SPORT SUPPLY GROUP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
January 23, 1997
(Effective Date of Grant)
TO: Xxxx X. Xxxxxx
WHEREAS, Sport Supply Group, Inc. (the "Company") wishes to
encourage Xxxx X. Xxxxxx'x (the "Optionee") sense of proprietorship
in the Company by owning the Common Stock, par value $.01 per share
(the "Common Stock"), of the Company;
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein, the Company hereby grants to the Optionee
a non-qualified stock option to purchase up to a total of 100,000
shares of the 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 on page 1 of this Agreement, 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. 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
Exchange Act 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 meaning provided in the Plan except to the extent otherwise
provided herein.
Except as otherwise provided herein, the option granted
hereunder shall terminate six (6) months after the date the Optionee
ceases to be an employee of the Company (the "Termination Date") or
until the option by its terms expires, whichever first occurs.
Notwithstanding the foregoing, in the event the termination 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 (i) of a Change in Control, (ii) Optionee is terminated
other than for Cause (as defined in that Certain Employment Agreement
by and between the Company and the Optionee dated as of January 23,
1997 to be effective as of December 11, 1996, the "Employment
Agreement") or (iii) of a Constructive Discharge (as defined in the
Employment Agreement) of Optionee, then from and after the date of
the Change in Control, the Constructive Discharge or the termination
without Cause, whichever is applicable, 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.
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.
In addition to the foregoing, the Company agrees to make one or
more loans to Optionee to purchase shares of Common Stock underlying
the Option granted hereunder, subject to the terms and provisions of
applicable laws, including, without limitation, Regulation G
promulgated by the Federal Reserve Board and the Delaware General
Corporation Law. The loan(s) shall be (i) for a period not to
exceed six (6) months, (ii) interest free, (iii) secured by the
shares of Common Stock issued upon exercise and (iv) evidenced by a
mutually satisfactory promissory note. The principal amount of any
such loans shall be equal to (a) the Option Price multiplied by the
number of shares of Common Stock being acquired upon exercise of the
Option plus (b) withholding tax less (c) the par value of the
shares, which par value must be paid by Optionee in cash at the time
of exercise.
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 of the right of such transferee to exercise this Option.
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
This Agreement has been executed in, and shall be deemed to be
performable in, Dallas, Dallas County, Texas. For these and other
reasons, the parties agree that this Agreement shall be governed by
and construed in accordance with the laws of the State of Texas. The
parties further agree that the courts of the State of Texas, and any
courts whose jurisdiction is derivative on the jurisdiction of the
courts of the State of Texas, shall have personal jurisdiction over
all parties to this Agreement.
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/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Chief Executive Officer
ACCEPTED:
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
