<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
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 240.14a-11(c) or 240.14a-12
HASKELL INTERNATIONAL, 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(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
HASKEL INTERNATIONAL, INC.
September 21, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Haskel International, Inc. which will be held at the Red Lion Hotel, 100 West
Glenoaks Boulevard, Glendale, California 91202, on Friday, October 30, 1998 at
10:30 a.m. local time.
The Notice of Annual Meeting and Proxy Statement are included with this
letter. The matters listed in the Notice of Annual Meeting are more fully
described in the Proxy Statement.
It is important that your shares be represented at the Annual Meeting
whether or not you are personally able to attend. YOU ARE THEREFORE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY, OF COURSE,
WITHDRAW YOUR PROXY SHOULD YOU WISH TO VOTE IN PERSON.
Thank you for your cooperation.
Sincerely,
/s/ EDWARD MALKOWICZ
------------------------------
Edward Malkowicz
Chairman of the Board
<PAGE> 3
HASKEL INTERNATIONAL, INC.
100 EAST GRAHAM PLACE
BURBANK, CALIFORNIA 91502
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 21, 1998
The Annual Meeting of Shareholders of Haskel International, Inc. will
be held on October 30, 1998 at 10:30 A.M. at the Red Lion Hotel, 100 West
Glenoaks Boulevard, Glendale, California 91202, for the following purposes:
1. Election of seven directors, consisting of three
Class A directors and four Class B directors, to
serve on the Company's Board of Directors until
the next Annual Meeting of Shareholders and until
their successors are duly elected and qualified;
2. Approval of the Company's 1998 Long-term
Performance Incentive Plan;
3. Ratification of the selection of Deloitte & Touche
LLP as the Company's independent auditors; and
4. Such other business as may properly come before
the meeting or any adjournments or postponements
thereof.
The Board of Directors has fixed September 14, 1998 as the record date
for determining the shareholders entitled to receive notice of and to vote at
the meeting.
All shareholders are cordially invited to attend the meeting. Whether
or not you expect to attend the meeting, please mark, sign, date and return
promptly the enclosed proxy card in the stamped return envelope provided.
By Order of the Board of Directors,
/s/ PATRICIA A. WEHR
------------------------------
Patricia A. Wehr
Secretary
<PAGE> 4
HASKEL INTERNATIONAL, INC.
100 EAST GRAHAM PLACE
BURBANK, CALIFORNIA 91502
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 30, 1998
GENERAL INFORMATION
This proxy statement (the "Proxy Statement") and the enclosed proxy are
furnished in connection with the solicitation of proxies by the Board of
Directors of Haskel International, Inc., a California corporation (the
"Company"), for use at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held at the Red Lion Hotel, 100 West Glenoaks Boulevard, Glendale,
California, 91202 on October 30, 1998 at 10:30 a.m. local time and any
adjournments or postponements thereof. The Company's Annual Report to
Shareholders for the fiscal year ended May 30, 1998, including the Company's
Form 10-K and other information concerning the Company, is also enclosed for
your information. The Company anticipates that the Proxy Statement and the
enclosed proxy will first be mailed or given to its shareholders on or about
September 21, 1998.
A proxy may be revoked by filing with the Secretary of the Company a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. Attendance in person at
the Annual Meeting does not itself revoke an otherwise valid proxy; however, any
shareholder who attends the Annual Meeting may orally revoke his or her proxy at
the Annual Meeting and vote in person. All properly executed proxies received
prior to or at the Annual Meeting, and not revoked, will be voted at the Annual
Meeting with the instructions indicated on such proxies. If no instructions are
indicated, such proxies will be voted for the election of the three Class A and
four Class B nominees, as the case may be, as directors, and for Proposals 2 and
3. The Board of Directors is not aware at the date hereof of any other matters
to be presented at the Annual Meeting; however, if any other matter is properly
presented, the proxyholders will vote in their sole discretion upon such other
matter.
The cost of this solicitation of proxies will be borne by the Company.
Proxies will be solicited by the Company principally through use of the mail,
but directors, officers and regular employees of the Company may solicit proxies
in person, by telephone, or by other means of communication. Such persons will
not be specially compensated for such services. The Company may reimburse
brokers, banks, custodians, nominees and other fiduciaries for their customary
and reasonable charges and expenses in forwarding proxy materials to beneficial
owners.
VOTING SECURITIES
Only shareholders of record at the close of business on September 14,
1998 will be entitled to vote at the Annual Meeting. On that date, there were
4,758,795 shares of the Company's Class A Common Stock and 40,000 shares of
Class B Common Stock outstanding. Each share of Common Stock is entitled to one
vote. The Class A Common Shares, voting as a class, shall elect a minority of
the Board of Directors. The Class B Common Shares, voting as a class, shall
elect a majority of the Board of Directors. The holders of a majority of the
outstanding shares of Common Stock present in person or by proxy and entitled to
vote will constitute a quorum at the Annual Meeting. Abstentions and shares held
by brokers that are present but not voted because the brokers had no
discretionary authority with respect to such shares (broker non-votes) will not
be counted as being present for purposes of determining a quorum. Kristin L.
Pudwill has been appointed by the Board of Directors to serve as the Inspector
of Elections for the purposes of this meeting.
1
<PAGE> 5
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to each person
who, as of August 14, 1998, is known by the Company to be the beneficial owner
of more than five percent (5%) of the Company's Common Stock:
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock
------------------------- -----------------------
Amount and Amount and Percent of
Nature of Percent Nature of Percent Combined
Name and Address of Beneficial of Beneficial of Voting
Beneficial Owner Ownership Class(1) Ownership Class(1) Power(2)
--------- ------ --------- ------ ------
<S> <C> <C> <C> <C> <C>
Hayman Family Trust 385,781(3) 8.1% 13,3333 33.3% 8.3%
FBO Sandra Nelson
c/o Mellon Trust of California
400 S. Hope Street, Suite 400
Los Angeles, CA 90071
Hayman Family Trust 385,781(4) 8.1% 13,3334 33.3% 8.3%
FBO Sheryl L. Everett
c/o Mellon Trust of California
400 S. Hope Street, Suite 400
Los Angeles, CA 90071
Hayman Family Trust 385,781(5) 8.1% 13,3345 33.4% 8.3%
FBO Rick Meeker Hayman
c/o Mellon Trust of California
400 S. Hope Street, Suite 400
Los Angeles, CA 90071
Hayman Family Trusts - Aggregate 1,521,477(6) 32.0% 40,0006 100.0% 32.5%
c/o Mellon Trust of California
400 S. Hope Street, Suite 400
Los Angeles, CA 90071
Maury S. Friedman 269,500(7) 5.7% -- -- 5.6%
29480 Bertrand Street
Agoura Hills, CA 91301
</TABLE>
[Footnotes on next page]
2
<PAGE> 6
- -------------------------
1 Included as outstanding for purposes of these calculations with
respect to (i) the Class A Common Stock were 4,759,205 shares of Class
A Common Stock outstanding as of August 14, 1998 and (ii) the Class B
Common Stock were 40,000 shares of Class B Common Stock outstanding as
of August 14, 1998.
2 Represents the combined voting power of the shares of Class A Common
Stock and Class B Common Stock beneficially owned by the persons named
as a percent of the aggregate combined voting power of all outstanding
shares of Common Stock.
3 Sandra Nelson, c/o Haskel International, Inc., 100 E. Graham Place,
Burbank, CA 91502, is the beneficiary of the trust. Mellon Trust of
California ("Mellon Trust"), Sandra Nelson, and Sheryl L. Everett are
the trustees of the trust. Mellon Trust has one vote and the other
trustees have one vote in determining action to be taken with respect
to the shares held by the trust.
4 Sheryl L. Everett, c/o Haskel International, Inc., 100 E. Graham
Place, Burbank, CA 91502, is the beneficiary of the trust. Mellon Trust
of California ("Mellon Trust"), Sandra Nelson, and Sheryl L. Everett
are the trustees of the trust. Mellon Trust has one vote and the other
trustees have one vote in determining action to be taken with respect
to the shares held by the trust.
5 Rick Meeker Hayman, c/o Haskel International, Inc., 100 E. Graham
Place, Burbank, CA 91502, is the beneficiary of the trust. Mellon Trust
of California ("Mellon Trust"), Sandra Nelson, and Sheryl L. Everett
are the trustees of the trust. Mellon Trust has one vote and the other
trustees have one vote in determining action to be taken with respect
to the shares held by the trust.
6 All of the shares shown are owned beneficially and of record by eight
irrevocable trusts, three of which are individually identified above.
Sandra Nelson, c/o Haskel International, Inc., 100 E. Graham Place,
Burbank, CA 91502, is the beneficiary of three of the trusts, Sheryl L.
Everett, c/o Haskel International, Inc., 100 E. Graham Place, Burbank,
CA 91502, the beneficiary of three of the trusts, and Rick Meeker
Hayman, c/o Haskel International, Inc., 100 E. Graham Place, Burbank,
CA 91502, the beneficiary of two of the trusts. The trustees of two of
the trusts of which Sandra Nelson is the beneficiary, two of the trusts
of which Sheryl L. Everett is the beneficiary and the two of the trusts
of which Rick Meeker Hayman is the beneficiary, are Mellon Trust of
California ("Mellon Trust"), Sandra Nelson and Sheryl L. Everett.
Mellon Trust has one vote and the other trustees have one vote in
determining action to be taken by each of these six trusts with respect
to the shares held by each such trust. Mellon Trust is sole trustee for
each of the other two trusts, one of which Sandra Nelson is the
beneficiary and one of which Sheryl L. Everett is the beneficiary.
Excludes 9,950 and 40,545 shares as to which Sandra Nelson and Sheryl
L. Everett, respectively, have sole voting and dispositive power; and
41,145 shares which are held in trust by another trustee, and with
respect to which Rick Meeker Hayman is the beneficiary, and has sole
voting and dispositive power.
7 Includes 265,000 shares owned beneficially and of record by the
Friedman Family Trust, of which Maury S. Friedman and Lisa E. Friedman
are co-trustees, and 4,500 shares owned by Mr. Friedman as custodian
for his minor children.
3
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of August 14, 1998, by (i)
each director and nominee for director, (ii) each of the executive officers
named in the Summary Compensation Table, and (iii) all directors and executive
officers as a group. Except as otherwise noted, and subject to applicable
community property and similar laws, each person named has sole voting and
investment power with respect to the Common Stock shown as beneficially owned.
<TABLE>
<CAPTION>
Class A Shares Percent
Beneficially of
Name and Address Title Owned Class
- ---------------- ----- -------------- -------
<S> <C> <C> <C>
R. Malcolm Greaves President, Chief Executive 138,784(1) 2.9%
100 East Graham Place Officer and Director
Burbank, CA 91502
Lonnie D. Schnell Chief Financial Officer and 25,730(2) *
100 East Graham Place Secretary(10)
Burbank, CA 91502
Henry Mason Managing Director of HESL 17,270(3) *
100 East Graham Place
Burbank, CA 91502
Edward Malkowicz Chairman of the Board and 42,200(4) *
100 East Graham Place Director
Burbank, CA 91502
Marvin L. Goldberger Director 50,155(5) 1.1%
100 East Graham Place
Burbank, CA 91502
Stanley T. Myers Director 8,200(6) *
100 East Graham Place
Burbank, CA 91502
Terrence A. Noonan Director 5,000(7) *
100 East Graham Place
Burbank, CA 91502
John Vinke Director 3,100(8) *
100 East Graham Place
Burbank, CA 91502
H. Carr Wells Director (Deceased)
100 East Graham Place
Burbank, CA 91502
W. Bradley Zehner II, Ph.D. Director 3,250(8) *
100 East Graham Place
Burbank, CA 91502
All directors and executive
officers as a group (10 persons) 293,689(9) 6.2%
</TABLE>
* Denotes beneficial ownership of less than 1%.
[Footnotes on next page]
4
<PAGE> 8
- --------------------------
1 Includes 131,800 shares issuable upon exercise of options
exercisable within 60 days of August 14, 1998.
2 Includes 21,000 shares issuable upon exercise of options exercisable
within 60 days of August 14, 1998.
3 Includes 17,270 shares issuable upon exercise of options exercisable
within 60 days of August 14, 1998.
4 Includes 15,000 shares owned beneficially and of record as community
property of Edward Malkowicz and Michaele Malkowicz. Includes 25,200
shares issuable upon exercise of options exercisable within 60 days of
August 14, 1998.
5 Includes 11,155 shares owned beneficially and of record by the
Marvin and Mildred Goldberger Family Trust, of which Dr. Goldberger is
a co-trustee; and 39,000 shares issuable upon exercise of options
exercisable within 60 days of August 14, 1998.
6 Includes 4,800 shares issuable upon exercise of options exercisable
within 60 days of August 14, 1998.
7 Includes 1,000 shares owned beneficially and of record by a family
trust of which Terrence A. Noonan and Carolyn L. Noonan are
co-trustees. Includes 4,000 shares issuable upon exercise of options
exercisable within 60 days of August 14, 1998.
8 Includes 2,000 shares issuable upon exercise of options exercisable
within 60 days of August 14, 1998.
9 Includes 247,070 shares issuable upon exercise of options
exercisable within 60 days of August 14, 1998.
10 Effective September 3, 1998, Patricia A. Wehr replaced Lonnie D.
Schnell as Chief Financial Officer and Secretary. As of August 14,
1998, Ms. Wehr beneficially owned 3,000 Class A Common Shares, less
than 1% of the outstanding Class A Common Shares.
5
<PAGE> 9
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, at the Annual Meeting seven
directors are to be elected to serve until the next Annual Meeting of
Shareholders and until the election and qualification of their successors. Three
directors are elected by the holders of Class A Common Stock voting as a class
and four directors are elected by the holders of Class B Common Stock voting as
a class. Holders of Class A Common Stock may vote only for Class A nominees and
holders of Class B Common Stock may vote only for Class B nominees. The three
Class A nominees and the four Class B nominees receiving the highest number of
affirmative votes of the shares entitled to vote, for the respective class of
nominees, shall be elected directors. Abstentions and broker non-votes will have
no effect on the outcome of the vote. Unless otherwise instructed, the
proxyholders will vote the proxies received by them for the nominees of the
respective class named below, all of whom are currently directors of the
Company. If any of the listed nominees is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for such
person or persons as the proxyholders may designate. The Board of Directors has
no reason to believe that any of the nominees will be unable or decline to serve
as a director.
NOMINEES FOR ELECTION AS DIRECTOR
Set forth below is certain information as of August 14, 1998 with
respect to each director and each person nominated for election as a director.
<TABLE>
<CAPTION>
Name Age Position with Company
- ---- --- ---------------------
<S> <C> <C>
R. Malcolm Greaves * 59 President, Chief Executive Officer and Director
Edward Malkowicz * 58 Chairman of the Board and Director
Marvin L. Goldberger, Ph.D. ** 76 Director
Stanley T. Myers * 61 Director
Terrence A. Noonan ** 60 Director
John Vinke** 54 Director
W. Bradley Zehner II, Ph.D.** 54 Director
</TABLE>
* Nominee as Class A director
** Nominee as Class B director
R. Malcolm Greaves was appointed President and Chief Executive Officer
of the Company in February 1996. He joined Haskel Energy Systems, Ltd. ("HESL"),
a wholly owned subsidiary of the Company, as General Manager in January 1989 and
was appointed Managing Director of HESL in June 1989. Mr. Greaves has served as
a director of the Company since September 1990. Between January 1994 and
February 1995, he served as Executive Vice President in charge of worldwide pump
operations, after serving as Vice President, Chief Operating Officer for Europe,
the Middle East, India and Africa from April 1993.
Edward Malkowicz has been a director of the Company since November
1994. He was elected Chairman of the Board in April 1995. Mr. Malkowicz served
as the acting Chief Executive Officer of the Company from April 1995 to February
1996. Between 1992 and May 1995, Mr. Malkowicz taught business courses at
Riverside College in Riverside, California. In September 1987, Mr. Malkowicz was
employed as Senior Vice President of Finance and Administration for Turbo-tek
International, a manufacturer and distributor of packaged consumer goods, and
served as its President and Chief Operating Officer from June 1989 through
November 1990.
6
<PAGE> 10
Marvin L. Goldberger, Ph.D., served as a director of the Company from
1982 through 1997. Since January 1993, Dr. Goldberger has been a professor of
physics at the University of California, San Diego. From September 1991 through
December 1992 he was a professor of physics at the University of California, Los
Angeles, and from 1987 through July 1991 he served as the director of the
Institute for Advanced Studies at Princeton, New Jersey. Dr. Goldberger served
as a director of General Motors from January 1981 through June 1983, and is
currently a member of the General Motors Corporate Advisory Council. He is
currently Dean of Natural Sciences, University of California, San Diego and
President Emeritus of the California Institute of Technology.
Stanley T. Myers has been a director of the Company since November
1994. Mr. Myers is currently President of Semiconductor Equipment and Materials
International (SEMI). SEMI is an international trade association that serves
more than 2,000 corporate members involved in the semiconductor and flat panel
display equipment and materials industries. Prior to his appointment at SEMI,
Mr. Myers served in various capacities at Mitsubishi Silicon America Corporation
(formerly Siltec Corporation), a manufacturer of silicon wafers, including
President and Chief Executive Officer since November 1985. Mr. Myers also serves
on the SEMI Board of Directors, a post to which he was elected in 1989 and he is
chairman of Mitsubishi Silicon America Board of Directors.
Terrence A. Noonan has been a director of the Company since May 1996.
Mr. Noonan is the President and Chief Operating Officer of Furon Company, a
manufacturing company specializing in polymer components. He has served in this
capacity since June 1991. He is also a member of the Board of Directors of Furon
Company.
John Vinke was elected a director of the Company in October 1996. Mr.
Vinke is the Vice President of Finance and Chief Financial Officer of Special
Devices, Inc. He has served in this capacity since April 1994. From January 1990
through March 1994, Mr. Vinke served as Vice President of Finance and Chief
Financial Officer of Chalco Industries, Inc.
H. Carr Wells served on the Board of Directors of Haskel International,
Inc. from October 17, 1997 until his untimely death on August 4, 1998. Mr. Wells
was President of Triconex Corporation, a subsidiary of SIEBE, PLC from 1995
until his death in 1998. He served as Vice President of Sales at the Foxboro
Company, a subsidiary of SIEBE, PLC, from 1992 until his appointment at Triconix
. Prior to joining the SIEBE organization, Mr. Wells served in various
capacities with Honeywell, Inc. from 1977 to 1992, including the position of
Vice President Western Region Business Center.
W. Bradley Zehner II, Ph.D. was appointed a director of the Company in
August 1997. Since 1989, Dr. Zehner has been an associate professor of business
strategy at Pepperdine University's MBA and executive MS in Technology
Management programs. Dr. Zehner also consults with a number of international
technology-based organizations. Dr. Zehner was formerly President - Worldwide
Sales and Marketing for John Brown Machinery Group; Managing Chairman of four
separate engineering/sales companies in the United States, England, France and
Hong Kong; and served as Vice President of Strategic Planning and Business
Development for John Brown PLC's Industrial Products Sector.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE CLASS A
NOMINEES BY THE HOLDERS OF CLASS A COMMON STOCK AND EACH OF THE CLASS B
NOMINEES BY THE HOLDERS OF CLASS B COMMON STOCK.
COMPENSATION OF DIRECTORS
Each of the Company's directors who is not an employee of the Company
receives an annual fee of $24,000, payable in monthly installments, except for
the Chairman, who receives annual compensation of $60,500. Non-employee
directors receive $500 for each committee meeting in which they participate,
except directors who chair a Board committee, who receive $750 per meeting. Each
director receives reimbursement for out-of-pocket expenses.
7
<PAGE> 11
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held five meetings during fiscal
1998. All of the current directors attended at least 75% of the meetings of the
Board of Directors and each committee of the Board on which they served during
fiscal 1998.
During fiscal 1998, the Board of Directors of the Company had three
standing committees: the Audit Committee (comprised of Messrs. Greaves,
Malkowicz and Vinke), the Compensation Committee (comprised of Messrs. Greaves,
Myers, Noonan and Wells), and the Executive Committee (comprised of Messrs.
Greaves, Malkowicz, Noonan, Vinke and Zehner). The Audit Committee held two
meetings, the Compensation Committee held four meetings, and the Executive
Committee held three meetings during fiscal 1998.
The Audit Committee reviews the arrangements for and the scope of the
independent audit, as well as the results of the audit engagement. The Audit
Committee also makes recommendations to the Board of Directors regarding the
retention or discharge of the Company's independent auditors. The Compensation
Committee reviews and makes recommendations to the Board of Directors regarding
salaries, compensation, bonuses, benefits and option grants for executive
officers and key employees. The Executive Committee was formed to expedite
certain matters relative to the management of the Company in lieu of a formal
board meeting and has all of the authority of the Board of Directors except with
respect to (i) the approval of any action for which the General Corporation Law
or the Articles of Incorporation also require shareholder approval; (ii) the
filling of vacancies on the Board or in any committee; (iii) the fixing of
compensation of the directors for serving on the Board or on any committee; (iv)
the adoption, amendment or repeal of By-Laws; (v) the amendment or repeal of any
resolution of the Board; (vi) any distribution to the shareholders; and (vii)
the appointment of other committees of the Board or the members thereof. The
Executive Committee preliminarily reviews and has the authority to approve
acquisition proposals up to a maximum of $1,000,000 and also performs searches
and makes recommendations for nominations of new Board members. Each committee
makes recommendations to the Board of Directors for further action by it.
EXECUTIVE OFFICERS
As of August 14, 1998, the executive officers of the Company were as
follows:
R. Malcolm Greaves, President, Chief Executive Officer and Director.
Biographical information regarding Mr. Greaves is set forth above under
"Nominees for Election as Director."
Lonnie D. Schnell, 49, joined the Company as Chief Financial Officer
and Secretary in November 1994. From August 1990 through October 1994, Mr.
Schnell was Vice President and Controller of Teleflex Control Systems, Inc., an
electromechanical actuator and cargo handling business. Effective September 3,
1998, Patricia A. Wehr replaced Lonnie D. Schnell as Chief Financial Officer and
Secretary.
Henry Mason, 48, was appointed Managing Director of HESL in January
1997. He has been employed by HESL since its formation in the United Kingdom in
1978 where he held the position of Business Manager for its Mining Products
Division. In 1987, he was appointed Sales Manager for HESL and was appointed
Sales and Marketing Director in April 1993.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1998, there were no transactions with members of the
Board of Directors or management which require disclosure under SEC
requirements.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's
directors, its executive officers, and any persons holding more than ten percent
of the Company's Common Stock are required to report their initial ownership of
the Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange
8
<PAGE> 12
Commission. Specific filing deadlines of these reports have been established and
the Company is required to disclose in this Proxy Statement any failure to file
by these dates during the fiscal year ended May 30, 1998. Based solely upon a
review of Forms 3 and 4 and amendments thereto furnished to the Company during
the fiscal year ended May 30, 1998 and Forms 5 and amendments thereto furnished
to the Company with respect to the fiscal year ended May 30, 1998, and written
representations, all of these filing requirements have been satisfied, except
that W. Bradley Zehner II, Ph.D., a director, made one late filing on Form 4,
relating to one transaction. All such filings have been made as of the date
hereof.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid by the
Company, together with long term and other compensation, for each of the last
three fiscal years to its Chief Executive Officer and to each of its executive
officers whose total salary and bonus from the Company exceeded or equaled
$100,000 in fiscal 1998 (the "Named Executive Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Long-term
Compensation
Other Annual Awards - Stock All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($)(2) Options(#)(3) Compensation($)(4)
- ------------------------------ ------ ----------- --------- ------------------ -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
R. Malcolm Greaves(1) 1998 $233,500 $41,000 $4,200 -- $ 31,000
President and Chief 1997 205,500 124,500 2,000 -- 30,000
Executive Officer 1996 165,200 110,000 -- 43,000 29,500
Lonnie D. Schnell 1998 117,500 19,000 4,500 -- --
Chief Financial Officer and 1997 105,700 42,800 2,400 15,000 --
Secretary(5) 1996 100,900 40,000 1,500 30,000 --
Henry Mason 1998 92,800 24,700 2,100 -- 19,600
Managing Director of HESL 1997 88,000 39,600 1,600 10,000 17,000
1996 66,800 24,800 1,600 -- 15,500
</TABLE>
- --------------------------
1 Mr. Greaves was appointed President and Chief Executive Officer in
February 1996.
2 Automobile allowance and employer's matching contribution to the
Haskel International, Inc. Retirement Savings Plan.
3 Options granted under the Company's Stock Option Plans.
4 Company's contribution to HESL Pension Plan.
5 Effective September 3, 1998, Patricia A. Wehr replaced Lonnie D.
Schnell as Chief Financial Officer and Secretary.
9
<PAGE> 13
EMPLOYMENT AGREEMENTS
The Company established, effective March 1, 1996, an Executive
Separation Pay Plan (the "Separation Pay Plan"), to establish a uniform basis
for providing separation allowances to certain executives when their positions
are eliminated or when they are terminated for reasons other than for cause. The
Separation Pay Plan is administered by the Compensation Committee. The Board of
Directors or the Compensation Committee has absolute discretion to designate
those executives who are covered by the Separation Pay Plan (a "Covered
Employee"). The amount of separation allowance which a Covered Employee is
entitled to receive is determined by the Board of Directors and specified as a
number of months of the Covered Employee's base salary as of the date of
termination of employment. Presently, the following Named Executive Officers are
the only executives designated as Covered Employees under the Separation Pay
Plan (specified period for separation allowance indicated in parentheses): R.
Malcolm Greaves, President and Chief Executive Officer (12 months); and Lonnie
D. Schnell, Chief Financial Officer and Secretary (8 months).
In September 1997, the Company entered into Change in Control Agreements
with R. Malcolm Greaves, President and Chief Executive Officer; Lonnie D.
Schnell, Chief Financial Officer and Secretary; and Henry Mason, Managing
Director of HESL. Such agreements were put in place in order to encourage the
executive to continue his employment with Haskel and to devote full attention to
Haskel's business notwithstanding the possibility, threat, or occurrence of an
acquisition, merger, or change of control of Haskel International, Inc. The
agreements provide for a continuation of employment in the executive's position
or a position of comparable responsibility and compensation. In the event of
termination following a change of control, salary and benefits continue for a
period of three years after the change of control for Mr. Greaves, and for a
period of two years for Mr. Schnell and Mr. Mason.
With the exception of the employment and change in control agreements
described above, the Company has no employment agreements with any of the Named
Executive Officers.
STOCK OPTION PLANS
1989 Incentive Stock Option Plan
The Haskel International, Inc. 1989 Incentive Stock Option Plan, as
amended (the "1989 ISO Plan") is administered by the Compensation Committee.
Subject to the terms of the 1989 ISO Plan, the Compensation Committee
establishes the terms and conditions applicable to option grants under said
Plan. The 1989 ISO Plan has a term of ten years and provides for the sale by the
Company of a maximum of 450,000 shares of Class A Common Stock, subject to
adjustments to reflect any future change in capitalization of the Company. As of
May 30, 1998, there were options granted and outstanding for 65,040 shares at an
exercise price of $9.46 per share, 50,000 shares at an exercise price of $8.03
per share, and 38,086 shares at an exercise price of $7.18 per share.
Nonqualified Stock Option Plan
The Haskel International, Inc. Stock Option Plan, as amended (the
"Nonqualified Plan"), is also administered by the Compensation Committee. The
Nonqualified Plan differs from the 1989 ISO Plan in that the 1989 ISO Plan is
qualified under the Internal Revenue Code as an Incentive Stock Option plan
entitling the optionee to certain income tax benefits, to which the optionee
under the Nonqualified Plan is not entitled. Subject to the terms of the
Nonqualified Plan, the Compensation Committee establishes the terms and
conditions applicable to option grants under said Plan. The Nonqualified Plan
has a term of ten years and provides for the sale by the Company of a maximum of
650,000 shares of Class A Common Stock, subject to adjustments to reflect any
future change in capitalization of the Company. As of May 30, 1998, there were
options granted and outstanding under the Nonqualified Plan for 92,667 shares at
an exercise price of $7.00 per share. 127,247 shares at an exercise price of
$7.18 per share, 87,500 shares at an exercise price of $9.46 per share, 21,600
shares at an exercise price of $10.00 per share.
10
<PAGE> 14
1995 Incentive Stock Option Plan
The Haskel International, Inc. 1995 Incentive Stock Option Plan (the
"1995 ISO Plan") permits certain employees of the Company and its subsidiaries
who are responsible for the management, growth and protection of the business of
the Company or its subsidiaries to be granted the right to purchase shares of
Class A Common Stock at the fair market value per share at the date of grant.
The 1995 ISO Plan is designed to assist the Company in securing and retaining
employees of outstanding ability and to motivate such individuals to exert their
best efforts on behalf of the Company. The 1995 ISO Plan is administered by the
Stock Option Committee of the Board of Directors, consisting of disinterested
directors as that term is defined by Rule 16b-3 under the Securities Exchange
Act of 1934, as amended. The Committee selects employees who may purchase shares
under the 1995 ISO Plan and establishes, subject to the terms of the 1995 ISO
Plan, the terms and conditions applicable to such purchase. In order to purchase
shares, an employee is required to enter into a purchase agreement with the
Company. The 1995 ISO Plan has a term of ten years and provides for the grant of
options to purchase an aggregate of 240,000 shares of Class A Common Stock, plus
the number of shares available as a result of presently outstanding options
which lapse because of nonexercise under the 1989 ISO Plan. That additional
number of shares cannot be determined at this time, but cannot exceed the total
number of 773,885 shares subject to options which are currently outstanding and
unexercised. The number of shares is also subject to adjustments to reflect any
future changes in the capitalization of the Company. As of May 30, 1998, there
were options granted and outstanding for 50,000 shares at an exercise price of
$5.375 per share, 43,000 shares at an exercise price of $6.50 per share, 5,000
shares at an exercise price of $7.25 per share, 8,000 shares at an exercise
price of $7.50 per share, 45,000 shares at an exercise price of $7.625 per
share, 5,000 shares at an exercise price of $9.00 per share, 65,000 shares at an
exercise price of $10.00 per share, 5,000 shares at an exercise price of $10.625
per share, and 5,000 shares at an exercise price of $12.00 per share.
1995 Formula Stock Option Plan
The Haskel International, Inc. 1995 Formula Stock Option Plan (the
"1995 Formula Plan") permits directors, who are not employees of the Company or
its subsidiaries ("Outside Directors"), and who have been granted options under
said Plan, the right to purchase shares of Class A Common Stock at the fair
market value per share at the date of the grant. Because the 1995 Formula Plan
operates by its own terms, and there are no discretionary decisions, there is no
committee needed to administer the 1995 Formula Plan. The 1995 Formula Plan is
designed to assist the Company in attracting and retaining high quality Outside
Directors. Every new Outside Director, upon becoming a director of the Company,
is granted an option to purchase 10,000 shares of Class A Common Stock. Such
options vest in equal amounts over five years, with the first installment
vesting on the first anniversary of the Outside Director's appointment as
director. Additional options are granted to each Outside Director if the
Company's performance exceeds certain benchmarks. All options granted under the
1995 Formula Plan become 100% vested in the event of a change in control of the
Company. The 1995 Formula Plan provides for grants of options to purchase an
aggregate of 40,000 shares of Class A Common Stock. The number of shares is also
subject to adjustments to reflect any future changes in the capitalization of
the Company. As of May 30, 1998, there were options granted and outstanding for
10,000 shares at an exercise price of $6.625 per share, 10,000 shares at an
exercise price of $8.00, 10,000 shares at an exercise price of $12.00, and
10,000 shares at an exercise price of $14.00.
11
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Named Executive Officers during
fiscal 1998.
STOCK OPTION EXERCISES AND OPTIONS OUTSTANDING
The following table provides certain information regarding outstanding
options held by the Named Executive Officers at May 30, 1998:
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-the-Money
Name Exercise (#) Realized ($) Options at May 30, 1998 (#) Options at May 30, 1998 ($)
- ---- ------------ ------------- ----------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Malcolm Greaves 0 $ 0 131,800 17,200 $ 377,480 $ 68,800
Lonnie D. Schnell 0 $ 0 21,000 24,000 $ 93,750 $ 67,500
Henry Mason 0 $ 0 15,270 12,000 $ 28,131 $ 32,880
</TABLE>
RETIREMENT PLANS
Haskel International, Inc. Profit Sharing Plan
The Haskel International, Inc. Profit Sharing Plan, as amended (the
"PSP"), covers all of Haskel International, Inc.'s employees and employees of
its U.S. subsidiaries, but not employees of HESL or its subsidiaries. The
purpose of the PSP is to enable participating employees of the Company to share
in a portion of the profits and in the growth and prosperity of the Company and
to provide them with the opportunity to accumulate capital for their future
economic security. Generally, employees whose employment terminates for any
reason other than death or retirement are vested after five years of service.
The Company's matching contribution is determined annually by the Board of
Directors of the Company. The PSP is administered by a four-member
administrative committee of employees (the "Administrative Committee") appointed
by the Board of Directors. The Board of Directors retains an independent
corporate trustee who holds all funds in trust.
Effective June 1, 1997, the Company amended the PSP to adopt the Haskel
International, Inc. Retirement Savings Plan. The Company adopted the Plan to
meet the requirements of a qualified retirement plan pursuant to the provisions
of Section 401(k) of the Internal Revenue Code.
HESL Pension Plan
All of HESL's employees who work at least 16 hours per week, who are at
least 21 years of age, and have been with HESL for one year or more are eligible
to join the Haskel Retirement Benefits Plan, a contributory pension plan (the
"HESL Pension Plan"). Mr. Greaves and Mr. Mason are the only executive officers
who are currently participating in the HESL Pension Plan. Currently, the pension
costs are equivalent to 15% of the individual's pensionable salary (basic annual
salary or wages at the HESL Pension Plan anniversary, which is June 1 of each
year) and are borne 80% by HESL and 20% by the individual. The pension benefits
payable are on a final salary basis, i.e. pension benefits accrue at the rate of
1/60th of final pensionable salary for each complete year of service with HESL
less deductions to take into account earnings between the lower-level earnings
and upper-level earnings limits originally set down in SERPS (State Earnings
Related Pension Scheme). Pension benefits are subject to an annual
cost-of-living increase of not less than 3% nor more than 5%. Four directors of
HESL have an enhancement to their pension plan (the "Haskel Discretionary
Benefits Scheme"), whereby pension benefits accrue at the rate of 1/40th of
pensionable salary but, again, subject to the deductions described in the
preceding sentence. The normal retirement age for both men and women is 65
years. The HESL Pension Plan additionally provides for a death-in-
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<PAGE> 16
service lump sum payment of twice salary (in the case of the four directors'
pension enhancement scheme, four times salary) and a spouse's pension of
two-thirds the prospective pension at date of death of the employee. The funds
are held and invested by Norwich Union on behalf of the trustees of the HESL
Pension Plan, and HESL is assisted in its management of the HESL Pension Plan by
Sedgwick Noble Lowndes, who are pension advisers. The trustees responsible for
the HESL Pension Plan are HESL's secretary, a retired director of HESL, an
employee of HESL and a representative of HESL's legal counsel, Dickinson Dees.
The following table sets forth annual pension benefits under the HESL
Pension Plan on a straight-line annuity basis for representative years of
service as defined in the HESL Pension Plan at an accrual rate of 1/60th of
final pensionable salary. Amounts shown assume retirement at age 65 on January
1, 1998. Other than the adjustment described in footnote 2 below, such benefits
are not subject to reduction for benefits and other offset amounts. As of May
30, 1998, Mr. Greaves and Mr. Mason had approximately 9 and 27 years of service,
respectively, credited under the HESL Pension Plan.
HESL Pension Plan Table
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefit at Age 65 for Indicated Years of Credited Service(2)
----------------------------------------------------------------------------------------
Final Pensionable Salary(1) 5 10 15 20 25 30 35
- ------------------------- ------- ------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 4,167 $ 8,333 $12,500 $16,667 $20,833 $ 25,000 $ 29,167
75,000 6,250 12,500 18,750 25,000 31,250 37,500 43,750
100,000 8,333 16,667 25,000 33,333 41,667 50,000 58,333
125,000 10,417 20,833 31,250 41,667 52,083 62,500 72,917
150,000 12,500 25,000 37,500 50,000 62,500 75,000 87,500
200,000 16,667 33,333 50,000 66,667 83,333 100,000 116,667
</TABLE>
- --------------------------
1 Calculated based on highest average of three consecutive years'
pensionable salaries at June 1 during the 13-year or shorter period
prior to retirement.
2 Benefits under the HESL Pension Plan are reduced by an amount of
1/100th of the employee's earnings in excess of a lower earnings limit
(as of April 6, 1998, such limit was (pound)3,328, subject to annual
adjustment), not to exceed an upper earnings limit (as of April 6,
1998, such limit was (pound)25,2200, subject to annual increase) times
the number of years in service after April 6, 1978.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding salaries, bonuses, benefits and other compensation
for executive officers and key employees of the Company. This Compensation
Committee report discusses the components of the Company's executive officer
compensation policies and programs and describes the bases upon which
compensation is determined by the Compensation Committee with respect to the
executive officers of the Company, including the Named Executive Officers.
Compensation Philosophy. The compensation philosophy of the Company is
to link executive compensation directly to individual and team contributions,
continuous improvements in corporate performance and shareholder value. The
Compensation Committee has adopted the following objectives as guidelines for
compensation decisions:
o Display a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
o Be willing to compensate executive officers in recognition
of superior individual performance, new responsibilities or new positions within
the Company.
o Take into account historical levels of executive
compensation and the overall competitiveness of the market for high quality
executive talent.
o Implement a balance between short and long-term compensation
to complement the Company's annual and long-term business objectives and
strategy and encourage executive performance in furtherance of the fulfillment
of those objectives.
13
<PAGE> 17
o Provide variable compensation opportunities based on the
performance of the Company, encourage stock ownership by executives and align
executive remuneration with the interests of shareholders.
The Compensation Committee is aware of the $1,000,000 cap on deductions
for compensation imposed by the Internal Revenue Code. While that cap does not
have an impact on the Company at present, the Compensation Committee will take
appropriate steps to make the Company's compensation policy comply should
circumstances warrant in the future.
Compensation Program Components. The Compensation Committee regularly
reviews the Company's compensation program to ensure that pay levels and
incentive opportunities are competitive with the market and reflect the
performance of the Company. The particular elements of the compensation program
for executive officers are further explained below.
Base Salary. The Company's base pay levels for executive officers are
determined by the particular responsibilities of the position held and the
experience of the individual and by comparing the salary scale with companies of
similar size and complexity. Actual base salaries are kept within a competitive
salary range for each position that is established through job evaluation and
market comparisons.
Chief Executive Officer's Compensation. The Chief Executive Officer
("CEO") of the Company heads a group of senior management officers who
participate in a common set of compensation criteria linked to the performance
of the Company. The compensation of the CEO is determined by the Compensation
Committee and approved by the Board of Directors based upon its assessment of
the Company's financial performance and non-financial performance measured
against a background of factors which are critical to the success of the
business. The Compensation Committee exercises its judgment in weighting the
factors and evaluating performance. The CEO, who currently sits on the
Compensation Committee, does not participate in deliberations regarding his own
compensation.
Annual Bonus. The executive bonus program provides for the granting of
cash bonuses to the senior managers (including the Named Executive Officers) of
the Company. The objective of the bonus is to enhance management's contribution
to shareholder value by providing competitive levels of compensation for the
attainment of financial objectives. In particular, the executive bonus program
focuses corporate behavior on consistent and steady earnings growth by basing
performance on a comparison of actual results to the Company's annual budget.
Actual bonuses are subject to decrease or increase on the basis of the Company's
performance and range up to 55% of base salary for attaining goals. Based on the
Company's performance during fiscal year 1998, bonuses were paid to the Named
Executive Officers and the majority of the senior management.
Summary. After its review of all existing programs, the Compensation
Committee continues to believe that the total compensation program for
executives of the Company is focused on increasing values for shareholders and
enhancing corporate performance. The Compensation Committee believes that
executive compensation levels of the Company are competitive with the
compensation programs provided by other corporations with which the Company
competes. The foregoing report has been approved by all members of the
Compensation Committee.
COMPENSATION COMMITTEE
Stanley T. Myers, Chairman
R. Malcolm Greaves
Terrence A. Noonan
H. Carr Wells
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 1998, Stanley T. Myers, R. Malcolm Greaves, Terrence A.
Noonan, and H. Carr Wells served as members of the Compensation Committee of the
Board of Directors, which determines salaries of the Company's employees. Mr.
Greaves, President and Chief Executive Officer of the Company, did not
participate in deliberations regarding his own compensation.
14
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total
shareholders' return since the Class A Common Stock became publicly traded on
November 1, 1994, with the Nasdaq Stock Market (National Market) Index, the
Standard & Poor's 500 Index and with a peer group comprised of companies which
manufacture high-pressure equipment and with which the Company generally
competes. The peer group is comprised of the following companies: Flowserve
Corp., Flow International Corp., IDEX Corp., Oilgear Co. and Watts Industries
Inc. The graph and table assume that $100 was invested on November 1, 1994 in
the Company's Class A Common Stock, at the initial public offering price of
$10.00 per share, and in each of the indexes mentioned above, and that all
dividends were reinvested.
INDEXED RETURNS
FISCAL YEAR
<TABLE>
<CAPTION>
BASE
PERIOD
COMPANY/INDEX 11/1/94 1995 1996 1997 1998
- ------------- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
HASKEL INTERNATIONAL, INC. 100 68.49 74.25 111.16 117.98
NASDAQ COMPOSITE 100 111.84 162.55 183.13 232.71
PEER GROUP 100 119.17 130.08 150.36 169.84
</TABLE>
15
<PAGE> 19
PROPOSAL NO. 2
APPROVAL OF THE
1998 LONG-TERM PERFORMANCE INCENTIVE PLAN
Acting upon the recommendation of the Compensation Committee, on May 28,
1998, the Company's Board of Directors unanimously approved a proposal to adopt
the Company's 1998 Long-term Performance Incentive Plan (the "Plan") and
directed that the proposal be submitted for shareholder consideration and action
at the annual meeting. The resolution to be proposed at the annual meeting is
attached to this Proxy Statement as Appendix A.
The Board of Directors has determined that the Plan is in the best
interest of the Company and its shareholders. The Board of Directors believes
that the grant of long-term performance incentives is an effective method to
attract and retain key employees and that the availability of shares of the
Company's stock for future grants is important to the Company's business
prospects and operations. In the 1997 fiscal year, the shareholders approved the
merger of the Company's 1995 ISO Plan and the 1989 ISO Plan into the Combined
Plan. The Combined Plan will expire in October, 1999 leaving the Company without
an approved stock option plan for long-term incentive awards. In the judgment of
the Board of Directors, approval of the 1998 Long-term Performance Incentive
Plan is important to ensure that the Company continues to have authorized shares
available for grants. Approval of the Plan by the shareholders will initially
authorize 250,000 shares of Class A Common Stock for issuance, and ratify the
grant of options made in the 1999 fiscal year under the Plan.
The following discussion summarizes the principal features of the Plan.
This discussion does not purport to be complete and is qualified in its entirety
by reference to the Plan, a copy of which is attached to this Proxy Statement as
Appendix B.
The Plan provides for the reservation of 250,000 shares of Class A
Common Stock of the Company for issuance upon the grant of incentives. The Plan
further provides that beginning June 1, 2000, and then annually thereafter, an
additional number of shares of the outstanding Class A Common Stock, equal to 3%
of the then outstanding shares, also be made available for grants.
The purpose of the Plan is to provide incentives to and to encourage the
ownership of Haskel International, Inc. stock by directors, officers, and other
employees of the Company and its subsidiaries. The Plan provides for stock
options which qualify as incentive stock options ("ISOs") under section 422 of
the Internal Revenue Code of 1986, as amended, as well as stock options which do
not qualify (non-statutory or non-qualified). The Plan further provides for the
issuance of Stock Appreciation Rights, Restricted Stock, Performance Shares, and
Other Stock Unit Awards, as deemed appropriate by the Compensation Committee.
The Plan is not a qualified deferred compensation plan under Section 401(a) of
the Internal Revenue Code and is not subject to the provisions of ERISA.
The Plan provides that an appropriate adjustment of shares available
under the Plan may be made in the event of any change in the number of
outstanding shares of Common Stock of the Company resulting from
reorganizations, recapitalization, reclassification, stock dividends, stock
splits or other similar events. All employees (including employee-directors),
and non-employee directors of the Company and its subsidiaries are eligible to
be granted options under the Plan.
The Plan will be administered by the Compensation Committee appointed by
the Board of Directors. The Compensation Committee has the authority to (i)
construe and interpret the Plan, (II) define the terms used therein, (iii)
prescribe, amend and rescind rules and regulations relating to the Plan, (iv)
determine the individuals to whom and the time or times at which options shall
be granted, the number of shares to be subject to each option, the terms of
vesting of each option, and the duration of each option, (v) amend the terms of
any outstanding option, with the consent of the option holder, and (vi) make all
other determinations necessary or advisable for the administration of the Plan.
The Plan will become effective on October 30, 1998, the date of approval
by the shareholders of
16
<PAGE> 20
the Company (the "Effective Date"). The Plan will terminate on the tenth
anniversary of the adoption of the Plan.
The exercise price of each option granted under the Plan must be at
least 100 percent of the fair market value per share of the Class A Common Stock
on the date the option is granted, except that options granted to a shareholder
who owns stock possessing more than 10 percent of the combined voting power of
all classes of stock (a "Ten Percent Holder') shall be at an exercise price no
less than 110 percent of fair market value an the date of grant. All options
granted pursuant to the Plan will expire no later than ten years from their
grant date, provided that any option granted to a Ten Percent Holder shall be
exercised within five years from the date of its grant
The Plan provides that an optionee whose employment relationship has
terminated may exercise his or her outstanding options for a period of three
months from the date of such termination, or within one year if permanently
disabled. If an option holder dies, his or her personal representative may
exercise such outstanding options within three months after the date of death
unless the option by its terms expires sooner. No option is transferable by the
optionee other than by will or the laws of descent and distribution.
The consideration to be received by the Company upon exercise of options
is to be paid (i) in cash, (ii) in the discretion of the Compensation Committee,
in previously owned shares of Class A Common Stock (which the optionee, if a
director or executive officer, has held at least six months prior to delivery of
such shares and for which the optionee has good title free and clear of all
liens and encumbrances) having an equivalent fair market value determined as of
the date of exercise or (iii) in the discretion of the Compensation Committee, a
combination of (i) and (ii), and by executing such documents as the Company may
reasonably request. No shares of Class A Common Stock shall be delivered until
the full purchase price therefor has been paid.
The Compensation Committee may at any time suspend or terminate the
Plan. The Compensation Committee may also at any time amend or revise the Plan
as it shall deem advisable, subject to any requirement of shareholder approval
required by applicable law, including Section 422 of the Internal Revenue Code
(the "Code"), provided, however, that no amendment shall be made without
shareholder approval if such amendment would (i) increase the maximum number of
shares of Class A Common Stock available under the Plan, (ii) reduce the minimum
purchase price per share of Class A Common Stock subject to an option, (iii)
effect any change inconsistent with Section 422 of the Code or (iv) extend the
term of the Plan or the maximum period during which an option may be exercised;
provided, further, that the Plan shall not be amended in a manner which fails to
comply with Rule 16b-3 under the Exchange Act. No amendment may impair the
rights of a holder of an outstanding option without the consent of such holder.
The federal income tax consequences associated with incentive stock
options are generally more favorable to the optionee and less favorable to the
employer than those associated with stock options which are not incentive stock
options. Under current federal income tax law, the grant of an incentive stock
option does not result in income to the optionee or in a deduction for the
Company at the time of the grant. The exercise of an incentive stock option will
not result in income for the optionee if the optionee (i) does not dispose of
the shares within two years after the date of grant or within one year after
exercise and (ii) is an employee of the Company or any of its subsidiaries from
the date of grant until three months before the exercise date (one year if
disabled). If these requirements are met, the basis of the shares upon later
disposition would be the option price. Any gain will be taxed to the optionee as
long-term capital gain and the Company will not be entitled to a deduction. If
the optionee disposes of the shares prior to the expiration of either of the
holding periods described above, the optionee would have compensation taxable as
ordinary income, and the Company would be entitled to a deduction equal to the
lesser of the fair market value of the shares on the exercise date minus the
option price or the amount realized on disposition minus the option price. If
the price realized in any such premature sale of the shares exceeds the fair
market value of the shares on the exercise date, the excess will be treated as
long-term or short-term capital gain depending on the optionee's holding period
for the shares.
17
<PAGE> 21
It is not possible to determine how many eligible employees will
participate in the plan in the future. Therefore, it is not possible to
determine with certainty the dollar value or number of Class A Common Shares
that will be distributed under the Plan. Because participation in the Plan is
optional, it is not possible to determine the benefits or amounts that would
have been received by the CEO, Named Executive Officers, or any other directors
or officers of the Company under the plan during Fiscal Year 1998.
Shareholders will be asked at the annual meeting to vote upon the
proposal to approve the Plan and to ratify the previous grant of options under
the Plan.
Unless otherwise directed, the persons named in the enclosed Proxy
intend to vote in favor of the Plan and to ratify the grant of options
heretofore.
An affirmative vote by the holders of a majority of the outstanding
shares of Class A Common Stock and Class B Common Stock, voting together,
present in person or represented by proxy at the meeting is required for
approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THIS PROPOSAL.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors recommends that shareholders vote to ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the 1999 fiscal year. Deloitte & Touche LLP served as the Company's independent
auditors for the fiscal year ended May 30, 1998. Representatives of Deloitte &
Touche LLP are expected to be present at the meeting and will have an
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
An affirmative vote by the holders of a majority of the outstanding
shares of Class A Common Stock and Class B Common Stock, voting together,
present in person or represented by proxy at the meeting is required for
approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER BUSINESS
The Board of Directors does not know of any other business to be
presented to the Annual Meeting and does not intend to bring any other matters
before such meeting. If any other matters properly do come before the Annual
Meeting, however, the persons named in the accompanying proxy are empowered, in
the absence of contrary instructions, to vote according to their best judgment.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
If a shareholder wishes to present a proposal at the next Annual
Meeting of Shareholders, such a proposal must be received by the Company at its
principal executive offices prior to May 29, 1999.
18
<PAGE> 22
AVAILABILITY OF REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for fiscal year 1998
as filed with the Securities and Exchange Commission is available upon written
request and without charge to any shareholder by writing to: Haskel
International, Inc., 100 East Graham Place, Burbank, CA 91502, Attn: Patricia A.
Wehr, Secretary.
By Order of the Board of Directors,
/s/ PATRICIA A. WEHR
------------------------
Patricia A. Wehr
Secretary
Burbank, California
September 21, 1998
PLEASE PROMPTLY DATE, SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED. AT
ANY TIME BEFORE A VOTE YOU MAY REVOKE YOUR PROXY BY (1) A LATER PROXY OR A
WRITTEN NOTICE OF REVOCATION DELIVERED TO THE INSPECTOR OF ELECTIONS OR (2)
ADVISING THE INSPECTOR OF ELECTIONS AT THE MEETING THAT YOU ELECT TO VOTE IN
PERSON. ATTENDANCE AT THE MEETING WILL NOT IN AND OF ITSELF REVOKE A PROXY.
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APPENDIX A
RESOLUTION REGARDING THE APPROVAL OF THE
1998 LONG-TERM PERFORMANCE INCENTIVE PLAN
RESOLVED that the 1998 Long-term Performance Incentive Plan of the Company, with
the terms and conditions as set forth in Appendix B to the Proxy Statement
delivered to the shareholders of the Company in connection with this meeting, is
hereby approved.
RESOLVED FURTHER, that the granting heretofore during the fiscal year of the
Company ending May 29, 1999, of options for the purchase of 25,000 shares of the
Class A Common Stock of the Company pursuant to the 1998 Long-term Performance
Incentive Plan of the Company is hereby ratified, approved and confirmed.
APPENDIX B
HASKEL INTERNATIONAL, INC.
1998 LONG-TERM PERFORMANCE INCENTIVE PLAN
1. PURPOSE.
The purpose of the Haskel International, Inc. 1998 Long-Term
Performance Incentive Plan (the "Plan") is to provide incentives to and to
encourage the ownership of Haskel International, Inc. (the "Company") stock by
directors, officers, and other employees of the Company and its subsidiaries.
The Plan provides for stock options which qualify as incentive stock options
("ISOs") under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as stock options which do not qualify (non-statutory or
non-qualified). The Plan is not a qualified deferred compensation plan under
Section 401(a) of the Code and is not subject to the provisions of ERISA.
2. ADMINISTRATION.
2.1 The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), consisting of not less than two
members of the Board of Directors of the Company (the "Board").
2.2 Subject to the limitations of the Plan, the Committee shall have
the sole and complete authority (a) to select those employees and non-employee
directors who shall be eligible to have awards made to them under the Plan from
the class of employees eligible to have awards made to them (as is identified in
Section 4 of this Plan) ("Participants"), (b) to make awards in such forms and
amounts as it shall determine and to cancel or suspend awards, (c) to impose
such limitations, restrictions, and conditions upon awards as it shall deem
appropriate, (d) to interpret the Plan and to adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan
and (e) to make all other determinations and to take all other actions necessary
or advisable for the proper administration of the Plan. Determinations of fair
market value under the Plan shall be made in accordance with the methods and
procedures established by the Committee. For purposes of the Plan, the fair
market value of any award which is issued as an incentive stock option shall be
determined without regard to any restriction other than a restriction which, by
its terms, will never lapse. The Committee's determinations on matters within
its authority shall be conclusive and binding on the Company and all other
parties. No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any award made
under it. The Committee may select one of its members as its Chairman, and shall
hold meetings at such times and places as it may determine. Acts by a majority
of the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee without a meeting, shall be the valid acts of the
Committee.
2.3 The "fair market value" of Company stock shall mean the closing
price of that class of stock
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as of the day in question (or, if such day is not a trading day in the principal
securities market or markets for such stock, on the nearest preceding trading
day), as reported with respect to the market (or the composite of markets, if
more than one) in which shares of such stock are then traded, or, if no such
closing prices are reported, on the basis of the mean between the high bid and
low asked prices that day on the principal market or quotation system on which
shares of such stock are then quoted, or, if not so quoted, as furnished by a
professional securities dealer making a market in such stock selected by the
Board or the Committee. If at any time the stock is not then publicly traded,
fair market value shall be established by the Committee or, at the discretion of
the Committee, by an independent appraiser or appraisers selected by the
Committee. In such case, the determination by the Committee or its appraiser or
appraisers of the fair market value of the stock shall be conclusive and
binding. For purposes of this Section 2.3, stock shall be considered "publicly
traded" if stock of that class is listed or admitted to unlisted trading
privileges on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. ("NASD") or if sales or bid and offer quotations are
reported for that class of stock in the automated quotation system ("NASDAQ")
operated by the NASD.)
3. TYPES OF AWARDS.
Awards under the Plan shall constitute or be otherwise based on Class A
Common shares of the Company ("Common Shares") and may be issued in any one or
more of the following: (a) stock options, including ISOs, (b) stock appreciation
rights ("SARs"), in tandem with stock options or free-standing, (c) restricted
stock, (d) performance shares and performance units conditioned upon meeting
performance criteria and, (e) other awards valued in whole or in part by
reference to or otherwise based on Common Shares ("other stock unit awards"). In
connection with any award or any deferred award, payments may also be made
representing dividends or interest or their equivalent. No awards shall be
granted under the Plan after ten years from the date the Plan is approved by the
shareholders of the Company or the date the Plan is adopted by the Board,
whichever occurs earlier.
4. SHARES SUBJECT TO PLAN AND ELIGIBLE EMPLOYEES/DIRECTORS.
4.1 Subject to adjustment as provided in Section 12 below, the
aggregate number of Common Shares which may be issued upon exercise of stock
options, including ISOs, or rights or upon any awards hereunder shall not exceed
250,000 shares, which is equal to approximately 5.3% of the total Common Shares
of the Company outstanding on May 31, 1998, plus such additional Common Shares
each fiscal year thereafter beginning June 1, 2000, which are equal in number to
3% of the number of Common Shares outstanding as of the first day of each such
fiscal year. In the future, if another company is acquired by the Company or any
of its subsidiaries, any Common Shares covered by or issued as a result of the
assumption or substitution of outstanding grants of the acquired company shall
not be deemed issued under the Plan and shall not be subtracted from the Common
Shares available for grant under the Plan. The Common Shares deliverable under
the Plan may consist in whole or in part of authorized and unissued shares or
issued shares which have been repurchased by the Company. Notwithstanding the
foregoing, if any award is forfeited, or an award is terminated without issuance
of Common Shares or other consideration, the Common Shares subject to such award
shall again be available for grant pursuant to the Plan.
4.2 The class eligible to have awards made to them under the Plan shall
be all employees and non-employee directors of the Company and its subsidiaries
as selected by the Committee.
4.3 Non-employee directors may only receive non-qualified options under
this Plan.
5. STOCK OPTIONS.
All stock options granted under the Plan shall be subject to the
following terms and conditions:
5.1 The Committee may, from time to time, subject to the provisions of
the Plan and such other terms and conditions as the Committee may prescribe,
grant to any Participant options to purchase Common Shares, which options,
except for options granted to Participants who are non-employee directors, may
be ISOs, options that are not ISOs, or both. The grant of an option shall be
evidenced by a signed written agreement ("Stock Option Agreement") containing
such terms and conditions as the Committee may from
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time to time prescribe. Options granted under the Plan which are intended to be
ISOs shall be designated as such in the Stock Option Agreement covering such
options.
5.2 The price per share of the shares subject to each option shall be
set by the Committee; provided, however, that such price shall be no less than
the par value of a Common Share and in the case of an ISO such price shall not
be less than one hundred percent (100%) of the fair market value of a Common
Share as of the date the option is granted; provided further, that in the case
of ISOs such price shall be no less than one hundred ten percent (110%) of the
fair market value of a Common Share as of the date the option is granted if such
option is granted to a person who owns ten percent (10%) or more of the issued
and outstanding Common Shares of the Company as of such date.
5.3 The term of an option shall be set by the Committee in its
discretion; provided, however, that no such term shall exceed a reasonable time
period, and provided further that, in the case of ISOs, the term shall not be
more than ten years from the date the ISO is granted, or, in the case of an
option granted to a person who owns ten percent (10%) or more of the issued and
outstanding Common Shares of the Company as of the date the option is granted,
the term shall not be more than five years from the date the ISO is granted.
5.4 The period during which the right to exercise an option in whole or
in part vests in the Participant shall be set by the Committee, and the
Committee may determine that an option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that no option
shall be exercisable by any Participant who is then subject to Section 16 of the
Exchange Act within the period ending six months after the date the option is
granted; provided further that, this six-month waiting period shall not apply to
the exercise of any option by such Participant if the grant of such option to
the Participant was approved in advance by the Board or, if the Committee is
then composed solely of two or more non-employee directors, by the Committee, or
was approved in advance or subsequently ratified not later than the date of the
next annual meeting of the Company's stockholders, by the stockholders. At any
time after grant of an option the Committee may, in its sole discretion and
subject to whatever terms and conditions it selects, accelerate the period
during which an option vests.
5.5 No portion of an option which is unexercisable at the time a
Participant terminates employment with the Company shall thereafter become
exercisable; provided, however, that provision may be made that such option
shall become exercisable, with the consent of the Committee, in the event of a
termination of employment because of a Participant's normal retirement or
permanent and total disability (each as determined by the Committee in
accordance with Company policies), death or early retirement and, provided
further, that the Committee's right to accelerate the period during which an
option vests, as described at Section 5.4, shall continue following a
Participant's termination of employment for a period of 30 days.
5.6 For those Participants who are employees of the Company or a
subsidiary of the Company, an option shall be exercisable by a Participant only
while he or she is an employee. The preceding notwithstanding, the Committee may
determine that an option may be exercised subsequent to a Participant's
termination of employment, subject to the following limitations:
(a) If a Participant dies while an option is exercisable under
the terms of this Plan, the Participant's beneficiary may exercise such rights,
to the extent the Participant could have done so immediately preceding his or
her death. Any such option must be exercised within twelve months after the
Participant's death, but no later than the option's expiration date. The
Committee may, in its discretion, extend the expiration date of such option to
accommodate such exercise; provided, however, that the term of an ISO may not be
extended beyond ten years from the date of grant.
(b) If a Participant's employment is terminated due to his or
her permanent and total disability, the Participant may exercise his or her
option, to the extent exercisable as of his or her termination of employment,
within twelve months after termination, but no later than the option's
expiration date. For purposes of this Subsection (b) and the Plan in general, a
Participant shall be considered to be under a "permanent and total disability"
if he or she is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or
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which has lasted or can be expected to last for a continuous period of not less
than 12 months.
(c) If a Participant's employment is terminated for any reason
other than those set forth in Subsection (a) or (b) above, the Participant may
exercise his or her option, to the extent exercisable as of his or her
termination of employment, within three months after such termination, but not
later than the option's expiration date.
5.7 An exercisable option may be exercised in whole or in part.
However, an option shall not be exercisable with respect to fractional shares
and the Committee may require that, by the terms of the option, a partial
exercise be with respect to a minimum number of shares.
5.8 All or a portion of an exercisable option shall be deemed exercised
upon:
(a) Delivery of all of the following to the Secretary of the
Company or his or her office:
(i) A written notice complying with the applicable
rules established by the Committee or the Company stating that the option, or a
portion thereof, is exercised. The notice shall be signed by the Participant or
other person then entitled to exercise the option or such portion;
(ii) Such representations and documents as the
Committee, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of 1933, as
amended, and any other federal or state securities laws or regulations. The
Committee may, in its absolute discretion, also take whatever additional actions
it deems appropriate to effect such compliance, including, without limitation,
placing legends on share certificates and issuing stop-transfer notices to
agents and registrars; and
(iii) In the event that the option shall be exercised
pursuant to Section 5.6(a) by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to exercise the option;
and
(b) Full cash payment to the Secretary of the Company for the
shares with respect to which the option, or portion thereof, is exercised.
However, at the discretion of the Committee, the terms of the option may allow,
or provide the Committee with the continuous discretion to allow: (i) a delay in
payment up to thirty days from the date the option, or portion thereof, is
exercised, (ii) payment, in whole or in part, through the delivery of Common
Shares owned by the Participant, (iii) payment, in whole or in part, through the
surrender of Common Shares then issuable upon exercise of the option; or (iv)
payment, in whole or in part, through the delivery of property of any kind which
constitutes good and valuable consideration.
5.9 As soon as practicable after receipt by the Company, pursuant to
Section 5.8(b), of full cash payment for the shares with respect to which an
option, or portion thereof, is exercised by a Participant, with respect to each
such exercise, the Company shall transfer to the Participant the number of
shares equal to the quotient of:
(a) The amount of the payment made by the Participant to the
Company pursuant to Section 5.8(b), and
(b) The price per share of the shares subject to the option as
determined pursuant to Section 5.3.
5.10 The Company shall not be required to issue or to deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee shall, in its absolute discretion, deem
necessary or
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advisable;
(b) Obtaining any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(c) The lapse of such reasonable period of time following the
exercise of the option as the Committee may establish from time to time for
reasons of administrative convenience; and
(d) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
5.11 To the extent that the aggregate fair market value of stock with
respect to which ISOs are exercisable for the first time by a Participant during
any calendar year (under the Plan and all other incentive stock option plans of
the Company or any Company subsidiary) exceeds $100,000, such options shall be
treated as non-qualified options to the extent required by Section 422 of the
Code. For purposes of this Section 5.11, the fair market value of stock shall be
determined as of the time the option, with respect to such stock, is granted.
6. STOCK APPRECIATION RIGHTS (SARS).
6.1 A SAR may be granted free-standing or in tandem with new options or
alter the grant of a related option which is not an ISO. The SAR shall represent
the right to receive payment of a sum not to exceed the amount, if any, by which
the fair market value of the Common Shares subject to the SAR on the date of
exercise of the SAR (or, if the Committee shall so determine in the case of any
SAR not related to an ISO, anytime during a specified period before the exercise
date) exceeds the grant price of the SAR. Each SAR shall be evidenced by a
signed written agreement containing such terms and conditions as the Committee
may determine.
6.2 The grant price (which shall not be less than the fair market value
of the Common Shares subject to the SAR on the date of grant) and other terms of
the SAR shall be determined by the Committee.
6.3 Payment of the amount to which a Participant is entitled upon the
exercise of a SAR shall be made in cash, Common Shares or other property or in a
combination thereof, as the Committee shall determine. To the extent that
payment is made in Common Shares or other property, the Common Shares or other
property shall be valued at fair market value on the date of exercise of the
SAR.
6.4 Unless otherwise determined by the Committee, any related option
shall no longer be exercisable to the extent the SAR has been exercised and the
exercise of an option shall cancel the related SAR to the extent of such
exercise.
7. RESTRICTED STOCK.
Common Shares awarded as restricted stock may not be disposed of by the
recipient until certain restrictions established by the Committee lapse.
Recipients of restricted stock are not required to provide consideration other
than the rendering of services or the payment of any minimum amount required by
law, unless the Committee otherwise elects. The Participant shall have, with
respect to Common Shares awarded as restricted stock, all of the rights of a
shareholder of the Company, including the right to vote the shares and the right
to receive any cash dividends, unless the Committee shall otherwise determine.
Upon termination of employment during the restriction period, all restricted
stock shall be forfeited, subject to such exceptions, if any, as are authorized
by the Committee, as to termination of employment, retirement, disability,
death, or special circumstances. Each award of restricted stock shall be
evidenced by a signed written agreement containing such terms and conditions as
the Committee may determine.
8. PERFORMANCE SHARES AND UNITS.
8.1 The Committee may award to any Participant performance shares and
performance units (collectively, "Performance Awards"). Each Performance Award
which is a performance share shall
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represent, as the Committee shall determine, one Common Share which becomes
payable after certain performance criteria are met with respect to a certain
performance period. Each Performance Award which is a performance unit shall
represent the right of a Participant to receive an amount equal to a value,
determined in relation to a Common Share and in the manner established by the
Committee at the time of award, which becomes payable after certain performance
criteria are met with respect to a certain performance period. Recipients of
Performance Awards are not required to provide consideration other than the
rendering of service, unless the Committee otherwise elects.
8.2 Each Performance Award under the Plan shall be evidenced by a
signed written agreement containing such terms and conditions as the Committee
may determine.
8.3 The performance period for each Performance Award shall be of such
duration as the Committee shall establish at the time of award ("Performance
Period"). There may be more than one award in existence at any one time, and
Performance Periods may differ. The performance criteria for each Performance
Period shall be determined by the Committee.
8.4 The Committee may provide that amounts equivalent to dividends paid
shall be credited with respect to each Performance Award which is a performance
share, and that amounts equivalent to interest at such rates as the Committee
may determine shall be credited with respect to amounts equivalent to dividends
previously credited to the Participant. The Committee may provide that amounts
equivalent to interest at such rates as the Committee may determine shall be
credited with respect to each Performance Award which is a performance unit.
8.5 Payment of a Performance Award which is a performance share and any
related dividends, amounts equivalent to dividends, and amounts equivalent to
interest may be made, in a lump sum or in installments, in cash, Common Shares
or other property, or in a combination thereof, as the Committee may determine.
Payment of a Performance Award which is a performance unit and any related
amounts equivalent to interest may be made, in a lump sum or in installments, in
cash, Common Shares or other property, or in a combination thereof, as the
Committee may determine.
9. OTHER STOCK UNIT AWARDS.
9.1 The Committee is authorized to grant to Participants, either alone
or in addition to other awards granted under the Plan, any other types of other
stock unit awards. Other stock unit awards may be paid in cash, Common Shares,
other property, or in a combination thereof, as the Committee shall determine.
Each award of another stock unit award shall be evidenced by a signed written
agreement containing such terms and conditions as the Committee may determine.
9.2 The Committee shall determine the Participants to whom other stock
unit awards are to be made, the times at which such awards are to be made, the
number of shares to be granted pursuant to such awards, and all other conditions
of such awards. The provisions of other stock unit awards need not be the same
with respect to each recipient. The Participant shall not be permitted to sell,
assign, transfer, pledge, or otherwise encumber the Common Shares or other
securities prior to the later of the date on which the Common Shares are issued
or the date on which any applicable restriction, performance, or deferral period
lapses. Common Shares granted pursuant to other stock unit awards may be issued
for no cash consideration or for such minimum consideration as may be required
by applicable law. Common Shares purchased pursuant to purchase rights granted
pursuant to other stock unit awards may be purchased for such consideration as
the Committee shall determine, which price shall not be less than the fair
market value of such Common Shares on the date of grant, unless the Committee
otherwise elects.
10. NONASSIGNABILITY OF AWARDS.
No award granted under the Plan shall be assigned, transferred,
pledged, or otherwise encumbered by a Participant, otherwise than by will or by
the laws of descent and distribution. Each award shall be exercisable during the
Participant's lifetime only by the Participant. Any attempt to assign, transfer,
pledge or otherwise encumber any such award or of any right or privilege
conferred thereby, contrary to this Section 10, or the sale or levy or similar
process upon the rights and privileges conferred thereby, shall be
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null and void.
11. DEFERRALS OF AWARDS.
The Committee may permit Participants to defer the distribution of all
or part of any award in accordance with such terms and conditions as the
Committee shall establish.
12. ADJUSTMENTS.
12.1 In the event of any change affecting the Common Shares by reason
of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, or other similar change, the Committee may make such substitution or
adjustment in the aggregate number or class of shares which may be distributed
under the Plan and in the number, class, and option price or other price of
shares subject to the outstanding awards granted under the Plan as it deems to
be appropriate in order to maintain the purpose of the original grant.
12.2 The Committee shall be authorized to make adjustments in
performance award criteria or in the terms and conditions of other awards in
recognition of unusual or non-recurring events affecting the Company or its
financial statements or changes in applicable laws, regulations, or accounting
principles. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any award in the manner and to the
extent it shall deem desirable to carry it into effect.
13. CHANGE OF CONTROL.
13.1 Notwithstanding any other provision of the Plan to the contrary,
if a "change in control" as defined below occurs, any stock option, SAR or
restricted stock granted under the Plan to Participants, prior to such change in
control may, at the discretion of the Committee, be immediately and fully
exercisable and free of all restrictions, regardless of any limits on exercise
or other restrictions that may have been imposed under the stock option, SAR, or
restricted stock.
13.2 "Change in control" means: (a) the election of persons
constituting a majority of the whole number of directors of the Company, which
persons were not nominated by the nominating committee of the Board or, if so
nominated, were not recommended by a majority of the directors in office prior
to being nominated by such nominating committee, unless the person nominated is
nominated to take the place of an individual previously so recommended by the
directors who has died, become disabled, or chose not to serve, in which event
that nominee shall be deemed to be recommended by the majority of the directors
in office if such majority recommends that nominee at the meeting of directors
next following the nomination of such person; (b) any consolidation or merger of
the Company if, within two years after such consolidation or merger, individuals
who were directors of the Company immediately prior to such consolidation or
merger cease to constitute a majority of the Board of Directors of the Company
or its successor by consolidation or merger, (c) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company other than to a directly or
indirectly majority-owned subsidiary of the Company; (d) the sale of a majority
of the voting interest in any subsidiary or subsidiaries of the Company, which
subsidiary or subsidiaries before such sale held assets that constituted all or
substantially all of the assets of the Company and its subsidiaries on a
consolidated basis; (e) the sale of a minority voting interest in the Company or
any direct or indirect subsidiary or subsidiaries of the Company, which
subsidiary or subsidiaries before the sale held assets that constituted all or
substantially all of the assets of the Company and its subsidiaries on a
consolidated basis, which gives the minority owner the ability to elect more
than one-third of the Board of Directors of the Company; or (f) the approval by
the shareholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company. For purposes of this Agreement, all directors of the
Company serving on the date this Plan becomes effective are deemed to have been
nominated by the nominating committee of the Company and recommended by a
majority of the directors in office.
13.3 The term "change in control" shall not refer to a merger the sole
purpose of which is to change the Company's state of incorporation or to a
transaction referred to in Section 13.2 if, after the consummation thereof, the
shareholders of the Company immediately prior to the consummation thereof own
more than fifty percent (50%) of the voting stock of the resulting entity.
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14. WITHHOLDING.
At the Committee's discretion, the recipient of any award under the
Plan may be required to pay to the Company, in cash, Common Shares or other
property, or a combination thereof, the amount of any taxes required to be
withheld with respect to such award or, in the case of an award in the form of
Common Shares, the Company shall have the right to retain from such award a
sufficient number of Common Shares to satisfy the applicable withholding tax
obligation.
15. SUBSIDIARIES.
For purposes of the Plan, a "subsidiary" of the Company means any
corporation of which at least fifty-one percent (51%) of the total combined
voting power of all classes of its stock is owned by the Company.
16. FINANCIAL ASSISTANCE.
The Company is vested with authority under this Plan to assist any
employee to whom an option is granted hereunder (including any director or
officer of the Company or any of its subsidiaries who is also an employee) in
the payment of the purchase price payable on exercise of that option, by lending
the amount of such purchase price to such employee on such terms and at such
rates of interest and upon such security (or unsecured) as shall have been
authorized by or under authority of the Board.
17. LIMITATIONS OF RIGHTS OF PARTICIPANTS.
17.1 A person to whom an option is granted under this Plan shall not
have any interest in the optioned shares or in any dividends paid thereon, and
shall not have any of the rights or privileges of a stockholder with respect to
such shares until the certificates therefor have been issued and delivered to
him or her.
17.2 No shares of stock issuable under the Plan shall be issued and no
certificate therefor delivered unless and until, in the opinion of legal counsel
for the Company, such securities may be issued and delivered without causing the
Company to be in violation of or to incur any liability under any federal, state
or other securities law, or any other requirement of law or of any regulatory
body having jurisdiction over the Company.
17.3 The receipt of an option does not give the optionee any right to
continued employment by the Company or a subsidiary for any period, nor shall
the granting of the option or the issuance of shares on exercise thereof give
the Company or any subsidiary any right to the continued services of the
optionee for any period.
17.4 Nothing contained in this Plan shall constitute the granting of an
option hereunder, which shall occur only pursuant to express authorization by
the Board or the Committee.
18. AMENDMENT AND TERMINATION.
The Board may alter, amend, suspend or terminate this Plan, provided
that no such action shall, without the consent of a Participant, alter or impair
any rights or obligations under any stock option or other award granted to such
Participant. Notwithstanding the foregoing, no such action of the Board, unless
taken with the approval of the stockholders of the Company, may:
(a) Increase the maximum number of shares for which options
granted under this Plan may be exercised;
(b) Reduce the minimum permissible exercise price;
(c) Extend the ten-year duration of the Plan set forth herein;
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(d) Alter the class of employees eligible to receive options
under the Plan; or
(e) Amend the Plan in any other manner which the Board, in its
discretion, determines should become effective only if approved by the
stockholders even though such stockholder approval is not expressly required by
this Plan.
19. STOCK OPTION AGREEMENTS.
Each option awarded to a Participant shall be evidenced by a written
stock option agreement, which shall be executed by the Participant and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan. Stock
option agreements evidencing ISOs shall contain such terms and conditions as may
be necessary to meet the applicable provisions of Section 422 of the Code.
20. GOVERNING LAW.
The place of administration of the Plan and such Agreement shall be in
the State of California. The corporate law of the Company's state of
incorporation shall govern issues related to the validity and issuance of
shares. Otherwise, this Plan and each Agreement shall be construed and
administered in accordance with the laws of the State of California, without
giving effect to principles relating to conflict of laws.
21. USE OF PROCEEDS.
Any cash proceeds received by the Company from the sale of shares
pursuant to grants made under this Plan shall be used for general corporate
purposes.
22. REGULATORY APPROVALS.
The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it, and the stock issued pursuant to it.
23. RESTRICTIONS ON RESALE.
Certain officers and directors of the Company may be deemed to be
"affiliates" of the Company, as that term is defined under the Securities Act.
Common Shares acquired under the Plan by an affiliate may only be re-offered or
resold pursuant to an effective registration statement or pursuant to Rule 144
under the Securities Act or another exemption from the registration requirements
of the Securities Act.
24. EFFECTIVE DATE.
This Plan shall become effective upon adoption by the Company's Board
of Directors, subject to the subsequent approval of the Plan by the stockholders
of the Company within 12 months from the date of said adoption. Stock options
may be granted prior to such stockholder approval, provided that such options
shall not be exercisable prior to the time when this Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said 12-month period, all options previously granted under this
Plan shall thereupon be cancelled and become null and void. No other awards
under the Plan shall be granted prior to stockholder approval.
28
<PAGE> 32
PROXY
CLASS A COMMON STOCK
HASKEL INTERNATIONAL, INC.
100 EAST GRAHAM PLACE
BURBANK, CALIFORNIA 91502
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Edward Malkowicz, R. Malcolm Greaves
and Stanley T. Myers, or any of them, with full power of substitution, as
proxies, to appear and vote, as designated on the reverse side of this proxy
card, all shares of Class A Common Stock of Haskel International, Inc. which
the undersigned would be entitled to vote if then personally present, at the
1998 Annual Meeting of Shareholders to be held on Friday, October 30, 1998, at
10:30 a.m. (local time), upon such business as may properly come before the
meeting and any adjournments thereof.
This proxy may be revoked prior to the exercise of the powers
conferred by the proxy.
(CONTINUED ON REVERSE SIDE)
-------------
SEE REVERSE
SIDE
-------------
<PAGE> 33
Please mark your
[X] votes as in this
example
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR ALL
OF THE CLASS A NOMINEES
NAMED BELOW AND FOR
PROPOSALS 2 AND 3.
WITHHOLD AUTHORITY
FOR to vote for all nominees
1. ELECTION OF [ ] [ ] NOMINEES:
DIRECTORS R. Malcolm Greaves
Edward Malkowicz
Stanley T. Myers
(INSTRUCTIONS: to withhold authority to vote FOR any individual nominee, strike
a line through the nominee's name in the list above)
2. Approval of the Company's 1998 FOR AGAINST ABSTAIN
Long-Term Performance Incentive Plan [ ] [ ] [ ]
3. Ratification of Appointment of Deloitte FOR AGAINST ABSTAIN
& Touche LLP as Independent Auditors [ ] [ ] [ ]
This proxy, when properly executed, will be voted in the manner specified by
the undersigned. Except as otherwise specified, this proxy will be voted FOR
the election as directors of all Class A nominees named above, FOR the approval
of the Company's 1998 Long-Term Performance Incentive Plan and FOR the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors.
PLEASE SIGN AND DATE THIS PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s) ___________________________________ Dated ___________ 1998
Please sign name exactly as it appears hereon. If shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
