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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use by the Commission Only
(as permitted by Rule 14e-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c)
or ss.240.14a-12
Eurotech, 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 the 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 with preliminary materials
[ ] Check box if any part of the fee is offset 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:
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PRELIMINARY
EUROTECH, LTD.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 1, 2000
TIME 10:00 a.m. on Tuesday, June 13, 2000
PLACE American Geophysical Union Building, Conference Center,
2000 Florida Avenue, NW, Washington, DC 20009
ITEMS OF BUSINESS (1) To elect five directors, to hold office until the 2001
Annual Meeting and until their successors are elected and
qualify
(2) To ratify the selection of Tabb, Conigliaro & McGann P.C.
as our independent public accountants for the year ending
December 31, 2000
(3) To amend our Articles of Incorporation to increase the
number of authorized common shares to 100,000,000 and the
number of preferred shares to 5,000,000.
(4) To approve the 1999 Incentive Stock Option Plan
(5) To consider such other business as may properly come
before the meeting
RECORD DATE You are entitled to vote if you were a shareholder at the
close of business on Friday, April 21, 2000.
ATTENDANCE IN If you were a shareholder of record on the record date, you
PERSON are entitled to, and we would be delighted if you would, come
to and vote at the meeting in person.
VOTING BY PROXY Please send in your proxy (or voting instructions to your
broker) as soon as possible so that your shares can be voted
at the meeting in accordance with your instructions. Please
refer to the QUESTIONS AND ANSWERS beginning on page 2 and
the instructions on the proxy card.
By order of the Board of Directors
Michael L. Thomas
Secretary
May 1, 2000
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EUROTECH, LTD.
1216 16th Street, N.W.
Washington, DC 20036
PROXY STATEMENT
YOUR VOTE IS VERY IMPORTANT
PLEASE SEND IN YOU PROXY AS SOON AS POSSIBLE SO THAT YOUR SHARES CAN BE VOTED AT
THE MEETING IN ACCORDANCE WITH YOUR INSTRUCTIONS, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING OF SHAREHOLDERS IN PERSON. THIS PROXY STATEMENT
DESCRIBES THE MATTERS TO BE VOTED ON AND CONTAINS SPECIFIC INSTRUCTIONS TO
FACILITATE YOUR VOTING.
Your Board of Directors is soliciting proxies for the 2000 Annual Meeting of
Shareholders of Eurotech, Ltd. to be held on June 13 , 2000. We are distributing
this Proxy Statement around about May 1, 2000. We are sending to you our Annual
Report, including audited financial statements for the year ended December 31,
1999, together with this Proxy Statement.
SOME QUESTIONS AND ANSWERS
WHAT AM I BEING ASKED TO VOTE ON?
You are being asked to vote on (1) the election of five directors; (2) to ratify
the Board's selection of Tabb, Conigliaro & McGann, P.C. as our auditors for the
fiscal year ending December 31, 2000; (3) to amend the Articles of Incorporation
to increase the number of authorized shares of Common Stock from 50,000,000 to
100,000,000 and to increase the number of authorized shares of Preferred Stock
from 1,000,000 to 5,000,000; and to approve our 1999 Stock Option Plan. Your
grant of a proxy will also confer on the holders of the proxy authority to vote
in their best judgment on any other matters that may properly come before the
meeting.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
The Board recommends a vote FOR each of its nominees for election as directors,
FOR ratification of the Board's selection of Tabb, Conigliaro & McGann, P.C. as
our auditors; FOR the increase in the authorized number of shares of our Common
Stock and our Preferred Stock; and FOR approving the 1999 Stock Option Plan.
WHO IS ENTITLED TO VOTE?
You are entitled to vote if you were the owner of shares of our common stock at
the close of business on April 21, 2000, the record date for voting. This
includes (1) shares held on that date directly by you as the shareholder of
record and (2) shares held on that date for your account as beneficial owner by
a broker, bank or other nominee.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS
A BENEFICIAL OWNER?
If the shares are registered directly in your name on the record maintained by
our transfer agent, Interwest Transfer Co., Inc., you are the shareholder of
record of those shares and we are sending the proxy materials directly to you.
As the shareholder of record, you are entitled to vote these shares in person at
the meeting or to designate a proxy to vote for you. We have enclosed a proxy
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card to permit you to instruct the proxy holder on how to vote your shares. If
your shares are held in a brokerage account or by a bank or other nominee, those
shares are registered on the record maintained by the transfer agent in the name
of the broker, bank or other nominee. The broker, bank or other nominee shares
held like that are frequently referred to as being held in "street name". If
your shares are held in street name, the broker, bank or other nominee is the
holder of record and will get the proxy materials from us in sufficient
quantities to pass on a set to you. You, as the beneficial owner, have the right
to direct the broker, bank or other nominee on how to vote and you are invited
to attend the meeting if you want to. Nevertheless, if you do attend, you will
be entitled to vote only if the record holder of these shares appoints you as
its proxy. Your broker, bank or other nominee has enclosed a voting instruction
card so that you can give instructions on how to vote your shares.
HOW DO I VOTE?
Shareholders may vote their shares at the Annual Meeting either in person or by
proxy. Since many shareholders may be unable to attend the meeting in person, we
send to all shareholders of record cards that permit them to designate proxies
to represent them at the meeting and to direct the designated proxies on how to
vote. Brokers, banks and nominees also send cards to beneficial owners to permit
them to provide instructions as to how they wish their shares to be voted.
HOW DO I VOTE BY MAIL?
Shareholders of record who wish to vote by mail should complete the enclosed
proxy card to indicate their voting instructions and then sign, date and mail
the proxy card in the postage-paid envelope provided. Beneficial owners may
direct their vote by mail by completing, signing and returning the voting
instruction card provided by their broker, bank or nominee.
HOW DO I VOTE AT THE ANNUAL MEETING?
We will pass out ballot papers to any shareholder of record who wants to vote in
person at the Annual Meeting rather than by proxy. If you hold your shares
through a broker, bank or nominee, you must obtain a proxy from that institution
to enable you to vote in person at the meeting.
WHOM AM I DESIGNATING AS MY PROXY?
You will be designating Chad A. Verdi, Don V. Hahnfeldt and Randolph A. Graves,
each an officer of ours, as a proxy to vote your shares in accordance with your
instructions.
HOW WILL MY PROXY VOTE MY SHARE?
The designated proxy will vote according to your instructions as indicated on
the proxy card . If you sign your proxy card but do not indicate voting
instructions on one or more of the business matters listed, the proxies will
vote all uninstructed shares in accordance with the recommendations of the
Board.
HOW MANY SHARES CAN VOTE?
As of the record date, we had issued and outstanding XXXX shares of common
stock. The holders of these shares are each entitled to one vote for each share
held.
HOW MANY SHARES NEED TO BE REPRESENTED FOR THE MEETING TO CONDUCT BUSINESS?
The meeting can conduct business only if the holders of a majority of the shares
outstanding on the record date are present at the meeting in person or by proxy.
Both abstentions and broker non-votes are counted as present for the purpose of
determining the presence of a quorum. Abstentions are also counted as shares
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present and entitled to be voted. Broker non-votes, however, are not counted as
shares present and entitled to be voted with respect to the matter on which the
broker has expressly not voted. Thus, a broker non-vote will have the same
effect as a negative vote on the one item of business that requires the
affirmative vote of the holders of two thirds of the outstanding shares but will
not affect the outcome of any of the other matters to be voted upon at the
meeting. Generally, a broker will not vote shares that it holds for a beneficial
owner for or against a particular proposal if (1) the broker has not received
voting instructions form the beneficial owner and (2) under the rules applicable
to the broker it is not allowed to vote on the particular proposal without
voting instructions.
HOW MANY VOTES ARE NEEDED FOR MATTERS TO BE ADOPTED AT THE MEETING?
For a person to be elected a director, that person must receive the affirmative
vote of a majority of the shares present or represented at the meeting. The
other matters to be voted on will be declared adopted if they receive the
affirmative vote of a majority of the shares present or represented at the
meeting, EXCEPT THAT THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
REQUIRES THE AFFIRMATIVE VOTE OF TWO-THIRDS OF THE OUTSTANDING SHARES. As a
result, non-votes, including broker non-votes, on this particular item of
business have the same effect as negative votes.
IS CUMULATIVE VOTING ALLOWED IN THE ELECTION OF DIRECTORS?
No. Each share is entitled to one vote in the election of directors as on every
other matter.
WHO WILL COUNT THE VOTES?
Your Corporate Secretary will count the votes unless a shareholder present at
the meeting requests count by inspectors of election, in which event the
Chairman of the meeting will appoint two inspectors, who may but need not be
shareholders, to effect the count.
WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
The Chairman will announce the results of the meeting. In addition, we will
publish them on our web site - www.eurotechltd .com - and in our quarterly
report on Form 10-Q for the second quarter of 2000 that we expect to file with
the SEC by August 15, 2000.
WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?
Eurotech will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials. In addition to mailing these proxy
materials, our directors and officers, who will not receive any additional
compensation for their soliciting activities, may seek to contact shareholders
by telephone or other electronic means. We will also reimburse brokers, and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses incurred by them in forwarding proxy materials to shareholders.
MAY I PROPOSE ACTIONS FOR CONSIDERATION AT FUTURE SHAREHOLDER MEETINGS,
INCLUDING DIRECTOR NOMINATIONS?
You may submit proposals for consideration at future shareholder meetings,
including director nominations.
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PROPOSALS: In order for a shareholder proposal to be considered for inclusion in
the proxy statement for our next year's Annual Meeting, our Corporate Secretary
must receive the written proposal by no later than December 31, 2000. Any such
proposal will need to comply with SEC regulations regarding the inclusion or
shareholder proposals in company-sponsored proxy materials. You may also move
the adoption of proposed resolutions from the floor at the Annual Meeting, but
then you should not expect proxies to vote in favor of it.
NOMINATIONS OF DIRECTOR CANDIDATES: You may suggest director candidates for
consideration by our Board. Any such suggestion should be addressed to our
Corporate Secretary. You may also make a director nomination from the floor at
the Annual Meeting, but then you should not expect proxies to be voted in favor
of your nominee.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table tells you, as of March 31, 2000, about:
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o Each beneficial owner of more than 5% of our common stock;
o Beneficial ownership of shares of our common stock by each of our
current directors and officers; and
o Beneficial ownership of shares of our common stock by all of our
directors and officers as a group.
For the purpose of this table, the beneficial ownership of a person includes
shares as to which that person has sole or shared voting or investment power as
well as shares that the person has the right to acquire within 60 days (such as
upon conversion of convertible securities or exercise of warrants or options) as
of March 31, 2000. For the purpose of calculating the ownership percentages, we
have considered to be outstanding both the total number shares actually
outstanding on March 31, 2000 and the total number of shares that various people
then had the right to acquire within 60 days.
Name Number of Shares Percentage of
---- of Common Stock Outstanding
Owned Beneficially Common Shares
------------------ -------------
Randolph A. Graves, Jr. 787,500(1) 1.64
Geraldine V. Cox None 0
Jon W. Dowie 10,000(2) .02
Encore Capital Management group 4,970,906(3) 10.37
Peter Gulko 5,630,000(4) 11.75
Don V. Hahnfeldt 400,000(5) .83
Michael L. Thomas 152,304(6) .32
Chad A. Verdi 416,353(7) .87
Woodward LLC 3,282,353(8) 6.85
Directors and officers as a group 1,766,157(9) 3.69
(See notes on next page.)
(1) Includes 637,500 shares that Dr. Graves owns of record and beneficially and
150,000 shares that he has the right to acquire upon exercise of an
immediately exercisable option.
(2) Issued to Mr. Dowie upon his employment as Chief Financial Officer in
February 2000.
(3) Includes shares owned of record and beneficially and shares issuable upon
conversion of immediately convertible debentures owned by JNC-Opportunity
Fund Ltd., JNC Strategic Fund Ltd. and Diversified Strategies Fund, L.P.,
for all of which Encore Capital Management, Inc., a registered investment
adviser, serves as investment manager.
(4) Includes 1,100,000 shares that Mr. Gulko owns of record and beneficially
and 4,530,000 shares registered in the name of CIS Development Corp., which
latter shares Mr. Gulko, while exercising exclusive voting and dispositive
power as to them, holds for the ultimate benefit of certain Russian
scientists.
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(5) Includes 200,000 shares that Mr. Hahnfeldt owns of record and beneficially,
50,000 shares that he has the right to acquire upon exercise of an
immediately exercisable warrant and 150,000 shares that he has the right to
acquire upon exercise of an immediately exercisable option.
(6) Includes 152,304 shares that Mr. Thomas owns of record and beneficially and
50,000 shares that Mr. Thomas has the right to acquire upon exercise of an
immediately exercisable option.
(7) Includes 156,353 shares that Mr. Verdi owns of record and beneficially,
110,000 shares that he has the right to acquire upon exercise of an
immediately exercisable warrant and 150,000 shares that he has the right to
acquire upon exercise of an immediately exercisable option.
(8) Includes 1,200,000 shares that Woodward LLC owns of record and
beneficially, 1,882,353 shares that it acquired on December 31, 1999 and no
longer owns of record but may still own beneficially, and 200,000 shares
that it has the right to acquire upon exercise of an immediately
exercisable warrant. Does not include a presently indeterminable number of
shares that may be issuable to Woodward LLC in the event of a "re-pricing"
of the shares originally issue to it or shares that we have the right to
issue to Woodward LLC in the event that we exercise our right to obtain
additional equity financing from Woodward.
(9) Five persons.
ITEM OF BUSINESS NO. 1
Your Board has nominated five persons, including the three persons who
are now directors, for election as directors for the forthcoming year. Since
Eurotech was organized in 1995, it has had a Board composed of three directors.
District of Columbia law, under which we are organized, says that the number of
directors, if different from the number shown in the Articles of Incorporation,
must be specified in the Bylaws. The Board of Directors has recently amended the
Bylaws to provide for a Board composed of five directors. District of Columbia
law further provides that any vacancy on the Board resulting from such an
increase can be filled only by the shareholders. Accordingly, the Board has
nominated and proposes that you elect the following five persons.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD
OF EACH OF THE FOLLOWING NAMED PERSONS.
VOTE REQUIRED
The five persons who received the highest number and a majority of the
votes cast by shareholders present at the meeting in person or by proxy will be
elected directors of Eurotech, to hold office until the next annual meeting and
until their successors are elected and qualified.
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Nominee Occupation during Past Five Years
------- ---------------------------------
Randolph A Graves, Jr. Principal, director and president of
Director, 1995-97 and again Graves Technology (consultants to
since 1999 aerospace, computing and small business
Age 61 entities) since 1991. President of
Eurotech, Ltd., 1995-97, Executive Vice
President since 2000.
DON V. HAHNFELDT President and chief executive officer of
Director since 2000 Eurotech, Ltd. since 1999. U.S. Navy,
Age 56 1970-1998; last position, Commodore,
Pacific Fleet, commanding Trident
missile submarines and nuclear
maintenance facilities.
CHAD A. VERDI President and chief executive officer,
Director since 1999 Coastal Food Services and Provisions,
Age 33 Inc. and Coastal Food Services
Companies, Cranston, RI, 1991-2000.
Chairman of the Board of and consultant
to Eurotech, Ltd. since 2000.
SIMON NEMZOW Private investor. Consultant to and
Age 78 director of various philanthropic and
industrial organizations. Founder,
Secretary and Production and
Manufacturing Manager of Allied
Fluorescent Company, Providence, RI,
1946-1981.
DR. LEONID KHOTIN President, Informatics and Prognostics
Age 69 (consulting and publishing), Berkeley,
CA, since 1981. Researcher, Center for
Slavic and East European Studies,
University of California at Berkeley,
1985-2000. Editor-in-Chief, Zarbezhnaia
periodicheskaia pechat' na russkom
iazykie, Moscow-Berkeley, since 1981.
The Board of Directors held no actual meetings during 1999. The
directors were, however, in frequent touch with one another and with management
by telephone and they took 88 formal actions by unanimous written consent. The
Board was not divided into committees. As of the year-end, none of the directors
then in office were in full compliance with their filing obligations under
Section 16(a) of the Securities Exchange Act of 1934, but at the date of this
Proxy Statement are in the process of bringing themselves into compliance.
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ITEM OF BUSINESS NO. 2
Your Board of Directors has appointed Tabb, Conigliaro & McGann, P.C.
as the independent accountants to audit our financial statements for the year
ended December 31, 2000. Tabb, Conigliaro & McGann, P.C. have served as our
outside auditors since our organization.
During 1999 and previous years, that firm has also prepared our tax
returns and generally provided advice to your directors and officers on
financial and accounting matters, for which services they were not separately
remunerated. A representative of Tabb, Conigliaro and McGann, P.C. is expected
to attend the Annual Meeting, where he will be available to respond to questions
and, if he desires, to make a statement.
YOUR BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
TABB, CONIGLIARO & MCGANN, P.C. AS OUR INDEPENDENT ACCOUNTANTS FOR THE YEAR
2000. If the appointment is not ratified, the Board will consider whether it
should select other independent accountants.
VOTE REQUIRED
Ratification of the appointment of Tabb, Conigliaro & McGann, P.C. as
our independent accountants for 2000 requires the affirmative vote of a majority
of the votes cast by shareholders present at the meeting in person or by proxy.
ITEM OF BUSINESS NO. 3
INCREASE IN NUMBER OF AUTHORIZED SHARES
We currently have an authorized capital stock consisting of 50,000,000
shares of common stock, $.00025 par value per share and 1,000,000 of preferred
stock, $.001 per share. Of the authorized common stock, 42,957,800 shares are
actually outstanding as of March 31, 2000. In addition, however,
2,763,286 shares are reserved for issuance upon conversion of
presently outstanding convertible debentures
200,000 shares are reserved for issuance upon exercise of the
warrant held by Woodward LLC
591,500 shares are reserved for issuance upon exercise of warrants
held by other investors
160,000 shares are reserved for issuance upon exercise of
warrants held by directors and officers
1,250,000 shares are reserved for issuance upon exercise of options
under Incentive Stock Option Plans, whether or not
awarded to date.
Total: 4,964,786 shares
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Thus, if we had to issue all of the shares reserved for issuance at
this time, a total of 47,922,586 shares of common stock would be issued and
outstanding, or substantially all of the shares of common stock at this time
authorized by our Articles of Incorporation.
While your Board of Directors has no specific plans at this time to
issue any additional shares of common stock, one can foresee some situations in
which it might become advantageous to do so. You should bear in mind that we
have the right, under our "equity line of credit", to issue additional shares of
common stock to Woodward LLC for additional investments by Woodward LLC in our
company of up to approximately $16,000,000. If we were to call on Woodward LLC
to invest the entire amount of its commitment, then, based on the market price
of our common stock as of March 31, 2000, we would have to issue at total of
8,220,938 shares, which is more shares the number of shares now authorized and
not already issued or reserved for issuance.
As the shareholders are aware from reading our financial reports,
because we have so far not produced any revenues we have been required to pay
many of our expenses, such as compensation of officers and consultants, in
shares of our common stock. We will have sufficient cash available in 2000 to
pay our obligations. We may, however, be required or find it advantageous to
make some substantial investments, such as to set up or participate in setting
up facilities to manufacture products in the United States and Israel. It is for
this reason your Board of Directors believes it to be a good idea to have some
authorized but unissued common shares available to raise the necessary capital.
We have not yet had occasion to issue any shares of preferred stock,
which are issuable from time to time in one or more series with such
designations and relative rights, preferences or limitations, including
conversion rights, as may be fixed by the Board of Directors in the resolution
or resolutions providing for the issuance of such shares. Having the flexibility
to issue a significant number of preferred shares on negotiated terms is
particularly useful in the context of acquisitions of the stock or assets of
other companies, opportunities for which may from time to time be presented to
us.
If the shareholders approve the recommended amendment to our Articles
of Incorporation, it would have the effect of authorizing the Board of Directors
to issue the additionally authorized shares without further action by the
shareholders, except as may be required in a specific case by applicable law or
the regulations of any stock market on which our outstanding shares are listed.
The issuance of additional shares of common stock could reduce existing
shareholders' percentage ownership and voting power in Eurotech and, depending
on the transaction in which the shares are issued, could affect the per share
book value or other per share financial measures. The availability of additional
shares of common stock could discourage, or make more difficult, efforts to
obtain control of the company. As to the issuance of preferred shares, its
effect would depend on the terms on which they were issued. Dividend and
liquidation preferences would subject common shares to the risks of leverage,
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and conversion rights could be dilutive. A preferred stock issuance could also
have an anti-takeover effect. The proposed increase in the number of authorized
shares is not intended to inhibit a change of control of Eurotech and we are not
aware of any pending or threatened efforts to acquire control of the company.
If approved by the shareholders, the amendment of the Articles of
Incorporation will become effective upon the filing of Articles of Amendment
with the Department of Consumer and Regulatory Affairs of the District of
Columbia.
YOUR BOARD URGES A VOTE FOR THE AMENDMENT OF THE ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO
100,000,000 SHARES AND THE NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK TO
5,000,000 SHARES.
VOTE REQUIRED
To be approved and go into effect, the amendment of the Articles of
Incorporation to increase the authorized capital stock of Eurotech, Ltd.
requires the affirmative vote of TWO-THIRDS OF THE NUMBER OF SHARES ISSUED AND
OUTSTANDING ON THE RECORD DATE.
ITEM OF BUSINESS NO. 4
APPROVAL OF THE 1999 INCENTIVE STOCK OPTION PLAN
In 1995, we adopted the 1995 incentive Stock Option Plan to authorize
the Board of Directors to issue options on up to 500,000 shares of common stock.
The 1995 Stock Option Plan was approved at the time by the shareholders, which
did not then include any public shareholders. No options were actually issued
under the 1995 Stock Option Plan until 1999, when, first, the Board awarded an
option, intended to be an incentive stock option, on 50,000 shares to the
Corporate Secretary, and then, in August 1999, options on 450,000 shares to the
directors themselves, who then included Dr. David Wilkes and did not include Mr.
Hahnfeldt. Under the terms of this plan, Dr. Wilkes, who retired from the Board
of January 15, 2000, had until April 15, 2000 to decide whether or not to
exercise his option. [He in fact exercised the option on April 14.][In fact, he
did not exercise prior to the deadline and accordingly this option has
lapsed.][Definitive proxy statement will insert applicable alternative.]
Thereupon, also in August 1999, the Board of Directors adopted the 1999
Incentive Stock Option Plan (the "Plan") to authorize the Board of Directors or
a committee thereof to issue options on up to an additional 750,000 shares. In
January of this year, the Board awarded an option, intended to be an incentive
stock option to the maximum possible extent, on 150,000 shares to Mr. Hahnfeldt.
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The following is a brief summary of the 1999 Incentive Stock Option
Plan, which the Board of Directors believes to be desirable to attract and
retain executive and other key employees of outstanding ability; options under
the Plan may also be granted to directors, advisors and consultants. We have
attached a copy of the Plan as Appendix A to this proxy statement.
The Plan is currently administered by the Board, which may empower a
committee to administer the Plan. The Board is generally empowered to interpret
the Plan, prescribe rules and regulations relating thereto, determine the terms
of the option agreements, amend them with the consent of the optionee, determine
the individuals to whom options are to be granted, and determine the number of
shares subject to each option and the exercise price thereof. The per share
exercise price for options granted under the Plan is determined by the Board,
provided that the exercise price of incentive stock options will not be less
than 100% of the fair market value of a share of the common stock on the date
the option is granted (110% of fair market value on the date of grant of an
incentive stock option if the optionee owns more than 10% of our common stock.).
Upon exercise of an option, the optionee may pay the purchase price with
previously acquired securities of the Company, or at the discretion of the
Board, we may lend some or all of the purchase price to the optionee.
Options will be exercisable for a term determined by the Board, which will
not be greater than ten years from the date of grant and five years in the case
of incentive stock options. Options may be exercised only while the original
grantee has a relationship with us which confers eligibility to be granted
options or within three months after termination of such relationship with the
Company, or up to one year after death or total and permanent disability. In the
event of the termination of such relationship between the original grantee and
us for cause, as defined in the Plan, all options granted to that original
optionee terminate immediately. In the event of certain basic changes in the
Company, including a reorganization, merger or consolidation of the Company, or
the purchase of shares pursuant to a tender offer for shares of our common
stock, in the discretion of the Board or administering committee, each option
may become fully and immediately exercisable. Incentive stock options are not
transferable other than by will or the laws of descent and distribution.
Non-qualified stock options may be transferred to the optionee's spouse or
lineal descendants, subject to certain restrictions. Options may be exercised
during the holder's lifetime only by the holder, his or her guardian or legal
representative.
Options granted pursuant to the Plan may be designated as incentive stock
options ("ISO"), with the attendant tax benefits provided under Sections 421 and
422 of the Internal Revenue Code of 1986. Accordingly, the Plan provides that
the aggregate fair market value determined at the time an ISO is granted of the
common stock subject to incentive stock options exercisable for the first time
by an employee during any calendar year under all our and our subsidiaries'
plans may not exceed $100,000. The Board may modify, suspend or terminate the
Plan; provided, that certain material modifications affecting the Plan must be
approved by the shareholders, and any change in the Plan that may adversely
affect an optionee's rights under an option previously granted under the Plan
requires the consent of the optionee.
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The Board of Directors recommends that you vote in favor of approving
their adoption of the 1999 Incentive Stock Option Plan. If you do not vote to
approve, the Plan will remain in effect but none of the options granted pursuant
to it, including the option already awarded to Mr. Hahnfeldt, can be ISOs.
VOTE REQUIRED
Approval of the 1999 Incentive Stock Option Plan requires the
affirmative vote of a majority of the votes cast by shareholders present at the
meeting in person or by proxy.
14
<PAGE>
ITEM OF BUSINESS NO. 5
OTHER BUSINESS
We do not know of any other item of business that may come before the
meeting, except a motion to adjourn. If at the meeting a sufficient number of
votes are not cast to adopt one or more of the items proposed for adoption, the
persons named in the accompanying form of proxy may vote to adjourn the meeting
to another specific date and time to permit continued solicitation of proxies.
COMPENSATION OF AND TRANSACTIONS WITH DIRECTORS AND OFFICERS
COMPENSATION OF CHIEF EXECUTIVE OFFICERS
- ----------------------------------------
The following summary compensation table sets forth the compensation
paid by us for services rendered in all capacities during the calendar years
1996, 1997 and 1998 to Randolph A. Graves, Jr., who was the chief executive
officer through January 23, 1998. The table also set forth the compensation paid
by us for services rendered in all capacities during 1998 to Peter Gulko and
John McNeil Wilkie, who also served as the chief executive officers during 1998.
No other executive officer or key employee was compensated in excess of $100,000
during 1996, 1997 or 1998. Finally the table sets forth the table sets forth the
compensation paid by us in all capacities to Frank X. Fawcett and Don V.
Hahnfeldt, who served as our chief executive officers during 1999.
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
Long-term
Name and Principal Position Year Annual Compensation Compensation
--------------------------- ---- ------------------- ------------
Restricted
Salary Bonus Stock Awards
------ ----- ------------
<S> <C> <C> <C> <C>
Randolph A. Graves, Jr., President and 1996 $ 77,374 $ 20,000 $243,109(1)
Chief Executive Officer 1997 77,374
1998 5,000
Peter Gulko, President and Chief Executive
Officer 1998 15,000
John McNeil Wilkie, Chief Financial
Officer; President and Chief Executive
Officer 1998 70,000 100,000(2)
Frank X. Fawcett, President and Chief
Executive Officer 1999 44,000 42,600(3)
Don V. Hahnfeldt, President and Chief
Executive Officer 1999 50,000 73,406(4)
</TABLE>
15
<PAGE>
(1) Reflects the value of common stock issued as partial compensation
for services rendered in 1996.
(2) Reflects the value of common stock issued as partial compensation
for services rendered in 1998
(3) Reflects the value of common stock issued as partial compensation
for services rendered in 1999
(4) Mr. Hahnfeldt was initially paid a salary at the rate of $104,000
per year, beginning on the date on which he was employed by us and took
office as President. He also received a 5-year warrant to purchase
50,000 shares of our common stock at $1.00 per share. On September 1,
1999 Mr Hahnfeldt was awarded under the 1999 incentive stock option
plan an option to purchase 150,000 shares at .71 per share, which,
assuming shareholder approval of the Plan, is an incentive stock option
to then extent of 140,845 shares. Effective November 5, 1999, Mr.
Hahnfeldt entered into a three-year employment contract with us that
provides for base compensation in the first contract year of $104,000;
in the second contract year, the sum of that amount plus the bonus
awarded to him in the first contract year; and in the third contract
year, that amount plus the bonus awarded to him in the second contract
year. The bonus to which Mr. Hahnfeldt is entitled in each contract
year is an amount, not to exceed 50% of base salary, determined by
applying to that year's base salary the percentage by which the market
price of our common stock had increased between the beginning and the
end of the contract year. In addition, for each contract year Mr.
Hahnfeldt will be issued a five-year warrant to purchase 100,000 shares
of our common stock for $1.00, $2.00 and $3.00 per share, successively.
COMPENSATION OF DIRECTORS AND SECRETARY
- ---------------------------------------
Each of the directors, including Dr. Wilkes who retired from the Board
on January 15, 2000, and not including Mr. Hahnfeldt, who was not a director
during 1999, received 2,500 shares per month for January through May 1999 and
5,000 shares per month for June through August. For the balance of their term as
directors, the Board awarded to each director, including Dr. Wilkes, a ten-year
option to purchase 150,000 shares of common stock at $0.71 per share under our
1995 incentive stock option plan, which is currently administered by the Board.
Under the terms of that plan, Dr.Wilkes' option will lapse unless he exercises
it by April 15, 2000. In the cases of Mr. Verdi and Dr. Graves, this
compensation is in addition to their compensation as consultants. The Secretary,
who had previously been awarded an incentive stock option under the 1995
incentive stock option plan on 50,000 shares, was also compensated with 2,500
shares per month for January through May 1999 and 5,000 shares per month and a
salary at the rate of $68,000 per year thereafter.
CHAIRMAN'S CONSULTING CONTRACTS
- -------------------------------
Mr. Chad A. Verdi., one of the two members of our Board of Directors
who were not employed by us in 1999, has entered into an agreement with us
render services to us as a consultant in the area of corporate finance. For
these services, he will be compensated at the rate of $1,000 per week and is to
be issued warrants to purchase up to an aggregate of 375,000 shares of our
common stock: a five-year warrant issued on October 1, 1999 to purchase 75,000
shares at $1.00 per share; a five-year warrant to be issued on October 1, 2000
to purchase 75,000 shares at $2.00 per share; a five-year warrant to be issued
16
<PAGE>
on October 1, 2001 to purchase 75,000 shares at $3.00 per share; a five-year
warrant to be issued on October 1, 2002 purchase 75,000 shares at $4.00 per
share; and a five-year warrant to be issued on October 1, 2003 to purchase
75,000 shares at $5.00 per share. This compensation is in addition to the
compensation that has been paid to Mr Verdi and for his services as a director.
TRANSACTIONS WITH SPINNERET FINANCIAL SYSTEMS, INC.
- ---------------------------------------------------
Spinneret Financial Systems, Inc. is a firm of which the brother of Don
V. Hahnfeldt, our President and Chief Executive Officer is the sole owner,
director and officer.
KRHL TRANSACTION. Around the same time as the organization of Eurotech,
our organizers also created another company called Kurchatov Research Holdings,
Ltd. ("KRHL"). In the organization of KRHL, one of our organizers, Mr. Peter
Gulko, a former director or ours and at one time our President who continues to
be one of our major shareholders and a consultant to our company, was acting on
behalf of the Russian scientists who had developed EKOR and whose continued
collaboration in the implementation of our EKOR program was and continues to be
considered by us as fundamentally important. Accordingly, on August 26, 1996 we
entered into an agreement with KRHL pursuant to which we assigned to KRHL a 50%
interest in the net profits (after deducting development costs and related
expenses attributable to EKOR) derived by us from the sale or licensing of EKOR.
Subsequently, KRHL obtained financing from public and private investors
and became involved in other technologies and ventures, in some of which we also
became involved. As a result, our directors became increasingly concerned about
the adverse effects on management and on public investor perception of divided
ownership of our most important technology and conflicting objectives between
the two companies. Two possible solutions were explored: one was for us to
acquire control of KRHL and the other was to reacquire undivided ownership of
the license to EKOR. In the direction of the first approach, we acquired from
Mr. Gulko the scientists' shares, representing an interest of about 40%, in
KRHL, in exchange for which we issued to Mr. Gulko, for the benefit of the
scientists, 4,530,000 shares of our own common stock. We were, however, unable
to acquire privately any other KRHL shares. We thus turned to negotiations with
KRHL's Board and influential shareholders with a view to reacquiring
undivided ownership of the EKOR license.
These negotiations resulted in an agreement, dated as of November 30,
1999, pursuant to which KRHL released to us all of its rights in EKOR. For this
release, we
o Released to KRHL all of our interest in the Resealable Container
Systems and TetraPak Container technologies, for which we had
previously received a $150,000 deposit, for additional consideration of
$350,000 payable on or before September 1, 2000;
17
<PAGE>
o Surrendered to KRHL the shares in it that we had acquired from Mr.
Gulko;
o Issued to KRHL 2,000,000 shares of our own common stock;
o Agreed to pay to KRHL a royalty of 2% on all our sales and services
derived from EKOR; and
o Assumed KRHL's obligations to Spinneret Financial Systems, Inc.
Spinneret had previously lent to KRHL $750,000 against convertible
notes on which KRHL was in default and on which interest and penalties had
accrued. Spinneret expressly consented to our assumption of this liability.
Subsequently and before year-end, Spinneret agreed to release us from this
liability in exchange for the issuance to Spinneret of 1,000,000 of our common
stock, which we included in our registration statement so that Spinneret could
sell them in the market immediately if it wanted to. .
ISSUANCE OF SHARES AND WARRANTS. On December 31, 1999, we issued to
Woodward LLC, a Cayman Islands investment fund, 1,882,353 shares of our common
stock, together with a five-year warrant to purchase an additional 200,000
shares, for a total consideration of $3,000,000. In connection with that
investment, we entered with Woodward a series of agreements, which provide in
summary for the following:
o Our shares issued to Woodward were subject to repricing, which means
that if the market price of our shares during certain periods following
the effectiveness of the amendment to our registration statement
registering for public sale the shares issued and issuable to Woodward
dropped significantly below the prices prevailing at the time our
original shares were issued to Woodward, we might be required to issue
additional shares to compensate for such decline. (At the date of this
proxy statement, the repricing contingency no longer applies as to any
of these shares.)
o We were required to register the shares, and the shares underlying the
warrant, issued to Woodward.
o We have the right, exercisable from time to time within, each time, to
certain limits, to require Woodward to purchase from us additional
shares of common stock for up to a total consideration of an additional
$22,000,000, at prices determined in accordance with a formula related
to market quotations for our outstanding shares. In March 2000, we
issued to Woodward under this commitment another 1,200,000 shares for
total proceeds of $6,315,790.
In connection with the December 31, 1999 financing, we paid to
Spinneret a consulting fee of $150,000. In connection with the March 2000
financing, we paid to Spinneret a further consulting fee of $315,790.
18
<PAGE>
CHERNOBYL LOAN. To enabled us to pay the expenses of the Chernobyl
demonstration project described in our Annual Report, Spinneret extended to us,
in the third quarter of 1999, credit in the amount of $250,000, of which we
actually drew $95,000. In the fourth quarter, we repaid this loan, with
interest, from the proceeds of a private placement and cancelled the credit. In
connection with this extension of credit, we issued to Spinneret a 3-year
warrant to buy 10,000 Eurotech shares at $1.00 per share.
LOAN FROM FORMER CHAIRMAN
On January 6, 1999, we obtained a working capital secured one-year loan
of $500,000, of which $450,000 was lent to us by one of the holders of our
convertible debentures and $50,000 was lent to us by Dr. David Wilkes, then the
Chairman of our Board of Directors. At this loan's January 6, 2000 maturity, we
repaid with interest the $450,000 lent to us by the convertible debenture
holder, while Dr. Wilkes accepted 200,000 shares of our common stock in
repayment of his portion of the loan and interest thereon.
<TABLE>
Option Grants in 1999
---------------------
<CAPTION>
% of Total
Options Value of
Granted to Unexercised
Number of Directors Grant Exercisable
Shares and Date in-the-Money
Underlying Employees Exercise Present Options at
Name Options in Fiscal Price Expiration Value Fiscal Year-
---- Granted Year ($/Sh) Date ($)(1) end ($) (2)
------- ---- ------ ---- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Chad A. Verdi 150,000 27.27 0.71 Aug. 2009 58,455 65,591
Don V. Hahnfeldt 50,000 9.09 1.00 Jul. 2009 14,950 30,955
150,000 27.27 0.71 Sep. 2009 58,455 65,591
Randolph A. Graves, Jr. 150,000 27.27 0.71 Aug. 2009 58,455 65,591
Michael L. Thomas 50,000 9.09 0.33 May 2009 9,055 30,955
</TABLE>
1 We used the Black-Scholes option pricing model to estimate Grant Date
Present Value in this table. Our use of this model is not an endorsement of
the model's accuracy in valuing options. All stock option models require a
prediction about future stock prices. We used the following assumptions in
calculating Grant Date Present Value: expected volatility - 33%; average
risk-free rate of return - 5%; dividend yield - 0; expected life - from
grant date to expiration date. The real value of options in this table
depends on the actual performance of Eurotech stock and the timing of
exercises.
2 We calculated the value of unexercised options by using the difference
between the option exercise price and the year-end bid price for our shares
on the NASDAQ Electronic Bulletin Board, multiplied by the number of shares
underlying the option.
19
<PAGE>
Performance Table
-----------------
The following table compares the cumulative total return on the
Eurotech common stock with the cumulative total return of the NASDAQ Total U.S.
Index resulting from an initial assumed investment of $100 in each and assuming
the reinvestment of any dividends, for the period beginning on the date of our
inception:
Eurotech, Ltd. NASDAQ Total U.S. Index
-------------- -----------------------
May 26, 1995 (Eurotech inception) $100 $100
December 31, 1995
December 31, 1996 [TO BE COMPLETED]
December 31, 1997
December 31, 1998
December 31, 1999
ANNUAL REPORT
A copy of our Annual Report on Form 10-K for the year ended December
31, 1999, as filed with the Securities and Exchange Commission, is being sent to
you together with this Notice of Annual Meeting and Proxy Statement.
By order of the Board of Directors
Michael L. Thomas
Vice President, Administration,
and Corporate Secretary
20
<PAGE>
EXHIBIT A
EUROTECH, LTD.
STOCK OPTION PLAN 1999
1. DEFINITIONS
-----------
The following terms when used In this Plan shall, except where the
context otherwise requires, have the following meanings:
(a) The term "Act" shall mean the Securities Act 1933 as now in effect
or hereafter amended,
(b) The term "Board" shall mean the Board of Directors of the
Corporation.
(c) The Term "Code" shall mean the Internal Revenue Code of 1986 as now
in effect or hereafter amended.
(d) The Term "Common Shares" shall mean the Common Shares, $0.0025 par
value, of the Corporation (as hereinafter defined) or such other capital stock
as may hereafter be authorized and listed in lieu thereof,
(e) The term "Corporation" shall moon EUROTECH, Ltd., a District of
Columbia corporation, or any successor thereto.
(f) The Term "Discharged for Cause" shall mean discharge for
dishonesty, theft, disclosing trade secrets of the Corporation or, if
hereinafter incorporated or acquired, any Subsidiary (as hereinafter defined),
entering into competition, directly or indirectly, with the Corporation or any
Subsidiary while employed, or using the Corporation's or any Subsidiary's
facilities or premises for the conduct of illegal or unlawful activities,
transactions or business.
(g) The term "Exchange Act" shall mean the Securities Exchange Act of
1934 as now in effect or hereafter amended.
(h) The term "Incentive Stock Option" shall mean every Option (as
hereinafter defined) granted under the Plan (as hereinafter defined) which is
intended to qualify as an Incentive stack option pursuant to Section 422 of the
Code.
(i) The term 'Non-Qualified Stock Option" shall mean every Option (as
hereinafter defined) granted under the Plan (as hereinafter defined) which is
not as Incentive Stock Option.
(j) The term "Option" shall mean any right to purchase shares
21
<PAGE>
Common Stock to be granted under the Plan.
(l) The term "Option Price" shall mean the price as which a share of
Common Stock may be purchased upon exercise of an Option,
(m) The term " Plan" shall mean the EUROTECH, Ltd., Stock Option Plan
of 1999."
(n) THE TERM "SUBSIDIARY" SHALL BE DEFINED IN THE SAME MANNER AS THE
TERM "SUBSIDIARY CORPORATION" IS DEFINED IN SECTION 424(f) OF THE CODE.
(o) THE TERM "WARRANT" SHALL MEAN ANY RIGHT TO PURCHASE SHARES OF
COMMON SHARES, SUCH AS IS COMMONLY CALLED AN OPTION, WARRANT OR RIGHT, WHICH IS
NOT GRANTED UNDER THE PLAN.
(p) ANY TERM USED IN THE PLAN IN THE MASCULINE GENDER SHALL INCLUDE THE
FEMININE GENDER OR, IN THE CASE OF A CONSULTANT OR AN ADVISOR, THE NEUTER
GENDER.
2. ADMINISTRATION
--------------
(a) The Plan shall be administered by the Compensation Committee of the
Board (hereinafter referred to as the "Committee") which shall consist of two or
more persons who shall be selected by and serve at the pleasure of the Board, in
the event that the Board has not appointed a Compensation Committee or at the
election of the Board, the Plan shall be administered by the Board.
(b) The Committee or, if applicable, the Board is authorized to
interpret the Plan and may from time to time adopt such rules and regulations
for carrying out the Plan as it may deem best. The Committee or, if applicable,
the Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge of
such expediency. The determinations of the Committee or, if applicable, the
Board on the matters referred to in this paragraph 2 shall be conclusive.
(c) SUBJECT TO THE TERMS, PROVISIONS AND CONDITIONS OF THE PLAN, THE
COMMITTEE OR, IF APPLICABLE, THE BOARD SHALL HAVE EXCLUSIVE JURISDICTION (a) TO
SELECT THE OPTIONEES TO BE GRANTED OPTIONS, (ii) TO DETERMINE THE NUMBER OF
SHARES SUBJECT TO EACH OPTION, (iii) TO DETERMINE THE TIME OR TIMES WHEN THE
OPTIONS WILL BE GRANTED, (iv) TO DETERMINE THE OPTION PRICE OF THE SHARE SUBJECT
TO EACH OPTION, WHICH OPTION PRICE MAY BE HIGHER THAN, OR EQUAL TO, (OR LESS
THAN) THE FAIR MARKET VALUE OF A SHARE OF THE COMMON SHARES ON THE RESPECTIVE
DATE OF GRANT (EXCEPT AS PROVIDED IN THE SUCCEEDING SENTENCE) AND SHALL BE
SUBJECT TO ADJUSTMENT AS PROVIDED IN PARAGRAPH 10 OF THE PLAN, (v) TO DETERMINE
THE DATES AFTER WHICH THE OPTION MAY BE EXERCISED, IN WHOLE OR IN PART, AND (vi)
22
<PAGE>
TO PRESCRIBE THE FORM, WHICH SHALL BE CONSISTENT WITH THE PLAN, OF THE
INSTRUMENTS EVIDENCING ANY OPTIONS GRANTED UNDER THE PLAN, ANY OPTIONS GRANTED
UNDER THE PLAN TO AN OPTIONEE SHALL BE AT THE FAIR MARKET VALUE OF A SHARE OF
THE COMMON SHARES ON THE RESPECTIVE DATE OF GRANT AND, IF THE OPTIONEE ON THE
DATE OF GRANT IS THE BENEFICIAL OWNER OF MORE THAN 10% OF THE OUTSTANDING SHARES
OF THE COMMON SHARES, THE EXERCISE PRICE OF THE INCENTIVE STOCK OPTION SHALL BE
110% OF THE FAIR MARKET VALUE OF A SHARE OF THE COMMON SHARES ON SUCH DATE.
In addition, anything in the Plan to the contrary notwithstanding, an
Incentive Stock Option shall be subject to such limitations on exercise or other
provisions as required by the Code or the regulations promulgated thereunder.
3. GRANT OF OPTION
---------------
(a) The aggregate number of shares as to which Options may be granted
pursuant to the Plan shall be 750,000 shares of the Common Shares, subject to
adjustment as provided in paragraph 10 hereof,
(b) An Optionee shall be granted an Option for such number of shares of
the Common Shares as may be determined by the Committee or, if applicable, the
Board, Nothing contained In the Plan shall be construed to preclude the granting
of an Option or Options to an Optioned in addition to an Option or Options
already granted to him and in existence or in addition to any outstanding
Warrant owned by him, provided that in each event the is eligible under the
provisions of paragraph 4 hereof. (An Option shall be Non-Qualified Stock Option
unless the Optionee is an employee of the Corporation or Subsidiary and requests
In writing that he be granted an Incentive Stock Option.) An Incentive Stock
Option shall not be granted later than ten years from September 1, 1999, i.e.,
the date the Plan was adopted by the Board and approved by the shareholders of
the Corporation.
(e) Whenever any Option granted pursuant to the Plan terminates under
the terms hereof prior to exercise thereof, the Committee or, IF applicable, the
Board may grant a new Option or Options with respect to such shares; provided,
however, that the Committee or, if applicable, the Board may not grant any such
Option if the effect of such grant would be to increase the number of shares
which may be issued upon exercise of Options granted under the Plan to more then
the amount provided in paragraph 3(a) hereof, subject to adjustment as provided
in paragraph 10 hereof.
4. ELIGIBLE OPTLONEES
------------------
Every key employee (including officer) of the Corporation or of any
Subsidiary (or any director of, or consultant or advisor to, the Corporation as
may be selected by the Committee or, if applicable, the Board) is eligible for
grant OF an Option under the Plan, (except that, if the Optionee is not an
employee of the Corporation or a Subsidiary, he may receive only a Non-Qualified
Stock Option and except that bona fide services shall be rendered by the
consultant or advisor and such services must not be in connection with the offer
or sale of securities in a capital raising transaction.
23
<PAGE>
5. EXERCISE OF OPTIONS
-------------------
(a) EXCEPT AS PROVIDED IN PARAGRAPHS 7 AND 10 HEREOF, THE OPTION SHALL
BE EXERCISABLE, EITHER IN ITS ENTIRETY OR IN SUCH INSTALLMENTS (WHICH MAY BE
ACCUMULATED) AS THE RESOLUTION GRANTING THE OPTION OF THE COMMITTEE OR, IF
APPLICABLE, THE BOARD SHALL PROVIDE.
Each Optionee may exercise his Option with respect to all shares then
available for purchase or with respect to such lesser number of shares as he may
from time to time desire prior to the expiration or termination of the option.
(b) Except as another date (whether later or earlier) for the
expiration or termination of the Option Is provided in the resolution of the
Committee or, if applicable, the Board granting an Option, each Option shall
expire and become void, to the extent it has not theretofore been exercised, at
the close of business five (5) years from the date of grant; provided, however,
that no Option may be granted to expire more than ten (10) years from the date
of grant. An Incentive Stock Option granted to the beneficial owner of more than
10% of the outstanding shares of the Common Shares shall expire and become void,
to the extent that it has not theretofore been exercised, at the close of
business five (5) years from the date of grant,
6. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP
-----------------------------------------
An Option shall terminate and all rights thereunder shall cease upon
termination of the Optionee's employment (or termination of his directorship or
consulting or advisory relationship) unless (a) such termination is by reason of
the Optionee's death, in which event the provisions of paragraph 7(a) hereof
shall govern; (b) such termination is as a result of the Optionee's disability
(as determined by the Committee or, if applicable, the Board) or his retirement
in accordance with the retirement policies of the Corporation or the Subsidiary
by which the Optionee was employed ( or for which he served as a director,
consultant or advisor) In which event the provisions of paragraph 7(b) shall
govern; (c) such termination is for a reason other than Discharge for Cause and
under the terms of an employment (consulting or advisory agreement) with the
Corporation and/or a Subsidiary such Optionee was entitled to notice of
termination, in which event the provisions of paragraph 7(c) shall govern; (d)
such termination is for a reason other than Discharge for Cause, in which event
the provisions of paragraph 7(d) hereof shall govern; and (e) the Committee or,
if applicable, the Board otherwise provides when it grants the Option.
24
<PAGE>
7. RIGHTS TO EXERCISE OPTION IN EVENT OF DEATH
-------------------------------------------
OR OTHER TERMINATION OF EMPLOYMENT
----------------------------------
(a) If an Optionee shall die while In the employ of the Corporation or
a Subsidiary, or within three (3) months after leaving the employ (because of
his retirement or disability as provided in paragraph 7(b) hereof (or if the
Optionee shall die serving as a director of, or as a consultant or an advisor
to, the Corporation, or within three (3) months after such cessation of service
(because of his retirement or disability as provided in paragraph 6(b) hereof)
his Option may be exercised, whether or not such Option was exercisable by him
at the date of his death, by the person or persons to whom his rights under the
Option are transferred by will or by the laws of descent and distribution, or by
his legal representative(s), whichever shall be applicable, at any time or from
time to time for one (1) year after the earlier of his death or his cessation of
service as an employee, director, consultant or advisor
(b) If an Optionee shall retire or become disabled and leave the
employee of the Corporation and all of Its Subsidiaries (or cease to be a
director of, or a consultant or an advisor to, the Corporation) for any such
reasons, as prescribed in paragraph 6(b) hereof, his Option may be exercised by
him, whether or not such Option was exercisable by him at the date of his
retirement or his ceasing to be an employee (director, consultant or advisor)
because of disability, at any time or from time to time for three (3) months
after the date of his retirement or his ceasing to be an employee (director,
consultant or advisor) because of disability.
(c) In the event that, pursuant to the terms of an employment,
consulting or advisory agreement between the Optionee and the Corporation and/or
a Subsidiary, such Optionee shall be entitled to notice of termination of
employment and such Optionee shall be terminated for a reason other than
Discharge for Cause, then such Optionee may exercise his Option, whether or not
such Option was exercisable at the time of delivery of the notice of
termination, at any time or from time to time for thirty (30) days after
delivery of the notice,
(d) In the event an Optionee is discharged by the Corporation and/or a
Subsidiary for a reason other than Discharge for Cause or the Optionee
voluntarily terminates his employment (directorship or consulting or advisory
arrangement) such Optionee may exercise his Option only as to such shares as to
which the Option was exercisable at the date of his discharge or his voluntary
termination at any time or from time to time for thirty (30) days from the date
of his discharge or his terminations of employment (directorship, or consulting
or advisory arrangement).
(e) This paragraph 7 is subject to the provisions of paragraph 11
hereof.
25
<PAGE>
8. NON-TRANSFERABILITY OF OPTIONS
------------------------------
(a) No Option shall be transferable otherwise than by will or by the
laws of descent and distribution, and each Option is exercisable during the
lifetime of an Optionee only by him or, in the case of the Optionee's certified
incompetency, by his duly authorized legal representative(s). Anything in the
foregoing to the contrary notwithstanding, an Optionee may request that the
shares of the Common Shares to be issued upon the exercise of an Option be
issued in his and his spouse's name as joint tenants, with right of ownership.
(b) No Options nor any rights of the Optionee pursuant to his Option
shall be subject to pledge, hypothecation, execution, attachment or similar
process.
9. EXERCISE OF OPTION AND PAYMENT FOR SHARES
-----------------------------------------
(a) There shall bean exercise of an Option upon receipt by the
Corporation, at its principal office, during the term of such Option of (i) a
written notice signed by the Optionee advising of his exercise of such Option
with respect to a specified number of shares, the notice to be in such form and
to contain such provisions as may at the time be required by the Committee or,
if applicable, the Board, including representations which comply with paragraph
12 hereof and his commitment pursuant to paragraph 11 (b) hereof, and (ii)
payment in United States funds of the full purchase price of the shares covered
by the notice. A check, bank draft or money order will be accepted as payment
subject to collection, and stock certificates registered in the name of the
Optionee for the shares of the Common Shares covered by such exercise will be
delivered in the ordinary course of business after such collection; provided
that the Corporation shall not be obligated to deliver any shares of the Common
Shares until there has been compliance with any federal or state law or
regulations which the Corporation may deem applicable, If a person or persons to
whom the rights of an Optionee under an Option are transferred by will or by
laws of descent and distribution shall become entitled to exercise an Option as
provided in paragraph 7(a) hereof, or if the legal representative(s) of an
Optionee shall become so entitled, references to the Optionee in this paragraph
9 shall, except where the context otherwise requires, be deemed to mean such
person or persons or such legal representative(s).
(b) A person entitled to exorcise an Option shalI have none of the
rights of a shareholder with respect to shares subject to such Option until such
shares shall have been issued upon exercise of such Option,
(c) Anything in paragraph 9(a) to the contrary notwithstanding an
Optionee may, in lieu of payment by check, bank draft or money order, surrender
to the
Corporation shares of the Common Shares having a fair market value on the date
of exercise at least equal to the product of the Option Price and the number of
shares of the Common Shares as to which the Option was exercised, For the
purpose of the foregoing calculation, the fair market value of a share of the
Common Shares shall be the mean of the high bid and the low asked process quoted
on the date of exercise (i) in the National Association of Securities Dealers
Automated Quotation ("NASDAQ") System if the Common Shares are traded in the
NASDAQ System; (ii) on the exchange on which the Common Shares are then traded;
or (iii) in the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. or In the pink shoots as reported by the National Quotation
Bureau, Inc. if not traded in the NASDAQ system or on an exchange.
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10. STOCK DIVIDEND CAPITAL CHANGES
------------------------------
(a) In the event that the Corporation shall pay a stock dividend with
respect to, or affect a subdivision or combination of shares or a
reclassification of the Common Shares, the Board shall make such adjustments In
the number and kind of shares then subject to each Option and the Option Price
as it may deem appropriate to reflect such action, and such adjustment shall
take effect at such time and in such a manner as the Board may in its
discretion.
(b) In the event of a complete or partial liquidation or reorganization
of the Corporation, including a merger, consolidation or sale or distribution of
assets, the Board may (i) make such adjustments, if any, as it may deem
appropriate in the provisions of any Option as to the Option Price and as to the
kind and number of shares or kind and amount of properly deliverable upon
exercise of such Option, (ii) terminate any Option at, or prior to, the
effective date of the liquidation or reorganization, or (iii) provide in
connection with the liquidation or reorganization for the assumption of any
Option by any surviving, consolidated or successor corporation or corporations.
(c) Notwithstanding any provisions of the Plan to the contrary, an
Optionee shall have the right to exercise his Option in whole or in part as to
all shares then subject to the Option, whether or not such Option is otherwise
exercisable on such date, at any time subsequent to (i) the sale or transfer by
the Corporation of all or substantially all of its assets or the merger or
consolidation of the Corporation Mere the Corporation is not the surviving
entity (other than a transfer of assets to, or a merger or consolidation with, a
Subsidiary, (ii) the sale or transfer of shares of the Corporation by the
Corporation and/or any one or more of its shareholders, in one or more
transactions, related or unrelated, to one or more Persons under circumstances
whereby any Person and its Affiliates shall own, after such sales and transfers,
at least one-fourth, but less than one-half, of the shares of the Corporation
having voting power for the election of directors, unless such sale or transfer
has been approved in advance by three-fourths of the directors of the
Corporation who have been directors of the Corporation for at least two years
(or who have been elected, or nominated for election by the shareholder of the
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Corporation, by the directors who have so served), (iii) the sale or transfer of
shares of the Corporation by the Corporation and/or any one or more of its
shareholders, in one or more transactions, related or unrelated, to one or more
Persons under circumstances whereby any Person and its Affiliates shall own,
after such sales and transfers, at least one-half of the shares of the
Corporation having voting power for the election of directors, or (iv) the
election of one or more individuals to the Board which election results in
one-third of the directors of the Corporation consisting of individuals who have
not been directors of the Corporation for at least two years, unless such
individuals have been elected as directors, or nominated for election by the
shareholders of the Corporation as directors, by three-fourths of the directors
of the Corporation who have been directors of the Corporation for at least two
years.
Anything in subparagraph (i) of this paragraph 10(c) to the contrary
notwithstanding, the Corporation shall give notice to each Optionee, at least
ten (10) days prior to the date of the meeting of shareholders called to approve
the sale by the Corporation of all or substantially all of its assets or the
merger or consolidation of the Corporation where it is not the survivor, of such
proposed sale, merger or consolidation and if, after such notice, the Optionee
does not exercise the Option in its entirety on or prior to the effective date
of any such sale, merger or consolidation, then the Option, to the extent not so
exercised shall have no further force and effect unless the Board, in any such
merger or consolidation, has made provision for the corporation surviving the
merger or consolidation to assume the Option.
For the purposes of this paragraph 10(c), "Person" shall mean an
individual, partnership, firm, trust, corporation or other similar entity. When
two or more Persons act as a partnership, limited partnership, syndicate, or
other group for the purpose of acquiring, holding, or disposing of securities of
the Corporation, such syndicate or group shall be deemed a "Person" within the
meaning of this paragraph 1 0(c). For the purpose of this paragraph 10(c),
"Affiliate" shall mean any Person that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, any Person.
11. OTHER CONDITIONS
----------------
(a) If at any time counsel to the Corporation shall be of the opinion
that any sale or delivery of shares of the Common Shares pursuant to the
exercise of any Option is or may be under the circumstances unlawful, the
Corporation shall have no obligation to make such sale or delivery, or to take
any action or refrain from taking any action to make such sale or delivery
lawful, and the right to exercise any Option shall be suspended until, in the
opinion of counsel, such sale or delivery shall be unlawful. Upon the
termination of any period of suspension under this paragraph, any Option
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available for purchase before such
suspension and as to shares which would otherwise have become available for
purchase during the period such suspension, but no such suspension shall extend
the term of any Option. If any Option is deemed or declared void or
unexercisable for any reason, no other Options shall be thereby affected,
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(b) It shall also be a condition precedent to an Optionee's right to
exercise an Option that he shall have entered into arrangement with the
Corporation, in form and substance satisfactory to the Committee, or if
applicable, the Board, with respect to any applicable withholding tax
requirements.
12. REPRESENTATIONS BY OPTIONEES
----------------------------
(a) So long as a registration statement filed under the Act shall not
be effective with respect to the Plan, the Optionee shall represent to the
Corporation, upon receipt of the Option, (i) that he is familiar with the
operations and financials status of the Corporation and, if hereinafter
incorporated or acquired, its Subsidiaries, (11) that he is aware that the
Company is obligated to file periodic reports under Section 13 of the Exchange
Act and the copies thereof may be obtained from the Corporation or the
Securities and Exchange Commission upon request; (111) that he understands the
financial and other information relating to the Corporation that has been
furnished, or made available, to him or has an advisor who has such
understanding, and has advised him, with respect thereto, (iv) that the Option
granted to him is being taken by him for investment and not with a view to, or
in connection with any distribution thereof and (v) all shares of the Common
Shares purchased upon exercise of such Option, whether by him or, in the case of
his death, by the person or persons to whom his rights under such Option are
transferred by will or by the laws of descent or distribution or by his legal
representative(s) are to be so taken shall be registered prior to the issuance
thereof under the Act, the Optionee or the other person exercising the Option as
permitted by paragraph 7 hereof will be required to give a representation in
writing that he is acquiring such shares as an investment and not with a view
to, or in connection with, the sale or distribution of any thereof,
(b) The Committee or, if applicable, the Board may require such
additional or alternative representations by the Optionee, whether upon receipt
of the Option by the Optionee and/or upon the exercise thereof, as the Committee
or, if applicable, the Board, acting upon the advice of counsel to the
Corporation, deems necessary or advisable (I) In order to comply with the Act or
any other applicable status, rule or regulation relating to stock options or
(ii) which is deemed to be in the best interests of the Corporation.
13. TAX STATUS
----------
(a) The Corporation makes no representation as to the tax status of any
Option or the tax consequences (under federal laws of any state or other
jurisdiction) of the granting of any of the Options, any exercise thereof or of
any sale of shares acquired pursuant thereto.
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(b) WHENEVER A REFERENCE IS MADE IN THE PLAN OR IN ANY INSTRUMENT
DELIVERED PURSUANT THERETO TO ANY SECTION OF THE CODE AND SUCH SECTION IS LATER
AMENDED, SUPERSEDED OR REDESIGNATED UNDER A NEW SECTION NUMBER, THE REFERENCE IN
THE PLAN SHELL, UNLESS THE BOARD SHALL PROVIDE TO THE CONTRARY, BE AUTOMATICALLY
AMENDED TO REFLECT SUCH AMENDMENT, REDESIGNATION OR OTHER CHANGE,
14. AMENDMENT OF PLAN
-----------------
The Board may suspend or terminate the Plan with respect to any shares
as to which Options have not been granted and may, at any time or from time to
time, amend the Plan in any respect, except that after this Plan has been
submitted to, and the Board has obtained the approval of, the shareholders of
the Corporation, then, Without the approval of shareholders holding a majority
of the shares of stock of the Corporation then issued and outstanding and
entitled to vote, no amendment shall be made (a) increasing or decreasing the
number of 'shares reserved under paragraph 3(a) hereof (other than as provided
in paragraph 10 hereof), (b) changing the designation of the class of eligible
Optionees, as provided in paragraph 4 hereof, to receive Options hereunder; and
(c) extending the term during which the Options may be granted or exercised.
15. EFFECTIVENESS OF PLAN
---------------------
The Plan shall become effective upon the date of its approval (a) by
the Board (which approval was given an November 12, 1995 and (b) its approval by
the holders of a majority of the outstanding shares of the Common Shares. The
Plan shall terminate and have no further force and effect, except as to Options
theretofore granted, at the close of business on the tenth anniversary of the
date that the Plan is adopted by the holders of a majority of the outstanding
shares of the Common Shares.
16. TIME OF GRANTING OPTIONS
------------------------
The date of grant of an Option under the Plan shall,
for all purposes, be the date on which the Committee or, if applicable, the
Board makes the determination granting such Option; and no grant shall be doomed
effective under the Plan prior to such date. Notice of the determination shall
be given to each Optionee to whom an Option is so granted within a reasonable
time after the date of such grant.
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17. TERMINATION OF RIGHTS OF ACTION
-------------------------------
EVERY RIGHT OF ACTION ARISING OUT OF. OR IN CONNECTION WITH, THE PLAN
BY OR ON BEHALF OF THE CORPORATION OR A SUBSIDIARY, OR BY ANY SHAREHOLDER OF THE
CORPORATION OR A SUBSIDIARY AGAINST ANY PAST, PRESENT OR FUTURE MEMBER OF THE
COMMITTEE OR, IF APPLICABLE, THE BOARD OR AGAINST ANY EMPLOYEE, CONSULTANT OR
ADVISOR, OR BY ANY EMPLOYEE, CONSULTANT OR ADVISOR (PAST, PRESENT OR FUTURE)
AGAINST THE CORPORATION OR A SUBSIDIARY SHALL, IRRESPECTIVE OF THE PLACE OF
RESIDENCE OF ANY SUCH SHAREHOLDER, DIRECTOR, EMPLOYEE, CONSULTANT OR ADVISOR,
CEASE AND BE BARRED BY THE EXPIRATION OF THREE (3) YEARS FROM THE DATE OF THE
ACT OR OMISSION IN RESPECT OF WHICH SUCH RIGHT TO ACTION IS ALLEGED TO HAVE
ARISEN.
18. USE OF PROCEEDS
---------------
The proceeds received by the Corporation from the sale of the Common
Shares pursuant to the Options will be used for general corporate purposes.
19. DECLINING MARKET PRICE
----------------------
In the event the fair market value of a share of the Common Shares
declines below the Option Price set forth in any Non-Qualified Stock Option, the
Committee or, if applicable, the Board may, at any time, adjust reduce, cancel
and regrant any unexercised Non-Qualified Stock Option or take any similar
action it deems to be for the benefit of the Optioned in light of the declining
fair market value for the Common Shares; provided, however, that none of the
foregoing actions may be taken by the Committee without the prior approval of
the Board.
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PRELIMINARY
FORM OF PROXY
SOLICITED BY THE BOARD OF DIRECTORS OF EUROTECH, LTD.
The undersigned shareholder of Eurotech, Ltd., a District of Columbia
corporation, hereby constitutes and appoints Chad A. Verdi, Don V. Hahnfeldt and
Michael A. Thomas as the undersigned's true and lawful attorney and proxy, in
the name and place of the undersigned to attend the Annual Meeting of
Shareholders of Eurotech, Ltd. called to be held on April 25, 2000, and at any
and all adjournments thereof, and thereat to vote:
[ ] For The election of Chad A. Verdi, Randolph A. Graves,
Jr., Don V. Hahnfeldt, Simon Nemzow and Leonid Khotin
as directors of Eurotech, Ltd. for the forthcoming
year
[ ] Authority is withheld as to all
[ ] Authority is withheld as to the following:_________________________________
[ ] For [ ] Against Ratification of the selection of Tabb, Conigliaro &
McGann, P.C. as our independent public accountants
for the year ending December 31, 2000
[ ] Abstain
[ ] For [ ] Against Amendment of the Articles of Incorporation to
increase the number of authorized shares of common
[ ] Abstain stock to 100,000,000 and the number of authorized
shares of preferred stock to 5,000,000
[ ] For [ ] Against Approval of the 1999 Incentive Stock Option Plan
[ ] Abstain
and in their discretion on all other matters that may properly come before the
meeting.
IF NO CHOICE IS SPECIFIED, THE PERSONS NAMED AS PROXIES ABOVE INTEND TO VOTE FOR
THE ELECTION OF THE NAMED NOMINEES AND FOR ALL OF THE OTHER PROPOSED ACTIONS.
- ------------------------------ ----------------------------------
(Date) (Sign exactly as your name appears
on the reverse side)
----------------------------------
(Signature of joint owner, if any)
----------------------------------------
(Officer, partner or fiduciary of holder
that is an entity or trust
<PAGE>
Name and address of holder as they appear on the transfer books of Eurotech,
Ltd.
Number of shares held of record
PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS SHEET AND MAIL IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE TO
Mr. Michael L. Thomas
Corporate Secretary
Eurotech, Ltd.
1216 16th Street N.W.
Washington, DC 20036
