SPORT SUPPLY GROUP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
January 23, 1997
(Effective Date of Grant)
TO: Xxxxxxxx X. Xxxxxx
WHEREAS, Sport Supply Group, Inc. (the "Company") desires to
encourage Xxxxxxxx X. Xxxxxx'x (the "Optionee") sense of
proprietorship in the Company by owning shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock");
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained in this Non-Qualified Stock Option Agreement (this
"Agreement"), the Company hereby grants to Optionee a non-qualified
stock option (the "Option") to purchase up to a total of 300,000
shares of Common Stock, at a price per share of $7.50 (the "Option
Price") on the terms and conditions and subject to the restrictions as
set forth in this Agreement and in the Sport Supply Group, Inc. Stock
Option Plan (the "Plan").
I. DEFINITIONS
a. Acquiring Person: An "Acquiring Person" shall mean any
person (including any "person" as such term is used in Sections
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) that, together with all Affiliates and
Associates of such person, is the beneficial owner of 10% or more of
the outstanding Common Stock. The term "Acquiring Person" shall not
include the Company, any subsidiary of the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or subsidiary of the Company or any person holding Common
Stock for or pursuant to the terms of any such plan, any corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company, Xxxxxxx Radio Corp. and its Affiliates and Associates or
Xxxxxxxx X. Xxxxxx. For the purposes of this Agreement, a person who
becomes an Acquiring Person by acquiring beneficial ownership of 10%
or more of the Common Stock at any time after the date of this
Agreement shall continue to be an Acquiring Person whether or not such
person continues to be the beneficial owner of 10% or more of the
outstanding Common Stock.
b. Affiliate and Associate. "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act in effect on
the date of this Agreement.
c. Change in Control. A "Change in Control" of the Company
shall have occurred if at any time during the term of this Agreement
any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person and as a result
of such merger, consolidation or reorganization less than 60% of
the combined voting power to elect each class of directors of the
then outstanding securities of the remaining corporation or legal
person or its ultimate parent immediately after such transaction
is available to be received by all of the Company's stockholders
on a pro rata basis and is actually received in respect of, or in
exchange for, voting securities of the Company pursuant to such
transaction;
(ii) The Company sells all or substantially all of its
assets to any other corporation or other legal person and as a
result of such sale less than 60% of the combined voting power to
elect each class of directors of the then outstanding securities
of such corporation or legal person or its ultimate parent
immediately after such transaction is available to be received by
all of the Company's stockholders on a pro rata basis and is
actually received in respect of, or in exchange for, voting
securities of the Company pursuant to such sale (provided that
this provision shall not apply to a registered public offering of
securities of a subsidiary of the Company, which offering is not
part of a transaction otherwise a part of or related to a Change
in Control);
(iii) Any Acquiring Person has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the
Exchange Act) of securities which when added to any securities
already owned by such person would represent in the aggregate 30%
or more of the then outstanding securities of the Company which
are entitled to vote to elect any class of directors; or
(iv) If, during any period of two consecutive calendar
years, individuals who at the beginning of such period were
members of the Company's Board of Directors cease for any reason
to constitute at least a majority thereof (unless the election,
or the nomination for election by the Company's stockholders 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).
II. GENERAL PROVISIONS
Subject to the other terms and provisions hereof, the shares
subject to this Option shall vest annually in equal installments on
March 31, 1998, 1999 and 2000. The right to exercise this Option
shall expire ten years from the Effective Date of Grant as set forth
in the upper right hand corner, except as the right to exercise this
Option is otherwise qualified by the terms of the Plan or this
Agreement. This Option is not transferable otherwise than by will or
the laws of descent and distribution, and is exercisable during the
Optionee's lifetime only by him or her. This Option is not liable for
or subject to, in whole or in part, the debts, contracts, liabilities
or torts of the Optionee nor shall it be subject to garnishment,
attachment, execution, levy or other legal or equitable process.
This Option shall be subject to the provisions of the Plan, which
is a part of the Form S-8 Prospectus (the "Prospectus") covering the
shares granted under this Option, and is incorporated in its entirety
by express reference herein. A copy of the Prospectus, as well as a
copy of the Company's annual report to security holders containing the
information required by Rule 14a-3(b) under the Securities Exchange
Act of 1934 for its latest fiscal year, has been provided to the
Optionee by the Company, and the Optionee hereby acknowledges receipt
of same. Additional copies of these documents are available from the
Company upon request. All defined terms contained herein shall have
the meanings provided in the Plan except to the extent otherwise
provided herein.
The Option granted hereunder shall terminate six (6) months after
the date the Optionee ceases to serve as an officer of the Company or
a Subsidiary (the "Termination Date"), except that in the event the
termination of Optionee's services results from the Optionee's death
or disability, the Option, to the extent it was exercisable on the
Termination Date, shall be exercisable for twelve months from the
Termination Date or until the Option by its terms expires, whichever
first occurs. After the Optionee's death, this Option shall be
exercisable only by the executor or administrator of the Optionee's
estate, or if the Optionee's estate is not in administration, by the
person or persons to whom the Optionee's rights shall have passed by
the Optionee's will or under the laws of descent and distribution of
the state where the Optionee was domiciled at the date of death. The
Company may suspend for a reasonable period or periods the time during
which this Option may be exercised if, in the opinion of the Company,
such suspension is required to enable the Company to remain in
compliance with regulatory requirements relating to the issuance of
shares of Common Stock subject to this Option.
Notwithstanding the provisions set forth herein, in the
event of a Change in Control, then from and after the date of the
Change in Control, all of the Options hereunder shall vest in full and
become immediately exercisable and shall remain exercisable until the
option expires by its terms.
III. EXERCISE OF OPTION
This Option may be exercised only by written notice (the
"Exercise Notice") by the Optionee to the Company at its principal
executive office. The Exercise Notice shall be deemed given when
deposited in the U. S. mails, postage prepaid, addressed to the
Company at its principal executive office, or if given other than by
deposit in the U.S. mails, when delivered in person to an executive
officer of the Company at that office. The date of exercise of the
Option (the "Exercise Date") shall be the date of the postmark if the
notice is mailed or the date received if the notice is delivered other
than by mail. The Exercise Notice shall state the number of shares in
respect of which the Option is being exercised and, if the shares for
which the Option is being exercised are to be evidenced by more than
one stock certificate, the denominations in which the stock
certificates are to be issued. The Exercise Notice shall be signed by
the Optionee and shall include the complete address of such person,
together with such person's social security number.
This Option may be exercised either by tendering cash in the
amount of the Option Price or by tendering shares of Common Stock
(which may include shares previously acquired upon exercise of options
granted under the Plan). The Exercise Notice shall be accompanied by
payment of the aggregate Option Price of the shares purchased by cash
or check payable to the order of the Company or by delivery of shares
of Common Stock owned by the Optionee, in form satisfactory to the
Company, tendered in full or partial payment of the Option Price. If
shares of Common Stock are used to pay part or all of the Option
Price, the value of such shares for purposes of exercising this Option
shall be the Fair Market Value of the Common Stock on the Exercise
Date. This Option may also be exercised by having shares of Common
Stock having a Fair Market Value on the Exercise Date equal to the
aggregate Option Price withheld by the Company.
In addition to the foregoing, any Option granted under this
Agreement may be exercised by a broker-dealer acting on behalf of the
Optionee if (i) the broker-dealer has received from the Optionee or
the Company a fully- and duly-endorsed agreement evidencing such
Option, together with instructions signed by the Optionee requesting
the Company to deliver the shares of Common Stock subject to such
Option to the broker-dealer on behalf of the Optionee and specifying
the account into which such shares should be deposited, (ii) adequate
provision has been made with respect to the payment of any withholding
taxes due upon such exercise, and (iii) the broker-dealer and the
Optionee have otherwise complied with Section 220.3(e)(4) of
Regulation T, 12 CFR Part 220, or any successor provision.
The certificates for shares of Common Stock as to which this
Option shall have been so exercised shall be registered in the name of
the Optionee and shall be delivered to the Optionee at the address
specified in the Exercise Notice. In the case of the exercise of the
option by an Optionee who is employed by the Company or a Subsidiary
on the Exercise Date, the Optionee in exercising such option shall
make payment or other arrangements (including, but not limited to,
requesting that the Company withhold shares of Common Stock that were
to be issued to the Optionee upon such exercise) satisfactory to the
Company for withholding federal and state taxes, if applicable, with
respect to the shares acquired upon exercise of the option. In the
case of options exercised when the Optionee is no longer employed by
the Company or a Subsidiary, such option exercise shall be valid only
if accompanied by payment or other arrangement satisfactory to the
Company with respect to the Company's obligations, if any, to withhold
federal and state taxes with respect to the exercise of the option.
In the event the person exercising the Option is a transferee of
the Optionee by will or under the laws of descent and distribution,
the Exercise Notice shall be accompanied by appropriate proof
(satisfactory to the Company) of the right of such transferee to
exercise the Option.
Subject to the limitations expressed herein, this Option may be
exercised with respect to all or a part of the shares of the Common
Stock subject to it.
Neither the Optionee nor any person claiming under or through the
Optionee shall be or have any rights or privileges of a stockholder of
the Company in respect of any of the shares issuable upon the exercise
of the Option, unless and until certificates representing such shares
shall have been issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the
Company).
IV. GOVERNING LAW; JURISDICTION
This Agreement will be governed by and construed in accordance
with the laws of the State of Texas without giving effect to any
principle of conflict-of-laws that would require the application of
the law of any other jurisdiction. Each party agrees that this
Agreement is performable in Dallas, Dallas County, Texas, and that any
action or proceeding arising out of or related in any way to this
Agreement shall be brought solely in a court of competent jurisdiction
sitting in Dallas, Dallas County, Texas. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts of the State of Texas and agrees and consents that
service of process may be made upon it in any proceeding arising out
of this Agreement by service of process as provided by Texas law. All
parties hereto hereby irrevocably waive, to the fullest extent
permitted by law, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement brought in the District Court of Dallas
County, State of Texas, or in the United States District Court for the
Northern District of Texas, and hereby further irrevocably waive any
claims that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Optionee
acknowledges that his country of residence or domicile may prohibit or
restrict him or a broker/dealer domiciled in the United States from
engaging in the transactions contemplated by this Agreement and, in
such event, this Agreement shall be enforceable only to the extent
permitted by applicable law.
V. ENTIRE AGREEMENT
Except for the Plan, this Agreement constitutes the entire
agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous
agreements, representations and understandings of the parties. No
supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the party to be charged
therewith. No waiver of any of the provisions of this Agreement shall
be deemed, or shall constitute a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing
waiver.
VI. DUPLICATE ORIGINALS
Duplicate originals of this document shall be executed by both
the Company and the Optionee, each of which shall retain one duplicate
original.
SPORT SUPPLY GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
President and Chief Operating
Officer
ACCEPTED:
Xxxxxxxx X. Xxxxxx
Address: Xxxxxxx Radio Corp.
Attn: Xxxxxxxx X. Xxxxxx
0 Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
