October 6, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held at the Corporate Headquarters of Allied Healthcare Products,
Inc., 1720 Sublette, St. Louis, Missouri 63110 at 9:00 a.m., Central Time, on
Tuesday, November 14, 2000. 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,
John D. Weil
Chairman of the Board
Earl R. Refsland
Chief Executive Officer
<PAGE>
ALLIED HEALTHCARE PRODUCTS, INC.
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, NOVEMBER 14, 2000
____________________
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 Corporate
Headquarters of Allied Healthcare Products, Inc., 1720 Sublette, St. Louis,
Missouri 63110 on Tuesday, November 14, 2000 at 9:00 a.m., Central Time, for the
following purposes:
(1) To elect five directors to serve until the next Annual
Meeting of Stockholders or until their successors are
elected and qualified;
(2) 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 October 2,
2000 are entitled to notice of and to vote at the meeting. A list of
stockholders of the Company at the close of business on October 2, 2000 will be
available for inspection during normal business hours from November 1 through
November 14, 2000 at the offices of the Company at 1720 Sublette Avenue, St.
Louis, Missouri 63110 and will also be available at the meeting.
By Order of the Board of Directors,
Gregory C. Kowert
Vice President-Finance, Chief Financial Officer
Secretary & Treasurer
St. Louis, Missouri
October 6, 2000
--------------------------------------------------------------------------------
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
TUESDAY, NOVEMBER 14, 2000
____________________
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 9:00
a.m., Central Time, Tuesday, November 14, 2000, 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 Corporate
Headquarters of Allied Healthcare Products, Inc., 1720 Sublette, St. Louis,
Missouri 63110. 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 6, 2000.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on Monday, October 2,
2000 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
7,806,682 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" (described below) 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. Proxies submitted by brokers that do
not indicate a vote for some of the proposals because the brokers don't have
discretionary voting authority and haven't received instructions from the
beneficial owners on how to vote on those proposals are called "broker
non-votes."
<PAGE>
ITEM NO. 1
----------
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 five members. The stockholders will
vote at the 2000 Annual Meeting for the election of five directors for the
one-year term expiring at the Annual Meeting of Stockholders in 2001. 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>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- -------------------- --------------
<S> <C> <C> <C>
Brent D. Baird . . . . . . . . . . . . . . . . 61 Chairman of First Carolina Investors, Inc. April 1999
of Buffalo, New York
James B. Hickey, Jr. . . . . . . . . . . . . . 47 Private Investor February 1998
William A. Peck. . . . . . . . . . . . . . . . 67 Executive Vice Chancellor for Medical April 1994
Affairs and Dean, School of Medicine,
Washington University, St. Louis, Missouri
Earl R. Refsland . . . . . . . . . . . . . . . 57 President and Chief Executive Officer of September 1999
the Company, St. Louis, Missouri
John D. Weil . . . . . . . . . . . . . . . . . 59 President of Clayton Management Co., August 1997
St. Louis, Missouri
</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. Baird is a private investor and Chairman of First Carolina
Investors, Inc., a closed-end, non-diversified management investment company
(listed on the Boston Stock Exchange). Mr. Baird currently serves as a director
of First Carolina Investors, Inc., Exolon-ESK Company, M & T Bank Corporation,
Todd Shipyards Corporation, Merchants Group, Inc., Ecology and Environment,
Inc., and Baldwin Piano & Organ Company.
Mr. Hickey is a private investor. Mr. Hickey served as President and
Chief Executive Officer of Angeion Corporation, based in Minneapolis, Minnesota
from July 1998 to January 2000. Mr. Hickey served as President and Chief
Executive Officer of Aequitron Medical from 1993 to 1997. Mr. Hickey currently
serves as a director of Vital Images, Inc., Angeion Corporation, Pulmonetic
Systems, Inc. and Merchants Exchange of St. Louis.
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
Reinsurance Group of America, Angelica Corporation, Hologic Corporation and TIAA
CREF Trust.
2
<PAGE>
Mr. Refsland has served as President and Chief Executive Officer of
the Company since September 1999. From February 1999 to January 2000, Mr.
Refsland served as Director and Chairman of the Board of Andros Technologies.
From May 1995 to March 1998, Mr. Refsland served as President and CEO of
Photometrics Limited. Mr. Refsland previously served as Chief Executive Officer
and member of the Board of Directors of Allied Healthcare Products, Inc. from
1986 to 1993.
Mr. Weil has served as President of Clayton Management Co. since 1973.
Mr. Weil currently serves as a director of Pico Holdings, Inc., Oglebay Norton
Co., Southern Investors Service Co., Todd Shipyards Corp. and Baldwin & Lyons,
Inc.
IF YOU SIGN AND RETURN THE PROXY FORM AND DO NOT SPECIFY OTHERWISE, WE WILL VOTE
YOUR SHARES FOR THE ELECTION OF THE FIVE NOMINEES LISTED ABOVE.
ITEM NO. 2
----------
OTHER BUSINESS
We do not know of any other matters to be presented at the meeting. If any
other matter is properly presented for a vote at the meeting, your shares will
be voted by the holders of the proxies using their best judgment.
3
<PAGE>
BOARD MEETINGS-COMMITTEES OF THE BOARD
The Board of Directors of the Company held five meetings during the
fiscal year ended June 30, 2000. The Board of Directors presently maintains a
Compensation Committee, an Audit Committee and a Nominating Committee.
The Compensation Committee consists of Messrs. Hickey, Baird and Peck.
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 did not
hold any meetings during the fiscal year ended June 30, 2000.
The Audit Committee consists of Messrs. Peck, Weil and Baird. 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 four meetings during the fiscal year ended June 30, 2000.
The Nominating Committee consists of Messrs. Baird, Peck and Weil.
This committee recommends nominees to fill vacancies on the Board of Directors.
The Nominating Committee did not hold any meetings during the fiscal year ended
June 30, 2000. 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 2001 if such
nominations are submitted in writing to the Company's headquarters Attention:
Nominating Committee, no later than June 1, 2001.
4
<PAGE>
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 August 31, 2000.
<TABLE>
<CAPTION>
PERCENT OF
SHARES OWNED OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY SHARES*
---------------------------------------- ------------- -----------
<S> <C> <C>
Heartland Advisors, Inc.(1) 1,947,800 24.95%
790 North Milwaukee Street
Milwaukee, WI 53202
John D. Weil(2) 1,478,500 18.93%
200 North Broadway
Suite 825
St. Louis, MO 63102
Warburg Pincus Asset Management, Inc.(3) 601,500 7.70%
466 Lexington Avenue
New York, New York 10017
Dimensional Fund Advisors Inc.(4) 567,000 7.26%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
__________________
<FN>
* All percentages are computed based upon 7,806,682 shares issued
and outstanding as of October 2, 2000.
(1) Information obtained from beneficial owner.
(2) Includes shares beneficially owned by Mr. Weil in the
following capacities: 1,430,500 shares owned by Woodbourne
Partners, L.P., a limited partnership whose general partner is
Controlled by Mr. Weil; 4,000 shares owned by Mr. Weil
directly; 10,000 shares owned by Mr. Weil's son for which he
disclaims beneficial ownership; 9,000 shares issuable within
60 days of the date hereof pursuant to the terms of Directors
Plans; and 25,000 shares issuable pursuant to warrants
exercisable within 60 days from the date hereof pursuant to
the Note Purchase Agreement dated August 7, 1997 among the
Company, B&F Medical Products, Inc., a Delaware corporation,
Bear Medical Systems, Inc., a California corporation, Hospital
Systems, Inc., a California Corporation Life Support Products,
Inc., a California corporation, BiCore Monitoring Systems,
Inc., a California corporation and each of the purchasers
named therein (the "Note Purchase Agreement").
(3) Information obtained from beneficial owner.
(4) Information obtained from beneficial owner.
</TABLE>
5
<PAGE>
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 22, 2000.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OUTSTANDINGSHARES+
------------------------------------------------------------- ------------ ------------------
<S> <C> <C>
Brent D. Baird(1) 132,500 1.70%
David A. Grabowski(2) 30,741 *
James B. Hickey, Jr.(3) 11,000 *
Gabriel S. Kohn(4) 3,500 *
Gregory C. Kowert(5) 0 *
William A. Peck(6) 24,200 *
Earl R. Refsland(7) 183,300 2.35
Eldon P. Rosentrater(8) 18,500 *
John D. Weil(9) 1,478,500 18.93%
------------ ------------------
All directors and executive officers as a group (9 persons) 1,926,241 24.68%
============ ==================
__________________
<FN>
+ All percentages are computed based upon 7,806,682 shares issued and outstanding as of
October 2, 2000.
* Less than 1.00%.
(1) Represents 81,000 shares owned by Mr. Baird, 50,000 shares held by Personal Holding
Company and 10,000 shares by Mr. Baird's retirement plan. Represents 1,500 shares
issuable pursuant to options exercisable within 60 days of the date hereof pursuant to
the terms of the 1995 Directors Non-Qualified Stock Option Plan (the "1995 Directors
Plan"). Excludes 10,000 shares issuable pursuant to options granted under the 1995
Directors Plan which are not currently exercisable.
(2) Represents 1,241 shares owned by Mr. Grabowski and 29,500 shares issuable pursuant to
options exercisable within 60 days of the date hereof pursuant to the terms of the
Company's 1991 Employee Plan (the "1991 Employee Plan") and the 1994 Employee Plan (the
"1994 Employee Plan") (the 1991 Employee Plan and the 1994 Employee Plan are
collectively referred to herein as the "Employee Plans"). Excludes 16,250 shares
issuable pursuant to options granted under the Employee Plans which are not currently
exercisable.
(3) Represents 5,000 shares owned by Mr. Hickey and 6,000 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
1995 Directors Non-Qualified Stock Option Plan (the "1995 Directors Plan") (the 1991
Directors Plan and the 1995 Directors Plan are collectively referred to herein as the
"Directors Plans"). Excludes 7,500 shares issuable pursuant to options granted under
the Directors Plan which are not currently exercisable.
(4) Represents 3,500 shares owned by Mr. Kohn. Mr. Kohn resigned as Vice President
Engineering of the Company on March 10, 2000.
6
<PAGE>
(5) Excludes 30,000 shares issuable pursuant to options granted under the 1994 Employee
Plans which are not currently exercisable.
(6) Represents 5,200 shares owned by Dr. Peck and 19,000 shares issuable pursuant to
options exercisable within 60 days of the date hereof pursuant to the terms of the
Directors Plans.
(7) Represents 42,800 shares owned by Mr. Refsland and 135,500 shares issuable pursuant to
options exercisable within 60 days of the date hereof pursuant to the terms of
the 1999 Incentive Stock Plan. Excludes 406,500 shares issuable pursuant to options
granted under the 1999 Incentive Stock Plan which are not currently exercisable.
(8) Represents 4,000 shares owned by Mr. Rosentrater and 14,500 shares issuable pursuant to
options exercisable within 60 days of the date hereof pursuant to the terms of the
Employee Plans. Excludes 2,750 shares issuable pursuant to options granted under the
Employee Plans which are not currently exercisable.
(9) See information under the heading "Holders of More Than Five Percent Beneficial
Ownership."
</TABLE>
No agreements, formal or informal, exist among the various executive
officers and directors with respect to the voting of the shares.
7
<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>
<CAPTION>
NAME AGE POSITION(S)
---------------------------------- ---- --------------------------------------------------
<S> <C> <C>
David A. Grabowski . . . . . . . . 47 Vice President - Sales and Marketing(1)
Gregory C. Kowert. . . . . . . . . 53 Vice President-Finance, Chief Financial Officer
Secretary & Treasurer(2)
Earl R. Refsland . . . . . . . . . 57 Director, President and Chief Executive Officer(3)
Eldon P. Rosentrater . . . . . . . 46 Vice President-Operations(4)
_______________
<FN>
(1) Mr. Grabowski has been Vice President - Sale and Marketing of the Company since
January 1997. He previously held the position of Vice President - International Sales
of the Company from 1996 to 1997. Prior to that time, Mr. Grabowski held the position
of Director of Marketing of the Company from 1990 to 1996.
(2) Mr. Kowert has been Vice President - Finance, Chief Financial Officer, Secretary and
Treasurer since August, 2000.
(3) Mr. Refsland has been Director, President and Chief Executive Officer of the Company
since September, 1999.
(4) Mr. Rosentrater has been Vice President-Operations of the Company since October 1999.
He previously held the position of Assistant to the President from 1998 to 1999. Prior
to that time, Mr. Rosentrater held the positions of Director of Information
Technologies from 1995 to 1998; Director of Business Development from 1993 to 1995
and Group Product Manager from 1989 to 1993.
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the fiscal years ended June 30, 2000 by the
Chief Executive Officer and each of the Company's executive officers whose total
salary and bonus exceeded $100,000 during such fiscal year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
ANNUAL
COMPENSATION(1)
<TABLE>
<CAPTION>
FISCAL STOCK OPTION ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY(2) BONUS AWARDS COMPENSATION
-------------------------------------------- ------ --------- ------- ------------ ------------
(In Shares)
<S> <C> <C> <C> <C> <C>
Uma N. Aggarwal 2000 $ 17,918 -- -- $139,548(3)
Former President and Chief Executive Officer 1999 225,000 -- -- 16,829(4)
1998 225,000 $15,000 -- 102,318(5)
David A. Grabowski(10) 2000 155,000 -- -- $ 19,006(6)
Vice President - Sales and Marketing 1999 155,000 -- -- 18,124(6)
1998 162,360 10,000 15,000 12,134(6)
Gabriel S. Kohn(10) 2000 98,654 -- -- 54,233(7)
Former Vice President - Engineering 1999 135,000 -- -- 11,766(8)
1998 125,481 10,000 9,000 11,024(8)
Thomas A. Jenuleson(11) 2000 145,000 10,000 -- 4,364(8)
Vice President - Finance and 1999 39,000 -- 30,000 --
Chief Financial Officer 1998 -- -- -- --
Earl R. Refsland 2000 228,000 -- 542,000 20,616(9)
President and Chief Executive Officer 1999 -- -- -- --
1998 -- -- -- --
Eldon P. Rosentrater 2000 112,750 -- -- 5,181(8)
Vice President - Operations 1999 -- -- -- --
1998 -- -- -- --
_____________________
<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) The amount shown represents matching contributions under the 401(k) feature of the Company's
Retirement Savings Plan, term life and disability insurance premiums and also reflects Mr.
Aggarwal's car allowance in the amount of $1,118 for fiscal 2000 and a severance package
Totaling $139,548. Mr. Aggarwal resigned as President and Chief Executive Officer of the
Company on July 28, 1999.
(4) The amount shown represents matching contributions under the 401(k) feature of the Company's
Retirement Savings Plan, term life and disability insurance premiums and also reflects
Mr. Aggarwal's car allowance
(5) The amount shown represents the amount paid for relocation reimbursement; term life and
disability insurance premiums; matching contributions under the 401(k) feature of the
Company's Retirement Savings Plan; and value realized on Stock Options.
9
<PAGE>
(6) The amount shown represents matching contributions under the 401(k) feature of the Company's
Retirement Savings Plan, term life and disability insurance premiums and also reflects
Mr. Grabowski's car allowance in the amount of $7,701 for fiscal 2000.
(7) The amount shown represents the amounts paid for term life and disability insurance
premiums, matching contributions under the 401(k) feature of the Company's Retirement
Savings Plan and a severance package totaling $54,233. Mr. Kohn resigned as Vice
President-Engineering of the Company on March 10, 2000.
(8) The amount shown represents the amounts paid for term life and disability insurance premiums
and matching contributions under the 401(k) feature of the Company's Retirement Savings
Plan.
(9) The amount shown represents matching contributions under the 401(k) feature of the Company's
Retirement Savings Plan, term life and disability insurance premiums and also reflects Mr.
Refsland's car allowance in the amount of $5,155 for fiscal 2000.
(10) In fiscal 1999, the Company entered into "change-in-control" severance agreements with David
A. Grabowski and Gabriel S. Kohn. If an individual is terminated without cause within two
years of a "change-in-control" event (as defined in each agreement), such individual is
entitled to receive a severance benefit of one year's base salary. This agreement commenced
on February 11, 1999 for David A. Grabowski and Gabriel S. Kohn and expires on December 31,
2000.
(11) Mr. Jenuleson resigned as Vice President-Finance and Chief Financial Officer of the Company
on September 22, 2000.
</TABLE>
10
<PAGE>
OPTIONS
The following table sets forth information concerning options granted
during the fiscal year ended June 30, 2000 under the Company's stock option
plans to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENTAGE OF AT 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 2000(1) PRICE DATE 5% 10%
---------------- ---------- -------------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Earl R. Refsland 542,000 96.4% 2.00 09/09 $ 681,722 $ 1,727,617
__________________
<FN>
(1) No options were granted to employees under the 1991 Employee Plan, 20,000 options were
granted to employees under the 1994 Employee Plan and Mr. Refsland's options were
granted under the 1999 Incentive Stock Option Plan for a total of 562,000. The purpose
of the Plans is to provide a financial incentive to key employees who are in a position
to make significant contributions to the Company. Options granted pursuant to the 1994
Employee Plan have an exercise price equal to the market price on the date of grant.
Generally, these 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. Mr. Refsland's options became exercisable at the rate of 6.25%
per quarter commencing in December of 1999.
(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.
</TABLE>
11
<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, 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000 AND
FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JUNE 30, 2000 JUNE 30, 2000
SHARES -------------------------- --------------------------
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------- ----------- -------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Grabowski -- -- 25,750 20,000 (1) (1)
Thomas A. Jenuleson -- -- -- 30,000 -- $ 45,000(2)
Earl R. Refsland -- -- 101,625 440,375 $139,734(2) $ 605,516(2)
Eldon P. Rosentrater -- -- 14,500 2,750 (1) (1)
<FN>
(1) No options held by this officer at June 30, 2000 were in-the-money. An option is "In-the-Money"
when the market value exceeds the exercise price of this option.
(2) The "Value of Unexercised In-the-Money Options at June 30, 2000" was calculated by determining
the difference between the fair market value of the underlying common stock at June 30, 2000
(The Nasdaq closing price of the Allied Healthcare Products, Inc. on June 30, 2000 was $3.375)
and the exercise price of the option.
</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's 1991 Directors Plan 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.
12
<PAGE>
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.
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 with the consent of
the grantee. The Company receives no consideration for the grant of options
under the 1995 Directors Plan.
13
<PAGE>
The following table sets forth information with respect to options
outstanding under the Directors Plans:
<TABLE>
<CAPTION>
DATE OF NUMBER OF EXERCISE PRICE
NAME GRANT SHARES PER SHARE
-------------------- -------- --------- --------------
<S> <C> <C> <C>
Brent D. Baird 04/01/99 10,000 $ 1.875
11/12/99 1,500 2.31
James B. Hickey, Jr. 02/09/98 10,000 7.25
02/09/98 500 7.25
11/16/98 1,500 2.50
11/12/99 1,500 2.31
William A. Peck 04/29/94 10,000 15.75
11/09/95 4,000 18.25
11/14/96 1,000 7.13
11/17/97 1,000 7.63
11/16/98 1,000 2.50
04/01/99 500 1.875
11/12/99 1,500 2.31
John D. Weil 08/04/97 10,000 7.00
11/17/97 1,000 7.63
02/09/98 500 7.25
11/16/98 1,500 2.50
04/01/99 5,000 1.875
11/12/99 1,000 2.31
Total 63,000
========
</TABLE>
14
<PAGE>
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 program 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 recommends to
the Board of Directors 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.
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. 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.
STOCK-BASED INCENTIVES. The Company's Employee Plans 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.
15
<PAGE>
Under these plans, approved by the stockholders, the Committee
periodically recommends to the Board of Directors grants of stock options by the
Board of Directors. Generally, the Committee attempts to reflect upon the
optionee's potential impact on corporate financial and operational performance
in the award of stock options.
Compensation Committee
James B. Hickey, Jr.
Brent D. Baird
William A. Peck
16
<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
three 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.
Market Index: Nasdaq Stock Market (US Companies)
Peer Index: Companies in Self-Determined Group : 5
CTU CHAD THERAPEUTICS INC
CXIM CRITICARE SYSTEMS INC
IVC INVACARE CORP
RESP RESPIRONICS INC
SMD SUNRISE MEDICAL INC
Comparison of Five-Year Cumulative Total Returns
Performance Report for
Allied Healthcare Products, Inc.
Prepared by the Center for Research in Security Prices
Produced on 09/21/2000 including data to 06/30/2000
Date Company Index Market Index Peer Index
06/30/1995 100.000 100.000 100.000
07/31/1995 93.846 107.344 101.358
08/31/1995 98.462 109.522 97.829
09/29/1995 113.077 112.046 106.745
10/31/1995 116.923 111.400 97.785
11/30/1995 109.231 114.014 96.777
12/29/1995 98.892 113.411 98.044
01/31/1996 72.238 113.978 98.734
02/29/1996 77.260 118.323 93.393
03/29/1996 82.320 118.720 96.390
04/30/1996 66.788 128.556 98.346
05/31/1996 71.447 134.451 99.343
06/28/1996 57.892 128.390 94.414
07/31/1996 43.810 116.962 101.346
08/30/1996 40.681 123.534 107.020
09/30/1996 45.375 132.980 104.998
10/31/1996 42.246 131.502 92.311
11/29/1996 43.810 139.654 89.226
12/31/1996 46.157 139.537 93.951
01/31/1997 51.633 149.436 95.480
02/28/1997 51.633 141.166 89.446
03/31/1997 46.157 131.962 88.108
04/30/1997 43.028 136.075 73.667
05/30/1997 38.334 151.486 81.727
06/30/1997 40.681 156.144 88.842
07/31/1997 44.592 172.596 90.944
08/29/1997 43.810 172.339 87.553
09/30/1997 48.504 182.552 98.009
10/31/1997 48.504 173.041 97.979
11/28/1997 49.482 173.953 95.408
12/31/1997 48.504 170.906 87.120
01/30/1998 45.375 176.319 82.987
02/27/1998 43.810 192.900 92.568
03/31/1998 41.463 200.029 101.635
04/30/1998 37.552 203.401 83.484
05/29/1998 32.858 192.099 81.075
06/30/1998 30.511 205.518 78.194
07/31/1998 19.558 203.121 70.408
08/31/1998 15.646 162.854 56.428
09/30/1998 12.517 185.449 61.521
10/30/1998 13.691 193.599 68.310
11/30/1998 15.646 213.281 76.548
12/31/1998 10.170 240.991 77.954
01/29/1999 12.517 275.953 67.638
02/26/1999 9.779 251.249 60.789
03/31/1999 12.126 270.250 61.612
04/30/1999 11.735 278.963 62.698
05/28/1999 11.735 271.232 69.097
06/30/1999 10.855 295.632 68.577
07/30/1999 11.930 290.294 54.937
08/31/1999 17.993 302.556 49.628
09/30/1999 15.646 302.981 47.061
10/29/1999 14.082 327.270 48.757
11/30/1999 17.993 367.055 48.750
12/31/1999 14.864 447.764 47.467
01/31/2000 15.744 431.192 50.847
02/29/2000 20.732 513.454 60.796
03/31/2000 20.340 502.638 68.156
04/28/2000 19.558 422.627 68.396
05/31/2000 20.732 371.603 64.330
06/30/2000 21.123 436.821 70.025
The index level for all series was set to 100.0 on 06/30/1995
17
<PAGE>
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, 2000.
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.
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.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
The rules of the SEC currently provide that stockholder proposals for
the 2001 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
2000 Annual Meeting to be considered by the Company for possible inclusion in
the proxy materials for the 2001 Annual Meeting.
18
<PAGE>
FINANCIAL INFORMATION
The Company's 2000 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 October 2, 2000,
who so requests in writing, a copy of such 2000 Annual Report or the Company's
2000 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: Chief Financial Officer.
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 2000 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,
Earl R. Refsland
Chief Executive Officer
October 6, 2000
19
<PAGE>
