<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Melamine Chemicals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
MELAMINE CHEMICALS, INC.
39041 HIGHWAY 18 WEST
DONALDSONVILLE, LOUISIANA 70346
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF MELAMINE CHEMICALS, INC.:
The Annual Meeting of Stockholders of Melamine Chemicals, Inc. will be held
at the Riverside House, 39209 Highway 18 West, Donaldsonville, Louisiana on
Tuesday, November 12, 1996 at 1:00 p.m., for the following purposes:
(i) to elect three directors to serve a three-year term of office expiring
at the 1999 annual meeting of stockholders;
(ii) to approve the 1996 Long-Term Incentive Plan;
(iii) to ratify the appointment of KPMG Peat Marwick LLP, certified public
accountants, as independent auditors for the Company for the fiscal year ending
June 30, 1997;
(iv) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on September 27, 1996
are entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, if you are unable to attend in person and wish to have your stock
voted, PLEASE FILL IN, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Your proxy may be revoked by
appropriate notice to the Secretary of Melamine Chemicals, Inc. at any time
prior to the voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ L. R. McMILLAN, II
L. R. McMillan, II
Secretary
Donaldsonville, Louisiana
October 4, 1996
<PAGE> 3
MELAMINE CHEMICALS, INC.
39041 HIGHWAY 18 WEST
DONALDSONVILLE, LOUISIANA 70346
PROXY STATEMENT
This Proxy Statement is furnished to stockholders of Melamine Chemicals,
Inc. (the "Company") in connection with the solicitation on behalf of the Board
of Directors of proxies for use at the Annual Meeting of Stockholders of the
Company to be held on Tuesday, November 12, 1996 at 1:00 p.m., at the Riverside
House, 39209 Highway 18 West, Donaldsonville, Louisiana.
Only holders of record of common stock of the Company (the "Common Stock")
at the close of business on September 27, 1996 are entitled to notice of and to
vote at the meeting. On that date, the Company had outstanding 5,455,300
shares of Common Stock, each of which is entitled to one vote.
The enclosed proxy may be revoked by the stockholder at any time prior to
the exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy will be
deemed revoked if the stockholder is present at the Annual Meeting and elects
to vote in person.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegraph; and banks, brokerage houses and
other institutions, nominees and fiduciaries will be requested to forward the
soliciting material to their principals and to obtain authorization for the
execution of proxies. The Company will, upon request, reimburse banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding proxy materials to their principals.
<PAGE> 4
SECURITY HOLDINGS OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of August 31, 1996
concerning the beneficial ownership of the Company's Common Stock by each
director, each named executive officer and other persons known to own
beneficially more than five percent of the Company's Common Stock. Unless
otherwise noted, all shares shown as beneficially owned are held with sole
voting and investment power.
<TABLE>
<CAPTION>
Amount Percent
Beneficially of
Name and Address Owned Class
---------------- ------------- -------
<S> <C> <C>
Ashland Inc. 1,275,000(1) 23.4%
5200 Blazer Parkway
Dublin, OH 43017
First Mississippi Corporation 1,275,000 23.4%
700 North Street
Jackson, MS 39215-1249
The Killen Group, Inc. 406,900(2) 7.4%
1189 Lancaster Avenue
Berwyn, PA 19312
Dimensional Fund Advisors, Inc. 366,600(3) 6.7%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
James W. Crook 105,000(4) 1.9%
David J. D'Antoni 11,370(5) (6)
Charles M. McAuley 200 (6)
Scotty B. Patrick 21,000 (6)
Nick H. Prater 1,000 (6)
Daniel D. Reneau 124(7) (6)
R. Michael Summerford 200 (6)
Frederic R. Huber 95,985(8) 1.7%
Wayne D. DeLeo 61,285(9) 1.1%
Martin F. Lapari 47,686(10) (6)
William A. Sorensen 12,667(11) (6)
All directors and executive officers as a group 356,517(12) 6.2%
</TABLE>
- --------------------------
(1) As reported on Schedule 13G dated September 30, 1993 and filed with the
Securities and Exchange Commission.
(2) As reported on Schedule 13G dated February 14, 1996 and filed with the
Securities and Exchange Commission. Sole voting power is held only with
respect to 129,500 of such shares.
(3) As reported on Amendment No. 4 to Schedule 13G dated February 7, 1996 and
filed with the Securities and Exchange Commission. Dimensional Fund
Advisors Inc. ("Dimensional"), a
2
<PAGE> 5
registered investment advisor, is deemed to have beneficial ownership of
366,600 shares, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in series of 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 such shares. Sole voting power is held
only with respect of 236,600 of such shares.
(4) Includes 90,000 shares which Mr. Crook has immediately exercisable options
to purchase. Does not include 1,275,000 shares held by First Mississippi
Corporation with respect to which Mr. Crook shares voting and investment
power as a member of the First Mississippi Corporation Board of Directors.
(5) Includes 10,870 shares owned by Mr. D'Antoni's wife and son.
(6) Less than 1%.
(7) Includes 24 shares owned by Mr. Reneau's son.
(8) Includes 800 shares owned by Mr. Huber's wife, children and mother-in-law
and 75,000 shares which Mr. Huber has immediately exercisable options to
purchase.
(9) Includes 40,833 shares which Mr. DeLeo has immediately exercisable options
to purchase.
(10) Includes 400 shares owned by Mr. Lapari's wife and 35,833 shares which Mr.
Lapari has immediately exercisable options to purchase.
(11) Includes 11,667 shares which Mr. Sorensen has immediately exercisable
options to purchase.
(12) Includes 253,333 shares that executive officers have immediately
exercisable options to purchase.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and By-laws divide the Board of
Directors into three classes serving three-year staggered terms. The Company's
By-laws authorize the Board of Directors to fix the size of the Board, and
until fixed otherwise by the Board, the By-laws have set the number of
directors at seven. The term of office of one class of three directors expires
at the Annual Meeting. A second class of two directors will serve until the
1997 annual meeting and a third class of two directors will serve until the
1998 annual meeting. James W. Crook, Charles M. McAuley and Scotty B.
Patrick, the directors whose terms are expiring, have been nominated by the
Board of Directors for re-election and will stand for re-election at the Annual
Meeting for a three-year term of office expiring at the 1999 annual meeting and
until their successors are duly elected and qualified. Accordingly, proxies
cannot be voted for more than three persons.
Unless authority to vote for the election of directors is withheld, all
shares represented by the enclosed form of proxy will be voted in favor of the
election of each of the three nominees listed below. Under the Company's
By-laws, directors are elected by plurality vote. The Company is informed that
Messrs. Crook, McAuley and Patrick are willing to serve if re-elected, although
Mr. Crook has advised the Company that if elected, he expects to retire prior
to the expiration of the three-year term. If any nominee should decline or
become unable to serve for any reason, votes represented by the enclosed proxy
will be cast instead for a substitute nominee designated by the Board of
Directors, or, if none is designated, votes will be cast according to the
judgment of the person or persons voting the proxy. Under the Company's
by-laws, a
3
<PAGE> 6
shareholder may nominate one or more persons for election as directors only if
written notice of such shareholders' intent to make such nomination, together
with certain other information, is received at the Company's principal
executive offices not later than the 10th day following the day on which the
notice of the Annual Meeting, included with this proxy statement, is mailed to
stockholders.
The following table sets forth certain information as of August 31, 1996
regarding the continuing directors and the nominees for election as directors
of the Company. Unless otherwise indicated, each director has been engaged in
the principal occupation shown for more than the past five years.
NOMINEES FOR RE-ELECTION:
<TABLE>
<CAPTION>
Nominated for
Name, Age, Principal Occupation and Director Term
Directorships in Other Public Corporations Since Expiring
------------------------------------------ --------- -----------
<S> <C> <C>
James W. Crook, 66 1972 1999
Chairman of the Board of the Company;
Director, First Mississippi Corporation
Charles M. McAuley, 62 1979 1999
Retired Corporate Executive(1)
Scotty B. Patrick, 61 1968 1999
Group Vice President, Petrochemical and
Technical, Ashland Chemical Company
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED ABOVE.
<TABLE>
<CAPTION>
Name, Age, Principal Occupation and Director Serving Term
Directorships in Other Public Corporations Since Expiring
------------------------------------------ --------- ------------
<S> <C> <C>
CONTINUING DIRECTORS:
Nilon H. Prater, 67 1991 1997
Retired Corporate Executive;
Director, Calgon Carbon Corporation;
Director, Harsco Corporation;
Director, Koppers Industries, Inc.
Daniel D. Reneau, 56 1987 1997
President, Louisiana Tech University
David J. D'Antoni, 51 1992 1998
President, Ashland Chemical Company and
Senior Vice President, Ashland Inc.
Director, State Auto Financial Corporation
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Name, Age, Principal Occupation and Director Serving Term
Directorships in Other Public Corporations Since Expiring
------------------------------------------ --------- ------------
<S> <C> <C>
R. Michael Summerford, 47 1983 1998
Vice President & Chief Financial Officer,
First Mississippi Corporation;
Director, Getchell Gold Corporation
</TABLE>
- ----------------
(1) From 1985 to March 1992, Mr. McAuley served as Group Vice President of
First Mississippi Corporation. From April 1992 to August 1994, Mr. McAuley
served as President, Chief Executive Officer and a Director of FirstMiss
Gold Inc.
During the fiscal year ended June 30, 1996, the Board of Directors held
four meetings. All of the directors attended 75% or more of the aggregate
number of meetings of the Board of Directors and committees of which they were
members.
The Board of Directors has no nominating committee. The Board has an
Audit Committee on which Messrs. Patrick, Prater and McAuley serve. The Audit
Committee has general responsibility for meeting from time to time with
representatives of the Company's independent public accountants in order to
obtain an assessment of the financial position and results of operations of the
Company and report to the Board with respect thereto. The Committee met two
times during fiscal year 1996. The Board also has a Personnel and Compensation
Committee (the "Compensation Committee") on which Messrs. Prater, Summerford
and Reneau serve. The Compensation Committee has given general responsibility
for the administration of certain of the Company's employee benefit plans and
of the Company's compensation structure. The Compensation Committee met two
times during fiscal year 1996. The Long-Term Incentive Plan Committee, on
which Messrs. Reneau and Prater serve, administers the Long-Term Incentive
Plan and determines the type, size and recipients of awards granted thereunder.
This committee met once during fiscal year 1996.
COMPENSATION OF DIRECTORS
During the period July 1, 1995 through January 31, 1996, non-employee
directors were compensated for their services at the rate of $600 per month and
received $600 per day for attendance at board and committee meetings.
Effective February 1, 1996, non-employee directors are compensated for their
services at the rate of $800 per month and receives $800 per day for attendance
at board and committee meetings. The Chairman of each committee receives an
additional $100 per meeting. Messrs. D'Antoni and Patrick have waived their
right to receive directors' fees. Directors are reimbursed for travel expenses
to and from meetings upon request. No fees are paid for informal meetings or
meetings held by telephone conference call. The Company furnishes each
director with $50,000 in accidental death and dismemberment insurance
protection at an annual premium cost of approximately $28 per director.
5
<PAGE> 8
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
WITH MANAGEMENT
COMPENSATION COMMITTEE AND LONG-TERM INCENTIVE PLAN COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Policies and Programs
The Company seeks to attract and retain executive officers who, in the
judgment of the Board of Directors, possess the skill, experience and
motivation to contribute significantly to the long-term success of the Company
and enhance value for the Company's shareholders. These committees follow an
executive officer compensation policy designed to compensate the Company's
executive officers with both cash and equity-based compensation in a program
that takes into account both individual performance and contribution to
corporate results.
The compensation policies followed by these committees involve three
components--base salary, annual incentive and long-term incentive compensation.
Base salary compensation is determined by the impact the executive has on the
Company, the skills and experience the executive brings to the job, competition
in the marketplace for those skills and the potential of the executive in the
job. The Compensation Committee reviews and approves base salary annually
based on the executive's performance in comparison to the Board's and the Chief
Executive Officer's expectations.
Annual incentive compensation is based on corporate net earnings and
individual performance and is paid through the Company's Annual Incentive Award
Plan. The payment to the executive is generally based on a return on equity
formula and the Compensation Committee's evaluation of the executive's overall
performance during the year. If the Company does not have net earnings, the
executives are not eligible for any payments under the Annual Incentive Award
Plan. Payments under the Annual Incentive Award Plan are made over a
three-year period. The Plan is reviewed annually to determine if changes and
modifications are needed.
Long-term incentive compensation generally consists of stock options
awarded by the Long-Term Incentive Plan Committee. The size of a stock option
award is based primarily on the executive's potential to contribute to the
long- term growth of the Company. The value of the option once it vests
(generally over a three-year period) depends upon the Company's performance as
evidenced by the price appreciation of its Common Stock at the time the option
is exercised. The long-term incentive compensation is designed to provide
significant financial rewards to the executives when shareholder value is
added. The long-term incentive compensation also attempts to align more
closely the executive's interests with those of the Company's shareholders.
Chief Executive Officer Compensation in 1996
At its February 13, 1996 meeting, the Compensation Committee reviewed Mr.
Huber's performance as Chief Executive Officer of the Company during the prior
year. The Compensation Committee noted that the Company's operating results
continued to show improvements as compared to the prior periods.
6
<PAGE> 9
The Compensation Committee felt that Mr. Huber's performance contributed
significantly to those improvements and decided to increase his base salary
from $187,980 to $203,000.
The Long-Term Incentive Plan Committee granted Mr. Huber an option to
purchase 15,000 shares of Common Stock at $8.75 per share (the market price at
the date of grant) to compensate Mr. Huber for the part he was expected to play
in the improvement of the Company's performance and in creating shareholder
value in the future. Based on the Company's return on equity for fiscal 1996
and the Compensation Committee's evaluation of Mr. Huber's performance during
fiscal 1996, the Compensation Committee at its August 13, 1996 meeting, awarded
him incentive compensation totaling $71,050. Of this amount, $23,683 was paid
to Mr. Huber on August 14, 1996, and the remainder will be paid out over the
next two years in equal installments.
Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the Company's tax deduction to $1 million for compensation paid to the most
highly paid executive officers in a single year. An exception to the $1
million limit is provided for "performance-based compensation" that meets
certain requirements including stockholder approval. The 1996 Long-Term
Incentive Plan has been structured such that grants of options under the Plan
will qualify as "performance based compensation" and be excluded in calculating
the $1 million limit under Section 162(m).
<TABLE>
<S> <C>
PERSONNEL AND COMPENSATION COMMITTEE: LONG-TERM INCENTIVE PLAN COMMITTEE:
Nick H. Prater Daniel D. Reneau Nick H. Prater Daniel D. Reneau
R. Michael Summerford
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Crook is a member of the Board of Directors of First Mississippi
Corporation, and Mr. Summerford, who serves on the Compensation Committee, is
an executive officer of First Mississippi Corporation.
SUMMARY OF EXECUTIVE COMPENSATION
Set forth on the next page is information on the compensation of the
Company's Chief Executive Officer and each other executive officer who received
compensation totaling $100,000 or more for services rendered during the most
recently completed fiscal year.
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation
---------------------------------------------- ---------------------------------
Name and Principal Fiscal Other Annual Options All Other
Position Year Salary Bonus Compensation Awards (#) Compensation(3) ($)
- ------------------- ------ ---------- ----- ------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frederic R. Huber 1996 $ 191,735 $71,050(1) (2) 15,000 $7,669
President & Chief 1995 179,907 86,394 (2) 15,000 7,196
Executive Officer 1994 162,750 0 (2) 15,000 6,510
Wayne D. DeLeo 1996 $ 120,185 $44,100(1) (2) 10,000 $4,635
Vice President & 1995 109,859 28,547 (2) 7,500 4,233
Chief Financial Officer 1994 90,000 0 (2) 7,500 3,600
Martin F. Lapari 1996 $ 114,841 $42,140(1) (2) 10,000 $4,429
Vice President of 1995 104,976 27,277 (2) 7,500 4,045
Manufacturing & 1994 86,000 0 (2) 7,500 3,440
Engineering
William A. Sorensen 1996 $ 100,372 $37,100(1) (2) 5,000 $4,015
Vice President of 1995 95,457 20,684 (2) 0 1,935
Sales and Marketing 1994 45,000(4) 0 (2) 15,000 0
</TABLE>
_____________
(1) One-third paid in August 1996. The remaining portion will be paid in equal
installments in fiscal 1997 and 1998.
(2) Less than 10% of the total annual salary and bonus reported.
(3) Amount represents Company's matching contribution to the 401(k) retirement
plan.
(4) Mr. Sorensen joined the Company as Vice President of Sales and Marketing on
January 1, 1994.
STOCK OPTIONS
Set forth below is information on stock options granted in fiscal 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------------------
Number of Potential Realizable Value at Assumed
Securities Percent of Total Annual Rates of Stock Price
Underlying Options Granted to Exercise Appreciation for Option Term
Options Employees in Price Expiration -------------------------------------
Name Granted(1) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- -------------------- ---------- ------------------ --------- ---------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frederic R. Huber 15,000 21.16% $8.75 8/2/05 $82,542 $209,178
Wayne D. DeLeo 10,000 14.10% 8.75 8/2/05 55,028 139,452
Martin F. Lapari 10,000 14.10% 8.75 8/2/05 55,028 139,452
William A. Sorensen 5,000 7.05% 8.75 8/2/05 27,514 69,726
</TABLE>
8
<PAGE> 11
(1) The options become exercisable in three equal annual increments beginning
one year after granted and are terminated in exchange for their cash value
in the event of a change of control of the Company.
Set forth below is information on the options exercised in fiscal 1996 and
the fiscal year end value of unexercised options to purchase Common Stock held
by the named executives:
AGGREGATE OPTION EXERCISES
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Value of Unexercised
Value Unexercised Options in-the-money Options
Shares Acquired Realized at Fiscal Year-End (#) at Fiscal Year-End ($)
Name on Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------- --------------- --------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Frederic R. Huber 0 0 60,000/30,000 $182,500/$41,250
Wayne D. DeLeo 0 0 32,500/17,500 65,312/21,563
Martin F. Lapari 5,000 $20,625 27,500/17,500 23,437/21,563
William A. Sorensen 0 0 10,000/10,000 28,750/16,250
</TABLE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the CRSP Total
Return Index for the NASDAQ Stock Market (US Companies) and an index composed
of a group of peer issuers. The members of the peer group were selected by the
Company based upon size and type of business. The peer group includes the
following companies: Kinark Corporation, High Plains Corporation and Detrex
Corporation.
Comparison of Cumulative Total Return
Assumes initial investment of $100 and reinvestment of Dividends
[GRAPH]
1991 1992 1993 1994 1995 1996
-----------------------------------------------------
Melamine Chemicals 100 48.78 53.91 63.22 92.42 93.71
Nasdaq US 100 120.13 151.08 152.52 203.59 261.37
Peer Group 100 119.66 116.94 137.76 133.5 98.06
9
<PAGE> 12
COMPENSATION PURSUANT TO PLANS
Retirement Plans
The Company funds a qualified defined benefit retirement plan and related
trust (the "Retirement Plan") covering all employees of the Company who have
completed six months of employment and worked at least 1,000 hours. An
employee becomes fully vested after five years. Retirement Plan benefits are
based on the participant's highest average base monthly compensation for any
successive five-year period preceding retirement or termination of employment
and are not subject to reduction for Social Security benefits. Retirement
income payable to a participant is equal to the sum of 1.4% of that portion of
highest average base monthly compensation that is not in excess of $600, plus
1.8% of his or her highest average base monthly compensation in excess of $600,
multiplied by years of service.
A participant may select one of five alternative payment options under the
Retirement Plan, including the Ten Years Certain and Life Option, the Life
Option, the Joint Annuitant Option, the Joint and 66 2/3% Survivor Option or
the lump- sum distribution. Except for lump sum distribution, each of these
options allows for the payment of benefits to the participant's dependents upon
the participant's death. Each payment option has the same actuarial value at
commencement, but monthly payments vary according to the alternative selected.
The benefit formula notwithstanding, the annual retirement benefit cannot
exceed the maximum benefit allowed under Section 415(b) of the Internal Revenue
Code. For 1996, the maximum annual benefit is $120,000.
In fiscal 1995, the Company adopted a Supplemental Retirement Plan (SRP) to
supplement the retirement plan benefits limited under federal law. The
supplement consists of an amount equal to the excess of the participant's
benefits calculated under the Retirement Plan over the maximum benefit
permitted by law. The Compensation Committee approves all employees covered
under the SRP. Mr. Huber is the only employee currently covered by the SRP.
The following table reflects annual retirement benefits that a participant
with the years of service and the compensation levels indicated below can
expect to receive under the Retirement Plan and, in the case of Mr. Huber, the
Supplemental Retirement Plan upon retirement at age 65. The table assumes that
benefits are paid pursuant to the Ten Years Certain and Life Option. As of
June 30, 1996, Messrs. Huber, DeLeo, Lapari and Sorensen had 4, 8, 13 and 2
years of credited service, respectively.
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
Earnings 10 15 20 25 30
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$100,000 $17,212 $26,568 $35,424 $44,280 $53,136
125,000 22,212 33,318 44,424 55,530 66,636
150,000 26,712 40,068 53,424 66,780 80,136
175,000 31,212 46,818 62,424 78,030 93,636
200,000 35,712 53,568 71,424 89,280 107,136
</TABLE>
10
<PAGE> 13
Change of Control Severance Agreements
The Company has entered into agreements with Messrs. Huber, DeLeo, Lapari,
and Sorensen providing for severance benefits if the officer's employment is
terminated for the reasons described below during a two-year period following a
change in control of the Company. The severance benefit is equal to the sum of
(i) two times the sum of his annual salary and bonus; (ii) any accrued and
unpaid or deferred benefits, including accrued salary, vacation pay and accrued
bonus, and (iii) the actuarial difference between the amount he would receive
under the Retirement Plan if he were employed for the two-year period following
termination and the amount paid or payable thereunder. The agreement also
provides for the continued provision of benefits under the Company's welfare
benefit plans, practices, policies and programs.
Such severance benefits are payable upon termination of employment by the
Company other than for disability or cause or by Messrs. Huber and DeLeo for
any reason. Such severance benefits are payable to Messrs. Lapari and Sorensen
upon termination of employment by the Company other than for disability or
cause, as defined therein, or by the officer for good reason, as defined
therein. In no event, however, may severance benefits payable under such
agreement exceed the amount allowable to the Company as a deduction for federal
tax purposes under applicable law.
The agreement also provides for the continued employment of Mr. Huber for a
period of two years following a change in control on terms at least as
favorable as those applicable for the 120-day period immediately preceding the
change in control and at an annual base salary at least equal to twelve times
the highest monthly base salary paid to him in the preceding five years.
CERTAIN TRANSACTIONS
Furnished below is information regarding certain transactions in which
executive officers, directors and principal stockholders of the Company had an
interest during the fiscal year ended June 30, 1996.
Prior to its initial public offering in 1987, the Company was operated as a
joint venture between First Mississippi Corporation ("First Mississippi") and
Ashland Inc. ("Ashland"). As participants in a joint venture, Ashland and
First Mississippi negotiated the terms of many significant contracts to which
the Company is a party. Certain of those contracts were with Ashland and First
Mississippi, and although the Company did not negotiate such contracts at
arm's- length, the Company believes that its current commercial relationships
with Ashland and First Mississippi are, and all future transactions between the
Company and its officers, directors and principal stockholders or any of their
affiliates will be on terms no less favorable than could be obtained from
unaffiliated third parties. Such future transactions will be approved by a
majority of the outside directors.
Feedstock Supply Agreement. The Company obtains all of its raw materials
(urea and anhydrous ammonia) from First Mississippi and Mississippi Chemical
Corporation ("Mississippi Chemical"), an unrelated party, out of the production
of Triad Chemical, a joint venture between First Mississippi and Mississippi
Chemical. First Mississippi previously provided all of the Company's urea and
anhydrous ammonia under a feedstock supply agreement. In July 1988, the
Company agreed to an assignment in which one-half of First Mississippi's
obligation under the feedstock supply agreement was assigned to
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<PAGE> 14
Mississippi Chemical. In this connection, First Mississippi executed a
stand-by agreement pursuant to which it agreed to supply urea and anhydrous
ammonia to the Company to the extent of the assignment if Mississippi Chemical
wrongfully ceased to make deliveries. The prices paid by the Company for urea
and anhydrous ammonia relate to their market prices. In the last fiscal year,
the Company paid First Mississippi approximately $11.6 million for urea and
anhydrous ammonia.
Payments to Triad for Certain Goods and Services. The Company obtains
certain utilities and services from Triad Chemical including clarified water,
demineralized water and certain of its steam and air. In addition, the Company
has agreed to share the expenses of certain basic services required for the
operation of the Company's and Triad's facilities including, among others, a
guard force, telephone equipment, road maintenance and shared legal costs. The
Company's payment for services provided under the agreement is based on the
actual cost of such services plus an overhead fee of 25%. The agreement may be
terminated by either party without cause upon one year's notice or the shutdown
of either Triad's or the Company 's facilities. Payments for such services to
Triad in fiscal year 1996 were approximately $266,000.
PROPOSAL TO APPROVE THE
1996 LONG-TERM INCENTIVE PLAN
GENERAL
The Board of Directors of the Company believes that the growth of the
Company depends significantly upon the efforts of its officers and key
employees and that such individuals are best motivated to put forth maximum
effort on behalf of the Company if they own an equity interest in the Company.
In accordance with this philosophy, the Board of Directors has adopted the 1996
Long-Term Incentive Plan (the "Plan") and has directed that it be submitted for
approval by the stockholders at the Annual Meeting.
Officers and other key employees of the Company will be eligible to receive
awards ("Incentives") under the Plan when designated by the Long-Term Incentive
Plan Committee of the Board of Directors (the "Committee"). With respect to
participants not subject to Section 162(m) of the Code, the Committee may
delegate its authority to grant Incentives under the Plan to appropriate
personnel of the Company. There are 5 officers and 31 key employees of the
Company and its subsidiaries who may be expected to participate in the Plan.
Incentives under the Plan may be granted to officers and employees in any one
or a combination of the following forms: (i) incentive and non-qualified stock
options; (ii) stock appreciation rights; (iii) restricted stock; (iv)
performance shares, (v) stock awards; and (vi) cash awards.
In addition, directors of the Company who are not employees of the Company
("Outside Directors") will automatically be granted non-qualified stock options
on an annual basis. There are currently six Outside Directors; however,
Messrs. D'Antoni and Patrick have waived their rights to receive options under
the Plan.
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PURPOSES OF THE PROPOSAL
The Board of Directors is committed to creating and maintaining a
compensation system based to a significant extent on grants of equity-based
incentive awards. Only 43,100 shares of Common Stock remain available for
issuance under the Company's Amended and Restated Long-Term Incentive
Compensation Plan adopted in 1987 (the "1987 Plan"). The Committee generally
makes its annual grant of Incentives in August and the Committee anticipates
that the number of shares that remain available under the 1987 Plan will not be
sufficient to accommodate the 1997 grants. The Board of Directors believes
that approval of the Plan will allow the Company to continue to provide members
of management and key personnel with a proprietary interest in the growth and
performance of the Company.
TERMS OF THE PLAN
SHARES ISSUABLE THROUGH THE PLAN
The total number of shares of Common Stock with respect to which Incentives
may be granted under the Plan is limited to 350,000 shares. There are
currently 451,600 shares subject to outstanding options granted under the 1987
Plan to officers and employees. Incentives with respect to no more than 35,000
shares may be granted to a single participant in one calendar year.
Shares of Common Stock subject to Incentives that are canceled, terminated
or forfeited, or shares of Common Stock that are issued as Incentives and
forfeited or reacquired by the Company, will again be available for issuance
under the Plan. A deduction from the shares issuable under the 1996 Plan will
not be made with respect to Incentives, such as stock appreciation rights or
performance shares, that are paid in cash rather than stock. Additional rules
for determining the number of shares granted under the Plan may be made by the
Committee as deemed necessary.
Proportionate adjustments will be made to the number of shares of Common
Stock subject to the Plan, including shares subject to outstanding Incentives,
in the event of any recapitalization, stock dividend, stock split, combination
of shares or other change in the Common Stock, and the terms of any Incentive
shall be adjusted to the extent appropriate to provide participants with the
same relative rights before and after the occurrence of such an event.
On September 17, 1996, the closing sale price of a share of Common Stock,
as reported on the Nasdaq National Market, was $7.50.
ADMINISTRATION OF THE PLAN
The Committee administers the Plan and has plenary authority to award
Incentives under the Plan to officers and employees, to interpret the Plan, to
establish any rules or regulations relating to the Plan that it determines to
be appropriate, to delegate its authority as appropriate, and to make any other
determination that it believes necessary or advisable for the proper
administration of the Plan.
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<PAGE> 16
AMENDMENTS TO THE PLAN
The Board may amend or discontinue the Plan at any time. No amendment or
discontinuance of the 1996 Plan may change or impair any previously-granted
Incentive without the consent of the recipient thereof, except that the Company
retains the right to (a) convert any outstanding incentive stock option to a
non-qualified stock option, (b) require the forfeiture of an Incentive if a
participant's employment is terminated for cause and (c) exercise all if its
rights under the Plan in the event of a change of control of the Company.
TYPES OF INCENTIVES
The Committee may grant the following types of Incentives to officers and
employees: non-qualified or incentive stock options, restricted stock, stock
appreciation rights, performance shares, stock awards and cash awards. The
various types of Incentives are described further below:
Stock Options. The Committee may grant non-qualified stock options or
incentive stock options to purchase shares of Common Stock. The Compensation
Committee will determine the number and exercise price of the options, provided
that the option exercise price may not be less than the fair market value of
the Common Stock on the date of grant. The term of the options, and the time
or times that the options become exercisable, will also be determined by the
Committee, provided that the term of an incentive stock option may not exceed
10 years.
The option exercise price may be paid in cash, check, in shares of Common
Stock that, unless otherwise permitted by the Committee, have been held for a
least six months, or through a broker-assisted exercise arrangement. If a
participant exercises an option and pays the exercise price with shares of
Common Stock owned by the participant, the Committee may grant such participant
an additional option to purchase the number of shares equal to the number of
shares surrendered. The Committee may also approve the purchase by the Company
of an unexercised stock option from the optionee by mutual agreement for the
difference between the exercise price and the fair market value of the shares
covered by the option.
Incentive stock options will be subject to certain additional requirements
necessary in order to qualify as incentive stock options under Section 422 of
the Code.
Restricted Stock. Shares of Common Stock may be granted by the Committee
to an eligible employee and made subject to restrictions regarding their sale,
pledge or other transfer by the employee for a specified period (the
"Restricted Period"). All shares of restricted stock will be subject to such
restrictions as the Committee may designate in an agreement with the employee,
including, among other things, that the shares are required to be forfeited or
resold to the Company in the event of termination of employment or in the event
specified performance goals or targets are not met. A Restricted Period of at
least three years is required, except that if vesting is subject to the
attainment of performance goals, a minimum Restricted Period of one year is
required. Subject to the restrictions provided in the restricted stock
agreement and the Plan, a participant receiving restricted stock shall have all
of the rights of a shareholder as to such shares.
Stock Appreciation Rights. A stock appreciation right, or "SAR," is a
right to receive, without payment to the Company, a number of shares of Common
Stock, cash or any combination thereof, the amount of which is determined
pursuant to the formula described below. A SAR may be granted in conjunction
with a stock option or alone without reference to any stock option. A SAR
granted in conjunction with a stock option may be granted
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<PAGE> 17
concurrently with the grant of such option or at such later time as determined
by the Committee and as to all or any portion of the shares subject to the
option.
The Plan confers on the Committee discretion to determine the number of
shares to which a SAR will relate as well as the duration and exercisability
terms of a SAR. In the case of a SAR granted with respect to a stock option,
the number of shares of Common Stock to which the SAR pertains will be reduced
in the same proportion that the holder exercises the related option. Unless
otherwise provided by the Committee, a SAR will be exercisable for the same
time period as any stock option to which it relates.
Upon exercise of an SAR, the holder is entitled to receive an amount that
is equal to the aggregate amount of the appreciation in the shares of Common
Stock as to which the SAR is exercised. For this purpose, the "appreciation"
in the shares consists of the amount by which the fair market value of the
shares of Common Stock on the exercise date exceeds (i) in the case of a SAR
related to a stock option, the purchase price of the shares under the option or
(ii) in the case of a SAR granted alone without reference to a related stock
option, an amount determined by the Committee at the time of grant.
Performance Shares. Performance Shares consist of the grant by the Company
to an eligible employee of a contingent right to receive shares of Common Stock
or cash with or without any payment by the employee. Each performance share
will be subject to the achievement of performance objectives by the Company, an
operating division or a subsidiary by the end of or within a specified period.
The number of shares granted and the performance criteria will be determined by
the Committee. The award of performance shares shall not create any rights in
a participant as a shareholder of the Company until the issuance of shares of
Common Stock with respect to an award. Performance shares may be awarded in
conjunction with the grant of dividend equivalent payment rights that entitle a
participant to receive an amount equal to the cash dividends paid on an equal
number of shares of Common Stock during the period beginning on the date of
grant of an award and ending on the date on which the award is paid or
forfeited.
Stock Awards. The Committee may grant shares of Common Stock to a
participant as additional compensation for services previously provided to the
Company.
Cash Awards. The Committee may grant a cash award consisting of a monetary
payment to a participant as additional compensation for services to the
Company. Payment of a cash award may relate to the tax liability of a
participant in connection with the grant, exercise, or payment of an Incentive
or may depend upon achievement of performance objectives by the Company or by
individuals. Cash awards may be subject to other terms and conditions, which
may vary from time to time among participants, as the Committee determines to
be appropriate.
GRANT OF OPTIONS TO OUTSIDE DIRECTORS
The Plan provides for the automatic grant to each Outside Director of an
option to acquire shares of Common Stock of the Company on the day following
the 1996 annual meeting and each subsequent annual meeting while the Plan
remains in effect. The number of options granted to each Outside Director will
be calculated by dividing the amount of cash compensation paid to the Outside
Director by the Company for services as a director during the preceding twelve
months divided by the fair market value of a share of Common Stock.
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<PAGE> 18
The options granted to Outside Directors become exercisable one year after
grant and have a term of ten years. If an Outside Director ceases to serve on
the Board of Directors for any reason, exercisable options granted under the
Plan must be exercised within one year from the date of termination of Board
service, except that if a director retires from Board service on or after
reaching age 65, exercisable options may be exercised for a period of five
years. The exercise price of the Outside Director options will be equal to the
fair market value of a share of Common Stock on the date of grant.
TERMINATION OF EMPLOYMENT
If a participant (other than an Outside Director) ceases to be an employee
of the Company for any reason, including death, any Incentive may be exercised,
shall vest or shall expire at such time or times as may be determined by the
Committee in the Incentive agreement with the participant.
CHANGE OF CONTROL
In the event of change of control of the Company, all outstanding options
and SARs granted under the Plan automatically will become fully exercisable,
all restrictions or limitations on any Incentives will lapse and all
performance criteria and other conditions relating to the payment of Incentives
will be deemed to be achieved. A change of control is defined to include (a)
Board approval of (i) a merger, consolidation or reorganization in which the
Company is not the surviving entity, (ii) a sale of all or substantially all of
the assets of the Company or (iii) a liquidation of the Company, (b) an
acquisition of more than 30% of the Company's outstanding voting stock, or (c)
a change in a majority of the Board as a result of a contested election of
directors.
The Plan also provides the Committee with the discretion to effect one or
more of the following alternatives in connection with a change of control as a
result of a reorganization, merger or consolidation, sale or other disposition
of all or substantially all of the assets of the Company or a complete
liquidation or dissolution of the Company: (i) require that all outstanding
options and/or SARs be exercised on or before a date fixed by the Committee
before or after such change of control, (ii) require the surrender to the
Company of some or all outstanding options and SARs in exchange for a payment
in cash or securities for each option or SAR equal in value to the per share
"change of control value," calculated as described below, over the exercise
price, (iii) make any equity adjustment to outstanding options as the Committee
deems necessary to reflect the corporate change, or (iv) provide that an option
under the Plan shall become an option relating to the number and class of
shares of stock or other securities or property (including cash) to which the
participant would have been entitled in connection with the corporate change if
the participant had been the holder of record of the number of shares of Common
Stock then covered by such options.
The "change of control value" equals the amount determined by whichever of
the following items is applicable: (i) the per-share price to be paid to
shareholders of the Company in any merger, consolidation or other
reorganization, (ii) the price per share offered to shareholders of the Company
in any tender offer or exchange offer whereby a change of control takes place,
(iii) in all other events, the fair market value per share of common stock into
which such options or SARs being converted are exercisable, as determined by
the Committee as of the date determined by the Committee to be the date of
conversion of such options or SARs.
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The Committee believes that the choices outlined above will permit it to
review all relevant tax, accounting and other issues relating to the treatment
of outstanding options or SARs at the time of the corporate change, and thereby
will enable the Committee to choose the treatment that will best serve the
participants and the Company.
TRANSFERABILITY OF INCENTIVES
Options, SARs and performance shares are transferable only (i) by will,
(ii) by the laws of descent and distribution, (iii) except in the case of an
incentive stock option, pursuant to a domestic relations order, to family
members, to a family partnership, to a family limited liability company, to a
trust for the benefit of family members or to charitable institutions, if
permitted by the Committee and if provided in the Incentive agreement or an
amendment thereto.
PAYMENT OF WITHHOLDING TAXES IN STOCK
A participant may, but is not required to, satisfy his or her withholding
tax obligation by electing to have the Company withhold, from the shares the
participant would otherwise receive upon exercise or vesting of an Incentive,
shares of Common Stock having a value equal to the amount required to be
withheld. This election must be made prior to the date on which the amount of
tax to be withheld is determined and is subject to the Committee's right of
disapproval.
AWARDS TO BE GRANTED
The grant of awards to officers and employees under the Plan is entirely in
the discretion of the Committee. The Committee has not yet made a
determination as to the awards to be granted to officers and employees under
the Plan, if it is approved by the stockholders. The size of awards to be made
under the terms of the Plan to Outside Directors cannot be calculated at this
time since the number of options to be granted to each Outside Director is
based upon the fair market value of the Company's stock on the date of grant
and the cash compensation paid to each Outside Director during the previous
twelve months. Only four current Outside Directors will receive options since
Messrs. D'Antoni and Patrick have waived their rights to receive options.
FEDERAL INCOME TAX CONSEQUENCES
Under existing federal income tax provisions, a participant who
receives stock options, SARs or performance shares or who receives shares of
restricted stock that are subject to restrictions that create a "substantial
risk of forfeiture" (within the meaning of Section 83 of the Code) will not
normally realize any income, nor will the Company normally receive any
deduction for federal income tax purposes, in the year such Incentive is
granted.
When a non-qualified stock option granted pursuant to the Plan is
exercised, the employee will realize ordinary income measured by the difference
between the aggregate fair market value of the shares of Common Stock on the
exercise date and the aggregate purchase price of the shares of Common Stock as
to which the option is exercised, and, subject to Section 162(m) of the Code,
the Company will be entitled to a deduction in the year the option is exercised
equal to the amount the employee is required to treat as ordinary income.
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<PAGE> 20
An employee generally will not recognize any income upon the exercise of any
incentive stock option, but the excess of the fair market value of the shares
at the time of exercise over the option price will be an item of adjustment,
which may, depending on particular factors relating to the employee, subject
the employee to the alternative minimum tax imposed by Section 55 of the Code.
An employee will recognize capital gain or loss in the amount of the difference
between the exercise price and the sale price on the sale or exchange of stock
acquired pursuant to the exercise of an incentive stock option, provided the
employee does not dispose of such stock within either two years from the date
of grant or one year from the date of exercise of the incentive stock option
(the "required holding periods"). An employee disposing of such shares before
the expiration of the required holding period will recognize ordinary income
generally equal to the difference between the option price and the fair market
value of the stock on the date of exercise. The remaining gain, if any, will
be capital gain. The Company will not be entitled to a federal income tax
deduction in connection with the exercise of an incentive stock option, except
where the employee disposes of the Common Stock received upon exercise before
the expiration of the required holding period.
If the exercise price of a non-qualified option is paid by the surrender of
previously owned shares, the basis and the holding period of the previously
owned shares carries over to the same number of shares received in exchange
therefor. The compensation income recognized on exercise of such non-qualified
option is added to the basis of the remaining shares received. If the
exercised option is an incentive stock option and the shares surrendered were
acquired through the exercise of an incentive stock option and have not been
held for the applicable holding period, the optionee will recognize income on
such exchange and the basis of the shares received will be equal to the air
market value of the shares surrendered. If the applicable holding period has
been met on the date of exercise,, there will be no income recognition and the
basis and the holding period of the previously owned shares carries over to the
same number of shares received in exchange therefor and the remaining shares
begin a new holding period and will have a zero basis.
When a SAR is exercised, the employee will recognize ordinary income in the
year the SAR is exercised equal to the value of the appreciation that he is
entitled to receive, and, subject to Section 162(m) of the Code, the Company
will be entitled to a deduction in the same year and in the same amount.
An employee who receives restricted stock or performance shares will
normally recognize taxable income on the date the shares become transferable or
no longer subject to substantial risk of forfeiture or on the date of their
earlier disposition. The amount of such taxable income will be equal to the
amount by which the fair market value of the shares of Common Stock on the date
such restrictions lapse (or any earlier date on which the shares are disposed
of) exceeds their purchase price, if any. An employee may elect, however, to
include in income in the year of purchase or grant the excess of the fair
market value of the shares of Common Stock (without regard to any restrictions)
on the date of purchase or grant over its purchase price. Subject to the
limitations imposed by Section 162(m) of the Code, the Company will be entitled
to a deduction for compensation paid in the same year and in the same amount as
income is realized by the employee. Dividends currently paid to the
participant will be taxable compensation income to the participant and
deductible by the Company.
A participant who receives a stock award under the Plan consisting of shares
of Common Stock will realize ordinary income in the year of the award equal to
the fair market value of the shares of Common Stock covered by the award on the
date it is made and, subject to Section 162(m) of the Code, the Company will be
entitled to a deduction equal to the amount the employee is required to treat
as ordinary income. An employee who receives a
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<PAGE> 21
cash award will realize ordinary income in the year the award is paid equal to
the amount thereof and the amount of the cash award will be deductible by the
Company, subject to Section 162(m) of the Code.
When the exercisability or vesting of an Incentive granted under the Plan is
accelerated upon a change of control, any excess on the date of the change in
control of the fair market value of the shares or cash issued under Incentives
over the purchase price of such shares may be characterized as "parachute
payments" (within the meaning of Section 280G of the Code) if the sum of such
amounts and any other such contingent payments received by the employee exceeds
an amount equal to three times the "base amount" for such employee. The base
amount generally is the average of the annual compensation of such employee for
the five years preceding such change in ownership or control. An "excess
parachute payment" with respect to any employee, is the excess of the present
value of the parachute payments to such person, in the aggregate, over and
above such person's base amount. If the amounts received by an employee upon a
change in control are characterized as parachute payments, such employee will
be subject to a 20% excise tax on the excess parachute payments pursuant to
Section 4999 of the Code, and the Company will be denied any deduction with
respect to such excess parachute payments.
This summary of federal income tax consequences of non-qualified stock
options, incentive stock options, SARs, restricted stock and performance shares
does not purport to be complete. Reference should be made to the applicable
provisions of the Code. There also may be state and local income tax
consequences applicable to transactions involving Incentives.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the total voting power
present or represented at the Annual Meeting is required for approval of the
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE PROPOSED APPROVAL OF THE 1996 LONG-TERM INCENTIVE PLAN.
PROPOSAL TO RATIFY THE SELECTION
OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the retention of KPMG Peat Marwick LLP ("Peat Marwick") as independent
auditors of the Company for the fiscal year ending June 30, 1997, which
selection will be submitted to the stockholders for ratification. If the
stockholders do not ratify the Board of Directors' selection of Peat Marwick by
the affirmative vote of at least a majority of the shares of Common Stock
represented at the meeting in person or by proxy, the selection of independent
auditors will be reconsidered by the Board.
Representatives of Peat Marwick are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so. They will also be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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OTHER MATTERS
QUORUM AND VOTING OF PROXIES
The presence in person or by proxy of a majority of the outstanding shares
of Common Stock of the Company is necessary to constitute a quorum. If a
quorum is present, the vote of a majority of the Common Stock present or
represented will decide all questions properly brought before the meeting,
except that directors will be elected by plurality vote. Abstentions will have
the effect of a vote against the proposal to approve the Plan and the proposal
to ratify the selection of Peat Marwick LLP as independent auditors (the
"Proposals"). Broker non-votes as to the Proposals will not be deemed a part
of the voting power present with respect to the Proposals, will not count as
votes for or against such proposals and will not be included in calculating the
number of votes necessary for approval of the Proposals.
All proxies in the form enclosed received by the Board of Directors will be
voted as specified and, in the absence of instructions to the contrary, will be
voted for the election of the nominees named above and for the Proposals.
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than the election of directors, the approval of the Plan
and the ratification of the selection of independent auditors. However, if any
other matters properly come before the meeting or any adjournment thereof, it
is the intention of the persons named in the enclosed proxy to vote the shares
represented by them in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Any stockholder who desires to present a proposal qualified for inclusion
in the Company's proxy materials relating to the 1997 annual meeting of
stockholders must forward the proposal to the Secretary of the Company at the
address shown on the first page of this Proxy Statement in time to arrive at
the Company prior to June 5, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ L. R. McMILLAN, II
L. R. McMillan, II
Secretary
Donaldsonville, Louisiana
October 4, 1996
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[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
------------------------
MELAMINE CHEMICALS, INC.
------------------------
RECORD DATE SHARES:
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
1. To elect three directors to serve a three-year term of office expiring at
the 1999 annual meeting of stockholders.
James W. Crook, Scotty B. Patrick and Charles M. McAuley
(Instruction: To withhold authority to vote for any nominee, mark the "For
All Except" box and strike a line through the nominee's name in the list
provided above.)
FOR WITHHOLD FOR ALL EXCEPT
[ ] [ ] [ ]
2. To approve the 1996 Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the appointment of KPMG Peat Marwick LLP, certified public
accountants, as independent public auditors for the Company for the fiscal
year ending June 30, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Mark box at right if comments or address change have been [ ]
noted on the reverse side of this card.
Please be sure to sign and date this Proxy. Date
---------------------
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Shareholder sign here Co-owner sign here
DETACH CARD
MELAMINE CHEMICALS, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders,
November 12, 1996.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Melamine Chemicals, Inc.
<PAGE> 24
MELAMINE CHEMICALS, INC.
39041 HIGHWAY 18 WEST
DONALDSONVILLE, LA 70948
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MELAMINE CHEMICALS, INC.
The undersigned hereby appoints Frederic R. Huber and Wayne D. DeLeo,
or either of them, as proxies, each with the power to appoint his substitute,
and hereby authorizes each of them to represent and to vote, as designated
below, all of the shares of Common Stock of Melamine Chemicals, Inc. held of
record by the undersigned on September 27, 1996 at the Annual Meeting of
Stockholders to be held on November 12, 1996, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1, 2 and 3. The individuals named above are authorized
to vote in their discretion on any other matter that may properly come before
the meeting.
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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