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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
THE BETHLEHEM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
<PAGE>
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
-2-
<PAGE>
THE BETHLEHEM CORPORATION
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 17, 1998
---------------
To the Shareholders of The Bethlehem Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of THE BETHLEHEM CORPORATION, a Pennsylvania corporation (the
"Company"), will be held on Thursday, December 17, 1998 at 10:00 a.m. local time
at the Marriott Residence Inn, 2180 Motel Drive, Bethlehem, Pennsylvania, for
the following purposes:
1. To elect eight directors, each to serve for a term of one year and
until the next Annual Meeting of Shareholders and until their successors are
duly elected and qualify;
2. To ratify the appointment of BDO Seidman, LLP as independent auditors
of the Company for the Fiscal year ending May 31, 1999; and
3. To transact such other business as may properly come before the Meeting
and any adjournment thereof according to the discretion of the persons voting
the accompanying proxy.
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 November 30, 1998 as the record date (the "Record Date") for the
Meeting. Only shareholders 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 notice of and to vote at the Meeting.
By Order of the Board of Directors
HAROLD BOGATZ
SECRETARY
December 1, 1998
- --------------------------------------------------------------------------------
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 PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
THE BETHLEHEM CORPORATION
25TH AND LENNOX STREETS
EASTON, PENNSYLVANIA 18045
--------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 17, 1998
---------------
INTRODUCTION
This Proxy Statement is being furnished to shareholders 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 Annual Meeting of
Shareholders of the Company (the "Meeting") to be held Thursday, December 17,
1998 at 10:00 a.m. local time at the Marriott Residence Inn, 2180 Motel Drive,
Bethlehem, Pennsylvania, or at any adjournment thereof.
The principal executive offices of the Company are located at 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
shareholders is December 1, 1998.
RECORD DATE AND VOTING SECURITIES
As of the close of business on November 30, 1998, the record date for
the Meeting (the "Record Date"), there were 2,288,520 outstanding shares of the
Company's common stock, no par value (the "Common Stock"). Except as indicated
below, holders of Common Stock have one vote per share on each matter to be
acted upon. Only holders of Common Stock (the "Shareholders") 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 for a quorum.
In the election of directors, each Shareholder shall have the right to
multiply the number of votes to which he may be entitled by the total number of
directors to be elected in the election of directors and he may cast the whole
number of his votes for one candidate or he may distribute them among any two or
more candidates. 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.
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
election as Directors of the eight persons who have been nominated by the Board
of Directors; (ii) to ratify the appointment of BDO Seidman, LLP as independent
auditors of the Company for the Fiscal year ending May 31, 1999 (the "1999
Fiscal Year"); and (iii) on 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 Shareholder's right to
attend the Meeting and to vote in person. Any Proxy executed and returned by a
Shareholder 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
2
<PAGE>
Meeting, or by execution of a subsequent proxy that is presented before the
Meeting, or if the Shareholder 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 that 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1998, information
regarding ownership of the outstanding Common Stock of the Company by (i) all
persons who are known to the Company to be the beneficial owner of more than 5%
of the Common Stock; (ii) each director and Named Executive Officer (as such
term is hereinafter defined); and (iii) all directors and executive officers of
the Company as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER* SHARES OWNED BENEFICIALLY (1) OUTSTANDING SHARES
- ------------------------------------- ----------------------------- ------------------
<S> <C> <C>
Universal Process Equipment, Inc. ("UPE") 2,706,600(2)(3) 63.5%
PO Box 338
Roosevelt, NJ 08555
Ronald H. Gale 2,779,100(4)(5) 65.2%
Jan P. Gale 2,777,100(4)(5) 65.1%
James L. Leuthe 339,124(4)(6) 14.0%
Alan H. Silverstein 310,000(7) 11.9%
Salvatore J. Zizza 188,000(8) 7.6%
B. Ord Houston 6,365(4) (9)
Harold Bogatz 10,000(10) (9)
James F. Lomma - (9)
Clarence T. Lind 13,999(11) (9)
Antoinette L. Martin 23,333(12) (9)
All directors and executive officers as a 3,767,921(13) 76%
group (12 persons)
</TABLE>
- ------------------------------------
* Unless otherwise noted, the address of each Beneficial Owner is c/o the
Company, 25th & Lennox Streets, Easton, Pennsylvania 18045.
3
<PAGE>
(1) All persons identified as holding options are deemed to be beneficial
owners of shares of Common Stock subject to such options by reason of
their right to acquire such shares within 60 days after November 30,
1998.
(2) Includes 1,975,000 shares subject to options. See "Certain
Relationships and Transactions."
(3) Does not include shares owned by Ronald H. Gale and Jan P. Gale.
(4) Includes 500 shares subject to options.
(5) Includes 2,706,600 shares beneficially owned by UPE, of which the
individual is an officer, director and principal stockholder.
(6) Of this total, 52,281 shares are owned by Nikki, Inc., a corporation of
which Mr. Leuthe is an officer and director and the sole stockholder,
161,343 shares are owned by Mr. Leuthe and 125,500 shares are subject
to options. This total does not include 640 shares owned by Mr.
Leuthe's adult children as to which he disclaims beneficial ownership.
(7) Consists of 310,000 shares subject to options.
(8) Consists of 188,000 shares subject to options.
(9) Less than 1.0%.
(10) Consists of 10,000 shares subject to options.
(11) Includes 9,999 shares subject to options.
(12) Consists of 23,333 shares subject to options.
(13) Includes 2,657,999 shares subject to options.
PROPOSAL I - ELECTION OF DIRECTORS
NOMINEES
It is proposed that eight nominee directors, Harold Bogatz, James F.
Lomma, Ronald H. Gale, Jan P. Gale, B. Ord Houston, James L. Leuthe, Alan H.
Silverstein and Salvatore J. Zizza (the "Nominees"), be elected to serve until
the next Annual Meeting of Shareholders and until their respective successors
are elected and qualify. Unless otherwise specified, all Proxies received will
be voted in favor of the election of the Nominees as directors of the Company.
All Nominees are currently directors of the Company.
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
Shareholders and until his successor is elected and qualified.
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<PAGE>
The following table sets forth information regarding the current ages,
terms of office and business experience of the Nominees, including their
positions with the Company:
<TABLE>
<CAPTION>
Year First Became a
Name Age Principal Occupation Director
- ---------------------- --- ---------------------------------------------- -------------------
<S> <C> <C> <C>
Salvatore J. Zizza 53 Chairman of the Board of Directors since 1995; 1995
Chairman and Principal of Hallmark Electrical
Supplies Corp., since May 1998; from 1991 to
April 1998, Chairman and Executive Vice
President and Treasurer of The Lehigh Group,
a public company listed on the New York Stock
Exchange with subsidiaries in the distribution
of electrical products
Alan H. Silverstein 49 President and Chief Executive Officer of the 1994
Company since December 1995; President and
Chief Operating Officer of the Company from
February 1994 to November 1995; from July 1992
to February 1994, President of Universal
Industrial Gas, Inc., a rebuilder of industrial
gas plants
James L. Leuthe 56 President, Midland Farms, Inc., since August 1998; 1976
Chairman of the Board of First Lehigh Corporation,
a bank holding company, from 1982 to 1998; from
1977 until 1995 held various positions with the
Company, including most recently President and
` Chief Executive Officer
Jan P. Gale(1) 44 Executive Vice President of UPE since 1978, an 1991
international supplier of complete process plants
and equipment and manufacturer of new equipment
in the United States and Europe
Ronald H. Gale(1) 47 President and Chief Executive Officer of UPE since 1990
1978
Harold Bogatz 60 Vice President and General Counsel of UPE 1995
since 1987; Secretary of the Company since 1996
James F. Lomma 53 President, J.F. Lomma Inc. since 1975, a trucking, 1998
rigging and export packaging firm located in South
Kearney, N.J. Mr. Lomma also serves as the Chairman
of the Special Carrier & Rigging Association
B. Ord Houston 86 Secretary of the Company from June 1983 to December 1976
1995; held various positions with the Company from
1966 until 1984, most recently as Executive Vice
President
</TABLE>
- ----------------------------
(1) Jan P. Gale and Ronald H. Gale are brothers.
5
<PAGE>
REQUIRED VOTE
In voting for directors, each Shareholder is entitled to eight votes
for each share of Common Stock held, one for each of eight directors to be
elected. A Shareholder may cast his votes evenly for all Nominees or may
cumulate his votes and cast them for one Nominee or distribute his votes among
two or more Nominees. The eight persons receiving the highest number of votes
cast in person or by proxy shall be elected to the Board of Directors. Brokers
that do not receive instructions are entitled to vote on the election of
directors. Abstentions from voting on the election of directors will have no
effect, because 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 had three meetings during the Fiscal year ended
May 31, 1998 (the "1998 Fiscal Year"). The Board of Directors has constituted an
Audit Committee, a Compensation Committee, a Stock Option Committee and a
Nominating Committee. No director of the Company attended fewer than 75% of the
aggregate of the total number of meetings of the Board of Directors held (while
they were a member of the Board of Directors) plus the total number of meetings
held by all committees of the Board on which he served during the 1998 Fiscal
Year.
The Audit Committee currently consists of Messrs. Leuthe, Houston and
Lomma and is appointed annually by the Board of Directors to recommend the
selection of independent auditors, to review the scope and results of the audit,
to review the adequacy of the Company's accounting, financial and operating
controls and to supervise special investigations. The Audit Committee met once
during the 1998 Fiscal Year.
The Compensation Committee currently consists of Messrs. Zizza, Houston
and R. Gale and 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 met once during the 1998 Fiscal Year.
The Stock Option Committee currently consists of Messrs. Ronald H. Gale
and B. Ord Houston and is appointed annually by the Board of Directors to
determine the terms of the grant of stock options and the persons to whom such
options shall be granted in accordance with the terms of the Company's Stock
option plans and to administer such plans. The Stock Option Committee met once
during the 1998 Fiscal Year.
The Nominating Committee currently consists of Messrs. J. Gale, Zizza,
Silverstein and Bogatz, and is appointed annually by the Board of Directors to
recommend to the Board of Directors nominees for election as directors. The
Nominating Committee met once during the 1998 Fiscal Year.
EXECUTIVE COMPENSATION TABLE
The following table summarizes compensation information for the
Company's President and Chief Executive Officer, and two executive officers of
the Company whose compensation exceeded $100,000 for the Fiscal Year ended May
31, 1998. The table presents for such individuals information with respect to
compensation paid or accrued by the Company for services rendered during the
Fiscal Years ended May 31, 1996, 1997 and 1998. Messrs. Silverstein, Lind and
Mrs. Martin are collectively referred to herein as the "Named Executive
Officers."
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL YEAR COMPENSATION LONG TERM COMPENSATION
------------------------ ----------------------
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTION ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1) AWARDS COMPENSATION (2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Silverstein 1998 $ 154,789 $ 91,214 $ 6,607 50,000 $ 11,865
President and Chief 1997 140,441 83,570 7,295 - 11,925
Executive Officer 1996 118,655 46,850 7,295 - 11,925
Clarence T. Lind 1998 104,923 21,303 5,849 - 612
Vice President of 1997 99,000 25,907 4,369 - 672
Sales and Marketing 1996 90,000 26,350 4,369 20,000 672
Antoinette L. Martin 1998 90,000 10,900 5,539 10,000 612
Vice President of 1997 89,038 890 5,902 - 612
Finance, Chief 1996 63,754 638 5,902 20,000 612
Financial Officer
</TABLE>
- -----------------------------------
(1) Represents lease and insurance payments made by the Company with
respect to use of an automobile.
(2) Represents life insurance premiums paid by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options granted
during the Fiscal year ended May 31, 1998 under the Company's stock option plans
to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options Granted
Underlying to Employees in Per Share Expiration
Name Options Granted Fiscal Year Exercise Price Date
- --------------------- --------------- ---------------- -------------- -----------
<S> <C> <C> <C> <C>
Alan H. Silverstein 50,000 5.8% $1.88 June 2, 2007
Antoinette L. Martin 10,000 1.17% $1.88 June 2, 2007
</TABLE>
7
<PAGE>
AGGREGATED FISCAL YEAR-END OPTIONS
The following table sets forth certain information regarding
unexercised stock options held by each of the Named Executive Officers as of May
31, 1998. No stock options were exercised by any Named Executive Officer during
the 1998 Fiscal Year.
<TABLE>
<CAPTION>
AGGREGATED FISCAL YEAR-END OPTION VALUES
NUMBER OF
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT MAY 31, 1998 IN-THE-MONEY OPTIONS AT MAY 31, 1998 ($)(1)
---------------------------- -------------------------------------------
EXERCISABLE/
NAME EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
- ---- ------------------------- -------------
<S> <C> <C>
Alan H. Silverstein 310,000/0 439,625/0
Clarence T. Lind 9,999/10,001 3,932/4,768
Antoinette L. Martin 23,333/6,667 10,066/3,734
</TABLE>
(1) On May 31, 1998 the last reported sale price of the Common Stock, as
reported by the American Stock Exchange, was $2.56 per share.
COMPENSATION OF DIRECTORS
Directors are not compensated in general for their services as a
director but are entitled to reimbursement of expenses incurred in connection
with their attendance at meetings. In the past the Company has granted options
to certain directors.
EMPLOYMENT AGREEMENTS
Alan H. Silverstein, President and Chief Executive Officer, 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 defined
earnings of the Company.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Ronald H. Gale and Jan P. Gale are Directors and Shareholders of the
Company and are officers, directors and principal shareholders of UPE, a
principal shareholder of the Company. UPE and/or Ronald H. Gale and/or Jan P.
Gale are also majority shareholders or otherwise affiliated with other companies
that engage in transactions with the Company. UPE and related entities have
purchased process equipment manufactured by the Company and have utilized the
Company's remanufacturing services. The approximate total revenues derived from
sales to UPE and related parties was approximately $1,318,000 for Fiscal 1998.
On March 26, 1996, the Board of Directors of the Company, subject to
the approval of the Company's shareholders, granted an option to UPE to purchase
350,000 shares of the Common Stock at an exercise price of $1.8125 per share.
Such option was issued in consideration for debt guarantees by UPE
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<PAGE>
for various borrowings by the Company. This transaction was approved by the
Company's Shareholders at the Annual Meeting of the Shareholders held on April
23, 1998 (the "April 1998 Meeting"). A financing charge of $296,000 related to
these options was recognized in Fiscal 1998. The value ascribed to these options
is approximately $424,000, and the balance of $128,000 will be amortized over
the terms of the outstanding guarantees.
On March 26, 1996, the Board of Directors, subject to the approval of
the Company's shareholders, authorized the issuance to UPE of 350,000 shares of
Common Stock in consideration for a 50% ownership interest in certain resale
inventory, which consists primarily of heat transfer equipment owned by UPE.
This transaction was approved at the April 1998 Meeting. The Company recorded
approximately $126,000 of non-cash compensation expense related to this
transaction in Fiscal 1998.
On August 21, 1998, the Board of Directors of the Company authorized
the issuance to UPE of an option to purchase 175,000 shares of Common Stock at
an exercise price of $1.63, which represented the fair market value of the stock
at the date of the grant. Such option was issued in consideration for guarantees
by UPE of borrowings by the Company from PNC Bank National Association. The
financing consists of a $4 million line of credit and term loan, secured by the
Company's inventory, accounts receivable, machinery and equipment and other
assets. The value ascribed to such options will be amortized over the term of
the guarantee.
In May 1998, the Company transferred inventory with a book value of
approximately $1,924,000 to UPE. As part of this transaction, UPE assumed
obligations of $1,390,000 and $534,000 of related bank debt. This transaction
did not result in a gain or loss in the Company's Fiscal 1998 statement of
income.
From time to time in the ordinary course of business, UPE advances
funds to the Company to enable the Company to meet certain temporary cash
requirements. The interest on the advances is prime rate (Chase Bank, New York)
plus 1%. In August 1996, UPE advanced $250,000 to the Company. UPE advanced an
additional $250,000 to the Company in October 1996. As of November 30, 1998,
$500,500 of these advances remains outstanding.
On February 28, 1997, the Company purchased a complete two stage
environmental thermal process system in Alberta, Canada. In order to effect the
acquisition of the equipment, the Company borrowed $225,000 from UPE at an
interest rate of prime rate (Chase Bank, New York) plus 2.5%. This loan was
repaid in full during the third and fourth quarter of Fiscal 1998.
As of June 1, 1996, the Company began a three year profit sharing
arrangement with UPE. This arrangement was agreed upon as consideration for
UPE's role in introducing the Company to Third Millenium Products, Inc.
("Millenium"), assisting in negotiating the acquisition of the assets of the
American Furnace Division of Millenium by Bethlehem Advanced Materials
Corporation ("BAM"), a wholly-owned subsidiary of the Company, and UPE's role in
originating, negotiating, developing and assisting in the marketing of the Tower
Filter Process product line. Under this arrangement, which expires in May 1999,
UPE is entitled to receive 25% of the defined pre-tax profits of BAM and the
Tower Filter Press product line. For the Fiscal Year 1998, no provision for this
profit sharing arrangement was required.
The Company and Salvatore J. Zizza, Chairman of the Board of the
Company, are parties to an agreement under which Mr. Zizza renders certain
financial advisory services, including those relating to proposed mergers and
acquisitions and equity and debt financing and relations with the financial
community and investors. Mr. Zizza receives compensation in the amount of
$120,000 per annum.
On March 26, 1996, the Board of Directors, subject to the approval of
the Company's Shareholders, authorized the issuance of 125,000 and 178,000
shares of Common Stock to James L. Leuthe, a director and former Chairman and
Chief Executive officer of the Company, and Salvatore J. Zizza, Chairman of the
Board of Directors of the Company, respectively. This transaction was approved
at the April 1998 Meeting. During Fiscal 1998, the Company recorded
approximately $32,000 in compensation expense for these options. The balance of
the option's fair value of approximately $335,000 will be expensed as services
rendered over the three year vesting period of the options.
9
<PAGE>
PROPOSAL II - RATIFICATION OF SELECTION OF AUDITORS
Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of BDO Seidman, LLP for the
1999 Fiscal Year be submitted to Shareholders for ratification due to the
significance of their appointment to the Company. If Shareholders do not ratify
the appointment of BDO Seidman, LLP, the Board of Directors will consider the
appointment of other certified public accountants. A representative of BDO
Seidman, LLP 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.
On March 6, 1997, the Board of Directors of the Company terminated the
engagement of Sobel & Co., LLC, Certified Public Accountants ("Sobel") as the
independent auditors of the Company and appointed BDO Seidman, LLP as the
independent auditors of the Company for the Fiscal Year ending May 31, 1997.
Sobel's report on the financial statements of the Company for the Fiscal Years
ended May 31, 1995 and May 31, 1996 did not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles. There were no other reportable events or
disagreements with Sobel to report in response to Item 304(a) of Regulation S-B.
REQUIRED VOTE
Ratification of the appointment of BDO Seidman, LLP requires the
affirmative vote of a majority of the votes cast by all Shareholders represented
and entitled to vote thereon. Brokers that do not receive instructions are
entitled to vote on the ratification of BDO Seidman, LLP. 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 Shareholder vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE 1999 FISCAL YEAR.
ANNUAL REPORT
All Shareholders of record as of the Record Date are concurrently
herewith being sent a copy of the Company's Annual Report for the 1998 Fiscal
Year and a copy of the Company's 10-QSB for the quarter ended August 31, 1998.
ANY SHAREHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB, FOR THE 1998 FISCAL YEAR (WITHOUT EXHIBITS), AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO SHAREHOLDER
INFORMATION, THE BETHLEHEM CORPORATION, 25TH AND LENNOX STREETS, EASTON,
PENNSYLVANIA 18045.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Shareholders of the
Company, shareholder proposals for such meeting must be submitted to the Company
no later than June 2, 1999.
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934, as amended. The amendment to Rule 14a-4 (c) (1) governs the Company's use
of its discretionary proxy voting authority with respect to a shareholder
proposal which is not addressed in the Company's proxy statement. The new
amendment provides that if a proponent of a proposal fails to notify the Company
at least 45 days prior to the month
10
<PAGE>
and day of mailing of the prior year's proxy statement, then the Company will be
allowed to use its discretionary voting authority when the proposal is raised at
the meeting, without any discussion of the matter in the proxy statement.
With respect to the Company's 1999 Annual Meeting of Shareholders, if
the Company is not provided notice of a shareholder proposal, which the
shareholder has not previously sought to include in the Company's proxy
statement, by October 15, 1999, the Company will be allowed to use its voting
authority as outlined above.
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 judgement.
By Order of the Board of Directors,
HAROLD BOGATZ
SECRETARY
December 1, 1998
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE BETHLEHEM CORPORATION
PROXY - ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 17, 1998
The undersigned, a Shareholder of The Bethlehem Corporation, a
Pennsylvania corporation (the "Company"), does hereby appoint Alan H.
Silverstein, Salvatore J. Zizza and Harold Bogatz 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 Annual Meeting of Shareholders of the Company to be
held Thursday, December 17, 1998 at 10:00 a.m. local time at the Marriott
Residence Inn, 2180 Motel Drive, Bethlehem, Pennsylvania or at any adjournment
thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS
To vote with respect to the election of Messrs. Harold Bogatz, James F.
Lomma, Jan P. Gale, Ronald H. Gale, B. Ord Houston, James L. Leuthe, Alan
Silverstein and Salvatore J. Zizza as directors.
FOR ALL WITHHOLD
NOMINEES AUTHORITY CUMULATIVE VOTES FOR ONE OR MORE
LISTED ABOVE FOR ALL NOMINEES AS FOLLOWS:
NOMINEES
- --------- --------
Harold Bogatz ________
INSTRUCTIONS: To withhold authority to vote for James F. Lomma ________
any individual nominee, write that Nominee's name Jan P. Gale ________
on the line provided below: Ronald H. Gale ________
B. Ord Houston ________
James L. Leuthe ________
Alan Silverstein ________
- -------------------------------- Salvatore J. Zizza ________
2. RATIFICATION OF APPOINTMENT OF AUDITORS
To ratify the appointment of BDO Seidman LLP as the Company's
independent auditors for the fiscal year ending May 31, 1999.
______ FOR _____ AGAINST _____ ABSTAIN
3. 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.
<PAGE>
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 AND 2.
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.
_____________________________________________
Signature
_____________________________________________
Signature, if shares held jointly
Dated _______________________, 1998
