-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RuPAtUIpmWIe/shXNfzXw88Pz6MchDJTvmcEZ5fE2Miw7Z7ylVWThhYBGxHHA2hi sQ6CNNSXImAj2kXNV7GSSw== 0001015426-96-000008.txt : 19960928 0001015426-96-000008.hdr.sgml : 19960928 ACCESSION NUMBER: 0001015426-96-000008 CONFORMED SUBMISSION TYPE: DEFC14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960808 DATE AS OF CHANGE: 19960820 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL JENSEN INC CENTRAL INDEX KEY: 0000853261 STANDARD INDUSTRIAL CLASSIFICATION: 3651 IRS NUMBER: 133346656 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: DEFC14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19779 FILM NUMBER: 96609549 BUSINESS ADDRESS: STREET 1: 25 TRI STATE INTERNATIONAL OFFICE CENTER STREET 2: STE 400 CITY: LINCOLNSHIRE STATE: IL ZIP: 60069 BUSINESS PHONE: 7083173700 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EMERSON RADIO CORP CENTRAL INDEX KEY: 0000032621 STANDARD INDUSTRIAL CLASSIFICATION: 3651 IRS NUMBER: 223285224 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEFC14A BUSINESS ADDRESS: STREET 1: NINE ENTIN RD STREET 2: PO BOX 430 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0430 BUSINESS PHONE: 2018845800 FORMER COMPANY: FORMER CONFORMED NAME: MAJOR ELECTRONICS CORP DATE OF NAME CHANGE: 19770921 DEFC14A 1 - - - - ------------------------------------------------------------------------------- - - - - ------------------------------------------------------------------------------- SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 3) Filed by the Registrant [_] Filed by a Party other than the Registrant [X] [_] Confidential, for Use of the Commission Only (as permitted by Check the appropriate box: Rule 14a-6(e)(2)) [_] Preliminary Proxy Statement [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 INTERNATIONAL JENSEN INCORPORATED (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) EMERSON RADIO CORP. (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [X] 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: common stock, $.01 par value per share (2) Aggregate number of securities to which transaction applies: 5,735,140 shares of common stock (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: $8.90 (3,599,354 shares of common stock); $11.00 (2,135,786 shares of common stock) (4) Proposed maximum aggregate value of transaction: $55,527,896 (5) Total fee paid: $11,105.58 [X] 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) Filing Party: (4) Date Filed: - - - - ------------------------------------------------------------------------------- - - - - ------------------------------------------------------------------------------- [LOGO] Emerson Radio Corp. August 8, 1996 Dear International Jensen Incorporated Stockholder: We are writing to you, the owners of International Jensen Incorporated ("Jensen"), regarding a matter of mutual interest. Emerson Radio Corp. ("Emerson"), a leading consumer electronics company, has long had an interest in acquiring Jensen due to the synergies that exist between the two companies. Emerson, through a series of merger and acquisition proposals, has consistently sought to provide you, the public stockholders of Jensen, with the highest and best value for your shares of Jensen stock. However, Robert G. Shaw, Jensen's Chairman, Chief Executive Officer, President, and largest stockholder, William Blair Leveraged Capital Fund, L.P. ("Blair"), through its principal, David Chandler, and Recoton Corporation ("Recoton"), the other bidder for Jensen, have, Emerson believes, acted together to block and inhibit Emerson's superior proposals. We believe that Emerson's proposals were not seriously considered to protect the benefit of certain highly favorable deals for Mr. Shaw. After (i) months of submitting consistently superior proposals, (ii) months of frustrating attempts to negotiate with Jensen's Special Committee and the Board of Directors of Jensen, (iii) months of Jensen, Mr. Shaw, and Blair agreeing to what Emerson believes to be improper lock-ups (including a lock-up of Blair's Jensen shares in favor of Recoton and the lock-up of Jensen's valuable Acoustic Research trademarks in favor of Recoton) and other improper arrangements, and (iv) Jensen conducting what Emerson believes to be a seriously flawed auction only after these lock-ups were put in place, on June 25, 1996, Emerson again proposed a merger with Jensen that is financially superior for Jensen's public stockholders as compared to the merger transaction Jensen announced with Recoton on June 24, 1996. Emerson announced that it was prepared to acquire all outstanding shares of Jensen stock for $12.00 per share (other than shares held by Mr. Shaw and Blair/Recoton). As to Mr. Shaw, Emerson would pay $8.90 per share, the EXACT SAME price he has agreed to accept from Recoton on several occasions. With respect to Blair's shares, Emerson on June 25, 1996, offered the same $8.90 per share Shaw would receive, and, based on new information which became available after such date, on July 16, 1996, Emerson offered to increase its offer to Blair to $10.00 per share, a SUBSTANTIALLY HIGHER price than Blair has repeatedly agreed to accept from Recoton. In fact, Emerson's offer to Blair included an offer immediately to purchase its shares premised on Emerson's belief that most of the provisions of a stock option and voting agreement Blair entered into with Recoton expired no later than July 15, 1996. Blair and Jensen have again refused Emerson's offer. On July 24, 1996, Emerson offered, in addition to the offer described above, to immediately pay approximately $20.4 million, or $2.2 million more than Mr. Shaw has currently agreed to pay for Jensen's original equipment manufacturing business ("OEM Business"). In conjunction with its offer, Emerson has provided to establish such fund at the time of closing an OEM Business sale and for Jensen's public stockholders to receive the $2.2 million increase (approximately $1.00 per share) on the closing of a Jensen/Recoton transaction, providing the public stockholders with an aggregate consideration of $12.00 per share. In the event Emerson is able to purchase the entirety of Jensen for $12.00 per share to the public stockholders, the $2.2 million would be applied to the merger consideration being paid by Emerson. On August 2, 1996, Jensen rejected Emerson's proposal to acquire the OEM Business stating that Recoton would not merge with Jensen if Emerson purchased the OEM Business, Shaw would not vote for the Recoton transactions and be paid $8.90 per share IF HE COULD NOT PURCHASE THE OEM BUSINESS, and Jensen's insistence of not being able to conclude a tiered consideration merger with Emerson without Mr. Shaw's and Blair's concurrence. Significantly, Emerson's proposals provide the maximum financial benefit to Jensen's public stockholders and are not conditioned upon and do not contemplate the sale of the OEM Business to Mr. Shaw, or any special asset sale with any Jensen insider. The merger agreement currently agreed upon by Jensen with Recoton contemplates the payment to all stockholders of Jensen (other than Mr. Shaw and Blair) of $11.00 per share ($1.00 per share less than Emerson's proposal), with Mr. Shaw and Blair receiving $8.90 per share. In addition, the Recoton transaction is specifically conditioned upon Mr. Shaw being allowed, at his sole discretion, to purchase the OEM Business at a substantial discount to the net book value of the OEM Business, and, Emerson believes, at a substantial discount to the fair valuation of the OEM Business, as reflected by Emerson's recent offer to purchase the OEM Business for payments aggregating approximately $20.4 million and the amount its asset based lender would advance (approximately $23 million) on the assets of the OEM Business. Mr. Shaw has no obligation to actually purchase the OEM Business under his purchase agreement with Jensen, although Jensen's transaction with Recoton is specifically conditioned upon such a transaction. Emerson further believes that Recoton and Mr. Shaw have been acting together in making their bids to acquire all of Jensen, as reflected in Jensen's rejection on August 2, 1996, of Emerson's proposal to acquire the OEM Business, and Blair, for undisclosed reasons, has joined this group by attempting to abdicate its fiduciary obligations through giving away the voting rights on its shares and giving Recoton an option to acquire Blair's shares at $8.90 per share. Thus, Recoton/Shaw/Blair control a majority of Jensen's outstanding stock and, Emerson believes, are acting to cause you, the true owners of Jensen, to receive less than you deserve. All this, to protect Mr. Shaw's highly favorable deals. JENSEN HAS REJECTED ALL OF EMERSON'S PROPOSALS. TO PRESERVE YOUR OPPORTUNITY TO CONSIDER THE BEST AVAILABLE OFFER, WE URGE YOU TO VOTE AGAINST THE PROPOSED RECOTON TRANSACTION BY SIGNING, DATING, AND RETURNING THE ENCLOSED BLUE PROXY CARD TODAY. EMERSON BELIEVES ITS OFFERS ARE FINANCIALLY SUPERIOR TO JENSEN'S PUBLIC STOCKHOLDERS. THE JENSEN BOARD, MR. SHAW, AND BLAIR ALL OWE FIDUCIARY DUTIES TO JENSEN'S PUBLIC STOCKHOLDERS. FURTHER, RECOTON IS ACTIVELY PARTICIPATING IN DEPRIVING YOU OF THE BENEFIT OF EMERSON'S PROPOSALS THROUGH ITS ATTEMPTED "LOCK UP" OF BLAIR'S SHARES AND PARTNERSHIP WITH SHAW AS WELL AS THE LOCK-UP OF VALUABLE TRADEMARK ASSETS. UNDER THE EMERSON PROPOSALS, YOU WOULD RECEIVE A SIGNIFICANT PREMIUM FOR YOUR SHARES, $12.00 PER SHARE AS COMPARED TO $11.00 PER SHARE UNDER THE RECOTON MERGER AGREEMENT. A VOTE AGAINST THE RECOTON MERGER SHOULD NOT BE CONSTRUED AS A VOTE IN FAVOR OF EMERSON'S PROPOSALS. HOWEVER, UNLESS THE PROPOSED TRANSACTIONS WITH RECOTON AND MR. SHAW ARE DEFEATED AT THE JENSEN SPECIAL MEETING OF STOCKHOLDERS, YOU WILL NOT HAVE THE POTENTIAL OPPORTUNITY TO CONSIDER OR VOTE ON THE EMERSON PROPOSALS, WHICH EMERSON BELIEVES ARE IN YOUR BEST INTEREST, OR EVEN THAT THE JENSEN BOARD WILL CONSIDER EMERSON'S PROPOSALS. None of Jensen, Mr. Shaw, or Blair has adequately explained, or, Emerson believes, could adequately explain, why Mr. Shaw or Blair could not validly accept Emerson's proposals, which would pay them exactly the same amount or more than they have agreed to accept from Recoton. Emerson believes that Mr. Shaw is seeking to protect the benefits accruing to him from the purchase of the OEM Business on a highly favorable basis. While Mr. Shaw has consistently argued that he was required to purchase the OEM Business to facilitate a transaction with Recoton, this hardly explains why Mr. Shaw has continued aggressively to pursue a transaction with Recoton in the face of higher Emerson proposals or in light of Emerson's higher offer to purchase the OEM Business. Blair signed away its voting rights to Recoton on May 1, 1996, and agreed to allow Recoton to purchase its shares at that time for $9.00 per share, only to agree to accept a lesser amount, $8.90 per share, when Recoton revised its offer on May 10, 1996. In connection with agreeing to accept a lesser amount, Blair also gave up its right to regain the vote over such stock if a Recoton merger agreement was terminated (thereby allowing Recoton to potentially vote Blair's shares against a merger transaction which could be more favorable to Jensen's public stockholders). Subsequently, when Blair was informed of Emerson's and certain stockholders' belief that most of the provisions of its option and voting agreement with Recoton had terminated, Blair disagreed, without explanation of its analysis, and threatened Emerson with litigation. Mr. Shaw, Blair, and the Jensen Board have also positioned the so-called "auction" process to require Mr. Shaw's approval of any Emerson proposal, which he is unwilling to do, Emerson believes, in light of the substantial personal benefits he would obtain on a purchase of the OEM Business. Jensen has argued it would be improper to proceed with an Emerson transaction since Mr. Shaw and Blair, Jensen's majority stockholders, have indicated they do not support and would not vote in favor of a transaction with Emerson. However, Emerson believes Mr. Shaw and Blair (through its principal David Chandler), as majority stockholders and directors of Jensen, have fiduciary duties to obtain the highest and best deal possible for the stock of Jensen's minority/public stockholders. REMIND SHAW, BLAIR (CHANDLER), AND THE REST OF THE JENSEN DIRECTORS OF THEIR FIDUCIARY DUTIES TO JENSEN'S PUBLIC STOCKHOLDERS. Emerson believes Jensen is unjustified in using Mr. Shaw's self-interested and Blair's alleged objections to an Emerson transaction as an excuse to deprive Jensen's public stockholders of higher and better bids from Emerson. IN EMERSON'S VIEW, BLAIR AND THE JENSEN BOARD HAVE ABDICATED THEIR FIDUCIARY DUTIES OWED TO JENSEN'S PUBLIC STOCKHOLDERS TO RECOTON AND TO SHAW, WHOSE GOAL IS TO PROTECT HIS OWN SELF-INTERESTED TRANSACTION, THE PURCHASE OF THE OEM BUSINESS AT A SIGNIFICANT DISCOUNT TO WHAT EMERSON BELIEVES TO BE ITS FAIR VALUE. YOUR VOTE IS ESSENTIAL IF YOU WANT TO HAVE THE POTENTIAL OPPORTUNITY TO BE PRESENTED WITH THE EMERSON MERGER PROPOSAL, WHICH EMERSON BELIEVES IS FINANCIALLY SUPERIOR TO THE PROPOSED TRANSACTIONS WITH RECOTON/SHAW/BLAIR, WE URGE YOU TO VOTE THE BLUE PROXY CARD AGAINST THE PROPOSED TRANSACTIONS WITH RECOTON/SHAW. ONLY BY DEFEATING THE JENSEN/RECOTON/SHAW MERGER AND RELATED TRANSACTIONS WILL A MESSAGE BE SENT TO THE JENSEN BOARD THAT IT SHOULD DEAL WITH EMERSON ON A GOOD FAITH BASIS AND ALLOW THE STOCKHOLDERS TO POTENTIALLY REALIZE THE GREATEST BENEFIT POSSIBLE FROM THE SALE OF THEIR STOCK. IF YOU HAVE ALREADY VOTED FOR THE PROPOSED TRANSACTIONS WITH RECOTON/SHAW, IT IS NOT TOO LATE TO CHANGE YOUR VOTE BY SIMPLY SIGNING, DATING, AND RETURNING THE BLUE PROXY CARD TODAY IN THE ENCLOSED, POSTAGE- PREPAID ENVELOPE. Emerson appreciates your consideration and support. Sincerely, Eugene I. Davis President IMPORTANT If your shares are held in your own name, please sign, date, and return the enclosed BLUE proxy card today. If your shares are held in "Street-Name," only your broker or bank can vote your shares and only upon receipt of your specific instructions. Please return the enclosed BLUE proxy to your broker or bank and contact the person responsible for your account to ensure that a BLUE proxy is voted on your behalf. SPECIAL MEETING OF STOCKHOLDERS OF INTERNATIONAL JENSEN INCORPORATED PROXY STATEMENT OF EMERSON RADIO CORP. SOLICITATION OF PROXIES IN OPPOSITION TO THE PROPOSED MERGER OF INTERNATIONAL JENSEN INCORPORATED AND RECOTON CORPORATION This Proxy Statement is furnished by Emerson Radio Corp., a Delaware corporation ("Emerson"), in connection with its solicitation of proxies to be used at a special meeting of stockholders of International Jensen Incorporated, a Delaware corporation ("Jensen"), and at any adjournments, postponements, or reschedulings thereof (the "Special Meeting"). Pursuant to this Proxy Statement, Emerson is soliciting proxies from stockholders of Jensen to vote against Jensen's proposal (i) to merge Jensen with and into a wholly-owned subsidiary of Recoton Corporation ("Recoton") (such proposed merger, the "Jensen/Recoton Merger") and (ii) to sell its original equipment manufacturing business ("OEM Business") to a corporation wholly- owned and controlled by Robert G. Shaw ("Shaw"), Jensen's Chairman, Chief Executive Officer ("CEO"), President, and largest stockholder. According to the International Jensen Incorporated Proxy Statement dated July 23, 1996 (the "Jensen Proxy Statement"), Jensen has fixed August 28, 1996 as the date of the Special Meeting and July 15, 1996, as the record date for determining those stockholders of Jensen who will be entitled to vote at the Special Meeting (the "Record Date"). This Proxy Statement and the enclosed proxy are first being sent or given to stockholders of Jensen on or about August 8, 1996. The principal executive offices of Jensen are located at 25 Tri-State International Office Center, Suite 400, Lincolnshire, Illinois 60069. The principal executive offices of Emerson are located at Nine Entin Road, Parsippany, New Jersey 07054-0430. SUMMARY BACKGROUND Emerson has long had an interest in acquiring Jensen. Beginning in the Spring of 1995, Bankers Trust Company ("Bankers Trust"), later to become Emerson's financial advisor, on behalf of another named client, contacted Shaw, Jensen's Chairman, CEO, President, and largest stockholder, regarding whether Jensen was interested in being sold. Bankers Trust was informed that Jensen was not for sale. Bankers Trust, on behalf of such other client continued to contact Shaw, and later, after its retention by Jensen as its financial advisor, Lehman Brothers Inc. ("Lehman Brothers"). Both Shaw and Scott Mohr of Lehman Brothers, on a number of occasions throughout the Summer and Fall of 1995, informed Bankers Trust either that Jensen was not for sale or that due diligence materials were not yet available or were being revised. On January 3, 1996, Jensen and Recoton entered into their original merger agreement. That agreement contemplated a merger consideration of $8.90 per share, payable 60% in cash and 40% in shares of Recoton's common stock. In connection with and as a precondition of this agreement, Shaw agreed with Jensen to purchase the OEM Business for $15 million, with the right to terminate this agreement if the net book value was less than $27.6 million, which, according to such agreement, was the net book value of the OEM Business as of November 30, 1995. Shaw provided very few representations to Jensen in this agreement, while requiring extensive representations from Jensen (of which he is CEO), with an ability of his part to terminate the agreement with no penalty to him, but with full reimbursement of his expenses, even if for HIS not being satisfied with his financing for the acquisition. In fact, Shaw did not even represent that he had the financing to consummate the purchase of the OEM Business. This and his right to terminate such agreement (and be reimbursed for his expenses) if he was unsatisfied with his financing are significant contingencies not previously disclosed by Jensen. The sales agreement for the OEM Business also contemplated certain side agreements relating to, among other things, royalties on trademarks, management sharing and office sharing arrangements, and other matters. These agreements were not completed at the time the January 3 agreements were executed. The original Jensen/Recoton Merger contemplated a termination fee of $6 million if Jensen accepted a competing offer, but no termination fee if Lehman Brothers could not issue any of the fairness opinions it was required to provide under the Jensen/Recoton Merger agreement and the OEM Business sales agreement. By way of a separate agreement, Recoton was given a one-year license on and a "lock-up" option to acquire the valuable "AR" and "Acoustic Research" trademarks (the "AR Trademarks") of Jensen for $6 million, the exact same amount as its termination fee. As indicated in the Jensen Proxy Statement, these amounts were designed to offset each other. Thus, if the Jensen/Recoton Merger was terminated, Recoton would obtain these valuable trademarks from Jensen for no real consideration (although Jensen and Recoton had voluntarily placed a $6 million value on these trademarks). After discovering that Jensen and Recoton had entered into a merger agreement with Recoton on January 3, 1996, John P. Walker, Emerson's Chief Financial Officer ("CFO"), immediately called Scott Mohr of Lehman Brothers to inform Lehman Brothers of Emerson's interest in making a competing bid. Stephen Goodman of Bankers Trust met with Shaw at the Consumer Electronics Show and expressed his surprise at the announcement of the proposed Jensen/Recoton Merger and the failure to contact Bankers Trust or the client despite their continuing expressions of interest. Emerson formally confirmed its interest in acquiring Jensen by letter dated January 11, 1996, to which Emerson received no response. On January 31, 1996, Bankers Trust informed Jensen and Lehman Brothers that Emerson was prepared immediately to proceed toward making a definitive all-cash proposal to acquire Jensen. Throughout January and February 1996, Jensen refused to meet with representatives of Emerson, as reflected in the Jensen Proxy Statement. Finally, Emerson representatives were able to meet with Jensen representatives in early March 1996. On March 4, 1996, Emerson and a potential partner in a Jensen acquisition executed a confidentiality and standstill agreement (the "Confidentiality Agreement") regarding Jensen, and Emerson was finally permitted to begin its diligence review. This diligence review was severely restricted by Shaw and Jensen. Emerson was not permitted to speak to any of Jensen's personnel (except Jensen's CFO and Controller), was provided only limited access to documents, was prohibited from any on-site due diligence review of Jensen's OEM Business, which was (and, pursuant to the Recoton/Shaw offer, still is) to be sold to a group led by Shaw (the "Shaw Group") in connection with the Jensen/Recoton Merger, was prevented for a substantial period of time from reviewing Jensen's European operations, and was secluded in an isolated conference room in Jensen's offices in conducting its review. Emerson conducted a substantial amount of due diligence review and analysis in a very compressed period of time, even with the severe restrictions imposed by Jensen. Furthermore, Emerson was forced into expedited due diligence by Jensen's management because it stated that the proxy statement for the Jensen/Recoton Merger was, as of early March, nearing completion and was to be mailed shortly. The Jensen Proxy Statement was not, in fact, ready for distribution at that time or at any time prior to July 23, 1996. It should also be noted that Shaw, in addition to owning and operating the OEM Business for his own benefit, is being hired by Recoton to operate the non- OEM Business aspects of Jensen's business that Recoton is to purchase and has now negotiated lucrative side agreements to the OEM Business sales agreement for his benefit which, among other things, provide for (i) a guaranteed purchase of product from the Shaw Group by Recoton and (ii) majority reimbursement of salaries and bonuses from Recoton for Shaw and his key employees who will operate the OEM Business. Based on the limited information provided to it concerning the OEM Business' value, Emerson initially sought to offer Jensen a similar transaction to Recoton's, including the sale of the OEM Business to Shaw. On April 4, 1996, Emerson representatives met with Shaw and his representatives to discuss the sale of the OEM Business to Shaw as part of an Emerson transaction and the various agreements relating thereto. It became obvious to Emerson that Shaw had no interest in dealing with Emerson, and from this meeting on, he consistently insisted on the "golden parachute" payment of up to approximately $4.8 million he felt he was owed under his employment agreement. Shaw had specifically agreed to waive these payments in return for a new employment arrangement with Recoton, which Emerson offered to substantively duplicate. Emerson attempted to include members of Jensen's Board of Directors in discussions with Shaw, but they refused to get involved, citing negotiations with Shaw as a necessary precondition and as Emerson's problem, not theirs. As a direct result of these frustrations in dealing with Shaw and under extreme time pressure from the Jensen Board of Directors which necessitated an expedited diligence review of Jensen's non-OEM businesses, on April 16, 1996, Emerson made a proposal to acquire Jensen in a negotiated merger transaction (the "Initial Emerson Proposal"). Under the Initial Emerson Proposal, Jensen stockholders would have received $9.90 in cash, representing a substantial premium to the $8.90 consideration (payable 40% in Recoton stock and 60% in cash) then being offered in the Jensen/Recoton Merger. Emerson believes Shaw preferred a stock transaction because of the favorable tax treatment he would obtain as a result thereof based on his average cost of less than $.03 per share. On May 1, 1996, without prior notice to Emerson, Jensen announced that it had accepted the first of a number of modified offers from Recoton (the "First Two-Tier Recoton Proposal"), in which Recoton raised the price it proposed to pay in the Jensen/Recoton Merger to $9.15 per share (still substantially less than the $9.90 all cash then being offered by Emerson), payable approximately 56% in cash and 44% in Recoton stock to Jensen stockholders other than Shaw and William Blair Leveraged Capital Fund, L.P. ("Blair"), Jensen's second largest stockholder, both of which would receive $9.00 per share in cash and stock. In addition, under the May 1 Recoton Proposal, Jensen was still required to sell its OEM Business prior to the closing to the Shaw Group for approximately $15.2 million, which would adjust in accordance with the OEM Business sales agreement then in effect based on an $11.4 MILLION DISCOUNT (or $5.40 per share held by Shaw) from the net book value of the OEM Business. Thus, Shaw was able to "lock-in" his highly favorable purchase price and potentially realize a benefit with the per share discount mentioned above that increased the effective price he received for his shares to approximately $14.30 per share. IN FACT, EMERSON HAS RECENTLY DISCOVERED IN THE JENSEN PROXY STATEMENT THAT, AT LEAST AS OF JUNE 14, 1996, LEHMAN BROTHERS ULTIMATELY DETERMINED THAT THIS PURCHASE PRICE WAS INADEQUATE AND NOT FAIR TO JENSEN. (See page 37 of the Jensen Proxy Statement.) Even with the current proposed Shaw/Recoton transaction, Lehman Brothers is not providing the opinion required in the OEM Business sales agreement that the transaction is fair from a financial point of view to Jensen. Instead, Lehman Brothers opined that the consideration to be received by Jensen in the sale of the OEM Business, within the context of the Jensen/Recoton Merger, was fair to Jensen only because (i) Recoton requires the prior sale of the OEM Business as a condition to the Jensen/Recoton Merger, (ii) the Jensen Board limited potential purchasers to insiders, and (iii) certain benefits Shaw gave to Recoton were instead attributed to Jensen. Given Shaw's fiduciary obligations to Jensen, and that Lehman Brothers did not provide the required opinion, Emerson is surprised that Jensen would attempt to proceed with the Jensen/Recoton Merger and the sale of the OEM Business to Shaw. Further, the purchase of the OEM Business, which was to occur prior to the Merger, was to be financed by discounting the OEM Business' receivables which were assets of Jensen prior to the Merger. In connection with this new Recoton offer, Blair (i) granted an option to Recoton to purchase its shares for $9.00 per share plus any net proceeds which Recoton might receive upon sale of such shares to the extent such net proceeds exceed $10.00 per share and (ii) agreed to vote its shares in favor of the First Two-Tier Recoton Proposal and to provide a proxy to Recoton to vote its shares under certain circumstances. In addition, Shaw agreed (the "Spread Agreement") that if a third party other than Recoton acquired Jensen, he would pay Recoton the spread between the amount per share paid by the third party and $9.00 per share, up to a maximum of $1.00 per share. The Blair and Shaw arrangements therefore amounted to approximately a $2 million windfall to Recoton, not Jensen's outside stockholders, if Emerson was ever successful in its then current offer. Accordingly, the value of a termination at that date to Recoton based on Emerson's then outstanding offer was approximately $8 million! In addition, Jensen's stockholders would lose the AR Trademarks, the discount on the OEM Business receivables, the termination fee, Jensen's costs, and the reimbursement of Shaw's costs. Although Emerson believed the First Two-Tier Recoton Proposal was still clearly inferior to the Initial Emerson Proposal, on May 1, 1996, Emerson delivered to Jensen a definitive proposal (the "May 1 Emerson Proposal") to acquire Jensen through a merger in which all of Jensen's stockholders would receive at least $9.90 per share in cash, except Shaw and Blair, both of which would receive $9.00 per share in cash (the same valued consideration, according to Jensen, they had agreed to accept under the First Two-Tier Recoton Proposal). In addition, Emerson agreed, among other things, to (i) remove all contingencies except for normal and customary conditions to closing, (ii) honor Shaw's "golden parachute" payment of up to approximately $4.8 million set forth in his employment agreement, (iii) distribute to all of Jensen's stockholders, other than Shaw and Blair, 50% of any recovery of the $4.8 million payable to Shaw as a "golden parachute" payment should a court decide he had breached his fiduciary duties, and (iv) retain and finance the OEM Business as part of its purchase. Emerson also stated it would pursue the value of the AR Trademarks which might be transferred to Recoton, and would cause 50% of such recovery, net of costs and expenses, to be distributed to Jensen's stockholders other than Shaw and Blair. In a proposal accepted by Jensen's Board of Directors on May 10 (the "Second Two-Tier Recoton Proposal") and another in the beginning of June 1996, Recoton made additional amended two-tier offers in response to Emerson's clearly higher offers, the first at $10.00 per share to Jensen's public stockholder, with Shaw and Blair to receive $8.90 per share, and the second raising the purchase price to the public stockholders to $10.25 (after Emerson had revised its offer either to $10.25 per share to all stockholders or $10.75 if Shaw either accepted $8.90 per share or agreed to purchase the OEM Business at its net book value of $27.6 million) (in both instances payable in cash and stock). The Recoton offers modified the percentages of cash and stock with the effect of not significantly increasing the cash component of such offers to Recoton. In each case, Jensen was still required to sell the OEM Business to the Shaw Group for substantially below its net book and, Emerson believes, fair values. Furthermore, the purchase of the OEM Business by Shaw contained many contingencies which were never disclosed to the stockholders of Jensen, including Shaw's ability to finance such purchase (as to which he did not even provide a representation) or his ability to terminate such purchase if he was unsatisfied for ANY reason with the terms of such financing (but with Shaw still having his expenses reimbursed). Time and again, the actions of Jensen, Shaw, Blair and Recoton, among other things in agreeing to lock-ups, shifting of stock and cash percentages, and what Emerson believes were bad faith negotiations, made it clear to Emerson that they were not interested in bargaining in good faith with Emerson. In connection with the Second Two-Tier Recoton Proposal, the option price was adjusted to $3.5 million (which Emerson believes was done in response to a stockholder complaint filed in Delaware Chancery Court the day before which, among other things, challenged the prior $6 million arrangement) and Jensen executed assignments of the AR Trademarks which it deposited in escrow with its law firm (of which Donald Jenkins, a Jensen director, is a partner) for the benefit of Recoton if the Jensen/Recoton Merger terminated. In connection with the amended Recoton proposals, Blair amended the Stock Option and Voting Agreement it had previously entered into to provide (i) an option to Recoton to purchase Blair's shares for the reduced price of $8.90 per share plus half of any net proceeds which Recoton receives upon sale of such shares to the extent such net proceeds are between $8.90 and $10.90 per share plus 100% of the net proceeds which Recoton may receive over $10.90 per share upon such sale and (ii) an agreement to vote its shares in favor of the Second Two-Tier Recoton Proposal and to provide a proxy to Recoton to vote its shares under certain circumstances. The proxy portion of such agreement was amended to permit Recoton to vote Blair's shares until July 15, 1996, extendable in Recoton's sole discretion to December 31, 1996, even if the Recoton Merger Agreement was terminated (thereby removing the "fiduciary out" that would have terminated this agreement if the Jensen Board had approved an offer from a third party). In addition, Shaw amended the Spread Agreement to provide that he would pay Recoton half of the spread between (a) the net proceeds per share received by Shaw from a third party, but not to exceed $10.90 per share and (b) $8.90 per share, subject to certain obligations of Recoton to reimburse possible tax liabilities. On May 9, 1996, a Jensen stockholder commenced a lawsuit in the Delaware Chancery Court challenging the Jensen/Recoton Merger and the sale of the OEM Business to Shaw, alleging, among other things, breaches of fiduciary duties by the Jensen directors. The following day, Jensen commenced an action against Emerson and its President, Eugene Davis in Federal District Court in Chicago, for allegedly violating the Confidentiality Agreement and the federal proxy rules. Emerson brought a counterclaim against Jensen and a third party complaint against Shaw in this action on May 20, 1996, on the grounds of fraudulent inducement of the Confidentiality Agreement and fraud and bad faith dealings. On July 2, 1996, Emerson brought a third party complaint against Recoton and Blair for conspiring in such actions. After, Emerson believes, repeatedly delaying its own "auction" deadlines to avoid having to accept a higher and better bid from Emerson (as evidenced, in part, by Lehman Brothers undisclosed refusal to issue a fairness opinion on the OEM Business sale to Shaw during such time), on June 24, 1996, Jensen announced that it had received and expeditiously approved yet another merger offer from Recoton in which all Jensen stockholders would receive $11.00 per share in cash, except for Shaw and Blair, both of which would receive $8.90 per share in cash (the "Third Two- Tier Recoton Proposal"). In addition, Jensen would continue to be required to sell the OEM Business to the Shaw Group at a substantial discount from its net book and, Emerson believes, fair values. Jensen accepted the Third Two-Tier Recoton Proposal, thereby, as the Jensen Board indicated, terminating the "auction," without first informing Emerson of its terms and seeking Emerson's reaction to it. Also, the Board approved this transaction in spite of Lehman Brothers' apparent inability to issue the fairness opinion in the form required by the OEM Business sales agreement. In response to the Third Two-Tier Recoton Proposal, on June 25, 1996, Emerson delivered to Jensen a new definitive proposal (the "June 25 Emerson Proposal") to acquire Jensen through a merger in which all of Jensen's stockholders would receive $12.00 per share in cash, except for Shaw and Blair, both of which would receive $8.90 per share (again, the same consideration they had agreed to accept under the Original Recoton Proposal, the Second Two-Tier Recoton Proposal, and the currently accepted Third Two-Tier Recoton Proposal). On July 16, 1996, Emerson delivered to the Special Committee and Blair a revised proposal (the "July 16 Emerson Proposal") to acquire Jensen which increased the purchase price Blair would receive to $10.00 per share ($1.10 per share MORE than Blair had agreed to accept from Recoton). The higher price offered Blair under the July 16 Emerson Proposal, payable at the time of a merger or prior thereto, is premised on Emerson's belief, and that of certain Jensen stockholders, that the voting provisions and the prior sale restriction of the amended Stock Option and Voting Agreement previously entered into between Blair and Recoton, under which Blair had given voting control over its shares to Recoton and had agreed not to sell its shares to any other party, terminated no later than July 15, 1996. Despite these superior offers, Jensen rejected both proposals and refuses to negotiate with Emerson. Instead, Jensen insists on favoring the interests of its largest "inside" stockholder by continuing to accept the Third Two-Tier Recoton Proposal. On July 17 and 18, 1996, Emerson received correspondence from (i) counsel to Blair, unsupported by any legal or contractual analysis, indicating Blair's position that the amended Stock Option and Voting Agreement was still in effect and (ii) from counsel to the Special Committee rejecting the July 16 Emerson Proposal based, in part, on Blair's position. Jensen also rejected Emerson's request that the standstill agreement, prohibiting Emerson from purchasing shares of Jensen stock, be waived in conjunction with such offer. On July 22, 1996, Emerson reaffirmed its July 16 Emerson Proposal to the Special Committee of Jensen's Board of Directors and specifically requested a waiver of the standstill provision. After receiving no response from Jensen concerning its July 22, 1996 request, on July 24, 1996, Emerson announced in a press release that it was providing an additional proposal to the July 16 Emerson Proposal. Under the terms of Emerson's new proposal (the "July 24 OEM Proposal"), Emerson would agree immediately to purchase all of the assets and businesses and assume all of the related liabilities of the OEM Business in the same manner as set forth in the current agreement between Jensen and Shaw, whereby Shaw would purchase the OEM Business at a price of approximately $18.2 million. Emerson would purchase the OEM Business at the same price but would, in addition, establish a fund at the time of consummating a purchase of the OEM Business of approximately $2.2 million (or $1.00 per share to outside stockholders) for direct distribution to stockholders other than Shaw and Blair if Recoton were to acquire Jensen for $11.00 per share, providing them with an aggregate consideration of $12.00 per share. In the event Emerson purchases Jensen for $12.00 per share to the public stockholders, the $2.2 million would be applied to the merger consideration being paid by Emerson. In connection with the July 24 OEM Proposal, Emerson would expressly waive certain provisions of the OEM Business side agreements which Shaw negotiated in his favor as part of the Jensen/Recoton Merger. The result of the July 24 OEM Proposal, if approved, is that Jensen's public stockholders are assured of receiving $12 per share for their stock whether Emerson's $12 proposal or Recoton's $11 proposal prevails. In addition, Emerson would continue to pursue the July 16 Emerson Proposal to acquire Jensen. On July 25, 1996, Emerson's counsel wrote the Special Committee's counsel that, if required by the Special Committee, Emerson would discuss the distribution of the $2.2 million to all Jensen stockholders. On July 30, 1996, Emerson filed a complaint in Delaware Chancery Court seeking to enjoin the Jensen/Recoton Merger and the sale of the OEM Business to Shaw. A hearing on a preliminary injunction based on motions by Emerson and on behalf of Jensen's stockholders has been scheduled for August 15, 1996. On August 2, 1996, Emerson received Jensen's rejection of the July 24 OEM Proposal to acquire the OEM Business stating that Recoton would not merge with Jensen if Emerson purchased the OEM Business, Shaw would not vote for the Recoton transaction and be paid $8.90 per share IF HE COULD NOT PURCHASE THE OEM BUSINESS, and Jensen's insistence of then not being able to conclude a tiered consideration merger with Emerson. Jensen also avoided making a decision on Emerson's request for a waiver of the standstill provision of the Confidentiality Agreement. NOT ONLY WILL THE JENSEN/RECOTON MERGER PAY LESS PER SHARE TO THE STOCKHOLDERS OF JENSEN THAN WILL THE JULY 16 EMERSON PROPOSAL, BUT IT WILL AWARD JENSEN'S CEO AND LARGEST STOCKHOLDER, SHAW, AS WELL AS HIS PROTECTED SENIOR LEVEL MANAGEMENT, A HIGHLY FAVORABLE DEAL ON THE PURCHASE OF THE OEM BUSINESS AND THE SIDE AGREEMENTS BETWEEN THE SHAW GROUP AND THOSE PORTIONS OF THE JENSEN BUSINESSES TO BE PURCHASED BY RECOTON (WHICH SHAW AND HIS GROUP WILL OPERATE FOR RECOTON). Emerson stands ready to complete negotiations with Jensen concerning its superior alternatives to the Jensen/Recoton Merger and OEM Business sales agreements set forth in the July 16 and July 24 Emerson Proposals and to execute agreements embodying such proposals immediately. Emerson believes that its most recent draft of a merger agreement is substantially in a form Jensen and Emerson could execute. THE JULY 16 EMERSON PROPOSAL AND JULY 24 EMERSON PROPOSAL CONSTITUTE AN INVITATION TO THE BOARD OF DIRECTORS OF JENSEN AND TO BLAIR AND SHAW TO CONDUCT GOOD FAITH MERGER NEGOTIATIONS WITH EMERSON AND TO EXECUTE SUCH MERGER OR ACQUISITION AGREEMENTS IMMEDIATELY. JENSEN NEVER INTENDED TO BARGAIN IN GOOD FAITH WITH EMERSON It has become clear to Emerson and its representatives that Jensen and its representatives have never had any intention of allowing an acquisition of Jensen by any party except Recoton/Shaw, as most recently and poignantly evidenced by the Jensen August 2, 1996 letter rejecting the July 24 Emerson Proposal. Since the Spring of 1995, when Bankers Trust first made inquiries concerning the availability of Jensen for acquisition on behalf of a larger potential acquiror and subsequently on behalf of Emerson, Emerson believes it has been met with rejection, interference, and bad faith by Jensen, its inside stockholders (Shaw and Blair), and its representatives. Initially, Jensen repeatedly informed Bankers Trust that it was not for sale. Then it advised Bankers Trust that due diligence materials were not yet available or were being revised. Then, after reneging on such statements by announcing a deal to merge with Recoton, as reflected in the Jensen Proxy Statement, Jensen rejected Emerson's attempts to meet with Jensen's representatives. Later, including by letter from Jensen's counsel dated April 19, 1996 and as reflected in the Jensen Proxy Statement, Jensen publicly questioned Emerson's ability to fund an acquisition of Jensen and to effectuate a transaction in the face of legal hurdles Emerson believes Jensen gratuitously assisted in implementing. However, Emerson's ability to finance the acquisition of Jensen at a higher price than the existing Recoton deal, as finally acknowledged by the Jensen Board and Lehman Brothers, and its attempts to deal with such unnecessary legal impediments did not lead to a favorable determination by Shaw, Blair, the Special Committee, or the Jensen Board of Directors. Emerson believes that no proposal on its part has or will ever favorably be viewed by Jensen or its majority stockholders, Shaw and Blair/Recoton, because of their own personal agendas so long as such parties continue to believe that some version of the Recoton/OEM Business transaction remains available. SHAW'S BENEFITS Shaw's deal with Recoton allows him to purchase the OEM Business at well under its net book value (according to Jensen's own financial statements) and, Emerson believes, its fair value, as evidenced by the July 24 Emerson Proposal. To protect this highly favorable deal for its majority stockholder, Shaw, Blair, and the Jensen Board have continually ignored better and higher proposals from Emerson, and made what Emerson believes are unsupportable excuses for their failure to consider such proposals. Shaw has repeatedly stonewalled Emerson whenever Emerson has attempted to negotiate with him. Further, the side agreements between the Shaw Group and Jensen after its merger with Recoton ensure continuing benefits to Shaw and Jensen's top officers. In fact, these side agreements even penalize the OEM Business if Shaw ceases to control it. For example, Shaw is required to pay a royalty of only 1% of net revenues with respect to OEM audio equipment utilizing the "Jensen" trademark. However, on a change of control of the OEM Business, the new owner would be required to pay increased royalty amounts for use of the Jensen trademarks. Now, while Emerson is offering $1.00 per share more to the public stockholders than the current Recoton proposal provides and is offering to acquire the OEM Business for $2.2 million more than Shaw, Jensen refuses to deal with Emerson based upon what Emerson believes to be bad faith excuses. THE PURPORTED INCREASES IN RECOTON'S OFFERS ARE SIMPLY A RESHUFFLING OF FUNDS In an effort to legitimize Jensen's rejection of the various Emerson proposals, Recoton and Shaw have "reworked" their numbers for the purpose of reflecting corresponding increases in the various Recoton proposals. The purported increases in Recoton's offers have actually been a function of (i) Shaw increasing the price he will pay for the OEM business, although still well below what Emerson believes to be its fair value, (ii) Shaw and Blair agreeing to take a lower price for their shares in a merger with Recoton, and (iii) with respect to all but the most recent proposal, decreasing the cash component of Recoton's stock plus cash offer. By way of example, Shaw himself basically funded the purported $1.4 million increase in the total $53.2 million consideration in the Second Two-Tier Recoton Proposal compared to the $51.8 million total consideration under the First Two-Tier Recoton Proposal. Because Shaw increased the purchase price for the OEM Business by $1.3 million and agreed (as did Blair) to take $200,000 less for his Jensen stock, the net cost to Recoton under the Second Two-Tier Recoton Proposal was basically the same as under the First Two-Tier Recoton Proposal. In fact, RECOTON'S NET CASH COST WENT DOWN FROM $13.7 TO $12.8 MILLION. This scenario is similarly true under Recoton's current proposal as Shaw has slightly increased the purchase price for the OEM Business, allowing Recoton to show an increase in its per share price for the public stockholders. See "Jensen/Recoton Merger, Analysis of Consideration Under Various Jensen/Recoton Merger Proposals". The bottom line is that Shaw, not Recoton, is really bidding against Emerson. Because Shaw is receiving such a highly favorable deal in his purchase of the OEM Business, he is willing to "kick-in" a little extra money in an effort to save the Shaw/Recoton deal. The Recoton transaction has tremendous hidden personal benefits for Shaw that you, the public stockholders, are paying. DISSENTERS' RIGHTS The Jensen/Recoton Merger may be prevented if 10% or more of the total shares of Jensen shares outstanding exercise their dissenters' rights as permitted by Section 262 of the Delaware General Corporation Law. Jensen stockholders exercising their dissenters' rights will be entitled to have their Jensen stock appraised by the Delaware Chancery Court and to receive payment in cash of the "fair value" of such stock, exclusive of any element of value arising from the expectation or accomplishment of the Jensen/Recoton Merger, together with a fair rate of interest, if any, as determined by such court. To exercise their dissenters' rights, holders of Jensen stock (i) must not vote in favor of the Jensen/Recoton Merger and (ii) must deliver to Jensen, prior to the vote on the Merger at the Special Meeting, a written demand for appraisal of such holders' Jensen stock. See "The Merger--Dissenters' Rights" discussion in Jensen Proxy Statement. Only by voting AGAINST the Jensen/Recoton Merger, including the sale of the OEM Business to Shaw, will the Jensen Board, Shaw, and Blair get the message that they must uphold their fiduciary responsibilities to the public stockholders of Jensen. A vote AGAINST the Jensen/Recoton Merger, including the sale of the OEM Business to Shaw, will let the Jensen Board know that it is now time to listen to all offers to acquire Jensen and not favor the interests of its majority stockholders. IMPORTANT EMERSON WILL WITHDRAW THE JULY 16 AND JULY 24 EMERSON PROPOSALS IF STOCKHOLDERS OF JENSEN APPROVE THE JENSEN/RECOTON MERGER, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW, AND THE NUMBER OF JENSEN SHARES EXERCISING DISSENTERS RIGHTS DO NOT EXCEED 10% OF THE TOTAL JENSEN SHARES OUTSTANDING AS OF THE RECORD DATE. REJECTION OF THE JENSEN/RECOTON MERGER, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW, WILL SEND AN IMPORTANT MESSAGE TO YOUR BOARD THAT YOU WANT THEM TO NEGOTIATE IN GOOD FAITH WITH EMERSON IN AN EFFORT TO MAXIMIZE THE VALUE OF YOUR SHARES. EVEN IF YOU HAVE ALREADY SENT A PROXY TO THE BOARD OF DIRECTORS OF JENSEN, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE. YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE JENSEN/RECOTON MERGER, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW, BY SIGNING, DATING, AND MAILING THE ENCLOSED BLUE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. NO POSTAGE IS NECESSARY IF YOUR PROXY IS MAILED IN THE UNITED STATES. PLEASE SIGN, DATE, AND MAIL THE BLUE PROXY TODAY. YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN. SEND A MESSAGE TO THE JENSEN BOARD The Jensen Board has scheduled a Special Meeting of Stockholders for August 28, 1996, and is trying to solicit votes to approve the Jensen/Recoton Merger and the sale of the OEM Business to Shaw. According to the Jensen Proxy Statement, the Jensen/Recoton Merger is in the best interest of Jensen's stockholders. But whose interests are the Jensen Board really advancing? Under the July 16 Emerson Proposal, Emerson would pay $12.00 per share in cash to all stockholders other than Shaw, Jensen's Chairman, CEO, President, and largest stockholder, who would receive $8.90 per share in cash, and Blair, Jensen's second largest stockholder, which would receive $10.00 per share in cash. Jensen has rejected the July 16 Emerson Proposal. Additionally, on July 24, 1996, Emerson offered to purchase the OEM Business for not only the $18.2 million Shaw is offering to pay, but with an additional payment to Jensen stockholders of $2.2 million ($1.00 per share if paid to Jensen's public stockholders). On the other hand, the Jensen Board has accepted the Third Two-Tier Recoton Proposal which will pay all Jensen stockholders $11.00 per share, except for Shaw and Blair, both of which will receive $8.90 per share. Emerson believes the reason Shaw is willing to accept the lower consideration for his stock is that Jensen is required to sell its OEM Business to the Shaw Group for substantially less than its net book (the discount of which equals approximately $4.00 per share held by Shaw) or, Emerson believes, its fair value. The highly favorable deal that Shaw has arranged for himself is not in the best interests of the other stockholders of Jensen and is preventing Jensen's stockholders from realizing the most from the sale of their shares. Jensen's second largest stockholder, Blair, has also taken questionable actions in an effort to ensure that a superior Emerson proposal will not be accepted. Blair, for no discernable reason, signed away its voting rights to Recoton on May 1, 1996, and agreed to allow Recoton to purchase its shares at that time for $9.00 per share, only to agree to accept a lesser amount, $8.90 per share, when Recoton again revised its offer on May 10, 1996. In addition, Blair has purportedly given up its right to regain the vote over such stock if a Recoton merger agreement is terminated (thereby allowing Recoton to potentially vote Blair's shares against any other merger transaction which could be more favorable to Jensen's public stockholders). Emerson and certain Jensen stockholders believe that the amended Stock Option and Voting Agreement between Blair and Recoton has terminated and that Blair is now free to vote its shares as it deems fit and sell them to a party other than Recoton. The Recoton Merger Agreement and the OEM Business sales agreement require separate affirmative votes of (i) a majority of the outstanding shares of Jensen common stock and (ii) a majority of the outstanding shares of Jensen common stock WHICH ARE VOTED AT THE SPECIAL MEETING other than shares held directly or indirectly by Shaw, although Jensen is requesting only a single vote to approve both the Jensen/Recoton Merger and the sale of the OEM Business to Shaw. Shaw and Blair/Recoton control approximately 63% of Jensen's outstanding shares, and Blair/Recoton controls approximately 41% of the approximately 63% of Jensen's outstanding shares not owned by Shaw. Furthermore, depending upon attendance at the Special Meeting, Blair/Recoton may control a larger percentage of the shares WHICH ARE VOTED at the Special Meeting, thus enabling Recoton to effectively control approval of the proposal put forward by Recoton and Shaw (although this is not disclosed in the Jensen Proxy Statement). For this reason, it is imperative that a high percentage of public stockholders vote or provide a proxy to vote on the Jensen/Recoton Merger. In rejecting Emerson's proposals, Jensen is seeking to abdicate it fiduciary duties and to hide behind Blair and Shaw not favoring Emerson's proposals. Emerson believes Jensen's Board should support the best acquisition proposal for Jensen's public stockholders. The Board appears to have forgotten that Jensen is not a privately-owned company. There are a number of interesting questions which have arisen from the actions of the Jensen Special Committee and Board, as well as from the actions of Shaw and Blair, in favoring the various Recoton/Shaw proposals over the Emerson proposals: 1. Why will Shaw and Blair accept $8.90 per share from Recoton and not from Emerson (or, in Blair's case, $10.00 per share from Emerson), when Emerson is willing to pay $1.00 per share more than Recoton to the public stockholders of Jensen? 2. Why has Shaw been willing to waive his claim for up to $4.8 million in "golden parachute" payments for Recoton, as set forth in the Amendment to Employment Agreement he has executed in Recoton's favor, but not for Emerson? 3. Why did Blair agree to grant Recoton a proxy on the voting of its shares, and later give up its right to regain its voting rights on a termination of the Jensen/Recoton Merger, for substantially less money than Emerson was offering at the time, and is now not availing itself of the opportunity immediately to accept Emerson's $10.00 per share offer when, Emerson believes, the amended Stock Option and Voting Agreement has terminated? 4. Why did Blair enter into its agreements with Recoton, which had also entered into agreements with Shaw, with the effect of continuously depriving Jensen's public stockholders of higher priced Emerson proposals? 5. The Jensen Proxy Statement advises that Blair offered to be a financial participant in Shaw's purchase of the OEM Business, but never states whether it is a participant or not. What is Blair's interest in the OEM deal? 6. How can Blair, acting as a fiduciary to its fund participants, justify its actions? 7. How can Jensen's financial advisor, Lehman Brothers, issue a fairness opinion on the sale of the OEM Business (which, in any event, is different than the one required in the OEM Business sales agreement), when Jensen has reported that the net book value of the OEM Business, as of May 31, 1996 is approximately $26.4 million and Emerson's asset based lender has stated that it is willing to advance approximately $23 million to Emerson to finance the purchase of the OEM Business? 8. How can the Special Committee and the Board justify what Emerson believes was a flawed auction process in which Emerson's proposals were never given fair consideration? 9. Why does the Special Committee (a supposedly impartial, non- interested group of directors established to evaluate Recoton's and Emerson's proposals) include a partner from the law firm which regularly advises Jensen? 10. Why did such law firm, one of whose members sits on the Special Committee and Board of Jensen and which is supposed to protect Jensen and its stockholders, agree to act as an escrow agent to protect Recoton's interest in the assignment of the valuable AR Trademarks? 11. How can Jensen justify effectively transferring the AR Trademarks for no real value on a termination of the Jensen/Recoton Merger? 12. Why has Jensen's top management continually erected road blocks to make it more difficult for Emerson to conclude its transaction? 13. Why is Recoton, by virtue of its control of Blair's shares, being allowed to largely dictate Jensen's future before it has purchased one share of stock? 14. Who is really insisting on the sale of the OEM Business to Shaw? Emerson believes the answer to the foregoing can be traced to one motive: PROTECT SHAW'S HIGHLY FAVORABLE DEAL EVEN AT THE EXPENSE OF JENSEN'S PUBLIC STOCKHOLDERS. Emerson believes that there is no reason for the Jensen Board to reject the July 16 Emerson Proposal in favor of the inferior Third Two-Tier Recoton Proposal. Since the Jensen Board is insisting on proceeding with a stockholder vote on August 28, 1996, Emerson believes that Jensen stockholders can best protect their interests by voting AGAINST the merger with Recoton, including the sale of the OEM Business to Shaw, and by exercising dissenters' rights. By voting AGAINST the Jensen/Recoton Merger, including the sale of the OEM Business to Shaw, and by seeking dissenters' rights, stockholders can send a strong message to Jensen's directors that they should negotiate with Emerson in good faith and enter into a merger agreement with Emerson without favoring the interests of Jensen's majority stockholder, Shaw, or permitting Blair's abdication of its fiduciary duties and voting rights in favor of Recoton to prevent Jensen's public stockholders from obtaining a move favorable transaction. BACKGROUND CONCERNING EMERSON'S PROPOSAL EARLY APPROACHES Emerson has long had an interest in acquiring Jensen. Beginning in the Spring of 1995, Bankers Trust, later to become Emerson's financial advisor, on behalf of another named client, contacted Shaw, Jensen's Chairman, CEO, President, and largest stockholder, regarding whether Jensen was interested in being acquired. Bankers Trust was informed that Jensen was not for sale. Bankers Trust, on behalf of such other client, continued to contact Shaw, and later, after its retention by Jensen as its financial advisor, Lehman Brothers. Both Shaw and Scott Mohr of Lehman Brothers, on a number of occasions throughout the Summer and Fall of 1995, informed Bankers Trust either that Jensen was not for sale or that diligence materials were not yet available or were being revised. These conversations continued through at least the Fall of 1995. ORIGINAL JANUARY 3 RECOTON AGREEMENT On January 3, 1996, Jensen and Recoton entered into their original merger agreement. That agreement contemplated a merger consideration of $8.90 per share, payable 60% in cash and 40% in shares of Recoton's common stock. In connection with and as a precondition of this agreement, Shaw agreed with Jensen to purchase the OEM Business for $15 million, with the right to terminate this agreement if the net book value was less than $27.6 million, the net book value of the OEM Business as of November 30, 1995. Shaw provided very few representations to Jensen in this agreement, while requiring extensive representations from Jensen (of which he is CEO), with an ability on his part to terminate the agreement with no penalty to him, but with full reimbursement of his expenses, even if for HIS not being satisfied with his financing for the acquisition. In fact, Shaw did not even represent that he had the financing to consummate the purchase of the OEM Business. This and his right to terminate such agreement (and be reimbursed for his expenses) if he was unsatisfied with his financing are significant contingencies not previously disclosed by Jensen. The sales agreement for the OEM Business also contemplated certain side agreements relating to, among other things, royalties on trademarks, management sharing and office sharing arrangements, and other matters. These agreements were not completed at the time the January 3 agreements were executed. The original Jensen/Recoton Merger contemplated a termination fee of $6 million if Jensen accepted a competing offer, but no termination fee if Lehman Brothers could not issue any of the fairness opinions it was required to provide under the Jensen/Recoton Merger agreement and the OEM Business sales agreement. By way of a separate agreement, Recoton was given a one-year license on and a "lock-up" option to acquire the valuable "AR" and "Acoustic Research" trademarks (the "AR Trademarks") of Jensen for $6 million, the exact same amount as its termination fee. As indicated in the Jensen Proxy Statement, these amounts were designed to offset each other. Thus, if the Jensen/Recoton Merger was terminated, Recoton would obtain these valuable trademarks from Jensen for no real consideration (although Jensen and Recoton had voluntarily placed a $6 million value on these trademarks). Consequently, Emerson urged Jensen and Lehman Brothers to consider this to protect the value of Jensen's assets. In subsequent versions of the Recoton Merger Agreement, Jensen has removed its ability not to pay a termination fee if Lehman Brothers could not issue the second fairness opinions. The Jensen/Recoton Merger contemplated two sets of fairness opinions from Lehman Brothers that (i) the merger consideration in the Jensen/Recoton Merger is fair from a financial point of view to Jensen's stockholders, AND, separately, (ii) the proceeds received by Jensen from the sale of the OEM Business to Shaw are fair from a financial point of view to Jensen, with such opinions to be given at the time of signing the agreements and updated at the time of the mailing of proxy materials. Emerson expressed at this time, and has continued to express, its belief that the sale of the OEM Business to a Jensen insider at well below its net book value, and, Emerson believes, its fair value, was and is not fair to Jensen or its stockholders. If Lehman Brothers was unable to issue its second fairness opinion when Jensen mailed its proxy materials to its stockholders, no termination fee would have been payable to Recoton, although Jensen could still have exercised its option, under certain circumstances, to compel Recoton to purchase the AR Trademarks for $6 million. The fairness opinion Lehman Brothers provided in conjunction with the Jensen Proxy Statement states that the consideration to be received by Jensen in the proposed sale of the OEM Business is fair SINCE RECOTON REQUIRES THE PRIOR SALE OF THE OEM BUSINESS AS A CONDITION OF THE CONSUMMATION OF THE JENSEN/RECOTON MERGER, NOT BECAUSE THE CONSIDERATION BEING PAID BY SHAW IS EQUAL TO THE FAIR VALUE OF THE OEM BUSINESS. The Jensen Proxy Statement also indicates that the OEM Business was not offered for sale to anyone except Jensen insiders and that Lehman Brothers included in its valuation of the OEM Business certain releases and waivers Shaw gave to Recoton, which are not attributable to the seller of the OEM Business, Jensen, or its stockholders. ATTEMPTS TO CONTACT JENSEN After discovering that Jensen and Recoton had entered into a merger agreement with Recoton on January 3, 1996, John P. Walker, Emerson's CFO, immediately called Scott Mohr of Lehman Brothers to express Emerson's interest in acquiring Jensen. Stephen Goodman of Bankers Trust met with Shaw at the Consumer Electronics Show in Las Vegas and expressed his surprise at the announcement of the proposed Jensen/Recoton Merger and the failure to contact Bankers Trust or the client despite their continuing expressions of interest. Mr. Shaw justified Jensen's actions by indicating that the Recoton offer, which had come out of a number of informal meetings, was simply too good to turn down. In later conversations, both Messrs. Shaw and Mohr apparently felt constrained to attempt to further justify Jensen's actions in adequately "shopping" Jensen for sale. If Lehman Brothers really shopped Jensen, you as stockholders have a right to request that the Jensen Board of Directors reveal the parties to whom the company was shopped and the reasons for excluding several other companies that had an interest in bidding for Jensen during the "auction" process. Emerson does not believe Jensen was adequately offered to other bidders, particularly since Jensen never contacted Bankers Trust, in spite of Bankers Trust informing Jensen over time of at least two potential bidders for Jensen, which included one very substantial named company. Emerson formally confirmed its interest in acquiring Jensen by letter dated January 11, 1996. Jensen did not respond to this letter. A number of telephone calls were made and correspondence sent by Emerson and its representatives, but Jensen continued to avoid a meeting with Emerson. On January 31, 1996, Bankers Trust informed Jensen and Lehman Brothers by letter that Emerson was prepared immediately to proceed toward making a definitive all-cash proposal to acquire Jensen. In its letter to Lehman Brothers, Bankers Trust stated: Emerson believes that it would be in a position to acquire Jensen for a cash consideration materially in excess of the value of the cash and stock being offered in the transaction with Recoton. We believe that a transaction with Emerson would be in the best interests of Jensen and its stockholders. A combination of the two companies would provide significant benefits in terms of their approach to the markets which they serve, sourcing and manufacturing utilization, product development and administration. Throughout January and February 1996, as also reflected in the Jensen Proxy Statement, Jensen refused to meet with representatives of Emerson, and required as a precondition for discussions that Emerson provide Jensen with a commitment letter with respect to the financing, a very expensive precondition to Emerson and an impossible request to satisfy without due diligence, which Jensen and Shaw refused to permit. On February 5, 1996, the President of Emerson, Eugene Davis, sent a letter to the Jensen Board, indicating that Emerson was prepared to offer between $9.75 and $10.50 per share for Jensen common stock. Finally, Emerson representatives were able to coerce a meeting with Jensen representatives in early March 1996. On March 4, 1996, Emerson and a potential partner in a Jensen acquisition executed the Confidentiality Agreement, and Emerson was finally permitted to begin its due diligence activities. Those diligence activities were severely restricted by Jensen. Emerson was not permitted to speak to any of Jensen's personnel except Jensen CFO Marc T. Tanenberg, an interested party in the Recoton deal, and Jensen Controller James Sula, was provided limited access to documents, was prohibited, at Shaw's insistance, from reviewing Jensen's OEM Business, which was (and, pursuant to the Recoton/Shaw offer, still is) to be sold to the Shaw Group in connection with the Jensen/Recoton Merger, was prevented for a substantial period of time from reviewing Jensen's European operations, and was secluded in an isolated conference room in Jensen's offices in conducting its review. Emerson conducted a substantial amount of due diligence review and analysis in a very compressed period of time, even with the severe restrictions imposed by Jensen. On March 5, 1996, Eugene I. Davis, President of Emerson, a representative of Bankers Trust, and John P. Walker, Emerson's CFO, as well as a representative of Emerson's potential partner, met with Shaw, Marc T. Tanenberg, Vice President of Finance and CFO of Jensen, Scott Mohr of Lehman Brothers, financial advisor to Jensen, and Donald Jenkins, Esq. and John R. Obiala, Esq., of the law firm of Vedder, Price, Kaufman & Kammholz, counsel for Jensen (Mr. Jenkins is also a board member of Jensen). The purpose of the meeting was to reiterate Emerson's desire to acquire Jensen and to set forth a schedule (i) for Emerson to complete preliminary due diligence concerning Jensen's operations and (ii) for Emerson to provide Jensen with a definitive proposal to acquire Jensen. At this meeting, Shaw repeatedly insisted that he was only buying the OEM Business because Recoton did not want it, and that it would be a "burden" for him to buy it. However, Shaw insisted that Emerson could not perform due diligence on the OEM Business. Based on the limited information provided to it concerning the OEM Business' value, Emerson initially sought to offer Jensen a similar transaction to Recoton's, including the sale of the OEM Business to Shaw. Emerson representatives met with the Jensen Board on March 15, 1996 and discussed the synergies between the companies. Emerson indicated that it would attempt to make a formal proposal by April 9, 1996, although the Jensen Board continued to insist that such proposal had to be made by April 1, 1996, together with commitment letters, as, they claimed, Jensen's proxy materials on the Jensen/Recoton Merger were almost finalized and they would continue to proceed with that transaction. The Jensen Proxy Statement was not, in fact, ready for distribution at that time or at any time prior to July 23, 1996. Further, the Jensen Board insisted that Emerson conduct all negotiations with Shaw, whom Emerson believes was only interested in protecting his deal with Recoton. The Jensen Board refused to become further involved in those negotiations. Moreover, Jensen continued to refuse to allow Emerson to conduct due diligence on the OEM Business and insisted that Emerson produce sufficient commitment letters prior to permitting due diligence on Jensen's European operations. On April 4, 1996, Emerson representatives met with Shaw and his representatives to discuss the sale of the OEM Business to Shaw as part of an Emerson transaction and the various agreements relating thereto. It became obvious to Emerson that Shaw had no interest in dealing with Emerson, and from this meeting on, he consistently insisted on the "golden parachute" payment of approximately $4.8 million he felt he was owed under his employment agreement, which he had already agreed to waive for Recoton. Shaw is also being hired by Recoton to operate the non-OEM Business aspects of Jensen's business that Recoton is to purchase and has now negotiated lucrative side agreements to the OEM Business sales agreement for the Shaw Group's benefit. In addition, Shaw is taking his closest associates from Jensen, most notably his CFO and Controller, with him to operate the OEM Business, with Recoton reimbursing Shaw for 75% of their cost. Emerson attempted to negotiate financially equivalent arrangements with Shaw relating to a purchase by Shaw of the OEM Business in the context of an Emerson merger, which Shaw apparently considered not as favorable to himself as the Recoton transaction. INITIAL EMERSON PROPOSAL After performing both limited legal and business due diligence of Jensen's domestic and international operations (other than on the OEM Business) on an expedited basis during March and early April, on April 16, 1996, Emerson, in an attempt to negotiate amicably with Jensen, expressed appreciation for Jensen's cooperation in its due diligence review, in spite of Jensen's restrictions of such review, and made the Initial Emerson Proposal to acquire Jensen in a negotiated merger transaction pursuant to which Jensen stockholders would have received $9.90 per share in cash, representing a substantial premium to the $8.90 consideration per share, payable in cash and Recoton stock, then being offered pursuant to the Recoton Merger Agreement. Contrary to Jensen's Proxy Statement, Emerson's $9.90 proposal was made approximately one month PRIOR to Recoton's $10.00 proposal to Jensen's public stockholders. The Initial Emerson Proposal, in an effort to meet Jensen's stated desires, contemplated a signing of definitive merger documents by April 27, 1996 (to which Jensen responded that such date would be an absolute deadline). Attached to the letter was evidence of the financial viability of its proposal supplied by Emerson and its lenders. The letter concluded by stating: Within the short time frame provided to it, Emerson has presented Jensen a higher and better proposal for its stockholders than the contemplated transactions under the Recoton [Merger] Agreement and related documents. Emerson has now supplied Jensen with adequate proof of the financial viability of its proposal, as well as a definitive proposal with respect to the structure of the proposed transactions. Emerson, with due and continuing respect to the fiduciary duties of Jensen's Board to all of its stockholders, looks forward to immediately proceeding with all necessary steps to expeditiously consummate the transactions. Very truly yours, /s/ Eugene I. Davis President In response to Jensen's stated desire to proceed expeditiously on the proposed transaction with Emerson, on April 18, 1996, Emerson forwarded drafts of (i) an Agreement and Plan of Merger (the "Emerson Merger Agreement") among Emerson, an indirect wholly-owned subsidiary of Emerson, and Jensen, substantially similar to the Recoton Merger Agreement, and (ii) a Voting Agreement whereby Shaw and Blair, Jensen's two largest stockholders, would agree to vote their shares in favor of the merger with Emerson. On April 19, 1996, Mr. Obiala, counsel to Jensen, delivered a letter to Eugene Davis setting forth certain comments to the Initial Emerson Proposal. In the letter, Mr. Obiala stated on behalf of the Jensen Board that: As we have previously informed you on a number of occasions, Jensen's Board is and remains committed to obtaining the highest price reasonably available to Jensen stockholders. HOWEVER, it is very important to the Board that NOTHING be done to jeopardize or significantly delay the Recoton transaction unless and until Emerson and Jensen are prepared to enter into a definitive agreement which has no significant contingencies or conditions and Emerson has obtained committed financing in amounts reasonably sufficient to complete the transaction, including the payment of all related fees and expenses and payments to employees and third parties (emphasis added). Despite Emerson providing (i) letters from Bankers Trust Company that it was highly confident of its ability to arrange loans for Emerson to finance the acquisition of Jensen (the "Highly Confident Letters") and (ii) commitment letters from Congress Financial Corporation which, in the aggregate, provided funding for the transaction, including all fees and expenses (and none of which were related to or contingent on the operations or financial profitability of Emerson), Jensen expressed skepticism concerning Emerson's ability to finance the proposed merger. Mr. Obiala stated: The Board and its financial advisor are very concerned about the fact that Emerson's proposed financing is not, at this time, committed and in place, that the financing proposals attached to your Proposal contain a number of unacceptable contingencies and that the financing proposals and contemplated equity do not appear to be adequate to complete the transaction and pay all related fees, expenses and payments to employees and third parties. Jensen will not be in a position to sign definitive agreements with Emerson until financing is fully committed in sufficient amounts to close the acquisition. On April 23, 1996, three members of the Special Committee (Donald Jenkins, Robert Jenkins, and Norman J. McMillan), without David D. Chandler ("Chandler"), who was at the time the Special Committee Chairman, met with Emerson representatives in Jensen's offices at Emerson's request. The members of the Special Committee left after thirty minutes, and no progress was made on preparing the necessary documents by Jensen's April 27, 1996, deadline. The Special Committee did inform Emerson's representatives that Emerson could meet with Recoton to discuss Recoton's termination arrangements, but only under tightly controlled and Jensen supervised conditions. The Special Committee subsequently informed Emerson that Recoton would not meet with Emerson for any such discussion. Emerson representatives attempted to negotiate with Shaw's and Jensen's attorneys on April 24, but were put off. In fact, Emerson representatives remained in Chicago through April 26 in the hope of negotiating and reaching an agreement with Jensen and Shaw, but with no success. Further, Emerson attempted to contact Chandler during this period in the hopes of negotiating with Blair a satisfactory resolution with Shaw. Chandler refused to accept Emerson's calls or to return them. On April 23, 1996, Mr. Eugene Davis also delivered a letter to the Jensen Board in which he expressed Emerson's surprise and displeasure with the tone and substance of Mr. Obiala's clearly hostile April 19, 1996 letter: We are troubled that Jensen's Board and its financial adviser are "very concerned" with regard to Emerson's proposed acquisition financing. Jensen's Board has received executed and extremely expensive commitment letters from Congress [Financial Corp.] and "highly confident" letters from Bankers Trust Company ("Bankers Trust") which, at least with respect to the Bankers Trust letter, Mr. Mohr has advised our Mr. Goodman, is fully understandable and acceptable. Mr. Davis also stated Emerson's intention to purchase the entirety of Jensen, including the OEM Business, as it appeared that the sale of the OEM Business to Shaw for approximately $15 million, as contemplated under the original Recoton Merger Agreement, was not in the best interests of Jensen and its stockholders inasmuch as the net book value of the OEM Business was approximately $27.6 million. Finally, Emerson expressed its intention to continue to negotiate with Shaw concerning his continuing employment with the post-merger Emerson on better terms than under the Recoton deal to obviate the up to $4.8 million "golden parachute" payment contemplated by his employment agreement following a merger. Emerson has never received a proposal from Shaw which did not include a demand for his "golden parachute" payment. Emerson believes Shaw has never intended to deal with Emerson in good faith and has acted in disregard to the interests of Jensen's public stockholders. On April 24, 1996, Mr. Obiala, on behalf of the newly-formed Special Committee of the Jensen Board (which at the time consisted of all Jensen directors other than Shaw), delivered a letter to Emerson's counsel, setting forth the purported concerns of the Special Committee to the Emerson offer. Included among the concerns listed were Emerson's financing, payments to Shaw under his employment agreement (a matter which would not arise, if at all, until AFTER a merger with Emerson was consummated and Jensen's stockholders had received their merger consideration), timing of due diligence and the closing, the potential termination fee under the Recoton Merger Agreement (which would permit Recoton to obtain the valuable AR Trademarks for no real value on the termination of the Recoton Merger Agreement), and the environmental liability materiality standard. On April 25, 1996, after Emerson's repeated requests and three days of waiting in Chicago representatives of Emerson and only David Chandler and Donald Jenkins of the Special Committee met to negotiate and discuss Emerson's financing. At that meeting, Congress Financial Corporation ("Congress"), which is widely known as a conservative asset-based lender, told Jensen that it was committed to advance Emerson an additional approximately $23 million for the purchase and operation of the OEM Business, and discussed with the meeting participants its analysis of the value of the OEM Business. This amount, which represents only a reduced percentage of the true value of the OEM Business, is approximately 50% of the amount Jensen would receive if the OEM Business was sold to Shaw under the original OEM Business sales agreement or any subsequent amendment of such agreement. Furthermore, Lehman Brother's concern, as expressed in the Jensen Proxy Statement, that the $23 million lending figure provided by Congress did not take into account the approximately $8 million of unsecured liabilities of the OEM business which would need to be funded in the ordinary course is misplaced. The amount Congress indicated it would advance was based on the orderly liquidation value of the OEM Business and took into account the other obligations of the OEM Business. Emerson attempted to negotiate with the Special Committee regarding Shaw's intransigence and again attempted to involve the Board in discussions with its Chairman. Yet again, the Special Committee refused. Emerson indicated that its offer at $9.90 per share, on a similar basis to Recoton's offer, was premised on Shaw accepting a similar economic package from Emerson as he agreed upon with Recoton and that if Shaw continued to treat Emerson in an unfair fashion, some adjustment to Emerson's offer price would be necessary. Emerson indicated such adjustment would be minor and also suggested that it would share the burden of satisfying Shaw's demands with Blair. Emerson's requests were ignored. The Special Committee terminated the April 25 meeting early and refused to meet again with Emerson representatives before the April 27, 1996 deadline which they had set. On April 27, 1997, Emerson CFO John P. Walker forwarded an executed copy of Congress Financial Corporation's commitment letter to the Special Committee of Jensen. On April 29, 1996, Mr. Obiala sent the following letter to Emerson's counsel: This will confirm our telephone conversation last night in which Scott Mohr and I advised you and Rob Levin [of Bankers Trust] that the Special Committee of the Board of Directors of International Jensen Incorporated will meet again on Tuesday, May 1, 1996 to consider the respective proposals of Emerson Radio Corp. and Recoton Corporation to acquire International Jensen Incorporated. If Emerson has anything to add to its proposal or any further information to provide to the Committee, please contact me, Scott Mohr or one of the members of the Committee no later than 1:00 p.m. Tuesday afternoon. On April 30, 1996, Mr. Eugene Davis sent a clarifying letter to the Special Committee of the Jensen Board in which Emerson (i) reiterated that it was prepared to pay all Jensen stockholders $9.90 per share in cash, (ii) accepted a $5 million materiality standard for environmental liabilities, and (iii) agreed to deposit with Jensen a $4 million fee if Emerson failed to close for reasons attributable to Emerson so long as Emerson would receive a $2 million breakup fee and reimbursement of its expenses up to $2 million if Jensen failed to close because of a higher offer or reasons attributable to Jensen. Emerson also described its proposal to Shaw. The proposal to Shaw contemplated that, in exchange for Shaw waiving his "golden parachute" rights under his employment agreement, he would receive a three year, $200,000 per year consulting agreement with Emerson, a cash payment at closing of $600,000, an additional payment of $600,000 approximately one year after closing, and an option to purchase 50,000 shares of Emerson stock. These payments would aggregate more than the $450,000 per year for two years Shaw is to receive from Recoton, where Recoton is paying, under the management services agreement, 75% of such amounts. Emerson has attempted to negotiate with Shaw on a number of occasions, with no success. Initially, due to its inability to conduct a due diligence review of the OEM Business, Emerson offered Jensen a similar transaction as Recoton's which contemplated the sale of the OEM Business to Shaw. However, it became obvious to Emerson that Shaw had no interest in negotiating with Emerson in good faith, based in large part on his initial unwillingness to discuss an OEM Business purchase in connection with an Emerson merger and his unwillingness to negotiate his "golden parachute" arrangements, and was merely seeking to protect his highly favorable deal. While Shaw was agreeing to waive his "golden parachute" payments in a Recoton transaction, he refused in an April 4, 1996 meeting with Emerson representatives to do so with Emerson even though Emerson's package would give him over $3.3 million more than Recoton. Emerson believes the reason was obvious. Emerson was not willing to give Shaw the same highly favorable arrangements in the side agreements to the OEM Business sale agreement. For example, Emerson expected market-based royalties on the use of Jensen's trademarks (including the "Jensen" trademark) by the OEM Business, as is normal industry practice in these situations (or compared to a requirements contract from a single supplier with escalating royalty percentage payments in an industry in which prices have been shown to deteriorate over time), and was not seeking to protect Shaw from a change in control of the OEM Business. Thus, Shaw was insisting on a payout of what he claimed was a $4.8 million, lump sum, "golden parachute" payment. In negotiations with Emerson, Shaw would consistently take Emerson's proposals, describe what a "burden" the purchase of the OEM Business was for him, and provide no counteroffers, only insisting that he was entitled to his "golden parachute." FIRST TWO-TIER RECOTON PROPOSAL After ignoring its own deadline, on May 1, 1996, without prior notice to Emerson, Jensen announced in a press release that it had accepted an amended proposal from Recoton in which Recoton raised the price it proposed to pay in the Jensen/Recoton Merger to $9.15 per share to Jensen stockholders (still substantially less than the $9.90 all cash then being offered by Emerson) other than Shaw and Blair, each of which would receive $9.00 per share. The consideration under the amended Recoton proposal would be payable approximately 56% in cash and 44% in stock, versus Emerson's higher proposal consideration ($9.90 per share) which would be payable 100% in cash. In addition, under the terms approved by the Jensen Board on May 1, 1996, Jensen was required to sell the OEM Business prior to the closing to the Shaw Group for approximately $15 million, or about $12 million (or $5.40 per share held by Shaw) under its net book value of $27.6 million. Emerson only learned of Jensen's acceptance of the First Two-Tier Recoton Proposal (containing a substantially lower price per share then the Initial Emerson Proposal [contrary to statements in the Jensen Proxy Statement]) by reading news reports of the Jensen press release. In connection with the First Two-Tier Recoton Proposal, Blair (i) granted an option to Recoton to purchase its shares for $9.00 per share plus any net proceeds which Recoton might receive upon sale of such shares to the extent such net proceeds exceed $10.00 per share and (ii) agreed to vote its shares in favor of the Jensen/Recoton Merger and to provide a proxy to Recoton to vote its shares under certain circumstances. Thus, Recoton was assured of receiving a windfall if its offer was topped. In addition, Shaw agreed in the Spread Agreement that if a third party other than Recoton acquired Jensen, he would pay Recoton the spread between the amount per share paid by the third party and $9.00 per share, up to a maximum of $1.00 per share. MAY 1 EMERSON PROPOSAL Although the First Two-Tier Recoton Proposal was still clearly inferior to the Initial Emerson Proposal, on May 1, 1996, Emerson delivered to Jensen the May 1 Emerson Proposal to acquire Jensen through a merger in which all of Jensen's stockholders would receive at least $9.90 per share in cash, except Shaw and Blair, both of which would receive $9.00 per share in cash (the same consideration they had agreed to accept under the First Two-Tier Recoton Proposal). In addition, Emerson agreed, among other things, to (i) remove all contingencies except for normal and customary conditions to closing, (ii) honor Shaw's "golden parachute" payment of approximately $4.8 million set forth in his employment agreement, (iii) distribute to all of Jensen's stockholders, other than Shaw and Blair, 50% of any recovery of the $4.8 million payable to Shaw as a "golden parachute" payment should a court decide he had breached his fiduciary duties in connection with (x) his attempted bargain purchase of the OEM Business on terms unfair to Jensen's public stockholders but highly favorably to himself and (y) his activities in rebuffing Emerson's attempts to acquire Jensen, and (iv) retain and finance the OEM Business as part of its purchase. Emerson also stated it would pursue the value of the AR Trademarks (set at $6 million by Jensen and Recoton) which might be transferred to Recoton, and would cause 50% of such recovery, net of costs and expenses, to be distributed to Jensen's stockholders other than Shaw and Blair. Mr. Eugene Davis, Emerson's President, delivered the following letter to the Special Committee of Jensen's Board together with the May 1 Emerson Proposal: May 1, 1996 International Jensen Incorporated 25 Tri-State International Office Center Suite 400 Lincolnshire, Illinois 60049 Attn: Special Committee of the Board of Directors Gentlemen: We were shocked to learn this morning that the Special Committee of the Board of Directors (the "Jensen Board") of International Jensen Incorporated ("Jensen") has approved an amended merger agreement with Recoton Corporation ("Recoton") and a continued pursuit of the OEM business to the Shaw Group, a highly suspect transaction which has not been fully or adequately disclosed to Jensen's stockholders. Having reviewed the press release which Jensen issued today, we remain firmly convinced that the offer of Emerson Radio Corp. ("Emerson") was and remains in the best interests of Jensen's stockholders. We vehemently disagree with the apparent determination of the Jensen Board with respect to Emerson's proposed financing to consummate the merger. The letter continued: Emerson fails to understand how the Jensen Board, in furtherance of its fiduciary obligations to the Jensen stockholders, determined to proceed with the Recoton merger in light of Emerson's offer which is clearly in the best interests of Jensen's stockholders. As Emerson previously has demonstrated, it will vigorously pursue all commercial and legal options available to it in connection with the acquisition of Jensen and will succeed in those efforts. Very truly yours, /s/ Eugene I. Davis President MAY 6 EMERSON PROPOSAL On May 6, 1996, Emerson, through its investment banker, sent a revised simplified proposal (the "May 6 Emerson Proposal") to Lehman Brothers and the Special Committee stating that earlier proposals remained open and additionally proposing the following proposal for consideration by Jensen: 1) Emerson will acquire all of the outstanding shares of [Jensen] paying $9.90 per share in cash, including the shares owned by Mr. Shaw and the Blair Fund; 2) Emerson will honor, in the appropriate manner, all of Jensen's valid and legal obligations, including without limitation, Mr. Shaw's employment agreement and the termination fee provisions of the Recoton merger agreement; 3) Emerson will provide a $5 million letter of credit to secure any termination fee; and 4) Emerson will remove all contingencies in its offer except for usual and customary closing conditions. On May 6, 1996, Special Committee Counsel requested that Emerson provide a copy of its proposed merger agreement to the Special Committee. On May 7, 1996, Emerson sent the Special Committee's counsel the proposed Emerson Merger Agreement. The Emerson Merger Agreement contemplated that Blair would enter into a voting agreement with Emerson. While Blair had previously signed a voting agreement with Recoton, that voting agreement provided that it would terminate upon termination of the Jensen/Recoton Merger, thereby permitting Blair to enter into a voting agreement with Emerson. The amended Stock Option and Voting Agreement Blair entered into with Recoton in connection with the Second Two-Tier Recoton Proposal removed this customary "fiduciary out." SECOND TWO-TIER RECOTON PROPOSAL On May 10, 1996, Jensen announced in a press release that it had accepted a further amended proposal from Recoton in which Recoton raised the price it proposed to pay in the Jensen/Recoton Merger to $10.00 per share to Jensen stockholders other than Shaw and Blair, each of which would receive $8.90 per share (or $.10 per share less than they would have received in Recoton's May 1, 1996 proposal). Under the terms of the Second Two-Tier Recoton Proposal approved by the Jensen Board on May 10, 1996, Jensen was still required to sell the OEM Business prior to the closing to the Shaw Group. The Shaw Group agreed to increase the purchase price for the OEM Business by approximately $1.3 million. Emerson believes the Second Two-Tier Recoton Proposal was made in response to the filing of a lawsuit by a Jensen stockholder in the Delaware Chancery Court on May 9, 1996, challenging the Jensen/Recoton Merger, the sale of the OEM Business to Shaw, and other matters on the basis of breaches of fiduciary duties and other legal theories. The Second Two Tier Recoton Proposal appeared to be an attempt to correct certain of the features of these transactions questioned in such lawsuit. For example, the termination arrangements with Recoton were modified to avoid the direct linkage between the payment of the termination fees and the purchase price of the AR Trademarks and to amend the option price to $3.5 million, which Jensen stated was "an amount believed by [Jensen's] Special Committee and [Jensen's] Board of Directors to be more than fair value for the trademarks." In other words, the previous $6 million voluntarily agreed to by Jensen and Recoton was apparently an arbitrary amount, according to Jensen, as opposed to the fair value of such trademarks. Further, Emerson believes in an attempt to silence it, Jensen sued Emerson and its President in Federal District Court in Chicago alleging breaches of the Confidentiality Agreement and violations of the federal proxy rules. On May 13, 1996, this Court issued a temporary restraining order ("TRO") based solely on Jensen's filings with the Court. The TRO subsequently has expired by its own terms. See "Certain Litigation Concerning the Jensen/Recoton Merger." In connection with the Second Two-Tier Recoton Proposal of May 10, 1996, Blair amended the Stock Option and Voting Agreement it had previously entered into to provide (i) an option to Recoton to purchase Blair's shares for a reduced price of $8.90 per share plus half of any net proceeds which Recoton receives upon sale of such shares to the extent such net proceeds are between $8.90 and $10.90 per share plus 100% of the net proceeds which Recoton may receive over $10.90 per share upon such sale and (ii) an agreement to vote its shares in favor of the Second Two-Tier Recoton Proposal and to provide a proxy to Recoton to vote its shares under certain circumstances. The proxy portion of such agreement was amended to permit Recoton to vote Blair's shares until July 15, 1996, unless unilaterally extended by Recoton to December 31, 1996, even if the Recoton Merger Agreement was terminated. Emerson believes this amended Stock Option and Voting Agreement, except as to the option provision, terminated no later than July 15, 1996, as this agreement relates to the Third Amended and Restated Recoton Merger Agreement, which has been superceded, by the terms of the Fourth Amended and Restated Recoton Merger Agreement relating to this Third Two-Tier Recoton Proposal. In addition, Shaw amended the Spread Agreement with Recoton to provide that if a third party other than Recoton acquires Jensen, he will pay to Recoton half of the spread between (a) the net proceeds per share received by Shaw, but not to exceed $10.90 per share and (b) $8.90 per share, subject to certain obligations of Recoton to reimburse possible tax liabilities. MAY 13 EMERSON PROPOSALS In response to the new "arrangement" between Jensen and Recoton, on May 13, 1996, Emerson delivered a letter and accompanying press release to Jensen setting forth alternative definitive merger proposals for the acquisition of Jensen. Under the first alternative, Emerson would pay $10.25 per share in cash for each outstanding share of Jensen common stock including those owned by Shaw and Blair. Under the second alternative, Emerson would pay $10.75 per share in cash to all stockholders (including Blair) other than Shaw, who would receive either $8.90 per share in cash or $10.75 per share in cash if he purchases the OEM Business for its net book value of $27.6 million. Emerson also indicated its proposals were subject to further negotiations with Jensen and that a voting agreement with Blair was not required, but still desirable. Subsequently, the Special Committee's counsel and Lehman Brothers sent letters to Emerson's counsel and its financial advisor regarding certain aspects of Emerson's proposals. On May 19, 1996, Banker's Trust requested further clarification from the Special Committee with respect to certain of the Special Committee's issues. On May 21, 1996, Lehman Brothers sent a letter to Bankers Trust requesting: (i) removal of all contingencies from Congress' commitment letter; (ii) a commitment letter for $30 million from Bankers Trust; (iii) evidence as to Emerson's equity contribution and the demand that Emerson fund its equity contribution into a cash account at Bankers Trust and provide assurances that such amount will remain available at closing; and (iv) an opinion from Emerson's outside counsel that no consent to an acquisition by the holders of Emerson's convertible debentures was required. On the contrary, Shaw's agreement for the purchase of the OEM Business requires no commitment letters or significant representations and provides Shaw with the right to "walk-away" at no cost to him, but with reimbursement of his expenses. PURPORTED AUCTION On May 20, 1996, Emerson brought a counterclaim against Jensen and a third party complaint against Shaw on the grounds of fraudulent inducement of the Confidentiality Agreement and bad faith dealings (on July 2, 1996, Emerson amended its third party complaint to include Recoton and Blair for participating in a conspiracy regarding these claims). Subsequent to bringing these claims, on May 23, 1996, the Federal District Court Judge conducted an informal, in-chambers conference during which, among other things, he expressed his desire that the auction process be conducted in a fair manner. At this conference, the Judge indicated, over Jensen's objections, that he would not extend the TRO and noted that he believed both sides would act in an appropriate manner. In spite of this, Jensen unsuccessfully attempted to have the Court cite Emerson and its President for civil contempt in July for allegedly violating the TRO, even though the TRO had lapsed approximately one and one-half months earlier. Emerson believes that as a result of this conference, Jensen for the first time began communicating with Emerson on the terms of its proposal and proposed merger agreement (from April 25, 1996, to this time, Jensen had largely avoided communicating with Emerson). However, Emerson now believes this auction and negotiation process was designed to appease the Court in Chicago and to better posture Jensen for its litigation in Delaware. For example, early in this process, during the one face-to-face negotiating session Emerson had with the Special Committee on May 28, 1996, the Special Committee insisted that a court reporter be present during the meeting. It was only after Emerson threatened to notify the federal judge in Chicago that the Special Committee agreed to meet with Emerson without a court reporter being present. In addition, Donald Jenkins left the May 28, 1996 meeting warning Emerson that ONLY AN OFFER ABOVE $11.00 PER SHARE for Jensen had any chance of success - even though Recoton's offer was just $10.00 per share to the public stockholders of Jensen at such time and $8.90 to Shaw and Blair while Emerson's outstanding offers were at $10.25 and $10.75 per share to all stockholders, depending on the price Shaw was willing to pay for the OEM Business. Emerson therefore believes the Special Committee would have known as early as May 28 that Recoton/Shaw would pay $11.00 per share to Jensen's public stockholders, but failed to inform Emerson or Jensen's public stockholders of this. Jensen's Special Committee, repeatedly delayed making a determination while Emerson's proposal was clearly superior, and afforded Recoton/Shaw numerous opportunities to improve their offers by inexplicably ignoring their own deadlines. Emerson also repeatedly obtained revisions to its commitment letters from its lenders, typically on minor issues, and attempted to negotiate its merger agreement, which Emerson believes was and is ready for execution. Once Recoton/Shaw produced a higher offer to Jensen's public stockholders, Jensen quickly accepted it without first informing Emerson of the terms of their offer. While Jensen claims it repeatedly sought higher bids from Emerson, it should be noted that Emerson had informed Jensen of its concerns that Shaw would quickly inform Recoton of the terms of Emerson's bids as and when made. At Chandler's request, and after just having flown back from Chicago that same day, Eugene Davis and Emerson's counsel immediately boarded a return flight and met with Chandler and his counsel in Chicago on Friday, May 24, 1996, immediately prior to the Memorial Day weekend. At this meeting, Davis and Chandler discussed Chandler's purported concerns with Emerson's proposal, and Chandler encouraged Davis to continue to pursue a friendly transaction with Jensen. In addition, Chandler indicted that (i) he regretted entering into the Stock Option and Voting Agreement, (ii) would support the highest bid, and (iii) would not accept any changes or extensions to the deal with Recoton. Emerson's continued pursuit of a possible friendly transaction with Jensen was strongly influenced by these actions of Blair, through Chandler. In connection with its alternative proposals, Emerson provided Jensen with continuing evidence of its ability to finance the acquisition of Jensen. On June 4, 1996, Emerson's counsel sent a letter to counsel for the Jensen Special Committee providing the following documents: 1. Letter from Eugene I. Davis to Messrs. Jenkins, Mohr, and Chandler; 2. Sources and uses materials prepared by John Walker; 3. Commitment letter from Bankers Trust Company; 4. Amendment to Commitment Letter from Congress Financial Corporation; 5. Term Sheet for preferred stock acquisition from [the proposed investor of such preferred stock]; and 6. Revised draft Merger Agreement. The letter also provided: You should note that while the revised draft Merger Agreement reflects a $10.25 purchase price per share for all outstanding shares of Jensen's common stock, Emerson continues to be willing to enter into a merger agreement with Jensen based on all alternatives outlined in its proposals of May 13, 1996. Emerson would appreciate the Special Committee informing it of the Special Committee's selection in this matter. The revised draft Merger Agreement incorporates most of the suggested changes requested by Jack Obiala. However, as described in Gene Davis' letter transmitted herewith, Mr. Obiala's suggested changes with regard to the termination obligations of the parties have not been made. As with the review by the Special Committee and its advisors of Emerson's financing sources, Emerson and its representatives are prepared to continue to discuss these matters. Emerson is prepared to meet with the Special Committee at any time to negotiate and finalize these matters. Jensen has informed Emerson that on June 4, 1996, Recoton told Jensen it would offer $10.25 per share for all stockholders except Shaw and Blair. Despite the fact that this offer was, Emerson believes, clearly inferior to the alternatives offered in the May 13 Emerson Alternative Proposals (including on an aggregate consideration basis), on June 10, 1996, Emerson added an additional proposal to its May 13 Emerson Alternative Proposals. Emerson offered as an option to pay each Jensen stockholder consideration of $10.75 per share with aggregate consideration composed of 55% cash and 45% in face value of a new issue of Emerson preferred stock. Emerson believed that this option might be more attractive to Jensen stockholders from a tax management point of view. On June 5, 1996, Jensen's financial advisor, Lehman Brothers, sent a letter to Recoton's President, Robert L. Borchardt, Emerson's President, Eugene I. Davis, and Jensen's President, Robert G. Shaw, confirming that the Special Committee would accept bids for Jensen until Monday, June 10, 1996. Between June 5 and June 10, Emerson and its counsel responded to Jensen's requests, often requiring needless and harassing changes. As a result, Emerson incurred significant counsel fees. Nonetheless, Emerson and its counsel provided all of the revisions which Emerson believed were not entirely unreasonable. Emerson was also required to obtain a number of revisions to its commitment letters, at great expense to Emerson, which Emerson also believes was required by Jensen to harass Emerson and its potential lenders. On June 10, 1996, Emerson's President, Eugene Davis, sent the following letter to clarify Emerson's position with regard to its proposals to acquire Jensen: Mr. Robert Jenkins, Chairman Special Committee Board of Directors International Jensen Incorporated c/o Sundstrand Corp. 4949 Harrison Ave. Rockford, Illinois 61125-7003 Mr. Scott Mohr Lehman Brothers 191 South LaSalle Street 25th Floor Chicago, Illinois 60603 Mr. David Chandler William Blair Leveraged Capital Fund 222 West Adams Chicago, Illinois 60606 Re: Acquisition of International Jensen Incorporated ("Jensen") by Emerson Radio Corp. ("Emerson") Gentlemen: Pursuant to Lehman Brothers' letter of June 5, 1996, and our discussions with the Special Committee, its counsel, and Lehman Brothers, we have previously forwarded to the Special Committee the final form of the Merger Agreement which Emerson is prepared to execute immediately upon acceptance by the Special Committee and the Board of Directors of Jensen and final documents evidencing our financial capability to close the transaction. We have attempted to follow the request contained in Mr. Mohr's letter that the bid be submitted in the form of a Merger Agreement together with a red-lined copy of such Merger Agreement to show changes from prior proposals. However, the form of Merger Agreement which we have submitted is only one of the alternative transactions that Emerson would be prepared to enter into, i.e., the $10.25 per share all-cash proposal for all outstanding shares. In order to avoid providing the Special Committee with a mountain of paper, we have not prepared separate merger agreements encompassing the two $10.75 per share proposals provided to the Special Committee on May 13, 1996. These two alternatives remain available at the discretion of the Special Committee and would require only minimal revision of the transaction documents, which would be accomplished in short order. While Emerson does not recognize the need to submit any proposal that exceeds the $10.25 per share offer reflected in the merger documents, since we believe that the competing proposal from Recoton/Shaw is neither legally nor commercially viable, we are prepared to offer an additional proposal at a higher face value that may be more attractive to Jensen stockholders from a tax management point of view. Under this alternative, Emerson would pay to each Jensen stockholder consideration of $10.75 per share with aggregate consideration composed of 55% cash and 45% in face value of a new issue of Emerson preferred stock. The attributes of the preferred stock would include a liquidation value in the value of the cash replaced by the stock together with unpaid dividends, conversion into Emerson common stock at anytime at a conversion rate of $4.00 per share for the first four years escalating 15% per year thereafter subject to normal anti-dilution protection, cumulative dividends (or, alternatively, PIK dividends) of 8% per annum and a feature where Emerson could call the preferred stock at anytime after one year for an amount equal to its liquidation preference plus unpaid dividends. The letter continued: We hope that the contents of this letter and the significant accommodations we have made in the merger and financing documents at Jensen's and Lehman Brothers' request, are viewed as the final constructive step preceding an immediate execution of the merger documents between Emerson and Jensen. As we have previously indicated, we remain available to discuss all matters relating to this transaction with the Special Committee, both before and after execution of the merger documents. We are also available for constructive conversations with Robert Shaw and/or representatives of Recoton Corporation, as appropriate. However, it is our view that, as a result of delays to which we have all been subject, it is of critical importance to sign the merger documents first and initiate the time consuming SEC, FTC and stockholder vote processes immediately. Discussions with Shaw and/or Recoton could be conducted while we await the stockholder vote under the terms of a stand-still arrangement that would preserve the rights and positions of effected parties while providing a less pressured environment for reaching agreement without additional legal expenditures. We are fearful that any extended delay in execution of documents, governmental review or closing of the transaction may further damage Jensen and its ultimate value to either purchaser. The thoughts of the Special Committee and their expedited attention to the various matters addressed in this letter are greatly appreciated. Very truly yours, /s/ Eugene I. Davis President As the so-called "auction" process wound-up, Emerson was informed by Jensen that two primary concerns of the Special Committee remained. The first revolved around the termination provisions of the Emerson Merger Agreement. Emerson had offered a $5 million termination fee deposit payable to Jensen if a merger with Emerson terminated as a result of Emerson's actions, to be secured by a $5 million standby letter of credit. Jensen sought a higher amount from Emerson, at one point as high as $9.7 million (based by Jensen upon the up to $4 million termination fee and costs which could be payable to Recoton and an arbitrary $1.00 per outstanding share [$5.7 million] amount), and an agreement that no termination fee should be paid to Emerson if stockholder approval was not obtained. Emerson believes the $5 million termination it agreed to is excessive, much less the enhanced amounts Jensen sought, and believes it is justified in not encouraging Jensen to seek to avoid a favorable stockholder vote. The second concern revolved around the payments and asset transfers to Recoton/Shaw upon termination of their agreements. Emerson offered not to hold Jensen liable for such actions, but reserved its rights against Recoton/Shaw to prevent or recover such payments or asset transfers. As Jensen was not to be prevented from taking actions it deemed proper, Emerson does not understand Jensen's CONCERNS in this regard. On June 12, 1996, Emerson's counsel received a letter from Shaw's counsel which set forth Shaw's position with regard to a number of issues, the resolution of which, Shaw indicated would be a precondition to consideration of Emerson's proposal. According to the letter, the issues included (i) Emerson having all financing in place necessary to consummate the terms of its offer to Shaw's satisfaction SEPARATE from Lehman Brothers' determination that Emerson had the funds, (ii) Emerson's recognition of the "lock-up" arrangements between Jensen and Recoton with respect to the AR Trademarks, (iii) Emerson's agreement to honor the transitional employment agreements for the Jensen employees covered by same, (iv) providing reasonable severance packages to the Jensen employees not covered by the transitional employment agreements, and (v) Emerson's acknowledgement of the existence and validity of Shaw's employment agreement under which he would be entitled to a "golden parachute" payment of up to $4.8 million. In addition, the letter stated the following points: First, the impetus for [Shaw's] purchase of the OE business did not rest with Bob. As you know, Recoton wished to pursue International Jensen but did not, and would not, agree to purchase the OE business. It was at that point that Bob agreed to purchase the business, SOLELY in order to facilitate the overall sale of the Company to Recoton. Emerson's continuing suggestions that this proposed purchase was designed to take advantage of Jensen shareholders is completely and totally inaccurate. Second, there has been some indication that you believe Bob has stated that he would never support an Emerson deal. BOB HAS NEVER STATED THAT HE WOULD NEVER SUPPORT AN EMERSON PROPOSAL. TO THE EXTENT YOU HAVE BEEN GIVEN THIS IMPRESSION, PLEASE UNDERSTAND THAT BOB HAS ALWAYS BEEN OPEN TO DISCUSSIONS WITH EMERSON. (emphasis added) By letter dated June 12, 1996, Emerson's counsel replied to the five issues set forth in the letter from Shaw's counsel as follows: (i) Emerson has commitments for all necessary financing to consummate the merger and has provided evidence of same to the Special Committee, (ii) Emerson has been precluded from discussing the AR Trademarks and the termination fees in the Recoton Merger Agreement with Recoton and requests that Jensen permit a meeting between Emerson and Recoton to discuss same, (iii) Emerson's obligations under the transitional employment agreements which it had previously agreed to honor as written is an issue that does not involve Shaw directly and, therefore, there is no need for Emerson to negotiate them with him, (iv) severance packages for long-term employees do not involve Shaw directly and, therefore, again, there is no need for Emerson to negotiate them with him, and (v) the issue of the amount of money due Shaw under his employment agreement should be discussed in the context of a resolution of all open issues as business matters. In furtherance of attempting to resolve the foregoing issues, Emerson's counsel invited Shaw, his counsel, and if Shaw permitted, representatives of Recoton, to Emerson's offices on June 13, 1996 to discuss all open business issues. Counsel for Shaw responded to Emerson's invitation to meet by stating that, for scheduling reasons, a meeting was not feasible. Despite Emerson's efforts to meet the requests of Jensen's counsel regarding terms of the draft Emerson Merger Agreement and other matters and a new Jensen decision deadline of June 14, neither the Special Committee nor its advisors had by June 18, 1996 made any effort to contact Emerson regarding the Special Committee's deliberations. Emerson's counsel attempted to contact the Special Committee's counsel; however, many telephone calls went unreturned. Ultimately, Emerson's counsel was told by Jensen's counsel that the Special Committee had not reached a decision and did not know when it would, but that official word would be given to Emerson. That word did not come until John Walker, Emerson's CFO, called Scott Mohr of Lehman Brothers for the second time on June 18, 1996 and was told that the Special Committee had decided to indefinitely delay any decision. On June 14, 1996, Lehman Brothers advised the Special Committee that it was not unable to render an opinion that the sale of the OEM Business was fair to Jensen based upon available financial information concerning the OEM Business through May 31, 1996. Lehman Brothers further informed the Special Committee that based on the OEM Business' performance, the valuation range for the OEM Business would need to be adjusted upward and the purchase price offered by the Shaw Group was INADEQUATE. See Jensen Proxy Statement at page 37. On June 18, 1996, Emerson's President sent a letter to the Special Committee, Lehman Brothers and Blair expressing Emerson's concern regarding the Special Committee's delay in making a decision and meeting its own deadlines. Emerson indicated that it expected to receive a response to its proposal by the end of the day on June 20, 1996, or it would be construed as a rejection of its proposal. In addition, Emerson indicated that it would hold all parties responsible for damages to Emerson and any deterioration in Jensen's value as a result of the delay. MEETING WITH SHAW On June 20, 1996, at the repeated requests of Chandler and Lehman Brothers, Emerson's Chairman, Geoffrey P. Jurick, its President, Eugene Davis, and Chief Financial Officer, John Walker, traveled to Cleveland, Ohio, to meet with Shaw in the hope of resolving a number of the purported issues Shaw had concerning Emerson's proposal. Also at the meeting on behalf of Jensen was Scott Mohr of Lehman Brothers, Jensen's financial advisor. At the meeting it became clear to Emerson's representatives that they had not been summoned to Cleveland to strike a deal, as Shaw continued to refuse to negotiate his "golden parachute" arrangements. Rather, Emerson believes that the meeting was part of the strategy of Jensen, Shaw, and Blair to create a better record for future litigation and to entice Recoton to respond with an enhanced offer over its previous bid. For example, Mohr indicated at the meeting that they were expecting a new proposal from Recoton and attempted to solicit a 10% increase ($1.00 or more) in Emerson's bid. Mr. Jurick informed him that Emerson currently had the highest bid on the table and that it would not bid against itself. Mr. Mohr then interjected the Special Committee's belief that the current offers of Emerson and Recoton were equal. Jurick dismissed that comment by stating, among other things, that in Emerson's estimation, Shaw was receiving about $14.00 per share (including the value per share of the OEM transaction to him) while Jensen's public stockholders were receiving $10.25 per share. Emerson believes that it was being used as a pawn to bring pressure on Recoton. Not only did Mr. Mohr spend most of his time on the phone with Recoton and Jensen, but he even gave Mr. Jurick updates on the process of Recoton's offer. With little progress being made, the Emerson representatives informed Shaw and Scott Mohr that they would be agreeable to participating in a meeting among all of the principals (Emerson, Jensen, and Recoton) with a mutual agreement to a floor price to the outside stockholders of Jensen of $10.25 per share. Mr. Mohr and Shaw appeared to accept the foregoing framework as a fair and pragmatic step if Recoton's apparently forthcoming offer would not resolve the situation for Jensen. Mohr also promised to contact Jurick regarding the proposed meeting and new Recoton proposal on June 21, 1996. At this point, the meeting concluded. Mr. Mohr never called. Meanwhile, while the meeting in Cleveland was occurring, Lehman Brothers wrote Emerson to confirm that the Special Committee had "been advised that Recoton is prepared to submit a new proposal which will be an improvement on its last proposal and that Recoton seeks prompt Committee action on its proposal." This letter nowhere indicated the nature of the improvement such that Emerson did not and could not know whether Recoton was submitting a higher bid, I.E., a higher price per share, and/or was submitting a bid that removed some or all of the many legal problems Emerson believes exists with the existing Recoton proposal and related Shaw purchase of the OEM Business. Also, Emerson believes that Mr. Shaw was communicating all of Emerson's proposals to Recoton. Accordingly, Emerson, not knowing the nature of the expected Recoton proposal, could not submit a meaningful counterproposal until it learned the specifics of Recoton's new proposal. Emerson communicated the foregoing concerns to Jensen, but did not receive a reply. THIRD TWO-TIER PROPOSAL After, Emerson believes, delaying repeatedly to avoid having to accept a higher bid from Emerson, as evidenced in part by Jensen not accepting an Emerson transaction and delaying its decision even when told that Lehman Brothers had determined, at least by June 14, 1996, that Shaw's purchase price for the OEM Business was inadequate, on June 24, 1996, Jensen announced that it had approved yet another merger offer from Recoton, in which all Jensen stockholders would receive $11.00 per share in cash, except for Shaw and Blair, both of which would receive $8.90 per share in cash. In addition, Jensen would continue to be required to sell the OEM Business to the Shaw Group at a substantial discount from its book and, Emerson believes, fair values. Jensen claims that Emerson agreed to the end of the auction process at this time. Rather, Emerson was pressing for Jensen's Special Committee and Board to establish reliable and fair guidelines and deadlines and then make a decision, although Emerson continued to express its concerns as to the fairness of the process and Shaw's role in it, and its desire to continue its pursuit of a Jensen acquisition. As previously stated, Jensen accepted the Third Two-Tier Recoton Proposal without first informing Emerson of its terms and seeking Emerson's reaction to it. JUNE 25 EMERSON PROPOSAL In response to the Third Two-Tier Recoton Proposal, on June 25, 1996, Emerson delivered to Jensen a definitive proposal to acquire Jensen through a merger in which all of Jensen's stockholders would receive $12.00 per share in cash, except for Shaw and Blair, both of which would receive $8.90 per share (again, the same consideration they had agreed to accept under the Third Two-Tier Recoton Proposal, and under previous Recoton proposals). Despite this clearly superior offer, Jensen rejected the proposal and refuses to negotiate with Emerson. Instead, Jensen insists on favoring the interests of its largest "inside" stockholder by continuing to accept the Third Two-Tier Recoton Proposal. In announcing the June 25 Emerson Proposal, Emerson expressed its skepticism concerning Jensen's willingness to consider the proposal in good faith: Emerson believes no proposal from Emerson will be fairly considered by the Jensen Board. Accordingly, in advising the Jensen Board of its latest proposal, Emerson has further notified the Jensen Board that it intends to file proxy solicitation materials with the Securities and Exchange Commission and, upon approval of such materials, will actively solicit Jensen stockholders with respect to the transaction. In addition, Emerson believes that final determination of the issues raised in the various stockholders lawsuits brought against Jensen, Jensen Board members, Shaw, and Recoton in the Delaware Chancery Court, when coupled with solicitation of Jensen's outside stockholders, will finally resolve this matter. Despite what Emerson believes is the clearly superior offer contained in its June 25, 1996 proposal, on June 26, 1996, Jensen issued a press release stating that its Board of Directors, based upon a recommendation of the Special Committee, had rejected Emerson's latest proposal to acquire Jensen, had reaffirmed the agreement with Recoton announced by Jensen on June 24, 1996, and had determined that the auction process was concluded. In its press release on June 26, 1996, Jensen stated that neither Shaw nor Blair had agreed to accept less from Emerson than is being paid to other stockholders (ALTHOUGH BOTH WERE CERTAINLY WILLING TO ACCEPT THE SAME $8.90 PER SHARE IN CONSIDERATION FROM RECOTON UNDER THREE SEPARATE AGREEMENTS). Both were reported to have advised the Jensen Special Committee that they would vote against the Emerson proposal if it was submitted to Jensen's stockholders. Emerson wonders why its cash is not as good at the same price to Shaw and Blair as Recoton's? Jensen also reported that: Absent their consent to the lesser amount, and a vote in favor of a merger on such terms, the Special Committee concluded, based on the advice of its Delaware counsel, that the Emerson proposal could not be consummated due to the lack of the necessary stockholder vote and that it would be improper to recommend the two-tier proposal as a matter of Delaware law and in light [of] fiduciary duties owed to all stockholders, including Mr. Shaw and the Blair Fund. On July 2, 1996, Emerson filed its counterclaim and third-party complaint. See "Certain Litigation Concerning the Jensen/Recoton Merger." JULY 16 EMERSON PROPOSAL On July 16, 1996, Emerson delivered to the Special Committee and Blair a revised proposal to acquire Jensen (including the OEM Business) through a merger in which all of Jensen's stockholders would receive $12.00 per share in cash, except for Shaw and Blair. Shaw's shares would continue to be purchased at $8.90 per share (as set forth in the June 25 Emerson Proposal and as he repeatedly agreed to accept from Recoton), while Blair would receive $10.00 per share ($1.10 PER SHARE MORE, or approximately $1.7 million, than Blair had agreed to accept from Recoton). The higher price offered Blair under the July 16 Emerson Proposal resulted from the fact that it appears to Emerson and certain Jensen stockholders that the agreement previously entered into between Blair and Recoton (except for the stock option provision, under which Blair had given voting control over its shares to Recoton and had agreed not to sell its shares to any other party), terminated no later than July 15, 1996. Such agreement provided it would terminate (except for the stock option provision) on the later of the termination of the "Revised Merger Agreement" (defined as the Third Amended and Restated Recoton Merger Agreement of May 10, 1996) or the "Termination Date" (a term not defined in such agreement, but defined in the Revised Merger Agreement as July 15, 1996, which date could be extended in Recoton's sole discretion to December 31, 1996). Jensen and Recoton have entered into a new Recoton Merger Agreement which states that it supersedes and replaces all prior agreements (thereby terminating the Revised Merger Agreement) and it does not appear that Recoton extended the Termination Date in the Revised Merger Agreement. This belief is also espoused in a Supplemental Complaint filed in the Delaware stockholder litigation against Jensen, Recoton, Blair, Shaw, and the Jensen directors on July 16, 1996. On July 17 and 18, 1996, Emerson received correspondence from counsel to Blair and the Special Committee, respectively, indicating Blair's position that the amended Stock Option and Voting Agreement was still in effect and that the Special Committee had rejected the July 16 Emerson Proposal. Jensen also rejected Emerson's request that the standstill agreement, prohibiting Emerson from purchasing shares of Jensen stock, be waived, although, based on Jensen's representations at the time the agreement was signed, Recoton appears to have been released from an identical restriction. Specifically, Blair's counsel stated the following in his July 17, 1996 letter to Emerson's counsel: I have relayed the offer [Emerson] made yesterday afternoon to William Blair Leveraged Capital Fund, L.P. ("Blair") to purchase Blair's outstanding holdings of International Jensen. As Gene stated, the Emerson offer to Blair is premised on the proposition that the Amended and Restated Stock Option and Voting Agreement of May 9, 1996 between Blair and Recoton has terminated (with the exception of Recoton's option under Section 1.2(a) of that agreement). Blair does not agree with that premise. Blair's May 9th Agreement with Recoton continues in full force and affect. Indeed, Emerson appears to recognize as much since contained in your offer to Blair was a pledge that Emerson would indemnify Blair from any and all claims brought by Recoton as a result of the proposed sale. Consequently, Blair will not consider Emerson's offer. Moreover, Blair considers Emerson's invitation that Blair breach its May 9th agreement with Recoton an intentional attempt to interfere with Blair's contractual relations. As such, Blair request that all such activities cease immediately. In response, on July 22, 1996, Emerson's counsel sent the following letter to Blair's counsel: I am in receipt of your letter to me dated July 17, 1996. I must confess my confusion at the tone and substance of your letter. The offer of Emerson Radio Corp. ("Emerson") to William Blair Leveraged Capital Fund, L.P. ("Blair") was intended to resolve all outstanding matters between Emerson and Blair, provide Blair with significantly more cash for its shares of common stock of International Jensen Incorporated ("Jensen"), and to allow Blair to make an independent decision regarding the best offer to purchase its shares of Jensen stock, free of any perceived impediments. In that regard, I would appreciate your interpretation of the Amended and Restated Stock Option and Voting Agreement of May 9, 1996 (the "Agreement") between Blair and Recoton Corporation as to how this Agreement should not be deemed to have terminated (with the exception of Recoton's option under Section 1.2(a) of the Agreement). Further, in light of the opportunities that Blair would have upon termination of the Agreement, Blair should be willing to permit an expedited determination by the Delaware Chancery Court as to the status of that Agreement. As you know, the effect of this Agreement allegedly has also had a significant impact on the deliberations of the Special Committee of the Jensen Board. An expeditious determination of the status of the Agreement could well be a critical element of the Special Committee's determinations as well. As you know, Blair's WISH to support the Blair/Recoton bid is vastly outweighed by its fiduciary OBLIGATIONS to Jensen's stockholders. Emerson would appreciate an explanation from Blair of the statement in the last paragraph of your letter that "Blair considers Emerson's invitation that Blair breach its May 9th Agreement with Recoton an intentional attempt to interfere with Blair's contractual relations." Emerson does not understand how this can be the case, particularly in light of Blair's fiduciary duties to the minority stockholders of Jensen, and, in fact, to the participants in the Blair Fund. I would also like to address two other matters in your letter. I do not understand how you could have so misconstrued Emerson's offer of indemnification for Blair. Emerson clearly does not believe that the Agreement continues in full force and effect. Rather, it is so certain that the Agreement has terminated, it would be willing to indemnify Blair from any claims brought by Recoton as a result of Emerson's proposed offer to purchase Blair's Jensen stock. This offer was meant to reassure Blair, but apparently Blair is more concerned about justifying its inaction. No response has been received to this letter, although Blair has filed a motion to dismiss Emerson's third-party claim against Blair. The Special Committee's counsel, in his July 18, 1996 letter to Emerson's counsel, stated in part: The proposal contained in the press release enclosed with your July 16 letter is identical to Emerson's June 25 proposal except that, instead of a two-tier transaction ($8.90 for Shaw and Blair, and $12 for the public), the consideration Emerson says it is willing to pay is divided into three tiers ($8.90 for Shaw, $10 for Blair, and $12 for the public). As with Emerson's prior two-tier proposals contemplating per share amounts to be paid to the public in the merger different from amounts to be paid Shaw and Blair, the current three-tier proposal is not acceptable. To repeat for emphasis, the Special Committee, based on advice as to Delaware law, will not approve, and recommend to Jensen's stockholders, a merger agreement providing less per share to some common stockholders than to others, without the consent of the common stockholders receiving less. And, again to repeat, even if the Special Committee could, and did, make such a recommendation, the current Emerson three-tier proposal (like Emerson's earlier two-tier proposal) cannot be effected over the opposition of the stock owned by Shaw and Blair. Emerson's counsel, by letter dated July 22, 1996, responded to the letter from the Special Committee's counsel as follows: I am in receipt of your letter to me dated July 18, 1996. As indicated in your letter, the Special Committee of the Board of Directors of International Jensen Incorporated ("Jensen") has once again chosen to avoid negotiation of a proposal from Emerson Radio Corp. ("Emerson") which would provide higher consideration to Jensen's public stockholders. Further, the Special Committee has not addressed the issues of whether it will consider a waiver of the standstill provisions of the letter agreement signed by Emerson pertaining to Jensen to allow Emerson to purchase any shares of Jensen stock, including specifically Blair's stock. Consequently, Emerson would appreciate a specific response as to whether Jensen will grant even a limited waiver of the standstill provision of the Confidentiality Agreement (the validity of which Emerson still questions). You are hereby advised that Emerson believes Blair's positions are incorrect in fact and in law, and that Blair's desire to continue to support the Shaw/Recoton proposal, although it is no longer constrained to do so, does not relieve the Special Committee of its fiduciary obligations to its public stockholders. Consequently, Emerson requests the Special Committee's positions and basis for decisions on the standstill provisions of the Confidentiality Agreement and on good faith negotiations with Emerson. Further, as the Blair Agreement with Recoton has been the basis of the Special Committee's rejection of Emerson's offers in the past, the Special Committee should make its own determination as to its validity, rather than continuing to abdicate its responsibilities to Shaw, Blair, or Recoton. In that regard, Emerson would encourage the Special Committee to seek an expedited determination by the Delaware Chancery Court as to the validity or termination of such Agreement. Emerson awaits your prompt response. In addition, attached to such letter was a press release which announced that, despite Jensen's rejection of the July 16 Emerson Proposal, Emerson reaffirmed its intention to acquire Jensen on such terms. After receiving no response from Jensen concerning the July 22, 1996 letter from Emerson's counsel, on July 24, 1996, Emerson announced in a press release that it was providing an additional proposal to the July 16 Emerson Proposal. Under the terms of this July 24 OEM Proposal, Emerson would agree immediately to purchase all of the assets and businesses and assume all of the related liabilities solely of the OEM Business in the same manner as set forth in the current agreement between Jensen and Shaw, whereby Shaw would purchase the OEM Business at a price of approximately $18.2 million. Emerson would purchase the OEM Business at the same price but would, in addition, establish a fund at the closing of the sale of the OEM Business to Emerson of approximately $2.2 million (or $1.00 per share if paid to Jensen's public stockholders) for direct distribution to stockholders other than Shaw and Blair if Recoton acquires Jensen, providing Jensen's public stockholder's with an aggregate consideration of $12.00 per share. If Emerson is able to acquire the entirety of Jensen for $12.00 per share to the public stockholders, the $2.2 million would be applied to the merger consideration being paid by Emerson. In connection with the July 24 OEM Proposal, Emerson would expressly waive certain provisions of the OEM side agreements which Shaw negotiated in his favor as part of the Jensen/Recoton Merger. The result of the July 24 OEM Proposal, if the same was approved, was that Jensen's public stockholders would be assured of receiving $12 per share for their stock whether Emerson's $12 proposal or Recoton's $11 proposal prevails. On July 25, 1996, Emerson clarified its July 24 Emerson Proposal by stating to the Jensen Board its willingness to discuss modifying its proposal to provide for distribution of the $2.2 million additional amount to all stockholders of Jensen if the Special Committee so requests. The Special Committee's counsel acknowledged on July 25, 1996, receipt of this letter and Emerson's July 24, 1996 proposal, both of which were to be considered by the Special Committee. On July 30, 1996, Emerson filed a complaint in the Court of Chancery of the State of Delaware against Jensen, all of its directors, Blair, Recoton, and certain affiliates of the foregoing alleging violations of Delaware law involving Jensen's auction process, interference with prospective economic advantage, and aiding and abetting breaches of fiduciary duties. In particular, the complaint seeks an order enjoining the consummation of the Jensen/Recoton Merger and the sale of the OEM Business to Shaw. The complaint also seeks to require Jensen and its Board of Directors to provide relevant due diligence materials to Emerson and to engage in good faith negotiations with Emerson by asking the Court to order Jensen and its Board of Directors to conduct a fair auction on a level playing field. Emerson is also requesting the Court to award damages and further relief as would be just and equitable. The Court has ordered expedited discovery and has scheduled a hearing on the matter and a similar motion for preliminary injunction on behalf of Jensen's stockholders for August 15, 1996. On August 2, 1996, Emerson voluntarily dismissed Blair from the Chicago litigation. In addition, on August 2, 1996, Emerson received a letter from counsel to the Special Committee notifying Emerson that the Special Committee had rejected the July 24 OEM Proposal to purchase the OEM Business. The letter stated in part: After consideration, the Special Committee has determined not to accept Emerson's OEM proposal for reasons which I shall now summarize in the briefest way. The Jensen public stockholders have currently available to them a transaction which, if approved at the stockholders' meeting on August 28, will provide them with $11 for each share of their Jensen stock. If the Emerson OEM proposal were accepted by the Special Committee, the Recoton transaction would be lost since Recoton has advised the Special Committee that it will not proceed with the Jensen-Recoton merger if OEM is sold to Emerson. That will result in the payment by Jensen to Recoton of the required fees and expenses. And, even were Recoton willing to so proceed, Mr. Shaw has informed the Special Committee that he would not accept $8.90 for his stock from Recoton if the OEM business were sold to Emerson. To reallocate the Recoton merger consideration to provide equal treatment for Shaw would result in a per share price to the public of less than $11 per share. The letter also avoided making a decision on Emerson's request that Jensen grant a waiver of the standstill provision of the Confidentiality Agreement. On August 5, 1996, Emerson issued a press release indicating its belief that all material issues with regard to its purchase of Jensen and/or the OEM Business and the competing Recoton/ Shaw proposals, will be finally addressed in the pending Delaware stockholder litigation and Emerson's recently filed Delaware lawsuit. In addition, Emerson reaffirmed its commitment to its July 16 and July 24 proposals and stated that it would await a final determination by the courts and/or Jensen's stockholders. Emerson believes it would be proper for the Jensen Board to recommend its tiered proposals, in light of what Emerson believes to be the bad faith and improper conduct of Shaw and Blair throughout the auction process in selling Jensen. Further, Emerson believes that Shaw and Blair are continuing to breach their fiduciary duties to the public stockholders of Jensen by not agreeing to the Emerson proposals, IN WHICH THEY RECEIVE THE SAME OR HIGHER CASH CONSIDERATION FOR THEIR SHARES THAN THEY HAVE REPEATEDLY AGREED TO ACCEPT FROM RECOTON, WHILE FORCING JENSEN'S STOCKHOLDERS TO RECEIVE LESS THAN THEY WOULD RECEIVE UNDER THE EMERSON PROPOSAL. Emerson believes that only the self-interested nature of the Recoton/Shaw transaction and the bad faith and improper conduct of Shaw, in receiving at least an effective $4.00 premium, and Blair can explain why you are being asked to take less than under Emerson's proposal. SEND A MESSAGE TO THE JENSEN BOARD, SHAW, AND BLAIR THAT THEIR ATTEMPTS TO DEPRIVE YOU OF ADDITIONAL VALUE AND TO DIVERT THAT VALUE TO SHAW ARE NOT ACCEPTABLE. LET THE JENSEN BOARD, SHAW, AND BLAIR KNOW THAT YOU REQUIRE THEM TO NEGOTIATE IN GOOD FAITH WITH EMERSON TO CONSUMMATE THE TRANSACTION EMERSON HAS PROPOSED, WHICH IS FREE OF ANY SELF-INTERESTED TRANSACTIONS. JENSEN/RECOTON MERGER Jensen has indicated it has first mailed the Jensen Proxy Statement to Jensen stockholders on July 23, 1996, describing the terms of the Jensen/Recoton Merger, as well as other related matters. A summary description of the Jensen/Recoton Merger based on publicly available information appears below under "Summary of the Jensen/Recoton Merger." Emerson is soliciting proxies from stockholders of Jensen in opposition to the Jensen/Recoton Merger. Emerson urges all stockholders of Jensen to vote AGAINST the Jensen/Recoton Merger and to seek dissenters' rights. SUMMARY OF THE VARIOUS JENSEN/RECOTON MERGER PROPOSALS The Jensen/Recoton Merger provides for the merger of a wholly-owned subsidiary of Recoton with and into Jensen. Under the terms of the Jensen/Recoton Merger, as originally proposed, each outstanding share of Jensen common stock would have been converted into the right to receive $8.90, payable 40% in Recoton common stock and 60% in cash. In addition, under the originally approved Recoton Merger Agreement, Jensen was required to sell the OEM Business prior to the closing to the Shaw Group (which Jensen has disclosed in the Jensen Proxy Statement to be a corporation wholly-owned by Shaw, with Shaw as its sole director and President) for approximately $15 million, when the net book value of the OEM Business was approximately $27.6 million. On May 1, 1996, Jensen announced that it had accepted an "enhanced" offer from Recoton in which Recoton raised the price it proposed to pay in the Jensen/Recoton Merger to $9.15 per share to all Jensen stockholders other than Shaw and Blair, both of which would receive $9.00 per share. Under the revised offer, the consideration would be payable approximately 44% in Recoton stock and 56% in cash, with Jensen still required to sell the OEM Business to Shaw. On May 10, 1996, it was announced that Jensen had accepted a modified offer from Recoton in which all Jensen stockholders would receive $10.00 per share, except for Shaw and Blair, each of which would receive $8.90 per share. Under this structure, Jensen was still required to sell the OEM Business to Shaw for well below its net book value. Finally, on June 24, 1996, Jensen announced that it had accepted yet another proposal which provided for the payment in cash of $11.00 per share to all stockholders, except for Shaw and Blair, both of which would continue to receive $8.90 per share. In addition, Jensen would continue to be required to sell the OEM Business to the Shaw Group at a substantial discount from its net book and, Emerson believes, fair values. Simultaneous with the execution of the initial Recoton Merger Agreement, Jensen and Recoton entered into a trademark lock-up agreement under which Recoton acquired from Jensen for $10,000 per month an exclusive worldwide license to Jensen's AR Trademarks. The license under this agreement was effective as of the date of the agreement and expires at the earlier of the Effective Time (as defined in the Recoton Merger Agreement), the date of the exercise of the Option (as defined below), or at the end of one year. Recoton also acquired an option (the "Option") to purchase the AR Trademarks for $6 million. As disclosed in the Jensen Proxy Statement, this Option amount was the termination fee imposed on Jensen for terminating the Jensen/Recoton Merger. Thus, the net effect of a termination of the Recoton/Jensen Merger Agreement by Jensen would have been that Recoton could have "acquired" the AR Trademarks (valued in the trademark lock-up agreement at $6 million) for no real value. Apparently in response to the Delaware litigation challenging the validity of the arrangements relating to the AR Trademarks and the termination provisions of the Recoton Merger Agreement, the Jensen Board, in concert with Shaw, Blair, and Recoton, amended these arrangements in conjunction with the Second Two-Tier Recoton Proposal. Specifically, the AR Trademarks license agreement was amended so that Recoton's option to purchase and Jensen's option to sell the AR Trademarks would be for $3.5 million, "an amount believed by Jensen's Special Committee and Jensen's Board of Directors to be more than fair value for the trademark," according to Jensen's press release. In effect, Jensen and Recoton were conceding that the $6 million Option price in the previous agreement to which they both voluntarily agreed was artificial, unrelated to the fair value of those assets, and SOLELY DETERMINED BY THE $6 MILLION TERMINATION FEE IN THE EARLIER VERSION OF THE RECOTON MERGER AGREEMENT. Likewise, in the merger agreement memorializing the Second Two-Tier Recoton Proposal, the termination arrangements were modified so that Jensen would be required to pay Recoton a termination fee of $1.5 million plus expenses of up to $2.5 million. The net effect of these changes is that if Jensen terminates the Jensen/Recoton Merger, Jensen will be required to pay Recoton up to $4 million in termination fees and expenses. Also, as a result of its arrangements with Blair and Shaw, Recoton may obtain additional amounts from topping offers. Jensen has told Emerson that, on June 4, 1996, Recoton informed Jensen that it had increased its offer to $10.25 per share for all stockholders except Shaw and Blair. Finally, on June 24, 1996, Jensen announced that it had approved yet another offer from Recoton to merge in which all Jensen stockholders would receive $11.00 per share in cash, except for Shaw and Blair, each of which would receive $8.90 per share in cash. In addition, Jensen would continue to be required to sell the OEM Business to the Shaw Group for well below the net book value of the OEM Business, nor, Emerson believes, its fair value. In connection with the Third Two-Tiered Recoton Proposal, Jensen inexplicably agreed to extend the license on the AR Trademarks for FOUR additional years. Except for the Recoton/Shaw June 24, 1996 proposal, none of their proposals has even equaled, on an aggregate basis, Jensen's net book value. To protect Shaw's highly favorable deal, Shaw has consistently agreed to subsidize Recoton's bid by agreeing to pay slightly more for the OEM Business (although Emerson believes still well below its fair value, as reflected in the opinion provided by Lehman Brothers as discussed in the Jensen Proxy Statement) to assist Recoton and largely fund Recoton's proposals. In conjunction with the sale of the OEM Business to the Shaw Group, a number of side agreements which further benefit Shaw were negotiated. Included among these side agreements are (i) a Non-Competition Agreement which prohibits Jensen from competing with the Shaw Group in the OEM Business niche for a period of five consecutive years, (ii) a Management Sharing Agreement which allows Shaw to retain his highly compensated management to run the OEM Business while having Recoton pay 75% of the cost of such employees, and (iii) a License Agreement by which Jensen grants the Shaw Group the exclusive right to use the various Jensen trademarks for audio equipment sold to vehicular original equipment manufacturers through the OEM Business for a period of 10 years, at what Emerson believes to be extremely favorable rates. For example, the Shaw Group is required to pay a royalty of only 1% of net revenues with respect to OEM Business audio equipment utilizing the "Jensen" trademark. In addition, on a change in control of the OEM Business (meaning if Shaw sells the OEM Business), the new owner would be required to pay significantly increased royalty amounts for use of the Jensen trademarks. This is further evidence of the highly favorable deal Shaw has been afforded. The obligation of the parties to effect the Jensen/Recoton Merger is subject to certain conditions, among other things, approval by stockholders of Jensen and certain regulatory approvals. According to the Jensen Proxy Statement, Jensen has fixed August 28, 1996 as the date of the Special Meeting and July 15, 1996 as the Record Date for determining those stockholders of Jensen who will be entitled to vote at the Special Meeting. The Recoton Merger Agreement and the OEM Business sales agreement (ALTHOUGH THE JENSEN PROXY STATEMENT DOES NOT REQUIRE A SEPARATE VOTE ON THE OEM BUSINESS SALES AGREEMENT AS REQUIRED BY THAT AGREEMENT) both require the affirmative vote of (i) a majority of the outstanding shares of Jensen common stock and (ii) a majority of the outstanding shares of Jensen common stock WHICH ARE VOTED AT THE SPECIAL MEETING other than shares held directly or indirectly by Shaw. Shaw and Blair/Recoton control approximately 63% of Jensen's outstanding shares, and Blair/Recoton controls approximately 41% of Jensen's outstanding shares excluding those owned by Shaw. Depending on attendance at the Special Meeting, Recoton may control a larger percentage of the shares WHICH ARE VOTED at the Special Meeting, thus enabling Shaw and Recoton to effectively control approval of the proposal put forward by them. ANALYSIS OF CONSIDERATION UNDER VARIOUS JENSEN/RECOTON MERGER PROPOSALS AMENDED RECOTON MERGER AGREEMENT (JANUARY 3, 1996) ($8.90 to All Stockholders) Total (Millions) Cash (60%) Stock (40%) Consideration Shaw 18.8 11.3 7.5 Blair 13.2 7.9 5.3 Public 18.8 11.3 7.5 Total 50.8 30.5 20.3 OEM Sale 15.0 15.0 Net Cost 35.8 15.5 SECOND AMENDED RECOTON MERGER AGREEMENT (MAY 1, 1996) ($9.00 to Shaw and Blair; $9.15 to Other Stockholders) Total (Millions) Cash (60%) Stock (40%) Consideration Shaw 19.0 10.6 8.4 Blair 13.4 7.4 6.0 Public 19.4 10.9 8.6 Total 51.8 28.9 22.9 OEM Sale 15.2 15.2 Net Cost 36.6 13.7 THIRD AMENDED RECOTON MERGER AGREEMENT (MAY 10, 1996) ($8.90 to Shaw and Blair; $9.90 to Other Stockholders) Total (Millions) Cash (60%) Stock (40%) Consideration Shaw 18.8 10.5 8.3 Blair 13.2 7.2 6.0 Public 21.2 11.6 9.6 Total 53.2 29.3 23.9 OEM Sale 16.5 16.5 Net Cost 36.7 12.8 FOURTH AMENDED RECOTON MERGER AGREEMENT (JUNE 24, 1996) ($8.90 to Shaw and Blair; $11.00 to Other Stockholders) Total (Millions) Cash (100) Consideration Shaw 18.8 18.8 Blair 13.2 13.2 Public 23.5 23.5 Total 55.5 55.5 OEM Sale 18.2 18.2 Net Cost 37.3 37.3 OTHER INFORMATION All outstanding shares of Jensen common stock as of the close of business on the Record Date will be entitled to vote at the Special Meeting. Each share of Jensen common stock is entitled to one vote. According to the Jensen Proxy Statement, there were outstanding 5,738,132 shares of Jensen common stock as of July 15, 1996. As of the Record Date and the date hereof, Emerson owns no shares of Jensen common stock, of record or beneficially. Shares of Jensen common stock not voted (including broker non-votes) and shares of Jensen common stock voted to "abstain" from such vote will have the same effect as a vote "against" the Jensen/Recoton Merger. Jensen has indicated in the Jensen Proxy Statement that failures to vote and abstentions will not, however, be considered in determining whether a majority of the shares voted at the Special Meeting other than shares held by Shaw have voted in favor of the Jensen/Recoton Merger. The accompanying BLUE proxy will be voted in accordance with the stockholder's instructions on such BLUE proxy. Stockholders may vote against the Jensen/Recoton Merger, including the sale of the OEM Business to Shaw, by marking the proper boxes on the BLUE proxy. If no instructions are given, the BLUE proxy will be voted AGAINST the Jensen/Recoton Merger, including the sale of the OEM Business to Shaw. EMERSON STRONGLY RECOMMENDS A VOTE AGAINST THE JENSEN/RECOTON MERGER. A VOTE AGAINST THE RECOTON MERGER SHOULD NOT BE CONSTRUED AS A VOTE IN FAVOR OF EMERSON'S PROPOSALS. HOWEVER, UNLESS THE PROPOSED TRANSACTIONS WITH RECOTON AND MR. SHAW ARE DEFEATED AT THE JENSEN SPECIAL MEETING OF STOCKHOLDERS, YOU WILL NOT HAVE THE POTENTIAL OPPORTUNITY TO CONSIDER OR VOTE ON THE EMERSON PROPOSALS, WHICH EMERSON BELIEVES ARE IN YOUR BEST INTEREST, OR EVEN THAT THE JENSEN BOARD WILL CONSIDER EMERSON'S PROPOSALS. VOTING YOUR SHARES WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, WE URGE YOU TO VOTE AGAINST THE JENSEN/RECOTON MERGER, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW, ON THE ENCLOSED BLUE PROXY AND IMMEDIATELY MAIL IT IN THE ENCLOSED ENVELOPE. YOU MAY DO THIS EVEN IF YOU HAVE ALREADY SENT IN A DIFFERENT PROXY SOLICITED BY JENSEN'S BOARD OF DIRECTORS. IT IS THE LATEST DATED PROXY THAT COUNTS. EXECUTION AND DELIVERY OF A PROXY BY A RECORD HOLDER OF SHARES OF JENSEN COMMON STOCK WILL BE PRESUMED TO BE A PROXY WITH RESPECT TO ALL SHARES OF JENSEN COMMON STOCK HELD BY SUCH RECORD HOLDER UNLESS THE PROXY SPECIFIES OTHERWISE. YOU MAY REVOKE ANY PROXY YOU SUBMIT (WHETHER THE PROXY FORM SOLICITED BY JENSEN OR THE BLUE PROXY SOLICITED BY EMERSON) AT ANY TIME PRIOR TO ITS EXERCISE BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON, BY SUBMITTING A DULY EXECUTED LATER DATED PROXY OR BY SUBMITTING A WRITTEN NOTICE OF REVOCATION. UNLESS REVOKED IN THE MANNER SET FORTH ABOVE, DULY EXECUTED PROXIES IN THE FORM ENCLOSED WILL BE VOTED AT THE SPECIAL MEETING ON THE PROPOSED JENSEN/RECOTON MERGER, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW, IN ACCORDANCE WITH YOUR INSTRUCTIONS. IN THE ABSENCE OF SUCH INSTRUCTIONS, SUCH PROXIES WILL BE VOTED AGAINST THE JENSEN/RECOTON MERGER. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE SPECIAL MEETING, SUCH PROXIES WILL BE VOTED ON SUCH MATTERS AS EMERSON, IN ITS SOLE DISCRETION, MAY DETERMINE. YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE, AND RETURN THE BLUE PROXY TODAY. IF YOU HAVE ALREADY SENT A PROXY TO THE BOARD OF DIRECTORS OF JENSEN, YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE JENSEN/RECOTON MERGER, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW, BY SIGNING, DATING AND MAILING THE ENCLOSED BLUE PROXY. If you have any questions about the voting of shares of Jensen common stock, please call: GEORGESON & COMPANY INC. Call Toll Free: (800) 223-2064 In New York City, call: (212) 440-9800 CERTAIN LITIGATION CONCERNING THE JENSEN/RECOTON MERGER On May 9, 1996, Randi Marcus, a Jensen stockholder, filed suit in the Court of Chancery in Delaware against Jensen, Shaw, the other members of the Jensen Board, Recoton, and Blair seeking, among other things, to block the Jensen/Recoton Merger. The complaint (the "Complaint") alleges that the directors of Jensen breached their fiduciary duties, that they were aided and abetted by "potential acquirors" and that certain specified agreements were invalid. Ms. Marcus also challenged the proposed sale of Jensen's OEM Business to the newly-formed group led by Shaw. Based on the foregoing allegations, Ms. Marcus requested, among other things, the following relief from the Court: (a) temporary, preliminary and permanent injunctive and declaratory relief against the sale of the OEM Business, the Recoton transaction, the related transactions contemplated by the OEM Agreement and the Recoton Merger Agreement and any golden parachute payments due Shaw, and (b) rescission of any of the transactions referred to that are consummated. On May 15, 1996, Ms. Marcus filed an Amended and Supplemental Complaint in the same matter which supplemented facts that had become known to the plaintiff after the filing of the Complaint on May 9, 1996. The Amended and Supplemental Complaint generally requested the same relief as the Complaint. On May 10, 1996, Jensen filed suit in the Federal District Court in Chicago, Illinois, seeking an order restraining Emerson and its President, Eugene I. Davis, from violating the federal proxy rules or misusing any confidential information provided by Jensen in connection with Emerson's offer to acquire Jensen. On May 13, 1996, the Court entered a TRO against Emerson and Mr. Davis, based only on papers submitted by Jensen, which subsequently has expired and which the Court refused to extend over Jensen's objections. On May 20, 1996, Emerson filed a counterclaim and third-party complaint against Jensen and Shaw, seeking damages for fraud, rescission of the Confidentiality Agreement Emerson and Davis are alleged to have breached, and a declaratory judgment that Jensen may not enforce the Confidentiality Agreement with respect to certain information. In addition, until all claims are finally resolved, Emerson moved the court to enjoin Jensen from enforcing the Confidentiality Agreement with respect to certain information, or in the alternative, enjoin Jensen from soliciting any proxies with respect to the Jensen/Recoton Merger. On July 2, 1996, Emerson amended its third-party complaint to, among other things, sue Recoton and Blair for conspiracy with regard to the actions of Jensen and Shaw set forth above. Jensen subsequently attempted to silence Emerson through the filing of a civil contempt motion. The Court denied Jensen's motion. On May 22, 1996, Harbor Finance Partners, a stockholder of Jensen, filed an action in the Court of Chancery of the State of Delaware against Jensen, Blair, Shaw, the other members of the Jensen Board, Recoton, and RC Acquisition Sub, Inc., seeking to enjoin the Jensen/Recoton Merger. The complaint alleged (i) breaches of fiduciary duty by Jensen's directors, including allegedly failing to act in good faith to negotiate with both Emerson and Recoton, rejecting an allegedly higher priced all cash transaction with Emerson and failing to act reasonably to obtain the best price in the sale of Jensen; and (ii) that all of the defendants aided and abetted the alleged breaches of fiduciary duty. The plaintiff requested that the lawsuit be maintained as a class action on behalf of all public stockholders of Jensen and sought temporary and permanent injunctive and declaratory relief, rescission of the Jensen/Recoton Merger should it occur, the establishment of a stockholders' committee to participate in the sale of Jensen, the awarding of compensatory damages against the defendants, and such other further relief as may be just and proper and an award of attorneys' fees and expenses. On July 8, 1996, the existing Delaware plaintiffs filed a Consolidated Class Action Complaint (the "Class Action Complaint") in the Court of the Chancery in Delaware. The Class Action Complaint alleges claims similar to those previously made by Ms. Marcus and Harbor Finance Partners with additional allegations charging that the wrongful conduct of the defendants continued through Jensen's acceptance of the Third Two-Tier Recoton Proposal and the rejection of the June 25 Emerson Proposal. On July 16, 1996, plaintiffs in the consolidated class action filed a supplemental complaint in the Delaware Chancery Court asserting a new claim that the Stock Option and Voting Agreement between Blair and Recoton had terminated and that Blair was free to sell its shares to Emerson or vote them in favor of the July 16 Emerson Proposal. Also, on July 16, 1996, the Delaware court denied a motion by plaintiffs for an order expediting discovery and to schedule a hearing on the application of a preliminary injunction in the case. On July 23, 1996, Blair filed a motion seeking to dismiss the third- party action filed against it in the Federal District Court in Chicago. On July 30, 1996, Emerson filed a complaint in the Court of Chancery of the State of Delaware against Jensen, all of its directors, Blair, Recoton, and certain affiliates of the foregoing alleging violations of Delaware law involving Jensen's auction process, interference with prospective economic advantage, and aiding and abetting breaches of fiduciary duties. In particular, the complaint seeks an order enjoining the consummation of the Jensen/Recoton Merger and the sale of the OEM Business to Shaw. The complaint also seeks to require Jensen and its Board of Directors to provide relevant due diligence materials to Emerson and to engage in good faith negotiations with Emerson by asking the Court to order Jensen and its Board of Directors to conduct a fair auction on a level playing field. Emerson is also requesting the Court to award damages and further relief as would be just and equitable. The Court has ordered expedited discovery and has scheduled a hearing on the matter and on a motion for preliminary injunction filed on behalf of Jensen's stockholders for August 15, 1996. On July 31, 1996, Recoton and Shaw filed separate motions seeking to dismiss the third-party actions filed against them in the Federal District Court in Chicago, while Jensen filed a motion seeking to dismiss the counterclaims of Emerson filed against them in the same action. All of such motions were denied on August 6, 1996. On August 2, 1996, Emerson voluntarily dismissed Blair from the Chicago litigation. SOLICITATION OF PROXIES Proxies will be solicited by mail, telephone, telefax, and in person. Emerson has retained Georgeson & Company, Inc. ("Georgeson") for solicitation and advisory services in connection with solicitations relating to the Special Meeting, for which Georgeson is to receive a fee of not to exceed $75,000 of which $10,000 represents a nonrefundable commitment to represent Emerson; $25,000 upon mailing of this Proxy Statement; $15,000 two weeks following; and an additional $25,000 upon the success of the solicitation of proxies for the Special Meeting. Emerson has also agreed to reimburse Georgeson for its reasonable out-of-pocket expenses and indemnify Georgeson against certain liabilities and expenses, including reasonable legal fees and related charges. Georgeson will solicit proxies for the Special Meeting from (i) brokers, banks and other institutional holders of Jensen stock and (ii) non-objecting beneficial owners and individual holders of record. Directors, officers, and employees of Emerson may assist in this solicitation of proxies without any additional remuneration. See Schedule I attached hereto. The entire expense of soliciting proxies for the Special Meeting by or on behalf of Emerson is being borne by Emerson. Bankers Trust acted as financial advisor to Emerson in connection with its efforts to acquire Jensen. Emerson had agreed to pay Bankers Trust an initial financial advisory fee of $50,000; a fee of 1% of the financing amount, not to exceed $350,000, for the provision of a Highly Confident Letter and/or a Commitment Letter with respect to Bankers Trust view of the financeability of the transaction or a commitment to finance the transaction; a $100,000 work fee in connection with any tender or exchange offer for Jensen securities; a success fee equal to 1% of the consideration paid in connection with the successful consummation of the acquisition, not to exceed $500,000; plus 1% of the consideration for the transaction if Emerson should acquire any assets or securities of Jensen or any of its subsidiaries other than pursuant to an acquisition transaction. Emerson also had agreed to reimburse Bankers Trust for its reasonable out-of-pocket expenses, including the fees and expenses of its legal counsel, incurred in connection with its engagement, and to indemnify Bankers Trust and certain related persons against liabilities and expenses in connection with its engagement. Bankers Trust has rendered various investment banking and other advisory services to Emerson and its affiliates in the past and is expected to continue to render such services, for which it has received and will continue to receive customary compensation from Emerson. CERTAIN INFORMATION ABOUT EMERSON Emerson, one of the nation's largest volume consumer electronics distributors, directly and through subsidiaries, designs, sources, imports, and markets a variety of video and audio consumer and microwave oven products. The Company distributes its products primarily through mass merchants and discount retailers. The Company relies primarily on the strength of its trademark, a nationally recognized trade name in the consumer electronics industry. The trade name "Emerson Radio" dates back to 1912 and is one of the oldest and most well respected names in the consumer products industry. In addition, the Company offers audio products for sale under the "H.H. Scott" and "Electrophonic" brand names. Emerson believes it possesses an advantage over its competitors due to (i) the Emerson Radio brand recognition, (ii) its extensive distribution base and established relations with customers in the mass merchant and discount retail channels of distribution, (iii) its sourcing expertise and established vendor relations, and (iv) an infrastructure boasting personnel experienced in servicing and providing logistical support to the domestic mass merchant distribution channel. The Company's core business consists of the distribution and sale of various low to moderately priced product categories, including black and white and color televisions, VCR's, video cassette players, TV/VCR combination units, home stereo and portable audio products, and microwave ovens. The Company was originally formed in the State of New York in 1956 under the name Major Electronics Corp. In 1977, the Company reincorporated in the State of New Jersey and changed its name to Emerson Radio Corp. On April 4, 1994, Emerson was reincorporated in Delaware by merger of its predecessor into its wholly-owned Delaware subsidiary formed for such purpose. The Company is currently headquartered in Parsippany, New Jersey. OTHER INFORMATION The information concerning Jensen and the Jensen/Recoton Merger contained herein has been taken from, or based upon, publicly available documents on file with the Securities and Exchange Commission, other publicly available information, and non-confidential information provided to Emerson by Jensen. Emerson was not involved in the preparation of such information and statements and is not in a position to verify any such information or statements. Accordingly, Emerson does not take any responsibility for the accuracy or completeness of such information or for any failure by Jensen to disclose events that may have occurred and may affect the significance or accuracy of any such information. Reference is made to the Jensen Proxy Statement for information concerning the common stock of Jensen, the beneficial ownership of such stock by the principal holders thereof, other information concerning Jensen's management, the procedures for submitting proposals for consideration at the next annual meeting of stockholders of Jensen, information regarding the terms of the Recoton Merger Agreement, OEM Business sales agreement, and the agreements contemplated thereby, the financial statements of Jensen and pro forma presentations, and certain other matters regarding Jensen and the Special Meeting. Emerson assumes no responsibility for the accuracy or completeness of any such information. Emerson is not aware of any other matter to be considered at the Special Meeting. However, if any other matter properly comes before the Special Meeting, Emerson will vote all proxies held by it as Emerson, in its sole discretion, may determine. PLEASE SIGN, DATE AND MAIL THE ENCLOSED BLUE PROXY TODAY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. BY SIGNING AND MAILING THE ENCLOSED BLUE PROXY, ANY PROXY PREVIOUSLY SIGNED BY YOU RELATING TO THE SUBJECT MATTER HEREOF WILL BE AUTOMATICALLY REVOKED. EMERSON RADIO CORP. Dated August 8, 1996 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF EMERSON RADIO CORP. AND CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES OF EMERSON RADIO CORP. The following table sets forth the name and title of persons who may be deemed to be participants on behalf of Emerson Radio Corp. in the solicitation of proxies from stockholders of International Jensen Incorporated. The principal business address of each director, executive officer, employee, or representative is Nine Entin Road, Parsippany, New Jersey 07054. DIRECTORS AND EXECUTIVE OFFICERS OF EMERSON RADIO CORP. NAME POSITION Geoffrey P. Jurick Chairman of the Board and Chief Executive Officer, Director Eugene I. Davis President, Director Robert H. Brown Director Peter G. Bnger Director Jerome H. Farnum Director Raymond L. Steele Director John P. Walker Executive Vice President; Chief Financial Officer Marino Andriani President of Emerson Radio Consumer Products Corporation (a wholly-owned subsidiary of the Company) John J. Raab Senior Vice President - Operations Eddie Rishty Senior Vice President - Controller and Logistics Elizabeth J. Calianese Vice President - Human Resources; Secretary FORM OF PROXY CARD PROXY SOLICITED BY EMERSON RADIO CORP. IN OPPOSITION TO THE PROXY SOLICITED BY THE DIRECTORS OF INTERNATIONAL JENSEN INCORPORATED The undersigned, a holder of record of shares of common stock, par value $.01 per share (the "Shares"), of International Jensen Incorporated, a Delaware corporation ("Jensen"), at the close of business on July 15, 1996 (the "Record Date"), hereby appoints Geoffrey P. Jurick, Eugene I. Davis, and John P. Walker, or any of them, as proxy or proxies of the undersigned, each with full power of substitution, to attend the Special Meeting of Jensen Stockholders to be held at the International Office Center, First Floor Auditorium, Building 200, Lincolnshire, Illinois 60069, on August 28, 1996, at 9:00 a.m. (and any adjournments, postponements, continuations or reschedulings thereof), at which holders of Shares will be voting on, among other things, approval and adoption of the Fourth Amended and Restated Agreement and Plan of Merger, dated as of January 3, 1996, by and among Jensen, Recoton Corporation ("Recoton") and RC Acquisition Sub, Inc. ("Acquisition Sub") (the "Recoton Merger Agreement"), providing for the merger of each of Acquisition Sub with and into Jensen, with Jensen surviving, and OEM Agreement and to vote as specified in the proxy all the Shares which the undersigned would otherwise be entitled to vote if personally present. The undersigned hereby revokes any previous proxies with respect to the matters covered in this Proxy. THE BOARD OF DIRECTORS OF EMERSON RADIO CORP. RECOMMENDS A VOTE AGAINST APPROVAL AND ADOPTION OF THE RECOTON MERGER AGREEMENT AND THE PROPOSED JENSEN/RECOTON TRANSACTION, INCLUDING THE SALE OF THE OEM BUSINESS TO SHAW. IF RETURNED CARDS ARE SIGNED BUT NOT MARKED, THE UNDERSIGNED WILL BE DEEMED TO HAVE VOTED AGAINST APPROVAL AND ADOPTION OF THE RECOTON MERGER AGREEMENT AND THE PROPOSED JENSEN/RECOTON TRANSACTION. (REVERSE OF PROXY CARD) EMERSON RADIO CORP. RECOMMENDS A VOTE AGAINST PROPOSAL 1. 1. The approval and adoption of the Fourth Amended and Restated Agreement and Plan of Merger dated as of January 3, 1996, among Jensen, Recoton Corporation, a New York corporation ("Recoton"), and RC Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Recoton, and the transactions contemplated thereby, including the Jensen/Recoton Merger and the sale of the OEM Business to IJI Acquisition Corp., an Illinois corporation solely owned by Robert G. Shaw. [_] AGAINST [_] FOR [_] ABSTAIN 2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Special Meeting or any adjournments, postponements, continuations or reschedulings thereof. Dated:_____________________, 1996 _________________________________ Signature (Title, if any) _________________________________ Signature if held jointly Please sign your name exactly as it appears hereon. When Shares are held of record by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or authorized officer. If a partnership, please sign in partnership name by authorized person. IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CONTACT GEORGESON & COMPANY INC. AT 1-800-223-2064. -----END PRIVACY-ENHANCED MESSAGE-----