THE SPORTS AUTHORITY, INC.
5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2001
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PURCHASE AGREEMENT
September 17, 1996
Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
The Sports Authority, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you (the "Purchaser") an aggregate of $130,000,000 principal amount of the
Convertible Subordinated Notes, convertible into shares of Common Stock, par
value $.01 per share ("Stock"), of the Company, specified above (the "Firm
Securities") and, at the election of the Purchaser, up to an aggregate of
$19,500,000 additional aggregate principal amount of such Convertible
Subordinated Notes (the "Optional Securities") (the Firm Securities and the
Optional Securities which the Purchaser elects to purchase pursuant to Section 2
hereof are herein collectively called the "Securities"). As used herein, the
term "Securities" shall be deemed, unless the context otherwise requires, to
include the Securities in the form of a temporary global Security representing
the Securities issued and sold in reliance on Regulation S.
The Purchaser and other holders (including subsequent transferees) of
Securities in registered form without coupons will be entitled to the benefits
of the registration rights agreement, to be dated as of the Time of Delivery (as
defined below) (the "Registration Rights Agreement") among the Company and the
Purchaser, in substantially the form previously delivered to you. Pursuant to
the Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission") under the circumstances
set forth therein a shelf registration statement pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
resale of (i) such Securities and (ii) the shares of Stock initially issuable
upon conversion of the Securities by holders thereof, and to use its reasonable
efforts to cause such shelf registration statement to be declared effective.
1. The Company represents and warrants to, and agrees with, you that:
(a) An offering circular, dated September 17, 1996 (the "Offering
Circular"), including the international supplement thereto and the
Company's Annual Reports on Form 10-K for the fiscal year ended January 28,
1996 (the "Form 10-K") and Quarterly Reports on Form 10-Q for the quarters
ended July 28, 1996 and April 28, 1996, which are attached to and made a
part of the Offering Circular, have been prepared in connection with the
offering of the Firm Securities and Optional Securities and shares of the
Stock issuable upon conversion thereof. Any reference to the Offering
Circular shall be deemed to refer to and include the Company's most recent
Annual Report on Form 10-K and all subsequent documents filed with the
United States Securities and Exchange Commission (the "Commission")
pursuant to Section 13(a), 13(c) or 15(d) of the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act") on or prior to the
date of the Offering Circular, and any reference to the Offering Circular,
as amended or supplemented, as of any specified date, shall be deemed to
include (i) any documents filed with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act after the date of the Offering
Circular, and prior to such specified date and (ii) any Additional Issuer
Information (as defined in Section 5(f)) furnished by the Company prior to
the completion of the distribution of the Securities; and all documents
filed under the Exchange Act and so deemed to be included in the Offering
Circular, or any amendment or supplement thereto are hereinafter called the
"Exchange Act Reports". The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The Offering
Circular and any amendments or supplements thereto and the Exchange Act
Reports did not and will not, as of their respective dates, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by you expressly for use
therein;
(b) The only subsidiaries of the Company are OSR, Inc., Authority
International Inc., The Sports Authority Canada, Inc., Intelligent Sports
Inc., The Sports Authority Florida, Inc., The Sports Authority Puerto Rico,
Inc. The Sports Authority Michigan, Inc. and Mega Sports Co., Ltd. (all
subsidiaries of the Company being referred to herein as the
"subsidiaries").
(c) Intelligent Sports Inc. and The Sports Authority Florida, Inc. are
the only subsidiaries that meet the definition of "significant subsidiary"
contained in Rule 1-02(w) of Regulation S-X (Intelligent Sports Inc. and
The Sports Authority Florida, Inc. being individually referred to as a
"Significant Subsidiary" and collectively as the "Significant
Subsidiaries");
(d) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the
Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Circular, that
would have,
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individually or in the aggregate, a material adverse effect on the
business, operations, financial condition, stockholders equity or results
of operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"); and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change in or affecting the business,
operations, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Offering Circular;
(e) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
material personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except, in each case, such as are
described in the Offering Circular or such as do not and would not,
individually or in the aggregate, have a Material Adverse Effect; and any
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(f) Each of the Company and the Significant Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Circular, and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(g) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued and outstanding shares of capital
stock of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable; the shares of Stock initially issuable
upon conversion of the Securities have been duly and validly authorized and
reserved for issuance out of the Company's authorized and unissued shares
of Stock and, when issued and delivered in accordance with the provisions
of the Securities and the Indenture referred to below, will be duly and
validly issued, fully paid and non-assessable and will conform to the
description of the Stock contained in the Offering Circular; and all of the
issued and outstanding shares of capital stock of the Significant
Subsidiaries of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, other than the lien in favor of the lenders under the
Credit Agreement, dated as of April 26, 1995, between the Company, as the
Borrower, and the Financial Institutions named therein, as the Lenders;
(h) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will
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constitute valid and legally binding obligations of the Company entitled to
the benefits provided by the indenture to be dated as of September 20, 1996
(the "Indenture") between the Company and The Bank of New York, as Trustee
(the "Trustee"), under which they are to be issued, each of the Indenture
and the Registration Rights Agreement have been duly authorized and, when
executed and delivered by the parties thereto, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Securities, the Indenture and the Registration Rights Agreement will
conform to the descriptions thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
(i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and the Registration Rights Agreement and the consummation of the
transactions herein and therein contemplated (i) will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) will not result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company and (iii) will not result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties, except, with respect to clauses (i) and (iii) above, for
such breaches, violations or defaults that would not, individually or in
the aggregate, have a Material Adverse Effect or that would not,
individually or in the aggregate, impair the Company's ability to
consummate the transactions herein contemplated; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement, the Registration Rights Agreement or the
Indenture, except (i) as required pursuant to the Registration Rights
Agreement, (ii) for the listing of the Stock issuable upon conversion of
the Securities on the New York Stock Exchange, (iii) such consents,
approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Purchaser and
conversion of the Securities into shares of Stock and, (iv) the filing,
pursuant to Section 5(h) hereof, by the Company of a notice on Form D,
pursuant to Regulation D under the Securities Act, with the Commission;
(j) None of the Company or either of its Significant Subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default in
the performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound, which default would have
a Material Adverse Effect;
(k) The statements set forth in the Offering Circular under the caption
"Description of Notes" and "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Securities and the
Stock, under the caption "United States Taxation", and under the caption
"Offer and Resale", insofar as they purport to describe the provisions of
this Agreement, fairly and accurately present the information disclosed
therein in all material respects;
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(l) Other than as set forth or contemplated in the Offering Circular,
there are no legal or governmental proceedings pending to which the Company
or any of its Significant Subsidiaries is a party or of which any property
of the Company or any of its Significant Subsidiaries is the subject which,
if determined adversely to the Company or any of its Significant
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(m) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or quoted in a U.S. automated inter-dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(o) The Company is not, and after giving effect to the offering and sale
of the Securities will not be an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(p) Neither the Company nor any person acting on its behalf has offered
or sold the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or, with
respect to Securities sold outside the United States to non- U.S. persons
(as defined in Rule 902 under the Act), by means of any directed selling
efforts within the meaning of Rule 902 under the Securities Act and the
Company, any affiliate of the Company and any person acting on its or their
behalf, has complied with and will implement the "offering restrictions"
within the meaning of such Rule 902;
(q) Within the preceding six months, neither the Company nor any other
person acting on behalf of the Company has offered or sold to any person
any Securities or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchaser
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Securities Act) of any
Securities or any substantially similar security issued by the Company,
within six months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Company by you), is made
under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Securities Act;
(r) None of the holders of outstanding shares of capital stock of the
Company and no other person has or will have any preemptive or other rights
(other than the conversion rights of the Securities) to purchase, subscribe
for or otherwise acquire (i) the shares of Stock to be issued upon
conversion of the Securities or any rights to such shares or (ii) as a
result of or in
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connection with the transactions contemplated by the Indenture or this
Agreement, any other capital stock of the Company or rights thereto;
(s) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes;
(t) Price Waterhouse LLP, who have certified certain financial
statements of the Company, are independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder;
(u) The Company, either directly or through its wholly-owned subsidiary,
Intelligent Sports, Inc., owns, or possesses adequate rights to use, all
trademarks, service marks, trade names, copyrights and licenses necessary
to conduct the business now operated by it, and neither the Company nor
Intelligent Sports Inc. has received any notice of infringement of or
conflict with (and knows of no such infringement or conflict with) asserted
rights of others with respect to any trademarks, service marks, trade
names, copyrights or licenses that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect;
(v) The Company and each of the Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, necessary
to own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Offering Circular, except to the
extent that the failure to obtain or file would not, alone or in the
aggregate, have a Material Adverse Effect; and
(w) The Company and each of the Significant Subsidiaries (i) is in
compliance with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received all permits,
licenses or other approvals required of it under applicable Environmental
Laws to conduct its business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, individually
or in the aggregate, have a Material Adverse Effect.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, at a purchase price of 97.5% of the principal amount thereof,
plus accrued interest, if any, from September 20, 1996, the Firm Securities,
and (b) in the event and to the extent that the Purchaser shall exercise the
election to purchase Optional Securities as provided below, the Company agrees
to issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company, at the same purchase price set forth in clause (a) of this Section
2, the aggregate principal amount of the Optional Securities as to which such
election shall have been exercised.
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The Company hereby grants to the Purchaser the right to purchase at its
election up to $19,500,000 aggregate principal amount of Optional Securities, at
the same purchase price set forth in clause (a) of the first paragraph of this
Section 2, for the sole purpose of covering overallotments in the sale of Firm
Securities. Any such election to purchase Optional Securities may be exercised
by written notice from you to the Company, given within a period of 30 calendar
days after the date of this Agreement, setting forth the aggregate principal
amount of Optional Securities to be purchased and the date on which such
Optional Securities are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Securities, the
Purchaser proposes to offer the Firm Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and the
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements of
Rule 144A, (ii) institutions which it reasonably believes are "accredited
investors" ("Institutional Accredited Investors") within the meaning of Rule 501
under the Act or, (iii) upon the terms and conditions set forth in Annex I to
this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased will be represented (i) in the case of
Securities purchased in reliance on Rule 144A (except in the case of Securities
to be acquired by Institutional Accredited Investors, which will be represented
in definitive certificated registered form), by one or more definitive global
Securities in book-entry form which will be deposited by or on behalf of the
Company with The Depository Trust Company ("DTC") or its designated custodian
and (ii) in the case of Securities purchased in reliance on Regulation S, by one
or more definitive global Securities in book-entry form which will be deposited
by or on behalf of the Company with DTC or its designated custodian for the
benefit of Xxxxxx Guaranty Trust Company of New York (Brussels office), as
operator of the Euroclear System, or Cedel Bank, Societe Anonyme, or both, for
credit to the account of Xxxxxxx, Sachs & Co., unless otherwise directed by you.
The Company will deliver the Securities to Xxxxxxx, Xxxxx & Co., for its
account, against payment therefor by or on behalf of the Purchaser of the
purchase price therefor by certified or official bank check or checks, or by
wire transfer, payable to the order of the Company in Federal (same day) funds,
by causing DTC to credit the Securities to the account of Xxxxxxx, Sachs & Co.
at DTC. The Company will cause the certificates representing the Securities to
be made available to Xxxxxxx, Xxxxx & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Securities, 10:00 a.m.,
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New York City time, on September 20, 1996, or such other time and date as the
Purchaser and the Company may agree upon in writing and, with respect to the
Optional Securities, 10:00 a.m., New York City time, on the date specified by
the Purchaser in the written notice given by the Purchaser of the Purchaser's
election to purchase such Optional Securities, or such other time and date as
the Purchaser and the Company may agree upon in writing. Such time and date for
delivery of the Firm Securities is herein called the "First Time of Delivery",
such time and date for delivery of the Optional Securities, if not the First
Time of Delivery, is herein called the "Second Time of Delivery", and each such
time and date for delivery is herein called a "Time of Delivery".
Such Securities, if any, as Xxxxxxx, Sachs & Co. may request upon at least
forty-eight hours' prior to notice to the Company (such request to include the
authorized denominations and the names in which they are to be registered),
shall be delivered in definitive certificated form, by or on behalf of the
Company to Xxxxxxx, Xxxxx & Co., against payment by or on behalf of such
Purchaser of the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company in Federal (same day) funds. The
Company will cause the certificates representing the Securities to be made
available for checking and packaging at least twenty-four hours prior to such
Time of Delivery at the office of Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
(b) The documents to be delivered at such Time of Delivery by or on behalf of
the parties hereto pursuant to Section 7 hereof, including the cross-receipt for
the Securities and any additional documents requested by the Purchaser pursuant
to Section 7(i) hereof, will be delivered at such time and date at the offices
of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at such Time of Delivery. A meeting will be held at the Closing Location at 3:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with the Purchaser:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular prior to such Time of
Delivery which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities and the shares of Stock issuable upon
conversion thereof for offering and sale under the securities laws of such
jurisdictions as you may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long
as may be necessary to complete the distribution of the Securities, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction or to take any other action which would subject it to the service
of process in suits or to taxation, other than as to matters and transactions
relating to the offer and sale of the Securities in each jurisdiction in which
the Securities have been qualified as provided above;
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(c) Subject to delays caused by the Purchaser or its counsel, prior to 1:00
p.m., New York City time, on the New York business day next succeeding the date
of this Agreement to furnish the Purchaser with ten copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Circular, and any amendment or supplement containing amendments to the
financial statements covered by such report(s), signed by the accountants,
copies of the Offering Circular in such quantities as are necessary to fulfill
confirmation requirements and additional copies thereof in such quantities as
you may from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any event
shall have occurred as a result of which the Offering Circular as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Offering
Circular is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Circular, to notify you and upon your request to prepare and furnish
without charge to the Purchaser and to any dealer in securities as many copies
as you may from time to time reasonably request of an amended Offering Circular
or a supplement to the Offering Circular which will correct such statement or
omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing to and
including the date 90 days after the Date of the Offering Circular, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to the
Securities or the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than pursuant to
employee benefit plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Agreement), without your prior written consent;
(e) Not to be or become, at any time prior to the expiration of three years
after the last Time of Delivery, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act;
(g) If requested by you, to use its best efforts to cause Securities sold in
reliance on Rule 144A to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc.;
(h) To file with the Commission, not later than 15 days after each Time of
Delivery, five copies of a notice on Form D under the Act (one of which will be
manually signed by a person duly authorized by the Company); to otherwise comply
with the requirements of Rule 503 under the Securities Act; and to furnish
promptly to you evidence of each such required timely filing (including a copy
thereof);
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(i) During a period of five years from the date of the Offering Circular to
furnish to the holders of the Securities as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the date of the Offering
Circular), consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(j) During a period of five years from the date of the Offering Circular, to
furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request;
(k) During the period of three years after the last Time of Delivery, the
Company will not, and will not permit any of its "affiliates" (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities which
constitute "restricted securities" under Rule 144 that have been reacquired by
any of them;
(l) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Offering Circular
under the caption "Use of Proceeds";
(m) Until such time as any Security or any Stock issuable upon conversion
thereof is registered under the Securities Act pursuant to the Registration
Rights Agreement and transferred pursuant to such registration, to include a
legend on the Securities and Stock issuable upon the conversion thereof to the
effect set forth under "Notice to Investors" in the Offering Circular;
(n) To reserve and keep available at all times, free of preemptive rights,
authorized and unissued shares of Stock for the purpose of enabling the Company
to satisfy any obligations to issue shares of its Stock upon conversion of the
Securities; and
(o) (i) As promptly as practicable, and in any event not later than 90 days
after the First Time of Delivery, to have the Shares of Stock issuable upon
conversion of the Securities approved for listing on the New York Stock
Exchange.
6. The Company covenants and agrees with the Purchaser that the Company will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the issue of the
Securities and the shares of Stock issuable upon conversion of the Securities
and all other expenses in connection with the preparation and printing of the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchaser and dealers; (ii) the cost of
printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Blue Sky Memo and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all expenses in
-10-
connection with the qualification of the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Purchaser in connection with such qualification
and in connection with the Blue Sky surveys; (iv) any fees charged by securities
rating services for rating the Securities; (v) the cost of preparing the
Securities; (vi) the fees and expenses of the Trustee and any agent of the
Trustee and the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities; (vii) any cost incurred in connection
with the designation of the Securities for trading in PORTAL and the listing of
the shares of Stock issuable upon conversion of the Securities; and (viii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Purchaser will pay all of its own costs and expenses,
including the fees of its counsel, transfer taxes on resale of any of the
Securities by it, and any advertising expenses connected with any offers it may
make, and the Purchaser will reimburse the Company for up to $325,000, and up to
an additional $48,750 in the event of the exercise by the Purchaser of its right
to purchase Optional Securities, for out-of-pocket expenses incurred in
connection with the transactions contemplated hereunder.
7. The obligations of the Purchaser hereunder at each Time of Delivery shall
be subject, in its discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of such
Time of Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) Xxxxxxxx & Xxxxxxxx, counsel for the Purchaser, shall have furnished to
you such opinion or opinions, dated such Time of Delivery, with respect to the
incorporation of the Company, the validity of the Securities being delivered at
such Time of Delivery, the Offering Circular and other related matters as you
may reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(b) Xxxxxx, Xxxxx & Bockius LLP, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing as a
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 Offering Circular;
(ii) The shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance
and, when issued and delivered in accordance with the provisions of the
Securities and the Indenture, will be duly and validly issued and fully paid
and non-assessable, and will conform to the description of the Stock
contained in the Offering Circular;
(iii) This Agreement has been duly authorized, executed and delivered
by the Company;
-11-
(iv) The Securities have been duly authorized, executed, authenticated,
issued and delivered, are entitled to the benefits provided by the Indenture,
and constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities, the Indenture, this Agreement
and the Registration Rights Agreement conform to the descriptions thereof in
the Offering Circular;
(v) The Indenture and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company and constitute valid and
legally binding instruments of the Company, enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(vi) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries
is subject and which was filed as an exhibit to the Form 10-K, nor will such
actions result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any Applicable Laws
or any Applicable Orders; provided, that in rendering such opinions such
counsel need not express any opinion with respect to (1) foreign or state
securities or Blue Sky laws or (2) the information contained in, or the
accuracy, completeness or correctness of, the Offering Circular, which
matters are dealt with separately herein;
For purposes of clauses (vi) and (vii) of this Section 7(b): (i)
"Applicable Laws" means those laws, rules and regulations of the State of
Delaware, the State of New York and the United States of America that, in
such counsel's experience, are normally applicable to transactions of the
type contemplated by the Purchase Agreement; (ii) "Applicable Orders" means
those judgments, orders or decrees of Delaware, New York or federal
Government Authorities (as such term is hereinafter defined) known to such
counsel and identified on a certificate from an appropriate officer of the
Company as applicable to the Company or its subsidiaries or their properties;
(iii) "Governmental Authorities" means any Delaware, New York or federal
executive, legislative, judicial, administrative or regulatory body; and (iv)
"Governmental Approval" means any consent, approval, license, authorization
or qualification or validation of, or notice to, or filing, recording or
registration with, any Governmental Authority pursuant to Applicable Laws or
Applicable Orders;
(vii) Based on such counsel's review of Applicable Laws and Applicable
Orders, no Governmental Approval is required for the issue and sale of the
Securities or the conversion of the Securities into shares of Stock or the
consummation by the Company of the transactions contemplated by this
Agreement, the Indenture and the Registration Rights Agreement except (i) as
required pursuant to the Registration Rights Agreement, (ii) such approvals
as may be required
-12-
under foreign or state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Purchaser, and (iii) the
filing, pursuant to Section 5(h) hereof, by the Company of a notice on Form
D, pursuant to Regulation D under the Securities Act, with the Commission;
(viii) The statements set forth in the Offering Circular under the
caption "Description of Notes" and "Description of Capital Stock", insofar as
they purport to constitute a summary of the terms of the Securities and the
Stock, under the caption "United States Taxation", and under the caption
"Offer and Resale", to the extent they constitute matters of law or legal
conclusions fairly and accurately present the information required to be
disclosed therein in all material respects; and
(ix) No registration of the Securities under the Securities Act, and no
qualification of an indenture under the United States Trust Indenture Act of
1939 with respect thereto, is required for the offer, sale and initial resale
of the Securities by the Purchaser in the manner contemplated by this
Agreement.
In addition, such counsel shall state that, in connection with the
preparation of the Offering Circular, such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent accountants of the Company, the Purchaser
and counsel for the Purchaser at which the contents of the Offering Circular
and related matters were discussed, and although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Offering Circular and has made
no independent check or verification thereof, on the basis of the foregoing,
no facts have come to the attention of such counsel that have led them to
believe that the Offering Circular (except for the financial statements,
schedules and other financial data included therein or omitted therefrom, as
to which such counsel need express no opinion), as of its date and as of each
Time of Delivery, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Such counsel may also state that, insofar as any opinions involve
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public officials
and others.
(c) Xxxxx X. Xxxx III, Vice President and General Counsel of the Company,
shall have furnished to you his written opinion, dated such Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which the Company owns or leases properties, or conducts
any business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
-13-
(ii) To the best of such counsel's knowledge, after due inquiry and
other than as set forth in the Offering Circular, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or such subsidiary, would individually or in the aggregate have a
material adverse effect on the business, operations, financial condition,
stockholder's equity or results of operations of the Company, or the
Company and its subsidiaries taken as a whole; and, to the best of such
counsel's knowledge, no such proceedings are threatened;
(iii) The issue and sale of the Securities being issued at such Time of
Delivery by the Company, the compliance by the Company with all of the
provisions of this Agreement, the Securities, the Indenture and the
Registration Rights Agreement and the consummation by the Company of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any real estate lease to which the Company or
any of its subsidiaries is a party, except for such conflicts, breaches,
defaults or violations which would not, individually or in the aggregate,
have a material adverse effect on the business, operations, financial
condition, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole; and
(iv) The Sports Authority Florida, Inc. has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
state of incorporation; and all of the issued and outstanding shares of
capital stock of The Sports Authority Florida, Inc. have been duly and
validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, other than the lien in favor of the
lenders under the Credit Agreement, dated as of April 26, 1995, between the
Company, as the Borrower, and the Financial Institutions named therein, as
the Lenders; and
(v) Intelligent Sports Inc. has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its state of
incorporation; and all of the issued and outstanding shares of capital
stock of Intelligent Sports Inc. have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims other than the lien in favor of the lenders under the
Credit Agreement, dated as of April 26, 1995, between the Company, as the
Borrower, and the Financial Institutions named therein, as the Lenders; and
(vi) To the best of such counsel's knowledge, after due inquiry and
other than as set forth in the Offering Circular, there are no legal or
governmental proceedings pending to which Intelligent Sports Inc. is a
party or of which any property of Intelligent Sports Inc. is the subject
which, if determined adversely to Intelligent Sports Inc., would
individually or in the aggregate have a material adverse effect on the
business, operations, financial condition, stockholder's equity or results
of operations of Intelligent Sports Inc.; and, to the best of such
counsel's knowledge, no such proceedings are threatened.
-14-
Such counsel may also state that, insofar as any opinions involve
factual matters, he has relied, to the extent he deems proper, upon
certificates of officers of the Company and certificates of public officials.
(d) On the date of the Offering Circular prior to the execution of this
Agreement and also at such Time of Delivery, Price Waterhouse LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex II hereto;
(e) (i) Neither the Company nor any of the Significant Subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Offering Circular,
and (ii) since the respective dates as of which information is given in the
Offering Circular there shall not have been any change in the capital stock or
long-term debt of the Company or any of the Significant Subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company or any of the Significant Subsidiaries, otherwise
than as set forth or contemplated in the Offering Circular, the effect of which,
in any such case described in Clause (i) or (ii), is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities being delivered at such Time of
Delivery on the terms and in the manner contemplated in this Agreement and in
the Offering Circular;
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities in New
York declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this Clause (iv) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Offering Circular;
(h) The Company shall have furnished or caused to be furnished to you at
each Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as
-15-
to the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth in
subsections (a) and (e) of this Section and as to such other matters as you may
reasonably request.
8. (a) The Company will indemnify and hold harmless the Purchaser against any
losses, claims, damages or liabilities, joint or several, to which the Purchaser
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 an untrue statement or alleged untrue statement of a material fact
contained in the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, and
will reimburse the Purchaser for any legal or other expenses reasonably incurred
by the Purchaser in connection with investigating or defending any such action
or claim as such expenses are incurred; PROVIDED, HOWEVER, that the Company
shall 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 or omission or alleged omission made in the Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by the Purchaser expressly for
use therein.
(b) The Purchaser will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company 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 an
untrue statement or alleged untrue statement of a material fact contained in the
Offering Circular, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
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 the Offering Circular or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein;
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably 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 shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending
-16-
or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim 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 any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchaser on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchaser on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser 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 Company bear to the total
underwriting discounts and commissions received by the Purchaser, in each case
as set forth in the Offering Circular. 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 on the one hand or the Purchaser
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchaser agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Purchaser shall not 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 investors were offered to investors exceeds the amount of any
damages which the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(e) The obligations of the Company under this Section 8 shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls the Purchaser
within the meaning of the Act; and the obligations of the Purchaser under this
Section 8 shall be in addition to any liability which the Purchaser may
otherwise
-17-
have and shall extend, upon the same terms and conditions, to each officer and
director of the Company and to each person, if any, who controls the Company
within the meaning of the Act.
9. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Purchaser, as set forth in this
Agreement or made by them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by the Purchaser or any controlling
person of the Purchaser, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment for
the Securities.
10. If the Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, the Company shall not be
under any liability to the Purchaser except as provided in Section 6 and 8
hereof, but if for any other reason the Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Purchaser for all out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Purchaser in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to the Purchaser except as provided in Sections 6 and
8 hereof, and the reimbursement provision at the end of paragraph 6 will have no
effect.
11. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchaser shall be delivered or sent by mail, telex or
facsimile transmission to you at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Registration Department; and if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Offering Circular, Attention: Secretary. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the benefit of,
the Purchaser, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or the Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from the Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH TH
LAWS OF THE STATE OF NEW YORK.
15. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
-18-
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Purchaser and the Company.
Very truly yours,
The Sports Authority, Inc.
By: /S/ XXXXXXX X. XXXXXXX
-------------------------------
Name:
Title:
Accepted as of the date hereof:
/S/ XXXXXXX, SACHS & CO
---------------------------------
(Xxxxxxx, Xxxxx & Co.)
-19-
ANNEX I
(1) THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE ACT
AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN ACCORDANCE WITH REGULATION S UNDER
THE ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT. THE PURCHASER REPRESENTS THAT IT HAS OFFERED AND SOLD THE SECURITIES, AND
WILL OFFER AND SELL THE SECURITIES (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME
AND (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING AND THE LAST TIME OF DELIVERY, ONLY IN ACCORDANCE WITH RULE 903 OF
REGULATION S, RULE 144A OR PURSUANT TO PARAGRAPH 2 OF THIS ANNEX I UNDER THE
SECURITIES ACT. ACCORDINGLY, THE PURCHASER AGREES THAT NEITHER IT, ITS
AFFILIATES NOR ANY PERSONS ACTING ON THEIR BEHALF HAS ENGAGED OR WILL ENGAGE IN
ANY DIRECTED SELLING EFFORTS WITH RESPECT TO THE SECURITIES, AND THEY HAVE
COMPLIED AND WILL COMPLY WITH THE OFFERING RESTRICTIONS REQUIREMENT OF
REGULATION S. THE PURCHASER AGREES THAT, AT OR PRIOR TO CONFIRMATION OF SALE OF
SECURITIES (OTHER THAN A SALE PURSUANT TO RULE 144A) OR PURSUANT TO PARAGRAPH 2
OF THIS ANNEX I, IT WILL HAVE SENT TO EACH DISTRIBUTOR, DEALER OR PERSON
RECEIVING A SELLING CONCESSION, FEE OR OTHER REMUNERATION THAT PURCHASES
SECURITIES FROM IT DURING THE RESTRICTED PERIOD A CONFIRMATION OR NOTICE TO
SUBSTANTIALLY THE FOLLOWING EFFECT:
"THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED
AND SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II)
OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING AND THE CLOSING DATE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH
REGULATION S (OR RULE 144A IF AVAILABLE) UNDER THE SECURITIES ACT. TERMS
USED ABOVE HAVE THE MEANING GIVEN TO THEM BY REGULATION S."
TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S.
THE PURCHASER FURTHER AGREES THAT IT HAS NOT ENTERED AND WILL NOT ENTER
INTO ANY CONTRACTUAL ARRANGEMENT WITH RESPECT TO THE DISTRIBUTION OR DELIVERY OF
THE SECURITIES, EXCEPT WITH ITS AFFILIATES OR WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchaser in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) The Purchaser further represents and agrees that (i) it has not offered
or sold, and will not offer or sell, in the United Kingdom by means of any
document, any Securities other than to persons whose ordinary business it is to
buy or sell debentures, whether as principal or as agent, or in circumstances
which do not constitute an offer to the public within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied, and will comply,
with all applicable provisions of the Financial Services Xxx 0000 of Great
Britain with respect to anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom, and (iii) it has only issued or
passed on, and will only issue or pass on, in the United Kingdom, any document
received by it in connection with the issuance of the Securities to a person who
is of a kind described in Article 11(3) of the Financial
A-1
Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996 of Great
Britain or is a person to whom the document may otherwise lawfully be issued or
passed on.
(4) The Purchaser agrees that it will not offer, sell or deliver any of the
Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
their purchase and resale of the Securities in such jurisdictions. The Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. The Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities.
A-2
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchaser to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable published
rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by them and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Offering Circular
agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in
the Offering Circular are not in conformity with generally accepted
accounting principles applied on the basis substantially consistent
with the basis for the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated statements
of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any such
unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included in
the Offering Circular;
(C) the unaudited financial statements which were not included
in the Offering Circular but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet
II-A-1
items included in the Offering Circular and referred to in Clause
(B) were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements included
in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to
form in all material respects with the applicable accounting
requirements or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise
of options and stock appreciation rights, upon earn- outs of
performance shares and upon conversions of convertible securities,
in each case which were outstanding on the date of the latest
financial statements included in the Offering Circular) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Purchaser, or
any increases in any items specified by the Purchaser, in each case
as compared with amounts shown in the latest balance sheet included
in the Offering Circular except in each case for changes, increases
or decreases which the Offering Circular discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in Clause (E) there were any decreases in consolidated
net revenues or operating profit or the total or per share amounts
of consolidated net income or other items specified by the
Purchaser, or any increases in any items specified by the Purchaser,
in each case as compared with the comparable period of the preceding
year and with any other period of corresponding length specified by
the Purchaser, except in each case for decreases or increases which
the Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Purchaser, which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
II-A-2
