<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /x/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
--------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
WIRELESS XCESSORIES GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
WIRELESS XCESSORIES GROUP, INC.
1840 COUNTY LINE ROAD
HUNTINGDON VALLEY, PENNSYLVANIA 19006
(215) 494-0111
Notice of Annual Meeting of Stockholders
To Be Held on November 28, 2000
To holders of shares of common stock:
You are invited to be present either in person or by proxy at the
annual meeting of stockholders of Wireless Xcessories Group, Inc. to be held at
its principal executive offices at 1840 County Line Road, Huntingdon Valley,
Pennsylvania 19006, on Tuesday, November 28, 2000, beginning at 10:00 a.m.,
local time, for the following purposes:
1. To elect six (6) directors for the coming year;
2. To approve an amendment to the Wireless Xcessories Group, Inc.
1995 Stock Option Plan to increase to 1,000,000 the number of
shares issuable upon exercise of options granted under the
plan, an increase of 400,000 shares;
3. To ratify the selection of Arthur Andersen LLP as the
company's independent auditors for the year ending December
31, 2000; and
4. To transact any other business as may properly come before the
meeting or any postponements or adjournments.
Management presently knows of no other business to be presented at the
meeting. If any other matters come before the meeting, the persons named in the
enclosed proxy will vote with their judgment on those matters.
The board of directors has fixed the close of business on October 19,
2000 as the record date for determining stockholders entitled to notice of and
to vote at the meeting and any adjournments. To make sure that your vote is
counted, please complete, date and sign the enclosed proxy and return it
promptly in the enclosed envelope, whether or not you plan to attend the meeting
in person. A self-addressed, postage paid envelope is enclosed for your
convenience. If you do attend the meeting, you may then withdraw your proxy and
vote your shares in person. In any event, you may revoke your proxy prior to its
exercise. Shares represented by proxies which are returned properly signed but
unmarked will be voted in favor of proposals made by the company.
By order of the board of directors,
/s/ Christopher F. McConnell
-----------------------------------
Christopher F. McConnell
October 31, 2000 Chairman of the Board
Huntingdon Valley, Pennsylvania
Your vote is important.
PLEASE FILL IN, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
<PAGE>
WIRELESS XCESSORIES GROUP, INC.
1840 County Line Road
Huntingdon Valley, Pennsylvania 19006
(215) 494-0111
--------------------
PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 28, 2000
--------------------
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
by the board of directors of Wireless Xcessories Group, Inc. (the "Company") of
proxies to be voted at its annual meeting of stockholders on Tuesday, November
28, 2000, to be held at 10:00 a.m., local time, at its offices at 1840 County
Line Road, Huntingdon Valley, Pennsylvania and at any adjournments, for the
purposes set forth in the accompanying notice of the meeting. This proxy
statement, the foregoing notice and the enclosed proxy card will first be mailed
to stockholders entitled to vote on or about October 31, 2000.
Sending a signed proxy will not affect a stockholder's right to attend
the meeting and vote in person because the proxy is revocable. Any stockholder
giving a proxy has the power to revoke it by returning to the Company prior to
the annual meeting a proxy bearing a later date, by attending the meeting and
voting in person or by otherwise giving written notice to the Secretary of the
Company at any time before the proxy is exercised.
When your proxy card is returned properly signed, those shares will be
voted in accordance with your instructions. The board knows of no matters that
are likely to be brought before the meeting, other than the matters specifically
referred to in the notice of the meeting. If any other matters properly come
before the meeting, the persons named in the enclosed proxy, or their duly
appointed substitutes acting at the meeting, will be authorized to vote or
otherwise act with their judgment in those matters. In the absence of
instructions, the shares represented at the meeting by the enclosed proxy will
be voted "FOR" the nominees for director, "FOR" the increase in the number of
shares issuable under the Wireless Xcessories Group, Inc. 1995 Stock Option Plan
and "FOR" the ratification of the selection of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 2000.
SOLICITATION OF PROXIES
The expense of this proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone or telecopy by officers or other regular employees of the Company,
without additional compensation to those officers and other employees. The
Company is required to pay, upon request, the reasonable expenses incurred by
record holders of common stock, who are brokers, dealers, banks, voting trustees
or other nominees for mailing proxy material and annual stockholder reports to
any beneficial owners of common stock they hold of record.
<PAGE>
QUORUM AND VOTING RIGHTS
Holders of record of the Company's common stock, as of the close of
business on October 19, 2000, the record date, will be entitled to notice and to
vote at the meeting and at any adjournments. Holders of shares of common stock
are entitled to vote on all matters brought before the meeting.
As of October 19, 2000, there were 5,223,080 shares of common stock
outstanding and entitled to vote on all matters. Each outstanding share of
common stock entitles the holder to one vote.
The presence in person or by proxy of the holders of a majority of the
outstanding common stock is necessary to constitute a quorum at the meeting.
The election of directors requires the favorable vote of a plurality
of the votes cast at the meeting by the holders of stock entitled to vote at the
meeting. The approval of the amendment to the 1995 Stock Option Plan and
ratification of the board's selection of the Company's auditors and any other
matters brought before the meeting will require the favorable vote of a majority
of the votes cast at the meeting by the holders of stock entitled to vote at the
meeting. The holders of common stock are not entitled to cumulate their votes in
the election of directors.
Abstentions will be counted for the purpose of determining whether a
quorum is present at the meeting and as votes cast and will have the effect of a
negative vote. Broker non-votes for all proposals will not be counted in
determining the presence of a quorum and will not be considered as votes cast,
and will have no effect on the results of the votes.
The Company is not aware of any matter, other than as referred to in
this proxy statement, to be presented at the meeting.
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The board currently consists of six directors. One director, Mr.
Christopher C. Cole, was appointed by the board on February 16, 2000 to fill an
existing vacancy. At the meeting, the stockholders will elect all six directors
for a term ending at the next annual meeting of stockholders and until that
director's successor is duly elected and qualified.
The table below sets forth the name of each person nominated by the
board to serve as a director for the coming year and the executive officers of
the Company. All of the nominees are currently directors of the Company for
terms expiring at the meeting. Each nominee has consented to be named as a
nominee and, to the present knowledge of the Company, is willing to serve as a
director, if elected. Should any of the nominees not remain a nominee at the end
of the meeting (a situation which is not anticipated), solicited proxies will be
voted in favor of those who remain as nominees and may be voted for substitute
nominees. Unless contrary instructions are given on the proxy, the shares
represented by a properly executed proxy will be voted "FOR" the election of
Christopher F. McConnell, Stephen Rade, Bradley T. MacDonald, Barbara M.
Henagan, Allan S. Kalish and Christopher C. Cole.
<TABLE>
<CAPTION>
Year First Elected
Nominees Position Age as a Director
-------- -------- --- -------------
<S> <C> <C> <C>
Christopher F. McConnell Chairman of the Board 47 1998
Stephen Rade President, Chief Executive Officer 63 1996
and Director
Bradley T. MacDonald Director 53 1999
Barbara M. Henagan Director 41 1999
Allan S. Kalish Director 75 1998
Christopher C. Cole Director 45 2000
Ronald E. Badke Chief Financial Officer and Secretary 55 n/a
</TABLE>
The principal occupations and qualifications of each nominee for
director are as follows:
Mr. McConnell has been Chairman of the Board of the Company since
December 1998. In addition, he is a principal of The Founders Group, an
organization dedicated to helping launch new, technology-based companies. Mr.
McConnell also co-founded and currently serves as Chairman of the Board of CFM
Technologies, Inc., a semiconductor capital equipment company, and Mi8
Corporation, a leading application service provider (ASP).
Mr. Rade has been President and Chief Executive Officer of the Company
since June 1998. From 1996 until June 1998, he was Executive Vice President of
the Company. He has been a director since April 1996. He has been the President,
Chief Executive Officer and a director of Advanced Fox Antenna, Inc., a wholly
owned subsidiary of the Company, since he founded that company in 1990.
Mr. MacDonald was elected a director of the Company in March 1999. He
is the Chairman of the Board and Chief Executive Officer of HealthRite, a
position he has held since January 1996. Prior to that election, he was
appointed as Program Director of the U.S. Olympic Coin Program of the Atlanta
Centennial Olympic Games. Mr. MacDonald has been employed by HealthRite as its
Chief Executive Officer since September 1996. From 1991 through 1994, Mr.
MacDonald was Deputy Director and Chief Financial Officer of the Retail, Food
and Hospitality and Recreation Business for the United States Marine Corps.
Ms. Henagan was elected to a director of the Company in March 1999.
From 1982 to 1999, she
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<PAGE>
was a Senior Managing Director of Bradford Ventures, Ltd. Since July 1999, she
has served as Manager of Linx Partners. Ms. Henagan also serves on the Board of
Directors of General Bearing Corporation and Hampton Industries, both public
companies.
Mr. Kalish is the owner of Kalish & Associates, a consulting firm
specializing in marketing, advertising and public relations, which he founded in
1986. Kalish & Associates serves advertisers, marketers and advertising agencies
throughout the country, including three New York Stock Exchange companies. Prior
to founding Kalish & Associates, Mr. Kalish managed Kalish & Rice, Inc., one of
the largest advertising agencies in Philadelphia. Mr. Kalish served as a member
of the Board of Directors of Checkpoint Systems, Inc., a New York Stock Exchange
listed company, from 1993 to 1997.
Mr. Cole was elected as a director of the Company in February 2000. He
currently is a private investor and runs Cole Consulting in Cincinnati, OH.
Until the acquisition of Pinnacle Automation by FKI, Plc. in early 2000, Mr.
Cole was employed by Pinnacle Automation as its Chief Operating Officer and
served as a director of Pinnacle Automation since June 1997 and as Executive
Vice President from March 1994 to June 1997. Mr. Cole served as a Vice President
of Cincinnati Milacron, from 1987 through March of 1994.
Mr. Badke has been Chief Financial Officer of the Company since
November 1995 and Secretary of the Company since March 1999. He was a Senior
Vice President and the Chief Financial Officer of Shoe Town Inc. from 1984
through September 1994, positions he later held (September to November 1995)
with Natures Elements. Mr. Badke, a certified public accountant, had been a
consultant from October 1994 through August 1995.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE NOMINEES
PRESENTED.
Meetings and Committees of the Board
During the year ended December 31, 1999, the Company's board of
directors held four meetings. The board has an Audit Committee and a
Compensation and Stock Option Committee but does not have an executive committee
or a nominating committee.
The Audit Committee of the board of directors consists of Mr.
MacDonald, Ms. Henagan and Mr. Cole. The duties and responsibilities of the
Audit Committee include, among other things, review of the Company's financial
statements, consideration of the nature and scope of the work to be performed by
the Company's independent auditors, discussion of the results of such work, the
receipt from such auditors of their letters to management which evaluate (as
part of their annual audit of the Company's financial statements) the internal
accounting control systems of the Company and meeting with representatives of
management to discuss particular areas of the Company's operations. The Audit
Committee held two meetings during 1999.
The Compensation and Stock Option Committee consists of Mr. Kalish, Ms.
Henagan and Mr. Cole. Its principal duties are the administration of the 1995
Stock Option Plan and the review and determination of the executive officers'
compensation program. The Compensation and Stock Option Committee held two
meetings during 1999.
4
<PAGE>
PROPOSAL NO. 2 - APPROVAL OF AMENDMENT TO 1995 STOCK OPTION PLAN
The Wireless Xcessories Group, Inc. 1995 Stock Option Plan, as amended
in December 1995 and September 1998, currently authorizes the issuance of
options to purchase up to 600,000 shares of common stock. In May 2000, the board
amended the 1995 Stock Option Plan, subject to stockholder approval, to increase
the aggregate number of shares authorized for issuance upon exercise of options
granted under this plan to 1,000,000. This amendment is designed to enhance the
flexibility of the administering committee in granting stock options to the
Company's directors, employees and non-employee consultants and advisors and to
ensure that the Company can continue to grant stock options to these persons at
levels determined to be appropriate by the committee.
General
The 1995 Stock Option Plan provides for the grant to directors,
employees and non-employee consultants and advisors of the Company and its
subsidiaries, approximately 26 persons, both incentive stock options and
non-qualified stock options to purchase up to 600,000 shares of common stock. If
the amendment is adopted by the stockholders, the number of shares which may be
issued upon exercise of options under this plan would increase by 400,000 shares
to 1,000,000 shares.
Purpose
The purpose of the plan is:
-- to attract and retain persons with training,
experience and ability as directors, employees and
non-employee consultants and advisors,
-- to encourage the sense of proprietorship of those
persons and
-- to stimulate the active interest of those persons in
our development and financial success.
Effectiveness
The amendment to the plan will become effective if it receives the
favorable vote of a majority of the votes cast at the meeting by the holders of
stock entitled to vote at the meeting.
Administration
The plan is administered by a committee designated by the board
consisting of at least two members of the board.
Exercise of Options
The exercise price for options granted under the plan is determined by
the committee at the time of grant. For incentive stock options, the exercise
price may not be less than 100% of the fair market value of the common stock on
that date. For non-qualified stock options, the exercise price may not be less
than 75% of the fair market value of the common stock on that date.
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The fair market value is the closing price of the common stock on
Nasdaq on the date the option is granted. If there are no sales on the date the
option is granted, the fair market value is the average of the closing sale
prices on the three most recent trading days preceding the date on which the
option is granted. If there were no closing sales prices, the fair market value
is the average of the high bid and low asked prices on Nasdaq on the date the
option is granted.
Options become exercisable as determined by the committee. The
committee determines the term of options but no term may exceed 10 years. In
addition, the committee is authorized to establish the period during which
options may be exercised following the termination of employment of an employee
option holder or, if the optionee is a non-employee director, after service as a
director. In accordance with this delegated authority, the committee on April
18, 2000 determined that all option agreements entered into after that date
should provide the following:
-- for an employee optionee who is terminated, the
options may not be exercised after the termination,
unless that termination is without cause, as
determined by the Company's board in its good faith
judgment. If the optionee is terminated without
cause, any outstanding, vested and unexpired option
may be exercised for a period of 90 days after the
date of termination.
-- for a non-employee director optionee who ceases to
serve as a director, the optionee may exercise any
outstanding, vested and unexpired option until the
earlier of the expiration of the option or one year
from the date the optionee ceases to serve as a
director.
-- for directors who are also employees, any vested
option may be exercised as long as the person remains
a director or an employee. If the optionee ceases to
serve as both a director and an employee, vested and
unexpired options may be exercised until the earlier
of the expiration of the option or one year from the
date the optionee ceases to serve as an employee or
director, whichever is later, but only to the extent
that the option had vested at that date.
In the latter two instances, the board may also extend the post-termination
exercise period for up to five years, but in no event may an option be exercised
after the period the option by its terms would otherwise have been exercisable.
The price payable upon the exercise of options may be paid in cash or,
with the consent of the committee, in shares of common stock held by the
optionee or in any other consideration that is deemed satisfactory by the
committee.
Transferability
Optionees may not transfer options, except by will or the laws of
descent and distribution. An option may be exercised, during the optionee's
lifetime, only by the optionee.
Changes in the common stock of the Company
If the outstanding common stock is increased or decreased as a result
of a stock split or the payment of a stock dividend or otherwise, an appropriate
and proportionate adjustment will be made in the number of shares covered by
each outstanding option and the purchase price of the shares.
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Options outstanding, exercisable and available for future grant
As of October 19, 2000, options to purchase 358,112 shares of common
stock were outstanding under the 1995 Stock Option Plan, of which 235,717
options were exercisable. The exercise price for the outstanding options ranged
from $1.062 to $5.00 per share. On October 19, 2000, the closing price of the
Company's common stock on Nasdaq was $0.875 per share. At October 19, 2000,
options to purchase 152,540 shares (plus any options that expire or are
cancelled in the future) were available for future grant exclusive of 400,000
additional shares covered by the proposed amendment.
Federal income tax consequences
Incentive stock options. An optionee will not be deemed to receive any
income at the time an incentive stock option is granted or exercised under the
plan. (However, special rules apply to optionees who are subject to the
alternative minimum tax.) If an optionee does not dispose of the shares acquired
upon exercise of the underlying option for two years after grant of the option
and one year after exercise of the option, the gain (if any) on a subsequent
sale (the amount received less the exercise price) or loss (if any) on a
subsequent sale (the exercise price less the amount received) will be a
long-term capital gain or loss.
If the optionee disposes (whether by sale, exchange or gift) of the
shares acquired upon exercise within two years after the date of grant or within
one year after exercise of the option, the disposition is a "disqualifying
disposition," and the optionee will recognize income in the year of the
"disqualifying disposition" equal to the amount received for the shares less the
exercise price. Of that income, the portion equal to the excess of the fair
market value of the shares at the time the option was exercised over the
exercise price will be treated as compensation taxable as ordinary income (for
which the Company will be entitled to a tax deduction, subject to any applicable
Internal Revenue Code limitation, in the year of the "disqualifying
disposition") and the balance, if any, will be long-term or short-term capital
gain depending on whether the shares were sold more than one year after the
option was exercised. However, in the case of a "disqualifying disposition" that
is a sale or exchange (other than a sale or exchange by persons related to the
optionee), the amount of compensation income recognized by the optionee will not
exceed the excess of the amount received over the exercise price, even where the
amount received is less than the fair market value of the shares at the time the
option was exercised. If an optionee uses shares acquired upon exercise of an
option to exercise that option at a time when the sale of the shares would
constitute a "disqualifying disposition," the optionee will recognize ordinary
income in the amount described in the preceding two sentences.
Non-qualified stock options. An optionee will not be considered to
receive any income at the time a non-qualified stock option is granted, nor will
the Company be entitled to a deduction. However, when the option is exercised,
the optionee will be considered to have received compensation taxable as
ordinary income in an amount equal to the difference between the exercise price
of the option and the fair market value of the shares received upon exercise.
If a director or executive officer exercises an option within six
months of the date of grant, the recognition of income will be delayed until the
shares may be resold without incurring liability under the securities laws
(generally six months after the date of grant of the option). In that case,
ordinary income will be determined upon recognition, based on the fair market
value of the shares on that date. However, if a director or executive officer
files an appropriate election under the Internal Revenue Code with the IRS
within 30 days of his or her exercise of the option, the optionee will be deemed
to have received compensation taxable as ordinary income for the difference
between the exercise price and the fair market value on the date of exercise of
the shares received.
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The Company will (subject to any applicable Internal Revenue Code
limitation) be entitled to a tax deduction for compensation taxable as ordinary
income recognized by the optionee.
Upon the sale of shares received upon exercise of an option, any gain
(the amount received less the fair market value of the shares on the date
ordinary income was recognized) or loss (the fair market value of the shares on
the date ordinary income was recognized less the amount received) will be a
long-term capital gain or loss if the sale occurs more than one year after the
date of exercise (or, if later, the date when income was recognized by the
optionee) and otherwise will be a short-term capital gain or loss.
If all or any part of the exercise price of the option is paid by the
optionee with shares of common stock (including shares previously acquired upon
exercise of an option), no gain or loss will be recognized on the shares
surrendered in payment. Shares received on exercise of the option equal to the
number of shares surrendered will have the same basis and holding period, for
purposes of determining whether future dispositions result in long-term or
short-term capital gain or loss, as the basis and holding period of the shares
surrendered. The balance of the shares received on exercise will be treated for
federal income tax purposes as described in the preceding paragraphs as though
issued upon exercise for a purchase price equal to the consideration, if any,
paid by the optionee in cash. The optionee's compensation, which is taxable as
ordinary income upon exercise, and the Company's deduction will not be affected
whether the exercise price is paid in cash or in shares of common stock.
THIS GENERAL DESCRIPTION OF THE POSSIBLE FEDERAL INCOME TAX
CONSEQUENCES OF EXERCISING OPTIONS OR SELLING SHARES PURCHASED THROUGH THE
EXERCISE OF OPTIONS IS BASED ON THE INTERNAL REVENUE CODE, AS IT HAS BEEN
INTERPRETED TO DATE AND THEREFORE MAY NOT BE A SUFFICIENT DESCRIPTION OF THE
CONSEQUENCES IF THERE WERE A CHANGE IN THE INTERNAL REVENUE CODE AS IT IS
CURRENTLY WRITTEN OR INTERPRETED. BECAUSE THE CONSEQUENCES MAY VARY WITH EACH
OPTIONEE, IT IS RECOMMENDED THAT OPTIONEES CONSULT WITH THEIR OWN TAX ADVISORS
TO DETERMINE THE TAX CONSEQUENCES, INCLUDING STATE, LOCAL OR NON-U.S. INCOME TAX
CONSEQUENCES.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE WIRELESS XCESSORIES GROUP, INC. 1995 STOCK OPTION PLAN.
PROPOSAL NO. 3 - RATIFICATION OF SELECTION OF AUDITORS
The board has selected Arthur Andersen LLP as the Company's independent
auditors for the year ending December 31, 2000 and the stockholders are asked to
ratify this selection. Arthur Andersen LLP has advised the Company that it has
no direct or material indirect interest in the Company or its affiliates.
Representatives of Arthur Andersen LLP are expected to attend the annual meeting
and will have the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
The favorable vote of a majority of the votes cast at the meeting by
holders entitled to vote at the meeting.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31,
2000.
CHANGE IN ACCOUNTANTS
By letter dated October 25, 1999, the Company terminated the engagement
of Deloitte & Touche,
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LLP ("Deloitte") as the Company's independent auditors, effective immediately.
On October 25, 1999, the Company engaged the independent certified public
accounting firm of Arthur Andersen LLP to audit the Company's consolidated
financial statements for the year ended December 31, 1999. This change in
accountants was approved and ratified by the Company's board of directors.
Deloitte's report on the Company's consolidated financial statements at
and for each of the years in the two year period ended December 31, 1998 did not
contain any adverse opinion, disclaimer of opinion and was not qualified or
modified as to any uncertainty of the audit's scope or accounting principles.
There were no disagreements between the Company and Deloitte on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to such accountant's
satisfaction, would have caused such accountant to make reference to the subject
matter of the disagreement in connection with its report on the consolidated
financial statements of the Company.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth for the years ended December 31, 1999,
1998 and 1997 the compensation for services rendered in all capacities to the
Company and subsidiaries by the Chief Executive Officer and the Company's other
executive officer.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------
Name and Position Year Salary
----------------- ---- ------
Stephen Rade 1999 $398,000(1)
Chief Executive Officer, 1998 350,000(2)
President and Director 1997 350,000(3)
Ronald E. Badke 1999 $135,000
Chief Financial Officer and 1998 135,000
Secretary 1997 129,515(4)
--------------------
(1) Includes a bonus of $200,000 earned in 1999 and payable in 2000.
(2) Includes a bonus of $200,000 earned in 1998 and deferred pursuant to an
agreement relating to the acquisition of Advanced Fox Antenna, Inc.
(3) Includes a bonus of $200,000 earned in 1997 and deferred pursuant to an
agreement relating to the acquisition of Advanced Fox Antenna, Inc.
(4) Does not include a bonus of $15,000 earned in 1996 and paid in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
Under the Wireless Xcessories Group, Inc. 1995 Stock Option Plan, the
board of directors or a stock option committee appointed by the board may grant
stock options to officers, key employees, directors, and independent consultants
of the Company. Currently, 600,000 shares of the Company's common stock are
subject to the plan.
Neither of the Company's executive officers was granted options in
1999.
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The following table sets forth the number of shares which underlie
unexercised options held at December 31, 1999 by the executive officers named in
the Summary Compensation Table. Neither of those officers exercised options
during 1999.
FISCAL YEAR END OPTION VALUES
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal at Fiscal Year-End
Year End
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
Stephen Rade 25,000/0 $53,000/$0
Ronald E. Badke 65,000/0 $17,500/$0
Employment Agreements
The employment agreements between the Company and each of Messrs.
Tauber, Rade and Badke terminated on April 1998, April 1999 and March 1999,
respectively.
Compensation of Directors
The Company does not pay a fee to its directors. It reimburses those
directors who are not employees of the Company for their expenses incurred in
attending meetings.
In addition, the Company recently approved the annual grant of options
to purchase the Company's common stock to certain directors in accordance with
the 1995 Stock Option Plan. Specifically, the board approved the following
grants:
-- to the chairperson of the board (if not also an
employee of the Company): an option to purchase
15,000 shares of common stock (the "Chairperson
Options"),
-- to every other director (if not also an employee of
the Company): an option to purchase 8,000 shares of
common stock (the "Director Options"), and
-- to each director who is a member of a board
committee: an option to purchase 3,000 shares of
common stock multiplied by the number of committees
on which the director sits ("Committee Options").
A director who receives Chairperson Options may not also receive Director
Options, unless the board determines otherwise.
Half of these options vest on the date they are granted, with the
remaining half vesting one year later; provided that these options will
terminate and never vest if the director receiving them does not attend at least
75% of the meetings of the board (or meetings of the applicable board committee,
in the case of Committee Options) held during the one year period following the
date the options are granted.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation and Stock Options Committee (the "Committee") is
authorized to review and make recommendations to the board as to the
compensation in cash or other forms for its executive officers, as described
below. The Committee currently has three members, Mr. Allan S. Kalish, Mr.
Christopher C. Cole and Ms. Barbara M. Henagan.
COMPENSATION MIX
The Company's executive compensation packages generally include three
components: base salary, a discretionary annual cash bonus and stock options.
The Committee generally reviews, and makes any changes to, the base salary and
bonus of each executive officer as of the beginning of each calendar year.
Base Salary
Its compensation policy is to provide for base salaries which are
comparable to the compensation paid to executive officers of equivalent
competency and responsibilities by companies of comparable size and
capitalization both in and out of the cellular accessories industry.
Discretionary Cash Bonus
The Committee believes that discretionary cash bonuses are useful on a
case by case basis to motivate and reward executive officers. Bonuses for
executive officers are not guaranteed, but are awarded from time to time only in
the discretion of the Committee. Criteria for bonuses for executive officers
range from success in increasing revenues to attracting equity capital.
Stock Options
Grants of stock options under the 1995 Stock Option Plan are designed
to promote the identity of the long-term interests between the Company's
executives and its stockholders and to assist in the retention of executives.
Since stock options granted by the Company generally become exercisable over a
multi-year period, their ultimate value is dependent upon the long-term
appreciation of the Company's stock price and the executive's continued
employment with the Company. In addition, grants of stock options may result in
an increase in executive officers' equity interests in the Company, thereby
providing such persons with the opportunity to share in the future value they
are responsible for creating.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Until its termination in April 1999, Mr. Rade's employment agreement
set forth his compensation package. Following the termination of that agreement,
in 1999 the Committee increased Mr. Rade's base salary and granted him a bonus
equal to the bonuses he received in each of the previous two years. The
Committee has determined that this package is competitive with that of chief
executives of certain other companies in the same or similar industries at
comparable stages of development. In addition, in order to align Mr. Rade's
interests with the long-term interests of the Company's stockholders, the
Committee attempts to make a significant portion of the value of his total
compensation dependent on the long-term appreciation of the Company's stock
price.
The Committee believes that Mr. Rade's performance as Chief Executive
Officer of the Company must be evaluated almost exclusively using subjective
criteria, including the Committee's evaluation of the Company's progress in
attracting and retaining senior management, identifying new products and market
segments and developing the Company's internet business strategy.
11
<PAGE>
In determining Mr. Rade's compensation package, the Committee
considered the following accomplishments of the Company during calendar year
1999:
-- the initiation of the Company's Internet business
strategy through its AccessorySolutions.com, Inc.
subsidiary,
-- the Company's significant progress in disposing of
its battery assembly and distribution segment, and
-- the increased sales volume in 1999, accompanied by
the ongoing development of the Company's warehousing
and distribution infrastructure.
Compensation Committee
Allan S. Kalish
Barbara M. Henagan
Christopher C. Cole
This report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under the Securities Act
and the Exchange Act and shall not be deemed soliciting material.
Compensation Committee Interlocks and Insider Participation
The Compensation and Stock Option Committee of the board is composed of
Mr. Allan S. Kalish, Mr. Christopher C. Cole and Ms. Barbara M. Henagan. Neither
of the members of the Compensation and Stock Option Committee were employees of
the Company during the year ended December 31, 1999.
12
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of October 19,
2000, as supplied to the Company, regarding the beneficial ownership of the
common stock by all persons known to the Company who own more than 5% of the
outstanding shares of the Company's common stock, each director of the Company,
each executive officer of the Company named in the Summary Compensation Table
included elsewhere in this proxy statement and all executive officers and
directors as a group. Unless otherwise indicated, based on information provided
to the Company by the directors, executive officers and principal stockholders,
the persons named in the table below have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them.
Number of
Shares
Beneficially
Name Owned (1) Percentage (2)
---- --------- --------------
Christopher F. McConnell (3) 171,067 3.3%
Robert W. Tauber (4) 258,000 4.9%
Stephen Rade (5) 775,000 14.8%
Ronald E. Badke (6) 69,000 1.3%
Christopher C. Cole (7) 27,000 **
Allan Kalish (8) 46,500 **
Barbara M. Henagan (9) 169,131 3.2%
Bradley T. MacDonald (10) 11,000 **
Directors and Officers as a group 1,526,698 29.2%
(8 persons) (11)
-------------------
* The business address of each shareholder named in this table,
is Wireless Xcessories Group, Inc., 1840 County Line Road,
Huntingdon Valley, PA 19006.
** Less than 1%.
(1) For purposes of this table, a person or group is deemed to have
"beneficial ownership" of any shares which such person has the right to
acquire within 60 days.
(2) Percentage ownership is based on 5,223,080 shares of common stock
outstanding on October 19, 2000. For purposes of computing the
percentage of outstanding shares held by each such person or group of
persons named above, any security which such person or group of persons
has the right to acquire within 60 days is deemed to be outstanding,
but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
13
<PAGE>
(3) Includes exercisable options to purchase 15,000 shares.
(4) Includes exercisable options to purchase 63,000 shares.
(5) Includes exercisable options to purchase 25,000 shares.
(6) Includes exercisable options to purchase 69,000 shares.
(7) Includes options to purchase 7,000 shares.
(8) Includes exercisable options to purchase 39,000 shares.
(9) Includes exercisable options to purchase 14,000 shares and 2,000 shares
held in a trust for which she serves as a Trustee.
(10) Includes exercisable options to purchase 11,000 shares.
(11) Includes exercisable options to purchase 243,000 shares.
Performance Graph
The following graph compares the percentage change in cumulative total
stockholder return on the Company's common stock, on a quarterly basis, from
April 9, 1996 to the present with the cumulative total return over the same
period of (i) the Russell 2000 Index and (ii) Peer Group which consists of U.S.
Office Products Company, Richy Electronics Inc., Omnipoint Corp., Kent
Electronics Corp. and Brightpoint Inc. The Russell 2000 Index measures the
performance of the 2,000 smallest companies within the 3,000 largest United
States companies based on total market capitalization. HISTORIC STOCK PRICE IS
NOT INDICATIVE OF FUTURE STOCK PRICE PERFORMANCE.
CUMULATIVE ANNUAL STOCKHOLDER RETURN
WIRELESS XCESSORIES GROUP, INC., RUSSELL 2000 AND PEER GROUP
(PERFORMANCE RESULTS THROUGH DECEMBER 31, 1999)
[INSERT GRAPH]
<TABLE>
<CAPTION>
4/9/96 12/31/96 12/31/97 12/31/98 12/31/99
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Wireless Xcessories Group, Inc. $100.00 $ 64.14 $ 30.97 $ 29.36 $ 60.87
Russell 2000 Index $100.00 $105.17 $128.51 $125.00 $147.80
Peer Group (including RCHY) $100.00 $ 81.08 $ 82.02 $ 27.06 $123.54
Peer Group (excluding RCHY) $100.00 $ 80.75 $ 82.00 $ 26.05 $118.54
</TABLE>
Assumes that $100 are invested at the open of trading (April 9, 1996) in
Wireless Xcessories Group, Inc. common stock, Russell 2000 Index and Peer Group
and that all dividends are reinvested.
CERTAIN TRANSACTIONS
14
<PAGE>
In consideration for the acquisition of Tauber and Advanced Fox, the
Company in April 1996 issued to Robert W. Tauber, a former director of the
Company, 300,000 shares of common stock and a five year option to purchase an
additional 50,000 shares at $5.00 per share. This option remains unexercised.
The principal offices of Advanced Fox, which comprise approximately
7,000 square feet in Huntingdon Valley, Pennsylvania, were occupied under a
month-to-month lease with Rade Limited Partnership, of which Mr. Rade and his
wife are the partners. The lease, as amended with respect to additions to the
facility, provides for an annual rent of $70,000 with the tenant obligated to
pay the applicable real estate taxes and maintenance and insurance costs. The
Company terminated this lease on or April 30, 2000. The Company relocated its
principal offices to space leased from a third party. Rental payments under
the lease with Rade Limited Partnership for the twelve months ended December 31,
1999, 1998 and 1997 were $76,462, $76,000 and
$76,000, respectively.
PRIOR MANAGEMENT
Messrs. Warren H. Haber, the former Chairman of the Board, and John L.
Teeger, the former Vice President, Secretary and Director of the Company, were
the sole stockholders, officers and directors of Founders Management Services,
Inc. ("Founders"). Pursuant to the Management Agreement between Founders and the
Company dated as of June 6, 1995, as subsequently amended, Founders was to
provide advice and consultative services regarding management, overall strategic
planning, acquisition policy, relations with commercial and investment banking
institutions, and stockholders matters to or on behalf of the Company. In
addition to an annual base fee of $150,000 and a fee based on the Company's
profits, Founders was entitled to receive originating fees with respect to
acquisitions or financings for which it performed originating services. This fee
was to be calculated by reference to the fee customarily charged by
non-affiliated investment bankers or professional originators for transactions
of similar size and nature. To determine the fees customarily charged, the
Company was to review then current proxy statements and investment publications
and consult with nonaffiliated investment bankers for the computation of
originating fees in similar transactions as those in which the Founders'
originating services have been employed. The amount of the fee was subject to
the approval of a majority of the directors not affiliated with Founders.
Founders received for its origination and consultation services in connection
with the combination with Advanced Fox and Tauber a fee of $150,000; and in
connection with the Battery Network acquisition and related financing of
$13,000,000, a fee of $240,000 and five year warrants to purchase 100,000 shares
of common stock at a price of $4.125 per share. These warrants were split
equally by Messrs. Haber and Teeger as designees of Founders.
In February 1998, the Management Agreement was revised by mutual
consent to, among other things, eliminate the origination and incentive fee
provisions of the original agreement. The revised agreement thereby limited fees
that were payable to Founders to an annual fee of $150,000, payable monthly.
Since June 1998, when Messrs. Haber and Teeger resigned as officers and
directors of the Company, Founders has provided no services to the Company and
the Company has not paid any fees to Founders. Although neither the Company nor
Founders has formally terminated the Management Agreement, both parties have
acted as if the Management Agreement has been terminated. Founders has initiated
a lawsuit against the Company with respect to this Management Agreement, which
the Company is contesting.
15
<PAGE>
GENERAL AND OTHER MATTERS
The board knows of no matter, other than as referred to in this proxy
statement, which will be presented at the meeting. However, if other matters
properly come before the meeting, or any of its adjournments, the person or
persons voting the proxies will vote them with their judgment in those matters.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers (including a person performing a principal policy-making function) and
persons who own more than 10% of a registered class of the Company's equity
securities to file with the SEC initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Directors, officers and 10% holders are required by SEC regulations to furnish
the Company with copies of all of the Section 16(a) reports they file. Based
solely upon a review of the copies of the forms furnished to the Company and the
representations made by the reporting persons to the Company, the Company
believes that during the year ended December 31, 1999, its directors, officers
and 10% holders complied with all filing requirements under Section 16(a) of the
Exchange Act, except for Stephen Rade, the President and Chief Executive Officer
of the Company, who inadvertently failed to file reports on Form 5 for the year
ended December 31, 1999.
ANNUAL REPORT
The Annual Report of the Company, including financial statements, for
the year ended December 31, 1999 is being mailed to stockholders with this proxy
material.
STOCKHOLDER PROPOSALS -- 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the annual
meeting of stockholders in 2001 must be received by July 2, 2001, to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. If any stockholder wishes to present a proposal to the
2001 annual meeting of stockholders that is not included in the Company's proxy
statement for that meeting and fails to submit such proposal to the Secretary of
the Company on or before September 15, 2001 then the Company will be allowed to
use its discretionary voting authority when the proposal is raised at the annual
meeting, without any discussion of the matter in its proxy statement.
Stockholder proposals should be directed to the Corporate Secretary, at the
address of the Company set forth on the first page of this proxy statement.
By order of the board of directors,
/s/ Christopher F. McConnell
-----------------------------------
Christopher F. McConnell
Chairman of the Board of Directors
October 31, 2000
16
