SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EMERSON RADIO CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid
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.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No:
(3) Date Filed:
EMERSON RADIO CORP.
Nine Entin Road
P.O. Box 430
Parsippany, New Jersey 07054-0430
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 6, 1998
As a stockholder of Emerson Radio Corp. (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy the
Annual Meeting of Stockholders of the Company to be held at Columbian
Country Club, 2525 Country Club Drive, Carrollton, Texas 75006, on Tuesday,
January 6, 1998 at 1:00 p.m. (local time), for the following purposes:
1. To elect five directors for a one-year term; and
2. To transact such other business as may properly come before the
meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on November 25,
1997 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at such meeting and any
adjournment(s) thereof. Only stockholders of record at the close of
business on the Record Date are entitled to notice of and to vote at such
meeting. The transfer books of the Company will not be closed.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, MANAGEMENT DESIRES TO HAVE THE
MAXIMUM REPRESENTATION AT THE MEETING AND RESPECTFULLY REQUESTS THAT YOU
DATE, EXECUTE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED STAMPED
ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. A proxy may be revoked by a stockholder any time prior to
its use as specified in the enclosed proxy statement.
By Order of the Board of Directors
ELIZABETH J. CALIANESE,
Vice President-Human Resources
and Secretary
Parsippany, New Jersey
December 3, 1997
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREIN.
EMERSON RADIO CORP.
_____________________
PROXY STATEMENT
_____________________
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 6, 1998
_____________________
TO OUR STOCKHOLDERS:
This Proxy Statement is furnished to stockholders of Emerson Radio
Corp. (the "Company" or "Emerson") for use at the Annual Meeting of
Stockholders to be held at the date, time and place and for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders, or
at any adjournment or adjournments thereof (the "Annual Meeting"). The
enclosed proxy is solicited on behalf of the Board of Directors of the
Company and is subject to revocation at any time prior to the voting of the
proxy. Unless a contrary choice is indicated, all duly executed proxies
received by the Company will be voted in accordance with the instructions
set forth on the back side of the proxy card. The record of stockholders
entitled to vote at the Annual Meeting was taken at the close of business
on November 25, 1997 (the "Record Date"). The approximate date on which
this Proxy Statement and the enclosed proxy are first being sent or given
to stockholders is December 5, 1997.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on November 25, 1997 to vote in the
election of directors. The proxy card provides space for a stockholder to
vote in favor of or to withhold voting for the nominees for the Board of
Directors. The election of directors will be decided by a plurality vote.
The holders of a majority of the outstanding shares of common stock,
par value $.01 per share (the "Common Stock") entitled to vote at the
Annual Meeting, present in person or by proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. If a quorum is not
present, the Annual Meeting may be adjourned from time to time until a
quorum is obtained. Shares as to which authority to vote has been withheld
with respect to the election of any nominee for director will not be
counted as a vote for such nominee. Broker nonvotes are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. A broker nonvote will have no effect on the
outcome of the election of directors. Stockholders are urged to sign the
accompanying form of proxy and return it promptly.
When a signed card is returned with choices specified with respect to
voting matters, the shares represented are voted by the proxies designated
on the proxy card in accordance with the stockholder's instructions. The
proxies for the stockholders are Geoffrey P. Jurick and John P. Walker. A
stockholder desiring to name another person as his or her proxy may do so
by crossing out the name of the designated proxies and inserting the
name(s) of such other person(s) to act as his or her proxy(ies). In that
case, it will be necessary for the stockholder to sign the proxy card and
deliver it to the person named as his or her proxy and for the person so
named to be present and vote at the Annual Meeting. Proxy cards so marked
should not be mailed to the Company.
If a signed proxy card is returned and the stockholder has made no
specifications with respect to voting matters, the shares will be voted for
the election of the five nominees for director and, at the discretion of
the proxies, on any other matter that may properly come before the Annual
Meeting or any adjournment(s). Valid proxies will be voted at the Annual
Meeting and at any adjournment in the manner specified.
Any stockholder of the Company has the unconditional right to revoke
his or her proxy at any time prior to the voting thereof by any act
inconsistent with the proxy, including notifying the Secretary of the
Company in writing, executing a subsequent proxy, or personally appearing
at the Annual Meeting and casting a contrary vote. However, no revocation
shall be effective unless notice of such revocation has been received by
the Company at or prior to the Annual Meeting.
The total issued and outstanding capital stock of the Company as of
November 25, 1997 consisted of 45,739,099 shares of Common Stock. Each
share of Common Stock is entitled to one vote.
ELECTION OF DIRECTORS
Five directors are proposed to be elected at the Annual Meeting. If
elected, each director will hold office until the next annual meeting of
stockholders or until his successor shall be elected and shall qualify.
The election of directors will be decided by a plurality vote. All
nominees named below are members of the present Board of Directors of the
Company. All nominees have consented to serve if elected. If any nominee
becomes unable to serve, the shares represented by all valid proxies will
be voted for the election of such substitute as the Board may recommend,
the Board may reduce the number of directors to eliminate the vacancy, or
the Board may fill the vacancy at a later date after selecting an
appropriate nominee. Management has no reason to believe that any of the
nominees named below will be unable to serve.
Nominations for election to the Board of Directors may be made by the
Board of Directors, a nominating committee appointed by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Nominations made by stockholders must be made by written notice
to the Secretary of the Company at its corporate offices in Parsippany, New
Jersey. Such notice shall set forth as to each proposed nominee who is not
an incumbent director: (a) the name, age, business address and, if known,
residence address of each nominee proposed in such notice; (b) the
principal occupation or employment of each such nominee; (c) the number of
shares of Common Stock of the Company that are beneficially owned by each
such nominee and the nominating stockholder; and (d) any other information
concerning the nominee that must be disclosed of nominees in proxy
solicitations pursuant to Rule 14(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Any such recommendation must be
accompanied by a written statement from the individual giving his or her
consent to be named as a candidate and, if nominated and elected, to serve
as a director.
The nominees named below were nominated for election to the Board of
Directors of the Company by the current Board of Directors. The name, age,
business experience and public directorships of each nominee for director
are as follows:
GEOFFREY P. JURICK, 56, Chairman of the Board, Chief Executive Officer and
President. Mr. Jurick has served as Director since September 1990,
President since April 1997, Chief Executive Officer since July 1992, and
Chairman since December 1993. Mr. Jurick also previously served as
President from July 1993 to October 1994. Since December 1996, Mr. Jurick
has served as a Director and Chairman of the Board of Sport Supply Group,
Inc. ("SSG"), a company whose securities are traded on the New York Stock
Exchange under the symbol "GYM". Mr. Jurick has served as Chief Executive
Officer of SSG since January 23, 1997. Mr. Jurick beneficially owns
approximately 64.2% of the issued and outstanding common stock of the
Company. The Company beneficially owns approximately 36% of the issued and
outstanding common stock of SSG. From March 1990 until approximately 1994,
Mr. Jurick was President and Director of Fidenas Investment Limited. Since
December 1993, Mr. Jurick has served as a Director of Fidenas International
Limited, L.L.C. and its predecessor ("FIN") and, since May 1994, as an
officer and general manager of FIN. Mr. Jurick has served as a Director,
Chairman, and Chief Executive Officer of GSE Multimedia Technologies
Corporation ("GSE"), which is traded in the over-the-counter market, since
May 1994. Since March 1996, Mr. Jurick has served as Chairman of Elision
International Ltd. ("Elision"). For more than the past five years, Mr.
Jurick has held a variety of senior executive positions with several of the
entities comprising the Fidenas group of companies ("Fidenas Group"), whose
activities encompass merchant banking, investment banking, investment
management, and corporate development. See "Certain Relationships and
Related Transactions."
ROBERT H. BROWN, Jr., 44, has been a Director since July 1992. Presently,
he is Executive Vice President of Rauscher Pierce Refsnes, Inc.
("Rauscher"), in Dallas, Texas. Since February 1994, Mr. Brown has been
Executive Vice President of Capital Markets of Rauscher. From January 1990
until February 1994, Mr. Brown was Senior Vice President and Director of
the Corporate Finance Department of Rauscher. Since May 1993, Mr. Brown
has served as a Director of Stevens Graphics Corp., which is traded on the
American Stock Exchange.
PETER G. BUNGER, 57, has been a Director since July 1992. Presently, he is
a consultant with Savarina AG and the Company. Since December 1996, Mr.
Bunger has served as a Director of SSG. Since October 1992, Mr. Bunger has
served as Director of Savarina AG, engaged in the business of portfolio
management monitoring in Zurich, Switzerland, and since 1992, as Director
of ISCS, a computer software company. From December 1991 until December
1993, he was Vice Chairman of Montcour Bank and Trust Company Limited, a
bank organized in the Bahamas and an affiliate of Fidenas International.
From 1981 until 1992, Mr. Bunger was owner and Managing Director of Peter
G. Bunger Investment Consulting, a firm which supervised, controlled, and
analyzed investments for individuals. See "Certain Relationships and
Related Transactions."
JEROME H. FARNUM, 62, has been a Director since July 1992. Since July 1994,
Mr. Farnum has been an independent consultant. From 1979 until 1994, Mr.
Farnum served as a senior executive with several of the entities comprising
the Fidenas Group, in charge of legal and tax affairs, accounting, asset
and investment management, foreign exchange relations, and financial
affairs. See "Certain Relationships and Related Transactions."
RAYMOND L. STEELE, 62, has been a Director since July 1992. Mr. Steele has
been retired since September 1993. From August 1990 until September 1993,
Mr. Steele served as Executive Vice President of Pacholder Associates,
Inc., a company providing investment management and other financial
advisory services to institutional clients. Mr. Steele is a member of the
Board of Directors of Pharmhouse, Inc., a publicly-traded retail drug
chain, Modernfall, Inc., IPL/VSC and the GFTA Advisory Board.
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of November 25, 1997, the
beneficial ownership of each current director, each nominee for director,
each officer named in the Summary Compensation Table, the directors and
executive officers as a group and each stockholder known to management of
the Company to own beneficially more than 5% of the Company's outstanding
shares of Common Stock. Except as otherwise indicated and based upon the
Company's review of information as filed with the Securities and Exchange
Commission ("SEC"), the Company believes that the beneficial owners of the
securities listed below have sole investment and voting power with respect
to such shares, subject to community property laws where applicable.
<TABLE>
Amount and
Nature of
Beneficial
Name and Address of Beneficial Owners Ownership (1) Percent of Class
<S> <C> <C>
Fidenas International Limited, 29,152,542 63.7%
L.L.C. (2)
831 Route 10
Suite 38, #113
Whippany, NJ 07981
Elision International, Inc. 1,600,000 3.5%
275 Wyman Street
Waltham, MA 02154
GSE Multimedia Technologies 12,000,000 26.2%
Corporation
Kostheimer-Landstrasse 36
55246 Mainz - Kostheim
Germany D6502
Geoffrey P. Jurick* (2) (3) 29,752,542 64.2%
Robert H. Brown, Jr.* 50,000 (4) **
Peter G. Bunger* 25,000 (4) **
Jerome H. Farnum* 25,000 (4) **
Raymond L. Steele* 50,000 (4) **
John P. Walker 200,000 (5) **
Marino Andriani 25,000 (5) **
John J. Raab 33,333 (5) **
Eugene I. Davis (6) 50,100 **
All Directors and Officers 30,170,975 64.5%
as a Group (10 persons) (7)
</TABLE>
______________________________
(*) Director (All current directors are nominees for director)
(**) Less than one percent
(1) Based on 45,739,099 shares of Common Stock outstanding as of November
25, 1997, plus shares of Common Stock under option of any director or
executive officer, exercisable within 60 days. Does not include (i)
shares of Common Stock issuable upon conversion of 7,299 shares of
Series A Preferred Stock, (ii) Common Stock issuable upon conversion
of certain warrants issued to the Company's former creditors, (iii)
Common Stock issuable upon exercise of outstanding options, which are
not currently exercisable within 60 days, (iv) Common Stock issuable
upon conversion of the Company's 8-1/2% Senior Subordinated
Convertible Debentures Due 2002 (the "Debentures"), or (v) Common
Stock issuable upon the exercise of warrants granted to (a) Dresdner
Securities (USA) Inc, ("the placement agent") and authorized dealers
in connection with the private placement of the Debentures, or (b)
First Cambridge Securities Corporation ("First Cambridge"), and/or
representatives of First Cambridge it so designates or its
beneficiaries.
(2) Consists of 15,552,542, 1,600,000 and 12,000,000 shares of Common
Stock held by FIN, Elision, and GSE, respectively. FIN is record
holder of an additional 847,458 shares of Common Stock and formerly
held such shares as nominee. The nominee relationship has been
terminated and FIN and Mr. Jurick disclaim beneficial ownership of
such additional shares. Mr. Jurick indirectly owns, through a
controlled holding company, approximately 95% of FIN. In addition, Mr.
Jurick is the manager of FIN. FIN owns approximately 14.3% of Elision.
Mr. Jurick indirectly owns, through certain holding companies and
beneficial interests in affiliates, a controlling interest in each of
GSE and Elision. In accordance with a Stipulation and Order of
Settlement, dated June 11, 1996 (the "Stipulation"), the shares of
Common Stock held by Elision and GSE were transferred and registered
in the name of FIN. All of the shares owned by FIN, GSE and Elision
are subject to certain restrictions. See "Certain Relationships and
Related Transactions."
(3) Includes options, exercisable within 60 days, to purchase 600,000
shares of Common Stock.
(4) Comprised of options issued pursuant to the Company's 1994 Non-
Employee Director Stock Option Plan. See "Security Ownership of
Certain Beneficial Owners and Management--Compensation of Directors."
(5) In July 1994, the Company granted stock options to purchase 200,000
shares of common stock to Mr. Walker exercisable at an exercise price
of $1 per share. In November 1995, Mr. Raab was granted stock options
to purchase 50,000 shares of common stock at an exercise price of
$2.875 per share. In April 1996, Mr. Andriani was granted stock
options to purchase 75,000 shares of common stock at an exercise price
of $2.563 per share. The options vest in annual increments of one-
third, commencing one year from the date of grant, and their exercise
is contingent on continued employment with the Company.
(6) Mr. Davis ceased to be an executive officer of the Company in
September 1997 and any stock options to which he may claim entitlement
are subject to certain litigation. See "Certain Relationships and
Related Transactions."
(7) Includes 1,018,333 shares of Common Stock subject to unexercised stock
options which were exercisable within 60 days under the Company's Stock
Compensation Program. Does not include options to purchase an
aggregate of 86,667 shares of Common Stock not currently exercisable
within 60 days.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the
Board of Directors. The Board meets during the Company's fiscal year to
review significant developments affecting the Company and to act on matters
requiring Board approval. The Board of Directors held nine (9) formal
meetings during the fiscal year ended March 31, 1997 ("Fiscal 1997").
During Fiscal 1997, each member of the Board participated in at least 75%
of all Board and committee meetings held during the period for which he
served as a director and/or committee member.
During Fiscal 1997, the Board of Directors had an Audit Committee and
a Compensation and Personnel Committee to devote attention to specific
subjects and to assist the Board in the discharge of its responsibilities.
The functions of these committees and their current members are described
below.
AUDIT COMMITTEE. The Company's Audit Committee is presently comprised
of Messrs. Brown (Chairman), Steele and Farnum. The Audit Committee
recommends to the Board of Directors the appointment of a firm of certified
public accountants to conduct audits of the accounts and affairs of the
Company and monitors the performance of such firm, reviews accounting
objectives and procedures of the Company and the findings and reports of
the independent certified public accountants, and makes such reports and
recommendations to the Board of Directors as it deems appropriate. During
Fiscal 1997, the Audit Committee met two (2) times and acted by unanimous
written consent one (1) time.
COMPENSATION AND PERSONNEL COMMITTEE. The Compensation and Personnel
Committee, which is presently comprised of Messrs. Brown, Steele
(Chairman), and Bunger, (i) makes recommendations to the full Board
concerning remuneration arrangements for executive management; (ii)
administers the Company's 1994 Stock Compensation Program; and (iii) makes
such reports and recommendations, from time to time, to the Board of
Directors upon such matters as the committee may deem appropriate or as may
be requested by the Board. During Fiscal 1997, the Compensation Committee
met four (4) times. See "Executive Compensation and Other Information--
Report of Compensation and Personnel Committee."
The Board of Directors did not have a standing nominating committee,
or any other committee performing similar functions during Fiscal 1997. The
functions customarily attributable to a nominating committee were performed
by the Board of Directors as a whole.
COMPENSATION OF DIRECTORS
Directors of the Company who are employees do not receive compensation
for serving on the Board. Non-employee Directors are paid $20,000 per annum
in quarterly installments. The Chairmen of the Audit Committee and
Compensation and Personnel Committee each receive an additional $10,000 per
annum. Pursuant to the terms of the Company's 1994 Non-Employee Director
Stock Option Plan, each non-employee Director was granted options to
purchase 25,000 shares of Common Stock on October 7, 1994. On October 7,
1994, each Chairman was also granted options to purchase an additional
25,000 shares of Common Stock.
OFFICERS
The following table sets forth certain information regarding the
officers of the Company as of the date hereof:
<TABLE>
Name Age Position
<S> <C> <C>
Geoffrey P. Jurick 56 Chairman of the Board, Chief Executive
Officer and President, Director
John P. Walker 34 Executive Vice President, Chief Financial
Officer
Marino Andriani 50 President, Emerson Radio Consumer Products
Corporation
John J. Raab 61 Senior Vice President - International
Elizabeth J. Calianese 40 Vice President - Human Resources, Secretary
Christina A. Iatrou 35 Assistant Secretary
</TABLE>
Geoffrey P. Jurick has served as Director since September 1990, President
since April 1997, Chief Executive Officer since July 1992, and Chairman
since December 1993. Mr. Jurick served as President from July 1993 to
October 1994. See "Election of Directors."
John P. Walker has served as Executive Vice President and Chief Financial
Officer since April 1996 and was Senior Vice President from April 1994
until March 1996. Mr. Walker was Vice President-Finance from February 1993
to April 1994 and Assistant Vice President-Finance from June 1991 to
January 1993. Since December 1996, Mr. Walker has served as a Director and
Chief Financial Officer of SSG. See "Certain Relationships and Related
Transactions."
Marino Andriani has served as President of Emerson Radio Consumer Products
Corporation since February 1996. From December 1994 until February 1996,
Mr. Andriani was President of Appliance Corp. of America, a Welbilt
Consumer Products Company. From March 1993 to December 1994, Mr. Andriani
was President of Orient Express Marketing. Prior thereto, Mr. Andriani was
Executive Vice President-Sales of the Company from September 1990 to March
1993.
John J. Raab has served as Senior Vice President - International since
October 1997, Senior Vice President-Operations from October 1995 to October
1997, and was Vice President-Far East Operations from May 1995 until
September 1995. Prior thereto, he was President and Chief Operating
Officer of Robeson Industries Corp. from March 1990 to March 1995. Robeson
Industries Corp. filed for relief under Chapter 11 of the United States
Bankruptcy Code and emerged from Bankruptcy and was sold in the end of
1994.
Elizabeth J. Calianese has served as Secretary since January 1996, as Vice
President-Human Resources since May 1995 and as Deputy General Counsel
since May 1995. From April 1991 to May 1995, Ms. Calianese served as
Assistant General Counsel.
Christina A. Iatrou has served as Assistant Secretary since August 1996 and
as Assistant General Counsel since May 1995. From October 1987 to May
1995, Ms. Iatrou was a senior associate with the law firm of Crocco &
DeMaio, P.C. in New York City.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following executive compensation disclosures reflect all plan and
non-plan compensation awarded to, earned by, or paid to the named executive
officers of the Company. The "named executive officers" are the Company's
Chief Executive Officer (the "CEO"), regardless of compensation level and
the four most highly compensated executive officers, other than the CEO,
serving as such on March 31, 1997. Where a named executive officer has
served during any part of Fiscal 1997, the disclosures reflect compensation
for the full year in each of the periods presented.
SUMMARY COMPENSATION TABLE
The following table summarizes for the years indicated the
compensation awarded to, earned by, or paid to the named executives for
services rendered in all capacities to the Company:
<TABLE>
SECUR-
ITIES ALL
OTHER UNDER- OTHER
Name and ANNUAL LYING COMPEN-
Principal FISCAL SALARY COMPEN- OPTIONS SATION
Position(s) YEAR (1) BONUS SATION(2) (3) (4)
<S> <C> <C> <C> <C> <C> <C>
GEOFFREY P. JURICK 1997 $443,473 $38,500 $121,646 - $2,207
CHAIRMAN OF THE 1996 490,000 137,500 102,661 - 1,693
BOARD, CHIEF 1995 378,333 275,000 78,702 600,000 311
EXECUTIVE OFFICER
AND PRESIDENT
EUGENE I. DAVIS 1997 408,333 87,500 89,528 - 17,113
VICE CHAIRMAN (5) 1996 450,000 87,500 90,745 - 12,997
1995 360,000 175,000 102,024 600,000 6,986
JOHN P. WALKER 1997 179,166 40,000 18,816 - 7,089
EXECUTIVE VICE 1996 165,000 40,000 24,307 - 4,912
PRESIDENT AND CHIEF 1995 110,000 75,000 20,420 200,000 3,841
FINANCIAL OFFICER
MARINO ANDRIANI 1997 387,100 - 9,808 75,000 11,352
PRESIDENT, EMERSON 1996 51,827 - 1,400 - -
RADIO CONSUMER 1995 - - - - -
PRODUCTS CORPORATION
(5)
JOHN J. RAAB 1997 212,100 - 8,638 - 11,237
SENIOR VICE 1996 178,846 - 9,131 50,000 1,882
PRESIDENT- 1995 - - - - -
INTERNATIONAL
(5)
</TABLE>
(1) Includes reimbursement of salary from SSG of $46,527 for Mr. Jurick
and $41,667 for Mr. Davis in Fiscal 1997, pursuant to the Management
Services Agreement, dated July 1, 1997, to be effective March 7, 1997,
between SSG and the Company (the "Management Services Agreement").
See "Certain Relationships and Related Transactions."
(2) Consists of (i) car allowance and auto expenses afforded to the
listed Company executive officers, including $32,085, $39,967 and
$30,546 paid to Mr. Davis, $13,063, $20,745 and $19,114 paid to Mr.
Walker, $8,400, $1,400 and $0 paid to Mr. Andriani and $8,400, $8,400
and $0 paid to Mr. Raab, respectively, in Fiscal 1997, 1996 and 1995,
(ii) tax preparation services provided to Mr. Davis in Fiscal 1997,
1996 and 1995, (iii) expenses paid by the Company on behalf of Mr.
Davis, covering his club membership, and (iv) relocation and temporary
lodging expenses and associated tax gross-ups in the amount of
$120,573, $102,661 and $73,394 for Mr. Jurick, $0, $24,493 and $43,002
for Mr. Davis paid by the Company in Fiscal 1997, 1996, and 1995,
respectively. See "Certain Relationships and Related Transactions."
(3) In July 1994, the Company granted stock options to purchase 600,000,
600,000, and 200,000 shares of common stock to each of Messrs. Jurick,
Davis, and Walker, respectively, exercisable at an exercise price of
$1 per share (except $1.10 in the case of Mr. Jurick). In November
1995, Mr. Raab was granted a stock option to purchase 50,000 shares of
common stock at an exercise price of $2.875 per share. In April 1996,
Mr. Andriani was granted a stock option to purchase 75,000 shares of
common stock at an exercise price of $2.563 per share. The options
vest in annual increments of one-third, commencing one year from the
date of grant, and their exercise is contingent on continued
employment with the Company. In November 1996, the Company
accelerated Mr. Walker's options to provide for immediate full vesting
of such options. Mr. Davis ceased to be an executive officer of the
Company in September 1997 and any stock options to which Mr. Davis may
claim entitlement is subject to certain litigation. See "Certain
Relationships and Related Transactions."
(4) Consists of the Company's contribution to its 401(k) employee savings
plan, life insurance and disability insurance.
(5) Mr. Raab became an executive officer of the Company in March 1995. Mr.
Andriani became an executive officer of the Company in February 1996.
Mr. Davis ceased to be an executive officer of the Company in
September 1997 and any stock options to which Mr. Davis may claim
entitlement are subject to certain litigation. See "Certain
Relationships and Related Transactions."
OPTION GRANTS DURING 1997 FISCAL YEAR
The following table provides information related to options granted to the
named executive officers during Fiscal 1997.
<TABLE>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM(1)
INDIVIDUAL GRANTS IN LAST FISCAL YEAR
<CAPTION>
% OF
TOTAL
OPTIONS/
NUMBER SARs
OF GRANT-
SECUR- ED
ITIES- TO EXER-
UNDER- EM- CISE
LYING PLOY- OR
OPTIONS/ EES BASE EX-
SARs IN PRICE PIRA-
GRANTED FISCAL ($/SH) TION
NAME (#) YEAR (2) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
GEOFFREY P. JURICK - - - - - -
EUGENE I. DAVIS - - - - - -
JOHN P. WALKER - - - - - -
MARINO ANDRIANI 75,000(2) 60% $2.563 4/8/06 $120,889 $306,357
JOHN J. RAAB - - - - - -
______________
</TABLE>
(1) The potential realizable value portion of the foregoing table
illustrates value that might be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation on the Company's Common
Stock over the term of the options.
(2) The stock options were granted under the 1994 Stock Compensation
Program, and are exercisable commencing one year after the grant date
in the three equal annual installments, with full vesting occurring on
the third anniversary of the date of the grant. The option exercise
price may be paid (a) in cash or, if approved by the Board of
Directors or an authorized Committee thereof, (b) in shares of Common
Stock previously owned by the executive officer, (c) by withholding
shares of Common Stock that would otherwise be issued upon exercise,
or (d) a combination of the foregoing.
OPTION EXERCISES DURING 1997 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by
the named executive officers during Fiscal 1997 and the number and value of
options held at fiscal year end. The Company does not have any outstanding
stock appreciation rights.
<TABLE>
Number
of
Securities Value of
Shares Underlying Unexercised
Ac- Unexercised In-the-Money
quir- Options/ Options/
ed Value SARs SARs
on Real- at FY-End at FY-End
Exer- iz- (#) ($)(1)
cise ed Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Geoffrey P. Jurick --- --- 400,000/200,000 $ 0/$ 0
Eugene I. Davis(2) --- --- 400,000/200,000 $24,000/$12,000
John P. Walker --- --- 200,000/ 0 $ 8,000/$ 4,000
Marino Andriani --- --- 0/ 75,000 $ 0/$ 0
John J. Raab --- --- 16,667/ 33,333 $ 0/$ 0
</TABLE>
(1) The closing price for the Company's Common Stock as reported by the
American Stock Exchange on March 31, 1997 was $1.06. Value is calculated
on the basis of the difference between $1.06 and the option exercise price
of "in the money" options, multiplied by the number of shares of Common
Stock underlying the option.
(2) Mr. Davis ceased to be an executive officer of the Company in
September, 1997 and any stock options to which Mr. Davis may claim
entitlement are subject to certain litigation. See "Certain Relationships
and Related Transactions."
CERTAIN EMPLOYMENT CONTRACTS
On August 13, 1992, Geoffrey P. Jurick, Chairman, Chief Executive
Officer and President of the Company, entered into five-year employment
agreements ("Jurick Employment Agreements") with the Company and two of its
wholly-owned subsidiaries, Emerson Radio (Hong Kong) and Emerson Radio
International Ltd. (formerly Emerson Radio (B.V.I.) Ltd.) (hereinafter,
collectively the "Companies"), providing for an aggregate annual
compensation of $250,000, which was increased to $390,000 in May 1994 and
to $490,000 effective April 1, 1995. In addition to his base salary, the
Jurick Employment Agreements provide that Mr. Jurick is entitled to an
annual bonus upon recommendation by the Compensation and Personnel
Committee of the Company's Board of Directors, subject to the final
approval of the Company's Board of Directors. By letter agreement dated
April 16, 1997, the terms of the Jurick Employment Agreements were extended
until March 31, 2000. However, pursuant to the Settlement Agreement,
hereinafter defined, Mr. Jurick's cash compensation from the Company and
all subsidiaries and affiliates is limited to a total of $750,000 annually
until the Settlement Amount is paid. See "Certain Relationships and
Related Transactions." Pursuant to the Management Services Agreement, SSG
reimbursed the Company for $46,527 in salary payments made to Mr. Jurick in
Fiscal 1997 for the benefit of SSG. The Management Services Agreement was
amended as of October 18, 1997 to provide that SSG will no longer reimburse
the Company for any of Mr. Jurick's salary payments, but will pay Mr.
Jurick directly. In addition, effective October 18, 1997, Mr. Jurick's
employment agreement with the Company (but not the wholly-owned
subsidiaries) was amended and Mr. Jurick's annual salary under the Jurick
Employment Agreements was reduced by $80,000.
Subject to certain conditions, each of the Jurick Employment
Agreements grants to Mr. Jurick severance benefits, through expiration of
the respective terms of each of such agreements, commensurate with Mr.
Jurick's base salary, in the event that his employment with the Companies
terminates due to permanent disability, without cause or as a result of
constructive discharge (as defined therein). In the event that Mr.
Jurick's employment with the Companies terminates due to termination for
"cause", because Mr. Jurick unilaterally terminates the agreements or for
reasons other than constructive discharge or permanent disability, Mr.
Jurick shall only be entitled to base salary earned through the applicable
date of termination. Similar provisions are set forth in each of the
contracts described below.
On August 13, 1992, Eugene I. Davis, former Vice Chairman of the
Company, entered into a five-year employment agreement ("Davis Employment
Agreement") with the Company, providing for an annual compensation of
$360,000, which was increased to $450,000 effective April 1, 1995. In
addition to his base salary, the Davis Employment Agreement provided that
Mr. Davis was entitled to an annual bonus equal to an amount up to 30% of
Mr. Davis' base salary, based upon attainment of objectives identified in
the Company's five-year business plan adopted by the Board of Directors
("Business Plan"). The Davis Employment Agreement also provided that Mr.
Davis was eligible to receive an additional annual performance bonus to be
recommended by the Compensation and Personnel Committee of the Company's
Board of Directors, subject to the final approval of the Company's Board of
Directors. Pursuant to the Davis Employment Agreement, the Company granted
to Mr. Davis an option to purchase 500,000 shares of Common Stock. Such
option was canceled pursuant to the Plan of Reorganization; however, the
Company subsequently granted Mr. Davis options to purchase 600,000 shares
of Common Stock. The Company also agreed to pay for and maintain legal
malpractice insurance covering Mr. Davis for occurrences and actions taken
by him at any time prior to or during the term of such agreement on behalf
of the Company or its employees. The Company also agreed to pay all sums,
which may be deductible amounts, not otherwise paid by such insurer.
By letter agreement dated April 16, 1997 ("Davis Extension
Agreement"), the Davis Employment Agreement was amended as follows: 1.) the
term of the Davis Employment Agreement was extended to March 31, 2000; 2.)
Mr. Davis was obligated to devote approximately 60% of his business time to
serve on behalf of the Company, its subsidiaries and affiliates, including
SSG; 3.) Mr. Davis was to serve as Vice Chairman of the Company, would no
longer serve as President of the Company and was to serve in such other
duties and capacities for the Company, its subsidiaries and affiliates
(including SSG) as was to be directed by the Company's Board of Directors,
Chairman or Chief Executive Officer; and, 4.) Mr. Davis was to receive his
current salary from the Company, subject to adjustment as provided in the
Davis Employment Agreement, and the Company was to credit against such
salary obligation any amount Mr. Davis received as consulting fees from
SSG. The Davis Extension Agreement also provided that during the 40% of
Mr. Davis' business time not devoted to the Company or SSG, Mr. Davis would
be developing other business opportunities with respect to which the
Company had a right of first refusal. The Davis Extension Agreement also
provided that Mr. Davis would resign upon the request of the Company's
Board of Directors or Chairman, but any such resignation would not affect
Mr. Davis' continued employment or rights under the Davis Employment
Agreement, as amended. The Davis Employment Agreement also included
certain termination provisions. On September 24, 1997, Mr. Davis was
requested to resign as a member of the Board of Directors and the Davis
Employment Agreement was terminated on September 25, 1997. See "Certain
Relationships and Related Transactions."
As of April 1, 1994, John P. Walker, Executive Vice President and
Chief Financial Officer, entered into a three-year employment agreement
with the Company providing for an annual compensation of $110,000, which
was increased to $165,000 effective April 1, 1995 and to $210,000 effective
April 1, 1996 ("Walker Employment Agreement"). In addition to his base
salary, the Walker Employment Agreement provides that Mr. Walker is
entitled to an annual bonus equal to an amount up to 30% of Mr. Walker's
base salary, upon attainment of objectives identified by the Executive
Committee and that Mr. Walker may also receive an additional annual
performance bonus to be recommended by the Compensation and Personnel
Committee of the Company's Board of Directors, subject to the final
approval of the Company's Board of Directors.
By Amendment No. 1 to Employment Agreement, dated April 16, 1997
("Walker Amendment Agreement"), the Walker Employment Agreement was amended
as follows: 1.) the term of the Walker Employment Agreement was extended to
April 1, 2000, with provisions for any negotiation of further extensions
thereof; 2.) Mr. Walker shall continue to serve as Executive Vice President
and Chief Financial Officer of the Company and shall also serve in such
other positions with the Company, its subsidiaries or affiliates (including
SSG) as may be directed by the Company's Board of Directors, Chairman,
President or Chief Executive Officer and that the Company understands that
Mr. Walker shall devote approximately 30% of his business time to the
Company with the balance of his business time devoted to the business of
SSG; 3.) Mr. Walker shall relocate to Dallas, Texas and the Company shall
reimburse Mr. Walker for his normal and reasonable traveling expenses to
the Company's offices in order to perform his business obligations to the
Company; 4.) effective December 11, 1996, Mr. Walker's annual salary was
reduced to $100,000 and Mr. Walker waived any right to a bonus for Fiscal
1997 to which he would have been entitled under the Walker Employment
Agreement; 5.) Mr. Walker is entitled to life insurance as provided
immediately prior to the effective date of the Walker Amendment Agreement
which shall be in accordance with the Company's policies afforded to senior
executives; and, 6.) in the event Mr. Walker's employment was terminated
due to Permanent Disability, a Without Cause Termination or a Constructive
Discharge, as defined therein, the Walker Amendment Agreement provides for
severance benefits. In the event Mr. Walker's employment is terminated due
to a Termination for Cause or Mr. Walker unilaterally severs the
relationship, Mr. Walker shall only be entitled to base salary earned
through the date of termination and vested qualified stock options will
remain vested.
If Messrs. Jurick and Walker were to be terminated due to permanent
disability, without cause or as a result of constructive discharge, the
estimated dollar amount to be paid after March 31, 1997 to each such
individual, based on the terms of their respective contracts, would be
$1,290,000 and $300,000, respectively. However, the estimated amounts to
be paid to Mr. Jurick is subject to certain limitations under the
Settlement Agreement.
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS
The provisions of the employment agreements may be deemed to have an
anti-takeover effect and may delay, defer, or prevent a tender offer or
takeover attempt that a stockholder may consider to be in the stockholder's
best interest, including attempts that might result in a premium over the
market price for shares held by stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Personnel Committee, which is presently comprised
of Messrs. Brown, Steele, and Bunger, (i) makes recommendations to the full
Board concerning remuneration arrangements for executive management; (ii)
administers the Company's 1994 Stock Compensation Program; and (iii) makes
such reports and recommendations, from time to time, to the Board of
Directors upon such matters as the committee may deem appropriate or as may
be requested by the Board.
Geoffrey P. Jurick serves as Chairman of the Board, Chief Executive
Officer and President of the Company and SSG. John P. Walker serves as
Executive Vice President and Chief Financial Officer of the Company and
SSG. Mr. Walker is also a director of SSG. Mr. Davis was an executive
officer and director of Emerson and is a director of SSG. Mr. Bunger, who
is a director of the Company and SSG, serves on the Compensation Committees
of the Company and SSG and also serves as a consultant to the Company. The
following executive officers, who were also members of the Board of
Directors during Fiscal 1997, participated in deliberations concerning
executive officer compensation: Geoffrey P. Jurick and Eugene I. Davis.
Eugene I. Davis is no longer an officer or director of the Company. See
"Certain Relationships and Related Transactions."
REPORT OF COMPENSATION AND PERSONNEL COMMITTEE
The Compensation and Personnel Committee of the Board of Directors
(the "Compensation Committee"), which contained two independent non-
employee Directors, oversees the Company's executive compensation strategy.
The strategy is implemented through policies designed to support the
achievement of the Company's business objectives and the enhancement of
stockholder value. The Compensation Committee reviews, on an ongoing
basis, all aspects of executive compensation.
The Compensation Committee's executive compensation policies support
the following objectives:
- The reinforcement of management's concern for enhancing
stockholder value.
- The attraction and retention of qualified executives.
- The provision of competitive compensation opportunities for
exceptional performance.
The basic elements of the Company's executive compensation strategy are:
BASE SALARY. Base salaries for the executive managers of the
Company represent compensation for the performance of defined
functions and assumption of defined responsibilities. The Compensation
Committee reviews each executive's base salary on an annual basis. In
determining salary adjustments, the Compensation Committee considers
the Company's growth in earnings and revenues and the executive's
performance level, as well as other factors relating to the
executive's specific responsibilities. Also considered are the
executive's position, experience, skills, potential for advancement,
responsibility, and current salary in relation to the expected level
of pay for the position. The Compensation Committee exercises its
judgment based upon the above criteria and does not apply a specific
formula or assign a weight to each factor considered. The Committee
decided upon, after reviewing each officer's duties and performance
level for the previous years and considering the Chief Executive
Officer's recommendations, three (3) year contract extensions for
Messrs. Jurick, Davis and Walker, agreeing to extend the terms of
their respective agreements with the Company throughout March 31,
2000. Mr. Davis' employment was terminated on September 25, 1997.
See "Certain Relationships and Related Transactions."
ANNUAL INCENTIVE COMPENSATION. At the beginning of each year,
the Board of Directors establishes performance goals of the Company
for that year, which may include target increases in sales, net income
and earnings per share, as well as more subjective goals with respect
to marketing, product introduction and expansion of customer base.
LONG-TERM INCENTIVE COMPENSATION. The Company's long-term
incentive compensation for management and employees consists of the
1994 Stock Compensation Program.
The Compensation Committee views the granting of stock options as a
significant method of aligning management's long-term interests with those
of the stockholders. The Compensation Committee determines awards to
executives based on its evaluation of criteria that include
responsibilities, compensation, past and expected contributions to the
achievement of the Company's long-term performance goals. Stock options are
designed to focus executives on the long-term performance of the Company by
enabling executives to share in any increases in value of the Company's
stock.
The Compensation Committee encourages executives, individually and
collectively, to maintain a long-term ownership position in the Company's
stock. The Compensation Committee believes this ownership, combined with a
significant performance-based incentive compensation opportunity, forges a
strong linkage between the Company's executives and its stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Geoffrey P. Jurick is the Chief Executive Officer and Chairman of
the Board of Directors of the Company. The Compensation Committee
considered the Company's results in all aspects of its business in its
review of Mr. Jurick's performance during Fiscal 1997.
POLICY ON QUALIFYING COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), for tax years beginning on or after January 1, 1994, provides that
public companies may not deduct in any year compensation in excess of $1
million paid to any of the individuals named in the Summary Compensation
Table that is not, among other requirements, "performance based," as
defined in Section 162(m). None of the named individuals received
compensation in excess of $1 million during Fiscal 1997, 1996 or 1995. The
Company's policy is to qualify, to the extent reasonable, its executive
officers' compensation for deductibility under applicable tax laws.
However, the Board of Directors believes that its primary responsibility is
to provide a compensation program that will attract, retain and reward the
executive talent necessary to the Company's success. Consequently, the
Board of Directors recognizes that the loss of a tax deduction could be
necessary in some circumstances.
COMPENSATION AND PERSONNEL COMMITTEE
Raymond L. Steele, Chairman
Robert H. Brown, Jr.
Peter G. Bunger
The foregoing report of the Compensation and Personnel Committee shall
not be deemed incorporated by reference by any general statement
incorporating by reference the Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under either act.
COMPARISON OF CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholders'
return on the Company's Common Stock for the period December 22, 1994
(the date on which the Company's Common Stock began trading on the
American Stock Exchange) to March 31, 1997, with the cumulative total
return over the same period of the American Stock Exchange and a peer
group of companies selected by the Company for purposes of comparison,
which includes Cobra Electronics Corp., Matushita Electric Industrial
Co. Ltd., Philips Electronics N.V., Sony Corp., and Zenith Electronics
Corp. The peer group assumes the investment of $100 in the Company's
Common Stock, on December 22, 1994 and reinvestment of all dividends,
if any. The information in the graph was provided by Media General
Financial Services ("MGFS"). The comparison of the returns are as
follows:
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
OF EMERSON RADIO CORP., PEER GROUP INDEX
AND BROAD MARKET INDEX
<CAPTION>
12/22/94 3/31/95 3/31/96 3/31/97
<S> <C> <C> <C> <C>
EMERSON RADIO CORP. 100.00 135.14 110.81 45.95
PEER GROUP 100.00 98.04 109.44 116.55
BROAD MARKET 100.00 106.85 131.38 132.63
</TABLE>
THE BROAD MARKET INDEX CHOSEN WAS:
AMERICAN STOCK EXCHANGE
THE PEER GROUP INDEX CHOSEN WAS:
CUSTOMER SELECTED STOCK LIST
THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES:
COBRA ELECTRONICS CORP.
MATSUSHITA ELEC IND CO
PHILIPS ELECTRONICS NV
SONY CORP.
ZENITH ELECTRONICS CORP.
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Corporate Performance Graph
will not be deemed to be incorporated by reference in any filing by the
Company under the Securities Act or the Exchange Act, except to the extent
that the Company specifically incorporates the graph by reference.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SPORT SUPPLY GROUP, INC.
On August 1, 1996, the Company and Emerson Radio HK, filed a Schedule
13D with the SEC. Pursuant to the Schedule 13D, Emerson HK reported that
it acquired 669,500 shares of SSG's Common Stock (the "Initial Shares").
On December 10, 1996, the Company acquired directly from SSG (i) an
additional 1,600,000 shares of newly-issued SSG Common Stock (the "New
Shares') for an aggregate consideration of $11,500,000, or approximately
$7.19 per share, and (ii) 5-year warrants to acquire an additional
1,000,000 shares of SSG Common Stock at an exercise price of $7.50 per
share, subject to standard anti-dilution adjustments (the "Emerson
Warrants") for an aggregate consideration of $500,000. In addition, the
Company agreed to arrange for foreign trade credit financing of $2 million
for the benefit of SSG to supplement SSG's existing credit facilities.
Prior to the exercise of any of the Emerson Warrants, the Company and
Emerson HK own approximately 28% of the issued and outstanding shares of
SSG Common Stock. If all of the Emerson Warrants are exercised by the
Company, the Company will own approximately 36% of the issued and
outstanding shares of SSG Common Stock.
Pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement"), SSG granted to the Company and Emerson HK certain demand and
incidental registration rights with respect to the resale of the shares of
SSG Common Stock they own, as well as on the exercise and resale of the
shares of SSG Common Stock the Company may acquire under the Warrant
Agreement governing the Emerson Warrants.
The total consideration paid by the Company pursuant to the Emerson
Agreement was $12 million, of which $11,500,000 was attributable to the
1,600,000 New Shares and $500,000 was attributable to the Emerson Warrants.
The $12,000,000 purchase price was borrowed by the Company from Congress
Financial Corporation ("Congress"), the Company's United States senior
secured lender, under the terms of the Company's existing credit facility
and in accordance with the terms of the consent obtained from Congress.
Pursuant to a Pledge and Security Agreement, the Company has pledged to
Congress the New Shares and the Emerson Warrants together with all proceeds
thereof and all dividends and other income and distributions thereon or
with respect thereto and all rights of the Company to have the New Shares
(and any shares of SSG Common Stock acquired through the exercise of the
Emerson Warrants as permitted by Congress) registered under the
Registration Rights Agreement.
In addition, for a period of at least 2 years after the closing,
neither SSG nor any of its subsidiaries are permitted to enter into or be a
party to any agreement or transaction with any Affiliate (as such term is
defined in the Exchange Act) of SSG or the Company, except (i) in the
ordinary course of SSG's or its subsidiaries' business and on terms no less
favorable to SSG or its subsidiaries than would be obtained in a comparable
arms' length transaction with a person not an Affiliate of SSG or the
Company or (ii) unless approved by a majority of SSG's directors who do
not have a direct or indirect material financial interest in the agreement
or transaction and which includes a majority of directors who are not
officers or employees of SSG or the Company or directors of the Company.
Pursuant to the Emerson Agreement, SSG also caused a majority of the
members of its Board of Directors to consist of the Company's designees.
SSG's Board of Directors now includes the following people that are
associated with the Company: Geoffrey P. Jurick, who beneficially owns
approximately 64.2% of the Company's issued and outstanding common stock
and is the Company's Chairman, Chief Executive Officer and President;
John P. Walker, the Company's Executive Vice President and Chief Financial
Officer; and Peter G. Bunger, a consultant serving both the Company and
Savarina AG. Mr. Jurick is currently the Chairman of the Board and Chief
Executive Officer of SSG. Mr. Walker is currently the Executive Vice
President and Chief Financial Officer of SSG. Mr. Bunger is a director of
both companies and serves on the Compensation Committee of each company.
Each of Mr. Jurick and Mr. Walker have employment agreements with the
Company and SSG and split their time between the two companies.
MANAGEMENT SERVICES AGREEMENT
During Fiscal 1997, SSG and the Company entered into a Management
Services Agreement in an effort to utilize SSG's excess capacity and to
enable the Company to reduce certain costs. The Management Services
Agreement implements a program whereby SSG performs certain services for
the Company in exchange for a fee. The services include payroll, banking,
computer/management information systems, payables processing, warehouse
services (including subleasing warehouse storage space), provision of
office space, design services and financial management services. During
Fiscal 1997, SSG also reimbursed the Company for the sharing of certain
employees. The Management Services Agreement may be terminated by either
party upon sixty (60) days prior notice. Termination of the Management
Services Agreement could have a material adverse effect on the Company and
its results of operations. The Company was billed $3,200 for services
provided with respect to the above mentioned agreement during Fiscal 1997.
In addition, the Company billed SSG approximately $47,000 towards Mr.
Jurick's salary during Fiscal 1997. The Company owed SSG approximately $0
for the services as of March 31, 1997 and the Company was owed
approximately $2,703 from SSG as of March 31, 1997.
STIPULATION OF SETTLEMENT ORDER
On September 29, 1993, the Company and five of its United States
subsidiaries filed voluntary petitions for relief under the reorganization
provisions of Chapter 11 of the United States Bankruptcy Code. On March
31, 1994, the United States Bankruptcy Court for the District of New Jersey
entered an order confirming the Fourth Amended Joint Plan of Reorganization
which became effective on that date.
Pursuant to the Company's bankruptcy restructuring plan, 30 million
shares of the Company's common stock were issued to GSE, FIN and Elision
(the "Affiliated Entities). The Affiliated Entities are all affiliates of
Geoffrey P. Jurick. Mr. Jurick is the Chairman of the Board, Chief
Executive Officer and President of the Company, and a beneficial owner of
approximately 64.2% of the issued and outstanding shares of the Company's
common stock.
Subsequent to confirmation of the Plan of Reorganization, litigation
arose among the principal shareholders of Fidenas Investment Limited
("FIL"), the Company's largest shareholder prior to confirmation of the
Plan of Reorganization, with respect to various business relations and
transactions entered into among the shareholders, certain affiliates and
their principals, including Mr. Jurick and Petra and Donald Stelling. Mr.
Stelling was the former Chairman of the Company.
Based on certain charges raised by the Stellings, the Swiss
authorities commenced investigations and have questioned Messrs. Jurick,
Bunger and Farnum, directors of the Company. In connection with the
settlement discussed below, letters were sent to the Swiss authorities
requesting the discontinuance of the criminal investigations of these
individuals. While the investigations are still pending, none of Messrs.
Jurick, Bunger or Farnum has been indicted by the Swiss Court. The Federal
Banking Commission of Switzerland has issued a decree purporting to
determine that certain entities affiliated with Messrs. Jurick and Farnum
are subject to Swiss banking laws and have engaged in banking activities
without a license.
On June 11, 1996, a Stipulation of Settlement and Order (the
"Settlement Agreement") was executed, which settles various legal
proceedings in Switzerland, the Bahamas and the United States. The
Settlement Agreement provides for, among other things, the payment by Mr.
Jurick and his Affiliated Entities of $49.5 million (the "Aggregate
Amount") to various claimants of Mr. Jurick and the Affiliated Entities
(the "Creditors"), to be paid from the proceeds of the sale of certain of
the 29,152,542 shares of the Company's common stock (the "Settlement
Shares") owned by the Affiliated Entities. In addition, Mr. Jurick is to
be paid the sum of $3.5 million from the sale of the Settlement Shares.
Such payments are contemplated to be made solely from the proceeds of the
sale of the Settlement Shares. The Settlement Agreement also requires the
Company to advance certain expenses and fees including certain expenses of
the Advisor and Settlement Agent, hereinafter defined, (currently $160,000)
in each instance to be reimbursed from the proceeds of the first sale of
the Settlement Shares. The maximum amount to be paid by the Company for
the initial advance for such reasonable fees and expenses is $250,000
("initial advance") which amount is to be reimbursed from the proceeds of
the first sale of Settlement Shares and which is to be paid prior to any
payment of the Aggregate Amount as set forth in the Settlement Agreement.
After full reimbursement to the Company of the initial advance, from time
to time the Company shall pay, on a revolving basis, additional reasonable
expenses, not to exceed $75,000 at any one time, incurred by the Settlement
Agent (including those incurred in its capacity as Collateral Agent) and
the Advisor. The Company shall be reimbursed for such further advances
from the proceeds of the first sale of Settlement Shares following an
advance of any portion of the $75,000. Additionally, to the extent not
reimbursed from the sales of Settlement Shares as set forth herein, the
Company shall be reimbursed for the expense incurred in connection with the
registration of Settlement Shares from the first proceeds of sales of such
Settlement Shares.
All of the Settlement Shares have been deposited with and remain in
the custody of the United States District Court in Newark, New Jersey (the
"Court") and have been divided into two pools. The Pool A Shares currently
consist of 15,286,172 shares of the Company's common stock. The Pool B
Shares currently consist of the number of the Company shares with respect
to which Mr. Jurick must retain beneficial ownership of voting power to
avoid an event of default arising out of a change of control of the Company
pursuant to the terms of the Company's Loan and Security Agreement with
Congress and/or the Indenture governing the Company's 8-1/2% Senior
Subordinated Convertible Debentures Due 2002 (the "Debentures"). The
Settlement Shares are to be sold over an indeterminate period of time by a
financial advisor, initially TM Capital (the "Advisor"). The Advisor is
continuing to formulate and refine a marketing plan taking into
consideration (i) the interests of the Company's minority stockholders, and
(ii) the goal of generating sufficient proceeds to pay the Creditors and
Mr. Jurick as quickly as possible.
All of the Settlement Shares secure payment of the $49.5 million owed
to the Creditors on a first priority basis. No assurance can be given that
sufficient proceeds will be realized from the sale of such shares to
satisfy in full the Creditors. Any Creditor may apply to the Court for an
order to terminate the Settlement Agreement if certain events occur. Such
events include, without limitation, delisting of the Settlement Shares from
a national securities exchange or a determination that there is no
reasonable prospect that the goals contemplated by the Settlement Agreement
can be achieved. On November 26, 1997, Petra Stelling and Barclays Bank
filed a motion with the Court for an order terminating the Settlement
Agreement on the ground that there is no reasonable prospect that the goals
contemplated by the Settlement Agreement can be accomplished, and granting
the Creditors authorization to exercise all the rights and remedies
provided by the Settlement and Pledge Agreements in the event of
termination including authorizing the Collateral Agent to sell the Emerson
Shares to fund payment of the Settlement Amount and to vote the Emerson
Shares pending such sale, directing the entry and release of the Consent
Judgments, authorizing Petra Stelling to enforce the Swiss Judgment and for
such other relief as the Court deems appropriate. The Company and Mr.
Jurick have approximately 30 days within which to respond and a Court
hearing on the motion will be held thereafter.
If the Court enters an order terminating the Settlement Agreement, the
Creditors may take any action permitted by law to execute the Consent
Judgments given to them in connection with the Settlement Agreement to
collect the unpaid balance (including, without limitation, foreclosing on
the Settlement Shares). If the Creditors foreclose on the Settlement
Shares and such foreclosure results in a change of control (as defined in
the Indenture governing the Debentures) of the Company, such foreclosure
will be deemed an event of default under the Company's Senior Secured
Credit Facility and under the Indenture pursuant to which the Debentures
were issued. Such default entitles the debtholders, under certain
circumstances, to accelerate payment of all such indebtedness. Any such
acceleration would have a material adverse effect on the Company.
EUGENE I. DAVIS
In connection with the execution of the Davis Employment Agreement
with the Company, Eugene I. Davis, the Company's former Vice Chairman,
agreed to relocate his residence to the general locality of the Company's
principal executive offices. See "Executive Compensation and Other
Information--Certain Employment Contracts." To assist in such relocation,
in the fiscal year ended March 31, 1993, the Company provided to Mr. Davis
an interest-free bridge loan of $120,000. Although the maturity date of
Mr. Davis' loan was extended to be due in the fiscal year ending March 31,
1998, the Company's position is that the termination of Mr. Davis'
employment accelerates the loan to be immediately due and payable . The
timing of payment of the bridge loan is subject to certain litigation as
described below.
A family member of Mr. Davis was a member of the law firm of Wolff &
Samson, P.A. and such law firm served as the Company's regular outside
counsel during Fiscal 1997. The Company was billed approximately $842,000
for legal services during Fiscal 1997 by such law firm.
On September 24, 1997, pursuant to the terms of his Employment
Agreement, as amended, Mr. Davis was requested to resign as a director. On
September 25, 1997 the Company terminated Mr. Davis' employment. The
circumstances surrounding such termination of employment are the subject of
two proceedings filed in the Superior Court of the State of New Jersey
("Superior Court"). The Company filed an action in the Chancery Division
of the Superior Court against Mr. Davis on October 2, 1997, seeking
injunctive and other relief arising from claims of breach of contract,
breach of good faith and fair dealing and breach of fiduciary duty. On or
about October 1, 1997, Mr. Davis filed an action against the Company, its
affiliate SSG and various unnamed "Johns Doe" in the Law Division of the
Superior Court seeking damages against the Company, its affiliates and
the unnamed "Johns Doe", jointly and severally, alleging breach of
contract, tortious interference with contractual relationships and
compelled defamation. The Company has filed and served an answer to Mr.
Davis' claims and has counterclaimed for injunctive and declaratory relief,
and money damages, arising from Mr. Davis' breaches of contract, fiduciary
duty, conversion, tortious interference with contract and unjust
enrichment. While the outcome of these actions are not certain at this
time, the Company believes it has meritorious defenses against the claims
made by Mr. Davis. In any event, the Company believes the results of the
litigation should not have a material adverse effect on the financial
condition of the Company or on its results of operations.
PETER G. BUNGER
In November 1996, Peter G. Bunger, a Director of the Company, was
retained as a consultant, and is being paid on a per diem basis, at the
approximate rate of $10,000 for each month when he is present in Hong Kong
and providing services to the Company. Mr. Bunger received compensation
and reimbursement of expenses aggregating $49,000 in Fiscal 1997.
FUTURE AFFILIATED TRANSACTIONS AND LOANS
The Company has adopted a policy that all future affiliated
transactions and loans will be made or entered into on terms no less
favorable to the Company than those that can be obtained from unaffiliated
third parties. In addition, all future affiliated transactions and loans,
and any forgiveness of loans, must be approved by a majority of the
independent outside members of the Company's Board of Directors who do not
have an interest in the transactions.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)") requires the Company's officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
SEC and the American Stock Exchange. Officers, directors and greater than
10% stockholders are required by certain regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that, during the year ended March 31, 1997, its
officers, directors and greater than 10% beneficial owners have complied
with all applicable filing requirements with respect to the Company's
equity securities.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with
applicable rules and regulations for presentation at the Company's next
annual meeting that is received at the Company's principal executive office
by July 31, 1998 will be included in the Company's proxy statement and form
of proxy for that meeting.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. The cost of soliciting proxies in the accompanying form will
be paid by the Company. Officers of the Company may solicit proxies by
mail, telephone or telegraph. Upon request, the Company will reimburse
brokers, dealers, banks and trustees, or their nominees, for reasonable
expenses incurred by them in forwarding proxy material to beneficial owners
of shares of the Common Stock. The Company has retained the services of
American Stock Transfer & Trust Company to solicit proxies by mail,
telephone, telegraph or personal contact. The estimated cost of the
solicitation will be approximately $20,000 plus out-of-pocket expenses.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent certified public accountants, has been
selected by the Board of Directors as the Company's independent auditor for
the current year. A representative of Ernst & Young LLP is expected to be
present at the Annual Meeting, will have an opportunity to make a statement
if he desires to do so and is expected to be available to respond to
appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any
other matter requiring a vote of stockholders arise, the proxies in the
enclosed form confer upon the person or persons entitled to vote the shares
represented by such proxies discretionary authority to vote the same in
accordance with their best judgment in the interest of the Company.
FINANCIAL STATEMENTS
THE COMPANY WILL PROVIDE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1997 (EXCLUSIVE OF EXHIBITS),
WITHOUT CHARGE, TO EACH PERSON TO WHOM A COPY OF THIS PROXY STATEMENT IS
DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON. REQUESTS
SHOULD BE DIRECTED TO INVESTOR RELATIONS (ATTENTION: ELIZABETH J.
CALIANESE, VICE PRESIDENT-HUMAN RESOURCES AND SECRETARY), EMERSON RADIO
CORP., NINE ENTIN ROAD, PARSIPPANY, NEW JERSEY 07054.
By Order of the Board of Directors,
ELIZABETH J. CALIANESE
Vice President-Human Resources
and Secretary
December 3, 1997
PROXY CARD
EMERSON RADIO CORP.
Board of Directors Proxy for the Annual Meeting
of Stockholders at 1:00 p.m. (local time), Tuesday, January 6, 1998
Columbian Country Club
2525 Country Club Drive
Carrollton, Texas 75005
The undersigned stockholder of Emerson Radio Corp. (the "Company")
hereby appoints Geoffrey P. Jurick and John P. Walker, or either of them,
as proxies, each with full powers of substitution, to vote the shares of
the undersigned at the above stated Annual Meeting and at any
adjournment(s) thereof:
(Continued from reverse side)
- ----------------------------------------------------------------------------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
EMERSON RADIO CORP.
JANUARY 6, 1998
Please Detach and Mail in the Envelope Provided
X
Please mark your
votes as in this
example.
FOR all nominees listed WITHHOLD AUTHORITY
at right (except as provided to vote for all nominees
to the contrary below) at right
1. To elect five Nominees:
directors for Geoffrey P. Jurick
a one-year term Robert H. Brown, Jr.
Peter G. Bunger
Raymond L. Steele
Jerome H. Farnum
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below:
_________________________________________________________
2. To transact such other business as may properly come before the
meeting and any adjournment(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON, IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEM (1), THIS PROXY WILL BE VOTED "FOR" SUCH
ITEM. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER
REFERRED TO IN ITEM (2). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
Receipt herewith of the Company's 1997 Annual Report and Notice of Meeting
and Proxy Statement, dated December 3, 1997, is hereby acknowledged.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.
PLEASE SIGN, DATE AND MAIL TODAY
SIGNATURE___________________________DATE_____________________________
SIGNATURE___________________________DATE_____________________________
(IF HELD JOINTLY)
Note: (Joint owners must EACH sign. Please sign EXACTLY as your name(s)
appear(s) on this card. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please give your FULL title.)
