-----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, SiZxNSfaam7veiq5NvlVqDF8pQ5JJUWY89KFoOHxIKM7kVw2/BEdoRkEWPaa75mB 0ot9N86Cy8UVC+yFhiZV3g== 0000032621-97-000032.txt : 19970730 0000032621-97-000032.hdr.sgml : 19970730 ACCESSION NUMBER: 0000032621-97-000032 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970729 SROS: AMEX FILER: 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: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07731 FILM NUMBER: 97647380 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 10-K/A 1 ____________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 _______________________ FORM 10-K/A-1 (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996] For the fiscal year ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-25226 EMERSON RADIO CORP. (Exact name of registrant as specified in its charter) Delaware 22-3285224 (State or other jurisdiction of incorporation (I.R.S. Employer Identifi- or organization) cation Number) Nine Entin Road, Parsippany, NJ 07054 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (973) 884-5800 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $.01 per share American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: Series A Preferred Stock and Warrants. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirement for the past 90 days. [X] YES [ ] NO. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]. Aggregate market value of the voting stock of the registrant held by non- affiliates of the registrant at July 28, 1997 (computed by reference to the last reported sale price of the Common Stock on the American Stock Exchange on such date): $7,838,191. Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [X] YES [ ] NO. Number of Common Shares outstanding at July 28, 1997: 41,743,747 DOCUMENTS INCORPORATED BY REFERENCE: None The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Annual Report on Form 10-K pursuant to the Securities Exchange Act of 1934, as amended, as set forth in the pages attached hereto: PART III, Items 10 - 13 are amended by the inclusion of such items herein. PART IV, Item 14(c) is amended by the inclusion of an additional exhibit. PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS MANAGEMENT OFFICERS AND DIRECTORS The following table sets forth certain information regarding the officers and directors of Emerson Radio Corp. (the "Company") as of the date hereof: Name Age Position Geoffrey P. Jurick 56 Chairman of the Board, Chief Executive Officer, President and Director Eugene I. Davis 42 Vice Chairman, Director John P. Walker 34 Executive Vice President, Chief Financial Officer Marino Andriani 49 President, Emerson Radio Consumer Products Corporation John J. Raab 61 Senior Vice President - Operations Elizabeth J. Calianese 39 Vice President-Human Resources, Secretary Robert H. Brown, Jr. 43 Director (1)(2) Peter G. Bunger (2) 56 Director Jerome H. Farnum (1) 61 Director Raymond L. Steele 62 Director (1)(2) ___________________________________ (1) Member of Audit Committee (2) Member of Compensation and Personnel Committee GEOFFREY P. JURICK has served as Director since September 1990, Chief Executive Officer since July 1992, Chairman since December 1993 and President since April 1997. Mr. Jurick also previously served as President from July 1993 to October 1994. From March 1990 until approximately 1994 he was President and Director of Fidenas Investment Limited. Since December 1993, Mr. Jurick has served as a Director of Fidenas International Limited, L.L.C. and its predecessor ("FIN") and, since May 1994, as an officer and general manager of Fidenas International. See "Legal Proceedings." Mr. Jurick has served as a Director, Chairman and Chief Executive Officer of GSE Multimedia Technologies Corporation ("GSE"), which is traded in the over-the-counter market, since May 1994. Since March 1996, Mr. Jurick has served as Chairman of Elision International Ltd. ("Elision"). For more than the past five years, Mr. Jurick has held a variety of senior executive positions with several of the entities comprising the Fidenas group of companies ("Fidenas Group"), whose activities encompass merchant banking, investment banking, investment management, and corporate development. Since December 1996, Mr. Jurick has served as a Director, Chairman of the Board and Chief Executive Officer of Sport Supply Group, Inc. ("SSG"), a company which is an affiliate of the Company and whose securities are traded on the New York Stock Exchange. EUGENE I. DAVIS has served as Vice Chairman since April 1997 and as a Director since September 1990. Mr. Davis served as President from October 1994 until April 1997, Interim Chief Financial Officer from February 1993 until November 1995 and as Executive Vice President from July 1992 to October 1994. Since August 1992, Mr. Davis has served as a director of Tipperary Corporation, which is traded on the American Stock Exchange. Since May, 1995, Mr. Davis has also served as a Director of Beth Israel Health Care Services, a private corporation. Since December 1996, Mr. Davis has served as a Director of and independent consultant to SSG, an affiliate of the Company. JOHN P. WALKER has served as Executive Vice President and Chief Financial Officer since April 1996 and was Senior Vice President from April 1994 until March 1996. Mr. Walker was Vice President-Finance from February 1993 to April 1994 and Assistant Vice President-Finance from June 1991 to January 1993. Since December 1996, Mr. Walker has served as a Director and Chief Financial Officer of SSG, an affiliate of the Company. MARINO ANDRIANI has served as President of Emerson Radio Consumer Products Corporation since February 1996. From December 1994 until February 1996, Mr. Andriani was President of Appliance Corp. of America, a Welbilt Consumer Products Company. From March 1993 to December 1994, Mr. Andriani was President of Orient Express Marketing. Prior thereto, Mr. Andriani was Executive Vice President-Sales of the Company from September 1990 to March 1993. JOHN J. RAAB has served as Senior Vice President-Operations since October 1995 and was Vice President-Far East Operations from May 1995 until September 1995. Prior thereto, he was President and Chief Operating Officer of Robeson Industries Corp. from March 1990 to March 1995. Robeson Industries Corp. filed for relief under Chapter 11 of the United States Bankruptcy Code and emerged from Bankruptcy and was sold in the end of 1994. ELIZABETH J. CALIANESE has served as Secretary since January 1996, as Vice President-Human Resources since May 1995 and as Deputy General Counsel since May 1995. From April 1991 to May 1995, Ms. Calianese served as Assistant General Counsel. ROBERT H. BROWN, JR. has been a Director since July 1992. Presently, he is Executive Vice President of Rauscher Pierce Refsnes, Inc. ("Rauscher"). Since February 1994, Mr. Brown has been Executive Vice President of Capital Markets of Rauscher, in Dallas, Texas. From January 1990 until February 1994, Mr. Brown was Senior Vice President and Director of the Corporate Finance Department of Rauscher. Since May 1993, Mr. Brown has served as a Director of Stevens Graphics Corp., which is traded on the American Stock Exchange. PETER G. BUNGER has been a Director since July 1992. Presently, he is a consultant with Savarina AG. Since October 1992, Mr. Bunger has served as Director of Savarina AG, engaged in the business of portfolio management monitoring in Zurich, Switzerland, and since 1992, as Director of ISCS, a computer software company. From December 1991 until December 1993, he was Vice Chairman of Montcour Bank and Trust Company Limited, a bank organized in the Bahamas and an affiliate of Fidenas International. From 1981 until 1992, Mr. Bunger was owner and Managing Director of Peter G. Bunger Investment Consulting, a firm which supervised, controlled, and analyzed investments for individuals. See "Legal Proceedings." Since December 1996, Mr. Bunger has served as a Director of SSG, an affiliate of the Company. JEROME H. FARNUM has been a Director since July 1992. Since July 1994, Mr. Farnum has been an independent consultant. From 1979 until 1994, Mr. Farnum served as a senior executive with several of the entities comprising the Fidenas Group, in charge of legal and tax affairs, accounting, asset and investment management, foreign exchange relations, and financial affairs. See "Legal Proceedings." RAYMOND L. STEELE has been a Director since July 1992. He has been retired since September 1993. From August 1990 until September 1993, Mr. Steele served as Executive Vice President of Pacholder Associates, Inc., a company providing investment management and other financial advisory services to institutional clients. Mr. Steele is a member of the Board of Directors of Pharmhouse, Inc., a publicly-traded retail drug chain, Modernfall, Inc., IPL/VSC and the GFTA Advisory Board. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's Directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of change in ownership of Common Stock and other equity securities of the Company. Executive officers, Directors and greater than ten percent stockholders are required by SEC Regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company and representations that no other reports were required, during the fiscal year ended March 31, 1997, all Section 16(a) filing requirements were complied with which were applicable to the officers, Directors and greater than ten percent beneficial owners. It is the practice of the Company to attend to the filing of Section 16(a) forms on behalf of the officers and directors of the Company. ITEM 11 - EXECUTIVE COMPENSATION AND OTHER INFORMATION COMPENSATION OF EXECUTIVE OFFICERS The following executive compensation disclosures reflect all plan and non- plan compensation awarded to, earned by, or paid to the named executive officers of the Company. The "named executive officers" are the Company's Chief Executive Officer (the "CEO"), regardless of compensation level, and the four most highly compensated executive officers, other than the CEO serving as such on March 31, 1997. Where a named executive officer has served during any part of the Company's fiscal year ended March 31, 1997 ("Fiscal 1997"), the disclosures reflect compensation for the full year in each of the periods presented. THREE-YEAR COMPENSATION SUMMARY The following table summarizes for the years indicated the compensation awarded to, earned by or paid to the named executive officers for services rendered in all capacities to the Company: SUMMARY COMPENSATION TABLE Annual Compensation Long-Term Compensation Awards Payouts
SECURI- OTHER RESTRIC- TIES ALL ANNUAL TED UNDER- LTIP OTHER FISCAL COMPEN- STOCK LYING PAY- COMPEN YEAR SALARY BONUS SATION AWARDS OPTIONS OUTS SATION (1) (2) (6) (3) Name and Principal Position(s) GEOFFREY P. JURICK 1997 $443,473 $38,500 $121,646 - - - $2,207 CHAIRMAN OF THE 1996 490,000 137,500 102,661 - - - 1,693 BOARD, CHIEF 1995 378,333 275,000 78,702 - 600,000 - 311 EXECUTIVE OFFICER AND PRESIDENT(4) EUGENE I. DAVIS 1997 408,333 87,500 89,528 - - - 17,113 VICE CHAIRMAN 1996 450,000 87,500 90,745 - - - 12,997 (4) 1995 360,000 175,000 102,024 - 600,000 - 6,986 JOHN P. WALKER 1997 179,116 40,000 18,816 - - - 7,089 EXECUTIVE VICE 1996 165,000 40,000 24,307 - - - 4,912 PRESIDENT AND 1995 110,000 75,000 20,420 - 200,000 - 3,841 CHIEF FINANCIAL OFFICER (4) MARINO ANDRIANI 1997 387,100 - 9,808 - 75,000 - 11,352 PRESIDENT, 1996 51,827 - 1,400 - - - - EMERSON 1995 - - - - - - - RADIO CONSUMER PRODUCTS CORPORATION (5) JOHN J. RAAB 1997 212,100 - 8,638 - - - 11,237 SENIOR VICE 1996 178,846 - 9,131 - 50,000 - 1,882 PRESIDENT- 1995 - - - - - - - OPERATIONS (5)
(1) Includes reimbursement of salary from Sport Supply Group, Inc. of $46,527 for Mr. Jurick and $41,667 for Mr. Davis in Fiscal 1997. See "Certain Relationships and Related Transactions." (2) Consists of (i) car allowance and auto expenses afforded to the listed Company executive officers, including $32,085, $39,967 and $30,546 paid to Mr. Davis, $13,063, $20,745 and $19,114 paid to Mr. Walker, $8,400, $1,400 and $0 paid to Mr. Andriani and $8,400, $8,400 and $0 paid to Mr. Raab, respectively, in Fiscal 1997, 1996 and 1995, (ii) tax preparation services provided to Mr. Davis in Fiscal 1997, 1996 and 1995, (iii) expenses paid by the Company on behalf of Mr. Davis, covering his club membership, and (iv) relocation and temporary lodging expenses and associated tax gross-ups in the amount of $120,573, $102,661 and $73,394 for Mr. Jurick, $0, $24,493 and $43,002 for Mr. Davis paid by the Company in Fiscal 1997, 1996 and 1995, respectively. See "Certain Relationships and Related Transactions." (3) Consists of the Company's contribution to its 401(k) employee savings plan, life insurance and disability insurance. (4) As more fully described below, pursuant to the Management Services Agreement, dated July 1, 1997 to be effective March 7, 1997, between SSG and the Company, SSG shall reimburse the Company for salary payments made to Mr. Jurick for the benefit of SSG, which payments shall be $20,833.33 per month, plus expenses incurred by Mr. Jurick on behalf of SSG, subject to increases approved by the SSG Board of Directors. As also more fully described below, pursuant to the Davis Extension Agreement effective April 1, 1997, Mr. Davis shall receive his current salary from the Company, subject to adjustment as provided in the Davis Employment Agreement, and the Company shall credit against such salary obligations any amounts Mr. Davis receives as base compensation from SSG. Initially, it is understood that Mr. Davis' base salary from the Company shall be $450,000, of which $200,000 shall be paid by SSG and $250,000 shall be paid by the Company. The Davis Extension Agreement also provides that Mr. Davis shall remain entitled to all other benefits and privileges currently available under his employment agreement. As also more fully described below, pursuant to the Walker Extension Agreement, effective December 11, 1996, Mr. Walker's base salary from the Company and SSG shall be $290,000 of which $190,000 shall be paid from SSG and $100,000 shall be paid from the Company. (5) Mr. Raab became an executive officer of the Company in March 1995. Mr. Andriani became an executive officer of the Company in February, 1996. (6) In July 1994, the Company granted stock options to purchase 600,000, 600,000, and 200,000 shares of common stock to each of Messrs. Jurick, Davis and Walker, respectively, exercisable at an exercise price of $1 per share (except $1.10 in the case of Mr. Jurick). In November 1995, Mr. Raab was granted a stock option to purchase 50,000 shares of common stock at an exercise price of $2.875 per share. On April 8, 1996, the Company granted Mr. Andriani stock options to purchase 75,000 shares of common stock, exercisable at an exercise price of $2.563. The outstanding options vest in annual increments of one-third, commencing one year from the date of grant, and their exercise is contingent on continued employment with the Company. STOCK OPTIONS The following table sets forth information regarding the grant of stock options during Fiscal 1997 to the named executive officers: OPTION GRANTS IN FISCAL 1997 Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Individual Grants Term (2)
% of Total Options Grant- ed to Employ- Exer- Number ees cise Of in Price Expir- Options Fiscal Per ation Name Granted 1997 Share Date(1) 5% 10% GEOFFREY P. JURICK - - - - - - EUGENE I. DAVIS - - - - - - JOHN P. WALKER - - - - - - MARINO ANDRIANI 75,000 60 $2.563 4/8/06 $120,889 $306,357 JOHN J. RAAB - - - - - -
(1) The stock options were granted under the 1994 Stock Compensation Program, and are exercisable commencing one year after the grant date in three equal annual installments, with full vesting occurring on the third anniversary of the date of the grant. (2) The dollar amounts under these columns are the result of calculations at the assumed compounded market appreciation rates of 5% and 10% as required by the Securities and Exchange Commission over a ten-year term and therefore, are not intended to forecast possible future appreciation, if any, of the stock price. OPTION EXERCISES AND HOLDINGS The following table sets forth information with respect to the named executive officers concerning the exercise of options during Fiscal 1997 and unexercised options held at March 31, 1997: OPTION EXERCISES IN FISCAL 1997 AND MARCH 31, 1997 OPTION VALUES
Number of Value of Unexercised Unexercised Options at In-the-Money Number of March 31, Options at Shares 1997 March 31, 1997 Acquired on Value Exercisable/ Exercisable/ Name Exercise Realized Unexercisable Unexercisable (1) GEOFFREY P. JURICK - - 400,000/200,000 $0/$0 EUGENE I. DAVIS - - 400,000/200,000 $24,000/$12,000 JOHN P. WALKER - - 133,333/ 66,667 $ 8,000/$ 4,000 MARINO ANDRIANI 0/ 75,000 $0/$0 JOHN J. RAAB - - 16,667/ 33,333 $0/$0
(1) Calculated based on the difference between the aggregate fair market value of the shares subject to options at March 31, 1997 and the aggregate option exercise price. CERTAIN EMPLOYMENT CONTRACTS On August 13, 1992, Geoffrey P. Jurick, Chairman, Chief Executive Officer and President of the Company, entered into five-year employment agreements ("Jurick Employment Agreements") with the Company and two of its wholly-owned subsidiaries, Emerson Radio (Hong Kong) and Emerson Radio International Ltd. (formerly Emerson Radio (B.V.I.) Ltd.) (hereinafter, collectively the "Companies"), providing for an aggregate annual compensation of $250,000, which was increased to $390,000 in May 1994 and to $490,000 effective April 1, 1995. In addition to his base salary, the Jurick Employment Agreements provide that Mr. Jurick is entitled to an annual bonus upon recommendation by the Compensation and Personnel Committee of the Company's Board of Directors, subject to the final approval of the Company's Board of Directors. By letter agreement dated April 16, 1997, the terms of the Jurick Employment Agreements were extended, and said agreements remain in full force and effect, until March 31, 2000. However, pursuant to the Settlement Agreement, hereinafter defined, Mr. Jurick's cash compensation from the Company and all subsidiaries and affiliates shall be limited to a total of $750,000 until the Settlement Amount is paid. See "Certain Relationships and Related Transactions." As more fully described below, pursuant to the Management Services Agreement, dated July 1, 1997 to be effective March 7, 1997, between SSG and the Company ("Management Services Agreement"), SSG shall reimburse the Company for salary payments made to Mr. Jurick for the benefit of SSG, which payments shall be $20,833.33 per month and commenced effective January 23, 1997, plus expenses incurred by Mr. Jurick on behalf of SSG, subject to increases approved by the SSG Board of Directors. Subject to certain conditions, each of the Jurick Employment Agreements grants to Mr. Jurick severance benefits, through expiration of the respective terms of each of such agreements, commensurate with Mr. Jurick's base salary, in the event that his employment with the Companies terminates due to permanent disability, without cause or as a result of constructive discharge (as defined therein). In the event that Mr. Jurick's employment with the Companies terminates due to termination for "cause", because Mr. Jurick unilaterally terminates the agreements or for reasons other than constructive discharge or permanent disability, Mr. Jurick shall only be entitled to base salary earned through the applicable date of termination. Similar provisions are set forth in each of the contracts described below. On August 13, 1992, Eugene I. Davis, Vice Chairman of the Company, entered into a five-year employment agreement ("Davis Employment Agreement") with the Company, providing for an annual compensation of $360,000, which was increased to $450,000 effective April 1, 1995. In addition to his base salary, the Davis Employment Agreement provides that Mr. Davis is entitled to an annual bonus equal to an amount up to 30% of Mr. Davis' base salary, based upon attainment of objectives identified in the Company's five-year business plan adopted by the Board of Directors ("Business Plan"). The Davis Employment Agreement also provides that Mr. Davis may also receive an additional annual performance bonus to be recommended by the Compensation and Personnel Committee of the Company's Board of Directors, subject to the final approval of the Company's Board of Directors. Pursuant to the Davis Employment Agreement, the Company granted to Mr. Davis an option to purchase 500,000 shares of Common Stock. Such option was canceled pursuant to the Plan of Reorganization; however, the Company subsequently granted Mr. Davis options to purchase 600,000 shares of Common Stock. The Company also agreed for the term of the Davis Employment Agreement and three years thereafter, to pay for and maintain legal malpractice insurance covering Mr. Davis for occurrences and actions taken by him at any time prior to or during the term of such agreement on behalf of the Company or its employees. The Company also agreed to pay all sums, which may be deductible amounts, not otherwise paid by such insurer. By letter agreement dated April 16, 1997 ("Davis Extension Agreement"), the Davis Employment Agreement was amended as follows: 1.) the term of the Davis Employment Agreement was extended to March 31, 2000; 2.) Mr. Davis is only obligated to devote approximately 60% of his business time to serve on behalf of the Company, its subsidiaries and affiliates, including SSG; 3.) Mr. Davis will serve as Vice Chairman of the Company, will no longer serve as President of the Company and shall serve in such other duties and capacities for the Company, its subsidiaries and affiliates (including SSG) as may be directed by the Company's Board of Directors, Chairman or Chief Executive Officer; and, 4.) Mr. Davis shall receive his current salary from the Company, subject to adjustment as provided in the Davis Employment Agreement, and the Company shall credit against such salary obligation any amount Mr. Davis receives as base compensation from SSG. Initially, it is understood that the combined base compensation from the Company and SSG shall be $450,000, of which $200,000 shall be paid by SSG and $250,000 from the Company The Davis Extension Agreement also provides that Mr. Davis shall be entitled to all other benefits and privileges available under the Davis Employment Agreement. The Davis Extension Agreement also provides it is understood that during the 40% of Mr. Davis' business time not devoted to the Company or SSG, Mr. Davis shall be developing other business opportunities and the Company has a right of first refusal on such opportunities. The Davis Extension Agreement also provides that upon the request of the Company's Board of Directors or Chairman, Mr. Davis shall resign as a Director of the Company but any such resignation shall not effect Mr. Davis' continued employment or rights under the Davis Employment Agreement, as amended. Upon execution of the Davis Employment Agreement, the Company provided Mr. Davis with a one-time lump sum payment of $100,000, which figure is net of applicable taxes and withholdings. In connection with Mr. Davis' relocation to New Jersey, the Company assumed certain relocation expenses and associated tax gross-ups on Mr. Davis' behalf aggregating $239,915. See "Summary Compensation Table." As of April 1, 1994, John P. Walker, Executive Vice President and Chief Financial Officer, entered into a three-year employment agreement with the Company providing for an annual compensation of $110,000, which was increased to $165,000 effective April 1, 1995 and increased to $210,000 effective April 1, 1996 ("Walker Employment Agreement"). In addition to his base salary, the Walker Employment Agreement provided that Mr. Walker is entitled to an annual bonus equal to an amount up to 30% of Mr. Walker's base salary, upon attainment of objectives identified by the Executive Committee and that Mr. Walker may also receive an additional annual performance bonus to be recommended by the Compensation and Personnel Committee of the Company's Board of Directors, subject to the final approval of the Company's Board of Directors. By Amendment No. 1 to Employment Agreement, dated April 16, 1997 ("Walker Amendment Agreement"), the Walker Employment Agreement was amended as follows: 1.) the term of the Walker Employment Agreement was extended to April 1, 2000, with provisions for any negotiation of further extensions thereof; 2.) Mr. Walker shall continue to serve as Executive Vice President and Chief Financial Officer of the Company and shall also serve in such other positions with the Company, its subsidiaries or affiliates (including SSG) as may be directed by the Company's Board of Directors, Chairman, President or Chief Executive Officer and that the Company understands that Mr. Walker shall devote approximately 30% of his business time to the Company with the balance of his business time devoted to the business of SSG; 3.) Mr. Walker shall relocate to Dallas, Texas and the Company shall reimburse Mr. Walker for his normal and reasonable traveling expenses to the Company's offices in order to perform his business obligations to the Company; 4.) effective December 11, 1996, Mr. Walker's annual salary was modified to $100,000 and Mr. Walker waived any right to a bonus for Fiscal 1997 to which he would have been entitled under the Walker Employment Agreement; 5.) Mr. Walker is entitled to life insurance as provided immediately prior to the effective date of the Walker Amendment Agreement which shall be in accordance with the Company's policies afforded to senior executives; and, 6.) in the event Mr. Walker's employment was terminated due to Permanent Disability, a Without Cause Termination or a Constructive Discharge, as defined therein, the Walker Amendment Agreement provides for severance benefits. In the event Mr. Walker's employment is terminated due to a Termination for Cause or Mr. Walker unilaterally severs the relationship, Mr. Walker shall only be entitled to base salary earned through the date of termination and vested qualified stock options will remain vested. If Messrs. Jurick, Davis and Walker were to be terminated due to permanent disability, without cause or as a result of constructive discharge, the estimated dollar amount to be paid after March 31, 1997 to each such individual, based on the terms of their respective contracts, would be $1,470,000, $1,350,000 and $300,000, respectively. However, the estimated amounts to be paid to (i) Mr. Jurick is subject to certain limitations under the Settlement Agreement and would be reduced by $20,833.33 per month for as long as the Management Services Agreement is in effect and (ii) Mr. Davis is subject to the Company's entitlement to a credit for as long as Mr. Davis receives compensation from SSG, initially at $200,000 per annum. COMPENSATION OF DIRECTORS Directors of the Company who are employees do not receive compensation for serving on the Board. Non-employee Directors are paid $20,000 per annum in quarterly installments. The Chairmen of the Audit Committee and Compensation and Personnel Committee each receive an additional $10,000 per annum. Pursuant to the terms of the Company's 1994 Non-Employee Director Stock Option Plan, each non-employee Director was granted options to purchase 25,000 shares of Common Stock on October 7, 1994. On October 7, 1994, each Chairman was also granted options to purchase an additional 25,000 shares of Common Stock. Peter G. Bunger, a Director of the Company, has also been retained by the Company for certain consulting services. See "Certain Relationships and Related Transactions." COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION In November 1996, Peter G. Bunger was retained as a consultant, and is being paid on a per diem basis, at the approximate rate of $10,000 for each month when he is present in Hong Kong and providing services to the Company. Mr. Bunger received compensation and reimbursement of expenses aggregating $49,000 in Fiscal 1997. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of July 28, 1997, by (i) each Director and nominee for Director of the Company, (ii) executive officers and Directors of the Company as a group and (iii) each person or entity known by the Company to be the beneficial owner of more than 5% of the Company's outstanding Common Stock. For purposes of this Form 10-K/A-1, beneficial ownership of securities is defined in accordance with the rules of the Securities and Exchange Commission and means generally the power to vote or exercise investment discretion with respect to securities, regardless of any economic interests therein. Except as otherwise indicated and based upon the Company's review of information on file with the Securities and Exchange Commission, the Company believes that the beneficial owners of the securities listed below have sole investment and voting power with respect to such shares, subject to community property laws where applicable.
Amount and Nature of Name and Address of Beneficial Percent of Class Beneficial Owner Ownership(2) Geoffrey P. Jurick (1)(3) 29,752,642 70.3% Nine Entin Road Parsippany, NJ 07054 Fidenas International 29,152,542 69.8% Limited, L.L.C. (1) c/o Geoffrey P. Jurick Nine Entin Road Parsippany, NJ 07054 Elision International, 1,600,000 3.8% Inc. 275 Wyman Street Waltham, MA 02154 GSE Multimedia 12,000,000 28.7% Technologies Corporation Kostheimer-Landstrasse 36 55246 Mainz - Kostheim Germany D6502 Eugene I. Davis (3) 650,000 1.5% Robert H. Brown, Jr. 33,334 (4) Peter G. Bunger 16,667 (4) Jerome H. Farnum 16,667 (4) Raymond L. Steele 33,334 (4) All Directors and Officers 30,749,311 71.0% as a Group (11 persons) (5)(6)
(1) Consists of 15,552,542, 1,600,000 and 12,000,000 shares of Common Stock held by FIN, Elision and GSE, respectively. FIN is record holder of 847,458 shares of Common Stock and formerly held such shares as nominee. The nominee relationship has been terminated and FIN and Mr. Jurick disclaim beneficial ownership. Mr. Jurick indirectly owns, through a controlled holding company, approximately 95% of FIN. In addition, Mr. Jurick is the manager of FIN. FIN owns approximately 14.3% of Elision. Mr. Jurick indirectly owns, through certain holding companies and beneficial interests in affiliates, a controlling interest in each of GSE and Elision. In accordance with a Stipulation and Order of Settlement, dated June 11, 1996 (the "Stipulation"), the shares of Common Stock held by Elision and GSE are to be transferred and registered in the name of FIN. All of the shares owned by FIN, Elision and GSE are subject to certain restrictions. See "Certain Relationships and Related Transactions" and "Legal Proceedings." (2) Based on 41,743,747 shares of Common Stock outstanding as of July 28, 1997, plus shares of Common Stock under option of any director or executive officer, exercisable within 60 days. Does not include (i) shares of Common Stock issuable upon conversion of 9,113 shares of Series A Preferred Stock, which are currently exercisable, (ii) Common Stock issuable upon conversion of certain warrants issued to the Company's former creditors, (iii) Common Stock issuable upon exercise of outstanding options, which are not currently exercisable within 60 days, (iv) Common Stock issuable upon conversion of the Company's 8-1/2% Senior Subordinated Convertible Debentures Due 2002 (the "Debentures") or (v) Common Stock issuable upon the exercise of warrants granted to (a) Dresdner Securities (USA) Inc, ("the placement agent") and authorized dealers in connection with the private placement of the Debentures or (b) First Cambridge Securities Corporation in connection with a consulting agreement. (3) Includes options, exercisable within 60 days, to purchase 600,000 shares of Common Stock. (4) Represents less than 1.0% of the outstanding Common Stock. (5) Includes 1,546,669 shares of Common Stock subject to unexercised stock options which were exercisable within 60 days under the Company's Stock Compensation Program. (6) Does not include options to purchase an aggregate of 173,331 shares of Common Stock not currently exercisable within 60 days. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS SETTLEMENT AGREEMENT On June 11, 1996, Barclays, Petra Stelling, the Official Liquidator of FiBank, (collectively, the "Creditors"), Mr. Jurick, the Company (together with the Creditors, the "Lead Parties"), FIN, Elision, GSE, and the Official Liquidator of FIL signed the Stipulation providing for a settlement of all litigation among them on a global basis. Under the Stipulation, Mr. Jurick and FIN agreed to pay the Creditors the aggregate sum of $49.5 million (the "Settlement Amount") and Mr. Jurick is to be paid the sum of $3.5 million, contemplated to be solely from the proceeds of the sale of shares of Emerson's Common Stock (the "Settlement Shares") owned by FIN, GSE, and Elision (the "Jurick Payment" and, together with the Settlement Amount, the "Aggregate Amount"). The Stipulation became effective on February 4, 1997 and all Settlement Shares have been deposited with and remain in the custody of the Court, to prevent defaults under the Company's borrowing facilities. The Settlement Shares (consisting of 29,152,542 shares of Emerson's Common Stock) are divided into two pools, Pool A and Pool B. All Settlement Shares are pledged to secure all obligations under the Stipulation, but the Pool B Shares consist of the amount of shares as to which Mr. Jurick must retain beneficial ownership, and generally are not available for sale or release from the custody of the Court or subject to foreclosure, to prevent defaults under the Company's borrowing facilities. FIN (which is controlled by Mr. Jurick) is to retain title to and the voting power over all Settlement Shares, but will provide notice to the Creditors prior to certain stockholder votes. The Creditors may seek to have the Court direct FIN to vote against any proposal of the Emerson Board, but the Emerson Board may withdraw and not solicit any vote of its stockholders with respect to such proposal. The Stipulation contemplates the employment of a marketing advisor (the "Advisor") and TM Capital Corp. has been so retained to serve as the initial Advisor. The Advisor is formulating a marketing plan for the sale from time to time of the Pool A Shares and will also appoint the Settlement Agent, who will administer certain ministerial aspects of the settlement. The Pool A Shares initially will consist of 15,286,172 Settlement Shares. In formulating the marketing plan, the Advisor will take into account the interests of all the Lead Parties, including the interests of the Company's minority stockholders and the goal of generating sufficient proceeds to pay the Creditors. Sales may be made of the Settlement Shares pursuant to a registered offering if the sales price is not less than 90% of the average of the three most recent closing prices ("Average Closing Price"), or, other than in a registered offering, of up to 1% of the Emerson common stock outstanding per quarter, if the sales price is not less than 90% of the Average Closing Price. Any other attempted sales are subject to the consent of the Company, Mr. Jurick, and the Creditors, or, if necessary, the Court. No definite time has been provided for the sale of the Settlement Shares or the full payment of the Settlement Amount. However, a Creditor may apply to the Court, on notice to all other Lead Parties, to terminate the Stipulation, based on the totality of the circumstances, on the grounds that its goals and purposes are not reasonably likely to be realized. No assurance can be given that sufficient proceeds will be realized from the sale of such shares to satisfy in full the Creditors. The Creditors will be able to resort to consent judgments against Mr. Jurick and his affiliates if the Stipulation is terminated. Such a termination would also likely result in a default under the Company's borrowing facilities. The Company's rights and obligations under the Settlement Agreement include the following: 1. The Company will advance certain expenses of the Advisor (currently, approximately $160,000) and the Settlement Agent and advance the reasonable fees and expenses for registration of the Settlement Shares, in each instance to be reimbursed from the proceeds of the first sales of the Settlement Shares. 2. If an offer to purchase Settlement Shares that would result in a Change of Control of the Company (i.e., beneficial ownership of 25% or more of the Company's Common Stock) were to occur, the offeror will be required to meet with the Company's independent directors and President, or their successors (the "Special Committee"), and the Special Committee will determine whether to approve such offer in the exercise of its fiduciary duties under applicable Delaware law. Any of the Creditors may apply to the Court to permit an exception, subject to the legal standard set forth in the immediately preceding sentence. 3. The Company has agreed to register the offer and sale of the Pool A Shares as set forth in the marketing plan. The Company previously has filed a shelf registration statement covering five million Settlement Shares owned by FIN to finance a settlement, which is subject to certain contractual restrictions and may be offered for sale or sold only by means of an effective registration statement. 4. The Lead Parties have agreed that Mr. Jurick will limit his total annual cash compensation not to exceed $750,000 until the Settlement Amount has been paid. The Company has also agreed not to grant Mr. Jurick any additional non-cash compensation. Requests have also been made by Petra Stelling to the Swiss authorities to discontinue the investigations involving Messrs. Jurick, Bunger, and Farnum, as described above. LEGAL SERVICES During Fiscal 1996, a family member of Mr. Davis became a member of Wolff & Samson, P.A., which regularly performs legal services for the Company. The Company was billed approximately $842,000, and $95,000 for legal services during Fiscal 1997 and Fiscal 1996, respectively, from such firm. RELOCATION LOAN In connection with the execution of his employment agreement with the Company, Eugene I. Davis, the Company's Vice Chairman, agreed to relocate his residence to the general locality of the Company's principal executive offices. To assist in such relocation, in the fiscal year ended March 31, 1993 ("Fiscal 1993"), the Company provided to Mr. Davis an interest-free bridge loan of $120,000. The maturity date of Mr. Davis' loan has been extended and is due in the fiscal year ending March 31, 1998. CONSULTING AGREEMENT In November 1996, Peter G. Bunger was retained as a consultant, and is being paid on a per diem basis, at the approximate rate of $10,000 for each month when he is present in Hong Kong and providing services to the Company. Mr. Bunger received compensation and reimbursement of expenses aggregating $49,000 in Fiscal 1997. SPORT SUPPLY GROUP, INC. AGREEMENTS By that certain Securities Purchase Agreement, dated November 27, 1996, by and between the Company and SSG (the "Agreement"), the Company purchased from SSG 1,600,000 shares of common stock, $.01 par value per share (the "Common Stock"), of SSG for an aggregate consideration of $11.5 million, or approximately $7.19 per share. In addition, the Company purchased, for an aggregate consideration of $500,000, 5-year warrants (the "Warrants") to acquire an additional 1,000,000 shares of Common Stock at an exercise price of $7.50 per share, subject to standard anti-dilution adjustments, pursuant to a Warrant Agreement (the "Warrant Agreement"). The purchase price paid by the Company was negotiated in an arms' length transaction with SSG. Prior to the closing of the Agreement, the Company beneficially owned approximately 9.9% of SSG's outstanding common stock. Based upon the purchase of the Common Stock as set forth above, the Company owns approximately 27.0% of the outstanding shares of the Common Stock. If the Company exercises all of the Warrants, it will beneficially own approximately 34.9% of the Common Stock. The $12,000,000 purchase price paid by the Company pursuant to the Agreement was obtained by the Company from Congress Financial Corporation ("Congress"), its United States senior secured lender, under the terms of its existing credit facility, and in accordance with the terms of the consent (the "Consent") obtained from such lender. Pursuant to a Pledge and Security Agreement dated December 10, 1996, the Company pledged to Congress the Common Stock and Warrants acquired under the Agreement. In accordance with a Registration Rights Agreement dated December 10, 1996 (the "Registration Rights Agreement"), the Company has been granted certain demand and incidental registration rights on the resale of the shares of Common Stock which it and Emerson Radio (Hong Kong) Limited own, as well as on the exercise and resale of the shares the Company may acquire under the Warrant Agreement. In addition, the Company has arranged for foreign trade credit financing of $2 million for the benefit of SSG to supplement SSG's existing credit facilities. Pursuant to the Agreement, SSG caused a majority of the members of its Board of Directors to consist of the Company's designees. In connection therewith, the Company designated Geoffrey P. Jurick, its Chairman, Chief Executive Officer and President, Eugene I. Davis, its Vice Chairman, John P. Walker, its Executive Vice President and Chief Financial Officer, Peter Bunger, a Director of the Company, and Johnson C. Ko, an independent Hong Kong businessman, to sit on the SSG Board. Peter S. Blumenfeld and William H. Watkins, Jr., Directors of SSG prior to the Closing, continue as Directors of SSG. SSG's stockholders have since elected the Company's nominees as a majority of its Board of Directors. Under the Agreement, for a period of at least two years from the date of the closing, neither SSG nor any of its subsidiaries is permitted to enter into or be a party to any agreement or transaction with any Affiliate (as such term is defined in the Securities Exchange Act of 1934, as amended) of SSG or the Company, except (i) in the ordinary course of SSG's or its subsidiaries' business and on terms no less favorable to SSG or its subsidiaries than would be obtained in a comparable arms' length transaction with a person not an Affiliate of SSG or the Company or (ii) unless approved by a majority of SSG's directors who do not have a direct or indirect material financial interest in the agreement or transaction and which includes a majority of directors who are not officers or employees of SSG or the Company or directors of the Company. As a result of its investment in SSG and in an effort to benefit by several cost sharing opportunities, on July, 1997 to be effective as of March 7, 1997, the Company entered into a Management Services Agreement with SSG by which SSG would perform the following services: 1.) Human Resource Services including processing of payroll and payroll taxes, administration of and coordination of payment for the Company's employee benefit programs; 2.) Banking Services including calculation of daily borrowing availability with the Company's secured credit facility, preparation of daily reporting for the Company's banks and forecasts of cash availability and cash flow, processing wire funds and letters of credit; 3.) Computer Services including provision of space for the Company's AS400 computer system and system operator services; 4.) Payable Services including processing of the Company's accounts payables and checks; 5.) Warehouse Services including provision of warehouse storage space for the Company's archives and product inventory; 6.) provision of Office Space; 7.) Design Services including the preparation, design and drafting of publications to be distributed by the Company relating to its products; and, 8.) Financial Management Services including the devotion of SSG's Mr. Ken Corby to the Company up to a maximum of 75% of his business time. The Management Services Agreement also provides that the Company shall 1.) furnish to SSG information needed to perform its services; 2.) furnish the AS400 and retain complete financial responsibility therefore; 3.) be responsible for resolving any dispute between the Company and any of its employees, answering inquiries by its employees regarding their benefits, administering the employee benefit plans and be responsible for all reporting obligations. The Management Services Agreement also provides for SSG to reimburse the Company for salary payments made by the Company to Mr. Jurick for the benefit of SSG, which monthly payments shall be $20,833.33, plus expenses incurred by Mr. Jurick on behalf of SSG, subject to increases approved by SSG's Board of Directors. The Management Services Agreement also provides that the Company shall reimburse SSG for an amount equal to 75% of Mr. Corby's salary (including payroll taxes and benefits) for the Financial Management Services. The Company was billed $3,200 for services provided with respect to the above mentioned agreement during Fiscal 1997. In addition, the Company billed SSG approximately $47,000 towards Mr. Jurick's salary during Fiscal 1997. The Company owed SSG approximately $0 for the services as of March 31, 1997 and the Company was owed approximately $2,703 from SSG as of March 31, 1997. FUTURE TRANSACTIONS The Company has adopted a policy that all future affiliated transactions and loans will be made or entered into on terms no less favorable to the Company than those that can be obtained from unaffiliated third parties. In addition, all future affiliated transactions and loans, and any forgiveness of loans, must be approved by a majority of the independent outside members of the Company's Board of Directors who do not have an interest in the transactions. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, STATEMENT SCHEDULE AND REPORTS ON FORM 8-K (c) Exhibits (2) Confirmation Order and Fourth Amended Joint Plan of Reorganization of Emerson Radio Corp. ("Old Emerson") and certain subsidiaries under Chapter 11 of the United States Bankruptcy Code, dated March 31, 1994 (incorporated by reference to Exhibit (2) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the Securities and Exchange Commission ("SEC") on August 9, 1994). (3) (a) Certificate of Incorporation of Emerson (incorporated by reference to Exhibit (3) (a) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (3) (b) Certificate of Designation for Series A Preferred Stock (incorporated by reference to Exhibit (3) (b) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (3) (c) Plan of Reorganization and Agreement of Merger by and between Old Emerson and Emerson Radio (Delaware) Corp. (incorporated by reference to Exhibit (3) (c) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (3) (d) Certificate of Merger of Old Emerson with and into Emerson Radio (Delaware) Corp. (incorporated by reference to Exhibit (3) (d) of Emerson's Registration Statement on Form S-1, Registration No. 33- 53621, declared effective by the SEC on August 9, 1994). (3) (e) Amendment dated February 14, 1996 to the Certificate of Incorporation of Emerson (incorporated by reference to Exhibit (3) (a) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (3) (f) By-Laws of Emerson adopted March 1994 (incorporated by reference to Exhibit (3) (e) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (3) (g) Amendment dated November 28, 1995 to the By-Laws of Emerson adopted March 1994 (incorporated by reference to Exhibit (3) (b) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (4) (a) Warrant Agreement to Purchase 750,000 shares of Common Stock, dated as of March 31, 1994 (incorporated by reference to Exhibit (4) (a) of Emerson's Registration Statement on Form S-1, Registration No. 33- 53621, declared effective by the SEC on August 9, 1994). (4) (b) Indenture, dated as of August 17, 1995 between Emerson and Bank One, Columbus, NA, as Trustee (incorporated by reference to Exhibit (1) of Emerson's Current Report on Form 8-K filed with the SEC on September 8, 1995). (4) (c) Common Stock Purchase Warrant Agreement to purchase 50,000 shares of Common Stock, dated as of December 8, 1995 between Emerson and Michael Metter (incorporated by reference to Exhibit (10) (e) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (4) (d) Common Stock Purchase Warrant Agreement to purchase 200,000 shares of Common Stock, dated as of December 8, 1995 between Emerson and Kenneth A. Orr (incorporated by reference to Exhibit (10) (f) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (10) (a) Agreement, dated as of November 14, 1973, between National Union Electric Corporation ("NUE") and Emerson (incorporated by reference to Exhibit (10) (a) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (10) (b) Trademark User Agreement, dated as of February 28, 1979, by and between NUE and Emerson (incorporated by reference to Exhibit (10) (b) of Emerson's Registration Statement on Form S-1, Registration No. 33- 53621, declared effective by the SEC on August 9, 1994). (10) (c) Agreement, dated July 2, 1984, between NUE and Emerson (incorporated by reference to Exhibit (10) (c) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (10) (d) Agreement, dated September 15, 1988, between NUE and Emerson (incorporated by reference to Exhibit (10) (d) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (10) (e) Form of Promissory Note issued to certain Pre-Petition Creditors (incorporated by reference to Exhibit (10) (e) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (10) (f) Loan and Security Agreement, dated March 31, 1994, by and among Emerson, Majexco Imports, Inc. and Congress Financial Corporation ("Congress") (incorporated by reference to Exhibit (10) (f) of Emerson's Registration Statement on Form S-1, Registration No. 33- 53621, declared effective by the SEC on August 9, 1994). (10) (g) Amendment No. 1 to Financing Agreements, dated as of August 24, 1995, among Emerson, Majexco Imports, Inc. and Congress (incorporated by reference to Exhibit (2) of Emerson's Current Report on Form 8-K filed with the SEC on September 8, 1995). (10) (h) Amendment No. 2 to Financing Agreements, dated as of February 13, 1996 (incorporated by reference to Exhibit (10) (c) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (10) (i) Amendment No. 3 to Financing Agreements, dated as of August 20, 1996 (incorporated by reference to Exhibit (10) (b) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (10) (j) Amendment No. 4 to Financing Agreements, dated as of November 14, 1996 (incorporated by reference to Exhibit (10) (c) of Emerson's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996). (10) (k) Amendment No. 5 to Financing Agreements, dated as of February 18, 1997 (incorporated by reference to Exhibit (10) (e) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996). (10) (l) Emerson Radio Corp. Stock Compensation Program (incorporated by reference to Exhibit (10) (i) of Emerson's Registration Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (10) (m) Employment Agreement between Emerson and Eugene I. Davis (incorporated by reference to Exhibit 6(a)(4) of Emerson's Quarterly Report on Form 10-Q for quarter ended June 30, 1992). (10) (n) Extension of Employment Agreement between Emerson and Eugene I. Davis dated April 16, 1997. (10) (o) Employment Agreement between Emerson and Geoffrey P. Jurick (incorporated by reference to Exhibit 6(a)(6) of Emerson's Quarterly Report on Form 10-Q for quarter ended June 30, 1992). (10) (p) Employment Agreement between Emerson Radio (Hong Kong) Ltd. and Geoffrey P. Jurick (incorporated by reference to Exhibit 6(a)(6) of Emerson's Quarterly Report on Form 10-Q for quarter ended June 30, 1992). (10) (q) Employment Agreement between Emerson Radio International Ltd. (formerly Emerson Radio (B.V.I.), Ltd.) and Geoffrey P. Jurick (incorporated by reference to Exhibit 6(a)(6) of Emerson's Quarterly Report on Form 10-Q for quarter ended June 30, 1992). (10) (r) Extension of Employment Agreement between Emerson and Geoffrey P. Jurick dated April 16, 1997. (10) (s) Lease Agreement dated as of March 26, 1993, by and between Hartz Mountain Parsippany and Emerson with respect to the premises located at Nine Entin Road, Parsippany, NJ (incorporated by reference to Exhibit (10) (ww) of Emerson's Annual Report on Form 10-K for the year ended December 31, 1992). (10) (t) Employment Agreement, dated April 1, 1994, between Emerson and John Walker (incorporated herein by reference to Exhibit (10)(ee) of Emerson's Statement on Form S-1, Registration No. 33-53621, declared effective by the SEC on August 9, 1994). (10) (u) Amendment No. 1 to Employment Agreement between Emerson and John P. Walker dated April 16, 1997. (10) (v) Employment Agreement, dated January 29, 1996 between Emerson and Marino Andriani (incorporated herein by reference to Exhibit (10) (a) of Emerson's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996). (10) (w) Partnership Agreement, dated April 1, 1994, between Emerson and Hopper Radio of Florida, Inc (incorporated by reference to Exhibit (10) (q) of Emerson's Annual Report on Form 10-K for the year ended March 31, 1995). (10) (x) Sales Agreement, dated April 1, 1994, between Emerson and E & H Partners (incorporated by reference to Exhibit (10) (r) of Emerson's Annual Report on Form 10-K for the year ended March 31, 1995). (10) (y) Agreement, dated as of April 24, 1996 by and among Emerson and E & H Partners relating to amendments of the Partnership Agreement dated April 1, 1994 and the Sales Agreement dated April 1, 1994 and the settlement of certain outstanding litigation (incorporated by reference to Exhibit (10) (w) of Emerson's Annual Report on Form 10-K for the year ended March 31, 1996). (10) (z) License Agreement, dated February 22, 1995, between Emerson and Otake Trading Co. Ltd. and certain affiliates ("Otake") (incorporated by reference to Exhibit 6(a)(1) of Emerson's Quarterly Report on Form 10- Q for quarter ended December 31, 1994). (10) (aa) Supply Agreement, dated February 22, 1995, between Emerson and Otake (incorporated by reference to Exhibit 6(a)(2) of Emerson's Quarterly Report on Form 10-Q for quarter ended December 31, 1994). (10) (ab) 1994 Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit (10) (y) of Emerson's Annual Report on Form 10-K for the year ended March 31, 1995). (10) (ac) Consulting Agreement, dated as of December 8, 1995 between Emerson and First Cambridge Securities Corporation (incorporated by reference to Exhibit (10) (d) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995). (10) (ad) License Agreement, dated as of August 23, 1996 between Emerson and REP Investment Limited Liability Company (incorporated by reference to Exhibit (10) (d) of Emerson's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996). (10) (ae) Distribution Agreement, dated as of September 11, 1996 between Emerson, Emerson Radio Canada Ltd. and AVS Technologies Inc. (incorporated by reference to Exhibit (10) (e) of Emerson's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996). (10) (af) Stipulation of Settlement and Order dated June 11, 1996 by and among the Official Liquidator of Fidenas International Bank Limited, Petra Stelling, Barclays Bank PLC, the Official Liquidator of Fidenas Investment Limited, Geoffrey P. Jurick, Fidenas International Limited, L.L.C., Elision International, Inc., GSE Multimedia Technologies Corporation and Emerson (incorporated by reference to Exhibit (10) (ae) of Emerson's Annual Report on Form 10-K for the year ended March 31, 1996). (10) (ag) Pledge Agreement dated as of February 4, 1997 by Fidenas International Limited, L.L.C. ("FIN") in favor of TM Capital Corp. (incorporated by reference to Exhibit (10) (a) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996). (10) (ah) Registration Rights Agreement dated as of February 4, 1997 by and among Emerson, FIN, the Creditors, FIL and TM Capital Corp. (incorporated by reference to Exhibit (10) (b) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996). (10) (ai) License and Exclusive Distribution Agreement with Cargil International Corp. dated as of February 12, 1997 (incorporated by reference to Exhibit (10) (c) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996). (10) (aj) Supply and Inspection Agreement with Cargil International Corp. dated as of February 12, 1996 (incorporated by reference to Exhibit (10) (d) of Emerson's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996). (10) (ak) Agreement dated April 10, 1997 between Emerson and Daewoo Electronics Co., Ltd. (10) (al) Securities Purchase Agreement dated as of November 27, 1996, by and between Sport Supply Group, Inc. ("SSG") and Emerson (incorporated by reference to Exhibit (2)(a) of Emerson's Current Report on Form 8-K dated November 27, 1996). (10) (am) Form of Warrant Agreement by and between SSG and Emerson (incorporated by reference to Exhibit (4)(a) of Emerson's Current Report on Form 8-K dated November 27, 1996). (10) (an) Form of Registration Rights Agreement by and between SSG and Emerson (incorporated by reference to Exhibit (4)(b) of Emerson's Current Report on Form 8-K dated November 27, 1996). (10) (ao) Consent No. 1 to Financing Agreements among Emerson, certain of its subsidiaries, and Congress (incorporated by reference to Exhibit (10)(b) of Emerson's Current Report on Form 8-K dated November 27, 1996). (10) (ap) License Agreement dated as of June 16, 1997 by and between World Wide One Ltd. and Emerson. (10) (aq) Agreement dated as of July 2, 1997 by and between Hi Quality International (U.S.A.) Inc. and Emerson. (10) (ar) Management Services Agreement dated July 1, 1997 to be effective March 7, 1997 by and between Sport Supply Group, Inc. and Emerson.* (11) Computation of Primary Earnings Per Share. (12) Computation of Ratio of Earnings (Loss) to Combined Fixed Charges and Preferred Stock Dividends. (21) Subsidiaries of the Company as of March 31, 1997. (27) Financial Data Schedule for year ended March 31, 1997. ___________________ * Filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the dated indicated. /s/ Geoffrey P. Jurick Chairman of the Board, July 29, 1997 Geoffrey P. Jurick Chief Executive Officer and President Vice Chairman and Director July 29, 1997 Eugene I. Davis /s/ John P. Walker Executive Vice President, July 29, 1997 John P. Walker Chief Financial Officer /s/ Robert H. Brown, Jr. Director July 29, 1997 Robert H. Brown, Jr. Director July 29, 1997 Peter G. Bunger /s/ Jerome H. Farnum Director July 29, 1997 Jerome H. Farnum /s/ Raymond L. Steele Director July 29, 1997 Raymond L. Steele EX-1 2 MANAGEMENT SERVICES AGREEMENT THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement"), is made and entered into on July 1, 1997 to be effective as of March 7, 1997 (the "Effective Date"), by and between Sport Supply Group, Inc., a Delaware corporation (the "Manager"), and Emerson Radio Corp., a Delaware corporation (the "Company"). WHEREAS, the Company has requested that the Manager provide various managerial services to the Company for the Company's benefit and the Company and Manager desire to enter into this Agreement on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Manager and the Company hereby agree as follows: ARTICLE I MANAGEMENT SERVICES 1.1 GENERAL DUTIES. The Company and the Manager hereby agree that, during the term of this Agreement, the Manager will be responsible for providing the Company with the following services: (a) Process payroll and payroll taxes for the Company's employees and assist Company by enrolling Company employees in the Company's employee benefit plans, and process the payment of insurance premiums to the Company's benefit providers so long as the Company submits the correct amount of the premium to the Manager on a timely basis (subject to the Manager receiving from the Company all of the necessary information, which is not in Manager's possession, custody or control, required to fulfill these functions) (collectively, "Human Resource Services"). Such Human Resources shall be performed on a timely basis in accordance with industry standards. (b) Calculate daily borrowing availability with respect to the Company's secured credit facility, prepare daily reporting for the Company's banks, prepare forecasts of cash availability and cash flow, wire funds and set-up letters of credit as may be requested by an officer of the Company, or an authorized agent of the Company (including, without limitation, Ken Corby) for which Manager receives notice of such authorization from an officer of the Company from time to time (collectively, the "Banking Services"); (c) Provide space for the Company's AS 400 Computer System and provide the system operator services set forth below (collectively, the "Computer Services"); DAILY Monitor computer messages Answer and respond to user requests (EDI problems, terminal/printer problems, etc.) Submit nightly batch jobs Format nightly save tapes Load nightly save tapes Start nightly data save to tape WEEKLY Load Payroll tapes Submit nightly batch jobs Format save tapes Load weekend save tapes Start weekly data save to tape Manager shall use the Company's AS 400 Computer System solely to perform the Computer Services. (d) Process the Company's accounts payables and process checks to be delivered, approved and signed by an officer of the Company (collectively, the "Payable Services"); (e) Provide warehouse storage space (subject to availability and obtaining the Landlord's consent, and in no event after the time the Manager ceases to occupy the warehouse space currently occupied by the Manager at 13700 Benchmark, Farmers Branch, Texas, in which event Manager shall provide the Company with at least thirty (30) days prior written notice of vacating such space) for the Company's archives and product inventory at Manager's warehouse located at 13700 Benchmark, Farmers Branch, Texas 75234, or such other mutually agreeable location (collectively, the "Warehouse Space"); and (f) Provide office space (subject to availability and in no event after the time the Manager ceases to occupy the office space currently occupied by the Manager at 1901 Diplomat Drive, Farmers Branch, Texas, in which event Manager shall provide the Company with at least thirty (30) days prior written notice of vacating such space) for certain employees of the Company at Manager's office located at 1901 Diplomat Drive, Farmers Branch, Texas 75234, or such other mutually agreeable location (collectively, the "Office Space"). (g) Prepare, design and draft publications to be distributed by the Company, such as owner manuals, service manuals, warranty text and any additions, modifications and revisions thereto, relating to products sold by the Company, all in accordance with the Company's past practices (the "Design Services"). The Company will be solely responsible for (and own) all information and intellectual property included in such publications and any and all legal requirements relating to such publications. All reproduction costs for the Design Services will be paid by the Company. The Design Services will not include any of the Company's documents that are customarily filed with the Securities and Exchange Commission, such as Annual Reports, proxy statements, 10-Qs, 10-Ks, etc. (h) Until the earlier of (i) the expiration or termination of this Agreement, or (ii) the date Ken Corby ceases to be an employee of the Manager, Mr. Corby will provide financial management services to the Company on an as needed basis, provided that Mr. Corby will not devote more than 75% of his working time to the provision of such services (collectively, the "Financial Management Services".) All of the services set forth in this Article shall be collectively referred to in this Agreement as the "Services". Notwithstanding the foregoing, Manager will not be responsible for providing any services to the Company not expressly set forth herein, including, without limitation, any legal or tax related services; PROVIDED, HOWEVER, the Manager will provide the necessary data as reasonably requested by ADP to enable ADP to prepare the Company's payroll tax returns.. 1.2 COMPANY RESPONSIBILITIES. During the term of this Agreement the Company will assume the responsibilities and perform the duties set forth below: (a) The Company will furnish to the Manager all information and data, not in Manager's custody or control, reasonably necessary for Manager to provide the services described above, including, without limitation, all payroll files and employee payroll and other information that Manager may advise the Company it requires to perform its services under this Agreement. Manager shall be entitled to rely upon the accuracy and completeness of all information that it reasonably believes to have been furnished to it by the Company or at the Company's direction, and shall have no duty to inquire about such information. Manager acknowledges no changes to the Company's corporate payroll records will be made without the prior written consent of the Company. (b) During the term of this Agreement, the Company will furnish to the Manager the AS400 that is owned by the Company, which equipment shall remain the property of the Company. Company shall retain complete financial responsibility for such equipment, including depreciation, maintenance, insurance and taxes, if any. Company hereby appoints the Manager as its sole agent for all matters pertaining to such equipment and shall promptly notify all appropriate third parties of such appointment. Company has sole responsibility for all aspects of the computer data and its hardware, including without limitation, uninterruptable power supply, data lines, disaster recovery, offsite storage and tape back-up. (c) The Company shall be solely responsible for resolving any dispute between the Company and any employee of the Company and answering any inquiries relating to a Company employee's rights and entitlements under the Company's benefit plans. The Company is solely responsible for the administration of its benefit plans (including, without limitation, its 401(k) Plan ) and executing and filing with any governmental authority or other person all reports or other documents required in connection with such benefit plans, and the Manager shall have no reporting obligation in connection with any aspect of the Company's benefit plans. In addition, the Manager shall not be deemed a fiduciary or plan administrator of the Company or any of the Company's benefit plans and shall not have any responsibility to monitor compliance by the Company with the terms and conditions of any benefit plan or any law applicable thereto. (d) The Company shall cooperate with the Manager by, among other things, making available, as reasonably requested by the Manager, management decisions, personnel information, approvals and acceptances in order that the work of Manager contemplated hereby may be accomplished. 1.3 INSURANCE. Manager will not be liable to the Company or any of the employees or contractors of the Company for damage or loss to person or property, including theft, burglary, assault, vandalism or other crimes, unless such damage or loss is caused by the gross negligence or willful misconduct of the Manager. The Manager will not be liable to the Company or any of its employees or contractors for personal injury or for damage to or loss of their personal property from fire, flood, water leaks, rain, hail, ice, snow, smoke, lightning, wind, explosions, strike, war, riot, insurrection, interruption of utilities or other occurrences unless such injury, loss or damage is caused by the gross negligence or willful misconduct of the Manager. Company acknowledges that neither the Warehouse Space nor the Office Space is fireproof. The Company is strongly urged to secure its own insurance to protect against all of the above. 1.4 PERMISSIBLE ACTIVITIES. Nothing herein shall in any way preclude the Manager from engaging in any business activities or from performing services for its own account or for the account of others. ARTICLE II COMPENSATION 2.1 SERVICE CHARGES. The Company and the Manager hereby agree that the Manager will be compensated at the initial rates set forth below for the services rendered by the Manager to the Company pursuant to this Agreement:
SERVICES AMOUNT IN U.S. DOLLARS BEGINNING DATE Human Resource Services $1,000 per pay period March 7, 1997 Banking Services $25,000 per year June 16, 1997 Computer Services $20,000 per year May 31, 1997 Payable Services $12,000 per year June 16, 1997 Warehouse Space $4.00 per square foot May 15, 1997 Office Space $5.00 per square foot June 16, 1997 Design Services $50,000 per year July 1, 1997 Financial Management Services See Section 2.3 below June 1, 1997
The amount of such service charges may be adjusted from time to time by the parties' mutual written agreement. Such service charges shall be payable within ten (10) days of the date an invoice is received. Partial months shall be prorated accordingly. The Company will also be responsible for paying all of the Company's out-of-pocket expenses related to the above services (including, without limitation, copying charges incurred in connection with the Design Services) and the Manager's expenses related to the Manager's business, such as postage, telephone and telecopy bills, telephone lines, office supplies, transition services, etc. The payment of any expenses incurred by Manager on the Company's behalf in excess of $1,000 requires the Company's written consent. 2.2 The Manager will reimburse the Company for salary payments made by the Company to Geoffrey P. Jurick for the benefit of the Manager, which payments shall be $20,833.33 per month, plus expenses incurred by Mr. Jurick on behalf of the Manager, subject to increases approved by the Manager's Board of Directors. Such reimbursements shall be made on a monthly basis. 2.3 The Company will reimburse the Manager for an amount equal to 75% times Ken Corby's salary, payroll taxes and all benefits (including, without limitation, insurance, Manager contributions to the Manager's 401(k) Plan, automobile allowances, and fees and expenses relating thereto, etc.) for the Financial Management Services. Such reimbursements shall be made on a monthly basis, payable within ten (10) days of the date an invoice is received. ARTICLE III TERM AND TERMINATION 3.1 TERM. This Agreement shall become effective as of the Effective Date and shall continue in force until terminated pursuant to the terms of this Agreement or otherwise agreed by the parties. 3.2 TERMINATION. This Agreement may be terminated by either party on sixty (60) days' prior written notice to the other party. 3.3 TERMINATION FOR NONPAYMENT. Notwithstanding Section 3.2 hereof, in the event that either party defaults in the payment when due of any amount due to the other hereunder and does not cure such default within ten (10) days after being given written notice of such default, then the non-defaulting party may, by giving written notice thereof to the defaulting party, terminate this Agreement as of the date specified in such notice of termination. 3.4 TERMINATION FOR INSOLVENCY. Notwithstanding Section 3.2 hereof, in the event that either party hereto becomes or is declared insolvent or bankrupt, is the subject of any proceedings relating to its liquidation, insolvency or for the appointment of a receiver or similar office for it, makes an assignment for the benefit of all or substantially all of its creditors, or enters into an agreement for the composition, extension, or readjustment of all or substantially all of its obligations, then the other party hereto may, by giving written notice thereof to such party, terminate this Agreement as of the date specified in such notice of termination. 3.5 RETURN OF RECORDS. Upon the termination of this Agreement for any reason, the Manager shall promptly return to the Company all books, records, documents, information and data (including data stored in computers or on any computer media or equipment), including all copies of the foregoing, that belong to the Company. ARTICLE IV GENERAL PROVISIONS 4.1 CONFIDENTIALITY. Each party agrees that all information communicated to it by the other, whether before or after the Effective Date, was and shall be received in strict confidence and shall be used only for the purposes of this Agreement, and that no such information, including, without limitation, the provisions of this Agreement, shall be disclosed or otherwise used by a party to this Agreement or its security holders, directors, officers, employees, or agents, without the prior written consent of the other party, except as may be necessary by reason of legal, accounting or regulatory requirements. The requirements and obligations of this Section 4.1 shall survive the termination of this Agreement. 4.2 INDEMNIFICATION. (a) The Manager agrees to indemnify, defend and hold harmless the Company and its affiliates and their respective directors, officers, agents, employees and controlling persons from and against any and all losses, claims, damages, liabilities and expenses (including the reasonable cost of investigating and defending against any claims therefor and reasonable counsel fees and expenses incurred in connection therewith) that resulted solely from the willful bad faith or gross negligence of the Manager in the performance of the Services that are the subject of this Agreement. No express or implied warranty is made by Manager in respect to any Service or product provided hereunder including, without limitation, any implied warranty or merchantibility or fitness for a particular purpose. (b) The Company agrees to indemnify, defend and hold harmless the Manager and its affiliates and their respective directors, officers, agents, employees and controlling persons from and against any and all losses, claims, damages, liabilities and expenses (including the reasonable cost of investigating and defending against any claims therefor and reasonable counsel fees and expenses incurred in connection therewith) related to or arising out of the Services provided hereunder by the Manager (including, without limitation, Manager's use of the Company's Brand Names and Marks, as described below), regardless if such losses, claims, damages, liabilities and expenses are founded in whole or in part, on the alleged negligence of the Manager, the Manager's representatives, or its employees, agents, invitees or licensees. The Company shall not be obligated to indemnify the Manager, however, in respect of any losses, claims, damages, liabilities or expenses that resulted solely from the willful bad faith or gross negligence of the Manager in the performance of the Services that are the subject of this Agreement. (c) IN NO EVENT WILL EITHER PARTY BE LIABLE FOR PUNITIVE DAMAGES OR FOR INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST PROFITS OF ANY PARTY, INCLUDING THIRD PARTIES. FURTHER, NO CAUSE OF ACTION WHICH ACCRUED MORE THAN ONE (1) YEAR PRIOR TO THE FILING OF A SUIT ALLEGING SUCH CAUSE OF ACTION MAY BE ASSERTED AGAINST EITHER PARTY. 4.3 RELATIONSHIP OF PARTIES. It is the express intention and understanding of the Manager and the Company that the relationship of the Manager to the Company shall be at all times that of an independent contractor, with the Manager having full and complete liberty to use its own free and uncontrolled will, judgment and discretion as to the method and manner of performing the obligations of the Manager hereunder. Other than the Services specifically stated herein to be performed by Manager, Manager does not undertake by this Agreement or otherwise to perform any regulatory or contractual obligation of Company, or to assume any responsibility for Company's business or operations. Nothing herein contained or done pursuant to this Agreement shall constitute the Manager or its agents or employees a partner or joint venturer of the Company, or a fiduciary of (i) the Company, (ii) any benefit plan of the Company, or (iii) any employee of the Company. 4.4 NOTICES. All notices that are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if given in writing and delivered personally, by commercial messenger service, or by registered or certified mail, postage prepaid, to the other party at the following address or to such other address as either party shall provide to the other party in writing in accordance with this Section 4.4: If to the Manager: If to the Company: Sport Supply Group, Inc. Emerson Radio Corp. 1901 Diplomat Drive Nine Entin Road Farmers Branch, Texas 75234 Parsippany, New Jersey 07054 Attn: President Attn: Chief Executive Officer cc: General Counsel cc: Law Department 4.5 ATTORNEYS' FEES. In the event that attorneys' fees or other costs are incurred to secure performance of any of the obligations set forth in this Agreement, to establish damages for the breach thereof, or to obtain any other appropriate relief, whether by way or prosecution or defense, the prevailing party (as determined by the judge in the judge's sole discretion) shall be entitled to recover reasonable attorneys' fees and costs incurred therein. 4.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts for the convenience of the parties hereto, all of which together shall constitute one and the same instrument. 4.7 BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding on, and inure to the benefit of, the parties hereto and their respective representatives, successors, and assigns, but neither this Agreement nor any of the rights, interests, or obligations hereunder shall be assigned or delegated by any of the parties hereto, whether by operation of law or otherwise, without the prior written consent of the other party (which consent shall not be unreasonably withheld), nor is this Agreement intended to confer upon any other person other than the parties hereto any rights or remedies hereunder. Any assignment or delegation in violation of this Agreement shall be null and void. 4.8 WAIVER. No delay on the part of either party in exercising any of its respective rights hereunder, nor the failure to exercise the same, nor the acquiescence in or waiver of a breach of any term, provision or condition of this Agreement shall be deemed or construed to operate as a waiver of such rights or acquiescence thereto except in the specific instance for which given. 4.9 SEVERABILITY. If any provision of this Agreement is declared or found to be illegal, unenforceable or void, then each party will be relieved of its obligations arising under such provision to the extent such provision is declared or found to be illegal, unenforceable or void (it being the intent and agreement of the parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to make it legal and enforceable while preserving its intent or, if that is not possible, by substituting therefor another provision that is legal and enforceable and achieves the same objective), and each provision not so affected will be enforced to the full extent permitted by law. 4.10 ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties relating to the subject matter of this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements and understandings relating to such subject matter. This Agreement cannot be modified, amended or terminated except in writing signed by the party against whom enforcement is sought. 4.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLE OR RULE THAT MIGHT REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. EACH PARTY AGREES THAT THIS AGREEMENT IS FULLY PERFORMABLE IN DALLAS COUNTY, TEXAS, AND THAT ANY ACTION, DISPUTE OR PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY TO THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE BROUGHT SOLELY IN A COURT OF COMPETENT JURISDICTION SITTING IN DALLAS, DALLAS COUNTY, TEXAS. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF ANY SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCOVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY THERETO. 4.12 OTHER DOCUMENTS. Each party hereto agrees to execute any and all documents, and to perform such other acts, that may be necessary or expedient to further the purposes of this Agreement. 4.13 FORCE MAJEURE. Each party hereto shall be excused from performance hereunder for any period and to the extent that it is prevented from performing any services pursuant hereto, in whole or in part, as a result of delays caused by the other party or by an act of God, war, civil disturbance, court order, labor dispute, third party nonperformance, or other cause beyond its reasonable control, including without limitation failures or fluctuations in electrical power, heat, light, air conditioning or telecommunications equipment, and such nonperformance shall not be a default hereunder or a ground for termination hereof. Notwithstanding the foregoing, in the event such condition exists greater than thirty (30) days, either party may terminate this Agreement by giving the other party written notice of termination, which termination shall be effective as of the date set forth in such notice. 4.14 HEADINGS. The section headings used herein are for reference and convenience only, and shall not enter into the interpretation hereof. 4.15 TRADEMARKS. Manager shall use its own name or trademarks in all dealings. It may not use any trademarks or tradenames or rights to use same belonging to the Company and/or its subsidiaries or affiliates (other than the Manager's) without the Company's prior written consent in each instance. To the extent the Company gives such consent, Manager may use such trademarks and "EMERSON" brand and product names and such other brand name(s) under which the products may hereinafter be marketed in the United States by the Company and/or its subsidiaries or affiliates (other than the Manager's) (collectively, the "Brand Names and Marks") only in connection with the performance of its Services. The Company may withdraw such consent at any time. Thereafter, except as provided below, no advertising or other use of the Brand Names and Marks may be made by Manager without the Company's prior written approval in each instance. All use of the Brand Names and Marks and all goodwill associated therewith shall inure to the benefit of the Company. Manager shall have no interest in or rights to the Brand Names or Marks or any of them nor shall Manager have or accrue any interest in or to the goodwill associated therewith. Upon expiration or earlier termination of this Agreement, Manager shall discontinue all use of the Brand Names or Marks in advertising or otherwise, and shall remove all signs and displays relating thereto and shall return to the Company at Company's expense, all signs, displays and other writings and materials relating thereto; PROVIDED, HOWEVER, the foregoing does not apply to any advertising in the process of being printed or in inventory that also includes the Manager's products (including, without limitation, catalogs). Manager is not and this Agreement does not constitute Manager as being a holder of a license or permitted to use the Brand Names or Marks nor shall this Agreement be deemed to make Manager a franchisee. Company shall use its own name or trademarks in all dealings. It may not use any trademarks or tradenames or rights to use same belonging to the Manager and/or its subsidiaries or affiliates (other than the Company's) without the Manager's prior written consent in each instance. 4.16 NO THIRD PARTY BENEFICIARIES. This Agreement and the rights and obligations hereunder do not and shall not confer any rights to any third parties and no third parties shall have any rights under this Agreement. 4.17 SURVIVAL. Paragraphs 2.1, 3.5, 4.1, 4.2, 4.4, 4.5, 4.11, 4.15, and 4.16 shall survive the expiration or earlier termination of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. THE MANAGER: SPORT SUPPLY GROUP, INC. /s/ Peter S. Blumenfeld Peter S. Blumenfeld, President THE COMPANY: EMERSON RADIO CORP. /s/ John P. Walker John P. Walker Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----