ROLLOVER AGREEMENT
Exhibit
D
EXECUTION VERSION
This
ROLLOVER AGREEMENT (this “Agreement”), dated as
of March 15, 2010, is entered into by and between Xxxx Xxxxxxxxxx, an individual
(the “Investor”), and Sage
Parent Company, Inc., a Delaware corporation (“Parent”).
RECITALS
WHEREAS,
the Investor is currently a stockholder of Sport Supply Group, Inc., Inc., a
Delaware corporation (the “Company”), and is the
owner of 60,091 shares of common stock, par value $0.01 per share, of the
Company (the “Company
Common Stock”);
WHEREAS,
subject to the terms and conditions of that certain Agreement and Plan of
Merger, dated as of the date hereof (the “Merger Agreement”),
by and among Parent, Sage Merger Company, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent (“Merger Sub”), and the
Company, Merger Sub shall merge with and into the Company with the Company as
the surviving corporation (the “Merger”);
WHEREAS,
subject to the terms and conditions of this Agreement, the Investor desires,
immediately prior to the consummation of the Merger on the Closing Date, to
contribute (the “Contribution”) to
Parent 60,091 shares of Company Common Stock (the “Rollover Shares”) in
exchange for that number of newly issued shares (the “Exchange Shares”) of
common stock, par value $0.01 per share, of Parent (the “Parent Common Stock”)
equal to (i) the aggregate Merger Consideration (as defined in the Merger
Agreement) payable with respect to the Rollover Shares if the Rollover Shares
had been cashed out in the Merger rather than exchanged for shares of Parent
Common Stock pursuant to this Agreement, divided by (ii) the
price per share at which the ONCAP Investors purchase shares of Parent Common
Stock at the Closing.
WHEREAS,
Parent and the Investor agree that the transactions contemplated by this
Agreement are intended to, and shall, result in the Investor investing in shares
of Parent Common Stock through the Contribution at the same price per share at
which the ONCAP Investors and any other investors making an equity investment in
Parent at Closing (through the rollover of equity or otherwise) shall acquire
shares of Parent Common Stock at the Closing;
WHEREAS,
Parent desires to issue to the Investor such Exchange Shares in exchange for the
Investor’s contribution to Parent of the Rollover Shares;
WHEREAS,
Parent and the Investor are parties to that certain Employment Agreement dated
as of the date hereof (the “Employment
Agreement”), whereby the parties thereto contemplate the entry into this
Agreement;
WHEREAS,
subject to the terms and conditions of the Equity Commitment Letter, dated as of
the date hereof, by and between ONCAP Investment Partners II L.P. (“ONCAP”) and Parent,
substantially simultaneously with the consummation of the Contribution, ONCAP
and/or one or more of its affiliated funds, successors or assigns (together with
ONCAP, the “ONCAP
Investors”) will capitalize Parent with up to $89,616,369.16 in cash (or
such lesser amount as may be required by the Equity Commitment Letter, the
“Cash Equity
Capitalization”), with such Cash Equity Capitalization to be contributed
by Parent to Merger Sub immediately prior to the consummation of the Merger on
the Closing Date, and Parent will issue to the ONCAP Investors newly issued
shares of Parent Common Stock (the “ONCAP Shares”) as
consideration for the Cash Equity Capitalization;
WHEREAS,
for United States federal income tax purposes, it is intended that the
contribution by the Investor of the Rollover Shares to Parent in exchange for
the Exchange Shares, taken together with the Cash Equity Capitalization, will
qualify as a transaction described in Section 351(a) of the Internal Revenue
Code of 1986, as amended;
WHEREAS,
substantially simultaneously with the execution and delivery of this Agreement,
Parent, the Investor and the ONCAP Investors will enter into a Stockholders
Agreement substantially in the form attached as Exhibit A hereto (the
“Stockholders
Agreement”); and
WHEREAS,
this Agreement and the representations, warranties, obligations and other
agreements of the Investor set forth herein are a material inducement to the
willingness of Parent to enter into the Merger Agreement and consummate the
transactions contemplated thereby and the Investor expressly acknowledges and
agrees that Parent is relying on the representations, warranties, obligations
and other agreements of the Investor set forth herein in entering into the
Merger Agreement.
NOW,
THEREFORE, in order to implement the foregoing and in consideration of the
mutual representations, warranties, covenants and agreements contained herein
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
Section
1. Contribution of the Rollover
Shares.
1.1 Contribution of the Rollover
Shares in Exchange for the Exchange Shares. On the terms and
conditions set forth herein, (i) the Investor agrees, at the closing of the
Contribution (the “Closing”), to
contribute to Parent the Rollover Shares, free and clear of any and all Liens
(as defined in Section 3.2 below), in exchange for the issuance by Parent to the
Investor of the Exchange Shares, and (ii) Parent agrees, at the Closing, to
issue to the Investor the Exchange Shares in exchange for the contribution by
the Investor to Parent of the Rollover Shares.
1.2 Closing. The
Closing shall occur immediately prior to the consummation of the Merger on the
Closing Date (as defined in the Merger Agreement). The Closing shall
take place at the offices of Xxxxxx & Xxxxxx L.L.P., 3200 Xxxxxxxx Xxxx
Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 or such other place as agreed upon
by the parties.
1.3 Conditions to
Closing. The Closing shall be subject to the satisfaction of
the following conditions unless waived in writing by Parent and the Investor (in
the case of clause (a)), by Parent (in the case of clause (b)) or by the
Investor (in the case of clause (c)):
(a) Merger Agreement
Conditions. The conditions set forth in Article VII of the
Merger Agreement (other than those conditions that can be satisfied only by
virtue of this Agreement and those conditions that may only be satisfied as of
the Closing) shall have been satisfied or waived and the parties to the Merger
Agreement shall have indicated that they intend to consummate the Merger
immediately following the consummation of the Contribution.
(b) Representations, Warranties
and Covenants of the Investor. All representations and
warranties made in this Agreement by the Investor shall be true and correct in
all respects on the date when made and on and as of the date of the Closing (the
“Closing Date”)
with the same effect as if made on and as of the Closing Date, and the Investor
shall have performed or complied in all material respects with all covenants and
agreements to be performed by the Investor under this Agreement at or prior to
the Closing Date.
(c) Representations, Warranties
and Covenants of Parent. All representations and warranties
made in this Agreement by Parent shall be true and correct in all respects on
the date when made and on and as of the Closing Date with the same effect as if
made on and as of the Closing Date, and Parent shall have performed or complied
in all material respects with all covenants and agreements to be performed by
Parent under this Agreement at or prior to the Closing Date.
1.4 Parent
Deliveries. At the Closing, Parent shall deliver to the
Investor stock certificates representing the Investor’s Exchange
Shares.
1.5 Investor
Deliveries. At the Closing, the Investor shall deliver to
Parent stock certificates evidencing the Investor’s Rollover Shares,
endorsed in blank or duly executed stock powers in form and substance reasonably
satisfactory to Parent.
Section
2. Representations and
Warranties of Parent. Parent hereby represents and warrants to
the Investor as follows:
2.1 Organization. Parent
is a corporation, duly organized, validly existing and in good standing under
the Laws of the State of Delaware.
2.2 Authority. Parent
has the requisite corporate power and authority to enter into and deliver this
Agreement, perform its obligations herein, and consummate the transactions
contemplated hereby. Parent has duly executed and delivered this
Agreement and, assuming the due authorization, execution and delivery by the
Investor, this Agreement is a valid, legal and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and
subject to general principles of equity (regardless of whether such enforcement
is considered in a proceeding at Law or at equity).
2.3 Shares Duly Authorized;
Capitalization. All of the shares of Parent Common Stock to be
issued to the Investor under this Agreement, when issued and delivered in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable.
2.4 No Conflicts; No
Consents. The execution and delivery of this Agreement by
Parent, the performance by Parent of its obligations hereunder, and the
consummation by Parent of the transactions contemplated hereby, do not and will
not (a) conflict with Parent’s certificate of incorporation or bylaws, (b)
materially violate or materially conflict with any constitution, law, ordinance,
regulation, statute or treaty of any Governmental Entity (as defined in the
Merger Agreement) (“Law”) applicable to
Parent or any of Parent’s assets or properties or (c) violate or conflict with
in any material respect, result in any material breach of, or constitute a
material default (or event which with the giving of notice or lapse of time, or
both, would become a default) under, any agreement to which Parent is a party or
by which any of its assets or properties is bound. No consent,
approval, authorization, license, order or permit of, or declaration, filing or
registration with, or notification to, any Governmental Entity, or any other
Person (as defined
in the Merger Agreement), on the part of Parent is required to be made or
obtained in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, other
than any filings as may be required under applicable state “Blue Sky”
Laws.
Section
3. Representations and
Warranties of Investor. The Investor hereby represents and
warrants to Parent as follows:
3.1 Ownership of the Rollover
Shares. The Investor is the record and beneficial owner of the
Rollover Shares, free and clear of all pledges, liens, proxies, claims, charges,
security interests, preemptive rights, voting trusts, voting agreements,
options, rights of first offer or refusal and any other encumbrances or
arrangements whatsoever with respect to the ownership, transfer or other voting
of the Rollover Shares (“Liens”). The
Investor is not a party to, or bound by, any contract, arrangement, agreement,
instrument or order (other than this Agreement and the Employment Agreement) (i)
relating to the sale, repurchase, assignment or other transfer of any capital
stock or equity securities of the Company, (ii) relating to the receipt of
dividends, proxy rights or voting rights of any capital stock or other equity
securities of the Company or (iii) relating to the rights to registration under
the Securities Act of 1933, as amended (the “Securities Act”), or
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), of
any capital stock or equity securities of the Company.
3.2 Investor
Intent. The Investor is acquiring the Exchange Shares for the
Investor’s own account as principal, for investment purposes only, not for any
other person or entity and not for the purposes of resale or
distribution. The Investor is not subscribing for the Exchange Shares
from Parent in a fiduciary capacity.
3.3 Financial
Status. The Investor is an “accredited investor” as such term
is defined in Regulation D promulgated under the Securities Act. The
Investor is able to bear the economic risk of an investment in shares of Parent
Common Stock for an indefinite period of time, has adequate means of providing
for its current financial needs and business contingencies, has no need for
liquidity in the investment in shares of Parent Common Stock, understands that
the Investor may not be able to liquidate its investment in Parent in an
emergency, if at all, and can afford a complete loss of the investment. The
Investor, in consummating the Contribution, if relying on any advice, is relying
solely on the advice of its personal tax and legal advisor(s) with respect to
the tax and other aspects of the Contribution.
3.4 Access to
Information. The Investor has been given the opportunity to
ask questions of and receive answers from Parent and its representatives
concerning (i) the terms and conditions of the issuance of the Parent Common
Stock and the other transactions contemplated in connection with the
Contribution and the Merger Agreement and (ii) the financial condition,
operation and prospects of Parent after giving effect to the
Merger.
3.5 No Other
Representation. The Investor has received no other
representations or warranties from Parent or any other Person acting on behalf
of the Company or Parent, other than those contained in Section 2 of this
Agreement.
3.6 No Conflicts; No
Consents. The execution and delivery of this Agreement by the
Investor, the performance by the Investor of his obligations hereunder and the
consummation by the Investor of the transactions contemplated hereby do not and
will not violate or conflict with in any material respect, result in any
material breach of, or constitute a material default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, any
agreement to which the Investor is a party or by which any of his assets or
properties is bound. No consent, approval, authorization, license,
order or permit of, or declaration, filing or registration with, or notification
to, any Governmental Entity, or any other Person, is required to be made or
obtained by the Investor in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated thereby.
Section
4. Agreements and
Acknowledgements of the Investor. The Investor hereby agrees
and acknowledges to Parent as follows:
4.1 No
Registration. The Investor understands and agrees that the
Exchange Shares are being acquired by the Investor in a transaction not
involving any public offering within the meaning of the Securities Act, in
reliance on an exemption therefrom. The Investor understands that the
Exchange Shares have not been, and will not be, approved or disapproved by the
Securities and Exchange Commission or by any other federal or state agency, and
that no such agency has passed on the accuracy or adequacy of disclosures made
to the Investor by Parent. No federal or state governmental agency
has passed on or made any recommendation or endorsement of the Exchange Shares
or an investment in Parent.
4.2 Limitations on Disposition
and Resale. The Investor understands and acknowledges that the
Exchange Shares have not been and will not be registered under the Securities
Act, or the securities laws of any state and, unless the Exchange Shares are so
registered, they may not be offered, sold, transferred or otherwise disposed of
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any applicable securities
laws of any state or foreign jurisdiction. The Investor agrees not to
sell, transfer or otherwise dispose of the Exchange Shares unless the Exchange
Shares have been so registered or an exemption from the requirement of
registration is available under the Securities Act and any applicable state
securities laws. The Investor further acknowledges and agrees that
its ability to dispose of the Exchange Shares will be subject to restrictions
contained in the Stockholders Agreement. The Investor recognizes that
there will not be any public trading market for Parent Common Stock and, as a
result, the Investor may be unable to sell or dispose of its interest in
Parent. The Investor further acknowledges and agrees that, except as
may be set forth in the Stockholders Agreement, Parent shall have no obligation
to register shares of Parent Common Stock.
4.3 Legend. The
Investor acknowledges and agrees that the Exchange Shares received in the
Contribution and represented by physical certificates will bear the following
legend (or one to substantially similar effect):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF MARCH 15,
2010 BY AND AMONG SAGE PARENT COMPANY, INC. (THE “COMPANY”) AND THE
OTHER PARTIES NAMED THEREIN. THE TERMS OF SUCH STOCKHOLDERS AGREEMENT
INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFER. A COPY OF SUCH
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.”
4.4 Newly Formed
Entity. The Investor recognizes that Parent was only recently
formed and, accordingly, has no financial or operating history and that the
investment in Parent is extremely speculative and involves a high degree of
risk.
Section
5. Support of the
Transaction. The Investor and Parent shall use commercially
reasonable efforts to assemble, prepare and file any information (and, as
needed, to supplement such information) as may be reasonably necessary to obtain
as promptly as practicable all governmental and regulatory consents required to
be obtained in connection with the Contribution.
Section
6. Investor
Acknowledgement. The Investor acknowledges that the Parent is
relying on the representations, warranties, obligations and other agreements of
the Investor set forth herein in entering into the Merger Agreement and that
such representations, warranties, obligations and other agreements of the
Investor set forth herein are a material inducement to the willingness of Parent
to enter into the Merger Agreement and consummate the transactions contemplated
thereby.
Section
7. Attorneys’
Fees. In the event of any litigation or other legal proceeding
involving the interpretation of this Agreement or enforcement of the rights or
obligations of the parties hereto, the prevailing party or parties shall be
entitled to recover reasonable attorneys’ fees and costs determined by a court
or other adjudicator.
Section
8. Governing Law, Severability,
Consent to Jurisdiction, Waiver of Jury Trial. This Agreement
is governed by and shall be construed in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed entirely in such
state, without giving effect to conflicts of law principles thereunder that
would give effect to the laws of another jurisdiction. Each of the
parties hereto, on behalf of itself and its respective affiliates, (i) consents
to submit to the personal jurisdiction of the Delaware Court of Chancery or the
other courts of the State of Delaware, in each case in connection with any
action arising out of, in connection with, in respect of, or in any way relating
to the negotiation, execution and performance of this Agreement and the
transactions contemplated hereby and waives any right to trial by jury with
respect to any such matters. Each party hereto, on behalf of itself
and its respective affiliates, irrevocably and unconditionally waives any
objection to the laying of venue of any Action arising out of, in connection
with, or in respect of this letter. If any provision of this
Agreement or the application thereof to any person or circumstance is held
invalid or unenforceable to any extent, the remainder of this Agreement and the
application of that provision to other persons or circumstances shall not be
affected thereby, and that provision shall be enforced to the greatest extent
permitted by law.
Section
9. Notices. All
notices and other communications among the parties shall be in writing and shall
be deemed to have been duly given when (i) delivered in person, (ii) three (3)
days after posting in the United States mail having been sent registered or
certified mail return receipt requested, or (iii) delivered by telecopy and
promptly confirmed by delivery in person or post as aforesaid in each case, with
postage prepaid, addressed as follows:
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(a)
|
If
to Parent, to:
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|
|
c/o
ONCAP Investment Partners II L.P.
000
Xxx Xxxxxx, 00xx
Xxxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Telecopy
No.: (000) 000-0000
Attention:
Xxxx
Xxxxxx
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with copies to:
O’Melveny
& Xxxxx LLP
Times
Square Tower
0 Xxxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Telecopy
No.: (000) 000-0000
Attention: Xxxxxxx
X. Xxxxx, Esq. and Xxxx X. Xxxxxxxx, Esq.
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(b)
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If
to the Investor, to:
Xxxx
Xxxxxxxxxx
0000
Xxxxxxx Xxxxxx Xxxx
Xxxxxx
Xxxxx 00000
Telecopy
No: (000)
000-0000
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with a
copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 Xxxx
Xxx Xxx 0000
Xxxxxx,
Xxxxx 00000
Telecopy
No.: (000) 000-0000
Attention: Xxxxx
Xxxxxxxx
Section
10. Assignment. No
party shall have the right or the power to assign or delegate any provision of
this Agreement except with the prior written consent of Parent, in the case of
an assignment or delegation by the Investor, or with the prior written consent
of the Investor, in the case of an assignment or delegation by
Parent. Except as provided in the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties’ respective
successors, assigns, executors and administrators.
Section
11. Counterparts. This
Agreement may be executed in counterparts, including via facsimile, each of
which shall be deemed an original and all of which taken together, shall
constitute one and the same document.
Section
12. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only in a writing executed by the party to be bound
thereby. This Agreement supersedes all prior and contemporaneous
agreements of the parties hereto, whether written, oral or otherwise, that
directly or indirectly bear on the subject matter hereof.
Section
13. Termination of
Agreement. This Agreement shall terminate on the earlier of
(i) the mutual written consent of Parent and the Investor and (ii) the
termination of the Merger Agreement pursuant to its terms.
Section
14. Remedies. The
Investor agrees that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. Accordingly, the Investor agrees that,
in the event of any breach or threatened breach by the Investor of any covenant
or obligation in this Agreement, Parent shall be entitled (in addition to any
other remedy that may be available to Parent whether in law or in equity) to
seek and obtain (i) a decree or order of specific performance to enforce
the observance and performance of such covenant or obligation, and (ii) an
injunction restraining such breach or threatened breach. The Investor
agrees that Parent shall not be required to obtain, furnish or post any bond or
similar instrument in connection with or as a condition to Parent obtaining any
remedy referred to in this Section 14, and the Investor irrevocably waives any
right the Investor may have to require the obtaining, furnishing or posting of
any such bond or similar instrument. Notwithstanding anything to the contrary
contained in this Agreement, no former, current or future directors, officers
employees, Affiliates, general or limited partners, stockholders, managers,
members, financing sources, assignees, agents or other Representatives of
Parent, or any direct or indirect holder of any equity interests or securities
of Parent (collectively, the “Party Affiliates”),
shall have any liability or obligation of any nature whatsoever in connection
with or under this Agreement or the transactions contemplated hereby, and the
Investor hereby waives and releases all claims against such Party Affiliates for
any such liability or obligation.
Section
15. No Third Party
Beneficiaries. This Agreement shall be binding on the
undersigned solely for the benefit of the undersigned parties to this Agreement,
and nothing set forth herein shall be construed to confer upon or give to any
person other than the parties to this Agreement any benefits, rights, or
remedies under or by reason of, or any rights to enforce or cause such parties
to enforce, the transactions contemplated hereby or any provision of this
Agreement.
Section
16. Further
Assurances. Subject to the terms and conditions provided
herein, each party hereto agrees to use all commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable, whether under applicable laws and
regulations or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement. The parties agree to
report, for federal income tax purposes, that the transaction contemplated by
this Agreement qualifies as a transaction described in Section 351(a) of the
Internal Revenue Code of 1986, as amended.
[Signature page
follows]
IN
WITNESS WHEREOF, the parties have hereby executed this Rollover Agreement as of
the date first above written.
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SAGE
PARENT COMPANY INC.
By:
/s/ Xxxxxxx
Xxx
Name:
Xxxxxxx Xxx
Title:
President
Investor
/s/ Xxxx Xxxxxxxxxx Name: Xxxx Xxxxxxxxxx |
EXHIBIT
A
STOCKHOLDERS
AGREEMENT
[Intentionally
Omitted]
