SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
GHS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
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GHS, INC.
1350 Piccard Drive
Rockville, Maryland 20850
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on October 23, 1997
The Board of Directors of GHS, Inc., a Delaware
corporation (the "Company"), hereby gives notice that the 1997
Annual Meeting of Stockholders of the Company will be held on
Thursday, October 23, 1997, at 9:00 a.m., Eastern Standard Time, at
The Woodfin Suites, Virginia Room, 1380 Piccard Drive, Rockville,
Maryland 20850, for the following purposes:
1. To elect three persons to serve on the Company's Board of
Directors until the next Annual Meeting of Stockholders or until
their successors are duly elected and qualified as provided in the
Company's By-laws.
2. To consider and vote upon a proposal to approve the
Company's 1997 Stock Option Plan.
3. To ratify the selection by the Board of Directors of
Richard A. Eisner, LLP, as the Company's independent public
accountants for the fiscal year ending December 31, 1997.
4. To transact such other and further business as may
properly come before the meeting or any adjournment(s) thereof.
Stockholders of record at the close of business on
September 8, 1997 are entitled to notice of and to vote at the
meeting. If you attend the meeting you may vote in person if you
wish, even though you have previously returned your proxy. A copy
of the Company's Proxy Statement and its Annual Report on Form 10-K
for its year ended December 31, 1996 are enclosed herewith.
By Order of The Board of Directors
Alan Gold, Chairman and President
September 19, 1997
GHS, INC.
1350 Piccard Drive
Rockville, Maryland 20850
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
on October 23, 1997
This Proxy Statement and the accompanying Notice of
Annual Meeting of Stockholders and Annual Report to Stockholders
for the year ended December 31, 1996 are being furnished in
connection with the solicitation by the Board of Directors of GHS,
Inc., a Delaware corporation (the "Company"), of proxies for use at
the 1997 Annual Meeting of Stockholders (the "Annual Meeting") of
the Company to be held on Thursday, October 23, 1997, at 9:00 a.m.,
Eastern Standard Time, at The Woodfin Suites, Virginia Room, 1380
Piccard Drive, Rockville, Maryland 20850, and at any adjournments
thereof. This Proxy Statement and the enclosed proxy are first
being sent to stockholders on or about September 22, 1997.
The close of business on September 8, 1997 has been
selected as the record date (the "Record Date") for determining the
holders of outstanding shares of the Company's common stock, par
value $.01 per share (the "Common Stock"), entitled to receive
notice of and vote at the Annual Meeting. On the Record Date,
there were 6,979,160 shares of Common Stock outstanding and
approximately 114 holders of record. Holders of Common Stock are
entitled to one vote per share.
The presence in person or by properly executed proxy of
the record holders of a majority of the outstanding shares of
Common Stock will constitute a quorum at the Annual Meeting.
Elections of directors will be determined by a plurality of vote of
all shares present in person or by properly executed proxy and
voting at the Annual Meeting. The affirmative vote of the record
holders of a majority of the Common Stock present in person or by
proxy at the Annual Meeting and voting is required to approve the
Company's 1997 Stock Option Plan and to ratify the selection of the
independent public accountants.
Unless proxies have been previously revoked, all shares
represented by properly executed proxies will be voted at the
Annual Meeting in accordance with the directions given on such
proxies. Any person giving a proxy has the power to revoke it, in
writing delivered to the Secretary of the Company at the address
given above, at any time prior to its exercise. If no direction is
given, a properly executed proxy will be voted FOR the election of
the persons named under "Election of Directors," FOR the approval
of the 1997 Stock Option Plan and FOR the ratification of the
selection of Richard A. Eisner, LLP, as the Company's independent
public accountants. The Board of Directors does not anticipate
that any other matters will be brought before the Annual Meeting.
If, however, other matters are properly presented, the persons
named in the proxy will have discretion, to the extent allowed by
Delaware law, to vote in accordance with their own judgment on such
matters.
ELECTION OF DIRECTORS
ITEM 1 -- ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Company's Board of
Directors consists of three members and the Board members are
elected by stockholders at each annual meeting to serve until the
next annual meeting or until their successors are elected and
qualified. At the Annual Meeting, stockholders will elect three to
serve until the next Annual Meeting of Stockholders and until their
successors are elected and qualified.
Nominees for Director
Alan Gold and William F. Leimkuhler, both incumbent
Directors, and Charles H. Merriman, III, a new nominee for
Director, have been nominated by management for reelection to the
Board of Directors as Directors at the Annual Meeting and have
consented to serve as such, if elected. Set forth below is
information concerning such nominees for Director:
ALAN GOLD. Alan Gold, 52, has served as President and a
director since the Company's formation. He was one of the founders
of Global Health Systems, the predecessor of the Company, serving
as its President since its formation in July 1983. From 1981 to
1983, he served as Executive Vice-President of Libra Group, a
company located in Rockville, Maryland, engaged in health care
automation, where he was President of Global Health Foundation and
Libra Research and Executive Vice President of Libra Technology.
WILLIAM F. LEIMKUHLER. William F. Leimkuhler, 45, has
served as director of the Company since its incorporation in 1984.
Since January 1994, Mr. Leimkuhler has been the Vice President of
Allen & Company Incorporated, an investment banking firm. From
1984 to December, 1993, Mr. Leimkuhler was a partner with the law
firm of Werbel McMillin & Carnelutti, which has served as counsel
to the Company on various matters since the Company's formation.
CHARLES H. MERRIMAN, III. Charles H. Merriman, III, 63,
is Managing Director of the Investment Banking and Corporate
Finance Department of Scott & Stringfellow, Inc., an investment
banking firm, and he has been employed at such firm since 1972.
Vote Required
The affirmative vote of the record holders of a plurality
of the Common Stock present in person or by proxy at the Annual
Meeting and voting is required to elect Directors. The enclosed
proxy provides a means for stockholders to vote for the election of
the nominees or to withhold authority to vote for such nominees.
Abstentions with respect to the election of the nominees for
Directors will have the same effect as a withheld vote and broker
non-votes will have no effect on the election of Directors.
It is the intention of the persons in the enclosed proxy
to vote FOR the election of Alan Gold, William F. Leimkuhler and
Charles H. Merriman, III to serve as Directors of the Company.
Messrs. Gold and Leimkuhler, who currently serve as Directors, and
Mr. Merriman, a new nominee for Director, have consented to be
named in this Proxy Statement and to continue to serve if elected.
Management does not contemplate or foresee that the nominees will
be unable or unwilling to serve or be otherwise unavailable for
election.
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR the election of the nominees for Director set forth above.
APPROVAL OF THE COMPANY'S 1997 STOCK OPTION PLAN
ITEM 2 -- PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1997
STOCK OPTION PLAN
General
On August 20, 1997, the Company's Board of Directors adopted
the Company's 1997 Stock Option Plan (the "1997 Option Plan"). The
following summary of the provisions of the 1997 Option Plan is
qualified in its entirety by express reference to the text of the
1997 Option Plan attached as Exhibit I hereto. Terms not otherwise
defined in this summary shall have the meaning given to them in the
text of the 1997 Option Plan.
Shares Granted and Reserved
Under the 1997 Option Plan, a total of 1,500,000 shares of
Common Stock are reserved to be issued upon exercise of options
granted under the plan, subject to adjustment in the event of,
among other things, an increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, stock
dividend, combination or reclassification of the Common Stock of
the Company or the payment of a stock dividend with respect to the
Common Stock. As of September 19, 1997, no options had been
granted under the 1997 Option Plan. On September 16, 1997 the
closing bid price of one share of Common Stock on the OTC Bulletin
Board (the "Bulletin Board") was $0.44.
Plan Description
Purpose. The purpose of the 1997 Option Plan is to strengthen
the Company by providing an incentive to its employees, consultants
and directors and encouraging them to devote their abilities to the
success of the Company. It is intended that this purpose be
achieved by extending to employees, consultants and directors of
the Company or any subsidiary an added long-term incentive for high
levels of performance and exceptional efforts through the grant of
options to purchase shares of the Common Stock of the Company.
Administration. The 1997 Option Plan provides that it shall
be administered by the Board of Directors or, at the option of the
Board, a duly authorized committee of the Board. Subject to the
terms of the 1997 Option Plan, the Board has full power to select,
from among the employees and directors eligible for option grants,
the individual to whom options will be granted, and to determine
the specific terms and conditions of each option grant in a manner
consistent with the 1997 Option Plan; to waive compliance by
participants with terms and conditions of option grants; to modify
or amend option grants in a manner consistent with the 1997 Option
Plan; to interpret the 1997 Option Plan and decide any questions
and settle all controversies and disputes that may arise in
connection therewith; and to adopt, amend, and rescind rules and
regulations for the administration of the 1997 Option Plan.
Determinations of the Board on all matters relating to the 1997
Option Plan are conclusive.
Eligibility. Options may be granted to any employee,
consultant or director of the Company, provided that incentive
stock options (as defined below) may only be granted to employees
and to directors who are also employees.
Options: Grants and Exercise. The 1997 Option Plan permits
the granting of non-transferable stock options that qualify as
incentive stock options ("ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and non-
transferable stock options that do not so qualify ("non-statutory
options"). The option exercise price of each option is to be
determined by the Committee, but it may not be less than 100% of
the fair market value of the shares on the date of grant (110% in
the case of a person who owns stock possessing more than 10% of the
voting power of the Company (a "10% stockholder")). For purposes
of the 1997 Option Plan, "fair market value" on any given date
means the closing bid price of the Common Stock on such date as
reflected on the OTC Bulletin Board.
The term of each option shall be determined by the Board;
provided, however, in the case of an ISO, the term may not exceed
ten years from the date of grant (five years, in the case of a 10%
stockholder); non-statutory options have a term limited to ten
years (five years, in the case of a 10% stockholder) from the date
of grant.
The Board determines at what time or times and under what
conditions (including performance criteria) each option may be
exercised. Options may be made exercisable in installments, and
the exercisability of options may be accelerated by the Board. The
Board also determines, at the time of grant of each option, the
terms and conditions under which the options granted to a
participant may be exercised in the event of such participant's
termination of service as an employee or director as a result of
death, disability or termination of employment.
To the extent not otherwise provided by the Board, options
granted to employees become exercisable in three installments, each
equal to one-third of the entire option granted and exercisable on
the first, second and third anniversaries of the grant date,
respectively. In the event of termination of a participant's
service to the Company, vested options may be exercised within one
year following the date of death or following a determination of
disability and within three months following termination for any
other reason; except that, if such termination is for cause, the
options will not be exercisable following such termination. In no
event may an option be exercised later than the date of expiration
of the term of the option as set forth in the agreement evidencing
such option.
In order to exercise an option, the participant must provide
written notice and full payment to the Secretary of the Company.
The option exercise price of options granted under the 1997 Option
Plan must be paid for in cash or other shares of Common Stock upon
such terms and conditions as determined by the Board. The Board
may require that upon exercise of an option, certificates
representing shares thereby acquired bear an appropriate
restrictive legend if the sale of the shares has not been
registered under the Securities Act of 1933, as amended.
No option may be transferred other than by will or by the laws
of descent and distribution, and during a participant's lifetime an
option may only be exercised by him or her.
Mergers and Consolidations. In the event of a dissolution or
liquidation or merger or consolidation of the Company, the options
shall continue in effect in accordance with their respective terms,
and each participant shall be entitled to receive the same number
and kind of stock, securities, cash, property or other
consideration that each holder of Common Stock was entitled to
receive in the transaction in respect of the Common Stock.
Amendment. The Board may amend the 1997 Option Plan or any
outstanding option for any purpose which may at the time be
permitted by law, except that no amendment or termination of the
1997 Option Plan may adversely affect the rights of any participant
(without his or her consent) under an option previously granted.
Insofar as Rule 16b-3 has been amended, in order to streamline
administration of the Plan, the Board may amend the 1997 Option
Plan to eliminate provisions of the Option Plan no longer mandated
by Rule 16b-3.
Term of Plan. Unless sooner terminated by the Board, the 1997
Option Plan will terminate at the tenth anniversary of the date of
adoption by the Board.
Certain Federal Income Tax Consequences
The following summary generally describes the principal
federal (and not state and local) income tax consequences of
options granted under the 1997 Option Plan. It is general in
nature and is not intended to cover all tax consequences that may
apply to a 1997 Option Plan participant or to the Company. The
provisions of the Code and the regulations thereunder relating to
these matters ("Treasury Regulations") are complex, and their
impact in any one case may depend upon the particular
circumstances. Each holder of an option under the 1997 Option Plan
should consult the holder's own accountant, legal counsel or other
financial advisor regarding the tax consequences of participation
in the 1997 Option Plan. This discussion is based on the Code as
currently in effect.
If an option (whether an ISO or non-statutory) is granted to
a participant in accordance with the terms of the 1997 Option Plan,
no income will be recognized by such participant at the time the
option is granted.
Generally, on exercise of a non-statutory option, the amount
by which the fair market value of the shares of the Common Stock on
the date of exercise exceeds the purchase price of such shares will
be taxable to the participant as ordinary income, and, in the case
of any employee, the Company will be required to withhold tax on
the amount of income recognized by the employee upon exercise of a
non-statutory option. Such amount of employee compensation will be
deductible for tax purposes by the Company in the year in which the
participant recognizes the ordinary income. The disposition of
shares acquired upon exercise of a non-statutory option will result
in capital gain or loss (long-term or short-term depending on the
applicable holding period) in an amount equal to the difference
between the amount realized on such disposition and the sum of the
purchase price and the amount of ordinary income recognized in
connection with the exercise of the non-statutory option.
Generally, on exercise of an ISO, an employee will not
recognize any income and the Company will not be entitled to a
deduction for tax purposes. However, the difference between the
purchase price and the fair market value of the shares of Common
Stock received ("ISO shares") on the date of exercise will be
treated as a positive adjustment in determining alternative minimum
taxable income, which may subject the employee to the alternative
minimum tax ("AMT"). Upon the disposition of the ISO shares, the
employee will recognize long-term or short-term capital gain or
loss (depending on the applicable holding period) in an amount
equal to the difference between the amount realized on such
disposition and the purchase price of such shares. Generally,
however, if the employee disposes the ISO shares within two years
after the date of option grant or within one year after the date of
option exercise (a "disqualifying disposition"), the employee will
recognize ordinary income, and the Company will be entitled to a
deduction for tax purposes for the taxable year in which the
disqualifying disposition occurs, in the amount of the excess of
the fair market value of the shares on the date of exercise over
the purchase price (or, if less, the amount of the gain on sale).
Any excess of the amount realized by the holder on the
disqualifying disposition over the fair market value of the shares
on the date of exercise of the ISO will ordinarily constitute
capital gain.
If an option is exercised through the use of Common Stock
previously owned by the employee, such exercise generally will not
be considered a taxable disposition of the previously owned shares
and, thus, no gain or loss will be recognized with respect to such
shares upon such exercise. However, proposed Treasury Regulations
would provide that, if the previously owned shares are ISO shares
and the holding period requirement for those shares was not
satisfied at the time they were used to exercise an option, such
use would constitute a disqualifying disposition of such previously
owned ISO shares, resulting in the recognition of ordinary income
(but not any additional capital gain) in the amount described
above. If an otherwise qualifying ISO first becomes exercisable in
any one year for shares having a fair market value, determined as
of the date of the grant, in excess of $100,000, the portion of the
option in respect of such excess shares will be treated as a non-
statutory option.
Section 16(b) of the Exchange Act generally requires officers,
directors and 10% stockholders of the Company to disgorge profits
realized by buying and selling the Company's Common Stock within a
six month period. Consequently, by application of Code Section 83
to those participants who are subject to Section 16, generally the
relevant date for recognizing and measuring the amount of ordinary
income in connection with an exercise of a non-statutory option (or
AMT in the case of an ISO), as well as the relevant date for
recognizing and measuring the amount of an employee's ordinary
income and the Company's tax deduction in connection with a
disqualifying disposition of ISO shares as discussed above, will be
the later of: (i) six months following the date of grant, and (ii)
the date of exercise of the option.
Vote Required
The affirmative vote of the record holders of a majority
of the Common Stock present in person or by proxy at the Annual
Meeting is required to approve the 1997 Option Plan. Approval of
the 1997 Option Plan by stockholders is required for ISO options
granted under the 1997 Option Plan to meet the requirements of Code
Section 422. Abstentions will have the same effect as a vote
against the approval of the 1997 Option Plan and broker non-votes
will have no effect on such vote.
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR the approval of the 1997 Option Plan.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
ITEM 3 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Richard
A. Eisner, LLP, as the Company's independent public accountants for
the fiscal year ending December 31, 1997. Although the selection
of auditors does not require ratification, the Board has directed
that the appointment of Richard A. Eisner, LLP be submitted to
stockholders for ratification because management believes this
matter is of such significance as to warrant stockholder
participation. The Company expects representatives of Richard A.
Eisner, LLP to be present at the Annual Meeting in person or by
telephone conference to respond to appropriate stockholder
questions, and they will be given the opportunity to address the
stockholders, if they so desire.
Vote Required
The affirmative vote of the record holders of a majority
of the Common Stock present in person or by proxy at the Annual
Meeting and voting is required to ratify the selection of the
independent public accountants. Abstentions and broker non-votes
will have no effect on the vote for the ratification of the
selection of the independent public accountants.
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR ratification of the selection of Richard A. Eisner, LLP, as the
Company's independent public accountants for the fiscal year ending
December 31, 1997.
MANAGEMENT OF THE COMPANY
The executive officers and directors of the Company are
as follows:
Name Age Position
- ------------------------------------------------------------------
Alan Gold 52 Chairman of the Board and
President
William F. Leimkuhler 45 Director
Executive Officers and Directors
ALAN GOLD. Alan Gold has served as President and a
director since the Company's formation. He was one of the founders
of Global Health Systems, the predecessor of the Company, serving
as its President since its formation in July 1983. From 1981 to
1983, he served as Executive Vice-President of Libra Group, a
company located in Rockville, Maryland, engaged in health care
automation, where he was President of Global Health Foundation and
Libra Research and Executive Vice President of Libra Technology.
WILLIAM F. LEIMKUHLER. William F. Leimkuhler has served
as director of the Company since its incorporation in 1984. Since
January 1994, Mr. Leimkuhler has been the Vice President of Allen
& Company Incorporated, an investment banking firm. From 1984 to
December, 1993, Mr. Leimkuhler was a partner with the law firm of
Werbel McMillin & Carnelutti, which has served as counsel to the
Company on various matters since the Company's formation.
Board of Directors and Committees
Pursuant to the Company's Bylaws, the Company's Board of
Directors is elected by stockholders at each annual meeting to
serve until the next annual meeting or until their successors are
elected and qualified. In the case of a vacancy, a director will be
appointed by a majority of the remaining directors then in office
to serve the remainder of the term left vacant. Directors do not
receive any fees for attending Board meetings. Directors are
entitled to receive reimbursement for travelling costs and other
out-of-pocket expenses incurred in attending Board meetings.
During the year ended December 31, 1996, the Board of Directors
held one meeting, which was attended by all incumbent directors.
The Company does not have a standing audit, nominating or
compensation committee.
Pursuant to the Company's Bylaws, officers of the Company
hold office until the first meeting of directors following the next
annual meeting of stockholders and until their successors are
chosen and qualified. It is anticipated that immediately following
the Annual Meeting, the Board of Directors elected at the Annual
Meeting will hold the 1997 Annual Meeting of the Board of
Directors. At such meeting, it is anticipated that the current
officers of the Company will be re-elected to serve in the
capacities set forth above until the next Annual Meeting of the
Board of Directors or until their respective successors are duly
elected and qualified.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of the copies of the forms
furnished to the Company, or written representations from certain
reporting persons, the Company believes that during the year ended
December 31, 1996, all filing requirements applicable to its
officers and directors were complied with by such individuals.
Compensation of Executive Officers
The following table sets forth all compensation awarded
to, earned by or paid to each of the Company's executive officers
for the Company's fiscal periods as specified below:
Annual Compensation
Name and
Principal Position Year (1) Salary
- ---------------------------------------------------------------
Alan Gold,
President & Director 1996 $150,000
1995 $150,000
1994 $150,000
Employment Agreement
The Company is a party to an employment agreement with
Mr. Gold which may be terminated by either party upon six months
prior notice.
Certain Relationships and Related Party Transactions
In 1993, the Company granted a 20% interest in the
Company's subsidiary which operates Gamma Knife centers, US
NeuroSurgical, Inc. ("USN"), to A. Hyman Kirshenbaum, M.D., an
officer of USN ("Kirshenbaum"), and Jerry Brown, Ph.D., a director
of the Company since July 1993 not being nominated for re-election
at the Annual Meeting ("Brown", and together with Kirshenbaum, the
"Defendants"). Under the terms of the purchase/option agreement
between the Company and the Defendants executed in 1993, the
Company possessed the right to buy for cash or Common Stock the 20%
interest owned by the Defendants at any time during each of the
third through sixth full fiscal years of the agreement. The
Company exercised its right in September 1996. The number of
shares for the purchase has been calculated by the Company to be
33,200, which valuation has been disputed by the Defendants.
On or about June 4, 1997, the Company commenced an action
for declaratory relief (the "Complaint") against Kirshenbaum and
Brown in the United States District Court for the District of
Maryland, Southern Division. The Complaint seeks a declaration
that the Company is entitled to purchase the Defendant's 20%
interest in USN for $33,181.41, or 33,200 shares of Common Stock.
These numbers were derived by the Company pursuant to the equation
set forth in the purchase/option agreement between the Company and
the Defendants. The Defendants have rejected these numbers and
allege that, based on their own calculation, their 20% interest in
USN is worth at least $584,497.00. Accordingly, the Company
brought suit for a declaration that its offer to the Defendants is
consistent with the purchase/option agreement and is fair and
equitable. The Company believes that the Defendants' claim lacks
merit and believes that it is working diligently to resolve this
dispute as expeditiously and cost-effectively as possible.
In connection with the grant of the 20% interest, the
Company entered into an agreement with the Defendants which
provided for reimbursement to such parties of their reasonable
expenditures towards establishing USN. The Company agreed to repay
up to $250,000 of such valid documented expenses by issuing up to
125,000 shares of Common Stock and up to $125,00 in USN notes
payable from pre-tax earnings of USN. One of the parties (Dr.
Brown) claims that the Company will owe 62,500 shares of Common
Stock and interest-bearing notes totaling $62,500, when he provides
documentation to the Company. The Company has requested
documentation of the claimed expenses since August 1993. No
documentation has been produced. However, the Company acting in
good faith issued 62,500 shares of Common Stock during 1993 and
1994. Dr. Brown has not documented any valid expenses. The
Company paid $30,000 for legal fees incurred prior to September 1,
1993 by Dr. Brown. The Company may take action to recover the
62,500 shares of Common Stock issued to Dr. Brown.
Dr. Brown entered into a three-year employment contract
with the Company in September 1993. Dr. Brown claims that his
contract was unilaterally modified by the Company in November 1994
and he was terminated without proper authority in August 1995. Dr.
Brown also claims that he has been denied reimbursement of
legitimate expenses of more than $20,000. The Company believes
that Dr. Brown's claims are without merit. Upon signing his
employment agreement, Dr. Brown requested a $60,000 pay advance.
The advance was granted as a loan with monthly repayments ending in
December 1995. Dr. Brown still owes the Company $6,900 on this
loan. In November 1994, the Company negotiated an incentive
compensation plan with Dr. Brown whereby he was paid a salary of
$150,000 per annum with quarterly adjustments against his salary if
the Gamma Knife operation did not meet minimum performance
standards. The agreement guaranteed Dr. Brown a minimum salary of
$100,000. Dr. Brown was paid salary through August 1995 at which
time he was terminated as an employee and removed from the USN
Board of Directors. During the term of his employment with USN,
Dr. Brown was fully reimbursed for expenses which he submitted as
incurred in connection with his responsibilities at USN; however,
the Company did not reimburse him for travel expenses that he
incurred which were for personal business or not pre-authorized by
the Company.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of September 8, 1997,
certain information concerning beneficial ownership of the
Company's Common Stock by (i) each person known to the Company to
beneficially own 5% or more of the Company's outstanding Common
Stock, (ii) all executive officers and directors of the Company
naming them, and (iii) all executive officers and directors of the
Company as a group, without naming them.
Name and Address of Number of Shares
Beneficial Owner Beneficially Owned (1) Percent of Class
- ------------------- ---------------------- ----------------
Alan Gold (2) 435,420 6.2%
President, Chief Executive
Officer and Director
1350 Piccard Drive
Rockville, MD 20850
William F. Leimkuhler -- --
Director
711 Fifth Avenue
New York, NY 10022
Jerry M. Brown, Ph.D. (3) 40,441 0.6%
Director
1205 Stratford Drive
Anderson, SC 29621
Charles H. Merriman, III -- --
Nominee for Director
5507 Cary Street Road
Richmond, VA. 23226
Stanley S. Shuman (4) 1,071,250 15.3%
711 Fifth Avenue
New York, NY 10022
Allen & Company Incorporated (5) 2,022,000 28.5%
711 Fifth Avenue
New York, NY 10022
Research Medical Center 500,000 7.2%
2316 East Meyer Blvd.
Kansas City, MO 64132
Charles Elsner 400,000 5.7%
c/o The Forschner Group Inc.
151 Long Hill Crossroads
Shelton, CT 86484
All Directors and Officers as a group
(three persons) (2)(3) 475,861 6.8%
- --------------------------------
(1) Unless otherwise indicated, all shares are beneficially owned
and sole voting and investment power is held by the person named
above.
(2) Includes 420,500 shares held jointly by Mr. Gold and his wife,
Ms. Susan Greenwald, as joint tenants with right of survivorship.
(3) Includes 11,941 shares which, in the opinion of the Company,
are owed to Dr. Brown in connection with the Company's purchase of
Dr. Brown's interest in USN. Dr. Brown has disputed such
valuation. See " Management of the Company - Certain Relationships
and Related Party Transactions."
(4) Includes 210,250 shares held in certain trusts for the benefit
of Mr. Shuman's children, of which shares Mr. Shuman disclaims
beneficial interest. Also includes warrants to purchase 20,000
shares of Common Stock beneficially owned by Mr. Shuman.
(5) In addition to those shares beneficially owned by Allen &
Company, certain officers of Allen & Company and their families,
including Mr. Shuman, own 1,721,750 shares. Also includes warrants
to purchase 120,000 shares of Common Stock.
OTHER MATTERS
The Board of Directors is not currently aware of any
other matters to be transacted at the Annual Meeting. However, if
any other matter should properly come before the Annual Meeting or
any adjournment thereof, the persons named in the accompanying
proxy intend to vote on such matters as they, in their discretion,
may determine, subject, in any event, to the requirements of
Delaware Law.
The Company will bear all costs of soliciting proxies in
the accompanying form. Solicitation will be made by mail, and
officers of the Company may also solicit proxies by telephone or
personal interview. In addition, the Company expects to request
persons who hold shares in their names for others to forward copies
of this proxy soliciting material to them and to request authority
to execute proxies in the accompanying form, and the Company will
reimburse such persons for their out-of-pocket and reasonable
clerical expenses in doing this.
FINANCIAL STATEMENTS
The Company's audited financial statements for the year
ended December 31, 1996 and certain other related financial and
business information of the Company are contained in the Annual
Report to Stockholders mailed with this Proxy Statement.
STOCKHOLDERS' PROPOSALS
Any proposal which an eligible stockholder wishes to
include in the proxy or information statement for the 1998 Annual
Meeting of Stockholders must be received by the Company at its
principal executive offices at 1350 Piccard Drive, Rockville,
Maryland 20850, not later than June 25 1998.
By Order of the Board of Directors
Alan Gold, Chairman and President
Dated: September 19, 1997
EXHIBIT I
GHS, INC.
1997 STOCK OPTION PLAN
GHS, INC.
1997 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to strengthen
GHS, Inc. by providing an incentive to its employees, consultants
and directors, encouraging them to devote their abilities to the
success of the Company. It is intended that this purpose be
achieved by extending to employees, consultants and directors of
the Company or any subsidiary an added long-term incentive for high
levels of performance and exceptional efforts through the grant of
options to purchase shares of the Company's common stock under this
GHS, Inc. 1997 Stock Option Plan.
2. Definitions. For purposes of the Plan:
2.1. "Agreement" means the written agreement
between the Company and an Optionee evidencing the grant of an
Option and setting forth the terms and conditions thereof.
2.2. "Board" means the Board of Directors of the
Company.
2.3. "Cause" means with respect to an Eligible
Employee, including an Eligible Employee who is a director of the
Company, (i) the voluntary termination of employment by such
Eligible Employee, (ii) intentional failure to perform, or habitual
neglect of, reasonably assigned duties, (iii) dishonesty or willful
misconduct in the performance of an Optionee's duties, (iv) an
Optionee's engaging in a transaction in connection with the
performance of such Optionee's duties to the Company or any of its
Subsidiaries thereof which transaction is adverse to the interests
of the Company or any of its Subsidiaries and which is engaged in
for personal profit to the Optionee, (v) willful violation of any
law, rule or regulation in connection with the performance of an
Optionee's duties, (vi) willful violation of any policy adopted by
the Company relating to the performance or behavior of employees or
(vii) acts of carelessness or misconduct which have in the
reasonable judgment of the Company's Board of Directors, an adverse
effect on the Company.
2.4. "Change in Capitalization" means any increase
or reduction in the number of Shares, or any change (including, but
not limited to, a change in value) in the Shares or exchange of
Shares for a different number or kind of shares or other securities
of the Company, by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance
of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination
or exchange of shares, repurchase of shares, public offering,
private placement, change in corporate structure or otherwise.
2.5. "Code" means the Internal Revenue Code of
1986, as amended.
2.6. "Company" means GHS, Inc.
2.7. "Consultant Option" means an Option granted to
a consultant pursuant to Section 7.
2.8. "Director Option" means an Option granted to
a Nonemployee Director pursuant to Section 5.
2.9. "Disability" means a physical or mental
infirmity which impairs the Optionee's ability to perform
substantially his or her duties for a period of sixty (60)
consecutive days.
2.10. "Eligible Employee" means any officer or
other employee of the Company or a Subsidiary who is designated by
the Board as eligible to receive Options subject to the conditions
set forth herein.
2.11. "Employee Options" means an Option granted to
an Eligible Employee pursuant to Section 6.
2.12. "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
2.13. "Fair Market Value" on any date means, as
long as the Shares are quoted on the OTC Bulletin Board or similar
over-the-counter means, the closing bid price on the OTC Bulletin
Board, and if the Shares are not so quoted, the average of the high
and low sales prices of the Shares on such date on the principal
national securities exchange on which such Shares are listed or
admitted to trading, or if such Shares are not so listed or
admitted to trading, the arithmetic mean of the per Share closing
bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked
quotations with respect to Shares on such date, the Fair Market
Value shall be the value established by the Board in good faith and
in accordance with Section 422 of the Code.
2.14. "Incentive Stock Option" means an Option
satisfying the requirements of Section 422 of the Code and
designated by the Board as an Incentive Stock Option.
2.15. "Nonqualified Stock Option" means an Option
which is not an Incentive Stock Option.
2.16. "Nonemployee Director" means a director of
the Company who is not a full-time employee of the Company or any
Subsidiary.
2.17. "Option" means an Employee Option, a Director
Option, a Consultant Option or any or all of them.
2.18. "Optionee" means a person to whom an Option
has been granted under the Plan.
2.19. "Parent" means any corporation which is a
parent corporation (within the meaning of Section 424(e) of the
Code) with respect to the Company.
2.20. "Plan" means the GHS, Inc. 1997 Stock Option
Plan.
2.21. "Shares" means the common stock, par value
$.01 per share, of the Company.
2.22. "Subsidiary" means any corporation which is
a subsidiary corporation (within the meaning of Section 424(f) of
the Code) with respect to the Company.
2.23. "Successor Corporation" means a corporation,
or a parent or subsidiary thereof within the meaning of Section
424(a) of the Code, which issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies.
2.24. "Ten-Percent Stockholder" means an Eligible
Employee or other eligible Plan participant, who, at the time an
Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1. The Plan shall be administered by the Board
which shall hold meetings at such times as may be necessary for the
proper administration of the Plan. The Board shall keep minutes of
its meetings. A quorum shall consist of not less than a majority
of the Board and a majority of a quorum may authorize any action.
Any decision or determination reduced to writing and signed by a
majority of all of the members of the Board shall be as fully
effective as if made by a majority vote at a meeting duly called
and held. No member of the Board shall be liable for any action,
failure to act, determination or interpretation made in good faith
with respect to this Plan or any transaction hereunder, except for
liability arising from his or her own willful misfeasance, fraud or
bad faith. The Company hereby agrees to indemnify each member of
the Board for all costs and expenses and, to the extent permitted
by applicable law, any liability incurred in connection with
defending against, responding to, negotiation for the settlement of
or otherwise dealing with any claim, cause of action or dispute of
any kind arising in connection with any action or failure to act in
administering this Plan or in authorizing or denying authorization
to any transaction hereunder.
3.2. Subject to the express terms and conditions
set forth herein, the Board shall have the power from time to time
to determine those Optionees to whom Options shall be granted under
the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to such Optionee and to
prescribe the terms and conditions (which need not be identical) of
each Option, including the purchase price per Share subject to each
Option, and make any amendment or modification to any Agreement
consistent with the terms of the Plan.
3.3. Subject to the express terms and conditions
set forth herein, the Board shall have the power from time to time:
(a) to construe and interpret the Plan and the
Options granted thereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan, including, but
not limited to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Agreement, in
the manner and to the extent it shall deem necessary or advisable
to make the Plan fully effective, and all decisions and
determinations by the Board in the exercise of this power shall be
final, binding and conclusive upon the Company, its Subsidiaries,
the Optionees and all other persons having any interest therein;
(b) to determine the duration and purposes for
leaves of absence which may be granted to an Optionee on an
individual basis without constituting a termination of employment
or service for purposes of the Plan;
(c) to exercise its discretion with respect to
the powers and rights granted to it as set forth in the Plan;
(d) generally, to exercise such powers and to
perform such acts as are deemed necessary or advisable to promote
the best interests of the Company with respect to the Plan.
3.4 Notwithstanding anything to the contrary
contained herein, the Board may designate a committee which shall
have and may exercise all the powers and authority of the Board in
administering this Plan. Any action specified herein to be taken
by the Board, shall, if a committee is formed to administer the
Plan, be satisfied by the action of the committee.
4. Stock Subject to Plan.
4.1. The maximum number of Shares that may be made
the subject of Options granted under the Plan is 1,500,000 Shares
(or the number and kind of shares of stock or other securities to
which such Shares are adjusted upon a Change in Capitalization
pursuant to Section 9) and the Company shall reserve for the
purposes of the Plan, out of its authorized but unissued Shares or
out of Shares held in the Company's treasury, or partly out of
each, such number of Shares as shall be determined by the Board.
4.2. Whenever any outstanding Option or portion
thereof expires, is canceled or is otherwise terminated for any
reason, the Shares allocable to the canceled or otherwise
terminated Option or portion thereof may again be the subject of
Options granted hereunder.
5. Option Grants for Nonemployee Directors.
5.1. Authority of Board. Subject to the provisions
of the Plan, the Board shall have full and final authority to
select those Nonemployee Directors who will receive Director
Options, the terms and conditions of which shall be set forth in an
Agreement.
5.2. Purchase Price. The purchase price or the
manner in which the purchase price is to be determined for Shares
under each Director Option shall be determined by the Board and set
forth in the Agreement evidencing the Option, provided that the
purchase price per Share under each Director Option shall be not
less than the Fair Market Value of a Share on the date the Director
Option is granted.
5.3. Duration. Director Options shall be for a
term to be designated by the Board and set forth in the Agreement
evidencing the Option.
5.4. Vesting. Each Director Option shall,
commencing not earlier than the date of its grant, become
exercisable in such installments (which need not be equal or may be
one installment) and at such times as may be designated by the
Board and set forth in the Agreement evidencing the Option. To the
extent not exercised, installments shall accumulate and be
exercisable, in whole or part, at any time after becoming
exercisable, to not later than the date the Director Option
expires. The Board may accelerate the exercisability of any Option
or portion thereof at any time.
6. Option Grants for Eligible Employees.
6.1. Authority of Board. Subject to the provisions
of the Plan, the Board shall have full and final authority to
select those Eligible Employees who will receive Employee Options,
the terms and conditions of which shall be set forth in an
Agreement; provided, however, that no Eligible Employee shall
receive an Incentive Stock Option unless he is an employee of the
Company, a Parent or a Subsidiary at the time the Incentive Stock
Option is granted.
6.2. Purchase Price. The purchase price or the
manner in which the purchase price is to be determined for Shares
under each Employee Option shall be determined by the Board and set
forth in the Agreement evidencing the Option, provided that the
purchase price per Share under each Employee Option shall be (i)
except as provided in clause (ii) of this Section 6.2, not less
than the Fair Market Value of a Share on the date the Employee
Option is granted; and (ii) with respect to any Incentive Stock
Option granted to a Ten Percent Stockholder, not less than 110% of
the Fair Market Value of a Share on the date the Option is granted.
6.3. Duration. Employee Options granted hereunder
shall be for such term as the Board shall determine, provided that
no Employee Option shall be exercisable after the expiration of ten
(10) years from the date it is granted (five (5) years in the case
of an Incentive Stock Option granted to a Ten-Percent Stockholder).
The Board may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding
sentence.
6.4. Vesting. Each Employee Option shall,
commencing not earlier then the date of its grant, become
exercisable in such installments (which need not be equal or may be
in one installment) and at such times as may be designated by the
Board and set forth in the Agreement evidencing the Option. To the
extent not otherwise provided by the Board, Employee Options shall
be exercisable in three (3) equal installments each equal to one-
third of the entire Option granted, the first of which shall become
exercisable on the first anniversary of the date of the grant of
the Employee Option, the second installment of which shall become
exercisable on the second anniversary of the date of grant of the
Employee Option, and the final installment of which shall become
exercisable on the third anniversary of the date of grant. To the
extent not exercised, installments shall accumulate and be
exercisable, in whole or part, at any time after becoming
exercisable, to not later than the date the Employee Option
expires. The Board may accelerate the exercisability of any Option
or portion thereof at any time.
7. Option Grants for Consultants.
7.1. Authority of Board. Subject to the provisions
of the Plan, the Board shall have full and final authority to
select those consultants to the Company or a Subsidiary who will
receive Consultant Options, the terms and conditions of which shall
be set forth in an Agreement. An employee or officer of the
Company shall not be deemed a consultant.
7.2. Purchase Price. The purchase price or the
manner in which the purchase price is to be determined for Shares
under each Consultant Option shall be determined by the Board and
set forth in the Agreement evidencing the Option, provided that the
purchase price per Share under each Consultant Option shall be not
less than the Fair Market Value of a Share on the date the
Consultant Option is granted.
7.3. Duration. Consultant Options granted
hereunder shall be for such term as the Board shall determine,
provided that no Consultant Option shall be exercisable after the
expiration of ten (10) years from the date it is granted. The
Board may, subsequent to the granting of any Consultant Option,
extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding
sentence.
7.4. Vesting. Each Consultant Option shall,
commencing not earlier then the date of its grant, become
exercisable in such installments (which need not be equal or may be
in one installment) and at such times as may be designated by the
Board and set forth in the Agreement evidencing the Option. To the
extent not otherwise provided by the Board, Consultant Options
shall be exercisable in three (3) equal installments each equal to
one-third of the entire Option granted, the first of which shall
become exercisable on the first anniversary of the date of grant of
the Consultant Options, the second installment of which shall
become exercisable on the second anniversary of the date of grant,
and the final installment of which shall become exercisable on the
third anniversary of the date of grant. To the extent not
exercised, installments shall accumulate and be exercisable, in
whole or part, at any time after becoming exercisable, to not later
than the date the Consultant Option expires. The Board may
accelerate the exercisability of any Option or portion thereof at
any time.
8. Terms and Conditions Applicable to All Options
8.1. Non-transferability. No Option granted
hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution,
and an Option may be exercised during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal
representative. The terms of each Option shall be final, binding
and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
8.2. Method of Exercise. The exercise of an Option
shall be made only by a written notice delivered in person or by
mail to the Secretary of the Company at the Company's principal
executive office, specifying the number of Shares to be purchased
and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of
an Option shall be paid in full upon such exercise, as determined
by the Board in its discretion, by any one or a combination of the
following: (i) cash, (ii) transferring Shares to the Company upon
such terms and conditions as determined by the Board; or (iii) as
otherwise determined by the Board. At the Optionee's request and
subject to the consent of the Board, Shares to be acquired upon the
exercise of a portion of an Option will be applied automatically to
pay the purchase price in connection with the exercise of
additional portions of the Option then being exercised. The
written notice pursuant to this Section 8.2 may also provide
instructions from the Optionee to the Company that upon receipt of
the purchase price in cash from the Optionee's broker or dealer,
designated as such on the written notice, in payment for any Shares
purchased pursuant to the exercise of an Option, the Company shall
issue such Shares directly to the designated broker or dealer. Any
Shares transferred to the Company as payment of the purchase price
under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option. If requested by
the Board, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the
Optionee. No fractional shares (or cash in lieu thereof) shall be
issued upon exercise of an Option and the number of Shares that may
be purchased upon exercise shall be rounded to the nearest number
of whole Shares.
8.3. Rights of Optionees. No Optionee shall be
deemed for any purpose to be the owner of any Shares subject to any
Option unless and until (i) the Option shall have been exercised
pursuant to the terms thereof, (ii) the Company shall have issued
and delivered the Shares to the Optionee and (iii) the Optionee's
name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such
Shares.
8.4. Termination of Employment or Services. Unless
otherwise provided in the Agreement evidencing the Option, an
Option (other than an Option granted to a consultant or a
Nonemployee Director) shall terminate upon an Optionee's
termination of employment (or similar arrangement) with the Company
and its Subsidiaries as follows:
(a) in the event the Optionee's employment
terminates as a result of Disability, the Optionee may at any time
within three (3) months after such event exercise the Option or
portion thereof that was exercisable on the date of such
termination;
(b) if an Optionee's employment terminates for
Cause, the Option shall terminate immediately and no rights
thereunder may be exercised;
(c) if an Optionee's employment terminates
without Cause, the Optionee may at any time within one (1) month
after such event exercise the Option or portion thereof that was
exercisable on the date of such termination; and
(d) if an Optionee dies while an employee of
the Company or any Subsidiary or within six (6) months after
termination as a result of Disability as described in clause (a) of
this Section 8.4, the Option may be exercised at any time within
six (6) months after the Optionee's death by the person or persons
to whom such rights under the Option shall pass by will or by the
laws of descent and distribution; provided, however, that an Option
may be exercised to the extent, and only to the extent, that the
Option or portion thereof was exercisable on the date of death or
earlier termination.
Notwithstanding the foregoing, in no event may any
Option be exercised by anyone after the expiration of the term of
the Option.
8.5. Termination of Nonemployee Director Options
and Consultant Options. Nonemployee Director Options and
Consultant Options granted to Nonemployee Directors and consultants
to the Company or a Subsidiary shall terminate under such
circumstances as are provided in the Agreement evidencing the
Option, and if not expressly specified, as of the close of business
on the last day of the term of the Option, but in no event may such
an Option be exercised by anyone after the expiration of the term
of the Option.
8.6. Modification or Substitution. The Board may,
in its discretion, modify outstanding Options or accept the
surrender of outstanding Options (to the extent not exercised) and
grant new Options in substitution for them. Notwithstanding the
foregoing, no modification of an Option shall adversely alter or
impair any rights or obligations under the Option without the
Optionee's consent.
9. Adjustment Upon Changes in Capitalization.
9.1. Subject to Section 10, in the event of a
Change in Capitalization, the Board shall conclusively determine
the appropriate adjustments, if any, to the maximum number or class
of Shares or other stock or securities with respect to which
Options may be granted under the Plan, the number and class of
Shares or other stock or securities which are subject to
outstanding Options granted under the Plan, and the purchase price
therefor, if applicable.
9.2. Any such adjustment in the Shares or other
stock or securities subject to outstanding Incentive Stock Options
(including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by
Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
9.3. If, by reason of a Change in Capitalization,
an Optionee shall be entitled to exercise an Option with respect to
new, additional or different shares of stock or securities, such
new, additional or different shares shall thereupon be subject to
all of the conditions which were applicable to the Shares subject
to the Option, as the case may be, prior to such Change in
Capitalization.
10. Effect of Certain Transactions.
In the event of (i) the liquidation or dissolution
of the Company or (ii) a merger or consolidation of the Company (a
"Transaction"), the Plan and the Options issued hereunder shall
continue in effect in accordance with their respective terms and
each Optionee shall be entitled to receive in respect of each Share
subject to any outstanding Options, as the case may be, upon
exercise of any Option, the same number and kind of stock,
securities, cash, property, or other consideration that each holder
of a Share was entitled to receive in the Transaction in respect of
a Share. In the event that, after a Transaction, there occurs any
change of a type described in Section 2.4 hereof with respect to
the shares of the surviving or resulting corporation, then
adjustments similar to, and subject to the same conditions as,
those in Section 9 hereof shall be made by the Board.
11. Termination and Amendment of the Program.
11.1. The Plan shall terminate on the day preceding
the tenth anniversary of the date of its adoption by the Board and
no Option may be granted thereafter. The Board may sooner
terminate or amend the Plan at any time and from time to time;
provided, however, that to the extent necessary under Section 16(b)
of the Exchange Act and the rules and regulations promulgated
thereunder or other applicable law, no amendment shall be effective
unless approved by the stockholders of the Company in accordance
with applicable law and regulations at an annual or special meeting
held within twelve (12) months after the date of adoption of such
amendment.
11.2. Except as provided in Sections 9 and 10
hereof, rights and obligations under any Option granted before any
amendment or termination of the Plan shall not be adversely altered
or impaired by such amendment or termination, except with the
consent of the Optionee, nor shall any amendment or termination
deprive any Optionee of any Shares which he may have acquired
through or as a result of the Plan.
12. Non-Exclusivity of the Plan. The adoption of the
Plan by the Board shall not be construed as amending, modifying or
rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
13. Limitation of Liability. As illustrative of the
limitations of liability of the Company, but not intended to be
exhaustive thereof, nothing in the Plan shall be construed to:
(i) give any person any right to be granted an
Option other than at the sole discretion of the Board;
(ii) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period of
time.
14. Regulations and Other Approvals; Governing Law.
14.1. This Plan and the rights of all persons
claiming hereunder shall be construed and determined in accordance
with the laws of the State of Delaware.
14.2. The obligation of the Company to sell or
deliver Shares with respect to Options granted under the Plan shall
be subject to all applicable laws, rules and regulations, including
all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Board.
14.3. The Plan is intended to comply with Rule 16b-
3 promulgated under the Exchange Act and the Board shall interpret
and administer the provisions of the Plan or any Agreement in a
manner consistent therewith. Any provisions inconsistent with such
Rule shall be inoperative and shall not affect the validity of the
Plan.
14.4. The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations
of any government authority, or to obtain for Eligible Employees
granted Incentive Stock Options the tax benefits under the
applicable provisions of the Code and regulations promulgated
thereunder.
14.5. Each Option is subject to the requirement
that, if at any time the Board determines, in its discretion, that
the listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the
issuance of Shares, no Options shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained
free of any conditions, or as otherwise determined to be acceptable
to the Board.
14.6. Notwithstanding anything contained in the
Plan to the contrary, in the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current
registration statement under the Securities Act of 1933, as
amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required
by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Board may require any individual
receiving Shares pursuant to the Plan, as a condition precedent to
receipt of such Shares upon exercise of an Option, to represent and
warrant to the Company in writing that the Shares acquired by such
individual are acquired without a view to any distribution thereof
and will not be sold or transferred other than pursuant to an
effective registration thereof under said act or pursuant to a
exemption applicable under the Securities Act of 1933, as amended,
or the rules and regulations promulgated thereunder. The
certificates evidencing any of such Shares shall be appropriately
amended to reflect their status as restricted securities as
aforesaid.
15. Miscellaneous.
15.1. Multiple Agreements. The terms of each
Option may differ from other Options granted under the Plan at the
same time, or at some other time. The Board may also grant more
than one Option to a given Eligible Employee during the term of the
Plan, either in addition to, or in substitution for, one or more
Options previously granted to that Eligible Employee.
15.2. Withholding of Taxes. (a) The Company shall
have the right to deduct from any distribution of cash to any
Optionee, an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to any Option. If an
Optionee is entitled to receive Shares upon exercise of an Option,
the Optionee shall pay the Withholding Taxes to the Company prior
to the issuance of such Shares. In satisfaction of the Withholding
Taxes, the Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of
the Board, to have withheld a portion of the Shares issuable to him
or her upon exercise of the Option having an aggregate Fair Market
Value, on the date preceding the date of exercise, equal to the
Withholding Taxes, provided that in respect of an Optionee who may
be subject to liability under Section 16(b) of the Exchange Act
either (i) (A) the Optionee makes the Tax Election at least six (6)
months after the date the Option was granted, (B) the Option is
exercised during the ten day period beginning on the third business
day and ending on the twelfth business day following the release
for publication of the Company's quarterly or annual statements of
earnings (a "Window Period") and (C) the Tax Election is made
during the Window Period in which the Option is exercised or prior
to such Window Period and subsequent to the immediately preceding
Window Period or (ii) (A) the Tax Election is made at least six
months prior to the date the Option is exercised and (B) the Tax
election is irrevocable with respect to the exercise of all Options
which are exercised prior to the expiration of six months following
an election to revoke the Tax Election. Notwithstanding the
foregoing, the Board may, by the adoption of rules or otherwise,
(i) modify the provisions in the preceding sentence or impose such
other restrictions or limitations on Tax Elections as may be
necessary to ensure that the Tax Elections will be exempt
transactions under Section 16(b) of the Exchange Act, and (ii)
permit Tax Elections to be made at such other times and subject to
such other conditions as the Board determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within
the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any Share or Shares issued to such
Optionee pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such
exercise, the Optionee shall, within ten (10) days of such
disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office, and
immediately deliver to the Company the amount of Withholding Taxes.
15.3. Designation of Beneficiary. Each Optionee
may designate a person or persons to receive in the event of his or
her death, any Option or any amount payable pursuant thereto, to
which he or she would then be entitled. Such designation will be
made upon forms supplied by and delivered to the Company and may be
revoked in writing. If an Optionee fails effectively to designate
a beneficiary, then his or her estate will be deemed to be the
beneficiary.
16. Effective Date. The effective date of the Plan
shall be the date of its adoption by the Board, subject only to the
approval by the affirmative votes of the holders of a majority of
the securities of the Company present, or represented, and entitled
to vote at a meeting of stockholders duly held in accordance with
the applicable laws of the State of Delaware within twelve (12)
months of such adoption.
GHS, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 1997
The undersigned hereby appoints Alan Gold and Howard Grunfeld
as proxies of the undersigned, with full power of substitution, to
vote all shares of Common Stock, par value $.01 per share, of GHS,
Inc., a Delaware Corporation (the "Company"), the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on Thursday, October 23, 1997 at 9:00 a.m.,
Eastern Standard Time, at The Woodfin Suites, Virginia Room, 1380
Piccard Drive, Rockville, Maryland 20850, or any adjournments or
postponements thereof, with all the powers the undersigned would
have if personally present on the following matters:
1. Election of the following WITHHOLD
nominees to serve as AUTHORITY
Directors until the next FOR to vote
Annual Meeting of all for all
Stockholders. nominees nominees
[ ] [ ]
NOMINEES: Alan Gold, William F. Leimkuhler and Charles H.
Merriman, III
INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominee's name
in the space provided below.
-------------------------------------------------------------
2. Proposal to approve the FOR AGAINST ABSTAIN
Company's 1997 Stock
Option Plan. [ ] [ ] [ ]
3. Proposal to ratify and
approve the selection by the
Board of Directors of Richard
A. Eisner, LLP, as the FOR AGAINST ABSTAIN
Company's independent public [ ] [ ] [ ]
accountants for the fiscal
year to end December 31, 1997.
4. In their discretion, the above-named
proxies are authorized to vote in
accordance with their own judgment
upon such other matters as may properly
come before the Annual Meeting or any
adjournments or postponements thereof.
This proxy when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction
is indicated, this proxy will be voted "FOR" the election of all
nominees for Directors in Item 1 and "FOR" Items 2 and 3 and the
proxies will use their discretion with respect to any matters
referred to in Item 4.
The undersigned stockholder(s) acknowledges receipt of an
accompanying Notice of Annual Meeting of Stockholders and
accompanying Proxy Statement dated September 19, 1997.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Dated:
, 1997
Signature(s):
------------------------------------------------
(Note: Please complete, date and sign exactly as your name appears
hereon. When signing as attorney, administrator, executor,
guardian, trustee or corporate official, please add your title. If
shares are held jointly, each holder should sign.)
RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
<COVER>
WERBEL & CARNELUTTI
A Professional Corporation
711 Fifth Avenue
New York, New York 10022
September 24, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Avenue, N.W.
Washington, D.C. 20549
Attention: Filing Desk
Re: GHS, Inc.
Definitive Proxy Statement
Dear Ladies and Gentlemen:
On behalf of GHS, Inc., a Delaware corporation (the
"Company"), I enclose for filing with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934 (the "Exchange Act") a definitive
copy of (1) the Company's Proxy Statement relating to its 1997
Annual Meeting, (2) a Notice of Annual Meeting and (3) the Proxy
Card. No fee is required in connection with this filing.
Pursuant to Rule 14a-6(d) under the Exchange Act, I
hereby advise you that the Company anticipates releasing definitive
copies of the proxy materials to its stockholders on or about
September 24, 1997.
If we can respond to any comments or questions, please do
not hesitate to contact the undersigned of this firm, collect, at
(212) 832-8300.
Sincerely,
Peter DiIorio
Enclosures
103780