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Exhibit 10(n)
February 11, 1997
Sun Television and Appliances, Inc.
c/o Xx. Xxx Xxxxxxxx
Xxxxxxx & Xxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
To the Members of the Board of Directors:
This letter agreement (the "Agreement") will confirm and set forth the
terms of the engagement by Sun Television and Appliances, Inc. ("SNTV" or the
"Company") of BTS LLC ("BTS"), a subsidiary of Price Waterhouse LLP ("PW"), to
develop and submit its business turnaround plan and recommendation (the "Plan")
to the Board of Directors of SNTV.
I. The Company shall be responsible for the accuracy and completeness of
all information provided to BTS. All information delivered by the
Company directly or indirectly through BTS to any third party will be
the express and sole responsibility of the Company and not BTS. The
Company agrees that it will advise in writing any third parties of its
responsibility under this section and agrees that BTS is authorized to
do the same as it deems appropriate.
II. While BTS's work may include an analysis of financial and accounting
data, this engagement will not include an audit, compilation or review
of any kind of the Company's financial statements or information.
Company management will be solely responsible for any and all financial
information prepared during the course of this engagement, and neither
BTS nor PW will examine, review or compile any such financial
information. Accordingly, as part of this engagement, neither BTS nor
PW will express any opinion on the financial statements or other
financial information of the Company.
III. The schedules, workpapers and internal memoranda, and other material
assembled or prepared by BTS during the engagement will be the property
of BTS. Any such materials furnished to the Board may be retained by
the Company as part of the permanent corporate records. Any records of
the Company obtained by BTS will be returned to the Company at the
conclusion of this engagement. Anything herein to the contrary
notwithstanding, information made available by the Company to BTS
concerning its business, financial condition, operations, assets and
liabilities
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February 11, 1997
("Company Information"), and all analyses, compilations, studies or
other documents prepared by BTS based, in whole or in part, upon
Company Information, shall be used solely for the purpose of effecting
the corporate revitalization and preparation of the business turnaround
plan and recommendation referred to above, and will be kept
confidential and will be disclosed only to employees of BTS and PW who
need to know such information for the purposes set forth in this
Agreement, and who agree to keep such information confidential.
IV. The Company shall not disclose any work or analysis of BTS to any third
party other than the Company's lenders, attorneys and advisors or as
otherwise required by law, without BTS's prior written consent, which
shall not be unreasonably withheld.
V. BTS is a subsidiary of PW, a firm which includes many offices through
the United States. PW is engaged by major clients every day and cannot
assure that, during or following this engagement period by you, an
engagement will not be accepted by PW or BTS for a client engaged in
the same business as the Company, in competition with the Company, or
doing business with the Company. Notwithstanding the foregoing, PW and
BTS will use their best efforts to ensure that, during the term of this
engagement and for six months thereafter, PW and BTS will not accept
any engagement involving BTS or PW personnel at a manager level or
higher utilized in performing duties hereunder, in any matter adverse
to the interests of the Company as contemplated by this engagement. In
the event it is determined that BTS or PW personnel are so engaged, the
Company reserves the right to terminate this agreement.
VI. The Company will pay BTS for time expended by BTS employees (other than
X. Xxxxxx Xxxx) and outside consultants engaged by BTS in the
preparation and submission to the Board of the Plan at standard hourly
rates for those persons so engaged, in an aggregate amount not to
exceed $100,000, plus their reasonable out-of-pocket (including
out-of-town living) expenses.
VII. As compensation for its services, BTS will receive from the Company
options to purchase 500,000 shares of common stock of the Company
pursuant to the Stock Option Agreement dated February 11, 1997 between
BTS and SNTV and incorporated herein by reference.
VIII. The options are exercisable with respect to 166,666 shares at the end
of the first year following the date of this Agreement and 166,667
shares at the end of each of the second and third years following the
date of this Agreement (such amounts to
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be cumulative). Notwithstanding the foregoing schedule, the options
shall be exercisable: (a) as to 250,000 shares whenever the price per
share shall reach $4.50 and stay at or above that level for sixty (60)
or more consecutive days; (b) as to all 500,000 shares whenever the
price per share shall reach $7.00 and stay at or above that level for
sixty (60) or more consecutive days; or (c) as to all 500,000 shares
upon Xx. Xxxxxx Xxxx'x termination as a member of the Board of
Directors after six months from the date of this agreement for any
reason other than for his intentional and willful disregard of his
duties.
IX. To the extent not exercised, the options will terminate upon (a) Xx.
Xxxx'x resignation as Chairman of the Board of Directors within two
months of the date of this Agreement; (b) failure of Xx. Xxxx, upon
request by the Board of Directors, to continue as Chairman of the Board
at compensation of an hourly rate of $350, not to exceed two days per
week, for an additional four months following the date of this
agreement; (c) resignation from the Board of Directors by Xx. Xxxx
within three years from the date of this agreement; (d) resignation of
Xx. Xxxx from the Board of Directors within one year from the date the
option is fully vested, if the option vests within two years from the
date of this agreement (e) the termination of Xx. Xxxx as a member of
the Board of Directors for intentional and willful disregard of his
duties; or (f) the fifth anniversary of the date of this Agreement.
X. The Company agrees that it will use its best efforts to promptly
register the shares covered by the options granted to BTS with the
Securities and Exchange Commission. It is expected that the
registration of those shares will be declared effective by the SEC no
later than June 30, 1997. In the event that the shares are not or for
whatever reason cannot be registered or are not available when the
options become exercisable pursuant to Paragraph VIII, the Company and
BTS agree that alternative arrangements will be entered into which
result in the same economic benefit to BTS as if the shares had been
registered.
XI. The Company agrees to release, indemnify and hold BTS, its members,
officers, directors, employees and agents, and PW, its partners,
principals, employees and agents, harmless from any and all liabilities
(including incidental or consequential damages), costs and expenses
(including reasonable attorney's fees) incurred by reason of any action
taken or omitted to be taken by any BTS or PW personnel performing
services for the Company, unless it is determined that such personnel
acted in intentional or willful disregard for their duties. The
indemnification shall survive any termination of this engagement for
any reason.
XII. If any BTS personnel is required to give testimony or attend hearings,
sessions or
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meetings in connection with any actual or threatened claims or
litigation proceedings (including without limitation arbitration,
mediation or alternative dispute resolution relating to any aspect of
extraordinary matters (e.g., shareholder suits, government or
regulatory investigations, unsolicited takeover attempts or proxy
fights, etc.)), all time expended in preparing for or giving such
testimony or attending such hearings or meetings, shall be charged at
standard hourly rates and, in addition, all reasonable expenses
incurred in connection therewith shall be reimbursed by the Company.
Once the engagement has terminated for any reason, all time expended by
BTS personnel in connection with any actual or threatened claims or
litigation proceedings relating in any way to BTS's duties pursuant to
this Agreement or in connection with this engagement shall be charged
to the Company at the standard hourly rates.
In addition to the fees described above, the Company will reimburse BTS
for actual out-of-pocket expenses incurred, such as photocopying,
travel, hotel, meals or apartment living. If during the term of this
Agreement, BTS deems it necessary to seek the advice of separate legal
counsel of its choice to advise them regarding matters related to this
engagement then, following notice to the Board and an opportunity to
discuss the matter with them, the reasonable fees and expenses of such
separate legal counsel will be reimbursed by the Company.
Invoices will be submitted on the second and last Tuesday of each month
to be paid within seven (7) days, with balances outstanding for more
than thirty days subject to a two percent (2%) per month interest
charge. Payment is to be made to:
BTS, LLC
c/o X. Xxxxxx Xxxx
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
XIII. This agreement will terminate (subject to a separate agreement by the
parties with respect to further services to be performed hereunder by
BTS and compensation therefor) upon termination of, or resignation by,
Xx. Xxxx as a member of the Board of Directors.
If you agree to the terms and conditions set forth above, please indicate your
acceptance and approval by signing this letter in the space provided below and
on the duplicate copy attached.
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We look forward to serving you in this important matter.
Sincerely,
BTS, LLC
a Subsidiary of
Price Waterhouse LLP
By: /s/ X. Xxxxxx Xxxx
--------------------------------
X. Xxxxxx Xxxx (not individually)
SUN TELEVISION AND APPLIANCES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Its: President
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Date: 2/11/97
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SUN TELEVISION AND APPLIANCES, INC.
STOCK OPTION AGREEMENT
Sun Television and Appliances, Inc. (the "Company") hereby grants,
effective this 11th day of February, 1997 (the "effective date") to BTS, LLC
(the "Optionee") an option to purchase 500,000 shares of its common stock, $.01
par value (the "Option Shares"), at a price of $2.1875 per share (the "Option").
1. RELATIONSHIP TO THE AGREEMENT. This Option is granted pursuant to
the Agreement dated as of February 11, 1997 (the "Agreement") between the
Company and the Optionee with respect to services to be rendered by Optionee to
the Company. Capitalized terms used herein without definition are used as
defined in the Agreement. The Option shall be exercisable and shall terminate as
provided in Paragraphs VIII and IX of the Agreement.
2. METHOD OF EXERCISE. This Option shall be exercisable by delivery to
the Company of written notice of exercise specifying the number of shares to be
purchased. Upon receipt of payment for the shares to be purchased pursuant to
the Option, the Company will deliver or cause to be delivered to the Optionee a
certificate or certificates for the number of shares with respect to which this
Option is being exercised, registered in the name of the Optionee; provided,
however, that if any law or regulation or order of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall require the
Company or Optionee to take any action in connection with the shares then being
purchased, the delivery of the certificate or certificates for such shares may
be delayed for the period necessary to take and complete such action.
3. REGISTRATION OF OPTION SHARES. The Company undertakes to file with
the Securities and Exchange Commission ("SEC") an appropriate registration
statement for the registration of the Option Shares pursuant to the Securities
Act of 1933, as amended (the "Act") and to use its best efforts to cause the
same to become and remain effective to permit the sale of the Option Shares
without violation of the Act. If the registration of the Option Shares is not
effected by June 30, 1997, the Company agrees that it will provide to the
Optionee a compensation arrangement based upon the price of the Company's common
stock as nearly as possible equivalent to, based upon the same number of shares,
and having the same base and acceleration prices and exercise and termination
provisions as the Option.
4. GENERAL. This Agreement shall be construed as a contract under the
laws of the State of Ohio. It may be executed in several counterparts, all of
which shall constitute one Agreement. It shall bind and benefit the parties and
their respective successors and assigns.
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IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed as of the date first above written.
SUN TELEVISION AND APPLIANCES, INC.
By: Xxxxx X. Xxxxxxxx
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Its: President
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OPTIONEE:
BTS, LLC
By: /s/ X. Xxxxxx Xxxx
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