EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX'X TRADING COMPANY, INC.,
DICK'S SPORTING GOODS, INC.
AND
DIAMONDBACKS ACQUISITION INC.
DATED AS OF JUNE 21, 2004
TABLE OF CONTENTS
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1. THE MERGER; SURVIVING CORPORATION; CLOSING............................1
1.1 The Merger...................................................1
1.2 Name of Surviving Corporation................................2
1.3 Articles of Incorporation....................................2
1.4 Bylaws; Directors and Officers...............................2
1.5 The Company's Shareholders' Meeting..........................2
1.6 Merger Without Meeting of Shareholders.......................3
1.7 Effective Time...............................................3
1.8 Closing......................................................3
1.9 Directors and Officers of the Surviving Corporation..........3
2. STATUS AND CONVERSION OF SECURITIES...................................3
2.1 Company Capital Stock........................................3
2.2 Purchaser Common Stock.......................................5
2.3 Dissenting Shares............................................5
2.4 Company Stock Options and Other Stock Plans and Warrant......6
3. THE OFFER.............................................................7
3.1 The Offer to Purchase........................................7
3.2 Offer Documents..............................................8
3.3 Company Actions..............................................9
3.4 Shareholder List............................................10
3.5 Directors...................................................10
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS...........................12
4.1 Representations, Warranties and Agreements of the Company...12
4.2 Representations, Warranties and Agreements of Parent........22
5. COVENANTS............................................................24
5.1 Covenants of the Company....................................24
5.2 Covenants of Parent.........................................30
5.3 Covenants of Purchaser......................................31
5.4 Mutual Covenants............................................32
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6. CONDITIONS TO CLOSING; ABANDONMENT AND TERMINATION...................34
6.1 Conditions to the Company's Closing and Its
Right to Abandon............................................34
6.2 Conditions to Parent's and Purchaser's Closing and
Right of Parent and Purchaser to Abandon....................35
7. TERMINATION..........................................................35
7.1 Terms.......................................................35
7.2 Effect of Termination.......................................38
8. TERMINATION FEE AND EXPENSES.........................................38
8.1 Termination Fee.............................................38
8.2 Costs and Expenses..........................................38
9. MISCELLANEOUS........................................................39
9.1 Termination of Covenants, Representations and Warranties....39
9.2 Execution in Counterparts...................................39
9.3 Waivers and Amendments......................................39
9.4 Confidentiality.............................................39
9.5 Indemnification by the Company..............................40
9.6 Indemnification by Parent...................................40
9.7 Procedure...................................................41
9.8 Notices.....................................................41
9.9 Entire Agreement; No Third Party Beneficiaries..............42
9.10 Governing Law...............................................42
9.11 Waiver of Jury Trial........................................43
9.12 Severability................................................43
9.13 Publicity...................................................43
9.14 Interpretation..............................................44
9.15 Non-Recourse................................................44
Schedules and Exhibits
----------------------
Schedule of Definitions
Exhibit A - Shareholder Tender Agreement
Exhibit B - Offer Conditions
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
June 21, 2004, by and among XXXXXX'X TRADING COMPANY, INC., an Indiana
corporation (the "Company"), DICK'S SPORTING GOODS, INC., a Delaware corporation
(the "Parent"), and DIAMONDBACKS ACQUISITION INC., an Indiana corporation and a
wholly-owned subsidiary of Parent (the "Purchaser").
RECITALS:
---------
The Board of Directors of the Company has determined that each of the
Offer and the Merger (each as defined below) is in the best interests of the
Company and has approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger;
The Boards of Directors of each of Parent and Purchaser have approved
the Offer and the Merger upon the terms and conditions hereinafter set forth and
have approved and adopted this Agreement;
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, no par value per share (the "Company Common Shares"), of
which 17,435,368 shares are issued and outstanding and no shares are held in the
treasury of the Company and 5,000,000 shares of Preferred Stock, no par value
per share (the "Company Preferred Stock"), of which no shares have been issued;
The authorized capital stock of Purchaser consists of 1,000 shares of
Common Stock, par value $.01 per share ("Purchaser Common Stock"), 100 of which
shares are issued and outstanding and owned by Parent; and
Immediately prior to the execution of this Agreement and as a condition
and inducement to Parent's and Purchaser's willingness to enter into this
Agreement, Parent is simultaneously entering into a shareholder tender agreement
substantially in the form set forth in Exhibit A (the "Shareholder Tender
Agreement") with certain holders of the Company Common Shares and/or rights to
acquire Company Common Shares, pursuant to which (i) such shareholders are,
among other things, agreeing to tender, and not withdraw, all of such
shareholders' Company Common Shares in the Offer upon the terms and conditions
specified therein, and (ii) such shareholders are agreeing to certain
restrictive covenants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows:
1. THE MERGER; SURVIVING CORPORATION; CLOSING
1.1 The Merger.
----------
Subject to the terms and conditions of this Agreement, the Company and
Purchaser shall be, at the Effective Time (as hereinafter defined), merged in
accordance with the Indiana Business Corporation Law (hereinafter called the
"Merger") into a single corporation existing under the laws of the State of
Indiana, whereby the Company shall be the surviving corporation (the Company, in
its capacity as the surviving corporation, is sometimes referred to herein as
the "Surviving Corporation"). The Merger shall have the effects set forth in
Section 23-1-40-6 of the Indiana Business Corporation Law.
1.2 Name of Surviving Corporation.
-----------------------------
The name of the Surviving Corporation from and after the Effective Time
shall be "Xxxxxx'x Trading Company, Inc."
1.3 Articles of Incorporation.
-------------------------
The Articles of Incorporation of Purchaser as in effect on the date
hereof shall from and after the Effective Time be and continue to be the
Articles of Incorporation of the Surviving Corporation until changed or amended
as provided by law.
1.4 Bylaws; Directors and Officers.
------------------------------
Without any further action by the Company and Purchaser, the Bylaws of
Purchaser, as in effect immediately prior to the Effective Time, shall from and
after the Effective Time be and continue to be the Bylaws of the Surviving
Corporation until amended as provided therein. The directors of Purchaser and
the officers of Purchaser at the Effective Time shall, from and after the
effectiveness of the Merger, be the initial directors and officers,
respectively, of the Surviving Corporation until in each case their successors
shall have been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Articles of Incorporation and Bylaws.
1.5 The Company's Shareholders' Meeting.
-----------------------------------
Unless the Merger is consummated in accordance with Section 23-1-40-4
of the Indiana Business Corporation Law as contemplated by Section 1.6 below,
the Company, acting through its Board of Directors, shall duly call a special
meeting of its shareholders (the "Special Shareholders Meeting") to be held in
accordance with the Indiana Business Corporation Law at the earliest practicable
date, upon due notice thereof to its shareholders, to consider and vote upon,
among other matters, the adoption and approval of this Agreement and the Merger.
Subject to Section 5.1.3 below, the Company's Board of Directors will recommend
the approval of the Merger and will use its reasonable best efforts, consistent
with its fiduciary duties and assuming the recommendation of the approval of the
Merger has not been withdrawn, to solicit the requisite vote of the Company's
shareholders to approve this Agreement and the Merger pursuant to proxy
solicitation materials. Each of Parent and Purchaser agrees that it will execute
a written consent or vote, or cause to be voted, all of the Company Common
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Shares acquired by it pursuant to the Offer and otherwise then owned by it and
its subsidiaries in favor of the approval of the Merger and the adoption of this
Agreement. In addition, each of Parent and Purchaser agrees that from (and
including) the date on which Parent or any of its subsidiaries purchases at
least a majority of the issued and outstanding Company Common Shares (the "Share
Purchase Date") through the Effective Time, it will not sell, transfer, assign,
pledge, exchange or otherwise dispose of the Company Common Shares (including
those purchased in the Offer) or rights therein (whether acquired pursuant to
the Offer or otherwise).
1.6 Merger Without Meeting of Shareholders.
--------------------------------------
If Purchaser shall own at least 90 percent of the outstanding shares of
each class of capital stock of the Company pursuant to the Offer or otherwise,
each of Parent, Purchaser and the Company shall take all necessary and
appropriate action to cause the Merger to become effective, as soon as
practicable after the consummation of the Offer, without a meeting of
shareholders of the Company, in accordance with Section 23-1-40-4 of the Indiana
Business Corporation Law.
1.7 Effective Time.
--------------
Subject to the provisions of this Agreement, Parent, Purchaser and the
Company shall cause the Merger to be consummated by filing articles of merger in
accordance with Section 23-1-40-5 of the Indiana Business Corporation Law on the
Closing Date (as defined below). The Merger shall become effective immediately
upon such filing with the Secretary of State of the State of Indiana, which date
and time is herein referred to as the "Effective Time."
1.8 Closing.
-------
The closing on the Merger (the "Closing") shall occur at the offices of
Xxxxxxxx Ingersoll PC, Pittsburgh, Pennsylvania. The Closing shall occur at a
time and date (the "Closing Date") to be specified by Parent, which shall be no
later than the third business day following satisfaction or waiver of the
conditions set forth in Article 6, unless another time or date is agreed to in
writing by the parties hereto.
1.9 Directors and Officers of the Surviving Corporation.
---------------------------------------------------
The directors of Purchaser immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation and the officers of Purchaser immediately prior to the Effective
Time shall, from and after the Effective Time, be officers of the Surviving
Corporation, in each case until their respective successors shall have been duly
elected, designated or qualified, or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Articles of Incorporation
and Bylaws.
2. STATUS AND CONVERSION OF SECURITIES
The manner and basis of converting the shares of the capital stock of
the Company and Purchaser (and rights to acquire common stock) and the amount of
consideration which the holders of the Company Common Shares (or holders of
options or warrants to acquire company common shares) are to receive in exchange
for such securities are as follows:
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2.1 Company Capital Stock.
---------------------
2.1.1. Conversion of Company Common Shares Into Cash. On the
Effective Time, each Company Common Share issued and outstanding immediately
prior to the Effective Time, other than Company Common Shares (if any) owned by
the Company, Parent or Purchaser, shall, by virtue of the Merger and without any
action on the part of the holder thereof, automatically be cancelled and be
converted into a right to receive the price per share actually paid in the Offer
in cash (the "Merger Consideration"). Each Company Common Share (if any) issued
and outstanding immediately prior to the Effective Time that is owned by the
Company, Parent or Purchaser shall automatically be cancelled and shall cease to
exist, and no consideration shall be delivered or deliverable in exchange
therefor.
2.1.2. Surrender and Exchange of Company Common Shares
Certificates. After the Effective Time, each holder of an outstanding
certificate or certificates theretofore representing Company Common Shares,
except those to be cancelled in accordance with the last sentence of Section
2.1.1, shall surrender such certificate or certificates to such bank or trust
company designated by Parent (the "Paying Agent"), duly endorsed in blank or
otherwise in proper form for transfer, and shall receive in exchange therefor
the Merger Consideration for each Company Common Share. Until so surrendered and
exchanged, each certificate theretofore representing outstanding Company Common
Shares shall be deemed to represent the right to receive for each Company Common
Share the Merger Consideration without interest thereon, upon surrender of the
certificate formerly representing such Company Common Shares.
2.1.3. Withholding Rights. Parent, Surviving Corporation or
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Shares such amounts as Parent, Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign Tax law; provided, however, that, pursuant to the
exception provided under Section 1445(b)(6) of the Code, none of Parent,
Surviving Corporation nor the Paying Agent shall withhold any amount under
Section 1445 of the Code. To the extent that amounts are so withheld and paid
over to the appropriate taxing authority by Parent, Surviving Corporation or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Common Shares in
respect of which such deduction and withholding was made by Parent, Purchaser or
the Paying Agent. For purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity.
2.1.4. Unclaimed Funds; Transfers. Promptly following the
date which is 180 days after the Effective Time, the Paying Agent shall deliver
to the Surviving Corporation all cash and other documents in its possession
relating to the transactions described in this Agreement, and the Paying Agent's
duties shall terminate. Thereafter, each holder of a certificate formerly
representing a Company Common Share may surrender such certificate to the
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Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in consideration therefor the aggregate price relating
thereto pursuant to Section 2.1.1, without any interest or dividends thereon.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of any Company Common Share which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates formerly representing Company Common Shares are presented to
the Surviving Corporation or the Paying Agent, they shall be surrendered and
cancelled in return for the payment of the aggregate price relating thereto, as
provided in Section 2.1.1.
2.1.5. Lost Certificates. If any certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such amount as
Parent may reasonably direct as indemnity against any claim that may be made
against it with respect to such certificate, the Paying Agent shall pay in
exchange for such lost, stolen or destroyed certificate the applicable Merger
consideration with respect thereto.
2.1.6. Transfer Taxes. If payment of the Offer Price payable
to a holder of Shares pursuant to the Offer or the Merger is to be made to a
person other than the person in whose name the surrendered certificate is
registered, it shall be a condition of payment that the certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other Taxes required by reason of the issuance to a person other
than the registered holder of the certificate surrendered or shall have
established to the satisfaction of Parent that such Tax either has been paid or
is not applicable.
2.2 Purchaser Common Stock.
----------------------
Each share of Purchaser Common Stock outstanding on the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and be one share of the common stock, no par value,
of the Surviving Corporation.
2.3 Dissenting Shares.
-----------------
2.3.1. Notwithstanding anything in this Agreement to the
contrary, each outstanding Company Common Share that is held of record by a
holder who has properly exercised dissenters' rights with respect thereto under
Section 23-1-44 of the Indiana Business Corporation Law shall not be converted
into or represent the right to receive the Merger Consideration pursuant to
Section 2.1.1, but the holder thereof shall be entitled to receive such payment
of the fair value of such Company Common Share from the Surviving Corporation as
shall be determined pursuant to Section 23-1-44 of the Indiana Business
Corporation Law; provided, however, that if any such holder shall have failed to
perfect or shall withdraw or lose such holder's rights under Section 23-1-44 of
the Indiana Business Corporation Law, each such holders' Company Common Shares
shall thereupon be deemed to have been converted as of the Effective Time into
the right to receive the Merger Consideration, without any interest thereon,
pursuant to Section 2.1.1.
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2.3.2. The Company shall give Parent (x) prompt notice of
any written demands for payment of the fair value of shares, withdrawals of such
demands and any other instruments delivered pursuant to Section 23-1-44 of the
Indiana Business Corporation Law and (y) the opportunity jointly to participate
with the Company in all negotiations and proceedings with respect to demands for
payment under Section 23-1-44 of the Indiana Business Corporation Law. The
Company will not voluntarily make any payment with respect to any demands
delivered to the Company pursuant to Section 23-1-44 of the Indiana Business
Corporation Law and will not, except with the prior written consent of Parent,
settle or offer to settle any such demands or waive any failure to comply with
Section 23-1-44 of the Indiana Business Corporation Law by any holder of Company
Common Shares.
2.4 Company Stock Options and Other Stock Plans and Warrants.
--------------------------------------------------------
2.4.1. Each warrant or other right to acquire Company Common
Shares, and each option granted under the Company's 1999 Stock Option Plan or
under any other plan or agreement of the Company that is outstanding and
unexpired immediately prior to the Effective Time, whether or not then vested or
exercisable, with respect to which the Merger Consideration exceeds the exercise
price per share shall, effective as of immediately prior to the Effective Time,
be cancelled in exchange for a single lump sum cash payment equal to the product
of (1) the number of Company Common Shares subject to such warrant or option and
(2) the excess of the Merger Consideration over the exercise price of such
option or warrant (subject to any applicable withholding taxes). Each warrant to
acquire Company Common Shares, and each option granted under the Company's 1999
Stock Option Plan or under any other plan or agreement of the Company that is
outstanding immediately prior to the Effective Time, whether or not then vested
or exerciseable, with respect to which the Merger Consideration does not exceed
the exercise price per share shall, effective as of immediately prior to the
Effective Time, be cancelled and no payments shall be made with respect thereto.
2.4.2. As soon as practicable following the date of this
Agreement, the Company's Board of Directors (or, if appropriate, any committee
administering Company stock plans) shall adopt such resolutions or take such
other actions as are required to give effect to this Section 2.4 as it relates
to options granted under the Company's 1999 Stock Option Plan, as amended. All
amounts payable pursuant to this Section 2.4 shall be subject to any required
withholding of Taxes or proof of eligibility of exemption therefrom and shall be
paid without interest by the Surviving Corporation as soon as practicable
following the Effective Time. The Company shall use its reasonable best efforts
to obtain all consents of the holders of Company stock options as shall be
necessary, if any, to effectuate the foregoing. Notwithstanding anything to the
contrary contained in this Agreement, payment shall, at Parent's request, be
withheld in respect of any Company stock option until all necessary consents
with respect to such Company stock option are obtained.
2.4.3. The Company Employee Stock Purchase Plan (the
"Company ESPP") shall be treated in accordance with its provisions (including
Sections 5.4(c) and 10.5 thereof). As soon as practicable following the date of
this Agreement, the Company's Board of Directors (or, if appropriate, any
committee administering the Company ESPP) shall take all action necessary to set
the Purchase Date (as defined in the Company ESPP) for the Calendar Half (as
defined in the Company ESPP) now in progress, which Purchase Date shall be the
6
earlier to occur of June 30, 2004 and the business day which immediately
precedes the Effective Time (the "New Purchase Date"). The Company shall give
any required notice to participants in the Company ESPP and the accumulated
payroll deductions credited to each participant's account through the New
Purchase Date shall be used to acquire Company Common Shares under the ESPP.
From and after the New Purchase Date, no new payroll contributions shall be
accepted by, or made to, the Company ESPP. The Company agrees that, from the
date of this Agreement through the New Purchase Date, the Company ESPP shall be
operated only in the ordinary course and in a manner consistent with the
previous operation of the Company ESPP.
2.4.4. All of the Company's stock option plans and
agreements (including any warrants) and the Company ESPP shall terminate as of
the Effective Time, and the provisions in any other the Company Benefit Plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall use its reasonable best
efforts to cause, following the Effective Time, no holder of a Company stock
option or any participant in any Company stock plan, the Company ESPP or other
Company benefit plan to have any right thereunder to acquire any capital stock
of the Company or the Surviving Corporation.
3. THE OFFER
3.1 The Offer to Purchase.
---------------------
3.1.1. The Offer to Purchase. Provided that this Agreement
shall not have been terminated in accordance with Article 7 and the Company
shall have filed, or shall be prepared to file upon commencement of the Offer
(as defined below), the Schedule 14D-9 (as defined below) as contemplated by
Section 3.3 below, Purchaser shall as promptly as practicable (but in no event
later than six business days following the public announcement of the terms of
this Agreement) commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") an offer (the "Offer") to
purchase for cash all of the outstanding Company Common Shares at a price per
share equal to $16.75 (such price, or any other price per share as may be paid
in the Offer, the "Offer Price"), net to the seller in cash, subject to the
conditions set forth in Exhibit B hereto. Purchaser shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment and pay for Company Common Shares tendered as soon as
practicable after the later of the satisfaction of the conditions to the Offer
and the expiration of the Offer. The obligations of Purchaser to commence the
Offer and to accept for payment and to pay for any Company Common Shares validly
tendered shall be subject only to the conditions set forth in Exhibit B hereto.
The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement and the conditions
set forth in Exhibit B hereto. Unless extended in accordance with Section 3.1.2
and/or Section 3.1.3 below, the Offer shall expire 20 business days after the
date of its commencement (such date, as may be extended in accordance with
Section 3.1.2 and/or Section 3.1.3 below, the "Expiration Date").
3.1.2. Purchaser reserves the right to modify the terms of
the Offer, except that, without the written consent of the Company, Purchaser
shall not (i) decrease the Offer Price, (ii) decrease the aggregate number of
Company Common Shares sought, (iii) change the form of consideration to be paid
pursuant to the Offer, (iv) modify any of the conditions to the Offer set forth
7
in Exhibit B hereto, (v) impose conditions to the Offer in addition to those set
forth in Exhibit B hereto, (vi) except as provided in the proviso set forth
below in this paragraph, extend the Offer, or (vii) amend any other term or
condition of the Offer in any manner which is adverse to the holders of Company
Common Shares, it being agreed that a waiver by Purchaser of any condition in
its discretion shall not be deemed to be adverse to the holders of Company
Common Shares; provided that, if on any scheduled expiration date of the Offer
(as it may be extended in accordance with the terms hereof), all conditions to
the Offer shall not have been satisfied or waived, Purchaser may, without the
consent of the Company, but shall, at the request of the Company, (x) from time
to time, extend the Offer in increments of not more than ten business days each
if any of the conditions set forth in clauses (i), (ii)(a), (d) and (e) of the
conditions set forth in Exhibit B hereto have not been satisfied or waived,
until such time as the conditions are satisfied or waived and (y) extend the
Offer for any period required by any regulation, interpretation or position of
the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer; provided, however, that the Expiration Date may not be
so extended beyond December 31, 2004. Notwithstanding the foregoing, if on any
scheduled expiration date of the Offer (as it may be extended in accordance with
the terms hereof), all conditions to the Offer shall not have been satisfied or
waived, Purchaser may, without the consent of the Company, from time to time,
extend the Offer in increments of not more than ten business days each if any of
the conditions set forth in clauses (ii)(b), (c) and (g) of the conditions set
forth in Exhibit B hereto have not been satisfied or waived, until such time as
the conditions are satisfied or waived provided, however, that the Expiration
Date may not be so extended beyond December 31, 2004.
3.1.3. If, on the Expiration Date, the Minimum Condition has
been satisfied or, with the consent of the Company, waived, and all other
conditions to the Offer have been satisfied or waived but less than 90% of the
Company Common Shares then issued and outstanding on a Fully-Diluted Basis,
together with Company Common Shares beneficially owned by Parent, Purchaser and
their subsidiaries, have been validly tendered and not withdrawn, Purchaser may
extend the Offer for a further period of time, after it has accepted and paid
for (in accordance with the first sentence of this Section) all of the Company
Common Shares tendered in the initial offer period, by means of a subsequent
offering period (a "Subsequent Offering Period") of at least 3 but no more than
20 business days in accordance with Rule 14d-11 under the Exchange Act to meet
the objective (which is not a condition to the Offer) that there be tendered
prior to the Expiration Date (as so extended) and not withdrawn a number of
Company Common Shares which, together with Company Common Shares beneficially
owned by Parent, Purchaser and their subsidiaries, represents at least 90% of
the then issued and outstanding Company Common Shares on a Fully-Diluted Basis.
During the Subsequent Offering Period, Purchaser shall immediately accept for
payment and promptly pay for all Company Common Shares as they are tendered
pursuant to the Offer in accordance with Rule 14d-11 under the Exchange Act.
3.1.4. If, before the Expiration Date, this Agreement has
been terminated pursuant to Article 7, Purchaser shall, and Parent shall cause
Purchaser to, promptly terminate the Offer without accepting for payment any
Company Common Shares (including any Company Common Shares subject to the
Shareholder Tender Agreement).
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3.2 Offer Documents.
---------------
Parent and Purchaser shall file with the SEC as soon as practicable on
the date the Offer is commenced, a Tender Offer Statement on Schedule TO with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule TO") which shall include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (the Schedule TO and such documents, collectively, together with
any amendments and supplements thereto, the "Offer Documents"). Parent and
Purchaser further agree to take all steps necessary to cause the Offer Documents
to be filed with the SEC and to be disseminated to holders of Company Common
Shares. Each of Parent and Purchaser, on the one hand, and the Company, on the
other hand, agrees promptly to correct any information provided by it or on its
behalf for use in the Offer Documents if and to the extent that it shall have
become false and misleading in any material respect, and Parent and Purchaser
further agree to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to the Company's
shareholders, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the opportunity to
review the Offer Documents before they are filed with the SEC. In addition,
Parent and Purchaser agree to provide the Company and its counsel in writing
with any comments Parent, Purchaser or their counsel may receive from time to
time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
3.3 Company Actions.
---------------
3.3.1. The Company hereby represents that (i) its Board of
Directors, at a meeting or meetings duly called and held, has (A) determined
that the Offer and the Merger are advisable and in the best interests of the
Company, (B) approved and adopted the plan of merger (as such term is used in
Section 23-1-40-1 of the Indiana Business Corporation Law) contained in this
Agreement, (C) subject to Section 5.1.3, resolved to recommend acceptance of the
Offer and approval of the plan of merger contained in this Agreement by the
shareholders of the Company, (D) irrevocably taken all necessary steps to cause
Chapter 42 of the Indiana Business Corporation Law to be inapplicable to the
Merger, the Shareholder Tender Agreement and the acquisition of Shares pursuant
to the Offer and the Shareholder Tender Agreement, (E) irrevocably taken all
necessary steps to approve Parent and Purchaser becoming, pursuant to the
Merger, Shareholder Tender Agreement and/or the acquisition of Company Stock
pursuant to the Offer, and the Shareholder Tender Agreement, "interested
shareholders" within the meaning of Section 23-1-43-10 of the Indiana Business
Corporation Law and causing any other requirements of Sections 23-1-43-18 and 19
of the Indiana Business Corporation Law to be inapplicable to the Merger, the
Shareholder Tender Agreement and the acquisition of Shares pursuant to the Offer
and the Shareholder Tender Agreement and (F) irrevocably resolved to elect, to
the extent of the Company's Board of Directors' power and authority and to the
extent permitted by law, not to be subject to any other "moratorium", "control
share acquisition", "business combination", "fair price" or other form of
anti-takeover laws and regulations (collectively, "Takeover Laws") of any
jurisdiction that may purport to be applicable to this Agreement or the
Shareholder Tender Agreement, and (ii) Xxxxxxx Xxxxx & Co. (the "Company
Financial Advisor"), the Company's independent financial advisor, has advised
the Company's Board of Directors that, in its opinion, the consideration to be
paid in the Offer and the Merger to the Company's shareholders is fair, from a
financial point of view, to such shareholders. Subject to Section 5.1.3, the
Company consents to the above recommendations being included in the Offer
Documents. The Company has delivered to Parent a true and complete copy of the
engagement agreement between the Company and the Company Financial Advisor.
9
3.3.2. Concurrently with the commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9"). Each of Parent and
Purchaser, on the one hand, and the Company, on the other hand, agrees promptly
to correct any information provided by it or on its behalf for use in the
Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to the Company's shareholders, in each case as and to
the extent required by applicable federal securities laws. Parent and Purchaser
and their counsel shall be given the opportunity to review the Schedule 14D-9
before it is filed with the SEC. In addition, the Company agrees to provide
Parent and Purchaser and their counsel in writing with any comments the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments.
3.4 Shareholder List.
----------------
In connection with the Offer, the Company shall, or shall cause its
transfer agent to, promptly furnish Parent and Purchaser with mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the Company Common Shares as of
the latest practicable date and shall furnish Parent and Purchaser with such
information and assistance (including periodic updates of such information) as
Parent or Purchaser or their agents may reasonably request in communicating the
Offer to the record and beneficial holders of such shares.
3.5 Directors.
---------
3.5.1. Promptly upon the purchase of and payment for Company
Common Shares by Parent on the Share Purchase Date and prior to the Effective
Time, (i) the size of the Board of Directors of the Company shall be decreased
to seven, (ii) all current directors shall resign, other than three of the
current directors who are not employees of the Company or shareholders,
affiliates, associates or employees of Parent or Purchaser (as shall be
designated by the board of directors of the Company prior to the Share Purchase
Date), and (iii) a number of persons equal to the aggregate vacancies so created
shall be designated by Parent and shall be elected to fill the vacancies so
created. Any person designated by Parent to serve on the Board of Directors of
the Company between the Share Purchase Date and the Effective Time shall be
responsible, qualified and knowledgeable about the retail industry and/or the
sporting goods industry, and the persons designated by Parent to serve shall,
collectively, satisfy all applicable NASD listing standards for composition of
the board. The Company shall, upon request of Parent, use its reasonable best
efforts promptly to secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's designees to be so elected or
appointed to the Board of Directors (and to the extent the Company is not
successful in securing all of such resignations, increase the size of the Board
of Directors to enable Parent to designate a majority of the total number of
directors of the Company), and shall use its reasonable best efforts to cause
Parent's designees to be so elected or appointed at such time. The Company's
10
obligations under this Section 3.5.1 shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to such Section 14(f) and Rule 14f-1 in order
to fulfill its obligations under this Section 3.5.1 (subject to Parent's timely
notification to the Company of such information as is necessary to fulfill such
obligations), including mailing to shareholders (together with the Schedule
14D-9 if Parent has then provided the necessary information) the information
required by such Section 14(f) and Rule 14f-1 as is necessary to enable the
parent's designees to be elected or appointed to the Company's board of
directors. Parent or Purchaser will supply the Company in writing and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of this Section 3.5.1 are in addition to and shall
not limit any rights which Purchaser, Parent or any of their affiliates may have
as a holder or beneficial owner of Company Common Shares as a matter of law with
respect to the election of directors of the Company or otherwise.
3.5.2. As provided in Section 3.5.1, following the Share
Purchase Date and prior to the Effective Time, the Company shall cause its Board
of Directors to have at least three directors who are directors on the date
hereof and who are not employed by the Company and who are not affiliates,
associates, shareholders or employees of Parent or Purchaser (the "Independent
Directors"); provided, however, that if any Independent Directors cease to be
directors for any reason whatsoever, the remaining Independent Directors (or
Independent Director, if there is only one remaining) shall be entitled to
designate any other person(s) who shall not be shareholders, affiliates,
associates or employees of Parent or any of its subsidiaries to fill such
vacancies and such person(s) shall be deemed to be Independent Director(s) for
purposes of this Agreement (provided that the remaining Independent Directors
shall fill such vacancies as soon as practicable, but in any event within five
business days, and provided further that if no Independent Director then
remains, the other directors shall designate three persons who shall not be
shareholders, affiliates, associates or employees of Parent or any of its
subsidiaries to fill such vacancies and such persons shall be deemed to be
Independent Directors for purposes of this Agreement). Following the Share
Purchase Date and prior to the Effective Time, neither Parent nor Purchaser will
take any action to cause any Independent Director to be removed other than for
cause. Notwithstanding anything in this Agreement to the contrary, after the
Share Purchase Date and prior to the Effective Time, any approval by the Board
of Directors or any other Company action must be made at a time when there are
at least three Independent Directors serving on the board of directors of the
Company and with the approval of at least six of the seven directors of the
Company (in each case, or such other number of directors that ensures that at
least a majority of the Independent Directors has granted such approval) in
order to (i) amend or terminate this Agreement by the Company, (ii) exercise or
waive any of the Company's rights, benefits or remedies hereunder, or (iii) take
any other action of the Board of Directors under or in connection with this
Agreement in any manner that adversely affects the holders of Company Common
Shares, as determined by a majority of the Independent Directors. The
Independent Directors shall have the authority to retain such counsel and other
advisors at the expense of the Company as determined appropriate by any of the
Independent Directors. In addition, the Independent Directors shall have the
authority to institute any action, on behalf of the Company, to enforce
performance of this Agreement. For purposes of this Agreement, an "affiliate" of
any person means another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such first person.
11
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
4.1 Representations, Warranties and Agreements of the Company.
---------------------------------------------------------
Except as set forth in a disclosure letter dated the date hereof and
delivered by the Company to Parent and Purchaser concurrently with the execution
and delivery of this Agreement (the "Company Disclosure Letter") (provided that
any fact or item disclosed in any section of the Company Disclosure Letter shall
be deemed to be disclosed with respect to other sections thereof), the Company
represents and warrants to each of Parent and Purchaser as follows:
4.1.1. Organization, Good Standing, Capitalization.
-------------------------------------------
(i) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana
with all requisite corporate power and authority to own, operate and lease its
properties, to carry on its business as now being conducted, to enter into this
Agreement and, subject to the approval of the Company's shareholders in
accordance with the Indiana Business Corporation Law, to perform its obligations
hereunder, except where the failure to be so duly organized, validly existing
and in good standing or to have such corporate power and authority would not
reasonably be expected to have a Material Adverse Effect on the Company. The
authorized and issued capital stock of the Company as of the date hereof is as
set forth in the recitals of this Agreement; all capital stock of the Company
listed therein as authorized has been duly authorized, and all capital stock of
the Company listed therein as issued and outstanding has been validly issued and
is fully paid and non-assessable, with no personal liability attaching to the
ownership thereof. There are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from, or the
sale or issuance by, the Company of any shares of its capital stock of any class
other than options to purchase (1) 2,853,667 shares of the Company's Common
Stock under the Company's stock option plans and stand-alone option agreements
and (2) a stock warrant to purchase 1,350,000 shares (as adjusted for any stock
split, reverse stock split or similar event) of common stock at an exercise
price of not less than $44.82 per share (as adjusted for any stock split,
reverse stock split or similar event). The Disclosure Letter sets forth the
exercise price of all outstanding rights, options, warrants, conversion rights
or other agreements for the purchase of shares of capital stock of the Company.
(ii) Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its respective state of incorporation with all corporate power and authority
to own, operate and lease its properties and to carry on its business as now
being conducted, except where the failures so to be duly organized, validly
existing and in good standing or to have such corporate power and authority,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company. All of the issued and outstanding shares
of common stock of each subsidiary of the Company are held (directly or
indirectly) by the Company, and all such shares have been validly issued and are
fully paid and non-assessable, with no personal liability attaching to the
ownership thereof. There are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from, or the
sale or issuance by, any subsidiary of the Company of any of its capital stock.
12
4.1.2. SEC Filings; Financial Statements. The Company has
filed timely all SEC reports and documents required to be filed by it or its
subsidiaries with the SEC since January 31, 2004 (collectively, the "Company SEC
Reports"), each of which has complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act, and the rules and regulations of the SEC
promulgated thereunder applicable to the Company SEC Reports, each as in effect
on the date so filed. The Company's consolidated statements of operations for
the three fiscal years ended January 31, 2004, February 1, 2003 and February 2,
2002 and the Company's consolidated balance sheets as of January 31, 2004 and
February 1, 2003 and the related notes to all of said financial statements, all
of which have been heretofore included in an Annual Report on Form 10-K filed
with the SEC with respect to the applicable fiscal year, present fairly, in
accordance with U.S. generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods covered except as specifically
referred to in such financial statements, the consolidated financial position of
the Company and its subsidiaries and the consolidated results of their
operations as of, and for the periods ended on, the dates specified.
4.1.3. No Undisclosed Liabilities. There are no material
liabilities of the Company or any of its subsidiaries of any kind whatsoever,
whether or not accrued and whether or not contingent or absolute, other than (i)
liabilities disclosed in the Company's consolidated balance sheet as of January
31, 2004, (ii) liabilities disclosed in the Company's Periodic Report on Form
10-K for the fiscal year ended January 31, 2004 and/or in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended May 1, 2004, (iii)
liabilities incurred on behalf of the Company in connection with this Agreement
and the contemplated Merger, (iv) liabilities incurred in the ordinary course of
business consistent with past practice since January 31, 2004, (v) other
liabilities disclosed to Parent in the Company Disclosure Letter, (vi)
performance obligations under contracts filed as exhibits to the Company SEC
Reports or entered into in the ordinary course of business consistent with past
practice required in accordance with their terms or performance obligations
required under any applicable law, ordinance or regulation of any Governmental
Entity, in each case arising after January 31, 2004, and (vii) liabilities or
obligations that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company. "Material Adverse
Effect" means any effect that with respect to the Company or Parent (1) is both
material and adverse to the financial condition, results of operations, assets
or business of the Company and its subsidiaries taken as a whole or Parent and
its subsidiaries taken as a whole, respectively, excluding any such effect
resulting from or arising in connection with (A) changes or conditions generally
affecting the retail industry and/or the sporting goods industry, (B) changes or
conditions generally affecting the U.S. economy or financial markets, (C)
increase or decrease in trading price or trading volume of the Company Common
Shares, (D) reduction in revenues, cash flow or earnings, (E) changes or
conditions arising by reason of this Agreement, the Merger and the other
transactions contemplated by this Agreement, including the announcement of any
of the foregoing, (F) commencement of a new war or material escalation of
current wars, armed hostilities or terrorism directly or indirectly involving
the United States or (G) the departure of employees of the Company; or (2) would
materially impair the ability of the Company, with respect to any effect on the
Company, or Parent or Purchaser, with respect to any effect on Parent, to
consummate the transactions under this Agreement. "Aggregate MAE" means a
Material Adverse Effect with respect to both the Company and Parent (including
their respective subsidiaries), taken as a whole.
13
4.1.4. Operation in Ordinary Course. Except as disclosed in
any of the Company's SEC reports and documents filed or furnished prior to the
date hereof, each of the Company and its subsidiaries has conducted its business
in the ordinary course consistent with past practice between January 31, 2004
and the date of this Agreement.
4.1.5. Authority Relative to this Agreement, etc. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, except in
the case of the Merger for any requisite approval of the Merger by its
shareholders. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles.
4.1.6. Vote Required. Unless the Merger is consummated
pursuant to Section 23-1-40-4 of the Indiana Business Corporation Law as
contemplated by Section 1.6 above, the affirmative vote of the holders of a
majority of the outstanding Company Common Shares are the only votes of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby. No bonds,
debenture notes or other indebtedness of the Company or its subsidiaries has the
right to vote on any matters on which the holders of the Company's capital stock
may vote.
4.1.7. Compliance with Other Instruments, etc. Subject to
requisite shareholder approval and except for the consents referred to in
Section 4.1.8, neither the execution nor delivery of this Agreement by the
Company nor the Company's consummation of the transactions contemplated hereby
will conflict with, result in any violation of, or constitute a default under,
(i) the Articles of Incorporation or Bylaws of the Company, (ii) any contract
required to be filed with the SEC under Item 601 of Regulation S-K ("Material
Contract") or any other contract, agreement, mortgage, indenture, license,
permit, lease or other instrument that, in any case, is material to the Company
and its subsidiaries taken as a whole or (iii) any judgment, decree, order or
material law or regulation of any governmental agency or authority in the United
States by which the Company or any of its subsidiaries is bound, except, with
respect to clauses (i) through (iii) above, where the conflict, violation or
default, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company.
4.1.8. Governmental and other Consents, etc. Subject to any
requisite shareholder approval and any required filings with the United States
Department of Justice or the Federal Trade Commission, and except for those
consents, approvals, authorizations or filings, which individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company, no consent, approval or authorization of, or filing with, any
court, tribunal, administrative agency or commission, legislative body or other
governmental or regulatory agency, authority, board, bureau or instrumentality
or other public persons or entities in the United States (a "Governmental
Entity") on the part of the Company or any of its subsidiaries is required in
connection with the execution or delivery by the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby other
than (i) filings in the State of Indiana in accordance with the Indiana Business
14
Corporation Law, (ii) filings with the SEC, the National Association of
Securities Dealers, Inc. and any applicable national securities exchange or
quotation system and (iii) filings or consents required in relation to firearms
licenses in connection with a change in control or a change in management.
4.1.9. No Misleading Statements. None of the Company SEC
Reports (including, but not limited to, any financial statements or schedules
included or incorporated by reference therein) contained when filed any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
4.1.10. Compliance with Applicable Law. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses as currently conducted (the "Company Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as disclosed in the Company's SEC reports and documents filed or furnished prior
to the date hereof, the businesses of the Company and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company. No investigation or review by any Governmental Entity
with respect to the Company or its subsidiaries is pending or, to the knowledge
of the Company, threatened, in each case as of the date of this Agreement, other
than those the outcome of which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
4.1.11. No Broker. No broker, finder, investment banker or
other person is entitled to any brokerage, finder's or similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company other than the Company
Financial Advisor.
4.1.12. Litigation. There is not now pending, and to the
knowledge of the Company there is neither threatened nor any basis for, any
litigation, action, suit or proceeding to which the Company or any of its
subsidiaries is or will be a party in or before or by any Governmental Entity,
except for (A) any litigation, action, suit or proceeding (whether instituted,
pending or threatened) involving claims with respect to the Offer, the Merger or
the other transactions contemplated by this Agreement or (B) any other
litigation, action, suit or proceeding (whether instituted, pending or
threatened) involving claims which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company. In
addition, there is no judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
subsidiaries having or which, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on the Company.
15
4.1.13. ERISA Matters.
-------------
(i) The Company has made available to Purchaser
copies of all deferred compensation, pension, profit-sharing and retirement
plans, and all bonus, welfare, severance plans, policies and agreements and
other "employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), fringe benefit or
stock option, stock ownership, stock appreciation, phantom stock or equity (or
equity-based) plans, separation and change in control programs, participated in
or maintained by the Company or with respect to which contributions are made or
obligations assumed by the Company in respect of the Company (including health,
life insurance and other benefit plans maintained for former employees or
retirees). Such plans or other arrangements are collectively referred to herein
as "Company Benefit Plans."
(ii) Except as indicated in the Company's SEC
reports and documents, and except as would not reasonably be expected to have a
Material Adverse Effect on the Company, (A) neither the Company nor any
affiliate maintains, nor has contributed since January 1, 2000, to any
multiemployer plan within the meaning of Sections 3(37) or 4001(a)(3) of ERISA,
(B) for each funded employee pension benefit plan (within the meaning of Section
3(2) of ERISA) that (x) is subject to the provisions of Section 401(a) of the
Code and (y) is maintained by the Company or any of its subsidiaries for any of
its employees, the Company or such subsidiary has obtained a favorable
determination letter from the Internal Revenue Service, (C) to the knowledge of
the Company, none of said determination letters has been revoked by the Internal
Revenue Service, nor has the Internal Revenue Service given any indication to
the Company or such subsidiary that it intends to revoke any such determination
letter, (D) neither the Company nor any affiliate currently maintains,
contributes to or has any liability with respect to any employee benefit plan
that is subject to Title IV of ERISA and (E) the Company, its subsidiaries and
the Company Benefit Plans have not committed any violation of ERISA or any
agreement relating to the administration of such plans.
4.1.14. Parachute Payments.
------------------
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event, such as termination of employment) (A) result
in any material payment (including severance, unemployment compensation,
parachute or otherwise) becoming due to any director or any employee of the
Company or any of its subsidiaries or affiliates from the Company or any of its
subsidiaries or affiliates under any Company Benefit Plan or otherwise, (B)
materially increase any benefits otherwise payable under any Company Benefit
Plan or (C) result in any acceleration of the time of payment or vesting of any
material benefits, except with respect to any event or condition referred to in
any of clauses (A) through (C) above that arises from any employee agreement
disclosed in the Company Disclosure Letter (the "Employee Agreements"). As of
the date of this Agreement, no individual who is a party to an Employee
Agreement has terminated employment or been terminated, in either case under
circumstances that have given rise to a severance obligation on the part of the
Company under such Employee Agreements.
16
4.1.15. Real Estate.
-----------
(i) The Company Disclosure Letter includes a
list, which is true and correct in all material respects, of all the real
property ("Owned Real Property") which is owned in fee by the Company or its
subsidiaries. The Company or its subsidiaries, as the case may be, has good,
marketable and insurable title to the Owned Real Property, except for failures
to have good, marketable and insurable title that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
(ii) The Company Disclosure Letter includes a
list, which is true and correct in all material respects, of all of the leases
and subleases and any amendments thereto of the Company and its subsidiaries and
each leased and subleased parcel of real property in which the Company or any of
its subsidiaries is a tenant, subtenant, landlord or sublandlord ("Real Property
Leases"). The Company Disclosure Letter includes a summary (on a per lease
basis), which, to the knowledge of the Company, is not incorrect in any material
respect, of the following information as and to the extent it is set forth in
any Real Property Lease, reciprocal easement agreement or similar instrument or
memorandum of lease specifically identified in the Disclosure Letter: (A) any
material consent or notice required to be delivered as the result of the
consummation of the Offer or the Merger; (B) each Real Property Lease's term and
any options to extend the term; (C) the rent payable and occupancy costs on a
per lease basis (including CAM (common area maintenance or other similar
charges), utilities, maintenance expenses and taxes) for each of the Company's
currently operating retail stores and the depreciation for each such store on a
per store basis; and (D) any material operating, use or other restrictions or
covenants that restrict or prohibit the use or operation of the store as a
sporting goods retailer (including any restrictions relating to the use or
operation of the lease space as a store of Parent, operating under the "Dick's
Sporting Goods, Inc." name) or the current operation of the store. The Company
Disclosure Letter lists those reciprocal easement agreements, subordination and
non-disturbance agreements, utility leases, title insurance policies and
documents referenced therein, assignments of leases and rents, mortgages,
indentures, tax indemnities and other instruments that the Company has reviewed
in connection with entering into this Merger Agreement, if any (the "Reviewed
Documents"), and discloses whether any of those reviewed agreements and other
reviewed documents contain any material operating, use or other restrictions or
covenants that restrict or prohibit the use or operation of the store as a
sporting goods retailer (including any restrictions relating to the use or
operation of the lease space as a store of Parent, operating under the "Dick's
Sporting Goods, Inc." name) or the current operation of the store. Other than
the Reviewed Documents, to the knowledge of the Company, the Company has not
reviewed any reciprocal easement agreements, subordination and non-disturbance
agreements, utility leases, title insurance policies and documents referenced
therein, assignments of leases and rents, mortgages, indentures, tax indemnities
or other instruments in connection with entering into this Agreement (all of the
foregoing, collectively, the "Unreviewed Documents"). To the knowledge of the
Company, the Company has not received written notice nor is it aware that the
Company's current use or operation of a leased property as a retail sporting
goods store violates any material obligation in the Unreviewed Documents. In the
ordinary course of the Company's due diligence for entering into Real Property
Leases relating to unopened stores for which the Company has entered into lease
agreements or stores which have opened since July 1, 2003 (collectively, "New
Stores") the Company or its agents conducted a review of title exception
documents that would materially restrict or prohibit the use or operation of any
17
New Store and based upon such review, to the knowledge of the Company, the
Company has not received written notice nor is it aware that such title
exception documents materially prohibit or restrict the use or operation of any
New Store as a prototypical Company store.
(iii) With respect to each Real Property Lease, as
of the date of this Agreement: (A) each is a legal, valid, binding and
enforceable agreement, in full force and effect, (B) to the knowledge of the
Company, neither the Company nor its subsidiaries have received written notice
that (i) it is in breach or default in any material respect or (ii) any event
has occurred that would constitute or permit termination, modification or
acceleration of the Real Property Lease or trigger liquidated damages, (C) to
the knowledge of the Company, neither the Company nor its subsidiaries have
received written notice or is aware of any dispute or claim and (D) no interest
in the Real Property Lease or the demised premises has been assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered, except with
respect to any event or condition referred to in Section 4.1.15(iii)(A) through
(D) that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company and/or would not reasonably be
expected to reduce by more than 18% the aggregate four-wall operating income,
calculated in accordance with the Company's four-wall contribution analysis, of
the top nine performing stores of the Company, based on operating income for the
fiscal year ended January 31, 2004; provided, however, that for purposes of
determining the amount of any such reduction, the reduction in the four-wall
operating income of any one store shall be deemed not to be more than 8% of the
aggregate four-wall operating income of the top nine performing stores of the
Company (a "Significant Store MAE").
(iv) The Company Owned Real Property and the Real
Property Leases are referred to collectively herein as the "Company Real
Property." With respect to the Company Real Property, as of the date hereof:
(A) to the knowledge of the Company,
neither the Company nor its subsidiaries have received written notice nor are
they aware that (1) any parcel is not in material compliance with all federal,
state or local laws in effect as of the date hereof relating to use, occupancy
and operation of the related retail store or (2) any condition currently or
previously existing on any Company Real Property that would reasonably be
expected to give rise to any violation of, or require any remediation under, any
existing federal, state or local laws applicable to the Company Real Property,
except with respect to any condition referred to in Section 4.1.15(iv)(A)(1) and
(2) that have arisen in the ordinary course of business that individually or in
the aggregate, would not reasonably be expected to have (x) a Material Adverse
Effect on the Company or (y) a Significant Store MAE;
(B) to the knowledge of the Company,
neither the Company nor its subsidiaries have received written notice of, and to
the knowledge of the Company, there is not currently threatened, any pending
condemnation or other similar proceeding that, after taking into account
insurance coverage, among other things, would reasonably be expected to have a
Material Adverse Effect on the Company;
(C) to the knowledge of the Company,
neither the Company nor its subsidiaries have received written notice that
current use of the Company Real Property violates in any material respect any
18
agreement other than those violations that, individually or in the aggregate,
would not reasonably be expected to have (1) a Material Adverse Effect on the
Company or (2) a Significant Store MAE;
(D) to the knowledge of the Company, no
damage or destruction has occurred, nor are there any defects, with respect to
any of the Company Real Property that, individually or in the aggregate, would
reasonably be expected to have (1) a Material Adverse Effect on the Company or
(2) a Significant Store MAE;
(E) to the knowledge of the Company,
neither the Company nor its subsidiaries have received written notice, nor is
the Company aware, of any required certificate of occupancy, permit, license,
franchise, approval or authorization of any Governmental Entity having
jurisdiction over the Company Real Property which the Company has not obtained
or maintained in effect, the absence of which would reasonably be expected to
have (1) a Material Adverse Effect on the Company or (2) a Significant Store
MAE;
(F) neither the Company nor any
subsidiary is obligated under any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the Company Real
Property or any portion thereof or interest therein other than any option, right
of first refusal or other contractual right which, individually or in the
aggregate, would not reasonably be expected to have (1) a Material Adverse
Effect on the Company or (2) a Significant Store MAE; and
(G) the Company has property and
casualty insurance policies that are commercially reasonable and consistent with
past practices of the Company.
4.1.16. Environmental. The business of the Company and its
subsidiaries is being conducted in material compliance with all current
applicable federal and state laws and regulations relating to the protection of
the environment, except for violations of such laws and regulations that would
not reasonably be expected to have a Material Adverse Effect on the Company.
There is not now pending, and to the knowledge of the Company there is neither
threatened nor any basis for, any action against the Company or its subsidiaries
under any applicable federal and state law or regulations relating to the
protection of the environment that would reasonably be expected to have a
Material Adverse Effect on the Company.
4.1.17. Intellectual Property.
---------------------
(i) The Company and its subsidiaries own or have
the right to use all Company Intellectual Property necessary to carry on their
respective businesses as currently conducted, except where, individually or in
the aggregate, such failure would not reasonably be expected to have Material
Adverse Effect on the Company. As used in this Agreement, "Company Intellectual
Property" means all trademarks, service marks, trade names, Internet domain
names, designs, logos, slogans and general intangibles of like nature, together
with goodwill, registrations and applications relating to the foregoing;
patents, copyrights, (including registrations and applications for any of the
foregoing); computer programs, including any and all databases and compilations,
including any and all data and collections of data; trade secrets; and any other
know-how, methods, concepts, or other proprietary rights owned by the Company
19
and its subsidiaries or held for use or used in the business of the Company and
its subsidiaries as conducted as of the date hereof, or as presently
contemplated to be conducted and any licenses to use any of the foregoing.
(ii) (A) Neither the Company nor its subsidiaries
have received written notice from any third party regarding any actual or
potential infringement or misappropriation, or other violations, by the Company
or any of its subsidiaries of any intellectual property of such third party, (B)
neither the Company nor its subsidiaries have received written notice from any
third party regarding any assertion or claim challenging the validity of any
Company Intellectual Property, (C) to the knowledge of the Company no third
party is misappropriating, infringing, diluting or violating any Company
Intellectual Property that is owned by the Company and that is material to the
Company's operations and (D) to the knowledge of the Company, all of the issued
or registered Company Intellectual Property owned by the Company or any of its
subsidiaries held of record in the name of the Company or the applicable
subsidiary (x) is free and clear of all mortgages, liens, pledges, encumbrances
and restrictions, and (y) is not the subject of any cancellation or
reexamination proceeding or any other proceeding challenging their extent or
validity, except with respect to any event or condition referred to in clauses
(A) through (D) above that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
4.1.18. Insurance. To the knowledge of the Company, neither
the Company nor any Purchaser of the Company has received notice of any pending
or threatened cancellation (retroactive or otherwise) with respect to any of the
insurance policies in force naming the Company, any of its subsidiaries or
employees thereof as an insured or beneficiary or as a loss payable payee.
4.1.19. Labor and Employment Matters.
----------------------------
(i) Neither the Company nor any Subsidiary is
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any subsidiary, nor, to the
knowledge of the Company, are there any activities or proceedings of any labor
union to organize any such employees. As of the date hereof, to the knowledge of
the Company, there are no unfair labor practice complaints pending against the
Company or any subsidiary before the National Labor Relations Board or any other
Governmental Authority or any current union representation questions involving
employees of the Company or any subsidiary. There is not now pending, and to the
knowledge of the Company there is neither threatened nor any basis for, (A) any
employment dispute or claim against the Company or its subsidiaries, (B) claims
of employment discrimination against the Company or its subsidiaries or (C)
federal or state labor citations, investigations, proceedings or complaints,
which in each case would reasonably be expected to have a Material Adverse
Effect on the Company.
(ii) From and after the date of this Agreement,
the Company will not enter into or establish (or amended or altered) any Company
Benefit Plan or Employee Agreements in which any director or executive officer
of the Company participates or any employment agreement to which any director or
executive officer is party without the written consent of Parent or Purchaser.
20
4.1.20. Offer Documents; Schedule 14D-9; and Proxy Statement.
----------------------------------------------------
(i) None of the information supplied or to be
supplied by or on behalf of the Company or any affiliate of the Company for
inclusion in the Offer Documents will, at the times such documents are filed
with the SEC and are mailed to shareholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9 will
not, at the time the Schedule 14D-9 is filed with the SEC and at all times prior
to the purchase of the Company Common Shares by Purchaser pursuant to the Offer,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, except
that no representation or warranty is made by the Company with respect to
information supplied in writing by Parent, Purchaser or an affiliate of Parent
or Purchaser expressly for inclusion in the Offer Documents. The Schedule 14D-9
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations of the SEC thereunder.
(ii) The letter to shareholders, notice of
meeting, proxy statement and form of proxy, or the information statement, as the
case may be, that may be provided to shareholders of the Company in connection
with the Merger (including any amendments or supplements) and any schedules
required to be filed with the SEC in connection therewith (collectively, the
"Proxy Statement") will not, at the time the Proxy Statement is first mailed and
at the time of the Special Shareholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
is made by the Company with respect to information supplied in writing by
Parent, Purchaser or any affiliate of Parent or Purchaser expressly for
inclusion in the Proxy Statement. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder.
4.1.21. Taxes. The Company and each of its subsidiaries have
timely filed all material Tax Returns required to be filed by any of them. All
such Tax Returns are correct and complete in all material respects and were
prepared in substantial compliance with all applicable laws and regulations,
except for any matter which would not reasonably be expected to have a Material
Adverse Effect on the Company. The Company and each subsidiary has withheld and
paid over to the relevant taxing authority all Taxes required to have been
withheld and paid in connection with payments to employees, officers, directors,
independent contractors, creditors, shareholders or other third parties, except
for such Taxes which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company. For purposes of this
Agreement, "Tax Return" means any return, report or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including any information return, claim for refund, amended return or
declaration of estimated Tax.
4.1.22. Related Party Transactions. Since February 1, 2003
the Company has not entered into any transaction of the type described in Item
404(a) of Regulation S-K promulgated by the SEC that is not described in the
Proxy Statement of the Company dated April 30, 2004 or in the other SEC reports
21
and documents filed or furnished with the SEC by the Company. Since April 15,
2004 the Company has not entered into any employment, consulting or other
compensatory agreement.
4.2 Representations, Warranties and Agreements of Parent.
----------------------------------------------------
Parent represents and warrants to the Company as follows:
4.2.1. Organization, Good Standing, Capitalization. Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware with all requisite corporate power and authority
to own, operate and lease its properties, to carry on its business as now being
conducted, and to enter into this Agreement and perform its obligations
hereunder.
4.2.2. Purchaser. Parent owns all of the issued and
outstanding shares of Purchaser. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana
with all requisite corporate power to enter into this Agreement and perform its
obligations hereunder. All of the issued and outstanding shares of Purchaser
have been validly issued and are fully paid and non-assessable with no personal
liability attaching to the ownership thereof. There are no outstanding rights,
options, warrants, conversion rights or agreements for the purchase or
acquisition from, or the sale or issuance by, Purchaser of any shares of its
capital stock, other than this Agreement. Since its organization, Purchaser has
conducted no business activities, except such as are related to this Agreement
and the performance of its obligations hereunder.
4.2.3. Authority Relative to this Agreement, etc. Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each
of Parent and Purchaser and constitutes a valid, legal and binding agreement of
each of Parent and Purchaser, respectively, enforceable against each of Parent
and Purchaser in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles.
4.2.4. Compliance with other Instruments, etc. Subject to
the consents referred to in Section 4.2.5, neither the execution nor delivery of
this Agreement by Parent or Purchaser nor Parent's or Purchaser's consummation
of the transactions contemplated hereby will conflict with, result in any
violation of, or constitute a default under, (i) the Articles or Certificate of
Incorporation or Bylaws of Parent or Purchaser, (ii) any Material Contract or
any other contract, agreement, mortgage, indenture, license, permit, lease or
other instrument material to Parent and its subsidiaries taken as a whole or
(iii) any judgment, decree, order, or any material law or regulation of any
governmental agency or authority in the United States by which Parent or any of
its subsidiaries is bound.
4.2.5. Governmental and other Consents, etc. Subject to any
required filing with the U.S. Department of Justice or the Federal Trade
Commission, no material consent, approval or authorization of or filing with any
Governmental Entity on the part of Parent, Purchaser or any of their
22
subsidiaries is required in connection with the execution or delivery by Parent
and Purchaser of this Agreement or the consummation of the transactions by
Parent and Purchaser contemplated hereby other than filings with the SEC and any
applicable national securities exchange or quotation system.
4.2.6. No Broker. No broker, finder, investment banker or
other person is entitled to any brokerage, finder's or similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Purchaser other than Xxxxx X.
Xxxxxxx Company, L.P.
4.2.7. Litigation. There is not now pending, and to the
knowledge of Parent and Purchaser there is neither threatened nor is there any
basis for, any litigation, action, suit or proceeding to which Parent or
Purchaser or any of their respective subsidiaries is or will be a party in or
before or by any Governmental Entity, except for (A) any litigation, action,
suit or proceeding (whether instituted, pending or threatened) involving claims
with respect to the Offer, the Merger or the other transactions contemplated by
this Agreement or (B) any other litigation, action, suit or proceeding (whether
instituted, pending or threatened) involving claims which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent and Purchaser or the Merger. In addition, there is no judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent or Purchaser or any of their respective subsidiaries
having or which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent and Purchaser or the
Merger.
4.2.8. Offer Documents; Proxy Statement.
--------------------------------
(i) None of the Offer Documents will, at the
times such documents are filed with the SEC and are mailed to the shareholders
of the Company, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by Parent or
Purchaser with respect to information supplied in writing by the Company or an
affiliate of the Company expressly for inclusion therein. The Offer Documents
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations of the SEC thereunder.
(ii) None of the information supplied by Parent,
Purchaser or any affiliate of Parent or Purchaser for inclusion in the Proxy
Statement or the Schedule 14D-9 will, at the date of filing with the SEC, and,
in the case of the Proxy Statement, at the time the Proxy Statement is mailed
and at the time of the Special Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.2.9. Sufficient Funds. Parent has (or will cause Purchaser
to have) the funds necessary to consummate the Offer and the Merger and pay the
Offer Price for each share tendered in the Offer, the Merger Consideration and
the payments required to be made by the Surviving Corporation pursuant to
23
Section 2.3 and 2.4 and the fees and expenses associated with this Agreement and
the transactions contemplated by this Agreement. As of the Share Purchase Date,
Parent will have (or will cause Purchaser to have) the funds necessary to
refinance all the Company's debt for borrowed money that is or could be required
to be repurchased or becomes, or could be declared, due and payable as a result
of the consummation of the Offer. Prior to the Share Purchase Date, Parent will
provide to the Company or its representatives on a confidential basis any
information required to be supplied under Section 5.2.3. Parent shall give the
Company prompt notice of any material adverse change with respect to the status
of the availability of such necessary funds.
5. COVENANTS
5.1 Covenants of the Company.
------------------------
5.1.1. Conduct of Business. The Company agrees that during
the period from the date of this Agreement to the Effective Time (unless the
other parties shall otherwise agree in writing, which approval shall not be
unreasonably withheld, conditioned or delayed and except as otherwise
contemplated by this Agreement), except as would not reasonably be expected to
have a Material Adverse Effect on the Company, the Company will, and will cause
each of its subsidiaries to, conduct its operations according to its ordinary
course of business consistent with past practice and use all commercially
reasonable efforts to preserve intact its current business organization, keep
available the service of its current employees and preserve its relationship
with customers, suppliers and others having significant dealings with it.
Without limiting the generality of the foregoing, and except as otherwise
permitted in this Agreement or as disclosed to Parent by the Company in the
Company Disclosure Letter, prior to the Effective Time, neither the Company nor
any of its subsidiaries will, without the prior written consent of Parent:
(i) except for shares to be issued or delivered
pursuant to the Company's stock plans and agreements for options outstanding and
unexpired on the date of this Agreement and the stock warrant to purchase
1,350,000 shares (as adjusted for any stock split, reverse stock split or
similar event) of common stock at an exercise price of at least $44.82 per
share, issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of capital stock of any class
(including Company Common Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock other than grants at
fair market value on the date of grant made to newly-hired employees of the
Company, or (B) any other securities in respect of, in lieu of, or in
substitution for, of Company Common Shares outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or
propose to redeem, purchase or otherwise acquire, any of its outstanding capital
stock, including Company Common Shares, or any rights, warrants or options to
acquire any such shares or other securities (except for shares of restricted
stock forfeitable under the terms of any of the Company's stock plans and except
in connection with option exercises);
24
(iii) split, combine, subdivide or reclassify any
Company Common Shares or declare, set aside for payment or pay any dividend, or
make any other actual, constructive or deemed distribution in respect of any
capital stock, including Company Common Shares or otherwise make any payments to
shareholders in their capacity as such, other than the declaration and payment
of any regular quarterly cash dividend on Company Common Shares and except for
dividends by a wholly-owned subsidiary of the Company;
(iv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its subsidiaries (other than
the Merger);
(v) adopt any amendments to its Articles or
Certificate of Incorporation or By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate structure or
ownership of any subsidiary of the Company;
(vi) except in each case in the ordinary course
of business consistent with past practice, make any acquisition, by means of
merger, consolidation or otherwise, or disposition, of assets or securities, or
mortgage or otherwise encumber or subject to lien any of its properties or
assets;
(vii) other than in accordance with leases or
other contractual obligations in existence on the date hereof and otherwise in
the ordinary course of business consistent with past practice, (A) incur any
indebtedness for borrowed money or sell any debt securities or guarantee any
such indebtedness, (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly-owned
subsidiary of the Company, or (C) make any commitments for capital expenditures
in excess of $500,000.00 individually, or $2,000,000.00 in the aggregate;
(viii) except in the ordinary course of business
consistent with past practice, grant any material increases in the compensation
of any of its directors, officers or key employees;
(ix) pay or agree to pay any pension, retirement
allowance or other employee benefit not required or contemplated by any of the
existing benefit, severance, termination, pension or employment plans,
agreements or arrangements as in effect on the date hereof to any employee,
consultant, director or officer, whether past or present, except that the
Company (i) may pay or commit to pay bonuses in an amount not to exceed $750,000
in the aggregate to employees of the Company that are not executive officers or
directors who agree to remain employed through the Effective Date and (ii) may
pay or commit to pay bonuses in an amount not to exceed $750,000 in the
aggregate to employees that are not executive officers or directors of the
Company who (A) agree to remain employed through the Effective Date and (B) with
respect to whom Parent has provided the Company prior written consent, which
consent shall not be unreasonably withheld or delayed; and provided that
immediately following the date of this Agreement the Company shall afford Parent
(in accordance with the protocols set forth below) the opportunity to interview
such employees of Company as the Parent selects in an effort to decide whether
or not to offer them a position with Purchaser in the event the transaction is
closed and to offer such future employment terms as Parent deems appropriate.
25
The protocols for this procedure shall be (a) such interviews shall not be
conducted on the premises of the Company, (b) a person selected by the Company
and agreed to by Parent shall be given the opportunity to sit in on any such
interviews (and Parent agrees to the selection of the Company's Executive Vice
President and General Counsel, Senior Vice President, Human Resources and Vice
President, Human Resources), and (c) the individuals of Parent who may conduct
such interviews shall include only the Chief Executive Officer, the President,
the Chief Administrative Officer, the Chief Financial Officer, the Senior Vice
Presidents of Allocations and Replenishments, Human Resources, Information
Technologies and Merchandising and any person approved by Xxxxx Xxxx.
(x) enter into any new or materially amend any
existing employment or severance, termination or similar agreement with any
director or officer;
(xi) except as may be required to comply with
applicable law or regulation, become obligated under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan, severance plan, benefit
arrangement, or similar plan or arrangement, which was not in existence on the
date hereof, or amend any such plan or arrangement in existence on the date
hereof if such amendment would have the effect of materially enhancing any
benefits thereunder;
(xii) (A) settle or compromise any material claims
or litigation (i) with the result that it would materially and adversely affect
a material relationship with a landlord, vendor or other person with whom the
Company has a significant relationship or (ii) which would reasonably be
expected to have a Material Adverse Effect on the Company; or (B) enter into,
modify, amend or terminate any Material Contract or waive, release or assign any
material rights or claims thereunder; for the avoidance of doubt, nothing in
this Section 5.1.1(xii)(B) shall limit the ability of the Company to enter into
Real Property Leases under Section 5.1.1(xvi);
(xiii) make any material change in accounting
policies or procedures applied by the Company (including Tax accounting policies
and procedures), other than (A) in the ordinary course of business consistent
with past practice, (B) as required by applicable law, regulation or change in
generally accepted accounting principles, or (C) based on the advice of its
independent auditors, as the Company determines in good faith is advisable to
conform to best accounting practices;
(xiv) except in the ordinary course of business or
as otherwise required by applicable law or regulation, make any Tax election or
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be canceled or terminated, except in the ordinary course of business;
(xv) authorize, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing;
(xvi) enter into more than two Real Property
Leases relating in each case to a retail store of the Company or its
subsidiaries; or
(xvii) enter into or become obligated under any
option, right of first refusal or other contractual right to purchase, acquire,
sell or dispose of the Company Real Property or any portion thereof or interest
26
therein other than any option, right of first refusal or other contractual right
existing as of the date hereof;
provided that nothing in this Section 5.1.1 shall give Parent or Purchaser the
right to control or direct the operations, assets, liabilities or business of
the Company and its subsidiaries until the Effective Time.
5.1.2. Access to Information. Until the Effective Time or
until the abandonment of the Merger as permitted by this Agreement, the Company
will allow Parent and its representatives reasonable access, during normal
business hours and upon reasonable prior notice specifying in reasonable detail
the information to which access is sought, to the properties, operations, books
and records of the Company and its subsidiaries that Parent in good faith
determines is necessary (i) from and after the date hereof, (A) to verify the
accuracy of the representations made by the Company in this Agreement, (B) to
verify the performance of covenants made by the Company in this Agreement or (C)
to verify the satisfaction of closing conditions and (ii) from and after the
Share Purchase Date, for the purposes stated in clause (i) above and any other
purpose reasonably related to the Merger, the Offer or the transactions
contemplated thereby; provided, however, that, to the extent not already
otherwise provided to Parent and its representatives, the Company will allow
Parent and its representatives reasonable access to information that may be
furnished to other persons pursuant to Section 5.1.3(i).
5.1.3. No Solicitations.
----------------
(i) The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries (A) to solicit, initiate or encourage, or take any other action to
facilitate (including by way of furnishing information), any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal (as hereinafter defined) (other than disclosures
permitted under Section 5.1.3(v) and the issuance of press releases and the
filing or furnishing of documents with the SEC, in each case as permitted under
Section 9.13), or (B) to participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that (1) the Company may in
response to a Takeover Proposal, request clarifications from (but not, in
reliance on this subsection (1), enter into negotiations with) any third party
which makes such Takeover Proposal if such action is taken solely for the
purpose of obtaining information reasonably necessary for the Company to
ascertain whether such Takeover Proposal is a Favorable Third Party Proposal (as
defined below) and (2) the Company may, in response to any proposal which
constitutes a Favorable Third Party Proposal (as defined below), (A) furnish
information with respect to it and its subsidiaries to any person pursuant to a
customary confidentiality agreement, the benefits of the terms of which, if more
favorable than the confidentiality agreement in place with Parent, shall be
extended to Parent, and (B) negotiate or otherwise engage in substantive
discussions with, the party making such proposal, if the Board or Directors of
the Company determines in good faith by a majority vote, based on the advice of
its outside legal counsel, there is a reasonable basis to conclude that such
action is required for it to comply with its fiduciary duties.
27
(ii) Immediately after the execution and delivery
of this Agreement, the Company will, and will cause its subsidiaries and
affiliates, and their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents to, cease and terminate any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any possible Takeover Proposal.
(iii) Subject to this Section 5.1.3, neither the
Board of Directors of the Company nor any committee thereof shall (A) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer or the adoption and approval of the matters to be
considered at the Special Shareholders Meeting, (B) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal, or (C) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal; provided that (x) actions taken by
the Board of Directors of the Company in accordance with the proviso to Section
5.1.3(i) shall not be deemed to be a withdrawal or modification of its approval
or recommendation of the Offer or the Merger or the matters to be considered at
the Special Shareholders Meeting and (y) a "stop-look-and-listen" communication
of the nature contemplated in Rules 14d-9(f) under the Exchange Act with respect
to an unsolicited tender offer or exchange offer that constitutes a Takeover
Proposal, without more, shall not be deemed to be any such withdrawal or
modification if, within the period contemplated by Rule 14e-2 under the Exchange
Act, the Board of Directors of the Company shall publicly confirm such approval
and recommendation and recommends against the acceptance of such tender offer or
exchange offer by the shareholders of the Company. Notwithstanding the
foregoing, in the event that the Board of Directors determines in good faith by
a majority vote, based on the advice of its outside legal counsel, that there is
a reasonable basis for its determination that such action is required for it to
comply with its fiduciary duties with respect to a Favorable Third Party
Proposal, then the Board of Directors of the Company may (1) withdraw or modify
its approval or recommendation of the Offer, the Merger or the adoption and
approval of the matters to be considered at the Special Shareholders Meeting,
(2) approve or recommend the Favorable Third Party Proposal and/or (3) after the
third business day following the Company's written notice to Parent that
specifies the material terms and conditions of the Favorable Third Party
Proposal, terminate this Agreement (and concurrently with such termination, if
it so chooses, cause the Company to enter into any Acquisition Agreement with
respect to the Favorable Third Party Proposal).
(iv) As used in this Agreement, "Takeover
Proposal" means any written proposal from a credible third party relating to any
direct or indirect acquisition or purchase of 20% or more of the assets of the
Company and its subsidiaries, taken as a whole, or 20% or more of any class or
series of equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any Person
beneficially owning 20% or more of the combined voting power of Company Common
Shares, or any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries in which the other party thereto or its shareholders will own
20% or more of the combined voting power of the parent entity resulting from any
such transaction, other than the transactions contemplated by this Agreement. As
used in this Agreement, "Favorable Third Party Proposal" means a written
28
proposal from a credible third party relating to any direct or indirect
acquisition or purchase of 50% or more of the assets of the Company and its
subsidiaries, taken as a whole, or 50% or more of any class or series of equity
securities of the Company or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 50% or more of the combined voting power of Company Common Shares, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries in which the other party thereto or its shareholders will own 50%
or more of the combined voting power of the parent entity resulting from any
such transaction, and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of the
Company Financial Advisor or another financial advisor of nationally recognized
reputation and considering any modifications to this Agreement proposed by
Parent), taking into account legal, financial, regulatory and other aspects of
the proposal deemed appropriate by the Board of Directors of the Company, to be
at a higher price or financial value per Company Common Share, than the Merger
(taking into account any amendments to this Agreement proposed by Parent in
response to the receipt by Parent of the proposal) to the Company's
shareholders.
(v) Nothing contained in this Section 5.1.3
shall prohibit the Company from taking and disclosing to its shareholders a
position contemplated by Rule 14d-9 or 14e-2 promulgated under the Exchange Act
or from making any disclosure to the Company's shareholders if the Board of
Directors determines in good faith by a majority vote, based on the advice of
its outside legal counsel, that there is a reasonable basis for its
determination that such action is required for it to comply with fiduciary
duties or applicable law.
5.1.4. Takeover Laws. The Company shall not take any action
that would cause the transactions contemplated by this Agreement to be subject
to requirements imposed by any Takeover Law and if any Takeover Law is or may
become applicable to the Offer or the Merger, the Company shall use its
reasonable best efforts to ensure that the transactions contemplated by this
Agreement and the Shareholder Tender Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise use its reasonable
best efforts to eliminate or minimize the effects of any Takeover Law on the
Offer or the Merger.
5.1.5. Proxy Statement. Unless the Merger is consummated in
accordance with Section 23-1-40-4 of the Indiana Business Corporation Law as
contemplated by Section 1.6 above and subject to Section 5.1.3, the Company
shall prepare and file with the SEC, subject to the prior review and approval of
Parent and Purchaser (which approval shall not be unreasonably withheld), as
soon as practicable after the consummation of the Offer, a preliminary Proxy
Statement (the "Preliminary Proxy Statement") relating to the Merger as required
by the Exchange Act and the rules and regulations thereunder. The Company shall
obtain and furnish the information required to be included in the Preliminary
Proxy Statement, shall provide Parent and Purchaser with, and consult with
Parent and Purchaser regarding, any comments that may be received from the SEC
or its staff with respect thereto, shall, subject to the prior review and
approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), respond promptly to any such comments made by the SEC or its staff
with respect to the Preliminary Proxy Statement, shall cause the Proxy Statement
to be mailed to the Company's shareholders at the earliest practicable date and
shall use its best efforts to obtain the necessary approval of the Merger by its
shareholders.
29
5.2 Covenants of Parent.
-------------------
5.2.1. Indemnification.
---------------
(i) For a period of six years after the
Effective Time, Parent shall cause the Surviving Corporation to fulfill and
honor in all respects the obligations of the Company pursuant to any
indemnification agreements, dated prior to the date hereof, between the Company
and its present and former directors and officers (the "Indemnified Parties")
and any indemnification provisions under the Company's Articles of Incorporation
or Bylaws as in effect on the date hereof, and will indemnify the Indemnified
Parties with respect to all such obligations of the Company. The Articles of
Incorporation and Bylaws of the Surviving Corporation shall contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Articles of Incorporation
and Bylaws of the Company as in effect on the date hereof, which provisions will
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of the Indemnified Parties.
(ii) For a period of six years after the
Effective Time, Parent shall, at its election, either (A) cause the Surviving
Corporation to use its commercially reasonable efforts to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy on terms no less favorable to those currently applicable to the
directors and officers of the Company or (B) obtain, or permit the Company to
obtain, a six year "tail" insurance policy that provides coverage no less
favorable than the coverage currently provided under the Company's directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy on
terms no less favorable to those applicable to the directors and officers of the
Company.
(iii) This Section 5.2.1 shall survive the
consummation of the Merger, is intended to benefit the Company, the Surviving
Corporation and each Indemnified Party, shall be binding on all successors and
assigns of the Surviving Corporation and Parent, and shall be enforceable by the
Indemnified Parties.
5.2.2. Employee Benefit Plans.
----------------------
(i) For a period of one year after the Closing,
Parent shall either (A) cause the Surviving Corporation to continue to sponsor
and maintain the Company Benefit Plans, or (B) provide benefits to the employees
of the Company who continue to be employed by the Surviving Corporation (the
"Company Employees") and their eligible dependents under employee benefit plans,
programs, policies or arrangements that in the aggregate are no less favorable
than those benefits provided to the Company Employees and their eligible
dependents by the Company immediately prior to the Closing Date. Except to the
extent necessary to avoid duplication of benefits, Parent shall recognize (or
cause to be recognized) service with the Company and any predecessor entities
(and any other service credited by the Company under similar benefit plans) for
purposes of vesting, eligibility to participate, severance and vacation accrual
under employee benefit plans or arrangements maintained by Parent, the Surviving
Corporation or any subsidiary of Parent, if any, in which the Company employees
30
are eligible to participate following the Closing. If Parent offers health
benefits to the Company Employees or their eligible dependents under a group
health plan that is not a Company Benefit Plan that was in effect on the Closing
Date, Parent shall (x) waive any pre-existing condition exclusion under such
group health plan to the extent coverage existed for such condition under the
corresponding Company Benefit Plan covering such Company Employee or eligible
dependent on the Closing Date and (y) credit each Company Employee and eligible
dependent with all deductible payments and co-payments paid by such Company
Employee or eligible dependent during the current plan year under any Company
health plan covering such Company Employee or eligible dependent prior to the
Closing Date for purposes of determining the extent to which any such Company
Employee or eligible dependent has satisfied his or her deductible and whether
he or she has reached the out-of-pocket maximum under any health plan for such
plan year.
(ii) For a period of one year after the Closing
Date, Parent shall cause the Company to maintain any severance pay plan, policy
or agreement of the Company in effect as of the Closing Date on terms no less
favorable to any person employed by the Company on the Closing Date than the
terms of such plan on the date of this Agreement. Parent shall cause the Company
to pay to any person employed by the Company on the Closing Date who becomes
eligible to receive a severance payment under such severance pay plan or policy
of the Company at any time after the Closing Date and prior to the first
anniversary thereof an amount equal to the greater of (A) the severance amount
payable to such employee under such severance pay plan or policy of the Company
and (B) the severance amount that would be payable to a comparable employee of
Parent under Parent's severance program then in effect.
(iii) After the Closing Date, Parent shall cause
the Surviving Corporation to honor all obligations under all of the employment,
severance, consulting and similar agreements of the Company existing on the date
hereof.
(iv) Nothing herein shall be construed as giving
any employee of the Company any right to continued employment after the Closing
Date.
5.2.3. Access. Until the Effective Time or until the
abandonment of the Merger as permitted by this Agreement, Parent will provide
the Company and its representatives with the names of the lenders, copies of
commitment letters and any other documentation or agreements relating to the
terms, conditions or contingencies for the financing described in Section 4.2.9
reasonably requested by the Company.
5.3 Covenants of Purchaser.
----------------------
Purchaser agrees that prior to the Effective Time:
5.3.1. No Business. Prior to the Effective Time, Purchaser
shall not conduct any business or make any investments other than as
specifically contemplated by this Agreement and will not have any assets (other
than a de minimis amount of cash paid to Purchaser for the issuance of its stock
to parent) or any liabilities or obligations, except those incident to its
formation and pursuant to this Agreement and the other transactions contemplated
by this Agreement. Parent will take all action necessary to cause Purchase to
perform its obligations under this Agreement and to consummate the Offer and the
Merger on the terms and conditions set forth in this Agreement.
31
5.3.2. Access. Until the Effective Time or until the
abandonment of the Merger as permitted by this Agreement, Purchaser will allow
the Company and its representatives reasonable access, during normal business
hours and upon reasonable prior notice specifying in reasonable detail the
information to which access is sought, to the properties, operations, books and
records of Purchaser and its subsidiaries to verify the accuracy in all material
respects of (i) the representations made by Purchaser in this Agreement and (ii)
the performance of covenants made by Purchaser in this Agreement.
5.4 Mutual Covenants.
----------------
5.4.1. Reasonable Best Efforts; Consents and Approvals.
-----------------------------------------------
(i) The Company, Parent and Purchaser shall each
use their reasonable best efforts to (A) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary and proper
under applicable law to consummate and make effective the transactions
contemplated hereby as promptly as practicable, (B) obtain from any Governmental
Entity or any other third party any consents, licenses, permits, waivers,
approvals, authorizations, or orders required to be obtained or made by the
Company or Parent or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby including the Offer and the Merger, and (C)
as promptly as practicable, make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement, the Offer and the
Merger required under (1) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws, (2) the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended (the "HSR Act"), and any related
governmental request thereunder and (3) any other applicable law. The Company,
Parent and Purchaser shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to
the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. The Company, Parent and Purchaser shall each use its reasonable best
efforts to furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
law (including all information required to be included in the Offer Documents
and the Proxy Statement) in connection with the transactions contemplated by
this Agreement. The Company, Parent and Purchaser shall each use its reasonable
best efforts to oppose, contest, resolve, appeal, defend against or lift, as
applicable, any action, injunction, proceeding, decree, statute, legislation,
rule, regulation or other order (whether temporary, preliminary or permanent)
("Order") of any Governmental Entity if this Agreement provides that, as a
result thereof, a party would not be obligated to perform any of its obligations
with respect to the Offer, the Merger or any other transaction contemplated by
this Agreement.
(ii) The Company and Parent agree, and shall
cause each of their respective subsidiaries, to cooperate and to use their
respective reasonable best efforts to obtain any government clearances required
for Closing (including through compliance with the HSR Act and any applicable
foreign government reporting requirements), to respond to any government
32
requests for information, and to contest and resist any Order or other action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any Order that restricts, prevents or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement, including by vigorously pursuing all available avenues of
administrative and judicial appeal and all available legislative action. The
Company and Parent also agree to take any and all of the following actions to
the extent necessary to obtain the approval of any Governmental Entity with
jurisdiction over the enforcement of any applicable laws regarding the Merger:
entering into negotiations; providing information; substantially complying with
any second request for information pursuant to the HSR Act; making proposals;
entering into and performing agreements or submitting to judicial or
administrative orders; selling or otherwise disposing of, or holding separate
(through the establishment of a trust or otherwise) particular assets or
categories of assets, or businesses of the Company, Parent or any of their
affiliates; and withdrawing from doing business in a particular jurisdiction.
The parties hereto will consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and proposals
made or submitted by or on behalf of any party hereto in connection with
proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law. Parent shall be entitled to direct any
proceedings or negotiations with any Governmental Entity relating to any of the
foregoing, provided that it shall afford the Company a reasonable opportunity to
participate therein.
(iii) Each of the Company and Parent shall give
(or shall cause their respective subsidiaries to give) any notices to third
parties, and use, and cause their respective subsidiaries to use, their
reasonable best efforts to obtain any third party consents related to or
required in connection with the Merger that are (A) necessary to consummate the
transactions contemplated hereby, or (B) required to prevent an Aggregate MAE
from occurring prior to or after the Effective Time.
(iv) Notwithstanding anything to the contrary in
this Section 5.4.1, (A) neither the Company nor Parent nor any of their
respective subsidiaries shall be required by this Section 5.4.1 to take any
action that, individually or in the aggregate, would reasonably be expected to
have an Aggregate MAE and (B) the Company, Parent and their respective
subsidiaries shall be required by this Section 5.4.1 to take any actions,
including selling, closing or otherwise disposing of stores, so long as such
actions, individually or in the aggregate, would not reasonably be expected to
have an Aggregate MAE.
5.4.2. Notification of Certain Matters. The Company shall
give prompt notice to Parent and Purchaser, and Parent and Purchaser shall give
prompt notice to the Company, of (i) the occurrence, or nonoccurrence, of any
event the occurrence, or non-occurrence, of which would reasonably be expected
to cause any representation or warranty contained in this Agreement to be untrue
or inaccurate in any material respect and (ii) any failure of the Company,
Parent or Purchaser, as the case may be, to comply in all material respects with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. Each of the Company, Parent and Purchaser shall give prompt
notice to the other parties of any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
33
5.4.3. Delisting. Each of the parties agrees to cooperate
with each other in taking, or causing to be taken, all actions necessary to
delist the Company Common Shares from Nasdaq and terminate registration under
the Exchange Act; provided that such delisting and termination shall not be
effective until after the expiration of the Offer or the Effective Time, as
appropriate.
5.4.4. Existing Credit Facilities. Each party agrees to use
its reasonable best efforts to obtain any extensions or waivers under the
Company's existing credit and other financing facilities that may be required so
that such facilities would not become due and payable until the Effective Time.
In the event such extensions or waivers are not obtained, from and after the
Share Purchase Date, Parent will make available to the Company sufficient funds
to repay all amounts that may become due and owning as of the Share Purchase
Date under such facilities.
6. CONDITIONS TO CLOSING; ABANDONMENT AND TERMINATION
6.1 Conditions to the Company's Closing and Its Right to Abandon.
------------------------------------------------------------
The Company shall not be required to close the Merger if any of the
following shall not be true or shall not have occurred or shall not have been
waived in writing by the Company at the Closing:
6.1.1. Injunction. No Order (whether temporary, preliminary
or permanent) shall have been issued, enacted, promulgated, enforced or entered
by any Governmental Entity to enjoin, restrain or prohibit the consummation of
the Merger; provided, however, that notwithstanding the foregoing, the Company
may not invoke the condition in this Section 6.1.1 if (A) the Company shall have
failed in any material respect to use its reasonable best efforts to oppose,
contest, resolve, appeal, defend against or lift, as applicable, such Order, (B)
compliance with such Order would not reasonably be expect to have an Aggregate
MAE or (C) violation of such Order would expose the Company to a maximum
monetary fine or penalty which is less than $15,000,000.00 and would not in the
reasonable judgment of the Company (i) expose the Company or any officer,
director, agent or attorney of the Company to violating any criminal law or to
any criminal sanction (ii) expose any officer, director, agent or attorney of
the Company to any contempt proceeding which could result in a fine or
imprisonment (iii) constitute a matter which an officer or director would have
to disclose in a proxy statement or Annual Report on Form 10-K under Item 401(f)
of Regulation S-K or (iv) constitute a "material violation" as such term is
defined in 17 C.F.R. Section 205.2.
6.1.2. HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
6.1.3. Shareholder Approval. Unless the Merger is
consummated in accordance with Section 23-1-40-4 of the Indiana Business
Corporation Law as contemplated by Section 1.6 above, the plan of merger
contained within this Agreement (within the meaning of Section 23-1-40-1 of the
Indiana Business Corporation Law) shall have been approved by the affirmative
vote of the shareholders of the Company required by and in accordance with
applicable law.
34
6.2 Conditions to Parent's and Purchaser's Closing and Right of
-----------------------------------------------------------
Parent and Purchaser to Abandon.
-------------------------------
Parent and Purchaser shall not be required to close the Merger if any
of the following shall not be true or shall not have occurred or shall not have
been waived in writing by Parent and Purchaser at the Closing:
6.2.1. Injunction. No Order (whether temporary, preliminary
or permanent) shall have been issued, enacted, promulgated, enforced or entered
by any Governmental Entity to enjoin, restrain or prohibit the consummation of
the Merger; provided, however, that notwithstanding the foregoing, Parent and
Purchaser may not invoke the condition in this Section 6.2.1 if (A) Parent or
Purchaser shall have failed in any material respect to use its reasonable best
efforts to oppose, contest, resolve, appeal, defend against or lift, as
applicable, such Order, (B) compliance with such Order would not reasonably be
expect to have an Aggregate MAE or (C) violation of such Order would expose
Parent or Purchaser to a maximum monetary fine or penalty which is less than
$15,000,000.00 and would not in the reasonable judgment of Parent or Purchaser
(i) expose Parent or Purchaser or any officer, director, agent or attorney of
Parent or Purchaser to violating any criminal law or to any criminal sanction
(ii) expose any officer, director, agent or attorney of Parent or Purchaser to
any contempt proceeding which could result in a fine or imprisonment (iii)
constitute a matter which an officer or director would have to disclose in a
proxy statement or Annual Report on Form 10-K under Item 401(f) of Regulation
S-K or (iv) constitute a "material violation" as such term is defined in 17
C.F.R. Section 205.2.
6.2.2. HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
6.2.3. Shareholder Approval. Unless the Merger is
consummated in accordance with Section 23-1-40-4 of the Indiana Business
Corporation Law as contemplated by Section 1.6 above, the plan of merger
contained within this Agreement (within the meaning of Section 23-1-40-1 of the
Indiana Business Corporation Law) shall have been approved by the affirmative
vote of the shareholders of the Company required by and in accordance with
applicable law.
7. TERMINATION
7.1 Terms.
-----
This Agreement may be terminated at any time prior to the Effective
Time, whether or not the shareholders of the Company have approved the Merger,
only as provided below:
(i) if the Merger shall not have occurred on or
before 5:00 p.m., local Pittsburgh, Pennsylvania time, on December 31, 2004, by
either the Company or Parent; provided, however, that (A) the Company may not
invoke this condition in this clause (i) if it is then in Company Material
Breach or the existence of a Company Material Breach resulted in the failure of
the Merger to be consummated on or before such date and (B) Parent may not
invoke the condition of this clause (i) if Parent or Purchaser is then in Parent
Material Breach or the existence of a Parent Material Breach resulted in the
failure of the Merger to be consummated on or before such date;
35
(ii) by the mutual agreement of Parent, Purchaser
and the Company (acting in accordance with Section 3.5, if applicable);
(iii) by either Parent or Purchaser on the one
hand, or the Company, on the other, if consummation of the Merger would violate
any final, non-appealable order, decree or judgment of any United States court
or other tribunal of competent jurisdiction, provided no party may invoke the
condition in clause (iii) if (A) it or any of its affiliates shall have failed
in any material respect to use its reasonable best efforts to oppose, contest,
resolve, appeal, defend against or lift, as applicable, such Order, (B)
compliance with such Order would not reasonably be expected to have an Aggregate
MAE or (C) (1) in the case of Parent or Purchaser, violation of such Order would
expose Parent or Purchaser to a maximum monetary fine or penalty which is less
than $15,000,000.00 and would not in the reasonable judgment of Parent or
Purchaser (i) expose Parent or Purchaser or any officer, director, agent or
attorney of Parent or Purchaser to violating any criminal law or to any criminal
sanction, (ii) expose any officer, director, agent or attorney of Parent or
Purchaser to any contempt proceeding which could result in a fine or
imprisonment, (iii) constitute a matter which an officer or director would have
to disclose in a proxy statement or Annual Report on Form 10-K under Item 401(f)
of Regulation S-K or (iv) constitute a "material violation" as such term is
defined in 17 C.F.R. Section 205.2 and (2) in the case of the Company, violation
of such Order would expose the Company to a maximum monetary fine or penalty
which is less than $15,000,000.00 and would not in the reasonable judgment of
the Company (i) expose the Company or any officer, director, agent or attorney
of the Company to violating any criminal law or to any criminal sanction, (ii)
expose any officer, director, agent or attorney of the Company to any contempt
proceeding which could result in a fine or imprisonment, (iii) constitute a
matter which an officer or director would have to disclose in a proxy statement
or Annual Report on Form 10-K under Item 401(f) of Regulation S-K or (iv)
constitute a "material violation" as such term is defined in 17 C.F.R. Section
205.2;
(iv) by either Parent or Purchaser on the one
hand, or the Company, on the other, if, at the Company's Special Shareholders
Meeting duly convened to approve the Merger or at any adjournment or
postponement thereof, the Company's shareholders shall not have approved the
Merger;
(v) prior to the Share Purchase Date, by Parent
or Purchaser, if (A) (x) any representation and warranty of the Company set
forth in Section 4.1 (which for purposes of this Section 7.1(v) shall be read as
though none of them contained any qualifiers such as "Material Adverse Effect,"
"Aggregate MAE," "in all material respects" or other materiality qualifiers)
shall not have been true and correct as of the date of this Agreement and as of
the then scheduled expiration date of the Offer (as it may be extended in
accordance with the terms hereof) with the same force and effect as though made
as of such date of termination pursuant to this clause (or as of the date when
made in the case of any representation and warranty which specifically relates
to an earlier date), except where the failure of such representations and
warranties in the aggregate to be true and correct, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company, or (y) the Company shall have breached or failed in any material
respect to perform and comply with any of its material obligations, covenants or
agreements contained in this Agreement and then required to be performed or
complied by it (a condition referred to in clauses (x) and (y) above being a
"Company Material Breach") and (B) such Company Material Breach cannot be or has
36
not been cured in all material respects within 30 days after the giving of
written notice to the Company of such Company Material Breach; provided,
however, that Parent and Purchaser may not invoke the condition in this clause
(v) if (1) Parent or Purchaser is then in Parent Material Breach or (2) such
Company Material Breach is curable through the exercise of the Company's
reasonable best efforts and the Company is so using its reasonable best efforts
to cure such breach or failure;
(vi) by the Company (A) in accordance with
Section 5.1.3(iii), provided that it has complied in all material respects with
all provisions contained in Section 5.1.3, including the notice provisions
therein, and that it complies in all material respects with the requirement to
pay the Termination Fee pursuant to Section 8.1 or (B) if Parent or Purchaser
fails to commence the Offer, amends the Offer or fails to consummate the Offer,
in any case in violation of Section 3.1;
(vii) prior to the Share Purchase Date by the
Company, if (A) (x) any representation and warranty of Parent or Purchaser set
forth in Section 4.2 (which for purposes of this Section 7.1(vii) shall be read
as though none of them contained any qualifiers such as "Material Adverse
Effect," "Aggregate MAE," "in all material respects" or other materiality
qualifiers) shall not have been true and correct as of the date of this
Agreement and as of the then scheduled expiration date of the Offer (as it may
be extended in accordance with the terms hereof) with the same force and effect
as though made as of such date of termination pursuant to this clause (or as of
the date when made in the case of any representation and warranty which
specifically relates to an earlier date), except where the failure of such
representations and warranties in the aggregate to be true and correct,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent, or (y) Parent or Purchaser shall have
breached or failed in any material respect to perform and comply with any of
their material obligations, covenants or agreements contained in this Agreement
(other than those expressly referenced in Section 7.1(vi)(B) and then required
to be performed or complied by either or both of them (a condition referred to
in clauses (x) and (y) above being a "Parent Material Breach") and (B) such
Parent Material Breach cannot be or has not been cured in all material respects
within 30 days after the giving of written notice to Parent of such Parent
Material Breach; provided, however, that the Company may not invoke the
condition in this clause (vii) if (1) the Company is then in Company Material
Breach or (2) such Parent Material Breach is curable through the exercise of
Parent's or Purchaser's reasonable best efforts and Parent and Purchaser are
using their reasonable best efforts to cure such breach or failure;
(viii) prior to the Share Purchase Date by Parent
or Purchaser if (A) the Board of Directors of the Company (or, if applicable,
any committee thereof) shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Offer or the Merger or the matters
to be considered at the Special Shareholders Meeting or failed to reconfirm its
recommendation within 15 business days after receiving a written request from
Parent to do so, or approved or recommended any Takeover Proposal in respect of
the Company or (B) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions; provided that
(x) actions taken by the Board of Directors of the Company in accordance with
the proviso to Section 5.1.3(i) shall not be deemed to be a withdrawal or
modification of its approval or recommendation of the Offer or the Merger or the
matters to be considered at the Special Shareholders Meeting and (y) a
"stop-look-and-listen" communication of the nature contemplated in Rules
14d-9(f) under the Exchange Act with respect to an unsolicited tender offer or
37
exchange offer, without more, shall not be deemed to be any such withdrawal or
modification if, within the period contemplated by Rule 14e-2 under the Exchange
Act, the Board of Directors of the Company shall publicly confirm such approval
and recommendation and recommends against the acceptance of such tender offer or
exchange offer by the shareholders of the Company.
7.2 Effect of Termination.
---------------------
If the Merger is abandoned and this Agreement is terminated as provided
in Section 7.1, this Agreement (except this Section 7.2, Article 8 and Sections
9.4 through 9.12) shall forthwith become wholly void and of no effect, and
neither Parent, the Company or Purchaser shall have any liability to any other
party hereunder other than for (i) the payment of all amounts due pursuant to
Article 8 and Sections 9.5 and 9.6 and (ii) all damages and other amounts due in
connection with fraud or the breach or failure to perform in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would permit any
party to terminate this Agreement pursuant to Section 7.1(v) (with respect to a
right to terminate of Parent or Purchaser) or pursuant to Section 7.1(vii) (with
respect to a right to terminate of the Company), in each case disregarding any
cure or ability or inability to cure and further disregarding whether or not
this Agreement was terminated as a result of the exercise of any such right
under Section 7.1(v) or Section 7.1(vii).
8. TERMINATION FEE AND EXPENSES
8.1 Termination Fee.
---------------
In the event that a Takeover Proposal shall have been made known to the
Company or any of its subsidiaries or has been made directly to the Company's
shareholders generally or any person shall have publicly announced an intention
(whether or not conditional) to make such a Takeover Proposal and thereafter
this Agreement is terminated by either the Company pursuant to Section
7.1(vi)(A) or Parent or Purchaser pursuant to Section 7.1(viii), then the
Company shall promptly, but in no event later than two days after the date of
such termination, pay Parent a fee equal to $13,000,000.00 by wire transfer of
same day funds (the "Termination Fee"). For purposes of this Section 8.1, all
references to 20% in the definition of Takeover Proposal shall be deemed to be
references to 50%. The Company acknowledges that the agreements contained in
this Section 8.1 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails promptly to pay the amount due
pursuant to this Section 8.1, and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 8.1, the Company shall pay to Parent its costs and
expenses (including reasonably fees and expenses of outside legal counsel for
Parent) in connection with such suit, together with interest on the amount of
the fee at the prime rate of PNC Bank, National Association in effect on the
date such payment was required to be made.
8.2 Costs and Expenses.
------------------
8.2.1. Generally. Except as otherwise set forth in this
Agreement, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
38
hereby shall be paid by the party incurring such expense (including the filing
fee in connection with the filings required under the HSR Act to be incurred by
Purchaser and Parent).
8.2.2. Termination in Connection with Takeover Proposals. If
this Agreement is terminated pursuant to Section 7.1(vi)(A) or to Section
7.1(viii), the Company will reimburse upon demand therefor Parent for all of the
out-of-pocket expenses incurred by Parent or Purchaser (including reasonable
fees and expenses of outside legal counsel for Parent).
9. MISCELLANEOUS
9.1 Termination of Covenants, Representations and Warranties.
--------------------------------------------------------
The respective covenants, representations and warranties of the parties
hereto contained in Articles 4 and 5 hereof, shall expire and be terminated and
extinguished upon the Effective Time, and none of the parties hereto shall
thereafter be under any liability whatsoever with respect to such covenants,
representations, and warranties. This Section 9.1 shall have no effect upon any
other obligations hereunder of any of the parties hereto whether to be performed
before or after the Effective Time.
9.2 Execution in Counterparts.
-------------------------
For the convenience of the parties, this Agreement and any amendments,
supplements, waivers and modifications may be executed in two or more
counterparts, which may be delivered by facsimile, each of which shall be deemed
an original, but all of which together shall constitute one and the same
document.
9.3 Waivers and Amendments.
----------------------
Prior to the Effective Time, this Agreement may be amended, modified
and supplemented in writing by the parties hereto and any failure of any of the
parties hereto to comply with any of its obligations, agreements or conditions
as set forth herein may be expressly waived in writing by the other parties
hereto.
9.4 Confidentiality; Amendment to Confidentiality Agreement.
-------------------------------------------------------
The Company and Parent will abide by the terms of that certain
Confidentiality Agreement dated June 27, 2003 between the Company and Parent
(the "Confidentiality Agreement"). In addition, the Company and Parent hereby
amend the Confidentiality Agreement by replacing (i) the reference in fifth line
of Section 8 (the non-solicitation provision) thereof from "one year" to "two
years" and (ii) the reference in fifth line of in Section 5 (the no-hire
provision) thereof from "one year" to "two years;" provided, however, that
notwithstanding the foregoing or otherwise, Section 8 of the Confidentiality
Agreement shall not act in any way or manner to prohibit or limit the Parent or
its affiliates from responding to any Takeover Proposal or from making an offer
to the Board of Directors to improve the terms and conditions of the Offer
and/or this Agreement in response to the Company's provision of notice of
approval or recommendation of a Favorable Third Party Proposal and provided,
further, however, that Section 5 (the no-hire provision) shall terminate and be
39
of no force and effect if the Company terminates this Agreement pursuant to
Section 7.1(vi)(A) or if Parent or Purchaser terminates this Agreement pursuant
to Section 7.1(viii) and a third party acquires a majority of the Company's
equity or it's a majority of the assets of the Company and its subsidiaries.
Accordingly, except as expressly set forth in the Confidentiality Agreement, as
amended or modified hereby, each provision of the Confidentiality Agreement
shall survive and continue to be binding on the parties thereto in accordance
with the terms thereof until June 27, 2005.
9.5 Indemnification by the Company.
------------------------------
If, for any reason, the Merger is not consummated pursuant to the terms
of this Agreement, as it may be amended, modified or supplemented, the Company
agrees to indemnify and hold harmless Parent and Purchaser, each person, if any,
who controls Parent or Purchaser, each officer and director of Parent and
Purchaser, and each and all of them, against any and all losses, claims,
damages, or liabilities, joint or several (and to reimburse each such
indemnified person for any legal or other expenses reasonably incurred by such
indemnified persons in connection with investigating or defending any such loss,
claim, damage or liability, or action in respect thereof) to which they, or any
of them may become subject under the Exchange Act or other statutory law or
common law, caused by, or arising out of, any of the information relating to the
Company, its subsidiary, affiliates, officers or directors included in the Offer
Documents or the Proxy Statement being false or misleading in any material
respect, failing to state any facts necessary to make the statements therein not
false or misleading in any material respect, or omitting to state any material
fact required to be stated therein with respect to the Company, its
subsidiaries, affiliates, officers or directors.
9.6 Indemnification by Parent.
-------------------------
If, for any reason, the Merger is not consummated pursuant to the terms
of this Agreement, as it may be amended, modified or supplemented, Parent agrees
to indemnify and hold harmless the Company, each person, if any, who controls
the Company, each officer and director of the Company, and each and all of them,
against any and all losses, claims, damages or liabilities, joint or several
(and to reimburse each such indemnified person for any legal or other expenses
reasonably incurred by such indemnified person in connection with investigating
or defending any such loss, claim, damage or liability, or action in respect
thereof) to which they, or any of them may become subject under the Exchange Act
or other statutory law or common law, caused by, or arising out of, any of the
information relating to Parent, its subsidiaries, affiliates, officers or
directors included in the Offer Documents and the Proxy Statement being false or
misleading in any material respect, failing to state any facts necessary to make
the statements therein not false or misleading in any material respect, or
omitting to state any material fact required to be stated therein with respect
to Parent, its subsidiaries, affiliates, officers or directors.
40
9.7 Procedure.
---------
If a claim with respect to which indemnification pursuant hereto is
intended to be sought is made against any person entitled to indemnification
against such claim hereunder, such indemnified person shall notify the
indemnifying party of the assertion thereof by the claimant or of any action
commenced against such indemnified person within a reasonable time after such
person shall have learned of such assertion or been served with the summons or
other first legal process or given information as to the nature and basis of the
claim. The indemnifying party shall assume the defense of any suit brought to
enforce any such claim and shall be entitled to use counsel selected by it, at
its own expense. The indemnified person shall be entitled to join in the defense
of any such claim with counsel of its own choice, at its own expense. The
indemnifying party shall not be entitled to settle any such claim, without the
prior written consent of the indemnified party, unless, as part of such
settlement, the indemnified party shall receive a general release with respect
to such claim from the claimant.
9.8 Notices.
-------
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (a) on the date of delivery, if personally delivered or facsimiled (with
confirmation), (b) on the first business day following the date of dispatch, if
delivered by a recognized next-day courier service, or (c) on the third business
day following the date of mailing, if mailed by registered or certified mail
(return receipt requested), in each case to such party at its address or
telecopy number set forth below or such other address or numbers as such party
may specify by notice to the other parties:
To the Company:
Xxxxxx'x Trading Company, Inc.
Xxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: C. Xxxxx Xxxx, Executive Vice President,
General Counsel and Secretary
with a copy to:
Drake S. Tempest, Esq.
O'Melveny & Xxxxx LLP
Times Square Tower
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
41
To Parent or Purchaser:
Dick's Sporting Goods, Inc.
000 Xxxxxxxx Xxxxx
XXXX Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Executive Vice
President and Chief Administrative Officer
with copies to:
Xxxxx X. Xxxxx, Xx., Esq.
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxxxxxx PC
20th Floor
301 Grant Street, One Oxford Centre
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
or to such other address as specified in a notice given in
like manner.
9.9 Entire Agreement; No Third Party Beneficiaries.
----------------------------------------------
This Agreement (including the documents and the instruments referred to
herein) (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and (b) except as provided in Section 5.2, is
not intended to confer upon any person other than the parties hereto or thereto
any rights or remedies hereunder or thereunder.
9.10 Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Indiana without regard to any applicable conflicts of
law. Each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any federal court located in the Northern District of Indiana or
any Indiana state court located in a county within the area comprising the
Federal District Court for the Northern District of Indiana in the event any
dispute arises out of this Agreement or the transactions contemplated by the
Merger Agreement, (ii) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that it shall not bring any action relating to this Agreement
or the transactions contemplated hereby in any court other than a federal or
state court sitting in the Federal District Court for the Northern District of
Indiana or located in a county within the area comprising the Federal District
Court for the Northern District of Indiana.
42
9.11 Waiver of Jury Trial.
--------------------
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.11.
9.12 Severability.
------------
If any term or other provision of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced
under any rule of law in any particular respect or under any particular
circumstances, such term or provision shall nevertheless remain in full force
and effect in all other respects and under all other circumstances, and all
other terms, conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
9.13 Publicity.
---------
The initial press release concerning the Offer and the Merger shall be
a joint press release and, thereafter, except for disclosures to shareholders in
accordance with Section 5.1.3 and except as otherwise required by law or the
rules of the SEC, the NYSE (with respect to Parent) or NASDAQ (with respect to
the Company), for so long as this Agreement is in effect, neither Parent nor the
Company shall, or shall permit any of their respective subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld; provided,
however, that either the Company or Parent or both may file a copy of this
Agreement and the related agreements with the SEC. The parties have agreed to
the text of the joint press release announcing the execution of this Agreement.
43
9.14 Interpretation.
--------------
When a reference is made in this Agreement to Sections or Exhibits,
such reference shall be to a Section of, or Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement or Exhibits, they shall be deemed to be followed by the words "without
limitation." No rule of construction against the draftsperson shall be applied
in connection with the interpretation or enforcement of this Agreement.
References to "knowledge" of a person mean actual present knowledge without
inquiry, and references to "knowledge of the Company" or "the Company's
knowledge" mean the actual present knowledge without inquiry of Xxxxx Xxxxxx,
Xxxxx Xxxx and Xxxxxx Xxxxxxx. References to "SEC reports and documents" mean
all forms, reports, statements and documents, including exhibits thereto, filed
or furnished to the SEC.
9.15 Non-Recourse.
------------
No recourse under this Agreement shall be had against any "controlling
person" (within the meaning of Section 20 of the Exchange Act) of any party or
the partners, shareholders, directors, officers, employees, agents and
affiliates of the party or such controlling persons, it being expressly agreed
and acknowledged that no personal liability whatsoever shall attach to, be
imposed on or otherwise be incurred by such controlling person, partner,
shareholder, director, officer, employee, agent or affiliate, as such, for any
obligations of the party under this Agreement or for any claim based on, in
respect of or by reason of such obligations or their creation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
44
IN WITNESS WHEREOF, this Agreement has been executed by each of the
undersigned, all on the date first above written.
XXXXXX'X TRADING COMPANY, INC.
By: /s/ C. XXXXX XXXX
-----------------------------------------
Name: C. Xxxxx Xxxx
Title: Executive Vice President, General
Counsel and Secretary
DICK'S SPORTING GOODS, INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and Chief
Administrative Officer
DIAMONDBACKS ACQUISITION INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
S-1
SCHEDULE OF DEFINITIONS
-----------------------
Acquisition Agreement.................................................5.1.3(iii)
---------------------
Aggregate MAE..............................................................4.1.3
-------------
Agreement......................................................................1
---------
Closing......................................................................1.8
-------
Closing Date.................................................................1.8
------------
Code.......................................................................2.1.3
----
Company........................................................................1
-------
Company Benefit Plans..................................................4.1.13(i)
---------------------
Company Common Shares..........................................................1
---------------------
Company Disclosure Letter....................................................4.1
-------------------------
Company Employees.......................................................5.2.2(i)
-----------------
Company ESPP...............................................................2.4.3
------------
Company Financial Advisor..................................................3.3.1
-------------------------
Company Intellectual Property..........................................4.1.17(i)
-----------------------------
Company Permits...........................................................4.1.10
---------------
Company Preferred Stock........................................................1
-----------------------
Company Real Property.................................................4.1.15(iv)
---------------------
Company SEC Reports........................................................4.1.2
-------------------
Confidentiality Agreement....................................................9.4
-------------------------
Effective Time...............................................................1.7
--------------
Employee Agreements.......................................................4.1.14
-------------------
ERISA..................................................................4.1.13(i)
-----
Exchange Act...............................................................3.1.1
------------
Expiration Date............................................................3.1.1
---------------
Favorable Third Party Proposal.........................................5.1.3(iv)
------------------------------
GAAP.......................................................................4.1.2
----
Governmental Entity........................................................4.1.8
-------------------
HSR Act.................................................................5.4.1(i)
-------
Indemnified Parties.....................................................5.2.1(i)
-------------------
Independent Directors......................................................3.5.2
---------------------
Material Adverse Effect....................................................4.1.3
-----------------------
Material Contract..........................................................4.1.7
-----------------
Merger.......................................................................1.1
------
Merger Consideration.......................................................2.1.1
--------------------
New Purchase Date..........................................................2.4.3
-----------------
New Stores............................................................4.1.15(ii)
----------
Offer......................................................................3.1.1
-----
Offer Documents..............................................................3.2
---------------
Offer Price................................................................3.1.1
-----------
Offer to Purchase..........................................................3.1.1
-----------------
Order...................................................................5.4.1(i)
-----
Owned Real Property....................................................4.1.15(i)
-------------------
Parent.........................................................................1
------
Parent Material Breach..................................................7.1(vii)
----------------------
Paying Agent...............................................................2.1.2
------------
Preliminary Proxy Statement................................................5.1.5
---------------------------
Proxy Statement.......................................................4.1.20(ii)
---------------
Purchaser......................................................................1
---------
Purchaser Common Stock.........................................................1
----------------------
Real Property Leases..................................................4.1.15(ii)
--------------------
Reviewed Documents....................................................4.1.15(ii)
------------------
Schedule 14D-9.............................................................3.3.2
--------------
Schedule TO..................................................................3.2
-----------
SEC........................................................................3.1.2
---
Securities Act.............................................................4.1.2
--------------
Share Purchase Date..........................................................1.5
-------------------
Shareholder Tender Agreement...................................................1
----------------------------
Significant Store MAE................................................4.1.15(iii)
---------------------
Special Shareholders Meeting.................................................1.5
----------------------------
Subsequent Offering Period.................................................3.1.3
--------------------------
Surviving Corporation........................................................1.1
---------------------
Takeover Laws..............................................................3.3.1
-------------
Takeover Proposal......................................................5.1.3(iv)
-----------------
Tax........................................................................2.1.3
---
Tax Return................................................................4.1.21
----------
Taxes......................................................................2.1.3
-----
Termination Fee..............................................................8.1
---------------
Unreviewed Documents..................................................4.1.15(ii)
--------------------
2
EXHIBIT B
---------
CONDITIONS OF THE OFFER
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Merger (the "Agreement") of which this
Exhibit B is a part. For purposes of this Exhibit B:
"Minimum Condition" means that there shall be validly tendered and not
withdrawn a number of Company Common Shares that (including the shares tendered
under the Shareholder Tender Agreement) immediately prior to the acceptance for
payment of Company Common Shares pursuant to the Offer represents at least a
majority of the Fully Diluted Number of Company Shares.
"Fully Diluted Number of Company Shares" means the sum of (i) the
aggregate number of Company Common Shares outstanding immediately prior to the
acceptance of Company Common Shares pursuant to the Offer, plus (ii) the
aggregate number of Company Common Shares issuable upon the exercise of any
option, warrant, other right to acquire capital stock of the Company or other
security exercisable or convertible for Company Common Shares or other capital
stock of the Company outstanding immediately prior to the acceptance of Company
Common Shares pursuant to the Offer.
A "Triggering Event" shall be deemed to have occurred if (A) the Board
of Directors of the Company (or, if applicable, any committee thereof) shall
have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Offer or the Merger or the matters to be considered at the
Special Shareholders Meeting or failed to reconfirm its recommendation within 15
business days after receiving a written request from Parent to do so, or
approved or recommended any Takeover Proposal in respect of the Company or (B)
the Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions; provided that (x) actions taken
by the Board of Directors of the Company in accordance with the proviso to
Section 5.1.3(i) of the Agreement shall not be deemed to be a withdrawal or
modification of its approval or recommendation of the Offer or the Merger or the
matters to be considered at the Special Shareholders Meeting and (y) a
"stop-look-and-listen" communication of the nature contemplated in Rules
14d-9(f) under the Exchange Act with respect to an unsolicited tender offer or
exchange offer, without more, shall not be deemed to be any such withdrawal or
modification if, within the period contemplated by Rule 14e-2 under the Exchange
Act, the Board of Directors or the Company shall publicly confirm such approval
and recommendation and recommends against the acceptance of such tender offer or
exchange offer by the shareholders of the Company.
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Company Common Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to any applicable rules and
regulations of the SEC, the payment for, any tendered Company Common Shares, and
may amend the Offer consistent with the terms of the Agreement or terminate the
Offer and not accept for payment any tendered Company Common Shares, if:
(i) the Minimum Condition shall not have been satisfied at the time of
expiration of the Offer, as it may be extended; or
(ii) on any scheduled expiration date as the same may be extended of
the Offer any of the following events or circumstances shall occur or exist or
shall be reasonably determined by Parent or Purchaser to have occurred or exist:
(a) any waiting period (and any extension thereof)
applicable to the consummation of the Offer and the Merger under the HSR Act
shall not have expired or been terminated;
(b) (A) with the exception of the representations and
warranties set forth in Section 4.1.15, any representation and warranty of the
Company set forth in Section 4.1 of the Agreement (which representations and
warranties for purposes of this paragraph (ii)(b)(A) shall be read as though
none of them contained any qualifiers such as "Material Adverse Effect,"
"Aggregate MAE," "in all material respects" or other materiality qualifiers)
shall not have been true and correct as of the date of this Agreement and as of
then scheduled expiration date of the Offer with the same force and effect as
though made as of the then scheduled expiration date of the Offer (or as of the
date when made in the case of any representation and warranty which specifically
relates to the date of this Agreement or an earlier date), except where the
failure of such representations and warranties in the aggregate, to be true and
correct, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company and (B) the representations and
warranties of the Company set forth in Section 4.1.15 of the Agreement (which
representations and warranties for purposes of this paragraph (ii)(b)(B) shall
be read as written, including with any qualifiers such as "Material Adverse
Effect," "Aggregate MAE," "in all material respects" or other materiality
qualifiers) shall not have been true and correct as of the date of this
Agreement and the then scheduled expiration date of the Offer (or as of the date
when made in the case of any representation and warranty which specifically
relates to the date of this Agreement or an earlier date); provided, that any
failure of any representation or warranty of the Company set forth in Section
4.1 of the Agreement, including those set forth in Section 4.1.15, to be true
and correct cannot be, or has not been, cured in all material respects within 30
days after the giving of written notice to the Company of such failure;
(c) the Company shall have breached or failed in any
material respect to perform and comply with any of its material obligations,
covenants or agreements contained in the Agreement and required to be performed
or complied with by it;
(d) any Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any Order which is in effect and which (i)
enjoins, restrains or prohibits consummation of the Offer or the Merger, (ii)
enjoins, restrains or prohibits the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a whole, or as a
result of the Offer or the Merger requires the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion of their
respective business assets, (iii) enjoins, restrains or prohibits Parent or any
subsidiary of Parent from exercising effectively full rights of ownership of any
Company Common Shares, including the right to vote any shares acquired by
Purchaser pursuant to the Offer on all matters properly presented to the
Company's shareholders including the approval and adoption of the Agreement and
the transactions contemplated thereby, (iv) requires divestiture by Parent or
2
any affiliate of Parent of any Company Common Shares; provided however, that
notwithstanding the forgoing, Purchaser may not invoke any condition in clauses
(i), (ii), (iii) and (iv) above if (A) Purchaser shall have failed in any
material respect to use its reasonable best efforts to oppose, contest, resolve,
appeal, defend against or lift, as applicable, such Order, (B) compliance with
such Order would not reasonably be expected to have an Aggregate MAE or (C)
violation of such Order would expose Parent or Purchaser to a maximum monetary
fine or penalty which is less than $15,000,000.00 and would not in the
reasonable judgment of Parent or Purchaser (i) expose Parent or Purchaser or any
officer, director, agent or attorney of Parent or Purchaser to violating any
criminal law or to any criminal sanction (ii) expose any officer, director,
agent or attorney of Parent or Purchaser to any contempt proceeding which could
result in a fine or imprisonment (iii) constitute a matter which an officer or
director would have to disclose in a proxy statement or Annual Report on Form
10-K under Item 401(f) of Regulation S-K or (iv) constitute a "material
violation" as such term is defined in 17 C.F.R. Section 205.2;
(e) there shall have occurred and be continuing: (i) any
general suspension of trading in, or limitation on prices for, securities on The
NASDAQ Stock Market or NYSE for a period equal to or in excess of one week
(excluding any organized halt triggered solely as a result of a specified
decrease in a market index or suspensions or limitations resulting solely from
physical damage, technological or software breakdowns or malfunctions or
interference with such exchange not related to market conditions); (ii) a
declaration by a Governmental Entity of a banking moratorium or any suspension
of payments in respect of banks in the United States; (iii) any extraordinary
limitation (whether or not mandatory) by any Governmental Entity on the
extension of credit generally by banks or other financial institutions; (iv)
commencement of a new war or material escalation of current wars, armed
hostilities or terrorism directly or indirectly involving the United States,
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company or Parent; or (v) a change in the general
financial, bank or capital market conditions which (1) materially and adversely
affects the ability of financial institutions in the United States to extend
credit or syndicated loans and (2) closes as a practical matter the capital
markets to Parent for more than one week;
(f) the Agreement shall have been terminated in
accordance with its terms or Parent or Purchaser shall have reached an agreement
or understanding in writing with the Company providing for termination or
amendment of the Offer or delay in payment for Company Common Shares; or
(g) a Triggering Event shall have occurred.
Subject to Section 3.1.2, the foregoing conditions are for the sole
benefit of Parent and Purchaser. Except for the Minimum Condition, the foregoing
conditions may be waived by Parent and Purchaser, in whole or in part at any
time and from time to time, in the sole discretion of Parent and Purchaser. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time prior to the Share Purchase Date.
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COMPANY DISCLOSURE LETTER
SECTION 4.1.1 ORGANIZATION, GOOD STANDING, CAPITALIZATION
SECTION 4.1.3 UNDISCLOSED LIABILITIES
SECTION 4.1.7 COMPLIANCE WITH OTHER INSTRUMENTS
SECTION 4.1.8 GOVERNMENTAL AND OTHER CONSENTS
SECTION 4.1.12 LITIGATION
SECTION 4.1.13 ERISA MATTERS
SECTION 4.1.14 PARACHUTE PAYMENTS
SECTION 4.1.15 REAL ESTATE
SECTION 4.1.17 INTELLECTUAL PROPERTY
SECTION 4.1.18 INSURANCE
SECTION 4.1.19 LABOR AND EMPLOYMENT MATTERS
SECTION 4.1.21 TAXES
SECTION 5.1.1 CONDUCT OF BUSINESS
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