<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OCAL, INC.
----------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
- --------------------------------------------------------------------------------
<PAGE>
[LOGO OF OCAL, INC.]
OCAL, INC.
14538 KESWICK STREET
VAN NUYS, CALIFORNIA 91405
March 31, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Ocal, Inc., to be held at 10:00 a.m. on Friday, April 25, 1997, at the Airtel
Plaza Hotel, 7277 Valjean Avenue, Van Nuys, California 91406.
At the meeting, we will vote on the proposals described in the accompanying
Notice and Proxy Statement. We will also report to you on the operations of the
Company. You will have the opportunity to ask questions about the Company that
may be of general interest to stockholders.
The enclosed proxy statement contains important information concerning the
Directors to be elected at the Annual Meeting. We hope you will take the time
to study it carefully. Your vote is very important, regardless of how many
shares you own. Even if you presently plan to attend our Annual Meeting, please
complete, sign, date and return the enclosed proxy card promptly in the
accompanying self-addressed postage prepaid envelope. If you do join us at the
Annual Meeting and wish to vote in person, you may revoke your proxy at that
time.
The other members of the Board of Directors and I look forward to seeing you
at the meeting.
Sincerely,
/s/ Ilan Bender
Ilan Bender
Chairman of the Board,
President and Chief Executive Officer
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE ANNUAL MEETING.
<PAGE>
[LOGO OF OCAL, INC.]
OCAL, INC.
14538 KESWICK STREET
VAN NUYS, CALIFORNIA 91405
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1997
TO THE STOCKHOLDERS OF OCAL, INC.:
The 1997 Annual Meeting of Stockholders of Ocal, Inc., a Delaware
corporation (the "Company"), will be held at the Airtel Plaza Hotel, 7277
Valjean Avenue, Van Nuys, California 91406 on Friday, April 25, 1997, at 10:00
a.m., local time, for the following purposes:
1. To elect a board of six Directors for the Company to hold office
until the next annual meeting of stockholders and until their
respective successors have been elected and qualified;
2. To consider and act upon a proposal to ratify the appointment of
Ernst & Young LLP as the Company's independent auditor for the year
ending December 31, 1997; and
3. To consider and transact such other business as may properly come
before the Annual Meeting and at any adjournments or postponements
thereof (the "Annual Meeting").
Only stockholders of record on the books of the Company as of the close of
business on March 3, 1997 will be entitled to notice of and to vote at the
Annual Meeting. A list of stockholders entitled to vote will be available for
inspection at the offices of the Company, 14538 Keswick Street, Van Nuys,
California 91405, for ten days prior to the Annual Meeting.
PLEASE READ THE ENCLOSED PROXY STATEMENT CAREFULLY.
It is important that your shares be represented at the Annual Meeting.
THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED SELF ADDRESSED, POSTAGE PREPAID ENVELOPE. If you later find that you
can be present or desire to revoke your proxy for any reason, you may do so at
any time before the voting at the Annual Meeting.
By Order of the Board of Directors
of the Company
/s/ Lida R. Frankel
Lida R. Frankel
Secretary
March 31, 1997
Van Nuys, California
<PAGE>
[LOGO OF OCAL, INC.]
OCAL, INC.
14538 KESWICK STREET
VAN NUYS, CALIFORNIA 91405
PROXY STATEMENT RELATING TO
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1997
----------------
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of Ocal, Inc., a Delaware corporation
(the "Company"), for use at the Annual Meeting of Stockholders of the Company
to be held at the Airtel Plaza Hotel, 7277 Valjean Avenue, Van Nuys,
California 91406, on Friday, April 25, 1997, beginning at 10:00 a.m., local
time, and at any adjournment or postponement thereof (the "Annual Meeting"),
pursuant to the accompanying Notice of Annual Meeting. The stockholders of the
Company will consider (i) the election of six Directors for the Company who
would serve for the coming year, (ii) the ratification of the appointment of
Ernst & Young LLP to serve as the Company's independent auditor for the year
ending December 31, 1997, and (iii) any other business that properly comes
before the Annual Meeting.
----------------
This Proxy Statement is dated March 31, 1997 and, together with the form of
proxy, shall first be mailed to the Company's stockholders on or about April
3, 1997.
VOTING RIGHTS AND PROXIES
RECORD DATE; OUTSTANDING SECURITIES
Only common stockholders of record on the books of the Company as of the
close of business on March 3, 1997 (the "Record Date") will be entitled to
notice of and to vote at the Annual Meeting. On that date, the Company had
5,780,000 shares of common stock (the "Common Stock") issued and outstanding.
Each share of Common Stock outstanding on the Record Date is entitled to one
vote at the Annual Meeting on each matter to be voted on.
QUORUM
The holders of a majority of the outstanding shares entitled to vote at the
Annual Meeting, present in person or represented by proxy (including
abstentions and broker non-votes), constitute a quorum for the transaction of
business at the Annual Meeting.
<PAGE>
PROXIES AND SOLICITATION OF PROXIES
Your proxy may be revoked by you at any time prior to its use by (i) filing
with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date or (ii) attending the Annual Meeting and voting in
person. Subject to such revocation, all shares represented by valid proxies
will be voted at the Annual Meeting in accordance with the specifications on
such proxies. If no specifications are given by the stockholder executing the
proxy card, valid proxies will be voted to elect the persons nominated for
election to the Board of Directors of the Company listed on the proxy card, to
ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the year ended December 31, 1997, and in the discretion of the
appointed proxy holders upon such other matters as may properly come before
the Annual Meeting. The Company is not aware of any other matters to be
considered at the Annual Meeting.
Proxies may be solicited by mail, personal interview, telephone and telecopy
by Directors, officers and employees of the Company on a part-time basis and
for no additional compensation. The entire cost of soliciting proxies under
this Proxy Statement will be borne by the Company and will include amounts
paid in reimbursement to banks, brokerage firms and others for their expenses
in forwarding soliciting material.
If you have any questions or need further assistance in voting your shares,
please call Lida Frankel of the Company at (818) 782-0711.
ELECTION OF DIRECTORS
(ITEM NO. 1 ON PROXY CARD)
At the Company's Annual Meeting, common stockholders will be asked to vote
on the election of six Directors who will constitute the full Board of
Directors of the Company (the "Board"). The six nominees receiving the highest
number of votes from holders of shares of the Common Stock of the Company
represented and voting at the Annual Meeting will be elected to the Board of
Directors of the Company. Unless a nominee other than the nominees listed
below is properly nominated, abstentions and broker non-votes will not have an
effect on the election of the nominees listed below. Each Director so elected
will hold office until the next annual meeting and until his successor is
elected and qualified.
GENERAL
Each proxy received will be voted for the election of the persons named
below, unless the stockholder signing such proxy withholds authority to vote
for one or more of these nominees in the manner described on the proxy.
Although it is not contemplated that any nominee named below will decline or
be unable to serve as a Director, in the event any nominee declines or is
unable to serve as a Director, the proxies will be voted by the proxy holders
as directed by the Board of Directors.
Except as described in this Proxy Statement, there are no family
relationships between any Director, nominee or executive officer and any other
Director, nominee or executive officer of the Company, nor are there are any
arrangements or understandings between any Director, nominee or executive
officer and any other person pursuant to which he has been or will be selected
as a Director and/or executive officer of the Company.
INFORMATION REGARDING THE NOMINEES FOR THE BOARD OF DIRECTORS OF THE COMPANY
The following is a list of and certain biographical information for the
persons nominated by the Board of Directors of the Company for election as
Directors of the Company. All of the nominees are currently Directors of the
Company. Directors' ages are as of March 1, 1997.
MR. ILAN BENDER, 60, is the founder of the Company and has served as its
Chairman of the Board, Chief Executive Officer and President since its
formation in 1965.
2
<PAGE>
MR. RONALD COSTA, 65, has served as a Director of the Company since June of
1996. Since 1995, he has held the position of Chief Executive Officer of
Financial Data Communications. From 1990 until 1995, he was President of U-
Corp., Incorporated.
MR. CARLOS R. ESPINOSA, 31, joined the Company as an employee in 1981 and
became Vice President of Research and Development in 1992. He has most
recently served as a Director since his appointment in June of 1996, and also
served as a Director from 1990 through October of 1995. Carlos R. Espinosa is
the son of Carlos V. Espinosa.
MR. CARLOS V. ESPINOSA, 55, joined the Company in 1971. He became the plant
manager in 1973 and has served as the Company's Vice President of
Manufacturing and a Director since 1976. Carlos V. Espinosa is the father of
Carlos R. Espinosa.
MR. WILLIAM T. GROSS, 67, has served as a Director of the Company since June
of 1996. Since 1991, he has served as Director of Cade Industries, and during
that time he has also been an independent business consultant.
MR. MICHAEL R. PEEVEY, 59, has served as a Director of the Company since
March of 1996. Since 1995, he has been President of New Energy Ventures. From
1993 to 1995, Mr. Peevey served as a business consultant. From October 1990
until he retired in 1993, Mr. Peevey was President of Southern California
Edison and SCE Corporation. Mr. Peevey also serves on the Board of Directors
for Dames & Moore, Inc., Electro Rent Corporation and Amerigon Incorporated.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ELECTION OF THE
NOMINEES LISTED ABOVE AS DIRECTORS.
CERTAIN INFORMATION CONCERNING THE BOARD OF
DIRECTORS AND ITS COMMITTEES
There are currently three committees of the Board. These committees meet
both formally and informally and the members of the Committees speak
frequently with each other. The Audit Committee, formed on June 12, 1996,
currently consists of Messrs. Gross (its Chairman), Bender, and Costa. The
Audit Committee recommends to the Board for its approval a certified public
accounting firm to conduct the Company's annual audit. The Audit Committee
will also (i) confer from time to time with the Company's certified public
accountants regarding their audit work and the details thereof, (ii) review
management letters of the Company's certified public accounting firm, (iii)
meet and consult with the Company's executive and financial officers to
discuss accounting policies, internal controls and procedures and implement
recommendations of the Board relating to financial matters, and (iv) provide
assistance and recommendations to the Board with respect to the general
financial needs, policies and practices of the Company. The Audit Committee
had no formal meeting in 1996.
The Stock Option Committee, formed on June 12, 1996, currently consists of
Messrs. Gross (its Chairman) and Peevey. The Stock Option Committee
administers the Ocal, Inc. 1995 Stock Option Plan (the "Stock Option Plan").
Subject to the terms of the Stock Option Plan, the Stock Option Committee has
the authority to determine the persons to whom options may be granted, the
exercise price and number of shares subject to each option, the character of
the grant, the time or times at which all or a portion of each option may be
exercised, and certain other provisions of each option. The Stock Option
Committee had no formal meeting in 1996.
The Compensation Committee, formed immediately after the Company's initial
public offering ("IPO") on March 18, 1996, currently consists of Messrs.
Peevey (its Chairman), Bender, and Costa. The Compensation Committee has full
power and authority to (i) consider and approve all matters with respect to
executive officer and employee compensation, (ii) make recommendations to the
Board with respect to the annual salaries and other compensation of the
officers of the Company, and (iii) provide assistance and recommendations to
the Board with respect to the compensation policies and practices of the
Company. The Compensation Committee had one formal meeting in 1996.
3
<PAGE>
New committees may be added, existing committees may be disbanded, and the
composition of any committee may be modified at any time in the discretion of
the Board.
During 1996, the Board of Directors held three regularly scheduled and
special meetings and acted by unanimous written consent on four occasions.
Except for Mr. Carlos R. Espinosa, who attended less than 75% of the meetings
since his appointment as a Director, each incumbent Director attended 100% of
(i) the formal meetings of the Board of Directors, and (ii) the total number
of formal meetings of the committees on which he served.
The members of the Board of Directors who are employed by the Company
receive no separate remuneration for acting as Directors of the Company.
Effective upon the Company's IPO on March 18, 1996, the Board implemented a
policy pursuant to which all Directors who are not employees of the Company
will be paid $2,000 for each Board meeting attended. Directors will not be
compensated for attendance at committee meetings. The Board has the authority
to revise this fee structure in its discretion. All Directors are entitled to
receive reimbursement for expenses incurred in connection with service on the
Board or Board committees. In addition, all Directors are eligible to
participate in, and (other than Mr. Bender, Mr. Carlos R. Espinosa, and
Mr. Carlos V. Espinosa) have received option grants under, the Stock Option
Plan described below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the formation of the Compensation Committee on March 18, 1996, the
Company did not have a Compensation Committee. Mr. Bender made all
compensation determinations for himself and the other executive officers
during 1995. Compensation determinations for salaries to be paid to executive
officers during 1996 were made by the unanimous approval of the Company's
Board of Directors prior to the formation of the Compensation Committee.
Immediately following the IPO, the Compensation Committee was established and
made all determinations with respect to bonuses paid to the Company's
employees and executive officers during 1996.
Mr. Bender, who is a member of the Compensation Committee, is the Company's
President and Chief Executive Officer and had relationships with the Company
which are disclosed under the caption "Certain Relationships and Related
Transactions".
EXECUTIVE OFFICERS OF THE COMPANY
Each of the executive officers of the Company holds office at the pleasure
of the Board of Directors. The current executive officers of the Company are
as follows:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Ilan Bender Chairman of the Board, President and Chief Executive Officer
Carlos V. Espinosa Vice President of Manufacturing
Carlos R. Espinosa Vice President of Research and Development
Raymond S. Mackewicz Vice President of Marketing and Sales
Lida R. Frankel Chief Financial Officer
</TABLE>
Background information for Mr. Bender, Mr. Carlos V. Espinosa, and Mr.
Carlos R. Espinosa is provided above.
MR. RAYMOND S. MACKEWICZ, 48, joined the Company in March 1993 as its Vice
President of Marketing. He was the Southern Regional Sales Manager for Robroy
Industries, Inc., the primary competitor of the Company, from April 1988 to
March 1993. From 1983 to 1987 he was a Specifications Manager for Texas and
Oklahoma at Burrus & Matthews (Houston, Texas), which is an electrical sales
agency. From 1981 to 1983, Mr. Mackewicz was a Regional Manager of Materials
for General Electric Supply Company, an electric supply distribution company.
4
<PAGE>
MS. LIDA R. FRANKEL, 36, joined the Company in August 1996 as its Chief
Financial Officer. She was Director of Finance for Whittaker Corporation from
1995 until August of 1996. From 1994 until 1995, she was Controller of Metric
Products, Inc. From 1991 until 1994, she was employed by ALTIUM, a wholly-
owned subsidiary of IBM Corporation, where she served in various positions
including Director of Finance and Controller. During 1990, Ms. Frankel was
Corporate Accounting Manager for Micropolis Corporation. From 1983 to 1989,
Ms. Frankel worked for the accounting firm of Deloitte Haskins & Sells (now
Deloitte & Touche). Ms. Frankel is a Certified Public Accountant.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation earned
by the Company's President and each of the other executive officers of the
Company whose annual salaries and bonuses exceeded $100,000 in total during
the year ended December 31, 1996 (collectively, the "Named Officers") for
services rendered in all capacities to the Company and its subsidiaries for
that fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------
NAME AND PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) COMPENSATION(4)
- ------------------ ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Ilan Bender
Chairman, President and
CEO 1996 $150,000 $ -- $4,324,000 $27,354
Carlos V. Espinosa
Vice President of
Manufacturing 1996 130,000 32,500 $ 253,000
Carlos R. Espinosa
Vice President of
Research and
Development 1996 110,000 17,000 $ 23,000
Raymond S. Mackewicz
Vice President of
Marketing and Sales 1996 110,000 10,000
</TABLE>
- --------
(1) Amount represents cash compensation earned and received by executive
officers.
(2) Amount represents cash bonuses earned and received by executive officers.
(3) Amount represents distribution of estimated S corporation earnings,
immediately prior to IPO. Ilan Bender was paid $1,504,000 in cash and
$2,820,000 in notes payable; Carlos V. Espinosa was paid $88,000 in cash
and $165,000 in notes payable; and Carlos R. Espinosa was paid $8,000 in
cash and $15,000 in notes payable. See "Certain Relationships and Related
Transactions".
(4) Amount represents life insurance premiums paid on behalf of Mr. Bender.
1995 STOCK OPTION PLAN
In August 1995, the Board of Directors adopted, and the stockholders of the
Company approved, the Stock Option Plan. The Stock Option Plan provides for
the award of incentive stock options to employees and the award of non-
qualified stock options to employees, independent contractors, directors and
consultants. The Company has reserved 400,000 shares of Common Stock under the
Stock Option Plan. Stock options under the Stock Option Plan are granted at
prices not less than the fair market value on the date of the grant.
Each non-employee Director was initially granted, on the date he became a
Director, options to purchase 25,000 shares of Common Stock. The options
become exercisable over three years and shall have a term of ten years from
the grant date. All such options have an exercise price not less than the per
share fair market value on the date of grant.
The Stock Option Plan is administered by the Stock Option Committee, which
has authority, subject to the terms of the Stock Option Plan, to determine the
individuals to whom options may be granted, the exercise price and number of
shares subject to each option, the character of the grant, the time or times
at which all or a portion of each option may be exercised, and certain other
provisions of each option.
5
<PAGE>
The purchase price of Common Stock upon exercise of incentive stock options
must not be less than the fair market value of the Common Stock at the date of
the grant or, in the case of incentive stock options issued to holders of more
than 10% of the outstanding Common Stock, 110% of the fair market value. The
maximum term of incentive stock options is ten years, or five years in the
case of 10% stockholders. The aggregate fair market value, on the date of the
grant, of the stock for which incentive stock options are exercisable for the
first time by an employee during any calendar year may not exceed $100,000.
Options are exercisable over a period of time in accordance with the terms of
option agreements entered into at the time of grant. Options granted under the
Stock Option Plan are generally nontransferable by the optionee during the
period of the optionee's employment or service with the Company or within a
specified period following the termination of employment or service.
As of March 15, 1997, the Company had granted options to purchase an
aggregate of 95,000 shares, net of cancellations, at a weighted average
exercise price of $5.36 per share. Of these 95,000 shares, 75,000 shares are
subject to options held by Directors and 12,000 shares are subject to options
held by executive officers of the Company. As of March 15, 1997, no options
had been exercised, so no shares had been purchased. Options granted through
March 15, 1997 to employees other than executive officers (covering an
aggregate of 8,000 shares, net of cancellations) pursuant to the Stock Option
Plan vest ratably each year over a three-year period commencing on the grant
date.
The Board of Directors may terminate, suspend or, subject to certain
restrictions, amend the Plan at any time.
INDEMNIFICATION AGREEMENTS
The Company's Certificate of Incorporation limits the liability of its
directors and officers. As permitted by the General Corporation Law of the
State of Delaware, directors and officers will not be liable to the Company
for monetary damages arising from a breach of their fiduciary duty as
directors in certain circumstances. Such limitation does not affect liability:
(i) for any breach of the director's or officer's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (iii)
pursuant to Section 174 of the General Corporation Law of the State of
Delaware (relating to unlawful payment of dividends or unlawful stock purchase
or redemption); or (iv) for any transaction from which such director or
officer derived an improper personal benefit. Such limitation of liability
also does not affect the availability of equitable remedies such as injunctive
relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the full extent permitted by Delaware law. In addition, the
Company has entered into indemnity agreements with each of its directors and
officers. The Company believes that these agreements and its Certificate of
Incorporation and Bylaw provisions regarding indemnification of directors and
officers are necessary to attract and retain qualified persons as directors
and officers. See "Certain Relationships and Related Transactions".
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, composed of a majority of outside directors, is
responsible for making recommendations to the Board regarding annual salaries
and other compensation of the officers of the Company and providing assistance
and recommendations with respect to the compensation policies and practices of
the Company. The current members of the Committee are Messrs. Bender, Costa,
and Peevey.
The goals of the Compensation Committee are to align executive officer
compensation with the Company's business performance and objectives, as well
as to enable the Company to attract, retain and reward well-qualified
executives, which the Compensation Committee believes are crucial to the
Company's long-term success. In support of these goals, the Committee's
general approach towards executive compensation is to pay cash salaries
commensurate with the executives' experience and expertise and, where
relevant, competitive with the salaries paid to executives in the electrical
industry in which the Company competes.
6
<PAGE>
In addition, the Compensation Committee may authorize the payment of
discretionary bonuses based upon an assessment of each executive's
contributions to the Company. While the Committee believes that, in general,
discretionary bonuses should be related to Company and executive performance,
specific performance criteria have not been established.
The Compensation Committee believes that stock ownership by key executives
provides a valuable incentive for such executives and helps align executives'
and stockholders' interests. To facilitate these objectives, the Company
adopted the Stock Option Plan, pursuant to which the Company may grant stock
options to executives (as well as other employees and Directors) to purchase
up to 400,000 shares of Common Stock. The options become exercisable over a
defined period of employment with the Company in order to encourage continued
employment with the Company. The Compensation Committee makes recommendations
to the Stock Option Committee, which administers the Plan, regarding option
grants to the Company's executive officers. The Compensation Committee
anticipates considering the granting of additional options to executives under
the Stock Option Plan in the near future.
Ilan Bender is the founder of the Company and has been the Company's chief
executive officer since its inception in 1965. Prior to the establishment of
the Compensation Committee in March 1996, the Board of Directors set Mr.
Bender's 1996 salary at the amount of $150,000, and he was not eligible for,
nor did he receive, a cash bonus in 1996. In determining Mr. Bender's future
level of compensation, the Compensation Committee in the future will evaluate
Company and individual performance, compensation paid to the Company's other
executive officers and total compensation (including salary, bonus and equity
compensation) paid to chief executive officers of comparable companies. Mr.
Bender will not participate in Compensation Committee deliberations or
recommendations relating to his compensation.
March 31, 1997 COMPENSATION COMMITTEE
Michael R. Peevey (Chairman)
Ilan Bender
Ronald Costa
7
<PAGE>
PERFORMANCE GRAPH
Set forth below is a comparison of the percentage change in total
shareholder return of the Company's Common Stock and the returns for the
NASDAQ National Market System and the NASDAQ Non-Financial Stocks Index. The
total shareholder return calculation is for the period commencing on March 18,
1996 (the date of the Company's initial public offering of Common Stock) and
includes the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN* AMONG THE COMPANY,
NASDAQ NON-FINANCIAL STOCKS INDEX & THE NASDAQ
NATIONAL MARKET SYSTEM INDEX**
<TABLE>
<CAPTION>
MARCH 18, 1996 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Company 100.00 70.00
NASDAQ 100.00 117.52
NASDAQ Non-Financial 100.00 115.68
</TABLE>
* ASSUMES $100 INVESTED ON MARCH 18, 1996 IN COMMON STOCK OF THE COMPANY,
NASDAQ NATIONAL MARKET SYSTEM INDEX, AND NASDAQ NON-FINANCIAL STOCKS INDEX
** TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
The above graph shows historical stock price performance (including
reinvestment of dividends) and is not necessarily indicative of future
performance.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 18, 1996, all of the outstanding capital stock of OCAL,
Incorporated ("Ocal Alabama"), Occidental Coating Company ("Occidental"), Ocal
Data Company ("Ocal Data"), and Ocal Transport Co. ("Ocal Transport") was
acquired by the Company through capital contributions by the respective
stockholders in exchange for an aggregate of 3,250,000 shares of the Company's
common stock (the "Reorganization"). Of the 3,250,000 shares issued, 3,212,599
were issued to executive officers and/or directors of the Company as follows:
Ilan Bender (3,068,479), Carlos V. Espinosa (132,109), and Carlos R. Espinosa
(12,011).
As part of this Reorganization, Ocal Alabama declared a $4,600,000
distribution to its former stockholders, Messrs. Bender, Carlos V. Espinosa,
and Carlos R. Espinosa, which represented estimated undistributed
S corporation retained earnings. The distribution was paid as follows:
(i) $1,600,000 was paid in cash on March 25, 1996; and
(ii) $3,000,000 in notes payable were issued, bearing interest at the
rate of 6.5% per annum, $1,500,000 of which are payable on September
18, 1997 and $1,500,000 of which are payable on March 18, 1999.
The amount of undistributed S corporation retained earnings as of March 18,
1996 was finalized as $4,900,000 after Ocal Alabama's income tax return for
the period from January 1, 1996 through March 18, 1996 was completed. The
additional $300,000 of distribution payable was paid in February 1997.
At December 31, 1995, there were outstanding loans and advances to the
Company made by Ilan Bender and persons affiliated with Mr. Bender, bearing
interest at 6.5% per annum. During 1995, Occidental loaned $1,609,572 to Mr.
Bender so that he could purchase a $2,000,000 certificate of deposit which was
used as a personal guarantee to secure the Company's revolving bank line of
credit. During March of 1996, in conjunction with the Reorganization, Mr.
Bender repaid the principal amount of $1,609,572 plus other outstanding loans
and advances and accrued interest of $35,000.
In the past, Mr. Bender made loans to Ocal Data which had an outstanding
principal amount of $377,000 at December 31, 1995. Ocal Data had made a prior
loan to an affiliated entity of Mr. Bender, with an outstanding principal
balance of $120,000 at December 31, 1995. Upon the Reorganization, the amount
owed by Ocal Data to Mr. Bender was offset by the amount owed by his
affiliated entity to Ocal Data, and the remaining $257,000 principal amount
owed by Ocal Data will be repaid to Mr. Bender on March 18, 1999.
Interest expense recognized by the Company related to the notes payable and
loans to Ocal Alabama and Ocal Data amounted to $170,000 in 1996.
Mr. Bender has personally guaranteed the payment of the Company's lease
obligations for its Mobile, Alabama manufacturing plant pursuant to a Personal
Guaranty, dated June 22, 1988, in favor of ADDSCO Industries, Inc.
The Company has entered into separate but identical indemnity agreements
(the "Indemnity Agreements") with each Director and executive officer of the
Company (the "Indemnitees"). The Indemnity Agreements provide that the Company
will indemnify each Indemnitee, to the fullest extent authorized or permitted
by law against payment of and liability for any and all expenses actually and
reasonably incurred by the Indemnitee, including, but not limited to,
judgments, fines, settlements and charges, costs, expenses of investigation
and expenses of defense of legal actions, suits, or proceedings payable by
reason of the fact that the Indemnitee is or was a director and/or officer of
the Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, in connection with the defense or settlement of
such proceedings, provided it is determined that the Indemnitee acted in good
faith and in a manner that he reasonably believed to be in or not opposed to
the best interests of the Company and, in the case of a criminal proceeding,
had no reasonable cause to believe that his conduct was unlawful. The
Indemnity Agreements also provide that all costs and expenses incurred by the
Indemnitee in defending or investigating such claim shall be paid by the
Company (and shall be paid by the Company in advance of the final disposition
thereof at the written request of the Indemnitee if the Indemnitee undertakes
to
9
<PAGE>
repay the Company for any costs or expenses so advanced if it shall ultimately
be determined by a court of competent jurisdiction in a final, nonappealable
adjudication that he is not entitled to indemnification under the Indemnity
Agreement) unless the Company, independent legal counsel or the stockholders
of the Company determine that: (i) the Indemnitee did not act in good faith
and in a manner that he reasonably believed to be in or not opposed to the
best interests of the Company; (ii) in the case of any criminal action or
proceeding, the Indemnitee had reasonable cause to believe his conduct was
unlawful; or (iii) the Indemnitee intentionally breached his duty to the
Company or its stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of March 1, 1997 information as to the
beneficial ownership of the Company's Common Stock by (i) each person who is
known by the Company to own beneficially more than 5% of its outstanding
shares of Common Stock (for whom addresses are also provided), (ii) each of
the Company's Directors, (iii) each Named Officer, and (iv) all executive
officers and Directors of the Company as a group. In each instance,
information as to the number of shares owned and the nature of ownership has
been provided by the individual or entity identified or described and is not
within the direct knowledge of the Company.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED CLASS(2)
--------------------------------------- ------------ --------
<S> <C> <C>
Ilan Bender.......................................... 3,066,379 53.1%
c/o Ocal, Inc.
14538 Keswick Street
Van Nuys, CA 91405
The Dreyfus Corporation.............................. 530,000(3) 9.2%
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, PA 15258
Ronald Costa......................................... -- *
Carlos R. Espinosa................................... 12,011 *
Carlos V. Espinosa................................... 132,109 2.3%
William T. Gross..................................... 1,000 *
Raymond S. Mackewicz................................. 2,500 *
Michael R. Peevey.................................... 8,333(4) *
All Directors and Executive Officers as a group (8
persons) ........................................... 3,223,332(4) 55.7%
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the Common Stock.
(1) Address provided for beneficial owners of more than 5% of the Common
Stock.
(2) Applicable percentages of beneficial ownership are based on 5,780,000
shares of Common Stock outstanding as of March 1, 1997. Additionally,
where applicable, shares of Common Stock underlying options exercisable by
any indicated person within 60 days of the Record Date have been deemed to
be outstanding and beneficially owned by such person for purposes of
determining the percentage of outstanding shares owned by such person or
such group of persons but not any other stockholder.
(3) The holder has advised the Company that it has sole voting power and
shared dispositive power to the shares reported.
(4) Includes 8,333 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date.
10
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Exchange Act, the officers and Directors of the
Company and certain shareholders beneficially owning more than 10% of the
Company's Common Stock ("Ten Percent Shareholders") are required to file with
the Securities and Exchange Commission and the Company reports of ownership,
and changes in ownership, of Company Common Stock. Based solely on a review of
the reports received by it, the Company believes that, during Fiscal 1996, all
of its officers and Directors and Ten Percent Shareholders complied with all
applicable filing requirements under Section 16(a).
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
(ITEM NO. 2 ON PROXY CARD)
In recognition of the important role of the independent auditor, the Board
of Directors has determined that its selection of the independent auditor for
the Company should be submitted to the Company's stockholders for ratification
on an annual basis. The Board of Directors, upon the recommendation of its
Audit Committee, has appointed Ernst & Young LLP to serve as the Company's
independent auditor for the year ending December 31, 1997, subject to
ratification by the Company's stockholders. Ernst & Young LLP conducted the
audit of the Company's financial statements for the year ended December 31,
1996. If the appointment is not ratified, the Board of Directors will appoint
another firm as the Company's independent auditor for the year ending
December 31, 1997. The Board of Directors also retains the power to appoint
another independent auditor for the Company to replace an auditor ratified by
the stockholders in the event the Board of Directors determines that the
interests of the Company require such a change.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting of Stockholders. Such representatives will have the opportunity
to make a statement if they so desire and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITOR OF
THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997.
OTHER
The Company does not know of any other business to be presented to the
Annual Meeting and does not intend to bring any other matters before the
Annual Meeting. However, if any other matters properly come before the Annual
Meeting, the persons named in the accompanying proxy are empowered, in the
absence of contrary instructions, to vote according to their best judgment.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy statement and
proxy card for the next Annual Meeting of Stockholders pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, stockholder proposals must be
received by the Secretary of the Company at its principal executive offices no
later than December 2, 1997. Stockholder nominations of Directors are not
stockholder proposals within the meaning of Rule 14a-8 and are not eligible
for inclusion in the Company's proxy statement.
11
<PAGE>
ANNUAL REPORT
The Company is delivering with this Proxy Statement a copy of its Annual
Report to Stockholders for 1996. However, it is not intended that the Annual
Report to Stockholders be a part of this Proxy Statement or a solicitation of
proxies.
By Order of the Board of Directors
/s/ Ilan Bender
Ilan Bender
Chairman of the Board,
President and Chief Executive Officer
Van Nuys, California
March 31, 1997
PLEASE PROMPTLY VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING. A RETURN SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE
UNITED STATES. A PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED. AT ANY TIME BEFORE A VOTE AT THE ANNUAL MEETING YOU MAY REVOKE
YOUR PROXY BY (1) A LATER DATED PROXY OR A WRITTEN NOTICE OF REVOCATION
DELIVERED TO THE INSPECTOR OF ELECTIONS OR (2) ADVISING THE INSPECTOR OF
ELECTIONS AT THE MEETING THAT YOU ELECT TO VOTE IN PERSON. ATTENDANCE AT THE
MEETING WILL NOT IN AND OF ITSELF REVOKE A PROXY.
THE ANNUAL MEETING IS ON APRIL 25, 1997. PLEASE RETURN YOUR PROXY IN TIME.
12
<PAGE>
PROXY OCAL, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS--APRIL 25, 1997
The undersigned hereby appoints Ilan Bender and Lida R. Frankel and each of
them (with full power to act without the other) the true and lawful proxies of
the undersigned, each having full power to substitute, to represent the
undersigned and to vote all shares of stock of Ocal, Inc. which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of Ocal, Inc. to be held at the Airtel Plaza Hotel, 7277 Valjean
Avenue, Van Nuys, California on Friday, April 25, 1997, at the hour of 10:00
a.m., local time.
1. FOR [_] WITHHOLD [_] election of the following nominees named in the
Proxy Statement as directors of the Company;
Ilan Bender, Ronald Costa, Carlos R. Espinosa, Carlos V. Espinosa,
William T. Gross, Michael R. Peevey
2. FOR [_] AGAINST [_] ABSTAIN [_] ratification of the appointment of
Ernst & Young as Ocal Inc.'s independent auditor for the year ending
December 31, 1997.
3. Upon all such other matters that may properly be brought before such
Annual Meeting, as to which the undersigned hereby confers discretionary
authority upon said proxies.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
WHEN PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED IN
ACCORDANCE WITH THE INSTRUCTIONS IN THIS PROXY. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL PROPOSALS AND FOR THE ELECTION OF ALL NOMINEES
NAMED AS DIRECTORS OF OCAL, INC. THE UNDERSIGNED MAY WITHHOLD AUTHORITY TO VOTE
FOR THE ELECTION OF ANY INDIVIDUAL NOMINEE BY LINING THROUGH THE NOMINEE'S NAME
ABOVE.
All other proxies heretofore given by the undersigned to vote shares of stock
of Ocal, Inc. which the undersigned would be entitled to vote if personally
present at said Annual Meeting or any adjournment thereof are hereby expressly
revoked. This proxy may be revoked at any time prior to the voting hereof.
NOTE: PLEASE DATE THIS PROXY AND SIGN IT EXACTLY AS YOUR NAME OR NAMES APPEAR
ON YOUR SHARES. IF SHARES ARE REGISTERED IN MORE THAN ONE NAME, ALL SUCH
PERSONS SHOULD SIGN. IF SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR,
GUARDIAN OR TRUSTEE, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER, STATING HIS OR HER
TITLE. IF A PARTNERSHIP, PLEASE SIGN IN THE PARTNERSHIP NAME BY AN AUTHORIZED
PERSON.
________________________________
(DATE)
________________________________
(SIGNATURE)
________________________________
(SIGNATURE)
TRANSFER AGENT = AMERICAN Stock Transfer CC--UR Head to Foot
