<PAGE> 1
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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
AMERICAN PRECISION INDUSTRIES INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
AMERICAN PRECISION INDUSTRIES INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:_______
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):____________
(4) Proposed maximum aggregate value of transaction:______________________
(5) Total fee paid:_______________________________________________________
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_______________________________________________
(2) Form, Schedule or Registration Statement No.:_________________________
(3) Filing Party:_________________________________________________________
(4) Date Filed:___________________________________________________________
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<PAGE> 2
AMERICAN PRECISION INDUSTRIES INC.
2777 WALDEN AVENUE, BUFFALO, NEW YORK
NOTICE OF MEETING OF SHAREHOLDERS
March 24, 1995
The Annual Meeting of Shareholders of American Precision Industries Inc.
will be held at the offices of the corporation at 2777 Walden Avenue, Buffalo,
New York 14225, on Friday, April 28, 1995 at 9:45 a.m. to consider and take
action upon the following matters:
1. Election of two Class I directors for a three-year term.
2. Approval of the proposed 1995 Employees Stock Option Plan.
3. Approval of the proposed 1995 Directors Stock Option Plan.
4. Approval of the proposed amendments to the 1989 Stock Option and 1993
Employees Stock Option Plans to extend the period in which certain retired
employees may exercise options.
5. Ratification of the selection of Price Waterhouse LLP, independent
public accountants, as auditors for the corporation.
6. Transaction of such other business as may properly come before the
meeting.
All persons who were holders of record of common shares at the close of
business on March 10, 1995, and no others shall be entitled to vote at such
meeting.
James J. Tanous
Secretary
SHAREHOLDERS ARE URGED TO VOTE BY SIGNING, DATING AND RETURNING THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
<PAGE> 3
AMERICAN PRECISION INDUSTRIES INC.
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of American Precision Industries Inc. (hereinafter referred
to as "API" or the "Company") of proxies to be used at the Annual Meeting of
Shareholders to be held on April 28, 1995 (the "Meeting").
Every duly signed proxy in the accompanying form which has been received a
reasonable time prior to the start of the Meeting will be voted at the Meeting
unless revoked by the shareholder. Every shareholder giving a proxy has the
power to revoke it at any time before it is exercised. The right to revoke a
proxy is not limited and is not subject to compliance with any formal procedure.
Each common share outstanding at the close of business on March 10, 1995,
will be entitled to one vote. As of March 10, 1995, there were 7,064,086 such
shares outstanding. Only shareholders of record at the close of business on
March 10, 1995, will be entitled to vote at the Meeting. At the Meeting a quorum
will consist of the holders of record of not less than a majority of the
outstanding common shares, present either in person or by proxy. Abstentions and
broker non-votes will be considered as being present or represented at the
Meeting, but not as votes for or against a nominee or proposal. This proxy
statement and the accompanying form of proxy will be sent to the shareholders on
or about March 24, 1995.
1. ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, provides
that the number of directors of the Company shall be not less than three and not
more than nine and that the directors shall be divided into three classes,
designated Class I, Class II, and Class III. Each class shall consist, as nearly
as possible, of one-third of the total number of directors constituting the
entire Board of Directors. One class stands for election to a three year term
each year. Effective April 25, 1994, the Board reduced the number of directors
from eight to seven, and two of those directors are to stand for election at the
Meeting. Each person so elected will serve until the Company's 1998 Annual
Meeting of Shareholders and until his successor is elected and shall qualify.
The vote of a plurality of the common shares present or represented by proxy is
required for the election of directors.
The directors recommend a vote FOR the two nominees standing for election
listed below. Unless otherwise instructed, the proxy holders will vote the
proxies received by them FOR these
2
<PAGE> 4
nominees. If any nominee becomes unavailable for election, the proxy holders
will vote the proxies for such other nominee as the Board may designate to fill
the vacancy.
Information regarding directors and nominees standing for election and
directors whose terms continue beyond the Meeting is set forth below:
CLASS I: DIRECTORS STANDING FOR ELECTION
Robert J. Fierle, age 72, has been a director since 1947. Mr. Fierle was
President and Chief Executive Officer of API from 1947 until his retirement on
June 30, 1992. Mr. Fierle continues as Chairman, and renders services to the
Company on a part-time basis. He also is a director of Nitta Gelatin NA Inc.
Douglas J. MacMaster, Jr., age 64, has been a director since 1990. Mr.
MacMaster was Senior Vice President of Merck & Co., Inc. from 1988 until his
retirement on January 1, 1992. Merck & Co., Inc. is a worldwide
research-intensive health products company that discovers, develops, produces,
and markets human and animal health products and specialty chemicals. From 1985
to 1988 he was President of Merck Sharp & Dohme, a division of Merck & Co., Inc.
Mr. MacMaster is a director of Martek Biosciences Corp.,* U.S. Bioscience,
Inc.*, Noese Pharmaceuticals, Inc., and Oravax Inc. He is also a Trustee of
Gwynedd-Mercy College and Thomas Jefferson University.
CLASS II: DIRECTORS WHOSE TERMS EXPIRE IN 1996
Bernard J. Kennedy, age 63, has been a director since 1987. Mr. Kennedy has
been Chairman, Chief Executive Officer, and President of National Fuel Gas
Company* since 1989 and is Chairman of certain of its subsidiaries. From 1987 to
1989 he was President and prior to 1987 Executive Vice President of National
Fuel Gas Company. National Fuel Gas Company and its subsidiaries are engaged in
production, purchase, storage, transportation, and sale of natural gas and in
the exploration for and development of oil and natural gas reserves. He is a
member of the Board of Directors of Merchants Mutual Insurance Company,
Associated Electric & Gas Insurance Services Limited, Marine Midland Banks,
Inc., and Marine Midland Bank.
William P. Panny, age 66, has been a director since 1981. Until his
retirement on January 14, 1991, Mr. Panny was Chairman and Chief Executive
Officer of MLX Corp., the largest independent distributor of commercial
refrigeration and air conditioning equipment, parts, and supplies, and a leading
global manufacturer of high energy friction products and components used in
aircraft brakes and in clutches, brakes, and transmissions for heavy duty trucks
and off-highway equipment. Mr. Panny was President of The Bendix Corporation
from 1977 to the end of 1980. He
---------------
*Denotes publicly-held company
3
<PAGE> 5
is a Trustee of The Rackham Engineering Foundation and a director of Amerisure,
Inc., Amerisure Insurance Company, Michigan Mutual Insurance Company, and
Fruehauf Trailer Corporation.*
Kurt Wiedenhaupt, age 57, has been a director since June 16, 1992. Mr.
Wiedenhaupt became President and Chief Executive Officer of the Company on July
1, 1992, following Mr. Fierle's retirement. From 1986 to June 30, 1992, Mr.
Wiedenhaupt was President and Chief Executive Officer of AEG Corporation, a
company engaged in transportation, electronics, industrial equipment and
business systems.
CLASS III: DIRECTORS WHOSE TERMS EXPIRE IN 1997
John M. Albertine, PhD, age 50, has been a director since 1985. In 1990 Dr.
Albertine became Chairman and Chief Executive Officer of Albertine Enterprises,
Inc., an economic forecasting and public policy firm based in Washington, D.C.
Dr. Albertine is also Chairman of JIAN Group Holdings, a full-service mergers
and acquisitions firm. Dr. Albertine was Vice Chairman of Farley, Inc.,
principally a fabric and garment manufacturer, from 1986 until 1990, Vice
Chairman of Fruit of the Loom, Inc. from 1987 until 1990, and Vice Chairman of
West Point Acquisition Corp. and its subsidiary, West Point-Pepperell Inc., from
1989 to 1990. Farley, Inc. became the subject of a reorganization proceeding
under Chapter 11 of the Federal bankruptcy laws in 1991 and emerged from
bankruptcy in December 1992. In 1992, West Point Acquisition Corp. was
financially restructured by exchanging equity for debt forgiveness, as part of a
so-called "pre-packaged" Chapter 11 bankruptcy filing of West Point Acquisition
Corp., and emerged from bankruptcy in September 1992. Prior to 1986 Dr.
Albertine served as the first President of the American Business Conference, a
coalition of 100 chief executive officers from America's most successful
mid-sized corporations. He serves on the Board of Directors of Thermo Electron
Corporation* and Bolt Beranek and Newman, Inc.*
Victor A. Rice, age 54, has been a director since 1994. Mr. Rice is
Chairman, Chief Executive Officer, and a director of Varity Corporation*, an
international manufacturer of automotive components and diesel engines, a
position he has held since 1980. Mr. Rice also serves as a director of Comptek
Research Inc.*, Louisiana Land & Exploration Co.*, and International Murex
Technologies Corp.*
The Board of Directors has no standing nominating committee. It has an
Audit Committee comprised of Mr. Panny, Chairman, and Messrs. Kennedy and Rice.
The Audit Committee had three meetings in 1994. It selects auditors (subject to
shareholder ratification), reviews their proposed audit plan and fees, reviews
their completed audit, and reviews their recommendations
---------------
*Denotes publicly-held company
4
<PAGE> 6
and the replies of management thereto. The Audit Committee invites direct access
by the auditors for information as to the Company's accounting practices. The
Board also has a Compensation Committee comprised of Mr. MacMaster, Chairman,
Dr. Albertine, and Mr. Kennedy. The Compensation Committee had three meetings in
1994. It submits recommendations to the Board on all matters relating to the
compensation of officers and key employees.
The Board of Directors had five meetings in 1994. All directors attended at
least 75% of the relevant board and committee meetings held during 1994.
Directors (except for Mr. Wiedenhaupt) are paid an attendance fee of $750 for
each board meeting attended in person and are also paid an annual retainer of
$14,000. Members of committees are paid $600 for attendance in person at each
meeting. In addition, the Chairman of the Audit and Compensation Committees each
receives $1,000 per annum. Directors with five or more years of continuous
service are entitled to a benefit of $10,000 a year payable over ten years upon
retirement, death prior to retirement, or nonelection to or removal from the
Board following an unfriendly change in control of the Company. In the event of
an unfriendly change in control, the director may opt to receive a lump sum
payment equal to the present value of the periodic payments discounted at a
current annuity discount rate.
The Company has adopted, subject to shareholder approval at the Meeting, a
stock option plan which permits outside directors to receive their retainer and
meeting and chairmanship fees in the form of stock options in lieu of cash. See
"3. Approval of the Proposed 1995 Directors Stock Option Plan" herein.
It is the Board of Directors' belief that it is in the best interest of the
Company that, absent special circumstances, incumbent directors not remain on
the Company's Board beyond the annual meeting of shareholders following their
70th birthday. However, the Board has asked Mr. Fierle, who is the founder of
the Company and has served as a director for 48 years, to continue to serve as a
director through the annual meeting following his 75th birthday, subject to his
reelection by the shareholders, and Mr. Fierle has indicated that he is willing
to continue to serve.
5
<PAGE> 7
SHARE OWNERSHIP OF MANAGEMENT
The following table shows the number of common shares beneficially owned by
(1) each director and each executive officer named in the Summary Compensation
Table and (2) all directors and executive officers of API as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF INDIVIDUAL BENEFICIAL COMMON SHARES
OR DESCRIPTION OF GROUP OWNERSHIP(1) OUTSTANDING(4)
--------------------------------------------- -------------------- --------------------
<S> <C> <C>
John M. Albertine............................ 14,456
Robert J. Fierle............................. 1,062,847(2) 15.0%
Bernard J. Kennedy........................... 3,781
Douglas J. MacMaster, Jr..................... 4,000
William P. Panny............................. 8,320
Victor A. Rice............................... 0
Kurt Wiedenhaupt............................. 88,000(3) 1.2%
James W. Bevevino............................ 81,344(3) 1.1%
Rudolph Kristich............................. 30,150(3)
John M. Murray............................... 33,578(3)
All directors and executive officers as a
group, including those named above......... 1,395,453(3) 19.1%
---------------
<FN>
(1) Each individual has sole voting and investment power over the shares
indicated as owned by that individual unless otherwise noted.
(2) Includes 5,000 shares owned by Mr. Fierle's spouse, as to which Mr. Fierle
disclaims beneficial ownership.
(3) The total includes 242,806 shares that executive officers of API as a group
have the right to acquire pursuant to options that are currently exercisable
or become exercisable within the next 60 days, including 85,000 for Mr.
Wiedenhaupt, 46,576 for Mr. Bevevino, 22,150 for Mr. Kristich, and 32,662
for Mr. Murray. Mr. Kristich retired from the Company on January 1, 1995,
and will have the right to acquire the shares referred to above only if the
shareholders approve proposal No. 4 contained herein to amend the 1989 Stock
Option and 1993 Employees Stock Option Plans.
(4) Except for Messrs. Fierle, Wiedenhaupt, and Bevevino, each of the directors
and executive officers named in the table owns less than 1% of the common
shares outstanding.
</TABLE>
6
<PAGE> 8
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of common shares owned by each person
or "group" known to API to be the beneficial owner of more than 5% of its common
shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP SHARES OUTSTANDING
--------------------------------------------- --------------------- ------------------
<S> <C> <C>
Robert J. Fierle............................. 1,062,847(1) 15.0%
East Aurora, NY 14052
Dimensional Fund Advisors Inc................ 434,074(2) 6.1%
1299 Ocean Avenue
Santa Monica, CA 90401
---------------
<FN>
(1) Includes 5,000 shares owned by Mr. Fierle's spouse. Mr. Fierle disclaims
beneficial ownership of all such shares.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 434,074 shares of the
Company's common stock as of December 31, 1994, all of which shares are held
in portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment Company, or in a series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and the DFA Participating
Group Trust, investment vehicles for qualified employee benefit plans, as to
all of which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
</TABLE>
7
<PAGE> 9
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Company, each of
whom is appointed to serve at the pleasure of the Board.
<TABLE>
<CAPTION>
HAS BEEN AN
EXECUTIVE
OFFICER
NAME AND AGE OFFICES HELD AT API SINCE
------------------------------ ---------------------------------------------- -----------
<S> <C> <C>
Kurt Wiedenhaupt, 57.......... President 1992
James W. Bevevino, 55......... Executive Vice President-Heat Transfer and 1982
Electronic Components Groups
James W. Bingel, 47........... President of Electronic Components Group 1991
John M. Murray, 61............ Vice President-Finance and Treasurer 1988
Richard S. Warzala, 41........ Vice President-President of Motion Technology 1986
Group
S. David Wegner, 50........... Vice President-Human Resources 1990
</TABLE>
All of the executive officers have been employed by API for more than five
years except for Mr. Wiedenhaupt, who was appointed to his position on July 1,
1992, and Mr. Bingel, who was appointed on December 2, 1991. Prior to joining
the Company, Mr. Wiedenhaupt was employed for 32 years in various positions in
several countries with units of AEG A.G., Frankfurt, Germany, a member of the
Daimler-Benz Group. AEG is a world-wide manufacturer of electric and electronic
products and systems. Mr. Bingel was employed for 12 years in various management
positions with the Aerospace and Aircraft Engine Groups of General Electric
Company prior to joining API.
8
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The Summary Compensation Table sets forth individual compensation
information for the Chief Executive Officer, the Chairman of the Board, and the
four other most highly compensated executive officers.
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM
---------------------------------------- COMPENSATION
OTHER ------------
NAME AND ANNUAL OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(3) COMPENSATION(4) SARS (#) COMPENSATION(5)
------------------------------- ----- -------- ------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Kurt Wiedenhaupt
President and CEO (1)........ 1994 $273,338 $73,640 $54,230 25,000 $ 65,425
1993 260,000 0 0 63,786
1992 130,074 0 250,000 195,594
Robert J. Fierle
Chairman (2)................. 1994 117,750 0 69,942 0 51,702
1993 117,750 0 48,172 0 53,835
1992 192,721 0 51,487 0 68,047
James W. Bevevino
Executive Vice President..... 1994 184,336 45,000 18,000 46,983
1993 175,000 0 18,000 17,713
1992 170,011 0 12,000 19,258
James W. Bingel
President-Electronic
Components Group............. 1994 101,335 45,853 5,000 1,013
1993 96,001 0 4,000 960
1992 94,239 0 3,000 975
Rudolph Kristich
Vice President............... 1994 118,335 24,000 22,185 5,000 119,653
1993 115,000 0 5,000 26,723
1992 112,556 0 5,000 26,191
John M. Murray
Vice President-Finance
and Treasurer................ 1994 126,400 17,042 8,000 28,947
1993 120,000 0 7,500 20,847
1992 116,667 0 10,000 21,321
---------------
<FN>
(1) Mr. Wiedenhaupt became President and CEO on July 1, 1992. The terms of his
employment contract are described on page 13 herein.
</TABLE>
9
<PAGE> 11
[FN]
(2) Mr. Fierle served as President and CEO until June 30, 1992 and has continued
as a part-time employee since that date under a contract described on page
14 herein. Salary for Mr. Fierle includes director fees of $17,750, $17,750,
and $12,100 in 1994, 1993, and 1992, respectively.
(3) Bonuses awarded to Messrs. Wiedenhaupt, Bevevino, Bingel and Murray will be
paid in three equal annual installments.
(4) Other Annual Compensation for Messrs. Wiedenhaupt and Kristich includes
payment for unused vacation time of $37,692 and $15,725, respectively. Other
Annual Compensation in 1994 for Mr. Fierle includes the cost to provide
nonbusiness transportation in the amount of $35,186. Other Annual
Compensation for Messrs. Bevevino, Bingel, and Murray does not exceed the
lesser of $50,000 or 10% of total salary and bonus.
(5) All Other Compensation for fiscal 1994 includes (i) accruals for the
Company's supplemental benefit program which will not be offset by benefits
under the split-dollar life insurance program (both of which are described
below), (ii) amounts paid to and on behalf of Messrs. Wiedenhaupt and
Bevevino under the Pension Benefit Restoration Plan adopted by the Company
in 1994 and described under Salaried Employee Retirement Income Plan below
(iii) the actuarial value of premium payments made by the Company allocable
to the executive officer's death benefit under the split-dollar life
insurance program, combined with compensation paid in connection with
premium payments made by the executive officer, (iv) Company contributions
to the 401(k) Retirement Savings Plan for Salaried Employees (which equal
25% of that portion of the employee's contribution which does not exceed 4%
of such employee's total pay for the year), and (v) the value of Mr.
Fierle's term insurance coverage under split-dollar insurance policies,
determined under relevant Internal Revenue Service regulations, in the
amount of $7,942. The amounts for each individual under items (i), (ii),
(iii), and (iv) were as follows:
<TABLE>
<CAPTION>
PENSION
SUPPLEMENTAL BENEFIT 401(K)
BENEFIT RESTORATION SPLIT-DOLLAR COMPANY
PROGRAM PLAN PROGRAM CONTRIBUTIONS
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Mr. Wiedenhaupt.......... $ 0 $10,988 $ 52,300 $ 2,137
Mr. Fierle............... 43,760 0 0 0
Mr. Bevevino............. 0 13,148 31,936 1,899
Mr. Bingel............... 0 0 0 1,013
Mr. Kristich............. 98,658 0 19,572 1,423
Mr. Murray............... 8,599 0 19,084 1,264
</TABLE>
The 1994 accrual for Mr. Kristich under the Supplemental Benefit Program
reflects the acceleration of his retirement date from July 1, 1997 to January 1,
1995.
10
<PAGE> 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on grants of stock options made
during the 1994 fiscal year to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
% OF
TOTAL POTENTIAL REALIZABLE
OPTIONS/ VALUE AT ASSUMED
SARS EXERCISE ANNUAL RATES OF STOCK
OPTIONS/ GRANTED TO OR PRICE APPRECIATION
SARS EMPLOYEES BASE FOR OPTION TERM (2)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#) (1) YEAR ($/SH) DATE 5% ($) 10% ($)
------------------------------- --------- ----------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kurt Wiedenhaupt............... 25,000 15.9% $ 7.375 4-25-04 $115,875 $293,875
James W. Bevevino.............. 18,000 11.4% $ 7.375 4-25-04 83,430 211,590
James W. Bingel................ 5,000 3.2% $ 7.375 4-25-04 23,175 58,775
Rudolph Kristich............... 5,000 3.2% $ 7.375 4-25-04 23,175 58,775
John M. Murray................. 8,000 5.1% $ 7.375 4-25-04 37,080 94,040
---------------
<FN>
(1) All of the options reflected in the table are ten year options and become
exercisable at the rate of 20% per year beginning on the first anniversary
of the date of grant.
(2) These amounts represent certain assumed rates of appreciation only. At an
assumed annual rate of appreciation of 5%, $7.375 would increase to $12.01
and at 10% would increase to $19.13. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Company's common
stock and overall market conditions. There can be no assurance that the
amounts reflected in this table will be achieved.
</TABLE>
11
<PAGE> 13
FISCAL YEAR-END OPTION/SAR VALUES
The following table summarizes information with respect to option exercises
in 1994 and unexercised stock options and stock appreciation rights ("SARs")
held by the executive officers named in the Summary Compensation Table at the
end of the 1994 fiscal year.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES 12/30/94 (#) 12/30/94 ($)
ACQUIRED VALUE
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
------------------------- -------- -------- ------------- --------------
<S> <C> <C> <C> <C>
Kurt Wiedenhaupt......... 0 0 100,000 $ 0
175,000 9,375
James W. Bevevino........ 0 0 34,976 4,800
43,600 22,950
James W. Bingel.......... 0 0 3,800 1,100
11,200 5,525
Rudolph Kristich......... 2,053 $4,907 20,350 1,500
14,400 6,625
John M. Murray........... 0 0 25,562 2,500
24,000 10,500
</TABLE>
SALARIED EMPLOYEE RETIREMENT INCOME PLAN
Executive officers of the Company are covered by the Salaried Employee
Retirement Income Plan (the "Plan"). Normal retirement age under the Plan is 65.
The normal monthly retirement benefit is equal to 1% of average monthly base
earnings multiplied by the years of credited service. Average monthly base
earnings is determined from the highest continuous five years out of the last
ten years worked prior to retirement. The normal monthly retirement benefit is
reduced by 1/2 of 1% for each month between the date benefits begin and the
participant's normal retirement date in the case of early retirement. Benefits
are not subject to any reduction for Social Security payments or other offset
amounts.
12
<PAGE> 14
The table set forth below illustrates representative annual retirement
benefits for various levels of compensation and periods of service under the
Plan.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
EARNINGS (HIGHEST
CONTINUOUS 5 OF ESTIMATED ANNUAL RETIREMENT BENEFITS
LAST BASED ON CREDITED YEARS OF SERVICE INDICATED
10 YEARS PRIOR TO -------------------------------------------------------
RETIREMENT) 10 15 20 25 30
----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 5,000 $ 7,500 $10,000 $12,500 $15,000
100,000 10,000 15,000 20,000 25,000 30,000
150,000
or more 15,000 22,500 30,000 37,500 45,000
</TABLE>
Under the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), the amount of
annual earnings which can be utilized in determining benefits under the Plan was
reduced from $235,840 to $150,000. This change significantly reduces the
retirement benefits under the Plan for Messrs. Wiedenhaupt and Bevevino. In
1994, the Company adopted a Pension Benefit Restoration Plan pursuant to which
the Company will make annual payments under flexible deposit annuity contracts
for these two executives and reimburse the executives for their income taxes on
the annuity payments. Upon retirement, the annuity contracts will provide
benefits equal to the benefits lost due to the enactment of OBRA. By way of
illustration, an employee covered by the Pension Benefit Restoration Plan
retiring with 30 years of credited service and Average Annual Earnings of
$200,000 would be entitled to an annual retirement benefit of $60,000, $45,000
of which would be provided by the Plan and $15,000 of which would be provided
through an annuity contract under the Pension Benefit Restoration Plan.
The credited years of service on December 30, 1994 for the persons named in
the Summary Compensation Table are as follows: Mr. Wiedenhaupt - 2 years; Mr.
Bevevino - 16 years; Mr. Bingel - 3 years; Mr. Kristich - 30 years; and Mr.
Murray - 6 years. The current compensation covered by the Plan, which excludes
bonus earnings, is reflected in the "Salary" column of the Summary Compensation
Table, subject to the aforementioned limit under OBRA. Messrs. Fierle and
Kristich retired from full-time employment on July 1, 1992 and January 1, 1995,
respectively, each with 30 years of credited service under the Plan, and began
receiving retirement benefits thereunder.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Wiedenhaupt was employed as President and Chief Executive Officer
effective July 1, 1992 and entered into an employment agreement (the "Employment
Agreement") for the five-year period ending June 30, 1997 (the "Employment
Period"). The Employment Agreement provides for an annual salary of not less
than $260,000 and entitles Mr. Wiedenhaupt to
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<PAGE> 15
participate in the Company's bonus and other benefit plans. Upon retirement at
age 65, Mr. Wiedenhaupt will be entitled to a supplemental retirement benefit of
$100,000 per year over 15 years, which vests 10% each year. This benefit is
secured by a life insurance policy with a death benefit of $1.5 million payable
to Mr. Wiedenhaupt's beneficiary. If the Employment Agreement is terminated by
the Company (other than for cause or by reason of Mr. Wiedenhaupt's death or
disability) or by him after a change in control of the Company, he will be
entitled to receive all unpaid salary and bonuses for the balance of the
Employment Period, his supplemental retirement benefit, his vested benefits
under other plans and one-half of his average annual bonus, subject to certain
limitations. These amounts will be paid on the dates they would have been paid
if his employment had not been terminated unless the Company (or, if there has
been a change in control, Mr. Wiedenhaupt) elects for them to be paid in a
discounted lump sum.
To provide a smooth transition from the leadership of Mr. Fierle to Mr.
Wiedenhaupt and to retain Mr. Fierle's services and his knowledge of the
Company's product lines, management philosophy, marketing strategy and
engineering technology, the Company entered into an agreement with Mr. Fierle
effective upon his retirement as Chief Executive Officer and President through
the date of the Company's annual shareholders' meeting in 1998. Under that
agreement he serves as Chairman of the Board and as a part-time employee, at an
annual salary of $100,000 plus the benefits he had been receiving prior to
retirement, and the Company pays him $6,500 per month over ten years under his
supplemental benefit program.
Messrs. Bevevino, Kristich, and Murray are participants in a supplemental
benefit program that provides an annual amount equal to 20% of current salary
payable over a 15 year period upon retirement at age 65, death or total
disability prior to retirement, or involuntary termination following an
unfriendly change in control of the Company. In the event of an unfriendly
change in control, the participant becomes fully-vested and may opt to receive a
lump sum payment equal to the present value of the periodic payments discounted
at a current annuity discount rate. Participants are also eligible to receive
benefits in the event of involuntary termination without an unfriendly change in
control according to a vesting schedule that provides 50% vesting after ten
years of service, increasing 5% for each year of service thereafter. The
benefits payable under this program are subject to offset by the amount of the
cash surrender value of split-dollar life insurance policies purchased by the
Company under a separate program. Under this program, the Company will recover
all premiums paid by it upon the earlier to occur of the policy's maturity or
the participant's death. If a participant's employment is terminated, the
Company will recover most or all of the prior cash premiums, depending on the
number of years the split-dollar contract was in effect.
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<PAGE> 16
PERFORMANCE GRAPH
The following performance line graph compares the cumulative total
shareholder return on an investment in the Company's common stock over the past
five years with the total return on the stocks comprising the Media General
Composite Index ("Composite Index") and with the total return on the stocks
comprising the Dow Jones diversified industrial manufacturing company index
("Industrials Index"). The data for the graph was furnished by Media General
Financial Services and Dow Jones & Company, Inc. The line graph assumes an
investment of $100 in API stock on December 29, 1989 and the reinvestment of
quarterly cash dividends at the closing price of API stock on the ex-dividend
date. Calculations for the Composite and Industrials Indexes are made in a
similar fashion.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG API, MEDIA GENERAL COMPOSITE INDEX
AND DOW JONES DIVERSIFIED INDUSTRIALS INDEX
MEASUREMENT PERIOD COMPOSITE INDUSTRIALS
(FISCAL YEAR COVERED) API INDEX INDEX
<S> <C> <C> <C>
1989 100 100 100
1990 97.2 93.0 92.7
1991 54.1 120.0 115.2
1992 53.1 124.8 133.9
1993 46.1 143.3 163.6
1994 56.8 142.1 150.1
</TABLE>
15
<PAGE> 17
During a period of ten trading days in January of 1991, the per share price
of the Company's common stock declined from $14.75 to $7.50 (a decline of 49%).
The Company attempted to determine the reasons for this sharp and unprecedented
decline, but the information available to it was inconclusive. There were no
adverse developments with respect to the Company, its financial condition,
business or prospects that could reasonably have accounted for the decline. The
Company has information which indicates that there was significant short selling
of its stock during the period from October 1990 to January 1991, which was
followed by a substantial increase in the trading volume during the ten-day
period referred to above. This unusually heavy selling appears to have been
contributed to by margin calls on brokerage accounts that were managed by a
party unaffiliated with the Company. To illustrate the unusualness of the
trading activity, the average daily trading volume on days the stock traded
during the aforementioned ten-day period was 43,600 shares, whereas the average
daily trading volume during all of the preceding year 1990 and the following
year 1992 was 4,079 shares and 6,491 shares, respectively. Even more
significant, during just two consecutive days during that ten day period in
January 1991 the stock price dropped $4.75 (a 38% decline) on trading of 343,000
shares.
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent outside directors. The Committee is responsible
for setting and administering the policies which govern annual compensation,
bonus plans, and stock ownership programs.
The Committee annually evaluates API's corporate performance and
compensation and share ownership programs as compared with industrial companies
reasonably similar in size, product content, profitability, return on equity,
and sound financial condition. Such data are gathered from consultant surveys
and, where available, published statistics and surveys. The Company's annual
compensation programs are designed to strike a reasonable balance between
competitive base salaries and a performance-oriented incentive system which does
not reward employees unless targeted goals are reached, and pay is increasingly
better as profit pools are created.
The Committee approved salary increases for the executive officers of the
Company for the 1994 fiscal year based on the Committee's evaluation of each
officer's performance, the performance of the officer's operating division, and
the overall performance of the Company. Mr. Wiedenhaupt's base annual salary is
determined by his Employment Agreement with the Company. The Committee, with the
approval of the Board of Directors, can determine, in its discretion, to
increase Mr. Wiedenhaupt's salary. At its meeting in April 1994, the Committee
reviewed Mr. Wiedenhaupt's performance for the prior year, with particular
attention given to the progress made by the Company in the development and
execution of its growth strategy, the
16
<PAGE> 18
Company's earnings and its return on equity. Based on this evaluation, and after
taking into account that Mr. Wiedenhaupt had not received a salary increase
since joining the Company in July 1992, the Committee increased his base salary
by $20,000 from the $260,000 set as his base annual salary in his Employment
Agreement to $280,000 effective May 1, 1994. In addition, based on this same
evaluation, the Committee granted Mr. Wiedenhaupt options to purchase 25,000
shares of the Company's common stock at the closing price of the Company's
common stock on the New York Stock Exchange on the date of grant. It is the
Committee's intent that any future increase in Mr. Wiedenhaupt's salary will be
based on the Company's earnings, return on equity and economic value added
criteria, as well as his role in the continued development and successful
execution of the Company's growth strategy.
As indicated above, in April 1994, the Committee granted stock options to
the chief executive officer, as well as to other executive officers and other
selected key employees. In determining the size of the grants for the executive
officers, the Committee assessed their individual performance, contributions to
the business and relative levels of responsibility.
The following is a description of the Company's bonus plans.
Corporate Incentive Compensation Plan
Under the Company's Corporate Incentive Compensation Plan (the "Corporate
Plan") which was in effect for 1994, a sum of money is designated as a corporate
bonus pool if the Company's pre-tax earnings, adjusted to reflect income from
tax-oriented investments and the impact of nonrecurring or nonoperating income
or expense, exceeds 15% of average shareholders' equity. Average shareholders'
equity is subject to adjustment for distortions caused by nonrecurring major
events. No bonuses will be earned or paid, however, unless the operating
divisions of the Company, on an aggregate basis, earn at least 40% of the
Initial Bonus Pool under the Company's Division Incentive Compensation Plan (the
"Division Plan") described below. The total bonuses paid under the Corporate and
Division Plans may not exceed 6% of shareholders' equity at the beginning of the
year.
The employees eligible to participate in the Corporate Plan include all
salaried employees in the Company's Corporate Division -- approximately 20
employees, including Messrs. Wiedenhaupt, Bevevino, and Murray. Eligible
employees have an "incentive opportunity" ranging from 20% to 100% of annual
base compensation, with the President, the Executive Vice President, and the
Vice Presidents having incentive opportunities of 100%, 70%, and 50%,
respectively. The portion of an eligible employee's incentive opportunity to be
awarded will be based on an individual performance evaluation by the employee's
immediate supervisor, which is subject to review and approval by the President
and the Committee. Bonuses are paid in three equal annual installments beginning
in the year subsequent to the declaration of the bonus, unless the bonus is less
than $15,000, in which event it is paid at a rate of up to $5,000 per year.
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<PAGE> 19
Termination of employment (other than by reason of death or retirement) will
result in the forfeiture of declared but unpaid bonus amounts.
For fiscal 1994, a bonus pool of approximately $184,000 was established
under the Corporate Plan of which $174,000 was determined pursuant to the
aforementioned Plan provisions and $10,000 of which was discretionary.
Division Incentive Compensation Plan
Under the Division Plan, each division earns a bonus pool if pre-tax income
("PTI") of the division equals or exceeds the PTI set forth in that division's
profit plan for the year ("plan PTI"), which must be approved by corporate
management. The bonus pool is based on a percentage of the base salaries of
eligible employees in the division plus a percentage of PTI in excess of plan
PTI. The bonus pool of each division is subject to reduction if actual PTI is
less than plan PTI for the entire Company, and, if the Company's PTI is less
than 50% of its plan PTI, no divisional bonuses will be earned or paid.
The employees eligible to participate in the Division Plan include all
employees in the Company's manufacturing divisions (including Messrs. Bingel and
Kristich) except for union workers. The corporate officers responsible for group
operations recommend the allocation of the bonus pools for the divisional
general managers, who in turn propose the distribution of the remainder of the
bonus pools, all of which is subject to review and adjustment by the President
and the Committee. Bonuses are paid in accordance with the same schedule as the
Corporate Plan.
For fiscal 1994, bonus pools aggregating approximately $457,000 were
established under the Division Plan of which $427,000 was determined pursuant to
the provisions described above and $30,000 of which was discretionary.
Submitted by the Compensation Committee of the Company's Board of
Directors:
Douglas J. MacMaster, Jr., Chairman
John M. Albertine
Bernard J. Kennedy
2. APPROVAL OF THE PROPOSED
1995 EMPLOYEES STOCK OPTION PLAN
A second matter to be presented to the Meeting is a proposal that the
shareholders approve the 1995 Employees Stock Option Plan for employees
(including officers) of API and its subsidiaries (the "Employees Plan"). The
text of the Employees Plan is set forth as Exhibit A to
18
<PAGE> 20
the proxy statement. The following description of the Employees Plan contains
summaries of certain provisions thereof and is qualified in its entirety by
reference to the plan itself.
The purpose of the proposed Employees Plan is to promote the interests of
API by ensuring continuity of management and increased incentive on the part of
employees by facilitating their acquisition of an equity interest in API.
As of February 1, 1995, options previously granted under the 1989 Stock
Option Plan and the 1993 Employees Stock Option Plan for 410,628 shares and
287,450 shares, respectively, remain outstanding and eligible for exercise over
various periods extending to January 15, 2005. As of February 1, 1995, options
for 65,125 shares are available for grant under the 1993 Employees Stock Option
Plan. No options may be granted under the 1989 Stock Option Plan.
Under the proposed Employees Plan, there will be reserved for issue upon
the exercise of options up to a maximum of 650,000 of the common shares of API,
which may be either authorized but unissued stock or treasury stock. The maximum
number of shares which may be issued to any one employee under the Employees
Plan is 200,000. No options may be granted under the Employees Plan after
December 15, 1999. The Employees Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee") comprised of not less than
two directors not eligible to receive options under the Employees Plan. The
Committee may make grants of both incentive stock options ("ISOs"), as defined
by section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
which enjoy certain preferential tax benefits for employees, and other stock
options which have no special tax advantages for employees.
The option price per share for each stock option granted under the
Employees Plan shall not be less than 100% of the fair market value of API's
common shares at the time the option is granted, and the term of each option may
not exceed ten years from the date of grant. No option may be exercised prior to
the first anniversary of the date of grant. Stock options are nontransferable
except by will or by the laws of descent and distribution.
Upon termination of employment due to a cause other than qualified
retirement, death, disability, or misconduct, options exercisable at the date of
termination remain exercisable for three months. In the event of qualified
retirement (after age 55 and continuous employment for a period of not less than
five years), options will continue to become exercisable and remain exercisable
for a period of five years following retirement, but may not be exercised later
than ten years after the date of grant or such earlier date as may be specified
in the option. Upon the retiree's death during such five year period, the
retiree's legal representative may exercise those options exercisable on the
date of death within twelve months following the date of death. In the event of
disability or the death of an active employee who is the holder of an option, he
or his legal representative, as the case may be, may exercise his option within
twelve months following
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<PAGE> 21
his death or disability but not later than ten years after the date of grant or
such earlier date as may be specified in the option.
The Committee may designate options as ISOs. An ISO granted to an employee
owning more than 10% of the voting power of all classes of API stock when the
option is granted must have an option price not less than 110% of the fair
market value of the stock at that time and must have a term of not more than
five years. Further, the aggregate fair market value of all ISOs exercisable for
the first time by any one employee within one calendar year may not exceed
$100,000.
Under the provisions of the Code, if shares are issued to an optionee upon
the exercise of an ISO and the optionee makes no disposition of the acquired
shares within one year of the date of exercise, then the optionee will not
realize income for federal income tax purposes as a result of the grant or
exercise of the option. The excess of the fair market value of the acquired
shares on the date of exercise over the option price will constitute an
adjustment in the calculation of the optionee's alternative minimum taxable
income, which may result in the imposition of an alternative minimum tax. Any
gain the optionee realizes on a subsequent disposition of the shares will be
long-term capital gain. Under such circumstances, API will not be entitled to
any deduction for federal income tax purposes with respect to the grant of the
ISO or issuance of shares upon exercise of the option. If the optionee disposes
of the acquired shares within one year of the date of exercise, an amount equal
to the lesser of (i) the excess of the fair market value of the shares on the
date of exercise over the option price, or (ii) the excess of the proceeds of
the disposition over the option price, will be ordinary income for the optionee
and deductible by API; the optionee will also recognize a short-term capital
gain to the extent the proceeds of the disposition exceed the fair market value
of the shares on the date of exercise.
The grant of a nonqualified stock option will not have any federal income
tax consequences for the optionee or API. The holder of a nonqualified stock
option will realize ordinary income upon exercise of the option. Generally, the
amount of ordinary income realized will be equal to the excess of the fair
market value of the acquired shares at the date of exercise over the option
price. API will be entitled to a deduction for federal income tax purposes equal
to the amount of ordinary income realized by the optionee.
Outstanding options are subject to adjustment in the event of a stock
dividend, stock split or other change in the Company's capital structure and, in
the sole discretion of the Committee, in the event of a merger or consolidation
in which the Company is not the survivor, a dissolution or liquidation of the
Company or a change in ownership of more than 45% of the outstanding common
stock as a result of concerted action by one or more persons (collectively
"Corporate Change"). The Employees Plan is subject to amendment by the Board of
Directors, except that no amendment that would (i) materially increase the
benefits accruing to participants under the Employees Plan, (ii) materially
increase the number of shares which may be issued under the Employees Plan
(other than increases by reason of a Corporate Change), or (iii) change the
class
20
<PAGE> 22
of persons eligible to receive options under the Plan, can be made without the
approval of shareholders of the Company; provided, however, that the Board of
Directors may amend the Employees Plan without further shareholder approval to
provide for the grant of options that are transferable, without payment of
consideration, to immediate family members of the optionee or to trusts or
partnerships for such family members, and, in the event of such amendment, to
amend outstanding options to provide for such transferability.
The Employees Plan was adopted by the Board of Directors of the Company on
December 16, 1994, subject to approval of the shareholders at the Meeting.
The affirmative vote of the holders of a majority of the common shares of
API voting on the proposal is required for approval of the Employees Plan.
The Board of Directors recommends approval of the proposed Employees Plan.
3. APPROVAL OF THE PROPOSED 1995 DIRECTORS
STOCK OPTION PLAN
At the Meeting, shareholders will be asked to vote on a proposal to approve
the 1995 Directors Stock Option Plan (the "Directors Plan"), as set forth in
full in Exhibit B hereto. The Directors Plan was adopted by the Company's Board
of Directors on December 16, 1994, subject to shareholder approval.
The purpose of the Directors Plan is to encourage ownership in the Company
by the outside directors, thereby providing them with an additional incentive to
continue as directors of the Company. The Board believes that the additional
incentive provided by the Directors Plan to outside directors will benefit the
Company's shareholders generally.
The affirmative vote of the holders, as of the record date, of a majority
of the common shares of API voting on the proposal is required for approval of
the Directors Plan.
The Board of Directors recommends approval of the proposed Directors Plan.
SUMMARY OF THE DIRECTORS PLAN
This summary of the Directors Plan is qualified in its entirety by the text
of the Plan which is attached hereto as Exhibit B.
Under the Directors Plan, an outside director of the Company may elect, six
months before the beginning of each year, to receive options instead of his
annual director's retainer and meeting and chairmanship fees for that year. The
options would be granted on the first day of each calendar quarter, which is the
date on which the payment of retainer and meeting fees would otherwise be made
in cash. (Only directors who are not employees of the Company
21
<PAGE> 23
receive director's fees.) The number of shares of common stock subject to an
option is equivalent to the amount of director's fees divided by the difference
between the fair market value of a share on the date of grant and the exercise
price. The exercise price is 30% of the fair market value of a share on the date
of grant, which is defined as the average of the closing prices for a share of
common stock on the New York Stock Exchange on the ten trading days preceding
the day on which the option is granted. Options become exercisable in full six
months after the grant thereof and expire ten years after the date of grant,
provided that options may expire earlier as a result of the termination of a
director's service on the board, as follows: if an option has not expired
earlier, it will expire on the fifth anniversary of the director's retirement
after age 70, or if the director dies before that fifth anniversary, the first
anniversary of the director's death; on the first anniversary of the termination
of the director's service on the board by reason of death or disability; or
three months after the termination of the director's service on the board for
any other reason. The exercise price is payable in cash.
A total of 50,000 shares of common stock are to be reserved for issuance
pursuant to options granted under the Directors Plan. If the Directors Plan is
approved by the shareholders, it will be effective with respect to fees payable
to the directors after June 30, 1995. All of the directors eligible under the
Directors Plan, with the exception of Mr. Fierle, elected prior to January 1,
1995 to participate in the Directors Plan in 1995 if the Directors Plan is
approved by the Company's shareholders.
The Directors Plan will be administered by the Committee. Outstanding
options are subject to adjustment in the event of a stock dividend, stock split
or other change in the Company's capital structure and, in the sole discretion
of the Committee, in the event of a merger or consolidation in which the Company
is not the survivor, a dissolution or liquidation of the Company or a change in
ownership of more than 45% of the outstanding common stock as a result of
concerted action by one or more persons (collectively "Corporate Change"). The
Directors Plan is subject to amendment by the Board of Directors, except that no
amendment which would (i) materially increase the benefits to participants under
the Directors Plan, (ii) increase the number of shares which may be issued under
the Directors Plan (other than increases by reason of a Corporate Change), or
(iii) materially modify the requirements as to eligibility for participation in
the Directors Plan, can be made without the approval of shareholders of the
Company; provided, however, that the Board of Directors may amend the Directors
Plan without further shareholder approval to provide for the grant of options
that are transferable, without payment of consideration, to immediate family
members of the optionee or to trusts or partnerships for such family members,
and, in the event of such amendment, to amend outstanding options to provide for
such transferability.
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<PAGE> 24
TAX INFORMATION
An optionee will not recognize income for federal income tax purposes upon
the grant of the option but will, upon the exercise of the option, recognize
ordinary income equal to the amount by which the fair market value of the shares
acquired through the exercise of the option exceeds the exercise price of the
option. When an optionee exercises an option, the Company is entitled to a
deduction for federal income tax purposes equal to the amount of income
recognized by the optionee upon the exercise of the option.
An optionee's basis for determining capital gain or loss on the sale or
exchange of shares acquired through the exercise of an option will be the
exercise price of the option plus any ordinary income recognized upon the
exercise of the option.
4. APPROVAL OF THE PROPOSED AMENDMENTS TO THE
1989 STOCK OPTION AND 1993 EMPLOYEES STOCK OPTION PLANS
The 1989 Stock Option Plan and the 1993 Employees Stock Option Plan each
provide that upon termination of employment with the Company due to a cause
other than death or permanent and total disability, all then unexercisable stock
options expire and stock options exercisable at the date of termination remain
exercisable for a period of three months thereafter. The Company's Board of
Directors believes this provision promotes a short-term outlook for optionees
who are approaching retirement and is inconsistent with the objectives set forth
in the growth strategy of the Company.
Management proposed an amendment to these plans which will encourage and
support long-term goals for Company performance. Specifically, the amendment
would provide that if an optionee age 55 or older with at least five years of
continuous service retires holding unexercised options that, when granted, were
scheduled to become exercisable over a period of five or more years, such
options would continue to become exercisable and be available for exercise for a
period of five years following retirement. Should the optionee die during this
five year period, his or her legal representative would have a period of 12
months following the date of death in which to exercise those options which were
exercisable on the date of death. This amendment would apply to options granted
after December 16, 1994, and, in the discretion of the Committee, to options
granted before that date.
Provisions in the 1989 and 1993 Plans with respect to the exercise of
options following termination of employment in all other circumstances remain
unchanged. The provisions contained in the proposed amendments have been
incorporated into the 1995 Employees Stock Option Plan which is also being
submitted for approval by the shareholders at the Meeting. The text of the
proposed amendments is attached hereto as Exhibit C, which is incorporated
herein by this reference.
23
<PAGE> 25
The proposed amendments to the 1989 and 1993 Plans also limit the number of
shares covered by options to any one employee to 100,000 under each plan.
The proposed amendments to the 1989 and 1993 Plans as described above were
approved by the Board of Directors on December 16, 1994, subject to approval by
the shareholders at the Meeting.
The affirmative vote of the holders of a majority of the common shares of
API voting on the proposal is required for approval of the amendments.
The Board of Directors recommends approval of the proposed amendments to
the 1989 and 1993 Plans.
5. RATIFICATION OF THE SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
At the Meeting a vote of the shareholders will be taken for the
ratification of the selection of the firm of Price Waterhouse LLP, independent
public accountants, as auditors for the fiscal year ending December 29, 1995.
Representatives of the firm are expected to be present at the Meeting, be
available to respond to appropriate questions, and have the opportunity to make
a statement if they so desire.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented to the 1996 annual meeting must
be received by API on or before November 24, 1995, for possible inclusion in the
proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
Management is not aware that any other matters will be presented for action
at the Meeting. If, however, other matters do properly come before the Meeting,
it is the intention of the persons named in the proxy to vote the proxy in
accordance with their best judgment on such matters.
COST OF PROXY SOLICITATION
The cost of preparing, assembling and mailing proxy statements and other
material furnished to shareholders in connection with the solicitation of
proxies will be borne by API. API has retained Regan & Associates, Inc., a proxy
soliciting firm, to assist in the solicitation of proxies. The fee for these
services will be approximately $3,750, plus expenses. Arrangements will be
24
<PAGE> 26
made with brokerage houses, nominees, fiduciaries, and other custodians to send
proxies and proxy material to beneficial owners of API's common shares, and API
will reimburse them for their expenses in so doing. Proxies may be solicited
personally or by telephone, fax, or mail by directors, officers, and regular
employees of API without additional compensation for such services.
By order of the Board of Directors
JAMES J. TANOUS
Secretary
March 24, 1995
25
<PAGE> 27
<TABLE>
<S> <C> <C>
P AMERICAN PRECISION INDUSTRIES INC.
R PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
O THE COMPANY FOR THE ANNUAL MEETING APRIL 28, 1995.
X The undersigned hereby constitutes and appoints James W. Bevevino and John M. Murray, and each
Y of them, proxies with full power of substitution to vote for the undersigned all shares of
common stock of American Precision Industries Inc. which the undersigned would be entitled to
vote if personally present at the annual meeting of shareholders to be held on April 28, 1995,
and at any adjournment thereof, upon the matters described in the accompanying Proxy Statement
and upon any other business that may properly come before the meeting or any adjournment
thereof. Said proxies are directed to vote or refrain from voting as indicated in this proxy,
and otherwise in their discretion.
Election of Directors, Nominees: (change of address)
ROBERT J. FIERLE and DOUGLAS J. MACMASTER, JR. --------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
</TABLE>
<PAGE> 28
<TABLE>
<S> <C> <C>
[X] PLEASE MARK YOUR SHARES IN YOUR NAME |
VOTES AS IN THIS |_____
EXAMPLE.
1. Election of FOR WITHHELD 2. Approval of the FOR AGAINST ABSTAIN 3. APPROVAL OF FOR AGAINST ABSTAIN
Directors [ ] [ ] Proposed 1995 [ ] [ ] [ ] THE PROPOSED [ ] [ ] [ ]
(see reverse) Employees 1995 DIRECTORS
Stock Option STOCK OPTION
Plan PLAN.
For, except vote withheld from the following nominee(s): 4. APPROVAL OF [ ] [ ] [ ]
THE PROPOSED
________________________________________________________ AMENDMENTS TO
THE 1989 STOCK
Change OPTION AND
of [ ] 1993 EMPLOYEES
Address STOCK OPTION
PLANS.
5. RATIFICATION OF [ ] [ ] [ ]
THE SELECTION
OF PRICE WATER-
HOUSE AS IN-
DEPENDENT
AUDITORS FOR
THE 1995
FISCAL YEAR
SIGNATURE(S) ____________________________________________________ DATE ______________
SIGNATURE(S) ____________________________________________________ DATE ______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
</TABLE>
<PAGE> 29
EXHIBIT A
AMERICAN PRECISION INDUSTRIES INC.
1995 EMPLOYEES STOCK OPTION PLAN
ARTICLE I. PURPOSE
The purpose of the 1995 Employees Stock Option Plan (the "Plan") is to
promote the interests of American Precision Industries Inc. (the "Company") by
ensuring continuity of management and increased incentive on the part of
employees by facilitating their acquisition of an equity interest in the
Company. Reference in the Plan to either gender shall be deemed to include the
other gender.
ARTICLE II. PLAN ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") appointed by and responsible to the Board of Directors.
(b) The Committee shall consist of not less than two directors, all of whom
shall be ineligible to participate in the Plan.
(c) The Committee shall have the authority within the limits of the Plan
to:
(i) select the employees who will participate in the plan;
(ii) determine the time or times when options shall be granted and the
number of shares applicable to each option;
(iii) determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(iv) approve and amend, if necessary, any objectives and goals which
may be established under the Plan;
(v) adopt such Administrative Guidelines as it deems necessary for the
Plan's operation.
(d) The Committee shall have full power and authority to construe and
interpret the Plan. Its decision shall be conclusive and binding upon the
Company, its officers, employees and shareholders, participants, and all other
persons having any interest in the Plan.
(e) The Board of Directors, at its discretion, shall have the authority to
amend or terminate the Plan without obtaining further shareholder approval,
unless such approval is required by law. Nevertheless, no such amendment shall,
without the approval of the shareholders of the Company:
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(i) materially increase the benefits to participants under the Plan;
(ii) except as provided in Article V(e)(vii), increase the number of
shares which may be issued under the Plan;
(iii) materially modify the requirements as to eligibility for
participation in the Plan;
provided, however, that the Board of Directors may amend the Plan without
further shareholder approval to provide for the grant of options that are
transferable, without payment of consideration, to immediate family members of
the optionee or to trusts or partnerships for such family members, and, in the
event of such amendment, to amend outstanding options to provide for such
transferability.
(f) No amendment, suspension, or termination of the Plan may, without the
consent of any person to whom an option shall theretofore have been granted,
adversely affect the rights of such person under such option or any unexercised
portion thereof.
ARTICLE III. PLAN PARTICIPATION
All full-time and part-time employees of the Company, including officers of
the Company (who may also be directors), based upon the recommendations of the
Chief Executive Officer and as may be selected from time to time by the
Committee in its discretion, are eligible to receive options under the Plan.
ARTICLE IV. ALLOTMENT OF SHARES
(a) Subject to the required approval by shareholders, a maximum of 650,000
authorized but unissued shares of the Common Stock of the Company (par value
$.66-2/3) shall be reserved for issuance upon exercise of options granted under
the Plan.
(b) Shares covered by options which are not exercised or have been
terminated during the duration of this Plan may be reallocated by the Committee.
(c) Upon exercise of any option by a Plan participant, the Committee may,
in its discretion, issue Treasury shares in lieu of authorized but unissued
shares; however, if Treasury shares are issued, the number of authorized but
unissued shares allocated to the Plan will be reduced.
(d) The maximum number of shares subject to options granted to any single
optionee under the Plan shall not exceed 200,000.
ARTICLE V. TERMS AND CONDITIONS OF OPTIONS
(a) The term of each stock option shall be no greater than ten years from
the date the option is granted, and the terms of the Option Agreement shall so
provide.
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(b) The Committee may designate options granted to employees of the Company
under the Plan as incentive stock options ("ISOs"), as such term is defined in
the Internal Revenue Code of 1986, as amended (the "Code"). Notwithstanding any
provision to the contrary in the Plan, no option may be designated an ISO unless
the following conditions are satisfied:
(i) Such option must be granted prior to December 16, 1999, and such
option by its terms, as set forth in the Option Agreement, must not be
exercisable after ten years from the date the option is granted. If a Plan
participant owning more than 10% of the outstanding shares of the Company
is granted an ISO, the stock option period will be no greater than five
years; and
(ii) The aggregate fair market value of the Common Stock subject to
such option plus the aggregate fair market value of the Common Stock
subject to ISOs previously or concurrently granted to the same employee
exercisable for the first time in the same calendar year (all determined at
the respective dates of grant of such options) must not exceed $100,000.
(c) The option price per share for each stock option shall not be less than
100% of the fair market value on the date the option is granted. For purposes of
this Article V (c), fair market value shall be the closing price of the
Company's Common Stock on the New York Stock Exchange (the "NYSE") on the date
of grant (or, if no sales were made on such date, on the next preceding day on
which sales were made). If an ISO is granted to any Plan participant owning more
than 10% of the voting power of all classes of stock of the Company immediately
before the option is granted, the option price per share for each such ISO shall
not be less than 110% of fair market value. The Committee shall be responsible
for determining the exercise price of stock options.
(d) (i) Payment for shares of Common Stock purchased upon exercise of an
option granted under the Plan shall be made to the Company in cash (including
check, bank draft, money order, or wire transfer), or by delivering shares of
Common Stock already owned by the option holder and having an aggregate value
(based on the fair market value of the Common Stock so delivered at the date of
delivery) equal to the option price of the shares purchased or by delivering a
combination of such shares and cash having an aggregate value (based on the fair
market value of the Common Stock so delivered at the date of delivery) equal to
the option price of the shares purchased. If any shares of Common Stock so
delivered as payment or partial payment were acquired by the Plan participant
through a previous exercise of a stock option, such shares must have been held
by the Plan participant one year or more at the date tendered.
(ii) For purposes of Articles V(d)(i) and V(e)(vii), fair market value
shall be the average of the high and low sales prices for the Company's
Common Stock on the NYSE on the date in question (or, if no sales were made
on such date, on the next preceding day on
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which sales were made), except that such average price shall be rounded up
to the nearest one-fourth of a dollar.
(e) Stock options may be exercised in whole or in such parts as may be
specified from time to time by the Committee, except that no stock option shall
be exercisable within one year immediately following the date the option is
granted. Options held for the required period may be exercised in whole or in
part. In all cases, exercise of a stock option shall be subject to the following
provisions:
(i) In the event a Plan participant holds unexercised options which at
the time of grant were scheduled to become exercisable over a period of
five or more years, has five or more years of service with the Company, and
retires at age 55 or later, such stock options will continue to become
exercisable according to their terms during a period of five years
following retirement, and the retiree's exercisable stock options may be
exercised during such five-year period. In the event the retiree dies
during such five-year period, all unexercisable stock options on the date
of death shall expire. Stock options exercisable on the date of death shall
remain exercisable for a period of twelve (12) months following the
retiree's death.
(ii) In the event of a Plan participant's termination of employment
due to a cause other than retirement under Article V(e)(i), death, or
permanent and total disability, all then unexercisable stock options shall
expire. Stock options exercisable at the date of termination shall remain
exercisable for a period of three months following a Plan participant's
termination date, unless the Plan participant was dismissed for misconduct,
as defined below, in which case all unexercised stock options shall expire
upon termination.
(iii) In the event of a Plan participant's termination due to death or
permanent and total disability, all then unexercisable stock options shall
expire. Stock options exercisable at the date of termination shall remain
exercisable for a period of twelve (12) months following the Plan
participant's death or disability. Notwithstanding the foregoing, in its
discretion the Committee may extend the exercise period for an option held
by (a) the estate of a deceased option holder or (b) anyone in the case of
options which are not ISOs.
(iv) Under no circumstances, including the termination of a Plan
participant, may a stock option be exercised after the expiration of ten
years from the date such option is granted, or such earlier date as may be
specified in the Option Agreement.
(v) All shares acquired through the Plan shall be paid for in full at
the time the option is exercised, in cash or through the transfer of stock
already owned by the Plan participant. At the same time, the Plan
participant must pay the Company for amounts which the Company may be
required to withhold upon such exercise for applicable federal (including
FICA), state, and local taxes, either through the delivery of a sufficient
amount of cash to the
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Company or through the retention of shares of Common Stock otherwise
issuable on the exercise of the option or the delivery of Common Stock to
the Company by the optionee, under such terms as the Committee finds
appropriate, and subject to the provisions of Rule 16b-3(e) under the
Securities Exchange Act of 1934, as amended.
(vi) An option shall not be transferrable by the Plan participant
except by will or by the laws of descent and distribution and shall be
exercisable during the Plan participant's lifetime only by the Plan
participant (or on his behalf by his guardian or like representative), and
the terms of each Option Agreement shall so provide.
(vii) If there is any change in the number of outstanding shares of
Common Stock of the Company through the declaration of stock dividends or
through stock splits, then the number of shares available for options and
of shares subject to any option and the purchase prices of any shares
subject to any option shall be automatically adjusted. If there is any
change in the number of outstanding shares of Common Stock of the Company
through any merger, consolidation, reorganization, recapitalization, or any
other change in the capital account of the Company, then the number of
shares available for options and of shares subject to any option and the
purchase price of any share subject to any option shall be appropriately
adjusted by the Committee, except to the extent the Committee takes other
action pursuant to the following paragraph.
Notwithstanding the provision of any other Section of the Plan, if the
Company shall not be the surviving corporation in any merger or
consolidation, or if the Company is to sell all or substantially all of its
assets, or if the ownership of more than 45 percent of the outstanding
shares of Common Stock shall change as the result of a concerted action by
one or more persons or corporations or if an attempt is so made to effect
such a change of ownership, or if the Company is to be dissolved and
liquidated (each such event shall be referred to in this paragraph as a
"Corporate Change"), then the Committee in its sole discretion may (i)
provide for the purchase of each Option then outstanding for an amount of
cash equal to the excess of the fair market value of the shares subject to
such option (which in the event of a change in the ownership of more than
45 percent of the outstanding shares of Common Stock shall not be less than
the amount of cash and the fair market value of other consideration
tendered for such outstanding shares) over the aggregate purchase price of
the shares subject to the option, (ii) make such adjustments to options
then outstanding as the Committee finds appropriate to reflect such
Corporate Change, or (iii) cause any surviving corporation in such
Corporate Change to assume options then outstanding or substitute new
options for such outstanding options.
(viii) Each option shall be evidenced by a written Option Agreement
executed by the Company and the option holder.
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(ix) For purposes of the Plan, "misconduct" shall mean a Plan
participant has, as determined by the Committee, (1) used for profit or
disclosed to an unauthorized person confidential information or trade
secrets of the Company, (2) breached any contract with or violated any
fiduciary obligation owed to the Company, (3) engaged in unlawful trading
in the securities of the Company or of another company based on information
gained as a result of his employment with the Company, or (4) committed a
felony or other serious crime. Under any of these circumstances, the Plan
participant shall forfeit all rights to any unexercised options granted
under the Plan and all of that Plan participant's outstanding options shall
automatically terminate and lapse, unless the Committee shall, in its sole
discretion, determine otherwise.
ARTICLE VI. TERM OF PLAN
The Plan shall be effective, subject to the approval of the shareholders,
as of December 16, 1994 and shall expire on December 15, 1999.
ARTICLE VII. CHOICE OF LAW
The Plan shall be interpreted and administered in accordance with the laws
of the State of Delaware. With respect to any options granted under the Plan
that are intended to qualify as incentive stock options as defined in section
422 of the Code, the terms of the Plan and of each ISO granted pursuant to the
Plan shall be construed to effectuate such intention. The Committee shall have
the power to amend the Plan to conform with section 422 of the Code or of any
new revenue laws of the United States that accord similar tax treatment to stock
option plans.
ARTICLE VIII. RIGHTS OF EMPLOYMENT
Nothing in the Plan or in any instrument executed as a result of the Plan's
operation shall confer upon any Plan participant any right to continue in the
Company's employ or shall affect the Company's right to terminate the employment
of any Plan participant.
ARTICLE IX. ADDITIONAL CONDITIONS
(a) Any shares of Common Stock issued or transferred under any provisions
of the Plan may be issued or transferred subject to any such conditions, in
addition to those specifically provided in the Plan, as the Committee may
impose.
(b) The Company shall only issue options and shares of Common Stock
issuable upon exercise or surrender of options in compliance with the Securities
Act of 1933, as amended, and any other applicable law; and any person to whom an
option is to be granted shall also agree to so comply.
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EXHIBIT B
AMERICAN PRECISION INDUSTRIES INC.
1995 DIRECTORS STOCK OPTION PLAN
1. Purpose
The purpose of the American Precision Industries Inc. 1995 Directors Stock
Option Plan ("Plan") is to encourage ownership of the stock of American
Precision Industries Inc. (the "Company") by directors of the Company who are
not employees of the Company and to enhance the Company's ability to attract and
retain highly qualified persons to serve as its directors.
2. Definitions
As used in the Plan:
"Annual Retainer Fees" means the amount that a director is entitled to
receive for serving as a director and, if applicable, as chairman of the Audit
or Compensation Committee or other committees of the Company's Board of
Directors during the one-year period beginning on a given January 1, not
including meeting fees for Board or Committee meetings.
"Meeting Fees" means the amount that a director is entitled to receive for
attending a meeting of the Board of Directors or a meeting of a committee of the
Board of Directors of which the director is a member.
"Committee" means the Compensation Committee of the Board of Directors of
the Company or such other committee of the Board that the Board has appointed to
administer the Plan. The Committee shall consist of two or more members of the
Board of Directors of the Company.
"Common Stock" means the common stock, $.66 2/3 par value, of the Company.
"Fair Market Value" of a share of Common Stock on any date means the
average of the closing sales prices of a share of Common Stock on the New York
Stock Exchange for the ten trading days prior to the date of determination as
published in The Wall Street Journal or in any other publication selected by the
Committee; provided, however, that if shares of Common Stock shall not have been
publicly traded during the ten days immediately preceding such date, then the
Fair Market Value of a share of Common Stock shall be determined by the
Committee in such manner as it may deem appropriate.
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"Option" means an option granted pursuant to the Plan to purchase shares of
Common Stock. Options granted pursuant to the Plan shall not be incentive stock
options as defined in section 422 of the Internal Revenue Code of 1986, as
amended ("Code").
"Purchase Price" has the meaning given in Section 6(a) hereof.
3. Administration
The grant of Options under this Plan shall be automatic. The Committee
shall administer the Plan. The Committee shall be authorized to interpret the
Plan and the Options granted under the Plan and to make any determinations it
believes necessary or advisable for the administration of the Plan. Any decision
of the Committee in the administration of the Plan shall be in its sole
discretion and conclusive. The Committee may act only by a majority of its
members in office, except that the members of the Committee may authorize any
one or more of their number or any officer of the Company to execute and deliver
documents on behalf of the Committee.
4. Shares Available
A total of 50,000 shares of Common Stock of the Company shall be available
for grant under the Plan. Upon the expiration or termination in whole or part of
any unexercised Option, the shares of Common Stock subject to such Option shall
again be available for grant under the Plan.
5. Grant of Options
a. Determination of Number of Shares
An Option shall be granted automatically on the first day of each quarter
of a calendar year to each nonemployee director who elected to receive options
instead of the director's Annual Retainer Fees and Meeting Fees for that year.
The number of shares of Common Stock subject to such an Option shall be equal to
the nearest number of whole shares determined according to the following
formula:
Number of Shares = Quarterly Amount of Annual Retainer and Meeting Fees
----------------------------------------------------
(Fair Market Value -- Purchase Price)
For the purposes of this formula, the Fair Market Value of a share of
Common Stock shall be determined as of the date of the grant of the Option, and
the Purchase Price of a share of Common Stock subject to the Option shall be
that described in Section 6(a). The quarterly amount of a director's Annual
Retainer Fees shall be the amount of the Annual Retainer Fees payable for the
calendar quarter beginning on the date of grant. The quarterly amount of a
director's Meeting Fees shall be the amount of the Meeting Fees payable to the
director for meetings held during the calendar quarter preceding the date of
grant. However, for the July 1,
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1995 grant of Options, the quarterly amount of a director's Meeting Fees shall
not include the amount of Meeting Fees already paid to the director for the
preceding calendar quarter.
b. Elections to Receive Option
To elect to receive an Option instead of Annual Retainer and Meeting Fees
for a given calendar year, a director shall file a written election with the
Secretary of the Company by June 30 of the preceding calendar year (or by
December 31, 1994, with respect to 1995), in the form attached as Appendix A to
the Plan.
c. Limitations
The following limitations shall apply to the grant of Options pursuant to
this Section 5:
(i) No Options shall be granted pursuant to this Section 5 before July 1,
1995.
(ii) If on any date on which Options are to be granted to a director
pursuant to this Section 5 there is an insufficient number of shares of Common
Stock available pursuant to Section 4 for the grant of Options to all electing
directors as provided in this Section 5, then the number of shares subject to
each Option granted pursuant to this Section 5 on such date shall equal the
number of shares that otherwise would be subject to such Option except for this
limitation multiplied by a fraction, the numerator of which shall be the total
number of shares then available pursuant to Section 4 for the grant of Options
under this Plan and the denominator of which shall be the aggregate number of
shares that otherwise would be subject to Options granted pursuant to this
Section 5 on such date, such product to be rounded down to the nearest whole
number. To the extent this Section 5(c)(ii) limits the number of shares of
Common Stock subject to an Option granted to a director under this Section 5 on
any given date, the director's election of an Option instead of Annual Retainer
and Meeting Fees shall be ineffective.
(iii) No Options shall be granted pursuant to this Section 5 after December
31, 2005.
6. Terms of Options
Each Option granted under the Plan shall be evidenced by a written
agreement in the form attached as Appendix B to the Plan executed on behalf of
the Company and by the holder of the Option, which includes the following terms
and conditions:
a. The Purchase Price of each share of Common Stock subject to an Option shall
equal 30% of the Fair Market Value of a share of Common Stock on the date the
Option is granted, rounded to the nearest whole cent.
b. An Option shall be exercisable in full six months after the grant of the
Option. To the extent not already exercised, an Option shall expire on the day
before the tenth anniversary of the date of the grant of the Option or, if
earlier, upon whichever of the following dates is applicable:
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(i) if the director's service as a director terminates by reason of the
director's retirement after reaching age 70, the fifth anniversary of the
director's retirement or, if the director dies before the fifth anniversary of
his retirement, then the first anniversary of the director's death; or
(ii) if the director's service as a director terminates by reason of the
director's disability or death, the first anniversary of the director's
disability or death; or
(iii) if the director's service as a director terminates for any other
reason, the date that is three months after the termination of the director's
service as a director of the Company.
c. An Option shall require that the optionee represent at the time of each
exercise of the Option that the shares purchased are being acquired for
investment and not with a view to distribution.
d. The Purchase Price of the shares with respect to which an Option is
exercised shall be payable in full and in cash on the date the Option is
exercised.
e. An Option shall not be assignable or transferable by the optionee except by
will or the laws of descent and distribution and shall be exercisable, during
the optionee's lifetime, only by him.
7. Adjustment of Shares Available
If there is any change in the number of outstanding shares of Common Stock
of the Company through the declaration of stock dividends or through stock
splits, then the number of shares available for Options and of shares subject to
any Option and the Purchase Prices of any shares subject to any Option shall be
automatically adjusted. If there is any change in the number of outstanding
shares of Common Stock of the Company through any merger, consolidation,
reorganization, recapitalization, or any other change in the capital account of
the Company, then the number of shares available for Options and of shares
subject to any Option and the Purchase Price of any share subject to any Option
shall be appropriately adjusted by the Committee, except to the extent the
Committee takes other action pursuant to the following paragraph.
Notwithstanding the provision of any other Section of this Plan, if the
Company shall not be the surviving corporation in any merger or consolidation,
or if the Company is to sell all or substantially all of its assets, or if the
ownership of more than 45 percent of the outstanding shares of Common Stock
shall change as the result of a concerted action by one or more persons or
corporations or if an attempt is so made to effect such a change of ownership,
or if the Company is to be dissolved and liquidated (each such event shall be
referred to in this paragraph as a "Corporate Change"), then the Committee in
its sole discretion may (i) provide for the purchase of each Option then
outstanding for an amount of cash equal to the excess of the Fair Market Value
of the shares subject to such Option (which in the event of a change in the
ownership of more than 45 percent of the outstanding shares of Common Stock
shall not be less than the
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amount of cash and the fair market value of other consideration tendered for
such outstanding shares) over the aggregate Purchase Price of the shares subject
to the Option, (ii) make such adjustments to Options then outstanding as the
Committee finds appropriate to reflect such Corporate Change, or (iii) cause any
surviving corporation in such Corporate Change to assume Options then
outstanding or substitute new options for such outstanding Options.
8. Effective Date
This Plan is adopted subject to the approval of the Plan by the
shareholders of the Company pursuant to a proxy solicitation under Regulation
14A promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. No Option granted under the Plan may be
exercised before receipt of such approval.
Upon receipt of such approval, the Plan will be effective as of July 1,
1995.
9. Amendment
The Board of Directors of the Company may amend the Plan in any respect;
provided, however, that without the approval of the shareholders of the Company
the Board may not: (i) materially increase the benefits to participants under
the Plan; (ii) except as provided in Section 7, increase the number of shares
which may be issued under the Plan; or (iii) materially modify the requirements
as to eligibility for participation in the Plan; provided, however, that the
Board of Directors may amend the Plan without further shareholder approval to
provide for the grant of options that are transferable, without payment of
consideration, to immediate family members of the optionee or to trusts or
partnerships for such family members, and, in the event of such amendment, to
amend outstanding options to provide for such transferability. No amendment of
the Plan shall adversely affect any right of any holder of an Option already
granted without such optionee's written consent.
10. Termination of Plan
The Board of Directors may terminate the Plan at any time with respect to
any shares of Common Stock that are not then subject to Options. Unless
terminated earlier by the Board of Directors, the Plan shall terminate on
December 31, 2005.
11. No Right to Continued Directorship
Nothing in the Plan or in any Option granted pursuant to the Plan shall
confer upon any director the right to continue as a director of the Company.
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12. Rights as Shareholder
No person shall have the rights of a shareholder with respect to shares of
Common Stock subject to an Option until the date of issuance, if any, of a stock
certificate pursuant to the exercise of an Option.
13. Regulatory Approvals and Listing
The Company shall not be required to issue any certificate or certificates
for shares of Common Stock upon the exercise of an Option prior to (a) the
obtaining of any approval from any government agency that the Company shall, in
its sole discretion, determine to be necessary or advisable, (b) the admission
of such shares to listing on any stock exchange on which the Common Stock may
then be listed, and (c) the completion of any registration or other
qualification of such shares under any state or Federal law or rulings or
regulations of any governmental body that the Company shall, in its sole
discretion, determine to be necessary or advisable.
14. Construction
The Plan shall be construed in accordance with the law of the State of
Delaware.
15. Satisfaction of Tax Liabilities
Notwithstanding any other provision of this Plan, the Company shall not be
required to issue any certificate for shares of Common Stock upon the exercise
of an Option unless any Federal, state, or local tax withholding obligation
incurred by the Company in connection with the exercise of the Option has been
provided for by the optionee through the delivery of a sufficient amount of cash
to the Company, or, with the consent of the Committee, through the retention of
shares of Common Stock otherwise issuable on the exercise of the Option or the
delivery of Common Stock to the Company by the optionee, under such terms as the
Committee finds appropriate.
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EXHIBIT C
A. AMENDMENT TO THE AMERICAN PRECISION INDUSTRIES INC. 1993 EMPLOYEES STOCK
OPTION PLAN
Article IV is amended by the addition of the following new Article IV(d) to
read as follows:
(d) The maximum number of shares of Common Stock subject to options granted to
any Plan participant shall not exceed 100,000.
Article V(e)(ii) through (viii) of the Plan are renumbered as Articles
V(e)(iii) through (ix), respectively. The introduction to Article V(e) is
amended. Article V(e)(i) is deleted and new Articles V(e)(i) and (ii) are
substituted in its place. The introduction to Article V(e) as amended and new
Articles V(e)(i) and (ii) read as follows:
(e) Stock options may be exercised in whole or in such parts as may be specified
from time to time by the Committee, except that no stock option shall be
exercisable within one year immediately following the date the option is
granted. Options held for the required period may be exercised in whole or
in part. The exercise of stock options granted after December 16, 1994,
shall be subject to the following provisions:
(i) In the event a Plan participant holds unexercised options which at the
time of grant were scheduled to become exercisable over a period of five or more
years, has five or more years of service with the Company, and retires at age 55
or later, such stock options will continue to become exercisable according to
their terms during a period of five years following retirement, and the
retiree's exercisable stock options may be exercised during such five year
period. In the event the retiree dies during such five year period, all
unexercisable stock options on the date of death shall expire. Stock options
exercisable on the date of death shall remain exercisable for a period of twelve
(12) months following the retiree's death.
(ii) In the event of a Plan participant's termination of employment due to
a cause other than retirement under Article V(e)(i), death, or permanent and
total disability, all then unexercisable stock options shall expire. Stock
options exercisable at the date of termination shall remain exercisable for a
period of three months following a Plan participant's termination date, unless
the Plan participant was dismissed for misconduct, as defined below, in which
case all unexercised stock options shall expire upon termination.
Article V(e) is further amended by the addition of a new paragraph at the
end of Article V(e), to read as follows:
The exercise of stock options granted before December 17, 1994, shall be
subject to the provisions of Articles V(e)(i) through (viii) as in effect before
this amendment, except that the Committee in its discretion may amend stock
options granted before December 17, 1994, to
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incorporate the provisions of Articles V(e)(i) and (ii) as amended above in
place of the provisions of the original Article V(e)(i).
B. AMENDMENT TO THE AMERICAN PRECISION INDUSTRIES INC. 1989 STOCK OPTION PLAN
Article IV is amended by the addition of the following new Article IV(d) to
read as follows:
(d) The maximum number of shares of Common Stock subject to options granted to
any Plan participant shall not exceed 100,000.
Article V(e) is amended by the addition of a new paragraph at the end of
Article V(e), to read as follows:
The exercise of stock options granted under this plan shall be subject to
the provisions of Article V(e)(i) through (vii) as in effect before this
amendment, except that the Committee in its discretion may amend stock options
granted under this plan to incorporate the provisions of Articles V(e)(viii) and
(ix) below in place of the provisions of the Article V(e)(i).
(viii) In the event a Plan participant holds unexercised options which at
the time of grant were scheduled to become exercisable over a period of five or
more years, has five or more years of service with the Company, and retires at
age 55 or later, such stock options will continue to become exercisable
according to their terms during a period of five years following retirement, and
the retiree's exercisable stock options may be exercised during such five year
period. In the event the retiree dies during such five year period, all
unexercisable stock options on the date of death shall expire. Stock options
exercisable on the date of death shall remain exercisable for a period of twelve
(12) months following the retiree's death.
(ix) In the event of a Plan participant's termination of employment due to
a cause other than retirement under Article V(e)(viii), death, or permanent and
total disability, all then unexercisable stock options shall expire. Stock
options exercisable at the date of termination shall remain exercisable for a
period of three months following a Plan participant's termination date.
C-2
