EXHIBIT 10.52
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT
This Employment and Change in Control Agreement (the "Agreement )
is entered into by and between Sportmart, Inc., a Delaware corporation
(the "Company ) and Xxxxxx X. Xxxxxxxxxxx ("Executive ) and shall be
effective as of November 1, 1996 (the "Effective Date ).
WHEREAS, Executive is employed by the Company as its Executive
Vice President and Chief Financial Officer; and
WHEREAS, the parties hereto agree that it is in their mutual best
interest to encourage Executive s full attention and dedication to the
Company by providing for compensation or benefits in the event of a
Change in Control of the Company or Executive s termination, under the
terms and conditions set forth herein.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Employment and Term. The Company hereby agrees to employ
Executive, and Executive hereby accepts employment by the Company in
accordance with the terms and conditions set forth herein. Subject to
the Termination provisions in contained in this Agreement, the term of
this Agreement shall be three (3) years, commencing on the Effective
Date. This Agreement shall terminate on the third anniversary
following the Effective Date unless the parties agree in writing to
extend the term of this Agreement. Following the termination of this
Agreement for any reason, any continued employment of Executive will
be "at will" and terminable at any time and for any reason by either
party.
2. Title and Duties of Executive. The Executive shall have the
title of Executive Vice President and Chief Financial Officer.
Executive s duties shall include national oversight of business
development and management of strategic, merchandising and financial
plans of the Company. Executive will devote his full-time energies
and skills to the performance of his duties for the Company.
3. Compensation and Benefits. The compensation and benefits
of Executive shall be reviewed by Company on an annual basis.
4. Termination of Employment - Death or Disability.
(a) Death of Executive. In the event Executive shall die
during the term of employment hereunder, this Agreement shall
terminate as of the date of Executive's death. Following such
termination of this Agreement, the Company shall have no further
liability with respect to Executive's employment, except to pay to
Executive s estate or beneficiaries, as appropriate, the value of any
accrued salary or other compensation due Executive on the date of his
death and other benefits payable under any employee benefit plan of
the Company in which Executive was a participant; provided, however,
that Executive's estate shall have the right to exercise any
unexercised stock options granted by the Company to Executive pursuant
to the Company's stock option plan and any option agreement then in
effect.
(b) Disability of Executive. In the event Executive
becomes disabled during the term of employment hereunder, and is
thereby unable to perform the essential functions of his position,
with or without accommodation, this Agreement shall terminate as of 30
days after the date such disability is established. As used in this
subparagraph, the term disabled means suffering from a physical or
mental impairment which renders the Executive substantially unable to
perform the essential functions of his position in a satisfactory
manner, as confirmed by competent medical evidence, for a period of
180 consecutive days or for more than 180 days in a twelve-month
period. The date on which Executive's disability is established shall
be the 181st consecutive day on which the impaired condition continues
or the 181st day in which the impaired conditions exists within a
twelve-month period. The Company shall give Executive written notice
of its intent to terminate this Agreement pursuant to this Section.
Following such termination of this Agreement, the Company shall have
no further liability with respect to Executive's employment, except to
pay to Executive the value of any accrued salary or other compensation
due Executive up to the date of his termination and other benefits
payable under any employee benefit plan of the Company in which
Executive was a participant; provided, however, that Executive shall
have the right to exercise any unexercised stock options granted by
the Company to Executive pursuant to the Company's stock option plan
and any option agreement then in effect.
5. Termination of Employment - Cause; Good Reason.
(a) Cause. The Company has the right to terminate this
Agreement for Cause (i) immediately upon written notice, if
Executive engages in conduct which the Company reasonably believes is
of a criminal nature and detrimental to the interests of the Company;
(ii) immediately upon written notice, if Executive materially breaches
a fiduciary duty owed to the Company; (iii) upon thirty days written
notice, if Executive refuses or materially fails to perform his
obligations under this Agreement, and fails to cure such deficiency
within said notice period; and (iv) immediately upon written notice if
executive commits a significant violation of Company policy.
(b) Good Reason. The Executive has the right to terminate
this Agreement for Good Reason based upon a Change in Control, as
d e fined herein. A termination for "Good Reason" shall mean
termination based on the occurrence of a Change of Control and
following which there occurs, without Executive's prior written
consent, within 18 months after a Change in Control of the Company:
(i) the assignment to the Executive of any material duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities, or any other material action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action and which is remedied by the
Company within 30 days after receipt of notice thereof given by the
Executive; or
(ii) a reduction in the Executive's annual base salary in an
amount exceeding 5 percent or, other than changes occasioned by a
substitution or modification of general welfare plans that are
generally applicable to all employees and do not discriminate against
the Executive, a material reduction in benefits and other
compensation; or
(iii) the Company's requiring the Executive to be based
at any office or location more than 50 miles from the Executive's
prior office or location.
6. Change in Control.
For purposes of this Agreement, a "Change in Control" shall mean
the happening of any of the following events:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of twenty-five percent (25%) or more of either
(A) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the"Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change in Control of the Company:
( 1 ) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (2)
any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (4) any acquisition
by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B) and (C) of
subsection (c) of this Section are satisfied; or
(b) Individuals who, as of the effective date of this Plan,
constitute the Board of Directors of the Company (the "Incumbent Board
of the Company") cease for any reason to constitute at least a
majority of the Board of Directors of the Company; provided, however,
that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board of the Company shall be
considered as though such individual were a member of the Incumbent
Board of the Company, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as contemplated by
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board of Directors of the
Company; or
(c) Approval by the shareholders of the Company of a
reorganization (including a plan of reorganization under applicable
bankruptcy law), merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (A) more than
seventy-five percent (75%) of, respectively, the then outstanding
share of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power
of the then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
c o n solidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any employee benefit plan (or related trust)
of the Company or such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially owning immediately
prior to such reorganization, merger or consolidation, directly or
indirectly, twenty five percent (25%) or more of the Outstanding
Company Common Stock or Outstanding Voting Securities, as the case may
be) beneficially owns, directly or indirectly, twenty-five percent
(25%) or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the members
of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent
Board of the Company at the time of the execution of the initial
agreement providing for such reorganization, merge or consolidation;
or
(d) Approval by the shareholders of the Company of the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following
such sale or other disposition, (A) more than seventy-five percent
(75%) of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding the
Company, any employee benefit plan (or related trust) of the Company
or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly,
twenty-five percent (25%) or more of the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, twenty-five percent (25%) or more of, respectively, the
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors and (3) at least a majority of the members
of the board of directors of such corporation were members of the
Incumbent Board of the Company at the time of the execution of the
initial agreement or action of the Board providing for such sale or
other disposition of assets of the Company.
7. Severance. In the event the Company terminates Executive
without Cause or Executive terminates this Agreement for Good Reason,
the Company shall pay Executive the following severance:
(a) Executive's base salary through the month during which
termination occurred, plus any other amount due at the time of
termination under any bonus plan of the Company plus any accrued but
unpaid bonus; and
(b) Subject to Executive's compliance with Section 11
(a), (b), (c) and (d) herein, monthly severance payments equal to
Executive's monthly base salary at the time of termination. Such
monthly severance payments shall commence in the month following
termination (to be paid on or about the 30th of the month) and shall
continue for eighteen months. Only in the event of a termination of
Executive without cause and in consideration of the above benefits,
E x ecutive agrees to make reasonable efforts to seek (and to
immediately notify the Company of) other employment, and to the extent
Executive receives compensation from other employment, the severance
payments provided herein shall be correspondingly reduced.
(c) Any grant of options to purchase shares of Company
stock shall be exercisable and grants of restricted stock held by
Executive will be vested to the extent and for such periods, and
otherwise governed, by the plans and programs (and the agreements and
other documents thereunder) pursuant to which such stock options or
restricted stock has been granted.
(d) All vested, nonforfeitable amounts owing or accrued at
the Date of Termination under any other compensation and benefit
plans, programs, and arrangements in which Executive theretofore
participated will be paid under the terms and conditions of the plans,
programs, and arrangements (and agreements and documents thereunder)
pursuant to which such compensation and benefits were granted.
8. Termination; No Further Liability. In the event the Company
terminates the Executive for Cause or Executive terminates the
Agreement without Good Reason, the Company shall have no further
liability with respect to Executive's employment, except to pay the
Executive the value of any accrued salary or other compensation due
Executive up to the date of his termination and other benefits payable
under any employee benefit plan in which Executive was a participant.
The Company and the Executive agree to provide 30 days written
notice of their intent to terminate this Agreement without Cause or
for Good Reason, as applicable, at any time within the term of this
Agreement. If Executive resigns for any other reason he will provide
the Company 30 days written notice and this Agreement will terminate
upon receipt of such notice by the Company.
9. Confidential Information. During his employment and at all
times thereafter, Executive shall keep secret and retain Confidential
Information in the strictest confidence, and shall not, without the
prior written consent of the Company, furnish, make available, or
disclose to any third party, any Confidential Information. As used in
this Agreement, Confidential Information shall mean any information
relating to the business or affairs of the Company or its products,
including, but not limited to, sales inventory analysis reports such
as the 509 report, the 588 report, 595 report, other related reports
and by whatever name change designated hereafter; memoranda, letters,
reports, notebooks, books of accounts, drawings, prints, models, and
other materials or records of a proprietary nature; records and policy
materials relating to research, finance, accounting, sales, sales
projections, personnel, management, advertising, inventory, data
processing, expansion plans, and operations; materials particularly
relating to operations, such as price lists, vendor lists, customer
lists, customer service requirements, costs of providing services and
goods, payroll and payroll matrix information, technical data, and
equipment maintenance costs, or other proprietary information used by
the Company; provided, however, Confidential Information shall not
include any information which is in the public domain or becomes known
in the industry through no wrongful act on the part of Executive or
breach of this Agreement. Executive acknowledges that the
Confidential Information is vital, sensitive, confidential and
proprietary to the Company.
10. Return of Company Materials Upon Termination. Executive
a g r ees that all records or documents containing Confidential
Information, whether or not prepared by Executive, is and shall remain
the property of the Company, and that upon termination of his
employment, Executive shall immediately return to the Company all such
items in his possession, as well as all copies thereof.
11. Post-Employment Matters. Executive acknowledges that his
employment with the Company has special, unique and extraordinary
value to the Company; that the Company has a lawful interest in
protecting its investment in training Executive and entrusting its
Confidential Information to him; and that the Company would be
irreparably damaged if Executive were to provide services to any
person or entity in violation of this Agreement; and that the
restrictions, prohibitions and other provision of this Section are
reasonable, fair and equitable in scope, terms, and duration, are
necessary to protect the legitimate business interests of the Company,
and are a material inducement to the Company to enter into this
Agreement.
(a) Non-Competition. Without the consent in writing of the
Board, upon the Executive's date of termination for any reason,
Executive will not, for a period of two years thereafter, acting alone
or in conjunction with others, directly or indirectly (i) engage
(either as owner, investor, partner, stockholder, employer, employee,
consultant, advisor or director (other than as below) in a retail
business in the continental United States and Canada that has gross
sales of sporting goods, athletic footwear and/or athletic apparel in
excess of 20% of its total retail sales, provided that, he may hold
stock not in excess of 5% in one or more publicly-held sporting goods
retailers;
(ii) induce any vendors of the Company or any of its subsidiaries
with whom Executive has had contacts or relationships, directly or
indirectly, during and within the scope of his employment with the
Company or any of its subsidiaries, to curtail or cancel their
business with such companies or any of them; or (iii) induce, or
attempt to influence, any employee of the Company or any of its
subsidiaries to terminate employment. The provisions of subparagraphs
(i), (ii), and (iii) above are separate and distinct commitments
independent of each of the other subparagraphs. It is agreed that the
ownership of not more than one percent of the equity securities of any
company having securities listed on an exchange or regularly traded in
the over-the-counter market shall not, of itself, be deemed
inconsistent with clause (i) of this paragraph (a), nor shall service
as a member of a board of directors on which Executive is serving on
the date of termination (including any successor board thereto) be
deemed, of itself, to be inconsistent with clause (i) of this
paragraph (a). However, this paragraph 11 (a) will not apply in the
event of a Change in Control as defined in paragraph 6 herein.
(b) Non-Disclosure. Executive shall not at any time
(including following Executive's date of termination for any reason),
disclose, use, transfer, or sell, except in the course of employment
with or other service to the Company, any confidential or proprietary
information of the Company or any of its subsidiaries so long as such
information has not otherwise been disclosed or is not otherwise in
the public domain, except as required by law or pursuant to legal
process.
(c) Cooperation With Regard to Litigation. Executive
agrees to cooperate with the Company (including following Executive's
date of termination for any reason), on a reasonable basis when
cooperation would not unreasonably interfere with Executive's
employment by making himself available to testify on behalf of the
Company or any subsidiary or affiliate of the Company, in any action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative, and to assist the Company, or any subsidiary or
affiliate of the Company, in any such action, suit, or proceeding, by
providing information and meeting and consulting with the Board and
its representatives or counsel, or representatives or counsel of or to
the Company, or any subsidiary or affiliate of the Company, as
requested; provided, however, this subsection (c) shall not apply to
any action between the Executive and the Company to enforce this
Agreement. The Company agrees to reimburse Executive, on an after-tax
basis, for all expenses actually incurred in connection with his
provision of testimony or assistance.
(d) Release of Employment Claims. Executive agrees, as a
condition to receipt of the severance payments and benefits provided
hereunder, that he will execute a release agreement, in a form
satisfactory to the Company, releasing any and all claims arising out
of Executive's employment (other than enforcement of this Agreement).
(e) Remedy. Without limiting the right of the Company to
pursue all of its legal and equitable remedies available for violation
by Executive of the covenants contained in this Section, it is
expressly agreed by the Executive and the Company that any such other
remedies cannot fully compensate the Company for any such violation
and that the Company shall be entitled to injunctive relief to prevent
any such violation.
(f) Survival. Notwithstanding any provision of this
Agreement to the contrary, the provisions of this Section 11 shall
survive the termination or expiration of this Agreement, shall be
valid and enforceable, and shall be a condition precedent to the
Executive (or his or her beneficiaries) receiving any amounts payable
hereunder.
12. Excise Tax Limit . If Executive becomes entitled to one or
more payments (with a "payment" including, without limitation, the
vesting of an option or other non-cash benefit or property), whether
pursuant to the terms of this Termination Agreement or any other plan,
arrangement, or agreement with the Company or any affiliated company
(the "Total Payments"), which are or could become subject to the tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any similar tax that may hereafter be
imposed, whether under federal, state, local or foreign law) (the
"Excise Tax"), the Company shall reduce or eliminate the Total
Payments, but only to the extent necessary, such that no amount of the
Total Payments shall be subject to the Excise Tax.
The Company agrees to indemnify and hold Executive harmless from
any tax, penalty or other charge or liability imposed upon Executive
resulting directly or indirectly from a Total Payment s (in whole or
in part) being subject to the Excise Tax after giving effect to any
reduction directed by the Company pursuant to the preceding sentence,
or from any tax, penalty or other charge or liability resulting
directly or indirectly from the Company's obligation to indemnify and
x x xx Executive harmless hereunder, including investigation and
attorneys fees and expenses.
13. Governing Law. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of
the State of Illinois, without regard to Illinois conflicts of law
principles, except insofar as federal laws and regulations may be
applicable. If under the governing law, any portion of this Agreement
is at any time deemed to be in conflict with any applicable statute,
rule, regulation, ordinance, or other principle of law, such portion
shall be deemed to be modified or altered to the extent necessary to
conform thereto or, if that is not possible, to be omitted from this
Agreement. The invalidity of any such portion shall not affect the
force, effect, and validity of the remaining portion hereof. If any
court determines that any provision of Section 10 is unenforceable
because of the duration or geographic scope of such provision, it is
the parties' intent that such court shall have the power to modify the
duration or geographic scope of such provision, as the case may be, to
the extent necessary to render the provision enforceable and, in its
modified form, such provision shall be enforced.
14. Arbitration. The parties agree that any claim or dispute
arising out of or relating to this Agreement or Executive's employment
with the Company will be submitted to and decided by arbitration
pursuant to the American Arbitration Act and conducted in accordance
with applicable rules and procedures of the American Arbitration
Association. Claims and disputes subject to this arbitration
provision shall include, but not be limited to, any claim arising
under this Agreement, the Civil Rights Act of 1964, as amended, the
Civil Rights Act of 1991, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the Fair Labor Standards Act, the
National Labor Relations Act, the Employee Retirement Income Security
Act, the Family and Medical Leave Act; the statutory law of any state
or locality regarding trade secrets, employment, discrimination in
employment, termination of employment, or wage payment; and the common
law of any state relating to employment contracts, wrongful discharge,
defamation, or any other matter arising under common law.
Notwithstanding the above, the parties agree that this
arbitration provision does not apply to: (i) claims for workers'
compensation benefits or unemployment compensation benefits; and (ii)
claims by the Company for injunctive or equitable relief, including
but not limited to claims related to unauthorized disclosure of
confidential information, trade secrets intellectual property, or
unfair competition. It is further agreed that claims relating to
employee benefits under the Company's insurance, disability and
retirement plans must be raised pursuant to the procedures set forth
in those plans, and that the parties may pursue arbitration only if
the matter is not resolved pursuant to those procedures.
The parties understand and agree that any result reached by the
arbitrator shall be binding, that no appeal may be taken and that
either party can seek a judgment upon the arbitration award, which may
be entered by any court having jurisdiction. Executive further
understands and agrees that by signing this Agreement, he is waiving
his right to have a trial by judge or jury of any claim or dispute
c o v ered by this arbitration provision. The parties further
acknowledge and agree that, other than as expressly set forth herein,
this arbitration provision does not alter or add to the substantive
legal rights, remedies and defenses of either party as provided by
federal or applicable state law.
15. General Provisions.
(a) Notices. Any notice required by this Agreement shall
be deemed sufficient if sent by registered or certified mail, postage
prepaid, with return receipt requested. Notices shall be addressed to
the parties as follows:
If to Executive: Xxxxxx X. Xxxxxxxxxxx
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
If to the Company: Sportmart, Inc.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Each party may change his or its address by written notice in
accordance with this Section. Notices shall be deemed effective at the
time of their actual receipt or refusal of receipt.
(b) Severability. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall continue in full force
and without being impaired or invalidated in any way.
(c) Entire Agreement. This Agreement supersedes and cancels
any and all previous and contemporaneous oral or written agreements
between the parties hereto with respect to the employment of Executive
by the Company and contains all of the covenants and agreements
between the parties with respect to such employment. Each party to
this Agreement acknowledges that no representations, inducements or
agreements, oral or otherwise, that have not been embodied herein, and
no other agreement, statement or promise not contained in this
Agreement, shall be valid or binding.
(d) Modification and Waiver. No amendment, modification,
or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by each of the parties hereto. Any
waiver or consent by any party to any breach of or any variation from
any provision of this Agreement shall be valid only if in writing and
only in the specific instance in which it is given, and such waiver or
consent shall not be construed as a waiver of any subsequent breach of
any other provision or as a consent with respect to any similar
instance or circumstance.
(e) Headings. The section, paragraph, and subparagraph
headings are for reference only and shall not define or limit the
provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
SPORTMART, INC.
By: /S/ XXXX X. XXXXXXXXXX
Title: Chief Operating Officer
EXECUTIVE:
/S/ XXXXXX X. XXXXXXXXXXX
