Exhibit 10.35
CONSULTING AND NON-COMPETITION AGREEMENT
This Consulting and Non-Competition Agreement (this "Agreement") between
Xxxxx Xxxxxxxx ("Consultant") and Gart Bros. Sporting Goods Company (the
"Company") is hereby made as of _________ ____, 2001.
1. Term of Agreement. The term of this Agreement shall be two years and
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one hundred eighty days from the Effective Date (the "Consulting Period"). The
Consulting Period shall commence on the date of effectiveness (the "Effective
Date") of the proposed merger between GSC Acquisition Corp. and Xxxxxx'x
Sporting Goods, Inc. ("Xxxxxx'x"). This Agreement shall terminate on the date
that is two years and one hundred eighty days from the Effective Date, or an
earlier date pursuant to Section 10 of this Agreement ("Termination Date").
2. Independent Contractor Status; Authority. It is the express intention
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of the parties to this Agreement that Consultant is an independent contractor,
and is not an employee, agent, joint venturer or partner of the Company. Nothing
in this Agreement shall be interpreted or construed as creating or establishing
an employment relationship between the Company and Consultant. The parties to
this Agreement agree that Consultant will have no authority to bind the Company
or any of its subsidiaries without the Company's prior written consent.
3. Services. Consultant agrees to provide services ("Services") to the
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Company during the Consulting Period. The Services shall include, but not be
limited to: (1) advising the Company with respect to strategic issues, real
estate, merchandising, inventory control and operations; (2) maintaining
employee morale; (3) providing transitional knowledge and assistance with
respect to (a) Xxxxxx'x previous operations, employees and vendors, and (b)
competition in the former market area of Xxxxxx'x; and (4) attending conferences
and conventions on behalf of the Company. Specific projects within the foregoing
categories shall be mutually agreed upon and defined by Consultant and the
Company's President from time to time during the Consulting Period.
4. Agreement Not to Compete.
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a. For purposes of this Section 4, the term "Conflicting
Organization" shall mean any person or organization that is engaged in, or about
to become engaged in, any retail sporting goods business in competition with the
Company in any geographical areas in which the Company was conducting business
during the Consulting Period.
b. Consultant covenants and agrees that during the Consulting Period
and for a period of two years following any termination of this Agreement,
Consultant shall not, without the Company's prior written approval, render
services for or own or participate in the ownership of, finance or participate
in the financing of, manage, operate, join or control, directly or indirectly,
in any capacity whatsoever, any Conflicting Organization, except that Consultant
may accept employment with a Conflicting Organization whose business is
diversified and that as to some part of its business is not a Conflicting
Organization, provided that the Company, prior to Consultant accepting such
employment, shall receive separate written assurances satisfactory to the
Company from such Conflicting
Organization and from Consultant that Consultant will not render services
directly or indirectly in connection with any part of the business that is a
Conflicting Organization.
c. Nothing contained in paragraph (b) above shall in any manner be
construed as prohibiting Consultant from purchasing for investment any stock or
securities listed on any recognized stock exchange; provided, however,
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Consultant may not purchase or own, directly or indirectly, a five percent (5%)
or greater equity interest in any Conflicting Organization issuing such stock or
securities.
d. Consultant acknowledges that this Section 4 constitutes an
independent covenant and shall not be affected by performance or non-performance
of any provision of this Agreement by the Company.
e. To the extent necessary to satisfy the laws of any applicable
jurisdiction, the Company and Consultant agree that any geographical, temporal
or other restriction set forth in this Section 4 can and should, if necessary,
be judicially modified and enforced as modified to protect any legitimate
interest of the Company.
f. Consultant warrants and represents that he: (i) is familiar with
covenants not to compete; (ii) has concluded that such provisions (including,
without limitation, the right to equitable relief and the length of time and
size of area provided for herein) are fair, reasonable and just under the
circumstances; and (iii) is fully aware of the obligations, limitations and
liabilities included in the covenant not to compete contained in this Agreement.
5. Employment of Assistants. Should Consultant, in his sole discretion,
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deem it necessary to employ assistants to aid him in the performance of the
Services, the parties agree that the Company will not direct, supervise, or
control in any way such assistants to Consultant in their performance of the
Services. Such assistant will, however, be required to execute a confidentiality
agreement with respect to non-public information regarding the Company. The
parties further agree that such assistants are employed solely by Consultant,
and that he alone is responsible for providing workers' compensation insurance
for his employees, for paying the salaries and wages of his employees, and for
ensuring that all required tax withholdings are made. Consultant further agrees
and warrants that he shall maintain workers' compensation insurance coverage for
his employees and acknowledges that he alone has responsibility for such
coverage.
6. Reporting to the Company's Facilities. Consultant is not required to
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report to work at any facility of the Company or during any particular work
hours. Rather, Consultant is free to report or not report to any of the
Company's facilities as he sees fit and as necessary to provide the Services to
the Company. The parties to this Agreement agree that Consultant's current
office shall be made available to Consultant to use to provide the Services to
the Company for so long as the Company maintains office facilities at the
location in which such office is located. If the Company ceases to maintain such
office facilities, the Company will not be obligated to provide alternative
office space to Consultant.
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7. Compensation. Consultant will receive compensation at a rate equal to
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$400,000 per year during the first year of the Consulting Period and $350,000
per year during the remainder of the Consulting Period (less withholding taxes
and benefit costs) payable bi-weekly or as often as the regular payroll of the
Company is paid, but not more frequently than weekly. Consultant and the
Company agree that such compensation will be allocated in consideration of
Consultant's agreements herein as follows: __% will be allocated to Consultant's
performance of Services as described in Section 3 and __% will be allocated to
Consultant's agreement not to compete pursuant to Section 4. On the Effective
Date, Consultant may elect to purchase in cash the automobile provided to him by
Xxxxxx'x immediately prior to the Effective Date at a price equal to the
automobile's fair market value as of the Effective Date. In addition, effective
as of the Effective Date, Consultant shall be granted a non-qualified stock
option pursuant to the 1994 Management Equity Plan, as amended (the "Plan"), of
Gart Sports Company ("Gart"). Such option shall cover an aggregate of 50,000
shares of Gart's common stock, $.01 par value ("Common Stock"), shall have an
exercise price equal to the fair market value (as defined in the Plan) of a
share of Common Stock on the Effective Date, and shall vest at the rate of
10,000 shares on each six month anniversary of the Effective Date. Such option
shall, in all other respects, be governed by the terms and conditions of the
Plan, as such Plan is administered as described therein. The foregoing
compensation is Consultant's sole compensation for rendering the Services to the
Company. The Company shall reimburse Consultant for any reasonable costs or
expenses (excluding the costs and expenses of any assistants hired by
Consultant) incurred by Consultant in performing the Services upon presentation
to the Company of any required documentation substantiating such costs and
expenses. Airline costs for reimbursement shall be in accordance with Company
policy and procedure.
In addition, Consultant shall be entitled to receive health, dental and
vision insurance and benefits to the same extent that executive employees of the
Company are entitled to receive such benefits. Consultant agrees to pay his
proportionate share of the costs of such benefits consistent with Company policy
and procedure. Consultant's portion of the cost of such benefits may be
deducted from Consultant's compensation set forth in the foregoing paragraph.
Consultant shall not be entitled to receive benefits under any employee benefit
plan of the Company (including, without limitation, vacation pay, sick pay,
personal leave benefits, severance pay benefits or any similar benefits) except
as expressly specified in this Section 7.
8. Confidential Information.
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a. "Confidential Information" means any information, technical data,
or know-how including, but not limited to, the Company's research, products,
product features, software, services, development, inventions, processes,
designs, drawings, engineering, marketing, future marketing plans, customers,
prospective customers, finances, employee information, salary information,
organizational structure information, disclosed by the Company, either directly
or indirectly, in writing, orally or by drawings or inspection of equipment or
facilities. Confidential Information does not include information, technical
data or know-how which: (1) was in Consultant's possession, as evidenced by
Consultant's files and records, prior to the earliest time of Consultant's
interaction with the Company, as either an employee or consultant of the Company
or otherwise; or (2) before or after it has been disclosed to Consultant, is
part of the public knowledge or literature, not as a result of
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any action or inaction of Consultant or unauthorized disclosure by any other
party; or (3) is approved for release to the general public by written
authorization of the Company.
b. Consultant agrees not to use Confidential Information for his own
use, for the use of any other company, individual or entity, or for any purpose
except to perform the specific assigned duties for the Company. Consultant will
not present himself as an employee or authorized representative of the Company.
c. Consultant agrees not to disclose the Company's Confidential
Information to any third party. Consultant agrees that he shall protect the
confidentiality of all Confidential Information and take all necessary steps to
prevent disclosure to or misuse of the Confidential Information and to prevent
it from falling into the public domain or the possession of any unauthorized
party. Consultant agrees that, during and after the term of this Agreement, he
shall not solicit or accept Confidential Information, such as lists of
employees, customers, telephone numbers, or organizational charts, from current
or prior employees, temporary or contract employees, vendors, or customers of
the Company.
d. Consultant agrees not to use the Company's name or logo in any
advertising nor as a reference for any promotional purposes without the prior
written consent of the Company.
e. Because of the unique and proprietary nature of Confidential
Information, Consultant acknowledges that the breach of any of his obligations
under this Section 8 is likely to cause or threaten irreparable harm to the
Company, and, accordingly, Consultant agrees that in such event, any remedies at
law for a breach will be inadequate and therefore the Company shall be entitled
to seek equitable relief to protect its interests, including but not limited to
preliminary and permanent injunctive relief, as well as money damages. Nothing
stated herein shall be construed to limit any other remedies available to the
Company.
9. Non-solicitation of the Company's Employees. During the Consulting
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Period and for one (1) year thereafter, Consultant shall not encourage or
solicit any employee of the Company to leave the Company for any reason.
10. Earlier Termination of Agreement. This Agreement may be terminated:
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a. By Consultant at any time prior to the Termination Date by giving
thirty (30) days' written notice of termination, which may be given at any time
for any reason, with or without cause; or
b. By the Company at any time prior to the Termination Date for: (i)
the breach by Consultant of any obligation of Section 4, 5, 6, 8 or 9 of this
Agreement or (ii) the breach by Consultant of any non-competition agreement that
he has entered into with Xxxxxx'x or an affiliate thereof; or
c. By the Company if Consultant dies during the Consulting Period,
and the Company shall have no liability or obligation to Consultant, his heirs,
personal representatives or assigns, or any other person claiming under or
through him, except for unpaid compensation accrued through the date of his
death.
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d. By the Company if, in the opinion of a qualified physician
selected by the Company's board of directors to examine Consultant, as a result
of physical or mental illness or injury, Consultant is unable to perform his
duties hereunder, and such inability is expected, in the opinion of such
physician, to continue for at least three months, and the Company shall have no
liability or obligation to Consultant except for unpaid compensation accrued
through the date on which such medical opinion is issued.
11. Enforceability of Agreement. Consultant agrees that any dispute in
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the meaning, effect, or validity of this Agreement shall be resolved in
accordance with the laws of the State of Colorado without regard to the conflict
of laws provisions thereof.
12. Assignment. This Agreement shall not be assignable by either
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Consultant or the Company without the express written consent of the other
party.
13. Dispute Resolution. Any controversy between the parties hereto
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involving the construction or application of any terms, covenants, or conditions
of this Agreement or any claim arising out of or relating to this Agreement will
be submitted to and be settled by final and binding arbitration in Denver,
Colorado, in accordance with the rules of the American Arbitration Association
then in effect, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof, provided, however, that any
dispute arising out of a breach of Section 4, 8 or 9 may be brought in federal
or state court in Denver, Colorado. Consultant agrees that he will not contest
the venue of any proceeding brought in connection with this Agreement. 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 reasonable attorneys'
fees and costs in addition to any other relief to which the party may be
entitled.
14. Entire Agreement. This Agreement contains the entire understandings
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and agreements of the parties regarding its subject matters and can only be
modified by a subsequent written agreement executed by Consultant and the
Company.
15. Notices. All notices required or given pursuant to this Agreement
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shall be addressed to the Company or Consultant at the designated addresses
shown below by registered mail, personal delivery, or a nationally recognized
overnight courier service:
a. To the Company:
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Gart Bros. Sporting Goods Company
0000 Xxxxxxxx
Xxxxxx, XX 00000
Attn: President
With a copy to: General Counsel
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b. To Consultant:
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Xxxxx Xxxxxxxx
_________________________
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16. Miscellaneous. Consultant further agrees that if one or more
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provisions of this Agreement are held to be illegal or unenforceable under
applicable Colorado law, such illegal or unenforceable portion(s) shall be
limited or excluded from this Agreement to the minimum extent required and the
balance of the Agreement shall be interpreted as if such portion(s) were so
limited or excluded.
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IN WITNESS WHEREOF, Consultant and the Company have caused this Agreement
to be duly executed and delivered on the day and year first written above.
Consultant:
_____________________________________________
Xxxxx Xxxxxxxx
Gart Bros. Sporting Goods Company
_____________________________________________
Xxxx Xxxxxxx Xxxxxx
President and Chief Executive Officer
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