<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
EMERSON RADIO CORP.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
291087
(CUSIP Number)
Kenneth S. Grossman Kenneth Liang
280 Park Avenue, Suite 39 West Managing Director & General Counsel
New York, New York 10017 Oaktree Capital Management, LLC
(212) 351-9708 333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
(213) 830-6300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 3, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
CUSIP NO. 291087
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kenneth Grossman
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
None
9 SOLE DISPOSITIVE POWER
None
10 SHARED DISPOSITIVE POWER
None
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,483,134.7
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
14 TYPE OF REPORTING PERSON
IN
<PAGE> 3
CUSIP NO. 291087
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Oaktree Capital Management, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY 3,483,134.7
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
None
9 SOLE DISPOSITIVE POWER
3,483,134.7
10 SHARED DISPOSITIVE POWER
None
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,483,134.7
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
14 TYPE OF REPORTING PERSON
IA;OO
<PAGE> 4
CUSIP NO. 291087
SCHEDULE 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
OCM Principal Opportunities Fund, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
None
9 SOLE DISPOSITIVE POWER
None
10 SHARED DISPOSITIVE POWER
None
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,483,134.7
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
14 TYPE OF REPORTING PERSON
PN
<PAGE> 5
CUSIP NO. 291087
This Amendment No. 3 (this "Statement") amends and restates in its entirety the
statement on Schedule 13D of Kenneth S. Grossman, Oaktree Capital Management,
LLC and OCM Principal Opportunities Fund, L.P. filed with the Securities and
Exchange Commission on May 13, 1998 as amended by Amendment No. 1 filed on
December 15, 1998 and Amendment No. 2 filed on February 10, 1999.
ITEM 1. SECURITY AND ISSUER
This Statement relates to common stock, par value $0.01 per share (the "Common
Stock"), of Emerson Radio Corp., a Delaware corporation (the "Issuer"). The
address of the principal executive office of the Issuer is Nine Entin Road,
Parsippany, New Jersey, 07054.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) & (f)
This Statement is filed on behalf of:
(i) Kenneth S. Grossman ("Grossman");
(ii) Oaktree Capital Management, LLC, a California limited
liability company ("Oaktree"); and
(iii) OCM Principal Opportunities Fund, L.P., a Delaware limited
partnership of which Oaktree is the general partner (the
"Oaktree Fund").
Grossman and the Oaktree Fund are referred to in this Statement together as the
"Investors."
(i) Grossman
The address of the principal business and principal office for Grossman is 280
Park Avenue, Suite 39 West, New York, New York 10017. The principal business of
Grossman is asset management, investment advisory services, and investing in
distressed and undervalued public and private securities for his own and
affiliated accounts. Grossman is a citizen of the United States of America.
(ii) Oaktree
The address of the principal business and principal office for Oaktree is 333
South Grand Avenue, 28th Floor, Los Angeles, California 90071. The principal
business of Oaktree is to provide investment advice and management services to
institutional and individual investors. The members and executive officers of
Oaktree are listed below. The principal address for each member and executive
officer of Oaktree is 333 South Grand Avenue, 28th Floor, Los Angeles,
California 90071. All individuals listed below are citizens of the United States
of America.
Executive Officers and Members
- ------------------------------
Howard S. Marks Chairman and Principal
Bruce A. Karsh President and Principal
Sheldon M. Stone Principal
David Richard Masson Principal
Larry Keele Principal
Russel S. Bernard Principal
Stephen A. Kaplan Principal
David Kirchheimer Managing Director and Chief Financial and
Administrative Officer
Kenneth Liang Managing Director and General Counsel
<PAGE> 6
CUSIP NO. 291087
(iii) The Oaktree Fund
The address of the principal business and principal office for the Oaktree Fund
is 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071. The
principal business of the Oaktree Fund is to invest in entities over which there
is a potential for the Oaktree Fund to exercise significant influence. The
Oaktree Fund is an investment partnership, and Oaktree is its sole general
partner. (See information in section (ii) above regarding Oaktree and its
members and executive officers.) The names and addresses of the portfolio
managers of the Oaktree Fund are listed below. All individuals listed below are
citizens of the United States of America.
Bruce A. Karsh
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Stephen A. Kaplan
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
(d) & (e)
During the last five years, none of Grossman, Oaktree or the Oaktree Fund, nor
to the best of their knowledge any of their respective executive officers,
directors, general partners, members or portfolio managers (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Oaktree Fund owns $13,239,000 principal amount of the Issuer's 8-1/2% Senior
Subordinated Convertible Debentures Due 2002 (the "Debentures"), having paid an
aggregate of $10,396,835.00 for such Debentures. All purchases were made from
working capital of the Oaktree Fund.
Grossman, including family members and affiliated entities, owns $650,000
principal amount of the Debentures, having paid an aggregate of $447,687.50 for
such Debentures. All purchases were made from personal funds.
As of the date of this Statement, the Investors beneficially own 3,483,134.7
shares of Common Stock, which is approximately 6.8% of the Issuer's outstanding
Common Stock issuable upon conversion of the $13,889,000 in principal amount of
the Debentures.
ITEM 4. PURPOSE OF TRANSACTION
The Investors acquired the Debentures for investment purposes in connection with
the Investors' investigation of a possible restructuring of the Issuer's balance
sheet and asset deployment strategy in a manner which produces a favorable
return on the Investors' investment. Potential restructuring strategies include,
but are not limited to, the acquisition of a controlling Common Stock stake by
the Investors or others, the redemption of Debentures and/or the Issuer's
outstanding Preferred Stock, an exchange of the Investors' securities, property,
or cash for assets of the Issuer including the securities of the Issuer's
minority owned subsidiary, a sale of the Issuer's shares of such subsidiary in
one or more public or private transactions or a divestiture or spin-off of such
subsidiary, a change of certain members of the Issuer's present Board of
Directors, a possible replacement or renegotiation of the Issuer's working
capital facility or other extraordinary transactions.
<PAGE> 7
CUSIP NO. 291087
As a result of these investigations, the Investors have decided to attempt to
acquire a controlling common stock stake in the Issuer's minority owned
subsidiary, Sport Supply Group, Inc. ("Sport Supply"). In furtherance of that
attempt, the Oaktree Fund has entered into (i) an Option Agreement, attached
hereto as Exhibit 1.4 and incorporated herein by reference (the "Option
Agreement"), with Thomas Hackett, Official Liquidator of Fidenas International
Bank Limited, Petra Stelling and Barclays Bank Plc (collectively, the
"Creditors"), which if consummated would result in the Oaktree Fund acquiring
certain rights held by the Creditors against the Issuer's majority shareholder,
Geoffrey P. Jurick ("Jurick") pursuant to a Stipulation of Settlement and Order
issued by the United States District Court for the District of New Jersey (the
"Court") and (ii) a Letter of Intent, attached hereto as Exhibit 1.5 and
incorporated herein by reference (the "Letter of Intent"), with the Issuer
and Jurick, which if consummated would result in the Oaktree Fund acquiring the
2,269,500 shares of common stock of Sport Supply and the 1,000,000 $7.50
warrants to purchase Sport Supply common stock owned by the Issuer and the
300,000 $7.50 options to purchase Sport Supply common stock owned by Jurick.
Consummation of the transactions described in the Option Agreement and the
Letter of Intent are subject to a number of conditions described therein.
The Oaktree Fund and the other Investors reserve the right to withdraw or modify
the Option Agreement and/or the Letter of Intent at any time, to continue to
pursue other possible restructuring strategies as outlined above, and subject to
applicable law and the Issuer's charter, to seek to call a special meeting of
shareholders, to propose business or nominate directors at any special or
scheduled meeting of shareholders, to seek proxies, consents and/or ballots in
support of nominees at special or scheduled meetings of shareholders or
otherwise or in support of or against other matters that may come before the
Issuer's shareholders for their vote or consent.
The Investors intend to review on a continuing basis their investment in the
Debentures. The Investors may, from time to time, retain, convert, sell or
exchange all or a portion of their holdings of the Debentures in the open market
or in privately negotiated transactions. Any actions that the Investors might
undertake with respect to the Debentures will be dependent upon their review of
numerous factors, including, among other things, the availability of Debentures
for purchase, the price levels of such Debentures, general market and economic
conditions as well as those in the areas in which the Issuer's properties are
located, ongoing evaluation of the Issuer's business, financial condition,
properties, operations and prospects, the relative attractiveness of alternative
business and investment opportunities, the actions of the Management, the Board
of Directors and/or the Creditors of the Issuer and other future developments
including future rulings of the Court, if any.
Although the foregoing reflects activities presently contemplated by the
Investors with respect to the Issuer, the foregoing is subject to change at any
time, and there can be no assurance that the Investors, either alone or with
others, will take any of the actions referred to above. Except as set forth
above, the Investors have no present plans or proposals which would result in or
relate to any of the transactions described in subparagraphs (a) through (j) of
Item 4 of Schedule 13D.
ITEM 5. INTEREST AND SECURITIES OF THE ISSUER
(a) Each of the Investors and Oaktree, as general partner of the Oaktree Fund,
may be deemed to beneficially own 3,483,134.7 shares of Common Stock or 6.8% of
the Common Stock outstanding (based on 47,828,215 shares of Common Stock
outstanding on June 23, 1999 as reported on the Issuer's Annual Report on Form
10-K for the year ending April 2, 1999). This consists entirely of 3,483,134.7
shares of Common Stock issuable upon conversion of $13,889,000 of the Debentures
based on a conversion price of $3.9875. To the best of the Investors' and
Oaktree's knowledge, none of the other people named in response to Item 2 own
any securities of the Issuer.
(b) Oaktree, as the general partner of the Oaktree Fund, has discretionary
authority and control over all of the assets of the Oaktree Fund pursuant to the
partnership agreement for the Oaktree Fund, including the power to vote and
<PAGE> 8
CUSIP NO. 291087
dispose of the Issuer's Common Stock held in the name of the Oaktree Fund.
Pursuant to a letter agreement among the Investors, dated as of January 7, 1998,
Oaktree, as general partner of the Oaktree Fund, and the Oaktree Fund have
discretionary authority and control over the investments of the Investors
including the securities owned by Grossman, including discretionary authority to
vote and dispose of the Issuer's Common Stock held by Grossman. Oaktree and each
of the individuals listed in Item 2 disclaims ownership of the shares of the
Issuer's Common Stock reported herein, and the filing of this Statement shall
not be construed as an admission that any such person is the beneficial owner of
any securities covered by this Statement.
(c) None of Grossman, Oaktree nor the Oaktree Fund, and to the best of their
knowledge, none of the other people named in response to Item 2, has effected
transactions involving the Issuer's Common Stock or Debentures during the last
60 days.
(d) No other person has the right to receive or the power to direct the receipt
of dividends from, or the proceeds of sale of, any of the Issuer's Common Stock
beneficially owned by Oaktree and the Oaktree Fund, except to the extent that
the investment advisory clients of Oaktree and the partners of the Oaktree Fund
may have such right subject to the notice, withdrawal and/or termination
provisions of advisory and partnership arrangements. No such client or partner
has an interest by virtue of such relationship that relates to more than 5% of
the Issuer's Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Oaktree, as general partner of the Oaktree Fund, receives a management fee for
managing the assets of the Oaktree Fund and has a carried interest in the
Oaktree Fund. Also incorporated by reference are Exhibits 1.2 though 1.5 hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following is filed herewith as an Exhibit to this Statement:
Exhibit 1.1 A written agreement relating to the filing of the
joint filing statement as required by Rule 13d-1(k)(1)
under the Securities Exchange Act of 1934, as amended.
(Incorporated by reference to Exhibit 1.1 to the Schedule
13D filed on May 13, 1998.)
Exhibit 1.2 Letter Agreement, dated as of January 7, 1998, between
the Investors. (Portions of this document have been
omitted pursuant to a request for confidential treatment
which has been granted by the SEC.) (Incorporated by
reference to Exhibit 1.2 to the Schedule 13D filed on May
13, 1998.)
Exhibit 1.3 Proposal, dated as of December 15, 1998, submitted by
the Investors to the Creditors. (Incorporated by reference
to Exhibit 1.3 to Amendment No. 1, filed on December 15,
1998, to the Schedule 13D filed on May 13, 1998.)
Exhibit 1.4 Option Agreement, dated as of July 30, 1999, among
Oaktree and the Creditors.
Exhibit 1.5 Letter of Intent, dated as of August 3, 1999, among
Oaktree, the Issuer and Jurick.
<PAGE> 9
CUSIP NO. 291087
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge and belief,
each of the undersigned certify that the information set forth in this Statement
is true, complete and correct.
Dated as of this 3rd day of August, 1999.
KENNETH S. GROSSMAN
/s/ Kenneth S. Grossman
- -------------------------------
By: Kenneth S. Grossman
OAKTREE CAPITAL MANAGEMENT, LLC
/s/ Kenneth Liang
- -------------------------------
By: Kenneth Liang
Title: Managing Director and General Counsel
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
By: Oaktree Capital Management, LLC
Its: General Partner
/s/ Kenneth Liang
- -------------------------------
By: Kenneth Liang
Title: Managing Director and General Counsel
<PAGE> 10
CUSIP NO. 291087
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
1.1 A written agreement relating to the filing of the
joint filing statement as required by Rule
13d-1(k)(1) under the Securities Exchange Act of
1934, as amended. (Incorporated by reference to
Exhibit 1.1 to the Schedule 13D filed on May 13,
1998.)
1.2 Letter Agreement, dated as of January 7, 1998,
between the Investors. (Portions of this document
have been omitted pursuant to a request for
confidential treatment which has been granted by the
SEC.) (Incorporated by reference to Exhibit 1.2 to
the Schedule 13D filed on May 13, 1998.)
1.3 Proposal, dated as of December 15, 1998, submitted
by the Investors to the Creditors. (Incorporated by
reference to Exhibit 1.3 to Amendment No. 1, filed
on December 15, 1998, to the Schedule 13D filed on
May 13, 1998.)
1.4 Option Agreement, dated as of July 30, 1999, among
Oaktree and the Creditors.
1.5 Letter of Intent, dated as of August 3, 1999, among
Oaktree, the Issuer and Jurick.
<PAGE> 1
Exhibit 1.4
OPTION AGREEMENT
THIS AGREEMENT dated as of July 30, 1999 among OAKTREE CAPITAL
MANAGEMENT, LLC, a California limited liability company ("Oaktree"), THOMAS
HACKETT, OFFICIAL LIQUIDATOR OF FIDENAS INTERNATIONAL BANK LIMITED (the "Fidenas
Liquidator"), PETRA STELLING ("Stelling") and BARCLAYS BANK PLC ("Barclays").
WHEREAS the Fidenas Liquidator, Stelling and Barclays (collectively,
the "Creditors") are parties to a Stipulation of Settlement and Order (the
"Stipulation") with Geoffrey P. Jurick ("Jurick"), Fidenas International Limited
L.L.C., Ellison International, Inc., GSE Multimedia Technologies, Inc., f/k/a
GSE Electronic Systems, Inc. and Emerson Radio Corp. (collectively, the "Jurick
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 Emerson Radio Corp. (the "Emerson 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 Jurick 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 Emerson Radio Corp. ("Emerson") and
Jurick providing for acquisition of the securities of Sport Supply Group, Inc.
owned by Emerson and Jurick (the "Sport Agreements"), the consummation of which
is conditioned on Oaktree obtaining from the Creditors all of their existing
rights against the Jurick Group and releases by the Creditors of the Jurick
Group (collectively, the "Creditor Rights");
WHEREAS, based on discussions with Emerson and Jurick, 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").
<PAGE> 2
(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
Jurick Group, (ii) a general release of each member of the Jurick Group, dated
as of the Closing Date and releasing all claims of such Creditor against each
member of the Jurick Group as of the Closing Date, other than the obligations of
Jurick 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 Jerome Farnum 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 Jurick of the
Emerson 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 Jurick Group and by Oaktree and (ii) a
stipulation of dismissal with prejudice of the Jersey Cases, executed by each
member of the Jurick 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.
<PAGE> 3
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 Jurick, 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:
Conor D. Reilly
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Telecopier: 212-351-5247
To the Fidenas Liquidator:
James E. Tolan
Dechert, Price & Rhodes
30 Rockefeller Plaza
New York, New York 10112
Telecopier: 212-698-3599
To Stelling:
David H. Wollmuth
Wollmuth, Maher & Deutsch LLP
500 Fifth Avenue
New York, New York 10110
Telecopier: 212-382-0050
To Barclays:
Wendy S. Walker
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telecopier: 212-309-6273
<PAGE> 4
(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/ Stephen Kaplan
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
THOMAS HACKETT, OFFICIAL LIQUIDATOR OF
FIDENAS INTERNATIONAL BANK LIMITED
/s/ Thomas Hackett
-------------------
/s/ Petra Stelling
------------------
PETRA STELLING
BARCLAYS BANK PLC
By: /s/ Stanley Garulnick
---------------------------------------------
Name:
Title:
<PAGE> 1
Exhibit 1.5
OAKTREE CAPITAL MANAGEMENT, LLC
333 SOUTH GRAND AVENUE
LOS ANGELES, CA.
August 3, 1999
Emerson Radio Corp.
9 Entin Road
Parsippany, NJ 07054
Geoffrey P. Jurick
c/o Emerson Radio Corp.
9 Entin Road
Parsippany, NJ 07054
Dear Sirs,
Oaktree Capital Management, LLC, on behalf of investment funds for
which it is investment manager ("Oaktree"), is pleased to submit its expression
of interest (the "Offer") regarding the potential acquisition of certain
securities of Sport Supply Group, Inc. ("Sport") on the terms and conditions set
forth below.
1. Form of Transaction. The proposed transaction will be effected
by the following steps:
(a) Oaktree will purchase certain claims (the "Claims") against
Geoffrey P. Jurick ("Jurick")for Twenty Million Dollars ($20,000,000) pursuant
to the attached Option Agreement (the "Option Agreement"). In conjunction
therewith, Oaktree will deliver to Jurick items (i) through (iv) and (vi) of
Section 1(d) of the Option Agreement and Jurick and Emerson Radio Corp.
("Emerson") will deliver to Oaktree items (i) and (ii) of Section 1(e) of the
Option Agreement.
(b) Oaktree will purchase from Emerson the 2,269,500 shares of common
stock of Sport owned by Emerson and the 1,000,000 $7.50 warrants to purchase
Sport common stock owned by Emerson in exchange for (i) Oaktree's assistance in
arranging the transactions reflected herein, (ii) an executed consent amending
the indenture for Emerson's outstanding publicly owned debt (the "Bonds") so as
to permit these transactions and otherwise eliminate restrictive covenants,
(iii) surrender of $13,889,000 face amount of Bonds and (iv) Fifteen Million
Dollars ($15,000,000).
(c) Emerson will make a Twenty-Three Million Dollar ($23,000,000)
self-tender for its common stock at a price of not less than One Dollar ($1.00)
per share.
(d) Jurick will purchase the Claims from Oaktree and Oaktree will
assign the Claims to Jurick for (i) transfer to Oaktree of Jurick's 300,000
$7.50 options for Sport common stock and (ii) Eighteen Million Eight Hundred
Thousand Dollars ($18,800,000)in cash.
(e) Jurick will tender all of the shares of Emerson common stock owned
by him (including those in the custody of the U.S. District Court for the
District of New Jersey) to the Emerson self-tender described in (c) above.
Jurick agrees that in no event will he be permitted to receive more than
Eighteen Million Eight Hundred
<PAGE> 2
Thousand Dollars ($18,800,000) for the shares which he so tenders. Jurick will
assign the proceeds from such tender to Oaktree to satisfy his obligation
described above in (d)(ii).
(f) Emerson will amend its bank facility or enter into a new
replacement bank facility releasing the lien on the Sport securities owned by
Emerson and giving Emerson the ability, after completion of the transactions
reflected herein, to continue its business operations with adequate working
capital.
(g) Emerson and Sport will enter into a mutually satisfactory extension
of the Management Services Agreement between them with the terms thereof
acceptable to Oaktree.
(h) Closing of the transactions described in the Option Agreement and
in sections (a) through (g) above to occur simultaneously (the "Closing").
Without limitation thereof, Oaktree will not close the transactions reflected in
the Option Agreement without the closing of the other items listed in this
section (h).
2. Conditions of the Offer. The Offer is conditional upon the
occurrence of all of the following:
(a) Completion of Oaktree's pre-acquisition due diligence review of
Sport, with results satisfactory (in Oaktree's sole discretion) to Oaktree.
(b) Negotiation and execution of definitive legal documentation
reflecting the transactions outlined in section 1 above, on mutually acceptable
terms and containing customary representations, warranties, covenants and
conditions, and the receipt of all necessary governmental approvals.
(c) Receipt by Emerson's board of directors of a fairness opinion from
an investment banking firm reasonably satisfactory to Oaktree relating to the
transactions described herein.
(d) Receipt by Emerson of all necessary Board of Director and
shareholder approvals; provided, however, that Jurick agrees to vote his shares
of common stock of Emerson in favor of the proposed transactions.
3. Sport Agreements. Emerson agrees to use its best efforts to cause
Sport, subject to execution of a mutually acceptable confidentiality agreement,
to provide Oaktree access to information regarding Sport necessary to complete
Oaktree's due diligence review described in section 2(a) above. Emerson agrees
to use its best efforts to cause Sport to consent, at the Closing, to the
transfer to Oaktree of the Sport securities referred to above.
4. Break-Up Fee. If the Closing does not occur because of the
consummation of the sale of all or substantially all of Emerson's Sport
securities to a third party either as a result of or after an offer by a third
party to purchase the Sport securities owned by Emerson and/or Jurick or to
purchase Sport securities generally, Emerson shall, upon the sale of any of
Emerson's Sport securities, pay to Oaktree a break-up fee of One Million Dollars
($1,000,000) in cash.
5. Termination of the Offer. The Offer will terminate upon termination
of the option pursuant to the Option Agreement.
6. Fees and Expenses. Each party hereto shall bear its respective
expenses incurred in connection with the negotiation and consummation of the
proposed acquisition; provided, however, that if (i) the Closing does not occur
for any reason other than Oaktree deciding not to go forward with the
transaction, (ii) the Offer terminates pursuant to section 5 above and (iii)
Oaktree is not paid the fee described in section 4 above, then Emerson shall pay
to Oaktree, promptly upon submission by Oaktree of evidence of its expenses,
one-half (1/2) of Oaktree's out of pocket expenses incurred in attempting to
complete the transactions reflected herein, up to a total reimbursement to
Oaktree not to exceed Two Hundred Fifty Thousand Dollars ($250,000).
<PAGE> 3
7. Binding Effect. Except with respect to sections 4 through 6 above,
this letter shall not constitute a binding contract among the parties hereto but
instead purports to set forth the present intentions of the parties with respect
to the terms proposed to be incorporated in definitive legal documentation.
8. Governing Law. This letter agreement shall be governed by and
construed in accordance with the substantive laws of the State of New York
without giving effect to the conflict of law rules thereof.
If you are in agreement with the foregoing, please sign, date and
return the enclosed copy of this letter, which will thereupon constitute our
agreement in principle with respect to the matters set forth herein, but shall
not be a legally binding agreement, except with respect to paragraphs 4 through
6 hereof.
Very truly yours,
OAKTREE CAPITAL MANAGEMENT, LLC
By:/s/ Stephen Kaplan
---------------------------
Name: Stephen Kaplan
Title: Principal
By:/s/ Michael P. Harmon
---------------------------
Name: Michael Harmon
Title: Vice President
Accepted to and agreed by
EMERSON RADIO CORP.
By: /s/ Geoffrey P. Jurick
---------------------------------------
Name: Geoffrey P. Jurick
Title: Chairman of the Board,
Chief Executive Officer and
President
This 3rd day of August, 1999.
/s/ Geoffrey P. Jurick
- ---------------------------------------
Geoffrey P. Jurick
This 3rd day of August, 1999.
