<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
.......................Health-Chem Corporation.....................
(Name of Registrant as Specified in Its Charter)
.......................Health-Chem Corporation.....................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 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:
...............................................................
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:_/
...............................................................
4) Proposed maximum aggregate value of transaction:
...............................................................
_/ Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount previously paid:
...............................................................
2) Form, Schedule or Registration Statement No.:
...............................................................
3) Filing Party:
...............................................................
4) Date Filed:
...............................................................
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 11, 1995
To the Stockholders of Health-Chem Corporation:
Notice is hereby given that the Annual Meeting of Stockholders
of Health-Chem Corporation (the "Company") will be held at the
Holiday Inn Holidome and Conference Center, 2000 Loucks Road, York,
Pennsylvania, on May 11, 1995 at 9:00 A.M. (local time) for the
following purposes:
1. To elect ten directors.
2. To approve the adoption of the 1995 Performance Equity
Plan.
3. To transact any such other business as may come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on
March 24, 1995 as the record date for determining stockholders
entitled to notice of and to vote at the meeting.
A proxy and return envelope are enclosed for your convenience.
By Order of the Board of Directors
Marvin M. Speiser,
Chairman of the Board and President
March 31, 1995
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, A RETURN
ENVELOPE REQUIRING NO POSTAGE IF MAILED IN THE UNITED STATES IS
ENCLOSED FOR YOUR CONVENIENCE. PROMPT RETURN OF THE PROXY WILL
ASSURE A QUORUM AND SAVE THE COMPANY UNNECESSARY EXPENSE.
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
_________________
PROXY STATEMENT
_________________
This Proxy Statement is furnished to the stockholders of Health-Chem
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the annual
meeting of stockholders of the Company (the "Meeting") to be held on May 11,
1995 and any adjournment or adjournments thereof. A copy of the notice of
meeting accompanies this Proxy Statement. It is anticipated that the mailing
of this Proxy Statement and the enclosed proxy will commence on March 31,
1995.
Only stockholders of record at the close of business on March
24, 1995, the record date for the Meeting, will be entitled to
notice of and to vote at the Meeting. On the record date, the
Company had outstanding for purposes of voting at the Meeting
7,980,424 shares of common stock, par value $.01 per share (the
"Common Stock"). See "Security Ownership of Certain Beneficial
Owners and Management."
Directors of the Company will be elected by a plurality vote
of the outstanding shares of Common Stock present and entitled to
vote at the Meeting. Action on any other matter is approved by a
majority vote of the outstanding shares of Common Stock present and
entitled to vote at the Meeting.
Stockholders who execute proxies may revoke them by giving
written notice to the Secretary of the Company at any time before
such proxies are voted or by submitting a duly executed proxy
bearing a later date. Attendance at the Meeting shall not have the
effect of revoking a proxy unless the stockholder so attending
shall, in writing, so notify the Secretary of the Meeting at any
time prior to the voting of the proxy.
The Board of Directors does not know of any matter that is
expected to be presented for consideration at the Meeting other
than as is described in this Proxy Statement. However, if other
matters properly come before the Meeting, the persons named in the
accompanying proxy intend to vote thereon in accordance with their
judgment.
All proxies received pursuant to this solicitation will be
voted except as to matters where authority to vote is specifically
withheld and, where a choice is specified as to the proposal, they
will be voted in accordance with such specification. If no
instructions are given, the proxy will be voted for the nominees
for election as directors of the Company listed below and for the
adoption of the 1995 Performance Equity Plan (the "1995 Plan").
Abstentions and broker non-votes will each be counted as present
for purposes of determining the presence of a quorum. With respect
to the adoption of the 1995 Plan, abstentions and broker non-votes
will each have the same effect as a negative vote.
The address of the Company's principal executive office is
1212 Avenue of the Americas, New York, New York 10036.
<PAGE>
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Board of Directors
may, from time to time, fix the number of directors constituting the Board of
Directors to be not less than three and not more than fifteen. The Board of
Directors currently consists of ten members. At the Meeting, ten directors
are to be elected to serve until the next annual meeting of stockholders or
until their respective successors are elected and qualified. Set forth below
are the names of the nominees for director, their ages, principal occupations
and business experience for at least the previous five years. All of the
nominees are presently directors of the Company. It is the intention of the
persons named in the enclosed proxy to vote for the election as directors of
the persons named in the table below unless a contrary direction is indicated
on the enclosed proxy. If any such nominee should become unavailable for
any reason, which the Board of Directors has no reason to anticipate, the
persons named in the enclosed proxy reserve the right to substitute another
person of their choice in his place. The holders of Common Stock are
entitled to one vote per share. The election of each director will require
the affirmative vote of a plurality of the votes cast at the Meeting.
<TABLE>
<CAPTION>
Name Age(1) Principal Occupation
---- ------ --------------------
<S> <C> <C>
Steven Bernstein 38 Senior Vice President
of the Company
Matthew Goldstein, Ph.D. 53 President of Baruch College
of the City University of
New York
Samuel R. Goodson 65 President of Pacific
Combining Corporation
Paul R. Moeller 48 Vice President-Finance
of the Company and
President of the Hercon
Environmental division of
Hercon Laboratories
Corporation
Eugene Roshwalb 55 Certified Public
Accountant
Bruce M. Schloss 39 Vice President, Secretary
and General Counsel of
the Company
Gregory P. Speiser(2) 38 Associate Director of
Bear, Stearns & Co., Inc.
Marvin M. Speiser(2) 69 Chairman of the Board and
President of the Company
Robert D. Speiser(2) 41 Executive Vice President of
the Company and President
of Hercon Laboratories
Corporation
Milton Y. Zussman 73 Attorney
(1) Age as of March 1, 1995.
(2) Marvin M. Speiser is the father of Robert D. Speiser and
Gregory P. Speiser.
</TABLE>
The following are summaries of the business experience during at
least the last five years of each of the persons nominated for election as a
director of the Company.
Steven Bernstein is an industrial engineer. He has been Senior Vice
President of the Company since April 1, 1994. From September 1986 to March
1994, Mr. Bernstein served as Vice President-Operations of the Company.
Prior thereto, he was Vice President-Operations of Union Broach Corporation,
a former wholly-owned subsidiary of the Company ("Union Broach"). Mr.
Bernstein was elected a director of the Company in December 1988.
Matthew Goldstein, Ph.D. has served as President of Baruch College
of the City University of New York ("The University") since September 1991.
Dr. Goldstein was the Acting Vice Chancellor for Academic Affairs for The
University from December 1990 to September 1991. He was President of the
Research Foundation of The University from 1982 to August 1991. Dr.
Goldstein is also a member of the Board of Trustees of the Bronx-Lebanon
Hospital Center and of the Board of Directors of the Jean Cocteau Repertory,
ex-officio. He became a director of the Company in March 1994.
Samuel R. Goodson has served as President of Pacific Combining
Corporation, a wholly-owned subsidiary of the Company ("Pacific"), for more
than five years. He was elected a director of the Company in November 1989.
Paul R. Moeller is a certified public accountant. In September
1985, he joined the Company as Group Controller. He has been Vice
President-Finance of the Company since November 1988 and President of the
Hercon Environmental division ("Hercon Environmental") of the Company's 98.5%
owned subsidiary, Hercon Laboratories Corporation ("Hercon"), since January
1992. Mr. Moeller was elected a director in December 1988.
<PAGE>
Eugene Roshwalb is a certified public accountant. He has maintained
a practice as a sole practitioner for more than five years. He became a
director of the Company in March 1991.
Bruce M. Schloss is an attorney. He has been General Counsel of the
Company since September 1991, Vice President since May 1992 and Secretary
since October 1991. Mr. Schloss has been a practicing attorney in New York
City for more than fourteen years. Prior to joining the Company, Mr. Schloss
was a member of the firm of McLaughlin & Stern, Ballen and Ballen since April
1989. He was an associate at that firm from February 1984 to March 1989.
Mr. Schloss was elected a director of the Company in May 1994.
Gregory P. Speiser has been an Associate Director of Bear, Stearns
& Co., Inc., since November 1993. From October 1992 to October 1993, Mr.
Speiser served as Managing Director of Safian Investment Research ("Safian"),
an investment research and advisory firm. From October 1991 to September
1992, he was a Vice President and Portfolio Manager/Investment Adviser with
Safian. Mr. Speiser was a Managing Director of Stuyvesant Capital Management
Corp. from December 1988 through September 1991. Stuyvesant was the
Company's investment advisor from December 1988 to December 1992. He was
elected a director of the Company in August 1987.
Marvin M. Speiser has served as Chairman of the Board of Directors
of the Company and President since December 1976.
Robert D. Speiser has been Executive Vice President of the Company
since April 1, 1994 and President of Hercon since May 1990. From October
1986 to March 1994, he served as Senior Vice President of the Company. Mr.
Speiser also served as President of Union Broach from January 1983 through
November 1993. Prior to 1986, he served as Vice President of the Company.
Mr. Speiser was elected a director of the Company in February 1983.
Milton Y. Zussman has been an attorney operating as a sole
practitioner for more than five years. Mr. Zussman also serves as Chairman
of the Board of Directors of United Community Services of Metropolitan
Detroit. He became a director of the Company in March 1991.
Directors' Fees, Committees and Meetings
The Company does not compensate its employee directors for services
rendered as directors. Non-employee directors receive $1,250 per month and
an additional fee of $500 for each meeting of the Board of Directors attended
and $500 for each committee meeting attended that is independently scheduled.
Non-employee directors were also reimbursed for expenses incurred in
attending such meetings. In addition, in 1994 the Company paid $60,000 for
the benefit of Mr. Gregory Speiser, a non-employee director, for consulting
services rendered to the Company in connection with investment strategy and
the Company's repurchase of its 10 3/8% convertible subordinated debentures.
Mr. Eugene Roshwalb, a non-employee director, was provided with the use of a
leased automobile for consulting services rendered to the Company in
connection with the resolution of certain workers' compensation rate
disputes. The adjusted annual lease value of this automobile in 1994 was
$4,267.
During 1994, the Board of Directors held five meetings. During such
period no director participated in fewer than 80% of the aggregate of the
number of meetings of the Board of Directors and committees thereof of which
such director was a member. The Board of Directors has, among others, an
Audit Committee and a Compensation Committee. The Committees receive their
authority and assignments from the Board of Directors and report to the
Board. The Audit and Compensation Committees are currently composed of
Eugene Roshwalb and Milton Y. Zussman, who are non-employee directors.
The Audit Committee, among other things, is empowered to recommend
to the Board of Directors the engagement of the independent auditors and to
review the scope and procedures of the activities of the independent auditors
and their reports on their audits. The Audit Committee meets periodically
with the independent auditors and management to review their work and confirm
that they are properly discharging their responsibilities. The Audit
Committee met twice during the last year.
The Compensation Committee is empowered to make recommendations to
the Board of Directors relating to the overall compensation arrangements for
senior management of the Company and to make recommendations to the Board of
Directors pertaining to any compensation plans in which officers and
directors of the Company are eligible to participate. The Compensation
Committee is also responsible for the administration of the Company's stock
option and performance equity plans and is the approving authority for
management's recommendations with respect to option grants. The Compensation
Committee met five times during 1994.
The Company does not have a standing nomination committee.
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
The following are the executive officers of the Company:
<CAPTION>
Officers Position Age(1)
-------- -------- ------
<S> <C> <C>
Marvin M. Speiser(2) Chairman of the Board 69
and President
Robert D. Speiser(2) Executive Vice President of 41
the Company and President
of Hercon
Steven Bernstein Senior Vice President 38
Samuel R. Goodson President of Pacific 65
Donald E. Kauffman, Jr. Vice President-Manufacturing 40
of Hercon
Murray Lieber Vice President-Marketing 56
of Hercon
Peter F. McKernan Executive Vice President 41
of Herculite
Elio P. Mariani, Ph.D. Senior Vice President 55
of Hercon
James N. Merrill Executive Vice President 39
of Herculite
Paul R. Moeller Vice President-Finance and 48
President of Hercon
Environmental
Alberto R. Quisumbing, Ph.D. Vice President-Environmental 47
Product Development of Hercon
Bruce M. Schloss Vice President, Secretary 39
and General Counsel
James W. Walter Vice President-Production of 66
Pacific
(1) As of March 1, 1995
(2) Marvin M. Speiser is the father of Robert D. Speiser.
</TABLE>
The following is a summary of the business experience during at
least the last five years of all executive officers of the Company and its
subsidiaries who are not directors or nominees for election as directors.
Each of the officers serves at the discretion of the Board of Directors of
the Company or its subsidiary, as the case may be, from the date of his
election until the next annual meeting of the Board of Directors of the
Company or its subsidiary or until his successor is elected and qualified,
subject to earlier termination by removal or resignation.
Donald E. Kauffman, Jr. has been Vice President-Manufacturing
of Hercon since July 1987. Mr. Kauffman joined the Company in June 1976 and
has served in various positions prior to becoming a Vice President of Hercon
in 1987.
Murray Lieber has been Vice President-Marketing of Hercon since June
1992. From September 1989 to June 1992 he was Vice President, Account
Supervisor at Klemtner Advertising, a pharmaceutical advertising agency. Mr.
Lieber was Vice President of Diversified Health Affiliates, Inc., a
pharmaceutical and health care consulting firm, from January 1988 to
September 1989. Prior thereto, Mr. Lieber held positions in marketing and
business development at companies including Berlex Laboratories (a division
of Schering AG), Roche Laboratories, and Warner-Chilcott Laboratories (a
division of Warner Lambert Company).
Peter F. McKernan has been an Executive Vice President of Herculite
Products, Inc., a wholly-owned subsidiary of the Company ("Herculite"), since
June 1993. For more than ten years prior thereto, Mr. McKernan was employed
by the BTR Group of companies, a British industrial manufacturing concern
where, for in excess of five years prior to June 1993, Mr. McKernan served as
a Director of Business Development.
Elio P. Mariani, Ph.D. has served as Senior Vice President of Hercon
since April 1993. Dr. Mariani joined Hercon as Vice President-Research and
Development of Hercon in April 1992. From December 1989 to March 1992, Dr.
Mariani was employed by Pharmaceutical Basics, Inc., a pharmaceutical
division of Akzo N.V. He served as Vice President-Research and Development
of Pharmaceutical Basics until May 1990, when he became Vice
President-Research and Development and Regulatory Affairs. From 1983 until
November 1989, Dr. Mariani was Section Head with Sterling Winthrop Research
Institute, a division of Sterling Drug, Inc.
James N. Merrill has been an Executive Vice President of Herculite
since June 1993. Mr. Merrill joined Herculite in 1983 as Industrial Sales
Manager. From July 1986 to June 1993, he served as Vice President-Sales and
Marketing of Herculite. Mr. Merrill also served as President of Hercon
Environmental from April 1989 to December 1991.
<PAGE>
Alberto R. Quisumbing, Ph.D. has been Vice President-Environmental
Product Development of Hercon since April 1989. Dr. Quisumbing joined the
Company in April 1975 as Field Applications Manager and has served in various
positions prior to becoming a Vice President of Hercon.
James W. Walter has been Vice President-Production of Pacific since
July 1985.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) As of February 28, 1995, other than as set forth in the
following table, the Company knows of no other person or
"group" (as that term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) who beneficially owns more
than 5% of any class of the Company's voting securities. The
following table contains, as to each class of the Company's
voting securities, the name and address of each such 5%
beneficial owner, the amount of securities of such class
beneficially owned, and the percent of such class beneficially
owned.
<TABLE>
<CAPTION> Number of Shares
Beneficially Owned
Name and address as of Percent
Title of Class of Beneficial Owner February 28, 1995(1) of Class
-------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Marvin M. Speiser(2) 3,724,597(3)(4) 45.76%
Laura G. and Marvin M.
Speiser Trust(2) 3,724,597(5) 45.76%
Dimensional Fund Advisors Inc. 470,600(6) 5.90%
1299 Ocean Avenue
Santa Monica, CA 90401
________________________
</TABLE>
(1) The information concerning security holders is based upon
information furnished to the Company by such security holder.
Except as otherwise indicated, all of the shares are owned of
record and beneficially and the persons identified have sole
voting and investment power with respect thereto.
(2) Address is c/o Health-Chem Corporation, 1212 Avenue of the
Americas, New York, NY 10036.
(3) Includes the following shares of Common Stock: (i) 266,664
shares owned by Lauralei Investors, Inc. ("Lauralei"), of
which Mr. Speiser and his wife, Laura G. Speiser, are the sole
stockholders; (ii) 204,000 shares owned by Laurvin Corporation
("Laurvin"), in which Mr. Speiser owns preferred stock
convertible into 98% of its voting common stock; (iii) 144,000
shares which Mr. Speiser would receive upon the exercise of
all stock options which are currently exercisable or
exercisable within sixty days; (iv) 14,651 shares which Mr.
Speiser would receive upon conversion of 10 3/8% convertible
subordinated debentures; (v) 924,436 shares held by the Laura
G. and Marvin M. Speiser Trust (the "Trust"), of which Laura
G. Speiser and Marvin M. Speiser serve as trustees; and (vi)
388,157 shares of Common Stock owned by Laura G. Speiser.
Marvin M. Speiser disclaims beneficial ownership of the shares
of Common Stock referenced in (vi) above.
(4) Includes: (i) 1,207,689 shares of Common Stock which the
Company has the right to acquire pursuant to an Option
Agreement, dated as of December 28, 1990, between Mr. Speiser
and the Company as amended on August 30, 1991 (the "1991
Option Shares"); and (ii) 575,000 shares of Common Stock which
the Company has the right to acquire pursuant to a Stock
Purchase and Option Agreement, dated as of July 15, 1994,
between Mr. Speiser and the Company (the "1994 Option Shares")
(see "Interest of Management in Certain Transactions"). Until
such time as the Company purchases the 1991 Option Shares
and/or the 1994 Option Shares, Mr. Speiser has agreed to vote
all such Option Shares on all matters for which stockholders
are entitled to vote substantially in the same proportion as
all other shares of the Company's Common Stock are voted at
any special or annual meeting of stockholders of the Company.
The Company cannot currently exercise such options due to
certain restrictions contained in the indenture relating to
its 10 3/8% convertible subordinated debentures.
(5) Includes the following shares of Common Stock: (i) 924,436
shares of Common Stock held by the Trust; (ii) 266,664 shares
of Common Stock owned by Lauralei; (iii) 204,000 shares of
Common Stock owned by Laurvin; (iv) options granted to Marvin
M. Speiser to purchase 144,000 shares of Common Stock which
are currently exercisable or exercisable within 60 days; (v)
14,651 shares of Common Stock which Marvin M. Speiser would
receive upon the conversion of 10 3/8% convertible
subordinated debentures; (vi) 1,782,689 shares of Common Stock
owned by Marvin M. Speiser; and (vii) 388,157 shares of Common
Stock owned by Laura G. Speiser. The Trust disclaims
beneficial ownership of all shares of Common Stock other than
those referenced in (i) above.
<PAGE>
Laura G. Speiser disclaims beneficial ownership of all shares
of Common Stock other than those referenced in (i) and (vii) above.
(6) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of
470,600 shares of Common Stock as of December 31, 1994, all of
which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA
Participating Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors
Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(b) As of February 28, 1995, each director of the Company, each of
the Company's current executive officers named in the Summary
Compensation Table below and all directors and officers of the
Company, as a group, beneficially owned the following amounts
(and percentages) of each class of the voting securities of
the Company.
<TABLE> Number of Shares
<CAPTION> Beneficially Owned
Name of as of Percent
Title of Class Beneficial Owner February 28, 1995(1) of Class
-------------- ---------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Steven Bernstein 33,500(2) *
Common Stock Matthew Goldstein 0 0
Common Stock Samuel R. Goodson 6,000(2) *
Common Stock Murray Lieber 5,000(2) *
Common Stock Elio P. Mariani 6,000(2) *
Common Stock Paul R. Moeller 15,000(2) *
Common Stock Eugene Roshwalb 5,000 *
Common Stock Bruce M. Schloss 6,000(2) *
Common Stock Gregory P. Speiser 777(3) *
Common Stock Marvin M. Speiser 3,724,597(2)(3)(4) 45.76%
Common Stock Robert D. Speiser 78,626(2)(3) *
Common Stock Milton Y. Zussman 24,854(3) *
Common Stock All directors and
officers as a group 3,942,454(5) 47.45%
(17 Persons)
______________________
* Indicates ownership of less than one percent (1%) of class.
</TABLE>
(1) The information concerning security holders is based upon
information furnished to the Company by such security holder.
Except as otherwise indicated, all of the shares are owned of
record and beneficially and the persons identified have sole
voting and investment power with respect thereto.
(2) Includes the following shares of Common Stock subject to stock
options which are currently exercisable or exercisable within
60 days: Mr. Bernstein - 33,500; Mr. Goodson - 6,000; Mr.
Lieber - 1,000; Dr. Mariani - 6,000; Mr. Moeller - 15,000; Mr.
Schloss - 6,000; Mr. Marvin M. Speiser -144,000; and Mr.
Robert D. Speiser - 52,000.
(3) Includes the following shares of Common Stock which the named
individual would receive upon the conversion of 10 3/8%
convertible subordinated debentures: Mr. Gregory P. Speiser -
512; Mr. Marvin M. Speiser - 14,651; Mr. Robert D. Speiser -
9,426; and Mr. Zussman - 2,254.
(4) See footnote (3) to the table under (a) above for the number
of shares with respect to which Mr. Marvin M. Speiser has the
right to acquire beneficial ownership and footnote (4) to the
table under (a) as to the beneficial ownership of certain
other shares.
(5) Includes the following shares of Common Stock: (i) 300,600
shares which twelve of such persons would receive upon the
exercise of stock options which are either currently
exercisable, or exercisable within 60 days; (ii) 26,843 shares
which would be acquired by four of such persons upon the
conversion of 10 3/8% convertible subordinated debentures; and
(iii) an aggregate of 470,664 shares owned by entities
controlled by or for the benefit of certain relatives of three
of such persons, all of which shares are or may be deemed to
be beneficially owned by such persons.
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation
of each of the Chief Executive Officer and the four most highly-compensated
executive officers of the Company whose annual salary and bonus, if any,
exceeded $100,000 for services in all capacities to the Company during the
last three fiscal years.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Name Long-term
and Other Compensation
Principal Annual Compensation Annual Awards All Other
Position Year Salary Bonus(1) Compensation(2)(4) Options Compensation(3)(4)
----------------------- ---- -------- ---------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Marvin M. Speiser 1994 $395,070 $152,075 $101,749 30,000 $34,428
Chairman and Chief 1993 363,753 451,950 109,322 20,000 27,480
Executive Officer (5) 1992 340,835 --- 54,544 50,000 21,989
Robert D. Speiser 1994 $212,644 $152,075 $13,481 20,000 $ 510
Executive Vice President 1993 195,788 394,573(6) 6,876 20,000 1,927
and President-Hercon 1992 183,500 --- 24,234 20,000 330
Laboratories Corporation
Elio P. Mariani 1994 $165,039 $ 76,038 $ 1,432 10,000 $ 1,350
Senior Vice President- 1993 155,626 197,287 5,635 10,000 864
Hercon Laboratories 1992 103,173 13,889 102,361 10,000 504
Corporation
Murray Lieber 1994 $121,031 $ 30,415 $ 742 7,500 $ 1,179
Vice President- 1993 114,962 78,915 301 5,000 945
Marketing-Hercon 1992 66,769 11,667 --- --- 340
Laboratories Corporation
Bruce M. Schloss 1994 $135,039 $ --- $ 9,136 10,000 $ 194
Vice President and 1993 125,077 15,000 5,196 10,000 180
General Counsel 1992 118,295 --- --- 10,000 167
(1) Bonuses paid for 1994 to named executive officers were based
on increases in earnings of Hercon's pharmaceutical division
over such entity's average earnings for the preceding two
calendar years.
(2) For 1994, includes the following: Marvin M. Speiser - $42,046
for tax preparation and legal services.
(3) Represents the term cost value of all excess group life
insurance policies on behalf of the named individuals. For
Marvin M. Speiser, also includes the term cost value of
individual insurance purchased, which for 1994 was $28,128.
(4) Does not include information with respect to personal benefits
provided to the named individuals which do not exceed
disclosure thresholds established under Securities and
Exchange Commission rules.
(5) Marvin M. Speiser is compensated pursuant to an Employment
Agreement with the Company which expires on December 31, 1996.
Mr. Speiser's Employment Agreement provides for a base salary
of $415,552 per annum commencing as of September 1, 1994. The
Employment Agreement further provides for a bonus each year
equal to 10% of the excess, if any, of Herculite's net income
over the average net income for the preceding two calendar
years and a bonus each year equal to 10% of the excess, if
any, of Hercon's net income over the average net income for
the preceding two calendar years.
(6) From time to time between September and December 1993, Robert
D. Speiser, Executive Vice President of the Company, borrowed
funds from the Company, the aggregate amounts of which were at
all times less than the then accrued but unpaid bonus payable
to him in 1994. The largest aggregate amount outstanding in
1994 was $347,000. Interest on the indebtedness was imputed
in conformance with IRS regulations. The indebtedness was
repaid in February 1994.
</TABLE>
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock
Price Appreciation
for
Individual Grants Option Term (2)
----------------- --------------------
% of Total
Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
---- ------- ------------ -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Marvin M. Speiser 30,000 16.76 3.25 5/3/04 61,317 155,390
Robert D. Speiser 20,000 11.17 3.25 5/3/04 40,878 103,593
Elio P. Mariani 10,000 5.59 3.25 5/3/04 20,439 51,797
Murray Lieber 7,500 4.19 3.25 5/3/04 15,329 38,847
Bruce M. Schloss 10,000 5.59 3.25 5/3/04 20,439 51,797
(1) The options were granted under the 1986 Stock Option Plan, and
are subject to a vesting schedule pursuant to which, in
general, the options become exercisable at a rate of 20% per
year commencing one year after the date of grant provided the
holder of the option remains employed by the Company. Options
may not be exercised beyond three months after the holder
ceases to be employed by the Company, except in the event of
termination by reason of death or permanent disability, in
which event the option may be exercised for up to one year
following termination.
(2) The assumed rates are compounded annually for the full term of
the options.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
12/31/94 12/31/94(2)
Shares Acquired Exercisable/ Exercisable/
on Exercises (1) Value Realized Unexercisable Unexercisable
Name (#) ($)(1) (#) ($)
---- ---------------- -------------- ------------- --------------------
<C> <C> <C> <C> <C>
Marvin M. Speiser --- --- 144,000/76,000 12,500/18,750
Robert D. Speiser --- --- 52,000/48,000 5,000/7,500
Elio P. Mariani --- --- 6,000/24,000 2,500/3,750
Murray Lieber --- --- 1,000/11,500 0/0
Bruce M. Schloss --- --- 6,000/24,000 2,500/3,750
(1) None of the named executive officers exercised any stock
options during the fiscal year ended December 31, 1994.
(2) Based upon the closing sale price of the Company's Common
Stock on December 31, 1994 on the American Stock Exchange
minus the respective option exercise price.
</TABLE>
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return for the five years ended December 31,
1994 based upon the market price of the Company's Common Stock, with the
cumulative total return on the AMEX Market Value Index and a defined peer
group based on (a) similar market capitalization as of December 31, 1994 and
(b) comparable sales performance over the five year period. The Company has
elected to compare its yearly percentage change in total stockholder return
against a market capitalization peer group because the Company operates in
several lines of business and financial information on the Company's
competitors in the synthetic fabric industry is not publicly available. The
Company therefore does not believe that it can reasonably identify an
industry-based peer group. The graph assumes a $100 investment on December
31, 1989 and the reinvestment of any and all dividends.
HEALTH-CHEM CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Health-Chem Corporation, AMEX Market Value Index and Market
Capitalization Peer Group*
<TABLE>
<CAPTION>
Market
Health-Chem AMEX Market Capitalization
Date Corporation Value Index Peer Group
-------- ----------- ----------- --------------
<S> <C> <C> <C>
12/31/89 100 100 100
12/31/90 35 81 59
12/31/91 53 102 82
12/31/92 100 106 104
12/31/93 176 126 103
12/31/94 147 115 86
-----------------------------
* Includes Diodes, Inc., Galileo Electro Optics Corp., GNI
Group, Inc. New Brunswick Scientific, Inc. and Varitronic
Systems, Inc.
</TABLE>
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee") is composed of two independent outside directors of the Company.
During 1994, the Committee met on five occasions to carry out its
responsibilities including the development and administration of policies
governing annual compensation for senior executives of the Company.
In developing and administering these policies, the Committee has
focused on compensating Company executives: on a competitive basis with other
comparably sized and managed companies; in a manner consistent and supportive
of overall Company objectives; and, through a compensation plan which
balances the longer and shorter-term strategic initiatives of the Company.
Consistent with compensation program objectives identified in last year's
Compensation Committee Report, the Committee intends that the executive
compensation program will:
(1) reward executives for strategic management and
enhancement of stockholder value;
(2) reflect each executive's success at resolving key
operational issues;
(3) facilitate both the short and long-term planning process;
and
(4) attract and retain key executives believed to be critical
to the long-term success of the Company.
The Company's compensation program for executive officers generally
consists of a fixed base salary, performance-related bonus awards and
long-term incentive compensation in the form of stock options. In addition,
Company executives are able to participate in various benefit plans generally
available to other full-time employees of the Company.
In reviewing the Company and executives' performance over the past
fiscal year, the Committee took into consideration, among other things, the
following performance factors in making its compensation recommendations:
continued increases in the Company's income from operations and stockholders'
equity and continued implementation of materials management and cost control
programs.
Finally, the Committee engaged an outside compensation consulting
firm during the 1994 fiscal year. This firm conducted a study to provide the
Committee with objective, independent information regarding overall content,
market competitiveness, long-term vs. short-term balance, and
performance-vs.-pay element of the Company's compensation plan. The
Committee considered the results of this study in the development of the
executive compensation program.
Base Salary
The Company's base salary is intended to provide a competitive
remuneration for services provided to the Company over a one year period.
Base salaries are set at levels designed to attract and retain the most
appropriately qualified individuals for each of the key management level
positions within the Company. In determining these amounts, the Committee
takes into consideration regional and national compensation information for
comparable companies, industry patterns, and levels of responsibility for
each executive. The independent compensation survey mentioned above has been
used to assist in determining the adequacy and appropriateness of these base
salary amounts.
Short-Term Incentives
Short-term incentives are paid primarily to recognize specific
operating performance achieved within the last fiscal year. Since such
incentive payments are related to a specific year's performance, the
Committee understands and accepts that such payments may vary considerably
from one year to the next. The Company's bonus program ties executive
compensation directly back to operating profitability in each of the
Company's subsidiary and/or divisional entities. Through this program, in
1994 each named executive's actual bonus payment was derived from specific
measures of company performance. Depending on management level and
seniority, executives within each entity are able to earn a percentage of the
improvement in earnings over the average earnings for the preceding two
calendar years within the entity.
Long-Term Incentives
In keeping with its desire to align long-term executive compensation
with long-term shareholder value improvements, the Committee has again
awarded stock option grants to executives of the Company. Recognizing the
<PAGE>
value of these grants in motivating long-term strategic decision making, the
use of the stock options in compensating other members of Company management
was again expanded beyond the named executive officers. In 1994, the five
named executive officers received 77,500 stock options. In addition, another
101,500 options were granted to other officers, managers and key employees of
the Company and its subsidiary entities. All options were granted at an
exercise price equal to the grant date market price, making the options
valuable to these executives, managers and key employees only if the share
price appreciates. The options become exercisable ratably over the next five
years as long as the optionee remains an employee of the Company. Consistent
with the objectives of the Compensation Committee, the Company has proposed
the 1995 Performance Equity Plan for shareholder ratification in this proxy
statement.
Chief Executive Officer
Through August 31, 1994, Mr. Marvin M. Speiser, Chief Executive
Officer, was compensated under a previously disclosed compensation contract
between himself and the Company. As of September 1, 1994, the Company and
Mr. Speiser agreed to an extension of Mr. Speiser's compensation contract
through year-end 1996.
Pursuant to the 1994 compensation contract, Mr. Speiser received an
increase in his base salary of 8% over the prior year's level, adjusted
proportionately for the balance of 1994. In addition to his base salary, Mr.
Speiser is eligible to participate in the short-term and long-term incentive
programs outlined above for the other named officers. During 1994, the
amount of Mr. Speiser's short-term incentive bonus was calculated based on
the improvement in earnings over the average earnings for the preceding two
calendar years within the Company's Hercon Pharmaceutical division. Based on
this formula, Mr. Speiser received a $152,075 bonus payment for fiscal year
1994.
Finally, Mr. Speiser was granted 30,000 stock options as part of the
Company's previously described long-term incentive program. These options
were again granted at an exercise price equal to the grant date market price,
and therefore attain value only through an increase in the publicly traded
price per share. The options become exercisable ratably over a five year
period.
The Committee believes that Mr. Speiser's compensation reflects his
contribution to the Company and the achievement of specific long-term and
short-term objectives of the Company. In addition to the Company's financial
performance, the Committee has taken into consideration a number of other
managerial and leadership factors, including the spearheading of programs
related to cost containment and materials management.
Compensation Committee
Eugene Roshwalb
Milton Y. Zussman
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
(1) Between April 12, 1994 and May 16, 1994, Marvin M. Speiser,
the Company's Chairman of the Board, borrowed funds from the Company, the
largest aggregate principal amount outstanding being $125,000. The rate of
interest paid by Mr. Speiser was at all times equal to the rate of interest
charged to the Company under its then outstanding line of credit agreement.
$100,000 of the indebtedness was repaid on June 1, 1994 and the balance was
repaid on August 3, 1994.
(2) On July 15, 1994, the Company exercised its option, pursuant
to a Put-Call Agreement dated July 12, 1991, by and between National Union
Fire Insurance Company of Pittsburgh, PA ("National Union") and the Company,
to purchase from National Union 525,000 shares of the Company's Common Stock,
par value $.01 per share, at $2.00 per share. These shares, which have been
retired by the Company into its treasury, had been issued to National Union
in July 1991 as part of a settlement between National Union and the Company
involving payments under a directors' and officers' liability policy issued
by National Union covering the directors of the Company.
In compliance with certain restrictive covenants under the
indenture, dated as of April 1, 1981, between Bankers Trust Company and the
Company governing the Company's 10 3/8% Convertible Subordinated Debentures
due April 15, 1999 (the "Indenture"), the Company paid for the 525,000 shares
from the substantially concurrent sale to Marvin M. Speiser of 575,000 shares
of the Company's treasury stock (the "1994 Option Shares") at $2.00 per share.
<PAGE>
The sale to Mr. Speiser was made pursuant to a Stock Purchase and
Option Agreement, dated July 15, 1994, wherein Mr. Speiser granted to the
Company an option to purchase the 1994 Option Shares at any time on or after
July 15, 1994 until June 30, 1999 at a purchase price equal to $2.00 per
share (the same purchase price as the 1994 Option Shares were sold to Mr.
Speiser) plus an amount equal to the aggregate interest accrued and paid or
unpaid under a loan made by The First National Bank of Maryland (the "Bank")
to Mr. Speiser to purchase the 1994 Option Shares (the "Speiser Loan"), or
any replacement loan therefor. As part of the Stock Purchase and Option
Agreement, Mr. Speiser has agreed to vote the 1994 Option Shares in the same
proportion as all other shares of Common Stock are voted at any special or
annual meeting of stockholders of the Company.
In connection with the Speiser Loan, the Company agreed to pledge to
the Bank certain cash equivalent collateral in exchange for the written
agreement by Mr. Speiser and his wife, Laura G. Speiser (collectively "the
Speisers") to indemnify and hold the Company harmless from and against any
and all losses that the Company may suffer as a result of the foreclosure by
the Bank on the pledged collateral in connection with the Speiser Loan (the
"Indemnification Agreement"). The Indemnification Agreement between the
Speisers and the Company is secured by the Speisers' pledge of certain assets
having an aggregate net realizable value at least equal to the collateral
pledged by the Company to the Bank in connection with the Speiser Loan.
All of the above-referenced transactions have been approved by
the Company's Board of Directors based upon the unanimous favorable
recommendation of a special committee of the Board comprised of outside
directors which was initially constituted to oversee the exercise of the
options granted under the Put-Call Agreement referenced above and which has
reviewed the terms of the transactions.
PROPOSAL NO. 2
PROPOSAL TO APPROVE AND ADOPT THE
HEALTH-CHEM CORPORATION
1995 PERFORMANCE EQUITY PLAN
On March 21, 1995 the Board adopted the 1995 Performance Equity Plan
("1995 Plan") subject to stockholder approval at the Meeting. The Board
believes that in order to attract and retain employees of the highest
caliber, provide increased incentive for officers and key employees and to
continue to promote the well-being of the Company, it is in the best
interests of the Company and its stockholders to provide officers and key
employees of the Company and its subsidiaries the opportunity to participate
in the value and/or appreciation in value of the Company's Common Stock
through the granting of stock or stock related incentive awards. As of March
21, 1995, the last sale price of the Company's Common Stock as reported on
the American Stock Exchange was $2.875.
Summary of the 1995 Plan
The following summary of the 1995 Plan does not purport to be
complete, and is subject to and qualified in its entirety by reference to the
text of the 1995 Plan, which is annexed hereto as Exhibit A.
Administration. The 1995 Plan is administered by the Compensation Committee
("Committee") of the Board or any other committee of the Board which the
Board may designate to administer the Plan or any portion thereof and
determine the terms and conditions of the awards granted under the 1995 Plan.
(If no Committee is so designated, then all references herein to "Committee"
shall mean the Board.) The Committee has full authority, subject to the
provisions of the 1995 Plan, to award (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock and/or (v)
other stock-based awards (collectively "Awards"). Awards will be evidenced
by agreements in such form as the Committee may prescribe.
Shares Subject to the Plan. The 1995 Plan authorizes up to an aggregate of
600,000 shares of the Company's Common Stock to be available for granting of
Awards. In any fiscal year of the Company, the maximum number of shares of
Common Stock which may be made subject to Awards to any single Holder shall
be 100,000 shares. The number of shares of Common Stock authorized by the
1995 Plan is subject to adjustment by the Board in the event of any increase
or decrease in the number of shares of outstanding Common Stock resulting
from a stock dividend, stock split, reverse stock split, merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Company's stock. If any Award is forfeited or
terminated, the shares of Common Stock that were available pursuant to such
Award shall again be available for distribution in connection with Awards
subsequently granted.
<PAGE>
Eligibility. Awards may be granted to key employees and officers who are
deemed to have rendered or to be able to render significant services to the
Company and are deemed to have contributed or to have the potential to
contribute to the success of the Company. Incentive Stock Options may only
be awarded to employees.
Types of Awards.
Options. The 1995 Plan provides both for "incentive" stock options
("Incentive Options") as defined in Section 422 of the Internal Revenue Code
of 1986, as amended ("Code"), and for options not qualifying as Incentive
Options ("Non-Qualified Options," together with Incentive Options the
"Options"), both of which may be granted with any other stock-based award
under the 1995 Plan. The exercise price of a Non-Qualified Option may be
less than 100% of the fair market value on the date of the grant. The
exercise price of an Incentive Option may not be less than 100% of the fair
market value on the date of grant (or 110% in case of a grant to a person
owning more than 10% of the Company's outstanding voting shares).
An Incentive Option may only be granted within a 10-year period
commencing from May 10, 1995 and may only be exercised within 10 years of the
date of the grant (or within 5 years in the case of an Incentive Option
granted to a person owning more than 10% of the Company's outstanding voting
shares). Subject to any limitations or conditions the Committee may impose,
Options may be exercised at any time during the term of the Option by written
notice accompanied by payment in full of the purchase price, either in cash
or in securities of the Company, or in combination thereof. Options granted
under the 1995 Plan are exercisable only by the Holder during his or her
lifetime. Options granted under the 1995 Plan may not be transferred other
than by will or by the laws of descent and distribution. However, if
compliance of the 1995 Plan with Rule 16b-3 would not be adversely affected,
the Options may also be transferred, for no consideration, by the Holder to
members of the Holder's immediate family, to a trust for the benefit of
members of the Holder's immediate family, or to a partnership whose only
partners are members of the Holder's immediate family.
Generally, if the Holder is an employee, no Option, or any portion
thereof, granted under the 1995 Plan may be exercised by the Holder unless he
or she is employed by the Company or a subsidiary at the time of the exercise
and has been so employed continuously from the time the Option was granted.
Exceptions may apply in circumstances of death, disability or retirement of
the employee. In the event of a Change in Control of the Company (as defined
in the 1995 Plan), all Options to the extent not then currently exercisable
shall become exercisable.
Stock Appreciation Rights. The Committee may grant Stock
Appreciation Rights ("SARs" or singularly "SAR") in conjunction with all or
part of any Option granted under the 1995 Plan, or may grant SARs on a
free-standing basis. In conjunction with Non-Qualified Options, SARs may be
granted either at or after the time of the grant of such Non-Qualified
Options. In conjunction with Incentive Options, SARs may be granted only at
the time of the grant of such Incentive Options. An SAR entitles the Holder
thereof to receive an amount (payable in cash and/or Common Stock as
determined by the Committee) equal to the excess fair market value of one
share of Common Stock over the SAR price or the exercise price of the related
Option, multiplied by the number of shares subject to the SAR.
Restricted Stock Awards. The Committee may award shares of
restricted stock ("Restricted Stock") either alone or in addition to other
Awards granted under the 1995 Plan. The Committee determines the restricted
period during which the shares of stock may be forfeited.
Deferred Stock. The Committee may award shares of deferred stock
("Deferred Stock") either alone or in addition to other Awards granted under
the 1995 Plan. The Committee determines the deferral period during which
time the receipt of the stock is deferred.
Other Stock-Based Awards. The Committee may grant performance
shares and shares of stock valued with reference to the performance of the
Company, either alone or in addition to or in tandem with any other Awards
under the 1995 Plan. The Committee has discretion to determine the terms and
conditions applicable to any such stock-based Awards.
Performance Measures. Under the 1995 Plan, the receipt of Awards of
Restricted Stock and Deferred Stock may be subject to the satisfaction of
certain performance measures. The performance measures applicable to a
particular Award will be determined by the Committee at the time of grant of
such Award. At present, no such Restricted Stock or Deferred Stock Awards
are outstanding and, accordingly, no performance measures have been
designated by the Committee. Performance measures may be based on a level
specified by the Committee for one or more of the following: growth in
<PAGE>
consolidated or subsidiary net operating profit, growth in consolidated or
subsidiary net earnings, performance of the fair market value of the Common
Stock in relation to its historical performance and/or that of applicable
market indices or market peer groups, or any combination of the foregoing or
any other criteria or objectives determined by the Committee. If the
performance measures applicable to a particular Award are satisfied, the
amount of compensation would be determined as follows: in the case of a
Restricted Stock Award, the amount of compensation would equal the number of
shares of Restricted Stock subject to such Award multiplied by the value of
a share of Common Stock at the time such Restricted Stock vests. In the case
of a Deferred Stock Award, the amount of compensation would equal the number
of shares of Deferred Stock subject to such Award multiplied by the value of
a share of Common Stock at the time such Deferred Stock vests. In the case
of Other Stock-Based Awards where the cash payment or other amount is
determined by reference to the fair market value of the Common Stock, the
amount of compensation payable under such Award would be equal to the nuber
of stock-based units which have vested multiplied by the value of the number
of shares of Common Stock represented by each such unit at the time of
payment.
Withholding Taxes. Upon the exercise of any Award granted under the 1995
Plan, the Holder may be required to remit to the Company an amount sufficient
to satisfy all federal, state and local withholding tax requirements prior to
delivery of any certificate or certificates for shares of Common Stock.
Subject to certain stringent limitations under the 1995 Plan and at the
discretion of the Company, the Holder may satisfy these requirements by
electing to have the Company withhold a portion of the shares to be received
upon the exercise of the Award having a value equal to the amount of the
withholding tax due under applicable federal, state and local laws.
Terms and Termination of the 1995 Plan. The 1995 Plan shall be effective as
of May 10, 1995 ("Effective Date"), subject to the approval of the 1995 Plan
by the stockholders of the Company within one year after the Effective Date.
Any Awards granted under the 1995 Plan prior to such approval shall be
effective when made (unless otherwise specified by the Committee at the time
of grant), but shall be conditioned upon, and subject to, the approval of the
1995 Plan by the Company's stockholders. If the 1995 Plan is not so
approved, all awards granted thereunder shall be of no effect and any shares
of Common Stock received by a Holder shall be deemed forfeited and returned
to the Company by the Holder. Unless terminated by the Board, the 1995 Plan
shall continue to remain effective until such time as no further Awards may
be granted and all Awards granted under the 1995 Plan are no longer
outstanding.
Amendments to the Plan. The Board may at any time, and from time to time,
amend, alter, suspend or discontinue any of the provisions of the 1995 Plan,
but no amendment, alteration, suspension or discontinuance shall be made
which would impair the rights of a Holder under any Agreement theretofore
entered into hereunder, without his or her consent.
Section 162(m) of the Code. In general, Section 162(m) of the Code limits to
$1 million the amount that a publicly held corporation is allowed each year
to deduct for the compensation paid to each of the corporation's chief
executive officer and the corporation's four other most highly compensated
executive officers. Certain types of compensation paid to such executives,
however, are not subject to the deduction limit, including compensation
deemed under the Code to be "performance-based." The determination of
whether compensation related to the 1995 Plan is performance-based for
purposes of the Code will be dependent upon a number of factors, including
stockholder approval of the 1995 Plan. Section 162(m) also prescribes
certain procedural requirements in order for compensation to be
performance-based, including that such compensation be related to awards
granted by a committee comprised of two or more "outside" directors within
the meaning of Section 162(m) and that any performace goals to which such
compensation may be subject be based upon the specific criteria described in
the 1995 Plan. Although the Company has structured the 1995 Plan such that
compensation payable with respect to Awards under the 1995 Plan will satisfy
the requirements of Section 162(m) of the Code with regard to its
performance-based criteria, Awards under the 1995 Plan may be made that do
not satisfy such criteria, and there can be no assurance that Awards under
the 1995 Plan intended to be "performance-based" will satisfy such criteria
and, accordingly, the Company may be limited in the deductions it may take
with respect to Awards under the 1995 Plan.
Federal Income Tax Consequences.
The following discussion of the federal income tax consequences of
participation in the 1995 Plan is only a summary of the general rules
applicable to the grant and exercise of stock options and does not purport to
give specific details on every variable and does not cover, among other
things, state, local and foreign tax treatment of participation in the 1995
Plan. The information is based on present law and regulations, which are
subject to being changed prospectively or retroactively.
<PAGE>
Incentive Options. The Participant will recognize no taxable income and the
Company will not qualify for any deduction upon the grant or exercise of an
Incentive Option. Upon a disposition of the shares underlying the Option
after the later of two years from the date of grant or one year after the
issuance of the shares to the Participant, the Participant will recognize the
difference, if any, between the amount realized and the exercise price as
long-term capital gain or long-term capital loss (as the case may be) if the
shares are capital assets. The excess, if any, of the fair market value of
the shares on the date of exercise of an Incentive Option over the exercise
price will be treated as an item of adjustment in computing the alternative
minimum tax for a Participant's taxable year in which the exercise occurs and
may result in an alternative minimum tax liability for the Participant. If
Common Stock acquired upon the exercise of an Incentive Option is disposed of
prior to two years from the date of the grant of the Option or in the same
taxable year as the exercise of the Option, (i) the Participant will
recognize ordinary compensation income in the taxable year of disposition in
an amount equal to the excess, if any, of the lesser of the fair market value
of the shares on the date of exercise or the amount realized on the
disposition of the shares, over the exercise price paid for such shares; and
(ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the limitation that the compensation be reasonable.
The Participant will recognize the excess, if any, of the amount realized
over the fair market value of the shares on the date of exercise, if the
shares are capital assets, as short-term or long-term capital gain, depending
on the length of time that the Participant held the shares, and the Company
will not qualify for a deduction with respect to such excess. In the case of
a disposition of shares in the same taxable year as the exercise of the
Option, where the amount realized on the disposition is less than the fair
market value of the shares on the date of exercise, there will be no
adjustment since the amount treated as an item of adjustment, for alternative
minimum tax purposes, is limited to the excess of the amount realized on such
disposition over the exercise price, which is the same amount included in
regular taxable income.
Non-Qualified Options. With respect to Non-Qualified Options (i) upon grant
of the Option, the Participant will recognize no income; (ii) upon exercise
of the Option (if the shares of Common Stock are not subject to substantial
risk of forfeiture), the Participant will recognize ordinary compensation
income in an amount equal to the excess, if any, of the fair market value of
the shares on the date of exercise over the exercise price, and the Company
will qualify for a deduction in the same amount, subject to the requirement
that the compensation be reasonable; and (iii) the Company will be required
to comply with applicable Federal income tax withholding requirements with
respect to the amount of ordinary compensation income recognized by the
Participant. On a disposition of the shares, the Participant will recognize
gain or loss equal to the difference between the amount realized and the
sum of the exercise price and the ordinary compensation income recognized.
Such gain or loss will be treated as capital gain or loss if the shares are
capital assets and as short-term or long-term capital gain or loss, depending
upon the length of time that the Participant held the shares.
If the shares acquired upon exercise of a Non-Qualified Option are
subject to a substantial risk of forfeiture, the Participant will recognize
income at the time when the substantial risk of forfeiture is removed and the
Company will qualify for a corresponding deduction at such time.
Stock Appreciation Rights. A Participant who receives an SAR will recognize
no income on the grant of such SAR but he or she will recognize ordinary
compensation income equal to the cash received, and the Company will qualify
for a deduction of equal amount subject to the reasonableness of compensation
limitation.
The affirmative vote of the holders of a majority of all outstanding
shares entitled to vote thereon, present in person or by proxy at the
Meeting, is required for approval of the 1995 Plan.
The Board of Directors recommends a vote "FOR" the adoption of this proposal.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, independent public accountants, currently
audits the Company's books and records.
Representatives of Deloitte & Touche LLP are expected to be present
at the Meeting, will be given the opportunity to make a statement if they so
desire, and are expected to be available to respond to appropriate questions.
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's 1994 Annual Report has been mailed to
stockholders of record at the close of business on March 24, 1995 together
with this Notice of Meeting and Proxy Statement. The Company files an annual
report on Form 10-K with the Securities and Exchange Commission which
includes additional information concerning the Company and its operations.
This report, except for exhibits, will be furnished to stockholders, without
charge, upon written request to the Secretary of the Company.
COST OF SOLICITATION
The Company will bear the cost of the Meeting and the cost of
soliciting proxies, including the cost of mailing the proxy material. In
addition to solicitation by mail, directors, officers, and regular employees
of the Company (who will not be specifically compensated for such services)
may solicit proxies by telephone or otherwise. Arrangements will be made
with brokerage houses and other custodians, nominees, and fiduciaries to
forward proxies and proxy material to their principals, and the Company
will reimburse them for their reasonable expenses incurred in connection
therewith.
STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to include proposals in the
proxy material in relation to the annual meeting of the Company to be held in
1996 must submit the same in writing so as to be received at the principal
executive office of the Company on or before November 17, 1995. Such
proposals must also meet the other requirements of the rules of the
Securities and Exchange Commission relating to stockholders proposals.
By Order of the Board of Directors,
Marvin M. Speiser
Chairman of the Board and President
New York, New York
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HEALTH-CHEM CORPORATION
Proxy Solicited by Board of Directors for the Annual Meeting of Stockholders
on May 11, 1995.
The undersigned stockholder of HEALTH-CHEM CORPORATION hereby appoints Marvin
M. Speiser, Robert D. Speiser and Bruce M. Schloss, and each of them, the
attorneys and proxies of the undersigned, with full power of substitution, to
vote on behalf of the undersigned all the shares of common stock of HEALTH-
CHEM CORPORATION which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company, to be held at the Holiday Inn
Holidome and Conference Center, 2000 Loucks Road, York, Pennsylvania 17404 on
May 11, 1995 at 9:00 A.M. and at all adjournments thereof, hereby revoking
any proxy heretofore given with respect to such stock.
IMPORTANT - This Proxy must be signed and dated on the reverse side
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTION TO THE CONTRARY
IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
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PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
For All
1. Election of Directors For Withheld Except nominee(s)
Nominees: Steven Bernstein, written below
Matthew Goldstein, Samuel R.
Goodson, Paul R. Moeller,
Eugene Roshwalb, Bruce M. ___________________
Schloss, Gregory P. Speiser,
Marvin M. Speiser, Robert D.
Speiser, Milton Y. Zussman
2. Approval of the Company's For Against Abstain
1995 Performance Equity
Plan
3. In their discretion, the
proxies are authorized to
vote upon such other business
as may properly come before
the meeting
IMPORTANT: Please sign your name or names exactly as shown hereon and date
your proxy in the blank space provided below. For joint accounts, each joint
owner must sign. When signing as attorney, executor, administrator, trustee
or guardian, please give your full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer.
PLEASE SIGN HERE AND RETURN PROMPTLY
__________________________________________
(Signature)
__________________________________________
(Signature)
DATED: ___________________________, 1995
<PAGE>
<PAGE>
EXHIBIT A
HEALTH-CHEM CORPORATION
1995 Performance Equity Plan
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the Health-Chem Corporation ("Company")
1995 Performance Equity Plan ("Plan") is to enable the Company to offer to
its key employees and officers whose past, present and/or potential
contributions to the Company and its Subsidiaries have been, are or will be
important to the success of the Company, an opportunity to acquire a
proprietary interest in the Company. The various types of long-term
incentive awards which may be provided under the Plan will enable the Company
to respond to changes in compensation practices, tax laws, accounting
regulations and the size and diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.
(b) "Award" means an award of Stock under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto and the regulations promulgated
thereunder.
(e) "Committee" means the Compensation Committee of the Board or
any other committee of the Board, which the Board may designate to administer
the Plan or any portion thereof. If no Committee is so designated, then all
references in this Plan to "Committee" shall mean the Board.
(f) "Common Stock" means the Common Stock of the Company, par value
$.01 per share.
(g) "Company" means Health-Chem Corporation, a Delaware corporation
(h) "Deferred Stock" means Stock to be received, under an award
made pursuant to Section 9 below, at the end of a specified deferral period.
(i) "Disability" means incapacity by illness or other disability
from performing usual employment obligations for a period in excess of 240
days (whether or not consecutive) or 120 days consecutively, as the case may
be, during any twelve month period.
(j) "Effective Date" means the date set forth in Section 12.
(k) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means,
as of any given date: (i) if the Common Stock is listed on a national
securities exchange or quoted on the Nasdaq National Market or Nasdaq
SmallCap Market, the last sale price of the Common Stock in the principal
trading market for the Common Stock on the date of grant of an award
hereunder, as reported by the exchange or Nasdaq, as the case may be; (ii) if
the Common Stock is not listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on the
date of grant of an award hereunder for which such quotations are reported by
the National Quotation Bureau, Incorporated or similar publisher of such
quotations; and (iii) if the fair market value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Committee
shall determine, in good faith.
(l) "Holder" means a person who has received an award under the
Plan.
(m) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of Section
422 of the Code.
(n) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(o) "Other Stock-Based Award" means an award under Section 10 below
that is valued in whole or in part by reference to, or is otherwise based
upon, Stock.
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(p) "Parent" means any present or future parent corporation of the
Company, as such term is defined in Section 424(e) of the Code.
(q) "Performance Measures" means criteria and objectives determined
by the Committee, which are to be satisfied or met during the applicable
Restriction Period or Deferral Period as a condition to the Holder's receipt
of Restricted Stock or Deferred Stock under Sections 8 and 9, respectively.
Such criteria and objectives may include, but are not limited to, growth in
consolidated or subsidiary net operating profit, growth in consolidated or
subsidiary net earnings, performance of the Fair Market Value of the Common
Stock in relation to its historical performance and/or that of applicable
market indices or market peer groups, or any combination of the foregoing or
any other criteria or objectives determined by the Committee.
(r) "Plan" means the Health-Chem Corporation 1995 Performance
Equity Plan, as hereinafter amended from time to time.
(s) "Restricted Stock" means Stock, received under an award made
pursuant to Section 8 below, that is subject to restrictions under said
Section 8.
(t) "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations under the Exchange Act, as in effect from time to time.
(u) "SAR Value" means the excess of the Fair Market Value of one
share of Common Stock over the exercise price per share specified in a
related Stock Option in the case of a Stock Appreciation Right granted in
tandem with a Stock Option and the Stock Appreciation Right price per share
in the case of a Stock Appreciation Right awarded on a free standing basis,
in each case multiplied by the number of shares in respect of which the Stock
Appreciation Right shall be exercised, on the date of exercise.
(v) "Stock" means the Common Stock of the Company, par value $.01
per share.
(w) "Stock Appreciation Right" means the right, pursuant to an
award granted under Section 7 hereof, to recover an amount equal to the SAR
Value.
(x) "Stock Option" or "Option" means any option to purchase shares
of Stock which is granted pursuant to the Plan.
(y) "Subsidiary" means any present or future subsidiary corporation
of the Company, as such term is defined in Section 424(f) of the Code.
(z) "Tandem Stock Appreciation Right" means a Stock Appreciation
Right granted in tandem with all or part of any Stock Option granted under
the Plan.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be administered by a
Committee. Committee members shall serve for such term as the Board may in
each case determine, and shall be subject to removal at any time by the
Board. It is the intent of the Board that the Plan qualify under Rule 16b-3
promulgated under the Securities Exchange Act of 1934 ("Exchange Act") and
that Awards hereunder qualify to the extent possible as "performance-based"
compensation under Code Section 162(m). To that end, unless otherwise
determined by the Board, each Committee member shall be a "disinterested
person" as defined in said Rule 16b-3 and as an "outside director" within the
meaning of Code Section 162(m). The membership of the Committee shall at all
times be comprised of persons so as not to adversely affect the compliance of
the Plan with the requirements of Rule 16b-3 under the Exchange Act, Code
Section 162(m) or with the requirements of any other applicable law, rule or
regulation.
2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 4 hereof, to award, pursuant to the terms of the Plan:
(i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock,
(iv) Deferred Stock and/or (v) Other Stock-Based Awards. For purposes of
illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):
(a) to select the key employees and officers of the Company or
any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred Stock and/or Other Stock-Based Awards may from time to time
be awarded hereunder;
(b) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or limitations,
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and any vesting, exchange, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions, as the Committee shall
determine);
(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction with
or apart from other equity awarded under this Plan and cash awards made by
the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the Plan
under such rules and procedures as the Committee may establish, including the
crediting of interest on deferred amounts denominated in cash and of dividend
equivalents on deferred amounts denominated in Stock; and
(f) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder shall be
deferred which may be either automatic or at the election of the Holder.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Sections 4.2 and 11 hereof,
the Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any award issued under the Plan (and to determine
the form and substance of all Agreements relating thereto), and to otherwise
supervise the administration of the Plan. Subject to Section 11 hereof, all
decisions made by the Committee pursuant to the provisions of the Plan shall
be made in the Committee's sole discretion and shall be final and binding
upon all persons, including the Company, its Subsidiaries and Holders.
Determinations by the Committee under the Plan relating to the form,
amount and terms and conditions of awards need not be uniform, and may
be made selectively among persons who receive or are eligible to receive
awards under the Plan, whether or not such persons are similarly situated.
(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options (including but not limited to Tandem Stock Appreciation
Rights granted in conjunction with an Incentive Stock Option) or any
Agreement providing for Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be
so exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Holder(s) affected, to disqualify any Incentive
Stock Option under such Section 422.
Section 3. Stock Subject to Plan
3.1 Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 600,000
shares. Shares of Stock under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If any shares of Stock
that have been granted pursuant to a Stock Option cease to be subject to a
Stock Option, or if any shares of Stock that are subject to any Stock
Appreciation Right, Restricted Stock, Deferred Stock award or Other
Stock-Based Award granted hereunder are forfeited or any such award otherwise
terminates without a payment being made to the Holder in the form of Stock,
such shares shall again be available for distribution in connection with
future grants and awards under the Plan. Only net shares issued upon a
stock-for-stock exercise (including stock used for withholding taxes) shall
be counted against the number of shares available under the Plan. In any
fiscal year of the Company, the maximum number of shares of Common Stock
which may be made subject to Awards granted under this Plan to any single
Holder shall be 100,000 shares.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of
any merger, reorganization, consolidation, recapitalization, dividend (other
than a cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under
the Plan and in the maximum number of shares of Common Stock which may be
made subject to Awards granted hereunder to any single Holder, in the number
and exercise price of shares subject to outstanding Options, in the number of
shares and Stock Appreciation Right price relating to Stock Appreciation
Rights, and in the number of shares subject to, and in the related terms of,
other outstanding awards (including but not limited to awards of Restricted
Stock, Deferred Stock, Reload Stock Options and Other Stock-Based Awards)
granted under the Plan as may be determined to be appropriate by the
Committee in order to prevent dilution or enlargement of rights, provided
that the number of shares subject to any award shall always be a whole number.
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Section 4. Eligibility.
4.1 General. Awards may be made or granted to key employees and
officers of the Company who are deemed to have rendered or to be able to
render significant services to the Company or its Subsidiaries and who are
deemed to have contributed or to have the potential to contribute to the
success of the Company. No Incentive Stock Option shall be granted to any
person who is not an employee of the Company or a Subsidiary at the time of
grant.
4.2 Awards and Grants. The granting of Stock Options and Awards under
the Plan shall be determined by the Committee.
Section 5. General Terms and Conditions.
5.1 General. With respect to the award or grant of any (i) Stock
Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv)
Deferred Stock and/or (v) Other Stock-Based Awards, the following terms and
conditions shall apply:
(a) Six-Month Holding Period. Any equity security granted
pursuant to the Plan must be held for six months from the date of grant or,
in the case of an option, at least six months elapse from the date of
acquisition of the option to the date of disposition of the option (other
than upon exercise or conversion) or its underlying equity security;
(b) Transferability:
(i) Incentive Stock Options: Any Stock Option issued
pursuant to and intended to be an Incentive Stock Option under the Plan shall
not be transferable by the Holder other than by will or the laws of descent
and distribution.
(ii) Non-Qualified Stock Options: Any Stock Option issued
pursuant to the Plan which is not intended to qualify as an Incentive Stock
Option, shall not be transferable by the Holder other than by will or the
laws of descent and distribution; provided, however, that to the extent that
transferability pursuant to the following provisions would not adversely
affect the compliance of the Plan with Rule 16b-3, such Stock Option may
also be transferred, for no consideration, by the Holder to the following
transferees ("Transferee"):
(A) a member of the Holder's immediate family. For
purposes of this section, "immediate family" shall include only brothers and
sisters (whether by the whole or half blood) spouse, parents, and natural or
adopted siblings,
(B) a trust for the benefit of members of the Holder's
immediate family, or
(C) a partnership whose only partners are members of the
Holder's immediate family,
if the Transferee shall agree to be subject to the same restrictions and
conditions as relate to the Holder pursuant to the Plan; and
(c) Change in Control. In the event of a Change in Control (as
defined below), all options to the extent not then currently exercisable
shall become immediately exercisable in full.
As used in this Plan, a "Change in Control" shall be deemed
to occur (i) when the Company acquires actual knowledge that any person, as
such term is used in the Exchange Act, including Section 14(d)(2) thereof,
(other than (a) any employee benefit plan established or maintained by the
Company or any of its subsidiaries, (b) Marvin M. Speiser or any member of
his immediate family or any affiliate of Marvin M. Speiser or any member of
his immediate family, and (c) any person who is deemed to be the beneficial
owner of any securities of the Company to which any person in clause (a) or
(b) above are and remain beneficial owners, including, without limitation,
any person that is a member of a group (as defined in said Section 14(d)(2)
of the Exchange Act) in which any person defined in clause (a) or (b) above
is also a member) is or becomes the beneficial owner (as defined in Rule 13d-
3 of the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities, (ii) upon the first purchase of the Company's Common
Stock pursuant to a tender or exchange offer (other than a tender or exchange
offer made by the Company or an employee benefit plan established or
maintained by the Company or any of its subsidiaries), (iii) upon the
approval by the Company's stockholders of (A) a merger or consolidation of
the Company with or into another corporation (other than a merger or
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consolidation in which the Company is the surviving corporation and which
does not result in any capital reorganization or reclassification or other
change in the Company's then outstanding shares of Common Stock), (B) a sale
or disposition of all or substantially all of the Company's assets or (C) a
plan of liquidation or dissolution of the Company, or (iv) if during any
period of two (2) consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company cease for any reason
to constitute at least two-thirds thereof, unless the election or nomination
for the election by the Company's stockholders of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
Section 6. Stock Options.
6.1. Grant and Exercise. Stock Options granted under the Plan may be
of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock
Options. Any Stock Option granted under the Plan shall contain such terms,
not inconsistent with this Plan, or with respect to Incentive Stock Options,
the Code, as the Committee may from time to time approve. The Committee
shall have the authority to grant Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options and may be granted alone or in
addition to other awards granted under the Plan. To the extent that any Stock
Option intended to qualify as an Incentive Stock Option does not so qualify,
it shall constitute a separate Non-Qualified Stock Option. An Incentive
Stock Option may only be granted within the ten year period commencing from
the Effective Date and may only be exercised within ten years of the date of
grant (or five years in the case of an Incentive Stock Option granted to an
optionee ("10% Stockholder") who, at the time of grant, owns Stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or a Parent or Subsidiary.
6.2. Terms and Conditions. Stock Options granted under the Plan shall
be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may be less than 100% of the Fair Market Value of the Stock
as defined above; provided, however, that the exercise price of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the
Stock (110%, in the case of a 10% Stockholder).
(b) Option Term. Subject to the limitations in Section 6.1, the
term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Subject to Section 5.1 (a) hereinabove,
Stock Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee. If the
Committee provides, in its discretion, that any Stock Option is exercisable
only in installments, i.e., that it vests over time, the Committee may waive
such installment exercise provisions at any time at or after the time of
grant in whole or in part, based upon such factors as the Committee shall
determine.
(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the
term of the Option, by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased. Such notice shall
be accompanied by payment in full of the purchase price, which shall be in
cash or, unless otherwise provided in the Agreement, in shares of Stock
(including Restricted Stock and other contingent awards under this Plan) or,
partly in cash and partly in such Stock, or such other means which the
Committee determines are consistent with the Plan's purpose and applicable
law. Cash payments shall be made by wire transfer, certified or bank check
or personal check, in each case payable to the order of the Company;
provided, however, that the Company shall not be required to deliver
certificates for shares of Stock with respect to which an Option is exercised
until the Company has confirmed the receipt of good and available funds in
payment of the purchase price thereof. Payments in the form of Stock shall be
valued at the Fair Market Value of a share of Stock on the date prior to the
date of exercise. Such payments shall be made by delivery of stock
certificates in negotiable form which are effective to transfer good and
valid title thereto to the Company, free of any liens or encumbrances.
Subject to the terms of the Agreement, the Committee may, in its sole
discretion, at the request of the Holder, deliver upon the exercise
of a Non-Qualified Stock Option a combination of shares of Deferred Stock and
Common Stock; provided that, notwithstanding the provisions of Section 9 of
the Plan, such Deferred Stock shall be fully vested and not subject to
forfeiture. A Holder shall have none of the rights of a stockholder with
respect to the shares subject to the Option until such shares shall be
transferred to the Holder upon the exercise of the Option.
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(e) Termination by Reason of Death. If a Holder's employment by
the Company or a Subsidiary terminates by reason of death, any Stock Option
held by such Holder, unless otherwise determined by the Committee at the time
of grant and set forth in the Agreement, shall be fully vested and may
thereafter be exercised by the legal representative of the estate or by the
legatee of the Holder under the will of the Holder, for a period of one year
(or such other greater or lesser period as the Committee may specify at
grant) from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter.
(f) Termination by Reason of Disability. If a Holder's
employment by the Company or any Subsidiary terminates by reason of
Disability, any Stock Option held by such Holder, unless otherwise determined
by the Committee at the time of grant and set forth in the Agreement, shall
be fully vested and may thereafter be exercised by the Holder for a period of
one year (or such other greater or lesser period as the Committee may specify
at the time of grant) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter.
(g) Other Termination. Subject to the provisions of Section
13.3 below and unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, if a Holder is an employee of the
Company or a Subsidiary at the time of grant and if such Holder's employment
by the Company or any Subsidiary terminates for any reason other than death
or Disability, the Stock Option shall thereupon automatically
terminate, except that if the Holder's employment is terminated by the
Company or a Subsidiary without cause or due to retirement from active
employment with the Company or any Subsidiary on or after age 65, then the
portion of such Stock Option which has vested on the date of termination of
employment may be exercised for the lesser of three months after termination
of employment or the balance of such Stock Option's term.
(h) Additional Incentive Stock Option Limitation. In the case
of an Incentive Stock Option, the amount of aggregate Fair Market Value of
Stock (determined at the time of grant of the Option) with respect to which
Incentive Stock Options are exercisable for the first time by a Holder during
any calendar year (under all such plans of the Company and its Parent and
Subsidiaries) shall not exceed $100,000.
(i) Buyout and Settlement Provisions. The Committee may at any
time offer to buy out a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish and communicate to the
Holder at the time that such offer is made.
(j) Stock Option Agreement. Each grant of a Stock Option shall
be confirmed by, and shall be subject to the terms of, the Agreement executed
by the Company and the Holder.
Section 7. Stock Appreciation Rights.
7.1. Grant and Exercise. Stock Appreciation Rights may be granted in
tandem with (i.e., Tandem Stock Appreciation Right) or in conjunction with
all or part of any Stock Option granted under the Plan or may be granted on
a free-standing basis. In the case of a Non-Qualified Stock Option, a Tandem
Stock Appreciation Right may be granted either at or after the time of the
grant of such Non-Qualified Stock Option. In the case of an Incentive Stock
Option, a Tandem Stock Appreciation Right may be granted only at the time of
the grant of such Incentive Stock Option.
7.2. Terms and Conditions. Stock Appreciation Rights shall be subject
to the following terms and conditions:
(a) Exercisability. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in accordance with the
provisions of Section 6 hereof and this Section 7 and may be subject to the
Code with respect to related Incentive Stock Options and such additional
limitations on exercisability as shall be determined by the Committee and set
forth in the Agreement. Other Stock Appreciation Rights shall be exercisable
at such time or times and subject to such terms and conditions as shall be
determined by the Committee and set forth in the Agreement.
(b) Termination. A Tandem Stock Appreciation Right shall
terminate and shall no longer be exercisable upon the termination or exercise
of the related Stock Option, except that, unless otherwise determined by the
Committee at the time of grant, a Tandem Stock Appreciation Right granted
with respect to less than the full number of shares covered by a related
Stock Option shall not be reduced until after the number of shares remaining
under the related Stock Option equals the number of shares covered by the
Tandem Stock Appreciation Right.
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(c) Method of Exercise. A Tandem Stock Appreciation Right may
be exercised by a Holder by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the Holder shall be
entitled to receive such amount in the form determined pursuant to Section
7.2(d) below. Stock Options which have been so surrendered, in whole or in
part, shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.
(d) Receipt of SAR Value. Upon the exercise of a Stock
Appreciation Right, a Holder shall be entitled to receive up to, but not more
than, an amount in cash and/or shares of Stock equal to the SAR Value with
the Committee having the right to determine the form of payment.
(e) Effect on Shares Issuable. Upon the exercise of a Tandem
Stock Appreciation Right, the Stock Option or part thereof to which such
Tandem Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Section 3 hereof on
the number of shares of Common Stock to be issued under the Plan, but only to
the extent of the number of shares, if any, issued under the Tandem Stock
Appreciation Right at the time of exercise based upon the SAR Value.
Section 8. Restricted Stock.
8.1. Grant. Shares of Restricted Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom, and the time or times at which,
grants of Restricted Stock will be awarded, the number of shares to be
awarded, the price (if any) to be paid by the Holder, the time or times
within which such awards may be subject to forfeiture ("Restriction Period"),
the vesting schedule and rights to acceleration thereof, and all other terms
and conditions of the awards, including, but not limited to, any Performance
Measures to which the vesting of the Restricted Stock shall be subject.
8.2. Terms and Conditions. Each Restricted Stock award shall be
subject to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of
the Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock and any
securities constituting Retained Distributions (as defined below) shall bear
a legend to the effect that ownership of the Restricted Stock (and such
Retained Distributions), and the enjoyment of all rights appurtenant thereto,
are subject to the restrictions, terms and conditions provided in the Plan
and the Agreement. Such certificates shall be deposited by the Holder with
the Company, together with stock powers or other instruments of assignment,
each endorsed in blank, which will permit transfer to the Company of all or
any portion of the Restricted Stock and any securities constituting Retained
Distributions that shall be forfeited or that shall not become vested in
accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The
Holder will have the right to vote such Restricted Stock, to receive and
retain all regular cash dividends and other cash equivalent distributions as
the Board may in its sole discretion designate, pay or distribute on such
Restricted Stock and to exercise all other rights, powers and privileges of
a holder of Common Stock with respect to such Restricted Stock, with the
exceptions that (i) the Holder will not be entitled to delivery of the
stock certificate or certificates representing such Restricted Stock until
the Restriction Period shall have expired and unless all other vesting
requirements with respect thereto shall have been fulfilled; (ii) the
Company will retain custody of the stock certificate or certificates
representing the Restricted Stock during the Restriction Period; (iii) other
than regular cash dividends and other cash equivalent distributions as the
Board may in its sole discretion designate, pay or distribute, the Company
will retain custody of all distributions ("Retained Distributions") made or
declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and conditions
as are applicable to the Restricted Stock) until such time, if ever, as the
Restricted Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and with respect
to which the Restriction Period shall have expired; (iv) a breach of any of
the restrictions, terms or conditions contained in this Plan or the
Agreement or otherwise established by the Committee with respect to any
Restricted Stock or Retained Distributions will cause a forfeiture of such
Restricted Stock and any Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction
Period with respect to each award of Restricted Stock and the satisfaction of
any other applicable restrictions, terms and conditions (i) all or part of
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such Restricted Stock shall become vested in accordance with the terms of the
Agreement, and (ii) any Retained Distributions with respect to such
Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested. If Performance Measures are
applicable to the award of Restricted Stock, the Committee shall certify the
level of Performance Measures attained and the portion of the Restricted
Stock which shall become vested. Any such Restricted Stock and Retained
Distributions that do not vest shall be forfeited to the Company and the
Holder shall not thereafter have any rights with respect to such Restricted
Stock and Retained Distributions that shall have been so forfeited.
Section 9. Deferred Stock.
9.1. Grant. Shares of Deferred Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which grants
of Deferred Stock shall be awarded, the number of shares of Deferred Stock to
be awarded to any person, the duration of the period ("Deferral Period")
during which, and the conditions under which receipt of the shares will be
deferred, and all the other terms and conditions of the awards, including,
but not limited to, any Performance Measures to which the receipt of the
Deferred Stock will be subject.
9.2. Terms and Conditions. Each Deferred Stock award shall be subject
to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or
the Additional Deferral Period referred to in Section 9.2(c) below, where
applicable), share certificates shall be delivered to the Holder, or his
legal representative, representing the number equal to the shares covered by
the Deferred Stock award.
(b) Vesting; Forfeiture. Upon the expiration of the Deferral
Period (or the Additional Deferral Period, where applicable) with respect to
each award of Deferred Stock and the satisfaction of any other applicable
limitations, terms or conditions, such Deferred Stock shall become vested in
accordance with the terms of the Agreement. If Performance Measures are
applicable to the award of Deferred Stock, the Committee shall certify the
level of Performance Measures attained and the portion of the Deferred Stock
which shall become vested. Any Deferred Stock that does not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights
with respect to such Deferred Stock that has been so forfeited.
(c) Additional Deferral Period. A Holder may request to, and
the Committee may at any time, defer the receipt of an award (or an
installment of an award) for an additional specified period or until a
specified event ("Additional Deferral Period"). Subject to any exceptions
adopted by the Committee, such request must generally be made at least one
year prior to expiration of the Deferral Period for such Deferred Stock award
(or such installment).
Section 10. Other Stock-Based Awards.
10.1. Grant and Exercise. Other Stock-Based Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be
consistent with the purposes of the Plan, including, without limitation,
purchase rights, shares of Common Stock awarded which are not subject to any
restrictions or conditions, convertible or exchangeable debentures, or other
rights convertible into shares of Common Stock and awards valued by reference
to the value of securities of or the performance of specified Subsidiaries.
Other Stock-Based Awards may be awarded either alone or in addition to or in
tandem with any other awards under this Plan or any other plan of the
Company.
10.2. Eligibility For Other Stock-Based Awards. The Committee shall
determine the eligible persons to whom and the time or times at which grants
of such Other Stock-Based Awards shall be made, the number of shares of
Common Stock to be awarded pursuant to such awards, and all other terms and
conditions of the awards.
10.3. Terms and Conditions. Each Other Stock-Based Award shall be
subject to such terms and conditions as may be determined by the Committee.
Section 11. Amendment and Termination.
The Board may at any time, and from time to time, amend, alter, suspend
or discontinue any of the provisions of the Plan, but no amendment,
alteration, suspension or discontinuance shall be made which would impair the
rights of a Holder under any Agreement theretofore entered into hereunder,
without his consent.
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Section 12. Term of Plan.
12.1 Effective Date. The Plan shall be effective as of May 10, 1995
("Effective Date"), subject to the approval of the Plan by the stockholders
of the Company within one year after the Effective Date. Any awards granted
under the Plan prior to such approval shall be effective when made (unless
otherwise specified by the Committee at the time of grant), but shall be
conditioned upon, and subject to, such approval of the Plan by the Company's
stockholders and no awards shall vest or otherwise become free of
restrictions prior to such approval.
12.2 Termination Date. Unless terminated by the Board, this Plan
shall continue to remain effective until such time no further awards may be
granted and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may only be
made during the ten year period following the Effective Date.
Section 13. General Provisions.
13.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to, the terms of the Agreement executed by
the Company and the Holder. The Committee may terminate any award made under
the Plan if the Agreement relating thereto is not executed and returned to
the Company within 60 days after the Agreement has been delivered to the
Holder for his or her execution.
13.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation and the Company shall
not be required to segregate any assets in respect of the Plan. With respect
to any payments not yet made to a Holder by the Company, nothing contained
herein shall give any such Holder any rights that are greater than those of
a general creditor of the Company.
13.3 Employees.
(a) Engaging in Competition With the Company. In the event an
employee Holder terminates his employment with the Company or a Subsidiary
for any reason whatsoever, and within eighteen (18) months after the date
thereof accepts employment with any competitor of, or otherwise engages in
competition with, the Company, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained (measured at the date of exercise, vesting or
payment) by such Holder at any time during the period beginning on that date
which is six months prior to the date of such Holder's termination of
employment with the Company.
(b) Termination for Cause. The Committee may, in the event an
employee is terminated for cause, annul any award granted under this Plan to
such employee and, in such event, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained (measured at the date of exercise, vesting or
payment) by such Holder at any time during the period beginning on that date
which is six months prior to the date of such Holder's termination of
employment with the Company.
(c) No Right of Employment. Nothing contained in the Plan or in
any award hereunder shall be deemed to confer upon any employee of the
Company or any Subsidiary any right to continued employment with the Company
or any Subsidiary, nor shall it interfere in any way with the right of the
Company or any Subsidiary to terminate the employment of any of its employees
at any time.
13.4 Investment Representations. The Committee may require each
person acquiring shares of Stock pursuant to a Stock Option or other award
under the Plan to represent to and agree with the Company in writing that the
Holder is acquiring the shares for investment without a view to distribution
thereof, or to take any other action which may be required in order to comply
with any applicable state securities laws or regulations.
13.5 Indemnification. No member of the Board or the Committee, nor
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made with respect to the Plan, and all members of the
Board or the Committee and all officers or employees of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company in respect of any such action, determination or
interpretation.
13.6 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
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granting of Stock Options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
13.7 Withholding Taxes. Not later than the date as of which an amount
first becomes includible in the gross income of the Holder for Federal income
tax purposes with respect to any option or other award under the Plan, the
Holder shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award
that gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional upon such payment or
arrangements and the Company or the Holder's employer (if not the Company)
shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to the Holder from
the Company or any Subsidiary.
13.8 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of New York (without regard to choice of law provisions).
13.9 Other Benefit Plans. Any award granted under the Plan shall not
be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or any Subsidiary and shall not affect any
benefits under any other benefit plan now or subsequently in effect under
which the availability or amount of benefits is related to the level of
compensation (unless required by specific reference in any such other plan to
awards under this Plan).
13.10 Compliance with Rule 16b-3. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under
the Exchange Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
13.11 Non-Transferability. Except as otherwise expressly provided in
the Plan, no right or benefit under the Plan may be alienated, sold,
assigned, hypothecated, pledged, exchanged, transferred, encumbered or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.
13.12 Applicable Laws. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness
of a registration statement under the Securities Act of 1933, as amended,
("1933 Act"), and (ii) the rules and regulations of any securities exchange
on which the Stock may be listed.
13.13 Conflicts. If any of the terms or provisions of the Plan
conflict with the requirements of (with respect to Incentive Stock Options)
Section 422 of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of said
Section 422 of the Code. Additionally, if this Plan does not contain any
provision required to be included herein under Section 422 of the Code, such
provision shall be deemed to be incorporated herein with the same force and
effect as if such provision had been set out at length herein.
13.14 Non-Registered Stock. The shares of Stock being distributed
under this Plan have not been registered under the 1933 Act, or
any applicable state or foreign securities laws and the Company has no
obligation to any Holder to register the Stock or to assist the Holder in
obtaining an exemption from the various registration requirements, or to list
the Stock on a national securities exchange.
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