SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ELTRAX SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
ELTRAX SYSTEMS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 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:*
4 Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how its
determined.
[ ] 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:
1996 ANNUAL MEETING
ELTRAX SYSTEMS, INC.
RUSH LAKE BUSINESS PARK
1775 OLD HIGHWAY 8
ST. PAUL, MINNESOTA 55112
TO THE SHAREHOLDERS OF ELTRAX SYSTEMS, INC.:
You are cordially invited to attend our Annual Meeting of Shareholders
to be held on July 23, 1996, at 10:00 a.m., local time, at the Sheraton
Park Place Hotel, 1500 Park Place Boulevard, St. Louis Park, Minnesota.
The formal Notice of Meeting, Proxy Statement and form of proxy are
enclosed.
Whether or not you plan to attend the meeting, please date, sign and
return the enclosed proxy in the envelope provided as soon as possible so that
your vote will be recorded.
Very truly yours,
Mack V. Traynor III
Chief Executive Officer
and President
July 1, 1996
PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY PROMPTLY
TO SAVE THE COMPANY THE EXPENSE
OF ADDITIONAL SOLICITATION.
ELTRAX SYSTEMS, INC.
RUSH LAKE BUSINESS PARK
1775 OLD HIGHWAY 8
ST. PAUL, MINNESOTA 55112
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 23, 1996
-----------------------------
TO THE SHAREHOLDERS OF ELTRAX SYSTEMS, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
Eltrax Systems, Inc. (the "Company") will be held on July 23, 1996, at 10:00
a.m., local time, at the Sheraton Park Place Hotel, 1500 Park Place Boulevard,
St. Louis Park, Minnesota, for the following purposes:
1. To elect seven (7) persons to serve as directors for the
ensuing year or until their successors are elected and
qualified;
2. To act on the proposal to amend Article III, Section 3.1 of
the Amended and Restated Articles of Incorporation of the
Company to increase the number of authorized shares of common
stock of the Company, $.01 par value (the "Common Stock") from
8,000,000 to 50,000,000; and
3. To consider and act upon such other matters as may properly
come before the meeting or any adjournment thereof.
The close of business on June 27, 1996 has been fixed as the record
date for the determination of shareholders who are entitled to vote at the
meeting or any adjournments thereof.
By Order of the Board of Directors
Mack V. Traynor III
Chief Executive Officer
and President
Dated: July 1, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. NO ADMISSION
TICKET OR OTHER CREDENTIALS WILL BE NECESSARY. IF YOU DO NOT PLAN TO ATTEND THE
MEETING, PLEASE BE SURE YOU ARE REPRESENTED AT THE MEETING BY MARKING, SIGNING,
DATING AND MAILING YOUR PROXY IN THE REPLY ENVELOPE PROVIDED.
ELTRAX SYSTEMS, INC.
RUSH LAKE BUSINESS PARK
1775 OLD HIGHWAY 8
ST. PAUL, MINNESOTA 55112
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
JULY 23, 1996
-------------------
INTRODUCTION
The Annual Meeting of Shareholders of Eltrax Systems, Inc. (the
"Company") will be held on July 23, 1996, at 10:00 a.m., local time, at the
Sheraton Park Place Hotel, 1500 Park Place Boulevard, St. Louis Park, Minnesota,
or at any adjournment or adjournments thereof, for the purposes set forth in the
Notice of Meeting.
A proxy card is enclosed for your use. You are solicited on behalf of
the Board of Directors to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The cost of
soliciting proxies, including the preparation, assembly and mailing of the
proxies and soliciting material, as well as the cost of forwarding such material
to the beneficial owners of the Company's common stock, $.01 par value (the
"Common Stock"), will be borne by the Company. Directors, officers and regular
employees of the Company may, without compensation other than their regular
compensation, solicit proxies by telephone, facsimile or personal conversation.
The Company may reimburse brokerage firms and others for reasonable expenses in
forwarding proxy materials to the beneficial owners of the Common Stock. The
Company may also elect to retain professional solicitors to assist in the
solicitation of proxies. Any professional solicitors will be paid by the
Company.
Any proxy given pursuant to this solicitation and received in time for
the Annual Meeting will be voted in accordance with the instructions given in
such proxy. Any shareholder giving a proxy may revoke it any time prior to its
use at the Annual Meeting by giving written notice of such revocation to the
Chief Executive Officer of the Company, by filing a revoking instrument or a
duly executed proxy bearing a later date with the Chief Executive Officer of the
Company or by attending the Annual Meeting and voting in person. Proxies that
are signed by shareholders but that lack any such specification will be voted in
favor of the proposals set forth in the Notice of Meeting and in favor of the
election as directors of the nominees listed in this Proxy Statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this proxy material will first be mailed to
shareholders on or about July 1, 1996.
VOTING OF SHARES
The close of business on Thursday, June 27, 1996, has been fixed by the
Board of Directors of the Company as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. On June
27, 1996, the Company had outstanding 6,583,563 shares of Common Stock, each
such share entitling the holder thereof to one vote in person or by proxy on
each matter to be voted on at the Annual Meeting, voting together as a single
class.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the meeting (3,291,782 shares as of June 27, 1996) is required for a quorum
for the transaction of business. In general, shares of Common Stock represented
by a properly signed and returned proxy card will be counted as shares present
and entitled to vote at the meeting for purposes of determining a quorum,
without regard to whether the card reflects abstentions (or is left blank) or
reflects a "broker non-vote" on a matter (i.e., a card returned by a broker on
behalf of its beneficial owner customer that is not voted on a particular matter
because voting instructions have not been received and the broker has no
discretionary authority to vote).
The election of a nominee for director and the approval of any other
proposal described in this Proxy Statement require the approval of a majority of
the shares present and entitled to vote in person or by proxy on that matter
(and at least a majority of the minimum number of votes necessary for a quorum
to transact business at the meeting). Shares represented by a proxy card voted
as abstaining on any of the proposals will be treated as shares present and
entitled to vote that were not cast in favor of a particular matter, and thus
will be counted as votes against that matter. Shares represented by a proxy card
including any broker non-vote on a matter will be treated as shares not entitled
to vote on that matter, and thus will not be counted in determining whether that
matter has been approved.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINATION
The Bylaws of the Company provide that the number of directors shall
consist of at least one and not more than seven. The Board of Directors of the
Company (the "Board") has determined that there will be seven directors of the
Company elected at the Annual Meeting. The Board has nominated the seven
individuals named below to serve as directors of the Company until the next
annual meeting of shareholders or until their respective successors have been
elected and qualified. All of the nominees are members of the current Board. The
election of each nominee requires the affirmative vote of a majority of the
shares of the Common Stock represented in person or by proxy at the Annual
Meeting.
BOARD OF DIRECTORS RECOMMENDATION
The Board recommends a vote FOR the election of each of the nominees
listed below. The election of each nominee requires the affirmative vote of the
shareholders holding at least a majority of the shares of Common Stock of the
Company represented in person or by proxy at the Meeting. In the absence of
other instructions, the proxies will be voted FOR the election of the nominees
named below. If prior to the meeting the Board should learn that any nominee
will be unable to serve by reason of death, incapacity or other unexpected
occurrence, the proxies that otherwise would have been voted for such nominee
will be voted for such substitute nominee as selected by the Board.
Alternatively, the proxies, at the Board's discretion, may be voted for such
fewer number of nominees as results from such death, incapacity or other
unexpected occurrence. The Board has no reason to believe that any of the
nominees will be unable to serve.
INFORMATION ABOUT NOMINEES
The following information has been furnished to the Company by the
persons who have been nominated by the Board to serve as directors for the
ensuing year.
Current
Name of Nominee Age Position(s)
Mack V. Traynor III 38 President, Chief Executive Officer,
Chief Financial Officer and Director
William P. O'Reilly 50 Chairman of the Board and Director
Patrick J. Dirk 56 Director
Gene A. Bier 57 Director
Thomas F. Madison 60 Director
Clunet R. Lewis 49 Director
Howard B. Norton 44 Director
OTHER INFORMATION ABOUT NOMINEES
MACK V. TRAYNOR has been the President and Chief Executive Officer of
the Company since August 1995. Mr. Traynor has served as the Company's Chief
Financial Officer since September 1995. From June 1988 to July 1995, Mr.
Traynor was the President and Chief Operating Officer of Military Communications
Center, Inc., a company which provided telecommunications services to U.S.
military personnel and which was acquired by LDDS Communications in October
1994. From July 1980 to May 1988, Mr. Traynor was employed by U.S. West, most
recently as President of the US West Enterprises Technologies Division, which
was responsible for designing, developing and marketing new products for the
telecommunications industry.
WILLIAM P. O'REILLY has been a director since July 1, 1995 and became
Chairman of the Board of Directors in August 1995. For the past 15 years, Mr.
O'Reilly has been a private investor and entrepreneur who has managed several
different successful business ventures. Mr. O'Reilly is currently the President
of Montana Corp., a company involved in business investments. In 1989, Mr.
O'Reilly formed a group of investors to acquire Military Communications Center,
Inc., where he served as Chairman of the Board and Chief Executive Officer from
1989 to 1994. In 1986, Mr. O'Reilly founded Digital Signal, Inc., a provider of
fiber optic capacity to long distance carriers in the telecommunications
industry, where he served as Chief Executive Officer from 1986 to 1989. In 1981,
Mr. O'Reilly founded Lexitel Corporation, a long distance carrier (which was
subsequently acquired by ALC Communications, Inc.), where he served as Chairman
of the Board and Chief Executive Officer from 1980 to 1984. Mr. O'Reilly is also
currently a director of Charter Communications, Inc., a builder and operator of
international communication networks which provides voice, video and data
services, and Restor Industries, Inc., a value added reseller of
telecommunications equipment.
PATRICK J. DIRK is a founder of the Company and has served as a
director of the Company since its formation and served as Chairman of the Board
from February 1995 until August 1995. Mr. Dirk served as President and Chief
Executive Officer of the Company from its formation until September 1985 and as
Chairman of the Board from formation until May 1989. Mr. Dirk is the Chairman of
the Board and Chief Executive Officer of Pierce Companies, Inc., a manufacturer
and marketer specializing in printing systems and related supplies. From 1973
until 1982, Mr. Dirk was employed in various capacities by Kroy Inc., a
Minnesota corporation involved in manufacturing automated lettering machines and
related products, serving most recently as President and a member of the Board
of Directors.
GENE A. BIER has been a director of the Company since July 1986 and was
Chairman of the Board of Directors from June 1989 to March 1990. Mr. Bier is
currently the President and Chief Executive Officer of XCORP Business
Development, Inc., a Minnesota corporation. Mr. Bier was Vice President and
Chief Executive Officer of Minnesota Northwestern Bell and has served in various
capacities in the Bell System from 1963 until January 1987. Mr. Bier has served
on the boards of many local organizations, including the Minnesota Business
Partnership, Inc., the Greater Minneapolis Metropolitan Housing Corporation, the
United Way of Minneapolis and the Metropolitan Medical Center. He is a past
chairman of the Greater Minneapolis Chamber of Commerce, the Governor's Jobs
Training Council and the Minnesota State Lottery Board.
THOMAS F. MADISON has served as a director of the Company since August
1993. Since January, 1993, Mr. Madison has been President and Chief Executive
Officer of MLM Partners, a company involved in small business consulting and
investments. Mr. Madison was Vice Chairman Office of the CEO for Minnesota
Mutual Life Insurance Company. From July 1988 to December 1992, Mr. Madison
served as President of US West Communications - Markets. Mr. Madison is
currently a director of Valmont Industries, Inc., Minnegasco, Span Link
Communications, Inc., Voyageur Mutual Funds, and serves on the advisory board of
Alexander & Alexander.
CLUNET R. LEWIS is currently the president of CRL Enterprises, Inc., a
legal and business consulting firm. Prior to becoming president of CRL
Enterprises, Inc., Mr. Lewis was a member of the law firm of Jaffe, Raitt, Heuer
& Weiss, P.C. for 20 years, ending in 1993. From 1989 to 1994, Mr. Lewis acted
as Secretary, General Counsel and director of Military Communications Center,
Inc. Since 1993, Mr. Lewis has also served on the Board of Directors and the
audit committee of Sun Communities, Inc., a New York Stock Exchange real estate
investment trust.
HOWARD B. NORTON has since 1989 been the President, and Vice President
of Nordata, Inc., and Rudata, Inc., collectively d/b/a Datatech, respectively, a
data communications distribution company, which provides wide area networking
solutions to its customers. Mr. Norton is also a founder of both Nordata, Inc.
and Rudata, Inc.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board, which
met fifteen (15) times during the fiscal year ended March 31, 1996 ("fiscal
1996"). The Board has also established a Compensation Committee and an Audit
Committee.
The current members of the Compensation Committee are Messrs. Bier and
Madison. The function of the Compensation Committee is to set the compensation
for those officers of the Company who are also directors of the Company and to
act on other such matters relating to compensation as it deems appropriate,
including the administration of the Company's 1992 Stock Incentive Plan (the
"1992 Plan") and the Company's 1995 Stock Incentive Plan (the "1995 Plan"). The
Compensation Committee met eight (8) times during fiscal 1996.
The members of the Audit Committee are Messrs. Dirk and Lewis. The
function of the Audit Committee is to review the accounting, auditing, operating
and reporting practices of the Company. The Audit Committee reviews all
financial releases to the public, the Company's annual financial statements,
changes in accounting practices, the selection and scope of the work of the
Company's independent auditors and the adequacy of internal controls for
compliance with corporate policies and directives. The Audit Committee met three
(3) times during fiscal 1996.
All of the Directors attended 75% or more of the meetings of the Board
and committees on which they served during fiscal 1996.
DIRECTOR COMPENSATION
DIRECTORS' FEES. The Company has not paid fees to the members of the
Board; however, effective as of June 1, 1996, the Company has implemented a new
plan to pay directors $1,500 cash compensation for each fiscal quarter (in
addition to automatic grants of options which are also awarded quarterly under
the Company's 1995 Plan) which compensation is payable on the first business day
following each quarter during which they serve as a Board member. The Company
also reimburses directors for out-of-pocket expenses incurred in attending Board
or committee meetings. The Company has in the past and may in the future grant
options to directors who are employees of the Company.
NON-EMPLOYEE DIRECTOR OPTIONS. Non-employee directors are automatically
granted options to purchase 1,500 shares of the Common Stock following each
fiscal quarter in which the director served ("Director Options"), subject to
certain limitations, under the Company's 1995 Plan. Pursuant to the terms of the
1995 Plan, each of such options had (i) a ten year term, (ii) an exercise price
equal to 100% of the fair market value of one share of the Common Stock on the
date of the automatic grant and (iii) become fully exercisable immediately on
the date of grant. Accordingly, in fiscal 1996, Messrs. Bier, Dirk and Madison
each received options to purchase an aggregate of 6,000 shares of the Common
Stock, and Messrs. O'Reilly and Lewis each received options to purchase an
aggregate of 4,500 shares of the Common Stock.
PRINCIPAL SHAREHOLDERS AND BENEFICIAL
OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of June 25, 1996, unless
otherwise noted, by (a) each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (b) each director,
nominee and executive officer named in the Summary Compensation Table below
under the heading "Executive Compensation and Other Benefits -- Summary of Cash
and Certain Other Compensation," and (c) all executive officers and directors of
the Company as a group.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)(2)
PERCENT
NAME AMOUNT OF CLASS
Howard B. and Ruby L. Norton 983,000 (3) 14.9%
27126 Paseo Espada, Suite 1602
San Juan Capistrano, California 92675
William P. O'Reilly 1,003,766 (4) 14.5%
2000 Town Center
Suite 690
Southfield, Michigan 48075
Mack V. Traynor III 471,553 (5) 6.9%
1775 Old Highway 8
St. Paul, Minnesota 55112
Patrick J. Dirk 355,442 (6) 5.3%
Pierce Companies, Inc.
2331 South Pullman Street
Santa Ana, California 92705
Clunet R. Lewis 307,553 (7) 4.6%
2000 Town Center
Suite 690
Southfield, Michigan 48075
Thomas F. Madison 136,500 (8) 2.1%
Suite 2100
200 South 5th Street
Minneapolis, Minnesota 55402
Gene A. Bier 88,850 (9) 1.3%
2820 Holly Lane
Plymouth, Minnesota 55447
All current directors and
executive officers
as a group (7 persons) 3,346,664 (10) 44.7%
(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person or member of a group to acquire them within 60 days
are treated as outstanding only when determining the amount and percent
owned by such person or group.
(2) Unless otherwise noted, all of the shares shown are held by individuals
or entities possessing sole voting and investment power with respect to
such shares.
(3) Includes 983,000 shares of Common Stock owned jointly by Mr. and Ms.
Norton as community property, 450,000 of such shares are held in escrow
by Norwest Bank, Minnesota, N.A.
(4) Includes warrants to purchase 314,286 shares and options to purchase
6,000 shares of Common Stock exercisable within 60 days.
(5) Includes warrants to purchase 42,857 shares and options to purchase
250,000 shares of Common Stock exercisable within 60 days.
(6) Includes 11,567 shares of the Common Stock owned by Pierce Companies,
Inc. of which Mr. Dirk is the Chairman of the Board, as to which he may
be deemed to have (sole) voting and investment power, 237,875 shares
owned jointly with Mr. Dirk's wife, as to which he may be deemed to
share voting and investment power, 36,000 shares of the Common Stock
purchasable upon the exercise of outstanding stock options and 40,000
shares of the Common Stock into which 4,000 shares of the Preferred
Stock (100% of the outstanding shares of the Preferred Stock) held
jointly by Mr. Dirk and his wife may be converted.
(7) Includes warrants to purchase 142,857 shares and options to purchase
6,000 shares of Common Stock exercisable within 60 days.
(8) Includes 26,500 shares of the Common Stock purchasable upon the
exercise of outstanding stock options exercisable within 60 days.
(9) Includes 72,850 shares of the Common Stock purchasable upon the
exercise of outstanding stock options exercisable within 60 days.
(10) Includes an aggregate of 2,232,442 shares of the Common Stock held by
controlled corporations, children, jointly with spouses or by spouses,
as to which members of the group may be deemed to have sole or shared
voting and investment power, 397,350 shares of the Common Stock
purchasable upon the exercise of outstanding stock options exercisable
within 60 days held by members of the group, 40,000 shares of the
Common Stock into which 4,000 shares of the Preferred Stock held by
members of the group (or owned jointly with their spouses) may be
converted and 500,000 shares of the Common Stock purchasable upon the
exercise of outstanding warrants exercisable within 60 days held by
members of the group.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer, and the former Chief Executive Officer of the Company (the "Named
Officers"). No other executive officer of the Company earned in excess of
$100,000 during fiscal 1996.
SUMMARY COMPENSATION TABLE
LONG TERM
FISCAL COMPENSATION
YEAR SECURITIES
NAME AND ENDED ANNUAL COMPENSATION UNDERLYING
PRINCIPAL POSITION MARCH 31 SALARY($) BONUS($) OPTIONS(#)
- ------------------ -------- --------- -------- ----------
Mack V. Traynor III (1) 1996 $ 65,000 $ 0 250,000
Chief Executive Officer and 1995 0 0 0
President 1994 0 0 0
Patrick J. Oven (1) 1996 $ 51,431 $ 0 62,795 (2)
Former Chief Executive 1995 105,558 0 49,167
Officer and President 1994 108,223 0 0
(1) Mack V. Traynor became the Company's Chief Executive Officer and
President on August 1, 1995, thereby replacing Mr. Oven in that
capacity. Effective August 1, 1995, Mr. Oven began serving as President
of the Company's Healthcare Group, a position from which he resigned
September 29, 1995.
(2) Reflects the extension through March 31, 1996 of the vested portion
only of outstanding options previously granted to Mr. Oven under the
Company's 1992 and 1995 Plan by the Compensation Committee of the Board
of Directors on September 25, 1995.
OPTION GRANTS
The following table summarizes option grants during fiscal 1996 to the
Named Officers and the potential realizable value of the options held by such
persons at March 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(#)(1) YEAR ($/SH) DATE
- ---- ------------- --------- ------ ----------
<S> <C> <C> <C> <C>
Mack V. Traynor III 50,000(2) 18.9 $.41 6/23/05
100,000(3) 37.8 $.75 6/23/05
100,000(4) 37.8 $1.00 6/23/05
Patrick J. Oven -0-(5) -0- -0- N/A
</TABLE>
(1) All options granted were granted under the 1995 Plan. To the extent not
already exercisable, options granted under the 1992 Plan become
immediately exercisable in full upon certain changes in control of the
Company, provided that, upon such a change in control, the Board may
determine that holders of options granted under the 1992 Plan will
receive cash in an amount equal to the excess of the fair market value
of such shares immediately prior to the effective date of such change
in control of the Company over the exercise price of such options.
(2) These options vest immediately at date of grant which was June 23,
1995.
(3) These options vest, either when the per share price of the Company's
Common Stock reaches $3.00, or January 1, 1997, whichever occurs
sooner. These options vested on February 27, 1996.
(4) These options vest, either when the per share price of the Company's
Common Stock reaches $5.00, or June 1, 1998, whichever occurs sooner.
These options vested on May 23, 1996.
(5) No options were granted to Mr. Oven in fiscal 1996; however on
September 25, 1995, the Board's Compensation Committee extended the
vested portion only of Mr. Oven's outstanding options.
OPTION EXERCISES. The following table summarizes option exercises
during fiscal 1996 by the Named Officers and the number of options held by the
Named Officers as of March 31, 1996.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT MARCH 31, 1996 MARCH 31, 1996 (1)
---------------------------- ------------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mack V. Traynor III 0 $ 0 150,000 100,000 $461,375 $231,250
Patrick J. Oven 22,292 $ 27,162 0 0 0 0
</TABLE>
(1) Value of the Company's unexercised, in-the-money options based on the
average of the high and low price of the Company's Common Stock as of
March 29, 1996 which was $3.3125.
CHANGE IN CONTROL AGREEMENTS
Under both the 1992 Plan and the 1995 Plan, outstanding non-vested
incentive awards are accelerated in connection with a change in control of the
Company.
PROPOSAL 2
PROPOSAL TO AMEND THE
COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED COMMON SHARES
INTRODUCTION
At present, the Company's Articles of Incorporation authorize the
issuance of 8,000,000 shares of Common Stock. As of June 25, 1996, 6,583,563
shares of Common Stock were issued and outstanding, 242,112 shares are reserved
for issuance, though not issued, under the Company's option plans and 1,446,587
shares are reserved for issued and outstanding options and warrants. In
addition, holders of options, warrants and convertible Preferred Stock of the
Company which are exercisable or convertible into an aggregate 838,000 shares of
Common Stock have agreed to suspend their right to purchase shares of Common
Stock until such time as an adequate number of shares are available.
Accordingly, on June 25, 1996, there were approximately 529,000 shares of Common
Stock available for issuance or sale by the Company other than those issuable as
described above.
AMENDMENT
On May 17, 1996, the Board approved an increase in the authorized
number of shares of Common Stock from 8,000,000 to 50,000,000 shares, subject to
shareholder approval. If this amendment is approved by the Company's
shareholders, 41,690,738 shares of Common Stock will be authorized and available
for issuance or sale by the Company immediately after the Annual Meeting, other
than those issuable as described above.
PURPOSE AND EFFECT OF PROPOSED AMENDMENT
The Board believes that it is necessary and desirable to increase the
number of shares of Common Stock that the Company is authorized to issue to give
the Board additional flexibility to raise equity capital, adopt additional
employee benefit plans, make acquisitions through the use of stock, and to
enable the Board to reserve additional shares for issuance under any warrants
which may be issued in the future. Although the Board continues to analyze
possible acquisitions and other transactions that may involve the issuance of
shares of Common Stock, the Board has no immediate plans, understandings,
agreements or commitments to issue additional Common Stock for any of these
purposes, except as permitted or required by the Company's incentive stock plan
or as may otherwise be available currently under the Company's authorized Common
Stock. The Board believes that the proposed increase in the authorized shares
would make it unnecessary to hold a special shareholders' meeting in the future
for the purpose of authorizing an increase in the authorized Common Stock should
the Company decide to use its shares for one or more of such previously
mentioned purposes. No additional action or authorization by the Company's
shareholders would be necessary prior to the issuance of such additional shares,
unless required by applicable law or regulation.
Under the Company's Articles of Incorporation, the Company's
shareholders do not have preemptive rights with respect to the Common Stock.
Thus, should the Board elect to issue additional shares of Common Stock,
existing shareholders would not have any preferential rights to purchase such
shares. In addition, if the Board elects to issue additional shares of Common
Stock, such issuance could have a dilutive effect on the shareholdings of
current shareholders.
The proposed amendment to increase the authorized number of shares of
Common Stock could, under certain circumstances, have an anti-takeover effect,
although this is not the intention of this proposal. In the event of a hostile
attempt to take over the Company, it might be possible for the Company to try to
impede such an attempt by issuing shares of the Common Stock through a "private
placement" to a friendly party, thereby diluting the voting power of the other
outstanding shares and increasing the potential cost to acquire control of the
Company. The overall effect, therefore, could be to discourage unsolicited
takeover attempts. By potentially discouraging initiation of any such
unsolicited takeover attempt, the proposed amendment may limit the opportunity
for the Company's shareholders to dispose of their shares at the higher price
generally available in takeover attempts or that may be available under a merger
proposal.
In addition, the proposed amendment may have the effect of permitting
the Company's current management, including the current Board, to retain its
position and place it in a better position to resist changes that shareholders
may wish to make if they are dissatisfied with the conduct of the Company's
business. As previously stated, however, the only intended purpose of the
proposed amendment is to increase the number of available shares of Common Stock
in order to give the Board more flexibility in conducting normal business
operations, and the proposal is not being presented as, nor is it part of, a
plan to adopt a series of anti-takeover measures.
PROPOSED RESOLUTION
A resolution in substantially the following form will be submitted to
the shareholders at the Annual Meeting:
"RESOLVED, that the Company's authorized shares of Common Stock be
increased from 8,000,000 shares to 50,000,000 shares.
RESOLVED FURTHER, that appropriate officers of the Company be, and the
same are, hereby resolved, empowered and directed in the name on behalf
of the Company to take such action and execute such documents as may be
deemed necessary or desirable to carry out the intent and purpose of
the foregoing resolution."
RECOMMENDATION OF THE BOARD
The Board recommends a vote FOR approval of such increase. The
affirmative vote of the holders of a majority of shares of Common Stock present
in person or by proxy at the Annual Meeting, assuming a quorum is present, is
necessary for approval. Unless a contrary choice is specified, proxies solicited
by the Board will be voted FOR approval of such increase.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) reports
they file. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company during the period ended March 31, 1996, no
directors, officers and beneficial owners of greater than 10% of the Company's
Common Stock have failed to file on a timely basis the forms required by Section
16 of the Exchange Act.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand, L.L.P. as the
Company's independent accountants for the fiscal year ending March 31, 1997.
Representatives of Coopers & Lybrand, L.L.P., will be present at the Annual
Meeting. Such representatives will have an opportunity to make a statement if
they so desire and will be available to respond to questions.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented in the proxy
materials relating to the next Annual Meeting must be received by the Company at
its principal executive offices on or before February 5, 1997. Such proposals
should be directed to the Company: Rush Lake Business Park, 1775 Old Highway 8,
St. Paul, Minnesota 55112; Attention: Shareholder Relations.
OTHER MATTERS
The management of the Company does not intend to present other items of
business and knows of no items of business that are likely to be brought before
the Annual Meeting except those described in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, the persons
named in the enclosed proxy will have discretionary authority to vote such proxy
in accordance with their best judgment on such matters.
MISCELLANEOUS
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-KSB (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED MARCH 31, 1996 TO
EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF JUNE 27, 1996, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT.
SUCH REQUEST SHOULD BE SENT TO: RUSH LAKE BUSINESS PARK, 1775 OLD HIGHWAY 8, ST.
PAUL, MINNESOTA 55112; ATTENTION: SHAREHOLDER RELATIONS.
BY ORDER OF THE BOARD OF DIRECTORS
Mack V. Traynor III
Chief Executive Officer
and President
St. Paul, Minnesota
July 1, 1996
- --------------------------------------------------------------------------------
PROXY
ELTRAX SYSTEMS, INC.
Rush Lake Business Park
1775 Old Highway 8
St. Paul, Minnesota 55112
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM P. O'REILLY and MACK V. TRAYNOR
III and each of them, as Proxies, each with full power of substitution, and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of Common Stock of Eltrax Systems, Inc. held of record by the
undersigned on June 27, 1996, at the Annual Meeting of Shareholders to be held
on July 23, 1996, or any adjournment, thereof.
1. ELECTION OF DIRECTORS.
|_| FOR all nominees listed below |_| AGAINST all nominees
(except as marked to the listed below
contrary below)
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME)
GENE A. BIER, PATRICK J. DIRK, CLUNET R. LEWIS, THOMAS F. MADISON,
HOWARD B. NORTON, WILLIAM P. O'REILLY, MACK V. TRAYNOR III
2. PROPOSAL TO AMEND ARTICLE III, SECTION 3.1 OF THE COMPANY'S AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 8,000,000 TO 50,000,000.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 2 AND FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE. Please sign
exactly as name appears below. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: ________________________, 1996
_____________________________________
Signature
_____________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
