EXHIBIT 10.5
CONSULTING AGREEMENT
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THIS CONSULTING AGREEMENT ("Agreement") is made and entered into this 16th
day of January, 1998, by and between JUMBOSPORTS INC., A Florida corporation
(hereinafter called "Client"), and Xxxx Xxxx - Raintree Partners, Inc.
(hereinafter called "Consultant").
WHEREAS, Client desires to establish a consulting agreement with
Consultant, and Consultant desires to accept this assignment, subject to the
terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound thereby, agree as follows:
WITNESSETH:
1. CONSULTING. Client hereby agrees to hire Consultant, and Consultant
hereby accepts assignment with Client upon the terms and conditions hereinafter
set forth (such period of time being hereinafter referred to as the "Initial
Term").
2. TERM.
(a) INITIAL TERM. Subject to the provisions of termination of the
cons15 ulting relationship as hereinafter provided, the term of
this Agreement shall commence on January 16, 1998 (the "Start
Date") and shall terminate on January 15, 1999.
(b) AUTOMATIC RENEWAL. Subject to the termination provisions hereof,
on each anniversary of the Start Date, this Agreement shall
automatically renew for an additional one (1) year term, unless
either party has provided to the other party hereto, at least 30
days prior to the anniversary of the Start Date, written notice
of an intention not to renew this Agreement.
3. DUTIES. The Consultant is engaged as the Client's Chief Executive
Officer and shall have such duties, responsibilities and accommodations as the
Client's Board of Directors shall designate to that position, together with such
other duties as are consistent with such position and may be assigned to him,
from time to time, by the Board of Directors of Client.
4. EXTENT OF SERVICE. Consultant shall devote an appropriate amount of
his working time, as established in agreement with the Board of Directors and
will devote his energy and attention to his duties in connection with Client,
provided that the Consultant may (i) make passive investments in entities which
are not publicly traded and which are not competitive with the client or
suppliers of goods or services to Client, (ii) own up to 2% of the outstanding
equity securities of any entity which is publicly traded on a national
securities exchange or on the NASDAQ Stock Market, and (iii) with the approval
of the Board of Directors, serve on boards of non-competing companies or engage
in activities of a community, civic or public interest nature.
5. FEES AND BENEFITS. During the term of this Agreement, Client shall pay
to Raintree Partners, Inc. the following fees and benefits:
(a) ANNUAL CONSULTING FEE. During the period from the Start Date
through January 15, 1999, an annual fee of no less than $300,000
U.S., provided that the Board of Directors in its sole discretion
may increase such consulting fee at any time during the term of
this Agreement and upon such increase the increased fee shall
become the new Annual Consulting Fee from the effective date of
such increase forward;
(b) STOCK OPTION GRANTS FOR 1998. In addition to the Annual
Consulting Fee set forth in subsection (a) above, the Client
shall grant, effective as of the same date as this Agreement,
stock options to purchase 200,000 shares of the Client's stock
(the "1998 Option") all of which options to purchase 200,000
shares of Client's stock shall be designated as nonqualified
options. Such stock options shall be granted to Consultant in
accordance with Client's 1989 Stock Incentive Plan, will be
exercisable for ten years from the date of grant and the exercise
price will be $1.125 per share (which was the closing price of
the Client's shares on the New York Stock Exchange on the day
Consultant began consulting with the Client). The 1998 Options
will vest as follows: options to purchase 100,000 shares will
vest immediately, and additional options to purchase 50,000
shares will vest on July 16, 1998 and additional options to
purchase 50,000 shares will vest on January 16, 1999.
(c) OPTIONS GRANTED SUBJECT TO PLAN AVAILABILITY. The parties hereto
acknowledge that there currently may not be a sufficient number
of shares of the Client's Common Stock reserved under the 1989
Plan to cover the options which the Client has agreed to grant to
Consultant under this Agreement. The Client hereby agrees to
increase the number of shares available under the 1989 Plan to
cover such options or to adopt one, or more than one, new stock
option plan that has a sufficient number of shares to cover such
options on a timely basis and to take all reasonable steps to
qualify such plan and such options for an exemption under Rule
16b-3 of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or any successor to such rule.
6. TERMINATION OF CONSULTING AGREEMENT.
(a)TERMINATION OF CONSULTING AGREEMENT WITH OR WITHOUT Cause. The
foregoing notwithstanding, this Agreement is not to be considered an
agreement for a fixed term or as a guarantee of a continuing or
permanent Consultant/Client relationship. Accordingly, subject to
the provisions of Sections 7 and 8 hereof, Consultant's agreement
may be terminated by Client with or without cause (as hereinafter
defined) upon immediate written notice to Consultant at any time
during the term of this Agreement. Additionally, _____ Consultant's
____ agreement ____ shall automatically terminate upon his death or
upon a determination that he is permanently disabled. Consultant may
terminate his agreement at any time upon 30 days' written notice to
Client. Upon any such termination, Consultant shall immediately
return any and all property and records belonging to Client which
are in Consultant's possession and shall vacate Client's offices in
a prompt and professional manner.
(b)TRANSITION SERVICES. Upon a termination of agreement, whether by
Consultant or by Client, with or without Cause, Consultant shall
cooperate with Client in order to insure an orderly and businesslike
transfer of Consultant's duties to other personnel designated by the
Client. Additionally, Consultant shall make himself available at
reasonable times upon reasonable notice to consult with Client and
assist Client with respect to (i) any matters for which Client
requests such assistance for a period of ninety (90) days after such
termination of agreement, and (ii) any litigation or governmental or
quasi-governmental agency investigation which may be pending at the
time of termination or implemented after termination which relates
to any period during which Consultant was employed by Client. In
such case, Client shall reimburse Consultant for any reasonable
out-of-pocket expense incurred by Consultant at Client's request in
connection with such consultation or assistance, and with respect to
(ii), Client shall schedule such consultation at time which will not
interfere with any subsequent employment or consulting agreement
which Consultant has obtained and such consultation shall not
require more than an average of two days per month without
Consultant's consent.
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7. CHANGE OF CONTROL BENEFITS. If Client should, during the term of this
Agreement, be acquired (see 7(a) definition of "Change of Control) and the Board
of Directors deem the acquisition or change of control to be "friendly", this
Agreement will be terminated immediately with no additional payment or benefit
(other than immediate vesting of any unvested stock options) required on the
part of Client. Conversely, if the acquisition (change of control) is deemed by
the Board of Directors to be "unfriendly", Consultant (Raintree Partners, Inc.)
will receive a lump sum payment of $300,000 (a "Change of Control" benefit).
(a) the term "Change of Control" means the first to occur of:
(i) the cumulative acquisition by any person (as that term is
defined in Section 13 (d) and 14 (d)(2) of the Securities
Exchange Act of 1934, as amended, but excluding Client, any
wholly owned subsidiary of Client or any employee benefit
plan of Client) during the term of this Agreement of
twenty-five percent or more of the voting securities of
Client either directly or indirectly. For purposes of this
determination, the attribution provisions of Section 318 of
the Code, as amended, shall be used to determine the voting
stock indirectly owned by a person; or
(ii) any transaction or series or transactions (including but
not limited to any tender offer, exchange offer, merger or
other business combination, sale of assets or other similar
transaction) occurring during the term of this Agreement,
the result of which is that less than a majority of the
combined voting power of the then outstanding securities of
the Client or any successor to the Client resulting from
such transaction or series of transactions are held in the
aggregate by holders of the Client's securities entitled to
vote generally in the election of directors of Client
immediately prior to such transaction or the beginning of
the series of transactions; or
(iii) during the period of this Agreement, individuals who at the
date of execution of this Agreement constitute the Board of
Directors of the Client cease for any reason to constitute
at least a majority of the Board of Directors of the
Client, unless the election, or the nomination for election
by the Client's stockholders, of each successor to such
director or each additional director elected during the
term of this agreement was approved by a vote of at least
two-thirds of the directors still in office who were
directors of the Client at the date of this Agreement and
those who were nominated and elected by such directors in
compliance with this provision.
8. EFFECT OF TERMINATION WITHOUT CAUSE OR CHANGE OF CONTROL ON OPTIONS AND
EXCISE TAXES.
(a) OPTIONS. In the event of a Change of Control or Client's
termination of Consultant's agreement without cause, all options
granted to Consultant prior to such Change of Control or
termination without cause shall immediately vest and be
exercisable by Consultant, regardless of Consultant's agreement
or termination of the agreement with Client.
(b) EXCISE TAX. In the event that any payment to be received by the
Consultant in connection with a Change of Control of Client or
the termination of his agreement by Client would be subject to an
excise tax pursuant to Section 4999 of the Code, whether in whole
or in part , as a result of being an "excess parachute payment"
with the meaning of such term in Section 2806(b) of the Code the
amount payable under this subparagraph
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(c) shall be reduced so that no portion of such payment or the
value of such acceleration rights is subject to excise tax
pursuant to Section 4999 of the Code. If the amount necessary to
eliminate such excise tax exceeds the amount otherwise payable
under this Section 11 (c), no payment shall be made under this
paragraph and no further adjustment shall be made.
Notwithstanding the preceding sentence, (a) no portion of such
payment or any acceleration right which tax counsel, selected by
Client's independent auditors and acceptable to Consultant,
determines not to constitute a "parachute payment" within the
meaning of Section 2806 (b)(2) of the Code will be taken into
account and (b) no portion of the total of Consultant's
Consulting Fee which tax counsel selected by Client's independent
auditors and acceptable to the Consultant determines to be
reasonable compensation for services rendered within the meaning
of Section 2806 (b) (4) of the Code will be taken into account.
9. NON-COMPETITION AND TIME RESTRICTED ACTIVITIES. During the term of this
Agreement and for a period of one year after the termination of the Consultant's
agreement hereunder (the "Restricted Period"), without the written consent of
the Client, Consultant shall not either directly or indirectly:
(a) engage (whether for his own account or as a partner, joint
venture, consultant, consultant, agent, contractor, officer,
director or shareholder or otherwise) in any business which
opera15 tes a retail sporting goods store located within a
50-mile radius of any retail sporting goods store operated by the
Client while Consultant was hired by Client, provided that the
foregoing shall not be deemed to prohibit Consultant from
purchasing and owning securities of a client traded on a national
securities exchange or on the NASDAQ Stock Market with which
Consultant has no relationship so long as such ownership does not
exceed 2% of the outstanding stock of such client. For purposes
of the foregoing, a retail sporting goods store shall be deemed
to be any store which sells sporting goods as its principal
business regardless of the format or size of the store or the
variety of the sporting goods offered for sale; or
(b) solicit, contact or encourage (i) any person who is an exempt
consultant of the Client or of any division or subsidiary of the
Client or (ii) any supplier, vendor, agent or consultant to the
Client, to terminate its, his, or her relationship with the
Client.
(c) make any derogatory, defamatory or negative statement about the
Client or any of its officers, directors, or consultants to the
press, to any part of the investment community, to the public, or
to any person connected with employed by or having a relationship
to the Client, provided that nothing contained herein shall be
deemed to prohibit full and xxxxx discussions of the Client and
its subsidiaries and its affairs in any Board of Directors
meeting of the Client;
(d) willfully interfere with or disrupt the Client's operations; or
(e) assist, advise or provide information or support, whether
financial or otherwise, to any person in connection with any
proxy contest, action by written consent or vote, the purpose of
which is to elect a director or slate of directors who were not
nominated by the then sitting Board of Directors of the Client,
provided, however, that nothing contained herein shall require
the Consultant to vote any shares held by him in any particular
manner.
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10. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS. While
hired as Consultant by Client and after termination of such agreement for the
Applicable period as defined below, Consultant shall not disclose, either
directly or indirectly, any Confidential Information or Trade Secrets to any
other person or otherwise use such Confidential Information or Trade Secrets for
any purpose except in connection with his consulting agreement with the Client.
For purposes of the foregoing, the term Trade Secret has the meaning ascribed
thereto in Section 688.002(4), Florida Statutes, or any revision or successor
thereto, and Confidential Information means any technical or nontechnical data,
formula, pattern, compilation, program, devise, method, technique, drawing,
process, know-how, financial data, financial plan, marketing plan, expansion
plan, cost analysis, list of suppliers or consultants, or consultants or other
proprietary information which is proprietary, secret and confidential and is not
readily and legally available to the public from sources other than the Client
which is not classified as a Trade Secret. The term "Applicable Period" shall
mean two years with respect to disclosure of Confidential Information and the
period during which a claim may be brought under Florida Statues Chapter 688 or
any revision or successor thereto with respect to disclosure of Trade Secrets.
11. SPECIAL INTERPRETIVE AND ENFORCEMENT PROVISION. The prohibited
activities set forth in Sections 9 and 10 above are herein defined as
"Restricted Activities" and the covenants set forth therein are herein defined
as "Restrictive Covenants". If a court determines that any Restricted Activity
is not enforceable or is unreasonable, arbitrary or against public policy, the
Restricted Activity and the related Restrictive Covenant shall be considered
divisible both as to time and geographic area, if applicable, so that the Client
shall be authorized to enforce such Restrictive Covenant for such lesser time
and if applicable lesser geographic area as the court determines to be
reasonable, non-arbitrary and not against public policy. In the event of a
breach or violation or threatened breach or violation by Consultant of the
provisions of any of these Restrictive Covenants, Client shall be entitled to an
injunction (without the provision of bond by Client) restraining Consultant from
directly or indirectly engaging in the Restrictive Activities in breach or
violation of these Restrictive Covenants, and restraining Consultant from
rendering any services to or participating with any person, firm, corporation,
association, partnership, venture or other entity which would constitute a
violation of a Restrictive Covenant. Nothing herein shall be construed as
prohibiting Client from pursuing any other remedies available to it by law or by
this Agreement for breach, violation or threatened breach or violation of the
provisions of these Restrictive Covenants, including, by way of illustration and
not by way of limitation, the recovery of damages from Consultant or any other
person, firm, corporation or entity. The provisions of these Restrictive
Covenants shall survive the termination of this Agreement for the purpose of
providing Client with the protection of the covenants of Consultant provided
herein. Should an action have to be brought by Client against Consultant to
enforce the Restrictive Covenants of Section 9, the period of restriction
applicable to such covenant shall be deemed to begin running on the date of
entry of an order granting Client preliminary injunctive relief and shall
continue uninterrupted for the original intended period of two years. Consultant
acknowledges and agrees that the intent and purpose of the Restrictive Covenants
in Section 10 is to preclude Consultant from engaging in the Restrictive
Activities for a full two years and that such purpose and effect would be
frustrated by measuring the period of restriction from the date of termination
of Consultant's employment where Consultant failed to honor these Restrictive
Covenants until directed to do so by court order.
12. CESSATION OF BENEFITS. In the event that (i) Consultant materially
breaches Consultant's agreements contained herein prior to a Change of Control
benefit becomes payable hereunder and such breach is not cured to Client's
satisfaction within ten (10) days of written notice thereof, (ii) Consultant
asserts in any litigation that the Restrictive Covenants or the Consultant
Release is unenforceable for any reason, or (iii) facts come to the attention of
the Client which prove Consultant, while hired by Client, was guilty or
committing an act involving embezzlement, misappropriation, theft or fraud, in
addition to any other remedy which Client may have as a result thereof, Client
shall be entitled to withhold any Change of Control benefit unpaid to the
Consultant at that point.
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13. NOTICES. Any notices, consents, approvals or waivers which are to be
given to any party to this Agreement by any other party or parties to this
Agreement shall be in writing, shall be properly addressed to the party to whom
such notice is directed and shall be either actually delivered to such party or
sent by United States mail, return receipt requested. Notices shall be addressed
to the parties as follows:
NAME ADDRESS
---- -------
Client JumboSports Inc.
0000 Xxxx Xxxxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Consultant Xxxx Xxxx - Raintree Partners, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
14. LITIGATION FORUM The parties hereto agree that this Agreement shall be
deemed for all purposes to have been entered into in Hillsborough County,
Florida. The parties hereto agree that all actions or proceedings, directly or
indirectly, arising out of or related to this Agreement or contesting the
validity or applicability of this Agreement shall be litigated exclusively in
the Circuit Court in and for Hillsborough County, Florida, or the United States
District Court for the Middle District of Florida, Tampa Division.
15. EXPENSES OF ENFORCEMENT. In the event of any legal proceeding arising
directly or indirectly from this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs from the non-prevailing party
(at both the trial and appellate court levels).
16. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement, including all exhibits and
schedules hereto as referenced herein, constitutes the entire
agreement between the parties hereto pertaining to the subject
matters hereof, and supersedes all negotiations, preliminary
agreements, and all prior and contemporaneous discussions and
understandings of the parties in connection with the subject
matters hereof. Except as otherwise herein provided, no covenant,
representation or condition not expressed in this Agreement, or
in an amendment hereto made and executed in accordance with the
provisions of subsection (b) of this section, shall be binding
upon the parties hereto or shall affect or be effective to
interpret, change or restrict the provisions of this Agreement.
(b) AMENDMENTS AND WAIVER. No change, modification, waiver or
termination of any of the terms, provisions, or conditions of
this Agreement shall be effective unless made in writing and
signed or initialed by all parties hereto. Any waiver of any
breach of any provisions of this Agreement shall operate only as
to the specific breach waived and shall not be deemed a waiver of
any other breach, whether occurring before or after such waiver.
(c) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida, without
reference to principles of choice or conflict of law thereunder.
(d) SEPARABILITY. Except as provided in Section 11 hereof, if any
section, subsection or provision of this Agreement or the
application of such section, subsection or provisions is held
invalid, the remainder of this Agreement and the application of
such section, subsection or provision to persons or
circumstances, other than those with respect to which it is held
invalid, shall not be affected thereby.
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(e) HEADING AND CAPTIONS. The titles or captions of sections and
subsections contained in this Agreement are provided for
convenience of reference only, and shall not be considered a part
hereof for purposes of interpreting or applying this Agreement;
and, therefore, such titles or scope or extent of this Agreement
or any of its terms, provisions, representations, warranties,
conditions, etc., in any manner or way whatsoever.
(f) GENDER AND NUMBER. All pronouns and variations thereof shall be
deemed to refer to the masculine, feminine or neuter and to the
singular or plural as the identity of the person or entity or
persons or entities may require.
(g) CONTINUANCE OF AGREEMENT. The rights, responsibilities and duties
of the parties hereto and the covenants and agreements herein
contained shall survive the execution hereof, shall continue to
bind the parties hereto, and shall continue in full force and
effect until each and every obligation of the parties hereto,
pursuant to this Agreement, shall have been fully performed.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above-written.
WITNESSES: JUMBOSPORTS INC.
_______________________________ By: _______________________________
Its: Duly Authorized Officer "CLIENT"
_______________________________ ___________________________________
Xxxx Xxxx, Raintree Partners, Inc.
"CONSULTANT"
_______________________________
_______________________________
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AGREEMENT FOR SERVICE
This Agreement made and entered into this 5th day of December, 1997, by and
between JumboSports Inc., a Florida Corporation and Xxxx Xxxx - Raintree
Partners, Inc.
JumboSports hereby agrees to compensate Xxxx Xxxx - Raintree Partners, Inc. for
performing the duties and responsibilities as Chairman of the Board of Directors
beginning on the above noted date and continuing until either party, Xxxx Xxxx
or the Board, notifies the other, in writing and giving at least 30-days advance
notice, that the arrangement is no longer desirable. Compensation to Xxxx Xxxx -
Raintree Partners, Inc. for fulfilling this role is $4,000.00 per month, payable
directly to Raintree Partners, Inc.
The parties have executed this Agreement the day and year first above written.
For: JumboSports Inc. For: Raintree Partners, Inc.
By: _____________________________ By: __________________________
It's Duly Authorized Officer Xxxx Xxxx
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