SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 4, 2006THE SPORTSMAN’S GUIDE, INC.
(Exact name of registrant as specified in its charter)
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0-15767
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41-1293081 |
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(State or other jurisdiction
of incorporation)
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(Commission File No.)
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(IRS Employer Identification No.) |
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411 Farwell Avenue, South St. Paul, Minnesota
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55075 |
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(Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (
651) 451-3030
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of
the registrant under any of the following provisions (see General
Instruction A.2. below):
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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þ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On
May 4, 2006, The Sportsman’s Guide, Inc. (the
“Company”) entered into an Agreement and Plan
of Merger (the
“Merger Agreement”) with VLP Corporation, a Delaware corporation (
“VLP”), and
Panther Subcorp, Inc., a Minnesota corporation and a wholly owned direct subsidiary of VLP
(
“Subcorp”). VLP is a wholly owned subsidiary of Redcats USA, Inc., a Delaware corporation.
Pursuant to the terms of the Merger Agreement, Subcorp will be merged with and into the
Company with
the Company continuing as the surviving corporation and a wholly owned subsidiary of
VLP (the
“Merger”). At the effective time of the Merger, each issued and outstanding share of
common stock, par value $0.01 per share, of
the Company, other than any shares held by shareholders
who perfect their rights as dissenting shareholders under the Minnesota Business Corporation Act,
will be converted into the right to receive $31.00 in cash. In addition, each outstanding option
to purchase shares of
the Company’s common stock granted pursuant to
the Company’s stock incentive
plans will be cancelled and the holder of the option will be entitled to receive an amount in cash
equal to the amount, if any, by which $31.00 exceeds the exercise price of the option.
Completion of the Merger is subject to customary closing conditions, including (i) approval of
the Company’s shareholders, (ii) expiration or termination of the Hart-Scott-Rodino waiting period
and (iii) the absence of any law or order prohibiting or enjoining completion of the Merger. In
addition, each party’s obligation to consummate the Merger is subject to certain other conditions,
including (i) the accuracy of the representations and warranties of the other party and (ii)
material compliance of the other party with its covenants. The parties currently expect that the
Merger will be completed during the third quarter of 2006.
The Merger Agreement contains customary non-solicitation provisions. The Merger Agreement
contains certain termination rights for both parties and further provides that, upon termination of
the Merger Agreement under specified circumstances,
the Company is required to pay VLP a
termination fee of $9,250,000 plus costs.
The Company’s Board of Directors unanimously approved the Merger Agreement and determined that
the Merger Agreement and the Merger are advisable and fair to and in the best interests of the
Company’s shareholders. Houlihan Lokey Howard & Zukin Financial Advisors, Inc. rendered a fairness
opinion to
the Company as to the fairness, from a financial point of view, of the consideration to
be received by
the Company’s shareholders in the Merger.
The foregoing description of the Merger and the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement which is filed as
Exhibit 2.1 to this report and is
incorporated herein by reference.
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Employment Agreements
In connection with the Merger Agreement, Gregory R. Binkley,
the Company’s President and Chief
Executive Officer,
Charles B. Lingen, Executive Vice President of Finance and Administration and
Chief Financial Officer, and John M. Casler, Executive Vice President of Merchandising, Marketing
and Creative Services, entered into new employment agreements with
the Company. The new employment
agreements will become effective upon consummation of the Merger and are substantially similar to
each individual’s existing employment agreement with
the Company, except as follows:
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Mr. Binkley’s and Mr. Casler’s new employment agreements are for a term of three
years and automatically renew for additional one year terms, unless notice of
non-renewal is given by either party. Mr. Lingen’s new employment agreement is for a
fixed term of two years and does not renew. |
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The Company will continue the 2006 bonus plan as it exists prior to the closing.
Mr. Binkley will receive approximately 22% of the 2006 bonus pool in accordance with
past practice and the Company will allocate the remainder of the pool in a fashion that
meets the commitments made to individual employees. Following 2006, annual bonuses
will be based upon a business plan agreed upon by Company management and the Board of
Directors. |
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The individuals will not receive equity compensation awards following the closing
date, but will instead participate in a three-year long-term incentive program
(two-year for Mr. Lingen) outlined in the agreement. |
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Upon a termination of employment entitling the individual to continued medical,
dental, accident and disability insurance benefits, the Company will continue the
individual’s automobile allowance for the same period. |
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The “gross-up” for any exercise tax imposed on any excess parachute payments will
apply only to the Merger and not to any future transactions. |
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The Merger is not considered a Substantial Event under the agreements (which would
have provided enhanced severance protections and benefits) and the individuals waive
the right to assert constructive termination claims arising as a result of the Company
no longer being a public company or becoming a subsidiary. |
The foregoing description of the new employment agreements does not purport to be complete and
is qualified in its entirety by reference to each individual’s new employment agreement which
agreements are filed as Exhibits 10.1, 10.2 and 10.3 to this report and incorporated herein by
reference.
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Director Compensation
William T. Sena, Chairman of the Board of
the Company, will receive $250,000 for past
services, and Gary Olen, co-founder and a director, will receive a $20,000 honorarium for past
services, payable following closing of the Merger. All non-employee directors will receive their
full annual director and committee chairman fees for 2006.
Additional Information About This Transaction
In connection with the Merger,
the Company will file a proxy statement and may file additional
relevant documents with the Securities and Exchange Commission (SEC). INVESTORS ARE URGED TO READ
THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the proxy statement
(when it becomes available) and other related documents filed with the SEC at the SEC’s
website at
www.sec.gov. The proxy statement (when it becomes available) and other documents filed with the
SEC may also be obtained free of charge by directing a request to The Sportsman’s Guide, Inc., 411
Farwell Avenue,
South St. Paul,
MN 55075, Attention: Investor Relations.
The Company and its directors and executive officers may be deemed, under SEC rules, to be
participants in the solicitation of proxies from
the Company’s shareholders with respect to the
Merger. Information regarding the directors and executive officers of
the Company is included in
its definitive proxy statement for its 2006 annual meeting filed with the SEC on
March 21, 2006.
More detailed information regarding the identity of potential participants, and their direct and
indirect interests, by security holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with the SEC in connection with the Merger.
Item 3.03 Material Modification to Rights of Security Holders.
In connection with the Merger Agreement,
the Company amended the
Rights Agreement dated
May
11, 1999 between
the Company and Wells Fargo Bank, National Association, as successor to Norwest
Bank Minnesota, N.A., as Rights Agent which governs
the Company’s Common Stock Purchase Rights.
The amendment provides that (i) neither VLP nor any of its affiliates will become an Acquiring
Person (as defined in the
Rights Agreement) as a result of the execution of the Merger Agreement,
(i) no Distribution Date (as defined in the
Rights Agreement) will occur as a result of the
execution of the Merger Agreement and (iii) the Rights will expire immediately prior to completion
of the Merger.
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