<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 Section 240.14a-12
ENSTAR INC.
(Name of Registrant as Specified in its Charter)
------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
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:
-----------------------------------------------------------------------
<PAGE>
/ / 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>
ENStar Inc.
7450 Flying Cloud Drive
Eden Prairie, Minnesota 55344
---------------------
June 4, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of ENStar Inc. to be held at 10:00 a.m. on July 13, 1999, at the
offices of Americable, Inc., 7450 Flying Cloud Drive, Eden Prairie, Minnesota
55344.
The Notice of Annual Meeting and the Proxy Statement that 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 ENStar Inc. (the "Company"). Also, shareholders will
be given the opportunity to ask questions.
The items being considered at the meeting 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,
/s/ JEFFREY J. MICHAEL
-----------------------
Jeffrey J. Michael
President and Chief Executive Officer
<PAGE>
ENStar Inc.
7450 Flying Cloud Drive
Eden Prairie, Minnesota 55344
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 13, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ENStar
Inc., a Minnesota corporation, will be held at 10:00 a.m. on July 13, 1999,
at the offices of Americable, Inc., 7450 Flying Cloud Drive, Eden Prairie,
Minnesota 55344.
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 June 1, 1999,
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
/s/ PETER E. FLYNN
--------------------
Peter E. Flynn
Executive Vice President and Secretary
Eden Prairie, Minnesota
June 4, 1999
<PAGE>
ENStar Inc.
7450 Flying Cloud Drive
Eden Prairie, Minnesota 55344
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JULY 13, 1999
This Proxy Statement is furnished to shareholders of ENStar Inc.
("ENStar" or the "Company"), 7450 Flying Cloud Drive, Eden Prairie, Minnesota
55344, 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
10:00 a.m. on July 13, 1999 at the offices of Americable, Inc., 7450 Flying
Cloud Drive, Eden Prairie, Minnesota 55344 (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
on or about June 4, 1999.
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
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. If a broker submits a proxy which indicates that the
broker does not have discretionary authority as to certain shares to vote on
the election of directors, 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.
All expenses of the Company in connection with this solicitation will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited by directors, officers and other employees of the Company by
telephone, Internet, telegraph, telefax or telex, in person or otherwise,
without additional compensation. The Company will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares held of record by such persons and will reimburse
such persons and the Company's transfer agent for their reasonable out-of-
pocket expenses in forwarding such material. Additionally, the Company has
elected to retain the services of Norwest Bank Minnesota, National
Association for the purposes of broker nominee search, distribution of proxy
materials to banks, brokers, nominees and intermediaries and solicitation in
order to obtain voted proxies for the Annual Meeting at an estimated cost of
$2,000, plus out-of-pocket expenses.
<PAGE>
A shareholder giving a proxy may revoke it any time prior to the voting
of the proxy by filing with the Secretary 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
Peter E. Flynn, Executive Vice President and Secretary, ENStar Inc., 7450
Flying Cloud Drive, Eden Prairie, Minnesota 55344.
The close of business on June 1, 1999, 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 2,976,723 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.
This Proxy Statement includes certain information regarding Americable,
Inc. ("Americable"), Transition Networks, Inc. ("Transition") and Enstar
Networking Corporation ("Enstar Networking"), which are (or were during 1998)
operating subsidiaries of the Company. The Company sold Transition effective
December 10, 1998 in the form of a sale of all of the common stock of
Transition.
The Company is including with this Proxy Statement its Annual Report to
Shareholders for the year ended December 31, 1998, which includes a copy of
the Company's 1998 Form 10-K Report as filed with the Securities and Exchange
Commission. Shareholders may receive, without charge, additional copies of
the Company's 1998 Form 10-K report by writing to ENStar Inc., 7450 Flying
Cloud Drive, Eden Prairie, Minnesota, 55344, Attention: Corporate Secretary.
<PAGE>
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
1999 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> <C>
James H. Michael (age 78) Mr. James H. Michael has served as Chairman
of the Board of ENStar since March 1996.
Mr. Michael served on the Board of Directors
of North Star Universal, Inc. ("NSU"), of
which ENStar was a wholly owned subsidiary
prior to February 1997, and was the Chairman
of the Board of NSU prior to July 1991.
Also prior to March 1996, Mr. Michael was
Chairman of the Board of Michael Foods, Inc.
("Michael"), into which NSU was merged in
February 1997. Mr Michael is the father of
Jeffrey J. Michael, ENStar's President and
Chief Executive Officer.
Miles E. Efron (age 72) Mr.Miles E. Efron has served on the Board of
Directors of ENStar since March 1996. From
July 1991 until February 1997, Mr. Efron
served as Chairman of the Board of Directors
of NSU. Mr. Efron also is a director of
Michael and Medtox Scientific, Inc.
<PAGE>
Richard J. Braun (age 54) Mr. Richard J. Braun has served as a
director of ENStar since March 1996. Mr.
Braun served on the Board of Directors of
NSU from 1994 to 1996. Since July 1996 he
also has served as Chief Executive Officer
and a Director of Medtox Scientific, Inc., a
company that provides laboratory and
diagnostic testing services. From 1994 to
1996, Mr. Braun acted as a private investor
and provided management consulting services
to the health care and technology
industries. From 1992 to 1994, Mr. Braun
served as Chief Operating Officer and a
Director of Employee Benefit Plans, Inc.
(NYSE: EBP).
Jeffrey J. Michael (age 42) 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. Mr. Michael served as President and
Chief Executive Officer of NSU from December
1990 until February 1997. Mr. Michael is
the son of James H. Michael. Mr. Michael
also is a director of Michael and CorVel
Corporation ("CorVel").
</TABLE>
<PAGE>
Information Concerning the Board of Directors
The Board of Directors met three times in 1998. The Board of Directors
has established an Audit Committee and a Compensation Committee. The Board
of Directors has not established a nominating committee.
The Audit Committee, consisting of Mr. Efron and Mr. Braun, met one
time in 1998. The Audit Committee reviews and makes 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,
adopted one written action in 1998. 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 1998, all of the directors attended all of the meetings of the
Board of Directors and Messrs. Efron and Braun both attended the meeting of
the Audit Committee.
Compensation of Directors
In 1998, the Company's non-employee directors received an annual
retainer of $8,000 for serving as members of the Company's Board of
Directors. Directors incurring travel expenses to attend meetings are
reimbursed in full.
Under the Stock Incentive Plan, each non-employee director of ENStar,
upon his or her initial election as a director, is granted an option to
purchase 4,000 shares of Common Stock. Starting with the 1997 Annual
Meeting, each non-employee director of ENStar is also 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.
As previously announced, on March 8, 1999 the Board of Directors
appointed a Special Committee of the Board consisting of Richard A. Braun to
consider a proposal by James Michael and Jeffrey Michael to acquire the
shares of Common Stock of the Company not already owned by members of the
Michael family and certain entities controlled by the Michael family. For
serving on the Special Committee, Mr. Braun will receive a $12,500 monthly
fee commencing in March 1999, however, such fees shall not exceed $50,000.
<PAGE>
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. The Committee also is responsible for administering
the Company's Stock Incentive Plan. Compensation for officers of the
Company's operating subsidiaries, Americable and Enstar Networking, 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 one executive officer who does not have direct
operating responsibilities at any of its operating subsidiaries, Jeffrey J.
Michael, President and Chief Executive Officer. The compensation
arrangements for Mr. Michael are designed to motivate and reward the
executive 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. The key components
of the Company's compensation programs are base salary, cash bonuses and
stock options.
The Company's other current named executive officers include Peter E.
Flynn, Executive Vice President and Secretary of the Company who is also
President of Americable, and Ronald D. Newman, President of Enstar
Networking. The compensation arrangements for Messrs. Flynn and Newman are
designed to motivate and reward these executives primarily for the financial
performance of the operating subsidiaries for which they perform services,
although, certain of Mr. Flynn'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
portion of each executive officer's compensation should be contingent and
based on the Company's and such officer's performance.
In setting an officer's base salary the Company considers the personal
performance of the officer, the relative importance of the functions the
officer performs, the 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 varies between
individuals and is 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. In 1998, Mr. Michael's base salary was $180,000 until April
<PAGE>
1998, at which time it was reduced to $160,000. In 1998, Mr. Flynn's base
salary was $157,500 until April 1998, at which time it was reduced to
$145,000. The base salaries were reduced in April 1998 to place more
emphasis on cash bonuses as an incentive mechanism, as well as to adjust for
a greater emphasis on stock options, which were granted in December 1997.
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 40% 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 annual cash bonuses for Messrs. Michael and Flynn are largely
discretionary based on each such officer's contribution to the achievement of
strategic goals of the Company. Mr. Michael received a bonus of $40,000 with
respect to 1998 and Mr. Flynn received a bonus of $83,000 with respect to
1998. These bonuses reflect the achievement of strategic goals, in
particular the sale of Transition in December 1998 and substantial progress
in the sale of certain assets of Enstar Networking during 1998. Mr. Flynn's
bonus also reflects the achievement of operating goals at Americable.
Stock Options
The Company has in the past granted, and may grant in the future, stock
options to executive officers in the belief 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. In 1998,
the only executive officer to receive stock options was Thomas S. Wargolet,
the former Chief Financial Officer and Secretary. See "Stock Options" below.
The Company's operating subsidiaries have established separate stock
option programs. 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.
1998 CEO Compensation
During 1998, Mr. Jeffrey J. Michael, as President and Chief Executive
Officer of ENStar, had overall responsibility for the strategic direction of
ENStar and the performance of ENStar's operating subsidiaries. Mr. Michael
first was elected President of NSU in December 1990, and was elected
President of ENStar at the time of its initial organization.
<PAGE>
Mr. Michael's compensation at ENStar in 1998 consisted of base salary
and a cash bonus. Mr. Michael's compensation was determined based on
consideration of the factors discussed under the headings "Base Salaries" and
"Cash Bonuses" appearing above.
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 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
<PAGE>
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") for each of the last
three fiscal years.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Salary Bonus Stock All Other
Name and Principal Position Year ($) ($) Options(#)(1) Compensation
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------ ---- -------- ------- ------------- ------------
Jeffrey J. Michael 1998 $165,385 $40,000 0 7,196(2)
President and Chief 1997 187,654 0 125,000 7,146
Executive Officer 1996 (3) -- -- 28,500 --
Peter E. Flynn 1998 148,365 83,000 0 6,590(4)
Executive Vice President 1997 157,939 0 90,000 6,889
1996 (5) -- -- 0 --
C.S. Mondelli 1998 140,000 48,296 0 51,951(6)
President and Chief
Executive Officer,
Transition Networks 1997 138,058 16,250 0 4,087
1996 120,000 24,000 70,000(7) 2,769
Ronald D. Newman 1998 145,385 15,000 125,000(8) 4,010(9)
President, 1997 124,000 13,347 20,000(10) 1,718
Enstar Networking 1996 85,000 10,150 25,000(10) 476
Thomas S. Wargolet 1998 90,000 5,625 50,000 2,869(9)
Chief Financial Officer 1997 90,000 0 0 4,404
and Secretary 1996 87,231 26,100 49,250(11) 2,890
</TABLE>
- ---------------
<PAGE>
(1) None of the Named Executive Officers held or received any awards of
restricted shares.
(2) Consists of $4,800 contributed to the Company's 401(k) plan for the benefit
of Mr. Michael and $2,396 of which represents life and disability insurance
premiums paid by ENStar for the benefit of Mr. Michael.
(3) 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 $2,466 of which represents life and disability insurance premiums
paid by NSU for the benefit of Mr. Michael.
(4) Consists of $4,451 contributed to the Company's 401(k) plan for the benefit
of Mr. Flynn and $2,139 of which represents life and disability insurance
premiums paid by ENStar for the benefit of Mr. Flynn.
(5) 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.
(6) Consists of $4,800 contributed to the Company's 401(k) plan for the benefit
of Mr. Mondelli and $47,151 relating to the termination of options to
purchase Transition stock in connection with the sale of Transition in
December 1998.
(7) Represents options to purchase shares of Transition common stock
(8) Represents options to purchase shares of Enstar Networking common stock.
(9) Amount contributed to the Company's 401(k) plan for the benefit of
employee.
(10) Represents options to purchase shares of Americable. Such options were
terminated in connection with the January 1998 grant of options to purchase
Enstar Networking common stock.
(11) Includes options to purchase 35,000 shares of Americable.
<PAGE>
STOCK OPTIONS
Option Grants During 1998
The following table sets forth individual grants of stock options made to
the Named Executive Officers during the year ended December 31, 1998:
<TABLE>
<CAPTION>
Potential Realizable
Value at
Assumed Annual Rates of
Number of Percent of Exercise Stock Price
Securities Total Options Price or Appreciation for
Underlying Granted to Base Price/ Option Term (1)
Options Employees in Share Expiration ----------------------
Name (#) Fiscal Year (%) ($) Date 5% ($) 10% ($)
- ---------------------- ---------- --------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey J. Michael 0 -- -- -- -- --
Peter E. Flynn 0 -- -- -- -- --
C.S. Mondelli 0 -- -- -- -- --
Ronald D. Newman 125,000(2) 29%(2) $ 1.00 1/1/08 $78,612 $199,218
Thomas S. Wargolet 50,000(3) 100% $ 7.375 12/31/08 $231,905 $587,692
</TABLE>
- --------------------
(1) 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 and overall stock market
conditions. The amounts represented in the table may not necessarily be
achieved.
(2) Each option represents the right to purchase one share of common stock of
Enstar Networking. The options are all non-qualified stock options. The
options become exercisable with respect to one-third of such shares each
year over a period of three years from 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 is not the
surviving corporation, a transfer of all the stock of ENStar, a sale of
substantially all the assets, or a dissolution or liquidation, of ENStar.
(3) Each option represents the right to purchase one share of common stock of
the Company. The options are all non-qualified stock options. The options
become exercisable with respect to 25% of such shares each year over a
period of four years from 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 is not the surviving
corporation, a transfer of all the stock of ENStar, a sale of substantially
all the assets, or a dissolution or liquidation, of ENStar.
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR END OPTION VALUES
The following table provides information concerning stock option exercises
and the value of unexercised options at December 31, 1998, for the Named
Executive Officers:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options In-The-Money Options
Acquired On Value At End of Year (#) At Year End ($)
Exercise Realized -------------------------- --------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey J. Michael 0 $ 0 38,375 115,125 $ 0 0
Peter E. Flynn 0 0 28,375 85,125 0 0
C.S. Mondelli(1) 0 0 0 0 0 0
Ronald D. Newman 0 0 0 125,000(2) 0 0
Thomas S. Wargolet 0 0 3,562 60,688 0 0
- ----------------
</TABLE>
(1) Mr. Mondelli's employment terminated in December 1998. See "Summary
Compensation Table."
(2) Represents the right to purchase shares of Enstar Networking.
Americable and Enstar Networking maintain separate stock option plans.
The exercise price of the options granted pursuant to the plans of the operating
subsidiaries are determined by the Board of Directors of the respective
operating subsidiaries, 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.
<PAGE>
Employment Contracts and Termination of Employment Arrangements
The Company has entered into severance agreements with certain of its
officers and employees, including Messrs. Flynn and Michael. Pursuant to Mr.
Flynn's agreement, he will be entitled to severance payments and benefits if the
Company terminates his employment within twenty-four months following a change
in control of the Company or Americable if the termination is by the Company
without "cause" or by Mr. Flynn for "good reason," as defined in the agreement.
The agreement provides for a lump sum payment equal to twenty-four months of
total compensation as in effect prior to the termination plus continuation of
benefits for twenty-four months. The agreement also provides that if such a
termination of employment occurs that is not in connection with a change in
control, Mr. Flynn will be entitled to twelve-months of total compensation and
continuation of benefits for twenty-four months. Mr. Flynn will be entitled to
a bonus payment equal to 50% of his annual compensation if he continues to be
employed with the Company through December 31, 1999 or an earlier date if
certain change in control events occur. The Company is obligated to compensate
Mr. Flynn for certain taxes and penalties resulting from payments and benefits
under the agreement and other arrangements. Pursuant to Mr. Michael's
agreement, he will be entitled to severance payments and benefits if the Company
terminates his employment within twenty-four months following a change in
control if the termination is by the Company without "cause," as defined in the
agreement. The events constituting a change in control specifically exclude a
change in control relating to a transaction with Mr. Michael and his family
members. The agreement provides for a lump sum payment equal to twenty-four
months of total compensation as in effect prior to the termination plus
continuation of benefits for twenty-four months. The Company is obligated to
compensate Mr. Michael for certain taxes and penalties resulting from payments
and benefits under the agreement and other arrangements. Mr. Wargolet received
a severance payment in the amount of $45,000 pursuant to the terms of an
employment agreement in connection with terminating his employment with the
Company in March 1999.
Related Party Transactions
None.
<PAGE>
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 March 20, 1999, 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
Beneficial Percent
Name of Beneficial Owner Ownership(1) of Class
- ------------------------------------ ------------ --------
<S> <C> <C> <C>
James H. Michael 1,020,965(2) 34.2%
Jeffrey J. Michael 916,165(3) 30.3%
Miles E. Efron 150,467(4) 5.0%
Peter E. Flynn 34,250(5) 1.1%
Thomas S. Wargolet 7,925(6) *
Richard D. Braun 5,500(7) *
C.S. Mondelli 0 *
Ronald D. Newman 0 *
All officers and directors
as a group (8 persons) 2,135,272(8) 69.3%
- ---------------
*Less than one percent
</TABLE>
The address for each 5% shareholder is: c/o ENStar Inc., 7450 Flying Cloud
Drive, Eden Prairie, Minnesota 55344.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC"), 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 962,164 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 5,500 shares of Common Stock issuable pursuant to
Currently Exercisable Options.
<PAGE>
(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 45,500 shares of Common Stock issuable pursuant to
Currently Exercisable Options.
(4) Includes 5,500 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(5) Consists of 34,250 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(6) Includes 7,125 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(7) Consists of 5,500 shares of Common Stock issuable pursuant to Currently
Exercisable Options.
(8) Shares shown as beneficially owned include 103,375 shares not outstanding,
but which may be acquired pursuant to Currently Exercisable Options.
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph and table compare the percentage change in the
cumulative total shareholder return on ENStar's Common Stock during the period
beginning March 3, 1997 and ending December 31, 1998, with the cumulative total
return on each of the S&P 500 Index, the S&P Healthcare Sector Index and the S&P
Computers (Networking) Index. The component S&P indices represent indices
relating to ENStar's operating subsidiaries (S&P Computers Networking Index) and
ENStar's investment in CorVel Corporation (S&P Healthcare Sector Index). The
comparison assumes $100 was invested on March 3, 1997 in ENStar's Common Stock
and in each of the foregoing indices and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
3/3/97 12/31/97 12/31/97
-------- -------- --------
<S> <C> <C> <C>
ENStar Inc. 100 91 85
S&P 500 100 125 160
S&P Computers (Networking) 100 129 278
S&P Healthcare Sector 100 128 184
</TABLE>
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, certain employees and persons who own more than ten percent
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and changes in
ownership of Common Shares and other equity securities of the Company.
Officers, directors and greater than ten percent shareholders are required
by SEC regulation to furnish the Company with all Section 16(a) forms they file.
To the Company's knowledge, all Section 16(a) filing requirements
applicable to officers, directors and greater than ten percent shareholders were
satisfied during fiscal 1998.
AUDITORS
The Board of Directors of the Company has appointed Grant Thornton as
independent auditors for the Company for the year ending December 31, 1999.
Grant Thornton audited the financial statements of the Company for the year
ended December 31, 1998. 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, the proxy holders have discretionary authority to vote the
proxy in accordance with their best judgment.
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, 1999 is expected to be held on or about July 13, 2000. Shareholder
proposals for that meeting, under Rule 14a-8 of the Securities and Exchange
Commission's proxy rules, must be prepared in accordance with the proxy rules
and received by the Company on or before February 5, 2000. Any other
shareholder proposals intended to be presented at the 1999 annual meeting must
be received by the Company on or before April 20, 2000.
By Order of the Board of Directors
/s/ JEFFREY J. MICHAEL
----------------------
Jeffrey J. Michael
President and Chief Executive Officer
June 4, 1999
<PAGE>
[FRONT OF CARD]
ENStar Inc.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 13, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby appoints Jeffrey J. Michael and Peter E. Flynn,
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 July 13, 1999, and at all
adjournments thereof:
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
James H. Michael, Miles E. Efron, Richard J. Braun, Jeffrey J. Michael
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
[BACK OF CARD]
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 , 1999
-----------------
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.
