EXHIBIT 99.1
5,200,000 SHARES
BIG 5 SPORTING GOODS CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
November 17, 2003
CREDIT SUISSE FIRST BOSTON LLC
As Representative of the Several Underwriters,
Eleven Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000-0000
Dear Ladies and Gentlemen:
1. Introductory. Big 5 Sporting Goods Corporation, a Delaware
corporation (the "COMPANY"), and Green Equity Investors, L.P., a Delaware
limited partnership (the "SELLING STOCKHOLDER"), confirm their respective
agreements with the several Underwriters named in Schedule A hereto (the
"UNDERWRITERS"), with respect to the sale by the Selling Stockholder and the
purchase by the Underwriters of 5,200,000 shares (the "FIRM SECURITIES") of the
Company's Common Stock, par value $0.01 per share ("SECURITIES"). The Selling
Stockholder also proposes to sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than 780,000 additional outstanding
shares of the Company's Securities (such 780,000 additional shares being
hereinafter referred to as the "OPTIONAL SECURITIES"). The Firm Securities and
the Optional Securities are herein collectively called the "OFFERED SECURITIES".
The Company and the Selling Stockholder hereby agree with the Underwriters as
follows:
2. Representations and Warranties of the Company and the Selling
Stockholder:
(a) The Company represents and warrants to, and agrees
with, the several Underwriters that:
(i) A registration statement (No. 333-109570),
including a prospectus, relating to the Offered Securities has
been filed with the Securities and Exchange Commission
("COMMISSION") and become effective under the Securities Act
of 1933, as amended ("ACT"). Such registration statement, as
amended up until the date hereof, is hereinafter referred to
as the "Registration Statement", and the prospectus included
in such Registration Statement, as supplemented to reflect the
terms of the offering of the Offered Securities as
contemplated by Section 5(a) hereof, as filed with the
Commission pursuant to and in accordance with Rule 424(b)
("RULE 424(b)") under the Act, including all material
incorporated by reference therein, is hereinafter referred to
as the "PROSPECTUS". No document has been or will be prepared
or distributed in reliance on Rule 434 under the Act.
(ii) On the effective date of the Registration
Statement, the Registration Statement conformed in all
material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder ("RULES AND
REGULATIONS") and did not include 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
not misleading, and on the date of this Agreement, the
Registration Statement conforms in all material respects to
the requirements of the Act and the Rules and Regulations, and
does not include 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 not misleading,
and the Prospectus conforms in all material respects to the
requirements of the Act and the Rules and Regulations, and
does not include 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 were made, not misleading,
except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written
information furnished to the Company by any Underwriter
through the Representative, it being understood and agreed
that the only such information is that described as such in
Section 7(c) hereof.
(iii) The Company has been duly incorporated and
is an existing corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to
own its properties and conduct its business as described in
the Prospectus; and the Company is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the condition
(financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a
whole (a "MATERIAL ADVERSE EFFECT").
(iv) Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing
under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and each
subsidiary of the Company is duly qualified to do business as
a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a
Material Adverse Effect; all of the issued and outstanding
capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each subsidiary owned
by the Company, directly or through subsidiaries, is owned
free from liens, encumbrances and defects.
(v) The Offered Securities and all other
outstanding shares of capital stock of the Company have been
duly authorized; all outstanding shares of capital stock of
the Company, including the Offered Securities, have been
validly issued, are fully paid and nonassessable and conform
in all material respects to the description thereof contained
in the Prospectus; and except as disclosed in the Prospectus,
there are no outstanding options, warrants or other rights to
subscribe for or to purchase from the Company, any securities
or obligations convertible into, or any contracts or
commitments with or by the Company to issue or sell, shares of
the Company's capital stock or any such options, warrants,
rights, convertible securities or obligations.
2
(vi) Except as disclosed in the Prospectus, there
are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim
against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection
with this offering, or, to the Company's knowledge, any other
arrangements, agreements, understandings, payments or
issuances with respect to the Company or any of its officers,
directors, stockholders, partners, employees, subsidiaries or
affiliates that may affect the Underwriters' compensation as
determined by the National Association of Securities Dealers,
Inc. (the "NASD").
(vii) Other than the agreements listed in Schedule
B hereto, there are no contracts, agreements or understandings
between the Company and any person granting such person the
right to require the Company to file a registration statement
under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company
to include such securities in the securities registered
pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Act. Other than the Selling
Stockholder (which exercised demand registration rights in
order to cause this registered offering of the Offered
Securities and elected not to include in this offering all of
the Securities it owns), each such person either (A) does not
have, or has waived any rights to require the Company to
include any securities in the Securities registered pursuant
to the Registration Statement or (B) has the ability to sell
100% of such person's securities pursuant to Rule 144(k) of
the Act.
(viii) The Offered Securities have been approved
for listing on The NASDAQ Stock Market's National Market.
(ix) No consent, approval, authorization, or
order of, or filing with, any governmental agency or body or
any court is required for the consummation of the transactions
contemplated by this Agreement in connection with the sale of
the Offered Securities by the Selling Stockholder, except such
as have been obtained and made under the Act and the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and such as may be required by the NASD and under state
securities laws.
(x) The execution, delivery and performance of
this Agreement and the sale of the Offered Securities will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (A) any statute,
any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction
over the Company or any subsidiary of the Company or any of
their properties, (B) any agreement or instrument to which the
Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject,
except for such breaches, violations or defaults that would
not result in a Material Adverse Effect, or (C) the charter or
by-laws of the Company or any such subsidiary.
(xi) This Agreement has been duly authorized,
executed and delivered by the Company.
3
(xii) Except as disclosed in the Prospectus, the
Company and its subsidiaries have good and marketable title to
all real properties and all other properties and assets owned
by them, in each case free from liens, encumbrances and
defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof
by them; and except as disclosed in the Prospectus, the
Company and its subsidiaries hold any leased real or personal
property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be
made thereof by them.
(xiii) The Company and its subsidiaries possess
adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to
conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit
that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
(xiv) No labor dispute with the employees of the
Company or any subsidiary exists or, to the knowledge of the
Company, is imminent that would reasonably be expected to have
a Material Adverse Effect.
(xv) The Company and its subsidiaries own,
possess or can acquire on reasonable terms, adequate
trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "INTELLECTUAL
PROPERTY RIGHTS") necessary to conduct the business now
operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company
or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus,
neither the Company nor any of its subsidiaries is in
violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "ENVIRONMENTAL
LAWS"), owns or operates any real property contaminated with
any substance that is subject to any environmental laws, is
liable for any off-site disposal or contamination pursuant to
any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination,
liability or claim would individually or in the aggregate have
a Material Adverse Effect; and the Company is not aware of any
pending investigation which might lead to such a claim.
(xvii) There are no pending actions, suits or
proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations
under this Agreement, or which are otherwise material in the
context of the sale of the Offered Securities; and no such
4
actions, suits or proceedings are, to the Company's knowledge,
threatened or contemplated.
(xviii) The financial statements included in each
Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States
("GAAP") applied on a consistent basis and the schedules
included in each Registration Statement present fairly the
information required to be stated therein; and the assumptions
used in preparing the pro forma financial data included in
each Registration Statement and the Prospectus provide a
reasonable basis for presenting the significant effects
directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma data reflect
the proper application of those adjustments to the
corresponding historical financial statement amounts.
(xix) Except as disclosed in the Prospectus, since
the date of the latest audited financial statements included
in the Prospectus, there has been no material adverse change,
nor any development or event involving a prospective material
adverse change, in the condition (financial or other),
business, properties or results of operations of the Company
and its subsidiaries taken as a whole, and, except as
disclosed in or contemplated by the Prospectus, there has been
no dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.
(xx) The Company is not and, after giving effect
to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.
(xxi) All material Tax returns required to be
filed by the Company and each of its subsidiaries have been
filed and all such returns are true, complete, and correct in
all material respects. All material Taxes that are due or
claimed to be due from the Company and each of its
subsidiaries have been paid other than those (i) currently
payable without penalty or interest or (ii) being contested in
good faith and by appropriate proceedings and for which, in
the case of both clauses (i) and (ii), adequate reserves have
been established on the books and records of the Company and
its subsidiaries in accordance with GAAP. There are no
proposed, material Tax assessments against the Company or any
of its subsidiaries as to which the Company has been notified.
To the Company's knowledge, the accruals and reserves on the
books and records of the Company and its subsidiaries in
respect of any material Tax liability for any taxable period
not finally determined are adequate to meet any assessments of
Tax for any such period. For purposes of this Agreement, the
term "TAX" and "TAXES" shall mean all federal, state, local
and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including
any interest, additions to tax, or penalties applicable
thereto.
5
(xxii) Neither the Company, nor any of its
affiliates, has taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or
which would reasonably be expected to constitute, the
stabilization or manipulation of the price of the Securities
to facilitate the sale or resale of the Offered Securities;
provided, however, that the Company does not make any
representation or warranty about the activities of the Selling
Stockholder in this clause (xxii);
(xxiii) KPMG LLP, who have certified the audited
financial statements included in each Registration Statement
and the Prospectus, are independent public auditors as
required by the Act and the Rules and Regulations. The Company
and each of its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to
maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability
for inventory assets is compared with the existing inventory
assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxiv) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are
engaged; none of the Company or any of its subsidiaries (A)
has received notice from any insurer or agent of such insurer
that substantial capital improvements or other material
expenditures will have to be made in order to continue such
insurance or (B) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers at a cost that would not have a Material Adverse
Effect.
(xxv) The Company is in compliance in all material
respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to
incur material liability under (A) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension
plan" or (B) Section 412 or 4971 of the Internal Revenue Code
of 1986, as amended, including the regulations and published
interpretations thereunder ("CODE"); and each "pension plan"
for which the Company and each of its subsidiaries would have
any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(xxvi) The Amendment to the Credit Agreement of Big
5 Corp., dated as of October 31, 2003 (the "CREDIT AGREEMENT
AMENDMENT") has been duly authorized, executed and delivered
by Big 5 Corp., and the execution, delivery and performance of
the Credit Agreement Amendment will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, (A) any statute, any rule,
6
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their
properties, (B) any agreement or instrument to which the
Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject,
except for such breaches, violations or defaults that would
not result in a Material Adverse Effect, or (C) the charter or
by-laws of the Company or any such subsidiary.
(xxvii) The redemption of $35,000,000 in principal
amount of the 10.875% senior notes due 2007 of Big 5 Corp. has
been duly authorized by Big 5 Corp., Big 5 Corp. has provided
all notices required in order to redeem the 10.875% senior
notes due 2007, and such redemption will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (A) any statute, any rule,
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their
properties, (B) any agreement or instrument to which the
Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject,
except for such breaches, violations or defaults that would
not result in a Material Adverse Effect, or (C) the charter or
by-laws of the Company or any such subsidiary.
(b) The Selling Stockholder represents and warrants to,
and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each
Closing Date hereinafter mentioned will have valid and
unencumbered title to the Offered Securities to be delivered
by such Selling Stockholder on such Closing Date and full
right, power and authority to enter into this Agreement and a
Custody Agreement (the "CUSTODY AGREEMENT") and to sell,
assign, transfer and deliver the Offered Securities to be
delivered by such Selling Stockholder on such Closing Date
hereunder; upon the delivery of and payment for the Offered
Securities on each Closing Date hereunder the several
Underwriters will acquire valid and unencumbered title to the
Offered Securities to be delivered by such Selling Stockholder
on such Closing Date; this Agreement and the Custody Agreement
have been duly authorized, executed and delivered; and the
Custody Agreement is, and at all times through each Closing
Date will be, a valid and binding obligation by such Selling
Stockholder.
(ii) All information furnished by or on behalf of
such Selling Stockholder in writing expressly for use in the
Registration Statement and Prospectus is, and on the Effective
Date will be, true, correct, and complete in all material
respects, and does not, and on the Effective Date will not,
contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not
misleading. Such Selling Stockholder confirms as accurate (x)
the information in the Prospectus under the caption "Selling
Stockholder" and (y) the information in the Prospectus under
the caption "Principal and Selling Stockholders" as such
information relates to the Selling Stockholder.
7
(iii) Except as disclosed in the Prospectus, there
are no contracts, agreements or understandings between such
Selling Stockholder and any person that would give rise to a
valid claim against such Selling Stockholder or any
Underwriter for a brokerage commission, finder's fee or other
like payment in connection with this offering.
(iv) Such Selling Stockholder has reviewed the
Registration Statement and the sale of the Offered Securities
by such Selling Stockholder pursuant hereto is not prompted by
any information concerning the Company or any of its
subsidiaries which is not set forth in the Prospectus or any
supplement thereto.
(v) Neither the Selling Stockholder, nor any of
its affiliates, has taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or
which would reasonably be expected to constitute, the
stabilization or manipulation of the price of the Securities
to facilitate the sale or resale of the Offered Securities.
3. Purchase, Sale and Delivery of Offered Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Selling Stockholder
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Selling Stockholder, at a purchase price of
$17.214 per share, that number of Firm Securities (rounded up or down, as
determined by Credit Suisse First Boston LLC ("CSFB") in its discretion, in
order to avoid fractions) obtained by multiplying 5,200,000 shares of Firm
Securities by a fraction the numerator of which is the number of shares of Firm
Securities set forth opposite the name of such Underwriter in Schedule A hereto
and the denominator of which is the total number of shares of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Selling Stockholder hereunder have been placed in custody, for delivery
under this Agreement, under a Custody Agreement made with the Company, as
custodian ("CUSTODIAN"). The Selling Stockholder agrees that the shares
represented by the certificates held in custody for the Selling Stockholder
under such Custody Agreement are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Stockholder for such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholder hereunder shall not be terminated by operation of law, whether by
the death of any general partner of the general partner of the Selling
Stockholder or the occurrence of any other event. If any general partner of the
general partner of the Selling Stockholder should die, or if any other such
event should occur, or if the Selling Stockholder is dissolved or terminated,
before the delivery of the Offered Securities hereunder, certificates for such
Offered Securities shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death or other event or
termination had not occurred, regardless of whether or not the Custodian shall
have received notice of such death or other event or termination.
The Custodian will deliver the Firm Securities to the Representative
for the accounts of the Underwriters against payment of the purchase price in
Federal (same day) funds by official bank check or checks or wire transfer to
an account at a bank acceptable to CSFB drawn to the order of Green Equity
Investors, L.P., at the office of Irell & Xxxxxxx LLP, 1800 Avenue of the
Stars, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 10:00 A.M., New York time,
on November 21, 2003, or at such other time not later than seven full business
days thereafter as CSFB and the Company determine, such time being herein
referred to as the "FIRST CLOSING DATE". For purposes of Rule 15c6-1 under the
Exchange Act, the First Closing Date (if later than the otherwise applicable
settlement date) shall be the settlement date for
8
payment of funds and delivery of securities for all the Offered Securities sold
pursuant to the offering. The certificates for the Firm Securities to be
delivered will be in definitive form, in such denominations and registered in
such names as CSFB requests and will be made available for checking and
packaging at the above office of Irell & Xxxxxxx LLP at least 24 hours prior to
the First Closing Date.
In addition, upon written notice from CSFB given to the Selling
Stockholder from time to time not more than 30 days subsequent to the date of
the Prospectus, the Underwriters may purchase all or less than all of the
Optional Securities at the purchase price per Security to be paid for the Firm
Securities. The Selling Stockholder agrees to sell to the Underwriters the
respective numbers of shares of Optional Securities specified in such notice.
Such Optional Securities shall be purchased from the Selling Stockholder for
the account of each Underwriter in the same proportion as the number of shares
of Firm Securities set forth opposite such Underwriter's name bears to the
total number of shares of Firm Securities (subject to adjustment by CSFB to
eliminate fractions) and may be purchased by the Underwriters only for the
purpose of covering over-allotments made in connection with the sale of the
Firm Securities. No Optional Securities shall be sold or delivered unless the
Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities or any portion thereof
may be exercised from time to time and to the extent not previously exercised
may be surrendered and terminated at any time upon notice by CSFB to the
Selling Stockholder.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by CSFB
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Custodian will deliver
the Optional Securities being purchased on each Optional Closing Date to the
Representative for the accounts of the several Underwriters against payment of
the purchase price therefor in Federal (same day) funds by official bank check
or checks or wire transfer to an account at a bank acceptable to CSFB drawn to
the order of Green Equity Investors, L.P., at the above office of Irell &
Xxxxxxx LLP. The certificates for the Optional Securities being purchased on
each Optional Closing Date will be in definitive form, in such denominations
and registered in such names as CSFB requests upon reasonable notice prior to
such Optional Closing Date and will be made available for checking and
packaging at the above office of Irell & Xxxxxxx LLP at a reasonable time in
advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholder.
The Company agrees with the several Underwriters and the Selling Stockholder
that:
(a) The Company will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (3) (or, if
applicable and if consented to by CSFB, subparagraph (5)) of Rule
424(b) not later than the second business day following the execution
and delivery of this Agreement. The Company will advise CSFB promptly
of any such filing pursuant to Rule 424(b). If an additional
registration statement is necessary to register a portion of the
Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time,
on the date of this Agreement or, if earlier, on
9
or prior to the time the Prospectus is printed and distributed to any
Underwriter, or will make such filing at such later date as shall have
been consented to by CSFB.
(b) The Company will advise CSFB promptly of any proposal
to amend or supplement the Registration Statement or the Prospectus and
will not effect such amendment or supplementation without CSFB's
consent, which will not be unreasonably withheld; and the Company will
also advise CSFB promptly of the effectiveness of each Registration
Statement (if its effective time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of
a Registration Statement or the Prospectus and of the institution by
the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(c) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, any event occurs as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the
Act, the Company will promptly notify CSFB of such event and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission
or an amendment which will effect such compliance. Neither CSFB's
consent to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth
in Section 6.
(d) As soon as practicable, but not later than 16 months
after the date of this Agreement, the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the effective date of the
Registration Statement (or, if later, the effective date of any
additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act.
(e) The Company will furnish to the Representative copies
of each Registration Statement (six of which will be signed and will
include all exhibits), each related preliminary prospectus, and, so
long as a prospectus relating to the Offered Securities is required to
be delivered under the Act in connection with sales by any Underwriter
or dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFB requests. The
Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the later of the execution and
delivery of this Agreement. All other documents shall be so furnished
as soon as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFB designates and will continue such qualifications in effect so long
as required for the distribution.
(g) For a period of 90 days after the date of this
Agreement, the Company will not offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any
additional shares of its
10
Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of CSFB, except grants of employee
stock options pursuant to the terms of the Company's 2002 Stock
Incentive Plan, issuances of Securities pursuant to the exercise of
such options and the filing with the Commission of a registration
statement on Form S-8 with respect to such options and Securities.
(h) The Company agrees with the several Underwriters that
the Company will pay all expenses incident to the performance of the
obligations of the Company under this Agreement, for any filing fees
and other expenses (including fees and disbursements of counsel) in
connection with qualification of the Offered Securities for sale under
the laws of such jurisdictions as CSFB designates and the printing of
memoranda relating thereto, for any applicable filing fee incident to
the review by the NASD of the Offered Securities, for any travel
expenses of the Company's officers and employees and any other expenses
of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, and for expenses
incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters.
The Selling Stockholder agrees with the several Underwriters to pay
(directly or by reimbursement) all fees and expenses incident to the
performance of their obligations under this Agreement which are not
otherwise specifically provided for herein, including but not limited
to any transfer taxes on the sale by the Selling Stockholder of Offered
Securities to the Underwriters and the fees and expenses of such
Selling Stockholder's counsel.
(i) The Selling Stockholder agrees to deliver to the
Company, as Custodian under the Custody Agreement, on or prior to the
First Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof). The
Company agrees to file a Form 1099 on behalf of the Selling Stockholder
in connection with the sale of Securities by the Selling Stockholder.
(j) The Selling Stockholder agrees, for a period of 90
days after the date of this Agreement, not to offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any
additional shares of the Securities of the Company or securities
convertible into or exchangeable or exercisable for any shares of
Securities, enter into a transaction which would have the same effect,
or enter into any swap, hedge or other arrangement that transfers, in
whole or in part, any of the economic consequences of ownership of the
Securities, whether any such aforementioned transaction is to be
settled by delivery of the Securities or such other securities, in cash
or otherwise, or publicly disclose the intention to make any such
offer, sale, pledge or disposition, or enter into any such transaction,
swap, hedge or other arrangement, without, in each case, the prior
written consent of CSFB.
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the First Closing Date and the Optional Securities to be purchased
on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholder herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholder of their obligations hereunder and to the following
additional conditions precedent:
11
(a) The Representative shall have received a letter,
dated the date of delivery thereof, of KPMG LLP confirming that they
are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating
to the effect that:
(i) in their opinion the financial statements
and schedules examined by them and included in the Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations;
(ii) they have performed the procedures specified
by the American Institute of Certified Public Accountants for
a review of interim financial information as described in
Statement of Auditing Standards No. 100, Interim Financial
Information, on the unaudited financial statements included in
the Prospectus;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements
included in the Prospectus do not comply as to form
in all material respects with the applicable
accounting requirements of the Act and the related
published Rules and Regulations or any material
modifications should be made to such unaudited
financial statements for them to be in conformity
with GAAP;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or,
at the date of the latest available balance sheet
read by such accountants, there was any decrease in
consolidated net current assets or net assets, as
compared with amounts shown on the latest balance
sheet included in the Prospectus; or
(C) for the period from the closing
date of the latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year, in
consolidated net revenue or net operating income or
in the total or per share amounts of consolidated
income before extraordinary items or of net income;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
12
(iv) they have compared specified dollar amounts
(or percentages derived from such dollar amounts) and other
financial information contained in the Prospectus (in each
case to the extent that such dollar amounts, percentages and
other financial information are derived from the general
accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or
are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a
reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in
such letter.
All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed
included in the Prospectus for purposes of this subsection.
(b) The Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company
or the Representative, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as one enterprise which, in the
judgment of a majority in interest of the Underwriters including the
Representative, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any change in U.S. or international
financial, political or economic conditions or currency exchange rates
or exchange controls as would, in the judgment of a majority in
interest of the Underwriters including the Representative, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market
or in respect of dealings in the secondary market; (iv) any material
suspension or material limitation of trading in securities generally on
the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange; (v) any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (vi) any banking moratorium declared by U.S. Federal or New
York authorities; or (vii) any major disruption of settlements of
securities or clearance services in the United States or (viii) any
attack on, outbreak or escalation of hostilities or act of terrorism
involving the United States, any declaration of war by Congress or any
other national or international calamity or emergency if, in the
judgment of a majority in interest of the Underwriters including the
Representative, the effect of any such attack, outbreak, escalation,
act, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities.
13
(d) The Representative shall have received an opinion,
dated such Closing Date, of Irell & Xxxxxxx LLP, counsel for the
Company, to the effect that:
(i) Each of the Company and Big 5 Corp. has been
duly incorporated and is an existing corporation in good
standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and each
of the Company and Big 5 Corp. is duly qualified to do
business as a foreign corporation in good standing in each
jurisdiction listed in a schedule to be attached to the legal
opinion;
(ii) The Company has authorized capital stock as
set forth in the Prospectus. Except as set forth in the
Prospectus, to such counsel's knowledge, there are no
outstanding options, warrants or other rights to subscribe for
or to purchase, any securities convertible into, or any
contracts or commitments to issue or sell, shares of the
Company's capital stock or any such options, warrants, rights,
convertible securities or obligations;
(iii) The Offered Securities and all other issued
and outstanding shares of capital stock of the Company and its
subsidiary Big 5 Corp., have been duly authorized and validly
issued and are fully paid and nonassessable; and all of the
capital stock of Big 5 Corp. is owned of record by the
Company;
(iv) The Offered Securities conform in all
material respects to the description thereof contained in the
Prospectus;
(v) Other than the agreements listed in Schedule
B, there are no contracts, agreements or understandings known
to such counsel between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person
or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
(vi) The Company is not and, after giving effect
to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940;
(vii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required to be obtained or made by the Company under
any law which in such counsel's experience is generally
applicable to transactions of the type contemplated by this
Agreement for the consummation of the transactions
contemplated by this Agreement in connection with the sale of
the Offered Securities, except such as have been obtained and
made under the Act and the Exchange Act and such as may be
required by the NASD or under state securities laws;
14
(viii) The execution, delivery and performance of
this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
(A) any statute, any rule, regulation or order of any
governmental agency or body or any court having jurisdiction
over the Company or its subsidiary Big 5 Corp. or any of their
properties which in our experience is generally applicable to
transactions of the type contemplated by this Agreement, (B)
or any agreement or instrument that is included as an exhibit
to the Registration Statement and to which the Company or such
subsidiary is a party or by which the Company or such
subsidiary is bound or to which any of the properties of the
Company or such subsidiary is subject, or (C) the charter or
by-laws of the Company or such subsidiary;
(ix) The Registration Statement was declared
effective under the Act as of the date and time specified in
such opinion, the additional Registration Statement (if any)
was filed and became effective under the Act as of the date
and time (if determinable) specified in such opinion, the
Prospectus either was filed with the Commission pursuant to
the subparagraph of Rule 424(b) specified in such opinion on
the date specified therein or was included in the Registration
Statement or the additional Registration Statement (as the
case may be), and, to such counsel's knowledge, no stop order
suspending the effectiveness of a Registration Statement or
any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of
their respective effective or issue dates, complied as to form
in all material respects with the requirements of the Act and
the Rules and Regulations; and
(x) This Agreement has been duly authorized,
executed and delivered by the Company.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon (except for the opinions explicitly given above) and
does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus (except
for the opinions explicitly given above) and any supplements or amendments
thereto, on the basis of the foregoing, nothing has come to their attention
which would lead them to believe that either the Registration Statement or any
amendments thereto, at the time the Registration Statement or such amendments
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and as
of the Closing Date, or any amendment or supplement thereto, as of its date or
as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief as
to the financial statements or schedules or other financial or statistical data
derived therefrom, included or incorporated by reference in the Registration
Statement or the Prospectus or any amendments or supplements thereto).
15
(e) The Representative shall have received an opinion,
dated such Closing Date, of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for
the Selling Stockholder, to the effect that:
(i) The Selling Stockholder has all requisite
limited partnership power and authority to sell, assign,
transfer and deliver the Offered Securities delivered by such
Selling Stockholder on such Closing Date hereunder;
(ii) Upon payment of the purchase price therefor
in accordance with this Agreement and assuming that neither
the Representative nor any Underwriter has notice of any
adverse claims (within the meaning of Section 8105 of the
Uniform Commercial Code as enacted and in effect on the date
hereof in the State of California (the "UCC")) with respect to
the stock certificates or the Offered Securities represented
thereby delivered on the date hereof, upon delivery (within
the meaning of Section 8301(a)(1) of the UCC) to the
Representative of such stock certificates endorsed in blank by
an effective endorsement (within the meaning of Section
8106(b)(1) of the UCC), each Underwriter will acquire its
interest in such stock certificates (and the Offered
Securities represented thereby) free of any adverse claims (as
defined in Section 8102(a)(1) of the UCC) under Section
8303(b) of the UCC;
(iii) The execution, delivery and performance of
the Custody Agreement and this Agreement and the consummation
of the transactions therein and herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, the limited
partnership agreement of the Selling Stockholder;
(iv) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required to be obtained or made by the Selling
Stockholder under any law which in such counsel's experience
is generally applicable to transactions of the type
contemplated by this Agreement and the Custody Agreement for
the consummation of the transactions contemplated by the
Custody Agreement or this Agreement in connection with the
sale of the Offered Securities sold by the Selling
Stockholder, except such as have been obtained and made under
the Act and such as may be required under the Exchange Act and
state securities laws;
(v) The execution, delivery and performance of
the Custody Agreement and this Agreement and the consummation
of the transactions therein and herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (a) any statute,
any rule or regulation which in such counsel's experience is
generally applicable to transactions of the type contemplated
by this Agreement and the Custody Agreement, (b) any order of
any governmental agency or any court having jurisdiction over
the Selling Stockholder identified to us by the Selling
Stockholder or (c) any of the agreements listed on Schedule A
to such counsel's opinion [schedule to include exhibits 4.1,
4.2 and 4.3 of the Form S-3 shelf registration statement];
(vi) The Custody Agreement has been duly
authorized, executed and delivered by the Selling Stockholder
and constitutes a valid and legally binding obligation of the
Selling Stockholder enforceable in accordance with its terms,
subject to
16
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity
principles; and
(vii) This Agreement has been duly authorized,
executed and delivered by the Selling Stockholder.
(f) The Representative shall have received from Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Underwriters, such
opinion or opinions, dated such Closing Date, with respect to the
incorporation of the Company, the Registration Statements, the
Prospectus and other related matters as the Representative may require,
and the Selling Stockholder and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(g) The Representative shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of
the Company in this Agreement are true and correct; the Company has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission; the additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule
462(b), including payment of the applicable filing fee in accordance
with Rule 111(a) or (b) under the Act, prior to the time the Prospectus
was printed and distributed to any Underwriter; and, subsequent to the
dates of the most recent financial statements in the Prospectus, there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole except as set forth
in the Prospectus or as described in such certificate.
(h) The Representative shall have received a certificate,
dated such Closing Date, of two executive officers of the general
partner of the Selling Stockholder in which such officers, to the best
of their knowledge after reasonable investigation, shall state that the
representations and warranties of the Selling Stockholder in this
Agreement are true and correct and that the Selling Stockholder has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to such Closing
Date.
(i) The Representative shall have received a letter,
dated such Closing Date, of KPMG LLP, which meets the requirements of
subsection (a) of this Section 6, except that the specified date
referred to in such subsection will be a date not more than three days
prior to such Closing Date for the purposes of this subsection.
(j) On or prior to the date of this Agreement, the
Representative shall have received lockup letters from each of the
executive officers and directors of the Company.
The Selling Stockholder and the Company will furnish the Representative with
such conformed copies of such opinions, certificates, letters and documents as
the Representative reasonably requests. CSFB may
17
in its sole discretion waive on behalf of the Underwriters compliance with any
conditions to the obligations of the Underwriters hereunder, whether in respect
of an Optional Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each
Underwriter, its partners, directors and officers and each person, if
any who controls such Underwriter within the meaning of Section 15 of
the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter
in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance
upon and in conformity with written information furnished to the
Company by any Underwriter through the Representative specifically for
use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information
described as such in subsection (c) below; and provided, further, that
with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus the
indemnity agreement contained in this subsection (a) shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities
concerned, to the extent that a prospectus relating to such Offered
Securities was required to be delivered by such Underwriter under the
Act in connection with such purchase and any such loss, claim, damage
or liability of such Underwriter results from the fact that there was
not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a
copy of the Prospectus if the Company had previously furnished copies
thereof to such Underwriter, and if the Prospectus (as so amended and
supplemental) would have cured the defect giving rise to such loss,
claim, damage or liability.
(b) The Selling Stockholder will indemnify and hold
harmless each Underwriter, its partners, directors and officers and
each person who controls such Underwriter within the meaning of Section
15 of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Selling Stockholder
will not be liable in any such case to the extent that any such loss,
claim,
18
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any
of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representative specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter
consists of the information described as such in subsection (c) below;
provided, further, that with respect to any untrue statement or alleged
untrue statement in or omission or alleged omission from any
preliminary prospectus the indemnity agreement contained in this
subsection (b) shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent
that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such
purchase and any such loss, claim, damage or liability of such
Underwriter results from the fact that there was not sent or given to
such person, at or prior to the written confirmation of the sale of
such Offered Securities to such person, a copy of the Prospectus if the
Company had previously furnished copies thereof to such Underwriter,
and if the Prospectus (as so amended and supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability;
provided, further, that the Selling Stockholder shall only be subject
to such liability to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission is based upon
information provided by the Selling Stockholder expressly for use in
the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by the
Selling Stockholder consists of the information set forth in the
Prospectus under the heading "Selling Stockholder" and the information
set forth in the Prospectus under the heading "Principal and Selling
Stockholders" as such information relates to the Selling Stockholder;
and provided, further, that the liability under this subsection of the
Selling Stockholder shall be limited to an amount equal to the
aggregate gross proceeds after underwriting commissions and discounts,
but before expenses, to the Selling Stockholder from the sale of
Securities sold by the Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly
indemnify and hold harmless the Company, its directors and officers and
each person, if any, who controls the Company within the meaning of
Section 15 of the Act, and the Selling Stockholder against any losses,
claims, damages or liabilities to which the Company or the Selling
Stockholder may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or
any related preliminary prospectus, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representative specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by
the Company and the Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed
that the only such information furnished by any Underwriter consists of
the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the
fourth paragraph under the caption "Underwriting."
19
(d) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under subsection (a), (b) or (c) above,
notify the indemnifying party of the commencement thereof; provided,
however, that (i) the failure to notify the indemnifying party shall
not relieve it from any liability that it may have under subsection
(a), (b) or (c) above except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses)
by such failure and (ii) the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an
indemnified party otherwise than under subsection (a), (b) or (c)
above. In case any such action is brought against any indemnified party
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified
party from all liability on any claims that are the subject matter of
such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of
an indemnified party.
(e) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a), (b) or (c) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a), (b) or (c) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and the
Underwriters on the other from the offering of the Securities or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Selling Stockholder on the one
hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Selling
Stockholder bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company,
the Selling Stockholder or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (e)
shall be deemed to include any legal or other expenses reasonably
20
incurred by such indemnified party in connection with investigating or
defending any action or claim which is the subject of this subsection
(e). Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (e) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling
Stockholder under this Section 7 shall be in addition to any liability
which the Company and the Selling Stockholder may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 7 shall be in
addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each director of the Company, to each officer of the Company who has
signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder on either
the First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date,
CSFB may make arrangements satisfactory to the Company and the Selling
Stockholder for the purchase of such Offered Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to CSFB, the Company and the Selling Stockholder
for the purchase of such Offered Securities by other persons are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Stockholder, except as provided in Section 9 (provided that if such default
occurs with respect to Optional Securities after the First Closing Date, this
Agreement will not terminate as to the Firm Securities or any Optional
Securities purchased prior to such termination). As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section 8. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Selling Stockholder, of the Company or its officers and of the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
21
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholder shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholder, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv), (vi), (vii) or (viii) of Section 6(c), the Company will
reimburse the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representative, c/o Credit Suisse First Boston LLC, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory
Group, or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at Big 5 Sporting Goods Corporation, 0000 Xxxx Xx Xxxxxxx Xxxx.,
Xx Xxxxxxx, XX 00000, Attention: Xxxx Xxxxx, Esq., or, if sent to the Selling
Stockholder, will be mailed, delivered or telegraphed and confirmed to Xxxxxxx
Xxxxx & Associates, L.P., 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxxxx X. Xxxxxxx; provided, however, that any
notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
12. Representation. The Representative will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representative will be binding
upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b).
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
22
If the foregoing is in accordance with the Representative's
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholder, the Company and the several Underwriters in accordance with
its terms.
Very truly yours,
BIG 5 SPORTING GOODS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
GREEN EQUITY INVESTORS, L.P.
By: Xxxxxxx Xxxxx & Associates, L.P.
Its general partner
By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: General Partner
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON LLC
Acting on behalf of itself and as the
Representative of the several Underwriters
By /s/ Xxx Xxxxxxxx
------------------------------
Name: Xxx Xxxxxxxx
Title: Director
SCHEDULE A
NUMBER OF
FIRM SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------
Credit Suisse First Boston LLC .......................... 1,560,000
U.S. Bancorp Xxxxx Xxxxxxx Inc .......................... 1,378,000
Xxxxxxxxx & Company, Inc. ............................... 780,000
Xxxxxxxx Inc. ........................................... 780,000
SunTrust Capital Markets, Inc. .......................... 234,000
Xxxxx Fargo Securities, LLC ............................. 234,000
First Albany Capital Inc. ............................... 234,000
---------
Total ............................................... 5,200,000
=========
SCHEDULE B
1. Stock Subscription Agreement dated as of September 25, 1992 by and among
Big 5 Corporation, a Delaware corporation, Green Equity Investors, L.P., a
Delaware limited partnership, and the people or entities identified on
Schedule 1 attached thereto
2. Stock Subscription Agreement dated as of September 25, 1992 by and between
Big 5 Corporation, a Delaware corporation, and Green Equity Investors,
L.P., a Delaware limited partnership, as amended.
3. Management Subscription and Stockholders Agreement dated as of September
25, 1992 by and among Big 5 Corporation, a Delaware corporation, Green
Equity Investors, L.P., a Delaware limited partnership, and the people or
entities identified on Annex A attached thereto.
4. Management Subscription and Stockholders Agreement dated as of September
25, 1992 by and among Big 5 Corporation, a Delaware corporation, Green
Equity Investors, L.P., a Delaware limited partnership, and the people or
entities identified on Annex A attached thereto.
5. Management Subscription and Stockholders Agreement dated as of October 15,
1992 by and among Big 5 Corporation, a Delaware corporation, Green Equity
Investors, L.P., a Delaware limited partnership, and the people identified
on Schedule 1 attached thereto.
6. Management Subscription and Stockholders Agreement dated as of November 11,
1997 by and among Big 5 Holdings Corp., a Delaware corporation, and the
people identified on Annex A attached thereto.
7. Investor Agreement dated as of November 13, 1997 among Big 5 Holdings
Corp., Green Equity Investors, L.P., Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx and
Ares Leveraged Investment Fund, L.P. and Amendment No. 1 dated as of April
15, 2001 thereto.
