<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN A 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 Rule 14a-11(c) or Rule 14a-12
Plymouth Rubber Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] 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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PLYMOUTH RUBBER COMPANY, INC.
CANTON, MASSACHUSETTS 02021
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1998
----------------
TO THE STOCKHOLDERS OF
PLYMOUTH RUBBER COMPANY, INC.:
The 1998 Annual Meeting of Stockholders of Plymouth Rubber Company, Inc.
will be held at the Four Points Hotel and Conference Center, 1151 Boston-
Providence Turnpike, Norwood, Massachusetts, on April 24, 1998 at 10:00 A.M.,
for the purpose of considering and acting upon the following:
1. The election of two directors, to serve for a term of three years;
2. Ratification of the Company's Amendment to the 1995 Non-Employee
Directors' Stock Option Plan.
3. Ratification of the selection of Price Waterhouse LLP as the Company's
auditors for the fiscal year ending November 27, 1998;
4. To act on a proposal submitted by a stockholder requesting that the
Board of Directors retain an investment banking firm to consider
strategic alternatives to increase shareholder value as more fully
described in the accompanying Proxy Statement.
5. The transaction of such other business as may properly be brought
before the meeting or any adjournments thereof.
Only holders of record of the Company's Class A Common Stock at the close
of business on February 27, 1998 will be entitled to notice of and to vote (to
the extent provided in the attached Proxy Statement) at the meeting or any
adjournments thereof.
A copy of the Company's annual report for the fiscal year ended November
28, 1997 is included herewith.
By Order of the Board of Directors
JOEL A. KOZOL, Clerk
Canton, Massachusetts
March 25, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
EXPECT TO BE PRESENT, PLEASE DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE>
PLYMOUTH RUBBER COMPANY, INC.
104 REVERE STREET
CANTON, MASSACHUSETTS 02021
----------------
PROXY STATEMENT
----------------
SOLICITATION OF PROXIES
This Proxy Statement, which is first being mailed to stockholders on or
about March 25, 1998, is furnished in connection with the solicitation by
management, at the direction of the Board of Directors, of proxies for use at
the Company's annual meeting of stockholders to be held on April 24, 1998.
Execution and return of the proxy will not in any way affect a stockholder's
right to attend the meeting and to vote in person. A stockholder who executes
a proxy may revoke it at any time before it is voted. Properly executed
proxies, received in due time and not previously revoked, will be voted at the
meeting or any adjournment thereof as specified therein, but if no
specification is made such proxy will be voted in favor of the election of the
directors nominated by the Board of Directors as hereinafter set forth, in
favor of the ratification of the Company's Amendment to the 1995 Non-Employee
Directors' Stock Option Plan, and in favor of the ratification of the
appointment of Price Waterhouse LLP as independent auditors for the year
ending November 27, 1998, and against the stockholder proposal.
The expense of the solicitation of proxies will be borne by the Company.
It is expected that the solicitation will be conducted exclusively by mail.
However, if it should appear desirable to do so in order to insure an adequate
representation of the shareholders at the meeting, either in person or by
proxy, officers and employees of the Company may communicate with
stockholders, banks, brokerage houses, nominees and others by telephone or
telegraph, or in person, to request that proxies be furnished.
OUTSTANDING SECURITIES AND OWNERSHIP THEREOF
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders are entitled to one (1) vote for each share of the Company's
Class A Common Stock, $1 par value ("Class A Stock"), owned by them of record
as of the close of business on February 27, 1998. On that date there were
outstanding 810,586 shares of Class A Stock entitled to be voted at the
meeting. The Class A Stock is the only class of the Company's outstanding
capital stock entitled to notice of and to vote at the meeting.
In addition to the foregoing voting securities, on February 27, 1998 the
Company had outstanding 1,263,464 shares of Class B Common Stock, $1 par value
("Class B Stock"). The holders of Class B Stock will not be entitled to vote
at the meeting. At the close of business on February 27, 1998, Maurice J.
Hamilburg, Joseph D. Hamilburg and Phyllis B. Hamilburg owned or controlled
through a voting trust an aggregate of 383,447 shares of the Company's Class B
Stock, constituting approximately 30.3% of the outstanding shares; Maurice J.
Hamilburg and Joseph D. Hamilburg owned 43,442 and 49 shares, respectively,
and the Plymouth Rubber Company Profit-Sharing Plan and Trust, Plymouth Rubber
Defined Benefit Unit Pension Plan and Trust and Joseph M. Hamilburg
Foundation, as to each of which Maurice J. Hamilburg and Joseph D. Hamilburg
are Trustees, owned an aggregate of 65,353 shares of the Company's Class B
Stock, constituting approximately 5.2% of the outstanding shares.
OWNERSHIP OF VOTING SECURITIES
The following table sets forth, as of February 27, 1998, the
information described therein with respect to the persons known by the Company
to own beneficially more than 5% of the outstanding shares of the Company's
Class A Common Stock ("Class A Stock"), the Company's sole class of voting
securities:
NAME AND ADDRESS NO. OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
PHYLLIS B. HAMILBURG 431,655(1) 53.3%
Red Oak Farm
P.O. Box 3329
Plymouth, Massachusetts 02361
MAURICE J. HAMILBURG 478,564(1) 59.0%
10 Draper Road
Wayland, Massachusetts 01778
JOSEPH D. HAMILBURG 472,698(1) 58.3%
16 Shaw Drive
Wayland, Massachusetts 01778
JANE H. GUY 279,351(2) 34.5%
1660 West Street
Mansfield, Massachusetts 02048
DR. IDO E. COLANTUONI(3) 64,700 8.0%
P.O. Box 28231
Washington, D.C. 20038
HANAPER PARTNERS, L.P., 63,900(4) 7.9%
Morris Propp,
Rodney M. Propp and
P-II Incorporated
c/o P-II, Incorporated
405 Park Avenue
New York, N.Y. 10022
- ------------
(1) Maurice J. Hamilburg, Joseph D. Hamilburg and Jane H. Guy are siblings;
Phyllis B. Hamilburg is their mother. The shares shown as beneficially
owned by each of Phyllis B. Hamilburg, Maurice J. Hamilburg and Joseph D.
Hamilburg are so shown by reason of their direct and indirect beneficial
ownership of certain of the shares and their respective voting powers with
respect to certain of the shares as Voting Trustees of a voting trust and
as trustees of various other trusts. For a breakdown of the actual
beneficial ownership of the shares, see "Stock Ownership of Nominees,
Continuing Directors and Officers."
(2) Of the shares shown as beneficially owned by Jane H. Guy, 18,011 shares
are owned indirectly (the direct ownership being held by a voting trust as
described under the caption "Stock Ownership of Nominees, Continuing
Directors and Officers"), and 515 are held directly, and the remainder are
in trusts of which she is a beneficiary or co-beneficiary with others and
with respect to which she has no voting powers.
(3) Based on Schedule 13D dated May 8, 1997.
(4) Based on a Schedule 13D dated May 4, 1997. Of the aggregate 63,900 shares
reported as beneficially owned: 49,000 shares were beneficially owned by
Hanaper Partners, L.P., its general partner, P-II, Incorporated, and
Morris Propp and Rodney M. Propp, the controlling persons of P-II,
Incorporated; 13,800 shares were beneficially owned by Morris Propp in his
individual capacity, and 1,100 shares were beneficially owned by Rodney M.
Propp in his individual capacity.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws provide for the election by stockholders of a Board
of Directors consisting of not less than three (3) nor more than nine (9)
directors, as fixed from time to time by the Board of Directors. The directors
are divided into three (3) classes as nearly equal in number as possible,
consistent with the total number of directors to serve, as fixed by the Board.
The directors of each class serve for a term of three (3) years, with the term
of each class expiring in successive years, except that the term of a director
elected to any class between annual elections will expire with the expiration
of the term of that class.
The Board of Directors has presently fixed (7) as the number of directors
to serve during the ensuing year, subject to the Board's authority to change
such number from time to time. Of the number so fixed, two (2) will be elected
at the meeting to replace the two (2) whose terms expire, such reelected
directors to serve for a term of three (3) years. The nominees are set forth
below.
All Class A proxies received by management will be voted (unless otherwise
specified) in favor of the persons named below as nominees for election as
directors, said nominees to serve for a term of three years (or one year as
described hereinabove), and until his or her successor is elected and
qualifies. Proxies cannot be voted for more than two directors. All of the
following directors (including the nominees) have been directors of the
Company for the periods indicated in the table below.
NOMINEE FOR ELECTION AS DIRECTOR AND CONTINUING DIRECTORS
Information concerning the nominees for election as director for a term to
expire in 2001:
<TABLE>
<CAPTION>
SERVED AS PRESENT
DIRECTOR TERM
NAME PRINCIPAL OCCUPATION AGE SINCE EXPIRES
---- -------------------- ----- --------- ---------
<S> <C> <C> <C> <C>
JOSEPH D. HAMILBURG(1)(2) President of 49 1974 1998
J.D.H. Enterprises, Inc.
SUSAN Y. FRIEDMAN(2)(3) Business Consultant 49 1993 1998
Information concerning other directors who will continue in office after the meeting:
<CAPTION>
SERVED AS PRESENT
DIRECTOR TERM
NAME PRINCIPAL OCCUPATION AGE SINCE EXPIRES
---- -------------------- ----- --------- ---------
<S> <C> <C> <C> <C>
JANE H. GUY(1) President and Treasurer of 46 1989 1999
Alladan Kennels, Inc.
MELVIN L. KEATING(2)(3) President of Kadeca Consulting 51 1989 1999
Corporation
JAMES M. OATES(2)(3) Managing Director of The 51 1996 1999
Wydown Group and Chairman of IBEX
Capital Markets LLC
MAURICE J. HAMILBURG(1) President and Chief Executive 51 1974 2000
Officer of the Company
DUANE E. WHEELER Retired Vice President -- Finance 65 1996 2000
and Treasurer of the Company
</TABLE>
Jane H. Guy, a graduate of Wheaton College, has since 1978, been President
and Treasurer of Alladan Kennels, Inc., a company engaged in the business of
operating dog care and grooming kennels. She also conducts a dog breeding
operation.
Since 1997, Melvin L. Keating has served as President of Kadeca Consulting
Corporation. Prior thereto, (1995-1997), Mr. Keating served as President of
Sunbelt Management Company. Sunbelt Management is an owner and operator of
commercial and retail real estate in North America. From 1994-1995 Mr. Keating
served as Senior Vice President of Reichmann International Companies and from
1986 to 1994, as Senior Vice President of Olympia & York Companies, U.S.A.,
entities controlled by the Reichmann family, engaged in the real estate
development business, including the development and construction of major
urban office buildings and other commercial property. Mr. Keating is a
graduate of Rutgers University where he earned a BA degree, and he holds
Master of Science and Master of Business Administration degrees from the
Wharton School of the University of Pennsylvania.
Maurice J. Hamilburg has been President of the Company since 1987. He
served as Executive Vice President from 1976 to 1987, and prior to 1976 he
served in various other capacities with the Company for several years. He is a
graduate of Harvard College and of the Harvard Graduate School of Business
Administration where he earned the degree of Master of Business
Administration.
Since October, 1988, Joseph D. Hamilburg, a graduate of Harvard College,
has served as President of J.D.H. Enterprises, Inc., an international
consulting company, and in this capacity since 1988, has served as a business
consultant to the Company. Prior to October, 1988, he served as Vice President
and Treasurer of the Company and in other executive officer capacities for
more than five (5) years.
Susan Y. Friedman, a graduate of Brown University and the Harvard Graduate
School of Business Administration where she earned the degree of Master of
Business Administration, has served as an independent business consultant
since 1991.
James M. Oates is presently Managing Director of the Wydown Group and
Chairman of IBEX Capital Markets LLC. Mr. Oates served as President and Chief
Executive Officer of Neworld Bancorp, Inc. and Neworld Bank from 1984-1994. He
is a graduate of Harvard College and the Harvard Graduate School of Business
Administration. He is a director of Blue Cross Blue Shield of New Hampshire,
Phoenix Mutual Funds, Phoenix Duff & Phelps, AIB Govett, Inc., Investors Bank
& Trust, Investor Financial Services Corp., Command Systems, Stifel Financial,
and the Massachusetts Housing Partnership.
Duane E. Wheeler served as Vice President -- Finance of the Company from
1980 to 1997, and as Treasurer from 1988 until 1998. Prior to 1980 he served
as Vice President of Administration and Finance of Acushnet Company, a
subsidiary of American Brands, which manufactures and distributes golf
equipment and precision rubber molded goods. Mr. Wheeler is a graduate of the
University of Massachusetts.
- ----------
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
CERTAIN MATTERS RELATING TO OFFICERS AND DIRECTORS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors has among its separate committees, a
Compensation Committee, (the "Committee"), which is comprised of three
Directors: Ms. Susan Y. Friedman (the Chair of the Committee), Mr. Melvin L.
Keating, and Mr. James M. Oates, all of whom are non-employee Directors.
THE BOARD COMPENSATION COMMITTEE REPORT
The Company administers executive compensation through its Compensation
Committee. This Committee is made up of three (3) Directors, all of whom are
non-employees. The Committee reviews policies and makes recommendations to the
Board of Directors with respect to such matters as (i) appropriate
compensation policy for key management personnel, including basic salary
levels, (ii) the implementation and/or amendment and/or termination of
existing employee benefit and incentive plans, (iii) the establishment and
implementation of new employee benefit and incentive plans, (iv) appropriate
implementation of the Company's stock option or other stock purchase plans
through grants thereunder, (v) the award of cash bonus, when appropriate, to
officers and other key employees, and (vi) generally, all matters relating to
officer and other key employee compensation.
Among the Committee's objectives is that of establishing executive
compensation competitive with that of other companies similar in size,
considering the relative responsibility levels of individual executives. The
Company's goal is to award competitive compensation based on a total
assessment of salary, stock options, and bonus. The Committee uses its
discretion and business judgment in setting executive compensation, using
neither a predetermined formula, nor any quantitative weights for the various
factors. While the Committee does not, itself, survey any companies when
setting and evaluating total compensation of the Company's executives, the
entire Committee reviews independently produced Executive Compensation
Surveys. The Compansation Surveys are used as a guide to determine whether
total compensation is within the reasonable range of those similarly situated,
as well as to evaluate whether the executives' salaries are reasonable in
relationship to each other, and to the market, taking into account the
individuals' responsibilities and contributions to corporate performance.
The CEO's compensation is comprised of a base salary, and depending upon
the above-stated factors and adjustments, a bonus, and may include a stock
option grant. The Committee does not use a predetermined formula for
establishing CEO or other executive compensation; rather, the Compensation
Committee uses its discretion, evaluates and weighs several factors, and
arrives at its compensation decision using its best judgement. When setting
and evaluating the CEO's compensation, the Committee members review the
Compensation Surveys and consider the CEO's compensation in relation to that
data. The Committee establishes the CEO's compensation after taking into
account the Company's performance, the CEO's performance, and the relationship
of the CEO's compensation to that of the other key executives.
The Committee evaluates the award of a bonus to the CEO, using its
discretion and business judgment. For fiscal 1997, the Compensation Committee
awarded a bonus to the CEO of approximately 22% of salary, based on his
contribution to current operations of the Company and achievement of several
objectives intended to strengthen the Company long term.
In addition, the Committee makes decisions regarding the payment of cash
bonuses to the Company's Executive Officers. The purpose of the bonus is to
provide incentives and rewards to the Executive Officers, based on the overall
achievement of corporate goals. The decision as to individual bonus awards is
discretionary. The Committee considers, without any specific assignment of
weight thereto, factors such as the Company's overall financial performance,
the individuals' levels of compensation relative to external markets, their
performance and value to the Company, and their relative contributions to the
management team. No bonus other than that awarded to the CEO was awarded to
Executive Officers for fiscal 1997.
The Board of Directors may also, upon the recommendation of the
Compensation Committee, award Incentive Stock Options (see the caption "Stock
Options" below and in this Proxy Statement) to certain key employees. The
purpose of this program is to provide long-term incentives to key employees to
increase shareholder value, and to align management's goals with those of
shareholders. Such Stock Options may be awarded in lieu of or in addition to
bonus, and utilize vesting periods to encourage key employees to continue in
the employ of the Company and to encourage a long-term perspective. The
Committee considers the amounts and terms of the prior years' grants in
deciding whether to award options, to whom, and in what amounts for the last
completed fiscal year. While the establishment of the actual award is
discretionary, no Incentive Stock Options were awarded in fiscal 1997.
Subsequent to year-end, an aggregate of 69,900 Incentive Stock Options were
awarded to certain key employees, not including the CEO, who received a cash
bonus for 1997.
The compensation model for the Company's executives is intended to be
competitive (at least the 50th percentile) when measured against executives of
comparably sized manufacturing companies.
In the Committee's opinion the Company's executives are appropriately
compensated when compared with others similarly situated.
Respectfully submitted,
Compensation Committee
By SUSAN Y. FRIEDMAN, Chair
MELVIN L. KEATING
JAMES M. OATES
<PAGE>
EXECUTIVE COMPENSATION
General. The following table sets forth the total annual compensation
paid or accrued by the Company to the account of each executive officer of the
Company whose cash compensation for the fiscal year ended November 28, 1997
exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ---------------------- --------
(# OF SHARES)
OTHER ---------------------
ANNUAL RESTRICTED ALL OTHER
PRINCIPAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME POSITION YEAR SALARY $ BONUS $ SATION $ AWARDS SARS PAYOUTS SATION
---- -------- ---- -------- ------- -------- ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
M. J. Hamilburg President and 1997 224,167 50,128 3,195 -- -- -- --
Chief Executive 1996 207,504 100,097 3,048 -- -- -- --
Officer 1995 198,504 245 1,770 -- -- -- --
A. I. Eisenberg Vice President 1997 153,250 128 -- -- -- -- --
Sales and 1996 136,836 25,597 -- -- -- -- --
Marketing 1995 132,119 11,245 -- -- -- -- --
S. S. Leppo Vice President 1997 141,504 128 -- -- -- -- --
Research and 1996 131,004 9,097 -- -- -- -- --
Development 1995 127,210 9,245 -- -- -- -- --
W. F. Mansell Vice President 1997 130,008 -- -- -- -- -- --
Manufacturing 1996 -- -- -- -- -- -- --
1995 -- -- -- -- -- -- --
D. E. Wheeler Vice President 1997 120,750 128 -- -- -- -- --
Finance and 1996 115,750 10,597 -- -- -- -- --
Treasurer 1995 112,501 9,745 -- -- -- -- --
</TABLE>
The 1996 bonus for Mr. Hamilburg includes $50,000 for fiscal 1995 and
awarded in 1996.
Other annual compensation includes the interest on a loan from the Company
and life insurance premiums of $1,055 and $2,140 in 1997, $1,187 and $1,861 in
1996, and $930 and $840 in 1995, respectively, for Mr. Hamilburg.
Mr. Wheeler resigned his office of Vice President of Finance as of August
25, 1997, but remained as Treasurer as of fiscal year end.
Mr. Mansell joined the Company on September 8, 1997. His salary for 1997
presented in the above table reflects an annualization of his compensation as
if he had been employed for the full year.
Options. The following table sets forth the details of options granted to
individuals listed in the Summary Table during the fiscal year 1997. The
second section in this section shows the value of unexercised options.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
------------------------------------- POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
---------------------------------------------------- ---------------------------
% OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME # FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------- ------------ ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
William Mansell ............... 15,000 37.5 4.75 September 6, 2007 44,850 113,850
</TABLE>
Options were granted under the 1995 Plymouth Rubber Company, Inc. Employee
Incentive Stock Option Plan described on page 20 of this Proxy Statement.
<TABLE>
<CAPTION>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
- -------------------------------------------------------------------------------- VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#) AT FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Maurice J. Hamilburg ..................... 28,875 68,434 -- --
57,750 107,935
Alan I. Eisenberg ........................ 8,085 46,877 19,635 46,194
23,100 48,164
Sheldon S. Leppo ......................... 5,775 32,398 17,325 39,877
17,325 36,123
Duane E. Wheeler ......................... 5,775 31,676 17,325 39,877
-- --
William Mansell .......................... -- -- -- --
15,000 --
</TABLE>
The value realized for shares acquired by exercise was determined using
the ending market value of the Company's Class B Common Stock at January 10,
1997, ($7.00) for Mr. Wheeler, January 28, 1997 ($7.313) for Mr. Eisenberg,
January 30, 1997 ($7.125) for Mr. Leppo, and June 28, 1997 ($4.75) for Mr.
Hamilburg less the exercise price of the exercised options.
The value of unexercised "in-the-money" was determined using the ending
market value of the Company's Class B Common Stock at November 30, 1997,
($4.25) less the exercise price of the unexercised options.
Common Stock Performance: As part of the executive compensation
information presented in the Proxy Statement, the Securities and Exchange
Commission requires a five-year comparison of stock performance for the
Company with the stock performance of appropriate similar companies. The
Company has selected the S&P 500 and the Amex Market Value Index for the broad
equity market and published industry indexes, respectively, for stock
performance comparison. The Company does not know of an appropriate peer group
or other industry index of comparably traded companies that would be more
meaningful.
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PLYMOUTH RUBBER COMPANY, INC. CLASS A AND B, THE S&P 500 INDEX
AND THE AMEX MARKET VALUE INDEX
Cumulative Total Return
-----------------------------------
11/92 11/93 11/94 11/95 11/96 11/97
PLYMOUTH RUBBER COMPANY, INC. ..... PLR.A 100 135 194 256 227 157
PLYMOUTH RUBBER COMPANY, INC. ..... PLR.B 100 132 197 251 205 111
S&P 500 ........................... S&P 100 110 111 152 195 250
AMEX MARKET VALUE INDEX ........... AMX 100 116 110 136 150 173
*$100 INVESTED ON 11/30/92 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING NOVEMBER 30.
Note to Graph Above: Assumes $100 invested on November 30, 1992 in
Plymouth Rubber Company, and an identical amount in the S&P 500 and AMEX
Market Value Index. There can be no assurance that the Company's stock
performance will continue into the future with the same or similar trends
depicted in the graph above. The Company will not make nor endorse any
predictions as to future performance.
RETIREMENT BENEFITS
The Company has a defined contribution profit sharing plan and trust which
includes an employee elective deferral of income under the provisions of
Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code").
In addition, the Company has a defined benefit pension plan and trust. The
Company may make discretionary contributions to the Profit Sharing Trust. With
respect to the Profit Sharing Plan prior to amendment, allocations were made
to each participant's account based upon years of service and salary. Under
the amended plan, Company contributions will be allocated based upon a
combination of annual pay and employee elective deferrals. Subject to the
provisions described below relating to the pension plan, on retirement a
participating employee's account is paid to him either in a lump sum or in ten
annual payments at the employee's designation.
The pension plan for salaried employees, established in 1980, is Company-
funded and provides for a monthly payment to a retired participant of $12.50
multiplied by the participant's number of years of credited service to the
Company, reduced by the amount of a monthly life annuity pension which would
be the actuarial equivalent of the amount accumulated in the employee's profit
sharing account at the date of retirement. If, without reduction by reason of
a participant's profit sharing plan account, benefits not less than the
actuarial equivalent of the amount in such participant's profit sharing plan
account would be provided to such participant under the pension plan,
distribution of the participant's profit sharing plan account is made by
transfer thereof to the pension plan trust. The benefits to the participant,
therefore, are those payable under the pension plan or the profit sharing
plan, whichever are greater. In August, 1996 the Company elected to curtail
the non-contributory defined benefit pension plan with respect to funding of
future benefits effective November 30, 1996.
The following table sets forth the estimated annual benefits upon
retirement payable under the foregoing plans to the identified Executive
Officers of the Company (and all executive officers as a group), based on the
amounts in their respective profit sharing accounts as of November 28, 1997
and reflects the impact of curtailment of the pension plan effective November
30, 1996.
ESTIMATED ANNUAL
NAME BENEFITS UPON RETIREMENT(1)
---- ---------------------------
MAURICE J. HAMILBURG .................................. $ 3,750
ALAN I. EISENBERG ..................................... 1,500
SHELDON S. LEPPO ...................................... 5,850
DUANE E. WHEELER ...................................... 2,400
7 Executive Officers as a Group ....................... 17,250
- ------------
(1) Lifetime annual payments under pension plan.
CERTAIN TRANSACTIONS
The Company has a consulting arrangement with Joseph D. Hamilburg, a
director, pursuant to which Mr. Hamilburg has been engaged to render
consulting services to the Company in the areas of sales, personnel and
administrative matters. During the fiscal year ended November 28, 1997, Mr.
Hamilburg was paid $118,500 for such services. The Company believes that the
amount paid to Mr. Hamilburg would be competitive with that which would be
required to be paid to an outside consultant with Mr. Hamilburg's knowledge
and experience in these areas, as they relate to the Company, with respect to
which he rendered such services.
The Company has a consulting arrangement with Jane H. Guy, a director,
pursuant to which Ms. Guy has been engaged to render consulting services to
the Company. During the year ended November 28, 1997 Ms. Guy was paid $32,900
for such services. The Company believes that the amount paid to Ms. Guy would
be competitive with that which would be required to be paid to an outside
consultant with Ms. Guy's knowledge and experience.
MEETING ATTENDANCE; COMMITTEES
During fiscal year 1997 the Board of Directors held 8 meetings. All
directors are paid $500 for each meeting attended. In addition, the Company's
outside directors receive an annual retainer of $5,000. The Company has no
nominating committee. It has an Executive Committee, a Compensation Committee
and an Audit Committee, the members of which are noted in the table under the
caption "Nominees for Election as Directors and Continuing Directors." The
Audit Committee which is comprised of four non-employee Directors held two
meetings during the past year attended by all members. The Audit Committee
reviews with the auditors the scope of the audit work and questions which may
arise in the course of the annual audit, reviews the fees charged by the audit
firm and considers such other matters as the adequacy of internal controls,
accounting staffing, etc. The Executive Committee held no meetings in fiscal
1997. The Compensation Committee, which held two meeting during the past year
attended by all members, reviews the compensation of Executive Officers and
makes recommendations with respect thereto from time to time. Members of the
Audit and Compensation Committees are paid $500 for each meeting attended.
Each director attended at least 75% of the Board of Director and respective
committee meetings, except Joseph D. Hamilburg who attended 70%.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of materials submitted to the Company, the Company
believes there are no directors, officers or beneficial owners of more than
10% of any class of equity securities of the Company who failed to file on a
timely basis reports as required by Section 16(a) of the Exchange Act, except
that: Ms. Friedman, a director of the Company, failed to file a Statement of
Changes of Beneficial Ownership, Form 4 with respect to a purchase of 700
shares of Class A Common Stock in May 1997. A Form 5 reflecting this
transaction was filed in January 1998.
STOCK OWNERSHIP OF NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as to all ownership of the
Company's capital stock by each present director, each nominee for election as
a director and all directors, nominees and executive officers as a group:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED ON PERCENT OF NATURE OF
NAME TITLE OF CLASS 2/27/98 CLASS OWNERSHIP
---- -------------- ------- ----- ---------
<S> <C> <C> <C> <C>
JANE H. GUY Class A Common 279,351(1) 34.5% Direct
&
Indirect
Class B Common 284,592(1) 22.5% Indirect
JOSEPH D. HAMILBURG Class A Common 472,698(2) 58.3% Direct
&
Indirect
Class B Common 466,174(3) 36.9% Direct
&
Indirect
MAURICE J. HAMILBURG Class A Common 478,564(2)(4)(5) 59.0% Direct
&
Indirect
Class B Common 492,535(3)(4)(5) 39.0% Direct
&
Indirect
SUSAN Y. FRIEDMAN Class A Common 900 -- Direct
Class B Common 17,356(8) -- Direct
MELVIN L. KEATING Class B Common 17,325(8) -- Direct
JAMES M. OATES Class B Common 15,550(8) -- Direct
DUANE E. WHEELER Class B Common 21,069(8) -- Direct
11 Officers and Directors Class A Common 479,999(6) 59.2% Direct
as a Group &
Indirect
Class B Common 662,608(7) 52.4% Direct
&
Indirect
</TABLE>
- ------------
(1) 18,011 Class A shares are owned indirectly, the shares being held in the
Voting Trust described below, and 515 are held directly; 2,791 Class B
shares are owned indirectly, the shares being held in the Voting Trust
described below, and 117 are held directly, and all remaining Class A and
Class B shares are beneficially owned as a beneficiary of various Trusts
for her sole benefit or as a co-beneficiary with Maurice J. Hamilburg and
Joseph D. Hamilburg, except that 12,258 Class B shares are held as
custodian for three minor children, as to which she disclaims beneficial
ownership; 17,325 of the Class B shares shown as owned by Jane H. Guy are
not actually owned but are subject to presently exercisable options to
purchase same.
(2) The number of shares of Class A Common Stock shown as beneficially owned
by each of Joseph D. Hamilburg and Maurice J. Hamilburg are so shown by
reason of their voting powers with respect thereto. 20 of the shares shown
as owned by Joseph D. Hamilburg are owned by him directly; 15 of the
shares shown as owned by Maurice J. Hamilburg are owned by him directly;
and 431,655 of the shares (53.3% of the Company's outstanding Class A
Common Stock) shown as owned by each are in a voting trust (the "Voting
Trust") of which they, with, Phyllis B. Hamilburg, are the Voting
Trustees. The actual beneficial ownership of the shares held by the Voting
Trust and the respective percentages of the outstanding Class A Common
Stock represented thereby are broken down as follows:
(i) 5,700 shares (.7%) beneficially owned by a trust of which Joseph D.
Hamilburg is the beneficiary;
(ii) 12,695 shares (1.6%) beneficially owned by two separate trusts of
which Maurice J. Hamilburg is the beneficiary;
(iii) 249,404 shares (30.8%) beneficially owned by a trust of which
Joseph D. Hamilburg and Maurice J. Hamilburg are Trustees and of
which Phyllis B. Hamilburg is a life income beneficiary and Jane H.
Guy, Joseph D. Hamilburg and Maurice J. Hamilburg are life income
beneficiaries following her death;
(iv) 5,700 shares (.7%) beneficially owned by a trust of which Joseph D.
Hamilburg and Maurice J. Hamilburg are Trustees for the benefit of
Jane H. Guy;
(v) 68,683 shares (8.5%) beneficially owned by a trust of which Joseph
D. Hamilburg, Maurice J. Hamilburg, and Joel A. Kozol, are Trustees
and of which Phyllis B. Hamilburg is the beneficiary for her life
and thereafter Jane H. Guy, Joseph D. Hamilburg and Maurice J.
Hamilburg are beneficiaries;
(vi) 4,252 shares (.5%) beneficially owned by Joseph M. Hamilburg
Foundation of which Joseph and Maurice Hamilburg are Trustees;
(vii) 5,721 shares (.7%) beneficially owned by a trust of which Phyllis
B. Hamilburg is Trustee for the benefit of Jane H. Guy;
(viii) 18,471 shares (2.3%) beneficially owned by the Plymouth Rubber
Defined Benefit Pension Plan and Trust, of which Joseph and Maurice
Hamilburg are Trustees;
(ix) 18,012 shares (2.2%) beneficially owned by Maurice J. Hamilburg;
(x) 25,006 shares (3.1%) beneficially owned by Joseph D. Hamilburg;
(xi) 18,011 shares (2.2%) beneficially owned by Jane H. Guy.
In addition, of the aggregate number of shares shown in the table as
beneficially owned by each of Joseph D. Hamilburg and Maurice J. Hamilburg
14,621 shares (1.8%) and 7,150 shares (.9%) not covered by the Voting
Trust are owned by the Plymouth Rubber Company Profit-Sharing Plan and
Trust and the Plymouth Rubber Defined Benefit Pension Plan and Trust,
respectively, of which Joseph Hamilburg and Maurice Hamilburg are
Trustees; and 19,252 shares (2.4%) are owned by the aforementioned Joseph
M. Hamilburg Foundation.
(3) The number of shares of Class B Common Stock shown as beneficially owned
by each of Joseph D. Hamilburg and Maurice J. Hamilburg are so shown by
reason of their voting powers with respect thereto on all matters on which
the Class B Stock may at any time be entitled to vote. 49 of the shares
shown as owned by Joseph D. Hamilburg; 17,325 of the shares shown as owned
by Joseph D. Hamilburg are not actually owned but are subject to presently
exercisable options to purchase same; and 43,442 of the shares shown as
owned by Maurice J. Hamilburg are owned by each directly; and 383,447
(30.4%) of the shares shown as owned by each are in the Voting Trust
referred to in footnote (1) above. The actual beneficial ownership of the
shares held by the Voting Trust and their respective percentages of the
outstanding Class B Common Stock are broken down as follows:
(i) 10,060 shares (.8%) beneficially owned by a trust of which Joseph D.
Hamilburg is the beneficiary;
(ii) 34,132 shares (2.7%) beneficially owned by two separate trusts of
which Maurice J. Hamilburg is the beneficiary;
(iii) 220,794 shares (17.5%) beneficially owned by a trust of which Phyllis
B. Hamilburg is a life income beneficiary and Jane H. Guy, Joseph D.
Hamilburg and Maurice J. Hamilburg are life income beneficiaries
following her death;
(iv) 10,060 shares (.8%) beneficially owned by a trust of which Joseph D.
Hamilburg and Maurice J. Hamilburg are Trustees for the benefit of
Jane H. Guy;
(v) 11,054 shares (.9%) beneficially owned by Joseph M. Hamilburg
Foundation of which Joseph D. Hamilburg and Maurice J. Hamilburg are
Trustees;
(vi) 21,247 shares (1.7%) beneficially owned by a trust of which Phyllis
B. Hamilburg is Trustee for the benefit of Jane H. Guy;
(vii) 23,510 shares (1.9%) beneficially owned by five grandchildren of
Phyllis B. Hamilburg, of which 11,252 shares are held by Maurice J.
Hamilburg as custodian for his two minor children, as to which he
disclaims beneficial ownership, and 12,258 shares held by Jane H. Guy
as custodian for her three minor children, as to which she disclaims
any beneficial ownership.
(viii) 2,791 shares (.2%) beneficially owned by Maurice J. Hamilburg;
(ix) 33,499 shares (2.7%) beneficially owned by Joseph D. Hamilburg;
(x) 2,791 shares (.2%) beneficially owned by Jane H. Guy;
(xi) 2,863 shares (.2%) beneficially owned by the Plymouth Rubber Defined
Benefit Pension Plan and Trust, of which Joseph D. Hamilburg and
Maurice J. Hamilburg are Trustees;
(xii) 10,646 shares (.8%) beneficially owned by a trust of which Joseph D.
Hamilburg, Maurice J. Hamilburg and Joel A. Kozol are Trustees and of
which Phyllis B. Hamilburg is the beneficiary for her life and
thereafter, Jane H. Guy, Joseph D. Hamilburg and Maurice J. Hamilburg
are beneficiaries.
In addition, of the aggregate number of shares shown in the table as
beneficially owned by each of Joseph D. Hamilburg and Maurice J. Hamilburg are
shares not covered by the Voting Trust, 18,922 shares (1.5%) are owned by the
aforementioned Joseph M. Hamilburg Foundation and 16,218 shares (1.3%) and
30,213 shares (2.4%) are owned by the Plymouth Rubber Company Profit-Sharing
Plan and Trust and the Plymouth Rubber Defined Benefit Pension Plan and Trust,
respectively, of which Joseph Hamilburg and Maurice Hamilburg are Trustees.
(4) Does not include 2,500 shares of Class A Stock and 2,760 shares of Class B
Stock owned by Mr. Hamilburg's wife, as to which he disclaims any
beneficial interest. The Class B shares shown as owned by Mr. Hamilburg
includes an aggregate of 11,252 and the Class A shares shown as owned by
Mr. Hamilburg excludes an aggregate of 1,000 shares all of which are held
by him as custodian for his minor children under the Uniform Gifts to
Minors Act, as to which he disclaims any beneficial interest.
(5) 5,871 shares of Class A and 293 shares of Class B are shown in the table
as beneficially owned by a trust of which Maurice J. Hamilburg is trustee
for the benefit of a niece of the late Daniel M. Hamilburg.
(6) By virtue of their individual direct beneficial ownership of Class A
shares and of their voting powers pursuant to the Voting Trust and other
trusts referred to in footnote (1) above, all officers and directors of
the Company as a group have more than 50% of the voting power of the
Company's outstanding Class A Common Stock. Messrs. Joseph D. Hamilburg,
Maurice J. Hamilburg and Phyllis B. Hamilburg have advised that they
intend to vote the shares with respect to which they possess voting power
(478,564 shares-59.0%) in favor of the nominees for directors, in favor of
the Amendment to the 1995 Non-Employee Director Stock Option Plan, and in
favor of Price Waterhouse as auditors and against Proposal #4, the
stockholder proposal. Accordingly, passage and non-passage of these
proposals, respectively, is assured.
(7) Includes an aggregate of 103,750 shares not actually owned, but subject to
presently exercisable options for the purchase of said number of shares.
(8) 17,325 of the shares shown as owned by Susan Y. Friedman, 17,125 of the
shares shown as owned by Melvin L. Keating and 11,550 of the shares shown
as owned by James M. Oates are not actually owned but are subject to
presently exercisable options to purchase same.
STOCK OPTIONS
The Company has in effect five stock purchase programs for executive
officers and other key personnel, and non-employee directors, as the case may
be. One such program is embodied in the Company's Executive Incentive Stock
Purchase Plan, adopted and approved by shareholders in 1969 (the "1969 Plan"),
pursuant to which the Company from time to time granted options to various
executive officers as determined by the Company's Board of Directors or the
Committee, if any, administering the Plan, for the purchase of restricted
shares of the Company's Class B Common Stock, $1.00 par value, at an exercise
price, as determined by the Board or Committee, but no less than $1.00 per
share. 30,452 shares were issued and all restrictions regarding same had
lapsed, as of November 28, 1997.
The second such stock purchase program is the Company's 1982 Employee
Incentive Stock Option Plan (the "1982 Plan"), adopted and approved by the
Company's shareholders in 1982, and amended by the Company's shareholders in
1990, pursuant to which options for the purchase of up to an aggregate of
200,000 shares of the Company's Class B Common Stock, $1.00 par value could
have been granted from time to time to key employees at an exercise price of
no less than fair market value as of the date of grant. Options for the
purchase of 135,649 shares have been granted. As of November 28, 1997 options
for 100,193 shares had been exercised, 33,039 remained exercisable and 2,417
expired. No further options may be granted under the 1982 Plan. (Pursuant to
the provisions of the 1982 Plan, the quantity and exercise price of the
options granted were adjusted for the 10% and 5% stock dividends declared and
paid in Class B shares in 1995 and 1996, respectively.)
The third such stock purchase program is the Company's 1992 Employee
Incentive Stock Option Plan ("the 1992 Plan"), adopted and approved by the
Company's shareholders in 1993, pursuant to which options for the purchase of
up to an aggregate of 225,000 shares (subject to adjustment as described
hereinbelow) of the Company's Class B Common Stock, $1.00 par value, may be
granted from time to time to key employees, at an exercise price of no less
than the fair market value of the shares as of the date of grant. Although the
Board of Directors or the Option Committee administering the 1992 Plan may
authorize variations, options granted under the 1992 Plan will generally be
exercisable in one-quarter increments, beginning one year from the date of
grant, with an additional one-quarter becoming exercisable at the end of each
year thereafter. The selection of key employees for the grant of options under
the 1992 Plan is made to attract and to retain key employees essential to the
Company's successful operations and growth. Of the total options issued and
outstanding under the 1992 Plan, 85,000 were issued with variations from this
standard form. These options granted in June 1992, were originally exercisable
only for five years from the date of grant and could not be exercised unless
the closing price of the Company's Class B common stock on the American Stock
Exchange had been no less than $12 on each of at least twenty days in any
consecutive sixty day period during the twelve months immediately preceding
the date of the exercise and unless the average daily closing price of the
Common Stock during the sixty day period immediately prior to the date of
exercise were not less than $12 (the "Price Hurdle"). During August 1993,
modifications to certain terms were made to alter the exercise provisions and
the period of exercisability. The revised terms provide for exercisability, in
any event, after the tenth anniversary of grant. In addition, the new terms
provide for accelerated exercisability should the "Price Hurdle" be attained.
Pursuant to the provisions of the 1992 Plan clarifications made to these
options, the quantity and Price Hurdle of the options were adjusted for the
10% and 5% stock dividends declared and paid in Class B shares in 1995 and
1996, respectively. During fiscal 1997 options to purchase 4,042 shares were
granted. As of November 28, 1997 options for the purchase of a total of
259,876 shares under the 1992 Plan have been granted, with exercise prices
that range from $2.17 to $7.13, and 35,805 options have been exercised and
113,780 options were exercisable, after adjustment for the 10% and 5% stock
dividends declared and paid in Class B shares in 1995 and 1996, respectively.
The fourth such stock purchase program is the Company's 1995 Employee
Incentive Stock Option Plan ("the 1995 Employee Plan"), adopted and approved
by the Company's shareholders in 1995, pursuant to which options for the
purchase of up to an aggregate of 150,000 shares of the Company's Class B
Common Stock, $1.00 par value, may be granted from time to time to key
employees, at an exercise price of no less than the fair market value of the
shares as of the date of grant. Although the Board of Directors or the Option
Committee administering the plan may authorize variations, options granted
under the plan will generally be exercisable in one-quarter increments,
beginning one year from the date of grant, with an additional one-quarter
becoming exercisable at the end of each year thereafter. The selection of key
employees for the grant of options under the plan is made to attract and to
retain key employees essential to the Company's successful operations and
growth. During fiscal 1997 options to purchase 35,958 shares were granted. As
of November 28, 1997, no options were exercisable.
The fifth such stock purchase program is the Company's 1995 Non-Employee
Directors' Stock Option Plan (the "1995 Director Plan"), adopted and approved
by the Company's shareholders in 1995. Pursuant to the 1995 Director Plan,
options are granted to the Company's non-employee Directors for the purchase
of up to an aggregate 120,000 shares (subject to adjustment as described
below), of the Company's Class B Common Stock, $1.00 par value, at an exercise
price of no less than the fair market value of the shares as of the date of
grant. The 1995 Director Plan provides for an automatic grant of an option to
purchase 15,000 shares to each current non-employee director upon approval by
the shareholders at the 1995 Annual Meeting and to any new non-employee
director upon their appointment or election. Although the Board of Directors
or the Option Committee administering the Plan may authorize variations,
options granted thereunder will generally be exercisable in one-third
increments, beginning one year from the date of grant, with an additional one-
third becoming exercisable at the end of each year thereafter. However, with
regard to non-employee directors serving at the time of adoption, for each
year (or partial year) of service on the Board of Directors prior approval by
the shareholders, one-third of the Class B Common Stock covered by such option
shall become exercisable. The entire option must expire, in any event, no
later than ten years from the date of grant of the option. During 1996, 17,325
options were granted to a non-employee Director, (as adjusted pursuant to the
provisions of the 1995 Director Plan following the 10% and 5% stock dividends
declared and paid in Class B shares in 1995 and 1996, respectively). As of
November 28, 1997, options for the purchase of a total of 200 shares had been
exercised and a total of 74,875 shares, (adjusted for the 10% and 5% stock
dividends) with exercise prices that range from $7.69 to $8.69, were
exercisable. Proposal No. 2 of this Proxy Statement proposes that the 1995
Director Plan be amended to provide for a repricing of all issued and
outstanding options granted under the 1995 Director Plan whether or not
currently exercisable. Please see Proposal No. 2 and the proposed amended 1995
Director Plan, Annex A to this proxy statement.
PROPOSAL NO. 2
AMENDMENT TO 1995 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN
On March 13, 1998, the Board of Directors of the Company adopted an
amendment to the 1995 Director Plan, subject to approval at the Meeting by a
majority of the stockholders of the Company. The amendment provides for a
repricing of all the issued and outstanding options granted under the 1995
Director Plan, whether or not currently exercisable. The amendment to the 1995
Director Plan provides that all options currently outstanding and unexercised
will be exercisable at a price per share reflecting the market price at the
close of business on the day before the day of the 1998 Annual Meeting of
Stockholders of the Company.
Generally, the 1995 Director Plan provides for automatic, or formula,
grants of options to purchase 15,000 shares of the Company's Class B Common
Stock to the Company's Non-Employee Directors, either on February 1, 1995 or
on the date of appointment of any new Non-Employee Director. The 1995 Director
Plan provides that the exercise price per share is the closing price on the
last trading day prior to (i) February 1, 1995 or (ii) the date of the
election of any director subsequent to February 1, 1995. Because of two stock
dividends granted by the Company on May 23, 1995 and June 24, 1996, the number
of shares underlying each option granted under the 1995 Director Plan is
17,325, rather than 15,000.
The following Non-Employee Directors currently hold options to purchase
shares of the Company's Class B Common Stock issued pursuant to the 1995
Director Plan, in the amounts and for the purchase prices indicated: each of
Susan Y. Friedman, Jane H. Guy and Joseph D. Hamilburg -- options to purchase
17,325 shares at $7.69 per share; Melvin L. Keating -- options to purchase
17,125 shares at $7.69 per share; and James M. Oates -- options to purchase
17,325 shares (of which options to purchase 11,550 shares are vested) at $8.69
per share. The purchase prices indicated are as adjusted for the stock
dividends, and all options are vested unless otherwise indicated. If this
Proposal is adopted at the Meeting, amendments to existing option agreements
will be entered into reflecting the changed exercise price.
The text of the amendment adopted by the Board of Directors of the Company
to Section 5(b)(i) follows, and the amended language is indicated in bold:
(The text of the 1995 Director Plan in its entirety, including the amendment,
is attached to this Proxy Statement as Annex A.)
"Section 5(b)(i). Exercise Price. The exercise price for the shares of
Class B Common Stock issuable upon the exercise of an option granted under
this Plan shall be the closing price of the Class B Common Stock on the last
trading day prior to (A) the date of the Annual Meeting of the Stockholders of
the Company on which a Non-Employee Director is first elected to the Board of
Directors or (B) THE DAY OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS in the
case of current Non-Employee Directors."
The Board of Directors of the Company recommends a vote in favor of this
proposal.
PROPOSAL NO. 3
RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS AUDITORS
The persons named in the accompanying proxy card as attorneys and proxies
intend, unless otherwise instructed, to ratify the appointment of Price
Waterhouse LLP as independent auditors of the Company for the next fiscal
year. The Board of Directors has voted to approve Price Waterhouse LLP to
audit the accounts of the Company for the year ending November 27, 1998. Since
their report will be addressed to the stockholders, the holders of Class A
Common Stock are asked to ratify this selection. Submission to the
stockholders of the ratification of the appointment of Price Waterhouse LLP as
auditors is not required and such appointment will remain in effect if not
approved by the stockholders.
The Board of Directors recommends a vote in favor of this proposal.
Price Waterhouse LLP is expected to have a representative at the Annual
Meeting of Stockholders who will have an opportunity to make a statement if he
desires to do so and who will be available to respond to appropriate
questions.
PROPOSAL NO. 4
TO RETAIN AN INVESTMENT BANKING FIRM TO CONSIDER
STRATEGIC ALTERNATIVES TO INCREASE SHAREHOLDER VALUE
Thelma K. Colantuoni, stockholder, 6286 Dunaway Court, McLean, Virginia
22101-2204, being the owner of 2,000 shares of Class A Common Stock makes the
following proposal:
RESOLVED: that the shareholders of the Plymouth Rubber Company, Inc.
(Company) assembled in the 1998 Annual Meeting in person and proxy, hereby
recommend that the Board of Directors of the Company take immediate action to
retain a nationally recognized investment banking firm to consider all
strategic alternatives to increase shareholder value, including the negotiated
sale of all or substantially all of the Company's assets. The Board of
Directors of the Company is requested to promptly report to all of its
shareholders on the recommendations of the investment banking firm retained
for the purpose of increasing shareholder value.
SUPPORTING STATEMENT: In the opinion of Thelma K. Colantuoni, the
recommended proposal is reasonable and justified because of the Company's
unsatisfactory financial performance (as shown in its audited financial
statements and other filings with the Securities and Exchange Commission) over
the past few years despite a robust economy as reflected in the U.S. national
income statistics and the strong financial performance of the automotive
industry which includes the General Motors Corporation, one of the Company's
largest customers for its automotive tape products. Moreover, the protracted
price decline since September 1995 in the Company's Class A and B shares
further suggests that a study of the Company by an investment banking firm to
consider ways to enhance shareholder value as recommended is both timely and
warranted. I believe that an independent evaluation as recommended will be
beneficial to all shareholders of the Plymouth Rubber Company, Inc.
The Board of Directors recommends a vote against this proposal.
GENERAL
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
In accordance with Rule 14-a 8 of the Exchange Act, stockholders desiring
to have proposals to be included in the Company's proxy materials for the 1999
Annual Meeting must be received by the Company, for its consideration, on or
before November 17, 1998.
OTHER MATTERS
Management knows of no other matters to be brought before the meeting. If
any other matters not mentioned in this Proxy Statement are properly brought
before the meeting, the persons named in the enclosed Class A proxies intend
to vote such proxies in accordance with their best judgment on such matters.
Stockholders are urged to vote and send in their proxies without delay.
PLYMOUTH RUBBER COMPANY, INC.
March 25, 1998
<PAGE>
ANNEX A
1995 NON-EMPLOYEE-DIRECTORS' STOCK OPTION PLAN
OF
PLYMOUTH RUBBER COMPANY, INC.
1. Purpose. The purpose of the 1995 Non-Employee Directors' Stock Option
Plan (the "Plan") of Plymouth Rubber Company, Inc., a Massachusetts
corporation (the "Company") is to secure for the Company and its stockholders
the benefits of incentive inherent in increased common stock ownership by the
members of the Board of Directors of the Company (the "Board") who are not
employees or officers of the Company or of any of its subsidiaries (the "Non-
Employee Directors").
2. Effective Date; Termination of Plan. This Plan shall become effective
after it has been adopted by the Board and approved by the stockholders of the
Company (the "Stockholders"); provided, however, that all grants of options
under this Plan prior to the approval of the Plan by the Stockholders at the
1995 Annual Meeting of the Stockholders of the Company shall be subject to
such approval.
This Plan shall terminate upon the earliest to occur of (i) ten (10) years
after the date the Board adopts the Plan, (ii) the date that all shares of
Class B Stock (as defined below) which may be issued under this Plan have been
issued through the exercise of options granted under this Plan, and (iii) such
time as the Board may determine.
3. Shares Subject to the Plan. The maximum number of shares which may be
issued through the exercise of options granted under this Plan shall be one
hundred twenty thousand (120,000) shares of the Class B common stock of the
Company, $1.00 par value (the "Class B Stock"), subject to adjustment as
provided in Section 7 below. The shares may be set aside out of the authorized
but unissued shares of Class B Stock not reserved for any other purpose or out
of shares of Class B Stock held in or acquired for the treasury of the
Company. Shares of Class B Stock subject to an option granted under the Plan
which for any reason is cancelled or terminates unexercised shall again be
subject to an option and available for issuance pursuant to the terms of this
Plan.
4. Formula Grant of Options. (a) Subject to the approval of this Plan by
the Stockholders as provided in Section 2 hereof, an option for fifteen
thousand (15,000) shares of Class B Stock shall be automatically granted under
this Plan to each person who is (i) newly elected a Non-Employee Director at
the Annual Meeting of the Stockholders of the Company in each of the years
1995 through 2004, or (ii) newly appointed a Non-Employee Director in the
years 1995 through 2004; provided, however, that each Non-Employee Director
who was elected a Non-Employee Director at the 1994 Annual Meeting of the
Stockholders of the Company or was serving as a Non-Employee Director during
1994 and who is serving on the Board on the date this Plan is approved (the
"Current Non-Employee Directors") shall be automatically granted an option for
fifteen thousand (15,000) shares of Class B Stock.
(b) The options-granted under this Plan shall be in addition to regular
director's fees and other benefits provided to the Non-Employee Directors.
5. Type of Option; Terms and Conditions. (a) Options granted under this
Plan shall not be considered incentive stock options as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Except as hereinafter provided, all options granted pursuant to this
Plan shall be subject to the following terms and conditions:
(i). EXERCISE PRICE. THE EXERCISE PRICE FOR THE SHARES OF CLASS B
COMMON STOCK ISSUABLE UPON THE EXERCISE OF AN OPTION GRANTED UNDER THIS
PLAN SHALL BE THE CLOSING PRICE OF THE CLASS B COMMON STOCK ON THE LAST
TRADING DAY PRIOR TO (A) THE DATE OF THE ANNUAL MEETING OF THE
STOCKHOLDERS OF THE COMPANY ON WHICH A NON-EMPLOYEE DIRECTOR IS FIRST
ELECTED TO THE BOARD OF DIRECTORS OR (B) THE DAY OF THE 1998 ANNUAL
MEETING OF STOCKHOLDERS IN THE CASE OF CURRENT NON-EMPLOYEE DIRECTORS.
(ii) Exercise of Options. Except as provided in subsection 5(b)(iii)
below, each option granted under this Plan shall become exercisable in an
amount equal to one-third (1/3) of the shares of Class B Stock covered by
such option on the first anniversary of the date of grant; and thereafter
an additional one-third (1/3) of the total number of shares of Class B
Stock covered by such option shall become exercisable on each subsequent
anniversary of the date of grant until on the third anniversary of the
date of grant the total number of Class B Stock covered by such option
shall be exercisable; provided, however, that with regard to Current Non-
Employee Directors, for each year (or partial year) of service on the
Board prior to the 1995 Annual Meeting of the Stockholders of the Company
one-third (1/3) of the Class B Stock covered by such option shall become
exercisable (and all Class B Stock covered by such option which does not
become exercisable under this proviso shall become exercisable as set
forth in the clauses immediately preceding this proviso). In the event
that the Company and/or the Stockholders enter into an agreement to
dispose of all or substantially all of the assets of the Company or an
amount of the outstanding capital stock of the Company sufficient to
constitute effective control of the Company by means of a sale, merger,
reorganization, separation, liquidation or any other transaction, the
total number of shares of Class B Stock covered by all options under this
Plan shall become exercisable.
(iii) Termination of Option. All options granted under this Plan
shall terminate ten (10) years subsequent to the date of grant. In the
event that any Non-Employee Director to whom an option has been granted
under this Plan ceases to be a member of the Board while holding an option
that has not expired and has not been fully exercised, the right to
exercise such option shall be only as follows:
(A) Death. If a Non-Employee Director ceases to be a member of
the Board by reason of death, his or her estate shall have the right
for one year following the date of death (but in no event subsequent
to ten (10) years after the date of grant) to exercise the option with
respect to all or any part of the shares of Class B Stock subject
thereto, regardless of whether the right to purchase such shares had
accrued on the date of his or her death. The term "estate" when used
in this Plan with respect to any Non-Employee Director shall mean the
legal representatives of the Non-Employee Director's estate or any
person or persons who acquire the right under the laws of descent and
distribution to exercise an option by reason of the Non-Employee
Director's death.
(B) Retirement of Disability. If a Non-Employee Director ceases
to be a member of the Board by reason of his or her (1) attaining the
age at which the Company's policy precludes re-election as a director
or (2) becoming disabled within the meaning of that term as defined in
Section 22(e)(3) of the Code, then such Non-Employee Director, or his
or her estate (in the event of his or her death after such cessation),
shall have the right for a period of six (6) months following such
cessation of service (but in no event subsequent to ten (10) years
after the date of grant) to exercise the option with respect to all or
any part of the shares of Class B Stock subject thereto, regardless of
whether the right to purchase such shares had accrued prior to such
Non-Employee Director ceasing to be a member of the Board.
(C) Other Reasons. If a Non-Employee Director ceases to be a
member of the Board for any reason other than those provided under
"Death" and "Retirement or Disability" above, such Non-Employee
Director, or his or her estate (in the event of his or her death after
such cessation), shall have the right for three (3) months following
such cessation of service (but in no event subsequent to ten (10)
years after the date of grant) to exercise the option with respect to
only such number of shares of Class B Stock as to which the right of
exercise had accrued prior to such Non-Employee Director ceasing to be
a member of the Board.
(iv) Transferability of Option. All options granted under this Plan
shall be transferable only by will or the laws of descent and distribution
and shall be exercisable during the Non-Employee Director's lifetime only
by him or her or by his or her guardian, conservator or legal
representative.
6. Rights of a Shareholder. A Non-Employee Director shall have no rights
as a shareholder with respect to any shares issuable or transferable upon the
exercise of an option granted under this Plan until the date of issuance of a
stock certificate for such shares. Except as otherwise provided pursuant to
Section 7 hereof, no adjustment shall be made for dividends or other rights
for which the record date is prior to the date of such stock certificate.
7. Adjustment of and Changes in Class B Stock. In the event that the
shares of Class B Stock, as presently constituted, shall be changed into or
exchanged for a different kind of shares of stock or other securities of the
Company or of another corporation (whether by reason of merger, consolidation,
split-up, recapitalization, reclassification, subdivision of shares,
combination of shares, or otherwise) or if the number of such shares of Class
B Stock shall be increased through the payment of a stock dividends or a
dividend on the shares of Class B Stock or rights or warrants to purchase
securities of the Company shall be made, then there shall be substituted for
or added to each share of Class B Stock theretofore appropriated or thereafter
subject or which may become subject to an option under this Plan, the number
and kind of shares of stock or other securities into which each outstanding
share of Class B Stock shall be so changed, or for which each such share shall
be exchanged, or to which each such share shall be entitled, as the case may
be, and references herein to the Class B Stock shall be deemed to be
references to any such stock or other securities as appropriate. Outstanding
options shall also be appropriately amended as to price and other terms as may
be necessary to reflect the foregoing events. In the event that there is any
other change in the number or kind of the outstanding shares of Class B Stock,
or of any stock or other securities into which such Class B Stock shall have
been changed or for which it shall have been exchanged, then if the Board
shall, in it sole discretion, determine that such change equitably requires an
adjustment in any option theretofore granted under this Plan, such adjustment
shall be made in accordance with such determination. Fractional shares
resulting from any adjustment in options pursuant to this Section 7 may be
settled in cash or otherwise as the Board shall determine. Notice of any
adjustment shall be given by the Company to each holder of an option which has
been so adjusted and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes of this Plan.
8. Securities Act Requirements. No option granted pursuant to this Plan
shall be exercisable, in whole or in part, and the Company shall not be
obligated to sell any shares of Class B Stock subject to any such option, if
such exercise and sale would, in the opinion of counsel for the Company,
violate the Securities Act of 1933 (or other federal or state statutes having
similar requirements), as in effect at that time. Each option shall be subject
to the further requirement that, if at any time the Board shall determine in
its discretion that he listing or qualification of the shares of Class B Stock
subject to such option under the requirements of any securities exchange
(including, without imitation, any listing under any rule of the American
Stock Exchange) or under any applicable law, or the consent of approval of any
governmental regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such option or the issuance of shares
thereunder, such option may not be exercised in whole or in part unless such
listing, qualification, consent or approval has been effected or obtained free
of any conditions not acceptable to the Board.
9. Withholding. Appropriate provision (which may, in accordance with the
procedures determined by the Board, and subject to its approval or the
approval of the Committee (as defined below), include the election by a Non-
Employee Director to have the Company withhold from the shares of Class B
Stock otherwise to be issued to the Non-Employee Director upon exercise, such
number of shares as would satisfy the withholding amount due or to deliver to
the Company shares of Class B Stock already owned to satisfy the withholding
amount, with all Class B Stock valued at the fair market value of the Class B
Stock on the date of exercise) shall be made for all taxes required to be
withheld from the shares of Class B Stock issued under this Plan under the
applicable laws or other regulations of any governmental authority, whether
federal, state or local, and domesitic or foreign. To that end, the Company
may at any time take such steps as it may deem necessary or appropriate
(including the sale or retention of shares) to provide for the payment of such
taxes.
10. Administration and Amendment of Plan. The Board may from time to time
adopt rules and regulations to administer this Plan and may designate a
committee of the Board of Directors (the "Committee") to administer the Plan
and to adopt such rules and regulations. The interpretation and construction
by the Board, or the Committee if the same has been designated by the Board,
of any provision of this Plan, or any option granted pursuant hereto, shall be
final and conclusive. No member of the Board, or of the Committee, shall be
liable for any action or determination made in good faith with respect to this
Plan or any option granted pursuant hereto. The Board may from time to time
make such changes in and additions to this Plan and, with the written consent
of the affected Non-Employee Director or the estate of the Non-Employee
Director, to the terms and conditions of any option granted under this Plan as
it may deem proper and in the best interests of the Company, without further
action on the part of the Stockholders; provided, however, that, except as
provided in Section 7 hereof, unless the Stockholder shall have first approved
thereof, (i) the total number of shares of Class B Stock subject to this Plan
shall not be increased and the minimum purchase price shall not be changed,
(ii) no option shall be exercisable more than ten (10) years after the date is
it granted, (iii) the expiration date of this Plan shall not be extended, and
(iv) no amendment of this Plan or of any option granted under this Plan may
materially increase the benefits accruing to Non-Employee Directors under this
Plan; and provided, further, that Sections 4 and 5 hereof may not be amended
more often than once every six (6) months unless such amendment is required to
comport with changes in the Code or the regulations promulgated thereunder.
The Board shall have the power, in the event of any disposition of
substantially all of the assets of the Company, its dissolution or of any
consolidation or merger of the Company with or into any other corporation, to
amend all outstanding options granted under this Plan prior to the effective
date of any such transaction and to terminate such options as of such
effective date. If the Board shall exercise such power, each option then
outstanding shall be deemed to have been amended to permit the exercise
thereof in whole or in part by the Non-Employee Director to whom it was issued
or his or her estate as provided herein at any time or from time to time as
determined by the Board prior to the effective date of such transaction and
such option shall be deemed to terminate upon such effective date.
<PAGE>
- -------------------------------------------------------------------------------
PLYMOUTH RUBBER COMPANY, INC.
CLASS A PROXY - ANNUAL MEETING OF STOCKHOLDERS - APRIL 24, 1998
The undersigned, a holder of Class A Common Stock of Plymouth Rubber
Company, Inc., hereby constitutes and appoints Joseph D. Hamilburg and Deborah
A. Kream and each of them, the attorneys and proxies of the undersigned with
full power of substitution and revocation, to attend the annual meeting of
stockholders of the Company to be held on April 24, 1998 at 10:00 a.m. at the
Four Points Hotel and Conference Center, 1151 Boston-Providence Turnpike,
Norwood, Massachusetts, and any adjournments thereof, to vote all of the shares
of Class A Common Stock of the Company which the undersigned may be entitled to
vote and to vote upon the matters set forth on the reverse side hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
UNLESS OTHERWISE INDICATED IT WILL BE VOTED IN FAVOR OF THE NOMINEES FOR
DIRECTOR, AND IN FAVOR OF ITEMS 2 AND 3 AND AGAINST ITEM 4.
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Meeting and Proxy Statement and hereby revokes any proxy or proxies
heretofore given.
(Continued and to be signed on reverse side.)
-----------
SEE REVERSE
SIDE
<PAGE>
<TABLE>
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--- Please mark your
A X votes as in this
--- example.
FOR WITHELD FOR AGAINST ABSTAIN
1. Election of --- --- To serve for a term of three (3) years: 2. Ratification of the Company's --- --- ---
Directors: Nominees: Joseph D. Hamilburg amendment to the 1995 Non
--- --- Susan Y. Friedman Employee Directors' Stock --- --- ---
Option Plan.
FOR all nominees listed at right, 3. Ratification of the selection --- --- ---
except vote withheld from the of Price Waterhouse LLP as the
following nominees (if any). Company's auditors for the --- --- ---
fiscal year ending November 27,
1998.
- --------------------------------
4. To act on a proposal submitted --- --- ---
by a stockholder requesting that
the Board of Directors retain --- --- ---
an investment banking firm to consider strategic
alternatives to increase shareholder value as more
fully set forth in the proxy statement.
5. The transaction of such other business as may properly
be brought before the meeting or any adjournment thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW ---
---
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE PROMPTLY.
Signature _____________________________ Date ____________ Signature ____________________________________ Date ______________
</TABLE>
