<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
_______________________________________________________________________________
(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):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
<PAGE>
ALPHA PRO TECH, LTD.
60 CENTURIAN DRIVE
SUITE 112
MARKHAM, ONTARIO, CANADA
L3R 9R2
Telephone: (905) 479-0654
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TAKE NOTICE that the 2000 Annual Meeting of Shareholders of Alpha Pro Tech,
Ltd., (the "Company") will be held at Little America Hotel & Towers, 500 Main
Street, Salt Lake City, Utah 84101 on:
FRIDAY, JUNE 9, 2000
at the hour of 9:15 o'clock A.M. (local time) for the following purposes:
1. To elect five directors.
2. To ratify the appointment of independent accountants.
3. To transact such other business as may properly come before the Meeting.
Accompanying this Notice is the Proxy Statement and Form of Proxy.
The Board of Directors set April 26, 2000, as the record date for the meeting.
This means that owners of our common stock at the close of business on that date
are entitled to (1) receive notice of the meeting and (2) vote at the meeting
and any adjournments or postponements of the meeting. We will make available a
list of our shareholders as of the close of business on April 26, 2000 for
inspection during normal business hours from May 24 through June 8, 2000, at our
offices, in Markham, Ontario. This list will also be available at the meeting.
DATED: May 8, 2000
BY ORDER OF THE BOARD OF DIRECTORS
AL MILLAR, PRESIDENT
YOUR VOTE IS IMPORTANT
WE URGE YOU TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR
SHARES IN PERSON.
<PAGE>
ALPHA PRO TECH, LTD.
60 CENTURIAN DRIVE
SUITE 112
MARKHAM, ONTARIO, CANADA
L3R 9R2
PROXY STATEMENT
This Proxy Statement and accompanying proxy are first being sent to shareholders
on or about May 8 ,2000.
VOTING AND PROXIES
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our Annual Meeting, Shareholders will act upon the matters outlined on the
previous page and described in this Proxy Statement, including the election of
directors and the ratification of the appointment of our independent
accountants. In addition, management will respond to questions from
shareholders.
WHO IS ENTITLED TO VOTE?
Only holders of record at the close of business on April 26, 2000 of Common
Stock are entitled to vote. Each holder of common stock is entitled to one vote
per share. We are authorized to issue 50,000,000 common shares, par value $.01
per share. There were issued and outstanding 24,228,616 shares of Common Stock
as of the close of business on April 26, 2000. There is only one class of
shares.
HOW DO I VOTE?
You can vote by filling out the accompanying proxy and returning it in the
postage paid return envelope that we have enclosed for you. Voting information
is provided on the enclosed form of proxy. If your shares are held in the name
of a bank or broker, follow the voting instructions on the form that you receive
from them.
WHAT IF MY SHARES ARE HELD BY A BROKER OR NOMINEE?
If you hold your shares in "street name" through a broker or other nominee, your
broker or nominee may not be permitted to exercise voting discretion as to some
of the matters to be acted upon. Thus, if you do not give your broker or nominee
specific instructions, your shares may not be voted on those matters and will
not be counted in determining the number of shares for approval.
HOW WILL MY PROXY BE VOTED?
Your proxy, when properly signed and returned to us, and not revoked, will be
voted in accordance with your instructions relating to the election of directors
and on Item 2. We are not aware of any other matter that may be properly
presented other than the election of directors and Item 2. If any other matter
is properly presented, the persons named in the enclosed form of proxy will have
discretion to vote in their best judgment.
2
<PAGE>
WHAT IF I DON'T MARK THE BOXES ON MY PROXY?
Unless you give other instructions on your form of proxy, the persons named as
proxies will vote in accordance with the recommendations of the Board of
Directors. The Board's recommendation is set forth together with the description
of each Item in this Proxy Statement. In summary, the Board recommends a vote
FOR:
- the election of directors;
- the ratification of the appointment of PricewaterhouseCoopers, LLP as
our independent accountants for 2000.
CAN I GO TO THE ANNUAL MEETING IF I VOTE BY PROXY?
Yes. Attending the meeting does not revoke the proxy. However, you may revoke
your proxy at any time before it is actually voted by giving written notice to
the secretary of the meeting or by delivering a later dated proxy.
WILL MY VOTE BE PUBLIC?
No. As a matter of policy, shareholder proxies, ballots and tabulations that
identify individual shareholders are kept confidential and are only available as
actually necessary to meet legal requirements.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a majority
in voting power of the outstanding shares of common stock entitled to vote will
constitute a quorum, permitting the meeting to conduct its business. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting.
HOW MANY VOTES ARE NEEDED TO APPROVE AN ITEM?
The affirmative vote of shares representing a majority in voting power of the
shares of common stock, present in person or represented by proxy and entitled
to vote at the meeting, is necessary for approval of Item 2. Proxies marked as
abstentions on these matters will not be voted and will have the effect of a
negative vote. The election of directors will be by a plurality of the votes
cast. A proxy marked to withhold authority for the election of one or more
directors will not be voted with respect to the director or directors indicated.
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 our regular
officers and employees. We may reimburse shareholder's 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 proxy. No
solicitation will be made by specifically engaged employees or soliciting
agents. The cost of solicitation will be borne by us.
ANNUAL REPORT
The Annual Report for the year ended December 31, 1999 containing financial and
other information about the Company is enclosed.
3
<PAGE>
ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors currently consists of five members. Directors are elected
annually for a term of office to expire at the succeeding annual meeting of
shareholders after their election and until their successors are duly elected
and qualified. The Board of Directors proposes that the nominees described
below, all of whom are currently serving as directors, be re-elected for a new
term of one year and until their successors are duly elected and qualified. All
nominees are currently directors and were elected by the shareholders.
Each of the nominees has consented to serve. If any of them should become
unavailable to serve as a director (which is not now expected), the Board may
designate a substitute nominee. In that case, the persons named as proxies will
vote for the substitute nominee designated by the Board.
There is set forth below following the names of the nominees and our executive
officers, their present positions and offices with the Company, their principal
occupations during the past five years, directorships held with other
corporations, certain other information, their ages and the year first elected
as a director or executive officer.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Director or Executive
Name Age Officer Since Position with the Company
- ---- --- ------------- -------------------------
<S> <C> <C> <C>
SHELDON HOFFMAN 62 July 11, 1989 CEO and Director
AL MILLAR 58 July 11, 1989 President and Director
ROBERT H. ISALY 70 November 15, 1989 Director
JOHN RITOTA 48 December 18, 1991 Director
DONALD E. BENNETT, JR. 59 June 23, 1994 Director and Senior Vice President-Manufacturing
LLOYD HOFFMAN 39 July 1, 1993 Senior Vice President - Finance and Administration
MICHAEL SCHEERER 40 January 1, 1997 Senior Vice President - Sales and Marketing
</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.
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
4
<PAGE>
development for North America. In March, 1988, he formed Milmed International
Distributors Limited to distribute the Company's products internationally. In
1989 Milmed gave up its rights to distribute these products internationally at
which time Milmed ceased 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. Prior
thereto he was involved with two Ohio based family businesses. The Isaly Dairy
Company and the H.R. Isaly Cheese Company. He 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.
OUR 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 our other current executive officers of the
Company.
LLOYD HOFFMAN has been employed by the Company since November 15, 1991 in
various capacities and since early 1997 has been Senior Vice President-Finance
and Administration. From 1987 to 1991, Mr. Hoffman was a shareholder and was in
charge of finance and administration at Software Concepts. Inc. a developer of
software for association and magazine publishers.
MICHAEL SCHEERER joined the Company on January 1, 1997 as Senior Vice
President-Sales and Marketing. From 1990 to October 1992, Mr. Scheerer was
Director of Sales-Development and Administration at Baxter Scientific Products.
In October, 1992, he was named Vice President-Sales and Marketing for Baxter's
Critical Environmental Solutions business. In September, 1995, Baxter Scientific
Products was purchased by VWR Scientific Products, Inc. where Mr. Scheerer
served as Vice-President Critical Environmental Solutions and New Business
Ventures until joining the Company.
There are no family relationships between the above persons other than Lloyd
Hoffman who is the son of Sheldon Hoffman.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of March 31, 2000 with
respect to shares of our common stock beneficially owned by each of our
directors, each nominee for director, each of our executive officers, all
executive officers and directors as a group, and by persons known to us to be
beneficial owners of more than 5% of the Company's Stock.
<TABLE>
<CAPTION>
Directors, Executive Officers Number of Shares
and 5% Shareholders Beneficially Owned Percent of Class
- ------------------- ------------------ ----------------
<S> <C> <C>
William R. Lykken
740 McHugh Avenue
Grafton, ND 1,657,465 6.8%
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Al Millar, President and Director 1,612,297 (1) 6.4%
Sheldon Hoffman, 1,322,138 (2) 5.3%
CEO and Director
Robert H. Isaly, Director 715,613 (3) 2.9%
John Ritota, Director 420,194 (4) 1.7%
Lloyd Hoffman, 353,000 (5) 1.4%
Sr. VP - Finance and Administration
Donald E. Bennett, Jr., 256,667 (6) 1.0%
Sr. VP - Manufacturing and Director
Michael Scheerer, 456,200 (7) 1.9%
Sr. VP - Sales and Marketing
All Directors and Officers 5,136,109 18.9%
as a Group (7 persons)
</TABLE>
(1) Includes 750,000 shares subject to currently exercisable options; and
includes 88,428 shares and 50,000 shares subject to currently exercisable
options owned beneficially by Mr. Millar's wife as to which Mr. Millar
denies beneficial ownership.*
(2) Includes 750,000 shares subject to currently exercisable options; and
includes 112,502 shares owned beneficially by Mr. Hoffman's wife, as to
which Mr. Hoffman denies beneficial ownership. Does not include 410,051
shares owned beneficially 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 258,000 shares subject to currently exercisable options; and
includes 141,523 shares owned beneficially by Mr. Isaly's wife, as to which
Mr. Isaly denies beneficial ownership;
(4) Includes 375,000 shares subject to currently exercisable options; and
includes 7,000 shares owned beneficially by Dr. Ritota's wife as to which
Dr. Ritota denies beneficial ownership.*
(5) Includes 285,000 shares subject to currently exercisable options; and
25,000 shares owned beneficially 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.*
(6) Includes 225,000 shares subject to currently exercisable options.*
6
<PAGE>
(7) Includes 225,000 shares subject to currently exercisable options; and
38,450 shares owned beneficially by Mr. Scheerer's wife as to which Mr.
Scheerer denies beneficial ownership. See "Management-Employee
Arrangements."*
* A currently exercisable option is one which is exercisable within 60 days
from the date hereof.
Applicable percentage of ownership is based on 24,230,116 shares of our common
stock outstanding on March 31, 2000 and treats as outstanding all shares
underlying currently exercisable options held by the identified director or
officer in the first column. These shares, however; are not deemed outstanding
for the purpose of computing the percentage ownership of any other person.
The addresses of each of the executive officers and directors is care of Alpha
Pro Tech, Ltd., 60 Centurian Dr., Suite 112, Markham, Ontario, Canada L3R 9 R2.
Messrs. Sheldon Hoffman, Al Millar and Lloyd Hoffman are residents of Canada and
Messrs. Ritota, Isaly, Bennett and Scheerer reside in the United States.
DIRECTOR'S MEETINGS
The Board of Directors of the Company met three times during the year ended
December 31, 1999. In 1998, the Company had no standing nominating or
compensation committees, these matters being handled by the entire Board of
Directors. In 1999 the Board of Directors formed a Compensation Committee
consisting of Messrs. Al Millar, Robert Isaly, and John Ritota. The Compensation
Committee makes recommendations concerning salaries and incentive compensation
for our executive officers. One meeting of the Compensation Committee was held
in 1999. 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 1999, the Audit Committee was
composed of Messrs. Hoffman, Isaly and Ritota. One meeting of the Audit
Committee was held in 1999.The Audit and Compensation Committee are each
composed of directors two of whom who are not officers or employees of the
Company ("Outside Directors").
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 , President and others regarding matters of interest and concern to the
Company.
COMPENSATION OF DIRECTORS
Outside Directors are reimbursed for their direct expenses incurred in
attending a meeting.
7
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
In 1999, the our executive compensation program was administered by the
Compensation Committee of the Board of Directors. The Committee makes
recommendations on all of the three key components of our executive compensation
program: base salary, contractual incentive awards, and long-term incentives.
Our executive compensation program is structured to help us 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
Our executive compensation program is designed to provide competitive
compensation opportunities for all corporate officers. Our 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
Our salary levels are intended to be consistent with competitive practices and
levels of responsibility, with salary increases reflecting competitive trends,
our overall financial performance of the Company, and the performance of the
individual.
CONTRACTUAL INCENTIVE AWARDS
Pursuant to the executive compensation program, we have contracted to provide
two of our 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
We periodically grant incentive and non-qualified stock options to purchase our
common stock in order to provide certain compensation to key employees and those
of our subsidiaries with a competitive total compensation package and to reward
them for their contribution to our short and long-term stock performance. These
stock options are designed to align the 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 terms of the options and the
dates after which the 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. We do not grant stock appreciation rights.
8
<PAGE>
1999 COMPENSATION
The CEO and President are each 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. Contractual
incentive awards were earned in 1999 by our CEO and President.
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 deduction 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,
Robert H. Isaly
Al Millar
John Ritota
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.
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, 1999, the Chief
Executive Officer and each of the most highly compensated executive officers (a
total of four persons), to the extent each earned more than $100,000 in salary
and bonus ("Named Officers").
9
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
------
Name and Shares
Principal Underlying All Other
Position YEAR Salary($) Bonus ($) Options (#) Compensation(1)
- -------- ---- --------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Sheldon Hoffman 1999 140,000 62,500 50,000
CEO 1998 120,000 17,550 100,000 6,900
1997 168,000 100,000 7,300
Al Millar 1999 147,000 62,500 50,000
President 1998 120,000 17,550 100,000 6,900
1997 156,000 100,000 7,500
Michael Scheerer 1999 115,000 25,000 25,000 14,000
1998 115,000 100,000 14,000
1997 115,000 100,000 13,000
Donald B.Bennett 1999 109,000 20,000 50,000 9,500
1998 110,000 25,000 8,400
</TABLE>
(1) Represents annual car allowance
STOCK OPTIONS
The following table provides information regarding grants of stock options made
during the fiscal year ended December 31, 1999 to the persons named in the
Summary Compensation Table above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rate of Stock
Underlying Granted to Price Appreciation for Options
Options Employees in Exercise Expiration Term
Name Granted (#) Fiscal Year Price ($/share) Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Al Millar 50,000 16.95% $.49 1/10/04 $6,750 $14,950
Sheldon Hoffman 50,000 16.95% $.49 1/10/04 6,750 14,950
Donald E Bennett, Jr. 50,000 16.95% $.49 1/10/04 6,750 14,950
Michael Scheerer 25,000 8.47% $.49 1/10/04 3,375 7,475
</TABLE>
(1) Options awarded under the Plan generally provide for immediate vesting.
(2) All options were granted with an exercise price equal to or greater than
fair market value of the Common Stock as determined on the date of the
grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the 5-year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by rules of the Securities
and Exchange Commission and do not represent the Company's estimate of the
future Common Stock price. This table
10
<PAGE>
does not take into account any appreciation in the price of the Common
Stock to date, which exceeds the hypothetical gain shown in the table.
No options were exercised during the fiscal year ended December 31,1999.
EMPLOYMENT ARRANGEMENTS
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). Each earned a bonus of
$62,500 for 1999.
BENEFIT PLANS
STOCK OPTION PLANS
INCENTIVE STOCK OPTION PLAN
The Company has an Incentive Stock Option Plan (the "Plan") for Officers and
other Key Employees with 3,750,000 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 transferable. 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. 290,000 options were
granted to 12 employees in 1999 at an average price of $0.50. At December 31,
1999 options to purchase 2,950,000 shares were outstanding under the Plan out of
3,750,000 shares reserved for such purpose.
RETIREMENT SAVINGS PLAN
In 1999 the Company initiated a Retirement savings Plan (the "401 (k) Plan")
which is intended to qualify under section 401(k) of the Internal Revenue Code.
Employees of the Company who have attained age 21 and completed at least one
year of service with the Company are eligible to make contributions to the
401(k) Plan on a pre-tax basis of up to 12% of the participant's compensation in
any year in accordance with limitations defined in the Code. Under the 401(k)
Plan the Company is matching 25% of the contributing participant's effective
deferral but not in excess of 4% of such contributing participant's
compensation. The pre-tax contributions made by a participant and the earnings
thereon are at all times fully vested. The participant's interest in Company's
contributions and in the earnings thereon will become vested at the rate of 20%
per year for each year of service with the Company or, if earlier upon such
participant's death or disability. A participant's fully vested benefit under
the 401(k) Plan may be distributed to the participant upon his retirement,
death, disability, or termination of employment or upon reaching age 59 1/2. At
December 31, 1999 the Company had accrued a contribution to the 401(k) Plan of
$15,334.. The Company's contribution on behalf of the officers named under
"Executive Compensation" were as follows: Sheldon Hoffman - $0; Al Millar - $0;
Michael Scheerer - $0 and Donald Bennett - $1,184.
11
<PAGE>
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 subsequently increased to 750,000 shares. 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 has an exercise price equal to fair
market value on the date of grant. As of December 31, 1999 options covering an
aggregate of 258,000 shares and 400,000 shares had been granted respectfully to
Robert Isaly and John Ritota at an exercise price of $ 0.76 per share.
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.
12
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------FISCAL YEAR ENDING----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 12/31/1994 12/30/1995 12/29/1996 12/31/1997 12/31/1998 12/31/1999
ALPHA PRO TECH, LTD. 100.00 176.92 119.38 126.77 59.08 99.69
Surgical Appliances & Supplies 100.00 150.77 145.35 186.10 238.79 212.65
NASDAQ Market Index 100.00 129.71 161.18 197.16 178.08 490.46
</TABLE>
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,
1995. THE COMPARISON ASSUMES THAT ALL DIVIDENDS ARE REINVESTED.
THE INDUSTRY INDEX REPRESENTS THE SURGICAL APPLIANCES AND SUPPLIES, COMPRISED OF
35 CORPORATIONS, COMPILED FROM THE SIC CODE WITHIN WHICH THE COMPANY IS LISTED.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1997, the Company entered into a three-year credit facility with an
asset-based lender. Pursuant to the terms of the credit agreement, the Company
has a $ 2,500,000 line of credit and a $ 400,000 term loan secured by accounts
receivable, inventory, trademarks, patents, property and equipment, and 66.67%
of the issued and outstanding shares of DMPI. The credit facility bears interest
at prime plus 2%, which was 10.5% at December 31, 1997. In the event the lender
comes into possession of the collateral securing the loan, each of Messrs.
Millar and Sheldon Hoffman have agreed to use their best efforts to assist the
lender in disposing of the collateral and collecting the accounts receivable. In
addition, the loan has been guaranteed by each of Messrs. Millar and Sheldon
Hoffman up to a maximum of $ 187,500.
ITEM 2.
RATIFICATION OF
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Management proposes the appointment of PricewaterhouseCoopers, LLP as
independent accountants to examine the financial statements of the Company for
the fiscal year 2000. The Board of Directors has directed that such appointment
be submitted for ratification by the shareholders at the meeting.
PricewaterhouseCoopers, LLP has served as the independent accountants for the
Company since 1992. A representative of PricewaterhouseCoopers, 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 BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS, LLP. RATIFICATION REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF SHARES PRESENT IN PERSON OR REPRESENTED BY
PROXY.
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 on
Form 3, 4, and 5 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 presentation that no other reports were required, the Company believes
that during 1998 all Section 16(a) filing requirements applicable to its
officers and directors were complied with except that each executive officer and
director did not timely file a Form 4 Statement of Change in Beneficial
Ownership of securities with the SEC with respect to stock options granted to
them during the year ended December 31, 1999.
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<PAGE>
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1999, 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
The 2000 Annual Meeting is expected to be held on Friday, June 8, 2001. If any
shareholder wishes to submit a proposal for inclusion in our Proxy Statement for
the 2001 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 December 31, 2000.
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
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<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 H. 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 Shareholders of the Company to be held at
Little America Hotel & Towers, 500 Main Street, Salt Lake City, Utah 84101 on
June 9, 2000 at 9:15 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 undersigned. IF NO DIRECTION IS MADE, SHARES
WILL BE VOTED FOR THE ELECTION OF DIRECTORS NAMED IN THE PROXY.
(CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)
Please mark your
/X/ votes as in this
example.
1. To elect as directors all the persons named below:
Al Millar Robert H. Isaly
Sheldon Hoffman John Ritota
Donald E. Bennett, Jr.
For: Withhold Vote:
For, except vote withheld from the following nominee(s)
____________________________________________
2. Ratification of appointment of PricewaterhouseCoopers, LLP, as
Independent Accountants of the Company
For: Against: Abstain:
3. 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.
(Signature should conform exactly to name on 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:________________________________, 2000
______________________________________
Signature
_______________________________________
Signature if held jointly
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