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EXHIBIT 10.111
EXECUTION COPY
STOCK OPTION AGREEMENT
This STOCK
OPTION AGREEMENT (this "Agreement") is made as of October 27,
2005, by and among Goody's Family Clothing,
Inc., a Tennessee corporation (the
"Company"), GF Goods Inc., a Delaware
corporation ("Parent"), and GF Acquisition
Corp., a Tennessee corporation
("Acquisition Corp."). Capitalized terms used but
not otherwise defined in this Agreement
shall have the meanings ascribed thereto
in the Merger Agreement.
WHEREAS,
concurrently herewith, Acquisition Corp., Parent and the
Company
are entering into an Acquisition Agreement
and Agreement and Plan of Merger (the
"Merger Agreement");
WHEREAS, the
Company agrees to grant Acquisition Corp. an option to
purchase Common Stock (as hereinafter
defined), upon the terms and subject to
the conditions of this Agreement; and
WHEREAS, the
Special Committee of the Board of Directors of the Company has
recommended the grant of such option and
the Merger Agreement be approved by the
Board of Directors of the Company and the
Board of Directors of the Company has
approved the grant of such option and the
Merger Agreement prior to the
execution hereof.
NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the
Merger Agreement, the parties hereto
agree as follows:
1. The Top-Up
Option. The Company hereby grants to Acquisition Corp. an
irrevocable option (the "Top-Up Option") to
purchase, subject to the terms
hereof, up to that number of shares of
common stock, no par value per share
("Common Stock"), of the Company (the
"Top-Up Option Shares") equal to the
lowest number of shares of Common Stock
that, when added to the number of shares
of Common Stock owned by Acquisition Corp.
at the time of such exercise, shall
constitute one share more than 90% of the
shares of Common Stock on a
Fully-Diluted Basis (assuming the issuance
of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share
equal to the Offer Price; provided,
however, that the Top-Up Option shall not
be exercisable unless immediately
after such exercise Acquisition Corp. would
own more than 90% of the shares of
Common Stock then outstanding and in no
event shall Acquisition Corp. have the
right hereunder to purchase shares of
Common Stock to the extent (but only to
the extent) that the exercise of
Acquisition Corp.'s right to purchase shares of
Common Stock hereunder would violate the
rules or regulations of the Nasdaq
National Market, Inc. The Company agrees to
provide Acquisition Corp. with
information regarding the number of
authorized shares of Common Stock available
for issuance on an ongoing basis.
2. Exercise of
Top-Up Option.
(a) Acquisition Corp. may exercise the Top-Up Option, in whole or
in
part, at any one time after the occurrence
of a Top-Up Exercise Event (as
defined below) and prior to the occurrence
of a Top-Up Termination Event (as
defined below).
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(b) A "Top-Up Exercise Event" shall occur for purposes of this
Agreement upon Acquisition Corp.'s payment
for shares of Common Stock
constituting at least 80% of the shares of
Common Stock then outstanding but
less than 90% of the shares of Common Stock
on a Fully-Diluted Basis.
(c) Each of the following shall be a "Top-Up Termination
Event":
(i) the Effective Time;
(ii) the date which is thirty-five days after the occurrence of
the Top-Up Exercise Event (or such later date on which the closing
of
a purchase may be consummated, as set forth in Section 3(a)
below);
and
(iii) the termination of the Merger Agreement.
3. Closing.
(a) In the event Acquisition Corp. wishes to exercise the
Top-Up
Option, Acquisition Corp. shall send to the
Company a written notice (a "Top-Up
Exercise Notice," the date of which notice
is referred to herein as the "Notice
Date") specifying the number of shares of
Common Stock to be acquired by
Acquisition Corp. pursuant to the Top-Up
Option, the denominations of the
certificate or certificates evidencing the
Top-Up Option Shares that Acquisition
Corp. wishes to receive, the place for the
closing of the purchase and sale
pursuant to the Top-Up Option (the "Top-Up
Closing") and a date not earlier than
one business day nor later than 10 business
days after the Top-Up Notice Date
for the Top-Up Closing (the "Closing
Date"); provided, however, that (i) if the
Top-Up Closing cannot be consummated by
reason of any applicable law or order,
the period of time that otherwise would run
pursuant to this sentence shall run
instead from the date on which such
restriction on consummation has expired or
been terminated and (ii) without limiting
the foregoing, if prior notification
to or approval of any governmental entity
is required in connection with such
purchase, Acquisition Corp. and the Company
shall promptly file the required
notice or application for approval and
shall cooperate in the expeditious filing
of such notice or application, and the
period of time that otherwise would run
pursuant to this sentence shall run instead
from the date on which, as the case
may be, (A) any required notification
period has expired or been terminated or
(B) any required approval has been
obtained, and in either event, any requisite
waiting period has expired or been
terminated. The Company shall, promptly after
receipt of the Top-Up Exercise Notice,
deliver a written notice to Acquisition
Corp. confirming the number of Top-Up
Option Shares and the aggregate purchase
price therefor.
(b) At the closing referred to in subsection (a) of this Section
3,
Acquisition Corp. shall (i) pay to the
Company the aggregate purchase price for
the shares of Common Stock purchased
pursuant to the exercise of the Top-Up
Option in immediately available funds by
wire transfer to a bank account
designated by the Company and (ii) present
and surrender this Agreement to the
Company.
(c) At such closing, simultaneously with the delivery of
immediately
available funds as provided in subsection
(b) of this Section 3, the Company
shall deliver to Acquisition
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Corp. a certificate or certificates
representing the number of shares of Common
Stock purchased by Acquisition Corp.
(d) Certificates evidencing the Common Stock to be delivered
hereunder
may include legends legally required
including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE
SECURITIES OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF
SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED AS
OF
OCTOBER 27, 2005, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER
UPON
REQUEST.
It is understood
and agreed that (i) the reference to the resale
restrictions of the Securities Act and
state securities or blue sky laws in the
foregoing legend shall be removed by
delivery of substitute certificate(s)
without such reference if the Company or
Acquisition Corp., as the case may be,
shall have delivered to the other an
opinion of counsel, in form and substance
reasonably satisfactory to the other, to
the effect that such legend is not
required for purposes of the Securities Act
or such laws; (ii) the reference to
the provisions of this Agreement in the
foregoing legend shall be removed by
delivery of substitute certificate(s)
without such reference if the shares have
been sold or transferred in compliance with
the provisions of this Agreement and
under circumstances that do not require the
retention of such reference; and
(iii) the legend shall be removed in its
entirety if the conditions in the
preceding clauses (i) and (ii) are both
satisfied. In addition, such
certificates shall bear any other legend as
may be required by law.
(e) Upon the giving by Acquisition Corp. to the Company of the
written
notice of exercise of the Top-Up Option
