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EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of this
9th day of January, 1998, by and among GART SPORTS COMPANY, a Delaware
corporation (the "Company") and GREEN EQUITY INVESTORS, L.P. (the "Initial
Holder").
RECITALS
A. This Agreement is made in connection with the Agreement and Plan of
Merger dated as of September 28, 1997 by and among the Company, Gart Bros.
Sporting Goods Company ("Sporting") and Sportmart, Inc. ("Sportmart") as amended
and restated on December 2, 1997 by and among the Company, Sporting, Sportmart
and GB Acquisition, Inc. (as such amended and restated agreement may be amended
from time to time, the "Merger Agreement").
B. The Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws to the Initial Holder with respect
to shares of the Company's common stock, par value $.01 per share (the "Common
Stock").
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Shareholders" means the Initial Holder and any transferees
or assignees thereof who agree to become bound by the provisions of this
Agreement in accordance with Article IX hereof. Any reorganization of the
internal structure or composition of a Shareholder will not affect its
designation as a Shareholder hereunder.
(b) "Person" means any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(c) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statement in compliance with the
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Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis
("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
(d) "Registrable Securities" means (i) the Initial
Shares and (ii) securities issued or issuable with respect to the Initial
Shares or other Registrable Securities by virtue of this clause (ii), in each
case by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, reorganization, reclassification,
merger, consolidation, compulsory share exchange or any other transaction or
series of related transactions in which shares of Common Stock or Registrable
Securities are changed into, converted into or exchanged for other securities.
As to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement registering such
securities under the Securities Act has been declared effective and such
securities have been sold or otherwise transferred by the holder thereof
pursuant to such effective registration statement, (ii) such securities are
sold in compliance with paragraph (d) of Rule 145 or (iii) such securities are
sold to the public in accordance with Rule 144.
(e) "Registration Period" means the period ending
on the earlier of (i) the date on which all of the Registrable Securities have
been sold (excluding transfers to Affiliates or for estate, securities or tax
planning or charitable gift giving purposes), and (ii) the date on which all
of the Registrable Securities (in the reasonable opinion of counsel to the
Initial Holder) may be immediately sold to the public without registration and
without restriction as to the number of Registrable Securities to be sold (and
without aggregation of any sale with sales of any other Person whose sales are
subject to volume limitations), whether pursuant to Rule 144, Rule 145(d) or
otherwise.
(f) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(g) "Requisite Amount" means 20% of the then
outstanding Registrable Securities; provided, however, that such Requisite
Amount will in no event be an amount less than 5% of the "Initial Amount."
(h) "Initial Amount" is the number of Registrable
Securities held by the Initial Holder on the date hereof (as adjusted pursuant
to Section 1.1(d)).
(i) "Initial Shares" means the shares of Common
Stock held by the Initial Holder on the date hereof.
1.2 Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Merger Agreement.
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ARTICLE II
REGISTRATION
2.1 DEMAND REGISTRATIONS. During the Registration Period, holders of
the Requisite Amount of Registrable Securities in aggregate shall be entitled to
make a written request of the Company (each such request being a "Demand") for
registration under the Securities Act, of all or part of the Registrable
Securities (a "Demand Registration"). Such Demand shall specify: (i) the
aggregate number and kind of Registrable Securities requested to be registered;
and (ii) the intended method of distribution in connection with such Demand
Registration to the extent then known. No Demand shall be effective or impose
any obligation upon the Company unless such Demand shall request the
registration of not less than the Requisite Amount of Registrable Securities.
Within ten (10) days after receipt of a Demand, the Company shall give written
notice of such Demand, the Company shall give written notice of such Demand to
all other holders of Registrable Securities and shall include in such
registration all Registrable Securities of each holder thereof with respect to
which the Company has received a written request for inclusion therein within
twenty (20) days after the receipt by such holder of the Company's notice
required by this paragraph. The holders of Registrable Securities shall be
entitled to four (4) Demand Registrations. A registration shall not be treated
as a Demand Registration unless the holders of Registrable Securities are able
to include, in accordance with the following provisions, at least 75% of the
Registrable Securities requested to be included in such registration and until
(i) the applicable registration statement under the Securities Act has been
filed with the SEC with respect to such Demand Registration and been declared
effective and (ii) such Registrations Statement shall have been maintained
continuously effective for a period ending two (2) years from the Effective Time
or one hundred twenty (120) days after the effective date of such registration
statement, whichever is greater, or such shorter period when all Registrable
Securities included therein have been sold thereunder in accordance with the
manner of distribution set forth in such registration statement. The Company
may include in such Demand Registration other securities held by security
holders entitled to registration rights, provided that such securities are of
the same class as the Registrable Securities with respect to which such Demand
Registration has been made. If, in connection with a Demand Registration, any
managing underwriter (or, if such Demand Registration is not an underwritten
offering, a nationally recognized independent underwriter selected by the
holders of a majority of the Registrable Securities sought to be registered in
such Demand Registration (which such underwriter shall be reasonably acceptable
to the Company and whose fees and expenses shall be borne solely by the Company
in the case of the first Demand Registration and borne on a pro rata basis by
all holders of securities permitted by such underwriter to be included in any
subsequent Demand registration, in proportion to the number of securities
included in such Demand Registration)) advises the Company and the holders of
the Registrable Securities sought to be included in such Demand Registration
that, in its judgement, marketing or other factors dictate that limiting the
securities to be included in the Registration Statement is necessary to
facilitate public distribution of the Registrable Securities ultimately to be
included therein, then the Company shall include in such Registration Statement
only such limited portion of the Registrable Securities and other securities
sought to be registered therein as the underwriter shall permit in accordance
with this paragraph. Any exclusion of Registrable Securities shall be made pro
rata among the Shareholders seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by such
Shareholders; provided, however, that the Company shall not exclude any
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Registrable Securities unless the Company has first excluded all outstanding
securities other than the Registrable Securities. If the holders of a majority
of the Registrable Securities sought to be registered in a Demand Registration
request that such Demand Registration be an underwritten offering, then such
holders shall select a nationally recognized underwriter or underwriters to
manage and administer such offering, such underwriter or underwriters, as the
case may be, to be subject to the approval of the Company's Board of Directors,
which such approval shall not be unreasonably withheld. The Company may
postpone for up to 60 days (but no more than 90 days in any 365 day period) the
filing or the effectiveness (which may include the withdrawal of an effective
registration statement) of a Registration Statement pursuant to this Section 2.1
if the Company's board of directors reasonably determines in its good faith
judgment that, because of the existence of any proposal or plan by the Company
or any of its subsidiaries to engage in any acquisition or financing activity
(other than in the ordinary course of business) or the unavailability for
reasons beyond the Company's control of any required financial statements, or
any other event or condition of similar significance to the Company, it would be
materially disadvantageous to the Company for such a Registration Statement to
be maintained effective, or to be filed and become effective; provided, however,
that in such event, the holders of Registrable Securities making such Demand
will be entitled to withdraw such Demand and, if such Demand is withdrawn, such
registration will not count as one of the Demand Registrations hereunder.
2.2 Piggy-Back Registrations. During the Registration Period, if
the Company shall file with SEC a Registration Statement (a "Piggyback
Registration Statement") relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(except on Form S-4 or Form S-8 or any successor form), then the Company shall
send to each Shareholder written notice of such determination and, if within
fifteen (15) days after the date of such notice, such Shareholder shall so
request in writing, the Company shall include in such Registration Statement all
or any part of the Registrable Securities such Shareholder requests to be
registered (provided that the Company shall not be obligated to include
Registrable Securities if such Registrable Securities are covered by a
Registration Statement pursuant to Section 2.1 which provides for sales during
the effective period of the Piggyback Registration Statement, except that if, in
connection with any such offering for the account of the Company or for the
account of others, the managing underwriter(s) thereof shall impose a limitation
on the number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment, marketing, or
other factors dictate that such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which such Shareholder has requested inclusion hereunder as the
underwriter shall permit. Any exclusion of Registrable Securities shall be made
pro rata among the Shareholders seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by such
Shareholders; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities, the holders of which did not initiate the filing of such
Registration Statement pursuant to so-called "demand" registration rights or are
not entitled to pro rata inclusion with the Registrable Securities (it being
agreed that the Shareholders' rights under this Section 2.2 shall be at least
co-equal with the rights of any other holder of piggy back registration rights
granted by the Company); and provided, further, however, that, after giving
effect to the immediately preceding proviso, any exclusion of
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Registrable Securities shall be made pro rata with holders of other securities
having the right to include such securities in the Registration Statement on the
basis of the number of securities such holders have requested to include in
such Registration Statement. No right to registration of Registrable Securities
under this Section 2.2 shall be construed to limit any registration required
under Section 2.1 hereof. If an offering in connection with which a Shareholder
is entitled to registration under this Section 2.2 is an underwritten offering,
then each Shareholder whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.
2.3 Holdbacks.
(a) Subject to the last sentence of this Section 2.3(a), each
holder of Registrable Securities agrees not to file or cause to be effected any
other registration of or effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable
or exercisable for such securities, during the ten (10) days prior to and 75
day period beginning on the effective date of any underwritten public offering
of Common Stock for the account of the Company or for the account of others,
in each case which is not in violation of Section 2.3(b) below (except as part
of such underwritten registration, if permitted by Section 2.2 or otherwise
permitted) unless the underwriters managing the registered public offering
otherwise agree and such sale or distribution otherwise complies with
Regulation M of the Securities Exchange Act. This Section 2.3(a) will not
prohibit sales of Registrable Securities by the Shareholders pursuant to Rule
144 or Rule 145 of the Securities Act.
(b) The Company agrees not to file or cause to be effected any
registration of or effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, whether for its own account or for the account of others,
during the ten (10) days prior to and the 75 day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten registration, if
otherwise permitted, or pursuant to registration on Form S-4 (but not with
respect to resales), Form S-8 or any successor form), unless the underwriters
managing the registered public offering otherwise agree.
(c) Notwithstanding the foregoing, neither the Shareholders nor
the Company will be subject to the foregoing holdbacks for any period or
periods in aggregate which are in excess of 150 days during any 365 day period.
ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
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3.1 A Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein and all documents
incorporated by reference therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein not misleading.
3.2 The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
required for such Registration Statement under this Agreement, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the
Registration Statement until the termination of said period.
3.3 The Company shall furnish to each Shareholder whose Registrable
Securities are included in the Registration Statement and its legal counsel (a)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, and, in the case of a Registration Statement
referred to in Section 2.1 or 2.2, each letter written by or on behalf of the
Company to the SEC or the staff of the SEC, and each item of correspondence
from the SEC or the staff of the SEC, in each case relating to such
Registration Statement (other than any portion, if any, thereof which contains
information for which the Company has sought confidential treatment), and (b)
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such
Shareholder may reasonably request in order to facilitate the disposition of
the Registrable Securities covered by the Registration Statement which are
owned (or to be owned) by such Shareholder. All correspondence to or from the
SEC or its staff shall, subject to applicable law and legal process, be kept
confidential by the Shareholders.
3.4 The Company shall use reasonable efforts to (a) register and
qualify the Registrable Securities covered by the Registration Statement under
securities laws of such jurisdictions in the United States as each Shareholder
who holds (or has the right to hold) Registrable Securities being offered
reasonably requests, (b) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (c) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (d) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (i) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3.4, (ii) subject itself to general taxation in
any such jurisdiction, (iii) file a general consent to service of process in
any such jurisdiction, (iv) provide any undertakings that cause the Company
material expense or burden, or (v) make any change in its charter or by-laws,
which in each case the board of directors of the Company determines to be
contrary to the best interests of the Company and its stockholders.
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3.5 In the event the Shareholders who hold a majority in interest
of the Registrable Securities being offered pursuant to a Registration Statement
or any amendment or supplement thereto under Section 2.1 or 2.2 hereof select
underwriters for the offering, the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
3.6 As soon as practicable after becoming aware of such event, the
Company shall notify each Shareholder of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and use its
best efforts as soon as practicable to prepare a supplement or amendment to
(and, in the event of an amendment, obtain the effectiveness thereof) the
Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each
Shareholder as such Shareholder may reasonably request.
3.7 The Company shall use its best efforts to prevent the issuance
of any stop order of other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest practicable time and to notify (by telephone and also by
facsimile and reputable overnight carrier) each Shareholder who holds
Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof.
3.8 The Company shall permit a single firm of counsel designated by
the Shareholder to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably and
timely objects.
3.9 The Company shall make generally available to its security
holders as soon as practical, but not later that ninety (90) days if such
earnings statement is on Form 10-K or forty-five (45) days if such earnings
statement is on Form 10-Q after the close of the period covered thereby, an
earnings statement (in form complying with the provisions of Rule 158 under
the Securities Act) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the effective date
(as defined in said Rule 158) of the Registration Statement.
3.10 At the request of any Shareholder, the Company shall furnish, on
the date of effectiveness of the Registration Statement and thereafter from time
to time on such dates as a Shareholder may reasonably request (a) an opinion,
dated as of such applicable date, from counsel representing the Company
addressed to the Shareholders and in form, scope and substance as is
customarily given in an underwritten public offering and (b) a letter, dated
as of such applicable date, from the Company's independent certified public
accountants addressed to the Shareholders and in form, scope and substance as
customarily given to underwriters in an underwritten public offering; provided,
however, that a Shareholder shall only be entitled to the foregoing no more
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than two times in any six-month period (unless a greater number of times or a
shorter period would otherwise be reasonable under their applicable
circumstances).
3.11 The Company shall make available for inspection by (i) one
Shareholder who or which has been designated by a majority in interest of the
Shareholders whose Registrable Securities are to be included in the applicable
Registration Statement as their representative, (ii) any underwriter
participating in any disposition pursuant to the Registration Statement, (iii)
one firm of attorneys and one firm of accountants retained by the Shareholders,
and (iv) one firm of attorneys retained by all such underwriters (collectively,
the "Inspectors") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably requested by any of the foregoing and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall hold in confidence and shall not make any disclosure (except to a
Shareholder) of any Record or other information which the Company determines in
good faith to be confidential, and of which determination the Inspectors are so
notified in writing, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement (in
which event the Company shall promptly make appropriate public disclosure
thereof unless such misstatement or omission relates to events set forth in the
last sentence of Section 2.1 which would allow the Company to postpone the
filing or effectiveness of a Registration Statement in which event the
Inspectors will be so notified and public disclosure of such misstatement or
omission will occur as soon as practicable but no later than 60 days from the
date the Inspectors are so notified), (b) the release of such Records is
ordered pursuant to subpoena or other order from a court or government body of
competent jurisdiction, or is otherwise required by applicable law or legal
process or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement (to the knowledge of the relevant Person). The Company shall
not be required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and reasonable substance satisfactory to
the Company) with the Company with respect thereto, substantially in the form
of this Section 3.11. Each Shareholder agrees that it shall, upon learning that
disclosure of such Records are sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing in this Section 3.11 shall be deemed to limit a
Shareholder's ability to sell Registrable Securities in a manner which is
consistent with applicable laws and regulations.
3.12 The Company shall hold in confidence and not make any disclosure of
information concerning a Shareholder provided to the Company unless (a)
disclosure of such information is necessary to comply with federal or state
securities laws, (b) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (c) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or is otherwise
required by applicable law or legal process, (d) such information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement (to the knowledge of the Company), or (e)
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such Shareholder consents to the form and content of any such disclosure.
The Company agrees that it shall, upon learning that disclosure of such
information concerning a Shareholder is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to
such Shareholder prior to making such disclosure, and allow the Shareholder, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
3.13 The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
3.14 The Company shall cooperate with the Shareholders who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Shareholders may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Shareholders may request.
3.15 At the request of any Shareholder, the Company shall promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary in order to
change the description of the plan of distribution set forth in such
Registration Statement.
3.16 The Company shall comply with all applicable laws related to the
applicable Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the SEC).
3.17 The Company shall take all such other actions as any Shareholder or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
ARTICLE IV
OBLIGATIONS OF THE SHAREHOLDERS
In connection with the registration of the Registrable Securities, a
Shareholder shall have the following obligations:
4.1 Such Shareholder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable
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Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least ten (10) business
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Shareholder of the information the Company
requires from each such Shareholder.
4.2 Each Shareholder, by such Shareholder's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statements hereunder, unless such Shareholder has notified the Company in
writing of such Shareholder's election to exclude all of such Shareholder's
Registrable Securities from the applicable Registration Statement.
4.3 Each Shareholder whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant
to such Registration Statement, and each such Shareholder shall comply with the
applicable prospectus delivery requirements of the Securities Act in connection
with any such sale.
4.4 Each Shareholder agrees to notify the Company promptly, but in any
event within five (5) business days after the date on which all Registrable
Securities covered by a Registration Statement which are owned by such
Shareholder have been sold by such Shareholder, if such date is prior to the
expiration of the Registration Period, so that the Company may comply with its
obligation to terminate such Registration Statement in accordance with Item
512(a)(3) of Regulation S-K.
4.5 Each Shareholder agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3.6,
such Shareholder will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Shareholder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3.6 and, if so directed by the
Company, such Shareholder shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Shareholder's possession (other than a limited number of
permanent file copies), of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
4.6 No Shareholder may participate in any underwritten distribution
pursuant to a Registration Statement under Sections 2.1 or 2.2 unless such
Shareholder (a) agrees to sell such Shareholder's Registrable Securities on the
basis provided in any underwriting arrangements in usual and customary form
entered into by the Company, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (c)
agrees to pay its pro rata share of all underwriting discounts and commissions
and any expenses in excess of those payable by the Company pursuant to
Article V.
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ARTICLE V
EXPENSES OF REGISTRATION
All expenses, other than underwriting discounts and commissions, incurred
by the Company in connection with registrations, filings or qualifications
pursuant to Articles II and III, hereof shall be borne by the Company,
including, without limitation, all registration, listing and qualification
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company, and the reasonable fees and expenses of one counsel to the
Shareholders for the review of filings hereunder.
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 The Company agrees to indemnify, to the fullest extent permitted by
law, each holder of Registrable Securities, its officers, directors, employees,
trustees, beneficiaries, partners, attorneys and agents and each Person who
controls (within the meaning of the Securities Act) such holder or such an
other indemnified Person against all losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or a fact necessary
to make the statements therein not misleading, except insofar as the same are
caused by and contained in any information furnished in writing to the Company
by such holder expressly for use therein. In connection with an underwritten
offering and without limiting any of the Company's other obligations under
this Agreement, the Company shall indemnify such underwriters, their officers,
directors, employees and agents and each Person who controls (within the
meaning of the Securities Act) such underwriters or such other indemnified
Person to the same extent as provided above with respect to the indemnification
of the holders of Registrable Securities. notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6.l, as it pertains to any preliminary prospectus, shall not inure to
the benefit of any indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section 3.3
hereof, and the indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a violation and such
indemnified Person, notwithstanding such advice, used such incorrect prospectus.
6.2 In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing information regarding such holder's ownership of Registrable
Securities and its intended method of distribution thereof and, to the extent
permitted by law, shall indemnify the Company, its directors, officers,
employees and agents and each Person who controls (within the meaning of the
Securities Act) the
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Company or such other indemnified Person against any losses, claims, damages,
liabilities and expenses (including with respect to any claim for
indemnification hereunder asserted by any other indemnified Person) resulting
from any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission
is caused by and contained in such information so furnished in writing by such
holder; provided that the obligation to indemnify will be several, not joint and
several, among holders of Registrable Securities and the liability of each such
holder of Registrable Securities will be in proportion to and limited to the
net amount received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
6.3 Any Person entitled to indemnification hereunder shall give prompt
written notice in the indemnifying party of any claim with respect to which its
seeks indemnification; provided, however, the failure to give such notice shall
not release the indemnifying party from its obligation under this Article VI,
except to the extent that the indemnifying party has been materially prejudiced
by such failure to provide such notice.
6.4 In any case in which any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not (so long as it shall continue to have
there right to defend, contest, litigate and settle the matter in question in
accordance with this paragraph) be liable to such indemnified party hereunder
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, supervision and monitoring (unless such indemnified party
reasonably objects to such assumption on the ground that there may be defenses
available to it which are different from or in addition to the defenses
available to such indemnifying party, in which event the indemnified party
shall be reimbursed by the indemnifying party for the expenses incurred in
connection with retaining separate legal counsel). An indemnifying party shall
not be liable for any settlement of an action or claim effected without its
consent. The indemnifying party shall lose its right to defend, contest,
litigate and settle a matter if it shall fail to diligently contest such matter
(except to the extent settled in accordance with the next following sentence).
No matter shall be settled by an indemnifying party without the consent of the
indemnified party (which consent shall not be unreasonably withheld).
6.5 The indemnification provided for under this Agreement shall remain in
full force effect regardless of any investigation made by or on behalf of the
indemnified person and will survive the transfer of the Registrable Securities.
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ARTICLE VII
CONTRIBUTION
If recovery is not available under Article VI for any reason or reasons
other than as specified therein, any Person who would otherwise be entitled to
indemnification by the terms thereof shall nevertheless be entitled to
contribution from the person who would otherwise have been the indemnifying
party with respect to any losses, claims, damages, liabilities or expenses with
respect to which such Person would be entitled to such indemnification but for
such reason or reasons. In determining the amount of contribution to which the
respective Persons are entitled, there shall be considered the Persons'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission, and other equitable considerations appropriate under the
circumstances. It is hereby agreed that it would not necessarily be equitable
if the amount of such contribution were determined by pro rata or per capita
allocation.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT; NASDAQ LISTING
With a view to making available to the Shareholders the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Shareholders to sell
securities of the Company to the public without registration ("Rule 144") and
to otherwise establish the existence of a public market with respect to the
Company's securities to provide liquidity for the Shareholders with respect to
the Registrable Securities, the Company agrees, during the Registration Period
and for a period of one (1) year thereafter, that:
8.1 The Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
8.2 The Company shall cause all such Registrable Securities to be listed
on each securities exchange and included in each established over-the-counter
market on which or through which securities of the same class of the Company
are then listed or traded and, if not so listed or traded, to be listed on the
NASD automated quotation system ("NASDAQ") and if listed on NASDAQ, secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 under the Securities Exchange Act of 1934, as amended, or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
(2) market makers to register as such and maintain such registration and
listing with respect to such Registrable Securities with the NASD.
8.3 The Company shall file with the SEC in a timely manner and make and
keep available all reports and other documents required of the Company under
the Securities Act and
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the Exchange Act so long as the filing and availability of such reports and
other documents is required for the applicable provisions of Rule 144.
8.4 The Company shall furnish to each Shareholder so long as such
Shareholder holds Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Shareholders to sell such securities pursuant
to Rule 144 without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Shareholders hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assigned by each Shareholder to any transferee of all or any
portion of the Registrable Securities (other than pursuant to a Registration
Statement, Rule 144 or Rule 145 (so long as the shares subject to such transfer
are thereafter freely tradeable under the Securities Act)) if: (a) the
Shareholder agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee, and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
or applicable state securities laws, and (d) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing for the benefit of the Company to be
bound by all of the provisions contained herein.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, the Initial Holder
(but only if the Initial Holder still owns any Registrable Securities) and
Shareholders who then hold a majority interest of the Registrable Securities.
Any amendment or waiver effected in accordance with this Article X shall be
binding upon each Shareholder and the Company. Notwithstanding the foregoing, no
amendment or waiver shall retroactively affect any Shareholder without its
consent or prospectively adversely affect any Shareholder who no longer owns any
Registrable Securities without its consent and neither Article VI nor Article
VII hereof may be amended or waived in a manner adverse to a Shareholder without
its consent. All consents of a Shareholder shall be in writing to be effective.
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ARTICLE XI
MISCELLANEOUS
11.1 A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
11.2 Any notices herein required or permitted to be given shall be
in writing and may be personally served or delivered by courier or by confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). The addresses for such
communications shall be:
If to the Company:
Gart Sports Company
0000 Xxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx Xxxxxx
Telecopier: (000)000-0000
with copies to:
Xxxxxxx Xxxxx & Partners, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx Xxxxxx
Telecopier: (000)000-0000
and
Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier: (000)000-0000
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and if to a Shareholder, to such Shareholder's address as it appears on the
Company's books and records, with a copy to:
Irell & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx Xxxxxxx
Telecopier: (000) 000-0000
or at such other address as each such party furnishes by notice given in
accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
11.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed in the State of Delaware. The Company irrevocably consents to the
jurisdiction of the federal courts located in the state of Delaware and the
state courts of the State of Delaware located in the County of New Castle in the
State of Delaware in any suit or proceeding based on or arising under this
Agreement and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. The Company irrevocably waives
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The parties hereto further agree that service of process upon the
parties hereto mailed by first class mail shall be deemed in every respect
effective service of process upon each such party in any such suit or
proceeding. Nothing herein shall affect either party's right to serve process
in any other manner permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
11.5 This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
11.6 Subject to the requirements of Article IX hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
11.7 Any headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement.
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11.9 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
11.10 The Company agrees not to enter into any registration rights or
comparable agreement which provides rights or restrictions which are
inconsistent with this Agreement other than the Registration Rights
Agreement made as of the date hereof among the Company, the Initial Holder and
the holders of Common Stock party thereto, and any conflict or inconsistencies
between this Agreement and such Registration Rights Agreement will be resolved
in favor of such Registration Rights Agreement.
11.11 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement.
***
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
GART SPORTS COMPANY
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
GREEN EQUITY INVESTORS, L.P.
By:
-----------------------------------
Its:
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