exv10w3






Exhibit 10.3




GUARANTY




     GUARANTY (this “Guaranty”), dated as of October 18, 2010, by BIG 5 SPORTING GOODS
CORPORATION, a Delaware corporation (the “Guarantor”) in favor of (a) WELLS FARGO BANK,
NATIONAL ASSOCIATION, as administrative agent (in such capacity, the “Administrative
Agent”) for its own benefit and the benefit of the other Credit Parties (as defined in the
Credit Agreement referred to below), (b) WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral
agent (in such capacity, the “Collateral Agent”) for its own benefit and the benefit of the
other Credit Parties, and (c) the Credit Parties.



W I T N E S S E T H




     WHEREAS, reference is made to that certain Credit Agreement, dated as of October 18, 2010 (as
amended, modified, supplemented or restated hereafter, the “Credit Agreement”), by and
among, among others, (i) Big 5 Corp. (the “Lead Borrower”), (ii) the other Borrowers party
thereto, (iii) the Administrative Agent, (iv) the Collateral Agent, and (v) the Lenders party
thereto (the “Lenders”). Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.



     WHEREAS, the Lenders have agreed to make Loans to the Borrowers, and the L/C Issuer has agreed
to issue Letters of Credit for the account of the Borrowers, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement.



     WHEREAS, the Guarantor is the owner of 100% of the Equity Interests in the Lead Borrower, and
acknowledges that it will receive direct and indirect benefits from the availability of the credit
facility provided for in the Credit Agreement, from the making of the Loans by the Lenders, and the
issuance of the Letters of Credit by the L/C Issuer.



     WHEREAS, the obligations of the Lenders to make Loans and of the L/C Issuer to issue Letters
of Credit are each conditioned upon, among other things, the execution and delivery by the
Guarantor of a guaranty in the form hereof. As consideration therefor, and in order to induce the
Lenders to make Loans and the L/C Issuer to issue Letters of Credit, the Guarantor is willing to
execute this Guaranty.



     Accordingly, the Guarantor hereby agrees as follows:



     SECTION 1. Guaranty. The Guarantor irrevocably and unconditionally guaranties, as a
primary obligor and not merely as a surety, the due and punctual payment when due (whether at the
stated maturity, by required prepayment, by acceleration or otherwise) and performance by the
Borrowers of all Obligations (collectively, the “Guaranteed Obligations”), including all
such Guaranteed Obligations which shall become due but for the operation of the Bankruptcy Code.
The Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole
or in part, without notice to or further assent from it, and that it will remain bound upon this
Guaranty notwithstanding any extension or renewal of any Guaranteed Obligation.



     SECTION 2. Guaranteed Obligations Not Affected. To the fullest extent permitted by
applicable Law, the Guarantor waives presentment to, demand of payment from, and protest to, any
Loan Party of any of the Guaranteed Obligations, and also waives notice of acceptance of this
Guaranty, notice of protest for nonpayment and all other notices of any kind. To the fullest



 









 







extent permitted by applicable Law, the obligations of the Guarantor hereunder shall not be
affected by (a) the failure of any Agent or any other Credit Party to assert any claim or
demand or to enforce or exercise any right or remedy against any Loan Party under the provisions of
the Credit Agreement, any other Loan Document or otherwise or against any other party with respect
to any of the Guaranteed Obligations, (b) any rescission, waiver, amendment or modification of, or
any release from, any of the terms or provisions of this Guaranty, any other Loan Document or any
other agreement, with respect to any Loan Party or with respect to the Guaranteed Obligations,
(c) the failure to perfect any security interest in, or the release of, any of the Collateral held
by or on behalf of the Collateral Agent or any other Credit Party, or (d) the lack of legal
existence of any Loan Party or legal obligation to discharge any of the Guaranteed Obligations by
any Loan Party for any reason whatsoever, including, without limitation, in any insolvency,
bankruptcy or reorganization of any Loan Party.



     SECTION 3. Security. The Guarantor hereby acknowledges and agrees that the Collateral
Agent and each of the other Credit Parties may (a) take and hold security for the payment of this
Guaranty and the Guaranteed Obligations and exchange, enforce, waive and release any such security,
(b) apply such security and direct the order or manner of sale thereof as they in their sole
discretion may determine, and (c) release or substitute any one or more endorsees, the Borrowers,
other guarantors or other obligors, in each case without affecting or impairing in any way the
liability of the Guarantor hereunder.



     SECTION 4. Guaranty of Payment. The Guarantor further agrees that this Guaranty
constitutes a guaranty of payment and performance when due of all Guaranteed Obligations and not of
collection and, to the fullest extent permitted by applicable Law, waives any right to require that
any resort be had by the Collateral Agent or any other Credit Party to any of the Collateral or
other security held for payment of the Guaranteed Obligations or to any balance of any deposit
account or credit on the books of any Agent or any other Credit Party in favor of any Loan Party or
any other Person or to any other guarantor of all or part of the Guaranteed Obligations. Any
payment required to be made by the Guarantor hereunder may be required by any Agent or any other
Credit Party on any number of occasions and shall be payable to the Administrative Agent, for the
benefit of the Agents and the other Credit Parties, in the manner provided in the Credit Agreement.



     SECTION 5. Indemnification. Without limiting any of its indemnification obligations
under the Credit Agreement or the other Loan Documents, and without duplication of any
indemnification provided for under the Credit Agreement or the other Loan Documents, the Guarantor
shall indemnify the Credit Parties and each of their Subsidiaries and Affiliates, and each of their
respective stockholders, directors, officers, employees, agents, attorneys, and advisors (each such
Person being called an “Indemnitee”), against, and hold each Indemnitee harmless from, any
and all damages, actual out-of-pocket losses, claims, actions, causes of action, settlement
payments, obligations, liabilities and related expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred, suffered, sustained or required to be
paid by, or asserted against, any Indemnitee arising out of, in any way connected with, or as a
result of, (i) the execution or delivery of this Guaranty, the Credit Agreement or any other Loan
Document or any other agreement or instrument contemplated hereby, the performance by the Guarantor
of its obligations thereunder, or the consummation of the transactions contemplated by the Credit
Agreement and the other Loan Documents or any other transactions contemplated hereby or thereby, or
(ii) any actual or



 









 







prospective claim, litigation, investigation or proceeding relating to or
arising from any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any
Indemnitee is a party thereto; provided, however, such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee for
intentional breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if
the Borrowers or such Loan Party has obtained a final and nonappealable judgment in its favor on
such claim as determined by a court of competent jurisdiction.



     SECTION 6. No Discharge or Diminishment of Guaranty. The obligations of the Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or termination for any
reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations),
including any claim of waiver, release, surrender, alteration or compromise of any of the
Guaranteed Obligations, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of
the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the
Guaranteed Obligations of the Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of any Agent or any other Credit Party to assert any claim or demand or to
enforce any remedy under this Guaranty, the Credit Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any other
act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or
that would otherwise operate as a discharge of the Guarantor as a matter of law or equity (other
than the indefeasible payment in full in cash of the Guaranteed Obligations).



     SECTION 7. Defenses of Loan Parties Waived. To the fullest extent permitted by
applicable Law, the Guarantor waives any defense based on or arising out of any defense of any Loan
Party or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or
the cessation from any cause of the liability of any Loan Party, other than the indefeasible
payment in full in cash of the Guaranteed Obligations. The Guarantor hereby acknowledges that the
Agents and the other Credit Parties may, at their election, foreclose on any security held by one
or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make
any other accommodation with any Loan Party, or exercise any other right or remedy available to
them against any Loan Party, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent that the Guaranteed Obligations have been indefeasibly
paid in full in cash. Pursuant to, and to the extent permitted by, applicable Law, the Guarantor
waives any defense arising out of any such election and waives any benefit of and right to
participate in any such foreclosure action, even though such election operates, pursuant to
applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantor against any Loan Party, as the case may be, or any security. The
Guarantor agrees that it shall not assert any claim in competition with any Agent or any other
Credit Party in respect of any payment made hereunder in any bankruptcy, insolvency,
reorganization, or any other proceeding.



 









 





     SECTION 8. Agreement to Pay; Subordination. In furtherance of the foregoing and not
in limitation of any other right that the Agents or any other Credit Party has at law or in equity
against the Guarantor by virtue hereof, upon the failure of any Loan Party to pay any Guaranteed
Obligation when and as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, the Guarantor hereby promises to and will forthwith pay, or
cause to be paid, to the Agents or such other Credit Party as designated thereby in cash the amount
of such unpaid Guaranteed Obligations. Upon payment by the Guarantor of any sums to any Agent or
any other Credit Party as provided above, all rights of the Guarantor against any Loan Party
arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Guaranteed Obligations. In addition, any
indebtedness of the Borrowers or any other Loan Party now or hereafter held by the Guarantor is
hereby subordinated in right of payment to the prior indefeasible payment in full in cash of all of
the Guaranteed Obligations. Notwithstanding the foregoing, unless an Event of Default has occurred
and is continuing, the Borrowers or any other Loan Party may make payments to the Guarantor on
account of any such indebtedness. After the occurrence and during the continuance of an Event of
Default, the Guarantor will not demand, sue for, or otherwise attempt to collect any such
indebtedness until the indefeasible payment in full in cash of the Guaranteed Obligations,
termination or expiration of the Commitments, and termination of the L/C Issuer’s obligation to
issue Letters of Credit under the Credit Agreement. If any amount shall erroneously be paid to the
Guarantor on account of (a) such subrogation, contribution, reimbursement, indemnity or similar
right or (b) any such indebtedness of any Loan Party, such amount shall be held in trust for the
benefit of the Credit Parties and shall forthwith be paid to the Administrative Agent to be
credited against the payment of the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement.



     SECTION 9. Limitation on Guaranty of Guaranteed Obligations. In any action or
proceeding with respect to the Guarantor involving any state corporate law, the Bankruptcy Code or
any other state or federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of the Guarantor under SECTION 1 hereof would otherwise
be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any
other creditors, on account of the amount of its liability under said SECTION 1, then,
notwithstanding any other provision hereof to the contrary, the amount of such liability shall,
without any further action by the Guarantor, any Credit Party, any Agent or any other Person, be
automatically limited and reduced to the highest amount which is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or proceeding.



     SECTION 10. Information. The Guarantor assumes all responsibility for being and
keeping itself informed of each Loan Party’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks that the Guarantor assumes and incurs hereunder, and agrees that none
of the Agents or the other Credit Parties will have any duty to advise the Guarantor of information
known to it or any of them regarding such circumstances or risks.



     SECTION 11. Termination. This Guaranty (a) shall terminate when (i) the Commitments
shall have expired or been terminated, (ii) the principal of and interest on each Loan and all fees
and other Guaranteed Obligations shall have been paid in full (other than contingent



 









 







indemnification obligations for which no claim has been asserted), (iii) all Letters of Credit
shall have expired or terminated or been cash collateralized or backstopped by a letter of credit
reasonably acceptable to the Administrative Agent and the L/C Issuer to the extent provided in the
Credit Agreement, and (iv) all L/C Obligations shall have been paid in full, and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored by any Credit
Party or the Guarantor upon the bankruptcy or reorganization of any Loan Party or otherwise.



     SECTION 12. Costs of Enforcement. Without limiting any of its obligations under the
Credit Agreement or the other Loan Documents, and without duplication of any fees or expenses
provided for under the Credit Agreement or the other Loan Documents, the Guarantor agrees to pay on
demand all Credit Party Expenses in connection with (i) the negotiation, documentation or amendment
of this Guaranty, and (ii) any Agent’s or any other Credit Party’s efforts to collect and/or to
enforce any of the Guaranteed Obligations of the Guarantor hereunder and/or to enforce any of the
rights, remedies, or powers of any Agent or any other Credit Party against or in respect of the
Guarantor (whether or not suit is instituted by or against any Agent or any other Credit Party).



     SECTION 13. Binding Effect; Several Agreement; Assignments. Whenever in this Guaranty
any of the parties hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party, and all covenants, promises and agreements by or on behalf of the
Guarantor that are contained in this Guaranty shall bind and inure to the benefit of each of the
Guarantor and its successors and assigns. This Guaranty shall be binding upon the Guarantor and
its successors and assigns, and shall inure to the benefit of the Agents and the other Credit
Parties, and their respective successors and assigns as permitted under the Credit Agreement,
except that the Guarantor shall not have the right to assign or transfer its rights or obligations
hereunder or any interest herein (and any such attempted assignment or transfer shall be void),
except as expressly permitted by this Guaranty or the Credit Agreement.



 









 





     SECTION 14. Waivers; Amendment.




     (a) The rights, remedies, powers, privileges, and discretions of the Agents hereunder
and under applicable Law (herein, the “Agents’ Rights and Remedies”) shall be
cumulative and not exclusive of any rights or remedies which they would otherwise have. No
delay or omission by the Agents in exercising or enforcing any of the Agents’ Rights and
Remedies shall operate as, or constitute, a waiver thereof. No waiver by the Agents of any
Event of Default or of any default under any other agreement shall operate as a waiver of
any other default hereunder or under any other agreement. No single or partial exercise of
any of the Agents’ Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between the Agents and any Person, at any time, shall preclude
the other or further exercise of the Agents’ Rights and Remedies. No waiver by the Agents
of any of the Agents’ Rights and Remedies on any one occasion shall be deemed a waiver on
any subsequent occasion, nor shall it be deemed a continuing waiver. The Agents’ Rights and
Remedies may be exercised at such time or times and in such order of preference as the
Agents may determine. The Agents’ Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Guaranteed Obligations. No waiver of any
provisions of this Guaranty or any other Loan Document or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the Guarantor in
any case shall entitle the Guarantor to any other or further notice or demand in the same,
similar or other circumstances.




     (b) Neither this Guaranty nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement entered into between the Agents and the Guarantor,
subject to any consent required in accordance with Section 10.01 of the Credit Agreement.



     SECTION 15. Copies and Facsimiles. This instrument and all documents which have been
or may be hereinafter furnished by the Guarantor to any of the Agents may be reproduced by the
Agents by any photographic, microfilm, xerographic, digital imaging, or other process. Any such
reproduction shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business). Any facsimile or other electronic
transmission which bears proof of transmission shall be binding on the party which or on whose
behalf such transmission was initiated and likewise so admissible in evidence as if the original of
such facsimile or other electronic transmission had been delivered to the party which or on whose
behalf such transmission was received.



     SECTION 16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.



     SECTION 17. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in Section 10.02 of the



 









 







Credit Agreement, provided that communications and notices to the Guarantor may be
delivered to the Lead Borrower on behalf of the Guarantor.



     SECTION 18. Survival of Agreement; Severability.




     (a) All covenants, agreements, indemnities, representations and warranties made by the
Guarantor herein and in the certificates or other instruments delivered in connection with
or pursuant to this Guaranty, the Credit Agreement or any other Loan Document shall be
considered to have been relied upon by the Agents and the other Credit Parties and shall
survive the execution and delivery of this Guaranty, the Credit Agreement and the other Loan
Documents and the making of any Loans by the Lenders and the issuance of any Letters of
Credit by the L/C Issuer, regardless of any investigation made by any Agent or any other
Credit Party or on their behalf and notwithstanding that the Administrative Agent or other
Credit Party may have had notice or knowledge of any Default or Event of Default or
incorrect representation or warranty at the time any credit is extended, and shall continue
in full force and effect until terminated as provided in SECTION 11 hereof. The provisions
of SECTION 5 and SECTION 12 hereof shall survive and remain in full force and effect
regardless of the repayment of the Guaranteed Obligations, the expiration or termination of
the Letters of Credit and the Commitments or the termination of this Guaranty or any
provision hereof.




     (b) Any provision of this Guaranty held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof, and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.



     SECTION 19. Rules of Interpretation. The rules of interpretation specified in
Sections 1.02 through 1.05 of the Credit Agreement shall be applicable to this Guaranty.



 









 





     SECTION 20. Jurisdiction; Consent to Service of Process.




     (a) The Guarantor agrees that any suit for the enforcement of this Guaranty or any
other Loan Document may be brought in the courts of the State of New York sitting in New
York County or any federal court sitting therein, as the Agents may elect in their sole
discretion, and consents to the non-exclusive jurisdiction of such courts. The Guarantor
hereby waives any objection which it may now or hereafter have to the venue of any such suit
or any such court or that such suit is brought in an inconvenient forum and agrees that a
final judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by Law. Nothing
in this Guaranty shall affect any right that the Agents or any other Credit Party may
otherwise have to bring any action or proceeding relating to this Guaranty against the
Guarantor or its properties in the courts of any jurisdiction.




     (b) The Guarantor agrees that any action commenced by the Guarantor asserting any claim
or counterclaim arising under or in connection with this Guaranty or any other Loan Document
shall be brought solely in a court of the State of New York sitting in New York County or
any federal court sitting therein, as the Agents may elect in their sole discretion, and
consents to the exclusive jurisdiction of such courts with respect to any such action.




     (c) The Guarantor irrevocably consents to service of process in the manner provided for
notices in SECTION 17. Nothing in this Guaranty or any other Loan Document will affect the
right of the Agents to serve process in any other manner permitted by law.



     SECTION 21. Waiver of Jury Trial. THE GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND WAIVES
THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR CROSS-CLAIM IN RESPECT OF, AND ALL STATUTES OF
LIMITATIONS WHICH MAY BE RELEVANT TO, SUCH ACTION OR PROCEEDING; AND WAIVES DUE DILIGENCE, DEMAND,
PRESENTMENT AND PROTEST AND ANY NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT. THE GUARANTOR (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY CREDIT PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH CREDIT PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS, AND (B) ACKNOWLEDGES THAT THE AGENTS AND THE OTHER CREDIT PARTIES HAVE BEEN
INDUCED TO ENTER INTO THE LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN
THIS SECTION 21.



[SIGNATURE PAGE FOLLOWS]




 









 





     IN WITNESS WHEREOF, the Guarantor has duly executed this Guaranty as of the day and year first
above written.



	 	 	 	 	 
	GUARANTOR:	 	BIG 5 SPORTING GOODS CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Barry D. Emerson
	 

	 	 	 	 
	 

	 	Name:
	 	Barry D. Emerson
	 

	 	Title:
	 	Senior V.P. and CFO