-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JbWipDLTvimXTR7IBkPg8TVhI7nBY5F9vJA7eUwCVO8CmRECi4FJVpLBJ3CLElFO 5FtjbFlT/F+hYCQfeiHnYQ== 0000950123-98-005387.txt : 19980525 0000950123-98-005387.hdr.sgml : 19980525 ACCESSION NUMBER: 0000950123-98-005387 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980522 SROS: NONE GROUP MEMBERS: KENNETH S. GROSSMAN GROUP MEMBERS: OAKTREE CAPITAL MANAGEMENT LLC /ADV GROUP MEMBERS: OCM PRINCIPAL OPPORTUNITIES FUND LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EMERSON RADIO CORP CENTRAL INDEX KEY: 0000032621 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 223285224 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-17956 FILM NUMBER: 98630865 BUSINESS ADDRESS: STREET 1: NINE ENTIN RD STREET 2: PO BOX 430 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0430 BUSINESS PHONE: 2018845800 FORMER COMPANY: FORMER CONFORMED NAME: MAJOR ELECTRONICS CORP DATE OF NAME CHANGE: 19770921 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: OAKTREE CAPITAL MANAGEMENT LLC /ADV CENTRAL INDEX KEY: 0000943457 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 954521152 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 550 S HOPE STREET STREET 2: 22ND FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 2136140900 MAIL ADDRESS: STREET 1: 550 SOUTH HOPE ST STREET 2: 22ND FL CITY: LOS ANGELES STATE: CA ZIP: 90071 FORMER COMPANY: FORMER CONFORMED NAME: OAKTREE CAPITAL MANAGEMENT LLC /ADV DATE OF NAME CHANGE: 19970210 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 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 c/o Juris Partners Managing Director & General Counsel 579 Fifth Avenue, Suite 1050 Oaktree Capital Management, LLC New York, New York 10017 550 South Hope Street, 22nd Floor (212) 593-0909 Los Angeles, California 90071 (213) 614-0900 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 13, 1998 (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 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). 2 SCHEDULE 13D - ---------------------- -------------------------------------- CUSIP NO. 291087 PAGE 2 OF 9 PAGES - ---------------------- -------------------------------------- ================================================================================ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Kenneth S. 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 United States - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY None OWNED BY EACH REPORTING PERSON WITH --------------------------------------------------------------- 8 SHARED VOTING POWER 3,056,489 --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,056,489 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,056,489 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.7% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- 3 SCHEDULE 13D - ---------------------- -------------------------------------- CUSIP NO. 291087 PAGE 3 OF 9 PAGES - ---------------------- -------------------------------------- ================================================================================ 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 - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY None OWNED BY EACH REPORTING PERSON WITH --------------------------------------------------------------- 8 SHARED VOTING POWER 3,056,489 --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,056,489 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,056,489 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.7% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IA;OO - -------------------------------------------------------------------------------- 4 SCHEDULE 13D - ---------------------- -------------------------------------- CUSIP NO. 291087 PAGE 4 OF 9 PAGES - ---------------------- -------------------------------------- ================================================================================ 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 - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY None OWNED BY EACH REPORTING PERSON WITH --------------------------------------------------------------- 8 SHARED VOTING POWER 3,056,489 --------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None --------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 3,056,489 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,056,489 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.7% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- 5 ITEM 1. SECURITY AND ISSUER This statement on Schedule 13D (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"). (i) Grossman The address of the principal business and principal office for Grossman is c/o Juris Partners, 579 Fifth Avenue, Suite 1050, 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 550 South Hope Street, 22nd 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 550 South Hope Street, 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
(iii) The Oaktree Fund The address of the principal business and principal office for the Oaktree Fund is 550 South Hope Street, 22nd 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 limited 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. 5 of 9 6 Bruce A. Karsh 550 South Hope Street, 22nd Floor Los Angeles, California 90071 Stephen A. Kaplan 550 South Hope Street, 22nd 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 On May 13, 1998, the Oaktree Fund purchased $1,310,000 in principal amount of the Issuer's 8-1/2% Senior Subordinated Convertible Debentures Due 2002 (the "Debentures") for $1,047,950. Including such purchase, the Oaktree Fund owns $11,139,000 principal amount of the Debentures, having paid an aggregate of $8,569,925 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 and 100,000 shares of the Issuer's Common Stock. The consideration paid for such Debentures and Common Stock was $447,687.50 and $50,000 ($0.50 per share), respectively. All purchases were made from personal funds. ITEM 4. PURPOSE OF TRANSACTION Grossman and the Oaktree Fund (together, the "Investors") acquired the Common Stock and Debentures for the purpose of investigating 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. The Investors plan to contact and meet with others with interests similar to those of the Investors, and possibly with the Issuer's Board of Directors, to pursue this end. 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 or proceeds from the sale of such subsidiary, a sale of the Issuer's shares of such subsidiary or a divestiture or spin-off of such subsidiary, a change of the membership of the present Board of Directors or Management or other extraordinary transactions. The Investors reserve the right, 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 and Common Stock. The Investors may, from time to time, retain, convert, sell or exchange all or a portion of their holdings of the Debentures or Common Stock in the open market or in privately negotiated transactions. Any actions that the Investors might undertake with respect to the Debentures or Common Stock will be dependent upon their review 6 of 9 7 of numerous factors, including, among other things, the availability of Debentures and Common Stock for purchase, the price levels of such Debentures and Common Stock, 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, material litigation, properties, operations and prospects, the relative attractiveness of alternative business and investment opportunities, and/or the actions of the Management or the Board of Directors. 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 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 the general partner of the Oaktree Fund, may be deemed to beneficially own 3,056,489 shares of Common Stock or 5.7% of the Common Stock outstanding (based on 50,491,786 shares of Common Stock outstanding on February 12, 1998 as reported on the Issuer's Quarterly Report on Form 10-Q for the quarterly period ending December 31, 1997). Such shares include 2,956,489 shares of Common Stock issuable upon conversion of $11,789,000 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 dispose of the Issuer's Common Stock held in the name of the Oaktree Fund. Pursuant to a letter agreement dated as of January 7, 1998, between the Investors, Oaktree 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. (c) On April 7, 1998, the Oaktree Fund purchased $2,700,000 in principal amount of the Debentures for $2,187,000. On May 13, 1998, the Oaktree Fund purchased $1,310,000 in principal amount of the Debentures for $1,047,950. On May 21, 1998, the Oaktree Fund purchased $414,000 in principal amount of the Debentures for $353,970. Other than these transactions, 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 The specified matter is incorporated by reference to Exhibit 1.2 hereto. 7 of 9 8 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. 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.) 8 of 9 9 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 22nd day of May, 1998. 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 9 of 9 10 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. 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.)
EX-99.1.1 2 JOINT FILING AGREEMENT 1 EXHIBIT 1.1 JOINT FILING AGREEMENT Each of the undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D will be filed on behalf of each of the undersigned without the necessity of filing additional joint filing statements. Each of the undersigned acknowledge that each undersigned is responsible for the timely filing of such amendments and for the completeness and accuracy of the information concerning such undersigned contained therein, but is not responsible for the completeness and accuracy of the information concerning each other undersigned except to the extent that such undersigned knows or has reason to believe that such information is inaccurate. Dated as of: May 22, 1998 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 EX-99.1.2 3 LETTER AGREEMENT 1 EXHIBIT 1.2 OAKTREE CAPITAL MANAGEMENT LLC - -------------------------------------------------------------------------------- STEPHEN A. KAPLAN 550 SOUTH HOPE STREET, 22nd FLOOR Principal LOS ANGELES, CALIFORNIA TEL: (213) 694-1513 FAX: (213) 694-1593 January 7, 1998 Kenneth S. Grossman 620 Fifth Avenue, 7th Floor New York, NY 10020 Dear Ken: This letter sets forth our binding agreement relating to existing and proposed investments currently under consideration (the "Investments") in Emerson Radio Corporation and its subsidiaries including Sport Supply, Inc. ("Emerson Radio") or such entities' securities in which the OCM Principal Opportunities Fund, L.P. including any affiliate ("Oaktree") may invest. 1. Oaktree and Kenneth S. Grossman, P.C. ("Grossman") will form a partnership, limited liability company, or other entity, the form of which will be mutually determined taking into account the nature of the transaction and each parties tax concerns (the "Joint Venture"), for the purpose of making an investment in Emerson Radio including, but not limited to, the purchase of 8.5% Senior Subordinated Convertible Debentures due 2002 of Emerson Radio (the "Convertible Notes"). The likely nature of the Joint Venture will be for each party to hold the securities it purchases in its own account with this letter governing the distributions and rights of each party. Both parties will devote such time and resources to the Joint Venture as required. Specifically Ken Grossman will devote such time as is necessary to oversee the purchase, structure, and management of the Investments and will operate at the direction of Oaktree as set forth in paragraph 9 hereof. 2. The Joint Venture will be capitalized by Oaktree contributing **%1 of all capital needed and Grossman or its designee contributing **% of all capital needed; provided that Grossman shall not be obligated to contribute more than $** to the Joint Venture but at its option Grossman may contribute more than $** at the above percentages. Each party will also contribute any Convertible Notes it owns to the Joint Venture, the cost basis of which will be credited to such party's capital contribution. The Joint Venture shall have the option to purchase, as a single block, the Emerson Radio common shares owned by Grossman. The exercise price, which will be credited to Grossman's capital contribution, shall be the average market price for the ten trading days prior to the options exercise date. All reasonable out of pocket costs and expenses incurred by either party relating to the Emerson Radio investment will be paid or reimbursed by Oaktree. Ken Grossman will not incur out of pocket expenses or costs in excess of $** without the express approval of Oaktree. - ----------------- (1) Portions of this document marked as ** have been omitted pursuant to a request for confidential treatment. 2 Kenneth S. Grossman January 6, 1998 Page 2 of 3 3. Distributions from the Joint Venture, or if the Joint Venture is not formed, distributions from the Investments, shall be made when realized in accordance with the percentage of capital contributed by each party; provided that once Oaktree receives distributions from the Joint Venture in order for Oaktree to realize a ** rate of return on its total invested capital (the "IRR") equal to **% per annum (the "Preferred Distributions"), Oaktree shall transfer to Grossman additional distributions equal to **% of the distributions payable to Oaktree beyond the Preferred Distributions in consideration for Grossman's introducing and structuring the transaction. The IRR shall be determined using all cash disbursements (including direct expenses) and cash receipts by or to Oaktree related to the Joint Venture. Oaktree will not allocate any indirect expenses (including salaries, rent, insurance or similar items) to the Joint Venture for the purposes of calculating the IRR. Neither party will receive any other compensation in connection with the Emerson Radio investment; provided, however, that each party shall be able to collect fees or other compensation in connection with any board of director responsibilities. 4. In the event that Oaktree obtains voting control of Emerson's board of directors (the "Board"), it will make reasonable efforts to cause Grossman or its designee to be elected to the Board and to receive compensation in connection with this role no less favorable than any other non-management director; provided, however, that in such capacity Grossman or its designee must act at the direction of Oaktree. 5. Oaktree and Grossman hereby agrees that both parties will keep the terms of this letter and proposed transaction confidential and shall not disclose to any third party except to their respective attorneys, accountants and advisers who need to know and agrees to keep such information confidential. Grossman agrees to cease any discussions regarding the Emerson Radio investment or Convertible Notes, which are not in furtherance of the interests of the Joint Venture, with any other party immediately. 6. The parties will execute mutually acceptable definitive documents that Oaktree will prepare as soon as possible. 7. Grossman represents and warrants to Oaktree that ** has no interest in the Joint Venture and hereby indemnifies and holds Oaktree harmless from any claim of ** relating to the activities of the joint venture. 8. Grossman further represents and warrants to Oaktree that it owns $650,000 face value of Convertible Notes and 100,000 shares of Emerson common stock. Oaktree represents and warrants to Grossman that it owns $1 million face value of 3 Kenneth S. Grossman January 6, 1998 Page 3 of 3 Convertible Notes. 9. Oaktree shall have complete discretion and control over the investments of the Joint Venture including the price paid for any securities or assets purchased by the Joint Venture, the timing and price of the sale of such securities and assets and all strategy decisions in connection therewith. Grossman shall have the right to review and to have his counsel review any 13-D or other filings with the Securities and Exchange Commission in connection with the Investments not less than three days in advance of such filings. 10. It is the parties' intention that this letter agreement be binding and conclusive as between them even if no further documentation evidencing the Joint Venture is executed. If the foregoing is acceptable to you, please sign a copy of this letter and fax it to me at (213) 694-1593, and I will then have the attorneys start preparing more definitive documents to structure the Joint Venture and the Emerson Radio investment. We look forward to working with you. Should you have any questions, please feel free to give me a call at (213) 694-1513. OCM Principal Opportunities Fund, L.P. By: Oaktree Capital Management, LLC Its: General Partner /s/ Stephen A. Kaplan By: Stephen A. Kaplan Agreed and accepted to: Kenneth S. Grossman, P.C. /s/ Kenneth S. Grossman - ----------------------------- By: Kenneth S. Grossman Its: President -----END PRIVACY-ENHANCED MESSAGE-----