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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ALLIED HEALTHCARE PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BARRY F. BAKER
VICE PRESIDENT--FINANCE, CHIEF FINANCIAL OFFICER AND SECRETARY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
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>
October 4, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders which will be held at the Mission Inn, 3649 7th Street, Riverside,
California 92501 at 10:00 a.m., Pacific Time, on Thursday, November 14, 1996. On
the following pages you will find the formal Notice of Annual Meeting and Proxy
Statement.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted at the meeting. Accordingly,
please date, sign and return the enclosed proxy card promptly.
We hope that you will attend the meeting and look forward to seeing
you there.
Sincerely,
/s/ Dennis W. Sheehan
----------------------------------
Dennis W. Sheehan
CHAIRMAN OF THE BOARD
/s/ James C. Janning
----------------------------------
James C. Janning
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
ALLIED HEALTHCARE PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, NOVEMBER 14, 1996
To the Stockholders of
Allied Healthcare Products, Inc.:
The Annual Meeting of Stockholders of Allied Healthcare Products,
Inc., a Delaware corporation (the "Company"), will be held at the Mission Inn,
3649 7th Street, Riverside, California 92501 on Thursday, November 14, 1996, at
10:00 a.m., Pacific Time, for the following purposes:
(1) To elect seven directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and
qualified;
(2) To approve or disapprove amendments to the Company's
1994 Employee Stock Option Plan;
(3) To ratify or reject the appointment of Price Waterhouse
LLP as independent auditors of the Company for the fiscal year
ending June 30, 1997; and
(4) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
Only stockholders of record at the close of business on September
27, 1996 are entitled to notice of and to vote at the meeting. A list of
stockholders of the Company at the close of business on September 27, 1996 will
be available for inspection during normal business hours from October 31 through
November 13, 1996 at the offices of the Company at 2085 Rustin Avenue,
Riverside, California 92507 and will also be available at the meeting.
By Order of the Board of Directors,
/s/ Barry F. Baker
----------------------------------
Barry F. Baker
VICE PRESIDENT - FINANCE, CHIEF
FINANCIAL OFFICER AND SECRETARY
St. Louis, Missouri
October 4, 1996
- --------------------------------------------------------------------------------
PLEASE FILL OUT, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE
ACCOMPANYING POSTAGE PAID ENVELOPE, EVEN IF YOU PLAN TO ATTEND THE MEETING. YOU
MAY REVOKE YOUR PROXY IN WRITING, OR AT THE ANNUAL MEETING IF YOU WISH TO VOTE
IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
ALLIED HEALTHCARE PRODUCTS, INC.
1720 SUBLETTE AVENUE
ST. LOUIS, MISSOURI 63110
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, NOVEMBER 14, 1996
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Allied
Healthcare Products, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held at 10:00
a.m., Pacific Time, Thursday, November 14, 1996, or at any adjournment thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting of Stockholders. The Annual Meeting will be held at the Mission Inn,
3649 7th Street, Riverside, California 92501. The proxy is revocable at any time
prior to its exercise by delivering to the Company a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.
This proxy material is first being sent to stockholders on or about
October 4, 1996.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on Friday, September
27, 1996 are entitled to notice of and to vote at the Annual Meeting. As of the
close of business on that date, there were outstanding and entitled to vote
7,796,682 shares of common stock, $.01 par value ("Common Stock"), each of which
is entitled to one vote. No cumulative voting rights exist under the Company's
Amended and Restated Certificate of Incorporation. For information regarding the
ownership of the Company's Common Stock by holders of more than five percent of
the outstanding shares and by the management of the Company, see "Security
Ownership of Certain Beneficial Owners and Management."
For purposes of determining the presence of a quorum and counting
votes on the matters presented, shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast, at the Annual
Meeting. Under Delaware law and the Company's By-laws, the election of directors
at the Annual Meeting will be determined on the basis of a percentage of votes
cast at the Annual Meeting and requires the affirmative vote of the holders of a
majority of the Company's Common Stock represented and voting at the Annual
Meeting for approval. All other matters expected to be submitted for
consideration at the Annual Meeting require the affirmative vote of the holders
of a majority of the Company's Common Stock represented and voting at the Annual
Meeting for approval.
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of a single class. The
directors are elected at the Annual Meeting of the Stockholders of the Company
and each director elected holds office until his or her successor is elected and
qualified. The Board currently consists of seven members. The stockholders will
vote at the 1996 Annual Meeting for the election of seven directors for the
one-year term expiring at the Annual Meeting of Stockholders in 1997. There are
no family relationships among any directors or executive officers of the
Company.
The persons named in the enclosed proxy will vote for the election
of the nominees named below unless authority to vote is withheld. All nominees
have consented to serve if elected. In the event that any of the nominees should
be unable to serve, the persons named in the proxy will vote for such substitute
nominee or nominees as they, in their discretion, shall determine. The Board of
Directors has no reason to believe that any nominee named herein will be unable
to serve.
The Board of Directors recommends voting "FOR" each of the nominees
named below.
The following material contains information concerning the nominees
for election as Directors.
<TABLE>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
<S> <C> <C> <C> <C> <C> <C>
David A. Gee .................. 68 President-Emeritus of The Jewish May 1991
Hospital of St. Louis, St. Louis,
Missouri
Samuel A. Hamacher ........... 44 Executive Vice President of May 1992
Harbour Group Industries, Inc.,
St. Louis, Missouri
James C. Janning ............. 49 President and Chief Executive May 1992
Officer of the Company, St.
Louis, Missouri and President of
Harbour Group Ltd., St. Louis,
Missouri
Robert E. Lefton ............. 65 President and Chief Executive August 1992
Officer of Psychological
Associates, Inc., St. Louis,
Missouri
Donald E. Nickelson .......... 63 Vice Chairman of Harbour Group May 1992
Industries, Inc., St. Louis,
Missouri
William A. Peck ............. 63 Executive Vice Chancellor for April 1994
Medical Affairs and Dean, School
of Medicine, Washington
University, St. Louis, Missouri
Dennis W. Sheehan ........... 62 Chairman of the Board of the April 1991
Company, St. Louis, Missouri and
Chairman of the Board, President
and Chief Executive Officer of
AXIA Incorporated, Oak Brook,
Illinois
</TABLE>
Except as set forth below, each of the nominees has been engaged in
his principal occupation described above during the past five years.
Mr. Gee has been President-Emeritus of The Jewish Hospital of St.
Louis since January 1991, and served as its President from 1978 to 1990.
Mr. Hamacher has been the Executive Vice President of Harbour Group
Industries, Inc. (an affiliate of Fox Family Harbour Group Fund I Investment
L.P. ("Harbour Group") which provides corporate development services to
affiliates of Harbour Group), in St. Louis, Missouri, in charge of corporate
development since January 1992. From January 1988 to January 1992, he was the
Vice President - Finance of Harbour Group Ltd. (an affiliate of Harbour Group
which provides operations management services to manufacturing affiliates of
Harbour
<PAGE>
Group), in St. Louis, Missouri. Mr. Hamacher currently serves as a director of
DT Industries, Inc. (a manufacturer of automated production equipment).
Mr. Janning has served as President and Chief Executive Officer
of the Company since May 1996 and as President of Harbour Group Ltd. since
January 1992. Mr. Janning holds various executive positions with operating
companies owned by affiliates of Harbour Group Ltd. Mr. Janning was previously
the President and Chief Executive Officer of the Company from July 1993 to
August 1994. From May 1988 to January 1992, Mr. Janning was Group President
and/or Chief Operating Officer of Harbour Group Ltd. and has served as Group
President of Harbour Group II Management Co. (an affiliate of Harbour Group
which is the general partner of a private investment fund) and President of HGM
III Co. (an affiliate of Harbour Group which is the general partner of a private
investment fund) since January 1990 and December 1993, respectively. Mr. Janning
was previously a director of the Company from April 1987 until April 1991 and he
currently serves as a director of Greenfield Industries, Inc. (a manufacturer of
cutting tools) and as a director and Chairman of the Board of DT Industries,
Inc.
Dr. Lefton has been the President and Chief Executive Officer of
Psychological Associates, Inc., an international consulting, training and
development firm headquartered in St. Louis, Missouri, since 1958. He presently
serves as a director of Stifel Financial Corp., Wave Technology, Inc. and
Greenfield Industries, Inc.
Mr. Nickelson has been the Vice Chairman of Harbour Group
Industries, Inc. in St. Louis, Missouri since 1991. From 1988 to 1990, he served
as President of PaineWebber Group, Inc. (an investment banking and brokerage
firm). Mr. Nickelson currently serves as a trustee of Corporate Property
Associates 10 and Corporate Property Associates 11, two public real estate
investment trusts located in New York, New York, and Mainstay Mutual Funds, as a
director of DT Industries, Inc., Sedgwick James of New York and Sugen Inc. and
as a director and Chairman of the Board of Greenfield Industries, Inc.
Dr. Peck has served as Executive Vice Chancellor for Medical Affairs
since 1993, and Dean of the School of Medicine since 1989, at Washington
University, St. Louis, Missouri. Dr. Peck currently serves as a director of
Boatmen's Trust Company, Reinsurance Group of America, Angelica Corporation and
Hologic Corporation.
Mr. Sheehan has been Chairman of the Board of the Company since
November 1992 and Chairman of the Board, President and Chief Executive Officer
of AXIA Incorporated, a privately-owned manufacturer of various commercial and
industrial products, with headquarters in Oak Brook, Illinois, since 1984. Mr.
Sheehan presently serves as a director of the Chamber of Commerce of the United
States of America, Greenfield Industries, Inc. and Bliss & Laughlin Industries,
Inc.
BOARD MEETINGS-COMMITTEES OF THE BOARD
The Board of Directors of the Company held twelve meetings during
the fiscal year ended June 30, 1996. The Board of Directors presently maintains
an Executive Committee, a Compensation Committee, an Audit Committee and a
Nominating Committee.
The Executive Committee consists of Messrs. Gee, Hamacher, Janning,
Nickelson and Sheehan. This committee exercises all powers of the Board of
Directors, to the extent permitted by law, between meetings of the Board. The
Executive Committee held four meetings during the fiscal year ended June 30,
1996.
The Compensation Committee consists of Messrs. Gee, Nickelson and
Sheehan. This committee reviews and approves the Company's executive
compensation policy, administers the Company's incentive compensation bonus plan
and makes recommendations concerning the Company's employee benefit policies and
stock option plans in effect from time to time. The Compensation Committee held
four meetings during the fiscal year ended June 30, 1996.
The Audit Committee consists of Messrs. Hamacher, Peck and Sheehan.
This committee recommends engagement of the Company's independent auditors and
is primarily responsible for approving the services performed by the Company's
independent auditors and for reviewing and evaluating the Company's accounting
principles and its systems of internal accounting controls. The Audit Committee
held three meetings during the fiscal year ended June 30, 1996.
<PAGE>
The Nominating Committee consists of Messrs. Gee, Janning and
Lefton. This committee recommends nominees to fill vacancies on the Board of
Directors. The Nominating Committee held no meetings during the fiscal year
ended June 30, 1996. The Nominating Committee will consider nominees submitted
by stockholders for inclusion on the recommended list of nominees submitted by
the Company and voted on at the Annual Meeting of Stockholders in 1997 if such
nominations are submitted in writing to the Company's headquarters Attention:
Nominating Committee, no later than June 6, 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following table sets forth information regarding all persons
known to the Company to be the beneficial owners of more than five percent of
the Company's Common Stock as of September 27, 1996.
<TABLE>
SHARES OWNED PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OUTSTANDING SHARES
<S> <C> <C>
Sam Fox (1) ................................... 1,375,834 17.65%
7701 Forsyth Boulevard, Suite 600
Clayton, MO 63105
T. Rowe Price Associates, Inc. (2) ............ 630,500 8.09
100 E. Pratt Street
Baltimore, MD 21202
Heartland Advisors, Inc. (3) .................. 597,500 7.66
790 North Milwaukee Street
Milwaukee, WI 53202
Robert Fleming, Inc. (4) ...................... 516,400 6.62
320 Park Avenue, 11th Floor
New York, NY 10022
John D. Weil (5) .............................. 500,300 6.42
200 North Broadway
Suite 825
St. Louis, Missouri 63102
Pioneering Management Corporation (6) ......... 464,300 5.96
60 State Street
Boston, MA 02109
Schwerin Boyle Capital Management, Inc. (7) .. 434,150 5.57
1391 Main Street
Springfield, MA 01103
<FN>
- ------------
(1) Includes shares beneficially owned by Mr. Fox in the following capacities:
1,102,182 shares owned by Fox Family Harbour Group Fund I Investment L.P.,
a Delaware limited partnership of which Mr. Fox is a general partner;
61,761 shares owned by Fox Family Foundation, a Missouri trust for which
Mr. Fox serves as a trustee; and 211,891 shares owned by Mr. Fox directly.
Excludes 2,570 shares owned by Mr. Fox's wife. Information obtained from
Amendment No. 2 to Schedule 13G dated February 10, 1995 filed with the
Securities and Exchange Commission by Mr. Fox.
(2) Information obtained from a Schedule 13G dated February 14, 1996 filed
with the Securities and Exchange Commission by T. Rowe Price Associates,
Inc., as supplemented by a Form 13F for the period ended March 31, 1996.
(3) Information obtained from a Form 13F for the period ended June 30, 1996
filed with the Securities and Exchange Commission by Heartland Advisors,
Inc.
<PAGE>
(4) Information obtained from Amendment No. 3 to Schedule 13G dated January 3,
1996 filed with the Securities and Exchange Commission by Pioneering
Management Corporation; as supplemented by a Form 13F for the period ended
June 30, 1996.
(5) Includes shares beneficially owned by Mr. Weil in the following
capacities: 260,000 shares owned by RKW Management Services, L.P., a
partnership whose general partner is controlled by Mr. Weil; 5,000 shares
owned by Clayton Management Company, a corporation controlled by Mr. Weil;
80,000 shares owned by several trusts for which Mr. Weil serves as a
trustee; and 155,300 shares owned by various members of Mr. Weil's family
for which he disclaims beneficial ownership. Information obtained from
Amendment No. 1 to Schedule 13D dated September 5, 1996 filed with the
Securities and Exchange Commission by John D. Weil.
(6) Information obtained from Amendment No. 3 to Schedule 13G dated January 3,
1996 filed with the Securities and Exchange Commission by Pioneering
Management Corporation, as supplemented by a Form 13F for the period ended
March 31, 1996.
(7) Information obtained from Amendment No. 2 to Schedule 13G dated February
9, 1996 filed with the Securities and Exchange Commission by Schwerin
Boyle Capital Management, Inc., as supplemented by a Form 13F for the
period ended June 30, 1996.
</FN>
</TABLE>
BENEFICIAL OWNERSHIP OF MANAGEMENT AND NOMINEES
The following table sets forth information regarding the ownership
of Common Stock of the Company for each director, each executive officer named
in the Summary Compensation Table and all directors and executive officers as a
group as of September 27, 1996.
<TABLE>
SHARES OWNED PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OUTSTANDING SHARES
<S> <C> <C>
Barry F. Baker ................................. 0 *
Alan G. Coe (1) ................................ 7,500 *
David A. Gee (2) ............................... 11,500 *
Samuel A. Hamacher (3) ......................... 17,500 *
James C. Janning (4) ........................... 66,750 *
Gabriel S. Kohn (5) ............................ 17,625 *
Richard P. Kuntz (6) ........................... 3,750 *
David V. LaRusso (7) ........................... 33,550 *
Robert E. Lefton (8) ........................... 13,000 *
Donald E. Nickelson (9) ........................ 11,500 *
William A. Peck (10) ........................... 7,700 *
Dennis W. Sheehan (11) ......................... 26,250 *
----------- ----------
All directors and executive officers as a group 216,625 2.78%
(13 persons)
=========== ==========
- ------------
<FN>
* Less than 1.00%.
(1) Represents 7,500 shares issuable pursuant to options exercisable within 60
days of the date hereof pursuant to the terms of the Company's 1991
Employee Stock Option Plan (the "1991 Employee Plan"). Excludes 42,500
shares issuable pursuant to options granted under the 1991 Employee Plan
and the Company's 1994 Employee Stock Option Plan (the "1994 Employee
Plan") (together with the 1991 Employee Plan, the "Employee Plans") which
are not currently exercisable.
<PAGE>
(2) Represents 11,500 shares issuable pursuant to options exercisable within
60 days of the date hereof pursuant to the terms of the 1991 Directors
Non-Qualified Stock Option Plan (the "1991 Directors Plan") and the 1994
Directors Non-Qualified Stock Option Plan (the "1994 Directors Plan")
(together with the 1991 Directors Plan the "Directors Plans"). Excludes
2,500 shares issuable pursuant to options granted under the 1991 Directors
Plan which are not currently exercisable.
(3) Represents 5,000 shares owned by Mr. Hamacher and 12,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 2,500 shares issuable
pursuant to options granted under the 1991 Directors Plan which are not
currently exercisable.
(4) Represents 55,250 shares owned by Mr. Janning and 11,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 2,500 shares issuable
pursuant to options granted under the 1991 Directors Plan which are not
currently exercisable.
(5) Represents 2,000 shares owned by Mr. Kohn and 15,625 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plans. Excludes 25,375 shares issuable
pursuant to options granted under the Employee Plans which are not
currently exercisable.
(6) Represents 3,750 shares issuable pursuant to options exercisable within 60
days of the date hereof pursuant to the terms of the 1991 Employee Plan.
Excludes 29,250 shares issuable pursuant to options granted under the
Employee Plans which are not currently exercisable.
(7) Represents 5,300 shares owned by Mr. LaRusso and 28,250 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Employee Plans. Excludes 57,750 shares issuable
pursuant to options granted under the Employee Plans which are not
currently exercisable. Pursuant to the terms of the Employee Plans, all
unexercised options will expire on or before November 30, 1996, three
months after the date of Mr. LaRusso's resignation from the Company.
(8) Represents 500 shares owned by Dr. Lefton and 12,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 2,500 shares issuable
pursuant to options granted under the 1991 Directors Plan which are not
currently exercisable.
(9) Represents 11,500 shares issuable pursuant to options exercisable within
60 days of the date hereof pursuant to the terms of the Directors Plans.
Excludes 2,500 shares issuable pursuant to options granted under the 1991
Directors Plan which are not currently exercisable.
(10) Represents 1,200 shares owned by Dr. Peck and 6,500 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 7,500 shares issuable
pursuant to options granted under the 1991 Directors Plan which are not
currently exercisable.
(11) Represents 10,000 shares owned by Mr. Sheehan and 16,250 shares issuable
pursuant to options exercisable within 60 days of the date hereof pursuant
to the terms of the Directors Plans. Excludes 3,750 shares issuable
pursuant to options granted under the 1991 Directors Plan which are not
currently exercisable. Also excludes 4,000 shares of Common Stock owned by
Mr. Sheehan's spouse, as to which Mr. Sheehan disclaims beneficial
ownership.
</FN>
</TABLE>
No agreements, formal or informal, exist among the various executive
officers and directors with respect to the voting of their shares.
<PAGE>
EXECUTIVE OFFICERS
The following provides certain information regarding the executive
officers of the Company who are appointed by and serve at the pleasure of the
Board of Directors:
<TABLE>
NAME AGE POSITION(S)
<S> <C> <C>
James C. Janning .......... 49 Director, President and Chief Executive Officer (1)
Barry F. Baker ............ 40 Vice President - Finance and Chief Financial
Officer, Secretary and Treasurer (2)
Alan G. Coe ............... 44 Vice President - Sales and Marketing (3)
Gabriel S. Kohn ........... 51 Vice President - Engineering (4)
Richard P. Kuntz .......... 45 Vice President - Operations (5)
Frederick H. Atwood ....... 52 Vice President - Human Resources (6)
<FN>
- ------------
(1) See information under the heading "Election of Directors."
(2) Mr. Baker has been Vice President - Finance of the Company since June
1995, Chief Financial Officer since August 1996 and Secretary and
Treasurer of the Company since November 1995. He previously served as
controller of Storz Instrument Company, a wholly-owned subsidiary of
American Home Products Corp., from 1987 to 1995. Prior thereto, Mr. Baker,
a Certified Public Accountant, served as an auditor with Deloitte &
Touche.
(3) Mr. Coe has been Vice President - Sales and Marketing of the Company since
November 1994. He previously held the position of General Manager of
International Sales at Puritan-Bennett Corporation from 1992 to 1994.
Prior to that time, Mr. Coe held the positions of Group Marketing Manager
and Division Marketing Manager of such company from 1987 to 1992.
(4) Mr. Kohn has been Vice President - Engineering of the Company since 1990.
He previously was Director of Engineering of the Company from 1988 to
1990.
(5) Mr. Kuntz has been Vice President - Operations of the Company since
November 1994. He previously served as Senior Manufacturing Manager with
Johnson & Johnson Professional, Inc. from 1992 to 1994. From 1990 to 1992
he served as General Manager of Halstead Industries, Inc.
(6) Mr. Atwood has been Vice President - Human Resources of the Company since
November 1995. He previously served as Director, Human Resources at
Calcium Carbonate Division, a division of J.M. Huber Corporation from 1988
through 1995.
</FN>
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by
the Company for services rendered during the fiscal years indicated to the two
chief executive officers serving during the fiscal year ended June 30, 1996 and
each of the Company's executive officers whose total salary and bonus exceeded
$100,000 during such fiscal year (the "Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION (1) COMPENSATION
----------------------- -----------------
<S> <C> <C> <C> <C> <C>
FISCAL STOCK OPTION ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY(2) BONUS AWARDS COMPENSATION
James C. Janning ............................ 1996 $20,520 --- 4,000 ---
President and Chief Executive Officer (3) 1995 9,750 $50,000 --- ---
1994 107,550 --- --- ---
David V. LaRusso ............................ 1996 225,486 --- --- $2,417(5)
Executive Vice President and Chief 1995 179,038 50,000 53,000 6,667(5)
Administrative Officer (4) 1994 114,500 85,000 17,000 5,376(5)
Barry F. Baker .............................. 1996 100,000 --- 20,000 144(5)
Vice President - Finance and Chief 1995 7,692 --- --- ---
Financial Officer, Secretary and
Treasurer (6)
Alan G. Coe ................................. 1996 158,210 -- --- 54,383(7)
Vice President - Sales and 1995 97,211 35,000 35,000 10,738(9)
Marketing (8)
Gabriel S. Kohn ............................. 1996 111,080 -- --- 2,879(5)
Vice President - Engineering 1995 106,753 10,600 10,500 5,144(5)
1994 100,000 22,000 11,000 5,564(5)
Richard P. Kuntz ............................ 1996 129,469 -- --- 92,312(7)
Vice President - Operations (10) 1995 75,414 25,000 15,000 160(11)
<FN>
- ------------
(1) Excludes certain personal benefits, the total value of which was less than 10% of the
total annual salary and bonus for each of the executives.
(2) Includes amounts deferred under the 401(k) feature of the Company's Retirement Savings
Plan.
(3) Mr. Janning was appointed to his position as President and Chief Executive
Officer in May 1996. Mr. Janning previously served as President and Chief
Executive Officer from July 1993 to August 1994.
(4) Mr. LaRusso was elected to his position as Executive Vice President and
Chief Administrative Officer in May 1996. Mr. LaRusso resigned as an
officer of the Company in August 1996. Prior thereto, Mr. LaRusso served
as President and Chief Executive Officer from August 1994 to May 1996, as
Vice President - Finance from 1988 to 1994 and as Secretary of the Company
from May 1991 through August 1994. The compensation shown reflects
compensation paid in each of these positions during the relevant periods.
(5) The amounts shown represent matching contributions made by the Company for
voluntary contributions made by the named executives to the Company's
Retirement Savings Plan, as well as amounts paid for term life insurance
premiums on behalf of Messrs. LaRusso, Baker and Kohn in the amounts of
$486, $144 and $706, respectively, in 1996, and on behalf of Messrs.
LaRusso and Kohn in the amounts of $668 and $874, respectively, in 1995,
and $796 and $1,564, respectively, in 1994.
<PAGE>
(6) Mr. Baker was appointed to his position as Vice President - Finance of the
Company in June 1995, as Secretary and Treasurer in November 1995 and as
Chief Financial Officer in August 1996.
(7) The amount shown represents amounts paid for relocation expenses on behalf
of Messrs. Coe and Kuntz in the amounts of $52,893 and $90,866,
respectively, matching contributions made by the Company for voluntary
contributions made by the named executives to the Company's Retirement
Savings Plan in the amounts of $1,181 and $1,138, respectively, and
amounts paid for term life insurance premiums in the amounts of $339 and
$308, respectively.
(8) Mr. Coe was appointed Vice President - Sales and Marketing of the Company
in November 1994.
(9) The amount shown represents amounts paid for relocation expenses.
(10) Mr. Kuntz was appointed as Vice President - Operations of the Company in
November 1994.
(11) The amount shown represents the amount paid for term life insurance on
behalf of Mr. Kuntz.
</FN>
</TABLE>
OPTIONS
The following table sets forth information concerning options
granted during the fiscal year ended June 30, 1996 under the Company's stock
option plans to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------
<TABLE>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENTAGE OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PER SHARE FOR OPTION TERM (2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED FISCAL 1996 (1) PRICE DATE 5% 10%
- ---- ---------- --------------- --------- ---------- -- ---
<S> <C> <C> <C> <C>
James C. Janning 4,000 11.0% $18.25 11/09/06 $45,910 $116,340
David V. LaRusso -- -- -- -- -- --
Barry F. Baker 20,000 54.8 16.13 8/07/05 202,883 514,128
Alan G. Coe -- -- -- -- -- --
Gabriel S. Kohn -- -- -- -- -- --
Richard P. Kuntz -- -- -- -- -- --
<FN>
(1) A total of 32,500 options were granted to employees under the 1994
Employee Plan during fiscal 1996, the purpose of which is to provide a
financial incentive to key employees who are in a position to make
significant contributions to the Company and 4,000 were granted to Mr.
Janning under the 1995 Directors Plan. Options granted pursuant to the
1994 Employee Plan have an exercise price equal to the market price on the
date of grant. Options become exercisable with respect to one-fourth of
the shares covered thereby on each anniversary of the date of grant,
commencing on the second anniversary thereof.
(2) Potential realizable value is calculated based on an assumption that the
price of the Company's Common Stock appreciates at the annual rate shown
(5% and 10%), compounded annually, from the date of grant of the option
until the end of the option term. The value is net of the exercise price
but is not adjusted for the taxes that would be due upon exercise. The 5%
and 10% assumed rates of appreciation are mandated by the rules of the
Securities and Exchange Commission (the "SEC") and do not in any way
represent the Company's estimate or projection of future stock prices.
</FN>
</TABLE>
<PAGE>
The following table sets forth information concerning option
exercises and the value of unexercised options held by the Named Executive
Officers as of June 30, 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JUNE 30, 1996 JUNE 30, 1996
-------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
James C. Janning ---- ---- 11,500 2,500 $9,375 $3,125
David V. LaRusso ---- ---- 28,250 57,750 18,750 6,250
Barry F. Baker ---- ---- ---- 20,000 ----(1) ----(1)
Alan G. Coe ---- ---- 7,500 27,500 ----(1) ----(1)
Gabriel S. Kohn ---- ---- 15,625 19,375 12,656 4,219
Richard P. Kuntz ---- ---- 3,750 14,250 ----(1) ----(1)
<FN>
- -----------
(1) No options held by this officer at June 30, 1996 were in-the-money.
</FN>
</TABLE>
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to
receive an annual fee of $10,000 for his services as a director and additional
fees of $750 for attendance at each meeting of the Board of Directors and $300
for attendance at each meeting of committees of the Board of Directors.
Directors are also entitled to reimbursement for their expenses in attending
meetings.
1991 DIRECTORS PLAN. The Company maintains the 1991 Directors Plan,
which provides for the granting of options to the Company's directors who are
not employees of the Company, for up to 100,000 shares of Common Stock (subject
to adjustment in the event of a reorganization, merger, consolidation, stock
split, dividend payable in Common Stock, split-up, combination or other exchange
of shares).
The 1991 Directors Plan is administered by a Stock Option Committee
of two or more members of the Board of Directors. Directors are not eligible to
serve on such committee if such director has been granted an option under the
plan during the twelve-month period preceding appointment to the committee, and
no option may be granted to a director while serving on the committee.
Options granted or to be granted under the 1991 Directors Plan may
not be exercised for a period of two years from the date of grant and thereafter
become exercisable on a cumulative basis in 25% increments beginning on the
second anniversary of the date of grant and concluding on the fifth anniversary
of the date of grant. All options granted under the 1991 Directors Plan expire
ten years from the date of grant.
Options granted or to be granted under the 1991 Directors Plan are
nontransferable, and the exercise price must be equal to the fair market value
of the Common Stock on the date of grant as determined pursuant to the 1991
Directors Plan. Upon exercise, the exercise price must be paid in full in cash
or such other consideration as the Stock Option Committee may permit, subject to
approval by a majority of the directors who have not been granted options under
any plan of the Company during the previous twelve months.
The 1991 Directors Plan provides for the grant of options thereunder
for the purchase of 10,000 shares of Common Stock to each eligible director on
the date of the Company's initial public offering, each eligible director who
subsequently becomes a director, and an additional option to the Chairman of the
Board (provided he is an eligible director) with respect to 5,000 shares of
Common Stock on the date he is elected to such office. In connection with the
adoption of the 1995 Directors Plan, the 1991 Directors Plan was terminated in
November 1995.
<PAGE>
1995 DIRECTORS PLAN. The 1995 Directors Plan provides for the
granting of non-qualified stock options for up to 150,000 shares of Common Stock
(subject to adjustment in the event of a reorganization, merger, consolidation,
stock split, dividend payable in Common Stock, split-up, combination or other
exchange of shares) to the members of the Board of Directors who are not
employees of the Company or any of its subsidiaries.
Pursuant to the express terms of the 1995 Directors Plan, options to
purchase 10,000 shares of Common Stock are granted to each eligible director on
the date such person is first elected to the Board of Directors of the Company.
An option to purchase an additional 5,000 shares of Common Stock is granted to
each eligible director on the date such person is first elected to serve as
Chairman of the Board of the Company. These options may not be exercised for a
period of two years from the date of grant and thereafter become exercisable on
a cumulative basis in 25% increments beginning on the second anniversary of the
date of grant and concluding on the fifth anniversary thereof.
In addition, the 1995 Directors Plan provides that options to
purchase 1,000 shares of Common Stock are granted to each eligible director on
the date such person is re-elected to the Board of Directors by the vote of the
stockholders, at the annual or other meeting at which directors are elected, and
that options to purchase 500 shares of Common Stock are granted to each eligible
director on the date such person is elected or re-elected to serve as Chairman
of a Committee maintained by the Board of Directors from time to time. These
options may not be exercised for a period of one year from the date of grant and
thereafter are exercisable in full.
In recognition of their past service to the Company, the 1995
Directors Plan also provided for the grant of options to purchase 3,000 shares
of Common Stock to each eligible director who was serving on the Board of
Directors at June 1, 1995 and provided for the grant of options to purchase 500
shares of Common Stock to each eligible director serving as Chairman of a
Committee maintained by the Board of Directors at June 1, 1995. Options granted
to such directors were not exercisable until June 1, 1996, at which time they
became exercisable in full.
Other options may be granted under the 1995 Directors Plan from time
to time pursuant to terms determined by the Board of Directors of the Company.
All options granted under the 1995 Directors Plan are nontransferable and
subject to certain limitations upon the removal or resignation of the director,
as set forth in the 1995 Directors Plan, and expire ten years from the date of
grant. No payments or contributions are required to be made by the directors
other than in connection with the exercise of options. The 1995 Directors Plan
will terminate on November 9, 2005 and no further options may be granted after
such date.
The purchase price for shares of Common Stock to be purchased upon
the exercise of options is equal to the last reported sales price per share of
Common Stock on the Nasdaq National Market on the date of grant (or the last
reported sales price on such other exchange or market on which the Common Stock
is traded from time to time). Upon exercise of an option, the exercise price
must be paid in full in cash or in kind or a combination thereof, by delivery of
shares having a fair market value, or surrender of currently exercisable options
having a value on the date of exercise, equal to the portion of the exercise
price so paid, as determined by the Board of Directors.
As adopted, the 1995 Directors Plan was intended to provide formula
awards in accordance with certain then-applicable exemptive rules of the SEC and
is administered by the Board of Directors, which may delegate administration
thereof to a committee of the Board. The Board may, in its discretion, terminate
or suspend the 1995 Directors Plan at any time. The Board may also amend or
revise the 1995 Directors Plan, or the terms of any option granted under the
1995 Directors Plan, without stockholder approval, provided that such amendment
or revision does not, except as otherwise permitted, increase the number of
shares reserved for issuance under the 1995 Directors Plan, change the purchase
price established or expand the category of individuals eligible to participate
in such plan. No amendment, suspension or termination will alter or impair any
rights or obligations under any option previously granted without the consent of
the grantee. The Company receives no consideration for the grant of options
under the 1995 Directors Plan.
<PAGE>
The following table sets forth information with respect to options
outstanding under the Directors Plans:
<TABLE>
DATE OF NUMBER OF EXERCISE PRICE
NAME GRANT SHARES PER SHARE
- ---- ------- --------- --------------
<S> <C> <C> <C>
David A. Gee ................... 01/13/92 10,000 $8.00
11/09/96 4,000 18.25
Samuel A. Hamacher ............. 09/14/92 10,000 9.50
11/09/96 5,000 18.25
James C. Janning ............... 09/14/92 10,000 9.50
11/09/96 4,000 18.25
Robert E. Lefton ............... 09/14/92 10,000 8.13
11/09/96 5,000 18.25
Donald E. Nickelson ............ 09/14/92 10,000 9.50
11/09/96 4,000 18.25
William A. Peck ................ 04/29/94 10,000 15.75
11/09/96 4,000 18.25
Dennis W. Sheehan .............. 01/13/92 10,000 8.00
11/03/92 5,000 9.00
11/09/96 5,000 18.25
------------
Total 106,000
============
</TABLE>
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Company's Amended and Restated Certificate of Incorporation
provides that the Company's directors are not liable to the Company or its
stockholders for monetary damages for breach of their fiduciary duties, except
under certain circumstances, including breach of the director's duty of loyalty,
acts or omissions not in good faith or involving intentional misconduct or a
knowing violation of law or any transaction from which the director derived
improper personal benefit. The Company's By-laws provide for the indemnification
of the Company's directors and officers, to the full extent permitted by the
Delaware General Corporation Law.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, composed entirely of non-employee,
independent members of the Board of Directors, reviews, recommends and approves
changes to the Company's compensation policies and programs for the chief
executive officer, other senior executives and certain key employees. In
addition to the delegated authority in areas of compensation, the Committee
administers the Company's stock option plans and agreements and approves annual
or other grants to be made in connection therewith.
In the Committee's discharge of its responsibilities, it considers
the compensation, primarily of the chief executive officer and the Company's
other executive officers, and sets overall policy and considers in general the
basis of the levels of compensation of other key employees.
POLICY AND OBJECTIVES. Recognizing its role as a key representative
of the stockholders, the Committee seeks to promote the interests of
stockholders by attempting to align management's remuneration, benefits and
perquisites with the economic well-being of the Company. Since the achievement
of operational objectives should, over time, represent the primary determinant
of share price, the Committee links elements of compensation of executive
officers and certain key employees with the Company's operating performance. In
this way, objectives under a variety of compensation programs should eventually
reflect the overall performance of the Company. By adherence to the above
program, the compensation process should provide for enhancement of stockholder
value. Basically, the Committee seeks the successful implementation of the
Company's business strategy by attracting and retaining talented managers
motivated to accomplish these stated objectives. The Committee attempts to be
fair and competitive in its views of compensation. Thus, rewards involve both
business and individual performance. The key ingredients of the program consist
of base salary, annual cash incentives and long range incentives consisting of
stock options.
<PAGE>
BASE SALARY. Base salaries for the chief executive officer, as well
as other executive officers of the Company, are determined primarily based on
performance. Generally, the performance of each executive officer is evaluated
annually and salary adjustments are based on various factors including revenue
growth, earnings per share improvement, increases in cash flow, new product
development, market appreciation for publicly traded securities, reduction of
debt and personal performance. In addition, the Committee compares salary data
for similar positions in companies that match the Company's size in sales and
earnings and utilizes such data as a factor in setting base salaries. Specific
reference is made to the annual salary survey published by the Health Industry
Manufacturers Association. Validation of this data is performed by an
independent nationally-recognized compensation consultant. This principle of
combining performance and position in the salary survey range was used in
setting the salary of Mr. LaRusso, the Company's previous President and Chief
Executive Officer. However, with respect to Mr. Janning, who currently serves as
the Company's President and Chief Executive Officer, an arrangement was
negotiated whereby Mr. Janning would be compensated at an hourly rate based on
his salary and benefits from Harbour Group Ltd. on a proportionate basis for his
time spent working for the Company. The Committee approves base salary
adjustments for the executive officers, including the chief executive officer.
CASH INCENTIVE COMPENSATION. To reward performance, the chief
executive officer and other executive officers are eligible for annual cash
bonuses. The actual amount of incentive compensation paid to each executive
officer is predicated on an assessment of each participant's relative role in
achieving the annual financial objectives of the Company as well as each such
person's contributions of a strategic nature in maximizing stockholder value. No
cash bonuses were paid to the chief executive officer or the other executive
officers in respect of fiscal 1996.
STOCK-BASED INCENTIVES. The Company's 1991 Employee Plan and 1994
Employee Plan provide a long term incentive program for the chief executive
officer, other executive officers and certain other key employees. The basic
objective of these plans is the specific and solid alignment of executive and
stockholder interests by forging a direct relationship between this element of
compensation and the stockholders' level of return. These programs represent a
desire by the Company to permit executives and other key employees to obtain an
ownership position and a proprietary interest in the Company's Common Stock.
Under these plans, approved by the stockholders, the Committee
periodically recommends to the Board of Directors (in the case of the 1991
Employee Plan) on approves (in the case of the 1994 Employee Plan) grants of
stock options by the Board of Directors. Generally, the Committee attempts to
reflect the optionee's potential impact on corporate financial and operational
performance in the award of stock options. To date, stock options under the
plans have been granted with an exercise price equal to the market price of the
Common Stock on the date of grant, expire after ten years, and, after two years,
vest 25% annually.
Compensation Committee
Dennis W. Sheehan, Chair
David A. Gee
Donald E. Nickelson
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following table presents the cumulative return for the Company,
the CRSP Index for Nasdaq Stock Market (US Companies) and an index comprised of
eight companies which the Company believes to present a representative peer
group of the Company. The Nasdaq and the peer group data have been provided by
the Center for Research in Security Prices, Chicago, Illinois, without
independent verification by the Company.
1/14/92 100 100 100
1/31/92 101.45 99.04 95.47
2/28/92 136.23 101.28 92.25
3/31/92 124.64 96.5 88.5
4/30/92 95.65 92.36 83.72
5/29/92 104.35 93.56 95.3
6/30/92 98.55 89.91 86.49
7/31/92 91.3 93.09 95.92
8/31/92 95.65 90.25 93.83
9/30/92 89.86 93.6 101.15
10/30/92 102.9 97.29 101.68
11/30/92 115.94 105.03 119.38
12/31/92 89.86 93.6 101.15
1/29/93 127.54 111.99 108.99
2/26/93 104.35 107.82 94.13
3/31/93 113.67 110.94 91.79
4/30/93 109.3 106.2 84.42
5/28/93 107.85 112.54 87.07
6/30/93 102.66 113.07 87.39
7/30/93 108.53 113.2 86.32
8/31/93 126.13 119.05 84.8
9/30/93 129.83 122.59 83.15
10/29/93 141.64 125.35 85.7
11/30/93 134.26 121.61 87.77
12/31/93 148.26 125 92.37
1/31/94 176.43 128.8 101
2/28/94 177.91 127.59 100
3/31/94 172.63 119.74 95.47
4/29/94 187.51 118.19 95.43
5/31/94 181.56 118.48 95.2
6/30/94 173.39 114.15 88.78
7/29/94 170.4 116.49 86.4
8/31/94 188.34 123.91 98.71
9/30/94 180.09 123.6 98.03
10/31/94 198.1 126.03 105.56
11/30/94 204.1 121.85 108.88
12/30/94 198.98 122.19 107.82
1/31/95 194.46 122.87 114.77
2/28/95 189.94 129.37 119.43
3/31/95 186.27 133.2 125.4
4/28/95 196.87 137.4 127.06
5/31/95 175.67 140.94 138.28
6/30/95 197.72 152.36 139.81
7/31/95 185.55 163.56 152.5
8/31/95 194.68 166.87 150.66
9/29/95 223.58 170.71 154.21
10/31/95 231.18 169.74 154.99
11/30/95 215.97 173.72 153.81
12/29/95 195.53 172.79 155.66
1/31/96 142.83 173.63 163.94
2/29/96 152.76 180.25 166.13
3/29/96 162.76 180.85 164.31
4/30/96 132.05 195.85 145.7
5/31/96 141.27 204.87 152.53
6/28/96 114.46 195.63 140.6
LEGEND
Symbol Index Description
________ ALLIED HEALTHCARE PRODUCTS, INC.
........ CRSP Index for Nasdaq Stock Market (US Companies)
-------- Self-Determined Peer Group
Companies in the Self-Determined Peer Group:
Infrasonics, Inc. Invacare Corporation
Respironics, Inc. Novametrix Medical Systems, Inc.
Aequitron Medical, Inc. Healthdyne Technologies, Inc.
Sunrise Medical, Inc. Nellcor-Puritan Bennett Corporation
NOTES:
A. The line represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization
on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceeding trading day is used.
D. The index level for all series was set to 100.0 on 01/14/92, the
date of the Company's initial public offering.
<PAGE>
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
The Company maintains an Operations Consulting and Advisory Services
Agreement (the "HGL Services Agreement") with Harbour Group Ltd. ("HGL"), an
affiliate of Harbour Group, pursuant to which HGL provides management consulting
services to the Company. The agreement is for a period of one year and will
automatically renew until terminated by the Company or HGL upon 30 days' notice.
Under the HGL Services Agreement, the Company compensates HGL for management
consulting services at HGL's approximate costs incurred in performing such
services. The Company also maintains a Corporate Development Consulting and
Advisory Services Agreement (the "HGI Services Agreement") with Harbour Group
Industries, Inc. ("HGI"), an affiliate of Harbour Group, pursuant to which HGI
provides corporate development services to the Company. The agreement is for a
period of one year and will automatically renew until terminated by the Company
or HGI upon 30 days' notice. Under the HGI Services Agreement, the Company
compensates HGI for corporate development services by paying an annual fee equal
to the greater of $100,000 or HGI's approximate costs incurred in performing
such services, plus a transaction fee equal to an amount which ranges from 2.5%
of the first $1 million of the purchase price to 0.5% of the portion of the
purchase price in excess of $4 million for each completed acquisition or
disposition by the Company in which HGI performs services during the term of the
HGI Services Agreement, subject to a minimum fee per transaction of $125,000.
Payments made under the HGL Services Agreement and the HGI Services Agreement
during the Company's fiscal year ended June 30, 1996 totaled $30,913 and
$149,907, respectively.
The terms of the HGL Services Agreement were determined by HGL and
the Company to preserve the historical arrangement between the Company and HGL
whereby HGL provided the Company with management consulting and advisory
services at approximate cost. The terms of the HGI Services Agreement were
determined in part to reimburse HGI for the estimated approximate annual cost of
HGI personnel engaged in performing services for the Company thereunder and in
part with reference to customary formulas utilized by financial advisors for
providing acquisition and/or divestiture-related services. The Company believes
that the rate agreed to by the Company and HGI is less than the rate customarily
charged by other financial advisory service providers. The terms of each of
these arrangements and the method of establishing the fees payable thereunder
have been reviewed and approved by the Company's Audit Committee.
Mr. Janning serves as President and Chief Executive Officer and as
a director of the Company. Messrs. Hamacher and Nickelson serve as directors of
the Company. Messrs. Hamacher, Janning and Nickelson also serve as directors
and/or executive officers of HGL and/or HGI.
AGREEMENTS WITH EXISTING STOCKHOLDERS
Pursuant to a registration rights agreement between the Company and
Harbour Group Investments, L.P. (the "Registration Rights Agreement"), Harbour
Group Investments, L.P. and such of its permitted transferees as may be deemed
to be affiliates of the Company (including Harbour Group) have the right to
demand registration under the Securities Act of 1933, as amended (the
"Securities Act"), of its or their shares of the Company's Common Stock. In
addition, in the event the Company proposes to register any of its securities
under the Securities Act, such persons (or their permitted transferees) will
have the right, subject to certain exceptions and limitations, to have the
shares of the Company's Common Stock then owned by them included in such
registration statement. The Company has agreed that, in the event of any
registration of securities owned by such persons (or a permitted transferee) in
accordance with the provisions thereof, it will indemnify such person, and
certain related persons, against liabilities incurred in connection with such
registration, including liabilities arising under the Securities Act.
The registration rights described above are subject to certain
limitations intended to prevent undue interference with the Company's ability to
distribute securities, including the provision that demand registration rights
may not be exercised within 90 days after the effective date of the Company's
most recent registration statement. The cost of effecting a registration under
the Registration Rights Agreement (except for the cost of underwriting discounts
or commissions and the expenses of separate counsel to a selling security
holder) are borne by the Company.
<PAGE>
APPROVAL OR DISAPPROVAL OF
AMENDMENTS TO THE COMPANY'S
1994 EMPLOYEE STOCK OPTION PLAN
The Board of Directors of the Company recently adopted an amendment
to the 1994 Employee Plan, subject to shareholder approval, to increase the
number of shares for which stock options may be granted thereunder to 550,000
shares and to change certain provisions in connection with recent SEC regulatory
amendments. Currently, the 1994 Employee Plan provides for the granting of
non-qualified and incentive stock options (the "Options") for up to 250,000
shares (subject to adjustment in the event of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares or the like) of the Common Stock to certain key employees of the Company
and its subsidiaries (the "Optionees"). Incentive options are intended to
qualify as options described in Section 422 of the Internal Revenue Code of
1986, as amended. A key employee is one upon whose effort the Company is
dependent for the successful conduct of its business. All officers and key
salaried employees are eligible to participate in such 1994 Employee Plan
subject to the Compensation Committee's discretion to designate employees who
are to receive Options. As of the date hereof, approximately 50 employees are
eligible to participate in the 1994 Employee Plan.
CURRENT 1994 EMPLOYEE PLAN
If any outstanding Options under the 1994 Employee Plan for any
reason expire or are terminated, the shares of Common Stock subject to the
unexercised portion of such Option or Options are again available for grants
under the 1994 Employee Plan as if no Option had been granted with respect to
such shares. There is no restriction on the number of Options or the maximum
number of shares that may be granted to one person. However, the aggregate fair
market value (determined as of the date an Option is granted) of the shares with
respect to which incentive Options are exercisable by any single employee during
any calendar year cannot exceed $100,000.
The 1994 Employee Plan is administered by the Compensation Committee
(the "Committee") of the Board. Members of the Committee, who otherwise qualify
as key employees, are not eligible to receive Options but may exercise
previously granted Options. Within the limitations of the 1994 Employee Plan,
the Committee will determine the individuals, if any, to whom Options shall be
granted, the period or periods of exercisability of each Option, the number of
shares subject to each Option, the Option price, and all other terms, including
any reload options. No Options may be granted after August 4, 2004.
No payments or contributions are required to be made by the
Optionees other than in connection with the exercise of the Options. An Optionee
may exercise each Option granted to such Optionee in such installments as the
Committee shall determine at the time of the grant thereof, provided that no
such Option may be exercised within six months of the date of grant. Except as
otherwise set forth in the 1994 Employee Plan or the applicable non-qualified
stock option agreement or incentive stock option agreement, an Option may be
exercised in whole or in part at any time or from time to time. Upon exercise of
an Option, the purchase price therefor shall be payable in full in cash or upon
such terms as determined by the Committee within the limitations of the 1994
Employee Plan. Options are nontransferable and subject to forfeiture or
limitations upon termination of employment, as set forth therein.
The purchase price for shares of Common Stock to be purchased upon
the exercise of Options shall be established by the Committee or the Board of
Directors. Except as otherwise set forth in the 1994 Employee Plan, the Option
price shall not be less than the fair market value of the Common Stock on the
date of grant, which is presently equal to the last transaction price per share
as reported by the Nasdaq Stock Market on that date.
The Board may, in its discretion, terminate or suspend the 1994
Employee Plan at any time. The Board may also amend or revise the 1994 Employee
Plan, or the terms of any Option granted under the 1994 Employee Plan, without
shareholder approval, provided that such amendment or revision does not, except
as otherwise permitted, increase the number of shares reserved for issuance
under the 1994 Employee Plan, change the purchase price established, or expand
the category of individuals eligible to participate in the 1994 Employee Plan.
No amendment, suspension, or termination shall alter or impair any rights or
obligations under any Option previously granted without the consent of the
Optionee.
<PAGE>
AMENDMENT TO THE 1994 EMPLOYEE PLAN
The amendment to the 1994 Employee Plan increases the number of
shares for which stock options may be granted to 550,000 shares. The amendment
also makes certain other revisions to the 1994 Employee Plan which incorporate
regulatory changes recently promulgated by the SEC. Such changes include:
permitting the 1994 Employee Plan to be administered either by the full Board or
by a committee thereof; who may qualify to serve on the committee; eliminating
the requirement that certain amendments to the 1994 Employee Plan be approved by
stockholders; elimination of the minimum six-month holding period for options;
and the addition of a provision which permits approval of option grants under
the 1994 Employee Plan by any one of the following methods: (i) the full Board
of Directors; (ii) a committee of "non-employee directors" (as that term is
defined in the 1994 Employee Plan); (iii) a majority of the stockholders; or
(iv) including a requirement that the securities underlying the option are held
for a period of six months from the date of acquisition.
TAX AND OTHER INFORMATION
Under current federal income tax laws, the grant of a non-qualified
Option pursuant to the 1994 Employee Plan generally has no tax effect on the
Company or the Optionee. Exercise of a non-qualified Option under the 1994
Employee Plan will result in taxable compensation income to the Optionee in the
amount by which the fair market value of the Common Stock issued pursuant to the
exercise, at the time of the exercise, exceeds the purchase price of such Common
Stock under the non-qualified Option, and the Company generally will be entitled
to a tax deduction equal to the amount of compensation income taxable to the
Optionee upon exercise of a non-qualified Option. Any transfer of Common Stock
acquired upon exercise of a non-qualified Option may result in taxable income.
The grant of an incentive Option pursuant to the 1994 Employee Plan
generally has no tax effect on the Company or the Optionee. Exercise of an
incentive Option under the 1994 Employee Plan will not be subject to the regular
federal income tax, but may be subject to the alternative minimum tax. The
Company will not be entitled to a tax deduction upon the exercise of an
incentive Option. Any transfer of Common Stock acquired upon exercise of an
incentive Option may result in taxable income, and the character of any such
income as capital gain or ordinary income will depend on whether certain holding
period requirements have been satisfied.
Information relating to the 1994 Employee Plan and the amendment
thereto is qualified in its entirety by reference to the 1994 Employee Plan, as
amended, which is incorporated in full by reference thereto. Copies of the 1994
Employee Plan, as amended, are available at no charge upon written request
directed to Allied Healthcare Products, Inc., 1720 Sublette Avenue, St. Louis,
Missouri 63110, Attention: Barry F. Baker.
The Board of Directors recommends voting "FOR" the amendment to the
1994 Employee Plan.
<PAGE>
PLAN BENEFITS UNDER THE 1994 EMPLOYEE PLAN
As of September 27, 1996 the market value of the Common Stock
underlying the Options was $7.00 per share. The following Options have been
granted pursuant to the 1994 Employee Plan:
<TABLE>
Number of Shares of
Common Stock Underlying
Name and Position Dollar Value Options Granted
- ----------------- ------------ -----------------------
<S> <C> <C>
James C. Janning
President and Chief
Executive Officer -- --
David V. LaRusso
Executive Vice President and
Chief Administrative Officer $0 8,000
Barry F. Baker
Vice President - Finance and
Chief Financial Officer 3,750 35,000
Alan G. Coe
Vice President - Sales and
Marketing 3,750 20,000
Gabriel S. Kohn
Vice President- Engineering 1,500 9,000
Richard P. Kuntz
Vice President - Manufacturing 3,750 18,000
All executive officers
as a group 14,250 90,000
All directors who are not
executive officers
as a group * *
All employees, including
all officers who are not
executive officers, as a group 135,000 246,000
<FN>
- -----------------
* Not eligible to participate in the 1994 Employee Plan.
</FN>
</TABLE>
Within the limitations of the 1994 Employee Plan, the Committee has
sole discretion in granting Options under the 1994 Employee Plan. Therefore, the
future benefits of any Options to be granted, if any, to the Named Executive
Officers, to the current directors, to each nominee for election as a director,
to each associate of any such directors, executive officers or nominees, to each
other person who is to receive five percent of such options, and to all other
employees who are not Named Executive Officers are not determinable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and persons who own more
than ten percent of a registered class of the Company's equity securities to
file with the SEC initial reports of beneficial ownership and reports of changes
in beneficial ownership of common stock and other equity securities of the
Company. Executive officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms which they file.
To the Company's knowledge, based solely on review of information
furnished to the Company, reports filed through the Company and representations
that no other reports were required, all Section 16(a) filing requirements
applicable to its directors, executive officers and greater than ten percent
beneficial owners were complied with during the year ended June 30, 1996.
<PAGE>
OTHER INFORMATION
On August 21, 1996, the Board of Directors entered into a Rights
Agreement pursuant to which one preferred stock purchase right (a "Right") per
share of Common Stock was distributed as a dividend to stockholders of record on
the close of business on September 4, 1996. Each Right, when exercisable, will
entitle the holder thereof to purchase one one-hundredth of a share of Series A
Preferred Stock at a price of $40.00 per share. The Rights will be exercisable
only if a person or group acquires 25% or more of the outstanding shares of
Common Stock of the Company or announces a tender offer following which it would
hold 25% or more of such outstanding Common Stock. The Rights entitle the
holders, other than the acquiring person, to purchase Common Stock having a
market value of two times the exercise price of the Right. If, following the
acquisition by a person or group of 25% or more of the Company's outstanding
shares of Common Stock, the Company were acquired in a merger or other business
combination, each Right would be exercisable for that number of the acquiring
company's shares of common stock having a market value of two times the exercise
price of the Right. The Company may redeem the Rights at one cent per Right at
any time until ten days following the occurrence of an event that causes the
Rights to become exercisable for Common Stock. The Rights expire in ten years.
For more information concerning the Rights Agreement and the Rights,
reference is hereby made to the Company's Current Report on Form 8-K dated
August 7, 1996 which was filed with the SEC.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Price Waterhouse LLP to be the
independent auditors of the Company for the year ending June 30, 1997.
The affirmative vote of the holders of a majority of the Company's
Common Stock represented and voted at the Annual Meeting will be required to
approve and ratify the Board's selection of Price Waterhouse LLP. The Board of
Directors recommends voting "FOR" approval and ratification of such selection.
A representative of Price Waterhouse LLP is expected to be available
at the Annual Meeting to make a statement if such representative desires to do
so and to respond to appropriate questions.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by officers,
directors and regular employees of the Company personally or by telephone or
facsimile for no additional compensation. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation material to beneficial owners of the stock held of record by such
persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in so doing. The Company has engaged D.
F. King & Co., Inc. to solicit proxies in connection with this Proxy Statement,
and employees of that company are expected to solicit proxies in person, by
telephone and by mail. The anticipated cost to the Company of such solicitation
is approximately $3,000 plus reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The rules of the SEC currently provide that stockholder proposals
for the 1997 Annual Meeting must be received at the Company's principal
executive office not less than 120 calendar days prior to the anniversary date
of the release of the Company's proxy statement to stockholders in connection
with the 1996 Annual Meeting to be considered by the Company for possible
inclusion in the proxy materials for the 1997 Annual Meeting.
FINANCIAL INFORMATION
The Company's 1996 Annual Report is being mailed to the stockholders
on or about the date of mailing this Proxy Statement. The Company will provide,
without charge to any record or beneficial stockholder as of September 27, 1996,
who so requests in writing, a copy of such 1996 Annual Report or the Company's
1996 Annual Report on Form 10-K (without exhibits), including the financial
statements and the financial statement schedules, filed with the SEC. Any such
request should be directed to Allied Healthcare Products, Inc., 1720 Sublette
Avenue, St. Louis, Missouri 63110, Attention: Barry F. Baker.
<PAGE>
OTHER MATTERS
The Board of Directors of the Company is not aware of any other
matters to come before the meeting. If any other matters should come before the
meeting, the persons named in the enclosed proxy intend to vote the proxy
according to their best judgment.
You are urged to complete, sign, date and return your proxy to make
certain your shares of Common Stock will be voted at the 1996 Annual Meeting.
For your convenience in returning the proxy, an addressed envelope is enclosed,
requiring no additional postage if mailed in the United States.
By Order of the Board of Directors,
/s/ James C. Janning
-------------------------------------
James C. Janning
PRESIDENT AND CHIEF EXECUTIVE OFFICER
October 4, 1996
<PAGE>
PROXY
ALLIED HEALTHCARE PRODUCTS, INC.
ANNUAL MEETING OF STOCKHOLDERS-NOVEMBER 14, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement of Allied Healthcare Products, Inc. (the
"Company"), each dated October 4, 1996, and the Annual Report to Stockholders
for the fiscal year ended June 30, 1996, and appoints James C. Janning and Barry
F. Baker, or either of them, as the proxies and attorneys-in-fact, with full
power to each of substitution on behalf and in the name of the undersigned to
vote and otherwise represent all of the shares registered in the name of the
undersigned at the 1996 Annual Meeting of Stockholders of the Company to be held
on November 14, 1996 at 10:00 a.m., Pacific Time, at the Mission Inn, 3649 7th
Street, Riverside, California 92501, and any adjournments thereof with the same
effect as if the undersigned were present and voting such shares, on the
following matters and in the following manner:
1. To elect the following persons as directors of the Company to serve for
a term of one year or until their successors are elected and qualified:
__ FOR all nominees listed below __ WITHHOLD AUTHORITY
(except as marked to the contrary) to vote all nominees listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME ON THE LIST BELOW.)
David A. Gee, Samuel A Hamacher, James C. Janning, Robert E. Lefton,
Donald E. Nickelson, William A. Peck, Dennis W. Sheehan
2. To approve or disapprove an amendment to the Company's 1994 Employee Stock
Option Plan.
__ FOR __ AGAINST __ ABSTAIN
3. To ratify or reject the appointment of Price Waterhouse LLP as independent
auditors of the Company for the fiscal year ending June 30, 1997:
__ FOR __ AGAINST __ ABSTAIN
<PAGE>
4. To transact such other business as may properly come before the meeting or
any adjournment thereof, according to the proxies' discretion, and in their
discretion.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" ALL NOMINEES LISTED
IN PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED "FOR" ALL NOMINEES LISTED IN PROPOSAL 1, "FOR"
PROPOSALS 2 AND 3 AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
Dated_______________________, 1996
-----------------------------------------
Name typed or printed
-----------------------------------------
Signature
-----------------------------------------
Capacity (Title or Authority, I.E.,
Executor, Trustee)
Please date and sign exactly as your name(s)
appears on the stock certificate. If shares
are held by joint tenants, both should sign.
When signing as attorney, executor, as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person. This proxy votes all shares held in
all capacities unless otherwise specified.
<PAGE>
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. IN ADDITION, PLEASE MARK THE FOLLOWING BOX IF YOU PLAN TO ATTEND THE
MEETING.
<PAGE>
APPENDIX
ALLIED HEALTHCARE PRODUCTS, INC.
AMENDMENT TO 1994 EMPLOYEE STOCK OPTION PLAN
WHEREAS, Allied Healthcare Products, Inc., a Delaware corporation (the
"Company"), adopted the Allied Healthcare Products, Inc. 1994 Employee Stock
Option Plan (the "Plan"), dated August 4, 1994. Capitalized terms used herein
and not otherwise defined have the meanings given such terms in the Plan;
WHEREAS, Article IV of the Plan provides that the Board may at any time
amend or revise the terms of the Plan, subject to stockholder approval as
described therein; and
WHEREAS, the Board has resolved to make certain amendments and revisions to
the Plan, subject to stockholder approval thereof.
NOW, THEREFORE, the Plan is hereby amended, effective upon stockholder
approval thereof, as follows:
1. Section 1(a) of Article I and Section 3 of Article II thereof are
hereby revised to state that a total of 550,000 shares are available for
issuance pursuant to the Plan.
2. Section 2(a) of Article I thereof is hereby revised to read as
follows:
a. The Plan shall be administered by a committee (the "Committee")
as appointed from time to time by the Board of Directors (the "Board") of
the Company (or any successor committee appointed by the Board). The
Committee shall consist of two or more individuals who shall be members of
the Board and each of whom shall be a "non-employee director" within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Members of the Committee shall not
be eligible to receive Options under the Plan while a member. Any member of
the Committee may, however, exercise Options previously granted. A majority
of the members of the Committee shall constitute a quorum. Any action of
the Committee with respect to the
A-1
<PAGE>
administration of the Plan shall be taken by majority vote or written
consent of a majority of its members. The Board of Directors, acting by
resolution approved at a duly convened meeting of the full Board of
Directors at which a quorum was present or by written consent of all of the
members of the Board of Directors, may exercise any of the powers granted
to the Committee under the Plan.
In addition, Options may be granted with any terms and conditions not
inconsistent with the Plan without approval of the Committee if such
Options (i) are subject to shareholder approval or (ii) may not be
exercised within six (6) months of the date of grant.
3. Section 6(a) of Article II thereof is hereby revised to read as
follows:
a. A participant may exercise each Option granted to the participant
in such installments as the Committee shall determine at the time of grant
thereof.
4. Section 8(g) of Article III thereof is hereby revised to read as
follows:
g. If the employment of any participant with the Company and all
parent and subsidiary corporations of the Company shall terminate for any
reason described in clause (i) or (ii) of paragraph a of this Section 8 and
at the time of such termination a Non-Qualified Option previously granted
to such participant was not fully exercisable solely because a period of
time prior to exercise set forth in the applicable Non-Qualified Stock
Option Agreement had not passed, then the Committee in its discretion may
amend such Agreement to permit the exercise of such Options at such times,
not after three years following such termination of employment, as the
Committee may determine in its discretion to be appropriate in any
particular instance.
5. Section 1(a) of Article IV thereof is hereby revised to read as
follows:
a. The Board may, in its discretion, at any time suspend or
terminate the Plan. The Board may also at any time amend or revise the
terms of the Plan or any Option granted under the Plan.
A-2
<PAGE>
6. No other provision of the Plan shall be altered, amended, revised or
otherwise modified hereby.
7. This Amendment to 1994 Employee Stock Option Plan shall become
effective upon stockholder approval hereof.
IN WITNESS WHEREOF, this Amendment has been duly executed by order of the
Board as of the 10th day of September 1996.
ALLIED HEALTHCARE PRODUCTS, INC.
By: /s/ Barry F. Baker
--------------------------------------
Barry F. Baker
Vice President--Finance,
Chief Financial Officer and
Secretary
