Document:

<PAGE>   1

               FOR PURPOSES OF SECTIONS 1272, 1273 and 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND PURSUANT TO SECTION 1.1275-3(b),
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, THE ISSUE PRICE OF THIS NOTE
IS 50.80% OF ITS PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS
NOTE IS $1,299 PER $1,000 OF STATED FACE AMOUNT, THE ISSUE DATE IS NOVEMBER 13,
1997 AND THE YIELD TO MATURITY IS ______%.

        THESE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS
(i) A REGISTRATION STATEMENT UNDER THE ACT SHALL HAVE BECOME EFFECTIVE WITH
RESPECT THERETO AND ALL APPLICABLE QUALIFICATIONS UNDER STATE SECURITIES LAWS
SHALL HAVE BEEN OBTAINED WITH RESPECT THERETO; OR (ii) A WRITTEN OPINION FROM
COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE COMPANY HAS BEEN OBTAINED
STATING THAT NO SUCH REGISTRATION OR QUALIFICATION IS REQUIRED.

                         SENIOR DISCOUNT NOTES DUE 2008

No.                                                                  $48,225,000

        Big 5 Holdings Corp., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Ares Leveraged Investment Fund, L.P., or
registered assigns, the principal sum of Forty Eight Two Hundred Twenty Five
Thousand Dollars on November 30, 2008, and to pay interest thereon from November
30, 2002 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually on May 31 and November 30 in each
year, commencing May 31, 2003, at 13.45% until the principal hereof is paid or
made available for payment, and (to the extent that the payment of such interest
shall be legally enforceable) at the rate of 15.45% per annum on any overdue
principal and premium] and on any overdue installment of interest until paid as
specified on the reverse hereof.

        The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is

<PAGE>   2

registered at the close of business on the Regular Record Date for such
interest, which shall be the May 15 or November 15 (whether or not a Business
Day), as the case may be, next preceding such interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.

        The principal of this Note shall not accrue interest until November 30,
2002, except in the case of a default in payment of principal upon acceleration
or redemption and, in such case, the interest payable pursuant to the preceding
paragraph on the overdue principal as specified on the reverse hereof shall be
payable on demand and, if not so paid on demand, such interest shall itself bear
interest at the rate of 15.45% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest or unpaid interest shall also be payable on
demand.

        Payment of the principal of (and premium, if any) and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Note
Register.

        Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

                                      -2-

<PAGE>   3

        Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.

        IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                            BIG 5 HOLDINGS CORP.

[Seal]

                                            By: /s/ Robert W. Miller
                                               ---------------------------------
                                               Title:

Attest:

-------------------------------
Title:

        This is one of the Notes referred to in the within-mentioned Indenture.

Dated:

                                            FIRST TRUST NATIONAL ASSOCIATION
                                            ------------------------------------
                                                     as Trustee

                                            By: /s/ illegible
                                                --------------------------------
                                                Authorized Officer

                                      -3-

<PAGE>   4

        This Note is one of a duly authorized issue of Notes of the Company
designated as its Senior Discount Notes due 2008 (herein called the "Notes?),
limited in aggregate principal amount to $48,225,000 issued and to be issued
under an Indenture, dated as of November 13, 1997 (herein called the
"Indenture?), between the Company and First Trust National Association, as
Trustee (herein called the "Trustee?, which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered.

        The Notes are subject to redemption upon not less than 30 nor more than
60 days' notice by mail, at any time on or after November 30, 2002, as a whole
or in part, at the election of the Company, at a Redemption Price which, if
during the twelve month period beginning November 30, 2002 is equal to 110% of
the principal amount of this Note; if during the twelve month period beginning
November 30, 2003 is equal to 106.67% of the principal amount of this Note; if
during the twelve month period beginning November 30, 2004 is equal to 103.33%
of the principal amount of this Note; and thereafter is equal to 100% of the
principal amount of this Note, in each case plus interest thereon accruing from
November 30, 2002 or the most recent Interest Payment Date to which interest has
been paid or duly provided for, at the rate of 13.45% per annum, provided that
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.

        Notwithstanding the foregoing, at any time prior to November 30, 2002,
the Company may give notice of redemption for all, but not less than all, of
this Note at a Redemption Price equal to 113.45% of the Accreted Value of this
Note promptly upon (and in no event later than 10 days after) the Company's
receipt of cash from the Net Cash Proceeds to the Company of any Public Equity
Offering. In such event, the Note shall be redeemed on a date not less than 30
days nor more than 60 days after the date of such notice.

                                      -4-

<PAGE>   5

        The Notes do not have the benefit of any sinking fund obligations.

        In the event of redemption or purchase pursuant to an Asset Sale Offer
or Change of Control Offer of this Note in part only, a new Note or Notes for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.

        If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner and
with the effect provided in the Indenture. Until and including November 30,
2002, the Default Amount in respect of this Note as of any particular date of
acceleration shall equal the Accreted Value of this Note. For this purpose,
Accreted Value means the Adjusted Issue Price as of the first day of the Accrual
Period in which the date of acceleration occurs increased by the daily portion
of the Original Issue Discount for each day in such Accrual Period ending on the
date of acceleration. Such Default Amount shall bear interest at the rate of
15.45% per annum (to the extent that the payment of such interest shall be
legally enforceable), which shall accrue from the date of acceleration to the
date payment has been made or duly provided for. On and after November 30, 2002,
the Default Amount in respect of this Note shall equal 100% of the principal
amount of this Note. Such Default Amount shall bear interest at the rate of
15.45% per annum from November 30, 2002 or the most recent Interest Payment Date
to which interest has been paid or duly provided for. Upon payment of (i) the
Default Amount so declared due and payable and any overdue installment of
interest, (ii) interest on the Default Amount and (iii) as provided on the face
hereof, interest on any overdue installment of interest or, if acceleration
occurs prior to November 30, 2002, on the interest referred to in the third
preceding sentence (in each case to the extent that the payment of such interest
shall be legally enforceable), all of the Company's obligations in respect of
the payment of the principal of and interest on the Notes shall terminate.

        The Indenture provides that, subject to certain conditions, if (i)
certain Net Cash Proceeds are available to the Company as a result of Asset
Sales or (ii) a Change of Control occurs, the Company shall be required to make
an Asset Sale Offer or Change of Control Offer, respectively, for all of the
Notes.

                                      -5-

<PAGE>   6

        The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of this Note or (ii) certain restrictive covenants and
Events of Default with respect to this Note, in each case upon compliance with
certain conditions set forth therein.

        The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.

        No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.

        As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in the Borough of Manhattan, The City of New York and at any other
office or agency maintained by the Company for such purpose, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

                                      -6-

<PAGE>   7

        The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.

        No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

        Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

        Accrual Periods and interest on this Note shall be computed on the basis
of a 360-day year of twelve 30-day months.

        No direct or indirect stockholder, employee, officer or director, as
such, past, present or future of the Company, the Subsidiaries or any successor
entity shall have any personal liability in connection with this Note solely by
reason of his or its status as such stockholder, employee, officer or director.
Each Holder by accepting this Note waives and releases all such liability,
acknowledges and consents to the transactions constituting the Recapitalization
and further acknowledges the waiver and release are part of the consideration
for the issuance of this Note.

        All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

        The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.

                                      -7-

<PAGE>   8

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased in its entirety by the
Company pursuant to Section 1013 or 1015 of the Indenture, check the box:

           [ ]

        If you want to elect to have only a part of this Note purchased by the
Company pursuant to Section 1013 or 1015 of the Indenture, state the amount: $

Dated:                                Your Signature:
                                                     ---------------------------
                                      (Sign exactly as name appears on the other
                                      side of this Note)

Signature Guarantee:
                    ------------------------------------------------------------
                      (Signature must be guaranteed by a member firm of the New
                      York Stock Exchange or a commercial bank or trust company)

                                      -8-<PAGE>   1

                                                                    EXHIBIT 10.3

                              BIG 5 HOLDINGS CORP.

                           1997 MANAGEMENT EQUITY PLAN

     1. Purpose. The purpose of this Plan is to secure for Big 5 Holdings Corp.
(the "COMPANY") and its stockholders the benefits arising from stock ownership
by officers, directors and selected key employees of the Company and its
subsidiaries, including without limitation, Big 5 Corp. ("BIG 5"), a
wholly-owned subsidiary of the Company, as the Committee (as hereinafter
defined) may from time to time determine.

     The Company intends that awards of Purchased Shares and Stock Options, and
the issuance of Common Stock upon exercise of Stock Options hereunder (all as
hereinafter defined), shall constitute the offer and sale of securities pursuant
to a compensatory benefit plan within the meaning of Rule 701 promulgated under
the Securities Act of 1933, as amended, and that this 1997 Management Equity
Plan (the "PLAN") constitutes a stock option plan and stock purchase plan within
the meaning of Section 25102(o) of the California Corporate Securities Law of
1968, as amended.

     With respect to Stock Options, the Plan will provide a means whereby (i)
key employees may purchase shares of Common Stock of the Company pursuant to
Stock Options that will qualify as "incentive stock options" under Section 422
of the Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) such
employees may purchase shares of Common Stock of the Company pursuant to
"non-incentive" or "non-qualified" Stock Options.

     2. Administration. The Plan shall be administered by the Board of Directors
of the Company or, in the discretion of the Board, a Committee (in either case,
the "COMMITTEE") consisting of three or more directors of the Company to whom
administration of the Plan has been duly delegated. If the Committee is not the
entire Board of Directors, the Committee shall be appointed by the Board of
Directors of the Company. From and after such time as the Company is subject to
the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), no director shall be appointed to or
shall serve on the Committee who is not a "Non-Employee Director" (as defined in
Rule 16b-3 promulgated under the Exchange Act) any other plan of the Company or
its affiliates during the period of one year prior to such appointment. Except
as otherwise provided in the Company's Certificate of Incorporation or Bylaws,
any action of the Committee with respect to administration of the Plan shall be
taken by a majority vote at a meeting at which a quorum is duly constituted or
unanimous written consent of the Committee's members.

     Subject to the provisions of the Plan, the Committee shall have sole and
final authority (i) to construe and interpret the Plan, (ii) to define the terms
used herein, (iii) to prescribe, amend and rescind rules and regulations
relating to the Plan, (iv) to make awards of Purchased Shares and Stock Options
hereunder, (v) to determine the individuals to whom and the time or times at
which such awards shall be made, the

<PAGE>   2

number of shares of Common Stock to be subject to such awards, the vesting of
such awards and the other terms of such awards, (vi) in the case of Stock
Options, to determine whether such Stock Options shall be intended as "incentive
stock options" or "non-incentive" or "non-qualified" Stock Options under Section
422 of the Code, and (vii) to make all other determinations necessary or
advisable for the administration of the Plan. All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants in the Plan and their legal representatives and beneficiaries.

     3. Shares Subject to the Plan. The shares to be allocated under this Plan
shall consist of the Company's authorized but unissued Common Stock, $.01 par
value per share ("COMMON STOCK"). Subject to adjustment as provided in Section 8
hereof, the aggregate number of shares of the Common Stock which may be
allocated to awards made to Participants (as defined) shall not exceed Five
Hundred Sixty Thousand (560,000) of such shares (no more than One Hundred
Thousand (100,000) of which shall be subject to Stock Options outstanding at any
time). Shares of Common Stock issued pursuant to the Plan and subsequently
reacquired by the Company shall be available for reissuance under the Plan; and
shares of Common Stock that are subject to Stock Options that lapse or terminate
without exercise shall be available to be subject to newly issued Stock Options
under the Plan or otherwise reissued under the Plan.

     4. Eligibility and Participation. All key employees of Big 5 shall be
eligible for selection to participate in the Plan (each, a "PARTICIPANT").

     5. Awards. A Participant may receive one of more awards hereunder, at any
time and from time to time, as determined by the Committee. Awards may be in the
form of (i) permitted purchases of Common Stock ("PURCHASED SHARES") or (ii)
options to purchase Common Stock ("STOCK OPTIONS"), or any combination of the
foregoing, as determined by the Committee. All awards of Purchased Shares shall
be pursuant to, and shall be subject to the terms and restrictions provided in,
a Management Subscription and Stockholders Agreement substantially in the form
approved from time to time by the Committee; and all awards of Stock Options
shall be pursuant to, and shall be subject to the terms and restrictions
provided in, either a Management Stock Option and Stockholders Agreement or an
Employee Stock Option Agreement substantially in the form attached hereto or as
approved from time to time by the Committee (collectively, the "GRANT
DOCUMENTS"). Subject to the terms of this Plan, the Committee shall determine
the exact terms and restrictions included in each of the foregoing agreements,
as applicable, with respect to each award to a Participant.

     6. Provisions Applicable to Stock Options.

     (a) No Stock Option granted hereunder shall have an exercise price which is
less than 85% of the fair market value of the Common Stock at the time the Stock
Option is granted. In the case of a Stock Option granted to any person who owns
Common Stock possessing more than 10% percent of the total combined voting power
of all classes of stock of the Company, no Stock Option shall be granted with an
exercise

                                      -2-

<PAGE>   3

price of less than 110% of the fair market value of the Common Stock at the time
of the grant.

     (b) If a holder of an "incentive stock option" ceases to be employed by Big
5, the Company or another subsidiary of the Company for any reason other than
the option holder's death or permanent disability (within the meaning of Section
22(e)(3) of the Code), the option holder's "incentive stock option" shall not be
entitled to incentive treatment under the Code if exercised after more than
three months after the date the option holder ceased to be an employee of one of
such corporations (unless by its terms such Stock Option sooner expires). If a
holder of an "incentive stock option" ceases to be employed by Big 5, the
Company or another subsidiary of the Company on account of death or permanent
disability (within the meaning of Section 22(e)(3) of the Code), such Stock
Option shall not be entitled to incentive treatment under the Code if exercised
after one year after the date of such death or permanent disability unless by
its terms it sooner expires. During such period after death, any vested
unexercised portion of the Stock Option may be exercised by the person or
persons to whom the option holder's rights under the Stock Option shall pass by
will or the laws of descent and distribution.

     To the extent that the aggregate fair market value of Common Stock or other
capital stock with respect to which "incentive stock options" are exercisable
for the first time by any individual during any calendar year (under all plans
of the Company and its parent and subsidiary corporations) exceeds $100,000,
such Stock Options shall be treated as Stock Options which are not "incentive
stock options."

     (c) Stock Options granted hereunder shall have an exercise period not to
exceed 120 months from the date the Stock Option is granted.

     (d) The right to exercise Stock Options granted hereunder shall vest at a
rate of at least 20% per year over five years from the date the option is
granted, provided, however, that all Stock Options shall cease to vest
immediately upon termination of a Participant's employment for any reason
(unless otherwise approved by the Committee); and provided further, that in the
case of Stock Options granted to officers or directors, such Stock Options may
become fully exercisable, subject to continued employment (unless otherwise
approved by the Committee), at any time or during any period as the Committee
shall determine.

     (e) In the event that any Participant previously granted Stock Options
hereunder ceases to be employed Big 5, the Company or another subsidiary of the
Company by which Stock Options such Participant had the right to exercise as of
the date such individual ceases to be employed by Big 5, the Company or another
subsidiary of the Company, such Stock Options will be exercisable:

          (i) For at least six months if the Participant ceases to be employed
by Big 5, the Company or another subsidiary of the Company because of death
or disability; or

                                      -3-

<PAGE>   4

          (ii) For at least thirty days if the Participant ceases to be employed
by Big 5, the Company or another subsidiary of the Company for reasons other
than death or disability.

     Notwithstanding the foregoing or any provision to the contrary contained in
any Grant Document, unless otherwise approved by the Committee, Stock Options
granted to any Participant whose employment is terminated for "just cause" shall
terminate immediately and cease to be exercisable. "Just Cause" shall mean
termination of the Participant' employment as a result of (i) such Participant's
violation of any rule or policy of the Company or its subsidiaries that results
in damage to the Company or its subsidiaries or which, after written notice to
do so, the Participant fails to correct within a reasonable time; (ii) any
material failure by the Participant to comply with a reasonable direction of the
Board of Directors of the Company or its subsidiaries or the willful misconduct
by the Participant in the responsibilities reasonably assigned to him or her;
(iii) any willful failure by the Participant to perform his or her job as
required to meet the objectives of the Company or its subsidiaries; (iv) the
Participant's performing services for any other corporation or person which
competes with the Company or its subsidiaries while he or she is employed by the
Company or its subsidiaries and without the written approval of the Chief
Executive Officer of the Company (or, in case the Chief Executive Officer is the
Participant, then by approval of the Company's Board of Directors); (v)
conviction by a court of competent jurisdiction of a felony; or (vi) any other
action or condition that may result in termination of an employee for cause
pursuant to any generally applied standard adopted by the Board of Directors of
the Company from time to time.

     7. Provisions Applicable to Purchased Shares. No grant of Purchased Shares
hereunder shall have a purchase price which is less than 85% of the fair market
value of the stock at the time the right to purchase Purchased Shares is
granted. In the case a right to purchase Purchased Shares is granted to any
person who owns stock possessing more than 10% percent of the total combined
voting power of all classes of stock of the Company, such right to purchase
Purchased Shares shall be granted with a purchase price of at least 100% of the
fair market value of the stock at the time of the grant.

     8. Adjustments. If the outstanding shares of the Common Stock of the
Company are increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of the Company or any other corporation
through reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, or in connection
with any merger or reorganization, (i) an appropriate and proportionate
adjustment shall be made in the maximum number and kind of shares which may be
awarded under this Plan and (ii) the restrictions and rights set forth in this
Plan or any of the Grant Documents shall apply with respect to such other
capital stock to the same extent as they are, or would have been applicable, to
the Common Stock on or with respect to which such other capital stock was
distributed or exchanged.

                                      -4-

<PAGE>   5

     Adjustments under this paragraph 8 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.

     9. Nontransferability of Stock Options or Rights to Purchase Shares. Stock
Options and a Participant's rights to purchase Purchased Shares granted
hereunder may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Participant, only
by the Participant.

     10. Amendment and Termination of the Plan. Subject to Section 11 of the
Plan, the Plan shall become effective upon the earlier to occur of its adoption
by the Board of Directors or its approval by the stockholders of the Company as
described in Section 11 of the Plan and shall continue in effect for a term of
ten (10) years; provided, however, that the Committee may at any time suspend or
terminate the Plan. The Committee may also at any time amend or revise the terms
of the Plan.

     Notwithstanding the foregoing, no amendment, suspension or termination of
the Plan that would materially adversely affect any rights or obligations of any
Participant under any Management Subscription and Stockholders Agreement,
Management Stock Option and Stockholders Agreement or Employee Stock Option
Agreement shall be effective as to such Participant unless there shall have been
specific action of the Committee and consent of the Participant.

     11. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
Stock Options may be granted but not exercised and Purchased Shares may be
granted and purchased prior to shareholder approval of the Plan. If any Stock
Options are so granted and stockholder approval shall not have been obtained
within twelve months of the date of adoption of this Plan by the Board of
Directors, such Stock Options shall terminate retroactively as of the date they
were granted. If any Purchased Shares are so granted and purchased and
shareholder approval shall not have been obtained within twelve months of the
date of adoption of this Plan by the Board of Directors, the sale of such
Purchased Shared shall be rescinded as of the date granted.

     12. No Employment Rights. The selection of any person to receive an award
under this Plan shall not give such person any right to be retained in the
employment of Big 5, the Company or any of their affiliates and the right and
the power of Big 5 to discharge any such person shall not be affected by such
award. No person shall have any right or claim whatever, directly, indirectly or
by implication, to receive an award, nor any expectancy thereof, unless and
until an award in fact shall have been made to such person by the Committee as
provided herein. The award to any person hereunder at any time shall not create
any right or implication that any other or further award may or shall be made at
another time. Each award hereunder shall be separate and distinct

                                      -5-

<PAGE>   6

from every other award and shall not be construed as a part of any continuing
series of awards or compensation.

     13. Annual Financial Information. Each Participant who receives Grant
Shares, Purchased Shares or Stock Options shall be provided with a copy of the
financial statements of the Company at least annually shall be provided with a
copy of financial statements of the Company at least annually.

     14. Repurchase Rights. The Grant Documents may include provisions which
grant the Company the right to repurchase Purchased Shares, Stock Options or
shares of Common Stock acquired upon the exercise of Stock Options substantially
similar to the repurchase rights in the form of the Grant Documents attached
hereto, provided that such rights comply with any state securities laws or
regulations, if any, applicable to the Plan or grants thereunder.

     15. Plan Not Exclusive. The Plan is not exclusive. The Company may have
other plans, programs and arrangements for compensation or the issuance of
shares or options. The Plan does not require that Participants hereunder be
precluded from participation in such other plans, programs and arrangements.

NOVEMBER 1997 MANAGEMENT SUBSCRIPTION AND STOCKHOLDERS AGREEMENT ATTACHED
HERETO.

                                      -6-

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