1
EXHIBIT 99.3
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement"), dated as of January 9, 1998,
and effective as of the termination of the Initial Term as defined in that
certain letter agreement between Consultant and Sportmart (as "Consultant" and
"Sportmart" are hereinafter defined) of even date herewith and attached as
Exhibit A hereto ("Effective Date"), is by and between Xxxx X. Xxxxxxxxxx
(''Consultant''), on the one hand and Gart Bros. Sporting Goods Company, a
Delaware corporation ("Sporting") and Sportmart, Inc., a Delaware corporation
("Sportmart" and collectively with Sporting, the "Company"), on the other hand.
RECITAL
Consultant has been employed by Sportmart as Chief Operating Officer
and Secretary. Sporting is a wholly owned subsidiary of Gart Sports Company, a
Delaware corporation ("Holdings") and, effective January 9, 1998, Sportmart
also became a wholly owned subsidiary of Holdings. In recognition of the
unique value the Consultant can provide to the Company, the Company wishes to
retain Consultant, and the Consultant wishes to provide consulting services to
the Company, on the terms and conditions of this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants in this
Agreement, the parties agree as follows:
1. Consulting Arrangement. During the Consulting Term,
Consultant shall be available from time to time at mutually acceptable times
and on an as needed basis (for up to but no more than 80 hours per month for
the first three (3) months of the Consulting Term, as hereafter defined, and
for up to but no more than 30 hours per month thereafter) to advise Company
with respect to strategic issues, planning, acquisition, merchandising,
strategies and operational issues. Consultant may render such consulting
services either in person or by telephone. Consultant may provide these
consulting services from any location and need not reside within any specific
geographic area. Consultant will not be required to perform the consulting
services during any period that Consultant is, in the Consultant's physician's
sole opinion, physically or mentally unable to perform such consulting services
without significant hardship.
2. Term. The term of Consultant's consulting arrangement
("Consulting Term") shall commence on the Effective Date of this Agreement and
shall continue for a one year period terminating on the first anniversary of
the Effective Date unless terminated before such date to the extent provided by
and in accordance with the provisions of Section 4 of this Agreement.
3. Compensation and Related Matters. During the Consulting Term,
Consultant shall receive the following compensation and benefits:
(a) Consulting Payments. During the Consulting Term, the Company
shall pay to Consultant an amount equal to fifty percent (50%)
of Consultant's annual base salary from Sportmart as in effect
on September 26, 1997 ("Total Cash Compensation") in equal
bi-weekly periodic installments. Consulting payments under
this Agreement shall continue to be paid during any period
that consulting services are not required to be performed
pursuant to Section 1 hereof due to physical or mental
inability as described therein.
(b) Medical Benefits. During the Consulting Term, the Company
shall provide Consultant and his dependents with medical
insurance coverage upon terms which, taken as a whole, are no
less favorable to Consultant than the medical insurance
provided Consultant by Sportmart immediately prior to the
commencement of the Consulting Term unless any of the benefits
provided to comparable consultants (other than Xxxxx X.
Xxxxxxxx) by the Company would be significantly more favorable
to the Consultant in which event such more favorable benefits
will be provided as soon as reasonably practicable. At the
end of the one-year Consulting Term provided under
2
Section 2 above, Consultant and Consultant's dependents shall
have the right and the Company shall have the obligation to
continue medical insurance coverage in accordance with the
requirements of Section 4980B(f) of the Internal Revenue Code
of 1986, as amended, or any successor provision thereto, as if
Consultant had been an executive employee of the Company
covered under a group health insurance plan maintained by the
Company and such medical insurance coverage terminated at the
end of such one-year Consulting Term. During the first six
months of the period covered in the preceding sentence, the
Company shall pay the premiums for such continued coverage.
(c) Automobile. Within thirty (30) days after the Effective Date,
Consultant may elect to purchase in cash, at the greater of
$100.00 or book value as of the Effective Date, the
automobile provided to him by Sportmart immediately prior to
the Effective Date.
(d) Expenses. The Company shall reimburse Consultant for all
reasonable expenses he incurs in connection with the
performance of the consulting services under this Agreement.
4. Termination of Consulting Term. The Consulting Term shall
terminate prior to the first anniversary of the Effective Date under either of
the circumstances set forth in (a) or (b) below:
(a) Termination Due to Consultant's Death. The Consulting Term
shall terminate upon Consultant's death. The Company shall
pay a death benefit upon the Consultant's death in an amount
equal to the portion of the Total Cash Compensation which
remains to be paid under this Agreement. The death benefit
shall be paid to the beneficiary designated by the Consultant
for purposes of this Agreement or, in the event the Consultant
has not designated a beneficiary, or such beneficiary
predeceases the Consultant, to the Consultant's estate.
(b) Termination Due to Consultant's Disability. If, in the sole
opinion of Consultant's physician, as a result of physical or
mental illness or injury, Consultant is unable to render
consulting services of substantially the kind, nature, and
extent required under this Agreement, and such inability is
expected in the sole opinion of Consultant's physician to
continue for at least six (6) months, Consultant may terminate
the Consulting Term for "Permanent Disability." Effective upon
termination of the Consulting Term due to Permanent
Disability, Consultant shall receive the portion of the Total
Cash Compensation which remains to be paid under this
Agreement.
(c) Continued Medical Benefits. Notwithstanding the provisions of
this Section 4, the medical benefits provisions of the first
sentence of Section 3(b) will stay in effect for the remainder
of the one-year Consulting Term and, thereafter, will continue
as provided in the second and third sentences thereof.
5. Severance Benefits. Anything herein to the contrary
notwithstanding, in executing and accepting the terms of this Agreement, the
Company agrees to pay to Consultant a severance benefit of 18 months salary at
Consultant's annual base salary level as in effect on September 26, 1997. The
payment will be due and payable in equal monthly installments over 18 months
beginning on the date he receives his first payment of Total Cash Compensation.
In executing and accepting the terms of this Agreement, the Consultant hereby
waives any comparable severance benefits to which he would otherwise be
entitled under the Sportmart, Inc. Severance Plan.
6. Other Benefits. Except as provided in Section 5, this
Agreement is not in derogation of any other benefits which may be due
Consultant with respect to his employment with Sportmart prior to the
commencement of the Consulting Term.
7. Notices. Any notice required or permitted under this
Agreement shall be in writing and shall be delivered personally or by next-day
courier or telecopied with confirmation of receipt, if to Company, at 0000
Xxxxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxx; and, if to Consultant
at: 0000 Xxxxxxxx Xxxx, Xxxxxxxx
0
Xxxx, XX 00000. The Company or the Consultant may direct in writing that any
notice to the Company or the Consultant, respectively, shall be delivered at
another address.
8. Successors. The obligations under this Agreement shall be
binding on each of the Company's subsidiaries and successors in interest.
9. Nonalienation of Benefits. Benefits payable under this
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, either voluntary or involuntary, and any such attempt to
dispose of any right to benefits payable hereunder shall be void.
10. Governing Law. This Agreement shall be governed by Colorado
law in effect at the time of construction. The invalidity or unenforceability,
in whole or in part, of any provision of this Agreement shall not affect the
validity or enforceability of any other provision.
11. Non-Employee. Consultant's relationship with the Company is
that of an independent contractor and not an employee of the Company.
12. Separate and Independent Obligations. The obligations of
Consultant and the Company hereunder are deemed to be separate and independent
of each other. For example, the obligations of the Company to make severance
and Total Cash Compensation payments and provide medical benefits will continue
regardless of any breach or alleged breach of Consultant's obligations
hereunder.
13. Joint and Several Liability. The obligations and liabilities
of Sporting and Sportmart hereunder are joint and several and each shall be a
primary obligor under this Agreement and not merely a surety. No corporate
reorganization, merger, sale of assets or comparable changes to, actions or
proceedings against or releases or changes in financial condition of either
Sporting or Sportmart will effect the liability of the other hereunder.
14. Miscellaneous. This Agreement contains the parties' entire
agreement with respect to its subject matter and supersedes all prior
agreements and understandings with respect to its subject matter. No
modification of this Agreement shall be binding unless in writing and signed by
all parties.
Consultant Gart Bros. Sporting Goods Company
By:
------------------------------ ------------------------------
XXXX X. XXXXXXXXXX
Its:
---------------------------
Sportmart, Inc.
By:
------------------------------
Its:
---------------------------
4
SPORTMART, INC.
January 9, 1998
Mr. Xxxx Xxxxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
Dear Xxxx:
This letter is to confirm our desire that, following completion of the
merger of GB Acquisition, Inc. into Sportmart, Inc., you will provide
consulting services to Sportmart, Inc. on a full-time basis for a period of
time as provided in the next paragraph before beginning your consulting on the
terms contained in the Consulting Agreement dated as of January 9, 1998 between
you, Sportmart and Sporting (the "Consulting Agreement"). Defined terms will
have the meanings ascribed to them in the Consulting Agreement unless otherwise
defined herein.
You shall provide such services on a full-time basis to Sportmart
through the earlier of (a) termination by you or Sportmart on or after April 1,
1998 and upon two weeks' notice, in each case with or without cause, or (b)
upon your death or disability ("Initial Term"). At the end of the Initial
Term, the Consulting Term will begin and the terms contained in the Consulting
Agreement will apply. During the Initial Term, you will be paid on the basis
of your full annual salary as in effect on September 26, 1997, and you will
continue to receive all benefits, including (without limitation) vacation, car
allowance and medical benefits, which you received at such time unless any of
the benefits provided to comparable persons by Sporting are significantly more
favorable in which case such more favorable benefits will be provided to you as
soon as reasonably practicable.
During the Initial Term, your duties will consist of assisting in the
operation of Sportmart stores and assisting in any transitional issues relating
to the merger, and you will report to the Chief Financial Officer of Sportmart.
You will not be required to relocate as a condition to your consultancy.
Furthermore, you will not be an officer of Sportmart, Sporting or Holdings nor
will you perform policy-making functions for any of such entities. The
relationship created hereby is that of independent contractor and not that of
employer/employee.
This letter agreement is in lieu of and supersedes all other prior
discussions, agreements or understandings, both written or oral, relating to
the subject matter contained herein.
If the foregoing is consistent with your understanding of our
agreement, please indicate your acceptance below.
Sportmart, Inc.
By:
------------------------------------
Its:
----------------------------
ACCEPTED AND AGREED TO
this ____ day of January, 1998.
------------------------------------
Xxxx X. Xxxxxxxxxx
