<PAGE> 1
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 Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.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)
(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 previously paid 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 22, 1998
---------------
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 22, 1998 for the
following purposes:
1. To elect four directors to serve for the ensuing year.
2. To approve Amendment to the Company's 1993 Equity Incentive Plan
increasing by 500,000 the shares available under the plan.
3. To approve the 1998 Stock Option Plan for Non-Employee Directors.
4. 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 8, 1998 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
North Billerica, Massachusetts
April 24, 1998
<PAGE> 3
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998
---------------
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 (the "Meeting") to be held on May 22, 1998 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. The Company has
retained Corporate Investor Communications for a fee of $4,500, plus reasonable
out of pocket expenses, to solicit proxies from banks, brokers and nominees.
The holders of record of shares of common stock, par value $.01 per share,
of the Company (the "Common Stock") at the close of business on April 8, 1998
are entitled to notice and to vote at the Meeting. There were 7,177,662 shares
of Common Stock outstanding on that date, each of which is entitled to one vote
on each matter to come before the meeting.
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, for
Amendment No. 2 to the Company's 1993 Equity Incentive Plan and for the approval
of the 1998 Stock Option Plan for Non-Employee Directors. 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 Meeting. Directors
shall be elected by a plurality of the votes cast at the meeting for the
election of directors. A majority of the votes properly cast on each of
Proposals 2 and 3 is necessary to approve those Proposals. The person designated
as the election inspector will count shares represented by proxies that withhold
authority to vote for a nominee for election as a director or that reflect
abstentions and "broker non-votes" (i.e. shares represented at the meeting held
by brokers or nominees as to which (i) instructions have not been received from
the beneficial owners or persons entitled to vote and (ii) the brokers or
nominee does not have the discretionary voting power on a particular matter)
only as shares that are present and entitled to vote on the matter for the
purposes of determining the presence of a quorum, but neither abstentions nor
brokers non-votes will have any effect on the outcome of voting on the matter.
The Annual Report to Stockholders for BTU's fiscal year ended December 31,
1997 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 of Stockholders. 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.
1
<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 58 1979
Chairman of the Board of Directors of
the Company
Alexander V. d'Arbeloff ................ Director of the Company; 70 1984
Director of GeoTel, a manufacturer of
software for telecommunications;
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 54 1989
The 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 78 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 1997, the Board of Directors held six meetings. Mr. van der Wansem
and Mr. Brown attended 100% of the Board and relevant committee meetings during
1997, Dr. Chu attended 83%, and Mr. d'Arbeloff attended 67% 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 Board meeting attended
and $500 for each committee meeting attended independent of a Board meeting.
During 1997 the Company paid $13,750 in a consulting fee to a company of
which Dr. Chu is the chairman. Also in 1997 the Company paid $30,000 in a
consulting fee to a company of which Mr. Brown is the president.
Under the Company's 1989 Stock Option Plan for Non-Employee Directors, on
April 30, 1997 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 ($3.75 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, 1997, 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.
2
<PAGE> 5
The Audit Committee, comprised of David A.B. Brown (Chairman), Alexander V.
d'Arbeloff and J. Chuan Chu are not employees of the Company. The Committee held
one meeting during 1997. 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, comprised of J. Chuan Chu
(Chairman), Alexander V. d'Arbeloff and David A.B. Brown, administers the
Company's stock option and compensation plans and provides recommendations to
the Board of Directors regarding compensation matters. The Committee held no
meetings independent of the Board of Directors meetings during 1997.
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, as amended, 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 1997 to file by these dates.
The Company's directors, officers and ten percent holders satisfied all of these
filing requirements for 1997. 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 April 8, 1998 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 OFFICERS SHARES CLASS
- ----------------------------------- --------- ----------
<S> <C> <C>
Paul J. van der Wansem(2) .......................... 1,809,497 24.9%
Alexander V. d'Arbeloff ............................ 33,125 *
David A.B. Brown ................................... 4,625 *
J. Chuan Chu ....................................... 2,100 *
David H. Barry(3) .................................. 8,900 *
Thomas P. Kealy(3) ................................. 21,530 *
All directors and executive officers as a group
(6 persons)(4) ................................... 1,879,777 25.8%
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
5% BENEFICIAL OWNERS
- ---------------------
<S> <C> <C> <C>
FMR Corp.(5) ........................................ 434,800 6.0%
82 Devonshire Street
Boston, MA 02109
John W. L. Moses(6) ................................. 432,650 5.9%
3616 N. Albemarle St.
Arlington, VA 22207
Dimensional Fund Advisors Inc(7) .................... 413,900 5.7%
1299 Ocean Avenue
Santa Monica, CA 90401
</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 50,947 shares held in a family
limited partnership, in which Mr. van der Wansem is a general partner and a
limited partner. Also includes 66,050 shares held by Mrs. van der Wansem,
in which Mr. van der Wansem disclaims beneficial ownership in these shares.
Also includes 18,500 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 8,900 shares for Mr. Barry and 8,500 for Mr. Kealy which are a
result of options exercisable within 60 days of the record date.
(4) Includes 42,275 shares which are as a result of options which are
exercisable within 60 days of the record date.
(5) According to information filed on February 9, 1998 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 452,300 shares owned by the Fund. Fidelity
carries out voting of the shares under written guidelines established by
the Fund's Board of Trustees.
(6) According to information filed on January 5, 1998 with the Securities and
Exchange Commission in a Schedule 13D, John W.L. Moses owns 432,650 shares
and has the sole power to dispose of and vote these shares.
(7) According to information filed on February 10, 1998 with the Securities and
Exchange Commission in a Schedule 13G, Michael T. Scardina, of Dimensional
Fund Advisors Inc., ("the Fund"), has sole power to dispose of the 413,900
shares owned by the Fund. The Fund carries out voting of the shares under
written guidelines established by the Fund's Board of Trustees.
4
<PAGE> 7
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, 1997 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 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) COMPENSATION($)(1)
- --------------------------- ---- --------- -------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Paul J. van der Wansem ................. 1997 253,590 2,750 50,000 36,454
Chairman and 1996 250,218 -- 12,000 8,250
Chief Executive Officer 1995 249,861 167,229 -- 7,750
David H. Barry ......................... 1997 130,378 -- 4,000 21,090
Vice President 1996 130,430 -- 5,000 2,570
and General Manager 1995 130,110 56,435 -- 2,361
Thomas P. Kealy ........................ 1997 98,314 1,066 8,000 1,953
Vice President, Corporate Controller 1996 98,146 -- 5,000 1,864
and Chief Accounting Officer 1995 98,109 25,842 -- 1,780
</TABLE>
(1) Consists of Company contributions to the 401(k) plan and, in the case of
Mr. van der Wansem, a Company payment of $33,454 for life insurance, and
Mr. Barry received a retirement payment of $18,504.
OPTION GRANTS IN 1997
The following table sets forth information with respect to options granted
to the Named Executive Officers during 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---------- ------------ --------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul J. van der Wansem 50,000 22.5% $ 3.75 05/13/04 $76,331 $177,884
David H. Barry 4,000 1.8% $ 3.75 05/13/04 $ 6,107 $ 14,231
Thomas P. Kealy 8,000 3.6% $ 3.75 05/13/04 $12,213 $ 28,462
</TABLE>
5
<PAGE> 8
The table below sets forth information with respect to the exercise of options
during 1997 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 (1)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON DECEMBER 31, 1997 DECEMBER 31, 1997
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE (#) UNEXERCISABLE ($)
- ---------------------- ----------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C>
Paul J. van der Wansem 4,500 15,187 3,000/59,000 919/74,631
David H. Barry........ 0 0 3,650/7,750 8,588/8,563
Thomas P. Kealy....... 0 0 5,250/11,750 13,688/14,313
</TABLE>
(1) Value is based on the closing sales price of the Company's Common Stock on
December 31, 1997, the last trading day of 1997 ($5.1875), less the
applicable option exercise price.
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 1997, served on the Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee has submitted the following report:
In February 1997 the Compensation Committee, as part of the Board of
Directors meeting, continued the Management Incentive Compensation Plan that was
adopted in 1996. This plan would pay executives of the Company a cash bonus
based on attaining certain goals, these goals are both an earnings per share
target and the accomplishment of specific organizational goals.
Operating performance in 1997 resulted in no payments pursuant to the
Management Incentive Compensation Plan as actual earnings per share were below
minimum target levels.
The Company has an Incentive Profit Sharing Plan for all eligible
employees. The persons included in the 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 Management Incentive Compensation Plan.
J. Chuan Chu, Chairman
David A.B. Brown
Alexander D. d'Arbeloff
6
<PAGE> 9
COMPARATIVE STOCK PERFORMANCE
The following graph shows the cumulative total return on BTU Common Stock
since December 31, 1992 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.
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Btu Intl Inc BTUI 100.00 130.77 292.31 288.46 184.62 319.23
S & P 500 100.00 110.08 111.53 153.45 188.68 251.64
S & P TECHNOLOGY SECTOR 100.00 123.01 143.37 206.51 292.98 369.42
</TABLE>
APPROVAL OF AMENDMENT NO. 2 TO THE 1993 EQUITY INCENTIVE PLAN
Subject to stockholder approval at the Annual Meeting of Stockholders, the
Board of Directors on February 13, 1998 approved a proposal to amend the
Company's 1993 Equity Incentive Plan (as amended to date, the "Incentive Plan")
to increase by 500,000 shares, the aggregate number of shares of Common Stock of
the Company that may be delivered in connection with options, stock appreciation
rights ("SARs") or other stock-based awards granted under the Incentive Plan.
As of April 8, 1998 there were 119,743 shares of Common Stock available for
award under the Incentive Plan. The Board of Directors believes that the number
of shares that remain available for issuance under the Incentive Plan is
insufficient to continue to fulfill the purpose of the Incentive Plan to
attract, retain and reward key employees of the Company and accordingly, the
number of shares of Common Stock authorized for delivery thereunder should be
increased by 500,000 shares to 619,743 shares of Common Stock.
The Incentive Plan is administered by the Compensation Committee. A total
of 541,183 shares of Common Stock, which became available due to the expiration
of the previous 1982 Stock Option Plan, was originally reserved for issuance
under the Incentive Plan, subject to adjustment for stock dividends and similar
events. 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 ("Amendment No. 1") which provided
for per-individual limitations on the number of shares of Common Stock issuable
upon exercise of options and SARs under
7
<PAGE> 10
the Incentive Plan in order to comply with Section 162(m) of the Internal
Revenue Code. Stockholders approved Amendment No. 1 at the Annual Meeting of
Stockholders held on May 30, 1997.
The following is a summary of the Incentive Plan as currently in effect the
full text of the Incentive Plan and Amendment No. 2 are available without charge
upon request to Thomas P. Kealy, Vice President, Corporate Controller and Chief
Accounting Officer, BTU International, Inc., 23 Esquire Road, North Billerica,
Massachusetts 01862-2396
GENERAL
Under the Incentive Plan, the Compensation Committee may grant stock
options (both incentive stock options and nonstatutory options), SARs,
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 maximum number of shares of Common Stock
for which options may be granted to any individual in any year of the Incentive
Plan is 250,000 and the maximum number of shares of Common Stock subject to SARs
granted to an individual in any year of the Incentive Plan is likewise 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 or greater 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 or greater 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 a 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.
8
<PAGE> 11
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). 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 Incentive Plan, 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.
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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
Amendment No. 2 is not approved by the Stockholders, the Company may not be able
to continue to competitively attract, retain and award such persons.
Accordingly, the Board of Directors has approved the adoption of Amendment No. 2
and recommends that the stockholders vote "FOR" the proposal to adopt Amendment
No. 2. Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise.
APPROVAL OF
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On September 5, 1989, the Board of Directors of the Company unanimously
approved the establishment of the 1989 Stock Option Plan for Directors (the
"1989 Plan"), which was approved by stockholders at the Annual Meeting of
Stockholders on May 11, 1990. No options may be granted under the 1989 Plan
after September 5, 1999. On February 13, 1998, the Board of Directors approved a
proposal to adopt the 1998 Stock Option Plan for Non-Employee Directors (the
"1998 Plan"), subject to stockholder approval at the Annual Meeting of
Stockholders. The 1998 Plan, if approved by the stockholders at the Annual
Meeting of Stockholders, will replace the 1989 Plan for any future option grants
to Eligible Directors (as defined below).
The 1998 Plan is designed to advance the Company's interests by enhancing
its ability to attract and retain non-employee directors who are in a position
to make significant contributions to the success of the Company and to reward
non-employee directors for such contributions through awarding options to
purchase shares of Common Stock of the Company. A total of 50,000 shares of
Common Stock has been reserved for issuance under the 1998 Plan, subject to
adjustment for stock dividends and similar events. Stockholders are being
requested to approve the 1998 Plan at the Annual Meeting of Stockholders. The
following is a summary of the 1998 Plan. The full text of the 1998 Plan is
available without charge upon request to Thomas P. Kealy, Vice President,
Corporate Controller and Chief Accounting Officer, BTU International, Inc., 23
Esquire Road, North Billerica, Massachusetts 01862-2396
GENERAL
The 1998 Plan is administered by a committee of the Board of Directors
designated for such purpose (the "Committee") or if no such committee is
designated, by the Board of Directors. Under the 1998 Plan, the Committee may
grant stock options to any director who (i) is not an employee of the Company or
of any subsidiary of the Company, and (ii) is not a holder of more than 5% of
the outstanding shares of the Stock, or a person who is in control of such
holder (such director being an "Eligible Director"). Of the current directors,
Messrs. d'Arbeloff, Brown and Chu are Eligible Directors.
If the Plan is approved, each Eligible Director will receive, immediately
following the 1998 Annual Meeting of Stockholders, an option to purchase 1,000
shares of Common Stock. This continues a practice in effect for several years
pursuant to which options to directors were for a fixed number of shares each
year. The directors are currently considering a new option policy which would
give directors the opportunity to increase their option position by choosing to
receive options in lieu of cash compensation.
The exercise price for all Formula Options granted under the 1998 Plan will
be the fair market value of Common Stock on the date of the grant. Formula
Options will become exercisable for one-quarter of the shares covered on each of
the first through fourth anniversaries of the grant. All Formula Options expire
in no more than seven years after the date of the grant.
The Committee will set the exercise price of a Discretionary Option, as
well as the term of each such option, which cannot exceed seven years from the
date of the grant, and the time or times each such option will be exercisable.
The exercise price may be paid in cash, check acceptable to the Company,
bank draft or money order payable to the order of the Company. Subject to
certain additional limitations, the Committee may also permit the exercise price
to be paid by tendering shares of Common Stock, by having the Company hold back
from the shares transferred upon exercise Common Stock equal in value
10
<PAGE> 13
to the purchase price, by using a promissory note, by delivering to the Company
an undertaking by a broker to promptly deliver sufficient funds to pay the
exercise price, or a combination of the foregoing.
Except as otherwise provided by the Committee, if an Eligible Director
dies, options exercisable immediately prior to death may be exercised by the
participant's executor, administrator or transferee during a period of six
months following such death (or for the remainder of their original term, if
less). Options not exercisable at the time of the Eligible Director's death
terminate.
If an Eligible Director's association with the Company terminates for
reasons other than death, options 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), unless the Eligible Director was
removed for cause or resigned under circumstances which, in the opinion of the
Committee, casts such discredit on him or her as to justify termination of the
options. Options not exercisable at the time of termination expire.
In the case of certain mergers, consolidations or other transactions in
which the Company is acquired or is liquidated, all outstanding options will
terminate provided that the Committee makes all outstanding options immediately
exercisable twenty days prior to the effective date of any such transaction. If
the transaction is to be accounted for as a pooling of interests, the Committee
shall, however, in its discretion arrange to have the successor or surviving
corporation assume the options, which will become fully exercisable and expire
180 days after the transaction. If there is a Change of Control, which is
defined as the acquisition of 30% of the voting power of the Company's
securities (other than from the Company), a change of control that is required
to be reported under the proxy rules of the Securities and Exchange Commission,
or certain mergers or consolidations or a sale of substantially all of the
Company's assets, all options will become fully exercisable.
FEDERAL TAX EFFECTS
The following discussion summarizes certain federal income tax consequences
of the exercise and receipt of options under the 1998 Plan. The summary does not
purport to cover federal tax consequences that may be associated with the 1998
Plan, nor does it cover state, local or non-U.S. taxes.
All options granted under the 1998 Plan will be non-qualified options for
federal tax purposes. 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 a capital gain or loss for which the
Company is not entitled to a deduction.
RECOMMENDATION OF YOUR BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors believes that the adoption of the 1998 Plan will
promote the interests of the Company and the stockholders and enable the Company
to attract, retain and reward non-employee directors who are in a position to
make significant contributions to the success of the Company. Accordingly, the
Board of Directors has approved the adoption of the 1998 Plan and recommends
that the stockholders vote "FOR" the proposal to adopt the 1998 Plan. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
otherwise.
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<PAGE> 14
AUDIT MATTERS
Arthur Andersen LLP has been selected to examine the financial statements
of the Company for the year ended December 31, 1998, and to report the results
of their examination.
A representative of Arthur Andersen LLP is expected to be present at the
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 1999 must be received by the Company no later than
December 9, 1998.
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 Annual
Meeting of Stockholders. 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 TO STOCKHOLDERS 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.
12
<PAGE> 15
0857-PS-98
<PAGE> 16
<TABLE>
<S> <C>
DETACH HERE
[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.
NOMINEES: Paul J. van der Wansem, Alexander V. d'Arbeloff, FOR AGAINST ABSTAIN
David A.B. Brown and J. Chuan Chu 2. Approve the Amendment to the [ ] [ ] [ ]
1993 Equity Incentive Plan,
FOR WITHHELD increasing the shares available
ALL FROM ALL under the Plan.
NOMINEES NOMINEES
[ ] [ ] 3. Approve the 1998 Stock Option [ ] [ ] [ ]
Plan for Non-Employee Directors.
[ ] ____________________________________________
For all nominees except as noted above.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
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: _______________
</TABLE>
<PAGE> 17
DETACH HERE
PROXY
ANNUAL MEETING OF BTU INTERNATIONAL, INC.
MAY 22, 1998
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 22, 1998 at 10:00
a.m., and at any adjournments thereof, upon and with respect to the number of
shares of Common Stock of the company as to which the undersigned may be
entitled to vote or act. The undersigned instructs such proxies, or their
substitutes, to vote in such manner as they may determine on any 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, IN FAVOR of the 1998 Stock Option Plan for
Non-Employee Directors and in the discretion of the named proxies as to any
other matter that may come before this meeting or any adjournment thereof.
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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