<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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
TRANSMATION, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
John A. Misiaszek, Vice President-Finance
------------------------------------------------------------------------
(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:
Notes:
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
[TRANSMATION INC. LOGO]
AUGUST 15, 1995
The Annual Meeting of Shareholders of TRANSMATION, INC. (the "Company")
will be held at the Hyatt Regency Hotel, 125 East Main Street, Rochester, New
York, on Tuesday, August 15, 1995 at 12:00 noon, local time, for the following
purposes more fully described in the accompanying proxy statement:
1. To elect three directors of the Company.
2. To consider and act upon a proposal to approve and ratify the
Transmation, Inc. Amended and Restated 1993 Stock Option Plan.
3. To consider and act upon a proposal to approve and ratify the
Transmation, Inc. Employees' Stock Purchase Plan.
4. To consider and act upon a proposal to approve and ratify the
Transmation, Inc. Amended and Restated Directors' Warrant Plan.
5. To consider and act upon a proposal to approve and ratify the
Transmation, Inc. Directors' Stock Plan.
6. To consider and act upon a proposal to approve and ratify the
selection of Price Waterhouse LLP as the Company's independent
auditors for the fiscal year ending March 31, 1996.
7. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 30, 1995 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN A. MISIASZEK
Secretary
Dated: July 5, 1995
<PAGE>
TRANSMATION, INC.
10 VANTAGE POINT DRIVE
ROCHESTER, NEW YORK 14624
-----------------------
PROXY STATEMENT
-----------------------
GENERAL INFORMATION
This proxy statement is furnished to shareholders in connection with the
solicitation of proxies by the Board of Directors of Transmation, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders of the Company which
will be held on Tuesday, August 15, 1995, and at any adjournments thereof (the
"Meeting"). This proxy statement and accompanying form of proxy are being first
mailed to shareholders on or about July 5, 1995. The proxy, when properly
executed and received by the Secretary of the Company prior to the Meeting, will
be voted as therein specified unless revoked by filing with the Secretary prior
to the Meeting a written revocation or a duly executed proxy bearing a later
date. Unless authority to vote for one or more of the director nominees is
specifically withheld according to the instructions, a signed proxy will be
voted FOR the election of the three director nominees named herein and, unless
otherwise indicated, FOR each of the other five proposals described in this
proxy statement and the accompanying notice of meeting.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by use of the mails, directors, officers or regular employees of
the Company, without extra compensation, may solicit proxies personally or by
telephone or other telecommunication. In addition, the Company has retained
Regan & Associates, Inc., a professional solicitation firm, which may assist in
soliciting proxies for a fee estimated at $3,000 plus reimbursement of
out-of-pocket expenses. The Company has requested persons holding stock for
others in their names or in the names of nominees to forward soliciting material
to the beneficial owners of such shares and will, if requested, reimburse such
persons for their reasonable expenses in so doing.
VOTES REQUIRED
As of June 30, 1995, the record date for the Meeting, there were 2,395,540
shares of the Company's Common Stock, par value $.50 per share (the "Common
Stock"), issued and outstanding. Only shareholders of record on the books of the
Company at the close of business on June 30, 1995 are entitled to notice of and
to vote at the Meeting and at any adjournments thereof. Each such shareholder is
entitled to one vote for each share of Common Stock registered in his name. A
majority of the outstanding Common Stock, represented in person or by proxy at
the Meeting, will constitute a quorum for the transaction of all business.
The affirmative vote of at least a majority of the outstanding shares of
Common Stock entitled to vote at the Meeting is required for approval and
ratification of the Company's (i) Amended and Restated 1993 Stock Option Plan,
(ii) Employees' Stock Purchase Plan, (iii) Amended and Restated Directors'
Warrant Plan and (iv) Directors' Stock Plan (collectively, the "Stock Plans").
See "PROPOSAL TO APPROVE AND RATIFY AMENDED AND RESTATED 1993 STOCK OPTION
PLAN," "PROPOSAL TO APPROVE AND RATIFY EMPLOYEES' STOCK PURCHASE PLAN,"
"PROPOSAL TO APPROVE AND RATIFY AMENDED AND RESTATED DIRECTORS' WARRANT PLAN,"
and "PROPOSAL TO APPROVE AND RATIFY DIRECTORS' STOCK PLAN." Pursuant to an
Employment Agreement, dated as of April 1, 1995, between the Company and Robert
G. Klimasewski, the Company's President and Chief Executive Officer, and as part
of the inducement and consideration therefor, each of the other directors of the
Company has given Mr. Klimasewski his irrevocable proxy to vote all of his
shares entitled to vote at the Meeting in favor of approval and ratification of
each of the Stock Plans. See "SECURITY OWNERSHIP OF CERTAIN
2
<PAGE>
BENEFICIAL OWNERS AND MANAGEMENT" and "EXECUTIVE COMPENSATION--EMPLOYMENT
AGREEMENTS." Accordingly, an aggregate of 721,168 shares of Common Stock
(including Mr. Klimasewski's shares), or 30.1% of the shares outstanding and
entitled to vote at the Meeting, will be voted in favor of approval and
ratification of each of the Stock Plans.
Shareholders are entitled to cumulate votes in the election of directors
provided a shareholder gives the President, a Vice President or the Secretary of
the Company notice that he desires that voting at the Meeting be cumulative.
Such notice must be in writing and must be given at least 48 hours before the
time fixed for holding the Meeting. In addition, a formal announcement must be
made at the commencement of the Meeting by the Chairman, the Secretary or by or
on behalf of the shareholder, stating that such notice has been given. In the
event such notice is not received by the Company within the prescribed time,
shareholders will not be entitled to cumulate votes.
ELECTION OF DIRECTORS
Three of the Company's nine current directors are to be elected by the
shareholders at the Meeting, each to hold office for a term expiring in 1998 or
until his successor is duly elected and qualifies.
The Board of Directors recommends the election of the three nominees named
below, all of whom are currently directors of the Company. Unless authority to
vote for one or more of the nominees is specifically withheld according to the
instructions, proxies in the enclosed form will be voted FOR the election of
each of the three nominees named below. The votes represented by such proxies
may be cumulated if notice is given as described in "VOTES REQUIRED."
The Board of Directors does not contemplate that any of the nominees will
be unable to serve as a director, but if that contingency should occur prior to
the voting of the proxies, the persons named in the enclosed proxy reserve the
right to vote for such substitute nominee or nominees as they, in their
discretion, shall determine.
PROPOSED FOR ELECTION AS DIRECTORS
AT THE 1995 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND SINCE
------------------- -----
<S> <C>
GERALD R. KATZ, age 77, is retired. He was President of Capital Industrial Finishing Inc., Rochester, 1974
New York (finisher of industrial parts) from 1980 to 1983.
ROBERT G. KLIMASEWSKI, age 52, has served as President and Chief Executive Officer of the Company since 1982
June 1994. He is also Vice Chairman of Burleigh Instruments, Inc., Rochester, New York (manufacturer
of laser instrumentation and micropositioning equipment), which he founded in 1972.
PHILIP P. SCHULP, age 63, is a Vice President of the Company. He served as Vice President-Sales from 1974
1987 to 1991, and as a Vice President in other capacities since 1973.
</TABLE>
3
<PAGE>
DIRECTORS WHOSE TERMS DO NOT EXPIRE
AT THE 1995 ANNUAL MEETING
The following table sets forth certain information with respect to each
director of the Company whose term in office does not expire at the Meeting.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND BACKGROUND SINCE EXPIRES
------------------- -------- -------
<S> <C> <C>
WILLIAM J. BERK, age 70, is retired. He founded the Company and served as 1964 1996
its President and Chief Executive Officer from 1964 until June 1994.
ANGELO J. CHIARELLA, age 61, has served as President and General Manager 1967 1996
of Midtown Holdings Corp., Rochester, New York (commercial real estate)
since 1963. He also serves on the Board of Directors of Rochester Gas &
Electric Corporation.
CORNELIUS J. MURPHY, age 64, has served as Chairman of the Board of the 1991 1997
Company since January 1995. He has been Senior Vice President in the
Rochester, New York office of Goodrich & Sherwood Company (human
resources management consulting) since 1989. For over 35 years prior to
that, he was employed by Eastman Kodak Company in various executive
positions, most recently Senior Vice President and a Director in the
office of the Chairman. Mr. Murphy also serves on the Board of
Directors of Rochester Gas & Electric Corporation.
JOHN W. OBERLIES, age 56, has served as Executive Vice President and 1987 1996
Chief Operating Officer of LeChase Construction, Rochester, New York
(general construction) since 1990. For more than five years prior to
that he was Senior Vice President, Customer & Administrative Services,
of Rochester Gas & Electric Corporation (public utility).
DR. HARVEY J. PALMER, age 49, is Professor and Chair of Chemical 1987 1997
Engineering in the College of Engineering and Applied Science of the
University of Rochester, Rochester, New York (education and scientific
research), where he has been a member of the faculty since 1971.
ARTHUR M. RICHARDSON, age 68, has been President of Richardson Capital 1985 1997
Corp., Rochester, New York (investments) since 1986. From 1974 to 1986
he served as Chairman and Chief Executive Officer of Security N.Y.
State Corp., Rochester, New York (commercial bank holding company). Mr.
Richardson also serves on the Boards of Directors of Rochester Gas &
Electric Corporation, Goulds Pumps, Inc. and Raymond Corporation.
</TABLE>
The Board of Directors held 12 meetings during the fiscal year ended March
31, 1995 ("Fiscal 1995"). Each director attended at least 75% of the total of
such Board meetings and meetings of Board Committees on which he served, except
for Arthur M. Richardson, who attended nine of 13 such meetings.
The Board of Directors has established, among other Committees, an Audit
Committee, a Compensation and Benefits Committee, and a Nominating Committee of
the Board of Directors.
The current members of the Audit Committee are Messrs. Richardson
(Chairman), Chiarella and Katz. The Committee held one meeting during Fiscal
1995, at which it reviewed with Price Waterhouse LLP, the Company's independent
auditors, the Company's financial statements and internal accounting procedures,
Price
4
<PAGE>
Waterhouse LLP's auditing procedures and fees, and the possible effects of
professional services upon the independence of Price Waterhouse LLP.
The current members of the Compensation and Benefits Committee are Messrs.
Murphy (Chairman), Berk and Chiarella. The Committee makes recommendations to
the Board with respect to compensation and benefits paid to the Company's
management and acts as the Stock Option Committee of the Board (see "EXECUTIVE
COMPENSATION"). The Compensation and Benefits Committee held five meetings
during Fiscal 1995.
The current members of the Nominating Committee are Messrs. Klimasewski
(Chairman), Murphy and Dr. Palmer. The purpose of the Nominating Committee is to
consider and establish procedures regarding nominations to the Board submitted
by shareholders. The Committee held no meetings during Fiscal 1995. Shareholder
recommendations for nomination to the Board should be sent to the Company, to
the attention of the President.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of June 30, 1995
regarding the only person known to the Company to be the record or beneficial
owner of more than 5% of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF COMMON STOCK PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (1)
------------------- ---------------------- --------
<S> <C> <C>
William J. Berk 565,084 23.6%
c/o Transmation, Inc.
10 Vantage Point Drive
Rochester, NY 14624
</TABLE>
- - ---------
(1) As reported by Mr. Berk as of June 30, 1995, with such percentage based on
2,395,540 shares issued and outstanding.
The following table sets forth certain information as of June 30, 1995
regarding the Common Stock held by (i) the directors of the Company, (ii) the
"Named Executives" (see "EXECUTIVE COMPENSATION"), and (iii) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (1)
------------------------ ---------------------- ---------
<S> <C> <C>
William J. Berk 565,084 23.6%
Angelo J. Chiarella 16,000(2) 0.7
Gerald R. Katz 33,500 1.4
Robert G. Klimasewski 6,400(3)(4) 0.3
Cornelius J. Murphy 2,800(3) 0.1
John W. Oberlies 2,200(3) 0.1
Harvey J. Palmer 5,200(3) 0.2
Arthur M. Richardson 4,500(3) 0.2
Philip P. Schulp 103,084(5) 4.3
Eric W. McInroy 0 -
Thomas R. Crumlish 20,005(6) 0.8
All directors and executive
officers as a group (12 persons) 794,045(7) 32.6
</TABLE>
- - ---------
(1) As reported by such persons as of June 30, 1995, with percentages based on
2,395,540 shares issued and outstanding except where the issuance of shares
pursuant to presently exercisable options and warrants indicated in the
other footnotes hereto would increase the number of shares owned by such
person and the number of shares outstanding.
(Footnotes continued)
5
<PAGE>
(2) Includes 3,200 shares jointly owned by Mr. Chiarella and his wife, and a
presently exercisable warrant to purchase 1,500 shares.
(3) Includes a presently exercisable warrant to purchase 1,500 shares.
(4) Does not include an aggregate of 716,268 additional shares, or
approximately 30% of the shares outstanding, owned by the other directors
and covered by irrevocable proxies given to Mr. Klimasewski to vote at the
Meeting in favor of approval and ratification of each of the Stock Plans.
See "VOTES REQUIRED."
(5) Includes 400 shares owned by Mr. Schulp's wife, and a presently exercisable
option to purchase 5,000 shares.
(6) Includes presently exercisable options to purchase an aggregate of 20,000
shares.
(7) Includes presently exercisable options and warrants to purchase an
aggregate of 39,000 shares.
EXECUTIVE OFFICERS
The Company is currently served by four executive officers, who are elected
annually by the Board of Directors and serve until their successors are elected
and qualify:
ROBERT G. KLIMASEWSKI, age 52, has served as President and Chief Executive
Officer of the Company since June 1994. He has served as a director of the
Company since 1982, and is also the Vice Chairman of Burleigh Instruments, Inc.,
a manufacturer of laser instrumentation and micropositioning equipment, which he
founded in 1972.
THOMAS R. CRUMLISH, age 39, is a Vice President of the Company and President of
the Company's Instrument Division, positions he has held since September 1994.
From October 1992 to September 1994, Mr. Crumlish served as Executive Vice
President and Chief Operating Officer of the Company, and from August 1991 until
October 1992 he served as Vice President-Sales. For more than five years prior
to that, Mr. Crumlish was the Company's International Business Manager.
ERIC W. MCINROY, age 48, is President of the Company's Transcat Division and
Vice President of Transmation (Canada) Inc., positions he has held since 1982
and 1979, respectively. Since August 1992, Mr. McInroy has also served as a Vice
President of the Company.
JOHN A. MISIASZEK, age 47, is Vice President-Finance of the Company, a position
he has held since 1982. Mr. Misiaszek, a certified public accountant who has
been with the Company since 1975, has also served as Secretary and Treasurer of
the Company for more than the past five years.
6
<PAGE>
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual and long-term
compensation for services rendered to the Company in all capacities, for the
fiscal years ended March 31, 1995, 1994 and 1993, paid by the Company to those
persons who were, at March 31, 1995, the Chief Executive Officer of the Company
and each other executive officer of the Company who earned over $100,000 during
Fiscal 1995 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- - --------------------------------------------------------------------------- ------------
OTHER ANNUAL OPTION ALL OTHER
NAME AND SALARY BONUS COMPENSATION GRANTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) (POUND) ($)(3)
------------------ ---- ------ ------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Klimasewski 1995 $ 108,788 $ 0 $ 0 100,000(5) $ 0
President and Chief
Executive Officer (4)
Eric W. McInroy 1995 $ 144,000 $ 0 $ 0 15,000 $ 960
President, Transcat 1994 122,200 0 0 0 1,528
Division 1993 112,200 15,000 0 0 3,297
Thomas R. Crumlish 1995 $ 104,000 $ 0 $ 0 15,000 $ 1,228
President, Instrument 1994 102,200 0 0 0 1,278
Division 1993 78,200 15,000 0 25,000 978
</TABLE>
(1) The amounts shown include cash compensation earned and paid during the
fiscal year indicated as well as cash compensation deferred at the election
of the Named Executive into the Company's Long Term Savings and Deferred
Profit Sharing Plan (the "401(k) Plan").
(2) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation for any year does not
exceed 10% of the total amount of annual salary and bonus for any Named
Executive.
(3) The amounts shown include Company contributions to the 401(k) Plan.
(4) Mr. Klimasewski became President and Chief Executive Officer of the Company
late in the first quarter of Fiscal 1995. Prior to that, he served as an
outside director of the Company but was not employed by the Company in any
capacity. The amount shown as salary includes $2,450 in standard outside
directors' fees paid to Mr. Klimasewski in Fiscal 1995 prior to his
becoming President and Chief Executive Officer. See "EXECUTIVE
COMPENSATION--OUTSIDE DIRECTOR COMPENSATION."
(5) All of such options are conditional options, granted conditioned on the
shareholders' approval and ratification of the Amended and Restated 1993
Stock Option Plan at the Meeting. See "PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED 1993 STOCK OPTION PLAN." Failing such approval and
ratification, all of such options will be automatically cancelled.
7
<PAGE>
STOCK OPTIONS
Shown below is further information on grants of stock options during Fiscal
1995 to the Named Executives. The Company has no provision for stock
appreciation rights.
OPTION GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
VALUE
PERCENT OF AT ASSUMED ANNUAL RATE
TOTAL OF
OPTIONS STOCK PRICE
GRANTED TO APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM (1)
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME (NUMBER) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------- ---- ------ ---- --------------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Klimasewski 100,000(2)(3) 36.5% $4.25 1/16/2000 $117,000 $259,000
Eric W. McInroy 15,000(3) 5.5% $4.25 1/16/2000 $17,550 $38,850
Thomas R. Crumlish 15,000(3) 5.5% $4.25 1/16/2000 $17,550 $38,850
</TABLE>
(1) The dollar amounts in these columns are the result of calculations of
potential realizable value at the 5% and 10% rates set by the Securities
and Exchange Commission (the "SEC") and are not intended to forecast future
appreciation of the Common Stock. There can be no assurance that the Common
Stock will perform at the assumed annual rates shown in the table. The
Company will neither make nor endorse any predictions as to future stock
performance. As an alternative to the assumed potential realizable values
stated in the 5% and 10% columns, SEC rules would permit stating the
present value of such options at the date of grant. Methods of computing
present value suggested by different authorities can produce significantly
different results. Moreover, since stock options granted by the Company are
not transferable, there is no objective criteria by which any computation
of present value can be verified. Consequently, the Company's management
does not believe there is a reliable method of computing the present value
of such stock options.
(2) All of such options are conditional options, granted conditioned on the
shareholders' approval and ratification of the Amended and Restated 1993
Stock Option Plan at the Meeting. See "PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED 1993 STOCK OPTION PLAN." Failing such approval and
ratification, all of such options will be automatically cancelled.
(3) None of such options vest or become exercisable unless and until the market
price of the Common Stock reaches and maintains certain specified levels.
See "PROPOSAL TO APPROVE AND RATIFY AMENDED AND RESTATED 1993 STOCK OPTION
PLAN."
No Named Executive exercised any stock options during Fiscal 1995. Shown
below is information with respect to the unexercised options to purchase Common
Stock granted prior to or during Fiscal 1995 to the Named Executives and held by
them at the end of Fiscal 1995.
8
<PAGE>
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF ALL UNEXERCISED
UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS AT
AT FY-END (NUMBER) FY-END ($) (1)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert G. Klimasewski 4,000(2) 101,000(3) $ 7,062(2) $108,563(3)
Eric W. McInroy 0 15,000(4) 0 $ 15,938(4)
Thomas R. Crumlish 19,000 26,000(5) $46,938 $ 42,125(5)
</TABLE>
(1) Expressed as the excess of the market value of the Common Stock at fiscal
year-end ($5.31 per share) over the exercise price of the option.
(2) Represents warrants granted in 1990 and 1993, under the Directors' Warrant
Plan, when Mr. Klimasewski was an outside director of the Company.
(3) Includes conditional options to purchase 100,000 shares granted conditioned
on the shareholders' approval and ratification of the Amended and Restated
1993 Stock Option Plan at the Meeting. Failing such approval and
ratification, all of such options will be automatically cancelled. Assuming
such approval and ratification, none of such options vest or become
exercisable unless and until the market price of the Common Stock reaches
and maintains certain specified levels. See "PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED 1993 STOCK OPTION PLAN." Also includes warrants to
purchase 1,000 shares granted in 1993, under the Directors' Warrant Plan,
when Mr. Klimasewski was an outside director of the Company.
(4) None of such options vest or become exercisable unless and until the market
price of the Common Stock reaches and maintains certain specified levels.
See "PROPOSAL TO APPROVE AND RATIFY AMENDED AND RESTATED 1993 STOCK OPTION
PLAN."
(5) Includes options to purchase 15,000 shares, none of which vest or become
exercisable unless and until the market price of the Common Stock reaches
and maintains certain specified levels. See "PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED 1993 STOCK OPTION PLAN."
EMPLOYMENT AGREEMENTS
During Fiscal 1995 the Company and Mr. Klimasewski were party to an
employment agreement dated June 29, 1995, the compensation provisions of which
are described in "EXECUTIVE COMPENSATION--REPORT OF THE COMPENSATION AND
BENEFITS COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION." Pursuant to that
employment agreement, which expired on March 31, 1995, Mr. Klimasewski also
agreed not to compete with the Company during the term thereof.
Effective April 1, 1995, the Company and Mr. Klimasewski entered into a new
one-year employment agreement (the "Employment Agreement"), subject to a
one-year renewal, that is terminable by either party on 30 days' notice. The
compensation provisions of the Employment Agreement are described in "EXECUTIVE
COMPENSATION--REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE WITH RESPECT TO
EXECUTIVE COMPENSATION." Mr. Klimasewski has also agreed not to compete with the
Company during the term of the Employment Agreement. In addition, because Mr.
Klimasewski views the Stock Plans as essential elements of his program for
improving the Company's performance, the Employment Agreement required, as part
of the inducement and consideration therefor, that each of the other directors
of the Company give Mr. Klimasewski his irrevocable proxy to vote all of his
shares at the Meeting in favor of approval and ratification of each of the Stock
Plans. See "VOTES REQUIRED."
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
WITH RESPECT TO EXECUTIVE COMPENSATION
The following report of the Compensation and Benefits Committee (the
"Committee") required by the rules of the SEC to be included in this Proxy
Statement shall not be deemed incorporated by reference by any statement
incorporating this Proxy Statement by reference into any filing under the
Securities Act of 1933, as
9
<PAGE>
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under either such Act.
The following discussion applies to the compensation of all of the
Company's senior executives, including the Named Executives and Robert G.
Klimasewski, the Chief Executive Officer, except to the extent that certain
elements of Mr. Klimasewski's compensation are fixed pursuant to contract with
the Company (see "CHIEF EXECUTIVE OFFICER COMPENSATION" later in this Report).
EXECUTIVE COMPENSATION PHILOSOPHY. The goals of the Company's executive
compensation program are to align compensation with business objectives and
performance, and to enable the Company to attract, retain and reward executives
who contribute to the long-term success of the Company and each of its business
Divisions and contribute to increasing shareholder value. The Company attempts
to compensate its executives competitively. To ensure that compensation is
competitive, the Company periodically compares its compensation practices with
those of comparable companies and adjusts its compensation parameters based on
this review. More importantly, the Company's executive compensation program is
intended to compensate sustained performance. Executives are rewarded based upon
corporate performance, Divisional performance and individual performance.
Corporate performance and Divisional performance are evaluated by reviewing the
extent to which strategic and business plan goals are met, including such
factors as operating profit and performance relative to benchmarks. Individual
performance is evaluated by reviewing organizational and management development
progress against set objectives. The primary criteria for individual performance
are as follows:
.Company-wide profitability in excess of an annually predetermined amount
is a prerequisite to the payment of any incentive compensation, so that
every executive is motivated to achieve profitability for the entire
Company
.Incentive compensation is measured by the Company's and each Division's
success in meeting key line items in the Company's budget, particularly
profits
.Divisional success for purposes of incentive compensation is measured by
gross margin and Divisional profitability
.Controlling expenses, as measured against budget, is rewarded
.Sales and orders in each Division are rewarded
In the first quarter of each fiscal year, the Committee reviews with the
Chief Executive Officer and approves, with any modifications it deems
appropriate, an annual salary plan for the executives other than the Chief
Executive Officer (whose salary is fixed by contract). This salary plan is
developed under the ultimate direction of the Chief Executive Officer based on
industry peer group information and performance judgments as to the past and
expected future contributions of each executive.
During the early part of each fiscal year, the Chief Executive Officer sets
individualized objectives and key goals for each of the Company's executives in
keeping with the performance criteria set forth above. During each fiscal year,
the Chief Executive Officer gives executives ongoing feedback on performance.
After the end of the fiscal year, the Chief Executive Officer evaluates each
executive's accomplishment of objectives and attainment of key goals and
provides performance appraisals to the Committee along with recommendations on
salary, bonuses and stock options. The performance appraisals and
recommendations are considered by the Committee in deciding whether to grant
performance awards and in establishing the base salary for executives for the
next fiscal year. Similar objective-setting, feedback and evaluation with
respect to the Chief Executive Officer's performance is provided by the Chairman
of the Committee.
EXECUTIVE COMPENSATION PROGRAM. The Company's executive compensation
program is structured to attract and retain key executives capable of improving
products, promoting technological innovation, fostering teamwork and motivating
employees, all with the ultimate goal of improving profitability and enhancing
shareholder value.
The annual cash compensation paid to executives consists of a base salary
and cash bonuses. Salaries are reviewed by the Committee on an annual basis and
may be changed at that time based on (i) information derived
10
<PAGE>
from the evaluation procedures described above and a determination that an
individual's contributions to the Company have increased or decreased, (ii)
changes in competitive compensation levels, and (iii) changes in the Company's
business prospects.
Performance awards in the form of cash bonuses are awarded under the
Company's Annual Executive Bonus Plan, which is approved by the Board of
Directors on the recommendation of the Committee. Under this Plan, the Company
must first make a profit at a level determined by the Board of Directors before
any cash bonuses are paid to executives. For profits above this amount, a bonus
is established upon which an individual executive would receive a cash bonus
based on his individual performance against pre-established goals for his job
classification. Based on the Company's financial performance in Fiscal 1995,
none of the Company's senior executives was awarded a bonus for Fiscal 1995.
Long-term incentives are intended to be provided through the grant of stock
options under the Amended and Restated 1993 Stock Option Plan. The Committee
views stock options as a means of aligning the long range interests of all
employees, including executives, with those of the shareholders by providing
them with the opportunity to build a meaningful stake in the Company. During
Fiscal 1995, the Committee granted to an aggregate of 48 employees (including
all of the executive officers) options and conditional options to purchase an
aggregate of 273,600 shares of Common Stock. These options are directly
dependent on increasing shareholder value because they do not vest and become
exercisable until the market price of the Common Stock reaches specified levels.
See "EXECUTIVE COMPENSATION--STOCK OPTIONS" and "PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED 1993 STOCK OPTION PLAN."
Executive and other employees are also entitled to participate in the
Company's Long-Term Savings and Deferred Profit Sharing Plan, a 401(k) plan.
CHIEF EXECUTIVE OFFICER COMPENSATION. Robert G. Klimasewski was elected
President and Chief Executive Officer of the Company on June 29, 1994 upon the
resignation of William J. Berk, the Company's founder. While it was initially
contemplated that Mr. Klimasewski would serve as such on an interim basis only,
the Board subsequently determined, and Mr. Klimasewski agreed, that he would
serve as President and Chief Executive Officer on a customary year-to-year
basis.
During Fiscal 1995, Mr. Klimasewski was compensated pursuant to an
employment agreement with the Company, which expired on March 31, 1995, which
contemplated such interim service and provided for compensation solely in the
form of a salary at the rate of $144,000 per year (plus, at Mr. Klimasewski's
election, the benefits provided to other senior executives of the Company). As
part of his request of management-level employees to make sacrifices while the
Company was in a difficult period of turn-around, Mr. Klimasewski voluntarily
deferred receipt of his entire salary until August 7, 1994, and thereafter
voluntarily deferred receipt of 20% of his salary until January 1, 1995. Such
salary deferrals, along with those of all other employees, were paid in full
prior to the end of Fiscal 1995.
The Committee, with the concurrence of the Board of Directors, credits the
Company's financial performance in Fiscal 1995 in large measure to Mr.
Klimasewski's leadership. The Company posted net income of $381,785 in Fiscal
1995 compared to a net loss of $586,234 in Fiscal 1994 (or a net loss of
$756,234 in Fiscal 1994 before the cumulative effect of an accounting principle
change). This amounted to net income of $0.16 per share in Fiscal 1995 compared
to a net loss of $0.25 per share in Fiscal 1994 (or a net loss of $0.32 per
share in Fiscal 1994 before the cumulative effect of the accounting principle
change). In addition, net sales increased almost 10% to approximately $37.3
million in Fiscal 1995 from approximately $34 million in Fiscal 1994.
In view of the Company's performance under Mr. Klimasewski's leadership,
the Board, on the Committee's recommendation, increased his salary to $200,000
per year effective January 1, 1995. In addition, as a long-term incentive to
enhancing shareholder value, Mr. Klimasewski was awarded conditional options to
purchase 100,000 shares of Common Stock. Such options are not effective unless
the shareholders approve the Amended and Restated 1993 Stock Option Plan, and
they do not vest and become exercisable until the market price of the Common
Stock reaches specified levels. See "EXECUTIVE COMPENSATION--STOCK OPTIONS" and
"PROPOSAL TO APPROVE AND RATIFY AMENDED AND RESTATED 1993 STOCK OPTION PLAN."
Effective April 1, 1995, Mr. Klimasewski and the Company entered into the
new Employment Agreement, approved by the Board of Directors on the Committee's
recommendation, which reflects the Board's assessment
11
<PAGE>
of Mr. Klimasewski's ability and dedication to provide the leadership and vision
necessary to enhance the long-term value of the Company. Under the Employment
Agreement, which expires on March 31, 1996 but may be renewed for one year
thereafter if both parties so elect by February 1, 1996, Mr. Klimasewski's
annual salary is $150,000 (plus an automobile allowance of $1,000 per month and,
at Mr. Klimasewski's election, the benefits provided to other senior executives
of the Company).
The Committee believes that the Employment Agreement fixes Mr.
Klimasewski's salary and benefits at a level that is lower than what is
competitive with amounts paid to other chief executive officers with comparable
qualifications, experience, responsibilities and proven results at similarly
positioned companies. Therefore, as an annual incentive, the Employment
Agreement also provides for (i) a $50,000 cash bonus if the Company's pre-tax
profits for the fiscal year, before payment of any bonuses, reach $550,000, and
(ii) a further cash bonus in twice the amount provided with respect to Mr.
Klimasewski by the Company's Annual Executive Bonus Plan. As a further
commitment to the Company by Mr. Klimasewski, he has agreed in the Employment
Agreement to apply 50% of the after-tax amount of this latter cash bonus to the
purchase of Common Stock. Finally, under the Employment Agreement Mr.
Klimasewski was paid in the fiscal year ending March 31, 1996 ("Fiscal 1996") a
one-time cash bonus of $100,000 as an incentive to entering into the Employment
Agreement.
The Employment Agreement is terminable by either party on 30 days' notice,
but if the Company terminates the Employment Agreement without cause (as defined
in the Employment Agreement) Mr. Klimasewski will be entitled to severance in an
amount equal to the total compensation (including bonuses, benefits and stock
compensation) payable to him during the 12 months immediately preceding
termination.
COMPENSATION AND BENEFITS COMMITTEE
Cornelius J. Murphy, Chairman
William J. Berk
Angelo J. Chiarella
INSIDER PARTICIPATION IN COMPENSATION AND BENEFITS COMMITTEE
The President and Chief Executive Officer of the Company consults with the
Compensation and Benefits Committee. He participates in discussions of the
Committee and makes recommendations to it, but he does not vote or otherwise
participate in the Committee's ultimate determinations. The Board of Directors
believes that it is wise and prudent to have the President and Chief Executive
Officer so participate in the operations of the Compensation and Benefits
Committee because his evaluations and recommendations with respect to the
compensation and benefits paid to executives other than himself are extremely
valuable to the Committee. However, the President and Chief Executive Officer
neither participates nor is otherwise involved in the deliberations of the
Compensation and Benefits Committee with respect to his own compensation and
benefits.
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing, for the five most recent fiscal
years, the cumulative total shareholder return on the Common Stock, based on the
market price thereof, with the cumulative total return of companies on the
Standard & Poor's 500 Stock Index and the Standard & Poor's High Tech Composite
Index.
12
<PAGE>
TOTAL RETURN TO SHAREHOLDER-DIVIDENDS REINVESTED
<TABLE>
<CAPTION>
ANNUAL RETURN PERCENTAGE
YEARS ENDING
COMPANY/INDEX Mar91 Mar92 Mar93 Mar94 Mar95
- - ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S&P 500 INDEX 14.41 11.04 15.23 1.47 15.57
TRANSMATION INC -8.33 -18.18 61.11 17.24 24.99
HIGH TECH COMPOSITE 9.17 2.33 9.88 17.62 26.54
</TABLE>
<TABLE>
<CAPTION>
INDEXED RETURNS
YEARS ENDING
COMPANY/INDEX Mar90 Mar91 Mar92 Mar93 Mar94 Mar95
- - ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 INDEX 100.00 114.41 127.05 146.39 148.55 171.68
TRANSMATION INC 100.00 91.67 75.00 120.83 141.67 177.07
HIGH TECH COMPOSITE 100.00 109.17 111.71 122.75 144.38 182.71
</TABLE>
ASSUMES $100 INVESTED ON MARCH 31, 1990 IN THE COMPANY'S COMMON STOCK, THE
COMPANIES COMPRISING THE STANDARD & POOR'S 500 STOCK INDEX AND THE COMPANIES
COMPRISING THE STANDARD & POOR'S HIGH TECH COMPOSITE INDEX.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will neither make nor endorse any predictions as to future
stock performance.
The Stock Price Performance Graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under either such Act.
OUTSIDE DIRECTOR COMPENSATION
During Fiscal 1995 the Company paid cash directors' fees aggregating
$33,250 to the non-employee directors of the Company (including, during the
first quarter of Fiscal 1995, Mr. Klimasewski), consisting for each such
director of a $350 attendance fee for each meeting of the Board of Directors and
of a Special Committee of the Board attended. The Company also has a policy of
paying each outside director a $1,000 retainer fee, but in Fiscal 1995 the Board
voluntarily deferred payment thereof.
During the fourth quarter of Fiscal 1995 the Board adopted the Directors'
Stock Plan, which provides for the issuance of shares of Common Stock, in lieu
of cash directors' fees, to outside directors who so elect. See "PROPOSAL TO
APPROVE AND RATIFY DIRECTORS' STOCK PLAN." Six of the Company's seven outside
directors elected to participate in the Directors' Stock Plan during the fourth
quarter of 1995, and an aggregate of 1,200 shares of Common Stock were so issued
to them.
The Company did not have any other standard arrangements with directors
during Fiscal 1995 except for reimbursement of travel expenses to attend Board
meetings.
13
<PAGE>
RELATED TRANSACTIONS
The Company had an Employment Agreement, effective April 1, 1990, with
William J. Berk, its former Chairman of the Board, President and Chief Executive
Officer, which terminated upon Mr. Berk's retirement on February 28, 1995.
Pursuant to the terms of this employment agreement, Mr. Berk was paid in Fiscal
1995 a base salary of $137,500, plus an incentive bonus equal to 6% of the
Company's annual pre-tax net operating income, or $19,654. The Company also
maintained a medical expense reimbursement plan for Mr. Berk's benefit, limited
to $10,000 per fiscal year, and agreed to reimburse him for actual out-of-pocket
costs for accounting and legal fees and expenses incurred by him or his
dependents, limited to $10,000 per fiscal year. Mr. Berk has agreed that he will
not compete with the Company for so long as he receives payments from the
Company in any form.
Pursuant to a Consulting Agreement with Mr. Berk dated April 1, 1979 and
amended April 1, 1990, the Company will retain him as a consultant for 20 years
commencing March 1, 1995, and will pay him $30,000 a year for the first ten
years and $20,000 a year for the remainder. Such payments are not dependent upon
the actual rendering of consulting services. Throughout the consulting period
the Company must also provide Mr. Berk with substantially the same fringe
benefits as were provided to him when he was employed by the Company.
Pursuant to a Disability, Supplemental Death Benefit and Retirement
Agreement with Mr. Berk dated April 1, 1979 and amended April 1, 1990, the
Company must make annual payments to Mr. Berk, commencing March 1, 1995 and
continuing for the rest of his life, in the amount of $96,456. Upon Mr. Berk's
death, his wife, if she survives him, will be paid annually 60% of that amount
for the rest of her life. The payments due under this agreement are not insured
or funded nor are any assets segregated or set aside for the benefit of Mr. Berk
or his wife.
Pursuant to a Stock Registration and Repurchase Agreement with Mr. Berk
dated April 1, 1979 and amended April 1, 1990, if at any time during Mr. Berk's
lifetime and for a period of five years thereafter, the Company proposes to
register and sell any of its shares through a public offering, Mr. Berk or his
estate will have the right to register the same number of his shares as are
being registered by the Company. All costs and expenses of such registration
will be borne by the Company, except for any underwriting discounts attributable
to Mr. Berk's shares and expenses of his counsel, if any. In addition, within
five years after Mr. Berk's death, his estate has the right to cause the Company
to register for sale all or any portion of the shares owned by the estate. The
Company is bound to provide such demand registration only once during such
five-year period. In addition, at the request of Mr. Berk's estate, the Company
will redeem from his estate the maximum number of shares permitted by ()303 of
the Internal Revenue Code (the "Code"), at a redemption price equal to the
market value of the Common Stock at the time of his death, except that no such
redemption will be required if it would cause a default under any agreement of
the Company or a violation of law. The Company has agreed to use its best
efforts to obtain a waiver or modification of any agreement or take such proper
corporate action to cure any violation of law so as to enable the redemption to
take place.
During Fiscal 1995 the Company maintained an ordinary $200,000 insurance
policy on Mr. Berk's life. Pursuant to a Split Dollar Agreement between the
Company and Mr. Berk, upon Mr. Berk's retirement on February 28, 1995, the
Company assigned its interest in the $134,285 cash value of the policy to Mr.
Berk without any additional payment by him.
PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
BACKGROUND AND PURPOSE: At the 1993 Annual Meeting, the shareholders
approved the Transmation, Inc. 1993 Stock Option Plan (the "1993 Plan"). The
1993 Plan is designed to provide incentives in the form of stock options to
executive and other key employees of the Company and its subsidiaries
(collectively, "key employees"), and is intended to motivate key employees to
excel in their work, influence key employees to align their prospects with that
of the shareholders, and serve the Company as a compensation vehicle that will
help to attract, hire and retain superior key employees.
14
<PAGE>
On January 17, 1995 and June 6, 1995, in an effort to expand the class of
employees intended to benefit from the 1993 Plan and ensure that the
compensation opportunities of substantially all of the Company's employees are
tied to shareholder value, the Board of Directors approved amendments to the
1993 Plan and adopted the Transmation, Inc. Amended and Restated 1993 Stock
Option Plan (the "Amended Option Plan"), and directed that the Amended Option
Plan be submitted to the shareholders for their approval and ratification at the
Meeting. The Board of Directors believes that the amendments reflected in the
Amended Option Plan will increase and strengthen the motivation of participating
employees in their efforts on behalf of the Company. In particular, the Board of
Directors believes that the vesting requirements under the Amended Option Plan
will result in a true incentive for participants to increase shareholder value,
because options granted under the Amended Option Plan will be exercisable only
if the market value of the Common Stock reaches certain minimum levels. See
"VESTING OF OPTIONS" below.
The Amended Option Plan will be effective as of August 15, 1995, if it is
approved and ratified by the shareholders at the Meeting, and is intended to
comply with Rule 16b-3 promulgated under the Exchange Act.
The following is a summary of the principal features of the Amended Option
Plan. This summary is qualified in its entirety by reference to the full text of
the Amended Option Plan, as set forth in Appendix A attached hereto.
Shareholders are urged to read the actual text of the Amended Option Plan in its
entirety.
INCREASE OF SHARES AVAILABLE: The 1993 Plan provided for the grant of stock
options to purchase up to an aggregate of 200,000 shares of Common Stock
(subject to adjustment as described below). The Amended Option Plan provides for
the granting of stock options to purchase up to an aggregate of 400,000 shares
of Common Stock (subject to adjustment as described below). If any option
granted under the Amended Option Plan expires or terminates without having been
exercised in full, shares subject to the unexercised portion of such option may
again be available for other option grants under the Amended Option Plan.
NATURE OF OPTIONS: The Company may grant under the Amended Option Plan both
incentive stock options within the meaning of section 422 of the Code
("Incentive Stock Options") and stock options that do not qualify for treatment
as Incentive Stock Options ("Nonstatutory Stock Options"). The Company receives
no consideration for the grant of any options under the Amended Option Plan.
TERM: The Amended Option Plan will continue in effect until all shares of
Common Stock subject to issuance under options granted thereunder have been
purchased, provided that no options may be granted under the Amended Option Plan
after June 14, 2003.
ADMINISTRATION: The Amended Option Plan is administered by a committee (the
"Stock Option Committee") comprised of the members of the Compensation and
Benefits Committee of the Board of Directors. Each member of the Stock Option
Committee and each member of the Compensation and Benefits Committee must be a
disinterested director within the meaning of Rule 16b-3 promulgated under the
Exchange Act. Subject to the express provisions of the Amended Option Plan, the
Stock Option Committee has authority in its discretion and without limitation
(i) to determine the recipients of options, whether an option is intended to be
an Incentive Stock Option or Nonstatutory Stock Option, the times of option
grants, the number of shares subject to each option, the option price of each
option, the term of each option, the date when each option becomes exercisable,
and the vesting schedule of each option, and (ii) to make all other
determinations necessary or advisable for administering the Amended Option Plan,
which determinations will be final and binding on all persons. Notwithstanding
the foregoing, all actions of the Stock Option Committee are subject to the
approval of the Compensation and Benefits Committee.
ELIGIBILITY: The 1993 Plan allowed for the grant of options only to such
full-time employees, including officers, of the Company and its subsidiaries as
the Stock Option Committee selected from time to time as key employees, provided
that no director of the Company was eligible to receive any options under the
1993 Plan.
Options under the Amended Option Plan may be granted to all full-time
employees of the Company, as the Stock Option Committee may select from time to
time, including those who are also officers or directors of the Company. As of
June 20, 1995, the Company had approximately 210 full-time employees eligible to
participate in the Amended Option Plan.
15
<PAGE>
VESTING OF OPTIONS: The 1993 Plan gave discretion to the Stock Option
Committee as to the vesting schedules and periods of exercisability of options
granted thereunder.
Subject to prior expiration (as described below), options granted under the
Amended Option Plan vest and become exercisable over a four-year period, and
only if the market price of the Common Stock reaches certain specified levels
for 20 of 30 consecutive days, as follows:
FOR OPTIONS GRANTED DURING THE 1995 CALENDAR YEAR:
<TABLE>
<CAPTION>
IF THE MARKET VALUE THE OPTION WILL BE
OF A SHARE OF COMMON EXERCISABLE
STOCK EQUALS AT LEAST ON OR AFTER TO THE EXTENT OF
- - --------------------- ---------------- -------------------
<C> <S> <C>
$ 7.00 the grant date 25%
$12.00 January 1, 1996 25%
$16.00 January 1, 1997 25%
$20.00 January 1, 1998 25%
</TABLE>
FOR OPTIONS GRANTED DURING THE 1996 CALENDAR YEAR:
<TABLE>
<CAPTION>
IF THE MARKET VALUE THE OPTION WILL BE
OF A SHARE OF COMMON EXERCISABLE
STOCK EQUALS AT LEAST ON OR AFTER TO THE EXTENT OF
- - --------------------- ---------------- -------------------
<C> <S> <C>
$12.00 the grant date 25%
$16.00 January 1, 1997 25%
$20.00 January 1, 1998 25%
$20.00 January 1, 1999 25%
</TABLE>
FOR OPTIONS GRANTED DURING THE 1997 CALENDAR YEAR:
<TABLE>
<CAPTION>
IF THE MARKET VALUE THE OPTION WILL BE
OF A SHARE OF COMMON EXERCISABLE
STOCK EQUALS AT LEAST ON OR AFTER TO THE EXTENT OF
- - --------------------- ---------------- -------------------
<C> <S> <C>
$16.00 the grant date 25%
$20.00 January 1, 1998 25%
$20.00 January 1, 1999 25%
$20.00 January 1, 2000 25%
</TABLE>
TERMS AND CONDITIONS OF OPTIONS; OPTION PRICE: Except as described below,
the minimum option price of any option granted under the Amended Option Plan is
the market value of the Common Stock on the grant date of the option, and the
term of the option, which is determined by the Stock Option Committee, may not
exceed ten years from the grant date. The market value of the Common Stock
(reflected by the last sale price thereof as reported by the Nasdaq Stock
Market) on June 20, 1995 was $6.25 per share.
Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to any person owning stock possessing more than 10% of the voting power
of the Company, the option price must be at least 110% of the market value of
the Common Stock on the grant date, and the term of the option may not exceed
five years from the grant date. In addition, the aggregate fair market value
(determined as of the grant date) of the shares with respect to which Incentive
Stock Options are exercisable for the first time by any grantee during any
calendar year may not exceed $100,000.
An optionee may pay for the shares subject to the option by one or any
combination of the following methods, as determined by the Stock Option
Committee on the option grant date: (i) in cash; (ii) by delivery of shares of
Common Stock (valued at its then market value) already owned by the optionee; or
(iii) by the Company withholding shares of Common Stock (valued at its then
market value) that would otherwise be delivered to the optionee upon such
exercise.
NON-TRANSFERABILITY; EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT: During
the lifetime of an optionee, an option may be exercised only by him and only
while he is an employee and has been an employee continuously since the option
grant. Options may be exercised for stated periods after termination of
employment
16
<PAGE>
in the case of the optionee's death, permanent and total disability, or
termination for other reason. During the lifetime of an optionee, options issued
under the Amended Option Plan may not be transferred, whether voluntarily or
otherwise.
VESTING ACCELERATION: Under the Amended Option Plan, all outstanding
options not then exercisable become immediately exercisable in full upon the
occurrence of certain defined events constituting a change in control of the
Company.
ADJUSTMENTS: In the event of a merger, consolidation, recapitalization,
stock split or similar event, the aggregate number and kind of shares available
for options under the Amended Option Plan, and the number and kind of shares
covered by each outstanding option and the price per share thereof, will be
appropriately adjusted by the Stock Option Committee.
AMENDMENTS: The Board of Directors, without further shareholder approval,
may at any time further amend the Amended Option Plan, provided that (except for
amendments made pursuant to the adjustment provisions described above), no
amendment may be made without the approval of the shareholders which would: (i)
increase the maximum number of shares that may be issued; (ii) reduce the
minimum option exercise price; (iii) change the class of individuals eligible to
receive options; (iv) extend the period for granting or exercising options; (v)
reduce the market price requirements for option vesting; or (vi) otherwise
materially increase the benefits accruing to participants under the Amended
Option Plan. In the event that any amendment to the Amended Option Plan so
requires approval by the shareholders, then prior to such approval the Stock
Option Committee may grant conditional options, which may not be exercised,
transferred or encumbered prior to such approval, and which will be
automatically cancelled if the shareholders fail to approve such amendment at
their next meeting.
SECURITIES ACT REGISTRATION: The Company intends to register the shares
issuable upon exercise of options granted and to be granted under the Amended
Option Plan, pursuant to a Registration Statement on Form S-8, as soon as
practicable, subject to the shareholders' approval and ratification of the
Amended Option Plan at the Meeting.
FEDERAL INCOME TAX CONSEQUENCES: The following summarizes the Federal
income tax consequences to participants and the Company of the grant and
exercise of Nonstatutory Stock Options and Incentive Stock Options under the
Amended Option Plan. This discussion is merely a summary and does not purport to
be a complete description of the Federal income tax consequences of the Amended
Option Plan. This description does not cover state and local tax treatment of
participation in the Amended Option Plan.
NONSTATUTORY STOCK OPTIONS: The grant of a Nonstatutory Stock Option under
the Amended Option Plan will not result in the recognition of gross income to
the optionee or a deduction to the Company at the time of the grant. Upon the
exercise of a Nonstatutory Option, the optionee will recognize ordinary income
for Federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the exercise price, unless he could be
subject to liability under Section 16(b) of the Exchange Act if he were to sell
the shares at a profit at such time (in which case, unless the optionee makes a
special election under the Code within 30 days after exercise, the optionee will
recognize ordinary income for Federal income tax purposes six months after the
date of the grant; if the optionee timely makes such election, he will recognize
ordinary income at the time of exercise). The Company is required to withhold
tax on the amount of income recognized by the optionee and is entitled to a tax
deduction equal to the amount of such income for the fiscal year of the Company
in which ends the taxable year of the optionee in which such amount is included
in the optionee's gross income. Subject to certain limitations on the
deductibility of capital losses, if an optionee disposes of any shares received
upon the exercise of a Nonstatutory Stock Option, the optionee will recognize a
capital gain or loss equal to the difference between the fair market value of
such shares at the time ordinary income was recognized and the amount realized
on disposition of such shares. The gain or loss will be either long-term or
short-term, depending on whether the shares have been held for more than 12
months from the date of exercise. The Company is not entitled to any tax
deduction in connection with such disposition of shares. The Code no longer
provides for a deduction with respect to net capital gain (the excess of
long-term capital gain over net short-term capital losses during a year). Net
capital gain is now taxed at ordinary income rates, except that the maximum tax
rate for long-term capital gain is currently 28%.
17
<PAGE>
INCENTIVE STOCK OPTIONS: In general, no income will be recognized by the
optionee and no deduction will be allowed to the Company at the time of the
grant or exercise of an Incentive Stock Option. The difference between the
exercise price and the fair market value of the shares on the date the Incentive
Stock Option is exercised is, however, an item of tax preference to the optionee
for purposes of the alternative minimum tax. Depending upon the optionee's
individual tax circumstances, there may be minimum tax liability in the year of
exercise as a result of the tax preference item. Further, depending upon the
optionee's individual tax circumstances, a credit against regular tax
corresponding to this minimum tax liability may be allowed in a subsequent year.
In computing alternative minimum taxable income in the year in which the
optionee disposes of shares acquired under the Amended Option Plan through the
exercise of an Incentive Stock Option, the basis of the shares acquired through
the exercise of the Incentive Stock Option will be increased by the excess of
the fair market value of the shares on the date of exercise over the exercise
price. Subject to certain limitations on deductibility of capital losses, when
the shares received on the exercise of an Incentive Stock Option are sold, the
optionee will recognize long-term capital gain or loss equal to the difference
between the amount realized and the exercise price of the Incentive Stock Option
relating to such shares, provided that the sale of the shares is not made within
two years from the date of grant of the Incentive Stock Option or within one
year of the date of issuance of such shares to the optionee. If the
abovementioned holding period requirements of the Code are not met, the sale of
the shares received upon the exercise of an Incentive Stock Option is a
"disqualifying disposition" and, in general, at the time of such disposition,
the optionee will recognize (i) ordinary income in an amount equal to the
difference between the exercise price and the lesser of the fair market value of
the shares on the date the Incentive Stock Option is exercised or the amount
realized on such disqualifying disposition, and (ii) capital gain to the extent
the amount realized on such disqualifying disposition exceeds the fair market
value of the shares on the date the Incentive Stock Option is exercised.
Alternatively, if the amount realized on such disqualifying disposition is less
than the exercise price, the optionee will recognize a capital loss in the
amount of the difference. Any capital gain or loss will be long-term or
short-term depending upon the holding period of the shares sold. In the event of
a disqualifying disposition, the Company may claim a deduction in the taxable
year of the disqualifying disposition equal to the amount taxable to the
optionee as ordinary income. In the absence of any disqualifying disposition,
the Company is denied any deduction in respect of shares transferred upon the
exercise of an Incentive Stock Option. As described above, the Code no longer
provides for a deduction with respect to net capital gain, and net capital gain
is now taxed at ordinary rates, except that the maximum tax rate for long-term
capital gain is currently 28%.
NEW PLAN BENEFITS: The following table sets forth the amount and dollar
value of option grants that would have been received by the Named Executives and
by certain groups of individuals during Fiscal 1995 if the Amended Option Plan
had then been in effect. The information shown includes options and conditional
options actually granted under the Amended Option Plan on January 17, 1995, as
well as options that would have been granted based on the present intentions of
the Stock Option Committee. The information shown assumes that all such option
grants were made on January 17, 1995.
18
<PAGE>
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)(1) NUMBER OF UNITS
----------------- ------------ ---------------
<S> <C> <C>
ROBERT G. KLIMASEWSKI $200,000 100,000
President and Chief Executive Officer
ERIC W. MCINROY $ 30,000 15,000
President, Transcat Division
THOMAS R. CRUMLISH $ 30,000 15,000
President, Instrument Division
ALL EXECUTIVE OFFICERS $284,000 142,000
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS $ 20,000 10,000
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS $410,600 205,300
</TABLE>
(1) Expressed as the excess of the market value of the Common
Stock on June 20, 1995 ($6.25 per share) over the assumed
exercise price of each option ($4.25 per share, that being
the market value of the Common Stock on January 17, 1995,
the assumed grant date of each option).
REQUIRED VOTE AND BOARD RECOMMENDATION: The affirmative vote of at least a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting is required for approval and ratification of the Amended Option Plan.
The Board of Directors recommends a vote in favor of the proposal to approve and
ratify the Transmation, Inc. Amended and Restated 1993 Stock Option Plan, and
the persons named in the enclosed proxy (unless otherwise instructed therein)
will vote such proxies FOR such proposal.
PROPOSAL TO APPROVE AND RATIFY
EMPLOYEES' STOCK PURCHASE PLAN
BACKGROUND AND PURPOSE: On June 6, 1995, the Board of Directors adopted the
Transmation, Inc. Employees' Stock Purchase Plan (the "Purchase Plan") and
recommended that it be submitted to the shareholders for their approval at the
Meeting. The Purchase Plan is intended to encourage ownership of Common Stock by
present and future Company employees at all levels, and thereby provide to such
employees the benefit of the incentive created by stock ownership. The Board of
Directors believes that participation in the Purchase Plan will more fully align
the interests of participating employees with those of the shareholders,
increase the desire of participating employees to remain with the Company,
bolster their efforts while employed by the Company, and help to attract other
qualified applicants for employment.
The Purchase Plan will be effective as of October 1, 1995, if it is
approved by the shareholders at the Meeting, and is intended to comply with the
provisions of Rule 16b-3 promulgated under the Exchange Act.
The following is a summary of the principal features of the Purchase Plan.
This summary is qualified in its entirety by reference to the complete text of
the Purchase Plan, as set forth in Appendix B attached hereto. Shareholders are
urged to read the actual text of the Purchase Plan in its entirety.
ELIGIBLE EMPLOYEES: Employees of the Company (and of any subsidiary of the
Company designated by the Board of Directors for participation) are eligible to
participate in the Purchase Plan, provided that their customary employment is
for more than 20 hours per week and they have been employed for at least one
year. As of June 20, 1995, the Board of Directors had designated no subsidiaries
as participating employers under the Purchase Plan. Accordingly, as of June 20,
1995, there were approximately 190 employees of the Company eligible to
participate in the Purchase Plan.
PURCHASE OF SHARES: Eligible employees may participate by enrolling in the
Purchase Plan and authorizing specified payroll deductions, of up to 10% of
regular earnings, for the purchase of shares of Common Stock at a purchase price
that is 85% of the then-current market value of the Common Stock. No
participating employee
19
<PAGE>
may, during any calendar year, purchase shares through the Purchase Plan having
an aggregate fair market value in excess of $25,000. In addition, a
participating employee may not make purchases through the Purchase Plan if such
purchases would cause him to own 5% or more of the then outstanding shares of
Common Stock. Upon the death or termination of employment of any participating
employee, any amount remaining in his payroll deduction account will be refunded
to him or his estate.
SHARES AVAILABLE: A total of 450,000 shares of Common Stock may be
purchased under the Purchase Plan. Shares subject to the Purchase Plan may be
either authorized but unissued shares or shares that were once issued and
subsequently reacquired by the Company. In the event of a merger, consolidation,
recapitalization, stock split or similar event, the aggregate number and kind of
shares available for purchase under the Purchase Plan will be appropriately
adjusted.
ADMINISTRATION AND AMENDMENT: The Purchase Plan will be administered by the
Stock Option Committee under the Amended and Restated 1993 Stock Option Plan
(see "PROPOSAL TO APPROVE AND RATIFY AMENDED AND RESTATED 1993 STOCK OPTION
PLAN"), or such other committee appointed by the Board of Directors. Any such
committee will be comprised of at least two disinterested members of the Board
of Directors.
The Board of Directors may amend the Purchase Plan at any time, provided
that shareholder approval will be required for amendments that materially (i)
increase the benefits accruing to participating employees, (ii) increase (other
than pursuant to the adjustment provisions described above) the number of shares
that may be issued under the Purchase Plan, or (iii) modify the requirements as
to eligibility for participation. The Board of Directors may terminate the
Purchase Plan at any time.
SECURITIES ACT REGISTRATION: The Company intends to register the shares of
Common Stock purchasable under the Purchase Plan, pursuant to a Registration
Statement on Form S-8, as soon as practicable, subject to the shareholders'
approval and ratification of the Purchase Plan at the Meeting.
NEW PLAN BENEFITS: Subject to the eligibility requirements described above,
all employees of the Company and its designated subsidiaries are eligible to
participate in the Purchase Plan. However, whether to participate in the
Purchase Plan and (subject to certain limitations described above) the amount of
each participating employee's authorized payroll deduction for stock purchases
under the Purchase Plan are solely within the discretion of each individual
employee. Accordingly, the benefits or amounts to be received by any particular
employee or groups of employees under the Purchase Plan are not determinable at
this time.
REQUIRED VOTE AND BOARD RECOMMENDATION: The affirmative vote of at least a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting is required for the approval and ratification of the Purchase Plan. The
Board of Directors recommends a vote in favor of the proposal to approve and
ratify the Transmation, Inc. Employees' Stock Purchase Plan, and the persons
named in the enclosed proxy (unless otherwise instructed therein) will vote such
proxies FOR such proposal.
PROPOSAL TO APPROVE AND RATIFY
AMENDED AND RESTATED DIRECTORS' WARRANT PLAN
BACKGROUND AND PURPOSE: The Transmation, Inc. Directors' Warrant Plan (the
"1984 Plan") was approved by the shareholders at the 1984 Annual Meeting. On
June 6, 1995, the Board of Directors approved a comprehensive amendment of the
1984 Plan, intended to amend the 1984 Plan in all material respects, and adopted
the Transmation, Inc. Amended and Restated Directors' Warrant Plan (the "Amended
Warrant Plan") and directed that the Amended Warrant Plan be submitted to the
shareholders for their approval at the Meeting.
The Amended Warrant Plan will be effective as of August 15, 1995, if it is
approved and ratified by the shareholders at the Meeting, and is intended to
comply with Rule 16b-3 promulgated under the Exchange Act.
The Amended Warrant Plan is designed to attract, retain and compensate
highly-qualified individuals, who are not employed by the Company or any of its
subsidiaries, for service on the Company's Board of Directors, and to allow them
to increase their ownership of Common Stock.
The following description of the Amended Warrant Plan is qualified in its
entirety by reference to the full text of the Amended Warrant Plan, as set forth
in Appendix C attached hereto. Shareholders are urged to read the actual text of
the Amended Warrant Plan in its entirety.
20
<PAGE>
ELIGIBILITY: Each member of the Company's Board of Directors who is not
employed by the Company or any of its subsidiaries and who is a member of the
Board of Directors on a "Grant Date" (as defined below) is eligible to
participate in the Amended Warrant Plan. If a participating director
subsequently becomes employed by the Company or any subsidiary, warrants
previously granted to him pursuant to the Amended Warrant Plan continue in full
force and effect while he remains a member of the Board, but he is not entitled
to further grants under the Amended Warrant Plan. As of June 30, 1995, the
Company had seven directors who were not employed by the Company or any of its
subsidiaries and who were therefore eligible to participate in the Amended
Warrant Plan.
INCREASE OF SHARES AVAILABLE: The 1984 Plan allowed for the granting of
warrants to purchase an aggregate of 50,000 shares of Common Stock. Under the
Amended Warrant Plan, the total number of shares of Common Stock issuable upon
exercise of warrants granted thereunder has been increased to 100,000. Shares of
Common Stock subject to warrants may be authorized but unissued shares or
previously issued shares reacquired by the Company. Shares subject to issuance
upon exercise of warrants will continue to be available for issuance if the
warrants for such shares are surrendered or lapse prior to exercise or otherwise
cease to be exercisable.
WARRANT GRANTS: The 1984 Plan was administered by a Warrant Committee
which, subject to certain limitations, granted warrants to eligible directors in
their sole discretion, provided that no director could receive warrants to
purchase, in the aggregate, more than 5,000 shares of Common Stock.
The Amended Warrant Plan provides for specific, non-discretionary grants to
participating directors of warrants to purchase 2,000 shares of Common Stock on
each of the following dates: (i) the day following conclusion of the 1995 Annual
Meeting (the "1995 Grant Date"), (ii) the day following conclusion of the 1996
Annual Meeting (the "1996 Grant Date"), and (iii) the day following the
conclusion of the 1997 Annual Meeting (the "1997 Grant Date") (each, a "Grant
Date"). The Amended Warrant Plan contains no limit on the aggregate number of
warrants issuable to any participating director. A participating director may
elect to decline any warrant grant, provided that the Company shall not pay
anything of value to such director in lieu of the warrant grant.
Warrants granted under the Amended Warrant Plan expire on the fifth
anniversary of the Grant Date, and cannot be transferred other than by will or
the laws of descent and distribution.
EXERCISE PRICE: Each warrant is exercisable to purchase shares of Common
Stock at the market value per share of the Common Stock on the Grant Date.
VESTING OF WARRANTS: Subject to prior expiration (as described below),
warrants granted under the Amended Warrant Plan vest and become exercisable over
a four-year period, if the market price of the Common Stock reaches certain
specified levels for 20 of 30 consecutive trading days, as follows:
FOR WARRANTS GRANTED ON THE 1995 GRANT DATE:
<TABLE>
<CAPTION>
IF THE MARKET VALUE THE WARRANT WILL BE
OF A SHARE OF COMMON EXERCISABLE TO
STOCK EQUALS AT LEAST ON OR AFTER PURCHASE
- - --------------------- ------------------ -------------------
<C> <S> <C>
$ 7.00 the 1995 Grant Date 500 shares
$12.00 January 1, 1996 500 shares
$16.00 January 1, 1997 500 shares
$20.00 January 1, 1998 500 shares
</TABLE>
FOR WARRANTS GRANTED ON THE 1996 GRANT DATE:
<TABLE>
<CAPTION>
IF THE MARKET VALUE THE WARRANT WILL BE
OF A SHARE OF COMMON EXERCISABLE TO
STOCK EQUALS AT LEAST ON OR AFTER PURCHASE
- - --------------------- ------------------ -------------------
<C> <S> <C>
$12.00 the 1996 Grant Date 500 shares
$16.00 January 1, 1997 500 shares
$20.00 January 1, 1998 500 shares
$20.00 January 1, 1999 500 shares
</TABLE>
21
<PAGE>
FOR WARRANTS GRANTED ON THE 1997 GRANT DATE:
<TABLE>
<CAPTION>
IF THE MARKET VALUE THE WARRANT WILL BE
OF A SHARE OF COMMON EXERCISABLE TO
STOCK EQUALS AT LEAST ON OR AFTER PURCHASE
- - --------------------- ------------------ -------------------
<C> <S> <C>
$16.00 the 1997 Grant Date 500 shares
$20.00 January 1, 1998 500 shares
$20.00 January 1, 1999 500 shares
$20.00 January 1, 2000 500 shares
</TABLE>
NON-TRANSFERABILITY; EARLY EXPIRATION OF WARRANTS: Warrants granted under
the Amended Warrant Plan are not transferable. If a participating director
ceases to serve on the Board of Directors for any reason other than death, all
outstanding unexercised warrants held by him will expire. Upon the death of a
participating director, only the portions of his warrants vested on the date of
death are exercisable by his legal representative, and only within 90 days after
the date of death (but in no event following expiration of the warrant).
ADJUSTMENTS: In the event of a merger, consolidation, recapitalization,
stock split or similar event, the aggregate number and kind of shares available
for warrants under the Amended Warrant Plan, and the number and kind of shares
covered by each outstanding warrant and the price per share thereof, will be
appropriately adjusted.
ADMINISTRATION AND AMENDMENT: The Amended Warrant Plan is administered by
the Board of Directors. The Amended Warrant Plan may be terminated or amended by
the Board of Directors provided that any amendment that changes the timing of
the grant of warrants, the eligibility requirements for participating directors,
the method of determining the exercise price of warrants, the vesting schedule
of warrants, or the number of shares subject to warrants, may not occur more
frequently than once each six months unless otherwise necessary to comply with
the Code or ERISA. In addition, the shareholders must approve any amendment to
the Amended Warrant Plan that would materially increase the benefits accruing to
participating directors, increase (other than pursuant to the adjustment
provisions described above) the number of shares that may be issued thereunder,
or modify the requirements as to eligibility for participation in the Amended
Warrant Plan.
SECURITIES ACT REGISTRATION: The Company intends to register the shares of
Common Stock issuable upon exercise of warrants granted under the Amended
Warrant Plan, pursuant to a Registration Statement on Form S-8, as soon as
practicable, subject to the shareholders' approval and ratification of the
Amended Warrant Plan at the Meeting.
NEW PLAN BENEFITS: The following table sets forth the amount and dollar
value of warrant grants that would have been received by the Named Executives
and by certain groups of individuals during Fiscal 1995 if the Amended Warrant
Plan had then been in effect. The information shown assumes that each
non-employee director participated in the Amended Warrant Plan, and that
pursuant to the Amended Warrant Plan warrants were granted to them on August 17,
1994, the day following the 1994 Annual Meeting.
22
<PAGE>
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)(1) NUMBER OF UNITS
----------------- ------------ ---------------
<S> <C> <C>
ROBERT G. KLIMASEWSKI 0 0
President and Chief Executive Officer
ERIC W. MCINROY 0 0
President, Transcat Division
THOMAS R. CRUMLISH 0 0
President, Instrument Division
ALL EXECUTIVE OFFICERS 0 0
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS $42,000 14,000
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS 0 0
</TABLE>
(1) Expressed as the excess of the market value of the Common
Stock on June 20, 1995 ($6.25 per share) over the assumed
exercise price of each warrant ($3.25 per share, that being
the market value of the Common Stock on August 17, 1994,
the assumed grant date of each warrant).
REQUIRED VOTE AND BOARD RECOMMENDATION: The affirmative vote of at least a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting is required for approval and ratification of the Amended Warrant Plan.
The Board of Directors recommends a vote in favor of the proposal to approve and
ratify the Transmation, Inc. Amended and Restated Directors' Warrant Plan, and
the persons named in the enclosed proxy (unless otherwise instructed therein)
will vote such proxies FOR such proposal.
PROPOSAL TO APPROVE AND RATIFY
DIRECTORS' STOCK PLAN
BACKGROUND AND PURPOSE: On January 17, 1995, the Board of Directors
approved the Transmation, Inc. Directors' Stock Plan (the "Directors' Stock
Plan") and recommended that it be submitted to the shareholders for their
approval and ratification at the Meeting. The Board of Directors believes that
the Directors' Stock Plan will foster and promote the Company's long term
financial success by attracting and retaining outstanding non-employee directors
by allowing them to elect to participate in the Company's growth through
automatic, non-discretionary awards of shares of Common Stock in lieu of cash
directors' fees. The Directors' Stock Plan became effective on January 17, 1995
and is intended to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act.
The following is a summary of the principal features of the Directors'
Stock Plan. This summary is qualified in its entirety by reference to the
complete text of the Directors' Stock Plan, as set forth in Appendix D attached
hereto. Shareholders are urged to read the actual text of the Directors' Stock
Plan in its entirety.
ELIGIBILITY AND PARTICIPATION: The Directors' Stock Plan provides for the
issuance of Common Stock to participating directors in lieu of receiving cash
payments for service as a director and attendance at Board and Board Committee
meetings. Each member of the Company's Board of Directors who is not an employee
of the Company or any of its subsidiaries is eligible to elect to participate in
the Directors' Stock Plan. Elections to so participate are made annually. As of
June 30, 1995 the Company had seven non-employee directors, six of whom have
elected to participate in the Directors' Stock Plan during Fiscal 1996.
SHARES AVAILABLE: A maximum of 100,000 shares of Common Stock may be issued
under the Directors' Stock Plan. Shares issued may be authorized but unissued
shares of Common Stock or previously issued shares of Common Stock reacquired by
the Company. In the event of a merger, consolidation, recapitalization, stock
split or similar event, the aggregate number and kind of shares available for
awards under the Directors' Stock Plan will be appropriately adjusted.
23
<PAGE>
AWARDS OF SHARES: Each eligible director who participates in the Directors'
Stock Plan will receive 1,000 shares of Common Stock for each full year during
which he serves as a director (or such lesser number of shares as has an
aggregate market value not exceeding $7,500). Directors must serve from one
annual meeting of shareholders to the next annual meeting of shareholders to
receive full awards. Pro rata awards will be given to participating directors
who serve less than a full year for any reason other than removal for cause.
In addition, each participating director will receive 200 shares of Common
Stock for each regular or special meeting of the Board he attends (or such
lesser number of shares as has an aggregate market value not exceeding $1,500).
In addition, each participating director will receive 100 shares of Common Stock
for each meeting of a Committee of the Board he attends (or such lesser number
of shares as has an aggregate market value not exceeding $750).
ADMINISTRATION AND AMENDMENT: The Directors' Stock Plan is
self-effectuating. Determinations necessary or advisable for the administration
or interpretation of the Directors' Stock Plan will be made by the Company's
officers. The Board of Directors may suspend or terminate all or any portion of
the Directors' Stock Plan at any time and may make such amendments to the
Directors' Stock Plan as the Board deems advisable, provided that any amendment
to the Directors' Stock Plan that changes the timing of stock awards, the
eligibility requirements for participating directors, or the number of shares
subject to an award may not occur more frequently than once each six months,
unless otherwise necessary to comply with the Code or ERISA.
SECURITIES ACT REGISTRATION: The Company intends to register the shares of
Common Stock issuable under the Directors' Stock Plan, pursuant to a
Registration Statement on Form S-8, as soon as practicable.
NEW PLAN BENEFITS: The following table sets forth the amount and dollar
value of stock awards that are anticipated to be received by the Named
Executives and by certain groups of individuals during Fiscal 1996 under the
Directors' Stock Plan. (Information is not shown as to the stock awards that
would have been received during Fiscal 1995 had the Directors' Stock Plan then
been in effect, because an unusually large number of Board meetings and Board
Committee meetings were held during Fiscal 1995, and the Board does not
anticipate that meetings will be held with such frequency in the future.) The
information shown is given with respect to the six non-employee directors who
have actually elected to participate in the Directors' Stock Plan during Fiscal
1996 (the "Participating Directors"), and assumes that (i) each Participating
Director serves for the entire period from the 1994 Annual Meeting to the 1995
Annual Meeting, (ii) six meetings of the Board of Directors are held during
Fiscal 1996, (iii) two meetings of each existing Board Committee are held during
Fiscal 1996, and (iv) each Participating Director attends all such Board
meetings and all such meetings of the Board Committees of which he is currently
a member.
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)(1) NUMBER OF UNITS
----------------- ------------ ---------------
<S> <C> <C>
ROBERT G. KLIMASEWSKI 0 0
President and Chief Executive Officer
ERIC W. MCINROY 0 0
President, Transcat Division
THOMAS R. CRUMLISH 0 0
President, Instrument Division
ALL EXECUTIVE OFFICERS 0 0
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS $100,000 16,000
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS 0 0
</TABLE>
(1) Expressed as the market value of the Common Stock on June
20, 1995 ($6.25 per share).
REQUIRED VOTE AND RECOMMENDATION: The affirmative vote of at least a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting is required for the approval and ratification of the Directors' Stock
Plan, in accordance with Rule 16b-3 promulgated under the Exchange Act.
Shareholder approval of the
24
<PAGE>
Directors' Stock Plan is not required for any other purpose. Accordingly, if the
Directors' Stock Plan is not so approved and ratified by the shareholders at the
Meeting, the Directors' Stock Plan will remain in effect, but will not qualify
under Rule 16b-3. If the Directors' Stock Plan fails to qualify under Rule
16b-3, a participating director may be exposed to liability to the Company for
"short-swing profits" realized in connection with purchases and sales of Common
Stock within six-month periods.
The Board of Directors recommends a vote in favor of the proposal to
approve and ratify the Transmation, Inc. Directors' Stock Plan, and the persons
named in the enclosed proxy (unless otherwise instructed therein) will vote such
proxies FOR such proposal.
SELECTION OF INDEPENDENT AUDITORS
The firm of Price Waterhouse LLP, certified public accountants, served as
the independent auditors of the Company for Fiscal 1995. In addition to the
audit of the Fiscal 1995 financial statements, the Company engaged Price
Waterhouse LLP to perform certain services for which it was paid professional
fees (see "RELATED TRANSACTIONS"). The Audit Committee of the Board of Directors
considered the possible effect of such professional services on the independence
of Price Waterhouse LLP and approved such services prior to their being
rendered.
The Board of Directors has selected Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending March 31, 1996. This selection
will be presented to the shareholders for their approval at the Meeting. The
Board of Directors recommends a vote in favor of the proposal to approve and
ratify this selection, and the persons named in the enclosed proxy (unless
otherwise instructed therein) will vote such proxies FOR such proposal. If the
shareholders do not approve this selection, the Board of Directors will
reconsider its choice.
The Company has been advised by Price Waterhouse LLP that a representative
will be present at the Meeting and will be available to respond to appropriate
questions. In addition, the Company intends to give such representative an
opportunity to make any statements if he should so desire.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In order for any shareholder proposal to be included in the Company's proxy
statement to be issued in connection with the 1996 Annual Meeting of
Shareholders, such proposal must be received by the Company no later than March
7, 1996.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Meeting. Should any other matter come before the
Meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN A. MISIASZEK
Secretary
Dated: July 5, 1995
25
<PAGE>
APPENDIX A
TRANSMATION, INC.
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
1. PURPOSE.
The Transmation, Inc. 1993 Stock Option Plan, effective June 15, 1993,
amended and restated effective January 17, 1995, and again amended and restated
effective June 6, 1995 (the "Plan"), is designed to create an incentive for
executive and other employees of Transmation, Inc., an Ohio corporation (the
"Company"), and its subsidiaries, to remain in the employ of the Company and its
subsidiaries and to contribute to their success by providing the opportunity for
stock ownership. The Company may grant under the Plan both incentive stock
options within the meaning of Section 422 of the Internal Revenue Code
("Incentive Stock Options") and stock options that do not qualify for treatment
as Incentive Stock Options ("Nonstatutory Stock Options"). Unless expressly
provided to the contrary, all references herein to "Options" include both
Incentive Stock Options and Nonstatutory Stock Options.
2. ADMINISTRATION.
(a) The Plan shall be administered by a committee (the "Stock Option
Committee") comprised of the members of the Compensation and Benefits Committee
of the Board of Directors of the Company (the "Compensation and Benefits
Committee"), which shall be comprised of two or more members of the Board of
Directors of the Company. The Stock Option Committee shall be a subcommittee of
the Compensation and Benefits Committee.
(b) Each member of the Stock Option Committee and each member of the
Compensation and Benefits Committee shall be a disinterested director of the
Company within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and at no time shall a
director serve on the Stock Option Committee or the Compensation and Benefits
Committee if he has been granted or awarded Options under the Plan at any time
during the one year prior to his service on such Committee, or during such
service.
(c) Subject to the express provisions of the Plan (including without
limitation the provisions of Section 8(b)), the Stock Option Committee shall
have the authority, in its discretion and without limitation:
(i) to determine the individuals to whom Options are granted, whether
an Option is intended to be an Incentive Stock Option or a Nonstatutory
Stock Option, the times when such individuals shall be granted Options, the
number of shares to be subject to each Option, the term of each Option, the
date when each Option shall become exercisable, whether an Option shall be
exercisable in whole or in part in installments, the number of shares to be
subject to each installment, the date each installment shall become
exercisable, the term of each installment, and the option price of each
Option; and
(ii) to make all other determinations necessary or advisable for
administering the Plan;
provided, however, that notwithstanding any other provision of the Plan to the
contrary, all actions of the Stock Option Committee, including without
limitation the granting of Options under the Plan, shall be subject to the
approval of the Compensation and Benefits Committee, and any action taken by the
Stock Option Committee without such approval shall be null and void and of no
effect.
(d) The Stock Option Committee shall act by majority vote. Subject to the
proviso contained in Section 2(c), the decision of the Stock Option Committee on
any question concerning or involving the interpretation or administration of the
Plan shall, as between the Company and Option holders, be final and conclusive.
The Stock Option Committee and the Compensation and Benefits Committee may
consult with counsel, who may be counsel for the Company, and shall not incur
any liability for any action taken in good faith in reliance upon the advice of
counsel.
A-1
<PAGE>
3. ELIGIBILITY.
(a) Participants in the Plan shall be selected by the Stock Option
Committee from among the full-time employees of the Company, including those who
are also directors or officers thereof. An employee on leave of absence may be
considered as still in the employ of the Company for purposes of eligibility for
participation in the Plan. All references in this Plan to employees of the
Company shall include employees of any parent or subsidiary of the Company, as
those terms are defined in Section 424 of the Internal Revenue Code.
(b) The right of the Company to terminate the employment of a Plan
participant at any time, with or without cause, shall in no way be restricted by
the existence of the Plan, any Option granted hereunder, or any stock option
agreement relating thereto.
4. NUMBER OF SHARES.
Subject to the provisions of Section 5, the total number of shares of the
Company's common stock, par value $.50 per share (the "Common Stock"), which may
be issued under Options granted pursuant to the Plan shall not exceed 400,000.
Shares subject to the Plan may be either authorized but unissued shares or
shares that were once issued and subsequently reacquired by the Company. If any
Option is surrendered before exercise, or lapses without exercise, or for any
other reason ceases to be exercisable, the shares reserved therefor shall
continue to be available for the grant of Options under the Plan. The Plan shall
terminate on June 14, 2003, or the earlier dissolution of the Company, and no
Option shall be granted after such date.
5. ADJUSTMENT PROVISIONS.
In the event that:
(a) in connection with a merger or consolidation of the Company or a
sale by the Company of all or a part of its assets, the outstanding shares
of Common Stock are exchanged for a different number or class of shares of
stock or other securities of the Company, or for shares of the stock or
other securities of any other entity; or
(b) new, different or additional shares or other securities of the
Company or of another entity are received by the holders of Common Stock,
whether by way of recapitalization or otherwise; or
(c) any dividend in the form of stock is made to the holders of
Common Stock, or any stock split or reverse split pertaining to Common
Stock is effected;
then the Stock Option Committee shall make the appropriate adjustment to:
(i) the number and kind of shares or other securities that may be
issued upon exercise of Options yet to be granted;
(ii) the option price per share to be paid upon exercise of each
outstanding Option; and
(iii) the number and kind of shares or other securities covered by
each outstanding Option.
6. ANNUAL LIMITATION ON INCENTIVE STOCK OPTIONS.
The aggregate fair market value (determined as of the date the Option is
granted) of the shares with respect to which Incentive Stock Options are
exercisable for the first time by a grantee during any calendar year (under all
plans of the Company and any parent and subsidiaries of the Company) shall not
exceed $100,000.
7. OPTION PRICE.
(a) For purposes of the Plan, the term "Grant Date" shall mean the date on
which the grant of an Option is duly authorized by the Stock Option Committee
and approved by the Compensation and Benefits Committee. The option price at
which an Option shall be exercisable shall be at least the fair market value per
share of the Common Stock on the Grant Date of such Option. However, if an
Incentive Stock Option is granted to any person who would, after the grant of
such Option, be deemed to own stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or of any parent
or subsidiary of the
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Company (a "Ten Percent Shareholder"), the option price shall be not less than
110 percent of the fair market value per share of the Common Stock on the Grant
Date of such Option.
(b) For purposes of the Plan, the fair market value per share of the
Common Stock on any date ("Fair Market Value") shall be the closing price of the
Common Stock on the principal national securities exchange on which the Common
Stock is then listed or admitted to trading, and the closing price shall be the
last reported sale price regular way or, if no sale takes place on such date,
the average of the closing bid and closing asked prices regular way, as reported
by such exchange. If the Common Stock is not then so listed or admitted to
trading on a national securities exchange, then Fair Market Value shall be the
closing price of the Common Stock in the over-the-counter market as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), and the closing price shall be the last reported sale price regular
way or, if no sale takes place on such date, the average of the closing bid and
closing asked prices regular way, as reported by NASDAQ. If the Common Stock
closing price is not then reported by NASDAQ, then Fair Market Value shall be
the mean between the representative closing bid and closing asked prices of the
Common Stock in the over-the-counter market as reported by NASDAQ. If the Common
Stock bid and asked prices are not then reported by NASDAQ, then Fair Market
Value shall be the quote furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If no member of the National Association of Securities Dealers, Inc.
then furnishes quotes with respect to the Common Stock, then Fair Market Value
shall be determined by resolution of the Company's Board of Directors.
Notwithstanding the foregoing provisions of this Section 7(b), if the Board of
Directors shall at any time determine that it is impracticable to apply the
foregoing methods of determining Fair Market Value, then the Board of Directors
is hereby empowered to adopt any other reasonable method for such purpose.
8. TERM OF OPTIONS; EXERCISABILITY.
(a) Subject to the provisions of Section 18, the term of each Option shall
be determined by the Stock Option Committee, but in no event shall an Option be
exercisable, either in whole or in part, after the expiration of ten years from
the Grant Date of such Option. Notwithstanding the foregoing, an Incentive Stock
Option granted to a Ten Percent Shareholder shall not be exercisable, either in
whole or in part, after the expiration of five years from the Grant Date of such
Option. The Stock Option Committee and an Option holder may at any time by
mutual agreement terminate any Option held by such Option holder.
(b) Subject to prior expiration or termination as provided by the Plan,
each Option shall vest and become exercisable over a four-year period, as set
forth in this Section 8(b).
(i) Each Option, if any, granted during the 1995 calendar year shall
vest and become exercisable as follows:
(A) 25 percent of the Option shall first become exercisable on the
date, if any, after the Grant Date on which Fair Market Value shall have
equaled or exceeded $7.00 per share for any 20 of 30 consecutive trading
days;
(B) an additional 25 percent of the Option shall first become
exercisable on the date, if any, after January 1, 1996 on which Fair
Market Value shall have equaled or exceeded $12.00 per share for any 20
of 30 consecutive trading days;
(C) an additional 25 percent of the Option shall first become
exercisable on the date, if any, after January 1, 1997 on which Fair
Market Value shall have equaled or exceeded $16.00 per share for any 20
of 30 consecutive trading days; and
(D) the balance of the Option shall first become exercisable on
the date, if any, after January 1, 1998 on which Fair Market Value shall
have equaled or exceeded $20.00 per share for any 20 of 30 consecutive
trading days.
(ii) Each Option, if any, granted during the 1996 calendar year shall
vest and become exercisable as follows:
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(A) 25 percent of the Option shall first become exercisable on the
date, if any, after the Grant Date on which Fair Market Value shall have
equaled or exceeded $12.00 per share for any 20 of 30 consecutive
trading days;
(B) an additional 25 percent of the Option shall first become
exercisable on the date, if any, after January 1, 1997 on which Fair
Market Value shall have equaled or exceeded $16.00 per share for any 20
of 30 consecutive trading days;
(C) an additional 25 percent of the Option shall first become
exercisable on the date, if any, after January 1, 1998 on which Fair
Market Value shall have equaled or exceeded $20.00 per share for any 20
of 30 consecutive trading days; and
(D) the balance of the Option shall first become exercisable on
the date, if any, after January 1, 1999 on which Fair Market Value shall
have equaled or exceeded $20.00 per share for any 20 of 30 consecutive
trading days.
(iii) Each Option, if any, granted during the 1997 calendar year
shall vest and become exercisable as follows:
(A) 25 percent of the Option shall first become exercisable on the
date, if any, after the Grant Date on which Fair Market Value shall have
equaled or exceeded $16.00 per share for any 20 of 30 consecutive
trading days;
(B) an additional 25 percent of the Option shall first become
exercisable on the date, if any, after January 1, 1998 on which Fair
Market Value shall have equaled or exceeded $20.00 per share for any 20
of 30 consecutive trading days;
(C) an additional 25 percent of the Option shall first become
exercisable on the date, if any, after January 1, 1999 on which Fair
Market Value shall have equaled or exceeded $20.00 per share for any 20
of 30 consecutive trading days; and
(D) the balance of the Option shall first become exercisable on
the date, if any, after January 1, 2000 on which Fair Market Value shall
have equaled or exceeded $20.00 per share for any 20 of 30 consecutive
trading days.
9. STOCK OPTION AGREEMENTS.
Each Option shall be evidenced by a written agreement which sets forth: (a)
the number of shares subject to the Option; (b) the option price; (c) the
vesting schedule of the Option; (d) the expiration date of the Option;
(e) the method of payment on exercise of the Option; (f) whether the Option is
an Incentive Stock Option or a Nonstatutory Stock Option; and (g) such
additional provisions, not inconsistent with the Plan, as the Stock Option
Committee may prescribe.
10. EXERCISE OF OPTIONS.
(a) Each Option, or any installment thereof, shall be exercised, whether
in whole or in part, by giving written notice to the Company at its principal
office, specifying the number of shares of Common Stock being purchased and the
purchase price being paid, and accompanied by payment in full of the purchase
price.
(b) An Option holder shall pay for the shares subject to the Option by one
or any combination of the following methods, as determined by the Stock Option
Committee on the Grant Date of the Option: (i) in cash, (ii) by delivery of
shares of Common Stock already owned by the Option holder, or (iii) by the
Company withholding shares of Common Stock that would otherwise be delivered to
the Option holder upon such exercise of the Option. Any shares of Common Stock
that are so delivered or withheld to pay the option price shall be valued at
Fair Market Value on the date of such Option exercise.
(c) The exercise of an Option shall be conditioned upon the Option holder
making arrangements satisfactory to the Stock Option Committee for the payment
to the Company of the amount of all taxes required by any governmental authority
to be withheld and paid over by the Company to the governmental authority on
account of the exercise. The payment of such withholding taxes to the Company
shall be made by one or any combination
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of the following methods, as determined by the Stock Option Committee on the
Grant Date of the Option: (i) in cash, or (ii) by the Company withholding such
taxes from any other compensation owed to the Option holder by the Company or
any of its subsidiaries.
11. NON-ASSIGNMENT.
Each Option by its terms shall provide that it is not transferable by the
grantee otherwise than by will or the laws of descent and distribution, and that
during the lifetime of the grantee, it is exercisable only by him.
12. DEATH OF GRANTEE.
In the event that a grantee shall die (i) while he is an employee of the
Company, or within three months after termination of such employment, and (ii)
prior to the complete exercise of Options granted to him under the Plan, then
any such remaining Options with exercise periods outstanding may be exercised,
in whole or in part, within one year after the date of the grantee's death and
then only:
(a) by the grantee's estate or by such person(s) to whom the grantee's
rights hereunder shall have passed under his will or the laws of descent and
distribution;
(b) to the extent that the grantee was entitled to exercise the Option on
the date of his death, and subject to all of the conditions on exercise imposed
hereby; and
(c) prior to the expiration of the term of the Option.
13. TERMINATION OF EMPLOYMENT.
(a) During the lifetime of a grantee, an Option shall be exercisable only
while he is an employee of the Company and has been an employee continuously
since the Grant Date of the Option, or within three months after the date on
which he ceases to be such an employee for any reason; provided, however, that
in the case of a grantee who is permanently and totally disabled (within the
meaning of Section 22(e)(3) of the Internal Revenue Code), such three-month
period shall instead be one year.
(b) Any Option that is exercisable after termination of employment, as
provided by Section 13(a), shall be exercisable only to the extent that the
grantee would have been entitled to exercise the Option on the date of
termination of employment; and further, no Option shall be exercisable after the
expiration of the term thereof.
(c) For purposes of this Section 13, an employment relationship shall be
treated as continuing during the period when a grantee is on military duty, sick
leave or other bona fide leave of absence if the period of such leave does not
exceed 90 days or, if longer, so long as a statute or contract guarantees the
grantee's right to re-employment with the Company. When the period of leave
exceeds 90 days and the individual's right to re-employment is not so
guaranteed, the employment relationship shall be deemed to have terminated on
the 91st day of such leave.
14. ADDITIONAL REQUIREMENTS.
Each grant of an Option under the Plan, and (unless a Registration
Statement with respect thereto shall then be effective under the Securities Act
of 1933, as amended (the "Securities Act")) each issuance of shares of Common
Stock upon exercise of an Option, shall be conditioned upon the Company's prior
receipt of a duly executed letter of investment intent, in form and content
satisfactory to counsel for the Company, of the Option holder that such Option
and such shares are being acquired by such holder solely for investment and not
with a view to, or for sale in connection with, any distribution thereof, nor
with any present intention of selling, transferring or disposing of the same.
Any shares of Common Stock acquired by the holder upon exercise of the Option
may not thereafter be offered for sale, sold or otherwise transferred unless (a)
a Registration Statement with respect thereto shall then be effective under the
Securities Act, and the Company shall have been furnished with proof
satisfactory to it that such holder has complied with applicable state
securities laws, or (b) the Company shall have received an opinion of counsel in
form and substance satisfactory to counsel for the Company that the proposed
offer for sale, sale or transfer is exempt from the registration requirements of
the Securities Act and may otherwise be transferred in compliance with the
Securities Act and in compliance with any other applicable
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law, including all applicable state securities laws; and the Company may
withhold transfer, registration and delivery of such securities until one of the
foregoing conditions shall have been met.
15. LISTING AND REGISTRATION.
The Company, in its discretion, may postpone the issuance and delivery of
shares upon any exercise of an Option until completion of such stock exchange
listing, or registration or other qualification of such shares under any state
or federal law, rule or regulation, as the Company may consider appropriate; and
may require any person exercising an Option to make such representations and
furnish such information as it considers appropriate in connection with the
issuance of the shares in compliance with applicable law, including without
limitation federal or state laws regulating the sale or issuance of securities.
Notwithstanding the foregoing, the Company shall be under no obligation
whatsoever to list, register or otherwise qualify any shares subject to Options
under the Plan.
16. RIGHTS AS A SHAREHOLDER.
No Option holder shall have any rights as a shareholder with respect to the
shares of Common Stock purchased by him pursuant to the exercise of an Option
until the date of the issuance to him of a stock certificate representing such
shares. No adjustment shall be made for dividends or for distributions of any
other kind with respect to shares for which the record date is prior to the date
of the issuance to the Option holder of a certificate for the shares.
17. EFFECT OF ACQUISITION, REORGANIZATION OR LIQUIDATION.
Notwithstanding any provision to the contrary in this Plan or in any
agreement evidencing Options granted hereunder, all Options with exercise
periods then currently outstanding shall become immediately exercisable in full
and remain exercisable until their expiration in accordance with their
respective terms upon the occurrence of either of the following events:
(a) the first purchase of shares pursuant to a tender or exchange offer
which is intended to effect the acquisition of more than 50 percent of the
voting power of the Company (other than a tender or exchange offer made by the
Company); or
(b) approval by the Company's shareholders of: (i) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation and
which does not result in any reclassification or reorganization of the shares),
(ii) a sale or disposition of all or substantially all of the Company's assets,
or (iii) a plan of complete liquidation or dissolution of the Company.
18. CONDITIONAL OPTIONS.
Prior to approval and ratification of the Plan by the shareholders of the
Company, the Stock Option Committee may grant "Conditional Options" under the
Plan. In addition, in the event that any amendment to the Plan requires approval
and ratification by the shareholders, then prior to such approval and
ratification the Stock Option Committee may grant Conditional Options under the
Plan. Conditional Options may be granted under the Plan only under the following
conditions: (a) a Conditional Option shall be clearly identified as a
Conditional Option; (b) the grant of a Conditional Option shall be expressly
conditioned upon the approval and ratification of the Plan (or of the amendment
to the Plan, as the case may be) by the shareholders of the Company; (c) such
shareholder approval and ratification shall occur no later than the Annual
Meeting of Shareholders of the Company next following the effective date of the
Plan (or of the amendment to the Plan, as the case may be); and (d)
notwithstanding any other provision of the Plan, no holder of a Conditional
Option shall have any right to exercise such Option prior to such approval and
ratification of the Plan (or of the amendment to the Plan, as the case may be)
by the shareholders. Notwithstanding any other provision of the Plan, prior to
approval and ratification of the Plan (or of the amendment to the Plan, as the
case may be) by the shareholders of the Company, no holder of a Conditional
Option shall have any right to sell, assign, transfer, pledge or encumber the
Conditional Option, or the shares underlying the Conditional Option, except by
will or the laws of descent and distribution (unless, in the case of a holder
who is subject to the provisions of Section 16 of the Exchange Act, transfer by
will or the laws of descent and distribution would cause the Option to fail to
satisfy the requirements of a conditional option
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under Rule 16b-3 promulgated under the Exchange Act). If the shareholders of the
Company fail to approve and ratify the Plan (or the amendment to the Plan, as
the case may be) at such Annual Meeting of Shareholders, then all Conditional
Options granted hereunder conditioned upon such approval and ratification shall
be automatically cancelled and shall immediately become null and void.
19. AMENDMENT OF PLAN.
The Plan may be amended at any time by the Board of Directors, provided
that (except for amendments made pursuant to Section 5) no amendment made
without the approval and ratification of the shareholders of the Company shall
increase the total number of shares which may be issued under Options granted
pursuant to the Plan, reduce the minimum option price, extend the latest date
upon which Options may be granted or shall be exercisable, change the class of
employees eligible to be granted Options, reduce the Fair Market Value
requirements for exercisability set forth in Section 8(b), or otherwise
materially increase the benefits accruing to participants under the Plan.
20. NO RESERVATION OF SHARES.
The Company shall be under no obligation to reserve shares of Common Stock
or other securities to satisfy the exercise of Options. The grant of Options
hereunder shall not be construed as constituting the establishment of a trust of
such shares, and no particular shares shall be identified as optioned or
reserved for issuance hereunder. The Company shall have complied with the terms
of the Plan if, at the time of its delivery of shares upon the exercise of any
Option, it has a sufficient number of shares authorized and unissued, or issued
and held in its treasury, which may then be delivered under the Plan,
irrespective of the date on which such shares were authorized.
21. APPLICATION OF PROCEEDS.
The proceeds of the sale of shares of Common Stock by the Company under the
Plan will constitute general funds of the Company and may be used by the Company
for any purpose.
22. RULE 16B-3 QUALIFICATION.
Some or all of the Options granted under the Plan are intended to qualify
under Rule 16b-3 promulgated under the Exchange Act.
23. IN GENERAL.
(a) As used herein, the masculine pronoun shall include the feminine and
the neuter, as appropriate to the context.
(b) As used herein, the term "Section" shall mean the appropriate Section
of the Plan.
* * * * *
THE FOREGOING TRANSMATION, INC. AMENDED AND RESTATED 1993 STOCK OPTION PLAN
WAS DULY ADOPTED BY THE BOARD OF DIRECTORS OF TRANSMATION, INC. ON JUNE 6, 1995.
/s/ JOHN A. MISIASZEK
--------------------------------
John A. Misiaszek, Secretary
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APPENDIX B
TRANSMATION, INC.
EMPLOYEES' STOCK PURCHASE PLAN
1. PURPOSE AND EFFECT OF PLAN
The purpose of the Plan is to secure for the Company and its shareholders
the benefits of the incentive inherent in the ownership of Common Stock by
present and future employees of the Company and certain of its subsidiaries. The
Plan is intended to conform with the provisions of Rule 16b-3 promulgated under
the Act and the terms of Code section 423.
2. DEFINITIONS
Where indicated by initial capital letters, the following terms shall have
the following respective meanings:
(a) ACT: the Securities Exchange Act of 1934, as amended.
(b) BASE COMPENSATION: the regular earnings of an Eligible Employee,
including (if any) overtime, bonuses and salary reduction contributions pursuant
to elections under a plan subject to Code sections 125 or 401(k).
(c) BOARD: the Board of Directors of the Company.
(d) CODE: the Internal Revenue Code of 1986, as amended, or any
subsequently enacted federal revenue law. A reference to a particular section of
the Code shall include a reference to any regulations issued under the section
and to the corresponding section of any subsequently enacted federal revenue
law.
(e) COMMITTEE: the committee established pursuant to Section 4 to be
responsible for the general administration of the Plan.
(f) COMMON STOCK: the Company's Common Stock, par value $.50 per share.
(g) COMPANY: Transmation, Inc. and any successor by merger, consolidation
or otherwise.
(h) CUSTODIAN: the custodian appointed by the Board to maintain the
Investment Accounts established in accordance with Section 9, which custodian
may be the Company itself, any employee of the Company or any third party so
appointed.
(i) DESIGNATED SUBSIDIARY: each subsidiary of the Company, now owned or
hereafter created or acquired, which the Board in its sole discretion hereafter
designates as a participating employer under the Plan.
(j) ELIGIBLE EMPLOYEE: any employee of the Company or of any Designated
Subsidiary who meets the eligibility requirements of Section 5.
(k) ENROLLMENT FORM: the form filed with the Committee authorizing payroll
deductions pursuant
to Section 6.
(l) FAIR MARKET VALUE: the last reported per share sale price, regular
way, of the Common Stock as reported by Nasdaq on the date in question or, if
the Common Stock shall not have traded on Nasdaq on such date, the last reported
per share sale price, regular way, so reported on the immediately preceding day
on which the Common Stock so traded.
(m) INVESTMENT ACCOUNT: the account established for each Participating
Employee to hold Common Stock purchased under the Plan in accordance with
Section 9.
(n) INVESTMENT DATE: the last business day of each calendar month on which
shares of Common Stock are or could be traded on Nasdaq.
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(o) ISSUANCE DATES: the dates on or about which certificates representing
shares of Common Stock held in the Investment Accounts shall be issued to each
Participating Employee. Unless or until changed by the Board, the Issuance Dates
shall be March 31 and September 30 of each year.
(p) NASDAQ: the Nasdaq Stock Market.
(q) PARTICIPATING EMPLOYEE: an Eligible Employee who elects to participate
in the Plan by filing an Enrollment Form in accordance with Section 6.
(r) PAYROLL DEDUCTION ACCOUNT: the account established for each
Participating Employee to hold payroll deductions in accordance with Section 6.
(s) PLAN: the Transmation, Inc. Employees' Stock Purchase Plan as set
forth herein and as amended from time to time.
(t) PURCHASE PRICE: the price for each share of Common Stock purchased
under the Plan, which shall be 85% of the Fair Market Value of the Common Stock
on the applicable Investment Date.
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of Section 12, the total number of shares of
Common Stock that may be purchased under the Plan shall not exceed 450,000.
Shares subject to the Plan may be either authorized but unissued shares or
shares that were once issued and subsequently reacquired by the Company.
4. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee, which shall be
appointed by the Board and shall be comprised of two or more members of the
Board. Each member of the Committee shall be a disinterested director of the
Company within the meaning of Rule 16b-3 promulgated under the Act. The
Committee shall be the Stock Option Committee under the Transmation, Inc.
Amended and Restated 1993 Stock Option Plan unless the Board shall appoint
another committee to administer the Plan.
(b) Subject to the express provisions of the Plan, the Committee shall
have the authority to take any and all actions necessary to implement the Plan
and to interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable in
administering the Plan. All of such determinations shall be final and binding
upon all persons. A quorum of the Committee shall consist of a majority of its
members and the Committee may act by vote of a majority of its members at a
meeting at which a quorum is present, or without a meeting by a written consent
to the action taken signed by all members of the Committee. The Committee may
request advice or assistance or employ such other persons as are necessary for
proper administration of the Plan.
5. ELIGIBLE EMPLOYEES
Any employee of the Company or of any Designated Subsidiary (a) whose
customary employment is for more than 20 hours per week, and (b) who has been
employed for one year or more, shall be an Eligible Employee eligible to
participate in the Plan.
6. ELECTION TO PARTICIPATE
(a) An Eligible Employee may become a Participating Employee effective on
the first day of any calendar month coincident with or following the date he
becomes an Eligible Employee by filing with the Committee, in care of the Vice
President-Human Resources of the Company, an Enrollment Form authorizing
specified regular payroll deductions from his Base Compensation. Such regular
payroll deductions shall not exceed 10 percent of his Base Compensation for any
pay period. All such regular payroll deductions shall be credited to the Payroll
Deduction Account that the Company has established in the name of the
Participating Employee.
(b) A Participating Employee may increase or decrease the amount of his
regular payroll deduction by filing a new Enrollment Form to be effective as of
the first day of the next following calendar month.
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(c) A Participating Employee may at any time, by filing a new Enrollment
Form so stating, withdraw from the Plan and cease to be a Participating
Employee. An employee who has ceased to be a Participating Employee may not
again become a Participating Employee for six months.
(d) In all cases, Enrollment Forms must be filed with the Committee, in
care of the Vice President-Human Resources of the Company, at least ten days
before the beginning of a calendar month to be effective for that month, unless
a shorter period of time is prescribed by the Committee. An Enrollment Form not
filed within the prescribed filing period shall be effective on the first day of
the next following calendar month.
7. PURCHASE OF SHARES
Each Participating Employee having eligible funds in his Payroll Deduction
Account on an Investment Date shall be deemed, without any further action, to
have purchased from the Company the number of whole shares of Common Stock that
the eligible funds in his Payroll Deduction Account could purchase at the
Purchase Price on that Investment Date. Under no circumstances shall fractional
shares be purchased under the Plan. All whole shares so purchased shall be
maintained by the Custodian, as provided in Section 9, in a separate Investment
Account for each Participating Employee. Expenses incurred in the purchase of
shares and the expenses of the Custodian shall be paid by the Company.
8. LIMITATION ON PURCHASES
(a) No Participating Employee may purchase during any one calendar year
under the Plan (or under any other plan qualified under Code section 423) shares
of Common Stock having an aggregate Fair Market Value (determined by reference
to the Fair Market Value on each Investment Date) in excess of $25,000. The
purpose of this limitation is to comply with Code section 423(b)(8).
(b) A Participating Employee's Payroll Deduction Account may not be used
to purchase Common Stock on any Investment Date to the extent that after such
purchase the Participating Employee would own (or be considered as owning within
the meaning of Code section 424(d)) 5 percent or more of the shares of Common
Stock then outstanding. For this purpose, Common Stock that the Participating
Employee may purchase under any outstanding option shall be treated as owned by
such Participating Employee. As of the first Investment Date on which this
Section 8(b) limits a Participating Employee's ability to purchase Common Stock,
he shall cease to be a Participating Employee.
9. INVESTMENT ACCOUNTS; STOCK CERTIFICATES
(a) The Custodian shall maintain an Investment Account for each
Participating Employee. All shares purchased under the Plan by a Participating
Employee shall, until the next Issuance Date, be uncertificated shares credited
to his Investment Account. The Participating Employee (or, if he so indicates on
his Enrollment Form, the Participating Employee jointly with one other person
with right of survivorship) shall have all of the rights of a shareholder of the
Company with respect to the shares held in his Investment Account as of the
Investment Date on which such shares were purchased.
(b) On or about each Issuance Date, the Custodian shall direct the
Company's transfer agent to issue in the name of each Participating Employee
(or, if he so indicates on his Enrollment Form, in the name of such
Participating Employee jointly with one other person with right of survivorship)
a stock certificate representing the whole shares of Common Stock then credited
to his Investment Account. Notwithstanding the foregoing, if on any Issuance
Date the Company does not have a currently effective Registration Statement on
Form S-8 under the Securities Act of 1933, as amended, covering the shares
subject to the Plan, then the Custodian may postpone the issuance of such stock
certificates until such Registration Statement is effective.
(c) As a condition of participation in the Plan, each Participating
Employee agrees to notify the Company if he sells or otherwise disposes of any
Common Stock purchased by him under the Plan within two years of the Investment
Date on which such shares were purchased.
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10. TERMINATION OF EMPLOYMENT; DEATH
In the event of the death or termination of the employment of a
Participating Employee for any reason, or if a Participating Employee ceases to
be such, then no further purchases of shares shall be made by him under the
Plan. In such event, the amount remaining in the Participating Employee's
Payroll Deduction Account shall be promptly refunded to him (or to his estate),
and on or about the next following Issuance Date a certificate shall be issued,
as provided in Section 9, representing the whole shares then credited to his
Investment Account.
11. RIGHTS NOT TRANSFERABLE
Except as expressly provided in Sections 9(b) and 10, neither payroll
deductions credited to a Participating Employee's Payroll Deduction Account, nor
any rights with regard to participation in the Plan, nor the right to be issued
shares of Common Stock under the Plan shall be transferable in any way by a
Participating Employee.
12. CHANGE IN CAPITAL STRUCTURE
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the surviving
corporation, or other change in the Company's capital stock applicable to all
shareholders generally, the number and kind of shares of stock or other
securities of the Company to be subject to the Plan, the maximum number of
authorized but unissued shares or other securities that may be delivered under
the Plan, and other relevant provisions shall be appropriately adjusted by the
Committee, whose determination shall be binding on all persons.
(b) If the Company is a party to a consolidation or a merger in which the
Company is not the surviving corporation, a transaction that results in the
acquisition of substantially all of the Company's outstanding stock by a single
person or entity, or a sale or transfer of substantially all of the Company's
assets, the Committee may take such actions with respect to the Plan as the
Committee deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the Committee
may take the foregoing actions without the consent of any Participating
Employee, and the Committee's determination shall be conclusive and binding on
all persons for all purposes.
13. AMENDMENT OF THE PLAN
The Board may at any time, or from time to time, amend the Plan in any
respect; provided, however, that the shareholders of the Company must approve
any amendment that would materially (a) increase the benefits accruing to
Participating Employees under the Plan, (b) increase (other than pursuant to
Section 12) the number of securities that may be issued under the Plan, or (c)
modify the requirements as to eligibility for participation in the Plan. The
Board's designation of a Designated Subsidiary shall not be deemed to be an
amendment of the Plan.
14. TERMINATION OF THE PLAN
The Plan and all rights of employees hereunder to purchase shares shall
terminate:
(a) on the Investment Date that Participating Employees become entitled to
purchase a number of shares greater than the number of shares remaining
available for purchase hereunder; or
(b) on any date in the discretion of the Board.
In the event that the Plan terminates under the circumstances described in "(a)"
above, the shares remaining available for purchase as of the termination date
shall be purchased by Participating Employees on a pro rata basis. Upon any
termination of the Plan, the amounts remaining in each Participating Employee's
Payroll Deduction Account shall be promptly refunded to him, and on or about the
next following Issuance Date certificates shall be issued, as provided in
Section 9, representing the whole shares then credited to each Participating
Employee's Investment Account.
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<PAGE>
15. GOVERNMENT AND OTHER REGULATIONS
The Plan, and the grant and exercise of rights to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or government agency as may, in the opinion of counsel for the
Company, be required.
16. EFFECTIVE DATE OF THE PLAN
Subject to due approval of the Plan by the shareholders of the Company, the
Plan shall become effective on October 1, 1995.
17. IN GENERAL
As used herein, the masculine pronoun shall include the feminine and the
neuter, and the singular shall include the plural, as appropriate to the
context. As used herein, the capitalized term "Section" means the appropriate
Section of the Plan.
* * * * *
THE FOREGOING TRANSMATION, INC. EMPLOYEES' STOCK PURCHASE PLAN WAS DULY
ADOPTED BY THE BOARD OF DIRECTORS OF TRANSMATION, INC. ON JUNE 6, 1995.
/s/ JOHN A. MISIASZEK
--------------------------------
John A. Misiaszek, Secretary
A-12
<PAGE>
APPENDIX C
TRANSMATION, INC.
AMENDED AND RESTATED DIRECTORS' WARRANT PLAN
The Transmation, Inc. Directors' Warrant Plan, effective August 21, 1984
and amended and restated effective August 15, 1995 (this "Plan") is established
to attract, retain and compensate highly qualified individuals who are not
employees of Transmation, Inc., an Ohio corporation (the "Company"), or any of
its subsidiaries, for their service as members of the Board of Directors of the
Company (the "Board of Directors"), and to enable them to increase their
ownership of the Company's Common Stock, par value $.50 per share (the "Common
Stock"). As used herein, the term "Shares" shall mean the Common Stock or such
other securities, if any, as may result from an adjustment under Section 10.
1. ELIGIBILITY. Each member of the Board of Directors (including any
member elected after the effective date of this Plan) who (a) is not an employee
of the Company or any of its subsidiaries and (b) is a member of the Board of
Directors on a "Grant Date" (as hereinafter defined) (each, a "Participating
Director"), is eligible to participate in this Plan.
2. WARRANTS. All warrants granted under this Plan ("Warrants") shall be
non-statutory warrants to purchase Shares.
3. SHARES AVAILABLE. Subject to adjustment as provided by Section 10, the
total number of Shares that may be issued pursuant to Warrants granted hereunder
shall not exceed 100,000. Shares subject to Warrants may be either authorized
but unissued shares or shares that were once issued and subsequently reacquired
by the Company. If any Warrant is surrendered before exercise, or lapses without
exercise, or for any other reason ceases to be exercisable, in whole or in part,
the Shares reserved for the unexercised portion thereof shall continue to be
available for the grant of Warrants hereunder.
4. GRANTS OF WARRANTS.
(a) GRANTS OF WARRANTS. On each of the following dates, each Participating
Director shall automatically be granted a Warrant to purchase 2,000 Shares: the
day next following conclusion of the Company's 1995 Annual Meeting of
Shareholders (the "1995 Grant Date"), the day next following conclusion of the
Company's 1996 Annual Meeting of Shareholders (the "1996 Grant Date"), and the
day next following conclusion of the Company's 1997 Annual Meeting of
Shareholders (the "1997 Grant Date") ( each, a "Grant Date").
(b) ELECTION TO DECLINE WARRANT. Any Participating Director may, by
written notice received by the Company prior to the Grant Date of such Warrant,
elect to decline a Warrant, in which case such Warrant shall not be granted to
him; provided, however, that at no time shall the Company pay or provide to such
Participating Director anything of value in lieu of the declined Warrant. In
addition, any Participating Director may, by written notice received by the
Company prior to the Grant Date of such Warrant, revoke a previous election to
decline a Warrant.
(c) EXPIRATION OF WARRANTS. Subject to earlier expiration as provided by
Section 7, each Warrant shall expire on the fifth anniversary of its Grant Date,
and to the extent any Warrant remains unexercised on such fifth anniversary, it
shall be forfeited.
5. EXERCISE PRICE. The price at which each Warrant shall be exercisable
shall be the fair market value per share (the "Market Value") of the Shares on
the Grant Date of such Warrant. For purposes of this Plan, the Market Value of
the Shares shall be the closing price of the Shares on the principal national
securities exchange on which the Shares are then listed or admitted to trading
(if the Shares are then listed or admitted to trading on any national securities
exchange), and the closing price shall be the last reported sale price regular
way or, in case no such sale takes place on such date, the last reported sale
price, regular way, so reported on the immediately preceding day on which a sale
takes place. If the Shares are not then so listed on a national securities
exchange, the Market Value of the Shares on any date shall be the closing price
(the last reported sale price regular way) in
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<PAGE>
the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq"), if the closing
price of the Shares is then reported by Nasdaq. If the closing price of the
Shares is not then reported by Nasdaq, the Market Value of the Shares on any
date shall be deemed to be the mean between the representative closing bid and
asked prices of the Shares in the over-the-counter market as reported by Nasdaq.
If the Shares are not then reported by Nasdaq, the Market Value of the Shares on
any date shall be as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If no member of the National Association of Securities Dealers, Inc.
furnishes quotes with respect to the Shares, the Market Value shall be
determined by such other reasonable method as is adopted by resolution of the
Board of Directors.
6. VESTING. Subject to prior expiration as provided by this Plan, each
Warrant shall vest and become exercisable over a four-year period, as set forth
in this Section 6.
(a) WARRANTS GRANTED ON 1995 GRANT DATE. Each Warrant granted on the 1995
Grant Date shall vest and become exercisable as follows:
(i) a Warrant to purchase 500 Shares shall first become exercisable
on the date, if any, after the 1995 Grant Date on which the Market Value of
the Common Stock shall have equaled or exceeded $7.00 per share for any 20
of 30 consecutive trading days;
(ii) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1996 on which the Market
Value of the Common Stock shall have equaled or exceeded $12.00 per share
for any 20 of 30 consecutive trading days;
(iii) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1997 on which the Market
Value of the Common Stock shall have equaled or exceeded $16.00 per share
for any 20 of 30 consecutive trading days; and
(iv) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1998 on which the Market
Value of the Common Stock shall have equaled or exceeded $20.00 per share
for any 20 of 30 consecutive trading days.
(b) WARRANTS GRANTED ON 1996 GRANT DATE. Each Warrant granted on the 1996
Grant Date shall vest and become exercisable as follows:
(i) a Warrant to purchase 500 Shares shall first become exercisable
on the date, if any, after the 1996 Grant Date on which the Market Value of
the Common Stock shall have equaled or exceeded $12.00 per share for any 20
of 30 consecutive trading days;
(ii) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1997 on which the Market
Value of the Common Stock shall have equaled or exceeded $16.00 per share
for any 20 of 30 consecutive trading days;
(iii) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1998 on which the Market
Value of the Common Stock shall have equaled or exceeded $20.00 per share
for any 20 of 30 consecutive trading days; and
(iv) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1999 on which the Market
Value of the Common Stock shall have equaled or exceeded $20.00 per share
for any 20 of 30 consecutive trading days.
(c) WARRANTS GRANTED ON 1997 GRANT DATE. Each Warrant granted on the 1997
Grant Date shall vest and become exercisable as follows:
(i) a Warrant to purchase 500 Shares shall first become exercisable
on the date, if any, after the 1997 Grant Date on which the Market Value of
the Common Stock shall have equaled or exceeded $16.00 per share for any 20
of 30 consecutive trading days;
(ii) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1998 on which the Market
Value of the Common Stock shall have equaled or exceeded $20.00 per share
for any 20 of 30 consecutive trading days;
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<PAGE>
(iii) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 1999 on which the Market
Value of the Common Stock shall have equaled or exceeded $20.00 per share
for any 20 of 30 consecutive trading days; and
(iv) an additional Warrant to purchase 500 Shares shall first become
exercisable on the date, if any, after January 1, 2000 on which the Market
Value of the Common Stock shall have equaled or exceeded $20.00 per share
for any 20 of 30 consecutive trading days.
7. EARLY EXPIRATION OF WARRANTS.
(a) CESSATION OF SERVICE. Upon a Participating Director's cessation of
service as a member of the Board of Directors for any reason other than his
death, all outstanding Warrants then held by him (whether or not currently
exercisable) shall, on the date of such cessation of service, expire and be of
no further force or effect.
(b) DEATH. Upon the death of a Participating Director while serving as a
member of the Board of Directors, only those Warrants (or portions thereof) that
have vested by the date of death shall thereafter be exercisable by his legal
representative, and such Warrants must be exercised within 90 days after the
date of death (but in no event after the expiration of the Warrant), whereupon
all such Warrants shall expire and be of no further force or effect.
8. LOSS OF ELIGIBILITY. If a Participating Director becomes an employee of
the Company or any of its subsidiaries, then all Warrants already granted to him
hereunder shall continue in full force and effect, in accordance with their
original terms, for so long as he remains a member of the Board of Directors,
but he shall be entitled to no further grants of Warrants hereunder.
9. METHOD OF EXERCISE. A Warrant shall be exercised by written notice to
the Company specifying the number of whole Shares to be purchased and
accompanied by full payment, in cash, for such Shares. A Warrant, to the extent
otherwise exercisable, may be exercised in whole or in part, provided that no
Warrant may be exercised for less than one whole Share. Upon determining that
compliance with this Plan has occurred, including compliance with such
reasonable requirements as the Company may impose pursuant to Section 11, the
Company shall issue certificates for the Shares purchased.
10. ADJUSTMENT PROVISIONS. In the event (but only in the event) that:
(a) in connection with a merger or consolidation of the Company or a sale
by the Company of all or a part of its assets, the outstanding Shares are
exchanged for a different number or class of shares of stock or other securities
of the Company, or for shares of the stock or other securities of any other
entity; or
(b) new, different or additional shares or other securities of the Company
or of another entity are received by the holders of Shares; or
(c) any dividend in the form of stock is paid to the holders of Shares, or
any stock split or reverse split pertaining to the Shares is effected;
then appropriate adjustments shall be made to:
(i) the number and kind of shares or other securities that may be
issued upon exercise of Warrants not yet granted (including the numbers of
shares set forth in Sections 3 and 4(a) );
(ii) the exercise price per share to be paid upon exercise of each
outstanding Warrant; and
(iii) the number and kind of shares or other securities covered by
each outstanding Warrant.
11. TAXES; COMPLIANCE WITH LAWS.
(a) TAXES. The Company, if necessary or desirable, may pay or withhold the
amount of any tax attributable to any Shares deliverable under this Plan, and
the Company may defer making delivery until it is reimbursed or indemnified to
its satisfaction for that tax.
(b) SECURITIES LAWS COMPLIANCE. Each grant of a Warrant hereunder, and
(unless a Registration Statement with respect thereto shall then be effective
under the Securities Act of 1933, as amended (the "1933 Act")) each issuance of
Shares upon exercise of a Warrant, shall be conditioned upon the Company's prior
receipt of a duly
A-15
<PAGE>
executed letter of investment intent, in form and content satisfactory to
counsel for the Company, of the Warrant holder that such Warrant and such Shares
are being acquired by such Warrant holder solely for investment and not with a
view to, or for sale in connection with, any distribution thereof, nor with any
present intention of selling, transferring or disposing of the same. Any Shares
acquired by the Warrant holder upon exercise of the Warrant may not thereafter
be offered for sale, sold or otherwise transferred unless (i) a Registration
Statement with respect thereto shall then be effective under the 1933 Act, and
the Company shall have been furnished with proof satisfactory to it that such
Warrant holder has complied with applicable state securities laws, or (ii) the
Company shall have received an opinion of counsel in form and substance
satisfactory to counsel for the Company that the proposed offer for sale, sale
or transfer is exempt from the registration requirements of the 1933 Act and the
Shares may otherwise be transferred in compliance with the 1933 Act and in
compliance with any other applicable law, including all applicable state
securities laws; and the Company may withhold transfer, registration and
delivery of such securities until one of the foregoing conditions shall have
been met. Unless a Registration Statement with respect thereto shall then be
effective under the 1933 Act, each certificate representing Shares issued upon
exercise of a Warrant shall bear an appropriate legend reflecting the foregoing.
Warrants are exercisable, and Shares can be delivered under this Plan, only in
compliance with all applicable federal and state laws and the rules of all stock
exchanges or trading markets on which the Shares are listed or traded at any
time. A Warrant may not be exercised, and Shares may not be issued under any
Warrant, until the Company has obtained the necessary consent or approval (if
any) of every regulatory body, federal or state, having jurisdiction over such
matters as the Company deems advisable.
12. ADMINISTRATION AND AMENDMENT OF PLAN. This Plan shall be administered
by the Board of Directors. This Plan may be terminated or amended by the Board
of Directors as it deems advisable; provided, however, that any amendment that
changes the timing of the grant of Warrants, the eligibility requirements for
Participating Directors, the method of determining the exercise price of
Warrants, the vesting schedule or expiration dates of Warrants, or the number of
Shares subject to Warrants, shall not be made more frequently than every six
months unless otherwise necessary to comply with the Internal Revenue Code of
1986, as amended, the Employee Retirement Income Security Act of 1974, as
amended, or any regulations thereunder. In addition, the shareholders of the
Company must approve any amendment that would materially (a) increase the
benefits accruing to Participating Directors under this Plan, (b) increase
(other than pursuant to Section 10) the number of securities that may be issued
under this Plan, or (c) modify the requirements as to eligibility for
participation in the Plan. No amendment of this Plan may revoke or alter in a
manner adverse to a Participating Director any Warrants then outstanding.
13. NON-TRANSFERABILITY. No Warrant granted under this Plan is
transferable other than by will or the laws of descent and distribution. During
a Participating Director's lifetime, a Warrant may be exercised only by him.
14. NO ADDITIONAL RIGHTS. Except as provided in this Plan, no
Participating Director shall have any claim or right to be granted a Warrant
under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any person any right to continue to serve as a member of the
Board of Directors. No person, estate or other entity shall have any rights as a
shareholder of the Company with respect to Shares subject to Warrants until a
certificate for such Shares has been delivered to the person exercising the
Warrant in accordance with the terms of this Plan.
15. WARRANT CERTIFICATES. Each Warrant shall be evidenced by a written
warrant certificate which sets forth (a) the number of Shares subject to the
Warrant, (b) the exercise price, (c) the vesting schedule of the Warrant, (d)
the expiration date of the Warrant, and (e) such additional provisions, not
inconsistent with the Plan, as the Board of Directors may prescribe.
16. RULE 16B-3 QUALIFICATION. Some or all of the Warrants granted under
this Plan are intended to qualify under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
17. IN GENERAL. As used herein, the masculine pronoun shall include the
feminine and the neuter, and the singular shall include the plural, as
appropriate to the context. As used herein, the term "Section" means the
appropriate Section of this Plan.
18. EFFECTIVE DATE. This Plan shall become effective immediately upon its
due ratification by the shareholders of the Company.
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<PAGE>
* * * * *
THE FOREGOING TRANSMATION, INC. AMENDED AND RESTATED DIRECTORS' WARRANT
PLAN WAS DULY ADOPTED BY THE BOARD OF DIRECTORS OF TRANSMATION, INC. ON JUNE 6,
1995.
/s/ JOHN A. MISIASZEK
--------------------------------
John A. Misiaszek, Secretary
A-17
<PAGE>
APPENDIX D
TRANSMATION, INC.
DIRECTORS' STOCK PLAN
EFFECTIVE JANUARY 17, 1995
THIS TRANSMATION, INC. DIRECTORS' STOCK PLAN (the "Plan") is established to
foster and promote the long-term financial success of Transmation, Inc., an Ohio
corporation (the "Company"), by attracting and retaining outstanding
non-employee Directors by enabling them to participate in the Company's growth
through automatic, non-discretionary awards ("Awards") of shares of the Common
Stock, par value $.50 per share, of the Company ("Shares"). Awards under this
Plan shall be in lieu of an annual cash retainer paid to Directors and cash fees
paid to Directors for attendance at meetings.
1. ELIGIBILITY. Eligibility in this Plan shall be limited to each member of
the Board of Directors of the Company (the "Board"), now or hereafter elected a
Director, who (a) is not an employee of the Company or any of its subsidiaries,
and (b) has elected, as herein provided, to receive Awards in lieu of cash
payments (each, a "Participating Director"). On or before March 31 of each year
(or such other date as the officers of the Company may, for reasons of
convenience of administration of this Plan, determine), each Director shall
notify the Company, by completing and executing the form annexed to this Plan as
Annex A, whether he elects to be a Participating Director for the ensuing fiscal
year of the Company. For the portion, subsequent to the effective date of this
Plan, of the fiscal year of the Company ending March 31, 1995, such election
shall be made on or before March 20, 1995.
2. SHARES SUBJECT TO THE PLAN. Shares which may be awarded under this Plan
may be, in whole or in part, authorized and unissued Shares or previously issued
Shares reacquired by the Company, including Shares purchased on the open market,
or such other securities as may be substituted pursuant to Section 6. The
maximum number of Shares which may be issued for all purposes under this Plan
shall be 100,000 (subject to adjustment pursuant to Section 9).
3. STOCK AWARDS.
(a) ANNUAL AWARDS. Each Participating Director shall receive an Award of
1,000 Shares for each full year during which he serves as a Director; provided,
however, that if, on the date of any such Award, 1,000 Shares has an aggregate
market value in excess of $7,500, then such Award shall instead be in the amount
of the largest number of whole Shares that has an aggregate market value not
exceeding $7,500. For purposes hereof, a full year of service as a Director
shall mean service as a Director from the date of one annual meeting of
shareholders to the next annual meeting of shareholders, commencing with the
year beginning August 16, 1994 and ending August 15, 1995. If a Director serves
less than a full-year term for any reason other than removal for cause, such
Director shall receive a pro rata Award of Shares for such year, based on the
number of whole months since the last annual meeting of shareholders during
which he served as a Director. If a pro rata Award would result in the issuance
of a fractional share, the fractional share shall be rounded up to 1 if the
fraction is .5 or greater and rounded down to zero if the fraction is less than
.5. Annual Awards shall be made on the annual meeting date and the share
certificates representing such Awards shall be issued as soon as practicable
after the next following September 30.
(b) AWARDS FOR BOARD MEETINGS ATTENDED. Each Participating Director shall
receive an Award of 200 Shares for each regular or special meeting of the Board
attended by such Participating Director; provided, however, that if, on the date
of any such Award, 200 Shares has an aggregate market value in excess of $1,500,
then such Award shall instead be in the amount of the largest number of whole
Shares that has an aggregate market value not exceeding $1,500. Such Awards
shall be made on the date of each such Board meeting, with share certificates
representing such Awards to be issued as soon as practicable after the last day
of each fiscal quarter of the Company, commencing with the quarter ending March
31, 1995.
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(c) AWARDS FOR COMMITTEE MEETINGS ATTENDED. Each Participating Director
shall receive an Award of 100 Shares for each meeting of a Committee of the
Board attended by such Participating Director; provided, however, that if, on
the date of any such Award, 100 Shares has an aggregate market value in excess
of $750, then such Award shall instead be in the amount of the largest number of
whole Shares that has an aggregate market value not exceeding $750. Such Awards
shall be made on the date of each such Committee meeting, with share
certificates representing such Awards to be issued as soon as practicable after
the last day of each fiscal quarter of the Company, commencing with the quarter
ending March 31, 1995.
4. ADMINISTRATION OF THE PLAN. This Plan shall be self-effectuating.
Administrative determinations necessary or advisable for the administration or
interpretation of this Plan in order to carry out its provisions and purposes
shall be made by the officers of the Company.
5. ADDITIONAL REQUIREMENTS. Unless a Registration Statement with respect
thereto shall then be effective under the Securities Act of 1933, as amended
(the "Act"), each Award to a Participating Director is conditioned upon the
Company's prior receipt of a letter, in the form of Annex A hereto, duly
executed by such Participating Director, stating that Shares issued to him under
this Plan will be held by such Participating Director solely for investment and
not with a view to, or for sale in connection with, any distribution thereof,
nor with any present intention of selling, transferring or disposing of the
same. Shares issued to a Participating Director hereunder may not thereafter be
offered for sale, sold or otherwise transferred unless (a) a Registration
Statement with respect thereto shall then be effective under the Act, and the
Company shall have been furnished with proof satisfactory to it that the holder
thereof has complied with applicable state securities laws, or (b) the Company
shall have received an opinion of counsel in form and substance satisfactory to
counsel for the Company that the proposed offer for sale, sale or transfer is
exempt from the registration requirements of the Act and may otherwise be
transferred in compliance with the Act and in compliance with any other
applicable law, including all applicable state securities laws; and the Company
may withhold transfer, registration and delivery of such Shares until one of the
foregoing conditions shall have been met.
6. LISTING AND REGISTRATION. The Company, in its discretion, may postpone
the issuance and delivery of Shares pursuant to any Award until completion of
such stock exchange listing, or registration or other qualification of such
Shares under any state or federal law, rule or regulation, as the Company may
consider appropriate; and may require any Participating Director to make such
representations and furnish such information as it considers appropriate in
connection with the issuance of Shares in compliance with applicable law,
including without limitation federal or state laws regulating the sale or
issuance of securities. Notwithstanding the foregoing, the Company shall be
under no obligation whatsoever to list, register or otherwise qualify any Shares
under this Plan.
7. RIGHTS AS A SHAREHOLDER. No Participating Director shall have any
rights as a shareholder with respect to the Shares awarded or to be awarded to
him under this Plan until the date of the issuance to him of a stock certificate
representing such Shares. No adjustment shall be made for dividends or for
distributions of any other kind with respect to Shares for which the record date
is prior to the date of the issuance to the Participating Director of a
certificate for the Shares.
8. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board may suspend or
terminate this Plan or any portion thereof at any time and may amend this Plan
from time to time in such respects as the Board may deem advisable; provided,
however, that any amendment that changes the timing of Awards, the eligibility
requirements for Participating Directors, or the number of Shares subject to an
Award shall not be made more frequently than every six months unless otherwise
necessary to comply with the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act of 1974, as amended, or any regulations
thereunder.
9. CAPITAL ADJUSTMENTS. In the event that (a) in connection with a merger
or consolidation of the Company or a sale by the Company of all or a part of its
assets, the outstanding Shares are exchanged for a different number or class of
shares of stock or other securities of the Company, or for shares of the stock
or other securities of any other entity; or (b) new, different or additional
shares or other securities of the Company or of another entity are received by
the holders of Shares, whether by way of recapitalization or otherwise; or (c)
any dividend in the form of stock is made to the holders of Shares, or any stock
split or reverse split pertaining to Shares is effected; then the Board shall,
in order to prevent the dilution or enlargement of rights under this Plan, make
such adjustments in the number and type of Shares or other securities authorized
and the number and type of Shares or other securities that may be awarded under
this Plan as may be determined to be appropriate and equitable.
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<PAGE>
10. RIGHTS OF DIRECTORS. Nothing in this Plan shall confer upon any
Director any right to serve as a Director for any period of time or to continue
his present or any other rate of compensation. A Participating Director's right
to receive Awards hereunder shall not be transferable in any way.
11. PLAN NOT EXCLUSIVE. The adoption of this Plan shall not preclude the
adoption by appropriate means of any stock option or other incentive plan for
Directors.
12. REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
hereunder shall be subject to all applicable rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
13. TERM OF PLAN. This Plan shall become effective upon its approval by
the Board, and shall continue in effect until terminated by the Board.
14. IN GENERAL. As used herein, the masculine pronoun shall include the
feminine and the neuter, as appropriate to the context. As used herein, the term
"Section" shall mean the appropriate Section of this Plan.
* * * * *
THE FOREGOING TRANSMATION, INC. DIRECTORS' STOCK PLAN WAS DULY ADOPTED BY
THE BOARD OF DIRECTORS OF TRANSMATION, INC. ON JANUARY 17, 1995.
/s/ JOHN A. MISIASZEK
--------------------------------
John A. Misiaszek, Secretary
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<PAGE>
ANNEX A
ELECTION UNDER THE TRANSMATION, INC. DIRECTORS' STOCK PLAN
To: Transmation, Inc.
[CHECK ONE BOX ONLY:]
[_] I hereby elect, for the fiscal year of Transmation, Inc. (the "Company")
ending March 31, 199__, to receive in lieu of cash Directors'
compensation, awards of shares of the Company's Common Stock, par
value $.50 per share (the "Shares"), under the Transmation, Inc.
Directors' Stock Plan (the "Plan").
[_] I hereby elect, for the fiscal year of the Company ending March 31,
199__, to receive Directors' compensation only in cash.
(a) I acknowledge and agree that unless a Registration Statement with
respect thereto shall then be effective under the Securities Act of 1933, as
amended (the "Act"), any Shares issued to me under the Plan shall be acquired by
me solely for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of selling,
transferring or disposing of the same. I further acknowledge and agree that any
Shares issued to me under the Plan may not be offered for sale, sold or
otherwise transferred or disposed of unless (i) a Registration Statement with
respect thereto shall then be effective under the Act, and I shall have provided
proof satisfactory to counsel for the Company that I have complied with all
applicable state securities laws, or (ii) the Company shall have received an
opinion of counsel in form and substance satisfactory to counsel for the Company
that the proposed offer for sale, sale or transfer of the Shares is exempt from
the registration requirements of the Act and may otherwise be effected in
compliance with any other applicable law, including all applicable state
securities laws.
(b) I agree that unless a Registration Statement with respect thereto
shall then be effective under the Act, a legend to this effect may be placed on
each certificate, and a stop transfer order may be placed against my account,
relating to the Shares issued to me under the Plan. In addition, each such
certificate shall bear such additional legends and statements as the Company
deems advisable to assure compliance with the provisions of Section 5 of the
Plan as well as all Federal and state laws and regulations, including securities
laws and regulations.
(c) I understand that the Company is relying upon the foregoing
representations and agreements in connection with the issuance to me of Shares
under the Plan. In consideration of such issuance, I hereby indemnify and hold
harmless the Company, and the officers, other Directors, employees and agents
thereof, from and against any and all liability, losses, damages, expenses and
attorneys' fees which they may hereafter incur, suffer or be required to pay by
reason of the falsity of, or my failure to comply with, any of the foregoing
representations and agreements.
Dated:
------------------------------ --------------------------------------
(signature)
A-21
<PAGE>
PROXY
TRANSMATION, INC.
The undersigned hereby appoints ROBERT G. KLIMASEWSKI and JOHN A. MISIASZEK,
and each of them, proxies for the undersigned with full power of substitution,
to vote all shares of the Common Stock of TRANSMATION, INC. (the "Company")
owned by the undersigned at the Annual Meeting of Shareholders to be held at the
Hyatt Regency Hotel, 125 East Main Street, Rochester, New York on Tuesday,
August 15, 1995 at 12:00 noon, local time, and at any adjournment or
adjournments thereof, reserving to such proxies the right to vote such shares
cumulatively to elect the maximum number of nominees:
<TABLE>
<S> <C>
1. Election of Directors.
[ ] FOR all nominees listed below (except as marked to the contrary). [ ] WITHHOLD authority to vote for all nominees
listed below.
Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW.
GERALD R. KATZ ROBERT G. KLIMASEWSKI PHILIP P. SCHULP
2. Proposal to approve and ratify the Transmation, Inc. Amended and Restated 1993 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve and ratify the Transmation, Inc. Employees' Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to approve and ratify the Transmation, Inc. Amended and Restated Directors' Warrant Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to approve and ratify the Transmation, Inc. Directors' Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Proposal to approve and ratify the selection of Price Waterhouse LLP as independent auditors for the year ending March
31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the
Meeting.
</TABLE>
(Continued and to be signed on reverse side)
<PAGE>
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
This Proxy will be voted as specified by the undersigned. This Proxy revokes any
prior proxy given by the undersigned. UNLESS AUTHORITY TO VOTE FOR ONE OR MORE
OF THE NOMINEES IS SPECIFICALLY WITHHELD ACCORDING TO THE INSTRUCTIONS, A SIGNED
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS AND, UNLESS
OTHERWISE SPECIFIED, FOR EACH OF THE OTHER PROPOSALS LISTED HEREIN AND DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT. The undersigned acknowledges receipt with
this Proxy of a copy of the Notice of Annual Meeting and Proxy Statement dated
July 5, 1995, describing more fully the proposals set forth herein.
Dated:......................,1995
..................................
..................................
Signature(s) of Shareholder(s)
Please date and sign name exactly
as it appears hereon. Executors,
administrators, trustees, etc.
should so indicate when signing.
If the shareholder is a
corporation, the full corporate
name should be inserted and the
proxy signed by an officer of the
corporation, indicating his title.
