<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Railtex, Inc
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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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Notes:
<PAGE>
May 20, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders of
RailTex, Inc. to be held on Wednesday, June 12, 1996, at 10:00 a.m. (CDT) at the
San Antonio Central Library, 600 Soledad Plaza, San Antonio, Texas. We look
forward to this opportunity to update you on developments here at RailTex and to
greet our new shareholders.
We hope you will attend the meeting in person. WHETHER OR NOT YOU EXPECT TO BE
PRESENT AND REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE MARK, SIGN AND
MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. Matters on which action will
be taken at the meeting are explained in detail in the notice and proxy
statement following this letter.
Sincerely,
[Signature of Bruce M. Flohr Appears Here]
Bruce M. Flohr
Chairman and Chief Executive Officer
[Signature of Laura D. Davies Appears Here]
Laura D. Davies
Vice President-Finance, Chief Financial Officer
and Corporate Secretary
Enclosure
<PAGE>
RAILTEX, INC.
4040 Broadway, Suite 200
San Antonio, Texas 78209
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 12, 1996
To the Shareholders of RailTex, Inc.:
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders of
RailTex, Inc., a Texas corporation, will be held at the San Antonio Central
Library, 600 Soledad Plaza, San Antonio, Texas, on Wednesday, June 12, 1996, at
10:00 a.m.(CDT) for the following purposes:
(1) To elect three (3) Directors to serve as Class I Directors for terms
expiring in 1999 and until their respective successors are duly elected and
qualified;
(2) To approve a proposal to amend the Company's 1993 Stock Plan to: (i)
increase the maximum number of shares of Common Stock issuable under the
1993 Plan from 750,000 to 1,250,000, without reduction for the number of
shares issued upon the exercise of options granted outside of the 1993
Plan, (ii) extend the exercise period for Outside Directors' Options from 2
to 10 years and increase the number of shares which may be purchased under
Outside Directors' Options from 2,000 to 3,000, (iii) specify 1,250,000
shares as the maximum number of shares issuable under the 1993 Plan to any
employee in any calendar year, (iv) permit the 1993 Plan administrator to
specify shorter vesting periods for Non-Qualified Options, and (v) clarify
that cashless exercises of Stock Rights are permitted under the 1993 Plan.
(3) To approve the appointment of Arthur Andersen LLP as the Company's auditors
for the 1996 fiscal year; and
(4) To transact such other business as may properly come before the meeting or
any adjournment thereof.
In accordance with the Bylaws of the Company and a resolution of the Board of
Directors, the record date for the meeting has been fixed at May 17, 1996.
Only shareholders of record at the close of business on that date will be
entitled to vote at the meeting or any adjournment thereof.
A complete list of shareholders entitled to vote at the meeting will be on file
at the Company's corporate office at 4040 Broadway, Suite 200, San Antonio,
Texas, for a period of ten days prior to the meeting. During such time, the
list will be open to the examination of any shareholder during ordinary business
hours for any purpose germane to the meeting.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY. A RETURN ENVELOPE IS ENCLOSED
FOR THAT PURPOSE.
RAILTEX, INC.
Laura D. Davies
Corporate Secretary
Dated: May 17, 1996
<PAGE>
RAILTEX, INC.
4040 Broadway, Suite 200
San Antonio, Texas 78209
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of RailTex,
Inc., a Texas corporation (the "Company"), to be voted at the 1996 Annual
Meeting of Shareholders at 10:00 a.m. (CDT) on Wednesday, June 12, 1996, or at
any adjournment thereof. This proxy statement and the accompanying proxy are
first being mailed to shareholders on or about May 20, 1996.
VOTING AND PROXIES
Only holders of record of Common Stock of the Company at the close of
business on May 17, 1996, will be entitled to vote at the meeting. There were
9,110,606 shares of common stock outstanding on the record date. Each share of
common stock outstanding is entitled to one vote. A majority of the shares
outstanding will constitute a quorum at the meeting.
All shares represented by proxies will be voted in accordance with the
shareholders' directions. If the proxy card is signed and returned without any
direction given, shares will be voted in accordance with the recommendations of
the Board of Directors as described in this proxy statement. Any shareholder
giving a proxy may revoke it at any time before the proxy is voted by giving
written notice of revocation to the Corporate Secretary, by submitting a later-
dated proxy, or by attending the meeting and voting in person.
The election of each nominee for Director requires a plurality of the votes
cast. The affirmative vote of a majority of the shares present and voting at
the meeting in person or by proxy is required for approval of proposed
amendments to the Company's 1993 Stock Plan described below and the appointment
of auditors. Abstentions and broker non-votes will be included in determining
the presence of a quorum at the meeting; however, abstentions and broker non-
votes will not be included in determining the number of votes cast on any
matter.
PROPOSAL #1
-----------
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors of not less
than three (3) members and not more than ten (10) members. Currently, there are
eight (8) Directors. At the 1995 Annual Meeting of Shareholders, the Company's
Bylaws were amended to classify the Board of Directors into three classes, each
of which class of Directors, after an interim arrangement, will serve for three
years, with one class being elected each year. At the 1995 Annual Meeting of
Shareholders, the classified Board of Directors was implemented by the election
of the initial Class I, Class II, and Class III Directors to serve for terms of
one year, two years, and three years, respectively.
The Board of Directors propose the election of three (3) Directors at
the 1996 Annual Meeting of Shareholders to serve as Class I Directors. The
Class I Director nominees are Bruce M. Flohr, Palmer L. Moe, and Laura D.
Davies. The nominees for Class I Directors, if elected, will serve for a three
year term expiring in 1999 and until their respective successors are elected and
qualified. The Board of Directors recommends a vote FOR such nominees.
1
<PAGE>
The proxies named in the accompanying proxy, who have been designated
by the Board of Directors, intend to vote for the above mentioned nominees for
election as Directors, unless otherwise specified. Such nominees have indicated
a willingness to serve as Directors, but should any of them decline or be unable
to serve, the persons named as proxies may vote for another person in the place
of such nominees according to their best judgment and in the interest of the
Company.
The following information is furnished with respect to each of the
nominees. Such information includes all positions with the Company and principal
occupations during the last five years.
Notice for election as Class I Directors, whose terms expire in 1999:
BRUCE M. FLOHR, age 56, founded RailTex in 1977, and currently serves as
Chairman of the Board of Directors and Chief Executive Officer. From 1975
through 1977, Mr. Flohr held the positions of Deputy Administrator and Acting
Administrator of the Federal Railroad Administration in Washington, D.C. In
those positions he had primary responsibility for rail safety, operation of the
Alaska Railroad, and operation of the Transportation Test Center at Pueblo,
Colorado. Mr. Flohr was employed by Southern Pacific Transportation Company
from 1965 through 1975 and served as Division Superintendent of its San Antonio
Division from 1971 through 1975. He is a founder and past Chairman of the
Regional Railroads of America and is a Director of the Association of American
Railroads. Mr. Flohr is also a Director of Harmon Industries, Inc.
PALMER L. MOE, age 52, has served since 1992 as the President of Storen
Resources, Inc., a privately owned corporation which provides consulting
services, primarily in the energy sector. From 1983 to 1992, Mr. Moe was
President and Chief Operating Officer of Valero Energy Corporation. From 1965
to 1983, Mr. Moe held various positions with Arthur Andersen LLP, including
Managing Partner of the San Antonio office from 1978 to 1983.
LAURA D. DAVIES, age 37, has served as Vice President-Finance and
Administration and Chief Financial Officer since July 1995. Mrs. Davies was
Vice President-Finance of RailTex Service Co., Inc. ("RSC"), a subsidiary of
RailTex from February 1995 to June 1995 and served as Controller of RSC since
1986. Mrs. Davies is a Certified Public Accountant and from 1981 to 1986 was
employed by Arthur Andersen LLP.
The following information is furnished with respect to each of the
continuing Directors. Such information includes all positions with the Company
and principal occupations during the last five years.
Class II Directors, whose terms expire in 1997:
HENRY M. CHIDGEY, age 46, joined RailTex as Chief Operating Officer in
April, 1995. In October 1995, Mr. Chidgey was appointed President of RailTex.
He was elected as Executive Vice President and a Director of RailTex in June
1995. From 1993 through March 1995, Mr. Chidgey was employed by Southern
Pacific Transportation Company as Vice President and Chief Mechanical Officer.
From 1989 to 1993, Mr. Chidgey was Vice President and Chief Mechanical Officer
of the Illinois Central Railroad Company. Prior to joining the Illinois Central
Railroad Company, Mr. Chidgey was employed, for 19 years, by the Southern
Pacific Transportation Company where he held various operating positions.
HEATHER J. GRADISON, age 43, has served as a Director since 1990 and is a
member of the Audit and Compensation Committees. Currently, Mrs. Gradison is an
international and domestic consultant specializing in advising on issues for
regulatory reform. From 1990 until 1994, Mrs. Gradison served as Assistant to
the President for the American Enterprise Institute for Public Policy Research.
From 1985 until 1990, Mrs. Gradison served as Chairman of the Interstate
Commerce Commission, and from 1982 until 1985, she was a Commissioner of the
Interstate Commerce Commission. From 1975 to 1982, Mrs. Gradison was employed
by the Southern Railway System.
2
<PAGE>
FERD. C. MEYER, JR., age 56, has served as a Director since 1977 and is a
member of the Compensation Committee. Since 1988, Mr. Meyer has been Senior
Vice President and General Counsel of Central and South West Corporation, a
public holding company for four electric utility companies operating in Texas,
Oklahoma, Arkansas, and Louisiana. From 1986 to 1988, Mr. Meyer was Vice
President and Assistant General Counsel of Central and South West Services,
Inc., a subsidiary of Central and South West Corporation.
Class III Directors, whose terms expire in 1998:
ROBERT R. LENDE, age 55, served as a Director, Executive Vice President,
and Chief Financial Officer of RailTex from 1980 until he retired in June 1995.
He currently serves as a Director of RailTex and is a member of the Nominating
Committee. From 1975 through 1980, Mr. Lende was employed by Rotan Mosle, Inc.,
a Texas-based regional investment banking firm, most recently as Vice President-
Corporate Finance. From 1971 to 1975, Mr. Lende was Vice President-Marketing
for Heatransfer Corporation, a manufacturer of automobile air conditioners. Mr.
Lende is also an Advisory Director of Alamo Group, Inc..
ROBERT M. AYRES, JR., age 69, has served as a Director since 1988 and is a
member of the Compensation and effective March 1996, the Nominating Committees.
Mr. Ayres is currently a financial consultant and investor. From 1977 until
1988, Mr. Ayres was President, Vice Chancellor, and Chief Executive Officer of
the University of the South. From 1973 to 1977, Mr. Ayres was Senior Vice
President and a Director of Rotan Mosle, Inc. From 1962 to 1973, he was
President and Director of Russ and Company, Inc., an investment banking firm.
Mr. Ayres is also a Director of Howell Corporation, Rochelle Communications,
PatOil Corporation, and James Avery Craftsmen.
PROPOSAL #2
-----------
APPROVAL OF AMENDMENT
OF THE 1993 STOCK PLAN
The purpose of the Company's 1993 Stock Plan (the "1993 Plan") is to
provide incentives to its officers, employees and directors and to help the
Company attract and retain qualified officers, employees and directors. Based
upon the Company's experience with the 1993 Plan since its adoption, the Board
of Directors has unanimously approved and recommends for adoption the several
amendments to the 1993 Plan described below which the Directors believe will
enhance the 1993 Plan's effectiveness. Accordingly, the Board of Directors
recommends that the shareholders vote FOR approval of the following amendments
to the 1993 Plan.
The following summary of amendments to the 1993 Plan is qualified in
its entirety by reference to the 1993 Plan as proposed to be amended, a copy of
which is attached as Exhibit "A" to this Proxy Statement.
1. Increase the maximum number of shares of Common Stock under the 1993
Plan from 750,000 to 1,250,000, without reduction for the number of shares
issued upon the exercise of options granted outside of the 1993 Plan. The 1993
Plan currently provides that the maximum number of shares issuable under the
1993 Plan is 750,000 shares, less the number of shares issuable or issued under
options granted prior to the adoption of the 1993 Plan (the "Prior Options") and
under options granted pursuant to the 1993 Plan. As of May 10, 1996, 188,961
shares are issuable under outstanding options granted under the 1993 Plan,
222,831 shares are issuable under outstanding Prior Options, and 306,168 shares
have been issued upon the exercise of Prior Options. As a result, as of May 10,
1996, only 32,040 shares are currently available for issuance under the 1993
Plan. The Board of Directors believes this number of shares is insufficient for
the Company to continue its efforts to attract and retain qualified officers,
employees and directors. Accordingly, the Board of Directors recommends that
the maximum number of shares issuable under the 1993 Plan be increased from
750,000 to 1,250,000 and the number of shares available for issuance under the
1993 Plan no longer be reduced by the number of shares issued upon exercise of
Prior Options. If these amendments to the 1993 Plan are approved, 806,168
shares will become available for issuance under the 1993 Plan. See paragraph 3
of Exhibit "A".
3
<PAGE>
2. Extend the exercise period for Outside Directors' Options from 2 to 10
years and increase the number of shares which may be purchased under Outside
Directors' Options from 2,000 to 3,000. The 1993 Plan currently provides for
annual grants of Outside Directors' Options (as defined in the 1993 Plan) to
each of the Company's Outside Directors. The Outside Directors' Options
entitles each Outside Director to purchase 2,000 shares of Common Stock over a 2
year period at an exercise price that is equal to the fair market value of the
Common Stock on the date of grant. The Board of Directors believes the exercise
period of the Outside Directors' Options should be extended from 2 years to 10
years and the number of shares which may be purchased under the Outside
Directors' Options should be increased from 2,000 to 3,000. The Board of
Directors believes these amendments to the Outside Directors' Options will
enhance the Company's ability to retain and attract highly qualified Outside
Directors. See paragraphs 8A and C of Exhibit "A".
3. Specify 1,250,000 shares as the maximum number of shares issuable under
the 1993 Plan to any employee in any calendar year. This amendment is
recommended in order to comply with the technical requirements of Section 162(M)
of the Internal Revenue Code of 1986, as amended, and related regulations so
that awards by the Company under the 1993 Plan will qualify as performance-based
and will not be limited by the cap on the deductibility of compensation paid to
certain executives which exceed $1,000,000. Although the Company desires to
comply with Section 162(M), it does not intend to pay $1,000,000 or more to any
employee of the Company. See paragraph 3 of Exhibit "A".
4. Permit the 1993 Plan administrator to specify shorter vesting periods
for Non-Qualified Options. The 1993 Plan currently provides that Non-Qualified
Options (as defined in the 1993 Plan) shall be exercisable at the rate of 20%
per year over a 5 year period, with the Non-Qualified Options first becoming
exercisable one calendar year after the date of their grant, subject to any
longer vesting periods which the 1993 Plan administrator may impose. The Board
of Directors believes it is important that the 1993 Plan administrator have the
flexibility to provide for shorter vesting periods which the administrator
believes it is advisable to do so. The Board of Directors believes giving the
1993 Plan administrator this flexibility will enhance the Company's ability to
retain and attract highly qualified employees, officers and directors. The 1993
Plan administrator is currently the Compensation Committee of the Company's
Board of Directors, a committee that is comprised solely of Outside Directors
who are not permitted under the 1993 Plan to receive grants of Non-Qualified
Options. See paragraph 5C of Exhibit "A".
5. Clarify that cashless exercises of Stock Rights are permitted under the
1993 Plan. The Board of Directors believes the 1993 Plan currently authorizes
the 1993 Plan administrator to allow any legal form of payment of the purchase
price which may be due upon the exercise of any Stock Rights (as defined in the
1993 Plan) granted under the 1993 Plan. This would include allowing the
recipient of a Stock Right to tender shares of Common Stock in lieu of cash
payment of the exercise price of options granted under the 1993 Plan. However,
the Board of Directors felt it was advisable to amend the 1993 Stock Plan to
make it clear that cashless exercises of Stock Rights are permitted under the
1993 Plan. See paragraphs 9 and 11 of Exhibit "A".
MEETINGS AND COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1995, the Board of Directors held
seven meetings. During the fiscal year ended December 31, 1995, no Director
attended fewer than seventy-five percent (75%) of the aggregate of (i) the total
number of meetings of the Board of Directors held during the period for which he
has been a Director and (ii) the total number of meetings held by all committees
of the Board of Directors on which he has served.
The members of the Board of Directors who are not full time employees of
the Company are compensated at the rate of $20,000 per year and $1,000 per
meeting attended. Members of committees of the Board of Directors are
compensated at the rate of $1,000 per meeting attended. In addition, each
Outside Director of the Company receives an annual grant of options to purchase
2,000 shares of Common Stock (commencing January 1, 1997, 3,000 shares if
proposed amendments to the 1993 Plan are adopted). The exercise price for these
options is the closing sale price on the last business day prior to January 1 of
the year for which the options are granted ($21.00 per share for 1996).
4
<PAGE>
AUDIT COMMITTEE
The Audit Committee of the Board of Directors, which currently consists of
Heather J. Gradison, James A. O'Donnell and Thomas D. Ellen (effective June 20,
1995), met twice during the 1995 fiscal year. The functions of the Audit
Committee are to recommend the selection of independent accountants, review and
recommend approval of annual audited financial statements, and review
significant changes in accounting policies and procedures. In addition, the
Audit Committee reviews the adequacy of internal control and record-keeping
systems, reviews compliance with applicable regulations and policies (including
environmental regulations and policies on insider trading), and monitors
litigation, fraud, and conflict of interest and their potential impact on
financial results.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors currently consists of
Robert M. Ayres, Jr., Heather J. Gradison and Ferd. C. Meyer, Jr. The
Compensation Committee met twice during the 1995 fiscal year. The functions of
the Compensation Committee are to review the compensation of officers and other
management personnel and to make recommendations concerning such compensation.
The Compensation Committee also administers the employee benefit plans of the
Company, including the Company's 1993 Stock Plan. No officer of the Company is
a member of the Compensation Committee.
NOMINATING COMMITTEE
The Nominating Committee of the Board of Directors currently consists of
Bruce M. Flohr, Robert R. Lende (effective June 1995) and Robert M. Ayres, Jr.
(effective March 1996). The Committee met once during fiscal year 1995. The
function of the Nominating Committee is to consider and recommend nominees for
election as Directors. The Nominating Committee will consider nominees
recommended by security holders. The names of any nominees to be recommended by
security holders to the Nominating Committee must be submitted in writing to the
Nominating Committee at the Company's corporate office at 4040 Broadway, Suite
200, San Antonio, TX 78209, no later than December 21, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers, and any persons holding more than ten percent of
the Company's Common Stock to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities
Exchange Commission and to provide copies of such reports to the Company. Based
upon the Company's review of copies of such reports received by the Company and
written representations of its Directors and executive officers, the Company
believes that during the year ended December 31, 1995, all Section 16(a) filing
requirements were satisfied, except for (i) an inadvertent late filing of a Form
4 by Ferd. C. Meyer, Jr. reporting his sale of 5,000 shares of the Company's
Common Stock on June 13, 1995; (ii) an inadvertent late filing of a Form 4 by
Laura D. Davies reflecting her gift of 200 shares of the Company's Common Stock
to the American Red Cross on December 4, 1995; (iii) an inadvertent late filing
of a Form 4 by Bruce M. Flohr reporting his sale of 12,000 shares on October 9,
1995; (iv) an inadvertent late filing of a Form 4 by Harland M. Irvin III, as
Trustee for three trusts, reporting their receipt by gift of an aggregate of
9,000 shares on October 9, 1995; (v) an inadvertent late filing of two Form 4s
by Robert M. Ayres, Jr. reporting his acquisition of 17,000 shares (2,000 shares
on August 18, 1995 as trustee for four trusts, 2,000 on August 18, 1995, 5,000
on August 22, 1995, 5,000 on August 23, 1995, 1,000 on August 29, 1995, and
2,000 on September 1, 1995); (vi) an inadvertent late filing of a Form 4 by
Henry M. Chidgey reporting his acquisition of 1,000 shares of the Company's
Common Stock on August 11, 1995 and 4,000 shares of the Company's Common Stock
on August 14, 1995; (vii) an inadvertent late filing of a Form 4 by David P.
Valentine reporting his sale of 4,461 shares of the Company's Common Stock on
August 21, 1995; and (viii) an inadvertent late filing of a Form 4 by Harland M.
Irvin III as trustee for three trusts reporting the sale of an aggregate 7,200
shares of the Company's Common Stock on August 30, 1995.
5
<PAGE>
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
The following table sets forth the beneficial ownership of the Company's
Common Stock at March 1, 1996 by (i) each person who is known by the Company to
own beneficially more than 5% of the outstanding shares of Common Stock, (ii)
each Director, (iii) the Chief Executive Officer and the other four most highly
compensated officers of the Company (the "Named Executives"), and (iv) all
Directors and executive officers as a group. The address for each of the
Directors and the Named Executives is the address of the Company.
<TABLE>
<CAPTION>
SHARES % OF TOTAL
BENEFICIALLY SHARES
5% SHAREHOLDERS, DIRECTORS AND NAMED EXECUTIVES OWNED(1) OUTSTANDING
----------------------------------------------- ------------ -----------
<S> <C> <C>
Bruce M. Flohr(2) 693,002 7.5%
Capital Guardian Trust 648,000 7.1
Neuberger & Berman, L.P. 581,900 6.5
Robert M. Ayres, Jr.(3) 197,374 2.2
Robert R. Lende(4) 127,989 1.4
Laura D. Davies(5) 62,297 0.7
David P. Valentine(6) 58,250 0.6
Eamonn F. Grant (7) 31,263 0.3
James A. O'Donnell(8) 20,503 0.2
Ferd. C. Meyer, Jr.(9) 16,950 0.2
Daniel T. McShane(10) 19,203 0.2
Heather J. Gradison(11) 9,000 0.1
Henry M. Chidgey 5,750 0.1
Thomas D. Ellen (12) 2,100 0.0
Michael T. Brigham (13) 2,569 0.0
Directors and executive officers as a 1,246,250 13.3
group (13 persons)(14)
</TABLE>
______________
(1) Each holder has advised the Company that, except as noted below, it has
sole investment and voting power with respect to the shares indicated.
(2) The number of shares of Common Stock beneficially owned by Mr. Flohr
includes 72,592 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days, and 84,800 shares of stock
held in trusts for members of Mr. Flohr's family for which Mr. Flohr has
voting but not investment power. Not included are an aggregate of 90,019
shares beneficially owned by certain relatives of Mr. Flohr not living in
his home.
(3) The shares of Common Stock beneficially owned by Mr. Ayres include 4,000
shares of Common Stock reserved for issuance under stock options which are
exercisable within 60 days. Also included are 10,000 shares of Common
Stock held by a private foundation for which Mr. Ayres has voting and
investment power.
(4) The number of shares of Common Stock beneficially owned by Mr. Lende
includes 15,918 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days. Also included are 7,500
shares held by a private foundation, of which Mr. Lende is a co-trustee.
Mr. Lende disclaims beneficial ownership of these shares.
(5) The number of shares of Common Stock beneficially owned by Mrs. Davies
includes 41,560 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days.
(6) The number of shares of Common Stock beneficially owned by Mr. Valentine
includes 46,791 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days and does not include an
aggregate of 36,299 shares of Common Stock beneficially owned by Mr.
Valentine's adult children.
(7) The number of shares of Common Stock owned by Mr. Grant includes 19,106
shares of Common Stock reserved for issuance under Stock Options which are
exercisable within 60 days.
(8) The number of shares of Common Stock beneficially owned by Mr. O'Donnell
includes 4,000 shares of Common Stock reserved for issuance under Stock
Options with are exercisable within 60 days.
(9) The shares of Common Stock beneficially owned by Mr. Meyer includes 4,000
shares of Common Stock reserved for issuance under stock options which are
exercisable within 60 days.
(10) The number of shares of Common Stock beneficially owned by Mr. McShane
includes 14,090 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days.
(11) The shares of Common Stock beneficially owned by Mrs. Gradison includes
4,000 shares of Common Stock reserved for issuance under stock options
which are exercisable within 60 days.
(12) The shares of Common Stock beneficially owned by Mr. Ellen includes 2,000
shares of Common Stock reserved for issuance under Stock Options which are
exercisable within 60 days.
(13) The number of shares of Common Stock beneficially owned by Mr. Brigham
includes 1,319 shares of Common Stock reserved for issuance under Stock
Options which are exercisable within 60 days.
(14) The number of shares of Common Stock beneficially owned by the Directors
and executive officers as a group includes 229,376 shares of Common Stock
reserved for issuance under stock options which are exercisable within 60
days.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table shows all cash and non-cash compensation paid to the
Company's Chief Executive Officer and each of the four most highly compensated
executive officers (collectively, the "Named Executives") for their services to
the Company during the years ended December 31, 1995, 1994, and 1993. The
Company does not have employment contracts with any of the Named Executives.
There are no arrangements under which any Named Executive will receive
compensation in excess of $100,000 as a result of resignation, retirement or
other termination of employment or as a result of any change in control of the
Company (or a change in the individual's responsibilities as a result of such a
change in control).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
--------------------------------- --------------------------------------------------------
RESTRICTED
FISCAL OTHER ANNUAL STOCK ALL OTHER
YEAR SALARY BONUS(1)(2) COMPENSATION AWARDS OPTIONS(4) COMPENSATION(5)
------ -------- ----------- ------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$234,192 $ 41,733 -- 14,338 $71,134
Bruce M. Flohr 1995 221,270 95,589 $26,518 -- 10,500 --
Chairman and Chief 1994 190,466 69,170 -- -- 13,500 --
Executive Officer 1993 --
Henry M. Chidgey 1995 172,838 124,978(3) -- -- -- 22,981
President, Chief 1994 -- -- -- -- -- --
Operating Officer 1993 -- -- -- -- -- --
David P. Valentine 1995 159,086 16,107 -- -- 5,213 --
Vice President - 1994 154,450 34,752 -- -- 3,900 --
Line Acquisitions 1993 148,512 25,280 -- -- 10,669 --
Laura D. Davies 1995 129,363 17,289 -- -- 4,085 13,454
Vice President-Finance 1994 100,860 27,232 -- -- 3,450 --
Chief Financial Officer 1993 96,978 42,015 -- -- 9,244 --
Daniel T. McShane 1995 112,840 14,396 -- -- 4,919 16,422
Vice President- 1994 105,620 32,794 -- -- 3,900 --
Acquisitions and 1993 101,556 25,355 -- -- 9,244 --
New Venture Dev.
------------------------
</TABLE>
(1) Bonuses are paid to executive officers, as well as all other employees of
the Company, pursuant to the Company's performance-based profit-sharing
program.
(2) The amount shown in the bonus column reflects bonuses paid in subsequent
periods for performance during the named period. In the Company's prior
proxy statements, the amount shown in the bonus column had reflected cash
paid in the corresponding fiscal period.
(3) Includes a signing bonus paid to Mr. Chidgey of $99,250.
(4) Reflects options granted during 1995.
(5) Consists of premium payments for split dollar life insurance.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS IN 1995 FOR OPTION TERM(1)
------------------------------------------- ------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(2) FISCAL YEAR ($/SHARE) (3) DATE 5% ($) 10% ($)
----------------------------- ------------ ----------- ------------ --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Flohr............... 14,338 12.0% $27.25 4/18/2005 $245,716 $622,692
Henry M. Chidgey............. -- -- -- -- -- --
David P. Valentine........... 5,213 4.4 27.25 4/18/2005 89,337 226,398
Laura D. Davies.............. 4,085 3.4 27.25 4/18/2005 70,006 177,409
Daniel T. McShane............ 4,919 4.1 27.25 4/18/2005 84,299 213,630
----------------------
</TABLE>
(1) Potential gains are net of exercise price, but before taxes associated with
exercise. The amounts represent certain assumed rates of appreciation only,
based on rules promulgated by the Securities and Exchange Commission.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, overall market conditions and the option
holders' continued employment through the vesting period. The amounts
reflected in this table may not necessarily be achieved. One share of stock
purchased at $27.25 in 1995 would yield profits of $17.14 at 5% appreciation
per year over ten years, or $43.43 at 10% appreciation per year over the
same period.
(2) All options granted in 1995 by the Company vest over a five year period from
the date of grant, provided the option holder remains employed with the
Company.
(3) The options were granted in April 1995. The exercise price was set at
$27.25, the last sale price for the Company's Common Stock on April 17,
1995.
The following table describes the exercisable and unexercisable options to
purchase shares of the Company's Common Stock held by the Company's Named
Executives and the value of such options as of December 31, 1995. No options
were exercised by these individuals during 1995.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/95 OPTIONS AT 12/31/95(1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Flohr............. None N/A 72,592 25,525 $1,035,781 $99,321
Henry M. Chidgey........... None N/A -- -- -- --
David P. Valentine......... None N/A 46,791 12,428 695,716 75,500
Laura D. Davies............ None N/A 41,560 10,761 614,534 69,611
Daniel T. McShane.......... None N/A 14,090 11,473 152,861 66,416
----------------------
</TABLE>
(1) The value of unexercised options is based on the difference between the
closing sales price of $21.00 per share of Common Stock on
December 29, 1995 and the option exercise price.
8
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors, consisting of Robert
M. Ayres, Jr., Heather J. Gradison and Ferd. C. Meyer, Jr. (the "Committee"),
presents the following report on executive compensation. The report describes
the Company's executive compensation programs and the basis on which the
Committee made compensation decisions for 1995 with respect to the Company's
executive officers, including those named in the above compensation tables.
Compensation Objectives. The Company's executive compensation programs are
designed to attract, retain and motivate the highest quality of management
talent. To achieve that objective, the Committee has developed a compensation
program which combines annual base salaries with annual bonuses and stock option
grants tied to corporate and individual performance.
Annual Base Salaries. The Committee annually establishes the base salaries
to be paid to the Company's executive officers during the coming year, subject
to approval by the Board of Directors. The Committee's decisions regarding the
1995 base salary to be paid to each executive officer and the executive officers
as a group were based upon several factors (without any particular emphasis
given by the Committee to one factor over another), including the executive's
job performance, competitive compensation data, and the executive's experience,
responsibilities and management abilities. The Committee also considered the
Company's performance in 1994, noting that the Company completed negotiations on
its two largest acquisitions in 1994 and the Company's 1994 consolidated net
income increased 89.0% and its operating revenues increased by 25.0%.
Annual Incentive Bonuses. The Company maintains a performance-based,
profit-sharing program through which a portion of the Company's earnings are
distributed as bonuses to all of its employees. Bonuses to railroad employees
are paid quarterly, while bonuses to the Company's executive officers and
headquarters personnel are paid annually. Commencing January 1, 1993, bonuses
may be earned by the Company's executive officers pursuant to an Executive
Incentive Bonus Plan (the "Executive Plan"). The Executive's Plan was
established by the Committee and sets a target bonus for each executive officer,
which is a specified percentage of the individual's base pay. This target bonus
is determined by the Committee, and may be increased up to a specified maximum
or decreased depending upon the Company's financial performance and the
executive officer's performance as determined by the Committee. The Compensation
Committee may also award special bonuses to recognize special achievements. The
executive officer bonuses for 1995 were determined and paid in March 1996.
Stock Options. In order to encourage executive officers to focus on the
Company's long-term performance, the Committee (subject to the approval of the
Board of Directors) granted each executive officer on April 18, 1995 options to
purchase shares of the Company's Common Stock. The options, with a ten-year
term, vest and become exercisable at the rate of 20% per year commencing on the
first anniversary of the date of grant, provided the executive officer remains
an employee of the Company. The exercise price of the options was set at $27.25
per share, the last sale price of the Company's Common Stock on April 17, 1995.
Compensation of Chief Executive Officer. Mr. Flohr's base annual salary for
the year ended December 31, 1995 was $234,192, a 6% increase over 1994. In March
1996, he was paid a bonus for 1995 of $41,733, which constituted 18% of his base
annual salary and a 44% decrease from the $95,589 bonus paid to him for 1994.
Mr. Flohr also received options to purchase 14,338 shares of the Company's
Common Stock at $27.25 per share. In establishing the 1995 annual salary for Mr.
Flohr, the Committee considered the same factors it considered in setting the
1995 annual salaries for the other executive officers as described above.
9
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Company's Common Stock first began publicly trading on the National Market
System of NASDAQ on November 18, 1993. The graph below compares the cumulative
total shareholder return on the Company's Common Stock for the period November
18, 1993 through December 31, 1995, with the cumulative total return on the
Nasdaq U.S. Composite Index, the Nasdaq Truck and Transportation Index, and a
composite comparison group determined by the Company consisting of certain Class
I railroads, trucking companies, and rail equipment companies. The return
calculations presented assume an investment of $100 on November 18, 1993 in the
Company's Stock and each of the indices, and the reinvestment of all dividends.
TOTAL SHAREHOLDER RETURN
NOVEMBER 18, 1993-DECEMBER 29, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
11/18/93 12/31/93 12/30/94 12/29/95
-------- -------- -------- --------
<S> <C> <C> <C> <C>
RailTex 100 168 144 127
NASDAQ US Composite
Index 100 106 103 146
NASDAQ Truck/Trans-
portation Index 100 103 93 109
Comparator Group 100 103 86 122
</TABLE>
10
<PAGE>
PROPOSAL #3
APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed the firm of Arthur
Andersen LLP to audit the accounts of the Company for the 1996 fiscal year.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Approval of the appointment of auditors is not a matter which is required
to be submitted to a vote of shareholders, but the Board of Directors considers
it appropriate for the shareholders to express or withhold their approval of the
appointment. If shareholder approval should be withheld, the Board would
consider an alternative appointment for the succeeding year. The Board
recommends that the shareholders vote FOR approval of the appointment of Arthur
Andersen LLP. The affirmative vote of a majority of the shares present and
voting at the meeting in person and by proxy is required for approval.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received in writing by the Company at its
corporate office no later than December 21, 1996. The Company's corporate office
is located at 4040 Broadway, Suite 200, San Antonio, Texas, 78209.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. To assist in
the proxy solicitation, the Company has engaged Corporate Investor
Communications, Inc. for a fee of $4,500, plus reimbursement for out-of-pocket
expenses. Proxies may be solicited through the mail and through telephonic or
telegraphic communication to, or by meeting with, shareholders or their
representatives by Directors, officers and other employees of the Company who
will receive no additional compensation therefor.
The Company requests 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 to request authority for the execution of the proxy. The Company
reimburses such persons for their reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company.
RailTex, Inc.
[Signature of Laura D. Davies Appears Here]
Laura D. Davies
Vice President-Finance, Chief Financial Officer,
and Corporate Secretary
Dated: May 17, 1996
11
<PAGE>
EXHIBIT "A"
RAILTEX, INC.
1993 STOCK PLAN
1. Purpose. This 1993 Stock Plan, as amended, (the "Plan") is intended to
provide incentives (a) to the officers and other employees of RailTex, Inc. (the
"Company"), its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422A(b) of
the Internal Revenue Code of 1986 (the "Code") ("ISO" or "ISOs"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations, or any other person or entity, by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified
Options"); (c) to directors, officers, employees and consultants of the Company
and Related Corporations, or any other person or entity, by providing them with
awards of stock in the Company ("Awards"); (d) to directors, officers, employees
and consultants of the Company and Related Corporations, or any other person or
entity, by providing them with Stock Appreciation Rights ("SAR" or "SARs") in
tandem with, or independently of, options granted hereunder; (e) to directors,
officers, employees and consultants of the Company and Related Corporations, or
any other person or entity, by providing them with performance awards in the
form of units ("Units") representing phantom shares of stock ("phantom share" or
"phantom shares"), each Unit representing one phantom share; (f) to directors,
officers, employees and consultants of the Company and Related Corporations, or
any other person or entity, by providing them with opportunities to make direct
purchases of stock in the Company ("Purchases"); and (g) to outside directors by
providing each of them with annual grants of ten-year options to purchase 3,000
shares of Common Stock ("Outside Directors' Options"). Anything in this Plan to
the contrary notwithstanding, Stock Rights (as defined below) shall not be
granted or awarded hereunder to any administrator or administrators if such
grant, award or purchase would cause such administrator or administrators not to
satisfy the "disinterested person" requirements of Rule 16b-3, or any successor
or amended rule ("Rule 16b-3"), promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "1934
Act").
ISOs, Non-Qualified Options and Outside Directors' Options are referred to
hereafter individually as an "Option" and collectively as "Options." Options,
Awards, SARs, Units and authorizations to make Purchases are referred to
hereafter collectively as "Stock Rights." Recipients of such Stock Rights are
hereafter referred to individually as an "Optionee" and collectively as
"Optionees." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation" respectively, as those terms are
defined in Section 425 of the Code.
2. Administration of the Plan. The Plan shall be administered (i) to the
extent required by Rule 16b-3, by an administrator or administrators in
compliance with Rule 16b-3, and (ii) in all other cases, by such administrator
or administrators as the Board of Directors (the "Board") may designate
(collectively, the "Administrators"). Subject to terms of the Plan, the
applicable Administrator shall have the authority to (i) determine the employees
of the Company and Related Corporations (from among the class of employees
eligible under paragraph 1 to receive ISOs) to whom ISOs may be granted and to
determine (from among the class of
<PAGE>
individuals and entities eligible under paragraph 1 to receive Non-Qualified
Options, Awards, SARs and Units and to make Purchases) to whom Non-Qualified
Options, Awards, SARs, Units and authorizations to make Purchases may be
granted; (ii) determine the time or times at which Options, Awards, SARs or
Units may be granted or Purchases made; (iii) determine the option price of
shares subject to each Option (subject to the requirements of paragraph 4 with
respect to ISOs and paragraph 5 with respect to Non-Qualified Options); (iv)
determine the purchase price of shares subject to each Purchase; (v) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (vi)
determine the time or times when each Option shall become exercisable and the
duration of the exercise period (subject to paragraph 4 with respect to ISOs and
paragraph 5 with respect to Non-Qualified Options); (vii) determine whether
restrictions such as repurchase options are to be imposed on shares subject to
Stock Rights and the nature of such restrictions, if any; and (viii) interpret
the Plan and prescribe and rescind rules and regulations relating to it;
however, neither the Board nor the applicable Administrator shall have any
authority to determine whether or when an outside director shall receive or
exercise Outside Directors' Options (or to determine the exercise price of such
Outside Directors' Options) other than to ensure compliance with the terms of
the Plan with respect to Outside Directors' Options. With respect to persons
subject to Section 16 of the 1934 Act, transactions under the Plan are intended
to comply with all applicable conditions of Rule 16b-3. To the extent any
provision of the Plan or action by the applicable Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the applicable Administrator. The interpretation and
construction by the applicable Administrator of any provisions of the Plan or of
any Stock Right granted under it shall be final unless otherwise determined by
the Board. Administrators or the Board may from time to time adopt such rules
and regulations for carrying out the Plan as they may deem best. No member of
the Board, any Administrator nor the Company shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
3. Stock. The stock subject to the Stock Rights shall be authorized but
unissued shares of the Company's Common Stock, par value $.10 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares of Common Stock which may be issued
pursuant to the Plan is 1,250,000; provided, however, that in no event shall the
number of shares of Common Stock subject to, and issued upon the exercise of,
ISOs exceed 1,250,000 in the aggregate; provided, further that the aggregate
number of shares of Common Stock subject to, and issuable or issued under, the
Plan and the shares of Common Stock subject to the Company's outstanding options
to purchase 306,168 shares of Common Stock that were granted outside of the Plan
shall not exceed 1,250,000; and provided further, that the maximum number of
shares of Common Stock issuable under the Plan to any employee in any calendar
year shall not exceed 1,250,000. The number of shares authorized for the grant
of Stock Rights under the Plan shall be subject to adjustment as provided in
paragraph 10. If any Option or any other Stock Right granted under the Plan
shall expire or terminate for any reason without having been exercised in full
or shall cease for any reason to be exercisable in whole or in part, or if the
Company shall reacquire any unvested shares issued pursuant to any Stock Right
the unpurchased shares subject to such Options or Stock Rights and
2
<PAGE>
any unvested shares so reacquired by the Company shall again be available for
grants of Stock Rights under the Plan to the extent permitted by Rule 16b-3.
4. ISO Provisions. Any of the following provisions shall have no force or
effect if its inclusion in the Plan is not necessary for Options issued as ISOs
to qualify as ISOs pursuant to the Code and the regulations issued thereunder.
A. Grant of ISO. All ISOs shall be granted under the Plan within ten
(10) years of the date of the Plan's adoption by the Board or the date the Plan
receives the requisite shareholder approval, whichever is earlier.
B. Minimum Option Price for ISOs.
(i) The price per share specified in the agreement relating
to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning
stock representing more than ten percent of the total combined
voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than 110 percent
of the fair market value per share of Common Stock on the date of
grant.
(ii) In no event shall the aggregate fair market value
(determined at the time an ISO is granted) of Common Stock for
which ISOs granted to any employee are exercisable for the first
time by such employee during any calendar year (under all stock
option plans of the Company and any Related Corporation) exceed
$100,000.
(iii) If, at the time an ISO is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value"
shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior
to the date such Option is granted and shall mean (a) the last
reported sales price of the Common Stock on the principal
national securities exchange on which the Common Stock is traded,
if the Common Stock is then traded on a national securities
exchange; or (b) the last reported sale price (on that date) of
the Common Stock on the NASDAQ National Market List, if the
Common Stock is not then traded on a national securities
exchange; or (c) the closing bid price (or the average of bid
prices) last quoted (on that date) by an established quotation
service for over-the-counter securities, if the Common Stock is
not reported on the NASDAQ National Market List. However, if the
Common Stock is not publicly traded at the time an ISO is granted
under the Plan, "fair market value" shall be deemed to be the
fair market value of the Common Stock as determined by the
applicable
3
<PAGE>
Administrator after taking into consideration all factors which
it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions
negotiated at arm's length.
C. Duration of ISOs. Subject to earlier termination as provided in
subparagraphs F and G hereunder, each ISO shall expire on the date specified by
the applicable Administrator, but not more than (i) ten years from the date of
grant in the case of ISOs generally, and (ii) five years from the date of grant
in the case of ISOs granted to an employee owning stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or any Related Corporation. Subject to the foregoing provisions and
such earlier termination as provided in said subparagraphs E and F, the term of
each ISO shall be the term set forth in the original instrument granting such
ISO, except with respect to any part of such ISO that is converted into a Non-
Qualified Option pursuant to subparagraph K below.
D. Eligible Employees. ISOs may be granted to any employee of the
Company or any Related Corporation. Those officers and directors of the Company
who are not employees may not be granted ISOs under the Plan.
E. Acceleration of Exercise of ISOs. The Administrator shall not,
without the consent of the Optionee, accelerate the exercise date of any
installment of any ISO granted to any employee (and not previously converted
into a Non-Qualified Option pursuant to subparagraph K below) if such
acceleration would violate the annual vesting limitation contained in Section
422A(d) of the Code, as described in subparagraph B(ii) hereinabove.
F. Effect of Termination of Employment on ISOs. If an ISO Optionee
ceases to be employed by the Company or any Related Corporation other than by
reason of death or disability (as such term is defined in subparagraph I
hereunder), any ISO granted to such Optionee within the six-month period
immediately preceding such termination shall be cancelled forthwith. With
respect to any ISOs granted to such Optionee more than six months prior to such
termination, no further installments of such ISOs shall become exercisable and
his ISOs shall terminate after the passage of 60 days from the date of
termination of his employment, but in no event later than on their specified
expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
subparagraph K below. Leave of absence with the written approval of the
applicable Administrator shall not be considered an interruption of employment
under the Plan, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the employee
after the approved period of absence. Employment shall also be considered as
continuing uninterrupted during any other bona fide leave of absence (such as
those attributable to illness, military obligations or governmental service)
provided that the period of such leave does not exceed 90 days or, if longer,
any period during which such Optionee's right to reemployment is guaranteed by
statute. ISOs granted under the Plan shall not be affected by any change of
employment within or among the Company and Related Corporations, so long as the
Optionee continues to be an employee of the Company or any Related Corporation.
4
<PAGE>
G. Effect of Death or Disability on ISOs. If an Optionee ceases to
be employed by the Company or any Related Corporation by reason of his death,
any ISO of his may be exercised, to the extent of the number of shares with
respect to which he could have exercised it on the date of his death, by his
estate, personal representative or beneficiary who has acquired the ISO by will
or by the laws of descent and distribution, at any time prior to the earlier of
the date specified in the ISO agreement, the ISO's specified expiration date or
one year of the death of the Optionee.
If an Optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any ISO held by him on the date of termination of employment, to the extent of
the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the date specified in the ISO
agreement, the ISO's specified expiration date or one year from the date of the
termination of the Optionee's employment. For the purposes of the Plan, the
term "disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code or successor statute.
H. Adjustments. Any adjustment made pursuant to paragraphs 10(A) or
(B) with respect to ISOs shall be made only after the applicable Administrator,
after consulting with counsel for the Company, determines whether such
adjustments would constitute a "modification" of such ISOs (as that term is
defined in Section 425 of the Code) or would cause any adverse tax consequences
for the holders of such ISOs. If the applicable Administrator determines that
such adjustments made with respect to ISOs would constitute a modification of
such ISOs, it may refrain from making such adjustments.
I. Notice to Company of Disqualifying Dispositions. Each employee
who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a "disqualifying disposition" of any Common Stock
acquired pursuant to the exercise of an ISO. A "disqualifying disposition" is
any disposition (including any sale) of such Common Stock before the later of
(a) two years after the date the employee was granted the ISO or (b) one year
after the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
J. Other Requirements. ISOs shall be issued subject to such
additional requirements as may be imposed from time to time by the Code or the
regulations issued thereunder.
K. Conversion of ISOs into Non-Qualified Options; Termination of
ISOs. The applicable Administrator, at the written request of any Optionee, may
in its discretion take such actions as may be necessary to convert such
Optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
Optionee is an employee of the Company or a Related Corporation at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise
5
<PAGE>
price of the appropriate installments of such Options. At the time of such
conversion, the applicable Administrator (with the consent of the Optionee) may
impose such conditions on the exercise of the resulting Non-Qualified Options as
the applicable Administrator in its discretion may determine, provided that such
conditions shall not be inconsistent with the provisions of paragraph 5 or any
other paragraph of the Plan. Nothing in the Plan shall be deemed to give any
Optionee the right to have such Optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Administrator
takes appropriate action. The applicable Administrator, with the consent of the
Optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
5. Non-Qualified Options.
A. Minimum Option Price. The price per share specified in the
agreement relating to each Non-Qualified Option granted under the Plan shall not
be less than the fair market value per share of Common Stock on the date of such
grant. If, at the time a Non-Qualified Option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Non-Qualified Option is
granted and shall mean (i) the last reported sales price of the Common Stock on
the principal national securities exchange on which the Common Stock is traded,
if the Common Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or the average of bid
prices) last quoted (on that date) by an established quotation service for over-
the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market List. However, if the Common Stock is not publicly traded at
the time a Non-Qualified Option is granted under the Plan, "fair market value"
shall be deemed to be the fair market value of the Common Stock as determined by
the applicable Administrator after taking into consideration all factors which
it deems appropriate, including, without limitation, recent sale and offer
prices of the Common Stock in private transactions negotiated at arm's length.
B. Duration of Non-Qualified Options. Each Non-Qualified Option
shall expire on the date specified by the applicable Administrator, but not more
than ten (10) years from the date of grant.
C. Vesting of Non-Qualified Options. Subject to any longer or
shorter vesting period and any termination provisions which the applicable
Administrator may impose, a Non-Qualified Option shall be exercisable as
follows: (i) 20% of the shares under the Non-Qualified Option shall be
exercisable one calendar year after the date of its grant, (ii) an additional
20% of the shares under the Non-Qualified Option shall be exercisable two
calendar years after the date of its grant, (iii) an additional 20% of the
shares under the Non-Qualified Option shall be exercisable three calendar years
after the date of its grant, (iv) an additional 20% of the shares under the Non-
Qualified Option shall be exercisable four calendar years after the
6
<PAGE>
date of its grant, and (v) the last 20% of the shares under the Non-Qualified
Option shall be exercisable five calendar years after the date of its grant.
D. Maintain Non-ISO Status. If the applicable Administrator
determines to issue a Non-Qualified Option, it shall take whatever actions it
deems necessary, under Section 422A of the Code and the regulations promulgated
thereunder, to ensure that such Non-Qualified Option is not treated as an ISO.
6. Stock Appreciation Rights. At the discretion of the applicable
Administrator, Options granted under this Plan may be granted in tandem with
SARs ("tandem SARS"), or SARs may be granted independently of and not in tandem
with any Option ("naked SARs"). SARs will become exercisable at such time or
times, and on such conditions, as the applicable Administrator may specify; the
applicable Administrator may impose conditions upon the grant or exercise of any
SAR, which conditions may include a condition that the SAR may only be exercised
in accordance with rules and regulations adopted by the applicable Administrator
from time to time. Such rules and regulations may govern the right to exercise
the SAR granted prior to the adoption or amendment of such rules and regulations
as well as SAR rights granted thereafter.
A. Tandem SARs.
(i) Any tandem SAR granted with an ISO may be granted only
at the date of grant of such ISO. Any tandem SAR granted with a
Non-Qualified Option may be granted either at or after the time
such Option is granted. A tandem SAR is the right of an
Optionee, without payment to the Company (except for applicable
withholding taxes), to receive the excess of the fair market
value (as defined in subparagraph 4(B)(iii)) per share on the
date on which such SAR is exercised over the option price per
share as provided in the relating underlying Option. A tandem
SAR granted with an ISO may be exercised only when the fair
market value (as defined in subparagraph 4(B)(iii)) per share of
the Common Stock subject to the ISO exceeds the per share
exercise price of the ISO. A tandem SAR granted with an Option
shall pertain to, and be granted only in conjunction with, the
related underlying Option granted under this Plan and shall be
exercisable and exercised only to the extent that the underlying
Option is exercisable. The number of shares of Common Stock
subject to such tandem SAR shall be all or part of the shares
subject to such Option as determined by the applicable
Administrator. The tandem SAR shall either become fully or
partially non-exercisable and shall then be fully or partially
forfeited if the exercisable portion, or any part thereof, of the
underlying Option is exercised and vice versa.
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<PAGE>
(ii) Subject to any restrictions or conditions imposed by
the applicable Administrator, a tandem SAR may be exercised by
the Optionee as to a number of shares of Common Stock under its
related Option only upon the surrender of the then-exercisable
portion of the related Option covering a like number of shares of
Common Stock. Upon the exercise of a tandem SAR and the
surrender of the exercisable portion of the related Option, the
Optionee shall be awarded cash, shares of Common Stock or a
combination of shares and cash at the discretion of the
applicable Administrator. The award shall have a total value
equal to the product obtained by multiplying (1) the excess of
the fair market value per share on the date on which such tandem
SAR is exercised over the Option price per share by (2) the
number of shares subject to the exercisable portion of the
related Option so surrendered.
B. Naked SARs.
(i) A naked SAR may be granted irrespective of whether the
recipient holds, is being granted, or has been granted any
options under any stock plan of the Company. A naked SAR may be
granted irrespective of whether the recipient holds, is being
granted, or has been granted any tandem SARs. A naked SAR may be
made exercisable without regard to the exercisability of any
option.
(ii) With respect to the exercise of any naked SAR, the term
"Spread" as used in this paragraph 6 shall mean an amount equal
to the product computed by multiplying (1) the excess of (A) the
fair market value per share of Common Stock of the Company on the
date such naked SAR is exercised over (B) the price designated by
the applicable Administrator (the "Award Price") by (2) the
number of shares with respect to which such naked SAR is being
exercised.
C. General Provisions.
(i) The applicable Administrator may specify that a SAR
shall be exercisable for cash, for shares, for a combination of
cash or shares, or in cash or shares at the holder's option. On
the exercise of a SAR, the holder thereof, except as provided in
subparagraphs (ii) and (iii) of this paragraph 6(C), shall be
entitled to receive either:
(a) if the exercise is for shares, a number of shares equal
to the quotient computed by dividing the Spread by the fair
market value per share on the date of exercise of the SAR,
provided, however, that in lieu of fractional shares the
Company shall pay cash equal
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<PAGE>
to the same fraction of the fair market value per share on
the date of exercise of the SAR; or
(b) if the exercise is for cash, an amount in cash equal to
the Spread; or
(c) if the exercise is partly for cash and partly for
shares, a combination of cash in the amount specified in
such SAR holder's notice of exercise, and a number of shares
calculated as provided in clause (a) of this subparagraph
(i), after reducing the Spread by such cash amount, plus
cash in lieu of any fractional share as provided above.
(ii) Notwithstanding the provisions of subparagraph (i) of
this paragraph 6(C) the applicable Administrator shall have sole
discretion to consent to or disapprove, in whole or in part, any
permitted election or the right without election of a holder of a
SAR to receive cash upon the exercise of a SAR ("Cash Election").
Such consent or disapproval may be given at any time after the
Cash Election to which it relates. If the applicable
Administrator shall disapprove a Cash Election, in lieu of paying
the cash (or any portion thereof) specified in such Cash
Election, the Administrator shall determine the amount of cash,
if any, to be paid pursuant to such Cash Election and shall issue
a number of shares calculated as provided in clause (a) of
subparagraph (i) of this paragraph 6(C), after reducing the
Spread by such cash to be paid plus cash in lieu of any
fractional share.
(iii) SARs granted or to be granted to officers or
directors of the Company under the Plan shall be subject to the
following additional provisions: (a) no grant shall be made
unless and until the Company has been subject to the reporting
requirements of Section 13(a) of the 1934 Act for at least a year
and has filed all reports and statements required to be filed
pursuant to such Section for that year; (b) a Cash Election may
be made only during the period beginning on the third business
day following the date of release for publication of the
quarterly and annual summary statements of sales and earnings of
the Company and ending on the twelfth business day following such
date; and (c) no Cash Election may be made (and no related Option
exercised) during the six months after grant, except in the event
of the death or disability of the holder. The Company intends
that this subparagraph (iii) shall comply with the requirements
of Rule 16b-3. Should any provision of this subparagraph (iii)
be unnecessary to comply with the requirements of the said Rule
16b-3, the Board may amend this Plan to add to or modify the
provisions of this Plan accordingly.
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<PAGE>
(iv) No SAR shall be transferable except by will or by the
laws of descent and distribution. During the life of a holder of
a SAR, the SAR shall be exercisable only by him or his guardian
or legal representative.
(v) A person exercising a SAR for shares shall not be
treated as having become the registered owner of any shares
issued on such exercise until such shares are delivered to him.
(vi) Each SAR shall be on such terms and conditions
(including additional terms and conditions) not inconsistent with
this Plan as the applicable Administrator may determine.
(vii) To exercise a SAR, the holder shall (i) give written
notice thereof to the Company addressed to the Secretary of the
Company by delivery to RailTex, Inc. at 4040 Broadway, Suite 200,
San Antonio, Texas 78209, and by specifying therein the amount he
elects (if such election is permitted under the terms of the SAR)
to receive in cash, if any, and the amount he elects (if such
election is permitted under the terms of the SAR) to receive in
shares and (ii) deliver to the Company such written
representations, warranties and covenants as may be required by
the Company or Company counsel. The date of exercise of a SAR
shall be the date on which the Company shall have received the
notice referred to in the first sentence of this subparagraph
(vii).
(viii) The number of shares awardable to an Optionee with
respect to the noncash portion of a SAR shall be determined by
dividing such noncash portion by the fair market value per share
(as determined in accordance with subparagraph 4(B)(iii)) on the
exercise date. No fractional shares shall be issued. Any
fractional shares which, but for this subparagraph (viii), would
have been issued to an Optionee pursuant to a SAR, shall be
deemed to have been issued and immediately sold to the Company
for their fair market value, and the Optionee shall receive from
the Company cash in lieu of such fractional shares.
7. Units. At the discretion of the applicable Administrator, performance
awards in the form of Units may be granted either independently of or in tandem
with a Stock Right granted hereunder, to such extent as determined by the
applicable Administrator, except that such Units shall not be granted in tandem
with ISOs granted under the Plan. Units granted hereunder may be based on such
factors as changes in the market price for shares of Common Stock of the
Company, personal performance of the recipient of such Units or of his division
or department, the performance of the Related Corporation by which he is
employed, or any other factors or criteria set by the applicable Administrator.
Units shall have such other terms and conditions as the applicable Administrator
shall determine and shall be payable in such form as such
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<PAGE>
Administrator may determine including, for example, payment in shares of the
Company's Common Stock.
8. Outside Directors' Options.
A. Grant. On January 1 of each calendar year after the date the
Plan is approved by the shareholders of the Company, each outside director then
serving shall receive an option to purchase 3,000 shares of Common Stock
(individually, an "Outside Director's Option," and collectively, "Outside
Directors' Options").
B. Minimum Purchase Price. The exercise price per share of the
Outside Directors' Options shall not be less than the fair market value per
share of Common Stock on the date of such grant. If, at the time an Outside
Director's Option is granted under the Plan, the Company's Common Stock is
publicly traded, "fair market value" shall be determined as of the last business
day for which the prices or quotes discussed in this sentence are available
prior to the date such Outside Director's Option is granted and shall mean (i)
the last reported sales price of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the NASDAQ National Market List, if
the Common Stock is not then traded on a national securities exchange; or (iii)
the closing bid price (or the average of bid prices) last quoted (on that date)
by an established quotation service for over-the-counter securities, if the
Common Stock is not reported on the NASDAQ National Market List. However, if
the Common Stock is not publicly traded at the time an Outside Director's Option
is granted under the Plan, "fair market value" shall be the average of the three
most recent sale and offer prices of the Common Stock in private transactions
negotiated at arm's length.
C. Duration of Outside Directors' Options. Each Outside Director's
Option shall expire ten (10) years from the date of grant; otherwise, an Outside
Director's Option shall not be subject to forfeiture or termination.
D. Exercise. An outside director may exercise an Outside Director's
Option, if exercisable, by providing written notice to the Company addressed to
the Secretary of the Company at 4040 Broadway, Suite 200, San Antonio, Texas
78209. The written notice shall specify the number of options being exercised,
and by paying the full exercise price. The written notice shall also include
such written representations, warranties and covenants as may be required by the
Company, Company counsel or the applicable Administrator.
E. Maintain Non-ISO Status. The applicable Administrator shall take
whatever actions it deems necessary, under Section 422A of the Code and the
regulations promulgated thereunder, to ensure that any such Outside Director's
Option is not treated as an ISO.
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<PAGE>
F. Holding Period and Termination. An outside director may not
dispose of any shares acquired as a result of the exercise of an Outside
Director's Option until six months after the date of the "grant" of the Outside
Director's Option, as determined in accordance with Rule 16(b)-3. Upon the
termination of the Plan or the unavailability of shares of Common Stock for
issuance under the Plan, no additional Outside Directors' Options shall be
granted.
9. Written Agreements. Stock Rights shall be evidenced by instruments
(which need not be identical) in such forms as the applicable Administrator may
from time to time approve. Such instruments shall conform to such terms,
conditions and provisions as are applicable hereunder and may contain such other
terms and conditions and provisions as the applicable Administrator deems
advisable which are not inconsistent with the Plan, including restrictions
applicable to shares of Common Stock issuable upon exercise of Stock Rights and
the payment, if applicable, of any legal form of consideration (including,
without limitation, whether payment must be in cash or by tendering shares of
Common Stock). A Stock Right may provide for acceleration of exercise in the
event of a change in control of the Company, in the discretion of and as defined
by the applicable Administrator. The applicable Administrator may from time to
time confer authority and responsibility on one or more of its own members
and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
10. Adjustments. Upon the happening of any of the following described
events, an Optionee's rights with respect to Options granted to him hereunder,
and the recipient's rights with respect to Common Stock to be acquired (or used
for measurement purposes) pursuant to the exercise of SARs or Units, or to be
acquired pursuant to a Purchase or Award hereunder, shall be adjusted as
hereinafter provided, unless otherwise specifically provided, in addition or to
the contrary, in the written agreement between the recipient and the Company
relating to such Stock Right.
A. Certain Corporate Events. In the event shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or
if, upon a merger, consolidation, reorganization, split-up, liquidation,
combination, recapitalization or the like of the Company, the shares of Common
Stock shall be exchanged for other securities of the Company or of another
corporation, each grantee of a Stock Right shall be entitled, subject to the
conditions herein stated, to purchase (or have used for measurement purposes)
such number of shares of Common Stock or amount of other securities of the
Company or such other corporation as were exchangeable for the number of shares
of Common Stock which such grantee would have been entitled to purchase (or have
used for measurement purposes) except for such action, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or exchange.
12
<PAGE>
B. Stock Dividends. In the event the Company shall issue any of its
shares as a stock dividend upon or with respect to the shares of stock of the
class which at the time shall be subject to a Stock Right hereunder, each
grantee upon exercising a Stock Right shall be entitled to receive (for the
purchase price paid upon such exercise) (or have used for measurement purposes)
the shares or other consideration as to which he is exercising his Stock Right
and, in addition thereto (at no additional cost), such number of shares of the
class or classes in which such stock dividend or dividends were declared or
paid, and such amount of cash in lieu of fractional shares, or other
consideration as he would have received if he had been the holder of the shares
as to which he is exercising (or which are used for measurement in connection
with) his Stock Right at all times between the date of grant of such Stock Right
and the date of its exercise.
C. New Securities. If any person or entity owning restricted Common
Stock obtained by exercise of a Stock Right made hereunder receives new or
additional or different shares or securities ("New Securities") in connection
with a corporate transaction described in subparagraph A above or a stock
dividend described in subparagraph B above as a result of owning such restricted
Common Stock, such New Securities shall be subject to all of the conditions and
restrictions applicable to the restricted Common Stock with respect to which
such New Securities were issued.
D. Cash Dividends. No adjustments shall be made for dividends paid
in cash or in property other than securities of the Company, unless specified to
the contrary by the applicable Administrator in the instrument evidencing such
Stock Right.
E. Fractional Shares. No fractional shares shall actually be issued
under the Plan. Any fractional shares which, but for this subparagraph E, would
have been issued to a grantee pursuant to a Stock Right shall be deemed to have
been issued and immediately sold to the Company for their fair market value, and
the grantee shall receive from the Company cash in lieu of such fractional
shares.
F. Adjustments. Upon the happening of any of the foregoing events
described in subparagraphs A or B above, the class and aggregate number of
shares set forth in paragraph 3 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Board shall determine the specific adjustments to be made under this
paragraph 10 and, subject to paragraph 4(H), its determination shall be
conclusive.
11. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised as specified in the written instrument
granting such Stock Right, which instrument may specify any legal method of
exercise and any method of payment of the exercise price, including, without
limitation, the payment of the exercise price by tendering outstanding shares of
Common Stock or shares of Common Stock received upon exercise of a Stock Right.
The holder of a Stock Right exercisable for shares shall not have the rights of
a shareholder with respect to the shares covered by his Stock Right until the
date of issuance of a stock certificate
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<PAGE>
to him for such shares. Except as expressly provided above in paragraph 10 with
respect to changes in capitalization and stock dividends, no adjustment shall be
made for dividends or similar rights for which the record date is before the
date such stock certificate is issued.
12. Transferability of Stock Rights. Except as otherwise provided in the
Plan, no Stock Right granted under the Plan shall be transferrable by an
Optionee other than by (i) will or the laws of descent and distribution, or (ii)
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act, or the rules thereunder.
13. Term of the Plan. This Plan was adopted by the Board on September 13,
1993, effective September 13, 1993, subject to approval of the Plan by the
holders of a majority of the outstanding shares of the Company at the next
meeting of shareholders present in person or by proxy at the next meeting of
shareholders. Stock Rights may be granted under the Plan at any time after
September 13, 1993, even if prior to the date of shareholder approval of the
Plan; provided, however, that such date shall not be prior to the date on which
the applicable Administrators acts to approve the grant or award. If the
requisite shareholder approval is not obtained by September 13, 1994, any grants
of ISOs under the Plan and any grants of Stock Rights to officers and directors,
as the case may be, made prior to that date will be automatically rescinded.
14. Termination; Amendment. The Board may terminate or amend the Plan in
any respect at any time, except that (i) no amendment requiring shareholder
approval under provisions of the Code and related regulations relating to ISOs
or under Rule 16b-3 will be effective without approval of shareholders as
required and within the times set by such rules, and (ii) no amendment may be
made more than once every six (6) months to the provisions of the Plan dealing
with, related to, affecting or governing Outside Directors' Options (other than
those required to comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules thereunder, or Rule 16b-3).
15. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Stock Rights authorized under the Plan shall be used
for general corporate purposes.
16. Governmental Regulation. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
17. Withholding of Additional Income Taxes. Upon the exercise of a Non-
Qualified Option, an Outside Director's Option, the grant of an Award, the
making of a Purchase of Common Stock for less than its fair market value, the
making of a Disqualifying Disposition (as defined in paragraph 4(I)), the
vesting of restricted Common Stock acquired on the exercise of a Stock Right
hereunder, or any other event in connection with a Stock Right, the Company, in
accordance with Section 3402(a) of the Code, may require the Optionee, Award
recipient,
14
<PAGE>
purchaser, or holder or exerciser of a Stock Right to pay additional withholding
taxes in respect of the amount that is considered compensation includable in
such person's gross income.
18. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the State of Texas. In construing this Plan, the singular shall include the
plural and the masculine gender shall include the feminine and neuter, unless
the context otherwise requires.
15
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<TABLE>
<CAPTION>
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| |
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<S> <C> <C>
1. To vote for the nominees for Class 1 FOR all nominees [x] WITHHOLD AUTHORITY to vote [x] * EXCEPTIONS [x]
Directors of the Board of Directors listed below for all nominees listed
below.
Bruce M Flohr, Palmer L. Mos and Laura D. Davies
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the Exceptions box and write that nominee's name on
the space provided below.)
*Exceptions _____________________________________________________________________________________________________________________
2. To approve a proposal to amend the Company's 1993 Stock Plan to: 3. To vote the appointment of Arthur Andersen LLP as the
(i) increase the maximum number of shares of Common Stock Issuable Company's auditor for the year ending December 31, 1996.
under the 1993 Plan from 750,000 to 1,250,000, without reduction
for the number of charges issued upon the exercise of options
granted outside of the 1993 Plan, (ii) extend the exercise period FOR [x] AGAINST [x] ABSTAIN [x]
for Outside Directors' Options from 2 to 10 years and increase the
number of shares which may be purchased under Outside Directors'
Options from 2,000 to 3,000, (iii) specify 1,250,000 shares as the
maximum number of shares issuable under the 1993 Plan to any employee
in any calendar year, (iv) permit the 1993 Plan Administrator to
specify shorter vesting periods for Non-Qualified Options, and (v) 4. In their discretion, to vote upon such other business
clarify that cashless exercises of Stock Rights are permitted under as may properly come before the meeting or any
the 1993 Plan. adjournment thereof.
FOR [x] AGAINST [x] ABSTAIN [x] Change of Address and [x]
or Comments Mark Here
Please sign exactly an your name appears to the left.
When shares are held by joint partners, both should
sign. When signing as attorney, as 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(s))
_____________________________________________________
(Signature(s))
Please Complete, Sign, Date and Return this Proxy Card Promptly VOTES MUST BE INDICATED [X]
Using the Enclosed Envelope. (X) IN BLACK OR BLUE INK.
</TABLE>
RAILTEX, INC.
4040 BROADWAY, SUITE 200
SAN ANTONIO, TX 78209
This proxy is solicited on behalf of the Board of Directors of RailTex, Inc.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
RailTex, Inc. ("the Company") and hereby appoints Bruce M. Flohr and Laura D.
Davies, and each of them, the attorneys of the undersigned, with power of
substitution, for an in the name of the undersigned, to vote as proxies for the
undersigned according to the number of shares of Common Stock the undersigned
would be entitled to vote if then personally present at the Annual Meeting of
Shareholders of the Company to be held June 12, 1996, or at any adjournment
thereof and to vote all shares of Common Stock of the Company held by the
undersigned and entitled to be voted upon the following matters as indicated on
the reverse side.
This Proxy may be revoked at any time prior to the voting thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS NUMBER 1, NUMBER 2, NUMBER 3 AND NUMBER 4.
(Please date and sign on other side)
RAILTEX, INC.
P.O. BOX 11305
NEW YORK, N.Y. 10203-0305
