SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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( X ) Definitive Proxy Statement Rule 14a-6(e)(2))
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Fuel-Tech N.V.
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(Name of Registrant as Specified in Its Charter)
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FUEL-TECH N.V.
Castorweg 22-24, Curacao, Netherlands Antilles
Notice of Annual General Meeting of Shareholders
To be Held June 12, 2001
To the Shareholders of Fuel-Tech N.V.:
The Annual General Meeting (the "Meeting") of Shareholders of Fuel-Tech
N.V., a Netherlands Antilles limited liability company (the "Company"), will be
held Tuesday, June 12, 2001, at the registered office of the Company, Castorweg
22-24, Curacao, Netherlands Antilles, at 10:00 a.m. local time, to consider and
act upon the following matters, each of which is explained more fully in the
following Proxy Statement. A proxy card for your use in voting on these matters
is also enclosed.
1. To approve the Annual Report of Management to Shareholders on the
business and administration of the Company for the calendar year ended
December 31, 2000 (the "Annual Report");
2. To approve the Financial Statements for said calendar year, being the
Consolidated Balance Sheet, Consolidated Statement of Operations, Consolidated
Statement of Shareholders' Equity and Consolidated Statement of Cash Flows with
Notes and Auditors Report together with the Balance Sheet and the Statement of
Operations of the Company (Schedule I);
3. To elect nine (9) Managing Directors and to approve their
compensation;
4. To approve the amendment of the Company's 1993 Incentive Plan to fix
from the number of shares available for all awards (now 12 1/2% of
outstanding shares) the shares which may be issued subject to Incentive
Stock Options at a total of 2,000,000 shares;
5. To approve the appointment of Ernst & Young LLP as the independent
auditors for the year 2001 and to authorize the Managing Directors to
approve their compensation; and
6. To transact any other business that may properly come before the
meeting or at any adjournment thereof.
Only common shareholders of record at the close of business on June 11,
2001 are entitled to notice of and to vote at the Meeting. The presence in
person or by proxy of stockholders entitled to cast one-third of the total
number of votes which may be cast shall constitute a quorum for the transaction
of business at the Meeting.
The Annual Report is enclosed with this Notice of Meeting and Proxy
Statement.
FUEL-TECH N.V.
Charles W. Grinnell
Secretary
April 23, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON IT IS REQUESTED THAT YOU
PROMPTLY FILL OUT, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD. YOU MAY ALSO
SEND YOUR COMPLETED PROXY CARD BY FACSIMILE TO THE TRANSFER AGENT IN THE UNITED
STATES AT (860) 528-6472.
AN INFORMATION MEETING WILL BE HELD ON JUNE 7, 2001 FROM 9:30 A.M. TO 11:00 A.M.
AT THE LONDON SHERATON HOTEL, PICCADILLY, W1J 7BX, LONDON, U.K.
FUEL-TECH N.V.
Proxy Statement
The enclosed proxy is solicited by the Board of Managing Directors (the
"Board") of Fuel-Tech N.V., a Netherlands Antilles limited liability company
(the "Company"), in connection with the Annual Meeting of Shareholders of the
Company (the "Meeting") to be held at the registered offices of the Company,
Castorweg 22-24, Curacao, Netherlands Antilles, Tuesday, June 12, 2001, at 10:00
a.m. local time, and at any adjournments thereof.
The record date with respect to mailing of this solicitation is April
16, 2001. Under Netherlands Antilles law, however, all holders of Company common
stock as of the close of business on June 11, 2001 are nevertheless entitled to
vote at the meeting. As of the record date the Company had 18,538,743 shares of
common stock outstanding according to the records of the Company's Transfer
Agent. Each share is entitled to one vote. Under the rules of The Nasdaq Stock
Market, Inc., a quorum of one third of the votes entitled to be cast is required
for action on matters taken up at the Meeting.
Each shareholder is entitled to appoint a representative at the Meeting
other than those named in the form of proxy. A shareholder desiring to appoint
some other person who need not be a shareholder may do so by completing another
proper form of proxy for use at the Meeting. All completed forms of proxy should
be mailed promptly in the enclosed return envelope for delivery on or before
5:00 p.m. (local time) June 11, 2001 to the transfer agent.
A shareholder giving a proxy may revoke such proxy by an instrument in
writing signed by the shareholder, by his attorney-in-fact authorized in
writing, or, if the shareholder is a corporation, under its corporate seal or by
a duly authorized officer or attorney, and deposited with the Transfer Agent at
the above address or with the Chairman of the Meeting at the time of the
Meeting.
If a proxy is signed and not revoked by the shareholder, the shares it
represents will be voted at the Meeting in accordance with the instructions of
the stockholder. Abstentions and broker non-votes are counted as present in
determining whether a quorum is present, but are not counted in the calculation
of the vote. If the proxy is signed and returned without specifying choices, the
shares will be voted in favor of each Item on the agenda in accordance with the
recommendations of the Board. Members of the Board and executive officers of the
Company may solicit shareholders' proxies by mail, telephone or facsimile. The
Company shall bear the cost of proxy solicitation, if any.
ANNUAL REPORT
The Company's Annual Report to Shareholders (the "Report"), contains
the report of Management on the business and administration of the Company for
the calendar year ended December 31, 2000 and financial statements reflecting
the financial position and results of operations of the Company for 2000 (the
"Financial Statements"), together with the Company's Balance Sheet and Statement
of Operations. The Financial Statements are set forth in the Report in
consolidated form and, as required by Netherlands Antilles law, in
unconsolidated form. See Schedule I to this Proxy Statement. The Report and this
Proxy Statement were distributed together commencing in the week of April 23,
2001. The Report is available for inspection at the office of the Company
written on the Notice of Meeting and will be available for inspection at the
Meeting.
A resolution will be presented at the Meeting for the adoption of the
Annual Report and the approval of the Financial Statements. The Company
understands that under Netherlands Antilles law, approval of the Report and the
Financial Statements at the Meeting will have the effect of discharging the
Managing Directors from legal liability for their activities as directors for
the year ended December 31, 2000.
The affirmative vote of a majority of the shares voting is required for
the approval of this proposal. The Board recommends a vote FOR this proposal.
ELECTION OF DIRECTORS
The Board proposes the election of nine Managing Directors. The term of
office of each director is until the next Annual General Meeting or until a
successor shall have been duly elected. Douglas G. Bailey, Ralph E. Bailey, John
A. de Havilland, Charles W. Grinnell, Jeremy D. Peter-Hoblyn, John R. Selby,
Thomas S. Shaw, Tarma Trust Management N.V., and James M. Valentine, who are
each incumbent directors, are the nominees for election as Managing Directors of
the Company. Mr. Shaw is proposed to be elected for the first time. Each of the
nominees has consented to act, if elected. Should one or more of these nominees
become unavailable to accept nomination or election, votes will be cast for a
substitute nominee, if any, designated by the Board. If no substitute nominee is
designated prior to the election, the individuals named as proxies on the
enclosed proxy card will exercise their judgment in voting the shares that they
represent. A motion will be proposed at the Meeting for the election of the
foregoing nine directors and to approve their compensation as described below
under the caption "Director's Compensation."
The affirmative vote of a majority of the shares voting is required for
the election of directors and the approval of their compensation. The Company
recommends a vote FOR each of the nominees.
4
The following table sets forth certain information with respect to each
person nominated and recommended to be elected as a Managing Director of the
Company.
Name Age Director Since
- ---- --- --------------
Ralph E. Bailey 77 1998
Douglas G. Bailey 51 1998
John A. de Havilland 63 1988
Charles W. Grinnell 64 1989
Jeremy D. Peter-Hoblyn 61 1988
John R. Selby 71 1998
Thomas S. Shaw 54 -
Tarma Trust Management N.V. - 1998
James M. Valentine 47 1993
Shareholders' Agreement
Pursuant to a Shareholders' Agreement of April 30, 1998 (the "Agreement")
between the Company and certain investors (the "Investors"), the Company and the
Investors have agreed that for a defined period, (a) the Investors may nominate
three directors for appointment as Managing Directors of the Company, one of
whom shall be an independent director and (b) the other Managing Directors (the
"Other Directors") shall be entitled to nominate four Managing Directors, one of
whom shall be an independent director.
The Board of Managing Directors has nominated for appointment as Managing
Directors the persons named above under the caption "Managing Directors." Of
these nominees, Messrs. D. G. Bailey, R. E. Bailey and Selby are nominees of the
Investors, Mr. Selby being independent. Messrs. de Havilland, Grinnell,
Peter-Hoblyn and Valentine are nominees of the Other Directors, Mr. de Havilland
being independent. Tarma Trust Management N.V. and Mr. Shaw, who are
independent, are the joint nominees of the Investors and the Other Directors.
The Investors are Douglas G. Bailey, Ralph E. Bailey, Nolan R. Schwartz and
certain related parties who are associated with American Bailey Corporation, a
privately owned company of which Mr. Ralph E. Bailey is Chairman and Mr. Douglas
G. Bailey, his son, is President and CEO.
The defined period for the exercise by the Investors of the above described
nominating rights is (a) not more than 10 years or (b) such lesser period ending
when as a group the Investors own, in the aggregate, (x) during the first four
years after the making of the Agreement, less than 50% of the shares of the
Company acquired pursuant to a Stock Purchase Agreement as of April 30, 1998
(the "SPA"), and (y) during the period following the Making of the Agreement and
ending on the tenth anniversary thereof, less than 10% of the then outstanding
shares of the Company. Pursuant to the SPA the Investors purchased and own
4,750,000 shares of the Company and have the right through warrants to acquire
an additional 3,000,000 shares.
5
Directors and Executive Officers of the Company and Fuel Tech, Inc.
Vincent M. Albanese, 52, has been Vice President Air Pollution Control,
Sales and Marketing of Fuel Tech, Inc. since April, 1998. He was Vice President
Sales and Marketing of Nalco Fuel Tech, a joint venture between Fuel Tech, Inc.
and Nalco Chemical Company ("Nalco"), prior to joining Fuel Tech, Inc., and had
served Nalco Fuel Tech since 1990. Prior to his service with Nalco Fuel Tech,
Mr. Albanese was a market development specialist with Nalco, his employer since
1975.
Steven C. Argabright, 58, has been a director and the President and
Chief Operating Officer of Fuel Tech, Inc. since April, 1998. He was President
and Chief Executive Officer of Nalco Fuel Tech from 1996 to April, 1998 and Vice
President of Nalco Fuel Tech from 1990 to 1996. Prior to the formation of Nalco
Fuel Tech, Mr. Argabright was a Regional Sales Manager of Nalco, his employer
since 1973.
Ralph E. Bailey has been a director and Chairman of the Board and Chief
Executive Officer of the Company and a director of FTI since April, 1998. He has
been a director and Chairman of American Bailey Corporation ("ABC"), a privately
owned business acquisition and development company, since 1984. Mr. Bailey is
the former Chairman and Chief Executive Officer of Conoco, Inc., an energy
company, and a former Vice Chairman of E.I. du Pont de Nemours & Co., a chemical
company. Mr. Bailey is also a director of Clean Diesel Technologies, Inc., a
pollution control products company.
Douglas G. Bailey has been a director of the Company and of Fuel Tech,
Inc. since April, 1998. Mr. Bailey, who is the son of Ralph E. Bailey, has been
the President and Chief Executive Officer of ABC since 1984. Mr. Bailey is
Chairman and Chief Executive officer of Golden Casting Corporation, an affiliate
of ABC and a foundry company. Mr. Bailey is a director of Clean Diesel
Technologies, Inc.
Stephen P. Brady, 44, has been Vice President - Fuel Chem of Fuel Tech,
Inc. since February, 1998. Prior to joining Fuel Tech, Inc., Mr. Brady was a
Regional Sales Manager of Nalco, his employer since 1980.
John A. de Havilland has been, except for the period April, 1998 to
December, 1998, a director of the Company since its inception and of FTI from
1984 to 1998. He is a director of Clean Diesel Technologies, Inc. Mr. de
Havilland was a director of J. Henry Schroder Wagg & Co. Ltd., a British bank,
from 1971 until his retirement in 1990.
Charles W. Grinnell has been Vice President, General Counsel and
Corporate Secretary of the Company since 1988 and a director of the Company and
FTI since September, 1989. Mr. Grinnell is a director of Clean Diesel
Technologies, Inc. and has also been engaged in the private practice of
corporate law in Stamford, Connecticut since 1992.
6
Jeremy D. Peter-Hoblyn has been a director of the Company since its
inception and of FTI since 1984. He has been a director and the President and
Chief Executive Officer of Clean Diesel Technologies, Inc. since 1994. Mr.
Peter-Hoblyn was Chief Executive Officer of Fuel-Tech N.V. from 1993 to 1996.
John R. Selby, has been a director of the Company since December, 1998
and a director of FTI since November, 1998. Mr. Selby was a director and the
President and Chief Executive Officer of SPS Technologies, Inc. until his
retirement in 1993 and was a director of General Signal Corporation from 1987 to
1998.
Thomas S. Shaw, has been President and Chief Operating Officer of
Conectiv, an electric power generating and distribution company, since September
2000 and previously had been employed by its predecessor Delmarva Power & Light
Company ("Delmarva") for over 25 years where he had been President of its
subsidiary Delmarva Capital Investments, Inc. from 1991 until 1995 and was
Executive Vice President of Delmarva from 1997 until September 2000. Mr. Shaw
was elected a director of FTI on February 22, 2001.
Nolan R. Schwartz, 50, has been a director of Fuel Tech, Inc. since
April, 1998. He is a Principal of American Bailey Corporation, his employer
since 1988. Mr. Schwartz is a Director of Golden Casting Corporation.
Scott M. Schecter, 44, has been Vice President, Chief Financial Officer
and Treasurer of the Company since January 1994 and has been a director of FTI
since April, 1998. Mr. Schecter was also Chief Financial Officer of Clean Diesel
Technologies, Inc. from 1995 through November, 1999. From June 1990 through
January 1994, Mr. Schecter was Senior Vice President and Chief Financial Officer
of American Vision Centers, Inc., a consumer products company.
Tarma Trust Management, N.V., a director of the Company since April,
1998 is a Netherlands Antilles limited liability company in Curacao specializing
in company management and representation.
James M. Valentine has been a director of the Company since September,
1993. Mr. Valentine has been a director and Executive Vice President and Chief
Operating Officer of Clean Diesel Technologies, Inc. since 1994. He served Fuel
Tech, Inc. from 1982 through 1990 as Vice President - Marketing and served the
Company as Executive Vice President from 1993 through April 1998. From the
period 1990 through 1993, Mr. Valentine was the head of his own energy and
environmental consulting firm.
There are no family relationships between any of the directors or
executive officers, except as stated above.
7
Board Committees of the Company and Fuel Tech, Inc.
The Board has an Audit Committee of which the members are Mr. de
Havilland, Chairman, Mr. Selby and Mr. R.E. Bailey (ex officio). Mr. Shaw will
be appointed to the Audit Committee effective upon his election as a Managing
Director of the Company. There are no other committees of the Board of Directors
of the Company. Compensation matters are determined by the Compensation
Committee of Fuel Tech, Inc. of which the members are Messrs. Selby, Chairman,
S. C. Arbabright (ex officio) D. G. Bailey, R. E. Bailey and N. R. Schwartz. Ex
officio members of Company or Fuel Tech, Inc. committees are participating but
non-voting members. Fuel Tech, Inc. is a wholly-owned subsidiary of the Company.
The Audit Committee is responsible for review of audits, financial
reporting and compliance, accounting and internal controls policy, and
recommendations to the Board regarding the engagement of independent auditors,
oversight of their activities and evaluation of their independence. The Charter
of the Audit Committee is attached as Schedule II.
The Compensation Committee is responsible for setting and administering
the policies and programs that govern both annual compensation and stock
ownership programs and recommends stock option awards to the Board of the
Company.
Meetings
During the year ended December 31, 2000 there were four meetings of the
Board of Directors of the Company, one meeting of its audit Committee and four
meetings of the Compensation Committee of Fuel Tech, Inc. Each director of the
Company attended at least 75% of Board and committee meetings of which he was a
member during the period of his directorship.
Indemnification
Under the Articles of Incorporation of the Company indemnification is
afforded the Company's directors and executive officers to the fullest extent
permitted by the laws of the Netherlands Antilles. Such indemnification also
includes payment of any costs which an indemnitee incurs because of claims
against the indemnitee. The Company is, however, not obligated to provide
indemnity and costs where it is adjudicated that the indemnitee did not act in
good faith in the reasonable belief that the indemnitee's actions were in the
best interests of the Company, or, in the case of a settlement of a claim, such
determination is made by the Board of Directors of the Company.
The Company carries insurance providing indemnification, under certain
circumstances, to its directors and officers for claims against them by reason
of, among other things, any act or failure to act
8
in their capacities as directors or officers. The current annual premium for
this policy is $76,000. No sums have been paid for such indemnification to any
past or present director or officer by the Company or under any insurance
policy.
9
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors on the recommendation of the Audit Committee has
appointed the firm of Ernst & Young LLP, Certified Public Accountants ("Ernst &
Young"), to be the Company's auditors for the year 2001 and submits that
appointment to the shareholders for approval. Ernst & Young has served in this
capacity since 1990 and is knowledgeable about the Company's operations and
accounting practices and is well-qualified to act in the capacity of independent
accountants. In making the appointment, the Board reviews Ernst & Young's
performance in prior years along with its reputation for integrity and overall
competence in accounting and auditing. Representatives of Ernst & Young are not
expected to be present in Curacao at the Meeting or in London at the Information
Meeting.
Audit Fees
For 2000, Ernst & Young billed $104,500 for fees for professional
services rendered for the audit of the Company's 2000 financial statements and
the review of the Company's financial statements included in the quarterly
reports on Securities and Exchange Commission Form 10-Q filed in 2000.
Financial Information Systems Design and Implementation Fees
For 2000, Ernst & Young did not render any professional services for
the Company in connection with financial information systems design and
implementation.
All Other Fees
For 2000, $1,500 was billed by Ernst & Young for all other non-audit services
performed for the Company.
The affirmative vote of a majority of the shares voting is required for
the approval of this proposal. The Company recommends a vote FOR this proposal.
Report of the Audit Committee
Management is responsible for the Company's internal controls and its
financial reporting. The independent auditors are responsible for performing an
audit of the Company's financial statements in accordance with generally
accepted auditing standards and for expressing an opinion on those financial
statements based on their audit. The Audit Committee reviews these processes on
behalf of the Board of Managing Directors. In such context, the Committee has
reviewed and discussed the audited financial statements contained in the 2000
Annual Report on Form 10-K with the Company's management and its independent
auditors.
The Committee has discussed with the independent auditors the matters
required to be discussed by the Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended.
10
The Committee has received the written disclosures and the letter from
the independent auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as amended, and has discussed
with the independent auditors their independence. The Committee has also
considered whether the provision of the services described above under the
captions "Financial Information Systems Design and Implementation" and "All
Other Fees" is compatible with maintaining the independence of the independent
auditors.
Based on the review and discussions referred to above. The Committee
recommended to the Board of Managing Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 filed with the Securities and Exchange Commission.
By the Audit Committee: J. A. de Havilland, Chairman, J. R. Selby and
R. E. Bailey (ex officio).
AMENDMENT OF 1993 INCENTIVE PLAN
The Plan
The Company's 1993 Incentive Plan (the "Plan") was adopted by the Board
of Managing Directors and approved by the shareholders of the Company in 1993
and amended thereafter from time to time. The Plan is intended to provide a
flexible structure within which the Company may utilize various compensation
devices to recruit and retain key personnel. A registration statement is
currently in effect with respect to shares of the Company's Common Stock
issuable under the Plan. The closing price of the Company's Common Stock on
April 2, 2001 was $2.438.
Awards under the Plan may be granted in the form of non-qualified stock
options, incentive stock options, stock appreciation rights, restricted stock,
performance awards, bonuses, or any other form of share-based or non-share-based
award or any combination of these awards. To date only non-qualified and
incentive stock options have been granted under the Plan.
Administration; Participation
The Plan is administered by a the Compensation Committee of Fuel Tech,
Inc. (see above under Board Committees of the Company and of Fuel Tech, Inc.).
The Committee recommends awards under the Plan subject to the approval of the
Board of the Company. Awards may be granted to employees, of whom there are
presently approximately 65, officers, directors and consultants of the Company.
Directors who are not employees each year are automatically awarded a 10,000
share non-qualified stock option on the second business day following the annual
general meeting. Awards under the Plan will be automatically vested in the event
of a change of control of the Company, as defined in the Plan.
11
Available Shares; Limitations
Subject to the approval of the Board, the administrator is authorized
to grant awards, provided that total shares subject to awards shall not exceed
an amount equal up to 12 1/2 percent of shares from time to time issued and
outstanding (as of the record date, 2,317,342 shares). Shares subject to awards
may appropriately be adjusted as a result of stock splits, recapitalizations and
the like.
There are presently a total of 2,184,250 shares subject to all
outstanding awards under the Plan. There is, moreover, a limit under the terms
of the Plan of one million shares which may be issued on account of awards of
incentive stock options ("ISOs")as opposed to non-qualified stock options
("NQOs")(See descriptions of these types of options below). Section 422 of the
Internal Revenue Code requires a fixed limitation of the number of shares
issuable under ISOs. There are, however, now outstanding and unexercised, awards
of ISOs for 1,582,750 shares and the excess of 582,750 shares is subject to the
approval of the proposed amendment of the Plan which is the subject of this
agenda item at the Meeting. If this agenda item is not approved, the excess over
one million shares will be treated as NQOs.
No award may be outstanding for more than ten years. Share based awards
at the time of grant shall have an exercise price of or be valued at not less
than 100% of the fair market value of the shares on the date of the award as
determined by the administrator. Awards under the plan, unless waived by the
administrator, are subject to certain restrictions on transferability. Awards
may be forfeitable in certain circumstances and are exercisable at such time or
times and during such periods as shall be set forth in the agreement evidencing
an award.
Amendments
The Board of Managing Directors may amend the Plan, which may include
suspension or termination of the Plan. In the absence of shareholder approval,
however, no amendment may cause the Plan to fail to comply with applicable law,
regulation or rule.
Tax Matters
The following summary describes the U.S. Federal income tax consequences of
awards under the Plan:
Non-Qualified Stock Options. No income will be recognized by the holder
and the Company will not be entitled to a deduction at the time of grant of a
NQO at not less than 100% of market value. On exercise of a NQO the amount by
which the fair market value of the stock on the date of exercise exceeds the
option price will be taxable to the holder as ordinary income and, subject to
satisfying certain withholding requirements and any Internal Revenue Code
Section 162(m) deduction limitation for compensation in excess of $1 million per
person, deductible by the Company. The subsequent sale of shares acquired upon
exercise of a NQO will ordinarily result in a capital gain or loss.
12
Incentive Stock Options. ISOs are granted pursuant to Sections 421 and
422 of the Internal Revenue Code to employees of the Company. No income will be
recognized by the employee at the time of the grant of an ISO at not less than
100% of market value. On exercise of ISO's no income will be recognized by the
employee so long as the shares are held and not transferred for two years from
the date of grant and one year from the date of exercise. If the shares are not
held for these periods, then the sale or transfer of the shares is a
disqualifying disposition and the treatment is the same as for a NQO with the
employee recognizing ordinary income as of the date of sale or transfer. A gift
of the shares is a transfer constituting a disqualifying disposition. A
transfer, however, of an ISO or shares obtained on exercise of an ISO to a
decedent's estate is not a disqualifying disposition.
For those ISO shares held for the above holding periods, long term
capital gain on a sale of the Shares on the difference between the sale price
and the option exercise price and not ordinary income will be recognized.
Currently the tax rate applicable to long-term capital gains is lower than the
highest tax rate applicable to ordinary income.
The amount of proceeds to which non-recognition of ordinary income and
deferred recognition of capital gains is applicable on exercise of ISO's is
limited to a total of all such exercises of $100,000 per year per optionee of
the market value of option shares when granted. This $100,000 amount is,
however, cumulative from the vesting date, so that, if in one year ISO's are not
exercised, then in the next year the amount will be $200,000.
The proceeds of ISO's when exercised, i.e. the difference between the
market value of shares on the date of exercise and the Exercise Price, are
"preference income" under the Code and the holder of an ISO may, accordingly, be
subject to the Alternative Minimum Tax in the year of exercise.
Stock Appreciation Rights. The amount of any cash or the fair market
value of any stock received upon the exercise of a stock appreciation right
under the Plan will be includible in the employee's ordinary income and, subject
to applicable withholding requirements and any Section 162(m) deduction
limitation, deductible by the Company.
Restricted Stock Awards. Under Internal Revenue Code Section 83(b), an
employee may elect to include in ordinary income, as compensation at the time
restricted stock is first issued, the excess of the fair market value of such
shares at the time of issuance over the amount paid, if any, by the employee.
Unless a Section 83(b) is made, no taxable income will generally be recognized
by the recipient of a restricted stock award until such shares are no longer
subject to the restrictions or the risk of forfeiture. When either the
restrictions or the risk of forfeiture lapses, the employee will recognize
ordinary income and, subject to applicable withholding requirements and any
13
Section 162(m) deduction limitation, the Company will be entitled to a deduction
in the amount equal to the excess of the fair market value of the stock on the
date of lapse over the amount paid, if any, by the employee for such shares.
Absent a Section 83(b) election any cash dividends or other distributions paid
with respect to the restricted stock prior to the lapse of the restrictions or
risk of forfeiture will be included in the employee's ordinary income as
compensation at the time of receipt.
14
Performance Shares or Units. Generally, an employee will not recognize
any taxable income and the Company will not be entitled to a deduction upon the
award of performance shares or units. When the employee receives a distribution
in respect of the performance shares or units, the fair market value of stock or
cash received in payment for such awards generally is taxable to the employee as
ordinary income and, subject to applicable withholding requirements and any
Section 162(m) limitation, deductible by the Company.
Future Awards
Future Awards under the Plan are discretionary and not currently
determinable. However, If the proposed amendment of the Plan had been in effect
in 2000, Awards in 2000 would not have been increased, although 323,000 granted
as incentive stock options would not have been subject to the approval of the
Plan amendment proposed in this agenda item. Each of the named executive
officers, who are also the current executive officers, would have received the
stock option Awards set out for them under the caption "Long Term" in the
Summary Compensation Table below, the non-employee Managing Directors would have
received non-qualified stock options for a total of 70,000 shares, and all
employees including all officers who are not the named executive officers, would
have received incentive stock options for a total of 323,000 shares and
non-qualified options for a total of 13,000 shares.
Proposed Amendment of the Plan
Management is of the opinion that the tax advantaged aspects of
incentive stock options are of importance to the Company's recruitment and
retention of key employees. The Internal Revenue Code requires a fixed
limitation. The present limitation in the Plan of one million shares is
insufficient for the Company's needs and an increase in that limitation is
recommended. Accordingly a resolution will be presented at the Meeting to
approve an amendment to the Plan to fix a limit of two million shares for
issuance under the Plan of shares on account of incentive stock options.
The affirmative vote of a majority of the shares voting is required for
the approval of this proposal. The Company recommends a vote FOR this proposal.
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of March 31, 2000 by (i) each person known to the
Company to own beneficially more than five percent of the outstanding Common
Stock; (ii) each director of the Company; (iii) the Named Executive Officers;
and (iv) all directors and executive officers as a group.
15
Name and Address(1) No. of Shares(2) Percentage(3)
- ------------------- ------------- ----------
Beneficial Owner
RIT Capital Partners plc 1,028,882 5.6%
Management
Vincent M. Albanese(4) 33,750 *
Steven C. Argabright (2) 69,000 *
Douglas G. Bailey (5) 1,942,500 9.5%
Ralph E. Bailey (5)(6) 4,690,000 25.3%
Stephen P. Brady 35,000 *
John A. de Havilland(5) 20,000 *
Charles W. Grinnell (5) 49,000 *
Jeremy D. Peter-Hoblyn(5) 120,000 *
John R. Selby (5)(6) 25,000 *
Scott M. Schecter (5) 136,500 *
Thomas S. Shaw - *
Tarma Trust Management N.V. - *
James M. Valentine(5) 55,000 *
All Directors and Officers
as a Group (13 persons)(3)(4)
(5)(6) 7,175,750 34.3%
* Less than one percent (1.0%)
(1) The address of RIT Capital Partners plc is 27 St. James Place, London,
England SW1A 1NR. The address of each of the above management beneficial owners
is c/o Fuel Tech, Inc., Suite 703, 300 Atlantic Street, Stamford, Connecticut
06901, except Tarma Trust Management N.V. which is Castorweg 22-24, Curacao,
Netherlands Antilles.
(2) Except for 4,000 of the shares indicated for Mr. Argabright which are
owned by his spouse, the owners of all shares are believed by the Company to
have sole ownership and investment control of such shares.
(3) The percentages in each case are of the outstanding common and all
warrants or options exercisable within 60 days.
(4) Does not include 2,000 shares owned by Mr. Albanese's spouse as to which
he disclaims beneficial ownership.
(5)Includes shares subject to options and warrants exercisable presently and
within 60 days for Mr. Albanese, 28,750 shares; Mr.Argabright, 60,000 shares;
Mr. D. G. Bailey, 1,867,500 shares; Mr. R.E. Bailey, 40,000 shares; Mr. Brady,
25,000 shares; Mr. de Havilland, 20,000 shares; Mr. Grinnell, 27,500 shares; Mr.
Peter-Hoblyn 120,000 shares; Mr. Schecter, 132,500 shares; Mr. Selby 20,000
shares; Mr. Valentine 55,000 shares; and, for all directors and officers as a
group, 2,396,250 shares.
(6) Does not include for Mr. R. E. Bailey 11,697 Units and for Mr. Selby
13,666 Units accrued at March 31, 2000 under the Directors Deferred Compensation
Plan.
16
EXECUTIVE COMPENSATION
The table below sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to Mr. Ralph E. Bailey,
Chairman and Chief Executive Officer, Mr. Vincent M. Albanese, Vice President of
FTI, Steven C. Argabright, Vice President and Chief Operating Officer of FTI,
Stephen P. Brady, Vice President of FTI and Scott M. Schecter, Vice president,
Treasurer and Chief Financial officer of the Company and FTI during the fiscal
years ending December 31, 1999, 1998 and 1997.
Summary Compensation Table
Annual Long-Term
Shares
Underlying
Other Options
Annual Granted All Other
Name and Principal Position Year Salary(1) Bonus(2) Compensation (#)(3) Compensation(4)
- --------------------------- ---- --------- -------- ------------ ------ ---------------
Vincent M. Albanese 2000 151,299 -- 35,000 10,200
Vice President 1999 140,852 35,553 50,000 9,456
1998 133,313 42,811 50,000 5,395
Steven C. Argabright 2000 194,334 -- 75,000 10,200
President and Chief 1999 178,230 72,475 75,000 9,600
Operating Officer 1998 164,278 76,856 100,000 8,277
Stephen P. Brady 2000 147,617 -- -- 10,200
Vice President 1999 140,837 35,087 50,000 9,285
1998 123,469 30,233 50,000 6,750
Ralph E. Bailey 2000 -- -- -- 10,000 10,000
President and Chief 1999 -- -- -- 10,000 14,603
Executive Officer 1998 -- -- -- 10,000 6,833
Scott M. Schecter 2000 200,467 -- 50,000 10,200
Vice President, Treasurer 1999 190,747 48,020 2,323 50,000 9,600
and Chief Financial 1998 183,189 36,223 2,249 50,000 9,600
Officer
- ----------
(1) Mr. Bailey is not an employee of the Company or of Fuel Tech, Inc. Prior
to April 30, 1998 Messrs. Argabright and Albanese were employees of Nalco
Chemical Company seconded to the Nalco Fuel Tech Joint Venture and the Company
bore 50% of the cost of their compensation prior to that date.
(2) Bonus payments for 1998 and 1999 were for participating employees in the
Fuel Tech Management Incentive Program; no bonuses were payable for 2000.
(3) With the exception of the options granted to Mr. Bailey which were
Non-Qualified Stock Options, the options granted were Incentive Stock Options.
The options do not include stock appreciation rights.
(4) The amounts designated "Other Compensation" for Mr. Bailey were directors
fees which for 2000 and 1999, respectively, were deferred under the Directors
Deferred Compensation Plan as 4,927 and 6,770 Units; and, for Messrs Albanese,
Argabright, Brady and Schecter, Company profit sharing and matching
contributions to the Fuel Tech, Inc. 401(k) Plan.
17
Directors' Compensation
The Company provides an annual retainer of $10,000 payable quarterly in
arrears and meeting fees of $1,000 for days spent on Board or committee meetings
in excess of five per year. The Board has generally four regularly scheduled
meetings per year. In addition, committee chairmen, both of the Company and Fuel
Tech, Inc., are provided an annual retainer of $2,000. Non-executive directors
are entitled under the Company's Directors Deferred Compensation Plan to defer
fees in either cash with interest or share equivalent "Units" until fixed dates,
including the date of retirement from the Board.
Directors employed by the Company or its subsidiaries receive
compensation other than directors fees but receive no compensation for their
service as directors. Except for the retainer for committee chairmen and the
non-executive options referred to below, Fuel Tech, Inc. directors are not
compensated for their service as directors.
Under the non-executive feature of the Company's 1993 Incentive Plan,
each non-executive director of the Company or of Fuel Tech, Inc. receives as of
the first business day following the annual meeting a Non-Qualified Stock Option
award of 10,000 shares for a term of 10 years vesting immediately. In 2000 such
10,000 share options were granted to Messrs. D. G. and R. E. Bailey, de
Havilland, Peter-Hoblyn, Schwartz, Selby and Valentine at the exercise price of
$2.344 per share.
Compensation Committee Interlocks and Insider Participation
Mr. R. E. Bailey, who is not an employee of the Company or of Fuel
Tech, Inc., is Chairman and Chief Executive Officer of the Company and is a
member of the Fuel Tech, Inc. Compensation Committee (the "Committee"). Mr.
Argabright is President and Chief Operating Officer of Fuel Tech, Inc. and, as
an ex officio member of the Committee, participates in meetings of the Committee
but does not vote on Committee actions. Mr. R. E. Bailey is Chairman and a
shareholder of ABC and Mr. D. G. Bailey is President, Chief Operating Officer
and an employee and shareholder of ABC, in which relationships they enjoy a
direct material interest in the management services fees set forth below under
the caption "Management Services Agreement."
18
OPTION GRANTS IN THE LAST FISCAL YEAR (1)
Expiration Date Potential Realizable
Number of % of Total Value of Assumed
Shares Options Annual Rates of Stock
Underlying Granted to Exercise or Price Appreciation for
Options Employees in Base Price Option Term
Granted (#) 1999 ($/Sh) 5% 10%
----------- ------------ ----------- --- ---
Name
Vincent M.
Albanese 35,000 8.6% $ 2.0625 2/8/10 $45,395 $115,048
Steven C.
Argabright 75,000 18.5% $ 2.0625 2/8/10 $97,275 $246,532
Ralph E.
Bailey 10,000 2.5% $ 2.344 6/26/10 $14,741 $ 37,357
Stephen P
Brady -- -- -- - - -
Scott M.
Schecter 50,000 12.3% $ 2.0625 2/8/10 $64,850 $164,355
(1) Except the options granted to Mr. Bailey which are immediately exercisable,
50% of the above stock option awards are first exercisable on the second
anniversary of grant and 25% of the awards on each of the third and fourth
anniversaries of grant. 2000 options were granted on February 8, 2000. The
Company has not historically and did not in 2000 grant stock appreciation
rights.
19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Number of Number of
Securities Securities Value of Value of
Underlying Underlying Unexercised Unexercised
Unexercised Unexercised in-the-Money in-the-Money
Shares Options at Options at Options at Options at
Acquired Fiscal Year Fiscal Fiscal Fiscal
on Value End/ Year-End/ Year-End/ Year-End/
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Vincent M.
Albanese 5,000 $ 3,906 28,750 110,000 $15,310 -
Steven C.
Argabright 20,000 $ 7,031 60,000 125,000 - -
Ralph E.
Bailey(1) -- -- 40,000 -- - -
Stephen P.
Brady -- -- 25,000 75,000 - -
Scott M.
Schecter -- -- 115,000 125,000 - -
(1) Including for Mr. Bailey warrants not under the Plan to purchase 10,000
shares at $1.75 per share.
20
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Compensation Policies
The Company's executive compensation policies are to pay competitive
salaries and annual incentive compensation, if earned, and to grant stock option
awards in appropriate amounts. Competitive salaries are based on Management's
knowledge of market conditions supplemented by salary surveys as well as the
position of each employee within the business and historical practice. Incentive
compensation, intended to encourage performance may be in the form of
discretionary bonuses or participation by managers in the Fuel Tech, Inc.
Management Incentive Program ("MIP"). Company stock option awards are made to
provide a long term incentive to employees and to create a common interest
between the employees and its shareholders generally.
Compensation of Executive Officers - 2000
The key components of the Company's executive compensation program
during the last fiscal year were base salary, incentive compensation, and stock
option awards under the 1993 Plan. Base salaries are fixed by the Board in its
discretion based upon historical levels, performance, ranking within the officer
21
group, amounts being paid by comparable companies, and the Company's financial
position. Incentive compensation, when earned, is based upon the Company's
achievement of a minimum level of performance under annual profit plan and the
individual officer's allocated percentage of an amount determined by the Board
to be the MIP "pool," if minimum financial performance is achieved. Incentive
compensation payments, however, were not made for 2000 as the minimum
performance level for 2000 was not achieved. The stock options are designed to
provide additional incentives to executive officers to maximize stockholder
value. Through the use of vesting periods the option program encourages
executives to remain in the employ of the Company. In addition, because the
exercise prices of such options are set at the fair market value of the stock on
the date of grant of the option, executives can only benefit from such options
if the trading price of the Company's shares increases, thus aligning their
financial interests with those of the shareholders.
Compensation of Chief Executive Officer - 2000
The Chairman and Chief Executive Officer, Ralph E. Bailey, is not an
employee of the Company or of Fuel Tech, Inc. and received director's fees and
stock option awards for service in his capacity as a director only. See also the
text below under the caption "Management Services Agreement" concerning payments
by the Company to American Bailey Corporation.
In 2000, Mr. Argabright, President and Chief Operating Officer of Fuel
Tech, Inc., was paid a competitive base salary. A significant portion of Mr.
Argabright's annual compensation was, however, to be based on incentive
compensation with a target percentage of 40%. The Company, however, did not
achieve its profit goals and that incentive compensation was not earned. Stock
option awards to Mr. Argabright in 2000 were 75,000 shares.
This report has been prepared by the following members of the
Compensation Committee of Fuel Tech, Inc.
D. G. Bailey R. E. Bailey
N. R. Schwartz J. R. Selby
This compensation report and the following performance graph shall not
be deemed incorporated by reference into any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent the Company specifically incorporates such report.
22
PERFORMANCE GRAPH
The following line graph compares (i) the Company's total return to shareholders
per share of Common Stock from January 1, 1996 through the end of 2000 to that
of (ii) the Russell 2000 index, (iii) the Standard and Poors Pollution Control
Index and (iv) the NASDAQ Industrial Index.
[STOCK PERFORMANCE GRAPH]
--------------------------------------------------------------------
Performance Graph -- Cumulative % Change from base year 12/31/95
--------------------------------------------------------------------
FTEK Russell 2000 SPPOLU NASDAQ Ind. Comparable Co.
--------------------------------------------------------------------
12/31/95 100 100 100 100 100
12/31/96 34 116 104 116 69
12/31/97 32 138 105 127 98
12/31/98 43 134 113 136 50
12/31/99 47 160 60 232 67
12/28/00 36 163 61 0 68
--------------------------------------------------------------------
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Services Agreement
Pursuant to a Management Services Agreement of April 30, 1998, as
amended, between Fuel Tech, Inc. (FTI) and American Bailey Corporation ("ABC"),
ABC will provide management services to FTI and, if requested, the Company. Such
management services shall consist of management policy guidance and assistance
in the areas of management focus and strategic direction, world-wide marketing
strategy and planning, internal accounting and administrative procedures,
management and organizational development, financial analysis, budgeting and
working capital management and market analysis, industry trend analysis, and
advice regarding power generation and internal combustion engine markets. The
fee payable to ABC by FTI for these services is $125,000 per year from September
1, 1999 through May 1, 2000 and thereafter $250,000 per year until expiration of
the Agreement on April 30, 2002. Ralph E, Bailey is Chairman and Douglas E.
Bailey is President and Chief Operating Officer of ABC and both are shareholders
of ABC.
Clean Diesel Technologies, Inc. Management Services Agreement
Under an August 3, 1995 Management and Services Agreement with CDT,
$106,000 was paid to the Company by Clean Diesel Technologies, Inc. in 1999 for
reimbursement on account of the costs to the Company of administrative, legal
and management services. $66,000 of the 1999 reimbursement was on account of
legal services provided by Mr. Grinnell to CDT.
The Company is entitled until 2008 to a royalty of 2.5% per year of
CDT's Platinum Fuel Catalyst revenues under assignments of technology from the
Company to CDT. CDT may terminate this royalty obligation by payment to the
Company of $8,727,273 in 2001 declining to $1,090,910 in 2008. To date no
royalty payments have been made under the assignments.
The Company has a 21.6% equity ownership interest in CDT. Messrs. Ralph
and Douglas Bailey, and de Havilland, Grinnell, Peter-Hoblyn and Valentine are
directors of the Company and of CDT.
Employment Agreements
Messrs. Albanese, Argabright, Brady and Schecter have employment
agreements with the Company effective January 17, 1994 for Mr. Schecter, March
30, 1998 for Mr. Albanese, February 6, 1998 for Mr. Argabright and February 1,
1998 for Mr. Brady. These agreements are for indefinite terms, provide for
disclosure and assignment of inventions to the Company, protection of Company
24
proprietary data, covenants against certain competition against the Company and
arbitration of disputes. Under Mr. Brady's agreement, he was paid a "Stay Bonus"
of $180,000 in February 2001, the third anniversary of his employment with the
Company, as reimbursement for loss of benefits under a previous employer's
defined benefit plan. Under Mr. Schecter's agreement, he is required to provide
two months notice on resignation and, if his employment is terminated by the
Company for reasons other than "just cause" (as defined in the agreement), the
Company must continue Mr. Schecter's then base salary and benefits until he
finds other comparable employment but not for a period in excess of one year.
GENERAL
Section 16(a) Beneficial Ownership Reporting Compliance
The Company believes that all reports required to be filed under
Section 16(a) of the Securities and Exchange Act of 1934 for the year 2000 were
filed. However, filing of reports due for the month of June 2000 were delayed
until after the due date for Messrs. D. G. Bailey, R. E. Bailey, de Havilland,
Peter-Hoblyn, Selby and Valentine.
Other Business
Management knows of no other matters that may properly be, or are
likely to be, brought before the meeting other than those described in this
proxy statement.
Shareholder Proposals
If other proper matters are introduced at the Meeting, the individuals
named as Proxies on the enclosed Proxy Card will vote in their discretion the
shares represented by the Proxy Card. In order to be presented for action at the
Meeting, such matters must, under the Articles of the Company, be sent by
registered airmail to the Board of Directors in writing postmarked prior to
Midnight, June 11, 2001 to the above address of the Company in order to be
presented for consideration at the Meeting.
Proposals of shareholders intended for inclusion in the proxy statement
and proxy to be mailed to all shareholders entitled to vote at the Annual
25
General Meeting of shareholders to be held in the year 2002 must be received in
writing addressed to the Board of Directors at the above address of the Company
or to the Secretary at Fuel Tech, Inc., 300 Atlantic Street, Stamford CT 06901
USA on or before December 26, 2001 and, if not received by such date, may be
excluded from the proxy materials.
FUEL-TECH N.V.
Charles W. Grinnell
Secretary
April 23, 2001
26
Schedule I
FUEL-TECH N.V. (PARENT COMPANY) FINANCIAL INFORMATION
Summary financial information for Fuel-Tech N.V. (Parent Company) is as follows:
Balance Sheets
December 31
-------------------------
2000 1999
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ -- $ --
Receivable and other current assets 226,000 43,000
Investments in and amounts owed by subsidiaries 17,162,000 17,654,000
----------- -----------
Total current assets $17,388,000 $17,697,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 198,000 $ 92,000
Shareholders' equity 17,190,000 17,605,000
----------- -----------
Total liabilities and shareholders' equity $17,388,000 $17,697,000
=========== ===========
Statements of Operations
For the years ended December 31
-----------------------------------------
2000 1999 1998
----------- ----------- -----------
Loss from operations $ (750,000) $ (524,000) $(1,017,000)
Interest and other income, net
-- -- 13,000
----------- ----------- -----------
Net loss $ (750,000) $ (524,000) $(1,004,000)
=========== =========== ===========
Dated: December 31, 2000
Douglas G. Bailey Jeremy D. Peter-Hoblyn
Ralph E. Bailey John R. Selby
John A. de Havilland Tarma Trust Management N.V.
Charles W. Grinnell James M. Valentine
27
Schedule II
FUEL-TECH N.V.
Audit Committee of the Board of Managing Directors
Charter
The Board of Managing Directors (the "Board") of Fuel-Tech N.V. (the "Company")
has established from among its members an Audit Committee (the "Committee") with
the composition, responsibilities and duties described below:
Composition
The Committee shall be comprised of not less than that number of independent
directors who shall meet the rules of The Nasdaq Stock Market, Inc. from time to
time in effect. "Ex Officio" members of the Committee shall not be included in
the number of required independent directors. Appointment to the Committee shall
not signify that the appointee has special expertise.
Responsibility
The Committee's responsibility is to assist the Board in fulfilling its
fiduciary responsibilities as to accounting policies and reporting practices of
the Company. The Committee is authorized to retain persons having a special
competence as necessary to assist the Committee in fulfilling such
responsibility. Notwithstanding the terms of this Charter, it shall not be the
duty of the Committee to plan or conduct audits or to determine that the
Company's financial statements are complete and accurate and are in accordance
with generally accepted accounting principles, that being the responsibility of
Management and the Independent Accountant. The Independent Accountant shall be
ultimately responsible to the Board and the Committee.
Attendance
At all meetings of the Committee two independent members shall constitute a
quorum. As necessary, the Chairman of the Committee may request members of
Management and representatives of the Independent Accountant to be present at
meetings.
Minutes
Minutes of the meetings of the Committee shall be prepared by the Corporate
Secretary, shall be sent to Committee members and to directors who are not
Committee members and, after approval by the Committee, shall be kept with the
minutes of the meetings of the Board.
Duties
1. Review with Management and the Independent Accountant the Company's policies
and procedures, as appropriate, to reasonably assess the adequacy of internal
accounting and financial reporting controls.
28
2. Recommend to the Board the Independent Accountant to be selected, subject to
ratification by the shareholders; evaluate the Independent Accountant; approve
the compensation of the Independent Accountant; and review and approve any
discharge of the Independent Accountant.
3. Receive periodic written statements from the Independent Accountant regarding
its independence and delineating all relationships between it and the Company;
discuss such reports with the Independent Accountant; and, if the Committee
shall so determine, recommend appropriate action to the Board.
4. Review with Management and the Independent Accountant the scope and general
extent of the Independent Accountant's audit examinations.
5. Review with Management and the Independent Accountant, upon completion of the
annual audit, the Company's financial results for the year prior to public
release. Discuss with the Independent Accountant the matters required to be
discussed by the Statement on Auditing Standards No. 61 relating to the annual
audit.
6. Discuss with the Independent Accountant the quality of the Company's
financial accounting personnel, and any relevant recommendations of the
Independent Accountant.
7. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement, commencing
with the proxy statement for the 2001 Annual meeting.
8. Review this Charter from time to time with a view toward recommending
revisions to the Board.
9. Perform such other duties as may be required by law, the Company's Articles
of Incorporation or the resolutions of the Board.
29
PROXY PROXY
Solicited by the Board of Managing Directors
FUEL-TECH N.V.
Annual Meeting of Shareholders - June 12, 2001
The undersigned hereby appoints Ralph E. Bailey, Charles W. Grinnell or
Tarma Trust Management N.V., acting singly, with full power of substitution,
proxies for the undersigned and authorizes them to represent and vote, as
designated on the reverse side, all of the shares of Common Stock of Fuel-Tech
N.V.(the "Company") which the undersigned may be entitled to vote at the Annual
General Meeting of Shareholders of the Company to be held at the office of the
Company, Castorweg 22-24, Curacao, Netherlands Antilles, at 10:00 a.m. on
Tuesday June 12, 2001, and at any adjournments or postponements of the meeting,
for the approval of the agenda items set forth below and with discretionary
authority as to any other matters that may properly come before the meeting, all
in accordance with and as described in the Notice of Meeting and accompanying
Proxy Statement. The Board of Directors recommends a vote for election as
Managing Director of each of the nominees and of each other agenda item, and, if
no direction is given, this proxy will be voted for all nominees and for such
other items.
IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE
. Fold and Detach Here .
30
1. To approve the Annual Report of Management of the Company for the year ended
December 31, 2000.
FOR AGAINST ABSTAIN
2. To approve the Financial Statements of the Company for the year ended
December 31, 2000.
FOR AGAINST ABSTAIN
3. To approve the election as Managing Directors of Douglas G. Bailey, Ralph E.
Bailey, John A. de Havilland, Charles W. Grinnell, Jeremy D. Peter-Hoblyn, John
R. Selby, Thomas S. Shaw, Tarma Trust Management N.V. and James M. Valentine and
to fix their compensation.
FOR all nominees WITHHOLD
listed above (except AUTHORITY
as marked to the to vote for all
contrary) nominees listed above
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
4. To approve the amendment of the Company's 1993 Incentive Plan to fix from the
number of shares available for all awards (now 12 1/2% of outstanding shares)
the shares which may be issued subject to Incentive Stock Options at a total of
2 million shares.
5. To approve the appointment of Ernst & Young LLP as the independent auditors
for the year 2001 and to authorize the Board of Managing Directors to fix their
compensation.
FOR AGAINST ABSTAIN
Dated____________________, 2001
(Signature of Shareholder)
Please sign exactly as name appears. If acting
as attorney, executor, trustee or in other
representative capacity, insert name and
title.
31
Appendix
THE 1993 INCENTIVE PLAN OF FUEL-TECH N.V.
(As amended through August 3, 1999)
1. Purpose and Effective Date
The purpose of this 1993 Incentive Plan of Fuel-Tech N.V., a
Netherlands Antilles corporation ("the Corporation") is to further the interests
of the Corporation and its shareholders by providing incentives in the form of
awards to such directors, officers, employees, consultants or advisors to the
Corporation or any of its Subsidiaries as the directors shall determine are key
to the continued success and profitability of the Corporation. The Plan is
intended to retain Participants with significant training, experience and
ability; to attract new Participants whose services are considered valuable; and
to encourage such Participants to acquire a proprietary interest in the
Corporation. So that the maximum incentive can be provided each Participant in
the Plan by granting to such participant an Award best suited to the
circumstances, the Plan provides for granting, Non-Qualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Shares,
Performance Awards, Bonuses, Other Awards, or any combination of the foregoing.
This Plan, as amended, shall become effective upon its adoption by the
Board, subject to approval within one (1) year of such adoption by the
Corporation's shareholders, and shall remain effective until terminated by
resolution of the Board.
2. Definitions
As used in this Plan:
(1) "Award" means the grant hereunder of any form of Option, Stock
Appreciation Right, Restricted Share, Performance Award, Other Award, Bonus, or
any other form of Share based or non-Share based Award.
(2) "Award Agreement" means a written agreement between the Corporation
and a Participant that sets forth the terms, conditions and limitations
applicable to an Award.
(3) "Beneficiary" means, where a Participant is with respect to any
Award not forfeitable by its terms on the death of the Participant entitled to
any unpaid portion thereof, such person or persons entitled thereto under the
Participant's will or under the laws of descent and distribution.
(4) "Board" means the Board of Directors of the Corporation.
(5) "Bonus" means any payment under Section 6.5.
32
(6) "Change in Control" has the meaning set forth in Section 8.
(7) "Code" means the United States Internal Revenue Code of 1986, as
amended and in effect from time to time, or any successor statute.
(8) "Committee" means the Committee of the Board or any successor
committee as described in Section 3.1, or, if there shall be no such Committee,
the Board.
(9) "Corporation" means Fuel-Tech N.V., a Netherlands Antilles
corporation.
(10) "Director Option" means an Option granted pursuant to Section
6.1(i).
(11) "Employee" means any individual who is a salaried employee on the
payroll of the Corporation or any of its Subsidiaries.
(12) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(13) "Fair Market Value Per Share" in reference to the common stock of
the Corporation means on any date 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 average 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 Per Share shall be the value established by the Board or Committee
in good faith and, in the case of an Incentive Stock Option, in accordance with
Section 422 of the Code.
(14) "Incentive Stock Option" means a stock option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
(15) "Nonemployee Director" means a director of the Corporation or of
Fuel Tech, Inc. who is a "nonemployee director" within the meaning of Rule
16b-3.
(16) "Non-Qualified Stock Option" means a stock option which is not an
Incentive Stock Option within the meaning of Section 422 of the Code.
(17) "Option" means an Award to purchase Shares granted pursuant to
Section 6.1.
(18) "Participant" means any director, officer, employee, consultant or
advisor of the Corporation or any of its Subsidiaries who is granted an Award
under this Plan. Except that consultants and advisors shall not include those
rendering services in connection with the offer or sale of the Corporation's
securities in a capital raising transaction.
33
(19) "Performance Award" has the meaning described in Section 6.4.
(20) "Plan" means this 1993 Incentive Plan of Fuel-Tech N.V., as
amended from time to time.
(21) "Restricted Shares" means Shares which have certain restrictions
attached to the ownership thereof, which may be issued under Section 6.3.
(22) "Retirement" or "Retires" means termination of a Participant's
employment with the Corporation and its Subsidiaries by retirement under the
normal, mandatory, early and applicable age plus service or other provision of
the applicable retirement plan of the Corporation or a Subsidiary, or, if there
shall be no such plan or plans, then under such procedures as the Corporation or
its Subsidiaries may from time to time establish.
(23) "Rule 16b-3" means such rule as promulgated by the Securities and
Exchange Commission under the Exchange Act as now in force or as such regulation
or successor regulation shall be hereafter amended.
(24) "Shares" mean shares of common stock of the Corporation.
(25) "Share Unit" means the right to receive a payment equivalent in
value to one Share on the date of payment.
(26) "Stock Appreciation Right" means a right which may be issued under
Section 6.2, the value of which is determined relative to the appreciation in
value of Shares.
(27) "Subsidiary" means any entity, incorporated or otherwise, of which
the Corporation owns directly or indirectly at least fifty percent (50%) of the
stock or interests therein.
(28) "Ten-Percent Stockholder" means a 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 the stock of the
Corporation.
(29) "Totally Disabled" means a condition of a Participant found by a
qualified physician selected by the Corporation to be that as described in
Section 22(e)(3) of the Code or as such Section or successor section shall be
hereafter amended.
34
3. Administration
3.1 Committee
(a) The Plan shall be administered by either the Board or by a
Committee, which shall consist of at least two (2) directors of the
Corporation; provided, however, that in the case of a Committee of less
than the entire Board, each member shall be a Nonemployee Director. The
Board may remove members from or add members to the Committee.
Vacancies on the Committee shall be filled by the Board.
(b) To the extent permitted by Section 13.3 and subject to
Section 6.1(i), the Board or Committee is authorized to (i) determine
the persons who shall be Participants in the Plan and which Awards
shall be granted to Participants, (ii) establish, amend and rescind
rules, regulations and guidelines relating to the Plan as it deems
appropriate, (iii) interpret and administer the Plan, Awards and Award
Agreements, (iv) establish, modify and terminate terms and conditions
of Award Agreements, (v) grant waivers and accelerations of Plan, Award
and Award Agreement restrictions and (vi) take any other action
necessary for the proper administration and operation of the Plan.
(c) The Board or Committee may designate persons and entities
other than its members, including but not limited to, any successor
committee, the Chief Executive officer, and the Corporate Secretary, to
carry out any of its responsibilities under and described in this Plan,
under such conditions or limitations as the Board or Committee may
establish, other than its authority with regard to participants who are
subject to Section 16 of the Exchange Act.
3.2 Effect of Determinations
Determinations of the Board or Committee and its designees shall be
final, binding and conclusive on the Corporation, its stockholders, Employees
and Participants. No member of the Board or Committee or any of its designees
shall be personally liable for any action or determination made in good faith
with respect to this Plan, any award, or any Award Agreement.
4. Eligibility
Persons eligible for Awards under this Plan shall consist of key,
managerial and other directors, officers, employees, consultants or agents of
the Corporation or its Subsidiaries who possess valuable experience and skills
and have contributed, or can be expected to contribute, materially to the
success and profitability of the Corporation. The Board or Committee shall
determine which persons shall be Participants, the types of Awards to be made to
Participants and the terms, conditions and limitations applicable to the Awards.
35
5. Shares Subject to This Plan
5.1 Maximum Number of Shares
The maximum number of Shares available for Awards under this Plan at
any time shall be twelve and one-half percent (12.5%) of the total number of
then issued and outstanding Shares, less the sum of that number of Shares as
shall then be subject to outstanding Awards by the Corporation hereunder or
under other plans or arrangements of the Corporation or of Fuel Tech, Inc. Any
and all such Shares may be issued in respect of any of the types of Awards. The
maximum number of Shares that may be the subject of Incentive Stock Options
granted under the Plan may not exceed one million (1,000,000) Shares. Upon a
change in capitalization, the maximum number of Shares referred to in this
Section 5.1 shall be adjusted in number and kind pursuant to Section 7. The
Corporation shall reserve for the purposes of the Plan, out of its authorized
but unissued Shares or out of Shares held in the Corporation's treasury, or
partly out of each, such number of Shares as shall be determined by the Board.
5.2 Share Accounting
Shares related to Awards that are forfeited, terminate, expire
unexercised, exchanged, settled in cash in lieu of Shares or settled in such
other manner so that a portion or all of the Shares included in an Award are not
issued to a Participant shall be available for other Awards. Any Shares not so
used shall be available for further Awards. Shares issued under this Plan shall
be authorized and unissued Shares or Shares reacquired by the Corporation, as
determined by the Committee. No fractional Shares shall be issued under this
Plan.
6. Awards
Awards may include, but are not limited to, those described in this
Section 6. Awards may be granted singly, in combination, or in tandem with other
Awards. Subject to the other provisions of this Plan, Awards may also be made in
combination or in tandem with, in replacement of, or as alternatives to, grants
or rights under this Plan and any other plan of the Corporation, including any
plan of any acquired entity and for the benefit of any present or former
director, officer, consultant or agent of such acquired entity. Subject to the
terms of the Awards described in this Section 6 and the related Award Agreement,
the form of payment for Awards may be in cash, in Shares, in Share Units, or
such other form as determined by the Board or the Committee, and may be made
partly in one form and partly in one or more other forms, all as determined by
the Committee. Except as otherwise provided in this Plan, Awards shall be
evidenced by Award Agreements, the terms of which other than a Director Option
may be amended or accelerated by the Board or Committee following the grant of
any Award and need not be uniform among Participants. Except as otherwise
36
provided in this Plan, Awards shall be granted for such minimum consideration as
is required by applicable law, rules and regulations, including without
limitation, the then applicable Rule 16b-3, and such additional consideration,
if any, as may be determined by the Committee.
6.1 Options
Non-Qualified and Incentive Stock Options may be granted under this
Plan from time to time. Director Options shall be granted under this Plan only
at such times as provided below. Subject to Sections 6.1(h) and 6.1(i), Options
shall be granted upon the following terms and conditions with such additional
terms and conditions, not inconsistent with the provisions of this Plan, as the
Board or Committee in its discretion shall deem desirable:
(a) No 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).
(b) The option price per Share for all Options shall be not
less than one hundred per cent (100%) of the Fair Market Value Per
Share on the date the Option is granted (one hundred ten percent (110%)
in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).
(c) Award Agreements for Options shall conform to the
requirements of this Plan, and other than with respect to Director
Options may contain such other provisions as the Committee shall deem
advisable.
(d) Award Agreements for Options shall specify when an Option
may be exercisable. An Option may be exercised, in whole or in part, by
giving written notice of exercise to the Corporation specifying the
number of Shares to be purchased. Shares purchased upon exercise of an
Option shall be paid for in full at the time the Option is exercised in
cash or in Shares. Payment may also be made in any other manner or form
approved by the Board or Committee, consistent with applicable law,
regulations and rules.
(e) A holder of an Option shall have no rights as a
stockholder with respect to any Shares covered by such Option unless
and until the date of the issuance of the stock certificate for such
Shares.
(f) (i) If, after completion of any required period of
continuous employment in order to exercise an Option as provided in an
Award Agreement, a Participant dies while employed by the Corporation
or its Subsidiaries, such Option shall be exercisable by the
Beneficiary thereof, but after the date of death of the Participant
37
only within the period specified in the Award Agreement which shall not
be later than the expiration date of the Option.
(ii) Following the death of a Participant, the Board
or Committee may at its discretion, upon the request of such
Participant's Beneficiary who holds an exercisable Option and in
consideration of the surrender of such Option, pay the amount by which
the Fair Market Value Per Share on the date of such request shall
exceed the Option price per Share multiplied by the number of Shares as
to which the request was made.
(g) If, after completion of any required period of continuous
employment in order to exercise an Option as provided in an Award
Agreement, a Participant is Totally Disabled or Retires, such Option
shall be exercisable by the Participant, but only within the period
specified in the Award Agreement.
(h) Incentive Stock Options.
(i) Each Incentive Stock Option shall not have an
aggregate Fair Market Value Per Share (determined for each Incentive
Stock Option at its grant date) of Shares with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under the Plan and any other
employee stock option plan of the Corporation or any of its
Subsidiaries ("Other Plans")), determined in accordance with the
provisions of Section 422 of the Code, which exceeds $100,000;
(ii) To the extent that the aggregate Fair Market
Value Per Share of stock with respect to which Incentive Stock Options
granted under the Plan and any Other Plans are exercisable by a
Participant for the first time during any calendar year exceeds
$100,000, such Incentive Stock Options shall be treated as
Non-Qualified Stock Options to the extent necessary so that such
aggregate Fair Market Value Per Share of stock does not exceed
$100,000. For purposes of the foregoing sentence, Incentive Stock
Options shall be treated as Non-Qualified Stock Options according to
the order in which they were granted such that the most recently
granted Incentive Stock Options are first treated as Non-Qualified
Stock Options.
(iii) Each Incentive Stock Option shall require the
Participant to notify the Board or Committee of any disposition of any
Shares issued pursuant to the exercise of the Incentive Stock Option
under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within ten (10) days
of such disposition.
(i) Director Options. The following provisions shall apply to
each Director Option granted under the Plan:
38
(i) Each individual who is a Nonemployee Director and
who is not an employee of the Corporation or any of its subsidiaries
shall be granted a Director Option in respect of 10,000 Shares on the
first business day after the annual meeting of the stockholders of the
Corporation in each year that the Plan is in effect, provided that the
individual is a director of the Corporation on such date.
(ii) Each Director Option shall become fully vested
and exercisable with respect to one hundred percent (100%) of the
Shares subject thereto upon grant.
(iii) Subject to Section 8.2, each Director Option
shall terminate on the date which is the tenth anniversary of the date
of grant, unless terminated earlier as follows:
(A) If a Participant's service as a director
terminates for any reason other than death or being Totally Disabled,
the Participant may for a period of three (3) months after such
termination exercise his or her Option to the extent, and only to the
extent, that such Option or portion thereof was vested and exercisable
as of the date the Participant's service as a director terminated,
after which time the Option shall automatically terminate in full.
(B) If a Participant's service as a director
terminates by reason of the Participant being Totally Disabled, the
Participant may, for a period of one (1) year after such termination,
exercise his or her Option to the extent, and only to the extent, that
such Option or portion thereof was vested and exercisable, as of the
date the Participant's service as director terminated, after which time
the Option shall automatically terminate in full.
(C) If a Participant dies while a director
or within three (3) months after termination of service as a director
as described in clause (A) of this Section 6.1(i)(iii) or within twelve
(12) months after termination of service as a director as described in
clause (B) of this Section 6.1(i)(iii), the Option granted to the
Participant may be exercised at any time within twelve (12) months
after the Participant's death by the Participant's Beneficiary, after
which time the Option shall terminate in full; 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 of the Participant`s services as a director.
6.2 Stock Appreciation Rights
Stock Appreciation Rights may be granted under this Plan from time to
time. If Stock Appreciation Rights are granted they shall be upon the following
terms and conditions, and such additional terms and conditions, not inconsistent
39
with the provisions of this Plan, as the Board or Committee in its discretion
shall deem desirable:
(a) A Stock Appreciation Right may be granted in tandem with
part or all of, in addition to, or completely independent of, an Option
or any other Award under this Plan. A Stock Appreciation Right issued
in tandem with an Option may be granted at the time of grant of the
related Option or at any time thereafter during the term of the Option.
(b) Award Agreements for Stock Appreciation Rights shall
conform to the requirements of this Plan and may contain such other
provisions (including but not limited to, the permitted form of payment
for the exercise of the Stock Appreciation Right, the requirement of
employment for designated periods of time prior to exercise and the
ability of the Board or Committee to revoke Stock Appreciation Rights
which are issued in tandem with Options without compensation to the
Participant) as the Board or Committee shall deem advisable.
(c) Stock Appreciation Rights issued in tandem with Options
shall be subject to the following:
(i) Stock Appreciation Rights shall be exercisable at
such time or times and to the extent, but only to the extent, that the
Option to which they relate shall be exercisable.
(ii) Upon exercise of Stock Appreciation Rights the
holder thereof shall be entitled to receive a number of Shares equal in
aggregate value to the amount by which the Fair Market Value Per Share
on the date of such exercise shall exceed the Option price per Share of
the related Option, multiplied by the number of Shares in respect of
which the Stock Appreciation Rights shall have been exercised.
(iii) All or any part of the obligation arising out
of an exercise of Stock Appreciation Rights may, at the discretion of
the Board or Committee, be settled by the payment of cash equal to the
aggregate value of the Shares (or a fraction of a Share) that would
otherwise be delivered under Section 6.2(c)(ii).
(iv) Upon exercise of Stock Appreciation Rights the
unexercised tandem Options of the Participant shall automatically
terminate upon the exercise of such Stock Appreciation Rights.
(v) Stock Appreciation Rights issued in tandem with
Options shall automatically terminate upon the exercise of such
Options.
6.3 Restricted Shares
Awards of Restricted Shares may be granted under this Plan from time to
time. If Awards of Restricted Shares are granted they shall be upon the
40
following terms and conditions and such additional terms and conditions, not
inconsistent with the express provisions of this Plan, as the Committee in its
discretion shall deem desirable:
(a) Restricted Shares are Shares which are subject to such
terms, conditions and restrictions as the Board or Committee deems
appropriate, which may include restrictions upon the sale, assignment,
transfer or other disposition of the Restricted Shares and the
requirement of forfeiture of the Restricted Shares upon termination of
employment under certain specified conditions. The Board or Committee
may condition the lapsing of restrictions on part or all of an Award of
Restricted Shares upon the attainment of specific performance goals or
such other factors as the Board or Committee may determine. Awards of
Restricted Shares may be granted for no cash consideration or for such
minimum consideration as may be required by applicable law.
(b) Award Agreements for Restricted Shares shall conform to
the requirements of this Plan, and may contain such other terms and
conditions (including but not limited to, a description of a period
during which the Participant may not transfer the Restricted Shares and
limits on encumbering the Restricted Shares during such period) as the
Board or Committee shall deem desirable. To the extent permitted by
Section 13.3 hereof, the Board or Committee may provide for the lapse
of any such term or condition in installments and may accelerate or
waive any such term or condition in whole or in part, based on service,
performance and/or such other factors or criteria as the Board or
Committee may determine.
(c) Award Agreements for Restricted Shares shall provide that
the stock certificates representing Restricted Shares shall be
legended, that the stock certificates shall be held by a custodian, or
that there be other mechanisms for maintaining control by the
Corporation of the Restricted Shares until the restrictions thereon are
no longer in effect. After the lapse, waiver or release of the
restrictions imposed pursuant to the Award Agreement on any Restricted
Shares, the Corporation shall cause to be issued in the Participant's
name a stock certificate evidencing the Restricted Shares with respect
to which the restrictions have lapsed or been waived or released, free
of any legend, and shall cause such stock certificate to be delivered
to the Participant.
(d) Except as otherwise provided in this Plan or in the Award
Agreement, the Participant shall have, with respect to Awards of
Restricted Shares, all of the rights of a shareholder of the
Corporation, including the right to vote the Restricted Shares and the
right to receive any cash or stock dividends on such Restricted Shares.
The Board or Committee may provide that the payment of cash dividends
shall or may be deferred. Any reinvestment of deferred cash dividends
41
shall be as determined by the Board or Committee. Stock dividends
issued with respect to Restricted Shares shall be Restricted Shares and
shall be subject to the same terms, conditions and restrictions that
apply to the Restricted Shares with respect to which such dividends are
issued. Any additional Shares issued with respect to cash or stock
dividends shall not be counted against the maximum number of Shares for
which Awards may be granted under this Plan as set forth in Section 5.
(e) If the employment of a Participant is terminated prior to
the lapse of restrictions on Restricted Shares because the Participant
dies or becomes Totally Disabled, the restrictions on all Restricted
Shares awarded to a Participant shall lapse on the date of such
termination.
6.4 Performance Awards
Performance Awards may be granted under this Plan from time to time. If
Performance Awards are granted they shall be upon the following terms and
conditions and such additional terms and conditions, not inconsistent with the
express provisions of this Plan, as the Board or Committee in its discretion
shall deem advisable:
(a) Performance Awards are Awards which are based upon the
long-term performance of all or a portion of the Corporation or which
are based upon the long-term individual performance of a Participant.
Performance Awards may be in the form of performance units, performance
shares and such other forms of Performance Awards which the Board or
Committee shall determine to be desirable. Performance Awards are
Awards which are granted to participants contingent upon (i) the future
performance of all or a portion of the Corporation which may include,
without limitation, performance relative to a group of companies in the
same or related industries, achievement of specific business
objectives, growth rates or profitability or earnings goals (in respect
of, for example, Share price, return on equity or return on assets) and
such other measurements as the Board or Committee determines to be
appropriate, (ii) the future performance of a Participant, which may
include, without limitation, attainment of specified goals and
objectives and such other measurements as the Board or Committee
determines to be appropriate, (iii) the future performance of a
combination of all or a portion of the Corporation and a Participant,
or (iv) such other measurements and criteria as may be considered
appropriate by the Board or Committee. Performance Awards may contain
multiple performance measurements.
(b) Award Agreements for Performance Awards shall conform to
the requirements of this Plan and may contain such other terms and
conditions as the Board or Committee shall deem desirable, including
but not limited to, applicable performance measurements, a description
42
of whether performance measurements are to be used singly or in
combination, a description of whether different performance
measurements may be used for different performance periods, the length
of performance periods, the ability of the Board or Committee to amend
and adjust measurements, payouts and performance periods of performance
Awards and any requirements of employment during performance periods.
(c) Award Agreements for Performance Awards shall provide for
a required minimum period of continuous employment during a performance
period of a Performance Award. If such minimum period of continuous
employment shall have elapsed, the Award Agreement may provide, or the
Board or Committee may determine, the portion of the payment of the
Performance Award which Participant or the Participant's beneficiary,
as applicable, is to receive at the end of the performance period.
6.5 Bonuses
Bonuses may be granted under this Plan from time to time on an annual
or one-time basis. The amount of Bonuses which may be awarded shall be as
determined by the Board or Committee. The Board or Committee may establish a
basis upon which aggregate Bonus expenditures for any year shall be determined,
which may include measurements of financial performance of the Corporation or of
a unit or department thereof, relative performance of the Corporation or of a
department thereof within the same or related industries, competitive
compensation considerations and other measurements and criteria.
(a) Each Bonus may be made at the discretion of the Board or
Committee either in cash, in Shares, in Share Units, or in another form
as determined by the Board or Committee and may be made partly in one
form and partly in one or more other forms. In the case of an Award of
a Bonus in Shares or Share Units, the number shall be determined by
using the Fair Market Value Per Share on the date of the Award of the
Bonus.
(b) The payment of any Bonus shall be subject to such
obligations or conditions as the Board or Committee may specify in
making or recommending the Award of the Bonus, but Bonuses need not be
evidenced by Award Agreements.
(c) When payment of all or part of a Bonus is deferred in the
form of Shares or Share Units, the account of the Participant to whom
the Bonus was made will be credited with an amount per Share equal to
the dividends payable on each issued and outstanding Share ("dividend
equivalents"). Amounts thus credited shall, in the discretion of the
Board or Committee, either:
(i) be paid in cash as and when each such credit
shall be made, or
(ii) be credited in Shares or Share Units, with the
number determined by using the Fair Market Value Per Share on the date
43
of the dividend payment and delivered in such form and at such time or
times as may be determined by the Committee.
(d) When payment of all or part of a Bonus is deferred in
cash, the Committee may provide that the account of the Participant to
whom the Bonus was made shall be credited with amounts equivalent to
interest ("interest equivalents"). Amounts thus credited shall be at
the rate determined by the Committee.
(e) Any Bonus payable in Shares may, in the discretion of the
Board or Committee, be paid in cash, on each date on which payment in
Shares would otherwise have been made, in an amount equal to the Fair
Market Value Per Share on each such date, multiplied by the number of
Shares which would otherwise have been paid on such date.
(f) Bonuses may be awarded in Share Units in accordance with
the following terms and conditions and such other terms and conditions
as the Board or Committee may impose:
(i) The number of Share Units awarded with respect to
any Bonus shall be the number determined by using the Fair Market Value
Per Share on the date of the Award of the Bonus.
(ii) Any Bonus made in Share Units may, in the
discretion or on the recommendation of the Board or Committee, be paid
in Shares on each date on which payment in cash would otherwise be
made.
(g) In lieu of the foregoing forms of payment of Bonuses, the
Board or Committee may specify or recommend any other form of payment
which it determines to be of substantially equivalent economic value to
the cash value of the Bonus including, without limitation, forms
involving payments to a trust or trusts for the benefit of one or more
Participants.
(h) Each payment of a Bonus that is to be made in cash shall
be from the general funds of the Corporation or its respective
subsidiary or affiliate, as the case may be.
(i) In the event of the death of a Participant to whom a Bonus
is to be or shall have been made, the Bonus or any portion thereof
remaining unpaid shall be paid to such Participant's Beneficiary under
the Participant's will or pursuant to the relevant laws of descent and
distribution.
6.6 Other Awards
(a) The Board or Committee may grant other Share based Awards
under this Plan, including without limitation, those Awards pursuant to
which Shares are or may in the future be acquired, Awards denominated
in Share Units, securities convertible into Shares and dividend
44
equivalents. The Board or Committee shall determine the terms and
conditions of such other Share based Awards. Shares issued in
connection with such other Share based Awards shall be issued for such
minimum consideration as shall be required by applicable law, rules and
regulations, including the then applicable Rule 16b-3, and such
additional consideration, if any, as may be determined by the Board or
Committee.
(b) The Board or Committee may also grant other non-Share
based Awards under this Plan and shall determine the terms and
conditions of such other non-Share based Awards in tandem or
combination with other Awards or each other, in exchange of other
Awards, or in tandem or combination with, or as alternatives to grants
or rights under any other employee plan of the Corporation, including
any plan of any acquired entity. The Board or Committee shall have the
authority to determine the Participants for such Awards and all other
terms and conditions of such other Awards. No amendment of this Plan is
required for the creation of another type of Award.
7. Adjustments Upon Changes in Capitalization
(a) Subject to any required action by the Corporation's
stockholders, in the event of a reorganization, recapitalization, stock
split, stock dividend, exchange of Shares, combination of Shares,
merger, consolidation or any other change in corporate structure of the
Corporation affecting the Shares, or in the event of a sale by the
Corporation of all or a significant part of its assets, or any
distribution to its shareholders other than a normal cash dividend, the
Board or Committee may make appropriate adjustment in the number, kind,
price and value of Shares authorized by this Plan and any adjustments
to outstanding Awards as it determines appropriate so as to prevent
dilution or enlargement of rights.
(b) The existence of an Award under this Plan shall not affect
in any way the right or power of the Corporation or its shareholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Corporation's capital structure
or its business, or any merger or consolidation of the Corporation, or
any issue of bonds, debentures, preferred or prior preference stocks,
or loan notes ahead of or affecting the Stock or rights thereunder or
convertible thereto, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its assets
or business or any other corporate act or proceeding, whether of a
similar character or otherwise.
8. Change in Control
8.1 Definition of Change in Control
45
A "Change in Control" shall be deemed to have occurred if any one or
more of the events described in paragraphs (a), (b) or (c) below occurs.
(a) Any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (including any group of persons with which
any person or its affiliates or associates, as such terms are defined
in Rule 12b-2 under the Exchange Act has any agreement, arrangement or
understanding, oral or written, regarding the acquiring, holding,
voting or disposing of any of the Corporation's securities, but
excluding a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation) (i) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing fifty one
percent (51%) or more of the combined voting power of the Corporation's
then outstanding securities (hereinafter referred to as an "Acquiring
Person"); or
(b) In any two (2) year period persons being a majority of the
Board shall cease to be so unless the nomination of the new directors
during such period was approved by at least a majority of the directors
then still in office who were directors at the beginning of the period;
or
(c) A consolidation or merger or "Business Combination," as
that term is defined as of the effective date of this Plan in Section
203(c)(3) of The General Corporation Law of Delaware, of the
Corporation shall occur (with the term "interested shareholder" as used
in that Section being deemed to refer to an Acquiring Person) in which
the Corporation is not the surviving Corporation and pursuant to which
the Corporation's Shares are converted to cash, securities or other
property but not a consolidation or merger or Business Combination
where shareholders of the Corporation prior to the Business Combination
have substantially the same proportionate ownership in a business
entity after the consolidation or merger or Business Combination; or
(d) The shareholders of the Corporation shall approve any plan
for liquidation or dissolution of the Corporation not otherwise
involving a transaction where shareholders of the Corporation prior to
the transaction have substantially the same proportionate ownership of
a business entity after the transaction.
(e) In no event, however, shall a Change in Control be deemed
to have occurred with respect to a Participant, if that Participant is
part of an Acquiring Person which consummates the Change in Control
transaction. A Participant shall be deemed "part of an Acquiring
Person" for purposes of the preceding sentence if the Participant is an
equity participant or has agreed to become an equity participant in the
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Acquiring Person (except for (i) passive ownership of less than three
percent (3%) of the securities of the Acquiring Person; or (ii)
ownership of equity participation in the Acquiring Person which is
otherwise not deemed to be significant, as determined prior to the
Change in Control by a majority of the disinterested "Continuing
Directors"). For purposes of this Section 8.1, "Continuing Directors"
means those directors (x) who were directors of the Board immediately
prior to the Change in Control transaction ("Incumbent Directors") and
(y) whose election, or nomination for election by the Corporation's
stockholders, was approved by a vote of at least a majority of the
Incumbent Directors.
8.2 Effect of Change in Control
Upon the occurrence of an event of Change in Control, unless otherwise
with respect to any Award specifically prohibited by the terms of the second
paragraph of Section 6:
(a) Any and all Options and Stock Appreciation Rights shall
become immediately exercisable.
(b) Any restriction periods and restrictions imposed on
Restricted Shares (except such as may be required by relevant
securities laws) shall lapse, and within ten (10) business days after
the occurrence of a Change in Control, the stock certificates
representing Restricted Shares, without any restrictions or legend
thereon (except a legend as may be required by relevant securities
laws), shall be delivered to the applicable Participants;
(c) The goal, objective, target value or the like, attainable
under all Performance Awards shall be deemed to have been fully earned
for the entire performance period as of the effective date of the
Change in Control, except that all Performance Awards which shall have
been outstanding less than six (6) months on the effective date of the
Change in Control shall not be deemed to have earned the goal,
objective, target value, or the like; and
(d) Subject to Section 14.3 hereof, all such other actions and
modifications to the Awards as determined by the Board or Committee to
be appropriate before the Change in Control of the Corporation shall
become effective.
9. Relationship of the Plan to Benefit Plans
The amount of Bonuses to any Participant under this Plan shall be
eligible for inclusion in the Participant's earnings base for the purpose of
determining the benefits to which the Participant is entitled under retirement,
pension, excess benefit, thrift, savings, profit-sharing, insurance, long-term
disability and other benefit plans, if any, of the Corporation or its
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Subsidiaries as determined by the Board or Committee. No other income of a
Participant attributable to this Plan shall be included in the Participant's
earnings for purposes of any benefit plan in which the Participant may be
eligible to participate.
10. Effect of the Plan On Right to Continued Employment and
Interest in Particular Property
(a) None of the existence of this Plan, any Awards granted
pursuant hereto or any Award Agreement shall create any right to
continued employment of any Participant by the Corporation or its
Subsidiaries. No Participant shall have, under any circumstances, any
interest whatsoever, vested or contingent, in any particular property
or asset of the Corporation or in any particular Share or Shares of the
Corporation that may be held by the Corporation (other than Restricted
Shares held by a custodian) by virtue of any Award. A Participant may
be granted additional Awards under this Plan under such circumstances
and at such times as the Board or Committee may determine; provided,
however, that no participant shall be entitled to any Award in the
absence of a specific grant by the Board or Committee of an Award,
notwithstanding the prior grant of an Award to such Participant.
(b) This Plan shall not be deemed a substitute for, and shall
not preclude the establishment or continuation of any other plan,
practice or arrangement that may now or hereafter be provided for the
payment of compensation, special awards or benefits to directors,
officer, employees, consultant and agents of the Corporation and its
Subsidiaries generally, or to any class or group of employees,
including without limitation, any retirement, pension, excess benefit,
thrift, savings, profit-sharing, insurance, long-term disability,
health care plans or other employee benefit plans. Any such
arrangements may be authorized by the Corporation and payment
thereunder made independently of this Plan.
11. Withholding Taxes and Deferrals
11.1 Cash Withholding
The Corporation and its participating subsidiaries shall have the right
to deduct from any cash payment made under Awards under this Plan any federal,
state, provincial or local income, or other taxes required by law to be withheld
with respect to such payment or to take such other action as may be necessary in
the opinion of the Corporation to satisfy all obligations for the payment of
such taxes.
11.2 Share Withholding
Any Share based Award may provide by the grant thereof that the
recipient of such Award may elect, in accordance with any applicable laws, rules
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and regulations, to pay a portion or all of the amount of such minimum required
withholding taxes in Shares. In such event, the Participant shall authorize the
Corporation to withhold, or shall agree to deliver to the Corporation, Shares
owned by such Participant or a portion of the Shares that otherwise would be
distributed to such Participant, having a Fair Market Value equal to the amount
of withholding tax liability.
11.3 Deferrals
The Board or Committee may require or permit a Participant to defer
such Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise, the
satisfaction of any requirements or goals or lapse or waiver of restrictions of
an Award made under this Plan. If any such deferment election is required or
permitted, the Board or Committee shall establish rules and procedures for such
payment deferrals.
12. Compliance With Applicable Legal Requirements
No certificate for Shares distributable pursuant to this Plan shall be
issued and delivered unless the issuance of such certificate complies with all
applicable legal requirements including, without limitation, compliance with the
provisions of applicable state securities laws, the Securities Act of 1933, as
amended from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges on which Shares may, at the time, be listed, and
the provisions of any foreign securities laws or the rules of foreign securities
exchanges, where applicable.
13. Amendments
13.1 Plan Amendments
The Board may, insofar as permitted by law, from time to time, with
respect to any Shares at the time not subject to Awards, suspend or discontinue
this Plan or revise or amend it in any respect whatsoever, provided, however,
unless the Committee or the Board, as appropriate, specifically otherwise
provides, any revision or amendment that would cause this Plan to fail to comply
with any requirement of applicable law, regulation or rule if such amendment
were not approved by the stockholders of the Corporation shall not be effective
unless and until the approval of the stockholders of the Corporation is
obtained.
13.2 Award Amendments
Subject to the terms and conditions and within the limitations of this
Plan, the Board or Committee may amend, cancel, modify, or extend outstanding
Awards granted under this Plan.
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13.3 Rights of Participants
No amendment, suspension or termination of this Plan nor any amendment,
cancellation or modification of any outstanding Award or Award Agreement that
would adversely affect the right of any Participant with respect to an Award
previously granted under this Plan will be effective without the written consent
of the affected Participant. Such written consent may be obtained simultaneously
with the grant of any Award.
13.4 Rule 16b-3
This Plan is intended to comply with Rule 16b-3 with respect to
Participants, if any, who are subject to Section 16 of the Exchange Act. Should
the requirements of Rule 16b-3 change, the Board or the Committee, as
appropriate, may amend the Plan to comply with the requirements of the amended
Rule 16b-3 or its successor provision or provisions.
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14. Miscellaneous Provisions
14.1 Awards in Various Countries
The Board or Committee shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or desirable to
comply with provisions of the laws of various countries in which the Corporation
or its Subsidiaries may operate to assure the viability of the benefits of
Awards made to Participants employed in such countries and to meet the
objectives of this Plan.
14.2 Transferability
Awards may not be pledged or assigned and may otherwise be transferred
only to the extent provided herein or in an Award Agreement not inconsistent
herewith, provided, however, that an Option or Stock Appreciation Right or any
other benefit or Award hereunder deemed to be a derivative security shall not be
transferable other than by will or the laws of descent and distribution and
shall be exercisable during a Participant's lifetime only by him or by his
guardian or legal representative or pursuant to a "qualified domestic relations
order" as defined by the Code, or such order under the laws of other
jurisdictions as shall be similar in effect to a qualified domestic relations
order.
14.4 Cancellation of Awards
Except as otherwise provided in this Plan or in applicable Award
Agreements, the terms of which need not be uniform among Participants, if a
Participant to whom an Award is granted ceases to be employed by the Corporation
all of such Participant's unexercised Awards and Awards on which there are
restrictions shall be immediately canceled.
14.5 Arbitration; Governing Law
(a) The Shares are registered in the United States under the
Exchange Act and are listed for trading on the United States stock exchange
known as The NASDAQ Stock Market. Any and all disputes whatsoever between a
Participant and the Corporation concerning the administration of this Plan, the
interpretation and effect of an Award Agreement or of this Plan or the rights of
a Participant under an Award Agreement shall be finally determined before one
neutral arbitrator in the City of New York, New York U.S.A. under the rules of
commercial arbitration of the American Arbitration Association then in effect
and judgment upon any award by such arbitrator may be entered in any Court
having jurisdiction or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be.
(b) This Plan, its administration and all Awards granted
hereunder, the terms and provisions of any related Award Agreements and the
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rights of all Participants shall be governed and interpreted in accordance with
the laws of New York, New York U.S.A.
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