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EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
this ___ day of ____________, 199_, by and among GART SPORTS COMPANY, a
Delaware corporation (the "Company"), GREEN EQUITY INVESTORS, L.P. and the
undersigned (the "Initial Shareholders").
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") pursuant to which the
Initial Shareholders will receive shares of the Company's common stock, par
value $.01 per share (the "Common Stock").
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.
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 Shareholders
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) "Merger Shares" means the shares of Common
Stock issued to the Initial Shareholders pursuant to the Merger (as defined in
the Merger Agreement).
(c) "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.
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(d) "Register," "registered," and "registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the 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").
(e) "Registrable Securities" means (i) the Merger
Shares and (ii) securities issued or issuable with respect to Merger 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.
(f) "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), (ii) the date on which all of the
Registrable Securities (in the reasonable opinion of counsel to the Initial
Shareholders) 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 and (iii) five (5) years from the date hereof as may be extended
pursuant to Section 2.4 below.
(g) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(h) "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 10% of the "Initial Amount."
(i) "Initial Amount" is the number of Registrable
Securities originally issued pursuant to the Merger Agreement (as adjusted
pursuant to Section 1.1(e)).
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 Mandatory Registration. In connection with the Merger, the
Company shall prepare and file with the SEC a Registration Statement covering
the resale of all of the Registrable Securities (it being understood that the
S-4 Registration Statement being utilized in the Merger for the issuance of
shares of Common Stock of the Company in connection therewith may be utilized
as such resale Registration Statement to the extent permitted by the rules and
regulations of the SEC). The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to (and subject to the approval of (which approval shall not
be unreasonably withheld or denied)) the Initial Shareholders and their counsel
prior to its filing or other submission. The Company shall cause such
Registration Statement to become effective no later than the Effective Time and
shall keep such Registration Statement continuously effective pursuant to Rule
415 for two (2) years from the Effective Time. Neither the Company nor any
other Person shall, by way of amendment or otherwise, include any other
securities for resale under the Registration Statement which is effective
pursuant to this Section 2.1. The Shareholders may sell Registrable Securities
without limitation during the initial six months after the effectiveness of the
Registration Statement which period will be extended for an additional period
of time equal to the aggregate of any periods that the Shareholders are unable
to sell Registrable Securities during the "Initial Period" (as hereafter
defined) due to the possession or imputed possession of material, non public
information which would preclude trading in the Company's securities (as
extended, but in no event more than seven months in aggregate except for such
further extensions due to the occurrence of events set forth in the last
sentence to this Section 2.1, the "Initial Period"). After the Initial Period,
the Shareholders may sell, during any rolling 90-day period during the two year
effective period, an amount of Registrable Securities equal to not more than
10% of the Initial Amount. Sales of Registrable Securities hereunder will not
be subject to any holdback limitations imposed on holders of Registrable
Securities under Section 2.6(a) below. The Company may notify the Shareholders
to suspend sales of Registrable Securities under the Registration Statement
covered by this Section 2.1 for a period of up to 60 days on any one occasion
and no more than 90 days in any 365 day period 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 sales to occur during such periods; provided, however,
that the Initial Period and the two-year period will each be extended on a
day-for-day basis to the extent such suspensions fall within these respective
time periods.
2.2 Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2.1 hereof involves an underwritten
offering, the Shareholders who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of the
Initial Shareholders, shall have the right to select a total of one legal
counsel to represent the Shareholders and an investment banker or bankers and
manager or managers to
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administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.
2.3 [Intentionally Omitted - see Section 2.6]
2.4 Demand Registrations. After the two-year period provided for
in Section 2.1 hereof and 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 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 two (2) 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 Registration Statement
shall have been maintained continuously effective for a period of at least one
hundred twenty (120) days 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. Neither the
Company nor any other Person shall include any other securities in a Demand
Registration, except with the written consent of the holders of the majority of
the Registrable Securities sought to be registered pursuant to such Demand
Registration; provided, however, that GEI (as defined in Section 2.6(b)) may
include securities of the same class as the Registrable Securities in such
Demand Registration as long as such securities do not exceed 50% of the
aggregate number of such securities and Registrable Securities sought to be
included in such Demand Registration. 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 the second 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 judgment, marketing or other factors dictate that
limiting the securities to be included in the Registration Statement is
necessary to facilitate public distribution of the
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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 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 2.4 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 and provided further,
however, that the Registration Period will be extended for a period of time
equal to any such postponements.
2.5 Piggy-Back Registrations. During the Registration Period, if
the Company shall file with the SEC a Registration Statement (a "Piggyback
Registration Statement") relating to an offering for its own account or the
account of others (including GEI) 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 (i) such Registrable Securities
are covered by a Registration Statement pursuant to Section 2.1 or 2.4 which
provides for sales during the effective period of the Piggyback Registration
Statement or (ii) such Piggyback Registration Statement does not provide for
underwritten sales, and provided further that, with respect to a Piggyback
Registration Statement demanded by GEI, the Registrable Securities sought to be
included will not exceed 50% of the aggregate number of Registrable Securities
and securities held by GEI which are sought to be included in such Piggyback
Registration), 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
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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; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of 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 2.5 shall be construed to limit any registration required under Section
2.1 or 2.4 hereof. If an offering in connection with which a Shareholder is
entitled to registration under this Section 2.5 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.
2.6 Holdbacks.
(a) Subject to the last sentence of this Section
2.6(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 2.6(b) below (except
as part of such underwritten registration, if permitted by Section 2.5 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 2.6(a) will not
prohibit sales of Registrable Securities by the Shareholders under Section 2.1
or pursuant to Rule 144 or Rule 145 of the Securities Act.
(b) The Company agrees (i) 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 at any time during the Initial Period, either
for its own account or for the account of others (other than for the account
only of the Shareholders pursuant to such Registration Statement); provided,
however, that during this Initial Period (y) the Company may, after three
months after the Effective Time, file, cause to go effective and sell equity
securities under one Registration Statement so long as such Registration
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Statement is on a primary basis for its own account (and for the account of no
other persons other than the Shareholders who can treat the Registration
Statement as a Piggyback Registration Statement) and (z) GEI may, after six
months after the Effective Time (or such earlier time if and after that date on
which the Shareholders have sold more than 50% of the Registrable Securities
issued to them with respect to the Merger such that such securities no longer
constitute Registrable Securities) exercise one demand registration right and
the Company can file a Registration Statement pursuant to such demand and GEI
can sell equity securities under the Registration Statement filed pursuant to
such demand (and the Company in such Registration Statement will not include
any of its equity securities or those of other persons except the Shareholders
who can treat such Registration Statement as a Piggyback Registration
Statement) and (ii) 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) Green Equity Investors, L.P., in its capacity
as a holder of the Company's equity securities or any securities convertible
into or exchangeable or exercisable for such securities, and its successors and
assigns (collectively, "GEI"), agrees not to file or cause to be effected any
registration of or effect any public sale or distribution of any such
securities during (i) any holdback period in Section 2.6(b)(ii) (except as part
of such underwritten registration, if otherwise permitted) unless the
underwriters managing the registered public offering otherwise agree or, if
such 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 registration (which such
underwriter shall be reasonably acceptable to the Company and whose fees and
expenses shall be borne solely by the Company) otherwise agrees and (ii) except
as permitted by Section 2.6(b)(i)(z), during the Initial Period (which
prohibition cannot be waived by any underwriters). This Section 2.6(c) shall
not, except during the Initial Period, prohibit sales of securities by GEI
pursuant to Rule 144 of the Securities Act.
(d) Notwithstanding the foregoing, neither the
Shareholders, the Company nor GEI 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 after the Initial 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, 2.4, or 2.5 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
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each case the board of directors of the Company determines to be contrary to
the best interests of the Company and its stockholders.
3.5 In the event the Shareholders who hold a majority in interest
of the Registrable Securities being offered in an offering pursuant to a
Registration Statement or any amendment or supplement thereto under Section
2.1, 2.4 or 2.5 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 or 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 Initial Shareholders 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 than 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
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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
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 2.4 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 a 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
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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) 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.
3.18 The Company shall not, and shall not agree to, allow the
holders of any securities of the Company to include any of their securities in
any Registration Statement or any amendment or supplement thereto under Section
2.1 or, except as permitted in this Agreement for GEI, Sections 2.4 or 2.5
hereof without the consent of the holders of a majority of the Registrable
Securities.
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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 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
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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 2.4 or 2.5
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.
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
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agreement contained in this Section 6.1, 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 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 to 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
the 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 grounds 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
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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 and effect regardless of any investigation made by or on
behalf of the indemnified Person and will survive the transfer of the
Registrable Securities.
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.
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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 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.
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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 Shareholders (but not an Initial Shareholder who no longer owns any
Registrable Securities and who is not affected by such amendment or waiver)
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.
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
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and
Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
and if to a Shareholder, to Xxxxxx X. Xxxxxxxx who is hereby designated as the
representative for purposes of coordinating communications with the
Shareholders (the "Representative"), at such address and telecopier number as
such Representative shall have provided in writing to the Company, with a copy
to:
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Barack
Xxxxx X. Xxxxxx
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
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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.
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 and GEI agree not to enter into any registration
rights or comparable agreement which provides rights or restrictions which are
inconsistent with this 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:
--------------------------------
INITIAL SHAREHOLDERS:
[See attached Signature Pages]
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