<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
SPORT SUPPLY GROUP, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
848915104
(CUSIP Number)
Kenneth S. Grossman Kenneth Liang
18 Norfolk Road Managing Director & General Counsel
Great Neck, New York 11021 Oaktree Capital Management, LLC
(516) 482-8836 333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
(213) 830-6300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 2, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 848915104
---------
SCHEDULE 13D
===============================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kenneth S. Grossman
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[X]
(b)[ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING -----------------------------------------------------------
PERSON WITH
8 SHARED VOTING POWER
None
-----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
-----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
403,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- -------------------------------------------------------------------------------
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CUSIP No. 848915104
---------
SCHEDULE 13D
===============================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Oaktree Capital Management, LLC
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[X]
(b)[ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 403,100
OWNED BY
EACH
REPORTING -----------------------------------------------------------
PERSON WITH
8 SHARED VOTING POWER
None
-----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
403,100
-----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
403,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
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14 TYPE OF REPORTING PERSON
IA;OO
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CUSIP No. 848915104
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SCHEDULE 13D
===============================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
OCM Principal Opportunities Fund, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[X]
(b)[ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING -----------------------------------------------------------
PERSON WITH
8 SHARED VOTING POWER
None
-----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
-----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
403,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
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CUSIP No. 848915104
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This Amendment No. 2 (this "Statement") amends and restates in its entirety the
statement on Schedule 13D of Kenneth S. Grossman, Oaktree Capital Management,
LLC and OCM Principal Opportunities Fund, L.P. filed with the Securities and
Exchange Commission on February 10, 1999, as amended by Amendment No. 1 filed
on August 3, 1999.
ITEM 1. SECURITY AND ISSUER
This Statement relates to common stock, par value $0.01 per share (the "Common
Stock") of Sport Supply Group, Inc., a Delaware corporation (the "Issuer"). The
address of the principal executive office of the Issuer is 1901 Diplomat Drive,
Farmer's Branch, Texas 75234.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) & (f)
This Statement is filed on behalf of:
(i) Kenneth S. Grossman ("Grossman");
(ii) Oaktree Capital Management, LLC, a California limited liability
company ("Oaktree"); and
(iii) OCM Principal Opportunities Fund, L.P., a Delaware limited
partnership of which Oaktree is the general partner (the "Oaktree
Fund").
Grossman and the Oaktree Fund are referred to in this Statement together as the
"Investors."
(i) Grossman
The address of the principal business and principal office for Grossman is 280
Park Avenue, Suite 39 West, New York, New York 10017. The principal business of
Grossman is asset management, investment advisory services, and investing in
distressed and undervalued public and private securities for his own and
affiliated accounts. Grossman is a citizen of the United States of America.
(ii) Oaktree
The address of the principal business and principal office for Oaktree is 333
South Grand Avenue, 28th Floor, Los Angeles, California 90071. The principal
business of Oaktree is to provide investment advice and management services to
institutional and individual investors. The members and executive officers of
Oaktree are listed below. The principal address for each member and executive
officer of Oaktree is 333 South Grand Avenue, 28th Floor, Los Angeles,
California 90071. All individuals listed below are citizens of the United States
of America.
Executive Officers and Members
Howard S. Marks Chairman and Principal
Bruce A. Karsh President and Principal
Sheldon M. Stone Principal
David Richard Masson Principal
Larry Keele Principal
Russel S. Bernard Principal
Stephen A. Kaplan Principal
David Kirchheimer Managing Director and Chief Financial
and Administrative Officer
Kenneth Liang Managing Director and General Counsel
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CUSIP No. 848915104
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(iii) The Oaktree Fund
The address of the principal business and principal office for the Oaktree Fund
is 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071. The
principal business of the Oaktree Fund is to invest in entities over which
there is a potential for the Oaktree Fund to exercise significant influence.
The Oaktree Fund is an investment partnership, and Oaktree is its sole general
partner. (See information in section (ii) above regarding Oaktree and its
members and executive officers.) The names and addresses of the portfolio
managers of the Oaktree Fund are listed below. All individuals listed below are
citizens of the United States of America.
Bruce A. Karsh
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Stephen A. Kaplan
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
(d) & (e)
During the last five years, none of Grossman, Oaktree or the Oaktree Fund, nor
to the best of their knowledge any of their respective executive officers,
directors, general partners, members or portfolio managers (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Oaktree Fund owns 403,100 shares of Common Stock, having paid an aggregate
of $3,710,326.89 for such Common Stock. The purchases were made on the open
market over a period from February 2, 1998 to June 30, 1998 at per share prices
ranging between $7.62 and $10.00 and in blocks ranging between 300 shares and
60,000 shares. All purchases were made from working capital of the Oaktree Fund.
Grossman, including family members and affiliated entities, nominally owns 0
shares of Common Stock.
ITEM 4. PURPOSE OF TRANSACTION
The Investors acquired the Common Stock which they own for investment purposes.
Oaktree has previously entered into (i) an Option Agreement, Exhibit 1.4 hereto
and incorporated herein by reference (the "Option Agreement"), with Thomas
Hackett, Official Liquidator of Fidenas International Bank Limited, Petra
Stelling and Barclays Bank Plc (collectively, the "Creditors"), which if
consummated would have resulted in Oaktree acquiring certain rights held by the
Creditors against Geoffrey P. Jurick ("Jurick"), the majority shareholder of
Emerson Radio Corp. ("Emerson"), and certain of Jurick's affiliates, pursuant to
a Stipulation of Settlement and Order issued by the United States District Court
for the District of New Jersey (the "Court") and (ii) a Letter of Intent,
Exhibit 1.5 hereto and incorporated herein by reference (the "Letter of
Intent"), with Emerson and Jurick, which if consummated would have resulted in
Oaktree acquiring the 2,269,500 shares of Common Stock and the 1,000,000 $7.50
warrants to purchase Common Stock owned by Emerson and the 300,000 $7.50 options
to purchase Common
<PAGE> 7
CUSIP No. 848915104
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Stock owned by Jurick. Consummation of the transactions described in the Option
Agreement and the Letter of Intent were subject to a number of conditions
described therein.
Oaktree and the Investors have decided, after conducting due diligence and
evaluating the Issuer's business and prospects, not to exercise the option
granted to them in the Option Agreement and not to complete the transaction
outlined in the Letter of Intent.
In determining whether to acquire additional shares of the Issuer's Common
Stock or to dispose of some or all of such shares owned by the Investors,
Oaktree, as the general partner of the Oaktree Fund, will evaluate the Issuer's
business and prospects, alternative investment opportunities and other factors.
The investment strategy of the Oaktree Fund is generally to invest in
undervalued entities in which there is a potential to exercise significant
influence over such entities. Additional shares of Common Stock may be acquired
in the open market or in privately negotiated transactions, or some or all of
the shares of Common Stock owned by the Oaktree Fund may be sold. Oaktree's
decisions and strategy will be subject to certain restrictions contained in a
Confidentiality Agreement, dated August 11, 1999, Exhibit 1.6 hereto and
incorporated by reference, between the Oaktree Fund and the Issuer. Other than
as disclosed herein, Oaktree currently has no agreements which would be related
to or would result in any of the matters described in Items 4(a) - (j) of
Schedule 13D; however, as part of its ongoing review of investment
alternatives, Oaktree may consider such matters in the future and, subject to
applicable law, may formulate a plan with respect to such matters and, from
time to time, Oaktree may hold discussions with or make formal proposals to
management or the Board of Directors of the Issuer, to shareholders of the
Issuer (independently or at a regularly scheduled or special meeting of the
shareholders of the Issuer) or to other third parties regarding such matters.
ITEM 5. INTEREST AND SECURITIES OF THE ISSUER
(a) Each of the Investors and Oaktree, as general partner of the Oaktree
Fund, may be deemed to beneficially own 403,100 shares of Common Stock or 5.6%
of the Common Stock outstanding (based on 7,252,606 shares of Common Stock
outstanding on August 10, 1999, as reported on the Issuer's Quarterly Report on
Form 10-Q/A for the quarterly period ending July 2, 1999). To the best of the
Investors' and Oaktree's knowledge, none of the other people named in response
to Item 2 own any securities of the Issuer.
(b) Oaktree, as the general partner of the Oaktree Fund, has discretionary
authority and control over all of the assets of the Oaktree Fund pursuant to
the partnership agreement for the Oaktree Fund, including the power to vote and
dispose of the Issuer's Common Stock held in the name of the Oaktree Fund.
Pursuant to a letter agreement among the Investors, dated as of January 7,
1998, Oaktree, as general partner of the Oaktree Fund, and the Oaktree Fund
have discretionary authority and control over the investments of the Investors
including the securities owned by Grossman, including discretionary authority
to vote and dispose of the Issuer's Common Stock held by Grossman. Oaktree and
each of the individuals listed in Item 2 disclaims ownership of the shares of
the Issuer's Common Stock reported herein and the filing of this statement
shall not be construed as an admission that any such person is the beneficial
owner of any securities covered by this statement.
(c) None of Grossman, Oaktree nor the Oaktree Fund, and to the best of their
knowledge, none of the other people named in response to Item 2 has effected
transactions involving the Issuer's Common Stock during the last 60 days.
(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds of sale of, any of the Issuer's
Common Stock beneficially owned by Oaktree and the Oaktree Fund, except to the
extent that the investment advisory clients of Oaktree and the partners of the
Oaktree Fund may have such right subject to the notice, withdrawal and/or
termination provisions of advisory and partnership arrangements. No such client
or partner has an interest by virtue of such relationship that relates to more
than 5% of the Issuer's Common Stock.
<PAGE> 8
CUSIP No. 848915104
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(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Oaktree, as general partner of the Oaktree Fund, receives a management fee for
managing the assets of the Oaktree Fund and has a carried interest in the
Oaktree Fund. Also incorporated by reference are the documents printed at
Exhibits 1.2 through 1.5 hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following is filed herewith as an Exhibit to this Statement:
Exhibit 1.1 A written agreement relating to the filing of the
joint filing statement as required by Rule 13d-1(k)(1)
under the Securities Exchange Act of 1934, as amended.
(Incorporated by reference to Exhibit 1.1 to the Schedule
13D filed on February 10, 1999.)
Exhibit 1.2 Letter Agreement, dated as of January 7, 1998, between
the Investors. (Portions of this document have been
omitted pursuant to a request for confidential treatment.)
(Incorporated by reference to Exhibit 1.2 to the Schedule
13D filed on February 10, 1999.)
Exhibit 1.3 Proposal, dated as of December 15, 1998, submitted by
the Investors to the Creditors. (Incorporated by reference
to Exhibit 1.3 to the Schedule 13D filed on February 10,
1999.)
Exhibit 1.4 Option Agreement, dated as of July 30, 1999, among
Oaktree and the Creditors. (Incorporated by reference to
Exhibit 1.4 to Amendment No. 1, filed on August 3, 1999,
to the Schedule 13D filed on February 10, 1999.)
Exhibit 1.5 Letter of Intent, dated as of August 3, 1999, among
Oaktree, Emerson and Jurick. (Incorporated by reference to
Exhibit 1.5 to Amendment No. 1, filed on August 3, 1999,
to the Schedule 13D filed on February 10, 1999.)
Exhibit 1.6 Confidentiality Agreement, dated as of August 11, 1999,
between the Oaktree Fund and the Issuer.
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CUSIP No. 848915104
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SIGNATURE
After reasonable inquiry and to the best of his or its knowledge and belief,
each of the undersigned certify that the information set forth in this
Statement is true, complete and correct.
Dated as of December 2, 1999.
KENNETH S. GROSSMAN
/s/ Kenneth S. Grossman
- -------------------------------
By: Kenneth S. Grossman
OAKTREE CAPITAL MANAGEMENT, LLC
/s/ Kenneth Liang
- -------------------------------
By: Kenneth Liang
Title: Managing Director and General Counsel
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
/s/ Kenneth Liang
- -------------------------------
By: Kenneth Liang
Title: Managing Director and General Counsel
<PAGE> 10
CUSIP No. 848915104
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- ------------
<S> <C>
1.1 A written agreement relating to the filing of the
joint filing statement as required by Rule
13d-1(k)(1) under the Securities Exchange Act of
1934, as amended. (Incorporated by reference to
Exhibit 1.1 to the Schedule 13D filed
on February 10, 1999.)
1.2 Letter Agreement, dated as of January 7, 1998,
between the Investors. (Portions of this document
have been omitted pursuant to a request for
confidential treatment.) (Incorporated by reference
to Exhibit 1.2 to the Schedule 13D filed on
February 10, 1999.)
1.3 Proposal, dated as of December 15, 1998, submitted
by the Investors to the Creditors. (Incorporated
by reference to Exhibit 1.3 to the Schedule 13D
filed on February 10, 1999.)
1.4 Option Agreement, dated as of July 30, 1999, among
Oaktree and the Creditors. (Incorporated by
reference to Exhibit 1.4 to Amendment No. 1 to
Schedule 13D filed on August 3, 1999.)
1.5 Letter of Intent, dated as of August 3, 1999,
among Oaktree, Emerson and Jurick. (Incorporated
by reference to Exhibit 1.5 to Amendment No. 1 to
Schedule 13D filed on August 3, 1999.)
1.6 Confidentiality Agreement, dated as of August
11, 1999, between the Oaktree Fund and the Issuer.
</TABLE>
<PAGE> 1
Exhibit 1.6
SPORT
SUPPLY GROUP, INC.
- --------------------------------------------------------------------------------
P.O. BOX 7726, DALLAS, TX 75209 PHONE (214)484-9484
August 11, 1999
OCM Principal Opportunities Fund, L.P.
c/o Oaktree Capital Management, LLC
333 South Grand Avenue
Los Angeles, California
CONFIDENTIALITY AGREEMENT
-------------------------
Ladies and Gentlemen:
Sport Supply Group, Inc. ("SSG") is entering into preliminary
discussions with OCM Principal Opportunities Fund, L.P. ("OCM") and its general
partner, Oaktree Capital Management, LLC (together with their affiliates
controlling or controlled by OCM, the "Company") concerning the Company's
potential interest in entering into certain transactions (the "Transactions")
including the purchase of an equity interest in SSG currently held by Emerson
Radio Corporation ("Emerson"). The Company and SSG understand that in
connection with such discussions, SSG may furnish the Company with certain
information that is non-public, confidential or proprietary in nature to assist
the Company in making an evaluation of the possible Transactions. Each party
further acknowledges that neither party has made a decision to approve or
consent to any Transactions, and that either party may elect, in its sole
discretion, to terminate such discussions at any time, and not to approve or
consent to any such Transactions.
As used herein, "Information" means all oral and written information
concerning SSG or concerning any subsidiary (as defined below) or division or
stockholder of SSG, which SSG or any of its subsidiaries or representatives (as
defined below) provides to the Company or to any "affiliates" (as such term is
used in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of the Company, or to any representatives of the Company or any
of their affiliates, together with analyses, compilations, studies, copies,
notes or other documents, whether prepared by any party hereto or by others,
which contain or otherwise reflect such information, at any time on or after
the date hereof. The term Information shall not included such portions of the
Information that (i) are or become known or available to the public other than
as a result of a disclosure by the Company or any of its representatives or
affiliates in breach of this Agreement, or (ii) are or become known or
available to the Company on a nonconfidential basis from a source (other than
SSG or any of its subsidiaries or representatives) which, to the knowledge of
the Company after reasonable inquiry, is not permitted from disclosing such
<PAGE> 2
Information to the Company or any of its affiliates or representatives by a
legal, contractual, fiduciary or other obligation to SSG or any of its
subsidiaries or representatives. The term "subsidiary" of any person shall mean
any other person in which such person or any of its subsidiaries owns 50% or
more of any class of equity securities. The term "representatives" of any party
as used herein shall mean the directors, officers, employees, representatives
or agents of such person or any subsidiary of such person including, without
limitation, financial advisors, attorneys and accountants. The term "person" as
used herein will be interpreted broadly to include, without limitation, any
corporation, company, entity, partnership, group or individual. Any reference
to "you" herein shall mean the Company as defined herein.
Accordingly, you hereby agree that:
1. You and your representatives (i) will use best efforts to keep
the Information confidential and will not (except as required by applicable law,
regulation or legal process, and only after compliance with paragraph 4 below),
without our prior written consent, disclose any Information in any matter
whatsoever, (ii) will not knowingly use the Information to the competitive
advantage of any person that competes or could reasonably be expected in the
future to compete with SSG, in furtherance of the business of any company that
competes or could reasonably be expected to compete with SSG, including without
limitation any portfolio company that is or becomes an affiliate of the
Company, or to the detriment of SSG or any of its subsidiaries (provided that
the foregoing shall not prevent the Company from disposing of shares of SSG
stock), and (iii) will not use any Information other than in connection with (a)
your evaluation of the desirablity of your entering into the Transactions, (b)
subject to paragraphs 6 and 8 hereof, your ownership, acquisition or disposition
of any SSG securities or your exercise of any rights as a holder of any SSG
securities, or (c) subject to paragraphs 6 and 8 hereof, your ownership,
acquisition or disposition of any securities other than those of SSG or your
exercise of any rights as a holder of any securities other than those of SSG
(the foregoing clauses (a)-(c) are collectively referred to herein as the
"Authorized Uses"); provided however, you may reveal the Information to your
representatives only if (x) they need to know the Information for the Authorized
Uses, (y) they are informed by you of the confidential nature of the
Information, and (z) they each agree to abide by such terms. You will cause your
representatives to observe the terms of this letter agreement, and you will be
responsible for any breach of this letter agreement by any of your
representatives, as if you had breached this letter agreement.
2. You and your representatives will not (except as required by
applicable law, regulation or legal process, and only after compliance with
paragraph 4 below; provided, however, that you need not comply with paragraph 4
below with respect to filings by you pursuant to the Exchange Act if you are
advised by counsel that such filings are required to be made thereunder, and you
provide SSG with reasonable prior notice and a copy of such documents prior to
filing them) disclose to any person the fact that the Information exists or has
been made available, that you are considering the Transactions of any other
transaction involving SSG, or that discussions or negotiations are taking or
have taken place concerning any Transactions or involving SSG or any term,
condition or other fact relating to the Transactions or such discussions or
negotiations, including, without limitation, the status thereof.
2
<PAGE> 3
3. If you determine not to proceed with the Transactions, you
will, without unreasonable delay, inform us of that decision and, in that
case, and at any time upon our request or the request of any of our
representatives, you will promptly deliver to us or destroy upon our request
(such destruction to be confirmed in writing), at your own expense, all copies
of the written Information in your or your representatives' possession.
Notwithstanding the foregoing, any portion of the Information that may be
found in analyses, compilations, forecasts, studies or other documents prepared
by you or your representatives or affiliates, and any written Information not so
requested and returned or destroyed, will be held by you and kept subject to
the terms of this Agreement. Except as provided in paragraph 4 below, all
retained Information (written or oral) will continue to be subject to this
agreement.
4. In the event that you or any of your representatives are
requested pursuant to, or required by, applicable law, regulation or legal
process to disclose any of the Information, subject to applicable law, you will
notify us in writing as promptly as possible so that we may seek a protective
order or other appropriate remedy or, in our sole discretion, waive compliance
with the terms of this letter agreement. You hereby agree to provide all
commercially reasonable cooperation with any efforts to obtain such a
protective order. In the event that no such protective order or other remedy is
obtained, or that we waive compliance with the terms of this letter agreement,
you will furnish only that portion of the Information which you are advised by
counsel is legally required and will exercise all commercially reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded the Information.
5. You and your representatives (i) acknowledge that neither we,
nor any of our subsidiaries or representatives, make any representation or
warranty, either express or implied, as to the accuracy or completeness of any
Information and (ii) agree that neither we, nor any subsidiary or
representative of ours, shall have any liability to you or any of your
representatives or affiliates on any basis (including, without limitation, in
contract, tort, under federal or state securities laws or otherwise) as a
result of our providing the Information to you or for any errors in the
Information or omissions therefrom, or your use of the Information. You further
agree that you are not entitled to rely on the accuracy or completeness of the
Information and that you will be entitled to rely solely on such
representations and warranties as may be included in any definitive written
agreement with respect to the Transactions, subject to such limitations and
restrictions as may be contained therein, and that only such written
representations and warranties will have any legal effect.
6. You and your representatives acknowledge that you are, and your
representatives and affiliates who are informed as to the matters that are the
subject of this agreement will be, (i) aware that the United States securities
laws may prohibit any person who has material non-public information about a
company from purchasing or selling securities of such company, or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell
such securities and (ii) familiar with the Exchange Act and the rules and
regulations promulgated thereunder to the extent they relate to the matters
referred to in this paragraph 6. You and your representatives agree you will
not use or cause any third party to use, and you will use reasonable efforts to
assure that none of your representatives or affiliates will use or cause any
third party to use, any
3
<PAGE> 4
Information in contravention of the United States securities laws, including
the Exchange Act or any rules and regulations promulgated thereunder or any
state securities laws.
7. In consideration for our furnishing you with the Information,
you and your representatives agree that for a period of one year from the date
of this Agreement, neither you nor any of your representatives or affiliates
will, without our prior written consent (other than as set forth in any
definitive agreement with respect to the proposed Transactions), use
the Information to solicit any employee of SSG or any of its subsidiaries, or
any person who was an employee of SSG within six (6) months of the date you
propose to hire such person, or solicit, encourage or induce any of our
customers or suppliers to cease or change the level or manner of doing business
with us or our subsidiaries. For the purposes of this paragraph 7, prohibited
solicitations shall not be deemed to include general advertisements or general
solicitations of employees, customers or suppliers.
8. You agree that, if the Transactions are not consummated on
substantially the same terms as set forth in the Letter of Intent, dated August
3, 1999, by and among Emerson, Geoffrey P. Jurick and the Company, and the
Option Agreement, dated July 16, 1999, by and among Petra Stelling, Fidenas
International Bank Limited, Barclays Bank PLC and the Company, then for a
period of eighteen (18) months from the date of this Agreement, unless
specifically consented to in writing by SSG's Board of Directors, you will not,
and will cause each of your affiliates (as such term is defined under the
Exchange Act) not to, in any manner, directly or indirectly, (i) acquire, by
purchase or otherwise (including, without limitation, any option or similar
arrangement), any equity securities representing greater than 3% of the issued
and outstanding equity securities, or a substantial portion of the assets, of
SSG or any of our subsidiaries; (ii) make, effect, propose or commence any
tender or exchange offer, merger or other business combination involving SSG or
any of our subsidiaries; (iii) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote, or seek to advise or influence any
person with respect to the voting of, any voting securities of SSG or any of
our subsidiaries (provided however that this clause (iii) shall not prevent the
Company from voting any SSG voting securities owned or controlled by the
Company); or (iv) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or policies of SSG.
9. You and your representatives also agrees that, for a period of
eighteen (18) months from the date of this Agreement, you shall not, and shall
cause each of your representatives and affiliates not to say, publish or do
anything that casts us or any of our affiliates (including, without limitation,
successors, assigns, officers, directors or employees), any of our products or
the industry or our management or any of our affiliates in an unfavorable
light, or disparage or injure our or any of our affiliates' goodwill, business
reputation or relationship, with existing or potential suppliers, vendors,
customers, employees, contractors, investors or the financial community in
general, or the goodwill or business reputation of any of our affiliates,
employees, former employees, officers, directors, consultants, representatives
or contractors.
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10. You acknowledge and agree that you or your representatives'
failure or threatened failure to comply with this letter agreement will cause
irreparable injury to us for which damages, even if available, will not be an
adequate remedy. Accordingly, without prejudice to any other rights and
remedies otherwise available to us, you consent and agree to the issuance of
injunctive relief in our favor without proof of actual damages to compel
specific performance of your and your representatives' obligations and to the
granting of the remedy of specific performance of your and your representatives'
obligations under this letter agreement.
11. You agree that no failure or delay by us in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
12. This agreement constitutes the entire agreement between us
with regard to the subject matter hereof and supersedes all prior and/or
contemporaneous agreements and understandings, written or oral, relating to the
subject matter hereof. No modification, amendment or waiver shall be binding
without the written consent of the parties hereto. If one or more provisions of
this agreement shall be held unenforceable, invalid, or illegal in any respect,
such unenforceability, invalidity or illegality shall not affect any other
provision of this agreement, which shall be construed as if such unenforceable,
invalid, or illegal provision had never been a part hereof.
13. This agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to conflicts of
law principles thereof. Each party agrees that any action or proceeding
arising out of or related in any way to this agreement shall be brought solely
in a court of competent jurisdiction sitting in Dallas, Dallas County, Texas.
Each party hereby irrevocably and unconditionally consents to the jurisdiction
of any such court and hereby irrevocably and unconditionally waives any defense
of an inconvenient forum to the maintenance of any action or proceeding in any
such court, any objection to venue with respect to any such action or
proceeding and any right of jurisdiction on account of the place of residence
or domicile of any party thereto.
14. This agreement shall inure to the benefit of and be binding
upon our respective successors and assigns, as well as any person that may
acquire, after the date hereof, any subsidiary or division of SSG with respect
to Information concerning the business or affairs of such subsidiary or
division. Any person who at any time after the date hereof becomes an affiliate
or representative of any of us shall be deemed to be the affiliate or
representative of such party for the purposes of this agreement, regardless of
whether such person was an affiliate or representative on the date hereof; all
references to affiliates or subsidiaries contained in this agreement shall
apply with equal force and effect to any and all representatives of such
referenced affiliates or subsidiaries.
15. This agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which shall constitute the same
agreement.
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Very truly yours,
Sport Supply Group,Inc.
By: /s/ Terrence M. Babilla
----------------------------
Name: Terrence M. Babilla
Title: Executive Vice President
Accepted and Agreed to
this 11th day of August 1999:
OCM Principal Opportunities Fund, L.P.
By: Oaktree Capital Management, LLC
Its General Partner
By: /s/ Michael P. Harmon
--------------------------
Name: Michael P. Harmon
Title: Vice President
By: /s/ Kenneth Liang
----------------------
Name: Kenneth Liang
Title: General Counsel/Managing Director
6
