EXHIBIT 10.20
EMPLOYMENT AGREEMENT
--------------------
This Agreement ("Agreement") is made and entered into as of the 12th
day of December, 2003, between Xxxxxxx X. Xxxxx ("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, General Merchandise Manager,
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 $265,000, 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 2003 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.
2
(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) the assignment (without the express written
consent of Employee) to Employee of a materially lower position in the
organization in terms of his responsibility, authority and status, any material
reduction in Employee's authority or status, or requiring Employee to perform
services not commensurate with Employee's ability, experience, and
qualifications; (ii) 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; (iii) any reduction in Employee's base
salary or bonus opportunity; (iv) any material breach by Company of the terms of
this Agreement; or (v) 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.
3
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.
(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, (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, (ii) the bonus, if any, that the Employee would
have received under the Company's incentive compensation program for the fiscal
year of termination, calculated and paid pursuant to the terms of such program
as if the Employee had remained employed until the bonus payment date, (iii)
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 later of the date that is (A) the first anniversary of the
date of his termination or (B) the second anniversary of the date hereof (such
period hereafter referred to as the "Severance Period); and (iv) continued
health coverage for the Severance Period on the same terms and conditions as
such coverage is available to active management employees of Company.
(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.
4
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:
(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"); (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; or (iv) 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
5
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 broadly as possible under applicable law. If Employee violates
any restriction and/or if Company receives injunctive relief, the Restricted
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
6
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.
(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
7
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 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.
0000 X. Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
18. NO DUTY TO MITIGATE: Payments due to Employee following his termination
of employment are not conditioned upon Employee's attempting to mitigate his
losses by seeking other employment or taking other action, and Employee shall be
under no obligation to do so.
8
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/ XXXXXXX X. XXXXX By: /s/ XXXXXX X. XXXX
------------------------------- -------------------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxx
Chief Executive Officer
9
