<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 transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO OF OCAL, INC.]
OCAL, INC.
14538 KESWICK STREET
VAN NUYS, CALIFORNIA 91405
April 3, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Ocal, Inc., to be held at 11:30 a.m. on Monday, May 18, 1998, at the Airtel
Plaza Hotel, 7277 Valjean Avenue, Van Nuys, California 91406.
At the meeting, you will be asked to vote on the following matters: First,
the election of six directors to the Ocal Board of Directors; and Second, the
ratification of Ernst & Young LLP as the Company's independent auditors for the
1998 calendar year. 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
Annual Meeting and the director nominees. We hope you will take the time to
study it carefully. Also enclosed is the Company's 1997 Annual Report to
Stockholders.
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 COMPLETE, SIGN, DATE 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.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1998
TO THE STOCKHOLDERS OF OCAL, INC.:
The 1998 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 Monday, May 18, 1998, at 11:30
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 auditors for the year ending
December 31, 1998; 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 foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record on the books of the Company as of the close of
business on April 1, 1998 will be entitled to notice of and to vote at the
Annual Meeting or any adjournments or postponements thereof. A list of such
stockholders entitled to vote will be available for inspection at the Annual
Meeting by any stockholder and, for 10 days prior to the Annual Meeting, at
the Company's offices at 14538 Keswick Street, Van Nuys, California 91405.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-paid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has already returned a proxy.
By Order of the Board of Directors
of the Company
/s/ Lida R. Frankel
Lida R. Frankel
Secretary
April 3, 1998
Van Nuys, California
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
OCAL, INC.
14538 KESWICK STREET
VAN NUYS, CALIFORNIA 91405
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of Ocal,
Inc. (the "Company"), for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Monday, May 18, 1998 at 11:30 a.m., local
time, and at any adjournment or postponement thereof, for the purposes set
forth in this Proxy Statement and in the accompanying Notice of Annual Meeting
of Stockholders. The Annual Meeting will be held at the Airtel Plaza Hotel,
7277 Valjean Avenue, Van Nuys, California 91406. The Company's telephone
number is (818) 782-0711. These proxy solicitation materials were first mailed
to stockholders of the Company on or about April 8, 1998.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on April 1, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting and
any adjournment or postponement thereof. At the Record Date, 5,681,000 shares
of the Company's Common Stock (the "Common Stock") were issued and
outstanding, held of record by 46 stockholders. At the Record Date, the
directors, executive officers, and other affiliates of the Company owned an
aggregate of 3,792,999 shares of Common Stock (66.8% of the shares entitled to
vote at the Annual Meeting).
VOTING AND SOLICITATION
On all matters to be voted on at the Annual Meeting, each Ocal stockholder
is entitled to one vote for each share of Common Stock held as of the Record
Date.
The accompanying Proxy Card is solicited on behalf of the Company's Board of
Directors. Stockholders are requested to complete, date, sign and return the
proxy in the accompanying envelope. All properly executed, returned, and
unrevoked proxies will be voted in accordance with the instructions indicated
thereon. EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR THE ELECTION OF EACH
DIRECTOR NOMINEE LISTED HEREIN AND FOR THE RATIFICATION OF ERNST & YOUNG LLP
AS THE COMPANY'S INDEPENDENT AUDITORS. The Board does not presently intend to
bring any business before the Annual Meeting other than the specific proposals
referred to in this Proxy Statement and specified in the Notice of Annual
Meeting of Stockholders. As to any business that may properly come before the
Annual Meeting, including any motion made for adjournment of the Annual
Meeting, the proxies will vote in their discretion.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for expenses incurred in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of
the Company's directors, officers and regular employees, without additional
compensation, by telephone, telegram, letter, facsimile, or in person.
<PAGE>
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company a written notice of revocation or a duly
executed proxy bearing a later date or (ii) attending the Annual Meeting and
voting in person.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST" or "WITHHELD" on a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter (other than the election of directors).
Accordingly, with the exception of the proposal for the election of directors,
abstentions will have the same effect as a vote against the proposal. Because
directors are elected by a plurality vote, abstentions in the election of
directors have no impact once a quorum exists.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Broker non-votes with respect to proposals set
forth in this Proxy Statement will therefore not be considered "Votes Cast"
and, accordingly, will not affect the determination as to whether the
requisite number of Votes Cast has been obtained with respect to a particular
matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are to be presented by such
stockholders at the Company's 1999 Annual Meeting must be received by the
Company no later than December 9, 1998 and must otherwise be in compliance
with applicable laws and regulations in order to be considered for inclusion
in the proxy statement and form of proxy relating to that meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date information relating to
the beneficial ownership of Common Stock by (i) each person who is known by
the Company to be the beneficial owner of more than 5% of the outstanding
shares of Common Stock (for whom addresses are also provided), (ii) each of
the Company's directors, (iii) each of the executive officers named in the
Summary Compensation Table appearing herein, and (iv) all executive officers
and directors of the Company as a group.
<TABLE>
<CAPTION>
PERCENT
NUMBER OF OF
NAME AND ADDRESS SHARES(1) TOTAL
---------------- --------- -------
<S> <C> <C>
Ilan Bender.............................................. 3,066,379 54.0%
c/o Ocal, Inc.
14538 Keswick Street
Van Nuys, CA 91405
Pioneering Management
Corporation(2).................................. 577,000 10.2%
60 State Street
Boston, MA 02109-1820
Carlos V. Espinosa....................................... 132,109 2.3%
Michael R. Peevey(3)..................................... 16,666 *
Carlos R. Espinosa....................................... 12,011 *
William T. Gross(4)...................................... 10,333 *
Ronald Costa(5).......................................... 8,333 *
Lida R. Frankel(6)....................................... 5,000 *
Raymond S. Mackewicz..................................... 2,500 *
All directors and executive officers as a group (8
persons)................................................ 3,253,331 57.3%
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes
voting or investment power with respect to the securities. In computing
the number of shares beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock subject to options held
by that person that will be exercisable on or before May 31, 1998, are
deemed outstanding. Such shares, however, are not deemed outstanding for
the purpose of computing the percentage ownership of any other person.
(2) Represents shares reported by Pioneering Management in its Schedule 13G
filed with the SEC on January 22, 1998.
(3) Includes 16,666 shares issuable upon exercise of stock options held by Mr.
Peevey which are currently exercisable or will become exercisable on or
before May 31, 1998.
(4) Includes 8,333 shares issuable upon exercise of stock options held by Mr.
Gross which are currently exercisable or will become exercisable on or
before May 31, 1998.
(5) Includes 8,333 shares issuable upon exercise of stock options held by Mr.
Costa which are currently exercisable or will become exercisable on or
before May 31, 1998.
(6) Includes 4,000 shares issuable upon exercise of stock options held by Ms.
Frankel which are currently exercisable or will become exercisable on or
before May 31, 1998.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of six (6) directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's nominees named below, all of whom
are presently directors of the Company. In the event that any nominee becomes
unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any nominee who shall be designated by the
present Board of Directors to fill the vacancy. The Company is not aware of
any nominee who will be unable or will decline to serve as a director. The
term of office of each person elected as a director will continue until the
next Annual Meeting of Stockholders and until a successor has been elected and
qualified. There are no arrangements or understandings between any director or
executive officer and any other person pursuant to which he is or was to be
selected as a director or officer of the Company.
The names of the nominees, and certain information about them as of the
Record Date, are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE SINCE PRINCIPAL OCCUPATION
--------------- --- -------- --------------------
<C> <C> <C> <S>
Ilan Bender (1) (3) 61 1965 Chairman of the Board, Chief
Executive Officer, and President
of the Company
Mr. Ronald Costa (1) (3) 66 1996 Chief Executive Officer,
Financial Data Communications
Mr. Carlos R. Espinosa 32 1996 Vice President of the Company
Mr. Carlos V. Espinosa 56 1976 Vice President of the Company
Mr. William T. Gross (1) (2) 68 1996 Independent Business Consultant
Mr. Michael R. Peevey (2) (3) 60 1996 President, New Energy Ventures
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Stock Option Committee.
(3) Member of the Compensation Committee.
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five (5) years and there
are no family relationships between any director or executive officer of the
Company.
Mr. Ilan Bender 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.
Mr. Ronald Costa has served as a director of the Company since June of 1996.
Since 1995, Mr. Costa has been Chief Executive Officer of Financial Data
Communications. From 1990 to 1995, he served as President of U-Corp.,
Incorporated. He also serves as a director of PKI, Inc.
Mr. Carlos R. Espinosa has most recently served as a director of the Company
since his appointment in June of 1996, and also served as a director from 1990
through October of 1995. He joined the Company as an employee in 1981 and
became Vice President of Research and Development in 1992. He is the son of
Mr. Carlos V. Espinosa.
Mr. Carlos V. Espinosa has served as a director of the Company since 1976.
He joined the Company in 1971. He became the plant manager in 1973 and has
served as the Company's Vice President of Manufacturing and as a director
since 1976. He is the father of Mr. Carlos R. Espinosa.
Mr. William T. Gross has served as a director of the Company since June of
1996. Since 1990, Mr. Gross has been an independent business consultant. Prior
to his retirement in 1989, he was employed by McDonnell
4
<PAGE>
Douglas Corporation in various management positions, including as President of
Douglas Aircraft Company. He also serves as a director of Cade Industries.
Mr. Michael R. Peevey has served as a director of the Company since March of
1996. Since 1995,Mr. Peevey has been President of New Energy Ventures. From
1993 to 1995, Mr. Peevey was an independent business consultant. From October
1990 until he retired in 1993, Mr. Peevey served as President of Southern
California Edison and SCE Corporation. Mr. Peevey also serves as a director
for Dames & Moore, Inc., Electro Rent Corporation and Amerigon Incorporated.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four (4) regular
meetings and three (3) special meetings and acted by unanimous written consent
on one occasion during 1997. No director serving during the year attended
fewer than 75% of the aggregate of all meetings of the Board of Directors and
the committees of the Board upon which such director served. The Board of
Directors has three committees, the Audit Committee, the Stock Option
Committee, and the Compensation Committee.
The Audit Committee of the Board of Directors currently consists of Messrs.
Bender, Costa, and Gross. This committee recommends engagement of the
Company's independent public accountants and is primarily responsible for
approving the services performed by the Company's independent public
accountants and for reviewing and evaluating the Company's accounting
principles and its system of internal accounting controls. The Audit Committee
held two (2) meetings during 1997.
The Stock Option Committee of the Board of Directors currently consists of
Messrs. Gross and Peevey. This 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 held two (2) meetings
and acted by unanimous written consent on one occasion during 1997.
The Compensation Committee of the Board of Directors currently consists of
Messrs. Bender, Costa, and Peevey. This committee is responsible for
establishing compensation guidelines for executives of the Company, reviewing
and approving executive bonuses, and providing guidance with respect to other
compensation issues, such as stock option grants. The Compensation Committee
held two (2) meetings during 1997.
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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".
DIRECTOR COMPENSATION
Directors who are not employees of the Company ("Outside Directors") are
paid $2,000 for each Board of Directors meeting attended. Outside Directors
are not compensated for their attendance at committee meetings, but may
receive consulting fees for projects completed at the request of management.
Employee directors are not compensated for their service on the Board of
Directors or on committees of the Board of Directors.
Options to purchase shares of Common Stock have been granted to Outside
Directors under the Company's Stock Option Plan. During the year ended
December 31, 1997, each Outside Director was granted options to
5
<PAGE>
purchase 10,000 shares of Common Stock at an exercise price of $3.1875 per
share. The options become exercisable over three years and have a term of ten
years from the grant date. As of the Record Date, a total of 105,000 options
had been granted to Outside Directors at a weighted average exercise price of
$4.93 per share and none of the options had been exercised.
On February 17, 1998, the Board of Directors adopted a resolution pursuant
to which all employees and directors have been or will be offered the
opportunity to cancel outstanding stock options with exercise prices in excess
of $2.375 per share in exchange for replacement options exercisable at $2.375
per share.
VOTE REQUIRED
The six nominees receiving the highest number of votes from holders of
shares of Common Stock represented and voting at the Annual Meeting will be
elected to the Board of Directors. Unless a nominee other than the nominees
listed above is properly nominated, abstentions and broker non-votes will not
be counted as represented or voting at the meeting and therefore will not have
an effect on the election of the nominees listed above.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
NOMINEES LISTED ABOVE.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the financial statements of the Company for the year ending December
31, 1998, and recommends that stockholders vote for ratification of such
appointment. In the event of a negative vote or ratification, the Board of
Directors will reconsider its selection. Ernst & Young LLP has audited the
Company's financial statements since the Company's initial public offering in
March of 1996. Representatives of Ernst & Young LLP are expected to be present
at the meeting with the opportunity to make a statement if they desire to do
so, and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
6
<PAGE>
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
---- --------
<C> <S>
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
Lida R. Frankel Chief Financial Officer and Secretary
</TABLE>
Background information for Mr. Bender, Mr. Carlos V. Espinosa, and Mr.
Carlos R. Espinosa is provided above. See "Election of Directors - Nominees."
Mr. Raymond S. Mackewicz, 49, joined the Company in March 1993 as its Vice
President of Marketing. From April 1988 to March 1993, Mr. Mackewicz served as
Southern Regional Sales Manager for Robroy Industries, Inc., the primary
competitor of the Company. From 1983 to 1987 he was employed as a
Specifications Manager for Burrus & Matthews, an electrical sales agency.
Ms. Lida R. Frankel, 37, joined the Company in August 1996 as its Chief
Financial Officer and also assumed the title of Corporate Secretary. From July
1995 to August of 1996, Ms. Frankel served as Director of Finance for
Whittaker Corporation. From 1994 to July 1995, she was Controller of Metric
Products, Inc. From 1990 to 1994, she was employed by ALTIUM, a wholly-owned
subsidiary of International Business Machines Corporation ("IBM") in various
positions including Director of Finance and Controller. Ms. Frankel is a
Certified Public Accountant.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the annual and long-term compensation of the
Company's Chief Executive Officer and the four additional most highly
compensated executive officers whose annual salaries and bonuses exceeded
$100,000 in total during the year ended December 31, 1997 (collectively, the
"Named Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(2)
---------------
ANNUAL SECURITIES
COMPENSATION(1) UNDERLYING ALL OTHER
NAME AND PRINCIPAL ------------------ STOCK COMPENSATION
POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)
- ------------------ ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Ilan Bender 1997 $166,587 $ -- -- $ --
Chairman, President and
CEO 1996 150,000 -- -- 27,354(3)
Carlos V. Espinosa 1997 $145,769 $32,500 12,000 $ --
Vice President of
Manufacturing 1996 130,000 32,500 -- --
Carlos R. Espinosa 1997 $116,866 $17,000 5,000 $ --
Vice President of
Research 1996 110,000 17,000 -- --
and Development
Raymond S. Mackewicz 1997 $110,000 $ 6,000 2,000 $ --
Vice President of
Marketing 1996 110,000 10,000 -- --
Lida R. Frankel (4) 1997 $110,850 $ 6,000 5,000 $ --
Chief Financial Officer
and Secretary
</TABLE>
- --------
(1) No perquisites are included since the aggregate amount is less than the
lesser of $50,000 or 10% of salary and bonus, in accordance with
regulations promulgated by the SEC.
(2) The Company has not granted any stock appreciation rights or restricted
stock awards and does not have any Long-Term Incentive Plans as that term
is defined in regulations promulgated by the SEC.
(3) Amount represents life insurance premiums paid on behalf of Mr. Bender.
(4) Ms. Frankel became Chief Financial Officer and Secretary of the Company on
August 12, 1996.
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. The Stock Option Plan is administered by the Stock Option
Committee, which has the 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.
The purchase price for the shares of Common Stock issuable upon exercise of
a stock option is determined by the Stock Option Committee at the time the
option is granted. However, the exercise price 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 stock options is ten years, or five years in the case of
incentive stock options granted to 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 vest 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
8
<PAGE>
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 December 31, 1997, the Company had granted options to purchase 155,500
shares, net of cancellations, at a weighted average exercise price of $4.51
per share. Of these 155,500 shares, 105,000 shares are subject to options held
by directors, 36,000 shares are subject to options held by executive officers
of the Company, and 14,500 shares are subject to options held by employees
other than executive officers. The options granted vest over a three-year
period commencing on the grant date, at a rate of 33.3% per year. As of
December 31, 1997, no options had been exercised, so no shares had been
purchased.
The Board of Directors may terminate, suspend or, subject to certain
restrictions, amend the Stock Option Plan at any time.
STOCK OPTION GRANTS IN 1997
The following table sets forth, for the Named Officers, information
concerning stock options granted during the year ended December 31, 1997. No
options were exercised by such executive officers during the year ended
December 31, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
--------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(1) ($/SHARE) DATE 5%($) 10%($)
---- ---------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ilan Bender -- -- $ -- -- $ -- $ --
Carlos V. Espinosa 12,000 39.3% 3.1875 7/21/07 24,000 60,960
Carlos R. Espinosa 5,000 16.4% 3.1875 7/21/07 10,000 25,400
Raymond S. Mackewicz 2,000 6.6% 3.1875 7/21/07 4,000 10,160
Lida R. Frankel 5,000 16.4% 3.1875 7/21/07 10,000 25,400
</TABLE>
- --------
(1) The Company granted options to purchase an aggregate of 6,500 shares to
all employees other than executive officers and granted options to
purchase an aggregate of 24,000 shares to all executive officers as a
group (5 persons) during the year ended December 31, 1997.
(2) Potential realizable value is based on an assumption that the price of the
Common Stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the ten (10) year option term.
Potential realizable value is shown net of exercise price. These amounts
are calculated based on the regulations promulgated by the SEC and do not
reflect the Company's estimate of future stock price growth.
FISCAL YEAR-END OPTION VALUES
The following table sets forth, for the Named Officers, information
concerning the value of unexercised options at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 (#) (1) DECEMBER 31, 1997 ($) (2)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ilan Bender -- -- $-- $--
Carlos V. Espinosa -- 12,000 -- --
Carlos R. Espinosa -- 5,000 -- --
Raymond S. Mackewicz -- 2,000 -- --
Lida R. Frankel 4,000 13,000 -- --
</TABLE>
- --------
(1) The Company has not granted any stock appreciation rights and its stock
plans do not provide for the granting of such rights.
(2) The market value of underlying securities is based on the difference
between the closing price of the Company's Common Stock on December 31,
1997 of $2.375 (as reported by Nasdaq National Market) and the exercise
price.
9
<PAGE>
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. Mr. Bender did not participate in Compensation Committee
deliberations or recommendations relating to his compensation.
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 is crucial to the
Company's long-term success. In support of these goals, the Committee's
general approach towards executive compensation is to pay compensation,
including salaries, bonuses and non-cash compensation, 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.
The Company's compensation program consists of both cash- and equity-based
compensation, which the Compensation Committee believes permits the Company to
attract, retain and motivate well-qualified executive officers and employees
who can enhance stockholder value and contribute to the success of the
Company. The components of the Company's compensation program are the
following:
Cash-Based Compensation
The Compensation Committee sets base salary guidelines and percentage
average annual merit increases on the basis of level of responsibility, prior
performance, the Committee's perception of the executive's ability to deliver
future performance and other factors. Compensation levels for competitive
positions in the Company's industry as well as geographic demographics are
considered in making this determination.
In addition, to further align its executives' compensation with the
Company's short- and long-term business strategies, management initiatives and
values, 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 yet been established.
Equity-Based Compensation
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 1995 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. In general, the options become
exercisable over a defined period 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.
10
<PAGE>
Compensation of Chief Executive Officer
The factors considered by the Compensation Committee in determining the
compensation of the Chief Executive Officer include 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. In April of 1997, the
Committee evaluated the performance of the Company and Mr. Bender for the past
year and recommended an increase in Mr. Bender's base salary to $175,000 per
year. No bonus or stock options were awarded to Mr. Bender during the year
ended December 31, 1997. Mr. Bender currently owns 54% of the outstanding
stock of the Company, and the Compensation Committee believes that he is
therefore sufficiently motivated to enhance stockholder value without
receiving additional stock options.
March 27, 1998 COMPENSATION COMMITTEE
Michael R. Peevey (Chairman)
Ilan Bender
Ronald Costa
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock with the cumulative total returns for the NASDAQ Stock Market
Index and the NASDAQ Non-Financial Stocks Index for the period commencing on
March 18, 1996 (the date of the Company's initial public offering of Common
Stock), assuming an investment of $100 and the reinvestment of any dividends.
No dividends have been declared or paid on the Common Stock during such
period. The stock price performance shown on the following graph is not
necessarily indicative of future price performance.
CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
3/18/1996 12/31/1996 12/31/1997
--------- ---------- ----------
<S> <C> <C> <C>
COMPANY...................................... $100.00 $ 70.00 $ 47.50
NASDAQ....................................... $100.00 $117.52 $144.27
NASDAQ NONFINANCIAL.......................... $100.00 $115.68 $135.86
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
and regulations of the SEC thereunder require the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of initial ownership and changes
in ownership with the SEC. Based solely upon a review of reports received by
the Company during or with respect to the year ended December 31, 1997
pursuant to Rule 16a-3(e) of the Exchange Act, all required reports on Form 3
and Form 4 were timely filed by the Company's directors, officers, and 10%
stockholders. Annual Reports on Form 5 for each of the Company's directors and
executive officers were filed on March 3, 1998, rather than on or before
February 15, 1998. Such Annual Reports disclosed no transactions in the
Company's common stock, but disclosed the receipt of stock options as
described elsewhere herein.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnity agreements with each of its directors
and officers that require the Company, among other things, to indemnify them
against certain liabilities which may arise by reason of their status or
service as directors or 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.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 18, 1996, all of the outstanding capital stock of OCAL, Incorporated
("Ocal Alabama"), Occidental Coating Company, Ocal Data Company ("Ocal Data"),
and Ocal Transport Co. 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").
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. Of this distribution, $1,600,000 was paid by the Company in
cash in March 1996 ($1,504,000 to Ilan Bender, $88,000 to Carlos V. Espinosa,
and $8,000 to Carlos R. Espinosa) and the remainder of the distribution was in
the form of $3,000,000 of interest-bearing notes payable ($2,820,000 to Ilan
Bender, $165,000 to Carlos V. Espinosa, and $15,000 to Carlos R. Espinosa). The
total amount of the distribution was finalized as $4,900,000 upon completion of
the final tax return for Ocal Alabama, and the additional $300,000 distribution
was paid in cash to the former stockholders in February 1997 ($282,000 to Ilan
Bender, $16,500 to Carlos V. Espinosa, and $1,500 to Carlos R. Espinosa). In
September of 1997, $1,500,000 principal amount of the notes was repaid in cash
and $1,500,000 principal amount of the notes (which is due on March 18, 1999)
remained outstanding at December 31, 1997.
Prior to the Reorganization, Mr. Bender had made loans to Ocal Data and Ocal
Data had made a loan to an affiliated entity of Mr. Bender. At the time of 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 to Mr. Bender (which is due on March 18,
1999) remained outstanding at December 31, 1997.
Interest expense related to the loans to the Company amounted to $184,000 in
1997.
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.
ANNUAL REPORT
The Company is delivering with this Proxy Statement a copy of its 1997 Annual
Report to Stockholders. 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 Directors
/s/ Ilan Bender
Ilan Bender
Chairman of the Board,
President and Chief Executive Officer
Van Nuys, California
April 3, 1998
13
<PAGE>
OCAL, INC.
ANNUAL MEETING OF STOCKHOLDERS--MAY 18, 1998
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 Monday, May 18, 1998, at the hour of 11:30
a.m., local time, and at any and all adjournments or postponements thereof.
1. To elect 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.
[_] FOR ALL NOMINEES LISTED ABOVE [_] WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS WITHHELD IN THE SPACE FOR ALL NOMINEES LISTED ABOVE
BELOW)
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided.
-----------------------------------------------------
2. To ratify the appointment of Ernst & Young LLP as Ocal, Inc.'s
independent auditors for the year ending December 31, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE SIGN AND DATE ON REVERSE SIDE.
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 HEREBY AUTHORIZES THE PROXIES
TO VOTE THIS PROXY ACCORDING TO THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
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.
-----------------------------------------------------
----------------------------------------
Date
----------------------------------------
Signature
----------------------------------------
Signature
(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.)
