1
EXHIBIT 10.9
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (this "Agreement"), dated as of April
20, 1994 (the "Execution Date"), is made by and between GART SPORTS COMPANY, a
Delaware corporation ("Gart Sports") and GART BROS. SPORTING GOODS COMPANY, a
Colorado corporation ("Gart Bros."), on the one hand (Gart Sports and Gart
Bros. are hereinafter referred to as "Company"), and XXXXXXX XXXXX &
ASSOCIATES, L.P., a California limited partnership ("LGA"), on the other hand.
WHEREAS, the Company desires to obtain from LGA, and LGA desires to
provide, certain management, consulting and financial planning services on an
ongoing basis and certain financial advisory and investment banking services in
connection with major financial transactions that may be undertaken from time
to time in the future;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Retention.
1.1 General Services. Subject to the terms and
conditions hereof, the Company hereby retains LGA, and LGA hereby agrees to be
retained by the Company, to provide management, consulting and financial
planning services to the Company on an ongoing basis in connection with the
operation and growth of the Company and its subsidiaries during the term of
this Agreement (the "General Services").
1.2 Major Transaction Services. Subject to the terms and
conditions hereof, the Company hereby retains LGA, and LGA hereby agrees to be
retained by the Company, to provide financial advisory and investment banking
services to the Company in connection with major financial transactions that
may be undertaken from time to time in the future ("Major Transaction Services"
and, together with the General Services, the "Services").
2. Compensation.
2.1 General Services Fee. In consideration of the
General Services, the Company shall pay LGA in the aggregate an annual fee
equal to One Hundred Twenty Thousand Dollars ($120,000) for calendar 1994
(prorated), 1995 and 1996, Two Hundred Fifty Thousand Dollars ($250,000) for
calendar 1997, and Five Hundred Thousand Dollars ($500,000) for each
subsequent calendar year during the term hereof. Such fee shall be payable in
equal monthly installments, in advance, on the first day of each month
commencing on the first such day following the date hereof.
2.2 Major Transaction Services Fee. In consideration of
Major Transaction Services provided by LGA from time to time, the Company shall
pay LGA reasonable and customary fees for services of like kind, taking into
consideration all relevant factors, including but not limited to the complexity
of the subject transaction, the time devoted to providing such services
2
and the value of LGA's investment banking expertise and relationships within
the business and financial community.
2.3 Expenses. In addition to the fees to be paid to LGA
under Sections 2.1 and 2.2 hereof, the Company shall pay to, or on behalf of,
LGA, promptly as billed, all reasonable out-of-pocket expenses incurred by LGA
in connection with the Services rendered hereunder. Such expenses shall
include, among other things, fees and disbursements of counsel, travel
expenses, word processing charges, messenger and duplicating services,
facsimile expenses and other customary expenditures.
3. Term.
3.1 Initial Term and Renewal. The term of this Agreement
shall be for a ten (10) year period commencing on the Execution Date unless
LGA, in its sole and absolute discretion, in the sixty (60) day period prior to
any anniversary of the Execution Date, gives written notice of termination of
this Agreement to Company, which written notice shall specify the date, not
sooner than one hundred twenty (120) days after the giving of such notice and
not later than the conclusion of the term of this Agreement, on which such
termination shall occur.
3.2 Survival of Certain Obligations. Notwithstanding any
other provision hereof, (1) the Company's obligation to pay amounts due
pursuant to Section 2 hereof with respect to periods prior to the conclusion of
the term and (2) the provisions of Section 5 hereof, shall survive any
termination of this Agreement.
4. Decisions/Authority of Management Advisor.
4.1 Limitation on LGA Liability. The Company reserves
the right to make all decisions with regard to any matter upon which LGA has
rendered advice and consultation, and there shall be no liability to LGA for
any such advice accepted by the Company pursuant to the provisions of this
Agreement.
4.2 Independent Contractor. LGA shall act solely as an
independent contractor and shall have complete charge of its personnel engaged
in the performance of the Services. As an independent contractor, LGA shall
have authority only to act as advisor to the Company and shall have no
authority to enter into any agreement or to make any representation, commitment
or warranty binding upon the Company or to obtain or incur any right,
obligation or liability on behalf of the Company.
5. Indemnification.
5.1 Indemnification/Reimbursement of Expenses. The
Company shall (i) indemnify LGA and GREEN EQUITY INVESTORS, L.P., a Delaware
limited partnership ("GEI"), their respective Affiliates (as hereinafter
defined), and the partners (general or limited), shareholders, directors,
officers, employees, agents and controlling persons of LGA, GEI and their
respective
2
3
Affiliates (collectively, the "Indemnified Parties"), to the fullest extent
permitted by law, from and against any and all losses, claims, damages and
liabilities, joint or several, to which any Indemnified Party may become
subject, caused by, related to or arising out of the Services or any other
advice or services contemplated by this Agreement or the engagement of LGA
pursuant to, and the performance by LGA of the Services contemplated by, this
Agreement, and (ii) promptly reimburse each Indemnified Party for all costs and
expenses (including reasonable attorneys' fees and expenses), as incurred, in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company and whether
or not resulting in any liability. For purposes of this Agreement,
"Affiliates" shall mean any person or entity directly or indirectly controlling
or controlled by or under common control with a specified person or entity or
which is an employee, agent, director, officer, partner (limited or general) or
shareholder of such specified entity. For purposes of this definition,
"control," when used with respect to any specified person or entity, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
5.2 Limited Liability. The Company shall not be liable
under the indemnification contained in Section 5.1 to the extent that such
loss, claim, damage, liability, cost or expense is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from LGA's bad faith or gross negligence. The Company further agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company, holders of its securities or its
creditors related to or arising out of the engagement of LGA pursuant to, or
the performance by LGA of the Services contemplated by, this Agreement, except
to the extent that any loss, claim, damage, liability, cost or expense is found
in a final non-appealable judgment by a court of competent jurisdiction to have
resulted from LGA's bad faith or gross negligence.
6. Miscellaneous.
6.1 Assignment. Neither of the parties hereto shall
assign this Agreement or the rights and obligations hereunder, in whole or in
part, without the prior written consent of the other party; provided, however,
that, without obtaining such consent, LGA may assign this Agreement or its
rights and obligations hereunder to any of its Affiliates. Subject to the
foregoing, this Agreement will be binding upon and inure solely for the benefit
of the parties hereto and their respective successors and assigns, and no other
person shall acquire or have any right hereunder or by virtue hereof.
6.2 Joint and Several Liability. Gart Sports and Gart
Bros. shall be jointly and severally liable for all obligations of the Company
to LGA and to all Indemnified Parties arising under or in connection with this
Agreement.
3
4
6.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California as applied
to contracts made and performed within the State of California without regard
to principles of conflict of laws.
6.4 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative lawful and enforceable means to achieve the same or substantially
the same result as that contemplated by such invalid, illegal, void or
unenforceable term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, illegal, void or
unenforceable.
6.5 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter of this
Agreement and memorializes and supersedes all written or verbal
representations, warranties, commitments and other understandings prior to the
date of this Agreement.
6.6 Further Assurances. Each party hereto agrees to use
all reasonable efforts to obtain all consents and approvals and to do all other
things necessary to consummate the transactions contemplated by this Agreement.
The parties agree to take such further action and to deliver or cause to be
delivered any additional agreements or instruments as any of them may
reasonably request for the purpose of carrying out this Agreement and the
agreements and transactions contemplated hereby.
6.7 Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover reasonable attorneys' fees and costs in
addition to any other available remedy.
6.8 Headings. The headings in this Agreement are for
convenience and reference only and shall not limit or otherwise affect the
meaning hereof.
6.9 Amendment and Waiver. This Agreement may be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may be given, provided that the same are in writing and
signed by both of the parties hereto.
6.10 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
4
5
IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement as of the date first appearing above.
GART SPORTS COMPANY, a Delaware corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
GART BROS. SPORTING GOODS COMPANY, a
Colorado corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
XXXXXXX XXXXX & ASSOCIATES, L.P., a
California limited partnership
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
5
