<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 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 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
JUNE 2, 2000
---------------
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, June 2, 2000, for the
following purposes:
1. To elect four directors to serve for the ensuing year.
2. To approve the Amendment No. 3 to the Company's 1993 Equity Incentive
Plan increasing by 750,000 the shares available under the plan.
3. To approve the Amendment No. 3 to the Company's 1988 Employee Stock
Purchase Plan increasing by 200,000 the shares available under the
plan.
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 24, 2000 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
May 3, 2000
<PAGE> 3
ANNUAL MEETING OF STOCKHOLDERS
JUNE 2, 2000
---------------
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 June 2, 2000 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 $6,000 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 24, 2000
are entitled to notice and to vote at the Meeting. There were 6,867,338 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 of Common Stock 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 and for the election as directors of the nominees named below,
for Amendment No. 3 to the Company's 1993 Equity Incentive Plan, for Amendment
No. 3 to the Company's 1988 Employee Stock Purchase 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 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 Form 10-K for BTU's fiscal year ended December 31, 1999 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 Chairman 60 1979
of the Board of Directors of the Company
David A.B. Brown..................... Director of the Company; President of 56 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; Director,
Technical Communications Corp., a manufacturer
and marketer of encryption equipment (1) (2)
J. Chuan Chu......................... Director of the Company; Chairman of Columbia 80 1991
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)
Joseph F. Wrinn...................... Director of the Company; 46 1999
Vice President, and General Manager of the Assembly
Test Division of Teradyne, Inc. (1) (2)
</TABLE>
- ----------
(1) Member of Audit Committee
(2) Member of Stock Option and Compensation Committee (the "Compensation
Committee")
During 1999, the Board of Directors held six meetings. Mr. Van der Wansem
and Mr. Brown attended 100% of the Board and relevant committee meetings during
1999; Mr. Wrinn attended 100% of the Board and relevant committee meetings after
his election on April 9, 1999; and Dr. Chu attended 83% of the Board and
relevant committee meetings during 1999. Each director who is not an officer or
employee of the Company receives an annual retainer. For 1999, the annual
retainer for directors was $10,000, which the directors are permitted to elect
to take up to one-half in the form of stock options. The number of options is
equal to twice the number of shares determined by dividing the cash amount by
the fair market value of the common stock on the payment date. The exercise
price of the options is equal to the fair market value of the common stock on
the date of the award. The options become exercisable on the first anniversary
of the date of grant and expire three years from the date of grant. Under this
program, on April 1, 1999, Mr. Brown and Dr. Chu elected to receive an option to
purchase 1,667 shares of common stock at an exercise price of $3.00 per share.
On October 1, 1999 Mr. Brown, Dr. Chu and Mr. Wrinn elected to receive options
to purchase 1,026 shares of common stock at an exercise price of $4.875 per
share. In addition, each non-employee director receives $750 for each Board
meeting attended and $500 for each committee meeting attended independent of a
Board meeting.
During 1999 the Company paid $15,000 in consulting fees to a company of
which Dr. Chu is the chairman.
Under the Company's 1998 Stock Option Plan for Non-Employee Directors, Mr.
Wrinn received on April 9, 1999, the date he was elected to the Board of
Directors, an option to purchase 2000 shares of BTU Common Stock with an
exercise price equal to the fair market value of the stock on that date ($2.6875
per share); on May 21, 1999 Mr. Brown and Dr. Chu received an option to purchase
1,000 shares of BTU Common Stock with an exercise price equal to the fair market
value of the stock on that date ($4.00 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.
2
<PAGE> 5
The Audit Committee in 1999 was comprised of David A.B. Brown (Chairman), J.
Chuan Chu and Joseph F. Wrinn, who are not employees of the Company. The Audit
Committee held one meeting during 1999. The Audit 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 Compensation Committee, comprised in 1999 of David A.B. Brown
(Chairman), J. Chuan Chu and Joseph F. Wrinn, administers the Company's stock
option and compensation plans and provides recommendations to the Board of
Directors regarding compensation matters. The Compensation Committee held no
meetings independent of the Board of Directors meetings during 1999.
The Company has no nominating committee.
Mr. Joseph F. Wrinn was elected as a Director on April 9, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1999 to file by these dates.
The Company's directors, officers and ten percent holders satisfied all of these
filing requirements for 1999. 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 24, 2000 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)...................................... 1,723,373 24.7%
David A.B. Brown (3)........................................... 2,917 *
J. Chuan Chu (3)............................................... 7,132 *
Joseph F. Wrinn (3)............................................ 1,500 *
Santo J. DiNaro (4)............................................ 15,000 *
Thomas P. Kealy (4)............................................ 18,430 *
All directors and executive officers as a group
(6 persons) (5)................................................ 1,768,352 25.4%
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
5% BENEFICIAL OWNERS
--------------------
<S> <C> <C>
FMR Corp. (6).................................................. 603,300 8.7%
82 Devonshire Street
Boston, MA 02109
Dimensional Fund Advisors Inc. (7)............................. 507,700 7.3%
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 100,000 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 the
shares held in this trust. Also includes 12,223 shares held in a family
limited partnership, in which Mr. van der Wansem is a general partner and a
limited partner. Also includes 86,050 shares held by Mrs. van der Wansem,
in which Mr. van der Wansem disclaims beneficial ownership. Includes 30,600
shares for Mr. van der Wansem which are a result of options exercisable
within 60 days of the record date.
(3) Includes 2,917 shares for Mr. Brown, 6,157 for Dr. Chu and 500 for Mr.
Wrinn which are a result of options exercisable within 60 days of the
record date.
(4) Includes 10,000 shares for Mr. DiNaro and 5,400 for Mr. Kealy which are a
result of options exercisable within 60 days of the record date.
(5) Includes 55,574 shares which are as a result of options which are
exercisable within 60 days of the record date.
(6) According to information filed on February 14, 2000 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 603,300 shares owned by the Fund. Fidelity
carries out voting of the shares under written guidelines established by
the Fund's Board of Trustees.
(7) According to information filed on February 4, 2000 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 507,700
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, 1999 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 1997, 1998 and 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($) OPTIONS (#)(1) COMPENSATION($)(2)
------------------------------------ ---- --------- --------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Paul J. van der Wansem................ 1999 273,848 222,752 45,000 36,653
Chairman and 1998 260,000 2,290 40,000 36,453
Chief Executive Officer 1997 253,590 2,750 50,000 36,454
Santo J. DiNaro....................... 1999 163,846 89,100 30,000 3,200
Executive Vice President 1998 150,000 16,291 30,000 2,192
1997 11,538 536 20,000
Thomas P. Kealy....................... 1999 105,597 35,775 5,000 2,112
Vice President, Corporate Controller 1998 100,770 846 5,000 2,015
and Chief Accounting Officer 1997 98,314 1,066 8,000 1,953
</TABLE>
(1) Options listed for 1997 and 1998 were repriced on 9/29/98 (see Stock
Option Repricing table).
(2) Consists of Company contributions to the 401(k) plan and, in the case of Mr.
van der Wansem, payment for life insurance.
OPTION GRANTS IN 1999
The following table sets forth information with respect to options granted
to the Named Executive Officers during 1999.
<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>
Paul J. van der Wansem...... 45,000 16.1% $ 5.00 12/06/04 $ 62,163 $ 137,364
Santo J. DiNaro............. 30,000 10.7% $ 5.00 12/06/04 $ 41,442 $ 91,576
Thomas P. Kealy............. 5,000 1.8% $ 5.00 12/06/04 $ 6,907 $ 15,263
</TABLE>
5
<PAGE> 8
The table below sets forth information with respect to the exercise of
options during 1999 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>
(1)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS OPTIONS AT DECEMBER
ACQUIRED ON AT DECEMBER 31, 1999 31, 1999
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE (#) UNEXERCISABLE ($)
---------------------- ----------- ------------ -------------------- -------------------
<S> <C> <C> <C> <C>
Paul J. van der Wansem..... 0 0 30,600 / 116,400 87,975 / 239,025
Santo J. DiNaro............ 0 0 15,000 / 65,000 43,125 / 123,125
Thomas P. Kealy............ 4,000 9,000 5,400 / 17,600 15,525 / 39,975
</TABLE>
(1) Value is based on the closing sales price of the Company's Common
Stock on December 31, 1999, the last trading day of 1999 ($5.75),
less the applicable option exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Brown, Chu, and Wrinn, none of whom is or was an executive officer
of the Company during 1999, served on the Compensation Committee.
STOCK OPTION REPRICING
The following table sets forth information concerning the repricing of stock
options. This repricing was offered to all employees, with a new four-year
vesting schedule and five-year expiration for all repriced options. The table
below sets forth information regarding repriced options held by the Named
Executive Officers.
STOCK OPTION REPRICING
<TABLE>
<CAPTION>
Number of
Securities Market Price Exercise Length
Underlying of Stock at Price at New Of Term
Date of Options Time of Time of Exercise Repriced
Name and Position Repricing Repriced Repricing Repricing Price Options
- ----------------- --------- ---------- ------------ --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Paul J. van der Wansem 9/29/98 12,000 $ 2.875 $ 4.88125 $ 2.875 5 Years
President and 9/29/98 50,000 $ 2.875 $ 3.75000 $ 2.875 5 Years
Chief Executive Officer 9/29/98 40,000 $ 2.875 $ 4.31250 $ 2.875 5 Years
Santo J. DiNaro 9/29/98 20,000 $ 2.875 $ 5.75000 $ 2.875 5 Years
Executive Vice President 9/29/98 10,000 $ 2.875 $ 5.00000 $ 2.875 5 Years
9/29/98 20,000 $ 2.875 $ 4.31250 $ 2.875 5 Years
Thomas P. Kealy 9/29/98 5,000 $ 2.875 $ 4.43750 $ 2.875 5 Years
Vice President 9/29/98 8,000 $ 2.875 $ 3.75000 $ 2.875 5 Years
Corporate Controller 9/29/98 5,000 $ 2.875 $ 4.31250 $ 2.875 5 Years
Chief Accounting Officer
</TABLE>
6
<PAGE> 9
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee has submitted the following report:
In January 1999 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 1999 resulted in payments pursuant to the
Management Incentive Compensation Plan (see "Executive Compensation" for actual
payment).
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.
In December 1999 the Compensation Committee approved the issuance of stock
options to all employees including executive officers (see "Option Grants in
1999" for actual grants to executive officers).
David A.B. Brown, Chairman
J. Chuan Chu
Joseph F. Wrinn
7
<PAGE> 10
COMPARATIVE STOCK PERFORMANCE
The following graph shows the cumulative total return on BTU Common Stock
since December 31, 1994 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 GRAPH]
Research Data Group Peer Group Total Return Worksheet
BTU INTL INC
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C> <C>
BTU INTERNATIONAL, INC. 100.00 98.68 63.16 109.21 63.16 121.05
S & P 500 100.00 137.58 169.17 225.61 290.09 351.13
S & P TECHNOLOGY SECTOR 100.00 144.04 204.35 257.67 445.72 780.60
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
8
<PAGE> 11
2. APPROVAL OF AMENDMENT NO. 3 TO THE 1993 EQUITY INCENTIVE PLAN
Subject to stockholder approval at the Annual Meeting of Stockholders, the
Board of Directors on February 10, 2000 approved a proposal to amend the
Company's 1993 Equity Incentive Plan (as amended to date, the "Incentive Plan")
to increase by 750,000 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 24, 2000 there were 123,623 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 750,000 shares to 873,623 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 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. On
February 13, 1998 the Board of Directors adopted Amendment No. 2 to the
Incentive Plan ("Amendment No. 2") which increased 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. Stockholders approved
Amendment No. 2 at the Annual Meeting of Stockholders on May 22, 1998.
The following is a summary of the Incentive Plan as currently in effect.
The full text of the Incentive Plan and Amendment No. 3 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
9
<PAGE> 12
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.
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
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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.
The Board of Directors recommend that stockholders vote "FOR" the proposal
to adopt Amendment No. 3.
3. APPROVAL OF AMENDMENT NO. 3 TO THE 1988 EMPLOYEE STOCK PURCHASE PLAN
Subject to stockholder approval at the Annual Meeting of Stockholders, the
Board of Directors on February 10, 2000 approved an amendment (the "Amendment")
to the Company's 1988 Employee Stock Purchase Plan (the "Purchase Plan")
established in October 1988. The Amendment would increase the maximum number of
shares of Common Stock subject to options under the Purchase Plan from 300,000
to 500,000 (subject to adjustment for stock splits and similar changes). As of
April 24, 2000 there were 18,090 shares of Common Stock available for issuance
under this Employee Stock Purchase Plan.
Each employee of the Company or of a participating subsidiary of the Company
having at least six months of continuous service on the date of grant of an
option will be eligible to participate in the Purchase Plan. At December 31,
1999, there were approximately 260 employees eligible to participate in the
Purchase Plan.
The Purchase Plan is administered by the Compensation Committee. Options are
granted twice yearly, on January 1 and July 1, and are exercisable effective on
the succeeding June 30 or December 31. Options are exercisable through
accumulation of payroll deductions (of not less tan 1/2% nor more than 10% of
compensation as defined) for the number of whole shares determined by dividing
the balance in the employee's withholding account on the last day of the option
period by the purchase price per share for the stock determined under the
Purchase Plan. The purchase price for shares will be the lower of 85% of the
fair market value of the stock at the time of grant, or 85% of that value at the
time of exercise.
An employee may cancel his or her option at any time prior to exercise, and
upon such cancellation, payments made shall be returned to the employee. Each
employee's rights in an option will be exercisable during his or her lifetime
only by the employee and may not be sold, pledged, assigned, or otherwise
transferred. The employee may elect to have the amount credited to his or her
withholding account at the time of his or her death or applied to the exercise
of his or her option for the benefit of named beneficiaries. Nothing in the
Purchase Plan is to be construed so as to give an employee the right to be
retained in the service of the Company.
No employee is to be granted an option under the Purchase Plan if such grant
would permit him to purchase shares of BTU Common Stock under all employee stock
purchase plans of the Company at a rate which exceeds $25,000 in fair market
value of such stock (determined at the time the option is granted) for each
calendar year during which any such option granted to him is outstanding at any
time.
The Purchase Plan is intended to be an "employee stock purchase plan" as
defined in Section 423 of the Internal Revenue Code of 1986, as amended. As a
general matter, an employee will not realize any taxable income upon the grant
or exercise of an option under the Purchase Plan. If shares acquired under the
Purchase Plan are disposed of more than two years from the date of grant of the
option, or in the event of the death of the employee (whenever occurring) while
the employee owns the shares, ordinary compensation
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income will result equal to the lesser of (i) the excess of the fair market
value of the shares at the time of disposition or death over the purchase price,
or (ii) 15 percent of the shares' fair market value at the time the option was
granted. Any additional gain will be long-term capital gain. If shares acquired
under the Purchase Plan are disposed of less than two years after the date of
grant of the option, the employee will generally realize ordinary compensation
income equal to the excess of the fair market value of the shares at time of
purchase over the purchase price, with any additional gain constituting
long-term or short-term capital gain depending on the employee's holding period
for such shares. BTU will not be entitled to any tax deduction in connection
with the grant or exercise of purchase rights under the Purchase Plan unless an
employee disposes of shares acquired under the Purchase Plan within the two-year
period described above, in which case BTU will be entitled to a tax disposition.
As of December 31, 1999 an aggregate of 281,910 shares of BTU Common Stock
were purchased under the Purchase Plan.
An affirmative vote of a majority of the shares present, in person or by
proxy, and entitles to vote at the Annual Meeting is required to approve the
Amendment.
The Board of Directors recommend that stockholders vote "FOR" the proposal
to adopt Amendment No. 3.
AUDIT MATTERS
Arthur Andersen LLP has examined the financial statements of the Company for
the year ended December 31, 1999. 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 2001 must be received by the Company no later than December
18, 2000.
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 PROVIDE TO YOU CONCURRENTLY WITH THIS PROXY STATEMENT.
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0857-PS-00
<PAGE> 16
BTU DETACH HERE
PROXY
ANNUAL MEETING OF BTU INTERNATIONAL, INC.
JUNE 2, 2000
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 June 2, 2000 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 1993 Equity Incentive Plan, IN FAVOR of the amendment to the 1988 Employee
Stock Purchase Plan and in the discretion of the named proxies as to any other
matter that may come before this meeting or any adjournment thereof.
SEE REVERSE SIDE SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 17
BTU DETACH HERE
[ ] 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: (1) Paul J. van der Wansem, (2) David A.B. Brown, (3) J. Chuan Chu
and (4) Joseph F. Wrinn
FOR ALL WITHHELD FROM
NOMINEES ALL NOMINEES
[ ] [ ]
[ ] ______________________________________
For all nominees except as noted above
2. Approve the Amendment to the 1993 Equity Incentive Plan, increasing the
shares available under the plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approve the Amendment to the 1988 Employee Stock Purchase Plan, increasing
the shares available under the plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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: ________
