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
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
GO-VIDEO, INC.
------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
- --------------------------------------------------------------------------------
July 25, 1997
Dear fellow Go-Video Stockholder:
You are cordially invited to attend our 1997 Annual Meeting of
Stockholders, which will begin at 8:00 a.m. at the Radisson Resort, 7171 North
Scottsdale Road, Scottsdale, Arizona, on Thursday, August 21, 1997.
The first item of business for the meeting is the election of
directors. The Board of Directors has nominated Tom Hartley and Carm Adimando
for new three year terms and Ralph Palaia for a two year term. Mr. Hartley has
served as a director since 1991 and played a key role in the reshaping of
Go-Video into a profitable, growing business. Mr. Adimando joined the Board last
October and has already made a significant contribution to the Company as a
result of his impressive business and financial expertise matched with his
enthusiasm for Go-Video's future. Mr. Palaia has served as a director since 1994
and has contributed valuable advice and counsel, particularly in matters related
to sales, marketing, and products. I believe the Company has demonstrated a
strong earnings turnaround with its core Dual-Deck VCR business. Our growth
strategies offer new challenges and opportunities and thus I'm very pleased
these gentlemen continue to offer their service and expertise. The Go-Video
Board of Directors recommends that you vote FOR the proposed director slate.
The second item of business concerns an amendment to the Go-Video, Inc.
1993 Employee Stock Option Plan (the "Plan"). I believe that a portion of
employee compensation should directly align their personal financial interests
with an increase in shareholder value, specifically the market price of the
Company's common stock. Because the Plan's authorized shares have been almost
fully reserved for options issued over the last four years, the proposed
amendment authorizes and reserves an additional 500,000 common shares for option
grants. The Go-Video Board of Directors recommends that you vote FOR the
proposed amendment to the Go-Video 1993 Employee Stock Option Plan.
I encourage you to attend this year's Annual Meeting in person. Whether
or not you plan to attend the meeting, it is critical that your shares are
represented. Accordingly, please mark, date, sign and return promptly your proxy
in the enclosed envelope. You may attend the meeting and vote your shares in
person if you wish, even if you have previously returned your proxy.
Sincerely,
/s/ Roger B. Hackett
Roger B. Hackett
Chairman, Chief Executive Officer,
and President
<PAGE>
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
NOTICE AND PROXY STATEMENT
For the Annual Meeting of Stockholders
to be held on August 21, 1997
To the Stockholders of Go-Video, Inc.:
The 1997 Annual Meeting of Stockholders of Go-Video, Inc., a Delaware
corporation, will be held at the Radisson Resort, 7171 North Scottsdale Road,
Scottsdale, Arizona, on Thursday, August 21, 1997, at 8:00 a.m., Mountain
Standard Time, for the following purposes:
1. To elect three (3) directors to the Board of Directors;
2. To amend the Go-Video, Inc. 1993 Employee Stock Option Plan to
authorize an additional 500,000 shares of Common Stock for option
grants; and
3. To act upon such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on July 16, 1997, as the
record date for determining the stockholders entitled to receive notice of and
to vote at the Annual Meeting or any adjournment thereof. Shares of Common Stock
can be voted at the meeting only if the holder is present at the meeting in
person or by valid proxy.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK, SIGN
AND DATE THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY WRITTEN
REQUEST TO THE SECRETARY OF THE COMPANY, BY VOTING IN PERSON AT THE ANNUAL
MEETING, OR BY SUBMITTING A LATER DATED PROXY.
Admission to the Annual Meeting is limited to stockholders or their proxies.
Stockholders who hold their shares in "Street" name (shares registered under a
broker, bank, or other nominee institution's name) will be admitted to the
meeting upon presentation of a written affidavit or statement from the
registered institution showing beneficial ownership as of the July 16, 1997
record date. The Annual Meeting will not be open to the public.
By Order of the Board of Directors
/s/ Douglas Klein
Douglas Klein
Vice President and Chief Financial Officer,
Secretary, Treasurer
Scottsdale, Arizona
July 25, 1997
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GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
(602) 998-3400
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors (the "Board") of
GO-VIDEO, Inc. (the "Company") in connection with the Annual Meeting of
Stockholders to be held at the Radisson Resort, 7171 North Scottsdale Road,
Scottsdale, Arizona, on Thursday, August 21, 1997, at 8:00 a.m., Mountain
Standard Time. The proxy materials were first mailed on or about July 25, 1997,
to shareholders of record at the close of business on July 16, 1997 (the "Record
Date"). As of July 16, 1997, there were outstanding 11,905,785 shares of the
Company's Common Stock. Each share of Common Stock is entitled to one vote on
each matter of business to be considered at the Annual Meeting.
The enclosed proxy is solicited by the Board of Directors of the Company. A
person giving the enclosed proxy has the power to revoke it at any time before
it is exercised by (i) attending the meeting and voting in person, (ii) duly
executing and delivering a proxy bearing a later date, or (iii) sending a
written notice of revocation to the Secretary of the Company, which notice shall
have been received by the Secretary prior to commencement of voting at the
Annual Meeting.
The Company will pay the cost of the proxy solicitation made by the Board,
including the charges and expenses of brokerage firms and others who forward
solicitation material to beneficial owners of Common Stock. In addition,
directors, officers, or employees of the Company may solicit proxies by mail,
personal interview, telephone, telegraph or facsimile transmission without
additional compensation.
If the enclosed proxy is properly executed and returned to the Company in time
to be voted at the meeting, it will be voted as specified on the proxy, unless
it is properly revoked prior thereto. If no specification is made in the proxy,
the shares represented by the proxy will be voted for the election of the
nominees for director named below and for the amendment to the Go-Video, Inc.
1993 Employee Stock Option Plan (the "1993 Plan"). With respect to any other
matters that may properly come before the meeting, or any adjournment thereof,
the proxy will be voted at the discretion of the person(s) named in the proxy.
The director candidates receiving the greatest number of votes cast at the
meeting will be elected. The proposed amendment to the 1993 Plan requires the
affirmative vote of a majority of the voting power of the Common Stock
represented at the meeting. All other proposals that properly come before the
meeting require the affirmative vote of the holders of a majority of the voting
power of Common Stock represented at the meeting. Abstentions are counted as
present at the meeting for such proposals, but because they are not affirmative
votes for such proposals, they would have the same effect as votes against the
proposal. Broker non-votes are not considered present at the meeting for
particular proposals for which the broker withheld authority.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO IS ENTITLED TO
VOTE AT THE MEETING AND WHO MAKES A WRITTEN REQUEST FOR SUCH, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1997,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. REQUESTS SHOULD BE ADDRESSED TO THE SECRETARY
AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.
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<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Bylaws provide for a classified Board of Directors that is divided
into three classes. Each year the stockholders elect directors for terms of up
to three years. Three members of the Board are to be elected at the 1997 Annual
Meeting.
NOMINEES FOR ELECTION
The Board has nominated Thomas F. Hartley, Jr. and Carmine F. Adimando for
election as directors for terms expiring at the 2000 Annual Meeting of
Stockholders and Ralph F. Palaia for a term expiring at the 1999 Annual Meeting
of Stockholders.
The Board of Directors recommends a vote
FOR the following nominees:
For Terms Expiring at the 2000 Annual Meeting
Thomas F. Hartley, Jr., age 47, has served as a director of the Company since
November 1991 and is Chairman of the Compensation Committee of the Board of
Directors. Mr. Hartley is currently Principal of J&H Marsh & McLennan of
Arizona, the Arizona subsidiary of Marsh & McLennan Companies, Inc. (NYSE: MMC),
a large insurance brokerage and consulting firm with headquarters in New York
City and over 200 offices worldwide. J&H Marsh & McLennan is the newly formed
company resulting from the April 1997 merger of Johnson & Higgins, which was Mr.
Hartley's previous employer, and Marsh & McLennan, Inc. Prior to joining Johnson
& Higgins in 1983, Mr. Hartley was Assistant Vice President with Marsh &
McLennan in Phoenix and New York, and an officer in the U.S. Navy's nuclear
submarine program. Mr. Hartley is on the boards of directors of various
community and professional organizations, including the Phoenix Economic Club,
the Arizona Association of Insurance Brokers, and the Arizona State University
Center for Services Marketing. He is also a member of Valley Leadership and the
Arizona State University Business School Dean's Council of 100. Mr. Hartley
received a Bachelor of Science Degree from the U.S. Naval Academy and a Masters
in Business Administration from New York University.
Carmine F. Adimando, age 53, was appointed as a director of the Company in
October 1996 and serves on the Compensation and Audit Committees of the Board of
Directors. Mr. Adimando is currently Chairman and President of CARMCO
Investments, LLC, a private investment firm which also provides advisory
services in investments, acquisitions, divestitures, investor relations, and the
creation of shareholder value. Prior to founding CARMCO Investments in 1996, Mr.
Adimando was Vice President of Finance and Administration, Treasurer, and Chief
Financial Officer of Pitney Bowes, Inc., where he also served as President of
Pitney Bowes International Holdings, Inc. and had served as Chief Executive
Officer of The Wheeler Group, Pitney Bowes' direct mail subsidiary for business
supplies, until it was sold in 1992. Prior to joining Pitney Bowes in 1979, Mr.
Adimando held positions with American Airlines, Inc., Burndy Corporation, and
Deloitte, Haskins & Sells. Mr. Adimando currently serves as Chairman of
Cordillera Asset Management and as a director of Executive Greetings, Inc. He
also serves on the Board of Trustees of Manhattanville College in Purchase, New
York and the Board of Overseers of the University of Connecticut School of
Business and is active in a number of charitable organizations including the
boards of St. Vincent Hospital Foundation of Fairfield, Connecticut and of St.
Christopher's Inn-Graymoor, based in Garrison, New York. Mr. Adimando received a
Bachelor of Science Degree in Accounting from St. John's University, graduated
from the Senior Financial Management Program at Stanford University's Graduate
School of Business, and is a Certified Public Accountant.
For a Term Expiring at the 1999 Annual Meeting
Ralph F. Palaia, age 47, has served as a director of the Company since December
1994. Mr. Palaia is Principal and co-owner of Innovative Marketing Group, a
marketing and distribution firm founded in April 1994
4
<PAGE>
performing marketing and merchandising functions, product line development,
product launch, retail sales development, channel strategy, and general
management consultation services for consumer electronics and other related
product clients. From February 1991 to April 1994, Mr. Palaia served in several
sales and marketing executive positions, most recently as Senior Vice President
of Marketing and Sales for Philips Consumer Electronics, Knoxville, Tennessee, a
division of Philips N.V., a leading international manufacturer and distributor
of consumer electronic products. Earlier positions with Philips included Vice
President of Retail Sales, Vice President of National Account Sales, and Vice
President of Marketing for the Personal Computer Category. Prior to joining
Philips in February 1991, Mr. Palaia founded MGN Technology Corp., Knoxville,
Tennessee, in 1987 and served as its President until he sold the company to
Craig Electronics in December 1990. From 1984 until 1987, Mr. Palaia was
Director of Marketing for the VCR-Camcorder Product Group of Philips. He
received a Bachelor of Arts Degree in Economics from Duke University.
CONTINUING DIRECTORS
Terms Expiring at the 1998 Annual Meeting
Thomas E. Linnen, age 51, has served as a director of the Company since August
1993 and serves on the Compensation Committee and as Chairman of the Audit
Committee of the Board of Directors. Mr. Linnen is Chief Financial Officer of
Hypercom Corporation, a privately-owned manufacturer of point-of-sale terminals
and computer networking products based in Phoenix, Arizona. Prior to joining
Hypercom in 1996, Mr. Linnen was Vice President of Finance, Secretary, Treasurer
and a director of Continental Circuits Corp. (NASDQ: CCIR), a manufacturer of
circuit boards. Prior to joining Continental Circuits in 1987, Mr. Linnen served
as Vice President - Finance for ITT Systems, Tempe, Arizona. Mr. Linnen has over
twenty-five years of experience in corporate finance and accounting positions.
Mr. Linnen also serves as a director of Innovonics, Inc. Mr. Linnen received a
Bachelor of Science Degree in Business Administration from the University of
Wisconsin and is a Certified Public Accountant.
William T. Walker, Jr., age 65, has served as a director of the Company since
August 1993 and serves on the Compensation Committee of the Board of Directors.
Mr. Walker is Chairman and President of Walker Associates, a Beverly Hills,
California-based corporate finance consulting firm which he founded in 1985. Mr.
Walker has over forty years of experience in the capital markets industry and
currently serves as a member of the board of directors of Aviation Distributors,
Inc. (ASE: ADI) and Fortune Petroleum Corporation (ASE: FPX). Mr. Walker has
been a member of the board of the Securities Industry Association, Chairman of
the California District Securities Industry Association, Governor of the Pacific
Stock Exchange, President of the Bond Club of Los Angeles, and a member of the
American Stock Exchange Advisory Committee. Mr. Walker graduated from Culver
Military Academy and attended Stanford University.
Term Expiring at the 1999 Annual Meeting
Roger B. Hackett, age 46, was first elected to the Board of Directors in
December 1992 and joined the Company as President and Chief Operating Officer in
January 1993. In March 1994, Mr. Hackett was elected Chief Executive Officer and
Chairman of the Board. Prior to joining the Company as President, Mr. Hackett
served from 1992 to January 1993 as Senior Vice President, Corporate Affairs, of
Serving Software Inc., a Minneapolis, Minnesota-based provider of computer
software used in the health care industry. In 1986, Mr. Hackett founded the CAMS
division of ATI Medical, Inc., a provider of "critical care" medical equipment,
and over six years developed CAMS into one of the leading providers of
bar-code-based information systems for the health care industry. In 1992, Mr.
Hackett negotiated the sale of the CAMS division to Serving Software. He also
served as a director of Serving Software from January 1993 until September 1994
when Serving Software was acquired by HBO & Co., a health care information
systems company. Mr. Hackett received a Bachelor of Science Degree in Business
Administration from Ohio State University.
5
<PAGE>
Meetings and Committees of the Board of Directors
During the fiscal year ended March 31, 1997, the Board met seven times. The
Board has standing Audit and Compensation committees.
The Audit Committee consists of Messrs. Linnen (Chairman) and Adimando and is
responsible for evaluating the Company's system of accounting controls and
approving the scope of the annual audit. The Committee had one formal meeting
during the fiscal year ended March 31, 1997.
The Compensation Committee consists of Messrs. Hartley (Chairman), Adimando,
Linnen, and Walker. The Committee acts on matters related to executive officer
compensation and grants of stock options pursuant to the Company's stock option
plans. None of the members of the Compensation Committee is eligible to receive
stock options under the Company's plans that they administer. The Compensation
Committee had three formal meetings during the fiscal year ended March 31, 1997.
All non-employee directors of the Company receive an annual retainer fee of
$15,000. All directors, including employee directors, also receive an annual
grant of options to purchase Common Stock from the 1991 Nonstatutory Directors'
Stock Option Plan (the "Directors' Plan"). The Board of Directors and
stockholders of the Company adopted the Directors' Plan effective November 1,
1991. The Directors' Plan provides for the automatic annual grant of stock
options to directors serving as of September 1st of each year. On that date, the
Chairman is granted options to purchase 20,000 shares of Common Stock and each
other director is granted options to purchase 10,000 shares of Common Stock. The
Directors' Plan also provides for an initial grant of options upon a director's
commencement of service. The number of options granted is equal to 10,000
multiplied by a fraction, the denominator of which is 12 and the numerator of
which is the number of full calendar months from the date the Director was first
appointed or elected to the Board to the following September 1st. The exercise
price for all options is the fair market value of the Common Stock on the date
of grant. Each option expires on the 10th anniversary date of its grant unless
earlier terminated in accordance with the Directors' Plan. During the fiscal
year ended March 31, 1996, the Board of Directors approved a resolution
voluntarily reducing the annual grant of options to be issued from the
Directors' Plan from 20,000 to 15,000 for the Chairman and from 10,000 to 7,500
for each director, effective with the 1996 grant. The resolution was a voluntary
reduction of a benefit previously approved by stockholders and was not intended
to restrict the Board's ability to further reduce or reinstate the annual grant
size.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Hartley, Adimando, Linnen, and Walker, all of whom are non-employee
directors, serve on the Compensation Committee of the Board of Directors. Mr.
Hartley is the Principal of J&H Marsh & McLennan of Arizona, an insurance
brokerage firm that obtains bids from and administers the Company's relations
with commercial insurance carriers. During fiscal 1997, J&H Marsh & McLennan
earned $20,173 in brokerage commissions on insurance premiums paid by the
Company of $169,258.
EXECUTIVE COMPENSATION
Report of the Compensation Committee
Committee Role
As part of its function, the Compensation Committee reviews the Company's
executive compensation programs to ensure they (i) are competitive with
companies of comparable size and complexity and those within the consumer
electronic equipment industry; (ii) reflect both stockholders' and participants'
best interests; (iii) are responsive to both short and long-term corporate and
individual performance goals; and (iv) provide the necessary incentives for the
executives to further stockholders' financial interests in the Company. In
performing this review, the Committee utilizes compensation data collected from
industry association studies on compensation and corporate performance data
provided by the Company. This data includes information
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concerning a peer group of companies which the Company considers its primary
competitors for both executive talent and business opportunities. These peer
companies for executive talent are not identical to the group of companies
identified under the section "Stock Performance Graph". The groups are not the
same because compensation data was obtained from trade studies which did not
disclose individual company participants and also included privately-owned
competitors which do not have publicly-traded common stock results to
incorporate into the stock performance chart.
Compensation Philosophy
The Company's executive compensation philosophy, which serves as the foundation
of the total compensation package, is based on the following principals:
* Programs must be supportive of the Company's strategic business
objectives and thereby stockholders' financial interests in the
Company.
* A significant ownership interest in the Company by senior executives
promotes those behaviors and actions that will result in an alignment
of stockholder and management interests.
* The total compensation package for executive officers should be
competitive with those of an appropriate peer group of companies and
reflect the Company's performance against that peer group.
* Variable pay, in the form of annual incentives and long-term
stock-based compensation, is intended to create an incentive for
superior performance from executive officers.
Base Salaries
Initially, base salaries for executive officers are set based upon a review of
the responsibility level of each position and the relative pay levels for
comparable positions at peer companies. Base salaries may be periodically
increased as a result of an individual assuming increased responsibilities, as a
result of competitive data indicating a meaningful change in base pay levels
among peer companies or as a result of the Board of Directors increasing
performance objectives and goals for the individual executive officer or the
Company.
Annual Incentives
In making determinations to award incentive payments, the Compensation Committee
reviews a variety of Company performance measures as well as the individuals'
objectives and accomplishments. The source and amount of the annual incentives
to be paid to the Company's executives is subjective, with consideration to
revenue, operating income, net income, return on equity, and various other
quantitative and qualitative assessments. The annual incentive payment for the
Chief Executive Officer is based on a percentage of pre-tax profit of the
Company for a given fiscal period plus subjective components. During fiscal
1997, the maximum incentive payments available for award to all employees,
including executive officers, was set by the Compensation Committee as a
percentage of pre-tax income.
Long-Term Incentives
The Company's current method of providing long-term incentive compensation
opportunities to its executive officers is through the use of stock options.
Stock options allow the recipient to purchase shares of the Company's Common
Stock at a specified price that is not less than its fair market value on the
grant date during a fixed period of time following the grant date. This period
has typically been ten years. The Company believes that this form of long-term
incentive is presently the best vehicle by which to link stockholder and
management interests, because value is provided to recipients only if the
Company's stock price increases.
The Compensation Committee is the administrator of the Company's stock option
plans and has the authority to approve awards to executive officers and
employees. The level of the awards granted is subjective and reflects the
relative impact which a recipient is expected to have on future corporate
results. In making this determination, the Committee considers the number of
options held by the executive officer and the dilution effect such grants may
have on existing stockholders.
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Chief Executive Officer's Compensation and Company Performance
The Compensation Committee completed an individual performance review of the
Chief Executive Officer addressing such issues, among others, as Mr. Hackett's
personal contributions to the Company, strengths and weaknesses in making those
contributions, and areas of responsibility he was to focus on. During this
review, the Committee also examined the Company's performance. The Committee
determined that Mr. Hackett exceeded or met substantially all of his strategic
goals and exceeded all of his financial goals for fiscal 1997. In particular,
Mr. Hackett's strategic accomplishments included the successful introduction of
a line of lower cost Dual-Deck VCRs from a new manufacturer, negotiation of
substantially lower manufacturing costs across all of the Company's core product
lines, commencement of international sales of Dual-Deck VCRs, and achievement of
significant progress toward product diversification through strategic alliances
with Loewe Opta, Prolux, and others. Under Mr. Hackett's leadership, the Company
also exceeded its revenue and net income goals while simultaneously continuing
to invest in future product lines. As a result of the performance review and
after giving consideration to the other factors listed above in establishing
executive compensation, the Committee increased Mr. Hackett's base salary by 15%
to $230,000, awarded a performance bonus of $135,000, and granted options to
purchase 50,000 shares of Common Stock at the fair value on the date of grant.
Section 162(m) of the Internal Revenue Code
The Committee has reviewed the Company's compensation plans in light of the
Internal Revenue Code relating to the disallowance of deductions for
compensation in excess of $1.0 million to certain executive officers. All
compensation paid to executive officers for the fiscal year ended March 31, 1997
is fully deductible. The Committee does not believe that Section 162(m)
limitations will apply to compensation to be paid in fiscal 1998.
Compensation Committee
Thomas F. Hartley, Jr., Chairman
Carmine F. Adimando
Thomas E. Linnen
William T. Walker, Jr.
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Summary Compensation Table
The following table shows, for the fiscal years ended March 31, 1996 and 1997,
the eight month transition period ended March 31, 1995 (resulting from the
change in the Company's fiscal year), and the fiscal year ending July 31, 1994,
the compensation of the Chief Executive Officer and all executive officers of
the Company with compensation exceeding $100,000:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
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Name and Principal Securities All Other
Position in Salary Bonus Underlying Compensation
Fiscal 1997 Year ($) ($) Options/SAR's (#) ($) (7)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Roger B. Hackett 1997 $209,000 $135,000 80,000 (6) $ 1,000
Chairman, Chief Executive 1996 $204,500 $ 0 80,000 (6) $ 77
Officer, President, and Chief ** 1995 $124,885 $ 19,605 70,000 (6) $ 0
Operating Officer (1) 1994 $179,000 $ 5,000 120,000 (6) $ 0
- -------------------------------------------------------------------------------------------------------
John R. Tweddale 1997 $146,862 $ 22,000 25,000 $ 2,316
Vice President, Sales (2) 1996 $ 85,368 $ 833 0 $ 501
** 1995 $ 56,747 $ 11,667 5,000 $ 0
1994 $ 71,321 $ 0 0 $ 0
- -------------------------------------------------------------------------------------------------------
Douglas P. Klein
Chief Financial Officer, Vice 1997 $111,266 $ 65,000 40,000 $ 3,119
President, Finance and 1996 $106,968 $ 0 25,000 $ 727
Administration, Secretary (3) ** 1995 $ 63,773 $ 8,350 40,000 $ 0
1994 $ 75,575 $ 2,500 10,000 $ 0
- -------------------------------------------------------------------------------------------------------
Edward J. Brachocki 1997 $106,910 $ 65,000 40,000 $ 3,069
Vice President, Planning and 1996 $ 99,525 $ 0 25,000 $ 219
Corporate Development (4) ** 1995 $ 63,446 $ 8,350 30,000 $ 0
1994 $ 77,154 $ 2,500 10,080 $ 0
- -------------------------------------------------------------------------------------------------------
Kevin P. Sullivan 1997 $156,006 $ 0 30,000 $ 0
Vice President, Home Theater 1996 $156,006 $ 8,333 50,000 $ 0
Division (5) ** 1995 $104,004 $ 5,000 20,000 $ 0
1994 $156,006 $ 0 30,000 $ 0
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Certain columns have been excluded because the information called for
therein is not applicable to the Company or the individuals named above
for the periods indicated.
** Information reflects compensation for the eight month transition
period from August 1, 1994 through March 31, 1995 as a result of the
change in the Company's fiscal year.
(1) Mr. Hackett joined the Company in January 1993 as President and Chief
Operating Officer and began serving as Chairman and Chief Executive
Officer in March 1994.
(2) Mr. Tweddale joined the Company in August 1993 and began serving as an
executive officer
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in October 1996.
(3) Mr. Klein joined the Company in April 1993 and began serving as an
executive officer in October 1993.
(4) Mr. Brachocki joined the Company in February 1993 and began serving as
an executive officer in October 1993.
(5) Mr. Sullivan joined the Company in September 1991 and began serving as
an executive officer in February 1993.
(6) Includes annual, automatic option grants from the 1991 Non-Statutory
Directors' Stock Option Plan (the "Directors' Plan") pursuant to
stockholder-approved plan rules. Options granted under the Directors'
Plan totaled 15,000 shares for 1997 and 20,000 shares for 1996, 1995,
and 1994, respectively.
(7) All amounts shown are Company contributions to the Go-Video, Inc.
401(k) Savings Plan, an employee retirement savings plan.
Non-cash personal benefits payable to executive officers during the fiscal year
ended March 31, 1997 did not exceed, in the aggregate, the lesser of 10% of the
cash compensation or $50,000 for any individual officer.
Stock Options
The following tables set forth grants of options to purchase shares of Common
Stock of the Company made to the executive officers named in the Summary
Compensation Table who served during the fiscal year ended March 31, 1997. The
tables also set forth the potential realizable value of these options assuming a
5% and 10% compounded appreciation in the market value of the stock over the
term of the option grants.
Option Grants in the Fiscal Year Ended March 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------ -------------------
Potential
Individual Grants Realizable
Value at Assumed
Number % of Total Annual Rates of
Of Securities Options / SAR's Stock Price
Underlying Granted to Exercise Appreciation for
Options / Employees Price Option Term
SAR's in the 1997 Per Expiration
Name Granted Fiscal Year Share Date 5% 10%
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roger B. Hackett 65,000 15.8% $0.9375 7/18/06 $ 38,323 $ 97,119
15,000 3.7% $1.50 9/01/06 $ 14,150 $ 35,859
John R. Tweddale 15,000 3.7% $0.9375 7/18/06 $ 8,844 $ 22,412
10,000 2.4% $1.375 10/17/06 $ 8,647 $ 21,914
Douglas P. Klein 40,000 9.7% $0.9375 7/18/06 $ 23,584 $ 59,765
Edward J. Brachocki 40,000 9.7% $0.9375 7/18/06 $ 23,584 $ 59,765
Kevin P. Sullivan 30,000 7.3% $0.9375 7/18/06 $ 17,688 $ 44,824
</TABLE>
The options granted to the individuals listed above were made at the fair market
value of the Company's Common Stock on the date of grant and were fully vested
following a six month holding period.
10
<PAGE>
Option Exercises and Holdings
The following table summarizes option exercises during the fiscal year ended
March 31, 1997, by the executive officers named in the Summary Compensation
Table and unexercised options held by these individuals on March 31, 1997.
Aggregated Option Exercises in Fiscal 1997 and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares 3/31/97 (#) 3/31/97 (1)
Acquired
on Exercise Value Exercisable/ Exercisable/
Name (# of shares) Realized ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roger B. Hackett - - 490,000 / 10,000 $ 39,063 / $ 6,250
John R. Tweddale - - 30,000 / 0 $ 11,250 / $ 0
Douglas P. Klein - - 105,000 / 10,000 $ 20,313 / $ 6,250
Edward J. Brachocki - - 105,080 / 10,000 $ 20,313 / $ 6,250
Kevin P. Sullivan - - 155,000 / 10,000 $ 15,625 / $ 6,250
</TABLE>
(1) The closing price of the Company's Common Stock as reported for March 31,
1997 on the American Stock Exchange Composite Tape was $1.5625.
Executive Separation Agreement
The Company has a Separation Agreement with Roger B. Hackett. The Agreement
provides that if Mr. Hackett's employment is terminated, Mr. Hackett would be
entitled to receive:
(a) in the event that Mr. Hackett's employment is terminated as a result of
a "takeover" of the Company, Mr. Hackett would receive 2.99 times his
annual base salary in a lump sum payment;
(b) in the event that the Company's Board initiates Mr. Hackett's
separation (absent a "takeover"), Mr. Hackett would be entitled to
receive payments equal to two times his gross annual base salary in
effect at the time of separation payable in equal installments over
twenty-four months. During the time of such payments, Mr. Hackett would
also receive all standard employee benefits, including
Company-subsidized health insurance;
(c) in the event Mr. Hackett initiates separation with a minimum of ninety
days notice, Mr. Hackett would receive payments equal to (i) 0.125
times each year of employment, to a maximum of one; plus (ii) 1/2,
multiplied by his gross annual base salary in effect at the time of
separation. Payments would be payable in equal installments timed to
coincide with the Company's payroll period over the applicable period.
As of July 18, 1997, with four years of service, Mr. Hackett would be
entitled to receive one year's gross base salary payable in equal
installments over twelve months. During the time of such payments, Mr.
Hackett would also receive all standard employee benefits, including
Company-subsidized health insurance.
The Agreement provides for the extension of the right to exercise options to
purchase Common Stock for the maximum period, not to exceed seven years,
permitted by the plans under which such options were granted. The Agreement
continues in full force and effect during the life of the Corporation or its
successors and/or assigns, unless amended or terminated with the consent of both
parties.
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following performance graph compares the yearly change since July 31, 1991
in cumulative return on the Common Stock of the Company to the AMEX Broad Market
Index and a Company-constructed Industry Peer Index. The Industry Peer Index
shown below is comprised of companies competing either solely or substantially
within the consumer electronics industry with common stock or ADRs traded on an
exchange within the United States. Each company's stock performance is weighted
within the Industry Peer Index by its relative market capitalization. The graph
assumes $100 was invested on July 31, 1991 and shows the cumulative total return
as of each July 31 thereafter through the fiscal year ended July 31, 1994, as of
the eight month transition period ended March 31, 1995, and as of the fiscal
years ended March 31, 1996 and 1997.
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on July 31, 1991)
Total Return Analysis
7/31/91 7/31/92 7/31/93 7/31/94 3/31/95 3/31/96 3/31/97
------- ------- ------- ------- ------- ------- -------
Go Video, Inc. $100.00 $328.57 $285.71 $171.43 $216.07 $128.57 $178.57
Peer Group $100.00 $ 72.96 $105.24 $141.49 $138.26 $150.89 $127.42
AMEX Broad Mkt. $100.00 $105.59 $118.66 $118.85 $126.10 $155.15 $154.42
Companies comprising the Industry Peer Index are: Audiovox Corp., Boston
Acoustics Inc., Carver Corp., Cobra Electronics Corp., Harman International
Industries Inc., Hitachi Ltd., Koss Corp., Matsushita Electronics Industries
Ltd., Philips Electronics NV, Pioneer Electronic Corp., Polk Audio Inc., Recoton
Corp., Sanyo Electronics Ltd., Sony Corp., Wells Gardner Electronics Group, and
Zenith Electronics Corp. International Jensen Inc. was dropped from the index
because they were acquired by Recoton Corp. during the year.
12
<PAGE>
PROPOSAL 2
TO AMEND THE GO-VIDEO, INC.
1993 EMPLOYEE STOCK OPTION PLAN
In 1993, shareholders of the Company approved the Go-Video, Inc. 1993 Employee
Stock Option Plan (the "1993 Plan"). The 1993 Plan is a key component of the
Company's executive and employee compensation program.
Summary of the Proposal
To enhance the effectiveness of the 1993 Plan, the Board of Directors of the
Company has approved a proposal (the "Proposal") to amend the 1993 Plan by
increasing the number of shares of Common Stock of the Company available for
option grants from 500,000 to 1,000,000, subject to approval by shareholders at
the Annual Meeting as required by its terms. The Board of Directors believes
that the Proposal will promote the achievement of long-term objectives of the
Company by further linking the personal financial interests of employees to
those of the shareholders by tying employees' personal financial interests
directly to an increase in the market price of the Company's Common Stock and in
aiding the Company in attracting and retaining employees of outstanding
competence. With approval by the shareholders, the proposed amendment to the
1993 Plan would become effective as of April 24, 1997.
The Proposal would increase the number of shares of Common Stock that could be
issued, transferred or exercised pursuant to options granted under the 1993 Plan
from 500,000 to 1,000,000. As of April 24, 1997, the 1993 Plan only had
available for future issuance options to purchase 184,500 shares of Common
Stock. Including options available from all other employee stock option plans,
the Company had a total of 271,220 options available for future issuance to
employees as of April 24, 1997. The Company intends to grant 255,000 of these
options during 1997. The Compensation Committee of the Board of Directors of the
Company, which administers employee stock option plans including the 1993 Plan,
has determined that the remaining shares available for future issuance are
inadequate to carry out the purposes of the 1993 Plan. The Proposal would
provide sufficient shares of Common Stock for future option grants over the next
several years, given the Compensation Committee's current issuance practices and
size and composition of the Company.
No Effect on Current Options
There are no participants whose current options or plan benefits would be
affected by the Proposal.
Summary of the Material Provisions of the 1993 Employee Stock Option Plan That
Are Not Affected by the Proposal
The Board of Directors and stockholders of the Company adopted the 1993 Plan
effective January 1, 1993 for employees of the Company. The 1993 Plan is
administered by the Compensation Committee of the Board of Directors, or by any
other committee appointed by the Board consisting of at least two (2)
non-employee directors.
Persons eligible to participate in the 1993 Plan include all officers and
employees of the Company, as determined by the Committee, including
employee-directors. On July 25, 1997, there were fifty-three employees of the
Company. The 1993 Plan provides for the granting of incentive and non-qualified
stock options at an exercise price no less than 100% of the fair market value of
the Company's Common Stock on the date of grant. Stock options may be exercised
as determined by the Committee, but in no event prior to six (6) months
following the date of grant or after the tenth (10th) anniversary date of grant,
subject to earlier termination as provided for in the 1993 Plan.
Notwithstanding the foregoing, in the case of an incentive stock option granted
to a participant who owns more than 10% of the voting stock of the Company, the
option exercise price shall be not less than 110% of the fair market value of
the Common Stock on the date of grant and the option shall expire on the fifth
(5th) anniversary of the date of grant. In addition, the aggregate fair market
value of all Company Common Stock
13
<PAGE>
with respect to which incentive stock options are first exercisable by a
participant in any calendar year shall not be greater than $100,000.
Upon exercise of a stock option, the purchase price must be paid in full in
either cash or its equivalent or by tendering previously acquired shares of
Company Common Stock with a fair market value at the time of exercise equal to
the exercise price. The Committee may also allow cashless exercises or by
payment through the exercise of a promissory note with collateral acceptable to
the Committee, a loan from the Company, the guarantee by the Company of a
third-party loan, or payment in installments.
The Board may terminate, amend, or modify the 1993 Plan at any time (except that
plan provisions relating to the amount, price, and timing of securities to be
awarded may not be amended more than once every six (6) months other than to
comport with changes in the Internal Revenue Code, ERISA, or the regulations
promulgated thereunder); provided, however, that stockholder approval is
required for any amendment that would materially increase the benefits accruing
to participants under the 1993 Plan, materially increase the number of
securities subject to the plan, or materially modify the eligibility
requirements; and provided further that the consent of the participant is
required to any amendment which would alter, terminate, or impair options
previously granted to the participant. The 1993 Plan shall remain in effect
until all shares subject to it have been either purchased or acquired in
accordance with the terms; however, in no event may an award be granted under
the 1993 Plan after December 31, 2002.
Federal Income Tax Consequences
The following discussion of certain relevant federal income tax effects
applicable to stock options granted under the 1993 Plan is a brief summary only,
and reference is made to the Code and the regulations and interpretations issued
thereunder for a more complete statement of relevant federal tax consequences.
A participant receiving nonqualified stock options will not recognize taxable
income at the time of grant. At the time the nonqualified stock option is
exercised, the participant will recognize ordinary taxable income in an amount
equal to the difference between the amount paid for the shares and the fair
market value of the Company's Common Stock on the date of exercise. The Company
will be entitled to a concurrent deduction equal to the ordinary income
recognized by the participant.
Upon a subsequent disposition of the Company Common Stock acquired through
exercise of a nonqualified stock option, the participant will realize capital
gain or loss to the extent of any intervening appreciation or depreciation. The
Company will not be entitled to any further deduction at that time.
A participant will not be treated as receiving taxable income upon the grant of
an incentive stock option or upon the exercise of an incentive stock option
pursuant to the terms of the 1993 Plan. If the Company Common Stock acquired
pursuant to an incentive stock option is not sold or otherwise disposed of
within two years from the date of grant and is held for at least one year after
the date of exercise of the incentive stock option, any gain or loss resulting
from such sale or disposition will be treated as a capital gain or loss. If the
Company Common Stock acquired through exercise of an incentive stock option is
disposed of prior to the expiration of such holding periods, the participant
will recognize ordinary income in the year of such disposition in an amount
equal to the excess of the lesser of the fair market value of the Company Common
Stock on the date of exercise or the fair market value of the Company's Common
Stock on the date of disposition over the exercise price. Any gain in excess of
such ordinary income amount generally will be taxed as a capital gain.
The Company will not be entitled to any deduction as a result of the grant or
exercise of an incentive stock option, or on a later disposition of the Company
Common Stock received, except that in the event of a disqualifying disposition,
the Company will be entitled to a deduction equal to the amount of ordinary
income realized by the participant.
14
<PAGE>
Text of the Go-Video, Inc. 1993 Employee Stock Option Plan
A copy of the 1993 Plan as amended to reflect the Proposal is attached to this
Proxy Statement as Exhibit A and is incorporated herein by reference. The
provisions of the 1993 Plan added by the Proposal are underlined, and the
provisions deleted by the Proposal are crossed out with a solid line, in the
attached exhibit. The foregoing description of the Proposal and the 1993 Plan is
qualified in its entirety by reference to the full text of the Go-Video, Inc.
1993 Employee Stock Option Plan set forth in Exhibit A.
Vote Required
Adoption of the Proposal to amend the 1993 Plan requires approval by a majority
of the holders of the outstanding shares of Company Common Stock present at the
1997 Annual Meeting and entitled to vote thereon.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the Proposal to amend the Go-Video,
Inc. 1993 Employee Stock Option Plan.
15
<PAGE>
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of July 18, 1997,
concerning shares of Common Stock beneficially owned by each stockholder known
by the Company to be the beneficial owner of more than five percent of the
Common Stock, by directors, named executive officers, and by all directors and
executive officers of the Company as a group. The information presented is based
upon information furnished to the Company by the beneficial owners.
Name and address of Number of shares Percent of
beneficial owner (1) beneficially owned (2) outstanding shares
- -------------------- ---------------------- ------------------
Roger B. Hackett 516,000 (3) 4.2%
John R. Tweddale 30,000 (4) **
Douglas P. Klein 120,000 (5) 1.0%
Edward J. Brachocki 116,080 (6) 1.0%
Kevin P. Sullivan 143,700 (7) 1.2%
Carmine F. Adimando 58,333 (8) **
Thomas F. Hartley, Jr. 60,000 (9) **
Thomas E. Linnen 37,500 (10) **
Ralph F. Palaia 40,000 (11) **
William T. Walker, Jr. 42,950 (12) **
All officers and directors as a group 1,164,563 (13) 9.0%
(11 persons)
** Less than 1.0%
- ---------------------
(1) The address of each beneficial owner is 7835 E. McClain Dr., Scottsdale,
Arizona, 85260.
(2) All options and warrants indicated are exercisable within 60 days.
(3) Includes options to acquire 500,000 shares.
(4) Includes options to acquire 30,000 shares.
(5) Includes options to acquire 115,000 shares.
(6) Includes options to acquire 115,080 shares.
(7) Includes options to acquire 135,000 shares.
(8) Includes options to acquire 8,333 shares.
(9) Includes options to acquire 50,500 shares.
(10) Includes options to acquire 37,500 shares.
(11) Includes options and warrants to acquire 27,500 shares.
(12) Includes options and warrants to acquire 41,950 shares.
(13) Includes options and warrants to acquire 1,060,863 shares.
CERTAIN TRANSACTIONS
Thomas F. Hartley, Jr., a director of the Company, is the Principal of J&H Marsh
& McLennan of Arizona, an insurance brokerage firm that obtains bids from and
administers the Company's relations with commercial insurance carriers. During
fiscal 1997, J&H Marsh & McLennan earned $20,173 in brokerage commissions on
insurance premiums paid by the Company of $169,258. Mark A. Sullivan is the
principal of Total Market Sales Inc. ("TMS"), an independent manufacturers'
representative who represents the Company, along with other consumer electronic
and personal computer firms, in the mid-Atlantic sales region. Mr. Sullivan is
the brother of Kevin P. Sullivan, an executive officer of the Company. During
fiscal 1997, sales commissions paid to TMS totaled $104,029. Sales commissions
were paid to TMS at the same percentage of revenue rate as were the majority of
the Company's other independent manufacturers' representatives. Ralph F. Palaia,
a director of the Company, is President of Innovative Marketing Group ("IMG"),
which provides sales and marketing consultation. IMG represents the Company for
one of the Company's new customer accounts. The Company pays sales commissions
to IMG at the same percentage
16
<PAGE>
of revenue rate as is customary for other new accounts opened by the Company's
independent manufacturing representatives. During fiscal 1997, sales commissions
paid to IMG totaled $61,432.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, officers, and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Based solely on its
review of the copies of such forms received by it, the Company believes that
during the fiscal year ending March 31, 1997, all filing requirements applicable
to its directors, officers, and greater-than-10% beneficial owners were complied
with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accounting firm utilized by the Company during
the fiscal year ending March 31, 1997 was Deloitte and Touche, independent
certified public accountants (the "Auditors"). It is presently contemplated that
the Auditors will be retained as the principal accounting firm to be utilized by
the Company during the current fiscal year. It is anticipated that a
representative of the Auditors will attend the Annual Meeting for the purpose of
responding to appropriate questions. At the meeting, a representative of the
Auditors will be afforded an opportunity to make a statement if the Auditors so
desire.
REPORTS TO STOCKHOLDERS
The Company has mailed this Notice and Proxy Statement and a copy of its 1997
Annual Report to each stockholder entitled to vote at the Annual Meeting.
Included in the 1997 Annual Report are the Company's financial statements for
the fiscal year ended March 31, 1997. The Company's 1997 Annual Report is not to
be regarded as proxy soliciting material.
PROPOSALS BY STOCKHOLDERS
Any stockholder proposal which is intended to be presented at the next annual
meeting must be received at the Company's principal executive offices by no
later than March 23, 1998, if such proposal is to be considered for inclusion in
the Company's Proxy Statement and Form of Proxy relating to such meeting.
OTHER BUSINESS
The meeting is being held for the purposes set forth in the Notice which
accompanies this Proxy Statement. The Board of Directors is not presently aware
of any business to be transacted other than the business described in the
Notice.
Go-Video, Inc.
/s/ Douglas P. Klein
Douglas P. Klein
Vice President and Chief Financial Officer,
Secretary, Treasurer
17
<PAGE>
EXHIBIT A
GO-VIDEO, INC.
1993 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE
-------
The purpose of the Go-Video, Inc. 1993 Employee Stock Option Plan (the
"Plan") is to provide a means through which Go-Video, Inc., a Delaware
corporation (the "Company"), may attract able persons as employees and to
provide a means whereby those key employees upon whom the responsibilities for
the successful administration and management of the Company rest, and whose
present and potential contributions to the success of the Company are of
importance, can acquire and maintain stock ownership, thereby strengthening
their commitment to the success of the Company and their desire to remain in its
employ.
2. DEFINITIONS
-----------
For purposes of the Plan, the following terms shall have the meanings
set forth herein:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(c) "Committee" means the Committee of the Board, referred to in
Section 4 appointed to administer the Plan.
(d) "Company" means Go-Video, Inc. and any successor thereto.
(e) "Date of Grant" means the date on which the granting of an
Option is authorized by the Committee or such later date as
may be specified by the Committee in such authorization.
(f) "Employee" means any person regularly employed by the Company
or a Subsidiary who satisfies all of the requirements of
Section 5.
(g) "Fair Market Value" means the closing bid price for the Stock
on the American Stock Exchange ("ASE"), as reported in the
Wall Street Journal for the date that Fair Market Value is to
be determined, or if no such bids were made on such date, the
closing bid price for the Stock on the ASE as reported in the
Wall Street Journal for the immediately succeeding date on
which such bids were made.
(h) "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code.
(i) "Nonqualified Stock Option" means an Option that does not
satisfy the requirements of Section 422 of the Code.
(j) "Normal Termination" means termination of employment:
(i) On account of permanent and total disability; or
(ii) With written approval of the Company, given in the
context of its recognition that any Option granted
under a shareholder-approved stock option plan which
has not been exercised by the terminating employee
but is then exercisable by him, will not be caused to
lapse by such termination.
(k) "Option" means the right granted under Section 6 of the Plan
to purchase Stock.
(l) "Participant" means an employee who has been granted an Option
pursuant to Section 6.
18
<PAGE>
(m) "Plan" means the Go-Video, Inc. 1993 Employee Stock Option
Plan, as the same may be amended from time to time.
(n) "Stock" means the Common Stock of the Company as defined in
the Company's Articles of Incorporation or such other stock
that is substituted therefor as provided in Section 8 of the
Plan.
3. SHARES OF STOCK SUBJECT TO THE PLAN
-----------------------------------
(a) Subject to the provisions of Section 3(c) and Section 6 of the
Plan, the aggregate number of shares of Stock that may be
issued, transferred or exercised pursuant to Options granted
under the Plan shall not exceed [Five Hundred Thousand
(500,000)] One Million (1,000,000) shares.
(b) The shares to be delivered under the Plan may be made
available from (i) authorized but unissued shares of Stock,
(ii) Stock held in the treasury of the Company or (iii)
previously issued and outstanding shares of Stock reacquired
by the Company, including shares purchased on the open market.
(c) To the extent that an Option lapses or the rights of a
Participant thereto terminate, any shares of Stock subject to
such Option shall again be available for the grant of an
Option.
4. ADMINISTRATION
--------------
(a) The Plan shall be administered by a Committee that is
appointed by, and shall serve at the discretion of, the Board.
The Committee shall consist of at least two (2) individuals
who are members of the Board who are "disinterested persons",
as such term is defined in Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934 (the "1934
Act") or any successor provision, except as may be otherwise
permitted under Section 16 of the 1934 Act and the regulations
and rules promulgated thereunder.
(b) A majority of the Committee shall constitute a quorum. The
acts of a majority of the members present at any meeting at
which a quorum is present or acts approved in writing by a
majority of the Committee shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in
good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company's independent
certified public accountants, or any executive compensation
consultant or other professional retained by the company to
assist in the administration of the Plan.
(c) Subject to the provisions of the Plan, the Committee shall
have exclusive power and discretion to: (i) select the
individuals or entities to participate in the Plan; (ii)
determine the Options to be granted; (iii) determine the time
or times when Options will be granted; (iv) determine the
conditions to which the grant of Options may be subject; (v)
prescribe the form or forms evidencing Options; and (vi)
except in the case of Incentive Stock Options, extend the
post-employment period in which an Option can be exercised up
to the balance of the normal term of the Option.
(d) The Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt, or revise such
rules and regulations and to make all such determinations
relating to the Plan as it may deem necessary or advisable for
the administration of the Plan. The Committee's interpretation
of the Plan or any Options granted pursuant thereto and all
decisions and determinations by the Committee with respect to
the Plan shall be final, binding, and conclusive on all
parties unless otherwise determined by the Board.
5. ELIGIBILITY
-----------
Officers and key employees of the Company (including officers or
employees who also serve as directors of the Company) who, in the opinion of the
Committee, have contributed or will contribute to the continued growth and
development and financial success of the Company shall be eligible to be granted
Options.
19
<PAGE>
6. STOCK OPTIONS
-------------
One or more Options may be granted to an Employee. Each Option so
granted shall be subject to the following conditions:
(a) The per share exercise price of any Option shall be set by the
grant, but in no instance shall it be less than Fair Market
Value on the Date of Grant; provided that if a Participant
owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company,
its parent corporation or any subsidiary corporation at the
time an Incentive Stock Option is granted, the per share
exercise price of that Incentive Stock Option must be at least
one hundred ten percent (110%) of the Fair Market Value of the
Stock subject to that Option.
(b) Each Option under the Plan may be exercised, in whole or in
part, at any time during the period specified in the written
instrument reflecting the grant of the Option which shall not
be earlier than the period beginning six (6) months after the
later of (i) its Date of Grant or (ii) the effective date of
the Plan (see Section 11), and ending on the date which is ten
(10) years after its Date of Grant (five (5) years after its
Date of Grant in the case of an Incentive Stock Option granted
to a Participant who owns stock possessing more than ten
percent (10%) of the total combined voting power of all
classes of stock of the Company, its parent corporation or any
subsidiary corporations at the time the Incentive Stock Option
is granted). At least six (6) months must elapse between a
Participant's receipt of an Option and the disposition of the
Stock obtained upon the exercise of such Option.
Notwithstanding the foregoing, if the Participant terminates
employment any outstanding Options shall lapse upon such
termination provided that if the Participant's termination is
determined to be (i) a Normal Termination, the Options shall
lapse three (3) months after the Participant's termination or
(ii) on account of "normal retirement" or "early retirement"
as determined by the Committee, the Options shall lapse one
(1) year after the Participant's retirement (three (3) months
after the Participant's retirement in the case of an Incentive
Stock Option), unless they expire earlier by their terms.
Notwithstanding the foregoing, except in the case of an
Incentive Stock Option, the Committee may, in its sole
discretion, extend the period in which a Participant who
terminates employment may exercise any outstanding Options to
the extent that the Participant was entitled to exercise the
Options at the date of such termination.
(c) Options shall be evidenced by a written instrument that shall
not include any terms and conditions which are inconsistent
with the provisions of the Plan.
(d) Options may be exercised by written notice to the Company,
accompanied by payment in full in cash or by check, in shares
of Stock having a Fair Market Value equal to the exercise
price provided that such shares shall have been held for at
least six (6) months as of the date of exercise, by delivery
to the Company of a promissory note with such collateral as
the Committee, in its discretion, determines to be sufficient,
or in a combination of the foregoing. As an alternative, the
Committee may, in its discretion, assist Participants in
paying the exercise price of Options by (i) causing the
Company to extend a loan to a Participant or to guarantee a
loan obtained by the Participant from a third party; or (ii)
authorizing payment of the Option exercise price in
installments over such period and subject to such terms and
conditions as the Committee shall determine.
(e) Notwithstanding the foregoing, if the Participant dies during
the Option period, as determined pursuant to Section 6(b), the
Option shall lapse unless it is exercised within the later to
occur of (i) the Option period or (ii) twelve (12) months
after the Participant's death by the Participant's legal
representative or representatives, by the person or persons
entitled to do so under the Participant's last will and
testament, or, if the Participant shall fail to make
testamentary disposition of such Option or shall die
intestate, by the person or persons entitled to receive said
Option under the applicable laws of descent and distribution.
(f) No fractional shares of stock shall be issued and the
Committee shall determine whether cash shall be given in lieu
of fractional shares or whether such fractional shares shall
be eliminated by rounding up or rounding down.
20
<PAGE>
(g) Notwithstanding any provision of this Plan, in the event of a
public tender for all or any portion of the Stock of the
Company or in the event that a proposal to merge, consolidate,
or otherwise combine with another company is submitted for
shareholder approval, the Committee may in its sole discretion
declare previously granted Options to be immediately
exercisable.
(h) In the case of an Incentive Stock Option, the aggregate Fair
Market Value (determined as of the time such Option is
granted) of all shares of Stock with respect to which
Incentive Stock Options are first exercisable by any
Participant in any calendar year may not exceed $100,000 (or
such other individual grant limit as may be in effect under
the Code on the Date of Grant).
7. GENERAL PROVISIONS
------------------
(a) Nothing in the Plan or in any instrument executed pursuant to
the Plan shall confer upon any Participant any right to
employment with the Company. Nothing in the Plan or any
instrument executed pursuant to the Plan is intended to limit
in any way, the compensation to be paid or the benefits to be
provided by the Company to any Participant.
(b) Neither a Participant nor any other person claiming under or
through such Participant shall have any right, title or
interest in any shares of Stock allocated or reserved under
the Plan or subject to any Option except as to such shares of
Stock, if any, that have been issued or transferred to such
Participant or other person claiming under or through the
Participant.
(c) No Option may be exercised by any person other than the
Participant or his or her guardian or legal representative
during the Participant's lifetime. No Option or any other
right under the Plan, contingent or otherwise, shall be
transferable, assignable or subject to any encumbrance, pledge
or charge of any nature, other than by will or the laws of
descent and distribution.
(d) The grant of Options and the obligation of the Company to
issue or transfer Stock as a result of the exercise of an
Option under the Plan shall be subject to the requirements of
all applicable laws, rules and regulations and to such
approval by government agencies and/or the securities
exchanges on which the Stock is listed as may be required or
deemed advisable by the Company. As a condition precedent to
the grant of any Option or the issuance or transfer of shares
pursuant to the exercise of any Option, the Company may
require the Participant to take any reasonable action to meet
such requirements or to obtain such approvals. The Company
shall be under no obligation to register under the Securities
Act of 1933, as amended (the "Securities Act"), any of the
shares of Stock issued or transferred as a result of the Plan.
The Company shall have the right to restrict the
transferability of shares of Stock issued or transferred under
the Plan in such manner as it deems necessary or appropriate
to insure the availability of any exemption from registration
under the Securities Act that may be available.
(e) The Committee and each member thereof shall be indemnified and
held harmless by the Company against any and all loss, cost,
liability or expense that may be imposed upon or reasonably
incurred by it or any member thereof in connection with or
resulting from any claim, action, suit or proceeding as a
result of any action or failure to act under the Plan.
8. CHANGES IN CAPITAL STRUCTURE
----------------------------
In the event a stock dividend is declared upon the Stock, the shares of
Stock then subject to each Option (and the number of shares reserved for
issuance pursuant thereto) shall be increased proportionately without any change
in the aggregate purchase price therefor. In the event the Stock shall be
changed into or exchanged for a different number or class of shares of Stock of
the Company or of another corporation, whether through reorganization,
recapitalization, stock split, combination of shares, merger or consolidation,
there shall be substituted for each such share of Stock then subject to each
Option (and for each share of Stock then reserved for issuance pursuant thereto)
the number and class of shares of Stock into which each outstanding share of
Stock shall be so exchanged, all without any change in the aggregate purchase
price for the shares then subject to each Option.
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Subject to any required action by the stockholders, if the Company
shall be the surviving or resulting corporation in any merger or consolidation,
any Option granted hereunder shall pertain to and apply to the securities or
rights to which a holder of the number of shares of Stock subject to the Option
would have been entitled; but a dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the surviving or resulting
corporation, shall, in the sole discretion of the Committee:
(a) Cause every Option outstanding hereunder to terminate, except
that the surviving or resulting corporation, may, in its
discretion, tender an option or options to purchase its shares
or exercise such rights on terms and conditions (both as to
the number of shares and rights) and otherwise which shall
substantially preserve the rights and benefits of any Option
then outstanding hereunder; or
(b) Give each Participant the right to exercise Options prior to
the occurrence of the event otherwise terminating the Options
over such period as the Committee, in its sole and absolute
discretion, shall determine.
9. AMENDMENT
---------
Subject to the approval of the Board, the Committee may, at any time,
or from time to time, amend, modify, terminate or suspend and, if suspended,
reinstate, the Plan in whole or in part, provided that the Committee may not
cancel, reduce or otherwise alter a Participant's Options without the
Participant's written consent, and provided further that, without additional
shareholder approval, the Committee shall not:
(a) Increase the maximum number of shares which may be issued on
exercise of Options;
(b) Change the minimum Option price;
(c) Extend the maximum Option term;
(d) Extend the termination date of the Plan; or
(e) Change the class of employees eligible to participate in the
Plan.
10. TERMINATION OF THE PLAN
-----------------------
The Plan will terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan, or
(b) the date ten (10) years after the effective date of the Plan.
The termination of the Plan will not affect the validity of any Option
outstanding on the date of termination.
11. EFFECTIVE DATE OF THE PLAN
--------------------------
The Plan will take effect on the date of adoption by the Board, subject
to and conditioned upon subsequent approval of the Plan by the shareholders of
the Company. The Plan and the grant of Options thereunder will be void ab initio
and of no force and effect if foregoing condition is not satisfied.
The Company has caused this Plan to be executed on this 8th day of
December, 1993.
GO-VIDEO, INC.
By /S/ R. TERREN DUNLAP
-------------------------
Chairman and Chief Executive Officer
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PROXY
-----
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF GO-VIDEO, INC.
The undersigned hereby appoints Roger B. Hackett and Douglas P. Klein, or any
one of them acting in the absence of the other with full powers of substitution,
the true and lawful attorneys and proxies for the undersigned and to vote, as
designated below, all shares of Common Stock of Go-Video, Inc. (the "Company")
that the undersigned is entitled to vote at the Annual Meeting of Stockholders
of Go-Video, Inc., to be held on Thursday, August 21, 1997, or at any
postponement or adjournment thereof, with the same effect as if the undersigned
was (were) present and voting the stock on all matters set forth in the Notice
and Proxy Statement for the Annual Meeting of Stockholders, dated July 25, 1997,
as directed below.
1. Proposal 1 - Election of Directors. The Board of Directors recommends a
vote for the nominees listed below:
Carmine F. Adimando, Thomas F. Hartley, Jr., Ralph E. Palaia
[] VOTE FOR ALL NOMINEES [] WITHHOLD AUTHORITY FOR A NOMINEE
Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name above.
2. Proposal 2 - Approval of an amendment to the Go-Video, Inc. 1993
Employee Stock Option Plan (the "1993 Plan") to increase the number of
shares of Common Stock of the Company available for option grants from
500,000 to 1,000,000. The Board of Directors recommends a vote for
Proposal 2.
[] VOTE FOR [] WITHHOLD AUTHORITY [] VOTE AGAINST
3. 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 STOCKHOLDER(S). UNLESS OTHERWISE DIRECTED, OR IF NO
DIRECTION IS GIVEN, THE PROXY WILL BE VOTED FOR THE NOMINEES IN PROPOSAL 1 AND
IN FAVOR OF THE AMENDMENT IN PROPOSAL 2, AND IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PROXIES OR ANY OF THEM ON ANY MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGE(S) RECEIPT OF THE NOTICE AND PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS.
Dated________________, 1997 ________________________________________________
Shareholder Joint Owner
Please date and sign exactly as your name or names
appear herein. Person signing in a fiduciary
capacity or as corporate officers should sign as
indicated.
