SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of
the Securities Exchange Act of 1934
____________________
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statements
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
____________________
AIR & WATER TECHNOLOGIES CORPORATION
(Name of Registrant as Specified In Its Charter)
AIR & WATER TECHNOLOGIES CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement
____________________
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] 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:
................................................
3) Date Filed:
................................................
AIR & WATER TECHNOLOGIES CORPORATION
U.S. Highway 22 West and Station Road
Branchburg, New Jersey 08876
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 1995
To the Stockholders of
Air & Water Technologies Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Air &
Water Technologies Corporation ("AWT" or the "Company") will be held on
Thursday, June 8, 1995 at 10:00 a.m., local time, at the Somerset Marriott
Hotel, 110 Davidson Avenue, Somerset, New Jersey 08873, to consider and act on
the following:
1. To elect nine members of the Board of Directors to serve for the
ensuing year;
2. To ratify the appointment by the Board of Directors of Arthur
Andersen & Co. as independent public accountants for the Company's 1995
fiscal year; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on April 27, 1995 will
be entitled to vote at the Annual Meeting. A list of such stockholders will
be available at the time and place of meeting and, during the ten days prior
to the meeting, at the Company's executive offices located at U.S. Highway 22
West and Station Road, Branchburg, New Jersey 08876.
A copy of the Company's 1994 Annual Report is enclosed herewith.
By Order of the Board of Directors
DOUGLAS A. SATZGER
Secretary
Branchburg, New Jersey
May 8, 1995
______________________________________________________________________________
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND MAIL THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS USE BY DELIVERING TO THE
COMPANY A WRITTEN NOTICE OF REVOCATION OR DULY EXECUTED PROXY BEARING A LATER
DATE. ANY STOCKHOLDER WHO HAS EXECUTED A PROXY BUT IS PRESENT AT THE MEETING
AND WHO WISHES TO VOTE IN PERSON MAY DO SO BY REVOKING HIS, HER OR ITS PROXY
AS DESCRIBED IN THE PRECEDING SENTENCE.
AIR & WATER TECHNOLOGIES CORPORATION
U.S. Highway 22 West and Station Road
Branchburg, New Jersey 08876
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Air & Water Technologies Corporation ("AWT" or the
"Company") of proxies for use at the Annual Meeting of Stockholders (the
"Annual Meeting") or at any adjournments thereof. The Annual Meeting will be
held on Thursday, June 8, 1995 at 10:00 a.m., local time, at the Somerset
Marriott Hotel, 110 Davidson Avenue, Somerset, New Jersey 08873.
If a stockholder properly executes and returns the enclosed form of proxy,
it will be voted according to his, her or its instructions. If no
instructions are given, it will be voted FOR the election as directors of the
nine nominees named below, and FOR ratification of the appointment by the
Board of Directors of Arthur Andersen & Co. as independent auditors of the
Company for its 1995 fiscal year. Any proxy given by a stockholder may be
revoked by the stockholder at any time before it is voted by written notice to
the Secretary of the Company, by a duly executed proxy bearing a later date,
or by voting in person at the meeting. No appraisal rights exist for any
action proposed to be taken at the Annual Meeting.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. The
solicitation of proxies may be made by directors, officers and regular
employees of the Company or any of its subsidiaries personally or by mail,
telephone, facsimile communication or telegraph. No additional compensation
will be paid for such solicitation. In addition, arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of stock held of
record by such persons, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing. In addition, the Company
has engaged the services of Kissel-Blake, Inc. to solicit proxies and will pay
such proxy soliciting agent $5,000 plus expenses in connection therewith.
Solicitation by such firm may be by mail, personal interview, telephone or
telegraph.
So far as the management of the Company is aware, stockholders will take
action on no matters other than those described in this Proxy Statement. In
the event that any other matters properly come before the meeting that call
for a vote of stockholders, the persons named as proxies in the enclosed form
of proxy will vote in accordance with their best judgment on such other
matters.
The Company is mailing this Proxy Statement and the accompanying form of
proxy to stockholders on or about May 8, 1995.
VOTING
The Board of Directors has fixed the close of business on April 27, 1995 as
the record date (the "Record Date") for determining stockholders entitled to
notice of and to vote at the Annual Meeting and at any adjournment or
adjournments thereof. On the Record Date, there were outstanding 32,018,004
shares of the Company's Class A Common Stock, $.001 par value per share
("Class A Common Stock") and 1,200,000 shares of the Company's 5 1/2% Series
A Convertible Exchangeable Preferred Stock, $.01 par value per share (the
"Series A Preferred Stock"). Shares of the Company's Class A Common Stock and
Series A Preferred Stock are entitled to be voted at the Annual Meeting.
Holders of issued and outstanding shares of Class A Common Stock are entitled
to one vote for each share they hold. Holders of Series A Preferred Stock are
entitled to that number of votes equal to the number of votes to which the
shares of Class A Common Stock issuable upon conversion of such shares of
Series A Preferred Stock would have been entitled if such shares of Class A
Common Stock had been outstanding on the Record Date. The presence in person
or by proxy of a majority of the votes entitled to be cast will constitute a
quorum for purposes of conducting business at the Annual Meeting. Pursuant to
the By-Laws, directors of the Company shall be elected by a plurality vote of
the votes cast at the Annual Meeting. All other questions shall be determined
by a majority of the shares entitled to vote at the Annual Meeting, except as
may otherwise be provided in the Company's Certificate of Incorporation,
By-Laws or by law. Accordingly, abstentions and broker non-votes will not
count as "votes cast" for or against a nominee for director. The proposal to
ratify the appointment of auditors requires the approval of a majority of the
shares entitled to vote at the Annual Meeting. Abstentions and broker
non-votes with respect to Proposal 2 will have the same effect as votes
against that proposal.
PROPOSAL 1: ELECTION OF DIRECTORS
Information Concerning the Nominees
The Company's Restated Certificate of Incorporation and By-Laws provide for
the Company's business to be managed by or under the direction of the Board of
Directors. Under the Company's By-Laws, the number of directors is fixed from
time to time by the Board of Directors and directors serve in office until the
next annual meeting of stockholders and until their successors have been
elected and qualified or until their earlier death, resignation or removal.
Pursuant to the terms of the Investment Agreement dated as of March 30,
1994, the Company has agreed that Compagnie Generale des Eaux ("CGE") will
have representation on the Board of Directors (and all committees thereof
other than any Special Committee of "Independent Directors" (as defined
below)) that is proportionate to the aggregate number of shares of Class A
Common Stock owned by CGE (rounded down to the next whole number if CGE owns
in the aggregate less than one-half of the outstanding shares of Class A
Common Stock, treating the shares of the Series A Preferred Stock owned by CGE
as having been converted, or, if otherwise, rounded up to the next whole
number). See "Certain Relationships and Related Transactions -- Certain
Covenants of the Company."
The Board of Directors has nominated for election as directors at the
Annual Meeting [four] individuals designated by CGE out of a total of nine
directors (Messrs. Elia, David, Deschamps and Kriegel) and an additional
Independent Director (a director not employed by the Company or CGE or their
respective affiliates) satisfactory to CGE (Ms. Green). The Chairman of the
Board of Directors is also designated by CGE. The Board of Directors has also
nominated Messrs. Costle, DeBenedictis, Morris and Senior as directors for
election at the Annual Meeting.
The Board of Directors of the Company has recommended that the stockholders
elect nine directors at the Annual Meeting. Each director elected at the
Annual Meeting will hold office until the next Annual Meeting of Stockholders
and until his successor is duly elected and qualified, or until his earlier
death, resignation or removal from office. The Board of Directors recommends
that the stockholders elect the nominees named below as directors of the
Company. The persons named in the enclosed proxy intend to vote the shares
represented by such proxy, unless the stockholder executing the proxy
otherwise instructs, for the election to the Board of Directors of each of the
nine nominees named below.
The Company has no reason to believe that any such nominees will be unable,
if elected, to serve as a director. If such an event should occur, however,
the persons named in the enclosed proxy intend to vote the shares represented
by the enclosed proxy for the remainder of the nominees, and for such
substitute nominee or nominees as the Company's current Board of Directors may
select.
All of the nominees for director named below currently serve as directors
of the Company for terms expiring at the Annual Meeting and were all last
elected at the Company's 1994 Annual Meeting of Stockholders.
Positions and other Relationships with
Name Age the Company and Business Experience
---- --- --------------------------------------
Claudio Elia.............. 52 Chairman of the Board of Directors, Chief
Executive Officer and member of the
Executive Committee. Mr. Elia was
elected Chairman and Chief Executive
Officer of AWT on June 14, 1994. Mr.
Elia is President and Chief Executive
Officer of Anjou International Company
("Anjou"), the United States holding
company subsidiary of CGE, since 1988 and
a director of Anjou since March 17, 1994.
In this capacity, Mr. Elia is the
representative of CGE in the United
States. He also holds the position of
President and Chief Executive Officer of
Montenay International Corporation, a
United States waste-to-energy company
which is part of CGE's activities in the
United States. Mr. Elia is also the
President and Chief Executive Officer of
Limbach Holdings, Inc., a leading American
climatization company.
Nicholas DeBenedictis..... 49 Director and member of the Audit Committee.
Mr. DeBenedictis was elected as a
director of AWT on June 14, 1994. Mr.
DeBenedictis is Chairman of Philadelphia
Suburban Corporation ("PSC") (the parent
company of Philadelphia Suburban Water
Company, one of America's leading
investor-owned water utilities), since May
1993. Mr. DeBenedictis joined PSC in
July 1992 as its President and Chief
Executive Officer, and from July 1992 to
May 1993 also served as Chairman of PSC's
principal subsidiary, Philadelphia
Suburban Water Company. From 1989 to
1992, Mr. DeBenedictis was Senior Vice
President of Corporate and Public Affairs
for Philadelphia Electric Company. Prior
thereto, he served as President of the
Greater Philadelphia Chamber of Commerce.
Mr. DeBenedictis also formerly served as
Secretary for the Department of
Environmental Resources (1983 to 1986) and
Director of the Office of Economic
Development (1981 to 1983) for the
Commonwealth of Pennsylvania. He serves
on the Board of Directors of the PNC East
Bank Advisory Board, the Greater
Philadelphia Chamber of Commerce, the
Philadelphia Convention and Visitors
Bureau, the Pennsylvania Environmental
Council, and The Children's Hospital of
Philadelphia. Mr. DeBenedictis is also a
member of the Board of Advisors of the
School of Business Administration of
Drexel University.
Douglas M. Costle......... 55 Director and member of the Audit Committee.
Mr. Costle, Administrator of the EPA from
1976 to 1981, became a director of AWT in
August 1988. Mr. Costle also served as a
director of Metcalf & Eddy Companies Inc.
from 1988 to October 1991. He is
presently a Distinguished Senior Fellow of
the Institute for Sustainable Communities
at Vermont Law School. He served as dean
of Vermont Law School from July 1987 to
July 1991. Prior thereto, Mr. Costle was
counsel to the law firms of Wald,
Harkrader & Ross in Washington, D.C. and
Updike, Kelly and Spellacy in Hartford,
Connecticut. Mr. Costle also serves as a
director of Clean Sites, Inc., an
independent non-profit corporation
established to help accelerate the clean-
up of abandoned hazardous waste sites in
the United States.
Jacques-Henri David....... 51 Director and member of the Executive
Committee and Compensation and Stock
Option Committee. Mr. David was elected
as a director of AWT on June 14, 1994.
Mr. David is Director General of CGE
since 1992. Mr. David was formerly
Chairman and CEO of Banque Stern from 1989
to 1992. Mr. David is on the Board of
Directors of several French and non-French
companies (among others, Certainteed and
Saint-Gobain Corp. in the United States,
Eridania, Beghin-Say and Banque Worms in
France). He is also Vice-Chairman of the
Economic Commission of the French Chief
Executives' Board and Chairman of that
Board's forecasting institute.
Jean-Dominique Deschamps.. 57 Director. Mr. Deschamps was elected as a
director of AWT on June 14, 1994. Mr.
Deschamps is Adjunct Director General and
Executive Vice President of CGE and
Executive Vice President since 1989. Mr.
Deschamps is also Chairman and a Director
of Professional Services Group, Inc. and
Polymetrics, Inc. in the United States.
He is also a Director of Compagnie de
l'Eau et de l'Ozone, Compagnie des Eaux de
Paris, Compagnie Fermiere de Services
Publics, Societe des Eaux de Versailles et
de St. Cloud, Societe Guyanaise des Eaux,
Societe d'Exploitation des Eaux de Guinee,
Compagnie Generale de Bruxelles, Anjou
International Company, Hinckley & Schmitt
and Kruger Systems AS.
Carol Lynn Green.......... 48 Director and member of the Compensation and
Stock Option Committee. Ms. Green was
elected as a director of AWT on June 14,
1994. Ms. Green is a Partner in the
Washington, DC law office of Bryan Cave
since 1986. Prior thereto, Ms. Green
served at the United States Department of
Justice from 1980 to 1986 as the first
Assistant Chief of the Environmental
Enforcement Section.
William V. Kriegel........ 49 Director. Mr. Kriegel was elected as a
director of AWT on June 14, 1994. Mr.
Kriegel is Chairman of the Board,
President and Chief Executive Officer of
Sithe Energies, Inc. since it was formed
in 1984. Prior to coming to the United
States in 1984, Mr. Kriegel co-founded an
unaffiliated French energy company that
within three years of its formation in
1980 became France's largest privately-
owned company engaged in the development
of small hydro-electric projects. In
1978, he co-founded S.I.I.F., an
unaffiliated company specializing in the
purchase and rehabilitation of residential
buildings and historical properties in
France.
John W. Morris............ 73 Director and member of the Audit Committee
and Compensation and Stock Option
Committee. General Morris became a
director of AWT in June 1992. From 1988
to October 1992, General Morris served as
a director of Metcalf & Eddy Companies
Inc. General Morris served as the Chief
of Engineers, U.S. Army Corps of
Engineers from 1976 to 1980 and presently
serves as President of the National
Waterways Foundation, Chairman of the
Water Resources Congress, Chairman of the
Environmental Effects Committee of the
U.S. Committee on Large Dams and
President of JW Morris Ltd., an
engineering consulting firm. From 1986 to
1987 he served as President and Chairman
of the Engineering Group of Planning
Research Corporations.
Enrique F. Senior......... 51 Director and member of the Executive
Committee and the Compensation and Stock
Option Committee. Mr. Senior has been a
Managing Director and Executive Vice
President of Allen & Company Incorporated,
an investment banking firm, for more than
the past five years. Mr. Senior became a
director of AWT in October 1987 and also
serves as a director of Dick Clark
Productions, Inc.
Committees of the Board of Directors and Meetings Held
During the Company's fiscal year ended October 31, 1994 ("Fiscal 1994"),
the Board of Directors of the Company held a total of six meetings.
The Executive Committee of the Board of Directors, of which Messrs. Elia,
David and Senior are currently members, met three times during Fiscal 1994.
The function of the Executive Committee is to exercise, when the full Board is
not in session, the powers of the Board in the management of the business and
affairs of the Company.
The Compensation and Stock Option Committee of the Board of Directors met
two times during Fiscal 1994. Messrs. David, Morris and Senior and Ms. Green
are currently members of the Compensation and Stock Option Committee, which
reviews, approves and makes recommendations on the Company's compensation
policies, practices and procedures to ensure that legal and fiduciary
responsibilities of the Board of Directors are carried out and that such
policies, practices and procedures contribute to the success of the Company.
The Compensation and Stock Option Committee also administers the Company's
Long-Term Incentive Compensation Plan.
The Audit Committee of the Board of Directors did not meet during Fiscal
1994. Messrs. DeBenedictis, Costle and Morris currently serve as members of
the Audit Committee, which reviews the engagement of the Company's independent
accountants, reviews annual financial statements, considers matters relating
to accounting policy and internal controls and reviews the scope of annual
audits.
The Company does not have a standing Nominating Committee.
[During Fiscal 1994, each of the incumbent directors of the Company
attended at least 75% of the aggregate number of meetings of the Board of
Directors and Committees on which he or she served during the period he or she
served on the Board of Directors.]
Compensation Committee Interlocks and Insider Participation
During the period from November 1, 1993 to June 14, 1994, the Compensation
and Stock Option Committee (the "Compensation Committee") of the Board of
Directors consisted of Mr. Costle and Mr. Richard M. Dowd. Mr. Dowd was a
Director of the Company until December 1994. Since June 14, 1994, Messrs.
David, Senior and Morris and Ms. Green have been serving on the Compensation
Committee. Mr. David is Director General of CGE. Mr. Senior is a Managing
Director of Allen & Company, which has performed investment banking and other
services for the Company from time to time. Allen & Company served as a
financial advisor to the Company in connection with the transactions
contemplated by the Investment Agreement. Ms. Green is a partner at the law
firm of Bryan Cave, which has performed various legal services for the Company
from time to time.
Compensation of Directors
Directors who are not employees of AWT or any of its affiliated companies
receive an annual fee of $18,000 for service on the Board of Directors and an
additional $7,500 per annum for service on each Committee thereof. Directors
are also reimbursed for out-of-pocket expenses of attending Board and
Committee meetings. In addition, pursuant to the Long-Term Incentive
Compensation Plan, on July 31 of each year, each director who is a member of
the Compensation and Stock Option Committee with responsibility for
administering the Plan as of such date is granted a non-qualified option to
purchase either (i) 3,000 shares of Class A Common Stock, if the director has
served less than one year on the Committee, or (ii) 500 shares of Class A
Common Stock, if the director has served one year or more on the Committee.
The options granted vest annually in four equal installments commencing one
year from the date of grant with exercise prices equal to the fair market
value of the Class A Common Stock on the grant date. The Long-Term Incentive
Compensation Plan provides that, upon a "change-in-control" of the Company (as
determined by the Board of Directors), any outstanding options not therefore
fully exercisable shall immediately become exercisable in their entirety.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to AWT under Rule 16a-3(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), during the fiscal year ended October 31, 1994
and Form 5 and amendments thereto furnished to AWT with respect to the fiscal
year ended October 31, 1994, the Company has identified the following persons
as having filed late reports under Section 16(a) of the Exchange Act: Robert
S. Volland filed one late report on Form 3 reporting his election as an
executive officer of AWT for the month of June 1994; CGE filed one late report
on Form 4 with respect to the acquisition of 222,500 shares of Class A Common
Stock in the month of October 1994.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of [March 30, 1995], as to
the beneficial ownership of AWT's capital stock by (i) each person owning
beneficially more than five percent of the outstanding shares of its Class A
Common Stock, (ii) each current director of AWT, (iii) each executive officer
named in the Summary Compensation Table herein and (iv) all current officers
and directors of AWT as a group. The persons named in the table have sole
voting and dispositive power with respect to all shares of Class A Common
Stock unless otherwise noted in the notes following the table. [Update Table]
Number of
Shares of Percent of
Class A Class A
Name of Person or Group Common Stock Common Stock
- ----------------------- ------------ -----------
Douglas M. Costle(1)............................ 47,689 *
Jacques-Henri David(2).......................... 18,214,642 49.3
Nicholas DeBenedictis........................... 0 *
Jean-Dominique Deschamps(2)..................... 18,214,642 49.3
Claudio Elia(3)................................. 18,214,642 49.3
Carol L. Green.................................. 0 *
William V. Kriegel.............................. 0 *
John W. Morris.................................. 3,079 *
Enrique F. Senior(4)............................ 1,906,011 6.0
Donald A. Deieso................................ 85,500 (5) *
Arthur L. Glenn................................. 107,000 (6) *
George C. Mammola............................... 37,500 (7) *
Douglas A. Satzger.............................. 51,000 (8) *
Allen & Company Incorporated.................... 1,367,367 4.3
711 Fifth Avenue
New York, New York 10022
Compagnie Generale des Eaux(9).................. 18,214,642 49.3
52 Rue d'Anjou
75384 Paris Cedex 08
France
State of Wisconsin Investment Board(10)......... 3,108,000 9.8
P.O. Box 7842
Madison, Wisconsin 53207
The Capital Group, Inc(11)...................... 3,213,660 10.0
333 South Hope Street
Los Angeles, California 90071
All directors and officers as a group
(18 persons)(12)(13).......................... 20,395,932 55.5
_____________
* Less than 1% ownership
(1) Includes 8,939 shares which may be acquired within 60 days of the date of
the table.
(2) All of these shares of Class A Common Stock (including the shares of the
Series A Preferred Stock and the 8% Convertible Subordinated
Debentures ("Convertible Debentures") convertible into such shares of
Class A Common Stock) are beneficially owned by CGE, with respect to
which Messrs. David and Deschamps disclaim beneficial ownership.
Messrs. David and Deschamps are Director General and Adjunct Director
General and Executive Vice President of CGE, respectively.
(3) Includes 18,167,975 shares of Class A Common Stock (including the shares
of the Series A Preferred Stock and the Convertible Debentures
convertible into such shares of Class A Common Stock) beneficially
owned by CGE, with respect to which shares Mr. Elia disclaims
beneficial ownership. Mr. Elia is President and Chief Executive
Officer of Anjou International Company, a subsidiary of CGE.
(4) Includes (i) 125,776 shares of Class A Common Stock owned by Mr. Senior's
spouse, (ii) 50,309 shares of Class A Common Stock owned by a trust for
his minor children, as to which Mr. Senior disclaims beneficial ownership
and (iii) 1,367,367 shares of Class A Common Stock owned by Allen &
Company, of which Mr. Senior is a Managing Director, as to which shares
Mr. Senior disclaims beneficial ownership.
(5) Includes 85,000 shares which may be acquired within 60 days of the date of
the table.
(6) Includes 73,000 shares which may be acquired within 60 days of the date of
the table.
(7) Represents 37,500 shares which may be acquired within 60 days of the date
of the table.
(8) Includes 49,000 shares which may be acquired within 60 days of the
date of the table.
(9) Includes 4,800,000 shares of Class A Common Stock underlying the
1,200,000 shares of the Series A Preferred Stock beneficially owned by
CGE and 46,667 shares of Class A Common Stock underlying the
$1,400,000 of Convertible Debentures beneficially owned by CGE. The
Convertible Debentures are convertible into Class A Common Stock at
$30 per share. CGE owns all of the outstanding shares of the Series A
Preferred Stock.
(10) Based on the information as of December 31, 1994 as set forth in the
Schedule 13G filed by the State of Wisconsin Investment Board with the
Securities and Exchange Commission on February 13, 1995.
(11) Based on the information as of December 31, 1994 as set forth in the
Schedule 13G filed by The Capital Group Companies, Inc. with the
Securities and Exchange Commission on February 6, 1995.
(12) Includes shares of Class A Common Stock held by Allen & Company and CGE.
(13) Includes 4,995,439 shares which may be acquired within 60 days of the
date of the table.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table shows, for the fiscal years ended October 31, 1994,
1993 and 1992 the cash compensation paid or accrued for those years to each of
the six most highly compensated executive officers of AWT in all capacities in
which they served.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
_________________________ _______________________
Awards
_______________________
Name and Restricted Securities All Other
Principal Other Annual Stock Underlying Compensa-
Position Year Salary($) Compensation($) Award(s)($) Options(#) tion($)
_________ ____ _________ _______________ ___________ _______ __________
<S> <C> <C> <C> <C> <C> <C>
Claudio Elia 1994 99,429(1) 0 20,000 (2) 100,000 0
Chairman of the
Board and Chief
Executive Officer
Eckardt C. Beck 1994 222,762 51,892 (3) 0 0 106,885 (4)
Former Chairman of 1993 356,000 94,507 (5) 0 26,000 145,389 (6)
the Board and Chief 1992 356,000 94,507 0 0 157,399
Executive Officer
Arthur L. Glenn 1994 245,031 0 0 0 0
President and Chief 1993 139,263(7) 0 22,000 (8) 73,000 0
Operating Officer
Donald A. Deieso 1994 195,023 0 0 0 0
President and Chief 1993 175,000 0 0 20,000 8,642 (9)
Executive Officer, 1992 175,000 0 0 0 11,501
Metcalf & Eddy, Inc.
Douglas A. Satzger 1994 178,279 0 0 0 462 (10)
Senior Vice President 1993 153,333 0 0 15,000 465 (9)
and General Counsel 1992 170,000 0 0 0 85
George C. Mammola 1994 184,080 0 0 0 693 (10)
President and Chief 1993 150,000 0 0 15,000 0
Executive Officer, 1992 116,667 0 31,746 (8) 12,500 0
Research-Cottrell, Inc.
<FN>
- -----------------
(1) Represents amounts paid to Mr. Elia since joining AWT on June 14, 1994.
Mr. Elia is paid a base salary of $275,000 per annum.
(2) As of October 31, 1994, Mr. Elia held 2,500 shares of restricted
Class A Common Stock vesting over a four-year period, with an aggregate
value of $17,500. The Company's Long-Term Incentive Compensation Plan
provides that, upon a "change-in-control" of the Company (as determined
by the Board of Directors), all restrictions on these shares will
lapse.
(3) "Other Annual Compensation" for Mr. Beck in fiscal 1994 includes $43,750
($6,250 per month) paid to Mr. Beck from November 1, 1993 through May 31,
1994 as a housing allowance, as well as other amounts paid to Mr. Beck for
time spent on behalf of AWT in Massachusetts and to reimburse Mr. Beck for
real estate and income taxes in Massachusetts.
(4) Includes (i) $105,578 of interest imputed to a loan made by AWT to Mr.
Beck (as more fully described below), for the period from November 1, 1993
to May 31, 1994 and (ii) a contribution of $1,307 to AWT's Thrift Plan.
(5) "Other Annual Compensation" for Mr. Beck in fiscal 1993 includes
$75,000 ($6,250 per month) paid to Mr. Beck as a housing allowance, as
well as other amounts paid to Mr. Beck for time spent on behalf of AWT
in Massachusetts and to reimburse Mr. Beck for real estate and income
taxes in Massachusetts.
(6) "All Other Compensation" for Mr. Beck for Fiscal 1993 consists of the
following: (i) a contribution of $1,799 to AWT's Thrift Plan; (ii) a
contribution of $8,125 to AWT's Supplemental Pension Plan; and (iii)
$135,465 of interest imputed to a loan made by AWT to Mr. Beck more fully
described below.
(7) Represents amounts paid to Mr. Glenn since joining AWT on April 12, 1993.
Mr. Glenn is paid a base salary of $250,000 per annum.
(8) The restrictions on all of these shares (2,000 shares in the case of
Mr. Glenn and 1,761 shares in the case of Mr. Mammola) lapsed because
the Board of Directors of AWT determined that the consummation of the
transactions contemplated by the Investment Agreement constituted a
"change-in-control" of AWT. Thus, as of October 31, 1994, Mr. Glenn
and Mr. Mammola do not hold any restricted Class A Common Stock.
(9) "All Other Compensation" for fiscal 1993 consists of (i) $465 contributed
to AWT's Thrift Plan on behalf of Mr. Satzger and (ii) $8,642 contributed
to AWT's Supplemental Pension Plan on behalf of Mr. Deieso.
(10) "All Other Compensation for Messrs. Satzger and Mammola in fiscal
1994 consists of (i) $462 contributed to AWT's Thrift Plan on behalf of
Mr. Satzger and (ii) $693 contributed to AWT's Thrift Plan on behalf
of Mr. Mammola.
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
Employment Contract with Mr. Beck
The following arrangements were in effect when Mr. Beck was serving as AWT's
Chairman of the Board of Directors and Chief Executive Officer. His
employment by the Company was terminated on June 14, 1994 as contemplated by
the Investment Agreement dated as of March 30, 1994 among the Company, CGE and
Anjou (the "Investment Agreement"). The following arrangements have been
superseded by the Termination Agreement (as defined below) as more fully
described below.
On August 20, 1990, the Board of Directors of the Company made a one-year,
interest-free, unsecured loan of $2,300,000 to Mr. Beck. This loan was made
to Mr. Beck, a founder of the Company, so that he could satisfy certain
personal financial obligations without having to sell a substantial portion of
his equity investment in the Company. The Company does not currently intend
to make loans to other members of the Company's management with terms similar
to those of Mr. Beck's loan. This loan will be forgiven over the next five
years as described below.
The Company and Mr. Beck entered into an Employment Agreement, dated as of
August 20, 1991, which, among other things, extended Mr. Beck's employment
term with AWT for a five-year term (the "Employment Agreement"). Pursuant to
the Employment Agreement, Mr. Beck served as AWT's Chairman of the Board of
Directors and Chief Executive Officer and a director and officer of AWT's
subsidiaries until his employment with the Company was terminated on June 14,
1994. AWT agreed in the Employment Agreement that, on each anniversary of the
date of the Employment Agreement, if Mr. Beck remained an employee of AWT
serving in the capacities of Chairman of the Board and Chief Executive Officer
at that time, AWT would forgive one-fifth of the unsecured, non-interest
bearing loan to Mr. Beck in the original principal amount of $2,300,000 to the
extent that all or any portion of the loan remained outstanding. AWT further
agreed to forgive such loan in its entirety in the event of Mr. Beck's death,
termination for disability (as defined), termination by AWT other than for
Cause (as defined), termination by Mr Beck in the event of a material breach
of the Employment Agreement by AWT (such event is defined as "Good Reason"),
or upon a change of control (as defined) of AWT. In addition, if Mr. Beck's
employment was terminated by Mr. Beck for "Good Reason," or by AWT for any
reason other than for "Cause," or by reason of Mr. Beck's death or disability,
Mr. Beck would be entitled to payment of all "Accrued Benefits" (as defined)
through the date of termination, and to payment of all salary payments that
Mr. Beck would have been entitled to had his employment not been so
terminated. Under the terms of the Employment Agreement, Mr. Beck is entitled
to an annual salary, subject to cost-of-living adjustments, of $356,000 for
such services, participation in stock option and other bonus and incentive
programs available to other senior executives, as well as a housing allowance
of $6,250 per month and reimbursement for certain other living and associated
expenses.
In each of 1992 and 1993, due to AWT's financial performance, Mr. Beck
decided to waive the requirement that a portion of the loan be forgiven. As a
result, the Executive Committee twice amended the Employment Agreement to
reflect this fact and added a sixth, and then a seventh year, to the
employment term so that Mr. Beck's Employment Agreement with AWT would expire
on August 20, 1998.
In anticipation of the consummation of the transactions contemplated by the
Investment Agreement, on March 17, 1994, the Company and Mr. Beck entered into
an amendment to the Employment Agreement which provided certain severance
payments to Mr. Beck by the Company at the time of the termination of Mr.
Beck's employment with the Company as contemplated by the Investment
Agreement, in addition to all other payments and benefits provided for in the
Employment Agreement. Mr. Beck and the Company also mutually acknowledged
that, effective upon the date of closing of the transactions contemplated by
the Investment Agreement, Mr. Beck's employment with AWT would cease and that
such cessation would be treated as termination of his employment other than
for Cause, pursuant to the Employment Agreement.
Termination Agreement
Notwithstanding the foregoing, subsequent to the termination of Mr. Beck's
employment with the Company as of June 14, 1994 as a result of the
consummation of the transactions contemplated by the Investment Agreement, the
Company and Mr. Beck have entered into an agreement dated November 21, 1994
(the "Termination Agreement") relating to all aspects of their relationship
following such termination of employment, which supersedes all rights and
obligations outstanding pursuant to the Employment Agreement, as amended. The
Termination Agreement provides, among other things, that: (a) Mr. Beck agrees
not to compete with the Company during the period beginning on June 14, 1994
and ending on December 31, 1999, (b) the Company agrees to pay Mr. Beck
$24,800 per month during the period beginning on January 1, 1995 and ending on
December 31, 1999 (the "Term"), (c) during the Term, the Company agrees to
reimburse Mr. Beck up to $10,000 per twelve-month period for the purchase of
health and medical insurance for him and his spouse, which obligation shall
terminate immediately upon Mr. Beck's becoming employed by an entity that
makes medical insurance available to its employees, (d) on January 1, 1995 and
on January 1 of each of the four succeeding years, the Company agrees to
forgive approximately one-fifth of the unsecured, non-interest-bearing loan to
Mr. Beck outstanding as of January 1, 1995 unless Mr. Beck breaches his
obligations under the Termination Agreement, the Consulting Agreement (as
defined below) and the Releases (as defined below), (e) the Company agrees to
pay Mr. Beck $330,000, which amount is intended to defray in whole or in part
various withholding taxes in connection with the Termination Agreement, (f)
the Company agrees to deliver to Mr. Beck a preferred stock certificate
representing ownership of a membership interest in Metedeconk National Golf
Club, Inc. and Mr. Beck agrees to pay to the Company $50,000 for such
transfer, and (g) all stock options held by Mr. Beck at the time of the
termination of his employment are cancelled. In addition, the Company and Mr.
Beck entered into a consulting agreement (the "Consulting Agreement") on the
same day, in which Mr. Beck agrees to make himself available throughout the
Term to serve, and the Company agrees to engage Mr. Beck, as a consultant to
the Company in connection with any litigation or claims in which the Company
or any of its affiliates is involved and in which Mr. Beck's testimony or
assistance is deemed necessary by the Company. The Company will pay Mr. Beck
$8,333 per month in consideration of his agreement to act as a consultant. As
a condition to the effectiveness of the Termination Agreement, Mr. Beck
executed certain releases (the "Releases") in which he agrees, among other
things, to indemnify the Company for certain litigation-related expenses
incurred by it on behalf of Mr. Beck.
Retention Agreements
The Company entered into agreements in March 1994 (the "Retention
Agreements") with Messrs. Glenn, Satzger, Mammola and Deieso, and with certain
other officers, which provide for each executive's employment by the Company
for an initial period of two years beginning upon the occurrence of a
Change-in-Control of the Company (as defined). The Retention Agreements
provide for an annual salary of $250,000, $200,000, $210,000 and $210,000 for
Messrs. Glenn, Satzger, Mammola and Deieso, respectively. Salaries under the
agreements may be increased by the Board of Directors, in its sole discretion,
taking into account the earnings and overall productivity of the Company,
available resources, the performance of the executive and such other factors
as it deems relevant. In addition, the agreements with Mr. Deieso and certain
other executives provide that the executive will be eligible to receive a
bonus of up to $30,000 in each year of the initial two-year period if, at any
time during the initial two-year term, certain operating targets are met. If,
during the initial two-year term, the Company terminates the executive's
employment other than for death, Disability (as defined), or Justifiable Cause
(as defined) or the executive terminates his employment for Good Reason (as
defined), the executive will be entitled to receive an amount equal to the
balance of the salary due to him for the remainder of the initial two-year
term. In addition, in that event, the executive will be entitled to exercise
any options which were exercisable on the date of termination until 90 days
after the end of the initial two-year term of the agreement or, if earlier,
the date of termination of the option. The consummation of the transactions
contemplated by the Investment Agreement constituted a Change-in-Control as
defined in the Retention Agreements.
Options
AWT's Long-Term Incentive Compensation Plan provides that, upon a
"change-in-control" of the Company (as determined by the Board of Directors),
any outstanding options not theretofore fully exercisable shall immediately
become exercisable in their entirety. The Board of Directors has determined
that the consummation of the transactions contemplated by the Investment
Agreement constituted a "change-in-control" for purposes of such plan.
SUPPLEMENTAL PENSION PLAN
The following table shows the estimated annual benefits payable upon
retirement to participants in the Company's Supplemental Pension Plan.
Estimated Annual Retirement Benefits
Years of Service
__________________________________________
Bonus
Remuneration 15 20 25 30 35
____________ __ __ __ __ __
$25,000 $5,625 $7,500 $9,375 $11,250 $13,125
50,000 11,250 15,000 18,750 22,500 26,250
75,000 16,875 22,500 28,125 33,750 39,375
100,000 22,500 30,000 37,500 45,000 52,500
125,000 28,125 37,500 46,875 56,250 65,625
Certain officers and key employees of whom one is named in the Summary
Compensation Table, participate in an unfunded supplemental pension plan which
provides additional annual retirement benefits equal to 1.5% of the average of
the participant's final five bonuses multiplied by the participant's years of
service, up to a maximum of 35 years. No separate accounts are maintained and
no amounts are vested until a participant reaches retirement in the employ of
AWT. Mr. Deieso, who is named in the Summary Compensation Table, has been
credited with 5 years of service. The last bonus paid to Mr. Deieso was for
the fiscal year 1990. Therefore, no amount of cash compensation in the
Summary Compensation Table is used for determining benefit accruals for Mr.
Deieso under the Supplemental Pension Plan. The benefit amounts set forth in
the Table above are not subject to reduction for social security benefits or
for other offsets.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information regarding the grant of stock
options under AWT's Long-Term Incentive Compensation Plan to the six named
executive officers of AWT during fiscal 1994. The potential realizable values
that would exist for the respective options are based on assumed rates of
annual compound stock price appreciation of 5% and 10% from the date of grant
over the full term of the option. Actual gains, if any, on stock options,
exercises and stock holdings are dependent on the future performance of the
Class A Common Stock.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
_________________________________________________ _______________________
Number of
Securities
Underlying % of Total
Options Options Granted Exercise
Granted to Employees Price Expiration
Name (#) (1) In Fiscal Year ($/Sh)(2) Date5 %($) 10%($)
____ __________ ______________ _________ __________ ______ _________
<S> <C> <C> <C> <C> <C> <C>
Claudio Elia 100,000 17.85% $8.00 8/19/2004 503,116 1,274,994
Eckardt C. Beck 0
Arthur L. Glenn 0
Donald A. Deieso 0
Douglas A. Satzger 0
George C. Mammola 0
<FN>
_________________________________
(1) Options granted in fiscal 1994 vest annually in four equal
installments commencing one year from the date of grant. Under the
terms of the Company's Long-Term Incentive Compensation Plan, the
Compensation Committee retains discretion, subject to plan limits, to
modify the terms of outstanding options and to reprice the options. The
options were granted for a term of 10 years, subject to earlier
termination in certain events related to termination of employment. The
Long-Term Incentive Compensation Plan provides that, upon a "change-in-
control" of the Company (as determined by the Board of Directors), any
outstanding options not theretofore fully exercisable shall immediately
become exercisable in their entirety.
(2) The exercise price may be paid in cash, in shares of Class A Common
Stock valued at their fair market value on the date of exercise or
pursuant to a cashless exercise procedure under which the optionee
provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to AWT, out of the sale proceeds, an amount
equal to the exercise price plus all applicable withholding taxes, if
any.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES
The following table sets forth information with respect to the named
executives concerning unexercised options, held as of October 31, 1994. No
options were exercised during fiscal 1994 by any of the named executive
officers.
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
FY-End at FY-End(1)
___________________________ ___________________________
Exercisable Unexercisable Exercisable Unexercisable
Name (#) (#) ($) ($)
_____ __________ _____________ __________ _____________
Claudio Elia(3) 0 100,000 N/A 0(2)
Eckardt C. Beck(4) 0 0 N/A N/A
Arthur L. Glenn(5) 73,000 0 0(2) N/A
Donald A. Deieso(6) 85,000 0 0(2) N/A
Douglas A. Satzger(7) 49,000 0 0(2) N/A
George C. Mammola(8) 37,500 0 0(2) N/A
___________
(1) The value of unexercised in-the-money options at fiscal year end
assumes a fair market value for the Class A Common Stock of $7.00, the
closing sale price per share of the Class A Common as reported on the
American Stock Exchange Composite Tape for October 31, 1994.
(2) The exercisable options held by Messrs. Glenn, Satzger and Mammola and the
unexercisable options held by Mr. Elia were not in-the-money as of October
31, 1994.
(3) The exercise price of the options held by Mr. Elia is $8.00 per
share, which was the fair market value of AWT's Common Stock on the
date of grant.
(4) Pursuant to the Termination Agreement, all stock options held by Mr. Beck
at the time of the termination of his employment were cancelled.
(5) The exercise price of the options held by Mr. Glenn is (i) $11.00 per
share in the case of his option to purchase 50,000 shares granted in
April 1993, or (ii) $11.75 per share in the case of his option to
purchase 23,000 shares granted in August 1993, in each case the fair
market value of AWT's Common Stock on the date of grant.
(6) The exercise price of the options held by Mr. Deieso is (i) $17.00
per share in the case of his option to purchase 30,000 shares granted
in August 1989, (ii) $19.125 per share in the case of his option to
purchase 10,000 shares granted in December 1989, (iii) $18.50 per share
in the case of his option to purchase 25,000 shares granted in December
1991, or (iv) $11.75 per share in the case of his option to purchase
20,000 shares granted in August 1993, in each case the fair market
value of AWT's Common Stock on the date of grant.
(7) The exercise price of the options held by Mr. Satzger is (i) $17.125 per
share in the case of his option to purchase 24,000 shares granted in June
1991, (ii) $18.50 per share in the case of his option to purchase 10,000
shares granted in December 1991, or (iii) $11.75 per share in the case of
his option to purchase 15,000 shares granted in August 1993, in each case
the fair market value of AWT's Common Stock on the date of grant.
(8) The exercise price of the options held by Mr. Mammola is (i) $23.00
per share in the case of his option to purchase 10,000 shares granted
in February 1991, or (ii) $18.50 per share in the case of his option to
purchase 12,500 shares granted in December 1991, or (iii) $11.75 per
share in the case of his option to purchase 15,000 shares granted in
August 1993, in each case the fair market value of the Company's Common
Stock on the date of grant.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on Page 17 shall not be incorporated by reference into
any such filings.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS
Decisions on compensation of the Company's executives generally are made
by the four-member Compensation and Stock Option Committee of the Board of
Directors (the "Compensation Committee" or "Committee"). In connection with
the transactions contemplated by the Investment Agreement, the Company changed
the composition of its Board of Directors and, as a result, the composition of
the Compensation Committee also changed. Prior to June 14, 1994, the
Compensation Committee consisted of Messrs. Costle and Dowd. Since June 14,
1994, the Compensation Committee consists of Messrs. David, Senior and Morris
and Ms. Green. Each member of the Compensation Committee is a non-employee
director. Mr. David is Director General of CGE. Mr. Senior is a Managing
Director of Allen & Company, which has performed investment banking and other
services for the Company from time to time. Allen & Company served as a
financial advisor to the Company in connection with the transactions
contemplated by the Investment Agreement. Ms. Green is a partner at the law
firm of Bryan Cave, which has performed various legal services for the Company
from time to time. The newly constituted Compensation Committee, among other
things, approved (i) Mr. Elia's salary and option and restricted stock awards
and (ii) Mr. Beck's Termination Agreement and related agreements.
Compensation Policy for Executive Officers
Under the supervision of the Compensation Committee, the Company has
developed and implemented compensation policies and programs that seek to
retain and motivate employees of the Company whose performance contributes to
the Company's goal of maximizing stockholder value in an industry that
continues to experience sluggish growth, overcapacity, intense competition and
marginal profitability. The Compensation Committee is of the opinion that
managing through a depressed market, such as the environmental markets of the
last few years, requires dedicated employees who can keep the Company on track
and position it for future competitive advantage. Historically, the Company
has sought to combine salaries with stock option awards, restricted stock
awards and, when appropriate, selected cash bonuses to provide a balanced
compensation package for its executives. The balance established by the
Committee is designed to reward past performance, retain key employees and
encourage future performance. Under this structure, long-term incentives are
based upon the value of the Company's Class A Common Stock in order to more
closely align executives' interests with those of stockholders. Compensation
decisions are made by the Compensation Committee after reviewing
recommendations prepared by the Company's Chief Executive Officer, with the
assistance of other Company personnel.
In approving and establishing compensation for the Company's executives
for fiscal 1994, several factors are considered by the Compensation Committee.
Performance criteria include individual performance, overall Company
performance (based on improvement in revenues, backlog and earnings) versus
that of its competitors and performance of the price of the Company's Class A
Common Stock in comparison to prior levels to the relative stock prices of its
competitors. Emphasis is placed upon the Committee's subjective assessment of
an individual's integrity, loyalty and competence in his or her areas of
responsibility. When evaluating the foregoing performance criteria in setting
executive compensation, the Committee gives greatest weight to those factors
it believes have or will contribute the most towards maximizing stockholder
value and increasing the Company's financial stability.
Messrs. Deieso, Satzger and Mammola received salary increases during
fiscal 1994 in connection with entering into the Retention Agreements and in
recognition of these individuals' past contributions and their significant
efforts on behalf of the Company in preserving its businesses. As further
described under EXECUTIVE COMPENSATION AND OTHER INFORMATION -- "Employment
Contracts and Termination and Change-in-Control Arrangements -- Retention
Agreements", these Agreements were designed to retain the services of Messrs.
Glenn, Deieso, Satzger and Mammola during and after the transactions
contemplated by the Investment Agreement between the Company and CGE.
Discussion of 1994 Compensation for the Chairman and Chief Executive
Officer
The employment arrangement with Mr. Beck, the former Chairman and Chief
Executive Officer of the Company, was terminated on June 14, 1994 as a result
of the consummation of the transactions contemplated by the Investment
Agreement. The Termination Agreement, which includes the provisions for
severance payments to Mr. Beck, was approved by the Compensation Committee.
For the description of the Termination Agreement, see EXECUTIVE COMPENSATION
AND OTHER INFORMATION -- "Employment Contracts and Termination and
Change-in-Control Arrangements -- Termination Agreement."
In considering the compensation for Mr. Elia, the Chairman and Chief
Executive Officer since June 14, 1994, the Compensation Committee established
his base salary level in accordance with the criteria described above.
In addition to regular salary payments to Mr. Elia, the Compensation
Committee granted stock options and restricted stock awards to Mr. Elia in
fiscal 1994 as an inducement to hire and as an incentive to future
performance. In deciding to make these awards, the Compensation Committee's
primary consideration was to provide a strong incentive to Mr. Elia to improve
the Company's performance in a manner that will have a positive effect on the
market value of the Company's Class A Common Stock.
COMPENSATION AND STOCK OPTION COMMITTEE
Jacques-Henri David
Carol Lynn Green
Enrique F. Senior
John W. Morris
STOCK PERFORMANCE GRAPH
AIR & WATER TECHNOLOGIES CORPORATION
GRAPHICS
A LINE CHART ILLUSTRATING THE FOLLOWING:
DATE AWT S&P FIDELITY
---- --- --- --------
10/89 100 100 100
10/90 101 93 93
10/91 124 124 105
10/92 75 136 101
10/93 80 156 109
10/94 41 162 100
The above graph shows a comparison of cumulative total return for the
period from November 1, 1990 through October 31, 1994, in (i) the Company's
Class A Common Stock, (ii) the S&P 500 Composite Stock Price Index, and (iii)
the Fidelity Select Environmental Services Fund. The stock price performance
shown on the graph above is not necessarily indicative of future price
performance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 14, 1994, the stockholders of AWT approved the issuance of Company
securities pursuant to an Investment Agreement dated as of March 30, 1994 (the
"Investment Agreement"), among AWT, CGE, and Anjou pursuant to which, among
other things, AWT (i) issued to CGE 1,200,000 shares of the Series A Preferred
Stock convertible into 4,800,000 shares of Class A Common Stock, for cash
consideration of $60,000,000, and (ii) issued to Anjou an aggregate of
6,701,500 shares of Class A Common Stock in connection with the acquisition
from Anjou of PSG and PSG Canada. As a result, CGE increased its ownership
interest in AWT to approximately 48% of the total voting power of the
Company's voting securities. In addition, AWT benefitted from certain
financial undertakings from CGE, including a $125,000,000 loan from CGE and
became CGE's exclusive vehicle in the United States, its possessions and its
territories for CGE's water and wastewater management and air pollution
activities. CGE also has representation on AWT's Board of Directors and the
right to designate AWT's Chief Executive Officer and Chief Financial Officer
all as further described below.
CERTAIN COVENANTS OF THE COMPANY
Representation on the Board of Directors; Management
Under the terms of the Investment Agreement, the Company has agreed that
CGE will have the right to cause the Company to include, as nominees for the
Company's Board of Directors recommended by the Board for election by the
stockholders, a number of directors (rounded down to the next whole number if
CGE owns in the aggregate less than one-half of the outstanding shares,
treating the shares of Series A Preferred Stock owned by CGE as having been
converted into shares of Class A Common Stock, or, if otherwise, rounded up to
the next whole number) that is equal to the product of the total number of
directors on the Board times a fraction the numerator of which is the
aggregate number of shares of Class A Common Stock owned by CGE and its
Affiliates (assuming conversion of the Series A Preferred Stock (or other
securities convertible into or exercisable or exchangeable for shares of Class
A Common Stock) held by CGE or its Affiliates) and the denominator of which is
the total number of shares of Class A Common Stock outstanding (assuming
conversion of the Series A Preferred Stock (or other securities convertible
into or exercisable or exchangeable for Shares of Class A Common Stock) held
by CGE or its affiliates). The Company has further agreed that CGE will have
proportionate representation on all Committees of the Board (other than any
Special Committee of Independent Directors) to the same extent as CGE is
entitled to representation on the Board of Directors. "Independent Director"
is defined for purposes of the Investment Agreement as any director who is not
an employee, agent or representative of the Company, CGE or any of their
respective Affiliates or Associates (as defined in the Investment Agreement)
and may include any person acting as outside counsel or financial advisor for
either the Company or CGE or any of their respective Affiliates or Associates.
All Independent Directors must be satisfactory to CGE.
AWT has also agreed in the Investment Agreement that CGE shall have the
right to designate the Chief Executive Officer and the Chief Financial Officer
of the Company.
At the Annual Meeting held on June 14, 1994, stockholders of the Company
elected five directors who were designated by CGE (Messrs. David, Elia,
Deschamps, DeBenedictis and Kriegel). Also in accordance with the terms of
the Investment Agreement, the Board of Directors appointed as designees of CGE
Claudio Elia as Chief Executive Officer and Alain Brunais as Chief Financial
Officer.
Registration Rights
Pursuant to the terms of the Investment Agreement, CGE and Anjou will have
the right to require on up to four occasions that the Company register all
shares of Class A Common Stock, Series A Preferred Stock or the Company's 5
1/2% Convertible Subordinated Notes (the "Convertible Debt") owned from time
to time by CGE and its Affiliates for sale to the public under the Securities
Act (a "Demand Registration"), provided that the Company is not obligated (i)
to effect more than one Demand Registration in any six-month period, (ii) to
effect a Demand Registration for less than five percent of the outstanding
Class A Common Stock or (iii) to effect a Demand Registration within six
months of CGE or Anjou selling any shares pursuant to a Piggyback Registration
(as defined below). In addition, CGE and Anjou will have the right to
participate in registrations by the Company of its Class A Common Stock (a
"Piggyback Registration"). The Company will pay all registration expenses on
behalf of CGE and Anjou, including certain related fees and expenses, other
than underwriting fees and discounts.
Access to Books and Records
The Company has agreed that for so long as CGE beneficially owns directly
or indirectly at least 26% of the outstanding shares of Class A Common Stock
on a fully-diluted basis, CGE will have access on reasonable terms to the
books, records and employees of the Company and its subsidiaries and to the
provision by the Company of all information reasonably requested by CGE,
subject to confidentiality obligations that may be owed at the time by the
Company to third parties and to appropriate confidentiality arrangements and
requirements of law.
CERTAIN COVENANTS OF CGE
Exclusivity
CGE has agreed in the Investment Agreement that, for so long as CGE (with
its affiliates) is the largest stockholder of the Company, AWT will be CGE's
exclusive vehicle in the United States, its possessions and its territories
for CGE's water and waste water management and air pollution activities. CGE
also agreed to assist the Company in developing its water and waste water
management and air pollution activities in both Canada and Mexico, subject to
certain limitations, and CGE and the Company agreed to establish a privileged
commercial relationship for the development of air pollution activities in
Europe.
Affiliate Transactions
CGE has agreed on behalf of itself and its affiliates that any transactions
(or series of related transactions) between the Company and any of its
affiliates and CGE or any of its affiliates will be on an arm's length basis.
Any such transaction (or series of related transactions) having an aggregate
value in excess of $1,000,000 and any settlement of the existing litigation
between the Company and the Puerto Rico Aqueduct and Sewer Authority must be
approved by a majority of the Independent Directors or a special committee
thereof. The Company, CGE and Anjou have further agreed that all claims by
the Company against CGE or its Affiliates under the Investment Agreement may
be taken only by majority approval of such Independent Directors on Special
Committee.
Sales of Shares
CGE has also agreed to give the Company one day's prior written notice of
any sale of Company securities by CGE if, to the knowledge of CGE, such sale
would result in any party's beneficially owning more than 15% of the
outstanding shares of Class A Common Stock.
Letter Agreement
Pursuant to a letter agreement dated March 18, 1994 between the Company and
CGE, CGE purchased 500,000 shares of the Company's Class A Common Stock at $10
a share for a total purchase price of $5,000,000. CGE also agreed in the
letter agreement that, subject to approval by CGE, CGE would co-sign on a
case-by-case basis with the Company applications for letters of credit with
respect to the Company's water and waste water management and air pollution
projects, which CGE acknowledged could reach or exceed the level of letters of
credit carried by the Company at March 18, 1994.
ISSUANCE OF SERIES A PREFERRED STOCK
General
Pursuant to the terms of the Investment Agreement, AWT issued to CGE,
1,200,000 shares of its Series A Preferred Stock, $.01 par value per share,
convertible into 4,800,000 shares of Class A Common Stock, for an aggregate
cash purchase price of $60,000,000. The Series A Preferred Stock is
exchangeable at the option of the Company for the Company's Convertible Debt
with a maturity of 10 years from the date of issuance of such Convertible
Debt.
Dividends
The holders of shares of Series A Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors, out of funds legally
available therefor, cumulative dividends at an annual rate of $2.75 per share,
payable in cash quarterly in arrears in equal amounts on March 31, June 30,
September 30 and December 31 of each year (each a "Dividend Payment Date"),
commencing on June 30, 1994. Dividends other than for a fully quarterly
period accrue on the basis of the actual number of days elapsed in a 365-day
year. Quarterly dividends which are not paid in full in cash cumulate without
interest until declared and paid by the Board of Directors. Holders of the
Series A Preferred Stock entitled to receive all accrued dividends in
preference to and priority over dividends on the Company's Class A Common
Stock, and no distribution in respect of the Class A Common Stock and no
redemption, purchase, retirement or acquisition for value of Class A Common
Stock may occur, or money be set apart therefor, unless all dividends accrued
on the Series A Preferred Stock through the immediately preceding Dividend
Payment Date have been declared and paid. If the Series A Preferred Stock is
exchanged into Convertible Debt, the interest rate will be 5 1/2% per annum.
The Company paid approximately $970,000 to CGE as dividends on the Series A
Preferred Stock during fiscal 1994.
Liquidation Preference
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of shares of Series A
Preferred Stock will be entitled to be paid out of the assets of the Company
available for distribution to its stockholders an amount in cash equal to $50
for each share outstanding, plus accrued and unpaid dividends thereon to the
date fixed for liquidation, dissolution or winding up, whether or not declared
to the date of such payment, before any payment shall be made or any assets
distributed to the holders of the Class A Common Stock. Neither a voluntary
sale, lease, or other transfer of all or substantially all of the assets of the
Company, nor a consolidation or merger of the Company with or into another
person, will be considered a liquidation, dissolution or winding up of the
Company for these purposes.
Exchange
Commencing June 30, 1997, the Series A Preferred Stock is exchangeable, in
whole and not in part, at the sole option of the Company, at any time, for the
Company's Convertible Debt, having a maturity of ten years from the date of
issuance of the Series A Preferred Stock, on not less than 30 nor more than 60
days' prior written notice. Each share of Series A Preferred Stock is
exchangeable for $50 principal amount of Convertible Debt.
Conversion
The Series A Preferred Stock and Convertible Debt are convertible, in whole
or in part, at the option of the holder, at any time and from time to time,
into shares of Class A Common Stock at a conversion price equal to $12.50 per
share of Class A Common Stock. The ratio at which the Series A Preferred
Stock and Convertible Debt are convertible into shares of Class A Common Stock
is subject to adjustment (using a weighted average in the case of items (iii),
(iv), (v) and (vi) below so as to preserve the fully diluted percentage of
Class A Common Stock into which the Series A Preferred Stock and Convertible
Debt are convertible) in the event of: (i) stock dividends, stock
reclassifications or recapitalizations, stock splits, reverse splits and the
like; (ii) dividends or other distributions of cash or assets or evidence of
indebtedness; (iii) dividends or other distributions of securities or rights
convertible into or exercisable for shares of any class of common stock of the
Company at a price less than the then conversion price per common share of the
Series A Preferred Stock; (iv) issuance of shares of any class of common stock
of the Company (other than common stock issued upon conversion of the Series A
Preferred Stock, the Convertible Debt or the Company's 8% Convertible
Subordinated Debentures due May 15, 2015, or pursuant to the Company's stock
option plans or other stock related employee compensation plans approved by
the Board of Directors) at a price less than the then conversion price per
common share of the Series A Preferred Stock; (v) issuance of securities or
rights convertible into or exercisable for shares of any class of common stock
of the Company at a purchase price less than the then conversion price per
common share of the Series A Preferred Stock; and (vi) repurchase by the
Company, directly or indirectly, of shares of any class of common stock at a
price in excess of the then conversion price per common share of the Series A
Preferred Stock.
Redemption
The Series A Preferred Stock is not redeemable before June 30, 1997.
Between June 30, 1997 and June 30, 2000, the Series A Preferred Stock will be
redeemable, in whole or in part, at the option of the Company on not less than
30 or more than 60 days' prior written notice. The Company may exercise this
option during such time period only if for 20 trading days within any period
of 30 consecutive trading days, including the last trading day of such period,
the closing price of the Class A Common Stock exceeds $18.75, subject to
adjustments. After June 30, 2000, the Series A Preferred Stock will be
redeemable by the Company at any time. The same redemption provisions apply
to the Convertible Debt. The redemption price is 103.85% of the liquidation
preference, plus accrued and unpaid dividends to the date of redemption, after
June 30, 1997 and will decrease by .55% each year until it reaches 100% of the
liquidation preference, plus accrued and unpaid dividends to the date of
redemption, whereupon it will remain fixed. The Series A Preferred Stock is
perpetual preferred stock.
Voting
Holders of Series A Preferred Stock and Convertible Debt are entitled to
vote with the holders of Class A Common Stock on all matters submitted for a
vote of holders of Class A Common Stock, and are entitled to that number of
votes equal to the number of votes to which the shares of Class A Common stock
issuable upon conversion of such shares of Series A Preferred Stock and
Convertible Debt would have been entitled if such shares of Class A Common
Stock had been outstanding at the time of the applicable vote and related
record date. In addition, the Series A Preferred Stock and Convertible Debt
will vote separately as a class on any amendments to the Restated Certificate
of Incorporation or By-Laws of the Company, whether by merger, consolidation,
combination, reclassification or otherwise, which would alter or circumvent
the voting powers, rights and preferences of the Series A Preferred Stock or
Convertible Debt. No amendment or alteration of the dividends payable,
liquidation preference or par value of the Series A Preferred Stock, or
interest rate and principal amount of the Convertible Debt, may be effected
without the consent of each holder of Series A Preferred Stock or Convertible
Debt, respectively.
Ranking
The Series A Preferred Stock with respect to dividend rights and rights on
liquidation, winding up and dissolution, ranks prior to all classes of the
Company's equity securities, including the Class A Common Stock. The
Convertible Debt will be subordinated to the Company's senior debt and senior
subordinated debt.
Restrictions on Resale; Registration Rights
The Series A Preferred Stock is a "restricted security" as that term is
defined in Rule 144 under the Securities Act. Consequently, resales of such
shares by CGE, unless registered under the Securities Act, are subject to the
timing, volume and other limitations of Rule 144. Under the Investment
Agreement, CGE has certain registration rights with respect to such shares.
See "-- Certain Covenants of the Company -- Registration Rights" above.
CGE CREDIT AGREEMENT
In connection with the Investment Agreement, the Company and CGE entered
into a Credit Agreement dated as of June 14, 1994 pursuant to which the
Company received a $125,000,000 term loan from CGE. The term loan is an
unsecured facility bearing interest at a rate based upon one, two, three or
six-month LIBOR, as selected by AWT, plus 125 basis points and has a final
maturity of June 15, 2001. The term loan contains certain financial and other
restrictive covenants with respect to the Company relating to, among other
things, the maintenance of certain financial ratios, and restrictions on the
sale of assets and the payment of dividends on or the redemption, repurchase,
acquisition or retirement of securities of the Company or its subsidiaries.
On June 14, 1994, the Company utilized a substantial portion of the proceeds
from the term loan to retire its 11.18% Senior Notes with The Prudential
Insurance Company of America. The Company paid approximately $1,857,000 to
CGE as interest on the term loan during fiscal 1994.
OTHER RELATED TRANSACTIONS
Mr. Senior, a Director of the Company since October 1987, is a Managing
Director of Allen & Company, which has performed investment banking and other
services for the Company from time to time. Allen & Company served as a
financial advisor to the Company in connection with the transactions
contemplated by the Investment Agreement. Ms. Green, a Director of the
Company since June 1994, is a partner at the law firm of Bryan Cave. Bryan
Cave has performed various legal services for the Company from time to time.
On August 20, 1990, the Board of Directors of AWT made a one-year,
interest-free, unsecured loan of $2,300,000 to Mr. Beck, the former Chairman
of the Board and Chief Executive Officer of AWT, so that he could satisfy
certain personal financial obligations without having to sell a substantial
portion of his equity investment in AWT. Under the terms of the Termination
Agreement with Mr. Beck, as discussed more fully in EXECUTIVE COMPENSATION AND
OTHER INFORMATION -- "Employment Contracts and Termination and
Change-in-Control Arrangements -- Termination Agreement", 20% of the principal
amount of the loan will be forgiven in each of the next five years. AWT does
not currently intend to make loans to other members of AWT management with
terms similar to those of Mr. Beck's loan.
PROPOSAL 2: TO RATIFY APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen & Co. , independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending October 31, 1995. Arthur Andersen & Co. has served as the
Company's independent public accountants since July 13, 1987. A
representative of Arthur Andersen & Co. is expected to be present at the
Annual Meeting with an opportunity to make a statement if he or she desires
to do so and to respond to appropriate questions. The Board of Directors
recommends a vote FOR this proposal. If the appointment is not ratified by
stockholders, the Board of Directors is not obligated to appoint other
independent public accountants, but the Board of Directors will consider such
unfavorable vote.
STOCKHOLDER PROPOSALS
Proposals of the Company's stockholders intended to be presented at the
Company's 1996 Annual Meeting of Stockholders must be received by the Company
no later than January 8, 1996 to be included in the Company's proxy statement
and form of proxy relating to such Annual Meeting. Any proposal should be
addressed to Douglas A. Satzger Esq., Secretary and General Counsel, Air &
Water Technologies Corporation, U.S. Highway 22 West and Station Road,
Branchburg, New Jersey 08876 and should be sent by certified mail, return
receipt requested.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for action
at the forthcoming Annual Meeting. However, the proxy confers upon the
persons named therein discretionary authority to act upon any other matter
that may properly come before the meeting.
The Company will furnish a copy of its Annual Report on Form 10-K
(including financial statements and any financial statement schedules but
excluding other exhibits), without charge, to any person upon request addressed
to Douglas A. Satzger, Esq., Secretary and General Counsel, Air & Water
Technologies Corporation, U.S. Highway 22 West and Station Road, Branchburg,
New Jersey 08876.
By Order of the Board of Directors
/s/ DOUGLAS A. SATZGER
----------------------------
DOUGLAS A. SATZGER
Secretary
May 8, 1995
Branchburg, New Jersey
AIR & WATER TECHNOLOGIES CORPORATION
This Proxy is Being Solicited by
Air & Water Technologies Corporation's
Board of Directors
The undersigned, revoking any previous proxies relating to these
shares, hereby acknowledges receipt of the Notice and Proxy Statement dated
May 8, 1995 in connection with the Annual Meeting to be held at 10:00 a.m. on
Thursday, June 8, 1995 at the Somerset Marriott Hotel, located at 110 Davidson
Avenue, Somerset, New Jersey and hereby appoints Claudio Elia, Alain Brunais
and Douglas A. Satzger, and each of them (with full power to act alone), the
attorneys and proxies of the undersigned, with power of substitution in each,
to vote all shares of the Class A Common Stock of AIR & WATER TECHNOLOGIES
CORPORATION (the "Company") registered in the name provided herein which the
undersigned is entitled to vote at the 1995 Annual Meeting of Shareholders,
and at any adjournments thereof, with all the powers the undersigned would
have if personally present. Without limiting the general authorization hereby
given, said proxies are, and each of them is, instructed to vote or not as
follows on the proposals set forth in said Proxy.
In their discretion the proxies are authorized to vote upon such
other matters as may properly come before the meeting or any adjournments
thereof.
ELECTION OF DIRECTORS
Douglas M. Costle, Jacques-Henri David, Nicholas DeBenedictis,
Jean-Dominique Deschamps, Claudio Elia, Carol Lynn Green,
William Kriehel, John W. Morris and Enrique P. Senior (of if
any nominee is not available for election, such substitute as
the Board of Directors may designate)
SEE REVERSE SIDE FOR ALL TWO PROPOSALS. If you wish
to vote in accordance with the Board of Directors'
recommendations, just sign on the reverse side.
You need not mark any boxes.
[ X ] Please mark
votes as in this
example.
This Proxy when executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR Proposals 1 and 2.
FOR WITHHELD
1. Election of
Directors
FOR AGAINST ABSTAIN
1. Proposal to ratify
the appointment of
Arthur Andersen &
Co. as the Company's
independent public
accountants for the
fiscal year ending
October 31, 1995.
For, except vote withheld from the following nominee(s):
___________________________________
SIGNATURE(S) ______________________________ DATE ________________
Please sign exactly as example(s) appears hereon. Joint owners should each
sign. When ______________ as attorney, executor, administrator, trustee or
guardian, please _____________ full title ________________.
