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
HACH COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
HACH COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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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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/X/ 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.
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4) Date Filed:
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[LOGO]
HACH COMPANY
5600 Lindbergh Drive
Loveland, Colorado 80539
---------------------
NOTICE OF ANNUAL MEETING
To the Stockholders:
The Annual Meeting of the Stockholders of HACH COMPANY, a Delaware
corporation, will be held on Tuesday, August 27, 1996, at 2:00 p.m. local time,
at the Company's principal executive offices located at 5600 Lindbergh Drive,
Loveland, Colorado, for the following purposes:
1. To elect a Board of seven directors.
2. To consider and act upon a proposal to amend the Certificate of
Incorporation of the Company to reduce the number of authorized shares of
Common Stock from 40,000,000 to 25,000,000.
3. To consider and act upon a proposal to approve the Company's 1995
Non-Employee Director Stock Plan.
4. To transact such other business as may lawfully come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed July 10, 1996, at the close of business, as
the record date for the determination of stockholders entitled to receive notice
of and to vote at this Annual Meeting, or any adjournments thereof. All
stockholders are urged to attend the meeting. In order to assure the presence of
a quorum, whether you expect to be present personally or not, please sign, date
and mail immediately the enclosed proxy, since you have full power to revoke it
at any time before it is exercised.
By Order of the Board of Directors,
ROBERT O. CASE, SECRETARY
July 22, 1996
HACH COMPANY
5600 Lindbergh Drive
Loveland, Colorado 80539
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 27, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hach Company (the "Company") to be voted at
the Annual Meeting of Stockholders to be held on August 27, 1996, and at any and
all adjournments thereof. All proxies received pursuant to this solicitation
will be voted, but stockholders who execute proxies may revoke them at any time
before they are voted by giving written notice to the Secretary of the Company
or by voting in person at the meeting. This proxy statement and the accompanying
proxy are being first mailed to stockholders on or about July 22, 1996.
Only stockholders of record at the close of business on July 10, 1996, will
be entitled to vote at the meeting. On that date, the Company had outstanding
11,363,058 shares of common stock entitled to vote at the meeting, each share
being entitled to one vote.
VOTING OF SHARES
Shares voted as abstentions on any matter (or a "withhold authority to vote
for" as to directors) will be counted as shares that are present and entitled to
vote for purposes of determining the presence or absence of a quorum at the
meeting and as unvoted, although present and entitled to vote, for purposes of
determining the approval of each matter as to which the shareholder has
abstained. If a broker submits a proxy that indicates the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
those shares will be counted as shares that are present and entitled to vote for
purposes of determining the presence or absence of a quorum at the meeting, but
will not be considered as present and entitled to vote with respect to such
matters.
An affirmative vote of the holders of a plurality of the votes cast at the
meeting is required for the election of directors. An affirmative vote of the
holders of a majority of the shares present or represented at the meeting is
required for the approval of each of the other matters to be voted upon.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 1996, certain information
with respect to each person who is known to the Company to own beneficially more
than 5% of the outstanding voting securities of the Company. This information
has been furnished by such persons to the Company.
TITLE OF BENEFICIALLY PERCENT OF
CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- ----------- ----------------------------------------------------------------- --------------- -----------
Common Kathryn Hach-Darrow ............................................. 4,613,926(1) 40.65%
Hach Company
5600 Lindbergh Drive
Loveland, Colorado 80537
Common Lawter International, Inc. ...................................... 3,157,220 27.81%
990 Skokie Boulevard
Northbrook, Illinois 60062
Common Hach Company Employee Stock 679,155(2) 5.98%
Ownership Plan and Trust........................................
Hach Company
5600 Lindbergh Drive
Loveland, Colorado 80537
The following table shows the amount of voting securities of the Company
beneficially owned by all officers and directors of the Company as a group (14
persons) on June 30, 1996.
TITLE OF BENEFICIALLY PERCENT OF
CLASS OWNED CLASS
- ----------------------------------------------------------------- --------------- -----------
Common........................................................... 5,007,714(3) 44.12%
- ------------------------
(1) The shares listed in the table above opposite Kathryn Hach-Darrow's name
include 942,962 shares held in Mrs. Hach-Darrow's name. The shares listed
above also include 1,869,743 shares held by Mrs. Hach-Darrow as trustee and
beneficiary of the Kathryn C. Hach Marital Trust, 95,176 shares held by Mrs.
Hach-Darrow as the trustee and beneficiary of the Clifford C. Hach
Generation Skipping Trust, and 73,635 shares held by the Clifford C. Hach
Family Trust, all three of which Trusts were created under an agreement
dated August 30, 1988, by Clifford C. Hach. Mrs. Hach-Darrow has the power
to vote and dispose of the shares held in the Marital, Generation Skipping
and Family Trusts. In addition, the shares listed above opposite Mrs.
Hach-Darrow's name include 1,511,415 shares owned by C&K Enterprises, Ltd.,
as to which Mrs. Hach-Darrow and the Kathryn C. Hach Marital Trust have
voting and investment powers, and 120,782 shares owned by the Hach
Scientific Foundation, a charitable foundation. Mrs. Hach-Darrow is
President and a co-trustee of the Foundation and she shares voting and
investment powers with respect to the shares held by the Foundation.
Finally, the shares listed above include 213 shares which have been
allocated to the account of Mrs. Hach-Darrow under the Company's Employee
Stock Ownership Plan (the "ESOP") and which Mrs. Hach-Darrow has the right
to direct the Plan trustee to vote.
2
(2) These shares are allocated to the accounts of the individual employees of
Hach Company who are participants in the ESOP, and who have the power to
vote the shares. The Trustees and the Company have investment power over the
stock held in the Plan.
(3) Includes the shares listed in the table above opposite Kathryn Hach-Darrow's
name. Excludes (i) 101,272 shares held by the Company's 401(k) Plan for the
individual accounts of employees other than officers and directors of the
Company, (ii) 651,429 shares held by the Company's ESOP, which are allocated
to the individual accounts of employees other than officers or directors of
the Company, (iii) 285,094 shares referred to in footnote 3 and the
aggregate of 20,000 shares referred to in footnote 5 to the table below
listing the shares beneficially owned by the directors, and (iv) 94,047
shares held by a partnership composed of the children of Kathryn Hach-Darrow
and the late Clifford C. Hach and their spouses, as to which Bruce J. Hach,
the President and a Director of the Company, is a partner. If all the shares
referred to in the preceding sentence were included, the shares beneficially
owned by officers and directors as a group would be 6,159,556 and the
percent of the class would be 54.26%.
ELECTION OF DIRECTORS
At the meeting seven directors are to be elected to hold office until the
next annual meeting and until their successors have been elected and qualified.
It is the intention of the persons named in the enclosed form of proxy, unless
the stockholder otherwise specifies therein, to vote for the election as
directors of the persons named in the table below. In case any such nominee
should be unavailable for any reason, the proxy holders reserve the right to
substitute another person of their choice in his place. The information
concerning the nominees and their security holdings has been furnished by them
to the Company.
COMMON STOCK BENEFICIALLY
OWNED ON JUNE 30, 1996
----------------------------
PRINCIPAL OCCUPATION AND OTHER DIRECTOR PERCENT OF
NAME AGE DIRECTORSHIPS SINCE NUMBER OF SHARES CLASS
- ------------------------ --- ------------------------------------------- ----------- ---------------- ----------
Kathryn Hach-Darrow 73 Chairman of the Board and Chief Executive 1951 4,613,926(1)(2) 40.65%
Officer of the Company since August 1988;
other executive offices of the Company,
including President and Chief Operating
Officer for more than the previous two
years.
Bruce J. Hach 50 President and Chief Operating Officer of 1987 160,673(2)(3) 1.42%
the Company since August 1988; a member of
senior management of the Company for more
than the previous two years.
3
COMMON STOCK BENEFICIALLY
OWNED ON JUNE 30, 1996
----------------------------
PRINCIPAL OCCUPATION AND OTHER DIRECTOR PERCENT OF
NAME AGE DIRECTORSHIPS SINCE NUMBER OF SHARES CLASS
- ------------------------ --- ------------------------------------------- ----------- ---------------- ----------
Gary R. Dreher 43 Vice President and Chief Financial Officer 1994 35,297(2)(4) *
since November 1994; Vice President and
Treasurer of the Company from August 1991
through November 1994; Vice President and
Controller of the Company from August 1990
through August, 1991; Controller of the
Company from September 1985 through August
1990.
Joseph V. Schwan 59 Senior Vice President and General Manager, 1987 17,237(2)(5) *
Forms Division of the Standard Register
Company; Vice President, Forms Marketing
and Sales of The Standard Register Company
(a publicly-held manufacturer and
distributor of business forms) since August
1991; Vice President-Forms Division of
Rittenhouse, Inc., from March 1990 to
August 1991; a member of senior management
of Wallace Computer Services (a
publicly-held computer services and supply
company) for the three previous years.
Fred W. Wenninger 57 President and Chief Executive Officer, Key 1990 -0- (5) *
Tronic Corporation (a publicly-held
manufacturer of computer keyboards) since
September 1, 1995; Independent businessman,
from January 1994 through August 1995;
President, Chief Executive Officer and
Director, Iomega Corporation (a publicly
held manufacturer of removable mass storage
products for computers) from May 1989
through December 1993; President of Allied
Signal, Inc.'s Bendix/King Avionics
division from 1986 to 1989.
John N. McConnell 57 Chairman and President of Labconco 1990 7,457 (5) *
Corporation (a laboratory equipment
manufacturer) since 1990; President of
Labconco since 1981.
Linda O. Doty 46 Certified Public Accountant, partner in 1991 8,343 (5) *
Doty & Associates, Certified Public
Accountants, since January 1, 1990; tax
partner with Coopers & Lybrand for more
than the previous three years.
- --------------------------
* Less than 1%.
4
(1) The shares listed in the table above opposite Kathryn Hach-Darrow's name
include 942,962 shares held in her name. The shares listed above also
include 1,869,743 shares held by Mrs. Hach-Darrow as trustee and beneficiary
of the Kathryn C. Hach Marital Trust, 95,176 shares held by Mrs. Hach-Darrow
as the trustee and beneficiary of the Clifford C. Hach Generation Skipping
Trust, and 73,635 shares held by the Clifford C. Hach Family Trust, all
three of which Trusts were created under an agreement dated August 30, 1988,
by Clifford C. Hach. Mrs. Hach-Darrow has the power to vote and dispose of
the shares held in the Marital, Generation Skipping and Family Trusts. In
addition, the shares listed above opposite Mrs. Hach-Darrow's name include
1,511,415 shares owned by C&K Enterprises, Ltd., as to which Mrs.
Hach-Darrow and the Kathryn C. Hach Marital Trust have voting and investment
powers, and 120,782 shares owned by the Hach Scientific Foundation, a
charitable foundation. Mrs. Hach-Darrow is President and a co-trustee of the
Foundation and she shares voting and investment powers with respect to the
shares held by the Foundation. Finally, the shares listed above include 213
shares which have been allocated to the account of Mrs. Hach-Darrow under
the Company's Employee Stock Ownership Plan and Trust (the "ESOP") and which
Mrs. Hach-Darrow has the right to direct the ESOP trustee to vote.
(2) Excludes 104,525 shares owned by the Hach Company 401(k) Plan. The Company
through its board of directors has the power to vote such shares. In
addition, the co-trustees of the 401(k) Plan share investment power with
respect to those shares. Also excludes shares of the Company's ESOP, as to
which the Company through its Board of Directors, and the ESOP's
co-trustees, have investment power. The co-trustees of each of the 401(k)
Plan and the ESOP are Randall A. Petersen, Gary R. Dreher and Loel J.
Sirovy. The ESOP as of June 30, 1996 held a total of 679,155 shares all of
which were allocated to the accounts of plan participants. Shares accrued to
the individual accounts of Kathryn Hach-Darrow, Bruce Hach and Gary Dreher
are reflected in the table above and the amounts of the shares being held in
said individual accounts are given in footnotes 1, 3, and 4 to the above
table. See footnote 2, page 3, with reference to the power to vote ESOP
shares.
(3) Excludes 64,644 shares held by Robert O. Case and Bruce J. Hach as
co-trustees of eight irrevocable trusts for the benefit of the grandchildren
of Kathryn Hach-Darrow. Robert O. Case and Bruce J. Hach have shared
investment and voting powers with respect to those shares. Three of the
beneficiaries of the trusts are the children of Bruce J. Hach. Also excludes
220,450 shares held in separate shares in an irrevocable trust for the
benefit of the grandchildren of Kathryn Hach-Darrow by Bank One - Loveland
under an agreement dated June 30, 1975, between Kathryn Hach-Darrow and the
late Clifford C. Hach as settlors, and The Northern Trust Company, as
initial trustee. The Trust is being held for the benefit of the
grandchildren of Kathryn Hach-Darrow and the late Clifford C. Hach, three of
whom are the children of Bruce J. Hach. Also excludes 94,047 shares held by
a partnership composed of the children of Kathryn Hach-Darrow and their
spouses. Includes 5,012 shares held by the ESOP which are accrued to the
account of Bruce J. Hach and which he has the right to direct the Plan
trustee to vote, and options to purchase 6,667 shares of stock.
(4) Includes 3,461 shares held by the ESOP which are accrued to the account of
Mr. Dreher and which he has the right to direct the Plan trustee to vote,
and options to purchase 16,667 shares of stock. Excludes an additional
675,694 shares owned by the ESOP, for which Gary R. Dreher as a co-trustee
of the ESOP shares investment power.
(5) Excludes an option to purchase 5,000 shares issued to this director under
the Director Stock Plan, which is subject to the approval of the plan by the
shareholders of the Company at this Annual Meeting.
Kathryn Hach-Darrow may be considered to be a controlling person of the
Company. Kathryn Hach-Darrow is the mother of Bruce J. Hach. Jerry M. Churchill,
56, chose not to stand for reelection as a Director at last year's Annual
Meeting of Shareholders held August 29, 1995. Mr. Churchill had been a director
of the Company since 1990. During the prior 5 years Mr. Churchill has served as
an officer of the Company and currently serves as Vice President, Domestic Sales
of the Company. Mr. Churchill beneficially owned 32,333 shares of the Company's
common stock as of June 30, 1996 (subject to the disclosures in footnote 2 to
the above table).
5
The Board of Directors has an Audit Committee, an Executive Committee and a
Compensation Committee, but does not have a nominating committee. The members of
the Audit Committee are Linda O. Doty and Joseph V. Schwan. There were two
meetings of the Audit Committee during the last fiscal year. The Audit Committee
oversees implementation of the Company's financial and accounting systems,
recommends the appointment of the independent auditors for the Company and
reviews the adequacy and scope of the auditor's examination.
The Compensation Committee, which is composed of Kathryn Hach-Darrow, John
N. McConnell (Chairman), Joseph V. Schwan and Linda O. Doty, met on four (4)
occasions during the last fiscal year. The Compensation Committee consults with
management and makes recommendations to the Board of Directors as to annual
compensation of, and the award of stock options to, key personnel and such other
compensation matters as may be delegated to it by the Board of Directors.
The members of the Executive Committee are Kathryn Hach-Darrow (Chairman),
Bruce J. Hach and Fred J. Wenninger. The Executive Committee acts in lieu of the
Board of Directors, when necessary, on matters which require the authorization
of the Board of Directors and are within the Committee's powers as provided by
statute, the Company's by-laws and Board resolutions. The Executive Committee
met once during the last fiscal year.
The Board of Directors met seven (7) times during the last fiscal year.
During fiscal 1996, all incumbent directors of the Company attended at least 75%
of the total number of meetings of the Board of Directors and meetings of
committees of which they were members.
DIRECTOR REMUNERATION. Prior to November 21, 1995, the Company paid each
director who is not also an employee of the Company (each such person, a
"Non-Employee Director" ) for his or her services as a director at the rate of
$3,750 per year, plus $750 per each board meeting attended in excess of five per
year, and at its option, $750 for each meeting of a board committee attended, by
a director. Effective November 21, 1995, the Company pays each Non-Employee
Director for his or her services as a director an annual retainer of $10,000 on
the last day of the Company's fiscal year, together with $1,000 for each board
meeting and $750 for each board committee meeting which the Non-Employee
Director attends in person. Attendance at telephonic board or board committee
meetings is not compensated. Directors who are employees of the Company do not
receive fees for service on the board or any board committees.
Prior to April 25, 1996, each Non-Employee Director who is not an officer of
the Company participated in the Company's Directors' Bonus Compensation Plan
under which such directors were eligible to receive annual awards of up to
$10,000 in Stock Units. The actual number of Stock Units received by each
eligible director is determined by dividing the dollar value of the units
awarded by the market value of the common stock of the Company on the date of
grant. In addition, when the Company pays a dividend on its common stock,
pursuant to this plan it issues Stock Units to the directors equal to the
dividends which would have been paid if the Stock Units previously awarded had
been shares of common stock. When the director retires, dies, resigns or is
otherwise not reelected as director, the Stock Units are settled for cash, in an
amount determined by multiplying the number of Stock Units held by the market
value of the Company's common stock on the date the director's service ends. The
Company has the right to terminate the Directors' Bonus Compensation Plan at any
time. In lieu of the cash compensation payment to Non-Employee Directors for
board committee meeting attendance, the Company, in its discretion, has provided
such compensation in the form of awards of Stock Units under the Plan. During
the fiscal year 1996, Joseph V. Schwan received $6,700
6
in Stock Units, Linda O. Doty received $6,700 in Stock Units, John N. McConnell
received $5,950 in Stock Units, and Fred W. Wenninger received $5,000 in Stock
Units. These awards were made in July, 1995 for the prior year's service and
include compensation for committee meeting attendance. The Directors' Bonus
Compensation Plan was frozen as of April 25, 1996 by action of the board and no
awards of Stock Units were or will be made to Non-Employee Directors for fiscal
year 1996 service. Outstanding Stock Units will continue to accrue cash or stock
dividends or other distributions, and the holders of outstanding Stock Units
will continue to have the right to receive distributions in connection with a
merger, reorganization or recapitalization of the Company as currently provided
in the Directors' Bonus Compensation Plan.
Finally, Non-Employee Directors were awarded stock options under, and will
be awarded automatic stock option grants pursuant to, the Non-Employee Director
Stock Plan, subject to approval of that Plan by the stockholders at this Annual
Meeting. In addition the Plan allows a Non-Employee Director under certain
circumstances to obtain Company Common Stock or stock options in lieu of
receiving payment of his or her annual retainer. A description of the Plan and
the compensation provided to directors thereunder is described in more detail
below at "Approval of the Company's 1995 Non-Employee Director Stock Plan."
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
See "Executive Employment Agreements" and "Compensation Committee Interlocks
and Insider Participation" below for a description of certain transactions and
business relationships, involving management of the Company.
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO REDUCE THE COMPANY'S AUTHORIZED COMMON STOCK
On April 25, 1996 the Board of Directors of the Company adopted a resolution
approving an amendment to the Certificate of Incorporation of the Company, that
would reduce the number of authorized shares of Common Stock from 40,000,000 to
25,000,000. The amendment is subject to approval by stockholders at the Meeting.
REASONS FOR AND GENERAL EFFECT OF THE AMENDMENT. At the close of business
on June 30, 1996, 11,351,572 shares of Common Stock were issued and outstanding,
271,381 shares were held in the Company's treasury and an aggregate of 1,261,490
shares of Common Stock were reserved for issuance as follows: (i) 625,000 shares
were reserved for issuance upon the exercise of options granted and to be
granted under the Company's 1993 Stock Option Plan, (ii) 486,490 shares were
reserved under the Company's Employee Stock Purchase Plan and (iii) 150,000
shares were reserved for issuance upon the exercise of options granted and to be
granted under the 1995 Non-Employee Director Stock Plan (assuming approval by
stockholders of such plan at this Annual Meeting). Accordingly, as of June 30,
1996, of the 40,000,000 shares of Common Stock authorized for issuance by the
Certificate of Incorporation, only 12,613,062 (excluding treasury shares) are
issued and outstanding or reserved for issuance.
The amendment to the Certificate of Incorporation would reduce the number of
authorized shares of Common Stock from 40,000,000 to 25,000,000. The reduction
in the number of authorized shares would result in an annual savings of
approximately $20,000 by reducing the amount of annual franchise taxes payable
to the State of Delaware, the Company's state of incorporation. Franchise taxes
in the state of Delaware are currently determined in accordance with a formula
that is based, in
7
part, on the amount of a corporation's authorized shares of capital stock. The
Board of Directors believes that, even with the reduction to 25,000,000 shares,
sufficient shares of Common Stock will be available for the Company's present
needs and its presently anticipated future needs.
Approval of the amendment to the Certificate of Incorporation and the
reduction in the number of authorized shares of Common Stock would have no
effect on the powers, designations, preferences or relative, participating,
optional or other special rights, qualifications or restrictions of shares of
Common Stock of the Company.
REQUIRED VOTE. The affirmative vote of a majority of the outstanding shares
of Common Stock entitled to vote on this proposal is required to approve the
amendment to the Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT.
APPROVAL OF THE COMPANY'S 1995 NON-EMPLOYEE DIRECTOR STOCK PLAN
The Board of Directors adopted the Hach Company 1995 Non-Employee Director
Stock Plan (the "Director Stock Plan" or the "Plan") on November 21, 1995,
subject to approval by the stockholders at the next Annual Meeting.
The Board of Directors believes that the ownership of Common Stock by
directors supports the objective of maximizing long-term stockholder value by
aligning the interests of directors with those of the stockholders. The Plan is
designed to provide a means of giving existing and new Non-Employee Directors an
increased opportunity to acquire an investment in the Company by providing for
the grant of stock options to outside directors, and by permitting such
directors to elect to receive all or a portion of their annual retainer in
Common Stock, options to purchase Common Stock or a combination of both options
and purchases.
SUMMARY OF THE DIRECTOR STOCK PLAN
A summary of the Director Stock Plan is set forth below. The summary is
qualified in its entirety by reference to the full text of the Director Stock
Plan, which is attached to this Proxy Statement as Appendix A.
The purpose of the Director Stock Plan is to promote the long-term growth of
Hach Company enhancing its ability to attract and retain highly qualified and
capable non-employee directors with diverse backgrounds and experience and by
increasing the proprietary interest of non-employee directors in the Company.
Only non-employee directors of Hach Company are eligible to participate in the
Director Stock Plan. Currently, Hach Company has four non-employee directors.
Subject to approval of the Director Stock Plan by stockholders, upon
adoption of the Plan on November 21, 1995, each current non-employee director
was granted an initial option to purchase 5,000 shares of Common Stock. Each
non-employee director who is first elected after the adoption of the Plan will
be granted an initial option to purchase 2,000 shares of Common Stock. In
addition, all non-employee director participants may elect to receive Common
Stock, or options to purchase Common Stock, or a combination of both, in lieu of
all or a portion of his or her annual retainer. Effective November 21, 1995,
non-employee directors are paid an annual retainer of $10,000.
A maximum of 150,000 shares of Common Stock will be available for the award
of shares and the grant of stock options under the Director Stock Plan, subject
to adjustment in the event of stock splits,
8
stock dividends or changes in corporate structure affecting Common Stock. To the
extent a stock option granted under the Director Stock Plan expires or
terminates unexercised, the shares of Common Stock allocable to the unexercised
portion of such option will be available for awards under the Director Stock
Plan. In addition, to the extent that shares are delivered (actually or by
attestation) to pay all or a portion of an option exercise price, such shares
will become available for awards under the Director Stock Plan.
If the Director Stock Plan is approved by stockholders, each non-employee
director will be automatically granted an option to purchase 1,000 shares of
Common Stock on September 1, 1996, and each September 1st thereafter while the
Director Stock Plan is in effect. If a non-employee director begins service on a
date other than the date of the annual meeting of Hach Company stockholders in
any year, the number of shares subject to the option shall be prorated. Each
non-employee director may also elect to receive a portion of his or her annual
retainer in Common Stock or options to purchase Common Stock. The number of
shares of Common Stock issuable will be based upon the fair market value per
share of Common Stock (as defined in the Director Stock Plan) on September 1st
in the year of such election, and will be determined by dividing such fair
market value into the amount of the annual retainer that the director elected to
receive in Common Stock. The number of stock options granted will be determined
by multiplying the amount of the annual retainer that the director elected to
receive in stock options by four, then dividing by such fair market value.
The exercise price per share of all stock options granted under the Director
Stock Plan will be 100% of the fair market value per share of Common Stock on
the grant date, defined as the closing price on the NASDAQ System if one is
available, otherwise the mean between the bid and asked price on said System at
the close of business on that date. Options granted under the Director Stock
Plan vest immediately, but are not exercisable until six months from the date of
grant. Options granted under the Director Stock Plan may be exercised until the
tenth anniversary of the date of grant. Options may be exercised either by the
payment of cash in the amount of the aggregate option price or by surrendering
(or attesting to ownership of) shares of Common Stock owned by the participant
for at least six months prior to the date the option is exercised, or a
combination of both, having a combined value equal to the aggregate option price
of the shares subject to the option or portion of the option being exercised.
Any option or portion thereof that is not exercised on or before the tenth
anniversary of the date of grant shall expire.
Options granted under the Director Stock Plan will not be transferable by
the participant other than by court order, will or the laws of descent and
distribution, unless such transferability is permitted under Rule 16b-3 under
the Exchange Act and will be exercisable during the participant's lifetime only
by the participant or the participant's guardian, legal representative or
similar person.
Upon the occurrence of a "change of control" of Hach Company as defined in
the Director Stock Plan, any and all outstanding options granted under the
Director Stock Plan become immediately exercisable.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an option under the Director Stock Plan will not result in
income for the participant or in a deduction for Hach Company. The exercise of
an option will generally result in compensation income for the participant and a
deduction for Hach Company, in each case measured by the difference between the
exercise price and the fair market value of the shares at the time of exercise.
9
The receipt of shares of Common Stock under the Director Stock Plan will
generally result in compensation income for the participant and a deduction for
Hach Company, based on the fair market value of the shares on the date awarded.
ADMINISTRATION OF THE DIRECTOR STOCK PLAN
The Director Stock Plan will be administered by a Committee of the Board of
Directors consisting of two or more directors who are not eligible to
participate in the Plan. The Board of Directors may amend or terminate the
Director Stock Plan at any time, but the terms of any option granted under the
Director Stock Plan may not be adversely modified without the participant's
consent. In addition, the Board of Directors may not amend the Director Stock
Plan more than once every six months to change the number of shares subject to
an option, the exercise price of an option, the grant date of an option, or the
termination provisions relating to an option, other than to comply with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations promulgated thereunder.
ADDITIONAL INFORMATION
The closing price of Hach Common Stock, as reported on the NASDAQ System on
November 21, 1995, was $16.125.
The affirmative vote of a majority of the votes cast on this proposal will
constitute approval of the Director Stock Plan.
NEW PLAN BENEFITS
As summarized in the following table, on the date of the adoption of the
Director Plan by the Board, the Compensation Committee granted each of the
Company's four (4) Non-Employee Directors an option to purchase 5,000 shares of
Common Stock at a fair market value exercise price of $16.125 per share. Since
only Non-Employee Directors are eligible to be granted options under the Plan,
no options have been granted to (a) the persons named in the Summary
Compensation Table below under the caption "Executive Compensation", (b)
executive officers of the Company, or (c) any other of the Company's employees.
DOLLAR
GROUP VALUE(1) NUMBER OF UNITS
- ------------------------------------ -------------- ---------------
Non-Employee Director Group N/A 20,000
- ------------------------
(1) All options under the Plan will be granted at fair market value.
Accordingly, the dollar value benefit is based upon future appreciation in
the Company's Common Stock and is not presently determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1995
NON-EMPLOYEE DIRECTOR STOCK PLAN.
10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides summary information concerning compensation
paid by the Company to its Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company (hereafter referred to
as the "named executive officers") for the fiscal years ended April 30, 1996,
1995 and 1994. No amounts were required to be disclosed in the "Other Annual
Compensation" column under applicable United States Securities and Exchange
Commission ("SEC") rules.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS(2)
ANNUAL COMPENSATION ----------------------------------
SECURITIES
-------------------- OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS
- --------------------------------------------- --------- --------- ----------- --------------------- -----------
Kathryn Hach-Darrow 1996 $ 126,089 $ 0 0
Chairman of the Board and 1995 126,004 0 -- 0
Chief Executive Officer 1994 125,887 0 0
Bruce J. Hach 1996 $ 173,449 $ 0 12,000
President and Chief 1995 160,280 0 -- 0
Operating Officer 1994 144,028 0 10,000
Loel J. Sirovy 1996 $ 127,848 $ 0 12,000
Senior Vice President, 1995 122,285 0 -- 0
Operations 1994 111,159 0 10,000
Jerry M. Churchill 1996 $ 122,273 $ 0 10,000
Vice President, Domestic Sales 1995 119,562 0 -- 0
1994 111,159 0 7,500
Gary R. Dreher 1996 $ 119,877 $ 0 12,000
Vice President and 1995 109,774 0 0
Chief Financial Officer 1994 96,434 0 10,000
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(3)
- --------------------------------------------- ----------------
Kathryn Hach-Darrow $ 20,237
Chairman of the Board and 18,049
Chief Executive Officer 18,041
Bruce J. Hach $ 20,004
President and Chief 17,513
Operating Officer 17,056
Loel J. Sirovy $ 21,512
Senior Vice President, 18,312
Operations 16,972
Jerry M. Churchill $ 20,324
Vice President, Domestic Sales 18,016
16,972
Gary R. Dreher $ 18,397
Vice President and 15,366
Chief Financial Officer 14,797
- ------------------------
(1) The aggregate amount of perquisites and other personal benefits did not
exceed the lesser of $50,000 or ten percent (10%) of the total annual salary
and bonus reported for any of the named officers, and is therefore not
included.
(2) No named executive officer had any restricted stock holdings as of April 30,
1996. The Company has not granted any stock appreciation rights to any named
executive officer. Kathryn Hach-Darrow does not participate in the Company's
stock option plans.
(3) The amounts reported as "All Other Compensation" include the following
payments or accruals under the Company's benefit and incentive plans:
(i) Company contributions during fiscal 1996 under the Company's Profit
Sharing Plan (including Company contributions made pursuant to Section
401(k) of the Internal Revenue Code) as follows: K. Hach-Darrow $11,384,
B. Hach $10,015, L. Sirovy $11,094, J. Churchill $10,316 and G. Dreher
$9,806. Under the Plan, all domestic full time employees of the Company
with six or more months of service are eligible to participate. The
Company's annual contribution (after allocation of the matching
contribution described below) is determined by the Board of Directors and
is proportionately allocated to participants' accounts based on their
annual
11
compensation not in excess of $150,000. Participants' accounts
attributable to the Company's contribution vest at the rate of 10% for
each of the first four years of service and 20% for each of the next
three years of service. The Profit Sharing Plan includes a voluntary
salary reduction provision as authorized by Section 401(k) of the
Internal Revenue Code. All employee contributions and any contributions
by the Company that the Board of Directors determines are pursuant to
Section 401(k), vest immediately. The Plan provides for a matching
contribution in the form of Company stock for all contributions by
employees with one or more years of service in an amount of 50% of the
employee's yearly contribution up to a maximum of 2.0% of the employee's
yearly compensation. Matching contributions by the Company vest at the
rate of 10% for each of the first four years of service and 20% for each
of the next three years of service. All vested amounts allocated to the
participants' accounts are distributable upon retirement at or after age
65, termination of employment, permanent disability or death.
(ii) Company contributions during fiscal 1996 to the Employee Stock
Ownership Plan ("ESOP") as follows: K. Hach-Darrow $3,754, B. Hach
$4,293, L. Sirovy $3,659, J. Churchill $3,402 and G. Dreher $3,234. All
domestic full time employees of the Company with six or more months of
service are eligible to participate in the ESOP. The Company's annual
contribution to the ESOP is determined by the Board of Directors and is
proportionately allocated to participants' accounts based on their annual
compensation not in excess of $150,000. Except for participants' accounts
transferred in 1989 from an earlier employee stock ownership plan, which
are fully vested, participants' accounts in the ESOP vest at the rate of
10% for each of the participant's first four years of service with the
Company and 20% for each of the participant's next three years of
service. The ESOP invests primarily in Company stock. All amounts in the
participants' accounts in the ESOP are distributable upon retirement at
or after age 65, termination of employment, permanent disability or
death.
(iii) Imputed compensation under Group Term Life Insurance Program as
follows: K. Hach-Darrow $5,099, B. Hach $696, L. Sirovy $1,759, J.
Churchill $1,606 and G. Dreher $357. The program, which is generally
available to all employees, provides coverage during employment equal to
twice salary (with a maximum benefit of $250,000). The above amounts of
premiums paid by the Company on behalf of named executive officers under
the program represent amounts imputed as compensation to such executive
officers under the Internal Revenue Code of 1986, as amended.
(iv) Company contributions during the 1996 fiscal year to the Company's
Deferred Compensation Plan as follows: K. Hach-Darrow $0, B. Hach $5,000,
L. Sirovy $5,000, J. Churchill $5,000 and G. Dreher $5,000. Company
contributions on behalf of eligible key employees under the Deferred
Compensation Plan are determined on an annual basis in the sole
discretion of the Plan's administration committee, which is appointed by
the Board of Directors. The Deferred Compensation Plan also allows all
eligible key employees to defer up to 25% of their base compensation and
up to 100% of bonuses and certain other payments on a tax favored basis
into a tax exempt trust pursuant to Internal Revenue Service guidelines.
The employee accounts are invested by the Plan trustee in an investment
fund as directed by the administration committee. The Deferred
Compensation Plan is the result of March 1, 1995 amendment and
reconstitution of the Company's Supplemental Executive Benefits Plan
("SEBP"), which was first established in 1988. Compensation deferred
under the Deferred Compensation Plan at the election of the named
executives are included above in the category (e.g., salary, bonus) and
year it would otherwise have been reported had it not been deferred.
12
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The Company maintains the 1993 Stock Option Plan (the "Option Plan"). The
Option Plan is administered by the Compensation Committee of the Company's Board
of Directors which, in its sole discretion, determines the persons from among
salaried, full-time employees owning less than five percent of the Company's
outstanding stock to whom options, either incentive or non-incentive as defined
in Section 422 of the Internal Revenue Code, will be granted and the terms and
conditions of each grant within the limits imposed by the Option Plan. The
following table provides information relating to options granted to the named
executive officers during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
--------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED
SECURITIES OPTIONS EXERCISE ANNUAL RATES OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE ($/ EXPIRATION -------------------------------------------
NAME GRANTED (#) FISCAL YEAR SH) DATE 0% 5% 10%
- ---------------------------- ----------- ------------- --------- ------------- --------- -------------- ----------------
Kathryn C. Hach............. 0 -- -- -- -- -- --
Bruce J. Hach............... 12,000 5.3% $ 16.125 11/21/2000 $ 0 $ 53,460 $ 118,134
Loel J. Sirovy.............. 12,000 5.3% 16.125 11/21/2000 0 53,460 118,134
Jerry M. Churchill.......... 10,000 4.4% 16.125 11/21/2000 0 44,550 98,445
Gary R. Dreher.............. 12,000 5.3% 16.125 11/21/2000 0 53,460 118,134
All Shareholders' Potential
Realizable Value(2)........ $ 0 $ 50,621,000 $ 111,866,000
- ------------------------
(1) Based on 225,000 options granted to employees in fiscal 1996.
(2) The potential realizable value to all shareholders at the stated
appreciation rates is based on shares outstanding at November 21, 1995,
assuming such shares were purchased for $16.125 on November 21, 1995 and
held until November 21, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table shows information concerning the exercise of stock
options by each of the named executive officers during fiscal 1996, and the
value of all remaining exercisable and unexercisable options at April 30, 1996,
on a pre-tax basis.
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS
VALUE 4/30/96(#) AT 4/30/96($)(2)
SHARES ACQUIRED REALIZED -------------------------- --------------------------
NAME ON EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- --------- ----------- ------------- ----------- -------------
Kathryn Hach-Darrow........... 0 $ 0 0 0 $ 0 $ 0
Bruce J. Hach................. 0 0 6,667 15,333 7,000 17,000
Loel J. Sirovy................ 0 0 16,667 15,333 7,000 17,000
Jerry M. Churchill............ 1,187 11,917 10,000 12,500 5,250 13,875
Gary R. Dreher................ 864 6,083 16,667 15,333 7,000 17,000
- ------------------------
(1) The value realized on exercise of stock options is calculated by subtracting
the exercise price from the market value of the Company's Common Stock as of
the exercise date.
(2) The value of unexercised in-the-money options is equal to the market value
of the Common Stock at April 30, 1996 ($17.25 per share) less the per share
option exercise price multiplied by the number of exercisable or
unexercisable options, as the case may be.
14
EXECUTIVE EMPLOYMENT AGREEMENTS
Each of the executive officers identified below has an employment agreement
with the Company which comes into effect only upon a "Change of Control" of the
Company (as defined in the agreements), and thereafter provides for continued
employment of such individual for a three year term (which is automatically
renewed annually for one year unless either party gives six months prior written
notice of termination) (the "Employment Period") at an annual compensation rate,
and with such employment benefits, as in effect at the time of the commencement
of the Employment Period. The agreement, once triggered, further provides that
if the individual's employment is terminated by the Company (except for "cause"
as defined in the agreements) or if the individual should resign under certain
circumstances set forth in the agreements, the individual shall be entitled to
certain payments described below. The executive officers who have employment
contracts are Messrs. Hach, Sirovy, Churchill, Dreher, Peterson, Thompson,
Privette and Ogan, and their current annual compensation rates range from
$93,500 to 165,000.
The Board of Directors believes that the Agreements assure fair treatment of
the executive officers in relation to their careers with the Company by assuring
them of some financial security. The Agreements also protect the stockholders by
encouraging the executive officers to continue their attention to their duties
without distraction in a potentially disturbing circumstance and neutralizing
any bias they might have in evaluating proposals for the acquisition of the
Company.
Upon the death of an individual, the Company is obligated to make payments
to the beneficiary or representative of the deceased at a rate equal to one-half
of the annual compensation rate in effect on the date of death, until the end of
the term of the agreement (without reduction of any life insurance benefits
payable directly to the deceased's beneficiaries or estate).
If the individual's employment is terminated by the Company by reason of
such individual's disability, the Company is obligated to pay a salary to such
individual at the annual rate in effect upon termination for the remaining term
of the Agreement.
The agreements entitle an individual to resign during the Employment Period
if, without his consent in any circumstance other than his disability, his
office in the Company or the geographical area of his employment should be
changed. Upon such resignation, the individual is entitled to a lump sum payment
equal to the aggregate cash compensation (based on his annual compensation rate
at the time of termination) which would have been payable to the individual over
the remaining term of the agreement had it not been terminated, plus any other
benefits which would have been payable to him during such period (including the
fair market value of any stock options or other stock rights granted him under
any stock plans of the Company).
Each agreement includes a covenant by the individual providing that if the
individual's employment terminates for any reason he will not for a period of
twelve months following the termination of his employment engage directly or
indirectly in any competitive business, nor will he at any time following
termination use the confidential information of the Company.
15
REPORT OF THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and recommending the compensation and other remuneration afforded the
named executive officers of the Company, including the grants of stock options
under the Company's Stock Option Plans. All decisions by the Compensation
Committee relating to the compensation of the Company's named executive officers
are reviewed and approved by the full Board.
In carrying out its responsibilities in fiscal 1996, the Compensation
Committee, as it has in prior years, considered the following:
- Financial performance of the Company as a whole on both a long-term and
short-term basis (including the increases in operating income, sales,
shareholder values, and returns on assets and equity achieved by the
Company in the prior fiscal year)
- The Company's evaluation of the executive officers with respect to overall
job performance, including, with respect to each individual executive
officer, the financial performance of that area of the Company, if any,
for which such executive officer is responsible
- The Company's policy and practices for compensation of employees generally
- Review of general compensation surveys prepared by executive compensation
consultants and available to the public
- Such other material information which the Compensation Committee deems
appropriate in the case of any particular individual
GENERAL COMPENSATION POLICY
The Committee's fundamental compensation policy is to make a substantial
portion of an executive's compensation contingent upon the financial performance
of the Company. Accordingly, in addition to each executive's base salary, the
Company offers bonuses and stock option awards which are tied to the Company's
and executive's performance goals. Prior to November, 1995, executive
compensation consisted of salary, benefits and stock options. Effective
November, 1995, the Board of Directors approved a new compensation package for
key management which added an incentive compensation component. The Compensation
Committee believes that providing incentives to the executive officers benefits
stockholders by aligning the long-term interests of stockholders and employees.
There are four components of key management's compensation package:
- Salary
- Benefits, which include only medical, dental and life insurance and
participation in a profit sharing and 401(k) plan and a deferred
compensation plan
- eligibility for equity purchase on more favorable terms than those
available to the outside common stockholder (through the 1993 Stock Option
Plan and through the Company's Employee Stock Purchase Plan)
- Eligibility for annual incentive compensation
16
FACTORS
Several of the more important factors which were considered in establishing
the components of each executive officer's compensation package for the 1996
fiscal year are summarized below. Additional factors were also taken into
account, and the Compensation Committee may, in its discretion, apply entirely
different factors, particularly different measures of financial performance, in
setting executive compensation for future fiscal years. However, all
compensation decisions will be designed to further the general compensation
policy indicated above.
BASE SALARY
Except as provided below with respect to Mrs. Hach-Darrow, the base salary
for each executive officer is set on the basis of personal performance, the
salary levels in effect for comparable positions with the Company's principal
competitors and the Company's financial performance relative to such
competitors. Factors relating to individual performance that are assessed in
setting base compensation are based on the particular duties and areas of
responsibility of the individual executive officer. Factors relating to the
Company's financial performance that may be related to increasing or decreasing
base salary include revenues and earnings. The establishment of base
compensation involves a subjective assessment and weighing of the foregoing
criteria and is not based on any specific formula.
ANNUAL INCENTIVE COMPENSATION
In November, 1995, the Company established the Hach Company Officer
Incentive Bonus Plan (the "Incentive Bonus Plan") which is an annual incentive
plan that provides cash compensation up to a maximum percentage of annual base
salary based on the achievement of goals set by the Compensation Committee for
the Company and the elected executive officers that are designated on a
year-to-year basis by the Compensation Committee for participation. The
overriding principle of the Incentive Bonus Plan is to motivate and reward key
management to achieve above average results. The bonus element of the
participant's total compensation package is therefore, more results-oriented
than any other element.
There were six participants in the Incentive Bonus Plan in fiscal 1996. All
named executive officers, other than Kathryn Hach-Darrow and Bruce Hach, were
designated by the Compensation Committee as eligible for fiscal year 1996
awards. The Incentive Bonus Plan is offered only to elected officers because
they can influence corporate results more than the other employee group. The
Incentive Bonus Plan is administered by the Compensation Committee. The
Compensation Committee may amend the Incentive Bonus Plan or discontinue the
Incentive Bonus Plan at any time.
For the last six months of fiscal 1996, the Compensation Committee
established corporate performance goals for net sales growth, increases in net
income as a percentage of net sales, and economic value added. Individual
management goals were set for each executive, depending on his or her particular
responsibilities and strategic objectives for the year. For the six months of
fiscal 1996, the maximum percentage of base salary which can be paid to an
executive under the Incentive Bonus Plan was set at 12.5% (and the maximum
percentage for the full 1997 fiscal year will be 25%). As of the date of this
report, the determination as to whether performance goals under the Incentive
Bonus Plan have been met has not been completed and consequently, no awards have
been paid under the Incentive Bonus Plan based upon fiscal 1996 year
performance. Any bonus amounts paid to named executive officers pursuant to the
Incentive Bonus Plan after the date hereof will be reported, as required, in the
Summary Compensation Table included in next year's proxy statement.
17
STOCK OPTIONS
All stock options are granted under the 1993 Plan and are intended to align
the interests of each officer-optionee with those of the stockholders and
provide them with a significant incentive to manage the Company from the
perspective of an owner with an equity interest in the success of the business.
The size of the option grant made to each executive officer under the 1993 Plan
is based upon that individual's current position with the Company, internal
comparability with option grants made to other Company executives and the
individual's potential for future responsibility and promotion over the option
term.
During fiscal year 1996, the Compensation Committee granted those stock
option awards to the named executive officers as are set forth in the option
grant table above under the heading "Executive Compensation-Stock Option Grants
in the Last Fiscal Year".
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee meets without Kathryn Hach-Darrow present to
evaluate her performance and to determine its recommendations to the Board of
Directors with respect to her compensation as the Chief Executive Officer. Mrs.
Hach-Darrow, other than by her participation in general employee benefit
programs, has been compensated by the Company almost solely through her annual
salary. She is not eligible to participate in the Company's Stock Option Plans,
Officer Incentive Bonus Plan or Employee Stock Purchase Plan.
The Compensation Committee continues to believe that the compensation paid
to Kathryn Hach-Darrow does not adequately reflect the value of Mrs.
Hach-Darrow's contributions to the Company's performance and the returns
recognized by the Company's shareholders and has not been competitive with the
compensation paid to the chief executive officers of other manufacturing
companies of comparable sales size. Notwithstanding the position of the
Compensation Committee, Mrs. Hach-Darrow, as she has in most prior years, has
again this year declined the increases in her compensation recommended by the
Compensation Committee. Consequently, Mrs. Hach-Darrow's fiscal 1996 base salary
remained at $125,000, the same amount she received in fiscal years 1993, 1994
and 1995.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the named executive officers. Qualifying performance based compensation
is not subject to the deduction limit if certain requirements are met.
The Compensation Committee continues to monitor qualifying compensation paid
to its named executive officers for deductibility under the Section 162(m)
limits for executive salaries. Compensation paid to such persons did not exceed
this limitation in fiscal year 1996 and is not expected to do so in the
forseeable future.
18
SUMMARY
The Compensation Committee believes that the policies and objectives of the
compensation programs at the Company serve to keep shareholder and management
interests in building value closely aligned and are consistent with programs
maintained by comparable industrial companies. The Company's senior leadership
team continues to move aggressively to position the organization for global
competition. Their efforts during fiscal 1996 have made the Company stronger and
well-positioned for world-wide opportunities.
COMPENSATION COMMITTEE:
John N. McConnell, Chairman
Kathryn Hach-Darrow
Joseph V. Schwan
Linda O. Doty
19
PERFORMANCE GRAPH
The following graph prepared by the Center for Research in Security Prices
compares the cumulative total shareholder return on the Common Stock of the
Company from April 30, 1991, through April 30, 1996, with the cumulative total
shareholder return for the Standard and Poor's 500 Index and the Company's
Self-Determined Peer Group (as defined below) over the same period, assuming the
investment of $100 on April 30, 1991 and the full reinvestment of all dividends.
The companies that comprise the Company's Self-Determined Peer Group are as
follows: Betz Laboratories, Inc.; Dionics Corporation; Ionics, Inc.; Isco, Inc.;
Millipore Corporation; OI Corporation; Osmonics, Inc.; Perkin Elmer Corporation;
Thermo Instrument Systems, Inc. and VWR Corporation.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
LEGEND
CRSP Total Returns Index for:
Hach Company S&P 500 Stocks Self-Determined Peer Group
4/30/91 100.0 100.0 100.0
4/30/92 160.5 114.0 106.8
4/30/93 158.2 124.5 107.0
4/29/94 117.9 130.8 118.0
4/28/95 131.6 153.8 131.8
4/30/96 143.9 200.7 202.0
Notes:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization
on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is
not
a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on
04/30/91.
20
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served as members of the Compensation Committee of
the Company's Board of Directors during fiscal 1996: Kathryn Hach-Darrow, John
N. McConnell, Joseph V. Schwan and Linda O. Doty.
Kathryn Hach-Darrow is the Chief Executive Officer of the Company. Although
Mrs. Hach-Darrow served on the Compensation Committee she did not participate in
any decisions regarding her own compensation as an executive officer other than
as described in the last sentence of the Compensation Committee's Report above.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company, acting upon the recommendation of the
Audit Committee, has selected the firm of Coopers & Lybrand L.L.P. as
independent certified public accountants of the Company and its subsidiaries for
the fiscal year 1997. Coopers & Lybrand L.L.P. also served as independent
certified public accountants during the fiscal year 1996. A representative of
Coopers & Lybrand L.L.P. is expected to be present at the meeting and will be
afforded the opportunity to make a statement if he or she desires to do so. He
or she will also respond to appropriate questions raised by the stockholders.
1997 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1997 Annual Meeting of the
Stockholders to be eligible for inclusion in the Company's proxy statement for
such meeting, they must be received by the Company at its principal office in
Loveland, Colorado prior to March 25, 1997.
GENERAL
The management knows of no other matters which may come before the meeting.
However, if any other matters are properly brought before the meeting, the
persons named in the endorsed proxy or their substitutes will vote in accordance
with their best judgment on such matters.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies by telephone or otherwise. The Company will reimburse brokers or
other persons holding stock in their names or in the names of their nominees for
their reasonable charges and expenses in forwarding proxies and proxy materials
to the beneficial owners of such stock.
A copy of the Company's 1996 Annual Report to the United States Securities
and Exchange Commission on Form 10-K may be obtained without charge by writing
to the Company at P.O. Box 389, Loveland, Colorado 80539, attention Mr. Gary R.
Dreher, Vice President and Chief Financial Officer.
By Order of the Board of Directors
ROBERT O. CASE, SECRETARY
July 22, 1996
21
EXHIBIT A
HACH COMPANY
1995 NON-EMPLOYEE DIRECTOR STOCK PLAN
ARTICLE I -- PURPOSE OF THE PLAN
The purpose of the Hach Company 1995 Non-Employee Director Stock Plan is to
promote the long-term growth of Hach Company by increasing the proprietary
interest of Non-Employee Directors in Hach Company and to attract and retain
highly qualified and capable Non-Employee Directors.
ARTICLE II -- DEFINITIONS
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
2.1 "ANNUAL RETAINER" means the annual cash retainer fee payable by the
Corporation to a Non-Employee Director for services as a director of the
Corporation, as such amount may be changed from time to time.
2.2 "AWARD" means an award granted to a Non-Employee Director under the
Plan in the form of Options or Shares, or any combination thereof.
2.3 "BOARD" means the Board of Directors of Hach Company.
2.4 "CORPORATION" means Hach Company.
2.5 "FAIR MARKET VALUE" shall mean the value of one Share of Hach stock
determined as follows:
(a) If the shares are traded on an exchange, the price at which Shares
traded at the close of business on the date of valuation; or
(b) If the Shares are traded over-the-counter on the NASDAQ System, the
closing price if one is available, or the mean between the bid and
asked prices on said System at the close of business on the date of
valuation; or
(c) if neither (a) nor (b) above applies, the fair market value as
determined by the Board or the Committee in good faith. Such
determination shall be conclusive and binding on all persons.
2.6 "OPTION" means an Option to purchase Shares awarded under Article VIII
or IX which does not meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, or any successor law.
2.7 "OPTION GRANT DATE" means the date upon which an Option is granted to
a Non-Employee Director.
2.8 "OPTIONEE" means a Non-Employee Director of the Corporation to whom an
Option has been granted or, in the event of such Non-Employee Director's death
prior to the expiration of an Option, such Non-Employee Director's executor,
administrator, beneficiary or similar person, or, in the event of a transfer
permitted by Article VII hereof, such permitted transferee.
2.9 "NON-EMPLOYEE DIRECTOR" means a director of the Corporation who is not
an employee of the Corporation or any subsidiary of the Corporation.
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2.10 "PLAN" means the Hach Company 1995 Non-Employee Director Stock Plan,
as amended and restated from time to time.
2.11 "STOCK AWARD DATE" means the date on which Shares are awarded to a
Non-Employee Director.
2.12 "SHARES" means shares of the Common Stock, par value $1.00 per share,
of the Corporation.
2.13 "STOCK OPTION AGREEMENT" means a written agreement between a
Non-Employee Director and the Corporation evidencing an Option.
ARTICLE III -- ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATOR OF THE PLAN. The Plan shall be administered by a
Committee appointed by the Board and consisting of two or more Directors who are
not eligible to participate in the Plan ("Committee").
3.2 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have full power and authority to: (i) interpret and construe the
Plan and adopt such rules and regulations as it shall deem necessary and
advisable to implement and administer the Plan and (ii) designate persons other
than members of the Committee to carry out its responsibilities, subject to such
limitations, restrictions and conditions as it may prescribe, such
determinations to be made in accordance with the Committee's best business
judgment as to the best interests of the Corporation and its stockholders and in
accordance with the purposes of the Plan, provided, however that the Committee
shall have no discretion with respect to the eligibility or selection of
Non-Employee Directors to receive options under the Plan, the number of shares
of stock subject to any such options or the Plan, or the purchase price
thereunder, nor shall the Committee have authority to take any action or make
any determination that would materially increase the benefits accruing to
participants under the Plan. The Committee may delegate administrative duties
under the Plan to one or more agents as it shall deem necessary or advisable.
3.3 DETERMINATIONS OF COMMITTEE. A majority of the Committee shall
constitute a quorum at any meeting of the Committee, and all determinations of
the Committee shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or a meeting of the
Committee by a written consent signed by all members of the Committee.
3.4 EFFECT OF COMMITTEE DETERMINATIONS. No member of the Committee or the
Board shall be personally liable for any action or determination made in good
faith with respect to the Plan or any Award or to any settlement of any dispute
between a Non-Employee Director and the Corporation. Any decision or action
taken by the Committee or the Board with respect to an Award or the
administration or interpretation of the Plan shall be conclusive and binding
upon all persons.
ARTICLE IV -- AWARDS UNDER THE PLAN
Awards in the form of Options shall be granted to Non-Employee Directors in
accordance with Article VIII. Awards in the form of Options or Shares, or a
combination thereof, may be granted to
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Non-Employee Directors in accordance with Article IX. Each Option granted under
the Plan shall be evidenced by a Stock Option Agreement in such form and
containing such terms and conditions (not inconsistent with the Plan) as the
Committee shall adopt.
ARTICLE V -- ELIGIBILITY
Non-Employee Directors of the Corporation shall be eligible to participate
in the Plan in accordance with Articles VIII and IX.
ARTICLE VI -- SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Article XII, the aggregate number of
Shares which may be issued upon the award of Shares and the exercise of Options
shall not exceed one hundred fifty thousand (150,000) Shares. To the extent that
Shares subject to an outstanding Option are not issued or delivered by reason of
the expiration, termination, cancellation or forfeiture of such Option or by
reason of the delivery of Shares (either actually or by attestation) to pay all
or a portion of the exercise price of such Option, then such Shares shall again
be available under the Plan.
ARTICLE VII -- NON-TRANSFERABILITY OF OPTIONS
All Options granted under the Plan shall not be transferable by a
Non-Employee Director during his or her lifetime and may not be assigned,
exchanged, pledged, transferred or otherwise encumbered or disposed of except by
court order, will or by the laws of descent and distribution. Notwithstanding
the foregoing, in the event Options may be transferable without failing to
comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
then each Option shall be transferable to the extent set forth in the related
Stock Option Agreement, as determined by the Committee (provided that all
Options granted under Article VIII with the same Option Grant Date shall have
identical provisions relating to the transferability of such Options). In the
event that any Option is thereafter transferred as permitted by the preceding
sentence, the permitted transferee thereof shall be deemed the Optionee
hereunder. Options shall be exercisable during the Optionee's lifetime only by
the Optionee or by the Optionee's guardian, legal representative or similar
person.
ARTICLE VIII -- NON-ELECTIVE OPTIONS
Each Non-Employee Director shall be granted Options, subject to the
following terms and conditions.
8.1 TIME OF GRANT. On the date of the adoption of this Plan by the Board
each present Non-Employee Director shall be granted an Option to purchase Five
Thousand (5,000) Shares. Each Non-Employee Director who is first elected or
begins to serve as a Non-Employee Director after the adoption of this Plan by
the Board shall be granted an Option to purchase Two Thousand (2,000) Shares on
the date he or she is elected. On the first business day of September of each
year (or, if later, on the date on which a person is first elected or begins to
serve as a Non-employee director), each person who is a Non-Employee Director
shall be automatically granted an Option to purchase One Thousand (1,000) Shares
which number shall be pro-rated if such Non-Employee Director is first elected
or begins to serve as a Non-Employee Director on a date other than the date of
an annual meeting of stockholders.
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8.2 PURCHASE PRICE. The purchase price per Share under each Option granted
pursuant to this Article shall be 100% of the Fair Market Value per Share on the
Option Grant Date.
8.3 EXERCISE OF OPTIONS. Each Option shall be fully exercisable on and
after that date which is six months after the Option Grant Date and, subject to
Article X, shall not be exercisable prior to such date. In no event shall the
period of time over which the Option may be exercised exceed ten years from the
Option Grant Date. An Option, or portion thereof, may be exercised in whole or
in part only with respect to whole Shares.
Shares shall be issued to the Optionee pursuant to the exercise of an Option
only upon receipt by the Corporation from the Optionee of payment in full either
in cash or by surrendering (or attesting to the ownership of) Shares together
with proof acceptable to the Committee that such Shares have been owned by the
Optionee for at least six months prior to the date of exercise of the Option, or
a combination of cash and Shares, in an amount or having a combined value equal
to the aggregate purchase price for the Shares subject to the Option or portion
thereof being exercised. The Shares issued to an Optionee for the portion of any
Option exercised by attesting to the ownership of Shares shall not exceed the
number of Shares issuable as a result of such exercise (determined as though
payment in full therefor were being made in cash) less the number of Shares for
which attestation of ownership is submitted. The value of owned Shares submitted
(directly or by attestation) in full or partial payment for the Shares purchased
upon exercise of an Option shall be equal to the aggregate Fair Market Value of
such owned Shares on the date of the exercise of such Option.
8.4 TERMINATION OF SERVICE. In the event of the termination of service on
the Board by the holder of any Option by reason of voluntary resignation, (other
than for disability or mandatory retirement) or failure, as a nominee, to be
elected at an annual meeting of stockholders, the then outstanding Options of
such holder shall be exercisable on their stated exercisable date and shall
expire three years after such termination, or on their stated expiration date,
whichever occurs first. In the case of removal for cause, the then outstanding
Options of such holder shall be exercisable only to the extent that they were
exercisable on the date of such removal and shall expire six months after such
removal or on their stated expiration date, whichever occurs first. Options that
are not exercisable on the date of such removal shall be forfeited.
8.5 RETIREMENT. In the event of termination of service by reason of
mandatory retirement pursuant to Board policy, the then outstanding Options
shall be exercisable on their stated exercisable dates and shall expire on their
stated expiration dates. In the case of retirement prior to the retirement date
required by mandatory Board policy, all Options outstanding on the retirement
date shall be exercisable on their stated exercisable date and shall be expire
three years after the retirement date, or on their stated expiration date,
whichever comes first.
8.6 DISABILITY. In the event of termination of service by reason of
disability (as defined herein), the outstanding Options shall be exercisable on
their stated exercisable dates and shall expire on their stated expiration
dates. "Disability" as used herein shall mean an Optionee's inability to engage
in any substantial gainful activity because of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted, or can be expected to last, for a continuous period of six months or
longer.
8.7 DEATH. In the event of the death of the holder of any Option, each of
the then outstanding Options of such holder shall become immediately
exercisable, and shall be exercisable by the holder's
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beneficiary at any time until the expiration date of the Option (as may be
adjusted pursuant to Sections 8.4 or 8.5). Optionee shall designate
beneficiaries in accordance with procedures established by the Committee.
8.8 PAYMENT OF TAX WITHHOLDING. In order to enable the Corporation to meet
any applicable federal, state or local withholding tax requirements arising as a
result of the exercise of an Option, the Optionee shall pay the Corporation the
amount of tax to be withheld or may elect to satisfy such obligation by
delivering to the Corporation Shares owned by the Optionee for six months prior
to exercising the Option, or by making a payment to the Corporation consisting
of a combination of cash and such Shares. The value of any Share of common stock
delivered to the Corporation pursuant to this Section 8.8 shall be the Fair
Market Value on the date to be used to determine the amount of tax to be
withheld.
ARTICLE IX -- ELECTIVE OPTIONS AND SHARES
Each Non-Employee Director shall be granted Options or Shares, or a
combination thereof, subject to the following terms and conditions:
9.1 TIME OF GRANT. On the first business day of September of each year,
Options or Shares, or a combination thereof, shall be granted to each
Non-Employee Director who, at least six months prior thereto, files with the
Committee or its designee a written election to receive Options or Shares, or a
combination thereof, in lieu of all or a portion of such Non-Employee Director's
Annual Retainer. In the event a Non-Employee Director does not file a written
election in accordance with the preceding sentence by reason of becoming a
Non-Employee Director after the date which is six months prior to the first
business day of September in any year, Options or Shares, or a combination
thereof, shall be granted to such Non-Employee Director on the first day (the
"Effective Date") which is six months after the date such Non-Employee Director
files with the Committee or its designee a written election to receive Options
or Shares, or a combination thereof, in lieu of all or a portion of such
Non-Employee Director's Annual Retainer; provided, however, that such election
may apply only to the portion of such Non-Employee Director's Annual Retainer
determined by multiplying such Non-Employee Director's Annual Retainer by a
fraction, the numerator of which is the number of days from and including the
Effective Date to and including the last day of the period for which such Annual
Retainer would otherwise be payable, and the denominator of which is 365 or 366,
as the case may be. An election pursuant to the first sentence of this Section
9.1 may be revoked or changed only on or prior to the date which is six months
prior to the first business day of the following September. An election pursuant
to the second sentence of this Section 9.1 shall be irrevocable.
9.2 NUMBER AND TERMS OF OPTIONS. The number of Shares subject to an Option
granted pursuant to this Article shall be the number of whole Shares equal to
(i) the product of four (4) times the portion of the Annual Retainer which the
Non-Employee Director has elected pursuant to Section 9.1 shall be payable in
Options, divided by (ii) the Fair Market Value per Share on the Option Grant
Date. Any fraction of a Share shall be disregarded and the remaining amount of
such Annual Retainer shall be paid in cash. The purchase price per share under
each Option granted pursuant to this Article shall be 100% of the Fair Market
Value per Share on the Option Grant date. Each Option granted pursuant to this
Article shall be exercisable in accordance with and subject to the terms and
provisions of Article VIII other than Section 8.1 thereof.
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9.3 NUMBER OF SHARES. The Number of Shares granted pursuant to this
Article shall be the number of whole Shares equal to (i) the portion of the
Annual Retainer which the Non-Employee Director has elected pursuant to Section
9.1 shall be payable in Shares, divided by (ii) the Fair Market Value per Share
on the Stock Award Date. Any fraction of a Share shall be disregarded and the
remaining amount of such Annual Retainer shall be paid in cash. Upon an Award of
Shares to a Non-Employee Director, the stock certificate representing such
Shares shall be issued and transferred to the Non-Employee Director, whereupon
the Non-Employee Director shall become a stockholder of the Corporation with
respect to such Shares and shall be entitled to vote the Shares.
ARTICLE X -- CHANGE OF CONTROL
10.1 EFFECT OF CHANGE OF CONTROL. Upon the occurrence of an event of
"Change of Control", as defined below, any and all outstanding Options shall
become immediately exercisable.
10.2 DEFINITION OF CHANGE CONTROL. A "Change of Control" shall occur when:
(a) the stockholders of the Corporation approve a definitive agreement
or plan to merge or consolidate the Corporation with or into
another corporation (other than a merger or consolidation which would result
in the Voting Stock (as defined below) of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation), or to sell, or otherwise
dispose of, all or substantially all of the Corporation's property and
assets, or to liquidate the Corporation; or
(b) the individuals who are Continuing Directors of the Corporation (as
defined below) cease for any reason to constitute at least a
majority of the Board of the Corporation.
The term "Continuing Director" means (i) any member of the Board who is a
member of the Board on September 1, 1995 or (ii) any person who subsequently
becomes a member of the Board whose nomination for election or election to the
Board is recommended or approved by a majority of the Continuing Directors. The
term "Voting Stock" means all capital stock of the Corporation which by its
terms may be voted on all matters submitted to stockholders of the Corporation
generally.
ARTICLE XI -- AMENDMENT AND TERMINATION
The Board may amend the Plan from time to time or terminate the Plan at any
time; provided, however, that no action authorized by this Article shall
adversely change the terms and conditions of an outstanding Option without the
Optionee's consent and, subject to Article XII, the number of Shares subject to
an Option granted under Article VIII, the purchase price therefor, the date of
grant of any such Option and the termination provisions relating to such Option,
shall not be amended more than once every six months, other than to comply with
changes in the Internal Revenue Code of 1986, as amended, or any successor law,
or the Employee Retirement Income Security Act of 1974, as amended, or any
successor law, or the rules and regulations thereunder.
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ARTICLE XII -- ADJUSTMENT PROVISIONS
12.1 If the Corporation shall at any time change the number of issued
Shares without new consideration to the Corporation (such as by stock dividend,
stock split, recapitalization, reorganization, exchange of shares, liquidation,
combination or other change in corporate structure affecting the Shares) or make
a distribution of cash or property which has a substantial impact on the value
of issued Shares, the total number of Shares reserved for issuance under the
Plan shall be appropriately adjusted and the number of Shares covered by each
outstanding Option and the purchase price per Share under each outstanding
Option and the number of Shares underlying Options to be issued annually
pursuant to Section 8.1 shall be adjusted so that the aggregate consideration
payable to the Corporation and the value of each such Option shall not be
changed.
12.2 Notwithstanding any other provision of the Plan, and without affecting
the number of Shares reserved or available hereunder, the Committee shall
authorize the issuance, continuation or assumption of outstanding Options or
provide for other equitable adjustments after changes in the Shares resulting
from any merger, consolidation, sale of assets, acquisition of property or
stock, recapitalization, reorganization or similar occurrence in which the
Corporation is the continuing or surviving corporation, upon such terms and
conditions as it may deem necessary to preserve Optionees' rights under the
Plan.
12.3 In the case of any sale of assets, merger, consolidation or
combination of the Corporation with or into another corporation other than a
transaction in which the Corporation is the continuing or surviving corporation
and which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property, or any combination
thereof (an "Acquisition"), any Optionee who holds an outstanding Option shall
have the right (subject to the provisions of the Plan and any limitation
applicable to the Option) thereafter and during the term of the Option, to
receive upon exercise thereof the Acquisition Consideration (as defined below)
receivable upon the Acquisition by a holder of the number of Shares which would
have been obtained upon exercise of the Option or portion thereof, as the case
may be, immediately prior to the Acquisition. The term "Acquisition
Consideration" shall mean the kind and amount of shares of the surviving or new
corporation, cash, securities, evidence of indebtedness, other property or any
combination thereof receivable in respect of one Share of the Corporation upon
consummation of an Acquisition.
ARTICLE XIII -- COMPLIANCE WITH SEC REGULATIONS
It is the Corporation's intent that the Plan comply in all respects with
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any related regulations. If any provision of this Plan is later found
not to be in compliance with such Rule and regulations, the provision shall be
deemed null and void. All grants and exercises of Options under this Plan shall
be executed in accordance with the requirements of Section 16 of the Exchange
Act and regulations promulgated thereunder.
ARTICLE XIV -- MISCELLANEOUS PROVISIONS
14.1 RIGHTS AS STOCKHOLDER. An Optionee under the Plan shall have no rights
as a holder of Corporation common stock with respect to Option grants hereunder,
unless and until certificates for shares of such stock are issued to the
Optionee, or such shares are credited to the Optionee's Account.
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14.2 COMPLIANCE WITH LEGAL REGULATIONS. During the term of the Plan and the
term of any Options granted under the Plan, the Corporation shall at all times
reserve and keep available such number of shares as may be issuable under the
Plan, and shall seek to obtain from any regulatory body having jurisdiction any
requisite authority required in the opinion of counsel for the Corporation in
order to grant Options to purchase Shares of Corporation common stock or to
issue such stock pursuant thereto. If in the opinion of counsel for the
Corporation the transfer, issue or sale of any shares of its stock under the
Plan shall not be lawful for any reason, including the inability of the
Corporation to obtain from any regulatory body having jurisdiction authority
deemed by such counsel to be necessary to such transfer, issuance or sale, the
Corporation shall not be obligated to transfer, issue or sell any such shares.
In any event, the Corporation shall not be obligated to transfer, issue or sell
any shares to any participant unless a registration statement which complies
with the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), is in effect at the time with respect to such Shares or other appropriate
action has been take under and pursuant to the terms and provisions of the
Securities Act, or the Corporation receives evidence satisfactory to the
Committee that the transfer, issuance or sale of such shares, in the absence of
an effective registration statement or other appropriate action, would not
constitute a violation of the terms and provisions of the Securities Act.
14.3 COSTS AND EXPENSES. The costs and expenses of administering the Plan
shall be borne by the Corporation and not charged to any Option or to any
Non-employee Director receiving an Option.
ARTICLE XV -- EFFECTIVE DATE
The Plan shall be submitted to the stockholders of the Corporation for
approval and, if approved by a majority of all the votes cast at the 1996 annual
meeting of stockholders, shall become effective as of the date of approval by
the Board. If stockholder approval is not obtained at the 1996 annual meeting of
stockholders, the Plan shall be nullified.
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PROXY
HACH COMPANY
ANNUAL MEETING OF SHAREHOLDERS - AUGUST 27, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) KATHRYN HACH-DARROW, BRUCE J. HACH and
ROBERT O. CASE, and each of them, each with the power of substitution, as
proxies and agents (""Proxy Agents''), in the name of the undersigned to
represent and to vote as designated below all of the shares of Common Stock
of HACH COMPANY (the ""Company''), held of record by the undersigned on
Wednesday, July 10, 1996, at the Annual Meeting of Shareholders to be held
on Tuesday, August 27, 1996, and any adjournment(s) thereof, the undersigned
herewith ratifying all that the said Proxy Agents may so do. The undersigned
further acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement in support of the Board's solicitation of proxies dated July 22,
1996.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED TO THE COMPANY, WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
(continued on reverse side)
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
1. ELECTION OF SEVEN DIRECTORS: FOR all the WITHHOLD
(INSTRUCTION: To withhold authority for any nominees listed AUTHORITY
individual nominee, strike a line through (except as marked to vote for
the nominee's name in the list below) to the contrary) all nominees
/ / / /
Kathryn Hach-Darrow, Bruce J. Hach,
Joseph V. Schwan, Fred W. Wenninger,
John N. McConnell, Linda O. Doty,
Gary R. Dreher
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S For Against Abstain
CERTIFICATE OF INCORPORATION TO REDUCE THE / / / / / /
COMPANY'S AUTHORIZED COMMON STOCK.
3. PROPOSAL TO APPROVE THE COMPANY'S 1995 EMPLOYEE For Against Abstain
STOCK PURCHASE PLAN. / / / / / /
4. In their discretion, the Proxy Agents are authorized to vote upon
such other business as may properly come before the meeting.
PLEASE DATE AND SIGN exactly as name(s) appears hereon and return
promptly in the accompanying prepaid envelope. If shares are held by joint
tenants or as community property, both shareholders should sign.
Dated: ________________________________, 1996
_____________________________________________
Signature
_____________________________________________
Signature