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EMPLOYMENT AGREEMENT
DATED AS OF JANUARY 1, 1997
BETWEEN
ACTION PERFORMANCE COMPANIES, INC.
AND
XXXXXXX X. XXXXXX
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TABLE OF CONTENTS
Page
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1. Employment.......................................................... 1
2. Full Time Occupation................................................ 1
3. Compensation and other Benefits..................................... 1
(a) Salary..................................................... 1
(b) Bonus...................................................... 1
(c) Stock Options.............................................. 1
(d) Fringe Benefits............................................ 1
(e) Reimbursement.............................................. 2
4. Term of Employment.................................................. 2
(a) Employment Term............................................ 2
(b) Termination Under Certain Circumstances.................... 2
(c) Result of Termination...................................... 2
5. Competition and Confidential Information............................ 2
(a) Interests to be Protected.................................. 2
(b) Non-Competition............................................ 3
(c) Non-Solicitation of Employees.............................. 3
(d) Confidential Information................................... 3
(e) Return of Books and Papers................................. 4
(f) Equitable Relief........................................... 4
(g) Restrictions Separable..................................... 4
6. Miscellaneous....................................................... 4
(a) Notices.................................................... 4
(b) Indulgences................................................ 5
(c) Controlling Law............................................ 5
(d) Binding Nature of Agreement................................ 5
(e) Execution in Counterpart................................... 5
(f) Provisions Separable....................................... 5
(g) Entire Agreement........................................... 5
(h) Paragraph Headings......................................... 6
7. Successors And Assigns.............................................. 6
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of the 1st day of January, 1997,
by and between ACTION PERFORMANCE COMPANIES, INC., an Arizona corporation
("Employer") and XXXXXXX X. XXXXXX ("Employee").
As of the date of this Agreement, Employer has acquired all of
the outstanding stock of Creative Marketing and Promotions, Inc., a North
Carolina corporation ("CMP"), and Employer's wholly owned subsidiary, MTL
Acquisition, Inc., an Arizona corporation, has purchased substantially all the
assets of Motorsport Traditions Limited Partnership, a North Carolina limited
partnership (together with CMP, "Motorsport Traditions"). Employee served in
various executive capacities with Motorsport Traditions prior to the
acquisition. Employer intends to continue the business of Motorsport Traditions.
Employer desires that Employee serve as General Manager of Motorsport Traditions
and perform various other services for Employer, and Employee desires to accept
such employment, upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants set forth in this Agreement, the parties hereto agree as
follows:
1. Employment.
Employer hereby employs Employee, and Employee hereby accepts
such employment, as Vice President of Employee's wholly owned subsidiary, Sports
Image, Inc., an Arizona corporation ("SII"), and in such other capacities and
for such other duties and services of an executive nature as shall from time to
time be specified by Employer.
2. Full Time Occupation.
Employee shall devote such of Employee's business time,
attention, and efforts as shall be reasonably necessary for the performance of
Employee's duties under this Agreement and shall serve Employer faithfully and
diligently.
3. Compensation and other Benefits.
(a) Salary. Employer shall pay to Employee, as
compensation for the services rendered by Employee during Employee's employment
under this Agreement, a salary at a rate of $120,000 per annum, to be paid in
equal monthly installments or in such other periodic installments upon which
Employer and Employee mutually agree.
(b) Bonus. Employee shall be eligible to receive an
annual bonus in an amount of up to 20% of Employee's salary with the amount to
be determined by the Board of Directors of Employer based upon such factors as
may be deemed relevant by the directors, including the performance of Employee.
(c) Stock Options and Awards. Employee shall be
granted qualified stock options under Employer's Stock Option Plan to purchase a
total of 15,000 shares of Employer's Common Stock at a price equal to $17.50 per
share at any time or from time to time within six years of the date of grant,
such options to vest 50% on the date of grant and 50% on the first anniversary
of the grant.
(d) Fringe Benefits. Employee shall be entitled to
participate in any group insurance, pension, retirement, vacation, expense
reimbursement, and other plans, programs, or benefits approved by Employer's
Board of Directors and made available from time to time to executive personnel
of Employer generally during the term of Employee's employment hereunder. The
foregoing shall not obligate Employer to adopt or maintain any particular plan,
program, or benefit.
(e) Reimbursement. Employer shall reimburse Employee
for all travel and entertainment expenses and other ordinary and necessary
business expenses incurred by Employee in connection with the business of
Employer and Employee's duties under this Agreement; provided, however, that
Employee shall not incur such expenses in an amount in excess of $5,000 during
any month without written authorization from Employer. The term "business
expenses" shall not include any item not deductible in whole or in part by
Employer for federal income tax purposes. To obtain reimbursement, Employee must
submit to Employer receipts, bills, or sales slips for the expenses incurred.
Reimbursements will be made by Employer monthly within 10 days of presentation
by Employee of satisfactory evidence of the expenses incurred.
4. Term of Employment.
(a) Employment Term. The term of Employee's
employment under this Agreement shall be for a period of two years commencing on
the date of this Agreement and continuing from year to year thereafter, unless
and until terminated by either party giving written notice to the other not less
than 60 days prior to the end of the then-current term of Employee's employment
under this Agreement.
(b) Termination Under Certain Circumstances.
Notwithstanding anything to the contrary herein contained:
(i) Death. Employee's employment shall
automatically terminate, without notice, effective upon the date of Employee's
death.
(ii) Disability. If Employee shall fail, for
a period of more than 60 consecutive days, or for 60 days within any 180-day
period, to perform any of Employee's duties under this Agreement as the result
of illness or other incapacity, Employer, at its option and upon notice to
Employee, may terminate Employee's employment effective on the date of that
notice.
(iii) Unilateral Decision of Employer.
Employer, at its option and upon notice to Employee, may terminate Employee's
employment effective on the date of that notice.
(iv) Unilateral Decision by Employee.
Employee, at his option, may terminate Employee's employment upon 90 days prior
notice to Employer.
(v) Certain Acts. If Employee engages in an
act or acts involving a felony, moral turpitude, fraud, or dishonesty, Employer,
at its option and upon notice to Employee, may terminate Employee's employment
effective on the date of that notice.
(c) Result of Termination. In the event of the
termination of Employee's employment pursuant to Sections 4(b)(i), (ii), (iv) or
(v) above, Employee shall receive no further compensation under this Agreement.
In the event of the termination of Employee's employment pursuant to Section
4(b)(iii) above, Employee shall continue to receive Employee's fixed
compensation during the remainder of the then-current term of Employee's
employment under this Agreement prior to such termination if termination is
before the end of the two-year term beginning on the date of this Agreement.
Employee shall receive no severance compensation in the event of the termination
of Employee's employment for any reason after the initial two-year term.
5. Competition and Confidential Information.
(a) Interests to be Protected. The parties
acknowledge that Employee will perform essential services for Employer, its
employees, and its shareholders during the term of Employee's employment with
Employer. Employee will be exposed to, have access to, and work with, a
considerable amount of Confidential Information (as defined below). The parties
also expressly recognize and acknowledge that the personnel of Employer have
been trained by, and are valuable to, Employer and that Employer will incur
substantial recruiting and training expenses if Employer must hire new personnel
or retrain existing personnel to fill vacancies. The parties expressly recognize
that it could seriously impair the goodwill and diminish the value of Employer's
business
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should Employee compete with Employer in any manner whatsoever. The parties
acknowledge that this covenant has an extended duration; however, they agree
that this covenant is reasonable and it is necessary for the protection of
Employer, its shareholders, and employees. For these and other reasons, and the
fact that there are many other employment opportunities available to Employee if
he should terminate his employment, the parties are in full and complete
agreement that the following restrictive covenants are fair and reasonable and
are entered into freely, voluntarily, and knowingly. Furthermore, each party was
given the opportunity to consult with independent legal counsel before entering
into this Agreement.
(b) Non-Competition. During the later of (i) 12
months of the date of this Agreement or (ii) the term of Employee's employment
with Employer and for the period ending six months after the termination of
Employee's employment with Employer (voluntarily by Employee or with cause by
Employer), Employee shall not (whether directly or indirectly, as owner,
principal, agent, stockholder, director, officer, manager, employee, partner,
participant, or in any other capacity) engage or become financially interested
in any competitive business conducted within the Restricted Territory (as
defined below) or otherwise circumvent any license agreements of Employer
relating to the business of Employer. As used herein, the term "competitive
business" shall mean (i) the design and manufacture of collectible die-cast and
pewter miniature replicas of motorsports vehicles and the design and manufacture
of licensed apparel, souvenirs, and other motorsports consumer items, including
t-shirts, hats, jackets, mugs, key chains, and drink bottles, in each case to be
distributed and sold through collector and fan clubs, wholesale distribution,
authorized retail dealers, trackside events, and promotional programs for
corporate sponsors; (ii) the development of marketing and product promotional
programs for corporate sponsors of motorsports, featuring Employer's die-cast
replicas or other products as premium awards, intended to increase brand
awareness of the products or services of the corporate sponsors; and (iii) the
design, manufacture, and sale of motorsports-related products (consisting of die
cast miniature replicas of motorsports vehicles and motorsports-related apparel
and souvenirs) specifically designed for the mass-merchandise market; and the
term "Restricted Territory" shall mean any state in which Employer or its
subsidiaries sells products or provides services during Employee's employment
hereunder. Employer acknowledges that Employee's ownership or operation of Chase
Raceware, L.L.C., Racing for Kids, L.L.C., Motorsports by Mail, Inc., Race
World, L.L.C., American Motorsports Marketing, Inc., and Cararrus Plastics, Inc.
(in the production of plastic products under manufacturing or similar
arrangements), as the businesses of such enterprises currently are conducted,
shall not be deemed "competitive businesses."
(c) Non-Solicitation of Employees. During the term of
Employee's employment and for a period of 12 months after the termination of
Employee's employment with Employer, regardless of the reason therefor, Employee
shall not directly or indirectly, for himself, or on behalf of, or in
conjunction with, any other person, company, partnership, corporation, or
governmental entity, seek to hire or hire any of Employer's or its subsidiaries'
personnel or employees for the purpose of having any such employee engage in
services that are the same as or similar or related to the services that such
employee provided for Employer or its subsidiaries.
(d) Confidential Information. Employee shall maintain
in strict secrecy all confidential or trade secret information relating to the
business of Employer and its subsidiaries (the "Confidential Information")
obtained by Employee in the course of Employee's employment, and Employee shall
not, unless first authorized in writing by Employer, disclose to, or use for
Employee's benefit or for the benefit of, any person, firm, or entity at any
time either during or subsequent to the term of Employee's employment, any
Confidential Information, except as required in the performance of Employee's
duties on behalf of Employer and its subsidiaries. For purposes hereof,
Confidential Information shall include without limitation any engineering,
drawings, or other reproduction of any kind; any trade secrets, knowledge, or
information with respect to processes, inventions, machinery, manufacturing
techniques and know-how and to the management, operational, marketing,
licensing, and distribution policies and practices of Employer and its
subsidiaries; any business methods or forms; any names or addresses of customers
or data on customers or suppliers; and any business policies or other
information relating to or dealing with the purchasing, production, sales,
marketing, and distribution policies or practices of Employer or its
subsidiaries or relating to or dealing with the management, operational, or
investment policies or practices of Employer or its subsidiaries.
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(e) Return of Books and Papers. Upon the termination
of Employee's employment with Employer for any reason, Employee shall deliver
promptly to Employer all samples or demonstration models, catalogues, files,
lists, books, records, manuals, memoranda, drawings, and specifications; all
cost, pricing, and other financial data; all customer, licensee, and supplier
information; all other written or printed materials that are the property of
Employer or its subsidiaries (and any copies of them); and all other materials
that may contain Confidential Information relating to the business of Employer
and its subsidiaries, which Employee may then have in Employee's possession,
whether prepared by Employee or not.
(f) Equitable Relief. In the event a violation of any
of the restrictions contained in this Section is established, Employer shall be
entitled to preliminary and permanent injunctive relief as well as damages and
an equitable accounting of all earnings, profits, and other benefits arising
from such violation, which right shall be cumulative and in addition to any
other rights or remedies to which Employer may be entitled. In the event of a
violation of any provision of subsection (b), (c), (f), or (g) of this Section,
the period for which those provisions would remain in effect shall be extended
for a period of time equal to that period beginning when such violation
commenced and ending when the activities constituting such violation shall have
been finally terminated in good faith.
(g) Restrictions Separable. If the scope of any
provision of this Agreement (whether in this Section 5 or otherwise) is found by
a Court to be too broad to permit enforcement to its full extent, then such
provision shall be enforced to the maximum extent permitted by law. The parties
agree that the scope of any provision of this Agreement may be modified by a
judge in any proceeding to enforce this Agreement, so that such provision can be
enforced to the maximum extent permitted by law. Each and every restriction set
forth in this Section 5 is independent and severable from the others, and no
such restriction shall be rendered unenforceable by virtue of the fact that, for
any reason, any other or others of them may be unenforceable in whole or in
part.
6. Miscellaneous.
(a) Notices. All notices, requests, demands, and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made, and received (i) if
personally delivered, on the date of delivery, (ii) if by facsimile
transmission, upon receipt, (iii) if mailed, three days after deposit in the
United States mail, registered or certified, return receipt requested, postage
prepaid, and addressed as provided below, or (iv) if by a courier delivery
service providing overnight or "next-day" delivery, on the next business day
after deposit with such service addressed as follows:
(1) If to Employer:
0000 Xxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy given in the manner
prescribed above, to:
X'Xxxxxx, Cavanagh, Anderson,
Xxxxxxxxxxxxx & Xxxxxxxx, P.A.
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
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(2) If to Employee:
Unit 407
First Turn Condominiums
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Phone: (000) 000-0000
with a copy given in the manner
prescribed above, to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 6 for the giving of notice.
(b) Indulgences; Waivers. Neither any failure nor any
delay on the part of either party to exercise any right, remedy, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power, or privilege preclude
any other or further exercise of the same or of any other right, remedy, power,
or privilege, nor shall any waiver of any right, remedy, power, or privilege
with respect to any occurrence be construed as a waiver of such right, remedy,
power, or privilege with respect to any other occurrence. No waiver shall be
binding unless executed in writing by the party making the waiver.
(c) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement, shall be
governed by and construed in accordance with the laws of the state of Arizona,
notwithstanding any Arizona or other conflict-of-interest provisions to the
contrary.
(d) Binding Nature of Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, and assigns, except that
no party may assign or transfer such party's rights or obligations under this
Agreement without the prior written consent of the other party.
(e) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as the
signatories.
(f) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
(g) Entire Agreement. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings, inducements and conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
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(h) Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
7. Successors And Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto;
provided that because the obligations of Employee hereunder involve the
performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement, successors and assigns shall include,
but not be limited to, any individual, corporation, trust, partnership, or other
entity that acquires a majority of the stock or assets of Employer by sale,
merger, consolidation, liquidation, or other form of transfer. Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of Employer to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Employer would be required to
perform it if no such succession had taken place. Without limiting the
foregoing, unless the context otherwise requires, the term "Employer" includes
all subsidiaries of Employer including SII.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ACTION PERFORMANCE COMPANIES, INC.
By:___________________________________________
Its:__________________________________________
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Xxxxxxx X. Xxxxxx
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