SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 22, 2005
EMERSON RADIO CORP.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25226 22-3285224
(State Or Other Jurisdiction (Commission File Number) (IRS Employer
Of Incorporation) Identification No.)
9 Entin Road, Parsippany, New Jersey 07054
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 884-5800
Not Applicable
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(Former Address, if changed since Last Report) (Zip Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Funai Amendment
On December 22, 2005, Emerson Radio Corp. ("Emerson") and Funai Corporation,
Inc. ("Funai") entered into an amendment to the License Agreement dated
effective January 1, 2001, as amended, between Emerson and Funai (the "License
Agreement"), under which the term of the License Agreement was extended until
December 31, 2007. The License Agreement provides that Funai will manufacture,
market, sell and distribute specified products bearing the Emerson logo
trademark to customers in U.S. and Canadian markets. Under the terms of the
agreement, Emerson will receive non-refundable minimum annual royalty payments
of $4.3 million each calendar year and a license fee on sales of products
subject to the License Agreement in excess of the minimum annual royalties.
Wachovia Loan Agreement
On December 23, 2005, Emerson, together with certain of its direct and indirect
subsidiaries, entered into a Revolving Loan and Security Agreement (the "Loan
Agreement") with Wachovia Bank, National Association ("Wachovia"). The new five
year facility consists of a senior secured revolving line of credit (the
"Revolver") and replaces a $35 million senior secured revolving credit facility
with PNC Bank, National Association, which was terminated. The Revolver provides
for revolving loans which, in the aggregate, are not to exceed the lesser of $45
million or a "Borrowing Base" amount based on specified percentages of eligible
accounts receivable and inventory and bears interest ranging from the Prime Rate
to the Prime Rate plus up to 0.50% or, at Emerson's election, the current LIBOR
rate plus up to 2.25%, in each case depending on Excess Availability (as each of
those terms are defined in the Loan Agreement). Pursuant to the Loan Agreement,
Emerson will be subject to certain operating covenants and will be restricted
from, among other things, paying cash dividends, repurchasing its common stock
except under certain circumstances, and entering into certain transactions
without Wachovia's prior consent. In addition, the Loan Agreement contains
certain financial covenants, including fixed charge coverage ratio and capital
expenditure covenants. Amounts outstanding under the Loan Agreement are secured
by substantially all of Emerson's assets, other than intellectual property.
The above descriptions of the terms of the amendment to the License Agreement
and the Loan Agreement, respectively, are qualified in their entirety by the
amendment to the License Agreement and the Loan Agreement which are being filed
as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K.
On December 28, 2005, Emerson issued the press release attached to this Current
Report on Form 8-K as Exhibit 99.1.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
See Item 1.01 for a description of the Wachovia Loan Agreement.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit 10.1 - Seventh Amendment to License Agreement dated December
22, 2005 between Emerson Radio Corp. and Funai Corporation, Inc.
Exhibit 10.2 - Loan and Security Agreement dated as of December 23,
2005, among Emerson Radio Corp., Emerson Radio Macao Commercial Offshore
Limited, Majexco Imports, Inc., Emerson Radio (Hong Kong) Ltd., and Emerson
Radio International Ltd. (as Borrowers) and Wachovia Bank, National Association.
Exhibit 99.1 - Press release dated December 28, 2005 (the following
Exhibit is furnished as part of this Current Report on Form 8-K).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EMERSON RADIO CORP.
By: /s/ Guy A. Paglinco
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Name: Guy A. Paglinco
Title: Vice President and Chief
Financial Officer
Dated: December 28, 2005