-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JVWcg/PtzxIvNf+HJ6Wk3w2x4gGLOYSmwZRInhczOHFjFvswGKN1oE8ZcFbdGmPQ 7rAs7fulg4uoWL077US+sw== 0000950112-96-003303.txt : 19960917 0000950112-96-003303.hdr.sgml : 19960917 ACCESSION NUMBER: 0000950112-96-003303 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 19960916 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIBBETT SPORTING GOODS INC CENTRAL INDEX KEY: 0001017480 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 631074067 STATE OF INCORPORATION: AL FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-07023 FILM NUMBER: 96630913 BUSINESS ADDRESS: STREET 1: 451 INDUSTRIAL LANE CITY: BIRMINGHAM STATE: AL ZIP: 35211 BUSINESS PHONE: 2059424292 MAIL ADDRESS: STREET 1: 451 INDUSTRIAL LANE CITY: BIRMINGHAM STATE: AL ZIP: 35211 S-1/A 1 HIBBETT SPORTING GOODS, INC. AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1996 REGISTRATION NO. 333-07023 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------- AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- HIBBETT SPORTING GOODS, INC. (Exact name of registrant as specified in its charter) ------------------- ALABAMA 5941 63-1074067 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Code Number) Identification No.)
451 INDUSTRIAL LANE BIRMINGHAM, ALABAMA 35211 (205) 942-4292 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------- SUSAN H. FITZGIBBON CHIEF FINANCIAL OFFICER HIBBETT SPORTING GOODS, INC. 451 INDUSTRIAL LANE BIRMINGHAM, ALABAMA 35211 (205) 942-4292 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------- COPIES TO: ALAN DEAN GREGORY S. CURRAN STEVEN DELLA ROCCA DAVIS POLK & WARDWELL BALCH & BINGHAM LATHAM & WATKINS 450 LEXINGTON AVENUE 1901 SIXTH AVENUE NORTH 885 THIRD AVENUE, SUITE 1000 NEW YORK, NEW YORK 10017 SUITE 2600 NEW YORK, NEW YORK 10022 (212) 450-4000 BIRMINGHAM, ALABAMA 35203 (212) 906-1200 (205) 251-8100
------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after this Registration Statement becomes effective. ------------------- If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / _________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / _________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED SEPTEMBER 16, 1996 PROSPECTUS 2,000,000 SHARES [LOGO] HIBBETT SPORTING GOODS, INC. COMMON STOCK -------------- All of the shares of Common Stock, par value $.01 per share (the "Common Stock"), being offered hereby (the "Offering") are being sold by Hibbett Sporting Goods, Inc. ("Hibbett" or the "Company"). Prior to this Offering, there has not been a public market for the Common Stock. It is currently estimated that the initial public offering price will be between $14.00 and $16.00 per share. See "Underwriting" for information relating to the factors considered in determining the initial public offering price. The shares of Common Stock have been approved for trading on the Nasdaq National Market under the symbol "HIBB", subject to official notice of issuance. SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY. -------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
< UNDERWRITING DISCOUNTS PROCEEDS TO PRICE TO PUBLIC AND COMMISSIONS (1) COMPANY(2) Per Share....................... $ $ $ Total(3)........................ $ $ $
(1) For information regarding indemnification of the Underwriters, see "Underwriting." (2) Before deducting expenses of the Offering estimated at $1,000,000 payable by the Company. (3) The Company has granted the Underwriters a 30-day option to purchase up to 300,000 additional shares of Common Stock, solely to cover over-allotments, if any. See "Underwriting." If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company will be $ , $ and $ , respectively. -------------- The shares of Common Stock are being offered by the several Underwriters named herein, subject to prior sale, when, as and if accepted by them and subject to certain conditions. It is expected that certificates for the shares of Common Stock offered hereby will be available for delivery on or about , 1996 at the offices of Smith Barney Inc., 333 West 34th Street, New York, NY 10001. -------------- SMITH BARNEY INC. MONTGOMERY SECURITIES THE ROBINSON-HUMPHREY COMPANY, INC. , 1996 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. [LOGO] [A picture of a storefront to a Hibbett Sports store appears in the inside front cover of the paper version of this Prospectus] --------------- IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 [LOGO] [PHOTOS OF STORE INTERIOR] [Several pictures of the layout of merchandise of the Company's stores and of sales personnel assisting customers appear in the gatefold of the paper verion of this Prospectus] PROSPECTUS SUMMARY The following summary is qualified in its entirety by and should be read in conjunction with the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. All references to fiscal years of the Company in this Prospectus refer to the fiscal years ended on the Saturday nearest to January 31 of such year, except that references to the Company's fiscal years 1992 and 1993 refer to the fiscal years ended on January 31 of such year. All references in this Prospectus to the number of stores currently operated by the Company are made as of September 10, 1996. Unless otherwise indicated, the information in this Prospectus (i) assumes that the Underwriters' overallotment option is not exercised, (ii) assumes the Company's reincorporation in the state of Delaware, which will be completed prior to the closing of the Offering and (iii) gives effect to a 1 for 6.1 reverse stock split effected on September 13, 1996. THE COMPANY Hibbett Sporting Goods, Inc. ("Hibbett" or the "Company") is a leading rapidly-growing operator of full-line sporting goods stores in small to mid-sized markets in the southeastern United States, based on sales. Hibbett's stores offer a broad assortment of quality athletic footwear, apparel and equipment at competitive prices with superior customer service. The Company's merchandise assortment features a core selection of brand name merchandise emphasizing team and individual sports complemented by a selection of localized apparel and accessories designed to appeal to a wide range of customers within each market. The Company believes that its stores are among the primary retail distribution alternatives for brand name vendors that seek to reach Hibbett's target markets. Hibbett has received the Nike Retailer Excellence Award for the Southeast region for eight consecutive years based on its performance in the full-line sporting goods category. The Company operates 68 Hibbett Sports stores as well as eight smaller-format Sports Additions athletic shoe stores and three larger-format Sports & Co. superstores. Hibbett's primary retail format and growth vehicle is Hibbett Sports, a 5,000 square foot store located predominantly in enclosed malls. Hibbett Sports is typically the primary, full-line sporting goods retailer in its markets because of, among other factors, its more extensive selection of traditional team and individual sports merchandise and its superior customer service. KEY BUSINESS STRATEGIES Unique Emphasis on Small Markets. The Company targets markets ranging in population from 30,000 to 250,000. Management believes that Hibbett is currently targeting markets of this size in the Southeast more aggressively than any of its national or regional full-line competitors. By targeting smaller markets, the Company believes that it is able to achieve significant strategic advantages, including numerous expansion opportunities, comparatively low operating costs and a more limited competitive environment than generally faced in larger markets. In addition, the Company establishes greater customer and vendor recognition as the leading full-line sporting goods retailer in the local community. Strong Regional Focus. With over 30 years of experience as a full-line sporting goods retailer in the Southeast, the Company believes that Hibbett benefits from strong name recognition, a loyal customer base and operating and cost efficiencies. Although the core merchandise assortment tends to be similar for each Hibbett Sports store, important local and regional differences frequently exist. Management believes that its ability to merchandise to local sporting or community interests differentiates Hibbett from its national competitors. The Company's regional focus also enables it to achieve significant cost benefits including lower corporate expenses, reduced distribution costs and increased economies of scale from its marketing activities. 3 Low Cost Operating Strategy. In addition to the cost benefits of the Company's small market emphasis and regional focus, Hibbett maintains tight control over its operating costs through the use of its management information systems. The Company's systems assist management in making timely and informed merchandise decisions, maintaining tight inventory control and monitoring store-level and corporate expenses. Emphasis on Training and Customer Satisfaction. Management seeks to exceed customer expectations in order to build loyalty and generate repeat business. The Company strives to hire enthusiastic sales personnel with an interest in sports and provides them with extensive training to create a sales staff with strong product knowledge dedicated to outstanding customer service. Hibbett's training programs focus on both selling skills and continuing product/technical training and are conducted through in-store clinics, video presentations and interactive group discussions. Investment in Management and Infrastructure. The Company's experienced management team and its recently upgraded information and distribution systems are expected to facilitate the Company's future growth. The Company's new headquarters and distribution center is currently capable of servicing in excess of 150 Hibbett Sports stores and has significant expansion potential to support the Company's growth for the foreseeable future. Through its comprehensive information systems, the Company monitors all aspects of store operations on a daily basis and is able to control inventory levels and operating costs. EXPANSION STRATEGY The Company is accelerating its rate of new store openings to take advantage of the growth opportunities in its target markets. As the Company continues to expand, it is anticipated that Hibbett Sports will remain its primary growth vehicle. The Company plans to open approximately 18 Hibbett Sports stores in fiscal 1997 (12 have been opened to date) and approximately 27 Hibbett Sports stores in fiscal 1998. The Company also intends to open one Sports & Co. superstore in September 1996. The Company anticipates that it will selectively open additional Sports Additions stores and Sports & Co. superstores as opportunities arise in the future. The Company has identified over 500 potential markets for future Hibbett Sports stores within the states in which it operates and in contiguous states. Hibbett's clustered expansion program, which calls for opening new stores within a two-hour driving radius of another Company location, allows it to take advantage of efficiencies in distribution, marketing and regional management. The Company believes its business and expansion strategies have contributed to its increasing net sales and operating profits. Over the past five fiscal years, net sales have increased at a 20.3% compound annual growth rate to $67.1 million in fiscal 1996, and operating income has increased at a 29.3% compound annual growth rate to $5.6 million in fiscal 1996. The Company's principal executive offices are located at 451 Industrial Lane, Birmingham, Alabama 35211, and its telephone number is 205-942-4292. 4 THE OFFERING
Common Stock offered.................. 2,000,000 shares of Common Stock Common Stock to be outstanding after the Offering.......................... 5,834,262 shares of Common Stock(1) Use of Proceeds....................... To redeem $16.0 million in aggregate principal amount of Subordinated Notes and accrued interest of approximately $1.5 million and to repay a $1.0 million Term Loan and accrued interest thereon, with the balance to be used to reduce outstanding balances under its Revolving Loan Agreement. See "Use of Proceeds." Nasdaq National Market symbol......... "HIBB"
- ------------ (1) Excludes 96,555 shares of Common Stock that are issuable under outstanding options that are currently exercisable or will become exercisable within 180 days after the closing of the Offering. 5 SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA (IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ------------------------------------------------------------------- -------------------- JANUARY 31, JANUARY 31, JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1992 1993 1994(1) 1995 1996 1995 1996 ----------- ----------- ----------- ----------- ----------- -------- --------- (52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED) STATEMENT OF OPERATIONS DATA: Net sales................... $32,033 $36,366 $40,119 $52,266 $67,077 $ 29,355 $ 39,019 Gross profit................ 9,901 11,368 12,388 16,041 20,435 8,817 11,747 Operating income............ 2,020 2,693 2,877 4,522 5,642 2,531 3,154(2) Interest expense............ 453 325 488 654 1,685(3) 410 1,814(3) Income before provision for income taxes............... 1,567 2,368 2,389 3,868 3,957 2,121 1,340 Net income.................. 979(4) 1,462(4) 1,469 2,389 2,443 1,310 826 Net income per share........ .15(4) .22(4) .23 .37 .42(5) .20 .21(5) Weighted average shares outstanding................ 6,342 6,505 6,505 6,505 5,838(3) 6,505 3,938(3) SELECTED OPERATING DATA: Number of stores open at end of period: Hibbett Sports............. 34 33 41 52 56 54 62 Sports & Co................ 0 0 0 0 3 1 3 Sports Additions........... 4 6 8 8 8 7 8 ----------- ----------- ----------- ----------- ----------- -------- --------- Total.................... 38 39 49 60 67 62 73 ----------- ----------- ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- ----------- ----------- -------- --------- Net sales growth............ 13.7% 13.5% 10.3% 30.3% 28.3% 28.0% 32.9% Comparable store net sales increase (decrease)(6)..... 2.4% 10.6% (0.3%) 15.6% 6.2% 6.3% 13.9% AT AUGUST 3, 1996 ------------------------- ACTUAL AS ADJUSTED(7) ------- -------------- (UNAUDITED) BALANCE SHEET DATA: Working capital......................................................... $16,478 $ 18,650 Total assets............................................................ 40,408 40,707 Total debt.............................................................. 33,148(3) 9,135 Stockholders' investment (deficit)...................................... (7,267)(3) 18,519
- ------------ (1) During fiscal year 1994, the Company changed its fiscal year from a twelve-month period ending January 31 to a 52-53 week period ending on the Saturday nearest to January 31. (2) Includes a $513,000 pre-tax gain on the sale of the Company's former headquarters and distribution facility and a one-time pre-tax compensation expense of $462,000 related to stock options issued on August 1, 1996. See "Certain Transactions--Advisory Agreements." (3) In November 1995, the Company completed a series of equity and debt transactions which resulted in a recapitalization of the Company and a change in controlling ownership of the common stock outstanding (the "Recapitalization"). The Recapitalization included the repurchase and retirement of 34,220,000 (on a pre-split basis) shares of common stock for cash and debt and the issuance of 17,609,000 (on a pre-split basis) new shares of common stock and debt in exchange for cash. The Recapitalization resulted in a substantial increase in total debt outstanding and a deficit in stockholders' investment. See "Certain Transactions--Transactions Related to the Recapitalization." (4) Prior to July 1, 1992, the Company was a Subchapter S corporation. Under these provisions the taxable income of the Company was included in the individual income tax returns of the stockholders. Effective July 1, 1992, the Company and its stockholders terminated the S corporation election 6 and the Company became a taxable corporation. Thus, the provisions for income taxes for the fiscal years ended January 31, 1992 and 1993 give effect to the application of pro forma income taxes that would have been reported had the Company been a taxable corporation for federal and state income tax purposes for such fiscal years. (5) The net proceeds from the Offering will be used to retire a substantial portion of the Company's debt. Accordingly, a presentation of supplemental net income per share before extraordinary item is calculated by dividing net income (after adjustment for applicable interest expense) by the number of weighted average shares outstanding after giving effect to the estimated number of shares that would be required to be sold (at an assumed initial public offering price of $15 per share) to repay $26,900,000 of debt at February 3, 1996 and August 3, 1996. Supplemental net income per share before an extraordinary item (to reflect the write-off of unamortized debt discount and debt issuance costs, net of taxes) for the fiscal year ended February 3, 1996 and the twenty-six week period ended August 3, 1996 was $.41 and $.38, respectively. Supplemental net income per share after an extraordinary item (to reflect the write-off of unamortized debt discount and debt issuance costs, net of taxes) for the fiscal year ended February 3, 1996 and the twenty-six week period ended August 3, 1996 was $.26 and $.20, respectively. (6) Comparable store net sales data for a period reflect stores open throughout that period and the corresponding period of the prior fiscal year. For the periods indicated, comparable store net sales do not include sales by Sports & Co. superstores or Team Sales (as defined herein). (7) Adjusted to give effect to the Offering and the application of the estimated net proceeds thereof as described in "Use of Proceeds," and the effect on retained earnings (deficit) of an extraordinary item representing the write-off of unamortized debt discount and debt issuance costs, net of taxes. 7 RISK FACTORS Before purchasing the shares of Common Stock offered hereby, a prospective investor should consider the specific factors set forth below as well as the other information set forth elsewhere in this Prospectus. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" for a description of other factors affecting the business of the Company generally. EXPANSION PLANS During the last three fiscal years, Hibbett opened approximately 10 new stores a year, growing from 39 stores at the beginning of fiscal 1994 to 67 stores at the end of fiscal 1996. The Company plans to open approximately 18 Hibbett Sports stores in fiscal 1997 (12 have been opened to date) and approximately 27 Hibbett Sports stores in fiscal 1998. The Company also intends to open one Sports & Co. superstore in September 1996. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." The proposed expansion is substantially more rapid than the Company's historical growth, and the continued growth of the Company will depend, in large part, upon the Company's ability to open new stores in a timely manner and to operate them profitably. However, successful expansion is subject to various contingencies, many of which are beyond the Company's control. These contingencies include, among others, (i) the Company's ability to identify and secure suitable store sites on a timely basis and on satisfactory terms and to complete any necessary construction or refurbishment of these sites, (ii) the Company's ability to hire, train and retain qualified managers and other personnel and (iii) the successful integration of new stores into existing operations. In addition, the Company's relatively short experience with opening and operating superstores and the increased competition typically faced by superstores may result in the Company's obtaining a lower rate of return on its Sports & Co. superstores as compared to Hibbett Sports stores. In addition, new Sports & Co. superstores may take a longer time to achieve profitability than Hibbett Sports stores. No assurance can be given that the Company will be able to complete its expansion plans successfully; that the Company will be able to achieve results similar to those achieved with prior locations; or that the Company will be able to continue to manage its growth effectively. The Company's failure to achieve its expansion plans could materially adversely affect its business, financial condition and results of operations. In addition, operating margins may be impacted in periods in which incremental expenses have been incurred in advance of new store openings. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Overview; --Quarterly Fluctuations." MERCHANDISE TRENDS The Company's success depends in part on its ability to anticipate and respond to changing merchandise trends and consumer demand in a timely manner. Accordingly, any failure by the Company to identify and respond to emerging trends could adversely affect consumer acceptance of the merchandise in the Company's stores, which in turn could materially adversely affect the Company's business, financial condition and results of operations. In addition, if the Company miscalculates either the market for the merchandise in its stores or its customers' purchasing habits, it may be faced with a significant amount of unsold inventory, which could have a material adverse effect on the Company's business, financial condition and results of operations. In addition, a major shift in consumer demand away from athletic footwear and apparel could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Merchandising." VENDOR RELATIONSHIPS The Company's business is dependent to a significant degree upon close relationships with vendors and the Company's ability to purchase brand name merchandise at competitive prices. During fiscal 8 1996, the Company's largest vendor, Nike, represented approximately 35% of its purchases. The loss of key vendor support could have a material adverse effect on the Company's business, financial condition and results of operations. The Company believes that it has long-standing and strong relationships with its vendors and that it has adequate sources of brand name merchandise on competitive terms; however, there can be no assurance that the Company will be able to acquire such merchandise at competitive prices or on competitive terms in the future. In this regard, certain merchandise that is high profile and in high demand may be allocated by vendors based upon the vendors' internal criteria which are beyond the Company's control. See "Business--Vendor Relationships." COMPETITION The business in which the Company is engaged is highly competitive and many of the items sold by the Company are sold by local sporting goods stores, department and discount stores, national and regional full-line sporting goods stores, footwear and other specialty sports supply stores and traditional shoe stores. Many of the stores with which the Company competes are units of national chains that have substantially greater financial and other resources than the Company. Although several of those competitors, such as Foot Locker or Foot Action, are already present in most of Hibbett Sports' mall locations, the Company believes that its Hibbett Sports format is able to compete effectively by distinguishing itself as a full-line sporting goods store emphasizing a selection of individual and team sports merchandise complemented by a localized mix of apparel and accessories. The Company's Sports & Co. superstores compete with sporting goods superstores, athletic footwear superstores, small-format sporting goods stores and mass merchandisers. The Company believes the principal competitive factors in its markets are service, breadth of merchandise offered, availability of local merchandise and price. The Company believes it competes favorably with respect to these factors in small to mid-sized markets in the Southeast. However, there can be no assurance that the Company will continue to be able to compete successfully against existing or future competition. Expansion by the Company into the markets served by its competitors, entry of new competitors or expansion of existing competitors into the Company's markets, could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business--Competition." RETAIL INDUSTRY; SEASONALITY AND QUARTERLY FLUCTUATIONS The Company's sales are subject to general economic conditions and could be adversely affected by a weak retail environment. No assurances can be given that purchases of sporting goods will not decline during recessionary periods or that a prolonged recession will not have a material adverse effect on the Company's business, financial condition and results of operations. In addition, the Company has historically experienced and expects to continue to experience seasonal fluctuations in its net sales, operating income and net income. The Company's net sales, operating income and net income are typically higher in the fourth quarter due to sales increases during the Christmas season. An economic downturn during this period could adversely affect the Company to a greater extent than if such downturn occurred at other times of the year. The Company's quarterly results of operations may also fluctuate significantly as a result of a variety of factors, including, among other factors, the timing of new store openings, the amount and timing of net sales contributed by new stores, the level of pre-opening expenses associated with new stores, the relative proportion of new stores to mature stores, merchandise mix, the relative proportion of stores represented by each of the Company's three store concepts and demand for apparel and accessories driven by local interest in sporting events such as the NCAA basketball championship. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Quarterly Fluctuations." Upon the repayment of the Subordinated Notes (as defined herein) and the Term Loan (as defined herein) and the reduction of the outstanding level of its borrowings under the Revolving Loan Agreement, concurrent with the Offering, the Company will record an extraordinary loss of approximately $1.1 million, net of taxes, reflecting a write-off of unamortized debt issuance costs and 9 debt discount. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." REGIONAL MARKET CONCENTRATION Most of the Company's stores are located in the southeastern United States. In addition, the Company's current expansion plans anticipate that all new stores will be located in the states where the Company currently has operations or in contiguous new states. Consequently, the Company's results of operations are more subject to regional economic conditions, regional weather conditions, regional demographic and population changes and other regional factors than the operations of more geographically diversified competitors. See "Business--Store Locations." DEPENDENCE ON KEY PERSONNEL The Company's future success depends to a significant extent upon the leadership and performance of Michael J. Newsome, President, Susan H. Fitzgibbon, Chief Financial Officer, Joy A. McCord, Vice President of Merchandising and Cathy E. Pryor, Vice President of Store Operations. The Company does not maintain key man insurance on any of its personnel. The loss of the services of any of these individuals could have a material adverse effect on the Company's business, financial condition and results of operations. As the Company continues to grow, it will continue to hire, appoint or otherwise change senior managers and other key executives. There can be no assurance that the Company will be able to retain its executive officers and key personnel or attract additional qualified members to its management team in the future. The Company does not have employment or non-competition agreements with its executive officers other than Mr. Newsome. None of the Company's senior management has any experience in managing a public company. See "Management." CONTROL OF THE COMPANY BY CERTAIN STOCKHOLDERS Upon completion of the Offering, The SK Equity Fund, L.P. and SK Investment Fund, L.P. (collectively, the "Funds") will own approximately 49% of the outstanding Common Stock, and the Anderson Shareholders (as defined herein) will own approximately 14% of the outstanding Common Stock. Pursuant to the Stockholders Agreement (as defined herein), the Funds and the Anderson Shareholders agreed to vote for a Board of Directors composed of the nominees of the Funds and the Anderson Shareholders. Directors are elected by a plurality of the votes cast by the holders of shares entitled to vote and cumulative voting is not permitted. Subject to the Stockholders Agreement, the Funds will effectively have power to elect the directors of the Company and to determine the outcome of any matter submitted to a vote of the Company's stockholders for approval which requires a majority stockholder vote. See "Certain Transactions--Stockholders Agreement" and "Principal Stockholders." A reduction in the ownership interest of the Funds may in certain circumstances lead to the acceleration of the Company's credit facilities, requiring refinancing or waiver. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS Certain provisions of the Company's Certificate of Incorporation and Bylaws which will be adopted in connection with the Company's reincorporation in Delaware prior to the completion of the Offering may be deemed to have anti-takeover effects and may discourage, delay or prevent a takeover attempt that a stockholder might consider in its best interest. These provisions, among other things, (i) classify the Company's Board of Directors into three classes, each of which will serve for different three year periods, (ii) provide that a director may be removed by stockholders only for cause by a vote of the holders of more than two-thirds of the shares entitled to vote, (iii) provide that all vacancies on the Company's Board of Directors, including any vacancies resulting from an increase in the number of 10 directors, may be filled by a majority of the remaining directors, even if the number is less than quorum, (iv) provide that special meetings of the stockholders may only be called by the Chairman of the Board of Directors, a majority of the Board of Directors or upon the demand of the holders of a majority of the shares entitled to vote at any such special meeting, and (v) require a vote of the holders of more than two-thirds of the shares entitled to vote in order to amend the foregoing and certain other provisions of the Certificate of Incorporation and Bylaws. See "Description of Capital Stock--Charter and Bylaw Provisions." In addition, the Board of Directors, without further action of the stockholders, is permitted to issue and fix the terms of preferred stock which may have rights senior to those of the Common Stock. See "Description of Capital Stock--Preferred Stock." The Company will also be subject to the Delaware business combination statute, which may render more difficult a change in control of the Company. See "Description of Capital Stock--Delaware Law." POTENTIAL ADVERSE MARKET PRICE EFFECTS OF SHARES ELIGIBLE FOR FUTURE SALE No prediction can be made as to the effect, if any, that future sales of Common Stock, or the availability of shares for future sales, will have on the market price of the Common Stock prevailing from time to time. Sales of substantial amounts of Common Stock, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Stock. Upon completion of the Offering, the Company will have 5,834,262 shares of Common Stock outstanding (assuming no exercise of the Underwriters' overallotment option and no exercise of outstanding options). Of these shares, the 2,000,000 shares sold in the Offering (assuming no exercise of the Underwriters' overallotment option) will be freely transferable by persons other than affiliates of the Company, without restriction or further registration under the Securities Act of 1933, as amended (the "Act"). On the date of this Prospectus, 3,834,262 "restricted shares" within the meaning of Rule 144 under the Act are outstanding and may not be sold in the absence of registration under the Act unless an exemption from registration is available, including exemptions contained in Rule 144. The Company and all of its shareholders, officers and directors have agreed that, for a period of 180 days following the date of this Prospectus, they will not, without the prior written consent of Smith Barney Inc., offer, sell, grant any option to purchase or otherwise dispose of Common Stock or any securities convertible into or exchangeable for Common Stock. After giving effect to these contractual restrictions, 947,541 shares of Common Stock will be eligible for sale 180 days after the date of this Prospectus under Rule 144 and 2,886,721 additional shares of Common Stock will be eligible for sale under Rule 144 beginning November 1, 1997. In addition, holders of 3,834,262 shares are entitled to piggyback registration rights, of which 3,711,311 shares are also entitled to demand registration rights. See "Shares Eligible for Future Sale" and "Underwriting." LACK OF PRIOR PUBLIC MARKET AND VOLATILITY OF STOCK PRICE Prior to the Offering, there has not been a public market for the Common Stock and there can be no assurance that an active trading market in the Common Stock will develop subsequent to the Offering or, if developed, that it will be sustained. The initial public offering price will be determined by negotiations between the Company and the Representatives of the Underwriters. See "Underwriting." Upon commencement of the Offering, the Common Stock will be quoted on the Nasdaq National Market, which has experienced and is likely to experience in the future significant price and volume fluctuations which could adversely affect the market price of the Common Stock without regard to the operating performance of the Company. Furthermore, the Company's failure to have two independent directors within 90 days after the date of this Prospectus may result in a delisting of the Common Stock from the Nasdaq National Market. In addition, the Company believes that factors such as seasonal and quarterly fluctuations in the financial results of the Company or the overall economy and condition of the financial markets could cause the price of the Common Stock to fluctuate substantially. DILUTION; STOCKHOLDERS' DEFICIT Purchasers of Common Stock in the Offering will incur immediate and substantial dilution in net tangible book value per share. See "Dilution." At August 3, 1996, the Company had a stockholders' deficit of $(7,267,000). 11 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of Common Stock offered hereby (after deducting underwriting discounts and commissions and estimated offering expenses) are expected to be approximately $26.9 million ($31.1 million if the Underwriters' over-allotment option is exercised in full). The Company intends to use the estimated net proceeds to redeem $16.0 million in aggregate principal amount of the Subordinated Notes (as defined herein) and accrued interest of approximately $1.5 million, and to repay a $1.0 million Term Loan (as defined herein) and accrued interest thereon, with the balance to be used to reduce the outstanding balance on the Revolving Loan Agreement (as defined herein). Amounts repaid under the Revolving Loan Agreement may be reborrowed subject to satisfaction of borrowing base requirements. As of September 10, 1996 the Anderson Shareholders owned $11,426,000 principal amount of the Subordinated Notes and the Funds owned the remaining $4,574,000. The Subordinated Notes bear interest at the rate of 12% per annum and mature on November 1, 2002. The Term Loan bears interest at a floating rate (8.92% at September 10, 1996) and matures in November 1997. The borrowings under the Revolving Loan Agreement bear interest at a floating rate (8.02% at September 10, 1996), and the Revolving Loan Agreement expires in November 2000. CAPITALIZATION The following table sets forth the Company's capitalization as of August 3, 1996 and as adjusted to give retroactive effect to the reverse stock split described in Note 10 of Notes to Consolidated Financial Statements and to give effect to the sale by the Company of 2,000,000 shares of Common Stock offered hereby at an assumed initial public offering price of $15 per share and application of the estimated net proceeds therefrom as described in "Use of Proceeds."
AUGUST 3, 1996 (IN THOUSANDS) --------------------------- ACTUAL AS ADJUSTED(1) -------- --------------- LONG-TERM DEBT: Revolving Loan Agreement............................................ $ 17,561 $ 9,135 Term Loan........................................................... 1,000 0 Subordinated Notes.................................................. 16,000 0 Unamortized debt discount related to Subordinated Notes............. (1,413) 0 -------- --------------- Total long-term debt.............................................. 33,148 9,135 -------- --------------- STOCKHOLDERS' INVESTMENT (DEFICIT): Common Stock, par value $.01 per share, 20,000,000 shares authorized, 3,834,262 shares issued and outstanding, 5,834,262 as adjusted............................................................ 38 58 Paid-in capital..................................................... 15,129 42,009 Retained earnings (deficit)......................................... (22,434) (23,548) -------- --------------- Total stockholders' investment (deficit).......................... (7,267) 18,519 -------- --------------- TOTAL CAPITALIZATION.............................................. $ 25,881 $ 27,654 -------- --------------- -------- ---------------
- ------------ (1) Reflects the issuance and sale of 2,000,000 shares of Common Stock offered hereby, the application of the estimated net proceeds thereof as described in "Use of Proceeds", and the effect on retained earnings (deficit) of an extraordinary item representing the write-off of unamortized debt discount and debt issuance costs, net of taxes. This presentation excludes currently outstanding stock options and the shares reserved for issuance under the Company's stock option plans. See "Management-- Stock Option Plans," "Certain Transactions--Advisory Agreements" and Note 8 of Notes to Consolidated Financial Statements. 12 DIVIDEND POLICY The Company currently anticipates that it will retain all available funds for use in the operation and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future. In addition, the Revolving Loan Agreement prohibits the Company from declaring, paying or making any dividend or distribution on its Common Stock other than dividends or distributions payable in stock. DILUTION The Company's net tangible book value at August 3, 1996 was a deficit of $(7,267,000) or $(1.90) per share of Common Stock after giving retroactive effect to the reverse stock split discussed in Note 10 of Notes to Consolidated Financial Statements. Without taking into account any changes in net tangible book value after August 3, 1996, other than to give effect to the sale by the Company of 2,000,000 shares of Common Stock offered hereby (at an assumed initial public offering price of $15 per share), the Company's pro forma net tangible book value at August 3, 1996 would have been $18,519,000, or $3.18 per share of Common Stock. This represents an immediate increase in net tangible book value of $5.08 per share to existing shareholders and an immediate dilution in net tangible book value of $11.82 per share to new investors purchasing shares in the Offering. The following table illustrates the per share dilution:
Assumed public offering price.............................................. $15.00 ------ Net tangible book value (deficit) before the Offering(1)................. $(1.90) Increase in net tangible book value attributable to new investors........ 5.08 ------ Pro forma net tangible book value per share after the Offering........... 3.18 ------ Dilution to new investors(2)............................................... $11.82 ------ ------
- ------------ (1) Net tangible book value (deficit) per share is determined by dividing the net tangible book value (deficit) of the Company (tangible assets less liabilities) by the number of shares of Common Stock outstanding as of August 3, 1996. (2) Dilution is determined by subtracting pro forma net tangible book value per share after the Offering from the amount of cash paid by a new investor for a share of Common Stock. The following table sets forth as of August 3, 1996 the number of shares of Common Stock purchased from the Company, the total consideration paid and the average price per share paid by the existing stockholders and by new investors:
SHARES PURCHASED TOTAL CONSIDERATION -------------------- ---------------------- AVERAGE PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE --------- ------- ----------- ------- ------------- Existing stockholders................. 3,834,262 65.7% $18,167,184 37.7% $ 4.74 New investors......................... 2,000,000 34.3 30,000,000 62.3 15.00 --------- ------- ----------- ------- ------------- Total................................. 5,834,262 100.0% $48,167,184 100.0% $ 8.26 --------- ------- ----------- ------- ------------- --------- ------- ----------- ------- -------------
The foregoing tables assume no exercise of outstanding stock options after August 3, 1996. At August 3, 1996, 182,581 shares of Common Stock were subject to outstanding options, at a weighted average exercise price of $6.44 per share. To the extent these options are exercised there will be further dilution to new investors. See "Management--Stock Option Plans," "Certain Transactions--Advisory Agreements" and Note 8 of Notes to Consolidated Financial Statements. 13 SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA The statement of operations data and balance sheet data for each of the five fiscal years ended January 31, 1992, January 31, 1993, January 29, 1994, January 28, 1995, and February 3, 1996 set forth below have been derived from audited financial statements of the Company, except for the provision for income taxes, net income and net income per share in fiscal 1992 and 1993, which are pro forma amounts as explained in footnote 4. The data for the twenty-six week periods ended July 29, 1995 and August 3, 1996 have been derived from unaudited financial statements of the Company. The unaudited financial statements include all adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position and results of operations for these periods. Operating results for the twenty-six week period ended August 3, 1996 are not necessarily indicative of the results that may be expected for any future period. The following data should be read in conjunction with the consolidated financial statements of the Company and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Prospectus.
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ------------------------------------------------------------------- -------------------- JANUARY 31, JANUARY 31, JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1992 1993 1994(1) 1995 1996 1995 1996 ----------- ----------- ----------- ----------- ----------- -------- --------- (52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Net sales............... $32,033 $ 36,366 $40,119 $52,266 $67,077 $ 29,355 $39,019 Cost of goods sold, including warehouse, distribution, and store occupancy costs......... 22,132 24,998 27,731 36,225 46,642 20,538 27,272 ----------- ----------- ----------- ----------- ----------- -------- --------- Gross profit............ 9,901 11,368 12,388 16,041 20,435 8,817 11,747 Store operating, selling, and administrative expenses(3)............. 7,224 7,861 8,579 10,453 13,471 5,624 7,767(2) Depreciation and amortization............ 657 814 932 1,066 1,322 662 826 ----------- ----------- ----------- ----------- ----------- -------- --------- Operating income........ 2,020 2,693 2,877 4,522 5,642 2,531 3,154 Interest expense........ 453 325 488 654 1,685(7) 410 1,814(7) ----------- ----------- ----------- ----------- ----------- -------- --------- Income before provision for income taxes....... 1,567 2,368 2,389 3,868 3,957 2,121 1,340 Provision for income taxes................... 588(4) 906(4) 920 1,479 1,514 811 514 ----------- ----------- ----------- ----------- ----------- -------- --------- Net income.............. $ 979(4) $ 1,462(4) $ 1,469 $ 2,389 $ 2,443 $ 1,310 $ 826 ----------- ----------- ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- ----------- ----------- -------- --------- Net income per share.... $ .15(4) $ .22(4) $ .23 $ .37 $ .42(5) $ .20 $ .21(5) ----------- ----------- ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- ----------- ----------- -------- --------- Weighted average shares outstanding............. 6,342 6,505 6,505 6,505 5,838(7) 6,505 3,938(7) ----------- ----------- ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- ----------- ----------- -------- ---------
14
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ------------------------------------------------------------------- -------------------- JANUARY 31, JANUARY 31, JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1992 1993 1994(1) 1995 1996 1995 1996 ----------- ----------- ----------- ----------- ----------- -------- --------- (52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED) SELECTED OPERATING DATA: Number of stores open at end of period: Hibbett Sports.................... 34 33 41 52 56 54 62 Sports & Co....................... 0 0 0 0 3 1 3 Sports Additions.................. 4 6 8 8 8 7 8 --- --- --- --- --- --- --- Total............................ 38 39 49 60 67 62 73 --- --- --- --- --- --- --- --- --- --- --- --- --- --- Net sales growth.................. 13.7% 13.5% 10.3% 30.3% 28.3% 28.0% 32.9% Comparable store net sales increase (decrease)(6)........... 2.4% 10.6% (0.3%) 15.6% 6.2% 6.3% 13.9% AS OF ------------------------------------------------------------------------------- JANUARY 31, JANUARY 31, JANUARY 29, JANUARY 28, FEBRUARY 3, AUGUST 3, 1992 1993 1994(1) 1995 1996 1996 ----------- ----------- ----------- ----------- ----------- --------- (52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED) (IN THOUSANDS) BALANCE SHEET DATA: Working capital..................... $ 2,825 $ 2,097 $ 4,030 $ 7,459 $10,907 $16,478 Total assets........................ 12,638 14,569 17,507 22,787 36,702 40,408 Total debt.......................... 4,661 4,810 6,179 5,328 31,912(7) 33,148(7) Stockholders' investment (deficit)........................... 4,666 4,402 5,871 8,259 (8,093)(7) (7,267)(7)
- ------------ (1) During fiscal year 1994, the Company changed its fiscal year from a twelve-month period ending January 31 to a 52-53 week period ending on the Saturday nearest to January 31. (2) Includes a $513,000 pre-tax gain on the sale of the Company's former headquarters and distribution facility and a one-time pre-tax compensation expense of $462,000 related to stock options issued on August 1, 1996. See "Certain Transactions--Advisory Agreements." (3) Includes management fees. See "Certain Transactions--Advisory Agreements" and Note 6 of Notes to Consolidated Financial Statements. (4) Prior to July 1, 1992, the Company was a Subchapter S corporation. Under these provisions, the taxable income of the Company was included in the individual income tax returns of the stockholders. Effective July 1, 1992, the Company and its stockholders terminated the S corporation election and the Company became a taxable corporation. Thus, the provisions for income taxes for the fiscal years ended January 31, 1992 and 1993 give effect to the application of pro forma income taxes that would have been reported had the Company been a taxable corporation for federal and state income tax purposes for such fiscal years. (5) The net proceeds from the Offering will be used to retire a substantial portion of the Company's debt. Accordingly, a presentation of supplemental net income per share before extraordinary item is calculated by dividing net income (after adjustment for applicable interest expense) by the number of weighted average shares outstanding after giving effect to the estimated number of shares that would be required to be sold (at an assumed initial public offering price of $15 per share) to repay $26,900,000 of debt at February 3, 1996 and August 3, 1996. Supplemental net income per share before an extraordinary item (to reflect the write-off of unamortized debt discount and debt issuance costs, net of taxes) for the fiscal year ended February 3, 1996 and the twenty-six week period ended August 3, 1996 was $.41 and $.38, respectively. Supplemental net income per share after an extraordinary item (to reflect the write off of unamortized debt discount and debt issuance costs, net of taxes) for the fiscal year ended February 3, 1996 and the twenty-six week period ended August 3, 1996 was $.26 and $.20, respectively. (6) Comparable store net sales data for a period reflect stores open throughout that period and the corresponding period of the prior fiscal year. For the periods indicated, comparable store net sales do not include sales by Sports & Co. superstores or Team Sales. (7) In November 1995, the Company completed the Recapitalization. The Recapitalization included the repurchase and retirement of 34,220,000 (on a pre-split basis) shares of common stock for cash and debt and the issuance of 17,609,000 (on a pre-split basis) new shares of common stock and debt in exchange for cash. The Recapitalization resulted in a substantial increase in total debt outstanding and a deficit in stockholders' investment. See "Certain Transactions--Transactions Related to the Recapitalization." 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Hibbett is a leading rapidly-growing operator of full-line sporting goods stores in small to mid-sized markets in the southeastern United States. The Company operates 79 stores in ten states. Hibbett began operations in 1945 in Florence, Alabama as Dixie Supply Company, a retailer of athletic, marine and aviation equipment. In 1952, the Company changed its operating strategy to focus on team sports oriented merchandise and its name to Hibbett & Sons. In the mid 1960s, the Company refocused its operating strategy on retailing and changed its name to Hibbett Sporting Goods, Inc. In 1980, the Anderson family of Florence, Alabama (the "Anderson Shareholders") purchased Hibbett and continued to expand the Company's store base at a moderate pace, while investing in professional management and systems. Beginning in fiscal 1994, Hibbett accelerated its store opening rate to approximately 10 stores per year. On November 1, 1995, The SK Equity Fund, L.P. and SK Investment Fund, L.P. (collectively, the "Funds") acquired the majority of the outstanding shares of Common Stock as part of a recapitalization of the Company (the "Recapitalization"). In connection with the Recapitalization, the Company (i) sold to the Funds approximately 75% of the Company's Common Stock, (ii) repurchased a portion of the Common Stock held by the Anderson Shareholders (leaving them with approximately 22% of the Company's outstanding Common Stock), (iii) issued $16,000,000 in aggregate principal amount of its subordinated notes ("Subordinated Notes") and (iv) issued $4,125,000 in aggregate principal amount of its senior subordinated notes ("Senior Subordinated Notes"). See "Certain Transactions--Transactions Related to the Recapitalization." In connection with the Recapitalization, the Company also refinanced its bank facilities with a $26,000,000 credit facility provided by Heller Financial, Inc. ("Heller"), consisting of a $25,000,000 revolving loan agreement (the "Revolving Loan Agreement") and a $1,000,000 term loan (the "Term Loan"). The Senior Subordinated Notes which financed the construction of the Company's new headquarters and distribution center were subsequently redeemed in February 1996 from proceeds of the sale and leaseback of this facility. In fiscal 1997, the Company has further accelerated its rate of new store openings to take advantage of the growth opportunities in its target markets. The Company plans to open approximately 18 Hibbett Sports stores in fiscal 1997 (12 have been opened to date) and approximately 27 Hibbett Sports stores in fiscal 1998. The Company also intends to open one Sports & Co. superstore in September 1996. To support its expansion plans, the Company has increased its staffing levels in finance, merchandising, real estate, distribution and field management. In January 1996, the Company moved into its new headquarters and distribution center which currently has the capacity to service in excess of 150 Hibbett Sports stores and has significant expansion potential to support the Company's growth for the foreseeable future. While operating margins may be impacted in periods in which incremental expenses have been incurred to support acceleration of the Company's expansion plans, over the long term, the Company expects to benefit from leveraging its expenses over a larger store base as it continues to implement its expansion plans. The Company operates on a 52 or 53 week fiscal year ending on the Saturday nearest to January 31 of such year. The consolidated statements of operations for the fiscal years ended January 28, 1995 and January 29, 1994 include 52 weeks of operations while the fiscal year ended February 3, 1996 includes 53 weeks of operations. Hibbett was incorporated under the laws of the state of Alabama and will reincorporate in Delaware prior to the closing of the Offering. 16 RESULTS OF OPERATIONS The following table sets forth selected statement of operations items expressed as a percentage of net sales for the periods indicated:
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- --------------------- JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- -------- --------- Net sales................................ 100.0% 100.0% 100.0% 100.0% 100.0% Cost of goods sold, including warehouse, distribution and store occupancy costs... 69.1 69.3 69.5 70.0 69.9 ----- ----- ----- -------- --------- Gross profit............................. 30.9 30.7 30.5 30.0 30.1 Store operating, selling, and administrative expenses(1)............. 21.4 20.0 20.1 19.2 19.9(2) Depreciation and amortization............ 2.3 2.0 2.0 2.2 2.1 ----- ----- ----- -------- --------- Operating income......................... 7.2 8.7 8.4 8.6 8.1(2) Interest expense......................... 1.2 1.3 2.5 1.4 4.7 ----- ----- ----- -------- --------- Income before provision for income taxes.................................... 6.0 7.4 5.9 7.2 3.4 Provision for income taxes............... 2.3 2.8 2.3 2.8 1.3 ----- ----- ----- -------- --------- Net income............................... 3.7% 4.6% 3.6% 4.4% 2.1% ----- ----- ----- -------- --------- ----- ----- ----- -------- ---------
- ------------ (1) Includes management fees. See "Certain Transactions--Advisory Agreements" and Note 6 of Notes to Consolidated Financial Statements. (2) Includes a $513,000 pre-tax gain on the sale of the Company's former headquarters and distribution facility and a one-time pre-tax compensation expense of $462,000 related to stock options issued on August 1, 1996. See "Certain Transactions--Advisory Agreements." Excluding these items, store operating, selling and administrative expenses would have represented 20.0% of net sales, and operating income would have been 8.0% of net sales for the twenty-six weeks ended August 3, 1996. TWENTY-SIX WEEKS ENDED AUGUST 3, 1996 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 29, 1995 Net sales. Net sales increased $9.7 million, or 32.9%, to $39.0 million for the twenty-six weeks ended August 3, 1996, from $29.4 million for the comparable period in the prior year. This increase is attributable to the opening of eight Hibbett Sports stores, two Sports & Co. superstores and one Sports Additions store and a 13.9% increase in comparable store net sales. During the twenty-six weeks ended August 3, 1996, the Company opened six Hibbett Sports stores. The increase in comparable store net sales was due primarily to increased footwear sales and improved inventory processing at the distribution center. New stores and stores not in the comparable store net sales calculation accounted for $5.9 million of the increase in net sales and increases in comparable store net sales contributed $3.8 million. Comparable store net sales data for a period reflect stores open throughout that period and the corresponding period of the prior fiscal year. For the periods indicated, comparable store net sales do not include sales by Sports & Co. superstores or Team Sales. Gross profit. Cost of goods sold includes the cost of inventory, occupancy costs for stores and occupancy and operating costs for the distribution center. Gross profit was $11.7 million, or 30.1% of net sales, in the twenty-six weeks ended August 3, 1996, as compared to $8.8 million, or 30.0% of net sales, in the same period of the prior fiscal year. Improved leveraging of store occupancy costs over higher sales were offset by higher markdowns in the current year period as well as the addition of distribution center personnel. 17 Store operating, selling and administrative expenses. Store operating, selling and administrative expenses for the twenty-six weeks ended August 3, 1996 include a net gain on the disposal of assets which primarily relates to the gain on the sale of the former headquarters and distribution facility which was replaced by the Company's new headquarters and distribution center, which net gain has been substantially offset by a one-time compensation expense of approximately $462,000 related to the issuance of stock options on August 1, 1996. See "Certain Transactions--Advisory Agreements." Excluding these items, store operating, selling and administrative expenses were $7.8 million, or 20.0% of net sales, for the twenty-six weeks ended August 3, 1996, as compared to $5.6 million, or 19.2% of net sales, for the comparable period a year ago. This increase as a percentage of net sales is primarily attributable to the costs associated with increasing the Company's corporate staff to support future growth, including the addition of a chief financial officer, as well as additional personnel in the Company's real estate, loss prevention, merchandise, operations and training departments. Depreciation and amortization. Depreciation and amortization as a percentage of net sales declined slightly to 2.1% in the twenty-six weeks ended August 3, 1996 from 2.2% in the prior year period. This decrease as a percentage of net sales is primarily due to a write-off of the unamortized portion of leasehold improvements for one of the Company's stores in the prior year period due to the change in the terms of that lease. Interest expense. The $1,404,000 increase in interest expense for the twenty-six weeks ended August 3, 1996 compared to the prior year period is due primarily to the interest expense associated with the Subordinated Notes which were issued in connection with the Recapitalization in November 1995 and also to an increase in borrowings under the Revolving Loan Agreement to fund new store openings. Net income. Net income decreased $484,000, or 36.9%, to $826,000 in the twenty-six weeks ended August 3, 1996 from $1,310,000 in the comparable period in the prior year. This decrease was attributable to factors described above. FISCAL 1996 COMPARED TO FISCAL 1995 Net sales. Net sales increased $14.8 million, or 28.3%, to $67.1 million in fiscal 1996 from $52.3 million in fiscal 1995. This increase is attributable to the opening of five Hibbett Sports stores, three Sports & Co. superstores and one Sports Additions store, an increase in comparable store net sales of 6.2% and an additional week of sales as fiscal 1996 included 53 weeks of operations, offset in part by the closing of one Sports Additions store. The increase in comparable store net sales was due primarily to increased sales of footwear and apparel. New stores and stores not in the comparable store net sales calculation accounted for $11.8 million of the increase in net sales and increases in comparable store net sales contributed $3.0 million. Gross profit. Gross profit was $20.4 million, or 30.5% of net sales, in fiscal 1996 as compared to $16.0 million, or 30.7% of net sales, in fiscal 1995. The decline in gross profit as a percentage of net sales primarily resulted from higher distribution costs. In anticipation of its accelerated expansion plan, the Company increased staff positions at its distribution center, adding two senior distribution center managers. Additionally, distribution costs were higher as a result of the higher occupancy costs associated with the Company's new headquarters and distribution center. Store operating, selling and administrative expenses. Store operating, selling and administrative expenses were $13.5 million, or 20.1% of net sales, in fiscal 1996 as compared to $10.5 million, or 20.0% of net sales, in fiscal 1995. This increase as a percentage of net sales is primarily attributable to the costs associated with increasing the Company's corporate staff to support future growth, including the addition of one real estate professional, one loss prevention professional, one merchandise buyer and one visual merchandise manager. 18 Depreciation and amortization. Depreciation and amortization as a percentage of net sales remained constant at 2.0% in fiscal 1996 and fiscal 1995. Interest expense. The $1.0 million increase in interest expense for fiscal 1996 is primarily due to the interest expense associated with the Subordinated Notes which were issued in connection with the Recapitalization and the increase in borrowings under the Revolving Loan Agreement and the previous loan agreement to fund new store openings. Net income. Net income increased $54,000, or 2.3%, to $2.4 million in fiscal 1996 compared to fiscal 1995 due to the factors discussed above. FISCAL 1995 COMPARED TO FISCAL 1994 Net sales. Net sales increased $12.1 million, or 30.3%, to $52.3 million in fiscal 1995 from $40.1 million in fiscal 1994. This increase is attributable to the opening of 11 Hibbett Sports stores and an increase in comparable store net sales of 15.6%. The increase in comparable store net sales was due primarily to a significant increase in branded apparel sales as well as a moderate increase in footwear sales. New stores and stores not in the comparable store net sales calculation accounted for $7.3 million of the increase in net sales and increases in comparable store net sales contributed $4.8 million. Gross profit. Gross profit was $16.0 million, or 30.7% of net sales, in fiscal 1995 as compared to $12.4 million, or 30.9% of net sales, in fiscal 1994. The decline in gross profit as a percentage of net sales primarily resulted from higher store occupancy costs. Store operating, selling and administrative expenses. Store operating, selling and administrative expenses were $10.5 million, or 20.0% of net sales, in fiscal 1995 as compared to $8.6 million, or 21.4% of net sales, in fiscal 1994. This decrease as a percentage of net sales was the result of spreading fixed costs over the Company's larger sales base. Depreciation and amortization. Depreciation and amortization as a percentage of net sales decreased to 2.0% in fiscal 1995 from 2.3% in fiscal 1994 as a result of the Company's operating leverage as these costs were allocated over a larger sales base. Interest expense. The $166,000 increase in interest expense for fiscal 1995 was due primarily to an increase in borrowings under the previous loan agreement to fund new store openings. Net income. Net income increased $920,000, or 62.6%, to $2.4 million in fiscal 1995 from $1.5 million in fiscal 1994. This increase as a percentage of net sales was attributable to factors described above. QUARTERLY FLUCTUATIONS The Company has historically experienced and expects to continue to experience seasonal fluctuations in its net sales and operating income. The Company's net sales and operating income are typically higher in the fourth quarter due to sales increases during the Christmas season. However, the seasonal fluctuations are mitigated by the strong product demand in the spring, summer and back-to-school sales periods. The Company's quarterly results of operations may also fluctuate significantly as a result of a variety of factors, including the timing of new store openings, the amount and timing of net sales contributed by new stores, the level of pre-opening expenses associated with new stores, the relative proportion of new stores to mature stores, merchandise mix, the relative proportion of stores represented by each of the Company's three store concepts and demand for apparel and accessories driven by local interest in sporting events such as the NCAA basketball championship. 19 The following tables set forth certain unaudited financial data for the quarters indicated:
QUARTER ENDED -------------------------------------------------------------- OCT 29, 1994 JAN 28, 1995 APR 29, 1995 JUL 29, 1995 ------------ ------------ ------------ ------------ (DOLLARS IN THOUSANDS) Net sales................................ $ 12,967 $ 16,372 $ 15,001 $ 14,355 Operating income......................... 1,105 1,375 1,476 1,055 QUARTER ENDED -------------------------------------------------------------- OCT 28, 1995 FEB 3, 1996 MAY 4, 1996 AUG 3, 1996 ------------ ------------ ------------ ------------ (14 WEEKS) (DOLLARS IN THOUSANDS) Net sales................................ $ 15,737 $ 21,984 $ 20,251 $ 18,768 Operating income......................... 1,323 1,788(1) 2,429(2) 725(3)
- ------------ (1) Includes pre-opening expenses for two Sports & Co. superstores opened in the fourth quarter of fiscal 1996. (2) Includes a $513,000 pre-tax gain on sale of the Company's former headquarters and distribution facility. Excluding this gain, operating income would have been $1,916,000. (3) Includes a one-time compensation expense of $462,000 related to the issuance of stock options on August 1, 1996. See "Certain Transactions--Advisory Agreements". Excluding this expense, operating income would have been $1,187,000. In the opinion of the Company's management, this unaudited information has been prepared on the same basis as the audited information presented elsewhere herein and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the information set forth therein. The operating results from any quarter are not necessarily indicative of the results to be expected for any future period. LIQUIDITY AND CAPITAL RESOURCES The Company's capital requirements relate primarily to new store openings and working capital requirements. The Company's working capital needs are somewhat seasonal in nature and typically reach their peak near the end of the third and the beginning of the fourth quarter of its fiscal year. Historically, the Company has funded its cash requirements primarily through cash flow from operations and borrowings under its revolving credit facilities. Net cash provided by (used in) operating activities has historically been driven by net income levels combined with fluctuations in inventory and accounts payable balances. Net income levels have increased in each of the last three fiscal years. In addition, the Company has continued to increase inventory levels throughout these periods and in the twenty-six weeks ended August 3, 1996 as the number of stores has increased and the larger Sports & Co. superstores have opened. These inventory increases were primarily financed through increased accounts payable balances in fiscal 1995 but were primarily financed with cash from operations in both fiscal 1996 and the twenty-six weeks ended August 3, 1996. These activities resulted in cash flows provided by (used in) operating activities in each of the last three fiscal years and in the twenty-six week period ending August 3, 1996 of $269,000, $3.2 million, $(158,000), and $(4.3) million, respectively. With respect to cash flows from investing activities, during the first quarter of fiscal 1997, the Company completed the sale-leaseback of its new headquarters and distribution center and the sale of the former headquarters and warehouse facilities for combined proceeds of $5.6 million and used the proceeds to repay $4.3 million then outstanding under the Senior Subordinated Notes issued to finance the new headquarters and distribution center on a temporary basis and to fund its working capital 20 requirements. Capital expenditures for fiscal 1996 were $8.2 million compared with $2.2 million in fiscal 1995 and $1.6 million in fiscal 1994. The increase in these expenditures for fiscal 1996 was primarily the result of the construction of the new headquarters and distribution center for $4.7 million. Cash flows from financing activities have historically represented the Company's financing of its long-term growth. As previously discussed, in fiscal 1996 the Company completed the Recapitalization. This resulted in the refinancing of all existing debt, the repurchase and retirement of previously existing shares of Common Stock for cash and debt and the issuance of debt and new shares of Common Stock in exchange for cash. The net impact of these financing activities provided $7.6 million in cash in fiscal 1996 and resulted in a substantial increase in total debt outstanding and a deficit in stockholders' investment. See "Certain Transactions--Transactions Related to the Recapitalization." The Company estimates capital expenditures in fiscal 1997 to be approximately $3.2 million, (i) approximately 70% of which will be used to fund the opening of approximately 18 Hibbett Sports stores and one Sports & Co. superstore and to remodel selected existing stores and (ii) approximately 30% of which will be used to fund capital expenditures related to the headquarters and distribution center. The Company estimates capital expenditures in fiscal 1998 to be approximately $3.6 million which includes resources budgeted to (i) fund the opening of approximately 27 Hibbett Sports stores, (ii) remodel selected existing stores and (iii) fund headquarters and distribution center-related capital expenditures. The Company's principal source of liquidity is its $25.0 million Revolving Loan Agreement provided by Heller. Borrowings under the Revolving Loan Agreement bear interest at the Company's option either at 2 1/4% plus LIBOR or 1/4% plus the higher of the prime rate and the federal funds rate. The Revolving Loan Agreement is secured by a lien on inventory, accounts receivable, equipment and certain other assets. Availability of funds under the Revolving Loan Agreement is restricted to a borrowing base consisting of designated percentages of eligible inventory and accounts receivable. In addition, the Revolving Loan Agreement requires the maintenance of certain specified financial ratios, restricts levels of capital expenditures and restricts the incurrence of debt and payments in respect of capital stock and junior indebtedness. As of August 3, 1996, the Company had $17.6 million of borrowings outstanding under the Revolving Loan Agreement and availability to borrow up to an additional $1.7 million. The Revolving Loan Agreement expires on November 1, 2000. The Company also has an outstanding $1.0 million Term Loan from Heller that matures on November 1, 1997. If Saunders Karp & Megrue, L.P. ceases to beneficially own and control, directly or indirectly, at least 40% of the issued and outstanding Common Stock, Heller may declare the amounts then outstanding under the Revolving Loan Agreement immediately due and payable, which would require the Company to refinance and replace the Revolving Loan Agreement with another credit facility. The Company plans to use the proceeds of the Offering (i) to repay $16.0 million aggregate principal amount of the Subordinated Notes issued in connection with the Recapitalization and accrued interest of approximately $1.5 million, (ii) to repay $1.0 million principal amount of the Term Loan borrowed in connection with the Recapitalization and accrued interest thereon and (iii) to reduce the outstanding level of its borrowings under the Revolving Loan Agreement. Upon the repayment of the Subordinated Notes and the Term Loan and the reduction of the outstanding level of its borrowings under the Revolving Loan Agreement, concurrent with the Offering, the Company will record an extraordinary loss of approximately $1.1 million, net of taxes, reflecting a write-off of unamortized debt issuance costs and debt discount. Based on its current operating and store opening plans, the Company believes that it can fund its cash needs for the foreseeable future through borrowings under the Revolving Loan Agreement and cash generated from operations. See "Use of Proceeds." 21 BUSINESS GENERAL Hibbett is a leading rapidly-growing operator of full-line sporting goods stores in small to mid-sized markets in the southeastern United States, based on sales. Hibbett's stores offer a broad assortment of quality athletic footwear, apparel and equipment at competitive prices with superior customer service. The Company's merchandise assortment features a core selection of brand name merchandise emphasizing team and individual sports complemented by a selection of localized apparel and accessories designed to appeal to a wide range of customers within each market. The Company believes that its stores are among the primary retail distribution alternatives for brand name vendors that seek to reach Hibbett's target markets. Hibbett has received the Nike Retailer Excellence Award for the Southeast region for eight consecutive years based on its performance in the full-line sporting goods category. The Company operates 68 Hibbett Sports stores as well as eight smaller-format Sports Additions athletic shoe stores and three larger-format Sports & Co. superstores. Hibbett's primary retail format and growth vehicle is Hibbett Sports, a 5,000 square foot store located predominantly in enclosed malls. Hibbett Sports is typically the primary, full-line sporting goods retailer in its markets because of, among other factors, its more extensive selection of traditional team and individual sports merchandise and its superior customer service. INDUSTRY OVERVIEW According to the National Sporting Goods Association ("NSGA"), United States retail sales of sporting goods (including athletic footwear, apparel and equipment) totaled approximately $36 billion in 1995. The marketplace for sporting goods remains highly fragmented, as many different retailers compete for market share by utilizing a variety of store formats and merchandising strategies. In recent years, the growth of large format retailers such as Sports Authority has resulted in significant consolidation in large metropolitan markets. However, the competitive environment for sporting goods remains different in small to mid-sized markets where retail demand does not currently support larger-format stores. In these markets, customers generally shop for sporting goods at either (i) a discount store or department store, (ii) a sporting goods retailer that focuses on a specialty category, such as athletic footwear, or an activity, such as golf or tennis, and that is either an independent local operator or part of a national chain or (iii) a full-line sporting goods retailer that is typically a single-store operation or part of a small chain. With over 30 years of operating experience in small to mid-sized markets (population range from 30,000 to 250,000), the Company believes that it is well-positioned to continue to compete effectively against such other sporting goods retailers. The Company's merchandise assortment features a core selection of brand name merchandise emphasizing team and individual sports complemented by a selection of localized apparel and accessories designed to appeal to a wide range of customers within each market. Compared to Hibbett, (i) discounters and department stores typically offer more limited sporting goods assortments, fewer high-quality name brands and more limited customer service; (ii) specialty sporting goods retailers typically focus on a specific category, such as athletic footwear, or an activity, such as golf or tennis, and therefore lack the wide range of products offered by Hibbett; and (iii) full-line sporting goods retailers are typically single store operations that lack the systems, vendor relationships and economies of scale of Hibbett. BUSINESS STRATEGY Unique Emphasis on Small Markets. The Company targets markets ranging in population from 30,000 to 250,000. Management believes that Hibbett is currently targeting markets of this size in the Southeast more aggressively than any of its national or regional full-line competitors. By targeting smaller markets, the Company believes that it is able to achieve significant strategic advantages, including numerous expansion opportunities, comparatively low operating costs and a more limited competitive environment than generally faced in larger markets. In addition, the Company establishes 22 greater customer and vendor recognition as the leading full-line sporting goods retailer in the local community. Strong Regional Focus. With over 30 years of experience as a full-line sporting goods retailer in the Southeast, the Company believes that Hibbett benefits from strong name recognition, a loyal customer base and operating and cost efficiencies. Although the core merchandise assortment tends to be similar for each Hibbett Sports store, important local and regional differences frequently exist. Management believes that its ability to merchandise to local sporting or community interests differentiates Hibbett from its national competitors. The Company's regional focus also enables it to achieve significant cost benefits including lower corporate expenses, reduced distribution costs and increased economies of scale from its marketing activities. Low Cost Operating Strategy. In addition to the cost benefits of the Company's small market emphasis and regional focus, Hibbett maintains tight control over its operating costs through the use of its management information systems. The Company's systems assist management in making timely and informed merchandise decisions, maintaining tight inventory control and monitoring store-level and corporate expenses. Emphasis on Training and Customer Satisfaction. Management seeks to exceed customer expectations in order to build loyalty and generate repeat business. The Company strives to hire enthusiastic sales personnel with an interest in sports and provides them with extensive training to create a sales staff with strong product knowledge dedicated to outstanding customer service. Hibbett's training programs focus on both selling skills and continuing product/technical training and are conducted through in-store clinics, video presentations and interactive group discussions. Investment in Management and Infrastructure. The Company's experienced management team and its recently upgraded information and distribution systems are expected to facilitate the Company's future growth. The Company's new headquarters and distribution center is currently capable of servicing in excess of 150 Hibbett Sports stores and has significant expansion potential to support the Company's growth for the foreseeable future. Through its comprehensive information systems, the Company monitors all aspects of store operations on a daily basis and is able to control inventory levels and operating costs. STORE LOCATIONS The Company operates 79 stores in ten states, including 68 Hibbett Sports stores, eight Sports Additions stores and three Sports & Co. superstores. Sixty-eight of the stores are located in malls, and 11, including the three Sports & Co. superstores, are in strip center locations. Over 80% of the Company's stores are in markets with a population of less than 250,000. 23 A map showing the states in which the Company operated stores as of September 10, 1996 and the states containing potential expansion markets is set forth below: [MAP] In the map, Alabama, Florida, Georgia, Southern Illinois, Kentucky, Louisiana, Mississippi, North Carolina South Carolina and Tennessee are shown (shaded green) as existing locations of stores. Arkansas, Indiana, Missouri, Ohio, Texas, Virginia and West Virginia are shown (shaded yellow) as potential expansion states for stores.] STORE LOCATIONS ALABAMA - 26 GEORGIA - 9 KENTUCKY - 7 MISSISSIPPI - 13 NORTH CAROLINA - 3 Auburn Athens Bowling Green Columbus (2) Hendersonville Birmingham (8) Brunswick Madisonville Corinth Albemarle Decatur Dalton Owensboro Hattiesburg New Bern Florence (3) Gainesville Paducah Jackson Gadsden LaGrange Somerset Laurel TENNESSEE - 13 Huntsville (3) Rome Corbin McComb Chattanooga Jasper Valdosta Elizabethtown Meridian (2) Cleveland Mobile Warner Robbins Oxford Columbia Muscle Shoals Waycross LOUISIANA - 1 Pascagoula Dyersburg (2) Oxford (2) Hammond Tupelo Jackson (2) Selma ILLINOIS - 1 Vicksburg Kingsport Troy Carbondale McMinnville Tuscaloosa (2) SOUTH Morristown CAROLINA - 3 Aiken Murfreesboro FLORIDA - 3 Greenwood Nashville Panama City Rock Hill Tullahoma Santa Rosa Lake City
EXPANSION STRATEGY The Company believes its business and expansion strategies have contributed to its increasing net sales and operating profits. Over the past five fiscal years, net sales have increased at a 20.3% compound annual growth rate to $67.1 million in fiscal 1996, and operating income has increased at a 29.3% compound annual growth rate to $5.6 million in fiscal 1996. Over this period, the Company's net sales growth has been driven by new store openings and increases in comparable store net sales. The Company increased its store base from 38 stores at the end of fiscal 1992 to 67 stores at the end of fiscal 1996. See comparable store net sales information in "Summary Consolidated Financial and Operating Data." The Company is accelerating its rate of new store openings to take advantage of the growth opportunities in its target markets. The Company has identified over 500 potential markets for future Hibbett Sports stores within the states in which it operates and in contiguous states. Hibbett's clustered expansion program, which calls for opening new stores within a two-hour driving radius of another 24 Company location, allows it to take advantage of efficiencies in distribution, marketing and regional management. In evaluating potential markets, the Company considers population, economic conditions, local competitive dynamics and availability of suitable real estate. Although approximately 90% of Hibbett Sports stores are located in enclosed malls, the stores also operate profitably in strip center locations. As the Company continues to expand, it will open new stores in mall and strip center locations. Management anticipates that Hibbett Sports will remain the Company's primary growth vehicle as it continues to expand. The Company plans to open approximately 18 Hibbett Sports stores in fiscal 1997 and approximately 27 Hibbett Sports stores in fiscal 1998. As of September 10, 1996 the Company has opened 12 Hibbett Sports stores and has signed leases for the remaining six planned to be opened in fiscal 1997. Hibbett Sports stores are typically profitable in the first year of operations. In September 1996, the Company plans to open one Sports & Co. superstore in Monroe, Louisiana, a lease with respect to which has been signed. In the future, the Company anticipates that it will selectively open Sports Additions stores and Sports & Co. superstores as opportunities arise. See "Risk Factors-- Expansion Plans." STORE CONCEPTS Hibbett Sports The Company's primary retail format is Hibbett Sports, a 5,000 square foot store located predominantly in enclosed malls. The Company tailors its Hibbett Sports concept to the size, demographics and competitive conditions of the small to mid-sized markets. Sixty Hibbett Sports stores are located in enclosed malls, the majority of which are the only enclosed malls in the county, and the remaining eight are located in strip centers. The Company uses exciting design and in-store atmosphere, eye-catching in-store signage and gift-with-purchase promotional programs to channel mall traffic into the stores. Hibbett Sports stores offer a core selection of quality, brand name merchandise with an emphasis on team and individual sports. This merchandise mix is complemented by a selection of localized apparel and accessories designed to appeal to a wide range of customers within each market. For example, the Company believes that apparel with logos of sports teams of local interest represents a larger percentage of the merchandise mix in Hibbett Sports stores than it does in the stores of national chain competitors. In addition, the Company strives to quickly respond to major sports events of local interest such as the recent University of Kentucky national championship in men's basketball. For example, Hibbett Sports stores in the state of Kentucky had a selection of national championship apparel and accessories prominently displayed in the front of each store the morning following the game and promoted this merchandise with local radio advertising. Sports & Co. The Company opened the first Sports & Co. superstore in the spring of 1995 in Huntsville, Alabama. Sports & Co. superstores average 25,000 square feet and offer a larger assortment of athletic footwear, apparel and equipment than Hibbett Sports stores. Athletic equipment and apparel represent a higher percentage of the overall merchandise mix at Sports & Co. superstores than they do at Hibbett Sports stores. Sports & Co. superstores are designed to project the same exciting and entertaining in-store atmosphere as Hibbett Sports stores but on a larger scale. For example, Sports & Co. superstores offer customer participation areas, such as putting greens and basketball hoop shoots, and feature periodic special events including appearances by well-known athletes. See "Risk Factors--Expansion Plans." 25 Sports Additions Sports Additions stores are small, mall-based stores, averaging 1,500 square feet with approximately 90% of merchandise consisting of athletic footwear and the remainder consisting of caps and a limited assortment of apparel. Sports Additions stores offer a broader assortment of athletic footwear, with a greater emphasis on fashion than the athletic footwear assortment offered by Hibbett Sports stores. All Sports Additions stores are currently located in the malls in which Hibbett Sports stores are also present. MERCHANDISING Merchandising Strategy. The Company's merchandising strategy is to provide a broad assortment of quality athletic footwear, apparel and equipment at competitive prices. The Company's stores offer a core selection of brand name merchandise with an emphasis on team and individual sports. This merchandise mix is complemented by a selection of localized apparel and accessories designed to appeal to a wide range of customers within each market. The Company's leading product category is athletic footwear, followed by apparel and sporting equipment, ranked according to sales. No single product category accounts for more than 50% of sales. The Company's pricing strategy is to offer competitive prices to its customers. The Company's management information systems track different retail prices for the same item at different stores, enabling more competitive pricing by location. In addition, information from the Company's point-of-sale computer system is regularly reviewed and analyzed by the purchasing staff to assist it in making merchandise allocation and markdown decisions. Brand Name Merchandise. The Company emphasizes quality brand name merchandise. The Company believes that the breadth and depth of its brand name merchandise selection generally exceeds the merchandise selection carried by local independent competitors. Many of these branded products are highly technical and require considerable sales assistance. The Company works with its vendors to educate the sales staff at the store level on new products and trends. The following list represents the top 25 brand names (based on sales) offered by the Company: Adidas K-Swiss Rollerblade Asics Louisville Slugger Russell Champion Mizuno Spalding Columbia New Balance Starter Converse New Era The Game Dodger Nike Umbro Easton Pro Line Wilson Everlast Rawlings Fila Reebok Regional Merchandise. Although the core merchandise assortment tends to be similar for each Hibbett Sports store, important local or regional differences frequently exist. Accordingly, the Company's stores regularly offer products that reflect preferences for particular sporting activities in each community and local interest in college and professional sports teams. The Company's knowledge of these interests, combined with its access to leading vendors, enables Hibbett Sports stores to react quickly to emerging trends or special events, such as college or professional championships. Purchasing. The Company's merchandise staff, consisting of the Vice President of Merchandising and nine merchandise buyers, analyze current sporting goods trends by maintaining close relationships with the Company's vendors, monitoring sales at competing stores, communicating with customers, store managers and personnel and reviewing industry trade publications. The merchandise staff works closely with store personnel to meet the requirements of individual stores for appropriate merchandise in sufficient quantities. 26 VENDOR RELATIONSHIPS The sporting goods retail business is very brand name driven. Accordingly, the Company maintains relationships with a number of well-known sporting goods vendors to satisfy customer demand. The Company believes that its stores are among the primary retail distribution alternatives for brand name vendors that seek to reach Hibbett's target markets. As a result, the Company is able to attract considerable vendor interest and establish long-term partnerships with vendors. As its vendors expand their product lines and grow in popularity, the Company expands its sales and promotions of these products within its stores. In addition, as the Company continues to increase its store base and enter new markets, the vendors have increased their brand presence within these regions. The Company also places significant emphasis on and works with its vendors to establish the most favorable pricing and to receive cooperative marketing funds. Management believes the Company maintains excellent working relationships with vendors. During fiscal 1996, the Company's largest vendor, Nike, represented approximately 35% of its total purchases. Hibbett has received the Nike Retailer Excellence Award for the Southeast region for eight consecutive years based on its performance in the full-line sporting goods category. ADVERTISING AND PROMOTION The Company targets special advertising opportunities in its markets to increase the effectiveness of its advertising spending. In particular, the Company prefers advertising in local media as a way to further differentiate itself from national chain competitors. Substantially all of the Company's advertising and promotional spending is centrally directed, with some funds allocated to district managers on an as-requested basis. Advertising in the sports pages of local newspapers serves as the foundation of the Company's promotional program, and in fiscal 1996 it accounted for the majority of total advertising spending. Other media such as local radio, television and outdoor billboards are used by the Company to reinforce Hibbett name recognition and brand awareness in the community. In addition, direct mail to customers on an in-house mailing list has been used by the Company to reinforce already established buying patterns and to increase customer loyalty. The cooperative promotional program with its vendors plays an integral part in the Company's advertising strategy by funding a significant portion of its advertising budget and increasing Hibbett's name recognition. The Company holds an annual marketing meeting at which it presents to its major vendors a number of advertising alternatives. At that meeting, vendors select their preferred advertising and promotional programs which often cover a number of different media and are based on multiple themes, and during the ensuing twelve-month period the Company develops and implements the selected programs in close cooperation with those vendors. For example, the Company has recently developed a joint television commercial with Nike and has begun placing vendor sponsored advertising signage on its delivery trucks. CUSTOMER SATISFACTION Customer Service. Commitment to customer satisfaction and service is an integral part of Hibbett's operating strategy. Management seeks to exceed customer expectations in order to build loyalty and generate repeat business. The Company strives to hire enthusiastic sales personnel with an interest in sports and provides them with extensive training to create a sales staff with strong product knowledge, dedicated to customer service. The Company also offers services such as special order programs, monogramming, sewing and screening services and large order processing for local groups in an effort to further maximize customer satisfaction. Training. The Company provides continuing sales and technical/product training for its sales personnel. A key part of the training process is its testing program. All store personnel are required to take a written test and perform role playing exercises before moving on to a higher sales position and ultimately advancing within the organization. The Company utilizes a number of training tools to 27 develop competent salespeople and future managers, including: (i) a two-part salesperson training program designed to teach new hires and seasoned employees how to be effective salespeople; (ii) a continuing product/technical training program taught through in-store clinics, instructional manuals or video presentations designed to educate the sales personnel on technical facets and the use of a particular product; and (iii) store training meetings designed to educate all salespeople at the store level as a group on a particular topic. STORE OPERATIONS Effective interaction between the corporate office and the stores is a key element of Hibbett's operating strategy. Close communications are maintained among senior management, district managers, store managers and sales personnel. Senior management is easily accessible to store managers and staff. In addition, the close proximity of the stores encourages regular visits by the district managers to address store issues and concerns, to provide encouragement and to discuss national, regional and local trends in the sporting goods sector. Senior management conducts monthly meetings at the Company's corporate headquarters with all of the district managers. The outcome of these meetings is communicated to the store base by the district managers on a regular basis as well as in similar all-day sessions with the store managers. These meetings facilitate constant two-way communication between headquarters and the store base. The Company's management structure consists of one district manager for approximately every ten stores and at the store level, on average, one store manager, two assistant store managers and five or six sales personnel including trainees. Additional trainees and part-time personnel are typically hired to assist the store personnel with increased traffic and sales volume in the fourth quarter. Store managers are responsible for the operations of individual stores including recruiting and hiring store personnel. The Company strongly favors internal development of its store managers and constantly looks for motivated and talented people to promote from within. DISTRIBUTION The Company maintains a single 130,000 square foot distribution center in Birmingham, Alabama for all 79 of its existing stores and manages the distribution process centrally from its corporate headquarters which are located in the same building as the distribution center. In January 1996 the Company moved its operations to this newly constructed distribution center which is capable of servicing in excess of 150 Hibbett Sports stores and has significant expansion potential to support the Company's growth for the foreseeable future. The Company believes strong distribution support for its stores is a critical element of its expansion strategy and is central to its ability to maintain a low cost operating structure. As the Company continues its expansion, it intends to open new stores in locations that can be supplied from the Company's distribution center. The Company receives substantially all of its merchandise at its distribution center. Upon receipt, the merchandise is inspected, entered into the Company's computer system, allocated to stores, ticketed (to the extent that it was not pre-ticketed by the vendor) and boxed for distribution to the Company's stores. For more efficient processing, the Company also operates a "cross-dock" system for merchandise that has been pre-split by store and pre-ticketed by the vendor before arriving at the distribution center. The Company continually strives to improve its allocation methods to manage its inventory more efficiently. For key products, the Company maintains backstock at the distribution center that is allocated and distributed to stores through an automatic replenishment program based on items sold during the prior week. Merchandise is typically delivered to stores weekly via Company-operated vehicles. MANAGEMENT INFORMATION SYSTEMS The Company utilizes integrated information systems centralized at the corporate level. The Company's systems are designed to track product movement throughout the store base. Detailed sales 28 transaction records are accumulated on each store's POS system and polled nightly by the Company's main system which runs on an IBM AS/400 system. This information is communicated to the merchandise buyers, who use the Company's inventory control system to order merchandise as needed. The Company recently upgraded its systems to manage a store base in excess of 150 stores. Inventory. The Company's inventory control systems, written by Island Pacific Software, report purchasing, receiving, shipping, sales and individual SKU level inventory stocking information. Information from the Company's point-of-sale computer system is regularly reviewed and analyzed by the purchasing staff to assist in making merchandise allocation and markdown decisions. The Company uses an automatic reorder system to maintain in-stock positions on key items. This system provides management with the information needed to determine the proper timing and quantity of reorders. Through the Island Pacific Software package, the Company is able to accommodate different retail prices for the same item at different stores and as a result to price merchandise competitively by market. EDI and Quick-Ship. Current electronic data interchange capabilities include the transmission of purchase orders directly to some of the Company's vendors. The Company has recently implemented EDI on its IBM AS/400 system. This allows for the scheduling of EDI transmissions and receiving as well as the required processes before and after communications. Management believes the Company's EDI effort with vendors will continue to grow in the future as retailers and suppliers focus on further increasing operating efficiencies. Financial Reporting. The financial reporting systems provide the Company with detailed financial reporting to support management's operational decisions and cost control efforts. All accounting, accounts payable, accounts receivable, payroll and human resources software is written and maintained by Lawson Software, Inc. and resides on the Company's IBM AS/400 system. This system provides functions such as scheduling of payments, receiving of payments, general ledger interface, vendor tracking, and flexible reporting options. TEAM SALES Hibbett Team Sales, Inc. ("Team Sales"), a wholly-owned subsidiary of the Company, is a leading supplier of customized athletic apparel, equipment and footwear to school, athletic and youth programs in Alabama. Team Sales sells its merchandise directly to educational institutions and youth associations. The operations of Team Sales are independent of the operations of the Company's stores, and its warehousing and distribution are managed separately out of its own warehouse. The Company believes that Team Sales' operations generate goodwill in the community and introduce young sports enthusiasts to Hibbett as a supplier of sporting goods. Although Team Sales represents a small percentage of the Company's sales and profits, management believes that through the operation of Team Sales the Company is able to enhance many of its vendor relationships. PROPERTIES The Company currently leases all of its existing 79 store locations and expects that its policy of leasing rather than owning will continue as it expands. The Company's leases typically provide for a short initial lease term with options on the part of the Company to extend. Management believes that this lease strategy enhances the Company's flexibility to pursue various expansion opportunities resulting from changing market conditions and to periodically re-evaluate store locations. The Company's ability to open new stores is contingent upon locating satisfactory sites, negotiating favorable leases and recruiting and training additional qualified management personnel. As current leases expire, the Company believes that it will be able either to obtain lease renewals if desired for present store locations or to obtain leases for equivalent or better locations in the same general area. To date, the Company has not experienced difficulty in either renewing leases for existing locations or securing leases for suitable locations for new stores. A majority of the Company's store leases contain provisions that would permit the landlord to terminate the lease or to increase rent upon a 29 change in control of the Company. The Recapitalization constituted a change in control that triggered these rights for a majority of the Company's landlords as of November 1, 1995, the date of the consummation of the Recapitalization. Many of such leases also require the Company to give notice of any change in control. No notice was given to landlords prior to the Recapitalization. As of September 10, 1996, the Company has not received any notice regarding any landlord's intention to either terminate a lease or to increase rent as a result of the Recapitalization. In addition, many of the Company's leases contain certain provisions with which the Company may not be in compliance. Based primarily on the Company's belief that it maintains good relations with its landlords, that most of its leases are at market rents and that it has historically been able to secure leases for suitable locations, management believes that these provisions will not have a material adverse effect on the business or financial condition of the Company. The Company moved its operations to the newly-built corporate offices and distribution center in Birmingham, Alabama in January 1996. The offices and the distribution center are leased by the Company under a long term operating lease. Team Sales owns its warehousing and distribution center located in Birmingham, Alabama. COMPETITION The business in which the Company is engaged is highly competitive and many of the items sold by the Company are sold by local sporting goods stores, department and discount stores, athletic footwear and other specialty athletic stores, traditional shoe stores and national and regional full-line sporting goods stores. Many of the stores with which the Company competes are units of national chains that have substantially greater financial and other resources than the Company. Although several of those competitors, such as Foot Locker or Foot Action, are already present in most of Hibbett Sports' mall locations, the Company believes that its Hibbett Sports format is able to compete effectively by distinguishing itself as a full-line sporting goods store with an emphasis on team and individual sports merchandise complemented by a selection of localized apparel and accessories. The Company's Sports & Co. superstores compete with sporting goods superstores, athletic footwear superstores and mass merchandisers. The Company believes the principal competitive factors in its markets are service, breadth of merchandise offered, availability of brand names, availability of local merchandise and price. The Company believes it competes favorably with respect to these factors in the small to mid-sized markets in the Southeast. However, there can be no assurance that the Company will continue to be able to compete successfully against existing or future competitors. Expansion by the Company into markets served by its competitors, entry of new competitors or expansion of existing competitors into the Company's markets, could have a material adverse effect on the Company's business, financial condition and results of operations. EMPLOYEES The Company employed approximately 380 full-time and approximately 610 part-time employees at August 3, 1996, none of whom are represented by a labor union. The number of part-time employees fluctuates depending on seasonal needs. There can be no assurance that the Company's employees will not, in the future, elect to be represented by a union. The Company considers its relationship with its employees to be good and has not experienced significant interruptions of operations due to labor disagreements. LEGAL PROCEEDINGS The Company is a party to various legal proceedings incidental to its business. In the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect the business, financial position or results of operations of the Company. 30 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The executive officers and directors of the Company and their ages as of August 3, 1996 are as follows:
NAME AGE POSITION - ------------------------------------------ --- ------------------------------------------ Michael J. Newsome........................ President; Chief Operating Officer; 57 Director Susan H. Fitzgibbon....................... 32 Chief Financial Officer Joy A. McCord............................. 41 Vice President of Merchandising Cathy E. Pryor............................ 33 Vice President of Store Operations John F. Megrue............................ 38 Chairman of the Board; Director Clyde B. Anderson......................... 36 Director Barry H. Feinberg......................... 51 Director F. Barron Fletcher, III................... 29 Director Thomas A. Saunders, III................... 60 Director
Michael J. Newsome has been the President and the Chief Operating Officer of the Company since 1981. Since joining the Company as an outside salesman over 30 years ago, Mr. Newsome has held numerous positions at Hibbett, including as retail clerk, outside salesman to schools, store manager, district manager, division manager and president. Prior to joining the Company, Mr. Newsome worked in the sporting goods retail business for six years. Susan H. Fitzgibbon has been the Chief Financial Officer of the Company since April 1996. Prior to joining the Company, she held various financial positions at Bruno's Inc., a supermarket store operator, from December 1992 through April 1996, serving most recently as Controller. Prior to Bruno's Inc., Ms. Fitzgibbon spent six years at Arthur Andersen LLP during which she worked extensively with retailing clients. Joy A. McCord has been the Vice President of Merchandising at the Company since 1995. Ms. McCord is responsible for buying, advertising and inventory control. Ms. McCord has been with the Company for nine years. During that time, she has held positions as sporting goods buyer for four years and general merchandise manager for five years. Prior to joining the Company, she worked as a department manager at Loveman's department stores for two years and merchandise buyer at Parisian department stores for eight years. Ms. McCord has over 19 years of experience in the retailing industry. Cathy E. Pryor has been the Vice President of Store Operations at the Company since 1995. Her responsibilities include overseeing all of the stores, directing district managers, organizing training and overseeing management information systems. Ms. Pryor has been with the Company for eight years. During that time, she has held positions as a district manager and Director of Store Operations. Prior to joining the Company, she worked at Champs as a district manager. Ms. Pryor has over eleven years of experience in the sporting goods retail business. John F. Megrue has been a Director and Chairman of the Board of the Company since 1995. Mr. Megrue has been a partner of SKM Partners, L.P., which serves as the general partner of Saunders Karp & Megrue, L.P., a private equity investment firm, and each of the Funds, since 1992. From 1989 to 1992, Mr. Megrue served as a Vice President and Principal at Patricof & Co., a private equity investment firm, and prior thereto he served as a Vice President at C.M. Diker Associates, a private equity investment firm. Mr. Megrue is also a Vice Chairman and director of Dollar Tree Stores, Inc. 31 Clyde B. Anderson has been a Director of the Company since 1987. Mr. Anderson has served as the Chief Executive Officer of Books-A-Million, Inc., a book retailer, since July 1992 and as director and President of Books-A-Million, Inc. since November 1987. Barry H. Feinberg has been a Director of the Company since 1996. Mr. Feinberg has been an advisor to Saunders Karp & Megrue, L.P. since 1994. He is a founding partner of Kaiser, Feinberg & Associates, a marketing consulting firm, specializing in multi-market retail organizations. From 1974 until 1991, he was with Silo, Inc., a national consumer electronics retailer, where he served as President and CEO from 1978 to 1991. Mr. Feinberg currently teaches courses in retailing and retail marketing at the Wharton School at the University of Pennsylvania. He also serves as a director of Deb Shops, Inc. F. Barron Fletcher, III has been a Director of the Company since 1995. Mr. Fletcher joined Saunders Karp & Megrue, L.P. as an associate in 1992 and is currently a principal. Prior to joining Saunders Karp & Megrue, L.P., from 1991 through 1992, Mr. Fletcher was a financial analyst with Wasserstein Perella & Co. where he served in the merchant banking department and also in mergers and acquisitions. Prior to that, Mr. Fletcher was a financial analyst with Trammell Crow Ventures which specialized in leveraged acquisitions and divestitures in the real estate industry. Thomas A. Saunders, III, has been a Director of the Company since 1995. Mr. Saunders has been a partner of SKM Partners, L.P., which serves as the general partner of Saunders Karp & Megrue, L.P. and each of the Funds, since 1990. Before founding Saunders Karp & Megrue, L.P., Mr. Saunders served as a Managing Director of Morgan Stanley & Co. Incorporated from 1974 to 1989 and as Chairman of The Morgan Stanley Leveraged Equity Fund II, L.P., from 1987 to 1989. Mr. Saunders is a member of the Board of Visitors of the Virginia Military Institute and is the Chairman of the Board of Trustees of the University of Virginia's Darden Graduate School of Business Administration. Mr. Saunders is also a Trustee of the Cold Spring Harbor Laboratory and a director of Dollar Tree Stores, Inc. Prior to the closing of the Offering, the Company's Certificate of Incorporation will provide that the number of directors constituting the Board of Directors shall be such number, not more than nine or less than six, as is established from time to time by resolution of the Board of Directors pursuant to the Bylaws. The Board of Directors currently consists of six directors who, prior to the closing of the Offering, will be divided into three classes of two directors, designated Class I, Class II and Class III. Messrs. Feinberg and Fletcher will be designated as Class I directors, Messrs. Newsome and Saunders will be designated as Class II directors and Messrs. Anderson and Megrue will be designated as Class III directors. The initial Class I directors will serve until the annual shareholder meeting in 1997, the initial Class II directors will serve until the annual shareholder meeting in 1998 and the initial Class III directors will serve until the annual shareholder meeting in 1999. All of the current members of the Board of Directors were elected pursuant to the Stockholders Agreement. See "Certain Transactions--Stockholders Agreement." It will be necessary for the Company to have two independent directors within 90 days after the date of this Prospectus in order to maintain its Nasdaq National Market listing. Failure to have such directors within such period could result in a delisting of the Common Stock from the Nasdaq National Market. The Company's Board of Directors intends to establish an audit committee (the "Audit Committee") and a compensation committee (the "Compensation Committee"). The Audit Committee will recommend the annual engagement of the Company's auditors, with whom the Audit Committee will review the scope of audit and non-audit assignments, related fees, the accounting principles used by the Company in financial reporting and the adequacy of the Company's internal control procedures. The Compensation Committee will determine officers' salaries and bonuses, and will administer the Company's stock plans. The two new independent directors will be appointed to the Audit and Compensation 32 Committees at the time they are elected to the Board of Directors of the Company. Further, the approval of disinterested directors will be required for any material agreements or arrangements between the Company and directors, officers, existing principal shareholders and their affiliates. The Company intends to establish an executive committee and Clyde B. Anderson will be appointed the chairman thereof. See "Certain Transactions--Advisory Agreements." DIRECTOR COMPENSATION During fiscal 1996, Clyde B. Anderson was paid $45,000 for his services as a director. Following the completion of the Offering, pursuant to the Bylaws, each non-employee director will be entitled to an annual fee of $10,000 plus $500 for each meeting, which fee may be waived by that director. All directors currently in office intend to waive their fees. EXECUTIVE COMPENSATION The following table sets forth the compensation earned by the President and each other executive officer whose compensation for services rendered in fiscal 1996 exceeded $100,000.
SUMMARY COMPENSATION TABLE - --------------------------------------------------------------------------------------------------------------------- LONG-TERM COMPENSATION -------------------------------- AWARDS ---------------------- ANNUAL COMPENSATION SECURITIES PAYOUTS ------------------------------------------- RESTRICTED UNDERLYING ------- ALL OTHER NAME AND PRINCIPAL OTHER STOCK OPTIONS LTIP COMPENSA- POSITION YEAR(1) SALARY BONUS COMPENSATION AWARDS /SARS (2) PAYOUTS TION (3) - ------------------------- ------- -------- ------- ------------ ---------- --------- ------- --------- Michael J. Newsome, President, Chief Operating Officer and Director................. 1996 $112,692 $96,705 -- -- 40,983 -- $ 6,750 Cathy E. Pryor, Vice President of Store Operations............... 1996 $ 75,654 $31,894 -- -- 12,684 -- $ 4,291
- ------------ (1) Hibbett's fiscal year ends on the Saturday nearest to January 31 of each year. (2) Consists of stock options granted pursuant to the Hibbett Sporting Goods, Inc. Stock Option Plan. (3) Consists of contributions by the Company under the Hibbett Sporting Goods, Inc. 401(k) Profit Sharing Plan. STOCK OPTION PLANS The Company's shareholders approved and adopted the Hibbett Sporting Goods, Inc. Stock Option Plan (as amended from time to time, the "Original Plan") as of August 25, 1995, in order to provide selected officers and employees of the Company who are responsible for the conduct and management of its business with equity-based incentives in connection with the performance of their duties and responsibilities with the Company. Under the Original Plan, 66,352 shares of Common Stock are reserved for issuance. Options on all of these shares have been granted and the Company's Board of Directors has discontinued future grants of stock options under the Original Plan. As of April 1, 1996, the Company's shareholders approved and adopted the Hibbett Sporting Goods, Inc. 1996 Stock Option Plan (as amended from time to time, the "1996 Plan") under which future grants of stock options under the Company's stock option program will be made. Under the 1996 Plan, 238,566 shares of Common Stock have been reserved for issuance. The Original Plan and the 1996 Plan (collectively, the "Plans") provide for the grant of stock options, which may be non-qualified stock options or incentive stock options for tax purposes. Following the completion of the Offering, the Plans will be administered by a Compensation Committee consisting of members of the Company's Board of Directors who are "non-employee directors" within the meaning 33 set forth in Rule 16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, as amended. Under the Plans, all full-time employees selected by the Compensation Committee will be eligible to receive options. The Compensation Committee is authorized to determine the terms and conditions of all option grants, subject to the limitations that the option price per share under the Plans may not be less than the fair market value of a share of Common Stock on the date of grant and the term of an option may not be longer than ten years. Payment of the option price may be made in the discretion of the Compensation Committee in cash or common stock or a combination thereof. Options granted under the Plans are not transferable except by will or the laws of descent and distribution, and are exercisable during the optionee's life only by the optionee. In the event of a change in control (as defined in the Plans), the Compensation Committee may take any action it deems appropriate with respect to outstanding options. The Plans may be amended or terminated by the Compensation Committee from time to time to the extent deemed appropriate; provided however that no amendment shall be made (i) which would impair the rights of an optionee without such optionee's consent or (ii) in the case of the Original Plan, which would increase the number of shares reserved for issuance under such Plan or change the class of employee eligible to participate in such Plan absent shareholder approval. Options to purchase a total of 66,352 shares of Common Stock have been granted under the Original Plan to six employees of the Company, including a grant to Mr. Newsome of an option to purchase 40,983 shares of Common Stock and a grant to Ms. Pryor of an option to purchase 12,684 shares of Common Stock. Ms. Pryor's options granted under the Original Plan vest over a three year period in equal installments beginning on the first anniversary of the grant date. Mr. Newsome's options vest over five years in equal installments beginning on the first anniversary of the grant date. On April 1, 1996 options to purchase a total of 45,409 shares of Common Stock were granted under the 1996 Plan to 36 employees, including a grant to Ms. Pryor of an option to purchase 10,655 shares of Common Stock. Effective upon consummation of the Offering, grants of options to purchase a total of 32,787 shares of Common Stock at a price equal to the public offering price will be made under the 1996 Plan to four employees, including Mr. Newsome and Ms. Pryor. Mr. Newsome and Ms. Pryor will be granted options to purchase 11,475 and 8,197 shares of Common Stock, respectively. Options granted under the 1996 Plan vest over a five year period, in equal installments, beginning on the first anniversary of the grant date. STOCK PLAN FOR OUTSIDE DIRECTORS The Company's Board of Directors has adopted, and the Company's shareholders have approved the Outside Director Stock Plan, which plan shall become effective upon consummation of the Offering. The Outside Director Stock Plan provides for awards of nonqualified options to directors of the Company who are not employees of the Company, Saunders Karp & Megrue, L.P. or any affiliate of either of them ("Eligible Directors"). The purpose of the Outside Director Stock Plan is to promote the interests of the Company and its shareholders by increasing the proprietary interest of Eligible Directors in the growth and performance of the Company. Pursuant to the Outside Director Stock Plan, on the closing date (the "Effective Date") of the Offering each Eligible Director will be granted an option to purchase 5,000 shares of Common Stock and each Eligible Director elected following the Effective Date will be granted an option to purchase 5,000 shares of Common Stock upon his initial election to the Board. On the last day of each fiscal year of the Company (beginning with the fiscal year commencing on a date following the Offering), each Eligible Director shall be granted an additional option for 2,500 shares of Common Stock; provided that any person elected as an Eligible Director during a fiscal year will be granted an option for a prorated portion of 2,500 shares on the last day of the fiscal year during which such person was elected. Each 34 option will: (i) vest immediately; and (ii) expire on the earlier of the tenth anniversary of the grant date or one year from the date on which an optionee ceases to be an Eligible Director. The exercise price per share of Common Stock will be 100% of the fair market value per share on the grant date. The maximum number of shares of Common Stock in respect of which options may be granted under the Outside Director Stock Plan is 50,000. Shares of Common Stock subject to options that are forfeited, terminated or canceled will again be available for awards. The shares of Common Stock to be delivered under the Outside Director Stock Plan will be made available from the authorized but unissued shares of Common Stock or from treasury shares. The number and class of shares available under the Outside Director Plan and/or subject to outstanding options may be adjusted by the Board of Directors to prevent dilution or enlargement of rights in the event of various changes in the capitalization of the Company. The Outside Director Stock Plan will be administered by the Board of Directors. Subject to the provisions of the Outside Director Stock Plan, the Board shall be authorized to interpret the Outside Director Stock Plan, to establish, amend, and rescind any rules and regulations relating to it and to make all other determinations necessary or advisable for its administration; provided, however, that the Board will have no discretion with respect to the selection of directors to receive options, the number of shares of Common Stock subject to any such options, the purchase price thereunder or the timing or term of grants of options. The determinations of the Board in the administration of the Outside Director Stock Plan will be final and conclusive. The validity, construction and effect of the Outside Director Stock Plan and any rules and regulations relating to it will be determined in accordance with the laws of the State of Delaware. The options granted under the Outside Director Stock Plan may not be assigned or transferred, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order. No option may be granted under the Outside Director Stock Plan after the tenth annual meeting of the Company's shareholders following the consummation of the Offering unless the plan is extended by the shareholders. The Outside Director Stock Plan may be amended by the Company's Board of Directors, as it shall deem advisable or to conform to any change in any law or regulation applicable thereto; provided that the Company's Board of Directors may not, except in the limited circumstances described above, without the authorization and approval of shareholders: (i) increase the number of shares of Common Stock which may be purchased pursuant to options, either individually or in the aggregate; (ii) change the requirement that option grants be priced at fair market value; or (iii) modify in any respect the class of individuals who constitute Eligible Directors. EMPLOYEE STOCK PURCHASE PLAN The Company's Board of Directors has adopted and the Company's shareholders have approved the Hibbett Sporting Goods, Inc. Employee Stock Purchase Plan (the "Employee Stock Purchase Plan"). Under the Employee Stock Purchase Plan, a maximum of 75,000 shares of Common Stock may be purchased from the Company by the employees through payroll withholding pursuant to a series of quarterly offerings following the consummation of the Offering. The Employee Stock Purchase Plan is established pursuant to the provisions of Section 423 of the Code. All full-time employees who have completed one year of service, except for employees who own Common Stock of the Company or options on such stock which represent more than 5% of the Common Stock of the Company, are eligible to participate. The Employee Stock Purchase Plan will be administered by a committee of the Board of Directors (the "Committee"). The Committee shall have discretion to administer, interpret and construe any and all provisions of the Employee Stock Purchase Plan. The Committee's determinations will be conclusive. In the event of certain corporate transactions or events affecting the Common Stock or structure of the Company, the Committee may make certain adjustments set forth in the Employee 35 Stock Purchase Plan. The Board may amend, alter or terminate the Plan at any time; provided that shareholder approval must generally be obtained for any change that would require shareholder approval under any regulatory or tax requirement that the Board deems desirable to comply with or obtain relief under and subject to the requirement that no rights under an outstanding option may be impaired by such action without the consent of the holder thereof. The purchase price of the Common Stock will be 85% of the fair market value of the Common Stock on the date of the offering commencement or termination, whichever is lower. The Shares of Common Stock which may be purchased pursuant to the Employee Stock Purchase Plan will be made available from authorized but unissued shares of Common Stock or from treasury shares. No employee will be granted any right to purchase Common Stock with a value in excess of $25,000 per year. OPTION/SAR GRANTS IN LAST FISCAL YEAR The following table sets forth certain information concerning grants of stock options made to the executive officers named in the Summary Compensation Table during the fiscal year ended February 3, 1996.
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION INDIVIDUAL GRANTS FOR OPTION TERM -------------------------------------------------------- -------------------- NUMBER OF % OF TOTAL SECURITIES OPTIONS/SARS EXERCISE UNDERLYING GRANTED TO OR BASE OPTIONS/SARS EMPLOYEES PRICE EXPIRATION NAME GRANTED IN FISCAL YEAR ($/SH) DATE 5% (3) 10% (3) - --------------------------- ------------ -------------- -------- ---------- -------- -------- Michael J. Newsome......... 40,983(1) 61.77% 6.10 11/01/05 $157,224 $398,436 Cathy E. Pryor............. 12,684(2) 19.12% 1.89 8/25/01 $ 8,153 $ 18,497
- ------------ (1) These options have a term of ten years and vest over a five year period, in equal installments beginning on the first anniversary of the grant date. These options were granted as of November 1, 1995 under the Original Plan pursuant to the terms of the Employment Agreement. See "--Employment Agreement." (2) These options have a term of six years and vest over a three year period, in equal installments beginning on the first anniversary of the grant date. (3) The dollar amounts shown are based on certain assumed rates of appreciation and the assumption that the options will not be exercised until the end of the expiration periods applicable to the options. Actual realizable values, if any, on stock option exercises and common stock holdings are dependent on the future performance of the Common Stock. There can be no assurance that the assumed rates of appreciation will be achieved. 36 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES No options were exercised by the executive officers named in the Summary Compensation Table during fiscal 1996. No stock appreciation rights were exercised by such executive officers or were outstanding at the end of the year. The following table sets forth certain information concerning unexercised options and fiscal year-end option values for the named executive officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS OPTIONS/SARS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($) NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1) - ---------------------------------------------- ------------------------- ----------------------------- Michael J. Newsome............................ 0/40,983 0/0 Cathy E. Pryor................................ 0/12,684 0/53,388
- ------------ (1) Based on the fair market value of the Company's Common Stock at the end of fiscal 1996 ($6.10 per share), as determined by the Company's Board of Directors less the exercise price payable for such shares. EMPLOYMENT AGREEMENT Michael J. Newsome, President and Chief Operating Officer of the Company, has entered into an employment agreement with the Company and a letter agreement with the Board of Directors of the Company (collectively, the "Employment Agreement") which took effect on November 1, 1995. The Employment Agreement has an initial term that expires on November 1, 1998 and provides for annual base salary and annual incentive bonuses and the grant of the options set forth above. If the Company terminates Mr. Newsome's employment without cause, as defined in the Employment Agreement (other than by reason of death or disability), or Mr. Newsome terminates his employment for good reason, as defined in the Employment Agreement, the Employment Agreement provides that Mr. Newsome will continue to receive his base salary and certain benefits for what would have been the remainder of the employment term determined without regard to such termination. Notwithstanding the foregoing, such payments will cease if Mr. Newsome breaches the noncompetition clause, described below. If the Company terminates Mr. Newsome's employment without cause or Mr. Newsome terminates his employment with good reason, the Company will have the right to purchase and Mr. Newsome will have the right to sell the shares of Common Stock held by him on October 31, 1995 at a price equal to the fair market value, as determined by the Compensation Committee of the Board of Directors. If the Company terminates Mr. Newsome's employment for cause or Mr. Newsome terminates his employment for any reason other than good reason, the Employment Agreement provides that the Company will have a right to repurchase such shares at book value, as defined in the Employment Agreement. The Employment Agreement includes a noncompetition clause requiring Mr. Newsome not to compete with the Company following a termination of his employment for a period which may be as long as the longer of (i) two years after ceasing to be employed and (ii) what would have been the remaining term of employment without regard to such termination of employment. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Board of Directors does not currently have a compensation committee, but anticipates establishing one within 90 days of the closing of the Offering. The functions of the compensation committee other than administration of the Plans, as discussed above, are currently performed by the Board of Directors of the Company. Mr. Newsome, the President of the Company, serves on the Board of Directors and on the committee established to administer the Plans prior to establishment of the compensation committee. 37 PRINCIPAL SHAREHOLDERS The following table sets forth certain information concerning the beneficial ownership of the Common Stock as of August 3, 1996 and as adjusted to reflect the sale of 2,000,000 shares of Common Stock offered hereby by (i) each person (or group within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) known by the Company to own beneficially more than five percent of the Company's Common Stock, (ii) each of the executive officers named in the Summary Compensation Table, (iii) each director and (iv) all directors and executive officers as a group:
PRIOR TO OFFERING AFTER OFFERING ----------------------------- ----------------------------- COMMON STOCK COMMON STOCK NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED PERCENT BENEFICIALLY OWNED PERCENT - --------------------------------------------- ------------------ ------- ------------------ ------- The SK Equity Fund, L.P.(2) SK Investment Fund, L.P.(2) Allan Karp(2) John F. Megrue(2) Thomas A. Saunders, III(2) Two Greenwich Plaza Suite 100 Greenwich, CT 06830........................ 2,886,721 74% 2,886,721 49% Clyde B. Anderson(3) 402 Industrial Lane Birmingham, AL 35211....................... 338,844 9% 338,844 6% Michael J. Newsome(4) 451 Industrial Lane Birmingham, AL 35211....................... 122,950 3% 122,950 2% All Directors and Executive Officers as a group(3)(5).................................. 3,354,857 86% 3,354,857 57%
- ------------ (1) As used in this table "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. A person is deemed as of any date to have "beneficial ownership" of any security that such person has a right to acquire within 60 days and such security is deemed to be outstanding for purposes of calculating the ownership percentage of such person, but is not deemed to be outstanding for purposes of calculating the ownership percentage of any other person. (2) Includes 2,855,484 shares owned by The SK Equity Fund, L.P. and 31,237 shares owned by SK Investment Fund, L.P. SKM Partners, L.P. is the general partner of each of The SK Equity Fund, L.P. and SK Investment Fund, L.P. Messrs. Karp, Megrue and Saunders are general partners of SKM Partners, L.P., and, therefore, may be deemed to have beneficial ownership of the shares shown as being owned by the Funds above. Messrs. Karp, Megrue and Saunders disclaim beneficial ownership of such shares, except to the extent that any of them has a limited partnership interest in SK Investment Fund, L.P. (3) Includes 35,885 shares owned by various trusts for the benefit of Mr. Anderson's children in respect of which Mr. Anderson's wife is the trustee and 70,820 shares issuable upon the exercise of options granted on August 1, 1996. See "Certain Transactions--Advisory Agreements." (4) Mr. Newsome retains voting power with respect to 16,393 shares held by his relatives. All 122,950 shares owned by Mr. Newsome and his relatives are subject to call by the Company at "book value" or "fair market value" if Mr. Newsome's employment is terminated under certain circumstances set forth in the Employment Agreement. See "Management--Employment Agreement." (5) Includes shares held by the Funds as a result of affiliations described in note (2) above and options to purchase 6,342 shares held by the executive officers, which will become exercisable within 60 days. 38 Prior to the consummation of the Offering, the Anderson Shareholders collectively own approximately 22% of the Company's Common Stock, including the Common Stock shown as being owned by Clyde B. Anderson in the table above. After the consummation of the Offering, the Anderson Shareholders will collectively own approximately 14% of the Company's Common Stock. The Anderson Shareholders have agreed that, for a period of 180 days from the date of this Prospectus, they will not, without the prior written consent of Smith Barney Inc. offer, sell, grant any option to purchase or otherwise dispose of the Company's Common Stock or any securities convertible into or exchangeable for such Common Stock. CERTAIN TRANSACTIONS The Company believes that the terms of each transaction described below are comparable to, or more favorable to the Company than, the terms that would have been obtained in an arms' length transaction with an unaffiliated party. Transactions Related to the Recapitalization Prior to November 1, 1995, all of the issued and outstanding common stock of the Company was owned by Charles C. Anderson, Sr., Joel R. Anderson, Charles C. Anderson, Jr., Terry C. Anderson, Clyde B. Anderson, Harold M. Anderson, certain Anderson family trusts and certain other persons (the "Anderson Shareholders") and by Michael J. Newsome. Pursuant to the terms of a stock purchase and redemption agreement dated November 1, 1995 (the "Stock Purchase Agreement"), The SK Equity Fund, L.P. (the "Equity Fund") and SK Investment Fund, L.P. (the "Investment Fund" and, together with the "Equity Fund", the "Funds") agreed to acquire from the Company for $24,250,000 in cash, and the Company agreed to issue and sell (i) to the Funds: (x) 17,609,000 (on a pre-split basis) shares of Common Stock and (y) $4,574,000 aggregate principal amount of its 12% Subordinated Notes due November 1, 2002 (the "Subordinated Notes"), and (ii) to the Equity Fund $2,500,000 in the aggregate principal amount of its 12% Senior Subordinated Note due November 2, 2000 (the "Senior Subordinated Notes") (collectively, the "Acquisition"). In addition, pursuant to the terms of the Stock Purchase Agreement, the Company agreed, upon the consummation of the Acquisition, to redeem from the Anderson Shareholders 34,220,000 (on a pre-split basis) shares of Common Stock (the "Redemption") in exchange for: (i) $22,250,000 in cash, (ii) $1,625,000 aggregate principal amount of the Senior Subordinated Notes and (iii) $11,426,000 aggregate principal amount of the Subordinated Notes. Thus, upon the consummation of the Acquisition and the Redemption, the Funds and the Anderson Shareholders owned 17,609,000 and 5,030,000 (on a pre-split basis) shares of Common Stock, respectively, or approximately 75.3% and 21.5% of the outstanding Common Stock, respectively. The remaining 750,000 (on a pre-split basis) shares of Common Stock were held by Mr. Newsome. In February, 1996 the Company repaid in full all the amounts outstanding under the Senior Subordinated Notes. The Subordinated Notes were issued by the Company at a discount, with a yield to maturity compounded annually of 14.92%. Pursuant to the terms of the Subordinated Notes, payment of interest accrued thereon during the first year of the term thereof is deferred until November 1, 1996. The Company is permitted to redeem the Subordinated Notes at their face value plus the interest accrued thereon until the day of redemption out of the proceeds from a public offering of its stock. The Subordinated Notes bear interest at the rate of 12% per annum and mature on November 1, 2002. The Company intends to redeem the Subordinated Notes out of the proceeds of the Offering. Prior to November 1, 1995, in consideration for his assistance in arranging the Recapitalization, the Company issued to Clyde B. Anderson 322,419 (on a pre-split basis) shares of Common Stock which at the time of issuance had the aggregate value of $322,419. 39 Stockholders Agreement In connection with the Acquisition and the Redemption, the Company, the Anderson Shareholders, Mr. Newsome and the Funds entered into a stockholders agreement dated as of November 1, 1995, as amended (the "Stockholders Agreement"). Except for provisions relating to indemnification and contribution, the Stockholders Agreement will terminate when the number of shares of Common Stock held by the Anderson Shareholders falls below 323,688. The Company anticipates that immediately following the consummation of the Offering the Anderson Shareholders will hold 647,377 shares of Common Stock. The Stockholders Agreement specifies the number of members of the Board of Directors of the Company as not more than nine and not less than six persons as well as the right of the Funds to nominate the majority of such members and the right of the Anderson Shareholders to nominate one such member. Such directors can only be removed for cause or if persons entitled to designate such directors consents to removal in writing. Actions of the Board require either (i) the affirmative vote of a majority of the directors at a duly convened meeting of the Board at which a quorum, of whom the majority must be designees of the Funds (other than the independent directors), is present or (ii) the unanimous written consent of the Board. Certain actions including an amendment to the Company's Articles of Incorporation or Bylaws, a sudden and material change in the Company's line of business, certain related party transactions and a change in the Company's auditors prior to the completion of the fiscal 1997 audit, require the affirmative vote of the Board, with the director designated by the Anderson Shareholders voting in the affirmative. Subject to certain exceptions, including the public offering of Common Stock, the Stockholders Agreement currently provides preemptive rights to each of the Funds, the Anderson Shareholders and Mr. Newsome to purchase their respective pro rata portions of any newly issued stock of the Company or any newly issued securities convertible, exchangeable or exercisable into the Company's stock. The Stockholders Agreement grants the Anderson Shareholders and Mr. Newsome "tag along" rights to participate in a private sale of shares of Common Stock by the Funds to a third party. In addition, the Stockholders Agreement grants the Funds certain "drag along rights" to compel the Anderson Shareholders and Mr. Newsome to participate in a private sale of all the shares of Common Stock owned by the Funds to a third party. The Stockholders Agreement also grants to the Funds unlimited demand registration rights and to the Anderson Shareholders, holding the majority of the total number of shares of Common Stock held by the Anderson Shareholders, one demand registration right that becomes exercisable 270 days after the closing of the Offering. The Company, notwithstanding these demand registration rights, shall not be obligated to effect more than one demand registration in any six-month period. The Stockholders Agreement also grants the Funds, the Anderson Shareholders and Mr. Newsome "piggy back" registration rights, subject to certain limitations, if the Company proposes to register its Common Stock. Clyde B. Anderson is entitled to "tag along," "piggy back" and demand registration rights, and is subject to "drag along rights" of the Funds, in respect of 70,820 shares of Common Stock issuable upon the exercise of the stock options granted to him on August 1, 1996. See "--Advisory Agreements." The Company is obligated to pay all reasonable fees, costs and expenses in connection with any demand or "piggy back" registration other than underwriting discounts or commissions. The Stockholders Agreement contains customary indemnity provisions between the Company and the selling shareholders for losses arising out of any demand or "piggy back" registration. 40 Advisory Agreements Prior to June 1, 1995, the Company contracted with ANCO Management Services, Inc. ("ANCO"), an affiliated entity of the Anderson Shareholders, to obtain certain financial advisory and administrative services. From June to November 1, 1995, following the liquidation of ANCO, the Company contracted for substantially similar services with Anderson & Anderson, LLC, another affiliated entity of the Anderson Shareholders. Fees for those services amounted to $227,000, $256,000 and $95,000 in fiscal 1994, 1995 and 1996, respectively. On November 1, 1995, the Company entered into an advisory agreement with Saunders Karp & Megrue, L.P. ("SKM"), a limited partnership the general partner of which is SKM Partners L.P., which is also the general partner of each of the Funds. Pursuant to the advisory agreement SKM has agreed to provide certain financial advisory services to the Company. In consideration for these services, SKM is entitled to receive an annual fee of $200,000, payable quarterly in advance. The expenses incurred in respect of that fee were $50,000 in fiscal 1996 and $100,000 during the twenty-six week period ending on August 3, 1996. The Company also has agreed to indemnify SKM for certain losses arising out of the provision of advisory services and to reimburse certain of SKM's out-of-pocket expenses. In addition, on November 1, 1995, the Company paid SKM a one-time fee of $500,000 primarily for its assistance in the arrangement, placement and negotiation of the Term Loan and the Revolving Loan Agreement. The Company and Clyde B. Anderson have entered into an agreement effective as of August 1, 1996, pursuant to which the Company granted to Clyde B. Anderson options to buy 70,820 shares of Common Stock at an exercise price of $8.48 per share (the "August Options") and agreed to pay him an annual fee of $50,000 in consideration for his agreement to provide advisory services to the Company. The August Options are exercisable beginning six months after the closing of the Offering, and will expire nine months after the closing of the Offering. The shares of Common Stock issuable upon the exercise of the August Options will be subject to the provisions of the Stockholders Agreement. Non-Competition Agreement Messrs. Charles C. Anderson, Joel R. Anderson and Clyde B. Anderson, as former controlling shareholders of the Company, have entered into a non-competition agreement with the Company and the Funds in connection with the Acquisition and Redemption. Under the agreement, Messrs. Andersons agreed not to be engaged in the retail sales of athletic equipment, apparel, footwear or other sporting goods in any and all states of Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Illinois, Tennessee and any other state immediately adjacent to any of the foregoing states at any time prior to November 1, 2000. Certain Transactions with Anderson Entities In November 1994, Hibbett paid $118,788 to reimburse Books-A-Million, Inc. ("Books-A-Million"), a book retailer in the southeastern United States controlled by the Anderson Shareholders, for payments made under a tax sharing arrangement. In fiscal 1994, the Company paid $66,227 in respect of certain vehicle purchases to Anderson Ford, a car dealership affiliated with the Anderson Shareholders. During fiscal 1995, the Company borrowed funds from ANCO, an affiliated entity of the Anderson Shareholders, to fund certain working capital needs. The average amount outstanding under these loans during fiscal 1995 was $120,000, the maximum amount outstanding was $810,000 and the weighted average interest rate was 7.45%. The loans were repaid in full during fiscal 1995. In February 1996 the Company sold its leasehold interest in its former headquarters and distribution facility to Anderson & Anderson, LLC, an entity affiliated with certain Anderson Shareholders, for $850,000. 41 Hibbett has recently entered into a sublease agreement ("Sublease Agreement") with Books-A-Million, pursuant to which Hibbett will sublease certain real estate from Books-A-Million in Florence, Alabama for one of its stores. The term of the Sublease Agreement expires in June 2008. Under the Sublease Agreement, Hibbett will make annual lease payments to Books-A-Million of approximately $190,000. SHARES ELIGIBLE FOR FUTURE SALE Prior to the Offering, there has been no public market for the Common Stock of the Company and there can be no assurance that an active trading market in the Common Stock will develop subsequent to the Offering or, if developed, that it will be sustained. Future sales of substantial amounts of Common Stock in the public market could adversely affect prevailing market prices or the Company's ability to raise capital in the equity markets. Upon completion of the Offering, the Company will have 5,834,262 shares of Common Stock outstanding (assuming no exercise of the Underwriters' over-allotment option and no exercise of outstanding options). Of these shares, the 2,000,000 shares sold in the Offering will be freely transferable by persons other than affiliates of the Company without registration under the Act. On the date of this Prospectus, 3,834,262 "restricted shares" as defined in Rule 144 will be outstanding. Of such shares, and without consideration of the contractual restrictions described below, 16,393 shares would be available for immediate sale in the public market without restriction pursuant to Rule 144(k). Beginning 90 days after the date of this Prospectus, and without consideration of the contractual restrictions described below, an additional 931,148 shares would be eligible for sale in reliance upon Rule 144 promulgated under the Act. The holders of the remaining 2,886,721 restricted shares will not be able to sell such shares pursuant to Rule 144 until November 1, 1997, when a two year period will have elapsed since the shares were acquired from the Company. Furthermore, holders of an aggregate of 3,834,262 shares are entitled to piggyback registration rights, of which 3,711,311 shares are also entitled to demand registration rights. In addition, Clyde B. Anderson is entitled to piggyback and demand registration rights in respect of 70,820 shares issuable upon the exercise of the stock options granted to him on August 1, 1996. See "Certain Transactions--Stockholders Agreement" and "--Advisory Agreements." To date, none of these holders has indicated an intention to exercise such demand registration rights. The officers, directors and all the shareholders of the Company have agreed not to offer, sell, contract to sell or grant any option to purchase or otherwise dispose of Common Stock of the Company or any securities convertible into, or exchangeable for, shares of Common Stock, subject to certain exceptions, owned by them without the prior written consent of Smith Barney Inc. for a period of 180 days after the date of this Prospectus. As a result of these contractual restrictions and the provisions of Rule 144, 947,541 shares will be eligible for sale beginning 180 days after the date of this Prospectus subject to Rule 144 volume limitations applicable to affiliates. In general, under Rule 144 as currently in effect, beginning 90 days after the Offering, a person (or persons whose shares are aggregated) may sell within any three-month period a number of shares that does not exceed the greater of 1% of the then outstanding shares of the Company's Common Stock (approximately 60,000 shares immediately after the Offering) or the average weekly trading volume of the Company's Common Stock during the four-calendar weeks preceding the date on which notice of the sale is filed with the Securities and Exchange Commission; provided that at least two years have elapsed since the shares to be sold were last acquired from the Company or an affiliate of the Company. Sales under Rule 144 are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about the Company. Any person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of the Company at any time during the 90 days preceding a sale, may sell shares under Rule 144(k) without regard to the volume limitations, manner of 42 sale provisions, public information requirements or notice requirements; provided that at least three years have elapsed since the shares to be sold were last acquired from the Company or an affiliate of the Company. 947,541 restricted shares have been issued for more than three years and will be eligible for sale under Rule 144(k) if their holders qualify for non-affiliate status. The Company has also agreed not to offer, sell, contract to sell or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or any rights to acquire Common Stock for a period of 180 days after the date of this Prospectus, without the prior written consent of Smith Barney Inc., subject to certain limited exceptions. Following the Offering, the Company intends to file registration statements under the Act covering approximately 430,000 shares of Common Stock issued or reserved for issuance under the Plans. Accordingly, shares registered under such registration statements will, subject to Rule 144 volume limitations applicable to affiliates, be available for sale in the open market, unless such shares are subject to vesting restrictions with the Company or the contractual restrictions described above. DESCRIPTION OF CAPITAL STOCK The Company is authorized to issue 20,000,000 shares of Common Stock, and 10,000,000 shares of Preferred Stock, par value $.01 per share ("Preferred Stock"), after giving effect to the reincorporation of the Company in Delaware prior to the completion of the Offering. The following summaries of certain provisions of the Common Stock and Preferred Stock are subject to, and qualified in their entirety by, the provisions of the Company's Certificate of Incorporation, which is included as an exhibit to the Registration Statement of which this Prospectus forms a part, and by applicable law. COMMON STOCK As of August 3, 1996 there were 3,834,262 shares of Common Stock outstanding which were held of record by 27 stockholders. There will be 5,834,262 shares of Common Stock outstanding (assuming no exercise of the Underwriters' over-allotment option and no exercise of outstanding options) after giving effect to the sale of the shares of Common Stock offered hereby. The holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders and do not have cumulative voting rights. Subject to preferences as may be applicable to any outstanding Preferred Stock, the holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. See "Dividend Policy." In the event of liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of Preferred Stock, if any, then outstanding. Except as provided in the Stockholders Agreement, the holders of Common Stock will have no preemptive or conversion rights or other subscription rights. See "Certain Transactions--Stockholders Agreement." There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and non-assessable, and the shares of Common Stock to be issued upon completion of this offering will be fully paid and non-assessable. PREFERRED STOCK The Board of Directors is empowered by the Company's Certificate of Incorporation to designate and issue from time to time one or more classes or series of Preferred Stock without stockholder approval. The Board of Directors may affix and determine the relative rights, preferences and privileges of each class or series of Preferred Stock so issued. Because the Board of Directors has the power to establish the preferences and rights of each class or series of Preferred Stock, it may afford the holders of any series or class of Preferred Stock preferences, powers and rights, with respect to voting, 43 liquidation or otherwise, senior to the rights of the holders of Common Stock. The issuance of Preferred Stock could have the effect of, among other things, restricting dividends on the Common Stock, diluting the voting power of the Common Stock, impairing the liquidation rights of the Common Stock and delaying or preventing a change in control of the Company. There are no shares of Preferred Stock currently outstanding, and the Board of Directors has no present plans to issue any shares of Preferred Stock. CHARTER AND BYLAW PROVISIONS Stockholders' rights and related matters are governed by the Delaware General Corporation Law, the Company's Certificate of Incorporation and its Bylaws. Certain provisions of the Certificate of Incorporation and Bylaws of the Company, which are summarized below, tend to limit stockholders' ability to influence matters of corporate governance. This may make it more difficult to change the composition of the Company's Board of Directors and may discourage or make more difficult any attempt by a persons or group to obtain control of the Company. Size of Board, Classified Board, Removal of Directors and Filling Vacancies. The Company's Certificate of Incorporation provides that subject to the right to elect additional directors that may be granted to holders of any class or series of Preferred Stock, the number of directors shall be fixed from time to time as provided in the Bylaws, but may not consist of more than nine or less than six persons. The Certificate of Incorporation further provides that the directors other than those who may be elected by the holders of any class or series of Preferred Stock shall be classified, with respect to the time for which they severally hold office, into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, and that one class shall be elected each year and serve for a three-year term. The Bylaws provide that the majority of the votes cast in the election of directors shall elect those directors. Accordingly, the holders of a majority of the then outstanding shares of voting stock can elect all the directors of the class then being elected. The Certificate of Incorporation also provides that a director may be removed by stockholders only for cause by a vote of the holders of more than two-thirds of the shares entitled to vote generally in the election of directors. The Certificate of Incorporation also provides that all vacancies on the Company's Board of Directors, including any vacancies resulting from an increase in the number of directors, may be filled by a majority of the remaining directors, even if the number is less than a quorum. The foregoing provisions may have the effect of making it more difficult for stockholders to change the composition of the Board. As a result, at least two annual meetings of stockholders may be required for the stockholders to change a majority of the directors, whether or not the majority of the Company's stockholders believes that such a change would be desirable. Super Majority Voting Requirements. The affirmative vote of the holders of more than two-thirds of the shares entitled to vote generally in the election of directors is required to amend, alter, change or repeal any of the foregoing provisions. In addition, under the Company's Certificate of Incorporation, the Company's Bylaws may not be amended by the stockholders without the affirmative vote of holders of more than two-thirds of the shares entitled to vote generally in the election of directors. This restriction makes it more difficult for the stockholders of the Company to amend the Bylaws and thus enhances the power of the Company's Board of Directors vis-a-vis stockholders with regard to the matters of corporate governance addressed by the Bylaws. Limitations on Calling Special Shareholder Meetings. Under the Company's Bylaws, special meetings of the stockholders may only be called by the Chairman of the Board, a majority of the Board of Directors or upon the demand of the holders of a majority of the shares entitled to vote at any such special meeting. This provision makes it more difficult for stockholders to require the Company to call a special meeting of stockholders to consider any proposed corporate action, including any sale of the Company, which may be favored by the stockholders. 44 DELAWARE LAW The Company will be a Delaware corporation and will be subject to Section 203 of the Delaware General Corporation Laws, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the "business combination" or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation's voting stock, other than "interested stockholders" prior to the time the Common Stock of the Company is quoted on the Nasdaq National Market. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors, including discouraging takeover attempts that might result in a premium over the market price for the shares of Common Stock held by stockholders. LIMITATION OF DIRECTORS' LIABILITY Section 145 of the Delaware General Corporation Act permits the Company to indemnify officers, directors or employees against expenses (including attorney's fees), judgments, fines and amounts paid in settlement in connection with legal proceedings "if [as to any officer, director or employee] he acted in good faith and in a manner he reasonably believed to be in, or not opposed to the best interests of the corporation, and, with respect to any criminal act or proceeding, had no reasonable cause to believe his conduct was unlawful", provided that with respect to actions by, or in the right of the corporation against, such individuals, indemnification is not permitted as to any matter as to which such person "shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation, unless, and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper." Individuals who are successful in the defense of such action are entitled to indemnification against expenses reasonably incurred in connection therewith. The By-Laws of the Company will require the Company to indemnify directors and officers against liabilities which they may incur under the circumstances set forth in the preceding paragraph. The Company is in the process of obtaining standard policies of insurance under which coverage will be provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the Company with respect to payments which may be made by the Company to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law. TRANSFER AGENT AND REGISTRAR The Transfer Agent and Registrar for the Common Stock is SunTrust Bank, Atlanta. 45 UNDERWRITING Upon the terms and subject to the conditions stated in the Underwriting Agreement dated , 1996, each of the Underwriters named below has severally agreed to purchase, and the Company has agreed to sell to such Underwriters, the respective number of shares of Common Stock set forth opposite the name of such Underwriter. NUMBER OF NAME SHARES - ---------------------------------------------------------------- --------- Smith Barney Inc................................................ Montgomery Securities........................................... The Robinson-Humphrey Company, Inc.............................. --------- Total................................................. 2,000,000 --------- --------- The Underwriting Agreement provides that the obligations of the several Underwriters to pay for and accept delivery of the shares offered hereby are subject to approval of certain legal matters by their counsel and to certain other conditions. The Underwriters are obligated to take and pay for all shares of Common Stock offered hereby (other than those covered by the over-allotment option described below) if any such shares are taken. The Underwriters, for whom Smith Barney Inc., Montgomery Securities and The Robinson-Humphrey Company, Inc. are acting as the Representatives, propose to offer part of the shares of Common Stock directly to the public at the public offering price set forth on the cover page of this Prospectus and part of the shares of Common Stock to certain dealers at a price which represents a concession not in excess of $ per share under the public offering price. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per share to certain other dealers. The Representatives of the Underwriters have advised the Company that the Underwriters do not intend to confirm any sales to any accounts over which they exercise discretionary authority. The Company has granted to the Underwriters an option, exercisable for thirty days from the date of this Prospectus, to purchase up to 300,000 additional shares of Common Stock at the price to public set forth on the cover page of this Prospectus minus the underwriting discounts and commissions. The Underwriters may exercise such option solely for the purpose of covering over-allotments, if any, in connection with the offering of the shares offered hereby. To the extent such option is exercised, each Underwriter will be obligated, subject to certain conditions, to purchase approximately the same percentage of such additional shares as the number of shares set forth opposite each Underwriter's name in the preceding table bears to the total number of shares listed in such table. The Company, its officers and directors and certain of its shareholders have agreed that, for a period of 180 days from the date of this Prospectus, they will not, without the prior written consent of Smith Barney Inc., offer, sell, pledge, contract to sell, or otherwise dispose of any Common Stock (or any security convertible into or exchangeable or exercisable for Common Stock) or other securities of the Company that are substantially similar to Common Stock or grant any options or warrants to purchase Common Stock or similar securities, subject to certain limited exceptions. Prior to the Offering, there has not been any public market for Common Stock of the Company. Consequently, the initial public offering price for the shares of Common Stock included in the Offering has been determined by negotiations between the Company and the Representatives. Among the factors considered in determining such price were the history of and prospects for the Company's business and the industry in which it competes, an assessment of the Company's management and the present state of the Company's development, the past and present revenues and earnings of the Company, the prospects for growth of the Company's revenues and earnings, the current state of the economy in the United States and the current level of economic activity in the industry in which the Company competes and in 46 related or comparable industries, and currently prevailing conditions in the securities markets, including current market valuations of publicly traded companies which are comparable to the Company. The Company and the Underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Davis Polk & Wardwell, New York, New York. Certain legal matters relating to the Offering will be passed upon for the Underwriters by Latham & Watkins, New York, New York. From time to time Davis Polk & Wardwell and Latham & Watkins render certain legal services to the Funds, and Latham & Watkins also renders certain legal services to certain of the Anderson Shareholders. EXPERTS The audited consolidated financial statements and related schedule of the Company and its subsidiaries as of January 28, 1995 and February 3, 1996, and for each of the three fiscal years in the period ended February 3, 1996, included in this Prospectus and the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement (of which this Prospectus is a part and which term shall encompass any amendments thereto) on Form S-1 pursuant to the Securities Act with respect to the Common Stock being offered in the Offering. This Prospectus does not contain all the information set forth in the Registration Statement and the exhibits and schedules thereto, certain portions of which have been omitted as permitted by the rules and regulations of the Commission. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete; with respect to any such contract, agreement or other document filed as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. For further information about the Company and the securities offered hereby, reference is made to the Registration Statement and to the financial statements, schedules and exhibits filed as a part thereof. Upon completion of the Offering, the Company will be subject to the information requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and, in accordance therewith, will file reports and other information with the Commission. The Registration Statement, the exhibits and schedules forming a part thereof and other information filed by the Company with the Commission in accordance with the Exchange Act can be inspected and copies obtained at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following regional offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material or any part thereof may also be obtained by mail from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission also maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The Company intends to furnish its stockholders with annual reports containing audited financial statements and quarterly reports containing unaudited summary financial information for the first three fiscal quarters of each fiscal year. 47 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.............................................. F-2 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets as of January 28, 1995, February 3, 1996, and August 3, 1996 (unaudited).............................................................. F-3 Consolidated Statements of Operations for the fiscal years ended January 29, 1994, January 28, 1995, and February 3, 1996, and the twenty-six week periods ended July 29, 1995 and August 3, 1996 (unaudited).......................................... F-4 Consolidated Statements of Stockholders' Investment (Deficit) for the fiscal years ended January 29, 1994, January 28, 1995, and February 3, 1996, and the twenty-six week period ended August 3, 1996 (unaudited).......................... F-5 Consolidated Statements of Cash Flows for the fiscal years ended January 29, 1994, January 28, 1995, and February 3, 1996, and the twenty-six week periods ended July 29, 1995 and August 3, 1996 (unaudited).................................... F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................................ F-7
F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Hibbett Sporting Goods, Inc.: We have audited the accompanying consolidated balance sheets of HIBBETT SPORTING GOODS, INC. (an Alabama corporation) AND SUBSIDIARIES as of January 28, 1995 and February 3, 1996, and the related consolidated statements of operations, stockholders' investment (deficit), and cash flows for each of the three fiscal years in the period ended February 3, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hibbett Sporting Goods, Inc. and subsidiaries as of January 28, 1995 and February 3, 1996, and the results of their operations and their cash flows for each of the three fiscal years in the period ended February 3, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Birmingham, Alabama April 2, 1996 (except with respect to the matter discussed in Note 10 as to which the date is September 13, 1996) F-2 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
JANUARY 28, FEBRUARY 3, AUGUST 3, 1995 1996 1996 ----------- ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents.................................... $ 727 $ 31 $ 36 Accounts receivable, net..................................... 1,094 1,341 1,705 Inventories.................................................. 14,736 20,705 26,946 Prepaid expenses and other................................... 112 756 1,194 Refundable income taxes...................................... 0 419 493 Deferred income taxes........................................ 410 538 631 ----------- ----------- ----------- 17,079 23,790 31,005 ----------- ----------- ----------- PROPERTY AND EQUIPMENT: Land......................................................... 94 748 24 Buildings.................................................... 1,084 4,869 83 Equipment.................................................... 3,145 4,581 5,176 Furniture and fixtures....................................... 2,557 3,470 3,867 Leasehold improvements....................................... 4,092 5,901 6,206 Construction in progress..................................... 673 170 933 ----------- ----------- ----------- 11,645 19,739 16,289 Less accumulated depreciation and amortization............... 6,281 7,605 7,646 ----------- ----------- ----------- 5,364 12,134 8,643 ----------- ----------- ----------- NONCURRENT ASSETS: Deferred income taxes........................................ 296 308 331 Unamortized debt issuance costs, net......................... 0 434 399 Other, net................................................... 48 36 30 ----------- ----------- ----------- 344 778 760 ----------- ----------- ----------- $22,787 $ 36,702 $ 40,408 ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' INVESTMENT (DEFICIT) CURRENT LIABILITIES: Current maturities of long-term debt......................... $ 420 $ 0 $ 0 Accounts payable............................................. 7,543 10,371 10,435 Accrued income taxes......................................... 71 0 0 Accrued expenses: Payroll-related............................................ 809 1,079 1,402 Other...................................................... 650 887 1,074 Related-party.............................................. 127 546 1,616 ----------- ----------- ----------- 9,620 12,883 14,527 ----------- ----------- ----------- LONG-TERM DEBT................................................. 4,908 31,912 33,148 ----------- ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' INVESTMENT (DEFICIT): Common stock, $.01 par value, 20,000,000 shares authorized, 3,834,262 shares issued and outstanding at August 3, 1996 (unaudited); $.01 par value, 3,000,000 shares authorized, 1,025,600 shares issued and outstanding at January 28, 1995; and $.01 par value, 50,000,000 shares authorized, 23,389,000 shares issued and outstanding at February 3, 1996........................................................... 10 234 38 Paid-in capital.............................................. 117 14,933 15,129 Retained earnings (deficit).................................. 8,132 (23,260) (22,434) ----------- ----------- ----------- 8,259 (8,093) (7,267) ----------- ----------- ----------- $22,787 $ 36,702 $ 40,408 ----------- ----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated balance sheets. F-3 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- ------------------------ JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- ---------- ---------- (52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED) NET SALES...................... $40,119 $52,266 $67,077 $29,355 $39,019 COST OF GOODS SOLD, INCLUDING WAREHOUSE, DISTRIBUTION, AND STORE OCCUPANCY COSTS........ 27,731 36,225 46,642 20,538 27,272 Gross profit............. 12,388 16,041 20,435 8,817 11,747 STORE OPERATING, SELLING, AND ADMINISTRATIVE EXPENSES...... 8,579 10,453 13,471 5,624 7,767 DEPRECIATION AND AMORTIZATION................... 932 1,066 1,322 662 826 Operating income......... 2,877 4,522 5,642 2,531 3,154 INTEREST EXPENSE............... 488 654 1,685 410 1,814 Income before provision for income taxes............... 2,389 3,868 3,957 2,121 1,340 PROVISION FOR INCOME TAXES..... 920 1,479 1,514 811 514 Net income............... $1,469 $2,389 $2,443 $1,310 $826 NET INCOME PER SHARE........... $.23 $.37 $.42 $.20 $.21 WEIGHTED AVERAGE SHARES OUTSTANDING.................... 6,504,521 6,504,521 5,838,267 6,504,521 3,938,224 ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- ---------- ----------
The accompanying notes are an integral part of these consolidated statements. F-4 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT (DEFICIT) (DOLLARS IN THOUSANDS)
COMMON STOCK --------------------- RETAINED NUMBER PAID-IN EARNINGS OF SHARES AMOUNT CAPITAL (DEFICIT) ----------- ------ ------- --------- BALANCE, January 31, 1993.......................... 10,256 $ 1 $ 126 $ 4,274 Net income....................................... 0 0 0 1,469 ----------- ------ ------- --------- BALANCE, January 29, 1994.......................... 10,256 1 126 5,743 Net income....................................... 0 0 0 2,389 Change in par value.............................. 0 (1 ) 1 0 Issuance of shares in connection with a 100-for-1 stock split........................................ 1,015,344 10 (10) 0 ----------- ------ ------- --------- BALANCE, January 28, 1995.......................... 1,025,600 10 117 8,132 Net income....................................... 0 0 0 2,443 Issuance of shares in connection with a 38.687189-for-1 stock split.................... 38,651,981 387 (387) 0 Purchase and retirement of shares................ (34,220,000) (342 ) (43) (33,835) Issuance of shares............................... 17,609,000 176 17,433 0 Expenses related to capital transactions......... 322,419 3 (2,187) 0 ----------- ------ ------- --------- BALANCE, February 3, 1996.......................... 23,389,000 234 14,933 (23,260) Net income (unaudited)........................... 0 0 0 826 Retroactive effect of 1-for-6.1 reverse stock split.............................................. (19,554,738) (196 ) 196 0 ----------- ------ ------- --------- BALANCE, August 3, 1996 (Unaudited)................ 3,834,262 $ 38 $15,129 $ (22,434) ----------- ------ ------- --------- ----------- ------ ------- ---------
The accompanying notes are an integral part of these consolidated statements. F-5 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- --------------------- JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- -------- --------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................................... $ 1,469 $ 2,389 $ 2,443 $1,310 $ 826 ----------- ----------- ----------- -------- --------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization........................ 989 1,124 1,475 687 943 Deferred income taxes................................ 21 (266) (140) (115) (116) (Gain) loss on disposal of assets.................... 20 4 6 2 (504) Interest expense funded through additional debt...... 0 0 128 0 14 (Increase) decrease in assets: Accounts receivable, net......................... (85) (9) (247) (541) (364) Inventories...................................... (1,966) (3,930) (5,969) (3,374) (6,241) Prepaid expenses and other....................... (159) 71 (644) (211) (438) Refundable income taxes.......................... (61) 61 (419) (412) (74) Other noncurrent assets.......................... (58) 11 (474) 7 (7) Increase (decrease) in liabilities: Accounts payable................................. 138 2,978 2,828 418 64 Accrued income taxes............................. (187) 71 (71) (71) 0 Accrued expenses................................. 148 694 926 (93) 1,580 ----------- ----------- ----------- -------- --------- Total adjustments............................... (1,200) 809 (2,601) (3,703) (5,143) ----------- ----------- ----------- -------- --------- Net cash provided by (used in) operating activities................................................ 269 3,198 (158) (2,393) (4,317) ----------- ----------- ----------- -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures..................................... (1,600) (2,179) (8,172) (1,683) (2,385) Proceeds from sale of property........................... 9 26 6 6 5,553 ----------- ----------- ----------- -------- --------- Net cash provided by (used in) in investing activities................................................ (1,591) (2,153) (8,166) (1,677) 3,168 ----------- ----------- ----------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase and retirement of shares........................ 0 0 (22,250) 0 0 Issuance of shares....................................... 0 0 17,609 0 0 Expenses related to capital transactions................. 0 0 (2,184) 0 0 Principal payments on long-term debt..................... (994) (3,251) (5,328) (1,197) (4,267) Proceeds from issuance of long-term debt................. 2,535 4,579 0 0 0 Proceeds from issuance of long-term debt to stockholders.............................................. 0 0 6,641 0 0 Proceeds from term loan.................................. 0 0 1,000 0 0 Revolving loan borrowings and repayments, net............ 0 0 12,140 0 5,421 Borrowings (repayments) of short-term debt, net.......... (172) (2,179) 0 5,579 0 ----------- ----------- ----------- -------- --------- Net cash provided by (used in) financing activities................................................ 1,369 (851) 7,628 4,382 1,154 ----------- ----------- ----------- -------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...... 47 194 (696) 312 5 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......... 486 533 727 727 31 ----------- ----------- ----------- -------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD................ $ 533 $ 727 $ 31 $1,039 $ 36 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest............................................... $ 327 $ 612 $ 1,038 $ 471 $ 632 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- --------- Income taxes, net of refunds........................... $ 1,147 $ 1,500 $ 2,144 $1,345 $ 703 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- --------- SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES: Issuance of debt (including unamortized debt discount) to stockholders for the purchase of shares................ $ 0 $ 0 $13,051 $ 0 $ 0 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- --------- Issuance of stock as compensation related to capital transactions.............................................. $ 0 $ 0 $ 322 $ 0 $ 0 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- ---------
The accompanying notes are an integral part of these consolidated statements. F-6 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Hibbett Sporting Goods, Inc. (the "Company") is an operator of full-line sporting goods retail stores in small to mid-sized markets in the Southeastern United States. The Company's fiscal year ends on the Saturday closest to January 31 of each year. Principles of Consolidation The consolidated financial statements of the Company include its accounts and the accounts of all wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect (1) the reported amounts of certain assets and liabilities and disclosure of certain contingent assets and liabilities at the date of the financial statements, and (2) the reported amounts of certain revenues and expenses during the reporting period. Actual results could differ from those estimates. Unaudited Interim Financial Statements In the opinion of management, the unaudited consolidated balance sheet as of August 3, 1996, and the unaudited consolidated statements of operations and cash flows for the twenty-six week periods ended July 29, 1995 and August 3, 1996, reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the information set forth therein. The results of operations for interim periods are not necessarily indicative of results for the full year as the Company's business is seasonal. Typically, sales and net income from operations are highest during the fourth fiscal quarter. Inventories Inventories are valued at the lower of cost or market using the retail inventory method of accounting, with cost determined on a first-in, first-out basis and market based on the lower of replacement cost or estimated realizable value. Property and Equipment Property and equipment are recorded at cost. It is the Company's policy to depreciate assets acquired prior to January 28, 1995 using accelerated and straight-line methods over the estimated service lives (3 to 10 years for equipment, 5 to 10 years for furniture and fixtures, and 10 to 31.5 years for buildings) and to amortize leasehold improvements using the straight-line method over the periods of the applicable leases. Depreciation on assets acquired subsequent to January 28, 1995 is provided using the straight-line method over the estimated service lives (3 to 5 years for equipment, 7 years for furniture and fixtures, and 39 years for buildings) or, in the case of leasehold improvements, 10 years or over the lives of the respective leases, if shorter. Maintenance and repairs are charged to expense as incurred. Costs of renewals and betterments are capitalized by charges to property accounts and are depreciated using applicable annual rates. The cost and accumulated depreciation of assets sold, retired, or otherwise disposed of are removed from the accounts, and the related gain or loss is credited or charged to income. F-7 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) Store Opening Costs Non-capital expenditures incurred in preparation for opening new retail stores are expensed in the period each store opens. Fair Value of Financial Instruments In preparing disclosures about the fair value of financial instruments, management has assumed that the carrying amount approximates fair value for cash and cash equivalents, receivables, short-term borrowings and accounts payable, because of the short maturities of those instruments. The estimated fair values of long-term debt instruments are based upon the current interest rate environment and remaining term to maturity. Income Taxes The Company accounts for income taxes using the asset and liability method, which generally requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. In addition, the asset and liability method requires the adjustment of previously deferred income taxes for changes in tax rates. Net Income Per Share Net income per share for each of the periods presented is calculated by dividing net income by the number of weighted average common shares outstanding. Common stock equivalents in the form of stock options are included in the calculation utilizing the treasury stock method for all periods presented. All net income per share, weighted average shares outstanding, stock options, and stock option per share amounts have been retroactively restated for all periods presented to reflect the 1-for-6.1 reverse stock split described in Note 10. Consolidated Statements of Cash Flows For purposes of the consolidated statements of cash flows, the Company considers all short-term, highly liquid investments with original maturities of three months or less to be cash equivalents. Accounting for the Impairment of Long-Lived Assets During 1995, Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, was issued. The new standard requires all businesses to recognize an impairment loss on a long-lived asset as a charge to current income when certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company adopted the new standard effective Febuary 4, 1996 with no significant impact on its financial position or results of operations (unaudited). Accounting for Stock-Based Compensation SFAS No. 123, Accounting for Stock-Based Compensation, allows companies to continue to record compensation cost under Accounting Principles Board Opinion ("APB") No. 25 or to record compensation cost based on the fair value of stock based awards. Management currently anticipates that it will F-8 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) continue using its current accounting policy under APB No. 25; and as a result, adoption of SFAS No. 123 will not affect the financial condition or results of operations of the Company. SFAS No. 123 does, however, require certain pro forma disclosures reflecting what compensation cost would have been if the fair value based method of recording compensation expense for stock-based compensation had been adopted. The disclosure rules under SFAS No. 123 will be adopted by the Company in fiscal 1997. Prior Year Reclassification Certain prior year amounts have been reclassified to conform to the current year presentation. 2. STOCKHOLDERS' INVESTMENT TRANSACTIONS In December 1994, the Company's Board of Directors approved an increase in the number of authorized shares of common stock from 20,000 to 3,000,000 shares and a decrease in the par value from $.10 to $.01 per share. In addition, the Company's Board of Directors declared a 100-for-1 stock split in the form of a 100% stock dividend. On November 1, 1995, the Company's Board of Directors approved a series of equity and debt transactions which resulted in a recapitalization of the Company and a change in controlling ownership of the common stock outstanding (the "Recapitalization"). In connection with the Recapitalization, the Company's Board of Directors (i) increased the number of authorized shares of common stock from 3,000,000 to 50,000,000 shares, (ii) declared a 38.687189-for-1 stock split, (iii) approved the repurchase and retirement of 34,220,000 shares of common stock for $1.00 per share ($22,250,000 cash and the issuance of $13,051,000 of debt (including unamortized debt discount), and (iv) approved the issuance of 17,609,000 new shares of common stock at $1.00 per share and $7,074,000 of debt (including unamortized debt discount) for $24,250,000 cash. Expenses of $2,506,000 were incurred in connection with the Recapitalization and have reduced paid-in capital. All references in the financial statements to weighted average shares outstanding, net income per share, and stock options have been restated to reflect the above stock splits. The Recapitalization described above has not been retroactively restated to give effect to the 1-for-6.1 reverse stock split discussed in Note 10. F-9 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 3. LONG-TERM DEBT The Company's long-term debt is as follows:
JANUARY 28, FEBRUARY 3, AUGUST 3, 1995 1996 1996 ----------- ----------- ----------- (UNAUDITED) Revolving loan agreement.................................. $ 0 $12,140,000 $17,561,000 Term loan agreement, due November 1997, unsecured......... 0 1,000,000 1,000,000 Subordinated notes payable to stockholders, unsecured, 12%, due November 2002, interest payable quarterly, beginning November 1, 1996.............................. 0 16,000,000 16,000,000 Senior subordinated bridge notes payable to stockholders, unsecured, 12%, due November 2000, interest payable quarterly................................................. 0 4,253,000 0 Revolving convertible term loan........................... 4,580,000 0 0 Bank notes payable, unsecured, principal and interest due quarterly, variable rates, 9% to 9.5% at January 28, 1995...................................................... 748,000 0 0 Unamortized debt discount................................. 0 (1,481,000) (1,413,000) ----------- ----------- ----------- 5,328,000 31,912,000 33,148,000 Less current maturities................................... 420,000 0 0 ----------- ----------- ----------- $ 4,908,000 $31,912,000 $33,148,000 ----------- ----------- ----------- ----------- ----------- -----------
At February 3, 1996 and August 3, 1996 (unaudited), the Company maintained a secured revolving loan agreement totaling $25,000,000 which expires November 2000. Amounts available and secured under the loan agreement are based on levels of the Company's accounts receivable and inventories. Based on the agreement, the Company may borrow amounts against a Base Rate or a LIBOR Rate, as defined in the agreement. Base Rate loans have no specified maturity date and interest on the loans is payable monthly. LIBOR Rate loans have specified interest periods (30, 60, 90, or 180 days) attached to the loan with the maturity date being the date principal and interest are due. As amounts under the loan agreement do not have to be repaid until the expiring date of November 2000, the full amount outstanding is classified as long-term debt. The amounts outstanding under the revolving loan agreement are as follows: FEBRUARY 3, AUGUST 3, 1996 1996 ----------- ----------- (UNAUDITED) Revolving loan agreement: Base Rate loans, 8.75% and 8.50% (unaudited)...... $ 2,140,000 $ 7,561,000 LIBOR Rate loans, 7.89% and 7.80% (unaudited)..... 10,000,000 10,000,000 ----------- ----------- $12,140,000 $17,561,000 ----------- ----------- ----------- ----------- The Company's term loan also allows the Company to specify the interest rate against which amounts are borrowed, the Base Rate or LIBOR Rate. At February 3, 1996 and August 3, 1996, the full amount of the term loan was borrowed against the LIBOR Rate which was 9.45% and 7.77% (unaudited), respectively. As part of the Recapitalization, in November 1995, the Company issued to stockholders subordinated notes and senior subordinated bridge notes totaling $20,125,000 with an original issue discount of $1,514,000 related solely to the stockholders subordinated notes. In January 1996, the Company issued F-10 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 3. LONG-TERM DEBT--(CONTINUED) $128,000 of additional notes as satisfaction for interest on the Company's bridge notes. A portion of the proceeds of these borrowings was utilized to retire existing debt. The Company's debt agreements contain certain restrictive covenants common to such agreements. The Company was in compliance, or had received a noncompliance waiver for fiscal year 1996, with respect to all of its covenants at February 3, 1996. The Company was in compliance with respect to all of its covenants at August 3, 1996 (unaudited). In addition, the revolving loan agreement prohibits the Company from declaring, paying, or making any dividend or distribution on its common stock other than dividends or distributions payable in stock. Long-term debt contractually matures in each of the next five fiscal years as follows: $0 in 1997, $1,000,000 in 1998, $0 in 1999, $0 in 2000, $16,393,000 in 2001, and $16,000,000 thereafter. However, the senior subordinated bridge notes ($4,253,000) were repaid in advance during the twenty-six week period ended August 3, 1996 (unaudited). During fiscal 1995 and the majority of fiscal 1996, the Company maintained working capital lines of credit under which the average borrowings outstanding were $4,009,000 and $5,200,0000, and the maximum borrowings outstanding were $6,620,000 and $6,697,000 in fiscal 1995 and 1996, respectively. The weighted average interest rate was approximately 7.35% and 9.0% in fiscal 1995 and 1996, respectively. In addition, during fiscal 1995, the Company also borrowed funds to meet working capital needs from a related party. The average amount of borrowings outstanding under these loans during fiscal 1995 was $120,000, the maximum amount outstanding was $810,000, and the weighted average interest rate was 7.45%. No borrowings related to these former working capital lines of credit were outstanding at January 28, 1995, February 3, 1996, or August 3, 1996 (unaudited). The revolving convertible term loan consisted of an unsecured $7,000,000 line of credit supported by a bank note payable program, of which $4,580,000 was outstanding at January 28, 1995. Borrowings under this loan bear interest at the bank's prime rate plus .5% (9% at January 28, 1995). All amounts outstanding under the revolving convertible term loan were repaid upon the establishment of the new revolving loan agreement in fiscal 1996. The estimated fair value of the Company's long-term debt was $32,657,000 and $33,722,000 (unaudited) at February 3, 1996 and August 3, 1996, respectively. 4. LEASES The Company leases the premises for its retail sporting goods stores under operating leases which expire in various years through the year 2008. Many of these leases contain renewal options and require the Company to pay executory costs (such as property taxes, maintenance, and insurance). Rental payments typically include minimum rentals plus contingent rentals based on sales. In February 1996, the Company entered into a sale-leaseback transaction to finance its new warehouse and office facilities. The sales price of $4,700,000 approximated the book value of the facility after considering transaction expenses. The related lease term is for 15 years at $476,000 per year, and is structured as an operating lease. F-11 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. LEASES--(CONTINUED) Minimum future rental payments under noncancelable operating leases having remaining terms in excess of one year as of February 3, 1996 are as follows: FISCAL YEAR ENDING - ------------------------------------------------ 1997............................................ $ 3,688,000 1998............................................ 3,625,000 1999............................................ 3,306,000 2000............................................ 3,117,000 2001............................................ 2,383,000 Thereafter...................................... 10,789,000 ----------- $26,908,000 ----------- ----------- Rental expense for all operating leases consisted of the following:
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- ------------------------ JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- ---------- ---------- (UNAUDITED) Minimum rentals................ $ 1,749,000 $ 2,469,000 $ 3,080,000 $1,204,000 $1,610,000 Contingent rentals............. 315,000 392,000 487,000 448,000 702,000 ----------- ----------- ----------- ---------- ---------- $ 2,064,000 $ 2,861,000 $ 3,567,000 $1,652,000 $2,312,000 ----------- ----------- ----------- ---------- ----------
5. PROFIT-SHARING PLAN The Company maintains a 401(k) profit sharing plan (the "Plan") which permits participants to make pretax contributions to the Plan. The Plan covers all employees who have completed one year of service and who are at least 21 years of age. Participants of the Plan may voluntarily contribute from 2% to 15% of their compensation within certain dollar limits as allowed by law. These elective contributions are made under the provisions of Section 401(k) of the Internal Revenue Code which allows deferral of income taxes on the amount contributed to the Plan. The Company's contribution to the Plan equals (1) an amount determined at the discretion of the Board of Directors plus (2) a matching contribution equal to a discretionary percentage of up to 6% of a participant's compensation. Contribution expense for fiscal years 1994, 1995, and 1996 was $89,000, $108,000, and $165,000, respectively, and was $45,000 and $47,000 (unaudited) for the twenty-six week periods ended July 29, 1995 and August 3, 1996, respectively. 6. RELATED-PARTY TRANSACTIONS Subsequent to November 1, 1995, the Company's new majority shareholder began providing financial advisory services to the Company for an annual fee of $200,000. Such services include, but are not necessarily limited to, advice and assistance concerning any and all aspects of the operation, planning, and financing of the Company. Management fee expense under this arrangement was $50,000 in fiscal 1996 and $100,000 for the twenty-six week period ended August 3, 1996 (unaudited). Prior to November 1, 1995, the Company's previous majority shareholders (now minority shareholders) provided to the Company similar services as discussed above. Fees for these services amounted F-12 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 6. RELATED-PARTY TRANSACTIONS--(CONTINUED) to $227,000, $256,000, and $95,000 in fiscal years 1994, 1995, and 1996, respectively, and $54,000 and $0 (unaudited) in the twenty-six week periods ended July 29, 1995 and August 3, 1996, respectively. Subordinated notes payable to stockholders, net of the related unamortized debt discount, were outstanding and included in long-term debt in the amount of $18,772,000 and $14,587,000 (unaudited) at February 3, 1996 and August 3, 1996, respectively. Related to these notes, the Company incurred approximately $620,000 of interest expense in fiscal 1996, of which approximately $492,000 was included in accrued expenses and approximately $128,000 was capitalized into the senior subordinated bridge notes payable at February 3, 1996. For the twenty-six week period ended August 3, 1996, the Company incurred approximately $960,000 (unaudited) of interest expense related to these notes. In connection with the Recapitalization discussed in Note 2, both the majority shareholder and minority shareholders were paid for services provided to the Company related to the Recapitalization. These costs were recorded as a reduction to paid-in capital and approximated $960,000 in fiscal 1996. In November 1995, the Company entered into a sublease for one store with an entity that is controlled by a minority shareholder which expires in June 2008. Minimum lease payments were $27,000 in fiscal 1996, and no excess rentals were paid in fiscal 1996. Future minimum lease payments under this noncancelable sublease aggregate $2,369,000. The Company leased its previous warehouse and office facilities under a lease-purchase agreement which was fully paid in a previous year. Subsequent to February 3, 1996, the Company sold an assignment of its interest in the lease on this property to a related party for $850,000, which resulted in a gain of approximately $513,000 in the twenty-six week period ended August 3, 1996. On August 1, 1996, the Company entered into an agreement with a minority shareholder which provides for an annual fee of $50,000 and the grant of 70,820 stock options discussed in Note 8 in consideration for his advisory services to the Company (unaudited). 7. INCOME TAXES A summary of the components of the provision for income taxes is as follows:
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- --------------------- JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- -------- --------- (UNAUDITED) Federal: Current.......................... $ 799,000 $ 1,553,000 $ 1,476,000 $823,000 $ 561,000 Deferred......................... 19,000 (237,000) (126,000) (102,000) (104,000) ----------- ----------- ----------- -------- --------- 818,000 1,316,000 1,350,000 721,000 457,000 ----------- ----------- ----------- -------- --------- State: Current.......................... 100,000 192,000 178,000 103,000 69,000 Deferred......................... 2,000 (29,000) (14,000) (13,000) (12,000) ----------- ----------- ----------- -------- --------- 102,000 163,000 164,000 90,000 57,000 ----------- ----------- ----------- -------- --------- Provision for income taxes......... $ 920,000 $ 1,479,000 $ 1,514,000 $811,000 $ 514,000 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- ---------
F-13 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 7. INCOME TAXES--(CONTINUED) The provision for income taxes differs from the amounts computed by applying federal statutory rates due to the following:
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- --------------------- JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- -------- --------- (UNAUDITED) Tax provision computed at the federal statutory rate (34%)....... $ 812,000 $ 1,315,000 $ 1,345,000 $721,000 $ 455,000 Effect of state income taxes, net of benefits...................... 66,000 127,000 118,000 59,000 44,000 Other.............................. 42,000 37,000 51,000 31,000 15,000 ----------- ----------- ----------- -------- --------- $ 920,000 $ 1,479,000 $ 1,514,000 $811,000 $ 514,000 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- ---------
Temporary differences which create deferred tax assets are detailed below:
JANUARY 28, 1995 FEBRUARY 3, 1996 AUGUST 3, 1996 -------------------- -------------------- -------------------- CURRENT NONCURRENT CURRENT NONCURRENT CURRENT NONCURRENT -------- ---------- -------- ---------- -------- ---------- (UNAUDITED) Depreciation........................... $ 0 $296,000 $ 0 $308,000 $ 0 $331,000 Inventory.............................. 253,000 0 371,000 0 321,000 0 Accruals............................... 147,000 0 153,000 0 296,000 0 Other.................................. 10,000 0 14,000 0 14,000 0 -------- ---------- -------- ---------- -------- ---------- 410,000 296,000 538,000 308,000 631,000 331,000 Valuation allowance.................... 0 0 0 0 0 0 -------- ---------- -------- ---------- -------- ---------- Deferred tax asset, net................ $410,000 $296,000 $538,000 $308,000 $631,000 $331,000 -------- ---------- -------- ---------- -------- ---------- -------- ---------- -------- ---------- -------- ----------
The Company has not recorded a valuation allowance for deferred tax assets as realization is considered more likely than not. 8. STOCK OPTIONS AND STOCK PURCHASE PLANS Stock Options The Hibbett Sporting Goods, Inc. Employee Stock Option Plan, as amended (the "Original Option Plan") authorizes the granting of stock options for the purchase of up to 66,352 shares of common stock. The difference in the total exercise price of the options and the estimated fair value at the date of the grant is recorded as compensation expense over the vesting period. As of February 3, 1996, options for all 66,352 shares were outstanding at that date. The weighted average exercise price of the options granted in fiscal 1996 was $4.49 per share. Options outstanding become exercisable 33% at the end of each of the following three successive years for 25,369 shares and 40,983 shares become exercisable 20% at the end of each of the following five successive years. Subsequent to February 3, 1996, the Company adopted the Hibbett Sporting Goods, Inc. 1996 Stock Option Plan, as amended (the "1996 Option Plan"). The 1996 Option Plan authorizes the granting of stock options for the purchase of up to 238,566 shares of common stock. The difference in F-14 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 8. STOCK OPTIONS AND STOCK PURCHASE PLANS--(CONTINUED) the total exercise price of the options and the estimated fair value at the date of the grant is recorded as compensation expense over the vesting period. As of September 13, 1996, a total of 193,157 shares of the Company's authorized and unissued common stock were reserved for future grants under the 1996 Option Plan, and options for 45,409 shares were outstanding at that date. The exercise price of the options outstanding under the 1996 Option Plan was $6.10 per share. Options outstanding become exercisable 20% at the end of each of the following five successive years. Effective upon Closing of the Initial Public Offering described in Note 11, grants of options to purchase 32,787 shares of Common Stock at a price equal to the public offering price will be made under the 1996 Option Plan (unaudited). On August 1, 1996, the Company granted options pursuant to the agreement discussed in Note 6 for 70,820 shares which are exercisable at $8.48 per share, and become exercisable six months after, and will expire no later than nine months after, the Closing of the Initial Public Offering described in Note 11. The Company recorded compensation expense of $462,000 related to these options in the twenty-six week period ended August 3, 1996 (unaudited). Stock Purchase Plans On September 13, 1996, the Company adopted an Employee Stock Purchase Plan and Outside Director Stock Purchase Plan reserving 75,000 shares and 50,000 shares of the Company's Common Stock, respectively, for purchase by the employees and directors at 85% and 100% of the fair value of the Common Stock, respectively (unaudited). 9. COMMITMENTS AND CONTINGENCIES Employment Agreement On November 1, 1995, the Company entered into an employment agreement with an employee which provides for a three-year employment period at a base salary plus various incentives. Legal The Company is a party to various legal proceedings incidental to its business. In the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect the financial position or results of operations of the Company. 10. SUBSEQUENT EVENT On September 13, 1996, the Board of Directors approved a 1-for-6.1 reverse stock split of the Company's Common Stock. All net income per share, weighted average shares outstanding, stock options, and stock option per share amounts have been retroactively restated for all periods presented to reflect this reverse stock split. In addition, the Board of Directors approved an increase in the number of authorized shares of common stock from 8,196,721 to 20,000,000 shares (unaudited). F-15 HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 11. INITIAL PUBLIC OFFERING (UNAUDITED) The Company is proceeding with the Offering of 2,000,000 shares of common stock at an initial public price of $15 per share. The estimated net proceeds to the Company of $26,900,000 will be used to repay the subordinated notes payable to stockholders and approximately $1,500,000 accrued interest thereon, and to repay the term loan and accrued interest thereon, with the balance to be used to reduce borrowings on the revolving loan agreement. Supplemental net income per share before extraordinary item is calculated by dividing net income (after adjustment for applicable interest expense) by the number of weighted average shares outstanding after giving effect to the estimated number of shares that would be required to be sold (at an assumed initial public offering price of $15 per share) to repay $26,900,000 of debt at February 3, 1996 and August 3, 1996 (unaudited), respectively. Supplemental net income per share before extraordinary item (to reflect the write-off of unamortized debt discount and debt issuance costs, net of taxes) for the fiscal year ended February 3, 1996 and the twenty-six week period ended August 3, 1996 was $.41 and $.38 (unaudited), respectively. Supplemental net income per share after extraordinary item (to reflect the write-off of unamortized debt discount and debt issuance costs, net of taxes) for the fiscal year ended February 3, 1996 and the twenty-six week period ended August 3, 1996 was $.26 and $.20 (unaudited), respectively. F-16 HIBBETT STORE LOCATIONS - 79 STORES IN 10 STATES [A map Under the caption "Hibbet Store Locations - 79 Stores in 10 States" of the Southeastern United States and contiguous states appears in the paper version of this Prospectus at this location In the map, Alabama, Florida, Georgia, Southern Illinois, Kentucky, Louisiana, Mississippi, North Carolina South Carolina and Tennessee are shown (shaded green) as existing locations of stores. Arkansas, Indiana, Missouri, Ohio, Texas, Virginia and West Virginia are shown (shaded yellow) as potential expansion states for stores.] [A picture of a delivery truck with the Company's logo, a soccer player and the Umbro brand name appears in the paper version of this Prospectus at this location] - ---------------------------------------- --------------------------------------- - ---------------------------------------- --------------------------------------- NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE 2,000,000 SHARES CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH [LOGO] INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. COMMON STOCK ------------------- TABLE OF CONTENTS PAGE ---- Prospectus Summary.................... 3 Risk Factors.......................... 8 Use of Proceeds....................... 12 Capitalization........................ 12 Dividend Policy....................... 13 Dilution.............................. 13 ---------- Selected Consolidated Financial and Operating Data........................ 14 PROSPECTUS Management's Discussion and Analysis of Financial Condition and Results , 1996 of Operations....................... 16 Business.............................. 22 ---------- Management............................ 31 Principal Shareholders................ 38 Certain Transactions.................. 39 Shares Eligible for Future Sale....... 42 Description of Capital Stock.......... 43 Underwriting.......................... 46 Legal Matters......................... 47 Experts............................... 47 Additional Information................ 47 Index to Consolidated Financial Statements............................ F-1 SMITH BARNEY INC. ------------------- UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, MONTGOMERY SECURITIES WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A THE ROBINSON-HUMPHREY PROSPECTUS. THIS IS IN ADDITION TO THE COMPANY, INC. OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. - ---------------------------------------- --------------------------------------- - ---------------------------------------- --------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS [Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Registration Fee............................................... $ 11,897 NASD Filing Fee................................................ 3,950 NASDAQ/National Market filing fee.............................. 32,086 Transfer Agent's Fees.......................................... 5,000 Printing and Engraving......................................... 165,000 Legal Fees..................................................... 500,000 Accounting Fees................................................ 100,000 Blue Sky Fees.................................................. 15,000 Miscellaneous.................................................. 167,067 ---------- Total...................................................... $1,000,000 ---------- ---------- Each of the amounts set forth above, other than the Registration Fee, NASD Filing Fee and NASDAQ/National Market filing fee, is an estimate. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Act permits the Registrant to indemnify officers, directors or employees against expenses (including attorney's fees), judgments, fines and amounts paid in settlement in connection with legal proceedings "if [as to any officer, director or employee] he acted in good faith and in a manner he reasonably believed to be in, or not opposed to the best interests of the corporation, and, with respect to any criminal act or proceeding, had no reasonable cause to believe his conduct was unlawful", provided that with respect to actions by, or in the right of the corporation against, such individuals, indemnification is not permitted as to any matter as to which such person "shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation, unless, and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper." Individuals who are successful in the defense of such action are entitled to indemnification against expenses reasonably incurred in connection therewith. The By-Laws of the Registrant require the Registrant to indemnify directors and officers against liabilities which they may incur under the circumstances set forth in the preceding paragraph. The Registrant is in the process of obtaining standard policies of insurance under which coverage will be provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law. The proposed form of Underwriting Agreement filed as Exhibit 1 to this Registration Statement provides for indemnification of directors and officers of the Registrant by the underwriters against certain liabilities. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. Since June 1, 1993, the Registrant has sold the following securities without registration under the Securities Act of 1933, as amended (the "Act"): 1. Immediately prior to the Recapitalization, in consideration for his assistance in arranging the Recapitalization, the Company issued to Clyde B. Anderson 322,419 (on a pre-split basis) shares of II-1 Common Stock. Section 4(2) of the Act was relied upon for exemption from the registration requirements. 2. On November 1, 1995, as part of the Recapitalization, The SK Equity Fund, L.P. purchased 17,418,455 (on a pre-split basis) shares of Common Stock for $17,418,455 in cash, and SK Investment Fund, L.P. purchased 190,545 (on a pre-split basis) shares of Common Stock for $190,545. Section 4(2) of the Act was relied upon for exemption from the registration requirements. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) The following exhibits are filed as part of this Registration Statement:
EXHIBIT NUMBER DESCRIPTION - -------- -------------------------------------------------------------------------------- 1 Form of Underwriting Agreement 3.1 Articles of Incorporation of the Registrant, as amended 3.2 Bylaws of the Registrant, as amended 3.3 Form of Certificate of Incorporation of the Registrant 3.4 Form of Bylaws of the Registrant 4.1 Form of Share Certificate 5.1* Opinion of Davis Polk & Wardwell 10.1.1** Loan and Security Agreement dated as of November 1, 1995 between the Registrant, Hibbett Team Sales, Inc. and Heller Financial, Inc. (the "Heller Loan Agreement") 10.1.2** Letter from Heller Financial, Inc. to the Registrant dated February 12, 1996 re: certain waivers from the Heller Loan Agreement 10.1.3 Waiver by Heller Financial, Inc. dated September 13, 1996 10.2.1** Stockholders Agreement dated as of November 1, 1995 among The SK Equity Fund, L.P., SK Investment Fund, L.P., the Registrant and certain stockholders of the Registrant named therein (the "Stockholders Agreement") 10.2.2 Amendment No. 1 to the Stockholders Agreement dated as of June 28, 1996 10.2.3 Form of Amendment No. 2 to the Stockholders Agreement 10.3** Advisory Agreement dated November 1, 1995 between the Registrant and Saunders, Karp & Co., L.P. 10.4** Employment and Post-Employment Agreement dated as of November 1, 1995 between the Registrant and Michael J. Newsome 10.5** Letter from the Registrant to Michael J. Newsome dated November 1, 1995 re: Incentive Compensation Arrangements 10.6** Non-competition Agreement dated November 1, 1995 among Charles C. Anderson, Joel R. Anderson, Clyde B. Anderson, the Registrant, The SK Equity Fund, L.P. and SK Investment Fund, L.P. 10.7 The Registrant's Stock Option Plan (as amended) 10.8 The Registrant's 1996 Stock Option Plan ("1996 Plan") (as amended) 10.9.1** Lease Agreement dated as of February 12, 1996 between QRS 12-14 (AL), Inc. and Sports Wholesale, Inc. (the "Lease Agreement") 10.9.2** Landlord's Waiver and Consent re: Lease Agreement dated February 12, 1996 by QRS 12-14 (AL), Inc. 10.10 The Registrant's Employee Stock Purchase Plan 10.11 The Registrant's Outside Director Stock Plan 10.12 Letter from the Registrant to Clyde B. Anderson dated September 13, 1996 re: Consulting Agreement 11 Statement of Computation of Net Income Per Share 21** List of Registrant's Subsidiaries 23.1 Consent of Arthur Andersen LLP 23.2* Consent of Davis Polk & Wardwell (to be included in Exhibit 5.1 to this Registration Statement) 27 Financial Data Schedule
- ------------ * Each exhibit marked by an (*) will be filed by Amendment to this Registration Statement. ** Previously filed exhibits are marked by (**). II-2 (b) Financial Statement Schedules. Report of Independent Public Accountants on Supplemental Schedule Schedule II--Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not required under the related instructions or are inapplicable as the information has been provided in the financial statements or related notes thereto. ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (a) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and persons controlling the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification (other than by policies of insurance) is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Birmingham, State of Alabama, on the 16th day of September, 1996. HIBBETT SPORTING GOODS, INC. By /s/ MICHAEL J. NEWSOME ................................... Michael J. Newsome President, Chief Operating Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 2 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ------------------------------------------ ------------------------------- * Principal Executive Officer and September 16, 1996 .......................................... Director Michael J. Newsome /s/ SUSAN H. FITZGIBBON Principal Financial Officer, September 16, 1996 .......................................... Controller and Principal Susan H. Fitzgibbon Accounting Officer * Director September 16, 1996 .......................................... Clyde B. Anderson * Director September 16, 1996 .......................................... Thomas A. Saunders, III * Director September 16, 1996 .......................................... F. Barron Fletcher, III * Director September 16, 1996 .......................................... John F. Megrue * Director September 16, 1996 .......................................... Barry H. Feinberg
*By /s/ SUSAN H. FITZGIBBON ....................................... Susan H. Fitzgibbon Attorney-in-fact II-4 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE To Hibbett Sporting Goods, Inc.: We have audited in accordance with generally accepted auditing standards, the financial statements of HIBBETT SPORTING GOODS, INC. (an Alabama corporation) AND SUBSIDIARIES, included in this registration statement and have issued our report dated April 2, 1996 (except with respect to the matter discussed in Note 10 as to which the date is September 13, 1996). Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II included in Part II of the registration statement is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Birmingham, Alabama April 2, 1996 S-1 HIBBETT SPORTING GOODS, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
TWENTY-SIX WEEK FISCAL YEAR ENDED PERIOD ENDED ----------------------------------------- --------------------- JANUARY 29, JANUARY 28, FEBRUARY 3, JULY 29, AUGUST 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- -------- --------- (UNAUDITED) Balance of allowance for doubtful accounts at beginning of period.... $13,000 $19,000 $ 61,000 $ 61,000 $ 86,000 Charged to costs and expenses...... 14,000 43,000 62,000 9,000 24,000 Write-offs net of recoveries....... (8,000) (1,000) (37,000) (16,000) (5,000) ----------- ----------- ----------- -------- --------- Balance of allowance for doubtful accounts at end of period.......... $19,000 $61,000 $ 86,000 $ 54,000 $ 105,000 ----------- ----------- ----------- -------- --------- ----------- ----------- ----------- -------- ---------
S-2 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - -------- ---------------------------------------------------------------------------------- 1 Form of Underwriting Agreement 3.1 Articles of Incorporation of the Registrant, as amended 3.2 Bylaws of the Registrant, as amended 3.3 Form of Certificate of Incorporation of the Registrant 3.4 Form of Bylaws of the Registrant 4.1 Form of Share Certificate 5.1* Opinion of Davis Polk & Wardwell 10.1.1** Loan and Security Agreement dated as of November 1, 1995 between the Registrant, Hibbett Team Sales, Inc. and Heller Financial, Inc. (the "Heller Loan Agreement") 10.1.2** Letter from Heller Financial, Inc. to the Registrant dated February 12, 1996 re: certain waivers from the Heller Loan Agreement 10.1.3 Waiver by Heller Financial, Inc. dated September 13, 1996 10.2.1** Stockholders Agreement dated as of November 1, 1995 among The SK Equity Fund, L.P., SK Investment Fund, L.P., the Registrant and certain stockholders of the Registrant named therein (the "Stockholders Agreement") 10.2.2 Amendment No. 1 to the Stockholders Agreement dated as of June 28, 1996 10.2.3 Form of Amendment No. 2 to the Stockholders Agreement 10.3** Advisory Agreement dated November 1, 1995 between the Registrant and Saunders, Karp & Co., L.P. 10.4** Employment and Post-Employment Agreement dated as of November 1, 1995 between the Registrant and Michael J. Newsome 10.5** Letter from the Registrant to Michael J. Newsome dated November 1, 1995 re: Incentive Compensation Arrangements 10.6** Non-competition Agreement dated November 1, 1995 among Charles C. Anderson, Joel R. Anderson, Clyde B. Anderson, the Registrant, The SK Equity Fund, L.P. and SK Investment Fund, L.P. 10.7 The Registrant's Stock Option Plan (as amended) 10.8 The Registrant's 1996 Stock Option Plan ("1996 Plan") (as amended) 10.9.1** Lease Agreement dated as of February 12, 1996 between QRS 12-14 (AL), Inc. and Sports Wholesale, Inc. (the "Lease Agreement") 10.9.2** Landlord's Waiver and Consent re: Lease Agreement dated February 12, 1996 by QRS 12-14 (AL), Inc. 10.10 The Registrant's Employee Stock Purchase Plan 10.11 The Registrant's Outside Director Stock Plan 10.12 Letter from the Registrant to Clyde B. Anderson dated September 13, 1996 re: Consulting Agreement 11 Statement of Computation of Net Income Per Share 21** List of Registrant's Subsidiaries 23.1 Consent of Arthur Andersen LLP 23.2* Consent of Davis Polk & Wardwell (to be included in Exhibit 5.1 to this Registration Statement) 27 Financial Data Schedule
- ------------ * Each exhibit marked by an (*) will be filed by Amendment to this Registration Statement. ** Previously filed exhibits are marked by (**). EX-1 2 EXHIBIT 1 DRAFT - September 12, 1996 _____________ Shares HIBBETT SPORTING GOODS, INC. Common Stock UNDERWRITING AGREEMENT ---------------------- __________, 1996 SMITH BARNEY INC. MONTGOMERY SECURITIES THE ROBINSON-HUMPHREY COMPANY, INC. As Representatives of the Several Underwriters c/o SMITH BARNEY INC. 388 Greenwich Street New York, New York 10013 Dear Ladies and Gentlemen: Hibbett Sporting Goods, Inc., a Delaware corporation (the "Company"), proposes to issue and sell an aggregate of ___________ shares (the "Firm Shares") of its common stock, $0.01 par value per share (the "Common Stock"), to the several Underwriters named in Schedule I hereto (the "Underwriters"). The Company also proposes to sell to the Underwriters, upon the terms and conditions set forth in Section 2 hereof, up to an additional _________ shares (the "Additional Shares") of Common Stock. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the "Shares". The Company wishes to confirm as follows its agreement with you (the "Representatives") and the other several Underwriters on whose behalf you are acting, in connection with the several purchases of the Shares by the Underwriters. 1. Registration Statement and Prospectus. The Company has prepared and ------------------------------------- filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Act"), a registration statement on Form S-1 (File No. 333-07023) under the Act, including a prospectus subject to completion relating to the Shares. The term "Registration Statement" as used in this Agreement means the registration statement (including all schedules and exhibits), as amended at the time it becomes effective, or, if the registration statement became effective prior to the execution of this Agreement, as supplemented or amended prior to the execution of this Agreement. If it is contemplated, at the time this Agreement is executed, that a post-effective amendment to the registration statement will be filed and must be declared effective before the offering of the Shares may commence, the term "Registration Statement" as used in this Agreement means the registration statement as amended by said post-effective amendment. The term "Prospectus" as used in this Agreement means the prospectus in the form included in the Registration Statement, or, if the prospectus included in the Registration Statement omits information in reliance on Rule 430A under the Act and such information is included in a prospectus filed with the Commission pursuant to Rule 424(b) under the Act, the term "Prospectus" as used in this Agreement means the prospectus in the form included in the Registration Statement as DRAFT - September 12, 1996 supplemented by the addition of the Rule 430A information contained in the prospectus filed with the Commission pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in this Agreement means the prospectus subject to completion in the form included in the Registration Statement at the time of the initial filing of the Registration Statement with the Commission and as such prospectus shall have been amended from time to time prior to the date of the Prospectus. 2. Agreements to Sell and Purchase. The Company hereby agrees, subject ------------------------------- to all the terms and conditions set forth herein, to issue and sell to each Underwriter and, upon the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions set forth herein, each Underwriter agrees, severally and not jointly, to purchase from the Company, at a purchase price of $_____ per Share (the "purchase price per share"), the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto (or such number of Firm Shares increased as set forth in Section 10 hereof). The Company also agrees, subject to all the terms and conditions set forth herein, to sell to the Underwriters, and, upon the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions set forth herein, the Underwriters shall have the right to purchase from the Company, at the purchase price per share, pursuant to an option (the "over-allotment option") which may be exercised at any time and from time to time prior to 9:00 P.M., New York City time, on the 30th day after the date of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on the next business day thereafter when the New York Stock Exchange is open for trading), up to an aggregate of ________ Additional Shares. Upon any exercise of the over-allotment option, each Underwriter, severally and not jointly, agrees to purchase from the Company the number of Additional Shares (subject to such adjustments as you may determine in order to avoid fractional shares) which bears the same proportion to the number of Additional Shares to be purchased by the Underwriters as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto (or such number of Firm Shares increased as set forth in Section 10 hereof) bears to the aggregate number of Firm Shares. 3. Terms of Public Offering. The Company has been advised by you that ------------------------ the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable and initially to offer the Shares upon the terms set forth in the Prospectus. 4. Delivery of the Shares and Payment Therefor. Delivery to the ------------------------------------------- Underwriters of and payment for the Firm Shares shall be made at the office of Latham & Watkins, 885 Third Avenue, New York, NY 10022, at 10:00 A.M., New York City time, on _________, 1996 (the "Closing Date"). The place of closing for the Firm Shares and the Closing Date may be varied by agreement between you and the Company. Delivery to the Underwriters of and payment for any Additional Shares to be purchased by the Underwriters shall be made at the aforementioned office of Smith Barney Inc. at such time on such date (the "Option Closing Date"), which may be the same as the Closing Date but shall in no event be earlier than the Closing Date nor earlier than two nor later than ten business days after the giving of the notice hereinafter referred to, as shall be specified in a written notice from you on behalf of the Underwriters to the Company of the Underwriters' determination to purchase a number, specified in such notice, of Additional Shares. The place of closing for any Additional Shares and the Option Closing Date for such Shares may be varied by agreement between you and the Company. 2 DRAFT - September 12, 1996 Certificates for the Firm Shares and for any Additional Shares to be purchased hereunder shall be registered in such names and in such denominations as you shall request prior to 9:30 A.M., New York City time, on the second business day preceding the Closing Date or any Option Closing Date, as the case may be. Such certificates shall be made available to you in New York City for inspection and packaging not later than 9:30 A.M., New York City time, on the business day next preceding the Closing Date or the Option Closing Date, as the case may be. The certificates evidencing the Firm Shares and any Additional Shares to be purchased hereunder shall be delivered to you on the Closing Date or the Option Closing Date, as the case may be, against payment of the purchase price therefor in immediately available funds. 5. Agreements of the Company. The Company agrees with the several ------------------------- Underwriters as follows: (a) If, at the time this Agreement is executed and delivered, it is necessary for the Registration Statement or a post-effective amendment thereto to be declared effective before the offering of the Shares may commence, the Company will endeavor to cause the Registration Statement or such post-effective amendment to become effective as soon as possible and will advise you promptly and, if requested by you, will confirm such advice in writing, when the Registration Statement or such post-effective amendment has become effective. (b) The Company will advise you promptly and, if requested by you, will confirm such advice in writing: (i) of any request by the Commission for amendment of or a supplement to the Registration Statement, any Prepricing Prospectus or the Prospectus or for additional information; (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iii) within the period of time referred to in paragraph (f) below, of any change in the Company's condition (financial or other), business, prospects, assets, liabilities, net worth or results of operations, or of the happening of any event, which makes any statement of a material fact made in the Registration Statement or the Prospectus (as then amended or supplemented) untrue or which requires the making of any additions to or changes in the Registration Statement or the Prospectus (as then amended or supplemented) in order to state a material fact required by the Act or the regulations thereunder to be stated therein or necessary in order to make the statements therein not misleading, or of the necessity to amend or supplement the Prospectus (as then amended or supplemented) to comply with the Act or any other law. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal of such order at the earliest possible time. (c) The Company will furnish to you, without charge, four signed copies of the Registration Statement as originally filed with the Commission and of each amendment thereto, including financial statements and all exhibits thereto, and will also furnish to you, without charge, such number of conformed copies of the Registration Statement as originally filed and of each amendment thereto, but without exhibits, as you may request. (d) The Company will not (i) file any amendment to the Registration Statement or make any amendment or supplement to the Prospectus of which you shall not previously have been advised or provided a copy of at least two business days prior to the filing thereof or to which you 3 DRAFT - September 12, 1996 shall object after being so advised or (ii) so long as, in the opinion of counsel for the Underwriters, a Prospectus is required to be delivered in connection with sales by any Underwriter or dealer, file any information, documents or reports pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), without delivering a copy of such information, documents or reports to you, as Representatives of the Underwriters, prior to or concurrently with such filing. (e) Prior to the execution and delivery of this Agreement, the Company has delivered to you, without charge, in such quantities as you have requested, copies of each form of the Prepricing Prospectus. The Company consents to the use, in accordance with the provisions of the Act and with the securities or Blue Sky laws of the jurisdictions in which the Shares are offered by the several Underwriters and by dealers, prior to the date of the Prospectus, of each Prepricing Prospectus so furnished by the Company. (f) As soon after the execution and delivery of this Agreement as possible and thereafter from time to time for such period as in the opinion of counsel for the Underwriters a prospectus is required by the Act to be delivered in connection with sales by any Underwriter or dealer, the Company will expeditiously deliver to each Underwriter and each dealer, without charge, as many copies of the Prospectus (and of each amendment or supplement thereto, if any) as you may request. The Company consents to the use of the Prospectus (and of each amendment or supplement thereto, if any) in accordance with the provisions of the Act and with the securities or Blue Sky laws of the jurisdictions in which the Shares are offered by the several Underwriters and by all dealers to whom Shares may be sold, both in connection with the offering and sale of the Shares and for such period of time thereafter as the Prospectus is required by the Act to be delivered in connection with sales by any Underwriter or dealer. If during such period of time any event shall occur that in the judgment of the Company or in the opinion of counsel for the Underwriters is required to be set forth in the Prospectus (as then amended or supplemented) or should be set forth therein in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend the Prospectus to comply with the Act or any other law, the Company will forthwith prepare and, subject to the provisions of paragraph (d) above, file with the Commission an appropriate supplement or amendment thereto, and will expeditiously furnish to the Underwriters and dealers a reasonable number of copies thereof. In the event that the Company and you, as Representatives of the several Underwriters, agree that the Prospectus should be amended or supplemented, the Company, if requested by you, will promptly issue a press release announcing or disclosing the matters to be covered by the proposed amendment or supplement. (g) The Company will cooperate with you and with counsel for the Underwriters in connection with the registration or qualification of the Shares for offering and sale by the several Underwriters and by dealers under the securities or Blue Sky laws of such jurisdictions as you may designate and will file such consents to service of process or other documents necessary or appropriate in order to effect such registration or qualification; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to service of process in suits, other than those arising out of the offering or sale of the Shares, in any jurisdiction where it is not now so subject. (h) The Company will make generally available to its security holders a consolidated earnings statement, which need not be audited, covering a twelve-month period commencing after 4 DRAFT - September 12, 1996 the effective date of the Registration Statement and ending not later than 15 months thereafter, as soon as practicable after the end of such period, which consolidated earnings statement shall satisfy the provisions of Section 11(a) of the Act and to advise you in writing when such statement has been made available. (i) During the period of five years hereafter, the Company will furnish to you (i) as soon as available, a copy of each report of the Company mailed to stockholders or filed with the Commission, and (ii) from time to time such other information concerning the Company as you may reasonably request. (j) If this Agreement shall terminate or shall be terminated after execution pursuant to any provisions hereof (otherwise than pursuant to the second paragraph of Section 10 hereof or by notice given by you terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or fulfill any of the conditions of this Agreement, the Company agrees to reimburse the Representatives for all out-of-pocket expenses (including, without limitation, fees and expenses of counsel for the Underwriters) incurred by you in connection herewith. (k) The Company will apply the net proceeds from the sale of the Shares substantially in accordance with the description set forth in the Prospectus under the caption "Use of Proceeds." (l) If Rule 430A of the Act is employed, the Company will timely file the Prospectus pursuant to Rule 424(b) under the Act and will advise you of the time and manner of such filing. (m) Except as provided in this Agreement, the Company will not sell, offer to sell, solicit an offer to buy, contract to sell, grant any options or warrants to purchase or otherwise issue, transfer or dispose of, in a public sale, public distribution or other public disposition, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, for a period of 180 days after the date of the Prospectus, without the prior written consent of Smith Barney Inc. (n) The Company has furnished or will furnish to you "lock-up" letters, in form and substance satisfactory to you, signed by each of its current officers and directors and each of its stockholders designated by you [To be named specifically.]. (o) The Company has not taken, nor will it take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares. (p) The Company will use its best efforts to have the Shares listed, subject to notice of issuance, on the Nasdaq National Market concurrently with the effectiveness of the Registration Statement and to maintain the inclusion of the Shares thereon for a period of five years thereafter. (q) The Company will use its best efforts to do and perform all things required or necessary to be done and performed under this Agreement by it prior to the Closing Date or the Option Closing Date, as the case may be, and to satisfy all conditions precedent to the delivery of 5 DRAFT - September 12, 1996 the Shares. 6. Representations and Warranties of the Company. The Company represents --------------------------------------------- and warrants to each Underwriter that: (a) Each Prepricing Prospectus included as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, or filed pursuant to Rule 424 under the Act, complied when so filed in all material respects with the provisions of the Act and did not or will not at any such times contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Commission has not issued any order preventing or suspending the use of any Prepricing Prospectus. (b) The Registration Statement in the form in which it became or becomes effective and also in such form as it may be when any post-effective amendment thereto shall become effective and the Prospectus and any supplement or amendment thereto when filed with the Commission under Rule 424(b) under the Act, complied or will comply in all material respects with the provisions of the Act and did not or will not at any such times contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that this representation and warranty does not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by or on behalf of any Underwriter through you expressly for use therein. (c) All the outstanding shares of Common Stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and are free of any preemptive or similar rights; the Shares have been duly authorized and, when issued and delivered to the Underwriters against payment therefor in accordance with the terms hereof, will be duly authorized, validly issued, fully paid and nonassessable and free of any preemptive or similar rights; and the capital stock of the Company conforms to the description thereof in the Registration Statement and the Prospectus. (d) The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus, and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure so to register or qualify does not have a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of the Company and the Subsidiaries (as hereinafter defined), taken as a whole. (e) All the Company's subsidiaries (collectively, the "Subsidiaries") are listed in an exhibit to the Registration Statement. Each Subsidiary is a corporation duly organized, validly existing and in good standing in the jurisdiction of its incorporation, with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus, and is duly registered and qualified to conduct its 6 DRAFT - September 12, 1996 business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure so to register or qualify does not have a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of such Subsidiary; all the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, and are owned by the Company directly, or indirectly through one of the other Subsidiaries, free and clear of any lien, adverse claim, security interest, equity, or other encumbrance. (f) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened, against the Company or any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or to which any of their respective properties is subject, that are required to be described in the Registration Statement or the Prospectus but are not described as required, and there are no agreements, contracts, indentures, leases or other instruments that are required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that are not described or filed as required by the Act. (g) Neither the Company nor any of the Subsidiaries is in violation of its certificate or articles of incorporation or by-laws, or other organizational documents, or of any law, statute, ordinance, administrative or governmental rule or regulation applicable to the Company or any of the Subsidiaries or of any decree of any court or governmental agency or body having jurisdiction over the Company or any of the Subsidiaries, or in default in any material respect in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any material agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound. (h) Neither the issuance and sale of the Shares, the execution, delivery or performance of this Agreement by the Company, nor the consummation by the Company of the transactions contemplated hereby (A) requires any consent, approval, authorization or other order of or registration, declaration, notice or filing to or with, any court, regulatory body, administrative agency or other governmental body, agency or official (except such as may be required for the registration of the Shares under the Act and the Exchange Act and compliance with the securities or Blue Sky laws of various jurisdictions, all of which have been or will be effected in accordance with this Agreement) or conflicts or will conflict with or constitutes or will constitute a breach of, or a default under, the certificate or articles of incorporation or bylaws, or other organizational documents, of the Company or any of the Subsidiaries or (B) conflicts or will conflict with or constitutes or will constitute a breach of, or a default under, any agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties may be bound, or violates or will violate any statute, law, rule, regulation or filing or judgment, injunction, order or decree applicable to the Company or any of the Subsidiaries or any of their respective properties, or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of the property or assets of any of them is subject. 7 DRAFT - September 12, 1996 (i) The accountants, Arthur Andersen LLP, who have certified or shall certify the financial statements included in the Registration Statement and the Prospectus (or any amendment or supplement thereto) are independent public accountants as required by the Act. (j) The financial statements, together with related schedules and notes, included in the Registration Statement and the Prospectus (and any amendment or supplement thereto), present fairly the consolidated financial position, results of operations and cash flows of the Company and the Subsidiaries on the basis stated in the Registration Statement at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data included in the Registration Statement and the Prospectus (and any amendment or supplement thereto) are accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company and the Subsidiaries. (k) The execution and delivery of, and the performance by the Company of its obligations under, this Agreement have been duly and validly authorized by the Company, and this Agreement has been duly executed and delivered by the Company and constitutes the valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as rights to indemnity and contribution hereunder may be limited by federal or state securities laws. (l) Except as disclosed in the Registration Statement and the Prospectus (or any amendment or supplement thereto), subsequent to the respective dates as of which such information is given in the Registration Statement and the Prospectus (or any amendment or supplement thereto), neither the Company nor any of the Subsidiaries has incurred any liability or obligation, direct or contingent, or entered into any transaction, not in the ordinary course of business, that is material to the Company and the Subsidiaries, taken as a whole, and there has not been any change in the capital stock, or material increase in the short-term debt or long-term debt, of the Company or any of the Subsidiaries, or any material adverse change, or any development involving or which may reasonably be expected to involve, a prospective material adverse change, in the condition (financial or other), business, net worth or results of operations of the Company and the Subsidiaries, taken as a whole. (m) Each of the Company and the Subsidiaries has good and marketable title to all property (real and personal) described in the Prospectus as being owned by it, free and clear of all liens, claims, security interests or other encumbrances except such as are described in the Registration Statement and the Prospectus or in a document filed as an exhibit to the Registration Statement and all the property described in the Prospectus as being held under lease by each of the Company and the Subsidiaries is held by it under valid, subsisting and enforceable leases. (n) The Company has not distributed and, prior to the later to occur of (i) the Closing Date and (ii) completion of the distribution of the Shares, will not distribute any offering material in connection with the offering and sale of the Shares other than the Registration Statement, the Prepricing Prospectus, the Prospectus or other materials, if any, permitted by the Act. (o) Neither the Company nor any of its Subsidiaries has violated any applicable 8 DRAFT - September 12, 1996 existing federal, state, local or foreign laws, statutes, rules or regulations, including, but not limited to, (i) any foreign, federal, state or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) any federal or state law relating to discrimination in the hiring, promotion or pay of employees, (iii) any applicable federal or state wages and hours laws and (iv) any provisions of the Employee Retirement Income Security Act and the rules and regulations promulgated thereunder, which in each of cases (i), (ii), (iii) or (iv) could result in a material adverse effect on the condition (financial or other), business, properties, net worth or results of operations of the Company and the Subsidiaries, taken as a whole. (p) There is (i) no significant unfair labor practice complaint pending against the Company or any of its Subsidiaries or, to the best knowledge of the Company, threatened against any of them, before the National Labor Relations Board or any state or local labor relations board, and no significant grievance or more significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company or any of its Subsidiaries or, to the best knowledge of the Company, threatened against any of them and (ii) no significant strike, labor dispute, slowdown or stoppage pending against the Company or any of its Subsidiaries or, to the best knowledge of the Company, threatened against it or any of its Subsidiaries except for such actions specified in clause (i) or (ii) above, which, singly or in the aggregate could not reasonably be expected to have a material adverse effect on the Company and its Subsidiaries, taken as a whole. (q) The Company and each of the Subsidiaries has such permits, licenses, franchises and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under all applicable Environmental Laws, as are necessary to own its respective properties and to conduct its business in the manner described in the Prospectus, subject to such qualifications as may be set forth in the Prospectus; the Company and each of the Subsidiaries has fulfilled and performed all its material obligations with respect to such permits and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such permit, subject in each case to such qualification as may be set forth in the Prospectus; and, except as described in the Prospectus, none of such permits contains any restriction that is materially burdensome to the Company or any of the Subsidiaries. (r) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (s) To the Company's knowledge, neither the Company nor any of its Subsidiaries nor any employee or agent of the Company or any Subsidiary has made any payment of funds of the Company or any Subsidiary or received or retained any funds in violation of any law, rule or regulation, which payment, receipt or retention of funds is of a character required to be disclosed 9 DRAFT - September 12, 1996 in the Prospectus. (t) The Company and each of the Subsidiaries have filed all tax returns required to be filed, which returns are complete and correct, and neither the Company nor any Subsidiary is in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto. (u) No holder of any security of the Company has any right to require registration of shares of Common Stock or any other security of the Company because of the filing of the Registration Statement or consummation of the transactions contemplated by this Agreement. (v) The Company and the Subsidiaries own or possess all patents, trademarks, trademark registrations, service marks, service mark registrations, trade names, copyrights, licenses, inventions, trade secrets and rights described in the Prospectus as being owned by them or any of them or necessary for the conduct of their respective businesses, and the Company is not aware of any claim to the contrary or any challenge by any other person to the rights of the Company and the Subsidiaries with respect to the foregoing. (w) Except as disclosed in the Prospectus, there are no business relationships or related party transactions required to be disclosed therein by Item 404 of Regulation S-K of the Commission. (x) The Company is not now, and after sale of the Shares to be sold by it hereunder and application of the net proceeds from such sale as described in the Prospectus under the caption "Use of Proceeds" will not be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (y) The Company has complied with all provisions of Florida Statutes, section 517.075, relating to issuers doing business with Cuba. 7. Indemnification and Contribution. (a) The Company agrees to indemnify -------------------------------- and hold harmless each of you and each other Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Prepricing Prospectus or in the Registration Statement or the Prospectus or in any amendment or supplement thereto, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of or are based upon any untrue statement or omission or alleged untrue statement or omission which has been made therein or omitted therefrom in reliance upon and in conformity with the information relating to such Underwriter furnished in writing to the Company by or on behalf of any Underwriter through you expressly for use in connection therewith; provided, however, that the indemnification contained in this paragraph (a) with respect to any Prepricing Prospectus shall not inure to the benefit of any Underwriter (or to the benefit of any person controlling such Underwriter) on account of any such loss, claim, damage, liability or expense arising from the sale of the Shares by such Underwriter to any person if a copy of the Prospectus shall not have been delivered or sent to such person within the time required by the Act and the regulations 10 DRAFT - September 12, 1996 thereunder, and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact contained in such Prepricing Prospectus was corrected in the Prospectus, provided that the Company has delivered the Prospectus to the several Underwriters in requisite quantity on a timely basis to permit such delivery or sending. The foregoing indemnity agreement shall be in addition to any liability which the Company may otherwise have. (b) If any action, suit or proceeding shall be brought against any Underwriter or any person controlling any Underwriter in respect of which indemnity may be sought against the Company, such Underwriter or such controlling person shall promptly notify the Company, and the Company shall assume the defense thereof, including the employment of counsel and payment of all fees and expenses. Such Underwriter or any such controlling person shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless (i) the Company has agreed in writing to pay such fees and expenses, (ii) the Company has failed to assume the defense and employ counsel, or (iii) the named parties to any such action, suit or proceeding (including any impleaded parties) include both such Underwriter or such controlling person and the Company and such Underwriter or such controlling person shall have been advised by its counsel that representation of such indemnified party and the Company by the same counsel would be inappropriate under applicable standards of professional conduct (whether or not such representation by the same counsel has been proposed) due to actual or potential differing interests between them (in which case the Company shall not have the right to assume the defense of such action, suit or proceeding on behalf of such Underwriter or such controlling person). It is understood, however, that the Company shall, in connection with any one such action, suit or proceeding or separate but substantially similar or related actions, suits or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of attorneys (in addition to any local counsel) at any time for all such Underwriters and controlling persons not having actual or potential differing interests with you or among themselves, which firm shall be designated in writing by Smith Barney Inc., and that all such fees and expenses shall be reimbursed as they are incurred. The Company shall not be liable for any settlement of any such action, suit or proceeding effected without its written consent, but if settled with such written consent, or if there be a final judgment for the plaintiff in any such action, suit or proceeding, the Company agrees to indemnify and hold harmless any Underwriter, to the extent provided in the preceding paragraph, and any such controlling person from and against any loss, claim, damage, liability or expense by reason of such settlement or judgment. (c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement, and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with respect to information relating to such Underwriter furnished in writing by or on behalf of such Underwriter through you expressly for use in the Registration Statement, the Prospectus or any Prepricing Prospectus, or any amendment or supplement thereto. If any action, suit or proceeding shall be brought against the Company, any of its directors, any such officer, or any such controlling person based on the Registration Statement, the Prospectus or any Prepricing Prospectus, or any amendment or supplement thereto, and in respect of which indemnity may be sought against any Underwriter pursuant to this paragraph (c), such Underwriter shall have the rights and duties given to the Company by paragraph (b) above (except that if the Company shall have assumed the defense thereof such Underwriter shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof, but the fees and expenses of such counsel 11 DRAFT - September 12, 1996 shall be at such Underwriter's expense), and the Company, its directors, any such officer, and any such controlling person shall have the rights and duties given to the Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be in addition to any liability which the Underwriters may otherwise have. (d) If the indemnification provided for in this Section 7 is unavailable to an indemnified party under paragraphs (a) or (c) hereof in respect of any losses, claims, damages, liabilities or expenses referred to therein, then an indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other hand 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 by the Underwriters on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by a pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities and expenses referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating any claim or defending any such action, suit or proceeding. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price of the Shares underwritten by it and distributed to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7 are several in proportion to the respective numbers of Firm Shares set forth opposite their names in Schedule I hereto (or such numbers of Firm Shares increased as set forth in Section 10 hereof) and not joint. (f) No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding. 12 DRAFT - September 12, 1996 (g) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 7 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter, the Company, its directors or officers, or any person controlling the Company, (ii) acceptance of any Shares and payment therefor hereunder and (iii) any termination of this Agreement. A successor to any Underwriter or any person controlling any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 7. 8. Conditions of Underwriters' Obligations. The several obligations of --------------------------------------- the Underwriters to purchase the Firm Shares hereunder are subject to the following conditions: (a) If, at the time this Agreement is executed and delivered, it is necessary for the Registration Statement or a post-effective amendment thereto to be declared effective before the offering of the Shares may commence, the Registration Statement or such post-effective amendment shall have become effective not later than 5:30 P.M., New York City time, on the date hereof, or at such later date and time as shall be consented to in writing by you, and all filings, if any, required by Rules 424 and 430A under the Act shall have been timely made; no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been instituted or, to the knowledge of the Company or any Underwriter, threatened by the Commission, and any request of the Commission for additional information (to be included in the Registration Statement or the prospectus or otherwise) shall have been complied with to your satisfaction. (b) Subsequent to the effective date of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in or affecting the condition (financial or other), business, assets, liabilities, net worth, results of operations or prospects of the Company or the Subsidiaries not contemplated by the Prospectus, which in your opinion, as Representatives of the several Underwriters, would materially, adversely affect the market for the Shares or (ii) any event or development relating to or involving the Company or any officer or director of the Company which makes any statement made in the Prospectus untrue or which, in the opinion of the Company and its counsel or the Underwriters and their counsel, requires the making of any addition to or change in the Prospectus in order to state a material fact required by the Act or any other law to be stated therein or necessary in order to make the statements therein not misleading, if amending or supplementing the Prospectus to reflect such event or development would, in your opinion, as Representatives of the several Underwriters, materially adversely affect the market for the Shares. (c) You shall have received on the Closing Date, an opinion of Davis Polk & Wardwell, counsel for the Company, dated the Closing Date and addressed to you, as Representatives of the several Underwriters, to the effect that: (i) The Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware with full corporate power and authority 13 DRAFT - September 12, 1996 to own its properties and to conduct its business as now being conducted, as described in the Registration Statement and the Prospectus (and any amendment or supplement thereto), and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure so to register or qualify does not have a material adverse effect on the condition (financial or other), business, assets, liabilities, net worth, results of operations, or prospects of the Company and the Subsidiaries, taken as a whole; (ii) Each of the Subsidiaries is a corporation duly organized and validly existing in good standing under the laws of the jurisdiction of its organization, with full corporate power and authority to own their respective properties and to conduct their respective businesses as now being conducted, as described in the Registration Statement and the Prospectus (and any amendment or supplement thereto); and all the outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, and are owned by the Company directly, or indirectly through one of the other wholly owned Subsidiaries, free and clear of any perfected security interest, or, to the best knowledge of such counsel after reasonable inquiry, any other security interest, lien, adverse claim, equity or other encumbrance; (iii) The authorized and issued and outstanding capital stock of the Company is as set forth under the caption "Capitalization" in the Prospectus; and the authorized capital stock of the Company conforms in all material respects as to legal matters to the description thereof contained in the Prospectus under the caption "Description of Capital Stock;" (iv) All the shares of capital stock of the Company outstanding prior to the issuance of the Shares have been duly authorized and validly issued, and are fully paid and nonassessable free or preemptive rights; (v) The Shares have been duly authorized and, when issued and delivered to the Underwriters against payment therefor in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and free of any preemptive, or to the best knowledge of such counsel after reasonable inquiry, similar rights that entitle or will entitle any person to acquire any Shares upon the issuance thereof by the Company; (vi) The form of certificates for the Shares conforms to the requirements of the Delaware General Corporation Law; (vii) The Registration Statement and all post-effective amendments, if any, have become effective under the Act and, to the best knowledge of such counsel after reasonable inquiry, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose are pending before or contemplated by the Commission; and any required filing of the Prospectus pursuant to Rule 424(b) has been made in accordance with Rule 424(b); (viii) The Company has the corporate power and authority to enter into this 14 DRAFT - September 12, 1996 Agreement and to issue, sell and deliver the Shares to the Underwriters as provided herein, and this Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors; (ii) as limited by the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and the discretion of the court before which any proceeding therefor may be brought; (iii) as limited by the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy; and (iv) to the extent that enforceability may be limited due to the existence of an untrue statement of a material fact in the Prospectus or the Registration Statement or the omission to state a material fact therein necessary to make the statements in the Prospectus and the Registration Statement not misleading; (ix) Neither the Company nor any of the Subsidiaries is in violation of its respective certificate or articles of incorporation or bylaws, or other organizational documents, or to the best knowledge of such counsel after reasonable inquiry, is in default in the performance of any material obligation, agreement or condition contained in any bond, debenture, note or other evidence of indebtedness, except as may be disclosed in the Prospectus; (x) Neither the offer, sale or delivery of the Shares, the execution, delivery or performance of this Agreement, compliance by the Company with the provisions hereof nor consummation by the Company of the transactions contemplated hereby constitutes or will constitute a breach or violation of, or a default under, the certificate or articles of incorporation or bylaws, or other organizational documents, of the Company or any of the Subsidiaries or any agreement, indenture, lease or other instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their respective properties is bound that is an exhibit to the Registration Statement, or is known to such counsel after reasonable inquiry, or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Subsidiaries, nor will any such action result in any violation of any existing law, regulation, ruling (assuming compliance with all applicable state securities and Blue Sky laws), judgment, injunction, order or decree known to such counsel after reasonable inquiry, applicable to the Company, the Subsidiaries or any of their respective properties or assets; (xi) No consent, approval, authorization or other order of, or registration, notice, declaration or filing to or with, any court, regulatory body, administrative agency or other governmental body, agency, or official is required on the part of the Company (except as have been obtained under the Act and the Exchange Act or such as may be required under state securities or Blue Sky laws governing the purchase and distribution of the Shares) for the valid issuance and sale of the Shares to the Underwriters as contemplated by this Agreement; 15 DRAFT - September 12, 1996 (xii) The Registration Statement and the Prospectus and any supplements or amendments thereto (except for the financial statements and the notes thereto and the schedules and other financial and statistical data included therein, as to which such counsel need not express any opinion) comply as to form in all material respects with the requirements of the Act; (xiii) To the best knowledge of such counsel after reasonable inquiry, (A) other than as described or contemplated in the Prospectus (or any supplement thereto), there are no legal or governmental proceedings pending or threatened against the Company or any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or any of their property, is subject, which are required to be described in the Registration Statement or Prospectus (or any amendment or supplement thereto) and (B) there are no agreements, contracts, indentures, leases or other instruments, that are required to be described in the Registration Statement or the Prospectus (or any amendment or supplement thereto) or to be filed as an exhibit to the Registration Statement that are not described or filed as required, as the case may be; (xiv) The Company and the Subsidiaries own all patents, trademarks, trademark registrations, service marks, service mark registrations, trade names, copyrights, licenses, inventions, trade secrets and rights described in the Prospectus as being owned by them or any of them or necessary for the conduct of their respective businesses, and such counsel is not aware of any claim to the contrary or any challenge by any other person to the rights of the Company and the Subsidiaries with respect to the foregoing; (xv) The statements in the Registration Statement and Prospectus, insofar as they are descriptions of contracts, agreements or other legal documents, or refer to statements of law or legal conclusions, are accurate and present fairly the information required to be shown; (xvi) Except as described in the Prospectus, there are no outstanding options, warrants or other rights calling for the issuance of, and such counsel does not know of any commitment, plan or arrangement to issue, any shares of capital stock of the Company or any security convertible into or exchangeable or exercisable for capital stock of the Company; (xii) Except as described in the Prospectus, there is no holder of any security of the Company or any other person who has the right, contractual or otherwise, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, the Shares or the right to have any Common Stock or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Act of any shares of Common Stock or other securities of the Company; (xiii) The Company is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; and 16 DRAFT - September 12, 1996 (xiv) Although counsel has not undertaken, except as otherwise indicated in their opinion, to determine independently, and does not assume any responsibility for, the accuracy or completeness of the statements in the Registration Statement, such counsel has participated in the preparation of the Registration Statement and the Prospectus, including review and discussion of the contents thereof, and nothing has come to the attention of such counsel that has caused it to believe that the Registration Statement at the time the Registration Statement became effective, or the Prospectus, as of its date and as of the Closing Date or the Option Closing Date, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that any amendment or supplement to the Prospectus, as of its respective date, and as of the Closing Date or the Option Closing Date, as the case may be, contained any untrue statement of a material fact or omitted 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 (it being understood that such counsel need express no opinion with respect to the financial statements and the notes thereto and the schedules and other financial and statistical data included in the Registration Statement or the Prospectus). In rendering their opinion as aforesaid, counsel may rely upon an opinion or opinions, each dated the Closing Date, of other counsel retained by them or the Company as to laws of any jurisdiction other than the United States or the State of New York, provided that (1) each such local counsel is acceptable to the Representatives, (2) such reliance is expressly authorized by each opinion so relied upon and a copy of each such opinion is delivered to the Representatives and is, in form and substance satisfactory to them and their counsel and (3) counsel shall state in their opinion that they believe that they and the Underwriters are justified in relying thereon. (d) You shall have received on the Closing Date an opinion of Latham & Watkins, counsel for the Underwriters, dated the Closing Date and addressed to you, as Representatives of the several Underwriters, with respect to the matters referred to in clauses (v), (vii), (viii), (xii) and (xvi) of the foregoing paragraph (c) and such other related matters as you may request. (e) You shall have received letters addressed to you, as Representatives of the several Underwriters, and dated the date hereof and the Closing Date from Arthur Andersen LLP, independent certified public accountants, substantially in the forms heretofore approved by you. (f) (i) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been taken or, to the knowledge of the Company, shall be contemplated or threatened by the Commission at or prior to the Closing Date; (ii) there shall not have been any change in the capital stock of the Company nor any material increase in the short-term or long-term debt of the Company (other than in the ordinary course of business) from that set forth or contemplated in the Registration Statement or the Prospectus (or any amendment or Supplement thereto); (iii) there shall not have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus (or any amendment or supplement thereto), except as may otherwise be stated in the Registration Statement and Prospectus (or any amendment or supplement thereto), any material adverse change in the condition (financial or other), business, prospects, assets, liabilities, net worth or results of operations of the Company and the Subsidiaries, taken as a whole; (iv) the Company and the 17 DRAFT - September 12, 1996 Subsidiaries shall not have any liabilities or obligations, direct or contingent (whether or not in the ordinary course of business), that are material to the Company and the Subsidiaries, taken as a whole, other than those reflected in the Registration Statement or the Prospectus (or any amendment or supplement thereto); and (v) all the representations and warranties of the Company contained in this Agreement shall be true and correct on and as of the date hereof and on and as of the Closing Date as if made on and as of the Closing Date, and you shall have received a certificate, dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company (or such other officers as are acceptable to you), to the effect set forth in this Section 8(f) and in Section 8(g) hereof. (g) The Company shall not have failed at or prior to the Closing Date to have performed or complied with any of its agreements herein contained and required to be performed or complied with by it hereunder at or prior to the Closing Date. (h) The Shares shall have been listed or approved for listing upon notice of issuance on the Nasdaq National Market. (i) On or prior to the Closing Date, the Underwriters shall have received the executed agreements referred to in Section 5(n) herein. (j) At or prior to the Closing Date, all consents required to effect the offering have been obtained and the Company shall have delivered to the Underwriters evidence satisfactory to the Underwriters that such consents have been obtained. (k) The Company shall have furnished or caused to be furnished to you such further certificates and documents as you shall have requested. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory in form and substance to you and your counsel. Any certificate or document signed by any officer of the Company and delivered to you, as Representatives of the Underwriters, or to counsel for the Underwriters, shall be deemed a representation and warranty by the Company to each Underwriter as to the statements made therein. The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the satisfaction on and as of any Option Closing Date of the conditions set forth in this Section 8, except that, if any Option Closing Date is other than the Closing Date, the certificates, opinions and letters referred to in paragraphs (c) through (k) shall be dated the Option Closing Date in question and the opinions called for by paragraphs (c) and (d) shall be revised to reflect the sale of Additional Shares. 9. Expenses. The Company agrees to pay the following costs and expenses -------- and all other costs and expenses incident to the performance by it of its obligations hereunder: (i) the preparation, printing or reproduction, and filing with the Commission of the Registration Statement (including, without limitation, financial statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and each amendment or supplement to any of them; (ii) the printing (or reproduction) and delivery (including, without limitation, postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement, each Prepricing Prospectus, the Prospectus and all amendments or supplements 18 DRAFT - September 12, 1996 to any of them as may be reasonably requested for use in connection with the offering and sale of the Shares; (iii) the preparation, printing, authentication, issuance and delivery of certificates for the Shares, including, without limitation, any stamp taxes in connection with the original issuance and sale of the Shares; (iv) the printing (or reproduction) and delivery of this Agreement, the preliminary and supplemental Blue Sky Memoranda and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Shares; (v) the registration of the Common Stock under the Exchange Act and the listing of the Shares on the Nasdaq National Market; (vi) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the several states as provided in Section 5(g) hereof (including, without limitation, the reasonable fees, expenses and disbursements of counsel for the Underwriters relating to the preparation, printing or reproduction, and delivery of the preliminary and supplemental Blue Sky Memoranda and such registration and qualification); (vii) the filing fees and the fees and expenses of counsel for the Underwriters in connection with any filings required to be made with the National Association of Securities Dealers, Inc.; (viii) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Shares; (ix) the fees and expenses of the Company's accountants and the fees and expenses of counsel (including local and special counsel) for the Company. 10. Effective Date of Agreement. This Agreement shall become effective: --------------------------- (i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at the time this Agreement is executed and delivered, it is necessary for the Registration Statement or a post-effective amendment thereto to be declared effective before the offering of the Shares may commence, when notification of the effectiveness of the Registration Statement or such post-effective amendment has been released by the Commission. Until such time as this Agreement shall have become effective, it may be terminated by the Company, by notifying you, or by you, as Representatives of the several Underwriters, by notifying the Company. If any one or more of the Underwriters shall fail or refuse to purchase Shares which it or they are obligated to purchase hereunder on the Closing Date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters are obligated but fail or refuse to purchase is not more than one-tenth of the aggregate number of Shares which the Underwriters are obligated to purchase on the Closing Date, each non-defaulting Underwriter shall be obligated, severally, in the proportion which the number of Firm Shares set forth opposite its name in Schedule I hereto bears to the aggregate number of Firm Shares set forth opposite the names of all non-defaulting Underwriters or in such other proportion as you may specify in accordance with Section 20 of the Master Agreement Among Underwriters of Smith Barney Inc., to purchase the Shares which such defaulting Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If any one or more of the Underwriters shall fail or refuse to purchase Shares which it or they are obligated to purchase on the Closing Date and the aggregate number of Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Shares which the Underwriters are obligated to purchase on the Closing Date and arrangements satisfactory to you and the Company for the purchase of such Shares by one or more non-defaulting Underwriters or other party or parties approved by you and the Company are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case which does not result in termination of this Agreement, either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any such default of any such Underwriter under this Agreement. The term "Underwriter" as used in this Agreement includes, for all purposes of this Agreement, any party not listed 19 DRAFT - September 12, 1996 in Schedule I hereto who, with your approval and the approval of the Company, purchases Shares which a defaulting Underwriter is obligated, but fails or refuses, to purchase. Any notice under this Section 10 may be given by telegram, telecopy or telephone but shall be subsequently confirmed by letter. 11. Termination of Agreement. This Agreement shall be subject to ------------------------ termination in your absolute discretion, without liability on the part of any Underwriter to the Company, by notice to the Company, if prior to the Closing Date or any Option Closing Date (if different from the Closing Date and then only as to the Additional Shares), as the case may be, (i) trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market shall have been suspended or materially limited, (ii) a general moratorium on commercial banking activities in New York or Delaware shall have been declared by either federal or state authorities or (iii) there shall have occurred any outbreak or escalation of hostilities or other international or domestic calamity, crisis or change in political, financial or economic conditions, the effect of which on the financial markets of the United States is such as to make it, in your judgment, impracticable or inadvisable to commence or continue the offering of the Shares at the offering price to the public set forth on the cover page of the Prospectus or to enforce contracts for the resale of the Shares by the Underwriters. Notice of such termination may be given to the Company by telegram, telecopy or telephone and shall be subsequently confirmed by letter. 12. Information Furnished by the Underwriters. The statements set forth ----------------------------------------- in the last paragraph on the cover page, the stabilization legend on the inside cover page, and the statements in the first and third paragraphs under the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus, constitute the only information furnished by or on behalf of the Underwriters through you as such information is referred to in Section 6(b) and Section 7 hereof. 13. Miscellaneous. Except as otherwise provided in Sections 5, 10 and 11 ------------- hereof, notice given pursuant to any provision of this Agreement shall be in writing and shall be delivered (i) if to the Company, at the office of the Company at 451 Industrial Lane, Birmingham, AL 35211, Attention: Mr. Michael Newsome, President; or (ii) if to you, as Representatives of the several Underwriters, care of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, Attention: Manager, Investment Banking Division. This Agreement has been and is made solely for the benefit of the several Underwriters, the Company, its directors and officers, and the other controlling persons referred to in Section 7 hereof and their respective successors and assigns, to the extent provided herein, and no other person shall acquire or have any right under or by virtue of this Agreement. Neither the term "successor" nor the term "successors and assigns" as used in this Agreement shall include a purchaser from any Underwriter of any of the Shares in his status as such purchaser. 14. Applicable Law; Counterparts. This Agreement shall be governed by and ---------------------------- construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. This Agreement may be signed in various counterparts which together constitute one and the same instrument. If signed in counterparts, this Agreement shall not become effective unless at least one counterpart hereof shall have been executed and delivered on behalf of each party hereto. 20 DRAFT - September 12, 1996 Please confirm that the foregoing correctly sets forth the agreement between the Company and the several Underwriters. Very truly yours, HIBBETT SPORTING GOODS, INC. By _____________________________ Name: Title: Confirmed as of the date first above mentioned on behalf of themselves and the other several Underwriters named in Schedule I hereto. SMITH BARNEY INC. MONTGOMERY SECURITIES THE ROBINSON HUMPHREY-COMPANY, INC. As Representatives of the Several Underwriters By SMITH BARNEY INC. By _______________________________ Name: Title: 21 DRAFT - September 12, 1996 SCHEDULE I Amount of Shares Underwriter to be Purchased - ----------- --------------- Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . Montgomery Securities. . . . . . . . . . . . . . . . . . . . . . . . . . The Robinson-Humphrey Company, Inc.. . . . . . . . . . . . . . . . . . . . Total ============== 22 EX-3.1 3 EXHIBIT 3.1 This Instrument Was Prepared By: William T. McGowin, IV 2900 AmSouth Harbert Plaza Birmingham, Alabama 35203 ARTICLES OF INCORPORATION OF HIBBETT SPORTING GOODS, INC. The undersigned incorporator hereby adopts the following Articles of Incorporation: ARTICLE I NAME OF CORPORATION ------------------- The name of the corporation shall be: Hibbett Sporting Goods, Inc. ARTICLE II PERIOD OF DURATION ------------------ The period of duration of the corporation shall be unlimited and perpetual. ARTICLE III OBJECTS AND PURPOSES -------------------- The objects and purposes for which the corporation is formed are: (a) To sell sporting goods, equipment and supplies. (b) To manufacture, purchase, or otherwise acquire, and to hold, own, mortgage, pledge, sell, transfer, or in any manner dispose of, and to deal and trade in goods, wares, merchandise and personal property of every class and description, wherever situated; and to own and operate mines, plants, factories, mills, warehouses, yards, merchandise stores, commissaries and all other installations of whatever character or description, together with the equipment, rolling stock, and other facilities used or useful in connection with or incidental thereto. (c) To purchase, or acquire by assignment, transfer or otherwise, and hold, mortgage or otherwise pledge, and to sell, exchange, transfer, deal in and in any manner dispose of, real property of any kind, class, interest, or type, wheresoever situated and to exercise, carry out and enjoy any license, power, authority, concession, right or privilege which any corporation may have or grant. (d) To purchase or otherwise acquire, hold, use, sell, assign, lease, mortgage or in any manner dispose of, and to take, exchange and grant licenses, or other rights therein, in respect of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements, processes, formulae, methods, copyrights, trademarks and trade names, know-how, and trade secrets, relating to or useful in connection with any business, objects or purposes of the corporation. (e) To subscribe for, acquire, hold, sell, assign, transfer, mortgage, pledge, or in any manner dispose of shares of stock, bonds or other evidences of indebtedness or securities issued or created by any other corporation of Alabama or any other state or foreign countries, and, while the owner thereof, to exercise all the rights, privileges and powers of ownership, including the right to vote thereon, to the same extent as a natural person may do, subject to the limitation, if any, on such rights now or hereafter provided by the laws of Alabama. (f) To enter into, make and perform contracts of every kind for any lawful purpose without limit as to amount, with any person, firm, association, corporation, municipality, county, state, territory, government, governmental subdivision or body politic. (g) To acquire the good will, rights, assets and properties, and to undertake the whole or any part of the liabilities, of any person, firm, association or corporation; to pay for the same in cash, the stock or other securities of the corporation, or otherwise; to hold, or in any manner dispose of, the whole or any part of the property so acquired; to conduct in any lawful manner the whole or any 2 part of the business so acquired and to exercise all the powers necessary or convenient in and about the conduct and management of any such business. (h) To borrow and lend money, without security, or upon the giving or receipt of such security as the Board of Directors of the corporation may deem advisable by way of mortgage, pledge, transfer, assignment, or otherwise of real and personal property of every nature and description by way of guaranty, or otherwise. (i) To draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, debentures, and other negotiable or transferable instruments. (j) To purchase (by means of tender, direct purchase, bids in the market or otherwise), take, receive, redeem, exchange, or otherwise acquire, hold, own, pledge, transfer or otherwise dispose of, at any time or from time to time, any of its bonds, debentures, notes, scrip, or evidences of indebtedness, or any of its common or other stock, whether or not redeemable, or other securities, and to hold, sell, transfer or reissue the same; provided that purchases of its own shares of stock may be made only to the extent of earned surplus and to the extent of capital surplus; and provided that any shares of the common stock of the corporation acquired by the corporation shall, until the disposition, retirement or cancellation thereof, be held by the corporation as treasury shares, unless, prior or subsequent to the acquisition of any such shares, the Board of Directors of the corporation shall have determined that such shares shall be restored to the status of authorized but unissued shares. (k) To act as agent, jobber, broker or attorney in fact in buying, selling and dealing in real and personal property of every nature and description and leases respecting securities thereon, in making and obtaining loans, whether secured by a mortgage of or security interest in such property or not, and in supervising, managing and protecting such property and loans and all interest in and claims affecting the same. (l) To enter into any plan or program for the assistance and welfare of its employees. (m) To enter into any legal arrangements for sharing of profits, reciprocal concessions, or cooperation as general or limited partner, joint venturer, or otherwise, with any person, partnership, corporation, association, combination, organization, entity or other body whatsoever, domestic or foreign, carrying on or proposing to carry on any business which this corporation is authorized to carry 3 on, or any business transaction deemed necessary, convenient or incidental to carrying out any of the objects of the corporation. (n) To have one or more offices to carry on all of its operations and business without restriction or limit as to amount, in any of the states, districts, territories or possessions of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, possession, colony or country. (o) To endorse, or otherwise guarantee, or become a surety with respect to, or obligate itself for, or without becoming liable therefore, nevertheless, to pledge or mortgage, all or any part of its properties to secure the payment of the principal of, and interest on, or either thereof, any bonds, including construction or performance bonds, debentures, notes, contracts or other obligations or evidences of indebtedness, or the performance of any contract, lease, construction, performance or other bond, mortgage, or obligation of any other corporation or association, domestic or foreign, or of any firm, partnership, joint venture, natural person or other entity whatsoever, in which the corporation may have a lawful interest, or on account of, or with respect to, any transaction in which the corporation shall receive any lawful consideration, advantage or benefit, on any account whatsoever. The corporation shall be deemed to have a lawful interest in any corporation, association, or person (A) which owns stock in the corporation, or (B) which owns stock in another corporation which owns stock in the corporation, or (C) in which the corporation owns stock, or (D) in which another corporation owns stock which also owns stock in the corporation, or (E) in which any one or more persons who own stock in the corporation also own stock, or (F) which or who has entered into any contractual agreement pursuant to which any such corporation or person undertakes corresponding or like obligations of endorsement, guarantee, or suretyship, with respect to all or any such obligations or evidences of indebtedness or contracts of the corporation, or which may engage with the corporation, in the conduct of any joint venture or enterprise, or in the use of common facilities or services. (p) To carry on any other business in connection with the foregoing. (q) To do any and all of the things herein set out and such other things as are incidental or conducive to the attainment of the objects and purposes of the corporation, to the same extent as natural persons might or could do and in any part of the world, as principal, factor, agent, contractor, or otherwise, either alone or in conjunction with any person, firm, association, corporation or any entity of whatsoever kind, and to do any and all such acts and things and to exercise any and all such powers to the full extent authorized or permitted to a corporation 4 under any laws that may be now or hereafter applicable or available to the corporation. The foregoing clauses, and each phrase thereof, shall be construed as objects and purposes of the corporation, as well as powers, and provisions for the regulation of the business and the conduct of the affairs of the corporation, all in addition to those powers specifically conferred upon the corporation by law, and it is hereby expressly provided that the foregoing specific enumeration of objects and purposes shall not be held to limit or restrict in any manner the powers of the corporation otherwise granted by law. Nothing herein contained, however, shall be construed as authorizing this corporation to carry on the business of banking or that of a trust company, or the business of insurance in any of its branches. ARTICLE IV LOCATION OF INITIAL REGISTERED OFFICE AND INITIAL REGISTERED AGENT ---------------------------- The location and mailing address of the initial registered office of the corporation in the State of Alabama shall be 131 25th St. So., Irondale, Alabama 35210, and the corporation's initial registered agent at such address shall be Mickey Newsom. ARTICLE V CAPITAL STOCK ------------- 5 The aggregate number of shares of capital stock which the corporation shall be authorized to issue and have outstanding shall be Ten Thousand (10,000) shares of the par value of One Dollar ($1.00), per share, being a total authorized capital stock of Ten Thousand Dollars ($10,000.00), all of the same class. ARTICLE VI BOARD OF DIRECTORS ------------------ The number of directors constituting the initial Board of Directors of the corporation is three (3), and the names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their successors are elected and shall qualify are as follows: NAME ADDRESS ---- ------- Charles C. Anderson 200 North Court St. Florence, AL 35630 Joe R. Anderson 202 North Court St. Florence, AL 35630 Mickey Newson 131 25th St. So. Irondale, AL 35210 ARTICLE VII INCORPORATOR ------------ The name and address of the incorporator is as follows: William T. McGowin, IV 6 2900 AmSouth Harbert Plaza Birmingham, Alabama 35203 IN WITNESS WHEREOF, the undersigned incorporator has executed these articles of Incorporation on this 2nd day of August, 1992. --- ------ ______________________________ William T. McGowin, IV STATE OF ALABAMA ) COUNTY OF JEFFERSON ) I, the undersigned Notary Public in and for said county in said state, hereby certify that William T. McGowin, IV, whose name is signed to the foregoing Articles of Incorporation, and who is known to me, acknowledged before me on this day, that, being informed of the contents of such instrument, he executed the same voluntarily on the day the same bears date. Given under my hand and official seal this 31st day August, 1992. ---- ------ _____________________ Notary Public My Commission Expires: _____________________ 7 This Instrument Was Prepared By: Timothy K. Corley 202 North Court Street Florence, Alabama 35630 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF HIBBETT SPORTING GOODS, INC. Pursuant to the provisions of Sec.Sec. 10-2A-110, et seq.,of the Code of ------ ------- Alabama (1975), the shareholders and directors of the undersigned corporation - ------- have adopted these Articles of Amendment. The information required by Sec. 10-2A-113 is as follows: ARTICLE ONE The name of the corporation is Hibbett Sporting Goods, Inc. ARTICLE TWO The amendment adopted is as follows: ARTICLE V of the Articles of Incorporation is hereby deleted in its entirety and the following substituted therefor: ARTICLE V The aggregate number of shares of capital stock which the corporation shall be authorized to issue and have outstanding shall be Twenty Thousand (20,000) shares of the par value of Ten Cents ($0.10) 8 per share, all of the same class, being a total authorized capital stock of Two Thousand Dollars ($2,000.00). ARTICLE THREE The amendment was adopted by the unanimous vote of the shareholders and directors by their execution of written consents to action taken without a meeting dated as of January 5, 1993, as permitted by Sec. 10-2A-56 and Sec. 10-2A-66 of the Code of Alabama (1975). --------------- ARTICLE FOUR The number of shares of capital stock outstanding at the time of the adoption of the amendment was 10,000 shares of common stock, all of the same class. ARTICLE FIVE The number of shares voted for the amendment was 10,000, and the number of shares voted against the amendment was zero. ARTICLE SIX The reduction of the par value of the outstanding 10,000 shares of common stock shall be effected automatically without the necessity of the exchange of certificates evidencing such shares. Henceforth, all shares of common stock issued and outstanding shall be deemed to have a par value of Ten Cents ($0.10) per share by virtue of this amendment. Upon the surrender of any certificate for transfer or otherwise, any new certificates issued shall specifically indicate a par value of Ten Cents ($0.10) per share. ARTICLE SEVEN The amendment effects a change in the amount of the stated capital of the corporation by reducing the One Dollar ($1.00) par value of the outstanding 10,000 shares of common stock to a par value of Ten Cents ($0.10) per share, thereby reducing the stated capital of the corporation from Ten Thousand Dollars ($10,000.00) to One Thousand Dollars ($1,000.00). 9 IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of Amendment to be executed in its name and on its behalf by its President and Secretary, duly authorized, on this 12th day of January, 1993. ----- ------- HIBBETT SPORTING GOODS, INC. By: ___________________________ Its President By: ___________________________ Its Secretary 10 STATE OF ALABAMA COUNTY OF Lauderdale ---------- Before me, the undersigned notary public, personally appeared Cynthia W. ---------- Clark, of Hibbett Sporting Goods, Inc., an Alabama corporation, who, being first - ----- duly sworn, verified that he signed the foregoing Articles of Amendment to the Articles of Incorporation as Secretary of said corporation and that the matters --------- stated therein are true and correct. Given under my hand and official seal this 12th day of January, 1993. ---- ------- _______________________ Notary Public My Commission Expires: August 28, 1994 --------------- 11 This Instrument Was Prepared By: Timothy K. Corley 202 North Court Street Florence, Alabama 35630 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF HIBBETT SPORTING GOODS, INC. Pursuant to the provisions of Sec.Sec. 10-2A-110, et. seq, of the Code of ------- ------- Alabama (1975), the shareholders and directors of the undersigned corporation - ------- have adopted these Articles of Amendment. The information required by Sec. 10-2A-113 is as follows: ARTICLE ONE The name of the corporation is Hibbett Sporting Goods, Inc. ARTICLE TWO The amendment adopted is as follows: ARTICLE V of the Articles of Incorporation is hereby deleted in its entirety and the following substituted therefor: ARTICLE V The aggregate number of shares of capital stock which the corporation shall be authorized to issue and have outstanding shall be Three Million (3,000,000) shares of the par value of One Cent ($0.01) per share, all of the same class, being a total authorized capital stock of Thirty Thousand Dollars ($30,000.00). ARTICLE THREE 12 The amendment was adopted by the unanimous vote of the shareholders and directors by their execution of written consents to action taken without a meeting dated as of December 15, 1994, as permitted by Sec.10-2A-56 and Sec.10-2A-66 of the Code of Alabama (1975). --------------- ARTICLE FOUR The number of shares of capital stock outstanding at the time of the adoption of the amendment was 10,256 shares of common stock, all of the same class. ARTICLE FIVE The number of shares voted for the amendment was 10,256, and the number of shares voted against the amendment was zero. ARTICLE SIX The reduction of the par value of the outstanding 10,256 shares of common stock shall be effected automatically without the necessity of the exchange of certificates evidencing such shares. Henceforth, all shares of common stock issued and outstanding shall be deemed to have a par value of One Cent ($0.01) per share by virtue of this amendment. Upon the surrender of any certificate for transfer or otherwise, any new certificates issued shall specifically indicate a par value of One Cent ($0.01) per share. ARTICLE SEVEN The amendment effects a change in the amount of the stated capital of the corporation by reducing the Ten Cent ($0.10) par value per share of the outstanding 10,256 shares of common stock to a par value of One Cent ($0.01) per share, thereby reducing the stated capital of the corporation from One Thousand Twenty-five Dollars and Sixty Cents ($1,025.60) to One Hundred Two Dollars and Fifty-six Cents ($102.56). 13 IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of Amendment to be executed in its name and on its behalf by its President and Secretary, duly authorized, on this 15th day of December, 1994. ---- -------- HIBBETT SPORTING GOODS, INC. By: ____________________________ Its President By: ____________________________ Its Secretary STATE OF ALABAMA COUNTY OF JEFFERSON Before me, the undersigned notary public, personally appeared Michael J. Newsome, President of Hibbett Sporting Goods, Inc., an Alabama corporation, who, being first duly sworn, verified that he signed the foregoing Articles of Amendment to the Articles of Incorporation as President of said corporation and that the matters stated therein are true and correct. Given under my hand and official seal this __ day of __________, 1994. ______________________________________ Notary Public My Commission Expires:_________________ 14 ARTICLES OF AMENDMENT to the ARTICLES OF INCORPORATION OF HIBBETT SPORTING GOODS, INC. Pursuant to, and with the effect provided in, Sections 10-2B-10.02 to 10.06 of the Code of Alabama, 1975, as amended (the "Code"), the undersigned --------------------- corporation adopts the following Articles of Amendment to its Articles of Incorporation: FIRST: The name of the corporation is "Hibbett Sporting Goods, Inc." (the "Corporation"). SECOND: The following amendment to the Corporation's Articles of Incorporation was adopted in the manner provided by the Code by the Corporation's shareholders, as of November 1, 1995: ARTICLE V of the Corporation's Articles of Incorporation is hereby deleted in its entirety and the following is substituted therefor: "Article V CAPITAL STOCK ------------- The aggregate number of shares of capital stock which the Corporation shall be authorized to issue and have outstanding shall be Fifty Million (50,000,000) shares of $.01 par value common stock, being a total authorized capital stock of Five Hundred Thousand and No/100 Dollars ($500,000);" THIRD: The following amendment to the Corporation's Articles of Incorporation was adopted in the manner provided by the Code by the Corporation's sharesholders, as of November 1, 1995: The Corporation's Articles of Incorporation is hereby amended by adding Article VIII as follows: 15 "Article VIII PREEMPTIVE RIGHTS ----------------- Except as otherwise provided in that certain Stockholders Agreement, dated as of November __ , 1995, by and among the Corporation and certain of the Corporation's shareholders, the shareholders of the Corporation shall not have a preemptive right to acquire the Corporation's unissued shares of capital stock;" FOURTH: The Corporation had 1,025,600 shares of $.01 par value Common Stock issued and outstanding at the time of the adoption of this amendment. All 1,025,600 shares of $.01 Common Stock issued and outstanding voted to approve, and no shares voted against or abstained from voting on the foregoing amendments. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to the Corporation's Articles of Incorporation to be executed in its name and on its behalf as of November __, 1995. HIBBETT SPORTING GOODS, INC. ____________________________ Michael J. Newsome President This Instrument Prepared By: Gregory S. Curran Balch & Bingham Post Office Box 306 Birmingham, AL 35201 16 EX-3.2 4 EXHIBIT 3.2 BY LAWS OF HIBBETT SPORTING GOODS, INC. ARTICLE 1 OFFICES Sec. 1. PRINCIPAL OFFICE. The principal office of the corporation shall be ---------------- established and maintained in Birmingham, Jefferson County, Alabama. The Board of Directors may change the location of said office from time to time. Sec. 2. OTHER OFFICES. The corporation may have other offices, either ------------- within or outside of the State of Alabama, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE 2 MEETINGS OF SHAREHOLDERS Sec. 1. PLACE OF MEETINGS. The annual and special meetings of shareholders ----------------- shall be held at the principal office of the corporation, or at such other place or places as shall be determined by the Chairman or Vice-Chairman of the Board, or the President, or the Board of Directors and stated in the notice of the meeting. Sec. 2. ANNUAL MEETINGS. The annual meeting of shareholders for the --------------- election of directors for the ensuing year and for the transaction of such other business as may properly come before the meeting shall be held in each year, commencing in 1993, on the 2nd Monday in April, or on another date between January and July, or at such time as shall be fixed by either the Board of Directors or the Executive Committee thereof. Sec. 3. SPECIAL MEETINGS. Special meetings of the shareholders for any ---------------- purpose may be called by the Chairman or Vice-Chairman of the Board or the President, or any two directors, or any shareholder or shareholders owning 10% in the aggregate of the stock in the corporation entitled to vote, or by resolution of the Board of Directors or the Executive Committee thereof. Sec. 4. VOTING. Each shareholder entitled to vote in accordance with the ------ terms of the Articles of Incorporation and in accordance with the provisions of these Bylaws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such shareholder. No proxy shall be valid after eleven (11) months from its date of execution, unless such proxy provides for a longer period. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Articles of Incorporation or the laws of Alabama. Sec. 5. VOTING LIST. A complete list of the shareholders entitled to vote ----------- at any regular or special meeting, arranged in alphabetical order, with the address of each and the number of voting shares held by each, shall be prepared by the Secretary or other officer in charge of the stock transfer books, either directly or through a Transfer Agent, and kept on file in the principal office of the corporation for at least ten (10) days before every meeting. At all times during the usual hours for business, and during the whole time of said meeting, such list shall be open to examination of any shareholder. Any shareholder wishing to examine said list during said ten (10) day period must make written request therefor. Sec. 6. QUORUM. Except as otherwise required by law, by the Articles of ------ Incorporation or by these Bylaws, the presence, in person or by proxy, of shareholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the shareholders. In case a quorum shall not be present at any meeting, the shareholders present in person or by proxy shall have power, by majority vote, to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. Shareholders may participate in a meeting by means of a conference telephone or similar communication equipment, to the extent authorized by statute. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. Sec. 7. NOTICE OF MEETINGS. Written or printed notice of each annual or ------------------ special meeting of shareholders, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given by the Secretary, or by the Chairman or Vice-Chairman of the Board or the President, or by the other person or persons calling the meeting, to each shareholder entitled to vote thereat, delivered personally or mailed first class postage prepaid and addressed to him at his last known mailing address according to the stock transfer 2 records of the corporation, not less than ten (10) nor more than fifty (50) days (or such period as the laws of Alabama may require) before the meeting. Sec. 8. ACTION WITHOUT MEETING. Whenever the vote of shareholders at a ---------------------- meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of statutes or of the Articles of Incorporation or of these Bylaws, unless prohibited by the laws of Alabama, the meeting and vote of shareholders may be dispensed with, if all (or such lesser number as the law of Alabama may permit) the shareholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE 3 DIRECTORS Sec. 1. NUMBER AND TERM. The number of directors shall be not less than --------------- one (1) (unless the laws of Alabama require a greater number) nor more than twenty (20), as determined and fixed from time to time by action of the shareholders at any regular or special meeting. The directors shall be elected at the annual meeting of the shareholders, and each director shall be elected to serve until his successor shall be elected to serve until his successor shall be elected and shall qualify. Directors need not be shareholders. Sec. 2. RESIGNATIONS. Any director may resign at any time. Such ------------ resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman or Vice-Chairman of the Board, President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. Sec. 3. VACANCIES. If the office of any director becomes vacant the --------- remaining directors in office, though less than a quorum, by a majority vote, may elect a successor to fill such vacancy, who shall hold office for the unexpired term. Sec. 4. POWERS. The Board of Directors shall exercise all of the powers of ------ the corporation except such as are by law, or by the Articles of Incorporation of the corporation, or by these Bylaws conferred upon or reserved to the shareholders. Sec. 5. ANNUAL MEETINGS. The Board of Directors may meet, without notice --------------- of such meeting, for the purpose of organization , the election of 3 officers and the transaction of other business, on the same day as, at the place at which, and as soon as practicable after each annual election of directors is held. Such annual meeting may be held at any other time or place specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or in a waiver of notice thereof. Sec. 6. REGULAR MEETINGS. Regular meetings of the Board of Directors may ---------------- be held at such times and places as may be fixed from time to time by action of the Board of Directors. Unless required by resolution of the Board of Directors, notice of any such meeting need not be given. Sec. 7. SPECIAL MEETINGS. Special meetings of the Board of Directors shall ---------------- be held whenever called by the Chairman or Vice-Chairman of the Board, or the President, or by any two or more directors, or, at the direction of any of the foregoing, by the Secretary. Notice of each such meeting shall be mailed, telegraphed, telecopied or telephoned to each director, addressed to him at his last known address according to the records of the corporation, at least three (3) days before the date on which the meeting is to be held (unless more notice is required under the laws of Alabama). Every such notice shall state the date, time, place and the purposes of the meeting. Notice of any adjourned or recessed meeting of the directors need not be given. Sec. 8. WAIVERS OF NOTICE OF MEETINGS. Anything in these Bylaws or in any ----------------------------- resolution adopted by the Board of Directors to the contrary notwithstanding, proper notice of any meeting of the Board of Directors shall be deemed to have been given to any director if such notice shall be waived by him in writing (including telegraph, telecopy, teletype, or cable) before or after the meeting. A director who attends a meeting shall be deemed to have had timely and proper notice thereof, unless he attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Sec. 9. QUORUM AND MANNER OF ACTING. A majority of the number of directors --------------------------- then in office shall constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. Directors may participate in a meeting by means of a conference telephone or similar communication equipment, to the extent authorized by statute. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum is present. The directors shall act only as a Board and the individual directors shall have no power as such. 4 Sec. 10. COMPENSATION. Each director shall be entitled to receive from ------------ the corporation such amount per annum or such fees for attendance at directors' meetings, or both, and such additional amounts for service upon committees, as the Board of Directors shall from time to time determine, together with reimbursement for the reasonable expenses incurred by him in connection with the performance of his duties. Nothing in this section shall preclude any director from serving the corporation or its subsidiaries in any other capacity and receiving proper compensation therefor. Sec. 11. REMOVAL. Any director may be removed, either with or without ------- cause, by resolution adopted at any regular or special meeting of the shareholders by vote of the holders of the majority of the corporation's voting stock outstanding and entitled to vote. ARTICLE 4 EXECUTIVE AND OTHER COMMITTEES Sec. 1. EXECUTIVE COMMITTEE. The Board of Directors may by resolution ------------------- designate three or more of their number, including in each case the Chairman and Vice-Chairman of the Board and the President, as an Executive Committee. While the Board of Directors is not in session, the Executive Committee, if there then be such a committee, shall have and exercise the authority of the Board of Directors in the management of the business and affairs of the corporation, subject to the restrictions hereinafter set out and further subject to such limitations upon its authority as the Board may from time to time impose. In no event shall the Executive Committee, or any other committee, have authority to approve an amendment to the Articles of Incorporation or a plan of merger or consolidation, to amend these Bylaws, or to elect officers or fix their compensation. The Executive Committee shall have the power to authorize the seal of the corporation to be affixed to all papers which may require it. Sec. 2. OTHER COMMITTEES. In addition to an Executive Committee, the Board ---------------- of Directors may by resolution designate other committees, each to consist of two or more directors, with such purposes and powers as the Board may specify. Sec. 3. PROCEDURE OF COMMITTEES. Unless the Board of Directors by ----------------------- resolution otherwise provides, the Executive Committee and each other committee shall choose its own chairman and secretary. The Executive Committee and each other committee shall record all its acts and proceedings and report the same from time to time to the Board of Directors. Regular meetings of any such committee, of which no notice shall be necessary, may be held at such 5 times and in such places as shall be fixed by a majority of the committee. Special meetings of any such committee may be called at the request of any member of the committee. Notice of each special meeting of such a committee shall be given by the person calling the same as provided by these Bylaws for special meetings of the full Board. Notice of any such meeting may be waived as provided by these Bylaws in the case of meetings of the full Board. A majority of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the committee. Members of any such committee shall act only as a committee and the individual members shall have no power as such. Sec. 4. TENURE OF COMMITTEEMEN. The Board of Directors shall have the ---------------------- power at any time to change the members of, fill vacancies in, and discharge any such committee, either with or without cause. The appointment of any director to any such committee, if not sooner terminated, shall automatically terminate upon the expiration of his term as a director or upon the earlier termination of his membership on the Board of Directors. ARTICLE 5 OFFICERS Sec. 1. OFFICERS. The officers of the corporation shall be a Chairman and -------- Vice-Chairman of the Board, President, one or more Vice-Presidents, a Treasurer and a Secretary, and the holders of such other offices as may be established in accordance with the provisions of Sec. 3 of this Article. Any two or more offices may be held by the same person, except as prohibited by statute. Sec. 2. ELECTION TERM OF OFFICE AND QUALIFICATIONS. The officers shall be ------------------------------------------ elected annually by the Board of Directors at the Board's annual meeting. Each officer shall hold office until his successor shall have been duly chosen and shall qualify, or until his death, resignation or removal in the manner hereinafter provided. The Chairman and Vice-Chairman of the Board and the President shall be chosen from among the directors, but no other officer need be a director. Sec. 3. OTHER OFFICES. The Board of Directors may from time to time ------------- establish offices in addition to those designated in Sec.1 with such duties as are provided in these Bylaws, or as they may from time to time determine. Sec. 4. REMOVAL. Any officer may be removed, either with or without cause, ------- by resolution declaring such removal to be in the best interests of the corporation and adopted at any regular or special meeting of the Board of 6 Directors by a majority of the directors then in office. Any such removal shall be without prejudice to the recovery of damages for breach of the contract rights, if any, of the person removed. Election or appointment of an officer or agent shall not of itself, however, create contract rights. Sec. 5. RESIGNATIONS. Any officer may resign at any time by giving oral or ------------ written notice to the Board of Directors or the Chairman or Vice-Chairman of the Board or the President or the Secretary of the corporation. Any such resignation shall take effect at the date of receipt of such notice or at any later time therein specified; and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. No resignation hereunder, however, or the acceptance thereof by the Board of Directors, shall prejudice the contract or other rights, if any, of the corporation with respect to the person resigning. Sec. 6. VACANCIES. A vacancy in any office because of death, resignation, --------- removal, disqualification or any other cause may be filled for the unexpired portion of the term by the Board of Directors. Sec. 7. COMPENSATION. Salaries or other compensation of the officers may ------------ be fixed from time to time by the Board of Directors or in such manner as it shall determine. No officer shall be prevented from receiving his salary by reason of the fact that he is also a director of the corporation. Sec. 8. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board ---------------------------------- shall be the Chief Executive Officer of the corporation and shall have general executive responsibility for the business of the corporation and its several officers, subject, however, to the control of the Board of Directors and the Executive Committee of the Board. He shall preside at all meetings of the Board of Directors and at all meetings of the shareholders. The Chairman of the Board shall have in general such powers and duties as are customary to the office of the Chief Executive Officer of a business corporation and such other duties as may be assigned or delegated to him from time to time by the Board of Directors or by the Executive Committee of the Board. Sec. 9. THE VICE-CHAIRMAN OF THE BOARD OF DIRECTORS. The Vice-Chairman of ------------------------------------------- the Board shall, in the absence or disability of the Chairman, perform the duties and exercise the powers of the Chairman and shall perform such other duties and have such other powers as the Board of Directors or the Chairman of the Board or the Executive Committee may from time to time prescribe. 7 Sec. 10. PRESIDENT. The President shall be the Chief Operating Officer --------- of the corporation and shall have general operating responsibility for the business of the corporation, subject, however, to the control of the Chairman and Vice-Chairman of the Board, the Board of Directors and the Executive Committee of the Board He shall at each annual meeting and from time to time report to the shareholders and to the Board of Directors and Executive Committee all matters within his knowledge which the interest of the corporation may require to be brought to their notice; in the absence of the Chairman and Vice- Chairman of the Board, shall preside when present at all meetings of the shareholders and, in the absence of the Chairman and Vice-Chairman of the Board, at all meetings of the Board of Directors; shall sign and execute in the name of the corporation all deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Directors or the Executive Committee except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the corporation; and in general shall perform all duties customary to the office of Chief Operating Officer of a business corporation and such other duties as may be delegated to him by the Board of Directors or the Executive Committee. Sec. 11. THE VICE-PRESIDENTS. The Vice-President (one or more of whom ------------------- may be designated as Executive Vice-President) shall perform such duties as from time to time may be assigned to them by the Board of Directors, or by any duly authorized committee of directors or by the President. Sec. 12. TREASURER. Except as may otherwise be specifically provided --------- by the Board of Directors or any duly authorized committee thereof, the Treasurer shall have the custody of, and be responsible for, all funds and securities of the corporation; receive and receipt for money paid to the corporation from any source whatsoever; deposit all such monies in the name of the corporation in such banks, trust companies, or other depositaries as shall be selected in accordance with the provisions of these Bylaws; against proper vouchers, cause such funds to be disbursed by check or draft on the authorized depositaries of the corporation signed in such manner as shall be determined in accordance with the provisions of these Bylaws; regularly enter or cause to be entered in books to be kept by him or under his direction, full and adequate accounts of all money received and paid by him for account of the corporation; and, in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors, or by any duly authorized committee of directors, or by the Chairman or Vice-Chairman of the Board or by the President. 8 Sec. 13. SECRETARY. The Secretary shall act as Secretary at all --------- meetings of the shareholders and of the Board of Directors of the corporation; shall keep the minutes thereof in the proper book or books to be provided for that purpose; shall see that all notices required to be given by the corporation are duly given and served; shall be the custodian of the seal of the corporation and shall affix the seal or cause it to be affixed to all documents the execution of which on behalf of the corporation under its corporate seal is duly authorized in accordance with the provisions of these Bylaws; shall have charge of the books, records and papers of the corporation relating to its organization and management as a corporation, and shall see that any reports or statements relating thereto, required by law or otherwise, are properly kept and filed; shall, in general, perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors, or by any duly authorized committee of directors or by the Chairman or Vice-Chairman of the Board or by the President. Sec. 14. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant ---------------------------------------------- Treasurers and Assistant Secretaries shall perform such duties as shall be assigned to them by the Treasurer and by the Secretary, respectively, or by the Board of Directors, or by any duly authorized committee of directors, or by the Chairman or Vice-Chairman of the Board or by the President. Sec. 15. CERTAIN OFFICERS TO GIVE BONDS. Every officer, agent or ------------------------------ employee of the corporation who may receive, handle or disburse money for its account or who may have any of the corporation's property in his custody or be responsible for its safety or preservation, may be required, in the discretion of the Board of Directors, to give bond, in such sum and with such sureties and in such form as shall be satisfactory to the Board of Directors, for the faithful performance of the duties of his office and for the restoration to the corporation, in the event of his death, resignation, or removal from office, of all books, papers, vouchers, moneys and other property of whatsoever kind in his custody belonging to the corporation. ARTICLE 6 MISCELLANEOUS Sec. 1. CERTIFICATES OF STOCK. Certificates of stock, numbered and with --------------------- the seal of the corporation affixed, signed by the President or a Vice-President, and by the Treasurer or an Assistant Treasurer, or by the Secretary or an Assistant Secretary, shall be issued to each shareholder certifying the number of shares owned by him in the corporation. When such certificates are 9 signed by a transfer agent or a transfer clerk acting on behalf of the corporation, the signatures of such officers may be facsimiles. Sec. 2. LOST CERTIFICATE. A new certificate of stock may be issued in the ---------------- place of any certificate theretofore issued by the corporation and alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate or the issuance of any such new certificate. Sec. 3. TRANSFER OF SHARES. The shares of stock of the corporation shall ------------------ be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled and one or more new certificates shall thereupon be issued. Sec. 4. CLOSING OF TRANSFER BOOKS; RECORD DATE. The Board of Directors -------------------------------------- shall have power to close the stock transfer books of the corporation for a period of days preceding the date of any meeting of shareholders, or the date for payment of any dividend, or the date for the determination of shareholders for any other proper purpose, or may fix in advance a date as the record date for any such determination of shareholders, as provided by statute. Sec. 5. SEAL. The corporation seal shall be circular in form and shall ---- contain the name of the corporation and the words, "CORPORATE SEAL." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Sec. 6. CHECKS, ETC. All checks, drafts or other orders for the payment of ------------ money, or notes or other evidence of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by the Board of Directors or the Executive Committee thereof. Sec. 7. CONTRACTS, ETC. The Board of Directors or the Executive Committee -------------- may authorize any officer or officers or agent or agents of the corporation to enter into any contract or execute and deliver any instrument in the 10 name of and on behalf of the corporation, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors or by the Executive Committee or by these Bylaws, no officer, agent, or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or for any amount Sec. 8. BOOKS AND RECORDS. The books and records of the corporation may be ----------------- kept within or outside the State of Alabama at such place or places as the Board of Directors may from time to time determine, except as otherwise required by law. Sec. 9. STOCK ETC.OWNED BY CORPORATION. Unless otherwise provided by ------------------------------ resolution of the Board of Directors, the Chairman or Vice-Chairman of the Board or the President may from time to time appoint any attorney or attorneys or agent or agents of this corporation, in the name and on behalf of this corporation, to cast the votes which this corporation may be entitled to cast as the holder of stock or other securities in any other corporation, at any meetings of the holders of such stock or other securities, or to consent in writing to any action by any such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may under its corporate seal, or otherwise, execute and deliver such written proxies, consents, waivers or other instruments that either of them may deem necessary or proper in the premises; or the Chairman or Vice-Chairman of the Board or the President may himself attend any meeting of the holders of stock or other securities of any such other corporation and thereat vote or exercise any or all other powers of this corporation as the holder of such stock or other securities. Sec. 10. INDEMNIFICATION. Each director or officer or former director --------------- or officer of this corporation, or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, or which is a subsidiary or affiliate of the corporation, shall be indemnified by this corporation in the manner and to the extent authorized by statute. The foregoing right of indemnification shall not be exclusive of other rights to which he may be entitled as a matter of law or under any Bylaw, agreement, vote of shareholders, or otherwise. The corporation shall have the right to intervene in and defend all such actions, suits, proceedings, or claims brought or asserted against any such present or former director or officer. Wherever in this section a director or officer is referred to, such reference shall be inclusive of his heirs, executors and administrators. 11 Sec. 11. PRONOUN, ETC. REFERENCES. All uses herein of male pronouns ------------------------ and adjectives shall mean and include all genders. ARTICLE 7 AMENDMENTS Sec. 1. BY THE DIRECTORS. The Board of Directors, by vote of the majority ---------------- of all directors in office, shall have the power to make, alter, amend or repeal the Bylaws of the corporation at any regular or special meeting of the Board unless otherwise provided in Section 2 of this Article VII. This power shall not be exercised by the Executive Committee. Sec. 2. BY THE SHAREHOLDERS. All Bylaws shall be subject to amendment, ------------------- alteration or repeal by the shareholders entitled to vote at any annual or special meeting. The shareholders may provide that certain Bylaws by them adopted, approved or designated may not be amended, altered or repealed except by the shareholders. 12 EX-3.3 5 EXHIBIT 3.3 CERTIFICATE OF INCORPORATION OF HIBBETT SPORTING GOODS, INC. _______________________________________ FIRST: The name of the Corporation is "Hibbett Sporting Goods, Inc." ----- SECOND: The address of its registered office in the State of Delaware ------ is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or ----- activity for which corporations may be organized under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended ("Delaware Law"). FOURTH: The total number of shares of stock which the Corporation shall ------ have authority to issue is 30,000,000, consisting of 20,000,000 shares of Common Stock, par value $.01 per share (the "Common Stock"), and 10,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"). The Board of Directors is hereby empowered to authorize by resolution or resolutions from time to time the issuance of one or more classes or series of Preferred Stock and to fix the designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to each such class or series of Preferred Stock and the number of shares constituting each such class or series, and to increase or decrease the number of shares of any such class or series to the extent permitted by the Delaware Law. FIFTH: The name and mailing address of the incorporator are: ----- Name Mailing Address ---- --------------- Jina L. Choi c/o Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 The power of the incorporator as such shall terminate upon the filing of this Certificate of Incorporation. SIXTH: (a) The business and affairs of the Corporation shall be managed ----- by or under the direction of a Board of Directors consisting of not less than six nor more than nine directors, the exact number of directors to be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. (b) The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Each director shall serve for a term ending on the date of the third annual meeting of stockholders next following the annual meeting at which such director was elected, provided that directors initially designated as -------- Class I directors shall serve for a term ending on the date of the 1997 annual meeting, directors initially designated as Class II directors shall serve for a term ending on the date of the 1998 annual meeting, and directors initially designated as Class III directors shall serve for a term ending on the date of the 1999 annual meeting. Notwithstanding the foregoing, each director shall hold office until such director's successor shall have been duly elected and qualified or until such director's earlier death, resignation or removal. In the event of any change in the number of directors, the Board of Directors shall apportion any newly created directorships among, or reduce the number of directorships in, such class or classes as shall equalize, as nearly as possible, the number of directors in each class. In no event will a decrease in the number of directors shorten the term of any incumbent director. (c) The names and mailing addresses of the persons who are to serve initially as directors of each Class are: 2 Name Mailing Address ---- --------------- Class I Barry H. Feinberg c/o Saunders Karp & Megrue, L.P. Suite 100 Two Greenwich Plaza Greenwich, CT 06830 F. Barron Fletcher, III c/o Saunders Karp & Megrue, L.P. Two Greenwich Plaza Suite 100 Greenwich, CT 06830 Class II Michael J. Newsome c/o Hibbett Sporting Goods, Inc. 451 Industrial Lane Birmingham, AL 35211 Thomas A. Saunders, III c/o Saunders Karp & Megrue, L.P. Two Greenwich Plaza Suite 100 Greenwich, CT 06830 Class III Clyde B. Anderson c/o Books-A-Million, Inc. 402 Industrial Lane Birmingham, AL 35211 John F. Megrue c/o Saunders Karp & Megrue, L.P. Two Greenwich Plaza Suite 100 Greenwich, CT 06830 (d) There shall be no cumulative voting in the election of directors. Election of directors need not be by written ballot unless the Bylaws of the Corporation so provide. (e) Vacancies on the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors may be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director, and each director so elected shall hold office for a term that shall coincide with the term of the Class to which such director shall have been elected. (f) No director may be removed from office by the stockholders except for cause with the affirmative vote of the holders of not less than two-thirds of the total voting power of all outstanding securities of the Corporation then entitled to vote generally in the election of directors, voting together as a single class. 3 (g) Notwithstanding the foregoing, whenever the holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH applicable thereto, and such directors so elected shall not be subject to the provisions of this ARTICLE SIXTH unless otherwise provided therein. SEVENTH: The Board of Directors shall have the power to adopt, amend or ------- repeal the Bylaws of the Corporation. The stockholders may adopt, amend or repeal the Bylaws only with the affirmative vote of the holders of not less than two-thirds of the total voting power of all outstanding securities of the Corporation then entitled to vote generally in the election of directors, voting together as a single class. EIGHTH: (1) A director of the Corporation shall not be liable to the ------ Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by Delaware Law. (2) Neither the amendment nor repeal of this ARTICLE EIGHTH, nor the adoption of any provision of this Certificate of Incorporation or the Bylaws of the Corporation, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall eliminate or reduce the effect of this ARTICLE EIGHTH in respect of any acts or omissions occurring prior to such amendment, repeal, adoption or modification. NINTH: The Corporation reserves the right to amend this Certificate of ----- Incorporation in any manner permitted by the Delaware Law and all rights and powers conferred upon stockholders, directors and officers herein are granted subject to this reservation. Notwithstanding the foregoing, the provisions set forth in ARTICLES SIXTH, SEVENTH, EIGHTH, and this ARTICLE NINTH may not be repealed or amended in any respect, and no other provision may be adopted, amended or repealed which would have the effect of modifying or permitting the circumvention of the provisions set forth in ARTICLES SIXTH, SEVENTH, EIGHTH, and this ARTICLE NINTH, unless such action is approved by the affirmative vote of the holders of not less than two-thirds of the total voting power of all outstanding securities of 4 the Corporation then entitled to vote generally in the election of directors, voting together as a single class. IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of _________ 1996. __________________________ Jina L. Choi 5 EX-3.4 6 EXHIBIT 3.4 BYLAWS OF HIBBETT SPORTING GOODS, INC. * * * * * ARTICLE I OFFICES Section 1. Registered Office. The registered office of the ----------------- Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. Other Offices. The Corporation may also have offices at ------------- such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. Section 3. Books. The books of the Corporation may be kept within or ----- without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Time and Place of Meetings. All meetings of stockholders -------------------------- shall be held at such place, either within or without the State of Delaware, on such date and at such time as may be determined from time to time by the Board of Directors (or the Chairman in the absence of a designation by the Board of Directors). Section 2. Annual Meetings. Annual meetings of stockholders, --------------- commencing with the year 1997, shall be held to elect one class of the Board of Directors and transact such other business as may properly be brought before the meeting. Section 3. Special Meetings. Special meetings of stockholders may be ---------------- called by the Board of Directors or the Chairman of the Board of Directors, or upon the demand of the holders of the majority of the total voting power of all outstanding securities of the corporation then entitled to vote at such special meetings and may not be called in any other manner. Such request shall state the purpose or purposes of the proposed meeting. Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of the resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH of the certificate of incorporation, special meetings of holders of such Preferred Stock. Section 4. Notice of Meetings and Adjourned Meetings; Waivers of ----------------------------------------------------- Notice. (a) Whenever stockholders are required or permitted to take any action - ------ at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended ("Delaware Law"), such notice shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting. Unless these bylaws otherwise require, when a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (b) A written waiver of any such notice signed by the person entitled thereto, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. 2 Section 5. Quorum. Unless otherwise provided under the certificate ------ of incorporation or these bylaws and subject to Delaware Law, the presence, in person or by proxy, of the holders of a majority of the outstanding capital stock of the Corporation entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business. Section 6. Voting. (a) Unless otherwise provided in the certificate ------ of incorporation and subject to Delaware Law, each stockholder shall be entitled to one vote for each outstanding share of capital stock of the Corporation held by such stockholder. Unless otherwise provided in Delaware Law, the certificate of incorporation or these bylaws, the affirmative vote of a majority of the shares of capital stock of the Corporation present, in person or by proxy, at a meeting of stockholders and entitled to vote on the subject matter shall be the act of the stockholders. (b) Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to a corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Section 7. Action by Consent. (a) Unless otherwise provided in the ----------------- certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding capital stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. (b) Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate 3 action referred to therein unless, within 60 days of the earliest dated consent delivered in the manner required by this Section and Delaware Law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Section 8. Organization. At each meeting of stockholders, the ------------ Chairman of the Board, if one shall have been elected, (or in his absence or if one shall not have been elected, the President) shall act as chairman of the meeting. The Secretary (or in his absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting) shall act as secretary of the meeting and keep the minutes thereof. Section 9. Order of Business. The order of business at all meetings ----------------- of stockholders shall be as determined by the chairman of the meeting. ARTICLE III DIRECTORS Section 1. General Powers. Except as otherwise provided in Delaware -------------- Law or the certificate of incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. Section 2. Number, Election and Term of Office. The Board of ----------------------------------- Directors shall consist of not less than three nor more than nine directors, with the exact number of directors to be determined from time to time solely by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. Except as otherwise provided in the certificate of incorporation, each director shall serve for a term ending on the date of the third annual meeting of stockholders next following the annual meeting at which such director was elected. Notwithstanding the foregoing, each director shall hold office until such 4 director's successor shall have been duly elected and qualified or until such director's earlier death, resignation or removal. Directors need not be stockholders. Section 3. Quorum and Manner of Acting. Unless the certificate of --------------------------- incorporation or these bylaws require a greater number, a majority of the total number of directors shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the directors present at meeting at which a quorum is present shall be the act of the Board of Directors. When a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Board of Directors may transact any business which might have been transacted at the original meeting. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 4. Time and Place of Meetings. The Board of Directors shall -------------------------- hold its meetings at such place, either within or without the State of Delaware, and at such time as may be determined from time to time by the Board of Directors (or the Chairman in the absence of a determination by the Board of Directors). Section 5. Annual Meeting. The Board of Directors shall meet for the -------------- purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such place either within or without the State of Delaware, on such date and at such time as shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article III or in a waiver of notice thereof signed by any director who chooses to waive the requirement of notice. Section 6. Regular Meetings. After the place and time of regular ---------------- meetings of the Board of Directors shall have been determined and notice thereof shall have been once given to each member of the Board of Directors, regular meetings may be held without further notice being given. 5 Section 7. Special Meetings. Special meetings of the Board of ---------------- Directors may be called by the Chairman of the Board or the President and shall be called by the Chairman of the Board, President or Secretary on the written request of three directors. Notice of special meetings of the Board of Directors shall be given to each director at least three days before the date of the meeting in such manner as is determined by the Board of Directors. Section 8. Committees. The Board of Directors may, by resolution ---------- passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the bylaws of the Corporation; and unless the resolution of the Board of Directors or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. Section 9. Action by Consent. Unless otherwise restricted by the ----------------- certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 10. Telephonic Meetings. Unless otherwise restricted by the ------------------- certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or such committee, as the 6 case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 11. Resignation. Any director may resign at any time by ----------- giving written notice to the Board of Directors or to the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 12. Vacancies. Unless otherwise provided in the certificate --------- of incorporation, vacancies on the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors may be filled solely by a majority of the directors then in office (although less than a quorum) or by the sole remaining director. Each director so elected shall hold office for a term that shall coincide with the term of the Class to which such director shall have been elected. If there are no directors in office, then an election of directors may be held in accordance with Delaware Law. Unless otherwise provided in the certificate of incorporation, when one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in the filling of the other vacancies. Section 13. Removal. No director may be removed from office by the ------- stockholders except for cause with the affirmative vote of the holders of not less than two-thirds of the total voting power of all outstanding securities of the Corporation then entitled to vote generally in the election of directors, voting together as a single class. Section 14. Compensation. Unless otherwise restricted by the ------------ certificate of incorporation or these bylaws, the Board of Directors shall have authority to fix the compensation of directors, including fees and reimbursement of expenses; provided that each non-employee director shall be entitled to an -------- annual fee of $10,000 plus $500 for each meeting of the Board attended by such director. Section 15. Preferred Directors. Notwithstanding anything else ------------------- contained herein, whenever the holders of one or 7 more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, the election, term of office, filling of vacancies, removal and other features of such directorships shall be governed by the terms of the resolutions applicable thereto adopted by the Board of Directors pursuant to the certificate of incorporation, and such directors so elected shall not be subject to the provisions of Sections 2, 12 and 13 of this Article III unless otherwise provided therein. Section 16. Indemnification of Officers, Directors, Employees and ----------------------------------------------------- Agents; Insurance. - ----------------- (1)(a) Each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware Law. The right to indemnification conferred in this Section 16 shall also include the right to be paid by the Corporation the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by Delaware Law. The right to indemnification conferred in this Section 16 shall be a contractual right. (b) The Corporation may, by action of its Board of Directors, provide indemnification to such of the directors, officers, employees and agents of the Corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by Delaware Law. (2) The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss incurred by such person in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under Delaware Law. 8 (3) The rights and authority conferred in this Section 16 shall not be exclusive of any other right which any person may otherwise have or hereafter acquire. ARTICLE IV OFFICERS Section 1. Principal Officers. The principal officers of the ------------------ Corporation shall be a President, one or more Vice Presidents, a Treasurer and a Secretary who shall have the duty, among other things, to record the proceedings of the meetings of stockholders and directors in a book kept for that purpose. The Corporation may also have such other principal officers, including one or more Controllers, as the Board may in its discretion appoint. One person may hold the offices and perform the duties of any two or more of said offices, except that no one person shall hold the offices and perform the duties of President and Secretary. Section 2. Election, Term of Office and Remuneration. The principal ----------------------------------------- officers of the Corporation shall be elected annually by the Board of Directors at the annual meeting thereof. Each such officer shall hold office until his successor is elected and qualified, or until his earlier death, resignation or removal. The remuneration of all officers of the Corporation shall be fixed by the Board of Directors. Any vacancy in any office shall be filled in such manner as the Board of Directors shall determine. Section 3. Subordinate Officers. In addition to the principal -------------------- officers enumerated in Section 1 of this Article IV, the Corporation may have one or more Assistant Treasurers, Assistant Secretaries and Assistant Controllers and such other subordinate officers, agents and employees as the Board of Directors may deem necessary, each of whom shall hold office for such period as the Board of Directors may from time to time determine. The Board of Directors may delegate to any principal officer the power to appoint and to remove any such subordinate officers, agents or employees. Section 4. Removal. Except as otherwise permitted with respect to ------- subordinate officers, any officer may be removed, with or without cause, at any time, by resolution adopted by the Board of Directors. Section 5. Resignations. Any officer may resign at any time by ------------ giving written notice to the Board of Directors (or to a principal officer if the Board of Directors has 9 delegated to such principal officer the power to appoint and to remove such officer). The resignation of any officer shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 6. Powers and Duties. The officers of the Corporation shall ----------------- have such powers and perform such duties incident to each of their respective offices and such other duties as may from time to time be conferred upon or assigned to them by the Board of Directors. ARTICLE V GENERAL PROVISIONS Section 1. Fixing the Record Date. (a) In order that the Corporation ---------------------- may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided that the Board of Directors may fix a new record date for the adjourned - -------- meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt 10 a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. (c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 2. Dividends. Subject to limitations contained in Delaware --------- Law and the certificate of incorporation, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, in property or in shares of the capital stock of the Corporation. Section 3. Fiscal Year. The fiscal year of the Corporation shall ----------- commence on the Sunday following the Saturday nearest to January 31 and end on the Saturday nearest to January 31 of the following year. Section 4. Corporate Seal. The corporate seal shall have inscribed -------------- thereon the name of the Corporation, the 11 year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced. Section 5. Voting of Stock Owned by the Corporation. The Board of ---------------------------------------- Directors may authorize any person, on behalf of the Corporation, to attend, vote at and grant proxies to be used at any meeting of stockholders of any corporation (except this Corporation) in which the Corporation may hold stock. Section 6. Amendments. These bylaws or any of them, may be altered, ---------- amended or repealed, or new bylaws may be made, only with the affirmative vote of the holders of not less than two-thirds of the total voting power of all outstanding securities of the Corporation then entitled to vote generally in the election of directors, voting together as a single class. 12 EX-4.1 7 EXHIBIT 4.1 NUMBER HIBBERT SPORTING GOODS SHARES C INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP 428565 10 5 SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES that is the owner of FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE, OF HIBBETT SPORTING GOODS, INC. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to the provisions of the Certificate of Incorporation of the Corporation and amendments thereto, to all of which the holder by acceptance hereof assents. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the corporation and the facsimile signatures of its truly authorized officers. Dated: [SEAL] Secretary President Countersigned and Registered: SUNTRUST BANK, ATLANTA Transfer Agent and Registrar By Authorized Officer The Corporation will furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIFORM GIFT MIN ACT-______Custodian______ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors JT TEN - as joint tenants with right of survivorship and not as Act_____________ tenants in common (State) Additional abbreviations may also be used though not in the above list. For value received ..................... hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ----------------------------------------- | | | | - --------------------------------------------------------........................ .............................................................................. Please print or typewrite name and address including postal zip code of assignee .............................................................................. .............................................................................. ..........................................................................Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint.............................................. ................................................................................ Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated, ............................... ........................................... NOTICE: The signature to this assignment must correspond with the name as written upon the face of the Certificate, in every particular, without alteration or enlargement, or any change whatever. 2 EX-10.1(3) 8 EXHIBIT 10.1.3 Heller Financial, Inc. 500 West Monroe Street Chicago, Illiniois 60661 312 441 7114 FAX: 312 441 6969 - -------------------------------------------------------------------------------- [LOGO] Heller Business Credit Paul L. Puryear, Jr. Senior Vice President Senior Group Portfolio Manager September 13, 1996 Via Facsimile and Federal Express - --------------------------------- Hibbett Sporting Goods, Inc. 131 South 25th Street Birmingham, Alabama 35211 Attn: Barron Fletcher RE: Third Amendment to Loan and Security Agreement --------------------------------------------------- Dear Mr. Fletcher: Reference is made to that certain Loan and Security Agreement dated as of November 1, 1995, as amended from time to time thereafter (the "Agreement") by and among Hibbett Sporting Goods, Inc. and Hibbett Team Sales, Inc. (collectively, "Borrowers") and Heller Financial, Inc. ("Lender"). Capitalized terms used herein, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby. In consideration of the mutual conditions and agreements set forth herein and in the Agreement, and in consideration of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree that subsection 8.1(F) of the Agreement is hereby amended to replace the words "fifty-one percent (51%)" appearing in line two (2) of said subsection with the words "forty percent (40%)". Except as above provided, the Agreement is in no way altered, amended or modified, and the same is affirmed, confirmed and ratified. Hibbett Sporting Goods, Inc. September 13, 1996 Page 2 Please acknowledge your agreement to the foregoing by signing both copies of this letter and returning one copy to my attention. Very truly yours, /s/ Paul L. Puryear, Jr. Paul L. Puryear, Jr. Senior Vice President ACCEPTED AND AGREED HIBBETT SPORTING GOODS, INC., as a Borrower By: /s/ Michael Newsome ---------------------- Title: President ------------------ HIBBETT TEAM SALES, INC., as a Borrower By: /s/ Michael Newsome ---------------------- Title: President ------------------ SPORTS WHOLESALE, INC., as Guarantor By: /s/ Michael Newsome ---------------------- Title: President ------------------ EX-10.2(2) 9 EXHIBIT 10.2.2 FIRST AMENDMENT TO STOCKHOLDERS AGREEMENT This First Amendment to Stockholders Agreement (this "Amendment") is made as of June 28, 1996, among The SK Equity Fund, L.P., a Delaware limited partnership, SK Investment Fund, L.P., a Delaware limited partnership, the Stockholders listed on the signature pages hereof, and Hibbett Sporting Goods, Inc., an Alabama corporation (the "Company"). W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Stockholders Agreement, dated as of November 1, 1995 (the "Stockholders Agreement"); and WHEREAS, the parties hereto desire to amend certain provisions of the Stockholders Agreement in order to clarify that the term "Permitted Transferee" includes certain trusts established for the benefit of certain specified Permitted Transferees and to permit Michael J. Newsome, a stockholder of the Company and a party to the Stockholders Agreement, to transfer certain of his shares of the Company's common stock which are subject to the Stockholders Agreement to a certain family member who is not a Permitted Transferee, as defined in the Stockholders Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Stockholders Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Capitalized terms used herein and not defined herein shall have the meanings set forth in the Stockholders Agreement. 2. Subsection (ii) under the defined term "Permitted Transferee" set forth in Section 1.1 of the Stockholders Agreement shall be amended to read in its entirety as follows: "(ii) in the case of any member of the Anderson Group (A) any Anderson Stockholder, (B) any spouse or lineal descendant of any Anderson Stockholder or any trust that is for the exclusive benefit of any such spouse or lineal descendant, (C) a Person to whom Shares are transferred from such Anderson Stockholder by will or the laws of descent and distribution, or (D) a trust, a corporation, a limited liability company or a partnership, in each case (1) the beneficial ownership interests of which are held only by members of the Anderson Group or (2) which was not formed for the purpose of taking an investment in the Shares and in which at least 80% of the beneficial ownership interest is held by members of the Anderson Group; and" 3. Subsection (iii) under the defined term "Permitted Transferee" set forth in Section 1.1 of the Stockholders Agreement shall be amended to read in its entirety as follows: "(iii) in the case of any member of the Management Group (A) any spouse or lineal descendant of the Management Stockholder or any trust that is for the exclusive benefit of any such spouse or lineal descendant, (B) a Person to whom Shares are transferred from the Management Stockholder by will or the laws of descent and distribution, (C) any trust that is for the exclusive benefit of the members of the Management Group, or (D) Judy Marie Newsome, the Management Stockholder's sister." 4. Except as herein provided, the terms of the Stockholders Agreement shall remain in full force and effect. 5. This Amendment may be executed in several counterparts, and by the parties on separate counterparts, and all such counterparts, when so executed and delivered, shall constitute but one and the same agreement. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written. THE SK EQUITY FUND, L.P. By SK Partners, L.P., the General Partner By: /s/ John F. Megrue ------------------------ Name: John F. Megrue Title: Partner - 2 - SK INVESTMENT FUND, L.P. By SK Partners, L.P., the General Partner By: /s/ John F. Megrue ------------------------ Name: John F. Megrue Title: Partner CHARLES C. ANDERSON, SR. By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Charles C. Anderson, Sr. JOEL R. ANDERSON By: /s/Joel R. Anderson ----------------------- Joel R. Anderson CHARLES C. ANDERSON, JR. By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Charles C. Anderson, Jr. TERRENCE C. ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Terrence C. Anderson CLYDE B. ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson HAROLD M. ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Harold M. Anderson - 3 - FIRST ANDERSON GRANDCHILDREN'S TRUST F/B/O CHARLES C. ANDERSON, III By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for First Anderson Grandchildren's Trust f/b/o Charles C. Anderson, III FIRST ANDERSON GRANDCHILDREN'S TRUST F/B/O LAUREN A. ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for First Anderson Grandchildren's Trust f/b/o Lauren A. Anderson FIRST ANDERSON GRANDCHILDREN'S TRUST F/B/O HAYLEY E. ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for First Anderson Grandchildren's Trust f/b/o Hayley E. Anderson SECOND ANDERSON GRANDCHILDREN'S TRUST F/B/O ALEXANDRA R. ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Second Anderson Grandchildren's Trust f/b/o Alexandra R. Anderson THIRD ANDERSON GRANDCHILDREN'S TRUST F/B/O TAYLOR CLAIRE ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Third Anderson Grandchildren's Trust f/b/o Taylor Claire Anderson - 4 - FOURTH ANDERSON GRANDCHILDREN'S TRUST F/B/O CARSON CAINE ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Fourth Anderson Grandchildren's Trust f/b/o Carson Caine Anderson FIFTH ANDERSON GRANDCHILDREN'S TRUST F/B/O HAROLD M. ANDERSON, JR. By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Fifth Anderson Grandchildren's Trust f/b/o Harold M. Anderson, Jr. SIXTH ANDERSON GRANDCHILDREN'S TRUST F/B/O BENTLEY BARBOUR ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Sixth Anderson Grandchildren's Trust f/b/o Bentley Barbour Anderson SEVENTH ANDERSON GRANDCHILDREN'S TRUST F/B/O OLIVIA BARBOUR ANDERSON By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Seventh Anderson Grandchildren's Trust f/b/o Olivia Barbour Anderson THE ASHLEY R. ANDERSON TRUST By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for The Ashley R. Anderson Trust - 5 - JOEL R. ANDERSON II TRUST By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Joel R. Anderson II Trust GERALD H. DAUGHERTY By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Gerald H. Daugherty MARTIN R. ABROMS By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Martin R. Abroms SANDRA B. COCHRAN By: /s/Clyde B. Anderson ----------------------- Clyde B. Anderson, as agent for Sandra B. Cochran MICHAEL J. NEWSOME By: /s/Michael J. Newsome ----------------------- Michael J. Newsome HIBBETT SPORTING GOODS, INC. By: /s/ Michael J. Newsome ----------------------------- Name: Michael J. Newsome Title: President - 6 - EX-10.2(3) 10 EXHIBIT 10.2.3 SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT AND WAIVER This SECOND AMENDMENT and WAIVER dated as of July , 1996 to the -- Stockholders Agreement dated as of November 1, 1995, as amended (the "Agreement") by and among The SK Equity Fund, L.P., a Delaware limited partnership (the "Equity Fund"), SK Investment Fund, L.P., a Delaware limited partnership (the "Investment Fund" and together with the Equity Fund, the "Funds"), the Stockholders listed on the signature pages thereof (the "Stockholders") and Hibbett Sporting Goods, Inc., an Alabama corporation (the "Company"). WITNESSETH: WHEREAS, the parties hereto desire to amend the corporate governance section of the Agreement relating to the composition of the board of directors of the Company; and WHEREAS, the Stockholders desire to waive certain incidental registration rights under the Agreement in respect of the anticipated initial public offering by the Company; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically ----------------------- defined herein, each term used herein which is defined in the Agreement has the meaning assigned to such term in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall from and after the date hereof refer to the Agreement as amended hereby. SECTION 2. Amendment of Section 2.1 of the Agreement. Section 2.1(a) ----------------------------------------- of the Agreement is amended to read in its entirety as follows: "For so long as the number of Shares held by the Anderson Group equals or exceeds 50% of the Original Anderson Shares, the Board shall consist of not less than six nor more than nine directors, one of whom shall be an officer of the Company, another of whom shall be designated by the Anderson Designee (the "Anderson Director") and the rest of whom shall be designated by the Funds. One of the directors designated by the Funds shall be elected as Chairman of the Board. After the number of Shares held by the Anderson Stockholders falls below 50% of the number of the Original Anderson Shares, all the directors shall be elected in accordance with the Charter of the Company, the Bylaws of the Company and the applicable provisions of law." SECTION 3. Inclusion of Additional Shares. Each party hereto hereby ------------------------------ agrees that (i) 432,000 Shares issuable to Clyde B. Anderson upon the exercise of options granted to him by the Company on August 1, 1996 shall be subject to the provisions of Articles IV and V of the Agreement and (ii) all Shares held by any Permitted Transferee of a Management Stockholder shall remain subject to all the provisions of the Agreement. SECTION 4. Waiver of Incidental Registration Rights. Each Stockholder ---------------------------------------- party hereto hereby waives its right under Section 5.2 of the Agreement (i) to be notified in respect of filing by the Company of the Registration Statement with the Securities and Exchange Commission (File No. 333-07023) (the "Registration Statement") and (ii) to request inclusion in the Registration Statement of any Shares owned by such Stockholder. SECTION 5. Governing Law. This Amendment shall be governed by, and ------------- construed in accordance with, the laws of the State of New York without regard to the conflicts of law rules of such state. SECTION 6. Counterparts; Effectiveness. This Amendment may be signed --------------------------- in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date and year first written above when the Company shall have received duly executed counterparts hereof signed by each party hereto. 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. THE SK EQUITY FUND, L.P. By SKM Partners, L.P., the General Partner By: ------------------------- Name: Title: SK INVESTMENT FUND, L.P., By SKM Partners, L.P., the General Partner By: ------------------------- Name: Title: CHARLES C. ANDERSON By: -------------------------- Charles C. Anderson JOEL R. ANDERSON ` By: ------------------------- Joel R. Anderson CHARLES C. ANDERSON, JR. By: ------------------------- Charles C. Anderson, Jr. 3 TERRENCE C. ANDERSON By: ------------------------- Terrence C. Anderson CLYDE B. ANDERSON By: ------------------------- Clyde B. Anderson HAROLD M. ANDERSON By: ------------------------- Harold M. Anderson FIRST ANDERSON GRANDCHILDREN'S TRUST F/B/O CHARLES C. ANDERSON, III By: ------------------------- Name Trustee FIRST ANDERSON GRANDCHILDREN'S TRUST F/B/O LAUREN A. ANDERSON By: ------------------------- Name Trustee FIRST ANDERSON GRANDCHILDREN'S TRUST F/B/O HAYLEY E. ANDERSON By: ------------------------- Name Trustee 4 SECOND ANDERSON GRANDCHILDREN'S TRUST F/B/O ALEXANDRA R. ANDERSON By: ------------------------- Name Trustee THIRD ANDERSON GRANDCHILDREN'S TRUST F/B/O TAYLOR CLAIRE ANDERSON By: ------------------------- Name Trustee FOURTH ANDERSON GRANDCHILDREN'S TRUST F/B/O CARSON CAINE ANDERSON By: ------------------------- Name Trustee FIFTH ANDERSON GRANDCHILDREN'S TRUST F/B/O HAROLD M. ANDERSON, JR. By: ------------------------- Name Trustee SIXTH ANDERSON GRANDCHILDREN'S TRUST F/B/O BENTLEY BARBOUR ANDERSON By: ------------------------- Name Trustee SEVENTH ANDERSON GRANDCHILDREN'S TRUST F/B/O OLIVIA BARBOUR ANDERSON By: ------------------------- Name Trustee THE ASHLEY R. ANDERSON TRUST By: ------------------------- Name Trustee By: ------------------------- Name Trustee JOEL R. ANDERSON II TRUST By: ------------------------- Name Trustee By: ------------------------- Name Trustee GERALD H. DAUGHERTY By: ------------------------- Gerald H. Daugherty MARTIN R. ABROMS By: ------------------------- Martin R. Abroms SANDRA B. COCHRAN By: ------------------------- Sandra B. Cochran MICHAEL J. NEWSOME By: ------------------------- Michael J. Newsome JUDY MARIE NEWSOME By: ------------------------- Judy Marie Newsome KELLY NEWSOME FREDETTE By: ------------------------- Kelly Newsome Fredette STACEY ANN NEWSOME By: ------------------------- Stacey Ann Newsome HIBBETT SPORTING GOODS, INC. By: ------------------------ Name: Title: EX-10.7 11 Exhibit 10.7 HIBBETT SPORTING GOODS, INC. STOCK OPTION PLAN (as amended effective as of September 13, 1996) TABLE OF CONTENTS Page SECTION 1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1 2.1. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.2. Change in Control . . . . . . . . . . . . . . . . . . . . . . . 1 2.3. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.4. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.5. Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.6. Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.7. Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.8. Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . 4 2.9. ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.10. Non-ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.11. Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.12. Option Certificate . . . . . . . . . . . . . . . . . . . . . . . 4 2.13. Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.14. Parent Corporation . . . . . . . . . . . . . . . . . . . . . . . 5 2.15. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.16. Rule 16b-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.17. Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.18. Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.19. Ten Percent Shareholder . . . . . . . . . . . . . . . . . . . . 5 SECTION 3. SHARES RESERVED UNDER THE PLAN . . . . . . . . . . . . . . . 5 SECTION 4. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 5. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 6. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 7. GRANT OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . 7 7.1. Committee Action . . . . . . . . . . . . . . . . . . . . . . . . 7 7.2. $100,000 Limit . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 8. OPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 9. EXERCISE PERIOD . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 10. TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . 10 10.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10.3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 10.4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 11. SECURITIES REGISTRATION . . . . . . . . . . . . . . . . . . 12 SECTION 12. LIFE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 13. ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 14. CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . 14 SECTION 15. AMENDMENT OR TERMINATION . . . . . . . . . . . . . . . . . . 15 SECTION 16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 16 16.1. No Shareholder Rights . . . . . . . . . . . . . . . . . . . 16 16.2. No Contract of Employment . . . . . . . . . . . . . . . . . 16 16.3. Other Conditions . . . . . . . . . . . . . . . . . . . . . . 16 16.4. Withholding . . . . . . . . . . . . . . . . . . . . . . . . 17 16.5. Construction . . . . . . . . . . . . . . . . . . . . . . . . 17 i HIBBETT SPORTING GOODS, INC. STOCK OPTION PLAN (as amended effective as of September 13, 1996) SECTION 1. PURPOSE ------- The purpose of this Plan is to promote the interests of the Company and its shareholders by granting Options to purchase Stock to Employees in order (1) to provide an additional incentive to each Employee to work to increase the value of the Company's stock, and (2) to provide each Employee with a stake in the future of the Company which corresponds to the stake of each of the Company's shareholders. SECTION 2. DEFINITIONS ----------- Each term set forth in this Section 2 shall have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular. 2.1. Board -- means the Board of Directors of the Company. ----- 2.2. Change in Control -- shall be deemed to have occurred if (i) any ----------------- "person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Stock of the Company, Saunders Karp & Megrue L.P. or any Affiliate thereof, or the Anderson Shareholders (as defined in the Stockholders Agreement dated as of November 1, 1995 among The SK Equity Fund L.P., SK Investment Fund L.P., the Company and certain shareholders of the Company named therein)), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) during any period of two consecutive years (not including any period prior to the adoption of the Plan), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this paragraph) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two- thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the 2 voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. If any of the events enumerated in clauses (i) through (iv) occur, the Committee shall determine the effective date of the Change in Control resulting therefrom, for purposes of the Plan. 2.3. Code -- means the Internal Revenue Code of 1986, as amended. ---- 2.4. Committee -- means the committee appointed by the Board to administer --------- this Plan which at all times shall consist of two or more members of the Board. At such time as the Company becomes subject to the reporting requirements under Section 16(b) of the Exchange Act, each member of the Committee shall be a "non- employee director" within the meaning of Rule 16b-3. 2.5. Company -- means Hibbett Sporting Goods, Inc., a Delaware corporation, ------- and any successor to such corporation. 2.6. Employee -- means any full-time employee of the Company who the -------- Committee, acting in its absolute discretion, has determined to be eligible for the grant of an Option under this Plan. 2.7. Exchange Act -- means the Securities Exchange Act of 1934, as amended. ------------ 3 2.8. Fair Market Value -- means the fair market value of a share of Stock ----------------- as determined pursuant to a valuation or an appraisal of the Stock and its value per share which is prepared by a qualified independent public accountant or other person experienced in valuing closely-held businesses and which is selected by the Board. Such valuation or appraisal shall be deemed to be the fair market value of the Stock and its value per share; provided, however, that the Board shall not be obligated to obtain more than one such independent valuation or appraisal in any calendar year; and, provided further, that if at any time the Stock is publicly traded on any exchange or in the over-the-counter market, the closing price on the date of determination for a share of Stock as reported by The Wall Street Journal or, if The Wall Street Journal does not ----------------------- ----------------------- report such closing price, such closing price as reported by a newspaper or trade journal selected by the Committee, shall be the fair market value of a share of Stock. 2.9. ISO -- means an option granted under this Plan to purchase Stock --- which is intended by the Company to satisfy the requirements of Code Section 422. 2.10. Non-ISO -- means an option granted under this Plan to purchase ------- Stock which is not intended by the Company to satisfy the requirements of Code Section 422. 2.11. Option -- means an ISO or a Non-ISO. ------ 2.12. Option Certificate -- means the written certificate or instrument ------------------ which sets forth the terms of an Option granted to an Employee or Director under this Plan. 4 2.13. Option Price -- means the price which shall be paid to purchase ------------ one share of Stock upon the exercise of an Option granted under this Plan. 2.14. Parent Corporation -- means any corporation which is a parent of ------------------ the Company within the meaning of Section 424(e) of the Code. 2.15. Plan -- means this Hibbett Sporting Goods, Inc. Stock Option ---- Plan, as amended from time to time. 2.16. Rule 16b-3 -- means the exemption under Rule 16b-3 to ---------- Section 16(b) of the Exchange Act or any successor to such rule. 2.17. Stock -- means the $.01 par value common stock of the Company. ----- 2.18. Subsidiary -- means a corporation which is a subsidiary ---------- corporation (within the meaning of Section 424(f) of the Code) of the Company. 2.19. Ten Percent Shareholder -- means a person who owns (after taking ----------------------- into account the attribution rules of Code Section 424(d)) more than ten percent (10%) of the total combined voting power of all classes of stock of the Company. SECTION 3. SHARES RESERVED UNDER THE PLAN ------------------------------ There shall be 66,352 shares of Stock reserved for use under this Plan, and such shares of Stock shall be reserved to the extent that the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired 5 by the Company. Furthermore, any shares of Stock subject to an Option which remain unissued after the cancellation, expiration or exchange of such Option thereafter shall again become available for use under this Plan. SECTION 4. EFFECTIVE DATE -------------- The effective date of this Plan shall be the date it is adopted by the Board, provided that the shareholders of the Company shall approve this Plan after the date of its adoption in accordance with Rule 16b-3 and, to the extent this Plan provides for the issuance of ISOs, the shareholders of the Company shall approve those portions of this Plan related to the granting of ISOs within twelve (12) months after the date of adoption. If any Options are granted under this Plan before the date of such shareholder approval, such Options automatically shall be granted subject to such approval. SECTION 5. ADMINISTRATION -------------- This Plan shall be administered by the Committee. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee shall be filled by the Board. The Committee shall select one of its members as Chairman and shall hold meetings at such times and places as it may determine. The Committee acting in its absolute discretion shall 6 exercise such powers and take such action as expressly called for under this Plan and, further, the Committee shall have the power to interpret this Plan and (in the event that the Company becomes subject to the reporting requirements of Section 16(b) of the Exchange Act, subject to Rule 16b-3) to take such other action (except to the extent the right to take such action is expressly and exclusively reserved for the Board or the Company's shareholders) in the administration and operation of this Plan as the Committee deems equitable under the circumstances, which action shall be binding on the Company, on each affected Employee or Director and on each other person directly or indirectly affected by such action. SECTION 6. ELIGIBILITY ----------- Only Employees shall be eligible for the grant of Options under this Plan. SECTION 7. GRANT OF OPTIONS ---------------- 7.1. Committee Action. The Committee, acting in its absolute discretion, ---------------- shall have the right to grant Options to Employees under this Plan from time to time to purchase shares of Stock and, further, shall have the right to grant new Options in exchange for outstanding Options which have a higher or lower Option Price. Each grant of an Option to an Employee shall be evidenced by an 7 Option Certificate, and each such Option Certificate shall (1) specify whether the Option is an ISO or Non-ISO and (2) incorporate such other terms and conditions as the Committee, acting in its absolute discretion, deems consistent with the terms of this Plan, including (without limitation) a restriction on the number of shares of Stock subject to the Option which first become exercisable during any calendar year. If the Committee grants an ISO and a Non-ISO to an Employee on the same date, the right of the Employee to exercise one such Option shall not be conditioned on his or her failure to exercise the other such Option. 7.2. $100,000 Limit. To the extent that the aggregate Fair Market Value of -------------- Stock (determined as of the date the ISO is granted) with respect to which ISOs first become exercisable in any calendar year exceeds $100,000, such Options shall be treated as Non-ISOs. The Fair Market Value of the Stock subject to any other option (determined as of the date such option was granted) which (1) satisfies the requirements of Section 422 of the Code and (2) is granted to an Employee under a plan maintained by the Company, a Subsidiary or a Parent Corporation shall be treated (for purposes of this $100,000 limitation) as if granted under this Plan. This $100,000 limitation shall be administered in accordance with the rules under Section 422(d) of the Code. 8 SECTION 8. OPTION PRICE ------------ The Option Price for each share of Stock subject to an Option shall be no less than the Fair Market Value of a share of Stock on the date the Option is granted; provided, however, if the Option is an ISO granted to a Ten Percent Shareholder, the Option Price for each share of Stock subject to such ISO shall be no less than 110% of the Fair Market Value of a share of Stock on the date such ISO is granted. The Option Price shall be payable in full upon the exercise of any Option and, at the discretion of the Committee, an Option Certificate can provide for the payment of the Option Price either in cash, by check, or in Stock acceptable to the Committee or in any combination of cash, check, and Stock acceptable to the Committee. Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the properly endorsed certificate for such Stock is delivered to the Committee or its delegate. SECTION 9. EXERCISE PERIOD --------------- Each Option granted under this Plan to an Employee shall be exercisable in whole or in part at such time or times as set forth in the related Option Certificate, but no Option Certificate shall make an Option granted to an Employee exercisable before the last day of the six-month period which begins on the date such Option is granted or after the earlier of 9 (a) the date such Option is exercised in full, (b) the date which is the fifth anniversary of the date the Option is granted, if the Option is an ISO and the Employee is a Ten Percent Shareholder on the date the Option is granted, or (c) the date which is the tenth anniversary of the date the Option is granted, if the Option is (i) a Non-ISO or (ii) an ISO which is granted to an Employee who is not a Ten Percent Shareholder on the date the Option is granted. An Option Certificate may provide for the exercise of an Option granted to an Employee after the employment of such Employee has terminated for any reason whatsoever, including death or disability. SECTION 10. TRANSFERABILITY --------------- 10.1. Except as otherwise set forth in this Section 10, no Option granted under this Plan shall be transferable by an Employee other than by will or by the laws of descent and distribution, and such Option shall be exercisable during the lifetime of an Employee only by such Employee. The person or persons to whom an Option is transferred by will or by the laws of descent and distribution thereafter shall be treated as the Employee under this Plan. 10.2. Upon the voluntary or involuntary termination of employment of an Employee for any reason, the Company shall repurchase, and such Employee or his legal representative shall 10 sell, all, but not less than all, of the Employee's Option and Stock acquired pursuant to Options granted hereunder (to the extent that such Options are exercisable) pursuant to this Section 10; provided, however, that in the event that the Stock becomes publicly traded, any Stock then held by such terminated Employee shall not be subject to the provisions of this Section 10.2. 10.3. The price at which the Company shall purchase Options pursuant to Section 10.2 shall be equal to the difference between the Fair Market Value of the Stock on the effective date of the Employee's termination and the exercise price for the Options being purchased. The price at which the Company shall purchase shares of Stock held by the Employee pursuant to Section 10.2 shall be equal to the Fair Market Value of the shares of Stock held by the Employee as of the date of termination. 10.4. Within thirty (30) days of the date of the Employee's termination, the Company shall deliver to the terminated Employee a check in the amount of the purchase price for the Employee's Stock and Options. Upon payment by the Company of the purchase price for the Stock and Options, the terminated Employee or his or her legal representative shall relinquish all further right, title and interest in and to the Stock and Options and shall surrender and deliver to the Company all of the certificates representing such Stock, with appropriate endorsement thereon or duly executed stock powers. Such Stock and Options shall be free from liens, options, or encumbrances of any kind. Any Options purchased by the Company pursuant to Section 10.2 shall be 11 cancelled and such options thereafter shall again become available for use under this Plan. SECTION 11. SECURITIES REGISTRATION ----------------------- Each Option Certificate shall provide that, upon the receipt of shares of Stock as a result of the exercise of an Option, the Employee shall, if so requested by the Company, hold such shares of Stock for investment and not with a view to resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement satisfactory to the Company to that effect. Each Option Certificate also shall provide that, if so requested by the Company, the Employee shall make a written representation to the Company that he or she will not sell or offer to sell any of such Stock unless a registration statement shall be in effect with respect to such Stock under the Securities Act of 1933, as amended ("1933 Act") and any applicable state securities law or unless he or she shall have furnished to the Company an opinion, in form and substance satisfactory to the Company, of legal counsel acceptable to the Company, that such registration is not required. Certificates representing the Stock transferred upon the exercise of an Option granted under this Plan may at the discretion of the Company bear a legend to the effect that such Stock has not been registered under the 1933 Act or any applicable state securities law and that such Stock may not be sold or offered for sale in the absence of an effective registration statement as 12 to such Stock under the 1933 Act and any applicable state securities law or an opinion, in form and substance satisfactory to the Company, of legal counsel acceptable to the Company, that such registration is not required. SECTION 12. LIFE OF PLAN ------------ No Option shall be granted under this Plan on or after the earlier of (1) the tenth anniversary of the effective date of this Plan (as determined under Section 4 of this Plan), in which event this Plan thereafter shall continue in effect until all outstanding Options have been exercised in full or no longer are exercisable, or (2) the date on which all of the Stock reserved under Section 3 of this Plan has (as a result of the exercise of Options granted under this Plan) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date. SECTION 13. ADJUSTMENT ---------- The number of shares of Stock reserved under Section 3 of this Plan, the number of shares of Stock subject to Options granted under this Plan, and the Option Price of such Options shall be adjusted by the Committee in an equitable manner to reflect any 13 change in the capitalization of the Company, including, but not limited to, such changes as stock dividends or stock splits. The Committee shall have the right to adjust (in a manner which satisfies the requirements of Section 424(a) of the Code) the number of shares of Stock reserved under Section 3 of this Plan, the number of shares of Stock subject to Options granted under this Plan, and the Option Price of such Options in the event of any corporate transaction described in Section 424(a) of the Code which provides for the substitution or assumption of Options. If any adjustment under this Section 13 would create a fractional share of Stock or a right to acquire a fractional share of Stock, such fractional share shall be disregarded and the number of shares of Stock reserved under this Plan and the number subject to any Options granted under this Plan shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment made under this Section 13 by the Committee shall be conclusive and binding on all affected persons. SECTION 14. CHANGE IN CONTROL ----------------- If there is a Change in Control of the Company, the Committee thereafter shall have the right to take such action with respect to any unexercised Options granted to any Employee as the Committee deems appropriate under the circumstances to protect the interest of the Company in maintaining the integrity of such grants under this Plan, including unilaterally canceling such Options in 14 exchange for cash, securities or other consideration. The Committee shall have the right to take different action under this Section 14 with respect to different Employees or different groups of Employees, as the Committee deems appropriate under the circumstances. In no event, however, shall the Committee take any action under this Section 14 which would impair the rights of an Employee with respect to Options theretofore granted to such Employee or which would impair the value of such Options, without such Employee's consent. SECTION 15. AMENDMENT OR TERMINATION ------------------------ This Plan may be amended by the Committee from time to time to the extent that the Committee deems necessary or appropriate; provided, however, that no amendment shall be made which would impair the rights of an Employee with respect to Options theretofore granted or which would impair the value of such Options, without such Employee's consent; and, provided further, that no such amendment shall be made absent the approval of the shareholders of the Company required under Section 422 of the Code (1) to increase the number of shares of Stock reserved under Section 3 or (2) to change the class of employees eligible for Options under Section 6. Any amendment which specifically applies to Non- ISOs shall not require shareholder approval unless such approval is necessary to comply with Section 16 of the Exchange Act. The Committee also may suspend the granting of Options under 15 this Plan at any time and may terminate this Plan at any time; provided, however, the Committee shall not have the right unilaterally to modify, amend or cancel any Option granted before such suspension or termination unless (1) the Employee consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in Section 13 or Section 14 of this Plan. SECTION 16. MISCELLANEOUS ------------- 16.1. No Shareholder Rights. No Employee shall have any rights as a --------------------- shareholder of the Company as a result of the grant of an Option to him or to her under this Plan or his or her exercise of such Option pending the actual delivery of Stock subject to such Option to such Employee. 16.2. No Contract of Employment. The grant of an Option to an Employee ------------------------- under this Plan shall not constitute a contract of employment and shall not confer on any Employee any rights upon his or her termination of employment in addition to those rights, if any, expressly set forth in the Option Certificate which evidences his or her Option. 16.3. Other Conditions. Each Option Certificate may require that an ---------------- Employee (as a condition to the exercise of an Option) enter into any agreement or make such representations prepared by the Company, including any agreement which restricts the transfer of Stock acquired pursuant to the exercise of such 16 Option or provides for the repurchase of such Stock by the Company under certain circumstances. 16.4. Withholding. The exercise of any Option granted under this Plan ----------- shall constitute full and complete consent by an Employee to whatever action the Committee deems necessary to satisfy the federal and state tax withholding requirements, if any, which the Committee acting in its discretion deems applicable to such exercise. The Committee also shall have the right to provide in an Option Certificate that an Employee may elect to satisfy federal and state withholding requirements through a reduction in the number of shares of Stock actually transferred to him or her under this Plan, and if the Employee is subject to the reporting requirements under Section 16 of the Exchange Act, any such election and any such reduction shall be effected so as to satisfy the conditions to the exemption under Rule 16b-3 under the Exchange Act. 16.5. Construction. This Plan shall be construed under the laws of the ------------ State of Delaware. 17 EX-10.8 12 Exhibit 10.8 HIBBETT SPORTING GOODS, INC. AMENDED AND RESTATED as of September 13, 1996 STOCK OPTION PLAN TABLE OF CONTENTS Page SECTION 1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1 2.1. Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.2. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.3. Change in Control . . . . . . . . . . . . . . . . . . . . . 2 2.4. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.5. Committee . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.6. Company . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.7. Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.8. Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . 4 2.9. Fair Market Value . . . . . . . . . . . . . . . . . . . . . 4 2.10. ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.11. Non-ISO . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.12. Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.13. Option Agreement . . . . . . . . . . . . . . . . . . . . . . 5 2.14. Option Price . . . . . . . . . . . . . . . . . . . . . . . . 5 2.15. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.16. Rule 16b-3 . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.17. Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 3. SHARES RESERVED UNDER THE PLAN . . . . . . . . . . . . . . . 5 SECTION 4. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 5. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . 6 5.1. Authority of Committee . . . . . . . . . . . . . . . . . . . . . 6 5.2. Committee Discretion Binding . . . . . . . . . . . . . . . . . . 7 SECTION 6. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 7. GRANT OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 8. OPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . 8 i SECTION 9. EXERCISE PERIOD . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 10. TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . 9 10.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 11. SECURITIES REGISTRATION . . . . . . . . . . . . . . . . . . 10 SECTION 12. LIFE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 13. ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 14. CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . 13 SECTION 15. AMENDMENT OR TERMINATION . . . . . . . . . . . . . . . . . . 13 15.1. Amendments to the Plan . . . . . . . . . . . . . . . . . . . 13 15.2. Amendments to Options . . . . . . . . . . . . . . . . . . . 14 15.3. Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events . . . . . . . . . . . . . . . . . . . 14 15.4. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 15 16.1. No Shareholder Rights . . . . . . . . . . . . . . . . . . . 15 16.2. No Contract of Employment . . . . . . . . . . . . . . . . . 15 16.3. Other Conditions . . . . . . . . . . . . . . . . . . . . . . 16 16.4. Withholding . . . . . . . . . . . . . . . . . . . . . . . . 16 16.5. No Rights to Awards . . . . . . . . . . . . . . . . . . . . 16 16.6. No Limit on Other Compensation Arrangements . . . . . . . . 17 16.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . 17 16.8. No Trust or Fund Created . . . . . . . . . . . . . . . . . . 17 16.9 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . 18 16.10 Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . 18 16.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 19 16.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . 19 ii HIBBETT SPORTING GOODS, INC. AMENDED AND RESTATED as of September 13, 1996 STOCK OPTION PLAN SECTION 1. PURPOSE ------- The purpose of this Plan is to promote the interests of the Company and its shareholders by granting Options to purchase Stock to Employees in order (1) to provide an additional incentive to each Employee to work to increase the value of the Company's Stock, and (2) to provide each Employee with a stake in the future of the Company which corresponds to the stake of each of the Company's shareholders. SECTION 2. DEFINITIONS ----------- Each term set forth in this Section 2 shall have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular. 2.1. Affiliate -- means any corporation, partnership, joint venture or --------- any other entity (i) that, directly or indirectly, is controlled by the Company or (ii) in which the Company owns, directly or indirectly, a significant equity interest, in either case as determined by the Committee. 2.2. Board -- means the Board of Directors of the Company. ----- 2.3. Change in Control -- shall be deemed to have occurred if (i) any ----------------- "person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Stock of the Company, Saunders Karp & Megrue, L.P. or any Affiliate thereof, or the Anderson Shareholders (as defined in the Stockholders Agreement dated as November 1, 1995 among the SK Equity Fund L.P., SK Investment Fund L.P., the Company and certain shareholders of the Company named therein)), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined 2 voting power of the Company's then outstanding securities; (ii) during any period of two consecutive years (not including any period prior to the adoption of the Plan), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this paragraph) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) 3 the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. If any of the events enumerated in clauses (i) through (iv) occur, the Committee shall determine the effective date of the Change in Control resulting therefrom, for purposes of the Plan. 2.4. Code -- means the Internal Revenue Code of 1986, as amended. ---- 2.5. Committee -- means a committee appointed by the Board to --------- administer this Plan which at all times shall consist of two or more members of the Board. To the extent the Board considers it desirable to comply with or qualify under Rule 16b-3 of the Exchange Act, each member of the Committee shall be a "non-employee director" within the meaning of Rule 16b-3. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee shall be filled by the Board. The Committee shall select one of its members as Chairman and shall hold meetings at such times and places as it may determine. 4 2.6. Company -- means Hibbett Sporting Goods, Inc., a Delaware ------- corporation, or any successor to such corporation, and its Affiliates. 2.7. Employee -- means any full-time employee of the Company who the -------- Committee, acting in its absolute discretion, has determined to be eligible for the grant of an Option under this Plan. 2.8. Exchange Act -- means the Securities Exchange Act of 1934, as ------------ amended. 2.9. Fair Market Value -- means, unless otherwise determined by the ----------------- Committee, the closing price on the date of determination for a share of Stock, or if there were no sales on such date, the most recent prior date on which there were sales, as reported by The Wall Street Journal or, if The Wall Street ----------------------- --------------- Journal does not report such closing price, such closing price as reported by a - ------- newspaper or trade journal selected by the Committee. 2.10. ISO -- means an option granted under this Plan to purchase Stock --- which is intended by the Company to satisfy the requirements of Code Section 422. 5 2.11. Non-ISO -- means an option granted under this Plan to purchase ------- Stock which is not intended by the Company to satisfy the requirements of Code Section 422. 2.12. Option -- means an ISO or a Non-ISO. ------ 2.13. Option Agreement -- means the written agreement or instrument ---------------- which sets forth the terms of an Option granted to an Employee under this Plan. 2.14. Option Price -- means the price which shall be paid to purchase ------------ one share of Stock upon the exercise of an Option granted under this Plan. 2.15. Plan -- means this Hibbett Sporting Goods, Inc. Amended and ---- Restated 1996 Stock Option Plan, as amended from time to time. 2.16. Rule 16b-3 -- means the exemption under Rule 16b-3 to ---------- Section 16(b) of the Exchange Act or any successor to such rule. 2.17. Stock -- means the $.01 par value common stock of the Company. ----- SECTION 3. SHARES RESERVED UNDER THE PLAN ------------------------------ 6 There shall be 238,566 shares of Stock reserved for use under this Plan, and such shares of Stock shall be reserved to the extent that the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company. Furthermore, any shares of Stock subject to an Option which remain unissued after the cancellation, expiration or exchange of such Option thereafter shall again become available for use under this Plan. SECTION 4. EFFECTIVE DATE -------------- The effective date of this Plan shall be the date it is adopted by the Board, provided that to the extent this Plan provides for the issuance of ISOs, the shareholders of the Company shall approve those portions of this Plan related to the granting of ISOs within twelve (12) months after the date of adoption. If any Options are granted under this Plan before the date of such shareholder approval, such Options automatically shall be granted subject to such approval. SECTION 5. ADMINISTRATION -------------- 7 5.1. Authority of Committee. The Plan shall be administered by the ---------------------- Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Employees to participate in the Plan; (ii) determine the type of Options to be granted to an eligible Employee; (iii) determine the number of shares of Stock to be covered by an Option; (iv) determine the terms and conditions of any Option; (v) determine whether, to what extent, and under what circumstances an Option may be exercised in cash, shares of Stock, other securities, or other property, or canceled, forfeited, or suspended and the method or methods by which Options may be exercised, canceled, forfeited, or suspended; (vi) interpret and administer the Plan and any instrument or agreement relating to, or grant made under, the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary to or desirable for the administration of the Plan. 8 5.2. Committee Discretion Binding. Unless otherwise expressly provided in ---------------------------- the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Option shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all persons, including the Company, any Employee, any holder or beneficiary of any Option and any shareholder. SECTION 6. ELIGIBILITY ----------- Only Employees shall be eligible for the grant of Options under this Plan. 9 SECTION 7. GRANT OF OPTIONS ---------------- Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Options shall be granted, the number of shares of Stock to be covered by each Option, the Option Price therefor, and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant ISOs, or to grant Non- ISOs, or to grant both types of Options. In the case of ISOs, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. SECTION 8. OPTION PRICE ------------ The Option Price for each share of Stock subject to an Option shall be determined by the Committee in its discretion, but in no event shall the Option Price be less than the Fair Market Value of a share of Stock on the date the Option is granted. The Option Price shall be payable in full upon the exercise of any Option and, at the discretion of the Committee, an Option Agreement can provide 10 for the payment of the Option Price in accordance with the rules and regulations established by the Committee, either in cash, by check, or in Stock acceptable to the Committee or in any combination of cash, check, and Stock acceptable to the Committee, in either case having a fair market value or combined fair market value equal to the Option Price as determined by the Committee in accordance with the Plan. SECTION 9. EXERCISE PERIOD --------------- Each Option granted under this Plan to an Employee shall be exercisable in whole or in part at such time or times as set forth in the related Option Agreement, but, unless otherwise provided for by the Committee, no Option Agreement shall make an Option granted to an Employee exercisable after the earlier of: (a) the end of the 30 day period which begins on the date that Employee's employment by the Company terminates for any reason other than death; (b) the end of the 180 day period which begins on the date that Employee's employment by the Company terminates because of death; 11 (c) the date which is the tenth anniversary of the date the Option is granted; or (d) the date such Option is exercised in full. SECTION 10. TRANSFERABILITY --------------- 10.1. No Option granted under this Plan shall be transferable by an Employee other than by will or by the laws of descent and distribution, and such Option shall be exercisable during the lifetime of an Employee only by such Employee. The person or persons to whom an Option is transferred by will or by the laws of descent and distribution thereafter shall be treated as the Employee under this Plan. 10.2. The Committee may impose such restrictions on any shares of Stock acquired pursuant to Options under the Plan as it may deem advisable, including, without limitation, restrictions under applicable federal securities law, restrictions imposed by any stock exchange upon which such shares of Stock may be listed, and restrictions under any blue sky or state securities laws applicable to such shares. SECTION 11. SECURITIES REGISTRATION ----------------------- 12 All certificates for shares of Stock or other securities of the Company delivered under the Plan pursuant to any Option or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which shares of Stock or other securities are then listed, and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. If so requested by the Company, the Employee shall make a written representation to the Company that he or she will not sell or offer to sell any of such Stock unless a registration statement shall be in effect with respect to such Stock under the Securities Act of 1933, as amended ("1933 Act") and any applicable state securities law or unless he or she shall have furnished to the Company an opinion, in form and substance satisfactory to the Company, of legal counsel acceptable to the Company, that such registration is not required. SECTION 12. LIFE OF PLAN ------------ 13 No Option shall be granted under this Plan on or after the earlier of (1) the tenth anniversary of the effective date of this Plan (as determined under Section 4 of this Plan), in which event this Plan thereafter shall continue in effect until all outstanding Options have been exercised in full or no longer are exercisable, or (2) the date on which all of the Stock reserved under Section 3 of this Plan, subject to adjustment pursuant to Section 13 hereof or amendment pursuant to Section 15 hereof, has (as a result of the exercise of Options granted under this Plan) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date. SECTION 13. ADJUSTMENT ---------- In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, shares of Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares 14 of Stock or other securities of the Company, issuance of warrants or other rights to purchase shares of Stock or other securities of the Company, or other similar corporate transaction or event affects the shares of Stock such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number of shares of Stock or other securities of the Company (or number and kind of other securities or property) with respect to which Options may be granted, (ii) the number of shares of Stock or other securities of the Company (or number and kind of other securities or property) subject to outstanding Options, and (iii) the Option Price with respect to any Options, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Option; provided, in each case, that with respect to ISOs no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code, as from time to time amended. 15 SECTION 14. CHANGE IN CONTROL ----------------- If there is a Change in Control of the Company, the Committee thereafter shall have the right to take such action with respect to any outstanding Options granted to any Employee as the Committee deems appropriate under the circumstances to protect the interest of the Company in maintaining the integrity of such grants under this Plan, including unilaterally canceling such Options in exchange for cash, securities or other consideration. The Committee shall have the right to take different action under this Section 14 with respect to different Employees or different groups of Employees, as the Committee deems appropriate under the circumstances. In no event, however, shall the Committee take any action under this Section 14 which would impair the rights of an Employee or which would impair the value of such Options, without such Employee's consent. SECTION 15. AMENDMENT OR TERMINATION ------------------------ 15.1. Amendments to the Plan. This Plan may be amended, in whole or in ---------------------- part, by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however, 16 that no amendment shall be made which would impair the rights of an Employee with respect to Options theretofore granted or which would impair the value of such Options, without such Employee's consent; and, provided further, that no such amendment shall be made absent the approval of the shareholders of the Company if such approval is necessary to comply with any tax or regulatory requirement for which or with which the Board deems it necessary or desirable to qualify or comply. The Board also may suspend the granting of Options under this Plan at any time and may terminate this Plan, in whole or in part, at any time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel any Option granted before such suspension or termination unless (1) the Employee consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in Section 13 or Section 14 of this Plan. 15.2. Amendments to Options. The Committee may waive any conditions or --------------------- rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Option theretofore granted, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or 17 termination that would adversely affect the rights of any Employee or any holder or beneficiary of any Option theretofore granted shall not to that extent be effective without the consent of the affected Employee, holder or beneficiary. 15.3. Adjustment of Awards Upon the Occurrence of Certain Unusual or -------------------------------------------------------------- Nonrecurring Events. The Committee is hereby authorized to make adjustments in - ------------------- the terms and conditions of Options in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. 15.4. Cancellation. Any provision of this Plan or any Option Agreement ------------ to the contrary notwithstanding, the Committee may cause any Option granted hereunder to be canceled in consideration of a cash payment or alternative Option made to the holder of such canceled Option equal in value to the Fair Market Value of such canceled Option. SECTION 16. MISCELLANEOUS ------------- 18 16.1. No Shareholder Rights. No Employee shall have any rights as a --------------------- shareholder of the Company as a result of the grant of an Option to him or to her under this Plan or his or her exercise of such Option pending the actual issuance of Stock subject to such Option to such Employee. 16.2. No Contract of Employment. The grant of an Option to an Employee ------------------------- under this Plan shall not constitute a contract of employment and shall not confer on any Employee any rights upon his or her termination of employment in addition to those rights, if any, expressly set forth in the Option Agreement which evidences his or her Option. 16.3. Other Conditions. Each Option Agreement may require that an ---------------- Employee (as a condition to the exercise of an Option) enter into any agreement or make such representations prepared by the Company, including any agreement which restricts the transfer of Stock acquired pursuant to the exercise of such Option. 16.4. Withholding. The exercise of any Option granted under this Plan ----------- shall constitute full and complete consent by an Employee to whatever action the Committee deems necessary to satisfy the federal and state tax withholding requirements, if any, which the Committee acting in its discretion deems applicable to 19 such exercise. The Committee also shall have the right to provide in an Option Agreement that an Employee may elect to satisfy federal and state withholding requirements through a reduction in the number of shares of Stock actually transferred to him or her under this Plan, and if the Employee is subject to the reporting requirements under Section 16 of the Exchange Act, any such election and any such reduction shall be effected so as to satisfy the conditions to the exemption under Rule 16b-3 under the Exchange Act. 16.5. No Rights to Awards. No Employee, or other person shall have any ------------------- claim to be granted any Option, and there is no obligation for uniformity of treatment of Employees, or holders or beneficiaries of Options. The terms and conditions of Options need not be the same with respect to each recipient. 16.6. No Limit on Other Compensation Arrangements. Nothing contained ------------------------------------------- in the Plan shall prevent the Company from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, and other types of awards whether or not provided for hereunder (subject to shareholder approval if such approval is 20 required), and such arrangements may be either generally applicable or applicable only in specific cases. 16.7. Severability. If any provision of the Plan or any Option is or ------------ becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Option, or would disqualify the Plan or any Option under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, person or Option and the remainder of the Plan and any such Option shall remain in full force and effect. 16.8. No Trust or Fund Created. Neither the Plan nor any Option shall ------------------------ create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and an Employee or any other person. To the extent that any person acquires a right to receive payments from the Company pursuant to an Option, such right shall be no greater than the right of any unsecured general creditor of the Company. 21 16.9 Delegation. Subject to the terms of the Plan and applicable law, ---------- the Committee may delegate to one or more officers or managers of the Company, or to a committee of such officers or managers, the authority, subject to such terms and limitations as the Committee shall determine, to grant Options to, or to cancel, modify or waive rights with respect to, or to alter, discontinue, suspend, or terminate Options held by, Employees who are not officers or directors of the Company for purposes of Section 16 of the Exchange Act, or any successor section thereto, or who are otherwise not subject to such Section. 16.10 Other Laws. The Committee may refuse to issue or transfer any ---------- shares of Stock or other consideration under an Option if, acting in its sole discretion, it determines that the issuance or transfer of such shares of Stock or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a holder or beneficiary of an Option in connection with the exercise of such Option shall be promptly refunded to the relevant holder or beneficiary. Without limiting the generality of the foregoing, no Option granted hereunder shall be construed as an offer to sell 22 securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject. 16.11. Headings. Headings are given to the Sections and subsections of -------- the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 16.12. Construction. This Plan shall be construed under the laws of the ------------ State of Delaware. 23 EX-10.10 13 EXHIBIT 10.10 HIBBETT SPORTING GOODS, INC. EMPLOYEE STOCK PURCHASE PLAN THIS HIBBETT SPORTING GOODS, INC. EMPLOYEE STOCK PURCHASE PLAN ("Plan"), made this 13th day of September, 1996, by Hibbett Sporting Goods, Inc. ("Company"). WHEREAS, the Company desires to provide a method whereby employees of the Company will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of common stock of the Company; WHEREAS, the Company desires to establish the Hibbett Sporting Goods, Inc. Employee Stock Purchase Plan pursuant to Section 423 of the Internal Revenue Code of 1986, as amended, to provide employees with the opportunity to purchase shares of common stock of the Company; NOW THEREFORE, the Company hereby adopts the Hibbett Sporting Goods, Inc. Employee Stock Purchase Plan upon the following terms and conditions: ARTICLE 1 DEFINITIONS For the purpose of this Plan, the following terms shall have the meanings set forth in this Article unless a different meaning is required by the context: 1.1 Board. Board of Directors of the Company. 1.2 Code. The Internal Revenue Code of 1986, as amended. 1.3 Committee. The group of individuals administering the Plan, as provided in Article 2 of the Plan. 1.4 Common Stock The common stock $0.01 par value of the Company or the number and kind of shares of stock or other securities into which such Common Stock may be changed in accordance with Section 12.4 of the Plan. 1.5 Compensation. Wages reported on Form W-2 before the deduction for elective deferrals to a Section 401(k) plan or Section 125 plan as those plans are defined in the Code. 1.6 Eligible Recipient. An Employee who satisfies the eligibility requirements contained in Section 3.1. 1.7 Employee. A common law employee of the Company. 1.8 Entry Dates. The earlier of the first day of July or first day of January next following the date on which an Employee has satisfied the eligibility requirements contained in Section 3.1. 1.9 Exchange Act. The Securities Exchange Act of 1934, as amended. 1.10 Fair Market Value. The Fair Market Value of a share of Common Stock, unless otherwise determined by the Committee, shall be the closing price on the date of determination for a share of stock or if there were no sales on such date, the most recent prior date on which there were sales, as reported by The Wall Street Journal or, if The Wall Street Journal does not report such closing price, such closing price as reported by a newspaper or trade journal selected by the Committee. 1.11 Offering. An offer made by the Company to the Participants for the purchase of shares of Common Stock, on a quarterly basis commencing on the Offering Commencement Date and ending on the Offering Termination Date, through payroll deductions subject to the terms and conditions of the Plan. 1.12 Offering Commencement Date. The first day of each calendar quarter except as provided in Article 13. The initial Offering Commencement Date shall be determined by the Committee in its discretion. 1.13 Offering Termination Date. The last day of each calendar quarter. 1.14 Option. The right of an Eligible Recipient to purchase Common Stock under the Plan. 1.15 Option Agreement. The Agreement described in Section 4.2. 2 1.16 Option Price. The purchase price for each share of Common Stock as determined in Section 6.2. 1.17 Participant. An Eligible Recipient who has elected to participate in the Plan in accordance with procedures established herein. ARTICLE 2 PLAN ADMINISTRATION 2.1 The Committee. The Plan shall be administered by the Board or by a committee of the Board consisting of not less than two persons. However, from and after the date on which the Company first registers a class of its equity securities under Section 12 of the Exchange Act, the Plan shall be administered by a committee appointed by the Board consisting of not less than two Board members. As used in this Plan, the term "Committee" shall refer to the Board or such a committee, if established. 2.2 Authority of the Committee. Subject to the express provisions of the Plan, the Committee shall have plenary authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination in the foregoing matters shall be conclusive. ARTICLE 3 ELIGIBILITY AND PARTICIPATION 3.1 Conditions of Eligibility. An Eligible Recipient is an Employee who: (1) customarily works more than 20 hours per week, and (2) has been employed by the Company for one (1) year. 3.2 Effective Date of Participation. An Eligible Recipient may become a Participant as of the earlier of the first day of January or the first day of July ("Entry Dates") which follows the date on which the Employee met the eligibility requirements contained in Section 3.1, provided that the Eligible Recipient remains employed on the Entry Date. 3.3 Election to Participate. An Eligible Recipient may become a Participant by completing an Option Agreement, which includes the authorization for a payroll deduction, on the form provided by the Company and filing it with the treasurer of the Company on or before the date set by the Committee, which date shall be prior to the Offering Commencement Date for which participation is sought. Properly authorized payroll 3 deductions for a Participant shall commence on the applicable Offering Commencement Date and shall end when terminated by the terms of the Option Agreement or when terminated by the Participant as provided in Article 8. 3.4 Restrictions on Participation. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an Option to participate in the Plan: 3.4.1 if, immediately after the grant, such Employee would own stock, and/or hold outstanding Options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company (for purposes of this paragraph, the rules of Section 424(d) of the Code shall apply in determining stock ownership of any employee); or 3.4.2 which permits an Employee's rights to purchase Common Stock under all employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 in fair market value of the Common Stock (determined at the time such Option is granted) for each calendar year in which such Option is outstanding. ARTICLE 4 OFFERINGS 4.1 Shares Authorized; Duration of Offerings. As provided in Article 10, the shareholders of the Company have authorized the Board to reserve 75,000 shares of Common Stock to be issued to the Participants in this Plan. The shares will be made available to the Participants in a series of quarterly Offerings which shall continue until all shares of Common Stock reserved for this Plan have been issued to the Participants. Notwithstanding anything to the contrary, this Plan shall terminate and there shall be no further Offerings upon the earlier of: (1) the issuance of all shares reserved under Section 10.1 of Common Stock or (2) the end of the fortieth (40th) quarterly Offering. 4.2 Option Agreement. Each Eligible Recipient shall receive an Option Agreement. The Option Agreement shall contain the terms for the purchase of Common Stock pursuant to the provisions of the Plan and the discretion of the Compensation Committee where applicable. The Option Agreement shall also contain authorization for the payroll deduction. An Eligible Recipient may only become a Participant upon the timely completion and return of the Option Agreement according to the terms contained therein. 4 ARTICLE 5 PAYROLL DEDUCTIONS 5.1 Amount of Deduction. Upon filing the Option Agreement, the Participant shall elect to have deductions made from his paycheck on each payday during the time he is a Participant in an Offering at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his compensation as determined for each applicable paycheck. 5.2 Participant's Account. The Company shall establish a bookkeeping account for each Participant and all payroll deductions made for a Participant shall be credited to his account under the Plan. 5.3 Changes in Payroll Deductions. A Participant may discontinue his participation in the Plan as provided in Article 8, but no other change can be made during an Offering and, specifically, a Participant may not alter the amount of his payroll deductions for that Offering. ARTICLE 6 GRANTING OF OPTION 6.1 Number of Option Shares. On each Offering Commencement Date, a Participant shall be deemed to have been granted an Option to purchase a maximum number of shares of Common Stock of the Company equal to an amount determined as follows: an amount equal to (i) that percentage of the Participant's Compensation which he has elected to have withheld (but not in any case in excess of 10%) multiplied by (ii) the Participant's compensation during the quarter of the Offering (iii) divided by 85% of the Fair Market Value of the Common Stock on the applicable Offering Commencement Date. 6.2 Option Price. The Option Price of the Common Stock purchased with payroll deductions made during each quarterly Offering for a Participant shall be the lower of: 6.2.1 85% of the Fair Market Value of the Common Stock on the Offering Commencement Date; or 6.2.2 85% of the Fair Market Value of the Common Stock on the Offering Termination Date. 5 ARTICLE 7 EXERCISE OF OPTION 7.1 Automatic Exercise. Unless a Participant gives written notice to the Company as hereinafter provided, his Option for the purchase of Common Stock with payroll deductions made during any Offering will be deemed to have been exercised automatically on the Offering Termination Date applicable to such Offering, for the purchase of the number of full shares of Common Stock which the accumulated payroll deductions in his account at that time will purchase at the applicable Option Price (but not in excess of the number of shares for which Options have been granted to the employee pursuant to Section 6.1) and any excess in his account at that time will be returned to him, except as provided in Section 7.3. 7.2 Withdrawal of Account. By written notice to the treasurer of the Company, at any time prior to the Offering Termination Date applicable to any Offering, a Participant may elect to withdraw all the accumulated payroll deductions in his account at such time. 7.3 Fractional Shares. Fractional shares will not be issued under the Plan and any accumulated payroll deductions which would have been used to purchase fractional shares shall, unless otherwise requested by the Participant, be held in the Participant's account for the purchase of Common Stock during the next Offering. 7.4 Transferability of Option. During a Participant's lifetime, Options held by such Participant shall be exercisable only by that Participant. 7.5 Delivery of Stock. As promptly as practicable after the Offering Termination Date of each Offering, the Company will deliver to each Participant, as appropriate, the certificates evidencing the stock purchased upon exercise of his Option. ARTICLE 8 WITHDRAWAL 8.1 In General. As indicated in Section 7.2, a Participant may withdraw payroll deductions credited to his account under the Plan at any time by giving written notice to the treasurer of the Company. All of the Participant's payroll deductions credited to his account will be paid to him promptly after receipt of his notice of withdrawal, and no further payroll deductions will be made from his pay during such Offering. The Company may, at its Option, treat any attempt to borrow by an employee on the security of his accumulated payroll deductions as an election, under Section 7.2, to withdraw such deductions. 8.2 Effect on Subsequent Participation. A Participant's withdrawal from any Offering will not have any effect upon his eligibility to participate in any succeeding Offering or in any similar plan which may hereafter by adopted by the Company. 6 8.3 Termination of Employment. Upon termination of the Participant's employment for any reason, including retirement (but excluding death while in the employ of the Company), the payroll deductions credited to his account will be returned to him, or, in the case of his death subsequent to the termination of his employment, to the person or persons entitled thereto under Section 12.1. 8.4 Termination of Employment Due to Death. Upon termination of the Participant's employment because of his death, his beneficiary (as defined in Section 12.1) shall have the right to elect, by written notice given to the treasurer of the Company prior to the earlier of the Offering Termination Date or the expiration of a period of sixty (60) days commencing with the date of death of the Participant, either: 8.4.1 to withdraw all of the payroll deductions credited to the Participant's account under the Plan, or 8.4.2 to exercise the Participant's Option for the purchase of Common Stock on the Offering Termination Date next following the date of the Participant's death for the purchase of the number of full shares of Common Stock which the accumulated payroll deductions in the Participant's account at the date of the Participant's death will purchase at the applicable Option Price, and any excess in such account will be returned to said beneficiary, without interest. In the event that no such written notice of election shall be duly received by the treasurer of the Company, the beneficiary shall automatically be deemed to have elected, pursuant to paragraph 8.4.2, to exercise the Participant's Option. ARTICLE 9 INTEREST No interest will be paid or allowed on any money paid into the Plan or credited to the account of any Participant. ARTICLE 10 STOCK 10.1 Maximum Shares. The maximum number of shares of Common Stock which shall be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in Section 12.4 shall be 75,000 shares. If the total number of shares of Common Stock for which Options are exercised on any Offering Termination Date in accordance with Article 6 exceeds the maximum number of shares reserved for this Plan, the Company shall make a pro rata allocation of the shares of Common Stock available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall 7 determine to be equitable, and the balance of payroll deductions credited to the account of each Participant under the Plan shall be returned to him as promptly as possible. 10.2 Participant's Interest in Common Stock. The Participant will have no interest in the Common Stock covered by his Option until such Option has been exercised on the applicable Offering Termination Date. 10.3 Issuance of Common Stock. Common Stock to be delivered to a Participant under the Plan will be issued in the name of the Participant, or, if the Participant so directs by written notice to the treasurer of the Company prior to the Offering Termination Date applicable thereto, in the names of the Participant and one such other person as may be designated by the Participant, as joint tenants with rights of survivorship or as tenants by the entireties, to the extent permitted by applicable law. ARTICLE 11 SECURITIES LAW RESTRICTIONS 11.1 Share Issuances. Notwithstanding any other provision of the Plan or any agreements entered into pursuant hereto, the Company shall not be required to issue or deliver any certificate for shares of Common Stock under this Plan, and an Option shall not be considered to be exercised notwithstanding the tender by the Participant of any consideration therefor, unless and until each of the following conditions has been fulfilled: 11.1.1 (i) There shall be in effect with respect to such shares a registration statement under the Securities Act and any applicable state securities laws if the Committee, in its sole discretion, shall have determined to file, cause to become effective and maintain the effectiveness of such registration statement; or (ii) if the Committee has determined not to so register the shares of Common Stock to be issued under the Plan, (A) exemptions from registration under the Securities Act and applicable state securities laws shall be available for such issuance (as determined by counsel to the Company) and (B) there shall have been received from the Participant (or, in the event of death or disability, the Participant's heir(s) or legal representative(s)) any representations or agreements requested by the Company in order to permit such issuance to be made pursuant to such exemptions; and 11.1.2 There shall have been obtained any other consent, approval or permit from any state or federal governmental agency which the Committee shall, in its sole discretion upon the advice of counsel, deem necessary or advisable. 11.2 Share Transfers. Shares of Common Stock issued pursuant to Options granted under the Plan may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of, whether voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, except pursuant to registration under the Securities Act and 8 applicable state securities laws or pursuant to exemptions from such registrations. The Company may condition the sale, assignment, transfer, pledge, encumbrance or other disposition of such shares not issued pursuant to an effective and current registration statement under the Securities Act and all applicable state securities laws on the receipt from the party to whom the shares of Common Stock are to be so transferred of any representations or agreement requested by the Company in order to permit such transfer to be made pursuant to exemptions from registration under the Securities Act and applicable state securities laws. 11.3 Legends. 11.3.1 Unless a registration statement under the Securities Act and applicable state securities laws is in effect with respect to the issuance or transfer of shares of Common Stock under the Plan, each certificate representing any such shares shall be endorsed with a legend in substantially the following form, unless counsel for the Company is of the opinion as to any such certificate that such legend is unnecessary: THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, ("THE ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. 11.3.2 The Committee, in its sole discretion, may endorse certificates representing shares issued pursuant to the exercise of Options with a legend in substantially the following form: THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF ON OR BEFORE THE EXPIRATION OF THE SECTION 423 HOLDING PERIODS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY. 9 ARTICLE 12 MISCELLANEOUS 12.1 Designation of Beneficiary. The designated beneficiary pursuant to a qualified plan (as described in Section 401(a) of the Code) maintained by the Company shall be the designated beneficiary for this Plan, unless a Participant files a written designation of a beneficiary pursuant to this Plan. Such designation of beneficiary may be changed by the Participant at any time by written notice to the treasurer of the Company. Upon the death of a Participant and upon receipt by the Company of proof of identity and existence at the Participant's death of a beneficiary validly designated by him under the Plan, the Company shall deliver such Common Stock and/or cash to such beneficiary. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant's death, the Company shall deliver such Common Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Common Stock and/or cash to the spouse or to any one or more dependents of the Participant as the Company may designate. No beneficiary shall, prior to the death of the Participant by whom he has been designated, acquire any interest in the stock or cash credited to the Participant under the Plan. 12.2 Transferability. Neither payroll deductions credited to a Participant's account nor any rights with regard to the exercise of an Option or to receive Common Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 7.2. 12.3 Use of Funds. Any payroll deductions received or held by the Company under this Plan may be used by the company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions. 12.4 Adjustment Upon Changes in Capitalization. 12.4.1 In the event that the Committee (or if the Company is not the surviving corporation in any of the following transactions, the board of directors of the surviving corporation) shall determine that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up spin-off combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below fair market value, or other similar corporate event affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under this Plan, then the Committee shall, in its sole discretion, and in such manner as the Committee may deem equitable, adjust any or all of (1) the number and kind of shares which thereafter may be made the 10 subject of the Options under the Plan, (2) the number and kind of shares subject to outstanding Options and (3) the purchase price with respect to any of the foregoing and/or, if deemed appropriate, make provision for a cash payment to a person who has an outstanding Option provided, however, that the number of shares subject to an Option shall always be a whole number. 12.4.2 Notwithstanding any contrary provision in this Section 12.4, there shall be no adjustment to shares authorized pursuant to this Plan for any event described in Section 12.4.1 which occurs before or simultaneously with the closing of the Public Offering as that term is defined in Article 13. 12.5 Amendment and Termination. The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Options under the Plan shall conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no such amendment shall be effective, without approval of the shareholders of the Company, if shareholder approval of the amendment is then required to comply with or obtain exemptive relief under any tax or regulatory requirement the Board deems desirable to comply with or obtain exemptive relief under, including without limitation, pursuant to Rule 16b-3 under the Exchange Act or any successor rule or Section 422 of the Code or under the applicable rules or regulations of any securities exchange or the NASD, and provided further that no such amendment shall change the terms, conditions or eligibility requirements of an Option granted under the Plan. No termination, suspension or amendment of the Plan shall alter or impair any outstanding Option without the consent of the Participant affected thereby; provided, however, that this sentence shall not impair the right of the Committee to take whatever action it deems appropriate under Section 12.4.1 or Section 12.4.2 of the Plan. 12.6 No Employment Rights. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue in the employ or service of the Company or any subsidiary. 12.7 Effect of Plan. The provisions of the Plan shall, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each employee participating in the Plan, including, without limitation, such Employee's estate and the executors, administrators or trustees thereof, heirs and legatee, and any receiver, trustee in bankruptcy or representative of creditors of such Employee. 12.8 Governing Law. The place of administration of the Plan shall be conclusively deemed to be within the State of Delaware, and the rights and obligations of any and all persons having or claiming to have had an interest under the Plan or under any agreements evidencing Options shall be governed by and construed exclusively and solely in 11 accordance with the laws of the State of Delaware without regard to conflict of laws provisions of any jurisdictions. All parties agree to submit to the jurisdiction of the state and federal courts of Delaware with respect to matters relating to the Plan and agree not to raise or assert the defense that such forum is not convenient for such party. 12.9 Construction and Headings. The use of the masculine gender shall also include within its meaning the feminine, and the singular may include the plural and the plural may include the singular, unless the context clearly indicates to the contrary. The headings of the Articles and Sections of the Plan are for convenience of reading only and are not meant to be of substantive significance and shall not add to or detract from the meaning of such Article or Section. ARTICLE 13 EFFECTIVE DATE The plan is effective September 13, 1996, the date the Plan was adopted by the Board and approved by unanimous written consent of the shareholders. Notwithstanding any other provision contained herein, no Options shall be granted pursuant to this Plan until the date of closing of a public offering of the Common Stock of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended. If the condition in the preceding sentence is not satisfied by December 31, 1996, then this Plan is null and void as if it had never been adopted by the Board and had never been approved by the shareholders. 12 EX-10.11 14 EXHIBIT 10.11 HIBBETT SPORTING GOODS, INC. STOCK PLAN FOR OUTSIDE DIRECTORS 1. Purpose The purpose of the Hibbett Sporting Goods, Inc. Stock Plan for Outside Directors (the "Plan") is to promote the interests of Hibbett Sporting Goods, Inc. (the "Company") and its stockholders by increasing the proprietary interest of outside directors in the growth and performance of the Company by granting such directors options to purchase shares of Common Stock, par value $.01 per share (the "Shares") of the Company. 2. Administration The Plan shall be administered by the Company's Board of Directors (the "Board"). Subject to the provisions of the Plan, the Board shall be authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the administration of the Plan; provided, however, that the Board shall have no discretion with respect to the selection of directors to receive options, the number of Shares subject to any such options, the purchase price thereunder or the timing of grants of options under the Plan. The determinations of the Board in the administration of the Plan, as described herein, shall be final and conclusive. The Secretary of the Company shall be authorized to implement the Plan in accordance with its terms and to take such actions of a ministerial nature as shall be necessary to effectuate the intent and purposes thereof. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware. 3. Eligibility The class of individuals eligible to receive grants of options under the Plan shall be the "Eligible Directors". For purposes of this Plan, an "Eligible Director" shall be a member of the Board who is not an employee of the Company, Saunders Karp & Megrue, L.P., or any affiliate of either of them. Any holder of an option granted hereunder shall hereinafter be referred to as a "Participant". 4. Shares Subject to the Plan Subject to adjustment as provided in Section 6, an aggregate of 50,000 Shares shall be available for issuance under the Plan. The Shares deliverable upon the exercise of options may be made available from authorized but unissued Shares or treasury Shares. If any option granted under the Plan shall terminate for any reason without having been exercised, the Shares subject to, but not delivered under, such option shall be available for issuance under the Plan. 5. Grant, Terms and Conditions of Options (a) Subject to the consummation of the initial public offering of the Company's Common Stock, each Eligible Director on the Effective Date (as defined in Section 10) will be granted on such date an option to purchase 5,000 Shares. (b) Each Eligible Director elected following the Effective Date (as defined in Section 10) shall be granted an option to purchase 5,000 Shares upon his initial election to the Board. (c) On the last day of each fiscal year of the Company (each an "Applicable Fiscal Year")(beginning with the fiscal year commencing on a date following the Effective Date), each Eligible Director who was initially elected to the Board before such date shall be granted an option pursuant to subsection (i) or (ii) of this Section 5(c), as the case may be: (i) Each Eligible Director who was initially elected to the Board after the first day of such Applicable Fiscal Year shall be granted an option. The number of shares of Common Stock covered be each such Option shall be 2,500 multiplied by a fraction, the numerator of which shall be the number of calendar days that have elapsed between the date of initial election of such Eligible Director and the last day of such Applicable Fiscal Year but not to exceed 365, and the denominator of which shall be 365; or (ii) Each Eligible Director who was initially elected to the Board on or before the first day of such Applicable Fiscal Year shall be granted an option. The number of shares of Common Stock covered by each such Option shall be 2,500. 2 (d) The options granted will be nonstatutory stock options not intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and shall have the following terms and conditions: (i) Price. The purchase price per Share deliverable upon the exercise of each option shall be 100% of the Fair Market Value per Share on the date the option is granted. For purposes of the Plan, Fair Market Value with respect to the exercise price of options granted under Section 5(a) hereof shall be the price at which Shares are sold to the public pursuant to the initial public offering. For all other purposes hereunder, unless otherwise determined by the Board, Fair Market Value shall be the closing price of the Shares for the date of determination or if there were no sales on such date, the most recent prior date on which there were sales, as reported in the Wall Street Journal, or if the Wall Street Journal does not ------------------- ------------------- report such closing price, such closing price reported by a newspaper or trade journal selected by the Board. (ii) Payment. Options may be exercised only upon payment of the purchase price thereof in full. Such payment shall be made in cash. (iii) Exercisability and Term of Options. Options shall vest and become exercisable immediately, and shall be exercisable until the earlier of ten years from the date of grant and the expiration of the one year period provided in paragraph (iv) below. (iv) Termination of Service as Eligible Director. Upon termination of a Participant's service as a director of the Company for any reason, all outstanding options held by such Eligible Director, to the extent then exercisable, shall be exercisable in whole or in part for a period of one year from the date upon which the Participant ceases to be a Director, provided that in no event shall the options be exercisable beyond the period provided for in paragraph (iii) above. (v) Nontransferability of Options. No option may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or the laws of descent and distribution, and during the lifetime of the Participant to whom an option is granted it may be exercised only by the Participant or by the Participant's guardian or legal representative. 3 Notwithstanding the foregoing, options may be transferred pursuant to a qualified domestic relations order. (vi) Option Agreement. Each option granted hereunder shall be evidenced by an agreement with the Company which shall contain the terms and provisions set forth herein and shall otherwise be consistent with the provisions of the Plan. 6. Adjustment of and Changes in Shares In the event of a stock split, stock dividend, extraordinary cash dividend, subdivision or combination of the Shares or other change in corporate structure affecting the Shares, the number of Shares authorized by the Plan shall be increased or decreased proportionately, as the case may be, and the number of Shares subject to any outstanding option shall be increased or decreased proportionately, as the case may be, with appropriate corresponding adjustment in the purchase price per Share thereunder. 7. No Rights of Shareholders Neither a Participant nor a Participant's legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company in respect of any Shares purchasable upon the exercise of any option, in whole or in part, unless and until certificates for such Shares shall have been issued. 8. Plan Amendments The Plan may be amended by the Board as it shall deem advisable or to conform to any change in any law or regulation applicable thereto; provided, that the Board may not, without the authorization and approval of shareholders of the Company: (i) increase the number of Shares which may be purchased pursuant to options hereunder, either individually or in the aggregate, except as permitted by Section 6, (ii) change the requirement of Section 5(b) that option grants be priced at Fair Market Value, except as permitted by Section 6, or (iii) modify in any respect the class of individuals who constitute Eligible Directors. 9. Listing and Registration. Each Share shall be subject to the requirement that if at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any 4 state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Shares, no such Share may be disposed of unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Board. 10. Effective Date and Duration of Plan The Plan shall become effective on the closing of the initial public offering of the Company's Common Stock (the "Effective Date"), subject to the consummation of such offering. In the event such public offering is not consummated, all options previously granted hereunder shall be canceled and all rights of Eligible Directors with respect to such options shall thereupon cease. The Plan shall terminate the day following the tenth Annual Shareholders Meeting at which Directors are elected succeeding such initial public offering, unless the Plan is extended or terminated at an earlier date by Shareholders or is terminated by exhaustion of the Shares available for issuance hereunder. 5 EX-10.12 15 EXHIBIT 10.12 HIBBETT SPORTING GOODS, INC. 451 Industrial Lane Birmingham, Alabama 35211 September 13, 1996 Mr. Clyde B. Anderson 402 Industrial Lane Birmingham, AL 35211 Dear Clyde: This letter will serve to formalize the arrangement entered into by you and Hibbett Sporting Goods, Inc. (the "Company") on August 1, 1996. The Company shall pay you for your services as a management consultant an annual fee of $50,000 payable monthly in arrears. In connection with your performance of such services, you shall be appointed the Chairman of the Executive Committee, which shall be established by the Company. This consulting arrangement is terminable by either your or the Company immediately upon written notice. In addition, in consideration of your services to the Company, the Company has granted to you an option to purchase 70,820 shares of Company common stock, $0.01 per share par value (the "Common Stock") at an exercise price of $8.48 per share (the "Option"). The Option shall become exercisable on the date six months after the consummation of the initial public offering of the Company's Common Stock (the "Initial Public Offering") and shall expire on the date nine months after the consummation of the Initial Public Offering. Additional terms and conditions of such Option shall be documented in an option agreement to be delivered to you. Very truly yours, Hibbett Sporting Goods, Inc. By: /s/ John F. Megrue ------------------------- John F. Megrue Chairman of the Board of Directors Acknowledged: /s/ Clyde B. Anderson ------------------------ Clyde B. Anderson EX-11 16 EXHIBIT 11
Hibbett Sporting Goods, Inc. Statement of Computation of Net Income Per Share Fiscal Year Ended Twenty - Six Week Period Ended ------------------------------------- ------------------------------ January 29, January 28, February 3, July 29, August 3, 1994 1995 1996 1995 1996 ----------- ----------- ----------- ----------- ----------- (52 Weeks) (52 Weeks) (53 Weeks) (Unaudited) Net income ............................. $ 1,469,000 $ 2,389,000 $ 2,443,000 $ 1,310,000 $ 826,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average number of common and common equivalent shares outstanding(1): Weighted average shares, excluding effect of stock options .... 6,504,521 6,504,521 5,820,763 6,504,521 3,834,262 Effect of stock options (2) ............ 0 0 17,504 0 103,962 ----------- ----------- ----------- ----------- ----------- 6,504,521 6,504,521 5,838,267 6,504,521 3,938,224 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net income per share (1)................ $.23 $.37 $.42 $.20 $.21 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(1) All share and per share amounts have been retroactively restated for all periods presented to reflect the 1-for-6.1 reverse stock split discussed in Note 10 of Notes to Consolidated Financial Statements. (2) Stock options have been included in the above computation utilizing the treasury stock method. EX-23.1 17 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated April 2, 1996 (except with respect to the matter discussed in Note 10 as to which the date is September 13, 1996) included in or made a part of this Registration Statement of Hibbett Sporting Goods, Inc. on Form S-1 (No. 333-07023) and to the reference to our Firm under the heading "Experts" in the Prospectus, which is part of this Registration Statement. Birmingham, Alabama September 16, 1996 EX-27 18
5 This schedule contains summary information extracted from the financial statements of Hibbett Sporting Goods, Inc. for the fiscal year ended February 3, 1996 and for the twenty - six week period ended August 3, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 YEAR 6-MOS FEB-3-1996 FEB-1-1997 JAN-29-1995 FEB-4-1996 FEB-3-1996 AUG-3-1996 31 36 0 0 1,427 1,810 86 105 20,705 26,946 23,790 31,005 19,739 16,289 7,605 7,646 36,702 40,408 12,883 14,527 0 0 0 0 0 0 234 38 (8,327) (7,305) 36,702 40,408 67,077 39,019 67,077 39,019 46,642 27,272 46,642 27,272 14,793 8,593 62 24 1,685 1,814 3,957 1,340 1,514 514 2,443 826 0 0 0 0 0 0 2,443 826 0.42 0.21 0.42 0.21
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