; or (vi)
breach of any material term of any stated material employment policy of Company.
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(b) Termination by Company for Other than Cause, Death, or
Disability: Company may immediately terminate Employee's employment for any
reason other than Cause, death, or Disability by giving ten (10) days written
notice to Employee.
(c) Death: Employee's employment shall automatically terminate
upon his death.
(d) Disability: Employee shall not be considered in breach of
this Agreement, if he fails to perform the material duties of his employment
because of a physical or mental condition that renders him unable to perform
such services (hereafter referred to as "Disability"). If for a continuous
period of twelve (12) months during the Term, Employee fails to perform the
material duties of his employment because of Disability, his employment shall
terminate on the first anniversary of the beginning of his Disability. If there
is any dispute as to whether Employee has a Disability, this issue shall be
settled by the opinion of an impartial reputable physician qualified to make the
determination agreed upon for the purpose by Employee and Company, or failing
such agreement within fourteen (14) days of a written request therefor by either
party to the other, by an impartial reputable physician qualified to make the
determination who is selected by agreement of a reputable physician selected by
Company and a reputable physician selected by Employee.
(e) Termination by Employee for Good Reason: Employee may
terminate employment during the Term for "Good Reason" by delivering to Company
(i) a Preliminary Notice of Good Reason (as defined below), and (ii) not earlier
than thirty (30) days and not later than three (3) months from the delivery of
such Preliminary Notice of Good Reason, a Notice of Termination. For purposes of
this Agreement, "Good Reason" means (i) requiring Employee (without his consent)
to relocate his primary work location more than fifty (50) miles away from the
current principal office of Company in Plainfield, Indiana; (ii) any reduction
in Employee's base salary or bonus opportunity; (iii) any material breach by
Company of the terms of this Agreement; or (iv) failure of any successor of the
Company to assume this Agreement; provided that "Good Reason" shall not include
(A) acts not taken in bad faith which are cured by Company in all respects not
later than twenty (20) days from the receipt by Company of a written notice from
Employee identifying in reasonable detail the act or acts constituting "Good
Reason" (a "Preliminary Notice of Good Reason") or (B) acts taken by Company as
a result of grounds for termination of employment for Cause pursuant to
Subsection (a). A Preliminary Notice of Good Reason shall not, by itself,
constitute a Notice of Termination.
5. OBLIGATIONS UPON TERMINATION:
(a) Termination by Company for Cause: If Company terminates
Employee for Cause at any time during the Term, Employee will receive his base
salary and other compensation and benefits earned under this Agreement but not
yet paid or delivered to Employee as of the date of termination, including
retirement benefits accrued through the date of such termination and payable
under the terms of such plans, but excluding any bonus. Other than the amounts
specified in this Subsection (a), if Company terminates Employee for Cause at
any time during the Term, Employee shall not be entitled to any other severance
pay, compensation, or benefits, except as may be payable under the terms of any
qualified retirement plan or under other plans or agreements in the event of
Disability or death.
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(b) Termination by Company for Other Than Cause, Disability,
Death, or by Employee for Good Reason: If Company terminates Employee's
employment for any reason other than Cause, Disability, or death at any time
during the Term, or if Employee terminates employment for Good Reason pursuant
to Section 4(e) during the Term, Employee shall receive, subject to the
limitations set forth below, including the limitations specified in Subsection
(e), (i) his base salary and other compensation and benefits earned under this
Agreement but not yet paid or delivered to Employee as of the date of his
termination, including any bonus owed for the immediately preceding fiscal year
and retirement benefits accrued through the date of such termination and payable
under the terms of such plans; and (ii) continuation of Employee's then current
base salary, less standard income and payroll tax withholding and other
authorized deductions, from the date of termination until the date that is the
first anniversary of the date of his termination (such period hereafter referred
to as the "Severance Period).
(c) Death or Disability: If Employee's employment terminates
pursuant to Section 4(c) or (d) as a result of his death or Disability, Employee
shall be entitled to the same compensation as provided under Subsection (a). In
addition, Employee (or his estate) shall receive a payment (at such time as is
consistent with the administration of Company's bonus program) equal to a
pro-rata share of the annual bonus he would have earned (as determined in a
manner consistent with Section 3(c)), if any, based on Company's actual results
for the fiscal year. For purposes of the preceding sentence, Employee's pro-rata
share shall be a fraction of the number of days in the fiscal year, the
numerator of which shall be the number of days in the fiscal year prior to
Employee's death or termination of employment pursuant to Section 4(d) and the
denominator of which shall be 365.
(d) Exclusive Remedy: Employee acknowledges that, other than
the payments described in this Section 5 and Employee's rights under any benefit
plan of Company in which Employee participates, he shall have no other claims
against, and shall be entitled to no other payments from, Company or its direct
or indirect parents, subsidiaries, affiliates, or related companies upon any
termination or breach by Company of this Agreement.
(e) Mitigation: Employee shall inform Company promptly if
Employee becomes employed by another employer or otherwise performs services for
compensation during the Severance Period. Any amounts payable to Employee
pursuant to clause (b)(ii) during the Severance Period shall be reduced by any
compensation to which Employee is entitled for the performance of services
during such period.
6. LOYALTY, NON-COMPETITION, AND CONFIDENTIALITY: In
consideration of the employment provided by Company, Employee agrees with
Company as follows:
(a) Definitions: For purposes of this Section, the following
terms, when capitalized, shall have the meanings specified below:
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(i) "Company" means Xxxxxx'x Trading Company, Inc.,
and any successor, assign, affiliated or related corporation, including a parent
or subsidiary, or other entity created due to a merger or transaction with any
of the above entities.
(ii) "Confidential Information" means, without
limitation, (i) all confidential information relating in any way to Company's
vendors, customers, distributors, products, contractual arrangements, policies,
prospects, property, or services; (ii) Company's management and operational
methods, strategies, and marketing plans; (iii) non-public financial information
of any type relating to Company; and (iv) information about Company's employees;
provided, however, "Confidential Information" shall not include any information
that is generally available to the public without the breach of this or other
confidentiality obligations.
(b) Treatment of Confidential Information: Employee shall keep
all Confidential Information in confidence and shall not use or disclose such
information during or after his employment (other than as required during his
employment in fulfilling his assigned duties). Confidential Information (and any
other Company property used or possessed by Employee) shall at all times remain
Company's property, and Employee shall return such property to Company
(including all copies) promptly upon termination of employment. The obligations
of this Subsection do not affect any obligation that Employee may have to
Company under applicable local, state, or federal law, including, without
limitation, state trade secrets laws.
(c) Non-Compete/Non-Solicitation: Employee agrees that during
his employment and for one (1) year thereafter ("Restricted Period"), he shall
not: (i) directly or indirectly own, operate, accept employment, or be employed
by, participate with, consult with, or assist any business in the United States
primarily engaged in the retail sporting goods or sports apparel business; (ii)
directly or indirectly accept employment or be employed by, participate with,
consult with, or assist in any way, the following competing companies, their
affiliates, or subsidiaries, wherever they may be located: Academy Sports, Bass
Pro, REI, Gander Mountain, Cabella's, Sports Authority, Dick's Sporting Goods,
Gart Sports, Modell's, Copeland, Sports Chalet, Hibbett's, and Christie Sports
("Designated Competitors"); or (iii) contact or have contact with any customer,
supplier, or vendor that did business with Company during Employee's employment
by Company, either directly or indirectly, for himself or for any other person
or entity so as to (A) divert or influence or attempt to divert or influence any
business of Company to a competitor of Company, (B) solicit, accept business
from, or provide products or services similar to those provided by Company, or
(C) interfere in any respect with Company's business or operations or in order
to assist Employee or any other person or entity in any endeavor competitive
with Company's business. Employee agrees that for eighteen (18) months following
termination of his employment for any reason (the "Non-Solicitation Period"), he
shall not attempt to hire or hire any person who is then (or was within the
preceding one (1) year period) a Company employee, or otherwise cause such
person to leave Company's employ or contribute to such person leaving Company's
employ. The restrictions set forth above are applicable and enforceable within
(i) a one hundred (100) mile radius of any office or store location of Company;
and (ii) in view of Company's national business, each state where Company
conducts business. In addition, the restrictions set forth above are applicable
and enforceable within all geographic areas in which the Designated Competitors
are located. The above obligations shall be applicable without regard to
Employee's termination, with or without cause, and they shall be interpreted as
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broadly as possible under applicable law. If Employee violates any restriction
and/or if Company receives injunctive relief, the Restricted Period and the
Non-Solicitation Period shall be automatically extended by the number of days on
which Employee was in violation or a basis for the granting of injunctive relief
existed, whichever is longer.
(d) Disparaging Remarks: Employee agrees that during his
employment by Company and at all times thereafter, he shall not make any
negative or disparaging remarks about Company.
(e) Return of Documents: Employee agrees that all documents of
any nature pertaining to activities of Company used, prepared, or made available
to Employee in the course of his rendering services to Company hereunder, are
and shall be the property of Company and that all copies of such documents shall
be surrendered to Company whenever requested by the Company.
(f) Enforcement: If Employee violates or threatens to violate
this Section, Company will suffer irreparable harm and will not have an adequate
remedy at law. Therefore, in such event, Company shall be entitled to injunctive
relief and to such other remedies that the court deems appropriate. Any action
relating to this Section shall be filed exclusively in a state or federal court
in Xxxxxx County, Indiana. In the event of Company's successful enforcement of
this Section or its receipt of injunctive relief, it shall be awarded its costs
and reasonable attorneys' fees.
7. CHANGE IN CONTROL:
(a) For purposes of this Section 7, the following terms shall
have the meanings set out below:
(i) "Board" means the Board of directors of the
Company or successor entity described in clause (a)(ii)(C) or (D) below:
(ii) "Change in Control" means the occurrence during
the Term of any of the following events: (A) any acquisition by any Person or
group (as defined in the Securities and Exchange Act of 1934 ("Exchange Act"))
other than a Permitted Shareholder of beneficial ownership of more than the
greater of (I) thirty percent (30%) of Company's then outstanding shares of
Common Stock and (II) the Common Stock held by Permitted Holders; (B)
consummation of a merger, reorganization, consolidation, or similar transaction
(any of the foregoing a "Merger"), unless the Persons who were the beneficial
owners of the Common Stock immediately before such Merger are the beneficial
owners, immediately after such Merger, directly or indirectly, in the aggregate,
of more than sixty percent (60%) of the common stock and other voting securities
of the entity resulting from such Merger in substantially the same relative
proportions as their ownership of the Common Stock immediately before the
Merger; (C) consummation of a sale of all or substantially all of the assets of
the Company (a "Sale"), unless the Persons who were the beneficial owners of the
Common Stock, immediately before such Sale, are the beneficial owners, directly
or indirectly, in the aggregate, of more than sixty percent (60%) of the common
stock and other voting securities of the entity or entities that own such assets
immediately after the Sale; or (D) approval by the Board or the Company
shareholders of a Plan of liquidation of the Company.
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(iii) "Permitted Holder" means Xxxxxxx, Spogli & Co.,
Inc. or Limited Brands, Inc., and "Permitted Holders" means Xxxxxxx, Spogli &
Co., Inc. and Limited Brands, Inc. The term "Permitted Holder" also includes any
affiliate of an entity described in the preceding sentence.
(iv) "Person" means an individual, corporation,
partnership, joint venture, association, limited liability company, joint-stock
company, trust, or unincorporated organization, or a governmental agency,
officer, department, commission, board, bureau, or instrumentality thereof.
(b) If a Change in Control shall occur on or prior to the
Termination Date or such earlier date upon which this Agreement is terminated in
accordance with the provisions set forth herein, Options previously granted to
Employee shall become fully vested on the date of such Change in Control to the
extent not already vested.
8. ENTIRE AGREEMENT: This Agreement contains the entire
understanding between Company and Employee concerning Employee's employment with
Company, and supersedes all prior negotiations, term sheets, and agreements
between them.
9. MODIFICATION: No provision of this Agreement may be amended,
modified, or waived except by written agreement signed by both Company and
Employee.
10. GOVERNING LAW: The provisions of this Agreement shall be
construed in accordance with, and governed by, the laws of the State of Indiana
without regard to principles of conflict of laws.
11. SAVINGS CLAUSE: If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
12. SUCCESSORS; NO ASSIGNMENT OF AGREEMENT: Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective legal representatives, heirs,
successors and assigns. Employee acknowledges that his services are unique and
personal. Accordingly, Employee may not assign his rights or delegate his duties
or obligations under this Agreement to any person or entity.
13. ADDITIONAL REPRESENTATIONS: Employee represents and warrants
to Company that he is knowledgeable and sophisticated as to business matters,
including the subject matter of this Agreement, that he has read this Agreement
and that he understands its terms. Employee acknowledges that, prior to
assenting to the terms of this Agreement, he had been given a reasonable time to
review it, to consult with counsel of his choice, and to negotiate at
arm's-length with Company as to its contents. Company and Employee agree that
the language used in this Agreement is the language chosen by the parties to
express their mutual intent, and that Employee has entered into this Agreement
freely and voluntarily and without pressure or coercion from anyone. Employee
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represents and warrants to Company that he is not bound by any agreement or
subject to any restriction which would interfere with or prevent his entering
into or carrying out this Agreement.
14. RIGHTS AND WAIVERS: All rights and remedies of the parties
hereto are separate and cumulative, and no one of them, whether exercised or
not, shall be deemed to be to the exclusion of any other rights or remedies or
shall be deemed to limit or prejudice any other legal or equitable rights or
remedies which either of the parties hereto may have. No party to this Agreement
shall be deemed to waive any rights or remedies under this Agreement unless such
waiver is in writing and signed by such party. No delay or omission on the part
of either party in exercising any right or remedy shall operate as a waiver of
such right or remedy or any other rights or remedies. A waiver on any one
occasion shall not be construed as a bar to or a waiver of any right or remedy
on any future occasion.
15. SURVIVABILITY: The expiration or termination of this Agreement
shall not operate to affect such of the provisions hereof as are expressed to
remain in full force and effect notwithstanding such termination.
16. CAPTIONS: The captions of this Agreement are for descriptive
purposes only and are not part of the provisions hereof and shall have no force
or effect.
17. NOTICES: All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows (or to such other party or address as Company or Employee
may designate in notice duly delivered to the other pursuant to this section):
If to Employee, to him at his address as shown on Company's
personnel records.
If to Company, to it at:
Xxxxxx'x Trading Company, Inc.
Xxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
IN WITNESS WHEREOF, Company and Employee, intending to be
legally bound, have executed this Agreement on the day and year first above
written.
EMPLOYEE: COMPANY:
XXXXXX'X TRADING COMPANY, INC.
/s/ XXXXX X. XXXXXXXXX By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxx
Chief Executive Officer
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