<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ENStar Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(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):
- - --------------------------------------------------------------------------------
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- - --------------------------------------------------------------------------------
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- - --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- - --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
ENSTAR INC.
6479 CITY WEST PARKWAY
EDEN PRAIRIE, MINNESOTA 55344-3246
------------------------------
May 23, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of ENStar Inc. to be held at 2:00 p.m. on Thursday, June 26, 1997 at the Marriot
Southwest, 5801 Opus Parkway, Minnetonka, Minnesota.
As you know, ENStar formerly was a wholly owned subsidiary of North Star
Universal, Inc. ("NSU"). In connection with the transactions (collectively, the
"Reorganization") consummated pursuant to a reorganization agreement entered
into between NSU and Michael Foods, Inc. ("Michael"), NSU transferred to ENStar
certain of its assets, including all of the shares of capital stock of its
wholly owned subsidiaries, Americable, Inc. ("Americable") and Transition
Networks, Inc. ("Transition"), and its common shares of CorVel Corporation
("CorVel"). Pursuant to the Reorganization, (i) NSU merged with Michael and (ii)
the common stock of ENStar was distributed to the shareholders of NSU (the
"Distribution") on February 28, 1997. As a result of the Distribution, ENStar
ceased to be a subsidiary of NSU and became a publicly owned company, the common
stock of which is quoted on the Nasdaq National Market under the symbol "ENSR."
The meeting to be held on June 26, 1997, will be the first Annual Meeting of
Shareholders of ENStar.
The Notice of Annual Meeting and the Proxy Statement which follow describe
the formal business to be transacted at the meeting. During the meeting we also
will review the activities of the past year and items of general interest about
the Company. Also, shareholders will be given the opportunity to ask questions.
The items requiring shareholder approval are:
1. election of a Board of Directors for the ensuing year and until their
successors are elected and qualified; and
2. such other business as may properly come before the meeting or any
adjournment thereof.
We recommend that you vote FOR the slate of directors that is set forth in
the accompanying Proxy Statement.
WHETHER OR NOT YOU CAN ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND MAIL THE ENCLOSED PROXY CARD PROMPTLY. THIS ACTION WILL NOT LIMIT YOUR
RIGHT TO REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT OR TO VOTE IN PERSON IF YOU WISH TO ATTEND THE ANNUAL MEETING AND VOTE
PERSONALLY.
Sincerely
Jeffrey J. Michael
Jeffrey J. Michael
President and Chief Executive Officer
<PAGE> 3
ENSTAR INC.
6479 CITY WEST PARKWAY
EDEN PRAIRIE, MINNESOTA 55344-3246
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ENStar
Inc., a Minnesota corporation, will be held at 2:00 p.m. on June 26, 1997 at the
Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota.
This meeting is being held for the following purposes:
1. To elect four persons to serve as directors until the next annual
election of directors and until their successors are duly elected and
qualified; and
2. To transact such other business as may properly come before the meeting.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MAY 21, 1997, WILL
BE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING. WHETHER OR NOT YOU PLAN TO
BE PRESENT AT THE MEETING, PLEASE SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY
IN THE ENCLOSED POSTAGE PREPAID ENVELOPE AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors
Thomas S. Wargolet
Thomas S. Wargolet,
Chief Financial Officer
and Secretary
Minneapolis, Minnesota
May 23, 1997
<PAGE> 4
ENSTAR INC.
6479 CITY WEST PARKWAY
EDEN PRAIRIE, MINNESOTA 55344-3246
------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 26, 1997
This Proxy Statement is furnished to shareholders of ENStar Inc. ("ENStar"
or the "Company"), 6479 City West Parkway, Eden Prairie, Minnesota 55344-3246,
in connection with the solicitation of proxies on behalf of the Board of
Directors for use at the Annual Meeting of Shareholders to be held at 2:00 p.m.
on June 26, 1997 at the Marriott Southwest, 5801 Opus Parkway, Minnetonka,
Minnesota 55343 (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting. This Proxy Statement and the accompanying
form of proxy are being mailed to shareholders commencing on or about May 23,
1997.
Shares represented by a proxy will be voted in the manner directed by the
shareholder. If no direction is made, the proxy will be voted (i) for the
election of the nominees for directors named in this Proxy Statement and (ii) in
accordance with the judgment of the persons named in the proxy as to such other
matters as may properly come before the meeting. Shares voted as abstentions on
any matter (or a "withhold vote for" as to directors) will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum at the meeting and as unvoted, although present and entitled to
vote, for purposes of determining the approval of each matter as to which the
shareholder has abstained. If a broker submits a proxy which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, those shares will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum at the
meeting, but will not be considered as present and entitled to vote with respect
to such matters. The Company has retained Norwest Bank Minnesota, National
Association to tabulate and report on the votes cast by shareholders.
A shareholder giving a proxy may revoke it any time prior to the voting of
the proxy by filing with any officer of the Company a written notice of
revocation or another proxy bearing a later date. Any written notice of
revocation or subsequently dated proxy should be mailed or delivered to Thomas
S. Wargolet, Chief Financial Officer and Secretary, ENStar Inc., 6479 City West
Parkway, Eden Prairie, Minnesota 55344-3246.
The close of business on May 21, 1997 was fixed by the Board of Directors
as the record date for determination of shareholders entitled to notice of and
to vote at the Annual Meeting. At such date the Company had outstanding
3,304,279 shares of common stock, $.01 par value per share (the "Common Stock").
Each share of Common Stock entitles the holder to one vote on all matters to
come before the meeting. There is no cumulative voting.
The Company is including with this Proxy Statement its Annual Report to
Shareholders for the year ended December 31, 1996, which includes a copy of the
Company's 1996 Form 10-K Report as filed with the Securities and Exchange
Commission. SHAREHOLDERS MAY RECEIVE, WITHOUT CHARGE, ADDITIONAL COPIES OF THE
COMPANY'S 1996 FORM 10-K REPORT BY WRITING TO ENSTAR INC., 6479 CITY WEST
PARKWAY, EDEN PRAIRIE, MINNESOTA, 55344-3246, ATTENTION: CHIEF FINANCIAL
OFFICER.
1
<PAGE> 5
ELECTION OF DIRECTORS
The Board of Directors has recommended that the number of directors to be
elected for the coming year be set at four. The Board of Directors has nominated
and recommended that the shareholders elect the nominees named below as
directors of the Company for the ensuing year and until their respective
successors are duly elected and qualified.
Unless otherwise indicated thereon, the persons named in the enclosed form
of proxy intend to vote FOR the election of the four nominees listed below. The
affirmative vote of a majority of the shares of the Company's Common Stock
present (or represented by proxy) and entitled to vote at the 1997 Annual
Meeting is required to elect each of the nominees as directors for the ensuing
year or until their successors are elected and have qualified. All of the
nominees are members of the present Board of Directors. If for any reason any
nominee shall be unavailable for election to the Board of Directors, votes will
be cast pursuant to authority granted by the enclosed proxy for such other
candidate or candidates as may be nominated by the Board of Directors. The Board
of Directors has no reason to believe that any of the nominees listed below will
be unable to serve if elected to office.
CERTAIN INFORMATION CONCERNING THE NOMINEES FOR DIRECTOR FOLLOWS:
<TABLE>
<CAPTION>
NAME BIOGRAPHICAL INFORMATION
---- ------------------------
<S> <C>
James H. Michael (age 76)................. Mr. James H. Michael has served as Chairman of the Board
of ENStar since March 1996. Prior to the Reorganization,
Mr. Michael served on the Board of Directors of NSU and
was the Chairman of the Board prior to July 1991. Also
prior to the Reorganization, Mr. Michael was Chairman of
the Board of Michael. Mr. Michael is the father of
Jeffrey J. Michael, ENStar's President and Chief
Executive Officer.
Miles E. Efron (age 70)................... Mr. Miles E. Efron has served on the Board of Directors
of ENStar since March 1996. Prior to the Reorganization,
Mr. Efron served as Chairman of the Board of Directors
of NSU since July 1991. Mr. Efron was President and
Chief Executive Officer of NSU from October 1988 to
December 31, 1990, and was Senior Vice President of NSU
from 1985 until October of 1988. Mr. Efron also is a
director of Michael and Editek, Inc.
Richard J. Braun (age 52)................. Mr. Richard J. Braun has served as a director of ENStar
since March 1996. Prior to the Reorganization, Mr. Braun
served on the Board of Directors of NSU since 1994. He
currently serves as Chief Executive Officer of Silicon
Biology, Inc., a technology company specializing in
genetic classification technology, and as a principal of
Excelsior Investment Group Ltd. Mr. Braun was the
Managing Director of Headwaters Capital Management
L.L.C. during 1995. From 1992-1994, Mr. Braun served as
Chief Operating Officer and a Director of Employee
Benefit Plans, Inc., and from 1989-1991 was Executive
Vice President, Chief Operating Officer and a Director
of Reich and Tang L.P., a publicly held investment
advisor and broker-dealer. From 1988-1989, Mr. Braun
served as President and Chief Executive Officer of Super
Cycle, Inc., a former subsidiary of NSU. Mr. Braun also
is a director of RSI Systems, Inc. and Editek, Inc.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Jeffrey J. Michael (age 40)............... Mr. Jeffrey J. Michael has served as the President and Chief
Executive Officer of the Company since March 1996. Mr. Michael was an
initial director and officer (serving as President and Secretary) of
ENStar at the time it was organized by NSU in December 1995. Prior to
the closing of the Reorganization, Mr. Michael served as President
and Chief Executive Officer of NSU since December 1990. Mr. Michael
served as Vice President-Finance from April 1989 to December 1990.
Prior to April 1989, Mr. Michael was employed by NSU in various
capacities. Mr. Michael originally was elected as a director of NSU
in 1987. Mr. Michael is the son of James H. Michael. Mr. Michael also
is a director of Michael and CorVel.
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors met once in 1996 and all other actions by the Board
of Directors were effected by written consent. The Board of Directors has
established an Audit Committee and a Compensation Committee.
The Audit Committee, consisting of Mr. Efron and Mr. Braun, did not meet in
1996. The Audit Committee will review and make recommendations and reports to
the Board with respect to (i) the independent auditors, (ii) the quality and
effectiveness of internal controls, (iii) engagement or discharge of the
independent auditors, (iv) professional services provided by the independent
auditors, and (v) the review and approval of major changes in the Company's
accounting principals and practices.
The Compensation Committee, consisting of Mr. Efron and Mr. Braun, met once
in 1996. The Compensation Committee considers and recommends to the Board
salaries, bonuses and other remuneration for the Company's executive officers.
This committee also administers the ENStar 1996 Stock Incentive Plan (the "Stock
Incentive Plan").
During 1996, all of the directors attended the meeting of the Board of
Directors and Messrs. Efron and Brown both attended the meeting of the
Compensation Committee.
COMPENSATION OF DIRECTORS
During 1996, none of the directors of the Company received director fees
for serving as directors. In 1997, the Company's non-employee directors will
receive an annual retainer of $8,000 for serving as members of the Company's
Board of Directors. Directors incurring travel expenses to attend meetings will
be reimbursed in full. Members of committees will receive an additional $300 for
each committee meeting they attend.
Under the Stock Incentive Plan, each non-employee director of ENStar, upon
his or her initial election as a director, will be granted an option to purchase
4,000 shares of Common Stock. Commencing with the 1997 Annual Meeting, each
non-employee director of ENStar also will be granted an option to purchase 1,000
shares of Common Stock on the date of the annual meeting of shareholders each
year if the director will remain in office immediately following such meeting.
The exercise price of each option is equal to 100 percent of the fair market
value per share on the date of grant. Such options are non-qualified stock
options, become exercisable six months after the date of grant and terminate on
the fifth anniversary of the date of grant or earlier, under certain
circumstances.
In connection with their election as directors and the adoption of the
Stock Incentive Plan, each of Messrs. James H. Michael, Efron and Braun were
granted an option to purchase 4,000 shares of Common Stock. The exercise price
of such options is $9.00 per share.
3
<PAGE> 7
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Board of Directors (the "Committee")
establishes the specific compensation for the Company's executive officers who
do not have direct operating responsibilities at one of the Company's operating
subsidiaries. After consideration of Committee recommendations, the full Board
of Directors reviews and approves the salaries and bonuses of such executive
officers. The Committee also is responsible for administering the Company's
Stock Incentive Plan. Compensation for officers of the Company's operating
subsidiaries, Americable and Transition, generally is determined by the
Company's Chief Executive Officer, consistent with the salary structure and
bonus programs at such operating subsidiaries.
EXECUTIVE COMPENSATION PHILOSOPHY AND GOALS
The Company has only two executive officers who do not have direct
operating responsibilities at either of its operating subsidiaries, Jeffrey J.
Michael, President and Chief Executive Officer, and Peter E. Flynn, Executive
Vice President. The compensation arrangements for Messrs. Michael and Flynn are
designed to motivate and reward these executives for attaining financial and
strategic objectives essential to the Company's overall success and continued
growth, while at the same time allowing the Company to retain high caliber
executives. Each of Messrs. Michael and Flynn previously were executive officers
of NSU. The key components of the Company's compensation programs are base
salary, cash bonuses and, to a lesser extent, stock options.
The Company's other named executive officers include Thomas S. Wargolet,
Chief Financial Officer and Secretary of the Company, who is also Vice President
- - -- Finance and Operations of Americable, and C.S. Mondelli, who is President and
Chief Executive Officer of Transition. The compensation arrangements for Messrs.
Wargolet and Mondelli are designed to motivate and reward these executives
primarily for the financial performance of Americable and Transition,
respectively; although, certain of Mr. Wargolet's compensation is based on his
additional responsibilities as an executive officer of the Company.
BASE SALARIES
The Committee generally believes executive officers' base salaries should
be moderate, yet competitive in relation to salaries commanded by persons in
similar positions; however, the Committee also believes that a substantial
portion of each executive officer's compensation should be contingent and based
on the Company's and such officer's performance. In February 1996, in
anticipation of the consummation of the Reorganization and spin-off of the
Company as an independent public company, an independent executive compensation
consultant was engaged to advise the Committee concerning the establishment of
compensation programs for the Company's executive officers consistent with these
general policies. The compensation consultant also reviewed the compensation
programs at the Company's operating subsidiaries. Based on the advice of such
consultant and other factors described below, the Committee established base
salaries for each of Messrs. Michael, Flynn and Wargolet. Neither the Committee
nor such consultant, however, conducted formal salary comparisons or surveys in
determining the compensation levels for the Company's executive officers.
The base salary of each named executive officer will be reviewed annually
and is expected to be set on the basis of personal performance, relative
importance of the functions the officer performs, scope of the officer's ongoing
responsibilities and estimated salary levels in effect at comparable companies
for comparable positions. The weight given to each of these factors will vary
between individuals and is expected to be a subjective determination by the
Committee or, in the case of the named executive officers at the Company's
operating subsidiaries, the Company's Chief Executive Officer after consultation
with the members of the Committee.
4
<PAGE> 8
CASH BONUSES
Annual bonuses for executives with direct operating responsibility at the
Company's operating subsidiaries are designed to reward such executives for
personal contributions to the success of such operating subsidiary and generally
are earned under a structured formula. Individual performance targets are
established based on an annual operating budget, which is submitted for review
and approved by the Chief Executive Officer of the Company after consultation
with the members of the Committee. At the end of the calendar year, the Chief
Executive Officer evaluates actual financial performance against individual
performance targets. The potential cash bonuses range from 10% to 30% of the
executive's annual base salary, beginning when operating profits exceed minimum
levels of performance (80% of budget) and increasing incrementally up to the
maximum when the profits equal or exceed a superior performance target (120% of
budget).
The Committee has not determined the manner in which incentive bonuses for
Messrs. Michael and Flynn will be calculated. It presently is anticipated that
annual cash bonuses for such officers will be largely discretionary based on
each such officer's contribution to the achievement of certain strategic goals
of the Company.
STOCK OPTIONS
In March 1996, in anticipation of the Reorganization, the Company approved
the grant of non-qualified stock options to Messrs. Michael, Flynn and Wargolet
pursuant to the Stock Incentive Plan. The number of shares subject to such
options was determined by the Committee after consultation with the Company's
executive compensation consultant. No formal survey of the level of stock option
awards made to persons holding similar positions at comparable companies was
conducted. It is anticipated that additional stock options periodically will be
granted to the Company's executive officers. Due to its limited corporate staff,
however, the Committee does not intend to establish formal policies or formulas
for determining the timing, amount or particular vesting schedules for stock
option awards. At the parent company level, the Committee believes that the
limited use of stock options for the Company's corporate staff will motivate
executives to achieve positive long-term financial results increasing
shareholder value.
With respect to officers of the Company's operating subsidiaries, the
Company has caused each of its operating subsidiaries, Americable and
Transition, to establish separate stock option programs at the operating
subsidiary level. Mr. Wargolet and Mr. Mondelli each participate in the stock
option program at Americable and Transition, respectively. The amount of the
stock option awards made pursuant to such programs in 1996 was determined by the
Company's Chief Executive Officer after consultation with the Board of Directors
of NSU. The Committee believes that the use of separate stock option programs at
the operating subsidiary level will cause those persons with operating
responsibilities at an operating subsidiary to focus more directly on the
performance of such subsidiary.
1996 EXECUTIVE COMPENSATION
During 1996, Mr. Jeffrey J. Michael, as President and Chief Executive
Officer of NSU, had overall responsibility for the strategic direction of NSU
and the performance of NSU's operating subsidiaries, Americable and Transition.
Further, Mr. Michael had overall responsibility concerning the Reorganization,
which closed in February 1997. All of Mr. Michael's compensation for 1996 was
paid by NSU. Mr. Michael first was elected President of NSU in December 1990,
and was elected President of ENStar at the time of its initial organization. Mr.
Michael is not a party to an employment agreement.
In March 1996, the Committee established base annual salaries for Messrs.
Michael, Flynn and Wargolet of $175,000, $150,000 and $90,000, respectively.
These base salaries were established after reviewing the historical compensation
paid to each of these officers by NSU and their respective new responsibilities
at the Company. Mr. Michael's compensation at NSU in 1996 consisted solely of
his base salary of $235,000. Mr. Michael did not participate in NSU's incentive
bonus program and was not granted stock options. As the Chief Executive Officer
of ENStar, Mr. Michael will receive a base salary of $175,000 in 1997, and will
be eligible to receive an annual cash bonus. Further, Mr. Michael received a
non-qualified stock option to purchase 28,500 shares of Common Stock in 1996
under the Stock Incentive Plan and will be eligible for
5
<PAGE> 9
further stock option grants under the plan. While the Committee consulted with
an independent executive compensation consultant, as discussed above, concerning
Mr. Michael's proposed compensation package, the Committee did not conduct a
formal survey of compensation packages for chief executive officers at other
comparable companies.
This report of the Committee shall not be deemed incorporated by reference
by any general statement incorporating by referencing this proxy statement into
any filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such acts.
Miles E. Efron
Richard J. Braun
Members of the Committee
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the President and
Chief Executive Officer and the four other most highly compensated executive
officers (the "Named Executive Officers") as of the year ended December 31,
1996, the first year in which the Company commenced operations.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION* COMPENSATION
-------------------- ------------ ALL OTHER
SALARY BONUS STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) (9)(10)
--------------------------- ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
Jeffrey J. Michael(1).................... 1996 $ -- $ -- 28,500 $ --
President and Chief Executive Officer
Peter E. Flynn(2)........................ 1996 -- -- 23,500 --
Executive Vice President
Thomas S. Wargolet(3).................... 1996 87,231 26,100 49,250(6) 2,890
Chief Financial Officer and Secretary
C.S. Mondelli(4)......................... 1996 120,000 24,000 70,000(7) 2,769
President and Chief Executive Officer
of Transition
Gary L. Eizenga(5)....................... 1996 165,577 65,000 150,000(8) 4,750
Former President and Chief Executive
Officer of Americable
</TABLE>
- - -------------------------
* During 1996, the Company was a wholly owned subsidiary of NSU, a
corporation subject to the reporting requirements of the Securities
Exchange Act of 1934.
(1) During 1996, Mr. Michael did not receive any cash compensation from the
Company. Mr. Michael did receive an annual salary of $235,000 from NSU, and
$7,196 in other compensation, $4,750 of which represents amounts
contributed by NSU for the benefit of Mr. Michael pursuant to NSU's 401(k)
Plan, and $2,446 of which represents life and disability insurance premiums
paid by NSU for the benefit of Mr. Michael.
(2) During 1996, Mr. Flynn did not receive any cash compensation from the
Company. Mr. Flynn did receive an annual salary of $161,330 and a bonus of
$100,000 from NSU, and $6,889 in other compensation, $4,750 of which
represents amounts contributed by NSU for the benefit of Mr. Flynn pursuant
to NSU's 401(k) Plan, and $2,139 of which represents life and disability
insurance premiums paid by NSU for the benefit of Mr. Flynn.
(3) Mr. Wargolet's 1996 salary and bonus were paid by Americable.
(4) Mr. Mondelli's 1996 salary and bonus were paid by Transition.
(5) Mr. Eizenga's 1996 salary and bonus were paid by Americable. Mr. Eizenga's
employment with Americable was terminated in February 1997.
(6) Includes options to purchase 35,000 shares of Americable common stock.
(7) Represents options to purchase shares of Transition common stock.
(8) Represents options to purchase shares of Americable common stock.
(9) Represents amounts contributed to the NSU 401(k) Plan for the benefit of
each of the Named Executive Officers in the following amounts: Mr.
Wargolet, $2,890; Mr. Mondelli, $2,769; and Mr. Eizenga, $4,750. Only
payments made in 1996 to Mr. Wargolet, Mr. Mondelli and Mr. Eizenga by
Transition and Americable are reported. No years prior to fiscal 1996 are
reported as the Company was a wholly owned subsidiary of NSU, a corporation
subject to the reporting requirements of the Securities Exchange Act of
1934.
(10) None of the Named Executive Officers held or received any awards of
restricted shares.
7
<PAGE> 11
STOCK OPTIONS
OPTION GRANTS DURING 1996
The following table sets forth individual grants of stock options made to
the Named Executive Officers during the year ended December 31, 1996:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS EXERCISE ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE OR PRICE APPRECIATION
OPTIONS EMPLOYEES BASE FOR OPTION TERM(3)
GRANTED IN FISCAL PRICE/SH. EXPIRATION ----------------------
NAME (#)(1) YEAR(%)(2) ($) DATE 5%($) 10%($)
---- ---------- ------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey J. Michael............. 28,500 37.0% $9.00 03/05/06 $161,311 $408,795
Peter E. Flynn................. 23,500 30.5 9.00 03/05/06 133,011 337,077
Thomas S. Wargolet............. 14,250 18.5 9.00 03/05/06 80,656 204,397
35,000(4) 10.1 0.82 12/02/06 18,049 45,740
C.S. Mondelli.................. 70,000(5) 24.5 1.25 10/01/06 55,028 139,452
Gary L. Eizenga................ 150,000(4) 43.5 0.82 12/02/06 77,354 196,030
</TABLE>
- - -------------------------
(1) Unless otherwise indicated, each option represents the right to purchase one
share of Common Stock. The options shown in this table are all non-qualified
stock options granted pursuant to the Stock Incentive Plan. The options to
purchase shares of Common Stock granted to Messrs. Michael, Flynn and
Wargolet for 28,500 shares, 23,500 shares and 14,250 shares, respectively,
become exercisable with respect to 25% of such shares over a period of four
years from the date of grant and have a term of ten years. The options to
purchase shares of Americable common stock granted to Mr. Wargolet for
35,000 shares are exercisable with respect to 20% of such shares on the date
of grant and on each anniversary of the date of grant during the four year
period thereafter, and have a term of ten years. The options to purchase
shares of Americable common stock granted to Mr. Eizenga for 150,000 shares
were exercisable with respect to 50% of such shares on the date of grant,
20% on each second and third anniversary of the date of grant and 10% on the
third anniversary of the date of grant, and had a term of ten years. The
options granted to Mr. Eizenga were terminated in February 1997. The options
to purchase shares of Transition common stock granted to Mr. Mondelli for
70,000 shares are exercisable with respect to 20% of such shares on the date
of grant and on each February 20 during the four year period following the
date of grant, and have a term of ten years. To the extent not already
exercisable, the options generally become exercisable in the event of a
merger in which ENStar, Americable or Transition, as the case may be, is not
the surviving corporation, a transfer of all the stock of ENStar, Americable
or Transition, as applicable, a sale of substantially all the assets, or a
dissolution or liquidation, of ENStar, Americable or Transition, as
applicable.
(2) In 1996, ENStar, Americable and Transition granted employees options to
purchase an aggregate of 77,083 shares of Common Stock, 345,000 shares of
Americable common stock and 298,500 shares of Transition common stock,
respectively.
(3) The compounding assumes a ten year exercise period for all option grants.
The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent ENStar's estimate or projection of future common stock prices.
These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the common stock of ENStar, Americable and Transition, as
applicable, and overall stock market conditions. The amounts represented in
the table may not necessarily be achieved.
(4) Represents the right to purchase shares of common stock of Americable.
(5) Represents the right to purchase shares of common stock of Transition.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR END OPTION VALUES
The following table provides information concerning stock option exercises
and the value of unexercised options at December 31, 1996 for the Named
Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT YEAR END(#) AT YEAR END($)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey J. Michael........... -- -- -- 28,500 -- --
Peter E. Flynn............... -- -- -- 23,500 -- --
Thomas S. Wargolet........... -- -- -- 14,250 -- --
-- -- 7,000(1) 28,000(1) -- --
C.S. Mondelli................ -- -- 14,000(2) 56,000(2) -- --
Gary L. Eizenga.............. -- -- 75,000(1) 75,000(1) -- --
</TABLE>
- - -------------------------
(1) Represents the right to purchase shares of common stock of Americable.
(2) Represents the right to purchase shares of common stock of Transition.
The options to purchase Americable common stock and Transition common stock
granted to certain of the Named Executive Officers in 1996 were granted pursuant
to the Americable, Inc. 1996 Stock Option Plan (the "Americable Plan") and the
Transition Networks, Inc. 1996 Stock Option Plan (the "Transition Plan"),
respectively. There are 5,000,000 shares of Americable common stock currently
outstanding and 600,000 shares of Americable common stock reserved for issuance
under the Americable Plan. Options to purchase 345,000 shares were granted in
1996 under the Americable Plan. There are 3,500,000 shares of Transition common
stock currently outstanding and 560,000 shares of Transition common stock
reserved for issuance under the Transition Plan. Options to purchase 285,250
shares were granted in 1996 under the Transition Plan. The exercise price of the
options granted pursuant to the Americable Plan was determined by the Board of
Directors of Americable, based on the then current fair value of the common
stock. The exercise price of the options granted pursuant to the Transition Plan
also was determined by the Board of Directors of Transition, based on the then
current fair value of the common stock. Pursuant to the terms of the applicable
option agreements under the plans, the shares of common stock that may be
purchased pursuant to the options are subject to restrictions on transfer and
certain repurchase rights by each of the respective issuers and by ENStar, based
on a valuation formula. The option agreements also include certain covenants
with respect to nondisclosure of confidential information and non-competition.
Prior to the termination of his employment with Americable, Gary Eizenga
was a party to a stock option agreement pursuant to which he was granted an
option to purchase from NSU up to approximately 2.5% of then outstanding shares
of Americable, subject to a price per share equal to the book value per share as
of September 30, 1989. In December 1996, in connection with the grant of a new
option to purchase 150,000 shares of common stock of Americable, Mr. Eizenga
agreed to terminate the earlier stock option agreement.
In connection with the termination of his employment with Americable, Mr.
Eizenga and the Company entered into an agreement pursuant to which the Company
will pay Mr. Eizenga $1,000 a month starting May 1, 1997, and ending December 1,
1998, for a total payment of $20,000.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Wargolet is a party to an employment contract with Americable which
provides that Mr. Wargolet is entitled to receive his base salary for six months
subsequent to the termination of his employment by Americable without cause.
RELATED PARTY TRANSACTION
On April 2, 1996, Mr. Efron, a director of the Company, and NSU entered
into a promissory note for $169,200, plus interest at the "reference rate" of
interest announced from time to time by First Bank National Association,
Minneapolis, Minnesota, to be repaid in four equal annual installments. Mr.
Efron used such funds to exercise stock options to purchase shares of common
stock of NSU, as permitted under the terms of the applicable NSU stock option
plan. Mr. Efron's note to NSU was assigned to the Company in connection with the
Reorganization. The largest amount outstanding under the note was $183,915.76 on
April 22, 1997, the date Mr. Efron repaid the promissory note in full.
9
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information concerning beneficial
ownership of the Common Stock of the Company as of May 1, 1997 with respect to
(i) all persons known by the Company to be the beneficial owners of more than 5%
of the outstanding Common Stock of the Company, (ii) each director of the
Company, (iii) each Named Executive Officer, and (iv) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------------------ ------------ -------
<S> <C> <C>
James H. Michael............................................ 1,044,465(2) 31.6%
Jeffrey J. Michael.......................................... 875,123(3) 26.5%
Miles E. Efron.............................................. 141,966(4) 4.3%
Peter E. Flynn.............................................. 5,875(5) *
Thomas S. Wargolet.......................................... 4,362(6) *
Richard J. Braun............................................ 4,000(7) *
C.S. Mondelli............................................... -- --
Heartland Advisors, Inc..................................... 331,200(8) 10.0%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
All officers and directors as a group (7 persons)........... 2,075,791(9) 62.8%
</TABLE>
- - -------------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable within 60 days of the
date hereof ("Currently Exercisable Options") are deemed outstanding for
computing the percentage beneficially owned by the person holding such
options, but are not deemed outstanding for computing the percentage
beneficially owned by any other person.
(2) Includes 952,164 shares of Common Stock held by 4J2R1C Limited Partnership,
as to which Mr. James H. Michael, as managing general partner, exercises
sole voting and dispositive power. Mr. James H. Michael has disclaimed any
beneficial ownership of the shares beneficially owned by Mr. Jeffrey J.
Michael. Also includes 4,000 shares of Common Stock issuable pursuant to
Currently Exercisable Options.
(3) Includes 865,666 shares of Common Stock held by 3J2R Limited Partnership, as
to which Mr. Jeffrey J. Michael, as general partner, exercises sole voting
and dispositive power. Mr. Jeffrey J. Michael has disclaimed any beneficial
ownership of the shares beneficially owned by Mr. James H. Michael. Includes
7,125 shares of Common Stock issuable pursuant to Currently Exercisable
Options.
(4) Includes 4,000 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(5) Includes 5,875 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(6) Includes 3,562 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(7) Includes 4,000 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(8) Based on information in a Schedule 13G Report showing information as of
February 14, 1997, and indicating that Heartland Advisors, Inc. has sole
voting power over 292,633 of such shares and sole dispositive power over all
such shares.
(9) Shares shown as beneficially owned include 28,562 shares not outstanding,
but which may be acquired pursuant to Currently Exercisable Options.
10
<PAGE> 14
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Company believes that during the year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and ten
percent shareholders were complied with and filed on a timely basis.
AUDITORS
The Board of Directors of the Company intends to appoint Grant Thornton as
independent auditors for the Company for the year ending December 31, 1997.
Grant Thornton audited the financial statements of the Company for the year
ended December 31, 1996. Representatives of Grant Thornton will be present at
the Annual Meeting and will be given an opportunity to make a statement, if they
desire to do so, and to respond to appropriate questions raised at the meeting.
OTHER MATTERS
The Board of Directors does not intend to present to the meeting any matter
not referred to above and does not presently know of any matters that may be
presented to the meeting by others. If other matters come before the meeting,
however, it is the intention of the persons named in the enclosed form of proxy
to vote the proxy in accordance with their best judgment.
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
this Proxy Statement and the form of proxy, including the reimbursement of
banks, brokers and other nominees for forwarding proxy materials to beneficial
owners, will be borne by the Company. Proxies also may be solicited personally
or by telephone by Directors, officers and regular employees of the Company who
will receive no additional compensation.
PROPOSALS OF SHAREHOLDERS
The proxy rules of the Securities and Exchange Commission permit
shareholders, after timely notice to issuers, to present proposals for
shareholder action in issuer proxy statements where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by company action in accordance with proxy
rules. The Company's annual meeting of shareholders for the year ending December
31, 1997 is expected to be held on or about June 15, 1998, and the proxy
materials in connection with that meeting are expected to be mailed on or about
May 15, 1998. Shareholder proposals for that meeting must be prepared in
accordance with the proxy rules and received by the Company on or before January
1, 1997.
By Order of the Board of Directors
Jeffrey J. Michael
Jeffrey J. Michael
President and Chief Executive Officer
May 23, 1997
11
<PAGE> 15
================================================================================
ENSTAR, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffrey J. Michael and Thomas
S. Wargolet, as proxies, each with the power to appoint a
substitute, and hereby authorizes them to present and to vote, as
designated below, all shares of common stock of ENStar, Inc. (the
"Company") the undersigned is entitled to vote at the Annual
Meeting of Shareholders of the Company, to be held on June 26,
1997, and at all adjournments thereof:
<TABLE>
<S> <C> <C> <C> <C>
ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
below
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE THROUGH THE NAME IN THE LIST
BELOW:
James H. Michael, Miles E. Efron, Richard J. Braun, Jeffrey J. Michael
</TABLE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE ABOVE ITEMS.
INSTRUCTIONS: Please sign
exactly as your name appears
on the label affixed hereto.
When shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
the full corporate name by an
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated , 1997
------------------------------
Signature
------------------------------
Please print name
------------------------------
Signature if held jointly
------------------------------
Please print name
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. A RETURN ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
