<PAGE>
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 240.14a-11(c) or 240.14a-12
Advanced Photonix, Inc.
___________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
___________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than 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)(1) 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:
_______________________________________________________________________
<PAGE>
Notice of Annual Meeting of Stockholders
To Be Held
August 21, 1997
To the Stockholders of Advanced Photonix, Inc.:
You are invited to attend the Annual Meeting of Stockholders (the "Annual
Meeting") of Advanced Photonix, Inc. (the "Company"), which will be held at the
Westlake Village Inn, 31943 Agoura Road, Westlake Village, California at 10:00
a.m., Pacific time, on August 21, 1997, to consider the following matters:
(1) The election of three Directors to hold office until the next Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified. The persons nominated by the Board of Directors
(James A. Gordon, Hayden Leason and Jon B. Victor) are described in the
accompanying Proxy Statement.
(2) The approval of the proposed Advanced Photonix, Inc. 1997 Stock Option
Plan.
(3) The transaction of such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on June 27, 1997 as the
record date for the Annual Meeting. Only stockholders of record of the Company's
Common Stock at the close of business on June 27, 1997 will be entitled to
notice of, and to vote at, the Annual Meeting or any adjournments or
postponements thereof. Shares can be voted at the Annual Meeting only if the
holder is present or represented by proxy.
The accompanying form of proxy is solicited by the Board of Directors of the
Company. Reference is made to the attached Proxy Statement for further
information with respect to the business to be transacted at the Annual Meeting.
A complete list of stockholders entitled to vote at the Annual Meeting shall be
open to the examination of any stockholder, for any purpose germane to the
Annual Meeting, during ordinary business hours, for a period of at least 10 days
prior to the Annual Meeting, at the Company's principal office, 1240 Avenida
Acaso, Camarillo, CA 93012.
Stockholders are cordially invited to attend the Annual Meeting. Whether or not
you expect to attend the Annual Meeting in person, please complete, date and
sign the accompanying proxy card and return it without delay in the enclosed
postage prepaid envelope. Your proxy will not be used if you are present and
prefer to vote in person or if you revoke the proxy.
By Order of the Board of Directors
/s/ Patrick J. Holmes
Patrick J. Holmes
July 25, 1997 Secretary
<PAGE>
Proxy Statement
Annual Meeting of Stockholders
August 21, 1997
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Advanced Photonix, Inc., a Delaware corporation
(the "Company"), for use at the 1997 Annual Meeting of Stockholders of the
Company and for any adjournments or postponements thereof (the "Annual Meeting")
to be held at the Westlake Village Inn, 31943 Agoura Road, Westlake Village,
California, at 10:00 a.m., Pacific time, on August 21, 1997, for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. A Board
of Directors' proxy (the "Proxy") for the Annual Meeting is enclosed, by means
of which you may vote as to the proposal described in this Proxy Statement.
All Proxies that are properly completed, signed and returned to the Company
prior to the Annual Meeting, and which have not been revoked, will be voted in
accordance with the stockholder's instructions contained in such Proxy. In the
absence of instructions, shares represented by such Proxy will be voted FOR the
election of the nominees of the Board of Directors for Director and the proposed
Advanced Photonix, Inc. 1997 Stock Option Plan. The Board of Directors is not
aware of any business to be presented at the Annual Meeting except the matters
set forth in the Notice and described in the Proxy Statement. If any other
matters come before the Annual Meeting, the persons named in the accompanying
Proxy will vote on those matters in accordance with their best judgment. A
stockholder may revoke his or her Proxy at any time before it is exercised by
filing with the Secretary of the Company at its offices at 1240 Avenida Acaso,
Camarillo, CA 93012, either a written notice of revocation or a duly executed
Proxy bearing a later date, or by appearing in person at the Annual Meeting and
expressing a desire to vote his or her shares in person.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders, Proxy and 1997 Annual Report to Stockholders are being sent to
stockholders on or about July 25, 1997.
VOTING SECURITIES
June 27, 1997 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. As of that date, the Company had
outstanding 10,854,495 shares of Class A and Class B Common Stock, $.01 par
value, excluding 22,223 Class B treasury shares. The presence, in person or by
proxy, of stockholders entitled to cast a majority of votes which stockholders
are entitled to cast in the election of Directors will constitute a quorum for
the Annual Meeting. Holders of Class A and Class B Common Stock are entitled to
one vote for each share owned upon all matters to be considered at the Annual
Meeting. Proxies marked "Abstain" are included in determining a quorum, but
broker proxies which have not voted in the election of Directors are not
included in determining a quorum for such matter. There is no cumulative voting
in the election of Directors.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 27, 1997, certain information
concerning the holdings of each person who was known by the Company to be the
beneficial owner of more than five percent (5%) of the outstanding shares of
Class A or Class B Common Stock of the Company, by each director and executive
officers and by all directors and officers as a group.
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock
-------------------------------------------- ------------------------------------------
Shares Under Shares Under
Shares Exercisable Percent of Shares Exercisable Percent of Percent
Owned Options/Warrants(1) Class Owned Options/Warrants Class Voting(2)
<S> <C> <C> <C> <C> <C> <C> <C>
The Dreyfus Corporation(3) 1,521,000 - 14.2 - - - 14.0
Hayden Leason(4) 1,304,100 25,500 12.4 - - - 12.2
J. Morton Davis(5) 656,045 333,340 9.0 - - - 8.9
The Townsend Group(6) 758,900 - 7.1 - - - 7.0
Advanced Detectors, Inc.(7) - 750,000 6.5 - - - 6.5
John Pappajohn(8) 186,668 500,000 6.1 - - - 6.0
James A. Gordon(9) 593,640 28,000 5.8 - - - 5.7
Edgewater Private Equity Fund(10) 593,640 28,000 5.8 - - - 5.7
Jon Victor(11) 237,400 25,000 2.4 - - - 2.4
James W. Ward 13,850 120,000 1.2 - - - 1.2
Patrick J. Holmes 50,000 84,000 1.2 - - - 1.2
Harry Melkonian 10,000 88,000 0.9 - - - 0.9
Robert C. King 30,000 28,000 0.5 - - - 0.5
Directors & Officers as a Group 2,238,990 398,000 23.7 - - - 23.4
<FN>
1 Includes shares under options/warrants exercisable on June 27, 1997 and options which become exercisable within 60 days
thereafter.
2 Represents combined voting power of both Class A and Class B Common Stock, assuming beneficial owner exercises all exercisable
options and warrants.
3 Shareholder is a subsidiary of Mellon Bank, N. A., One Mellon Bank Center, Pittsburgh, PA 15258-0001.
4 The address of this shareholder is Palmas Del Mar, 10 Monte Sol, Humacao, Puerto Rico 00791.
5 The address of this shareholder is D.H. Blair, 44 Wall Street, New York, NY 10005. Includes 617,760 shares and 333,340 shares
underlying a unit purchase option owned by D. H. Blair Investment Banking Corp. and 38,285 shares owned by Parliament Hill
Corporation.
6 The address of this shareholder is 22601 Pacific Coast Hwy., #200, Malibu, CA 90265.
7 Formerly Xsirius, Inc., the last address known for this beneficial owner was 1220 Avenida Acaso, Camarillo, CA 93012.
8 The address of this shareholder is c/o Equity Dynamics, 2116 Financial Center, Des Moines, IA 50309.
9 The address of this shareholder is c/o Edgewater Private Equity Fund, 666 Grand Avenue, Suite 200, Des Moines, IA 50309.
Includes 593,640 shares owned by Edgewater Private Equity Fund, L.P. ("Edgewater"). Mr. Gordon is the President of Gordon
Management, Inc. which is the general partner of Edgewater.
10 The address of this shareholder is c/o Edgewater Private Equity Fund, 666 Grand Avenue, Suite 200, Des Moines, IA 50309.
Includes 28,000 options granted to Mr. Gordon.
11 The address of this shareholder is c/o Greenwich Ventures, LLC, 2 Soundview Drive, Greenwich, CT 06830.
</FN>
</TABLE>
2
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively the "Reporting Persons")
to file reports of beneficial ownership and changes in beneficial ownership of
the Company's equity securities with the Securities and Exchange Commission and
to furnish the Company with copies of these reports. Based on the Company's
review of copies of these reports received by it, the Company believes that all
filings required to be made by the Reporting Persons during fiscal year 1997
were made on a timely basis.
ELECTION OF DIRECTORS
A Board of three Directors of the Company is to be elected at the Annual
Meeting, each to serve, subject to the provisions of the Company's by-laws,
until the next Annual Meeting of Stockholders and until his successor is duly
elected and qualified. It is management's recommendation that the accompanying
form of Proxy be voted FOR the election as Directors of the three persons named
below, all of whom are currently Directors of the Company. The Board of
Directors believes that the nominees named below are willing to serve as
Directors. However, in the event that any of the nominees should become unable
or unwilling to serve as a Director, the Proxy will be voted for the election of
such person or persons as shall be designated by the Directors. The Board of
Directors does not have a nominating committee. After this election, four
vacancies will exist on the Board that are not intended to be filled at this
time.
The following persons are nominees for election as Directors:
Name Age Position
---- --- --------
Hayden Leason 66 Chairman of the Board of Directors
and Chief Executive Officer
James A. Gordon 47 Director
Jon B. Victor 44 Director
Set forth below is certain information relating to the other officers of the
Company:
Name Age Position
---- --- --------
Harry Melkonian 47 President
Patrick J. Holmes 51 Executive Vice President, Chief
Financial Officer, Corporate
Secretary and Treasurer
Robert C. King 53 Vice President of Sales and
Marketing
Hayden Leason, Chairman of the Board and Chief Executive Officer
Mr. Leason became a director of the Company in July 1995 and was elected
Chairman of the Board in October 1996 and elected Chief Executive Officer in
November 1996. In 1965 Mr. Leason founded Filtertek Inc., a designer and
manufacturer of specialty filtration elements, which subsequently became a New
York Stock Exchange listed company. He served as Chairman and Chief Executive
Officer until 1992 when he sold his interest to Schawk Inc. Since 1992, Mr.
Leason has managed various private investments. Mr. Leason is a 1954 graduate of
Northwestern University where he received his Bachelor of Science degree in
Business Administration.
3
<PAGE>
James A. Gordon, Director
Mr. Gordon became a director of the Company in August 1992. Since January 1992,
Mr. Gordon has been President of Gordon Management, Inc., which is the general
partner of Edgewater Private Equity Fund L.P., a limited partnership formed for
investment purposes. In addition, Mr. Gordon has managed Focused Value Equity
portfolios since 1985. Since 1986, Mr. Gordon has been a member of the Board of
Directors of Bankers Trust Company (Iowa), and has served as Chairman of its
Trust and Investment Committee, as well as a member of both its Audit and Loan
Committees. He presently serves as a member of the Boards of Directors of the
following organizations: Grinnell College (also serving as Chairman of the
Investment Committee); IMNET, Inc.; SoftNet Systems, Inc.; HealthDesk, Inc.;
Cellular World Corp.; DAC Vision, Inc.; Microware Systems Corporation; Pride
Industries, Inc.; and Pangea, Inc. He is currently a Board member of the
National Committee for the Performing Arts of the Kennedy Center. Mr. Gordon
served as a member of the Board of Directors for Des Moines Art Center; Des
Moines Ballet; Des Moines Metro Opera; Governor's United Nations Board; Iowa
Society to Prevent Blindness; Des Moines Parent Teacher Association; Young
President's Organization; and Northwestern University Alumni Board.
Jon B. Victor, Director
Mr. Victor became a director of the Company in June 1995. Mr. Victor is the
Manager of Greenwich Ventures, LLC, which is the general partner of Greenwich
Ventures, LP and Vantage Ventures, CV, Investment Partnerships which he
organized in 1996. He began his career in the equity research and trust
departments of the Bank of New York. From 1978 through 1982 he worked for J. &
W. Seligman & Co., where he was responsible for offshore advisory relationships,
and was President of the firm's broker/dealer subsidiary. Mr. Victor founded
Security Capital Management, Inc., an investment advisory firm, in 1983, and
served as its President or Co-President until 1996. In 1992, Mr. Victor
co-founded Gordon Management, Inc., the general partner of Edgewater Private
Equity Fund, LP, and Edgewater Private Equity Fund II, LP. Mr. Victor is a 1973
magna cum laude graduate of Washington University and a 1977 graduate of the
George Washington University School of Law where he earned his J.D. cum laude
and completed his M.B.A. course work. Mr. Victor serves on the Board of
Directors of several private investment firms and acts as an independent
arbitrator for the National Futures Association.
Harry Melkonian, President
Mr. Melkonian joined the Company in June 1992 and was elected President in
November 1996. He served as General Manager of the Company's PIN photodiode
business from 1993 until November 1996. From 1989 until joining the Company, Mr.
Melkonian operated Melkonian Associates, a consulting firm that assisted the
Company in the acquisition of its subsidiary, Silicon Detector Corporation. From
1987 until 1989, he was Director of Operations at Simulaser Corporation; and for
six years previously, he held various operations level positions at Sensor
Technology, Inc. Mr. Melkonian holds a Bachelor of Science degree in Business
Administration from Northeastern University.
Patrick J. Holmes, Executive Vice President, Chief Financial Officer, Corporate
Secretary and Treasurer
Mr. Holmes joined the Company in August 1993 and was named Executive Vice
President in November 1996. From 1989 until joining the Company, Mr. Holmes was
a Division Controller for Textron, Inc. From 1985 until 1989, he was Chief
Accountant and Financial Operations Manager for two start-up companies of
Lockheed Corporation in Sunnyvale, CA. Previously, Mr. Holmes held senior
financial posts with General Dynamics and Datapoint Corporation. Mr. Holmes, who
is a Certified Public Accountant, received his degree in accounting, magna cum
laude, from the University of Missouri in St. Louis and is a past recipient of
the Missouri Society of CPAs Silver Medal.
Robert C. King, Vice President of Sales & Marketing
Mr. King joined the Company in December 1995. From 1992 until joining the
Company, Mr. King was Vice President, Sales and Marketing of Medical Materials
Corporation. From 1989 until 1992, he was Vice President, Market and Business
Development of PCO, a subsidiary of Corning Incorporated and an affiliate of
IBM. From
4
<PAGE>
1986 until 1989, he was Executive Vice President, Sales and Marketing of
Wangtek. Prior to 1986, Mr. King held sales and executive level positions for
Granger Associates, Q.T. Wiles and Associates, TRW Semiconductor and North
American Aviation. Mr. King holds a Bachelor of Science degree in Mechanical
Engineering, cum laude, from Ohio University in Athens, Ohio.
Directors serve annual terms until the next annual meeting of stockholders and
until their successors are elected and qualified. Officers serve at the pleasure
of the Board of Directors. Pursuant to an agreement between the Company and D.H.
Blair, entered into in connection with a private placement offering of the
Company's capital in 1992, D.H. Blair has the right, at its option through
August 10, 1997, to designate one director to the Board of Directors of the
Company. To date, it has not exercised its option.
Meetings and Committees of the Board of Directors
The Board of Directors held five meetings during the fiscal year ended March 30,
1997 and acted by unanimous consent on one occasion. The Board of Directors has
the following standing committees: Audit Committee and Compensation Committee.
The Audit Committee reviews the accounting principles, the controls and scope of
the audit practices of the Company, and makes reports and recommendations to the
Board of Directors on those matters and with respect to the independent auditor.
It met one time in fiscal 1997. The members of the Audit Committee are Mr.
Victor, Chairman, and Mr. Gordon.
The Compensation Committee was established to evaluate both Directors and
management compensation plans as well as the Company's stock option and
incentive plans. It met two times in fiscal 1997 and acted by unanimous written
consent on one occasion. The members of the Compensation Committee are Mr.
Victor, Chairman, and Mr. Gordon.
Compensation of Directors
Directors and Committee members do not receive fees for their services. Each of
the Directors who is not an employee of the Company is eligible for grants of
stock options upon their appointment to the Board of Directors under the 1991
Special Directors Stock Option Plan ("Directors' Plan") and on an annual basis
so long as they remain on the Board. On October 18, 1995, the Board approved a
resolution to suspend participation in the Directors' Plan until the resolution
is thereafter countermanded. The resolution did not affect any options
previously granted under the Directors' Plan. All Directors, including employee
Directors, are reimbursed for reasonable travel expenses incurred in connection
with their attending meetings of the Board of Directors and Committees.
APPROVAL OF 1997 EMPLOYEE STOCK OPTION PLAN OF ADVANCED PHOTONIX, INC.
The Board of Directors has adopted, subject to shareholder approval, and
recommends the adoption of the proposed 1997 Employee Stock Option Plan ("1997
Plan"), under which options may be granted for an aggregate of 1,000,000 shares
of Class A Common Stock prior to January 13, 2007. All employees of, and
consultants and advisors to, the Company and its subsidiaries are eligible to
participate in the 1997 Plan.
The following description of the 1997 Plan is qualified in its entirety by
reference to such 1997 Plan, a copy of which is attached to this Proxy Statement
as Exhibit 10.13 and is incorporated by reference herein. Attention is
particularly directed to the description therein of the prices, expiration dates
and other material conditions upon which the options may be granted and
exercised.
5
<PAGE>
The 1997 Plan provides, among other things, that options may be granted to
purchase shares of Class A Common Stock at a price per share fixed by a
committee (the "Committee") composed of two or more non-employee members of the
Board of Directors; provided, however, that in the case of an incentive stock
option ("ISO"), as defined by Section 422 of the Internal Revenue Code, as
amended, the exercise price shall not be less than 100% of the fair market value
of the Class A Common Stock on the date of the option grant (110% of such fair
market value in the case of optionees holding 10% or more of the total combined
voting rights of all classes of stock of the Company or its subsidiaries). The
Committee may determine the employees, consultants and advisors to whom options
are to be granted and the number of shares subject to each option. Options may
be exercised by the payment in full in cash or by the tendering of shares of
Class A Common Stock having a fair market value, as determined by the Committee,
equal to the option exercise grant. The Committee shall determine whether an
option granted under the Plan is intended to be an ISO, or whether such option
is intended not to be an ISO.
The principal federal income tax consequences of the issuance and granting of
options will be as follows:
Although an individual can receive an unlimited number of ISOs during any
calendar year, the aggregate fair market value (determined at the time of the
option grant) of the stock with respect to which ISOs first become exercisable
during any calendar year (under all of the Company's Plans) cannot exceed
$100,000. An optionee will not realize taxable income for federal income tax
purposes upon the exercise of an ISO provided he does not dispose of shares
acquired upon the exercise within two years from the date of grant or within one
year from the date of exercise. If these conditions are met, the Company will
not be entitled to a deduction in connection with the grant or the exercise of
the option. The net capital gain realized on the sale or disposition of the
shares is subject to tax at the same rate as ordinary income. If the optionee
disposes of the shares within the two year or one year periods mentioned above,
he will realize taxable ordinary income in an amount equal to any excess of the
fair market value of the shares on the date of exercise (or the amount realized
on disposition, if less) over the option price, and the Company will be allowed
a corresponding deduction as the case of a non-ISO.
The foregoing is only a summary of the effect of federal income taxation upon
the Optionee and the Company with respect to the grant and exercise of options
under the Employee Plan, does not purport to be complete, and does not discuss
the income tax laws of any state or foreign country in which an optionee may
reside.
The Board of Directors is of the opinion that adoption of the proposed 1997 Plan
is in the best interests of the Company in that it will aid the Company in
securing and retaining competent management personnel and other employees by
making it possible to offer them an opportunity to acquire stock of the Company
and thereby increase their proprietary interest in the Company's success. The
Company is also of the opinion that affording to the Committee the right to
determine the employees, consultants and advisors to be granted options and the
number of shares as to which options will be granted, will permit the Board of
Directors to weigh the advantages and disadvantages at any particular time and
take into special circumstances with respect to attracting or retaining
particular persons.
EXECUTIVE COMPENSATION
The following table sets forth compensation paid or accrued by the Company for
services rendered to the Company's Chief Executive Officer and to each of the
other executive officers of the Company whose cash compensation exceeded
$100,000 for services rendered during the last three fiscal years.
6
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
-------------------------- -------------------------- --------
Securities
Name and Other Annual Restricted StockUnderlying LTIP All Other
Principal Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)(1)
- -------- ---- --- --- --- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hayden Leason 1997 - - - - - - -
Chairman of the Board and 1996 - - - - 25,000 - -
Chief Executive Officer(2) 1995 - - - - - - -
- ---------------------------------------------------------------------------------------------------------------------
James W. Ward 1997 109,000 - - - - - 55,700(3)
Chairman of the Board, 1996 173,000 25,000 - - - - 4,700
President and Chief 1995 142,000 - - - 150,000(4) - 3,600
Executive Officer(3)
- ---------------------------------------------------------------------------------------------------------------------
Harry Melkonian, 1997 135,000 - - - 140,000 - 3,900
President5 1996 110,000 15,000 - - - - 3,300
1995 110,000 15,000 - - 60,000 - 3,300
- ---------------------------------------------------------------------------------------------------------------------
Patrick J. Holmes 1997 125,000 - - - 70,000 - 3,300
Executive Vice President, 1996 125,000 15,000 - - - - 3,800
CFO, Secretary and Treasure1995 125,000 - - - 80,000 - 3,800
- ---------------------------------------------------------------------------------------------------------------------
Robert King 1997 125,000 18,000 - - 20,000 - 4,500
Vice President of Sales 1996 42,000 8,000 - - 60,000 - 900
1995 - - - - - - -
- ---------------------------------------------------------------------------------------------------------------------
<FN>
1 Represents amounts paid by the Company on behalf of the named person in connection with the Company's 401(k) Retirement Plan
accept for $51,000 paid to Mr. Ward (see note 3 below).
2 Mr. Leason became Chairman of the Board in October 1996 and Chief Executive Officer in November 1996.
3 Mr. Ward terminated his employment in October 1996. Pursuant to an arrangement with the Company, amounts paid to him subsequent
to the termination of his employment are included in All Other Compensation.
4 Does not include 150,000 option shares granted in May 1994 which were canceled in January 1995. See "Ten-Year Option
Repricings."
5 Mr. Melkonian became President in November 1996.
</FN>
</TABLE>
Employment Agreements
The Company has employment and termination agreements with certain employees,
including Messrs. Melkonian and Holmes under which the employees may receive
severance pay through the end of the term of the contract or up to twelve
months.
James W. Ward terminated his employment on October 16, 1996 and remained as a
Director. Pursuant to an agreement with the Company, Mr. Ward will continue to
be paid his salary through September 16, 1997, subject to certain reductions for
his other earnings.
Stock Options
Stock options are granted by a committee (the "Committee") composed of two or
more non-employee members of the Board of Directors under the Company's 1990 and
1997 Stock Option Plans (the"Plans") to aid in the retention of key employees
and consultants and to align their interests with those of the stockholders.
Stock options have value for an employee or consultant only if the price of the
Company's stock increases above the fair market value on the grant date and the
employee or consultant remains in the Company's employ for the period required
for the stock option to be exercisable, thus providing an incentive to remain in
the Company's employ. In addition, stock options directly link a portion of an
employee's or consultant's compensation to the interests of stockholders by
providing an incentive to maximize stockholder value.
The Committee shall determine whether an option granted under the Plans is
intended to be an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, or whether such option is
intended not to be an incentive stock option. The Plans are administered in all
respects by the
7
<PAGE>
Committee. The Committee may determine the employees and consultants to whom
options are to be granted and the number of shares subject to each option. Under
the terms of the Plans, all employees of and consultants to, the Company or
subsidiaries of the Company are eligible for option grants. The option exercise
price of options granted under the Plans is fixed by the Committee but must be
no less than 100% of the fair market value of the shares of Common Stock subject
to the option at the time of grant, except that in the case of a 10% Holder, the
exercise price for incentive stock options must be no less than 110% of said
fair market value. Options may be exercised by payment in full in cash or by
tendering of shares of Class A Common Stock having a fair market value, as
determined by the Committee, equal to the option exercise price. Options granted
under the Plans may not be exercised more than ten years after the date of
grant, five years in the case of an incentive stock option granted to a 10%
Holder. All currently outstanding options have a term of ten years.
The tables set forth below certain information concerning stock options granted
to and exercised by the persons named in the Summary Compensation Table during
the last fiscal year and unexercised stock options held by such persons at the
end of such fiscal year. No options were exercised during the last fiscal year.
<TABLE>
Option Grants in Fiscal 1997
Individual Grants
-----------------
<CAPTION>
Number of Securities % of Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name(1) Granted (#) Fiscal Year ($/Sh) Date
- ------- ----------- ----------- ------ ----
<S> <C> <C> <C> <C>
Hayden Leason - - - -
Harry Melkonian 140,000 28% $2.50 1/14/07
Patrick J. Holmes 70,000 14% $2.50 1/14/07
Robert C. King 20,000 4% $2.50 1/14/07
<FN>
1 See "Summary Compensation Table" and Item 10 "Directors and Executive Officers" for principal position.
</FN>
</TABLE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<CAPTION>
Value of Unexercised
Number of Securities Underlying In-the-Money Options at
Shares Acquired Unexercised Options at Fiscal Year End (#) (Fiscal Year End ($)
Name(1) on Exercise (#) Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Hayden Leason - - 25,000/0 -
James W. Ward - - 90,000/60,000 33,750/22,500
Harry Melkonian - - 88,000/112,000 22,500/0
Patrick J. Holmes - - 74,000/76,000 18,000/4,500
Robert C. King - - 28,000/52,000 -
- -------------------------- ----------------- ----------------- --------------------------------------------------------------
<FN>
1 See "Summary Compensation Table" and Item 10 "Directors and Executive Officers" for principal position.
</FN>
</TABLE>
On January 18, 1995 the Board of Directors canceled outstanding options to
purchase an aggregate of 365,000 shares of the Company's Class A Common Stock
and granted to the holders of such options new options to purchase an equivalent
number of shares. These options were the only options of the Company which have
been issued coincident with the cancellation of outstanding options or otherwise
repriced since the Company's inception through April 2, 1995. The Board of
Directors concluded that the subsequent decrease in the market price for the
Company's Class A Common Stock below the exercise price for the canceled options
was due to factors which were principally not all within the realm of
responsibility of the option holders and that the options no longer provided the
incentive to such option holders to perform on behalf of the Company in the
manner contemplated by the Board when the canceled options were initially
granted. On the date of the issuance of the new options and the cancellation of
the outstanding options, the closing sale price for the Company's Class A
8
<PAGE>
Common Stock as reported on the American Stock Exchange was $1.56. The following
table sets forth certain information regarding the aforementioned canceled and
new options:
<TABLE>
Ten-Year Option Repricings
--------------------------
<CAPTION>
Number of Securities Market Price of Exercise Price at Length of Original
Underlying Options Stock at Time of Time of New Option Term Remaining at
Repriced or Repricing or Repricing or Exercise Date of
Name(1) Date Amended (#) Amendment ($) Amendment ($) Price ($) Repricing or Amendment
- ---- ---- ----------- ------------- ------------- --------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
James W. Ward 1/18/95 150,000 1.56 3.25 1.56 9 years
Harry Melkonian 1/18/95 60,000 1.56 3.62 1.56 7 years
Patrick J. Holmes 1/18/95 30,000 1.56 4.87 1.56 9 years
30,000 1.56 4.50 1.56 9 years
- -------------------- ---------- -------------------- ----------------- ---------------- ---------- -------------------------
<FN>
1 See "Summary Compensation Table" and Item 10 "Directors and Executive Officers" for principal position.
</FN>
</TABLE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen, independent auditors, audited the Company's financial
statements for fiscal years 1995-1997 and has been selected to audit the
Company's financial statements for fiscal year 1998. Representatives of Arthur
Andersen are expected to be present at the Annual Meeting to respond to
appropriate questions from stockholders and to make a statement if they desire
to do so.
EXPENSES
The entire cost of preparing, assembling, printing and mailing the Proxy
Statement, the enclosed Proxy, Annual Report and other materials, and the cost
of soliciting Proxies with respect to the Annual Meeting, will be borne by the
Company. The Company will request banks and brokers to solicit their customers
who beneficially own shares listed of record in names of nominees, and will
reimburse those banks and brokers for the reasonable out-of-pocket expenses of
such solicitations. The solicitation of Proxies by mail may be supplemented by
telephone and telegram by officers and other regular employees of the Company,
but no additional compensation will be paid to such individuals.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders in 1998 must be received at its principal executive office no later
than April 22, 1998.
By Order of the Board of Directors
/s/ Patrick J. Holmes
Camarillo, California Patrick J. Holmes
July 25, 1997 Secretary
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS PROXY
STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 30, 1997 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, BUT EXCLUDING EXHIBITS). SUCH REQUESTS SHOULD BE DIRECTED TO
CORPORATE SECRETARY, 1240 AVENIDA ACASO, CAMARILLO, CALIFORNIA 93012.
9
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ADVANCED PHOTONIX, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
AUGUST 21, 1997
The undersigned hereby constitutes and appoints Hayden Leason and Jon B. Victor
or any one of them, as proxies, with full power of substitution, to vote all
share of stock of Advanced Photonix, Inc. (the "Company") which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held at the Westlake Village Inn, 31943 Agoura
Road, Westlake Village, California, at 10:00 o'clock A.M., Pacific Time, on
August 21, 1997, or at any adjournments or postponements thereof:
(1) Election of Directors
FOR all nominees listed below (except as marked to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
James A. Gordon, Hayden Leason, Jon B. Victor
(Instructions: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the above list.)
(2) To approve the Advanced Photonix Inc. 1997 Stock Option Plan
Vote for / / Vote against / / Vote withheld / /
(3) To transact such other business as may properly come before the meeting or
any adjournment or postponements thereof.
(PLEASE SIGN ON REVERSE SIDE)
- --------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED, OR IF NO
SPECIFICATIONS ARE MADE, WILL BE VOTED BY THE PROXIES FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR, FOR PROPOSAL NO. 2 AND TO USE THEIR DISCRETION TO
VOTE ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND ANNUAL
REPORT FURNISHED HEREWITH.
Dated:___________________,1997
_________________________
Signature of Stockholder
_________________________
Signature of Stockholder
NOTE: When signing as attorney-in-fact, executor, administrator, trustee or
guardian, please add your title as such, and if signer is a corporation, please
sign with full corporate name by duly authorized officer or officers and affix
the corporate seal. Where stock is issued in the name of two or more prersons,
all such persons should sign. Please date, sign and return in the enclosed
envelope promptly.
EXHIBIT 10.13
1997 EMPLOYEE STOCK OPTION PLAN
OF
ADVANCED PHOTONIX, INC.
(As adopted by the Board of Directors as of January 14, 1997)
1. The Plan. This 1997 Employee Stock Option Plan (the "Plan") is intended to
encourage ownership of stock of Advanced Photonix, Inc. (which together with its
subsidiaries is hereinafter referred to as the "Corporation") by specified
employees of, and consultants and advisors to, the Corporation and its
subsidiaries and to provide additional incentive for them to promote the success
of the business of the Corporation.
2. Stock Subject to the Plan. Except as otherwise provided herein, the total
number of shares of Class A Common Stock, par value $.001 per share, of the
Corporation (the "Stock") which may be issued pursuant to the exercise of
options granted hereunder ("Options") shall be 1,000,000. Such shares of Stock
may be in whole or in part, either authorized and unissued shares or treasury
shares as the Board of Directors of the Corporation (the "Board") shall from
time to time determine. If an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares covered thereby
shall (unless the Plan shall have been terminated) again be available for
Options under the Plan.
3. Administration of the Plan. The Plan shall be administered by a committee
(the "Committee") composed of two or more non-employee members of the Board
which shall have plenary authority, in its discretion, to determine the
employees of the Corporation and its subsidiaries to whom Options shall be
granted ("Optionees"), the number of shares to be subject to each Option
(subject to the provisions of Paragraph 2), the option exercise price (the
"Exercise Price") (subject to the provisions of Paragraph 7), the vesting
schedule of each option, whether an Option is intended to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code (an "ISO")
or whether it is intended not to be an ISO (a "Non ISO") and the other terms of
each Option. The Committee shall hold meetings at such times and places as it
may determine. Acts approved at a meeting by a majority of the members of the
Committee or acts approved in writing by the unanimous consent of the members of
the Committee shall be the valid acts of the Committee. The Committee shall have
plenary authority, subject to the express provisions of the Plan, to interpret
the Plan, to prescribe, amend and rescind any rules and regulations relating to
the Plan and to take such other action in connection with the Plan as it deems
necessary or advisable. The interpretation and construction by the Committee of
any provisions of the Plan or of any Option granted thereunder shall be final
and no member of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted thereunder by
the Committee.
4. Employees Eligible for Options. All employees of and consultants and advisors
to, the Corporation shall be eligible for Options. In making the determination
as to persons to whom Options shall be
<PAGE>
granted, the number of shares to be covered by such Options, and the other terms
and conditions of the Option, the Committee shall take into account their
duties, their present and potential contributions to the success of the
Corporation and such other factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan.
5. Term of Plan. The Plan shall terminate on, and no Options shall be granted
after, January 13, 2007 provided that the Committee may at any time terminate
the Plan prior thereto.
6. Maximum Option Grant. Subject to the provisions of Section 2 above, the
number of shares of Stock for which any individual may be granted Options shall
be unlimited.
7. Exercise Price. Each Option shall state the exercise price, which shall be
such price as the Committee in its discretion may determine provided, however,
that in the case of ISOs, the exercise price shall be not less than 100% of the
fair market value of the Stock on the date of the granting of the Option, nor
less than 110% of such fair market value in the case of an ISO granted to an
individual who, at the time the Option is granted, is a 10% Holder (as
hereinafter defined). The fair market value of shares of Stock shall be
determined by the Committee and shall be (i) the closing price of the Stock on
the date of the granting of the Option if the Stock is traded on a regulated
securities exchange, or (ii) if not traded on such an exchange, the mean between
the high bid and low asked prices on such date as reported by a recognized
over-the-counter reporting source.
8. Term of Options. The term of each Option granted under this Plan shall be for
a maximum of ten years from the date of granting thereof, and a maximum of five
years in the case of an ISO granted to a 10% Holder, but may be for a lesser
period or be subject to earlier termination as hereinafter provided.
9. Exercise of Options. Except as otherwise provided by the Committee, an Option
may be exercised from time to time as to any part or all of the Stock covered
thereby, provided, however, that an Option may not be exercised (a) as to less
than 100 shares at any time (or as to less than the remaining shares then
purchasable under the Option, if less than 100 shares), and (b) prior to the
expiration of at least six months from the date of grant. The Exercise Price
shall be paid in full at the time of the exercise of an Option (i) in cash or
(ii) by the transfer to the Corporation of shares of its Stock with a fair
market value (as determined by the Committee) equal to the purchase price of the
Stock issuable upon exercise of such Option. The holder of an Option shall not
have any rights as a stockholder with respect to the Stock issuable upon
exercise of an Option until certificates for such Stock shall have been
delivered to him after the exercise of the Option.
10. Non-Transferability of Options. Except as provided in the following
sentence, an Option shall not be transferable otherwise than by will or the laws
of descent and distribution and is exercisable during the lifetime of the
employee only by him or his guardian or legal representative. Options will be
transferable to members of an Optionee's immediate family, including trusts for
the benefit of such family members and partnerships in which such family members
are the only partners ("Permitted Transferees"). A transferred Option would be
subject to all of the same terms and conditions as if such Option had not been
transferred.
<PAGE>
11. Form of Option. Each Option granted pursuant to the Plan shall be evidenced
by an agreement (the "Option Agreement") which shall clearly identify the status
of the Options granted thereunder (i.e., whether an ISO or Non-ISO) and which
shall be in such form as the Committee shall from time to time approve. The
Option Agreement shall comply in all respects with the terms and conditions of
the Plan and may contain such additional provisions, including, without
limitation, restrictions upon the exercise of the Option, as the Committee shall
deem advisable.
12. Termination of Options. No Option shall be exercisable after the first to
occur of the following:
a. Expiration of the Option term specified in the Option, which in no event
shall exceed (A) ten years from the date of grant, or (B) in the case of an
ISO granted to an Optionee who is a 10% Holder, five years from the date of
the grant;
b. Six months following the date the Optionee ceases to be an employee of the
Company for any reason; or
c. The date, if any, set by the Committee to be an accelerated expiration date
pursuant to the provisions of Paragraph 17 below.
13. Cessation of Employment. For purposes of the Plan, the termination of the
contractual relationship between the Corporation and a consultant or advisor
shall be deemed a termination or cessation of employment.
14. Limit on Exercise of Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time Options are granted) of the Shares with respect
to which Incentive Stock Options may first become exercisable by an Optionee in
any one calendar year under the Plan and under any other plan of the Corporation
or an affiliate of the Corporation, shall not exceed $100,000. The limits
imposed by this Paragraph 9 shall apply only to Incentive Stock Options granted
under the Plan, and not to any other Options. In the event an individual
receives an Option intended to be an Incentive Stock Option which is
subsequently determined to have exceeded the limit set forth above, or if any
individual is granted an Option intended to be an ISO that first becomes
exercisable in a calendar year for Option Shares that have an aggregate fair
market value (determined as of the time the Options are granted) exceeding the
limits set forth above, the Options for Option Shares in excess of the limit
shall be treated as non-ISOs.
15. Stock Dividends or Recapitalization. In the event of a stock dividend paid
in shares of the class of stock subject to any Option outstanding hereunder, or
recapitalization, reclassification, split-up or combination of shares with
respect to said class of stock, the Committee shall have the power to make
appropriate adjustments of the exercise price under such option and of the
number and kind of shares as to which such Option is then exercisable, to the
end that the Optionee's proportionate interest shall be maintained as before the
occurrence of such event, and in any case an appropriate adjustment shall
<PAGE>
also be made in the total number and kind of shares of stock reserved for the
future granting of options under this Plan. Any such adjustment made by the
Committee pursuant to this Plan shall be binding upon the holders of all
unexpired option rights outstanding hereunder. Anything in the foregoing to the
contrary notwithstanding, no such adjustment shall be made with respect to any
option which is an ISO without the consent of the Optionee, if such adjustment
would be a modification of such option within the meaning of subsection 425(h)
of the Internal Revenue Code.
16. Mergers, Consolidation, Reorganization, Etc. If the Corporation shall become
a party to any corporate merger, agreement for the sale of substantially all of
its assets and property, separation or reorganization, the Committee shall have
the power to make appropriate arrangements, which shall be binding upon the
holders of unexpired option rights, for the substitution of new options for any
unexpired options then outstanding under this Plan, or for the assumption of any
such unexpired options, which in the opinion of the Committee maintain, to the
maximum extent practicable, the Optionee's proportionate interest as before the
occurrence of such event; provided, however, that such arrangements shall meet
the requirements of subsections 422A (with respect to ISOs) and 425(h)(a) of the
Internal Revenue Code.
17. Liquidation or Dissolution of the Corporation.
a. In the event of the dissolution or liquidation of the Corporation, whether
voluntary or otherwise, and unless in connection therewith the obligations
of the Corporation under all outstanding options granted under this Plan
have been assumed or replaced in accordance with Section 16 hereof, all
options outstanding under this Plan shall be exercised, if at all, within
the ninety day period commencing on the date specified in subparagraph (b)
below and shall be exercisable only to the extent of, and with respect to,
any or all shares for which they could have been exercised immediately
prior to such date. All options not exercisable prior to the date specified
in subparagraph (b) shall terminate upon such date, and all options
exercisable immediately prior to such date shall, to the extent not
exercised within the ninety-day period commencing on such date, terminate
at the end of such ninety-day period.
b. The date specified in this subparagraph (b) is the date of the earliest to
occur of the following events:
i. The entry, in a court having jurisdiction, of an order that the
corporation be liquidated or dissolved;
ii. Adoption by the shareholders of the Corporation of a resolution
resolving that the corporation be liquidated or dissolved voluntarily;
or
iii. Adoption by the shareholders of the Corporation of a resolution to the
effect that the Corporation cannot, by reason of its liabilities,
continue its business and that it is advisable to liquidate or
dissolve the Corporation.
<PAGE>
18. Shareholder and Stock Exchange Approval. This Plan is subject to and no
Options shall be exercisable hereunder until after the approval by the holders
of a majority of the Stock of the Corporation voting at a duly held meeting of
the stockholders of the Corporation within twelve months after the date of the
adoption of the Plan by the Board.
19. Amendment of the Plan. The Board shall have complete power and authority to
modify or amend the Plan (including the form of Option Agreement) from time to
time in such respects as it shall deem advisable; provided, however, that the
Board shall not, without the approval of the votes represented by a majority of
the outstanding Stock of the Corporation present or represented at a meeting
duly held in accordance with the applicable laws of the Corporation's
jurisdiction of incorporation and entitled to vote at a meeting of stockholders
or by the written consent of stockholders owning stock representing a majority
of the votes of the corporation's outstanding stock, (i) increase the maximum
number of shares which in the aggregate are subject to Options under the Plan
(except as provided by Paragraph 15), (ii) extend the term of the Plan or the
period during which Options may be granted or exercised, (iii) reduce the
Exercise Price, in the case of ISOs below 100% (110% in the case of an ISO
granted to a 10% Holder) of the fair market value of the Stock issuable upon
exercise of Options at the time of the granting thereof, other than to change
the manner of determining the fair market value thereof, (iv) increase the
maximum number of shares of Stock for which any employee may be granted Options
under the Plan pursuant to Paragraph 6, (v) modify the requirements as to
eligibility for participation in the Plan, or (vi) with respect to options which
are ISOs, amend the plan in any respect which would cause such options to no
longer qualify for ISO treatment pursuant to the Internal Revenue Code. No
termination or amendment of the Plan shall, without the consent of the
individual Optionee, adversely affect the rights of such Optionee under an
Option theretofore granted to him or under such Optionee's Option Agreement.
20. Taxes. The Corporation may make such provisions as it may deem appropriate
for the withholding of any taxes which it determines is required in connection
with any Options granted under the Plan. The Corporation may further require
notification from the Optionees upon any disposition of Stock acquired pursuant
to the exercise of Options granted hereunder.
21. Code References and Definitions. Whenever reference is made in this Plan to
a section of the Internal Revenue Code, the reference shall be to said section
as it is now in force or as it may hereafter be amended by any amendment which
is applicable to this Plan. The term "subsidiary" shall have the meaning given
to the term "subsidiary corporation" by Section 425(f) of the Internal Revenue
Code. The term "10% Holder" shall mean any person who, for purposes of Section
422 of the Internal Revenue Code owns more than 10% of the total combined voting
power of all classes of stock of the employer corporation or of any subsidiary
corporation.
