<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
USA DETERGENTS, 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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------
3) Filing Party:
--------------------------------------------------------------------
4) Date Filed:
--------------------------------------------------------------------
<PAGE>
USA DETERGENTS, INC.
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Wednesday, August 13, 1997 at 10:00 A.M., New York
time, at The University Club, 1 West 54th Street, New York, New York.
The formal Notice of Meeting and the accompanying Proxy Statement set forth
proposals for your consideration this year. You are being asked to elect
directors; vote upon a proposal to amend the Company's Certificate of
Incorporation to, among other things, provide for the division of the Board of
Directors into three classes serving staggered terms; vote upon a proposal to
amend the Company's 1995 Stock Option Plan to increase the number of shares
available for issuance thereunder; and ratify the appointment of Deloitte &
Touche LLP as the independent certified public accountants of the Company.
At the meeting, the Board of Directors will also report on the affairs of
the Company, and a discussion period will be provided for questions and
comments of general interest to stockholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you are able to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign, date and mail, at your earliest convenience, the
enclosed proxy in the envelope provided for your use.
Thank you for your cooperation.
Very truly yours,
/s/ Uri Evan
--------------------------------
Uri Evan,
Chief Executive Officer
July 15, 1997
<PAGE>
USA DETERGENTS, INC.
1735 JERSEY AVENUE
NORTH BRUNSWICK, NEW JERSEY 08902
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 13, 1997
Notice Is Hereby Given that the Annual Meeting of Stockholders of USA
Detergents, Inc. (the "Company") will be held on Wednesday, August 13, 1997 at
10:00 A.M., New York time, at The University Club, 1 West 54th Street, New
York, New York, for the following purposes:
(1) To elect six directors to serve for the ensuing year.
(2) To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to, among other things, provide for the
division of the Board of Directors into three classes serving
staggered terms.
(3) To consider and vote upon a proposal to amend the Company's 1995
Stock Option Plan to increase the number of shares available for
issuance thereunder.
(4) To consider and act upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent certified public
accountants for the fiscal year ending December 31, 1997.
(5) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on June 17, 1997 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, EACH STOCKHOLDER IS URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM
OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. No postage is
required if the proxy is mailed in the United States. Stockholders who attend
the Annual Meeting may revoke their proxy and vote their shares in person.
By Order of the Board of
Directors
Daniel Bergman,
Secretary
July 15, 1997
<PAGE>
USA DETERGENTS, INC.
1735 JERSEY AVENUE
NORTH BRUNSWICK, NEW JERSEY 08902
PROXY STATEMENT
General Information
GENERAL
This Proxy Statement (first mailed to stockholders on or about July 15,
1997) is furnished to the holders of Common Stock, par value $.01 per share
(the "Common Stock"), of USA Detergents, Inc. (the "Company") in connection
with the solicitation by the Board of Directors of the Company of proxies for
use at the Annual Meeting of Stockholders (the "Annual Meeting"), or at any
adjournment thereof, pursuant to the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held on Wednesday, August 13, 1997,
at 10:00 A.M., New York time, at The University Club, 1 West 54th Street, New
York, New York.
It is proposed that at the Annual Meeting: (i) six directors will be
elected, (ii) the Company's Certificate of Incorporation (the "Certificate of
Incorporation") will be amended to, among other things, provide for the
division of the Board of Directors into three classes serving staggered terms,
(iii) the Company's 1995 Stock Option Plan (the "Plan") will be amended to
increase the number of shares available for issuance thereunder and (iv) the
appointment of Deloitte & Touche LLP as the independent certified public
accountants of the Company for the fiscal year ending December 31, 1997 will
be ratified.
Management currently is not aware of any other matters which will come
before the Annual Meeting. If any other matters properly come before the
Annual Meeting, the persons designated as proxies intend to vote in accordance
with their best judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be solicited chiefly by mail; however,
certain officers, directors, employees and agents of the Company, none of whom
will receive additional compensation therefor, may solicit proxies by
telephone, telegram or other personal contact. The Company will bear the cost
of the solicitation of the proxies, including postage, printing and handling,
and will reimburse the reasonable expenses of brokerage firms and others for
forwarding material to beneficial owners of shares of Common Stock.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. Unless otherwise indicated on the form of proxy, shares of
Common Stock
1
<PAGE>
represented by any proxy in the enclosed form, assuming the proxy is properly
executed and received by the Company prior to the Annual Meeting, will be
voted with respect to the following items on the agenda: (i) the election of
each of the nominees for director as shown on the form of proxy, (ii) the
amendment of the Certificate of Incorporation to, among other things, provide
for the division of the Board of Directors into three classes serving
staggered terms, (iii) the amendment of the Plan to increase the number of
shares available for issuance thereunder and (iv) the appointment of Deloitte
& Touche LLP as the independent certified public accountants of the Company.
Stockholders may revoke the authority granted by their execution of a proxy
at any time prior to the effective exercise of the powers conferred by that
proxy, by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in
person at the meeting. Shares of Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the instructions specified
in such proxies. If no specifications are given, the proxies intend to vote
the shares represented thereby "for" the election of each of the nominees for
director as shown on the form of proxy, "for" approval of amendment of the
Certificate of Incorporation to, among other things, provide for the division
of the Board of Directors into three classes serving staggered terms, "for"
approval of the proposed amendment to the Plan to increase the number of
shares available for issuance under the Plan, "for" the ratification of the
appointment of Deloitte & Touche LLP as the independent certified public
accountants of the Company, and in accordance with their best judgment on any
other matters which may properly come before the meeting.
RECORD DATE AND VOTING RIGHTS
On June 17, 1997, there were 13,795,029 shares of Common Stock outstanding,
each of which is entitled to one vote upon each of the matters to be presented
at the Annual Meeting. Only stockholders of record at the close of business on
June 17, 1997 are entitled to notice of and to vote at the Annual Meeting or
any adjournment thereof. 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 broker non-votes
will be counted for purposes of determining the presence or absence of a
quorum, but will not be counted with respect to the specific matter being
voted upon. "Broker non-votes" are shares held by brokers or nominees which
are present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person
or represented by proxy and entitled to vote at the Annual Meeting is required
both for the approval of the proposed amendment to the Plan and for the
ratification of the appointment of Deloitte & Touche LLP.
2
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
Certain Stockholders and Management
The following table sets forth information as of June 1, 1997 regarding the
beneficial ownership of the Company's Common Stock of: (i) each person known
by the Company to own beneficially more than five percent of the outstanding
Common Stock; (ii) each director and nominee for director of the Company;
(iii) each executive officer named in the Summary Compensation Table (see
"Executive Compensation" below); and (iv) all directors and executive officers
of the Company as a group. Except as otherwise specified, the named beneficial
owner has the sole voting and investment power over the shares listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) COMMON STOCK (2) COMMON STOCK
- -------------------------------------------------------------------------------
<S> <C> <C>
Uri Evan (3)............................ 984,505 7.14%
Dinah Evan (3).......................... 984,505 7.14
Frederick J. Horowitz (4)............... 1,049,080 7.60
Daniel Bergman (5)...................... 907,503 6.58
Bergman Family Limited Partnership (5)
1961 East 1st Street
Brooklyn, New York 11223 .............. 900,003 6.52
Frederick R. Adler (6)
1520 South Ocean Boulevard
Palm Beach, Florida 33480.............. 1,758,558 12.75
Dr. Shlomo Kalish (7)................... 3,375 *
Richard A. Mandell (6)
c/o Clariden Asset Management
540 Madison Avenue
New York, New York 10022............... 12,375 *
Joseph S. Cohen (8)
1585 East 10th Street
Brooklyn, New York 11230............... 900,003 6.52
Mark Antebi (9)
1435 East 9th Street
Brooklyn, New York 11230............... 900,003 6.52
Rachamim Anatian (10)
1323 President Street
Brooklyn, New York 11230............... 1,208,300 8.76
Frank Corella (11)...................... 75,822 *
All directors and executive officers
as a group (8 persons) (12)............ 4,507,551 32.64%
</TABLE>
- -----------------
* Indicates less than one percent.
3
<PAGE>
(1) Except as otherwise noted, the address of the named stockholder is c/o
USA Detergents, Inc., 1735 Jersey Avenue, North Brunswick, New
Jersey 08902.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") which generally
attribute beneficial ownership of securities to persons who possess
sole or shared voting power and/or investment power with respect to
those securities.
(3) Amounts reflected for Uri Evan and Dinah Evan, who are married to one
another, consist of (i) an aggregate of 386,430 shares held by Dinah
Evan and a grantor retained annuity trust of which Mrs. Evan is the
grantor, (ii) 312,130 shares held by Uri Evan and (iii) 285,945
shares of Common Stock held by a trust for the benefit of a child of
Mr. Evan. Mr. and Mrs. Evan may each be deemed to beneficially own
the shares of Common Stock held by the other and the shares of Common
Stock held by each trust. Each of Mr. and Mrs. Evan disclaims
beneficial ownership of all shares other than those held in his or
her name.
(4) Includes 283,667 shares of Common Stock held by the grantor retained
annuity trust of which Dinah Evan is the grantor and Mr. Horowitz is
the remainderman and a trustee. See footnote (3) above.
(5) Daniel Bergman may be deemed to be the beneficial owner of the 900,003
shares of Common Stock beneficially owned by the Bergman Family
Limited Partnership, a Nevada partnership of which Mr. Bergman is the
general partner. Mr. Bergman disclaims beneficial ownership of all
shares other than those held in his name.
(6) Includes options to purchase 7,875 shares of Common Stock, exercisable
within 60 days.
(7) Represents options to purchase 3,375 shares of Common Stock,
exercisable within 60 days.
(8) Includes 238,290 shares of Common Stock held by the children of Mr.
Cohen. Mr. Cohen disclaims beneficial ownership of all shares other
than those held in his name.
(9) Includes 211,813 shares of Common Stock held by the children of Mr.
Antebi. Mr. Antebi disclaims beneficial ownership of all shares other
than those held in his name.
(10) Information is as of February 7, 1997 and is derived solely from the
Schedule 13D, as amended, dated February 7, 1997, filed with the
Securities and Exchange Commission by Mr. Anatian.
(11) Includes options to purchase 3,750 shares of Common Stock, exercisable
within 60 days.
(12) Includes shares beneficially owned by Dinah Evan, shares beneficially
owned by a trust for the benefit of a child of Mr. Evan, shares held
by a trust of which Mr. Horowitz is the remainderman and a trustee,
shares owned by a partnership of which Mr. Bergman is the general
partner, and options to purchase 22,875 shares of Common Stock,
exercisable within 60 days. See footnotes (3), (4), (5), (6), (7) and
(11) above.
4
<PAGE>
PROPOSAL NO. 1--ELECTION of DIRECTORS
Six directors (constituting the entire Board of Directors) are to be
elected at the Annual Meeting. If the proposed amendment to the Certificate of
Incorporation concerning classification of the Board of Directors (as provided
under Proposal No. 2 below) is adopted, two directors will be elected for a
term expiring at the 1998 Annual Meeting of Stockholders ("Class I
Directors"), two directors will be elected for a term expiring at the 1999
Annual Meeting of Stockholders ("Class II Directors") and two directors will
be elected for a term expiring at the 2000 Annual Meeting of Stockholders
("Class III Directors"). If the amendment is not adopted, all six directors
will be elected for a term expiring at the 1998 Annual Meeting of
Stockholders.
Unless otherwise specified, the enclosed proxy will be voted in favor of
the persons named below (all of whom are currently directors of the Company).
If any of these nominees becomes unavailable for any reason, or if a vacancy
should occur before the election, the shares represented by the proxy will be
voted for the person, if any, who is designated by the Board of Directors to
replace the nominee or to fill the vacancy on the Board. All nominees have
consented to be named and have indicated their intent to serve if elected. The
Board of Directors has no reason to believe that any of the nominees will be
unable to serve or that any vacancy on the Board of Directors will occur.
The nominees, their proposed classification (if Proposal No. 2 is adopted),
their respective ages, the year in which each first became a director of the
Company and their principal occupations or employment during the past five
years are as follows:
<TABLE>
<CAPTION>
YEAR
FIRST
CLASS OF BECAME PRINCIPAL OCCUPATION DURING
NOMINEE DIRECTOR AGE DIRECTOR THE PAST FIVE YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Uri Evan III 61 1989 Chairman of the Board of the
Company since 1989, Chief
Executive Officer since 1993
and President since 1997.
Since 1993, Mr. Evan has
been Vice Chairman and Chief
Executive Officer of
American Value Brands Inc.,
a food marketing company of
which he was a co-founder.
From 1991 to 1992, he served
as Chairman and Chief
Executive Officer of I.
Rokeach & Sons Inc., a
kosher food manufacturing
and marketing company. From
1988 to 1990, Mr. Evan was
Chairman and Chief Executive
Officer of Newrock
Development Inc., a real
estate development company.
Frederick R. Adler III 71 1993 Director of the Company since
1993. Mr. Adler is Managing
Director of Adler & Company,
a venture capital management
firm he organized in 1968,
and a general partner of its
related investment funds.
Since January 1, 1996, Mr.
Adler has been of counsel to
the law firm of Fulbright &
Jaworski L.L.P. and for more
than five years prior
thereto was a senior partner
in the firm. Mr. Adler is
also Chairman of the
Executive Committee and a
director of Data General
Corporation, a computer
company, Chairman and a
director of Shells Seafood
Restaurants, Inc., a
restaurant chain, and a
director of
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR
FIRST
CLASS OF BECAME PRINCIPAL OCCUPATION DURING
NOMINEE DIRECTOR AGE DIRECTOR THE PAST FIVE YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Global Pharmaceutical Corp.,
a manufacturer of generic
pharmaceuticals, of Prime
Cellular, Inc., a software
company, and of various
private companies.
Daniel Bergman I 39 1988 Co-founder of the Company and
a Vice President of the
Company since June 1995. Mr.
Bergman also has been
Director of New York Metro
Sales, Secretary and a
director of the Company
since 1988. Between 1987 and
1991, Mr. Bergman was
President of Carnegie
International Inc., a retail
and export electronics
company.
Frederick J. Horowitz II 32 1989 Executive Vice President and
Chief Administrative Officer
of the Company since June
1995, having served as
Managing Director of the
Company since January 1995
and a director of the
Company since 1989. From
1991 through 1994, Mr.
Horowitz was President and
Chief Operating Officer of
the Company. From 1990 to
1991, he served as Vice
President of Operations.
From 1988 to 1991, Mr.
Horowitz was a Senior Vice
President of Newrock
Development Inc., a real
estate development company.
Mr. Horowitz is the son of
Dinah Evan, who is married
to Uri Evan.
Dr. Shlomo Kalish I 45 1995 Director of the Company since
August 1995. Dr. Kalish has
served since September 1990
as the director of the
Recanati Wharton Insead York
International Marketing
Program at the Leon Recanati
Graduate School of
Management Administration,
Tel Aviv University. Dr.
Kalish has also served since
June 1995 as the managing
director of Jerusalem Global
Consultants, an Israeli
investment banking boutique
and strategic consulting
firm. Between September 1981
and August 1987, Dr. Kalish
was a professor at the Simon
School of Business,
University of Rochester.
Richard A. Mandell II 54 1995 Director of the Company since
August 1995. Mr. Mandell has
served since January 1996 as
Vice President--Private
Investments at Clariden
Asset Management (New York)
Inc., a subsidiary of
Clariden Bank, a private
Swiss bank. From 1982 to
June 1995, he was a Managing
Director of Investment
Banking for Prudential
Securities Incorporated. Mr.
Mandell is also a director
of Sbarro, Inc., a food
service company, and
Trend-Lines, Inc., a
specialty retailer of
woodworking tools and
accessories and golf
equipment and supplies.
</TABLE>
The Board of Directors met five times and acted by written consent six
times in 1996 with each director attending at least 75% of the total number of
meetings, other than Dr. Kalish who did not attend two meetings.
6
<PAGE>
The Board of Directors has an Audit Committee, Compensation Committee,
Stock Option Committee, Executive Committee and Nominating Committee. The
Audit Committee is currently composed of Messrs. Mandell, Kalish and Horowitz.
The functions performed by this Committee include recommending to the Board of
Directors the engagement of independent auditors, reviewingthe scope of
internal controls and reviewing the implementation by management of
recommendations made by the independent auditors. The Audit Committee met
twice during 1996.
The Compensation Committee is currently composed of Messrs. Adler and
Mandell (during 1996, composed of Messrs. Adler and Mandell, and Joseph S.
Cohen, a co-founder of the Company and the former Vice Chairman of the Board).
The functions of this Committee include the review of existing and proposed
employment arrangements and making recommendations to the Board of Directors
with respect to all forms of remuneration to any officer or director of the
Company. The Compensation Committee met once during 1996.
The Stock Option Committee is currently composed of Messrs. Kalish, Adler
and Mandell. The Stock Option Committee is responsible for recommending grants
of stock options under the Company's 1995 Stock Option Plan. The Stock Option
Committee acted twice by written consent during 1996.
The Executive Committee, formed in May 1997, is currently composed of
Messrs. Adler, Evan and Mandell. The Executive Committee is empowered to act
on behalf of the full Board of Directors to the maximum extent permitted by
Delaware law.
The Nominating Committee is currently composed of Messrs. Evan and Adler
(during 1996, composed of Messrs. Evan and Adler, and Mark Antebi, a
co-founder of the Company and a former Vice President of the Company). The
Nominating Committee is responsible for recommending director nominees and
Board of Director committee members. The Nominating Committee did not meet
during 1996. Stockholders who wish to propose director candidates for
consideration by the Nominating Committee may do so by writing to the
Company's Secretary and supplying the candidate's name, biographical data and
qualifications.
VOTE REQUIRED
The six nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them
shall be elected as directors. Only votes cast for a nominee will be counted,
except that the accompanying proxy will be voted for all nominees in the
absence of instructions to the contrary. Abstentions, broker non-votes and
instructions on the accompanying proxy card to withhold authority to vote for
one or more nominees will not be counted as a vote for any such nominee.
THE BOARD OF DIRECTORS DEEMS THE ELECTION AS DIRECTORS OF THE SIX NOMINEES
LISTED ABOVE TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THESE NOMINEES.
7
<PAGE>
PROPOSAL NO. 2--Proposed Amendment to the Certificate of Incorporation
There continues to be a trend toward the accumulation of substantial stock
positions in public corporations by third parties with a view toward using a
control block of stock to force a merger or consolidation or other
restructuring of a corporation. Such actions often are undertaken by the third
party without advance notice to or consultation with a corporation's board of
directors. In many cases, these third parties seek representation on the
corporation's board of directors in order to increase the likelihood that
their proposals will be implemented by the corporation. If the corporation
resists their efforts to obtain representation on the corporation's board, the
third parties may commence proxy contests to have themselves or their nominees
elected to the board of directors in place of certain directors or the entire
board.
The Board of Directors believes that an abrupt change of control could be
disruptive to the business and affairs of the Company and might deprive
individual stockholders of the opportunity to realize the full value of their
investment in the Company. Moreover, in the particular case of a growth
oriented company like the Company, the market price at a given time of a
company's publicly traded securities may not be an accurate measure of the
company's intrinsic value, since the price may be reflective of short-term
results or difficulties and may not reflect long-term planning and projected
growth nor certain information such as the impact of prospective products or
plans which have not publicly been disclosed. Accordingly, a hostile
acquisition that is not negotiated by the Board of Directors could result in a
price which is not indicative of the Company's true value.
In considering general takeover trends and the Company's specific
circumstances, the Board of Directors determined that it would be advisable
and in the best interests of the Company and its stockholders for the Company
to adopt certain anti-takeover measures to make more difficult a hostile
acquisition of the Company. The proposed amendment to the Certificate of
Incorporation discussed below is not being proposed in response to any
specific effort to accumulate the Company's stock or obtain control of the
Company. The proposed amendment is designed to help ensure that holders of
Common Stock are treated fairly and equally in any multi-step acquisition. In
addition, it is intended to encourage persons seeking to acquire control of
the Company to initiate such an acquisition through arms-length negotiations
with the Board of Directors. Stockholders should be aware, however, that these
proposals may have the effect of discouraging a third party from making a
tender offer or otherwise attempting to obtain control of the Company, even
though such an attempt in certain circumstances might be economically
beneficial to the Company and its stockholders.
APPROVAL OF CLASSIFIED BOARD OF DIRECTORS
On July 7, 1997, the Board of Directors unanimously adopted, subject to
stockholder approval, a new Article Tenth to the Certificate of Incorporation
to establish a classified board of directors. The form of Article Tenth, as
proposed to be amended, is attached to this Proxy Statement as Exhibit A.
The Company's By-Laws currently provide for directors to be elected
annually at the annual meeting of stockholders. The General Corporation Law of
the State of Delaware ("Delaware Law") permits a corporation to provide for a
classified board of directors in its
8
<PAGE>
certificate of incorporation with up to three classes, each serving terms of
three years. The proposed amendment to the Certificate of Incorporation would
provide that directors, other than those who may be elected in specified
circumstances by the holders of preferred stock or indebtedness having special
rights to elect directors, will be divided or "classified," with respect to
the time for which they individually hold office, into three classes, as
nearly equal in number as possible. Directors elected to Class I would hold
office initially for a term expiring at the 1998 Annual Meeting of
Stockholders; directors elected to Classes II and III would hold office
initially for terms expiring at, respectively, the 1999 and 2000 Annual
Meeting of Stockholders. At each annual meeting beginning with the 1998 Annual
Meeting, only directors for the class whose term is expiring would be voted
upon and, upon election, each such director would serve a three-year term. If
this proposal is approved and the nominees of the Board of Directors are
elected, Mr. Bergman and Dr. Kalish will be elected as Class I Directors,
Messrs. Horowitz and Mandell will be elected as Class II Directors and Messrs.
Adler and Evan will be elected as Class III Directors.
Under Delaware Law, directors serving on a classified board may be removed
by stockholders only for cause unless the certificate of incorporation
provides otherwise. The Certificate of Incorporation currently has no contrary
provision and, if the proposed amendment is adopted, the Certificate of
Incorporation will be thereby amended to require a super-majority vote (as
described below) to amend the Certificate of Incorporation to provide that
directors may be removed without cause.
In addition, if the proposed amendment is adopted, the Certificate of
Incorporation would be amended to specifically provide incumbent directors
with the power to fill vacancies on the Board of Directors, whether occurring
as a result of an increase in the number of directors or otherwise. A director
elected to fill a vacancy would hold office for the unexpired portion of the
term of the director who was being replaced. A director elected to fill a
newly created directorship would hold office until the next election of the
class to which such director was elected. If the number of directors is
increased, the additional directors will be apportioned among the three
classes of directors in order to keep all classes as nearly equal as possible.
The proposed Article Tenth would also set the number of directors of the
Board of Directors at six directors, and would require any increase in the
size of the Board of Directors to be approved by a majority of the Continuing
Directors (as defined below). The size of the Board of Directors could also be
increased through an amendment of Article Tenth, which would require the
super-majority approval specified below. The purpose of this provision is
intended to prevent a party from seeking to circumvent the provisions of
Article Tenth by increasing the size of the Board of Directors and filling the
vacancies with nominees of that party, all at one meeting of the stockholders.
The classification of the Board of Directors will make it more difficult for
stockholders to change the composition of the Board of Directors in a
relatively short period of time. At least two annual meetings of stockholders,
instead of one, generally will be required to change the majority of the Board
of Directors.
If Article Tenth is added as proposed, the Certificate of Incorporation
would be amended to require, as permitted by Delaware Law, that amendments to
or repeal of Article Tenth would be effective only if approved by either (a) a
majority of the Continuing Directors (in addition to
9
<PAGE>
the vote otherwise required by Section 242(b)(1) of Delaware Law), or (b) an
affirmative vote of the holders of (i) eighty percent (80%) of the outstanding
shares of capital stock of the Company entitled to vote generally for the
election of directors voting as a single class, and (ii) if an Interested
Stockholder (as defined below) is proposing such amendment, two-thirds or more
of the outstanding shares of capital stock of the Company entitled to vote
generally for the election of directors voting as a single class which are not
beneficially owned, directly or indirectly, by such Interested Stockholder.
Delaware Law provides that, unless a greater vote is specified in a
corporation's certificate of incorporation, amendments to the certificate of
incorporation require the approval of the holders of a majority of outstanding
stock entitled to vote thereon and approval of a majority of the outstanding
shares of each class entitled to vote thereon. The requirement of a
super-majority vote to amend or repeal Article Tenth, as proposed to be
amended, is designed to prevent a stockholder controlling less than a
substantial majority of the voting power of the Company from circumventing the
protections which a classified board is intended to provide simply by
repealing or amending Article Tenth.
If the proposed amendment is adopted, the Board of Directors will amend the
Company's By-Laws to conform to the provisions of Article Tenth to the
Certificate of Incorporation, as amended.
Recommendation
The proposal to adopt a classified Board of Directors is intended to
encourage any person who might seek to acquire control of the Company to
consult first with the Board of Directors and to negotiate with the Board of
Directors the terms of any proposed business combination or tender offer.
Without a classified board, a potential acquiror, at a single meeting of
stockholders, could obtain control of the Board of Directors and unilaterally
approve an acquisition or other transaction that might not provide all
stockholders with adequate consideration for their investment in the Company
or treat all stockholders equally. Article Tenth, as proposed, would have the
effect of delaying a contest for the election of directors and making more
difficult the acquisition of control of the Company by means of a hostile
tender offer, open market purchases, a proxy contest or otherwise, and the
removal of incumbent management. As a result, the proposal may have the effect
of limiting stockholder participation in certain types of transactions that
might be proposed, whether or not such transactions were favored by a majority
of stockholders. The Board of Directors believes that it is in the best
interests of the Company and all its stockholders to provide a mechanism that
allows takeover attempts to be evaluated by the Board of Directors (which may
be in possession of non-public information critical to an accurate assessment
of the attractiveness of an acquisition proposal) and the stockholders in a
careful and deliberate manner.
Vote Required
The approval of this proposal requires the affirmative vote of a majority
of all outstanding shares.
Definitions
Proposed Article Tenth of the Certificate of Incorporation confers on a
majority of the Continuing Directors the power and duty to determine, on the
basis of information known to
10
<PAGE>
them after reasonable inquiry, the applicability of certain defined terms used
in proposed Article Tenth, in addition to such other matters with respect to
which a determination is required under proposed Article Tenth. A summary of
the definitions of certain of these terms follows.
"Affiliate" and "Associate" shall have the respective meanings ascribed to
them in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934 (the "Exchange Act").
A person shall be a "beneficial owner" of any Voting Shares:
(i) which such person or any of its Affiliates or Associates beneficially
owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has (1) the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise or (2) the right to vote or to direct
the voting thereof pursuant to any agreement, arrangement or
understanding; or
(iii) which is beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Voting Shares.
A "Continuing Director" is any member of the Company's Board of Directors
who is unaffiliated with, and not a nominee of, an Interested Stockholder, and
any successor of a Continuing Director who is unaffiliated with, and not a
nominee of, an Interested Stockholder and is approved to succeed a Continuing
Director by a majority of Continuing Directors then on the Board of Directors.
"Interested Stockholder" shall mean any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company or any entity holding shares of Common Stock for or
pursuant to the terms of any such plan or any person who acquires more than
15% of the outstanding Voting Shares with the prior approval of a majority of
the Continuing Directors), who or which:
(i) is the beneficial owner, directly or indirectly, of more than 15% of
the combined voting power of the then outstanding Voting Shares; or
(ii) is an assignee of or has otherwise succeeded to the beneficial
ownership of any Voting Shares which were at any time within the two-year
period immediately prior to the date in question beneficially owned by an
Interested Stockholder.
For the purposes of determining whether a person is an Interested
Stockholder, the number of Voting Shares deemed to be outstanding shall
include shares deemed owned through application of the definition of
beneficial ownership provided above but shall not include any Voting Shares
beneficially owned by any person other than the Interested Stockholder which
may be issuable pursuant to any agreement, arrangement or understanding or
upon exercise of conversion rights, warrants or options, or otherwise.
11
<PAGE>
"Person" shall mean any individual, firm, trust, partnership, association,
corporation, unincorporated organization or other entity (other than the
Company, any Subsidiary of the Company for itself or as a fiduciary for
customers or a trustee holding stock for the benefit of the employees of the
Company or its Subsidiaries, or any one of them, pursuant to one or more
employee benefit plans or arrangements), as well as two or more persons acting
as a partnership, limited partnership, syndicate, association or other group
for the purpose of acquiring, holding or disposing of shares of stock.
"Subsidiary" shall mean any corporation, partnership or other entity of
which a majority of any class of equity security (as defined in Rule 3a(11)-1
of the General Rules and Regulations under the Exchange Act), is owned,
directly or indirectly, by the Company; provided, however, that for purposes
of the definition of Interested Stockholder set forth above, the term
"Subsidiary" shall mean only a corporation, partnership or other entity of
which a majority of each class of equity security is beneficially owned,
directly or indirectly, by the Company.
"Voting Shares" shall mean shares of all classes and series of the Company
entitled to vote generally in the election of the directors.
Other Anti-Takeover Provisions
The Certificate of Incorporation currently provides that the Company may
issue up to 1,000,000 shares of Preferred Stock, from time to time in one or
more series, and the Board of Directors is authorized to fix the dividend
rights and terms, any conversion rights, any voting rights, any redemption
rights and terms (including sinking fund provisions), the rights in the event
of liquidation and any other rights, preferences, privileges and restrictions
of any series of Preferred Stock, as well as the number of shares constituting
such series and the designation thereof. The issuance of shares of Preferred
Stock could enable the Board of Directors to render more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer or other business combination transaction directed at the Company
by, among other things, placing shares of Preferred Stock with investors who
might align themselves with the Board of Directors, issuing new shares to
dilute stock ownership of a person or entity seeking control of the Company or
creating a class or series of Preferred Stock with class voting rights. The
issuance of shares of the Preferred Stock as an anti-takeover device might
preclude stockholders from taking advantage of a situation which they believed
could be favorable to their interests. No shares of Preferred Stock are
presently outstanding, although the Company reserves the right to issue these
shares directly or may determine in the future to establish a stockholders'
rights plan (or poison pill) through the issuance of shares of Preferred
Stock.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR A CLASSIFIED
BOARD OF DIRECTORS.
12
<PAGE>
EXECUTIVE Compensation
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Company's chief executive
officer and each of the three most highly compensated executive officers of
the Company during the fiscal year ended December 31, 1996 for services in all
capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------
SECURITIES
UNDERLYING
OTHER ANNUAL STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$
Uri Evan(2) 1996 $200,000 -- $22,020 --
Chairman of the Board and 1995 118,308 -- 21,491 --
Chief Executive Officer 1994 70,000 -- -- --
Frederick J. Horowitz(2) 1996 125,000 42,367 5,600 --
Chief Administrative Officer and 1995 88,538 30,144 5,456 --
Executive Vice President 1994 -- -- -- --
Frank Corella 1996 175,000 150,000(3) 12,933 15,000
Vice President of Sales and 1995 150,000 273,750(3) 20,000 --
Marketing 1994 150,000 190,388(3) 20,000 --
Daniel Bergman(2) 1996 125,000 42,367 5,600 --
Vice President 1995 88,538 30,144 7,877 --
1994 65,000 -- -- --
</TABLE>
- -----------------------
(1) Amounts reflected have been adjusted for the three-for-two stock split of
the Company's Common Stock in the form of a stock dividend paid on
February 9, 1996 (the "Stock Split").
(2) Dollar amounts reflected do not include S corporation distributions made
by the Company in each of 1994 and 1995, prior to the Company's initial
public offering of stock in August 1995 (the "1995 IPO").
(3) Represents sales commissions and bonuses. See "--Employment Agreements."
13
<PAGE>
The following table sets forth information on option grants in the fiscal
year ended December 31, 1996 to the persons named in the Summary Compensation
Table. All amounts have been adjusted to reflect the Stock Split.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF % OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR(1) PER SHARE DATE 5% 10%
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uri Evan -- -- -- -- -- --
Frederick J. Horowitz -- -- -- -- -- --
Frank Corella 15,000 13.18 $15.75 1/2/06 $130,251 $320,815
--
Daniel Bergman -- -- -- -- --
</TABLE>
- ----------------------
(1) Options vest over three years in installments of 25%, 25% and 50%.
(2) Amounts reflected in these columns represent hypothetical values that may
be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified annually compounded rates
of appreciation of the Company's Common Stock over the term of the
options. These numbers are calculated based on rules promulgated by the
Securities and Exchange Commission. Actual gains, if any, on stock option
exercises and Common Stock holdings are dependent on the timing of such
exercise and the future performance of the Company's Common Stock.
The following table sets forth information with respect to (i) exercises of
stock options during fiscal 1996 and (ii) unexercised stock options held at
December 31, 1996 by the persons named in the Summary Compensation Table.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
OPTION EXERCISES HELD AT FISCAL YEAR END AT FISCAL YEAR END($)(2)
-----------------------------------------------------------------------------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uri Evan -- -- -- -- -- --
Frederick J. Horowitz -- -- -- -- -- --
Frank Corella 29,786 $1,183,994 29,786 74,573 $1,180,270 $2,748,705
--
Daniel Bergman -- -- --
</TABLE>
- -----------------------
(1) The "value realized" represents the difference between the exercise price
of the option and the closing price of the Common Stock on The Nasdaq
National Market on the date of exercise.
(2) The value for an "in-the-money" option represents the difference between
the exercise price of the option and the closing price of the Common Stock
on The Nasdaq National Market on December 31, 1996 of $41.625.
14
<PAGE>
EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into an amended employment agreement
with Mr. Evan which provides for an annual base salary of $200,000, as well as
such bonuses as may be authorized from time to time by the Board of Directors.
The agreement expires in June 1999, with automatic extensions of one year
unless terminated, and a covenant not to compete for a period of up to
twenty-four months following the termination of employment. Mr. Evan has
agreed to devote approximately 80% of his working time to the business and
affairs of the Company. If the Company terminates the agreement other than for
cause, Mr. Evan will be entitled to continue to receive his base salary
through the end of the term. The agreement also provides that in the event of
a Change of Control (as defined in the agreement) during the term of the
agreement or during the twenty-four months thereafter, Mr. Evan shall receive
a payment equal to 2.5% of the increase in the Market Capitalization of the
Company (as defined in the agreement) between the Company's 1995 initial
public offering and such Change of Control.
Messrs. Horowitz and Bergman have each entered into an employment agreement
with the Company that provides for an annual base salary of $125,000, the
right to receive 8% of the OGM Pool (as defined below) and such other bonuses
as may be authorized from time to time by the Board of Directors. See
"--Profit Sharing Plan." Both agreements have a term of three years expiring
in 1998, with automatic extensions of one year unless terminated, and a
covenant not to compete for a period of up to twenty-four months following the
termination of employment. Mr. Corella has entered into an employment
agreement with the Company that provides for an annual base salary of
$175,000. Mr. Corella is also expected to be able to earn sales commissions
and, pursuant to the terms of his employment agreement, is entitled to receive
an additional $125,000 in bonuses in the event the Company's net sales exceed
$100,000,000 for the year. Each agreement requires the executive to devote his
full time, attention and efforts to the business and affairs of the Company.
In March 1997, the Company entered into an employment agreement with
Richard D. Coslow to serve as the Company's Chief Financial Officer beginning
April 14, 1997. The agreement provides for an annual base salary of $156,000
plus such bonuses as may be authorized from time to time by the Board of
Directors, the right to receive 8% of the OGM Pool and the right to receive an
option to purchase 15,000 shares of Common Stock pursuant to the Plan. The
agreement has an initial three year term, with automatic extensions of one
year unless terminated. If the Company terminates the agreement other than for
cause, or the permanent disability or death of Mr. Coslow, he will be entitled
to continue to receive his base salary for a period of six months from the
date of such termination (or one year in the event such termination occurs
within the first year of his employment).
Since retiring from the Board of Directors on April 14, 1997, each of Mark
Antebi and Joseph Cohen have served as consultants to the Company. Pursuant to
the terms of their consulting agreements with the Company, both expiring on
June 13, 1998, each of Messrs. Antebi and Cohen will receive a consulting fee
equal to $125,000 on an annualized basis, as well as continuation of their
health and other benefits.
15
<PAGE>
PROFIT SHARING PLAN
The Company has a profit sharing plan (the "OGM Plan") based on the amount
by which the Company's OGM exceeds 10% in a given year. OGM is equal to the
percentage of gross sales represented by the Company's income from operations
plus general and administrative expenses. If the Company's OGM exceeds 10%, a
percentage of that excess is placed in a bonus pool (the "OGM Pool"). The
percentage added to the OGM Pool varies between 5% and 22% of OGM in excess of
10%, except that the total amount available for distribution does not include
amounts calculated based on annual net sales in excess of $200 million. Of the
OGM Pool, 24% currently is allocated for distribution to senior executives
with Messrs. Bergman, Horowitz and Coslow each to receive 8%. Of the remainder
of the OGM Pool, no participant currently can receive a distribution greater
than 50% of his or her base salary. Amounts not allocated for distribution
under the OGM Pool will not be distributed. For 1995 and 1996, the Company
made payments aggregating approximately $231,000 and $410,000, respectively,
under the OGM Plan. No distributions were made under the OGM Plan for periods
prior to 1995.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives (i) an annual fee of
$15,000 and (ii) $1,500 per day for each Board of Directors or committee
meeting attended but not more than $1,500 for any single day, regardless of
the number of meetings of the Board of Directors or any committee thereof
attended during that day. In addition, directors who are not employees of the
Company are compensated through stock options. See "--Non-Employee Directors'
Plan."
1995 STOCK OPTION PLAN
See "Proposal No. 3" for a description of the terms of the Plan.
NON-EMPLOYEE DIRECTORS' PLAN
Effective in August 1995, the Company adopted a Stock Option Plan for
Non-Employee Directors (the "Directors' Plan"), pursuant to which options to
acquire an aggregate of 75,000 shares of Common Stock may be granted to
non-employee directors. The Directors' Plan provides for the automatic grant
to each of the Company's non-employee directors of (1) an option to purchase
4,500 shares of Common Stock on the later of the date of such director's
initial election or appointment to the Board of Directors or the date of
adoption of the Directors' Plan, and (2) an option to purchase 4,500 shares of
Common Stock on each annual anniversary of such election or appointment,
provided that such individual is on that anniversary date a non-employee
director. The options will have an exercise price of 100% of the fair market
value of the Common Stock on the date of grant, have a ten-year term and
become exercisable in four equal quarterly installments commencing on the date
which is three months after the date of the grant thereof, subject to
acceleration in the event of a change of control (as defined in the Directors'
Plan). The options may be exercised by payment in cash, check or shares of
Common Stock.
16
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
General. The Compensation Committee, presently consisting of Messrs. Adler
and Mandell (during 1996, composed of Messrs. Adler, Mandell and Joseph S.
Cohen during 1996), was established in August 1995 and is responsible for the
planning, review and administration of the Company's executive compensation
program. Prior to the establishment of the Compensation Committee, the Board
of Directors administered the Company's executive compensation programs,
monitored corporate performance and its relationship to compensation of
executive officers, and made appropriate decisions concerning matters of
executive compensation.
The Company's objective is to provide a superior return to its
stockholders. To support this objective, the Company believes it must attract,
retain and motivate top quality executive talent. The Company's executive
compensation program is a critical tool in this process. The Company's
executive compensation program has been designed to link executive
compensation to Company performance through at-risk compensation
opportunities, providing significant reward to executives based on the
Company's success. The Company's executive compensation program consists of
base salary, annual cash incentive opportunities and long-term incentives
represented by stock options.
Base Salary. The Committee recognizes the importance of a competitive
compensation structure in retaining and attracting senior executives.
Executive salary levels are reviewed and established annually. The salaries
received by the Company's executives generally reflect their levels of
responsibility and other factors, such as assessments of individual
performance.
As described above, the compensation for Mr. Evan, the Company's Chief
Executive Officer, was $222,020 during 1996. This, combined with the provision
in Mr. Evan's employment agreement providing for the payment to Mr. Evan of a
percentage of the increase in the Company's market capitalization on a change
in control of the Company, reflected the Board of Directors' agreement on Mr.
Evan's contributions to the Company during the last year, including Mr. Evan's
performance in strategically positioning the Company for future growth.
Profit Sharing Plan. The Company's executive officers are eligible for
annual cash performance bonuses under the OGM Plan, as described above. The
OGM Plan is designed to create an additional incentive for certain executive
officers and employees of the Company to grow the Company's business while
continuing to focus on operating profits. The Committee believes that this
form of compensation helps to more closely align the interests of employees
with those of the Company and its stockholders. For 1996, the Company made
payments aggregating approximately $410,000 under the OGM Plan.
Stock Options. Stock option grants have historically been utilized by the
Company as part of its compensation program for all team members, including
the Company's executives and management team members. The Company's stock
option program permits team members to buy a specific number of shares of
Common Stock, in the future, at the fair market value of such shares on the
date the option is granted. Since stock options gain value only if the price
of the Common Stock increases above the option exercise price, the use of
stock option grants reflects the Company's philosophy of linking compensation
to performance. In addition, the Committee believes that stock option grants
to team members help to provide an incentive for their
17
<PAGE>
continued employment and otherwise more closely align their interests with
those of the Company and its stockholders. The Company also used stock options
as part of its standard compensation package developed to attract highly
qualified employment candidates to the Company.
Option grants made by the Committee during 1996 to the Company's executive
officers included the grant of performance options for the purchase of 28,125
shares of the Common Stock. These option grants were part of the Committee's
program to provide the Company's executives with added long-term incentive
through stock-based compensation. The options vest over the next three years,
at 25% for each of the first and second years, and 50% for the third year.
The Compensation Committee believes that linking executive compensation to
individual accomplishments as well as corporate performance results in a
better alignment of compensation with corporate business goals and stockholder
value. As strategic and performance goals are met or exceeded, resulting in
increased value to stockholders, executives are rewarded commensurately. The
Compensation Committee believes that compensation levels during 1996
adequately reflect the Company's compensation goals and policies.
Compensation Committee,
Frederick R. Adler
Richard A. Mandell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Uri Evan, Chief Executive Officer, Chairman of the Board and a principal
stockholder of the Company, is also a director, officer and stockholder of
American Value Brands Inc. and a director and officer of Net Grocer Inc. and
Frederick R. Adler, a director and principal stockholder of the Company, is
also a director and stockholder of American Value Brands Inc. and a director
of Net Grocer Inc.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, the Company's directors, executive officers and
beneficial owners of more than ten percent of the Company's Common Stock are
in compliance with the reporting requirements of Section 16(a) under the
Exchange Act. The Company is aware that during 1996, each of Messrs. Horowitz
and Kalish failed to timely report one transaction on Form 4, which
transactions were subsequently reported.
18
<PAGE>
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock
with the cumulative total stockholder return of (i) a broad equity market
index and (ii) an index based on returns from a peer group of companies. The
peer group of companies compared in the chart below consists of Church &
Dwight Co., Inc., The Clorox Company, Colgate-Palmolive Company, The Dial
Corp., INBRAND, NCH Corporation, Paragon Trade Brands, Inc., Paragon Group,
Inc., Perrigo Company, The Proctor & Gamble Company, and Unilever N.V. (the
"Peer Group Index"). This peer group was selected based on the Company's good
faith determination that these companies fairly represent the companies which
compete in the same industry or line-of-business as the Company. This chart
compares the Common Stock with (i) the Nasdaq Composite Index and (ii) the
Peer Group Index, and assumes an investment of $100 on August 7, 1995 (the
date the Company's shares began trading on the Nasdaq National Market) in each
of the Common Stock, the stocks comprising the Nasdaq Composite Index and the
stocks comprising the Peer Group Index.
USA DETERGENTS, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN
(AUGUST 7, 1995-DECEMBER 31, 1996)(1)
<TABLE>
<CAPTION>
PEER COMPANIES
Sep Dec Mar Jun Sep Dec
COMPANY SYMBOL 7-Aug-95 30-Sep-95 31-Dec-95 31-Mar-96 30-Jun-96 30-Sep-96 31-Dec-96
- ------- ------ -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CHURCH & DWIGHT CHD 100.0000 95.0800 80.8750 91.2594 91.2594 89.0692 99.9980
CLOROX CLX 100.0000 107.9400 108.3178 130.2413 134.0183 144.9810 151.7806
COLGATE PALMOLIVE CL 100.0000 95.3500 100.5370 111.4453 121.2859 124.3302 132.0262
DIAL/VIAD DL/VVI 100.0000 101.5400 121.5434 114.8707 117.4323 113.8389 127.1694
INBRAND INBR 100.0000 82.3500 97.0577 133.8232 164.7096 167.6579 133.8245
NCH CORP. NCH 100.0000 95.2200 96.0484 94.1755 106.8609 92.1034 100.2085
PARAGON PTB 100.0000 105.9800 159.8284 141.8797 147.0016 159.8201 205.1131
PARAGON PAO 100.0000 90.1300 91.4459 92.7627 86.1858 81.5835 93.4294
PERRIGO PRGO 100.0000 101.0300 97.9385 111.3365 92.7767 81.4394 75.2581
PROCTOR & GAMBLE PG 100.0000 110.9900 119.6361 122.1604 130.6261 140.5406 155.1287
UNI-LEVER UN 100.0000 98.5800 106.7326 102.9436 110.0570 119.5329 132.8967
USA DETERG $ 100 $ 100 $ 107 $ 111 $ 118 $ 122 $ 132
NASDAQ
COMPOSITE $ 100 $ 105 $ 106 $ 111 $ 119 $ 123 $ 130
USA DETERGENTS USA DETERG $ 100 $ 143 $ 162 $ 336 $ 412 $ 411 $ 430
</TABLE>
(1) Comparison has been restated from comparison included in the Company's
Proxy Statement, dated April 12, 1996, to reflect the removal of Armor
All Products Corp. and De Soto Inc. from the Peer Group Index, due to
the acquisition of both companies during 1996 which resulted in the
cessation of public trading in their common stocks.
19
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1994, U.S.A. Products, Inc., a New Jersey corporation, agreed to
act as guarantor under the Company's then existing line of credit facility.
This facility, and consequently the guaranty, were terminated in December
1996. U.S.A. Products, Inc. is owned by Mr. Horowitz and the wives of Messrs.
Antebi, Bergman, Cohen and Anatian.
In 1995, Mr. Adler and Mr. Blair Effron were granted rights to "piggyback"
on any registration statement filed by the Company, subject to certain
restrictions. The registration rights agreement relating to such "piggyback"
rights covers all Common Stock held by Messrs. Adler and Effron. Mr. Adler
has been of counsel to the law firm of Fulbright & Jaworski L.L.P. since
January 1, 1996, which firm was retained to provide legal services to the
Company during fiscal 1996.
PROPOSAL NO. 3-APPROVAL OF AN AMENDMENT TO THE
COMPANY'S 1995 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES WHICH MAY BE ISSUED THEREUNDER
The Board of Directors has unanimously adopted, subject to stockholder
approval, an amendment to the Company's 1995 Stock Option Plan which would
increase the aggregate number of shares of Common Stock that may be issued
under the Plan from 388,935 shares to 1,000,000 shares. The Board of Directors
believes that approval of this amendment will serve the best interests of the
Company and its stockholders.
The Plan was adopted for the purpose of securing for the Company and its
stockholders the benefits of common stock ownership of the Company by key
personnel of the Company and its subsidiaries. The Board of Directors believes
that the granting of options under the Plan will foster the Company's ability
to attract, retain and motivate those individuals who will be largely
responsible for the profitability and long-term future growth of the Company.
The proposed amendment to the Plan will provide the Company with the
flexibility to continue to grant stock options to these persons. The Company
presently is actively engaged in a search for a new President. It is expected
that any person so hired as the President of the Company will be granted, as
part of his or her compensation, an option to purchase a significant number of
shares of Common Stock. As of June 1, 1997, the number of shares available for
future grants under the Plan was 191,160 and approximately 675 persons were
eligible to participate in the Plan.
The Plan authorizes the Board to issue incentive stock options ("ISO's"),
as defined in Section 422(b) of the Internal Revenue Code (the "Code"), and
stock options that do not conform to the requirements of that Code section
("Non-ISO's"). The exercise price of each ISO may not be less than 100% of the
fair market value of the Common Stock at the time of grant, except that in the
case of a grant to an employee who owns (within the meaning of Code Section
422(b)(6)) 10% or more of the outstanding stock of the Company or any
subsidiary (a "10%
20
<PAGE>
Stockholder"), the exercise price may not be less than 110% of such fair
market value. The exercise price of each Non-ISO may not be less than the par
value of the Common Stock. Generally, options will vest over a three to five
year period, subject to acceleration in the event of a Change in Control (as
hereinafter defined), and may not be exercised after the tenth anniversary
(fifth anniversary in the case of an ISO granted to a 10% Stockholder) of
their grant. Options may not be transferred during the lifetime of an
optionholder. No stock options may be granted under the Plan after August
2005.
The Plan is administered by the Stock Option Committee (the "Committee") of
the Board of Directors. Subject to the provisions of the Plan, the Committee
has the authority to, among other things, determine the individuals to whom
the stock options are to be granted, the number of shares to be covered by
each option, the option price, the type of option, the option period, the
restrictions, if any, on the exercise of the option and the terms for the
payment of the option price, interpret the provisions of the Plan, fix and
interpret the provisions of option agreements made under the Plan, supervise
the administration of the Plan, and take such other action as may be necessary
or desirable in order to carry out the provisions of the Plan. Each grant of
options is to be evidenced by a stock option agreement executed by the Company
and the optionee at the time of grant in accordance with the terms and
conditions of the Plan.
No option will become exercisable unless the person to whom the option is
granted remains in the continuous employ or service of the Company or one of
its subsidiaries for at least six months (or for such longer period as the
Committee may designate) from the date the option is granted. Unless extended
by the Committee, if an optionee ceases to be employed by or to perform
services for the Company or one of its subsidiaries for any reason other than
death or disability, then each outstanding option granted to him or her under
the Plan will terminate on the date three months after the date of such
termination of employment or service, of, if earlier, the date specified in
the option agreement. If an optionee's employment or service is terminated by
reason of the optionee's death or disability (or if the optionee's employment
or service is terminated by reason of his or her disability and the optionee
dies within one year after such termination of employment or service), then,
unless extended by the Committee, each outstanding option granted to the
optionee under the Plan will terminate on the date one year after the date of
such termination of employment or service (or one year after the later death
of a disabled optionee) or, if earlier, the date specified in the option
agreement.
If any event constituting a "Change in Control of the Company" shall occur,
all options granted under the Plan which are outstanding at the time a Change
in Control of the Company occurs will immediately become exercisable. A
"Change in Control of the Company" will be deemed to occur if (i) there is
consummated (x) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange
21
<PAGE>
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company, or (ii) the
stockholders of the Company approve any plan or proposal for liquidation or
dissolution of the Company, or (iii) any person (as such term is used in
Section 13(d) and 14(d)(2) of the Exchange Act), becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more of
the Company's outstanding Common Stock other than pursuant to a plan or
arrangement entered into by such person and the Company, or (iv) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
The Board of Directors may amend or terminate the Plan. Except as otherwise
provided in the Plan with respect to equity changes, any amendment which would
increase the aggregate number of shares of Common Stock as to which options
may be granted under the Plan, materially increase the benefits under the
Plan, or modify the class of persons eligible to receive options under the
Plan is subject to the approval of the Company's stockholders. No amendment or
termination may affect adversely any outstanding option without the written
consent of the optionee.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not realize taxable income upon the grant of an option. In
general, the holder of a Non-ISO will realize ordinary income when the option
is exercised equal to the excess of the value of the stock over the exercise
price (i.e., the option spread), and the Company receives a corresponding
deduction in the same amount, subject to the deduction limits of Section
162(m) of the Code. (If an optionee is subject to the six month restrictions
on sale of Common Stock under Section 16(b) of the Exchange Act, ordinary
income recognition generally will be postponed until the date the restrictions
lapse, unless an early income recognition election is made.) Upon a later sale
of the stock, an optionee will realize capital gain or loss equal to the
difference between the selling price and the value of the stock at the time
the option was exercised (or, if later, the time the ordinary income is
recognized with respect to the shares received upon exercise).
The holder of an ISO will not realize taxable income upon the exercise of
the option (although the option spread is an adjustment to taxable income that
may result in alternative minimum tax (the adjustment, if any, is also added
to the basis of the shares for purposes of determining adjusted gain or loss
under the alternative minimum tax when the shares are sold)). If the stock
acquired upon exercise of the Incentive Stock Option is sold or otherwise
disposed of within two years from the option grant date or within one year
from the exercise date, then, in general, gain realized on the sale is treated
as ordinary income to the extent of the option spread at the exercise date,
and the Company receives a corresponding deduction in the same amount, subject
to the limitations of Section 162(m) of the Code. Any remaining gain is
treated as short-term or long-term capital gain depending on the holding
period. If the stock is
22
<PAGE>
held for at least two years from the grant date and one year from the exercise
date, then gain or loss realized upon the sale will be capital gain or loss
and the Company will not be entitled to a deduction.
THE AMENDMENT TO THE PLAN
The Board of Directors believes that approval of the amendment to increase
the aggregate number of shares which may be issued under the Plan will serve
the best interests of the Company and its stockholders by permitting the
Committee to exercise needed flexibility in the administration of the Plan and
the granting of options thereunder. In addition, the Board of Directors
believes that the ability to grant additional options will help attract,
motivate and retain key employees and directors who are in a position to
contribute to the successful conduct of the business and affairs of the
Company as well as stimulate in such individuals an increased desire to render
greater service to the Company.
Accordingly, the Board of Directors recommends that the stockholders
approve the following resolution:
RESOLVED, that the aggregate number of shares of the Company's Common
Stock which may be issued under the Company's 1995 Stock Option Plan (the
"Plan") shall be increased to 1,000,000 shares, and that the first
sentence of Section 2 of the Plan be amended to read in its entirety as
follows:
"The Company may issue and sell a total of 1,000,000 shares of its common
stock, $.01 par value (the "Common Stock"), pursuant to the Plan."
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
PROPOSAL NO. 4-RATIFICATION OF APPOINTMENT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Deloitte &
Touche LLP as the independent certified public accountants of the Company for
the fiscal year ending December 31, 1997. Deloitte & Touche LLP audited the
financial statements of the Company for the fiscal year ended December 31,
1996. A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so and is expected to be available to respond to appropriate
questions from stockholders.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
23
<PAGE>
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the Annual
Meeting of Stockholders of the Company to be held in 1998 must be received by
the Company no later than March 16, 1998 for inclusion in the Board of
Directors' proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend
the Annual Meeting, please sign the proxy and return it in the enclosed
envelope.
By Order of the Board of
Directors
Daniel Bergman,
Secretary
Dated: July 14, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: USA DETERGENTS,
INC., ATTENTION: TREASURER, 1735 JERSEY AVENUE, NORTH BRUNSWICK, NEW JERSEY
08902.
24
<PAGE>
EXHIBIT A
TEXT OF PROPOSED AMENDMENT TO THE
CORPORATION'S CERTIFICATE OF
INCORPORATION TO ADOPT A CLASSIFIED BOARD
The Corporation's Certificate of Incorporation will be amended by adding an
ARTICLE TENTH which shall read in its entirety as follows:
"TENTH:
(a) CLASSIFICATION OF BOARD OF DIRECTORS. The Board of Directors shall
consist of six directors; provided that the number of directors may be
increased from time to time by resolution adopted by the affirmative
vote of a majority of the Continuing Directors (as defined below). The
directors shall be divided into three classes, designated Class I,
Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting
the entire Board of Directors. At the 1998 Annual Meeting of
stockholders, Class I directors shall be elected for a one-year term,
Class II directors for a two-year term and Class III directors for a
three-year term. At each succeeding Annual Meeting of stockholders
beginning in 1999, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term.
If the number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of the class, but in no case will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for
the year in which his or her term expires and until his or her
successor shall be elected and qualified. Any vacancy on the Board of
Directors for any reason, and any directorships resulting from any
increase in the number of directors of the Board of Directors, may be
filled by a majority of the Board of Directors then in office,
although less than a quorum, and any directors so chosen shall hold
office until the next election of the class for which such directors
shall have been chosen and until their successors shall be elected and
qualified. Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of stock issued by the Corporation shall
have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms of this Certificate
of Incorporation applicable thereto, such directors so elected shall
not be divided into classes pursuant to this Article Tenth,
Section(a), and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the
foregoing provision of this Article Tenth, Section (a), in each case
unless expressly provided by such terms.
(b) AMENDMENT OR REPEAL. Notwithstanding anything in this Certificate of
Incorporation to the contrary, the provisions set forth in this
Article TENTH may not be repealed or amended in any respect, unless
such action is approved by either (a) a majority of the Continuing
Directors (in addition to the vote otherwise required by Section
242(b)(1) of the GCL) or (b) the affirmative vote of the holders of
(i) eighty percent (80%) of the outstanding shares of capital stock of
the Corporation entitled to vote generally for the election of
directors voting as a single class, and (ii) if an Interested
Stockholder (as defined below) is proposing such amendment, sixty-six
and
A-1
<PAGE>
two-thirds percent (66 2/3%) of the outstanding shares of the capital
stock of the Corporation entitled to vote generally for the election of
directors which are not beneficially owned, directly or indirectly, by
such Interested Stockholder, voting as a single class.
(c) REMOVAL OF DIRECTORS. Notwithstanding anything in this Certificate of
Incorporation to the contrary, the Corporation's Certificate of
Incorporation may not be amended to provide for removal of directors
without cause as permitted by Section 141(k) of the GCL, unless such
action is approved by either (a) a majority of the Continuing
Directors (in addition to the vote otherwise required by Section
242(b)(1) of the GCL) or (b) the affirmative vote of the holders of
(i) eighty percent (80%) of the outstanding shares of capital stock of
the Corporation entitled to vote generally for the election of
directors voting as a single class, and (ii) if an Interested
Stockholder is proposing such amendment, sixty-six and two-thirds
percent (66 2/3%) of the outstanding shares of the capital stock of
the Corporation entitled to vote generally for the election of
directors which are not beneficially owned, directly or indirectly, by
such Interested Stockholder, voting as a single class; provided,
however, whenever the holders of any class or series of the
Corporation's outstanding securities are entitled to elect one or more
directors by this Certificate of Incorporation, this subsection shall
apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding
shares of that class or series and not to the vote of the outstanding
shares as a whole.
(d) DEFINITIONS. Proposed Article Tenth of the Certificate of Incorporation
confers on a majority of the Continuing Directors the power and duty to
determine, on the basis of information known to them after reasonable
inquiry, the applicability of certain defined terms used in proposed
Article Tenth, in addition to such other matters with respect to which
a determination is required under proposed Article Tenth. A summary of
the definitions of certain of these terms follows.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to them in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
A person shall be a "beneficial owner" of any Voting Shares:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has
(1) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise or (2) the right to vote or to direct the voting thereof
pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any Voting
Shares.
A "Continuing Director" is any member of the Corporation's Board of
Directors who is unaffiliated with, and not a nominee of, an Interested
Stockholder, and any successor of a Continuing Director who is
unaffiliated with, and not a nominee of, an Interested Stockholder and is
approved to succeed a Continuing Director by a majority of Continuing
Directors then on the Board of Directors.
A-2
<PAGE>
"Interested Stockholder" shall mean any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee benefit
plan of the Corporation or any Subsidiary of the Corporation or any
entity holding shares of Common Stock for or pursuant to the terms of
any such plan or any person who acquires more than 15% of the
outstanding Voting Shares with the prior approval of a majority of the
Continuing Directors), who or which:
(i) is the beneficial owner, directly or indirectly, of more than
15% of the combined voting power of the then outstanding Voting
Shares; or
(ii) is an assignee of or has otherwise succeeded to the
beneficial ownership of any Voting Shares which were at any time
within the two-year period immediately prior to the date in question
beneficially owned by an Interested Stockholder.
For the purposes of determining whether a person is an Interested
Stockholder, the number of Voting Shares deemed to be outstanding shall
include shares deemed owned through application of the definition of
beneficial ownership provided above but shall not include any Voting
Shares beneficially owned by any person other than the Interested
Stockholder which may be issuable pursuant to any agreement,
arrangement or understanding or upon exercise of conversion rights,
warrants or options, or otherwise.
"Person" shall mean any indtividual, firm, trust, partnership,
association, corporation, unincorporated organization or other entity
(other than the Corporation, any Subsidiary of the Corporation for
itself or as a fiduciary for customers or a trustee holding stock for
the benefit of the employees of the Corporation or its Subsidiaries, or
any one of them, pursuant to one or more employee benefit plans or
arrangements), as well as two or more persons acting as a partnership,
limited partnership, syndicate, association or other group for the
purpose of acquiring, holding or disposing of shares of stock.
"Subsidiary" shall mean any corporation, partnership or other entity
of which a majority of any class of equity security (as defined in Rule
3a(11)-1 of the General Rules and Regulations under the Exchange Act),
is owned, directly or indirectly, by the Corporation; provided,
however, that for purposes of the definition of Interested Stockholder
set forth above, the term "Subsidiary" shall mean only a corporation,
partnership or other entity of which a majority of each class of equity
security is beneficially owned, directly or indirectly, by the
Corporation.
"Voting Shares" shall mean shares of all classes and series of the
Corporation entitled to vote generally in the election of the
Corporation's directors.
A-3
<PAGE>
USA DETERGENTS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON August 13, 1997
The undersigned, a stockholder of USA Detergents, Inc. (the "Corporation"),
hereby constitutes and appoints Uri Evan and Frederick J. Horowitz and each of
them, the true and lawful proxies and attorneys-in-fact of the undersigned,
with full power of substitution in each of them, to vote all shares of Common
Stock of the Corporation which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Corporation to be held on Wednesday,
August 13, 1997, and at any and all adjournments or postponements thereof, as
follows:
(1) ELECTION OF DIRECTORS
[ ] FOR the nominees listed below (except
as marked to the contrary below) [ ] WITHHOLDING AUTHORITY
to vote for all the nominees
listed below
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
Nominees: Frederick R. Adler, Daniel Bergman, Uri Evan, Frederick J.
Horowitz, Dr. Shlomo Kalish and Richard A. Mandell.
(2) PROPOSAL TO AMEND THE CORPORATION'S CERTIFICATE OF INCORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) PROPOSAL TO AMEND THE CORPORATION'S 1995 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE THEREUNDER
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) In their discretion, upon such other business as may properly come
before the meeting and any and all adjournments or postponements thereof.
(CONTINUED ON REVERSE SIDE.)
1
<PAGE>
(CONTINUED)
Shares represented by this Proxy will be voted in accordance with the
instructions indicated in items 1, 2, 3 and 4 above. IF NO INSTRUCTION IS
INDICATED, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES FOR DIRECTORS, FOR
PROPOSAL 2, FOR PROPOSAL 3 AND FOR PROPOSAL 4.
Any and all proxies heretofore given by the undersigned are hereby revoked.
Dated:
----------------------
----------------------
----------------------
Please sign exactly as
your name(s) appear
hereon. If shares are
held by two or more
persons each should
sign. Trustees,
executors and other
fiduciaries should
indicate their
capacity. Shares held
by corporations,
partnerships,
associations, etc.
should be signed by an
authorized person,
giving full title or
authority.
PLEASE DATE, SIGN AND MAIL IN THE ENCLOSED REPLY ENVELOPE
2
