<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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PICO PRODUCTS, INC.
-----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_______________________________________________
2) Form Schedule or Registration Statement No.:__________________________
3) Filing Party:_________________________________________________________
4) Date Filed:___________________________________________________________
<PAGE>
PICO PRODUCTS, INC.
12500 Foothill Boulevard
Lakeview Terrace, California 91342
November 17, 1995
Dear Shareholder:
The Company's Annual Meeting of Shareholders for the fiscal year ended
July 31, 1995, will be held at 10:00 a.m. Pacific Time on Thursday, December
14, 1995, at the Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll Avenue,
Pasadena, California 91106. We hope that you will attend.
The formal Notice of Annual Meeting of Shareholders and the Proxy
Statement for the Meeting are on the following pages.
You will note that the Board of Directors of the Company recommends a vote
"FOR" the election of seven directors to serve until the Annual Meeting of
Shareholders for the fiscal year ending July 31, 1996, "FOR" the ratification
of Deloitte & Touche LLP as independent public accountants of the Company,
and "FOR" the amendment of the Company's 1981 Non-Qualified Stock Option
Plan.
In order to assure that a quorum is present at the Meeting, you are urged
to sign and mail the enclosed proxy card at once, even though you may plan to
attend in person. You may revoke the proxy granted in the proxy card at any
time prior to its being voted by filing with the Secretary of the Company
either an instrument of revocation or a duly executed proxy card bearing a
later date. If you attend the Meeting, you may elect to revoke the proxy and
vote your shares in person.
The prompt return of your proxy card will help us avoid the expense of
further requests for proxies.
For your convenience in returning your proxy card, we enclose a return
envelope which requires no postage.
Very truly yours,
Everett T. Keech
Chairman and Chief
Executive Officer
<PAGE>
PICO PRODUCTS, INC.
12500 Foothill Boulevard
Lakeview Terrace, California 91342
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 1995
----------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Pico
Products, Inc. for the fiscal year ended July 31, 1995, will be held at the
Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll Avenue, Pasadena,
California 91106, on Thursday, December 14, 1995, at 10:00 a.m. Pacific Time,
for the following purposes:
1. To elect the members of the Board of Directors to serve until the next
annual meeting of shareholders and until their successors are duly elected
and qualified.
2. To consider and act upon a proposal to ratify the selection by the Board of
Directors of Deloitte & Touche LLP as the independent public accountants for
Pico Products, Inc. for the fiscal year ending July 31, 1996.
3. To consider and act upon a proposal to amend the Company's 1981
Non-Qualified Stock Option Plan.
4. To consider and transact such other business as may properly be brought
before the Meeting or any adjournment thereof.
Only shareholders of record at the close of business on November 13, 1995,
will be entitled to vote at the Meeting.
By order of the Board of Directors,
Spencer W. Franck, Jr.,
Secretary
Lakeview Terrace, California
November 17, 1995
- --------------------------------------------------------------------------------
| YOUR VOTE IS IMPORTANT |
| Whether or not you plan to attend the Meeting, please complete, date, sign |
|and mail your proxy card promptly in the enclosed postage paid envelope. |
- --------------------------------------------------------------------------------
<PAGE>
PICO PRODUCTS, INC.
12500 FOOTHILL BOULEVARD
LAKEVIEW TERRACE, CALIFORNIA 91342
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 1995
This Proxy Statement and the enclosed form of proxy card are intended to
be sent or given to shareholders of Pico Products, Inc. (the "Company") on or
about November 17, 1995, in connection with the solicitation of proxies by
Management on behalf of the Board of Directors of the Company for use at the
Annual Meeting of Shareholders for the fiscal year ended July 31, 1995 (the
"Meeting"), which will be held on Thursday, December 14, 1995, at 10:00 a.m.
Pacific Time at the Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll
Avenue, Pasadena, California 91106.
If the enclosed proxy card is properly signed and returned, the shares
represented by the proxy card will be voted and, if the shareholder indicates
a voting choice in the proxy card, the shares will be voted in accordance
with the choice. If the proxy card is signed but no specification is made,
the shares represented by the proxy card will be voted FOR the election of
the nominees for director listed below, FOR the ratification of the
appointment of Deloitte & Touche LLP as the independent public accountants
for the Company for the fiscal year ending July 31, 1996, and FOR the
amendment of the Company's 1981 Non-Qualified Stock Option Plan (the "1981
Plan"). Management knows of no business that will be presented to the Meeting
other than that which is set forth in this Proxy Statement. If any other
matter properly comes before the Meeting, the proxy holders will vote the
shares represented by the proxy cards in accordance with their best judgment,
subject to contrary shareholder instructions on any specific proxy.
Any proxy granted in a proxy card may be revoked by the shareholder giving
it, at any time prior to its being voted, by filing with the Secretary of the
Company an instrument of revocation or a duly executed proxy card bearing a
later date. Any proxy granted in a proxy card may also be revoked by the
shareholder's attendance at the Meeting and election, by filing an instrument
of revocation, to vote in person.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on November 13,
1995, as the record date (the "Record Date") for the determination of the
shareholders of the Company entitled to notice of, and to vote at, the
Meeting. At that date, there were outstanding 3,682,246 shares of the
Company's Common Stock, $.01 par value (the "Common Shares"). The
shareholders of record on the Record Date will be entitled to one vote per
Common Share on each matter submitted to the Meeting. No other voting
securities of the Company are outstanding. The presence at the Meeting, in
person or by proxy, of the holders of a majority of the Common Shares
entitled to vote shall constitute a quorum for the transaction of business at
the Meeting. Assuming a quorum is present, the affirmative vote of (i) a
plurality of the votes cast at the Meeting will be required for the election
of directors, (ii) the holders of a majority of the issued and outstanding
Common Shares present or represented and entitled to vote at the Meeting will
be required to approve the amendment of the 1981 Plan, and (iii) a majority
of the votes cast at the Meeting will be required for the ratification of
Deloitte & Touche LLP as the independent public accountants for the fiscal
year ending July 31, 1996, as well as for approval of such other matters as
may properly come before the Meeting or any adjournment of the Meeting.
With respect to the vote for the election of directors and the ratification
of the Company's independent public accountants, abstentions will have the same
effect as a "no" vote, and broker non-votes will have no effect on the outcome
of the vote. With respect to the amendment of the 1981 Plan, abstentions and
broker non-votes will have no effect on the outcome of the vote, unless a broker
<PAGE>
is deemed to be present but does not enter a vote, in which case the effect will
be the same as a "no" vote. In the event a broker that is a record holder of
Common Shares does not return a signed proxy, the Common Shares represented by
such proxy will not be considered present at the Meeting and, therefore, will
not be counted towards a quorum.
The following table sets forth, as of September 30, 1995, the number and
percentage of shares of the Company's Common Shares (the Company's only
outstanding class of capital stock) which, according to information supplied
to the Company, are beneficially owned by: (i) each person who is the
beneficial owner of more than 5% of the Common Shares; (ii) each of the
directors and the nominees for directorship of the Company individually;
(iii) each executive officer; and (iv) all current directors and executive
officers of the Company as a group. Unless otherwise indicated, the persons
named in the table below have sole voting and investment power with respect
to all Common Shares shown as beneficially owned by them.
Common Shares
Beneficially Owned Percent of
as of Class
Name and Address September 30, 1995 (Approx.)(1)
- ---------------- ------------------ ------------
Charles G. Emley, Jr. (2) 7,000 *
817 S. Madison Avenue
Pasadena, California 91106
David A. Heenan (3) 0 *
c/o The Estate of James Campbell
900 Fort Street Mall #1450
Honolulu, Hawaii 96813
Everett T. Keech (4) 178,100 4.7%
c/o Pico Products, Inc.
One Tower Bridge, Suite 501
West Conshohocken, Pennsylvania 19428
Joseph T. Kingsley (5) 7,333 *
c/o Pico Products, Inc.
12500 Foothill Boulevard
Lakeview Terrace, California 91342
George M. Knapp (6) 194,991 5.2%
c/o Pico Products, Inc.
12500 Foothill Boulevard
Lakeview Terrace, California 91342
E. B. Leisenring, Jr. 25,000 *
One Tower Bridge, Suite 501
West Conshohocken, Pennsylvania 19428
William W. Mauritz (7) 40,200 1.1%
c/o DeSilva & Partners, Inc.
866 Third Avenue
New York, New York 10022
2
<PAGE>
Common Shares
Beneficially Owned Percent of
as of Class
Name and Address September 30, 1995 (Approx.)(1)
- ---------------- ------------------ ------------
Norman F. Reinhardt (8) 2,500 *
c/o Pico Products, Inc.
12500 Foothill Boulevard
Lakeview Terrace, California 91342
J. Michael Sills (9) 217,143 5.9%
126 Shady Lane
Fayetteville, New York 13066
Standard Chartered Equitor Trustee 350,000 8.8%
CI Limited (10)
P.O. Box 284
Commercial House, Commercial Street
St. Helier, Jersey, Channel Islands
All directors and officers as a group
(9 individuals) 672,267 16.9%
- ------
* Denotes less than one percent of class.
(1) The percent of class for any person or group who, as of September 30,
1995, beneficially owned any shares pursuant to options which are
exercisable within 60 days of September 30, 1995, is calculated assuming
all such options have been exercised in full and adding the number of
shares subject to such options to the total number of shares issued and
outstanding on September 30, 1995.
(2) Includes options for 5,000 Common Shares granted by the Board of
Directors; such options were not granted pursuant to or under any of the
Company's option plans and are, therefore, non-qualified. Mr. Emley had
the right to acquire beneficial ownership of the shares underlying these
options within 60 days of September 30, 1995.
(3) Does not include 1,300 Common Shares owned by Mr. Heenan's wife. Mr.
Heenan disclaims beneficial ownership of such 1,300 Common Shares.
(4) Includes options for 150,000 Common Shares granted under the 1981
Non-Qualified Stock Option Plan and options for 25,000 Common Shares
granted under the 1992 Incentive Stock Plan. Mr. Keech had the right to
acquire beneficial ownership of the shares underlying these options
within 60 days of September 30, 1995. Also includes 100 Common Shares
held by Mr. Keech as custodian for his minor child under the Uniform
Gifts to Minors Act.
(5) Includes options for 3,333 Common Shares granted under the 1992
Incentive Stock Plan. Mr. Kingsley had the right to acquire beneficial
ownership of the shares underlying these options within 60 days of
September 30, 1995.
(6) Includes options for 75,000 Common Shares granted under the 1981
Non-Qualified Stock Option Plan and options for 3,333 Common Shares
granted under the 1992 Incentive Stock Plan. Mr. Knapp had the right to
acquire beneficial ownership of the shares underlying these options
within 60 days of September 30, 1995. Does not include 4,242 Common
Shares owned by Mr. Knapp's adult son. Mr. Knapp disclaims beneficial
ownership of such 4,242 Common Shares.
(7) Includes options for 25,000 Common Shares granted under the 1981
Non-Qualified Stock Option Plan and options for 10,000 Common Shares
granted under the 1992 Incentive Stock Plan. Mr. Mauritz had the right
to acquire beneficial ownership of the shares underlying these options
within 60 days of September 30, 1995.
3
<PAGE>
(8) Includes options for 1,667 Common Shares granted under the 1981
Non-Qualified Stock Option Plan and options for 833 Common Shares
granted under the 1992 Incentive Stock Plan. Mr. Reinhardt had the right
to acquire beneficial ownership of the shares underlying these options
within 60 days of September 30, 1995.
(9) Includes options for 35,000 Common Shares which were granted under the
1981 Non-Qualified Stock Option Plan and options for 10,000 Common
Shares granted under the 1992 Incentive Stock Plan. Mr. Sills had the
right to acquire beneficial ownership of the shares underlying these
options within 60 days of September 30, 1995. Does not include 300
Common Shares owned by Mr. Sills' adult son. Mr. Sills disclaims
beneficial ownership of such 300 Common Shares.
(10) Standard Chartered Equitor Trustee CI Limited ("Standard Chartered") is
a trust corporation that acts as a custodian of Scimitar Development
Capital Fund, a trust organized under the laws of Bermuda (the "Scimitar
Fund"), and is the trustee of Scimitar Development Capital "B" Fund, a
trust organized under the laws of Jersey (the "Capital "B" Fund").
Standard Chartered is deemed to have beneficial ownership of 350,000
Common Shares, which consist of warrants to purchase Common Shares which
are exercisable within 60 days of September 30, 1995 (the "Warrants").
The Scimitar Fund purchased 213,990 of the Warrants, and the Capital "B"
Fund purchased 136,010 of the Warrants. Standard Chartered shares voting
and dispositive power for 213,990 Common Shares to be purchased pursuant
to the exercise of the Warrants with the Scimitar Fund. Standard
Chartered shares voting and dispositive power for 136,010 Common Shares
to be purchased pursuant to the exercise of the Warrants with the
Capital "B" Fund.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons
who own more than ten percent of a registered class of the Company's equity
securities, to file reports of the ownership and changes in the ownership of
such securities with the Securities and Exchange Commission ("SEC") and the
American Stock Exchange. Officers, directors and beneficial owners of more
than ten percent of the Company's stock are required by SEC regulation to
furnish the Company with copies of all such forms which they file.
Based solely on the Company's review of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended July 31, 1995, all filing requirements applicable to its officers,
directors and persons who own more than ten percent of the Common Shares were
complied with.
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Company's Board of Directors
shall consist of not less than three nor more than eleven directors, as
determined by the Company's Board of Directors, and that each director shall
hold office until the next Annual Meeting of Shareholders and until a
successor shall be duly elected and qualified. The present number of
directors constituting the entire board is seven.
At the Meeting seven directors are to be elected to serve until the 1996
Annual Meeting and until their respective successors have been elected and
qualified. The persons designated as proxies in the accompanying proxy card
intend to vote FOR the seven nominees designated by Management listed below,
unless a contrary instruction is stated on the proxy card. If for any reason
any such nominee should become unavailable for election, the persons
designated as proxies in the proxy card may vote the proxy for the election
of a substitute designated by Management, unless a contrary instruction is
given on the proxy card. Management has no reason to believe that any of the
nominees will be unable or unwilling to serve if elected, and all nominees
have expressed their intention to serve the entire term for which election is
sought.
The Board of Directors has unanimously recommended that each of the
persons presently serving as director be reelected as director at the
Meeting. An affirmative vote of a plurality of the votes cast at the Meeting
4
<PAGE>
and entitled to vote thereon is required for the election of each director. The
names of the persons presently serving as directors of the Company, each of whom
has been nominated for reelection, and the executive officers of the Company are
listed below, together with their ages and certain other information as of
September 30, 1995 (except as indicated):
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
Name Age Director Since Position
---- --- -------------- ---------
<S> <C> <C> <C>
Everett T. Keech 55 1991 Chairman of the Board and Chief
Executive Officer
Charles G. Emley, Jr. 54 1993 Director
David A. Heenan 55 1995 Director
George M. Knapp 57 1979 Director and Senior Vice President
E.B. Leisenring, Jr. 70 1994 Director
William W. Mauritz 61 1992 Director
J. Michael Sills 57 1971 Director
Joseph T. Kingsley 50 -- Senior Vice President, Finance and
Operations, Chief Financial Officer
and Treasurer
Norman F. Reinhardt 42 -- Vice President, Technology and Product
Development
</TABLE>
CERTAIN BIOGRAPHICAL AND OTHER INFORMATION REGARDING THE COMPANY'S DIRECTORS
AND OFFICERS
Everett T. Keech has been the Chief Executive Officer of the Company since
October 1992. Mr. Keech has also been a director and Chairman of the Board of
the Company since February 1991. Prior to that, Mr. Keech was a partner in
several investment firms and was Chairman of Quaker Securities, Inc. from
1990 to 1994. Mr. Keech served as Vice Dean of the Wharton School of the
University of Pennsylvania from 1978 to 1985. Before that, Mr. Keech served
in a number of positions in Washington and was both Assistant Secretary and
Acting Under Secretary of the Air Force.
Charles G. Emley, Jr. has been a director of the Company since November
1993. Mr. Emley joined Unisys Corporation in November 1993 as Managing
Principal, World Wide Information Services. Prior to that he was a vice
president of IBM Consulting Group from November 1992 through October 1993,
and a management consulting partner with Deloitte & Touche LLP from 1977
until November 1992.
David A. Heenan has been a director of the Company since September 1995.
Since January 1995, Mr. Heenan has been a trustee of the Estate of James
Campbell. From May 1982 to December 1994, Mr. Heenan served as Chairman and
Chief Executive Officer of Theo. H. Davies & Co., Ltd., where he was
responsible for the North American operations of Jardine Matheson & Co. From
April 1975 to April 1982, Mr. Heenan was Vice President for Academic Affairs
of the University of Hawaii. Mr. Heenan currently serves on the Board of
Directors of Aloha Airgroup Inc., Bancorp Hawaii Inc., C. Brewer Homes Inc.
and Kennedy-Wilson Inc. Mr. Heenan received a Ph.D. from the Wharton School
of the University of Pennsylvania.
5
<PAGE>
George M. Knapp has been a director of the Company since 1979. Mr. Knapp
was the President of the Company from October 1982 to February 1991. In
February 1991, Mr. Knapp was appointed to the position of President of Pico
Macom, Inc., a subsidiary of the Company. In July 1991, Mr. Knapp was
appointed as a Senior Vice President of the Company. Mr. Knapp has advised
the Company that due to health reasons he expects to step down shortly from
the positions of Senior Vice President of the Company and President of Pico
Macom, Inc., but will continue as a director of the Company.
E.B. Leisenring, Jr. has been a director of the Company since November
1994. Mr. Leisenring has been Chairman of the Executive Committee of
Westmoreland Coal Company since January 1992. Prior to that, Mr. Leisenring
was Chairman of the Board and Chief Executive Officer of both Westmoreland
Coal Company and Penn Virginia Corporation, serving as Chairman of the Board
since 1978. Mr. Leisenring is also a director of Norfolk Southern Corporation
and SKF-USA, Inc. and Chairman of The Philadelphia Contributionship Insurance
Company.
William W. Mauritz has been a director of the Company since June 1992. Mr.
Mauritz joined DeSilva & Partners, Inc. as a Partner in June 1995. Mr.
Mauritz was Managing Director of William W. Mauritz & Associates, a
management consulting firm, from September 1990 to June 1995. From 1989 to
September 1990 he served as Executive Vice President-Human Resources for the
Bank of New England. From 1984 to 1989 he was Senior Vice President, Human
Resources for McGraw-Hill, Inc.
J. Michael Sills has been a director of the Company since 1971. Mr. Sills
has been President of Foresite Real Estate Inc. since July 1995. From
September 1990 through June 1995 Mr. Sills was an independent real estate
broker with Condor Brokerage Inc.
Joseph T. Kingsley has been Senior Vice President, Finance and Operations,
Chief Financial Officer and Treasurer of the Company, and Senior Vice
President, Finance and Operations of Pico Macom, Inc., since September 1995.
From November 1994 to September 1995, Mr. Kingsley was Senior Vice President,
Finance, Chief Financial Officer and Treasurer of the Company, and Senior
Vice President, Finance of Pico Macom, Inc. From 1988 to 1994, Mr. Kingsley
was Vice President, Business Administration for Kaiser Marquardt, Inc. and
Ferranti Defense & Space/The Marquardt Company.
Norman F. Reinhardt has been Vice President, Technology and Product
Development of the Company and Pico Macom, Inc., a subsidiary of the Company,
since March 1995. From January 1994 to March 1995, Mr. Reinhardt was Vice
President, Engineering of the Company and Pico Macom, Inc. Prior to joining
the Company, Mr. Reinhardt was Vice President, Business Development for News
Datacom, Inc., a subsidiary of News Corp., from 1992 to 1994, and Director,
Commercial Product Management, of VideoCipher Division of General Instrument,
from 1985 to 1992.
There are no family relationships between any director, executive officer
or person nominated or chosen by the Company to become a director or
executive officer.
GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
During the fiscal year ended July 31, 1995, the Board of Directors held a
total of three meetings. Each of the directors attended more than 75% of the
aggregate number of meetings of the Board and meetings of any committee of
which he is a member which was held during the time in which he was a
director or a committee member, as applicable.
The Board of Directors has an Audit Committee to discuss and review with
the Company's independent public accountants and management the scope of the
Company's annual audit examination, audit budget, proposed work schedule and
internal control policies. The current members of the Audit Committee are
E.B. Leisenring, Jr., Chairman, Charles G. Emley, Jr., William W. Mauritz,
and J. Michael Sills. The Audit Committee held one meeting during the fiscal
year ended July 31, 1995.
The Board of Directors has a Compensation Committee to review compensation
of officers of the Company and Pico Macom, Inc., a subsidiary of the Company,
and to administer the Company's stock option plans. The current members of
the Compensation Committee are William W. Mauritz, Chairman, Charles G.
Emley, Jr., E.B. Leisenring, Jr., and J. Michael Sills. The Compensation
Committee held three meetings during the fiscal year ended July 31, 1995.
6
<PAGE>
At the September 12, 1995 meeting of the Board of Directors, a Nominating
Committee was appointed for the purpose of recommending candidates for
nomination to the Board of Directors for election at the Meeting. William W.
Mauritz and E.B. Leisenring, Jr. served as members of this Nominating
Committee.
CERTAIN TRANSACTIONS
There were no reportable related party financial transactions during the
fiscal year ended July 31, 1995.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth a summary of all compensation paid or
accrued by the Company for services rendered during the last three fiscal
years, to the Chief Executive Officer of the Company and to each of the
Company's most highly compensated individuals who were serving as executive
officers at July 31, 1995 or who had served as executive officers during the
fiscal year ended July 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Other Annual Stock Option All Other
Principal Position Fiscal Year Salary Bonus Compensation(1) Grants Compensation
------------------ ----------- ------ ----- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Everett T. Keech, 1995 $160,416 $40,000 $32,546(2) 25,000 --
Chairman and Chief 1994 140,000 70,350 -- 25,000 --
Executive Officer 1993 133,462 -- -- 25,000 --
George M. Knapp, 1995 $135,000 $ 7,500 -- 10,000 --
Director and Senior 1994 135,000 54,270 -- -- --
Vice President 1993 135,000 -- -- -- --
Peter J. Moerbeek (3) 1995 $122,760 -- -- -- --
Former Director and 1994 118,943 $47,738 -- 10,000 --
Former Senior Vice 1993 110,000 -- -- -- --
President, Operations
Norman F. Reinhardt 1995 $ 92,917 $10,454 -- 7,500 --
Vice President, Technology
and Product Development
</TABLE>
- ------
(1) Does not include amounts for perquisites and other personal benefits,
securities or property paid to any of the named executive officers, which
arose primarily as a result of Company cars, car allowances and the use
of memberships in private clubs, the value of which does not exceed the
lesser of $50,000 or ten percent of the total of annual salary and bonus
reported for such person.
(2) Includes: $21,202 for premiums on life insurance and $8,088 car
allowance.
(3) Mr. Moerbeek resigned as a director and officer of the Company effective
July 13, 1995.
7
<PAGE>
STOCK OPTIONS
The following table sets forth grants of stock options made during the
Company's fiscal year ended July 31, 1995, to each of the named current and
former executive officers of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value
At Assumed Annual
Rates
Of Stock Price
Appreciation
Individual Grants For Option Term
--------------------------------------------------------------------------------- ----------------------
Number of % of Total Options
Options Granted to Employees Exercise Market Price on Expiration
Name Granted in Fiscal Year Price Date of Grant Date 5% 10%
- ---- ----------- -------------------- ---------- --------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Everett T. Keech 25,000 37.9% $3.19 $3.19 10/5/99 $22,033 $48,688
George M. Knapp 10,000 15.2% $3.19 $3.19 10/5/99 $ 8,813 $19,475
Joseph T. Kingsley 10,000 15.2% $2.50 $2.50 11/14/99 $ 6,907 $15,263
Norman F. Reinhardt 5,000 7.6% $2.50 $2.50 3/15/2000 $ 3,454 $ 7,631
Norman F. Reinhardt 2,500 3.8% $3.19 $3.19 10/5/99 $ 2,203 $ 4,869
Peter J. Moerbeek -0-
</TABLE>
- ------
Note: The grant of options disclosed in this table vest over the respective
three year period immediately following the date of grant.
EXERCISE OF OPTIONS
The following table sets forth information regarding the exercise of stock
options and the value of any unexercised stock options of each of the named
current and former executive officers of the Company during the fiscal year
ended July 31, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options at
End Fiscal Year End
----------------------- ------------------------
Shares Acquired Value
Name on Exercise Realized Vested Unvested Vested Unvested
- ---- --------------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Everett T. Keech -- -- 150,000 50,000 $198,333 $21,667
George M. Knapp -- -- 75,000 10,000 $105,000 --
Joseph T. Kingsley -- -- -- 10,000 -- --
Norman F. Reinhardt -- -- 1,667 10,833 -- --
Peter J. Moerbeek -- -- 58,533 6,667 $ 92,941 $5,334
</TABLE>
8
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph illustrates a five year comparison of cumulative
shareholder return for each of the fiscal years ended July 31, 1991, 1992,
1993, 1994 and 1995, among the Company, the American Stock Exchange Market
Index and a peer group index. The peer group index consists of comparable
companies which manufacture and distribute products for the cable television
industry.
|-----------------------------------------------------------------|
| $ Pico Products, Inc. *Peer Group Index @ Amex Market Index |
|-----------------------------------------------------------------|
$350|------------------------------------------------------------------|
| |
| |
$300|-------------------------------------------------------------*----|
| |
D | $ |
O $250|-------------------------------------------------*----------------|
L | |
L | * |
A $200|-------------------------------------------------------------$----|
R | |
S | |
$150|-------------------------------------------------------------@----|
| |
| $ $*@ @ |
$100|@*$---------@-----------------------$-----------------------------|
| * |
| |
$50|------------------------------------------------------------------|
| |
| |
0|-|-----------|-----------|-----------|-----------|-----------|----|
1990 1991 1992 1993 1995 1995
<TABLE>
<CAPTION>
|------------------------|----------|----------|----------|-----------|----------|---------|
| | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 |
|------------------------|----------|----------|----------|-----------|----------|---------|
<S> <C> <C> <C> <C> <C> <C>
| Pico Products, Inc. | 100 | 112.50 | 112.50 | 118.75 | 250.00 | 200.00 |
|------------------------|----------|----------|----------|-----------|----------|---------|
| Peer Group Index | 100 | 86.35 | 112.47 | 206.49 | 245.31 | 317.53 |
|------------------------|----------|----------|----------|-----------|----------|---------|
| Amex Market Index | 100 | 105.82 | 114.13 | 124.62 | 127.72 | 154.90 |
|------------------------|----------|----------|----------|-----------|----------|---------|
</TABLE>
Note: Assumes $100 invested on August 1, 1990 in the Company's Common Shares
and in each of the foregoing indices and assumes dividends reinvested.
The peer group index consists of Augat Inc., C-Cor Electronics Inc.,
California Amplifier Inc., Microwave Filter Inc., Oak Industries, Pico
Products, Inc., TSX Corp. and Wegener Corp.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
It is the responsibility of the Company's Compensation Committee to
exercise the power and authority of the Board of Directors with respect to
the compensation of employees, the administration of the Company's incentive
stock option plans, the review of compensation levels of members of
management and the evaluation of the performance of management.
In evaluating the reasonableness of compensation paid to the Company's
executive officers, the Committee takes into account how compensation
compares to compensation paid by competing companies as well as the Company's
performance. In making these determinations, the Committee has relied on
independent surveys of compensation of management of companies engaged in the
manufacture and distribution of electrical equipment, electronic components
and accessories.
It is the Company's policy that the compensation of executive officers be
based, in substantial part, on the Company's performance, as well as
individual contribution of each executive officer. As a result, much of an
executive officer's compensation is "at risk" in the form of stock option
compensation and incentive bonuses with target levels established by the
Committee for each position relative to position level. The Company's
performance for purpose of compensation decisions is measured against goals
established at the beginning of the fiscal year by the Compensation Committee
based on the fiscal year's budget approved by the Board of Directors. In
addition to financial performance, the Committee also weighs individual
performance so that in each case any discretionary annual bonuses reflect
individual achievements during the year. Also, no bonuses may be paid if the
Company fails to reach a stated earnings target.
During fiscal 1995, the Compensation Committee granted stock options
awards to some of the Company's executive officers. The key factors
considered by the Committee in determining the awards to these executives
were: their past performance; their existing stock and stock option
positions; their level of responsibilities; their relative position in the
Company; and the extent to which their actions can affect the Company's
future financial performance.
The base salary of Everett T. Keech, the Company's Chairman and Chief
Executive Officer, was established in September 1992, at $140,000 when he
became the Company's full-time Chief Executive Officer, and was increased in
September 1994, effective January 1, 1995, to $175,000. Determination of Mr.
Keech's salary level was based on independent salary survey information and
an evaluation of Mr. Keech's individual performance. In September 1995, Mr.
Keech entered into an employment agreement with the Company, pursuant to
which such base salary level will continue, subject to increase in the
discretion of the Committee.
Mr. Keech was a participant in the 1995 Management Incentive Plan and was
awarded a bonus of $40,000 based on individual performance in recognition of
the following achievements: continued profitability of the CATV Division;
ongoing reorganization of the Company's management structure; enhancement of
the Company's new product development program; and implementation of the
Company's program for increased international business.
Compensation Committee:
William W. Mauritz, Chairman
Charles G. Emley, Jr.
E.B. Leisenring, Jr.
J. Michael Sills
10
<PAGE>
EMPLOYMENT AGREEMENTS
Everett T. Keech and the Company are parties to a three-year employment
agreement, dated as of September 22, 1995. Terms of this agreement include a
minimum base salary of $175,000, a car allowance, participation in the
Company's incentive compensation plans and certain special life insurance
plans, and other standard benefits. In the event of a change of control, Mr.
Keech will receive a sum from the Company equal to 2.99 times his annual base
compensation, as well as continued payment by the Company of all of his
health, dental, hospitalization and disability benefits and car allowance for
a period of two years. If the Company terminates the employment agreement,
other than for cause or due to Mr. Keech's death or disability, the Company
will be obligated to pay Mr. Keech a sum equal to twice his annual base
compensation plus his target bonus for the year of termination and
continuation of benefits for a period of one year.
George M. Knapp and the Company are parties to a one-year, renewable
employment agreement, dated as of June 19, 1992 which expires June 18, 1996.
Terms of this agreement include a minimum base salary of $135,000, special
life insurance coverage and other standard benefits. In the event of a change
of control, Mr. Knapp will receive a sum from the Company equal to two times
his annual base compensation, as well as the continued payment by the Company
of all of his health, dental, hospitalization and disability benefits for a
period of two years. If the Company terminates the employment agreement with
Mr. Knapp, other than for cause or due to Mr. Knapp's death or disability,
the Company will be obligated to pay Mr. Knapp a sum equal to his annual base
compensation and continuation of benefits for a period of one year.
Joseph T. Kingsley and the Company are parties to a one-year employment
agreement, dated as of January 1, 1995. Terms of this agreement include a
minimum base salary of $105,000, special life insurance coverage and other
standard benefits. In the event of a change in control, Mr. Kingsley will
receive a sum from the Company equal to his annual base compensation, as well
as the continued payment by the Company of all of his health, dental,
hospitalization and disability benefits for a period of one year. If the
Company terminates the employment agreement with Mr. Kingsley, other than for
cause or due to Mr. Kingsley's death or disability, the Company will be
obligated to pay Mr. Kingsley a sum equal to his annual base compensation and
continuation of benefits for a period of one year.
Norman F. Reinhardt and the Company are parties to a one-year employment
agreement, dated as of March 22, 1995. Terms of this agreement include a
minimum base salary of $95,000 and standard benefits. In the event of a
change in control, Mr. Reinhardt will receive a sum from the Company equal to
his annual base compensation, as well as the continued payment by the Company
of all of his health, dental, hospitalization and disability benefits for a
period of one year. If the Company terminates the employment agreement with
Mr. Reinhardt, other than for cause or due to Mr. Reinhardt's death or
disability, the Company will be obligated to pay Mr. Reinhardt a sum equal to
his annual base compensation and continuation of benefits for a period of one
year.
COMPENSATION OF DIRECTORS
For the year ended July 31, 1995, outside directors received a fee of
$12,000 per year (payable monthly) and an annual grant of options for 2,000
Common Shares for their services as directors. Additionally, the chairmen of
the compensation and audit committees, respectively, of the Board of
Directors will receive an additional $6,000 and $3,000 per year (payable
monthly) for their services in these positions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended July 31, 1995, the Compensation
Committee consisted of Messrs. Mauritz, Emley, Leisenring and Sills. There
was no insider participation during the fiscal year ended July 31, 1995.
11
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touche LLP, and its predecessor, Touche Ross & Co., has been
the independent public accountant for the Company since January 1, 1982.
Deloitte & Touche LLP has been selected by the Company's Board of Directors
as the Company's independent public accountant for the current fiscal year.
This appointment will be submitted to the shareholders for ratification at
the Meeting.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting. He will be afforded an opportunity to make a statement if he desires
and will be available to respond to questions by shareholders. If the
shareholders do not ratify the selection of this firm, the selection of
another firm of independent certified public accountants will be considered
by the Board of Directors.
The Board of Directors may, in its discretion, direct appointment of a new
independent accounting firm at any time during the year if the Board believes
that such a change would be in the best interest of the Company and its
shareholders. No such change is anticipated.
The Board of Directors recommends a vote FOR the proposal to ratify the
selection of Deloitte & Touche LLP as the Company's independent certified
public accountants.
AMENDMENT OF THE 1981 NON-QUALIFIED STOCK OPTION PLAN
DESCRIPTION OF THE PROPOSED AMENDMENT AND VOTE REQUIRED
The Company's 1981 Non-Qualified Stock Option Plan (the "1981 Plan") was
originally adopted by the Board of Directors of the Company in 1981 and
approved by the shareholders of the Company at the 1981 Annual Meeting of
Shareholders. In 1991, the Board of Directors adopted certain amendments to
the 1981 Plan, which were approved by the shareholders at the 1991 Annual
Meeting of Shareholders.
On September 11, 1995, the Compensation Committee of the Board of
Directors voted to recommend that the 1981 Plan be further amended. On
September 12, 1995, the Board of Directors approved the amendment in
principle. By unanimous consent, dated as of November 6, 1995, the Board of
Directors adopted the amendment and directed that such amendment be submitted
for the approval of the shareholders at the Meeting. Such amendment will
become effective on the affirmative vote of the holders of a majority of
Common Shares present or represented and entitled to vote at the Meeting.
Should the amendment not be approved, the 1981 Plan will remain in force as
adopted in 1981 and as amended in 1991.
The proposed amendment increases the maximum term of options which may be
granted under the 1981 Plan from five years to ten years and grants to the
Compensation Committee of the Board (the "Committee") the right, in its
discretion, to modify any outstanding option by extending the expiration date
to a date no later than ten years from the date of original grant of such
option. Any such extension could be made at any time prior to the expiration
of the exercise period of the option.
SUMMARY DESCRIPTION OF THE 1981 PLAN
The Company's 1981 Plan permits the granting of options to purchase shares
of the Company's Common Stock to Key Employees and Key Contractors (including
officers, directors, and employees of, and consultants and advisors to, the
Company or any majority-owned subsidiary). Pursuant to the terms of the 1981
Plan, the Company has reserved 450,000 shares for issuance thereunder. To
date, the Company has awarded options for 450,000 shares, of which 40,000
have been exercised. Any options which are cancelled or not exercised within
the option period become available for future grants. No new options may be
granted after May 1, 1996. The number of shares which may be issued under the
1981 Plan is subject to anti-dilution adjustments.
The 1981 Plan is administered by the Committee, which has the authority to
determine to whom (within the class of eligible persons) the options will be
granted, the number of shares to be covered by each option, the time or times at
12
<PAGE>
which the options may be granted or exercised and, for the most part, the terms
and provisions of the options. The exercise price of options granted under the
1981 Plan may not be less than 80% of the fair market value of the Company's
Common Stock as determined by the Board on the date of grant.
Options granted to Key Employees and Key Contractors under the 1981 Plan
expire no later than five years from the date the option is granted, but
cannot be exercised during the first twelve months after the date of grant.
In general, no option may be exercised by a Key Employee more than 210 days
after the termination of the optionee's employment, unless such termination
of employment occurs by reason of the optionee's death. Options that are
exercisable at the time of an optionee's death may be exercised by the
optionee's heirs or representatives for one year from the date of death.
Options may not be transferred during the lifetime of an optionee. The terms
of an option grant may specify that payment of the exercise price may be made
by either cash or shares of the Company's Common Stock, valued in such manner
specified by the Committee. From time to time, the Committee may amend or
terminate the Plan with respect to shares as to which options have not been
granted.
13
<PAGE>
EFFECT OF PROPOSED AMENDMENT
As discussed above, the Company has issued all of the 450,000 options
authorized under the 1981 Plan. Pursuant to the terms of the 1981 Plan, the
options that have been granted will begin to expire in 1996. If the proposed
amendment to the 1981 Plan is approved, the Committee would have the
authority and discretion to extend the expiration date of options previously
granted to certain directors and executive officers, as well as other
participants in the 1981 Plan.
The table below sets forth for each director and current or former
executive officer who holds outstanding stock options granted under the 1981
Plan, individually, and, as groups, all current executive officers, all
current non-executive directors, and all current non-executive officer
employees, the following information: (i) the number of options held
(including both vested and unvested options), and (ii) the increase in
potential realizable value of such options, as of July 31, 1995. The increase
in potential realizable value is determined assuming (a) the present exercise
period of each option is extended for five years and (b) the price per share
of the Company's Common Stock appreciates over the extended term of each
option at the rates of five percent and ten percent, compounded annually:
<TABLE>
<CAPTION>
Increase in Potential
Realizable Value of Options
Assuming Exercise Period
Name and Position Options Held Is Extended By Five Years
- ------------------------------------ -------------- ----------------------------
5% 10%
------------ ------------
<S> <C> <C> <C>
Everett T. Keech, 150,000 $ 87,754 $204,826
Chairman and Chief
Executive Officer
George M. Knapp, 75,000 43,514 100,734
Director and Senior
Vice President
William Mauritz, 25,000 15,230 36,936
Director
Peter J. Moerbeek, 20,000 (1) (1)
Former Director and
Former Senior Vice
President, Operations
Norman F. Reinhardt, 10,000 3,526 13,712
Vice President, Technology
and Product Development
J. Michael Sills, 35,000 20,597 48,352
Director
All Current Executive Officers 235,000 134,794 319,272
All Current Non-Executive Directors 60,000 35,827 85,288
All Current Non-Executive Officer 88,500 52,772 (1) 129,917 (1)
Employees
</TABLE>
- ------
(1) Does not include potential realizable value of options owned by former
employees.
14
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS GRANTED UNDER THE 1981 PLAN
As noted above, options for all 450,000 shares of stock covered by the
1981 Plan have already been issued. The optionees receiving such options did
not recognize taxable income, and the Company was not entitled to a
deduction, upon the initial grant of stock options under the 1981 Plan. Upon
exercise of an option, the optionee will recognize ordinary income in an
amount equal to the excess of the fair market value as of the date of
exercise of the shares so acquired over the exercise price paid for such
shares. The amount so recognized as income by the optionee will be deductible
by the Company, to the extent such amount otherwise qualifies as an ordinary
and necessary business expense and is not considered a capital expenditure.
An optionee's initial tax basis in the Common Shares acquired upon the
exercise of an option will equal their fair market value on the date of
exercise. Assuming the shares will constitute capital assets in the hands of
the optionee, any gain or loss recognized upon a subsequent sale or other
disposition of these shares will be capital gain or loss, and will be either
long-term or short-term depending upon the holding period of the shares.
Under current law there is little direct authority on the federal income
tax consequences, if any, of an extension of the expiration date of
outstanding options previously granted under the 1981 Plan. The Internal
Revenue Service may take the position that the extension of an outstanding
option should be treated as the grant of a new option for federal income tax
purposes. Even in such a case, however, the extension of the term of an
outstanding option should not be taxable to the optionee or deductible by the
Company since the extended option should not be deemed to have a "readily
ascertainable fair market value" within the meaning of applicable Treasury
Regulations. Accordingly, an optionee should not have to recognize taxable
income, and the Company will not be allowed any compensation deduction, until
such time as the extended option is exercised.
RECOMMENDATION
The 1981 Plan is intended to aid the Company in attracting and retaining
qualified directors, officers, employees, consultants and advisors who are
able to contribute materially to the successful conduct of the Company's
business and affairs. The Company believes that the 1981 Plan has offered
flexibility to the Company, by providing additional and alternative
incentives to the Company's directors, officers, employees, consultants and
advisors, and that permitting the Committee to extend the expiration date of
any outstanding option as described herein is in the best interest of the
Company.
Accordingly, the Board of Directors recommends that the 1981 Plan be
amended to increase the maximum term of options which may be granted under
the 1981 Plan from five years to ten years, and, to give the Committee the
authority, in its discretion, to modify any outstanding option by extending
the expiration date to a date not later than ten years from the date of
original grant of such option.
THE BOARD OF DIRECTORS DEEMS THIS PROPOSAL TO BE IN THE BEST INTERESTS OF THE
COMPANY AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
EXPECTED VOTE OF DIRECTORS AND OFFICERS
The Company expects that the directors and officers of the Company, who
are the beneficial owners of approximately 9.0% of the outstanding Common
Shares of the Company, will vote, or direct that their shares be voted, in
favor of the election of the directors nominated herein, ratification of the
selection of the Company's independent certified public accountants and the
amendment of the 1981 Plan.
15
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission. Should a shareholder intend to present a proposal at the annual
meeting for the fiscal year ending July 31, 1996, it must be received by the
Secretary of the Company (at 12500 Foothill Boulevard, Lakeview Terrace,
California 91342) not later than July 20, 1996, and meet certain other
requirements of the rules of the SEC relating to stockholders' proposals, in
order to be considered for inclusion in the Company's proxy statement and
form of proxy card relating to that meeting.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended July
31, 1995, accompanies this Proxy Statement. The Annual Report to Shareholders
does not constitute a part of the proxy solicitation materials.
MISCELLANEOUS
This solicitation is made on behalf of the Board of Directors of the
Company, and its cost (including preparing and mailing of the notice, this
proxy statement and the form of proxy card) will be paid by the Company. The
Company will also make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send the proxy materials to their
principals and will reimburse them for their reasonable expenses in so doing.
To the extent necessary in order to assure sufficient representation at the
Meeting, officers and regular employees of the Company may solicit the return
of proxies by mail, telephone, telegram and personal interview. No
compensation in addition to regular salary and benefits will be paid to any
such officer or regular employee for such solicitation. Although the Company
has no present plans to employ solicitors in connection with the Meeting, if
in Management's judgment additional solicitations are necessary to secure a
quorum, solicitors may be hired at the Company's expense.
Where information contained in this Proxy Statement rests peculiarly
within the knowledge of a person other than the Company, the Company has
relied upon information furnished by such person.
By Order of the Board of Directors,
Spencer W. Franck, Jr.
Secretary
16
<PAGE>
PROXY PROXY
PICO PRODUCTS, INC.
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 1995
THIS PROXY IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Everett T. Keech and George M. Knapp,
and each of them jointly and severally, Proxies, with full power of
substitution, to vote, as designated on the reverse side, all shares of
Common Stock of Pico Products, Inc. held of record by the undersigned
on November 13, 1995, at the Annual Meeting of Shareholders to be held
on December 14, 1995, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
SEVEN NOMINEES TO SERVE AS DIRECTORS, "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS, AND "FOR" THE AMENDMENT TO THE 1981
NON-QUALIFIED STOCK OPTION PLAN. The shares represented by this
Proxy will be voted as specified on the reverse side. IF NO
DIRECTION IS GIVEN IN THE SPACE PROVIDED on the reverse side, THIS
PROXY WILL BE VOTED "FOR" ITEMS 1, 2 AND 3.
<PAGE>
1. ELECTION OF DIRECTORS (TERM TO EXPIRE AT NEXT ANNUAL MEETING).
FOR ALL NOMINEES
LISTED TO THE RIGHT
(EXCEPT AS
MARKED TO THE
CONTRARY AT RIGHT)
| |
WITHHOLD
AUTHORITY TO
VOTE FOR ALL
NOMINEES LISTED TO
THE RIGHT
| |
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW
CHARLES G. EMLEY, JR., DAVID A. HEENAN, EVERETT T. KEECH, GEORGE M.
KNAPP, E.B. LEISENRING, JR., WILLIAM W. MAURITZ, AND J. MICHAEL SILLS
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING
JULY 31, 1996.
FOR AGAINST ABSTAIN
| | | | | |
3. PROPOSAL TO AMEND THE 1981 NON-QUALIFIED STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
| | | | | |
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF
AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
PLEASE SIGN EXACTLY AS THE NAME APPEARS HEREON. 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 AND AFFIX CORPORATE SEAL. IF A PARTNERSHIP, PLEASE
SIGN IN PARTNERSHIP NAME BY GENERAL PARTNER.
DATE:_____________, 1995
--------------------------------------------------------------
SIGNATURE
--------------------------------------------------------------
SIGNATURE
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
<PAGE>
APPENDIX
PICO PRODUCTS, INC.
1981 NON-QUALIFIED STOCK OPTION PLAN
(Including Proposed Amendment
Of Section 7.4)
PICO PRODUCTS, INC., a New York Corporation, has adopted the
terms and provisions below to constitute its 1981 Non-Qualified Stock option
Plan:
1. Definitions. The terms below shall be defined as indicated.
1.1 "Board" means the Board of Directors of the Company,
including any directors who may be Participants.
1.2 "Committee" means the Stock Option Plan Committee of the
Board described in Section 3.
1.3 "Common Shares" means the Company's presently authorized
common shares, except as otherwise provided in Section 9.
1.4 "Company" means Pico Products, Inc., a New York
corporation, and any successor corporation which adopts the Plan.
1.5 "Key Employees" means persons (including officers, whether
or not they are also directors) employed by the Company, or a majority-owned
subsidiary thereof, on a full time basis, who are compensated for such
employment by a regular salary, and who hold positions of responsibility with
the Company or such subsidiaries.
1.6 "Key Contractors" means persons (including officers
whether or not they are all directors) engaged by the Company or a majority
owned subsidiary thereof to render services (including, without limitation,
services solely as a member of the Board) to or on behalf of the Company.
<PAGE>
1.7 "Option" means an option, granted by the Company pursuant
to the Plan, to purchase Common Shares.
1.8 "Option Agreement" means a written agreement as described
in Section 7 between the Company and a Participant evidencing an option.
1.9 "Option Period" means the period from the date of the
granting of an option to the date after which such option can no longer be
exercised.
1.10 "Option Price" means the price to be paid for the Common
Shares purchased pursuant to an option.
1.11 "Participant" means any person who is granted an option
under the Plan.
1.12 "Plan" means the Company's 1981 Non-Qualified Stock
Option Plan.
2. Purpose. The Plan is intended to encourage ownership of Common
Shares by certain officers, directors, and Key Employees and Key Contractors in
order to increase their proprietary interest in the Company's success and to
encourage them to remain in the employ of or to render services to, the Company
or its subsidiaries.
3. Administration.
3.1 The Plan shall be administered by the Board or, if the
Board so designates, by a Stock Option Plan Committee (the "Committee")
appointed by the Board from among its members. The Committee shall consist of
not less than three members.
3.2 Any provision of the Plan to the contrary notwithstanding,
the Board may exercise all the powers and shall have all the authority conferred
on the Committee hereby and in the event of any inconsistency between action
taken by the Board and action taken by the Committee with respect to the Plan or
any options hereunder, the action taken by the Board shall govern; provided,
-2-
<PAGE>
however, that the Board shall have the sole and exclusive authority, subject to
the terms of the Plan, to grant options to members of the Committee subject to
the provisions of the Plan, and no member of the Committee shall vote on, or be
counted for quorum purposes with respect to, any proposed action of the Board
relating to any option to be granted to that member.
3.3 The interpretation and construction by the Committee of
any provision of the Plan or of any option Agreement shall be final and
conclusive unless otherwise determined by the Board, and in any such event the
determination by the Board shall be final and conclusive.
3.4 The Board or the Committee, as the case may be, shall have
authority, subject to the terms of the Plan, to determine the persons to whom
options shall be granted, the number of shares to be covered by each Option, the
time or times at which Options shall be granted, and the terms and provisions of
the options, to interpret the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.
3.5 No member of the Board or of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted under the Plan.
4. Eligible Persons. The Board or the Committee, as the case may be,
may grant Options only to officers and directors of the Company and Key
Employees and Key Contractors of the Company. Options may be granted to a
director or an officer of the Company who is not also a Key Employee or Key
Contractor.
-3-
<PAGE>
5. Grant of Options.
5.1 Except with respect to options to be granted to members of
the Committee, the Committee shall recommend the number of Common Shares for
which an option shall be granted. Upon approval by the Board of such
recommendation, the option shall be deemed to be granted, provided that the
person to whom the option is to be granted subsequently becomes a party to an
option Agreement. The Board shall determine the number of Common Shares for
which an option shall be granted to a member of the Committee, subject to such
person's becoming a party to an option Agreement.
5.2 Nothing contained in the Plan shall be construed to
preclude the granting of an option or Options to a Participant in addition to an
option or Options for the purchase of Common Shares already held by such
Participant and then in existence or the granting of more than one option to a
Participant at the same time, but no option shall be granted in substitution for
an option that has previously been granted and is exercisable at a higher
exercise price than the substitute Option.
5.3 Any and all grants of Options shall be subject to all
applicable rules and regulations of any exchange of which the Company's shares
may then be listed.
6. Effective and Expiration Dates of Plan. Options may be granted at
any time, before or after the Plan has been adopted by the Board and the
shareholders of the Company, but no option shall be granted after May 1, 1996.
Options granted prior to any necessary approval by the Company's shareholders,
may be made conditional upon obtaining such approval.
-4-
<PAGE>
7. Option Agreements. Option Agreements shall be in such form as the
Committee shall, from time to time, recommend and the Board shall, from time to
time, approve or determine, as the case may be. All Option Agreements shall
comply with and be subject to the following terms and conditions:
7.1 Medium and Time of Payment. An Option shall be exercised
in the manner set forth in the option Agreement relating thereto and payment in
full for all shares shall be made at the time of delivery of the certificates
for the shares issued pursuant to the exercise. Payment shall be in United
States dollars effected in cash, certified check or bank draft or, if specified
in the option, in the form of Common Shares of the Company valued in such manner
as the Board shall determine.
7.2 Number Common Shares. Option Agreement shall state the
number of Common Shares to which it pertains.
7.3 Option Price. Subject to Section 9, except for options
which are given in substitution for options of any parent, subsidiary,
predecessor to, or party to a merger or reorganization with or into the Company,
no Option Price shall be less than 80% (or a higher percentage if the Board or
Committee shall determine) of the fair market value of the Common Shares on the
date the option is granted, such market value to be determined from time to time
by the Committee or the Board as the case may be.
7.4 Option Period. Each option granted under the Plan shall
expire no later than [five] TEN years from the date the Option is granted.
Option Agreements for Key Employees shall contain provisions for the earlier
expiration of the Options in the event of the Key Employee's termination of
employment as provided by Section 7.9. Option Agreements for Key Contractors
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shall contain such provisions for the earlier expiration of the Options as the
Board or Committee deems appropriate. THE COMMITTEE SHALL HAVE THE RIGHT, IN ITS
DISCRETION, TO MODIFY ANY EXISTING OPTION AGREEMENT BY EXTENDING THE EXPIRATION
DATE OF AN OPTION TO A DATE NO LATER THAN TEN YEARS FROM THE DATE OF GRANT OF
SUCH OPTION.
7.5 Date of Exercise. An Option may be exercised in whole or
in part from time to time during the option Period, provided that except for
Options which are given in substitution for options of any parent, subsidiary,
predecessor to, or party to a merger or reorganization with or into the Company,
no option may be exercised within 12 months after the date it is granted. The
exercise of options may be further limited or precluded for such additional
periods of time as the Board or the Committee, as the case may be, may specify
in the option Agreements.
7.6 Compliance with the Laws Relating to the Sale of
Securities. The exercise of any Option shall be contingent upon receipt by the
Company of a written representation by the Participant that at the time of such
exercise it is the intention of the Participant exercising the option to acquire
the shares being purchased by or transferred to the Participant for investment
and not for resale or distribution, or, in the alternative, the Company or the
Participant shall take such action prior to the issuance of the shares as the
Board may deem necessary to comply with any applicable law which would render
such a representation inapplicable. The Board may require each share certificate
representing shares purchased upon the exercise of an Option to bear a legend
stating that the shares evidenced thereby may not be sold or transferred except
in compliance with the Securities Act of 1933 and the provisions of the Plan.
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7.7 Reorganization. In case the Company is merged or
consolidated with another corporation, or in case of a separation,
reorganization, or liquidation of the Company, the Board or the board of
directors of any corporation assuming the obligations of the Company hereunder,
shall either (i) make appropriate provisions for the protection of any
outstanding options by the substitution on an equitable basis of appropriate
shares of the Company, or appropriate shares of the merged, consolidated, or
otherwise reorganized corporation, provided only that the excess of the
aggregate fair market value of the shares subject to Options outstanding under
the Plan immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof, or (ii) give written notice to Participants that their options
must be exercised within 60 days of the date of such notice or they will be
terminated. In any such case the Board may, in its discretion, waive the
applicable waiting period.
7.8 Assignability. No option shall be assignable or
transferable except by will or by the laws of descent and distribution. During
the lifetime of a Participant, the option shall be exercisable only by such
Participant or by his or her guardian or legal representative.
7.9 Continuation with Company. No Option shall be exercisable
by a Participant who is a Key Employee later than 210 days after termination of
such Participant's employment as a Key Employee or of his or her status as an
officer or director of the Company, unless such termination of employment occurs
by reason of retirement with the consent of the Company or death. If a
Participant retires with the consent of the Company, such Participant's Options
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or unexercised portions thereof shall expire on the date of retirement, except
for options or unexercised portions thereof which were otherwise exercisable on
the date of retirement, which shall expire unless exercised within a period of
90 days after the date of retirement. If a Participant dies while a Key Employee
of the Company, the options or unexercised portion thereof that were exercisable
on the date of death shall be exercisable by such Participant's personal
representatives, heirs or legatees at any time prior to the expiration of one
year from the date of death. Nothing in the Plan or in any option granted under
it shall confer any right to continue in the employ or continue to be retained
by the Company or any subsidiary or interfere in any way with the right of the
Company or any of its subsidiaries to terminate employment or retention at any
time.
7.10 Rights as a Shareholder. A Participant shall have no
rights as a shareholder with respect to shares covered by any option until the
date of the issuance or transfer of certificates for the shares issued to such
Participant. No adjustment shall be made for dividends or other rights relating
to shares for which the record date is prior to the date the shares are issued
or transferred.
7.11 Other Provisions. Option Agreements shall contain such
other terms and conditions not inconsistent with the provisions of this Section
7 or the other provisions of the Plan as the Committee shall recommend and the
Board shall deem advisable, including, but not limited to, a requirement that a
Participant represent to the Company in writing, when an Option is granted, that
such Participant is accepting such option for his or her own account for
investment only and not with a view to distribution and that the Participant
will not make any sale or transfer or distribution of any shares purchased
except (i) pursuant to the registration thereof under the Securities Act of
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1933, as amended, (ii) pursuant to an opinion of counsel satisfactory in form
and substance to the Company that said sale or other disposition may be made
without requirement of registration, or (iii) pursuant to a "no action" letter
from the Securities and Exchange Commission.
8. Number of Shares Available for Option.
8.1 Subject to Section 9 no more than 450,000 Common Shares
shall be subject to purchase pursuant to options granted under the Plan.
8.2 If any outstanding option under the Plan expires for any
reason or is terminated prior to the expiration date of the Plan as set forth in
Section 6, the Common Shares allocable to any unexercised portion of such option
may again be subject to an option.
9. Recapitalization or Change in Par Value of Common Shares. The
aggregate number of Common Shares purchasable under options pursuant to the
Plan, the maximum number of such shares which may be purchased by the officers,
directors, Key Employees or Key Contractors of the Company and the number of
shares and the option Price for such shares covered by each outstanding option
shall all be proportionately adjusted, as deemed appropriate by the Committee or
the Board, as the case may be, for any increase or decrease in the number of
issued Common Shares resulting from a subdivision (stock split) or consolidation
(reverse split) of the issued Common Shares and may, in the absolute discretion
of the Board, be similarly adjusted for any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares,
effected with or without receipt of consideration by the Company. In the event
of a change in the Company's presently authorized Common Shares which is limited
to a change of all of its presently authorized shares with par value into the
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same number of shares without par value, or any change of the then authorized
shares with par value into the same number of shares with a different par value,
the shares resulting from any such change shall be deemed to be Common Shares as
defined in Section 1, and no change in the number of shares covered by each
Option or in the Option Price shall take place.
10. Indemnification and Exculpation.
10.1 Each person who is or shall have been a member of the
Board or of the Committee shall be indemnified and held harmless by the Company
against and from any and all loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
such person in settlement thereof (with the Company's written approval) or paid
by such person in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment in favor of the Company based upon finding of such
person's bad faith, subject, however, to the condition that upon the institution
of any such claim, action, suit or proceeding, such person shall in writing give
the Company an opportunity to intervene at its own expense on his or her behalf.
The foregoing right of indemnification shall not be exclusive of any other right
to which such person may be entitled as a matter of law or otherwise, or any
power that the Company may have to indemnify such person or hold him or her
harmless.
10.2 Each member of the Board or of the Committee, and each
officer and employee of the Company shall be fully justified in relying or
acting upon any information furnished in connection with the administration of
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this Plan by any person or persons other than her or his self. No person who is
or shall have been a member of the Board or of the Committee, or an officer or
employee of the Company shall be liable for any determination made or other
action taken or any omission to act in reliance upon any such information or for
any action taken (including the furnishing of information) or any failure to
act.
11. Discontinuance of the Plan. The Board may, from time to time,
amend, suspend, or discontinue the Plan with respect to any shares as to which
options have not been granted, and, with the consent of the Participant who is a
party thereto and with the approval of the Board, any Option Agreement, subject
to the terms of the Plan, may be modified or amended.
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