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Exhibit 1.4
OPTION AGREEMENT
THIS AGREEMENT dated as of July 30, 1999 among OAKTREE CAPITAL
MANAGEMENT, LLC, a California limited liability company ("Oaktree"), XXXXXX
XXXXXXX, OFFICIAL LIQUIDATOR OF FIDENAS INTERNATIONAL BANK LIMITED (the "Fidenas
Liquidator"), XXXXX XXXXXXXX ("Xxxxxxxx") and BARCLAYS BANK PLC ("Barclays").
WHEREAS the Fidenas Liquidator, Xxxxxxxx and Barclays (collectively,
the "Creditors") are parties to a Stipulation of Settlement and Order (the
"Stipulation") with Xxxxxxxx X. Xxxxxx ("Xxxxxx"), Fidenas International Limited
L.L.C., Xxxxxxx International, Inc., GSE Multimedia Technologies, Inc., f/k/a
GSE Electronic Systems, Inc. and Xxxxxxx Radio Corp. (collectively, the "Xxxxxx
Group") entered in Case Nos. 93-27874/NW through 93-27879, 95-B-2263 and
95-1179, pending in the United States District Court for the District of New
Jersey (the "Jersey Cases");
WHEREAS pursuant to the Stipulation 29,152,542 shares of common stock
of Xxxxxxx Radio Corp. (the "Xxxxxxx Shares") are in the custody of the United
States District Court for the District of New Jersey to be held as security for
amounts payable to the Creditors pursuant to the Stipulation;
WHEREAS proceedings (the "Swiss Proceedings") regarding alleged
violations of law by Xxxxxx and others, initiated by the District Attorney for
the Canton of Zurich, Switzerland are currently pending;
WHEREAS Oaktree, on behalf of certain investment limited partnerships
(the "Oaktree Funds") as to which it serves as investment manager, is desirous
of entering into certain agreements with Xxxxxxx Radio Corp. ("Xxxxxxx") and
Xxxxxx providing for acquisition of the securities of Sport Supply Group, Inc.
owned by Xxxxxxx and Xxxxxx (the "Sport Agreements"), the consummation of which
is conditioned on Oaktree obtaining from the Creditors all of their existing
rights against the Xxxxxx Group and releases by the Creditors of the Xxxxxx
Group (collectively, the "Creditor Rights");
WHEREAS, based on discussions with Xxxxxxx and Xxxxxx, Oaktree is
hopeful that it can conclude such agreements within a five month time frame and
therefore wishes to secure from the Creditors an option to purchase the Creditor
Rights on the terms and conditions set forth below; and
WHEREAS, the Creditors are desirous of selling the Creditor Rights to
Oaktree on the terms and conditions set forth below and are therefore willing to
grant to Oaktree the option described below.
NOW, THEREFORE, in order to induce Oaktree to attempt to finalize the
Sport Agreements and to make the necessary expenditures to bring such about, and
for consideration of $1.00 paid to each Creditor by Oaktree simultaneously with
the execution of this Agreement and in consideration of the premises and the
agreements contained herein, the parties hereto agree as follows:
1. The Option.
(a) The Creditors hereby grant to Oaktree, acting on
behalf of the Oaktree Funds, an irrevocable option to purchase the Creditor
Rights on the terms and subject to the conditions set forth herein (the
"Option").
(b) The Option may be exercised by Oaktree, only in
whole, at any time during the period commencing on the date of this Agreement
and ending on the date which is five (5) months after the date of this Agreement
(the "Expiration Date").
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(c) If Oaktree wishes to exercise the Option, it
shall send a written notice to the Creditors of its intention to exercise the
Option, specifying the place and the time and date of the closing (the "Closing
Date") of the purchase (the "Closing"). Such notice shall be provided to the
Creditors not less than five (5) business days prior to the Closing Date.
(d) At the Closing, each Creditor shall deliver to
Oaktree (i) an assignment of such Creditor's rights against each member of the
Xxxxxx Group, (ii) a general release of each member of the Xxxxxx Group, dated
as of the Closing Date and releasing all claims of such Creditor against each
member of the Xxxxxx Group as of the Closing Date, other than the obligations of
Xxxxxx under the Stipulation (a) to use his best efforts to re-register the
"pink sheet" stock as described in Section 9(d) of the Stipulation and (b) to
return to the Fidenas Liquidator the funds previously deposited by the Fidenas
Liquidator to secure the appearance of Varick and Xxxxxx Xxxxxx in accordance
with Section 10(i) of the Stipulation, (iii) a consent to the release by the
United States District Court for the District of New Jersey to Xxxxxx of the
Xxxxxxx Shares, signed by such Creditor, (iv) a stipulation of dismissal with
prejudice of the Jersey Cases, executed by such Creditor, (v) a general release
of Oaktree by each Creditor and (vi) except as set forth in Section 1(d)(ii)(b)
above, an assignment of all proceeds and rights to proceeds received by such
Creditor as a result of the Swiss Proceedings, all of documents (i) through
(vi) to be in form and substance reasonably satisfactory to Oaktree.
(e) At the Closing, Oaktree shall pay to the
Creditors pursuant to the exercise of the Option, by wire transfer, Twenty
Million Dollars ($20,000,000) in cash in immediately available funds, divided
among the Creditors and paid to such accounts of the Creditors as shall be
specified to Oaktree in a writing signed by all of the Creditors, such writing
to be received by Oaktree no more than two (2) business days prior to the
Closing; provided, however, that if no such specification is received by Oaktree
by the required date, Oaktree shall pay such sum to the custody of the U.S.
District Court for the District of New Jersey, with reference to the Jersey
Cases, for the account of the Creditors, and such payment shall satisfy the
payment obligation of Oaktree pursuant to this subsection (e). At the Closing,
Oaktree shall also deliver to each Creditor (i) a general release of such
Creditor by each member of the Xxxxxx Group and by Oaktree and (ii) a
stipulation of dismissal with prejudice of the Jersey Cases, executed by each
member of the Xxxxxx Group, both documents described in (i) and (ii) to be in
form and substance reasonably satisfactory to the Creditors.
(f) The Closing shall be subject to the satisfaction
of the following conditions: (i) no court, arbitrator, governmental body, agency
or official shall have issued any order, decree or ruling restraining, enjoining
or prohibiting the consummation of the purchase and sale of the Creditor Rights
pursuant to the exercise of the Option and (ii) the closing of the transactions
reflected in the Sport Agreements shall close simultaneously with the closing of
the Option exercise.
2. Oaktree Covenants. Oaktree covenants to the Creditors as
follows:
(a) Oaktree will use its commercially reasonable
efforts to attempt to finalize the Sport Agreements and to close the
transactions reflected therein as soon as reasonably possible. The Creditors
acknowledge that Oaktree's decision to complete such transactions is subject to
satisfactory completion, in Oaktree's sole discretion, of its due diligence
regarding Sport Supply Group, Inc.
(b) If Oaktree determines that the Sport Agreements
will not be finalized or that the transactions reflected therein will not close
prior to the Expiration Date, it will promptly so notify the Creditors and,
thereupon, the Option will expire.
(c) While the Option is in existence, Oaktree will,
through its counsel, respond to inquiries from the Creditors as to the status of
efforts to finalize the Sport Agreements and to close the transactions reflected
therein.
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3. Further Assurances. The Creditors and Oaktree will, from
time to time, execute and deliver, or cause to be executed and delivered, such
additional or further consents, documents and other instruments as may be
reasonably requested for the purpose of effectively carrying out the
transactions contemplated by this Agreement. Without limitation of the
foregoing, the Creditors agree that, after the Closing, if so requested by a
party hereto or Xxxxxx, counsel for each of the Creditors will promptly provide
a copy of the releases delivered pursuant to Section 1(d)(ii) and a copy of the
assignment delivered pursuant to Section 1(d)(vi) to any Swiss or other courts.
4. Standstill. While the Option is in existence, the Creditors
agree not to assign, sell, transfer or impair the Creditor Rights, other than
pursuant to exercise of the Option.
5. General Provisions.
(a) Amendments. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier or sent by telecopier to the addresses listed below
or to such other addresses as any party shall specify to the other parties by
like notice:
To Oaktree:
Xxxxx X. Xxxxxx
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier: 000-000-0000
To the Fidenas Liquidator:
Xxxxx X. Xxxxx
Dechert, Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 212-698-3599
To Xxxxxxxx:
Xxxxx X. Xxxxxxxx
Xxxxxxxx, Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 212-382-0050
To Barclays:
Xxxxx X. Xxxxxx
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
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(c) Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that each party need not sign the same counterpart.
(d) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and performed in that state, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law thereof.
6. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the U.S. District Court for the
District of New Jersey, this being in addition to any other remedy to which they
are entitled at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their authorized signatories as of the date first written above.
OAKTREE CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx Xxxxxx
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Name:
Title:
By:
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Name:
Title:
XXXXXX XXXXXXX, OFFICIAL LIQUIDATOR OF FIDENAS
INTERNATIONAL BANK LIMITED
/s/ Xxxxxx Xxxxxxx
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/s/ Xxxxx Xxxxxxxx
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XXXXX XXXXXXXX
BARCLAYS BANK PLC
By: /s/ Xxxxxxx Garulnick
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Name:
Title:
