<PAGE>
OPTON HANDLER GOTTLIEB FEILER & KATZ, LLP
ATTORNEYS AT LAW
52 VANDERBILT AVENUE
NEW YORK, NEW YORK 10017-3808
(212) 599-1744
October 29, 1996
"SCHEDULE 14-A"
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
RE: ALPHA PRO TECH, LTD.
COMMISSION FILE NO. 0-19893-
Dear Sirs/Madames:
Enclosed for filing please find the definitive Proxy material of the
above-referenced registrant used in connection with its Annual Meeting of
Shareholders held on June 21, 1996.
Very truly yours,
Peter Landau
PL:mdy
Enclosures
<PAGE>
ALPHA PRO TECH, LTD.
60 CENTURIAN DRIVE
SUITE 112
MARKHAM, ONTARIO
L3R 9R2
TELEPHONE: (905) 479-0654
NOTICE OF ANNUAL MEETING
TAKE NOTICE that the 1996 Annual Meeting of Shareholders of Alpha Pro Tech,
Ltd., (the "Company") will be held at Little America--Hotel & Towers, 500 South
Main Street, Salt Lake City, Utah 84101 on:
FRIDAY, JUNE 21, 1996
at the hour of 10:00 o'clock a.m. (local time) for the following purposes:
1. To elect five directors.
2. To amend the Company's 1993 Incentive Stock Option Plan so as to increase
the number of shares available under the Plan.
3. To ratify the appointment of independent accountants.
4. To transact such other business as may properly come before the Meeting.
Accompanying this Notice is the Proxy Statement and Form of Proxy.
Only Shareholders of record at the close of business on May 10, 1996 will be
entitled to vote at the meeting and any adjournments thereof.
DATED: Markham, Ontario, May 28, 1996.
BY ORDER OF THE BOARD OF DIRECTORS
"Al Millar"
President
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT YOUR
SHARES WILL BE REPRESENTED AT THE MEETING. IF YOU CHOOSE TO ATTEND THE MEETING,
YOU MAY REVOKE YOUR PROXY AND PERSONALLY CAST YOUR VOTES.
<PAGE>
ALPHA PRO TECH, LTD.
60 CENTURIAN DRIVE
SUITE 112
MARKHAM, ONTARIO
L3R 9R2
PROXY STATEMENT
REVOCABILITY OF PROXY
This Proxy Statement and accompanying proxy are first being sent to
shareholders on or about May 30, 1996.
The accompanying proxy is solicited by the Board of Directors. It may be
revoked at any time before being voted by written notice given to the secretary
of the meeting or by the delivery of a later dated proxy. Proxies properly
executed, duly returned to the Company and not revoked, will be voted for the
election of directors (except to the extent that authority therefor is withheld)
and on the other Proposals described in this Proxy Statement in accordance with
the instructions in the proxy. The Board of Directors is not aware at the date
hereof of any other matter proposed to be presented at the meeting, and does not
believe that any matter may be properly presented other than the election of
directors and Proposals 2 and 3. If any other matter is properly presented, the
persons named in the enclosed form of proxy will have discretionary authority to
vote thereon according to their best judgment. Presence at the meeting does not
of itself revoke the proxy.
VOTING
The only securities of the Company entitled to be voted are shares of Common
Stock.
A quorum consisting of a majority of all shares outstanding and entitled to
vote at the meeting, present in person or by proxy, is required for the purpose
of considering the matters to come before the meeting. A quorum being present,
directors are elected by a plurality of shares present in person or represented
by proxy and entitled to vote and the approval of the amendment to the 1993
Incentive Stock Option Plan and the ratification of the appointment of
independent accountants requires the affirmative vote of a majority of shares
present in person or represented by proxy and entitled to vote.
Proxies marked as abstentions, or to withhold a vote from a nominee as a
director in the case of the election of directors, will have the effect of a
negative vote. Broker non-votes (where a nominee holding shares for a beneficial
owner has not received voting instructions from the beneficial owner with
respect to a particular matter and such nominee does not have or choose to
exercise his discretionary authority with respect thereto), will be considered
as present at the meeting but not entitled to vote with respect to the
particular matter and will therefore have no effect on the vote.
The Company is authorized to issue 50,000,000 Common Shares, par value $.01
per share. There is one class of shares only. There are issued and outstanding
20,237,123 shares as of the close of business May 10, 1995, the record date for
the meeting, each of which is entitled to one vote on each matter to be voted on
at the meeting.
PERSONS MAKING THE SOLICITATION
Solicitations will be made by mail and possibly supplemented by telephone or
other personal contact to be made without special compensation by regular
officers and employees of the Company. The Company may reimburse members'
nominees or agents (including brokers holding shares on behalf of clients) for
the cost incurred in obtaining from their principals authorization to execute
forms of proxies. No solicitation will be made by specifically engaged employees
or soliciting agents. The cost of solicitation will be borne by the Company.
<PAGE>
ANNUAL REPORT
The Annual Report for the year ended December 31, 1995 containing financial
and other information about the Company and its subsidiaries is enclosed.
PROPOSAL 1.
ELECTION OF DIRECTORS
Each director of the Company is elected annually and holds office until the
next Annual Meeting of Shareholders and until his successor is duly elected. In
the absence of instructions to the contrary the shares represented by proxy will
be voted FOR the nominees listed below. All the nominees, are currently
directors, and all have consented to be named and to serve if elected.
MANAGEMENT DOES NOT CONTEMPLATE THAT ANY OF THE NOMINEES WILL BE UNABLE TO
SERVE AS A DIRECTOR. IN THE EVENT THAT PRIOR TO THE MEETING ANY VACANCIES OCCUR
IN THE SLATE OF NOMINEES LISTED BELOW, IT IS INTENDED THAT DISCRETIONARY
AUTHORITY SHALL BE EXERCISED BY THE PERSON NAMED IN THE PROXY AS NOMINEE TO VOTE
THE SHARES REPRESENTED BY PROXY FOR THE ELECTION OF ANY OTHER PERSON OR PERSONS
AS DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES
NAMED BELOW.
A PLURALITY OF THE VOTES CAST AT THE MEETING IS REQUIRED TO ELECT EACH
DIRECTOR.
CERTAIN INFORMATION REGARDING EACH NOMINEE FOR DIRECTOR IS GIVEN BELOW.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITION WITH THE COMPANY
- --------------------------------- --- ----------------- ---------------------------------
<S> <C> <C> <C>
Sheldon Hoffman.................. 58 July 11, 1989 CEO & Director, of the Company
and Alpha Pro Tech, Inc.
Al Millar........................ 54 July 11, 1989 President & Director of the
Company and Alpha Pro Tech, Inc.
Robert Isaly..................... 67 November 15, 1989 Director
John Ritota...................... 45 December 18, 1991 Director
Donald E. Bennett, Jr. .......... 55 June 23, 1995 Director and President of the
Company's Apparel Division
</TABLE>
SHELDON HOFFMAN is a chartered accountant and has been a director and chief
executive officer of the Company since July 11, 1989. Mr. Hoffman founded and
was president of Absco Aerosols Ltd., a custom manufacturer of aerosols and
liquids, from 1967 to 1985 until that company was sold to CCL Industries Inc.
("CCL"), a manufacturer of aerosol and liquid products and containers. Mr.
Hoffman joined CCL from 1986 to 1987 as director of business development and
then joined CCW Systems Ltd., a water filter manufacturer, as president and
chief executive officer. Mr. Hoffman devotes full time to the Company's
operations.
ALEXANDER W. MILLAR has been a director of the Company since July 11, 1989 and
president since August 1, 1989. Mr. Millar has spent over 20 years as a
professional in sales and marketing including international marketing. Mr.
Millar, in various sales capacities, including vice-president of sales, was
associated with Mr. Hoffman at Absco Aerosols Ltd. from 1971 to 1985, when the
business was sold to CCL. He then joined CCL as manager of business development
for North America. In March, 1988, he formed Milmed International Distributors
Limited to distribute the Company's products internationally. In
2
<PAGE>
1989 Milmed gave up its rights to distribute these products internationally at
which time Milmed ceased operations. Mr. Millar devotes full time to the
Company's operations.
ROBERT ISALY has been a director of the Company since November 20, 1989. He was
the owner of a nursery, Florida Bedding Plants Inc. from 1986 to 1992 and is
currently an independent businessman.
JOHN RITOTA has been a director of the Company since December 18, 1991 and since
1981 to the present time has been operating a general dentistry practice, Ritota
and Ritota, with his brother in Del Ray Beach, Florida.
DONALD E. BENNETT, JR. joined the Company on March 24, 1994 as President of its
newly formed Apparel Division which was established to acquire the assets of
Disposable Medical Products, Inc. ("DMPI"), a manufacturer of medical apparel
items including bouffant caps, shoe covers, gowns, coveralls and lab coats. Mr.
Bennett owned and operated DMPI for approximately twenty years prior to the
Company's acquisition of its assets. (See "Certain Relationships and Related
Transactions").
EXECUTIVE OFFICERS
Three of the executive officers of the Company, Sheldon Hoffman, Al Millar
and Donald E. Bennett, Jr. are also directors and nominees, and are identified
above. Information follows on the other current executive officer of the
Company.
Lloyd Hoffman (35) has been employed by the Company starting November 15,
1991 in the capacity of accountant and since early 1995 in the capacity of Vice
President and Controller. From 1987 to 1991, Mr. Hoffman was a shareholder and
was in charge of finance and administration at Software Concept Inc., a
developer of software for association and magazine publishers.
There are no family relationships between the above persons other than Lloyd
Hoffman who is the son of Sheldon Hoffman.
SETTLEMENT WITH BRITISH COLUMBIA SECURITIES COMMISSION
On November 10, 1995, Sheldon Hoffman a Director and CEO of the Company and
Alexander Millar, a Director and President of the Company settled all
outstanding matters pending before the British Columbia Securities Commission
(the "BCSC"), which were commenced in March 1992 by the British Columbia
Superintendent of Brokers ("Superintendent"). The settlement provides that as to
each of Messrs. Hoffman and Millar: a Cease Trade Order as to sales by them of
the Company's securities in British Columbia shall remain in effect for 2 years;
each shall be prohibited from becoming or acting as a director or officer of any
British Columbia reporting issuer, other than the Company, until such time as
they have successfully completed a course of study satisfactory to the
Superintendent concerning the duties of directors and officers of reporting
issuers; full payment to the BCSC shall have been made of $29,000 as to Hoffman
and $14,500 as to Millar; and the Superintendent consents to their acting in the
capacity of a director or officer of a British Columbia reporting issuer. All
matters pending as to Robert Isaly, a Director of the Company, were dropped.
3
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of May 10, 1996 with
respect to shares of Common Stock of the Company beneficially owned by each
director of the Company, each nominee for director, each executive officer of
the Company, by all officers and directors as a group, and by persons known to
the Company to be beneficial owners of more than 5% of the Company's Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
DIRECTORS, EXECUTIVE OFFICERS BENEFICIALLY
AND 5% SHAREHOLDERS OWNED PERCENT OF CLASS
- ------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
Cede & Co................................................... 10,348,384* 46.8%
Box 20 Bowling Green Sta.
New York, NY
U.S.A. 10004
Al Millar, President & Director............................. 1,341,611(1)(8) 6.1%
423 Herridge Circle
Newmarket, Ontario
L3Y 7H7
Canada
Sheldon Hoffman, CEO and Director........................... 1,049,297(2)(8) 4.7%
Robert H. Isaly, Director................................... 615,613(3) 2.8%
John Ritota, Director....................................... 140,194(4) 0.6%
Lloyd Hoffman, VP & Controller.............................. 273,000(5) 1.2%
Donald E. Bennett, Jr., Pres.,
Apparel Division of Company............................... 163,334(6) .7%
James C. Rothstein **....................................... 450,000(7) 2.0%
All Directors and Officers
as a Group (7 persons).................................... 4,033,049 18.2%
</TABLE>
- ------------------------
* This company is nominee for beneficial owners of these shares whose identity
is unknown to the Company.
** Not standing for re-election as a director.
(1) Includes 300,000 options currently exercisable at $0.75 per share, expiring
October 27, 1998; 200,000 currently exercisable options at $1.34 per share,
expiring December 21, 2000; 46,840 currently exercisable Warrants at $1.03
per share expiring January 31, 1997; and includes 44,198 shares and
currently exercisable options to purchase 35,000 shares at $0.75 per share
owned beneficially by Mr. Millar's wife as to which Mr. Millar denies
beneficial ownership.+
(2) Includes 300,000 currently exercisable options at $0.75 per share, expiring
October 27, 1998; 200,000 options currently exercisable at $1.34 per share,
expiring December 21, 2000; Warrants to purchase 48,544 shares at $1.03 per
share expiring January 31, 1997; and includes 42,821 shares owned
beneficially by Mr. Hoffman's wife, as to which Mr. Hoffman denies
beneficial ownership. Does not include 420,051 shares held by Hoffman Family
Trust, as to which Mr. Hoffman denies beneficial ownership. The
beneficiaries of the Hoffman Family Trust are Mr. Hoffman's wife and their
two children. Mr. Hoffman does not have the power to vote or dispose of the
shares held by the Trust.+
(3) Includes 141,523 shares owned beneficially by Mr. Isaly's wife, as to which
Mr. Isaly denies beneficial ownership; 108,000 currently exercisable options
at $0.75 per share, expiring October 27, 1998; and 50,000 options currently
exercisable at $1.34 per share expiring December 21, 2000.+
(4) Includes currently exercisable options to purchase 50,000 shares at $0.75
per share, expiring October 27, 1998; 50,000 currently exercisable options
at $1.34 per share expiring December 21, 2000; and includes 2,000 shares
held by Mr. Ritota's wife as to which Mr. Ritota denies beneficial
ownership.+
4
<PAGE>
(5) Includes 135,000 options currently exercisable at $0.75 per share, expiring
October 27, 1998, 25,000 options currently exercisable at $1.34 per share
expiring December 21, 2000; and 5,000 shares beneficially owned by Mr.
Hoffman's wife, as to which Mr. Hoffman denies (beneficial) ownership. Mr.
Hoffman disclaims beneficial ownership with respect to any shares of the
Company held in the Hoffman Family Trust (see (2) above), except to the
extent of his pecuniary interest therein. See "Certain Relationships and
Related Transactions".+
(6) Includes 100,000 options currently exercisable at $1.00 per share, 50,000 of
which expire on April 29, 1999 and 50,000 of which expire on December 31,
1999; 25,000 currently exercisable options at $2.03 per share, expiring June
22, 2000; 25,000 options currently exercisable at $1.34 per share, expiring
December 21, 2000; and 6667 Warrants currently exercisable at $.75 per
share, expiring March 1, 1999.+
(7) Includes 200,000 Warrants currently exercisable at $0.75 per share expiring
March 1, 1997; 25,000 options currently exercisable at $2.03 per share,
expiring June 22, 2000; and 25,000 options currently exercisable at $1.34 pr
share expiring December 21, 2000. See "Certain Relationships and Related
Transactions".+
(8) Pursuant to an escrow agreement made in June 1989 between the National Trust
Company, the Company and certain shareholders of Alpha Pro Tech, Ltd. (the
"Escrow Agreement"), 3,150,000 of the Company's shares are held in escrow by
the National Trust Company, Vancouver, B.C., and are subject to certain
performance criteria before they are released. The Escrow Agreement provides
that the shares will be released to the shareholders, pro rata, on the basis
of one share for each $0.30 of Net Cumulative Cash Flow (as defined in the
Escrow Agreement) in any fiscal period commencing June 1, 1989. The Escrow
Agreement was a condition of an agreement relating to the purchase of
certain assets by the Company to commence the manufacturing and marketing of
its products, and a requirement of the Vancouver Stock Exchange. The
shareholders pursuant to the Escrow Agreement included the following persons
named in the foregoing table in the following amounts: Al Millar as to
675,00 shares; Sheldon Hoffman as to 337,500 shares; Hoffman Family Trust as
to 337,500 shares; Irving Bronfman as to 675,000 shares and Robert Isaly, on
behalf of various persons, as to 450,000 shares. The balance of 675,000
shares were owned by John Russell and are deemed to be cancelled. See
"Certain Transactions and Related Matters".
+ A currently exercisable option or warrant is one which is exercisable within
60 days from the date hereof.
Percentages are based on 20,237,123 Common Shares of the Company outstanding
on May 10, 1996 plus currently exercisable options and warrants for 1,920,051
shares held by directors and officers, for an aggregate total of 22,157,174
shares.
Messrs. Sheldon Hoffman, Al Millar and Lloyd Hoffman are residents of Canada
and Messrs. Ritota, Isaly, Bennett and Rothstein reside in the United States.
DIRECTOR'S MEETINGS
The Board of Directors of the Company met 4 times during the year ended
December 31, 1995. In 1995 the Company had no standing nominating or
compensation committees, these matters being handled by the entire Board of
Directors. In 1993, the Board of Directors of the Company formed an
Administrative Committee for the 1993 Stock Option Plan For Directors consisting
of Messrs. Al Millar and Sheldon Hoffman which recommends granting of
non-qualified stock options to non-employee directors. The Board of Directors
also has an Audit Committee which reviews the scope and plan of the annual
audit, reviews the audit results and report thereon, oversees action taken by
the Company's independent auditors and reviews the Company's internal controls.
The Company's Audit Committee sits for a term of one year and a new audit
committee is formed each year following the annual meeting. In 1995 the Audit
5
<PAGE>
Committee was composed of Messrs. Hoffman, Isaly and Rothstein. Mr. Rothstein is
not a candidate for re-election to the Board. One meeting of the Audit committee
was held in 1995.
In addition to participation at Board and Committee Meetings, the Company's
directors discharge their responsibilities throughout the year through personal
meetings and other communications, including considerable telephone contact with
the CEO and others regarding matters of interest and concern to the Company.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company ("Outside
Directors") are reimbursed for their direct expenses incurred in attending a
meeting.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
In 1995 the Company's executive compensation program was administered by the
Board of Directors. The entire Board makes recommendations on two of the three
key components of the Company's executive compensation program, base salary and
contractual incentive awards, and the Outside directors recommend and award the
long-term incentives.
The Company's executive compensation program is structured to help the
Company achieve its business objectives by:
- providing compensation opportunities that will attract, motivate and
retain highly qualified managers and executives.
- linking executives' total compensation to company and individual job
performance.
- providing an appropriate balance between incentives focused on achievement
of annual business plans and longer term incentives tied to increases in
shareholder value.
The Company's executive compensation program is designed to provide
competitive compensation opportunities for all corporate officers. The Company's
total compensation levels fall in the low to middle of the range of rates paid
by other employers of similar size and complexity, although complete comparative
information is not easily obtainable.
BASE SALARIES
The Company's salary levels are intended to be consistent with competitive
practices and levels of responsibility, with salary increases reflecting
competitive trends, the overall financial performance of the Company, and the
performance of the individual.
CONTRACTUAL INCENTIVE AWARDS
Pursuant to the executive compensation program, the Company has contracted
to provide two of its executive employees with profit participation incentive
compensation. Messrs. Millar and Hoffman are each entitled to a cash incentive
participation equal to 5% of the consolidated annual pre-tax profits of the
Company.
STOCK OPTIONS
The Company periodically grants incentive and non-qualified stock options to
purchase the Company's Common Stock in order to provide certain Compensation to
key employees of the Company and its subsidiaries with a competitive total
compensation package and to reward them for their contribution to the Company's
short and long-term stock performance. These stock options are designed to align
the
6
<PAGE>
employees' interest with those of the shareholders. All options have an option
price that is not less than the fair market value of the stock on the date of
grant. The term of the options and the dates after which they become exercisable
are established by the Board, with respect to incentive stock options, within
the parameters of the 1993 Incentive Stock Option Plan and by the Administrative
Committee with respect to the 1993 Stock Option Plan For Directors. The Company
does not grant stock appreciation rights.
1995 COMPENSATION
The CEO, President and President of the Company's Disposable Apparel
Division are compensated on a salary and pay-for-performance approach. Taken
into consideration are overall Company performance in attaining annual growth in
revenues, the addition or development of new and enhanced products, pretax
earnings, and the achievement of short and long term goals of the Company's
business as established in its five year plan. Messrs. Hoffman and Millar's
salaries were increased in 1995 from its previous level of $100,000 to $115,000.
No contractual incentive awards were paid for 1995.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE OF 1986
DEDUCTIBILITY OF COMPENSATION. Effective January 1, 1994, the Internal
Revenue Service under Section 162(m) of the Internal Revenue Code will generally
deny the deduction of compensation paid to the Chairman and the four other
highest paid executive officers required to be named in the Summary Compensation
Table to the extent such compensation exceeds $1 million per executive per year
subject to an exception for compensation that meets certain "performance-based"
requirements. Whether the Section 162(m) limitations with respect to an
executive will be exceeded and whether the Company's tax deductions for
compensation paid in excess of the $1 million limit will be denied will depend
upon the resolution of various factual and legal issues that cannot be resolved
at this time. As to options granted under the 1993 Incentive Stock Option Plan,
the Committee intends to qualify to the extent practicable such options under
the rules governing the Section 162(m) limitation so that compensation
attributable to such options will not be subject to limitation under such rules.
As to other compensation, while it is not expected that compensation to
executives of the Company will exceed the Section 162(m) limitation in the
foreseeable future (and no officer of the Company received compensation in 1994
which resulted under Section 162(m) in the non-deductibility of such
compensation to the Company), various relevant considerations will be reviewed
from time to time, taking into account the interests of the Company and its
Shareholders, in determining whether to endeavor to cause such compensation to
be exempt from the Section 162(m) limitation.
Respectfully submitted,
Sheldon Hoffman, Chief Executive
Officer
Al Millar, President
Donald E. Bennet, Jr.
Robert H. Isaly
John Ritota
James C. Rothstein
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Membership of the Compensation Committee is set forth under "Report of
the Compensation Committee". Except with respect to their compensation
arrangements, Mr. Hoffman, CEO and Mr. Millar, President, participated in
executive compensation deliberations and recommendations of the Board of
Directors.
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate cash and cash equivalent forms
of compensation paid by the Company during the last three fiscal years for
services in all capacities to those persons who were as of December 31, 1995,
the Chief Executive Officer and each of the most highly compensated executive
officers (a total of three persons), to the extent each earned more than
$100,000 in salary and bonus ("Named Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------- --------------------------------------
AWARDS
--------
OTHER SHARES
ANNUAL UNDERLYING
NAME AND COMPEN- OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) (#) COMPENSATION($)
- ------------------------------ ---- --------- -------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Shelly Hoffman, CEO........... 1995 115,000 -- -- 200,000 4,500
1994 100,000 -- -- -- 4,500
1993 100,000 -- -- 300,000 4,500
Al Millar, Pres............... 1995 115,000 -- -- 200,000 7,500
1994 100,000 -- -- -- 7,500
1993 100,000 -- -- 300,000 7,500
</TABLE>
The following table contains information concerning the stock option grants
under the 1993 Incentive Stock Option Plan which were made for the fiscal year
ended December 31, 1994 to the Named Officers.
OPTION GRANTS FOR FISCAL YEAR 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
---------------------------- ASSUMED ANNUAL RATES
PERCENT OF
OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR
OPTIONS GRANTED EXERCISE OPTION TERM (2)
GRANTED TO EMPLOYEES PRICE EXPIRATION ----------------------
(#) IN FISCAL YEAR ($/SH) DATE 5% 10%
--------- --------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sheldon Hoffman................................. 200,000 31.4% $ 1.34 12/21/2000 $ 342,043 $ 431,617
Al Millar....................................... 200,000 31.4% $ 1.34 12/21/2000 342,043 431,617
Lloyd Hoffman................................... 25,000 3.4% $ 1.34 12/21/2000 42,755 53,952
Donald E. Bennett, Jr........................... 50,000 $ 1.00 04/29/1999
25,000 $ 2.03 06/22/2000
25,000 15.8% $ 1.34 12/21/2000 171,341 216,211
</TABLE>
- ------------------------
(1) Each option was granted under the 1993 Incentive Stock Option Plan. Each
option is immediately exercisable for all the option shares.
(2) There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the five-year option term will be the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock does in
fact appreciate over the option term, no value will be realized from the
option grants made to the executive officers.
EMPLOYMENT ARRANGEMENTS
Messrs. Hoffman and Millar receive annual car allowances of U.S. $4,500 and
U.S.$7,500, respectively.
8
<PAGE>
Messrs. Hoffman and Millar are also entitled to a combined bonus equal to
10% of the pre-tax net profits of the Company (5% to each). No bonus was earned
with respect to the fiscal year ended December 31, 1994.
Donald E. Bennett, Jr., entered into a three year employment agreement with
the Company in March 1994 as President of the newly formed Apparel Division
providing for an annual salary of $65,000, a $700 per month automobile allowance
and 15% of the Division's net profit before taxes. During 1995 the agreement was
amended to eliminate the 15% of net profits provision and to increase his annual
salary to $100,000.
STOCK OPTION PLANS
INCENTIVE STOCK OPTION PLAN
The Company has an Incentive Stock Option Plan (the "Plan") for Officers and
other Key Employees with 1,600,000 shares reserved for grant thereunder. The
Plan, which was adopted by the Board of Directors in October, 1993 was approved
by Shareholders at the Annual Meeting in June 1994. The Plan, is administered by
the Board of Directors which selects the employees to whom the options are
granted, determines the number of shares subject to each option, sets the time
or times when the options will be granted, determines the time when the options
may be exercised and establishes the market value of the shares. The Plan
provides that the purchase price under the option shall be at least 100 percent
of the fair market value of the shares of the Company's Common Stock. The
options are not transferrable. There are limitations on the amount of incentive
stock options that an employee can be granted in a single calendar year. The
terms of each option granted under the Plan is determined by the Board of
Directors, but in no event may such term exceed ten years. Between October 28,
1993 and March 31, 1996, five-year, options covering an aggregate of 1,774,000
shares were granted to 31 employees at an average exercise price of $0.95 per
share.
Included in those employees to whom options were granted are the following
executive officers:
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS GRANTED
- ------------------------------------------------------------------- -------------------------
<S> <C>
Al Millar, President............................................... 500,000
Sheldon Hoffman, CEO............................................... 500,000
Donald Bennett, President Apparel Division......................... 150,000
</TABLE>
In addition, Donna Millar, an employee of the Company and the wife of Al
Millar, President, was granted an option to purchase 35,000 shares and Lloyd
Hoffman, an officer of the company and the son of Sheldon Hoffman, was granted
an option to purchase 235,000 shares. Shareholders are being asked to vote for
an increase in the number of shares available under the Plan. See "Proposal 2.".
DIRECTORS STOCK OPTION PLAN
The Board of Directors of the Company in October 1993 approved the 1993
Directors Stock Option Plan (the "Directors Plan") covering an aggregate of
600,000 shares of Common Stock. The Board of Directors or a Committee thereof
administers the Directors Plan. Directors of the Company who are not employees
of the Company are eligible to participate in the Plan. Each option granted will
have an exercise price equal to fair market value on the date of grant. As of
December 31, 1995 options covering an
9
<PAGE>
aggregate of 400,000 shares have been granted to 5 directors and two former
directors at an average exercise price of $1.02 per share as follows:
<TABLE>
<CAPTION>
NAME OPTION DATE EXPIRATION DATE NUMBER OF SHARES
- --------------------------------------------- ----------- --------------- -----------------
<S> <C> <C> <C>
Robert Isaly................................. 12/21/95 12/21/2000 50,000
Robert Isaly................................. 10/28/93 10/27/98 108,000
John Ritota.................................. 12/21/95 12/21/2000 50,000
John Ritota.................................. 10/28/93 10/27/98 50,000
Irving Bronfman**............................ 10/28/93 10/27/98 25,000
Hans Rieder*................................. 10/28/93 10/27/98 42,000
Robert Gayton**.............................. 10/28/93 10/27/98 25,000
Jim Rothstein................................ 06/23/95 06/22/2000 25,000
Jim Rothstein................................ 12/22/95 12/21/2000 25,000
</TABLE>
The Company does not have any pension, profit sharing or similar plans
established for its employees, other than the bonus payable to Messrs. Hoffman
and Millar described above.
- ------------------------
* Retired as a director on June 24, 1994.
** Retired as a director on June 23, 1995.
10
<PAGE>
- ------------------------
THE ABOVE GRAPH COMPARES THE FIVE-YEAR CUMULATIVE RETURN OF THE COMPANY WITH THE
COMPARABLE RETURN OF TWO INDICES. THE INDUSTRY INDEX REPRESENTS THE INDUSTRY OR
LINE-OF-BUSINESS OF THE COMPANY. THE GRAPH ASSUMES $100 INVESTED ON JANUARY 1,
1991. THE COMPARISON ASSUMES THAT ALL DIVIDENDS ARE REINVESTED.
THE INDUSTRY INDEX REPRESENTS THE ORTHOPEDIC, PROSTHETIC AND SURGICAL APPLIANCES
DIVISION, COMPRISED OF 50 CORPORATIONS, COMPILED FROM THE SIC CODE WITHIN WHICH
THE COMPANY IS LISTED.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INTEREST OF CERTAIN PERSONS IN MATERIAL TRANSACTIONS
No director or executive officer of the Company, no proposed nominee for
election as a director of the Company and no associate or affiliate of any of
the foregoing, has any material interest, direct or indirect, in any transaction
since the commencement of the Company's last fiscal year in any proposed
transaction, which, in either case, has materially affected or will materially
affect the Company or any of its subsidiaries, except as follows: James C.
Rothstein, a nominee for election as a director purchased 200,000 Units
consisting of 200,000 shares of the Company's Common Stock together with 2-year
Warrants to purchase an additional 200,000 shares of Common Stock at $.75 per
share in March 1995 at a purchase price of $.75 per Unit for an aggregate of
$150,000, pursuant to a private placement.
Donald E. Bennett, Jr., President of the Company's Apparel Division formed
in 1994 and a director of the Company was an owner and officer of Disposable
Medical Products, Inc. ("DMP"). Mr. Bennett was also a purchaser of 6667 Units
in March 1995 pursuant to the private placement referred to above, on the same
terms and conditions for an aggregate of $5000.
On March 25, 1994, the Company, through its wholly owned subsidiary Alpha
Pro Tech, Inc., acquired the assets of DMP and 96.8% of the shares of DMP's
wholly owned subsidiary DPI De Mexico for $336,000 including $32,000 of direct
acquisition costs. As part of the transaction the Company paid $319,000 to DMP.
Mr. Bennett was an officer and one of the previous owners of DMP and as noted
above is now an employee of the Company. Prior to the acquisition, DMP had been
operating as a debtor in possession under Chapter 11 of the Bankruptcy Code.
Under the purchase agreement, the Company operated DMP under a post petition
financing agreement through March 1995. In March 1995, the acquisition was
finalized and all related payments were made. Under the terms of the agreement,
the Company was entitled to the risks and rewards of operating DMP in exchange
for providing DMP with sufficient working capital for continuing operations.
DMP's operations have been consolidated into those of the Company's since April
1, 1994.
The Company was one of several defendants in a lawsuit commenced by John
Russell ("Russell"), in the Circuit Court of Jefferson County, Alabama on May
25, 1990 against BFD Inc., BFD Industries Inc., Alexander Millar, Sheldon
Hoffman, Irving Bronfman, 779177 Ontario Inc., and Milmed International
Distributors Ltd., alleging breach of contract, fraud, conversion, and
conspiracy against the defendants, jointly. Compensatory and punitive damage
originally claimed in the aggregate amount of $25,000,000.00 were increased to
$40,000,000 in 1993. Messrs. Millar, Hoffman are directors and officers of the
Company and Mr. Bronfman was a director and officer of the Company. Russell, the
Company and the other co-defendants settled and compromised all claims involved
in the litigation pursuant to a Settlement Agreement dated August 19, 1994, the
terms of which provided for the payment by the Company of $250,000 to Mr.
Russell and the cancellation of 675,000 of the Company's Common Shares owned by
Mr. Russell.
As of January 31, 1996 Messrs. Millar and Sheldon Hoffman loaned $48,245 and
$50,000 respectively to the Company. The terms of the loan provided for a Note
to each of Messrs. Millar and Hoffman, payable on demand, bearing interest at
15% per annum and to be secured by and repaid from the proceeds of an
anticipated income tax refund of approximately $168,000. In addition Messrs.
Millar and Hoffman were issued Warrants to purchase 46,840 and 48,544 shares
respectively of the Company's Common Stock at $1.03 per share, the fair market
value of the Common Stock on the date of issuance of the Warrant. The Warrants
expire on January 31, 1997. Interest on the loans have accrued but have not been
paid.
12
<PAGE>
PROPOSAL 2.
AMENDMENT TO 1993 INCENTIVE STOCK OPTION PLAN
On October 27, 1993, the Board of Directors of the Company adopted the Alpha
Pro Tech, Ltd. 1993 Incentive Stock Option Plan (the "Plan") which was approved
by the Shareholders at the 1994 Annual Meeting. The Plan is designed to qualify
as an "incentive stock option plan" under Section 422A of the Internal Revenue
Code. Under the Plan, the Company's Board of Directors or the Company's Stock
Option Committee is authorized to grant option to purchase up to 1,600,000
shares of Common Stock to key employees of the Company and its subsidiaries,
including officers. See "Executive Compensation - Stock Option Plans" for a
description of the Plan.
The Plan is intended to induce new executives to become associated with the
Company, and to provide a closer identity of interest between present key
employees and the Company by encouraging their ownership of Common Stock of the
Company. Consistent with this intention the Board of Directors believed it would
be in the best interest of the Company and its shareholders to increase the
number of shares available under the Plan from the previous amount of 1,600,000
and voted to increase the number of shares to 2,100,000 subject to shareholder
approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
FOLLOWING RESOLUTION, APPROVAL OF WHICH REQUIRES AN AFFIRMATIVE VOTE OF A
MAJORITY OF SHARES PRESENT IN PERSON OR REPRESENTED BY PROXY.
"RESOLVED", that the first sentence of paragraph 8 of the 1993 Incentive
Stock Option Plan adopted by the Board of Directors in 1993 and approved by
a majority of the shareholders in June 1994 be amended to read as follows:
8. Stock Subject to the Plan; Effect of Recapitalization, Merger, Etc.
(a) Shares which may be subject to Options Granted. Subject to
adjustments made pursuant to subsection (b) of this Section 8, the total
number of shares which may be granted under the Plan (which shares may be
authorized but unissued shares or treasury shares) is 2,100,000 shares of
common stock without par value.
PROPOSAL 3.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Management proposes the appointment of Price Waterhouse, LLP as independent
accountants to examine the financial statements of the Company for the fiscal
year 1996. The Board of Directors has directed that such appointment be
submitted for ratification by the Shareholders at the Meeting.
Price Waterhouse has served as the independent accountants for the Company
since 1992. A representative of Price Waterhouse, LLP is expected to be present
at the Meeting and will have the opportunity to make statements if he desires to
do so and will be available to respond to appropriate questions.
The affirmative vote of a majority of the Common Shares present, in person
or by proxy, is required for ratification of the appointment of Price
Waterhouse, LLP as the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF
THE APPOINTMENT OF PRICE WATERHOUSE. RATIFICATION REQUIRES THE AFFIRMATIVE VOTE
OF A MAJORITY OF SHARES PRESENT IN PERSON OR REPRESENTED BY PROXY.
13
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's common stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "SEC"). Such persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the Company,
or written representation that no other reports were required, the Company
believes that during 1995 all Section 16(a) filing requirements applicable to
its officers and directors were complied with.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
MAILED WITHOUT CHARGE TO SHAREHOLDERS UPON REQUEST. REQUESTS SHOULD BE ADDRESSED
TO THE COMPANY AT 60 CENTURIAN DRIVE, SUITE 112, MARKHAM, ONTARIO L3R 9R2,
CANADA, ATTENTION: SHELDON HOFFMAN, CEO. THE FORM 10-K INCLUDES CERTAIN EXHIBITS
WHICH WILL BE PROVIDED ONLY UPON PAYMENT OF A FEE COVERING THE COMPANY'S
REASONABLE EXPENSES.
FUTURE PROPOSALS
If any member wishes to submit a proposal for inclusion in the Proxy
Statement for the Company's 1996 Annual Meeting, the rules of the United States
Securities and Exchange Commission require that such proposal be received at the
company's principal executive office by January 30, 1997.
OTHER MATTERS
Management knows of no other matters to come before the meeting other than
those referred to in the Notice of Meeting. However, should any other matters
properly come before the meeting, the shares represented by the proxy solicited
hereby will be voted on such matters in accordance with the best judgment of the
persons voting the shares represented by the proxy.
BY ORDER OF THE BOARD OF DIRECTORS
"AL MILLAR"
President
14
<PAGE>
ALPHA PRO TECH, LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Al Millar, Sheldon Hoffman and Robert Isaly,
and each of them individually with the power of substitution, as Proxy or
Proxies of the undersigned, to attend and act for and on behalf of the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
Little America--Hotel & Towers, 500 South Main Street, Salt Lake City, Utah
84101 on June 21, 1996 at 10:00 A.M. local time and at any adjournment thereof,
hereby revoking any prior Proxy or Proxies. This Proxy when properly executed
will be voted as directed herein by the undesigned. IF NO DIRECTION IS MADE,
SHARES WILL BE VOTED FOR THE ELECTION OF DIRECTORS NAMED IN THE PROXY AND FOR
PROPOSALS 2 AND 3.
(CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)
<TABLE>
<S> <C>
/X/ Please mark your votes as in this example.
1. To elect as directors all the persons named below:
AL MILLAR, ROBERT ISALY, SHELDON HOFFMAN, JOHN RITOTA, DONALD E. BENNETT, JR.
For: / / Withhold Vote: / /
For, except vote withheld from the following nominee(s)
2. Proposal to amend 1993 Stock Option Plan.
For: / / Against: / / Abstain: / /
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3. To appoint Price Waterhouse, LLP, as Independent Accountants of the Company.
For: / / Against: / / Abstain: / /
4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
Date sign and return the Proxy Card promptly using the enclosed envelope.
</TABLE>
(Signatures should conform
exactly to name on the this
proxy. Where shares are held by
joint tenants, both should sign.
Executors, administrators,
guardians, trustees, attorneys
and officers signing for
corporations should give full
title).
Dated
-------------------------------- ,
1996
--------------------------------
Signature
--------------------------------
Signature if held jointly
October 28, 1996
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ALPha ProTech, Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
