SPORT SUPPLY GROUP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
October 27, 1997
(Effective Date of Grant)
TO: Xxxxxxxx X. Xxxxxxx
WHEREAS, Sport Supply Group, Inc. (the "Company") wishes to
encourage Xxxxxxxx X. Xxxxxxx'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, or as specifically provided below.
Optionee may transfer this option to (i) the spouse, children or
grandchildren of the Optionee ("Immediate Family Members"), (ii) a trust
or trusts for the exclusive benefit of such Immediate Family Members,
(iii) a partnership or other entity in which such Immediate Family
Members are the only partners, or (iv) to other persons or entities
deemed appropriate by the Company's Stock Option Committee. This option
may be exercised during the lifetime of the Optionee, only by the
Optionee or by his guardian or legal representative or his transferee as
permitted hereunder. This option may be exercised, during the lifetime
of the Optionee, only by the Optionee or by his guardian or legal
representative or his transferee as permitted hereunder. 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 Optionee's transferee as permitted hereunder or
by the executor or administrator of the Optionee's estate, or if the
Optionee's estate is not in administration, by the Optionee's transferee
as permitted hereunder or 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 August 4 , 1997 to
be effective as of August 1, 1997, 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. 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, the Exercise Notice shall be
accompanied by appropriate proof of the right of such transferee to
exercise this Option.
Subject to the limitation expressed herein, this Option may be
exercised with respect to all or a part of the shares of 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
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/Xxxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
