SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14(a)-12
THE BETHLEHEM CORPORATION
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
THE BETHLEHEM CORPORATION
- - -------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement)
Payment of filing fee (check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $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:
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(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 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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- - --------
1Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
/ / 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.:
Preliminary Proxy Statement
- - -------------------------------------------------------------------------------
(3) Filing party:
The Bethlehem Corporation
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(4) Date filed:
October 23, 1995
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<PAGE>
[PRELIMINARY PROXY MATERIALS]
THE BETHLEHEM CORPORATION
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 12, 1995
--------------
To the Stockholders of
The Bethlehem Corporation:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders
(the "Meeting") of The Bethlehem Corporation, a Pennsylvania corporation (the
"Company"), will be held on Tuesday, December 12, 1995 at 3:00 p.m. local time
at the Holiday Inn, Route 512, Bethlehem, Pennsylvania, for the following
purposes:
1. To approve an amendment to the Company's Articles of
Incorporation to increase the authorized capitalization of the Company
to a total of 25,000,000 shares of stock, consisting of 20,000,000
shares of common stock, no par value, and 5,000,000 shares of
preferred stock, no par value;
2. To elect four directors, each to serve for a term of one year
or until the next Meeting of Stockholders and until their successors
are duly elected and qualified;
3. To approve the adoption of the Company's 1994 Stock Option
Plan (the "1994 Stock Option Plan");
4. To amend the Company's Equity Incentive Plan for Directors
(the "Directors Option Plan") to increase the term of options granted
under the Directors Option Plan and to increase the period after
termination of service during which an outstanding option may be
exercised.
5. To ratify the amendment to the Company's By-laws to eliminate
the provision establishing four classes of directors and to provide
that all directors shall be elected annually to serve one year terms;
6. To ratify the appointment of Sobel & Co. as independent
auditors of the Company for the fiscal year ending May 31, 1996; and
7. To transact such other business as may properly come before
the Meeting and any adjournment thereof according to the proxies
discretion and in their discretion.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on October 11, 1995 as the record date (the "Record Date") for the
Meeting. Only stockholders of record of the Company's Common Stock, no par
value, on the Company's stock transfer books on the close of business on the
Record Date are entitled to vote at the Meeting.
By Order of the Board of Directors
B. ORD HOUSTON
Secretary
November __, 1995
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WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU
ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE THAT IS PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
- - -----------------------------------------------------------------------------
<PAGE>
[PRELIMINARY PROXY MATERIALS]
THE BETHLEHEM CORPORATION
25th and Lennox Streets
Easton, Pennsylvania 18045
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1995
----------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders by the Board of
Directors of The Bethlehem Corporation, a Pennsylvania corporation (the
"Company"), in connection with the solicitation of the accompanying proxy (each
a "Proxy" and collectively, the "Proxies") for use at the 1995 Annual Meeting of
Stockholders of the Company (the "Meeting") to be held Tuesday, December 12,
1995 at 3:00 p.m. local time at the Holiday Inn, Route 512, Bethlehem,
Pennsylvania or at any adjournment thereof.
The principal executive offices of the Company are located at The Bethlehem
Corporation, 25th and Lennox Streets, Easton, Pennsylvania 18045. The
approximate date on which this Proxy Statement and the accompanying Proxy will
first be sent or given to stockholders is November __, 1995.
RECORD DATE AND VOTING SECURITIES
As of the close of business on October 11, 1995, the record date of the
Meeting (the "Record Date"), there were 1,888,520 outstanding shares of the
Company's common stock, no par value (the "Common Stock"). Holders of Common
Stock have one vote per share on each matter to be acted upon. Only stockholders
of Common Stock (the "Stockholders") of record at the close of business on the
Record Date will be entitled to vote at the Meeting and at any adjournment
thereof. A majority of the outstanding shares of Common Stock present in person
or by proxy is required to constitute a quorum at the Meeting. For purposes of
determining the presence of a quorum and counting votes on the matters
presented, shares represented by abstentions and "broker non-votes" will be
counted as present, but not as votes cast, at the Meeting. The amendment to the
Company's Articles of Incorporation described in Proposal I below requires the
affirmative vote of the holders of a majority of the outstanding Common Stock of
the Company entitled to vote at the Meeting for approval. All other matters
expected to be brought before the Meeting require the affirmative vote of the
holders of a majority of the Company's Common Stock represented and voting at
the Meeting for approval.
<PAGE>
VOTING OF PROXIES
Shares of Common Stock represented by Proxies, which are properly executed,
duly returned and not revoked, will be voted in accordance with the instructions
contained therein. If no specification is indicated on the Proxy, the shares of
Common Stock represented thereby will be voted: (i) for the proposed amendment
to the Company's Articles of Incorporation to increase the authorized
capitalization of the Company; (ii) for the election as Directors of the four
persons who have been nominated by the Executive Committee of the Board of
Directors; (iii) to approve the adoption of the Company's 1994 Stock Option Plan
(the "1994 Stock Option Plan"); (iv) to amend the Company's Equity Incentive
Plan for Directors (the "Directors Option Plan"); (v) to ratify the amendment to
the Company's By-laws to eliminate a provision establishing four classes of
directors; (vi) to ratify the appointment of Sobel & Co. as independent auditors
of the Company for the year ending May 31, 1996 (the "1996 Fiscal Year"); and
(vii) for any other matter that may properly be brought before the Meeting in
accordance with the judgment of the person or persons voting the Proxies.
The execution of a Proxy will in no way affect a Stockholder's right to
attend the Meeting and vote in person. Any Proxy executed and returned by a
Stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Meeting, or by execution of a subsequent proxy which is presented
before the Meeting, or if the Stockholder attends the Meeting and votes by
ballot, except as to any matter or matters upon which a vote shall have been
cast pursuant to the authority conferred by such Proxy prior to such revocation.
For purposes of determining the presence of a quorum for transacting business at
the Meeting, abstentions and broker "non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted.
The cost of solicitation of the Proxies being solicited on behalf of the
Board of Directors will be borne by the Company. In addition to the use of the
mail, proxy solicitation may be made by telephone, telegraph and personal
interview by officers, directors and employees of the Company. The Company will,
upon request, reimburse brokerage houses and persons holding Common Stock in the
names of their nominees for their reasonable expenses in sending soliciting
material to their principals.
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<PAGE>
PROPOSAL I--APPROVAL OF THE AMENDMENT
TO THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
The Board of Directors has unanimously approved and recommends that the
Stockholders adopt an amendment (the "Charter Amendment") to the Company's
Articles of Incorporation to increase its authorized Common Stock from 4,000,000
shares to 20,000,000 shares and to increase its authorized preferred stock, no
par value, ("Preferred Stock") from 1,000,000 shares to 5,000,000 shares. The
relative rights and limitations of the Common Stock and Preferred Stock would
remain unchanged under the Charter Amendment. The Preferred Stock may be issued
by the Board of Directors from time to time without stockholder approval, in one
or more classes or series with such designations and preferences and voting and
other rights as the Board of Directors deems appropriate.
On the Record Date the Company had 1,888,520 shares of Common Stock issued
and outstanding. In addition, (i) 280,000 shares of Common Stock are reserved
for issuance under the Company's 1989 Equity Incentive Plan and the Directors
Option Plan, (ii) 1,450,000 shares of Common Stock are reserved for issuance
pursuant to an option granted to Universal Process Equipment, Inc. ("UPE") (see
"Certain Transactions" below) and (iii) 140,000 shares of Common Stock are
reserved for issuance pursuant to an option granted to certain unaffiliated
third parties. Accordingly, on the Record Date, there remain only 241,480
authorized and unissued shares of Common Stock not reserved for issuance.
The increase in the authorized Common Stock and Preferred Stock has been
adopted by the Board of Directors to assure that an adequate supply of
authorized unissued shares is available for general corporate needs, such as
future stock dividends or stock splits or issuance under the Company's stock
option plans. The additional authorized shares of Common Stock and Preferred
Stock could also be used for such purposes as raising additional capital for the
operations of the Company or financing acquisitions of other businesses. The
terms of any series of Preferred Stock to be issued will be dependent largely on
market conditions and other factors existing at the time of issuance and sale.
There are currently no plans or arrangements relating to the issuance of any of
the additional shares of Common Stock proposed to be authorized, other than
pursuant to the 1994 Stock Option Plan, or any shares of Preferred Stock.
However, all such shares would be available for issuance without further action
by the Stockholders, unless required by the Company's Articles of Incorporation
or Bylaws or by applicable law.
The issuance of additional shares of Common Stock may, among other things,
have a dilutive effect on earnings per share and on the equity and voting power
of existing holders of Common Stock. Until the Board of Directors determines the
specific rights, preferences and limitations of any shares of Preferred Stock to
be issued, the actual effect on the holders of Common Stock of the issuance of
such shares cannot be ascertained. However, such effects might include
restrictions on dividends on the Common Stock if dividends on Preferred Stock
are in arrears, dilution of the voting power of Common Stock to the extent that
any series of Preferred Stock has voting rights, and reduction of amounts
available on liquidation as a result of any liquidation preference granted to
any series of preferred stock.
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<PAGE>
The issuance of additional shares of Common Stock by the Company also may
potentially have an antitakeover effect by making it more difficult to obtain
stockholder approval of various actions, such as a merger or removal of
management. Issuance of authorized shares of Preferred Stock could also make it
more difficult to obtain stockholder approval of such actions, particularly in
light of the power of the Board of Directors to specify certain rights and
preferences of the Preferred Stock. The Board of Directors, by issuing such
Common Stock or Preferred Stock could adversely affect the voting power of the
outstanding shares of Common Stock and discourage an attempt to gain control of
the Company.
The increase in authorized shares of Common Stock and the creation of
Preferred Stock has not been proposed for an anti-takeover-related purpose and
the Company has no knowledge of any current efforts to obtain control of the
Company or to accumulate its Common Stock. At present, the Board of Directors
does not intend to propose further amendments to the Company's Articles of
Incorporation or By-laws that might affect attempts to take over or change
control of the Company.
VOTE REQUIRED
The affirmative vote of the holders of a majority of all outstanding shares
of Common Stock entitled to vote at a meeting of stockholders, in person or by
proxy, is required for approval of the proposed amendment to the Company's
Articles of Incorporation. Broker non-votes and proxy cards marked "abstain"
with respect to this proposal will be counted towards a quorum. However, since
the proposal requires the approval of a majority of all outstanding shares of
Common Stock entitled to vote at a meeting of stockholders, abstentions and
broker non-votes will be treated as a vote against this proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
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<PAGE>
SECURITY OWNERSHIP
HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following table sets forth, as of September 28, 1995, information
regarding all persons who are known to the Company to be the beneficial owner of
more than 5% of the Company's outstanding Common Stock.
Name and Address of Percent of
Beneficial Owner Shares Owned Beneficially Outstanding Shares
- - ---------------------------- -------------------------- ------------------
James L. Leuthe 223,624(1) 11.8%
25th & Lennox Streets
Easton, PA 18045
Universal Process 1,831,600(2)(3)(4) 54.9
Equipment, Inc. (UPE)
P.O. Box 338
Roosevelt, NJ 08555
Robert F. Bacigalupo 150,901(5) 7.9
2433 S. Oakley Avenue
Chicago, IL 60608
- - --------------------
(1) Of this total, 52,281 shares are owned by Nikki, Inc., a corporation in
which Mr. Leuthe is an officer, director and the sole stockholder, 161,343
shares are owned by Mr. Leuthe and 10,000 shares are purchasable by Mr. Leuthe
upon exercise of options granted under the Directors Option Plan. This total
does not include 640 shares owned by Mr. Leuthe's children, of which he
disclaims beneficial ownership.
(2) Includes 1,450,000 shares issuable pursuant to an option granted to
Universal Process Equipment, Inc. by the Company on December 22, 1993.
(3) According to information provided to the Company by UPE, Ronald H. Gale and
Jan Gale are officers, directors and principal stockholders of UPE, and may be
deemed to beneficially own the shares owned by UPE. In addition to shares they
beneficially own through UPE, (i) Ronald H. Gale individually owns 72,000 shares
of Common Stock and has the right to purchase 10,000 shares upon the exercise of
options granted under the Directors Option Plan and (ii) Jan Gale individually
owns 70,000 shares and has the right to purchase 10,000 shares upon the exercise
of options granted under the Directors Option Plan.
(4) Information obtained from Amendment No. 1 to Schedule 13D which was filed
with the Securities and Exchange Commission on or about December 23, 1993.
-5-
<PAGE>
(5) Of this total, 140,901 shares are owned by Mr. Bacigalupo and 10,000 shares
are purchasable upon the exercise of options granted under the Directors Option
Plan. This total does not include 2,331 shares owned by Mr. Bacigalupo's wife,
1,000 shares held in trust for the benefit of his son and 5,000 shares held in
trust for the benefit of his mother. Mr. Bacigalupo is the trustee of the two
trusts, and he disclaims beneficial ownership of these 8,331 shares.
BENEFICIAL OWNERSHIP BY MANAGEMENT AND DIRECTORS
The following table sets forth, as of September 28, 1995, information
regarding the ownership of the outstanding Common Stock of the Company for each
director, each Named Executive Officer and all directors and executive officers
of the Company as a group.
Shares Owned Percent of
Name of Beneficial Owner Beneficially Outstanding Shares
- - ---------------------------------------- -------------- -----------------
James L. Leuthe(1)(2) 223,624 11.8%
Alan H. Silverstein (3) 10,000 *
Robert F. Bacigalupo (1)(2) 150,901 7.9
D.B. Cahoon (2) 10,000 *
O. Karl Dieckmann (2) 46,686 2.5
Ronald H. Gale (1)(2)(4) 1,913,600 57.1
Jan Gale (1)(2)(4) 1,911,600 57.1
B. Ord Houston (2) 14,865 *
John W. Pike (2) 40,000 2.1
Antoinette L. Martin --- ---
Anthony Chiarella --- ---
All directors and executive officers as a 2,489,676 72.3%
group (11 persons)
- - -------------------------
* Less than 1.0%.
(1) Reference is made to "Holders of More than Five Percent Beneficial
Ownership" above.
(2) Includes 10,000 shares issuable pursuant to options exercisable within
60 days of the date hereof pursuant to the terms of the Directors Option Plan.
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<PAGE>
(3) Includes 10,000 shares issuable pursuant to options exercisable within
60 days of the date hereof pursuant to the terms of the Directors Option Plan
and does not include 200,000 shares issuable pursuant to options granted under
the 1994 Stock Option Plan, the exercise of which is subject to approval by the
stockholders at the Meeting. See "Proposal III - Adoption of the 1994 Stock
Option Plan" below.
(4) Includes 1,831,600 shares beneficially owned by UPE, in which the
individual is an officer, director and principal shareholder. See "Security
Ownership of Certain Beneficial Owners and Management - Holders of More Than
Five Percent Beneficial Ownership."
PROPOSAL II--ELECTION OF DIRECTORS
NOMINEES
Section 10.3 of the Company's By-laws provides for the organization of
the Board of Directors into four classes with directors in each class serving
for four year terms. The Board of Directors has approved, and will submit to the
Stockholders for their ratification at the Meeting, an amendment to the By-laws
(the "By-laws Amendment") that amends this provision and creates a Board of
Directors whose entire membership is elected annually. The By-laws Amendment
will not effect the terms of incumbent directors who were elected in prior years
whose terms do not expire at the Meeting. These incumbent directors will
continue to serve as directors until the expiration of their respective terms
and until their successors are elected and qualified. See "Proposal V --
Ratification of Amendment to the By-laws."
It is proposed that four nominee directors, B. Ord Houston, Ronald H.
Gale, Salvatore J. Zizza and Harold Bogatz (the "Nominees"), be elected to serve
until the 1996 annual meeting of stockholders of the Company and until their
successors are elected and qualified. The Stockholders will vote at the Meeting
for the election of these four directors. Unless otherwise specified, all
Proxies received will be voted in favor of the election of the Nominees as
directors of the Company. Two Nominees, Mr. Houston and Mr. Ronald H. Gale, are
currently directors of the Company. There are no family relationships between
any of the Nominees.
Each Nominee has consented to serve if elected. In the event that any
of the Nominees should be unable to serve, the Proxies will vote for such
substitute nominee or nominees as they, in their discretion, shall determine.
The Board of Directors has no reason to believe that any of the Nominees named
herein will be unable to serve. Any vacancy occurring on the Board of Directors
for any reason may be filled by a majority vote of the directors then in office,
and each person so elected shall serve until the next annual Meeting of the
Stockholders of the Company and until each of the respective successors is
elected and qualified.
The following table sets forth information regarding the current ages,
terms of office and business experience of the current directors and the
Nominees:
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<PAGE>
<TABLE>
<CAPTION>
Year First
Became a Year Term
Name Age Principal Occupation Director Will Expire
- - ---- --- -------------------- --------------- -------------
<S> <C> <C> <C> <C>
James L. Leuthe 53 Chairman of the Board 1976 1997
of Directors since 1977;
President and Chief
Executive Officer of the
Company from February 1979
to November 1983; Chief
Executive Officer since
November 1983; Chairman of
the Board of First Lehigh
Corporation, a bank holding
company
Alan H. Silverstein 6 President and Chief 1994 1997
Operating Officer of the
Company since February
1994; from 1991 to
present, President of
Earth Environmental
Services, Inc., a
presently inactive solid
waste remediation firm
and developer of solid
waste co-generation
projects; from July 1992
to February 1994,
President of Universal
Envirogenics, Inc., a
rebuilder of industrial
gas plants
Jan P. Gale 40 Vice President since 1991 1996
1978 of UPE, an
international supplier
of complete process
plants and equipment
and manufacturer of new
equipment in the United
States and Europe(1)
O. Karl Dieckmann 82 Investment manager and 1960 1997
consultant, retired for at
least the past five years
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Year First
Became a Year Term
Name Age Principal Occupation Director Will Expire
- - ---- --- -------------------- --------------- -------------
<S> <C> <C> <C> <C>
B. Ord Houston* 82 Secretary of the 1976 1995
Company since June
1983, otherwise retired
for at least the last five
years; held various
positions with the
Company since 1966,
most recently as
Executive Vice President
Ronald H. Gale* 44 President and Chief 1990 1995
Executive Officer of
UPE since 1978(1)
Salvatore J. Zizza* 49 Chairman of The Lehigh ---- ---
Group: a public
company that is listed
on the New York Stock
Exchange which has a
subsidiary in the
distribution of electrical
products and until 1991
included major interior
construction, asbestos
abatement and heavy
equipment
manufacturing
Harold Bogatz* 57 Vice President and ---- ---
General Counsel of UPE
since 1987
</TABLE>
- - -------------------
* Nominee for director.
(1) Ronald H. Gale, a Nominee, and Jan P. Gale, an incumbent director, are
brothers.
If the Nominees are elected at the Meeting and the proposal described
under the heading "Proposal V--Ratification of Amendment to the By-laws" is
approved by the Stockholders, the Nominees will each hold office until the next
annual meeting of stockholders and until their successors are elected and are
qualified. If the Nominees are elected at the Meeting and Proposal V is not
approved by the Stockholders, the Nominees will each hold office for respective
terms expiring at the Annual Meeting of Stockholders to be
-9-
<PAGE>
held for the following years: Mr. Zizza - 1996; Mr. Houston - 1998; Mr. Ronald
Gale - 1998; and Mr. Bogatz - 1999.
VOTE REQUIRED
Directors shall be elected by a plurality of the votes cast, in person
or by proxy, at the Meeting. Abstentions from voting and broker non-votes on the
election of directors will have no effect since they will not represent votes
cast at the Meeting for the purpose of electing directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES.
BOARD MEETINGS -- COMMITTEES OF THE BOARD
The Board of Directors met once during the fiscal year ended May 31,
1995 (the "1995 Fiscal Year"). The Board of Directors presently maintains an
Executive Committee, an Audit Committee, a Compensation Committee and a
Nominating Committee. None of the directors of the Company attended fewer than
75% of the aggregate of the total number of meetings of the Board of Directors
held plus the total number of meetings held by all committees of the Board on
which he served during 1995 Fiscal Year.
The Executive Committee currently consists of Messrs. Houston, Leuthe,
and Silverstein and is appointed annually by the Board of Directors to exercise
all powers of the Board of Directors, to the extent permitted by law, between
meetings of the Board. The Executive Committee met four times during the 1995
Fiscal Year.
The Audit Committee currently consists of Messrs. J. Gale, Houston and
Leuthe and is appointed annually by the Board of Directors to recommend the
selection of independent auditors, review the scope and results of the audit,
review the adequacy of the Company's accounting, financial and operating
controls and supervise special investigations. The Audit Committee did not meet
during the 1995 Fiscal Year.
The Compensation Committee is appointed annually by the Board of
Directors to recommend to the Board of Directors remuneration arrangements for
senior management and directors, the adoption of compensation plans in which
officers and directors are eligible to participate and the granting of options
or other benefits under such plans. The Compensation Committee did not meet
during the 1995 Fiscal Year.
The Nominating Committee currently is comprised of Messrs. Bacigalupo
and Leuthe and is appointed annually by the Board of Directors to recommend to
the Board of Directors nominees for election as directors. The Nominating
Committee did not meet during the 1995 Fiscal Year.
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<PAGE>
EXECUTIVE COMPENSATION TABLE
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years ended December 31, 1992 and 1993,
during the transition period ended May 31, 1994 and during the 1995 Fiscal Year
to the Company's Chief Executive Officer and to each of the Company's executive
officers whose total salary and bonus exceeded $100,000 during the 1995 Fiscal
Year (the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------------------- ---------------------------------
Name and Other Annual Stock Option All Other
Principal Position Year Salary Bonus Compensation(s) Awards Compensation
- - --------------------- -------- -------- --------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James L. Leuthe 1995 -- -- -- -- $672(2)
Chairman and Chief 1994(3) -- -- -- -- 280(2)
Executive Officer(1) 1993 -- -- -- -- 672(2)
1992 $2,616 -- $8,387(4) -- 672(2)
Alan H. Silverstein 1995 110,000 30,000 5,472(4) 250,000 11,925(2)
President and Chief 1994(3) 36,667 - 1,824(4) 10,000 224(2)
Operating Officer(5)
</TABLE>
- - ------------------------
(1) Mr. Leuthe was not compensated for his services during the Company's
fiscal year ended December 31, 1993, the transition period ended May 31, 1994 or
the Company's fiscal year ended May 31, 1995.
(2) Represents life insurance premiums paid by the Company.
(3) Includes compensation received only during the transition period
January 1 to May 31, 1994.
(4) Includes lease and insurance costs paid by the Company with respect to
use of an automobile.
(5) Mr. Silverstein was elected President and Chief Operating Officer of
the Company in February 1994. Prior to that time, Mr. Silverstein served as a
consultant to the Company.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options granted
during the fiscal year ended May 31, 1995 to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of
Securities Percentage of Total Per Share
Underlying Options Granted to Exercise
Name Options Granted Employees Price Expiration Date
- - ----------------------------- ----------------- -------------------- ------------- ----------------------
<S> <C> <C> <C> <C>
Alan H. Silverstein 250,000 100.0% $0.9375 December 29, 2004
</TABLE>
AGGREGATED FISCAL YEAR-END OPTIONS
The following table sets forth certain information regarding
unexercised stock options held by each of the Named Officers named in the
Summary Compensation Table as of May 31, 1995. No stock options were exercised
by any such officer during the fiscal year ended May 31, 1995.
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of Value of Unexercised
Unexercised Options in-the-Money Options
at May 31, 1995 at May 31, 1995 ($)(1)
Exercisable/ Exercisable/
Unexercisable Unexercisable
Name --------------------- ------------------------
- - ----
James L. Leuthe 10,000/0 0/0
Alan H. Silverstein (2) 10,000/250,000 0/296,875
- - ------------------------
(1) On the Record Date, the last reported sales price of the Company's
Common Stock as reported by the American Stock Exchange was $3.75 per
share.
(2) The 250,000 options referenced are not exercisable until approval by
stockholders at the Annual Meeting and, further, as to the 50,000 of
such options, until January 1, 1996.
COMPENSATION OF DIRECTORS
Directors are not compensated for their services as a director but are
entitled to reimbursement of expenses incurred in connection with their
attendance at all meetings.
The Company maintains the Directors Option Plan for directors. Under
the Directors Option Plan: (i) each person who was a director of the Company on
March 21, 1991 received an option for 10,000 shares under the Directors Option
Plan and (ii) each individual who
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<PAGE>
becomes a director of the Company after March 21, 1991 is granted an option for
10,000 shares. The exercise price of each option granted under the Directors
Option Plan is the greater of $3.15 per share or 100% of the fair market value
of a share of the Company's Common Stock on the date the option is granted. No
option granted under the Directors Option Plan may be exercised during the six
months after its grant; thereafter, the option becomes exercisable in full.
Options are not assignable. No option may be exercised after five years from the
date of grant. See Proposal IV -- "Amendment to the Company's Equity Incentive
Plan for Directors" for the terms of a proposed amendment to the Directors
Option Plan.
Set forth below is information with respect to options outstanding
under the Directors Option Plan.
<TABLE>
<CAPTION>
Number of Exercise Price
Date of Grant Shares Per Share(1)
Name ------------------- --------------------- ---------------------
- - ----
<S> <C> <C> <C>
Robert F. Bacigalupo(2)........................ 3/21/91 10,000 $3.15
O. Karl Dieckmann.............................. 3/21/91 10,000 3.15
Jan Gale....................................... 3/21/91 10,000 3.15
Ronald H. Gale................................. 3/21/91 10,000 3.15
B. Ord Houston................................. 3/21/91 10,000 3.15
James L. Leuthe................................ 3/21/91 10,000 3.15
Joseph T. Posh(2).............................. 3/21/91 10,000 3.15
John W. Pike(2)................................ 2/20/92 10,000 3.15
D.B. Cahoon(2)................................. 2/05/93 10,000 3.15
Alan H. Silverstein............................ 4/12/94 10,000 3.15
</TABLE>
- - ------------------
(1) As of the Record Date, the last reported sales price of the Company's
Common Stock as reported on the American Stock Exchange, Inc. was $3.75
per share.
(2) These options will expire if Proposal IV is not approved by the
Stockholders. See "Proposal IV--Amendment to the Company's Equity
Incentive Plan for Directors."
Mr. Alan Silverstein is employed by the Company pursuant to an
agreement (the "Employment Agreement") dated February 1, 1994. The Employment
Agreement provides for a five year term, with automatic renewal for successive
terms of two years, subject to a mutual right, exercisable within 120 days prior
to the expiration of any term, not to renew the Employment Agreement. The salary
paid to Mr. Silverstein for the first year under the Employment Agreement is
$110,000, increasing to $165,000 in the fifth year. Mr. Silverstein is entitled
to a quarterly bonus based on the earnings of the Company, with a minimum
guaranteed bonus for the first 18 months of $30,000.
PROPOSAL III--ADOPTION OF THE 1994 STOCK OPTION PLAN
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<PAGE>
The Board of Directors has adopted the 1994 Stock Option Plan, which
provides for the granting of non-qualified and incentive stock options and stock
appreciation rights (collectively, the "Options") for up to 400,000 shares of
the Common Stock (or the number and kind of shares of stock or other securities
which are substituted for those shares or to which those shares are adjusted by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, issuance of warrants or rights, stock dividend, stock split or
reverse stock split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise) to certain officers, non-employee
directors and key employees (collectively, the "Key Employees") of the Company
and its subsidiaries whose substantial contributions are essential to the
continued growth and success of the Company's business. Incentive options are
intended to qualify as options described in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). The 1994 Stock Option Plan is
administered by a committee of outside directors appointed by the Board of
Directors (the "Committee"). All Key Employees, as identified by the Committee,
are eligible to participate in the 1994 Stock Option Plan, subject to the
Committee's discretion to designate Key Employees who are to receive Options. As
of the date hereof, approximately 15 Key Employees are eligible to participate
in the 1994 Stock Option Plan. As of May 30, 1995, Options to purchase an
aggregate of 250,000 shares of Common Stock had been granted to a Key Employee
of the Company. A total of 200,000 Options are currently exercisable, subject to
stockholder approval of the 1994 Stock Option Plan.
If any outstanding Options or any portions thereof for any reason
expire or are cancelled or otherwise terminated, the shares of Common Stock
subject to the unexercised portion of such Option or Options are again available
for grants under the 1994 Stock Option Plan as if no Option had been granted
with respect to such shares, provided, however, that any such terminated Option
shall count against the maximum number of shares that may be granted to any Key
Employee. The maximum number of shares that may be granted to one person
pursuant to the Plan is 250,000 shares. In addition, the aggregate fair market
value (determined as of the date an option is granted) of the shares with
respect to which incentive stock options are exercisable by any single employee
during any calendar year cannot exceed $100,000.
Within the limitations of the 1994 Stock Option Plan, the Committee
will determine the individuals to whom Options shall be granted (the
"Optionees"), the number of shares subject to each Option, the Option price and
the other terms and conditions of the Option. No Option may be granted after the
termination date of the 1994 Stock Option Plan which is December 23, 2004.
No payments or contributions are required to be made by the Optionees
other than in connection with the exercise of the Options. An Optionee may
exercise each Option granted to such Optionee in such installments as the
Committee shall determine at the time of grant thereof. Except as otherwise set
forth in the 1994 Stock Option Plan or the applicable agreement, an Option may
be exercised in whole or in part at any time or from time to time, except that
not less than 100 shares may be purchased at any time unless the number of
shares so purchased constitutes the total number of shares then purchasable
under the Option. Upon exercise of an Option, the purchase price therefor shall
be payable in full in cash or check or, at the discretion of the Committee and
upon such terms as determined by the Committee, by
-14-
<PAGE>
transferring shares of Common Stock to the Company or by a cashless exercise
procedure. Options are nontransferable and are subject to forfeiture or
limitations upon termination of employment, as set forth in the 1994 Stock
Option Plan.
The purchase price for the shares of Common Stock to be purchased upon
the exercise of Options shall be established by the Committee. Except as
otherwise set forth in the 1994 Stock Option Plan, the Option price shall not be
less than the fair market value of the Common Stock on the date of grant, which
is presently equal to the last sale price per share as reported by the American
Stock Exchange on that date.
The 1994 Stock Option Plan also provides, with certain exceptions, that
each non-employee director who, after December 1, 1994, is elected to the Board
of Directors for the first time at any meeting of stockholders will, at the time
of such election, automatically be granted an option to purchase 10,000 shares
of Common Stock. In addition, on the date of each annual meeting of stockholders
subsequent to January 1, 1995, each continuing non-employee director will
automatically granted an option to purchase 500 shares of Common Stock.
A copy of the 1994 Stock Option Plan is attached as Annex A to this
Proxy Statement.
TAX CONSEQUENCES
Under current federal income tax laws, the grant of a non-qualified
Option pursuant to the 1994 Stock Option Plan generally has no tax effect on the
Company or the Optionee. Exercise of a non-qualified Option under the 1994 Stock
Option Plan will result in taxable compensation income to the Optionee in the
amount by which the fair market value of the Common Stock issued pursuant to the
exercise, at the time of the exercise, exceeds the purchase price of such Common
Stock under the non-qualified Option, and the Company generally will be entitled
to a tax deduction equal to the amount of compensation income taxable to the
Optionee upon exercise of a non-qualified Option. Any transfer of Common Stock
acquired upon exercise of a non-qualified Option may result in taxable income.
The grant of an incentive Option pursuant to the 1994 Stock Option Plan
generally has no tax effect on the Company or the Optionee. Exercise of an
incentive Option under the 1994 Stock Option Plan will not be subject to the
regular federal income tax, but may be subject to the alternative minimum tax.
The Company will not be entitled to a tax deduction upon the exercise of an
incentive Option. Any transfer of Common Stock acquired upon exercise of an
incentive Option may result in taxable income, and the character of any such
income as capital gain or ordinary income will depend on whether certain holding
period requirements have been satisfied.
PLAN BENEFITS UNDER THE PLAN
The Company received no consideration for the grant of Options under
the 1994 Stock Option Plan. As of the Record Date, the last reported sales price
of the Company's Common Stock on the American Stock Exchange was $3.75 per
share.
-15-
<PAGE>
The following table sets forth certain information with respect to
Options granted under the Plan.
PLAN BENEFITS
Number of Shares of
Common Stock
Underlying Options
Dollar Value($) Granted
---------------- -------------------
Alan H. Silverstein.................... 0 250,000
All Named Executive Officers as a
Group.................................. 0 250,000
All Directors who are not Named
Executive Officers as a group(1)....... 0 0
All Employees who are not Named
Executive Officers as a Group.......... 0 30,000
(1) This number also represents grants to all director nominees.
VOTE REQUIRED
The approval of the 1994 Stock Option Plan requires the affirmative
vote of a majority of the votes cast by all Stockholders represented and
entitled to vote thereon. An abstention, withholding of authority to vote or
broker non-vote, therefore, will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has received
the requisite stockholder vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE 1994
STOCK OPTION PLAN.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors. and persons who own
more than 10% of a registered class of the Company's equity securities to file
with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of equity securities of the
Company. Executive officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms which they file.
-16-
<PAGE>
To the Company's knowledge, based solely on a review of the copies of
such forms received by it, or written representations from certain reporting
persons that no other reports were required for those persons, the Company
believes that all filing requirements applicable to its executive officers,
directors and greater than 10% stockholders were complied with during the fiscal
year ended December 31, 1993 and the transition period ended May 31, 1994 and
the 1995 Fiscal Year, except that Jan P. Gale and Ronald H. Gale each filed one
Form 4 and one Form 5 late and D.B. Cahoon filed one Form 4 late.
CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS
Ronald H. Gale and Jan Gale are directors and stockholders of the
Company and are officers, directors and principal stockholders of UPE, a
corporation which is a stockholder of the Company. UPE and/or Ronald H. Gale
and/or Jan Gale are also majority stockholders or otherwise affiliated with
other companies that engage in transactions with the Company. UPE and related
entities purchased processing equipment manufactured by the Company as well as
utilized the Company's remanufacturing services. The approximate total revenues
derived from sales to UPE and related parties were $2.4 million for the fiscal
year ended May 31, 1995, $290,000 for the transition period from January to May
1994 and $740,000 for the fiscal year ended December 31, 1993. The terms of such
sales were at least as favorable to the Company as could have been obtained from
unaffiliated third parties.
On December 22, 1993, UPE was granted 300,000 shares of the Company's
Common Stock and an option to purchase an additional 1,450,000 shares pursuant
to an agreement (the "UPE Agreement") between the Company and UPE. Such stock
was granted in consideration of UPE's (i) services in structuring and
negotiating a settlement agreement among The Harrisburg Authority
("Harrisburg"), the Company and UPE with respect to a judgment in the amount of
$2,127,071 which Harrisburg had obtained against the Company; (ii) payments on
behalf of the Company to Harrisburg under the settlement agreement; (iii)
providing a guaranty of and surety for the Company's full and timely payment to
Harrisburg of $650,000 in specified installments; and (iv) granting to
Harrisburg security interests in certain equipment held for sale by UPE and in a
percentage of the proceeds from the sale of such equipment in the ordinary
course of UPE's business.
Beginning in July, 1993 through January, 1994, Alan H. Silverstein was
retained as a consultant to the Company. In that capacity he played a key
advisory role in the structure and negotiation of the final settlement agreement
with the Harrisburg Authority and the resolution of several other potential
litigation matters. Mr. Silverstein was paid $69,939 in consulting fees and
expenses for services during that time.
In October 1995, O. Karl Dieckmann and Robert F. Bacigalupo resigned as
directors of the Company. Following their resignations, the Executive Committee
of the Board of Directors designated Messrs. Dieckmann and Bacigalupo honorary
directors emeritus in recognition of their many years of service as directors.
Messrs. Dieckmann and Baciagalupo will serve in such capacities as advisors to
the Board of Directors.
-17-
<PAGE>
PROPOSAL IV--AMENDMENT TO THE COMPANY'S
EQUITY INCENTIVE PLAN FOR DIRECTORS
The Board of Directors has unanimously approved and recommends that the
Stockholders approve an amendment to the Directors Option Plan to (i) extend the
terms of options granted under the Directors Option Plan from five years to six
years; (ii) eliminate provisions by which options automatically terminate one
month from termination of an optionees's service with the Company (other than as
a result of death or disability); and (iii) eliminate provisions by which
options granted under the Directors Option Plan automatically terminate one year
from the death or disability of an optionee.
Pursuant to the Directors Option Plan, options may be granted to
directors and consultants of the Company or any subsidiary of the Company. As of
the Record Date, options to purchase 100,000 shares of Common Stock were
outstanding under the Directors Option Plan and no options had been exercised.
Options to purchase shares of Common Stock have been granted pursuant to the
Directors Option Plan are as follows:
<TABLE>
<CAPTION>
Number of Exercise Price
Name Date of Grant Shares Per Share(1)
- - ----- ------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
Robert F. Bacigalupo(2)........................ 3/21/91 10,000 $3.15
O. Karl Dieckmann.............................. 3/21/91 10,000 3.15
Jan Gale....................................... 3/21/91 10,000 3.15
Ronald H. Gale................................. 3/21/91 10,000 3.15
B. Ord Houston................................. 3/21/91 10,000 3.15
James L. Leuthe................................ 3/21/91 10,000 3.15
Joseph T. Posh(2).............................. 3/21/91 10,000 3.15
John W. Pike(2)................................ 2/20/92 10,000 3.15
D.B. Cahoon(2)................................. 2/05/93 10,000 3.15
Alan H. Silverstein............................ 4/12/94 10,000 3.15
</TABLE>
- - --------------------------
(1) As of the Record Date, the last reported sales price of the Company's
Common Stock as reported on the American Stock Exchange, Inc. was $3.75
per share.
(2) These options will expire if Proposal IV is not approved by the
Stockholders.
ADMINISTRATION
The Directors Option Plan is administered by a committee (the
"Committee") which consists of two members of the Board of Directors of the
Company. The members of the
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<PAGE>
Committee are appointed by the Board of Directors and serve at the pleasure of
the Board of Directors. The Committee has the power to interpret the Directors
Option Plan, the options granted thereunder and to adopt rules for the
administration, interpretation and application of the Directors Option Plan as
are consistent therewith and to interpret, amend or revoke any such rules. The
Committee does not have any discretion to determine who will be granted options
or to determine the number of options, the exercise price of options or the
timing of the grant of options to be granted to any Director. Members of the
Committee shall not receive any compensation for their services as members, but
all expenses and liabilities they incur in connection with the administration of
the Directors Option Plan shall be borne by the Company.
DESCRIPTION OF OPTIONS
Each director as of March 21, 1991 and each person who became a
director after March 21, 1991 was granted an option to purchase 10,000 shares of
Common Stock at an exercise price of $3.15 per share. No option is exercisable
in whole or in part during the six months after the option is granted.
PROPOSED AMENDMENT
The proposed amendment is as follows:
Article 4, Subsection (b)(v) of the Company's Equity
Incentive Plan for Directors is hereby amended and restated to read in
its entirety as follows:
"(v) Expiration of Options. Each Option shall terminate
upon the expiration of six years from the date the Option was
granted."
VOTE REQUIRED
The approval of the amendment to the Directors Option Plan requires the
affirmative vote of a majority of the votes cast by all Stockholders represented
and entitled to vote thereon. An abstention, withholding of authority to vote or
broker non-vote, therefore, will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has received
the requisite stockholder vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
PROPOSAL TO AMEND THE DIRECTORS OPTION PLAN.
-19-
<PAGE>
PROPOSAL V--RATIFICATION OF AMENDMENT TO THE BY-LAWS
The Board of Directors has unanimously approved and adopted the By-laws
Amendment, which amendment would phase out the current Board of Directors
structure consisting of four classes of directors. Pursuant to Section 10.3 of
the current By-laws, the members of each class of directors serve four year
terms, with approximately one-fourth of the Board of Directors elected each
year. The By-laws Amendment amends Section 10.3 by providing for the annual
election of directors. The By-law Amendment will not effect the terms of
incumbent directors who were elected in prior years whose terms do not expire at
the Meeting. These incumbent directors will continue to serve as directors until
the expiration of their respective terms and until their successors are elected
and qualified. The directors elected at the Meeting will serve until the next
annual meeting of stockholders and until their successors are duly elected and
qualified. The adoption of the By-laws Amendment permits the Stockholders to
change the entire composition of the Board of Directors at a single annual
meeting of stockholders beginning with the 1997 annual meeting of stockholders.
The Company has no present intention to reintroduce the classified structure in
the future.
VOTE REQUIRED
Ratification of the amendment to the Company's By-laws requires the
affirmative vote of a majority of the votes cast by all Stockholders represented
and entitled to vote thereon. An abstention, withholding of authority to vote or
broker non-vote, therefore, will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has received
the requisite stockholder vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE AMENDMENT TO THE COMPANY'S BY- LAWS.
-20-
<PAGE>
PROPOSAL VI--RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Sobel & Co. to be the independent
auditors of the Company for the year ending May 31, 1996. Although the selection
of auditors does not require ratification, the Board of Directors has directed
that the appointment of Sobel & Co. be submitted to shareholders for
ratification due to the significance of their appointment to the Company. If
shareholders do not ratify the appointment of Sobel & Co., the Board of
Directors will consider the appointment of other certified public accountants. A
representative of Sobel & Co. is expected to be available at the Meeting to make
a statement if such representative desires to do so and to respond to
appropriate questions.
VOTE REQUIRED
Ratification of the appointment of Sobel & Co. requires the affirmative
vote of a majority of the votes cast by all Stockholders represented and
entitled to vote thereon. An abstention, withholding of authority to vote or
broker non-vote, therefore, will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has received
the requisite stockholder vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF SOBEL & CO. AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE 1996 FISCAL YEAR.
-21-
<PAGE>
ANNUAL REPORT
All stockholders of record as of the Record Date have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report for the
1995 Fiscal Year.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE 1995 FISCAL YEAR (WITHOUT
EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO
STOCKHOLDER INFORMATION, THE BETHLEHEM CORPORATION, 25TH AND LENNOX STREETS,
EASTON, PENNSYLVANIA 18045.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than August 12, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration at
the Meeting. If any other matter or matters are properly brought before the
Meeting or any adjournment thereof, the persons named in the accompanying Proxy
will have discretionary authority to vote, or otherwise act, with respect to
such matters in accordance with their judgment.
By Order of the Board of Directors,
B. ORD HOUSTON
Secretary
November __, 1995
-22-
<PAGE>
ANNEX A
to
Proxy Statement
THE BETHLEHEM CORPORATION
1994 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Plan is to provide additional
incentive to those officers and key employees of the Company and its
Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts will
result in the long-term growth and profitability of the Company. An additional
purpose of the Plan is to build a proprietary interest among the Company's
Non-Employee Directors and thereby secure for the Company's stockholders the
benefits associated with common stock ownership by those who will oversee the
Company's future growth and success. To accomplish such purposes, the Plan
provides that the Company may grant Incentive Stock Options, Nonqualified Stock
Options, or Stock Appreciation Rights.
2. DEFINITIONS. For purposes of this Plan:
(a) "Agreement" means the written agreement evidencing
the grant of an Option and Stock Appreciation Rights, if applicable, and setting
forth the terms and conditions thereof.
(b) "Board" means the Board of Directors of the
Company.
(c) "Cause" means, unless otherwise defined in the
particular Agreement evidencing the grant of an Option (i) the willful neglect
or refusal to perform the Optionee's duties or responsibilities or the willful
taking of actions which materially impair the Optionee's ability to perform the
Optionee's duties or responsibilities which continues after being brought to the
attention of the Optionee (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness) or (ii) the willful act
or failure to act by the Optionee which is materially injurious to the Company
or a Subsidiary which is brought to the attention of the Optionee in writing not
more than thirty (30) days from the date of its discovery by the Company, a
Subsidiary or the Board.
(d) "Change in Capitalization" means any increase,
reduction, or change or exchange of Shares for a different number or kind of
shares or other securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of warrants or
rights, stock dividend, stock split or reverse stock split, combination or
exchange of shares, repurchase of shares, change in corporate structure or
otherwise.
(e) "Change in Control" means one of the following
events:
A-1
<PAGE>
(i) any "person" (as defined in Sections 13(d)
and 14(d) of the Exchange Act other than any person who is a stockholder of the
Company on the effective date hereof), other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any Subsidiary, or any corporation owned, directly or indirectly, by the
stockholders of the Company, in substantially the same proportions as their
ownership of stock of the Company, acquires "beneficial ownership" of more than
fifteen percent (15%) of the issued and outstanding Shares of the Company; or
(ii) during any period of not more than two (2) consecutive years, individuals
who at the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in subsections 2(e)(i),
2(e)(iii) or 2(e)(iv) hereof) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or (iii) the stockholders of the Company approve a merger other than (x) a
merger which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
Subsidiary, at least fifty percent (50%) of the combined voting power of all
classes of stock of the Company or such surviving entity outstanding immediately
after such merger or (y) a merger effected to implement a recapitalization of
the Company (or similar transaction) in which no person (other than any person
who is a stockholder of the Company on the effective date hereof) acquires more
than fifty percent (50%) of the combined voting power of the Company's then
outstanding securities; or (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or a sale of all or substantially all of
the assets of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as
amended.
(g) "Committee" means a committee of two or more
Outside Directors appointed by the Board to administer the Plan and to perform
the functions set forth herein.
(h) "Company" means The Bethlehem Corporation, a
Pennsylvania corporation.
(i) "Disability" means the inability, due to illness
or injury, to engage in any gainful occupation for which the individual is
suited by education, training or experience, which condition continues for at
least twelve (12) months.
(j) "Eligible Employee" means any officer or other key
employee of the Company or a Subsidiary designated by the Committee as eligible
to receive Options or Stock Appreciation Rights subject to the conditions set
forth herein.
(k) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
A-2
<PAGE>
(l) "Fair Market Value" means the fair market value of
the Shares as determined by the Committee in its sole discretion; provided,
however, that (A) if the Shares are admitted to trading on a national securities
exchange, Fair Market Value on any date shall be the last sale price reported
for the Shares on such exchange on such date or on the last date preceding such
date on which a sale was reported, (B) if the Shares are admitted to quotation
on the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or other comparable quotation system and have been designated as a
National Market System ("NMS") security, Fair Market Value on any date shall be
the last sale price reported for the Shares on such system on such date or on
the last day preceding such date on which a sale was reported, or (C) if the
Shares are admitted to quotation on NASDAQ and have not been designated a NMS
security, Fair Market Value on any date shall be the average of the highest bid
and lowest asked prices of the Shares on such system on such date.
(m) "Incentive Stock Option" means an Option within
the meaning of Section 422 of the Code.
(n) "Non-Employee Director" means a member of the
Board who is not an employee of the Company or a Subsidiary.
(o) "Nonqualified Stock Option" means an Option which
is not an Incentive Stock Option.
(p) "Option" means an Incentive Stock Option, a
Nonqualified Stock Option, or either or both of them, as the context requires.
(q) "Optionee" means a person to whom an Option has
been granted under the Plan.
(r) "Outside Director" means a member of the Board
satisfying the requirements of Section 162(m)(4)(C)(i) of the Code and the
regulations promulgated thereunder.
(s) "Parent" means any corporation in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock of one of the other corporations
in such chain.
(t) "Plan" means The Bethlehem Corporation 1994 Stock
Option Plan, as amended from time to time.
(u) "Securities Act" means the Securities Act of 1933,
as amended.
(v) "Shares" means shares of the Common Stock, no par
value per share, of the Company (including any new, additional or different
stock or securities resulting from a Change in Capitalization), as the case may
be.
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<PAGE>
(w) "Stock Appreciation Right" means a right to
receive all or some portion of the increase in the value of Shares as provided
in Section 7 hereof.
(x) "Subsidiary" means any corporation in an unbroken
chain of corporations, beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(y) "Ten-Percent Stockholder" means an Eligible
Employee, who, at the time an Incentive Stock Option is to be granted to such
Eligible Employee, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company, a Parent or a Subsidiary within the
meaning of Sections 424(e) and 424(f), respectively, of the Code.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee,
which shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings. A
majority of the Committee shall constitute a quorum and a majority of a quorum
may authorize any action. Any decision reduced to writing and signed by a
majority of the members of the Committee shall be fully effective as if it had
been made at a meeting duly held. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan, Options, or Stock Appreciation Rights, and all members of
the Committee shall be fully indemnified by the Company with respect to any such
action, determination or interpretation. The Company shall pay all expenses
incurred in the administration of the Plan.
(b) Subject to the express terms and conditions set
forth herein, the Committee shall have the power from time to time:
(i) to determine those Eligible Employees to whom
Options shall be granted under the Plan and the number of
Nonqualified Stock Options, Stock Appreciation Rights
and/or Incentive Stock Options to be granted to each
Eligible Employee and to prescribe the terms and
conditions (which need not be identical) of each Option
and Stock Appreciation Right, including the purchase price
per share of each Option;
(ii) to construe and interpret the Plan and the
Options and Stock Appreciation Rights granted hereunder and
to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any
Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective,
and all decisions and determinations by the Committee in
the exercise of this power shall be
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final and binding upon the Company or a Subsidiary, and the
Optionees, as the case may be;
(iii) to determine the duration and purposes for
leaves of absence which may be granted to an Optionee
without constituting a termination of employment or service
for purposes of the Plan; and
(iv) generally, to exercise such powers and to
perform such acts as are deemed necessary or advisable to
promote the best interests of the Company with respect to
the Plan.
4. STOCK SUBJECT TO PLAN.
(a) The aggregate number of Shares that may be issued
or transferred pursuant to Options or Stock Appreciation Rights granted under
the Plan is 400,000 Shares, and the maximum number of Shares with respect to
which Options or Stock Appreciation Rights may be granted to any Eligible
Employee is 250,000 Shares. The Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, such number of Shares as shall be
determined by the Board.
(b) Whenever any outstanding Option or portion thereof
expires, is cancelled or is otherwise terminated (other than by exercise of the
Option or any related Stock Appreciation Right), the Shares allocable to the
unexercised portion of such Option may again be the subject of Options and Stock
Appreciation Rights hereunder; provided, however, that any such terminated
option shall count against the maximum numbers of Shares with respect to which
Options or Stock Appreciation Rights may be granted to any Eligible Employee.
(c) The aggregate fair market value of Shares
(determined on the date of grant) for which an Eligible Employee may be granted
Incentive Stock Options which are exercisable for the first time in any
particular calendar year (whether under the terms of the Plan or any other stock
option plan of the Company, a Parent or a Subsidiary) shall not exceed $100,000.
To the extent any Option which is intended to be an Incentive Stock Option is
granted to any Eligible Employee fails to satisfy the requirements of this
subsection, the Incentive Stock Option shall be treated as a Nonqualified Stock
Option. This Section 4 shall be applied by taking Options into account in the
order in which they are granted.
5. ELIGIBILITY. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible Employees
who will receive Options and Stock Appreciation Rights.
6. OPTIONS. The Committee may grant Options in accordance
with the Plan, the terms and conditions of which shall be set forth in an
Agreement. Each Option and Agreement shall be subject to the following
conditions:
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(a) PURCHASE PRICE. The purchase price or the manner
in which the purchase price is to be determined for Shares under each Option
shall be set forth in the Agreement, provided that the purchase price per Share
under each Option shall not be less than the Fair Market Value of a Share at the
time the Option is granted (one hundred ten percent (110%) in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder).
(b) DURATION. Options granted hereunder shall be for
such term as the Committee shall determine, provided that (i) no Incentive Stock
Option shall be exercisable after the expiration of ten (10) years from the date
it is granted (five (5) years in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder) and (ii) no Nonqualified Stock Option shall be
exercisable after the expiration of ten (10) years and one (1) day from the date
it is granted. The Committee may, subsequent to the granting of any Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
(c) NON-TRANSFERABILITY. No Option granted hereunder
shall be transferable by the Optionee to whom granted otherwise than by will or
the laws of descent and distribution, and an Option may be exercised during the
lifetime of such Optionee only by the Optionee or such Optionee's guardian or
legal representative. The terms of such Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.
(d) VESTING. Subject to subsection 6(e) below, unless
otherwise set forth in the Agreement, each Option shall become exercisable as to
33-1/3 percent of the Shares covered by the Option on the first anniversary of
the date the Option was granted and as to an additional 33-1/3 percent of the
Shares covered by the Option on each of the following two (2) anniversaries of
such date of grant. To the extent not exercised, installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming exercisable,
but not later than the date the Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
(e) ACCELERATED VESTING. Notwithstanding the
provisions of subsection 6(d) above, each Option granted to an Optionee shall
become immediately exercisable in full upon a Change in Control.
(f) TERMINATION OF EMPLOYMENT. In the event that an
Optionee ceases to be employed by the Company or a Subsidiary, any outstanding
Options held by such Optionee shall, unless the Agreement evidencing such Option
provides otherwise, terminate as follows:
(i) If the Optionee's termination of employment
is due to his death or Disability, the Option (to the
extent exercisable at the time of the Optionee's
termination of employment) shall be exercisable for a
period of one (1) year following such termination of
employment, and shall thereafter terminate;
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(ii) If the Optionee's termination of employment
is by the Company or a Subsidiary for Cause, the Option
shall terminate on the date of the Optionee's termination of
employment; and
(iii) If the Optionee's termination of employment
is for any other reason (including an Optionee's ceasing to
be employed by a Subsidiary as a result of the sale of such
Subsidiary or an interest in such Subsidiary), the Option
(to the extent exercisable at the time of the Optionee's
termination of employment) shall be exercisable for a period
of three (3) months following such termination of
employment, and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide, either at
the time an Option is granted or thereafter, that the Option may be exercised
after the periods provided for in this subsection 6(f), but in no event beyond
the term of the Option.
(g) METHOD OF EXERCISE. The exercise of an Option
shall be made only by a written notice delivered to the Secretary of the Company
at the Company's principal executive office, specifying the number of Shares to
be purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The purchase price
for any Shares purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise in cash, by check, or, at the discretion of the
Committee and upon such terms and conditions as the Committee shall approve, by
transferring Shares to the Company or by a cashless exercise procedure. Any
Shares transferred to the Company as payment of the purchase price under an
Option shall be valued at their Fair Market Value on the day preceding the date
of exercise of such Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option and the Agreement evidencing any
related Stock Appreciation Right to the Secretary of the Company, who shall
endorse thereon a notation of such exercise and return such Agreement to the
Optionee. Not less than 100 Shares may be purchased at any time upon the
exercise of an Option unless the number of Shares so purchased constitutes the
total number of Shares then purchasable under the Option.
(h) RIGHTS OF OPTIONEES. No Optionee shall be deemed
for any purpose to be the owner of any Shares subject to any Option unless and
until (i) the Option shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the Shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.
7. STOCK APPRECIATION RIGHTS. The Committee may, in its
discretion in connection with the grant of an Option, grant Stock Appreciation
Rights in accordance with the Plan, the terms and conditions of which shall be
set forth in an Agreement. A Stock Appreciation Right shall cover the same
shares covered by the Option (or such lesser number of shares as the Committee
may determine) and shall, except as provided in this Section 7, be subject to
the same terms and conditions as the related Option.
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(a) STOCK APPRECIATION RIGHTS RELATED TO AN OPTION.
(i) TIME OF GRANT. A Stock Appreciation Right may
be granted only at the time of grant of the related Option.
(ii) PAYMENT. A Stock Appreciation Right shall
entitle the holder thereof, upon exercise of the Stock
Appreciation Right or any portion thereof, to receive
payment of an amount computed pursuant to subsection
7(a)(iv) below.
(iii) EXERCISE. A Stock Appreciation Right shall be
exercisable at such time or times and only to the extent
that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be
transferable. A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be
exercisable only if the Fair Market Value of a Share on the
date of exercise exceeds the purchase price specified in the
related Incentive Stock Option.
(iv) AMOUNT PAYABLE. Upon the exercise of a Stock
Appreciation Right, the Optionee shall be entitled to
receive an amount determined by multiplying (A) the excess
of the Fair Market Value of a Share on the date of exercise
of such Stock Appreciation Right over the per Share purchase
price under the related Option, by (B) the number of Shares
as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any
Stock Appreciation Right by including such a limit at the
time it is granted.
(v) TREATMENT OF RELATED OPTIONS AND STOCK
APPRECIATION RIGHTS UPON EXERCISE. Upon the exercise of a
Stock Appreciation Right, the related Option shall be
cancelled to the extent of the number of Shares as to which
the Stock Appreciation Right is exercised and upon the
exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be
cancelled to the extent of the number of Shares as to which
the Option is exercised or surrendered.
(b) METHOD OF EXERCISE. Stock Appreciation Rights
shall be exercised by an Optionee only by a written notice delivered in person
or by mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the Secretary
of the Company, who shall endorse thereon a notation of such exercise and return
such Agreements to the Grantee.
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(c) FORM OF PAYMENT. Payment of the amount determined
under subsection 7(a)(iv) above may be made solely in whole Shares in a number
determined based upon their Fair Market Value on the date of exercise of the
Stock Appreciation Right or, alternatively, at the sole discretion of the
Committee, solely in cash, or in a combination of cash and Shares as the
Committee deems advisable. In the event that a Stock Appreciation Right is
exercised within the sixty-day period following a Change in Control, any amount
payable shall be solely in cash. If the Committee decides to make full payment
in Shares, and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash. Notwithstanding the foregoing, to the
extent required by Rule 16b-3 of the Exchange Act, no payment in the form of
cash may be made upon the exercise of a Stock Appreciation Right pursuant to
subsection 7(a)(iv) above to an officer of the Company or a Subsidiary who is
subject to Section 16(b) of the Exchange Act, unless the exercise of such Stock
Appreciation Right is made during the period beginning on the third business day
and ending on the twelfth business day following the date of release for
publication of the Company's quarterly or annual statements of earnings.
8. LOANS.
(a) The Company or any Subsidiary may make loans to an
Optionee in connection with the exercise of an Option, subject to the following
terms and conditions and such other terms and conditions not inconsistent with
the Plan, including the rate of interest, if any, as the Committee shall impose
from time to time.
(b) No loan made under the Plan shall exceed the sum
of (i) the aggregate purchase price payable pursuant to the Option with respect
to which the loan is made, plus (ii) the amount of the reasonably estimated
income and employment taxes payable by the Optionee with respect to the exercise
of the Option, reduced by (iii) the aggregate par value of the Shares being
acquired pursuant to exercise of the Option. In no event may any such loan
exceed the Fair Market Value, at the date of exercise, of the Shares received
pursuant to such exercise.
(c) No loan shall have an initial term exceeding ten
(10) years; provided, that loans under the Plan shall be renewable at the
discretion of the Committee; and provided further, that the indebtedness under
each loan shall become due and payable, as the case may be, on a date no later
than (i) one (1) year after termination of the Optionee's employment due to
death, Disability, or retirement or (ii) the date of termination of the
Optionee's employment for any reason other than death, Disability, or
retirement.
(d) Loans under the Plan may be satisfied by an
Optionee, as determined by the Committee, in cash or, with the consent of the
Committee, in whole or in part by the transfer to the Company of Shares whose
Fair Market Value on the date of such payment is equal to part or all of the
outstanding balance of such loan.
(e) A loan shall be secured by a pledge of Shares with
a Fair Market Value of not less than the principal amount of the loan. After any
repayment of a loan, pledged Shares no longer required as security may be
released to the Optionee.
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(f) Every loan shall meet all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction.
9. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
the maximum number and class of shares of stock with respect to which Options
and Stock Appreciation Rights may be granted under the Plan, the number and
class of shares of stock as to which Options and Stock Appreciation Rights have
been granted under the Plan, and the purchase price therefor, if applicable.
(b) Any such adjustment in the Shares or other
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
10. NON-EMPLOYEE DIRECTOR OPTIONS. Notwithstanding any of the
other provisions of the Plan to the contrary, the provisions of this Section 10
shall apply only to grants of Options to Non-Employee Directors. Except as set
forth in this Section 10, the other provisions of the Plan shall apply to grants
of Options to Non-Employee Directors to the extent not inconsistent with this
Section 10. For purposes of interpreting Section 6 of the Plan, a Non-Employee
Director's service as a member of the Board shall be deemed to be employment
with the Company or its Subsidiaries.
(a) GENERAL. Non-Employee Directors shall receive
Nonqualified Stock Options in accordance with this Section 10 and may not be
granted Stock Appreciation Rights or Incentive Stock Options under this Plan.
The purchase price per Share purchasable under Options granted to Non-Employee
Directors shall be the Fair Market Value of a Share on the date of grant. No
Agreement with any Non-Employee Director may alter the provisions of this
Section 10 and no Option granted to a Non-Employee Director may be subject to a
discretionary acceleration of exercisability.
(b) GRANTS TO NEW NON-EMPLOYEE DIRECTORS. Each
Non-Employee Director who, after December 1, 1994, is elected to the Board for
the first time by stockholders of the Company at any special or annual meeting
of stockholders and who does not receive a grant of an option as prescribed in
Section 4(a)(ii) of The Bethlehem Corporation Equity Incentive Plan For
Directors, will, at the time such director is elected and duly qualified, be
granted automatically, without action by the Committee, an Option to purchase
10,000 Shares.
(c) GRANTS TO CONTINUING DIRECTORS. On the date of each
annual meeting of stockholders subsequent to January 1, 1995, each continuing
Non-Employee Director (i.e., a director not being elected by stockholders for
the first time) will be granted automatically, without action by the Committee,
an Option to purchase 500 Shares.
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(d) VESTING. Subject to accelerated vesting pursuant to
subsection 6(e)(i) hereof, each Option shall be exercisable as to 33-1/3% of the
Shares covered by the Option on the date the Option is granted and as to an
additional 33-1/3% of the Shares covered by the Option on each of the following
two anniversaries of such date of grant. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Option expires.
Subsections 6(d), 6(e)(ii) and 6(f) hereof shall not apply to Options granted to
Non-Employee Directors.
(e) DURATION. Subject to the immediately following
sentence, each Option granted to a Non-Employee Director shall be for a term of
ten (10) years and one (1) day. Upon the cessation of a Non-Employee Director's
membership on the Board for any reason, Options granted to such Non-Employee
Director shall expire upon the earlier of (i) three (3) years from the date of
such cessation of Board membership or (ii) expiration of the term of the Option.
The Committee may not provide for an extended exercise period beyond the periods
set forth in this subsection 10(e).
11. RELEASE OF FINANCIAL INFORMATION. A copy of the Company's
annual report to stockholders shall be delivered to each Optionee if and at the
time any such report is distributed to the Company's stockholders. Upon request
by any Optionee, the Company shall furnish to such Optionee a copy of its most
recent annual report and each quarterly report and current report filed under
the Exchange Act since the end of the Company's prior fiscal year.
12. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall
terminate on the day preceding the tenth anniversary of its effective date,
except with respect to Options and Stock Appreciation Rights outstanding on such
date, and no Options or Stock Appreciation Rights may be granted thereafter. The
Board may sooner terminate or amend the Plan at any time, and from time to time;
provided, however, that, except as provided in Section 9 hereof, no amendment
shall be effective unless approved by the stockholders of the Company where
stockholder approval of such amendment is required (a) to comply with Rule 16b-3
under the Exchange Act subsequent to the registration of a class of equity
securities of the Company under Section 12 of the Exchange Act or (b) to comply
with any other law, regulation or stock exchange rule. Notwithstanding anything
in this Section 12 to the contrary, subsequent to the registration of a class of
equity securities of the Company under Section 12 of the Exchange Act, Section
10 hereof shall not be amended more than once in any six-month period, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules or regulations thereunder.
Except as provided in Section 9 hereof, rights and obligations
under any Option granted before any amendment of the Plan shall not be adversely
altered or impaired by such amendment, except with the consent of the Optionee.
13. NON-EXCLUSIVITY OF THE PLAN. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the
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granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
14. LIMITATION OF LIABILITY. As illustrative of the limitations
of liability of the Company, but not intended to be exhaustive thereof, nothing
in the Plan shall be construed to:
(a) give any person any right to be granted an Option
or Stock Appreciation Right other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect
to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or its
Subsidiaries to terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company or its Subsidiaries will employ any
person in any particular position, at any particular rate of compensation or for
any particular period of time.
15. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
(a) This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to the choice of law
principles thereof.
(b) The obligation of the Company to sell or deliver
Shares with respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(c) Any provisions of the Plan inconsistent with Rule
16b-3 under the Exchange Act shall be inoperative and shall not affect the
validity of the Plan.
(d) Except as otherwise provided in Section 12 hereof,
the Board may make such changes as may be necessary or appropriate to comply
with the rules and regulations of any government authority or to obtain for
Optionees granted Incentive Stock Options, the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.
(e) Each Option and Stock Appreciation Right is
subject to the requirement that, if at any time the Committee determines, in its
absolute discretion, that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option or Stock Appreciation Right or the issuance of
Shares, no
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Options or Stock Appreciation Rights shall be granted or payment made or Shares
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
(f) In the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and the Committee may
require an Optionee receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares, to represent to the Company in writing that
the Shares acquired by such Optionee are acquired for investment only and not
with a view to distribution.
16. MISCELLANEOUS.
(a) MULTIPLE AGREEMENTS. The terms of each Option or
Stock Appreciation Right may differ from other Options or Stock Appreciation
Rights granted under the Plan at the same time, or at any other time. The
Committee may also grant more than one Option or Stock Appreciation Right to a
given Optionee during the term of the Plan, either in addition to, or in
substitution for, one or more Options or Stock Appreciation Rights previously
granted to that Optionee. The grant of multiple Options or Stock Appreciation
Rights may be evidenced by a single Agreement or multiple Agreements, as
determined by the Committee.
(b) WITHHOLDING OF TAXES. The Company shall have the
right to deduct from any payment of cash to any Optionee an amount equal to the
federal, state and local income and employment taxes and other amounts required
by law to be withheld with respect to any Option or Stock Appreciation Right.
Notwithstanding anything to the contrary contained herein, if an Optionee is
entitled to receive Shares upon exercise of an Option or Stock Appreciation
Right, the Company shall have the right to require such Optionee, prior to the
delivery of such Shares, to pay to the Company the amount of any federal, state
or local income and employment taxes and other amounts which the Company is
required by law to withhold. The Agreement evidencing any Incentive Stock Option
granted under this Plan shall provide that if the Optionee makes a disposition,
within the meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Optionee pursuant to such
Optionee's exercise of the Incentive Stock Option, and such disposition occurs
within the two-year period commencing on the day after the date of grant of such
Option or within the one-year period commencing on the day after the date of
transfer of the Share or Shares to the Optionee pursuant to the exercise of such
Option, such Optionee shall, within ten (10) days of such disposition, notify
the Company thereof and thereafter immediately deliver to the Company any amount
of federal, state or local income and employment taxes and other amounts which
the Company informs the Optionee the Company is required to withhold.
(c) DESIGNATION OF BENEFICIARY. Each Optionee may,
with the consent of the Committee, designate a person or persons to receive in
the event of such Optionee's death, any Option or Stock Appreciation Right
and/or amounts payable pursuant thereto, to which such Optionee would then be
entitled. Such designation will be made upon forms
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supplied by and delivered to the Company and may be revoked or changed in
writing. In the event of the death of an Optionee and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Optionee's death, the Company shall deliver such Options, Stock Appreciation
Rights and/or amounts payable to the executor or administrator of the estate of
the Optionee, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
Options, Stock Appreciation Rights and/or amounts payable to the spouse or to
any one or more dependents or relatives of the Optionee, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
17. EFFECTIVE DATE. The Plan shall become effective upon
adoption by the Board, subject, however, to its further approval by the
requisite vote of the shareholders of the Company within twelve (12) months
after the date the Plan is adopted by the Board, at a regular meeting of the
stockholders or at a special meeting of the stockholders called and held for
such purpose. Grants of Incentive Stock Options, Nonqualified Stock Options and
Stock Appreciation Rights may be made prior to such stockholder approval, but
all grants made prior to such stockholder approval shall be subject to the
obtaining of such approval and, if such approval is not obtained, such grants
shall not be effective for any purpose.
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[PRELIMINARY PROXY MATERIALS]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE BETHLEHEM CORPORATION
Proxy - Annual Meeting of Stockholders
December 12, 1995
The undersigned, a stockholder of The Bethlehem Corporation, a
Pennsylvania corporation (the "Company"), does hereby appoint B. Ord Houston and
Alan H. Silverstein and each of them, the true and lawful attorneys and proxies
with full power of substitution, for and in the name, place and stead of the
undersigned, to vote all of the shares of Common Stock of the Company which the
undersigned would be entitled to vote if personally present at the 1995 Annual
Meeting of Stockholders of the Company to be held Tuesday, December 12, 1995 at
3:00 p.m. local time at the Holiday Inn, Route 512, Bethlehem, Pennsylvania or
at any adjournment thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. INCREASE IN AUTHORIZED CAPITAL
To approve an amendment to the Company's Articles of Incorporation to
increase the authorized capitalization of the Company to a total of 25,000,000
shares of stock, consisting of 20,000,000 shares of Common Stock, no par value,
and 5,000,000 shares of preferred stock, no par value.
______ FOR _____ AGAINST _____ ABSTAIN
2. ELECTION OF DIRECTORS
To vote for the election of Messrs. Houston, R. Gale, Zizza and Bogatz
as directors.
TO WITHHOLD
AUTHORITY TO TO WITHHOLD AUTHORITY
VOTE FOR ALL TO VOTE FOR ANY INDIVIDUAL
FOR____ NOMINEES____ NOMINEE(S), PRINT NAME(S) BELOW:
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<PAGE>
3. 1994 STOCK OPTION PLAN
To approve the adoption of the Company's 1994 Stock Option Plan;
______ FOR _____ AGAINST _____ ABSTAIN
4. AMENDMENT OF THE DIRECTORS OPTION PLAN
To amend the Company's Equity Incentive Plan for Directors to increase
the term of options granted under the Directors Option Plan, to increase the
period during which outstanding options may be exercised and to modify certain
termination provisions.
______ FOR _____ AGAINST _____ ABSTAIN
5. RATIFICATION OF BY-LAWS AMENDMENT
To ratify an amendment to the Company's By-laws providing for the
elimination of the classification of the Board of Directors.
______ FOR _____ AGAINST _____ ABSTAIN
6. RATIFICATION OF APPOINTMENT OF AUDITORS
To ratify the appointment of Sobel & Co. as the Company's independent
auditors for the 1996 Fiscal Year.
______ FOR _____ AGAINST _____ ABSTAIN
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<PAGE>
7. DISCRETIONARY AUTHORITY
To transact such other business as may properly come before the Meeting
and any adjournment thereof according to the proxies discretion and in their
discretion.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 THROUGH 7.
Please mark, date and sign exactly
as your name appears on this proxy
card. When shares are held jointly,
both holders should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give your full title. If the
holder is a corporation or
partnership, the full corporate or
partnership name should be signed
by a duly authorized officer.
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Signature
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Signature, if shares held jointly
Dated _______________________ 1995
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