AMENDMENT NO. 5 TO FINANCING AGREEMENTS February 18, 1997 Emerson Radio Corp. Majexco Imports, Inc. 9 Entin Road Parsippany, New Jersey 07054 Gentlemen: Congress Financial Corporation ("Lender"), Emerson Radio Corp. ("Emerson") and Majexco Imports, Inc. ("Majexco; together with Emerson, individually and collectively, the "Borrower") have entered into certain financing arrangements pursuant to the Loan and Security Agreement, dated March 31, 1994, currently between Lender and Borrower, as amended by Amendment No. 1 to Financing Agreements, dated August 24, 1995, Amendment No. 2 to Financing Agreements, dated February 13, 1996, Amendment No. 3 to Financing Agreements, dated August 20, 1996 and Amendment No. 4 to Financing Agreements, dated November 14, 1996 (the "Loan Agreement"), together with various other agreements, documents and instruments at any time executed and/or delivered in connection therewith or related thereto (as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, collectively, the "Financing Agreements"). All capitalized terms used herein and not herein defined shall have the meanings given to them in the Financing Agreements. Borrower has requested that Lender agree to certain amendments to the Financing Agreements, and Lender is willing to agree to such amendments, subject to the terms and conditions set forth herein. In consideration of the foregoing, the mutual agreements and covenants contained herein and other good and valuable consideration, the parties hereto agree as follows: 1. WORKING CAPITAL COVENANT. Section 9.13 of the Loan Agreement shall be deleted in its entirety and replaced with the following, effective as of December 31, 1996: "9.13 WORKING CAPITAL. Emerson shall, as of the end of each fiscal quarter of Emerson, maintain, on a consolidated basis with its subsidiaries, Working Capital of not less than $10,000,000." 2. ADJUSTED NET WORTH COVENANT. Section 9.14(a) of the Loan Agreement, as previously amended through Amendment No. 4 to Loan Agreement, shall be further amended by deleting the last sentence thereof and replacing it with the following, effective as of December 31, 1996: "As used herein, the `Base Amount" shall mean the amount of $17,000,000." 3. FEE. In consideration of Lender's entering into this Amendment, Borrower shall pay Lender a facility amendment fee in an amount equal to $25,000, payable simultaneously with the execution hereof, which fee is fully earned as of the date hereof. Such fee may, at Lender's option, be charged directly to any of Borrower's Revolving Loan accounts maintained by Lender under the Financing Agreements. 4. MISCELLANEOUS. (a) ENTIRE AGREEMENT; RATIFICATION AND CONFIRMATION OF THE FINANCING AGREEMENTS. This Amendment contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous term sheets, proposals, discussions, negotiations, correspondence, commitments and communications between or among the parties concerning the subject matter hereof. This Amendment may not be modified or any provision waived, except in writing signed by the party against whom such modification or waiver is sought to be enforced. Except as specifically modified pursuant hereto, the Financing Agreements are hereby ratified, restated and confirmed by the parties hereto as of the effective date hereof. To the extent of conflict between the terms of this Amendment and the Financing Agreements, the terms of this Amendment shall control. (b) GOVERNING LAW. This Amendment and the rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of the State of New York. (c) BINDING EFFECT. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns. (d) COUNTERPARTS. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. By the signatures hereto of each of their duly authorized officers, all of the parties hereto mutually covenant and agree as set forth herein. Very truly yours, CONGRESS FINANCIAL CORPORATION By: /s/ Kenneth G. Donahue Title: Vice President AGREED AND ACCEPTED: EMERSON RADIO CORP. By: /s/ John Walker Title: EVP & CFO MAJEXCO IMPORTS, INC. By: /s/ John Walker Title: CONSENTED TO AND AGREED: H.H. SCOTT, INC. EMERSON COMPUTER CORP. By: /s/ John Walker Title: EMERSON RADIO CANADA LTD. By: /s/ John Walker Title: EMERSON RADIO & TECHNOLOGIES N.V. By: /s/ John Walker Title: