<PAGE> 1
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12.
</TABLE>
GENTEK INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
[GENTEK INC. LOGO]
April 7, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
GenTek Inc. (the "Annual Meeting") to be held at the Mellon Bank Building, 8
Loockerman Street, Dover, Delaware on Tuesday, May 9, 2000 at 9:15 a.m. local
time.
The Annual Meeting has been called for the purpose of (i) electing seven
Directors for a one-year term; (ii) ratifying the appointment of Deloitte &
Touche LLP as the Company's independent auditors; (iii) approval and adoption of
the GenTek Inc. 2000 Long-Term Incentive Plan; and (iv) voting upon such other
business as may properly come before the Annual Meeting and any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on April 3, 2000 as
the record date for determining stockholders entitled to receive notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors recommends that you vote "FOR" the election of the
seven nominees of the Board of Directors as Directors of the Company, the
ratification of Deloitte & Touche LLP as the Company's independent auditors and
approval and adoption of the GenTek Inc. 2000 Long-Term Incentive Plan.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
Very truly yours,
/s/ Todd M. DuChene
Todd M. DuChene
Secretary
<PAGE> 3
GENTEK INC.
Liberty Lane
Hampton, New Hampshire 03842
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2000
------------------------
To the Stockholders of GenTek Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of GenTek
Inc. (the "Company") will be held at the Mellon Bank Building, 8 Loockerman
Street, Dover, Delaware on Tuesday, May 9, 2000 at 9:15 a.m. local time for the
following purposes:
1. To elect seven Directors of the Company, each for a term of one
year;
2. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the current fiscal year;
3. To consider approval of the GenTek Inc. 2000 Long-Term Incentive
Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of record of the Company's Common Stock and Class B Common Stock at
the close of business on April 3, 2000 are entitled to notice of and to vote at
the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ Todd M. DuChene
Todd M. DuChene
Secretary
Hampton, New Hampshire
April 7, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE
PAID ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
GENTEK INC.
------------------------
ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
April 7, 2000
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of GenTek Inc., a Delaware corporation
("GenTek" or the "Company"), for use at the Company's Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Mellon Bank Building, 8
Loockerman Street, Dover, Delaware, May 9, 2000 at 9:15 a.m. local time, and any
adjournment thereof. This proxy statement and the related proxy card, together
with the Company's Annual Report to Stockholders for the year ended December 31,
1999, were first mailed by the Company on or about April 7, 2000 to stockholders
of record as of April 3, 2000.
All proxies in the enclosed form that are properly executed and returned to
the Company will be voted at the Annual Meeting or any adjournment thereof in
accordance with the specifications thereon, or, if no specification is made,
will be voted FOR approval of the proposals and FOR election of each of the
nominees for director set forth in the Notice of Annual Meeting of Stockholders.
A previously returned proxy may be revoked by any stockholder who attends the
Annual Meeting and gives oral notice of his or her intention to vote in person,
without compliance with any other formalities. In addition, any proxy given
pursuant to this solicitation may be revoked prior to the Annual Meeting by
delivering a written revocation or a duly executed proxy bearing a later date to
the Secretary of GenTek at Liberty Lane, Hampton, New Hampshire 03842.
A proxy may confer discretionary authority to vote with respect to any
matter presented at the Annual Meeting, except as set forth in the proxy and
except for matters proposed by a stockholder who notifies the Company not later
than the close of business on the tenth day following the day on which such
stockholder's Notice of Annual Meeting of Stockholders was mailed by the
Company. At the date hereof, management has no knowledge of any business that
will be presented for consideration at the Annual Meeting and which would be
required to be set forth in this proxy statement or the related proxy card other
than the matters set forth in the Notice of Annual Meeting of Stockholders. If
any other matter is properly presented at the Annual Meeting for consideration,
it is intended that the persons named in the enclosed form of proxy and acting
thereunder will vote in accordance with their best judgment on such matter.
The expense of preparing, printing and mailing this proxy statement and the
proxies solicited hereby will be borne by the Company. In addition to the use of
the mails, proxies may be solicited by officers and directors and regular
employees of GenTek, without additional remuneration, by personal interview,
telephone, telegraph or otherwise. The Company will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares held of record on April 3, 2000 and will provide
reimbursement for the cost of forwarding the material in accordance with
customary charges.
VOTING RIGHTS AND OUTSTANDING SHARES
Holders of record of Common Stock and Class B Common Stock (the "Voting
Stock"), at the close of business on April 3, 2000, are entitled to notice of
and to vote at the Annual Meeting. Holders of Common Stock are entitled to one
vote per share and holders of the Class B Common Stock are entitled to ten votes
per share, on each of the matters properly presented at the Annual Meeting. A
stockholders' list will be available for examination by GenTek stockholders at
the Annual Meeting.
On April 3, 2000, there were 20,229,006 shares of Common Stock and
4,750,107 shares of Class B Common Stock issued and outstanding and entitled to
vote at the Annual Meeting. The holders of a majority of the shares entitled to
vote, present in person or represented by proxy at the Annual Meeting, will
constitute a quorum for the transaction of business at the Annual Meeting.
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<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 3, 2000 certain information
concerning each person believed to be a beneficial owner of more than 5% of
Common and Class B Common Stock and beneficial ownership by each nominee,
director, named executive officer and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF GENTEK
--------------------------------------------------------
SHARES OF
SHARES OF PERCENT OF CLASS B PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK CLASS(1) COMMON STOCK CLASS(2)
------------------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Paul M. Montrone.......................... 12,674,753(3)(4) 50.7 4,750,107(3) 100.0
Paul M. Meister........................... 2,089,378(5) 8.4 853,247(5) 18.0
1996 GRAT................................. 2,068,128(3) 8.3 853,247(3) 18.0
J. P. Morgan and Co. Incorporated......... 1,914,650(6) 7.7 -- --
Thomson Horstmann & Bryant, Inc........... 980,950(7) 3.9 -- --
John W. Gildea............................ 615,996(8)(9) 2.5 -- --
Richard R. Russell........................ 142,153(10) * -- --
Ralph M. Passino.......................... 93,979(11) * -- --
James N. Tanis............................ 86,979(12) * -- --
James A. Wilkinson........................ 64,415(13) * -- --
Bodo B. Klink............................. 51,888(14) * -- --
Scott M. Sperling......................... 25,000(9) * -- --
Ira Stepanian............................. 25,000(9) * -- --
Bruce L. Koepfgen......................... 10,767(15) * -- --
All directors and Executive Officers
as a group (16 persons)................. 13,905,930(16) 54.6 4,750,107 100.0
</TABLE>
- ---------------
* Less than 1%
(1) The percentage of ownership of Common Stock has been calculated assuming
the conversion of all outstanding shares of Class B Common Stock.
Percentage figures are based on 24,979,113 shares, which represents the
total number of shares of Common Stock and Class B Common Stock outstanding
as of April 3, 2000. As of such date, there were 20,229,006 shares of
Common Stock and 4,750,107 shares of Class B Common Stock.
(2) Holders of Class B Common Stock may convert each share of Class B Common
Stock into one fully-paid and nonassessable share of Common Stock.
(3) Includes (a) 920,578 shares of Common Stock held directly by Paul M.
Montrone; (b) 2,239,414 shares of Class B Common Stock held directly by
Paul M. Montrone; (c) 36,000 shares of Common Stock held directly by Mr.
Montrone's wife, Sandra G. Montrone; (d) 3,600 shares of Common Stock held
by a trust (the "Trust") of which Paul M. Montrone is the sole trustee and
a beneficiary; (e) 1,214,881 shares of Common Stock and 853,247 shares of
Class B Common Stock held by a grantor retained annuity trust formed in
1996 (the "1996 GRAT"), of which Paul M. Montrone is the settlor and
annuity beneficiary and Sandra G. Montrone and Paul M. Meister are
co-trustees with shared investment and voting discretion; (f) 1,099,661
shares of Common Stock and 12,969 shares of Class B Common Stock held by a
grantor retained annuity trust formed in December 1998 (the "1998 GRAT"),
of which Paul M. Montrone is the settlor and annuity beneficiary, and
Sandra G. Montrone and Paul M. Montrone are co-trustees with shared
investment and voting discretion; (g) 1,188,717 shares of Common Stock and
252,954 shares of Class B Common Stock held by a grantor retained annuity
trust formed in March 1999 (the "1999 GRAT"), of which Paul M. Montrone is
the settlor and annuity beneficiary and Sandra G. Montrone and Paul M.
Montrone are co-trustees with shared investment and voting discretion; (h)
1,400,163 shares of Common Stock and 599,837 shares of Class B Common Stock
held by Sewall Associates Family, L.P., a Delaware
2
<PAGE> 6
limited partnership of which Sandra G. Montrone and Paul M. Montrone are
the sole general partners with shared investment and voting discretion and
Paul M. Montrone and a grantor retained annuity trust formed in January
2000 (of which Paul M. Montrone is the settlor and annuity beneficiary and
Sandra G. Montrone and Paul M. Montrone are co-trustees with shared
investment and voting discretion) are the limited partners; and (i)
2,061,046 shares of Common Stock and 791,686 shares of Class B Common Stock
held by PMM GK Investment LLC. The address of Mr. and Mrs. Montrone, each
of the GRATs and Sewall Associates Family, L.P. is c/o GenTek Inc., Liberty
Lane, Hampton, New Hampshire 03842. The address of PMM GK Investment LLC is
c/o Wilmington Trust Company, 1100 N. Market Street, Wilmington, Delaware
19890, n/o PMM GK Investment LLC.
The shares of Class B Common Stock beneficially owned by Mr. Montrone
represent 81.8% of the combined voting power of the outstanding shares of
the voting stock.
Pursuant to a registration rights agreement with GenTek, Mr. Montrone and
the Montrone family trusts and entities may request, at any time prior to
April 2004, the registration of their shares of Common Stock (including
shares of Common Stock received upon the conversion of any Class B Common
Stock) for sale under the Securities Act of 1933. The Company is required
to accept up to three requests for registration and, in addition, to
include the shares of Mr. Montrone and his family trusts in a proposed
registration of shares of Common Stock under the Securities Act in
connection with the sale of shares of Common Stock by the Company or any
other stock holder of the Company. The Company will be responsible for the
expenses of any registration of shares of Mr. Montrone and the Montrone
family trusts effected under the registration rights agreement and entities
other than brokerage and underwriting commissions and taxes relating to the
sale of the shares.
(4) Does not include an additional 120,000 shares of Common Stock held by a
charitable foundation, of which Paul M. Montrone is a director and Mrs.
Montrone is a Director and Officer. By virtue of their positions with the
foundation, Mr. and Mrs. Montrone may be deemed to be beneficial owner of
shares of Common Stock held by the foundation. Mr. and Mrs. Montrone
expressly disclaim any beneficial ownership in the 120,000 shares of Common
Stock held by the foundation.
(5) Includes 10,000 shares of Common Stock owned by Mr. Meister and 11,250
restricted units granted to Mr. Meister pursuant to the Long Term Incentive
Plan. Also includes 1,214,881 shares of Common Stock and 853,247 shares of
Class B Common Stock held by the 1996 GRAT. By virtue of his status as a
co-trustee of the 1996 GRAT, Mr. Meister may be deemed to beneficially own
the shares held by the 1996 GRAT. Mr. Meister expressly disclaims
beneficial ownership of such shares.
(6) The information presented herein is based solely upon a Schedule 13G filing
made with the Securities and Exchange Commission (the "SEC") by J.P. Morgan
and Co. Incorporated ("J.P. Morgan") on February 10, 2000. According to
such filing J.P. Morgan has sole voting power over 1,488,125 of the above
shares, shared voting power over none of the above shares and sole
dispositive power over 1,914,650 shares. The address of J.P. Morgan is 60
Wall Street, New York, New York 10260. The percentage ownership of Common
Stock held by J.P. Morgan has been calculated assuming the conversion of
all outstanding shares of Class B Common Stock into Common Stock. Prior to
such conversion, the percentage ownership of Common Stock for J.P. Morgan
would be 9.5%.
(7) The information presented herein is based solely upon a Schedule 13G filing
made with the SEC by Thomson Horstmann & Bryant, Inc. ("Horstmann") on
January 13, 2000. According to such filing, Horstmann has sole voting power
over 586,900 of the above shares, shared voting power over 21,400 of the
above shares and sole dispositive power over 980,950 of the above shares.
The address of Horstmann is Park 80 West, Plaza Two, Saddle Brook, New
Jersey 07663. The percentage ownership of Common Stock by Horstmann has
been calculated assuming the conversion of all outstanding shares of Class
B Common Stock into Common Stock. Prior to such conversion, the percentage
ownership of Common Stock for Horstmann would be 4.8%.
(8) Includes 90,000 shares of Common Stock held by Mr. Gildea directly, 30,000
shares of Common Stock held by a defined benefit plan of Gildea Investment
Company, a Connecticut S Corporation of which Mr. Gildea is an officer and
sole stockholder. The information presented herein is based solely upon a
Schedule 13D filing with the SEC on February 16, 1999 by Mr. Gildea, a
director of GenTek, on behalf of
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<PAGE> 7
himself and Network Fund III, Ltd. ("Network"). Network is an investment
fund managed by Gildea Management Company, of which Mr. Gildea is the
Chairman of the Board of Directors, Chief Executive Officer and sole
stockholder. According to such filing, Network possesses dispositive power
over 470,996 of the above shares while Mr. Gildea possesses sole voting and
sole dispositive power over all of the above shares. The address of Mr.
Gildea is 115 East Putnam Avenue, Greenwich, CT 06830.
(9) Includes 5,000 restricted units granted pursuant to the Restricted Unit
Plan for Non-Employee Directors and options to purchase 20,000 shares of
Common Stock.
(10) Includes 26,996 shares of Common Stock held by Mr. Russell directly, 24,000
shares of Common Stock held by Mr. Russell's wife, 1,200 shares of Common
Stock held by Mr. Russell's daughter, an aggregate of 83,957 restricted
units granted pursuant to the Long Term Incentive Plan and options to
purchase 6,000 shares of Common Stock. Mr. Russell disclaims any beneficial
ownership of the 25,200 shares of Common Stock held by his wife and
daughter.
(11) Consists of 9,000 shares of Common Stock held by Mr. Passino's wife and
children, an aggregate of 41,979 restricted units granted pursuant to the
Long Term Incentive Plan, and options to purchase 43,000 shares of Common
Stock. Mr. Passino disclaims any beneficial ownership of the 9,000 shares
of Common Stock held by his wife and children.
(12) Includes 2,000 shares of Common Stock held by Mr. Tanis directly, an
aggregate of 41,979 restricted units granted pursuant to the Long Term
Incentive Plan and options to purchase 43,000 shares of Common Stock.
(13) Includes 26,808 shares of Common Stock held by Mr. Wilkinson directly,
5,223 shares held by Mr. Wilkinson's spouse, 10,884 restricted units
granted pursuant to the Long Term Incentive Plan and options to purchase
21,500 shares of Common Stock.
(14) Includes 900 shares of Common Stock held by Mr. Klink directly, an
aggregate of 27,988 restricted units granted pursuant to the Long Term
Incentive Plan, and options to purchase 23,000 shares of Common Stock.
(15) Includes 5,000 restricted units granted pursuant to the Restricted Unit
Plan for Non-Employee Directors.
(16) Of such shares, 12,674,753 are beneficially owned by Mr. Montrone (see
notes 3 and 4 above) and 615,996 are beneficially owned by Mr. Gildea (see
note 8 above). The address for all directors and executive officers is c/o
GenTek Inc., Liberty Lane, Hampton, New Hampshire 03842.
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors of GenTek (the "Board") consists of Paul M. Montrone
(Chairman), Paul M. Meister (Vice Chairman), John W. Gildea, Bruce L. Koepfgen,
Richard R. Russell, Scott M. Sperling and Ira Stepanian, each of whom (other
than Mr. Koepfgen) became a member of the Board in April 1999. Mr. Keopfgen
became a member of the Board in September 1999.
Upon recommendation of the Nominating Committee, the Board has nominated
for election as directors at the Annual Meeting Messrs. Paul M. Montrone, Paul
M. Meister, John W. Gildea, Bruce L. Koepfgen, Richard R. Russell, Scott M.
Sperling and Ira Stepanian, each of whom is currently a director whose term
expires at the Annual Meeting. If elected, the nominees will serve for a
one-year term expiring in 2001. Management does not contemplate that the
nominees will be unable to serve, but in that event, proxies solicited hereby
will be voted for the election of such other person as may be recommended by the
Board in place of such nominee.
The affirmative vote of a plurality of the votes cast is required to elect
the directors. Abstentions from voting on this proposal (including broker
non-votes) will have no effect on the outcome of the vote. Mr. Montrone and the
Montrone family trusts and entities, as described in notes 3 and 4 to the table
under "Security Ownership of Certain Beneficial Owners and Management," have
indicated that they intend to vote for the nominees for election as directors.
It is expected, therefore, that the nominees for director will be elected
regardless of the vote by other stockholders.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
4
<PAGE> 8
Information about the nominees for election as directors, including
biographical and employment information, is set forth below.
NOMINEES FOR ELECTION AS DIRECTORS (ALL FOR A TERM EXPIRING IN 2001)
Paul M. Montrone, 58, Chairman of the Board, has been a Director of the
Company since April 1999. Mr. Montrone has been Chairman of the Board of Fisher
Scientific International Inc. ("Fisher") since March 1998, Chief Executive
Officer and a Director of Fisher since prior to 1995, and President from prior
to 1995 until 1998. Mr. Montrone is also a Director of Waste Management, Inc.
and is Chairman of the Board of The General Chemical Group Inc. ("General
Chemical Group") (producer of soda ash and calcium chloride).
Paul M. Meister, 47, Vice Chairman of the Board, has been a Director of the
Company since April 1999. Mr. Meister has been Vice Chairman of the Board and
Executive Vice President of Fisher since March 1998, Chief Financial Officer
since prior to 1995 and Senior Vice President of Fisher from prior to 1995 to
1998. Mr. Meister is also a Director of Mineral Technologies Inc. and M&F
Worldwide Corp., and is Vice Chairman of the Board of General Chemical Group.
John W. Gildea, 56, has been a Director of the Company since April 1999,
and served as a director of General Chemical Group from 1997 to 1999. Mr. Gildea
has been Managing Director of Gildea Management Company (investment management
firm) since prior to 1995. He is also a Director of American Service Group,
Inc., and Konover Property Trust.
Bruce L. Koepfgen, 47, has been a Director of the Company since September
1999. Mr. Koepfgen is a private investor who spent 23 years with Salomon
Brothers Inc., 15 of which he was a managing director. Most recently, he led
Salomon's efforts in Fixed Income Sales and managed its Chicago office. He was
also Chairman of Salomon Analytics, a company established to develop
sophisticated fixed income analytic tools for institutional investors.
Richard R. Russell, 57, has been a Director, President and Chief Executive
Officer of the Company since April 1999. Mr. Russell served as President and
Chief Executive Officer and a Director of General Chemical Group from prior to
1995 until April 1999. Mr. Russell has also been President and Chief Executive
Officer of General Chemical Corporation since 1986.
Scott M. Sperling, 42, has been a Director of the Company since April 1999,
and served as a director of General Chemical Group from 1996 to 1999. Mr.
Sperling is a Principal Managing Director of Thomas H. Lee Partners, L.P.
("THL"). From prior to 1995 to 1999, Mr. Sperling served as a Managing Director
of THL. He is also Vice President and Trustee of THL Equity Trust III, the
general partner of Thomas H. Lee Equity Advisors III Limited Partnership, which
is the general partner of Thomas H. Lee Equity Fund III. For the ten years prior
to 1994, Mr. Sperling was Managing Partner of The Aeneus Group, Inc., the
private capital affiliate of the Harvard Management Company. Mr. Sperling is
also a director of Fisher; Big Flower Holdings, Inc.; Wyndham International; and
Safelite Glass Corp.
Ira Stepanian, 62, has been a Director of the Company since April 1999, and
served as a director of General Chemical Group from 1996 to 1999. Mr. Stepanian
was Chairman and Chief Executive Officer of Bank of Boston Corporation and its
principal subsidiary, The First National Bank of Boston, from prior to 1994
until 1995.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities (collectively, "Section 16 reporting persons"), to file with
the SEC and the New York Stock Exchange initial reports of beneficial ownership
and reports of changes in beneficial ownership of such equity securities of the
Company. Section 16 reporting persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
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<PAGE> 9
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations that no other
reports were required, during the fiscal year ended December 31, 1999, the
Section 16 reporting persons complied with all Section 16(a) filing requirements
applicable to them.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board met four (4) times during 1999. Each of the members of the Board
attended at least 75% of the meetings of the Board and of the Board Committees
on which he served. The Board has four standing committees: the Audit Committee,
the Compensation Committee, the Executive Committee and the Nominating
Committee. During 1999, the Audit Committee met once, the Compensation Committee
met two times, the Executive Committee did not meet and the Nominating Committee
did not meet.
Audit Committee. The Audit Committee of the Board consists of Messrs.
Gildea, Koepfgen and Stepanian, with Mr. Stepanian serving as Chairman. All of
the members of the Audit Committee are "independent" within the meaning of the
New York Stock Exchange rules pertaining to such matters and, as a result, no
member has any relationship with the Company that may interfere with the
exercise of his independence from the Company and the Company's management.
On March 7, 2000, the Board adopted a new charter for the Audit Committee
(the "Charter"). The Charter contains the Committee's mandate, membership
requirements, and duties and obligations. A copy of the Charter is attached to
this Proxy Statement as Annex I. The Committee will annually review the Charter
to determine its adequacy and, if appropriate, recommend revisions to the Board.
Under the Charter, the Audit Committee is responsible for, among other tasks,
recommending the firm to be appointed as independent accountants to audit the
Company's financial statements and to perform services related to the audit;
reviewing the scope and the results of the audit with the independent
accountants; reviewing with management and the independent accountants the
Company's year-end operating results; considering the adequacy of the internal
accounting and control procedures of the Company; reviewing the non-audit
services to be performed by the independent accountants, if any; and considering
the effect of such performance on the accountants' independence.
Compensation Committee. The Compensation Committee consists of Messrs.
Koepfgen, Meister and Sperling, with Mr. Sperling serving as Chairman. It is
responsible for the review and recommendation of compensation arrangements for
directors and officers, for the approval of such arrangements for other senior
level employees, and for the administration of certain benefit and compensation
plans of GenTek and its subsidiaries.
Executive Committee. The Executive Committee consists of Messrs. Montrone,
Russell and Stepanian, with Mr. Montrone serving as Chairman. The Executive
Committee possesses, and may exercise during the interval between meetings of
the Board, all the powers of the Board. The Committee is responsible for
overseeing the management and direction of all of the businesses and affairs of
GenTek, in such manner as the Executive Committee deems in the best interests of
GenTek. Meetings may be called by the Chief Executive Officer of GenTek or the
Chairman of the Committee.
Nominating Committee. The Nominating Committee consists of all members of
the Board, with Mr. Montrone serving as Chairman. It is responsible for the
nomination of persons for election to the Board. The Nominating Committee will
consider nominees properly recommended by stockholders. The Bylaws of the
Company prescribe an advance notice procedure with regard to the nomination,
other than by or at the direction of the Board or a committee thereof, of
candidates for election as directors (the "Nomination Procedure").
The Nomination Procedure requires that a stockholder give prior written
notice, in proper form, of a planned nomination to the Secretary of the Company.
The requirements as to the form and timing of that notice are specified in the
Bylaws. The Company's Bylaws provide that any stockholder of record wishing to
nominate candidates for election as directors must provide written notice of
such proposal and appropriate supporting documentation, as set forth in the
Bylaws, to the Company at its principal executive office, not less than 75 days
nor more than 20 days prior to the anniversary date of the immediately preceding
annual meeting (the "Anniversary Date"), provided, however, that in the event
the annual meeting is scheduled to be held on a date
6
<PAGE> 10
more than 30 days before the Anniversary Date or more than 60 days after the
Anniversary Date, a stockholder's notice shall be timely if delivered to, or
mailed and received by, the Company at its principal executive office not later
than the close of business on the later of (i) the 75th day prior to the
scheduled date of such annual meeting or (ii) the 15th day following the day on
which public announcement of the date of such annual meeting is first made by
the Company. If the inspectors of election determine that a person was not
nominated in accordance with the Nomination Procedure, such person will not be
eligible for election as a director. Stockholder recommendations may be sent to
the Nominating Committee, c/o Secretary, GenTek Inc., Liberty Lane, Hampton, New
Hampshire 03842.
REPORT OF AUDIT COMMITTEE
In the past year, the Audit Committee has, among other activities, (i)
reviewed and discussed with management the Company's audited annual financial
statements for the fiscal year ended December 31, 1999, (ii) discussed with
Deloitte & Touche, the Company's independent auditors, the matters required to
be discussed by the American Institute of Certified Public Accountants Auditing
Standards Board Statement on Auditing Standards No. 61 ("Communication with
Audit Committees"), and (iii) assured the objectivity of Deloitte & Touche LLP,
by having the discussions and receiving the letter and other written disclosures
required by the International Standards Board Standard No. 1 ("Independence
Discussions with Audit Committees"). On the basis of its review and discussions,
the Audit Committee recommended to the Board that the Company's audited
financial statements for the fiscal year ended December 31, 1999 be included in
the Company's Annual Report on Form 10-K for year ended December 31, 1999.
The Audit Committee
Of the Board of Directors
Ira Stepanian, Chairman
John W. Gildea
Bruce L. Koepfgen
7
<PAGE> 11
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
The Non-Employee Directors of GenTek are entitled to receive cash
compensation and compensation pursuant to the plans described below.
Cash Compensation. Non-Employee Directors of the Company (other than
Messrs. Montrone and Meister) receive compensation of $40,000 per year, with no
additional fees for attendance at Board or committee meetings. Pursuant to the
Deferred Compensation Plan for Non-Employee Directors of GenTek Inc., any
Director entitled to compensation may elect, generally prior to the commencement
of any calendar year, to have all or any portion of the director's compensation
for such calendar year and for succeeding calendar years credited to a deferred
compensation account. Amounts credited to the Director's account will accrue
interest based upon the average quoted rate for ten-year U.S. Treasury Notes.
Deferred amounts will be paid in a lump sum or in installments at the Director's
discretion commencing on the first business day of the calendar year following
the year in which the Director ceases to serve on the Company's Board or of a
later calendar year specified by such Director.
Retirement Plan for Non-Employee Directors. Pursuant to the Retirement Plan
for Non-Employee Directors of GenTek Inc., any Non-Employee Director who retires
from the Board with at least five years of service as a non-employee director
(other than Messrs. Montrone and Meister) is eligible for an annual retirement
benefit for the remainder of the director's lifetime. The annual retirement
benefit for a director who retires with five years of service is equal to 50% of
the Director fee in effect at the date of the director's retirement and for
directors with more than five years of service the retirement benefit is
increased by 10% of the director's fee in effect at the date of the director's
retirement for each additional year of service, up to 100% of such fee for 10 or
more years of service as a director or for Directors who retire at age 70
regardless of the length of service.
Restricted Unit Plan for Non-Employee Directors. Pursuant to the Restricted
Unit Plan for Non-Employee Directors of GenTek Inc., each Non-Employee Director
of the Company (other than Messrs. Montrone and Meister), upon becoming a
Director of the Company, receives a one-time grant of 5,000 restricted units
under the Restricted Unit Plan for Non-Employee Directors evidencing a right to
receive shares of Common Stock, subject to certain restrictions. The Company
will maintain a memorandum account for each Director who received the grant of
restricted units and credit to such account the amount of any cash dividends and
shares of stock of any subsidiary distributed on the shares of Common Stock
("Dividend Equivalents") underlying such Director's restricted units from the
date of grant until the payment date described below. No shares of Common Stock
will be issued at the time restricted units are granted, and the Company will
not be required to set aside a fund for any such grant or for amounts credited
to the memorandum account. Pursuant to the terms of the Plan neither the
restricted units nor the memorandum account may be sold, assigned, pledged or
otherwise disposed of. Twenty-five percent of the restricted units and the
related Dividend Equivalents will vest for each year of service as a Director of
the Company. Vested restricted units and the related Dividend Equivalents will
not be payable until the Director ceases to be a member of the Company's Board.
At that time, the Director will receive one share of Common Stock for each
vested restricted unit, provided that a Director may elect, prior to the date on
which restricted units vest, to have payment deferred to a later date. Any
restricted units and related Dividend Equivalents that have not vested at the
time the Director ceases to be a Director of the Company will be cancelled
unless service has terminated because of death or disability, in which event all
such restricted units and related Dividend Equivalents will vest immediately.
When payment of restricted units is made, eligible Non-Employee Directors will
also receive cash and securities equal to the related Dividend Equivalents,
together with interest on the cash based upon the average quoted rate for
ten-year U.S. Treasury Notes. In the event of a stock dividend, stock split,
recapitalization, merger, liquidation or similar event, the Board, in its sole
discretion, may make equitable adjustments in outstanding awards and the number
of shares of Common Stock reserved for issuance under the plan.
8
<PAGE> 12
I. SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the President and
Chief Executive Officer and each of GenTek's four other most highly compensated
executive officers or key employees (the "Named Executives") for services in all
capacities to GenTek and its subsidiaries during or with respect to 1997, 1998
and 1999. In connection with the Company's spinoff from General Chemical Group
(the "Spinoff"), all of the Named Executive Officers resigned as officers of
General Chemical Group and were appointed as officers of the Company or its
subsidiaries as of April 30, 1999.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
NAME AND ------------------ UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY$ BONUS$ OPTIONS# COMPENSATION$(1)
------------------ ---- ------- ------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Richard R. Russell 1999 440,000 440,000 20,000 53,000
President, Chief Executive Officer 1998 400,000 75,000 0 26,000
and Director 1997 400,000 375,000 0 46,000
Ralph M. Passino 1999 280,000 305,000 10,000 35,000
Vice President & General Manager 1998 250,000 50,000 0 16,000
Manufacturing Group, 1997 250,000 225,000 0 28,000
General Chemical Corporation
James N. Tanis 1999 290,000 200,000 10,000 29,000
Vice President and General Manager 1998 250,000 50,000 0 16,000
Performance Products, 1997 250,000 225,000 0 28,000
General Chemical Corporation
Bodo B. Klink 1999 240,000 220,000 10,000 28,000
Vice President, 1998 205,000 35,000 0 13,000
Business Development and Services, 1997 205,000 120,000 5,000 20,000
General Chemical Corporation
James A. Wilkinson 1999 240,000 170,000 5,000 25,000
Vice President, Manufacturing, 1998 220,000 40,000 0 14,000
General Chemical Corporation 1997 220,000 110,000 0 20,000
</TABLE>
- ---------------
(1) Amounts listed in this column reflect the Company's contributions to the
Company's Savings and Profit Sharing Plan and Supplemental Savings Plan.
II. OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted during 1999 to the
Named Executives.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED FISCAL YEAR ($/SH) DATE ($)(1)
---- ---------- ------------ -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Richard R. Russell.............. 20,000(2) 6.45% 9.65 04/07/2009 80,000
Ralph M. Passino................ 10,000(2) 3.23% 9.65 04/07/2009 40,000
James N. Tanis.................. 10,000(2) 3.23% 9.65 04/07/2009 40,000
Bodo B. Klink................... 10,000(2) 3.23% 9.65 04/07/2009 40,000
James A. Wilkinson.............. 5,000(2) 1.61% 9.65 04/07/2009 20,000
</TABLE>
- ---------------
(1) The estimated grant date present value reflected in this column is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value
of the options reflected above include (i) a stock price as indicated in the
table above, equal to the fair market value of the underlying stock on the
date of grant; (ii) options are exercised at the end of a five-year period;
9
<PAGE> 13
(iii) interest rates representing the interest rate on U.S. Treasury
securities with maturity dates of five years as of the date of grant; and
(iv) volatility of approximately 50.0%. The ultimate value of the options
will depend on the future market price of the Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, an optionee
will realize upon exercise of an option will depend on the excess of the
market value of the Common Stock on the date the option is exercised over
the exercise price.
(2) Vesting Options granted pursuant to the GenTek Inc. Long Term Incentive
Plan. Options become exercisable in installments of 30%, 30% and 40%, on the
first three anniversaries of the date of grant, respectively.
III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each Named Executive with
regard to the aggregate stock options held on December 31, 1999, and the value
of in-the-money stock options held as of December 31, 1999. No stock options
were exercised by Named Executives in 1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT 12/31/99(#) AT 12/31/99 ($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard R. Russell... -- -- 0 420,000 0 15,760
Ralph M. Passino..... -- -- 40,000 35,000 0 7,880
James N. Tanis....... -- -- 40,000 35,000 0 7,880
Bodo B. Klink........ -- -- 20,000 15,000 0 7,880
James A. Wilkinson... -- -- 20,000 5,000 0 3,940
</TABLE>
- ---------------
(1) Excess of the value of the underlying securities at December 31, 1999 of
$10.438 over the exercise price.
PERFORMANCE PLAN
The Company has adopted the GenTek Inc. Performance Plan (the "GenTek
Performance Plan"), pursuant to which executive officers and key employees of
GenTek and its subsidiaries are eligible to receive annual or other period
bonuses. The GenTek Performance Plan is administered by the Compensation
Committee. Non-Employee Directors are not eligible for awards under the GenTek
Performance plan.
Each year, GenTek establishes target incentive bonuses for participants in
the GenTek Performance Plan. Bonuses are payable under the GenTek Performance
Plan for a year if GenTek meets the performance objectives for such year
selected for a participant or group of participants by the Compensation
Committee. The performance objectives may be based upon either company-wide or
operating unit performance in the following areas: earnings per share, revenues,
operating cash flow, operating earnings, working capital to sales ratio and
return on capital.
In addition, notwithstanding the foregoing, the Compensation Committee has
the right, in its discretion, to pay to any participant an annual bonus based on
individual performance or any other criteria that the Compensation Committee
deems appropriate and, in connection with the hiring of any person or otherwise,
the Compensation Committee may provide for a minimum bonus amount in any
calendar year, regardless of whether performance objectives are attained.
The GenTek Performance Plan vests broad powers in the Compensation
Committee to administer and interpret the Plan. The Compensation Committee's
powers include authority, within the limitations set forth in the Performance
Plan, to select the persons to be granted awards, to determine the time when
awards will be granted, to determine and certify whether objectives and
conditions for earning awards have been met, to determine whether an award or
payment of an award will be made at the end of an award period or deferred, and
to determine whether an award or payment of an award should be reduced or
eliminated. The GenTek
10
<PAGE> 14
Performance Plan generally vests broad powers in the Compensation Committee to
amend and terminate the GenTek Performance Plan.
LONG-TERM INCENTIVE PLAN
The Company has adopted the GenTek Inc. Long-Term Incentive Plan (the
"LTIP"), which provides for the grant of any or all of the following types of
awards: (1) stock options, including incentive stock options; (2) stock
appreciation rights ("SARs"); (3) restricted stock and restricted units; (4)
incentive stock and incentive units; and (5) deferred stock units (each, an
"Award").
The LTIP also provides for the grant of a split of General Chemical Group
equity-related incentive awards held by all employees in connection with the
Spinoff. See "General Chemical Group Stock Option and Restricted Unit
Conversion" below.
LTIP awards may be granted to key employees, including executive officers
of the Company, its subsidiaries and affiliates, but may not be granted to any
Non-Employee Director. The number of employees eligible to participate in the
LTIP is, at present, approximately 134, but will vary from year to year. A total
of 3,050,000 shares of the Company's Common Stock are authorized for issuance
under the LTIP, which number of shares includes the GenTek shares issued as a
result of the split of General Chemical Group equity-related incentive awards,
as described under "General Chemical Group Stock Option and Restricted Unit
Conversion" below.
If shares subject to an option under the LTIP cease to be subject to such
option, or if shares awarded under the LTIP are forfeited or if an award
otherwise terminates without a payment being made to the participant in the form
of GenTek Common Stock, such shares will again be available for future award
under the LTIP. In the event of certain changes in GenTek's capital structure
affecting GenTek Common Stock, the Compensation Committee may make appropriate
adjustments in the number of shares of the Common Stock of GenTek that may be
awarded and in the number of such shares covered by options and other awards
then outstanding under the LTIP, and, where applicable, the exercise price of
outstanding awards under the LTIP. The LTIP will be administered by the
Compensation Committee.
GENERAL CHEMICAL GROUP STOCK OPTION AND RESTRICTED UNIT CONVERSION
Pursuant to the Employee Benefits Agreement, effective as of April 30,
1999, the date on which the Company was spun-off by its former parent company,
General Chemical Group, holders of outstanding options to purchase General
Chemical Group common stock and holders of restricted stock units had their
interests adjusted as described below.
Stock Options. Employees of the Company who held General Chemical Group
stock options received under the Company's LTIP options to purchase the same
number of shares of GenTek as entitled by their General Chemical Group stock
options. The exercise price of their existing General Chemical Group stock
options was adjusted, and the exercise price of their GenTek stock options was
established in a manner that preserved (1) the difference between the exercise
price and the value of the shares covered by the General Chemical Group stock
option and (2) the ratio of the exercise price per share to the fair market
value of the share covered by the option. All other terms of such adjusted
options remained unchanged. Individuals who continued to provide employment,
consulting and similar to both GenTek and General Chemical Group similarly
retained their options to acquire shares of Common Stock of General Chemical
Group and received additional options to acquire shares of Common Stock of
GenTek, in each case as adjusted in the manner described above.
Restricted Units. Each restricted unit, whether held by employees of GenTek
or General Chemical Group, following the Spinoff Date, represents a similar
award with respect to each of GenTek and General Chemical Group.
PENSION PLANS
The Company's employees continue to participate in The General Chemical
Corporation Salaried Employee's Pension Plan (the "Pension Plan")--of which
GenTek continues to be the sponsor following the
11
<PAGE> 15
Spinoff-on the same terms and conditions as before the Spinoff, is a defined
benefit plan that generally benefits full-time, salaried employees. A
participating employee's annual retirement benefit is determined by the
employee's credited service under the Pension Plan and average annual earnings
during the five years of the final ten years of service credited under the
Pension Plan for which such employees' earnings were highest. Annual earnings
include principally salary, overtime and short-term incentive compensation. The
Pension Plan provides that a participating employee's right to receive benefits
under the Pension Plan becomes fully vested after five years of service. Under
the Pension Plan, benefits are adjusted by a portion of the social security
benefits received by participants. Under this formula, the average recognized
compensation under the Pension Plan for each of the Named Executives as of
December 31, 1999 was: Mr. Russell, $742,000; Mr. Passino, $441,000; Mr. Tanis,
$432,000; Mr. Klink, $333,000; and Mr. Wilkinson, $329,000.
In addition, the Named Executive Officers participate in an unfunded
nonqualified excess benefit plan which pays benefits which would otherwise
accrue in accordance with the provisions of the Pension Plan, but which are not
payable under the Pension Plan by reason of certain benefit limitations imposed
by the Internal Revenue Code of 1986, as amended, (the "Code").
The following table shows the total estimated annual benefits payable under
the Pension Plan and the excess benefit plan in the form of a straight life
annuity to hypothetical participants upon retirement at normal retirement age,
with respect to the compensation and years-of-service categories indicated in
the table.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUALIZED
AVERAGE 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
EARNINGS OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $40,000 $60,000 $80,000 $100,000 $100,000 $105,000
250,000 50,000 75,000 100,000 125,000 125,000 131,250
300,000 60,000 90,000 120,000 150,000 150,000 157,500
400,000 80,000 120,000 160,000 200,000 200,000 210,000
500,000 100,000 150,000 200,000 250,000 250,000 262,500
600,000 120,000 180,000 240,000 300,000 300,000 315,000
700,000 140,000 210,000 280,000 350,000 350,000 367,500
800,000 160,000 240,000 320,000 400,000 400,000 420,000
900,000 180,000 270,000 360,000 450,000 450,000 472,500
1,000,000 200,000 300,000 400,000 500,000 500,000 525,000
</TABLE>
The years of service recognized under the Pension Plan generally include
all service with GenTek and its predecessors. The credited years of service as
of December 31, 1999 under the Pension Plan for each of the Named Executives,
are as follows: Mr. Russell, 23 years; Mr. Passino, 20 years; Mr. Tanis, 12
years, Mr. Klink, 25 years and Mr. Wilkinson, 15 years.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's compensation program is administered by the Compensation
Committee of the Board (the "Committee") which has responsibility for reviewing
all aspects of compensation paid by the Company to its executive officers. The
Committee's primary objectives with respect to executive compensation are to
attract and retain the best possible executive talent, incentivize these
executives to achieve GenTek's business objectives, and strengthen the link
between management and shareholder interests. To achieve these objectives, the
Committee expects to retain those compensation plans that tie a substantial
portion of an executive's overall compensation to GenTek's performance.
12
<PAGE> 16
The principal elements of GenTek's executive compensation program consist
of base salaries and incentive variable compensation in the form of annual
bonus, stock options and other long-term compensation awards. The policies of
the Compensation Committee with respect to the base salary and incentive
compensation awarded to the Company's senior executives, including Mr. Russell,
the Company's President and Chief Executive Officer, are discussed below.
Base Salaries. The initial base salaries for executive officers are
determined by the Compensation Committee based on its evaluation of the
responsibilities of the position held by the executive, their business
experience, past performance and anticipated contributions to the Company's
future success.
Salary adjustments are based on a periodic evaluation of the performance of
the Company and of each executive officer. The Compensation Committee will take
into consideration in the case of each executive officer the scope of their
responsibilities, time commitments, financial results, product quality
improvements, regulatory compliance, new business development and any other
applicable factors. Mr. Russell's base salary was increased from $400,000 to
$440,000 in 1999.
Annual Incentive Compensation. Pursuant to the terms of the GenTek Inc.
Performance Plan, annual cash incentive awards are payable to the extent that
annual Company and individual business performance objectives specified by the
Committee are attained. Company and individual performance objectives may be
based on Company-wide or operating unit performance in the following areas:
earnings per share, revenues, operating cash flow, operating earnings, working
capital to sales ratio and return on capital; and the level of individual
contribution to the success of the Company as well as compensation opportunities
under other GenTek incentive plans. Based on the performance of the Company in
1999, Mr. Russell was awarded a bonus of $440,000 for 1999.
Long-Term Incentive Compensation. The Committee expects to endeavor to
foster an ownership culture that encourages superior performance by GenTek's
executive officers and employees through the use of stock-based compensation
plans designed to increase stock ownership throughout the Company. To that end,
pursuant to the GenTek Inc. Long-Term Incentive Plan, during 1999 the Board of
Directors awarded options to purchase 310,000 shares having an exercise price
range of $7.813 to $13.938. The Committee in its discretion will determine
subsequent awards and has recommended to the full board and stockholders that
the 2000 LTIP set forth in the proposal be approved.
Compliance with Section 162(m). The Compensation Committee believes that,
unless circumstances warrant an exception, GenTek should only pay compensation
to its executive officers in excess of $1 million if such excess amount is
performance-based compensation exempt from the limit on deductibility of such
compensation under Section 162(m) of the Code.
The Compensation Committee
of the Board of Directors
Scott M. Sperling, Chairman
Bruce L. Koepfgen
Paul M. Meister
13
<PAGE> 17
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 on April
30, 1999 (the date of the Company's spin-off from General Chemical Group, with
each of (i) GenTek Inc. Common Stock (ii) the Standard & Poor's 500 Composite
Index, (iii) the Standard & Poor's Supercomposite Manufacturers (Diversified)
Index and (iv) the Standard & Poor's Midcap Manufacturers (Diversified) Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG GENTEK INC. COMMON STOCK,
THE STANDARD & POOR'S 500 INDEX, THE STANDARD & POOR'S
SUPERCOMPOSITE MANUFACTURERS (DIVERSIFIED) INDEX AND THE
[GRAPH] STANDARD & POOR'S MIDCAP MANUFACTURERS (DIVERSIFIED) INDEX
<TABLE>
<CAPTION>
S&P SUPERCOMP.MFRS. S&P MIDCAP MFRS.
GENTEK (GK) S&P 500 COMP. INDEX (DIV) INDEX (DIV.) INDEX
----------- ------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
4/30/99 100.00 100.00 100.00 100.00
6/30/99 100.41 104.36 109.36 114.42
9/30/99 82.70 97.84 106.83 105.91
12/31/99 76.24 112.40 104.11 113.33
</TABLE>
ASSUMES $100 INVESTED ON APRIL 30, 1999
ASSUMES DIVIDENDS REINVESTED
<TABLE>
<CAPTION>
4/30/99 6/30/99 9/30/99 12/31/99
------- ------- ------- --------
<S> <C> <C> <C> <C>
GenTek (GK) ................................................ 100.00 100.41 82.7 76.24
S&P 500 Composite Index..................................... 100.00 104.36 97.84 112.40
S&P Supercomp. Manufacturers (Div.) Index................... 100.00 109.36 106.83 104.11
S&P Midcap Manufacturers (Div.) Index....................... 100.00 114.42 105.91 113.33
</TABLE>
14
<PAGE> 18
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company is party to a management agreement with Latona Associates Inc.
("Latona Associates"). Latona Associates is a management company that, since
1995, has provided the Company with strategic management, business and financial
advisory services, including guidance and advice relating to financings,
security offerings, recapitalization, restructurings, acquisitions and tax and
employee benefit matters. Paul M. Montrone, the controlling stockholder and
Chairman of our Board, also controls Latona Associates. In addition, Paul M.
Meister, a member of the Company Board, is a Managing Director of Latona
Associates.
In connection with the Company's spin-off in April 1999 from its former
parent company General Chemical Group, Latona Associates agreed to provide its
services separately to the Company and to General Chemical Group and to split
its current fee between the two companies. The fee the Company currently pays to
Latona is $4.5 million annually, payable quarterly in advance, adjusted annually
after 1999 for increases in the U.S. Department of Labor, Bureau of Labor
Statistics, Consumer Price Index. In addition, if the Company requests Latona to
provide advisory services in connection with any acquisition, business
combination or other strategic transaction, the Company will pay Latona
Associates additional fees, comparable to those received by investment banking
firms for such services (subject to the approval of a majority of our
independent directors). In 1999, Latona Associates advised the Company with
respect to its acquisition of Noma, Defiance and Krone, and received total fees
of $3.6 million for services rendered in connection with these transactions.
The Company's agreement with Latona Associates will extend through 2004.
The agreement may be terminated by the Company or Latona Associates if the other
party ceases, or threatens to cease, to carry on its business, or commits a
material breach of the agreement which is not remedied within 30 days of notice
of such breach. The Company may terminate the agreement if Mr. Montrone ceases
to hold, directly or indirectly, shares of our capital stock constituting at
least 20% of the aggregate voting power of our capital stock.
While there can be no assurance that the amount of fees paid by the Company
to Latona Associates do not exceed the amount that the Company would have to pay
to obtain from unaffiliated third parties the services provided by Latona
Associates, the Company believes that the employees of Latona Associates have
extensive knowledge concerning its business which would be impractical for a
third party to obtain. As a result, the Company has not compared the fee payable
to Latona Associates with fees that might be charged by third parties for
similar services.
Proposals regarding amendments to, waivers of, extensions of or other
changes in the terms of the agreement with Latona Associates, as well as any
transactions perceived to involve potential conflicts of interest, will be dealt
with on a case-by-case basis, taking into account relevant factors including the
requirements of the New York Stock Exchange and prevailing corporate practices.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board, the Board has
appointed Deloitte & Touche LLP as the Company's independent auditors for the
2000 fiscal year and hereby requests that the stockholders ratify such
appointment.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they so desire, and
to respond to appropriate questions from stockholders.
APPROVAL AND ADOPTION OF
GENTEK INC. 2000 LONG-TERM INCENTIVE PLAN
The Board of Directors has adopted, and is seeking approval of the GenTek
Inc. 2000 Long-Term Incentive Plan (the "2000 LTIP"). A copy of the 2000 LTIP is
attached to this proxy statement as Annex II.
15
<PAGE> 19
The terms of the 2000 LTIP are identical to those of the Company's current
LTIP (as defined above). The approval and adoption of the 2000 LTIP is necessary
because the Company has allocated all of the stock options, including the
incentive stock options, available under the current LTIP for allocation to the
key employees and consultants of the Company. The 2000 LTIP would allow for
stock options, including incentive stock options, to be allocated to the
officers, directors, key employees and consultants of the Company, thereby
helping the Company to continue to attract and retain such individuals, to
provide an incentive for them to achieve long-range performance goals, to enable
them to participate in the long-term growth of the Company and to increase the
alignment of interests among the Company's executives and stockholders.
Set forth below is a summary of the principal provisions of the 2000 LTIP.
The 2000 LTIP provides for the grant of any or all of the following types
of awards: (1) stock options, including incentive stock options; (2) stock
appreciation rights ("SARs"); (3) restricted stock and restricted units; (4)
performance shares and performance units; (5) stock awards; (6) deferred stock
units; and (7) dividend equivalents and interest rights (each, an "Award").
LTIP awards may be granted to key employees (including executive officers),
directors (both employee and non-employee directors) and consultants of the
Company, its subsidiaries and affiliates. The number of individuals eligible to
participate in the 2000 LTIP is, at present, approximately 134, but will vary
from year to year.
If shares subject to an option under the 2000 LTIP cease to be subject to
such option, or if shares awarded under the 2000 LTIP are forfeited or if an
award otherwise terminates without a payment being made to the participant in
the form of GenTek Common Stock, such shares will again be available for future
award under the LTIP. In the event of certain changes in GenTek's capital
structure affecting GenTek Common Stock, the Compensation Committee may make
appropriate adjustments in the number of shares that may be awarded and in the
number of shares covered by options and other awards then outstanding under the
2000 LTIP, and, where applicable, the exercise price of outstanding awards under
the 2000 LTIP. The 2000 LTIP will be administered by the Compensation Committee.
STOCK OPTIONS
The Compensation Committee may grant options to purchase shares of GenTek
Common Stock that are either "qualified", which includes those awards that
satisfy the requirements of Section 422 of the Internal Revenue Code (the
"Code") for incentive stock options, or "nonqualified", which includes those
awards that are not intended to satisfy the requirements of Section 422 of the
Code. Under the terms of the 2000 LTIP, the exercise price of the options will
not, unless the Compensation Committee determines otherwise, be less than (1) in
the case of incentive stock options, 100% of the fair market value of the Common
Stock of the Company at the time such options are granted; or (2) in the case of
non-qualified stock options, 50% of the fair market value of the Common Stock of
the Company at the time such options are granted. The exercise price of the
option is payable in cash or its equivalent or, as permitted by the Compensation
Committee, by exchanging shares of GenTek Common Stock owned by the participant,
or by a combination of the foregoing.
The options will generally have a term of ten years, unless the
Compensation Committee specifies a shorter term, and, will become exercisable at
such times as the Compensation Committee shall specify in the applicable option
agreement. If an option holder ceases employment with GenTek as a result of the
holder's death or disability, the holder (or his or her beneficiary or legal
representative) may exercise any option then exercisable, for a period of one
year (or such greater or lesser period as determined by the Compensation
Committee at or after grant), but in no event after the date the option
otherwise expires. All options that are not exercisable as of the date of an
option holder's termination of employment, board service or other business
relationship with the Company due to the death or disability of the option
holder will, unless otherwise determined by the Compensation Committee,
immediately terminate. If an option holder's employment, board service or other
business relationship with the Company is terminated for any other reason, all
of his or her options will immediately terminate, regardless of whether then
exercisable (unless determined otherwise by the Compensation Committee). If the
option holder's employment, board service or other business relationship with
the Company ceases for reasons other than the death or disability of the option
holder, or for cause, the option holder may
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exercise any option then exercisable, for such period to time as the
Compensation Committee shall determine, but in no event after the date the
option otherwise expires. The Compensation Committee may provide that a
participant who delivers shares of GenTek Common Stock to exercise an option
when the market value of the GenTek Common Stock exceeds the exercise price of
the option will be automatically granted new options for the number of shares
delivered to exercise the option ("reload options"). Reload options will be
subject to the same terms and conditions as the related option except that the
exercise price will be the fair market value on the date the reload option is
granted and such reload option will not be exercisable for six months. An option
holder may, by written notice filed with the Compensation Committee, elect to
defer receipt of the Common Stock of the Company that the option holder is
entitled to receive pursuant to the exercise of an option.
STOCK APPRECIATION RIGHTS
The 2000 LTIP authorizes the Compensation Committee to grant SARs in tandem
with a stock option, in addition to a stock option, or freestanding and
unrelated to a stock option. SARs entitle the participant to receive the excess
of the fair market value of a stated number of shares of GenTek Common Stock on
the date of exercise over the base price of the SAR. The base price may not be
less than 50% of the fair market value of the GenTek Common Stock on the date
the SAR is granted. The Committee shall determine when an SAR is exercisable,
the method of exercise, and whether settlement of the SAR is to be made in cash,
shares of GenTek Common Stock or a combination of the foregoing.
RESTRICTED STOCK AND RESTRICTED UNITS
The 2000 LTIP authorizes the Compensation Committee to grant Awards in the
form of restricted stock and restricted units. For purposes of the 2000 LTIP,
restricted stock is an Award of GenTek Common Stock and a restricted unit is a
contractual right to receive GenTek Common Stock (or cash based on fair market
value of GenTek Common Stock). Such Awards will be subject to such terms and
conditions, if any, as the Compensation Committee deems appropriate. Unless
otherwise determined by the Compensation Committee, participants will be
entitled to receive either currently or at a future date, dividends or other
distributions paid with respect to restricted stock and, if and to the extent
determined by the Compensation Committee, either will be credited with or
receive, currently an amount equal to dividends paid with respect to the
corresponding number of shares covered by restricted units. Restricted stock and
restricted units become vested and nonforfeitable upon the lapse of the
applicable restriction period and/or the attainment of pre-established
performance goals during the applicable restriction period, unless the
Compensation Committee determines otherwise. If the participant's employment,
board service or other business relationship with the Company terminates during
the restriction period, or if the applicable performance conditions are not
satisfied during the restriction period, the restricted stock can either be
repurchased by the Company (at the issue price or a formula price) or be treated
as forfeited. Similarly, if a participant's employment, board service or other
business relationship with the Company terminates during the restriction period,
the restricted units may, at the discretion of the Compensation Committee, be
treated as forfeited or as vested and nonforfeitable as to that percentage of
the restricted units based upon the days worked as a percentage of total days in
the restriction period (or such greater percentage as the Compensation Committee
may determine).
UNRESTRICTED STOCK AWARDS
The Compensation Committee may, in its sole discretion, grant an award of
unrestricted Common Stock of the Company to any participant. A participant may
also elect to receive all or a portion of the cash compensation (including
directors' fees) payable to such participant in the form of unrestricted Common
Stock of the Company.
PERFORMANCE SHARES AND PERFORMANCE UNITS
The 2000 LTIP allows for the grant of Awards in the form of performance
shares and performance units. For purposes of the 2000 LTIP, performance stock
is an Award of GenTek Common Stock and a performance unit is a contractual right
to receive GenTek Common Stock (or cash based on fair market value of GenTek
Common Stock). Such awards will be contingent upon the attainment, in whole or
in part, of certain performance objectives over a period to be determined by the
Compensation Committee. With regard to a particular performance period,
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<PAGE> 21
the Compensation Committee will have the discretion, subject to the LTIP's
terms, to determine the terms and conditions of such Awards, including the
performance objectives to be achieved during such period and the determination
of whether and to what degree such objectives have been attained. Participants
will not be entitled to receive either currently or at a future date, dividends
or other distributions paid with respect to performance shares or performance
units. Unless the Compensation Committee determines otherwise, any performance
stock or performance unit award will be forfeited on termination of employment.
DEFERRED STOCK UNITS
An Award of deferred stock confers upon a participant who is a director of
the Company the right to receive shares of GenTek Common Stock at the end of a
specified deferral period. On such date or dates established by the Compensation
Committee and subject to the terms and conditions as determined by the
Compensation Committee, a participant who is a director of the Company may be
permitted to defer receipt of all or a portion of his or her director fees and
receive the equivalent amount in notional shares of the Company's Common Stock
("Phantom Stock")based on the fair market value of GenTek Common Stock on the
date of grant. A participant's Phantom Stock will be credited to the
participant's stock account under the LTIP. Phantom Stock carry no voting rights
until the shares of Common Stock of the Company underlying such Phantom Stock
have been issued. A participant will be entitled to dividend equivalents with
respect to Phantom Stock credited to the participant's stock account. Phantom
Stock and dividend equivalents with respect thereto are fully vested at all
times. Amounts credited to a participant's stock account will be distributed
upon the termination of such participant's board service to the Company. A
participant may elect to receive such distributions in a lump sum or in
installments.
DIVIDEND EQUIVALENT AND INTEREST RIGHTS
Participants may be awarded Dividend Equivalent Rights as a component of
another Award under the LTIP or as a freestanding Award. A Dividend Equivalent
Right entitles the participant to receive dividends on the shares of Common
Stock of the Company underlying an Award. Dividend Equivalent Rights may be paid
currently to a participant or be reinvested in additional shares of the
Company's Common Stock. Dividend Equivalent Rights that are components of other
Awards may be subject to the terms and conditions of such Awards. Any Award
under the LTIP that allows for the deferral of cash may provide for "interest
rights" (i.e. the payment of interest) in connection with such Awards.
If there is a "Change of Control", all Awards that are not then vested will
become vested and any restrictions or limitations will lapse. For these
purposes, a "Change of Control" shall mean the occurrence of any of the
following events, subject to certain exceptions: (1) a change in the composition
of a majority of the Board of Directors of the Company unless the selection or
nomination of each of the new members was approved by a majority of incumbent
members of the Board of Directors of the Company; (2) the acquisition by any
person or group, with certain exceptions, of the beneficial ownership of
securities representing more than 35% of the voting power of the Company's then
outstanding voting securities having the right to elect directors; (3) the
consummation, after approval by the Company's stockholders, of a merger or other
business combination with an entity other than a majority-owned subsidiary of
the Company, or the sale of all or substantially all of the Company's assets; or
(4) the purchase by any person or group, with certain exceptions, of 35% or more
of the outstanding shares of the Company's common stock pursuant to a tender or
exchange offer.
Notwithstanding the foregoing, a change in control will not be deemed to
occur in the event we file for bankruptcy, liquidation or reorganization under
the United States Bankruptcy Code.
The Board or the Compensation Committee may amend, suspend or terminate the
2000 LTIP.
Approval of the 2000 LTIP requires the affirmative vote of the majority of
all votes of the Voting Stock present in person or represented by proxy at the
Annual Meeting of Shareholders. Abstention from voting on the proposal
(including broker non-votes) will have the same effect of voting against the
proposal.
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SUBMISSION OF PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at GenTek's annual meetings, consistent with regulations adopted by the
SEC and the By-laws of the Company. Proposals to be considered for inclusion in
the proxy statement for the 2001 Annual Meeting of Stockholders must be received
by GenTek at its principal executive offices not later than December 14, 2000.
Proposals to be timely submitted for stockholder action at GenTek's 2001 Annual
Meeting must be received by GenTek at its principal executive offices not less
than 30 days nor more than 60 days prior to the 2001 Annual Meeting. Proposals
should be directed to the attention of the Secretary, GenTek Inc., Liberty Lane,
Hampton, New Hampshire 03842.
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year ended
December 31, 1999 and this proxy statement are being mailed together to all
stockholders of the Company of record on April 3, 2000, the record date for
voting at the Annual Meeting.
By Order of the Board of Directors,
TODD M. DUCHENE
Secretary
April 7, 2000
THE COMPANY'S 1999 ANNUAL REPORT ON FORM 10-K, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE BY WRITTEN REQUEST FROM THE
OFFICE OF THE SECRETARY, GENTEK INC., LIBERTY LANE, HAMPTON, NH 03842.
Additional information about the Company can be found at the Company's
Internet site: http://www.gentek-global.com
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ANNEX I
GENTEK INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the quality
and integrity of the Corporation's financial reports; the Corporation's systems
of internal controls regarding finance and accounting; and the Corporation's
auditing, accounting and financial reporting processes generally. The Audit
Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
systems.
- Review and appraise the audit efforts of the Corporation's independent
accountants and internal accountants.
- Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section III of this Charter. While the
Committee has the responsibilities and duties set forth in this Charter, it is
not the Committee's duty (1) to plan or conduct audits, (2) to determine that
the Corporation's financial statements are complete and accurate and in
accordance with GAAP, which remains the responsibility of the Corporation's
management and independent accountants, or (3) to conduct investigations,
resolve disagreements, if any, between management and the independent
accountants or to assure compliance with laws and regulations or the
Corporation's Code of Business Conduct.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors. Subject
to the next paragraph, each of the members of the Committee shall be independent
directors, free from any relationship that, in the opinion of the Board, may
interfere with the exercise of his or her independent judgment as a member of
the Committee or independence from management and the Corporation. All members
of the Committee shall be financially literate (or must become financially
literate within a reasonable period of time after his or her appointment), and
at least one member of the Committee shall have accounting or related financial
management expertise.
Notwithstanding the previous paragraph, a person with a business
relationship with the Corporation may serve on the Audit Committee if the Board
determines in its business judgment that the relationship does not interfere
with the person's exercise of independent judgment as a director. In addition,
one director who is not a current employee (or an immediate family member of
such employee) of the Corporation, but is nonetheless not "independent" for the
purposes of the NYSE rules, may be appointed to the Committee, under exceptional
and limited circumstances, if the Board of Directors determines that membership
on the Committee by the individual is required in the best interests of the
Corporation and its shareholders, and the Corporation discloses, in the next
annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination.
III. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Review Financial Reports
1. Review and discuss the Corporation's audited financial statements with the
Corporation's management.
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2. Review with management and the independent accountants the interim financial
statements prior to filing the 10-Q and publicly releasing quarterly
earnings. The Chair of the Committee may represent the entire Committee for
purposes of this review.
Independent Accountants
3. Review and recommend to the Board of Directors the engagement of independent
accountants, including approval of their fee and the scope and timing of
their audit of the Corporation's financial statements.
4. Review, with the independent accountants, the accountants' report on the
Corporation's financial statement.
5. Evaluate the performance of the independent accountants; where appropriate
recommend that the Board of Directors replace the independent accountants
and approve any proposed discharge of the independent accountants.
6. On an annual basis, obtain from the Corporation's independent public
accountants written disclosure delineating all relationships between such
accountant and the Corporation and its affiliates, including the written
disclosure and letter required by ISB Standard No. 1, as it may be modified
or supplemented.
7. From time to time, as appropriate, actively engage the Corporation's
independent public accountants in a dialogue with respect to any disclosed
relationships or services that may impact the objectivity and independence
of such accountants and recommend to the Board of Directors appropriate
action in response to the outside auditors' report to satisfy itself of the
auditors' independence.
8. Inform the independent accountant that it is ultimately accountable to the
Board of Directors and the Audit Committee, as representatives of the
shareholders.
9. Periodically discuss with the independent accountants out of the presence of
management the Corporation's internal controls, including their
recommendations, if any, for improvements in the Corporation's internal
controls and the implementation of such recommendations, the fullness and
accuracy of the Corporation's financial statement and certain other matters
required to be discussed by SAS 61*, as it may be modified, and information
that would be required to be disclosed by GAAS.
Reviewing and Improving Processes
10. Review, with the independent accountants, any internal auditors and the
Company's management, policies and procedures with respect to internal
auditing and financial and accounting controls.
11. As part of its job to foster open communication, the Committee should meet
at least annually with the Corporation's management and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed
confidentially.
12. In consultation with the independent accountants, review the integrity and
quality of the organization's financial reporting processes, both internal
and external, and the independent accountant's perception of the
Corporation's financial and accounting personnel.
13. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied and
significant judgments affecting its financial reporting.
14. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
- ---------------
* SAS 61 requires independent auditors to communicate certain matters related to
the conduct of an audit to those who have responsibility for oversight of the
financial reporting process, specifically the audit committee. Among the
matters to be communicated to the audit committee are: (1) methods used to
account for significant unusual transactions; (2) the effect of authoritative
guidance or consensus; (3) the process used by management in formulating
particularly sensitive accounting estimates and the basis for the auditor's
conclusions regarding the reasonableness of those estimates; and (4)
disagreements with management over the application of accounting principles,
the basis for management's accounting estimates, and the disclosures in the
financial statements.
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15. Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved by
the Audit Committee, have been implemented.
16. Consider and recommend to the Board of Directors, if appropriate, major
changes to the Corporation's financial reporting, auditing and accounting
principles and practices as suggested by the independent accountants or
management.
Other
17. State in the Audit Committee's Report in the Corporation's Annual Proxy
Statement whether, based on the review and discussions referred to in items
1, 6, 7 and 9 above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the
Corporation's Annual Report on Form 10-K for the last fiscal year.
18. Review and, if appropriate, recommend updates of this Charter annually.
19. Perform any other activities consistent with this Charter, the Corporation's
By-laws and applicable law, as the Committee or the Board deems necessary or
appropriate.
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ANNEX II
GENTEK INC.
2000 LONG-TERM INCENTIVE PLAN
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. GENERAL PURPOSE OF THE PLAN:DEFINITIONS..................... 1
SECTION 2. ADMINISTRATION OF PLAN: COMMITTEE AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS........................... 3
(a) Committee............................................... 3
(b) Powers of Committee..................................... 3
(c) Delegation by the Committee............................. 4
(d) Limitations on Certain Awards........................... 4
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION........ 4
(a) Stock Issuable.......................................... 4
(b) Recapitalizations....................................... 4
(c) Mergers................................................. 4
(d) Substitute Awards....................................... 5
SECTION 4. ELIGIBILITY................................................. 5
SECTION 5. STOCK OPTIONS............................................... 5
(a) Option Awards; Option Agreement......................... 5
(b) Reload Options.......................................... 7
(c) Share Deferral.......................................... 7
(d) Form of Settlement...................................... 7
SECTION 6. STOCK APPRECIATION RIGHTS................................... 8
(a) Nature of Stock Appreciation Rights..................... 8
(b) Grant and Exercise of Stock Appreciation Rights......... 8
(c) Terms and Conditions of Stock Appreciation Rights....... 8
SECTION 7. RESTRICTED STOCK AND RESTRICTED UNITS....................... 8
(a) Nature of Restricted Stock Awards and Restricted Unit
Awards.................................................. 8
(b) Rights as a Stockholder................................. 8
(c) Restrictions............................................ 9
(d) Settlement of Awards.................................... 9
(e) Waiver, Deferral and Reinvestment of Dividends.......... 9
SECTION 8. STOCK AWARDS................................................ 9
(a) Grant or Sale of Stock.................................. 9
(b) Elections to Receive Stock in Lieu of Compensation...... 9
SECTION 9. DEFERRED COMPENSATION PROGRAM FOR DIRECTORS................. 10
(a) Deferral Election....................................... 10
(b) Stock Account........................................... 10
(c) Distribution from Accounts Upon Termination of Service
as a Director........................................... 10
(d) Distribution from Stock Account Prior to Termination of
Service as a Director................................... 10
(e) Payment of Plan Distributions........................... 11
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 10. PERFORMANCE SHARES AND PERFORMANCE UNITS.................... 11
(a) Nature of Performance Share Awards...................... 11
(b) Restrictions on Transfer................................ 11
(c) Rights as a Stockholder................................. 11
(d) Settlement of Awards.................................... 11
(e) Termination............................................. 11
(f) Acceleration, Waiver, Etc............................... 12
SECTION 11. DIVIDEND EQUIVALENT AND INTEREST RIGHTS..................... 12
(a) Dividend Equivalent Rights.............................. 12
(b) Interest Equivalents.................................... 12
SECTION 12. TAX WITHHOLDING............................................. 12
(a) Payment by Participant.................................. 12
(b) Payment in Stock........................................ 12
SECTION 13. TRANSFER, LEAVE OF ABSENCE, ETC............................. 13
SECTION 14. AMENDMENTS AND TERMINATION.................................. 13
SECTION 15. STATUS OF PLAN.............................................. 13
SECTION 16. CHANGE OF CONTROL PROVISIONS................................ 13
(a) Status of Awards........................................ 13
(b) Definition.............................................. 13
SECTION 17. NONTRANSFERABILITY OF AWARDS................................ 14
SECTION 18. GENERAL PROVISIONS.......................................... 15
(a) No Distribution; Compliance with Legal Requirements..... 15
(b) Delivery of Stock Certificates.......................... 15
(c) Other Compensation Arrangements; No Employment Rights,
etc..................................................... 15
(d) Indemnification......................................... 15
(e) Beneficiary Designation................................. 15
(f) Severability of Provisions.............................. 15
(g) No Impact On Benefits................................... 15
(h) Governing Law........................................... 15
(i) Effective Date.......................................... 15
</TABLE>
<PAGE> 29
GENTEK INC.
2000 LONG-TERM INCENTIVE PLAN
SECTION 1.
GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The name of the plan is GenTek Inc. 2000 Long-Term Incentive Plan (the
"Plan"). The purpose of the Plan is to encourage and enable the officers,
employees, Directors and other key persons of GenTek Inc. (the "Company") and
its Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" means with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the first Person, including but
not limited to a Subsidiary of the first Person, a Person of which the first
Person is a Subsidiary, or another Subsidiary of a Person of which the first
Person is also a Subsidiary.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Unit
Awards, Stock Awards, Performance Share Awards, Performance Unit Awards and
Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Board Service" means services rendered by a Participant in the
Participant's capacity as a Director.
"Cause" as such term relates to the termination of any Participant, means
the occurrence of one or more of the following: (i) the Participant is convicted
of, pleads guilty or nolo contendere to, or confesses to any felony or act of
fraud, misappropriation or embezzlement, (ii) the Participant engages in
fraudulent conduct or in other conduct or activities damaging to the property,
business or reputation of the Company or any Subsidiary, (iii) any act or
omission by the Participant involving malfeasance or negligence in the
performance of the Participant's duties to the Company or any Subsidiary and
which results in a detriment to the Company or any Subsidiary, (iv) failure by
the Participant to comply in any material respect with the terms of any written
policies or directives of the Company, (v) breach by the Participant of his
noncompetition agreement with the Company, if any, as determined by the Board in
good faith and in its sole discretion, or (vi) failure by the Participant to
comply in any material respect with the terms of the Participant's employment
agreement with the Company, if any, as determined by the Board in good faith and
in its sole discretion; provided, however that in the case of a Participant who
is a party to an employment agreement with the Company or a Subsidiary that
provides for a definition of "cause", "Cause" shall be determined under such
agreement.
"Change of Control" is defined in Section 16.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the committee of the Board referred to in Section 2.
"Deferral Election" means the election by a Director.
"Director" means a member of the Board, whether or not such member is an
officer or employee of the Company.
"Directors' Fees" means fees paid to a Director as compensation for Board
Service.
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"Disability" means a total disability within the meaning of an applicable
long-term disability plan maintained for the benefit of the Participant by the
Company or, if the Participant is not covered by such a long-term disability
plan, then as determined by the Committee.
"Dividend Equivalent Right" means Awards granted pursuant to Section 11.
"Effective Date" means the date on which the Plan is adopted by the Board.
"Fair Market Value" on any given date means the last reported sale price at
which Stock is traded on such date or, if no Stock is traded on such date, the
next preceding date on which Stock was traded, as reflected on the principal
stock exchange or, if applicable, any other national stock exchange on which the
Stock is traded or admitted to trading.
"Incentive Stock Option" means any Option designated and qualified as an
"incentive stock option" as defined in Section 422 of the Code.
"Non-Qualified Stock Option" means any Option that is not an Incentive
Stock Option.
"Option" means any option to purchase Stock granted pursuant to Section 5.
"Optionee" means a Participant who has been awarded an Option pursuant to
Section 5.
"Participant" means an officer, employee, Director or other key person of
the Company and its Subsidiaries who has received an Award under the Plan.
"Performance Shares" means Shares received by the Participant upon the
attainment of specified performance criteria established by the Committee.
"Performance Share Award" means an Award granting the Participant
Performance Shares pursuant to Section 10.
"Performance Unit" means a contractual right to receive Stock (or cash
based on the Fair Market Value of Stock) upon the attainment of specified
performance criteria established by the Committee.
"Performance Unit Award" means an Award granting the Participant
Performance Units pursuant to Section 10.
"Person" means any natural person, firm, partnership, limited liability
company, association, corporation, company, trust, business trust, governmental
authority or other entity.
"Restricted Stock" means Stock subject to such restrictions and conditions
as the Committee may determine at the time of grant.
"Restricted Stock Award" means an Award entitling the Participant to
acquire, at par value or such other purchase price determined by the Committee,
shares of Restricted Stock and which is granted pursuant to Section 7.
"Restricted Unit" means a contractual right to receive Stock, or cash based
on the Fair Market Value of Stock, that is forfeitable by the Participant until
the completion of a specified period of future service or until the attainment
of certain performance criteria established by the Committee.
"Restricted Unit Award" means an Award granting the Participant Restricted
Units pursuant to Section 7.
"Share" means a share of Stock.
"Stock" means the common stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Stock Account" means a memorandum account established in accordance with
Section 9(b) to record the deferral of Directors Fees, pursuant to a Deferred
Election described in Section 9(a).
"Stock Appreciation Right" means any Award granted pursuant to Section 6.
"Stock Award" means any Award granted pursuant to Section 8.
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"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the economic interest or the total combined voting power of all classes
of stock or other interests in one of the other corporations or entities in the
chain.
SECTION 2.
ADMINISTRATION OF PLAN: COMMITTEE AUTHORITY TO
SELECT PARTICIPANTS AND DETERMINE AWARD
(a) Committee. The Plan shall be administered by the Compensation Committee
of the Board, or any other committee so designated by the Board. The Committee
shall consist of two or more members, at least two of whom shall be
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Act and "outside directors" within the meaning of Section 162(m) of the Code
and the Treasury Regulations thereunder. In the absence of such a committee of
the Board designated to administer the Plan, the Plan shall be administered by
the Board. Where Rule 16(b)-3, as promulgated under the Act, would require
action to be taken by the Board, references herein to the Committee shall be
deemed to refer to the Board.
(b) Powers of Committee. The Committee shall have the power and authority
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers, employees, Directors and key persons of
the Company and its Subsidiaries to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Restricted Unit Awards, Stock Awards,
Performance Share Awards, Performance Unit Awards and Dividend Equivalent
Rights, or any combination of the foregoing to be granted to any one or
more Participants;
(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine which Directors may defer Board Fees pursuant to
Section 9, and the terms and conditions of such deferrals;
(v) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and Participants, and to approve the form of written instruments
evidencing the Awards;
(vi) to accelerate at any time the exercisability or vesting of all or
any portion of any Award;
(vii) subject to the provisions of Section 5(a)(iii), to extend at any
time the period during which Options may be exercised;
(viii) to determine at any time whether, to what extent, and under
what circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
Participant and whether and to what extent the Company shall pay or credit
amounts constituting interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals; and
(ix) at any time to adopt, alter and repeal such rules, guidelines and
practices for the administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
Any decision or action taken by the Board or the Committee, as the case may
be, arising out of or in connection with the construction, administration
interpretation and effect of the Plan and of its rules and regulations, or of
any Award, shall, to the fullest extent permitted by law, be within its sole and
absolute
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discretion and shall be conclusive and binding on the Company, any Subsidiary,
all Participants and any person claiming under or through any Participant.
(c) Delegation by the Committee. The Committee may delegate its authority
under the Plan; provided that the Committee shall in no event delegate its
authority with respect to the compensation of the Chief Executive Officer of the
Company, the four most highly compensated executive officers (as determined
under Section 162(m) of the Code and regulations thereunder) of the Company and
any other individual whose compensation the Board or Committee reasonably
believes may become subject to Section 162(m) of the Code.
(d) Limitations on Certain Awards. No Participant may be granted options or
Stock Appreciation Rights covering more than 1,000,000 shares of Stock in any
calendar year.
SECTION 3.
STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. Subject to Section 3(b), the number of shares of Stock
reserved and available for issuance under the Plan shall be 2,000,000 shares.
For purposes of this limitation, the shares of Stock underlying any Awards which
are forfeited, canceled, reacquired by the Company, satisfied without the
issuance of Stock or otherwise terminated (other than by exercise) shall be
added back to the shares of Stock available for issuance under the Plan. Subject
to such overall limitation, shares of Stock may be issued up to such maximum
number pursuant to any type or types of Award. The Shares available for issuance
under the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company. In the case of any Stock Appreciation Rights that are
granted in tandem with any Options, upon the exercise of a Stock Appreciation
Right settled in shares of Stock, the right to purchase an equal number of
shares of Stock covered by a related Option, shall be deemed to have been
surrendered and will no longer be exercisable, and said number of shares of
Stock shall no longer be available under the Plan.
(b) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization (including, but not limited to, an
extraordinary all-cash dividend), reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, such that
an adjustment is required to preserve, or prevent the enlargement of the rights
and obligations of the Participant, the Committee shall make an appropriate or
proportionate adjustment in (i) the maximum number of Shares reserved for
issuance under the Plan, (ii) the annual limitation described in Section 2(d)
hereunder, (iii); the number and kind of Shares or other securities subject to
any then outstanding Awards under the Plan, and (iv) the grant, exercise or
conversion price with respect to the foregoing. No fractional shares of Stock
shall be issued under the Plan resulting from any such adjustment, but the
Committee in its discretion may make a cash payment in lieu of fractional
Shares.
(c) Mergers. Upon consummation of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Stock are exchanged for securities, cash or other property of an unrelated
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company may, in its discretion, take any one or more of the following
actions, as to outstanding Options and Stock Appreciation Rights: (i) provide
that such Options shall be assumed or equivalent options shall be substituted,
by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to the Optionees, provide that all unexercised Options and Stock
Appreciation Rights will terminate immediately prior to the consummation of such
transaction unless exercised by the Optionee within a specified period following
the date of such notice, and/or (iii) in the event of a business combination
under the terms of which holders of the Stock of the Company will receive upon
consummation thereof a cash payment for each Share surrendered in the business
combination, make or provide for a cash payment to the Optionees equal to the
difference between (A) the value (as determined by the Committee) of the
consideration payable per share of Stock pursuant to the business combination
(the "Merger
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Price") times the number of shares of Stock subject to such outstanding Options
and Stock Appreciation Rights (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights in exchange for the
termination of such Options and Stock Appreciation Rights.
(d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4.
ELIGIBILITY
Each officer, Director, full or part-time employee or other key person
(including consultant or advisor) of the Company and its Subsidiaries who is or
may be responsible for or contribute to the management, growth or profitability
of the Company and its Subsidiaries, as are selected from time to time by the
Committee in its sole discretion, shall be eligible to participate in the Plan.
SECTION 5.
STOCK OPTIONS
Any Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after the tenth
anniversary of the Effective Date.
(a) Option Awards; Option Agreement. The Committee may grant Options to
purchase Stock and determine the number of Shares to be covered by each Option,
and the exercise price of each Option. Options granted pursuant to this Section
5(a) shall be evidenced by a written Option Agreement embodying the following
terms and such additional terms and conditions, not inconsistent with the terms
of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock covered
by an Option granted pursuant to this Section 5(a) shall be determined by
the Committee at the time of grant ("Grant Date") but shall not be less
than 100% of the Fair Market Value of a share of Stock on the Grant Date in
the case of Incentive Stock Options, or 50% of the Fair Market Value of a
share of Stock on the Grant Date, in the case of Non-Qualified Stock
Options. If Participant owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation and an Incentive Stock Option is
granted to such Participant, the exercise price of such Incentive Stock
Option shall be not less than 110% of the Fair Market Value of a share of
Stock on the Grant Date of such Incentive Stock Option.
(ii) Grant of Discount Options in Lieu of Cash Bonus. With the consent
of the Committee, a Participant may elect to receive Non-Qualified Options
in lieu of any cash bonus to which the Participant may become entitled
under any other plan or arrangement of the Company, provided that such
election may be made only with respect to a cash bonus that would otherwise
be paid during the calendar year following the calendar year in which the
election is made. Any such election must be made in accordance with the
terms and conditions determined by the Committee. The election shall be
made on or before the date set by the Committee, which date shall be no
later than 15 days (or such shorter period permitted by the
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Committee) preceding January 1 of the calendar year in which the cash bonus
would otherwise be paid. The number of shares of Stock subject to the
Options granted pursuant to a deferral election shall be determined by
dividing the amount of the waived cash bonus by the difference between the
Fair Market Value of the Stock on the date the Option is granted and the
exercise price per Option. The Option shall be granted for whole number of
Shares so determined; the value of any fractional share shall be paid in
cash.
(iii) Option Term. The term of each Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the Option is granted. If Participant owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such Participant, the term of such Option shall be no
more than five years from the date of grant.
(iv) Exercisability: Rights of a Stockholder. Options shall become
vested and exercisable at such time or times, and subject to such terms, as
the Committee shall specify in the applicable Option Agreement, provided
that an Option shall be exercisable during the life of the Participant only
by the Participant or his or her legal representative. The Committee may at
any time accelerate the exercisability of all or any portion of any Option.
An Optionee shall have the rights of a stockholder only as to Shares
acquired upon the exercise of an Option and not as to Options. To the
extent required for "incentive stock option" treatment under Section 422 of
the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the shares of Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its parent and
subsidiary corporations become exercisable for the first time by an
Optionee during any calendar year shall not exceed $100,000. To the extent
that any Option exceeds this limit, it shall constitute a Non-Qualified
Stock Option.
(v) Method of Exercise. Options may be exercised in whole or in part,
by giving written notice of exercise to the Company, specifying the number
of Shares to be purchased. Payment of the purchase price may be made by one
or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject to
restrictions under any plan and that have been held by the Optionee for
at least six months, if permitted by the Committee in its discretion.
Such surrendered shares shall be valued at Fair Market Value on the date
of exercise of the Option; or
(C) By the Optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the purchase price; provided that in the event the
Optionee chooses to pay the purchase price as so provided, the Optionee
and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee shall
prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The
delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of an Option will be contingent upon
receipt from the Optionee (or a purchaser acting in his stead in
accordance with the provisions of the Option) of the full exercise price
of such Options and the fulfillment of any other requirements contained
in the Option Agreement, the Plan or applicable provisions of laws.
(vi) Termination by Reason of Death. Except as otherwise determined by
the Committee at or following the Grant Date, any Option held by an
Optionee whose employment by (or Board Service or other business
relationship with) the Company and its Subsidiaries is terminated by reason
of death may thereafter be exercised by the legal representative or legatee
of the Optionee, to the extent it was exercisable on the date of death, (A)
for a period of 12 months from the date of the Optionee's death or (B) if
earlier, until the expiration of the stated term of the Option.
Notwithstanding the foregoing sentence, any Incentive Stock Option held by
an Optionee on the date of the Optionee's death may thereafter be exercised
by the legal representative or legatee of the Optionee to the extent it was
exercisable on the date of the Optionee's death, (A) for a period of up to
three months from the date of the Optionee's death or (B) if earlier, until
the
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expiration of the stated term of the Option. Except as otherwise determined
by the Committee at or after the Grant Date, to the extent that any portion
of any Option is not exercisable on the date of the Optionee's death, such
portion of the Option shall immediately terminate and be of no force or
effect.
(vii) Termination by Reason of Disability.
(A) Except as otherwise determined by the Committee at or after the
Grant Date, any Option held by an Optionee whose employment by (or Board
Service or other business relationship with) the Company and its
Subsidiaries is terminated by reason of Disability may thereafter be
exercised, to the extent it was exercisable on the date of termination
of employment (or Board Service or business relationship) (A) for a
period of 12 months from the date of such termination of employment (or
Board Service or other business relationship), or (B) if earlier, until
the expiration of the stated term of the Option. Except as otherwise
determined by the Committee at or after the Grant Date, to the extent
that any portion of an Option is not exercisable on the date of such
termination of employment (or Board Service or business relationship),
such portion of the Option shall immediately terminate and be of no
force or effect.
(B) Except as otherwise provided by the Committee at or after the
Grant Date, the death of an Optionee during the period provided in this
Section 5(a)(vii) for the exercise of an Option shall extend such period
for 12 months (3 months in the case of an Incentive Stock Option) from
the date of death, subject to earlier termination on the expiration of
the stated term of the Option.
(viii) Termination for Cause. If any Optionee's employment by (or
Board service or other business relationship with) the Company and its
Subsidiaries is terminated for Cause, any Option held by such Optionee,
including any Option that is immediately exercisable at the time of such
termination, shall immediately terminate and be of no further force and
effect; provided, however, that the Committee may, in its sole discretion,
provide that all or a portion of such Option can be exercised for a period
of up to 30 days from the date of termination of employment (or Board
Service or other business relationship), or until the expiration of the
stated term of the Option, if earlier.
(ix) Other Termination. Unless otherwise determined by the Committee,
if an Optionee's employment by (or Board Service or other business
relationship with) the Company and its Subsidiaries terminates for any
reason other than death, Disability or for Cause, any Option held by such
Optionee may thereafter be exercised to the extent it was exercisable on
the date of termination of employment (or Board service or other business
relationship), (A) for three months (or in the case of Non-Qualified Stock
Options, for such longer period as the Committee shall specify at any time)
from the date of termination of employment (or Board service or other
business relationship), or (B) if earlier, until the expiration of the
stated term of the Option. Except as otherwise determined by the Committee
at or after the Grant Date, to the extent that any portion of any Option is
not exercisable on the date of such termination of employment (or Board
Service or other business relationship), such portion of the Option shall
immediately terminate and be of no force or effect.
(b) Reload Options. At the discretion of the Committee, Options granted
under Section 5(a) may include a "reload" feature pursuant to which an Optionee
exercising an Option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(v)(B) hereunder would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Committee may provide) to purchase that number of shares of Stock equal to the
number stock delivered with respect to the exercise of the original Option.
(c) Share Deferral. Subject to the terms and conditions as the Committee
determines to be appropriate, a Participant may, by written notice filed with
the Committee, elect to defer receipt of the certificate or certificates for
Shares then purchased pursuant to the exercise of an Option.
(d) Form of Settlement. Shares of Stock issued upon exercise of an Option
shall be free of all restrictions under the Plan, except as otherwise provided
in the Plan.
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SECTION 6.
STOCK APPRECIATION RIGHTS
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
Award entitling the Participant to receive an amount in cash or shares of Stock
or a combination thereof having a value equal to (i) the excess of the Fair
Market Value of the Stock on the date of exercise over the base price per Stock
Appreciation Right set by the Committee at the time of grant, which base price
shall not be less than 50% of the Fair Market Value of the Stock on the date of
grant (or over the option price per Share, if the Stock Appreciation Right was
granted in tandem with an Option) multiplied by (ii) the number of shares of
Stock with respect to which the Stock Appreciation Right shall have been
exercised. The Committee having the right to determine the form of payment of
the Stock Appreciation Right.
(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation
Rights may be granted in tandem with, or independently of, any Option granted
pursuant to Section 5 of the Plan. In the case of a Stock Appreciation Right
granted in tandem with a Non-Qualified Stock Option, such Stock Appreciation
Right may be granted either at or after the time of the grant of such Option. In
the case of a Stock Appreciation Right granted in tandem with an Incentive Stock
Option, such Stock Appreciation Right may be granted only at the time of the
grant of such Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with an Option shall terminate and no longer be exercisable upon the termination
or exercise of the related Option.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related
Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with an Option shall
be transferable only when and to the extent that the underlying Option
would be transferable. Stock Appreciation Rights not granted in tandem with
Option shall not be transferable otherwise than by will or the laws of
descent or distribution.
SECTION 7.
RESTRICTED STOCK AND RESTRICTED UNITS
(a) Nature of Restricted Stock Awards and Restricted Unit Awards. The
Committee may grant Restricted Stock Awards or Restricted Unit Awards to any
Participant. The Committee shall have the power to determine (i) the number of
shares of Restricted Stock and the number of Restricted Units to be granted to
each Participant and (ii) the other terms and conditions of such Awards.
Restrictions and conditions applicable to Restricted Stock and Restricted Unit
Awards may be based on continued employment (or Board Service or other business
relationship) with the Company and its Subsidiaries and/or the achievement of
pre-established performance goals and objectives during the applicable
restriction period.
(b) Rights as a Stockholder. Any stock certificate issued in respect of
Restricted Stock shall be registered in the name of the Participant entitled to
the Restricted Stock. The Participant shall have the rights of a stockholder
with respect to the voting of the Restricted Stock and with respect to the
receipt of dividends, subject to such conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Committee shall
otherwise determine, certificates evidencing the Restricted Stock shall be
deposited by the Participant, together with a stock power endorsed in blank,
with the Company (or its designee). The number of Shares subject to a Restricted
Unit Award shall be recorded in the Company's records. A Participant shall not
have any of the rights of a stockholder with respect to the Stock underlying a
Restricted Unit Award.
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(c) Restrictions. Restricted Stock and Restricted Units may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award or the Restricted Unit Award. If a Participant's
employment (or Board Service or other business relationship) with the Company
and its Subsidiaries terminates for any reason whatsoever or if the conditions
specified by the Committee with respect to Restricted Stock are not satisfied
prior to the applicable restriction period or periods established by the
Committee, the Company shall have the right to repurchase Restricted Stock with
respect to which conditions have not lapsed at their issue price or other stated
or formula price from the Participant or the Participant's legal representative.
Alternatively, the Company may require a forfeiture of such Restricted Stock.
Similarly, if a Participant's employment (or Board Service or other business
relationship) with the Company and its Subsidiaries terminates for any reason
whatsoever or if the conditions specified by the Committee with respect to
Restricted Units are not satisfied prior to the applicable restriction period or
periods established by the Committee, the Committee may, in its discretion,
treat (i) a pro rata portion of the Restricted Unit Award as vested or (ii) the
entire Restricted Unit Award as forfeited. If the Committee chooses to treat a
pro-rata portion of the Restricted Unit Award as vested, such pro-rata portion
shall be determined by multiplying the number of Restricted Unit subject to the
Award by a fraction, the numerator of which is the number of days in the
restriction period that had elapsed prior to the termination of the
Participant's employment (or Board Service or other business relationship) and
the denominator of which is the number of days in the restriction period.
(d) Settlement of Awards. At the expiration of the applicable restriction
periods or upon the satisfaction of the conditions specified with respect to a
Restricted Stock Award, the Company (or its designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or, if
the Participant has died, to the beneficiary designated by the Participant to
receive amounts due or to exercise rights of the Participant in the event of the
Participant's death or, in the absence of an effective designation by the
Participant, the Participant's estate. Unless the Committee determines otherwise
at or after the date of grant, upon the expiration of the applicable restriction
period(s) or upon the satisfaction of the conditions specified with respect to a
Restricted Unit Award, the Participant (or the Participant's beneficiary or
estate) shall receive (i) one Share for each vested Restricted Unit (and any
additional Restricted Units credited in respect of Dividend Equivalents Awarded
under Section 11 or (ii) if the Committee so determines, the Committee may
direct the Company to pay to the Participant the Fair Market Value of such
Shares as of such payment date.
(e) Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Restricted Stock Award or the Restricted Unit Award may require
or permit the immediate payment, waiver, deferral or investment of dividends (if
any) paid on such Awards.
SECTION 8.
STOCK AWARDS
(a) Grant or Sale of Stock. The Committee may, in its sole discretion,
grant (or sell at a purchase price determined by the Committee) a Stock Award to
any Participant, pursuant to which such Participant may receive shares of Stock
free of any restrictions under the Plan. Stock Awards may, at the discretion of
the Committee, be granted or sold as described in the preceding sentence in
respect of past services or other valid consideration, or in lieu of any cash
compensation (including Directors' Fees) due to a Participant.
(b) Elections to Receive Stock in Lieu of Compensation. An election to
receive all or a portion of the cash compensation (including Directors' Fees)
otherwise payable to Participant in the form of shares of Stock must be made at
such times and in the manner determined by the Committee. The number of shares
of Stock to be received in lieu of cash compensation (including Director's Fees)
shall be determined by dividing (i) the amount of such cash compensation by (ii)
the Fair Market Value of a share of Stock on the date that the cash compensation
would have been paid.
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SECTION 9.
DEFERRED COMPENSATION PROGRAM FOR DIRECTORS
(a) Deferral Election. (i) On or before December 31 of any calendar year
ending within the term of the Plan, a Director may, by written notice filed with
the Secretary of the Company, elect to defer receipt of all or any part of any
Directors' Fees payable to such Director in respect of the calendar year
following the year in which such election is made, and to have such amounts
credited, in whole or in part, to a Stock Account, in accordance with Section
9(b) (such written notice, a "Deferral Election").
(ii) A Deferral Election shall continue in effect (including with respect
to Directors' Fees payable for subsequent calendar years) unless and until the
Director revokes or modifies such Deferral Election by written notice filed with
the Secretary of the Company. Any such revocation or modification of a Deferral
Election shall apply only with respect to the deferral of all or any part of any
Directors' Fees payable to such Director in respect of calendar years following
the year in which such revocation or modification is made, provided that such
revocation or modification shall in no event become effective earlier than six
months after it is received by the Secretary of the Company. Amounts credited to
the Director's Stock Account prior to the effective date of any such revocation
or modification of a Deferral Election shall not be affected by such revocation
or modification and shall be distributed only in accordance with the otherwise
applicable terms of the Plan. A Director who has revoked a Deferral Election may
file a new Deferral Election, provided that such Deferral Election shall be
effective no sooner than in the calendar year following the year in which such
Deferral Election is filed.
(b) Stock Account. Any Directors' Fees deferred pursuant to a Deferral
Election shall be deemed to be invested in a number of notional Shares of the
Company (the "Phantom Stock") equal to the quotient of (i) the amount of such
Directors' Fees divided by (ii) the Fair Market Value of a Share on the date the
Directors' Fees would have been payable. Whenever a dividend other than a
dividend payable in the form of Shares is declared with respect to the Shares,
the number of Phantom Stock in the Director's Stock Account shall be increased
by the number of Phantom Stock determined by dividing (i) the product of (A) the
number of Phantom Stock in the Director's Stock Account on the related dividend
record date and (B) the amount of any cash dividend declared by the Company on a
Share (or, in the case of any dividend distributable in property other than
Shares, the per Share value of such dividend, as determined by the Company for
purposes of income tax reporting) by (ii) the Fair Market Value of a Share on
the related dividend payment date. In the case of any dividend declared on
Shares which is payable in Shares, the Director's Stock Account shall be
increased by the number of Phantom Stock equal to the product of (i) the number
of Phantom Stock credited to the Director's Stock Account on the related
dividend record date and (ii) the number of Shares (including any fraction
thereof) distributable as a dividend on a Share. In the event of any change in
the number or kind of outstanding Shares by reason of any event described in
Section 3 affecting the Shares, other than a stock dividend as provided above,
the Board shall make an appropriate adjustment in the number of Phantom Stock
credited to the Director's Stock Account. Fractional Phantom Stock shall be
credited, but shall be rounded to the nearest hundredth of a Share.
(c) Distribution from Accounts Upon Termination of Service as a
Director. At the time a Director makes a Deferral Election pursuant to this
Section 9, the Director shall also file with the Committee a written election (a
"Distribution Election") with respect to whether (i) the value of any Phantom
Stock to be credited to the Stock Account shall be distributed wholly in cash,
in the greatest number of whole Shares (with any fractional interest payable in
cash) or a combination of cash and whole Shares, (ii) such distribution shall
commence immediately following the date the Director terminates his or her Board
Service or on the first business day of any calendar year following the calendar
year in which the Director terminates his or her Board Service and (iii) such
distribution shall be in one lump-sum payment or in such number of annual
installments (not to exceed ten) as the Director may designate. A Director may
at any time, and from time to time, change any Distribution Election applicable
to his or her Stock Account, provided that no election to change the timing of
any terminal distribution shall be effective unless it is made in writing and
received by the Secretary of the Company at least one full calendar year prior
to the time at which the Director terminates his or her Board Service.
(d) Distribution from Stock Account Prior to Termination of Service as a
Director. Any Director may, by filing a written election with the Committee,
elect to receive a distribution of all or any portion of the amounts credited to
the Director's Stock Account as of a date which is at least one full year after
the date as of which a
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Deferral Election is filed with the Secretary; provided that, any Director who
elects to receive a distribution pursuant to this Section 9(d) shall cease to be
eligible to make any additional deferrals under this Section 9 with respect to
fees payable in the two calendar years immediately following the year in which
such election is filed with the Secretary.
(e) Payment of Plan Distributions. Any distribution to be made hereunder,
whether in the form of a lump-sum payment or installments, following the
termination of an Director's Board Service shall commence in accordance with the
Distribution Election made by the Eligible Director in accordance with Section
9(c). If a Director fails to specify a form of payment or a commencement date
for a distribution in accordance with Section 9(c), such distribution shall be
made in cash and commence on the first business day of the calendar year
immediately following the year in which the Director terminates his or her Board
Service. If an Eligible Director fails to specify in accordance with Section
9(c) that a distribution shall be made in a lump-sum payment or a number of
installments, such distribution shall be made in a lump-sum payment. In the case
of any distribution being made in annual installments, each installment after
the first installment shall be paid on the first business day of each subsequent
calendar year until the entire amount subject to such installment Distribution
Election shall have been paid.
SECTION 10.
PERFORMANCE SHARES AND PERFORMANCE UNITS
(a) Nature of Performance Share Awards. The Committee may grant Performance
Share Awards or Performance Unit Awards to any Participant. The Committee may
make Performance Share Awards and Performance Unit Awards independent of or in
connection with the granting of any other Award under the Plan. Performance
Share Awards and Performance Unit Awards may be granted under the Plan to any
Participant, including those who qualify for awards under other performance
plans of the Company. The Committee in its sole discretion shall determine
whether and to whom Performance Share Awards and Performance Unit Awards shall
be made, the performance goals applicable under each such Award, the periods
during which performance is to be measured, and all other limitations and
conditions applicable to the Awards; provided, however, that the Committee may
rely on the performance goals and other standards applicable to other
performance unit plans of the Company in setting the standards for Performance
Share Awards and Performance Unit Awards.
(b) Restrictions on Transfer. Performance Share Awards, Performance Unit
Awards and all rights with respect to such Awards may not be sold, assigned,
transferred, pledged or otherwise encumbered.
(c) Rights as a Stockholder. A Participant receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the Participant under the Plan and not with respect to shares subject to the
Award but not actually received by the Participant. A Participant receiving a
Performance Unit Award shall not have any of the rights of a stockholder with
respect to the Stock underlying such Performance Unit Award.
(d) Settlement of Awards. A Participant shall be entitled to receive a
stock certificate evidencing the acquisition of shares of Stock underlying a
Performance Share Award only upon satisfaction of all conditions specified in
the written instrument evidencing the Performance Share Award (or in a
performance plan adopted by the Committee). Unless the Committee determines
otherwise at or after the date of grant, when a condition with respect to a
Performance Unit Award is satisfied lapses and the Performance Units become
vested and nonforfeitable, the Participant shall receive (i) one Share for each
such Performance Unit (including additional Performance Units credited in
respect of Dividend Equivalents awarded under Section 11) or (ii) if the
Committee so determines, the Committee may direct the Company to pay to the
Participant the Fair Market Value of such Shares as of such payment date. A
Participant shall not be entitled to receive shares or any payment in connection
with a Performance Unit Award if the conditions with respect to such Award have
not been satisfied during the applicable restriction period.
(e) Termination. Except as may otherwise be provided by the Committee at
any time prior to termination of employment (or Board Service other business
relationship), a Participant's rights in all Performance Share and
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Performance Unit Awards shall automatically terminate upon the Participant's
termination of employment (or Board service or other business relationship) with
the Company and its Subsidiaries for any reason whatsoever.
(f) Acceleration, Waiver, Etc. At any time prior to the Participant's
termination of employment (or Board service or other business relationship) by
the Company and its Subsidiaries, the Committee may in its sole discretion
accelerate, waive or, subject to Section 14, amend any or all of the goals,
restrictions or conditions imposed under any Performance Share or Performance
Unit Awards.
SECTION 11.
DIVIDEND EQUIVALENT AND INTEREST RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such Shares were held by the Participant. A
Dividend Equivalent Right may be granted hereunder to a Participant, as a
component of another Award or as a freestanding award. The terms and conditions
of Dividend Equivalent Rights shall be specified in the grant. Such grant may
specify that dividend equivalents credited to the holder of a Dividend
Equivalent Right may be paid currently or may be deemed to be reinvested in
additional shares of Stock, which may thereafter accrue additional equivalents.
Any such reinvestment shall be at Fair Market Value on the date of reinvestment
or such other price as may then apply under a dividend reinvestment plan
sponsored by the Company, if any. Dividend Equivalent Rights may be settled in
cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other award.
(b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
SECTION 12.
TAX WITHHOLDING
(a) Payment by Participant. Each Participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
hereunder first becomes includable in the gross income of the Participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Participant.
(b) Payment in Stock. Upon such terms and conditions as the Committee
determines appropriate, a Participant may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
Shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the Participant with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
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<PAGE> 41
SECTION 13.
TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment with respect to an officer or employee:
(a) a transfer to the employment of the Company from a Subsidiary or
Affiliate or from the Company to a Subsidiary or Affiliate, or from one
Subsidiary or Affiliate to another; or
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Committee otherwise so provides in writing.
SECTION 14.
AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Committee
may, at any time, amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan, but such
price, if any, must satisfy the requirements which would apply to the substitute
or amended Award if it were then initially granted under this Plan) for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Committee to be
required by the Act to ensure that Awards granted under the Plan are exempt
under Rule 16b-3 promulgated under the Act, or that Incentive Stock Options
granted under the Plan are qualified under Section 422 of the Code, Plan
amendments shall be subject to approval by the Company stockholders entitled to
vote at a meeting of stockholders.
SECTION 15.
STATUS OF PLAN
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
Participant, a Participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.
SECTION 16.
CHANGE OF CONTROL PROVISIONS
(a) Status of Awards. Upon the occurrence of a Change of Control as defined
in this Section 16: (i) each outstanding Stock Option and Stock Appreciation
Right shall automatically become fully exercisable; and (ii) each Restricted
Stock Award and Performance Share Award or other Award shall be subject to such
terms, if any, as have been provided by the Committee in connection with such
Award.
(b) Definition. "Change of Control" shall mean the occurrence of any one of
the following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Act (other than the Company, any of its Subsidiaries, any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries, or any
record or beneficial holder of any Class B Common Stock of the Company as
of the Effective Date or any descendant, other family member, beneficiary
or any affiliate thereof or any trust for the benefit of any of the
foregoing (collectively, the "Excluded Holders")), together with all
"affiliates" and "associates" (as such terms are defined in
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<PAGE> 42
Rule 12b-2 under the Act) of such person, shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing (A) 35% or more of
the combined voting power of the Company's then outstanding securities
having the right to vote in an election of a majority of the Company's
Board of Directors ("Voting Securities") (other than as a result of an
acquisition of securities directly from the Company), and (B) more of the
combined voting power of the Company's Voting Securities than is possessed
by the Voting Securities beneficially owned by the Excluded Holders; or
(ii) persons who, as of the Effective Date, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority
of the Board, provided that any person becoming a director of the Company
subsequent to the Effective Date whose election or nomination for election
was approved by a vote of at least a majority of the Incumbent Directors
shall, for purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where either the
stockholders of the Company, immediately prior to the consolidation or
merger, or the Excluded Holders would not, immediately after the
consolidation or merger, beneficially own (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, shares representing in the
aggregate a majority of the voting rights in respect of the capital stock
of the corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), (B) any sale,
lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of all
or substantially all of the assets of the Company, other than to an entity
in which, both or before and after such sale, lease, exchange or other
transfer, either the stockholders of the Company or the Excluded Holders
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing a majority of the voting rights
in respect of the capital stock of such entity or (C) any plan or proposal
for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases the
proportionate voting power represented by the Voting Securities beneficially
owned by any person to 35% or more of the combined voting power of all then
outstanding Voting Securities; provided, however, that if any person referred to
in the preceding clause of this sentence shall thereafter become the beneficial
owner of any additional shares of Stock or other Voting Securities (other than
pursuant to a stock split, stock dividend, or similar transaction), then a
"Change of Control" shall be deemed to have occurred for purposes of the
foregoing clause (i).
SECTION 17.
NONTRANSFERABILITY OF AWARDS
No Award shall be assignable or transferable except by will or the laws of
descent and distribution; provided that the Committee may permit (on such terms
and conditions as it shall establish) a Participant to transfer an Award for no
consideration to his or her child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Participant's household
(other than a tenant or employee), a trust in which these persons have more than
fifty percent of the beneficial interest, a foundation in which these persons
(or the Participant) control the management of assets, and any other entity in
which these persons (or the Participant) own more than fifty percent of the
voting interests ("Permitted Transferees"). Except to the extent required by
law, no right or interest of any Participant shall be subject to any lien,
obligation or liability of the Participant. All rights with respect to Awards
granted to an Participant under the Plan shall be exercisable during the
Participant's lifetime only by such Participant or, if applicable, his or her
Permitted Transferee(s). The rights of a Permitted Transferee shall be limited
to the rights conveyed to such Permitted Transferee, who shall be subject to and
bound by the terms of the agreement or agreements between the Participant and
the Company.
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<PAGE> 43
SECTION 18.
GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The Committee may
require each Participant acquiring Stock pursuant to an Award to represent to
and agree with the Company in writing that such Participant is acquiring the
Shares without a view to distribution thereof. No shares of Stock shall be
issued pursuant to an Award until all applicable securities law and other legal
and stock exchange or similar requirements have been satisfied. The Committee
may require the placing of such stop-orders and restrictive legends on
certificates for Stock and Awards as it deems appropriate.
(b) Delivery of Stock Certificates. Delivery of stock certificates to
Participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the Participant, at the
Participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights, etc. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any Participant any right to
continued employment or Board Service or to continue any other business
relationship with the Company or any Subsidiary.
(d) Indemnification. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be made a party or in which he may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him in settlement thereof, with the
Company's approval, or paid by him in satisfaction of any judgment in any such
action, suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive and shall be independent of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-laws, by contract, as a matter of law,
or otherwise.
(e) Beneficiary Designation. Each Participant under the Plan may from time
to time name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid or by whom any
right under the Plan is to be exercised in case of the Participant's death. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Company during the Participant's lifetime.
In the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to or exercised by the Participant's surviving
spouse, if any, or otherwise to or by his estate.
(f) Severability of Provisions. If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and this Plan shall be construed and enforced as if
such provision had not been included.
(g) No Impact On Benefits. Except as may otherwise be specifically stated
under any employee benefit plan, policy or program, no amount payable in respect
of any Award shall be treated as compensation for purposes of calculating a
Participant's right under any such plan, policy or program.
(h) Governing Law. This Plan shall be governed by Delaware law except to
the extent such law is preempted by federal law.
(i) Effective Date. This Plan shall become effective upon its approval by
the Company's stockholders.
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<PAGE> 44
GENTEK INC.
ANNUAL MEETING, MAY 9, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Messrs. Paul M. Montrone, Paul M. Meister, Richard R. Russell and Todd
M. DuChene, each with power of substitution, are hereby authorized to vote all
shares of common stock of GenTek Inc., which the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders of Gentek
Inc. to be held on Tuesday, May 9, 2000, and at any adjournments, as specified
on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE
REVERSE SIDE HEREON AND RETURN IT IN THE ENCLOSED ENVELOPE.)
FOLD AND DETACH HERE
<PAGE> 45
<TABLE>
<S> <C>
A VOTE FOR PROPOSALS 1, 2 AND 3 IS RECOMMENDED BY THE BOARD OF DIRECTORS. Please mark
your votes as [X]
indicated in
this example
1. Election of Directors with terms expiring at the Annual Meeting in 2001. 2. Ratify the appointment of Deloitte &
Touche LLP as independent auditors of
Nominees: Paul M. Montrone, Paul M. Meister, the Company for the current fiscal year.
John W. Gildea, Bruce L. Koepfgen,
Richard R. Russell, Scott M. Sperling FOR AGAINST ABSTAIN
and Ira Stepanian [ ] [ ] [ ]
FOR each Withhold Authority
nominee to vote for each (Instructions: To withhold authority to vote
listed. nominee listed. for any individual nominee, write the nominee's
[ ] [ ] name on the space provided below)
-----------------------------------------------
3. Approval and adoption of the 4. In their discretion, on such A MAJORITY (OR IF ONLY ONE, THEN THAT ONE)
Company's 2000 Long-Term other business as may properly OF THE ABOVE PERSONS OR THEIR SUBSTITUTES
Incentive Plan. come before the meeting. WHO SHALL BE PRESENT AND ACTING AT THE MEETING
SHALL HAVE THE POWERS CONFERRED HEREBY.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: , 2000
---------------------------------
---------------------------------------------
---------------------------------------------
Signature of Stockholder(s)--please sign name
exactly as imprinted (do not print). Please
indicate any change of address.
NOTE: Executors, administrators, trustees
and others signing in a representative
capacity should indicate the capacity in
which they sign. If shares are held jointly,
EACH holder should sign.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
</TABLE>
FOLD AND DETACH HERE
