<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT RE CHANGE IN MAJORITY
OF DIRECTORS PURSUANT TO RULE 14F-1
UNDER SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No.1-10704
SPORT SUPPLY GROUP, INC.
(Exact name of registrant in its charter)
DELAWARE 75-2241783
(State or other jurisdiction of I.R.S. Employer
incorporation of organization) Identification No.)
1901 Diplomat Drive, Farmers Branch, Texas 75234
(Address of principal executive office, including Zip Code)
Registrant's telephone number - (214) 484-9484
Securities registered under
Section 12(b) of the Exchange Act:
COMMON STOCK, $0.01 PAR VALUE
(Title of each class)
<PAGE> 2
SPORT SUPPLY GROUP, INC.
1901 DIPLOMAT
FARMERS BRANCH, TEXAS 75234
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREOF
NO VOTE OR OTHER ACTION OF THE
COMPANY'S STOCKHOLDERS IS REQUIRED
IN CONNECTION WITH THIS INFORMATION
STATEMENT
This Information Statement is being mailed on or about November 29, 1996 to
the holders of shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of Sport Supply Group, Inc., a Delaware corporation (the "Company"),
in connection with the anticipated designation of persons (the "Designated
Directors") to the Board of Directors of the Company, other than at a meeting
of stockholders. Such designation is to be made pursuant to a Securities
Purchase Agreement (the "Agreement") dated November 27, 1996 by and between the
Company and Emerson Radio Corp., a Delaware corporation listed on the American
Stock Exchange under the symbol "MSN" ("Emerson"). According to public
documents, Emerson, one of the nation's largest volume consumer electronics
distributors, directly and through subsidiaries, designs, sources, imports, and
markets a variety of video and audio consumer electronics and microwave oven
products. NO ACTION IS REQUIRED BY THE STOCKHOLDERS OF THE COMPANY IN
CONNECTION WITH THE APPOINTMENT OF THE DESIGNATED DIRECTORS. However, Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and Rule 14f-1 promulgated thereunder requires the mailing to the Company's
stockholders of the information set forth in the Information Statement prior to
a change in a majority of the Company's directors other than at a meeting of
the Company's stockholders.
Pursuant to the Agreement and subject to certain customary closing
conditions, the Company has agreed to issue or grant, as the case may be, and
Emerson has agreed to subscribe for and purchase from the Company, (i)
1,600,000 newly- issued shares (the "Shares") of Common Stock of the Company
and (ii) five-year warrants (the "Warrants") to purchase up to 1,000,000
newly-issued shares of the Common Stock at an exercise price of $7.50 per
share, subject to adjustments (collectively, the "Transactions"). After the
purchase of the Shares and assuming the full exercise of the Warrants, Emerson
will be the beneficial owner of 3,269,500 shares of the Common Stock of the
Company, which will represent approximately 34.9% of the then outstanding
shares of Common Stock of the Company.
Upon consummation of the Transactions, Emerson will have the right to
designate a majority of the Company's Board of Directors until the Company's
next shareholder meeting. See "Certain Relationships and Related Transactions."
The parties anticipate that the Transactions will close on or about December
12, 1996.
The information contained in this Information Statement concerning Emerson
and the Designated Directors has been furnished to the Company by Emerson and
the Designated Directors. With respect to the accuracy and completeness of such
information, the Company has relied solely upon the information furnished by
Emerson and the Designated Directors in preparing the sections of this
Information Statement relating to such information.
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<PAGE> 3
OUTSTANDING SECURITIES AND VOTING RIGHTS
The shares of Common Stock are the only outstanding class of voting
securities of the Company. Each share of Common Stock has one vote. As of
November 27, 1996, there were 6,764,834 shares of Common Stock issued and
outstanding (the "Outstanding Shares").
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
CURRENT DIRECTORS
The Board of Directors presently consists of 4 members. Pursuant to the
Company's Bylaws, each director holds office until such director's successor is
elected and qualified or until such director's earlier resignation, death or
removal. The individuals described below comprise the Company's current Board
of Directors. Upon the closing of the Transactions, Peter S. Blumenfeld and
William H. Watkins, Jr. will continue as Directors, while Michael J. Blumenfeld
and Robert W. Philip will resign as Directors of the Company.
MICHAEL J. BLUMENFELD, 50. Mr. M. Blumenfeld serves as Chairman of the Board
and Chief Executive Officer of the Company and has served as Chairman of the
Board and Chief Executive Officer and in various other executive capacities for
the Company and its predecessors for more than 20 years. From 1972 until
December 1992, Mr. M. Blumenfeld served as Chairman of the Board, Chief
Executive Officer and President of Aurora Electronics, Inc. (f/k/a BSN Corp.
and referred to herein as "Aurora"), a provider of specialized distribution and
materials support services to the electronics industry. Aurora was the
Company's former parent. Mr. M. Blumenfeld has been a director of the Company
since 1985. Michael J. Blumenfeld is the brother of Peter S. Blumenfeld.
PETER S. BLUMENFELD, 48. Mr. P. Blumenfeld serves as President and Chief
Operating Officer of the Company and has served in these or in various other
executive positions with the Company and its predecessors for more than 15
years. Mr. P. Blumenfeld has been a director of the Company since February
1991. Peter S. Blumenfeld is the brother of Michael J. Blumenfeld.
ROBERT W. PHILIP, 61. Robert W. Philip was an Executive in Residence and
Lecturer in the Department of Accounting of the College of Business
Administration at the University of North Texas in Denton, Texas from September
1989 until May, 1994. Prior to that time, Mr. Philip served as an audit partner
with Arthur Andersen, S.C. for approximately 18 years. Mr. Philip is also a
director of Medical Control, Inc. (NASDAQ--MDCL), a health care cost management
company. Mr. Philip has been a director of the Company since February 1991. Mr.
Philip is currently retired from the University of North Texas and Arthur
Andersen, S.C.
WILLIAM H. WATKINS, JR., 54. William H. Watkins, Jr. serves as a director of
the Company and has served in this capacity since May 1996. Mr. Watkins has
been a partner and Certified Public
2
<PAGE> 4
Accountant with Watkins, Watkins and Keenan since December 1971. Mr. Watkins
also serves as a director of Aurora.
DESIGNATION OF DIRECTORS; EMERSON'S DESIGNEES
The Company's Bylaws provide that the number of directors shall be fixed
from time to time by resolution of the Board of Directors but shall not be less
than three nor more than ten. Upon consummation of the Transactions, the
Company's Board of Directors has authorized increasing the number of directors
to permit the Designated Directors to become members of the Company's Board.
In accordance with the terms of the Agreement, upon the closing of the
Transactions, the individuals described below will be appointed as Directors of
the Company, thereby constituting a majority of the Board of Directors. Upon
the closing of the Transactions, Peter S. Blumenfeld and William H. Watkins,
Jr., currently Directors of the Company, will continue as Directors, while
Michael J. Blumenfeld and Robert W. Philip will resign as Directors.
GEOFFREY P. JURICK, 55. Mr. Jurick has served as a Director of Emerson since
1990, and as Emerson's Chief Executive Officer and Chairman since July 1992 and
December 1993, respectively. Mr. Jurick served as President of Emerson from
July 1993 to October 1994. 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 FIN. Mr. Jurick has
also served as a Director of Fidenas Investment Limited ("FIL") and Fidenas
International Bank Limited ("FIBANK"). On January 10, 1995, the Supreme Court
of the Commonwealth of the Bahamas (the "Bahamas Court") appointed an official
liquidator of FIL and ordered that FIL be wound up. On January 27, 1995, the
Bahamas Court appointed an official liquidator for FIBANK and ordered, subject
to the ongoing supervision of the Bahamas Court, that FIBANK's assets be
liquidated. Mr. Jurick has served as a Director, Chairman, and Chief Executive
Officer of GSE Multimedia Technologies Corporation, 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., a provider of computer and
telecommunication services. 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, whose activities encompass merchant
banking, investment banking, investment management, and corporate development.
(1)
EUGENE I. DAVIS, 41. Mr. Davis has served as a Director of Emerson since
September 1990 and as President of Emerson since October 1994. Mr. Davis served
as Interim Chief Financial Officer of Emerson from February 1993 until November
1995 and as Executive Vice President from July 1993 to October 1994. From June
1989 to July 1992, Mr. Davis was a shareholder and director of the law firm of
Holmes Millard & Duncan, P.C. in Dallas, Texas. Since August 1992, Mr. Davis
has served as a Director of Tipperary Corporation, which is traded on the
American Stock Exchange and, from October 1993 until January 1995, he served as
a Director of Crandall Finance Corporation, which was traded on the pink sheets
of the over-the-counter market. Since May 1995, Mr. Davis has also served as a
Director of Beth Israel Health Care Services, a private corporation and is a
Director of Newark Beth Israel Medical Center, an affiliate of the Saint
Barnabus Health
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Care System, the largest health care system in New Jersey. Mr. Davis is also a
Trustee, Governor and Secretary of Green Brook Country Club. (1)
PETER J. BuNGER, 56. Mr. Bunger has been a Director of Emerson since July 1992.
Presently, he is a consultant with Savarina AG and serves as a consultant to
Emerson. Since October 1992, Mr. Bunger has served as a Director of Savarina
AG, an entity engaged in the business of portfolio management monitoring in
Zurich, Switzerland, and since 1992, as a Director of ISCS, a computer software
company. From December 1991 until December 1993, Mr. Bunger was Vice Chairman
of Montcour Bank and Trust Company Limited, a bank organized in the Bahamas and
an affiliate of FIN. 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. (1)
JOHN P. WALKER, 33. Mr. Walker has served as Executive Vice President and Chief
Financial Officer of Emerson since April 1996. Mr. Walker served as Emerson's
Senior Vice President from April 1994 until March 1996, Vice President-Finance
from February 1993 to April 1994, Assistant Vice President-Finance from June
1991 to January 1993, and Director of Financial Management from September 1989
to May 1991. (1)
JOHNSON C. KO, 45. Since February 1994, Mr. Ko has served as the Chairman and
Director of Universal Appliances Limited ("Universal"), a Hong Kong corporation
listed on The Stock Exchange of Hong Kong Limited, which is engaged in the
manufacturing and distribution of consumer electronics, household electrical
and telecommunication products and in the dissemination of international
financial market information and consumer data. Recently, the Universal Group
has also commenced the manufacturing of printed circuit boards in the People's
Republic of China. Universal is the holding company for the Universal Group
which holds numerous subsidiary companies. Mr. Ko has also served on certain
boards of these subsidiaries since February 1994. Mr. Ko also has served as the
Chairman and Director of Kwan Wing Holdings Limited ("Kwan Wing Holdings")
since October 1992, which is the holding company of Universal, organized under
the laws of the British Virgin Islands, and an investment vehicle whose
activities encompass trading, real property holding and financial services.
Kwan Wing Holdings' principal operating company in Hong Kong is its wholly
owned subsidiary Kwan Wing Development Ltd., in which Mr. Ko has served as
Director since 1989. Kwan Wing Development Ltd. was the initial operating
company prior to the creation of Kwan Wing Holdings Limited. From November 1992
to April 1995, Mr. Ko also served as Chairman and Director of Mandarin Dragon
Holdings Limited ("Mandarin"), a Hong Kong corporation listed on The Stock
Exchange of Hong Kong Limited, which was also an investment holding company
with business in the manufacturing and distribution of pharmaceuticals. Prior
to 1989, Mr. Ko held various business investment positions.
- ---------------
(1) On September 29, 1993, Emerson and five of its United States subsidiaries
filed voluntary petitions for relief under the reorganization provisions of
Chapter 11 of the United States Bankruptcy Code. On March 31, 1994, the
United States Bankruptcy Court for the District of New Jersey entered an
order confirming the Fourth Amended Joint Plan of Reorganization which
became effective on that date.
4
<PAGE> 6
EXECUTIVE OFFICERS OF THE COMPANY
Except as set forth below, each of the executive officers of SSG listed
below has held the position listed below, or a similar position with SSG, for
at least the last five years.
<TABLE>
<CAPTION>
COMPANY OFFICER
NAME AGE PRESENT POSITION SINCE
---- --- ---------------- -----
<S> <C> <C> <C>
Michael J. Blumenfeld 50 Chairman of the Board and 1985
Chief Executive Officer
Peter S. Blumenfeld 48 President and Chief 1988
Operating Officer
Terrence M. Babilla 34 General Counsel and 1995
Secretary (1)
</TABLE>
All officers are elected for a term of one year or until their successors are
duly elected.
- ---------------
(1) Mr. Babilla has been the Company's General Counsel since March 1995 and the
Company's Secretary since May 1996. From September 1987 to February 1995,
Mr. Babilla was an attorney with the law firm of Hughes & Luce, L.L.P. in
Dallas, Texas.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following tables set forth certain information regarding the beneficial
ownership of the Company's Common Stock as of November 27, 1996, by (i) each
Director and each person to be designated a 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 a beneficial owner of more than 5%
of the Company's outstanding Common Stock. For purposes of this Information
Statement, beneficial ownership of securities is defined in accordance with the
rules of the Securities and Exchange Commission (the "SEC") 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 as filed with the SEC, 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.
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<TABLE>
<CAPTION>
DIRECTORS AMOUNT PERCENT OF CLASS
- --------- ------ ----------------
<S> <C> <C>
Michael J. Blumenfeld (1) 625,634 8.73%
Peter S. Blumenfeld (2) 313,388 4.48%
Robert W. Philip (3) 17,406 (*)
William H. Watkins, Jr. (4) 4,765 (*)
Executive officers and
directors as a group (5
persons) (5) 986,443 13.17%
</TABLE>
- ---------------
(*) Less than one percent
(1) Consists of: (a) 8,925 shares of Common Stock and 2,019 shares issuable
upon exercise of the Company's common stock purchase warrants (each warrant
is exercisable into 1.25 shares of the Company's Common Stock, the "Existing
Warrants"), owned of record by the wife of Mr. M. Blumenfeld; (b) 215,189
shares of Common Stock and 4,551 shares of Common Stock issuable upon
exercise of the Existing Warrants owned of record by Mr. M. Blumenfeld; (c)
56,250 shares of Common Stock issuable upon exercise of stock options
granted in accordance with the Company's Option Plan (each of which is
exercisable into one share of Common Stock, the "Plan Options") owned of
record by Mr. M. Blumenfeld; and (d) 338,750 shares of Common Stock issuable
upon exercise of stock options granted other than pursuant to the Company's
Option Plan (each of which is exercisable into one share of Common Stock,
the "Non-Plan Options") owned of record by Mr. M. Blumenfeld.
(2) Consists of: (a) 2,375 shares of Common Stock and 594 shares of Common
Stock issuable upon exercise of Existing Warrants owned of record by the
wife of Mr. P. Blumenfeld; (b) 500 shares of Common Stock and 125 shares of
Common Stock issuable upon exercise of Existing Warrants owned of record by
Mr. P. Blumenfeld's minor children; (c) 33,375 shares of Common Stock
and 11,469 shares of Common Stock issuable upon exercise of Existing
Warrants owned of record by Mr. P. Blumenfeld; (d) 193,750 shares of Common
Stock issuable upon exercise of Plan Options; and (e) 71,200 shares of
Common Stock issuable upon exercise of Non-Plan Options.
(3) Consists of: (a) 1,625 shares of Common Stock; (b) 156 shares of Common
Stock issuable upon exercise of Existing Warrants; and (c) 15,625 shares of
Common Stock issuable upon exercise of Plan Options.
(4) Consists of: (a) 1,250 shares of Common Stock; (b) 390 shares of Common
Stock issuable upon exercise of Warrants; and (c) 3,125 shares of Common
Stock issuable upon exercise of Plan Options.
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(5) Includes (a) 268,750 shares of Common Stock issuable upon exercise of Plan
Options; (b) 434,950 shares of Common Stock issuable upon exercise of
Non-Plan Options; and (c) 19,304 shares of Common Stock issuable upon
exercise of Existing Warrants.
<TABLE>
<CAPTION>
PERSONS TO BE DESIGNATED DIRECTORS AMOUNT PERCENT OF CLASS
- ---------------------------------- ------ ----------------
<S> <C> <C>
Geoffrey P. Jurick 669,500 (1) 9.9%
Eugene I. Davis 0 0
John P. Walker 0 0
Peter G. Bunger 0 0
Johnson C.S. Ko 0 0
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL STOCKHOLDERS AMOUNT PERCENT OF CLASS
- ---------------------- ------ ----------------
<S> <C> <C>
Emerson Radio Corp.
Nine Entin Road
Parsippany, New Jersey 07054 669,500 (2) 9.9%
Pioneer Management Corporation
60 State Street
Boston, Massachusetts 02114 646,200 (3) 9.6%
</TABLE>
- ---------------
(1) Mr. Jurick's address is c/o Emerson Radio Corp., Nine Entin Road,
Parsippany, New Jersey 07054. Mr. Jurick, directly and indirectly,
beneficially owns 72.3% of the outstanding shares of Emerson's common stock
and is the Chairman of the Board and Chief Executive Officer of Emerson,
and, therefore, may be deemed to control Emerson. As a result of such
control, Mr. Jurick may be deemed to beneficially own the Common Stock of
the Company beneficially owned by Emerson. See Note (2) below. Mr. Jurick
disclaims any such beneficial ownership.
(2) Based on information set forth in Amendment No. 2 to Schedule 13D dated
November 6, 1996, as amended, filed with the SEC by Emerson. In accordance
with the provisions of the Agreement, the Company has agreed to issue or
grant, as the case may be, and Emerson has agreed to subscribe for and
purchase from the Company (i) 1,600,000 Shares of Common Stock of the
Company and (ii) Warrants to purchase up to 1,000,000 shares of the Common
Stock at an exercise price of $7.50 per share, subject to adjustments.
After the purchase of the Shares and assuming the full exercise of the
Warrants, Emerson will be the beneficial owner of 3,269,500 shares of the
Common Stock of the Company, which will represent 34.9% of the outstanding
shares of Common Stock of the Company. Under the terms of the Agreement,
Emerson will have the right to designate a majority of the Board of
Directors of the Company until the Company's next shareholder meeting. See
"Certain Relationships and Related Transactions."
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(3) Based on information set forth in Amendment No. 3 to Schedule 13G, dated
January 9, 1996, filed with the SEC by Pioneer Management Corporation, a
registered investment adviser. Pioneer Management Corporation reported it
has sole voting and dispositive power with respect to 646,200 shares.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets during the Company's fiscal year to review
significant developments affecting the Company and to act on matters requiring
Board approval. The Board of Directors held 8 formal meetings and acted by
unanimous written consent 3 times during the 1996 fiscal year. During the 1996
fiscal year, each member of the Board participated in at least 75% of all Board
and committee meetings held during the period for which he served as a director
and/or committee member.
The Board of Directors has an audit committee and a stock option committee
to devote attention to specific subjects and to assist the Board in the
discharge of its responsibilities. The functions of these committees and their
current members are described below.
Audit Committee. The Company's Audit Committee is presently comprised of
Robert W. Philip and William H. Watkins, Jr. (Chairman). The Audit Committee
recommends to the Board of Directors the appointment of a firm of certified
public accountants to conduct audits of the accounts and affairs of the Company
and monitors the performance of such firm, reviews accounting objectives and
procedures of the Company and the findings and reports of the independent
certified public accountants, and makes such reports and recommendations to the
Board of Directors as it deems appropriate. The Audit Committee held 1 formal
meeting during fiscal 1996.
Stock Option Committee. The Company's Option Plan is presently administered
by William H. Watkins, Jr. and Robert W. Philip (both of whom are
Disinterested Directors, as defined in the Option Plan). The Option Plan
provides that the Stock Option Committee has full and final authority to select
the key employees and directors to whom awards are granted, the number of
shares of Common Stock with respect to such awards, and the terms of such
awards, including the exercise price of the stock options and any vesting
periods. In general, the Stock Option Committee is authorized to construe,
interpret and administer the Option Plan and the provisions of the options
granted thereunder, prescribe and amend rules for the operation of the Option
Plan, and make all other determinations necessary or advisable for its
implementation and administration. The Stock Option Committee acted by
unanimous written consent 3 times during fiscal 1996.
The Board of Directors does not have standing nominating or compensation
committees, or any other committee performing similar functions. The functions
customarily attributable to a nominating committee and compensation committee
are performed by the Board of Directors as a whole.
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<PAGE> 10
COMPENSATION OF DIRECTORS
Nonmanagement directors are entitled to receive up to $7,500 in annual
directors' fees. During fiscal 1996, Mr. Philip received $6,000 in directors'
fees and Mr. Watkins received $3,000 in directors' fees. In addition, the
Company reimbursed Mr. Philip, a nonmanagement director, for his annual health
insurance premiums which were $3,806 for the fiscal year-ended November 1,
1996. In addition, the Company paid Mr. Watkins $1,888 for consulting fees.
Officers of the Company do not receive compensation for serving on the Board of
Directors. Disinterested Directors, who are not otherwise eligible for grants
under the Option Plan, are automatically granted nonqualified stock options to
purchase 3,125 shares of Common Stock (post-split) on an annual basis, provided
the Company's net earnings from continued operations before interest and income
tax expense exceeds $4 million for the calendar year preceding the date of
grant.
On November 1, 1996, the Company appointed Mr. Watkins and Mr. Philip as
members of a Special Committee of the Board of Directors to negotiate and
consider various financing transactions, including, without limitation, the
terms of the Agreement. See "Certain Relationships and Related Transactions."
In exchange for serving on the Special Committee, the Board of Directors (other
than Mr. Philip and Mr. Watkins) unanimously voted to pay each member of the
Special Committee $1,000 for each Special Committee meeting attended by such
member, not to exceed $10,000 in the aggregate for each member.
None of the Designated Directors received any compensation from the Company
from the beginning of the Company's 1996 fiscal year through the date of this
Information Statement.
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<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's other most highly
compensated executive officers, based on salary and bonus earned during fiscal
1996. The Company changed its fiscal year-end to October 31 during 1995. As a
result, fiscal year 1995 is a transition period consisting of ten calendar
months. The Company currently operates on a 52/53 week year ending on the
Friday closest to October 31. The information set forth in the following table
is for the fiscal year-ended December 31, 1994, for the ten month fiscal
year-ended October 31, 1995 and for the fiscal year-ended November 1, 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------- SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#)(1) ($)
- ---------------------- ---- ---------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Blumenfeld, 1996 $221,442 --- $25,892 (2) --- ---
Chairman of the 1995 $170,000 --- --- 120,000 (3) ---
Board and Chief 1994 $224,000 $18,500 --- 25,000 ---
Executive Officer (4)
Sanford R. Edlein, 1996 $140,788(5) --- --- --- $74,664 (5)
Chief Executive 1995 $120,812 --- --- 33,930 (6)(7) ---
Officer (5) 1994 $ 44,450 --- --- 25,000 (7) ---
Peter S. Blumenfeld, 1996 $224,258 --- --- --- ---
President and Chief 1995 $178,333 --- --- 21,200 (6) ---
Operating Officer (8) 1994 $224,000 $18,500 --- 25,000 ---
William R. Estill, 1996 $98,166 --- --- --- $42,900 (9)
Vice President, 1995 $90,833 --- --- 11,750 (6)(9) ---
Chief Financial 1994 $115,000 $9,500 --- 20,000 (9) ---
Officer, Secretary
and Treasurer (9)
Terrence M. Babilla, 1996 $182,500 --- --- 25,000 (11) ---
General Counsel and 1995 $108,212 --- --- 25,000 (11) ---
Secretary (10) 1994 --- --- --- --- ---
</TABLE>
- ---------------
(1) Options to acquire shares of Common Stock. These stock options enable the
named executive officers to elect for a period of 180 days following a
change in control (as defined in the option agreements governing the
options) to surrender to the Company for
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<PAGE> 12
cancellation all or any part of the unexercised portion of the option. In
consideration of such surrender and cancellation, the named executive
officer is entitled to receive for each share of Common Stock as to which
the surrendered portion of the option relates, an amount in cash equal to
the difference between the exercise price per share under the option and
the highest closing sales price per share of Common Stock during the 360
day calendar period prior to the named executive officer's election to
surrender the option as described in this paragraph. Mr. Edlein's stock
option agreements were amended to delete this provision. The execution,
delivery and performance of the Agreement will be deemed to be a change in
control for purposes of these options. See "Executive Compensation and
Other Information -- Option Agreements."
(2) Comprised of $18,258 for automobile allowance and $7,634 for country club
dues.
(3) Includes 20,000 Non-Plan Options granted in lieu of a salary increase for
1995.
(4) Mr. Blumenfeld served as Chairman of the Board and Chief Executive Officer
during the entire three (3) fiscal years, except that from December 4, 1995
to May 13, 1996, Mr. Edlein served as Chief Executive Officer.
(5) Mr. Edlein served as Chief Operating Officer from September 9, 1994 to
December 4, 1995 and as Chief Executive Officer from December 4, 1995 to
May 13, 1996. Mr. Edlein resigned as a director on May 6, 1996 and as an
officer on May 13, 1996. The Board of Directors authorized the Company to
pay Mr. Edlein up to $224,000 as a result of his efforts in facilitating
the sale of the Company's Gold Eagle Golf Products Division. In connection
therewith, the Company has paid Mr. Edlein $18,666 per month, beginning
July 1996, for a total of $74,664. The Board of Directors also authorized
the Company to reimburse Mr. Edlein for up to one year of monthly lease
payments on the automobile provided by the Company to Mr. Edlein so long as
such lease is assumed by Mr. Edlein.
(6) Consists of Non-Plan Options granted in lieu of a salary increase for 1995.
(7) Although the Stock Option Agreements governing these options expired by
their terms upon Mr. Edlein's resignation from the Company, the Board of
Directors amended the Stock Option Agreements to provide that (i) all of
such stock options shall remain exercisable by Mr. Edlein until November
10, 1997 and (ii) the change in control provisions included in any such
agreements shall be null and void and of no further force or effect.
(8) Mr. P. Blumenfeld served as President during the entire three (3) fiscal
years. Mr. P. Blumenfeld also served as Chief Operating Officer from
January 1, 1994 to September 9, 1994 and from December 4, 1995 to the
present date.
(9) Mr. Estill resigned as an officer and director of the Company on May 10,
1996. The $42,900 referenced under "All Other Compensation" relates to
indebtedness in the amount of $20,295 that was forgiven upon Mr. Estill's
resignation, value realized from options
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<PAGE> 13
exercised in the amount of $18,517 and a $4,088 automobile allowance. Mr.
Estill's stock options have been terminated and have no further force or
effect.
(10) Mr. Babilla was employed by the Company on March 13, 1995 and has served
as General Counsel since such date. Mr. Babilla was elected as Secretary
on May 13, 1996 and has served in such capacity since such date.
(11) Mr. Babilla was granted options to acquire 25,000 shares of the Company's
Common Stock in fiscal 1995. All of Mr. Babilla's options granted in
fiscal 1995 were repriced in fiscal 1996 and are, therefore required to
be reported as compensation in fiscal 1996. See "Executive Compensation
and Other Information -- Ten Year Option Repricings."
OPTION GRANTS DURING 1996 FISCAL YEAR
The following table provides information related to options granted to
the named executive officers during fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
INDIVIDUAL GRANTS IN LAST FISCAL YEAR APPRECIATION FOR OPTION TERM (1)
------------------------------------------------------------------ --------------------------------
Number of % of Total
Securities Options/
Underlying SARs Exercise Grant
Options/ Granted to or Date
SARs Employees Base Market
Granted in Fiscal Price Price Expiration
Name (#)(2) Year ($/Sh)(3) ($/Sh)(3) Date 0% ($) 5% ($) 10%($)
- ------------------- --------- --------- --------- -------- ---------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Terrence M. Babilla 25,000 3.9% $5.50 $12.00 3/10/05 $0 $73,750 $180,750
</TABLE>
- ---------------
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Company's Common Stock over the term of the
options.
(2) Although none of these stock options were granted in fiscal 1996, they
were required to be disclosed in this table as granted in fiscal 1996
because the options were repriced in fiscal 1996. These stock options
enable the named executive officer to elect for a period of 180 days
following a change in control (as defined in the option agreements
governing the options) to surrender to the Company for cancellation all
or any part of the unexercised portion of the option. In consideration of
such surrender and cancellation, the named executive officer is entitled
to receive for each share of Common Stock as to which the surrendered
portion of the option relates, an amount in cash equal to the difference
between the exercise price per share under the option and the highest
closing sales price per share of
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<PAGE> 14
Common Stock during the 360 day calendar period prior to the named
executive officer's election to surrender the option as described in this
paragraph.
(3) The option exercise price may be paid (a) in shares of Common Stock
previously owned by the executive officer, (b) by withholding shares of
Common Stock that would otherwise be issued upon exercise, (c) in cash or
(d) a combination of the foregoing.
OPTION EXERCISES DURING 1996 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by
the named executive officers during the 1996 fiscal year and the number and
value of options held at fiscal year end. The Company does not have any
outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END AT FY-END
ACQUIRED VALUE (#) ($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- --------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Michael J. Blumenfeld --- --- 395,000 /-0- $0/0
Sanford R. Edlein --- --- 58,930/-0- $0/0
Peter S. Blumenfeld --- --- 264,950 /-0- $6,719
Terrence M. Babilla --- --- 25,000/-0- $9,375
William R. Estill 3,375 $18,517 0/0 $0/0
</TABLE>
- ---------------
(1) The closing price for the Company's Common Stock as reported by the New
York Stock Exchange on November 1, 1996 was $5.875. Value is calculated on the
basis of the difference between the option exercise price of "in the money"
options and $5.875, multiplied by the number of shares of Common Stock
underlying the option.
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<PAGE> 15
COMPENSATION COMMITTEE AND BOARD REPORT ON OPTION REPRICING
The Board of Directors and the Stock Option Committee recognized that the
per share exercise price of a significant majority of outstanding options
previously granted to key persons exceeded $10.00 per share and that the market
price of the Company's Common Stock declined significantly since the issuance
of these options. As of November 26, 1996, the last sales price of the
Company's Common Stock as reported on the New York Stock Exchange was $5.50 per
share.
The Board and Stock Option Committee believe the Company has taken
constructive steps to improve its performance and believes hiring and retaining
key employees is central to implementing these measures. In furtherance of
these goals, in May 1996 the Stock Option Committee reduced the per share
exercise prices of options previously granted to all employees, excluding
Michael J. Blumenfeld, Peter S. Blumenfeld, Sanford R. Edlein and Terrence M.
Babilla. The per share exercise price of options owned by directors was not
reduced.
In order to induce Mr. Edlein to join the Company as Chief Operating
Officer, on September 9, 1994, the Board of Directors unanimously approved a
stock option agreement that permitted Mr. Edlein, at his sole discretion, to
reset the exercise price of this option one time to current market value by
delivering a written notice to the Company's President or Chief Executive
Officer. On September 30, 1994, Mr. Edlein reset the price of his options in
accordance with the terms of his Option Agreement. No other provision of this
option was altered.
In order to induce Mr. Babilla to join the Company as General Counsel, on
February 10, 1995, the Board of Directors unanimously approved a stock option
agreement that permitted Mr. Babilla, at his sole discretion, to reset the
exercise price of this option one time to current market value during the term
of the option by delivering a written notice to the Company's President or
Chief Executive Officer. On July 29, 1996, Mr. Babilla reset the price of his
options in accordance with the terms of his Option Agreement. No other
provision of this option was altered.
At a Special Meeting of the Board of Directors held on November 19, 1996,
the Board of Directors unanimously ratified and confirmed the grant of all of
the issued and outstanding options to acquire the Company's Common Stock and
the repricing of such options as described above.
In accordance with the rules of the SEC, this Option Repricing Report of
the Board of Directors and the Stock Option Committee is not intended to be
"filed" or soliciting material" or subject to Regulations 14A or 14C or Section
18 of the Exchange Act, or incorporated by reference into any other filing by
the Company with the Commission.
THE STOCK OPTION COMMITTEE THE BOARD OF DIRECTORS
William H. Watkins, Jr. Michael J. Blumenfeld
Robert W. Philip Peter S. Blumenfeld
Robert W. Philip
William H. Watkins, Jr.
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<PAGE> 16
The following table summarizes certain information concerning the repricing
of options to buy the Company's Common Stock held by all executive officers
since the Company became a reporting company after its initial public offering
in April 1991.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET LENGTH OF
SECURITIES PRICE OF EXERCISE ORIGINAL
UNDERLYING STOCK AT PRICE AT NEW OPTION TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING AT
DATE OF REPRICED REPRICING REPRICING PRICE DATE OF
NAME REPRICING # $ $ $ REPRICING
- ------------------- --------- ---------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sanford R. Edlein,
Chief Executive
Officer (1) Sept. 30, 1994 25,000 $12.13 $15.13 $12.13 3.2 years (1)
Terrence M. Babilla,
General Counsel
and Secretary July 29, 1996 25,000 $5.50 $12.00 $5.50 8.8 years
</TABLE>
- ---------------
(1) Mr. Edlein resigned on May 13, 1996. These options were amended since the
date of repricing and are scheduled to expire on November 10, 1997.
EMPLOYMENT AGREEMENTS
In February 1991, the Company entered into a five-year employment agreement
with Peter S. Blumenfeld. In March 1995, the Company entered into a three-year
employment agreement with Terrence M. Babilla. Under their respective
employment agreements, Mr. P. Blumenfeld and Mr. Babilla receive base annual
compensation (subject to annual increases by the Board of Directors) of
$224,000, and $190,000, respectively. The employment agreements also provide
that each is able to use a company car and receive certain other benefits, such
as participation in the Company's health insurance plan. Each of the employment
agreements automatically renews for successive one-year periods following the
initial term, unless one party provides written notice that such party intends
to terminate the employment at least six months prior to termination.
The Company may terminate its obligations under the applicable employment
agreement if either of Messrs. P. Blumenfeld or Babilla is discharged for
cause. Each agreement defines "cause" as: (a) an intentional material act of
fraud or embezzlement by the employee in connection with his employment with
the Company; (b) an intentional wrongful material damage to the Company's
property; (c) an intentional wrongful disclosure of material secret processes
or material confidential information of the Company; or (d) an intentional and
continued failure by the employee to perform
15
<PAGE> 17
his duties in his official capacity. Messrs. P. Blumenfeld or Babilla may be
discharged without cause, provided the Company continues to pay the remaining
compensation payments due under the agreements and continues to provide health
insurance. Messrs. P. Blumenfeld and Babilla may terminate their employment
prior to expiration of the agreements and, if the Company has not breached any
provision of the agreements, the Company will be required to pay only the
compensation earned to the date of termination. Any amount payable upon
termination will reduce amounts payable under the Severance Agreements
described below.
SEVERANCE AGREEMENTS
The Company has entered into a Severance Agreement with Messrs. M.
Blumenfeld, P. Blumenfeld and Babilla. Upon a change in control of the Company,
each of the Severance Agreements becomes effective for three years, with
automatic one-year extensions on each anniversary of the change in control,
unless the Board of Directors elects not to extend the term and such election
is made at least ninety days prior to the anniversary of the change in control.
In general, a change in control is defined under the agreements as: (a) a
merger, consolidation, reorganization or sale of all or substantially all the
assets of the Company resulting in a reduction of the current voting power of
the Company's Common Stock to less than 60% of the voting power; (b) the
acquisition by any person of greater than 20% of the outstanding voting
securities of the Company; (c) a change in the majority of the Company's
directors at any time unless the new directors are approved by at least a
majority of the old directors still in office; (d) an event required to be
reported by the Company in response to Item 6(e) of Schedule 14A promulgated
under the Exchange Act; or (e) any other event causing a change in control as
determined by the Board of Directors. A change in control is deemed not to have
occurred as a result of any of the foregoing transactions if such transaction
was proposed by, and included a significant equity participation of, executive
officers of the Company or any Company employee stock ownership plan or pension
plan. The execution, delivery and performance of the Agreement with Emerson
will result in a change in control under the Severance Agreements. See "Certain
Relationships and Related Transactions."
After a change in control, the Company may terminate the employee's
employment only by reason of the employee's death or disability or for cause
(as defined in the agreements). The employee is entitled to cash severance
compensation from the Company if the Company terminates the employee's
employment for any other reason after a change in control, or if the employee
resigns after a change in control and any one of the following events has
occurred: (a) an adverse change in the nature or scope of the employee's
position with the Company; (b) a reduction in the employee's salary, bonus or
incentive compensation or a significant reduction in other monetary or
nonmonetary benefits to which the employee was entitled; (c) a good faith
determination by the employee that a change in circumstances has significantly
affected his position, or that a change in the composition or policies of the
Board of Directors, or such other material event, has substantially rendered
such employee unable to carry out or perform his position with the Company; (d)
the Company has required the employee to relocate or travel significantly more
than prior to the change in control; or (e) the Company has committed any
material breach of the agreement.
16
<PAGE> 18
The cash severance compensation is equivalent to 299% of the sum of: (a)
the highest annual salary of the employee during the period of employment
commencing on the day prior to a change in control and continuing until
expiration of the agreement or the employee's salary immediately prior to the
change in control, whichever is larger; and (b) bonuses or incentive
compensation paid by the Company in the preceding fiscal year. The severance
compensation is generally designed to compensate for the loss of the employee's
compensation, including salary and bonuses, less any amounts the payment of
which might cause adverse consequences under federal income tax laws (as
described in the agreements). The maximum aggregate contingent liability under
the named executive officers' severance agreements is currently approximately
$1,914,000.
OPTION AGREEMENTS
All of the option agreements held by the named executive officers listed
above enable such executive officers to elect for a period of 180 days
following a change in control (as defined in the option agreements governing
the options) to surrender to the Company for cancellation all or any part of
the unexercised portion of their respective option. In consideration for such
surrender and cancellation, the named executive officer is entitled to receive
for each share of Common Stock as to which the surrendered portion of the
option relates, an amount in cash equal to the difference between the exercise
price per share under the option and the highest closing sales price per share
of Common Stock during the 360 day calendar period prior to such named
executive officer's election to surrender the option as described in this
paragraph. Mr. Edlein's stock option agreements were amended to delete this
provision. The execution, delivery and performance of the Agreement will be
deemed to be a change in control for purposes of these options. See "Executive
Compensation and Other Information -- Option Agreements." The maximum aggregate
contingent liability under the named executive officers' option agreements is
currently approximately $210,000.
BOARD OF DIRECTOR INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 1996, the members of the Board of Directors were primarily
responsible for determining executive compensation. The following executive
officers, who also were members of the Board of Directors during fiscal 1996,
participated in deliberations concerning executive officer compensation:
Michael J. Blumenfeld, Peter S. Blumenfeld and Sanford R. Edlein.
REPORT OF THE BOARD OF DIRECTORS AND STOCK OPTION COMMITTEE ON EXECUTIVE
COMPENSATION
Currently, the Company's Board of Directors and the Stock Option Committee
share the responsibility for establishing and administering the Company's
executive compensation programs. The Board of Directors has responsibility for
determining executive compensation. The Stock Option Committee has
responsibility for administering the Company's Option Plan, including authority
regarding the selection of award recipients and the size and terms of all
option grants under the Option Plan. The Chairman of the Board, subject to
review and approval
17
<PAGE> 19
by the Board of Directors, determines on an annual basis the compensation to be
paid to the executive officers of the Company. Under the supervision of the
Board of Directors, the Company has developed and implemented compensation
policies, plans and programs that seek to enhance the profitability of the
Company, and thus stockholder value, by aligning closely the financial
interests of the Company's executives with those of its stockholders. The
specific objectives of the Company's executive compensation program are to:
-- Support the achievement of the Company's strategic operating
objectives.
-- Provide compensation at competitive levels that will attract and
retain superior talent and reward executive officers based upon
performance.
-- Align the executive officers' interests with the success of the
Company by placing the majority of pay increases at risk (i.e.
increases that are dependent upon Company performance).
The Company's executive officer compensation program for fiscal 1996 was
comprised of base salary and long-term incentive compensation in the form of
stock options and various benefits generally available to employees of the
Company (such as health insurance).
It is the objective of the Company to maintain base salaries that are in
the mid-range of competitive amounts paid to senior executives with comparable
qualifications, experience and responsibilities at other companies engaged in
the same or similar business and with revenues and earnings in a range
comparable to those of the Company. Through the use of industry-specific
published compensation surveys and executive compensation data derived from the
proxy statements of a competitive peer group of companies, the Company has
established and continues to monitor the salary levels of its executive
officers. The peer group used by the Company for establishing salary levels is
identical to the group used in the Corporate Performance Graph described below.
The Company has entered into employment agreements with each of Peter S.
Blumenfeld and Terrence M. Babilla. Pursuant to such employment agreements and
subsequent pay raises, Messrs. P. Blumenfeld and Babilla receive base salaries
of $224,000 and $190,000, respectively. See "-- Employment Agreements".
The award of options to purchase Company Common Stock forms the basis for
the Company's long-term incentive plan for officers and key employees. No
option awards were made to any of the named executive officers during fiscal
year 1996.
Michael J. Blumenfeld was the founder of the Company and has served as
Chairman of the Board and Chief Executive Officer of the Company or its
predecessors for more than 20 years. Beginning in 1994, the Board of Directors
established a base salary for Mr. M. Blumenfeld equivalent to $224,000 per
year. Mr. Blumenfeld's base salary remained at $224,000 for calendar years 1995
and 1996. Mr. Blumenfeld agreed to reduce his annual cash salary by $20,000 for
1995. In addition, he agreed to forego a salary increase for 1995 in exchange
for options to acquire 20,000 shares of Common Stock in a continuing effort to
change to a more variable focused compensation package. In addition, in fiscal
1995 Mr. M. Blumenfeld received as remuneration for services performed in his
capacity as Chief Executive Officer
18
<PAGE> 20
options to purchase 100,000 shares of Common Stock at an exercise price of
$11.63 per share (fair market value on the date of grant). Mr. Blumenfeld did
not receive an increase in salary for fiscal 1996 or any option grants in
fiscal 1996. The current salary level was subjectively established by the Board
of Directors and not subject to specific criteria. However, the Board of
Directors believes that the compensation levels are reasonable.
This report is submitted by the members of the Board of Directors and the
Stock Option Committee:
Board of Directors Stock Option Committee
------------------ ----------------------
Michael J. Blumenfeld William H. Watkins, Jr.
Peter S. Blumenfeld Robert W. Philip
Robert W. Philip
William H. Watkins, Jr.
This report will not be deemed to be incorporated by reference in any
filing by the Company under the Securities Act of 1933 (the "Securities Act")
or the Exchange Act, except to the extent that the Company specifically
incorporates this report by reference.
19
<PAGE> 21
CORPORATE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the S&P 500 Composite Index and an index of peer companies selected by
the Company for the period since June 10, 1991 (the end of the first full
quarter following the Company's initial public offering on April 12, 1991). The
comparison assumes $100 was invested on June 30, 1991 in the Company's Common
Stock and in each of the two indices and assumes reinvestment of dividends.
Companies in the peer group are as follows: Ajay Sports, Inc., Anthony
Industries, Inc., Escalade, Inc., and Johnson Worldwide Associates, Inc.
[GRAPH]
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Corporate Performance Graph will
not be deemed to be incorporated by reference in any filing by the Company
under the Securities Act or the Exchange Act, except to the extent that the
Company specifically incorporates the graph by reference.
20
<PAGE> 22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 27, 1996 Emerson and the Company entered into the Agreement
under which Emerson will purchase from the Company 1,600,000 Shares of the
Company at a purchase price of approximately $7.19 per Share (for an aggregate
consideration of $11,500,000). In addition, Emerson will purchase, for an
aggregate consideration of $500,000, 5-year Warrants to acquire an additional
1,000,000 shares of Common Stock at an exercise price of $7.50 per share,
subject to adjustments. All funds to be utilized by Emerson in connection with
the purchase of the Shares and the Warrants will be borrowed by Emerson from
Congress Financial Corporation, its current senior lender, under the terms of
its existing Loan Agreement. After the closing of the Transactions, but prior
to the exercise of any such Warrants, Emerson will own approximately 27.0% of
the outstanding shares of the Common Stock and, assuming exercise of all such
warrants, will beneficially own approximately 34.9% of the Common Stock. See
"Beneficial Ownership of Common Stock." Emerson will also be granted, pursuant
to a Registration Rights Agreement (the "Registration Rights Agreement"),
registration rights on the resale of the shares of Common Stock it will own, as
well as on the exercise and resale of the shares it may acquire under the
Warrants. Emerson has also agreed to arrange for foreign trade credit financing
of $2 million for the benefit of the Company to supplement the Company's
existing credit facilities.
Pursuant to the Agreement, the Company will cause a majority of the members
of its Board of Directors to consist of Emerson's designees until the Company's
next shareholder meeting. In addition, for a period of at least 2 years after
the closing, neither the Company nor any of its subsidiaries shall be permitted
to enter into or be a party to any agreement or transaction with any Affiliate
(as such term is defined in the Exchange Act) of the Company or Emerson, except
(i) in the ordinary course of the Company's or its subsidiaries business and on
terms no less favorable to the Company or its subsidiaries than would be
obtained in a comparable arms' length transaction with a person not an
Affiliate of the Company or Emerson and (ii) unless approved by a majority of
the Company's directors who do not have a direct or indirect material financial
interest in the agreement or transaction and are not officers or employees of
SSG or Emerson or directors of Emerson.
The parties expect that a closing of the transactions contemplated by the
Agreement will occur on or before December 12, 1996 (the "Closing Date"),
subject to adjournments or postponements as agreed upon by the parties, but in
no event later than December 16, 1996. If the Transactions are not consummated
due to (i) the Company's acceptance of an Acquisition Proposal (as such term is
defined in the Agreement) other than with Emerson or (ii) the willful failure
to close by the Company and Emerson has not in any way contributed to the
failure to so close, the Company will pay Emerson a termination fee of
$750,000. If the Transactions are not consummated due solely to the financial
inability or willful failure to close by Emerson and the Company has not in any
way contributed to the failure to so close, Emerson will pay the Company a
termination fee of $3,000,000, which fee is secured by an irrevocable standby
letter of credit.
21
<PAGE> 23
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities to file reports of ownership and changes in
ownership with the SEC and the New York Stock Exchange. Officers, directors and
greater than 10% stockholders are required by certain regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, since October 31, 1995, its officers, directors and
greater than 10% beneficial owners have complied with all applicable filing
requirements with respect to the Company's equity securities.
SIGNATURE
Pursuant to the requirements of the Exchange Act, the Registrant has duly
caused the report to be signed on its behalf by the undersigned thereto duly
authorized.
SPORT SUPPLY GROUP, INC.
By: /s/ Peter S. Blumenfeld
----------------------------------------
Name: Peter S. Blumenfeld
Title: President and Chief Operating Officer
22
