SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by registrant [x] Filed by a party other than the
registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Shared Technologies Fairchild Inc.
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(Name of Registrant as Specified in Its Charter)
Shared Technologies Fairchild Inc.
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(Name of Person[s] Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] 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:
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SHARED TECHNOLOGIES FAIRCHILD INC.
100 GREAT MEADOW ROAD
WETHERSFIELD, CONNECTICUT 06109
(860) 258-2400
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 1996
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The Annual Meeting of Stockholders of Shared Technologies Fairchild Inc.
(the "Company") will be held at the Company's offices, located at 100 Great
Meadow Road, Wethersfield, Connecticut 06109 on Friday, May 10, 1996, at 10:00
a.m., for the purpose of considering and acting upon the following matters:
1. To elect one class of four directors;
2. To ratify the adoption by the Company of an incentive stock option
plan;
3. To approve the material terms of the performance goals for the fiscal
1996 incentive compensation awards for certain executives of the
Company; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Pursuant to the provisions of the Company's Bylaws, the Board of Di-
rectors has fixed the close of business on April 23, 1996 as the record date for
determining the stockholders of the Company entitled to notice of, and to vote
at, the meeting or any adjournment thereof.
Stockholders who do not expect to be present in person at the meeting are
urged to date and sign the enclosed proxy and promptly mail it in the
accompanying envelope. The proxy will not be used if you attend and vote at the
meeting in person or if you revoke the proxy prior to the meeting.
By Order of the Board of Directors
KENNETH M. DORROS
Secretary
Dated: April 26, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES AT THE ANNUAL MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
SHARED TECHNOLOGIES FAIRCHILD INC.
100 GREAT MEADOW ROAD
WETHERSFIELD, CONNECTICUT 06109
(860) 258-2400
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PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
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MAY 10, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Shared Technologies Fairchild Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on May 10, 1996 and at any adjournment of that meeting.
All proxies will be voted in accordance with the instructions contained therein
and, if no choice is specified, the proxies will be voted in favor of the
proposals set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before it is exercised by giving written
notice to that effect to the Secretary of the Company.
The Board of Directors has fixed April 23, 1996 as the record date for
determining stockholders who are entitled to vote at the meeting. At the close
of business on April 23, 1996, there were outstanding and entitled to vote
14,773,912 shares of Common Stock of the Company, $.004 par value per share
("Common Stock"). Each share is entitled to one vote.
The presence of the holders of at least one-third in interest of the
outstanding shares of Common Stock of the Company is necessary to constitute a
quorum at the meeting. Therefore, holders of not less than 4,924,638 shares of
Common Stock must be present in person or by proxy for there to be a quorum.
Shares of Common Stock represented by all proxies received, including proxies
that withhold authority for the election of directors, as well as "broker
non-votes", discussed below, count toward establishing the presence of a quorum.
Assuming the presence of a quorum, directors of the Company are elected by
plurality vote of the shares of Common Stock present in person or by proxy and
voting in the election of directors. Shares may be voted for or withheld from
each nominee for election as a director. Shares for which the vote is withheld
and "broker non-votes" will be excluded entirely and have no effect on the
election of directors of the Company.
Assuming the presence of a quorum, an affirmative vote of a majority of the
shares of Common Stock present in person or by proxy and voting will be required
for ratification of the adoption of the 1996 Equity Incentive Plan. As to such
matter, shares may be voted for or against the matter or may abstain from voting
on the matter. Abstentions and "broker non-votes," discussed below, are not
counted in determining the number of votes cast with respect to such matter.
Under applicable rules, brokers who hold shares of the Company's Common
Stock in street name have the authority to vote the shares in the broker's
discretion on "routine" matters if they have not received specific instructions
from the beneficial owner of the shares. Item 1, the uncontested election of
directors, is a "routine" matter for this purpose. With respect to matters which
are determined by the appropriate broker-dealer regulatory organization to be
"non-routine," which includes Items 2 and 3 on the agenda for this meeting of
the Company's stockholders, brokers may not vote shares held in street name
without specific instructions from the beneficial owner. If a broker holding
shares in street name submits a proxy card on which the broker physically lines
out the matter (whether it is "routine" or "non-routine") or does not indicate a
specific choice ("for", "against" or "abstain") on a matter that is
"non-routine," that
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action is called a "broker non-vote" as to that matter. "Broker non-votes",
whether with respect to "routine" matters, such as Item 1 on the agenda for this
meeting, or "non-routine" matters, are not counted in determining the number of
votes cast with respect to the matter. If a broker submits a proxy but does not
indicate a specific choice on a "routine" matter, the shares will be voted as
specified in the proxy card. At this meeting of the Company's stockholders,
shares represented by such a proxy card would be voted for the election of the
director nominees.
The Company's Annual Report for the fiscal year ended December 31, 1995 is
being mailed to stockholders with the mailing of this Notice and Proxy Statement
on or about April 26, 1996.
MATTERS TO BE BROUGHT BEFORE THE MEETING
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Board of Directors currently consists of eleven members, divided into
two classes of four directors each and one class of three directors, with the
terms of each class staggered so that the term of one class expires at each
annual meeting of the stockholders.
The terms of directors in one class, consisting of four directors, Ajit G.
Hutheesing, Jo McKenzie, Jeffrey J. Steiner and Mel D. Borer, expire at the 1996
annual meeting. All of the nominees are currently members of the Board. Unless
otherwise instructed in the proxy, all proxies will be voted for the election of
each of these nominees to a three-year term expiring at the 1999 annual meeting,
with each to hold office until his successor has been duly elected and
qualified. Stockholders who do not wish their shares to be voted for a
particular nominee may so indicate in the space provided on the proxy card.
Management does not contemplate that any of the nominees will be unable to
serve, but in that event, proxies solicited hereby will be voted for the
election of another person or persons to be designated by the Board of
Directors.
The following table and narrative sets forth information regarding the
principal occupation, other affiliations, committee memberships and age, for the
four nominees and each director continuing in office.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THESE NOM-
INEES.
<TABLE>
<CAPTION>
DIRECTOR POSITION TERM
NAME AGE SINCE WITH COMPANY ENDS
---- --- ----- ------------ ----
<S> <C> <C> <C> <C>
NOMINEES FOR ELECTION:
Mel D. Borer(1) 52 1996 President, Chief Operating Officer and 1996
Director
Ajit G. Hutheesing(3)(4) 60 1994 Director 1996
Jo Mckenzie(2) 64 1991 Director 1996
Jeffrey J. Steiner(1)(4) 59 1996 Vice Chairman and Director 1996
DIRECTORS CONTINUING IN OFFICE:
Anthony D. Autorino(1)(4) 56 1986 Chairman, Chief Executive Officer and 1997
Director
Thomas H. Decker(4) 54 1992 Director 1997
William A. Dibella(2)(3) 53 1986 Director 1998
Vincent Divincenzo(4) 46 1992 Senior Vice President -- Administration 1997
and Finance, Treasurer, Chief Financial
Officer and Director
</TABLE>
2
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<TABLE>
<CAPTION>
DIRECTOR POSITION TERM
NAME AGE SINCE WITH COMPANY ENDS
---- --- ----- ------------ ----
<S> <C> <C> <C> <C>
Natalia Hercot 30 1996 Director 1998
Edward J. Mccormack, Jr.(2)(3) 72 1991 Director 1997
Donald E. Miller 49 1996 Director 1998
</TABLE>
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(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation and Stock Option Committee.
(4) Member of the Strategic Steering Committee.
MEL D. BORER is President, Chief Operating Officer and Director. He was
Vice President of Fairchild Industries, Inc. from 1991 until March 1996 and
President of Fairchild Communications Services Company from 1989 until March
1996.
AJIT G. HUTHEESING is a Director. He has been director of the Company since
June 1994. Mr. Hutheesing is the founder, Chairman and Chief Executive Officer
of International Capital Partners, Inc. ("ICP"). Prior to starting ICP in 1988,
he was Chairman of the Board and Director of Corporate Finance of The Sherwood
Group. Before joining Sherwood, Mr. Hutheesing was with the J. Henry Schroder
Corporation from 1975 to 1986 and held the position of Vice Chairman from 1982.
Prior to that time, Mr. Hutheesing spent ten years with the International
Finance Corporation, a private sector investment banking arm of the World Bank.
Mr. Hutheesing is Chairman of Age Wave, Inc. He also serves as a director of
Counsel Corporation and Cryenco Sciences Inc. He was educated at Cambridge
University in England where he received a B.S. degree in chemistry, physics and
mathematics and an M.A. degree in chemical engineering. Mr. Hutheesing holds an
M.B.A. degree from Columbia University.
JO MCKENZIE is a Director. She has been a director of the Company since
June 1991. Mrs. McKenzie is a former Republican State Chairwoman of Connecticut
and has held a wide variety of Republican Party leadership positions at the
federal, state and local levels. Recently, Mrs. McKenzie served as a Republican
National Committeewoman from Connecticut. From 1993, Mrs. McKenzie has been a
consultant to businesses providing hospitality services.
JEFFREY J. STEINER is Vice Chairman of the Board and a Director. He has
been Chairman of the Board and Chief Executive Officer of The Fairchild
Corporation ("TFC") since December 1985, and President of TFC since July 1,
1991. Mr. Steiner also served as President of TFC from November 1988 until
January 1990. He has served as Chairman of the Board, Chief Executive Officer
and President of Banner Aerospace since September 1993. He served as Vice
Chairman of the Board of Rexnord Corporation from July 1992 to December 1993. He
served as Chairman, President and Chief Executive Officer of Fairchild
Industries, Inc. from July 1991 until March 1996 and of RHI Holdings, Inc. from
1988 until March 1996. Mr. Steiner is and for the past five years has been
President of Cedco Holdings Ltd. He serves as a director of The Franklin
Corporation, The Copley Fund and TFC.
ANTHONY D. AUTORINO is the Chairman of the Board, Chief Executive Of-
ficer, and Director. Mr. Autorino has been Chairman, President and Chief
Executive Officer of the Company since January 1986. From January 1985 to
January 1986, he was Chairman and Chief Executive Officer of ShareTech, a joint
venture between United Technologies Corporation and AT&T. He was President of
United Technologies Building System Company from 1981 to 1984 and was its
Chairman and Chief Executive Officer from 1984 to 1985. Mr. Autorino joined the
Hamilton Standard Division of United Technologies in 1960, holding the positions
of Vice President, Executive Vice President and President of the Division. Mr.
Autorino was Chairman of the firearms manufacturer Colt's Manufacturing Company,
Inc. and of its parent company, CF Holding Corp. from March 1990 to March 1992.
He also served as Acting Chief Executive Officer from September 1991 to December
1991. Mr. Autorino is also a director of FiberVision Corporation. Mr. Autorino
serves on the board of directors of the Connecticut Children's Medical Center.
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THOMAS H. DECKER is a Director. He has been a director of the Company since
May 1992. Since September 1992, Mr. Decker has served as a Senior Vice President
of Investments at Prudential Securities. From 1981 to September 1992 he served
as a Senior Vice President at Tucker Anthony Incorporated. Mr. Decker also
serves as a director of FiberVision Corporation.
WILLIAM A. DIBELLA is a Director. He has been a director of the Company
since April 1986. Since 1981, Mr. DiBella has been a Connecticut State Senator
and is currently Senate Minority Leader and was Senate Majority leader from 1992
to 1994. Prior thereto, he served as Chairman of the Finance, Revenue and
Bonding Committee. Mr. DiBella was Chairman of the Metropolitan District
Commission 1977 to 1981, was a member of the Hartford City Council from 1971 to
1979 and Deputy Mayor from 1975 to 1977.
VINCENT DIVINCENZO is Senior Vice President -- Administration and Fi-
nance, Chief Financial Officer and Director. He has been a director of the
Company since May 1992 and Senior Vice President -- Administration and Fi-
nance, Treasurer and Chief Financial Officer since September 1993. Mr. Di-
Vincenzo joined the Company in July 1988 and served as its Vice President --
Finance, Treasurer and Chief Financial Officer until September 1993. From 1987
to 1988, Mr. DiVincenzo was Controller of KCR Technology, Inc. From 1982 to
1986, he was employed by Lorlin Test Systems (formerly Eaton Corporation)
serving as controller in his last capacity. Prior to 1982, Mr. DiVincenzo served
as Manager of General Accounting for Interrad Corporation and for the ConDiesel
Mobile Equipment Division of Condec Corporation.
NATALIA HERCOT IS a Director. She was a Director of FII from 1989 until
March 1996. Since 1991, she has served in various capacities at both TFC and
FII, and currently serves as International Coordinator and Translator at TFC.
Ms. Hercot is the daughter of Jeffrey J. Steiner.
EDWARD J. MCCORMACK, JR. is a Director. He has been a director of the
Company since June 1991. Mr. McCormack is a former three-term Attorney General
of The Commonwealth of Massachusetts. Mr. McCormack is a lawyer with the law
firm of Goldstein & Manello, P.C., Boston, Massachusetts. From 1988 until
September 1991, Mr. McCormack was a senior partner of the law firm of McCormack
& Putziger in Boston. He is a former three-term Boston City Council member,
having served as President of the Council and Acting Mayor of the City of
Boston.
DONALD E. MILLER is a Director. He has been a Director of the Company since
March 1996. Mr. Miller was Vice President and General Counsel of Fairchild
Industries, Inc. from 1991 until March 1996 and its Secretary from 1995 until
March 1996. He has been Senior Vice President and General Counsel of The
Fairchild Corporation since 1991 and its Secretary since 1995. Prior to 1991,
Mr. Miller was a principal in the law firm Temkin & Miller, Ltd., in Providence,
Rhode Island.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors which
provides the opportunity for direct contact between the Company's independent
public accountants and the Board. The Audit Committee is currently comprised of
Mrs. McKenzie and Messrs. DiBella and McCormack. The Audit Committee met once
during the year ended December 31, 1995, to review the effectiveness of the
auditors during the annual audit, discuss the Company's internal control
policies and procedures and consider and recommend the selection of the
Company's independent public accountants.
The Company has a standing Compensation and Stock Option Committee of the
Board of Directors which provides recommendations to the Board regarding
compensation programs of the Company. The Compensation Committee is currently
comprised of Messrs. Hutheesing, DiBella and McCormack. The Compensation
Committee met twice during the year ended December 31, 1995.
The Company has an Executive Committee of the Board of Directors which is
authorized to act on behalf of the Board of Directors when the Board is not in
session. The Executive Committee is currently comprised of Messrs. Autorino,
Steiner and Borer. The Executive Committee met twice during the year ended
December 31, 1995.
4
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The Company has a Strategic Steering Committee, which is authorized to
review, analyze and present to the Board of Directors various options, such as
strategic alliances. The Strategic Steering Committee is currently comprised of
Messrs. Autorino, Steiner, DiVincenzo, Hutheesing and Decker. The Strategic
Steering Committee met three times during the year ended December 31, 1995.
During the year ended December 31, 1995, the Board of Directors held seven
meetings. Each of the directors attended at least 75% of the total number of
meetings of the Board of Directors held during the period in which they served
on the Board, except for two former directors, Herbert L. Oakes, Jr., who
attended 71% of the meetings, and Lewis M. Rambo, who attended 50% of the
meetings prior to his resignation October 10, 1995. Each of the directors also
attended at least 75% of all committees of the Board of Directors on which they
respectively served. The Company does not have a standing nominating committee.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive cash compensation of
$750 per meeting of the Board of Directors attended ($400 if attended by
teleconference) and $500 for each committee meeting attended ($400 if attended
by teleconference), plus reimbursement of out-of-pocket expenses for attendance
at each Board or committee meeting.
The Company has a formula-based stock option plan for independent di-
rectors, the 1994 Directors Option Plan (the "Directors' Plan"). Under the
Directors' Plan, an "independent director" is a director of the Company who is
neither an employee nor a principal stockholder of the Company. The Directors'
Plan provides for a one-time grant of an option to purchase 15,000 shares of
Common Stock to all independent directors who served during the 1994-95 term,
issuable as of September 22, 1994.
The Directors' Plan further provides for the grant of an option to purchase
15,000 shares of Common Stock to each independent director first elected after
September 22, 1994, the effective date of the Directors' Plan.
Each independent director who received a one-time option grant on Sep-
tember 22, 1994 who was elected to a new term as a director in 1995 or is
elected to a new term as a director in 1996 received or shall receive upon such
reelection a grant of an option for 5,000 or 10,000 options, respectively.
Reelection after 1996 of any independent director in service as of September 22,
1994 shall entitle such director to a grant of 15,000 options.
All options will be exercisable at the closing bid price for the date
preceding the date of grant on which there was a sale of Common Stock on the
principal national securities exchange on which the Common Stock was then listed
or admitted to trading. Options will vest at the rate of one-third per year of
service completed as a director, and are exercisable for so long as the optionee
continues as an independent director of the Company and for a period of 90 days
after the optionee ceases to be a director of the Company. The options will in
no event be exercisable for a period in excess of ten years following the grant
date.
PROPOSAL TO APPROVE 1996 EQUITY INCENTIVE PLAN
(ITEM 2 ON PROXY CARD)
On February 2, 1996, the Board of Directors authorized the 1996 Equity
Incentive Plan (the "1996 Plan"), subject to approval by the stockholders,
pursuant to which the Company will offer shares, and share-based compensation,
to key employees and consultants of, and persons having a business relationship
with, the Company, its subsidiaries and affiliates. The 1996 Plan will provide
for the grant to eligible employees of stock options, stock appreciation rights,
restricted stock, performance shares, and performance units (the "Awards"). The
1996 Plan will be administered by the Compensation and Stock Option Committee of
the Company's Board of Directors (the "Compensation Committee"), which will be
entitled to make all determinations with respect to selection of participants
and the Awards to be granted. Officers and full-time salaried employees of the
Company who, in the judgment of the Compensation Committee, are in a position to
make a substantial contribution to the management, growth and success of the
Company will be eligible to receive Awards.
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<PAGE>
The 1996 Plan provides that not more than 1.5 million shares of Common
Stock will be granted under the 1996 Plan. However, the number of shares is
subject to adjustment to reflect certain dilutive changes in the number of
outstanding shares of Common Stock. Any shares subject to an Award, which are
not issued or are forfeited because the terms and conditions of the Award are
not met, may again be used for an Award under the 1996 Plan. However, the
exercise of a stock appreciation right will result in the cancellation of the
related stock option, and options so cancelled shall not be available for future
Awards. Prior to being earned (or exercised, in the case of stock options), no
rights under any Award may be transferred.
A stock option grant will entitle a participant to purchase from the
Company a specified number of shares of Common Stock at a specified price per
share. In the discretion of the Compensation Committee, stock options may be
granted as non-qualified stock options or incentive stock options. The purchase
price per share of Common Stock subject to an option shall be fixed by the
Compensation Committee at the time such option is granted, but shall not be less
than 100% of the fair market value per share of Common Stock at the time the
option is granted in the case of incentive stock options and shall not be less
than 50% of the fair market value per share of Common Stock at the time the
option is granted in the case of non-qualified stock options, provided that such
non-qualified options, if priced below fair market value, shall be subject to
vesting requirements as determined in the discretion of the Compensation
Committee. Furthermore, any such below-market pricing shall be subject to bona
fide business criteria, as determined by the Compensation Committee. Payment for
shares of Common Stock acquired on exercise of a stock option may be made in
cash, in shares of Common Stock having a fair market value as of the date of
exercise equal to the exercise price, or a combination thereof. However, the
Compensation Committee will be able to impose limitations on the use of shares
of Common Stock to exercise stock options, as it deems appropriate. Stock
options may be exercised during such periods of time fixed by the Compensation
Committee (except that no incentive stock option may be exercised later than ten
years after the date of grant).
Stock appreciation rights ("SARs") may be granted only in tandem with stock
options. Each SAR will entitle the participant, in general, to receive upon
exercise the excess of a share's fair market value at date of exercise over the
exercise price of the related stock option. An SAR granted in tandem with an
option will be exercisable only to the extent the option is exercisable. To the
extent the option is exercised, the accompanying SAR will cease to be
exercisable, and vice versa.
A grant of restricted stock will consist of a specified number of shares of
Common Stock which will be contingently awarded in amounts to be determined by
the Compensation Committee to those participants selected by the Compensation
Committee and will be subject to forfeiture to the Company under such conditions
and for such a period of time as the Compensation Committee may determine. A
participant may vote and receive dividends on restricted stock, but may not
sell, assign, transfer, pledge or otherwise encumber the restricted stock during
the restricted period. The purchase price, if any, to be paid for the restricted
stock will be determined at the time of grant by the Compensation Committee.
Awards of performance shares will entitle the participant to receive shares
of Common Stock based upon the degree of achievement of pre-established
performance goals over a period as determined by the Compensation Committee in
its discretion. Performance goals will be fixed by the Compensation Committee in
its discretion on the basis of such criteria and to accomplish such goals as the
Compensation Committee may select. The Compensation Committee will have
discretion to determine the employees eligible for performance shares, the
duration of each performance period, and the number of shares to be earned on
the basis of the Company's performance relative to the established goals. At the
end of the performance period, the Compensation Committee will determine the
number of performance shares which have been earned on the basis of the
Company's performance in relation to the performance goals.
Awards of performance units will entitle the participant to receive cash
based upon the degree of achievement of pre-established performance goals over a
performance period as determined by the Compensation Committee. Performance unit
awards and performance goals for each performance period will be recommended by
the Chief Executive Officer of the Company (other than with respect to awards
and goals applicable to the Chief Executive Officer, which are determined by the
Board of Directors) and
6
<PAGE>
submitted to the Compensation Committee for approval. At the time of grant, a
performance valuation schedule (other than for the Chief Executive Officer) will
be recommended by the Chief Executive Officer of the Company, subject to
approval by the Compensation Committee in its discretion, which schedule will
set ultimate performance-unit values which correspond to various levels of
performance of the Company in relation to the performance goals. The performance
valuation schedule for the Chief Executive Officer will be recommended by the
Compensation Committee and approved by the Board of Directors of the Company. At
the end of a performance period the Compensation Committee will review the
actual performance of the Company and determine the amount of award payouts, if
any.
In the event of a participant's termination of employment prior to the
exercise of share options granted under the 1996 Plan, if such termination is
for cause, in general, the outstanding stock options will be canceled. If the
termination is other than for cause, in general, the stock options will expire
90 days following the termination of employment, subject to the discretion of
the Compensation Committee. Notwithstanding the general rules described above,
the Compensation Committee may rescind the right to exercise stock options
following termination of employment if the participant engages in competition
with or otherwise engages in activity which is adverse to the Company. In
addition, the exercise period for incentive stock options may not extend beyond
the period allowed by the Internal Revenue Code of 1986, as amended.
In the event of a participant's termination of employment prior to
satisfaction of conditions related to outstanding performance share awards,
restricted stock awards and performance units awards for reasons other than
discharge or resignation, a participant or his estate or beneficiary, in the
sole discretion of the Compensation Committee, may be entitled to receive a pro
rata number of shares (or amount of cash in the case of performance units) with
respect to the Award. In the event of a termination of employment due to
resignation or discharge, the Award will be canceled without consideration,
subject to the discretion of the Compensation Committee to release restrictions
on all or any part of an Award.
In order to preserve the deductibility of certain compensation expenses
relating to the 1996 Plan, the Company has established limits on the maximum
number of non-statutory stock options that may be granted under the 1996 Plan to
the following executives of the Company: Mr. Autorino, 500,000; Mr. Steiner,
350,000; Mr. Borer, 150,000; and Mr. DiVincenzo, 100,000. In no event shall more
than 100,000 options be issuable to any other participant.
Although the foregoing summarizes the essential features of the 1996 Plan,
it is qualified in its entirety by reference to the full text of the 1996 Plan,
which is attached as Exhibit "I" to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
APPROVAL OF MATERIAL TERMS OF PERFORMANCE GOALS
FOR FISCAL 1996 INCENTIVE COMPENSATION AWARDS
FOR CERTAIN EXECUTIVES OF THE COMPANY
(ITEM 3 ON PROXY CARD)
At the Annual Meeting, the shareholders will be asked to approve the
material terms of the performance goals for the fiscal 1996 incentive com-
pensation awards ("Awards") for certain executives of the Company. Effective for
tax years beginning in 1994, the Internal Revenue Code of 1986, as amended, (the
"Code"), disallows deductions for publicly-held corporations with respect to
compensation in excess of $1,000,000 paid to certain executive officers.
However, compensation payable solely on account of attainment of one or more
performance goals is not subject to this deduction limitation if the performance
goals are objective, pre-established and determined by a compensation committee
comprised solely of two or more outside directors, the material terms of the
performance goals under which the compensation is to be paid are disclosed to
the shareholders and approved by a majority vote, and the compensation committee
certifies that the performance goals and other material terms were in fact
satisfied before the compensation is paid.
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On March 28, 1996, the Company's Compensation Committee (the "Committee")
established performance goals for the following executives of the Company for
fiscal 1996 incentive compensation Awards and the maximum amount payable to such
executives if the goals are achieved. The executives covered by these
performance goals are (i) the Chairman and Chief Executive Officer, (ii) the
Vice-Chairman, (iii) the President and Chief Operating Officer, and (iv) the
Senior Vice President -- Administration and Finance, Treasurer and Chief
Financial Officer (the "Executives").
The performance goals and maximum amounts payable for fiscal 1996, as set
forth below, are based on the Company's success in substantially achieving or
exceeding a target level of $46.7 million of EBITDA, i.e. earnings before
interest, taxes, depreciation and amortization, (the "Target").
1. If the Company fails to achieve more than 90% of the Target, then no
incentive compensation shall be paid to the Executives.
2. To the extent that the Company achieves in excess of 90%, but not more
than 100% of the Target, then each Executive shall receive an Award in an amount
up to 4% of such Executive's base salary for each percentage point that the
Company exceeds the Target.
3. To the extent that the Company achieves in excess of 100% of the Target,
then each Executive shall receive, in addition to the amount described in the
preceding paragraph, an Award in an amount up to 2% of such Executive's base
salary for each percentage point that the Company exceeds the Target from 100%
to 120% of such Target.
The Committee retains the right to determine the actual amount of in-
centive compensation to be awarded to the Executives in fiscal 1996 based on his
individual contribution, consistent with the foregoing goals and in an amount no
greater than the maximum amounts set forth above.
Assuming the shareholders approve the material terms of the performance
goals as described herein, the Company believes that any such incentive
compensation award to the Executives will qualify as performance-based
compensation that will be deductible from the Company's gross income for federal
income tax purposes.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the ex-
ecutive officers of the Company who are not also directors. The executive
officers are elected annually by the Board of Directors following the Annual
Meeting of Stockholders and serve at the discretion of the Board.
<TABLE>
<CAPTION>
POSITION
NAME AGE WITH COMPANY
---- --- ------------
<S> <C> <C>
Paul R. Barry 31 Senior Vice President -- Business Development
Kenneth M. Dorros 36 Senior Vice President, General Counsel and
Secretary
Thomas E. Dupont, Jr. 34 Controller
</TABLE>
PAUL R. BARRY is Senior Vice President -- Business Development. Mr. Barry
has been Vice President -- Business Development of the Company since November
1995. Mr. Barry joined the Company in October 1989 as Manager -- Investor
Relations. From June 1990 to December 1990 he served as a Regional Director. He
then served as a Vice President until November 1992, then became Vice President
- -- Operations until January 1995, and held the position of President of the FMS
Division from January 1995 until November 1995. Mr. Barry is a graduate of
Massachusetts College of Pharmacy and received an M.B.A. from Rensselaer
Polytechnic Institute. Mr. Barry is the son-in-law of Mr. Autorino.
8
<PAGE>
KENNETH M. DORROS is Senior Vice President, General Counsel and Secre-
tary. He has been General Counsel of the Company since June 1986. Mr. Dorros
became Secretary in 1987 and he was named a Vice President in 1992 and a Senior
Vice President in February, 1996. Prior thereto, he was Assistant General
Counsel of ShareTech since 1985. A graduate of Lehigh University, Mr. Dorros
received his law degree from the Fordham University School of Law. He is
admitted to the bars of New York and Connecticut.
THOMAS E. DUPONT, JR. is Controller. He has been Controller of the Company
since May 1994. From June 1990 to April 1994, Mr. Dupont was a Senior Associate
at Coopers & Lybrand. From June 1989 to May 1990 he was associated with the
accounting firm of John W. Clegg & Co. Mr. Dupont holds a B.A. degree from the
University of Connecticut and an M.B.A. from Bryant College.
EXECUTIVE COMPENSATION
1. REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing the compensation, including bonus and incentive
arrangements, of the Company's Chief Executive Officer and to consider and
approve or modify the recommendations of the Chief Executive Officer as to the
proposed compensation of each executive officer of the Company and its operating
subsidiaries.
The Committee makes appropriate recommendations concerning executive
compensation, and reports to the Board of Directors. Under the supervision,
approval and review of the Committee, the Company's compensation policies and
programs are designed to motivate, retain and attract management with incentives
linked to financial performance of the Company and the value that is delivered
to its shareholders. Specifically, the Company's policies and programs endeavor
to: (i) link executive compensation to sustainable increases in the financial
performance of the Company, where possible, and where not possible, preservation
or realization of shareholder value; (ii) provide rewards contingent upon
Company performance; (iii) differentiate compensation based upon individual
contribution, (iv) promote teamwork among executives and other Company
employees; and (v) encourage the retention of a sound management team.
The Company's objective is to manage the total cash compensation to provide
median levels of cash compensation at average levels of corporate and individual
performance. Cash compensation consists of two components: (i) a base salary
that is competitive with that of other companies paying at the median level of
the market, and (ii) an annual incentive opportunity that is variable and is
reflective of the financial performance of the Company and the individual
performance of the executive officer. When high levels of performance are
achieved, the level of cash compensation may exceed the median of the market.
Conversely, when the Company or the individual falls short of the predetermined
goals, the level of cash compensation may be substantially below the market
median. The objective of this mix is to deliver total annual cash compensation
competitive with compensation offered at other companies facing similar
challenges for similar positions, while simultaneously linking the payment of
the annual cash incentive to the achievement of specific objectives in the
Company's annual operating plan as approved by the Board.
The Chief Executive Officer's salary is determined annually by the
Committee based on the Committee's evaluation of a variety of factors, each of
which is weighted by each member of the Committee according to his own
experience and background. Among the criteria used by each member of the
Committee in making his evaluation of the appropriate compensation of the Chief
Executive Officer to the Company are: (i) the compensation of the chief
executives of competitive entities; (ii) his influence on the performance of the
Company through his management skills; (iii) his ability to work with, influence
and effectuate the policies of the Board of Directors; (iv) his skill in long
range planning for the Company's future growth and activities; and (v) the
manner in which he positions the Company to succeed in a highly competitive and
diversified market.
9
<PAGE>
The award and size of any performance bonus are based upon: (i) the
executive officer's performance against individual goals; and (ii) the
performance of the Company against Company goals. Goals vary from year to year
and, with regard to individual goals of executive officers, usually include both
quantitative and qualitative factors. The Committee also occasionally awards
special bonuses in connection with extraordinary transactions by the Company.
The bonuses generally are awarded to individuals who make significant
contributions towards consummation of the transactions.
The Committee believes that stock option grants serve as a desirable
long-term method of compensation because they closely ally the interests of
management with the preservation and enhancement and realization of stockholder
value and serve as an additional incentive to promote the success of the
Company.
The Compensation Committee has considered the impact of a recently en-
acted provision of the Internal Revenue Code of 1986, as amended (the "Code"),
which in certain circumstances disallows income tax deductions for compensation
in excess of $1,000,000. This disallowance provision does not apply to
performance-based compensation and certain other forms of compensation. The
Compensation Committee currently intends to structure the Company's incentive
compensation awards and the 1996 Equity Incentive Plan in a manner that complies
with the Code's requirements for performance-based compensation to ensure that
the Company is entitled to full deductibility of such compensation.
The Committee believes that the total compensation program for executives
of the Company is on a level with the compensation programs provided by other
companies facing similar challenges.
Respectfully submitted,
Ajit G. Hutheesing, Chairman
William A. DiBella
Edward J. McCormack, Jr.
2. RECOMMENDATIONS OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer recommends to the Committee the proposed
compensation (other than his own) of each executive officer of the Company and
its operating subsidiaries.
In making his evaluation of the performance of an executive officer in his
or her area of responsibility, and in formulating his recommendation to the
Committee, while the Chief Executive Officer adheres to the criteria and
principles enunciated in the Committee's report set forth above, he relies most
heavily on the following criteria used by the Committee:
(a) the executive's influence on the performance of the Company through
his or her management skills;
(b) the executive's skill in long range planning for the Company's fu-
ture growth and activities; and
(c) the manner in which the executive positions the Company to succeed in
the future.
Respectfully submitted,
Anthony D. Autorino
Chairman and Chief Executive Officer
10
<PAGE>
The following table sets forth the annual and long-term compensation
awarded or paid to or earned by the Company's Chief Executive Officer and each
of the Company's other four most highly paid executive officers (collectively,
the "Named Executive Officers") for the fiscal years ended 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
SECURITIES
UNDER-
RESTRICTED WRITING
SALARY BONUS OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION AWARDS (#)(A) COMPENSATION($)
--------------------------- ---- --- --- ------------ ------ ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony D. Autorino ............. 1995 330,000 50,000 -- -- -- 55,944(b)
Chairman, President and 1994 325,808 15,000 -- -- 120,000 57,528(c)
Chief Executive Officer 1993 269,280 12,500 -- -- 50,000 4,947(d)
Ronald E. Scott(e) .............. 1995 211,955 -- -- -- -- 63,298(f)
Vice Chairman, Executive
Vice President and Chief
Operating Officer
Vincent Divencenzo .............. 1995 112,000 25,000 -- -- 10,000 9,374(g)
Senior Vice President --
Administration, Chief Financial
Officer and Treasurer
James D. Rivette(h) ............. 1995 102,000 15,000 -- -- -- 4,870(i)
President -- STS Division
Paul R. Barry ................... 1995 82,917 20,000 -- -- 10,000 2,599(j)
Senior Vice President --
Business Development
</TABLE>
- --------
(a) Represents options granted pursuant to the Company's 1987 Stock Option
Plan.
(b) Represents the market value of 1,045 shares of the Company's Common Stock
contributed to Mr. Autorino's account under the Company's Savings and
Retirement Plan. Under this plan, the Company makes contributions in
Company Common Stock equal in value to 50% of an employees contributions.
In 1995, the employee contribution could not exceed 20% of the employees'
salary, and the Company contribution could not exceed 5% of the employees'
salary. Company contributions are made monthly and the Common Stock is
valued at the closing (bid) price on the last day of the month in which a
contribution is made. Also includes $450 paid by the Company for Mr.
Autorino's benefit for life insurance through the Company's group life
insurance policy and $47,448 for additional life insurance. Also includes
$4,028 for automobile lease expenses and $4,018 for supplemental disability
insurance. Also includes options granted to Mr. Autorino on December 26,
1995 to purchase 60,000 shares of Shared Technologies Cellular, Inc. common
stock owned by the Company at a purchase price equal to $2.50 per share.
(c) Represents the market value of 1,351 shares of the Company's Common Stock
contributed to Mr. Autorino's account under the Company's Savings and
Retirement Plan. Also includes $450 paid by the Company for Mr. Autorino's
benefit for life insurance through the Company's group life insurance
policy.
(d) Represents the market value of 886 shares of the Company's Common Stock
contributed to Mr. Autorino's account under the Company's Savings and
Retirement Plan. Also includes $450 paid by the Company for Mr. Autorino's
benefit for life insurance through the Company's group life insurance
policy.
(e) Mr. Scott ceased to be an officer and director of the Company on February
7, 1996.
(f) Represents the market value of 1,035 shares of the Company's Common Stock
contributed to Mr. Scott's account under the Company's Savings and
Retirement Plan. Also includes $174 paid by the Company for Mr. Scott's
benefit for life insurance through the Company's group life insurance
policy and $22,554 for additional life insurance for Mr. Scott's benefit
paid for by the Company. Also includes $6,000 for automobile lease
expenses, $3,227 for supplemental disability insurance and a moving
allowance of $31,344. As of February 7, 1996, Mr. Scott ceased to be an
officer and director of the Company.
11
<PAGE>
(g) Represents the market value of 973 shares of the Company's Common Stock
contributed to Mr. DiVincenzo's account under the Company's Savings and
Retirement Plan. Also includes $174 paid by the Company for Mr.
DiVincenzo's benefit for life insurance through the Company's group life
insurance policy and $4,370 for additional life insurance for Mr.
DiVincenzo's benefit paid for by the Company. Also includes $4,269 for
automobile lease expenses and an $561 for supplemental disability
insurance. Also includes options granted to Mr. DiVincenzo on December 26,
1995 to purchase 50,000 shares of Shared Technologies Cellular, Inc. common
stock owned by the Company at a purchase price equal to $2.50 per share.
(h) Mr. Rivette ceased to be an officer of the Company on March 13, 1996.
(i) Represents the market value of 759 shares of the Company's Common Stock
contributed to Mr. Rivette's account under the Company's Savings and
Retirement Plan. Also includes $174 paid by the Company for Mr. Rivette's
benefit for life insurance through the Company's group life insurance
policy and $2,430 for additional life insurance for Mr. Rivette's benefit
paid for by the Company. Also includes $1,598 for automobile lease expenses
and an $668 for supplemental disability insurance.
(j) Represents the market value of 713 shares of the Company's Common Stock
contributed to Mr. Barry's account under the Company's Savings and
Retirement Plan. Also includes $54 paid by the Company for Mr. Barry's
benefit for life insurance through the Company's group life insurance
policy and $775 for additional life insurance for Mr. Barry's benefit paid
for by the Company. Also includes $1,548 for automoHbile lease expenses
and $221 for supplemental disability insurance.
Employment Agreements. As of March 13, 1996, the Company entered into
two-year Employment Agreements with Messrs. Autorino, Borer, DiVincenzo and
Steiner providing for base salaries of $500,000, $250,000, $150,000 and
$350,000, respectively.
The Company has also entered into employment agreements with approxi-
mately 20 employees providing for severance payments including up to 15 months
of base pay and bonus. With respect to employment agreements for certain senior
managers, payments amounting in the aggregate to up to $5 million would be
payable in the event of a change of control of the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of stock
options during the fiscal year ended December 31, 1995 to the Named Executive
Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------- ---------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#)(A) YEAR(B) ($/SH) DATE 5% ($) 10% ($)
---- ------ ------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Anthony D. Autorino -- -- -- -- -- --
Vincent DiVincenzo 10,000 25 4.125 8/31/05 25,942 65,742
Ronald E. Scott -- -- -- -- -- --
Paul R. Barry 10,000 25 4.125 8/31/05 25,942 65,742
James D. Rivette -- -- -- -- -- --
</TABLE>
- --------
(a) Options to acquire shares of Common Stock of the Company granted pursuant
to the Company's 1987 Stock Option Plan. All options are exercisable at a
price equal to the fair market value of the Common Stock of the Company on
the date of grant.
(b) Based on a total of 40,000 options granted during the fiscal year ended
December 31, 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
No options were exercised during the fiscal year ended December 31, 1995.
The following table presents information concerning the value of unexercised
stock options at the end of the fiscal year ended December 31, 1995 with respect
to the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
---- --------------------------- ---------------------------
<S> <C> <C>
Anthony D. Autorino 214,584/46,666 $161,417/$18,333
Vincent DiVincenzo 36,667/45,833 $ 7,083/$14,167
Ronald E. Scott --/-- --/--
Paul R. Barry 22,917/33,333 $ 5,833/$11,667
James D. Rivette 24,167/18,333 $ 5,000/$10,000
</TABLE>
SECURITIES OWNERSHIP
The following table sets forth certain information as of April 24, 1996,
with respect to the Common Stock owned by (a) each director of the Company, (b)
the Named Executive Officers, (c) all directors and executive officers of the
Company as a group, and (d) each person who is known by the Company to own
beneficially more than 5% of the Common Stock. Unless otherwise indicated in the
footnotes to the table, all stock is owned of record and beneficially by the
persons listed in the table.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES COMMON STOCK
NAMES AND ADDRESSES(A) BENEFICIALLY OWNED(B) OUTSTANDING
---------------------- --------------------- -----------
<S> <C> <C>
DIRECTORS AND OFFICERS
Anthony D. Autorino ....................................... 1,158,279(c) 7.8%
Chairman, Chief Executive Officer and Director
Paul R. Barry ............................................. 100,281(d) *
Senior Vice President, Business Development
Mel D. Borer .............................................. 0 *
President, Chief Operating Officer and Director
Thomas H. Decker .......................................... 14,750(e) *
Director
William A. DiBella ........................................ 51,663(f) *
Director
Vincent DiVincenzo ........................................ 39,363(g) *
Director, Senior Vice President -- Administration and Finance,
Treasurer and Chief Financial Officer
Natalia Hercot ............................................ 0 *
Director
Ajit G. Hutheesing ........................................ 309,957(h) 2.1%
Director
Edward J. McCormack, Jr. .................................. 107,677(i) *
Director
Jo McKenzie ............................................... 9,575(j) *
Director
Donald E. Miller ........................................... 0 *
Director
Jeffrey J. Steiner ........................................ 3,838,176(l) 20.7%
Vice Chairman and Director
All directors and executive officers as a group (14 persons) 5,681,096(m) 37.3%
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES COMMON STOCK
NAMES AND ADDRESSES(A) BENEFICIALLY OWNED(B) OUTSTANDING
---------------------- --------------------- -----------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS
Access Trust and Stuart M. Crow, Trustee .................. 1,068,805(n) 7.12%
2001 Ross Avenue, Suite 3200
Dallas, TX 75201
Rhi Holdings, Inc. ........................................ 9,921,568(l) 53.8%
300 West Service Road
Chantilly, VA 22021
Zesiger Capital Group LLC ................................. 1,792,325(o) 11.8%
320 Park Avenue
New York, NY 10022
</TABLE>
- --------
* Less than 1%
(a) The mailing address of each of the Company's directors and executive
officers is c/o Shared Technologies Fairchild Inc., 100 Great Meadow Road,
Wethersfield, Connecticut 06109.
(b) Except as otherwise specifically noted, the number of shares stated as
being owned beneficially includes shares believed to be held beneficially
by spouses and minor children. The inclusion herein of any shares deemed
beneficially owned does not constitute an admission of beneficial ownership
of those shares. Each stockholder possesses sole voting and investment
power with respect to the shares listed opposite such stockholder's name,
except as otherwise indicated.
(c) Includes 214,584 shares currently issuable upon exercise of options. Also
includes 93,750 shares owned of record by Mr. Autorino's spouse, as to
which Mr. Autorino disclaims beneficial ownership. Also includes 5,827
shares owned by Mr. Autorino through the Company's Savings and Retirement
Plan. Also includes 11,500 shares of Series D Preferred Stock, which are
convertible into 11,500 shares of Common Stock, and 11,500 Common Stock
Purchase Warrants, which are convertible into an additional 11,500 shares
of Common Stock. Also includes 17,500 shares of Series D Preferred Stock
owned of record by Mr. Autorino's spouse and 17,500 Common Stock Purchase
Warrants also owned by her, as to which shares and warrants Mr. Autorino
disclaims beneficial ownership.
(d) Includes 22,917 shares currently issuable upon exercise of options. Also
includes 60,000 shares owned of record by Mr. Barry's spouse and 11,050
shares owned by Mr. Barry's children as to which Mr. Barry disclaims
beneficial ownership. Also includes 1,600 shares owned through the
Company's Savings and Retirement Plan. Mr. Barry is the son-in-law of Mr.
Autorino, the Chairman, Chief Executive Officer and Director of the
Company. Mr. Autorino disclaims beneficial ownership of any shares owned of
record by Mr. Barry, his spouse or his children.
(e) Includes 8,750 shares currently issuable upon exercise of options.
(f) Includes 22,913 shares currently issuable upon exercise of options. Also
includes 28,750 shares owned of record by Mr. DiBella's spouse, as to which
Mr. DiBella disclaims beneficial ownership.
(g) Includes 36,667 shares currently issuable upon exercise of options. Also
includes 2,244 shares owned by Mr. DiVincenzo through the Company's Savings
and Retirement Plan.
(h) Includes 5,000 shares currently issuable upon exercise of options. Also
includes a Common Stock Purchase Warrant which is convertible into 298,957
shares of Common Stock which is owned of record by International Capital
Partners, Inc., of which Mr. Hutheesing is the Chairman, Chief Executive
Officer and a stockholder.
(i) Includes 9,500 shares currently issuable upon exercise of options. Also
includes 65,135 shares owned of record by Mr. McCormack's spouse, as to
which Mr. McCormack disclaims beneficial ownership.
14
<PAGE>
(j) Includes 9,575 shares currently issuable upon exercise of options.
(k) Includes 14,575 shares currently issuable upon exercise of options. Also
includes 2,625 shares owned of record by Overseas and Foreign Investors
Inc., of which Mr. Oakes is an officer. Also includes 1,687 shares owned of
record by L&H International, Inc., of which Mr. Oakes is an officer,
director and stockholder and 2,187 shares owned of record by H.L. Oakes &
Co., Inc., of which Mr. Oakes is an officer, director and principal. Also
included are 6,812 shares owned of record by Overseas & Foreign Managers,
Inc., of which Mr. Oakes is an officer.
(l) Mr. Steiner owns Class A shares and Class B shares of the common stock of
The Fairchild Corporation ("TFC"). Class A shares are entitled to one vote
per share and Class B shares are entitled to ten votes per share. Each
Class B share is immediately convertible into one Class A share. Mr.
Steiner owns both Class A shares and Class B shares and, accordingly, his
voting power in TFC is greater than his economic ownership in TFC. As of
December 31, 1995, Mr. Steiner beneficially owned 3,687,388 Class A shares
(27.4% of the outstanding Class A shares) and 2,569,996 shares of Class B
shares (95.3% of the outstanding Class B shares). Such Class A shares and
Class B shares represents 38.7% of the Class A and Class B shares and 72.7%
of the combined voting power of all outstanding capital stock at TFC as of
December 31, 1995. Such amounts exclude options and warrants of TFC held by
Mr. Steiner. TFC owns all the issued and outstanding capital stock of RHI
Holdings, Inc. ("RHI"), which owns 6.0 million shares of Common Stock and
250,000 shares of Convertible Preferred Stock which are convertible into
3,921,568 shares of Common Stock. For purposes of Mr. Steiner's beneficial
ownership of the Company, beneficial ownership represents Mr. Steiner's
economic ownership of TFC. However, through his ownership of TFC Class B
stock and his positions with TFC and RHI, Mr. Steiner may be deemed to
beneficially own all of the Common Stock owned by RHI.
(m) Includes a total of 361,564 shares which officers and directors of the
Company have the right to acquire under outstanding stock options. Also
includes 29,000 shares of Series D Preferred Stock currently convertible
into 29,000 shares of Common Stock and 29,000 Common Stock Purchase
Warrants, as set forth in footnote (c) above. Also includes 298,957 shares
of Common Stock issuable upon conversion of a Common Stock Purchase
Warrant, as set forth in footnote (h) above. Also includes 12,606 shares
owned by officers and directors through the Company's Savings and
Retirement Plan.
(n) Includes 197,500 shares currently issuable upon exercise of Common Stock
Purchase Warrants.
(o) Includes 746,325 shares of Common Stock issuable upon exercise of Common
Stock Purchase Warrants.
15
<PAGE>
CUMULATIVE SHAREHOLDER RETURN
The following graph and chart compare the cumulative annual stockholder
return on the Company's Common Stock over the period commencing December 31,
1990 through December 29, 1995 to that of "Center for Research in Securities
Prices ("CRSP") Total Return Index for the Nasdaq Stock Market (U.S. Companies)"
and the CRSP Total Return Index for Standard Industrial Classification Code
4890--Communication Services, Not Elsewhere Classified ("SIC Code Index") assum-
ing the investment of $100 on December 31, 1990. In calculating total annual
stockholder return, reinvestment of dividends is assumed. The stock performance
graph and chart below are not necessarily indicative of future price
performance.
Line Graph using plot points shown in table below:
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
<S> <C> <C> <C> <C> <C> <C>
Shared Technologies $100.00 $ 27.80 $ 22.00 $ 14.20 $ 16.00 $ 14.40
NASDAQ $100.00 $160.50 $186.80 $214.50 $209.70 $296.60
SIC Code Index $100.00 $154.60 $151.10 $228.70 $157.70 $233.60
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1995, approximately $288,000 had been paid for life
insurance premium payments made on behalf of Anthony D. Autorino, the Com-
pany's Chairman and Chief Executive Officer. The amount was repaid from the
proceeds of a $2,500,000 face value life insurance policy which was owned by Mr.
Autorino and whose estate was the beneficiary. In January 1994, the beneficiary
on the policy was changed from Mr. Autorino's estate to the Company in order to
reduce the premium payments required by the Company. As of December 31, 1995,
the amount due to the Company related to premiums paid exceeded the cash
surrender value of the policy by $130,000. Accordingly, Mr. Autorino has agreed
to reimburse the Company for this amount.
In January 1995, the Company sold 300,000 shares of its Common Stock
through a private placement offering with the assistance of Oakes, Fitzwilliams
& Co. Limited, ("O&F"), of which Herbert L. Oakes, Jr., a former director of the
Company, is a managing director. O&F received compensation from the Company for
such assistance in the amount of $102,000 and a warrant to purchase 30,000
shares of the Company's Common Stock for $5.00 per share. The Company believes
that these fees are comparable to fees that would be charged by an unrelated
third party providing similar services.
In December 1995, the Company granted options to Messrs. Autorino, Di-
Vincenzo, DiBella, Decker and International Capital Partners, Inc., of which Mr.
Hutheesing is Chairman and Chief Executive Officer, to purchase 60,000, 50,000,
20,000, 20,000 and 40,000 shares, respectively, of Shared Technologies Cellular,
Inc. common stock owned by the Company at a purchase price equal to $2.50 per
share.
16
<PAGE>
On December 29, 1995, the Company's majority-owned subsidiary, Shared
Technologies Cellular, Inc. ("STC"), effected a $3 million private placement of
certain shares of STC stock. The shares were sold to certain investors
represented by ICP Investments, Inc. ("ICP"), an affiliate of International
Capital Partners, Inc. ("Partners"). Ajit G. Hutheesing, a Director of the
Company, is Chairman and Chief Executive Officer of Partners. In connection with
the offering, ICP received a fee of $300,000 and a warrant to purchase 150,000
shares of STC common stock at an exercise price of $2.50 per share, subject to
certain adjustments.
INDEPENDENT ACCOUNTANTS
Rothstein, Kass & Company, P.C. audited the Company's financial state-
ments for the fiscal year ended December 31, 1995. Rothstein, Kass & Company,
P.C. has no direct or indirect material financial interest in the Company or its
subsidiaries. The Board of Directors has not yet selected independent
accountants to audit the Company's financial statements for the fiscal year
ending December 31, 1996. It was the determination of the Board of Directors
that the Company should not be obligated at this time to retain a specific firm
of independent accountants. However, the Company has agreed pursuant to its
credit agreement with Credit Suisse and certain other lenders, to appoint as the
Company's auditors an independent accounting firm acceptable to the Company's
lenders.
No representatives of Rothstein, Kass & Company, P.C. are expected to be
present at the Annual Meeting of Stockholders or to make a statement or respond
to questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting of Stockholders. However, if any other matters are
properly presented at the Annual Meeting of Stockholders, it is the intention of
the persons named in the accompanying proxy to vote, or otherwise act, in
accordance with their judgment on such matters.
All costs of solicitations of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for out-of-pocket expenses
thereby incurred.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for consideration at the
Company's next annual meeting of stockholders, which is currently scheduled to
be held on May 15, 1997, must submit the proposal to the Company so that it is
received at the principal executive offices of the Company, 100 Great Meadow
Road, Wethersfield, Connecticut 06109, on or before January 20, 1997. Any
stockholder desiring to submit a proposal should consult applicable regulations
of the Securities and Exchange Commission.
ADDITIONAL INFORMATION
In accordance with the provisions of Item 405 of Regulation S-K, the
Company knows of no delinquent filings under Section 16(a) of the Exchange Act
during the fiscal year ended December 31, 1995 other than a Form 4 report for
the spouse of Edward J. McCormack, Jr. in connection with the sale of 1,200
shares of Common Stock, which was required to be filed on or before December 10,
1995 but was filed in January, 1996.
FORM 10-K
A COPY OF THE COMPANY'S FORM 10-K AS FILED WITH THE SECURITIES AND EX-
CHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, SHARED TECHNOLOGIES FAIRCHILD
INC., 100 GREAT MEADOW ROAD, WETHERSFIELD, CONNECTICUT 06109.
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EXHIBIT I
SHARED TECHNOLOGIES FAIRCHILD INC.
1996 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the SHARED TECHNOLOGIES FAIRCHILD INC. 1996 EQUITY IN-
CENTIVE PLAN (the "Plan") is to attract and retain key employees and con-
sultants, to provide an incentive for them and other persons having a business
relationship with the Company to assist the Company achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company.
SECTION 2. DEFINITIONS
"AFFILIATE" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.
"AWARD" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means a committee of not less than three members of the Board
appointed by the Board to administer the Plan, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 or any successor provision.
"COMMON STOCK" or "STOCK" means the Common Stock, $0.004 par value per
share, of the Company.
"COMPANY" means Shared Technologies Fairchild Inc., a Delaware corpo-
ration.
"DESIGNATED BENEFICIARY" means the beneficiary designated by a Partic-
ipant, in a manner determined by the Committee, to receive amounts due or
exercise the rights of the Participant in the event of the Participant's death.
In the absence of an effective designation by a Participant, Designated
Beneficiary shall mean the Participant's estate.
"FAIR MARKET VALUE" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Com-
mittee in good faith or in the manner established by the Committee from time to
time.
"INCENTIVE STOCK OPTION" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"NONSTATUTORY STOCK OPTION" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be an
Incentive Stock Option.
"OPTION" means an Incentive Stock Option or a Nonstatutory Stock Option.
"PARTICIPANT" means a person selected by the Committee to receive an Award
under the Plan.
"PERFORMANCE CYCLE" or "CYCLE" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"PERFORMANCE SHARES" means shares of Common Stock which may be earned by
the achievement of performance goals awarded to a Participant under Section 8.
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"REPORTING PERSON" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.
"RESTRICTED PERIOD" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.
"RESTRICTED STOCK" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"STOCK APPRECIATION RIGHT" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.
"STOCK UNIT" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons and all
determinations under the Plan with respect thereto, provided that the Committee
shall fix the maximum amount of such Awards for the Participants who are not
Reporting Persons and a maximum for any one Participant.
SECTION 4. ELIGIBILITY
All employees and consultants of, and other persons having a business
relationship with, the Company or any Affiliate capable of contributing
significantly to the successful performance of the Company, other than a person
who has irrevocably elected not to be eligible, are eligible to be Participants
in the Plan. Incentive Stock Options may be awarded only to persons eligible to
receive such Options under the Code.
SECTION 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to 1,500,000 shares of Common Stock; provided, however, that
awards for no more than 500,000 shares of Common Stock may be made to any one
Participant. If any Award in respect of shares of Common Stock expires or is
terminated unexercised or is forfeited for any reason or settled in a manner
that results in fewer shares outstanding than were initially awarded, including
without limitation the surrender of shares in payment for the Award or any tax
obligation thereon, the shares subject to such Award or so surrendered, as the
case may be, to the extent of such expiration, termination, forfeiture or
decrease, shall again be available for award under the Plan. Common Stock issued
from an acquired company shall not reduce the shares available for Awards under
the Plan. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, may equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be under the Plan, (ii) the number and kind of shares subject to outstanding
Awards, and (iii) the award, exercise or conversion price with respect to any
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of the foregoing, and if considered appropriate, the Committee may make
provision for a cash payment with respect to an outstanding Award, provided that
the number of shares subject to any Award shall always be a whole number.
(c) Notwithstanding any other provision of the Plan, no more than 1,500,000
shares of Common Stock shall be cumulatively available for the award of
Incentive Stock Options; provided that to the extent an Incentive Stock Option
expires or is terminated unexercised or is forfeited for any reason the shares
which were subject to such Option may again be awarded as Incentive Stock
Options.
SECTION 6. STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to, and comply with,
Section 422 of the Code or any successor provision, and any regulations
thereunder.
(b) The Committee shall establish the option price at the time each Option
is awarded, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of award with respect to Incentive Stock Options
and not less than 50% of the Fair Market Value of the Common Stock on the date
of award with respect to Nonstatutory Stock Options.
(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter; provided, however, that no Option may be transferable otherwise than
by will or the laws of descent and distribution. The Committee may impose such
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, valued
at their Fair Market Value on the date of delivery, or such other lawful
consideration as the Committee may determine.
(e) The Committee may provide for the automatic award of an Option upon the
delivery of shares to the Company in payment of an Option for up to the number
of shares so delivered.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs shall have an
exercise price of not less than 50% of the Fair Market Value of the Common Stock
on the date of award, or in the case of SARs in tandem with Options, the
exercise price of the related Option.
(b) An SAR related to an Option which can only be exercised during limited
periods following a change in control of the Company, may entitle the
Participant to receive an amount based upon the highest price paid or offered
for Common Stock in any transaction relating to the change in control or paid
during the thirty-day period immediately preceding the occurrence of the change
in control in any transaction reported in the stock market in which the Common
Stock is normally traded.
SECTION 8. PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Per-
formance Cycle and the duration of each Performance Cycle. There may be more
than one Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of Performance
Shares shall be
20
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equal to the Fair Market Value of the Common Stock on the date the Performance
Shares are earned or, in the discretion of the Committee, on the date the
Committee determines that the Performance Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded for such
Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.
SECTION 9. RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant has died, to the Participant's
Designated Beneficiary.
SECTION 10. STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.
SECTION 11. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Reporting Person Limitations. Notwithstanding any other provision of
the Plan, to the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934 and any successor provision, (i)
any Common Stock or other equity security offered under the Plan to a Reporting
Person may not be sold for at least six months after acquisition, except in case
of death or disability and (ii) any Option, SAR or other similar right related
to an equity security, issued under the Plan to a Reporting Person shall not be
transferable other than by will or the laws of descent and distribution, shall
not be exercisable for at least six months except in the case of death or
disability, and shall be exercisable during the Participant's lifetime only by
the Participant or the Participant's guardian or legal representative.
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(b) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(c) Committee Discretion. Each type of Award may be made alone, in addition
to, or in relation to any other type of Award. The terms of each type of Award
need not be identical, and the committee need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.
(d) Settlement. The Committee shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the Company, Awards
or other property. The Committee may permit a Participant to defer all or any
portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(e) Dividends and Cash Awards. In the discretion of the Committee, any
Awards under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
(f) Termination of Employment. The Committee shall determine the effect on
an Award of the disability, death, retirement or other termination of employment
of a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(g) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company, the Committee in its
discretion may, at the time an Award is made or at any time thereafter, take one
or more of the following actions: (i) provide for the acceleration of any time
period relating to the exercise or realization of the Award, (ii) provide for
the purchase of the Award upon the Participant's request for an amount of cash
or other property that could have been received upon the exercise or realization
of the Award had the Award been currently exercisable or payable, (iii) adjust
the terms of the Award in a manner determined by the Committee to reflect the
change in control, (iv) cause the Award to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the Committee
may consider equitable and in the best interests of the Company.
(h) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.
(i) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.
(j) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization, or converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
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SECTION 12. MISCELLANEOUS
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to employment or continued employment. The Company
expressly reserves the right at any time to dismiss a Participant free from any
liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the shareholders of the
Company, the Plan shall be effective on February 2, 1996. Prior to such
approval, Awards may be made under the Plan expressly subject to such approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement, including any requirement for
exemptive relief under Section 16(b) of the Securities Exchange Act of 1934 or
any successor provision.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Delaware.
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SHARED TECHNOLOGIES FAIRCHILD INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony D. Autorino and Vincent DiVin-
cenzo, or either of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all shares of Common Stock of Shared Technologies Fairchild Inc. held of
record by the undersigned on April 23, 1996 at the Annual Meeting of
Stockholders to be held on May 10, 1996, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be voted
"FOR" proposals 1,2 and 3.
Please sign exactly as name appears on the reverse side. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title of such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by general partner or
other authorized person.
1. To elect one class of four directors.
[ ] FOR all nominees. [ ] WITHHELD from all nominees.
FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. To ratify the adoption of an incentive
stock option plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the material terms of the
performance goals for the fiscal 1996
incentive compensation awards for certain
executives of the Company. [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(PROXY IS CONTINUED AND IS TO BE SIGNED AND DATED ON THE OTHER SIDE)
<PAGE>
ACCOUNT NUMBER NUMBER OF VOTES PROXY NO.
Dated: __________________ ,1995
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(Signatures)
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New Address
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY AND USE THE ENCLOSED ENVELOPE.