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
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
ZING TECHNOLOGIES, INC.
-----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Henry A. Singer, Esq., Morrison Cohen Singer Weinstein, LLP
750 Lexington Avenue, New York, New York 10022
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $0.00 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(l), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / 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 transactions
applies:
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(2) Aggregate number of securities to which transactions
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
<PAGE>
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/ / Fee paid previously with preliminary materials
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/ / 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
ZING TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS OF ZING TECHNOLOGIES, INC.
The undersigned acknowledges receipt of a Notice of Annual Meeting and of
an accompanying Proxy Statement, and hereby appoints Deborah J. Schrader and
Martin S. Fawer, and either of them, proxies with several powers of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of ZING TECHNOLOGIES, INC. (the "Company"), to be held on January
11, 1999 or at any adjournment thereof, as indicated upon the following matters
as described in the Notice of Meeting and accompanying Proxy Statement:
1. For election of three nominees for director listed below (unless
authority to vote is withheld as to all nominees by crossing out this Item, or
as to any individual nominee by crossing out his name below) to serve in one of
the two existing classes of the Board of Directors for a term as described in
the accompanying Proxy Statement.
John F. Catrambone
Laurence W. Higgitt
Henry A. Singer
2. To approve the appointment of Ernst & Young LLP as the independent
public accountants for the Company.
/ / FOR / / AGAINST / / ABSTAIN
3. Upon any other business that may properly come before the meeting or any
adjournment thereof, including the election of directors not named as nominees
if any of such nominees shall be unable to serve as a director by reason of
death, incapacity or for any other reason or for good cause will not serve,
according to the number of votes and as fully as the undersigned would be
entitled to vote if personally present, hereby revoking any prior proxy or
proxies. If more than one of the above-named proxies shall be present in person
or by substitute, both of the proxies so present and voting shall have and
either may exercise all the powers hereby granted.
<PAGE>
Continued from other side
Said proxies will withhold the vote on the election of directors if so
instructed under Item 1.
IF NO INSTRUCTION IS INDICATED, SAID PROXIES WILL VOTE IN FAVOR OF THE NOMINEES
LISTED IN PROPOSAL 1 AND IN FAVOR OF PROPOSAL 2 AND WILL USE THEIR DISCRETION
WITH RESPECT TO ANY MATTERS REFERRED TO IN ITEM 3.
Dated: , 199
-------------------- -
Please Date
Signature(s):
------------------------------------
(Please sign under name exactly as it
appears on stock certificate)
___ Check here if you plan
to attend the meeting
<PAGE>
ZING TECHNOLOGIES, INC.
115 Stevens Avenue
Valhalla, New York 10595
(914) 747-7474
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 11, 1999
The Annual Meeting of Shareholders of Zing Technologies, Inc. (the
"Company") will be held at Westchester Marriott Hotel, 670 White Plains Road,
Tarrytown, New York 10591, on January 11, 1999 at 11:00 A.M., for the following
purposes:
1. To elect to the Board of Directors three members to serve in a
class the term of which will expire at the second succeeding Annual Meeting
of Shareholders and until their successors shall be elected and shall
qualify.
2. To approve the appointment of Ernst & Young LLP as the independent
public accountants for the Company.
3. To act upon any other business that may properly come before the
meeting.
The shareholders of record at the close of business on November 30, 1998
will be entitled to notice of and to vote at the Annual Meeting. The transfer
books of the Company will not be closed. Your attention is directed to the Proxy
Statement attached to this Notice for a discussion of the proposals to be acted
upon at the meeting.
Whether or not you plan to attend the meeting, kindly fill in, date and
sign the enclosed Proxy exactly as your name appears on your stock certificate,
and mail it promptly in the enclosed return envelope in order that your vote can
be recorded. The giving of this Proxy will not affect your right to vote in
person in the event you find it convenient to attend the meeting.
By Order of the Board of Directors
Deborah J. Schrader
Secretary
Dated: December 11, 1998
<PAGE>
ZING TECHNOLOGIES, INC.
115 Stevens Avenue
Valhalla, New York 10595
(914) 747-7474
PROXY STATEMENT
Solicitation and Use of Proxy
The enclosed Proxy is solicited by the Board of Directors of Zing
Technologies, Inc. (the "Company" or "Zing") for use at the Annual Meeting of
Shareholders of the Company to be held on January 11, 1999 or at any
adjournments thereof, for the purposes set forth in the attached Notice of
Meeting. This Proxy Statement and the Annual Report of the Company for the
fiscal year ended June 30, 1998 are being mailed to shareholders on or about
December 11, 1998. The Company previously mailed to shareholders the Quarterly
Report on Form 10-QSB for the fiscal quarter and the nine-month period ended
March 31, 1998.
The shares of common stock represented by each duly executed proxy received
by the Board of Directors before the Annual Meeting will be voted at the Annual
Meeting as specified in the proxy. A stockholder may withhold authority to vote
for all of the nominees by striking a line through such nominees' names in the
appropriate space on the accompanying proxy card or withhold authority to vote
for any individual nominee by striking a line through such nominee's name in the
appropriate space on the accompanying proxy card. UNLESS INSTRUCTIONS TO THE
CONTRARY ARE GIVEN, EACH PROPERLY EXECUTED PROXY WILL BE VOTED FOR (i) THE
ELECTION OF DIRECTORS NAMED IN THIS PROXY STATEMENT AND THE FORM OF PROXY AND
(ii) THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
Any shareholder giving a Proxy may nevertheless revoke it at any time prior
to its use at the Meeting by filing with the Secretary of the Company an
instrument revoking it or by a duly executed proxy bearing a later date. In
addition, if the person executing the proxy is present at the meeting, he or she
may vote his or her shares in person. Proxies, if duly signed and received in
time for voting, and not so revoked, will be voted at the meeting. Where choices
are specified by a shareholder by means of the ballot provided on the Proxy for
that purpose, the Proxy will be voted in accordance with such specifications. In
the absence of such specifications, the Proxy will be voted for the election of
the three directors nominated by management to the class herein described and
the appointment of auditors selected by the Board of Directors as set forth in
this Proxy Statement.
Under New York State law and the Charter and By-Laws of the Company for
purposes of determining whether a quorum is present, abstentions will be counted
and broker non-votes will not be counted. For purposes of determining whether
the vote required for the election of directors and for the appointment of
auditors selected by the Board of Directors, as set forth in this Proxy
Statement has been achieved, abstentions and broker non-votes will not be
counted.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by the use of the mails, certain officers and regular employees of
the Company may solicit proxies personally and by telephone. The Company may
request banks, brokerage houses and custodians, nominees and fiduciaries to
forward soliciting material to their principals and will reimburse them for
their out-of-pocket expenses. The Company has also retained the firm of Regan &
Associates, Inc. to assist in solicitations for a fee of $2,000 plus
out-of-pocket disbursements.
<PAGE>
Outstanding Shares and Voting Rights
As of November 30, 1998, the record date fixed for the determination of
shareholders entitled to vote at the Annual Meeting, there were outstanding
2,405,443 shares of common stock (excluding 652,594 shares held in treasury),
par value $.01 per share, which constitute the only outstanding securities of
the Company having voting rights. Each outstanding share of common stock is
entitled to one vote on each matter to be voted upon. One-third of the shares of
common stock represented in person or by proxy will constitute a quorum for the
transaction of business.
SECURITY OWNERSHIP
Principal Security Holders
The following table sets forth, as at November 30, 1998, information
concerning the beneficial ownership of voting securities of the Company by each
person who is known by management to own beneficially more than 5% of any class
of such securities:
<TABLE>
<CAPTION>
Name and Address Amount Benefi- Percent of
Title of Class of Beneficial Owner cially Owned Class
- -------------- ------------------- -------------- ----------
<S> <C> <C> <C>
Common Robert E. Schrader 1,152,711 47.92%
72 Haight Crossroad
Chappaqua, NY 10514
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and By-Laws provide for a Board
of Directors consisting of not fewer than six nor more than ten members,
classified into three classes if there shall be nine or more directors, or two
classes if there shall be fewer than nine directors, in either case with each
class being as nearly as possible equal in size to the others and with at least
three directors in each class. The Board of Directors is comprised of the
following members in the following classes:
CLASS I CLASS II
(To Serve Until the (To Serve Until the
Annual Meeting of Annual Meeting of
Shareholders following Shareholders following
Fiscal Year 1999) Fiscal Year 2000)
Robert E. Schrader Henry A. Singer
Deborah J. Schrader John F. Catrambone
Martin S. Fawer Laurence W. Higgitt
Under Proposal Number 1, therefore, shareholders will be asked to vote for
three nominees to Class II to serve until the second succeeding meeting of the
shareholders to be held following the Company's Fiscal Year 2000. The Class II
nominees are Henry A. Singer, John F. Catrambone and Laurence W. Higgitt. This
proposal requires the affirmative vote of a plurality of those authorized to
vote who are present at the Annual Meeting in person or by proxy.
At each annual meeting, the class of directors whose term expires at such
meeting is to stand for election for a staggered two-year term ending the second
annual meeting following such class election. The following table sets forth
certain information concerning the nominees for directors, the directors and the
executive officers of the Company.
2
<PAGE>
<TABLE>
<CAPTION>
Director of
Name, Age, Position with the Company, Experience, Other Directorships Zing Since
- --------------------------------------------------------------------- -----------
<S> <C>
JOHN F. CATRAMBONE, 58, has been President and Chief Executive Officer of 1986
Omnirel Corporation, a manufacturer of power hybrid semiconductor devices
since 1985. Omnirel has been a subsidiary of the Company since June 1991.
MARTIN S. FAWER, 64, became Chief Financial Officer and Treasurer in February 1984
1988. From October 1984 to January 1988 Mr. Fawer was Treasurer of the Company.
He is also a director and serves as the Chief Financial Officer and Treasurer of
Transition Analysis Component Technology, Inc. and Omnirel, both subsidiaries of
the Company. For more than five years, Mr. Fawer has been a principal of The
Fawer Group, P.C. and its predecessors, certified public accountants.
LAURENCE W. HIGGITT, 53, has been employed by Stephen Rose & Partners, Limited, 1985
investment bankers, in London, England since 1984 and has been on its Board of
Directors since 1985. Prior to 1984, he was a fund manager for Lazard Brothers &
Co. Ltd., merchant bankers, London, England.
DEBORAH J. SCHRADER, 51, has been Secretary of the Company since its 1969
incorporation. She is also the Secretary and a director of Transition Analysis
Component Technology, Inc., a subsidiary of the Company. She is the wife of
Robert E. Schrader.
ROBERT E. SCHRADER, 54, is the founder of the Company and has been President and 1969
Chief Executive Officer since its incorporation in 1969. Prior to organizing the
Company, Mr. Schrader was an account executive with a division of Lafayette
Radio Corporation, a district sales manager of Arrow Electronics, Inc. and held
purchasing manager positions with two electronic equipment manufacturers. He is
also a director and vice-president of Transition Analysis Component Technology,
Inc. and Omnirel Corporation, each a subsidiary of the Company. He is the
husband of Deborah J. Schrader.
HENRY A. SINGER, 60, has been a member of the law firm of Morrison Cohen Singer 1988
& Weinstein, LLP and its predecessor for more than the past five years. Morrison
Cohen Singer & Weinstein, LLP serves as general counsel to the Company.
</TABLE>
Board Committees and Meetings
The Company maintains standing audit, executive and compensation committees
of the Board of Directors, but does not maintain a nominating committee. Each
committee was created on July 31, 1985. The members of the audit committee are
Laurence W. Higgitt, Henry A. Singer and Martin S. Fawer. The audit committee,
which met once during the fiscal year ended June 30, 1998 (the "1998 Fiscal
Year" and each fiscal year ended June 30, a "Fiscal Year"), and is scheduled to
meet again on January 11, 1999, is responsible for assuring that management
fulfills its financial reporting responsibilities and will meet periodically
with representatives of management and with the Company's independent auditors.
The members of the compensation committee during the 1998 Fiscal Year were
Martin S. Fawer, Laurence W. Higgitt and Henry A. Singer. The compensation
committee, which met once during the 1998 Fiscal Year, is responsible for
reviewing levels and methods of executive compensation and making
recommendations to the Board. The members of the executive committee are Robert
E. Schrader, Deborah J. Schrader and Martin S. Fawer. The executive committee,
which met twice during the 1998 Fiscal Year, is responsible for acting as
required when the full board is unavailable for deliberation. The Company also
maintains a stock option committee, whose members during the 1998 Fiscal Year
were Robert E. Schrader and Henry A. Singer. The stock option committee did not
meet during the 1998 Fiscal Year. The stock option Committee has responsibility
to designate optionees under the Company's 1982 Incentive Stock Plan, the
3
<PAGE>
exercise price of the options, the date of grant and period of the options, and
other terms and conditions. None of the members of the stock option committee is
eligible to receive options while serving in such capacity. The Board of
Directors met two times during the 1998 Fiscal Year. With the exception of
Deborah J. Schrader who attended one of the two Board meetings, all of the
directors attended at least 75% of the Board's meetings.
Security Ownership of Management
The following table sets forth, as at November 30, 1998 information
concerning the beneficial ownership of voting securities of the Company by all
current directors individually, by the Chief Executive Officer and the executive
officers of the Company whose total annual salary and bonus exceeded $100,000 in
the 1998 Fiscal Year, and by all directors and officers as a group:
<TABLE>
<CAPTION>
- ----------------------------------------------- ------------------- -------
Amount of
Common Stock Percent
Beneficially Owned of Class
- ----------------------------------------------- ------------------- -------
<S> <C> <C>
John F. Catrambone 209,500 8.71%
- ----------------------------------------------- ------------------- -------
Martin S. Fawer - 0 - 0%
- ----------------------------------------------- ------------------- -------
Laurence W. Higgitt 3,000 *
- ----------------------------------------------- ------------------- -------
Henry A. Singer 3,000(1) *
- ----------------------------------------------- ------------------- -------
Deborah J. Schrader 1,152,711(2) 47.92%
- ----------------------------------------------- ------------------- -------
Robert E. Schrader 1,152,711 47.92%
- ----------------------------------------------- ------------------- -------
All Officers and Directors
as a Group (6 persons,
including two such persons
who own no shares individually) 1,368,211 56.63%
- ----------------------------------------------- ------------------- -------
</TABLE>
- -----------------------
(*) Represents less than 1% of the shares outstanding.
(1) Represents shares owned by Morrison Cohen Singer & Weinstein, LLP.
(2) Beneficial ownership of Mr. Schrader's shares only. No shares held
directly.
Robert E. Schrader, Deborah J. Schrader and Martin S. Fawer are directors
of Transition Analysis Component Technology, Inc. No other director is a
director of any company with a class of securities registered pursuant to
Section 12 of the Act or of any company registered as an Investment Company
under the Investment Company Act of 1940. Other than Robert E. Schrader and
Deborah J. Schrader, who are married to each other, there is no family
relationship among any of the members of the Board of Directors or the officers
of the Company.
4
<PAGE>
Compensation of Directors and Executive Officers
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth a summary for the last three (3) fiscal
years of the cash compensation paid by the Company and its subsidiaries as well
as certain other compensation paid or accrued for those years, to the Chief
Executive Officer and the only two executive officers of the Company whose total
annual salary and bonus exceeded $100,000 in the 1998 Fiscal Year (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Name and -------------------- All Other
Principal Position Year Salary Bonus Compensation(1)
- ------------------ ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Robert E. Schrader 1998 $250,000 $100,000 $1,800
President, Chief Executive Officer and 1997 $225,000 $ 25,000 $1,800
Chairman of the Board 1996 $150,000 $165,000 $1,800
John F. Catrambone(2) 1998 $154,166 $101,250 $5,334
President of Omnirel Corporation 1997 $150,000 $121,000 $1,049,829
1996 $213,275 $121,000 $4,684
Martin S. Fawer 1998 $112,500 $ -0- $9,600
Chief Financial Officer 1997 $ 75,000 $ 86,000 $9,600
1996 $ 75,000 $ 49,000 $9,600
</TABLE>
(1) The amounts reflect the following payments of annual life insurance
premiums in the 1996 Fiscal Year, 1997 Fiscal Year and 1998 Fiscal Year: $1,800
in each such year on behalf of Mr. Robert E. Schrader; and $4,684, $4,579 and
$5,334, respectively, on behalf of Mr. John F. Catrambone. Mr. Fawer receives an
annual automobile allowance of $9,600. See also footnote number 2 below with
respect to Mr. John F. Catrambone and the 1997 Fiscal Year.
(2) The bonus amounts for Mr. Catrambone in each of the 1996 Fiscal Year,
1997 Fiscal Year and 1998 Fiscal Year include (i) $18,900, 15,300 and $15,300,
respectively, representing interest imputed at 9% per annum on the $250,000
interest free loan provided by the Company to Mr. Catrambone for the purchase of
the Company's common stock ($80,000 of this loan was repaid in the 1996 Fiscal
Year) and (ii) an annual bonus awarded pursuant to his employment agreement. The
"All Other Compensation" amount in the 1997 Fiscal Year for Mr. Catrambone
includes $1,045,250 resulting from the issuance of the Company's common stock in
exchange for Mr. Catrambone's options to purchase shares of the Company's
Omnirel subsidiary common stock in connection with the Company's acquisition of
all minority interests in its Omnirel subsidiary on June 30, 1997. As a result,
the Company incurred a pretax charge against earnings equal to the value of the
shares issued in exchange for the options held.
The above amounts do not include certain personal benefits, which do not
exceed, as to any executive officer identified above, 10% of his total Annual
Compensation.
5
<PAGE>
GRANTS OF WARRANTS
During the 1998 Fiscal Year, no warrants, options or stock appreciation
rights in the Company were granted to any Named Executive Officer.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
During the 1998 Fiscal Year, no warrants, options or stock appreciation
rights in the Company were exercised by any Named Executive Officer.
COMPENSATION OF DIRECTORS
The Company pays each director who is not an officer or employee of the
Company (other than Henry A. Singer) $4,000 per year for his services as a
director plus $250 for each Board of Directors meeting attended and for each
Committee meeting attended if not held on the same day as a Board meeting. Mr.
Singer does not receive such fee since the firm of which he is a partner is paid
its customary legal fees for Mr. Singer's attendance and participation. See
"Compensation Committee Interlocks and Insider Participation", below.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
John Catrambone has an employment agreement with the Company's Omnirel
subsidiary. The agreement, the term of which is set to expire on June 30, 2000,
provides for a base salary of $175,000 per year and an incentive bonus linked to
a set of performance criteria determined annually by Omnirel's Board of
Directors and subject to percentage limitations of Mr. Catrambone's base salary
(90% for the 1998 Fiscal Year). Mr. Catrambone was also loaned $300,000 by the
Company in connection with the purchase of Omnirel by the Company, such loan was
repaid from Mr. Catrambone's annual guaranteed bonus which bonus is no longer a
part of Mr. Catrambone's compensation. The Company has guaranteed the base
compensation payments under such employment agreement to Mr. Catrambone. The
Company also loaned Mr. Catrambone $250,000, without interest, to purchase
shares of the Company's common stock. Such loan, which is due in June, 2001, is
secured by the stock so purchased by Mr. Catrambone. No principal repayments
were made during the 1998 Fiscal Year and at the end of the 1998 Fiscal Year
there was a principal balance of $170,000 remaining on such note.
Mr. Schrader does not have an employment agreement with the Company and his
compensation is set by the Compensation Committee subject to the approval of the
Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the 1998 Fiscal Year were
Martin S. Fawer, Laurence W. Higgitt and Henry A. Singer. Henry A. Singer, a
director of the Company during the 1998 Fiscal Year, is a partner of Morrison
Cohen Singer & Weinstein, LLP, counsel to the Company. The amount paid to such
firm in the 1998 Fiscal Year was less than 5% of such firm's gross revenues.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for reviewing levels and methods
of executive compensation and making recommendations to the Board of Directors.
Such recommendations were made in the past primarily based upon comparisons of
executive compensation in other comparable companies engaged in the distribution
of high reliability electronic components.
6
<PAGE>
The comparable companies which were reviewed by the Compensation Committee
in the 1998 Fiscal Year included only in part those companies which are included
in the Dow Jones Semiconductors and Related Index. The other comparable
companies chosen were based upon those having a more comparable size to that of
the Company. When the bonuses described below are included in total annual
compensation, the compensation levels for the Company's executives are above the
average range of compensation of these comparable companies.
The Compensation Committee met once in the 1998 Fiscal Year. In reviewing
executive compensation issues, the Committee concurred in management's decision
to set Mr. Schrader's 1998 Fiscal Year base salary at the level of his Fiscal
Year 1997 base salary plus the $25,000 bonus paid in Fiscal Year 1997 in respect
of Fiscal Year 1996; to increase Mr. Fawer's base salary to $120,000 and to pay
Mr. Schrader a bonus of $100,000 in respect of the 1997 Fiscal Year payable in
accordance with the Company's normal payroll practices. Mr. Fawer abstained from
deliberations and discussions regarding his compensation.
In setting Mr. Schrader's base salary for the 1998 Fiscal Year, the
Compensation Committee noted that Mr. Schrader was responsible for the Company's
investment portfolio. Furthermore, it was difficult to determine base salary for
Mr. Schrader since he is the chief executive officer of what essentially is a
holding company.
The Zing Technologies, Inc. Compensation Committee
Martin S. Fawer
Laurence W. Higgitt
Henry A. Singer
With respect to Mr. Catrambone, the Omnirel Board of Directors (with Mr.
Catrambone abstaining) established performance criteria for his incentive bonus
in accordance with his employment agreement. Such performance criteria include
the amount of increase in Omnirel's pre-tax profit and the amount of reduction
in Omnirel's indebtedness to the Company. The amount of the bonus, in each case,
is based upon the percentage of the goal achieved. During the 1998 Fiscal Year,
Mr. Catrambone was given a specific mandate to increase Omnirel's pre-tax
profits and to use the corresponding increase in cash flows to better manage
Omnirel's balance sheet by reducing its debt. As a result of Omnirel's achieving
certain performance objectives established by Omnirel's Board for the 1997
Fiscal Year, Mr. Catrambone received his full $121,000 performance bonus under
his employment agreement in the 1998 Fiscal Year, of which amount $101,250 was
paid during the 1998 Fiscal Year.
Omnirel Corporation Board of Directors
Robert E. Schrader
Martin S. Fawer
John F. Catrambone
INTEREST IN CERTAIN TRANSACTIONS OF DIRECTORS,
OFFICERS AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The Company paid Morrison Cohen Singer & Weinstein, LLP, of which Henry A.
Singer, a director of the Company, is a partner, $229,175 for legal services
rendered to the Company in the 1998 Fiscal Year. In June, 1995, the Company
advanced $112,000 to Mr. Fawer which advance is repayable from any bonuses Mr.
Fawer receives from the Company. In the 1998 Fiscal Year, Mr. Fawer repaid the
$29,000 balance of such advance. In the 1998 Fiscal Year, the Company loaned
$103,465 to Mr. Catrambone, the proceeds of which were used to pay taxes
resulting from the sale by Mr. Catrambone to the Company of his options to
purchase stock in the Company's Omnirel subsidiary in exchange for Company
common stock. In connection therewith, Mr. Catrambone delivered a promissory
note which is secured by shares of his Company common stock and carries interest
at the rate of 6.65% per annum.
7
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities (the "10% Stockholders"), to file reports of ownership on Form 3 and
reports of changes in ownership on Form 4 or Form 5 with the Securities Exchange
Commission. Executive officers, directors and the 10% Stockholders are required
to furnish the Company with copies of such reports. Based solely on its review
of the copies of such forms received by the Company, or written representations
that no other reports are required, the Company believes that during the 1998
Fiscal Year, the Company's executive officers, directors and 10% Stockholders
complied with the applicable Section 16(a) filing requirements.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL THREE NOMINEES
FOR DIRECTOR.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Messrs. Ernst & Young LLP have been the Company's independent public
accountants since 1983, and were selected by the Board of Directors to serve in
such capacity for the 1998 Fiscal Year as well. Accordingly, the Board of
Directors recommends that the shareholders now ratify the appointment of Ernst &
Young LLP as the Company's auditors. Representatives of Ernst & Young LLP will
attend the Annual Meeting, will have an opportunity to make a statement and will
be available to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
Shareholder Proposals at the Company's Next Annual Meeting of Shareholders
Shareholders of the Company who intend to submit proposals to the Company's
shareholders at the Company's next annual meeting of shareholders must submit
such proposals to the Company no later than August 30, 1999, 120 days before the
anticipated date of mailing of the Proxy Statement for such meeting. Shareholder
proposals should be submitted to Deborah J. Schrader, Corporate Secretary, 115
Stevens Avenue, Valhalla, New York 10595.
Incorporation by Reference
The Company hereby incorporates by reference its Annual Report on Form
10-KSB for the fiscal year ended June 30, 1998.
Other Matters
Management knows of no other matters to be presented at the Meeting. If any
other matter does properly come before the Meeting, the appointees named in the
Proxy will vote the Proxy in accordance with their best judgment.
By Order of the Board of Directors
Deborah J. Schrader
Secretary
Dated: Valhalla, New York
December 11, 1998
8
