<PAGE>
SCHEDULE 14A
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 Section 240.14a-11(c) or Section
240.14a-12
EURO TECH HOLDINGS COMPANY LIMITED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by Registration Statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
Euro Tech Holdings Company Limited
18/F Gee Chang Hong Centre
65 Wong Chuk Hang Road
Hong Kong
NOTICE OF ANNUAL MEETING
of
SHAREHOLDERS
PLEASE TAKE NOTICE that the 1998 Annual Meeting of Shareholders of
Euro Tech Holdings Company Limited (the "Company") will be held at the principal
offices of the Company located at 18/F Gee Chang Hong Centre, 65 Wong Chuk Hang
Road, Hong Kong, on Wednesday, October 14, 1998 at 4:00 P.M. local time for the
following purposes:
1. to elect seven persons to serve on the Company's
Board of Directors until the next Annual Meeting of Shareholders
or until their respective successors are duly elected and
qualified as provided in the Company's Memorandum and Articles
of Association;
2. to confirm and ratify the retention of Arthur, Anderson
& Co., Hong Kong, as the Company's independent auditors for the
fiscal year to end December 31, 1998; and
3. to transact such other and further business as may
properly come before the meeting or any adjournment(s)
thereof.
Shareholders of record at the close of business on September 18, 1998,
are entitled to notice of and to vote at the meeting.
By Order of The Board of Directors
Jerry Wong, Secretary
September 18, 1998
<PAGE>
Euro Tech Holdings Company Limited
18/F Gee Chang Hong Centre
65 Wong Chuk Hang Road
Hong Kong
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON OCTOBER 14, 1998
GENERAL INFORMATION
This Proxy Statement and the accompanying Notice of Annual Meeting and
proxy card are being furnished in connection with the solicitation of proxies by
the Board of Directors of Euro Tech Holdings Company Limited (the "Company") for
use at the Company's Annual Meeting of Shareholders (the "Annual Meeting") to be
held on Wednesday, October 14, 1998 at the Company's principal executive offices
located at 18/F Gee Chang Hong Centre, 65 Wong Chuk Hang Road, Hong Kong, at
4:00 P.M. local time and at any adjournments thereof. The matters to be acted
upon at the Annual Meeting are set forth in the Notice of Annual Meeting. This
Proxy Statement and a proxy card are scheduled to be mailed to shareholders
commencing on September 18, 1998.
Only holders of Common Stock of record on the books of the Company at
the close of business on September 18, 1998 (the "Record Date") will be entitled
to notice of and to vote at the meeting. On the Record Date, there were
2,068,200 shares of Common Stock of the Company outstanding and 26 holders of
record.
The cost of soliciting proxies will be borne by the Company. Directors,
officers and employees of the Company may solicit proxies by telephone, telegram
or personal interview. The cost for such services is estimated at $1,000,
including expenses.
If a shareholder specifies on the accompanying proxy card how shares
are to be voted, they will be voted accordingly. If the shareholder does not
specify on the proxy card how the shares are to be voted, they will be voted FOR
the election of directors, and the confirmation of the appointment of Arthur
Anderson & Co., Hong Kong as independent auditors for the Company's fiscal year
ended December 31, 1998. A shareholder may revoke a proxy by giving written
notice to the Secretary of the Company at or prior to the meeting or by voting
at the meeting.
<PAGE>
The presence, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes which all shareholders are entitled to cast
constitutes a quorum for the purposes of transacting business at the meeting.
Each outstanding share of the Company's Common Stock is entitled to one vote on
each matter which may be properly brought before the Annual Meeting. Each
director nominee must receive the affirmative vote of a simple majority of the
stock having voting power and that did not abstain in order to be elected as a
director and to ratify the appointment of the auditors for the fiscal year
ending December 31, 1998, the affirmative vote of a simple majority of the stock
having voting power and that did not abstain is also required.
PROPOSAL I
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors will be elected to serve until
the next Annual Meeting of Shareholders or until each of their respective
successors has been duly elected and qualified as provided in the Memorandum and
Articles of Association.
Unless otherwise indicated on the proxy, votes pursuant to the
accompanying proxy will be cast for the election of the nominees on the proxy,
provided that, if any of the nominees named below shall become unavailable to
serve as a director prior to the meeting, the shares represented by valid
proxies shall be voted for the election of such other person as the Board may
recommend in his or her place, or the number of directors to be elected shall be
decreased. The Board of Directors has no reason to believe that any nominee will
be unable to serve.
T.C. Leung, Jerry Wong, Nancy Wong, C.P. Kwan, Alex Sham, Adam L.
Goldberg, and Y.K. Liang have been nominated for election to the Board of
Directors and each has consented to serve as such, if elected. Each of the
nominees who has been nominated for election as a director commencing at the
conclusion of this Annual Meeting, is currently a director. In order to be
elected, each such nominee must receive the affirmative vote of a simple
majority of the votes of the shares entitled to vote thereon and were voted and
not abstained.
The enclosed proxy gives shareholders the following options: (A) vote
for all director nominees; (B) vote against all director nominees; (C) vote for
only director nominee(s) they specify; (D) vote against only director nominee(s)
they specify; and (E) abstain.
The directors and executive officers of the Company are as follows:
2
<PAGE>
<TABLE>
<CAPTION>
Name Age Position
------ ------- -----------
<S> <C> <C>
T.C. Leung ............................... 54 Chairman of the Board of
Directors and Chief Exec
utive Officer
Jerry Wong ............................... 38 Director and Chief Finan
cial Officer
Nancy Wong ............................... 48 Director
C.P. Kwan ................................ 38 Director
Alex Sham ................................ 34 Director
Adam L. Goldberg ......................... 39 Director
Y.K. Liang ............................... 68 Director
</TABLE>
Set forth below is a brief background of each director nominee based
upon the information supplied by them to the Company.
T.C. Leung has been Chief Executive Officer and Chairman of the Board
of Directors of both the Company and of Euro Tech Far East Ltd. ("Far East")
since their inception in 1996 and 1971, respectively. Far East was acquired by
the Company upon completion of the Company's public offering in March 1997
("Public Offering"). Before establishing Far East, Mr. Leung was an engineer for
English Electric in England, from 1965 to 1968, and Lockheed Aircraft in Hong
Kong, from 1968 to 1970. Mr. Leung also served as managing director of EuroTherm
(Far East) Ltd. between 1971 and 1992. Since 1988, Mr. Leung has also served as
managing director of Eurotherm Hong Kong. Mr. Leung received a Masters degree in
Business Administration from the University of East Asia, Macao in 1986 and is a
Chartered Engineer, a title bestowed upon a member of the Council of Engineering
Institutions in the United Kingdom.
Jerry Wong has served as Director and Chief Financial Officer of Far
East since 1994 and has been with Far East since 1987. Mr. Wong has been the
Chief Financial Officer and a Director of the Company since its inception. From
1985 until 1987, Mr. Wong worked for MUA Agencies Ltd., a subsidiary of a Hong
Kong publicly listed company engaged in the insurance business, as deputy
manager of its secretarial, legal and accounting department. From 1981 until
1985, Mr. Wong served as a senior accountant in Price Waterhouse-Hong Kong. He
is a Fellow of the Chartered Association of Certified Accountants in the United
Kingdom and a Certified
3
<PAGE>
Public Accountant in Hong Kong.
Nancy Wong has been a Director of the Company since its inception and a
Director of Far East, and its Personnel Manager, since 1994. Ms. Wong has
been with Far East since 1971. Ms. Wong is also Far East's Chief Representative
in China. During the last several years, Ms. Wong has played a pivotal role in
Far East's business expansion in China. Ms. Wong received a Bachelor of Science
degree in Business Administration from the University of East Asia, Macao in
1989.
C.P. Kwan joined Far East in 1984 and has served as a Director and
Manager of its Process Equipment Department since 1991. Mr. Kwan has been a
Director of the Company since its inception. Before joining Far East, he was
employed by Haven Automation (H.K.) Ltd., a company involved in the water
treatment and process control business between 1981 and 1984.
Alex Sham has been a Director of the Company since its inception. Mr.
Sham joined Far East in 1988 and has been its Sales Manager since 1993 and
became a Director of Far East in 1996. Mr. Sham received a Bachelor of Science
in Applied Chemistry from Hong Kong Baptist University in 1990. Prior to joining
Far East, Mr. Sham was employed by the Environmental Protection Department of
the Hong Kong Government from 1986 until 1988.
Adam L. Goldberg has been a director of the Company since February 16,
1998. Mr. Goldberg is an attorney who has maintained his own practice in New
York City since 1993. From 1989 until 1993, Mr. Goldberg was employed as a staff
attorney with the New York City Department of Housing Preservation and
Development. Mr. Goldberg is the designee of May Davis Group, Inc., ("May
Davis") the underwriter of the Company's Public Offering.
Y.K. Liang has been a Director of the Company since Febru
ary 16, 1998. Mr. Liang is a director of Wong Liang Consultants
Ltd. ("Consultants") and a member of the certified public account
ing firm of Y.K. Liang & Co. ("LCO"). Mr. Liang has been associated
with both Consultants and LCO for more than the past five years.
Consultants is a general business consulting firm.
Directors of the Company serve until the next annual meeting of
shareholders of the Company and until their successors are elected and duly
qualified. Officers of the Company are elected annually by the Board of
Directors and serve at the discretion of the Board of Directors.
The Company believes that none of its directors, officers or beneficial
owners of ten percent or more of its Common Stock are required to file any
reports pursuant to Section 16(a) of the
4
<PAGE>
Securities Exchange Act of 1934, as amended (the "1934 Act").
The Company had three meetings of its Board of Directors during Fiscal
1997. Messrs. Leung, Goldberg and Liang are the members of the Company's Audit
Committee. The Company presently does not have standing nominating or
compensation committees.
The Company has not had any directors resign or decline to stand for
re-election at any time during or since December 31, 1997.
There are no material legal proceedings involving any director, officer
or affiliate of the Company, owner of record or beneficially of more than five
percent of the Company's Common Stock or any associate of any of the foregoing.
Executive Compensation
The following table sets forth certain summary information with respect
to the compensation paid by Far East for services rendered in all capacities to
Far East during Fiscal 1997 and Fiscal 1996 by Far East's Chairman of the Board
and Chief Executive Officer.
Summary Compensation Table
<TABLE>
<CAPTION>
Name and
Principal Position Year Salary($) Bonus ($)
- ------------------ ---- --------- ---------
<S> <C> <C> <C>
T.C. Leung
Chairman of the Board 1997 78,890 32,269
of Directors and
Chief Executive Officer 1996 15,584 38,329
</TABLE>
Compensation of Directors
Directors of the Company do not receive compensation for their services
as directors; however, the Board of Directors may authorize the payment of
compensation to directors for their attendance at regular and special meetings
of the Board and for attendance at meetings of committees of the Board as is
customary for similar companies. Directors will be reimbursed for their
reasonable out-of-pocket expenses incurred in connection with their duties to
the Company.
Pension Plan
The Company has a defined contribution pension plan for all of its
employees. Under this plan, all employees are entitled to a pension benefit
equal to 50% to 100% of their individual fund account balances at their dates of
resignation or retirement which
5
<PAGE>
depends on their years of services. The Company is required to make
specific contributions at approximately 10% of the basic salaries of the
employees to an independent fund management company. The Company has no future
obligations for the pension payment or any post-retirement benefits beyond the
annual contributions made. The independent fund management company is
responsible for the ultimate pension liabilities to those resigned or retired
employees. During the years ended December 31, 1995, 1996 and 1997, the Company
made total pension contributions of approximately $111,600, $53,500 and
$115,000, respectively.
Employment Agreement - T.C. Leung
T.C. Leung's services to the Company and Far East are provided pursuant
to a five year personal services agreement between the Company, Far East and
Shereman Enterprises Ltd., a management company, pursuant to which Mr. Leung
will continue to serve as the Chairman of the Board of Directors and Chief
Executive Officer of Far East and the Company. The agreement requires that
Mr. Leung devote substantially all of his business time to the affairs of the
Company and Far East. The agreement provides for the payment of $100,000 and six
percent of the Company's consolidated pre-tax income to the management company
in exchange for Mr. Leung's services during the first year of the agreement's
term with compensation past the first year to be renegotiated annually. The
rates of Mr. Leung's compensation remain unchanged. The agreement contains a
confidentiality provision and a covenant not to compete with the Company or Far
East for a period of one year following termination of the agreement under
certain circumstances.
Stock Option Plan
In November 1996, the Board of Directors adopted the Company's 1996
Stock Option Plan (the "1996 Stock Option Plan" or, the "Plan"). The 1996 Stock
Option Plan provides for the grant of options to employees, officers, directors
and consultants of the Company. The total number of shares of Common Stock for
which options may presently be granted under the 1996 Stock Option Plan is
100,000 shares, and the exercise price of all such options must be at least
$5.50 per share. Originally, up to 150,000 Options were eligible to have been
granted under the 1996 Stock Option Plan, but as the Company failed to achieve
net income for its fiscal year ended December 31, 1997 ("Fiscal Year 1997") of
at least $990,000, a total of 50,000 options thereof were cancelled in
accordance with the terms of the Plan. The remaining 100,000 options will be
cancelled unless the Company achieves net income of at least $1,800,000 for the
fiscal year ended December 31, 1998 ("Fiscal Year 1998").
Management Options
6
<PAGE>
The Company has authorized the issuance of 1,400,000 Options to
purchase up to an aggregate of 1,400,000 shares of Common Stock (the "Management
Options") to its officers, directors and employees in such numbers and to such
persons as the Company's Chairman of the Board and Chief Executive Officer may
direct. The Management Options became exercisable on March 14, 1998 for a term
of ten years.
The exercise price and the number of shares of Common Stock purchasable
upon exercise of any Management Options are subject to adjustment upon the
occurrence of certain events, including stock dividends, reclassification,
reorganizations, consolidations, mergers, and certain issuances and redemptions
of Common Stock and securities convertible into or exchangeable for Common Stock
excluding certain issuances of shares of the Company's Common Stock. No
adjustments in the exercise price will be required to be made with respect to
the Management Options until cumulative adjustments amount to $.05. In the event
of any capital reorgani zation, certain reclassifications of the Common Stock,
any consolidation or merger involving the Company (other than (i) a
consolidation or merger which does not result in any reclassification or change
in the outstanding shares of Common Stock or (ii) the acquisition of Far East or
any other business), or sale of the properties and assets of the Company, as, or
substantially as, an entirety to any other corporation, Management Options will
thereupon become exercisable only for the number of shares of stock or other
securities, assets, or cash to which a holder of the number of shares of Common
Stock of the Company purchasable (at the time of such reorganization,
reclassification, consolidation, merger, or sale) upon exercise of such
Management Options would have been entitled upon such reorganization,
reclassification, consolidation, merger, or sale.
The table below shows, as to each of the executive officers and
directors of the Company and as to all executive officers and directors of the
Company as a group, the following information with respect to Management Options
granted to date: (i) the aggregate amounts of shares of Common Stock subject to
Management Options granted to date; and (ii) the per share exercise price for
the Management Options granted to these individuals. No other options to these
individuals were issued and outstanding as of July 1, 1998.
<TABLE>
<CAPTION>
Names of Executive Shares Subject Per Share
Officers and Directors to Options Exercise Price
- ------------------------ ---------------- ----------------
<S> <C> <C>
T.C. Leung........................ 750,000 $5.50
350,000 $4.00
Alex Sham......................... 30,000 $5.50
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
20,000 $4.00
Jerry Wong........................ 25,000 $5.50
15,000 $4.00
Nancy Wong........................ 22,500 $5.50
7,500 $4.00
C.P. Kwan......................... 22,500 $5.50
7,500 $4.00
All Executive Officers and
Directors as a Group (7 persons) 1,250,000 $4.00-$5.50(1)
</TABLE>
Other officers and/or employees of the Company have been or will be
granted Management Options to purchase an aggregate of 150,000 Management
Options, all of which will be exercisable at $5.50 per share. No Management
Options have been exercised as of July 1, 1998.
The Company has made no other grants, awards or issuances to any of its
directors or executive officers of restricted stock awards, stock appreciation
rights, or payouts under any long-term incentive plans. The Company has adopted
the 1996 Stock Option Plan, under which options for 100,000 shares of Common
Stock may but have yet to be issued. Such 100,000 options under the 1996 Stock
Option Plan will terminate unissued unless the Company achieves net income of at
least $1,800,000 for Fiscal 1998.
The 1996 Stock Option Plan is to be administered by the Board of
Directors or a committee of the Board of Directors which will determine the
terms of options granted, including the exercise price, exercise period (up to
six years) the number of shares subject to the option and the terms and
conditions of exercise.
The exercise price of all stock options granted under the 1996 Stock
Option Plan must be at least $5.50. The term of each option granted pursuant to
the 1996 Stock Option Plan was established by the Board of Directors or a
committee of the Board of Directors, in its sole discretion; provided, however,
that the maximum term of each option under the 1996 Stock Option Plan is six
years. Options shall become exercisable at such times and in such installments
as provided by either the Board of Directors or a committee of the Board of
Directors in the terms of each individual option.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of July 1, 1998, certain information
concerning beneficial ownership of shares of Common Stock with respect to (i)
each person known to the Company to own 5% or more of the outstanding shares of
Common Stock, (ii) each executive officer and director of the Company and (iii)
all officers and directors of the Company as a group:
- -----------
(1) Price range.
8
<PAGE>
<TABLE>
<CAPTION>
Amount and Approximate
Nature of Percentage
Beneficial of Common
Ownership Stock Owned
------------ --------------
<S> <C> <C>
T.C. Leung(1)(2)(3)............... 2,500,000 79%
Jerry Wong(1)(3)(4)............... 40,000 2%
Nancy Wong(1)(3)(4).............. 30,000 1%
C.P. Kwan(1)(3)(4)............... 30,000 1%
Alex Sham(1)(3)(4)............... 50,000 2%
Adam L. Goldberg(1)........ 0 *
Y.K. Liang(1)................. 0 *
Pearl Venture Ltd.(1)(2)........ 2,500,000 79%
Regent Earning Ltd.(1)........ 1,027,600 50%
All Executive Officers and
Directors of the Company
as a group (7 persons)(2)(3)(4)... 2,650,000 80%
</TABLE>
- -------------
(1) The address for each of Ms. Wong and Messrs. Wong, Kwan,
Sham, Goldberg, Liang and Leung is c/o Euro Teach (Far East) Ltd.,
18/F Gee Chang Hong Centre, 65 Wong Chuk Hang Road, Hong Kong. The
address for Pearl Venture Ltd. ("Pearl") is Columbus Centre
Building, Wichhams Cay, Road Town, Tortola, British Virgin Islands.
The address for Regent Earning Ltd. ("Regent") is Room 101 Wo Hing
Commercial Building, No. 11 Wing Ho Street, Central Hong Kong.
(2) Includes shares of the Company's Common Stock owned of record by
Pearl, which is a trust established for the benefit of Mr. Leung. Also
includes those shares of the Company's Common Stock owned of record by
Regent, of which Pearl is the majority share holder. See "Certain
Relationships and Related Transactions."
(3) Does not include such person's proportionate interest in shares of the
Company's Common Stock held of record by Regent or Broadskill Investments, Inc.
("Broadskill"). Broadskill is a Hong Kong Corporation which owns an approximate
44% equity interest in Regent. See "Certain Relationship and Related
Transactions."
(4) Gives effect to the exercise of Management Options owned of record by
such person(s).
* Denotes less than 1%.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was incorporated under the laws of the British Virgin
Islands on September 30, 1996. Shortly after incorporation, the Company sold
50,000 shares of its Common Stock to Gusrae, Kaplan & Bruno and 100,000 shares
of its Common Stock to Sidford for aggregate cash consideration of $1,500 or
$.01 per share. Gusrae, Kaplan & Bruno is United States counsel to the Company
and was granted the right to purchase said shares in partial consideration of
its services rendered to the Company in connection with the Public Offering.
Sidford has been and is a business consultant to Far East which initially was
paid HK$5,000 by Far East and granted the option to purchase the aforementioned
100,000 shares. In January 1997, Far East amended its consulting agreement with
Sidford to pay Sidford $5,000 per month for twenty months. At that same time,
the Company repurchased the 100,000 shares of its Common Stock held by Sidford.
Pearl is a British Virgin Islands company which is a trust for the
benefit of T.C. Leung, the Company's Chairman of the Board and Chief Executive
Officer. Regent is a Hong Kong corporation.
Concurrently with the closing of the Company's Public Offering in March
of 1997, the Company consummated the acquisition of Far East by exchanging
1,400,000 shares of the Company's Common Stock for the 1,000,000 issued and
outstanding shares of the Common Stock of Far East at a ratio of 1.4 (one and
four-tenths) shares of the Company's Common Stock for each issued and
outstanding share of Far East's Common Stock.
Pearl was one of the original shareholders of Far East. Prior to 1995,
Pearl and Regent purchased and accumulated 266,000 and 734,000 shares (or 100%
in the aggregate) of the issued and outstanding common stock of Far East for an
aggregate consideration of approximately HK$11,130,000. Broadskill is a Hong
Kong corporation which owns an approximate 44% equity interest in Regent. No
executive officer or director of the Company is an officer or director of Pearl,
Regent or Broadskill. In addition to its direct record ownership of 372,400
shares of the Company's Common Stock, Pearl is also the beneficial owner of
approximately 527,069 shares of the Company's Common Stock through its equity
interest in Regent. Mr. Kwan, and each of Messrs. Wong, Sham and Ms. Wong,
Executive Officers and Directors of the Company and Far East, have equity
interests in Regent and/or Broadskill which if converted into shares of the
Company's Common Stock would represent less than 5% in the case of Mr. Kwan, and
less than 1% of the Company's Common Stock for each of Messrs. Wong and Sham and
Ms. Wong, respectively.
During Fiscal 1996, the Company transferred its equity interests in
three former subsidiaries, Armiston (a wholly
10
<PAGE>
owned subsidiary), Action (a 51% owned subsidiary) and Euro Electron (an
80% owned subsidiary) to Regent and Pearl in exchange for the book value price
(an aggregate of HK$10,000) of the Company's interest in these three
subsidiaries.
On November 11, 1996 the Company completed a private placement of an
aggregate of 1,000,000 Warrants (the "Private Warrants") at $.15 per Warrant and
received therefrom aggregate gross proceeds of $150,000. May Davis acted as the
Company's placement agent in connection with this private placement and received
an aggregate of $19,500 in commissions and non-accountable expenses. The terms
and conditions of the Private Warrants are identical to the Public Warrants sold
in the Public Offering in March 1997. In March 1997, the Company repurchased
70,000 Private Warrants at their purchase price for an aggregate repayment of
$10,500.
Mr. Leung may be deemed to be a "promoter" of the Company as such term
is defined by the rules promulgated by the Commission under the Securities Act.
As so defined, a promoter is any person who (i) acting alone or in conjunction
with others, took the initiative in founding and organizing an issuer's business
or enterprise, or (ii) in connection with founding and organizing the business
or enterprise of an issuer, receives in consideration for services and/or
property, ten percent or more of any class of the issuer's securities or the
proceeds therefrom. Mr. Leung was the proponent of the Public Offering to raise
capital for the Company and Far East and of establishing a company in the
British Virgin Islands for that purpose. Mr. Leung is the beneficial owner of
approximately 79% of the Company's shares of Common Stock after giving effect to
the exercise of the 1,100,000 Management Options owned by him.
All transactions between the Company and its executive officers and
directors are believed by the Company to be on terms no less favorable than
could be obtained from independent third parties and are approved by a majority
of the Company's directors who are not interested in such transaction(s).
All outstanding balances with related parties are unsecured,
non-interest bearing and are repayable in 1998. The related companies with which
the Company has engaged in transactions are Euro Electron, EuroTherm, Action and
Armiston. During Fiscal 1997 the Company made sales to Action, Euro Electron and
EuroTherm of approximately $4,000, $172,000 and $50,000, respectively. Addition
ally, during Fiscal 1997 the Company made purchasers from Action, Armiston and
EuroTherm of approximately $6,000, $36,000 and $598,000, respectively.
No loans or advances have been or will be made in the future to the
Company's officers, directors or shareholders of at least
11
<PAGE>
five (5%) percent of the issued and outstanding shares of any class of
equity securities ("5%-plus Shareholders"), or their respective affiliates
unless such loans are for bona fide business purposes.
In connection with the Public Offering, the Company sold to May Davis,
for the sum of $10.00, Warrants to purchase up to 60,000 shares of the Company's
Common Stock at $8.25 and Warrants, at a price of $.2475 per Warrant to purchase
up to an additional 60,000 shares of the Company's Common Stock at $5.50 per
share (the "May Davis Warrants"). The May Davis Warrants were not transferable
until March 14, 1998, except to officers and partners of May Davis and selected
dealers who participated in the Public Offering, and are exercisable until March
14, 2002. For the life of the May Davis Warrants, the holders thereof are given
the opportunity to profit from a rise in the market price of the Warrants and/or
Common Stock of the Company with a resulting dilution in the interest of other
securityholders. The Company may find it more difficult to raise additional
equity capital if it should be needed for the business of the Company while the
May Davis Warrants are outstanding, and at any time when the holder of the May
Davis Warrants might be expected to exercise them, the Company would probably be
able to obtain additional equity capital on terms more favorable than those
provided in the May Davis Warrants. The Company has agreed, at its expense, to
register under the Act, on one occasion, and at May Davis' expenses on another
occasion, the May Davis Warrants and/or the underlying securities at the request
of the holder thereof. The Company has also agreed to certain "piggy-back"
registration rights for the holders of the May Davis Warrants and securities
issuable upon exercise thereof.
The Company has also agreed with May Davis, that if the Company, its
current or future subsidiaries, if any, and its principal shareholders, or their
respective affiliates, will until March 14, 2000 provide May Davis with a Right
of First Refusal with respect to any public or private offering of securities to
raise capital. May Davis must agree to undertake any such financing on the same
or better terms as any other financing proposal.
The Company has agreed that for a period of time ending not earlier
than March 14, 2000, May Davis will have the right to designate a person to be a
non-voting advisor to the Company's Board of Directors who will receive the same
compensation as a member of the Board of Directors and who will be indemnified
by the Company against any claims arising out of his participation at meetings
of the Board of Directors. Alternatively, May Davis has the right, during such
period, to designate one person to be elected to the Company's Board of
Directors. The Company has agreed to use its best effort to obtain the election
of the May
12
<PAGE>
Davis designee and such person shall be entitled to receive the same
compensation, expense reimbursement and other benefits as any other non-employee
director of the Company, if any. May Davis has designated Mr. Goldberg to the
Company's Board of Directors. At the completion of the Public Offering, the
Company retained May Davis to act as a financial consultant for a period of time
concluding on March 14, 2000 for fees aggregating $108,000 which were paid in
full at that time.
PROPOSAL II
APPROVAL OF AUDITORS
The Board of Directors, upon the recommendation of the Company's Audit
Committee, have selected Arthur Andersen & Co., Hong Kong, a certified public
accounting firm, as independent auditors of the Company's financial statements
for its fiscal 1998 to end December 31, 1998. A representative of Arthur
Andersen is expected to be present at the Annual Meeting and will have an
opportunity to make a statement if he desires to do so. The representative is
expected to be available to respond to appropriate questions.
The members of the Board of Directors recommend that the shareholders
vote "FOR" the proposal to approve Arthur Andersen & Co., Hong Kong as the
Company's auditors for its fiscal year ending December 31, 1998. In order to be
so approved Arthur Andersen & Co., Hong Kong must receive the affirmative vote
of a simple majority of the votes of the shares entitled to vote thereon and
were voted and not abstained.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Any shareholder proposals intended to be considered for presentation at
the 1999 Annual Meeting and for inclusion in the 1999 proxy statement must be
made in writing and received by the Corporate Secretary at the Company's
principal executive offices by May 31, 1999. The Company will consider only
proposals meeting the requirements of applicable Securities and Exchange
Commission rules. Shareholders are urged to review these rules and, if questions
arise, consult their own legal counsel before submitting a proposal to the
Company.
Recommendations by shareholders for directors to be nominated at the
1999 Annual Meeting must be made in writing, with sufficient biographical and
other relevant information such that an informed judgment as to the proposed
nominee's qualifications can be made and be accompanied by a notarized written
consent to be named in the Proxy Statement, if nominated, and to serve as a
director, if elected, executed by the proposed nominee. Recommendations received
in proper order by the Corporate
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Secretary at the Company's principal executive office at least four months
prior to the 1999 Annual Meeting will be referred to, and considered by, the
Company's Board of Directors. No shareholder recommendations were received
before the 1998 Annual Meeting.
FINANCIAL STATEMENTS
Consolidated financial statements for the Company and its subsidiaries
are contained in the Company's Annual Report for the fiscal year ended December
31, 1997, as amended, which is being delivered to you herewith.
OTHER MATTERS
The Board of Directors is not currently aware of any other matter to be
transacted at the Annual Meeting.
14
<PAGE>
PROXY STATEMENT
ITEM 1. DATE, TIME AND PLACE.
The 1998 Annual Meeting of Securityholders (the "Annual Meeting") shall be
held at 4:00 p.m., Wednesday, October 14, 1998, at the principal executive
offices of the Company, located at 18/F Gee Chang Hong Centre, 65 Wong Chuk Hang
Road, Hong Kong.
This Proxy Statement is being sent to securityholders of the Company on or
about September 18, 1998.
ITEM 2. REVOCABILITY OF PROXY.
Under the corporation laws of the British Virgin Islands, proxy revocation
rights, if any, are created by a corporation's governance instruments. The
Memorandum and Articles of Association of the Company, constituting the internal
governance instruments of the Company, are silent with regards to rights of
revocation for proxies by securityholders.
However, the Article 80 of the Articles of Association provides that the
chairman presiding over any meeting at which a vote is cast by proxy or on
behalf of any person other than an individual may call for a notarially
certified copy of such proxy or authority which shall be produced within seven
(7) days of the request, or the vote(s) cast by such proxy shall be disregarded.
ITEM 3. DISSENTERS' RIGHT OF APPRAISAL.
Not applicable.
ITEM 4. PERSONS MAKING THE SOLICITATION.
This proxy solicitation is being made by the Company. Management of the
Company has not been informed, in writing or otherwise, of the intent of any
director of the Company to oppose any action intended herein to be taken by the
Company.
ITEM 5. INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON.
The holdings of securities of the Company of all directors and executive
officers of the Company, as of July 1, 1998, are provided in the response to
Item 6 herein.
15
<PAGE>
ITEM 6. VOTING SECURITIES.
The Company had outstanding, as of August 14, 1998, 2,068,200 shares of
Common Stock, $.01 par value (the "Common Stock"). The Company has only one
class of Common Stock, and the Common Stock is the only class of voting
securities.
The record date of this proxy solicitation is September 18, 1998 (the
"Record Date"). Holders of the Common Stock on the Record Date will have the
right to vote at, or give proxies for, the Annual Meeting. The shareholders of
the Company do not have cumulative voting rights.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of July 1, 1998, certain information
concerning beneficial ownership of shares of Common Stock with respect to (i)
each person known to the Company to own 5% or more of the outstanding shares of
Common Stock, (ii) each executive officer and director of the Company and (iii)
all officers and directors of the Company as a group:
- ------------------------------ ----------- -------------
AMOUNT AND APPROXIMATE
NATURE OF PERCENTAGE
BENEFICIAL OF COMMON
OWNERSHIP STOCK OWNED
- ------------------------------ ----------- -------------
T.C. Leung (1)(2)(4) 2,500,000 79%
- ------------------------------ ----------- -------------
- -----------------------
(1) The address for each of Ms. Wong and Messrs. Wong, Kwan, Sham,
Goldberg, Liang and Leung is c/o Euro Tech (Far East) Ltd., 18/F Gee Chang Hong
Centre, 65 Wong Chuk Hang Road, Hong Kong. The address for Pearl Venture Ltd.
("Pearl") is Columbus Centre Building, Wichhams Cay, Road Town, Tortola, British
Virgin Islands. The address for Regent Earning Ltd. ("Regent") is Room 101 Wo
Hing Commercial Building, No. 11 Wing Ho Street, Central Hong Kong.
(2) Includes shares of the Company's Common Stock owned of record by
Pearl, which is a trust established for the benefit of Mr. Leung. Also includes
those shares of the Company's Common Stock owned of record by Regent, of which
Pearl is the majority shareholder. See "Certain Transactions."
16
<PAGE>
- ------------------------------ ----------- -------------
AMOUNT AND APPROXIMATE
NATURE OF PERCENTAGE
BENEFICIAL OF COMMON
OWNERSHIP STOCK OWNED
- ------------------------------ ----------- -------------
Jerry Wong (3)(4) 40,000 2%
- ------------------------------ ----------- -------------
Nancy Wong(3)(4) 30,000 1%
- ------------------------------ ----------- -------------
C.P. Kwan(3)(4) 30,000 1%
- ------------------------------ ----------- -------------
Alex Sham(3)(4) 50,000 2%
- ------------------------------ ----------- -------------
Adam L. Goldberg 0 *
- ------------------------------ ----------- -------------
Y.K. Liang 0 *
- ------------------------------ ----------- -------------
Pearl Venture Ltd.(1)(2) 2,500,000 79%
- ------------------------------ ----------- -------------
Regent Earning Ltd.(1) 1,027,600 50%
- ------------------------------ ----------- -------------
All Executive Officers
and Directors of the
Company as a group
(7 persons)(2)(3)(4) 2,650,000 80%
- ------------------------------ ----------- -------------
ITEM 7. DIRECTORS AND EXECUTIVE OFFICERS.
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
T.C. Leung 54 Chairman of the Board of Directors and Chief
Executive Officer
Jerry Wong 38 Director and Chief Financial Officer
- --------------------
(3) Does not include such person's proportionate interest in shares of the
Company's Common Stock held of record by Regent or Broadskill Investments, Inc.
("Broadskill"). Broadskill is a Hong Kong Corporation which owns an approximate
44% equity interest in Regent.
(4) Gives effect to the exercise of Management Options owned of record by
such person(s).
* Denotes less than 1%
17
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Nancy Wong 48 Director
C.P. Kwan 38 Director
Alex Sham 34 Director
Adam L. Goldberg 39 Director
Y.K. Liang 68 Director
Set forth below is a brief background of the executive officers and
directors based upon the information supplied by them:
T.C. LEUNG has been Chief Executive Officer and Chairman of the Board of
Directors of both the Company and Far East since their inception. Before
establishing Far East, Mr. Leung was an engineer for English Electric in
England, from 1965 to 1968, and Lockheed Aircraft in Hong Kong, from 1968 to
1970. Mr. Leung also served as managing director of Eurotherm (Far East) Ltd.
between 1971 and 1992. Since 1988, Mr. Leung has also served as managing
director of Eurotherm Hong Kong. Mr. Leung received a Masters degree in Business
Administration from the University of East Asia, Macao in 1986 and is a
Chartered Engineer, a title bestowed upon a member of the Council of Engineering
Institutions in the United Kingdom.
JERRY WONG has served as Director and Chief Financial Officer of Far East
since 1994 and has been with Far East since 1987. Mr. Wong has been the Chief
Financial Officer and a Director of the Company since its inception. From 1985
until 1987, Mr. Wong worked for MUA Agencies Ltd., a subsidiary of a Hong Kong
publicly listed company engaged in the insurance business, as deputy manager of
its secretarial, legal and accounting department. From 1981 until 1985, Mr. Wong
served as a senior accountant in Price Waterhouse-Hong Kong. He is a Fellow of
the Chartered Association of Certified Accountants in the United Kingdom and a
Certified Public Accountant in Hong Kong.
NANCY WONG has been a Director of the Company since its inception and a
Director of Far East, and its Personnel Manager, since 1994. Ms. Wong has been
with Far East since 1971. Ms. Wong is also Far East's Chief Representative in
China. During the last several years, Ms. Wong has played a pivotal role in Far
East's business expansion in China. Ms. Wong received a Bachelor of Science
degree in Business Administration from the University of East Asia, Macao in
1989.
C.P. KWAN joined Far East in 1984 and has served as a Director and Manager
of its Process Equipment Department since 1991. Mr. Kwan has been a Director of
the Company since its inception. Before joining Far East, he was employed by
Haven Automation (H.K.) Ltd., a
18
<PAGE>
company involved in the water treatment and process control business between
1981 and 1984.
ALEX SHAM has been a Director of the Company since its inception. Mr. Sham
joined Far East in 1988 and has been its Sales Manager since 1993 and became a
Director of Far East in 1996. Mr. Sham received a Bachelor of Science in Applied
Chemistry from Hong Kong Baptist University in 1990. Prior to joining Far East,
Mr. Sham was employed by the Environmental Protection Department of the Hong
Kong Government from 1986 until 1988.
ADAM L. GOLDBERG has been a director of the Company since February 16,
1998. Mr. Goldberg is an attorney who has maintained his own practice in New
York City since 1993. From 1989 until 1993, Mr. Goldberg was employed as a staff
attorney with the New York City Department of Housing Preservation and
Development. Mr. Goldberg is the designee of May Davis Group, Inc., ("May
Davis") the underwriter of the Company's initial public offering (the "Public
Offering").
Y.K. LIANG has been a director of the Company since February 16, 1998.
Mr. Liang is a director of Wong Liang Consultants Ltd. ("Consultants") and a
member of the certified public accounting firm of Y.K. Liang & Co. ("LCO").
Mr. Liang has been associated with both Consultants and LCO for more than the
past five years. Consultants is a general business consulting firm.
Directors of the Company serve until the next annual meeting of
shareholders of the Company and until their successors are elected and duly
qualified. Officers of the Company will be elected annually by the Board of
Directors and serve at the discretion of the Board of Directors.
The Company believes that none of its directors, officers or beneficial
owners of five percent or more of its Common Stock are required to file any
reports pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "1934 Act").
The Company had three meetings of its Board of Directors during Fiscal
1997. Messrs. Leung, Goldberg and Liang are the members of the Company's Audit
Committee. The Company presently does not have standing nominating or
compensation committees.
The Company has not had any directors resign or decline to stand for
re-election at any time during or since Fiscal 1997.
There are no material legal proceedings involving any director, officer or
affiliate of the Company, owner of record or beneficially of more than five
percent of the Company's Common Stock or any associate of any of the foregoing.
19
<PAGE>
ITEM 8. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information with respect to
the compensation paid by Far East for services rendered in all capacities to Far
East during Fiscal 1997 and Fiscal 1996 by Far East's Chairman of the Board and
Chief Executive Officer.
SUMMARY COMPENSATION TABLE
NAME AND
PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- ------------------ ---- --------- --------
T.C. Leung, Chairman of the Board of 1997 78,890 32,269
Directors and Chief Executive Officer 1996 15,584 38,329
COMPENSATION OF DIRECTORS
Directors of the Company do not receive compensation for their services as
directors; however, the Board of Directors may authorize the payment of
compensation to directors for their attendance at regular and special meetings
of the Board and for attendance at meetings of committees of the Board as is
customary for similar companies. Directors will be reimbursed for their
reasonable out-of-pocket expenses incurred in connection with their duties to
the Company.
PENSION PLAN
The Company has a defined contribution pension plan for all of its
employees. Under this plan, all employees are entitled to a pension benefit
equal to 50% to 100% of their individual fund account balances at their dates of
resignation or retirement which depends on their years of services. The Company
is required to make specific contributions at approximately 10% of the basic
salaries of the employees to an independent fund management company. The Company
has no future obligations for the pension payment or any post-retirement
benefits beyond the annual contributions made. The independent fund management
company is responsible for the ultimate pension liabilities to those resigned or
retired employees. During the years ended December 31, 1995, 1996 and 1997, the
Company made total pension contributions of approximately $111,600, $53,500 and
$115,000, respectively.
EMPLOYMENT AGREEMENT - T.C. LEUNG
T.C. Leung's services to the Company and Far East are provided pursuant to
a five year
20
<PAGE>
personal services agreement between the Company, Far East and Shereman
Enterprises Ltd., a management company, pursuant to which Mr. Leung will
continue to serve as the Chairman of the Board of Directors and Chief Executive
Officer of the Far East and the Company. The agreement requires that Mr. Leung
devote substantially all of his business time to the affairs of the Company and
Far East. The agreement provides for the payment of $100,000 and six percent of
the Company's consolidated pre-tax income to the management company in exchange
for Mr. Leung's services during the first year of the agreement's term with
compensation past the first year to be renegotiated annually. The rates of Mr.
Leung's compensation remains unchanged. The agreement contains a confidentiality
provision and a covenant not to compete with the Company or Far East for a
period of one year following termination of the agreement under certain
circumstances.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
STOCK OPTION PLAN
In November 1996, the Board of Directors adopted the Company's 1996 Stock
Option Plan (the "1996 Stock Option Plan" or, the "Plan"). The 1996 Stock Option
Plan provides for the grant of options to employees, officers, directors and
consultants of the Company. The total number of shares of Common Stock for which
options may presently be granted under the 1996 Stock Option Plan is 100,000
shares, and the exercise price of all such options must be at least $5.50 per
share. Originally, up to 150,000 Options were eligible to have been granted
under the 1996 Stock Option Plan, but as the Company failed to achieve net
income for its fiscal year ended December 31, 1997 ("Fiscal Year 1997") of at
least $990,000, a total of 50,000 options thereof were cancelled in accordance
with the terms of the Plan. The remaining 100,000 options will terminate unless
the Company achieves net income of at least $1,800,000 for the fiscal year ended
December 31, 1998 ("Fiscal Year 1998"). See "Item 13. Interest of Management in
Certain Transactions."
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
During Fiscal 1997, the Company had sales to or purchases from four related
companies, Euro Electron (Far East) Ltd. ("Euro Electron"), EuroTherm
International ("EuroTherm"), Action Instruments (China) Ltd. ("Action") and
Armtison Limited ("Armtison") (collectively, the "Related Companies"). Sales in
the approximate amounts of $4,000 to Action, $172,000 to Euro Electron and
$50,000 to EuroTherm were made. Purchases in the approximate amounts of $6,000
from Action, $36,000 from Armtison and $598,000 from EuroTherm were made.
Each of the Related Companies is a company of which one or more of the
directors or principal shareholders of the Company has a direct or beneficial
interest, or a company which is under common control with the Company. The
Company has two principal shareholders, Regent Earning Ltd. ("Regent") and Pearl
Venture Ltd. ("Pearl") (a majority shareholder of Regent), which hold majority
equity interests in each of Euro Electron, Action and Armtison. Pearl is a
21
<PAGE>
trust for the benefit of T.C. Leung, the Company's Chairman of the Board, Chief
Executive Officer and principal beneficial shareholder. Mr. Leung is a director
of EuroTherm.
All current transactions and future transactions between the Company and
its executive officers and directors are and will be on terms no more favorable
than those which could be obtained from independent third parties and are or
will be approved by a majority of the Company's disinterested directors.
MANAGEMENT OPTIONS
The Company has authorized the issuance of 1,400,000 Options to purchase up
to an aggregate of 1,400,000 shares of Common Stock (the "Management Options")
to its officers, directors and employees in such numbers and to such persons as
the Company's Chairman of the Board and Chief Executive Officer may direct. The
Management Options became exercisable on March 14, 1998 for a term of ten years.
The exercise price and the number of shares of Common Stock purchasable
upon exercise of any Management Options are subject to adjustment upon the
occurrence of certain events, including stock dividends, reclassification,
reorganizations, consolidations, mergers, and certain issuances and redemptions
of Common Stock and securities convertible into or exchangeable for Common Stock
excluding certain issuances of shares of the Company's Common Stock. No
adjustments in the exercise price will be required to be made with respect to
the Management Options until cumulative adjustments amount to $.05. In the event
of any capital reorganization, certain reclassifications of the Common Stock,
any consolidation or merger involving the Company (other than (i) a
consolidation or merger which does not result in any reclassification or change
in the outstanding shares of Common Stock or (ii) the acquisition of Far East or
any other business), or sale of the properties and assets of the Company, as, or
substantially as, an entirety to any other corporation, Management Options will
thereupon become exercisable only for the number of shares of stock or other
securities, assets, or cash to which a holder of the number of shares of Common
Stock of the Company purchasable (at the time of such reorganization,
reclassification, consolidation, merger, or sale) upon exercise of such
Management Options would have been entitled upon such reorganization,
reclassification, consolidation, merger, or sale.
The table below shows, as to each of the executive officers and directors
of the Company and as to all executive officers and directors of the Company as
a group, the following information with respect to Management Options granted to
date: (i) the aggregate amounts of shares of Common Stock subject to Management
Options granted to date; and (ii) the per share exercise price for the
Management Options to be granted for these individuals. No other options to
these individuals were issued and outstanding as of July 1, 1998.
22
<PAGE>
NAMES OF SHARES SUBJECT PER SHARE
EXECUTIVE OFFICERS AND DIRECTORS TO OPTIONS EXERCISE PRICE
T.C. Leung 750,000 $5.50
350,000 $4.00
Alex Sham 30,000 $5.50
20,000 $4.00
Jerry Wong 25,000 $5.50
15,000 $4.00
Nancy Wong 22,500 $5.50
7,500 $4.00
C.P. Kwan 22,500 $5.50
7,500 $4.00
All Executive Officers and
Directors as a Group (7 persons) 1,250,000 $4.00-$5.50(1)
Other officers and/or employees of the Company have been or will be granted
Management Options to purchase an aggregate of 150,000 Management Options, all
of which will be exercisable at $5.50 per share. No Management Options have been
exercised as of July 1, 1998.
The Company has made no other grants, awards or issuances to any of its
directors or executive officers of restricted stock awards, stock appreciation
rights, or payouts under any long-term incentive plans. The Company has adopted
the 1996 Stock Option Plan, under which options for 100,000 shares of Common
Stock may but have yet to be issued. Such 100,000 options under the 1996 Stock
Option Plan will terminate unissued unless the Company achieves net income of at
least $1,800,000 for Fiscal 1998.
The 1996 Stock Option Plan is to be administered by the Board of Directors
or a committee of the Board of Directors which will determine the terms of
options granted, including the exercise price, exercise period (up to six years)
the number of shares subject to the option and the terms and conditions of
exercise.
The exercise price of all stock options granted under the 1996 Stock Option
Plan must be
- -----------------------
(1) Price range.
23
<PAGE>
at least $5.50. The term of each option granted pursuant to the 1996 Stock
Option Plan was established by the Board of Directors or a committee of the
Board of Directors, in its sole discretion; provided, however, that the maximum
term of each option under the 1996 Stock Option Plan is six years. Options shall
become exercisable at such times and in such installments as provided by either
the Board of Directors or a committee of the Board of Directors in the terms of
each individual option, except that 50,000 Options under the Plan already
automatically terminated under the terms thereof because the Company failed to
achieve net income of at least $990,000 during the Company's Fiscal Year 1997,
and further, if the Company does not achieve net income of at least $1,800,000
during its Fiscal Year 1998, the remaining 100,000 Options under the 1996 Stock
Option Plan will automatically terminate.
ITEM 9. INDEPENDENT PUBLIC ACCOUNTANTS.
The Company's present independent public accounting firm is Arthur Andersen
& Co., Hong Kong. Management recommends to shareholders that Arthur Andersen &
Co., Hong Kong ("Arthur Andersen"), be elected to serve as the Company's
accountants for the next fiscal year.
Management expects that representatives of Arthur Andersen will be present
at the Annual Meeting, and that such representatives will have the opportunity
to make a statement if they so desire at the Annual Meeting, and will be
available thereat to respond to appropriate questions.
ITEM 10. COMPENSATION PLANS.
No compensation plan for the Company's directors, executive officers or
others will be proposed or otherwise acted upon at the Annual Meeting.
ITEM 11. AUTHORIZATION OR ISSUANCE OF SECURITIES OTHERWISE THAN FOR EXCHANGE.
Not applicable.
ITEM 12. MODIFICATION OR EXCHANGE OF SECURITIES.
Not applicable.
ITEM 13. FINANCIAL AND OTHER INFORMATION.
Not applicable.
ITEM 14. MERGERS, CONSOLIDATIONS, ACQUISITIONS AND SIMILAR MATTERS.
Not applicable.
24
<PAGE>
ITEM 15. ACQUISITION OR DISPOSITION OF PROPERTY.
Not applicable.
ITEM 16. RESTATEMENT OF ACCOUNTS.
Not applicable.
ITEM 17. ACTION WITH RESPECT TO REPORTS.
Not applicable.
ITEM 18. MATTERS NOT REQUIRED TO BE SUBMITTED.
Not applicable.
ITEM 19. AMENDMENT OF CHARTER, BY-LAWS OR OTHER DOCUMENTS.
Not applicable.
ITEM 20. OTHER PROPOSED ACTION.
Not applicable.
ITEM 21. VOTING PROCEDURES.
The Company is nominating its current seven directors for re-election. In
the election of Directors, Common Shareholders do not have cumulative voting
rights and are entitled to one vote for each whole share. Votes will be counted
at the Company's Annual Shareholders Meeting by inspectors who will, in all
probability, be employees or otherwise associated with the Company. As provided
for in the Company's Memorandum and Articles of Association; resolutions are
approved and Directors are elected by a resolution approved at a duly convened
and constituted meeting of the members of the Company by the affirmative vote of
a simple majority of the votes of the shares entitled to vote thereon and were
voted and not abstained.
ITEM 22. INFORMATION REQUIRED IN INVESTMENT COMPANY PROXY STATEMENT.
Not applicable.
25
<PAGE>
PROXY CARD FRONT
EURO TECH HOLDINGS COMPANY LIMITED
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints T.C. Leung and Jerry Wong
and each of them, with full power of substitution, as proxies to represent the
undersigned and vote all the shares of Common Stock of Euro Tech Holdings
Company Limited, which the undersigned is entitled to vote at the Annual Meeting
of Shareholders to be held on October 14, 1998, at 4:00 P.M. local time at the
offices of the Company located at 18/F Gee Chang Hong Centre, 65 Wong Chuk Hang
Road, Hong Kong and at any adjournments thereof, in the following manner:
Management recommends that you vote FOR Proposal 1 and FOR Proposals 2
and 3.
1. [ ] For all nominees listed below, except any nominee(s) for whom
authority to vote has been withheld in the manner specified below.
T.C. Leung, Jerry Wong, Nancy Wong, C.P. Kwan, Alex Sham, Adam L. Goldberg
and Y.K. Liang
[ ] Against all nominees listed below.
[ ] For only those nominees listed below. Instructions: To grant
authority to vote for any specific nominee(s), you must write the name or
names of such nominees in the following space: ____________________________
[ ] Against only those nominees listed below. Instructions: To withhold
authority to vote for any specific nomiee(s), you must write the name or
names of such nominees in the following space: ____________________________
[ ] Abstain
2. Proposal to ratify the appointment of Arthur Andersen & Co., Hong Kong
as auditors for the 1998 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In accordance with their best judgement, the Proxy is authorized to vote
upon any other matter which may properly come before the Meeting.
<PAGE>
PROXY CARD BACK
(continued from other side)
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. UNLESS
OTHERWISE DIRECTED, OR IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE DIRECTOR NOMINEES NAMED ON THE REVERSE SIDE AND FOR
PROPOSALS 2 AND 3.
Date: , 1998
---------------------
- -------------------------------
Signature
- -------------------------------
Signature if jointly held
Please date and sign exactly as
your name appears hereon. If
shares are jointly held, all
joint owners should sign.
Trustees and others signing in
a representative capacity in
which they sign. If the signa-
tory is a corporation or part-
nership, sign the full corpo-
rate or partnership name by a
duly authorized officer or
partner.
26
