OMNI RAIL PRODUCTS, INC.
975 SE Sandy Boulevard
Portland, Oregon 97214
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 4, 1999
To the shareholders of OMNI Rail Products, Inc.:
The Annual Meeting of the shareholders of OMNI Rail Products, Inc. (the
"Company") will be held at the Company offices at 975 SE Sandy Boulevard,
Portland, Oregon 97214 at 10:00 A.M. on November 4, 1999, or at any adjournment
or postponement thereof, for the following purposes:
1. To elect three directors of the Company.
2. To transact such other business as may properly come before the
meeting.
Details relating to the above matters are set forth in the attached Proxy
Statement. All shareholders of record of the Company as of the close of business
on September 24, 1999 will be entitled to notice of and to vote at such meeting
or at any adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY. A REPLY CARD IS ENCLOSED FOR YOUR CONVENIENCE. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
September 30, 1999 William E. Cook
Chairman of the Board of Directors
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PROXY STATEMENT
OMNI RAIL PRODUCTS, INC.
975 SE Sandy Boulevard
Portland, Oregon 97214
Telephone (503) 230-8034
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 4, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of OMNI Rail Products, Inc. (the "Company"), a
Delaware corporation, of $.01 par value Common Stock ("Common Stock") to be
voted at the Annual Meeting of Shareholders of the Company ("Annual Meeting") to
be held at 10:00 A.M. on November 4, 1999 or at any adjournment or postponement
thereof. The Company anticipates that this Proxy Statement and the accompanying
form of proxy will be first mailed or given to all shareholders of the Company
on or about September 30, 1999. The shares represented by all proxies that are
properly executed and submitted will be voted at the meeting in accordance with
the instructions indicated thereon. Unless otherwise directed, votes will be
cast for the election of the nominees for directors hereinafter named. The
holders of a majority of the shares represented at the Annual Meeting in person
or by proxy will be required to approve all proposed matters.
Any shareholders giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person,
at the Annual Meeting, that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the materials enclosed herewith and all costs of soliciting
proxies will be paid by the Company. In addition to the solicitation by mail,
proxies may be solicited by officers and regular employees of the Company by
telephone, telegraph or personal interview. Such persons will receive no
compensation for their services other than their regular salaries. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of the
shares held of record by such persons, and the Company may reimburse such
persons for reasonable out of pocket expenses incurred by them in so doing.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The close of business on September 24, 1999 has been fixed by the Board of
Directors of the Company as the record date (the "Record Date") for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. On the Record Date, there were outstanding 1,703,098 shares of Common
Stock, each share of which entitles the holder thereof to one vote on each
matter which may come before the Annual Meeting. Cumulative voting for directors
is not permitted.
A majority of the issued and outstanding shares entitled to vote,
represented at the meeting in person or by proxy, constitutes a quorum at any
shareholders' meeting. Abstentions and broker non-votes are counted for purposes
of determining whether a quorum exists at the annual meeting but are not counted
and have no affect on the determination of whether a plurality exists with
respect to a given nominee.
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Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 24, 1999, by
(i) each person who is known by the Company to own of record or beneficially
more than 5% of the Company's Common Stock; (ii) each of the Company's directors
and officers; and (iii) all directors and officers of the Company as a group.
Except as noted, the stockholders listed in the table have sole voting and
investment powers with respect to the shares indicated.
Name and Address of Number of
Beneficial Owner(1) Shares Owned Percent of Class (1)
------------------- ------------ --------------------
William E. Cook (2) 667,806 21.4%
1413 Loniker Drive
Raleigh, NC 27615
John E. Hart (3) 54,349 1.7%
Box 2495
Grass Valley, CA 95945
Edward S. Smith (4) 329,310 10.5%
921 SW Washington St., Ste. 762
Portland, OR 97205
Richard A. Kreitzberg (5) 868,462 27.8%
3332 El Dorado Loop South
Salem, OR 97032
Robert Tuzik (6) 84,273 2.7%
1732 Aspen Ct.
Lake Oswego, OR 97034
M. Charles Van Rossen (7) 70,000 2.2%
2747 SW English Ct.
Portland, OR 97201
Michael L. DeBonny 199,894 6.4%
16101 Parelius Circle
Lake Oswego, OR 97034
All officers and directors 1,205,738 38.6%
as a group (5 persons)
- ----------
(1) Assumes no exercise or conversion of common stock purchase warrants and
underwriter's warrants issued in conjunction with the Company's 1994 public
offering, outstanding warrants, options or other commitments of the Company
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that are convertible into or exercisable for shares of Common Stock, except
that Common Stock obtainable by persons named in the above table upon
exercise of options or conversion of debt is deemed outstanding and
beneficially owned by such persons in calculating their percentage
ownership.
(2) Includes options held by Mr. Cook to purchase 33,334 shares of Common Stock
under the Company's Incentive Stock Option Plan and includes 634,472 shares
available on conversion of convertible subordinated notes.
(3) Includes options held by Mr. Hart to purchase 36,668 shares under the
Company's Incentive Stock Option Plan.
(4) Includes options held by Mr. Smith to purchase 44,485 shares of Common
Stock under the Company's Incentive Stock Option Plan and includes 155,280
shares available on conversion of convertible subordinated note.
(5) Includes shares owned by Mr. Kreitzberg's spouse. Also includes 634,472
shares available on conversion of convertible subordinated note.
(6) Includes options held by Mr. Tuzik
(7) Includes options held by Mr. Van Rossen
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of
the Company's registered equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10 percent shareholder are required by the
regulations of the Securities and Exchange Commission to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and other representations, during the fiscal year April 30, 1999 all section
16(a) filing requirements were complied with, with the exception of Mr.
Kreitzberg who will complete the necessary filings within the next 30 days.
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect three directors of the
Company. Cumulative voting is not permitted for the election of directors. In
the absence of instructions to the contrary, the person named in the
accompanying proxy will vote in favor of the election of each of the persons
named below as the Company's nominees for directors of the Company. All of the
nominees are presently members of the Board of Directors. Each of the nominees
has consented to be named herein and to serve if elected. It is not anticipated
that any nominee will become unable or unwilling to accept nomination or
election, but if such should occur, the person named in the proxy intends to
vote for the election in his stead of such person as the Board of Directors of
the Company may recommend.
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The following table sets forth certain information regarding each nominee
and each executive officer of the Company
Officer or
Name Age Office Director Since
---- --- ------ --------------
William E. Cook 51 Chairman of the Board of November, 1998
Directors and Director
Edward S. Smith 80 Director May, 1997
John E. Hart 60 Director and Secretary May, 1997
Robert E. Tuzik 48 President and Chief May, 1997
Operating Officer
M. Charles Van Rossen 43 Chief Financial Officer August, 1998
Directors hold office for a period of one year from their election at the
annual meeting of stockholders and until their successors are duly elected and
qualified. Officers of the Company are elected by, and serve at the discretion
of, the Board of Directors. None of the above individuals has any family
relationship with any other. Directors not employed by the Company receive a
$2,500 quarterly retainer, $500 each for attending Board of Directors' meetings
and are reimbursed for out-of-pocket expenses.
Background
The following is a summary of the business experience of each executive
officer and director of the Company for at least the last five years:
William E. Cook served as restructuring consultant and interim Chief Executive
Officer of the Company from March 31, 1998 through November 10, 1998, when he
accepted a seat on the board of directors and the chairmanship of the board. Mr.
Cook, through his company RiptideHoldings, Inc., was hired by the Company to
assist with the restructuring and turnaround of the Company. Mr. Cook has been
President of Riptide for four years. For the four years prior to that Mr. Cook
was President, CEO, a director and board chairman of DDL Electronics, Inc., a
New York Stock Exchange company with printed circuit board and electronic
contract assembly manufacturer operations in the United States and Europe. Prior
to that, Mr. Cook was a partner with TBM Associates, a venture capital firm
based in Boston, Massachusetts. Prior to that, Mr. Cook was President and CEO of
Signal Technology, Inc., a company he co-founded in 1981. Mr. Cook acts as a
consultant and/or serves on the boards of several private companies. Mr. Cook
has both undergraduate and graduate degrees in Engineering from North Carolina
State University and a Masters degree in Business Administration from MIT.
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Edward S. Smith was Chairman of the Board of Directors from March 31, 1998 until
Mr. Cook's acceptance of the position. He has been a director of the Company
since closing of the Company's merger with OMNI on April 30, 1997 and had been a
director of OMNI from 1994 to the closing of the merger. Mr. Smith is
President/Owner of Ted Smith & Company. He is the former chairman and Chief
Executive Officer of Omark Industries, Inc., an international manufacturer of
cutting chain for chain saws, hydraulic log loaders and sporting ammunition. His
business activity during the last five years has been concentrated on private
investing and board memberships. Currently he serves on the Board of Directors
of Georgia Gulf Corporation and Expert Systems Publishing Company.
John E. Hart has been a director of the Company since closing of the merger with
OMNI on April 30, 1997. Prior to the Company's merger with OMNI, he had been
general counsel to the Company since October 1993 and its Secretary and
Treasurer since June, 1994. From 1985 to 1994 he was engaged in the private
practice of law. He resumed his law practice in May, 1997. Mr. Hart holds a JD
degree from the University of Southern California and a BA degree from the
University of Redlands.
Robert E. Tuzik became President and Chief Operating Officer of the Company
October 15, 1998. He was Vice President - Sales and Marketing of the Company
from closing of the Company's merger with OMNI on April 30, 1997 until his
appointment to the position of President and Chief Operating Officer on October
15, 1998. He had been Vice President - Sales and Marketing of OMNI from 1996 to
the closing of the merger. From 1995 to 1996 he owned and operated Talus
Associates, specializing in railway marketing and media relations. Prior to that
he spent six years as engineering editor of Railway Track and Structures, a
railroad engineering journal. Mr. Tuzik holds a BA in English and MS in
Journalism from the University of Illinois at Chicago and Northwestern
University.
M. Charles Van Rossen served as the Company's interim Chief Financial Officer
from May 1, 1998 until his appointment as Chief Financial Officer, Vice
President Finance and Treasurer on August 11, 1998. From 1995 to 1998 he was a
private financial and management consultant. Prior to that he spent four years
as Chief Financial Officer and Controller of DDL Electronics, Inc., a New York
Stock Exchange company with printed circuit board and electronic contract
assembly manufacturer operations in the United States and Europe. Prior to that
he spent seven years with the Pacificorp group of companies working in various
management positions for that company's many subsidiaries. Prior to that Mr. Van
Rossen was an audit manager with KPMG Peat Marwick. He is a Certified Public
Accountant and holds a BS degree in Accounting and Quantitative Methods from the
University of Oregon.
DIRECTOR MEETINGS AND COMMITTEES
During the last full fiscal year, the Board of Directors held five meetings that
were all attended by all directors. There are no standing audit, nominating or
compensation committees of the Board of Directors.
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EXECUTIVE COMPENSATION
The following table sets forth remuneration paid to certain executive
officers for the fiscal years ended April 30, 1999, 1998 and 1997, respectively:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------------- --------------------
Other Securities
Year Annual Underlying
Ended Compen- Options LTIP All other
Name and Principal Position April 30 Salary Bonus sation SARs Payments Comp.
- --------------------------- -------- ------ ----- ------ ---- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
William E. Cook 1999 141,728(1) 33,334
Interim CEO 1998 0 0 30,000 0 0 0
Michael L. DeBonny (2) 1999 0 0 0 0 0 125,000
Former CEO, President 1998 150,000 0 0 0 0 0
and Treasurer 1997 151,814 0 0 618,144 0 0
(1) Represents consulting fees paid during fiscal 1999. Mr. Cook's current
contract provides for a monthly consulting fee of $7,500.
(2) Mr. DeBonny resigned from the Company on April 30, 1998. Pursuant to
his employment contract and the settlement agreement reached between
him and the Company, Mr. DeBonny was paid $125,000 severance during
fiscal 1999.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the number of shares of the Company's Common
Stock subject to stock options granted the named Executive Officer listed the
Summary Compensation Table during fiscal 1999, together with related
information.
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise of
Options/SARs Employees In Base Price Expiration
Name Granted(1) Fiscal Year(2) ($/Share) Date
---- ---------- -------------- --------- ----
William E. Cook 33,334 15% $0.375 10/15/08
(1) Represents non-qualified, fully vested stock options at time of grant.
(2) The indicated percentage represents the options to purchase the Company's
Common Stock granted to the named executive expressed as a percentage of
the aggregate number of options to purchase the Company's Common Stock
granted to employees of the Company in fiscal 1999.
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CERTAIN TRANSACTIONS
On July 6, 1998, Michael L. DeBonny who had served as an officer and
director of the Company entered into a Separation and Mutual Release Agreement
which resolved certain disputes and controversies between him and the Company.
Mr. DeBonny's employment was terminated and he resigned as a director both
effective April 30, 1998. In addition, Mr. DeBonny relinquished options to
purchase 618,144 shares of common stock and 63,150 shares of Series B preferred
stock and granted the directors of the Company an irrevocable proxy to vote all
shares he is entitled to vote through April 30, 2000.
In February, 1997, three OMNI directors (Messrs. DeBonny, Kreitzberg and
Smith) purchased shares in OMNI for a total of $99,617 at $3.50 per share.
Simultaneously, put agreements were executed requiring the Company to purchase
those shares at a price equivalent to $4.00 per share 120 days following the
investment. Mr. Kreitzberg exercised his put and his shares were repurchased in
June, 1997. The put agreements with Messrs. DeBonny and Smith were extended and
the put price adjusted. In March, 1998, they agreed to defer exercise of the
puts until April 2, 1999 and to adjust the price of the put to reflect an 11%
per annum return on the investment. Effective as of June 30, 1998, in
conjunction with the FINOVA debt restructuring, Mr. Smith's put was deemed
exercised and a note was issued to him for the amount due. The note is
subordinated to the FINOVA obligations and has deferred payments on the same
terms as other unsecured creditors who were required by FINOVA to subordinate
and defer payment. Mr. DeBonny's put was cancelled as of June 30, 1998, in
conjunction with the FINOVA debt restructuring and his separation agreement. The
subordinated promissory note from the Company to Mr. DeBonny which had been used
to pay for the stock issued in the put transaction in February 1997 was
reinstated and payment was deferred on the same terms as other unsecured
creditors who were required by FINOVA to subordinate and defer payment.
In March, 1997, OMNI entered into a short term equipment rental agreement
with one of its directors. The Company continues to rent such equipment on a
month to month basis.
On October 15, 1998, the directors authorized the issuance of up to
$250,000 worth of convertible subordinated notes to comply with the FINOVA debt
restructuring requirements. William E. Cook, who was restructuring consultant to
the Company and interim CEO, until joining the board of directors and becoming
Chairman of the Board on November 10, 1998, invested a total of $122,580 in
those notes. Mr. Smith invested $30,000. The notes are secured, are convertible
into common stock at $0.1932 per share and are due October 2003 and January
2004, with holder's option to require pay back in twelve monthly payments after
the notes' second anniversary date. The notes are subject to Subordination and
Standstill Agreements with the Company's senior lender.
Management is of the opinion that all transactions described above between
the Company and its officers, directors or stockholders were on terms at least
as fair to the Company as had the transactions been concluded with an
unaffiliated party. All material transactions effected in the future between the
Company and its officers, directors and principal stockholders will be subject
to approval by a majority of the Company's outside directors not having an
interest in the transaction.
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTS
KPMG Peat Marwick LLP conducted the audit of the Company's financial
statements for the year ended April 30, 199. It is the Company's understanding
that this firm is obligated to maintain audit independence as prescribed by the
accounting profession and certain requirements of the Securities and Exchange
Commission. As a result, the directors of the Company do not specifically
approve, in advance, non-audit services provided by the firm services on audit
independence.
Representatives from KPMG will be on hand at the annual meeting of
shareholders and will be available to answer any appropriate questions from
shareholders attending the meeting.
OTHER BUSINESS
Management of the Company is not aware of any other matters which are to be
presented to the Annual Meeting, nor has it been advised that other persons will
present any such matters. However, if other matters properly come before the
meeting, the individual named in the accompanying proxy shall vote on such
matters in accordance with his best judgment.
The above notice and Proxy Statement are sent by order of the Board of
Directors.
William E. Cook
Chairman of the Board of Directors
September 30, 1999
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
OMNI RAIL PRODUCTS, INC.
TO BE HELD NOVEMBER 4, 1999
The undersigned hereby appoints William E. Cook, Edward S. Smith or John E.
Hart as the lawful agent and Proxy of the undersigned (with all the powers the
undersigned would possess if personally present, including full power of
substitution), and hereby authorizes him to represent and to vote, as designated
below, all the shares of Common Stock of OMNI Rail Products, Inc. held of record
by the undersigned on September 24, 1999, at the Annual or any adjournment or
postponement thereof.
1. ELECTION OF DIRECTORS
FOR the election as a director of all nominees listed below (except as
marked to the contrary below).
WITHHOLD AUTHORITY to vote for all nominees listed below:
NOMINEES: William E. Cook, John E. Hart, Edward S. Smith
INSTRUCTION: To withhold authority to vote for individual nominees, write their
names in the space provided below.
2. In his discretion, the Proxy is authorized to vote upon any matters
which may properly come before the Annual Meeting, or any adjournment or
postponement thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS NAMED IN ITEM 1 ABOVE.
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and confirms all that said Proxy may do by virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: _________________ __________________________________
Signature
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE. __________________________________
Signature, if held jointly
PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OF
SHAREHOLDERS. _____
