SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PRAB, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -----------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box)
[ X ] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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):
____________________________________________________________________
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5. Total fee paid:
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[ ] 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:
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4. Date Filed:
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PRAB, INC.
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
(616) 382-8200
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 25, 1999
TO: The Shareholders
Prab, Inc.
The Annual Meeting of Shareholders of Prab, Inc., a Michigan
corporation, of Kalamazoo, Michigan, will be held at Holiday Inn-East, 3522
Sprinkle Road, Kalamazoo, Michigan, on Thursday, March 25, 1999, at 10:00
a.m. (EST). A form of Proxy and Proxy Statement for the meeting are furnished
herewith. The purpose of the meeting is to consider and vote on the following
matters.
1. To elect a Board of six (6) directors for terms of one year each.
2. To consider and act upon a proposal to adopt the Prab, Inc. 1999
Stock Option Plan.
3. To ratify the appointment of Plante & Moran, LLP, Certified
Public Accountants as independent public accountants for the
Company.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on January
28, 1999, as the record date for determination of shareholders entitled to
notice of and to vote at the meeting.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU MAY HOLD. YOU ARE INVITED TO ATTEND
THE MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE
COMPLETE, DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU WISH,
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By order of the Board of Directors
Eric V. Brown, Jr.
Secretary
Date: February 18, 1999
Kalamazoo, Michigan
PRAB, INC.
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
February 18, 1999
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of PRAB, INC., a
Michigan corporation (the "Company"), from the holders of the common stock,
$0.10 par value, of the Company (the "Common Stock") for use at the Annual
Meeting of Shareholders to be held on Thursday, March 25, 1999, at 10:00 a.m.
(EST), at Holiday Inn-East, 3522 Sprinkle Road, Kalamazoo, Michigan. This
Proxy Statement is being mailed to shareholders beginning on or about
February 18, 1999, accompanied by the Company's annual report for the fiscal
year ending October 31, 1998.
The cost of solicitation will be borne by the Company. In addition
to the use of the mails, these proxies may be solicited by persons regularly
employed by the Company, by personal interview, and by telephone.
Arrangements have been made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock.
The Board of Directors knows of no business which will be presented
at the meeting other than the matters referred to in the accompanying Notice
of Annual Meeting of Shareholders. However, if any other matters are properly
presented at the meeting, it is intended that the persons named in the proxy
will vote upon the same and act in accordance with their judgment. Shares
represented by properly executed proxies will be voted at the meeting in the
manner specified therein. If no instructions are specified in the proxy, the
shares represented thereby will be voted for the proposals referred to
therein and the election as directors of the nominees referred to below. Any
proxy may be revoked by the person giving it any time prior to being voted by
giving a later dated proxy or by attending the meeting, revoking the proxy
and voting in person.
Only shareholders of record at the close of business on January 28,
1999, are entitled to notice of and to vote at the meeting. On such date: (i)
1,757,339 shares of Common Stock having one vote each were outstanding; and
(ii) 366,667 shares of Convertible Preferred Stock, $0.75 par value, having
one vote each for the election of one director (as described below) were
outstanding.
1. ELECTION OF DIRECTORS
Six directors are to be elected by the holders of Common Stock to
hold office until the next Annual Meeting of Shareholders and until their
successors are elected and qualified. Except as otherwise specified in the
proxy, proxies will be voted for a Board of six directors and will be voted
for the election of the nominees named below, all of whom are now members of
the Board. If a nominee becomes unable or unwilling to serve,
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proxies will be voted for such other person, if any, as shall be designated
by the Board. However, management now knows of no reason to anticipate that
this will occur.
Directors are elected by a plurality of votes cast at the meeting
meaning that the six nominees receiving the highest number of votes will be
elected as directors. Abstentions and broker non-votes will have no effect on
the election of directors.
The holders of the Company's Convertible Preferred Stock have the
right to vote as a class to nominate and elect one member of the Board. The
holders of Convertible Preferred Stock have no other voting rights, except as
required by law. The Company has been advised that the State of Michigan
Retirement Systems ("SMRS"), the sole holder of the Company's Convertible
Preferred Stock, intends to waive its right to nominate and elect a director
at the 1999 Annual Meeting of Shareholders.
Nominees for election by the holders of Common Stock are as follows:
Present Principal Occupation,
Director Business Experience, and
Name Age Since Certain Other Information
-------- --- ----- -----------------------------
John J. Wallace (1) 83 1961 Chairman of the Board of the Company
since 1974; Chief Executive Officer
from 1974 to December, 1988;
President from 1961 to 1982, and from
July, 1990 to June, 1991.
Gary A. Herder (1) 51 1991 President and Chief Executive Officer
since 1991; joined the Company in
1965, previously served as Executive
Vice President, General Manager of
Conveyors, and Chief Engineer.
James H. Haas 52 1993 President and Founder of Summit
Polymers, Inc., a plastic injection
molding company, since 1972.
Eric V. Brown, Jr. 58 1996 Attorney in private practice of law
since 1965 and currently a senior
principal in the law firm of Miller,
Canfield, Paddock and Stone, P.L.C.;
Secretary of the Company since 1996.
John W. Garside 59 1996 President of Woodruff Coal Company, a
diversified energy company, since
1980. Director of Universal Forest
Products, Inc., a lumber products
company.
William G. Blunt 58 1996 Retired-President of Harborlite
Corporation, a manufacturer of
industrial minerals, from 1969 to
1996.
- --------
(1) Messrs. Wallace and Herder are the only executive officers of the
Company.
Meetings and Committees of the Board of Directors. The Board of
Directors has a standing Audit Committee, which during fiscal year 1998,
consisted of Eric V. Brown, Jr., John W. Garside, James H. Haas, and William
G. Blunt. The Audit Committee met once during the last fiscal year. Its
principal functions are to recommend to the full Board of Directors the
engagement or discharge of independent auditors; to direct and supervise
investigations into matters relating to audit functions; to review with
independent auditors the plan and results of the audit engagement; to review
the scope and results of internal auditing procedures; to approve services
performed by independent auditors before such services are performed; to
review the degree of independence of the auditors; to consider the range of
audit and non-audit fees; and to review the adequacy of the Company's system
of internal accounting controls. The Board of Directors has a standing
Compensation
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Committee, which during fiscal year 1998 consisted of Eric V.
Brown, Jr., John W. Garside, James H. Haas, and William G. Blunt. The
Compensation Committee did not meet during the last fiscal year. Its
principal functions are to review the performance of Mr. Herder and certain
other management personnel and to make recommendations to the Board of
Directors regarding the salary, bonuses and other compensation to be paid to
such individuals. The Board of Directors does not have a standing nominating
committee.
During the last fiscal year, the Board of Directors met six times.
For the fiscal year, no incumbent director attended fewer than 75% of the
aggregate total number of meetings of the Board (held during the period for
which he was director) and the Committees on which he served (during the
period that he served), except John J. Wallace.
Section 16(a) Beneficial Ownership Reporting Compliance. Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished to the
Company during the last fiscal year and Form 5 and amendments thereto
(together with written representations from reporting persons that no Form 5
was required) furnished to the Company with respect to the last fiscal year,
the Company is not aware of any person who, at any time during the last
fiscal year, was a director, officer, or beneficial owner of more than 10% of
the Company's Common Stock, that failed to file on a timely basis reports
required by Section 16(a) of the Securities Exchange Act of 1934 during the
most recent fiscal year or prior years, except Eric V. Brown, Jr. failed to
timely file, on Form 4, a statement of change in beneficial ownership
regarding the transfer of shares of the Company's Common Stock into a trust
of which Mr. Brown is co-trustee and one of several beneficiaries.
Executive Compensation. The following table shows the total
compensation received by the Company's Chief Executive Officer for the last
three fiscal years. No executive officer of the Company, other than the Chief
Executive Officer, received total annual salary and bonus in excess of
$100,000 during the last fiscal year.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation ------------
------------------- Other Annual Securities
Name and Compensation Underlying All Other
Principal Position Year Salary Bonus (1) Options Compensation
- ------------------ ---- ------ ------ ------------ ------------ ------------
Gary A. Herder, 1998 $150,010 $49,254 $6,000 4,000 $11,115(2)
President and Chief 1997 $145,353 $48,903 $6,000 0 $10,799
Executive Officer 1996 $137,976 $33,170 $6,000 0 $ 9,773
<FN>
- ---------
(1) Represents annual car allowance paid to Mr. Herder
(2) Represents: $2,104 Company match under the Company's 401(k) Plan; $2,000
Company contribution under the Company's 401(k) Plan; $6,657 Company
contribution under the Company's Profit Sharing Plan; and $354 Company
payment for life insurance to fund the Company's obligations under its
deferred compensation agreement with Mr. Herder.
Option Grant Table. The following table provides information
regarding stock options granted in fiscal year 1998 to the Chief Executive
Officer of the Company. All option exercise prices are based on the average
of the bid and ask prices of the Company's Common Stock on the grant date.
3
Option Grants in Last Fiscal Year
% of Total Options
No. of Shares Granted to
Underlying Options Employees in Exercise Price
Name Granted (#) Fiscal Year ($/Sh) Expiration Date (1)
---- ------------------ ------------------ -------------- -------------------
Gary A. Herder 4,000 20.0% $2.125 November 19, 2007
<FN>
- ----------
(1) The options granted to Mr. Herder become exercisable on November 1, 1999.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values. The following table provides information on the value of
options held by the Chief Executive Officer of the Company at October 31,
1998 measured in terms of the average of the bid and ask prices of the
Company's common stock on that day. There were no options exercised by an
officer during the fiscal year ended October 31, 1998.
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
October 31, 1998 (#) October 31, 1998 ($)
----------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Gary A. Herder 78,500 4,000 $115,406 $3,250
Compensation of Directors. The Company pays each of the outside
directors $500 plus traveling expenses in excess of $100 for each Board
meeting attended by them and $250 for each committee meeting attended by
them, plus an additional $250 for each such meeting not held in conjunction
with a regularly scheduled Board meeting. Subject to approval by the
shareholders of the proposal to adopt the Prab, Inc. 1999 Stock Option Plan
described below, the directors will be eligible to receive stock options.
Certain Relationships and Related Transactions. Eric V. Brown, Jr.,
Secretary and director of the Company is a senior principal in the law firm
of Miller, Canfield, Paddock and Stone, P.L.C. which firm is general legal
counsel to the Company.
On October 31, 1996, the Company purchased from the State of
Michigan Retirement Systems (the "SMRS") substantially all of the Company's
common and preferred stock owned by the SMRS. In connection with the
purchase, the Company borrowed $680,000 from certain individuals including
members of management of the Company and the Board pursuant to Subordinated
Capital Notes (the "Subordinated Capital Notes"). The Subordinated Capital
Notes in the aggregate principal amount of $680,000 provided for interest at
the rate of 12% per annum payable in quarter annual installments commencing
January 31, 1997 and for payment of all principal on October 31, 2001.
Payment of the Subordinated Capital Notes was subordinated to payment of: (i)
the Company's debt to Arcadia Bank (now known as The Huntington National
Bank) pursuant to certain Subordination Agreements executed by the payees of
the Subordinated Capital Notes in favor of such bank; and (ii) other
indebtedness and obligations of the Company. In consideration of the loans
evidenced by the Subordinated Capital Notes, the payees of such Notes were
issued warrants by the Company to purchase shares of the Company's Common
Stock for nominal value. All of such warrants were exercised on October 31,
1996. The following chart sets forth the names of the executive officers and
directors of the Company that held
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Subordinated Capital Notes, the principal amount borrowed by the Company from
each such individual, and the number of shares of Common Stock issued to each
such individual pursuant to his exercise of the warrants issued in connection
with the Subordinated Capital Notes:
Name Amount Loaned Number of Shares
---- ------------- ----------------
Gary A. Herder $ 77,500 14,047
Eric V. Brown, Jr. 53,250 9,651
William G. Blunt 117,000 21,206
John W. Garside 118,250 21,433
Messrs. Brown, Jr., Blunt and Garside were appointed directors of
the Company effective November 26, 1996. In November 1997, the Company paid
all Subordinated Capital Notes in full using a combination of cash on hand
and drawing on its bank line of credit.
Security Ownership of Certain Beneficial Owners and Management. The
following table sets forth certain information as of December 31, 1998,
regarding each person known by the Company to own beneficially more than 5%
of the Company's Common Stock, each director and nominee of the Company, each
executive officer named in the Summary Compensation Table above, and all
directors and executive officers of the Company as a group. Except as noted,
each person named below is the record owner of the shares indicated and
possesses sole voting and investment power with respect to such shares.
Name and Address of
Beneficial Owner or Amount of Percentage
Identity of Group Beneficial Ownership Ownership
- -------------------- -------------------- ----------
John J. Wallace 314,424(1)(2) 17.9%
3003 W. Gull Lake Drive
Richland, Michigan
Gary A. Herder 305,901(2)(3) 16.6%
89885 Shorelane Dr.
Lawton, Michigan
William G. Blunt 21,206 1.2%
963 Reed Lane
Vicksburg, Michigan
Eric V. Brown, Jr. 20,631(2)(4) 1.2%
444 W. Michigan Avenue
Kalamazoo, Michigan
John W. Garside 22,183 1.3%
309 E. Michigan
Kalamazoo, Michigan
James H. Haas -- --
7177 E. U.V. Avenue
Vicksburg, Michigan
Gary A. Herder and 189,354(2) 10.8%
Robert W. Klinge,
Co-Trustees
5944 E. Kilgore Road
Kalamazoo, Michigan
Robert W. Klinge 224,635(2)(5) 12.6%
120 S. Patterson
Wayland, Michigan
Estate of Henry Penn 129,100 7.3%
Wenger, Deceased
Tammy Williams, Personal Rep.
C/O Register & Company P.A.
5
255 Alhombra Circle, Suite 550
Coral Gables, Florida 33134
State of Michigan
Retirement Systems 366,667(5) 17.3%
All executive officers and
directors as a
group (6 persons) 684,345(2) 37.2%
(1) Includes 303,230 shares held by Mr. Wallace as trustee of a trust of
which he is the grantor and beneficiary.
(2) Gary A. Herder and Robert W. Klinge are the Co-Trustees of the Company's
profit sharing plan. This plan holds 189,354 shares of the Company's
Common Stock (the "Plan Stock"). Messrs. Herder and Klinge have the sole
power to vote the Plan Stock. The Administrative Committee appointed by
the Board of Directors to administer this Plan has the sole power to
direct the disposition of the Plan Stock. During the last fiscal year,
the members of the Administrative Committee were John J. Wallace, and
Eric V. Brown, Jr. The Plan Stock is not included in any of the amounts
or percentages set forth in the table regarding Messrs. Wallace and
Brown. The Plan Stock is included in the amounts and percentages set
forth in the table regarding Messrs. Herder and Klinge and all executive
officers and directors as a group.
(3) Includes 82,500 shares with respect to which Mr. Herder has the right to
acquire beneficial ownership pursuant to the Company's Stock Option Plans
and 189,354 shares as to which Mr. Herder shares voting power.
(4) Includes 10,980 shares as to which Mr. Brown shares voting and investment
power as co-trustee of a trust.
(5) Includes 24,750 shares with respect to which Mr. Klinge has the right to
acquire beneficial ownership pursuant to the Company's Stock Option Plans
and 189,354 shares as to which Mr. Klinge shares voting power. Mr. Klinge
is the Controller of the Company. Mr. Klinge's shares are not included in
the amount and percentage set forth in the table regarding all executive
officers and directors as a group.
(6) The State of Michigan Retirement Systems has the right to acquire the
shares indicated pursuant to its rights as a holder of the Company's
Convertible Preferred Stock, (366,667 shares). The Convertible Preferred
Stock may be converted to Common Stock at a ratio of one share of Common
Stock for each share of Convertible Preferred Stock.
Changes in Control of Registrant. The Company is not aware of any
arrangements which may result in a change in control of the Company.
2. PROPOSAL TO ADOPT THE PRAB, INC. 1999 STOCK OPTION PLAN
On February 1,1999, the Board of Directors adopted, subject to
shareholder approval, the Prab, Inc. 1999 Stock Option Plan (the "1999
Plan"). The text of the 1999 Plan is set forth in the Appendix to this Proxy
Statement. The following summary is subject to, and qualified in its entirety
by reference to the Appendix.
The Company has had stock option plans in effect since 1982 in order
to provide key employees with a personal and financial interest in the
success of the Company and to enable the Company to compete with others for
the services of new employees. Stock option plans have been adopted by the
Board of Directors and shareholders in 1982, 1985 and 1988. Pursuant to the
terms of these stock option plans, no additional options may be granted as
the plans have expired. Management believes that these plans have been
helpful in attracting and retaining skilled personnel.
The Board of Directors has recommended that the shareholders
authorize the continuance of the stock option program and increase its scope
to include all employees and directors, by adopting the 1999 Plan.
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The 1999 Plan provides for the grant of options covering up to
50,000 shares of Common Stock, which may be authorized but unissued shares or
shares acquired by the Company. If any option granted under the 1999 Plan is
canceled or expires for any reason prior to being exercised in full, the
unpurchased shares may again be subjected to an option under the 1999 Plan.
The 1999 Plan contains an anti-dilution provision, which provides for
adjustment in the number of shares in the event of stock splits, stock
dividends and the like.
Options may be granted under the 1999 Plan to any employee or
director of the Company and its subsidiaries. As of December 31, 1998, there
were approximately 98 employees and 6 directors who would be eligible to
receive options under the 1999 Plan if approved by the shareholders of the
Company. The persons to whom options will be granted and the terms thereof
will be determined by the Stock Option Committee which consists of all
directors of the Company who are not eligible and have not, within one year
prior, been eligible for selection as a person to whom incentive stock
options (under Section 422 of the Internal Revenue Code of 1986, as amended)
may be granted pursuant to any plan of the Company or its subsidiaries,
except that the full Board of Directors shall make such determination in the
case of options granted to non-employee directors.
The Stock Option Committee (or the Board of Directors, in the case
of options granted to non-employee directors) is authorized to prescribe the
times at which an option may be exercised and the number of shares as to
which an option may be exercised at such times. However, no option may be
exercised before the expiration of one year from the date of grant, except in
the case of the merger, consolidation, sale of assets or dissolution of the
Company, or more than ten years after the date of grant, and no option may be
granted after January 31, 2009. Under the 1999 Plan, the option price cannot
be less than 100% of the fair market value of the Common Stock on the date
the option is granted. The option price may be paid in cash, shares of Common
Stock of the Company valued at the fair market value thereof on the date of
exercise or any combination of cash and Common Stock. The average of the bid
and ask prices of the Company's Common Stock on February 4, 1999 was $2.53
per share.
Options under the 1999 Plan are exercisable during the optionee's
lifetime only by the optionee and may not be transferred except by will or
the laws of descent and distribution. The options terminate one month after
the optionee ceases to be an employee or director, except that in the case of
termination of employment or service as a director because of death or
disability, the options terminate one year thereafter and in the case of
termination of employment or service as a director because of retirement, the
option terminates three months thereafter. In the case of termination of
employment because of death, disability, retirement or otherwise, an option
may be exercised during the applicable period following termination with
respect to only such number of shares of Common Stock as to which the right
of exercise had accrued on or before the last day on which the grantee was
either an employee or director of the Company or any subsidiary.
The Board of Directors may terminate or amend the 1999 Plan, but the
Board may not, without shareholder approval, increase the number of shares
covered by the 1999 Plan, reduce the minimum purchase price or extend the
term of the 1999 Plan or the maximum term of any option granted thereunder.
Options granted under the 1999 Plan will be designated to be
"nonstatutory stock options" or "incentive stock options" under Section 422
of the Internal Revenue Code of 1986, as amended. The grant of an option will
have no immediate tax consequences to the optionee or the Company.
The exercise of a nonstatutory stock option will require an optionee
to include in income, as compensation, the amount by which the fair market
value of the acquired shares on the exercise date exceeds the
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option price. The Company will be entitled to a deduction at the same time
and in the same amount as the optionee is in receipt of income in connection
with the exercise of a nonstatutory stock option. Upon a subsequent sale or
taxable exchange of shares acquired upon exercise of a nonstatutory stock
option, an optionee will recognize long or short-term capital gain or loss
equal to the difference between the amount realized on the sale and the tax
basis of such shares.
If the optionee exercises an incentive stock option and does not
dispose of the acquired shares within two years after the date of grant of
the option nor within one year after the date of the transfer of such shares
to him (a "disqualifying disposition"), the optionee will realize no
compensation income and any gain or loss that the optionee realizes on a
subsequent disposition of such shares will be treated as long-term capital
gain or loss. For purposes of computing the alternative minimum tax, however,
the option generally will be treated as if it were a nonstatutory stock
option. If an optionee makes a disqualifying disposition, the optionee will
be required to include in income, as compensation, the lesser of (i) the
difference between the option price and the fair market value of the acquired
shares on the exercise date or (ii) the amount of gain realized on such
disposition. In addition, depending on the amount received as a result of
such disposition, the optionee may realize long or short-term capital gain or
loss. The Company will be entitled to a deduction at the same time and in the
same amount as the optionee is in receipt of compensation income as a result
of a disqualifying disposition. If there is no disqualifying disposition, no
deduction will be available to the Company.
Approval of the proposed adoption of the 1999 Plan requires the
affirmative vote of a majority of the votes cast by the holders of shares at
the Annual Meeting. The Board of Directors recommends that shareholders vote
FOR the adoption of the 1999 Plan.
3. SELECTION OF AUDITORS
The Board of Directors has, subject to ratification by the
affirmative vote of a majority of the votes cast by the holders of shares at
the Annual Meeting, appointed the accounting firm of Plante & Moran, LLP (the
"Auditing Firm"), as the principal independent accountants for the Company
for the current fiscal year. Ratification of the appointment of auditors is
being submitted to the shareholders of the Company because management
believes it is an important corporate decision in which shareholders should
participate. The firm of independent accountants is located in Kalamazoo,
Michigan. The Company has been informed that neither the Auditing Firm nor
any of its partners has any financial interest, direct or indirect, in the
Company or in the securities of the Company, and that no partner of the firm
was connected with the Company as promotor, underwriter, voting trustee,
director, officer or employee during the four years ended October 31, 1998.
If the appointment is rejected, or if the Auditing Firm shall decline to act,
resign or otherwise become incapable of acting, or if their employment is
otherwise discontinued, the Board of Directors will appoint other auditors
for the period remaining until the 2000 Annual Meeting of Shareholders when
employment of auditors shall be subject to approval by the shareholders at
the meeting.
Representatives of the Auditing Firm are expected to be present at
the Shareholders' Meeting and have the opportunity to make a statement and
respond to appropriate questions.
4. OTHER MATTERS
The Board of Directors had not received notice by January 4, 1999,
and does not know, of any other matters which may come before the meeting.
However, if any other matters are properly presented to the meeting, it is
the intention of the holders of the proxies to vote, or otherwise to act, in
accordance with their
8
judgment on such matters.
2000 SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 2000 Annual Meeting of
Shareholders to be eligible for inclusion in the Company's proxy statement,
they must be received by the Company at its principal office, 5944 E. Kilgore
Road, P.O. Box 2121, Kalamazoo, Michigan 49003, on or before October 19,
1999. The proxy for the 2000 Annual Meeting of Shareholders may confer
discretionary authority to the proxy holders for that meeting with respect to
voting on any shareholder proposal received by the Secretary of the Company
after January 4, 2000, which is eligible for consideration at the meeting.
By order of the Board of Directors,
Eric V. Brown, Jr., Secretary
9
APPENDIX
PRAB, INC.
1999 STOCK OPTION PLAN
1. Purpose. The purpose of the Prab, Inc. 1999 Stock Option Plan
(this "Plan") is to advance the interests of Prab, Inc., a Michigan
corporation (the "Corporation"), and its subsidiaries by providing a larger
personal and financial interest in the success of the Corporation and its
subsidiaries to employees and directors upon whose judgment, interest and
special efforts the Corporation and its subsidiaries are dependent for the
successful conduct of its and their operations and to enable the Corporation
and its subsidiaries to attract and retain key employees and directors.
2. Participants. Options may be granted under this Plan to any
employee or director of the Corporation and its subsidiaries. The employees
and directors of the Corporation and its subsidiaries to whom options are
granted and the terms of such options shall be determined by the Stock Option
Committee (as defined in Section 10 hereof), except that the full Board of
Directors, acting by affirmative vote of a majority of the directors then in
office, shall make such determinations in the case of directors who are not
also employees of the Corporation or any subsidiary ("Non-Employee
Directors"). A grantee may hold more than one option. Nothing contained in
this Plan, nor in any option granted pursuant to this Plan, shall confer upon
any employee or director any right to the continuation of his or her
employment or directorship nor limit in any way the right of the Corporation
or its subsidiaries to terminate such employment or directorship at any time.
As used herein, the term "subsidiary" shall mean any present or future entity
that is controlled by the Corporation, directly or through one or more
intermediaries.
3. Effectiveness and Termination of Plan. This Plan shall become
effective upon approval thereof by the shareholders of the Corporation at a
meeting held, among other things, for such purpose. The adoption date of this
Plan shall be February 1, 1999, the date of its adoption by the Board of
Directors of the Corporation. This Plan shall terminate on the earliest of:
(i) ten (10) years from its adoption date; (ii) when all shares of Common
Stock (as defined in Section 4 hereof) that may be issued under this Plan
shall have been issued through exercise of options granted under this Plan;
or (iii) at any earlier time that the Board of Directors may determine. Any
option outstanding under this Plan at the time of its termination shall
remain in effect in accordance with its terms and conditions and those of
this Plan.
4. Common Stock. The aggregate number of shares of common stock,
$.10 par value per share, of the Corporation (the "Common Stock") that may be
issued under this Plan shall consist of 50,000 shares, subject to further
adjustment as provided in Section 7 hereof. Such number of shares may be set
aside out of the authorized but unissued shares of Common Stock of the
Corporation not reserved for any other purpose or out of shares of Common
Stock acquired by the Corporation. All or any shares of Common Stock
subjected under this Plan to an option that, for any reason, is canceled,
terminates, lapses or expires unexercised as to such shares may again be
subjected to an option under this Plan.
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5. Types of Options and Terms and Conditions.
(a) Options granted under this Plan shall be in the form of: (i)
incentive stock options ("Incentive Stock Options") as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"); or (ii)
options not qualifying under that Section ("Nonstatutory Stock Options").
(b) Options may be granted at any time and from time to time
prior to the termination of this Plan. Except as hereinafter provided, all
options granted pursuant to this Plan shall be subject to the following terms
and conditions:
(i) Price. The purchase price of the shares of Common Stock
issuable upon exercise of options granted under this Plan shall be
not less than 100% of the fair market value of the Common Stock on
the date of the grant of the option. For purposes of this Plan, "fair
market value" of the Common Stock shall mean: (A) the mean between
the closing high bid and low asked prices as reported by the National
Association of Securities Dealers Automated Quotation System (or, if
not so reported, by the system then regarded as the most reliable
source of such quotation); or (B) if the Common Stock is quoted in
the domestic over-the-counter market, but there are not reported
quotations on the given date, the value determined pursuant to (A)
above using the reported quotations on the last previous date on
which so reported; or (C) if neither of the foregoing clauses apply,
the price determined in good faith by the Stock Option Committee (or
the Board of Directors in the case of options granted to Non-Employee
Directors).
The purchase price shall be paid in full at the time of such
purchase, in: (A) cash; (B) shares of Common Stock of the Corporation
valued at the fair market value of the Common Stock on the date of
purchase; or (C) any combination of cash and Common Stock.
Notwithstanding the foregoing, the Stock Option Committee (or the
Board of Directors in the case of options granted to Non-Employee
Directors) may, in order to prevent any possible violation of law,
require the purchase price to be paid in cash and further provide
that the right to deliver Common Stock in payment of the purchase
price may be limited or denied in any Option Agreements (as defined
in Section 11 hereof). The purchase price shall be subject to
adjustment, but only as provided in Section 7 hereof.
(ii) Duration and Exercise of Options. Options may be granted for
terms of up to but not exceeding ten (10) years from the date the
particular option is granted. Options shall be exercisable as
provided by the Stock Option Committee (or the Board of Directors in
the case of options granted to Non-Employee Directors) at the time of
grant thereof.
(iii) Termination of Employment or Service as a Director. Upon
the termination of the grantee's employment or service as a director,
his or her rights to exercise an option shall be only as follows:
(1) Death, Disability or Retirement. If the grantee's
employment or service as a director is terminated by reason of
death or disability (as described in Section 22(e)(3) of the
Code), the grantee or the grantee's estate may, within one (1)
year following such termination, exercise the option with respect
to only such number of shares of Common Stock as to which the
right of exercise had accrued on or before the last day on which
the grantee was either an employee or director of the Corporation
or any subsidiary. If the grantee's employment or
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service as a director is terminated by reason of retirement,
the grantee or the grantee's estate (in the event of
the grantee's death after such termination) may, within three (3)
months following such termination, exercise the option with
respect to only such number of shares of Common Stock as to which
the right of exercise had accrued on or before the last day on
which the grantee was either an employee or director of the
Corporation or any subsidiary. For purposes of this Plan,
"retirement" shall mean termination of employment or service as a
director with the Corporation and/or its subsidiaries on or after
the grantee's 65th birthday or the grantee's 60th birthday if the
grantee has completed ten (10) years of service with the
Corporation and/or its subsidiaries.
(2) Other Reasons. If the grantee ceases to be an employee
or director for any reason other than those provided above under
"Death, Disability or Retirement," the grantee or the grantee's
estate (in the event of the grantee's death after such
termination) may, within the one (1) month period following such
termination, exercise the option with respect to only such number
of shares of Common Stock as to which the right of exercise had
accrued on or before the last day on which the grantee was either
an employee or director of the Corporation or any subsidiary.
(3) General. Notwithstanding the foregoing, no option shall
be exercisable in whole or in part: (A) after the termination
date provided in the option; or (B) except as provided in the
second paragraph of Section 10, for one (1) year following the
date the option was granted. A grantee's "estate" shall mean the
grantee's legal representatives upon the grantee's death or any
person who acquires the right under the laws of descent and
distribution to exercise an option by reason of the grantee's
death.
(iv) Transferability of Option. Except as otherwise provided
herein, options shall be transferable only by will or the laws of
descent and distribution and shall be exercisable during the
grantee's lifetime only by him or her. An option and all rights
thereunder shall terminate immediately if the holder attempts to or
does sell, assign, transfer, pledge, hypothecate or otherwise dispose
of the option or any rights thereunder to any person except as
permitted herein.
(v) Other Terms and Conditions. Options may also contain such
other provisions, which shall not be inconsistent with any of the
foregoing terms, as the Stock Option Committee (or the Board of
Directors in the case of options granted to Non-Employee Directors)
shall deem appropriate.
(c) Incentive Stock Options granted pursuant to this Plan
shall be subject to all the terms and conditions included in subsection (b)
and to the following terms and conditions:
(i) No Incentive Stock Option shall be granted to an individual
who is not an employee of the Corporation or a "subsidiary
corporation" as defined in Section 424(f) of the Code;
(ii) No Incentive Stock Option shall be granted to an employee
who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation unless the grant
complies with the requirements of Section 422(c)(5) of the Code;
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(iii) The aggregate fair market value (determined as of the date
the option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
any grantee during any calendar year (under all plans of the
Corporation) shall not exceed $100,000 or such other amount as may
subsequently be specified by the Code; provided that, to the extent
that such limitation is exceeded, any excess options (as determined
by the Code) shall be deemed to be Nonstatutory Stock Options; and
(iv) No Incentive Stock Option may be granted under this Plan if
such grant, together with any applicable prior grants that are
Incentive Stock Options within the meaning of Section 422(b) of the
Code, would exceed any maximum established under the Code for
incentive stock options that may be granted to an individual employee.
6. Rights of a Shareholder. A recipient of an option shall have no
rights as a shareholder with respect to any shares issuable or transferable
upon exercise thereof until the date of issuance of a stock certificate for
such shares. Except as otherwise provided pursuant to Section 7 hereof, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the date of such stock certificate.
7. Adjustment of and Changes in Common Stock. In the event that the
shares of Common Stock of the Corporation, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares of stock
or other securities of the Corporation or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares, or otherwise) or if the number of such
shares of Common Stock shall be increased through the payment of a stock
dividend or a dividend on the shares of Common Stock of rights or warrants to
purchase securities of the Corporation shall be made, then there shall be
substituted for or added to each share of Common Stock theretofore
appropriated or thereafter subject or that may become subject to an option
under this Plan, the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock of the Corporation shall be
so changed, or for which each such share shall be exchanged, or to which each
such share shall be entitled, as the case may be, and references herein to
the Common Stock shall be deemed to be references to any such stock or other
securities as appropriate. Outstanding options shall also be appropriately
amended as to price and other terms as may be necessary to reflect the
foregoing events. In the event there shall be any other change in the number
or kind of the outstanding shares of the Common Stock of the Corporation, or
of any stock or other securities into which such Common Stock shall have been
changed or for which it shall have been exchanged, then if the Board of
Directors shall, in its sole discretion, determine that such change equitably
requires an adjustment in any option theretofore granted or that may be
granted under this Plan, such adjustments shall be made in accordance with
such determination. Fractional shares resulting from any adjustment in
options pursuant to this Section 7 may be settled in cash or otherwise as the
Board of Directors shall determine. Notice of any adjustment shall be given
by the Corporation to each holder of an option that shall have been so
adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of this Plan.
8. Securities Act Requirements. No option granted pursuant to this
Plan shall be exercisable in whole or in part, and the Corporation shall not
be obligated to sell any shares of Common Stock subject to any such option,
if such exercise and sale would, in the opinion of counsel for the
Corporation, violate the Securities Act of 1933 (or other Federal or State
statutes having similar requirements), as in effect at that time. Each option
shall be subject to the further requirement that, if at any time the Board of
Directors shall determine in its discretion that the listing or qualification
of the shares of Common Stock subject to such
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option under any securities exchange requirements or under any applicable
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issue of
shares thereunder, such option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors.
9. Withholding. Appropriate provision (which may, in accordance with
rules determined by the Stock Option Committee (or the Board of Directors in
the case of options granted to Non-Employee Directors), include the election
by the grantee to have the Corporation withhold from the Common Stock to be
issued upon exercise of an option a number of shares having an aggregate fair
market value that would satisfy the withholding amount due or to deliver to
the Corporation shares of Common Stock already owned having such aggregate
fair market value to satisfy the withholding amount) shall be made for all
taxes required to be withheld from shares of Common Stock issued under this
Plan under the applicable laws or other regulations of any governmental
authority, whether federal, state or local, and domestic or foreign. To that
end, the Corporation may at any time take such steps as it may deem necessary
or appropriate (including sale or retention of shares) to provide for payment
of such taxes.
10. Administration and Amendment of Plan. The "Stock Option
Committee" shall consist of all directors of the Corporation who are not
eligible and have not, within one (1) year prior, been eligible for selection
as a person to whom Incentive Stock Options may be granted pursuant to any
plan of the Corporation or its subsidiaries. The Stock Option Committee (or
the Board of Directors in the case of options granted to Non-Employee
Directors) from time to time may adopt rules and regulations for carrying out
this Plan. The interpretation and construction by the Stock Option Committee
(or the Board of Directors in the case of options granted to Non-Employee
Directors) of any provision of this Plan or any option granted pursuant
hereto shall be final and conclusive. No member of the Stock Option Committee
or the Board of Directors shall be liable for any action or determination
made in good faith with respect to this Plan or any option granted pursuant
thereto. The Board of Directors (but not the Stock Option Committee) may from
time to time make such changes in and additions to this Plan as it may deem
proper and in the best interests of the Corporation, without further action
on the part of the shareholders of the Corporation except as required by law,
regulation or by the rules of the principal trading market of the
Corporation's Common Stock at that time; provided, however, that, unless the
shareholders of the Corporation shall have first approved thereof: (i) except
as provided in Section 7 hereof, the total number of shares of Common Stock
subject to this Plan shall not be increased and the minimum purchase price
shall not be changed; (ii) no option shall be exercisable more than ten (10)
years after the date it is granted; and (iii) the expiration date of this
Plan shall not be extended.
The Board of Directors shall have the power, in the event of any
disposition of substantially all of the assets of the Corporation, its
dissolution or of any consolidation or merger of the Corporation with and
into any other corporation, to amend all outstanding options to permit the
exercise of all such options prior to the effectiveness of any such
transaction and to terminate such options as of such effectiveness. If the
Board of Directors shall exercise such power, all options then outstanding
and subject to such requirement shall be deemed to have been amended to
permit the exercise thereof in whole or in part by the grantee at any time or
from time to time as determined by the Board of Directors prior to the
effectiveness of such transaction and such options shall be deemed to
terminate upon such effectiveness.
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11. Miscellaneous.
(a) Separate Plan. This Plan is separate and independent from
any other stock option plan or similar plan of the Corporation.
(b) Option Agreements. Options granted hereunder shall be
evidenced by option agreements ("Option Agreements") containing such terms
and conditions as the Stock Option Committee (or the Board of Directors in
the case of options granted to Non-Employee Directors) shall establish from
time to time consistent with this Plan. Option Agreements need not be
identical but each Option Agreement shall contain, without limitation,
language including the substance of the following provisions:
(i) Number of Shares and Exercise Price. Each Option Agreement
shall state the number of shares to which it pertains and the
exercise price therefor.
(ii) Exercise of Options. Options may be exercised only in
accordance with the terms of each Option Agreement which shall
include the period of time during which the option may be exercised.
(iii) Method of Exercise and Payment of Purchase Price. An
option may be exercised, as to all or part of the shares covered by
the option, by the grantee delivering to the Stock Option Committee
(or the Board of Directors in the case of options granted to
Non-Employee Directors): (A) a written notice identifying the option
being exercised, stating the number of shares being purchased and
enclosing payment to the Corporation of the purchase price for the
number of shares being exercised; and (B) such items as the
Corporation may reasonably request. If the option is being exercised
by any person or persons other than the grantee, the written notice
exercising the option shall be accompanied by appropriate proof of
the right of such person or persons to exercise the option.
(iv) Additional Terms and Conditions. The Stock Option Committee
(or the Board of Directors in the case of options granted to
Non-Employee Directors) may specify such additional terms and
conditions as it deems appropriate.
(c) Loans. Subject to the sole discretion of the Stock Option
Committee (or the Board of Directors in the case of options granted to
Non-Employee Directors), the Corporation may loan the grantee funds to
finance the exercise of any option.
(d) Governing Law. This Plan and the Option Agreements shall be
interpreted and enforced in accordance with the laws of the State of
Michigan.
IN WITNESS WHEREOF, this Plan has been executed by the Corporation
on the 5th day of February, 1999.
PRAB, INC.
By: /s/ Gary A. Herder
------------------
Gary A. Herder
Its: President
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PROXY PRAB, INC.
The shareholder whose signature appears hereon appoints John J.
Wallace, Eric V. Brown, Jr. and Robert W. Klinge, or any one of them, proxies
with full power of substitution, to vote all of the common stock of Prab,
Inc., which the shareholder is entitled to vote at the Annual Meeting of
Shareholders to be held at Holiday Inn-East, 3522 Sprinkle Road, Kalamazoo,
Michigan, on March 25, 1999 at 10:00 A.M. (EST), and at any adjournment
thereof, with all the powers the shareholder would possess if personally
present, upon the proposals set forth below and in their discretion, upon any
other business that may properly come before said meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR
PROPOSAL 2 AND 3.
1. Election of Directors FOR all nominees (except ____________
as noted below)
WITHHOLD AUTHORITY __________
to vote for all nominees
Nominees: John J. Wallace, Gary A. Herder, Eric V. Brown, Jr.,
John W. Garside, William G. Blunt and James H. Haas.
[INSTRUCTIONS: To withhold authority to vote for one or more individual
nominees, line through or otherwise strike the name(s) of such nominee(s)].
............................................................................
2. Approval of adoption of the Prab, Inc. 1999 Stock Option Plan.
FOR ___ AGAINST ___ ABSTAIN ___
............................................................................
3. Selection of Plante & Moran, LLP, as independent public accountants.
FOR ___ AGAINST ___ ABSTAIN ___
(Continued and to be signed on other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF NOT OTHERWISE
SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES AND FOR PROPOSALS
2 AND 3. The undersigned revokes all proxies heretofore given to vote at such
meeting and all adjournments.
Dated: _________________
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Please Sign Here
(To assist our planning, please check here if you plan to personally attend
the meeting _____ ). Please sign your name as it appears above. If executed
by a corporation, a duly authorized officer should sign. Executors,
administrators and trustees should so indicate when signing. If shares are
held jointly, EACH holder should sign.