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