<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or Rule 14a-2
BAYCORP HOLDINGS, LTD.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BAYCORP HOLDINGS, LTD.
COCHECO FALLS MILLWORKS
100 MAIN STREET, SUITE 201
DOVER, NEW HAMPSHIRE 03820-3835
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1997
To the Stockholders:
The Annual Meeting of Stockholders of BayCorp Holdings, Ltd. (the
"Company") will be held at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York, on Tuesday, April 29, 1997 at 10:00 a.m.,
local time, to consider and act upon the following matters:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders of the Company and until their successors are duly elected
and qualified.
2. To ratify the selection by the Board of Directors of Arthur Andersen
LLP as the Company's independent public accountants for the current
fiscal year.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on March 21, 1997 will be
entitled to notice of and to vote at the Meeting. The stock transfer books of
the Company will remain open for the purchase and sale of the Company's Common
Stock.
All stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors,
FRANK W. GETMAN JR., Secretary
Dover, New Hampshire
March 26, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE> 3
BAYCORP HOLDINGS, LTD.
COCHECO FALLS MILLWORKS
100 MAIN STREET, SUITE 201
DOVER, NEW HAMPSHIRE 03820-3835
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BayCorp Holdings, Ltd. (the "Company") for
use at the Annual Meeting of Stockholders to be held on April 29, 1997 and at
any adjournment of that meeting (the "Meeting"). All proxies will be voted in
accordance with the instructions contained therein, and if no choice is
specified, the proxies will be voted in favor of the proposals set forth in the
Notice of Meeting. Any proxy may be revoked by a stockholder at any time before
it is exercised by giving written notice to that effect to the Secretary of the
Company.
The Company's Annual Report for the fiscal year ended December 31, 1996
(which consists in principal part of the Company's Annual Report on Form 10-K
for such year as filed with the Securities and Exchange Commission (the
"Commission")) is being mailed to stockholders with the mailing of this Notice
and Proxy Statement on or about March 31, 1997. A copy of the Exhibits to the
Company's Annual Report on Form 10-K for such year will be furnished to any
stockholder upon payment of an appropriate processing fee pursuant to a written
request sent to the Secretary, BayCorp Holdings, Ltd., Cocheco Falls Millworks,
100 Main Street, Suite 201, Dover, New Hampshire 03820-3835.
VOTING SECURITIES AND VOTES REQUIRED
On March 21, 1997, the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting, there were outstanding and
entitled to vote an aggregate of 8,298,855 shares of Common Stock of the
Company, $.01 par value per share ("Common Stock"). Stockholders are entitled to
one vote per share.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting shall be
necessary to constitute a quorum for the transaction of business. Abstentions
and "broker non-votes" will be considered as present for quorum purposes but
will not be counted as votes cast. Accordingly, abstentions and broker non-votes
will have no effect on the voting on a matter that requires the affirmative vote
of a certain percentage or a plurality of the votes cast or shares voting on a
matter.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented at the meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented at the meeting is required for the
ratification of the selection of Arthur Andersen LLP as the Company's
independent accountants for the current fiscal year.
BAYCORP HOLDINGS, LTD. AS SUCCESSOR TO GREAT BAY POWER CORPORATION
As a result of a corporate restructuring that was effective on January 24,
1997 (the "Restructuring Date"), the Company's principal asset is its 100%
equity interest in Great Bay Power Corporation ("Great Bay"). Unless the context
requires otherwise, references in this Proxy Statement to the Company for events
and time periods before the Restructuring Date reflect treatment of the Company
as the successor to Great Bay.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of February 28, 1997,
regarding the ownership of the Company's Common Stock by (i) the only persons
known by the Company to own more than five percent of
<PAGE> 4
the outstanding shares, (ii) all directors and nominees of the Company, (iii)
each of the executive officers of the Company named in the Summary Compensation
Table (the "Named Executive Officers") and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES OF OF
NAME AND ADDRESS COMMON STOCK COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(2)
------------------- --------------------- ------------
<S> <C> <C>
5% Stockholders
Group consisting of:
Leon G. Cooperman,
Omega Capital Partners, L.P.,
Omega Institutional Partners, L.P. and
Omega Advisors, Inc. (the "Omega Group")...... 2,710,500(3) 32.6%
c/o Omega Advisors, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Group consisting of:
Elliott Associates, L.P.,
Westgate International, L.P. and
Martley International, Inc.
(the "Elliott Group")......................... 1,987,208(4) 23.9%
c/o Elliott Associates, L.P.
712 Fifth Avenue
36th Floor
New York, NY 10019
Group consisting of:
SC Fundamental Fund, L.P.,
SC Fundamental Inc.,
SC Fundamental Value BVI, Inc.,
Gary N. Siegler and
Peter M. Collery.............................. 941,103(5) 11.3%
c/o Siegler, Collery & Co.
712 Fifth Avenue
New York, NY 10019
Directors and Executive Officers:
Kenneth A. Buckfire............................. 42,000(6) *
Andrew J. Kurtz................................. 40,000(6)(7) *
Charles A. Leeds, Jr............................ 2,710,500(8) 32.6%
John A. Tillinghast............................. 201,100(9) 2.4%
Frank W. Getman Jr.............................. 60,000(10) *
All directors and executive officers as a group
(5 individuals)............................... 3,053,600(7)(8) 35.3%
<FN>
- ---------------
* Percentage is less than 1% of the total number of outstanding shares of
Common Stock of the Company.
(1) The number of shares of Common Stock beneficially owned by each person or
entity is determined under rules promulgated by the Commission. Under such
rules, beneficial ownership includes any shares as to which the person or
entity has sole or shared voting power or investment power, and also
includes any shares which the person or entity has the right to acquire
within 60 days after February 28, 1997. Unless otherwise indicated, each
person or entity referred to above has sole voting and investment power
with respect to the shares listed. The inclusion herein of any shares
deemed beneficially owned does not constitute an admission of beneficial
ownership of such shares.
</TABLE>
2
<PAGE> 5
(2) Number of shares deemed outstanding includes 8,318,855 shares outstanding
as of February 28, 1997, plus any shares subject to options held by the
person or entity in question that are currently exercisable or exercisable
within 60 days after February 28, 1997.
(3) The information presented herein is as reported in, and based solely upon,
a Schedule 13D filed by the indicated stockholders with the Commission on
February 25, 1997. Leon G. Cooperman reported beneficial ownership of
2,710,500 shares, with sole voting and dispositive power with respect to
2,266,520 of such shares and shared voting and dispositive power with
respect to 443,980 of such shares. Omega Capital Partners, L.P. ("Omega
Capital") reported beneficial ownership of 1,031,760 shares, with sole
voting and dispositive power as to all such shares. Omega Institutional
Partners, L.P. ("Omega Institutional") reported beneficial ownership of
76,520 shares, with sole voting and dispositive power as to such shares.
Omega Advisors, Inc. ("Omega Advisors") reported beneficial ownership of
1,602,220 shares with sole voting and dispositive power with respect to
1,158,240 of such shares and shared voting and dispositive power with
respect to 443,980 of such shares. Mr. Cooperman is the managing partner of
each of Omega Capital Partners, L.P. and Omega Institutional Partners, L.P.
and is the President of Omega Advisors, Inc. These stockholders may be
deemed to be a group for purposes of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(4) The information presented herein is as reported in, and based solely upon,
a Schedule 13D filed by the indicated stockholders with the Commission on
February 19, 1997. Elliott Associates, L.P., a Delaware limited partnership
("Elliott"), reported beneficial ownership of 1,267,809 shares, with sole
voting and dispositive power as to such shares. Westgate International,
L.P., a Cayman Islands limited partnership ("Westgate"), reported
beneficial ownership of 719,399 shares. Martley International, Inc., a
Delaware corporation and investment manager for Westgate ("Martley"), and
Westgate reported shared voting and dispositive power with respect to all
shares reported as beneficially owned by Westgate. Mr. Paul E. Singer and
Braxton Associates, L.P., a New Jersey limited partnership, which is
controlled by Singer, are the general partners of Elliott. Hambledon, Inc.,
a Cayman Islands corporation, is the sole general partner of Westgate.
Martley is the investment manager for Westgate. Martley expressly
disclaimed equitable ownership of and pecuniary interest in any Common
Stock. The stockholders identified in this note may be deemed to be a group
for purposes of Rule 13d-3 promulgated under the Exchange Act.
(5) The information presented herein is as reported in, and based solely upon,
written information provided by the indicated stockholders to the Company
as of February 28, 1997 (the "1997 Report"). SC Fundamental Value Fund,
L.P. ("Fund") reported beneficial ownership of 601,480 shares. SC
Fundamental Value BVI Ltd. ("BVI") reported beneficial ownership of 316,923
shares. SC Fundamental Savings Plan ("Plan") reported beneficial ownership
of 15,000 shares. Gary N. Siegler reported beneficial ownership of 200
shares. In a Schedule 13D filed by the indicated stockholders with the
Commission on July 13, 1995 (the "1995 Schedule 13D") with respect to Great
Bay Power Corporation, a wholly-owned subsidiary of the Company, Fund
identified its general partner as SC Fundamental Inc. ("SC"). According to
the 1995 Schedule 13D, Mr. Siegler is a controlling stockholder, president
and a director of SC and BVI and Mr. Peter M. Collery is a controlling
stockholder, vice president and a director of SC and BVI. According to the
1997 Report, Mr. Collery has shared investment authority over 7,500 shares
held by a student sponsorship partnership. Fund, BVI, Plan, and Messrs.
Siegler and Collery disclaimed any and all beneficial ownership with
respect to the shares held by the student sponsorship partnership. These
stockholders may be deemed to be a group for purposes of Rule 13d-3
promulgated under the Exchange Act.
(6) Includes 40,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(7) Excludes the 1,987,208 shares deemed beneficially owned by the Elliott
Group. See footnote (4) above. Mr. Kurtz is an analyst and portfolio
manager for Stonington Management Corporation, an affiliate of Elliott
Associates, L.P. Mr. Kurtz disclaims beneficial ownership of all shares
deemed beneficially owned by the Elliott Group.
3
<PAGE> 6
(8) Includes the 2,710,500 shares deemed beneficially owned by the Omega Group.
See footnote (3) above. Mr. Leeds is a general partner of Omega Capital and
Omega Institutional. Mr. Leeds disclaims beneficial ownership of all shares
deemed beneficially owned by the Omega Group.
(9) Includes 200,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(10) Includes 60,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy card (John A. Tillinghast and Frank
W. Getman Jr.) will vote to elect the four nominees named below as Directors of
the Company unless authority to vote for the election of any or all of the
nominees is withheld by marking the proxy card to that effect. Each nominee is
presently serving as a director and has consented to being named in this Proxy
Statement and to serve if elected.
Each director will be elected to hold office until the next annual meeting
of stockholders or until his successor is elected and qualified. If for any
reason any nominee should become unavailable for election prior to the Meeting,
the person acting under the proxy may vote the proxy for the election of a
substitute. It is not presently expected that any of the nominees will be
unavailable.
Set forth below are the name and age of each member of the Board of
Directors and the positions and offices held by him, his principal occupation
and business experience during the past five years, the names of other publicly
held companies of which he serves as a director and the year of the commencement
of his term as a director of the Company. Information with respect to the number
of shares of Common Stock beneficially owned by each director, directly or
indirectly, as of February 28, 1997, appears under "Security Ownership of
Certain Beneficial Owners and Management."
KENNETH A. BUCKFIRE, age 38, has served as a director of the Company since
November 1994. Mr. Buckfire has been a Director at Wasserstein Perella & Co.,
Inc. since February 1996. Mr. Buckfire served with Lehman Brothers, Inc. from
September 1994 to January 1996 as a Senior Vice President of High Yield Banking
and from March 1991 to August 1994 as a Vice President of High Yield Banking.
Mr. Buckfire is a director of Pike Advertising Services, Inc. and Caddis
International, Inc. Mr. Buckfire holds a B.A. from the University of Michigan
and an M.B.A. from Columbia University.
ANDREW J. KURTZ, age 31, has served as a director of the Company since May
1995. Mr. Kurtz has been an analyst and portfolio manager for Stonington
Management Corporation, an affiliate of Elliott Associates, L.P., since July
1994. From August 1992 to July 1994, Mr. Kurtz was an attorney at Weil, Gotshal
and Manges in New York. Mr. Kurtz was employed by Chemical Realty Corporation, a
division of Chemical Bank, from 1988 to 1989. Mr. Kurtz has a B.S. in Economics
from the Wharton School of Business at the University of Pennsylvania and a J.D.
from the University of Pennsylvania.
CHARLES A. LEEDS, JR., age 45, has served as a director of the Company
since November 1995. Mr. Leeds has served as the Investment Advisor for Omega
Advisors, Inc. since 1991. Mr. Leeds holds a B.A. in Economics from the
University of Pennsylvania and an M.B.A. from Columbia University.
JOHN A. TILLINGHAST, age 69, has served as President, Treasurer and a
director of the Company since November 1994 and Chief Executive Officer since
April 1995. Since 1987, Mr. Tillinghast has served as President and the sole
stockholder of Tillinghast Technology Interests, Inc. ("TILTEC"), a private
consulting firm. From 1986 to 1993, Mr. Tillinghast served as Chairman of the
Energy Engineering Board of the National Academy of Sciences. He holds an M.S.
in Mechanical Engineering from Columbia University.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock to
file with the Commission initial reports of ownership and
4
<PAGE> 7
reports of changes in ownership of Common Stock and other equity securities of
the Company. Such persons are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms filed by such person with respect
to the Company.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that during 1996, its directors, executive officers and holders of more than 10%
of the Company's Common Stock complied with all Section 16(a) filing
requirements except that one report of changes in beneficial ownership on Form 4
for Kenneth A. Buckfire, a director of the Company, was filed on July 11, 1996,
one day after its due date, because of circumstances beyond the control of Mr.
Buckfire.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met 12 times (including by telephone conference and
by written consent) during 1996. All directors attended at least 75% of the
meetings of the Board of Directors and of the committees on which they served.
The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries and incentive compensation for employees of
and consultants to the Company and administers and grants stock options pursuant
to the Company's 1996 Stock Option Plan (the "1996 Plan"). The Compensation
Committee held three meetings during 1996. The current members of the
Compensation Committee are Messrs. Buckfire, Kurtz and Leeds.
The Board of Directors has an Audit Committee, which reviews the results
and scope of the audit and other services provided by the Company's independent
public accountants. The Audit Committee met in March 1997 to review the results
of the audit of fiscal year 1996. The current members of the Audit Committee are
Messrs. Buckfire and Kurtz.
The Company has no nominating committee of the Board of Directors.
COMPENSATION OF DIRECTORS
Employee directors do not receive any compensation for serving on the
Board. Non-employee directors receive $2,500 per quarter, plus reasonable
expenses. Non-employee directors are also eligible to receive stock option
grants in accordance with a formula specified in the 1996 Plan. Mr. Leeds, a
non-employee director of the Company, has waived his rights to all compensation
available to non-employee directors, including his right to receive stock
options pursuant to the 1996 Plan.
EXECUTIVE COMPENSATION
<TABLE>
Summary Compensation Table. The following table sets forth certain
information concerning the compensation of the Company's Chief Executive Officer
and the Company's other executive officer who was serving as an executive
officer on December 31, 1996:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- OTHER ANNUAL ------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) COMPENSATION($) OPTIONS/SARS(#)(2)
--------------------------- ---- ------------ ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
John A. Tillinghast.................... 1996 $ 95,000 $ 0 $ 0 0
President and Chief Executive Officer 1995 95,000 0 0 200,000
1994(3) 9,896 0 0 0
Frank W. Getman Jr..................... 1996 100,000 35,436 25,000(4) 50,000
Chief Operating Officer and Secretary 1995(5) 41,667 0 0 75,000
<FN>
- ---------------
(1) Amounts shown represent cash compensation earned by the Named Executive
Officers for the fiscal years presented.
</TABLE>
5
<PAGE> 8
(2) The option exercise price is equal to the fair market value of the Common
Stock on the date of grant. Each executive officer also holds a contingent
stock appreciation right relating to his option pursuant to his respective
employment agreement. See "Employment Agreements."
(3) Mr. Tillinghast's employment with the Company commenced on November 23,
1994.
(4) Amount shown represents compensation in the form of partial forgiveness of a
loan to Mr. Getman. See "Employment Agreements."
(5) Mr. Getman's employment with the Company commenced on August 1, 1995.
<TABLE>
Option/SAR Grant Table. The following table sets forth certain information
regarding options and SARs granted during the fiscal year ended December 31,
1996 by the Company to the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/ RATES
UNDERLYING SARS OF STOCK PRICE
OPTIONS/ GRANTED TO APPRECIATION FOR
SARS EMPLOYEES EXERCISE OR OPTION TERM(2)
GRANTED IN FISCAL BASE PRICE EXPIRATION --------------------
NAME (#) YEAR ($/SH)(1) DATE 5%($) 10%($)
---- ---------- ----------- ------------ ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
John A. Tillinghast................ -- -- -- -- -- --
Frank W. Getman Jr................. 50,000(3)(4) 71.4% $ 8.00 9/17/2006 $251,558 $637,497
<FN>
- ---------------
(1) The exercise price is equal to the fair market value of the Company's Common
Stock on the date of grant. Each executive officer also holds a contingent
stock appreciation right relating to his option pursuant to his respective
employment agreement. See "Employment Agreements."
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the dates the respective options were granted
to their expiration dates. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the Company's Common Stock, the
optionholder's continued employment through the option period, and the date
on which the options are exercised.
(3) The exercisability of these options is accelerated upon the occurrence of a
change in control (as defined in the 1996 Plan). See "Employment
Agreements." These options are intended to qualify as incentive stock
options.
(4) This option may be exercised with respect to 25,000 shares on or after
September 17, 1996 and with respect to an additional 25,000 shares only in
the event of a "Change of Control" of the Company, as that term is defined
in an Employment Agreement between the Company and Mr. Getman, dated August
1, 1995, as amended September 17, 1996. See "Employment Agreements."
</TABLE>
6
<PAGE> 9
<TABLE>
Option Exercises and Year-End Values. The following table sets forth
certain information concerning each exercise of stock options during the fiscal
year ended December 31, 1996 by each of the Named Executive Officers and the
number and value of unexercised options held by each of the Named Executive
Officers on December 31, 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
YEAR-END YEAR-END
SHARES (#)(1) ($)(2)
ACQUIRED VALUE ---------------- ---------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ------------ --------- ---------------- ---------------
<S> <C> <C> <C> <C>
John A. Tillinghast....................... 0 0 100,000/100,000 $37,500/$37,500
Frank W. Getman Jr........................ 0 0 60,000/ 65,000 $ 9,375/$9,375
<FN>
- ---------------
(1) Options granted under the Company's 1996 Stock Option Plan. Each executive
officer also holds a contingent stock appreciation right relating to his
option pursuant to his respective employment agreement. See "Employment
Agreements."
(2) Based on the fair market value of the Common Stock on December 31, 1996
($8.375) less the option exercise price.
</TABLE>
EMPLOYMENT AGREEMENTS
Effective October 8, 1996, John A. Tillinghast, the President of the
Company, entered into an Employment Agreement with the Company (the "Tillinghast
Employment Agreement") pursuant to which Mr. Tillinghast agreed to serve not
less than 40 full-time days per quarter in his capacity as the President and
Chief Executive Officer of the Company. The termination date of the Tillinghast
Employment Agreement is December 31, 1997. If on or before September 1, 1997,
neither the Company nor Mr. Tillinghast notifies the other of its or his desire
not to extend the termination date of the Tillinghast Employment Agreement, then
the termination date of the Tillinghast Employment Agreement will extend to
December 31, 1998. The Tillinghast Employment Agreement provides for an annual
salary of $130,000. In addition, if during the term of the Tillinghast
Employment Agreement, a change of control of the Company occurs (as that term is
defined under the agreement), then the Tillinghast Employment Agreement will
terminate and Mr. Tillinghast will receive a lump sum payment of $130,000 from
the Company at that time. Additionally, the Tillinghast Employment Agreement
contains a two-year trailing non-solicitation and noncompetition covenant.
Effective August 1, 1995 (the "Getman Commencement Date"), Frank W. Getman
Jr. commenced employment with the Company and entered into an Employment
Agreement (the "Getman Employment Agreement") pursuant to which Mr. Getman
agreed to serve as Vice President, General Counsel and Secretary through August
1, 1998. On September 17, 1996, the Company and Mr. Getman amended the Getman
Employment Agreement, broadening Mr. Getman's role to include primary authority
and responsibility for operational and managerial aspects of the Company. Mr.
Getman now serves as the Company's Chief Operating Officer and Secretary. The
Getman Employment Agreement provides for an annual salary of $100,000. In
addition, the Company loaned Mr. Getman $75,000 at the time he commenced
employment, of which $25,000 was forgiven on the first anniversary of the Getman
Commencement Date. The remaining $50,000 of the principal amount of the loan
will be forgiven in equal installments of $25,000 on each of the second and
third anniversaries of the Getman Commencement Date, so long as Mr. Getman
remains employed by the Company on such dates. In the event that Mr. Getman's
employment is terminated for cause (as defined in the Getman Employment
Agreement) or by Mr. Getman, he has agreed to repay to the
7
<PAGE> 10
Company the outstanding principal amount of such loan at such time, less any
amounts forgiven by the Company, plus interest accrued on such adjusted
principal amount from the Getman Commencement Date at an interest rate of 6% per
year.
In the event that Mr. Getman's employment with the Company terminates in a
"Qualifying Termination" in connection with a "Change in Control" (each as
defined in the Getman Employment Agreement), (i) Mr. Getman is entitled to
receive in cash an amount equal to the greater of the sum of his annual salary
from the date of termination until the date of expiration of the Getman
Employment Agreement or twice his annual salary (excluding loan forgiveness) at
the date of such Change in Control; (ii) the outstanding loan amount, to the
extent not forgiven, shall be immediately forgiven; and (iii) all outstanding
stock options shall become immediately exercisable. A Qualifying Termination
will be treated as having occurred prior to the second anniversary of a Change
in Control upon (i) the termination of Mr. Getman's employment other than for
cause or (ii) the voluntary resignation by Mr. Getman following, generally, any
material impairment or material adverse change in his working conditions,
authority, position or compensation as compared with that in effect immediately
prior to the Change in Control.
CERTAIN TRANSACTIONS
From November 23, 1994 until April 30, 1996, Great Bay leased its office
space under an expense sharing agreement with TILTEC, a company owned by the
Company's President. Under the agreement, TILTEC provided Great Bay with
furnished office space and administrative support services for a total fee of
$7,400 per month. This agreement was terminated as of April 30, 1996.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors is
responsible for establishing compensation policies with respect to the Company's
executive officers. The objectives of the Company's executive compensation
program are to establish compensation levels designed to enable the Company to
attract, retain and reward executive officers who contribute to the long-term
success of the Company so as to enhance stockholder value. Stock options granted
under the 1996 Plan are a key component of the executive compensation program
and are intended to provide executives with an equity interest in the Company so
as to link a meaningful portion of the compensation of the Company's executives
with the performance of the Company's Common Stock.
To date, the Company has only two executive officers, both of whom serve
pursuant to employment agreements. See "Employment Agreements."
In October 1996, the Compensation Committee approved a new employment
agreement with John A. Tillinghast pursuant to which Mr. Tillinghast agreed to
serve as the President and Chief Executive Officer of the Company at an annual
salary of $130,000. See "Employment Agreements." The Committee determined Mr.
Tillinghast's compensation based on their judgment of Mr. Tillinghast's
historical and expected contributions to the Company and the value of his
experience and knowledge of the Company's industry. The Committee also sought to
assure the availability of Mr. Tillinghast's services to the Company through the
end of 1997.
In September 1996, the Compensation Committee approved an amendment to the
Company's employment agreement with Frank W. Getman Jr., pursuant to which Mr.
Getman's role was broadened to include primary authority and responsibility for
operational and managerial aspects of the Company. See "Employment Agreements."
As in the case of its determination of Mr. Tillinghast's compensation, the
Committee evaluated Mr. Getman's performance during 1996 and sought to further
align the interests of Mr. Getman with those of the Company's stockholders.
Accordingly, the Compensation Committee approved a grant to Mr. Getman of an
incentive stock option to purchase 50,000 shares of Common Stock, at an exercise
price of $8.00 per share, on which options to purchase 25,000 shares of Common
Stock will become exercisable only in the event of a "Change of Control" of the
Company (as defined in the Getman Employment Agreement).
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1,000,000 paid to its chief
executive officer and each of its four other most highly
8
<PAGE> 11
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. Based on
the compensation awarded to Mr. Tillinghast and Mr. Getman, it does not appear
that the Section 162(m) limitation will have a significant impact on the Company
in the near term. While the Committee does not currently intend to qualify its
incentive awards as a performance-based plan, it will continue to monitor the
impact of Section 162(m) on the Company.
COMPENSATION COMMITTEE
Kenneth A. Buckfire
Andrew J. Kurtz
Charles A. Leeds, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation Committee are Messrs.
Buckfire, Kurtz and Leeds. No executive officer of the Company has served as a
director or member of the compensation committee (or other committee serving an
equivalent function) of any other entity, whose executive officers served as a
director of or member of the Compensation Committee of the Company.
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<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Common Stock of Great Bay Power Corporation, the Company's predecessor and
currently a wholly-owned subsidiary of the Company, with the cumulative total
return for the S&P 500 Stock Index and the Philadelphia Stock Exchange Utility
Index. Great Bay's Common Stock was first registered under Section 12 of the
Exchange Act on April 17, 1995. This graph assumes the investment of $100 on
April 17, 1995 in Great Bay's Common Stock, the S&P 500 Stock Index and UTY
Philadelphia Stock Exchange Utility Index and assumes dividends are reinvested.
Measurement points are at April 17, 1995, December 31, 1995 and December 31,
1996.
<TABLE>
COMPARATIVE TOTAL RETURNS(1)
BAYCORP HOLDINGS, LTD.(2), S&P 500(3), UTY UTILITY INDEX(3)
(Performance results through 12/31/96)
[Graph]
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) MWH S&P 500 UTY INDEX
--------------------- ---- ------- ---------
<S> <C> <C> <C>
4/17/95 100.00 100.00 100.00
12/31/95 114.29 123.91 117.97
12/31/96 119.64 152.36 109.03
<FN>
- ---------------
(1) Assumes $100 invested at the close of trading on April 17, 1995 in the
Common Stock of Great Bay Power Corporation (the Company's predecessor and
currently a wholly-owned subsidiary of the Company), the S&P 500, and the
UTY Utility Index. Cumulative total return assumes reinvestment of
dividends.
(2) For purposes of this chart, BayCorp Holdings, Ltd. is treated as the
successor to Great Bay Power Corporation. Trading of BayCorp Holdings, Ltd.
Common Stock commenced on January 28, 1997.
(3) Underlying data values are courtesy of The American Stock Exchange.
</TABLE>
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<PAGE> 13
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of its Audit Committee, has
selected the firm of Arthur Andersen LLP, independent public accountants, as
accountants of the Company for the fiscal year ending December 31, 1997.
Although stockholder approval of the Board of Directors' selection of Arthur
Andersen LLP is not required by law, the Board of Directors believes that it is
advisable to give stockholders an opportunity to ratify this selection. If this
proposal is not approved at the Meeting, the Board of Directors will reconsider
its selection of Arthur Andersen LLP.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting. The representative will have the opportunity to make a statement if he
or she desires to do so and will also be available to respond to appropriate
questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, facsimile and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names. The Company will reimburse banks and brokers for
their reasonable out-of-pocket expenses incurred in connection with the
distribution of proxy materials.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Dover, New Hampshire not later than November 24, 1997 for inclusion in the
proxy statement for that meeting.
By Order of the Board of Directors,
FRANK W. GETMAN JR., Secretary
March 26, 1997
THE MANAGEMENT HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
11
<PAGE> 14
BAYCORP HOLDINGS, LTD.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 29, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY AND SHOULD BE RETURNED AS SOON AS POSSIBLE TO
BOSTON FINANCIAL DATA SERVICES, INC.
The undersigned, having received notice of the meeting and management's proxy
statement therefor, and revoking all prior proxies, hereby appoint(s) John A.
Tillinghast and Frank W. Getman, Jr., each of them, attorneys or attorney of
the undersigned (with full power of substitution in them and each of them) for
and in the name(s) of the undersigned to attend the Annual Meeting of
Stockholders of BAYCORP HOLDINGS, LTD. (the "Company") to be held at the
American Stock Exchange, 86 Trinity Place, New York, New York on Tuesday, April
29, 1997, at 10:00 a.m., Eastern Standard Time, and any adjourned session
thereof, and there to vote and act upon the following matters in respect of all
shares of stock of the Company which the undersigned will be entitled to vote
or act upon, with all the powers the undersigned would possess if personally
present.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
The proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. The shares represented by this Proxy will be voted
as directed by the undersigned. If no direction is given with respect to any
proposal, this proxy will be voted for such proposal. Attendance of the
undersigned at the meeting or at any adjournment thereof will not be deemed to
revoke this proxy unless the undersigned shall revoke this proxy in writing.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 15
[X] PLEASE MARK
YOUR VOTES AS IN THIS
EXAMPLE
NOMINEES: Kenneth A. Buckfire
FOR WITHHELD Andrew J. Kurtz
1.) To elect the Charles A. Leeds, Jr.
following [ ] [ ] John A. Tillinghast
Directors:
For, except withheld from the following nominee(s):
- -----------------------------------------------------------
FOR AGAINST ABSTAIN
2.) To ratify the appointment of Arthur Andersen [ ] [ ] [ ]
LLP as the Company's independent public
accountants for the current fiscal year.
3.) To transact such other business as may [ ] [ ] [ ]
properly come before the meeting or any
adjournment thereof.
Mark box at right if you plan to attend [ ]
the meeeting
Mark box at right if comments or address [ ]
change have been noted on the reverse
side of this card
STOCKHOLDER______________________________________________DATE__________________
CO-HOLDER (IF ANY)_______________________________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
