<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BTU International, Inc.
(Name of Registrant as Specified In Its Charter)
BTU International, Inc.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BTU INTERNATIONAL, INC.
23 ESQUIRE ROAD
NORTH BILLERICA, MASSACHUSETTS 01862-2596, USA
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 1997
------------------------
Notice is hereby given that the Annual Meeting of Stockholders of BTU
International, Inc. will be held at the offices of the Company, 23 Esquire Road,
North Billerica, Massachusetts, at 10:00 A.M. on Friday, May 30, 1997 for the
following purposes:
1. To elect four directors to serve for the ensuing year.
2. To approve an amendment to the Company's 1993 Equity Incentive Plan.
3. To transact any other business that may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 7, 1997 are
entitled to notice of and to vote at the meeting.
If you are unable to be present personally, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
JOHN E. BEARD
Secretary
April 24, 1997
<PAGE> 3
ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 1997
------------------------
PROXY STATEMENT
------------------------
The enclosed proxy is solicited on behalf of the Board of Directors of BTU
International, Inc. ("BTU" or the "Company") to be voted at the Annual Meeting
of Stockholders to be held on May 30, 1997 or at any adjournment thereof. The
cost of solicitation of proxies will be borne by BTU. Directors, officers and
employees of BTU may also solicit proxies by telephone, telegraph or personal
interview. BTU will reimburse banks, brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending
proxy materials to the beneficial owners of shares.
Only stockholders of record at the close of business on April 7, 1997 are
entitled to notice and to vote at the meeting. There were 7,280,096 shares
outstanding on that date, each of which is entitled to one vote.
Shares represented by proxies in the form enclosed, if properly executed
and returned and not revoked, will be voted as specified, but where no
specification is made, the shares will be voted to fix the number of directors
at four, for the election as directors of the nominees named below and for the
amendment to the Company's 1993 Equity Incentive Plan. To be voted, proxies must
be filed with the Secretary prior to voting. Proxies may be revoked at any time
before exercise by filing a notice of such revocation with the Secretary.
The holders of a majority of the issued and outstanding shares of Common
Stock, present in person or represented by proxy and entitled to vote, will
constitute a quorum for the transaction of business at the Annual Meeting.
Directors shall be elected by a plurality of the votes cast at the meeting for
the election of directors. The affirmative vote of a majority of shares, present
or represented by proxy and entitled to vote on the amendment, is required for
approval. Abstentions from voting and broker non-votes will have no effect on
the outcome of either matter.
The Annual Report to Stockholders for BTU's fiscal year ended December 31,
1996 has been mailed with this proxy statement. This proxy statement and the
enclosed proxy were mailed to stockholders on the same date as the date of the
Notice of Annual Meeting. The principal executive offices of BTU are located at
23 Esquire Road, North Billerica, Massachusetts 01862-2596.
1. ELECTION OF DIRECTORS
The persons named in the enclosed proxy intend to vote each share as to
which a proxy has been properly executed and returned and not revoked to fix the
number of directors at four and in favor of the election as directors of the
four nominees named below, all of whom are now directors of BTU, unless
authority to vote for the election of any or all of such nominees is withheld by
marking the proxy to that effect.
The persons elected as directors will serve until the next Annual Meeting
of Stockholders and until their successors are elected and shall qualify. It is
expected that each of the nominees will be able to serve, but if any nominee is
unable to serve, the proxies reserve discretion to vote or refrain from voting
for a substitute nominee or nominees or to fix the number of directors at a
lesser number.
<PAGE> 4
<TABLE>
<CAPTION>
BUSINESS EXPERIENCES AND DIRECTOR
NAME CURRENT DIRECTORSHIPS AGE SINCE
- ----------------------------------- ------------------------------------------ ---- ---------
<S> <C> <C> <C>
Paul J. van der Wansem............. President, Chief Executive Officer and 57 1979
Chairman of the Board of Directors of the
Company
Alexander V. d'Arbeloff............ Director of the Company; Chief Executive 69 1984
Officer and Chairman of the Board of
Directors of Teradyne, Inc., a
manufacturer of semiconductor test
equipment; Director, Stratus Computer,
Inc., a computer manufacturer; Director,
PRI Automation, Inc., a semiconductor
equipment manufacturer(1)(2)
David A.B. Brown................... Director of the Company; President of The 53 1989
Windsor Group, Inc., a management
consulting firm of which he is co-founder;
Director, EMCOR Group, Inc., an electrical
and mechanical engineering company;
Director, Marine Drilling Companies, an
owner and operator of offshore drilling
rigs.(1)(2)
J. Chuan Chu....................... Director of the Company; Chairman of 77 1991
Columbia International Corporation, an
engineering firm; Senior Advisor, Office
of the President of SRI International, an
international consulting firm; Director,
Interproject Corp., an international
construction and trading company; Senior
Research Professor, Development Research
Center, State Council, China(1)(2)
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Stock Option and Compensation Committee.
During 1996, the Board of Directors held seven meetings. Mr. van der Wansem
attended 100% of the Board and relevant committee meetings during 1996, Mr.
Brown attended 86% of the same meetings, and Mr. d'Arbeloff and Dr. Chu attended
71% of the same meetings. Each director who is not an officer or employee of the
Company is entitled to receive $5,000 annually, plus $750 for each directors
meeting attended and $500 for each committee meeting attended independent of a
directors meeting.
During 1996 the Company paid $ 15,000 in a consulting fee to a company of
which Dr. Chu is the chairman.
Under the Company's 1989 Stock Option Plan for Non-Employee Directors, on
April 30, 1996 each non-employee director received an option to purchase 500
shares of BTU common stock with an exercise price equal to the fair market value
of the stock on that date ($4.75 per share). These options become exercisable as
to one-fourth of the shares on each of the first four anniversaries of the date
of grant. In addition, on April 30, 1996, the Board awarded to each non-employee
director from the Company's 1993 Equity Incentive Plan an additional option
covering 500 shares of BTU common stock at the same exercise price and with the
same vesting schedule.
The Audit Committee, composed of Alexander V. d'Arbeloff, J. Chuan Chu and
David A.B. Brown, did not meet independent of the Board of Directors meetings
during 1996. The Committee recommends to the Board of Directors the independent
public accountants to be engaged by the Company; reviews with the independent
public accountants and management the Company's internal accounting procedures
and controls; and reviews with the independent public accountants the scope and
results of the auditing engagement.
The Stock Option and Compensation Committee, composed of Alexander V.
d'Arbeloff, J. Chuan Chu and David A.B. Brown, administers the Company's stock
option and compensation plans and provides
2
<PAGE> 5
recommendations to the Board regarding compensation matters. The Committee held
no meetings independent of the Board of Directors meetings during 1996.
The Company has no nominating committee.
COMPLIANCE UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors, its officers and any persons holding more than ten percent of the
Company's Common Stock are required to report to the Securities and Exchange
Commission holdings and transactions in the Common Stock. Specific due dates for
these reports have been established, and the Company is required to report in
this proxy statement any failure during 1996 to file by these dates. The
Company's directors, officers and ten percent holders satisfied all of these
filing requirements for 1996, except that Messrs. Brown, Chu and d'Arbeloff each
inadvertently failed to file on a timely basis a Form 5 reporting the exempt
award of an option. In making these statements, the Company has relied on the
written representations of its directors, officers and ten percent holders and
copies of the reports that they have filed with the Commission and the Company.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding beneficial
ownership as of March 7, 1997 of the Company's Common Stock (i) by each person
known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) by each of the Company's directors and nominees, (iii) by each
executive officer of the Company and (iv) by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------
NUMBER OF PERCENT OF
DIRECTORS AND EXECUTIVE OFFICER SHARES CLASS
------------------------------- --------- ----------
<S> <C> <C>
Paul J. van der Wansem(2)...................................... 1,769,208 24.3%
Alexander V. d'Arbeloff........................................ 33,000 *
David A.B. Brown............................................... 3,000 *
J. Chuan Chu................................................... 1,475 *
David H. Barry(3).............................................. 14,050 *
Thomas P. Kealy(3)............................................. 6,230 *
All directors and executive officers as a group (6
persons)(4).................................................. 1,826,963 25.1%
5% BENEFICIAL OWNERS
--------------------
FMR Corp.(5)................................................... 434,800 5.9%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
* Less than one percent
(1) Except as otherwise noted, each person or entity named in the table has sole
voting and investment power with respect to all shares of Common Stock shown
as beneficially owned by him or it.
(2) Includes 120,000 shares of Common Stock held by trusts, of which Mr. van der
Wansem is a trustee, for the benefit of certain members of Mr. van der
Wansem's family. Mr. van der Wansem disclaims beneficial ownership in these
shares held this trust. Also includes 73,208 shares held in a family limited
partnership, in which Mr. van der Wansem is a general partner and a limited
partner. Includes 7,500 shares, which are as a result of options which are
exercisable within 60 days of the record date. Mr. van der Wansem's address
is c/o BTU International, Inc. 23 Esquire Road, North Billerica, Ma.
01862-2596.
(3) Includes 3,650 shares for Mr. Barry and 5,250 for Mr. Kealy which are a
result of options exercisable within 60 days of the record date.
(4) Includes 23,375 shares which are as a result of options which are
exercisable within 60 days of the record date.
3
<PAGE> 6
(5) According to information filed on February 14, 1997 with the Securities and
Exchange Commission in a Schedule 13G, Edward C. Johnson 3d, FMR Corp.,
through its wholly owned subsidiary Fidelity Management & Research Company
("Fidelity"), and the Fidelity Low-Priced Stock Fund ("the Fund") each has
sole power to dispose of the 434,800 shares owned by the Fund. Fidelity
carries out voting of the shares under written guidelines established by the
Fund's Board of Trustees.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation
paid to or accrued on behalf of the persons who on December 31, 1996 were the
chief executive officer and the two other most highly paid executive officers of
the Company (the "Named Executive Officers") for services to the Company for the
years 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
- ---------------------------------------- ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Paul J. van der Wansem.................. 1996 250,218 -- 12,000 8,250
Chairman and.......................... 1995 249,861 167,229 -- 7,750
Chief Executive Officer............... 1994 237,554 123,936 15,000 7,250
David H. Barry.......................... 1996 130,430 -- 5,000 2,570
Vice President........................ 1995 130,110 56,435 -- 2,361
and General Manager................... 1994 117,526 42,144 8,000 1,875
Thomas P. Kealy......................... 1996 98,146 -- 5,000 1,864
Vice President, Corporate
Controller......................... 1995 98,109 25,842 -- 1,780
and Chief Accounting Officer....... 1994 89,284 19,560 4,000 1,415
</TABLE>
(1) Consists of Company contributions to the 401(k) plan and, in the case of Mr.
van der Wansem, a Company payment of $5,250 for term life insurance.
OPTION GRANTS IN 1996
The following table sets forth information with respect to options granted
to the Named Executive Officers during 1996.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------
GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---------- ------------- ----------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Paul J. van der Wansem........ 12,000 9.4% $4.88125 04/16/01 $16,183 $36,838
David H. Barry................ 5,000 3.9% $ 4.4375 04/16/01 $ 6,130 $13,546
Thomas P. Kealy............... 5,000 3.9% $ 4.4375 04/16/01 $ 6,130 $13,546
</TABLE>
4
<PAGE> 7
The table below sets forth information with respect to the exercise of
options during 1996 and the aggregate value at year end of options held by the
Named Executive Officers.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, DECEMBER 31,
ACQUIRED ON 1996 1996
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE(#) UNEXERCISABLE($)
- ------------------------------------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Paul J. van der Wansem..................... 22,500 47,859 0/16,500 0/4,500
David H. Barry............................. 14,600 36,858 0/7,400 0/2,400
Thomas P. Kealy............................ 8,000 25,000 2,800/6,200 2,800/1,200
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Brown, Chu, and d'Arbeloff , none of whom is or was an executive
officer of the Company during 1996, served on the Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee has submitted the following report:
In February 1996 the Compensation Committee, as part of the Board of
Directors meeting, adopted a 1996 Management Incentive Compensation Plan
pursuant to which cash bonuses were to be paid to executives of the Company
based on achievement of both levels of earnings per share and accomplishment of
specific organizational goals. During 1996, as a result of this plan, no award
was payable if 1996 earnings per share amounted to less than $0.60. At $0.60,
the minimum or 50% of target bonus was payable; at $0.75, 100% of target bonus
was payable ; at $0.85, the maximum or 150% of target bonus was payable.
Operating results in 1996 resulted in no payments pursuant to the 1996
Management Incentive Compensation Plan as actual earnings per share where below
minimum target levels.
The Company has an Incentive Profit Sharing Plan for all eligible
employees. The persons included in the 1996 Management Incentive Compensation
Plan are eligible to participate in the Company-wide profit sharing plan, but
any earnings they derive from this plan during the year are deducted from their
bonuses earned under the 1996 Management Incentive Compensation Plan.
Operating results in 1996 resulted in no payments pursuant to the Incentive
Profit Sharing Plan as actual earnings were below minimum eligible levels.
David A.B. Brown, Chairman
Alexander D. d'Arbeloff
J. Chuan Chu
5
<PAGE> 8
COMPARATIVE STOCK PERFORMANCE
The following graph shows the cumulative total return on BTU Common Stock
since December 31, 1991 compared to the Standard & Poors 500 Index and the
Standard & Poors, Technology Sector Index. Historical stock price performance is
not necessarily indicative of future performance.
Research Total Return - Data Summary
<TABLE>
BTUI
<Captions>
Cumulative Total Return
---------------------------------------------
12/91 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C> <C>
BTU INTL INC BTUI 100 163 213 475 469 300
S & P 500 1500 100 108 118 120 165 203
S & P TECHNOLOGY SECTOR ITES 100 104 128 149 215 305
</TABLE>
APPROVAL OF AMENDMENT NO. 1 TO THE 1993 EQUITY INCENTIVE PLAN
The 1993 Equity Incentive Plan (the "Incentive Plan") is administered by
the Compensation Committee and is designed to advance the Company's interests by
enhancing its ability to attract and retain employees and others in a position
to make significant contributions to the success of the Company through
ownership of shares of Common Stock. A total of 541,183 shares of Common Stock
which became available due to the expiration of the previous 1982 Stock Option
Plan, have been reserved for issuance under the Incentive Plan, subject to
adjustment for stock dividends and similar events. As of April 7, 1997 there
were 324,053 shares of Common Stock available for award. The closing price of
the Common Stock on that date was $2.75.
The Incentive Plan was adopted by the Board of Directors on February 22,
1993. Stockholders approved the Incentive Plan at the Annual Meeting of
Stockholders held on May 14, 1993. On April 23, 1997, the Board of Directors
adopted Amendment No. 1 to the Incentive Plan (the "Amendment") which provides
for per-individual limitations on the number of shares of Common Stock issuable
upon exercise of options and stock appreciation rights ("SARs") under the
Incentive Plan in order to comply with Section 162(m) of the Internal Revenue
Code. Stockholders are being requested to approve the Amendment at the Annual
Meeting. If the Amendment is not approved by the Stockholders, no additional
grants of options or SARs under the Incentive Plan will be permitted to be made
to the Named Executive Officers. The following summary of the Incentive Plan and
the Amendment is qualified in its entirety by the full text of the Incentive
Plan and the Amendment which are available without charge upon request to Thomas
P. Kealy, Vice President, Corporate Controller and Chief Accounting Officer.
6
<PAGE> 9
GENERAL
Under the Incentive Plan, the Compensation Committee may grant stock
options (both incentive stock options and nonstatutory options), stock
appreciation rights, restricted stock, unrestricted stock, deferred stock
grants, and performance awards, as well as loans in connection with such grants
and awards and cash payments intended to offset income taxes due with respect to
any such grant or award. Awards under the Incentive Plan may also include
provision for the payment of dividend equivalents with respect to the shares
subject to the awards. Employees of the Company and its subsidiaries and other
persons or entities who, in the Compensation Committee's opinion, are in a
position to make a significant contribution to the success of the Company are
eligible to receive awards under the Incentive Plan. The Amendment provides that
(i) the maximum number of shares of Common Stock for which options may be
granted to any individual in any year of the Incentive Plan shall be 250,000 and
(ii) the maximum number of shares of Common Stock subject to stock appreciation
rights granted to an individual in any year of the Incentive Plan shall likewise
be 250,000. These per-individual limitations are intended to be construed and
applied consistent with the rules and regulations under Section 162(m) of the
Internal Revenue Code.
Stock Options. The exercise price of an incentive stock option granted
under the Incentive Plan may not be less than 100% (110% in the case of ten
percent shareholders) of the fair market value of the Common Stock at the time
of grant. The exercise price of a nonstatutory option granted under the
Incentive Plan is determined by the Compensation Committee. The Compensation
Committee sets the term of each option, which cannot exceed ten years from grant
(five years from grant in the case of an incentive stock option granted to a ten
percent shareholder), and specifies the time or times each option will be
exercisable. The exercise price may be paid in cash or check acceptable to the
Company. Subject to certain additional limitations, the Compensation Committee
may also permit the exercise price to be paid by tendering shares of Common
Stock, by using a promissory note, by delivering to the Company an undertaking
by a broker to deliver promptly sufficient funds to pay the exercise price, or a
combination of the foregoing.
Stock Appreciation Rights (SARs). SARs may be granted either alone or in
tandem with stock option grants. Each SAR entitles the participant, in general,
to receive upon exercise the excess of a share's fair market value at the date
of exercise over the share's fair market value on the date the SAR was granted.
The Incentive Plan also provides for SARs entitling the participant, upon
exercise, to receive an amount based on certain other measures, including SARs
that entitle the recipient to receive, following a change in control of the
Company as determined by the Compensation Committee, an amount measured by
specified values or averages of values prior to the change in control. If an SAR
is granted in tandem with an option, the SAR will be exercisable only to the
extent the option is exercisable. To the extent the option is exercised, the
accompanying SAR will cease to be exercisable, and vice versa.
Stock Awards. The Incentive Plan provides for awards of nontransferable
shares of restricted Common Stock subject to forfeiture as well as of
unrestricted shares of Common Stock. Restricted Common Stock must be forfeited
to the Company if the participant ceases to be an employee before the
restriction lapse. Other awards under the Incentive Plan may also be settled
with restricted Common Stock.
The Incentive Plan also provides for deferred grants entitling the
recipient to receive shares of Common Stock in the future at such times and on
such conditions as the Compensation Committee may specify, and performance
awards entitling the recipient to receive cash or Common Stock following the
attainment of performance goals determined by the Compensation Committee.
Performance conditions and provisions for deferred stock may also be attached to
other awards under the Incentive Plan.
The Compensation Committee may approve loans from the Company in connection
with the purchase of Common Stock under an award or the payment of taxes in
connection with an award, and may provide for outright cash grants to make
participants whole for certain taxes. A loan under the Incentive Plan will have
such provision as the Compensation Committee determines but may not have a term
exceeding ten years.
Except as otherwise provided by the Compensation Committee, if a
participant dies, options and SARs exercisable immediately prior to death may be
exercised by the participant's executor, administrator or transferee during a
period of one year following such death (or for the remainder of their original
term, if less).
7
<PAGE> 10
Options and SARs not exercisable at a participant's death terminate. Outstanding
awards of Restricted Stock must be transferred to the Company upon a
participant's death and, similarly, Deferred Stock grants, performance awards
and supplemental awards to which a participant is not irrevocably entitled will
be forfeited unless otherwise provided.
In the case of termination of a participant's association with the Company
for reasons other than death, options and SARs remain exercisable, to the extent
they were exercisable immediately prior to termination, for three months (or for
the remainder of their original term, if less), shares of Restricted Stock must
be resold to the Company, and other awards terminate, except as otherwise
provided.
In the case of certain mergers, consolidations or other transactions in
which the Company is acquired or is liquidated, all outstanding awards will
terminate. The Compensation Committee may, however, in its discretion cause
unvested awards to vest or become exercisable, remove performance or other
conditions on the exercise of or vested right to an award, or in certain
circumstances provide for replacement awards.
FEDERAL TAX EFFECTS
The following discussion summarizes certain federal income tax consequences
of the exercise and receipt of options under the Incentive Plan. The summary
does not purport to cover federal employment tax or other federal tax
consequences that may be associated with the plans, nor does it cover state,
local or non-U.S. taxes.
Incentive Stock Options. In general, an optionee realizes no taxable
income upon the grant or exercise of an incentive stock option ("ISO"). However,
the exercise of an ISO may result in an alternative minimum tax liability to the
optionee. With certain exceptions, a disposition of shares purchased under an
ISO within two years from the date of grant or within one year after exercise
produces ordinary income to the optionee (and a deduction to the Company) equal
to the value of the shares at the time of exercise less the exercise price. Any
additional gain recognized in the disposition is treated as a capital gain for
which the Company is not entitled to a deduction. If the optionee does not
dispose of the shares until after the expiration of these one- and two-year
holding periods, any gain or loss recognized upon a subsequent sale is treated
as a long-term capital gain or loss for which the Company is not entitled to a
deduction.
Nonstatutory Options. In general, in the case of a nonstatutory option,
the optionee has no taxable income at the time of grant but realizes income in
connection with exercise of the option in an amount equal to the excess (at time
of exercise) of the fair market value of the shares acquired upon exercise over
the exercise price; a corresponding deduction is available to the Company; and
upon a subsequent sale or exchange of the shares, appreciation and depreciation
after the date of exercise is treated as capital gain or loss for which the
Company is not entitled to a deduction.
In general, an ISO that is exercised more than three months after
termination of employment (other than termination by reason of death) is treated
as a nonstatutory option. ISOs granted after 1986 are also treated as
nonstatutory options to the extent they first become exercisable by an
individual in any calendar year for shares having a fair market value
(determined as of the date of grant) in excess of $100,000.
Under the so-called "golden parachute" provisions of the Internal Revenue
Code, options that vest in connection with a change in control of the Company
may be required to be valued and taken into account in determining whether the
participant has received payments in the nature of compensation that are
contingent on the change in control ("parachute payments") equal to or greater
than three times the participant's average compensation for the five years ended
prior to the year in which the change in control occurs. If this limit is
exceeded, the excess of the participant's parachute payments over one times the
five-year average base amount may be subject to an additional 20% federal tax
and may be nondeductible to the Company.
RECOMMENDATION OF YOUR BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors believes that the Incentive Plan promotes the
interests of the Company and the stockholders and enables the Company to
attract, retain and reward persons important to the Company's success. If the
Amendment is not approved by the Stockholders, no additional grants of options
or SARs under the Incentive Plan will be permitted to be made to the Named
Executive Officers. Accordingly, the
8
<PAGE> 11
Board of Directors has approved the adoption of the Amendment and recommends
that the stockholders vote "FOR" the proposal to adopt the Amendment. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
otherwise.
AUDIT MATTERS
Arthur Andersen LLP. has been selected to examine the financial statements
of the Company for the year ended December 31, 1997, and to report the results
of their examination.
A representative of Arthur Andersen LLP. is expected to be present at the
Annual Meeting and will be afforded the opportunity to make a statement and to
respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders submitted for consideration at the Annual Meeting
of Stockholders in 1998 must be received by the Company no later than
December 8, 1997.
OTHER BUSINESS
The Board of Directors knows of no business that will come before the
meeting for action except as described in the accompanying Notice of Meeting.
However, as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
FORM 10-K
A COPY OF BTU'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE (EXCEPT FOR A REASONABLE CHARGE
FOR FURNISHING EXHIBITS) BY WRITING TO: OFFICE OF INVESTOR RELATIONS, BTU
INTERNATIONAL, INC., 23 ESQUIRE ROAD, NORTH BILLERICA, MASSACHUSETTS 01862.
9
<PAGE> 12
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DETACH HERE BTU2
ANNUAL MEETING OF BTU INTERNATIONAL, INC.
MAY 30,1997
The undersigned hereby constitutes and appoints Paul J. van der Wansem
and Thomas P. Kealy, or either of them with power of substitution to each,
proxies to vote and act at the Annual Meeting of Stockholders on May 30, 1997
P at 10:00 a.m., and at any adjournments thereof, upon and with respect to the
R number of shares of Common Stock of the company as to which the undersigned
O may be entitled to vote or act. The undersigned instructs such proxies, or
X their substitutes, to vote in such manner as they may determine on any
Y matters which may come before the meeting, all as indicated in the
accompanying Notice of Meeting and Proxy Statement, receipt of which is
acknowledged, and to vote on the following as specified by the undersigned.
All proxies heretofore given by the undersigned in respect of said meeting
are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. Unless
otherwise specified in the boxes provided on the reverse side hereof, the
proxy will be voted IN FAVOR of all nominees for director, IN FAVOR of the
amendment to the 1993 Equity Incentive Plan and in the discretion of the
named proxies as to any matter that may come before this meeting or any
adjournments thereof.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
<PAGE> 13
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DETACH HERE BTU 1
[X]Please mark -----
votes as in
this example
PLEASE DO NOT FOLD THIS PROXY.
1. To fix the number of Directors
for the ensuing year at (4),
and to elect the following (4)
Directors.
FOR AGAINST ABSTAIN
Nominees: Paul J. van der Wansem, 2. The Approval [ ] [ ] [ ]
Alexander V. d'Arbeloff, of an Amendment
David A.B. Brown and to the 1993 Equity
J. Chuan Chu. Incentive Plan.
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] [ ]
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
--------------------------------------
For all nominees except as noted above
Please sign exactly as name(s)
appear hereon. When signing as
attorney, executor, administrator,
trustee, or guardian, please sign
your full title as such. Each joint
owner should sign.
Signature Date Signature Date
---------------- ---------- ---------------- --------
<PAGE> 14
0857-PS-97
