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:
|_| 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 (S)240.14a-11(c) or (S)240.14a-12
EVERCEL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------------------------------------
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
________________________
(2) Aggregate number of securities to which transaction applies:
____________ ___________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):__________________
(4) Proposed maximum aggregate value of transaction: ____________
(5) Total Fee paid:_______________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:______________________
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(3) Filing Party:________________________________
(4) Date Filed:__________________________________
<PAGE>
EVERCEL, INC.
2 Lee Mac Avenue, Danbury, CT 06813
203-825-3900
-------------------------------------------------------------------------------
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD JULY 19, 2000
-------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF EVERCEL, INC.:
NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of Evercel,
Inc. (the "Company"), will be held at the Danbury Hilton Hotel located at 18 Old
Ridgebury Road, Danbury, Connecticut on July 19, 2000 at 10:00 a.m. Eastern Time
for the following purposes:
1. To elect two directors to serve for a three-year term and
until their successors are duly elected and qualified;
2. To approve a proposal to amend the Company's Certificate of
Incorporation to increase the number of authorized common
shares that may be issued to 30,000,000;
3. To approve a proposal to amend the Company's 1998 Equity
Incentive Plan to increase the total number of shares of
common stock for which options may be granted from 600,000 to
1,300,00;
4. To approve a proposal to amend the Company's Certificate of
Incorporation to provide that members of the Board of
Directors of the Company may be removed with or without cause;
and
5. To transact such other business as may properly come before
the Annual Meeting.
Shareholders of record at the close of business on June 15,
2000 are entitled to notice of and to vote at the meeting.
YOUR ATTENTION IS DIRECTED TO THE ATTACHED PROXY STATEMENT. IF YOU DO NOT
EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN, DATE AND MAIL THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO SAVE THE COMPANY FURTHER
SOLICITATION EXPENSE. THERE IS ENCLOSED WITH THE PROXY AN ADDRESSED ENVELOPE FOR
WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GREGORY W. SCHULTE
----------------------
GREGORY W. SCHULTE
CORPORATE SECRETARY
Danbury, Connecticut
June 19, 2000
<PAGE>
EVERCEL, INC.
2 Lee Mac Avenue
Danbury, CT 06813
203-825-3900
--------------------------------------------------------------------------------
PROXY STATEMENT
EVERCEL, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 19, 2000
--------------------------------------------------------------------------------
This Proxy Statement is furnished to the shareholders of Evercel, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the 2000 Annual Meeting of Shareholders
(the "Annual Meeting") and at any adjournments thereof. The Annual Meeting will
be held on July 19, 2000 at the Danbury Hilton Hotel located at 18 Old Ridgebury
Road, Danbury, CT at 10:00 a.m. Eastern Time. The Company is a Delaware
corporation.
The approximate date on which this Proxy Statement and the accompanying
proxy card are first being sent or given to shareholders is June 21, 2000.
VOTING
GENERAL
The securities which can be voted at the Annual Meeting consist of (1)
shares of Common Stock, with each share entitling its owner to one vote on each
matter submitted to the shareholders; and (2) shares of Series A Cumulative
Convertible Preferred Stock of the Company ("Series A Preferred Stock"), with
each share entitling its owner to 3.64 votes on each matter submitted to the
shareholders. The record date for determining the holders of Common Stock and
Preferred Stock who are entitled to notice of and to vote at the Annual Meeting
is June 15, 2000. On the record date, 7,124,338 shares of Common Stock and
264,000 shares of Preferred Stock were outstanding and eligible to be voted at
the Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock and Preferred Stock of the Company is necessary to
constitute a quorum at the Annual Meeting. The affirmative vote of the holders
of a plurality of the votes represented in person or by proxy at the Annual
Meeting is required to elect directors and amend the Company's 1998 Equity
Incentive Plan. The affirmative vote of a majority of all votes represented by
the outstanding Common Stock and Preferred Stock is required to amend the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock and to provide that Directors may be removed with or
without cause.
VOTING BY PROXY
In voting by proxy with regard to the election of directors,
shareholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. Shareholders should
specify their choices on the accompanying proxy card. All properly executed
proxy cards delivered by shareholders to the Company and not revoked will be
1
<PAGE>
voted at the Annual Meeting in accordance with the directions given. IF NO
SPECIFIC INSTRUCTIONS ARE GIVEN WITH REGARD TO THE MATTERS TO BE VOTED UPON, THE
SHARES REPRESENTED BY A SIGNED PROXY CARD WILL BE VOTED (1) FOR THE ELECTION OF
THE DIRECTORS NOMINATED BY THE BOARD; (2) FOR AMENDING THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF COMMON SHARES THAT MAY BE ISSUED FROM
10,000,000 TO 30,000,000; (3) FOR AMENDING THE COMPANY'S 1998 EQUITY INCENTIVE
PLAN TO INCREASE THE TOTAL NUMBER OF SHARES FOR WHICH OPTIONS MAY BE GRANTED
FROM 600,000 TO 1,300,000; AND (4) FOR AMENDING THE COMPANY'S CERTIFICATE OF
INCORPORATION TO PROVIDE THAT MEMBERS OF THE BOARD OF DIRECTORS MAY BE REMOVED
EITHER WITH OR WITHOUT CAUSE. If any other matters properly come before the
Annual Meeting, the persons named as proxies will vote upon such matters
according to their best judgment.
Any shareholder delivering a proxy has the power to revoke it at any
time before it is voted by giving written notice to the Secretary of the
Company, by executing and delivering to the Secretary a proxy card bearing a
later date or by voting in person at the Annual Meeting.
In addition to soliciting proxies through the mail, the Company may
solicit proxies through its directors and employees in person and by telephone.
Brokerage firms, nominees, custodians and fiduciaries also may be requested to
forward proxy materials to the beneficial owners of shares held of record by
them. All expenses incurred in connection with the solicitation of proxies will
be borne by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock and Preferred Stock as of
June 5, 2000 by each person or group that is known by the Company to be the
beneficial owner of more than 5% of its outstanding Common Stock, each director
of the Company, each of the executive officers named under the heading
"Executive Compensation" below and all directors and executive officers of the
Company as a group (10 persons). This information is based upon information
received from or on behalf of the named individuals.
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP (1) PERCENT OF CLASS
------------------------------- --------------------- --------------------------
Warren D. Bagatelle 714,372 (2) 10.0%
c/o Loeb Partners Co. LXXV
61 Broadway
New York, NY 10006
Thomas L. Kempner 528,216 (2) 7.4%
c/o Loeb Partners Co. LXXV
61 Broadway
New York, NY 10006
Loeb Investors Co. LXXV 528,216 (2) 7.4%
61 Broadway
New York, NY 10006
2
<PAGE>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP (1) PERCENT OF CLASS
------------------------------- --------------------- --------------------------
James D. Gerson 748,303 (3) 10.3%
c/o Fahnestock and Co.
780 3rd Avenue
New York, NY 10017
Jerry D. Leitman 266,666 (4) 3.7%
William A. Lawson 1,220 *
Robert L. Kanode 58,764 (5) *
Allen Charkey 33,333 (6) *
John H. Gutfreund 11,273 (7) *
Robert Gable 6,000 (8) *
U.S. Trust Company of New York 695,000 9.8%
114 West 47th Street
New York, New York
All Directors and Executive 1,889,930 (9) 25.4%
Officers as a Group
(10 persons)
------------------------------- ---------------------- -------------------------
* Less than one percent.
(1) Unless otherwise noted, each person identified possesses sole voting
and investment power with respect to the shares listed.
(2) Warren Bagatelle and Thomas L. Kempner, by virtue of being general
partners of Loeb Investors Co. LXXV, may each be deemed to beneficially
own the shares of Loeb Investors Co. LXXV. Each of Mr. Kempner and Mr.
Bagatelle is a member of a group, as that term is used in Section 13(d)
of the Exchange Act, which group, in the aggregate, owns 468,200 shares
of Common Stock.
(3) Mr. Gerson's shareholdings include 71,078 shares held by his wife,
Barbara Gerson, as Custodian for two children (of which 22,545 shares
are issuable upon conversion of Series A Preferred Stock and exercise
of related options) and also includes 21,064 shares held by a private
foundation, of which Mr. Gerson is President and a Director. Mr. Gerson
disclaims beneficial ownership of the securities held by his wife and
by the private foundation.
(4) Mr. Leitman's shareholdings include currently exercisable options to
purchase 100,000 shares of Common Stock.
(5) Includes 50,000 shares which may be issued upon exercise of options and
6,764 shares which may be issued upon conversion of Series A Preferred
Stock and exercise of related options.
(6) Represents shares which may be issued upon exercise of options within
60 days.
(7) Represents shares which may be issued upon conversion of Series A
Preferred Stock and related warrants.
3
<PAGE>
(8) Represents shares held by his wife as to which he declares beneficial
interest.
(9) Includes currently exercisable options to purchase 183,333 shares of
Common Stock, which are currently exercisable or are exercisable within
60 days, and 146,036 shares which may be issued upon conversion of
Series A Preferred Stock and exercise of related warrants.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Two directors are to be elected at the Annual Meeting, each to hold
office for a three-year term and until the next annual meeting of shareholders
and until a successor is elected and qualified. It is the intention of the
persons named in the enclosed form of proxy to vote, if authorized, the proxies
for the election as directors of the two persons named below as nominees. Both
of the nominees are at present directors of the Company. If either nominee
declines or is unable to serve as a director (which is not anticipated), the
persons named as proxies reserve full discretion to vote for any other person
who may be nominated.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO
ELECT THE TWO NOMINEES LISTED BELOW AS DIRECTORS OF THE COMPANY.
The following table sets forth certain information for each nominee for
election as a director, each director who is continuing in office and an
executive officer of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
DIRECTORS NOMINATED FOR ELECTION:
Thomas L. Kempner 72 Thomas L. Kempner has been Chairman and Chief 1998
Executive Officer of Loeb Partners Corporation
since 1979 and a general partner of Loeb Investors
Co. LXXV, an affiliate of Loeb Partners
Corporation and an investment partnership. Mr.
Kempner is a director of Alcide Corporation, an
agricultural products company; IGENE
Biotechnology, Inc, a microbiology products
company; Intermagnetics General Corporation, CCC
Information Services Group, Inc., a claims
management company; Insight Communications
Company, Inc., a cable television systems company;
and Roper Starch Worldwide, Inc. and director
emeritus of Northwest Airlines, Inc. Mr. Kempner
is a director of FuelCell Energy, Inc.
("FuelCell") and was Chairman of the Board of
Directors from March, 1992 to August, 1997.
4
<PAGE>
William A. Lawson 66 William A. Lawson has been President since 1987 of 1998
W.A. Lawson Associates, an industrial and
financial consulting firm. Mr. Lawson has been
Chairman of the Board of Directors of Newcor,
Inc., a manufacturer of motor vehicle parts, since
March 1991. Mr. Lawson was Chairman and Chief
Executive Officer of Bernal International Inc.
(formerly Atlantic Eagle, Inc.), a manufacturer of
industrial marketing equipment, from 1997 to
1999. Mr. Lawson also serves on the Board of
Directors of FuelCell.
DIRECTORS WHO WILL CONTINUE IN OFFICE:
Jerry D. Leitman 57 Jerry D. Leitman has been President and Chief 1998
Executive Officer and a director of FuelCell since
August 1997. Mr. Leitman was previously President
of ABB, Asea Brown Boveri's global air pollution
control businesses from 1992 to 1995. Prior to
joining ABB, Mr. Leitman was Group Executive Vice
President of FLAKT AB, a Swedish multinational,
responsible for FLAKT`s worldwide industrial
businesses from 1989 to 1992. Mr. Leitman is also
a Director and a member of the Audit Committee of
Esterline Technologies, Inc., a manufacturer
serving the aerospace and defense markets.
Warren D. Bagatelle 61 Warren D. Bagatelle has been a Managing Director 1998
of Loeb Partners Corporation, a financial services
company, since 1988. Mr. Bagatelle is a general
partner of Loeb Investors Co. LXXV, an investment
company and an affiliate of Loeb Partners
Corporation, since 1988. Mr. Bagatelle also
serves on the FuelCell Board of Directors.
5
<PAGE>
Robert Gable 69 Mr. Gable was Chairman of the Board and Chief 1999
Executive Officer of Unitrode Corporation, a
manufacturer of power source and battery control
technology, between 1990 and 1998. Mr. Gable also
serves as a director of New England Business
Services Inc. and IBIS Technology Corporation.
James D. Gerson 56 James D. Gerson has been a Vice President of 1998
Fahnestock & Co., Inc., a financial services
company, since March 1993. Mr. Gerson also serves
as a director of Ag Services of America, Inc., a
company distributing and financing farm inputs;
American Power Conversion Corp., a producer of
uninterruptible power supplies; and FuelCell.
John H. Gutfreund 70 Mr. Gutfreund is the former Chairman and Chief 2000
Executive Officer of Salomon Brothers Inc. and
former Vice Chairman of the New York Stock
Exchange. He is President of Gutfreund & Company,
Inc., an investment banking and consulting firm.
He is also a director of AMBI, Inc., a
manufacturer of nutrition products; Ascent
Assurance, Inc., an insurance holding company;
Baldwin Piano & Organ Company, Inc., a musical
instruments company; Foamex International, Inc., a
manufacturer of plastic foam products; LCA-Vision,
Inc., a provider of services to outpatient eye
surgery facilities; and Universal Bond Fund.
Robert L. Kanode 50 Mr. Kanode has been the President and Chief 1999
Executive Office of the Company since April 1999.
Prior to joining the Company, Mr. Kanode served as
President of Varta Batteries North America, a
battery manufacturer, from 1995 to 1999. Mr.
Kanode also held numerous positions with IBM,
including the IBM ThinkPad team and other
permanent and consulting positions focused on
electronic manufacturing and operations.
6
<PAGE>
Allen Charkey 58 Mr. Charkey has been Executive Vice President and 1999
Chief Operating Officer since October 1998. He
joined FuelCell in 1970 and held various positions
at FuelCell and was Vice President of the Battery
Group from January 1997 until October 1998. Prior
to joining FuelCell, Mr. Charkey was employed by
Yardney Electric Corporation, a battery
manufacturer, from 1963 to 1970 as a battery
scientist.
</TABLE>
The terms of Messrs. Bagatelle, Gerson and Gable will expire in 2001
and the terms of Messrs. Leitman, Charkey, Kanode and Gutfreund will expire in
2002.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the year ended December
31, 1999. All incumbent directors attended at least 75% of the meetings of the
Board of Directors and Board committees of which they were members during the
period they served as directors. The Company does not have a standing nominating
committee.
EXECUTIVE COMMITTEE
The Company has an Executive Committee consisting of Messrs. Gutfreund
(Chairman), Gable and Kempner. The Executive Committee was formed in 2000 and
did not have any meetings in 1999. The function of the Executive Committee is to
assist the management in projects that benefit from the expertise of the Board
of Directors without having to convene the entire Board.
AUDIT COMMITTEE
The Company has an Audit Committee consisting of Messrs. Bagatelle
(Chairman), Gerson and Lawson. The Board of Directors of the Company has adopted
a written charter for the Audit Committee, a copy of which is attached to this
Proxy Statement. The Audit Committee had one meeting in 1999 and has
responsibility for consulting with the Company's officers regarding the
appointment of independent public accountants as auditors, discussing the scope
of the auditors' examination and reviewing annual financial statements. The
Audit Committee has discussed and reviewed the audited financial statements with
management. In addition, the Audit Committee has received the written
disclosures and letter from KPMG LLP required by Independence Standards Board
Standard No. 1 and has discussed with KPMG LLP their independence. Based on
these factors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K. The members of the Audit Committee are independent
(as defined by the NASD listing standards).
AUDIT COMMITTEE
--------------------------------------------------------------------------------
Warren Bagatelle
James Gerson
William Lawson
7
<PAGE>
COMPENSATION COMMITTEE
The Company has a Compensation Committee consisting of Messrs. Lawson
(Chairman) and Gerson. The Compensation Committee had three meetings in 1999.
The functions of the Compensation Committee are to review, approve and recommend
to the Board of Directors the terms and conditions of incentive bonus plans
applicable to corporate officers and key management personnel, to review and
approve the annual salary of the chief executive officer, and to administer the
Evercel, Inc. 1998 Equity Incentive Plan (the "1998 Plan").
DIRECTOR COMPENSATION
Beginning in 2000, each outside board member will receive $10,000 per
annum and a one-time grant of 4,000 nonqualified stock options. The stock
options will be granted pursuant to the Company's 1998 Plan. The option exercise
price is the fair market value as of the grant date and are exercisable
commencing one year after grant at the rate of 25% of such shares in each
succeeding year and have restrictions as to transferability. An additional
$4,000 per annum will be paid to the Chairman and $2,000 per annum will be paid
to each member of the Compensation and Audit Committees.
EXECUTIVE COMPENSATION
The table below sets forth information concerning the compensation we
paid to our chief executive officer and the other executive officer whose salary
and bonus exceeded $100,000 in 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARD
----------------------- ----------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
--------------------------- ---- ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Robert L. Kanode(1) 1999 $ 187,512 $ 45,000(2) 200,000 $ 1,154(3)
President and Chief Executive
Officer
Allen Charkey(4) 1999 150,000 40,500(2) --- 5,850(3)
Executive Vice President 1998 122,512 18,000 66,666 14,500(3)
and Chief Operating Officer 1997 116,168 9,000 --- 11,265(3)
-----------------------
</TABLE>
(1) Mr. Kanode joined us as President and Chief Executive Officer on April
5, 1999.
(2) Of these amounts, in the case of Mr. Kanode, $25,000 and, in the case
of Mr. Charkey, 15,000, were earned in 1999 and paid in 2000.
(3) Represents employer contributions to qualified pension plans and
Section 401(k) plans. In November 1999, we adopted a Section 401(k)
Plan. Prior to the spin-off, Mr. Charkey received benefits from the
FuelCell Defined Contribution Pension Plan and employer contributions
to the FuelCell Section 401(k) Plan.
(4) Includes compensation received as an employee of FuelCell prior to
February 16, 1999.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding options granted in
the year ended December 31, 1999 to the executive officers named in the
Compensation Table above. Amounts represent the hypothetical gains that could be
achieved from the respective options if exercised at the end of the option term.
These gains are based on assumed rates of stock appreciation, mandated by the
rules of the Securities and Exchange Commission, of 5% and 10% compounded
annually from the date the respective options were granted to their expiration
date based upon the grant price.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES RATES OF STOCK PRICE
UNDERLYING PERCENT OF THE TOTAL EXERCISE OR APPRECIATION FOR OPTION
OPTIONS/SARs OPTIONS/SARs GRANTED TO BASE PRICE EXPIRATION TERM (2)
NAME GRANTED (1) EMPLOYEES IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Kanode 200,000(1) 43.8% $3.00 3/23/09 $377,377 $956,245
Allen Charkey - - - - - -
-------------------
</TABLE>
(1) Options vest equally over four years beginning on March 23, 2000.
1999 YEAR-END OPTION VALUES
The following table contains information about the aggregate value of
the unexercised options for our common stock that were held at the end of 1999
by the executive officers named in the Compensation Table above. No options were
exercised by these officers in 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year End Options at Year End
------------------------------------- -------------------------------------
NAME Exercisable Unexercisable Exercisable Unexercisable
---- -------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Robert L. Kanode......... --- 200,000 $ --- $ 1,875,000
Allen Charkey............ 33,333 33,333 312,470 312,470
</TABLE>
EMPLOYMENT, CHANGE OF CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has entered into an employment agreement with Robert L.
Kanode, President and Chief Executive Officer. Pursuant to the agreement, Mr.
Kanode receives a minimum annual salary of $250,000 and a bonus of up to 40% of
his annual salary based on performance objectives established by the
Compensation Committee of the Board of Directors. Mr. Kanode will receive
continued salary and benefits for a period of one year if his employment is
terminated without cause. Mr. Kanode also holds options to purchase 200,000
shares of common stock at $3.00 per share, of which 25% vest each year in four
annual installments. If the Company experiences a change of control, all of the
options will automatically vest.
9
<PAGE>
The Company has also entered into an employment agreement with Allen
Charkey, Executive Vice President and Chief Operating Officer. Pursuant to the
agreement, Mr. Charkey receives an annual salary of $150,000. Mr. Charkey will
receive continued salary and benefits for a period of one year if his employment
is terminated without cause. Mr. Charkey also holds options to purchase 66,666
shares of common stock at common stock at $3.00 per share. Of these options,
33,333 are vested and the balance vest in equal installments in 2000 and 2001.
If the Company experiences a change of control, all of the options will
automatically vest.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's primary objectives in developing executive compensation
policies are to attract, motivate and retain superior talent to enable the
Company to achieve its business objectives and to align the financial interests
of the executive officers with the shareholders of the Company.
The compensation of executive officers consists of base compensation,
bonus, periodic grants of options and participation in benefit plans generally
available to employees. In setting compensation, the Compensation Committee and
the Chief Executive Officer strive to maintain base compensation for the
Company's executive officers at levels which the Compensation Committee and the
Chief Executive Officer, based on their experience, believe are competitive with
the compensation of comparable executive officers in similarly situated
companies while relying upon stock options and the informal bonus plan to
provide significant performance incentives.
Executive officers are eligible to participate in an informal bonus
plan. Awards under the informal bonus plan are determined by the Compensation
Committee. The Compensation Committee relies significantly upon the
recommendation of the Chief Executive Officer with respect to the bonus to be
awarded to the other executive officers. The executive officers, as well as
other key employees, may receive discretionary bonuses based upon a subjective
evaluation of the performance of the Company and their contributions to the
Company.
Each of the executive officers and certain key employees are eligible
to receive awards under the 1998 Plan. The 1998 Plan will be used to align a
portion of the officers' compensation with the shareholders' interest and the
long-term success of the Company. In determining the number of options to be
granted to each executive officer, the Compensation Committee reviews the
recommendations provided by the Chief Executive Officer with respect to the
executive officers other than the Chief Executive Officer and makes a subjective
determination regarding those recommendations.
The compensation paid by the Company to its chief executive officer for
fiscal 1999 was based upon an employment agreement negotiated with Mr. Kanode.
The Compensation Committee has not conducted any surveys of compensation
packages of chief executive officers in comparable companies, but believes,
based upon the individual experience of its members, that the compensation
package for Mr. Kanode for 1999 was reasonable based upon Mr. Kanode's
experience, his level of responsibility and the contributions made and expected
to be made by him to the Company. See "Employment Agreement" for a description
of Mr. Kanode's employment agreement.
COMPENSATION COMMITTEE
--------------------------------------------------------------------------------
William Lawson
James Gerson
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the annual change in the cumulative total
shareholder return on the Company's Common Stock for the period since the
Company's spin-off from FuelCell Energy, Inc. with the cumulative total return
on the Russell 2000 and a peer group consisting of SIC Group Code 369 companies
listed on The American Stock Exchange, Nasdaq Stock Market and New York Stock
Exchange for that period.
YEAR ENDING
COMPANY/INDEX/MARKET 4/6/99 12/31/99
---------------------------------------- ------------ --------------
Evercel, Inc. 100.00 429.17
Misc. Electric Equipment Suppliers 100.00 152.19
Russell 2000 Index 100.00 126.89
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and any persons owning more than 10% of a class of the
Company's stock to file certain reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "SEC"). All filings for fiscal
1999 were made on a timely basis.
The above information is to the Company's knowledge, based solely on a
review of copies of reports furnished to the Company and representations of
certain officers, directors and shareholders owning more than 10% of the
Company's Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A number of our directors are also directors of, and have a significant
investment in, FuelCell. Accordingly, these directors may be deemed to have an
indirect interest in certain transactions with us because of their relationship
with FuelCell.
We entered into certain agreements with FuelCell, including a
distribution agreement, a tax sharing agreement, a services agreement and the
license assistant agreement for the purpose of defining our ongoing relationship
with FuelCell and to provide certain services during the transition. The
distribution agreement provides for the transfer of the business and principal
assets of the battery business group to us and the assumption by us of certain
liabilities and obligations relating to that business.
11
<PAGE>
The tax sharing agreement defines the rights and obligations of
FuelCell and us with respect to filing of returns, payments, deficiencies and
refunds of federal, state and other income, franchise or certain other taxes
relating to our operations after the spin-off. The tax sharing agreement is
intended to allocate the tax liability of FuelCell between FuelCell and us as if
we were separate taxable companies.
The services agreement sets forth the terms under which FuelCell
provides to us certain management and administrative services, as well as the
use of certain office, research and development and manufacturing and support
facilities and services. We paid FuelCell $378,000 under this agreement in the
fiscal year ended October 31, 1999 and $67,000 for the two months ended December
31, 1999.
The license assistance agreement is intended to transfer to us
FuelCell's benefits and obligations to us under the Joint Venture contract and
the Three Circles License Agreement while together we seek formal approval for
that transfer. The license assistance agreement provides that we will provide
the services and assistance necessary to effectively fulfill, on behalf of
FuelCell, all of FuelCell's obligations under the Joint Venture contract and
related license agreement. In exchange for our assuming all of the obligations
of these arrangements, FuelCell agreed to transfer its rights to use and pay us
all same accruing to FuelCell and to act accordingly to our instructions in
connection with matters of Joint Venture governance and agreed not to permit the
amendment of the related documents without our consent.
In February 1999, we borrowed $300,000 from FuelCell for working
capital and capital expenditures. This loan was secured by all of our assets. At
the same time, we borrowed an additional $1.6 million from a bank, which was
guaranteed by FuelCell. These loans were repaid in April 1999.
In March 1999, Jerry D. Leitman, our Chairman, exercised options for
166,666 shares of our common stock at $3.00 per share. For 100,000 of these
shares, Mr. Leitman issued to us a nonrecourse, non-interest-bearing note in the
original principal amount of $300,000 payable in equal installments through
2001. No principal payments have yet been made on this note. If this note is not
paid, Mr. Leitman's shares will be forfeited.
In December 1999, James Gerson and John Gutfreund, each a director, and
a retirement plan for Robert Kanode, our President and a director, bought
20,000, 2,000 and 1,200 shares of Series A Preferred Stock and accompanying
warrants at $25.00 per share.
Loeb Partners Corporation, an affiliate of Thomas Kempner and Warren
Bagatelle, each a director, received $174,000 plus expenses as standby
underwriter in connection with our 1999 rights offering. As standby underwriter,
Loeb Partners Corporation purchased 411,000 shares not purchased in the rights
offering in April 1999 at a 4.0% discount.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK
BACKGROUND
The Board of Directors believes that the Company should increase its
authorized shares to facilitate the Company's future growth as additional equity
is needed or desirable.
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THE PROPOSAL
The Certificate of Incorporation of the Company currently authorizes
the issuance of a total of 10,000,000 shares of common stock and 1,000,000
shares of preferred stock. On the record date, 7,124,388 shares of common stock
were issued and outstanding and 2,357,099 shares of common stock were reserved
for issuance upon conversion of shares of Series A Preferred Stock, stock
options and warrants granted or available for grant, leaving 518,513 authorized
shares of common stock available for future issuance.
The Board of Directors considers the proposed increase in the number of
authorized shares desirable because it would give the Company the necessary
flexibility to issue common stock to facilitate potential future growth.
DESCRIPTION AND TEXT OF PROPOSED AMENDMENT
On April 18, 2000, the Board of Directors unanimously adopted a
resolution proposing and declaring the advisability of an amendment to Section 4
of the Certificate of Incorporation which would effect an increase in the number
of authorized shares of common stock from 10,000,000 to 30,000,000. To become
effective, the amendment must also be adopted by the stockholders of the
Company. The resolution amending Section 4 of the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
common stock is set forth below:
That, subject to approval of the shareholders of the Company,
the Company's Certificate of Incorporation is hereby amended
in the following respect:
Section 4 is hereby amended to read in its entirety as
follows:
"FOURTH: The total number of shares of stock which
the Corporation shall have authority to issue is
30,000,000 shares of common stock, par value $0.01
per share ("Common Stock") and 1,000,000 shares of
Preferred Stock, par value $0.01 per share
("Preferred Stock")."
REASONS FOR PROPOSED AMENDMENT
The Board of Directors considers the proposed increase in the number of
authorized shares desirable because it would permit the Board to pursue its
growth strategy on an on-going basis. The proposed increase would give the Board
the necessary flexibility to have the Company issue common stock in connection
with possible future transactions which management believes would provide
potential growth for the Company. Additional authorized shares could also be
used to raise cash through sales of stock to public and future private
investors. No definitive arrangements have been entered into in connection with
any future transactions involving the issuance by the Company of shares of its
common stock. Notwithstanding the foregoing, with the limited number of shares
currently available, it would be impractical for the Company to evaluate or seek
to consummate transactions that, if they could be accomplished, might enhance
stockholder value. If additional shares are available, transactions dependent
upon the issuance of additional shares would be less likely to undermined by
delays and uncertainties occasioned by the need to obtain prior stockholder
authorization. The ability to issue shares by the Board, as deemed in the
Company's best interest, will also permit the Company to avoid the expenses that
would be incurred in holding special stockholders' meetings in the future.
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CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
The issuance of additional shares of common stock and preferred stock
by the Company may potentially have an anti-takeover effect by making it more
difficult to obtain stockholder approval of various actions, such as merger or
removal of management. The amendment to the Certificate of Incorporation, if
approved, could strengthen the position of management and might make the removal
of management more difficult, even if removal would be generally beneficial to
the Company's stockholders. The authorization to issue the additional shares of
common stock or preferred stock would provide management with a capacity to
negate the efforts of unfriendly tender offerors through the issuance of
securities to others who are friendly or desirable to management.
The proposed amendment to the Certificate of Incorporation is not the
result of management's knowledge of any specific effort to accumulate the
Company's securities or to obtain control of the Company by means of a merger,
tender offer, proxy solicitation in opposition to management or otherwise.
The submission of the proposed amendment to the Certificate of
Incorporation is not a part of any plan by the Company's management to adopt a
series of amendments to the Company's Certificate of Incorporation or Bylaws so
as to render the takeover of the Company more difficult.
VOTE REQUIRED
As discussed above, to become effective, the amendment must be adopted
by the Board of Directors and the stockholders. The Board has already adopted
the amendment. Under Delaware law and the Company's Certificate of
Incorporation, the amendment must be approved by the affirmative vote of the
holders of a majority of the outstanding shares. Abstentions and broker
non-votes will be treated as votes cast against the proposal.
THE OFFICERS AND DIRECTORS OF THE COMPANY WILL VOTE THE SHARES OF
COMMON STOCK AND PREFERRED STOCK BENEFICIALLY OWNED OR CONTROLLED
BY THEM (REPRESENTING APPROXIMATELY 25.4% OF THE SHARES
OUTSTANDING) IN FAVOR OF THE PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
COMMON SHARES
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
COMMON SHARES
PROPOSAL NO. 3
APPROVAL OF THE AMENDMENT OF THE COMPANY'S
1998 EQUITY INCENTIVE PLAN, TO
INCREASE THE NUMBER OF SHARES AVAILABLE FOR GRANT
On April 18, 2000, the Board of Directors adopted a resolution, subject
to shareholder approval, to amend the 1998 Equity Incentive Plan (the "Plan") to
increase the number of shares available for grant under the Plan from 600,000 to
1,300,000.
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The Board of Directors believes that stock options are valuable tools
for recruitment, retention and motivation of qualified employees, including
offers, and other persons who can materially contribute to the Company's
success. As of the Record Date, 13,502 shares remained available and the Company
has agreed to grant options for an additional 170,500 shares at various times
and subject to certain conditions, including shareholder approval to increase
the number of shares available for grant under the Plan. Further, the Company
may wish to make additional grants to existing employees, new employees gained
through normal growth or future business acquisitions (although the Company has
no definitive plans for any such acquisitions at this time), or for other
purposes. The Board of Directors believes that it is important to have
additional shares available under the Plan to provide adequate incentives to the
Company's workforce. The material features of the Plan, including the proposed
increase, are outlined below.
The affirmative vote of the holders of a plurality of the shares of
common stock voting at the Meeting, in person or by proxy, is necessary for
approval of the restated Plan and, unless this vote is received, the restatement
of the Plan, including the increase in the number of options available for
grant, will not become effective. Abstentions and broker non-votes will not be
treated as votes cast against the proposal.
PURPOSE OF PLAN
The purpose of the Plan is to provide incentives to selected directors,
officers, employees and consultants of the Company and its subsidiaries, by
providing them with the opportunities to realize stock appreciation, by
facilitating stock ownership and by rewarding them for achieving a high level of
corporate performance. The Plan is also intended to facilitate recruiting and
retaining key personnel of outstanding ability.
ADMINISTRATION
The Plan may be administered by a committee (the "Committee") appointed
by the Company's Board of Directors. Except with respect to options granted to
non-employee Directors, the Committee has the exclusive power to grant options
under the Plan and to determine when and to whom options will be granted, and
the form, amount and other terms and conditions of each grant, subject to the
provisions of the Plan. The Committee has the authority to interpret the Plan
and any grant or agreement made under the Plan.
ELIGIBILITY
The Plan provides for grants to all employees of the Company and its
subsidiaries of "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, and for grants of non-qualified
options to employees, officers, directors and consultants of the Company and its
subsidiaries.
TYPE OF GRANTS
The Company has discretion to determine whether an option grant shall
be an incentive stock option or a non-qualified option. Subject to certain
restrictions applicable to incentive stock options, options will be exercisable
by the recipients at those times as are determined by the Committee, but in no
event may the term of an option be longer than ten years after the date of grant
(five years with respect to an incentive option granted to an employee holding
10% or more of the Company's stock). Both incentive and non-qualified stock
options may be granted to recipients at such exercise prices as the Committee
may determine, except that the exercise price of an incentive stock option shall
not be less than 100% of the fair market value of the stock on the date of its
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grant (110% in the case of a grant to a 10% or greater shareholder) and the
exercise price of a non-qualified option granted to a non-employee Director
shall be the fair market value of the stock on the date of its grants.
The purchase price payable upon exercise of options may be paid in
cash, by delivering, subject to the approval of the Options Committee, stock
already owned by the holder (where the fair market value of the shares delivered
on the date of exercise is equal to the option price of the stock being
purchased), by forfeiting options owned by the holder (where differences between
the fair market value of the shares and the exercise price of the forfeited
options is equal to the option price of the stock being purchased), or a
combination of cash, stock, and forfeited options.
TRANSFERABILITY
During the lifetime of an employee to whom an option has been granted,
only the employee, or the employee's legal representative, may exercise an
option. No options may be sold, assigned, transferred, exchanged or otherwise
encumbered except to a successor in the event of an option holder's death.
STOCK APPRECIATION RIGHTS
Options may be accompanied by either general or limited stock
appreciation rights. Upon exercising a stock appreciation right, a related
option shall no longer be exercisable, but the options shall be considered to
have been exercised to that extent for purposes of determining the number of
shares available for the grant of further options. Upon exercise of a right, the
holder receives the difference between the fair market value per share on the
date the right is exercised and the purchase price per share at which the option
is exercisable, multiplied by the number of shares with respect to which the
right is being exercised. A limited right, however, may be exercised only during
the period of a tender or exchange offer for the Company's shares.
AMENDMENT OR TERMINATION
The Board of Directors may amend or discontinue the Plan but no
amendment or termination shall be made that would impair the rights of any
holder of any option granted before the amendment or termination.
FEDERAL TAX CONSIDERATIONS
The Company has been advised by its counsel that the grant, exercise
and sale of options and stock under the Plan generally results in the following
tax events for United States citizens under current United States Federal income
tax laws.
Incentive Stock Options - A recipient will realize no taxable income,
and the Company will not be entitled to any related deduction, at the time an
incentive stock option is granted under the Plan. If certain statutory
employment and holding period conditions are satisfied before the recipient
disposes of shares acquired pursuant to the exercise of such an option, then no
taxable income will result upon the exercise of an incentive stock option and
the Company will not be entitled to any deduction in connection with that
exercise. Upon disposition of the shares after expiration of the statutory
holding periods, any gain or loss realized by a recipient will be a capital gain
or loss. The Company will not be entitled to a deduction with respect to a
disposition of the shares by a recipient after the expiration of the statutory
holding periods.
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Except in the event of death, if shares acquired by a recipient upon
the exercise of an incentive stock option are disposed of by the recipient
before the expiration of the statutory holding periods, the recipient will be
considered to have realized, as compensation taxable as ordinary income in the
year of disposition, an amount, not exceeding the gain realized on the
disposition, equal to the difference between the exercise price and the fair
market value of the shares on the date of exercise of the option. The Company
will be entitled to a deduction at the same time and in the same amount, since
the recipient is deemed to have realized ordinary income. Any gain realized on
the disposition in excess of the amount treated as compensation or any loss
realized on the disposition will constitute capital gain or loss, respectively.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes, at the time of exercise of an incentive stock
option, the recipient would realize income includable in alternative minimum
taxable income.
Non-Qualified Stock Options - A recipient will realize no taxable
income, and the Company will not be entitled to any related deduction, at the
time a non-qualified stock option is granted under the Plan. At the time of
exercise of a non-qualified stock option, the recipient would realize ordinary
income, and the Company would be entitled to a deduction, equal to the excess of
the fair market value of the stock on the date of exercise over the exercise
price. Upon disposition of the shares, any additional gain or loss realized by
the recipient will be taxed as a capital gain or loss.
THE OFFICERS AND DIRECTORS OF THE COMPANY WILL VOTE THE SHARES OF
COMMON STOCK AND PREFERRED STOCK BENEFICIALLY OWNED OR CONTROLLED
BY THEM (REPRESENTING APPROXIMATELY 25.4% OF THE SHARES
OUTSTANDING) IN FAVOR OF THE PROPOSED AMENDMENT TO THE 1998 EQUITY
INCENTIVE PLAN TO INCREASE THE NUMBER OF OPTIONS THAT MAY BE
GRANTED FROM 600,000 TO 1,300,000
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE AMENDMENT OF THE 1998 EQUITY INCENTIVE
PLAN TO INCREASE THE NUMBER OF OPTIONS THAT MAY BE GRANTED.
PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO PROVIDE THAT MEMBERS OF THE BOARD
OF DIRECTORS MAY BE REMOVED WITH OR WITHOUT CAUSE
BACKGROUND
In order to comply with the "blue sky" law of the state of California
at the time of the Company's original spin-off from FuelCell, the Company
undertook an obligation to amend its Certificate of Incorporation in the manner
proposed.
THE PROPOSAL
The Board of Directors has unanimously adopted a resolution proposing
and declaring the advisability of an amendment to Section 5 of the Company's
Certificate of Incorporation which would specify that the members of the Board
of Directors could be removed with or without cause. The resolution amending
Section 5 of the Company's Certificate of Incorporation as set forth below:
That, subject to approval of the shareholders of the Company, the
Company's Certificate of Incorporation is hereby amended in the
following respect:
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A sentence is hereby added to the end of ARTICLE FIFTH as
follows: "Notwithstanding anything to the contrary set forth
herein, any member of the Board of Directors may be removed
with or without cause."
THE OFFICERS AND DIRECTORS OF THE COMPANY WILL VOTE THE SHARES OF
COMMON STOCK AND PREFERRED STOCK BENEFICIALLY OWNED OR CONTROLLED
BY THEM (REPRESENTING APPROXIMATELY 25.4% OF THE SHARES
OUTSTANDING) IN FAVOR OF THE PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO PROVIDE THAT MEMBERS OF THE BOARD OF
DIRECTORS MAY BE REMOVED WITH OR WITHOUT CAUSE.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO PROVIDE THAT MEMBERS OF THE BOARD
OF DIRECTORS MAY BE REMOVED WITH OR WITHOUT CAUSE.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG LLP, certified public
accountants, to audit the consolidated financial statements of the Company for
the year ending December 31, 2000.
A representative of KPMG LLP will be present at the Annual Meeting to
make a statement if such representative desires to do so and to respond to
appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Shareholders who may wish to present proposals for inclusion in the
Company's proxy materials and for consideration at the 2001 Annual Meeting of
Shareholders should submit the proposals in writing to the Secretary of the
Company in accordance with all applicable rules and regulations of the SEC no
later than February 20, 2001. A proposal by a shareholder submitted outside the
processes of Rule 14a-8 of the Securities Exchange Act of 1934 must be received
by the Company on or before February 20, 2001 or it will be considered untimely.
ANNUAL REPORT AND FORM 10-K
ADDITIONAL COPIES OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1999 AND COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ARE AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON
WRITTEN REQUEST ADDRESSED TO: EVERCEL, INC., 2 LEE MAC AVENUE, DANBURY,
CONNECTICUT 06813 ATTN: SECRETARIES.
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OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of no
matters which will be presented for consideration at the Annual Meeting other
than the proposals set forth in this Proxy Statement. If any other matters
properly come before the meeting, it is intended that the persons named in the
proxy will act in respect thereof in accordance with their best judgment.
By Order of the Board of Directors
/s/ Gregory W. Schulte
----------------------
Gregory W. Schulte
Corporate Secretary
Danbury, CT
June 19, 2000
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EVERCEL, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The principal purpose of the Audit Committee is to assist the Board of Directors
in fulfilling its responsibility to oversee management's conduct of the
Company's financial reporting process, including by reviewing the financial
reports and other financial information provided by the Company, the Company's
systems of internal accounting and financial controls, and the annual
independent audit process.
In discharging its oversight role, the Committee is granted the power to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose.
The outside auditor is ultimately accountable to the Board and the Committee, as
representatives of the stockholders. The Board and the Committee shall have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditor. The Committee shall be responsible for
overseeing the independence of the outside auditor.
This Charter shall be reviewed for adequacy on an annual basis by the Committee
and, to the extent necessary, the Board.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board,
and the Committee's composition will meet the requirements of the Nasdaq Audit
Committee Requirements. Accordingly, all of the members will be directors:
o Who have no relationship to the Company that may interfere with the
exercise of their independent judgment in carrying out the
responsibilities of a director; and
o Who are financially literate or who become financially literate within
a reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will have accounting or
related financial management expertise.
KEY RESPONSIBILITIES
In carrying out its oversight role, the Committee shall perform the following
functions, which are set forth as a guide and may be varied from time to time as
appropriate under the circumstances.
o The Committee shall review with management and the outside auditor the
audited financial statements to be included in the Company's Annual
Report on Form 10-K and the Annual Report to Stockholders, and shall
review and consider with the outside auditor the matters required to be
discussed by Statement on Auditing Standards No. 61.
o As a whole, or through the Committee chair, the Committee shall, to the
extent necessary, review with the outside auditor, prior to filing with
the Securities and Exchange Commission, the Company's interim financial
information to be included in the Company's Quarterly Reports on Form
10-Q and the matters required to be discussed by SAS No. 61.
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o The Committee shall periodically discuss with management and the
outside auditor the quality and adequacy of the Company's internal
controls.
o The Committee shall obtain from the outside auditor at least annually a
formal written statement delineating all relationships between the
auditor and the Company consistent with Independence Standards Board
Standard No. 1, discuss with the outside auditor any such disclosed
relationships and their impact on the outside auditor's independence,
and take or recommend that the Board take appropriate action to oversee
the independence of the outside auditor.
o The Committee, subject to any action that may be taken by the Board,
shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside auditor.
o The Committee shall prepare the report required by the Securities and
Exchange Commission to be included in the annual proxy statement.
The Committee's role is one of oversight, and it is not the duty of the
Committee to plan or conduct audits or to determine that the Company's financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. The preparation of the Company's financial
statements is the responsibility of the outside auditor.
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EVERCEL, INC.
TWO LEE MAC AVENUE
DANBURY, CT 06813
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Robert L. Kanode and Gregory W. Schulte
as Proxies, and each of them, each with power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of Common Stock of Evercel, Inc. (the "Company") held by the undersigned
of record on June 15, 2000, at the annual meeting of the shareholders of the
Company to be held on July 19, 2000 and at any and all adjournments thereof, and
hereby revokes all former proxies:
1. Election of two directors.
|_| FOR all nominees listed below (except as marked to the contrary
below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below:
Thomas L. Kempner
William A. Lawson
(Instruction: To withhold authority to vote for any individual nominee or
nominees, write that nominee's name(s) in the space provided below.)
--------------------------------------------------------------------------------
2. Proposal to amend the Company's Certificate of Incorporation to
increase the number of authorized common shares from 10,000,000 to
30,000,000.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal to amend the Company's 1998 Equity Incentive Plan to increase
the total number of shares of common stock for which options may be
granted from 600,000 to 1,300,000.
|_| FOR |_| AGAINST |_| ABSTAIN
4. Proposal to amend the Company's Certificate of Incorporation to
provide that members of the Board of Directors of the Company may be
removed with or without cause.
|_| FOR |_| AGAINST |_| ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments thereof.
<PAGE>
(sign on reverse side)
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED (i) FOR THE ELECTION OF ALL NOMINEES LISTED ABOVE; (ii) FOR AMENDING THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF COMMON SHARES
THAT MAY BE ISSUED FROM 10,000,000 TO 30,000,000; (iii) FOR AMENDING THE
COMPANY'S 1998 EQUITY INCENTIVE PLAN TO INCREASE THE TOTAL NUMBER OF SHARES FOR
WHICH OPTIONS MAY BE GRANTED FROM 600,000 TO 1,300,000; AND (iv) FOR AMENDING
THE COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE THAT DIRECTORS MAY BE
REMOVED EITHER WITH OR WITHOUT CAUSE.
Dated _______________________, 2000
_____________________________________
Signature
_____________________________________
Signature if held jointly
Please sign exactly as name appears on
this card. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
