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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ELECTRONICS COMMUNICATIONS CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
ELECTRONICS COMMUNICATIONS CORP.
10 PLOG ROAD
FAIRFIELD, NEW JERSEY 07004
------------------------
PROXY STATEMENT
---------------------
October 17, 1996
This proxy statement sets forth certain information with respect to the
accompanying proxy proposed to be used at the 1996 Annual Meeting of
stockholders (the "Meeting") of Electronics Communications Corp. (the "Company")
or at any adjournment thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting. The proxy statement and enclosed form of proxy are
first being mailed to stockholders on October 17, 1996. The board of directors
of the Company solicits this proxy and urges you to sign the proxy, fill in the
date and return same immediately.
Shares of the Company's common stock, $0.05 par value (the "Common Stock"),
represented by valid proxies in the enclosed form, executed and received in time
for the meeting, will be voted as directed, or if no direction is indicated,
will be voted for the election as directors of the nominees described herein and
in favor of proposal No. 2 and proposal No. 3. Proxies are being solicited by
mail, and, in addition, officers and regular employees of the Company may
solicit proxies by telephone or personal interview. As is customary, the expense
of solicitation will be borne by the Company. The Company will also reimburse
brokers for the expenses of forwarding proxy solicitation material to beneficial
owners of shares held of record by such brokers. Your prompt cooperation is
necessary in order to insure a quorum and to avoid expense and delay.
PROXIES ARE REVOCABLE AT ANY TIME PRIOR TO BEING VOTED EITHER BY WRITTEN
NOTICE DELIVERED TO THE SECRETARY OF THE COMPANY OR BY VOTING AT THE MEETING IN
PERSON.
The mailing address of the principal executive offices of the Company is 10
Plog Road, Fairfield, NJ 07004. The annual report of the Company for the fiscal
year ended December 31, 1995 ("Fiscal 1995") including consolidated financial
statements, supplementary financial information and management's discussion and
analysis of financial condition and results of operations, accompanies this
proxy statement.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's by-laws provide that the board of directors be comprised of
six (6) directors. The board of directors have, pursuant to the by-laws, fixed
the number of directors to serve until the next annual meeting of stockholders
at six (6). Therefore, six (6) directors are to be elected until the next annual
meeting or until their successors have been elected and qualified. Proxies are
solicited in favor of the nominees named below, all of whom are now serving as
directors. In the event one or more of the nominees is unable to serve as a
director, it is intended that the proxies will be voted for the election of such
other person, if any, as shall be designated by the board of directors. The
Company is unaware of any
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information which would indicate that any of the nominees will be unable to
serve and is not presently considering any additional persons to serve on the
board.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AGE PRESENTLY HELD WITH THE COMPANY
- ------------------------------------------------------------ --- ------------------------------------------------------------
<S> <C> <C>
William S. Taylor........................................... 34 CEO, President and Chairman of the Board
Les Winder.................................................. 42 Executive Vice President, Treasurer and Director
Brenda Taylor............................................... 56 Secretary and Director
Mal Gurian.................................................. 69 Director
Robert DePalo............................................... 41 Director
Ira J. Tabankin............................................. 47 Director
</TABLE>
A director is elected to hold office until the next annual meeting of
stockholders and until his or her successor is elected and qualified. Vacancies
on the Board of Directors may be filled by the remaining directors until the
next annual meeting of stockholders. The Company's officers are appointed by the
board of directors and hold office at the will of the Board.
Mr. Taylor was appointed the President and Chief Executive Officer and was
elected Chairman of the Board of the Company in February 1994. Mr. Taylor is a
co-founder of Trade Zone and Free Trade and has been an executive officer of
each since 1992 and was appointed the President of these companies in 1993. Mr.
Taylor was President and founder of Cellcom Telephone Company and served as its
President from 1984-1992. Cellcom Corp., the parent of Cellcom Telephone
Company, filed for protection under Chapter 11 of the United States Bankruptcy
Code in April 1992. On October 7, 1993, Cellcom Corp.'s modified and
consolidated plan of reorganization was confirmed and as of the date hereof has
been substantially consummated within the meaning of Section 1101 (2) of the
Bankruptcy Code. Mr. Taylor remains a director and secretary of Cellcom Corp.
Mr. Taylor is a member of the Radio Club of America, one of the oldest and most
prestigious communication organizations in the United States. Mr. Taylor is a
frequent speaker in the cellular communications industry and has been the
recipient of numerous industry awards.
Mr. Winder was appointed Vice President and Treasurer of the Company in
February 1994, in connection with the acquisition of Free Trade and Trade Zone.
Mr. Winder has been engaged in the cellular telephone industry since its
inception in the early 1980's. From 1983-1992 he co-founded and was Vice
President of EMA, Inc. and Jersey Cellular Systems, Inc. Both of which companies
were engaged in cellular sales and marketing. During the same period Mr. Winder
was General Partner of Eastern Marketing Associates, which acted as sales and
marketing consultants to many large cellular equipment manufacturers. Mr. Winder
is a member of the Radio Club of America.
Mrs. Taylor, mother of William S. Taylor, was appointed Secretary and
elected Director of the Company in February 1994. Mrs. Taylor is a co-founder of
Trade Zone and Free Trade and has been an executive officers of each since their
inception. From 1984-1991, Mrs. Taylor was Secretary and office manager of
Cellcom Telephone Company. See Mr. Taylor's biography for information concerning
the bankruptcy proceeding of Cellcom Corp., the parent of Cellcom Telephone
Company.
Mr. Gurian was elected a Director of the Company in March 1995. From January
1993 to the present, Mr. Gurian has been Chairman of the Board and CEO of
GlobaLink Communications, Inc. From February 1995 to the present, Mr. Gurian has
been Chairman and CEO of Authentix Network, Inc. From early 1992 to January
1993, Mr. Gurian was the CEO and a director of Universal Cellular Corporation.
From early 1989 until late 1991 Mr. Gurian served as President of Cellcom
Cellular Corporation. From 1980 until 1988 Mr. Gurian was the President and a
director of the Cellular Telephone Division of OKI Telecom ("OKI"), a division
of OKI Electrics Industries, a Japanese Corporation, the first manufacturer of
cellular telephones in the world. While at OKI, Mr. Gurian was responsible for
OKI's receipt of the first FCC Type Certification for a cellular telephone and
negotiated for OKI the only private label contract with the seven regional Bell
companies. Under Mr. Gurian's management, OKI introduced the first briefcase
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transportable cellular telephone, the OKI/Chysler "Visor Phone" and OKI's credit
card "swipe" telephone. Mr. Gurian has served as an executive advisor to TRW
Wireless Communications. He is on the advisory board of SIMS Communications,
Inc. Mr. Gurian has received many awards including the "Sarnoff Citation" and
"Fred Link Mobile Radio Award" from the Radio Club of America and the
"Chairman's Award" which is the high recognition bestowed by the National
Association of Business and Education Radio. Mr. Gurian is currently a Fellow of
the Radio Club of America and has been a Director from 1977 to 1980, Vice
President from 1980 to 1992, Executive Vice President in 1993 and President in
1994 of that organization.
Mr. Depalo was elected a Director of the Company in November 1995. Mr.
DePalo has been in excess of the last 5 years a private investment banker and
sole shareholder of Bayside Federal Equities, a private investment banking and
consulting firm. Mr. DePalo graduated New York University with a B.S. in
Accounting and received his M.B.A. in Management from Mercy-L. I. U. College.
Mr. Tabankin was elected a Director of the Company in September 1995. From
1994 to the present, Mr. Tabankin has been President of 4 Sight L.C., a computer
software development joint venture between 4 Sight International and CE
Software. From 1991 to 1994, Mr. Tabankin was the General Manager of Robert
Bosch Corporation, responsible for the start up of that corporation's cellular
telephone products division. From 1987 to 1991, Mr. Tabankin was the Group Vice
President of Novatel Communication. At Novatel Communications, Mr. Tabankin's
responsibilities included the strategic planning, product development,
multi-site manufacturing, sales and marketing of Novatel's cellular telephone
products division.
For information concerning meetings, committees and compensation paid to the
above nominees during Fiscal 1995, see "Information Concerning the Board of
Directors and Committees."
PROPOSAL NO. 2
TO RATIFY THE SELECTION OF STETZ, BELGIOVINE CPA's, P.C.
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The board of directors has recommended that Stetz, Belgiovine CPA's, P.C. be
retained as the Company's independent certified public accountants for the
fiscal year ending December 31, 1996. Although this recommendation is not
required to be submitted to a vote of stockholders, the board of directors
believes it appropriate as a matter of policy that this recommendation be
submitted for ratification at the Company's annual meeting. In the event the
stockholders do not ratify the retention of Stetz, Belgiovine CPA's, P.C., the
selection of other independent auditors will be considered by the board of
directors. See "Relationship with Independent Certified Public Accountants."
STOCKHOLDER VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares present in
person and by proxy and voting at the Meeting is required for ratification of
the selection of independent certified public accountants.
The board of directors recommends a vote FOR ratification of the selection
of Stetz, Belgiovine CPA's P.C.
VOTING SECURITIES AND RECORD DATE
Holders of Common Stock of the Company of record at the close of business on
October 11, 1996, are entitled to notice and to vote at the Meeting. At the
close of business on October 11, 1996, the Company had 11,915,515 shares of
Common Stock outstanding, each of which entitled the holder thereof to one vote.
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PROPOSAL NO. 3
RATIFICATION OF PURCHASE BY CERTAIN OFFICERS AND
DIRECTORS OF SERIES B PREFERRED STOCK
The Board of Directors has adopted, subject to shareholder ratification, the
purchase by certain Officers and Directors of 4,000,000 shares of the Company's
Series B Preferred Stock (1996 Officer and Director Purchase). The purpose of
this board approved purchase is to foster and promote the financial success of
the Company and increase stockholder value by strengthening the Company's
ability to attract and retain qualified officers and directors in the employ of
the Company by furnishing suitable recognition of their efforts which
contributed to the success of the Company and to align their interest to the
long-term interest of the Company's stockholder.
PARTICIPANTS, TERMS AND CONDITIONS
On July 23, 1996 the Board of Directors of the Company at a Special Meeting
of the Directors authorized the purchase of an aggregate of 4,000,000 Series B
Preferred Shares of the Company by Brenda Taylor (1,000,000), William S. Taylor
(1,000,000), Les Winder (1,000,000) and Robert DePalo (1,000,000). The board
authorized the sale of the shares in return for their personal guarantees of
approximately $3,000,000 of the Company's Subordinated Convertible Debentures
and certain other financial accommodations. Each share of Series B Preferred
Stock is valued at $1.50 per share and convertible into 1.5 shares of the
Company's Common Stock. The Series B Preferred Shares are payable by a three
year Promissory Note bearing interest at the rate of 7% per annum, with interest
accruing, but not payable until the securities are sold. The Promissory Notes
shall automatically be extended for additional one-year terms. The Series B
Preferred Shares are fully paid and non-assessable. The Promissory Notes are
non-recourse, but are collateralized by a Pledge of the Stock.
These Series B Preferred Shares are subject to a three (3) year vesting
period pursuant to which 1/3 of the shares will vest immediately, and
thereafter, on July 23, 1997, if Brenda Taylor and Messrs. Taylor, Winder and
DePalo are still employed by or a director of the Company at such time, an
additional one-third shall best and thereafter on July 23, 1998, if the
aforementioned individuals are still employed by or a director of the Company at
such time, the balance shall vest.
On July 23, 1996 the Company reserved 6,000,000 common shares for issuance
upon the conversion of these Series B Preferred Shares.
THE BOARD OF DIRECTORS HAS APPROVED THE PURCHASE BY CERTAIN OFFICERS AND
DIRECTORS OF 4,000,000 SHARES OF THE COMPANY'S SERIES B PREFERRED STOCK AND
RECOMMENDS A VOTE FOR THE APPROVAL AND RATIFICATION OF SUCH PURCHASE. SUCH
APPROVAL AND RATIFICATION REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF SHARES OF COMMON STOCK ENTITLED TO VOTE AND REPRESENTED IN PERSON OR
BY PROXY AT THE MEETING. IF THIS PURCHASE BY CERTAIN OFFICERS AND DIRECTORS IS
NOT RATIFIED THE BOARD OF DIRECTORS WILL CONTEMPLATE REVERSING THE TRANSACTION.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 11, 1996, the number and
percentage of shares of Common Stock of the Company, owned of record and
beneficially, by each person known by the Company
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to own 5% or more of such stock, each director of the Company and by all
executive officers and directors of the Company, as a group:
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF SHARES APPROXIMATE
NAMED AND ADDRESS OF OF COMMON STOCK PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
- ------------------------------------------------------------------------------------------ ------------------ -------------
<S> <C> <C>
William S. Taylor......................................................................... 2,676,750(2) 18.7%
10 Plog Road
Fairfield, NJ 07004
Les Winder................................................................................ 2,066,750(3) 14.8%
10 Plog Road
Fairfield, NJ 07004
Brenda Taylor............................................................................. 2,323,500(4) 16.5%
10 Plog Road
Fairfield, NJ 07004
Robert DePalo............................................................................. 1,975,000(7) 14.3%
10 Plog Road
Fairfield, NJ 07004
Mal Gurian................................................................................ 20,000(5) *
14 Old Farmstead Road
Chester, NJ 07930
Ira J. Tabankin........................................................................... -- --
1851 N.W. 150th Court
Clive, Iowa 50325
Technics In Design & Manufacturing, Inc................................................... 800,000(6) 6.3%
One Great Neck Road
Great Neck, NY 11021
All Officers and Directors as a group (6 persons)......................................... 9,062,000(8) 44.5%
</TABLE>
- ------------------------
(1) There were 11,915,515 shares of Common Stock outstanding as of October 11,
1996
(2) Includes 736,750 shares of Common Sock issuable upon exercise of the A
Warrants, 150,000 shares of Common Stock issuable upon the exercise of the B
Warrants and 1,500,000 shares of Common Stock issuable upon the conversion
of Series B Preferred Shares.
(3) Includes 516,750 shares of Common Stock issuable upon the exercise of the A
Warrants and 1,500,000 shares of Common Stock issuable upon the conversion
of Series B Preferred Shares.
(4) Includes 70,000 shares owned by Stewart Taylor, father of William S. Taylor
and husband of Brenda Taylor, an aggregate of 483,500 (41,750 held by
Stewart Taylor and 441,750 held by Brenda Taylor) shares of Common Stock
issuable upon exercise of A Warrants, an aggregate of 150,000 (75,000 held
by Stewart Taylor and 75,000 held by Brenda Taylor) shares of Common Stock
issuable upon exercise of the B Warrants and 1,500,000 shares of Common
Stock issuable upon the conversion of Series B Preferred Shares.
(5) Includes 20,000 shares of Common Stock issuable upon the exercise of stock
options.
(6) Includes 800,000 shares of Common Stock issuable upon the exercise of A
Warrants.
(7) Includes 400,000 shares of Common Stock issuable upon exercise of A Warrants
and 1,500,000 shares of Common Stock issuable upon conversion of Series B
Preferred Shares.
(8) Includes an aggregate of 8,457,000 shares of Common Stock issuable upon the
exercise of warrants and options and the conversion of Series B Preferred
Stock owned by Officers and Directors.
* Less than 1%
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COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers 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 reports of changes in
ownership of Common Stock 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 copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
INFORMATION CONCERNING BOARD OF DIRECTORS AND COMMITTEES
DIRECTOR'S FEES
During Fiscal 1995, the Company paid no director's fees. All directors are
reimbursed for travel and other expenses relating to attendance at board
meetings. Directors who are officers of the Company receive no additional
compensation for service on the board. The present board does not have any
committees.
COMMITTEES AND MEETINGS
During Fiscal 1995, the board of directors met formally six (6) times. All
such meetings were attended either personally or telephonically by all of the
directors.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information regarding the
compensation of the Company's Chief Executive Officer and each of its other
executive officers whose total salary and bonus for the fiscal year ended
December 31, 1995 exceeded $100,000:
<TABLE>
<CAPTION>
NAME FISCAL YEAR POSITION SALARY
- -------------------------------------------------- ----------- -------------------------------------------------- --------
<S> <C> <C> <C>
William S. Taylor................................. 1995 President, CEO and Chairman $166,641
1994 President, CEO and Chairman $ 83,212
1993 CEO and Chairman $ 82,250
Les Winder........................................ 1995 Executive Vice President and Treasurer $117,245
1994 Vice President and Treasurer $ 70,786
1993 Vice President and Treasurer $ 28,300
Brenda Taylor..................................... 1995 Secretary and Director $ 38,278
1994 Secretary and Director $ 35,173
1993 Secretary and Director $ 21,600
All executive officers as a group (three 1995 $322,164
persons)........................................ 1994 $189,171
1993 $132,150
</TABLE>
STOCK OPTION PLAN
On September 27, 1994, the Board of Directors of the Company adopted a Stock
Option Plan (the "Plan") The Plan was amended by the Board of Directors on
November 22, 1994, and approved by
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stockholders on February 15, 1996, to increase the number of shares as to which
options may be granted from 100,000 to 300,000. The Plan permits the granting of
awards to employees, directors and consultants of the Company stock options.
Stock options granted under the Plan may be "incentive stock options," meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended, or non-qualified options which do not meet the requirements of Section
422. The Plan provides that 300,000 shares of Common Stock are reserved for
issuance pursuant to awards granted under the Plan. As of the date hereof, there
were 20,000 shares subject to stock options outstanding under the Plan. All
options granted pursuant to the Plan will be at least 85% of the fair market
value of the Company's Common Stock on the date of grant.
The Plan is administered by a committee which was appointed by the Board of
Directors. The Plan gives broad powers to the committee to administer and
interpret the Plan, including the authority to select the individuals to be
granted options, and to prescribe the particular form and conditions of each
option granted.
A WARRANTS
On June 3, 1996, the Board of Directors of the Company authorized the
issuance to officers and directors of the Company an aggregate of 1,800,000 A
Warrants to purchase 1,800,000 shares of common stock as compensation for
certain loans and guarantees made by Brenda Taylor and Messrs. Taylor, Winder
and DePalo. Ms. Taylor and Mr. DePalo were each issued 400,000 A Warrants. Mr.
Taylor and Mr. Winder were each issued 500,000 A Warrants. The Company reserved
1,800,000 common shares for issuance upon the exercise of such A Warrants.
B WARRANTS
On November 22, 1994, the Board of Directors of the Company authorized the
sale to officers, directors, principal stockholders and consultants of the
Company an aggregate of 1,000,000 B Warrants to purchase 1,000,000 shares of
Common Stock at $5.00 per share. The price per B Warrant is $.10. On January 20,
1995, the Company agreed to reduce the exercise price of an aggregate of 300,000
B Warrants from $5.00 to $2.50 owned by William S. Taylor (150,000), Brenda
Taylor (75,000) and Stewart Taylor (75,000). In addition, the exercise period of
these 300,000 B Warrants was changed so that they did not become exercisable
until February 1, 1996 and expire on May 12, 1999. In exchange, the Company
received certain financial guarantees and extensions of certain loans due by the
Company to William S. Taylor and Stewart Taylor. On November 16, 1995, William
S. Taylor, Brenda Taylor, Stewart Taylor and Les Winder each sold for $10 per B
Warrant, 33,250 B Warrants or an aggregate of 133,000 B Warrants to Mr. Joseph
Albanese. On November 16, 1995, William S. Taylor, Brenda Taylor and Stewart
Taylor each sold, for $.10 per B Warrant 50,000 B Warrants or an aggregate of
150,000 B Warrants to Gary Holman. On November 16, 1995, Les Winder sold, for
$.10 per B Warrant, 50,000 B Warrants to Deborah Lanava (40,000), and Merritt
Fine (5,000) and Pauline Eskovitz (5,000). On November 20, 1995, the Board of
Directors authorized an amendment to the Warrant Agreement between the Company
and American Stock Transfer and Trust Company, (the Company's Warrant Agent) to
provide for the consolidation of B Warrant having the same economic terms as
outstanding A Warrants and to permit the holders of such B Warrants to hold A
Warrants. Accordingly, as of the date hereof, there are 300,000 B Warrants
remaining outstanding. See "Item 11. Security Ownership of Certain Beneficial
Owners and Management" and "Item 12. Certain Relationships and Related
Transactions."
SERIES B PREFERRED SHARES
On July 23, 1996 the Board of Directors of the Company at a Special Meeting
of the Board of Directors authorized the issuance of an aggregate of 4,000,000
Series B Preferred Shares of the Company to Brenda Taylor (1,000,000) and
Messrs. Taylor (1,000,000), Winder (1,000,000) and DePalo (1,000,000) in
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return for their personal guarantees of approximately $3,000,000 of the
Company's Subordinated Convertible Debentures. Each share of Series B Preferred
Stock is valued at $1.50 per share and convertible into 1.50 shares of Common
Stock. The Series B Preferred Shares are payable by a three year Promissory Note
bearing interest at the rate of 7% per annum, with interest accruing, but not
payable until the securities are sold. The Promissory Notes are immediately
extended for additional one-year terms. The Series B Preferred Shares are fully
paid and non-assessable. The Promissory Notes are non-recourse, but are
collateralized by a Pledge of the Stock.
These Series B Preferred Shares are subject to a three (3) year vesting
period pursuant to which 1/3 of the shares will vest immediately, and
thereafter, on July 23, 1997, if Brenda Taylor and Messrs. Taylor, Winder and
DePalo are still employed by or a director of the Company at such time, an
additional one-third shall best and thereafter on July 23, 1998, if the
aforementioned individuals are still employed by or a director of the Company at
such time, the balance shall vest.
On July 23, 1996 the Company reserved 6,000,000 common shares for issuance
upon the conversion of these Series B Preferred Shares.
EMPLOYMENT AGREEMENTS
Effective December 1, 1994, the Company entered into an employment agreement
with Mr. Taylor for a term of five years with an option for additional three
one-year terms. The agreement provides for annual compensation of $150,000
during the term of the employment agreement and entitles Mr. Taylor to certain
fringe benefits, including an automobile, maintenance, disability insurance,
medical benefits and life insurance coverage. Mr. Taylor has agreed that during
the term of his agreement and for 12 months thereafter (unless the agreement is
terminated without cause), he will be subject to non-competition provisions.
Upon termination of employment without cause, Mr. Taylor will be entitled to a
lump sum payment of $75,000 times the number of years of his employment by the
Company.
On May 17, 1995, the Company entered into an employment agreement with Mr.
Les Winder, which agreement was amended on October 1, 1996. The term of the
agreement is for five years with an option for additional one year terms. The
agreement provides for annual compensation of $137,500 during the term of the
employment agreement and entitles Mr. Winder to certain fringe benefits,
including an automobile (leasing and insuring), disability insurance, medical
benefits and life insurance coverage. Mr. Winder has agreed that during the term
of his agreement and for 6 months thereafter (unless the agreement is terminated
without cause), he will be subject to non-competition provisions. Upon
termination of employment without cause, Mr. Winder will be entitled to a lump
sum payment of 50,000 times the number of years of his employment by the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 1, 1994 (retroactive to January 1, 1994), the Company in
exchange for 1,000,000 shares of Common Stock, acquired all of the outstanding
equity shares of Free Trade and Trade Zone connection with the transaction,
William S. Taylor received 440,000 shares, Brenda Taylor received 220,000
shares, Stewart Taylor received 220,000 shares, Les Winder received 100,000
shares and Fawn Taylor McCauley received 20,000 shares. In exchange for the
shares of Free Trade and Trade Zone for which they had paid the aggregate of
approximately $75,000.
During fiscal years 1992, 1993 and 1994, Les Winder, the Company's Vice
President, loaned the Company an aggregate of $29,462. The loan bears interest
at varying rates of 6 1/2% to 7 1/2% per annum. As of December 31, 1994, the
outstanding amount due to Mr. Winder was $20,962 with interest at 7 1/2%, this
loan was repaid during 1995. In November 1995 Mr. Winder loaned the Company
$50,000. The proceeds of this loan were used to collateralize a loan with a
bank. This loan is unsecured and bears interest at the rate of 10%. In addition,
Mr. Winder pledged 50,000 shares of the Company's Common Stock owned by
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him as additional security for the loan with the bank and personally guaranteed
the Company's obligations ($1,150,000) due to the bank.
During fiscal years 1992, 1993 and 1994, William S. Taylor loaned the
Company and aggregate of $197,816. The largest amount outstanding at any given
time during that period was $128,924. As of December 31, 1994, the Company was
not indebted to Mr. Taylor. The loans bear interest at varying rates between
6 1/2% to 17% per annum with a weighted interest of 7.5%.
During fiscal year 1995 Mr. Taylor loaned the Company an aggregate of
$263,778. As of December 31, 1995, the outstanding amount due to Mr. Taylor was
$111,069 with interest at 10%. In addition, Mr. Taylor pledged 210,000 shares of
the Company's Common Stock owned by him as additional security for the loan with
the bank and personally guaranteed the Company's obligations ($1,150,000) due to
the bank.
In June 1994, the Company loaned Mr. Taylor $82,392, bearing interest at the
fluctuating prime lending rate and was secured by certain collateral that was
previously pledged by Mr. Taylor to the Company's bank as a financial
accommodation to the Company. In September 1994, the bank released the
collateral, which Mr. Taylor then sold to repay the loan. As of December 31,
1994, Mr. Taylor is not indebted to the Company.
In November 1995 Mr. Robert DePalo, a director of the Company, personally
guaranteed $1,150,000 due by the Company to a bank.
During fiscal years 1991, 1992, 1993 and 1994, Stewart Taylor loaned the
Company an aggregate of $284,741. The loan has been repaid from time to time and
as of December 31, 1994, there remains $42,357 to Mr. Taylor. During fiscal year
1995, Stewart Taylor loaned the Company an additional $47,444 which has been
repaid from time to time. The largest amount outstanding at any time was
$60,854. At December 31, 1995, the amount outstanding was $40,936 with interest
at 10.65%. These various loans bear interest at varying rates between 6 1/2% to
17% per annum with a weighted average interest of 10.38%. At December 31, 1994,
the interest was 9.8%.
In November 1995 Mrs. Brenda Taylor loaned the Company $50,000. The proceeds
of this loan was used to collateralize a loan with a bank. This loan is
unsecured and bears interest at the rate of 10%.
The interest rate charged by the above lenders represent the cost of funds
incurred by them from unrelated banking institutions. Unless otherwise
specified, the proceeds from the loans were used for general working capital
purposes. Management believes that the loans made to the Company by affiliates
are on terms as favorable to the Company as those which would have been
available from an independent third party in arm's length negotiations. The
Board of Directors has agreed to compensate these individuals for the financial
guarantees and financial accommodations provided by them to the Company.
However, as of the date hereof, the Board has not determined what compensation
will be paid to these individuals.
In December 1994, the Company sold for $.10 each an aggregate of 990,000 B
Warrants to purchase an equal number of shares of Common Stock at a price of
$5.00 per share to William S. Taylor (470,000), Les Winder (100,000), Brenda
Taylor (200,000), Stewart Taylor (200,000) and Fawn Taylor McCauley (20,000).
The Warrants are exercisable immediately and expire on the fourth anniversary of
the Effective Date. In payment, the Company received promissory notes to the
Company aggregating $99,000. The notes bear interest at the rate of 8% per annum
and are due the earlier of the date of exercise of the B Warrants or December 1,
1996. On January 20, 1995, the Company agreed to reduce from $5.00 to $2.50 the
price of 300,000 B Warrants (150,000 owned by William S. Taylor and 75,000 each
owned by Brenda and Stewart Taylor) and extend to February 1, 1996 the exercise
period to commence on February 1, 1996 of the 300,000 B Warrants. In exchange,
the Company received certain financial guarantees and extensions of certain
loans due by the Company to William S. Taylor and Stewart Taylor.
9
<PAGE>
All future transactions and loans between the Company and officers,
directors and 5% shareholders will be on terms no less favorable than could be
obtained from unaffiliated third parties and will be approved by a majority of
the independent, disinterested directors of the Company.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's board of directors have appointed Stetz, Belgiovine CPA's
P.C., independent certified public accountants to serve as auditors for fiscal
1996. Stetz, Belgiovine CPA's P.C. audited the Company's financial statements as
of and for each of the years ended December 31, 1994 and 1995.
A representative of the firm of Stetz, Belgiovine CPA's P.C. is expected to
be present at the meeting and will be available to respond to appropriate
questions. They will be given an opportunity to make a statement if they desire
to do so.
ANNUAL REPORT
A copy of the Company's Form 10-KSB Annual Report for the fiscal year ended
December 31, 1995, filed by the Company with the Securities and Exchange
Commission, including the financial statements and schedules thereto is enclosed
herewith.
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the next annual
meeting to be held in 1997 must be received by the Secretary of the Company on
or before May 30, 1997 in order to be included in the proxy statement for that
meeting.
OTHER BUSINESS
There is no matter other than those described above, so far as is known to
the management of the Company, at the date of this proxy statement, to be acted
on at the meeting. It is intended, however, if other matters come up for action
at said meeting or any adjournments thereof, that the persons named in the
enclosed form of proxy shall, in accordance with the terms of the proxy, have
authority in their discretion to vote shares represented by proxies received by
them, in regard to such other matters, as seems to said persons in the best
interests of the Company and its stockholders.
COST OF SOLICITATION
The Company will bear the cost of the solicitation of proxies from its
stockholders. In addition to the use of mail, proxies may be solicited by
directors, officers and regular employees of the Company in person or by
telephone or other means of communication. The directors, officers and employees
of the Company will not be compensated additionally for the solicitation, but
may be reimbursed for out-of-pocket expenses in connection with this
solicitation. Arrangements are also being made with brokerage houses and any
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of the Company, and the Company will reimburse
such brokers, custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses.
ELECTRONICS COMMUNICATIONS CORP.
Brenda Taylor
Secretary
10
<PAGE>
ELECTRONICS COMMUNICATIONS CORP.
10 PLOG ROAD
FAIRFIELD, NJ 07004
------------------------
NOTICE OF ANNUAL MEETING
---------------------
October 17, 1996
NOTICE IS HEREBY given that the Annual Meeting of the stockholders of
Electronics Communications Corp. (the "Company"), will be held at the Company's
offices at 10 Plog Road, Fairfield, New Jersey 07004, on November 7, 1996 at
10:00 A.M., for the following purposes:
1. To elect a board of directors to each serve until the next annual
meeting of stockholders of the Company and until their successors have
been duly elected and qualified.
2. To ratify the selection of the Company's independent certified public
accountants for the next fiscal year.
3. To consider and ratify the purchase by certain Officers and Directors of
four million shares of the Company's Series B Preferred Stock.
4. To transact such other business as may properly come before the meeting
or any ad journment or adjournments thereof.
The board of directors has fixed the close of business on October 11, 1996
as the record date for the determination of stockholders who are entitled to
notice of, and to vote at the 1996 Annual Meeting of stockholders. Only
stockholders of record as of the close of business on October 11, 1996 will be
entitled to notice of and to vote at the annual meeting.
Please sign, date and mail the enclosed proxy promptly in the enclosed
postage-paid envelope so that your shares will be represented at the meeting.
THE COMPANY URGES THAT AS MANY STOCKHOLDERS AS POSSIBLE BE REPRESENTED AT
THE MEETING. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE
URGED TO READ THE ATTACHED PROXY STATEMENT AND THEN FILL IN, DATE, SIGN AND
RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE PRESENT
IN PERSON AT THE MEETING, YOU MAY VOTE IN PERSON REGARDLESS OF HAVING SENT IN
YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING AND
YOUR PROMPTNESS WILL ASSIST US IN PREPARATIONS FOR THE MEETING.
By Order of the Board of Directors
Brenda Taylor, Secretary
<PAGE>
PROXY
ELECTRONICS COMMUNICATIONS CORP.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 7, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ELECTRONICS
COMMUNICATIONS CORP. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE CHOICES SPECIFIED BELOW.
The undersigned stockholder of Electronics Communications Corp. (the "Company")
hereby appoints William S. Taylor and Brenda Taylor, the true and lawful
attorneys, agents and proxies of the undersigned with full power of substitution
for and in the name of the undersigned, to vote all the shares of Common Stock
of the Company which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Company's offices at 10
Plog Road, Fairfield, New Jersey 07004 on Tuesday, November 7, 1996 at 9:00
a.m., and any and all adjournments thereof, with all of the powers which the
undersigned would possess if personally present, for the following purposes:
1. To elect six Directors.
FOR WITHHOLD
Nominees: William S. Taylor [ ] [ ]
Les Winder
Brenda Taylor
Mal Gurian
Robert DePalo
Ira J. Tabankin
INSTRUCTION: To withhold authority to vote for one
or more individual nominees, write the nominees'
name(s) on the line provided below.
FOR AGAINST ABSTAIN
2. To ratify the selection of Stetz, [ ] [ ] [ ]
Belgiovine CPA's P.C. as independent
public accountants of the Company
for the fiscal year ending
December 31, 1996.
3. To ratify the purchase by certain [ ] [ ] [ ]
Officers and Directors of 4,000,000
shares of the Company's Series B
Preferred Stock.
4. The proxies are authorized to vote as
they determine in their discretion
upon such other matters as may
properly come before the meeting.
THIS PROXY WILL BE VOTED FOR THE CHOICES SPECIFIED. IF NO CHOICE IS SPECIFIED
FOR ITEMS 1, 2 AND 3, THIS PROXY WILL BE VOTED FOR THESE ITEMS.
The undersigned hereby acknowledged receipt of the Notice of Annual Meeting and
Proxy Statement dated October 17, 1996.
<PAGE>
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
DATED:______________________ _______________________________________
[Signature]
________________________________________
[Signature if jointly held]
________________________________________
[Printed Name]
Please sign exactly as name appears on stock
certificate(s). Joint owners should each sign.
Trustees and others acting in a representative
capacity should indicate the capacity in which
they sign.
