<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Aerovox Incorporated
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Aerovox Incorporated
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
[_] 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:
Notes:
<PAGE>
AEROVOX INCORPORATED
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 9, 1995
----------------
To the Shareholders of Aerovox Incorporated
Notice is hereby given that the Annual Meeting of Shareholders of Aerovox
Incorporated (the "Company") will be held at the offices of Ropes & Gray, One
International Place, Room 36/1, Boston, Massachusetts 02110, at 10:00 a.m. on
Tuesday, May 9, 1995 for the following purposes:
1. To elect three Class III directors to serve until the 1998 Annual
Meeting.
2. To approve an amendment to the Company's 1989 Stock Option Plan for
Directors to increase the number of shares of Common Stock of this
corporation reserved for issuance under the Plan from 50,000 to 80,000 and
to change the vesting schedule so that options become exercisable on the
first anniversary of the date of the grant.
3. To transact any other business that may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 14, 1995 as
the record date for the determination of shareholders entitled to notice of and
to vote at this meeting and at any adjourned session thereof.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
By order of the Board of Directors
/s/ RONALD F. MURPHY
RONALD F. MURPHY, Secretary
Boston, Massachusetts
March 24, 1995
<PAGE>
AEROVOX INCORPORATED
370 FAUNCE CORNER RD.
NORTH DARTMOUTH, MA 02747
ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Aerovox Incorporated (the "Company") to be voted at the Annual Meeting of
Shareholders to be held on May 9, 1995 and at any adjourned session thereof.
You can ensure that your shares will be voted by signing and returning the
enclosed proxy in the envelope provided. Sending in a proxy will not affect
your right to attend the meeting and vote in person. You may revoke your proxy
at any time before it is voted by a written revocation received by the
Secretary, by a subsequently dated proxy or by oral revocation in person to the
Secretary at the meeting. This Proxy Statement and accompanying proxy will be
mailed commencing on or about April 3, 1995 to all shareholders entitled to
vote at the meeting. The Annual Report to Shareholders for the Company's fiscal
year ended December 31, 1994 is being mailed with this Proxy Statement.
The cost of solicitation of proxies will be borne by the Company. Directors,
officers and employees of the Company may solicit proxies by telephone,
facsimile or personal interview, but will not be specially compensated for such
service. The Company will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of shares. In addition, the
Company has retained Beacon Hill Partners, Inc. to assist in the solicitation
of proxies for a fee of $2,000.
PROPOSAL 1
ELECTION OF DIRECTORS
The persons named in the enclosed proxy intend to vote in favor of the
election of the three nominees named below, one of whom is now a director of
the Company, as Class III directors unless authority to vote for the election
of all of such nominees is withheld by marking the box entitled "WITHHOLD
AUTHORITY TO VOTE FOR ALL NOMINEES" on the enclosed proxy. Authority to vote
for any individual nominee may be withheld by writing the name of the nominee
in the space provided on the enclosed proxy.
The Company's By-laws provide for not more than fifteen nor less than three
members of the Board of Directors, as determined by the Board of Directors. The
Board of Directors has fixed the number of directors for the ensuing year at
eight members. As provided in the Company's Amended and Restated Certificate of
Incorporation and By-Laws, the Board of Directors is divided into three
classes. Directors of each class are considered for re-election at the Annual
Meeting of Shareholders held in the year in which the term of such class
expires and serve thereafter for three years.
The persons elected as Class III directors will serve until the 1998 Annual
Meeting of Shareholders and until their successors are elected and shall
qualify. The remaining five incumbent directors will continue to serve as set
forth below. Each of the nominees is expected to be able to serve, but if any
nominee is unable to serve, or should any vacancy arise for whatever reason,
the proxies intend to vote the shares to which this proxy relates for the
election of such other person or persons as may be designated by the Board of
Directors or, in the absence of such designation, in such other manner as they
may in their discretion determine. Alternatively, in any such situation, the
Board of Directors may take action to fix the number of directors for the
ensuing year at the number of nominees named herein who are then able to serve.
Proxies will then be voted for the election of such nominees, except to the
extent the authority to so vote is withheld.
<PAGE>
The Board of Directors has adopted a director retirement policy pursuant to
which directors retire from the board prior to the Annual Meeting of
Stockholders in the calendar year following the calendar year in which their
seventieth birthday shall occur. Herbert J. Rowe, who has served on the
Company's Board of Directors since 1989, will be retiring from the Board at the
Annual Meeting pursuant to the Board's director retirement policy described
above. Kenneth F. Yontz, a Director since 1989, has determined not to stand for
re-election as a Class III Director. The Company thanks Mr. Rowe and Mr. Yontz
for their years of service.
On December 13, 1994, the Board of Directors elected William G. Little to
fill the unexpired term of Richard D. Capra, a Class I Director, who resigned
his position on the Board on November 29, 1994, when he assumed the role of
senior vice president of the Company and president of the Aero M Group.
The names of the nominees as Class III directors and incumbent Class I and
Class II directors, their ages, and certain other information regarding the
nominees and incumbent directors are set forth in the following table.
<TABLE>
<CAPTION>
NAME AGE INFORMATION
- - ---- --- -----------
NOMINEES AS CLASS III DIRECTORS--TERMS EXPIRING 1998
<S> <C> <C>
Dennis Horowitz................. 49 Mr. Horowitz is Corporate Vice President,
Americas, AMP Incorporated, a manufacturer
of electronic components. Mr. Horowitz was
President and Chief Executive Officer of
Philips Technologies, a manufacturer of
electrical and electronic equipment and
components, from 1993 to 1994; and of
Philips Components, a manufacturer of
electrical and electronic components and
photonic products, from 1990 to 1993; and
of Magnovox CATV Systems (now called
Philips Broadband), a manufacturer of
cable television equipment, from 1986 to
1990--all divisions of Philips Electronics
North America Corporation. Mr. Horowitz is
a director of Superconductor Technologies,
Inc.
Ronald F. Murphy................ 65 Mr. Murphy is the Senior Vice President and
Director since 1989 Treasurer (since 1976) and Secretary
(since April, 1989) of Aerovox. Mr. Murphy
has been a director of Aerovox and its
predecessors since 1976.
Benedict P. Rosen............... 59 Mr. Rosen is President and Chief Executive
Officer of AVX Corporation, a manufacturer
of passive electronic components, which he
joined in 1972. From 1990 to 1993, Mr.
Rosen was President and Chief Operating
Officer of AVX Corporation, and was
Executive Vice President of the company
from 1985 to 1990. He serves as a Managing
Director of Kyocera Corporation, AVX's
parent company, and as President of
Kyocera subsidiary Elco Corporation, a
supplier of electronic connectors.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME AGE INFORMATION
- - ---- --- -----------
INCUMBENT CLASS II DIRECTORS--TERMS EXPIRING 1997
<S> <C> <C>
James B. Hangstefer............. 68 Mr. Hangstefer is President of Cordel
Director since 1989 Associates, Inc., a management consulting
firm. From September 1972 to November
1990, Mr. Hangstefer was President of
Silenus Wines Incorporated, an importer,
wholesaler and retailer of fine wines. Mr.
Hangstefer is a director of Dynatech
Corporation.
Clifford H. Tuttle.............. 64 Mr. Tuttle is the Chairman of the Board
Director since 1989 (since 1989), President and Chief
Executive Officer (since 1973) of Aerovox.
Mr. Tuttle has been a director of Aerovox
and its predecessors since 1973.
INCUMBENT CLASS I DIRECTORS--TERMS EXPIRING 1996.
John F. Brennan................. 62 Mr. Brennan is Dean, School of Management,
Director since 1989 Suffolk University. He was F. William
Harder Professor of Management at Skidmore
College from 1984 to 1992, Chairman and
Chief Executive Officer of the H. T.
Hackney Company from 1981 to 1983 and of
Chemical Separations Corporation from 1972
to 1981. Mr. Brennan serves as a director
of The Timberland Company and Data Storage
Corp.
William G. Little............... 53 Mr. Little is President and Chief Executive
Director since 1994 Officer of Quam Nichols Co., a
manufacturer of commercial audio products,
which he joined in 1970.
John L. Sprague................. 64 Dr. Sprague is currently President of John
Director since 1989 L. Sprague Associates, a private
management and business consulting firm.
From 1981 through 1987 Dr. Sprague served
as President and Chief Executive Officer
of Sprague Electric Co., a manufacturer of
electronic components, which he joined in
1959. Dr. Sprague is a director of State
Mutual Life Assurance Co. of America and
California Micro Devices Corp.
</TABLE>
Directors who are not employees of the Company receive annual fees in the
amount of $12,000, plus $1,500 for each Board meeting attended and $500 for
each meeting of a Committee of the Board attended in conjunction with a Board
meeting, and $1,000 for committee meetings held separately from a Board
meeting. Members of the Executive Committee and Committee Chairmen receive an
additional $1,000 per year. All Directors are reimbursed for out-of-pocket
expenses incurred in attending such meetings.
During fiscal 1994, two Directors received additional fees for special
services they provided, including consulting. Mr. Brennan received $750 and Mr.
Rowe, $3,250.
The Board has established an Executive Committee, an Audit Committee, a
Finance Committee, a Compensation Committee and a Nominating Committee. The
Executive Committee, consisting of Messrs. Brennan, Capra (through November
1994), Rowe, Sprague and Tuttle (Chairman), has the authority to act for the
Board of Directors between meetings of the full Board. The Executive Committee
did not hold any
3
<PAGE>
meetings during fiscal 1994. After the Annual Meeting, the Committee will
consist of Messrs. Horowitz, Rosen, Sprague and Tuttle (Chairman).
The Audit Committee, consisting of Messrs. Hangstefer, Sprague and Brennan
(Chairman), held 2 meetings during fiscal 1994. The Audit Committee is
responsible for recommending to the full Board the selection of independent
auditors for the Company, reviewing the scope of the audit, reviewing the non-
audit services provided by such auditors prior to the performance thereof,
review of the audit reports and annual financial statements, review of
financial and accounting controls and procedures and review of all related
party transactions.
The Finance Committee, consisting of Messrs. Little (commencing December
1994), Rowe, and Hangstefer (Chairman), held 2 meetings during fiscal 1994.
After the Annual Meeting, the Committee will consist of Messrs. Horowitz,
Little and Hangstefer (Chairman). The Finance Committee reviews the financial
and capital plans of the Company and recommends to the Board an operating
budget.
The Compensation Committee, consisting of Messrs. Brennan, Capra (through
November 1994), Little (commencing December 1994) and Rowe (Chairman), held 3
meetings during fiscal 1994. After the Annual Meeting, the Committee will
consist of Messrs. Brennan, Rosen and Little (Chairman). The Compensation
Committee is responsible for reviewing officer, certain senior manager and
director compensation arrangements and certain benefit programs.
The Nominating Committee, consisting of Messrs. Capra (through November
1994), Hangstefer, Little (commencing December 1994), Sprague and Tuttle
(Chairman), held 2 meetings in 1994. After the Annual Meeting, the Committee
will consist of Messrs. Brennan, Hangstefer and Sprague (Chairman). The
Nominating Committee recommends potential Board members and the re-election of
the Directors at the expiration of their respective terms, presents annually a
slate of officers for the Board and makes nominations as vacancies occur,
recommends to the Board appointments to standing committees and evaluates the
effectiveness and performance of all Board committees.
The Board of Directors held 5 meetings during fiscal 1994. Each of the
directors attended at least 75% of all the directors' meetings and the relevant
committee meetings during 1994, except Mr. Yontz who attended 60% of the
directors' meetings.
The Company's By-Laws establish an advance notice procedure with respect to
stockholder nomination of candidates for election as directors. In general,
notice regarding stockholder nominations for director or other stockholder
proposals must be received by the Secretary of the Company not less than 45
days prior to the anniversary of the date of the immediately preceding annual
meeting and must contain certain specified information concerning the persons
to be nominated and the stockholder submitting the nomination or proposal. The
presiding officer of the meeting may refuse to acknowledge any director
nomination not made in compliance with such advance notice requirements.
Stock Option Plan for Directors
The Company has established the 1989 Stock Option Plan for Directors (the
"Plan") pursuant to which each of the current directors who is not an employee
of the Company (each an "Eligible Director") was awarded options to purchase
2,500 shares of Common Stock upon adoption of the Plan or upon his election as
a director, and each newly elected Eligible Director will be awarded options to
purchase 2,500 shares of Common Stock on the date of his first election.
Following the initial grant, each person who is an Eligible Director on the day
immediately succeeding the day of each annual meeting of shareholders of the
Company will receive options covering 1,000 shares (subject to the maximum
number of shares available under the Plan) of Common Stock on such date,
provided that if less than one year elapses between an initial grant and an
annual grant, the Eligible Director will receive options covering 250 shares
for each quarter of service. The exercise price of each option is 100% of fair
market value (as defined in the Plan) on the date of award. The exercise price
of the options for 1,000 shares awarded to each Messrs. Brennan, Capra,
Hangstefer, Rowe, Sprague and Yontz all in 1994 was $9.00. The exercise price
of the Initial Award to Mr. Little in
4
<PAGE>
1994 was $6.75. Options become exercisable on a vesting schedule of one-third
on each of the first, second and third anniversaries of the date of grant.
50,000 shares have been authorized for delivery upon exercise of options under
the Plan. See Proposal 2, Approval Of Amendment To The Aerovox Incorporated
1989 Stock Option Plan For Directors. The Plan is administered by directors of
the Company who are not eligible to receive awards under the Plan (Messrs.
Tuttle and Murphy).
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE AEROVOX INCORPORATED
1989 STOCK OPTION PLAN FOR DIRECTORS
SUMMARY OF THE AMENDMENTS
On January 27, 1995, the Committee of the Board of Directors administering
the Aerovox Incorporated 1989 Stock Option Plan for Directors (the "Plan")
adopted amendments (the "Amendments") to the Plan (i) to increase the number of
shares reserved for issuance upon exercise of options granted to non-employee
directors under the Plan from 50,000 to 80,000 and (ii) to change the vesting
schedule so that options become exercisable on the first anniversary of the
date of the grant. The Board directed submission of the Amendments to the
stockholders for approval at the 1995 Annual Meeting of Stockholders. The
Company's management believes that it is important to continue to have options
available for grant in order to attract and retain non-employee directors of
exceptional abilities. Company management also believes that it is appropriate
for options granted in a particular year to become exercisable after the
director has completed a year of service.
GENERAL
Under the Plan, each director who was not an employee of the Company (each an
"Eligible Director") was awarded options to purchase 2,500 shares of the
Company's Common Stock upon adoption of the Plan or upon his election as a
director, and each newly elected Eligible Director will be awarded an option to
purchase 2,500 shares of Common Stock on the day of his first election.
Following the initial grant, each person who is an Eligible Director on the day
immediately succeeding the day of each annual meeting of the stockholders of
the Company will receive options covering 1,000 shares of the Company's Common
Stock (subject to the maximum number of shares available under the Plan) on
such date, provided that if less than one year elapses between an initial grant
and an annual grant, the Eligible Director will receive options covering 250
shares for each quarter of service. The exercise price of each option is 100%
of fair market value (as defined in the Plan) on the date of award. The option
exercise price of options for 1,000 shares awarded to each such director
following the 1994 Annual Meetings of Stockholders was $9.00. The exercise
price of the initial award to Mr. Little in 1994 was $6.75. There are currently
outstanding options to purchase an aggregate of 37,250 shares under the Plan
with an average exercise price of $6.375. Currently, options become exercisable
on a vesting schedule of one-third on each of the first, second and third
anniversaries of the date of grant. If proposal No. 2 is adopted, options will
become exercisable on the first anniversary of the date of grant. The Plan is
administered by directors of the Company who are not eligible to receive awards
under the Plan, currently Messrs. Tuttle and Murphy.
The exercise price of the options under the Plan may be paid in cash or by
check, bank draft or money order or by delivery of shares of the Company's
Common Stock or by any combination of cash and Common Stock. The maximum term
of each option is ten years, and no options may be awarded under the Plan after
April 23, 1999. All options are non-transferrable, except by will or by the
laws of descent and distribution. Upon the death of any Eligible Director, all
options issued to him which are not then exercisable shall terminate. Options
that are exercisable at the time of death may be exercised by his administrator
or executor, or by the person to whom the option is transferred by will or the
applicable laws of descent and distribution, at any time within the three-year
period ending with the third anniversary of the director's death, subject in
each case to the maximum option term. If an Eligible Director's service for the
Company terminates for any reason other than death, all options held by the
director that are not exercisable shall terminate and options that are
exercisable on the date of termination may be exercised for a period of three
months thereafter, subject in each case to the maximum option term.
5
<PAGE>
In the event of a stock dividend, stock split, combination of shares,
recapitalization or other change in the Company's capital stock, the number and
kind of shares subject to options, the exercise price and other relevant
provisions under the Plan will be appropriately adjusted. In the event of a
merger or consolidation of the Company, or sale of all or substantially all
assets or dissolution or liquidation of the Company, all outstanding options
terminate, but at least 20 days prior to the effective date of such merger,
consolidation or sale all options outstanding will become immediately
exercisable, provided that, unless the event will give rise to a Change of
Control (as defined in the Plan), the Committee may instead arrange that the
successor or surviving corporation grant replacement options. In the event of a
Change of Control all options will become immediately exercisable.
The following table sets forth certain information concerning the Plan for
fiscal 1994:
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES SHARES UNDERLYING MARKET VALUE OF
UNDERLYING OPTION OUTSTANDING OPTIONS SECURITIES UNDERLYING
PLAN PARTICIPANTS GRANTS IN FISCAL 1994 AT END OF FISCAL YEAR OUTSTANDING OPTIONS(1)
- - ----------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C>
NOMINEES:
John F. Brennan......... 1,000 6,000 $14,062
James B. Hangstefer..... 1,000 6,000 $14,062
Dennis Horowitz......... (2) (2) (2)
William G. Little....... 2,500(3) 2,500 $ 2,188
Benedict P. Rosen....... (2) (2) (2)
John L. Sprague......... 1,000 5,625 $12,890
Current Directors as a
Group (6 persons)...... 7,500 32,125 $71,326
</TABLE>
- - --------
(1) Based on the share price of $7.625 on December 30, 1994
(2) Each of Messrs. Horowitz and Rosen will begin participation in the Plan
upon their election as directors at the 1995 Annual Meeting.
(3) Initial Grant.
FEDERAL TAX ASPECTS
The following discussion summarizes certain federal tax consequences
associated with options granted under the Plan. The summary is for general
information only and does not purport to cover federal employment tax or other
federal tax consequences that may be associated with the Plan, nor does it
cover state, local or non-U.S. taxes.
The grant of stock options under the Plan will not result in the recognition
of taxable income to the director or in a deduction to the Company. Upon
exercise of the option, a director will recognize ordinary income in an amount
equal to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price of the option. The Company is entitled to a
tax deduction in the same amount. Any gain or loss recognized on a later sale
or exchange will be treated as a capital gain or loss (long-term or short-term,
depending upon the holding period of the stock sold) as to which the Company
will not be entitled to a deduction.
If a director exercises an option by surrendering previously acquired stock,
no gain or loss is recognized on the exchange for an equivalent number of new
shares. The director will realize ordinary income, and the Company will be
entitled to a corresponding deduction equal to the fair market value of any new
shares received in excess of the number of previously acquired shares
surrendered in the exchange, less any cash paid.
RECOMMENDATION AND VOTE
Approval of the Amendment requires the affirmative vote of the holders of at
least a majority of the shares of Common Stock present and entitled to vote on
the matter. It is the intention of the persons named as proxies to vote shares
to which the proxy relates to approve the Amendment unless instructed to the
contrary.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THE AMENDMENT.
6
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
Set forth below is certain information with respect to compensation paid by
the Company or its subsidiaries for the fiscal year ended December 31, 1994 to
the Chief Executive Officer and the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------
AWARDS(1)
------------
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND COMPEN- UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION(2) OPTIONS SATION(3)
------------------ ---- -------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Clifford H. Tuttle...... 1994 $287,558 $ 52,807 -- -- $18,737
Chairman of the Board &
CEO 1993 244,352 121,292 -- -- 14,067
1992 226,600 -- -- -- 12,337
Ronald F. Murphy........ 1994 174,385 25,962 -- -- 11,873
Senior Vice President &
Treasurer 1993 156,041 61,197 -- -- 7,586
1992 141,561 15,000 -- -- 9,051
Philip J. Fox........... 1994 145,264 33,913 -- -- 10,864
Senior Vice President,
Operations Support 1993 138,609 54,360 -- -- 9,471
1992 135,016 26,962 -- -- 8,893
Peter B. Kirschmann..... 1994 168,885 60,930 21,600 -- 12,080
Senior Vice President
and General Manager, 1993 144,615 84,600 33,459 40,000 8,573
Aerovox Group 1992 -- -- -- -- --
Earl F. Sherman......... 1994 147,456 47,739 -- -- 9,073
Vice President Market-
ing, Aerovox Group 1993 145,657 -- -- -- 8,217
1992 141,041 -- -- -- 8,541
</TABLE>
- - --------
(1) The Company has not issued restricted stock awards or SARs. In addition,
the Company does not maintain a "Long Term Incentive Plan" as that term is
defined in the applicable rules.
(2) Does not exceed the lesser of $50,000 or 10% of salary and bonus, except
for Mr. Kirschmann who received relocation compensation of $21,600.
(3) The amounts shown for each named officer for fiscal 1994 include matching
Company payments for (i) life insurance premiums, and contributions to (ii)
the Aerovox Profit Sharing Savings Plan and (iii) the Aerovox Deferred
Supplemental Savings Plan, respectively, as follows: Mr. Tuttle: $2,400,
$3,750, $12,587; Mr. Murphy: $2,400, $3,750, $5,723; Mr. Fox: $2,400,
$3,750, $4,714; Mr. Kirschmann: $2,400, $2,391, $7,289; Mr. Sherman:
$2,400, $3,750, $2,923.
OPTION GRANT TABLE
No stock options were granted during the fiscal year ended December 31, 1994
to the Chief Executive Officer and the other officers named in the summary
compensation table.
7
<PAGE>
YEAR-END OPTION VALUE TABLE
The following table shows as to the individuals named in the compensation
table certain information with respect to options held on December 31, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END 1994 FY-END 1994(1)
------------- ---------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C>
Clifford H. Tuttle...... 50,000 $237,500 50,000/ -0- $231,250/ -0-
Ronald F. Murphy........ -- 40,000/ -0- 185,000/ -0-
Philip J. Fox........... -- 35,000/ 5,000 161,875/23,125
Peter B. Kirschmann..... -- 8,000/32,000 -0-/ -0-
Earl F. Sherman......... -- 24,000/16,000 96,000/64,000
</TABLE>
In each case options were granted at fair market value on the date of grant and
are non-statutory options. Each option becomes exercisable 20% per year (or
earlier upon termination of employment at age 65) and expires ten years from
date of grant.
- - --------
(1) Based on the share price of $7.625 which was the closing price for a share
of the Company's common stock on December 30, 1994.
Change of Control Severance Benefits
The Company has Severance Agreements with certain key employees, including
Messrs. Tuttle, Murphy, Fox, Kirschmann and Sherman. Such Severance Agreements
provide that if, within 24 months following a "change in control" (as defined
in the Severance Agreements), the Company were to terminate the employee's
employment other than for cause (as defined) or the employee were to terminate
his employment for reasons specified in the agreements, the employee would
receive severance pay in an amount equal to the sum of his annual base salary
(at the rate in effect immediately before the change of control) plus his
target bonus for such year, without deduction for any amounts previously paid
under the bonus plan (or twice such base salary and bonus in the case of Mr.
Murphy, Mr. Fox, Mr. Kirschmann, and Mr. Sherman and three times such base
salary and bonus in the case of Mr. Tuttle). In addition, the Severance
Agreements provide for the immediate vesting of bonus awards, stock options
etc. and immediate payment of deferred compensation amounts upon such
termination. For one year following any such termination of employment, the
employee would be entitled to continue participation in all accident and health
plans provided by the Company. In the case of Mr. Tuttle, Mr. Murphy, Mr. Fox,
Mr. Kirschmann and Mr. Sherman, the Severance Agreements further provide for a
"gross-up" under which, if amounts paid under such Agreements would be subject
to a federal excise tax on "excess parachute payments," the Company will pay
Mr. Tuttle and the above named, as the case may be, an additional amount of
cash so that, after payment of all such taxes by the employee, the employee
will have received the amount he would have received in the absence of any such
tax. For all other executives, the foregoing benefits would be payable whether
or not they gave rise to a federal excise tax on so-called "excess parachute
payments" or were nondeductible, except to the extent a reduction in amounts
paid would maximize the employee's after-tax benefits. The Company would also
be obligated to pay all legal fees and expenses reasonably incurred by the
employee in seeking enforcement of contractual rights following a change of
control.
Agreement With Mr. Tuttle and Mr. Murphy
The company has entered into a Consulting, Non-Competition and
Confidentiality Agreement with each of Mr. Tuttle and Mr. Murphy in order to
assure the Company that the experience and advice of such officers will be
available to the Company at the time they retire from active management of the
Company. Provided
8
<PAGE>
that Messrs. Tuttle and Murphy continue to serve as executive officers of the
Company until attainment of age 65, from and after their retirement, such
officers have agreed to provide consulting services to the Company for a period
of ten years commencing on the date of such retirement. Pursuant to the
agreements, the Company has agreed to pay such officers a fee in the amount of
$5,000 per month, in the case of Mr. Tuttle and $3,000 per month in the case of
Mr. Murphy, and to pay $1,600 per day in the case of Mr. Tuttle, and $960 per
day in the case of Mr. Murphy, for each day of consulting services rendered.
The Company has agreed to pay for a minimum of 25 days consulting services. In
the event that such officers' employment with the Company is terminated at any
time for a reason other than cause (as defined in the agreements) or with or
without cause on or after two years of a change of Control (as defined in the
agreements) the Company has agreed to pay the monthly fees and 25 day minimum
per diem fees for the full term of the agreements.
Indemnification Agreements
The Company has entered into Indemnification Agreements with each director
and certain officers of the Company including the officers named in the Summary
Compensation Table. The Indemnification Agreements provide a number of
procedures, presumptions and remedies used in the determination of the right of
the director or officer to indemnification. These procedures, presumptions and
remedies substantially broaden the indemnity rights of directors and officers
beyond that provided by the Company's Amended and Restated Certificate of
Incorporation. If an action against an indemnified party is dismissed with or
without prejudice, the defense is deemed to have been successful and the
indemnification is required to be made. The Indemnification Agreements provide
that expenses must be paid within twenty days of the indemnification request
(otherwise a determination in favor of the indemnified party is deemed to have
been made). If there is a change in control of the Company (as defined in the
Indemnification Agreement), the indemnified party is presumed to be entitled to
indemnification (although the Company may overcome this presumption). The
indemnified party may require that independent counsel make the determination
of entitlement and may choose such counsel, subject to objection by the Company
on limited grounds. If a determination of entitlement is made, the Company is
bound, but if the indemnified party has previously been denied indemnification
pursuant to the terms of the Indemnification Agreement he or she is entitled to
seek a de novo determination from a court. The Company is precluded from
challenging the validity of the procedures and presumptions contained in the
Indemnification Agreement in any court proceeding. The Indemnification
Agreement covers proceedings brought on or after the date of the execution of
the particular Indemnification Agreement, including proceedings based on acts
prior to the date of that Agreement.
9
<PAGE>
PERFORMANCE COMPARISON
The graph below compares cumulative total shareholder returns for the Company
since public trading began February 26, 1990 with the NASDAQ Market Index and a
Peer Group.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- - ----------------------------- FISCAL YEAR ENDING -------------------------------
COMPANY 1990 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
AEROVOX INC 100 82.14 150.00 176.79 225.00 217.86
PEER GROUP 100 83.64 110.86 192.26 204.97 256.91
BROAD MARKET 100 88.18 113.21 114.32 137.13 143.97
</TABLE>
Assumes $100 invested on February 26, 1990, the first day of public trading
of the Company's Common Stock. The Peer Group consists of American Technical
Ceramics Corp., Bel Fuse Inc., CTS Corp., Corcom Inc., Dallas Semiconductor
Corp., Del Electronics Corp., Robinson Nugent Inc., The Cherry Corp. and Vishay
Intertechnology Inc.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee consists of three non-employee members
of the Board of Directors. The Committee is responsible for reviewing officer
compensation arrangements and certain benefit programs.
For the purpose of comparison, the Committee reviewed survey information on
officer salaries outlined by Wyatt Data Services, focusing generally on the
"durable goods manufacturing" sector for the Northeast region (New England).
Information from this source, rather than salary data from the peer group, was
selected for comparison because it is readily available.
There are three elements of the executive compensation program at Aerovox:
base salary, annual incentive bonuses, and stock based awards. The program is
designed to attract competent executives, and to
motivate them to achieve both the short and long term goals of the Company. The
Company believes its compensation program links executive achievement with
shareholder interests.
Executive officer compensation in 1994 was not impacted by section 162(m) of
the Internal Revenue Code because compensation levels were below the threshold
established by that statute, and the Committee does not expect 162(m) to impact
executive compensation in the foreseeable future.
10
<PAGE>
Base Salary
Base salaries of executives who have been with the Company for some time are
generally in line with the median compensation for comparable positions as
outlined in the survey by Wyatt Data Services. Occasionally the Committee has
found, however, that higher salaries are required to attract new executives
with the requisite technical expertise.
Decisions on annual increases are based on three factors. First, the
Committee makes a subjective appraisal of how well the Company has done within
its own industry, considering competitive and economic situations. Secondly, a
formal annual review is conducted to evaluate each officer's performance.
Finally, if there has been a significant increase in responsibility, this is
recognized in salary increase decisions.
Executive Incentive Bonus Plan
Under the Company's Executive Incentive Bonus Plan, officers and other
members of management may receive cash incentive awards based on a pre-
established percentage of the participant's base compensation (with rates
ranging from 20% to 50% depending on the individual's level of responsibility)
and a targeted Return on Net Assets ("RONA") which is set annually by the
Compensation Committee. RONA is calculated by dividing net after tax income by
the Company's average net assets (as defined). Payment to any participant is
triggered by achievement of at least 75% of this RONA target, and failure to
achieve this level of RONA results in no bonus whatsoever. Actual awards may be
up to 1.5 times the pre-established rate if RONA exceeds the targeted level.
Profit alone, however, does not determine the total bonus payout. Fifty
percent of the amount earned is discretionary and heavily based on the
achievement of specific pre-established individual goals, most of which will
have a marked effect on the Company's performance two to three years after the
goal is completed. Thus, the score an individual achieves in the Company's
formal Goals and Objectives Program, a program under which goals are formulated
and achievement evaluated, is an important determinant in the bonus actually
paid. The Company believes this Program assures a balance between short term
financial performance and long term objectives in an incentive program.
In 1994, the performance of two of the Company's three operating groups
triggered bonus payments. BHC Aerovox exceeded the RONA established for the
group and consequently individuals in the group were eligible for maximum bonus
awards, in accordance with the individual's level of participation and the
score achieved in the Goals and Objectives Program. Aerovox Group performance
was just below their targeted RONA level and bonus payments were commensurate
with this achievement. As a result of the poor performance of the Aero M Group,
bonuses were not awarded to individuals in this group. This latter group's
performance had a sufficiently negative effect on the Company that only minimum
payments were authorized to corporate participants, essentially recognizing
effort only.
Stock Incentive Plan
The third element of the Company's executive compensation program is the
Stock Incentive Plan. Under this Plan, employees who contribute to the
management, growth and profitability of the Company are eligible to receive
stock options which vest over a five year period. The Compensation Committee
considers that ownership of securities encourages management to have a
propriety interest in the long-term success of the Company, which ultimately
enhances shareholder value. In order to encourage significant ownership of the
Company's stock in connection with its Stock Incentive Plan, the Board of
Directors has determined that with respect to options granted after March 2,
1993, options will not become exercisable unless an employee owns, at the time
of exercise, a number of shares equal to at least 40% of the aggregate number
of shares acquired by previously exercised options granted after March 2, 1993.
11
<PAGE>
Guidelines for option awards were established at the inception of the program
in 1989. The awards are commensurate with the participant's ability to effect
the profitability of the Company. Awards established for each level of
responsibility are as follows: options for 100,000 shares for the CEO; 40,000
for the CFO and subsidiary presidents; 10,000 to 35,000 for other officers; and
2,500 to 10,000 for key engineering, marketing, administrative and
manufacturing personnel. The exercise price of each option is determined by the
Compensation Committee, but may not be less than 100% of the fair market value
of the shares on the date of grant.
Chief Executive Officer Compensation
In 1994, Clifford H. Tuttle Jr., Chairman of the Board and Chief Executive
Officer ("CEO") was paid a base salary of $287,558, reflecting a 17.7%
(annualized) increase over his 1993 base salary. The Committee awarded Mr.
Tuttle this increase to bring his salary more in line with the median CEO
salary levels reported by companies of comparable size based on Wyatt Data
Services information and the fact that the Company had performed well in 1993.
Mr. Tuttle earned an incentive bonus award of $52,807 for the year, which was
a minimum payment under the Incentive Bonus Plan in which Mr. Tuttle had a
participation rate of 50% of base salary. Mr. Tuttle's total compensation for
1994 was $340,365. While total compensation data is not available for all the
companies in the peer group, the data we do have would indicate Mr. Tuttle's
total compensation is well below the average for the group.
The foregoing chart and textual and tabular descriptions provide details of
the payments and programs referenced in this report. The industry peer group
selected for the five year cumulative return comparison is a broad group which
covers electronic and electrical equipment component companies with markets
similar to Aerovox's.
John F. Brennan
William G. Little
Herbert J. Rowe, Chairman
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 17, 1995, certain information
regarding the Common Stock ownership of the Company's current directors and
nominees, the named executive officers and of all directors and executive
officers of the Company as a group. Except as indicated below, all of the
shares listed are held by the persons named with both sole voting and
investment power.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
---------------- ------------ --------
<S> <C> <C>
Clifford H. Tuttle.................................. 131,362 2.5%
Ronald F. Murphy.................................... 47,917 *
John F. Brennan..................................... 10,165 *
Philip J. Fox....................................... 50,192 *
James B. Hangstefer................................. 49,165 *
Dennis Horowitz..................................... --
Peter B. Kirschmann................................. 14,219 *
William G. Little................................... 3,500 *
Benedict P. Rosen................................... --
Herbert J. Rowe..................................... 12,165 *
Earl B. Sherman..................................... 39,394 *
John L. Sprague..................................... 6,290 *
Kenneth F. Yontz.................................... 95,116 1.8%
All directors and executive officers as a group (19
persons)........................................... 535,907(2) 10.2%
</TABLE>
--------
* Less than 1%.
(1) Includes the following number of shares issuable pursuant to options
currently exercisable or exercisable within sixty days: Messrs. Tuttle:
50,000; Murphy: 40,000; Brennan: 4,165; Fox: 35,000; Hangstefer: 4,165;
Kirschmann: 14,000; Rowe: 4,165; Sherman: 32,000; Sprague: 3,790; and
Yontz: 6,116.
(2) Includes 269,823 shares issuable pursuant to options currently exercisable
or exercisable within sixty days.
As required by the Securities and Exchange Commission rules under Section 16
of the Securities and Exchange Act of 1934, the Company notes that during 1994
one director inadvertently filed an untimely report on a transaction in the
Company's common stock: Kenneth F. Yontz, one report regarding the sale of
1,000 shares.
The only persons or entities known to the Company to be the beneficial owner
of more than five percent of the Company's Common Stock are as follows:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- - ------------------- ------------ -------
<S> <C> <C>
Texas Art Supply Co....................................... 503,934(a) 9.7%
910 Travis Street, Suite 2030
Houston, TX 77002
William D. Witter, Inc.................................... 548,574(b) 10.5%
One Citicorp Center
153 East 53rd Street
New York, NY 10022
</TABLE>
- - --------
(a) Texas Art Supply Co., Louis K. Adler, Marc F. Adler, and the Adler
Foundation beneficially own, with sole voting and dispositive power,
475,300 shares, 18,500 shares, 10,000 and 134 shares, respectively. Texas
Art Supply Co. is a wholly owned subsidiary of Westlane Corporation. Louis
K. Adler is President of both Texas Art Supply Co. and Westlane
Corporation. Gail F. Adler, the wife of Louis K. Adler, is
13
<PAGE>
Vice President of both Texas Art Supply Co. and Westlane Corporation. Louis
K. Adler and Gail F. Adler are the only directors of both Texas Art Supply
Co. and Westlane Corporation. Louis K. Adler, Gail F. Adler and Marc F.
Adler are three of the four Trustees of the Adler Foundation. Marc F. Adler
is the son of Louis and Gail Adler. Westlane Corporation may be deemed to be
the indirect beneficial owner of shares of Aerovox Common Stock owned by
Texas Art Supply Co. and, as such, could be regarded as sharing with Texas
Art Supply Co. investment and dispositive power with respect to such shares.
Westlane Corporation disclaims beneficial ownership of any of the shares of
Aerovox Common Stock held by Texas Art Supply Co.
(b) Sole voting power: 545,574 shares. Shared dispositive power: 3,000 shares.
OTHER INFORMATION
OUTSTANDING SHARES
Only shareholders of record at the close of business on March 14, 1995, are
entitled to notice of and to vote at the meeting. There were 5,232,350 shares
of Aerovox Common Stock ("Common Stock"), $1.00 par value, outstanding on that
date, each of which is entitled to one vote.
QUORUM, REQUIRED VOTES AND METHOD OF TABULATION
Consistent with state law and under the Company's Bylaws, a majority of the
shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the Annual Meeting will be counted by persons appointed
by the Company to act as election inspectors for the meeting.
The three nominees for election as Class III directors at the Annual Meeting
who receive the greatest number of votes present and entitled to vote for the
election of such directors shall be elected. A majority of the votes present
and entitled to vote on the matter is necessary to approve Proposal 2.
The election inspectors will count the total number of votes cast "for"
approval of the increase in reserved shares for purposes of determining whether
sufficient affirmative votes have been cast. The election inspectors will count
shares represented by proxies that withhold authority to vote for a nominee for
election as a director or that reflect abstentions and "broker non-votes"
(i.e., shares represented at the meeting held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) only as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum, but neither abstentions nor broker non-votes have any
effect on the outcome of voting on the matter.
AUDIT MATTERS
A representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting and will be afforded the opportunity to make a statement if he
desires to do so and to respond to appropriate questions from shareholders.
The Company intends to request proposals for auditing services in 1995,
including a proposal from Coopers & Lybrand L.L.P., and therefore has not yet
selected an independent public accountant for the current year.
SHAREHOLDER PROPOSALS
In order for any proposal that a shareholder intends to present at the next
Annual Meeting of Shareholders to be eligible for inclusion in the Company's
proxy material for that meeting, it must be received by the Company no later
than December 2, 1996.
14
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no business that will come before the meeting
for action except as described in the accompanying Notice of Meeting. However,
as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
The Board of Directors encourages you to have your shares voted by signing
and returning the enclosed form of proxy. The fact that you will have returned
your proxy in advance will in no way affect your right to vote in person should
you find it possible to attend. However, by signing and returning the proxy you
have assured your representation at the meeting. Thank you for your
cooperation.
15
<PAGE>
Appendix A
AEROVOX HOLDING COMPANY
1989 STOCK OPTION PLAN FOR DIRECTORS
1. PURPOSE
-------
The purpose of this 1989 Stock Option Plan for Directors (the "Plan") is to
advance the interests of Aerovox Holding Company (the "Company") by enhancing
the ability of the Company to attract and retain directors who are in a position
to make significant contributions to the success of the Company and to reward
directors for such contributions through ownership of shares of the Company's
common stock (the "Stock").
2. ADMINISTRATION
--------------
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company consisting of those Directors
who are not eligible to receive options under the Plan. The Committee shall
have authority, not inconsistent with the express provisions of the Plan, (a) to
grant options in accordance with the Plan to such directors as are eligible to
receive options; (b) to prescribe the form or forms of instruments evidencing
options and any other instruments required under the Plan and to change such
forms from time to time; (c) to adopt, amend and rescind rules and regulations
for the administration of the Plan; and (d) to interpret the Plan and to decide
any questions and settle all controversies and disputes that may arise in
connection with the Plan. Such determinations of the Committee shall be
conclusive and shall bind all parties. Subject to Section 8, the Committee shall
also have the authority, both generally and in particular instances, to waive
compliance by a director with any obligation to be performed by him under an
option and to waive any condition or provision of an option.
3. EFFECTIVE DATE AND TERM OF PLAN
-------------------------------
The Plan shall become effective on the date on which the Plan is approved
by the shareholders of the Company. No
-1-
<PAGE>
option shall be granted under the Plan after the completion of ten years from
the date on which the Plan was adopted by the Board, but options previously
granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
--------------------------
(a) Number of Shares. Subject to adjustment as provided in Section 4(c),
----------------
the aggregate number of shares of Stock that may be delivered upon the exercise
of options granted under the Plan shall be 80,000. If any option granted under
the Plan terminates without having been exercised in full, the number of shares
of Stock as to which such option was not exercised shall be available for future
grants within the limits set forth in this Section 4(a).
(b) Shares to be Delivered. Shares delivered under the Plan shall be
----------------------
authorized but unissued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in
treasury. No fractional shares of Stock shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or
----------------
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the Company
subject to options then outstanding or subsequently granted under the Plan, the
maximum number of shares or securities that may be delivered under the Plan, the
exercise price, and other relevant provisions shall be appropriately adjusted by
the Committee, whose determination shall be binding on all persons.
5. ELIGIBILITY FOR OPTIONS
-----------------------
Directors eligible to receive options under the Plan ("Eligible Directors")
shall be any director who (i) is not an employee of the Company, and (ii) is not
a holder of more than 5% of the outstanding shares of the Stock or a person who
is in control of such holder.
6. TERMS AND CONDITIONS OF OPTIONS
-------------------------------
(a) Number of Options. Eligible Directors who are directors on the date
-----------------
of shareholder approval of the Plan shall be awarded options covering 2,500
shares of Stock on that date. Following shareholder approval of the Plan, each
newly elected Eligible Director shall be awarded options
-2-
<PAGE>
covering 2,500 shares of Stock on the date of his first election.
Following the initial grants, each Eligible Director shall be awarded
options covering 1,000 shares of Stock for each year of service on the day
immediately succeeding the day of each annual meeting of the shareholders of the
Company following his or her initial grant and each anniversary thereof,
provided such individual is then an Eligible Director. If less than one full
year elapses between an initial grant and an annual grant, the Eligible Director
shall receive options covering 250 shares for each quarter of service.
(b) Exercise Price. The exercise price of each option shall be 100% of
--------------
the fair market value per share of the Stock at the time the option is granted,
but not less, in the case of an original issue of authorized stock, than par
value per share. For this purpose, "fair market value" shall have the same
meaning as it does in the provisions of the Internal Revenue Code of 1986 (the
"Code") and the regulations thereunder applicable to incentive options.
(c) Duration of Options. The latest date on which an option may be
-------------------
exercised (the "Final Exercise Date") shall be the date which is ten years from
the date the option was granted.
(d) Exercise of Options.
-------------------
(1) Each option shall become exercisable in full on the first anniversary
of the date of grant.
(2) Any exercise of an option shall be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (a) the
option certificate and any other documents required by the Committee
and (b) payment in full for the number of shares for which the option
is exercised.
(3) If an option is exercised by the executor or administrator of a
deceased director, or by the person or persons to whom the option has
been transferred by the director's will or the applicable laws of
descent and distribution, the Company shall be under no obligation to
deliver Stock pursuant to such exercise until the Company is satisfied
as to the authority of the person or persons exercising the option.
-3-
<PAGE>
(e) Payment for and Delivery of Stock. Stock purchased under the Plan
---------------------------------
shall be paid for as follows: (i) in cash or by certified check, bank draft or
money order payable to the order of the Company, (ii) through the delivery of
shares of Stock having a fair market value on the last business day preceding
the date of exercise equal to the purchase price or (iii) by a combination of
cash and Stock as provided in clauses (i) and (ii) above.
An option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him under the
Plan.
The Company shall not be obligated to deliver any shares of Stock (a)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, and (b) if the outstanding Stock
is at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (c) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(f) Nontransferability of Options. No option may be transferred other
-----------------------------
than by will or by the laws of descent and distribution, and during a director's
lifetime an option may be exercised only by him.
(g) Death. Upon the death of any Eligible Director granted options under
-----
this Plan, all options not then exercisable shall terminate. All options held
by the director that are exercisable immediately prior to death may be exercised
by his executor or administrator, or by the person or persons to whom the option
is transferred by will or the applicable laws of descent and distribution, at
any time within the three-year period ending with the third anniversary of the
director's death (subject, however, to the limitations of Section 6(c) regarding
the maximum exercise period for such option). After completion of that three
year period, such options shall terminate to the extent not previously
exercised.
-4-
<PAGE>
(h) Other Termination of Status of Director. If a director's service with
---------------------------------------
the Company terminates for any reason other than death, all options held by the
director that are not then exercisable shall terminate. Options that are
exercisable on the date of termination shall continue to be exercisable for a
period of three months (subject to Section 6(c)), but shall terminate
immediately if the director was removed for cause or resigned under
circumstances which in the opinion of the Committee casts such discredit on him
as to justify termination of his options. After completion of that three-month
period, such options shall terminate to the extent not previously exercised,
expired or terminated.
(i) Mergers, etc. Subject to Section 7, in the event of any merger or
-------------
consolidation involving the Company, any sale of substantially all of the
Company's assets or a dissolution or liquidation of the Company, all options
held by each Eligible Director shall terminate, but at least 20 days prior to
the effective date of any such merger, sale, dissolution, or liquidation, the
Committee shall make all options outstanding hereunder immediately exercisable,
provided that, unless the event will give rise to a Change of Control (as
hereinafter defined) or it is anticipated that a Change of Control will coincide
with or follow the event, the Committee may instead arrange that the successor
or surviving corporation, if any, grant replacement options.
7. CHANGE OF CONTROL
-----------------
Notwithstanding any other provision of this Plan, in the event of a Change
of Control of the Company as defined in Exhibit A hereto each option held by
each Eligible Director will immediately become fully exercisable.
-5-
<PAGE>
8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
---------------------------------------------------------------
Neither adoption of the Plan nor the grant of options to a director shall
affect the Company's right to grant to such director options that are not
subject to the Plan, to issue to such directors Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
directors.
The Committee may at any time discontinue granting options under the Plan.
The Committee may at any time or times amend the Plan for the purpose of
satisfying any changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, or may at any time terminate
the Plan as to any further grants of options, provided that (except to the
extent expressly required or permitted herein above) no such amendment shall,
without the approval of the shareholders of the Company, (a) increase the
maximum number of shares available under the Plan, (b) increase the number of
options granted to Eligible Directors, (c) amend the definition of Eligible
Director so as to enlarge the group of directors eligible to receive options
under the Plan, (d) reduce the price at which options may be granted, (e) change
of extend the times at which options may be granted, or (f) amend the provisions
of this Section 8, and no such amendment shall adversely affect the rights of
any director (without his consent) under any option previously granted.
Adopted: 1989
Amended: May 11, 1994
Amended: May 9, 1995
-6-
<PAGE>
AEROVOX INCORPORATED
MAY 9, 1995
ANNUAL MEETING OF AEROVOX INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Clifford H. Tuttle and Ronald F.
Murphy or either of them, with power of substitution to each, proxies to vote
and act at the Annual Meeting of Shareholders on Tuesday, May 9, 1995 at the
offices of Ropes & Gray, One International Place, 36th Floor, Boston,
Massachusetts 02110, and at any adjournments thereof, upon and with respect to
the number of shares of Common Stock of the Company as to which the undersigned
may be entitled to vote or act. The undersigned instructs such proxies, or their
substitutes, to vote in such manner as they may determine on any matters which
may come before the meeting, and to vote on the following as specified by the
undersigned, all as indicated in the accompanying Notice of Meeting and Proxy
Statement, receipt of which is acknowledged, and proxies heretofore given by the
undersigned in respect of said meeting are hereby revoked.
Unless otherwise specified in the spaces provided on the reverse side, the proxy
will be voted in FAVOR of all nominees as Class III directors, and IN FAVOR of
the increase in the number of shares of Common Stock reserved for issuance under
the 1989 Stock Option Plan for Directors from 50,000 to 80,000 and to change the
vesting schedule so that options become exercisable on the first anniversary of
the date of the grant, and in the discretion of the named proxies as to any
other matter not known a reasonable time before this solicitation that may come
before this meeting or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED ENVELOPE
------------------------------------------------------------------------
(See Reverse Side)
<PAGE>
[X] Please mark your ++ +
votes as in this + +
example ++++
FOR WITHHELD
1.Election of [_] [_] Nominees: Dennis Horowitz
Class III Ronald F. Murphy
Directors: Benedict P. Rosen
For, except vote withheld from the
following nominee(s):
- - ----------------------------------
FOR AGAINST ABSTAIN
2. Approval of Increase in number of [_] [_] [_]
Shares of Common Stock reserved
under the 1989 Stock Option Plan for
Directors from 50,000 to 80,000 and
change in vesting schedule.
Please mark, sign date and return the proxy card using the
enclosed envelope.
SIGNATURE__________________ DATE____________ SIGNATURE____________ 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.
