<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Seiler Pollution Control System, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
555 METRO PLACE NORTH, SUITE 100
DUBLIN, OHIO U.S.A. 43017
October 10, 1997
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders,
which will be held in Columbus, Ohio, on Wednesday, November 12, 1997. By
attending the meeting, you will have an opportunity to hear a report on the
operations of your Company and to meet your directors and executives.
The enclosed notice of the meeting and proxy statement describe the matters
to be acted upon at the meeting, including the election of directors, approval
of amending the Company's certificate of incorporation to increase the number of
authorized shares of Common Stock from 25,000,000 to 35,000,000 shares,
ratification of the appointment of auditors, and transaction of such other
business as may properly come before the meeting.
Please read the proxy statement, then complete, sign and return your proxy
in the enclosed envelope. Your vote is important.
Sincerely,
/s/ Werner Heim
Werner Heim
Chairman of the Board and President
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
---------------------------------------------------------
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
---------------------------------------------------------
October 10, 1997
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that pursuant to the call by its Directors the regular
annual meeting of stockholders of Seiler Pollution Control Systems, Inc. will be
held at the Columbus Marriott North located at 6500 Doubletree Avenue, Columbus,
Ohio, on Wednesday, November 12, 1997, at 10:00 a.m., local time, for the
purpose of considering and voting upon the following matters.
1. Election of Directors. To elect the four nominees listed in the Proxy
Statement dated October 10, 1997, as directors.
2. Approval of amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 25,000,000
shares to 35,000,000 shares.
3. Ratification of the Board of Directors' action of the selection of
Schneider Downs & Co., Inc. as independent auditor for the fiscal year
ending March 31, 1998.
4. Transaction of such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
By order of the Board of Directors
/s/ Werner Heim
Werner Heim
Chairman of the Board and President
WE URGE YOU TO MARK, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO
ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY. ALSO, YOU MAY REVOKE YOUR
PROXY AT ANY TIME PRIOR TO THE MEETING BY SUBMITTING A LATER SIGNED PROXY OR
UPON WRITTEN NOTIFICATION TO THE PRESIDENT.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROXY STATEMENT
SEILER POLLUTION CONTROL SYSTEMS, INC.
555 Metro Place North, Suite 100
Dublin, Ohio U.S.A. 43017
This Proxy Statement is being furnished by Seiler Pollution Control
Systems, Inc. (the "Company"), a Delaware corporation, to its stockholders in
connection with the solicitation by the Board of Directors of proxies to be
voted at the Annual Meeting of Stockholders to be held at 10:00 a.m., local
time, on November 12, 1997, (the "Meeting"), at the Columbus Marriott North
located at 6500 Doubletree Avenue, Columbus, Ohio, and at any postponement or
adjournments thereof.
In the course of discussions in this Proxy Statement of recommendations and
solicitations of votes, the term "Management" refers to the Board of Directors
of the Company, unless otherwise required by the context.
The approximate date on which this Proxy Statement is first being sent or
given to stockholders is October 14, 1997.
A COPY OF FORM 10-K (ANNUAL REPORT) FOR THE FISCAL YEAR ENDED MARCH 31,
1997, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY
ACCOMPANIES THE PROXY STATEMENT.
Voting, Proxy Solicitation and Revocation
Your proxy is solicited by the Board of Directors of the Company for use at
the Meeting.
If the enclosed proxy is properly executed and returned prior to or at the
Meeting, and is not revoked prior to or at the Meeting, all shares represented
thereby will be voted at the Meeting as specified in the proxy by the persons
designated therein. If a signed proxy card is returned and the stockholder has
made no specifications with respect to voting matters, the shares will be voted
"FOR" the election of the nominees as directors and "FOR" ratification of the
auditor. Abstentions and broker non-votes are counted only for purposes of
determining whether a quorum is present at the Meeting, but will not be
considered as votes cast with respect to any matter as to which the abstention
or non-vote is indicated. The solicitation of proxies will be by mail, but
proxies may also be solicited by telephone, telegraph or in person by officers
and other employees of the Company. The entire cost of this solicitation will
be borne by the Company. Should the Company, in order to solicit proxies,
request the assistance of banks, brokerage houses and other custodians, nominees
or fiduciaries, the Company will reimburse such persons for their reasonable
expenses in forwarding the proxies and proxy material to the beneficial owners
of such shares. A stockholder may revoke his proxy by a later proxy or by
delivery of notice of revocation to the President, in writing, at any time prior
to the date and time of meeting or in open meeting. Attendance at the Meeting
will not in and of itself revoke a proxy.
<PAGE>
Shares Entitled to Vote
The Board of Directors has fixed the close of business on October 7, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting. At the close of business on such date, there were
outstanding and entitled to vote at the Meeting 21,147,188 shares of Common
Stock, par value $.0001 per share. Each outstanding share is entitled to one
vote at the Meeting for all items set forth in the Notice. Cumulative voting
for the nominees for director is not permitted.
Principal Beneficial Owners of Common Stock
As of the October 7, 1997, record date, the following person was the only
person or group of persons known to the Company to be the beneficial owner of
more than five percent of the Company's common stock. Such person has
beneficial ownership of the shares and has sole voting power and sole investment
power with respect to the number of shares beneficially owned.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class (1)
- ------------------ ------------------------- ----------------
<S> <C> <C>
PTI Management AG (2)
Witikoenstrasse 311B 1,450,000 6.8%
CH-8053
Zurich, Switzerland
- ---------------------------
</TABLE>
(1) On the basis of 21,147,188 shares outstanding on October 7, 1997, the
record date.
(2) PTI Management AG is a Swiss corporation whose shares are issued solely in
bearer name. Werner Heim, Chairman of the Company's Board of Directors and
President of the Company, is a "control" person of PTI Management AG, but
he disclaims beneficial ownership of any such shares.
In addition, the only other record holder known by the Company to hold more
than five percent of the Company's Common Stock is Cede & Co., P.O. Box 20,
Bowling Green Station, New York, New York 10004. As of the record date Cede &
Co. held a total of 19,009,371 shares of the Company's Common Stock, which
represented 89.9 % of the total number of shares outstanding. Cede & Co. is a
nominee of the Depository Trust Company, which held such shares of record on
behalf of various of its customers. The names of the beneficial owners of the
shares held by those stockholders are unknown to Management.
<PAGE>
PROPOSAL NUMBER 1
Election of Directors
The Directors are elected annually by the stockholders of the Company. The
Certificate of Incorporation of the Company provides that the number of
Directors authorized to serve until the next annual meeting of stockholders
shall be the number established in the Company's Bylaws. The Bylaws provide
that the Board of Directors by resolution shall fix the number of directors. In
accordance with the Bylaws, the Board has fixed the number of directors at four.
In accordance therewith, a total of four persons have been designated by the
Board as nominees for election at the Meeting and are being presented to the
stockholders for election. The directors to be elected at the Meeting shall be
determined by a plurality vote of the shares represented in person or by proxy
and entitled to vote at the Meeting.
The Bylaws of the Company permit the Board of Directors by a majority
vote, between annual meetings of the stockholders, to increase the number of
directors and to appoint qualified persons to fill the vacancies created
thereby.
The persons named below are being proposed as nominees for election as
directors for the term expiring at the next annual meeting to be held in 1998,
and until their successors are elected and qualify. Each person is currently a
director of the Company. The persons named in the enclosed proxy intend to vote
for such nominees for election as directors, but if the nominees should be
unable to serve, proxies will be voted for such substitute nominees as shall be
designated by the Board of Directors to replace such nominees. It is believed
that each nominee will be available for election. The names of the nominees for
election and certain information as to each of them are as follows:
<PAGE>
<TABLE>
<CAPTION>
Name Date of Principal Occupation During Director Number of Percent of
Birth Past Five Years and Other Since Common Shares
Directorships (a) Shares Outstanding
Beneficially Owned on
10/7/97 (b)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Werner 10/6/33 Chairman of the Company 1993 405,500 (1) 1.9%
Heim (c) since June 1993, President
since March 1995, and
Secretary from 1994 until
May 1996; president of SEPC
AG, a subsidiary of the
Company, since its inception
in November 1993; from
1991 to 1993, he served as
industrial consultant/business
development for (a)
Clearwater Ltd., a firm
engaged in a biological clean-
up of oil spills, (b) Seiler
SHT, a firm engaged in high
temperature waste
vitrification, (c) Set AG, a
firm specializing in
insulating, security, and high
temperature glass production,
and (d) Odessa, Inc., a firm
engaged in food production
and distribution in Odessa,
Ukraine; from 1988 to 1991
Mr. Heim served as chairman
of Biopore, Ltd., a U.S. based
company then engaged in a
joint venture with the French
government and others with
respect to microfiltration
research and development.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name Date of Principal Occupation During Director Number of Percent of
Birth Past Five Years and Other Since Common Shares
Directorships (a) Shares Outstanding
Beneficially Owned on
10/7/97 (b)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Niklaus 7/23/37 Vice President-Systems 1994 300,000 (1) 1.4%
Seiler Research Development of the
Company since January 1996;
president and chief executive
officer of Seiler Patent AG
since 1995, a company
engaged in vitrification
systems development and
operations for waste
processing. Mr. Seiler has
also been associated with (a)
Seiler HT AG, founder (since
1993) director and president
engaged in the manufacture,
fabrication, and engineering
of high temperature
vitrification systems, (b)
N&H Seiler Pumpenbau,
founder (1974-1993),
engaged in the manufacture,
fabrication, and engineering
of pumps, and (c) Seiler
Montageunternehmon,
founder (1969-1974),
engaged in the fabrication
business. Mr. Seiler is the
holder of the Swiss patent for
the High Temperature
Vitrification System, which is
the basis for the Company's
proprietary system. Mr. Seiler
owns 52% of the stock of
Seiler HT AG.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name Date of Principal Occupation During Director Number of Percent of
Birth Past Five Years and Other Since Common Shares
Directorships (a) Shares Outstanding
Beneficially Owned on
10/7/97 (b)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alan B. 2/20/48 Vice President-North 1995 300,000 (1) 1.4%
Sarko American Operations of the
Company since March 1995;
Secretary, Treasurer, and
Chief Financial Officer since
May 1996; from February
1994 until March 1995, Mr.
Sarko was employed by the
Company as director of
marketing and environmental
affairs. Prior thereto from June
1984 to February 1994 Mr.
Sarko served as director of
marketing and environmental
compliance for Inorganic
Recycling Corporation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name Date of Principal Occupation During Director Number of Percent of
Birth Past Five Years and Other Since Common Shares
Directorships (a) Shares Outstanding
Beneficially Owned on
10/7/97 (b)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dr. Gerold 1/12/45 Vice President-European - 200,000 (1) .9%
Weser Operations of the Company
since January 1996; elected to
Board of Directors
May 20, 1997; president of
STSB GmbH. From 1993 until
joining Seiler, Dr. Weser was
Chief Executive Officer and
Administrator of Dr. Weser &
partner, an environmental
consulting company; from
1990 until 1993, Dr. Weser
served as Managing
Director of Centralsug,
Hamburg/Stockholm, Sweden,
an environmental treatment
and service company.
From 1978 to 1990, Dr. Weser
worked for various
environmental management,
processing, handling and
recycling companies. Dr. Weser
owns 10% of the stock of Seiler TSB.
</TABLE>
(a) The business experience of each director during the past five years was
that typical to a person engaged in the principal occupation listed for
each.
(b) The information under this caption regarding ownership of securities is
based upon statements by the individual nominees, directors, and officers.
(c) PTI Management AG, of which Mr. Heim is a "control" person, owns 1,450,000
shares or approximately 6.8 % of the Company's outstanding common stock. Mr.
Heim disclaims beneficial ownership of any such shares.
(1) Except for 105,500 shares owned by Mr. Heim, represents shares under
option from the Company's stock option plan which are exercisable within
sixty days.
All directors and executive officers as a group beneficially owned 1,205,500
shares (except for shares owned by Mr. Heim, all in the form of stock options)
as of October 7, 1997, which represented 5.7 % of total shares outstanding,
including options exercisable within sixty days.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Directors, executive officers, and any beneficial owner of more than 10% of a
company's stock must, under Section 16(a) of the Securities Exchange Act of
1934, file certain periodic reports of changes in beneficial ownership of
Company securities. The Company endeavors to assist directors and executive
officers in filing the required reports. To the Company's knowledge, all filing
requirements under the Securities Exchange Act during the fiscal year ended
March 31, 1997 were satisfied.
Board Meetings and Committees of the Board
During the fiscal year that ended March 31, 1997, there were four meetings of
the Board of Directors. Each incumbent director attended at least 75% of the
meetings of the Board. The Company has no standing audit, nominating, and
compensation committees. The Board of Directors performs all of the functions
that might otherwise be performed by such committees.
Compensation of Directors and Officers
Board of Directors Fees
For the fiscal year ended March 31, 1997, members of the Board of Directors
did not receive any fees for attending meetings of the Board of Directors. The
Company's policy is to reimburse Board members for their expenses incurred to
attend Board meetings. Officers of the Company, who are also Directors, do not
receive any fees.
Executive Compensation
The following table sets forth information concerning the chief executive
officer of the Company and the Company's executive officers whose total annual
salary and bonus exceeded $100,000 for the fiscal year ended March 31, 1997.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Long Term
Compensation Awards
-------------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year (1) Salary Compensation (6) Options (#) Compensation (7)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Werner Heim, Chairman, CEO, 1997 $150,000 - - -
President (2) 1996 150,000 - 300,000 -
1995 121,002 - - -
Alan B. Sarko, Vice President, 1997 150,000 - - 7,500
Secretary (3) 1996 105,000 - 200,000 5,250
Niklaus Seiler, Vice President (4) 1997 150,000 - - -
Gerold Weser, Vice President (5) 1997 150,000 - - -
</TABLE>
- -------------------------------
(1) For the fiscal year ended March 31 of the year listed below.
(2) Became an executive officer in August 1994.
(3) Became an executive officer in March 1995.
(4) Became an executive officer in January 1996.
(5) Became an executive officer in June 1996.
(6) Individual amounts are not material.
(7) Pension benefits.
Option Grants Information
There were no option grants made during the fiscal year ended March 31,
1997, to any executive officer named in the Summary Compensation Table above.
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table presents information concerning the exercise of stock
options during the fiscal year ended March 31, 1997 by each executive officer
named in the Summary Compensation Table above, and the value at March 31, 1997,
of unexercised options. Value of unexercised, in-the-money options at fiscal
year-end is the difference between their exercise prices and the fair market
value of the underlying stock on March 31, 1997, which was $3.15625 per share.
These values, unlike the amounts set forth in the column headed "Value
Realized," have not been realized at the date of this proxy statement and may
never be realized. The underlying options have not been exercised at the date
of this proxy statement and may never be exercised; and actual gains, if any, on
exercise will depend on the value of Seiler Common Stock on the date of
exercise. There can be no assurance that these values will be realized.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End (2)
---------------------------------------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized (1) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Werner Heim - - $300,000/-0- $316,875/-0-
Alan B. Sarko - - 300,000/-0- 398,875/-0-
Gerold Weser - - 200,000/-0- 211,250/-0-
Niklaus Seiler - - 300,000/-0- 361,875/-0-
</TABLE>
- ---------------
(1) Represents the difference between the fair market value of the securities
underlying the options and the exercise price of the options on the date of
exercise.
(2) Represents the difference between the fair market value of the securities
underlying the options and the exercise price of the options at March 31,
1997. The average of the high and low trading prices on March 31, 1997 was
$3.15625.
Retirement Plan
On January 1, 1994 the Company adopted a Simplified Employee Pension Plan
("SEP") for the benefit of eligible employees. The SEP enables the employees to
contribute up to a maximum of 10% of base salary through salary reduction and
requires the Company to make a contribution equal to 5% of the employee's base
salary. See the Summary Compensation Table above for amounts contributed by the
Company to officers of the Company under the SEP.
<PAGE>
Employment Contracts, Termination of Employment, and Change in Control
Agreements
On June 29, 1996 the Company entered into five-year employment agreements
with Messrs. Heim, Sarko, Seiler, and Weser. The agreements are effective as of
January 1, 1996 and terminate on January 1, 2001. Each of the officers will be
compensated at a base salary of $150,000 per year. The agreements provide for
the base salary to be increased on an annual basis equal to the greater of 5% or
the annual inflation percentage of the consumer price index. Each agreement
includes a bonus feature whereby each respective executive officer will receive
a cash bonus based upon the Company's annual operating profit, as defined,
ranging from 1% if such operating profit is between $3 million and $5 million to
.25% if the operating profit is more than $50 million. The agreements also
provide change-in-control, confidentiality, and covenant-not-to-compete
provisions.
The change-in-control provisions with each of the Company's executive
officers provide in general that, in the event that the Company is acquired by
another company or any of certain other changes in control of the Company should
occur and results in the executive officer's employment with the Company being
terminated without cause or his salary being reduced or his duties or
responsibilities being changed (except by promotion), he will be entitled to
receive severance pay equal to three times a base amount. An executive's "base
amount" for these purposes is his annual compensation includible in his gross
income for federal income tax purposes, as of the date of termination or as of
the date immediately preceding the change in control, whichever is higher and
will include his base salary, non-deferred amounts under annual incentive
benefits, long-term performance benefits, profit sharing plan benefits,
retirement plan benefits, stock option plan benefits, the value of all
perquisites, and the value of distributions for all previously deferred amounts
for such executive under any benefit plan during the term of the agreement.
Compensation Committee Interlocks and Insider Participation
The Company has no compensation committee; rather the Company's Board of
Directors performs the functions that would otherwise be performed by a
compensation committee. Mr. Heim, chairman of the board and president of the
Company, Mr. Sarko, vice president, secretary, treasurer and chief financial
officer of the Company, and Mr. Seiler, vice president of the Company, serve on
the Company's Board of Directors. Dr. Weser, Vice President, will serve on the
compensation committee when his nomination to the Board of Directors is
ratified. As members of the Company's Board of Directors and in view of the
fact that the Company does not have a compensation committee, Messrs. Heim,
Sarko, and Seiler currently participate and Dr. Weser, in the future, will
participate in deliberations concerning executive officer compensation.
PTI Management AG, a principal stockholder of the Company and a firm in
which Mr. Heim is a control person, has from time to time loaned the Company
sums of money on an interest-free basis. The principal sum due and outstanding,
as of March 31, 1997 was $89,085. These monies are due and payable December 31,
1997. Mr. Heim has loaned the Company, as of March 31, 1997 the sum of $824,542
on an interest-free basis with the understanding that such amounts are to be
repaid on a mutually agreeable future date. The Company has paid during the
year ended March 31, 1997 to its sole supplier, Seiler HT AG, a total of
$2,340,314 toward the purchase of its initial High Temperature Vitrification
System. Seiler HT on behalf of the Company constructs System plants, tests the
System, and performs research and development services on an ongoing basis. Mr.
Seiler is the founder and a director of Seiler HT AG.
<PAGE>
Compensation Committee Report on Executive Compensation
Since the Company does not have a compensation committee, the Board of
Directors performs all functions regarding the determination, establishment, and
administration of the Company's compensation and benefits policies. In this
regard the Board establishes the nature and extent of executive compensation,
including the terms and conditions of employment agreements with executives and
the Company's executive bonus program, awards stock options, and determines the
terms of the CEO's and other executive officers' employment. The Company's
executive compensation program is designed to motivate, reward, and retain the
management talent needed to achieve its business objectives. Recognizing that
the Company is in the early stages of its operations, with such limitations as
its business operations have therefore imposed, the Board has focused more on
offering a greater degree of incentive compensation to the officers for their
accomplishment of Company objectives. The Board has designed a total
compensation package that includes a base salary, an annual incentive plan, and
competitive base salaries that recognize a philosophy of promoting executive
stability and career continuity. Compensation decisions for all executives,
including the chief executive officer and the other named executives, are based
on the same criteria.
The Company's executive compensation program is comprised of both fixed
(base salary) and variable (incentive) compensation elements. Variable
compensation consists of annual cash incentives and stock option grants.
Management of the Company believes that variable compensation should be based
both on short-term and long-term measurements and be directly and visibly tied
to Company performance, thereby introducing substantial risk and reward elements
with respect to the particular executive in the payout level of the incentive
plan. It is expected that total compensation will vary annually, based on
Company and individual performance.
Base Salary. A competitive base salary is vital to support the philosophy
------------
of management development and career orientation of executives and is consistent
with the long-term nature of the Company's business. In recognizing the early
development of the Company's operations and its modest financial resources, the
Company has based its compensation criteria for its chief executive officer on
the Company's subjective evaluation of the CEO's performance. In this regard,
the Company paid Mr. Heim, its chief executive officer, the amounts it believed
it could afford during fiscal years ended March 31, 1994 and 1995 while at the
same time taking into account the level of compensation expressed by Mr. Heim in
his discussions with the Company. The Company raised Mr. Heim's salary for each
of the fiscal years ended March 31, 1995 and 1996 in recognition of his efforts
in establishing the Company's operations in the U.S. and in enhancing the
Company's operations in Europe, and noted especially his start-up efforts
regarding the operations in Germany. On June 29, 1996 the Company entered into
five-year employment agreements with Messrs. Heim, Sarko, Seiler, and Weser.
The base salaries established in the employment agreements were determined as a
result of Board consideration of the various employment and business objectives
referred to above and in direct negotiations between the Company and the
respective executive. The salaries of each executive, including that of the
chief executive officer, were determined based upon the competitive salary
framework referred to above while taking into account the Company's financial
condition and capital resources and Management's desire to place more emphasis
at the present time upon offering greater performance incentives. The salaries
of the chief executive officer and the other executive officers were based upon
the Board's judgment concerning the Company's financial resources and the chief
executive officer's and the other executive officers' individual contributions
to the Company's business, Board expectation of each officer's
<PAGE>
successful achievement of Company goals, their respective levels of
responsibility, and career experience. Although none of these factors has a
specific weight, primary consideration was given to the Company's finances and
the respective officer's, including the chief executive officer's, individual
contributions to the Company's business. No particular formulas or measures were
used.
Bonus Incentive Program. A major feature of the respective employment
-----------------------
agreements of the Company's executive officers is the bonus incentive program.
Short-term awards to executives are granted in cash as bonuses. The bonus
provisions in the executives' employment agreements have established objective
business performance criteria, that being the Company's annual operating profit,
as defined in the agreements. In establishing these criteria, the Board
considered the present condition and future prospects of the Company's business
and its operational objectives and goals. The specific bonus opportunity is
dependent upon the Company's achievement of its operational goals, which will
reflect the individual performance of each executive officer and the
accomplishment of each such officer's individual goals and responsibilities.
Assessment of an individual's relative performance is made annually. Upon the
accomplishment of such goals, the named officer would be entitled to receive
cash payments. This bonus feature was negotiated by the parties and the Board
as a part of their respective plenary compensation packages.
Stock Option Plan. The Board believes that stock ownership by the
-----------------
Company's executive officers will develop a commonality of interest between the
executive officers and the Company's stockholders. Stock options have been the
primary long-term incentive vehicle granted to the Company's executive officers.
The Board believes that a significant portion of the Company's executive
officers' compensation should be dependent upon value created for the
stockholders. Options are an excellent method to accomplish this by tying the
executives' interests directly to the stockholders' interests. The number of
options that the Board grants is based upon individual performance and level of
responsibility.
In order to provide long-term incentives to key employees, including
executive officers, to encourage stock ownership by key officers, and to retain
and motivate key officers to further stockholder returns, the Company has
adopted a stock option program. Management believes that stock options, which
provide value to participants only when the Company's stockholders benefit from
stock price appreciation, are an important part of the Company's executive
compensation program. The number of options held by an officer at any
particular time is not a factor in determining individual grants. With respect
to the options granted to Mr. Heim and the other executive officers, the Board
chose to award a substantially large number of options that would afford the
executive officers a strong long-term incentive to advance the interests and
profitability of the Company, thereby creating additional stockholder value
resulting from the appreciation of the Company's stock, and to become
significant owners of the Company. Options are granted at no less than 85% of
the fair market value of the Company's stock at the time of grant. Management
believes that the market price of the Company's stock will reflect the Company's
operational performance. Since an option gives the officer only the right to
purchase the option shares at a fixed price over a future period, the
compensation value is derived by the incentive to increase stockholder value in
the future, hence the motivation to improve the Company's performance. The
Board's long-term incentive awards reflect the Board's judgment of the
respective executive's overall contribution as an officer. In making this
determination, the Board considered the complex and long-term nature of the
Company's business. Narrow quantitative measures are not viewed as sufficiently
comprehensive for this purpose.
<PAGE>
Werner Heim
Alan Sarko
Niklaus Seiler
Gerold Weser
Members of the Board of Directors
Performance Graph
The following graph compares the cumulative total shareholder return (i.e.,
market price change of the stock and reinvestment of cash dividends, although
the Company has never paid a cash dividend) on the Company's common Stock
against the cumulative total return of the NASDAQ Stock Market (US Companies)
Index and the NASDAQ Stock Market (Non-Financial Companies) Index. The stock
performance graphs assume that $100 was invested on December 31, 1993. The
Company's stock was registered under the Securities Exchange Act of 1934 on
December 8, 1993. The Company received approval on January 31, 1994 for the
listing of its Common Stock on the NASDAQ SmallCap Market. Prior thereto, its
Common Stock was traded in the over-the-counter market and its stock prices were
reflected in the National Quotation Data Service ("pink sheets") and in the
Electronic Over-the-Counter Bulletin Board. The graph further assumes the
reinvestment of dividends into additional shares of the same class of equity
securities at the frequency with which dividends are paid on such securities
during the relevant fiscal year. In view of the relatively short period of time
the Company's stock has been registered under the Securities Exchange Act of
1934, the following graph is plotted on a semiannual basis from December 31,
1993 through June 30, 1997 as marked on the horizontal axis. Each of the
referenced indices is calculated in the same manner. Both are market-
capitalization-weighted indices, so companies judged by the market to be more
important (i.e., more valuable) count for more in both indices. The graph is
presented in accordance with SEC requirements. Stockholders are cautioned
against drawing any conclusions from the data contained therein, as past results
are not necessarily indicative of future performance. The indices are included
for comparative purposes only and do not necessarily reflect management's
opinion that such indices are an appropriate measure of performance of Seiler
Common Stock.
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG SEILER POLLUTION
CONTROL SYSTEMS, INC., THE INDEX FOR NASDAQ NON-FINANCIAL
STOCKS, AND THE NASDAQ STOCK MARKET (US COMPANIES) INDEX.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Company/Index 12/31/93 6/30/94 12/31/94 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seiler 100.00 42.26 56.00 57.04 35.83 97.91 52.17 43.48
Nasdaq (U.S.) 100.00 91.32 97.75 121.89 138.24 156.50 170.03 190.32
Nasdaq (Non-Fin) 100.00 87.79 96.16 120.62 134.01 153.16 162.86 180.07
</TABLE>
Stock Option Plans
The Board of Directors has adopted non-statutory stock option plans (the
1993 Non-Statutory Stock Option Plan, the 1994 Non-Statutory Stock Option Plan,
the 1995 Non-Statutory Stock Option Plan and the 1996 Non-Statutory Stock Option
Plan) and has reserved 1,000,000, 500,000 1,000,000 and 2,000,000 shares under
the plans, respectively, for issuance to key employees, directors, advisors, and
consultants. Options are nontransferable and are exercisable during a term of
not more than ten years from the date of grant. The options are issuable in
such amounts, at such prices and upon such terms and conditions as determined by
the Board of Directors, except that the option price of each grant may not be
less than 85% percent of the fair market value of such shares on the date of
grant. As of the record date, all options under the 1993 plan except 72,000
have been granted. A total of 425,000 options has been granted pursuant to the
1994 plan including 100,000 to Mr. Heim and 100,000 to Mr. Sarko; all of the
options have been granted under the 1995 plan, including 300,000 options to Mr.
Seiler, and 200,000 options to each of Messrs. Heim, Sarko, and Weser; and
total of 690,000 options have been granted pursuant to the 1996 Plan, none to
key employees of the Company. See the Summary Compensation Table and the
accompanying stock option tables presented above.
<PAGE>
Related Party Transactions
PTI Management AG, a principal stockholder of the Company and a firm in
which Mr. Heim, the Company's Chairman of the Board of Directors and President,
is a control person, has from time loaned the Company sums of money on an
interest-free basis. The principal sum due and outstanding, as of March 31,
1997 was $89,085. These monies are due and payable December 31, 1997.
Additionally, Mr. Heim has individually loaned funds to the Company; as of
March 31, 1997 the sum of $824,542 was outstanding on an interest-free basis
with the understanding that the loan is to be repaid to Mr. Heim on a future
mutually agreeable date.
The Company has paid during the year ended March 31, 1997 to its supplier,
Seiler HT AG, a total of $10,518,246 toward the purchase of its initial High
Temperature Vitrification System. Seiler HT on behalf of the Company constructs
System plants, tests the System, and performs research and development services
on an ongoing basis. Mr. Niklaus Seiler, a vice president and director of the
Company, is the founder, director and president of Seiler HT AG and holds 52% of
the stock of that company.
PROPOSAL NUMBER 2
Proposal to Increase Authorized Common Stock
The Board of Directors has approved, and recommends that the Company's
shareholders adopt, the proposal to amend the Company's Certificate of
Incorporation ("Certificate") to increase the number of authorized shares of the
Company's Common Stock from 25,000,000 shares to 35,000,000 shares. Article
FOURTH of the Certificate as amended is set forth below. The Board of Directors
has directed that the amendment to the Certificate be submitted to the
shareholders for their consideration at the Meeting.
It is the Company's intention to finance its operations through, among
other things, the issuance from time to time of equity securities and to
consider the issuance of additional shares of Company Common Stock for other
corporate purposes. These purposes may include stock dividends, stock splits,
retirement of indebtedness, employee benefit programs, corporate business
combinations, acquisitions of property, funding of product programs or
businesses, or other corporate purposes. Accordingly, the continued
availability of shares of Common Stock is necessary to provide the Company with
the flexibility to take advantage of opportunities in such situations. There
are at present no plans, understandings, agreements, or arrangements concerning
the issuance of additional shares of Common Stock. The Company's Board believes
that the proposed increase in the number of authorized shares of Company Common
Stock will provide flexibility needed to meet the corporate objectives and is in
the best interests of the Company and its shareholders.
The Board does not intend to issue any stock except on terms or for
reasons, which the Board deems to be in the best interests of the Company.
Authorized but unissued shares of Common Stock may be issued from time to time
to such persons and for such consideration as the Board may determine. Holders
of the then outstanding shares of Company Common Stock may or may not be given
the opportunity to vote upon any such issuance, depending upon the nature of any
such transaction, applicable law, the rules and policies of applicable stock
exchanges, and the judgment of the Company's Board of Directors regarding the
submission thereof to the Seiler shareholders. Shareholders generally will have
no preemptive rights to subscribe to newly issued shares.
<PAGE>
The Company's Certificate currently authorizes the issuance of up to
25,000,000 shares of Common Stock. As of June 30, 1997, the Company had
21,142,108 shares of Common Stock outstanding. In addition, as of the same
date, approximately 1,915,000 shares were reserved for future issuance under the
Company's various stock option plans. The additional shares of Common Stock for
which authorization is sought would be part of the existing class of Common
Stock and, if and when issued, would have the same rights and privileges as the
shares of Common Stock presently outstanding.
If the proposal is adopted, Article FOURTH of the Company's Certificate, as
amended, will be further amended to read as follows:
FOURTH. The total number of shares of stock which the Corporation
shall have authority to issue is Thirty-five Million (35,000,000). The par
value of each of said shares is $.0001. All such shares are of one voting
class and are shares of common stock without cumulative voting rights and
without preemptive rights.
The Board of Directors unanimously recommends a vote FOR the proposal to
---
amend the Company's Certificate to increase the number of shares of Common Stock
that Seiler is authorized to issue. Proxies will be so voted unless
shareholders specify otherwise in their proxies. The affirmative vote of
holders of a majority of the outstanding shares of Common Stock is required for
approval of this proposal. Consequently, any shares not voted (whether by
abstention, broker non-vote or otherwise) will have the same effect as votes
against the proposed amendment to the Company's Certificate. If this proposed
amendment is approved by the shareholders, it will become effective upon the
filing of Articles of Amendment with the Delaware Secretary of State, which will
occur as soon as reasonably practicable after approval.
PROPOSAL NUMBER 3
Proposal to Ratify the Board of Directors Action in Selection of
Schneider Downs & Co., Inc. as Independent Auditor for the Company
The Board of Directors has appointed Schneider Downs & Co., Inc., independent
certified public accountants, as auditor of the Company to examine the financial
statements for the fiscal year ending March 31, 1998. Schneider Downs & Co.,
Inc. was retained as the Company's auditor in May 1996 and in that capacity
audited the Company's financial statements for the fiscal years ended March 31,
1996 and March 31, 1997. The firm has no relationship with the Company except
the existing professional relationship of independent auditor.
Ratification of the employment of Schneider Downs & Co., Inc. will require
the affirmative vote of the holders of a majority of the shares represented at
the Meeting in person or by proxy and entitled to vote. The Board of Directors
recommends a vote FOR Proposal Number 3. In the event the stockholders fail to
ratify this employment, it will be considered as a directive to the Board of
Directors to select other auditors for the current year.
<PAGE>
Representatives of Schneider Downs & Co., Inc. are expected to be present
at the Meeting, will have the opportunity to make a statement if they choose,
and will be expected to be available to respond to appropriate questions.
Bederson & Company LLP, the Company's independent auditors for its fiscal
years ended March 31, 1995 and 1994, resigned as the Company's auditors on May
10, 1996. The report of Bederson & Company LLP on the Company's financial
statements for the fiscal years ended March 31, 1995 and 1994 did not contain an
adverse opinion or a disclaimer of opinion nor were the opinions qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
Company's fiscal years ended March 31, 1996 and 1995 and the interim period
preceding the resignation of Bederson & Company LLP, there were no disagreements
between the Company and Bederson & Company LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
procedure.
Stockholder Proposals
The Company anticipates that the 1998 Annual Meeting will be held on
September 24, 1998, and that the proxy materials for the 1998 Annual Meeting
will be mailed on or about August 20, 1998. If any security holder wishes a
proposal to be considered for inclusion in the 1998 Proxy Statement, this
material must be received by the Chief Executive Officer no later than May 21,
1998.
Other Matters
Management does not know of any other matters, which may come before the
Meeting. However, if any matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with the recommendations of the Board of Directors. It is important
that proxies be returned promptly. Therefore, stockholders who do not expect to
attend in person are urged to mark, date, sign and return the enclosed proxy in
the accompanying postage paid envelope.
By Order of the Board of Directors
/s/ Werner Heim
Werner Heim
Chairman of the Board of Directors
And President
Dated: October 10, 1997
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
Proxy for 1997 Annual Meeting
This Proxy is Solicited by the Board of Directors
KNOW ALL MEN BY THESE PRESENTS that I (we), the undersigned Stockholder(s) of
Seiler Pollution Control Systems, Inc. (the "Company"), do hereby nominate,
constitute and appoint Werner Heim and Alan B. Sarko or either of them (with
full power to act alone), my true and lawful attorney(s) with full power of
substitution, for me and in my name, place and stead to vote all the Common
Stock of said Company, standing in my name on its books on the record date,
October 7, 1997, at the Annual Meeting of its Stockholders to be held at the
Columbus Marriott North located at 6500 doubletree Avenue, Columbus, Ohio, on
November 12, 1997, at 10:00 a.m., local time, or at any postponement or
adjournments thereof, with all the powers the undersigned would possess if
personally present.
This Proxy, when properly executed, will be voted as directed below. In the
absence of any direction, the shares represented hereby will be voted for the
election of the nominees listed, for increasing the number of authorized shares
of Common Stock and for ratification of the appointment of the auditors.
[X] Please mark your votes as in this example.
1. Election of Directors. Election of the four nominees, Werner Heim, Niklaus
Seiler, Alan B. Sarko and Gerold Weser.
For All Withhold From
Nominees All Nominees
[ ] [ ]
The Board of Directors recommends a vote FOR the Nominees. If you do not wish
your shares voted FOR a particular nominee, draw a line through that person's
name above.
2. Approval of amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 25,000,000 shares
to 35,000,000 shares.
For Against Abstain
[ ] [ ] [ ]
The Board of Directors recommends a vote FOR approval.
3. Approval of the appointment of Schneider Downs & Co., Inc. as independent
auditor of the Company for the fiscal year ending March 31, 1998.
For Against Abstain
[ ] [ ] [ ]
The Board of Directors recommends a vote FOR approval.
<PAGE>
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or adjournment or postponement
thereof.
SIGNATURE(S) DATE
--------------------------------
----------------------------
NOTE: Please sign exactly as the name(s) appears hereon. Joint owners should
sign. When signing as attorney, executor, administrator, trustee, or guardian,
please give full title as such.
