EMPLOYMENT AGREEMENT
DATED AS OF NOVEMBER 7, 1996
BETWEEN
ACTION PERFORMANCE COMPANIES, INC.
AND
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TABLE OF CONTENTS
Page
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1. Employment........................................ 1
2. Full Time Occupation.............................. 1
3. Compensation and other Benefits................... 1
(a) Salary................................... 1
(b) Bonus.................................... 1
(c) Stock Options............................ 1
(d) Fringe Benefits.......................... 1
(e) Reimbursement............................ 2
4. Term of Employment................................ 2
(a) Employment Term.......................... 2
(b) Termination Under Certain Circumstances.. 2
(c) Result of Termination.................... 2
5. Competition and Confidential Information.......... 2
(a) Interests to be Protected................ 2
(b) Non-Competition.......................... 3
(c) Non-Solicitation of Employees............ 3
(d) Confidential Information................. 3
(e) Return of Books and Papers............... 3
(f) Disclosure of Information................ 4
(g) Assignment............................... 4
(h) Equitable Relief......................... 4
(i) Restrictions Separable................... 4
6. Miscellaneous..................................... 4
(a) Notices.................................. 4
(b) Indulgences.............................. 5
(c) Controlling Law.......................... 5
(d) Binding Nature of Agreement.............. 5
(e) Execution in Counterpart................. 5
(f) Provisions Separable..................... 5
(g) Entire Agreement......................... 5
(h) Paragraph Headings....................... 6
(i) Gender................................... 6
(j) Number of Days........................... 6
7. Successors And Assigns............................ 6
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of the 7th day of November, 1996
by and between ACTION PERFORMANCE COMPANIES, INC., an Arizona corporation
("Employer") and ▇▇▇ ▇▇▇▇▇▇ ("Employee").
Employer's wholly owned subsidiary, SII Acquisition, Inc., an
Arizona corporation ("SII"), has purchased substantially all the assets of
Sports Image, Inc., a North Carolina corporation ("SNC"). Employee served as the
President of SNC prior to the acquisition. SII, which plans to change its
corporate name to Sports Image, Inc., will continue the business of SNC.
Employer desires that Employee serve as President of SII and perform various
other services for Employer and Employee desires to accept such employment upon
the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants set forth in this Agreement, the parties hereto agree as
follows:
1. Employment.
Employer hereby employs Employee, and Employee hereby accepts
such employment, as Vice President of Employer and as President of Employer's
SII subsidiary and in such other capacities and for such other duties and
services of an executive nature as shall from time to time be specified by
Employer.
2. Full Time Occupation.
Employee shall devote Employee's entire business time,
attention, and efforts to the performance of Employee's duties under this
Agreement, shall serve Employer faithfully and diligently, and shall not engage
in any other employment while employed by Employer.
3. Compensation and other Benefits.
(a) Salary. Employer shall pay to Employee, as
compensation for the services rendered by Employee during Employee's employment
under this Agreement, a salary at a rate of $225,000 per annum, to be paid in
equal monthly installments or in such other periodic installments upon which
Employer and Employee mutually agree.
(b) Bonus. Employee shall be eligible to receive an
annual bonus in an amount of up to 30% of Employee's salary with the amount to
be determined by the Board of Directors of Employer based upon such factors as
may be deemed relevant by the directors, including the performance of Employee.
(c) Stock Options and Awards. Employee shall be
granted qualified stock options under Employer's Stock Option Plan to purchase a
total of 50,000 shares of Employer's Common Stock at a price equal to $14.875
per share at any time or from time to time within five years of the date of
grant, such options to vest 60% on the date of grant, 20% on the first
anniversary of the grant, and 20% on the second anniversary of the grant.
(d) Fringe Benefits. Employee shall be entitled to
participate in any group insurance, pension, retirement, vacation, expense
reimbursement, and other plans, programs, or benefits approved by Employer's
Board of Directors and made available from time to time to executive personnel
of Employer generally during the term of Employee's employment hereunder. The
foregoing shall not obligate Employer to adopt or maintain any particular plan,
program, or benefit.
(e) Reimbursement. Employer shall reimburse Employee
for all travel and entertainment expenses and other ordinary and necessary
business expenses incurred by Employee in connection with the business of
Employer and Employee's duties under this Agreement; provided, however, that
Employee shall not incur such expenses in an amount in excess of $5,000 during
any month without written authorization from Employer. The term "business
expenses" shall not include any item not deductible in whole or in part by
Employer for federal income tax purposes. To obtain reimbursement, Employee must
submit to Employer receipts, bills, or sales slips for the expenses incurred.
Reimbursements will be made by Employer monthly within 10 days of presentation
by Employee of satisfactory evidence of the expenses incurred.
4. Term of Employment.
(a) Employment Term. The term of Employee's
employment under this Agreement shall be for a period of three years commencing
on the date of this Agreement and continuing from year to year thereafter,
unless and until terminated by either party giving written notice to the other
not less than 60 days prior to the end of the then-current term of Employee's
employment under this Agreement.
(b) Termination Under Certain Circumstances.
Notwithstanding anything to the contrary herein contained:
(i) Death. Employee's employment shall
automatically terminate, without notice, effective upon the date of Employee's
death.
(ii) Disability. If Employee shall fail, for
a period of more than 60 consecutive days, or for 60 days within any 180-day
period, to perform any of Employee's duties under this Agreement as the result
of illness or other incapacity, Employer, at its option and upon notice to
Employee, may terminate Employee's employment effective on the date of that
notice.
(iii) Unilateral Decision of Employer.
Employer, at its option and upon notice to Employee, may terminate Employee's
employment effective on the date of that notice.
(iv) Unilateral Decision by Employee.
Employee, at his option, may terminate Employee's employment upon 90 days prior
notice to Employer.
(v) Certain Acts. If Employee engages in an
act or acts involving a crime, moral turpitude, fraud, or dishonesty, Employer,
at its option and upon notice to Employee, may terminate Employee's employment
effective on the date of that notice.
(c) Result of Termination. In the event of the
termination of Employee's employment pursuant to Sections 4(b)(i), (ii), or (v)
above, Employee shall receive no further compensation under this Agreement. In
the event of the termination of Employee's employment pursuant to Section
4(b)(iii) above, Employee shall continue to receive Employee's fixed
compensation during the remainder of the then-current term of Employee's
employment under this Agreement prior to such termination if termination is
before the 24th month. After the 24th month and during any renewal term,
Employee shall have a rolling 12 month severance compensation. In the event of
the termination of Employee's employment pursuant to 4(b)(iv) above, Employee
shall be entitled to receive an amount equal to Employee's fixed salary as
provided in Section 3(a) above during the four-month period immediately
following the termination.
5. Competition and Confidential Information.
(a) Interests to be Protected. The parties
acknowledge that Employee will perform essential services for Employer, its
employees, and its stockholders during the term of Employee's employment with
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Employer. Employee will be exposed to, have access to, and work with, a
considerable amount of Confidential Information (as defined below). The parties
also expressly recognize and acknowledge that the personnel of Employer have
been trained by, and are valuable to, Employer and that Employer will incur
substantial recruiting and training expenses if Employer must hire new personnel
or retrain existing personnel to fill vacancies. The parties expressly recognize
that it could seriously impair the goodwill and diminish the value of Employer's
business should Employee compete with Employer in any manner whatsoever. The
parties acknowledge that this covenant has an extended duration; however, they
agree that this covenant is reasonable and it is necessary for the protection of
Employer, its stockholders, and employees. For these and other reasons, and the
fact that there are many other employment opportunities available to Employee if
he should terminate his employment, the parties are in full and complete
agreement that the following restrictive covenants are fair and reasonable and
are entered into freely, voluntarily, and knowingly. Furthermore, each party was
given the opportunity to consult with independent legal counsel before entering
into this Agreement.
(b) Non-Competition. During the term of Employee's
employment with Employer and for the period ending six months after the
termination of Employee's employment with Employer, provided termination is
pursuant to Section 4(b)(iv) (but 12 months if pursuant to Section 4(b)(ii) or
Section 4(b)(v)), Employee shall not (whether directly or indirectly, as owner,
principal, agent, stockholder, director, officer, manager, employee, partner,
participant, or in any other capacity) engage or become financially interested
in any competitive business conducted within the Restricted Territory (as
defined below). As used herein, the term "competitive business" shall mean any
business that sells or provides or attempts to sell or provide products or
services the same as or substantially similar to the products or services sold
or provided by Employer during Employee's employment hereunder, and the term
"Restricted Territory" shall mean any state in which Employer sells products or
provides services during Employee's employment hereunder. If termination of
employment pursuant to Section 4(b)(iii), then this Section is not applicable.
(c) Non-Solicitation of Employees. During the term of
Employee's employment and for a period of 12 months after the termination of
Employee's employment with Employee, regardless of the reason therefor, Employee
shall not directly or indirectly, for himself, or on behalf of, or in
conjunction with, any other person, company, partnership, corporation, or
governmental entity, seek to hire or hire any of Employer's personnel or
employees for the purpose of having any such employee engage in services that
are the same as or similar or related to the services that such employee
provided for Employer.
(d) Confidential Information. Employee shall maintain
in strict secrecy all confidential or trade secret information relating to the
business of Employer (the "Confidential Information") obtained by Employee in
the course of Employee's employment, and Employee shall not, unless first
authorized in writing by Employer, disclose to, or use for Employee's benefit or
for the benefit of, any person, firm, or entity at any time either during or
subsequent to the term of Employee's employment, any Confidential Information,
except as required in the performance of Employee's duties on behalf of
Employer. For purposes hereof, Confidential Information shall include without
limitation any materials, trade secrets, knowledge, or information with respect
to management, operational, or investment policies and practices of Employer;
any business methods or forms; any names or addresses of customers or data on
customers or suppliers; and any business policies or other information relating
to or dealing with the management, operational, or investment policies or
practices of Employer.
(e) Return of Books and Papers. Upon the termination
of Employee's employment with Employer for any reason, Employee shall deliver
promptly to Employer all files, lists, books, records, manuals, memoranda,
drawings, and specifications; all cost, pricing, and other financial data; all
other written or printed materials that are the property of Employer (and any
copies of them); and all other materials that may contain Confidential
Information relating to the business of Employer, which Employee may then have
in Employee's possession, whether prepared by Employee or not.
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(f) Disclosure of Information. Employee shall
disclose promptly to Employer, or its nominee, any and all ideas, designs,
processes, and improvements of any kind relating to the business of Employer,
whether patentable or not, conceived or made by Employee, either alone or
jointly with others, during working hours or otherwise, during the entire period
of Employee's employment with Employer or within six months thereafter.
(g) Assignment. Employee hereby assigns to Employer
or its nominee, the entire right, title, and interest in and to all inventions,
discoveries, and improvements, whether patentable or not, that Employee may
conceive or make during Employee's employment with Employer, or within six
months thereafter, and which relate to the business of Employer.
(h) Equitable Relief. In the event a violation of any
of the restrictions contained in this Section is established, Employer shall be
entitled to preliminary and permanent injunctive relief as well as damages and
an equitable accounting of all earnings, profits, and other benefits arising
from such violation, which right shall be cumulative and in addition to any
other rights or remedies to which Employer may be entitled. In the event of a
violation of any provision of subsection (b), (c), (f), or (g) of this Section,
the period for which those provisions would remain in effect shall be extended
for a period of time equal to that period beginning when such violation
commenced and ending when the activities constituting such violation shall have
been finally terminated in good faith.
(i) Restrictions Separable. If the scope of any
provision of this Agreement (whether in this Section 5 or otherwise) is found by
a Court to be too broad to permit enforcement to its full extent, then such
provision shall be enforced to the maximum extent permitted by law. The parties
agree that the scope of any provision of this Agreement may be modified by a
judge in any proceeding to enforce this Agreement, so that such provision can be
enforced to the maximum extent permitted by law. Each and every restriction set
forth in this Section 5 is independent and severable from the others, and no
such restriction shall be rendered unenforceable by virtue of the fact that, for
any reason, any other or others of them may be unenforceable in whole or in
part.
6. Miscellaneous.
(a) Notices. All notices, requests, demands, and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made, and received (i) if
personally delivered, on the date of delivery, (ii) if by facsimile
transmission, upon receipt, (iii) if mailed, three days after deposit in the
United States mail, registered or certified, return receipt requested, postage
prepaid, and addressed as provided below, or (iv) if by a courier delivery
service providing overnight or "next-day" delivery, on the next business day
after deposit with such service addressed as follows:
(1) If to Employer:
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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with a copy given in the manner
prescribed above, to:
▇'▇▇▇▇▇▇, Cavanagh, Anderson,
▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(2) If to Employee:
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with a copy given in the manner
prescribed above, to:
Gray, Layton, Drum, Kersh, Solomon,
▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 6 for the giving of notice.
(b) Indulgences; Waivers. Neither any failure nor any
delay on the part of either party to exercise any right, remedy, power, or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power, or privilege preclude
any other or further exercise of the same or of any other right, remedy, power,
or privilege, nor shall any waiver of any right, remedy, power, or privilege
with respect to any occurrence be construed as a waiver of such right, remedy,
power, or privilege with respect to any other occurrence. No waiver shall be
binding unless executed in writing by the party making the waiver.
(c) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement, shall be
governed by and construed in accordance with the laws of the state of Arizona,
notwithstanding any Arizona or other conflict-of-interest provisions to the
contrary.
(d) Binding Nature of Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, and assigns, except that
no party may assign or transfer such party's rights or obligations under this
Agreement without the prior written consent of the other party.
(e) Execution in Counterpart. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as the
signatories.
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(f) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
(g) Entire Agreement. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings, inducements and conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
(h) Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
(i) Gender. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine,
or neuter, as the context requires.
(j) Number of Days. In computing the number of days
for purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays, and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday, or holiday, then the final day shall be
deemed to be the next day that is not a Saturday, Sunday, or holiday.
7. Successors And Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto;
provided that because the obligations of Employee hereunder involve the
performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement successors and assigns shall include,
but not be limited to, any individual, corporation, trust, partnership, or other
entity that acquires a majority of the stock or assets of Employer by sale,
merger, consolidation, liquidation, or other form of transfer. Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of Employer to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Employer would be required to
perform it if no such succession had taken place. Without limiting the
foregoing, unless the context otherwise requires, the term "Employer" includes
all subsidiaries of Employer including SII.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ACTION PERFORMANCE COMPANIES, INC.
By:_____________________________________
Its:____________________________________
________________________________________
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