<PAGE>
EMONS TRANSPORTATION GROUP, INC.
96 SOUTH GEORGE STREET
YORK, PENNSYLVANIA 17401
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders to be held at 9:00 a.m., on November 19, 1998
at The Yorktowne Hotel, 48 East Market Street, York, Pennsylvania 17401 (the
"Meeting").
I look forward to greeting you personally. The accompanying Proxy Statement
describes the matters to be acted on at the Meeting, and I urge you to read it
carefully.
At the Meeting, your Board of Directors is recommending the election of
seven directors and the appointment of Arthur Andersen LLP as independent
public accountants. Your Board of Directors believes that the election of the
seven directors and the appointment of Arthur Andersen LLP as independent
public accountants are in the best interests of all stockholders and has
unanimously recommended that you vote "FOR" both proposals.
It is important that your shares be represented at the Meeting regardless
of the number of shares you may hold. In order for your vote to be counted,
you must sign, date and return the enclosed proxy card or attend the meeting
in person. I urge you to sign and return the enclosed proxy card promptly.
Sincerely,
Robert Grossman
Chairman, President
and Chief Executive Officer
York, Pennsylvania
October 14, 1998
<PAGE>
EMONS TRANSPORTATION GROUP, INC.
96 SOUTH GEORGE STREET
YORK, PENNSYLVANIA 17401
----------------
NOTICE OF 1998 ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD NOVEMBER 19, 1998
----------------
TO THE STOCKHOLDERS OF EMONS TRANSPORTATION GROUP, INC.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of Emons
Transportation Group, Inc. (the "Company") will be held on Thursday, November
19, 1998, at 9:00 a.m., local time, at The Yorktowne Hotel, 48 East Market
Street, York, Pennsylvania 17401, for the following purposes:
(1) To elect seven directors of the Company to serve for the ensuing year
and until their successors are elected and qualified;
(2) To ratify the appointment of Arthur Andersen LLP as independent public
accountants to examine the financial statements of the Company for its 1999
fiscal year; and
(3) To transact such other business as may properly come before the meeting
or any adjournments thereof.
Provision is made on the enclosed proxy card(s) for your direction as to the
matters set forth as items 1 and 2 above.
Only holders of the Company's Common Stock and $.14 Series A Cumulative
Convertible Preferred Stock of record at the close of business on September 24,
1998 are entitled to receive notice of and to vote at the Annual Meeting of
Stockholders and at all adjournments thereof.
A copy of the Company's Annual Report to Stockholders for the year ended
June 30, 1998 is enclosed herewith.
Whether or not you plan to attend the meeting in person, you are urged to
fill out, sign and mail promptly the enclosed proxy in the accompanying
envelope on which no postage is required if mailed in the United States.
By Order of the Board of Directors
--------------------------------------
Scott F. Ziegler
Secretary
York, Pennsylvania
October 14, 1998
<PAGE>
EMONS TRANSPORTATION GROUP, INC.
96 SOUTH GEORGE STREET
YORK, PENNSYLVANIA 17401
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 19, 1998
----------------
SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (sometimes hereinafter referred to as the
"Board") of Emons Transportation Group, Inc. (the "Company"), to be voted at
the annual meeting of stockholders to be held on November 19, 1998 (the
"Meeting"), at 9:00 a.m., local time, at The Yorktowne Hotel, 48 East Market
Street, York, Pennsylvania 17401, and at any postponement or adjournments
thereof, for the purposes set forth in the foregoing notice of the Meeting.
This Proxy Statement and the enclosed proxy are being sent to stockholders
commencing on or about October 14, 1998.
Solicitation will be primarily by mail but may also be made by personal
interview or by telephone, in each case by officers and regular employees of
the Company who will not be additionally compensated therefore. The Company
will request persons such as brokers, nominees and fiduciaries, holding stock
in their names for others, or holding stock for others who have the right to
give voting instructions, to forward proxy material to their principals and
request authority for the execution of the proxy. The total cost of soliciting
proxies will be borne by the Company.
VOTING
Holders of record at the close of business on September 24, 1998 (the
"Record Date") of Common Stock, par value $.01 per share, of the Company
("Common Stock") and $.14 Series A Cumulative Convertible Preferred Stock of
the Company ("Convertible Preferred Stock") will be entitled to vote at the
Meeting.
On the Record Date, there were 6,082,868 shares of Common Stock and
1,487,278 shares of Convertible Preferred Stock outstanding. Each share of
Common Stock and Convertible Preferred Stock outstanding on the Record Date
will be entitled to one vote at the Meeting, with the Common Stock and
Convertible Preferred Stock voting together as a single class. Holders of
Common Stock and Convertible Preferred Stock are not entitled to cumulate their
votes on any matter to be considered at the Meeting. The presence at the
Meeting, in person or by proxy, of the holders of a majority of the total
number of shares of Common Stock and Convertible Preferred Stock outstanding on
the Record Date constitutes a quorum for the transaction of business by such
holders at the Meeting.
At the Meeting, abstentions and broker non-votes (as hereinafter defined)
will be counted as present for the purpose of determining the presence of a
quorum. For the purpose of computing the vote required for approval of matters
to be voted on at the Meeting, shares held by stockholders who abstain from
voting will be treated as being "present" and "entitled to vote" on the matter
and, thus, an abstention has the same legal effect as a vote against the
matter, except that abstentions will have no effect on the election of
directors of the Company. However, in the case of a broker non-vote as to a
particular matter, such shares will not be treated as "present" and "entitled
to vote" on the matter and, thus, a broker non-vote will have no effect on the
outcome of the vote on the matter, except that, in the case of any matter which
requires the affirmative vote of a majority of the outstanding stock entitled
to vote, a broker non-vote will have the same legal effect as a vote against
the matter. A "broker non-vote" refers to shares represented at the Meeting in
person or by proxy by a broker or nominee where such broker or nominee (i) has
not received voting instructions on a particular matter from the beneficial
-1-
<PAGE>
owners or persons entitled to vote and (ii) the broker or nominee does not have
the discretionary voting power on such matter.
The holder of 1,295,831 shares of Common Stock and 572,342 shares of
Convertible Preferred Stock (or approximately 21% and 38% of the outstanding
Common Stock and Convertible Preferred Stock, respectively, entitled to vote at
the Meeting) has advised the Company that it intends to vote such shares, in
person or by proxy, proportionally in accordance with the votes cast by the
other holders of the outstanding Common Stock and Convertible Preferred Stock.
The holder holds such shares as escrow agent for holders of claims and
interests in Emons Industries, Inc., a direct wholly-owned subsidiary of the
Company ("Industries"), pursuant to the Second Amended and Restated Joint Plan
of Reorganization of Industries and ET Railcar Corporation dated November 10,
1986, and in such capacity has the right to vote such shares. See "PRINCIPAL
STOCKHOLDERS OF THE COMPANY".
Proxies in the enclosed form are solicited by the Board of Directors of the
Company in order to provide every stockholder an opportunity to vote on all
matters scheduled to come before the Meeting, whether or not the stockholder
attends in person. If proxies in the enclosed form are properly executed and
returned, the shares represented thereby will be voted at the Meeting in
accordance with the stockholder's directions. IN THE ABSENCE OF SPECIFIC
DIRECTIONS, PROPERLY EXECUTED PROXIES WILL BE VOTED "FOR" THE ELECTION OF SEVEN
DIRECTORS AND "FOR" THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS. A STOCKHOLDER WHO SUBMITS A PROXY MAY REVOKE
IT AT ANY TIME PRIOR TO THE VOTING OF THE PROXY BY WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY OR BY ATTENDING THE MEETING AND VOTING SUCH
STOCKHOLDER'S SHARES IN PERSON.
ELECTION OF DIRECTORS
The by-laws of the Company provide that the number of directors of the
Company shall be determined by the Board of Directors. The Board has set the
number of directors at seven. The directors are to be elected at the Meeting by
the holders of Common Stock and Convertible Preferred Stock, to hold office
until their successors have been elected and qualified. It is intended that,
unless authorization to do so is withheld, the proxies will be voted "FOR" the
election of the nominees named below. All of the seven nominees are now
directors of the Company. Each nominee has consented to be named in this Proxy
Statement and to serve as a director if elected. However, if any nominee shall
become unable to stand for election as a director at the Meeting, an event not
now anticipated by the Board, the proxy will be voted for a substitute
designated by the Board.
The nominees are listed on the following pages with brief statements of
their principal occupations and other information. All of the nominees for
director named below were elected by the stockholders to their present terms as
directors at the annual meeting in 1997.
<TABLE>
<CAPTION>
PRINCIPAL DIRECTOR
NOMINEE AGE OCCUPATION SINCE*
------- --- ---------- --------
<C> <C> <S> <C>
Michael J. Blake 55 Chairman of Med-Vision, Inc., Vallon, Inc., 1997
EdView, Inc. and Robinson, Blake, George &
Danzis, Inc.
Robert Grossman 57 Chairman of the Board, Chief Executive Officer 1972
and President of the Company
Kimberly A. Madigan 42 Principal of Chambers, Conlon & Hartwell 1995
Robert J. Smallacombe 65 President and Chief Executive Officer of 1983
Executive Advisory Group Ltd.
Alfred P. Smith 44 General Manager - Network Operations, 1992
Canadian National Railway Company
Dean H. Wise 44 Partner at Carlisle, Fagan, Gaskins & Wise, Inc. 1996
Scott F. Ziegler 42 Senior Vice President and Chief Financial 1997
Officer, Controller and Secretary of the Company
</TABLE>
*Dates set forth in this column include periods served as director of
Industries prior to the creation of the Company in 1986.
-2-
<PAGE>
MICHAEL J. BLAKE. Mr. Blake has been Chairman of Robinson, Blake, George &
Danzis, Inc., an investment firm, since December, 1992, Chairman of MedVision,
Inc., an imaging company, since April, 1994, Chairman of Vallon, Inc., a
Website developer, since November, 1995, and Chairman of EdView, Inc., an
internet software developer, since January, 1997. Mr. Blake has also been a
Director of the Minneapolis Grain Exchange, a futures exchange, since October,
1990. Mr. Blake was a Director of BDS Communications, Inc. from August, 1991 to
February, 1996. Mr. Blake was also Chairman of MedIntell Systems Corporation
from July, 1993 to April, 1995.
ROBERT GROSSMAN. Mr. Grossman, who devotes all of his business time to the
affairs of the Company, has been a Director and the Chairman of the Board and
Chief Executive Officer of the Company since its inception in December, 1986
and was President of the Company until September, 1996. In September, 1997, Mr.
Grossman reassumed the position of President of the Company. He is now, and for
more than five years has been, the Chairman of the Board, President, or Chief
Executive Officer of each direct or indirect wholly-owned subsidiary of the
Company except for Emons Finance Corp. Mr. Grossman has held various offices
with the Company and its subsidiaries since 1971.
KIMBERLY A. MADIGAN. Ms. Madigan has been a Principal of Chambers, Conlon &
Hartwell, a company which consults on transportation and government relations
issues, since December, 1993. Ms. Madigan also serves as the president of the
National Railroad Construction and Maintenance Association. Ms. Madigan was a
member of the National Mediation Board, which directs the actions and policies
of the government agency charged with the administration of the Railway Labor
Act, from August, 1990 to July, 1992 and Chairman of the National Mediation
Board from July, 1992 to December, 1993.
ROBERT J. SMALLACOMBE. Mr. Smallacombe has been President and Chief
Executive Officer of Executive Advisory Group Ltd., a consulting and management
services firm, since March, 1986. From June, 1996 through May, 1997, Mr.
Smallacombe had served as a Director for Northstar Rehabilitation, Inc.,
located in Indiana, Pennsylvania, and Chairman of its Audit Committee. He also
served as its Chief Executive Officer from April through May, 1997. Mr.
Smallacombe has been a Director of Allied Devices Corporation, located in
Baldwin, New York, since July, 1996. He was President and Chief Operating
Officer of O'Brien Environmental Energy, Inc., from September, 1994 to May,
1996. On September 28, 1994, O'Brien Environmental Energy, Inc., filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the District of New
Jersey. From February, 1993 to May, 1994 Mr. Smallacombe was Chief Executive
Officer of Cardinal Publishing, a publisher of church bulletins.
ALFRED P. SMITH. Mr. Smith has been General Manager - Network Operations of
Canadian National Railway Company since August, 1998 and was Assistant Chief of
Transportation of Canadian National Railway Company from September, 1997 until
August, 1998. Mr. Smith was the President and Chief Operating Officer of the
Company from September, 1996 to September, 1997 and the President of the
Maryland and Pennsylvania Railroad Company from January, 1987 to September,
1997 and Yorkrail, Inc. from December, 1987 to September, 1997. Mr. Smith was
the President and Chief Operating Officer of Maine Intermodal Transportation,
Inc. from 1994 to September, 1997 and the St. Lawrence & Atlantic Railroad
Company from May, 1989 to September, 1997. Mr. Smith was Executive Vice
President of the Company from September, 1992 to September, 1996 and was Vice
President of the Company from January, 1987 to September, 1992.
DEAN H. WISE. Mr. Wise has been a Partner with Carlisle, Fagan, Gaskins &
Wise, Inc., a management consulting firm based in Concord, Massachusetts
specializing in transportation and logistics services since April, 1995. Mr.
Wise held various positions, most recently as Vice President, at Mercer
Management Consulting, Inc., a management consulting firm, from July, 1983,
until March, 1995.
SCOTT F. ZIEGLER. Mr. Ziegler has been Senior Vice President and Chief
Financial Officer, Controller and Secretary since September, 1998, was Vice
President - Finance, Controller and Secretary of the Company from September,
1996 until September, 1998 and was Vice President, Controller and Secretary
from January, 1993 until September, 1996. Mr. Ziegler was the Director of
Finance of Master Power, Inc., a power tools manufacturing company, from
December, 1987 to January, 1993. Mr. Ziegler has been Vice President-Finance,
Controller and Secretary of each of the Company's subsidiaries except for Emons
Finance Corp. since November, 1996, and was Vice President, Controller and
Secretary of each of the Company's subsidiaries except for Emons Finance Corp.
from January, 1993 to November, 1996.
-3-
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has three standing committees: an Audit Committee, a
Management Compensation Committee and an Executive Committee.
AUDIT COMMITTEE. The Audit Committee is charged with recommending
appointment of the independent auditors, consulting with the independent
auditors, and reviewing the results of independent audits and the audit report
with the independent auditors engaged by the Company. Further, the Audit
Committee is empowered to make independent investigations and inquiries into
all financial reporting or other financial matters of the Company, as it deems
necessary. The members of the Audit Committee are Kimberly A. Madigan, Robert
J. Smallacombe and Dean H. Wise.
MANAGEMENT COMPENSATION COMMITTEE. The Management Compensation Committee
reviews, and recommends to the Board of Directors, the compensation of
executive officers of the Company and reviews and recommends to the Board of
Directors the adoption of any compensation plans in which officers are eligible
to participate. The Management Compensation Committee also administers the
Company's 1996 and 1986 Stock Option Plans, Incentive Compensation Plan and
1991 Restricted Stock Plan. The members of the Management Compensation
Committee are Kimberly A. Madigan, Robert J. Smallacombe and Dean H. Wise.
EXECUTIVE COMMITTEE. The Executive Committee has general authority over the
supervision and direction of the finances and business of the Company and has
the power and authority of the Board of Directors, except as limited by the
Company's Certificate of Incorporation, in the management of the business and
affairs of the Company between meetings of the Board of Directors. The members
of the Executive Committee are Robert Grossman, Scott F. Ziegler and Kimberly
A. Madigan.
During the fiscal year ended June 30, 1998, the Board of Directors of the
Company held four regularly scheduled meetings and one special meeting. The
Management Compensation Committee held five meetings, and the Audit Committee
held two meetings. The Executive Committee held no meetings. Each director who
is standing for re-election attended 100% of the aggregate number of meetings
of the Board of Directors and of the committees of the Board on which they
served except Mr. Smallacombe who missed one committee meeting.
The Company currently pays each director who is not a full-time employee of
the Company a yearly retainer of $10,000 and a fee of $500 for each Board
meeting attended or committee meeting attended which is not held on the same
day as a Board meeting. A fee of $250 is paid to each director who is not a
full-time employee for each telephonic Board meeting attended and for each
committee meeting held the same day as a meeting of the Board. During the 1998
fiscal year, non-employee directors Messrs. Smith and Blake have received
options to purchase 15,000 shares of Common Stock at an exercise price of
$3.2188 per share.
-4-
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITION WITH THE COMPANY
---- --- -----------------------------------
<C> <C> <S>
Robert Grossman 57 Chairman, President and Chief Executive Officer of the
Company and Chairman or President of each of its direct and
indirect wholly-owned subsidiaries except for Emons Finance
Corp.
Scott F. Ziegler 42 Senior Vice President and Chief Financial Officer,
Controller and Secretary of the Company and Vice
President - Finance, Controller and Secretary of each of
its direct and indirect wholly-owned subsidiaries except
for Emons Finance Corp.
Matthew C. Jacobson 37 Vice President of the Company, and President and Chief
Operating Officer of Maine Intermodal Transportation, Inc.
and St. Lawrence & Atlantic Railroad Company
Phillip A. DuPont 57 Vice President of the Company, and President and Chief
Operating Officer of Maryland and Pennsylvania Railroad
Company, Penn Eastern Rail Lines, Inc., Yorkrail, Inc. and
Emons Logistics Services, Inc.
</TABLE>
ROBERT GROSSMAN. For information regarding Mr. Grossman, see "ELECTION OF
DIRECTORS," above.
SCOTT F. ZIEGLER. For information regarding Mr. Ziegler, see "ELECTION OF
DIRECTORS," above.
MATTHEW C. JACOBSON. Mr. Jacobson has been a Vice President of the Company
since September, 1996 and has been President and Chief Operating Officer of
Maine Intermodal Transportation, Inc. and St. Lawrence & Atlantic Railroad
Company since June, 1998. Mr. Jacobson was Vice President of Maine Intermodal
Transportation, Inc. and St. Lawrence & Atlantic Railroad from May, 1996 until
June, 1998. Mr. Jacobson was an International Sales Manager of an affiliate of
Sea-Land Service, Inc. from August, 1995 to April, 1996. Mr. Jacobson was a
Market Manager from August, 1992 until December, 1993 and an Account Manager
from December, 1993 to August, 1995 of CSX Transportation, Inc. Mr. Jacobson
was a pilot, and most recently an instructor pilot, for the United States Air
Force from August, 1984 until February, 1993.
PHILLIP A. DUPONT. Mr. DuPont has been a Vice President of the Company since
September, 1997 and has been President and Chief Operating Officer of the
Maryland and Pennsylvania Railroad Company, Penn Eastern Rail Lines, Inc.,
Yorkrail, Inc. and Emons Logistics Services, Inc. since June, 1998. Mr. DuPont
was Vice President of the Maryland and Pennsylvania Railroad Company, Yorkrail,
Inc. and Emons Logistics Services, Inc. from September, 1997 until June, 1998
and was Vice President - Marketing of Penn Eastern Rail Lines, Inc. from
November, 1997 until June, 1998. Mr. DuPont was Logistics Manager of the
Company from November, 1996 to September, 1997. Mr. DuPont was a self-employed
transportation consultant from May, 1996 to November, 1996. Mr. DuPont was
employed by Conrail and its predecessors for over thirty years and was most
recently employed by Conrail as a Manager of Customer Development from
September, 1995 to May, 1996, an Account Executive from January, 1994 to
February, 1995 and Market Manager for the Metals Business Group from 1987 to
January, 1994.
The term of office of each officer expires at the first meeting of directors
of the Company following the Meeting.
-5-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation earned in
each of the Company's last three fiscal years by the Chief Executive Officer
and the other executive officers of the Company or its subsidiaries, whose cash
compensation exceeded $100,000 during the fiscal year ended June 30, 1998 (a
"Named Executive Officer").
<TABLE>
<CAPTION>
---------------------
LONG TERM COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- ------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK UNDERLYING LTIP COMPEN-
NAME AND FISCAL COMPENSATION AWARD(S) OPTIONS/ PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) ($) SARS(#) ($) ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Grossman, 1998 233,187 84,800 * --/1/ -- -- --
Chairman,
President and 1997 212,000 30,085 * -- 50,000 -- --
Chief Executive
Officer 1996 212,000 -- * -- -- -- --
- ------------------------------------------------------------------------------------------------------
Alfred P. Smith, 1998/2/ 33,316 -- * --/3/ -- -- --
President and
Chief Operating 1997 139,692 16,391 59,992 -- 50,000 -- --
Officer
1996 129,600 -- 31,471 -- -- -- --
- ------------------------------------------------------------------------------------------------------
Scott F. Ziegler, 1998 98,365 31,500 * --/4/ 15,000 -- --
Senior Vice
President and 1997 88,499 8,940 * -- 50,000 -- --
Chief Financial
Officer, Controller 1996 80,005 9,160 * -- -- -- --
and Secretary
- ------------------------------------------------------------------------------------------------------
Phillip A. DuPont, 1998 71,132 26,000 15,518/5/ 47,340/6/ 60,000 -- --
Vice President
1997 29,214 8,886 * 16,250 5,000 -- --
1996 -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------
Matthew C. 1998 85,450 24,000 15,295/7/ --/8/ 40,000 -- --
Jacobson, Vice
President 1997 77,553 3,769 11,152 109,375 10,000 -- --
1996 10,962 -- * -- 15,000 -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Denotes perquisites and other personal benefits, securities or property the
aggregate amount of which is the lesser of $50,000 or ten percent (10%) of the
total of annual salary and bonus reported.
/1/ As of September 24, 1998, Mr. Grossman had 87,500 vested and 37,500
unvested shares of Restricted Common Stock. Based on an average of the closing
bid and ask prices on June 30, 1998, the unvested shares of Restricted Common
Stock were valued at $2.875 per share.
/2/ In September, 1997, Mr. Smith ceased to be an executive officer of the
Company. Mr. Smith continues to serve as a Director of the Company.
/3/ As of September 24, 1998, Mr. Smith had 23,729 vested and no unvested
shares of Restricted Common Stock.
/4/ As of September 24, 1998, Mr. Ziegler had 17,500 vested and 17,500 unvested
shares of Restricted Common Stock. Based on an average of the closing bid and
ask prices on June 30, 1998, the unvested shares of Restricted Common Stock
were valued at $2.875 per share.
/5/ During the 1998 fiscal year, the Company paid $4,285 toward life insurance
benefits on behalf of Mr. DuPont. In the same period, Mr. DuPont received a
$6,901 automobile allowance from the Company.
/6/ As of September 24, 1998, Mr. DuPont had 8,000 vested and 27,000 unvested
shares of Restricted Common Stock. Based on an average of the closing bid and
ask prices on June 30, 1998, the unvested shares of Restricted Common Stock
were valued at $2.875 per share.
-6-
<PAGE>
/7/ During the 1998 fiscal year, Mr. Jacobson received a $14,144 automobile
allowance from the Company.
/8/ As of September 24, 1998, Mr. Jacobson had 7,000 vested and 28,000
unvested shares of Restricted Common Stock. Based on an average of the closing
bid and ask prices on June 30, 1998, the unvested shares of Restricted Common
Stock were valued at $2.875 per share.
No stock appreciation rights were granted to a Named Executive Officer by
the Company or its subsidiaries during the fiscal year ended June 30, 1998.
No awards were made to a Named Executive Officer of the Company or its
subsidiaries pursuant to a long-term incentive plan during the fiscal year
ended June 30, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTION/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED ($) FISCAL YEAR ($/SH) DATE
- ----------------------------------------------------------------------
Phillip A. DuPont 15,000/1/ 6.6 1.875 8/05/07
15,000/2/ 6.6 3.1563 9/18/07
15,000/3/ 6.6 3.9063 3/12/08
15,000/4/ 6.6 2.875 6/17/08
- ----------------------------------------------------------------------
Matthew C. Jacobson 25,000/1/ 11.1 1.875 8/05/07
15,000/5/ 6.6 2.875 6/17/08
- ----------------------------------------------------------------------
Scott F. Ziegler 15,000/5/ 6.6 2.875 6/17/08
======================================================================
/1/Options granted to Messrs. DuPont and Jacobson vest over a five year period
and become fully exercisable on August 5, 2002.
/2/ Options granted to Mr. DuPont vest over a five year period and become fully
exercisable on September 18, 2002.
/3/ Options granted to Mr. DuPont vest over a three year period and become
fully exercisable on March 12, 2001.
/4/ Options granted to Mr. DuPont vest over a three year period and become
fully exercisable on June 17, 2001.
/5/ Options granted to Messrs. Ziegler and Jacobson vest over a five year
period and become fully exercisable on June 17, 2003.
EMPLOYMENT AND TERMINATION AGREEMENT
On June 17, 1998, the Company entered into an amendment to the Amended and
Restated Employment Agreement (the "Amended Agreement") with Mr. Grossman to
employ him as the Company's Chairman of the Board and Chief Executive Officer
for a term commencing on December 31, 1997 and ending December 31, 2002, which
term shall be extended for additional one year terms unless sixty (60) days'
prior written notice of termination is given by Mr. Grossman or the Company.
The Amended Agreement also provides for an increase in Mr. Grossman's annual
salary. Pursuant to the terms of his employment agreement, if Mr. Grossman's
employment is terminated other than for due cause, death or disability, he
shall be entitled to a payment equal to twenty-four months' base salary at a
rate equal to the highest annualized rate in effect during the six months prior
to such termination. The Company shall also continue Mr. Grossman's health,
disability and life insurance benefits and car allowance for twenty-four months
after such termination. A change in control of the Company or constructive
demotion of Mr. Grossman by the Company may constitute a termination under his
employment agreement.
-7-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning beneficial ownership
of the Company's equity securities as of September 24, 1998, by each director
and each nominee for director individually and all nine directors and executive
officers as a group. No director or executive officer of the Company owns any
shares of Convertible Preferred Stock. Each non-employee director and each
executive officer of the Company has been granted options to purchase Common
Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER+ BENEFICIAL OWNERSHIP OF CLASS
-------------- ------------------------- -------------------- --------
<C> <C> <C> <S>
Common Stock Robert Grossman 509,814/1/ 8.01%
Common Stock Michael J. Blake 416,100/2/ 6.83%
Common Stock Scott F. Ziegler 86,000/3/ 1.40%
Common Stock Alfred P. Smith 82,500 1.36%
Common Stock Phillip A. DuPont 61,000/4/ 1.00%
Common Stock Robert J. Smallacombe 60,000/5/ *
Common Stock Kimberly A. Madigan 22,666/6/ *
Common Stock Dean H. Wise 28,333/7/ *
Common Stock All directors and officers 1,314,413/8/ 20.19%
as a group, (9 persons)
</TABLE>
None of the officers and directors of the Company engaged in securities
transactions for which they have failed to file, or failed to file on a timely
basis, Forms 4 or 5 with the Securities and Exchange Commission.
None of the current officers and directors of the Company failed to file, or
failed to file on a timely basis, a Form 3 with the Securities and Exchange
Commission stating that they have assumed the responsibilities of such
respective office.
- ----------------
*Percentage of shares beneficially owned does not exceed one percent of Common
Stock outstanding.
+ The address for all directors and executive officers is c/o Emons
Transportation Group, Inc., 96 South George Street, York, Pennsylvania 17401-
1436.
/1/ Includes (i) 1,000 shares owned by Mr. Grossman's wife, as to which Mr.
Grossman disclaims beneficial ownership; (ii) 37,500 shares of Restricted
Common Stock which have not vested as of September 24, 1998 and are subject to
risk of forfeiture; and (iii) currently exercisable options to purchase 50,000
shares of Common Stock at a price of $.906 per share, 225,000 shares of Common
Stock at a price of $1.0625 per share and 10,000 shares of Common Stock at a
price of $3.25 per share. Does not include unvested options to purchase 75,000
shares of Common Stock at a price of $1.0625 per share and 40,000 shares of
Common Stock at a price of $3.25 per share.
/2/ Includes options to purchase 5,000 shares of Common Stock at a price of
$3.2188 per share which are currently exercisable or will become exercisable
within 60 days. Does not include unvested options to purchase 10,000 shares of
Common Stock at a price of $3.2188 per share.
/3/ Includes (i) 17,500 shares of Restricted Common Stock which have not vested
as of September 24, 1998 and are subject to risk of forfeiture; and (ii)
currently exercisable options to purchase 25,000 shares of Common Stock at a
price of $.8125 per share, 15,000 shares of Common Stock at a price of $1.0625
per share and 10,000 shares of Common Stock at a price of $3.25 per share. Does
not include unvested options to purchase 10,000 shares of Common Stock at a
price of $1.0625 per share, 40,000 shares of Common Stock at a price of $3.25
per share, and 15,000 shares of Common Stock at a price of $2.875 per share.
/4/ Includes (i) 34,500 shares of Restricted Common Stock which have not vested
as of September 24, 1998 and are subject to risk of forfeiture, and (ii)
options to purchase 2,000 shares of Common Stock at a price of $2.5625 per
share, 3,000 shares of Common Stock at a price of $1.875 per share and 3,000
shares of Common Stock at a price of $3.1563 per share which are currently
exercisable or will become exercisable within 60 days. Does not include
unvested options to purchase 3,000 shares of Common Stock at a price of $2.5625
per share, 12,000
-8-
<PAGE>
shares of Common Stock at a price of $1.875 per share, 12,000 shares of Common
Stock at a price of $3.1563 per share, 15,000 shares of Common Stock at a price
of $3.9063 per share and 15,000 shares of Common Stock at a price of $2.875 per
share.
/5/ Includes currently exercisable options to purchase 10,000 shares of Common
Stock at a price of $.906 per share, 15,000 shares of Common Stock at a price
of $1.0625 per share and 5,000 shares of Common Stock at a price of $2.2813 per
share. Does not include unvested options to purchase 10,000 shares of Common
Stock at a price of $2.2813 per share.
/6/ Includes currently exercisable options to purchase 15,000 shares of Common
Stock at a price of $2.4375 per share and 6,666 shares of Common Stock at a
price of $1.375 per share. Does not include unvested options to purchase 3,334
shares of Common Stock at a price of $1.375 per share.
/7/ Includes currently exercisable options to purchase 10,000 shares of Common
Stock at a price of $1.6875 per share and 3,333 shares of Common Stock at a
price of $3.25 per share. Does not include unvested options to purchase 5,000
shares of Common Stock at a price of $1.6875 per share and 6,667 shares of
Common Stock at a price of $3.25 per share.
/8/ See notes 1 through 7 above. Includes (i) 28,000 shares of Restricted
Common Stock which have not vested as of September 24, 1998 and are subject to
risk of forfeiture, and (ii) currently exercisable options to purchase 6,000
shares of Common Stock at a price of $1.25 per share, 2,000 shares of Common
Stock at a price of $3.25 per share and 5,000 shares of Common Stock at a price
of $1.875 per share, held by one officer not named above. Does not include
unvested options to purchase 9,000 shares of Common Stock at a price of $1.25
per share, 8,000 shares of Common Stock at a price of $3.25 per share, 20,000
shares of Common Stock at a price of $1.875 per share and 15,000 shares of
Common Stock at a price of $2.875 per share, held by one officer not named
above.
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<PAGE>
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth certain information regarding ownership of
the Company's equity securities as of September 24, 1998 by each person who is
known to the Company to own beneficially more than 5% of its voting securities:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------- ----------------- --------
<C> <C> <C> <S>
Common Stock IBJ Schroder Bank & 1,295,831/1/ 21.30%
Trust Company
One State Street
New York, New York 10004
Convertible Preferred Stock IBJ Schroder Bank & 572,342/1/ 38.48%
Trust Company
One State Street
New York, New York 10004
Common Stock Robert Grossman 509,814 8.01%
96 South George Street
York, Pennsylvania 17401
Common Stock Chase Manhattan Bank 382,063 6.28%
One Chase Manhatten Plaza
10th Floor
New York, New York 10051
Convertible Preferred Stock Chase Manhattan Bank 157,096 10.56%
One Chase Manhatten Plaza
10th Floor
New York, New York 10051
Common Stock Michael J. Blake 416,100 6.83%
412 South Fourth Street
Suite 1200
Minneapolis, Minnesota 55415
Common Stock Reliance Insurance Company 255,567 4.20%
55 East 52nd Street
Park Avenue Plaza
New York, New York 10055
Convertible Preferred Stock Reliance Insurance Company 105,231 7.08%
55 East 52nd Street
Park Avenue Plaza
New York, New York 10055
Common Stock State of Michigan Retirement 235,954 3.88%
Systems
P.O. Box 30117
Treasury Building
Lansing, Michigan 48909
Convertible Preferred Stock State of Michigan Retirement 131,737 8.86%
Systems
P.O. Box 30117
Treasury Building
Lansing, Michigan 48909
</TABLE>
- ----------------
/1/ The Shares owned of record by IBJ Schroder Bank & Trust Company are owned
by it in its capacity as escrow agent (the "Escrow Agent") acting for and on
behalf of certain holders of claims and interests in Industries, pursuant to
the Second Amended and Restated Joint Plan of Reorganization of Industries and
ET Railcar Corporation dated November 10, 1986, (the "Plan"), which shares
shall be distributed on a quarterly basis
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<PAGE>
pro rata to holders of certain allowed claims under the Plan. The Escrow Agent,
as record owner of those shares, has the power to vote those shares and has
expressed its intention to vote such shares, in person or by proxy,
proportionally in accordance with the votes cast on each matter by the other
holders of the outstanding Common Stock and Convertible Preferred Stock. The
number of shares of Common Stock or Convertible Preferred Stock to be
distributed to any one holder of claims depends upon the resolution of certain
contingent liabilities of Industries. It is not possible to determine at this
time either the manner in which those contingent liabilities will be resolved
or the resulting disposition of the shares of Common Stock or Convertible
Preferred Stock currently held by the Escrow Agent. The Company knows of no
individual holder, other than the Escrow Agent, Robert Grossman, Chase
Manhattan Bank, Michael J. Blake, Reliance Insurance Company and State of
Michigan Retirement Systems who beneficially owns more than 5% of the Common
Stock or Convertible Preferred Stock.
To the knowledge of the Company, none of the beneficial owners of more than
10% of the Company's equity securities engaged in securities transactions for
which they have failed to file, or failed to file on a timely basis, Forms 4 or
5 with the Securities and Exchange Commission.
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<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected the firm of Arthur Andersen LLP as its independent
public accountants to audit the books and accounts of the Company for the 1999
fiscal year.
Although the appointment of independent public accountants is not required
to be ratified by the stockholders, the Board of Directors believes that the
stockholders should participate in the selection of the independent public
accountants through the ratification process. If such ratification is not
obtained, the Board will consider the appointment of other independent public
accountants for the following year.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and to have the opportunity to make a statement and to be available to
respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP.
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<PAGE>
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS
Pursuant to the by-laws of the Company, the Secretary of the Company must be
advised in writing of prospective nominations for election to the Board of
Directors at the Meeting not less than thirty days before the date fixed for
such Meeting.
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders of the Company must be received by the Company for
inclusion in the Company's Proxy Statement and form(s) of proxy relating to
such Meeting no later than June 12, 1999. In order to curtail controversy as to
the date on which a proposal was received by the Company, proponents should
submit their proposals by Certified Mail-Return Receipt Requested. Timely
receipt of a stockholder's proposal, however, will satisfy only one of various
requirements for inclusion in the Company's proxy materials.
DISCRETIONARY AUTHORITY
It is not intended to bring before the Meeting any matters except the
election of directors and the ratification of the appointment of Arthur
Andersen LLP as independent public accountants. Management is not aware at this
time of any other matters to be presented for action. If, however, any other
matters properly come before the Meeting, the persons named as proxies in the
enclosed form of proxy intend to vote in accordance with their judgment on the
matters presented.
OTHER MATTERS
On written request, the Company will promptly provide without charge to each
record or beneficial holder of the Company's Common Stock or Convertible
Preferred Stock as of the Record Date, a copy of the Company's Annual Report on
Form 10-K for the year ended June 30, 1998, as filed with the Securities and
Exchange Commission. Requests should be addressed to Investor Relations, Emons
Transportation Group, Inc., 96 South George Street, York, Pennsylvania 17401.
By Order of the Board of Directors
---------------------------------------
Scott F. Ziegler
Secretary
October 14, 1998
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