____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________
FORM 10-K/A-1
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED,
EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-25226
EMERSON RADIO CORP.
(Exact name of registrant as specified in its charter)
Delaware 22-3285224
(State or other jurisdiction of incorporation (I.R.S. Employer Identifi-
or organization) cation Number)
Nine Entin Road, Parsippany, NJ 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 884-5800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Common Stock, par value $.01 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Series A Preferred
Stock and Warrants.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days. [X] YES [ ] NO.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ].
Aggregate market value of the voting stock of the registrant held by non-
affiliates of the registrant at July 28, 1997 (computed by reference to the last
reported sale price of the Common Stock on the American Stock Exchange on such
date): $7,838,191.
Indicate by check mark whether the registrant has filed all documents and
reports to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. [X] YES [ ] NO.
Number of Common Shares outstanding at July 28, 1997: 41,743,747
DOCUMENTS INCORPORATED BY REFERENCE: None
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K
pursuant to the Securities Exchange Act of 1934, as amended, as set forth in the
pages attached hereto:
PART III, Items 10 - 13 are amended by the inclusion of such items herein.
PART IV, Item 14(c) is amended by the inclusion of an additional exhibit.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT
OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the officers
and directors of Emerson Radio Corp. (the "Company") as of the date hereof:
Name Age Position
Geoffrey P. Jurick 56 Chairman of the Board, Chief Executive
Officer, President and Director
Eugene I. Davis 42 Vice Chairman, Director
John P. Walker 34 Executive Vice President, Chief
Financial Officer
Marino Andriani 49 President, Emerson Radio Consumer
Products Corporation
John J. Raab 61 Senior Vice President - Operations
Elizabeth J. Calianese 39 Vice President-Human Resources,
Secretary
Robert H. Brown, Jr. 43 Director
(1)(2)
Peter G. Bunger (2) 56 Director
Jerome H. Farnum (1) 61 Director
Raymond L. Steele 62 Director
(1)(2)
___________________________________
(1) Member of Audit Committee
(2) Member of Compensation and Personnel Committee
GEOFFREY P. JURICK has served as Director since September 1990, Chief Executive
Officer since July 1992, Chairman since December 1993 and President since April
1997. Mr. Jurick also previously served as President from July 1993 to October
1994. From March 1990 until approximately 1994 he was President and Director of
Fidenas Investment Limited. Since December 1993, Mr. Jurick has served as a
Director of Fidenas International Limited, L.L.C. and its predecessor ("FIN")
and, since May 1994, as an officer and general manager of Fidenas International.
See "Legal Proceedings." Mr. Jurick has served as a Director, Chairman and Chief
Executive Officer of GSE Multimedia Technologies Corporation ("GSE"), which is
traded in the over-the-counter market, since May 1994. Since March 1996, Mr.
Jurick has served as Chairman of Elision International Ltd. ("Elision"). For
more than the past five years, Mr. Jurick has held a variety of senior executive
positions with several of the entities comprising the Fidenas group of companies
("Fidenas Group"), whose activities encompass merchant banking, investment
banking, investment management, and corporate development. Since December 1996,
Mr. Jurick has served as a Director, Chairman of the Board and Chief Executive
Officer of Sport Supply Group, Inc. ("SSG"), a company which is an affiliate of
the Company and whose securities are traded on the New York Stock Exchange.
EUGENE I. DAVIS has served as Vice Chairman since April 1997 and as a Director
since September 1990. Mr. Davis served as President from October 1994 until
April 1997, Interim Chief Financial Officer from February 1993 until November
1995 and as Executive Vice President from July 1992 to October 1994. Since
August 1992, Mr. Davis has served as a director of Tipperary Corporation, which
is traded on the American Stock Exchange. Since May, 1995, Mr. Davis has also
served as a Director of Beth Israel Health Care Services, a private corporation.
Since December 1996, Mr. Davis has served as a Director of and independent
consultant to SSG, an affiliate of the Company.
JOHN P. WALKER has served as Executive Vice President and Chief Financial
Officer since April 1996 and was Senior Vice President from April 1994 until
March 1996. Mr. Walker was Vice President-Finance from February 1993 to April
1994 and Assistant Vice President-Finance from June 1991 to January 1993. Since
December 1996, Mr. Walker has served as a Director and Chief Financial Officer
of SSG, an affiliate of the Company.
MARINO ANDRIANI has served as President of Emerson Radio Consumer Products
Corporation since February 1996. From December 1994 until February 1996, Mr.
Andriani was President of Appliance Corp. of America, a Welbilt Consumer
Products Company. From March 1993 to December 1994, Mr. Andriani was President
of Orient Express Marketing. Prior thereto, Mr. Andriani was Executive Vice
President-Sales of the Company from September 1990 to March 1993.
JOHN J. RAAB has served as Senior Vice President-Operations since October 1995
and was Vice President-Far East Operations from May 1995 until September 1995.
Prior thereto, he was President and Chief Operating Officer of Robeson
Industries Corp. from March 1990 to March 1995. Robeson Industries Corp. filed
for relief under Chapter 11 of the United States Bankruptcy Code and emerged
from Bankruptcy and was sold in the end of 1994.
ELIZABETH J. CALIANESE has served as Secretary since January 1996, as Vice
President-Human Resources since May 1995 and as Deputy General Counsel since May
1995. From April 1991 to May 1995, Ms. Calianese served as Assistant General
Counsel.
ROBERT H. BROWN, JR. has been a Director since July 1992. Presently, he is
Executive Vice President of Rauscher Pierce Refsnes, Inc. ("Rauscher"). Since
February 1994, Mr. Brown has been Executive Vice President of Capital Markets
of Rauscher, in Dallas, Texas. From January 1990 until February 1994, Mr. Brown
was Senior Vice President and Director of the Corporate Finance Department of
Rauscher. Since May 1993, Mr. Brown has served as a Director of Stevens
Graphics Corp., which is traded on the American Stock Exchange.
PETER G. BUNGER has been a Director since July 1992. Presently, he is a
consultant with Savarina AG. Since October 1992, Mr. Bunger has served as
Director of Savarina AG, engaged in the business of portfolio management
monitoring in Zurich, Switzerland, and since 1992, as Director of ISCS, a
computer software company. From December 1991 until December 1993, he was Vice
Chairman of Montcour Bank and Trust Company Limited, a bank organized in the
Bahamas and an affiliate of Fidenas International. From 1981 until 1992, Mr.
Bunger was owner and Managing Director of Peter G. Bunger Investment Consulting,
a firm which supervised, controlled, and analyzed investments for individuals.
See "Legal Proceedings." Since December 1996, Mr. Bunger has served as a
Director of SSG, an affiliate of the Company.
JEROME H. FARNUM has been a Director since July 1992. Since July 1994, Mr.
Farnum has been an independent consultant. From 1979 until 1994, Mr. Farnum
served as a senior executive with several of the entities comprising the Fidenas
Group, in charge of legal and tax affairs, accounting, asset and investment
management, foreign exchange relations, and financial affairs. See "Legal
Proceedings."
RAYMOND L. STEELE has been a Director since July 1992. He has been retired
since September 1993. From August 1990 until September 1993, Mr. Steele served
as Executive Vice President of Pacholder Associates, Inc., a company providing
investment management and other financial advisory services to institutional
clients. Mr. Steele is a member of the Board of Directors of Pharmhouse, Inc.,
a publicly-traded retail drug chain, Modernfall, Inc., IPL/VSC and the GFTA
Advisory Board.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of change in ownership of Common Stock and other equity securities of
the Company. Executive officers, Directors and greater than ten percent
stockholders are required by SEC Regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended March 31, 1997, all Section 16(a) filing
requirements were complied with which were applicable to the officers, Directors
and greater than ten percent beneficial owners. It is the practice of the
Company to attend to the filing of Section 16(a) forms on behalf of the officers
and directors of the Company.
ITEM 11 - EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following executive compensation disclosures reflect all plan and non-
plan compensation awarded to, earned by, or paid to the named executive officers
of the Company. The "named executive officers" are the Company's Chief
Executive Officer (the "CEO"), regardless of compensation level, and the four
most highly compensated executive officers, other than the CEO serving as such
on March 31, 1997. Where a named executive officer has served during any part
of the Company's fiscal year ended March 31, 1997 ("Fiscal 1997"), the
disclosures reflect compensation for the full year in each of the periods
presented.
THREE-YEAR COMPENSATION SUMMARY
The following table summarizes for the years indicated the compensation
awarded to, earned by or paid to the named executive officers for services
rendered in all capacities to the Company:
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards Payouts
<CAPTION>
SECURI-
OTHER RESTRIC- TIES ALL
ANNUAL TED UNDER- LTIP OTHER
FISCAL COMPEN- STOCK LYING PAY- COMPEN
YEAR SALARY BONUS SATION AWARDS OPTIONS OUTS SATION
(1) (2) (6) (3)
Name and
Principal
Position(s)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GEOFFREY P. JURICK 1997 $443,473 $38,500 $121,646 - - - $2,207
CHAIRMAN OF THE 1996 490,000 137,500 102,661 - - - 1,693
BOARD, CHIEF 1995 378,333 275,000 78,702 - 600,000 - 311
EXECUTIVE
OFFICER AND
PRESIDENT(4)
EUGENE I. DAVIS 1997 408,333 87,500 89,528 - - - 17,113
VICE CHAIRMAN 1996 450,000 87,500 90,745 - - - 12,997
(4) 1995 360,000 175,000 102,024 - 600,000 - 6,986
JOHN P. WALKER 1997 179,116 40,000 18,816 - - - 7,089
EXECUTIVE VICE 1996 165,000 40,000 24,307 - - - 4,912
PRESIDENT AND 1995 110,000 75,000 20,420 - 200,000 - 3,841
CHIEF FINANCIAL
OFFICER (4)
MARINO ANDRIANI 1997 387,100 - 9,808 - 75,000 - 11,352
PRESIDENT, 1996 51,827 - 1,400 - - - -
EMERSON 1995 - - - - - - -
RADIO CONSUMER
PRODUCTS
CORPORATION (5)
JOHN J. RAAB 1997 212,100 - 8,638 - - - 11,237
SENIOR VICE 1996 178,846 - 9,131 - 50,000 - 1,882
PRESIDENT- 1995 - - - - - - -
OPERATIONS (5)
</TABLE>
(1) Includes reimbursement of salary from Sport Supply Group, Inc. of $46,527
for Mr. Jurick and $41,667 for Mr. Davis in Fiscal 1997. See "Certain
Relationships and Related Transactions."
(2) Consists of (i) car allowance and auto expenses afforded to the listed
Company executive officers, including $32,085, $39,967 and $30,546 paid to
Mr. Davis, $13,063, $20,745 and $19,114 paid to Mr. Walker, $8,400, $1,400
and $0 paid to Mr. Andriani and $8,400, $8,400 and $0 paid to Mr. Raab,
respectively, in Fiscal 1997, 1996 and 1995, (ii) tax preparation services
provided to Mr. Davis in Fiscal 1997, 1996 and 1995, (iii) expenses paid by
the Company on behalf of Mr. Davis, covering his club membership, and (iv)
relocation and temporary lodging expenses and associated tax gross-ups in
the amount of $120,573, $102,661 and $73,394 for Mr. Jurick, $0, $24,493
and $43,002 for Mr. Davis paid by the Company in Fiscal 1997, 1996 and
1995, respectively. See "Certain Relationships and Related Transactions."
(3) Consists of the Company's contribution to its 401(k) employee savings plan,
life insurance and disability insurance.
(4) As more fully described below, pursuant to the Management Services
Agreement, dated July 1, 1997 to be effective March 7, 1997, between SSG
and the Company, SSG shall reimburse the Company for salary payments made
to Mr. Jurick for the benefit of SSG, which payments shall be $20,833.33
per month, plus expenses incurred by Mr. Jurick on behalf of SSG, subject
to increases approved by the SSG Board of Directors. As also more fully
described below, pursuant to the Davis Extension Agreement effective April
1, 1997, Mr. Davis shall receive his current salary from the Company,
subject to adjustment as provided in the Davis Employment Agreement, and
the Company shall credit against such salary obligations any amounts Mr.
Davis receives as base compensation from SSG. Initially, it is understood
that Mr. Davis' base salary from the Company shall be $450,000, of
which $200,000 shall be paid by SSG and $250,000 shall be paid by the
Company. The Davis Extension Agreement also provides that Mr. Davis shall
remain entitled to all other benefits and privileges currently available
under his employment agreement. As also more fully described below,
pursuant to the Walker Extension Agreement, effective December 11, 1996,
Mr. Walker's base salary from the Company and SSG shall be $290,000 of
which $190,000 shall be paid from SSG and $100,000 shall be paid from the
Company.
(5) Mr. Raab became an executive officer of the Company in March 1995. Mr.
Andriani became an executive officer of the Company in February, 1996.
(6) In July 1994, the Company granted stock options to purchase 600,000,
600,000, and 200,000 shares of common stock to each of Messrs. Jurick,
Davis and Walker, respectively, exercisable at an exercise price of $1 per
share (except $1.10 in the case of Mr. Jurick). In November 1995, Mr. Raab
was granted a stock option to purchase 50,000 shares of common stock at an
exercise price of $2.875 per share. On April 8, 1996, the Company granted
Mr. Andriani stock options to purchase 75,000 shares of common stock,
exercisable at an exercise price of $2.563. The outstanding options vest
in annual increments of one-third, commencing one year from the date of
grant, and their exercise is contingent on continued employment with the
Company.
STOCK OPTIONS
The following table sets forth information regarding the grant of stock
options during Fiscal 1997 to the named executive officers:
<TABLE>
OPTION GRANTS IN FISCAL 1997
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Price
Appreciation
for Option
Individual Grants Term (2)
<CAPTION>
%
of
Total
Options
Grant-
ed
to
Employ- Exer-
Number ees cise
Of in Price Expir-
Options Fiscal Per ation
Name Granted 1997 Share Date(1) 5% 10%
<S> <C> <C> <C> <C> <C> <C>
GEOFFREY P. JURICK - - - - - -
EUGENE I. DAVIS - - - - - -
JOHN P. WALKER - - - - - -
MARINO ANDRIANI 75,000 60 $2.563 4/8/06 $120,889 $306,357
JOHN J. RAAB - - - - - -
</TABLE>
(1) The stock options were granted under the 1994 Stock Compensation Program,
and are exercisable commencing one year after the grant date in three equal
annual installments, with full vesting occurring on the third anniversary
of the date of the grant.
(2) The dollar amounts under these columns are the result of calculations at
the assumed compounded market appreciation rates of 5% and 10% as required
by the Securities and Exchange Commission over a ten-year term and
therefore, are not intended to forecast possible future appreciation, if
any, of the stock price.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during Fiscal 1997 and
unexercised options held at March 31, 1997:
<TABLE>
OPTION EXERCISES IN FISCAL 1997
AND MARCH 31, 1997 OPTION VALUES
<CAPTION>
Number of Value of
Unexercised Unexercised
Options at In-the-Money
Number of March 31, Options at
Shares 1997 March 31, 1997
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable (1)
<S> <C> <C> <C> <C>
GEOFFREY P. JURICK - - 400,000/200,000 $0/$0
EUGENE I. DAVIS - - 400,000/200,000 $24,000/$12,000
JOHN P. WALKER - - 133,333/ 66,667 $ 8,000/$ 4,000
MARINO ANDRIANI 0/ 75,000 $0/$0
JOHN J. RAAB - - 16,667/ 33,333 $0/$0
</TABLE>
(1) Calculated based on the difference between the aggregate fair market value
of the shares subject to options at March 31, 1997 and the aggregate option
exercise price.
CERTAIN EMPLOYMENT CONTRACTS
On August 13, 1992, Geoffrey P. Jurick, Chairman, Chief Executive Officer
and President of the Company, entered into five-year employment agreements
("Jurick Employment Agreements") with the Company and two of its wholly-owned
subsidiaries, Emerson Radio (Hong Kong) and Emerson Radio International Ltd.
(formerly Emerson Radio (B.V.I.) Ltd.) (hereinafter, collectively the
"Companies"), providing for an aggregate annual compensation of $250,000, which
was increased to $390,000 in May 1994 and to $490,000 effective April 1, 1995.
In addition to his base salary, the Jurick Employment Agreements provide that
Mr. Jurick is entitled to an annual bonus upon recommendation by the
Compensation and Personnel Committee of the Company's Board of Directors,
subject to the final approval of the Company's Board of Directors. By letter
agreement dated April 16, 1997, the terms of the Jurick Employment Agreements
were extended, and said agreements remain in full force and effect, until March
31, 2000. However, pursuant to the Settlement Agreement, hereinafter defined,
Mr. Jurick's cash compensation from the Company and all subsidiaries and
affiliates shall be limited to a total of $750,000 until the Settlement Amount
is paid. See "Certain Relationships and Related Transactions." As more fully
described below, pursuant to the Management Services Agreement, dated July 1,
1997 to be effective March 7, 1997, between SSG and the Company ("Management
Services Agreement"), SSG shall reimburse the Company for salary payments made
to Mr. Jurick for the benefit of SSG, which payments shall be $20,833.33 per
month and commenced effective January 23, 1997, plus expenses incurred by Mr.
Jurick on behalf of SSG, subject to increases approved by the SSG Board of
Directors.
Subject to certain conditions, each of the Jurick Employment Agreements
grants to Mr. Jurick severance benefits, through expiration of the respective
terms of each of such agreements, commensurate with Mr. Jurick's base salary, in
the event that his employment with the Companies terminates due to permanent
disability, without cause or as a result of constructive discharge (as defined
therein). In the event that Mr. Jurick's employment with the Companies
terminates due to termination for "cause", because Mr. Jurick unilaterally
terminates the agreements or for reasons other than constructive discharge or
permanent disability, Mr. Jurick shall only be entitled to base salary earned
through the applicable date of termination. Similar provisions are set forth in
each of the contracts described below.
On August 13, 1992, Eugene I. Davis, Vice Chairman of the Company, entered
into a five-year employment agreement ("Davis Employment Agreement") with the
Company, providing for an annual compensation of $360,000, which was increased
to $450,000 effective April 1, 1995. In addition to his base salary, the Davis
Employment Agreement provides that Mr. Davis is entitled to an annual bonus
equal to an amount up to 30% of Mr. Davis' base salary, based upon attainment
of objectives identified in the Company's five-year business plan adopted by the
Board of Directors ("Business Plan"). The Davis Employment Agreement also
provides that Mr. Davis may also receive an additional annual performance bonus
to be recommended by the Compensation and Personnel Committee of the Company's
Board of Directors, subject to the final approval of the Company's Board of
Directors.
Pursuant to the Davis Employment Agreement, the Company granted to Mr.
Davis an option to purchase 500,000 shares of Common Stock. Such option was
canceled pursuant to the Plan of Reorganization; however, the Company
subsequently granted Mr. Davis options to purchase 600,000 shares of Common
Stock. The Company also agreed for the term of the Davis Employment Agreement
and three years thereafter, to pay for and maintain legal malpractice insurance
covering Mr. Davis for occurrences and actions taken by him at any time prior to
or during the term of such agreement on behalf of the Company or its employees.
The Company also agreed to pay all sums, which may be deductible amounts, not
otherwise paid by such insurer.
By letter agreement dated April 16, 1997 ("Davis Extension Agreement"), the
Davis Employment Agreement was amended as follows: 1.) the term of the Davis
Employment Agreement was extended to March 31, 2000; 2.) Mr. Davis is only
obligated to devote approximately 60% of his business time to serve on behalf of
the Company, its subsidiaries and affiliates, including SSG; 3.) Mr. Davis will
serve as Vice Chairman of the Company, will no longer serve as President of the
Company and shall serve in such other duties and capacities for the Company, its
subsidiaries and affiliates (including SSG) as may be directed by the Company's
Board of Directors, Chairman or Chief Executive Officer; and, 4.) Mr. Davis
shall receive his current salary from the Company, subject to adjustment as
provided in the Davis Employment Agreement, and the Company shall credit
against such salary obligation any amount Mr. Davis receives as base
compensation from SSG. Initially, it is understood that the combined base
compensation from the Company and SSG shall be $450,000, of which $200,000 shall
be paid by SSG and $250,000 from the Company The Davis Extension Agreement also
provides that Mr. Davis shall be entitled to all other benefits and privileges
available under the Davis Employment Agreement. The Davis Extension Agreement
also provides it is understood that during the 40% of Mr. Davis' business time
not devoted to the Company or SSG, Mr. Davis shall be developing other business
opportunities and the Company has a right of first refusal on such
opportunities. The Davis Extension Agreement also provides that upon the
request of the Company's Board of Directors or Chairman, Mr. Davis shall resign
as a Director of the Company but any such resignation shall not effect Mr.
Davis' continued employment or rights under the Davis Employment Agreement, as
amended.
Upon execution of the Davis Employment Agreement, the Company provided Mr.
Davis with a one-time lump sum payment of $100,000, which figure is net of
applicable taxes and withholdings. In connection with Mr. Davis' relocation to
New Jersey, the Company assumed certain relocation expenses and associated tax
gross-ups on Mr. Davis' behalf aggregating $239,915. See "Summary Compensation
Table."
As of April 1, 1994, John P. Walker, Executive Vice President and Chief
Financial Officer, entered into a three-year employment agreement with the
Company providing for an annual compensation of $110,000, which was increased to
$165,000 effective April 1, 1995 and increased to $210,000 effective April 1,
1996 ("Walker Employment Agreement"). In addition to his base salary, the
Walker Employment Agreement provided that Mr. Walker is entitled to an annual
bonus equal to an amount up to 30% of Mr. Walker's base salary, upon attainment
of objectives identified by the Executive Committee and that Mr. Walker may also
receive an additional annual performance bonus to be recommended by the
Compensation and Personnel Committee of the Company's Board of Directors,
subject to the final approval of the Company's Board of Directors.
By Amendment No. 1 to Employment Agreement, dated April 16, 1997 ("Walker
Amendment Agreement"), the Walker Employment Agreement was amended as follows:
1.) the term of the Walker Employment Agreement was extended to April 1, 2000,
with provisions for any negotiation of further extensions thereof; 2.) Mr.
Walker shall continue to serve as Executive Vice President and Chief Financial
Officer of the Company and shall also serve in such other positions with the
Company, its subsidiaries or affiliates (including SSG) as may be directed by
the Company's Board of Directors, Chairman, President or Chief Executive Officer
and that the Company understands that Mr. Walker shall devote approximately 30%
of his business time to the Company with the balance of his business time
devoted to the business of SSG; 3.) Mr. Walker shall relocate to Dallas, Texas
and the Company shall reimburse Mr. Walker for his normal and reasonable
traveling expenses to the Company's offices in order to perform his business
obligations to the Company; 4.) effective December 11, 1996, Mr. Walker's annual
salary was modified to $100,000 and Mr. Walker waived any right to a bonus for
Fiscal 1997 to which he would have been entitled under the Walker Employment
Agreement; 5.) Mr. Walker is entitled to life insurance as provided immediately
prior to the effective date of the Walker Amendment Agreement which shall be in
accordance with the Company's policies afforded to senior executives; and, 6.)
in the event Mr. Walker's employment was terminated due to Permanent Disability,
a Without Cause Termination or a Constructive Discharge, as defined therein, the
Walker Amendment Agreement provides for severance benefits. In the event Mr.
Walker's employment is terminated due to a Termination for Cause or Mr. Walker
unilaterally severs the relationship, Mr. Walker shall only be entitled to base
salary earned through the date of termination and vested qualified stock options
will remain vested.
If Messrs. Jurick, Davis and Walker were to be terminated due to permanent
disability, without cause or as a result of constructive discharge, the
estimated dollar amount to be paid after March 31, 1997 to each such individual,
based on the terms of their respective contracts, would be $1,470,000,
$1,350,000 and $300,000, respectively. However, the estimated amounts to be
paid to (i) Mr. Jurick is subject to certain limitations under the Settlement
Agreement and would be reduced by $20,833.33 per month for as long as the
Management Services Agreement is in effect and (ii) Mr. Davis is subject to the
Company's entitlement to a credit for as long as Mr. Davis receives compensation
from SSG, initially at $200,000 per annum.
COMPENSATION OF DIRECTORS
Directors of the Company who are employees do not receive compensation for
serving on the Board. Non-employee Directors are paid $20,000 per annum in
quarterly installments. The Chairmen of the Audit Committee and Compensation and
Personnel Committee each receive an additional $10,000 per annum. Pursuant to
the terms of the Company's 1994 Non-Employee Director Stock Option Plan, each
non-employee Director was granted options to purchase 25,000 shares of Common
Stock on October 7, 1994. On October 7, 1994, each Chairman was also granted
options to purchase an additional 25,000 shares of Common Stock. Peter G.
Bunger, a Director of the Company, has also been retained by the Company for
certain consulting services. See "Certain Relationships and Related
Transactions."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In November 1996, Peter G. Bunger was retained as a consultant, and is
being paid on a per diem basis, at the approximate rate of $10,000 for each
month when he is present in Hong Kong and providing services to the Company.
Mr. Bunger received compensation and reimbursement of expenses aggregating
$49,000 in Fiscal 1997.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 28, 1997, by (i) each
Director and nominee for Director of the Company, (ii) executive officers and
Directors of the Company as a group and (iii) each person or entity known by the
Company to be the beneficial owner of more than 5% of the Company's outstanding
Common Stock. For purposes of this Form 10-K/A-1, beneficial ownership of
securities is defined in accordance with the rules of the Securities and
Exchange Commission and means generally the power to vote or exercise investment
discretion with respect to securities, regardless of any economic interests
therein. Except as otherwise indicated and based upon the Company's review of
information on file with the Securities and Exchange Commission, the Company
believes that the beneficial owners of the securities listed below have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of Class
Beneficial Owner Ownership(2)
<S> <C> <C>
Geoffrey P. Jurick (1)(3) 29,752,642 70.3%
Nine Entin Road
Parsippany, NJ 07054
Fidenas International 29,152,542 69.8%
Limited, L.L.C. (1)
c/o Geoffrey P. Jurick
Nine Entin Road
Parsippany, NJ 07054
Elision International, 1,600,000 3.8%
Inc.
275 Wyman Street
Waltham, MA 02154
GSE Multimedia 12,000,000 28.7%
Technologies Corporation
Kostheimer-Landstrasse 36
55246 Mainz - Kostheim
Germany D6502
Eugene I. Davis (3) 650,000 1.5%
Robert H. Brown, Jr. 33,334 (4)
Peter G. Bunger 16,667 (4)
Jerome H. Farnum 16,667 (4)
Raymond L. Steele 33,334 (4)
All Directors and Officers 30,749,311 71.0%
as a Group (11 persons)
(5)(6)
</TABLE>
(1) Consists of 15,552,542, 1,600,000 and 12,000,000 shares of Common Stock
held by FIN, Elision and GSE, respectively. FIN is record holder of
847,458 shares of Common Stock and formerly held such shares as nominee.
The nominee relationship has been terminated and FIN and Mr. Jurick
disclaim beneficial ownership. Mr. Jurick indirectly owns, through a
controlled holding company, approximately 95% of FIN. In addition, Mr.
Jurick is the manager of FIN. FIN owns approximately 14.3% of Elision. Mr.
Jurick indirectly owns, through certain holding companies and beneficial
interests in affiliates, a controlling interest in each of GSE and Elision.
In accordance with a Stipulation and Order of Settlement, dated June 11,
1996 (the "Stipulation"), the shares of Common Stock held by Elision and
GSE are to be transferred and registered in the name of FIN. All of the
shares owned by FIN, Elision and GSE are subject to certain restrictions.
See "Certain Relationships and Related Transactions" and "Legal
Proceedings."
(2) Based on 41,743,747 shares of Common Stock outstanding as of July 28, 1997,
plus shares of Common Stock under option of any director or executive
officer, exercisable within 60 days. Does not include (i) shares of Common
Stock issuable upon conversion of 9,113 shares of Series A Preferred Stock,
which are currently exercisable, (ii) Common Stock issuable upon conversion
of certain warrants issued to the Company's former creditors, (iii) Common
Stock issuable upon exercise of outstanding options, which are not
currently exercisable within 60 days, (iv) Common Stock issuable upon
conversion of the Company's 8-1/2% Senior Subordinated Convertible
Debentures Due 2002 (the "Debentures") or (v) Common Stock issuable upon
the exercise of warrants granted to (a) Dresdner Securities (USA) Inc,
("the placement agent") and authorized dealers in connection with the
private placement of the Debentures or (b) First Cambridge Securities
Corporation in connection with a consulting agreement.
(3) Includes options, exercisable within 60 days, to purchase 600,000 shares of
Common Stock.
(4) Represents less than 1.0% of the outstanding Common Stock.
(5) Includes 1,546,669 shares of Common Stock subject to unexercised stock
options which were exercisable within 60 days under the Company's Stock
Compensation Program.
(6) Does not include options to purchase an aggregate of 173,331 shares of
Common Stock not currently exercisable within 60 days.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SETTLEMENT AGREEMENT
On June 11, 1996, Barclays, Petra Stelling, the Official Liquidator of
FiBank, (collectively, the "Creditors"), Mr. Jurick, the Company (together with
the Creditors, the "Lead Parties"), FIN, Elision, GSE, and the Official
Liquidator of FIL signed the Stipulation providing for a settlement of all
litigation among them on a global basis. Under the Stipulation, Mr. Jurick and
FIN agreed to pay the Creditors the aggregate sum of $49.5 million (the
"Settlement Amount") and Mr. Jurick is to be paid the sum of $3.5 million,
contemplated to be solely from the proceeds of the sale of shares of Emerson's
Common Stock (the "Settlement Shares") owned by FIN, GSE, and Elision (the
"Jurick Payment" and, together with the Settlement Amount, the "Aggregate
Amount"). The Stipulation became effective on February 4, 1997 and all
Settlement Shares have been deposited with and remain in the custody of the
Court, to prevent defaults under the Company's borrowing facilities.
The Settlement Shares (consisting of 29,152,542 shares of Emerson's Common
Stock) are divided into two pools, Pool A and Pool B. All Settlement Shares are
pledged to secure all obligations under the Stipulation, but the Pool B Shares
consist of the amount of shares as to which Mr. Jurick must retain beneficial
ownership, and generally are not available for sale or release from the custody
of the Court or subject to foreclosure, to prevent defaults under the Company's
borrowing facilities.
FIN (which is controlled by Mr. Jurick) is to retain title to and the
voting power over all Settlement Shares, but will provide notice to the
Creditors prior to certain stockholder votes. The Creditors may seek to have
the Court direct FIN to vote against any proposal of the Emerson Board, but the
Emerson Board may withdraw and not solicit any vote of its stockholders with
respect to such proposal.
The Stipulation contemplates the employment of a marketing advisor (the
"Advisor") and TM Capital Corp. has been so retained to serve as the initial
Advisor. The Advisor is formulating a marketing plan for the sale from time to
time of the Pool A Shares and will also appoint the Settlement Agent, who will
administer certain ministerial aspects of the settlement. The Pool A Shares
initially will consist of 15,286,172 Settlement Shares. In formulating the
marketing plan, the Advisor will take into account the interests of all the Lead
Parties, including the interests of the Company's minority stockholders and the
goal of generating sufficient proceeds to pay the Creditors. Sales may be made
of the Settlement Shares pursuant to a registered offering if the sales price is
not less than 90% of the average of the three most recent closing prices
("Average Closing Price"), or, other than in a registered offering, of up to 1%
of the Emerson common stock outstanding per quarter, if the sales price is not
less than 90% of the Average Closing Price. Any other attempted sales are
subject to the consent of the Company, Mr. Jurick, and the Creditors, or, if
necessary, the Court.
No definite time has been provided for the sale of the Settlement Shares or
the full payment of the Settlement Amount. However, a Creditor may apply to the
Court, on notice to all other Lead Parties, to terminate the Stipulation, based
on the totality of the circumstances, on the grounds that its goals and purposes
are not reasonably likely to be realized. No assurance can be given that
sufficient proceeds will be realized from the sale of such shares to satisfy in
full the Creditors. The Creditors will be able to resort to consent judgments
against Mr. Jurick and his affiliates if the Stipulation is terminated. Such a
termination would also likely result in a default under the Company's borrowing
facilities.
The Company's rights and obligations under the Settlement Agreement include
the following:
1. The Company will advance certain expenses of the Advisor
(currently, approximately $160,000) and the Settlement Agent and advance
the reasonable fees and expenses for registration of the Settlement Shares,
in each instance to be reimbursed from the proceeds of the first sales of
the Settlement Shares.
2. If an offer to purchase Settlement Shares that would result in a
Change of Control of the Company (i.e., beneficial ownership of 25% or more
of the Company's Common Stock) were to occur, the offeror will be required
to meet with the Company's independent directors and President, or their
successors (the "Special Committee"), and the Special Committee will
determine whether to approve such offer in the exercise of its fiduciary
duties under applicable Delaware law. Any of the Creditors may apply to
the Court to permit an exception, subject to the legal standard set forth
in the immediately preceding sentence.
3. The Company has agreed to register the offer and sale of the Pool
A Shares as set forth in the marketing plan. The Company previously has
filed a shelf registration statement covering five million Settlement
Shares owned by FIN to finance a settlement, which is subject to certain
contractual restrictions and may be offered for sale or sold only by means
of an effective registration statement.
4. The Lead Parties have agreed that Mr. Jurick will limit his total
annual cash compensation not to exceed $750,000 until the Settlement Amount
has been paid. The Company has also agreed not to grant Mr. Jurick any
additional non-cash compensation.
Requests have also been made by Petra Stelling to the Swiss authorities to
discontinue the investigations involving Messrs. Jurick, Bunger, and Farnum, as
described above.
LEGAL SERVICES
During Fiscal 1996, a family member of Mr. Davis became a member of Wolff &
Samson, P.A., which regularly performs legal services for the Company. The
Company was billed approximately $842,000, and $95,000 for legal services
during Fiscal 1997 and Fiscal 1996, respectively, from such firm.
RELOCATION LOAN
In connection with the execution of his employment agreement with the
Company, Eugene I. Davis, the Company's Vice Chairman, agreed to relocate his
residence to the general locality of the Company's principal executive offices.
To assist in such relocation, in the fiscal year ended March 31, 1993 ("Fiscal
1993"), the Company provided to Mr. Davis an interest-free bridge loan of
$120,000. The maturity date of Mr. Davis' loan has been extended and is due in
the fiscal year ending March 31, 1998.
CONSULTING AGREEMENT
In November 1996, Peter G. Bunger was retained as a consultant, and is
being paid on a per diem basis, at the approximate rate of $10,000 for each
month when he is present in Hong Kong and providing services to the Company.
Mr. Bunger received compensation and reimbursement of expenses aggregating
$49,000 in Fiscal 1997.
SPORT SUPPLY GROUP, INC. AGREEMENTS
By that certain Securities Purchase Agreement, dated November 27, 1996, by
and between the Company and SSG (the "Agreement"), the Company purchased from
SSG 1,600,000 shares of common stock, $.01 par value per share (the "Common
Stock"), of SSG for an aggregate consideration of $11.5 million, or
approximately $7.19 per share. In addition, the Company purchased, for an
aggregate consideration of $500,000, 5-year warrants (the "Warrants") to acquire
an additional 1,000,000 shares of Common Stock at an exercise price of $7.50 per
share, subject to standard anti-dilution adjustments, pursuant to a Warrant
Agreement (the "Warrant Agreement"). The purchase price paid by the Company was
negotiated in an arms' length transaction with SSG. Prior to the closing of the
Agreement, the Company beneficially owned approximately 9.9% of SSG's
outstanding common stock. Based upon the purchase of the Common Stock as set
forth above, the Company owns approximately 27.0% of the outstanding shares of
the Common Stock. If the Company exercises all of the Warrants, it will
beneficially own approximately 34.9% of the Common Stock.
The $12,000,000 purchase price paid by the Company pursuant to the
Agreement was obtained by the Company from Congress Financial Corporation
("Congress"), its United States senior secured lender, under the terms of its
existing credit facility, and in accordance with the terms of the consent (the
"Consent") obtained from such lender. Pursuant to a Pledge and Security
Agreement dated December 10, 1996, the Company pledged to Congress the Common
Stock and Warrants acquired under the Agreement.
In accordance with a Registration Rights Agreement dated December 10, 1996
(the "Registration Rights Agreement"), the Company has been granted certain
demand and incidental registration rights on the resale of the shares of Common
Stock which it and Emerson Radio (Hong Kong) Limited own, as well as on the
exercise and resale of the shares the Company may acquire under the Warrant
Agreement. In addition, the Company has arranged for foreign trade credit
financing of $2 million for the benefit of SSG to supplement SSG's existing
credit facilities.
Pursuant to the Agreement, SSG caused a majority of the members of its
Board of Directors to consist of the Company's designees. In connection
therewith, the Company designated Geoffrey P. Jurick, its Chairman, Chief
Executive Officer and President, Eugene I. Davis, its Vice Chairman, John P.
Walker, its Executive Vice President and Chief Financial Officer, Peter Bunger,
a Director of the Company, and Johnson C. Ko, an independent Hong Kong
businessman, to sit on the SSG Board. Peter S. Blumenfeld and William H.
Watkins, Jr., Directors of SSG prior to the Closing, continue as Directors of
SSG. SSG's stockholders have since elected the Company's nominees as a majority
of its Board of Directors.
Under the Agreement, for a period of at least two years from the date of
the closing, neither SSG nor any of its subsidiaries is permitted to enter into
or be a party to any agreement or transaction with any Affiliate (as such term
is defined in the Securities Exchange Act of 1934, as amended) of SSG or the
Company, except (i) in the ordinary course of SSG's or its subsidiaries'
business and on terms no less favorable to SSG or its subsidiaries than would be
obtained in a comparable arms' length transaction with a person not an Affiliate
of SSG or the Company or (ii) unless approved by a majority of SSG's directors
who do not have a direct or indirect material financial interest in the
agreement or transaction and which includes a majority of directors who are not
officers or employees of SSG or the Company or directors of the Company.
As a result of its investment in SSG and in an effort to benefit by several
cost sharing opportunities, on July, 1997 to be effective as of March 7, 1997,
the Company entered into a Management Services Agreement with SSG by which SSG
would perform the following services: 1.) Human Resource Services including
processing of payroll and payroll taxes, administration of and coordination of
payment for the Company's employee benefit programs; 2.) Banking Services
including calculation of daily borrowing availability with the Company's secured
credit facility, preparation of daily reporting for the Company's banks and
forecasts of cash availability and cash flow, processing wire funds and letters
of credit; 3.) Computer Services including provision of space for the Company's
AS400 computer system and system operator services; 4.) Payable Services
including processing of the Company's accounts payables and checks; 5.)
Warehouse Services including provision of warehouse storage space for the
Company's archives and product inventory; 6.) provision of Office Space; 7.)
Design Services including the preparation, design and drafting of publications
to be distributed by the Company relating to its products; and, 8.) Financial
Management Services including the devotion of SSG's Mr. Ken Corby to the Company
up to a maximum of 75% of his business time. The Management Services Agreement
also provides that the Company shall 1.) furnish to SSG information needed to
perform its services; 2.) furnish the AS400 and retain complete financial
responsibility therefore; 3.) be responsible for resolving any dispute between
the Company and any of its employees, answering inquiries by its employees
regarding their benefits, administering the employee benefit plans and be
responsible for all reporting obligations. The Management Services Agreement
also provides for SSG to reimburse the Company for salary payments made by the
Company to Mr. Jurick for the benefit of SSG, which monthly payments shall be
$20,833.33, plus expenses incurred by Mr. Jurick on behalf of SSG, subject to
increases approved by SSG's Board of Directors. The Management Services
Agreement also provides that the Company shall reimburse SSG for an amount equal
to 75% of Mr. Corby's salary (including payroll taxes and benefits) for the
Financial Management Services. The Company was billed $3,200 for services
provided with respect to the above mentioned agreement during Fiscal 1997. In
addition, the Company billed SSG approximately $47,000 towards Mr. Jurick's
salary during Fiscal 1997. The Company owed SSG approximately $0 for the
services as of March 31, 1997 and the Company was owed approximately $2,703 from
SSG as of March 31, 1997.
FUTURE TRANSACTIONS
The Company has adopted a policy that all future affiliated transactions
and loans will be made or entered into on terms no less favorable to the Company
than those that can be obtained from unaffiliated third parties. In addition,
all future affiliated transactions and loans, and any forgiveness of loans, must
be approved by a majority of the independent outside members of the Company's
Board of Directors who do not have an interest in the transactions.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, STATEMENT SCHEDULE AND REPORTS ON FORM
8-K
(c) Exhibits
(2) Confirmation Order and Fourth Amended Joint Plan of Reorganization of
Emerson Radio Corp. ("Old Emerson") and certain subsidiaries under
Chapter 11 of the United States Bankruptcy Code, dated March 31, 1994
(incorporated by reference to Exhibit (2) of Emerson's Registration
Statement on Form S-1, Registration No. 33-53621, declared effective
by the Securities and Exchange Commission ("SEC") on August 9, 1994).
(3) (a) Certificate of Incorporation of Emerson (incorporated by reference to
Exhibit (3) (a) of Emerson's Registration Statement on Form S-1,
Registration No. 33-53621, declared effective by the SEC on August 9,
1994).
(3) (b) Certificate of Designation for Series A Preferred Stock (incorporated
by reference to Exhibit (3) (b) of Emerson's Registration Statement on
Form S-1, Registration No. 33-53621, declared effective by the SEC on
August 9, 1994).
(3) (c) Plan of Reorganization and Agreement of Merger by and between Old
Emerson and Emerson Radio (Delaware) Corp. (incorporated by reference
to Exhibit (3) (c) of Emerson's Registration Statement on Form S-1,
Registration No. 33-53621, declared effective by the SEC on August 9,
1994).
(3) (d) Certificate of Merger of Old Emerson with and into Emerson Radio
(Delaware) Corp. (incorporated by reference to Exhibit (3) (d) of
Emerson's Registration Statement on Form S-1, Registration No. 33-
53621, declared effective by the SEC on August 9, 1994).
(3) (e) Amendment dated February 14, 1996 to the Certificate of Incorporation
of Emerson (incorporated by reference to Exhibit (3) (a) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1995).
(3) (f) By-Laws of Emerson adopted March 1994 (incorporated by reference to
Exhibit (3) (e) of Emerson's Registration Statement on Form S-1,
Registration No. 33-53621, declared effective by the SEC on August 9,
1994).
(3) (g) Amendment dated November 28, 1995 to the By-Laws of Emerson adopted
March 1994 (incorporated by reference to Exhibit (3) (b) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1995).
(4) (a) Warrant Agreement to Purchase 750,000 shares of Common Stock, dated as
of March 31, 1994 (incorporated by reference to Exhibit (4) (a) of
Emerson's Registration Statement on Form S-1, Registration No. 33-
53621, declared effective by the SEC on August 9, 1994).
(4) (b) Indenture, dated as of August 17, 1995 between Emerson and Bank One,
Columbus, NA, as Trustee (incorporated by reference to Exhibit (1) of
Emerson's Current Report on Form 8-K filed with the SEC on September
8, 1995).
(4) (c) Common Stock Purchase Warrant Agreement to purchase 50,000 shares of
Common Stock, dated as of December 8, 1995 between Emerson and Michael
Metter (incorporated by reference to Exhibit (10) (e) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1995).
(4) (d) Common Stock Purchase Warrant Agreement to purchase 200,000 shares of
Common Stock, dated as of December 8, 1995 between Emerson and Kenneth
A. Orr (incorporated by reference to Exhibit (10) (f) of Emerson's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1995).
(10) (a) Agreement, dated as of November 14, 1973, between National Union
Electric Corporation ("NUE") and Emerson (incorporated by reference to
Exhibit (10) (a) of Emerson's Registration Statement on Form S-1,
Registration No. 33-53621, declared effective by the SEC on August 9,
1994).
(10) (b) Trademark User Agreement, dated as of February 28, 1979, by and
between NUE and Emerson (incorporated by reference to Exhibit (10) (b)
of Emerson's Registration Statement on Form S-1, Registration No. 33-
53621, declared effective by the SEC on August 9, 1994).
(10) (c) Agreement, dated July 2, 1984, between NUE and Emerson (incorporated
by reference to Exhibit (10) (c) of Emerson's Registration Statement
on Form S-1, Registration No. 33-53621, declared effective by the SEC
on August 9, 1994).
(10) (d) Agreement, dated September 15, 1988, between NUE and Emerson
(incorporated by reference to Exhibit (10) (d) of Emerson's
Registration Statement on Form S-1, Registration No. 33-53621,
declared effective by the SEC on August 9, 1994).
(10) (e) Form of Promissory Note issued to certain Pre-Petition Creditors
(incorporated by reference to Exhibit (10) (e) of Emerson's
Registration Statement on Form S-1, Registration No. 33-53621,
declared effective by the SEC on August 9, 1994).
(10) (f) Loan and Security Agreement, dated March 31, 1994, by and among
Emerson, Majexco Imports, Inc. and Congress Financial Corporation
("Congress") (incorporated by reference to Exhibit (10) (f) of
Emerson's Registration Statement on Form S-1, Registration No. 33-
53621, declared effective by the SEC on August 9, 1994).
(10) (g) Amendment No. 1 to Financing Agreements, dated as of August 24, 1995,
among Emerson, Majexco Imports, Inc. and Congress (incorporated by
reference to Exhibit (2) of Emerson's Current Report on Form 8-K filed
with the SEC on September 8, 1995).
(10) (h) Amendment No. 2 to Financing Agreements, dated as of February 13, 1996
(incorporated by reference to Exhibit (10) (c) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1995).
(10) (i) Amendment No. 3 to Financing Agreements, dated as of August 20, 1996
(incorporated by reference to Exhibit (10) (b) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1995).
(10) (j) Amendment No. 4 to Financing Agreements, dated as of November 14, 1996
(incorporated by reference to Exhibit (10) (c) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996).
(10) (k) Amendment No. 5 to Financing Agreements, dated as of February 18, 1997
(incorporated by reference to Exhibit (10) (e) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996).
(10) (l) Emerson Radio Corp. Stock Compensation Program (incorporated by
reference to Exhibit (10) (i) of Emerson's Registration Statement on
Form S-1, Registration No. 33-53621, declared effective by the SEC on
August 9, 1994).
(10) (m) Employment Agreement between Emerson and Eugene I. Davis (incorporated
by reference to Exhibit 6(a)(4) of Emerson's Quarterly Report on Form
10-Q for quarter ended June 30, 1992).
(10) (n) Extension of Employment Agreement between Emerson and Eugene I. Davis
dated April 16, 1997.
(10) (o) Employment Agreement between Emerson and Geoffrey P. Jurick
(incorporated by reference to Exhibit 6(a)(6) of Emerson's Quarterly
Report on Form 10-Q for quarter ended June 30, 1992).
(10) (p) Employment Agreement between Emerson Radio (Hong Kong) Ltd. and
Geoffrey P. Jurick (incorporated by reference to Exhibit 6(a)(6) of
Emerson's Quarterly Report on Form 10-Q for quarter ended June 30,
1992).
(10) (q) Employment Agreement between Emerson Radio International Ltd.
(formerly Emerson Radio (B.V.I.), Ltd.) and Geoffrey P. Jurick
(incorporated by reference to Exhibit 6(a)(6) of Emerson's Quarterly
Report on Form 10-Q for quarter ended June 30, 1992).
(10) (r) Extension of Employment Agreement between Emerson and Geoffrey P.
Jurick dated April 16, 1997.
(10) (s) Lease Agreement dated as of March 26, 1993, by and between Hartz
Mountain Parsippany and Emerson with respect to the premises located
at Nine Entin Road, Parsippany, NJ (incorporated by reference to
Exhibit (10) (ww) of Emerson's Annual Report on Form 10-K for the year
ended December 31, 1992).
(10) (t) Employment Agreement, dated April 1, 1994, between Emerson and John
Walker (incorporated herein by reference to Exhibit (10)(ee) of
Emerson's Statement on Form S-1, Registration No. 33-53621, declared
effective by the SEC on August 9, 1994).
(10) (u) Amendment No. 1 to Employment Agreement between Emerson and John P.
Walker dated April 16, 1997.
(10) (v) Employment Agreement, dated January 29, 1996 between Emerson and
Marino Andriani (incorporated herein by reference to Exhibit (10) (a)
of Emerson's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996).
(10) (w) Partnership Agreement, dated April 1, 1994, between Emerson and Hopper
Radio of Florida, Inc (incorporated by reference to Exhibit (10) (q)
of Emerson's Annual Report on Form 10-K for the year ended March 31,
1995).
(10) (x) Sales Agreement, dated April 1, 1994, between Emerson and E & H
Partners (incorporated by reference to Exhibit (10) (r) of Emerson's
Annual Report on Form 10-K for the year ended March 31, 1995).
(10) (y) Agreement, dated as of April 24, 1996 by and among Emerson and E & H
Partners relating to amendments of the Partnership Agreement dated
April 1, 1994 and the Sales Agreement dated April 1, 1994 and the
settlement of certain outstanding litigation (incorporated by
reference to Exhibit (10) (w) of Emerson's Annual Report on Form
10-K for the year ended March 31, 1996).
(10) (z) License Agreement, dated February 22, 1995, between Emerson and Otake
Trading Co. Ltd. and certain affiliates ("Otake") (incorporated by
reference to Exhibit 6(a)(1) of Emerson's Quarterly Report on Form 10-
Q for quarter ended December 31, 1994).
(10) (aa) Supply Agreement, dated February 22, 1995, between Emerson and Otake
(incorporated by reference to Exhibit 6(a)(2) of Emerson's Quarterly
Report on Form 10-Q for quarter ended December 31, 1994).
(10) (ab) 1994 Non-Employee Director Stock Option Plan (incorporated by
reference to Exhibit (10) (y) of Emerson's Annual Report on Form 10-K
for the year ended March 31, 1995).
(10) (ac) Consulting Agreement, dated as of December 8, 1995 between Emerson and
First Cambridge Securities Corporation (incorporated by reference to
Exhibit (10) (d) of Emerson's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995).
(10) (ad) License Agreement, dated as of August 23, 1996 between Emerson and REP
Investment Limited Liability Company (incorporated by reference to
Exhibit (10) (d) of Emerson's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996).
(10) (ae) Distribution Agreement, dated as of September 11, 1996 between
Emerson, Emerson Radio Canada Ltd. and AVS Technologies Inc.
(incorporated by reference to Exhibit (10) (e) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996).
(10) (af) Stipulation of Settlement and Order dated June 11, 1996 by and among
the Official Liquidator of Fidenas International Bank Limited, Petra
Stelling, Barclays Bank PLC, the Official Liquidator of Fidenas
Investment Limited, Geoffrey P. Jurick, Fidenas International Limited,
L.L.C., Elision International, Inc., GSE Multimedia Technologies
Corporation and Emerson (incorporated by reference to Exhibit (10)
(ae) of Emerson's Annual Report on Form 10-K for the year ended
March 31, 1996).
(10) (ag) Pledge Agreement dated as of February 4, 1997 by Fidenas International
Limited, L.L.C. ("FIN") in favor of TM Capital Corp. (incorporated by
reference to Exhibit (10) (a) of Emerson's Quarterly Report on Form
10-Q for the quarter ended December 31, 1996).
(10) (ah) Registration Rights Agreement dated as of February 4, 1997 by and
among Emerson, FIN, the Creditors, FIL and TM Capital Corp.
(incorporated by reference to Exhibit (10) (b) of Emerson's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996).
(10) (ai) License and Exclusive Distribution Agreement with Cargil International
Corp. dated as of February 12, 1997 (incorporated by reference to
Exhibit (10) (c) of Emerson's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996).
(10) (aj) Supply and Inspection Agreement with Cargil International Corp. dated
as of February 12, 1996 (incorporated by reference to Exhibit (10) (d)
of Emerson's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996).
(10) (ak) Agreement dated April 10, 1997 between Emerson and Daewoo Electronics
Co., Ltd.
(10) (al) Securities Purchase Agreement dated as of November 27, 1996, by
and between Sport Supply Group, Inc. ("SSG") and Emerson (incorporated
by reference to Exhibit (2)(a) of Emerson's Current Report on Form 8-K
dated November 27, 1996).
(10) (am) Form of Warrant Agreement by and between SSG and Emerson
(incorporated by reference to Exhibit (4)(a) of Emerson's Current
Report on Form 8-K dated November 27, 1996).
(10) (an) Form of Registration Rights Agreement by and between SSG and Emerson
(incorporated by reference to Exhibit (4)(b) of Emerson's Current
Report on Form 8-K dated November 27, 1996).
(10) (ao) Consent No. 1 to Financing Agreements among Emerson, certain of its
subsidiaries, and Congress (incorporated by reference to Exhibit
(10)(b) of Emerson's Current Report on Form 8-K dated November 27,
1996).
(10) (ap) License Agreement dated as of June 16, 1997 by and between World Wide
One Ltd. and Emerson.
(10) (aq) Agreement dated as of July 2, 1997 by and between Hi Quality
International (U.S.A.) Inc. and Emerson.
(10) (ar) Management Services Agreement dated July 1, 1997 to be effective March
7, 1997 by and between Sport Supply Group, Inc. and Emerson.*
(11) Computation of Primary Earnings Per Share.
(12) Computation of Ratio of Earnings (Loss) to Combined Fixed Charges and
Preferred Stock Dividends.
(21) Subsidiaries of the Company as of March 31, 1997.
(27) Financial Data Schedule for year ended March 31, 1997.
___________________
* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Registrant
and in the capacities and on the dated indicated.
/s/ Geoffrey P. Jurick Chairman of the Board, July 29, 1997
Geoffrey P. Jurick Chief Executive Officer and
President
Vice Chairman and Director July 29, 1997
Eugene I. Davis
/s/ John P. Walker Executive Vice President, July 29, 1997
John P. Walker Chief Financial Officer
/s/ Robert H. Brown, Jr. Director July 29, 1997
Robert H. Brown, Jr.
Director July 29, 1997
Peter G. Bunger
/s/ Jerome H. Farnum Director July 29, 1997
Jerome H. Farnum
/s/ Raymond L. Steele Director July 29, 1997
Raymond L. Steele
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement"), is made and entered
into on July 1, 1997 to be effective as of March 7, 1997 (the "Effective
Date"), by and between Sport Supply Group, Inc., a Delaware corporation (the
"Manager"), and Emerson Radio Corp., a Delaware corporation (the "Company").
WHEREAS, the Company has requested that the Manager provide various
managerial services to the Company for the Company's benefit and the Company and
Manager desire to enter into this Agreement on the terms and conditions set
forth herein;
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 Manager and the Company hereby
agree as follows:
ARTICLE I
MANAGEMENT SERVICES
1.1 GENERAL DUTIES. The Company and the Manager hereby agree that,
during the term of this Agreement, the Manager will be responsible for providing
the Company with the following services:
(a) Process payroll and payroll taxes for the Company's
employees and assist Company by enrolling Company employees in the
Company's employee benefit plans, and process the payment of insurance
premiums to the Company's benefit providers so long as the Company
submits the correct amount of the premium to the Manager on a timely
basis (subject to the Manager receiving from the Company all of the
necessary information, which is not in Manager's possession, custody
or control, required to fulfill these functions) (collectively,
"Human Resource Services"). Such Human Resources shall be performed
on a timely basis in accordance with industry standards.
(b) Calculate daily borrowing availability with respect to the
Company's secured credit facility, prepare daily reporting for the
Company's banks, prepare forecasts of cash availability and cash flow,
wire funds and set-up letters of credit as may be requested by an
officer of the Company, or an authorized agent of the Company
(including, without limitation, Ken Corby) for which Manager receives
notice of such authorization from an officer of the Company from time
to time (collectively, the "Banking Services");
(c) Provide space for the Company's AS 400 Computer System and
provide the system operator services set forth below (collectively,
the "Computer Services");
DAILY
Monitor computer messages
Answer and respond to user requests (EDI problems, terminal/printer
problems, etc.)
Submit nightly batch jobs
Format nightly save tapes
Load nightly save tapes
Start nightly data save to tape
WEEKLY
Load Payroll tapes
Submit nightly batch jobs
Format save tapes
Load weekend save tapes
Start weekly data save to tape
Manager shall use the Company's AS 400 Computer System solely to perform the
Computer Services.
(d) Process the Company's accounts payables and process checks
to be delivered, approved and signed by an officer of the Company
(collectively, the "Payable Services");
(e) Provide warehouse storage space (subject to availability and
obtaining the Landlord's consent, and in no event after the time the
Manager ceases to occupy the warehouse space currently occupied by the
Manager at 13700 Benchmark, Farmers Branch, Texas, in which event
Manager shall provide the Company with at least thirty (30) days prior
written notice of vacating such space) for the Company's archives and
product inventory at Manager's warehouse located at 13700 Benchmark,
Farmers Branch, Texas 75234, or such other mutually agreeable location
(collectively, the "Warehouse Space"); and
(f) Provide office space (subject to availability and in no
event after the time the Manager ceases to occupy the office space
currently occupied by the Manager at 1901 Diplomat Drive, Farmers
Branch, Texas, in which event Manager shall provide the Company with
at least thirty (30) days prior written notice of vacating such space)
for certain employees of the Company at Manager's office located at
1901 Diplomat Drive, Farmers Branch, Texas 75234, or such other
mutually agreeable location (collectively, the "Office Space").
(g) Prepare, design and draft publications to be distributed by
the Company, such as owner manuals, service manuals, warranty text and
any additions, modifications and revisions thereto, relating to
products sold by the Company, all in accordance with the Company's
past practices (the "Design Services"). The Company will be solely
responsible for (and own) all information and intellectual property
included in such publications and any and all legal requirements
relating to such publications. All reproduction costs for the
Design Services will be paid by the Company. The Design Services will
not include any of the Company's documents that are customarily filed
with the Securities and Exchange Commission, such as Annual Reports,
proxy statements, 10-Qs, 10-Ks, etc.
(h) Until the earlier of (i) the expiration or termination of
this Agreement, or (ii) the date Ken Corby ceases to be an employee of
the Manager, Mr. Corby will provide financial management services to
the Company on an as needed basis, provided that Mr. Corby will not
devote more than 75% of his working time to the provision of such
services (collectively, the "Financial Management Services".)
All of the services set forth in this Article shall be collectively referred
to in this Agreement as the "Services".
Notwithstanding the foregoing, Manager will not be responsible for providing
any services to the Company not expressly set forth herein, including, without
limitation, any legal or tax related services; PROVIDED, HOWEVER, the Manager
will provide the necessary data as reasonably requested by ADP to enable ADP to
prepare the Company's payroll tax returns..
1.2 COMPANY RESPONSIBILITIES. During the term of this Agreement the
Company will assume the responsibilities and perform the duties set forth below:
(a) The Company will furnish to the Manager all information and
data, not in Manager's custody or control, reasonably necessary for
Manager to provide the services described above, including, without
limitation, all payroll files and employee payroll and other
information that Manager may advise the Company it requires to perform
its services under this Agreement. Manager shall be entitled to rely
upon the accuracy and completeness of all information that it
reasonably believes to have been furnished to it by the Company or at
the Company's direction, and shall have no duty to inquire about such
information. Manager acknowledges no changes to the Company's
corporate payroll records will be made without the prior written
consent of the Company.
(b) During the term of this Agreement, the Company will furnish
to the Manager the AS400 that is owned by the Company, which equipment
shall remain the property of the Company. Company shall retain
complete financial responsibility for such equipment, including
depreciation, maintenance, insurance and taxes, if any. Company
hereby appoints the Manager as its sole agent for all matters
pertaining to such equipment and shall promptly notify all appropriate
third parties of such appointment. Company has sole responsibility
for all aspects of the computer data and its hardware, including
without limitation, uninterruptable power supply, data lines, disaster
recovery, offsite storage and tape back-up.
(c) The Company shall be solely responsible for resolving any
dispute between the Company and any employee of the Company and
answering any inquiries relating to a Company employee's rights and
entitlements under the Company's benefit plans. The Company is solely
responsible for the administration of its benefit plans (including,
without limitation, its 401(k) Plan ) and executing and filing with
any governmental authority or other person all reports or other
documents required in connection with such benefit plans, and the
Manager shall have no reporting obligation in connection with any
aspect of the Company's benefit plans. In addition, the Manager shall
not be deemed a fiduciary or plan administrator of the Company or any
of the Company's benefit plans and shall not have any responsibility
to monitor compliance by the Company with the terms and conditions of
any benefit plan or any law applicable thereto.
(d) The Company shall cooperate with the Manager by, among other
things, making available, as reasonably requested by the Manager,
management decisions, personnel information, approvals and acceptances
in order that the work of Manager contemplated hereby may be
accomplished.
1.3 INSURANCE. Manager will not be liable to the Company or any of the
employees or contractors of the Company for damage or loss to person or
property, including theft, burglary, assault, vandalism or other crimes, unless
such damage or loss is caused by the gross negligence or willful misconduct of
the Manager. The Manager will not be liable to the Company or any of its
employees or contractors for personal injury or for damage to or loss of their
personal property from fire, flood, water leaks, rain, hail, ice, snow, smoke,
lightning, wind, explosions, strike, war, riot, insurrection, interruption of
utilities or other occurrences unless such injury, loss or damage is caused by
the gross negligence or willful misconduct of the Manager. Company acknowledges
that neither the Warehouse Space nor the Office Space is fireproof. The Company
is strongly urged to secure its own insurance to protect against all of the
above.
1.4 PERMISSIBLE ACTIVITIES. Nothing herein shall in any way preclude
the Manager from engaging in any business activities or from performing services
for its own account or for the account of others.
ARTICLE II
COMPENSATION
2.1 SERVICE CHARGES. The Company and the Manager hereby agree that the
Manager will be compensated at the initial rates set forth below for the
services rendered by the Manager to the Company pursuant to this Agreement:
<TABLE>
<CAPTION>
SERVICES AMOUNT IN U.S. DOLLARS BEGINNING DATE
<C> <C> <C>
Human Resource Services $1,000 per pay period March 7, 1997
Banking Services $25,000 per year June 16, 1997
Computer Services $20,000 per year May 31, 1997
Payable Services $12,000 per year June 16, 1997
Warehouse Space $4.00 per square foot May 15, 1997
Office Space $5.00 per square foot June 16, 1997
Design Services $50,000 per year July 1, 1997
Financial Management
Services See Section 2.3 below June 1, 1997
</TABLE>
The amount of such service charges may be adjusted from time to time by the
parties' mutual written agreement. Such service charges shall be payable within
ten (10) days of the date an invoice is received. Partial months shall be
prorated accordingly. The Company will also be responsible for paying all of
the Company's out-of-pocket expenses related to the above services (including,
without limitation, copying charges incurred in connection with the Design
Services) and the Manager's expenses related to the Manager's business, such
as postage, telephone and telecopy bills, telephone lines, office supplies,
transition services, etc. The payment of any expenses incurred by Manager on
the Company's behalf in excess of $1,000 requires the Company's written consent.
2.2 The Manager will reimburse the Company for salary payments made by the
Company to Geoffrey P. Jurick for the benefit of the Manager, which payments
shall be $20,833.33 per month, plus expenses incurred by Mr. Jurick on behalf
of the Manager, subject to increases approved by the Manager's Board of
Directors. Such reimbursements shall be made on a monthly basis.
2.3 The Company will reimburse the Manager for an amount equal to 75%
times Ken Corby's salary, payroll taxes and all benefits (including, without
limitation, insurance, Manager contributions to the Manager's 401(k) Plan,
automobile allowances, and fees and expenses relating thereto, etc.) for the
Financial Management Services. Such reimbursements shall be made on a monthly
basis, payable within ten (10) days of the date an invoice is received.
ARTICLE III
TERM AND TERMINATION
3.1 TERM. This Agreement shall become effective as of the Effective
Date and shall continue in force until terminated pursuant to the terms of this
Agreement or otherwise agreed by the parties.
3.2 TERMINATION. This Agreement may be terminated by either party on
sixty (60) days' prior written notice to the other party.
3.3 TERMINATION FOR NONPAYMENT. Notwithstanding Section 3.2 hereof, in
the event that either party defaults in the payment when due of any amount due
to the other hereunder and does not cure such default within ten (10) days after
being given written notice of such default, then the non-defaulting party may,
by giving written notice thereof to the defaulting party, terminate this
Agreement as of the date specified in such notice of termination.
3.4 TERMINATION FOR INSOLVENCY. Notwithstanding Section 3.2 hereof, in
the event that either party hereto becomes or is declared insolvent or bankrupt,
is the subject of any proceedings relating to its liquidation, insolvency or for
the appointment of a receiver or similar office for it, makes an assignment for
the benefit of all or substantially all of its creditors, or enters into an
agreement for the composition, extension, or readjustment of all or
substantially all of its obligations, then the other party hereto may, by giving
written notice thereof to such party, terminate this Agreement as of the date
specified in such notice of termination.
3.5 RETURN OF RECORDS. Upon the termination of this Agreement for any
reason, the Manager shall promptly return to the Company all books, records,
documents, information and data (including data stored in computers or on any
computer media or equipment), including all copies of the foregoing, that belong
to the Company.
ARTICLE IV
GENERAL PROVISIONS
4.1 CONFIDENTIALITY. Each party agrees that all information communicated
to it by the other, whether before or after the Effective Date, was and shall be
received in strict confidence and shall be used only for the purposes of this
Agreement, and that no such information, including, without limitation, the
provisions of this Agreement, shall be disclosed or otherwise used by a party to
this Agreement or its security holders, directors, officers, employees, or
agents, without the prior written consent of the other party, except as may be
necessary by reason of legal, accounting or regulatory requirements. The
requirements and obligations of this Section 4.1 shall survive the termination
of this Agreement.
4.2 INDEMNIFICATION.
(a) The Manager agrees to indemnify, defend and hold
harmless the Company and its affiliates and their respective
directors, officers, agents, employees and controlling persons from
and against any and all losses, claims, damages, liabilities and
expenses (including the reasonable cost of investigating and defending
against any claims therefor and reasonable counsel fees and expenses
incurred in connection therewith) that resulted solely from the
willful bad faith or gross negligence of the Manager in the
performance of the Services that are the subject of this Agreement.
No express or implied warranty is made by Manager in respect to any
Service or product provided hereunder including, without limitation,
any implied warranty or merchantibility or fitness for a particular
purpose.
(b) The Company agrees to indemnify, defend and hold harmless
the Manager and its affiliates and their respective directors,
officers, agents, employees and controlling persons from and against
any and all losses, claims, damages, liabilities and expenses
(including the reasonable cost of investigating and defending against
any claims therefor and reasonable counsel fees and expenses incurred
in connection therewith) related to or arising out of the Services
provided hereunder by the Manager (including, without limitation,
Manager's use of the Company's Brand Names and Marks, as described
below), regardless if such losses, claims, damages, liabilities and
expenses are founded in whole or in part, on the alleged negligence of
the Manager, the Manager's representatives, or its employees, agents,
invitees or licensees. The Company shall not be obligated to
indemnify the Manager, however, in respect of any losses, claims,
damages, liabilities or expenses that resulted solely from the willful
bad faith or gross negligence of the Manager in the performance of the
Services that are the subject of this Agreement.
(c) IN NO EVENT WILL EITHER PARTY BE LIABLE FOR PUNITIVE
DAMAGES OR FOR INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT
LIMITATION, LOST PROFITS OF ANY PARTY, INCLUDING THIRD PARTIES.
FURTHER, NO CAUSE OF ACTION WHICH ACCRUED MORE THAN ONE (1) YEAR PRIOR
TO THE FILING OF A SUIT ALLEGING SUCH CAUSE OF ACTION MAY BE ASSERTED
AGAINST EITHER PARTY.
4.3 RELATIONSHIP OF PARTIES. It is the express intention and
understanding of the Manager and the Company that the relationship of the
Manager to the Company shall be at all times that of an independent contractor,
with the Manager having full and complete liberty to use its own free and
uncontrolled will, judgment and discretion as to the method and manner of
performing the obligations of the Manager hereunder. Other than the Services
specifically stated herein to be performed by Manager, Manager does not
undertake by this Agreement or otherwise to perform any regulatory or
contractual obligation of Company, or to assume any responsibility for Company's
business or operations. Nothing herein contained or done pursuant to this
Agreement shall constitute the Manager or its agents or employees a partner or
joint venturer of the Company, or a fiduciary of (i) the Company, (ii) any
benefit plan of the Company, or (iii) any employee of the Company.
4.4 NOTICES. All notices that are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally, by commercial messenger
service, or by registered or certified mail, postage prepaid, to the other party
at the following address or to such other address as either party shall provide
to the other party in writing in accordance with this Section 4.4:
If to the Manager: If to the Company:
Sport Supply Group, Inc. Emerson Radio Corp.
1901 Diplomat Drive Nine Entin Road
Farmers Branch, Texas 75234 Parsippany, New Jersey 07054
Attn: President Attn: Chief Executive Officer
cc: General Counsel cc: Law Department
4.5 ATTORNEYS' FEES. In the event that attorneys' fees or other costs
are incurred to secure performance of any of the obligations set forth in this
Agreement, to establish damages for the breach thereof, or to obtain any other
appropriate relief, whether by way or prosecution or defense, the prevailing
party (as determined by the judge in the judge's sole discretion) shall be
entitled to recover reasonable attorneys' fees and costs incurred therein.
4.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
4.7 BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding on,
and inure to the benefit of, the parties hereto and their respective
representatives, successors, and assigns, but neither this Agreement nor any of
the rights, interests, or obligations hereunder shall be assigned or delegated
by any of the parties hereto, whether by operation of law or otherwise, without
the prior written consent of the other party (which consent shall not be
unreasonably withheld), nor is this Agreement intended to confer upon any other
person other than the parties hereto any rights or remedies hereunder. Any
assignment or delegation in violation of this Agreement shall be null and void.
4.8 WAIVER. No delay on the part of either party in exercising any of its
respective rights hereunder, nor the failure to exercise the same, nor the
acquiescence in or waiver of a breach of any term, provision or condition of
this Agreement shall be deemed or construed to operate as a waiver of such
rights or acquiescence thereto except in the specific instance for which given.
4.9 SEVERABILITY. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, then each party will be relieved of its
obligations arising under such provision to the extent such provision is
declared or found to be illegal, unenforceable or void (it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objective), and each provision not so affected will be
enforced to the full extent permitted by law.
4.10 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties relating to the subject matter of this Agreement and supersedes all
prior written or oral and all contemporaneous oral agreements and understandings
relating to such subject matter. This Agreement cannot be modified, amended or
terminated except in writing signed by the party against whom enforcement is
sought.
4.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLE OR RULE THAT MIGHT
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. EACH PARTY AGREES
THAT THIS AGREEMENT IS FULLY PERFORMABLE IN DALLAS COUNTY, TEXAS, AND THAT ANY
ACTION, DISPUTE OR PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY TO THE
SUBJECT MATTER OF 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 INCOVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND ANY
RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF
ANY PARTY THERETO.
4.12 OTHER DOCUMENTS. Each party hereto agrees to execute any and all
documents, and to perform such other acts, that may be necessary or expedient to
further the purposes of this Agreement.
4.13 FORCE MAJEURE. Each party hereto shall be excused from performance
hereunder for any period and to the extent that it is prevented from performing
any services pursuant hereto, in whole or in part, as a result of delays caused
by the other party or by an act of God, war, civil disturbance, court order,
labor dispute, third party nonperformance, or other cause beyond its reasonable
control, including without limitation failures or fluctuations in electrical
power, heat, light, air conditioning or telecommunications equipment, and such
nonperformance shall not be a default hereunder or a ground for termination
hereof. Notwithstanding the foregoing, in the event such condition exists
greater than thirty (30) days, either party may terminate this Agreement by
giving the other party written notice of termination, which termination shall
be effective as of the date set forth in such notice.
4.14 HEADINGS. The section headings used herein are for reference and
convenience only, and shall not enter into the interpretation hereof.
4.15 TRADEMARKS. Manager shall use its own name or trademarks in all
dealings. It may not use any trademarks or tradenames or rights to use same
belonging to the Company and/or its subsidiaries or affiliates (other than the
Manager's) without the Company's prior written consent in each instance. To the
extent the Company gives such consent, Manager may use such trademarks and
"EMERSON" brand and product names and such other brand name(s) under which the
products may hereinafter be marketed in the United States by the Company and/or
its subsidiaries or affiliates (other than the Manager's) (collectively, the
"Brand Names and Marks") only in connection with the performance of its
Services. The Company may withdraw such consent at any time. Thereafter,
except as provided below, no advertising or other use of the Brand Names and
Marks may be made by Manager without the Company's prior written approval in
each instance. All use of the Brand Names and Marks and all goodwill associated
therewith shall inure to the benefit of the Company. Manager shall have no
interest in or rights to the Brand Names or Marks or any of them nor shall
Manager have or accrue any interest in or to the goodwill associated therewith.
Upon expiration or earlier termination of this Agreement, Manager shall
discontinue all use of the Brand Names or Marks in advertising or otherwise, and
shall remove all signs and displays relating thereto and shall return to the
Company at Company's expense, all signs, displays and other writings and
materials relating thereto; PROVIDED, HOWEVER, the foregoing does not apply to
any advertising in the process of being printed or in inventory that also
includes the Manager's products (including, without limitation, catalogs).
Manager is not and this Agreement does not constitute Manager as being a holder
of a license or permitted to use the Brand Names or Marks nor shall this
Agreement be deemed to make Manager a franchisee.
Company shall use its own name or trademarks in all dealings. It may not
use any trademarks or tradenames or rights to use same belonging to the Manager
and/or its subsidiaries or affiliates (other than the Company's) without the
Manager's prior written consent in each instance.
4.16 NO THIRD PARTY BENEFICIARIES. This Agreement and the rights and
obligations hereunder do not and shall not confer any rights to any third
parties and no third parties shall have any rights under this Agreement.
4.17 SURVIVAL. Paragraphs 2.1, 3.5, 4.1, 4.2, 4.4, 4.5, 4.11, 4.15, and
4.16 shall survive the expiration or earlier termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THE MANAGER:
SPORT SUPPLY GROUP, INC.
/s/ Peter S. Blumenfeld
Peter S. Blumenfeld, President
THE COMPANY:
EMERSON RADIO CORP.
/s/ John P. Walker
John P. Walker
Executive Vice President and
Chief Financial Officer
