EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 1st day of October 1999 by and between XXXXX X. XXXXXXXXX, an individual
("Employee") and Sports Group International, Inc., a Florida corporation ("SPGK"
or the "Company"). This Agreement terminates the Employment Agreement between
the Employee and Surf City Acquisition Corp II dated May 16, 1997.
R E C I T A L S
A. The Company desires to be assured of the continued services of
Employee in order to take advantage of his experience, knowledge and abilities,
and the Company is willing to employ Employee, and Employee desires to be so
employed, on the terms and conditions set forth in this Agreement.
B. Employee is currently employed under an the terms of the First
Modified Joint Plan of Reorganization Proposed by the Debtor and the Official
Committee of Unsecured Creditors in the United States Bankruptcy Court for the
District of Arizona on November 18, 1997 (the "Plan of Reorganization") with
Surf City Squeeze, Inc. ("SCS"). It is the intent to supplement the terms of the
employment under the Plan of Reorganization.
Accordingly, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties hereby agree as follows:
1. EMPLOYMENT.
The Company hereby employs Employee, and Employee hereby accepts such
employment on the terms and conditions set forth below, to perform during the
term of this Agreement such duties as are described in Section 4 of this
Agreement as well as such other services as are described herein.
2. TERM OF EMPLOYMENT.
Unless sooner terminated pursuant to Section 5 herein, the term of
employment under this Agreement shall be for three (3) years commencing on
October 1, 1999 and ending as of September 30, 2002. After the initial term,
this Agreement shall continue for an indefinite term until terminated pursuant
to Section 5.
3. COMPENSATION.
During the continuance of Employee's employment hereunder, and as the
total compensation for the services which he renders hereunder, Employee shall
be entitled to the following:
a. BASE SALARY. Employee shall be entitled to receive an annual base
salary of $150,000.00 less income tax and other applicable withholdings, payable
in semi-monthly installments, and subject to annual review and upward adjustment
consistent with the Company's policies. Under the Employee's current terms of
employment with SCS, Employee receives an annual base salary of $100,000.00. The
base salary received from the Company shall be reduced by said amount so long as
Employee receives said base salary from SCS.
1 of 6
b. EXPENSE REIMBURSEMENT. Employee shall be entitled to receive
reimbursement of any and all reasonable and documented expenses incurred by
Employee from time to time in the performance of his duties hereunder,
consistent with the Company's policies as set by the Company's Board of
Directors. Such reasonable expenses shall be reimbursed to Employee upon receipt
by the Company of an itemized list of such expenses, signed by Employee.
c. EMPLOYEE BENEFITS. Subject to applicable eligibility
requirements, Employee shall be entitled to participate in all employee benefit
plans and programs maintained by the Company for employees in general, including
without limitation, participation in any savings plan, retirement plan, group
health plan, medical reimbursement plan, and life and disability insurance plan.
Said benefits, to the extent permissible by law, shall also extend to Employee's
spouse and minor children.
d. AUTO ALLOWANCE. Employee shall be entitled to receive an auto
allowance as set by the Company's Board of Directors, payable on a monthly
basis, or such other amount, if any, as may be payable to employees of the
Company in comparable positions pursuant to the policies and plans of the
Company.
e. VACATIONS. Employee shall be entitled to take vacations at such
time or times and for such duration as may be approved by the Board of Directors
or the executive officers of the Company.
4. DUTIES. Employee shall serve as President of the Company and shall,
unless otherwise not reelected by the Company's shareholders, serve on its Board
of Directors. Employee shall devote as much of his principal occupational time,
ability and attention as necessary to perform his duties. Employee shall
diligently and conscientiously utilize his best efforts to, further the
Company's business, it being understood that Employee shall not be deemed to be
in breach of his duties hereunder if, and to the extent that, he engages in
personal investments and business so long as such activity or activities do/does
not interfere with his duties to be performed under this Agreement. Employee
shall provide such managerial and executive duties and acts, commensurate with
his position, skills and experience, as may be reasonably required by the
Company's board of Directors in connection with any aspect of the Company's
business. It is expressly understood and agreed that Employee has begun
development of a rolled-sandwich concept. It is expressly understood and agreed
that Employee may devote whatever time is necessary to further those concepts so
long as such time does not interfere with Employee's duties for the Company. It
is further understood and agreed that Employee is under no obligation to share
the profits of said concepts or other concepts, whether said concepts are
brought to the attention of the Company or not. It is expressly understood and
agreed that said outside ventures or concepts shall be the sole property of
Employee and not that of the Company.
5. TERMINATION.
a. EVENTS OF TERMINATION. Employment under this Agreement shall
terminate upon the happening of any of the following events
("Event of Termination"):
i. The mutual agreement between the Company and Employee or
after eighteen (18) months by either party;
ii. The death of Employee;
iii. At the option of the Company's Board of Directors consistent
with subparagraph (c), if Employee has become so physically
or mentally disabled as to be incapable of substantially
performing his duties hereunder for a period of 90
consecutive days in the case of a mental disability and 180
consecutive days in the case of physical disability;
2 of 6
iv. At the option of the Company's Board of Directors, in the
event of a material breach by Employee of this Agreement or
"for cause." As used in this Agreement, the term "for cause"
shall mean any of the following: any act of fraud,
misappropriation or similar conduct by Employee against the
Company; repeated intoxication by alcohol or drugs during
the performance of Employee's duties; failure, neglect or
refusal of Employee to perform any material obligation under
this Agreement (all duties described in Section 4 above are
deemed to be material); conviction of Employee of a felony;
conviction of Employee of a misdemeanor involving a breach
of trust; any undisclosed conflict of interest (except as
permitted by this Agreement); Employee's breach of its
confidentiality obligations set forth in Section 6(b)
herein; Employee's failure to or to comply with his
fiduciary duties to the Company (except as permitted by this
Agreement). Notwithstanding the foregoing, the following
shall not constitute "for cause": The disagreement by the
Company's Board of Directors with any action taken by
Employee in the exercise of Employee's reasonable and good
faith business judgment, unless such action violates any
directive of the Board of Directors of the Company (not in
conflict with the terms of this Agreement) made known to
Employee prior to such action;
v. the expiration of the term of employment under this
Agreement as set forth in Section 2 herein.
b. DUTIES UPON TERMINATION. Upon termination of employment under
this Agreement pursuant to Section 5(a) above, neither the
Company nor Employee shall have any remaining duties or
obligations under this Agreement except that:
i. The Company shall pay to Employee or his Estate such
compensation as is due pursuant to Section 3 above, prorated
to the date of termination;
ii. The Company shall pay to Employee or his Estate such other
compensation as may be due pursuant to Section 3 above in
the event termination is made under Sections 5(a)(i), (ii),
(iii) or (v) for a period of two (2) years in consideration
of Employee's strict adherence to the restrictive covenants
set forth in Section (6) herein;
iii. The Company shall provide conversion rights for the benefit
of Employee, his spouse and/or dependents, as applicable,
for medical, dental and other benefits as and to the extent
possible under the Company's then-existing insurance and
benefits plans or policies, but in no event shall said
medical and dental benefits cease less than two (2) year
following termination or upon Employee finding employment
with said benefits provided to Employee and Employee's
family; and
iv. Upon termination, Employee shall continue to be bound by the
provisions of Sections 6 of this Agreement.
3 of 6
c. DETERMINATION OF DISABILITY. The determination of disability
shall be made by a member of the medical profession in good
standing selected or approved by the Company; provided, however,
that in the event the Employee disagrees with a determination of
disability, he shall be entitled to present a contrary
determination by a member of the medical profession in good
standing selected by him, and the two doctors so selected shall
attempt to reach agreement as to the determination of disability.
In the event the two doctors fail to agree, the determination
regarding disability shall be made by a third member of the
medical profession in good standing jointly appointed by such
doctors or, if they fail to agree upon such appointment, such
third professional shall be selected in accordance with the rules
of the American Arbitration Association then in effect. A
determination regarding disability made by the third professional
so appointed shall be final and binding upon the Company and
Employee.
d. NOTICE AND CURE. In the event of a termination "for cause"
pursuant to subsection (a)(iv), Employee shall be provided with
written notice of the terminable event specifically describing
the same and shall have a period of thirty (30) days to correct
such event; provided, however, that such event is subject to
correction. Thus, for example, fraud, misappropriation or similar
conduct, repeated intoxication, or a conviction, shall not be
subject to correction. All other events shall be deemed curable.
6. NON-DISCLOSURE AND RESTRICTIVE COVENANTS. Employee recognizes that the
business of the Company is a specialized business, that Employee holds a
position of trust and importance with the Company, and that as a result of
Employee's employment by the Company, Employee will gain access to information
of a confidential and proprietary nature relating to the Company's business.
Accordingly, the Company and Employee agree as follows:
a. RETURN OF MATERIALS. Employee acknowledges and agrees that all
materials (including but not limited to tools, books, papers, documents,
drawings, writings, records, customer lists, price lists, job cost estimates,
software, recipes, and software documentation) which are furnished to Employee
by the Company, or which Employee prepares or otherwise acquires in the course
of his employment ("collectively, the "Proprietary Materials"), are the
exclusive property of the Company, and Employee shall promptly surrender to the
Company, upon termination of Employee's employment, all such materials and all
copies of such materials.
b. CONFIDENTIALITY. Employee agrees to maintain the confidentiality
of the Proprietary Materials and their contents and not to disclose the same to,
or discuss the same with, any person except his immediate family, legal counsel
and accounting advisors or as required by law, provided that Employee shall
inform each such person of the confidential nature of the Proprietary Materials
and each such person shall be directed by Employee to treat the Proprietary
Materials confidentially and shall agree to abide by the provisions of this
Section 6(b)
7. MISCELLANEOUS.
a. SEVERABLE PROVISIONS. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall nevertheless
be binding and enforceable.
4 of 6
b. BINDING AGREEMENT. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective successors and
assigns. Notwithstanding the foregoing, neither this Agreement nor any rights
hereunder shall be assigned, pledged, hypothecated or otherwise transferred by
Employee without the prior written consent of the Company, except by operation
of law.
c. GOVERNING LAW. This Agreement is intended to be, and shall be,
governed in all respects by the laws of the State of Arizona.
d. SURVIVAL OF COVENANTS. Subject to the provision of Section 5(b)
herein, the covenants, promises and agreements set forth in Section 6 shall
survive the termination of this Agreement.
e. CAPTIONS. The section captions are inserted only as a matter of
convenience and reference and in no way define, limit or describe the scope of
this Agreement or the intent of any provisions hereof.
f. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties pertaining to the subject matter hereof, and the parties hereto
have made no agreements, representations or warranties relating to the subject
matter of this Agreement that are not set forth herein. No supplement,
modification, waiver or termination of this Agreement shall be valid unless made
in writing and signed by the parties to be bound thereby.
g. NOTICE. Any notice or demand required or permitted to be given
hereunder shall be in writing and shall be deemed effective upon the personal
delivery thereof or, if faxed upon the receipt of the fax and facsimile
confirmation, or if by mail, forty-eight (48) hours after having been deposited
in the United States mail, postage, pre-paid, and addressed to the party to whom
it is directed at the address set forth below:
If to Employee: Xxxxx X. Xxxxxxxxx
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Company: Attention Vice President
0000 X. Xxxxxxxx Xx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Either party may change the address to which such notices are to be
addressed by giving the other party notice in the manner set forth herein.
h. INSURANCE. SPGK agrees to provide Directors and Officers
Liability Insurance in amounts deemed acceptable to Employee. If SPGK fails to
provide said Insurance, Employee may obtain said Insurance at the sole and
complete expense of SPGK.
5 of 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first set forth herein.
Employee:
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxxx
Sports Group International, Inc.:
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Its: Vice President - Chief Financial Officer
------------------------
6 of 6
