SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c)
or Rule 14a-12
SHARED TECHNOLOGIES CELLULAR, INC.
--------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------
(Name of Person[s] Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-(6)(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
--------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
--------------------------------------------------------------
(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:
--------------------------------------------------------------
- -----------
1 Set forth the amount on which the filing fee is calculated
and state how it was determined.
SHARED TECHNOLOGIES CELLULAR, INC.
100 GREAT MEADOW ROAD, SUITE 102
WETHERSFIELD, CONNECTICUT 06109
(860) 258-2500
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 23, 1997
------------------
The Annual Meeting of Stockholders of Shared Technologies Cellular,
Inc. (the "Company") will be held at the Company's offices, located at 100 Great
Meadow Road, Suite 102, Wethersfield, Connecticut 06109 on Friday, May 23, 1997,
at 10:00 a.m., for the purpose of considering and acting upon the following
matters:
1. To elect the directors;
2. To ratify the adoption of an amendment to the 1994 Stock Option
Plan to increase the number of shares of the Company's common
stock available for awards from 274,797 to 525,000;
3. To reappoint Rothstein, Kass & Company, P.C. as auditors for 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
Directors has fixed the close of business on April 22, 1997 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 30, 1997
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.
SHARED TECHNOLOGIES CELLULAR, INC.
100 GREAT MEADOW ROAD, SUITE 102
WETHERSFIELD, CONNECTICUT 06109
(860) 258-2500
--------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
--------------
May 23, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Shared Technologies Cellular, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on May 23, 1997 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 22, 1997 as the record date for
determining stockholders who are entitled to vote at the meeting. At the close
of business on April 22, 1997, there were outstanding and/or entitled to vote
5,120,407 shares of common stock of the Company, $.01 par value per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote. In
addition, as of such date there were outstanding 500,000 shares of Series B
Convertible Preferred Stock of the Company, $.01 par value per share (the
"Series B Stock"). Each share of Series B Stock is entitled to four votes.
Accordingly, the Series B Stock entitles its holders to 2,000,000 votes, which,
when combined with Common Stock votes, equals 7,120,407 votes.
The presence of the holders of at least one-half in interest of the
shares of the capital stock of the Company entitled to vote is necessary to
constitute a quorum at the meeting. Therefore, holders of not less than
3,560,204 shares of such capital stock must be present in person or by proxy for
there to be a quorum. Shares represented by all proxies received, including
proxies that withhold authority for the election of directors and/or abstain
from voting on the ratification of the accountants, 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 (i) the reappointment of Rothstein, Kass & Company, P.C. as the
Company's independent auditors and (ii) the ratification of the adoption of an
amendment to the 1994 Stock Option Plan. As to each 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 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,
and Item 2,
the ratification of independent auditors, are "routine" matters for this
purpose. With respect to matters which are determined by the appropriate
broker-dealer regulatory organization to be "non-routine," which includes Item 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 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, 1996
is being mailed to stockholders with the mailing of this Notice and Proxy
Statement on or about May 5, 1997.
MATTERS TO BE BROUGHT BEFORE THE MEETING
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Board of Directors currently consists of seven members. Directors
serve for one-year terms, expiring at each annual meeting of the stockholders.
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 one-year term expiring at the 1998 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 each
of the nominees for director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' EACH OF THESE NOMINEES.
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR AGE SINCE POSITION WITH COMPANY
-------- --- ----- ---------------------
<S> <C> <C> <C>
Anthony D. Autorino (1)(3)............58 1989 Chairman, Chief Executive Officer and Director
Thomas H. Decker (2)..................56 1994 Director
William A. DiBella (2)(3).............54 1994 Director
Vincent DiVincenzo (1)................47 1993 Chief Financial Officer, Treasurer and Director
Ajit G. Hutheesing (1)(3).............61 1995 Director
Craig A. Marlar.......................42 1996 Director
Nicholas E. Sinacori..................52 1996 Director
</TABLE>
- -----------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
-2-
ANTHONY D. AUTORINO has been Chairman and Chief Executive Officer of
the Company since its formation in 1989. From 1989 to 1995, he also held the
title of President. He has been Chairman and Chief Executive Officer of Shared
Technologies Fairchild Inc. ("STFI") since he founded it in 1986. STFI is a
principal stockholder of the Company's shares. Mr. Autorino was President of
STFI from 1986 to March 1996. 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 Corp. 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 a director of FiberVision Corporation and serves on the Board of
Directors of the Connecticut Children's Medical Center.
THOMAS H. DECKER has been a director of the Company since September
1994. Mr. Decker has been a director of STFI since September 1992. Since
September 1992, Mr. Decker has served as a Senior Vice President-Investments of
Prudential Securities. From 1981 to September 1992 he served as a Senior Vice
President at Tucker Anthony Incorporated. Mr. Decker serves as a director of
FiberVision Corporation.
WILLIAM A. DIBELLA has been a director of the Company since September
1994. Mr. DiBella has been a director of STFI since 1986. From 1981 to 1997, Mr.
DiBella served as a Connecticut State Senator, including serving as both Senate
Majority Leader and Senate Minority Leader. He also served as Chairman of the
Finance, Revenue and Bonding Committee. Mr. DiBella was Chairman of the
Metropolitan District Commission from 1977 to 1981, was a member of the Hartford
City Council from 1971 to 1979 and Deputy Mayor from 1975 to 1977.
VINCENT DIVINCENZO has been Treasurer of the Company since March 1989,
Chief Financial Officer since February 1994 and a director of the Company since
March 1993. He has been Senior Vice President-Administration and Finance of STFI
since 1993 and Treasurer, Chief Financial Officer of STFI since 1988 and a
director of STFI since 1992. He served as Vice President-Finance of STFI from
1988 until 1993. From 1987 to 1988, Mr. DiVincenzo was Controller of KCR
Technology, Inc., a research and development firm. From 1982 to 1986 he was
employed by Lorlin Test Systems, formerly, Eaton Corporation, last serving as
Controller. Prior to 1982, Mr. DiVincenzo served as Manager of General
Accounting for Interrad Corporation and for the ConDiesel Mobile Equipment
Division of Condec Corporation.
AJIT G. HUTHEESING has been a Director of the Company since December
1995. He has been a director of STFI since June 1994. Mr. Hutheesing is the
founder, Chairman and Chief Executive Officer of International Capital Partners,
Inc. ("ICP"). ICP is a private investment management firm. 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. 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.
CRAIG A. MARLAR has been a Director of the Company since May 1996. Mr.
Marlar has owned and operated a variety of businesses, including his own
cellular rental business, which was acquired by the Company in April 1996 (see
"Certain Relationships and Related Transactions"). Since May 1989 he has been
President of Summit Assurance, Inc., a private investment holding company. Mr.
Marlar was President of Anderson Paint Corporation, a manufacturer and retailer
of paints, prior to a bankruptcy filing by that company in January 1995.
-3-
NICHOLAS E. SINACORI has been a Director of the Company since August
1996. He has served as Managing Partner of the private investment management
firm of International Capital Partners, Inc. since 1990. From 1985 to 1990, Mr.
Sinacori was President of Westport Management, Inc., a private real estate
investment company. From 1974 to 1985 he was Vice President and Treasurer of
U.S. Industries, an international conglomerate.
BOARD AND COMMITTEE MEETINGS
The Company's Board of Directors maintains an Executive Committee, an
Audit Committee and a Compensation Committee. The Executive Committee met once
in 1996. No other committee meetings occurred in 1996.
The Executive Committee of the Board of Directors 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, DiVincenzo and
Hutheesing.
The Audit Committee was established to provide the opportunity for
direct contact between the Company's independent public accountants and the
Board. The Audit Committee intends 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
accountants. The Audit Committee is currently comprised of Messrs. Decker and
DiBella.
The Compensation Committee was established to provide recommendations
to the Board regarding compensation programs of the Company. The Compensation
Committee is currently comprised of Messrs. Autorino, DiBella and Hutheesing.
During the year ended December 31, 1996, the Board of Directors held
five 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.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its affiliates
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 such meeting.
In addition, pursuant to the 1994 Director Option Plan, non-employee
directors receive an option, at the beginning of each director's one-year term,
to purchase 2,000 shares of the Common Stock. Such option shall have an exercise
price equal to the fair market value of the Common Stock at the time of grant of
such option.
PROPOSAL TO APPROVE AMENDMENT TO STOCK OPTION PLAN
(ITEM 2 ON PROXY CARD)
In 1994, the Board of Directors authorized, and the Company's
stockholders approved, the 1994 Stock Option Plan (the "Plan"), pursuant to
which the Company may grant stock options to key employees and consultants of
the Company, its subsidiaries and affiliates.
Pursuant to the Plan, 274,797 shares are currently reserved for
issuance upon the exercise of options granted thereunder. At the annual meeting,
the Company's stockholders will be asked to approve an
-4-
amendment to the Plan to increase the number of shares issuable under the Plan
by an additional 250,203 shares, such that the aggregate number of shares
issuable upon the exercise of options granted under the Plan, as amended, would
be 525,000.
The number of employees eligible to participate under the Plan is
approximately 190 persons. The number of shares currently subject to option
awards is 266,999. The Company's management, through the Board's Compensation
Committee (the "Committee"), relies on stock options and other stock awards as
an essential part of the compensation packages necessary for the Company to
attract and retain experienced officers and employees. The Board of Directors
believes that the proposed increase in the number of shares available under the
Plan is essential to permit the Company's management to continue to provide
long-term, equity-based incentives to present and future employees. In 1996, the
Company granted options under the Plan with fair-market-value exercise prices as
follows: to all current executive officers as a group, 33,500 shares; and to all
non-executive officer employees and consultants, 15,000 shares.
MATERIAL FEATURES OF THE PLAN
The Plan provides that the Committee has authority to award
non-qualified stock options. The Committee has the authority to fix all terms of
any award or awards granted. Under the Plan, employees (including officers and
consultants) of the Company may be granted awards.
Option Price and Duration. The exercise price per share of options
granted under the Plan cannot be less than seventy percent (70%) of the
fair-market value of the stock subject to the option on the date the option is
granted. The Plan provides that each option shall expire on the date specified
by the Committee, but not more than ten years from its date of grant.
Exercise of Options. Each Option granted under the Plan may either be
fully exercisable at the time of grant or may become exercisable in such
installments as the Committee may specify. Each option may be exercised from
time to time, in whole or in part, up to the total number of shares with respect
to which it is then exercisable. The Board has the right to accelerate the date
of exercise of any installment of any option.
Changes in Capitalization and Other Matters. Option holders are
protected against dilution in the event of a stock dividend, recapitalization,
stock split, merger or similar transaction. The Board of Directors may from time
to time adopt amendments to the Plan, certain of which are subject to
stockholder approval, and may terminate the Plan at any time (although such
action shall not affect options previously granted). Any shares subject to an
option granted under the Plan, which for any reason expire or terminate
unexercised, may again be available for future option grants. Unless terminated
sooner, the Plan will terminate ten years from the date of adoption of the Plan
and options may be granted under the Plan at any time prior to such termination.
Federal Tax Considerations. The following general rules are applicable
under current federal income tax law to non-qualified options under the Plan:
1. The optionee generally does not realize any taxable income upon the
grant of an option, and the Company is not allowed a business expense deduction
by reason of such grant.
2. The optionee generally will recognize ordinary compensation income
at the time of exercise of the option in an amount equal to the excess, if any,
of the fair-market value of the shares on the date of exercise over the exercise
price.
3. When the optionee sells the shares, he or she generally will
recognize a capital gain or loss in an amount equal to the difference between
the amount realized upon the sale of the shares and his or her basis in the
stock (generally, the exercise price plus the amount taxed to the optionee as
compensation income). If the optionee's holding period for the shares exceeds
one year, such gain or loss will be a long-term capital gain or loss.
-5-
4. The Company generally should be entitled to a tax deduction when
compensation income is recognized by the optionee.
5. An optionee may be entitled to exercise a non-qualified option by
delivering shares of the Common Stock to the Company in payment of the exercise
price. If any optionee exercises a non-qualified option in such fashion, special
rules will apply.
A copy of the Plan is available upon request to the Company's Legal
Department at the Company's address appearing on the front page of this Proxy
Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE APPROVAL OF THE PROPOSAL TO
AMEND THE COMPANY'S 1994 STOCK OPTION PLAN TO INCREASE FROM 274,797 TO 525,000
THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE.
RATIFICATION OF CHOICE OF INDEPENDENT AUDITORS
(ITEM 3 ON PROXY CARD)
The Board of Directors has appointed Rothstein, Kass & Company, P.C.,
independent auditors, to audit the books, records and accounts of the Company
for the 1997 fiscal year. This selection is being presented to the stockholders
for ratification at the Annual Meeting of Stockholders.
Rothstein, Kass & Company, P.C. has no direct or indirect material
financial interest in the Company or its subsidiaries. Representatives of
Rothstein, Kass & Company, P.C. are not expected to be present at the Annual
Meeting of Stockholders.
Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise. Ratification by the stockholders is not
required. If the proposal is not approved by the stockholders, the Board of
Directors will not change the appointment for fiscal 1997, but will consider the
stockholder vote in appointing auditors for fiscal 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' THIS PROPOSAL.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive 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>
OFFICER AGE POSITION WITH COMPANY
------- --- ---------------------
<S> <C> <C>
Kenneth M. Dorros.....................37 Vice President, General Counsel and
Secretary
Sean P. Hayes.........................32 Executive Vice President
Jon F. Sorenson.......................34 President - Rental Division
John Lovkay...........................59 Senior Vice President - Operations
Ismael Pinho..........................38 Controller
</TABLE>
-6-
KENNETH M. DORROS has been Secretary of the Company since 1989 and has
served as Vice President and General Counsel since April 1995. Mr. Dorros was a
director of the Company from 1989 to 1990. He is Senior Vice President, General
Counsel and Secretary of STFI, of which he has been General Counsel since June
1986, Secretary since 1987, a Vice President from 1992 until 1996 and a Senior
Vice President since February 1996. 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.
SEAN P. HAYES is Executive Vice President, having served in such
capacity since March 1993. From December 1992 to March 1993 he served as
Director of Operations. From March 1993 to August 1996 Mr. Hayes served on the
Company's Board of Directors. Prior to joining the Company, Mr. Hayes was
employed by STFI, serving as Director of STFI's Data Division from 1990 to 1992
and as a Regional Business Manager from 1988 to 1990.
JOHN LOVKAY is Senior Vice President - Operations, in which capacity he
has served since October 1996. From April 1995 to October 1996 he held the
position of Vice President - Operations Support. Prior to joining the Company,
Mr. Lovkay was employed by STFI in the position of Senior Vice President -
Operations Analysis, from August 1994 to April 1995. From December 1992 to
August 1994, Mr. Lovkay was a software consultant, which included work for
Integrated Management Systems and DeSai Consulting Group. Mr. Lovkay was
Executive Vice President and Chief Operating Officer of STFI from January 1987
to December 1992. He also served as President of the Hamilton Standard Division
of United Technologies Corporation from 1984 to 1986. Mr. Lovkay holds a B.S. in
electrical engineering from the Massachusetts Institute of Technology and an
M.S. from the University of Connecticut.
ISMAEL PINHO joined the Company as its Controller in May 1995. From
October 1990 to May 1995 he was Controller of F.L. Roberts & Company, Inc., a
retailer and distributor of petroleum products. Mr. Pinho was Controller of
Shapiro Equipment, a construction equipment company, from 1986 to 1990.
JON F. SORENSON is President - Rental Division, in which capacity he
has served since September, 1996. He joined the Company in November 1995, as
President - Transportation Division. From March 1994 to November 1995, Mr.
Sorenson served as Chief Operating Officer of PTC Cellular, Inc. ("PTC"). The
Company acquired substantially all of the assets of PTC in November 1995. Prior
to that, from December 1992 to March 1994, Mr. Sorenson was a Vice President of
the S&S Companies, a national office beverage distribution and real estate
company. From July 1991 to December 1992, he served as Executive Vice President
of Cafeccino, Inc., a nationwide provider of office beverage services. From
August 1989 to June 1991, Mr. Sorenson served as a Vice President of NVS, Inc.,
a nationwide management company. Mr. Sorenson holds a B.A. degree in economics
from the University of Maine.
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 review the
compensation of other executive officers of the Company, as established by the
Chief Executive Officer. However, the Chief Executive Officer currently receives
cash compensation only from the Company's affiliate, Shared Technologies
Fairchild Inc. ("STFI"), in connection with the Company's Management Agreement
with STFI (see "Certain Relationships and Related Transactions").
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
-7-
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 of the achievement of specific objectives in the
Company's annual operating plan as approved by the Board.
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 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,
Anthony D. Autorino
William A. DiBella
Ajit G. Hutheesing
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.
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
future growth and activities; and
-8-
(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
The following table sets forth the annual and long-term compensation
awarded or paid to or earned by the Company's Chief Executive Officer for the
fiscal years ended 1996, 1995 and 1994. No executive officer of the Company
received compensation in excess of $100,000 in any of such years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Securities
Under-
Restricted lying
Salary Bonus Other Annual Stock Options All Other
Name & Principal Position Year ($) ($) Compensation Awards (#) Compensation($)
- ------------------------- ---- --- --- ------------ ------ --- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony D. Autorino............ 1996 -- -- -- -- -- (a)
Chairman and 1995 -- -- -- (a) -- (a)
Chief Executive Officer 1994 -- -- -- (a) -- (a)
</TABLE>
- ------------------------
(a) The Chief Executive Officer, Anthony D. Autorino, is paid by the Company's
affiliate, Shared Technologies Fairchild Inc. ("STFI"), of which he is
Chairman and Chief Executive Officer, in accordance with the Management
Agreement described in "Certain Relationships and Related Transactions". In
1995 and 1994, Mr. Autorino received compensation only in the form of stock
options and stock grant, as set forth below. In 1995, Mr. Autorino received
options to purchase 25,000 shares of the Common Stock at an exercise price
of $3.128 per share (the then-current fair market value of the Common
Stock) and in 1994 he received options to purchase 33,333 shares of Common
Stock at an exercise price of $3.675 per share (the then-current fair
market value of the Common Stock) and a grant of 62,764 shares of Common
Stock having an estimated value of $5,000 at the time of such grant on
January 1, 1994. Additionally, in 1995, Mr. Autorino received from STFI a
warrant to purchase 60,000 shares of the Common Stock owned by STFI at an
exercise price of $2.50 per share and, in 1996, Mr. Autorino received from
STFI a warrant to purchase 480,000 shares of the Common Stock owned by STFI
at an exercise price of $1.72 per share.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1996, the Chief Executive
Officer received no grants of stock options from the Company.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
Anthony D. Autorino............. 41,666/16,666 --/--
</TABLE>
-9-
SECURITIES OWNERSHIP
COMMON STOCK
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of April 21, 1997 by (i) all
directors of the Company, (ii) the Chief Executive Officer of the Company, (iii)
all directors and officers of the Company as a group, and (iv) each person known
by the Company to own beneficially more than five percent of the outstanding
shares of the Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES COMMON STOCK
NAMES AND ADDRESS (1) BENEFICIALLY OWNED (2) OUTSTANDING
--------------------- ---------------------- ------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Anthony D. Autorino (a)................................ 3,846,166 54.6%
Chief Executive Officer and Director
Thomas H. Decker (b)................................... 40,333 *
Director
William A. DiBella (c)................................. 57,333 1.1%
Director
Vincent DiVincenzo (d)................................. 147,715 2.8%
Treasurer, Chief Financial Officer, and Director
Ajit G. Hutheesing (e)................................. 444,333 8.0%
Director
Craig A. Marlar (f).................................... 602,000 11.1%
Director
Nicholas E. Sinacori (g)............................... 444,333 8.0%
Director
All directors and officers as a group (12 persons)(h). 5,277,437 65.3%
FIVE PERCENT STOCKHOLDERS
Shared Technologies Fairchild Inc. (i)................. 3,498,736 51.5%
100 Great Meadow Road
Wethersfield, CT 06109
Zesiger Capital Group LLC (j).......................... 2,813,116 41.4%
320 Park Avenue
New York, NY 10022
The Fairchild Corporation (k).......................... 1,000,000 17.8%
and RHI Holdings, Inc.
300 West Service Road
P.O. Box 10803
Chantilly, VA 20153
International Capital Partners, Inc.(l)................. 444,333 8.0%
300 First Stamford Place
Stamford, CT 06902
Summit Assurance, Inc. (m).............................. 602,000 11.1%
777 E. Tahquitz Canyon Way, Suite 333
Palm Springs, CA 92262
</TABLE>
- --------------
* Less than 1%
-10-
(1) The mailing address of each of the Company's directors and executive
officers is c/o the Company, 100 Great Meadow Road, Wethersfield, CT 06109.
(2) 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 stockholders' name,
except as otherwise indicated.
(a) Includes 41,666 shares currently issuable upon exercise of options by Mr.
Autorino. Also includes 13,000 shares owned beneficially by Mr. Autorino's
spouse, as to which Mr. Autorino disclaims beneficial ownership. Also
includes 1,832,070 shares beneficially owned by Shared Technologies
Fairchild Inc. ("STFI"). Also includes 1,666,666 shares currently issuable
to STFI upon conversion of 250,000 shares of Series B Convertible Preferred
Stock (the "Series B Stock") beneficially owned by STFI (such Series B
Stock converts, via a formulaic calculation, into a certain number of
shares of Common Stock and a warrant exercisable for an equal number of
shares of Common Stock; the number of shares of Common Stock resulting from
the conversion of Series B Stock may not exceed 1,666,666). As the Chairman
and Chief Executive Officer of STFI, Mr. Autorino may be deemed, for
reporting purposes, to be the beneficial owner of those shares owned by
STFI. However, Mr. Autorino disclaims beneficial ownership of all shares
owned by STFI. With respect to such shares owned by STFI, Mr. Autorino is
the beneficial owner of warrants, pursuant to which Mr. Autorino currently
has the right to purchase from STFI 220,000 shares of Common Stock (such
warrants to acquire STFI-owned Common Stock are referred to in the
following footnotes as STFI Warrants). Excluding all shares beneficially
owned by STFI, Mr. Autorino has personal ownership (including shares owned
by his spouse) of 347,430 shares, which represents ownership of 6.5% of the
Common Stock.
(b) Includes 4,000 shares currently issuable upon exercise of options by Mr.
Decker. Also includes 28,333 shares currently issuable upon exercise of
STFI Warrants.
(c) Includes 4,000 shares currently issuable upon exercise of options by Mr.
DiBella. Also includes 53,333 shares currently issuable upon exercise of
STFI Warrants.
(d) Includes 18,334 shares currently issuable upon exercise of options by Mr.
DiVincenzo. Also includes 98,000 shares currently issuable upon exercise of
STFI Warrants.
(e) Includes 6,000 shares currently issuable upon exercise of options, 390,000
shares currently issuable upon exercise of warrants, and 48,333 shares
currently issuable upon exercise of STFI Warrants, all of which are owned
beneficially by International Capital Partners, Inc. ("ICP"), of which Mr.
Hutheesing is Chairman and Chief Executive Officer. Mr. Hutheesing
disclaims beneficial ownership of all shares owned by ICP. He personally
owns no shares of the Company.
(f) Includes 2,000 shares currently issuable upon exercise of options by Mr.
Marlar. Also includes 300,000 shares of Common Stock and 300,000 shares
currently issuable upon exercise of warrants, all of which are owned
beneficially by Summit Assurance, Inc. ("Summit"), of which Mr. Marlar is
the sole director and officer. Mr. Marlar disclaims beneficial ownership of
all shares owned by Summit.
(g) Includes 6,000 shares currently issuable upon exercise of options, 390,000
shares currently issuable upon exercise of warrants, and 48,333 shares
currently issuable upon exercise of STFI Warrants, all of which are owned
beneficially by International Capital Partners, Inc. ("ICP"), of which Mr.
Sinacori is Managing Director. Mr. Sinacori disclaims beneficial ownership
of all shares owned by ICP. He personally owns no shares of the Company.
-11-
(h) Includes 136,666 shares currently issuable upon exercise of options,
1,523,333 shares currently issuable upon exercise of warrants and 467,999
shares currently issuable upon exercise of STFI Warrants, which includes
all options, warrants and STFI Warrants beneficially owned by ICP and
Summit, which, for reporting purposes, may be deemed to be beneficially
owned by Messrs. Hutheesing and Sinacori (see notes (e) and (g) above), and
Mr. Marlar (see note (f) above), although such Directors disclaim
beneficial ownership of all shares owned by ICP and Summit, respectively.
Also includes 1,666,666 shares currently issuable to STFI upon conversion
of 250,000 shares of Series B Stock beneficially owned by STFI (see note
(a) above). Also includes 2,205 shares owned by officers and Directors
through the Company's Savings and Retirement Plan.
(i) Includes 1,666,666 shares currently issuable upon conversion of 250,000
shares of Series B Stock owned by STFI (see note (a) above). Of the
1,832,070 shares of Common Stock owned by STFI, 790,412 are subject to STFI
Warrants that are currently exercisable by various holders.
(j) Includes 1,666,666 shares currently issuable upon conversion of 250,000
shares of Series B Stock owned by Zesiger Capital Group LLC (such Series B
Stock converts, via a formulaic calculation, into a certain number of
shares of Common Stock and a warrant exercisable for an equal number of
shares of Common Stock; the number of shares of Common Stock resulting from
the conversion of Series B Stock may not exceed 1,666,666).
(k) Included 500,000 shares currently issuable upon exercise of warrants
beneficially owned by The Fairchild Corporation ("TFC") and RHI Holdings,
Inc. ("RHI"). RHI is a wholly-owned subsidiary of TFC.
(l) Includes 6,000 shares currently issuable upon exercise of options, 390,000
shares currently issuable upon exercise of warrants and 48,333 shares
currently issuable upon exercise of STFI Warrants beneficially owned by
ICP.
(m) Includes 2,000 shares currently issuable upon exercise of options
beneficially owned by Mr. Marlar (see note (f) above), and 300,000 shares
currently issuable upon exercise of warrants beneficially owned by Summit.
SERIES B CONVERTIBLE PREFERRED STOCK
The following table sets forth certain information regarding the
beneficial ownership of the Company's Series B Convertible Preferred Stock (the
"Series B Stock") as of April 21, 1997 by (i) all directors of the Company, (ii)
the Chief Executive Officer of the Company, (iii) all directors and officers of
the Company as a group, and (iv) each person known by the Company to own
beneficially more than five percent of the outstanding shares of the Series B
Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES SERIES B STOCK
NAMES AND ADDRESS BENEFICIALLY OWNED (1) OUTSTANDING
----------------- ---------------------- -----------
<S> <C> <C>
Anthony D. Autorino (a)............................ 250,000 50%
Chief Executive Officer and Director
Shared Technologies Fairchild Inc.................. 250,000 50%
100 Great Meadow Road
Wethersfield, CT 06109
Zesiger Capital Group LLC.......................... 250,000 50%
320 Park Avenue
New York, NY 10022
</TABLE>
- ------------
-12-
(1) There are currently 500,000 shares of Series B Stock of the Company
issued and outstanding. Each share of Series B Stock is currently ultimately
convertible into 3.33 shares of Common Stock, subject to certain adjustments.
Thus, an aggregate of 1,666,666 shares of Common Stock are currently issuable
upon conversion of all such 500,000 shares of Series B Stock. Each share of
Series B Stock, until converted into Common Stock, provides its holder the right
to vote on matters submitted to holders of the Common Stock at the rate of
four-to-one; that is, one share of Series B Stock entitles its holder to voting
power equivalent to that held by the holder of four shares of Common Stock.
(a) Such shares are held beneficially by Shared Technologies Fairchild
Inc. ("STFI"). As the Chairman and Chief Executive Officer of STFI, Mr. Autorino
may be deemed, for reporting purposes, to be the beneficial owner of these
shares. However, Mr. Autorino disclaims such beneficial ownership and personally
owns no shares of Series B Stock.
CUMULATIVE STOCKHOLDER RETURN
The following graph and chart compare the cumulative annual stockholder
return on the Common Stock over the period commencing April 21, 1995 (the date
of the Company's initial public offering and the date that Common Stock
commenced trading on Nasdaq) through December 29, 1996 to that of the 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 the Standard
Industrial Classification Codes 4810-4819 Telephone Communications ("SIC Code
Index") assuming the investment of $100 on April 21, 1995. 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.
<TABLE>
<CAPTION>
- --------------------------- ------------ ------------ ------------ ------------ ------------ ------------
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- --------------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shared Technologies
Cellular $33.70 $30.40
- --------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Nasdaq $69.80 $81.20 $93.30 $91.20 $128.90 $158.60
- --------------------------- ------------ ------------ ------------ ------------ ------------ ------------
SIC Code Index $61.00 $76.60 $114.60 $90.20 $123.90 $144.80
- --------------------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
-13-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 27, 1996, the Company acquired certain assets of its only
franchisee and licensee in order to expand the Company's operations to Florida,
Nevada, Arizona and California (beyond its current operations in Los Angeles).
The principal stockholder of the various corporate entities from which the
Company purchased such assets, Craig A. Marlar, was elected to the Company's
Board of Directors on May 15, 1996 pursuant to the terms of the purchase
agreement. The purchase price for such assets consisted of a combination of cash
and securities of the Company and the assumption of certain liabilities, which
in the aggregate represented a purchase price of approximately $3.5 million.
In August 1996, the Company entered into a one-year agreement with
International Capital Investments, Inc. ("Investments"), an affiliate of
International Capital Partners, Inc. ("ICP"), pursuant to which Investments
agreed to provide certain financial and managerial advisory services to the
Company in consideration for the Company's issuance to ICP of a warrant for the
purchase of 240,000 shares of the Common Stock, exercisable at $3.00 per share,
which exercise price was in excess of the fair market value of the Common Stock
as of the date of issuance of the warrant. Two of the Company's directors,
Messrs. Hutheesing and Sinacori, are principals of ICP and Investments, and ICP
is a principal stockholder of the Company.
The Company is a party to a Management Agreement with its parent
company, STFI, pursuant to which STFI has agreed to provide the Company general
management and administrative services in the legal, financial, MIS, personnel,
marketing and public relations areas, as well as the specific management
services of Messrs. Autorino, DiVincenzo and Dorros. The Management Agreement is
currently on a month-to-month basis. In consideration for such services, the
Company has agreed to pay STFI a fee of $25,000 per month, subject to certain
restrictions and limitations, including that no such fee shall be payable for
any month in which the Company incurs a pre-tax loss.
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 22, 1998, 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 5, 1998. Any
stockholder desiring to submit a proposal should consult applicable regulations
of the Securities and Exchange Commission.
-14-
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 officers and Directors, and persons who own more than 10% of the
Company's outstanding shares of Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC") and
Nasdaq. Officers, Directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
In accordance with the provisions of Item 405 of Regulation S-K, the
Company knows of no delinquent filings by any such persons under Section 16(a)
of the Exchange Act during the fiscal year ended December 31, 1996.
FORM 10-K
A COPY OF THE COMPANY'S FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON
WRITTEN REQUEST TO THE INVESTOR RELATIONS DEPARTMENT, SHARED TECHNOLOGIES
CELLULAR, INC., 100 GREAT MEADOW ROAD, SUITE 102, WETHERSFIELD, CT 06109.
-15-
SHARED TECHNOLOGIES CELLULAR, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Anthony D.
Autorino and Vincent DiVincenzo, 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
Cellular, Inc. held of record by the undersigned on April 22, 1997 at the Annual
Meeting of Stockholders to be held on May 23, 1997, or any adjournment or
adjournments 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 seven Directors:
ANTHONY D. AUTORINO, THOMAS H. DECKER, WILLIAM A. DIBELLA, VINCENT
DIVINCENZO, AJIT G. HUTHEESING, CRAIG A. MARLAR AND
NICHOLAS E. SINACORI
[ ] FOR all nominees.
[ ] WITHHOLD from all nominees. [ ] FOR, except vote withheld from the
following nominee(s):
2. To ratify the adoption of an amendment to the 1994 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To reappoint Rothstein, Kass & Company, P.C. as auditors for 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).
ACCOUNT NUMBER NUMBER OF VOTES PROXY NO.
Dated: May ___, 1997
-------------------------------
-------------------------------
(Signatures)
-------------------------------
-------------------------------
New Address
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY AND USE THE ENCLOSED ENVELOPE.
