<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant (X) Filed by a party other than the registrant ( )
Check the appropriate box:
( X ) Preliminary Proxy Statement.
( ) Definitive Proxy Statement.
( ) Definitive Additional Materials.
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
( ) Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
Emergent Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Emergent Group, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
( X ) No fee required.
( ) Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
Release Date: The registrant intends to release definitive copies of the proxy
statement, form of proxy, and other solicitation materials to shareholders on
May 5, 1998.
<PAGE>
PRELIMINARY COPY
EMERGENT GROUP, INC.
15 SOUTH MAIN STREET, SUITE 750
P.O. BOX 17526
GREENVILLE, SOUTH CAROLINA 29606
May 5, 1998
To All Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Emergent Group, Inc. (the "Company"), which will be held at the Greenville
Commerce Club, One Insignia Financial Plaza, 17th Floor, Beattie Place,
Greenville, South Carolina, on Wednesday, June 10, 1998, at 9:00 a.m. All
holders of the Company's outstanding Common Stock of record at the close of
business on April 23, 1998 are entitled to notice of and to vote at the Annual
Meeting.
Time will be set aside for discussion of each item of business described in
the accompanying Notice of Annual Meeting and Proxy Statement. A current report
on the business operations of the Company will be presented at the Annual
Meeting and shareholders will have an opportunity to ask questions.
Upon adjournment of the Annual Meeting, the Directors and officers will be
available to confer informally with shareholders.
We hope that you will attend the Annual Meeting. Whether or not you plan to
attend, please sign, date and return your proxy promptly in the envelope
provided in order to make certain that your shares will be represented at the
Annual Meeting.
The Company's Annual Report for 1997 is included in this package, and we
urge you to read it carefully.
Sincerely yours,
John M. Sterling, Jr.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
EMERGENT GROUP, INC.
15 SOUTH MAIN STREET, SUITE 750
P. 0. BOX 17526
GREENVILLE, SOUTH CAROLINA 29606
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 1998
----------------------------------------
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Emergent Group, Inc. (the "Company")
will be held at 9:00 a.m. on June 10, 1998, at the Greenville Commerce Club, One
Insignia Financial Plaza, 17th Floor, Beattie Place, Greenville, South Carolina,
for the purpose of considering and acting upon the following:
1. The election of eight Directors to serve for specified terms, or until
the next Annual Meeting of Shareholders, or until their successors have
been elected and qualified;
2. The proposal to amend the Company's 1995 Employee and Officer Stock
Option Plan to increase by 200,000 shares the number of shares
authorized for grant to a total of 916,667 shares;
3. The proposal to change the name of the Company to HomeGold Financial,
Inc.; and
4. The transaction of such other matters as may properly come before the
meeting or any adjournment thereof.
Only those shareholders of record at the close of business on April 23,
1998 will be entitled to notice of the meeting and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
C. THOMAS WYCHE, SECRETARY
Greenville, South Carolina
May 5, 1998
A form of proxy and the Annual Report of the Company for the calendar year
1997 are enclosed. You are cordially invited to attend the meeting in person
but, whether or not you plan to attend, you are urged to SIGN, DATE AND RETURN
the proxy in the enclosed, postage-paid, addressed envelope. If you attend the
meeting, you may either vote by your proxy or withdraw your proxy and vote in
person.
<PAGE>
EMERGENT GROUP, INC.
15 SOUTH MAIN STREET, SUITE 750
P. O. BOX 17526
GREENVILLE, SOUTH CAROLINA 29606
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
June 10, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Emergent Group, Inc. (the "Company") to
be voted at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting") to be held at 9:00 a.m. on Wednesday, June 10, 1998, at the Greenville
Commerce Club, One Insignia Financial Plaza, 17th Floor, Beattie Place,
Greenville, South Carolina. The approximate date of mailing this Proxy Statement
is May 5, 1998.
Shares represented by proxies in the accompanying form, if properly signed and
returned and not revoked before their voting, will be voted at the Annual
Meeting and any adjournment or adjournments thereof in accordance with the
specifications made thereon. If a proxy is signed and returned without
indicating any voting instructions, the shares represented by that proxy will be
voted: (1) FOR the election of the nominees for Director named in this proxy
statement; (2) FOR the proposal to amend the 1995 Employee and Officer Stock
Option Plan to increase the shares authorized for grant by 200,000 shares to
916,667 shares (the "Option Plan Amendment"); (3) FOR the proposal to change the
name of the Company to HomeGold Financial, Inc.; and (4) in the discretion of
the proxy holders on such other matters as may properly come before the Annual
Meeting or any adjournment thereof.
Any person signing and mailing the enclosed proxy may revoke it at any
time before it is voted by giving written notice of revocation to the Secretary
of the Company prior to the proxy being voted, by mailing to the Company a later
dated proxy which is received by the Company prior to the Annual Meeting, or by
attending the Annual Meeting and giving notice of revocation to the Secretary of
the Company either prior to the meeting or in open meeting prior to the proxy
being voted (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice revoking a proxy should
be sent to Emergent Group, Inc., Post Office Box 17526, Greenville, South
Carolina 29606, Attention: Secretary.
Shareholders of record at the close of business on April 23, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of such date, there were outstanding 9,708,083 shares of the Company's Common
Stock, $.05 par value per share ("Common Stock"), each of which is entitled to
one vote. An automated system administered by the Company's transfer agent
tabulates the votes. Each is tabulated separately. Abstentions and broker non-
votes are each included in the determination of the number of shares present for
purposes of determining whether a quorum exists. A majority of the shares
outstanding and represented in person or by proxy will constitute a quorum at
the Annual Meeting.
1
<PAGE>
Abstentions and broker non-votes have no effect with respect to any of
the proxy items presented herein except Item 3. Directors are elected by a
plurality of votes cast by the shares voting in person or by proxy at the Annual
Meeting. Item 2 (the Option Plan Amendment) requires the affirmative vote of a
majority of the shares present or represented at the Annual Meeting and voting
on the matter. Item 3 (proposed name change) requires the affirmative vote of
two-thirds of the outstanding shares of Common Stock. With respect to Item 3,
abstentions and broker non-votes will have the same effect as a vote against the
proposal.
This solicitation of proxies is made by the Company, and the Company
will bear the cost of this proxy solicitation, including the cost of preparing,
handling, printing and mailing the Proxy Statement, Notice of Annual Meeting and
Proxy Card (collectively, the "Proxy Materials"). Proxies will be solicited
principally through these Proxy Materials. However, the Company has also engaged
the firm of Corporate Communications, Inc. ("CC") as proxy solicitors to assist
the Company in this proxy solicitation. Employees of CC may contact shareholders
by mail, by telephone or through personal solicitation. The Company expects to
pay CC approximately $5,000 in connection with such solicitation. Proxies may
also be solicited by telephone or through personal solicitation conducted by
employees of the Company. Employees and officers will be reimbursed for the
actual out-of-pocket expenses incurred in connection with this proxy
solicitation. Banks, brokers and other custodians are requested to forward these
Proxy Materials to their customers where appropriate, and the Company will
reimburse such banks, brokers and custodians for their reasonable out-of-pocket
expenses incurred in sending these Proxy Materials to beneficial owners of the
Common Stock.
2
<PAGE>
ELECTION OF DIRECTORS
(PROXY ITEM 1)
GENERAL
The Company's Bylaws provide that the Company shall have at least three
and no more than nine Directors, with the exact number to be determined by the
Board of Directors (the "Board"). The Board has, by resolution, fixed the number
of Directors at eight. Each Director will serve until the next annual meeting of
shareholders or until his successor has been elected or appointed. Unless
otherwise instructed, proxy holders will vote the proxies received by them for
the election of the nominees named below. All of the nominees for Director are
currently Directors of the Company. If any nominee becomes unavailable for any
reason, it is intended that the proxies will be voted for a substitute nominee
designated by the Board. The Board has no reason to believe that any of the
nominees named will be unable to serve if elected. Any vacancy occurring on the
Board for any reason may be filled by vote of a majority of the Directors then
in office until the next meeting of shareholders.
CUMULATIVE VOTING
The Company's Common Stock may be voted cumulatively in the election of
Directors. The right to vote cumulatively means that each shareholder entitled
to vote at the election of Directors shall be entitled to as many votes as shall
equal the number of shares of Common Stock held by the shareholder as of the
Record Date multiplied by the number of Directors to be elected and may cast all
such votes for a single candidate or may distribute them among two or more
candidates nominated for Director. No shares may be voted in such manner unless
the shareholder intending to vote cumulatively shall either: (1) give separate
written designation to an officer of the Company not less than 48 hours before
the time for the meeting, stating that such shareholder intends to vote his or
her shares cumulatively, which notice will be announced in the meeting before
the voting, or (2) announce his or her intention in the meeting before the
voting for Directors shall commence. Instructions with respect to cumulative
voting on the proxy card do not constitute notice of an election that a
shareholder intends to vote his or her shares cumulatively. In the event that
cumulative voting is invoked, the person presiding may, or if requested by any
shareholder shall, recess the meeting for a period not to exceed two hours. If
any shareholder of the Company exercises his or her right to vote cumulatively
in the election of Directors, all shares, including those to be voted by proxy
holders, will be voted cumulatively. If there is no designation and cumulative
voting rights are invoked, proxy holders, in their own judgment, will cumulate
votes for Directors to secure the election of as many as possible of the Board's
nominees. Directors will be elected by a plurality of votes.
3
<PAGE>
NOMINEES
The names of the nominees for Director, together with their proposed
terms and certain information about them, are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE SINCE PRINCIPAL OCCUPATION
------------ ----- --------------------
<S> <C> <C>
JOHN M. STERLING, JR. (60) 1991 Chairman of the Board and Chief
Executive Officer of the Company; President,
Palmetto Seed Capital Corporation (1)
BUCK MICKEL (72) 1991 Chairman of the Board and Chief
Executive Officer, RSI Holdings, Inc. (2)
PORTER B. ROSE (56) 1991 President, PBR Incorporated (3)
TECUMSEH HOOPER, JR. (50) 1991 President, Carolinas-Virginia District, IKON Office
Solutions, Inc. (4)
KEITH B. GIDDENS (43) 1992 President and Chief Operating
Officer of the Company (5)
CLARENCE B. BAUKNIGHT (61) 1995 Chairman of the Board,
Enterprise Computer Systems, Inc. (6)
LARRY G. BLACKWELL, Ph.D. (57) 1997 Chairman of the Board, Chief Executive Officer and
President, Datastream Systems, Inc. (7)
J. ROBERT PHILPOTT, JR. (51) 1997 President, Philpott, Ball & Co. (8)
</TABLE>
1. Mr. Sterling has served as Chief Executive Officer and Chairman of the
Board of the Company since August 1996. Mr. Sterling also served as
President of the Company from January 1991 to August 1996. Mr. Sterling has
served as President of Palmetto Seed Capital Corporation since November
1993. Palmetto Seed Capital Corporation is the general partner of Palmetto
Seed Capital, L.P. ("PSC"). PSC invests primarily in early stage South
Carolina companies and is managed by the Company. Mr. Sterling was Chairman
of the Board and Chief Executive Officer of Modern Office Machines, Inc.
("MOM" now known as IKON Office Solutions), which is engaged in the sale of
office equipment and supplies, from 1981 through August 1992. Mr. Sterling
served as General Partner and Manager of Reedy River Ventures ("RRV"),
which Mr. Sterling founded, from 1981 to 1995. In 1995 the Company became
General Partner and Manager of RRV. In 1997, the Company purchased RRV and
Emergent Equity Advisors, Inc. ("EEA"), a wholly-owned subsidiary of the
Company, became the General Partner of RRV. RRV is a Small Business
Investment Company licensed by the Small Business Administration to invest
in small businesses. Mr. Sterling also serves on the Board of Directors of
Datastream Systems, Inc. and several private companies.
2. Mr. Mickel has served since 1989 as Chairman of the Board and Chief
Executive Officer of RSI Holdings, Inc., which, until 1994, engaged in the
distribution of outdoor power and turf care equipment and is currently
seeking new business opportunities. Mr. Mickel has served in various
executive positions, including Vice Chairman of the Board of Fluor
Corporation, a construction firm, from which he resigned in 1987, and
Chairman of the Board of Daniel International Corporation, a construction
firm and a subsidiary of Fluor Corporation, from which he resigned in 1987.
Mr. Mickel also serves on the Board of Directors of Liberty Corporation,
Duke Power Company, Delta Woodside Industries, Inc. and Insignia Financial
Group, Inc.
4
<PAGE>
3. Mr. Rose established and became president of PBR Incorporated, a private
investment management company, in January 1998. Between August 1997 and
January 1998, Mr. Rose served as Senior Vice President of Philpott, Ball &
Company, a Charlotte, North Carolina based investment banking firm. For the
period between April 1968 and June 1997, Mr. Rose served in several Senior
Executive capacities, primarily in investment management, for The Liberty
Corporation. The Liberty Corporation is a Greenville, South Carolina based
holding company with interests in insurance and broadcasting.
4. Mr. Hooper served as Treasurer of the Company from January 1991 through
1992. Mr. Hooper has served as President, Carolinas-Virginia District of
IKON Office Solutions, Inc. ("IKON") since 1995 and as President of MOM
since 1982. From October 1994 through September 1995, Mr. Hooper served as
Southeast Regional Director for IKON. From 1981 to 1995, Mr. Hooper also
served as General Partner of RRV.
5. Mr. Giddens has served as President and COO of the Company since August
1996. Prior to that he was the Executive Vice President and COO of the
Company from November 1995 to August 1996 and Vice President of Operations
of the Company from 1994 to 1995. He also serves as CEO and Vice Chairman
of Carolina Investors, Inc. ("CII"), and as CEO and Chairman of Emergent
Business Capital, Inc. ("EBC"), Sterling Lending Corp. ("SLC"), Emergent
Financial Corp. ("EFC") and EEA, all of which are subsidiaries of the
Company. Mr. Giddens was a partner in the public accounting firm of Ernst &
Young LLP prior to joining the Company in 1991.
6. Mr. Bauknight has served since 1978 as Chairman of the Board of Enterprise
Computer Systems, Inc., which is engaged in the development of computer
software for the building supply industry. Mr. Bauknight also served as
Chairman of the Board and CEO of Builderway, Inc. from 1976 to 1996.
Builderway, Inc. is engaged in the business of distribution and retail sale
of building supplies and appliances. Mr. Bauknight also serves on the Board
of Directors of Builder Marts of America, Inc. and Pelican Companies, Inc.,
both of which are building supply companies. Mr. Bauknight was a founder of
Builderway, Inc., Enterprise Computer Systems, Inc., and Builder Marts of
America, Inc.
7. Dr. Blackwell has been Chairman of the Board, CEO and President of
Datastream Systems, Inc. since 1986. Datastream Systems, Inc. is engaged in
the business of developing and marketing computer software used for
industrial maintenance. Dr. Blackwell served as President of the Datastream
Division of RMT from 1984 through 1986, at which time Dr. Blackwell
purchased the Datastream Division from RMT, a subsidiary of Wisconsin Power
and Light. From 1974 to 1984, Dr. Blackwell served as Chairman of EDI
Technology Companies, an environmental and industrial process engineering
consulting company of which he was the co-founder.
8. Mr. Philpott has been President of Philpott, Ball & Company since 1991.
Philpott, Ball & Company, which Mr. Philpott founded in 1991, is engaged in
the business of providing investment banking services to small- to mid-size
companies. Mr. Philpott was Managing Director of the Capital Markets Group
for Interstate/Johnson Lane Corporation, an investment banking firm
("IJL"), from 1989 to 1990. From 1985 to 1989, Mr. Philpott served as
Senior Vice President and Manager of IJL's Corporate Finance Department.
From 1981 to 1985, he served as Vice President in the Corporate Finance
Department of J.C. Bradford & Company, an investment banking firm. Mr.
Philpott also served as a regional corporate lending officer for Wachovia
Bank and Trust Company, N.A., from 1972 to 1981. Mr. Philpott serves on the
Board of Directors of Pluma, Inc.
The Board has designated Mr. Jacob H. Martin, who served on the Board from 1991
to 1997, as Director Emeritus for a one-year term, and granted him a $5,000
annual stipend in connection therewith.
5
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during and with respect to its most recent fiscal year,
and written representations that no Form 5 was required, the Company believes
that all of its executive officers, Directors and persons who may have been
deemed to be greater than 10% shareholders during the year have made all filings
required to be made under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act) except as follows: Mr. Sterling made a late
filing of a Form 4 reporting 3 transactions and a late filing of a Form 5
reporting 1 transaction; Mr. Mickel made a late filing of a Form 4 reporting 1
transaction; and Mr. Hooper made a late filing of a Form 4 reporting 1
transaction.
MEETINGS AND COMMITTEES
During fiscal 1997, the Company's Board met four times. Each Director
attended more than 75% of the total number of meetings of the Board and all
committees on which he served.
The Board has an Executive Committee, the function of which is to make
decisions between meetings of the Board of Directors pursuant to authority
delegated by the Board. The current members of the Executive Committee are
Messrs. Sterling, Rose and Mickel. The Executive Committee met 6 times during
1997.
The Board also has an Audit Committee, which is responsible for
reviewing and making recommendations regarding the Company's engagement of
independent auditors, the annual audit of the Company's financial statements and
the Company's internal accounting practices and policies. The current members of
the Audit Committee are Messrs. Hooper, Philpott and Blackwell. The Audit
Committee met one time during 1997.
The Board also has a Compensation Committee, the function of which is
to make recommendations to the Board as to the salaries, bonuses and stock
option awards of the officers and employees of the Company. The current members
of the Compensation Committee are Messrs. Bauknight, Mickel and Philpott. The
Compensation Committee met one time during 1997.
The Board has a Risk Oversight Committee, the function of which is to
review the operations of the Company with a view toward assessing various
Company risks, including asset/liability risk, interest rate risk, credit risk
and liquidity risk. The current members of the Risk Oversight Committee are
Messrs. Bauknight, Blackwell, Rose and Hooper. The Risk Oversight Committee met
2 times during 1997.
The Board does not have a Nominating Committee. The functions of a
Nominating Committee are performed by the Board as a whole.
DIRECTORS' FEES
Nonemployee Board members ("Outside Directors") receive Directors' fees
of $15,000 per year and a grant of Common Stock equivalent to $12,000 in value
based on the market value of the Common Stock at the time of grant. Pursuant to
the terms of the Company's Director Stock Option Plan, each Outside Director has
been entitled to receive automatically from the Company on December 15 of each
year options with respect to an aggregate of 666 shares of Common Stock. In
addition, pursuant to the terms of the Company's Restricted Stock Agreement
Plan, each Outside Director is entitled to receive annual grants of agreements
entitling him to purchase at $.05 per share, shares of Common Stock with an
aggregate fair market value of $12,000 on or about January 31 of each year. For
fiscal year 1997, the Directors have voted to award Outside Directors $12,000 in
value of Common Stock in place of the option and agreements otherwise available
under the Director Stock Option Plan and Restricted Stock Agreement Plan.
6
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 1997 the Company entered into an agreement with Philpott, Ball &
Company pursuant to which Philpott, Ball will receive compensation which may
total as much as $185,000 for certain consulting services provided to the
Company. As previously noted, Mr. J. Robert Philpott, Jr. is currently a
director of the Company and has been nominated for reelection to that position.
Mr. Philpott is also the President and a 50 percent owner of Philpott, Ball
& Company.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the
current executive officers of the Company, all of whom are serving for an
indefinite term of office until their successors are elected by the Board:
<TABLE>
<CAPTION>
NAME AND AGE POSITION
------------ --------
<S> <C> <C>
John M. Sterling, Jr. (60) Chairman of the Board and Chief Executive Officer (1)
Keith B. Giddens (43) President and Chief Operating Officer (1)
Kevin J. Mast (37) Vice President, Chief Financial Officer and Treasurer (2)
Robert S. Davis (51) Vice President - Administration (3)
</TABLE>
1. See information under "Election of Directors; Nominees."
2. Mr. Mast has served as Vice President and Chief Financial Officer of the
Company since August 1996, as Treasurer of the Company since November 1995,
as Executive Vice President, Chief Financial Officer, Treasurer and
Secretary of EBC since April 1992, as Chief Financial Officer and Treasurer
of The Loan Pro$, Inc. and Premier Financial Services, Inc., both
subsidiaries of the Company, from April 1995 to March 1998, as Vice
President and Treasurer of EFC since April 1996, and as Vice President and
Treasurer of CII and Emergent Mortgage Corporation ("EMC"), a wholly-owned
subsidiary of the Company, since April 1995. He serves as a director of
each of EBC, EFC, EMC and CII. From June 1991 to October 1992, Mr. Mast
served as Executive Vice President, Chief Financial Officer and a director
of Citizens Bank & Trust Co. and as Chief Financial Officer of its parent
company, Business Banc of America. In these positions he was responsible
for overseeing accounting systems, financial reporting and internal
controls of these companies. Prior to that time, Mr. Mast was a Senior
Manager at the accounting firm of Ernst & Young LLP, where he specialized
in the audits of financial institutions.
3. Mr. Davis has served as Vice President-Administration of the Company since
August 1996, as Vice President and Chief Financial Officer of the Company
from January 1991 to August 1996, as Treasurer of the Company from 1992 to
1995, as Vice President of Finance of the Company from November 1989
through June 1990, as President and Treasurer of the Company from June
through December 1990, and as Corporate Controller of the Company from 1986
through November 1989. Prior to 1986, Mr. Davis was Chief Financial Officer
and Treasurer of Alexander's Wholesale Distributors, Inc., a catalog
retailer of consumer goods.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the
Company or its subsidiaries during fiscal years 1997, 1996 and 1995 to the
Company's Chief Executive Officer and to the executive officers of the Company
whose cash and cash equivalent compensation exceeded $100,000 for services
rendered in all capacities (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($) (1) ($) ($) (2) (#) ($) (3)
<S> <C> <C> <C> <C> <C>
John M. Sterling, Jr. 1997 250,000 -- -- -- 4,750
Chairman and Chief 1996 227,312 220,000 -- 50,000 3,234
Executive Officer 1995 186,992 110,000 -- 30,000 3,234
Keith B. Giddens 1997 220,000 -- -- -- 4,486
President and Chief 1996 196,016 200,000 -- 40,000 2,835
Operating Officer 1995 173,923 100,000 -- 74,000 2,835
Kevin J. Mast
Vice President, Chief 1997 141,154 25,000 -- -- 4,750
Financial Officer and 1996 108,263 50,000 -- 25,000 2,007
Treasurer 1995 93,461 25,000 -- 22,668 2,698
Robert S. Davis 1997 120,000 15,000 -- -- 3,281
Vice President - 1996 111,652 43,000 -- 10,000 3,145
Administration 1995 93,796 43,000 -- 33,334 2,663
</TABLE>
- ------------------
(1) A portion of total salary may have been deferred, at the option of the
employee, pursuant to the Company's 401(k) plan.
(2) Certain amounts may have been expended by the Company which may have had
value as a personal benefit to the executive officer. However, the total
value of such benefits did not exceed the lesser of $50,000 or 10% of the
annual salary and bonus of such executive officer.
(3) Amounts shown under "All Other Compensation" consist of contributions
during fiscal 1997, 1996 and 1995 to the Company's 401(k) plan in the
amount shown to match pre-tax elective deferral contributions (included
under salary) made by the executive officers to the plan.
8
<PAGE>
STOCK OPTIONS
The following table sets forth certain information with respect to
options to purchase shares of Common Stock held by the Named Executive Officers
and as to the number of shares covered by both exercisable and unexercisable
stock options. Also reported are the values for the "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock option and the year-end fair market value of the Common Stock.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Options Value of Unexercised
Shares at 1997 Fiscal In-the-Money Options at 1997
Acquired Upon Value Year-End (#) Fiscal Year-End ($) (1)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C> <C> <C>
John M. Sterling, Jr. 6,666 $ 82,738 32,000/48,000 $137,920/$206,880
Keith B. Giddens 25,470 $ 335,041 47,600/30,800 $304,498/$195,950
Kevin J. Mast -- -- 27,266/14,534 $146,647/$62,598
Robert S. Davis -- -- 34,174/10,667 $316,285/$76,984
</TABLE>
(1) The indicated value is based on exercise prices ranging from $1.09 to
$12.25 per share and a per share value of $13.88. This represents the
closing market price of a share of the Company's Common Stock on December
31, 1997 as reported by the NASDAQ National Market.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date, except as
otherwise noted, certain information regarding ownership of the Company's Common
Stock by (i) each person or group who is known by the Company to own
beneficially more than 5% of the Company's Common Stock, (ii) each of the
Company's Directors and Named Executive Officers, and (iii) all Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership Outstanding Shares (1)
- ---------------- --------- ----------------------
<S> <C> <C>
Wellington Management Co., LLP 1,250,700(2) 12.88%
75 State Street
Boston, MA 02109
John M. Sterling, Jr. 1,083,277(3) 11.11%
P. 0. Box 17526
Greenville, SC 29606
The Sterling Family Limited 847,168(4) 8.73%
Partnership
P. 0. Box 17526
Greenville, SC 29606
Buck Mickel 304,880(5) 3.14%
P. 0. Box 19019
Greenville, SC 29602-9019
Clarence B. Bauknight 257,918(6) 2.66%
P. 0. Box 2183
Greenville, SC 29602
Keith B. Giddens 161,138(7) 1.65%
P. 0. Box 17526
Greenville, SC 29606
Tecumseh Hooper, Jr. 228,180(8) 2.35%
P. 0. Box 5615
Greenville, SC 29606
Larry G. Blackwell 90,700 *
50 Datastream Plaza
Greenville, SC 29605
Robert S. Davis 94,750(9) *
P. 0. Box 17526
Greenville, SC 29606
Porter B. Rose 31,898(10) *
P. 0. Box 789
Greenville, SC 29602
Kevin J. Mast 32,291(11) *
P. 0. Box 17526
Greenville, SC 29606
J. Robert Philpott, Jr. 11,000 *
212 South Tryon Street
Charlotte, NC 28281
All Executive Officers and Directors 2,296,032(12) 23.31%
as a Group (10 persons)
</TABLE>
10
<PAGE>
(footnotes to previous table)
(1) Pursuant to Rule 13d-3 under the Exchange Act, shares are deemed
"beneficially owned" if the named person or group has the right to
acquire ownership of such shares within 60 days. The percentage for
each person or group is computed on the assumption that shares subject
to acquisition upon the exercise of options by such person or group are
outstanding, but that no other such shares similarly subject to
acquisition by other persons are outstanding.
(2) Includes 430,900 shares of Common Stock owned by Wellington Management
Co., LLP ("WMC") directly. Also includes 819,800 shares of Common Stock
managed by WMC for which WMC does not have voting power.
(3) Includes 112,091 shares of Common Stock owned by Mr. Sterling directly;
847,168 shares of Common Stock owned by The Sterling Family Limited
Partnership, a limited partnership whose general partners are Mr.
Sterling and his spouse and the limited partners of which are their
three adult children; 14,232 shares owned by Mr. Sterling and held in a
Keogh account; and 70,786 shares of Common Stock owned by a trust of
which Mr. Sterling is the trustee, as to which shares Mr. Sterling
disclaims beneficial ownership. Also includes 39,000 shares of Common
Stock, which may be acquired pursuant to currently exercisable stock
options.
(4) The Sterling Family Limited Partnership is a limited partnership of
which Mr. Sterling and his wife, Elizabeth H. Sterling, serve as the
general partners and the limited partners of which are their three
adult children.
(5) Includes 24,631 shares of Common Stock owned by Mr. Mickel directly.
Also includes 42,156 shares owned by a corporation of which Mr. Mickel
is the sole shareholder; 236,360 shares of Common Stock owned by Mr.
Mickel's spouse, as to which shares he disclaims beneficial ownership;
933 shares which may be acquired pursuant to currently exercisable
stock options; and 800 shares which may be acquired pursuant to the
Company's 1995 Restricted Stock Agreement Plan ("the Plan").
(6) Includes 6 shares of Common Stock owned by Mr. Bauknight's IRA account;
253,680 shares of Common Stock owned by a partnership whose partners
are Mr. Bauknight, his spouse and his two adult children; 1,332 shares
of Common Stock which may be acquired pursuant to currently exercisable
stock options; and 2,900 shares of Common Stock which may be acquired
pursuant to the Plan.
(7) Includes 69,342 shares of Common Stock owned by Mr. Giddens directly;
15,996 shares of Common Stock owned by a trust administered by Mr.
Giddens' spouse for his three children; and 35,000 shares of Common
Stock owned by the Giddens Family Limited Partnership, a limited
partnership whose general partners are Mr. Giddens and his spouse and
the limited partners of which are their three children. Also includes
40,800 shares of Common Stock that may be acquired pursuant to
currently exercisable stock options.
(8) Includes 218,948 shares of Common Stock owned by Mr. Hooper directly.
Also includes 5,000 shares owned by the children of Mr. Hooper; 1,332
shares of Common Stock which may be acquired pursuant to currently
exercisable stock options; and 2,900 shares of Common Stock which may
be acquired pursuant to the Plan.
(9) Includes 66,176 shares of Common Stock owned by Mr. Davis directly.
Also includes 28,574 shares of Common Stock, which may be acquired
pursuant to currently exercisable stock options.
(10) Includes 27,666 shares of Common Stock owned by Mr. Rose directly;
1,332 of Common Stock, which may be acquired pursuant to currently
exercisable stock options, and 2,900 shares of Common Stock which may
be acquired pursuant to the Plan.
(11) Includes 12,225 shares of Common Stock owned by Mr. Mast directly and
20,066 shares of Common Stock which may be acquired pursuant to
currently exercisable stock options.
(12) Excludes the shares described as excluded and includes the shares
described as included in the notes above.
* Less than one percent of the outstanding shares of the class.
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Over the past several years, the Company provided management services
to RRV. The Company and certain of the Company's officers and Directors, namely
John M. Sterling, Jr., Buck Mickel, Tecumseh Hooper, Jr., and Clarence B.
Bauknight, were partners of RRV. During 1996 and through June of 1997, RRV paid
the Company $175,000 and $87,500, respectively, in management fees. The Company
purchased RRV in June 1997 and EEA serves as its general partner.
Certain officers, Directors and employees of the Company held senior
notes and/or subordinated debentures bearing fixed rates of interest
(collectively, the "Debentures") issued by CII which at December 31, 1997
aggregated approximately $659,636. These Debentures were purchased on terms
which were the same as those available to purchasers not affiliated with the
Company.
During the 1997 fiscal year the Company's Compensation Committee
consisted of Messrs. Bauknight, Mickel and Philpott. During the 1996 fiscal year
Mr. Bauknight was Chairman of the Board and Chief Executive Officer of
Enterprise Computer Systems, Inc. Mr. John M. Sterling, Jr., Chief Executive
Officer and Chairman of the Board of the Company, served as a member of the
Compensation Committee of Enterprise Computer Systems, Inc. until March 13,
1997, at which time Mr. Sterling resigned from such committee.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board (the "Compensation Committee")
annually submits to the Board recommendations respecting the salaries, bonuses
and stock option grants to be provided to the Company's executive officers and
administers the Company's stock option plan for officers and key employees. The
Compensation Committee provides the following report.
POLICIES FOR COMPENSATION OF EXECUTIVE OFFICERS
The Compensation Committee attempts to act on the shareholders' behalf
in establishing an executive compensation program. The basic policy underlying
the Company's compensation program for executive officers is that their
compensation should vary depending on the Company's success in meeting its
financial and strategic objectives and in creating value for shareholders. In
addition to salary, the compensation program may consist of an annual bonus and
grants of stock options under the Employee and Officer Stock Option Plan.
The Compensation Committee annually reviews the Company's corporate
performance and that of its executive officers and sets levels of compensation
in its discretion. As a result, the executive officers' actual compensation
levels in any particular year may be above or below those of the Company's
competitors, depending upon Company-wide and individual performance.
In the case of all executive officers except Mr. Sterling, the
Compensation Committee adjusted their salaries in 1997 based upon the
recommendations of Mr. Sterling. Factors considered by Mr. Sterling included
earnings increases as well as his perception of individual performance and the
level of individual responsibility. The Compensation Committee determined that
these salary adjustments were appropriate in light of the Company's operating
performance during 1997 and to compensate executive officers for the increased
level of responsibility associated with the increase in the Company's size.
12
<PAGE>
The Compensation Committee believes that the market value of the Common
Stock as well as the operating performance of the Company are valid criteria for
determining annual bonuses. The Compensation Committee carefully monitors key
Company performance criteria, including change in market value of the Company's
Common Stock, growth in earnings and revenue and financial performance as
compared to budget. Based on these criteria and on the recommendations of Mr.
Sterling for all executive officers except himself, the Compensation Committee
awarded bonuses to executive officers in the amounts shown in the Summary
Compensation Table.
Stock option grants are generally made on an annual basis with exercise
prices set at the market closing price on the day of the stock option grant and
have the purpose of providing the Company's executive officers and key employees
with an equity ownership opportunity in the Company and with incentives to
maximize shareholder values. For the year 1997, the Compensation Committee made
an option grant to each executive officer of the Company, however, the grant was
made in March 1998. In determining the size of any stock option grant, the
Compensation Committee considered the following qualitative factors: the
Committee's perception of the Company's overall performance, the individual's
performance and the potential effect which the individual's future performance
may have on the Company.
MR. STERLING'S 1997 COMPENSATION
The Compensation Committee's general approach in setting Mr. Sterling's
annual compensation is to base a significant percentage of his compensation upon
objective strategic performance criteria, and to set total compensation that is
competitive within the industry. This approach may result in some fluctuations
in the actual level of Mr. Sterling's annual compensation increases from year to
year. The Compensation Committee, however, believes that its emphasis upon
objective strategic performance criteria appropriately provides incentives to
the Company's executive officers. The objective performance criteria consist of
growth in the market value of the Company's Common Stock, growth in earnings and
financial performance as compared to budget.
The Compensation Committee increased Mr. Sterling's base salary from
$227,312 in 1996 to $250,000 in 1997, an increase of 9.98%, to reward him for
increased responsibility associated with the increase in the size of the
Company, the growth in the market value of the Common Stock and the growth in
the Company's earnings.
Mr. Sterling's total compensation during 1997 decreased 44.1% from his
total compensation during fiscal 1996. The Company's diluted earnings per share
from continuing operations decreased 35.5% during fiscal 1997 as compared to
fiscal 1996 and the Company's per share stock price increased 32.1% from the end
of fiscal 1996 to the end of fiscal 1997.
In addition, in March 1998, the Compensation Committee granted Mr.
Sterling options with respect to an aggregate of 35,000 shares of the Company's
Common Stock. In determining the size of this grant, the committee considered
the following factors: the Company's overall performance, Mr. Sterling's
performance and the potential effect of his future performance on the Company.
At fiscal 1997 year-end Mr. Sterling had outstanding exercisable in-the-money
stock options with respect to 32,000 shares of Common Stock. The Compensation
Committee believes that the stock options provide Mr. Sterling with appropriate
incentives to promote long-term shareholder value.
COMPENSATION COMMITTEE
Buck Mickel, Chairman
Clarence B. Bauknight
J. Robert Philpott, Jr.
13
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
AMONG THE COMPANY, NASDAQ MARKET
INDEX AND PEER GROUP INDEX FOR THE FIVE
YEAR PERIOD
ENDING DECEMBER 31, 1997
A line graph comparing the cumulative total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total returns of the NASDAQ Market Index and a peer group consisting of publicly
traded companies classified as nontraditional mortgage banks by SNL Securities,
over the same period (assuming a $100 initial investment), is presented below.
The Company will promptly furnish without charge to any shareholder of record on
April 23, 1998, the identity of the companies included in the peer group.
Requests should be directed to the Company, Post Office Box 17526, Greenville,
South Carolina 29606; Attn: Shareholder Relations.
Note: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
(The Performance Graph appears here. The plot points are listed in the table
below.)
<TABLE>
<CAPTION>
Period Ending
----------------------------------------------------------------------
Index 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Emergent Group, Inc. 100.00 128.77 193.15 821.92 1,438.36 1,900.68
NASDAQ - Total US 100.00 114.80 112.21 158.70 195.19 239.53
SNL Nontraditional Mortgage Banks 100.00 185.48 207.56 434.76 723.21 537.63
</TABLE>
The cumulative total return of a $100 investment over the five-year period from
December 31, 1992 to December 31, 1997 for each of the NASDAQ - Total US, the
nontraditional mortgage bank group and the Company, is $239.53, $537.63, and
$1,900.68, respectively.
14
<PAGE>
PROPOSAL TO AMEND THE 1995 EMPLOYEE AND OFFICER
STOCK OPTION PLAN TO INCREASE BY 200,000 THE
NUMBER OF SHARES AUTHORIZED FOR GRANT
(ITEM 2 ON THE PROXY)
GENERAL
The Board has determined that an amendment to the Company's 1995
Employee and Officer Stock Option Plan to increase by 200,000 the number of
shares authorized for grant (the "Option Plan Amendment") is in the best
interests of the Company.
Under the 1995 Plan, the Board (or a committee thereof) currently has
the discretion to grant options to purchase up to 716,667 shares of Common Stock
to certain key employees and officers of the Company. As of the Record Date, the
Board had granted options to purchase a total of approximately 547,000 shares of
Common Stock to a total of 20 key employees and officers. The number of shares
authorized for grant and not subject to outstanding options under the 1995 Plan
was 59,008 as of the Record Date. During 1997, the Board granted no options
pursuant to the 1995 Plan, while in 1998, prior to the Record Date, the Board
granted options to purchase a total of 205,000 shares of Common Stock,
contingent on the approval by the shareholders of the proposal. The proposed
amendment would increase the total number of shares authorized for grant under
the 1995 Plan from 716,667 to 916,667.
Participation in the 1995 Plan is determined by the Board (or a
committee thereof) and is limited to those key employees and officers of the
Company or its subsidiaries who have the greatest impact on the Company's
long-term performance. In determining the key employees and officers to whom
options shall be granted and the number of shares subject to such options, the
Board (or committee) shall take into account relevant factors such as the level
and responsibility of the key employee's or officer's position, the key
employee's or officer's level of performance and compensation and the potential
of the key employee or officer.
The price at which an option granted under the 1995 plan may be
exercised is determined by the Board (or committee) at the time of grant based
on such criteria as the Board (or committee) may adopt in good faith; provided,
however, that in the case of an option intended to qualify as an incentive stock
option under federal income tax laws, the exercise price per share shall be not
less than the fair market value of a share of the Common Stock at the time of
grant (110% of the fair market value in the case of a recipient who owns stock
representing more than 10% of the combined voting power of all outstanding stock
of the Company or any of its subsidiaries (a "Ten Percent Shareholder")). On
April 17, 1998, the closing price of the Company's Common Stock as reported on
the NASDAQ National Market was $9.125 per share.
The recipient of an option under the 1995 Plan is not required to pay
the Company any amount at the time of receipt. Upon exercising the option, the
recipient must tender (1) the full amount of the exercise price in cash or, if
authorized by the Board (or committee) at the time of grant, in shares subject
to the option being exercised and (ii) payment in full in cash of the amount of
all federal and state withholding or other applicable employment taxes.
In the discretion of the Board (or committee), options granted under
the 1995 Plan may be "incentive stock options" for federal income tax purposes.
The Company is not allowed a deduction at any time in connection with, and the
participant is not taxed upon either the grant or the exercise of, an incentive
stock option. The difference between the option price of such an option and the
market value at the date of exercise, however, constitutes a tax preference item
for the participant in the year of exercise for alternative minimum tax
purposes. To qualify as an incentive stock option, the shares acquired by the
recipient must be held for at least two years after the option is granted and
one year after it is exercised. If
15
<PAGE>
the recipient satisfies these time requirements, the recipient will be taxed
only upon any gain realized upon disposition of the stock. The participant's
gain will be equal to the difference between the sales price of the stock sold
and the option exercise price. If an incentive stock option is exercised after
the death of the employee by the estate of the decedent, or by a person who
acquired the right to exercise such option by bequest or inheritance or by
reason of the death of the decedent, none of the time limits described above
apply.
If the recipient does not satisfy the aforementioned time limits, the
option will be treated as though it were not an incentive stock option. In the
case of options which are not incentive options, the recipient generally is not
taxed upon grant of the option, but upon exercise the recipient recognizes
ordinary income equal to the difference between the fair market value of the
shares of stock acquired and the exercise price of the option. Generally, the
Company receives a deduction for the amount the participant reports as ordinary
income arising from the exercise of the option. Upon subsequent sale or
disposition, the holder of the shares recognizes taxable income equal to any
excess of the selling price over the fair market value of the shares at the date
of exercise. If the recipient fails to satisfy the time limits described above
with respect to an option intended to be an incentive stock option, the income
to the recipient and the deduction for the Company shall arise at the time of
the early disposition and shall equal the excess of (i) the lower of the fair
market value of the shares at the time of exercise or such value at the time of
disposition over (ii) the exercise price.
Recipients may not transfer options granted under the 1995 Plan except
by will, the laws of descent, or a qualified domestic relations order as defined
under the Internal Revenue Code or Title I of the Employee Retirement Income
Security Act, or the rules promulgated thereunder.
The term of each option is established by the Board (or committee) but
cannot exceed 10 years (or 5 years in the case of a Ten Percent Shareholder) and
is exercisable according to such schedule as the Board (or committee) may
establish. Any recipient whose employment with the Company, or any subsidiary of
the Company, terminates for any reason other than death or permanent and total
disability cannot exercise any options more than three months after such
termination. If such employment terminates due to the death or permanent and
total disability of the recipient, or the recipient dies within three months of
terminating such employment, the recipient or the recipient's personal
representative may exercise any options granted under the 1995 Plan during a
period not exceeding one year after the recipient's termination of employment.
In no event, however, can an option be exercised past the expiration of its
term.
The Board (or committee) may at any time suspend, amend or terminate
the 1995 Plan; provided that the Board may not alter or impair the rights of any
recipient with respect to any option previously granted under the 1995 Plan.
Approval by a majority of shareholders is also required if a proposed amendment
would (i) materially increase the benefits accruing to participants; (ii)
increase the number of securities authorized for grant (other than to reflect
recapitalization of the Company); (ill) change the class of persons eligible to
receive options; or (iv) otherwise materially modify the requirements for
eligibility.
By its terms, the 1995 Plan terminates on the close of business of May
31, 2005. Such termination will not affect any options previously granted under
the 1995 Plan.
The purpose of the 1995 Plan is to promote the growth and profitability
of the Company and its subsidiaries by increasing the personal participation of
key employees and officers of the Company and its subsidiaries in the continued
growth and financial success of the Company and its subsidiaries, while enabling
the Company and its subsidiaries to attract and retain key employees and
officers of outstanding competence and by providing such key employees and
officers with an equity opportunity in the
16
<PAGE>
Company. The Board recommends approval of the Option Plan Amendment because it
will provide the Company's employees who participate in the 1995 Plan with an
incentive to maximize shareholder value. Because the executive officers of the
Company will be eligible to participate in the 1995 Plan (and have previously
received grants thereunder), they may be deemed to have an interest in the
outcome of this proposal.
The additional shares to be available for grant, if the Option Plan
Amendment is approved, would be subject to the same terms and conditions as are
the shares currently available under the 1995 Plan, which was approved by the
shareholders of the Company at the June 9, 1995 Shareholders' Meeting.
VOTE REQUIRED
The vote of the holders of a majority of the shares of Common Stock
represented in person or by proxy and voting at the Annual Meeting is required
for approval of the Option Plan Amendment.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE OPTION PLAN AMENDMENT.
PROPOSAL TO ADOPT AN AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO CHANGE
THE NAME OF THE COMPANY TO HOMEGOLD FINANCIAL, INC.
(ITEM 3 ON THE PROXY)
REASONS FOR NAME CHANGE
The Company's name was changed to Emergent Group, Inc. in 1991 in order
that its name would be more consistent with the Company's ongoing operations.
This action by the shareholders followed the sale of the Company's former
operating assets and reinvestment of the proceeds into other operating
companies. The Company has since focused its operations on financial services,
with particular emphasis on mortgage loans to borrowers who have limited access
to credit or who may be considered credit-impaired by conventional lending
standards.
In April 1996, the Company began its retail strategy of originating
mortgage loans under the name HOMEGOLD(R). This name was chosen to reflect the
value that could be obtained by borrowers through the equity in their homes.
As 90% of the loan originations by the Company are now represented by
the mortgage division, it is the belief of the Board of Directors that the name
of the Company should be changed to HomeGold Financial, Inc. The Board believes
that this name change will provide the Company with a more recognizable name and
more adequately reflect the business from which the Company derives the
principal amount of its loan originations and revenues.
VOTE REQUIRED
The vote of the holders of two-thirds of the outstanding shares of
Common Stock is required for approval of this amendment to the Company's
Articles of Incorporation.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT CHANGING THE
NAME OF THE COMPANY.
17
<PAGE>
ANNUAL REPORT
THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR ITS FISCAL YEAR ENDED
DECEMBER 31, 1997 (THE "ANNUAL REPORT") IS BEING MAILED WITH THIS PROXY
STATEMENT. ADDITIONAL COPIES MAY BE OBTAINED FROM THE COMPANY. IN ADDITION, THE
COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD AS OF APRIL 23,
1998, WHO SO REQUESTS IN WRITING, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10K FOR THE YEAR ENDED DECEMBER 31, 1997 (WITHOUT EXHIBITS). ANY SUCH REQUEST
SHOULD BE DIRECTED TO THE COMPANY, P. 0. BOX 17526, GREENVILLE SOUTH CAROLINA
29606, ATTENTION: ROBERT S. DAVIS, VICE PRESIDENT-ADMINISTRATION.
AUDITORS
The Board of Directors has appointed the accounting firm of KPMG Peat
Marwick, LLP ("KPMG") as independent auditors for the Company's 1998 fiscal
year. Representatives of KPMG are expected to be present at the Annual Meeting
and will have the opportunity to make a statement if they so desire and to be
available to respond to appropriate questions.
On August 26, 1996, the Company determined to dismiss Elliott Davis &
Company, LLP ("Elliott Davis") and to engage KPMG as the Company's independent
auditors for the 1996 fiscal year. Elliott Davis had served as the Company's
principal accountants since 1993. The change in auditors resulted from the
Company's decision that it was in the Company's best interest to utilize a
national accounting firm, with its attendant size, experience, and expertise.
The Audit Committee of the Board and the Board approved the change of accounting
firms.
In connection with Elliott Davis' audit completed for the fiscal year
ending December 31, 1995, there were no disagreements between the Company and
Elliott Davis on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the auditors, would have caused it to make
reference to the subject matter of the disagreement in connection with its
report. Moreover, Elliott Davis' report as principal auditor of the financial
statements of the Company for such period did not contain an adverse opinion or
a disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder who, in accordance with and subject to the provisions
of the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Company's proxy statement for its 1999 meeting of
Shareholders must deliver such proposal in writing to the Secretary of the
Company at the Company's principal executive offices at Post Office Box 17526,
Greenville, South Carolina 29606 no later than December 23, 1998, and must
otherwise comply with the rules and regulations of the Securities and Exchange
Commission.
OTHER MATTERS
The Board does not know of any matters to be presented for
consideration other than the matters described in the Notice of Annual Meeting,
but if any matters are properly presented, it is the intention of the persons
named in the accompanying proxy to vote on such matters in accordance with their
best judgment.
By Order of the Board of Directors,
C. Thomas Wyche, Secretary
Dated: May 5, 1998
18
<PAGE>
APPENDIX A
PRELIMINARY COPY
Emergent Group, Inc.
15 South Main Street, Suite 750
P. O. Box 17526
Greenville, SC 29606
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EMERGENT GROUP,
INC. (THE "COMPANY")
The undersigned hereby appoints C. T. Wyche and Robert S. Davis or either of
them as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of Common Stock of the Company held of record by the undersigned on April 23,
1998, at the annual meeting of Shareholders to be held June 10, 1998 or any
adjournment thereof.
Proxy for Common Stock
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
FOR the eight nominees listed below (except as marked to the contrary
below) [ ]
WITHHOLD AUTHORITY to vote for the eight nominees listed below [ ]
Clarence B. Bauknight, Larry G. Blackwell, Keith B. Giddens, Tecumseh
Hooper, Jr., Buck Mickel, J. Robert Philpott, Jr., Porter B. Rose, John
M. Sterling, Jr.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW. IF YOU DESIRE TO
CUMULATE YOUR VOTES FOR ANY PARTICULAR NOMINEE(S), IN THE EVENT
CUMULATIVE VOTING IS ELECTED, WRITE YOUR INSTRUCTIONS AS TO THE NUMBER
OF VOTES CAST FOR EACH IN THE SPACE PROVIDED BELOW.
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. PROPOSAL TO AMEND THE COMPANY'S 1995 EMPLOYEE AND OFFICER STOCK OPTION
PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR GRANT BY 200,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. PROPOSAL TO ADOPT AN AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO HOMEGOLD FINANCIAL,
INC.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned
<PAGE>
shareholders. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF
PROPOSALS 1 THROUGH 3 AND IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Please sign exactly as name appears herein. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATE _______________________________________
--------------------------------------------
SIGNATURE
--------------------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
THE ABOVE SIGNATURE HEREBY ACKNOWLEDGES
RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS DATED MAY 5, 1996, AND THE
PROXY STATEMENT FURNISHED THEREWITH.
