SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)[x]
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 1998.
OR
k One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)[x]
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)[ ]
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 1-10704
SPORT SUPPLY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2241783
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Diplomat Drive, Farmers Branch, Texas 75234
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 484-9484
Not Applicable
Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceeding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [x] No [ ]
Indicated below is the number of shares outstanding of each class
of the registrant's common stock as of May 11, 1998.
Title of Each Class of Common Stock Number Outstanding
Common Stock, $0.01 par value 8,130,887 shares
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Index to Consolidated Financial Statements
Page
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 3, 1998 AND SEPTEMBER 26, 1997
<CAPTION>
April 3, September
1998 26, 1997
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,815,317 $ 602,779
Accounts receivable --
Trade, less allowance for
doubtful accounts of
$1,171,000 in 1998 and
$797,000 in 1997 15,253,217 13,452,286
Other 306,466 467,661
Income taxes receivable 1,576,030 1,653,875
Inventories, net 15,528,297 12,284,425
Other current assets 733,044 583,414
Deferred tax assets 2,069,678 2,069,678
Total current assets 37,282,049 31,114,118
DEFERRED CATALOG EXPENSES 2,330,098 1,150,514
PROPERTY, PLANT AND EQUIPMENT :
Land 8,663 8,663
Buildings 1,595,228 1,595,228
Machinery and equipment 5,511,439 5,661,315
Furniture and fixtures 2,497,214 2,427,527
Leasehold improvements 2,752,373 2,277,372
12,364,917 11,970,105
Less -- Accumulated depreciation (7,113,707) (6,638,319)
and amortization
5,251,210 5,331,786
DEFERRED TAX ASSETS 4,901,697 5,838,895
COST IN EXCESS OF TANGIBLE NET
ASSETS ACQUIRED,
less accumulated amortization of
$1,184,000 in 1998 and
$1,130,000 in 1997 3,230,423 2,959,114
TRADEMARKS, less accumulated
amortization of $1,039,000 in
1998 and $935,000 in 1997 3,260,137 3,364,046
OTHER ASSETS, less accumulated
amortization of $1,088,000
in 1998 and $1,119,000 in 1997 904,945 725,624
$57,160,559 $50,484,097
<PAGE>
CURRENT LIABILITIES :
Accounts payable $7,074,368 $4,956,830
Accrued property taxes - 294,882
Other accrued liabilities 740,654 1,292,247
Notes payable and capital lease
obligations, current portion 580,128 564,638
8,395,150 7,108,597
DEFERRED GAIN 16,066 22,091
NOTES PAYABLE AND CAPITAL LEASE
OBLIGATIONS,
net of current portion 7,498,728 4,396,090
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY :
Preferred stock, par value $0.01,
100,000 shares authorized, no shares
outstanding in 1998 or 1997 -- --
Common stock, par value $0.01,
20,000,000 shares authorized,
9,191,534 and 9,158,749 shares
issued in 1998 and 1997, 8,130,887
and 8,084,384 shares outstanding
in 1998 and 1997 91,916 91,588
Paid-in capital 58,759,464 58,574,218
Retained deficit (7,738,970) (9,709,357)
Treasury stock, at cost,
1,060,647 shares in 1998
and 1,074,365 in 1997 (9,861,795) (9,999,130)
41,250,615 38,957,319
$57,160,559 $50,484,097
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
<CAPTION>
For the 3 Months Ended For the Six Months Ended
April 3,1998 March 28,1997 April 3,1998 March 2, 1997
<S> <C> <C> <C> <C>
Net Revenues $32,273,245 $25,623,716 $46,685,091 $39,661,511
Cost of Sales 20,124,427 15,698,742 28,909,119 25,083,002
Gross profit 12,148,818 9,924,974 17,775,972 14,578,509
<PAGE>
Selling, General and 8,355,008 8,022,365 14,905,649 15,234,996
Administrative Expenses
Nonrecurring charges - 1,300,000 - 1,300,000
Earnings (loss before
interest, other income
and taxes 3,793,810 602,609 2,870,323 (1,956,487)
Interest Expense (156,172) (206,174) (274,791) (477,298)
Other Income, net 110,379 32,461 389,902 31,526
Earnings (loss) from
continuing operations
before provision (benefit)
for income taxes 3,748,017 428,896 2,985,434 (2,402,259)
Provision (benefit) 1,274,328 145,817 1,015,047
for income taxes (831,227)
Earnings (loss) from
continuing operations 2,473,689 283,079 1,970,387 (1,571,032)
Discontinued Operations:
Loss from operations, net - - - (160,000)
Loss on disposal, net - (2,574,000) - (5,934,000)
Loss from discontinued
operations (2,574,000)_ - (6,094,000)
Net earnings (loss) $2,473,689 $(2,290,921) $ 1,970,387 $(7,665,032)
Earnings (loss) per
common and common
equivalent share:
Continuing operations $ 0.31 $ 0.03 $ 0.24 $ (0.20)
Discontinued operations 0.00 (0.30) 0.00 (0.76)
Net earnings (loss) $ 0.31 $ (0.27) $ 0.24 $ (0.96)
Continuing operations - $ 0.30 $ 0.03 $ 0.24 $ (0.20)
assuming dilution
Discontinued operations - 0.00 (0.30) 0.00 (0.76)
assuming dilution
Net earnings (loss) - $ 0.30 $ (0.27) $ 0.24 $ (0.96)
assuming dilution
Weighted average
number of common and
common equivalent
shares outstanding 8,108,135 8,364,834 8,094,284 8,020,083
<PAGE>
Weighted average
number of common and
common equivalent
shares outstanding -
assuming dilution 8,324,358 8,366,471 8,263,444 8,021,896
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
SPORT SUPPLY GROUP, INC. SUPPLY GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
<CAPTION>
For the Six Months Ended
April 3, March 28,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $1,970,387 $(7,665,032)
Adjustments to reconcile net earnings
(loss)
to net cash used in operating activities -
Loss on disposal of
discontinued operations - 6,094,000
Depreciation and amortization 688,918 1,062,895
Provision for allowances
for accounts receivable (52,641) (304,032)
Changes in assets and liabilities --
Increase in receivables (441,536) (2,300,928)
(Increase) decrease in inventories (2,466,699) 313,903
Increase in deferred catalogs
and other current assets (1,329,214) (4,827,556)
Increase (decrease) in payables 2,117,538 (1,038,813)
Increase (decrease) in
accrued liabilities (1,146,475) 1,152,017
(Increase) decrease in
other assets 760,659 (4,590,110)
Other (6,025) (6,025)
Discontinued operations -
noncash charges and
working capital changes - 5,840,265
Net cash provided by (used in)
operating activities 94,912 (5,661,352)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant
& equipment (240,861) (79,442)
Payments for acquisitions,
net of cash (1,500,682) --
Proceeds from sale of investments 6,200 10,000
Investing activities of
discontinued operations -- (1,657)
Proceeds from sale of discontinued operations -- 8,160,826
Net cash provided by (used in) investing
activities (1,735,343) 8,089,727
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of notes payable 2,922,599 6,496,922
Payments of notes payable and capital (392,539) (20,900,027)
lease obligations
Proceeds from common stock issuances 322,909 12,000,000
Net cash provided by (used in) financing 2,852,969 (2,403,105)
activities
Net change in cash 1,212,538 25,270
Cash, beginning of period 602,779 577,888
Cash, end of period $1,815,317 $ 603,158
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 264,587 $ 940,612
Cash paid during the period for income taxes $ 856 -
</TABLE>
The accompanying notes are an integral part of these financial statements.
SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
These consolidated financial statements reflect all normal and recurring
adjustments that are, in the opinion of management, necessary to present a
fair statement of Sport Supply Group, Inc.'s (the "Company" or "SSG")
consolidated financial position as of April 3, 1998 and the results of its
operations for the three and six month periods ended April 3, 1998 and
March 28, 1997. In January 1997, the Company changed its financial
reporting year end from October 31 to September 30. The Company is
operating on a 52/53 week year ending on the Friday closest to September
30. Consequently, results of operations presented for the three and six
month periods ended March 28, 1997 represent a different period than
historically reported by the Company.
<PAGE>
The consolidated financial statements include the accounts of SSG and its
wholly-owned subsidiary, Athletic Training Equipment Company, Inc.
("ATEC"). All significant intercompany accounts and transactions have
been eliminated in consolidation. The consolidated financials also
include estimates and assumptions made by management that affect the
reported amounts of assets and liabilities, the reported amounts of
revenues and expenses, provisions for and the disclosure of contingent
assets and liabilities. Actual results could materially differ from those
estimates.
During May 1996, the Company sold substantially all of the assets (other
than cash and accounts receivable) of its Gold Eagle Professional Golf
Products Division (the "Gold Eagle Division"). Subsequent to the sale
of the Gold Eagle Division, the Company adopted a formal plan to dispose
of the remaining operations of the Company's retail segment (which
previously included the Gold Eagle Division) and therefore has
classified these operations as discontinued. On March 28, 1997, SSG
disposed of substantially all of the remaining assets of the
discontinued operation to Nitro Leisure Products, Inc., a Delaware
corporation. As a result, the Company's retail segment is being
reported as a discontinued operation through the date of disposal in the
accompanying consolidated financial statements.
Note 1 - Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method for items manufactured by the Company
and weighted-average cost for items purchased for resale. As of April 3,
1998 and September 26, 1997, inventories consisted of the following:
<TABLE>
<CAPTION>
April 3 September 26,
1998 1997
<S> <C> <C>
Raw materials $ 3,431,488 $2,410,009
Work-in-progress 285,910 113,170
Finished and purchased goods 12,708,770 10,471,262
16,426,168 12,994,441
Less inventory reserve for (897,874) (710,016)
obsolete or slow moving items
$15,528,294 $12,284,425
</TABLE>
Note 2 - Stockholders' Equity
The Company maintains a stock option plan that provides up to 2,000,000
shares of common stock for awards of incentive and non-qualified stock
options to directors and employees of the Company. Under the stock option
plan, the exercise price of options will not be less than the fair market
value of the common stock at the date of grant or not less than 110% of
fair market value for incentive stock options granted to certain
employees, as more fully described in the Amended and Restated Stock
Option Plan. Options expire 10 years from the grant date, or 5 years from
the grant date for incentive stock options granted to certain employees,
or such earlier date as determined by the Board of Directors of the
Company (or a Stock Option Committee comprised of members of the Board of
Directors).
<PAGE>
Transactions under the plan for the six months ended April 3, 1998 and
March 28, 1997 are summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended
April 3, 1998 March 28, 1997
<S> <C> <C>
Options outstanding -
beginning of period 1,040,573 708,723
Options granted 182,300 594,375
Options exercised (27,050) --
Options forfeited (1,175) (215,275)
Options outstanding -
end of period 1,194,648 1,087,823
Weighted average prices $7.31 $7.18
<CAPTION>
Stock Options
Stock Options Outstanding Exercisable
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Remaining Exercise Exercise
Range of Exercise Prices Shares Life Price Shares Price
<S> <C> <C> <C> <C> <C>
$4.80 - $7.50 1,194,648 7.2 yrs. $7.31 484,648 $7.13
</TABLE>
As of April 3, 1998 there were 186,200 non-qualified options outstanding
that were issued outside the plan. Such options have exercise prices
ranging from $6.88 to $15.00 per share.
Note 3 - Notes Payable and Capital Lease Obligations
As of April 3, 1998 and September 26, 1997, notes payable and capital
lease obligations consisted of the following:
<TABLE>
<CAPTION>
April 3, September 26,
1998 1997
<S> <C> <C>
Note payable under revolving line
of credit,
interest at prime plus 1/2%
(9.0% at April 3, 1998) or
LIBOR plus 2-1/4% (7.9% at
April 3, 1998), due October 31,
2000 collateralized by substantially
all assets $ 5,930,165 $ 3,000,000
Term loan, interest at LIBOR plus
2-1/4% (7.9% at April 3, 1998), payable
in quarterly installments plus accrued
accrued interest of $125,000 through
October 31, 2000, collateralized by
substantially all assets 1,250,000 1,625,000
<PAGE>
Promissory note, noninterest
bearing, due June 30, 1999 525,000 --
Capital lease obligation,interest
at 9.0%, payable in annual installments
of principal and interest totaling
$55,000 through August 2005 290,599 290,599
Other 83,092 45,129
Total 8,078,856 4,960,728
Less - current portion (580,128) (564,638)
Long-term debt and capital
lease obligations, net $7,498,728 $4,396,090
</TABLE>
The Company has a senior secured credit facility to finance its working
capital requirements. The Company's ability to borrow funds under its
revolving credit facility is based upon certain percentages of eligible
trade accounts receivable and eligible inventories. On September 9,
1997, the Company entered into a Second Amended and Restated Loan and
Security Agreement ("Agreement"), which includes a senior credit
facility of $25,000,000 with a maturity date of October 31, 2000. This
Agreement provides for a revolving line of credit, a letter of credit
facility, a term loan, additional loans to be made to SSG for the cost
of certain capital expenditures (up to a maximum of $4,000,000) and
reduced interest rates and fees. The Agreement also contains financial
and net worth covenants in addition to limits on capital expenditures.
As of April 3, 1998, the Company was in compliance with the covenants in
the senior credit facility.
Amounts outstanding under the senior credit facility are collateralized
by substantially all assets of the Company. As of April 3, 1998, the
Company had the option of electing the revolving credit facility and the
term loan to bear interest at the prevailing LIBOR rate plus 2-1/4%
(7.9% at April 3, 1998) or the lender's prime rate plus 1/2% (9.0% at
April 3, 1998). Historically, the Company has elected the lower of the
interest rates available under the facility.
As of April 3, 1998, the Company had borrowings of approximately
$5,930,000 outstanding under the revolving credit facility,
approximately $1,681,000 of letters of credit outstanding for foreign
purchases of inventory, and availability of approximately $14,919,000.
In addition, as of April 3, 1998, SSG had borrowings of $1,250,000 under
the term loan which is payable in quarterly installments of principal
and accrued interest of $125,000 through October 31, 2000.
Note 4 - Net Earnings (Loss) Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share"). Statement No. 128 replaced the previously reported
primary and fully diluted earnings per share with basic and diluted
earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants,
and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods have been presented, and where
necessary, restated to conform to the Statement No. 128 requirements.
<PAGE>
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
April 3, March 28, April 3, March 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Numerator:
Net earnings (loss) from
continuing operations $2,473,689 $ 283,079 $1,970,387 ($1,571,032)
Numerator for basic and
diluted earnings per share
- - income available to common
stockholders $2,473,689 283,079 $1,970,387 ($1,571,032)
Denominator:
Denominator for basic
earnings per share -
weighted average shares 8,108,135 8,364,834 8,094,284 8,020,083
Effect of dilutive
securities:
Warrants 78,262 -- 61,488 --
Employee stock options 137,961 1,637 107,712 1,813
Denominator for diluted
earnings per share -
adjusted weighted average
shares and assumed conversions 8,324,358 8,366,471 8,263,444 8,020,083
Basic earnings (loss) per share $0.31 $0.03 $0.24 ($0.20)
Diluted earnings (loss) per share $0.30 $0.03 $0.24 ($0.20) $0.24
</TABLE>
Note 5 - Acquisitions
During December 1997, the Company acquired certain assets of Athletic
Training Equipment Company, Inc. ("ATEC"), a manufacturer of pitching
machines for cash, a noninterest bearing promissory note and the
assumption of certain liabilities.
Note 6 - Recently Issued Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," which is required to be adopted
in fiscal year 1999. At that time, the Company will be required to
disclose total comprehensive income and comprehensive income per share.
Comprehensive income is defined as all changes in stockholders' equity
exclusive of transactions with owners such as capital investments and
dividends.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
<PAGE>
The Company's working capital increased approximately $4.9 million during
the six months ended April 3, 1998, from $24.0 million at September 26,
1997 to $28.9 million at April 3, 1998. The increase in working capital
is primarily a result of: (i) a $3.2 million increase in inventory
associated with the seasonality of the Company's business as well as the
inventory acquired from the acquisition of Athletic Training Equipment
Company, Inc. ("ATEC") in December, 1997; and (ii) a $1.8 million
increase in trade receivables due to higher revenues generated in the
second fiscal quarter of 1998 as compared to the fourth fiscal quarter of
1997. This increase in working capital was offset by a $2.1 million
increase in accounts payable.
On September 9, 1997, the Company entered into a Second Amended and
Restated Loan and Security Agreement ("Agreement") which includes a
senior credit facility of $25,000,000 with a maturity date of October 31,
2000. This Agreement provides for a revolving line of credit, a letter of
credit facility, a term loan, additional loans to be made to SSG for the
cost of certain capital expenditures (up to a maximum of $4,000,000) and
reduced interest rates. The Agreement also contains financial and net
worth covenants in addition to limits on capital expenditures.
As of April 3, 1998, the Company had total borrowings under its senior
credit facility of approximately $7.2 million including a term loan of
$1.4 million which is payable in quarterly installments of principal and
accrued interest of $125,000 through October 31, 2000, outstanding letters
of credit for foreign purchases of inventory of approximately $1.7
million, and availability of approximately $14.9 million. The net
increase of $2.5 million in borrowings under the senior credit facility
compared to September 26, 1997 partially reflects the cash payment for the
ATEC acquisition in December, 1997.
The Company believes it will satisfy its short-term and long-term
liquidity needs from borrowings under its senior credit facility and cash
flows from operations.
On May 28, 1997, the Company approved the repurchase of up to 1,000,000
shares of its issued and outstanding common stock in the open market
and/or privately negotiated transactions. Such purchases are subject to
price and availability of shares, working capital availability and any
alternative capital spending programs of the Company. As of April 3,
1998, the Company repurchased approximately 287,300 of its issued and
outstanding common stock in the open market. Except as described below,
the Company does not currently have any material commitments for capital
expenditures.
Impact of Year 2000 and System Implementation
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Some of
the Company's computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a failure or miscalculations causing disruptions of
operations, including the inability to process transactions or engage in
normal business activities. The Company has determined that it will be
necessary to replace significant portions of its software and hardware so
that its computer systems will function properly with respect to dates in
the year 2000 and thereafter. The Company expects that with successful
<PAGE>
conversions to new software that are Year 2000 compatible, the Year 2000
Issue will pose no significant operational problems for its computer
systems. However, if such conversions are not made, or are not successfully
completed on a timely basis, the Year 2000 Issue and system implementation
could have a material adverse effect on the Company's operations. The
Company is utilizing internal and external resources to convert to, test,
and implement the new software. The Company anticipates completing the
Year 2000 and system implementation project during calendar year 1999. The
Company has received competitive bids from vendors and has preliminarily
determined the total estimated cost of the system implementation project
to range between $3.5 and $4.5 million. The cost of the system implementation
project will be funded through operating cash flows and borrowings under
the Company's senior credit facility. The majority of these costs associated
with the Year 2000 and system implemtation project will be capitalized and
amortized in accordance with Generally Accepted Accounting Principles
beginning in fiscal year 2000.
Results of Operations
Net Revenues. Net revenues increased approximately $6.6 million (26.0%)
and $7.0 million (17.7%) for the three and six month periods ended April
3, 1998 as compared to the same periods ended March 28, 1997. This
increase in net revenues reflects increases in revenues associated
primarily with the Company's Youth, U.S. Games, and track and field
divisions as well as the Company's new subsidiary, ATEC, which was
acquired on December 2, 1997. These increases were partially offset by a
decrease in Government sales. If Government spending continues to be
reduced, the Company will continue to experience a decrease in Government
sales in future periods. Net revenues were also adversely impacted
because the Company mailed significantly less catalogs to its customers
after consolidating the BSN, GSC, and Passons' catalogs into one catalog.
The benefits from reducing catalog and postage expenses are reflected in
the "Selling, General and Administrative Expenses." The Company is
constantly reviewing its marketing methods to maximize revenue growth and
minimize expenses. As a result of the ATEC acquisition, the Company
expects to experience an increase in sales related to sporting goods
dealers and retailers.
Gross Profit. Gross profit increased approximately $2.2 million (22.4%)
and $3.2 million (21.9%) for the three and six month periods ended April
3, 1998 as compared to the same periods ended March 28, 1997. As a
percentage of net revenues, gross profit decreased from 38.7% to 37.6%
and increased from 36.8% to 38.1% for the three and six month periods
ended April 3, 1998 as compared to the same periods ended March 28, 1997.
The decrease in gross profit as a percentage of net revenues for the
three month period ended April 3, 1998 as compared to the same period
ended March 28, 1997 is attributable to sales related to ATEC and the
Youth division, as such sales have lower margins than other sales within
SSG's business. In the event that revenues related to ATEC and the
Youth division continue to represent a larger percentage of total revenues,
the Company may experience a decrease in gross profit as a percentage of
net revenues in future periods. The increase in gross profit as a
percentage of net revenues for the six month period ended April 3,
1998 as compared to March 28, 1997 is attributable to a $950,000 charge
to the inventory reserve in 1997.
Selling, General and Administrative Expenses. Operating expenses
decreased approximately $967,000 (10.4%) and $1.6 million for the three
<PAGE>
and six month periods ended April 3, 1998 as compared to the same periods
ended March 28, 1997. As a percentage of net revenues, operating expenses
decreased from 36.4% to 25.9% and from 41.7% to 31.9% for the three and
six month periods ended April 3, 1998 as compared to the same periods
ended March 28, 1997. The dollar decrease in operating expenses as well
as the decrease in operating expenses as a percentage of net revenues
were primarily a result of the following:
(i) A non-recurring charge of $1.3 million recorded in the prior year
related to the "change in control" of the Company as a result of
a stock purchase agreement with Emerson Radio Corp. ("Emerson").
(ii) A decrease in catalog expenses associated with the Company's
consolidation of the BSN, GSC, and Passons' catalogs.
(iii) A decrease in bad debt expense associated with the Company's
successful collection efforts and better credit evaluations of
potential customers.
Operating Profit (Loss). Operating profit for the three and six month
periods ended April 3, 1998 increased approximately $3.2 million and $4.8
million as compared to the same periods ended March 28, 1997. This
reflects the impact of the (i) increase in gross profit dollars and (ii)
the decrease in operating expenses as discussed above.
Interest Expense. Interest expense decreased approximately $50,000
(24.3%) and $203,000 (42.4%) for the three and six month periods ended
April 3, 1998 as compared to the same periods ended March 28, 1997. The
decrease in interest expense resulted from reduced interest rates and
overall reduced levels of borrowings. See Item 2 "Liquidity and Capital
Resources".
Other Income, Net. Other income increased approximately $78,000 and
$358,000 for the three and six month periods ended April 3, 1998 as
compared to the same periods ended March 28, 1997. The increase in
other income resulted from promotional agreements entered into between
the Company and certain corporate sponsors of a market segment. In
addition, other income includes services provided to Emerson such as
human resources, advertising, warehousing/distribution, and banking
functions as provided in a Management Services Agreement between the
Company and Emerson effective May 1997.
Provision (Benefit) for Income Taxes. The provision for income taxes
increased approximately $1.1 million and $1.8 million for the three and
six month periods ended April 3, 1998 as compared to the same periods
ended March 28, 1997. The Company's effective tax rate remained constant
at 34% and decreased from 34.6% to 34.0% for the three and six month
periods ended April 3, 1998 as compared to the same periods ended March
28, 1997.
Net Earnings (Loss) from Continuing Operations. Net earnings from
continuing operations increased approximately $2.2 million and $3.5
million for the three and six month periods ended April 3, 1998, as
compared to the same periods ended March 28, 1997. Net earnings per share
from continuing operations increased from $0.03 to $0.31 and from a loss
of ($0.20) to $0.24 for the three and six month periods ended April 3,
<PAGE>
1998 as compared to the same periods ended March 28, 1997. The three and
six month periods ended April 3, 1998 include a decrease of approximately
3.1% and an increase of approximately 1.0% in weighted average shares
outstanding, respectively.
Certain Factors that May Affect the Company's Business or Future Operating
Results
This report contains various forward looking statements and information
that are based on Management's beliefs as well as assumptions made by and
information currently available to Management. When used in this report,
the words "anticipate," "believes," "estimate," "expect," "predict,"
"project," and similar expressions are intended to identify forward
looking statements. Such statements are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, expected or
projected. Among the key factors that may have a direct bearing on the
Company's results are set forth below.
Future trends for revenues and profitability remain difficult to predict.
The Company continues to face many risks and uncertainties, including:
general and specific market economic conditions, reduced sales to the
United States Government due to reduction in Government spending, risk of
nonpayment of accounts receivable, competitive factors, and foreign
supplier related issues.
The general economic condition in the U.S. could affect pricing on raw
materials such as metals and other commodities used in the manufacturing
of certain products as well as finished goods. Any material price increases
to the customer could have an adverse effect on revenues and any price
increases from vendors could have an adverse effect on costs.
Approximately 7% of the Company's institutional sales are made to the
U.S. Government, a majority of which are made to military installations.
Anticipated reductions in U.S. Government spending could reduce funds
available to various government customers for sports related equipment,
which could adversely affect the Company's results of operations.
The Company ships approximately 80% of its products using UPS. As
experienced in 1997, a strike by any of the Company's major carriers
could adversely affect the Company's results of operations due to not
being able to deliver its products in a timely manner and using other
more expensive freight carriers. Although the Company has analyzed the
cost benefit effect of using other carriers, the Company continues to
utilize UPS for the majority of its small package shipments.
Management continues to closely monitor orders and the creditworthiness
of its customers. The Company has not experienced abnormal increases in
losses associated with accounts receivable; however, credit risks
associated with the youth league division and ATEC's retail customer base
are considered by the Company to be greater than any other division. The
Company has made allowances for the amount it believes to be adequate to
properly reflect the risk to accounts receivable; however, unforeseen
market conditions may compel the Company to increase the allowances.
The sports related equipment market in which the Company participates is
<PAGE>
highly competitive and there are no significant barriers to enter this
market. SSG competes principally in the institutional market with local
sporting goods dealers, as well as other direct mail companies. While
large sporting goods companies dominate the market of sporting goods in
the United States, the Company does not compete with such companies.
The Company derives a significant portion of its revenues from sales of
products purchased directly from foreign suppliers located primarily in
the Far East. In addition, the Company believes many of the products it
purchases from domestic suppliers are produced by foreign manufacturers.
The Company is subject to risks of doing business abroad, including
delays in shipments, adverse fluctuations in currency exchange rates,
increases in import duties, decreases in quotas, changes in custom
regulations and political and/or economic turmoil. The occurrence of any
one or more of the foregoing could adversely affect the Company's
operations.
Advances and changes in available technology can significantly impact the
Company. The Year 2000 Issue and system implementation project (as
described above) creates risks for the Company from unforeseen problems
in its own computer systems and from third parties with whom the Company
deals on a daily basis. Such failures of the Company's and/or third
parties' computer systems could have a material adverse impact on the
Company's ability to conduct its business.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company from time to time becomes involved in various claims and
lawsuits incident to its business (primarily relating to product liability
issues). In the opinion of management of SSG, any ultimate liability
arising out of currently pending claims and lawsuits will not have a
material effect on the financial condition or the results of operations of
SSG.
Item 2. Changes in Securities
(a) Not applicable.
(b) Not applicable.
Item 3. Defaults Upon Senior Securities
(a) Not applicable.
(b) Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
Item
(a)(1) Exhibit 3.1 -- Amended and Restated Certificate of Incorporation
of the Company (incorporated by reference from Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration
No. 33-80028).
(a)(2) Exhibit 3.1.1 -- Certificate of Amendment of Amended and
Restated Certificate of Incorporation of the Company (incorporated
by reference from Exhibit 4.1 to the Company's Registration
Statement on Form S-8 (Registration No. 33-80028).
(a)(3) Exhibit 3.2 -- Amended and Restated Bylaws of the Company
(incorporated by reference from Exhibit 3.2 to the Company's
Report on Form 10-K for the year ended November 1, 1996).
(a)(4) Exhibit 4.1 -- Specimen of Common Stock Certificate
(incorporated by reference from Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-39218).
(a)(5) Exhibit 4.2 -- Warrant Agreement entered into between the
Company and Warrant Agent, including form of Warrant, relating
to the purchase of up to 1,300,000 shares of the Company's
common stock for $25.00 per share, which expires on December 15,
1998 (incorporated by reference from Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (Registration No. 33-71574)).
(a)(6) Exhibit 4.3 -- Warrant Agreement entered into between the
Company and Emerson relating to the purchase of up to 1,000,000
shares of the Company's common stock for $7.50 per share, which
expires on December 10, 2001 (incorporated by reference from
Exhibit 4(a) to the Company's Report on Form 8-K filed on
December 12, 1996).
*(a)(7) Exhibit 10.1 -- Employment Agreement by and between the Company
Adam Blumenfeld.
*(a)(8) Exhibit 10.2 -- Employment Agreement by and between the Company
and Eugene J. P. Grant.
*(a)(9) Exhibit 10.3 -- Employment Agreement by and between the Company
and Terrence M. Babilla.
*(a)(10) Exhibit 10.4 -- Employment Agreement by and between the Company
and John P. Walker.
*(a)(11) Exhibit 10.5 -- Severance Agreement by and between the Company
and John P. Walker.
*(a)(12) Exhibit 10.6 -- Restricted Stock Agreement by and between the
Company and John P. Walker.
*(a)(13) Exhibit 10.7 -- Severance Agreement by and between the Company
and Doug Pryor.
<PAGE>
*(a)(14) Exhibit 10.8 -- Amendment No. 1 to Stock Option Agreement
by and between the Company and John P. Walker
*(a)(15) Exhibit 10.9 -- Amendment No. 1 to Stock Option Agreement
by and between the Company and
Terrence M. Babilla
*(a)(16) Exhibit 10.10 -- Amendment No. 2 to Stock Option Agreement
by and between the Company and
Peter S. Blumenfeld
*(a)(17) Exhibit 27 -- Financial Data Schedule
(b) No Reports on Form 8-K were filed during the quarter ended April 3,
1998.
----------------------------------
* Filed Herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPORT SUPPLY GROUP, INC.
May 15, 1998 By: /s/ John P. Walker
John P. Walker
Executive Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
ITEM
*(a)(7) Exhibit 10.1 -- Employment Agreement by and between the Company
Adam Blumenfeld.
*(a)(8) Exhibit 10.2 -- Employment Agreement by and between the Company
and Eugene J. P. Grant.
*(a)(9) Exhibit 10.3 -- Employment Agreement by and between the Company
and Terrence M. Babilla.
*(a)(10) Exhibit 10.4 -- Employment Agreement by and between the Company
and John P. Walker.
*(a)(11) Exhibit 10.5 -- Severance Agreement by and between the Company
and John P. Walker.
*(a)(12) Exhibit 10.6 -- Restricted Stock Agreement by and between the
Company and John P. Walker.
<PAGE>
*(a)(13) Exhibit 10.7 -- Severance Agreement by and between the Company
and Doug Pryor.
*(a)(14) Exhibit 10.8 -- Amendment No. 1 to Stock Option Agreement
by and between the Company and John P. Walker
*(a)(15) Exhibit 10.9 -- Amendment No. 1 to Stock Option Agreement
by and between the Company and
Terrence M. Babilla
*(a)(16) Exhibit 10.10 -- Amendment No. 2 to Stock Option Agreement
by and between the Company and
Peter S. Blumenfeld
*(a)(17) Exhibit 27 -- Financial Data Schedule
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made January 27,
1998 to be effective as of January 16, 1998, by and between Sport Supply
Group, Inc., a Delaware corporation ("Employer"), and Adam Blumenfeld
("Employee").
RECITALS:
WHEREAS, Employer desires to retain the services of Employee, and
Employee desires to continue providing services to Employer in
accordance with the terms, conditions, and provisions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Term. Subject to the terms and conditions set forth in this
Agreement, Employer hereby employs Employee, and Employee hereby accepts
such employment from Employer, for a three year period commencing on
January 16, 1998 (the "Effective Date") and expiring on January 16,
2001, except as otherwise provided herein.
2. Duties. Employee will be employed as the Vice President-
Marketing and Sales Related Operations, and in such capacity will
perform the normal duties associated with such position and/or such
other reasonable duties as may be assigned from time to time by the
Chairman of the Board or the Board of Directors of Employer. During the
term of this Agreement, Employee shall devote his full time, attention,
and energies to the business of Employer in order to discharge his
duties faithfully, diligently, to the best of his abilities, and in a
manner consistent with any and all policies and guidelines as may be
established by Employer from time to time.
3. Compensation.
(a) Subject to the terms and conditions of this Agreement and
as compensation for the performance of his services hereunder, Employer
will pay Employee a fixed salary at a minimum annual rate of $125,000
(such rate is referred to herein as "Salary"). If Employer's
consolidated Pretax Earnings from continuing operations (as set forth on
the Employer's audited Consolidated Statement of Operations) for any
Fiscal Year (excluding any revenues and expenses attributable to
operations acquired by Employer during such Fiscal Year, such as the
ATEC acquisition as it relates to Fiscal 1998) equal or exceed such
consolidated Pretax Earnings from continuing operations as projected in
the Employer's Business Plan that is approved by the Board of Directors,
Employee's Salary will be increased by at least seven percent (7%) for
the following Fiscal Year. For purposes of this Agreement, "Pretax
Earnings" is defined as Net Revenues less Cost of Sales less Selling,
General and Administrative Expenses (which include freight) less
Nonrecurring Charges less Interest Expense plus/minus Other Income and
Other Expense. Employee's Salary will accrue and be payable to Employee
in accordance with the payroll practices of Employer in effect from time
to time during the term of this Agreement.
(b) Employer will pay Employee a $500 per month allowance for
car and car related expenses payable on the 15th day of each month in
accordance with the payroll practices of Employer in effect from time to
time during the term of this Agreement.
<PAGE>
(c) If Pretax Earnings for the Employer's Youth Division
equal or exceed $2,777,145 for the Fiscal Year ending October 2, 1998,
then Employer will pay Employee a $27,000 bonus. Employer will pay
Employee an additional $10,000 bonus if the Employer's audited
consolidated Pretax Earnings from continuing operations (exclusive of
all earnings attributable to (1) sales from ATEC related products or (2)
acquisitions of companies or other entities during said Fiscal Year)
equal or exceed $8,907,145 for the Fiscal Year ending October 2, 1998.
(d) If Employer's audited consolidated Pretax Earnings from
continuing operations for the Fiscal Years ending October 1, 1999 and/or
September 29, 2000 (excluding any revenues and expenses attributable to
operations acquired by Employer during such Fiscal Years) equal or
exceed such consolidated Pretax Earnings from continuing operations as
projected in the Employer's Business Plan that is approved by the Board
of Directors for each such Fiscal Year, then Employer will pay Employee
a performance bonus equal to thirty percent (30%) times the Employee's
base Salary in effect on the last day of each such Fiscal Year. No
bonus shall be due and payable for a Fiscal year if the Pretax Earnings
from continuing operations (as set forth on the Employer's audited
Consolidated Statement of Operations for such Fiscal Year) for such
Fiscal Year is less than the projected consolidated Pretax Earnings from
continuing operations for such Fiscal Year as set forth in the
Employer's Business Plan.
Employer shall pay Employee any performance bonus earned with
respect to a Fiscal Year within 90 days of the end of such Fiscal Year,
provided the audit is completed by such date. Notwithstanding the
foregoing, the performance bonus (if any) shall be paid within 135 days
of the end of the Fiscal Year.
(e) At its sole discretion, the Board of Directors of
Employer may give additional bonuses to Employee, but is not required to
do so under any circumstances. Employee is not entitled to participate
in any bonus plan (other than receiving his performance bonus, if any,
as described above) offered by Employer to its employees unless
expressly provided for in writing.
(f) Employer agrees to execute and deliver to Employee that
certain Stock Option Agreement, a copy of which is attached hereto as
Exhibit A and that certain Amendment No. 1 to Stock Option Agreement, a
copy of which is attached hereto as Exhibit B.
(g) All payments to Employee pursuant to this Agreement will
be subject to deduction and withholding authorized or required by
applicable law.
4. Confidentiality
(a) In exchange for and in consideration for the promises made by
Employee herein, including promises made by Employee regarding
noncompetition and nonsolicitation in Section 5 herein, Employer
promises and agrees to provide Employee with confidential, nonpublic
information (in addition to any such information previously obtained by
Employee in the course of his employment) consistent with the duties of
an individual in Employee's position, including but not limited to
Employer's customer, supplier, and distributor lists, trade secrets,
<PAGE>
plans, manufacturing techniques, sales, marketing and expansion
strategies, and technology and processes of Employer and/or its
affiliates, as they may exist from time to time, and information
concerning the products, services, production, development, technology
and all technical information, procurement and sales activities and
procedures, promotion and pricing techniques and credit and financial
data concerning customers of, and suppliers to, Employer and/or its
affiliates (referred to hereinafter as ``Confidential Information").
Employee acknowledges that such Confidential Information constitutes
valuable, special and unique assets of the Employer and that his access
to and knowledge of the Confidential Information is essential to the
performance of his duties under this Agreement. In consideration for
Employer's promises herein, Employee agrees that all Confidential
Information previously provided or known to Employee in the course of
his employment with Employer and all such Confidential Information made
available and provided to Employee pursuant to the terms of this
Agreement will be considered Confidential Information owned by Employer
and Employee agrees that Employee will not (i) disclose any Confidential
Information to any person or entity other than in connection with his
employment for Employer in accordance with Employer's policy, or
(ii) make use of any Confidential Information for his own purposes or
for the benefit of any other person or entity, other than Employer.
Employee further represents and warrants that, on or prior to the date
of this Agreement, he has not (i) disclosed any Confidential Information
to any person or entity other than in connection with his employment for
Employer in accordance with Employer's policy or (ii) made use of any
Confidential Information for his own purposes or for the benefit of any
other person or entity, other than Employer.
(b) Employee acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, reports, financial records
(including, without limitation, budgets, business plans and financial
statements), computers, computer equipment, computer disks, hard drives,
electronic storage devices, books, procedures, forms, documents, records
or paper, or copies thereof, pertaining to the operations or business of
Employer made or received by Employee or made known to him in any way in
connection with his employment and any other Confidential Information
are and will be the exclusive property of Employer. Employee agrees not
to copy or remove any of the above from the premises and custody of
Employer, or disclose the contents thereof to any other person or entity
except in the ordinary course of business consistent with Employer's
policies. Employee acknowledges that all such papers and records will
at all times be subject to the control of Employer, and Employee agrees
to surrender the same upon request of Employer, and will surrender such
no later than any termination of his employment with Employer, whether
voluntary of involuntary.
5. Non-Compete Covenant. Employee acknowledges that the
Confidential Information specified above is extremely valuable to the
Employer and that, therefore, its protection and maintenance constitute
a legitimate interest to be protected by the Employer by the enforcement
of this covenant not to compete. Therefore, in consideration for the
promises made by Employer herein, including but not limited to the
provision of Confidential Information set forth in Section 4 herein,
Employee covenants and agrees that Employee will not, directly or
indirectly, either as an individual or as an employer, employee,
consultant, partner, officer, director, shareholder, substantial
investor, trustee, agent, advisor, or consultant or in any other
capacity whatsoever, of any person or entity (other than the Employer):
<PAGE>
(a) from the effective date through January 16, 2001, conduct
or assist others in conducting any business in any market area in the
United States related to the promotion, marketing, distribution,
manufacturing, sourcing, importing and/or sale of sports related
equipment and/or supplies of the type sold by Employer at the time of
termination, or any other business that generates more than 10% of
Employer's revenues at the time of termination (the "Employer's
Business");
(b) from the effective date through January 16, 2002,
recruit, hire, assist others in recruiting or hiring, discuss employment
with or refer to others for employment (collectively referred to as
"Recruiting Activity") any person who is, or within the 24 month period
immediately preceding the date of any such Recruiting Activity was, at
any time, an employee of the Employer or its affiliates; or
(c) from the effective date through January 16, 2002, (i)
communicate to any competing entity or enterprise any competitive non-
public information concerning any past, present or identified
prospective client or customer of, or supplier to, Employer; or (ii)
call on, solicit or take away or attempt to call on, solicit or take
away any of the customers, suppliers, clients, licensors, licensees,
manufacturers, distributors, dealers or independent salespersons of the
Employer or any of its affiliates that are engaged in the Employer's
Business or that conduct business with Employer in the United States; or
induce, attempt to induce or assist any other person or entity in
inducing or attempting to induce, directly or indirectly, any such
customer, supplier, client, licensor, licensee, manufacturer, dealer,
distributor or independent salesperson to discontinue their relationship
with the Employer or its affiliates.
The alleged breach of any other provision of this Agreement
asserted by Employee or the existence of any claim or cause of action of
Employee against Employer, or any officer, director, or shareholder of
Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the covenants of
Employee contained in this Section 5; provided, however, an actual
breach of any material provision of this Agreement by Employer will be a
defense to claims arising from Employer's enforcement of this covenant
if a court of competent jurisdiction shall have determined that Employer
committed such breach.
If Employee violates any covenant contained in this Section 5 and
Employer brings legal action for injunctive or other relief, Employer
shall not, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full period of any such covenant. During
any period of time in which Employee is in breach of this covenant not
to compete, the parties agree that the time period of this covenant
shall be extended for an amount of time that Employee is in breach
hereof.
Employee understands and agrees that the scope of this covenant
contained in this Section 5 is reasonable as to time, area, and persons
and is necessary to protect the proprietary and legitimate business
interests of the Employer, and but for such covenant the Employer would
not have agreed to enter into the transactions contemplated by this
Agreement. Employee agrees that this covenant is reasonable in light of
<PAGE>
the compensation and other benefits Employee has accepted pursuant to
this Agreement. It is further agreed that such covenant will be
regarded as divisible and will be operative as to time, area, and
persons to the extent that it may be so operative. If any part of this
Section is declared invalid, unenforceable, or void as to time, area, or
persons, the validity and enforceability of the remainder will not be
affected. Should a court of competent jurisdiction determine this
covenant unenforceable as written, the parties agree that the court
shall modify this covenant to the extent necessary to make it
enforceable.
6. Proprietary Information. Employee hereby assigns to
Employer all of Employee's right, title and interest to, and shall
promptly disclose to Employer, all ideas, inventions, products,
services, discoveries or improvements (whether or not patentable)
conceived or developed solely or jointly by Employee during the term of
this Agreement (a) that relate to the Employer's Business or the actual<PAGE>
or anticipated research or development of Employer, (b) that result from
any work performed by Employee for Employer, or (c) for which equipment,
supplies, facilities or Confidential Information of Employer was used.
Employee agrees to execute any further documents and/or patents that
Employer requests and will otherwise assist Employer (at Employer's
expense) in protecting Employer's rights to such ideas, inventions,
products, services, discoveries or improvements. Employee hereby
appoints Employer as his attorney-in-fact, with full power of
substitution, to execute and deliver such documents or patents on behalf
of Employee. This appointment is coupled with an interest in and to the
ideas, inventions, products, services, discoveries and improvements
conceived or developed by Employee and shall survive Employee's death or
disability. Employee hereby waives and quitclaims to Employer any and
all claims of any nature whatsoever that Employee may now or may
hereafter have for infringement of any patents or copyrights resulting
from or relating to any applications for any United States or foreign
letters, patent or copyright registrations assigned hereunder to
Employer. Employee represents to Employer that Employee has not
conceived or reduced to practice any ideas, inventions, products,
services, discoveries or improvements at the time of signing this
Agreement.
7. Termination
(a) Employer's obligations under this Agreement shall be
terminated if Employee is discharged by Employer for cause. For the
purposes of this Agreement, a discharge for cause shall mean a discharge
resulting from a determination by Employer that Employee: (i) has been
convicted of a crime involving moral turpitude, including fraud, theft
or embezzlement; (ii) has failed and/or refused to follow the policies,
practices, directives, or orders established by Employer's Board of
Directors; (iii) has committed acts of gross negligence or misconduct to
the detriment of Employer; (iv) has been insubor dinate and/or has
persistently failed to perform his duties hereunder; or (v) has breached
any of the material terms or provisions of this Agreement (including,
but not limited to, a breach of Section 4, 5 or 6 hereof).
<PAGE>
(b) If Employee is absent from employment, or unable to
render services herein, by reason of physical or mental illness or
disability (as determined by a mutually agreeable physician) for more
than three (3) months in the aggregate in any twelve (12) month period,
and the Employee is unable to perform his essential job functions with
or without reasonable accommodation, then Employee shall be considered
permanently disabled, and this Agreement may be immediately terminated
by Employer without any further obligation to Employee. In the event
Employee is terminated pursuant to this Section 7(b), the provisions of
Section 5 hereof will not apply to Employee unless Employer continues to
pay Employee his salary (calculated as of the date of termination) less
any amounts paid to Employee pursuant to disability insurance, through
January 16, 2001.
(c) If Employee dies, this Agreement shall immediately and
automatically terminate, without further obligation to Employee or
Employee's estate.
(d) In the event Employee resigns from the employ of
Employer, all of Employer's obligations under this Agreement shall be
terminated.
(e) If Employee is terminated without cause, or in the event
of a Constructive Discharge (as defined below) of Employee prior to
January 16, 2001 (and so long as Employee continues to abide by Sections
4, 5 and 6 hereof after such termination), then Employer will continue
to pay Employee his Salary (calculated as of the date of
termination/discharge) through January 16, 2001 as if the Employee was
not terminated or discharged and after the end of the Fiscal Year during
which such termination occurs, the amount of the performance bonus
payable to Employee for such Fiscal Year, if any, pursuant to Section
3(c) or 3(d) of this Agreement (such amount to be reduced
proportionately for any period of less than 12 months in which the
Employee was employed). Except as set forth in the immediately preceding
sentences, Employer will have no other obligations to Employee if
Employee is terminated without cause.
(f) For the purposes of this Agreement, "Constructive
Discharge" means a change in office, title or position from that
reasonably associated with being Vice President-Marketing and Sales
Related Operations, other than a promotion; a change in reporting of
Employee to any person other than the Chairman, Chief Executive Officer,
President, Executive Vice President, or the Board of Directors of
Employer; a required relocation to a location in excess of thirty (30)
<PAGE>
miles of Employer's current principal location; a reduced Salary; a
material diminution in responsibilities, or any other material breach of
this Agreement by Employer, so long as Employee gives Employer ten (10)
days written notice and an opportunity to cure such diminution in
responsibilities or other material breach.
(g) The provisions of Sections 4, 5 6, 7 and 8 shall survive
any termination or expiration of this Agreement without the payment of
any additional consideration by the Employer; provided, however, the
provisions of Section 5 shall not survive if the Employee is terminated
without cause (as described in Section 7(a) hereof) or Constructively
Discharged (as described in Section 7(f) hereof) and Employer does not
<PAGE>
honor its obligations in Section 7(e) hereof. So long as the Employer
continues to pay the Employee the compensation set forth in Section 7,
the restrictive covenants set forth in Section 5 will apply to the
Employee through the scheduled duration, even if employee is terminated
without cause or Constructively Discharged.
8. Injunctive Relief. Each party acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each party will be entitled to specific
performance and injunctive and other equitable relief in case of any
breach or attempted breach and agrees not to use as a defense that any
party has an adequate remedy at law. This Agreement shall be
enforceable in a court of equity, or other tribunal with jurisdiction,
by a decree of specific performance, and appropriate injunctive relief
may be applied for and granted in connection herewith. Such remedy
shall not be exclusive and shall be in addition to any other remedies
now or hereafter existing at law or in equity, by statute or otherwise.
No delay or omission in exercising any right or remedy set forth in this
Agreement shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right or
remedy.
9. Binding Nature. The rights and obligations of Employer
under this Agreement will inure to the benefit of and will be binding
upon the successors and assigns of Employer.
10. Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, in whole or in part, then
both parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable or void.
The intent and agreement of the parties to this Agreement is that this
Agreement will be deemed amended by modifying any such illegal,
unenforceable or void provision to the extent necessary to make it legal
and enforceable while preserving its intent, or if such is not possible,
by substituting therefor another provision that is legal and enforceable
and achieves the same objectives. Notwithstanding the foregoing, if the
remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision
not so affected will be enforced to the extent permitted by law.
11. Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
12. Governing Law. 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.
<PAGE>
13. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: If to Employer:
Sport Supply Group, Inc. Sport Supply Group, Inc.
Attention: Adam Blumenfeld Attention: Chief Executive Officer
1901 Diplomat Drive 1901 Diplomat Drive
Farmers Branch, Texas 75234 Farmers Branch, Texas 75234
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
14. Submission to Jurisdiction. All parties hereto hereby
irrevocably submit to the nonexclusive jurisdiction of the state and
federal courts of the State of Texas and agree and consent 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.
<PAGE>
15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
16. Assignment. The rights and obligations of Employer may,
without the consent of Employee, be assigned by Employer to any parent,
subsidiary, Affiliate, or successor of Employer. Employee may not
assign any of his rights or obligations under this Agreement.
17. Entire Agreement. This Agreement (along with the Exhibits)
constitutes the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement and there are no
understandings or agreements relative to this Agreement which are not
fully expressed in this Agreement and the Exhibits. All prior or
contemporaneous agreements between the parties with respect to the
subject matter of this Agreement (including, without limitation, that
certain Employment Agreement dated as of January 1, 1997 by and between
Employer and Employee) being expressly superseded by this Agreement and
the Exhibits. No change, waiver, or discharge of this Agreement will be
valid unless in writing and signed by the party against which such
change, waiver, or discharge is to be enforced.
18. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to receive from the other its
reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Geoffrey P. Jurick
Geoffrey P. Jurick
Chairman of the Board
and Chief ExecutiveOfficer
EMPLOYEE:
/s/ Adam Blumenfeld
Adam Blumenfeld
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of
March 24, 1998, by and between Athletic Training Equipment Company, Inc.,
a Delaware corporation ("Employer") and Eugene J. P. Grant ("Employee").
RECITALS:
WHEREAS, Employer desires to retain the services of Employee, and
Employee desires to provide services to Employer in accordance with the
terms, conditions, and provisions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Term. Subject to the terms and conditions set forth in this
Agreement, Employer hereby employs Employee, and Employee hereby accepts
such employment from Employer, for a three year period commencing on
March 24, 1998 (the "Effective Date") and expiring on March 23, 2001,
except as otherwise provided herein.
2. Duties. Employee will be employed as the President of
Employer, and in such capacity will perform the normal duties associated
with such position and/or such other reasonable duties as may be
assigned from time to time by the Board of Directors or Chairman of the
Board of Employer. During the term of this Agreement, Employee shall
devote his full time, attention, and energies to the business of
Employer in order to discharge his duties faithfully, diligently, to the
best of his abilities, and in a manner consistent with any and all
policies and guidelines as may be established by Employer from time to
time. Employee shall report to the Chairman of the Board and to the
Board of Directors of Employer.
3. Compensation.
(a) Subject to the terms and conditions of this Agreement and
as compensation for the performance of his services hereunder, Employer
will pay Employee a fixed salary at a minimum annual rate of $127,500
(such rate is referred to herein as "Salary"). Employee's Salary will
accrue and be payable to Employee in accordance with the payroll
practices of Employer in effect from time to time during the term of
this Agreement.
(b) Employer will pay Employee a $500 per month allowance for
car and car related expenses payable in accordance with the payroll
practices of Employer in effect from time to time during the term of
this Agreement.
(c) Subject to the terms and provisions of this Agreement,
Employee shall be entitled to earn an annual cash bonus in an amount up
to sixty percent (60%) of his Salary ("Performance Bonus") based upon
the performance of Employer against specified performance criteria set
forth in a Business Plan as agreed to in writing by Employee and
Employer's Chairman of the Board of Directors and Chief Executive
Officer; provided, however, the actual results of operations as compared
to the Business Plan shall be calculated to exclude all revenues and
expenses attributable to operations acquired by Employer or its
<PAGE>
affiliates after the Effective Date unless provided for in the
Business Plan. The amount of the Performance Bonus, if any, shall be
determined by the Chairman of the Board in his sole discretion. The
parties shall use commercially reasonable efforts to agree upon a
Business Plan by May 1, 1998 and 1999 for the fiscal years ended
September 30, 1999 and 2000, respectively.
Employer shall pay Employee any Performance Bonus earned with
respect to a fiscal year within 90 days of the end of such fiscal year.
(d) At its sole discretion, the Board of Directors of
Employer may give additional bonuses to Employee, but is not required to
do so under any circumstances. Employee is not entitled to participate
in any bonus plan (other than receiving his Performance Bonus, if any,
as described above) offered by Employer to its employees unless
expressly provided for in writing.
(e) Employer agrees to execute and deliver to Employee that
certain Stock Option Agreement, a copy of which is attached hereto as
Exhibit A (the "Option Agreement").
(f) All payments to Employee pursuant to this Agreement will
be subject to deduction and withholding authorized or required by
applicable law.
4. Confidentiality
(a) In exchange for and in consideration for the promises made by
Employee herein, including promises made by Employee regarding
noncompetition in Section 5 herein, Employer promises and agrees to
provide Employee with confidential, nonpublic information (in addition
to any such information previously obtained by Employee in the course of
his employment) consistent with the duties of an individual in
Employee's position, including but not limited to Employer's customer,
supplier, and distributor lists, trade secrets, plans, manufacturing
techniques, sales, marketing and expansion strategies, and technology
and processes of Employer and/or its affiliates, as they may exist from
time to time, and information concerning the products, services,
production, development, technology and all technical information,
procurement and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers of, and
suppliers to, Employer and/or its affiliates (referred to hereinafter as
"Confidential Information"). Employee acknowledges that such
Confidential Information constitutes valuable, special and unique assets
of the Employer and that his access to and knowledge of the
Confidential Information is essential to the performance of his duties
under this Agreement. In consideration for Employer's promises herein,
Employee agrees that all Confidential Information previously provided or
known to Employee in the course of his employment with Employer and all
such Confidential Information made available and provided to Employee
pursuant to the terms of this Agreement will be considered Confidential
Information owned by Employer and Employee agrees that Employee will not
(i) disclose any Confidential Information to any person or entity other
than in connection with his employment for Employer in accordance with
Employer's policy, or (ii) make use of any Confidential Information for
his own purposes or for the benefit of any other person or entity, other
than Employer. Employee further represents and warrants that, on or
<PAGE>
prior to the date of this Agreement, he has not (i) disclosed any
Confidential Information to any person or entity other than in
connection with his employment for Employer in accordance with
Employer's policy or (ii) made use of any Confidential Information for
his own purposes or for the benefit of any other person or entity, other
than Employer.
(b) Employee acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, reports, financial records
(including, without limitation, budgets, business plans and financial
statements), computers, computer equipment, computer disks, hard drives,
electronic storage devices, books, procedures, forms, documents, records
or paper, or copies thereof, pertaining to the operations or business of
Employer made or received by Employee or made known to him in any way in
connection with his employment and any other Confidential Information
are and will be the exclusive property of Employer. Employee agrees not
to copy or remove any of the above from the premises and custody of
Employer, or disclose the contents thereof to any other person or entity
except in the ordinary course of business consistent with Employer's
policies. Employee acknowledges that all such papers and records will
at all times be subject to the control of Employer, and Employee agrees
to surrender the same upon request of Employer, and will surrender such
no later than any termination of his employment with Employer, whether
voluntary of involuntary.
5. Non-Compete Covenant. Employee acknowledges that the
Confidential Information specified above is valuable to the Employer and
that, therefore, its protection and maintenance constitutes a legitimate
interest to be protected by the Employer by the enforcement of this
covenant not to compete. Therefore, in consideration for the promises
made by Employer herein, including but not limited to the provision of
Confidential Information set forth in Section 4 herein, Employee
covenants and agrees that, (i) during the term of his employment by the
Employer (or an affiliate of Employer) and (ii) for a period commencing
upon the termination of Employee's employment by Employer (or an
affiliate of Employer) and ending upon the first anniversary thereof,
Employee will not, directly or indirectly, either as an individual or as
an employer, employee, consultant, partner, officer, director,
shareholder, substantial investor, trustee, agent, advisor, or
consultant or in any other capacity whatsoever, of any person or entity
(other than the Employer):
(a) conduct or assist others in conducting any business in
any market area in the United States related to (i) the promotion,
marketing, distribution, manufacturing, sourcing, importing and/or sale
of (A) sports related equipment and/or supplies marketed to
institutional customers through direct mail catalogs,
(B) baseball/softball pitching machines, or (ii) any other business
that generates more than 10% of Employer's revenues at the time
of termination (the "Employer's Business");
(b) recruit, hire, assist others in recruiting or hiring,
discuss employment with or refer to others for employment (collectively
referred to as "Recruiting Activity") any person who is, or within the
24 month period immediately preceding the date of any such Recruiting
Activity was, at any time, an employee of the Employer or its
affiliates; or
<PAGE>
(c) (i) communicate to any competing entity or enterprise any
competitive non-public information concerning any past, present or
identified prospective client or customer of, or supplier to, Employer;
or (ii) call on, solicit or take away or attempt to call on, solicit or
take away any of the customers, suppliers, clients, licensors,
licensees, manufacturers, distributors, dealers or independent
salespersons of the Employer or any of its affiliates that are engaged
in the Employer's Business or that conduct business with Employer in the
United States; or induce, attempt to induce or assist any other person
or entity in inducing or attempting to induce, directly or indirectly,
any such customer, supplier, client, licensor, licensee, manufacturer,
dealer, distributor or independent salesperson to discontinue their
relationship with the Employer or its affiliates.
The existence of any claim or cause of action of Employee against
Employer, or any officer, director, or shareholder of Employer, whether
predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Employer of the covenants of Employee
contained in this Section 5.
If Employee violates any covenant contained in this Section 5 and
Employer brings legal action for injunctive or other relief, Employer
shall not, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full period of any such covenant.
Accordingly, the covenants of Employee contained in this Section 5 shall
be deemed to have durations as specified above, which periods shall
commence upon the later of (i) the termination of Employee's employment
with Employer, and (ii) the date of entry by a court of competent
jurisdiction of a final, non-appealable judgment enforcing the covenants
of Employee in this Section 5. During any period of time in which
Employee is in breach of this covenant not to compete, the parties agree
that the time period of this covenant shall be extended for an amount of
time that Employee is in breach hereof.
Employee understands and agrees that the scope of this covenant
contained in this Section 5 is reasonable as to time, area, and persons
and is necessary to protect the proprietary and legitimate business
interests of the Employer, and but for such covenant the Employer would
not have agreed to enter into the transactions contemplated by this
Agreement. Employee agrees that this covenant is reasonable in light of
the compensation and other benefits Employee has accepted pursuant to
this Agreement. It is further agreed that such covenant will be
regarded as divisible and will be operative as to time, area, and
persons to the extent that it may be so operative. If any part of this
Section is declared invalid, unenforceable, or void as to time, area, or
persons, the validity and enforceability of the remainder will not be
affected. Should a court of competent jurisdiction determine this
covenant unenforceable as written, the parties agree that the court
shall modify this covenant to the extent necessary to make it
enforceable. The alleged breach of any other provision of this
Agreement asserted by Employee shall not be a defense to claims arising
from Employer's enforcement of this covenant.
6. Proprietary Information. Employee hereby assigns to
Employer all of Employee's right, title and interest to, and shall
promptly disclose to Employer, all ideas, inventions, products,
services, discoveries or improvements (whether or not patentable)
<PAGE>
conceived or developed solely or jointly by Employee during the term of
this Agreement (a) that relate to the Employer's Business or the actual
or anticipated research or development of Employer, (b) that result from
any work performed by Employee for Employer, or (c) for which equipment,
supplies, facilities or Confidential Information of Employer was used.
Employee agrees to execute any further documents and/or patents that
Employer requests and will otherwise assist Employer (at Employer's
expense) in protecting Employer's rights to such ideas, inventions,
products, services, discoveries or improvements. Employee hereby
appoints Employer as his attorney-in-fact, with full power of
substitution, to execute and deliver such documents or patents on behalf
of Employee. This appointment is coupled with an interest in and to the
ideas, inventions, products, services, discoveries and improvements
conceived or developed by Employee and shall survive Employee's death or
disability. Employee hereby waives and quitclaims to Employer any and
all claims of any nature whatsoever that Employee may now or may
hereafter have for infringement of any patents or copyrights resulting
from or relating to any applications for any United States or foreign
letters, patent or copyright registrations assigned hereunder to
Employer. Employee represents to Employer that Employee has not
conceived or reduced to practice any ideas, inventions, products,
services, discoveries or improvements at the time of signing this
Agreement.
7. Termination
(a) Employer's obligations under this Agreement shall be
terminated if Employee is discharged by Employer for cause. For the
purposes of this Agreement, a discharge for cause shall mean a discharge
resulting from a determination by the Chairman of the Board of Employer
that Employee: (i) has been convicted of a crime involving fraud, theft
or embezzlement; (ii) has failed and/or refused to follo w the written
policies, practices, directives, or orders established by Employer's
Board of Directors and such failure or refusal is not cured within
fifteen (15) days of the date Employer sends a written notice to
Employee requesting that Employee cure such failure or refusal;
(iii) has committed acts of gross negligence to the detriment of
Employer; (iv) has persistently failed or refused to perform his duties
hereunder and such failure or refusal is not cured within fifteen (15)
days of the date Employer sends a written notice to Employee requesting
that Employee cure such failure or refusal; (v) has been insubordinate;
or (vi) has breached any of the material terms or provisions of this
Agreement (including, but not limited to, a breach of Section 4, 5 or 6
hereof). Notwithstanding anything to the contrary contained herein, the
15-day cure period referenced in subsections (ii) and (iv) of this
Section shall not apply if Employee has been given the opportunity to
cure an alleged default under either of these subsections on a prior
occasion. Any termination for cause shall be appealable to the Board of
Directors of the Company.
(b) If Employee is absent from employment, or unable to
render services herein, by reason of physical or mental illness or
disability for more than three (3) months in the aggregate in any twelve
(12) month period, and the Employee is unable to perform his essential
job functions with or without reasonable accommodation, then Employee
shall be considered permanently disabled, and this Agreement may be
immediately terminated by Employer without any further obligation to
Employee.
<PAGE>
(c) If Employee dies, this Agreement shall immediately and
automatically terminate, without further obligation to Employee or
Employee's estate.
(d) In the event Employee resigns from the employ of
Employer, all of Employer's obligations under this Agreement shall be
terminated.
(e) If Employee is terminated without cause prior to
March , 2001 (and so long as Employee continues to abide by the Sections
of this Agreement that survive after such termination), then Employer will
continue to pay Employee his Salary through March , 2001 as if the
Employee was not terminated and after the end of the fiscal year during
which such termination occurs, the amount of the Performance Bonus
payable to Employee for such fiscal year, if any, pursuant to Section
3(c) of this Agreement (such amount to be reduced proportionately for
any period of less than 12 months in which the Employee was employed).
Except as set forth in the immediately preceding sentences, Employer
will have no other obligations to Employee if Employee is terminated
without cause. However, in the event Employee is terminated without
cause in the last twelve (12) months of employment, the provisions of
Section 5 shall continue only so long as Employer continues to pay
Employee his Salary in accordance with Employer's payroll practices in
effect at such time.
(f) The provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14, 17, 18 and 19 shall survive any termination or expiration of
this Agreement.
8. Injunctive Relief. Each party acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each party will be entitled to specific
performance and injunctive and other equitable relief in case of any
breach or attempted breach and agrees not to use as a defense that any
party has an adequate remedy at law. This Agreement shall be
enforceable in a court of equity, or other tribunal with jurisdiction,
by a decree of specific performance, and appropriate injunctive relief
may be applied for and granted in connection herewith. Such remedy
shall not be exclusive and shall be in addition to any other remedies
now or hereafter existing at law or in equity, by statute or otherwise.
No delay or omission in exercising any right or remedy set forth in this
Agreement shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right or
remedy.
9. Binding Nature. The rights and obligations of Employer
under this Agreement will inure to the benefit of and will be binding
upon the successors and assigns of Employer.
10. Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, in whole or in part, then
both parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable or void.
The intent and agreement of the parties to this Agreement is that this
Agreement will be deemed amended by modifying any such illegal,
unenforceable or void provision to the extent necessary to make it legal
<PAGE>
and enforceable while preserving its intent, or if such is not possible,
by substituting therefor another provision that is legal and enforceable
and achieves the same objectives. Notwithstanding the foregoing, if the
remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision
not so affected will be enforced to the extent permitted by law.
11. Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
12. Governing Law. 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.
13. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: If to Employer:
Eugene J. P. Grant Athletic Training Equipment Company, Inc.
5011 West Albuquerque Road Attention: Chief Executive Officer
Reno, Nevada 89511 1901 Diplomat Drive
Farmers Branch, Texas 75234
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
14. Submission to Jurisdiction. All parties hereto hereby
irrevocably submit to the jurisdiction of the state and federal courts
of the State of Texas and agree and consent 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.
15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
<PAGE>
16. Assignment. The rights and obligations of Employer may,
without the consent of Employee, be assigned by Employer to any parent,
subsidiary, affiliate, or successor of Employer. Employee may not
assign any of his rights or obligations under this Agreement.
17. Entire Agreement. This Agreement and the Option Agreement
constitute the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement and there are no
understandings or agreements relative to this Agreement (other than the
Option Agreement) which are not fully expressed in this Agreement. All
prior or contemporaneous agreements between the parties with respect to
the subject matter of this Agreement (other than the Option Agreement)
being expressly superseded by this Agreement. No change, waiver, or
discharge of this Agreement will be valid unless in writing and signed
by the party against which such change, waiver, or discharge is to be
enforced.
18. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to receive from the other its
reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
19. Representations, Warranties and Covenants. Employee
understands as part of the consideration for the offer of employment
extended to Employee by Employer and of his employment or continued
employment by Employer, that Employee has not brought and will not bring
with him to Employer or use in the performance of his responsibilities
at Employer any materials or documents of a former employer (other than
Athletic Training Equipment Company, Inc., a Nevada corporation) that
are not generally available to the public, unless Employee has obtained
express written authorization from the former employer for their
possession and use. Employee represents and warrants to Employer that
the execution, delivery, and performance of Employee of and under this
Agreement does not and will not with the passage of time or the giving
of notice or both violate the terms and conditions of any other written
or oral agreement to which Employee is a party or by which Employee is
bound. Employee represents and warrants that he is not a party to any
employment, non-competition, proprietary information or confidentiality
agreement with any former employer that remains or may remain in effect
as of the date hereof. Employee has not entered into, and Employee
agrees not to enter into, any oral or written agreement that is in any
way inconsistent with the terms of this Agreement. Employee also
understands that, in his employment with Employer, Employee is not to
breach any obligation of confidentiality that Employee has to former
employers.
Employee further represents and warrants that he has never been:
(i) convicted or indicted in a criminal proceeding and is not a named
subject of a pending criminal proceeding (excluding minor traffic
violations); (ii) the subject of any investigation, order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court,
permanently or temporarily enjoining him from, or otherwise limiting,
Employee's engagement in any (A) activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal or State securities laws or (B) type of business
practice; or (iii) found, whether formally or informally, by a court in
a civil action or by the Securities and Exchange Commission to have
violated any Federal or State securities laws.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
ATHLETIC TRAINING EQUIPMENT COMPANY, INC.,
a Delaware corporation
By: /s/ John P. Walker
John P. Walker
Chief Executive Officer
EMPLOYEE:
/s/ Eugene J. P. Grant
Eugene J. P. Grant
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of
January 14, 1998 by and between Sport Supply Group, Inc., a Delaware
corporation ("Employer"), and Terrence M. Babilla ("Employee").
RECITALS:
WHEREAS, Employer desires to retain the services of Employee, and
Employee desires to provide services to Employer in accordance with the
terms, conditions, and provisions of this Agreement; and
WHEREAS, Employer and Employee desire to terminate that certain
Employment Agreement dated February 2, 1995 and replace it with this
Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Term. Subject to the terms and conditions set forth in this
Agreement, Employer hereby employs Employee, and Employee hereby accepts
such employment from Employer, for a period commencing on January 14,
1998 (the "Effective Date") and expiring on January 13, 2001, except as
otherwise provided herein.
2. Duties. Employee will be employed as an Executive Vice
President, General Counsel and Secretary of Employer, and in such
capacity will perform the normal duties associated with such positions
and such other reasonable duties as may be assigned from time to time by
the Board of Directors of Employer consistent with that of an Executive
Vice President or a General Counsel and Secretary. Employer
acknowledges that Employee currently is serving as an employee of
Emerson Radio Corp. ("Emerson"), and that Employee will devote certain
of his time, attention, and energies, not to exceed 10% of his working
time during the term of this Agreement, to such responsibilities.
During the term of this Agreement, Employee shall devote his full time,
attention, and energies (except for those devoted to the business of
Emerson as contemplated in the immediately preceding sentence hereto) to
the business of Employer to discharge his duties faithfully, diligently,
to the best of his abilities, and in a manner consistent with any and
all policies and guidelines as may be established by Employer from time
to time. Employee shall report solely to the Board of Directors,
Chairman, and Chief Executive Officer of Employer.
3. Compensation.
(a) Subject to the terms and conditions of this Agreement and
as compensation for the performance of his services hereunder,
Employer will pay Employee a fixed salary at a minimum annual rate
of $220,000 (such initial rate as it may be adjusted upward from
time to time as provided by the Board of Directors of Employer, is
referred to herein as "Salary"). Employee's Salary will accrue and
be payable to Employee in accordance with the payroll practices of
Employer for senior executives in effect from time to time during
the term of this Agreement.
<PAGE>
(b) Employee shall be entitled to receive an annual formula
bonus equal to an amount up to thirty percent (30%) of the Salary
based upon attainment of objectives identified in a business plan
for Employer adopted by the Board of Employer .
At its sole discretion the Board of Directors of Employer may
develop such other incentive compensation arrangements, including
but not limited to additional bonus incentives, as may be
determined to be appropriate for the conduct of Employer's business
and Employee's duties in connection therewith.
(c) All payments to Employee pursuant to this Agreement will
be subject to deduction and withholding authorized or required by
applicable law. Employee shall also be paid amounts as shall equal
the federal and state, if applicable, income taxes (i.e., gross-up
for income taxes) which will be payable by Employee relating to the
reimbursement of expenses as set forth in Section 4 hereof.
4. Employee Benefits; Reimbursement of Expenses. During the term
of this Agreement,Employer shall provide such fringe benefits,
including paid sick leave, paid holidays, participation in health,
dental, and life insurance plans, and other employee benefit plans which
are regularly maintained by Employer for its senior executive officers
in accordance with the policies of Employer in effect from time to time.
Notwithstanding the foregoing, Employee shall be entitled to a minimum
of four (4) weeks of paid vacation each year of this Agreement. In
addition, during the term of this Agreement, at Employee's option,
Employer shall either pay Employee an automobile allowance of $1,000 per
month and reimburse Employee for the cost of liability and collision
insurance on such automobile and all maintenance and gasoline purchases,
or lease a new automobile of Lexus quality for Employee in lieu of
receiving an automobile allowance (such lease not to exceed the
automobile allowance described above grossed up for taxes); provided,
however, so long as Employee is driving the Lexus LS400 currently leased
by Employer for the benefit of Employee, Employer will continue to
provide liability and collision insurance, gasoline and maintenance for
such automobile in lieu of an automobile allowance. Employer will also
pay for the costs of initiation fees, not to exceed a total of $30,000,
for a resident member of a country club selected by Employee in the
Dallas/Ft. Worth metropolitan area as well as pay or reimburse Employee
for all monthly dues, not to exceed $500 per month, and other
assessments generally charged to the resident members at such country
club during the term of this Agreement. Employer will also reimburse
Employee for his travel , entertainment, and other business expenses
incurred in connection with his employment under this Agreement in
accordance with the policies of Employer in effect from time to time.
5. Confidentiality.
(a) From the Effective Date of this Agreement and in
consideration for the promises made by Employee herein, including
promises made by Employee in Section 6 below, Employer promises and
agrees to provide Employee certain confidential information
consistent with the job duties of an individual in his position
including, without limitation, customer, supplier, product and
distributor lists, trade secrets, plans, manufacturing techniques,
sales, marketing and expansion strategies, financial records
<PAGE>
(including business plans, financial statements, etc.), and
technology and processes of Employer and/or its affiliates, as they
may exist from time to time, and information concerning the
products, services, production, development, technology and all
technical information, procurement and sales activities and
procedures, promotion and pricing techniques and credit and
financial data concerning customers of, and suppliers to, Employer
and/or its affiliates (collectively ``Confidential Information'').
In consideration for Employer's promises herein, Employee
acknowledges and agrees that all Confidential Information
previously provided or known to Employee in the course of his
employment with Employer and all such Confidential Information
made available and provided to Employee pursuant to the terms of
this Agreement will be received in strict confidence and will be
used only for the purposes of performing his duties pursuant to
this Agreement and that no such Confidential Information will
otherwise be used or disclosed by Employee during or after the term
of this Agreement without the prior written consent of Employer.
Employee acknowledges and agrees that upon termination of
Employee's employment hereunder for any reason, Employee will leave
and/or return all Confidential Information and other documents,
records, notebooks, customer lists, mailing lists, business
proposals, contracts, agreements, and other repositories containing
information concerning Employer or its financial condition or
business (including all copies thereof) in Employee's possession,
whether prepared by Employee or others, will remain with or be
returned to Employer. Notwithstanding the foregoing, this Section
shall be inoperative as to any portion of the Confidential
Information which (i) is or becomes generally available to the
public other than as a result of a disclosure by Employee or (ii)
becomes available to Employee on a non-confidential basis and not
in contravention of Employer's rights or applicable law from a
source (other than Employer) which Employee reasonably believes is
entitled to possess and disclose it.
(b) Employee acknowledges and agrees that all manuals,
drawings, blueprints, letters, notes, notebooks, financial records
(including, without limitation, budgets, business plans and
financial statements), reports, computers, computer equipment,
computer disks, hard drives, electronic storage devices, books,
procedures, forms, documents, records or paper, or copies thereof,
pertaining to the operations or business of Employer made or
received by Employee or made known to him in any way in connection
with his employment activities or otherwise and any other
Confidential Information are and will be the exclusive property of
Employer. Employee agrees not to copy or remove any of the above
from the premises and custody of Employer, or disclose the contents
thereof to any other person or entity except in the ordinary course
of business consistent with Employer's policies. Employee
acknowledges that all such papers and records will at all times be
subject to the control of Employer, and Employee agrees to
surrender the same upon request of Employer, and will surrender
such no later than any termination or expiration of this Agreement.
6. Noncompetition. Employee covenants and agrees that, during
the period Employee is employed by Employer, and if Employee's
employment is terminated pursuant to Section 8(a) or Employee resigns
<PAGE>
for any reason (other than as a result of a Constructive Discharge), for
a period of one year thereafter, Employee will not directly or
indirectly compete with Employer in the United States . For the purposes
of this Section 6, the following terms shall have the meanings indicated
below:
(a) The term "compete" shall mean, with respect to the
business of Employer, engaging in or attempting to engage in the
direct mail marketing with the use of a catalog of sports related
equipment to institutional customers or any other business which
generates more than 10% of Employer's revenues at the time of
termination, either alone or with any individual, partnership,
corporation, or association.
(b) The words "directly or indirectly" as they modify the
word "compete" shall mean: (i) acting as an agent,
representative, consultant, officer, director, or employee of any
entity or enterprise which is competing (as defined in this
Section 6) with the business of Employer; (ii)
participating in any such competing entity or enterprise as an
owner, partner, limited partner, joint venturer, creditor, or
stockholder (except as a stockholder holding less than a five
percent (5%) interest in a corporation whose shares are actively
traded on a regional or national securities exchange or in the
over-the-counter market); (iii) communicating to any such competing
entity or enterprise any competitive non-public information
concerning any past, present, or identified prospective client or
customer of, or supplier to, Employer; (iv) soliciting the
customers, distributors, dealers, or independent sales persons of
Employer or its Affiliates (as defined below) as of Employee's
termination date; or (v) recruiting, hiring, or assisting others in
recruiting or hiring (collectively referred to as "Recruiting
Activity") any person who is, or within the 12-month period
immediately preceding the date of any such Recruiting Activity was,
an employee of Employer or its Affiliates. For the purposes of
this Agreement, the term "Affiliates" shall mean all subsidiaries
of Employer and each entity in which Employer is an equity investor
(or was an equity investor within the 12-month period preceding the
date Affiliate status is determined) which controls, is controlled
by, or under common control with Employer.
(c) Employee understands and agrees that the scope of this
covenant by Employee contained in this Section is reasonable as to
time, area, and persons and is necessary to protect the proprietary
and legitimate business interest of the Employer, and but for such
covenant by Employee the Employer would not have agreed to enter
into the transactions contemplated by this Agreement. Employee
agrees that this covenant is reasonable in light of the
compensation and other consideration Employer has agreed to provide
Employee pursuant to this Agreement. It is further agreed that
such covenant will be regarded as divisible and will be operative
as to time, area, and persons to the extent that it may be so
operative.
(d) Notwithstanding anything to the contrary contained in
this Section or elsewhere in this Agreement, Employee shall not be
precluded or otherwise restricted from practicing law for any law
firm, business or other entity.
<PAGE>
7. Injunctive Relief. If Employee breaches any of the provisions
of Sections 5 or 6 hereof, Employer shall be entitled to specific
performance, injunctive relief, or such other legal and/or equitable
remedies as may be appropriate. Nothing contained herein shall be
construed as prohibiting Employer from pursuing any other remedies
available to it for such breach of any of the terms and provisions of
this Agreement, nor limiting its right to the recovery of damages from
Employee or any other person or entity for the breach or violation of
any provision of this Agreement, whether such remedy be at law or in
equity.
8. Termination.
(a) Employer may terminate Employee's employment for Cause
(as defined herein). Notwithstanding the foregoing and with
respect to Section 8(g)(iv), Employer may terminate Employee's
employment for Cause only if such Cause is not cured within 10 days
following Employee's receipt of written notice thereof by Employer
to Employee. If Employee's employment is terminated for Cause,
Employee will be paid Salary to the date of such termination notice
and shall be paid Salary for all accrued but unused personal,
vacation, and sick days (less all amounts required to be withheld
or deducted therefrom and all undisputed amounts owed or due by
Employee to Employer).
(b) If Employer terminates Employee other than for Cause or
in the event of a Constructive Discharge of Employee (as
hereinafter defined) during the term hereof, Employer shall (i) pay
Employee his Salary (A) through the stated term of this Agreement,
if such termination or Constructive Discharge occurs prior to June
30, 1999 , or (B) through a period of 18 months from the date of
such termination or Constructive Discharge, if such termination or
Constructive Discharge occurs on or after June 30, 1999 (in either
event Employee shall also receive all accrued but unused personal,
vacation, and sick days and less all amounts required to be
withheld or deducted therefrom and all amounts owed or due by
Employee to Employer), and (ii) continue to provide Employee,
during the period through which his Salary will be paid, health
insurance with coverage no less than the coverage available during
such period to Employer's senior executive officers, and Employer
shall have no other obligation hereunder. Notwithstanding anything
to the contrary contained herein, if Employee is paid in full
pursuant to the terms of that certain Severance Agreement by and
between Employer and Employee on or before December 10, 1999, then
Employee will not be entitled to receive any severance payment
under this Section 8(b). Section 8(b)(i)(B) of this Agreement
shall survive even if this Agreement expires by its own terms
unless Employer and Employee agree in writing to mutually terminate
this Agreement or amend this provision or if Employer and Employee
enter into a new Employment Agreement.
(c) If Employee terminates his employment with Employer other
than as a result of a Constructive Discharge and, if during the
term of this Agreement set forth in Section 1 Employer has not
materially breached any provision of this Agreement, Employee will
be paid only Salary as has been earned to the date of termination
and for all accrued but unused personal, vacation, and sick days
(less all amounts required to be withheld or deducted therefrom and
all amounts owed or due by Employee to Employer).
<PAGE>
(d) If no other provision in this Section 8 is applicable and
if this Agreement terminates pursuant to the expiration of the term
set forth in Section 1, subject to Section 8(b), Employee will be
paid only Salary as has been earned to the date of termination and
for all accrued but unused personal, vacation, and sick days (less
all amounts required to be withheld or deducted therefrom and all
amounts owed or due by Employee to Employer) or such longer period
as he is entitled pursuant to the provisions of Section 8(b) and/or
9.
(e) If Employee dies or is disabled, as determined by his
physician, so that he is unable to work for six consecutive months
during the term hereof, this Agreement will terminate, and Employer
will (i) pay to the estate of Employee, or Employee, as the case
may be, the Salary which would otherwise be payable to Employee up
to the end of the month in which his death or such six-month period
occurs and for all accrued but unused personal, vacation, and sick
days (less all amounts required to be withheld or deducted
therefrom and all amounts owed or due by Employee to Employer), and
(ii) provide to Employee's dependents (including his spouse) and to
Employee, in the case of such a disability, for a period of at
least two years after Employee's death or disability and at no
charge to such dependents or Employee, health and accident
insurance with coverage no less than the coverage available during
such time to Employer's senior executive officers. Notwithstanding
the foregoing, Employer's obligations under this Section shall be
reduced by the amounts obtained by Employee under any applicable
disability insurance policy.
(f) If this Agreement or the employment of Employee is
terminated, except as otherwise specifically set forth herein,
Employee will not be obligated to mitigate his damages nor the
amount of any payment provided for in this Agreement by seeking
other employment or otherwise, and the acceptance of employment
elsewhere after termination shall in no way reduce the amount of
Salary due hereunder.
(g) For the purposes of this Agreement, "Cause" shall mean
that Employee shall have committed:
(i) an intentional material act of fraud or embezzlement
in connection with his duties or in the course of his
employment with Employer;
(ii) an intentional wrongful material damage to property
of Employer;
(iii) an intentional wrongful disclosure of material
secret processes or material confidential information of
Employer; or
(iv) an intentional and continued failure to perform his
duties as Executive Vice President, General Counsel and
Secretary (other than any such failure resulting from
incapacity due to physical injury or illness or mental illness
as such is provided for in Section 9).
<PAGE>
For purposes of this Agreement, no act or failure to act, on
the part of Employee, shall be deemed ``intentional'' unless
done, or omitted to be done, by the Employee in bad faith and
without reasonable belief that his action or omission was in
the best interest of the Employer.
(h) For the purposes of this Agreement, "Constructive Discharge"
means a change in office, title, or position from that reasonably
associated with being an Executive Vice President, General Counsel and
Secretary, other than a promotion; a change in reporting of Employee
to any person other than the Chairman, Chief Executive Officer, or the
Board of Directors of Employer; a required relocation to a location in
excess of thirty (30) miles of Employer's current principal location;
a reduced Salary; a material diminution in responsibilities; or any other
material breach of this Agreement by Employer.
(i) The provisions of this Section 8 shall survive the
termination of this Agreement.
9. Disability. If Employee is unable to perform his assigned
duties by reason of illness, injury, or incapacity (other than as a
result of abuse of drugs, alcohol, or other substances), he will be
entitled to receive such disability benefits as are provided by
Employer's disability policies for its other senior executive officers.
10 . Binding Nature.
(a) Employer will require any successor and any corporation
or other legal person which is in control of such successor (as
"control" is defined in Regulation 230.405 or any successor rule or
regulation promulgated under the Securities Act of 1933, as
amended) to all or substantially all of the business and/or assets
of Employer (by purchase, merger, consolidation, or otherwise), by
agreement in form and substance reasonably satisfactory to
Employee, 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.
Failure of Employer to obtain such agreement prior to the
effectiveness of any such succession will be a material breach of
this Agreement by Employer. Notwithstanding the foregoing, any
such assumption shall not, in any way, affect or limit the
liability of the Employer under the terms of this Agreement or
release the Employer from any obligations hereunder. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or all or part of its
assets as aforesaid which executes and delivers the agreement
provided for in this Section 10 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement and all the rights of Employee under this
Agreement will inure to the benefit of and will be enforceable by
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and
legatees.
<PAGE>
(c) Except as set forth above, neither this Agreement, nor
any of the rights, interests or obligations hereunder shall be
assigned by either party hereto, whether by operation of law or
otherwise, without the prior written consent of the other party,
nor is this Agreement intended to confer upon any other person
other than the parties hereto any rights or remedies hereunder.
11 . Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable, or void, in whole or in part,
then both parties will be relieved of all obligations arising under such
provision, but only to the extent of the portion of the provision which
is illegal, unenforceable, or void. The intent and agreement of the
parties to this Agreement is that this Agreement will be deemed amended
by modifying and/or reforming any such illegal, unenforceable, or void
provision to the extent necessary to make it legal and enforceable while
preserving its intent, or if such is not possible, by substituting
therefor another provision which is legal and enforceable and achieves
the same objectives. Notwithstanding the foregoing, if the remainder of
this Agreement will not be affected by such declaration or finding and
is capable of substantial performance, then each provision not so
affected will be enforced to the extent permitted by law.
12 . Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
13 . Governing Law. 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 which would require
the application of the law of any other jurisdiction. All parties
hereto hereby irrevocably submit to the nonexclusive jurisdiction of the
state and federal courts of the State of Texas and agree and consent
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 agree that the venue for any and all suits, actions
or proceedings arising out of or relating to this Agreement shall be
brought solely in a Court of competent jurisdiction sitting in Dallas,
Dallas County, Texas. All parties hereto hereby irrevocably waive, to
the fullest extent permitted by law, any objection which such party 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.
14 . Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
<PAGE>
If to Employee: Terrence M. Babilla
6912 Desco Circle
Dallas, Texas 75225
If to Employer: Sport Supply Group, Inc.
Attention: Chief Executive Officer
1901 Diplomat Drive
Farmers Branch, Texas 75234
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
15 . Attorneys' Fees. If any arbitration or civil action, whether
at law or in equity, is necessary to enforce or interpret any of the
terms of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, court costs, and other reasonable expenses
of litigation, in addition to any other relief to which such party may
be entitled.
16 . Arbitration. Any dispute arising under this Agreement shall
be submitted to arbitration in Dallas, Texas, in accordance with the
rules of the American Arbitration Association. The decision of the
arbitrator(s) will be binding, conclusive, and nonappealable.
17 . Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
18 . Entire Agreement. This Agreement and the Severance Agreement
constitute the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement and there are no
understandings or agreements relative to this Agreement which are not
fully expressed in this Agreement (other than the Severance Agreement).
All prior agreements between the parties with respect to the subject
matter of this Agreement (other than the Severance Agreement), whether
oral or written, are expressly superseded by this Agreement. No change,
waiver, or discharge of this Agreement will be valid unless in writing
and signed by the party against which such change, waiver, or discharge
is to be enforced. In addition, the parties hereto expressly
acknowledge and agree that no other agreement nor any breach of or
default under any other agreement (other than the Severance Agreement)
shall have any effect on the rights and obligations of the parties
hereto, including, without limitation, under any employment or other
agreement between Employee and Emerson. The Severance Agreement is not
modified in any way by this Agreement and shall remain in full force and
effect in accordance with the terms thereof.
<PAGE>
IN WITNESS WHEREOF, the parties of this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Geoffrey P. Jurick
Geoffrey P. Jurick,
Chief Executive Officer
EMPLOYEE:
/s/ Terrence M. Babilla
Terrence M. Babilla
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of
January 14, 1998 by and between Sport Supply Group, Inc., a Delaware
corporation ("Employer"), and John P. Walker ("Employee").
RECITALS:
WHEREAS, Employer desires to retain the services of Employee,
and Employee desires to provide services to Employer in accordance with
the terms, conditions, and provisions of this Agreement; and
WHEREAS, Employer and Employee desire to terminate that certain
Employment Agreement dated January 23, 1997 to be effective as of
December 1, 1996 and replace it with this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Term. Subject to the terms and conditions set forth in this
Agreement, Employer hereby employs Employee, and Employee hereby accepts
such employment from Employer, for a period commencing on January 14,
1998 (the "Effective Date") and expiring on January 13, 2001, except as
otherwise provided herein.
2. Duties. Employee will be employed as an Executive Vice
President and the Chief Financial Officer of Employer, and in such
capacity will perform the normal duties associated with such position
and such other reasonable duties as may be assigned from time to time by
the Board of Directors of Employer consistent with that of an Executive
Vice President or a Chief Financial Officer. Employer acknowledges that
Employee currently is an Executive Vice President and Chief Financial
Officer of Emerson Radio Corp. ("Emerson"), and that Employee will
devote certain of his time, attention, and energies, not to exceed 33%
of his working time during the term of this Agreement, to such
responsibilities. During the term of this Agreement, Employee shall
devote his full time, attention, and energies (except for those devoted
to the business of Emerson as contemplated in the immediately preceding
sentence hereto) to the business of Employer to discharge his duties
faithfully, diligently, to the best of his abilities, and in a manner
consistent with any and all policies and guidelines as may be
established by Employer from time to time. Employee shall report solely
to the Board of Directors, Chairman, and Chief Executive Officer of
Employer.
3. Compensation.
(a) Subject to the terms and conditions of this Agreement and
as compensation for the performance of his services hereunder,
Employer will pay Employee a fixed salary at a minimum annual rate
of $290,000 (such initial rate is referred to herein as the
"Initial Salary," and as it may be adjusted upward from time to
time as provided by the Board of Directors of Employer, is referred
to herein as "Salary"). Employee's Salary will accrue and be
payable to Employee in accordance with the payroll practices of
Employer for senior executives in effect from time to time during
the term of this Agreement.
<PAGE>
(b) Employee shall be entitled to receive an annual formula
bonus equal to an amount up to thirty percent (30%) of the Salary
based upon attainment of objectives identified in a business plan
for Employer to be adopted by the Board of Employer.
At its sole discretion the Board of Directors of Employer may
develop such other incentive compensation arrangements, including
but not limited to additional bonus incentives, as may be
determined to be appropriate for the conduct of Employer's business
and Employee's duties in connection therewith.
(c) All payments to Employee pursuant to this Agreement will
be subject to deduction and withholding authorized or required by
applicable law. Employee shall also be paid amounts as shall equal
the federal and state, if applicable, income taxes (i.e., gross-up
for income taxes) which will be payable by Employee relating to the
reimbursement of expenses as set forth in Section 4 hereof.
4. Employee Benefits; Reimbursement of Expenses. During the term
of this Agreement, Employer shall provide such fringe benefits,
including paid sick leave, paid holidays, participation in health,
dental, and life insurance plans, and other employee benefit plans which
are regularly maintained by Employer for its senior executive officers
in accordance with the policies of Employer in effect from time to time.
Notwithstanding the foregoing, Employee shall be entitled to a minimum
of four (4) weeks of paid vacation each year of this Agreement. In
addition, during the term of this Agreement, at Employee's option,
Employer shall either pay Employee an automobile allowance of $1,000 per
month and reimburse Employee for the cost of liability and collision
insurance on such automobile and all maintenance and gasoline purchases,
or lease a new automobile for Employee (of a quality like the automobile
currently leased by the Employer for Employee) in lieu of receiving an
automobile allowance (such lease not to exceed the automobile allowance
described above grossed up for taxes). Employer will also pay or
reimburse Employee for all monthly dues of a country club selected by
Employee in the Dallas/Ft. Worth metropolitan area, not to exceed $500
per month during the term of this Agreement. Employer will also
reimburse Employee for his travel (including, without limitation, the
costs of first class or business class air travel in those instances in
which Employee does not have upgrade certificates, or upgrades are
unavailable, from coach class air travel), entertainment, and other
business expenses incurred in connection with his employment under this
Agreement in accordance with the policies of Employer in effect from
time to time. During the term of this Agreement, Employer will also pay
the premiums for a $400,000 term life insurance policy on Employee's
life if Emerson or its affiliates do not pay such premiums.
5. Confidentiality.
(a) From the Effective Date of this Agreement and in
consideration for the promises made by Employee herein, including
promises made by Employee in Section 6 below, Employer promises and
agrees to provide Employee certain confidential information
consistent with the job duties of an individual in his position
including, without limitation, customer, supplier, product and
distributor lists, trade secrets, plans, manufacturing techniques,
<PAGE>
sales, marketing and expansion strategies, financial records
(including business plans, financial statements, etc.), and
technology and processes of Employer and/or its affiliates, as they
may exist from time to time, and information concerning the
products, services, production, development, technology and all
technical information, procurement and sales activities and
procedures, promotion and pricing techniques and credit and
financial data concerning customers of, and suppliers to, Employer
and/or its affiliates (collectively ``Confidential Information'').
In consideration for Employer's promises herein, Employee
acknowledges and agrees that all Confidential Information
previously provided or known to Employee in the course of his
employment with Employer and all such Confidential Information
made available and provided to Employee pursuant to the terms of
this Agreement will be received in strict confidence and will be
used only for the purposes of performing his duties pursuant to
this Agreement and that no such Confidential Information will
otherwise be used or disclosed by Employee during or after the term
of this Agreement without the prior written consent of Employer.
Employee acknowledges and agrees that upon termination of
Employee's employment hereunder for any reason, Employee will leave
and/or return all Confidential Information and other documents,
records, notebooks, customer lists, mailing lists, business
proposals, contracts, agreements, and other repositories containing
information concerning Employer or its financial condition or
business (including all copies thereof) in Employee's possession,
whether prepared by Employee or others, will remain with or be
returned to Employer. Notwithstanding the foregoing, this Section
shall be inoperative as to any portion of the Confidential
Information which (i) is or becomes generally available to the
public other than as a result of a disclosure by Employee or (ii)
becomes available to Employee on a non-confidential basis and not
in contravention of Employer's rights or applicable law from a
source (other than Employer) which Employee reasonably believes is
entitled to possess and disclose it.
(b) Employee acknowledges and agrees that all manuals,
drawings, blueprints, letters, notes, notebooks, financial records
(including, without limitation, budgets, business plans and
financial statements), reports, computers, computer equipment,
computer disks, hard drives, electronic storage devices, books,
procedures, forms, documents, records or paper, or copies thereof,
pertaining to the operations or business of Employer made or
received by Employee or made known to him in any way in connection
with his employment activities or otherwise and any other
Confidential Information are and will be the exclusive property of
Employer. Employee agrees not to copy or remove any of the above
from the premises and custody of Employer, or disclose the contents
thereof to any other person or entity except in the ordinary course
of business consistent with Employer's policies. Employee
acknowledges that all such papers and records will at all times be
subject to the control of Employer, and Employee agrees to
surrender the same upon request of Employer, and will surrender
such no later than any termination or expiration of this Agreement.
<PAGE>
6. Noncompetition. Employee covenants and agrees that, during
the period Employee is employed by Employer, and if Employee's
employment is terminated pursuant to Section 8(a) or Employee resigns
for any reason (other than as a result of a Constructive Discharge), for
a period of one year thereafter, Employee will not directly or
indirectly compete with Employer in the United States. For the purposes
of this Section 6, the following terms shall have the meanings indicated
below:
(a) The term "compete" shall mean, with respect to the
business of Employer, engaging in or attempting to engage in the
direct mail marketing with the use of a catalog of sports related
equipment to institutional customers or any other business which
generates more than 10% of Employer's revenues at the time of
termination, either alone or with any individual, partnership,
corporation, or association.
(b) The words "directly or indirectly" as they modify the
word "compete" shall mean: (i) acting as an agent, representative,
consultant, officer, director, or employee of any entity or
enterprise which is competing (as defined in this Section 6)
with the business of Employer; (ii) participating in any such
competing entity or enterprise as an owner, partner, limited
partner, joint venturer, creditor, or stockholder (except as a
stockholder holding less than a five percent (5%) interest in a
corporation whose shares are actively traded on a regional or
national securities exchange or in the over-the-counter market);
(iii) communicating to any such competing entity or enterprise any
competitive non-public information concerning any past, present, or
identified prospective client or customer of, or supplier to,
Employer; (iv) soliciting the customers, distributors, dealers, or
independent sales persons of Employer or its Affiliates (as defined
below) as of Employee's termination date; or (v) recruiting,
hiring, or assisting others in recruiting or hiring (collectively
referred to as "Recruiting Activity") any person who is, or within
the 12-month period immediately preceding the date of any such
Recruiting Activity was, an employee of Employer or its Affiliates.
For the purposes of this Agreement, the term "Affiliates" shall
mean all subsidiaries of Employer and each entity in which Employer
is an equity investor (or was an equity investor within the
12-month period preceding the date Affiliate status is determined)
which controls, is controlled by, or under common control with
Employer.
(c) Employee understands and agrees that the scope of this
covenant by Employee contained in this Section is reasonable as to
time, area, and persons and is necessary to protect the proprietary
and legitimate business interest of the Employer, and but for such
covenant by Employee the Employer would not have agreed to enter
into the transactions contemplated by this Agreement. Employee
agrees that this covenant is reasonable in light of the
compensation and other consideration Employer has agreed to provide
Employee pursuant to this Agreement. It is further agreed that
such covenant will be regarded as divisible and will be operative
as to time, area, and persons to the extent that it may be so
operative.
<PAGE>
7. Injunctive Relief. If Employee breaches any of the provisions
of Sections 5 or 6 hereof, Employer shall be entitled to specific
performance, injunctive relief, or such other legal and/or equitable
remedies as may be appropriate. Nothing contained herein shall be
construed as prohibiting Employer from pursuing any other remedies
available to it for such breach of any of the terms and provisions of
this Agreement, nor limiting its right to the recovery of damages from
Employee or any other person or entity for the breach or violation of
<PAGE>
any provision of this Agreement, whether such remedy be at law or in
equity.
8. Termination.
(a) Employer may terminate Employee's employment for Cause
(as defined herein), in writing, stating the reasons for
termination with Cause within fifteen (15) days of the date of
termination. Notwithstanding the foregoing and with respect to
Section 8(g)(iv), Employer may terminate Employee's employment for
Cause only if such Cause is not cured within 10 days following
Employee's receipt of written notice thereof by Employer to
Employee. If Employee's employment is terminated for Cause,
Employee will be paid Salary to the date of such termination notice
and shall be paid Salary for all accrued but unused personal,
vacation, and sick days (less all amounts required to be withheld
or deducted therefrom and all undisputed amounts owed or due by
Employee to Employer).
(b) If Employer terminates Employee other than for Cause or
in the event of a Constructive Discharge of Employee (as
hereinafter defined) during the term hereof, Employer shall (i) pay
Employee his Initial Salary (A) through the stated term of this
Agreement, if such termination or Constructive Discharge occurs
prior to June 30, 1999, or (B) through a period of 18 months from
the date of such termination or Constructive Discharge, if such
termination or Constructive Discharge occurs on or after June 30,
1999 (in either event Employee shall also receive all accrued but
unused personal, vacation, and sick days and less all amounts
required to be withheld or deducted therefrom and all amounts owed
or due by Employee to Employer), and (ii) continue to provide
Employee, during the period through which his Initial Salary will
be paid, health insurance with coverage no less than the coverage
available during such period to Employer's senior executive
officers, and Employer shall have no other obligation hereunder.
Notwithstanding anything to the contrary contained herein, if
Employee is paid in full pursuant to the terms of that certain
Severance Agreement by and between Employer and Employee dated the
date hereof, then Employee will not be entitled to receive any
severance payment under this Section 8(b). Section 8(b)(i)(B) of
this Agreement shall survive even if this Agreement expires by its
own terms unless Employer and Employee agree in writing to mutually
terminate this Agreement or amend this provision or if Employer and
Employee enter into a new Employment Agreement.
(c) If Employee terminates his employment with Employer other
than as a result of a Constructive Discharge and, if during the
term of this Agreement set forth in Section 1 Employer has not
materially breached any provision of this Agreement, Employee will
<PAGE>
be paid only Salary as has been earned to the date of termination
and for all accrued but unused personal, vacation, and sick days
(less all amounts required to be withheld or deducted therefrom and
all amounts owed or due by Employee to Employer).
(d) If no other provision in this Section 8 is applicable and
if this Agreement terminates pursuant to the expiration of the term
set forth in Section 1, subject to Section 8(b), Employee will be
paid only Salary as has been earned to the date of termination and
for all accrued but unused personal, vacation, and sick days (less
all amounts required to be withheld or deducted therefrom and all
amounts owed or due by Employee to Employer) or such longer period
as he is entitled pursuant to the provisions of Section 8(b) and/or
Section 9.
(e) If Employee dies or is disabled, as determined by his
physician, so that he is unable to work for six consecutive months
during the term hereof, this Agreement will terminate, and Employer
will (i) pay to the estate of Employee, or Employee, as the case
may be, the Salary which would otherwise be payable to Employee up
to the end of the month in which his death or such six-month period
occurs and for all accrued but unused personal, vacation, and sick
days (less all amounts required to be withheld or deducted
therefrom and all amounts owed or due by Employee to Employer), and
(ii) provide to Employee's dependents (including his spouse) and to
Employee, in the case of such a disability, for a period of at
least two years after Employee's death or disability and at no
charge to such dependents or Employee, health and accident
insurance with coverage no less than the coverage available during
such time to Employer's senior executive officers. Notwithstanding
the foregoing, Employer's obligations under this Section shall be
reduced by the amounts obtained by Employee under any applicable
disability insurance policy.
(f) If this Agreement or the employment of Employee is
terminated, except as otherwise specifically set forth herein,
Employee will not be obligated to mitigate his damages nor the
amount of any payment provided for in this Agreement by seeking
other employment or otherwise, and the acceptance of employment
elsewhere after termination shall in no way reduce the amount of
Salary due hereunder.
(g) For the purposes of this Agreement, "Cause" shall mean
that Employee shall have committed:
(i) an intentional material act of fraud or embezzlement
in connection with his duties or in the course of his
employment with Employer;
(ii) an intentional wrongful material damage to property
of Employer;
(iii) an intentional wrongful disclosure of material
secret processes or material confidential information of
Employer; or
<PAGE>
(iv) an intentional and continued failure to perform his
duties as Executive Vice President and Chief Financial Officer
(other than any such failure resulting from incapacity due to
physical injury or illness or mental illness as such is
provided for in Section 9).
For purposes of this Agreement, no act or failure to act, on
the part of Employee, shall be deemed "intentional" unless done, or
omitted to be done, by the Employee in bad faith and without
reasonable belief that his action or omission was in the best
interest of the Employer.<PAGE>
(h) For the purposes of this Agreement, "Constructive
Discharge" means a change in office, title, or position from that
reasonably associated with being an Executive Vice President and
Chief Financial Officer, other than a promotion; a change in
reporting of Employee to any person other than the Chairman, Chief
Executive Officer, or the Board of Directors of Employer; a
required relocation to a location in excess of thirty (30) miles of
Employer's current principal location; a reduced Salary; a material
diminution in responsibilities; or any other material breach of
this Agreement by Employer.
(i) The provisions of this Section 8 shall survive the
termination of this Agreement.
9. Disability. If Employee is unable to perform his assigned
duties by reason of illness, injury, or incapacity (other than as a
result of abuse of drugs, alcohol, or other substances), he will be
entitled to receive such disability benefits as are provided by
Employer's disability policies for its other senior executive officers.
10. Relocation Expenses. To the extent not covered by existing
policies of Employer and as a supplement to such existing policies,
Employer shall provide the following to Employee:
(a) Reimbursement of principal, interest, taxes, and
insurance and maintenance on Employee's existing residence in New
Jersey until the earlier of June 30, 1998 or the sale of such
property; and
(b) Employer will provide an interim bridge loan in the
amount of $100,000 secured by a lien against either Employee's
existing residence or, if permitted by applicable law, Employee's
new residence, interest-free until the earlier of September 18,
1998 or through the date of sale of Employee's existing residence
in New Jersey. The bridge loan will be forgiven if, prior to the
due date of the bridge loan, (i) there is a Change in Control (as
defined in the Employee's Severance Agreement) of Employer and
(ii) the Employee is terminated pursuant to Section 3(a)(2) of the
Severance Agreement. Employee shall also be reimbursed for all
closing, sales, and mortgage related fees and expenses (including
points and real estate commissions) with respect to the sale of
Employee's existing residence in New Jersey and purchase by
Employee of a new residence in Texas, but in no event in excess of
$30,000. In addition, Employee will be reimbursed for all
reasonable moving expenses.
11. Binding Nature.
<PAGE>
(a) Employer will require any successor and any corporation
or other legal person which is in control of such successor (as
"control" is defined in Regulation 230.405 or any successor rule or
regulation promulgated under the Securities Act of 1933, as
amended) to all or substantially all of the business and/or assets
of Employer (by purchase, merger, consolidation, or otherwise), by
agreement in form and substance reasonably satisfactory to
Employee, 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.
Failure of Employer to obtain such agreement prior to the
effectiveness of any such succession will be a material breach of
this Agreement by Employer. Notwithstanding the foregoing, any
such assumption shall not, in any way, affect or limit the
liability of the Employer under the terms of this Agreement or
release the Employer from any obligations hereunder. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or all or part of its
assets as aforesaid which executes and delivers the agreement
provided for in this Section 11 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(b) This Agreement and all the rights of Employee under this
Agreement will inure to the benefit of and will be enforceable by
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and
legatees.
(c) Except as set forth above, neither this Agreement, nor
any of the rights, interests or obligations hereunder shall be
assigned by either party hereto, whether by operation of law or
otherwise, without the prior written consent of the other party,
nor is this Agreement intended to confer upon any other person
other than the parties hereto any rights or remedies hereunder.
12. Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable, or void, in whole or in part,
then both parties will be relieved of all obligations arising under such
provision, but only to the extent of the portion of the provision which
is illegal, unenforceable, or void. The intent and agreement of the
parties to this Agreement is that this Agreement will be deemed amended
by modifying and/or reforming any such illegal, unenforceable, or void
provision to the extent necessary to make it legal and enforceable while
preserving its intent, or if such is not possible, by substituting
therefor another provision which is legal and enforceable and achieves
the same objectives. Notwithstanding the foregoing, if the remainder of
this Agreement will not be affected by such declaration or finding and
is capable of substantial performance, then each provision not so
affected will be enforced to the extent permitted by law.
13. Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
<PAGE>
14. Governing Law. 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 which would require
the application of the law of any other jurisdiction. All parties
hereto hereby irrevocably submit to the nonexclusive jurisdiction of the
state and federal courts of the State of Texas and agree and consent
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 agree that the venue for any and all suits, actions
or proceedings arising out of or relating to this Agreement shall be
brought solely in a Court of competent jurisdiction sitting in Dallas,
Dallas County, Texas. All parties hereto hereby irrevocably waive, to
the fullest extent permitted by law, any objection which such party 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.
15. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: John P. Walker
1901 Diplomat Drive
Farmers Branch, Texas 75234
If to Employer:
Sport Supply Group, Inc.
Attention: Chief Executive Officer
1901 Diplomat Drive
Farmers Branch, Texas 75234
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
16. Attorneys' Fees. If any arbitration or civil action, whether
at law or in equity, is necessary to enforce or interpret any of the
terms of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, court costs, and other reasonable expenses
of litigation, in addition to any other relief to which such party may
be entitled.
17. Arbitration. Any dispute arising under this Agreement shall
be submitted to arbitration in Dallas, Texas, in accordance with the
rules of the American Arbitration Association. The decision of the
arbitrator(s) will be binding, conclusive, and nonappealable.
18. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
<PAGE>
19. Entire Agreement. This Agreement and the Severance Agreement
constitute the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement and there are no
understandings or agreements relative to this Agreement which are not
fully expressed in this Agreement (other than the Severance Agreement).
All prior agreements between the parties with respect to the subject
matter of this Agreement (including, without limitation, that certain
Employment Agreement by and between Employee and Employer dated January
23, 1997 to be effective as of December 11, 1996), whether oral or
written, are expressly superseded by this Agreement. No change, waiver,
or discharge of this Agreement will be valid unless in writing and
signed by the party against which such change, waiver, or discharge is
to be enforced. In addition, the parties hereto expressly acknowledge
and agree that no other agreement nor any breach of or default under any
other agreement (other than the Severance Agreement) shall have any
effect on the rights and obligations of the parties hereto, including,
without limitation, under any employment or other agreement between
Employee and Emerson.
IN WITNESS WHEREOF, the parties of this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Geoffrey P. Jurick
Geoffrey P. Jurick,
Chief Executive Officer
EMPLOYEE:
/s/ John P. Walker
John P. Walker
SEVERANCE AGREEMENT
THIS AGREEMENT is made as of the 14th day of January, 1998, between
Sport Supply Group, Inc., a Delaware corporation (the "Company"), and
John P. Walker (the "Employee").
WHEREAS, the Board of Directors of the Company (the "Board") desires
to offer an inducement to the Employee to remain an employee of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained,
this Agreement sets forth benefits which the Company will pay to
Employee in the event of termination of Employee's employment, except as
a result of death, disability, retirement or termination by the Company
for Cause, following a "Change in Control" of the Company (in each case
as such terms or events are defined or discussed herein):
1. Term. The term of this Agreement shall continue until the
earlier of (i) the expiration of the third anniversary of the occurrence
of a Change in Control, (ii) the Employee's death, or (iii) the
Employee's earlier voluntary retirement (except for those events
described in Section 3(a)(2)).
2. Definitions.
(a) Acquiring Person: An "Acquiring Person" shall mean any
person (as defined in Section 2(d)(iii) of this Agreement) that,
together with all Affiliates and Associates of such person, is the
beneficial owner of 15% or more of the outstanding Common Stock.
The term "Acquiring Person" shall not include the Company, any
subsidiary of the Company, any employee benefit plan of the Company
or subsidiary of the Company, any person holding Common Stock for
or pursuant to the terms of any such plan, or Emerson Radio Corp.
and its Affiliates and Associates. For the purposes of this
Agreement, a person who becomes an Acquiring Person by acquiring
beneficial ownership of 15% 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 15% 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act") in effect on
the date of this Agreement.
(c) Cause. For "Cause" shall mean that the Employee shall
have committed:
(i) an intentional material act of fraud or embezzlement
in connection with his duties or in the course of his
employment with the Company;
(ii) intentional wrongful material damage to property of
the Company; or
(iii) intentional wrongful disclosure of material
secret processes or material confidential information of the
<PAGE>
Company. For the purposes of this Agreement, no act, or
failure to act, on the part of the Employee shall be deemed
"intentional" unless done, or omitted to be done, by the
Employee not in good faith and without reasonable belief that
his action or omission was in the best interest of the
Company.
(d) 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 (who were stockholders immediately
prior to the merger, consolidation or reorganization) on a pro
rata basis and is actually received in respect of or 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 (who were
stockholders immediately prior to the merger, consolidation or
reorganization) on a pro rata basis and is actually received
in exchange for the assets 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 person (including any "person" as such term
is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, but excluding Emerson Radio Corp. and its
Affiliates and Associates) 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 20% or
more of the then outstanding securities of the Company which
are entitled to vote to elect any class of Directors;
(iv) If at any time, the Continuing Directors then
serving on the Board cease for any reason to constitute at
least a majority thereof;
(v) Any occurrence that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A or
any successor rule or regulation promulgated under the
Exchange Act; or
<PAGE>
(vi) Such other events that cause a change in control of
the Company, as determined by the Board in its sole
discretion; provided, however, that a Change in Control of the
Company shall not be deemed to have occurred as the result of
any transaction having one or more of the foregoing effects if
such transaction is proposed by, and includes a significant
equity participation (i.e., an aggregate of at least 20% of
the then outstanding common equity securities of the Company
immediately after such transaction which are entitled to vote
to elect any class of Directors) of executive officers of the
Company as constituted immediately prior to the occurrence of
such transaction or any Company employee stock ownership plan
or pension plan.
(e) Code. The "Code" shall mean the Internal Revenue Code of
1986, as amended.
(f) Continuing Director. A "Continuing Director" shall mean
a Director of the Company who (i) is not an Acquiring Person, an
Affiliate or Associate, or a representative of an Acquiring Person
or nominated for election by an Acquiring Person, and (ii) was
either a member of the Board of Directors of the Company on the
date of this Agreement or subsequently became a Director of the
Company and whose initial election or initial nomination for
election by the Company's stockholders was approved by a majority
of the Continuing Directors then on the Board of Directors of the
Company.
(g) Employment Term. The "Employment Term" shall be the
period of employment under this Agreement commencing on the day
prior to a Change in Control and continuing until the expiration of
this Agreement.
(h) Severance Compensation. The "Severance Compensation"
shall be a lump sum amount equal to 299% of the sum of (A) the
highest annual salary of the Employee in effect at any time during
the Employment Term or the salary of the Employee in effect
immediately prior to the Change in Control, whichever is the larger
amount, plus (B) the bonus or incentive compensation of the
Employee, based upon the dollar amount of bonus or incentive
compensation that the Employee received from the Company for the
fiscal year preceding the year in which the Change in Control
occurred or for the fiscal year preceding the year in which the
Termination Date occurs, whichever is the larger amount.
(i) Termination Date. The "Termination Date" shall be the
date upon which the Employee or the Company effectively terminates
the employment of the Employee.
3. Rights of Employee Upon Change in Control or Termination.
(a) The Company shall provide the Employee, within ten days
following the Termination Date, Severance Compensation in lieu of
compensation to the Employee for periods subsequent to the
Termination Date, but without affecting the rights of the Employee
at law or in equity, if, following the occurrence of a Change in
Control, any of the following events shall occur:
<PAGE>
(1) the Company terminates the Employee's employment
during the Employment Term other than for any of the following
reasons:
(i) the Employee dies;
(ii) the Employee becomes permanently disabled and
is unable to work for a period of 180 consecutive days;
or
(iii) for Cause,
(2) the Employee terminates his employment after such
Change in Control and the occurrence of at least one of the
following events:
(i) An adverse change in the nature or scope of the
authorities, functions or duties attached to the position
with the Company that the Employee had immediately prior
to the Change in Control, any reduction in the Employee's
salary during the Employment Term or any reduction in
bonus or incentive compensation (based upon the dollar
amount of bonus or incentive compensation that the
Employee received from the Company for the fiscal year
preceding the year in which the Change in Control
occurred or for the fiscal year preceding the year in
which the Termination Date occurs, whichever is the
larger amount) or a significant reduction in scope or
value of the aggregate other monetary or nonmonetary
benefits to which the Employee was entitled from the
Company immediately prior to the Change in Control, any
of which is not remedied within ten calendar days after
receipt by the Company of written notice from the
Employee of such change, reduction, alteration or
termination, as the case may be;
(ii) A determination by the Employee made in good
faith that as a result of a Change in Control and a
change in circumstances thereafter significantly
affecting his position, changes in the composition or
policies of the Board, or of other events of material
effect, he has been rendered substantially unable to
carry out, or has been substantially hindered in the
performance of, the authorities, functions or duties
attached to his position immediately prior to the Change
in Control, which situation is not remedied within ten
calendar days after receipt by the Company of written
notice from the Employee of such determination;
(iii) The Company shall require the Employee to
relocate his principal location of work by more than 20
miles from the location thereof immediately prior to the
Change in Control or to travel away from his office in
the course of discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar year)
than required of him prior to the Change in Control
without in either case his prior written consent; or
<PAGE>
(iv) the Company commits any material breach of this
Agreement.
(b) Notwithstanding the above section or any other provision
of this Agreement, in no event shall the Company pay or be
obligated to pay the Employee an amount which would be an Excess
Parachute Payment. For purposes of this Agreement, the term
"Excess Parachute Payment" shall mean any payment or any portion
thereof which would be an "excess parachute payment" within the
meaning of Section 280G of the Code, and would result in the
imposition of an excise tax under Section 4999 of the Code, in the
opinion of tax counsel selected by the Company's independent
accountants and acceptable to the Employee. If it is established
pursuant to a final determination of a court or an Internal Revenue
Service administrative appeals proceeding that, notwithstanding the
good faith of the Employee and the Company in applying the terms of
this Agreement, a payment (or portion thereof) made is an Excess
Parachute Payment, then, except as hereafter provided, the Employee
shall have an obligation to repay the Company upon demand an amount
equal to the minimum amount (but without interest) necessary to
insure that no payments made or to be made by the Company pursuant
to this Agreement is an Excess Parachute Payment; provided,
however, that if, in the opinion of tax counsel selected by the
Company's independent accountants and acceptable to the Employee
(in the circumstance where the Company or Employee has requested
such opinion), such repayment will not ensure that no Excess
Parachute Payment would be made hereunder, then (1) no such
repayment obligation will exist and (2) the Company shall pay to
the Employee an additional amount in cash equal to the amount
necessary to cause the amount of the aggregate after-tax cash
compensation and benefits otherwise receivable by the Employee to
be equal to the aggregate after-tax cash compensation and benefits
he would have received as if Sections 280G and 4999 of the Code had
not been enacted.
(c) Upon written notice given by the Employee to the Company
prior to the receipt of Severance Compensation, the Employee, at
his sole option, may elect to have all or any part of any such
amount paid to him, without interest, on an installment basis
selected by him.
(d) The payment of Severance Compensation by the Company to
the Employee shall not affect any rights and benefits which the
Employee may have pursuant to any other agreement, policy, plan,
program or arrangement of the Company providing benefits to the
Employee prior to the Termination Date, which rights shall be
governed by the terms thereof, except that payments hereunder after
termination shall reduce by an equal amount any sums payable after
termination under the Employment Agreement, dated the date hereof,
by and between the Company and the Employee. The Company shall
provide to the Employee throughout the Employment Term benefits
substantially similar to those which the Employee was receiving or
entitled to receive immediately prior to the Termination Date.
Such benefits as provided by the Company, however, shall be reduced
to the extent comparable benefits are actually received by the
Employee during the Employment Term as a result of employment other
than with the Company.
<PAGE>
(e) The Company shall pay to the Employee all reasonable
legal fees and expenses incurred by him as a result of the
enforcement of any of Employee's rights hereunder within ten
business days of the date such expenses are incurred (including
without limitation all such fees and expenses, if any, incurred in
contesting or disputing any termination of employment or in seeking
to obtain or enforce any right or benefit provided by this
Agreement in accordance with Section 12 hereof).
(f) The Company shall have no right of set-off or
counterclaim in respect of any claim, debt or obligation against
any payment or benefit to or for the benefit of the Employee
provided for in this Agreement.
(g) Without limiting the rights of the Employee at law or in
equity, if the Company fails to make any payment required to be
made hereunder on a timely basis, the Company shall pay interest on
the amount thereof on demand at an annualized rate of interest
equal to 120% of the then applicable Federal rate determined under
Section 1274(d) of the Code, compounded semi-annually (but in no
event shall such interest exceed the highest lawful rate).
4. No Mitigation Required. In the event that this Agreement or
the employment of the Employee hereunder is terminated, the Employee
shall not be obligated to mitigate his damages nor the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, and except for the termination of benefits pursuant to
Section 3(d), the acceptance of employment elsewhere after termination
shall in no way reduce the amount of Severance Compensation payable
hereunder.
5. Successors; Binding Agreement.
(a) The Company will require any successor and any
corporation or other legal person (including any "person" as
defined in Section 2(d)(iii) of this Agreement) which is in control
of such successor (as "control" is defined in Regulation 230.405 or
any successor rule or regulation promulgated under the Securities
Act of 1933, as amended) to all or substantially all of the
business and/or assets of the Company (by purchase, merger,
consolidation or otherwise), by agreement in form and substance
satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall
be a material breach of this Agreement by the Company.
Notwithstanding the foregoing, any such assumption shall not, in
any way, affect or limit the liability of the Company under the
terms of this Agreement or release the Company from any obligation
hereunder. As used in this Agreement, "Company" shall mean the
Company as herein before defined and any successor to its business
and/or all or part of its assets as aforesaid which executes and
delivers the agreement provided for in this Section 5 or which
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
<PAGE>
(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
6. Notice. The Company shall give written notice to Employee
within ten days after any Change in Control. Failure to give such
notice shall constitute a material breach of this Agreement. For
purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or received after being mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Employee:
John P. Walker
1901 Diplomat Drive
Farmers Branch, Texas 75234
If to the Company:
Sport Supply Group, Inc.
1901 Diplomat Drive
Farmers Branch, Texas 75234
Attention: Chairman of the Board
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
7. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and such
officer as may be specifically designated by the Board. No waiver by
either party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, unless specifically referred to
herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the substantive laws of the State of Delaware,
without regard to principles of conflicts of law.
8. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
10. Employment Rights. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or
<PAGE>
the Employee to have the Employee remain in the employment of the
Company prior to any Change in Control; provided, however, that any
termination of employment of the Employee or removal of the Employee as
an elected officer of the Company following the commencement of any
discussion authorized by the Board of Directors of the Company with a
third person that ultimately results in a Change in Control shall be
deemed to be a termination or removal of the Employee after a Change in
Control for purposes of this Agreement and shall entitle the Employee to
all Severance Compensation. Notwithstanding any other provision hereof
to the contrary, the Employee may, at any time during the Employment
Term, upon the giving of 30 days prior written notice, terminate his
employment hereunder. If this Agreement or the employment of the
Employee is terminated under circumstances in which the Employee is not
entitled to any Severance Compensation, the Employee shall have no
further obligation or liability to the Company hereunder or otherwise
with respect to his prior or any future employment by the Company.
11. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other
taxes as shall be required pursuant to any law or government regulation
or ruling; provided, however, that no withholding pursuant to Section
4999 of the Code shall be made unless, in the opinion of tax counsel
selected by the Company's independent accountants and acceptable to the
Employee, such withholding relates to payments which result in the
imposition of an excise tax pursuant to Section 4999 of the Code.
12. Legal Fees and Expenses. It is the intent of the Company that
the Employee not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation or other
legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Employee
hereunder. Accordingly, if it should appear to the Employee that the
Company has failed to comply with any of its obligations under the
Agreement or in the event that the Company or any other person takes any
action to declare the Agreement void or unenforceable, or institutes any
litigation designed to deny, or to recover from, the Employee the
benefits intended to be provided to the Employee hereunder, the Company
irrevocably authorizes the Employee from time to time to retain counsel
of his choice, at the expense of the Company as hereafter provided, to
represent the Employee in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company
or any director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Employee's entering into an
attorney-client relationship with such counsel, and in that connection
the Company and the Employee agree that a confidential relationship
shall exist between the Employee and such counsel. The Company shall
pay and be solely responsible for any and all attorneys' and related
fees and expenses incurred by the Employee as a result of the Company's
failure to perform this Agreement or any provision thereof or as a
result of the Company or any person contesting the validity or
enforceability of this Agreement or any provision thereof as aforesaid.
13. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Employee is intended to be exclusive
<PAGE>
of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective on the date and year first above written.
SPORT SUPPLY GROUP, INC.
By: /s/ Geoffrey P. Jurick
Geoffrey P. Jurick,
Chief Executive Officer and
Chairman of the Board
/s/ John P. Walker
John P. Walker
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the "Agreement"), is
entered into as of January 14, 1998, by and between Sport Supply Group,
Inc., a Delaware corporation (collectively with its direct and indirect
subsidiaries, the ``Company''), and John P. Walker, an employee of the
Company (the "Grantee").
The Company's Compensation Committee (the "Committee") has determined
that the Grantee shall be granted shares of the Company's common stock, par
value $.01 per share, upon the terms and subject to the conditions and
restrictions hereinafter contained (the "Restricted Stock").
1. Number of Shares. The Grantee is hereby granted 50,000 shares
of Restricted Stock, subject to the restrictions set forth herein.
2. Terms of Restricted Stock. The grant of Restricted Stock
provided in Section 1 hereof shall be subject to the following terms,
conditions and restrictions:
(a) Subject to the restrictions set forth in this Agreement,
the Grantee shall possess all incidents of ownership of the
Restricted Stock granted hereunder, including the right to receive
dividends with respect to the Restricted Stock and the right to
vote such Restricted Stock.
(b) Restricted Stock and any interest therein may not be
sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and
distribution, prior to the lapse of the restrictions set forth in
this Agreement.
(c) Notwithstanding any other provision of this Agreement, in
no event shall any outstanding restrictions lapse prior to the
satisfaction by the Grantee of the liabilities described in Section
8 hereof.
3. Certificate; Restrictive Legend.
(a) The Restricted Stock has not been registered under the
Securities Act of 1933 or qualified under applicable state
securities laws. Accordingly, unless there is an effective
registration statement and qualification respecting the resale of
the Restricted Stock under the Securities Act of 1933 (the
"Securities Act") under applicable state securities laws at the
time of resale of the Restricted Stock, any stock certificate
evidencing the Restricted Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR
SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE
STATE SECURITIES LAWS."
(b) The Grantee agrees that any certificate issued for
Restricted Stock prior to the lapse of any outstanding restrictions
relating thereto shall also be inscribed with the following legend:
<PAGE>
"THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS, INCLUDING FORFEITURE
PROVISIONS AND RESTRICTIONS AGAINST TRANSFER (THE ``RESTRICTIONS''),
CONTAINED IN THE RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO
BETWEEN THE REGISTERED OWNER AND THE COMPANY. ANY ATTEMPT TO
DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS,
INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION
OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT."
4. Lapse of Restrictions. Subject to Section 8 hereof, the
restrictions on transfer set forth in Section 3(b) hereof shall lapse
immediately with respect to 16,667 shares of Restricted Stock. Except
as may otherwise be provided herein, the restrictions on transfer set
forth in Section 3(b) shall also lapse with respect to 1,389 shares of
Restricted Stock (as may be adjusted from time to time pursuant to
Section 5(a) hereof on the fifteenth day of each month, beginning
February 15, 1998 (the "Lapse Dates").
Upon the lapse of restrictions relating to Restricted Stock set
forth in Section 3(b) hereof, and provided that the Grantee shall have
complied with the Grantee's obligations under Section 8 hereof, the
Company shall issue to the Grantee or the Grantee's personal
representative a stock certificate representing one share of Common
Stock, free of the restrictive legend described in Section 3(b) hereof
(but not free of the restrictive legend set forth in Section 3(a) hereof
until the resale of the Restricted Stock has been registered under the
Securities Act or the resale is exempt from registration under the
Securities Act), in exchange for each share of Restricted Stock with
respect to which such restrictions have lapsed. If certificates
representing such Restricted Stock shall have theretofore been delivered
to the Grantee, such certificates shall be returned to the Company,
complete with any necessary signatures or instruments of transfer prior
to the issuance by the Company of such shares of Restricted Stock free
of the restrictive legend described in Section 3(b) hereof.
5. Effect of Certain Changes.
(a) If there is any change in the number or class of shares of
Common Stock through the declaration of stock or cash dividends, or
recapitalization resulting in stock splits, or combinations or exchanges
of such shares, the number or class of shares of such outstanding
Restricted Stock may be proportionately adjusted by the Committee in its
sole discretion to reflect any such change in the number or class of
issued shares of Common Stock; provided, however, that any fractional
shares resulting from any such adjustment shall be eliminated. In the
event of any other extraordinary corporate transaction, including but
not limited to distributions of cash or other property to the Company's
shareholders, the Committee may equitably adjust outstanding Restricted
Stock as it deems appropriate in its sole discretion.
(b) If, while unvested Restricted Stock remains outstanding, the
Company undergoes a "Change in Control" (as defined below), then, from
and after the date of the Change in Control, all the outstanding
Restricted Stock shall vest in full. 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:
<PAGE>
(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 (who
were stockholders immediately prior to the merger, consolidation or
reorganization) on a pro rata basis and is actually received in
respect of or 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 (who were stockholders immediately prior to
the merger, consolidation or reorganization) on a pro rata basis
and is actually received in exchange for the assets 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 person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act"), including any
"person" as such term is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act, but excluding Emerson Radio Corp. and
its Affiliates and Associates, as such terms are defined in Rule
12b-2 under the Exchange Act) 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 20% or more of the then
outstanding securities of the Company which are entitled to vote to
elect any class of Directors;
(iv) During any period of up to two consecutive years,
individuals who at the beginning of such period and any new
director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at
least a majority of the directors then still in office who either
were directors at the beginning of such period or whose
appointment, election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(v) Any occurrence that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A or any
successor rule or regulation promulgated under the Exchange Act.
Notwithstanding any provision to the contrary contained herein, a
Change in Control of the Company shall not be deemed to have occurred as
<PAGE>
the result of any transaction having one or more of the foregoing
effects if such transaction is proposed by, and includes a significant
equity participation (i.e., an aggregate of at least 20% of the then
outstanding common equity securities of the Company immediately after
such transaction which are entitled to vote to elect any class of
Directors) of executive officers of the Company as constituted
immediately prior to the occurrence of such transaction or any Company
employee stock ownership plan or pension plan.
(c) To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive.
(d) Except as expressly provided herein, the Grantee shall have no
rights by reason of any subdivision or consolidation of shares of stock
of any class or the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spin-off of
assets of stock of another corporation; and any issuance by the Company
of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the Restricted Stock. The award
of Restricted Stock pursuant hereto shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to
merge or to consolidate or to dissolve, liquidate or sell, or transfer
all or part of its business or assets.
6. Death, Disability, Termination Without Cause or Constructive
Discharge. If the Grantee shall die while employed by the Company, or
if the Grantee's employment shall terminate by reason of Disability,
termination without Cause or Constructive Discharge (as defined below),
all Restricted Stock theretofore granted to such Grantee shall vest as
of the date of death, Disability, termination without Cause or
Constructive Discharge (as defined below) of the Grantee.
For purposes of this Agreement, "Disability" means Grantee is
unable to perform his assigned duties by reason of illness, injury or
incapacity (other than as a result of abuse of drugs, alcohol and other
substances) for three (3) consecutive months during the term hereof.
(a) For purposes of this Agreement, "Cause" means that Grantee
shall have committed:
(i) an intentional material act of fraud or embezzlement
in connection with his duties or in the course of his
employment with Company;
(ii) an intentional wrongful material damage to property
of Company;
(iii) an intentional wrongful disclosure of material
secret processes or material confidential information of
Company; or
(iv) an intentional and continued failure to perform his
duties as Executive Vice President and Chief Financial
Officer.
<PAGE>
(b) For the purposes of this Agreement, no act or failure to act
on the part of Grantee shall be deemed "intentional" unless done, or
omitted to be done, by the Grantee in bad faith and without reasonable
belief that his action or omission was in the best interest of the
Company.
(c) For the purposes of this Agreement, "Constructive Discharge"
means a change in office, title, or position from that reasonably
associated with being an Executive Vice President and Chief Financial
Officer, other than a promotion; a change in reporting of Grantee to any
person other than the Chairman, Chief Executive Officer, or the Board of
Directors of Company; a required relocation to a location in excess of
thirty (30) miles of Company's current principal location; a reduced
salary; or a material diminution in responsibilities.
7. Termination of Employment. In the event that the Grantee
ceases to be employed by the Company, for any reason other than death,
Disability, termination without Cause or Constructive Discharge prior to
the vesting of the Restricted Stock, all Restricted Stock (with respect
to which the restrictions set forth in Section 3(b) herein have not yet
lapsed) shall thereupon be forfeited by the Grantee. Restricted Stock
forfeited pursuant to the preceding sentence or for any other reason set
forth herein shall be transferred to, and reacquired by, the Company
without payment of any consideration by the Company, and neither the
Grantee nor any of the Grantee's successors, heirs, assigns or personal
representatives shall thereafter have any further rights or interests in
such shares or certificates. If certificates containing restrictive
legends shall have theretofore been delivered to the Grantee or the
Grantee's personal representative, such certificates shall be returned
to the Company, complete with any necessary signatures or instruments of
transfer.
8. Taxes. The Grantee shall pay to the Company promptly upon
request, and in any event at the time the Grantee recognizes taxable
income in respect of the Restricted Stock (or, if the Grantee makes an
election under Section 83(b) of the Code, in connection with such
grant), an amount equal to the taxes the Company determines it is
required to withhold under applicable tax laws with respect to the
Restricted Stock. Such payment shall be made in the form of cash,
shares of Common Stock already owned or otherwise issuable upon the
lapse of restrictions, or in a combination of such methods. The grantee
shall promptly notify the Company of any election made pursuant to
Section 83(b) of the Code. If the Grantee fails to pay, on or before
the date requested by the Company, an amount equal to the taxes the
Company determines it is required to withhold under applicable tax laws
with respect to the Restricted Stock, the Company may elect to withhold
shares of Restricted Stock from the Grantee or prevent or delay the
vesting of shares of Restricted Stock until such amounts are paid to the
Company.
9. Covenants.
(a) From the date of this Agreement and in consideration for
the promises made by Grantee herein, including promises made by
Grantee below, Company promises and agrees to provide Grantee
certain confidential information consistent with the job duties of
an individual in his position including, without limitation,
<PAGE>
customer, supplier, product and distributor lists, trade secrets,
plans, manufacturing techniques, sales, marketing and expansion
strategies, financial records (including business plans, financial
statements, etc.), and technology and processes of Company and/or
its affiliates, as they may exist from time to time, and
information concerning the products, services, production,
development, technology and all technical information, procurement
and sales activities and procedures, promotion and pricing
techniques and credit and financial data concerning customers of,
and suppliers to, Company and/or its affiliates (collectively
"Confidential Information"). In consideration for Company's
promises herein, Grantee acknowledges and agrees that all
Confidential Information previously provided or known to Grantee in
the course of his employment with Company and all such Confidential
Information made available and provided to Grantee pursuant to the
terms of this Agreement will be received in strict confidence and
will be used only for the purposes of performing his duties
pursuant to this Agreement and that no such Confidential
Information will otherwise be used or disclosed by Grantee during
or after the term of this Agreement without the prior written
consent of Company. Grantee acknowledges and agrees that upon
termination of Grantee's employment hereunder for any reason,
Grantee will leave and/or return all Confidential Information and
other documents, records, notebooks, customer lists, mailing lists,
business proposals, contracts, agreements, and other repositories
containing information concerning Company or its financial
condition or business (including all copies thereof) in Grantee's
possession, whether prepared by Grantee or others, will remain with
or be returned to Company. Notwithstanding the foregoing, this
Section shall be inoperative as to any portion of the Confidential
Information that (i) is or becomes generally available to the
public other than as a result of a disclosure by Grantee or (ii)
becomes available to Grantee on a non-confidential basis and not in
contravention of Company's rights or applicable law from a source
(other than Company) which Grantee reasonably believes is entitled
to possess and disclose it.
Grantee acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, financial records
(including, without limitation, budgets, business plans and
financial statements), reports, computers, computer equipment,
computer disks, hard drives, electronic storage devices, books,
procedures, forms, documents, records or paper, or copies thereof,
pertaining to the operations or business of Company made or
received by Grantee or made known to him in any way in connection
with his employment activities or otherwise and any other
Confidential Information are and will be the exclusive property of
Company. Grantee agrees not to copy or remove any of the above
from the premises and custody of Company, or disclose the contents
thereof to any other person or entity except in the ordinary course
of business consistent with Company's policies. Grantee
acknowledges that all such papers and records will at all times be
subject to the control of Company, and Grantee agrees to surrender
the same upon request of Company, and will surrender such no later
than any termination or expiration of this Agreement.
<PAGE>
(b) As an officer and employee with the Company, Grantee may
develop or participate in the development of inventions,
discoveries, improvements or innovations which relate to the
current or reasonably anticipated business activities of the
Company. Grantee acknowledges that the Company remains the sole
owner of any such inventions, discoveries, improvements or
innovations and Grantee agrees to promptly disclose such
developments to his or her immediate supervisor. At the request of
the Company, Grantee agrees to execute any documents and perform
any acts that the Company requires to obtain patent, copyright or
other protection over any such developments.
(c) Grantee covenants and agrees that, during the period
Grantee is employed by Employer, and if Grantee's employment is
terminated for Cause or Grantee resigns for any reason (other than
as a result of a Constructive Discharge), for a period of one year
thereafter, Grantee will not directly or indirectly compete with
Employer in the United States. For the purposes of this Section,
the following terms shall have the meanings indicated below:
(i) The term "compete" shall mean, with respect to the
business of Company, engaging in or attempting to engage in the
direct mail marketing with the use of a catalog of sports related
equipment to institutional customers or any other business which
generates more than 10% of Company revenues at the time of
termination, either alone or with any individual, partnership,
corporation, or association.
(ii) The words "directly or indirectly" as they modify the
word "compete" shall mean: (A) acting as an agent, representative,
consultant, officer, director, or employee of any entity or
enterprise which is competing (as defined herein) with the
business of Company; (B) participating in any such competing
entity or enterprise as an owner, partner, limited partner, joint
venturer, creditor, or stockholder (except as a stockholder holding
less than a five percent (5%) interest in a corporation whose
shares are actively traded on a regional or national securities
exchange or in the over-the-counter market); (C) communicating to
any such competing entity or enterprise any competitive non-public
information concerning any past, present, or identified prospective
client or customer of, or supplier to, Company; (D) soliciting the
customers, distributors, dealers, or independent sales persons of
Company or its Affiliates (as defined in Rule 12b-2 under the
Exchange Act) as of Grantee's termination date; or (E) recruiting,
hiring, or assisting others in recruiting or hiring (collectively
referred to as "Recruiting Activity") any person who is, or within
the 12-month period immediately preceding the date of any such
Recruiting Activity was, an Grantee of Company or its Affiliates.
(iii) Grantee understands and agrees that the scope of
this covenant by Grantee contained in this Section is reasonable as
to time, area, and persons and is necessary to protect the
proprietary and legitimate business interest of the Company, and
but for such covenant by Grantee the Company would not have agreed
to enter into the transactions contemplated by this Agreement.
Grantee agrees that this covenant is reasonable in light of the
compensation and other consideration Company has agreed to provide
Grantee pursuant to this Agreement. It is further agreed that such
covenant will be regarded as divisible and will be operative as to
time, area, and persons to the extent that it may be so operative.
<PAGE>
10. Registration Rights
(a) Upon Grantee's request that the Company effect the
registration or qualification or filing for exemption under applicable
Federal or State law of the Restricted Stock, the Company shall,
subject to the conditions of Section 10.(b), (c), (e) and (f), use its
best efforts to effect any such registration or qualification or filing
for exemption of the Restricted Stock with any governmental authority
under any Federal or State law, and any listing with any securities
exchange, which may be required to permit the offering and sale or other
disposition of any such Restricted Stock that the Grantee proposes to
make upon the effectiveness of such registration, qualification, or
filing for exemption, and the Company shall keep effective such
registration, qualification, or exemption for at least 150 days;
provided, that the Company shall only be required initially to file a
registration statement or qualification application no later than 145
days after any final year end of the Company and at such reasonable time
as it has available for utilization therein the audited consolidated
financial statements of the Company as of the preceding fiscal year end.
(b) The Company's obligation to make any filing under Section
10(a) may be deferred by the Company for an appropriate period (not to
exceed 90 days) if the Company shall in good faith determine that the
registration, qualification, or filing for exemption would have a
material adverse affect on an offering or contemplated offering or a
material acquisition, merger, or other corporate transaction to which
the Company or any of its subsidiaries is, or is expected to be, a party
or any other pending material corporate development.
(c) In addition, the Company shall not be required to take any
action under Section 10(a):
(i) more than once during any period of 12 consecutive
calendar months or more than an aggregate of two (2)
times;
(ii) within 90 days after the effective date of a registration
referred to in Section 10(a) or Section 10(d) pursuant to
which such holder was afforded the opportunity to
register the Restricted Stock under the Securities Act
but declined so to do;
(iii) within 90 days following the execution of an
underwriting agreement with respect to any underwritten
public offering of securities by the Company if the
managing underwriter with respect to such proposed public
offering by the Company advises the Company and the
Grantee in writing that such proposed public offering by
Grantee would impair the public offering by the Company;
provided that if such managing underwriter shall have
advised the Company that a portion of the Restricted
stock as to which registration shall have been requested
could be registered, then such portion shall be
registered;
<PAGE>
(iv) if such action would require the Company to qualify as a
foreign corporation to do business or file a general
consent to service of process in any state or
jurisdiction in which it is not then qualified or as to
which it has not previously filed a general consent to
service of process; or
(v) if filing the registration statement would require a
special audit.
(d) The Company agrees that at any time it proposes to register
the issuance or resale of any of its securities, whether held by third
parties or to be issued by the Company, under the Securities Act on
Form S-1 or any other form of registration statement then available for
the registration under the Securities Act of securities of the Company
(other than a registration statement on Form S-4 or any form of
registration statement not available for general registration of
securities) it shall give written notice to Grantee of its intention so
to do, and upon the written request of the Grantee, given within twenty
(20) days after receipt of any such notice from the Company, the Company
shall in each instance use its best efforts, subject to the next
sentence, to cause all Restricted Stock held by Grantee to be registered
under the Securities Act and registered or qualified under any State
securities law, all to the extent necessary to permit the offering and
sale or other disposition thereof in the manner stated in such request
by the Grantee. If the managing underwriter of a proposed public
offering by the Company shall advise the Company in writing that, in its
opinion, the distribution of some or all of the shares of Restricted
Stock requested to be included in the registration concurrently with the
securities to be offered by the Company would materially impair the
distribution of securities by the Company, then the Company need not
include in such registration any shares that such underwriter believes
would cause such impairment and shall reduce the amount of securities as
to which he requested registration in such manner that the aggregate
number of shares being registered for Grantee does not exceed that
number recommended by such underwriter. Grantee shall in his request
for registration describe the manner of any proposed transfer or
intended method of disposition of such Restricted Stock. Nothing in
this Section shall be deemed to require the Company to (i) proceed with
any registration of its securities after giving the notice herein
provided, or (ii) maintain the effectiveness of any registration
statement for a minimum period of time.
(e) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section that the Grantee
shall furnish to the Company such information regarding him, the
Restricted Stock held by him, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company. If
Grantee refuses to provide the Company with any of such information on
the grounds that it is not necessary to include such information in the
registration statement, the Company may exclude such Grantee's
Restricted Stock from the registration statement, unless Grantee
provides the Company with an opinion of counsel, such opinion to be
reasonably satisfactory to the Company, to the effect that such
information need not be included in the registration statement.
<PAGE>
(f) Notwithstanding anything to the contrary contained herein, the
Company shall have no obligation to register, qualify, or file for
exemption with respect to shares of Restricted Stock in accordance with
this Agreement if counsel to the Company provides an opinion to the
Company and the Grantee that the shares of Restricted Stock requested to
<PAGE>
be registered may be sold in one or more public transactions within a
period of 90 days pursuant to Rule 144 under the Securities Act, or any
successor rule thereto.
(g) In consideration of the performance by the Company of its
obligations under this Agreement, the Grantee agrees in connection with
a registration of the Company's securities that, upon the written
request of the Company or the underwriters managing any underwritten
offering of the Company's securities, the Grantee will not sell, make
any short sale of, lend, grant any option for the purchase of, or
otherwise dispose of, any shares of the Company's Common Stock (other
than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 120 days) from the effective date of
such registration as the Company or the underwriters may specify.
11. No Guarantee of Employment. Nothing set forth herein shall
confer upon the Grantee any right of continued employment for any period
by the Company, or shall interfere in any way with the right of the
Company to terminate such employment.
12. Notices. Any notice required or permitted under this
Agreement shall be deemed given when delivered personally, or when
deposited in a United States Post Office, postage prepaid, addressed, as
appropriate, to the Grantee at the last address specified in Grantee's
employment records, or such other address as the Grantee may designate
in writing to the Company, or to the Company, Attention: Chief Executive
Officer, Sport Supply Group, Inc., 1901 Diplomat Drive, Farmers Branch,
Texas 75234 or such other address as the Company may designate in
writing to the Grantee.
13. Failure To Enforce Not a Waiver. The failure of the Company
to enforce at any time any provision of this Agreement shall in no way
be construed to be a waiver of such provision or of any other provision
hereof.
14. Governing Law. The Agreement shall be governed by and
construed according to the laws of the State of Delaware, without regard
to the conflicts of laws provisions thereof.
<PAGE>
15. Amendments. The Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original but all of which
together shall represent one and the same agreement.
17. Effectiveness. This Agreement and the Restricted Stock
granted hereunder shall not be effective unless and until this Agreement
is executed by both parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year set forth above.
COMPANY:
SPORT SUPPLY GROUP, INC.
By: /s/ Geoffrey P. Jurick
Geoffrey P. Jurick
Chairman of the Board and
Chief Executive Officer
GRANTEE:
/s/ John P. Walker
John P. Walker
NON-COMPETITION, CONFIDENTIALITY AND SEVERANCE AGREEMENT
This Non-Competition, Confidentiality and Severance Agreement (this
"Agreement") is made as of February 15, 1998, by and between Sport
Supply Group, Inc., a Delaware corporation ("Employer"), and Doug Pryor
("Employee").
RECITALS:
WHEREAS, Employee has requested that Employer pay Employee a
specified severance amount if Employee is terminated without cause (as
described in Paragraph 1 below) by Employer;
WHEREAS, Employer has agreed to the severance arrangement described
herein so long as Employee agrees to abide by the terms and provisions
of this Agreement.
WHEREAS, but for Employee's promises and representations made
herein, Employer would not have agreed to the payment of severance as
set forth herein;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the parties to this Agreement agree as
follows:
1. Severance.
Employee acknowledges and agrees that Employee is an employee at
will and may be terminated by Employer at any time with or without cause
(as described below). Notwithstanding the foregoing, in consideration
for the promises made by Employee herein, including but not limited to
Employee's agreement regarding non-competition and nondisclosure of
Confidential Information below, Employer agrees as follows: If Employee
is terminated by Employer without cause, Employer agrees to pay Employee
his then current bi-weekly salary (i.e., happening every two weeks) for
a period of twenty-four (24) bi-weekly periods from the date of
termination (less all amounts required to be deducted or withheld
therefrom and all amounts owed or due by Employee to Employer). In
exchange for Employer's agreement to make such severance payments to
Employee and other promises made by Employer herein, Employee agrees
that upon the termination of his employment without cause he will sign
and deliver to Employer a Release in the form of Exhibit A attached
hereto. If Employee revokes the Release pursuant to Section 4 thereof
or otherwise, Employer shall not be obligated to pay any severance to
Employee.
Employee acknowledges that he shall not be entitled to the
severance payments referenced above (but he will continue to be
obligated by all the provisions that survive termination of this
Agreement, including without limitation Sections 2, 3 and 4) if Employee
(i) dies, (ii) resigns, (iii) is absent from employment or unable to
satisfactorily perform his essential job functions, by reason of
physical or mental illness or disability for more than thirty (30) days
in the aggregate in any twelve (12) month period, or (iv) is terminated
for cause. For the purposes of this Agreement, a discharge "for cause"
shall mean a discharge resulting from a determination by Employer that
Employee: (i) has committed a crime involving moral turpitude, including
fraud, theft or embezzlement; (ii) has failed and/or refused to follow
<PAGE>
the policies, practices, directives, or orders established by Employer's
Board of Directors; (iii) has committed acts of gross negligence or misconduct
to the detriment of Employer; (iv) has been insubordinate and/or has
persistently failed to perform his duties hereunder; or (v) has breached
any of the terms or provisions of this Agreement (including, but not limited
to, a breach of Section 2, 3 or 4 hereof).
Except as set forth in this Section and/or required by federal or
state law, Employer will have no other obligations to Employee if
Employee is terminated with or without cause.
2. Confidentiality
(a) In exchange for and in consideration for the promises made by
Employee herein, including promises made by Employee regarding
noncompetition in Section 3 herein as well as Employee's agreement to
execute the attached Release in the event of Employee's discharge from
employment without cause, Employer promises and agrees to provide
Employee with confidential, nonpublic information (in addition to any
such information previously obtained by Employee in the course of his
employment) consistent with the duties of an individual in Employee's
position, including but not limited to Employer's customer, supplier,
and distributor lists, trade secrets, plans, manufacturing techniques,
sales, marketing and expansion strategies, and technology and processes
of Employer and/or its affiliates, as they may exist from time to time,
and information concerning the products, services, production,
development, technology and all technical information, procurement and
sales activities and procedures, promotion and pricing techniques and
credit and financial data concerning customers of, and suppliers to,
Employer and/or its Affiliates (referred to hereinafter as
"Confidential Information"). Employee acknowledges that such
Confidential Information constitutes valuable, special and unique assets
of the Employer and that his access to and knowledge of the
Confidential Information is essential to the performance of his duties
under this Agreement. In consideration for Employer's promises herein,
Employee agrees that all Confidential Information previously provided or
known to Employee in the course of his employment with Employer and all
such Confidential Information made available and provided to Employee
pursuant to the terms of this Agreement will be considered Confidential
Information owned by Employer and Employee agrees that Employee will not
(i) disclose any Confidential Information to any person or entity other
than in connection with his employment for Employer in accordance with
Employer's policy, or (ii) make use of any Confidential Information for
his own purposes or for the benefit of any other person or entity, other
than Employer. Employee further represents and warrants that, on or
prior to the date of this Agreement, he has not (i) disclosed any
Confidential Information to any person or entity other than in
connection with his employment for Employer in accordance with
Employer's policy or (ii) made use of any Confidential Information for
his own purposes or for the benefit of any other person or entity, other
than Employer.
(b) Employee acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, reports, financial records
(including, without limitation, budgets, business plans and financial
statements), computers, computer equipment, computer disks, hard drives,
electronic storage devices, books, procedures, forms, documents, records
<PAGE>
or paper, or copies thereof, pertaining to the operations or business of
Employer made or received by Employee or made known to him in any way in
connection with his employment and any other Confidential Information
are and will be the exclusive property of Employer. Employee agrees not
to copy or remove any of the above from the premises and custody of
Employer, or disclose the contents thereof to any other person or entity
except in the ordinary course of business consistent with Employer's
policies. Employee acknowledges that all such papers and records will
at all times be subject to the control of Employer, and Employee agrees
to surrender the same upon request of Employer, and will surrender such
no later than any termination of his employment with Employer, whether
voluntary of involuntary.
3. Non-Compete Covenant.
Employee acknowledges that the Confidential Information specified
above is valuable to the Employer and that, therefore, its protection
and maintenance constitutes a legitimate interest to be protected by the
Employer by the enforcement of this covenant not to compete. Therefore,
in consideration for the promises made by Employer herein, including but
not limited to Employer's promises regarding the payment of severance
benefits set forth in Section 1 and the provision of Confidential
Information set forth in Section 2 herein, Employee covenants and agrees
that, (i) during the term of his employment by the Employer (or an
affiliate of Employer) and (ii) for a period commencing upon the
termination of Employee's employment by Employer (or an affiliate of
Employer) and ending upon the first anniversary thereof, Employee will
not, directly or indirectly, either as an individual or as an employer,
employee, consultant, partner, officer, director, shareholder,
substantial investor, trustee, agent, advisor, or consultant or in any
other capacity whatsoever, of any person or entity (other than the
Employer):
(a) conduct or assist others in conducting any business in
any market area in the United States related to the promotion,
marketing, distribution, manufacturing, sourcing, importing and/or sale
of sports related equipment and/or supplies to institutional customers
(including, without limitation, schools, government agencies, military
facilities, athletic clubs, youth sport leagues, recreational
organizations, sporting goods dealers, etc.) or any other business that
generates more than 10% of Employer's revenues at the time of
termination (the "Employer's Business");
(b) recruit, hire, assist others in recruiting or hiring,
discuss employment with or refer to others for employment (collectively
referred to as "Recruiting Activity") any person who is, or within the
24 month period immediately preceding the date of any such Recruiting
Activity was, at any time, an employee of the Employer or its
affiliates; or
(c) (i) communicate to any competing entity or enterprise any
competitive non-public information concerning any past, present or
identified prospective client or customer of, or supplier to, Employer;
or (ii) call on, solicit or hire or attempt to call on, solicit or hire
any of the customers, suppliers, clients, licensors, licensees,
manufacturers, distributors, dealers or independent salespersons of the
Employer or any of its affiliates which are engaged in the Employer's
<PAGE>
Business or that conduct business with Employer in the United States; or
induce, attempt to induce or assist any other person or entity in
inducing or attempting to induce, directly or indirectly, any such
customer, supplier, client, licensor, licensee, manufacturer, dealer,
distributor or independent salesperson to discontinue their relationship
with the Employer or its affiliates.
The existence of any claim or cause of action of Employee against
Employer, or any officer, director, or shareholder of Employer, whether
predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Employer of the covenants of Employee
contained in this Section 3. In addition, the provisions of this
Section 3 shall continue to be binding upon Employee in accordance with
its terms, notwithstanding the termination of Employee for any reason.
If Employee violates any covenant contained in this Section 3 and
Employer brings legal action for injunctive or other relief, Employer
shall not, as a result of the time involved in obtaining the relief, be
deprived of the benefit of the full period of any such covenant.
Accordingly, the covenants of Employee contained in this Section 3
shall be deemed to have durations as specified above, which periods
shall commence upon the later of (i) the termination of Employee's
employment with Employer, and (ii) the date of entry by a court of
competent jurisdiction of a final, non-appealable judgment enforcing the
covenants of Employee in this Section 3. During any period of time in
which Employee is in breach of this covenant not to compete, the parties
agree that the time period of this covenant shall be extended for an
amount of time that Employee is in breach hereof.
Employee understands and agrees that the scope of this covenant
contained in this Section 3 is reasonable as to time, area, and persons
and is necessary to protect the proprietary and legitimate business
interests of the Employer, and but for such covenant the Employer would
not have agreed to enter into the transactions contemplated by this
Agreement. Employee agrees that this covenant is reasonable in light of
the compensation and other benefits Employee has accepted pursuant to
this Agreement. It is further agreed that such covenant will be
regarded as divisible and will be operative as to time, area, and
persons to the extent that it may be so operative. If any part of this
Section is declared invalid, unenforceable, or void as to time, area, or
persons, the validity and enforceability of the remainder will not be
affected. Should a court of competent jurisdiction determine this
covenant unenforceable as written, the parties agree that the court
shall modify this covenant to the extent necessary to make it
enforceable. The alleged breach of any other provision of this
Agreement asserted by Employee shall not be a defense to claims arising
from Employer's enforcement of this covenant.
The provisions of Sections 1, 2, 3 4, 5, 6 and 10 shall survive
any termination or expiration of this Agreement.
4. Proprietary Information. Employee hereby assigns to
Employer all of Employee's right, title and interest to, and shall
promptly disclose to Employer, all ideas, inventions, products,
services, discoveries or improvements (whether or not patentable)
conceived or developed solely or jointly by Employee during the term of
this Agreement (a) which relate to the business or the actual or
<PAGE>
anticipated research or development of Employer, (b) which result from
any work performed by Employee for Employer, or (c) for which equipment,
supplies, facilities or Confidential Information of Employer was used.
Employee agrees to execute any further documents and/or patents that
Employer requests and will otherwise assist Employer (at Employer's
expense) in protecting Employer's rights to such ideas, inventions,
products, services, discoveries or improvements. Employee hereby
appoints Employer as his attorney-in-fact, with full power of
substitution, to execute and deliver such documents or patents on behalf
of Employee. Employee represents to Employer that Employee has not
conceived or reduced to practice any ideas, inventions, products,
services, discoveries or improvements at the time of signing this
Agreement.
5. Injunctive Relief. Each party acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be
inadequate, agrees that each party will be entitled to specific
performance and injunctive and other equitable relief in case of any
breach or attempted breach and agrees not to use as a defense that any
party has an adequate remedy at law. This Agreement shall be
enforceable in a court of equity, or other tribunal with jurisdiction,
by a decree of specific performance, and appropriate injunctive relief
may be applied for and granted in connection herewith. Such remedy
shall not be exclusive and shall be in addition to any other remedies
now or hereafter existing at law or in equity, by statute or otherwise.
No delay or omission in exercising any right or remedy set forth in this
Agreement shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right or
remedy.
6. Binding Nature. The rights and obligations of Employer
under this Agreement will inure to the benefit of and will be binding
upon the successors and assigns of Employer.
7. Confidentiality. Employee further agrees to keep the terms
of this Agreement wholly and completely confidential. Further,
Employee agrees not to disclose the amount, terms, substance, or
contents of this Agreement to any person or persons, excluding only his
spouse, his attorneys, his tax advisors and any government agency to
which he is required by law to reveal the terms of this Agreement.
8. Severability. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, in whole or in part, then
both parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable or void.
The intent and agreement of the parties to this Agreement is that this
Agreement will be deemed amended by modifying and/or reforming any such
illegal, unenforceable or void provision to the extent necessary to make
it legal and enforceable while preserving its intent, or if such is not
possible, by substituting therefor another provision that is legal and
enforceable and achieves the same objectives. Notwithstanding the
foregoing, if the remainder of this Agreement will not be affected by
such declaration or finding and is capable of substantial performance,
then each provision not so affected will be enforced to the extent
permitted by law.
<PAGE>
9. Waiver. No delay or omission by either party to this
Agreement to exercise any right or power under this Agreement will
impair such right or power or be construed as a waiver thereof. A
waiver by either of the parties to this Agreement of any of the
covenants to be performed by the other or any breach thereof will not be
construed to be a waiver of any succeeding breach thereof or of any
other covenant contained in this Agreement. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu
of any other remedies available to either party at law, in equity, or
otherwise.
10. Governing Law. 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.
11. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: If to Employer:
Sport Supply Group, Inc. Sport Supply Group, Inc.
Attention: Doug Pryor Attention: Chief Executive Officer
1901 Diplomat Drive 1901 Diplomat Drive
Farmers Branch, Texas 75234 Farmers Branch, Texas 75234
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
12. Submission to 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. All parties hereto hereby
irrevocably submit to the nonexclusive jurisdiction of the state and
federal courts of the State of Texas and agree and consent 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.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. Assignment. The rights and obligations of Employer may,
without the consent of Employee, be assigned by Employer to any parent,
subsidiary, affiliate, or successor of Employer. Employee may not
assign any of his rights or obligations under this Agreement.
<PAGE>
15. Entire Agreement. This Agreement (along with the Exhibit)
constitutes the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement and there are no
understandings or agreements relative to this Agreement which are not
fully expressed in this Agreement and the Exhibit. All prior or
contemporaneous agreements between the parties with respect to the
subject matter of this Agreement being expressly superseded by this
Agreement and the Exhibit. No change, waiver, or discharge of this
Agreement will be valid unless in writing and signed by the party
against which such change, waiver, or discharge is to be enforced.
16. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to receive from the other its
reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
EMPLOYER:
SPORT SUPPLY GROUP, INC.
By: /s/ Peter S. Blumenfeld
Peter S. Blumenfeld
President and Chief Operating Officer
EMPLOYEE:
/s/ Doug Pryor
Doug Pryor
AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT
THIS AMENDMENT TO STOCK OPTION AGREEMENT (this "Amendment"),
dated to be effective as of January 14, 1998, is by and between John P.
Walker ("Walker") and Sport Supply Group, Inc. ("SSG").
WHEREAS, SSG granted Walker options to acquire an aggregate of
100,000 shares of SSG's Common Stock (collectively referred to herein as
the "Options").
WHEREAS, on October 27, 1997, the Stock Option Committee
unanimously agreed to amend the Options to permit the transferability of
such Options.
WHEREAS, in order to induce Walker to enter into a new employment
agreement with SSG, on January 14, 1998, the Stock Option Committee
determined that it would be in the Company's best interests to further
amend the Options to provide that, in the event of a Change in Control
(as defined in the Stock Option Agreement governing the Options), Walker
could surrender the Options to SSG for cancellation in exchange for an
amount in cash equal to the difference between the exercise price per
share under the Options and the highest closing sale price per share of
SSG's Common Stock during the 360 day calendar period prior to Walker's
election to surrender the Option;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. The third sentence in the first paragraph under Section 2.
"General Provisions", that reads "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." is
deleted in its entirety and replaced by the following:
"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's "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."
The second sentence in the third paragraph under Section 2.
"General Provisions", that reads "After the Optionee's death, this
Option shall be exercised 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." is
deleted in its entirety and replaced by the following:
"After the Optionee's death, this Option shall be exercisable only
by the Optionee's transferee as permitted hereunder, or by the Executor
<PAGE>
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 under the laws of descent and
distribution of the State where the Optionee was domiciled at the date
of death."
The last sentence of the fourth paragraph of Section 3. "Exercise
of Option", that reads "In the event the person exercising the Optionee
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." is hereby deleted in its entirety and replaced
with the following:
"In the event the person exercising the Option is a transferee of
the Optionee, the Exercise Notice shall be accompanied by appropriate
proof (satisfactory to the Company) of the right of such transferee to
exercise the Option."
2. Subject to the terms and provisions of this Amendment, the
Stock Option Agreement governing the Options is hereby amended to
include the following language:
"Notwithstanding the provisions set forth herein, the Optionee may
elect for a period of 180 days following a Change in Control to
surrender to the Company for cancellation all or any part of the
unexercised portion of the Option. In consideration of such surrender
and cancellation, the Optionee shall be entitled to receive for each
share of Common Stock as to which the surrendered portion of the Option
relates an amount in cash equal to the difference between the Option
Price per share under the Option and the highest closing sales price per
share (as reported on the principal stock exchange on which the Common
Stock is traded) of Common Stock during the 360 calendar day period
prior to Optionee's election pursuant to this paragraph."
<PAGE>
3. This Amendment and the Stock Option Agreement governing the
Options between Walker and the Company constitute the entire agreement
between the parties pertaining to the subject matter contained herein
and therein and supersede all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement,
modification or amendment of this Amendment shall be binding unless
signed by the party to be charged therewith.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of January 14, 1998.
SPORT SUPPLY GROUP, INC.
/s/ Geoffrey P. Jurick
Geoffrey P. Jurick
Chairman of the Board and
Chief Executive Officer
/s/ John P. Walker
John P. Walker
AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT
THIS AMENDMENT TO STOCK OPTION AGREEMENT (this "Amendment"),
dated to be effective as of January 14, 1998, is by and between Terrence
M. Babilla ("Babilla") and Sport Supply Group, Inc. ("SSG").
WHEREAS, SSG granted Babilla options to acquire an aggregate of
100,000 shares of SSG's Common Stock (collectively referred to herein as
the "Options").
WHEREAS, in order to induce Babilla to enter into a new employment
agreement with SSG, on January 14, 1998, the Stock Option Committee
determined that it would be in the Company's best interests to amend the
Options to provide that, in the event of a Change in Control (as defined
in the Stock Option Agreement governing the Options), Babilla could
surrender the Options to SSG for cancellation in exchange for an amount
in cash equal to the difference between the exercise price per share
under the Options and the highest closing sale price per share of SSG's
Common Stock during the 360 day calendar period prior to Babilla's
election to surrender the Option;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Subject to the terms and provisions of this Amendment, the
Stock Option Agreement governing the Options is hereby amended to
include the following language:
"Notwithstanding the provisions set forth herein, the Optionee
may elect for a period of 180 days following a Change in Control to
surrender to the Company for cancellation all or any part of the
unexercised portion of the Option. In consideration of such surrender
and cancellation, the Optionee shall be entitled to receive for each
share of Common Stock as to which the surrendered portion of the Option
relates an amount in cash equal to the difference between the Option
Price per share under the Option and the highest closing sales price per
share (as reported on the principal stock exchange on which the Common
Stock is traded) of Common Stock during the 360 calendar day period
prior to Optionee's election pursuant to this paragraph."
2. This Amendment and the Stock Option Agreement governing the
Options between Babilla and the Company constitute the entire agreement
between the parties pertaining to the subject matter contained herein
and therein and supersede all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement,
modification or amendment of this Amendment shall be binding unless
signed by the party to be charged therewith.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of January 14, 1998.
SPORT SUPPLY GROUP, INC.
/s/ Geoffrey P. Jurick
Geoffrey P. Jurick
Chairman of the Board and
Chief Executive Officer
/s/ Terrence M. Babilla
Terrence M. Babilla
AMENDMENT NO. 2 TO STOCK OPTION AGREEMENTS
THIS AMENDMENT NO. 2 TO STOCK OPTION AGREEMENTS (this "Amendment"),
dated to be effective as of January 14, 1998, is by and between Peter S.
Blumenfeld ("Blumenfeld") and Sport Supply Group, Inc. ("SSG").
WHEREAS, SSG granted Blumenfeld options to acquire an aggregate of
299,950 shares of SSG's Common Stock, the terms of which are summarized
on Schedule 1 attached hereto (collectively referred to herein as the
"Options").
WHEREAS, in order to induce Blumenfeld to remain in SSG's employ,
on January 14, 1998, the Stock Option Committee determined that it would
be in the Company's best interests to amend the Options to provide that,
in the event of a Change in Control (as defined below), Blumenfeld could
surrender the Options to SSG for cancellation in exchange for an amount
in cash equal to the difference between the exercise price per share
under the Options and the highest closing sale price per share of SSG's
Common Stock during the 360 day calendar period prior to Blumenfeld's
election to surrender the Option;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Subject to the terms and provisions of this Amendment, the
Stock Option Agreements governing the Options are hereby amended to
include the following language:
"Notwithstanding the provisions set forth herein, the Optionee
may elect for a period of 180 days following a Change in Control
(as defined below) to surrender to the Company for cancellation all
or any part of the unexercised portion of the Option. In
consideration of such surrender and cancellation, the Optionee
shall be entitled to receive for each share of Common Stock as to
which the surrendered portion of the Option relates an amount in
cash equal to the difference between the Option Price per share
under the Option and the highest closing sales price per share (as
reported on the principal stock exchange on which the Common Stock
is traded) of Common Stock during the 360 calendar day period prior
to Optionee's election pursuant to this paragraph."
2. The Stock Option Agreements governing the Options are hereby
amended to include the following language (Note: If these terms were
previously defined in the Option Agreements, the previous definitions
are deleted in their entirety and replaced with the definitions set
forth below):
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
<PAGE>
or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company, Emerson
Radio Corp. and its Affiliates and Associates (including successors and
assigns) or Geoffrey P. Jurick. 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).
<PAGE>
3. This Amendment and the Stock Option Agreements governing the
Options between Blumenfeld and the Company (as previously amended)
constitute the entire agreement between the parties pertaining to the
subject matter contained herein and therein and supersede all prior and
contemporaneous agreements, representations and understandings of the
parties (other than Amendment No. 1). No supplement, modification or
amendment of this Amendment shall be binding unless signed by the party
to be charged therewith.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of January 23, 1998.
SPORT SUPPLY GROUP, INC.
/s/ Geoffrey P. Jurick
Geoffrey P. Jurick
Chairman of the Board and
Chief Executive Officer
/s/ Peter S. Blumenfeld
Peter S. Blumenfeld
<TABLE>
SCHEDULE 1
SUMMARY OF OPTIONS
<CAPTION>
DATE OF EXPIRE NUMBER EXERCISE
GRANT DATE OF OPTIONS PRICE
<S> <C> <C> <C> <C>
02/25/91 02/25/01 110,625[1] $7.50[2]
06/25/91 06/25/01 6,250[1] 4.80
02/07/92 02/07/02 18,750[1] 7.50[2]
12/28/92 12/28/02 14,375[1] 6.90
08/12/93 08/12/03 18,750[1] 7.50[2]
12/27/93 12/27/98 50,000[1] 7.50[2]
05/09/94 05/09/04 25,000 7.50[2]
01/03/95 01/02/05 21,200 7.50[2]
01/23/98 01/22/08 35,000 7.50[2]
TOTAL 299,950
[1] Adjusted for March 10, 1994 5:4 Stock Split
[2] Exercise Price reduced to $7.50 per share pursuant to Amendment
No. 1 to Stock Option Agreements dated to be effective as of
January 23, 1997
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-02-1998
<PERIOD-END> APR-03-1998
<CASH> 1,815,317
<SECURITIES> 0
<RECEIVABLES> 16,731,040
<ALLOWANCES> (1,171,357)
<INVENTORY> 15,528,297
<CURRENT-ASSETS> 37,282,049
<PP&E> 12,364,917
<DEPRECIATION> (7,113,707)
<TOTAL-ASSETS> 57,160,559
<CURRENT-LIABILITIES> 8,395,150
<BONDS> 0
0
0
<COMMON> 91,916
<OTHER-SE> 41,158,699
<TOTAL-LIABILITY-AND-EQUITY> 57,160,559
<SALES> 32,273,245
<TOTAL-REVENUES> 32,273,245
<CGS> 20,124,427
<TOTAL-COSTS> 8,355,008
<OTHER-EXPENSES> 110,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 156,172
<INCOME-PRETAX> 3,748,017
<INCOME-TAX> 1,274,328
<INCOME-CONTINUING> 2,473,689
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,473,689
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.30
</TABLE>
