<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
UNITED AIR SPECIALISTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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> 2
UNITED AIR SPECIALISTS, INC.
4440 Creek Road
Cincinnati, Ohio 45242
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
You are hereby notified that the Annual Meeting of Shareholders of United
Air Specialists, Inc. will be held at the corporate offices of the Company,
4440 Creek Road, Cincinnati, Ohio, at 1:00 p.m. (EST) on November 13, 1996 for
the purpose of considering and acting upon the following:
1. The election of five directors of the Company as set forth
herein.
2. The ratification of Arthur Andersen LLP to serve as independent
auditors for the Company for the fiscal year ending June 30, 1997.
3. The transaction of such other business as may properly come
before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on September 16, 1996
are entitled to receive notice of, and to vote at, the meeting. Management, at
present, knows of no other business to be brought before the meeting. There
will be a separate special meeting of shareholders to consider the proposed
merger with CLARCOR Inc.
All persons who find it convenient to do so are invited to attend the
meeting in person.
By order of the Board of Directors
Durwood G. Rorie, Jr.
President and Chief Executive Officer
Cincinnati, Ohio
October 9, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. PROXIES MAY BE REVOKED BY
WRITTEN NOTICE OF REVOCATION, THE SUBMISSION OF A LATER DATED PROXY, OR
ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE> 3
UNITED AIR SPECIALISTS, INC.
4440 Creek Road
Cincinnati, Ohio 45242
(513) 891-0400
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of United Air Specialists, Inc. (the "Company") of
proxies to be voted at the Annual Meeting of Shareholders on November 13, 1996.
This Proxy Statement and the accompanying Proxy Card are first being mailed to
shareholders of the Company on or about October 9, 1996.
OUTSTANDING VOTING SECURITIES
The number of voting securities of the Company outstanding on September
16, 1996, the record date for the meeting, was 2,912,265 shares of common
stock, without par value, all of one class and each entitled to one vote, owned
by approximately 259 shareholders of record. A list of shareholders of the
Company may be examined at the offices of the Company at the address given
above.
PROXIES AND VOTING
The persons named as proxies were selected by the Board of Directors of
the Company and are directors or officers of the Company.
When the enclosed form of proxy is properly executed and returned, the
shares it represents will be voted as specified at the meeting. Any
shareholder giving a proxy has the power to revoke it at any time before it is
voted by giving written notice to the Company, by giving a later dated proxy
indicating a desire to vote differently, or by appearing at the meeting and
casting a ballot. There are no rights of appraisal or similar rights of
dissenting shareholders with respect to any matter to be acted upon at the
meeting.
The cost of solicitation of proxies will be paid by the Company. In
addition to the solicitation of proxies by use of the mails, solicitation may
be made by officers and regular employees of the Company by personal interview,
telephone and fax. Banks, brokerage houses and other custodians, nominees or
fiduciaries will be reimbursed for their reasonable expenses incurred in
forwarding soliciting material to their principals and in obtaining
authorizations for the execution of the proxies.
In accordance with the Ohio General Corporation Law, the affirmative vote
of a plurality of the shares present in person or represented by proxy at the
meeting will be sufficient for the election of
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<PAGE> 4
directors. Generally, other matters are determined by the affirmative vote of
a majority of the shares present in person or represented by proxy, with
abstentions having the effect of negative votes and broker non-votes deemed to
be absent shares. Votes at the meeting will be tabulated by financial
management employees of the Company. The Company has not established a
procedure for confidential voting.
THE BOARD OF DIRECTORS
Pursuant to the Ohio General Corporation Law, as implemented by the
Company's Amended Articles of Incorporation and Amended and Restated Code of
Regulations, all corporate powers are exercised, and the Company's business,
property and affairs are managed, by or under the direction of the Board of
Directors.
Directors of the Company are elected at the Annual Meeting of
Shareholders. Currently there are five directors, and the Board of Directors
recommends that the current five directors be reelected. The persons described
below have been nominated for election as directors to serve until the Annual
Meeting of Shareholders in 1997 or until their successors are elected and
qualified. The Company's common stock has no cumulative voting rights.
At the present time, it is intended that proxies received by management of
the Company which contain no instructions to the contrary will be voted for the
nominees listed below. Management does not contemplate that any nominee will
be unable to serve but, if that contingency should occur, the persons named as
proxies reserve the right to substitute another person of their choice as a
director when voting at the Annual Meeting of Shareholders.
Set forth below is certain information with respect to each nominee:
DURWOOD G. RORIE, JR., age 63. Mr. Rorie has been President and Chief
Executive Officer of the Company and a Director of the Company since its
inception in 1966. Mr. Rorie is co-founder of the Company along with Mr.
Cheney.
WILLIAM A. CHENEY, age 72. Mr. Cheney has been a Director of the Company
since its inception in 1966 and Chairman of the Board of Directors since 1972.
He served as Senior Vice President and Secretary from 1966 until 1991. In
1991, Mr. Cheney retired as Senior Vice President, but remains as Chairman of
the Board of Directors and Secretary of the Company.
DAVID F. HERCHE, age 46. Mr. Herche has been a Director of the Company
since 1992. He has been Chairman and Chief Executive Officer of Enerfab, Inc.
since 1988. Enerfab, Inc. is engaged in the fabrication and erection of
stainless steel and carbon tanks for the brewery, beverage, chemical,
pharmaceutical and power industries.
WILLIAM C. TILLINGHAST, age 74. Mr. Tillinghast has been a Director of
the Company since 1985. He was Chairman of the Board of Senco Products, Inc.
from 1963 until 1988 when he became Chairman of the Board of SENCORP. SENCORP
is the parent company of Senco Products, Inc., a manufacturer of industrial
fasteners. Mr. Tillinghast became Chairman Emeritus of SENCORP on July 1,
1994.
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<PAGE> 5
GEORGE T. REHFELDT, age 64. Mr. Rehfeldt has been a Director of the
Company since July, 1995. He has been President and Chief Executive Officer of
Sumitomo Sitix Silicon since 1989. Sumitomo Sitix Silicon is engaged in the
manufacture of semiconductor materials and is a member of the Sumitomo Group of
companies headquartered in Osaka, Japan.
MEETINGS; COMMITTEES OF THE BOARD. The Board of Directors held four
meetings in fiscal year 1996. The Board has an audit committee consisting of
Messrs. Herche and Rehfeldt. The audit committee, among other things,
recommends to the Board the appointment of independent public accountants,
meets with management and the independent public accountants to review the
scope and results of annual financial statements or special audit activities,
and reviews the adequacy of the Company's internal accounting controls and
reporting practices. The audit committee met once in fiscal year 1996. The
Board does not have a compensation committee or nominating committee. Each
incumbent director attended more than seventy five percent of the aggregate of
all meetings of the Board of Directors during fiscal year 1996.
COMPENSATION OF DIRECTORS. During fiscal year 1996, nonemployee directors
of the Company received an annual fee of $1,000 and fees of $100 for each Board
meeting attended. No fees are paid to directors who are also employees of the
Company. Each nonemployee director also is annually awarded nondiscretionary
options to purchase 1,000 shares of the Company's common stock.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS. The current executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Durwood G. Rorie, Jr. 63 President and Chief Executive
Officer, Director
William A. Cheney 72 Chairman of the Board of
Directors, Secretary
Brian D. Colls 67 Senior Vice President-European
Operations
Raymond E. Warrick, Jr. 41 Senior Vice President-Operations
William M. Rehl, III 37 Vice President-Finance, Treasurer
</TABLE>
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<PAGE> 6
Information about Messrs. Rorie and Cheney is given above under "The Board
of Directors". Information about the Company's other executive officers is
given below:
BRIAN D. COLLS. Mr Colls has been Senior Vice President-European
Operations since 1987. He served as Vice President-European Operations from
1980 until 1987.
RAYMOND E. WARRICK, JR. Mr. Warrick has been Senior Vice
President-Operations since March, 1995. He served as Senior Vice President-Air
Quality Group from December, 1993 until March, 1995; as Vice President,
Commercial and Residential Products from February, 1993 until December, 1993;
as Manager, North American Commercial Air Quality from September, 1991 until
February, 1993; and as Smokeeter National Sales Manager from November, 1988
until September, 1991.
WILLIAM M. REHL, III. Mr. Rehl has been Vice President-Finance since
December, 1993 and Treasurer of the Company since March, 1995. He served as
Controller from July, 1988 until December, 1993.
Officers of the Company are elected by, and serve at the discretion of,
the Board of Directors.
SUMMARY INFORMATION. The following table sets forth, for the fiscal year
ended June 30, 1996, amounts of cash and certain other compensation paid by the
Company to (i) Durwood G. Rorie, Jr., the Company's Chief Executive Officer,
and (ii) Brian D. Colls and Raymond E. Warrick, Jr., the Company's other
executive officers at June 30, 1996 whose salaries and bonuses exceeded
$100,000. Messrs. Rorie, Colls and Warrick are sometimes referred to hereafter
as the "named executive officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
----------------------------------------------------------
Other Securities
Annual Underlying
Compen- Stock Option All Other
Name and sation Grants Compensation
Principal Position Year Salary ($) Bonus ($) ($)(1) (#) ($)(2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Durwood G. Rorie, Jr. 1996 172,862 73,150 -- 0 9,240
President and CEO 1995 161,060 31,908 -- 0 8,607
1994 160,784 40,720 -- 0 10,605
Brian D. Colls 1996 180,765 0 -- 0 2,773
Senior Vice President- 1995 146,583 0 -- 0 2,425
European Operations 1994 109,067 0 -- 0 2,095
Raymond E. Warrick, Jr. 1996 107,848 31,550 -- 0 2,145
Senior Vice President- 1995 103,061 21,938 -- 0 1,656
Operations 1994 70,000 27,347 -- 0 1,398
</TABLE>
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<PAGE> 7
(1) None, other than perquisites which did not exceed the lesser of $50,000 or
10% of salary and bonus for any named executive officer.
(2) Amounts disclosed for 1996 are comprised of the following: (i) term life
insurance premium payments for the benefit of Mr. Rorie ($3,848), Mr. Colls
($2,773) and Mr. Warrick ($108); (ii) a portion of premium payments for the
benefit of Mr. Rorie under a split dollar life insurance policy which provides
for the refund of premiums to the Company upon termination of the policy,
consisting of premium payments for the term insurance portion of the policy
($2,487) and the actuarial value of the remainder of the premiums paid ($974);
(iii) disability insurance premium payments for Mr. Rorie ($439) and Mr.
Warrick ($165); and (iv) matching contributions to the Company's 401(k) Plan on
behalf of Mr. Rorie ($1,492) and Mr. Warrick ($1,872) in respect of their
respective contributions to the Plan.
STOCK OPTIONS. The only plan pursuant to which options for shares of
common stock may be granted to employees is the 1994 Stock Option Plan. This
Plan does not provide for the grant of stock appreciation rights. The
information below has been adjusted to take into account the five-for-four stock
split effective February 2, 1996 for shareholders of record on January 19, 1996.
With respect to each named executive officer, the following table sets
forth information concerning option grants during fiscal year 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option Term
----------------------------------------------------------------------------------------------------
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($)(2) 10% ($)(2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Durwood G. Rorie, 0 -- -- -- -- --
Jr.
Brian D. Colls 0 -- -- -- -- --
Raymond E. Warrick, 7,500(1) 15% $3.30 08/01/05 $15,565 $39,445
Jr.
</TABLE>
(1) These options become exercisable as to 50% of the shares on August 1, 1996
and as to the remaining 50% on August 1, 1997, provided that these options are
exercisable only if the market price of the Company's stock is at least $6.60
on the date immediately preceding the date of exercise.
(2) This calculation assumes a market price of the Company's stock on August 1,
1995, the date of grant, of $4.125, which equals the closing price of the
Company's stock on the Nasdaq National Market on July 31, 1995, the next
preceding day on which a trade occurred.
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<PAGE> 8
With respect to each named executive officer, the following table sets forth
information concerning option exercises during fiscal year 1996 and unexercised
options held at June 30, 1996.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Value Realized ($) Underlying Unexercised In-The-Money options
Options at FY-End (#) at FY-End ($)
(Market Price on Exercisable/
Shares Acquired on Exercise Less Exercisable/ Unexercisable
Name Exercise(#) Exercise Price) Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Durwood G. Rorie, Jr. 0 -- 187,500/0 522,937/0(1)
Brian D. Colls 7,500 17,020(2) 0/0 0/0(1)
Raymond E. Warrick, Jr. 0 -- 15,000/7,500 41,835/6,188(1)
</TABLE>
(1) There were no trades of the Company's common stock on the Nasdaq National
Market on June 30, 1996. This calculation assumes a market price of the
Company's stock on June 30, 1996, of $4.125, which equals the closing price of
the Company's stock on the Nasdaq National Market on June 28, 1996, the next
preceding day on which a trade occurred.
(2) Based on a market price of the Company's stock on July 25, 1995, the date
of exercise, of $3.8125, which equals the closing price of the Company's stock
on the Nasdaq National Market on that date.
EMPLOYMENT AGREEMENTS. Mr. Rorie has an employment agreement with the
Company providing for his employment as President and Chief Executive Officer of
the Company until June 30, 2001. Under the agreement, Mr. Rorie is entitled to
an annual base salary not less than the greater of $130,000 or his base salary
for the preceding year and to an annual bonus equal to 2-1/2% of the pre-tax
consolidated net profits of the Company each year. If Mr. Rorie is unable to
perform his services because of illness or incapacity for more than six months,
the Company may reduce his compensation by 50% during the continuation of the
illness or incapacity, and if Mr. Rorie is absent from his employment for any
reason for a continuous period of one year, the Company may terminate the
agreement. Upon termination of Mr. Rorie's employment by the Company for any
reason, with or without cause, Mr. Rorie is entitled to receive a severance
payment equal to twice his total compensation for the previous fiscal year, and
upon Mr. Rorie's death, the Company is obligated to continue paying his base
salary to his surviving spouse (or his estate) for 12 months. The agreement
provides that during its term and for two years after termination of Mr. Rorie's
employment (or for the remaining term of the agreement if the Company terminates
Mr. Rorie for cause or Mr. Rorie terminates his employment in violation of the
agreement), Mr. Rorie will not directly or indirectly compete with the Company
in any counties in the United States where the Company is conducting business.
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<PAGE> 9
The Company and Mr. Rorie are also parties to an Amended Split Dollar
Life Insurance Plan dated June 1, 1992 (the "Plan") and a related Agreement
dated November 15, 1995 (the "Agreement"). Under the Plan, upon termination of
the Plan, Mr. Rorie is obligated to pay the Company $50,230.20 plus the
aggregate premium amounts treated as an obligation of the Company under the Plan
and paid by the Company after March 23, 1992. Under the Agreement, the Company
has agreed that on July 1, 1998 or the date of Mr. Rorie's earlier death or
retirement (the "Trigger Date") and on the first and second anniversary of the
Trigger Date, Mr. Rorie's payment obligation as described above will be reduced
by an amount equal to 1/3 of the payment obligation on the Trigger Date, and Mr.
Rorie's payment obligation is automatically reduced to zero upon his death.
Under the Agreement, Mr. Rorie's payment obligation is not subject to any
further reduction if he is discharged for cause or breaches the noncompetition
obligations of his employment agreement. The total amount of Mr. Rorie's
payment obligation which is subject to reduction will be approximately $143,000
as of July 1, 1998.
Mr. Colls has an employment agreement with the Company providing for his
employment as Vice President of European Operations of the Company. Under the
agreement, Mr. Colls is entitled to an annual base salary of GBP8,000 and to a
sales commission of 2.5% of the Company's net sales for shipment to the European
continent each fiscal year. The Company may terminate the agreement with or
without cause on 18 months notice, and Mr. Colls may terminate the agreement
with or without cause on six months notice. The agreement provides that during
its term and thereafter Mr. Colls will not directly or indirectly compete with
the Company on the European continent and that for one and one-half years after
termination of his employment Mr. Colls will not directly or indirectly engage
in the air pollution control business on the European continent.
Mr. Colls also has an employment agreement with United Air Specialists
(UK) Ltd., a wholly-owned subsidiary of the Company ("UAS-UK"), providing for
his employment as Managing Director of UAS-UK. The performance of this
agreement by UAS-UK is guaranteed by the Company. Under the agreement, Mr.
Colls is entitled to an annual base salary of not less than GBP6,000 and a
sales commission of 1.5% of UAS-UK's net sales each fiscal year up to GBP1
million and 2.5% of UAS-UK's net sales above that each fiscal year. UAS-UK may
terminate the agreement with or without cause on 18 months notice, and Mr.
Colls may terminate the agreement with or without cause on six months notice.
The agreement provides that if Mr. Colls becomes incapacitated, he will receive
his full remuneration for the first 26 weeks of the incapacity in any
consecutive period of 52 weeks. The agreement provides that UAS-UK will
provide reasonable health insurance to Mr. Colls and will pay the premiums due
on certain pension policies issued by Scottish Amicable Insurance Company
Limited which provide for certain pensions benefits to Mr. Colls. These
policies are owned by Mr. Colls, and the premiums on these policies have been
fully paid. Under the agreement, upon Mr. Coll's termination for any reason,
UAS-UK is obligated to keep in force for one year his UAS-UK health insurance
arrangements. The agreement provides that during its term and for one year
thereafter Mr. Colls will not directly or indirectly compete with UAS-UK
in England.
NON-COMPETITION AGREEMENTS. The Company and Mr. Rorie are parties to a
non-competition agreement under which Mr. Rorie agrees that upon termination of
his employment he will not directly or indirectly engage in any activity which,
in the opinion of the Board of Directors of the Company, is in competition with
the Company or its subsidiaries, and in return, the Company agrees to make
certain payments to Mr. Rorie upon his retirement or if the Company terminates
his employment without cause or due to disability. Under the agreement, the
payments to Mr. Rorie commence on the first day of the calendar month after his
retirement or termination without cause or one year after his termination due to
disability, and Mr. Rorie will receive a monthly payment for the rest of his
life equal to one twenty-
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<PAGE> 10
fourth of his average annual base salary for the three fiscal years preceding
his retirement or termination. Under the agreement, the Company also is
obligated, at its expense, to provide health insurance benefits to Mr. Rorie
during his lifetime substantially similar to those generally available to senior
management under any group health insurance plan maintained by the Company from
time to time. The agreement provides that the required payments will be made
from the general funds of the Company and that no special fund will be
established to assure payment. Any payments under the agreement are in addition
to payments to which Mr. Rorie may be entitled under any present or future
retirement, pension or profit sharing plan or executive bonus plan adopted by
the Company generally for the benefit of its employees. The Company has signed
an Agreement and Plan of Merger under which a subsidiary of CLARCOR Inc. will
merge with and into the Company, and the Company will become a subsidiary of
CLARCOR Inc., subject to approval of the Company's shareholders and certain
other conditions. Mr. Rorie has entered into an agreement with CLARCOR Inc.
under which he will receive a lump-sum payment of $668,321.52 upon consummation
of the merger in satisfaction of the Company's payment obligations under
Mr. Rorie's non-competiton agreement.
The Company and Mr. Cheney are parties to a non-competition agreement
providing for payments to Mr. Cheney on the same terms as under the Company's
non-competition agreement with Mr. Rorie. Mr. Cheney retired as an employee of
the Company on June 30, 1991, and is currently receiving payments under his
agreement. On March 1, 1996, the Company and Mr. Cheney amended the agreement
to provide that, starting on that date, the monthly payment under the agreement
will be 110% of the payment originally provided under the agreement.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION. The
compensation of the CEO is established by the Board. The compensation of other
executive officers is established by the CEO under the supervision of the Board.
In setting compensation, the Board and CEO seek to:
- Attract and retain high-quality employees.
- Link rewards to Company performance and individual performance.
- Align the interests of the Company's employees with those of
its shareholders.
The Company's executive compensation consists of annual salaries,
annual bonuses and stock options.
ANNUAL SALARIES. The CEO's annual salary is established by his
Employment Agreement and the Board. The Employment Agreement provides
for a base salary not less than the greater of $130,000 or the base
salary paid in the previous year. On an annual basis, the Board
reviews the base salary and decides whether to set it above the
minimum specified in the CEO's Employment Agreement. In fiscal 1996,
the CEO's base salary was $162,000. In setting the salary at this
level, the Board took into account the Company's recent performance
based on general operational and financial criteria, including sales
and profits. The Board did not base its decision on specific
quantifiable performance goals or targets, but instead made a
subjective determination based on consideration of all such factors.
The annual salary of other executive officers is established by the
CEO. In doing so, the CEO assesses the level of responsibility and
contribution of each individual executive officer and makes a
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<PAGE> 11
subjective judgment on his annual salary. The CEO also takes into account
information periodically available from various sources on the compensation of
executives at local, regional or national companies.
BONUSES. Mr. Rorie's bonus is established by his Employment Agreement
and the Board. The Employment Agreement provides for a bonus of 2-1/2% of the
Company's annual pre-tax consolidated net profits. From time to time, the Board
awards Mr. Rorie a bonus in addition to or in lieu of the bonus specified in his
Employment Agreement. In fiscal 1996, Mr. Rorie's bonus under the Employment
Agreement was $53,000. In addition, Mr. Rorie received a performance bonus of
$20,150 determined by the Board based on the Board's assessment of Mr. Rorie's
performance and the overall performance of the Company.
The bonuses of the Company's other executive officers are established by
the CEO. Each officer's bonus is based on different criteria, but those
criteria generally tie bonuses directly or indirectly to the performance of the
operations supervised by the officer. In fiscal 1996 and certain prior years,
Mr. Warrick received a bonus based on the contribution to profit margin (after
directly controllable costs) of operations he supervised. In addition, Mr.
Warrick received a performance bonus determined by Mr. Rorie based on the
overall performance of the Company. In fiscal 1996 and certain prior years, Mr.
Rehl received a bonus determined by Mr. Rorie based on Mr. Rorie's assessment of
Mr. Rehl's performance and the overall performance of the Company. Mr. Colls
does not receive a bonus but receives commission under his employment agreements
as described above.
Section 162(m) of the Internal Revenue Code generally limits to
$1,000,000 the annual corporate federal income tax deduction for certain
"non-performance based" compensation paid to the Company's executive officers
who appear in the Summary Compensation Table. The Company's 1994 Stock Option
Plan meets the requirements for deductibility under Section 162(m). The
Company's deductions for executive compensation were not affected by Section
162(m) during fiscal 1996 and are not likely to reach the $1,000,000 threshold
in the foreseeable future. However, it is possible that at some point in the
future the Board may authorize payment of nondeductible compensation if it
determines such action would be in the best interests of the Company.
STOCK OPTIONS. From time to time, the Company has issued stock options
to its executive officers. In general, options are intended to tie a portion of
compensation to long-term shareholder value. In recent years, the Company has
granted options intermittently instead of on a regular basis.
By the Board of Directors: Durwood G. Rorie, Jr.
William A. Cheney
David F. Herche
William Tillinghast
George T. Rehfeldt
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Company currently has no compensation committee (or other Board committee
performing equivalent functions). During fiscal 1996, Mr. Rorie and Mr. Cheney
participated in deliberations of the Company's Board of Directors concerning
executive officer compensation.
PERFORMANCE GRAPH. The following graph compares, over the period shown,
the cumulative total shareholder return of the Company's common stock to the
cumulative total return of companies
9
<PAGE> 12
included in the Center for Research in Security Prices' Index for The Nasdaq
Stock Market (U.S. Companies) and in a peer group index comprised of stocks
traded on the Nasdaq Stock Market with the same three-digit Standard Industrial
Classification Code as the Company (SIC 356). The period covered by the
comparison begins on January 17, 1995, the date the Company's common stock was
registered under Section 12 of the Securities Exchange Act of 1934. In each
case, it is assumed that $100 was invested on January 17, 1995, and that all
dividends were reinvested. The information below has been adjusted to take into
account the three-for-one stock split in the Company's common stock effective
June 1, 1994 for shareholders of record on May 18, 1994, and the five-for-four
stock split effective February 2, 1996 for shareholders of record on January
19, 1996.
UNITED AIR SPECIALISTS, INC.
SHAREHOLDER RETURN PERFORMANCE GRAPH
[A paper copy of the performance graph is being submitted supplementally to the
Company's Assistant Director in the Division of Corporation Finance as required
by Rule 304(d) of Regulation S-T. The data as presented in such graph is set
forth below.]
<TABLE>
<CAPTION>
01/17/95* 06/30/95* 06/30/96
<S> <C> <C> <C>
UAS 100.0 200.0 125.0
Market 100.0 121.2 155.7
Peer 100.0 125.0 136.6
<FN>
*The Company's common stock was accepted for inclusion on the Nasdaq
Small Cap Market on July 17, 1995, and no closing price is available for the
Company's common stock on January 17, 1995 or June 30, 1995. This graph assumes
a market price of the Company's common stock on January 17, 1995 of $1.50, which
equals the closing price of the Company's stock on December 1, 1994 (the closest
available date), as reported by the National Quotation Bureau, Inc., and a
market price of the Company's common stock on June 30, 1995 of $3.00, which
equals the closing price of the Company's stock on June 29, 1995, as reported by
the National Quotation Bureau, Inc.
</TABLE>
10
<PAGE> 13
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors desires to obtain from the shareholders an
indication of their approval or disapproval of the Board's action in appointing
Arthur Andersen LLP, Certified Public Accountants, as independent auditors of
the Company for fiscal year 1997.
Arthur Andersen LLP has served the Company since the Company's
inception. The Company has been informed that neither Arthur Andersen LLP nor
any of its partners has any direct financial interest or any material indirect
financial interest in the Company and during the past three years has had no
connection therewith in the capacity of promoter, underwriter, voting trustee,
director, officer or employee.
The Board of Directors recommends a vote "FOR" approval of Arthur
Andersen LLP.
In the event the resolution is defeated, the adverse vote will be
considered a direction to the Board of Directors to select other auditors for
the following year. However, because of the difficulty and expense of making
any substitution of auditors so long after the beginning of the current year, it
is contemplated that the appointment for fiscal year 1997 will be permitted to
stand unless the Board finds other good reasons for making a change.
Representatives of Arthur Andersen LLP will be in attendance at the meeting,
with the opportunity to make a statement if they desire, and will be available
to respond to appropriate questions.
CERTAIN TRANSACTIONS
The Company and Meiko Mercantile, Ltd. ("Meiko"), a Japanese company
that beneficially owns more than five percent of the Company's common stock, are
parties to an Export Marketing Agreement under which Meiko acts as the Company's
exclusive distributor in Japan for certain of the Company's air cleaning
equipment. Under the agreement, Meiko purchases commercial and industrial air
cleaning equipment from the Company at prices agreed to by the parties from time
to time. The agreement provides that it may be terminated by either party on 60
days prior notice. During fiscal years 1994, 1995 and 1996, the Company's sales
to Meiko under the agreement were approximately $1.7 million, $2.0 million, and
$2.2 million, respectively. The Company believes that the terms of its sales to
Meiko are no less favorable to the Company than those available from unrelated
third parties.
Mr. Rorie, Mr. Cheney and Meiko are parties to a Stock Purchase and Sale
Agreement under which Meiko purchased shares of the Company's common stock from
Mr. Rorie and Mr. Cheney in January, 1992. Under the agreement, Mr. Rorie and
Mr. Cheney agree that if Mr. Rorie is neither Chief Executive Officer nor
Chairman of the Board of the Company (except by reason of Mr. Rorie's death,
disability or retirement subsequent to age 65), Mr. Rorie and Mr. Cheney will
vote as shareholders in favor of the Company redeeming all of the common stock
then held by Meiko and its affiliates at a purchase price equal to the greater
of (x) 78% of book value per common share as audited at the Company's last
fiscal year end, or (y) a per share price equal to the average bid price for the
Company's common stock as published for the five business days immediately prior
to the event triggering the redemption rights. Under the agreement, Mr. Rorie
and Mr. Cheney further agree that if they each sell
11
<PAGE> 14
more than 50% of their respective holdings of the Company's common stock (except
for specified dispositions to family members or trusts for such family members),
they will use their best efforts to obtain the agreement of the purchaser or
purchasers of their shares to purchase a proportionate number of shares from
Meiko on the same terms and, if the purchaser or purchasers decline, Mr. Rorie
and Mr. Cheney will proportionately reduce the shares they sell and will permit
Meiko to sell a proportionate number of shares in their place.
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT
The following table sets forth, as of September 15, 1996, certain
information with regard to the beneficial ownership of the Company's common
stock by (i) each of the Company's present shareholders known to hold more than
five percent of the outstanding shares of common stock, (ii) each director and
nominee and each executive officer named on the Summary Compensation Table,
individually, and (iii) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
Percentage of
Name of Beneficial Owner Shares Owned Ownership (1)
----------------------- ------------ --------------
<S> <C> <C>
Durwood G. Rorie, Jr. 931,776 30.06%
(2) (3) (4) (6)
William A. Cheney 628,227 21.57%
(3) (5) (6)
Brian D. Colls 86,040 2.95%
(2)
Raymond E. Warrick, Jr. 28,832 *
(2)
David F. Herche 11,875 *
(2)
William C. Tillinghast 6,000 *
(2)
George T. Rehfeldt 5,500 *
(2)
All directors and executive
officers as a group - eight
persons (2) 1,709,500 54.48%
Nobuaki Hasegawa 167,000 5.73%
(3) (7)
</TABLE>
12
<PAGE> 15
* Less than 1%
- ------------------------
NOTES:
(1) The percentage of ownership figures assume 2,912,265 shares
outstanding as of September 15, 1996, plus, with respect to each individual or
group named, the number of common shares subject to options held by the
individual or group which are exercisable or convertible on or before November
13, 1996.
(2) The beneficial ownership number includes shares subject to options
which are currently exercisable or which become exercisable on or before
November 13, 1996 as follows: Mr. Rorie, 187,500; Mr. Colls, none; Mr. Warrick,
15,000; Mr. Herche, 5,625; Mr. Tillinghast, 5,625; Mr. Rehfeldt, 4,375; and all
directors and executive officers as a group (eight persons), 225,625. Certain
of the options issued by the Company are exercisable only if the fair market
value of the Company's common stock is at least $6.60 per share on the date
immediately preceding the exercise date. The beneficial ownership numbers in
this footnote assume that the fair market value of the Company's common stock
does not exceed $6.60 per share on or before November 13, 1996.
(3) The business addresses of those shareholders beneficially owning at
least 5% of the Company's common stock are as follows: Mr. Rorie, 4440 Creek
Road, Cincinnati, Ohio 45242; Mr. Cheney, 4440 Creek Road, Cincinnati, Ohio
45242; and Nobuaki Hasegawa, 5-4, 2-Chome, Showa-Machi, Kita-Ku, Tokyo, 114,
Japan.
(4) The beneficial ownership number includes 525,078 shares owned by
Mr. Rorie's wife, of which Mr. Rorie disclaims beneficial ownership, 750 shares
owned by Mr. Rorie as Custodian for his granddaughter, and 2,000 shares owned by
a Trust of which Mr. Rorie is trustee with sole voting and investment power and
Mr. Rorie's daughter is the beneficiary.
(5) The beneficial ownership number includes 623,227 shares owned by
the W. A. Cheney Family Trust, of which Mr. Cheney is trustee with sole voting
and investment power and Mr. Cheney's children and grandchildren are the
beneficiaries, and 4,250 shares owned by Mr. Cheney's wife, of which Mr. Cheney
disclaims beneficial ownership.
(6) Mr. Rorie and Mr. Cheney are parties to a Stock Transfer
Restriction, Purchase and Redemption Agreement, which restricts the sale,
assignment, transfer, pledge, hypothecation or other disposition of the shares
of the Company's common stock held by them. The Agreement provides that before
either Mr. Rorie (or his wife) or Mr. Cheney (or the W. A. Cheney Family Trust)
may dispose of shares, the shareholder disposing of shares must first give the
other party and UAS the right of first refusal to purchase the shares on the
terms specified in the Agreement.
(7) Mr. Hasegawa owns 12,000 shares and Meiko Mercantile, Ltd., a
company of which Mr. Hasegawa is a shareholder, owns 155,000 shares. The
Company believes that Nobuaki Hasegawa is the beneficial owner of the common
stock held by Meiko Mercantile, Ltd.
13
<PAGE> 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's equity securities, to file reports of
security ownership and changes in such ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors and greater-than-ten-percent
beneficial owners also are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based upon a review of copies of such forms and written representations
from its executive officers and directors, the Company believes that all Section
16(a) filing requirements were complied with on a timely basis during and for
fiscal year 1996, except that a Form 3 report required to be filed by a Trust of
which Mr. Rorie is trustee and Mr. Rorie's daughter is beneficiary was filed
late.
PROXY STATEMENT PROPOSALS
Shareholder proposals will be considered for inclusion in the Proxy
Statement for the 1997 Annual Meeting if they are received by the Company before
the close of business on June 14, 1997.
OTHER BUSINESS
The Company is not aware of any business or matter which may properly be
presented at the meeting other than as discussed herein. However, if any other
matters do come before the meeting, or an adjournment thereof, it is intended
that the proxies will vote thereon in accordance with the recommendation of the
Board of Directors.
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K BY WRITING TO THE MANAGER OF SHAREHOLDER RELATIONS OF THE
COMPANY AT THE COMPANY'S ADDRESS SHOWN ABOVE.
14
<PAGE> 17
UNITED AIR SPECIALISTS, INC.
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS
O
X The undersigned hereby constitutes and appoints William A. Cheney
Y and Durwood G. Rorie, and each of them, his true and lawful agents
and proxies with full power of substitution in each, to represent
the undersigned at the Annual Meeting of Shareholders of United Air
Specialists, Inc. to be held at the corporate offices of the
Company, 4440 Creek Road, Cincinnati, Ohio on Wednesday, November
13, 1996 at 1:00 p.m. (EST), and at any adjournments thereof, on
all matters coming before said meeting.
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
Durwood G. Rorie, Jr., William A. Cheney, _________________________________
David F. Herche, William Tillinghast, _________________________________
George T. Rehfeldt _________________________________
_________________________________
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
PLEASE DETACH CARD AND RETURN TOP PORTION ONLY IN THE ENVELOPE PROVIDED.
<PAGE> 18
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Ratification of / / / / / /
Directors Arthur Andersen
(see reverse) LLP as independent
auditors
For, except vote withheld from the following nominee(s):
Change / /
of
Address
Attend / /
Meeting
SIGNATURE(S) _____________________________________________________________ DATE_________
SIGNATURE(S) _____________________________________________________________ DATE_________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
</TABLE>
- --------------------------------------------------------------------------------
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