<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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commissioner Only (as permitted by Rule
14a-6(e)(2)
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ZOLTEK COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE BOARD OF DIRECTORS OF ZOLTEK COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total Fee paid: N/A
/ / 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE> 2
January 6, 1997
DEAR FELLOW SHAREHOLDERS:
Our Annual Meeting of Shareholders will be held at the St. Louis
Marriott West Hotel, located at 660 Maryville Centre Drive, St. Louis,
Missouri, at 10:00 A.M., local time, on Friday, February 7, 1997. The Notice
of Annual Meeting of Shareholders, Proxy Statement and Proxy Card which
accompany this letter outline fully matters on which action is expected to be
taken at the Annual Meeting.
We cordially invite you to attend the Annual Meeting. Please
RSVP to 314-291-5110 if you plan to attend the meeting. Even if you plan to
be present at the meeting, you are requested to date, sign and return the
enclosed Proxy Card in the envelope provided so that your shares will be
represented. The mailing of an executed Proxy Card will not affect your
right to vote in person should you later decide to attend the Annual Meeting.
Sincerely,
ZSOLT RUMY
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
ZOLTEK COMPANIES, INC.
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 7, 1997
Dear Shareholder:
The Annual Meeting of Shareholders of Zoltek Companies, Inc. (the
"Company") will be held at the St. Louis Marriott West Hotel, located at 660
Maryville Centre Drive, St. Louis, Missouri, on Friday, February 7, 1997, at
10:00 A.M., local time, for the following purposes:
1. To elect two Class I directors to hold office for a term of
three years.
2. To consider and vote upon an amendment of Article IV of
the Restated Articles of Incorporation of the Company
to increase the authorized number of shares of Common
Stock, $.01 par value per share, from 20,000,000 to
50,000,000 shares.
3. To consider and vote upon certain amendments to the
Company's 1992 Long Term Incentive Plan.
4. To transact any and all other business that may properly
come before the meeting or any adjournment thereof.
These items are more fully described in the following Proxy
Statement, which is hereby made a part of this Notice. Only shareholders of
record of the Company at the close of business on December 30, 1996 are
entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
By order of the Board of Directors,
DANIEL D. GREENWELL
Chief Financial Officer and
Secretary
January 6, 1997
<PAGE> 4
ZOLTEK COMPANIES, INC.
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 7, 1997
-----------------
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of ZOLTEK
COMPANIES, INC. (the "Company") in connection with the solicitation of
proxies for use at the Annual Meeting of Shareholders to be held at the St.
Louis Marriott West Hotel, St. Louis, Missouri, at 10:00 A.M., local time, on
Friday, February 7, 1997, and at all adjournments thereof (the "Annual
Meeting"), for the purposes set forth in the preceding Notice of Annual
Meeting of Shareholders.
This Proxy Statement, the Notice of Annual Meeting and the
accompanying Proxy Card were first mailed to the shareholders of the Company
on or about January 6, 1997.
The proxy reflected on the accompanying Proxy Card is being
solicited by the Board of Directors of the Company. A proxy may be revoked
at any time before it is voted by filing a written notice of revocation or a
later-dated Proxy Card with the Secretary of the Company at the principal
offices of the Company or by attending the Annual Meeting and voting the
shares in person. Attendance alone at the Annual Meeting will not of itself
revoke a proxy. Proxy Cards that are properly executed, timely received and
not revoked will be voted in the manner indicated thereon at the Annual
Meeting and any adjournment thereof.
The Company will bear the entire expense of soliciting proxies.
Proxies will be solicited by mail initially. The directors, executive
officers and employees of the Company also may solicit proxies personally or
by telephone or other means but such persons will not be specially
compensated for such services. Certain holders of record, such as brokers,
custodians and nominees, are being requested to distribute proxy materials to
beneficial owners and will be reimbursed by the Company for their reasonable
expenses incurred in sending proxy materials to beneficial owners.
Only shareholders of record at the close of business on December
30, 1996 are entitled to notice of, and to vote at, the Annual Meeting. On
such date, there were 16,210,338 shares of the Company's Common Stock, $.01
par value ("Common Stock"), issued and outstanding.
Each outstanding share of the Company's Common Stock is entitled
to one vote on each matter to be acted upon at the Annual Meeting. A quorum
is required for votes taken at the Annual Meeting to be deemed valid. A
quorum shall be attained if holders of a majority of the Common Stock issued
and outstanding are present at the Annual Meeting in person or by proxy.
After a quorum has been established, the vote of the holders of a majority of
the Common Stock present in person or by proxy shall be required for the
election of any director and, except as required by the Company's Restated
Articles of Incorporation or applicable law, any other matter submitted for a
vote of the
<PAGE> 5
shareholders at the Annual Meeting requires the vote of the holders of a
majority of the Common Stock outstanding. The affirmative vote of holders of a
majority of the shares of Common Stock outstanding shall be required for
approval of the proposed amendment to the Company's Restated Articles of
Incorporation. See "Item 2. Proposal to Amend the Restated Articles of
Incorporation to Increase the Authorized Number of Shares of Common Stock." The
affirmative vote of the holders of a majority of the Common Stock present at the
Annual Meeting in person or by proxy shall be required for the approval of the
proposed amendment to the Company's 1992 Long Term Incentive Plan. See "Item 3.
Proposal to Amend the Company's 1992 Long Term Incentive Plan."
Shares subject to abstentions will be treated as shares that are
present at the Annual Meeting for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the base number of shares
voting on a particular proposal. Accordingly, abstentions will have the same
effect as a vote withheld on the election of directions or a vote against on
other matters submitted to the shareholders for a vote (including the
proposal to amend the Company's Restated Articles of Incorporation and the
proposal to amend the Company's 1992 Long Term Incentive Plan), as the case
may be. If a broker or other nominee holder indicates on the Proxy Card that
it does not have discretionary authority to vote the shares it holds of
record on a proposal, those shares will not be considered as voted for
purposes of determining the approval of the shareholders on a particular
proposal.
VOTING SECURITIES AND PRINCIPAL HOLDER THEREOF
The following table includes information as to the only person
who was known to management of the Company to beneficially own five percent
or more of the Company's outstanding Common Stock as of December 30, 1996:
<TABLE>
<CAPTION>
Number of Shares Percent of Outstanding
Name and Address of Beneficial Owner Beneficially Owned Common Stock<F1>
- ------------------------------------ ------------------ ----------------
<S> <C> <C>
Zsolt Rumy 5,600,000 34.54%
3101 McKelvey Road
St. Louis, Missouri 63044
<FN>
- ----------------
<F1> The percentage calculation is based upon 16,210,338 shares of the
Company's Common Stock that were issued and outstanding as of December 30,
1996.
</TABLE>
ITEM 1. ELECTION OF DIRECTORS
Two individuals will be elected at the Annual Meeting to serve as
Class I directors of the Company for a term of three years. The two nominees
receiving the vote of holders of a majority of the shares entitled to vote
and represented in person or by proxy at the Annual Meeting will be elected.
Shareholders do not have the right to cumulate votes in the election of
directors.
The persons named as proxies on the accompanying Proxy Card
intend to vote all duly executed proxies received by the Board of Directors
for the election of John L. Kardos and Linn Bealke as Class I directors,
except as otherwise directed by the shareholder on the Proxy Card. Messrs.
Kardos and Bealke are currently directors of the Company. If for any reason
Mr. Kardos or Mr. Bealke becomes unavailable for election, which is not now
anticipated, the persons named in the accompanying Proxy
- 2 -
<PAGE> 6
Card will vote for such substitute nominee as is designated by the Board of
Directors. The Board of Directors recommends a vote "FOR" the election of John
L. Kardos and Linn Bealke as Class I directors.
The name, age, principal occupation or position and other
directorships with respect to Messrs. Kardos and Bealke and the other
directors whose terms of office will continue after the Annual Meeting is set
forth below.
CLASS I - TO BE ELECTED FOR A TERM OF THREE YEARS EXPIRING IN 2000
John L. Kardos, age 57, has served as a Director of the Company
since August 1992. For more than the past five years he has been Professor
of Chemical Engineering of Washington University, St. Louis, Missouri, where
he has been Chairman of the Department of Chemical Engineering since July
1991. From June 1971 to July 1991, he was Chairman of the Graduate Program
in Materials Science and Engineering and Director of the Materials Research
Laboratory of Washington University.
Linn Bealke, age 52, has served as a Director of the Company
since August 1992. For more than the past five years he has been President
and Director of Mississippi Valley Bancshares, Inc. (a bank holding company)
and Vice Chairman of Southwest Bank of St. Louis (a commercial bank).
CLASS II - TO CONTINUE IN OFFICE UNTIL 1998
James W. Betts, age 59, has served as a Director of the Company
since August 1992. For more than the past five years, he has been Vice
President Raw Materials of Great Lakes Carbon Corp. (a producer of carbon
products).
James Dorr, age 61, has served as a Director of the Company since
August 1992. Since June 1995, he has been engaged in business as a
consultant. For more than five years prior to June 1995 when he retired, he
served as Director-Advanced Materials and Structures of McDonnell Douglas
Corporation (an aircraft manufacturer).
CLASS III - TO CONTINUE IN OFFICE UNTIL 1999
Zsolt Rumy, age 54, is the founder of the Company and has served
as its Chairman, President and Chief Executive Officer and as a Director
since 1975. Prior to founding the Company, Mr. Rumy served as Industrial
Marketing Manager and Process Engineer for Monsanto Company, Accounts Manager
for General Electric Company and Technical Sales Representative for W.R.
Grace Company. Since May 1996, Mr. Rumy has served as a director of
Southwest Bank of St. Louis, with which the Company maintains its primary
banking relationships.
Charles A. Dill, age 56, has served as a Director of the Company
since August 1992. Since October 1995, he has been a managing partner of
Gateway Venture Partners, a venture capital firm. He served as President of
Bridge Information Systems, Inc. (a provider of databases and systems to
institutional investors) from 1991 to October 1992 and as Chief Executive
Officer from October 1992 to April 1995. From February 1988 to September
1990, he was President and a Director of AVX Corporation (a ceramic
electronic devices manufacturer). From May 1982 to February 1988, he was
Senior Vice President and a member of the Office of the Chief Executive and
an Advisory Director of Emerson Electric Company (a diversified manufacturer
of electrical and other products), where he was the corporate officer
responsible for that corporation's power transmission, electrical and
electronic divisions. Mr. Dill serves as a director of Stifel Financial
Corp., the parent of Stifel, Nicolaus & Company, Incorporated (a securities
brokerage, investment management and investment banking firm).
- 3 -
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
During fiscal 1996, the Board of Directors of the Company met
four times and acted two times by unanimous written consent. Each of the
directors and nominees attended not less than 75% of the meetings of the
Board of Directors and committees of which such director or nominee was a
member during fiscal 1996.
The Board of Directors has a standing Audit Committee and
Compensation Committee.
The members of the Audit Committee are Messrs. Bealke and Dorr.
The Audit Committee reviews the scope of the Company's engagement of its
independent public accountant and their reports. The Audit Committee also
meets with the financial staff of the Company to review accounting procedures
and reports. The Audit Committee met two times in fiscal 1996.
The Compensation Committee is composed of Messrs. Betts and Dill.
The Compensation Committee is authorized to review and make recommendations
to the Board of Directors regarding the salaries and bonuses to be paid
executive officers and to administer the Company's Long Term Incentive Plan.
The Compensation Committee met two times during fiscal 1996.
DIRECTORS' FEES
Directors who are not also employees of the Company are paid $750
per board meeting attended. In addition, each of the directors who is not
also an employee of the Company (an "Eligible Director") participates in the
Zoltek Directors Stock Option Plan (the "Directors Plan"). The Directors
Plan provides for the granting of non-qualified stock options to Eligible
Directors. Under the Directors Plan, each person who is an Eligible Director
on the first business day after the date of the Company's annual meeting of
shareholders is granted options to acquire 7,500 shares of Common Stock,
provided, however, that no grant shall be made to any Eligible Director who
is first elected a director of the Company at the annual meeting of
shareholders immediately preceding the date of such grant. The Directors
Plan otherwise does not establish a limit on the aggregate number of options
that may be granted thereunder. Options granted pursuant to the Directors
Plan entitle the director to purchase the Company's Common Stock at a price
equal to the Fair Market Value (as defined in the Directors Plan) on the date
of grant. The option by its terms is not transferable by the director except
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order. The option is exercisable during the director's
lifetime solely by the director. Each option is immediately exercisable as
to any or all shares and may be exercised at any time or from time to time.
Options that are outstanding and unexercised at the time the holder ceases to
be a director of the Company for any reason terminate on the first to occur
of the expiration date of the option or the expiration of 24 months after the
date the holder ceases to be a director. Unless exercised or terminated
sooner, each option expires on the tenth anniversary of the date of grant.
SECURITY OWNERSHIP BY MANAGEMENT
The following table indicates, as of December 30, 1996, the
beneficial ownership of the Company's Common Stock by each person who is a
director or nominee for director and the executive officer named in the
Summary Compensation Table, individually, and all directors and executive
officers as a group:
- 4 -
<PAGE> 8
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class<F1>
- ------------------------ ------------------ --------------------
<S> <C> <C>
Zsolt Rumy<F2> 5,600,000 34.54%
Linn Bealke 7,500<F3> <F*>
James W. Betts 39,000<F4> <F*>
Charles A. Dill 21,400<F4> <F*>
James Dorr 21,000<F5> <F*>
John L. Kardos 21,000<F4> <F*>
All directors and executive officers as a group (9 persons) 5,710,200<F6> 35.04%
<FN>
- ------------------
<F*> Less than one percent
<F1> Based upon 16,210,338 shares of the Company's Common Stock issued and
outstanding as of December 30, 1996 and, for each director or executive
officer or the group, the number of shares subject to options that may be
acquired upon exercise thereof by such director or executive officer or
the group within 60 days of December 30, 1996.
<F2> Mr. Rumy's address is 3101 McKelvey Road, St. Louis, Missouri 63044.
<F3> Includes 7,500 shares subject to presently exercisable stock options.
<F4> Includes 21,000 shares subject to presently exercisable options.
<F5> Includes 15,000 shares subject to presently exercisable stock options.
<F6> Includes 85,500 shares subject to presently exercisable stock options.
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the executive
officer of the Company whose annual salary exceeded $100,000 for fiscal
1996.
- 5 -
<PAGE> 9
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual
Compensation
------------
All Other
Name and Principal Position Year Salary($) Bonus($) Compensation<F1>
--------------------------- ---- --------- -------- ----------------
<S> <C> <C> <C> <C>
Zsolt Rumy 1996 $150,000 $100,000 $11,565
Chairman of the Board, President 1995 150,000 $ 2,194
and Chief Executive Officer 1994 150,000
- -------------------
<FN>
<F1> Total includes amounts allocated to Mr. Rumy's account pursuant to the
Company's defined contribution profit sharing plan.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning the number of
exercisable and unexercisable stock options at September 30, 1996, as well as
the value of such stock options having an exercise price lower than the last
reported trading price on September 30, 1996 ("in-the-money" options) held by
the executive officer named in the Summary Compensation Table. No stock
options were exercised by such individuals during the 1996 fiscal year.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at Fiscal
Fiscal Year-End (#) Year-End($)<F1>
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- -------------------------------------------------------------------------------------
<S> <C> <C>
Zsolt Rumy 0/150,000 $0/4,762,500
- --------------
<FN>
<F1> Based on a price per share of $38.00, being the last reported trading
price before the fiscal year end.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
The Company's executive compensation program is administered under the
direction of the Compensation Committee of the Board of Directors. The
Committee's compensation policies are based upon the principle that the
financial rewards of the Company's executives should be aligned with the
financial interests of its shareholders. In this manner, the Company seeks
to meet its ultimate responsibility to its shareholders by striving to create
superior long-term return on their investment through earnings growth and
prudent management of the Company's business.
- 6 -
<PAGE> 10
In determining the appropriate level of executive compensation in fiscal
1996, the Committee considered management's continuing success in achieving
numerous quantitative and qualitative accomplishments since the Company's
initial public offering in fiscal 1992. The Committee did not assign
specific weights to individual factors, but rather considered all such
factors as a whole.
In fiscal 1996, the Company reported record financial performance and
continued its trend of substantial growth in sales, net income and earnings
per share. Compared to fiscal 1995, net sales increased 443%, net income
increased 206% and net income per share from continuing operations increased
183%. Shareholder wealth also increased, as the market price of the
Company's Common Stock grew from $8.25 at September 30, 1995 to $38.00 at
September 30, 1996 (adjusted for the two-for-one stock split effective in
June 1996).
In determining its policy, the Committee also considered significant
strategic accomplishments of management in fiscal 1996. During the year, the
Company completed the acquisition of Magyar Viscosa, Rt. ("Viscosa") which
affords the Company access to the technology underlying the primary raw
material utilized in the production of carbon fibers, as well as the
potential ultimately to diversify the Company's source of supply. Not only
did management complete the acquisition, it has been able to operate Viscosa
on a profitable basis, despite the transition from government to private
ownership. In addition, management has developed and begun to execute plans
for greatly accelerated growth in the Company's carbon fibers manufacturing
capacity. Moreover, the financings completed during the year position the
Company to achieve its long-term goal of becoming the world's leading
producer of low cost carbon fiber.
The Company's executive compensation policy in fiscal 1996 consisted of
base salary, incentive compensation, non-cash benefits and stock options.
Mr. Rumy's base salary was $150,000 in fiscal 1996, the same as that paid to
him in the prior year. Mr. Rumy's base salary was set at such level at his
suggestion in order to minimize the Company's administrative overhead,
despite the Committee's view that such amount is below the level which the
Company could expect to pay for an executive of Mr. Rumy's background and
responsibilities.
The Company's incentive compensation program consists of long-term
and short-term components. The long-term component is in the form of
stock option grants which, for the Company's executives, include vesting
provisions intended to reward these individuals based upon the Company's
success in accomplishing its strategic plans to become the world's leading
carbon fiber producer by the year 2000. Based upon his ownership of the
Company's Common Stock and prior year stock option grants, Mr. Rumy was not
granted any stock option grants in fiscal 1996.
The Company's short-term incentive compensation program consists of cash
bonuses paid based upon the Company's actual results compared to targeted
amounts using an Economic Value Added, or EVA(R)<F*>, formula. For 1996, the
amount of short-term compensation varied from 30% (lower level managers) to
60% (chief executive officer) of total compensation, based upon position.
The Company substantially exceeded its targeted EVA of $1.75 million in fiscal
1996. However, at Mr. Rumy's request, his bonus was set at 40% of total
compensation.
Although the foregoing describes the Committee's current compensation
policies applicable to the Company's executive officers, the Committee
reserves the right to amend these policies at such times in the future and in
such manner as the Committee deems necessary or advisable.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally limits federal income tax deductions for compensation paid after
1993 to the chief executive officer and the four other most highly
compensated officers of the Company to $1 million per year, but contains an
exception for performance-based compensation that satisfies certain
conditions. In the absence of final regulations under Section 162(m), the
Committee has not adopted a policy regarding Section 162(m) and intends to
study the implications of Section 162(m) on its compensation programs. In
making compensation decisions, the Committee will consider the net cost of
compensation to the Company and whether it is practicable and consistent with
other compensation objectives to qualify the Company's incentive compensation
under the applicable exemption of Section 162(m). The Committee anticipates
that deductibility of compensation payments will be one among a number of
factors used by the Committee in ascertaining appropriate levels or modes of
compensation, and the Committee will make its compensation decisions based
upon an overall determination of what it believes to be in the best interests
of the Company and its shareholders.
[FN]
- -------
<F*> EVA(R) is a trademark of Storn Stewart & Co.
- 7 -
<PAGE> 11
Submitted by the Compensation Committee of the Board of Directors
Charles A. Dill James W. Betts
ITEM 2. PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
The Board of Directors recently approved a proposal to amend Article IV
of the Company's Restated Articles of Incorporation (the "Restated Articles")
to increase the number of shares of Common Stock, $.01 par value, authorized
thereunder from 20,000,000 to 50,000,000, and has directed that the proposal
be submitted to the vote of the shareholders at the Annual Meeting. The
Company also has a class of Preferred Stock, $.01 par value, authorized
pursuant to Article IV of its Restated Articles. No change to the number of
shares of Preferred Stock presently authorized is being made pursuant to this
proposed amendment.
On December 30, 1996, the record date for the Annual Meeting, 16,210,338
shares of the Company's Common Stock were issued and outstanding. In
addition, approximately 690,500 shares of Common Stock will be required to
satisfy the Company's potential obligations under its stock-based benefit
plans. Accordingly, at such date the Company had approximately 3,099,162
authorized shares of its Common Stock that were not issued, reserved or
designated for issuance as described above. Authorized shares of Common
Stock were issued pursuant to the two-for-one stock split (payable in the
form of a stock dividend) effective June 17, 1996 and a public offering of
Common Stock in September 1996.
The Board of Directors of the Company believes that it is in the best
interests of the Company and its shareholders to increase the number of
authorized but unissued shares of its Common Stock. The increase will
provide a reserve of shares available for issuance upon authorization of the
Board for any corporate purpose (including, without limitation, stock
dividends and/or stock splits, financing transactions, acquisitions and
employee benefit plans) without the necessity of soliciting further
shareholder approval, subject to applicable shareholder vote requirements of
the Nasdaq Stock Market.
The Company currently has no understandings, arrangements or agreements
that would require the issuance of additional shares of Common Stock. The
authorized shares may, however, be issued from time to time in connection
with future acquisitions, capital raising, stock-based employee benefit plans
and other requirements of the Company. The additional shares of Common Stock
for which authorization is sought herein would be identical to the shares of
Common Stock now authorized under the Restated Articles. The amendment to
increase the number of authorized shares will not affect the legal rights of
the holders of the existing shares of Common Stock.
Adoption of the proposed amendment could render more difficult any
attempted takeover of the Company that is opposed by the Company's Board of
Directors. The Board of Directors may issue, without further action or
approval of the shareholders, additional shares of Common Stock to the
public, thereby increasing the number of shares that would have to be
acquired to effect a change of control of the Company.
The Restated Articles also provide for the issuance of up to 1,000,000
shares of Preferred Stock, none of which have been issued to date. The Board
of Directors is authorized, without further shareholder action or approval,
to set such rights and conditions of the Preferred Stock as it deems
appropriate, including dividend rates, redemption features, liquidation
rights, conversion rights, voting
- 8 -
<PAGE> 12
rights and such other preferences, qualifications, limitations, restrictions
and special rights. The issuance of Preferred Stock with certain terms and
conditions under certain circumstances may render a change of control of the
Company more difficult.
The complete text of Article IV of the Restated Articles as proposed to
be amended is set forth in Appendix A to this Proxy Statement.
Adoption of the proposed amendment to Article IV of the Restated
Articles will require the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock of the Company. The Board of Directors
recommends a vote "FOR" the proposed amendment to Article IV of the Restated
Articles.
ITEM 3. PROPOSAL TO AMEND THE ZOLTEK COMPANIES, INC.
1992 LONG TERM INCENTIVE PLAN
The Board of Directors of the Company has adopted proposed amendments to
the Zoltek Companies, Inc. 1992 Long Term Incentive Plan (the "Plan") and has
directed such amendments be submitted to the shareholders for approval at the
Annual Meeting. The affirmative vote of the holders of a majority of the
shares of Common Stock represented in person or by proxy at the Annual
Meeting is required for approval of the proposed amendment. If the proposed
amendment is not approved, the amendment will not be implemented and the
existing Plan will continue in effect. A copy of the Plan as proposed to be
amended is attached as Appendix A to this Proxy Statement and the following
description of the Plan and the proposed amendments to the Plan are qualified
by reference to Appendix B. Capitalized terms used in this discussion and
not otherwise defined herein shall have the meanings ascribed to them in the
Plan.
DESCRIPTION OF THE PROPOSED AMENDMENTS
The proposed amendments to the Plan (the "Amendments") approved by the
Board of Directors (i) increase the total number of shares authorized for
issuance under the Plan from 900,000 to 1,500,000, (ii) accelerate the
exercise or vesting of Awards granted under the Plan in the event of a
Change of Control, (iii) permit the transfer of nonqualified stock options
granted under the Plan to certain family members of the recipient, (iv) limit
the number of shares of the Stock which may be subject to an Awards granted
to a Participant in one year, and (v) make certain conforming changes to the
Plan in accordance with recent amendments to Rule 16b-3 under the Securities
Act of 1934, as amended ("Rule 16b-3"). The material changes which the
amendment would make to the Plan are summarized below.
Increase in Shares Available For Grant. A maximum of 900,000 shares of
Common Stock are presently authorized for issuance (from treasury stock or
authorized but unissued shares) under the Plan. As of December 30, 1996,
690,500 shares were subject to outstanding Awards under the Plan and 209,500
shares were available for future Awards. The Amendment would increase the
total number of shares of Common Stock authorized for issuance (from treasury
stock or authorized but unissued shares) from 900,000 to 1,500,000 shares.
Change of Control Provisions. The Amendment would include in the Plan
that provide that in the event of a Change of Control (as defined in the
Plan) of the Company, subject to the terms of any applicable agreement with
the Participant, the following shall occur (i) outstanding stock options
become immediately exercisable and remain immediately and fully exercisable
until such option would otherwise expire by reason of lapse of time, (ii) any
outstanding and unexercised SAR shall become immediately
- 9 -
<PAGE> 13
exercisable, (iii) unvested Restricted Stock shall become immediately vested,
and (iv) outstanding Performance Awards shall become immediately fully earned
and payable in lump sum. The Plan as in effect prior to the Amendments does not
contain any provisions relating to a Change of Control.
Transfers of Nonqualified Options. Under the Plan as in effect prior to
the Amendments, Awards granted under the Plan are not transferable otherwise
than by will or the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order and are exercisable during the
Participant's lifetime only by a Participant. The Amendment provides that if
certain conditions are met nonqualified stock options may be transferred by a
Participant to a "Permitted Transferee." A "Permitted Transferee" is defined
under the Amendment as either (i) the spouse, children or grandchildren of a
Participant ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (iii) a partnership in
which such Immediate Family Members are the only partners.
Limits on Awards to Participants. The Plan as in effect prior to the
Amendments does not contain any limits on the maximum or minimum number of
shares for which an Award may be granted, except that the aggregate fair
market value of the Common Stock subject to incentive stock options that are
exercisable for the first time in any calendar year may not exceed $100,000.
Under the Amendment, to maintain the deductibility of compensation paid
pursuant to the Plan under Section 162(m) of the Code no Participant will be
entitled to receive a grant of Awards with respect to more than 300,000
shares of Common Stock in any year.
Changes Relating to Rule 16b-3. In May 1996, the Securities and Exchange
Commission announced a number of major revisions to the provisions of Rule
16b-3, including provisions relating to the composition of committees of the
board of directors which administer benefit plans and provisions relating
exercisability of grants of awards. To conform with such changes, the
Amendment provides that the Committee may be made up of members of the
Compensation Committee of the Board of Directors of the Company which are
both (i) qualified to administer the Plan under Rule 16b-3 and (ii) an
"outside director" as contemplated by Section 162(m) of the Code. In
addition, the Amendment eliminates certain restrictions under the Plan which
required that Awards granted under the Plan be held for six months prior to
exercise or sale.
The Board of Directors believes that the Amendment is appropriate and
will enhance the purposes of the Plan by enhancing the ability of the Company
to continue to provide incentives to its key employees induce qualified
individuals to serve as, or remain, employees of the Company and to promote
the best interests of the Company.
DESCRIPTION OF THE PLAN
The following is a brief description of the material features of the
Plan as in effect prior to the Amendment and is qualified in its entirety by the
complete text of the Plan attached hereto as Appendix B.
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"), consisting of two or more directors of the
Company. The Committee, by majority action thereof, is authorized in its sole
discretion to determine the individuals to whom the benefits will be granted,
the type and amount of such benefits and the terms of the benefit grants, as
well as to interpret the Plan and to make all other determinations necessary
or advisable for the administration of the Plan to the extent not contrary to
the express provisions of the Plan.
- 10 -
<PAGE> 14
Under the terms of the Plan, key employees of the Company and its
subsidiaries as determined in the sole discretion of the Committee are
eligible to receive (a) stock options ("Stock Options") exercisable into
shares of the Company's Common Stock which may or may not qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code, as amended, (b) stock appreciation rights, (c) restricted
shares of the Company's Common Stock ("Restricted Stock"), and (d)
performance awards ("Performance Awards").
STOCK OPTIONS. Stock Options granted under the Plan entitle the
holder thereof to purchase the Company's Common Stock at a purchase price
established therefor by the Committee, which price shall not be less than the
Fair Market Value (as defined in the Plan) of the Company's Common Stock on
the date of grant for incentive stock options and not less than 85% of Fair
Market Value on the date of grant for options which are not incentive stock
options ("non-qualified stock options"). The Committee shall determine the
term of such Stock Options and the times at, and conditions under which, such
Stock Options will become exercisable. Stock Options are not exercisable
earlier than six months from the date of grant (except in the case of death
or disability of the employee holding the same), nor later than ten years
from the date of the grant. For any employee, the aggregate fair market value
of the Company's Common Stock subject to qualifying incentive stock options
that are exercisable for the first time in any calendar year may not exceed
$100,000.
STOCK APPRECIATION RIGHTS. The Committee may grant stock
appreciation rights (a "SAR") giving the holder thereof a right to receive,
at the time of surrender, Common Stock of the Company equal in value to the
difference between the Fair Market Value of such stock at the date of
surrender of the SAR and the "Base Price" established by the Committee
therefor at the time of grant, subject to any limitation imposed by the
Committee on appreciation. The "Base Price" shall not be less than the Fair
Market Value of the Company's Common Stock on the date of the grant of the
SAR. In the Committee's discretion, the value of a SAR may be paid in cash
or Common Stock, or a combination thereof. A SAR may be granted either
independent of, or in conjunction with, any Stock Option. If granted in
conjunction with a Stock Option, at the discretion of the Committee a SAR may
either be surrendered (a) in lieu of the exercise of such Stock Option, (b)
in conjunction with the exercise of such Stock Option, or (c) upon expiration
of such Stock Option. The term of any SAR shall be established by the
Committee, but in no event shall such term exceed ten years from the date of
grant.
RESTRICTED STOCK. The Committee may issue shares of the
Company's Common Stock either as a stock bonus or at a purchase price of less
than fair market value, subject to the restrictions or conditions specified
by the Committee at the time of grant. In addition to any other restrictions
or conditions that may be imposed on the Restricted Stock, shares of
Restricted Stock may not be sold or disposed of for a period of six months
after the date of grant. During the period of restriction, holders of
Restricted Stock shall be entitled to receive all dividends and other
distributions made in respect of such stock and to vote such stock without
limitation.
PERFORMANCE AWARDS. The Committee may grant Performance
Awards consisting of shares of the Company's Common Stock, monetary units
payable in cash or a combination thereof. These grants would result in the
issuance, without payment therefor, of Common Stock or the payment of cash
upon the achievement of certain pre-established performance criteria (such as
return on average total capital employed, earnings per share or return on
shareholders' equity) during a specified performance period not to exceed
five years. The participating employee would have no right to receive
dividends on or to vote any shares subject to Performance Awards until the
award is actually earned and the shares are issued.
- 11 -
<PAGE> 15
The Plan is to remain in effect until the Board terminates the
Plan or September 1, 2002, whichever shall first occur. The Board, in its
sole discretion may terminate the Plan at any time and from time to time may
amend or modify the Plan; provided, however, that no such action of the Board
may, without the approval of the shareholders of the Company, change the
total number of shares which may be issued under the Plan and no amendments
requiring shareholder approval in order to meet the requirements of Rule
16b-3 shall be effective unless such shareholder approval is obtained. No
amendment, modification or termination of the Plan shall in any manner
adversely affect any award theretofore granted under the Plan, without the
consent of the participant affected thereby.
FEDERAL INCOME TAX CONSEQUENCES
No income will be realized by a participating officer or employee
on the grant of an incentive stock option or a non-qualified stock option or
upon the award of Restricted Stock, and the Company will not be entitled to a
deduction at such time. If a holder exercises an incentive stock option and
does not dispose of the shares acquired within two years from the date of the
grant, or within one year from the date of exercise of the option, no income
will be realized by the holder at the time of exercise. The Company will not
be entitled to a deduction by reason of the exercise.
If a holder disposes of the shares acquired pursuant to an
incentive stock option within two years from the date of grant of the option
or within one year from the date of exercise of the option, the holder will
realize ordinary income at the time of disposition which will equal the
excess, if any, of the lesser of (a) the amount realized on the disposition,
or (b) the fair market value of the shares on the date of exercise, over the
holder's basis in the shares. The Company generally will be entitled to a
deduction in an amount equal to such income in the year of the disqualifying
disposition.
Upon the exercise of a non-qualified option, the excess, if any,
of the fair market value of the stock on the date of exercise over the
purchase price is ordinary income to the holder as of the date of exercise.
The Company generally will be entitled to a deduction equal to such excess
amount in the year of exercise.
Subject to a voluntary election by the holder under Section 83(b)
of the Internal Revenue Code of 1986, as amended (the "Code"), a holder will
realize income as a result of the award of Restricted Stock at the time the
restrictions expire on such shares. An election pursuant to Section 83(b) of
the Code would have the effect of causing the holder to realize income in the
year in which such award was granted. The amount of income realized will be
the difference between the fair market value of the shares on the date such
restrictions expire (or on the date of issuance of the shares, in the event
of a Section 83(b) election) over the purchase price, if any, of such shares.
The Company generally will be entitled to a deduction equal to the income
realized in the year in which the holder is required to report such income.
An employee will realize income as a result of a Performance
Award at the time the award is issued or paid. The amount of income realized
by the participant will be equal to the fair market value of the shares on
the date of issuance, in the case of a stock award, and to the amount of the
cash paid, in the event of a cash award. The Company will be entitled to a
corresponding deduction equal to the income realized in the year of such
issuance or payment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSED AMENDMENT TO THE PLAN, WHICH IS ITEM 3 ON THE PROXY CARD.
- 12 -
<PAGE> 16
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total
shareholder return, including the reinvestment of dividends, on the Company's
Common Stock with the cumulative return of the NASDAQ Industrial Index for
the period beginning on the date of its initial public offering (November 6,
1992) to September 30, 1996.
[GRAPH]
ASSUMES $100 INVESTED ON NOVEMBER 6, 1992 IN
ZOLTEK COMPANIES, INC. COMMON STOCK,
THE NASDAQ INDUSTRIAL INDEX AND
THE RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
11/6/92 9/30/93 9/30/94 9/30/95 9/30/96
<S> <C> <C> <C> <C> <C>
Zoltek Companies, Inc. 100.000 168.754 281.257 618.765 2850.071
NASDAQ Industrial Index 100.000 115.450 114.798 159.997 186.648
The Russell 2000 Index 100.000 127.313 130.644 161.214 182.388
</TABLE>
CERTAIN TRANSACTIONS
Mr. Bealke, who is a Director of the Company, also is Vice
Chairman of Southwest Bank of St. Louis ("Southwest Bank") which is the
Company's bank lender. As of September 30, 1996, the Company's borrowings
from Southwest Bank aggregated $1.8 million. During the fiscal year ended
September 30, 1996, the Company's interest payments to Southwest Bank
aggregated $190,416.
The Company believes that all of the transactions set forth above
were made on terms not less favorable to the Company than would have been
obtained from unaffiliated third parties. All future transactions (including
loans) between the Company and its officers, directors, principal
shareholders and affiliates, are required to be approved by a majority of the
Board of Directors, including a majority of the independent and disinterested
outside directors and must be on terms no less favorable to the Company than
could be obtained from unaffiliated third parties.
- 13 -
<PAGE> 17
APPOINTMENT OF AUDITORS
Price Waterhouse LLP served as the Company's independent
accountants for fiscal 1996. The Board of Directors anticipates that
representatives of Price Waterhouse LLP will be present at the Annual Meeting
of Shareholders to respond to appropriate questions and to make a statement
if they desire. The Board of Directors has not yet appointed independent
accountants to be the Company's auditors for fiscal 1997. The Company
expects that the Company's auditors for fiscal 1997 will be appointed by the
end of the second quarter of fiscal 1997.
PROPOSALS OF SHAREHOLDERS
Under applicable regulations of the Securities and Exchange
Commission, all proposals of shareholders to be considered for inclusion in
the proxy statement for, and to be considered at, the 1997 Annual Meeting of
Shareholders must be received at the offices of the Company, c/o Daniel D.
Greenwell, Chief Financial Officer and Corporate Secretary, 3101 McKelvey
Road, St. Louis, Missouri 63044 by not later than September 8, 1997. The
Company's By-Laws also prescribe certain time limitations and procedures
regarding prior written notice to the Company by shareholders, which
limitations and procedures must be complied with for proposals of
shareholders to be included in the Company's proxy statement for, and to be
considered at, such annual meeting. Any shareholder who wishes to make such
a proposal should request a copy of the applicable provisions of the
Company's By-Laws from the Secretary of the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
the Company does not intend to present, nor has it been informed that other
persons intend to present, any matters for action at the Annual Meeting,
other than those specifically referred to herein. If, however, any other
matters should properly come before the Annual Meeting, it is the intention
of the persons named on the Proxy Card to vote the shares represented thereby
in accordance with their judgment as to the best interest of the Company on
such matters.
ZSOLT RUMY
Chairman of the Board, President
and Chief Executive Officer
January 6, 1997
- 14 -
<PAGE> 18
APPENDIX A
RESOLUTION TO AMEND THE RESTATED ARTICLES OF INCORPORATION
OF
ZOLTEK COMPANIES, INC.
The following amendment to the Restated Articles of Incorporation of
Zoltek Companies, Inc. (the "Company") shall be put to a vote of the
shareholders of the Company at the Annual Meeting of Shareholders to be held
February 7, 1996.
RESOLVED, that Article 4.1 of the Restated Articles of Incorporation of
the Company shall be amended to increase the aggregate number of shares of
Common Stock, $.01 par value per share, of the Company authorized for
issuance from 20,000,000 to 50,000,000, by deleting Article 4.1 in its
entirety and including the following:
4.1 The corporation shall have authority to issue the following
shares:
(1) Fifty Million (50,000,000) shares shall be common stock having a
par value of $.01 per share ("Common Stock"); and
(2) One Million (1,000,000) shares shall be preferred stock having a
par value of $.01 per share ("Preferred Stock").
(a) The Board of Directors, by adoption of an authorizing
resolution, may cause Preferred Stock to be issued from
time to time in one
or more series.
(b) The Board of Directors, by adoption of an authorizing
resolution, may with regard to the shares of any series of
Preferred Stock:
(i) Fix the distinctive serial designation of the shares;
(ii) Fix the dividend rate, if any;
(iii) Fix the date from which dividends on shares issued
before the date for payment of the first dividend
shall be cumulative, if any;
(iv) Fix the redemption price and terms of redemption, if
any;
(v) Fix the amounts payable per share in the event of
dissolution or liquidation of the Corporation, if
any;
(vi) Fix the terms and amounts of any sinking fund to be
used for the purchase or redemption of shares, if
any;
(vii) Fix the terms and conditions under which the shares
may be converted, if any;
(viii) Provide whether such shares shall be non voting, or
shall have full or limited voting rights, and the
rights, if any, of such shares to vote as a class on
some or all matters on which such shares may be
entitled to vote; and
(ix) Fix such other preferences, qualifications,
limitations, restrictions and special or relative
rights not required by law.
<PAGE> 19
APPENDIX B
----------
ZOLTEK COMPANIES, INC.
LONG TERM INCENTIVE PLAN
(AS PROPOSED TO BE AMENDED)
SECTION 1. ESTABLISHMENT AND PURPOSE.
Zoltek Companies, Inc. hereby establishes a long term
incentive plan to be named the Zoltek Companies, Inc. Long Term
Incentive Plan, for certain employees of the Company and its
subsidiaries. This Plan was amended by action of the Board of
Directors and the shareholders of the Company effective as of
February 7, 1996. The purpose of this Plan is to encourage certain
employees of the Company, and of such subsidiaries of the Company
as the Committee administering the Plan designates, to acquire
Common Stock of the Company or to receive monetary payments based
on the value of such stock or based upon achieving certain goals on
a basis mutually advantageous to such employees and the Company and
thus provide an incentive for continuation of the efforts of
employees for the success of the Company and for continuity of
employment.
SECTION 2. DEFINITIONS.
Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) AWARD means any Stock Option, Stock Appreciation Right,
Restricted Stock, or Performance Award granted under the
Plan.
(b) AWARD AGREEMENT means the written agreement evidencing
an award under the Plan, which shall be executed by the
Company and the Participant.
(c) BASE PRICE means, in the case of an Option or a Stock
Appreciation Right, a price fixed by the Committee,
which shall not be less than 100% of the par value of a
share of Stock on the date of grant of such Option or
SAR.
(d) BOARD means the Board of Directors of the Company.
(e) CHANGE OF CONTROL is as defined in Section 18.
(f) CODE means the Internal Revenue Code of 1986, as amended
and in effect from time to time.
(g) COMMITTEE means those members of the Compensation
Committee of the Board, each of whom is both (i)
qualified to administer the Plan as contemplated by Rule
16b-3 and (ii) an "outside director" as contemplated by
Section 162(m) of the Code.
(h) COMPANY means Zoltek Companies, Inc., a Missouri
corporation.
(i) DISABILITY means permanent and total disability as
defined in Section 22(e)(3) of the Code, as determined
by the Committee in good faith, upon receipt of and in
reliance on sufficient competent medical advice.
(j) EMPLOYEE means a salaried employee (including officers
and directors who are also employees) of any member of
the Group.
<PAGE> 20
(k) EXCHANGE ACT means the Securities Exchange Act of 1934,
as amended.
(l) FAIR MARKET VALUE means, for any particular date, (i)
for any period during which the Stock shall not be
listed for trading on a national securities exchange,
but when prices for the Stock shall be reported by the
National Market System of the National Association of
Securities Dealers Automated Quotation System
("NASDAQ"), the last transaction price per share as
quoted by National Market System of NASDAQ, (ii) for any
period during which the Stock shall not be listed for
trading or a national securities exchange or its price
reported by the National Market System of NASDAQ, but
when prices for the Stock shall be reported by NASDAQ,
the closing bid price as reported by the NASDAQ, (iii)
for any period during which the Stock shall be listed
for trading on a national securities exchange, the
closing price per share of Stock on such exchange as of
the close of such trading day or (iv) the market price
per share of Stock as determined by a nationally
recognized investment banking firm selected by the Board
of Directors in the event neither (i), (ii) or (iii)
above shall be applicable. If Fair Market Value is to
be determined as of a day when the securities markets
are not open, the Fair Market Value on that day shall be
the Market Price on the preceding day when the markets
were open.
(m) GROUP means the Company and every Subsidiary of the
Company.
(n) OPTION means the right to purchase Stock at the Base
Price for a specified period of time. For purposes of
the Plan, an Option may be an INCENTIVE STOCK OPTION
within the meaning of Section 422 of the Code, a
NONSTATUTORY STOCK OPTION, or any other type of option
encompassed by the Code.
(o) PARTICIPANT means any Employee designated by the
Committee to participate in the Plan.
(p) PERFORMANCE AWARD means a right to receive a payment
equal to the value of a unit or other measure as
determined by the Committee based on performance during
a Performance Period.
(q) PERFORMANCE PERIOD means a period of not more than ten
years established by the Committee during which certain
performance goals set by the Committee are to be met.
(r) PERIOD OF RESTRICTION means the period during which a
grant of shares of Restricted Stock is restricted
pursuant to Section 11 of the Plan.
(s) PERMITTED TRANSFEREE means either (i) the spouse,
children or grandchildren of a Participant ("Immediate
Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or
(iii) a partnership in which such Immediate Family
Members are the only partners.
(t) REPORTING PERSON means a person subject to Section 16 of
the Securities Exchange Act of 1934, as amended.
(u) RESTRICTED STOCK means Stock granted pursuant to Section
11 of the Plan, but a share of such Stock shall cease to
be Restricted Stock when the conditions to and
limitations on transferability under Section 11 have
been satisfied or have expired, respectively.
2
<PAGE> 21
(v) RETIREMENT (including NORMAL, EARLY, and DISABILITY
Retirement) means termination of employment with
eligibility for normal, early or disability retirement
benefits under the terms of the Zoltek Companies, Inc.
Profit Sharing Plan, as amended and in effect at the
time of such termination of employment.
(w) RULE 16b-3 means Rule 16b-3 promulgated by the
Securities and Exchange Commission pursuant to the
Exchange Act, or any successor regulation.
(x) STOCK means the Common Stock of the Company, $.01 par
value per share.
(y) STOCK APPRECIATION RIGHT or SAR means the right to
receive a payment from the Company equal to the excess
of the Fair Market Value of a share of Stock at the date
of exercise over the Base Price. In the case of a Stock
Appreciation Right which is granted in conjunction with
an Option, the Base Price shall be the Option exercise
price.
(z) SUBSIDIARY means a subsidiary corporation as defined in
Section 425 of the Code.
(aa) TAXABLE EVENT means an event requiring Federal, state or
local tax to be withheld with respect to an Award
hereunder, including but not limited to the exercise of
Nonqualified Stock Options or SARs, the ending of a
Period of Restriction with respect to Restricted Stock,
the making by a Participant of an election under Section
83(b) of the Code, or any of the foregoing with respect
to a Performance Award.
SECTION 3. ADMINISTRATION.
The Plan will be administered by the Committee. The
determinations of the Committee shall be made in accordance with
their judgment as to the best interests of the Company and its
stockholders and in accordance with the purpose of the Plan.
Notwithstanding the foregoing, the Committee may delegate to
executive officers, administration of the Plan solely as it relates
to Participants who are not Reporting Persons. A majority of
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee, by a writing
signed by a majority of the Committee members. Determinations,
interpretations, or other actions made or taken by the Committee
pursuant to the provisions of the Plan shall be final and binding
and conclusive for all purposes and upon all persons whomsoever.
SECTION 4. SHARES RESERVED UNDER THE PLAN; LIMITS ON AWARDS TO
PARTICIPANTS.
There is hereby reserved for issuance under the Plan an
aggregate of 1,500,000 shares of Stock, which may be authorized
but unissued or treasury shares. Stock underlying outstanding
options or Performance Awards will be counted against the Plan
maximum while such options or awards are outstanding. Calculations
of the number of shares remaining available for issuance under the
Plan shall be by those methods permissible under Rule 16b-3 which
result in the greatest number of shares remaining available for
issuance. In accordance with the requirements under Section 162(m)
of the Code, no Participant shall receive a grant of Awards with
respect to more than 300,000 shares of Stock in any year.
3
<PAGE> 22
SECTION 5. PARTICIPANTS.
Participants will consist of such officers and key employees
of the Company or any designated subsidiary as the Committee in its
sole discretion determines have a major impact on the success and
future growth and profitability of the Company. Designation of a
Participant in any year shall not require the Committee to
designate such person to receive an Award in any other year or to
receive the same type or amount of Award as granted to the
Participant in any other year or as granted to any other
Participant in any year. The Committee shall consider such factors
as it deems pertinent in selecting Participants and in determining
the type and amount of their respective Awards.
SECTION 6. TYPES OF AWARDS.
The following Awards may be granted under the Plan:
(a) Incentive Stock Options; (b) Nonqualified Stock Options;
(c) Stock Appreciation Rights; (d) Restricted Stock; and
(e) Performance Awards; all as described below. Except as
specifically limited herein, the Committee shall have complete
discretion in determining the type and number of Awards to be
granted to any Participant, and the terms and conditions which
attach to each Award, which terms and conditions need not be
uniform as between different Participants. All Awards shall be in
writing.
SECTION 7. GRANTING OF AWARDS.
All Awards granted under the Plan shall be granted as of an
Award Date. Within ten business days after each Award Date, the
Company shall notify the Participant of the grant of the Award, and
shall hand deliver or mail to the Participant an Award Agreement
and a Confidentiality Agreement, duly executed by and on behalf of
the Company, with the request that the Participant execute the
Agreements within 30 days after the date of mailing or delivery by
the Company of the Agreements to the Participant. If the
Participant shall fail to execute and deliver to the Company the
written Award Agreement and Confidentiality Agreement within said
30-day period, his or her Award shall be automatically terminated.
SECTION 8. INCENTIVE STOCK OPTIONS.
Incentive Stock Options shall consist of options to purchase
shares of Stock at purchase prices not less than 100% of the fair
market value of the shares on the date the option is granted. Said
purchase price may be paid by check or, in the discretion of the
Committee, by the delivery of shares of Stock then owned by the
Participant, provided such shares have been held by such
Participant or Permitted Transferee, as the case may be, for longer
than six months. Incentive Stock Options will be exercisable not
later than ten years after the date they are granted and will
terminate not later than three months after termination of
employment for any reason other than death or Disability. In the
event termination of employment occurs as a result of death or
Disability, such an option will be exercisable for 12 months after
such termination. If the optionee dies within 12 months after
termination of employment by reason of Disability, then the period
of exercise following death shall be the remainder of the 12-month
period, or three months, whichever is longer. If the optionee dies
within three months after termination of employment for any other
reason, then the period of exercise following death shall be three
months. However, in no event shall any Incentive Stock Option be
exercised more than ten years after its grant. Leaves of absence
granted by the Company for military service, illness, and transfers
of employment between the Company and any subsidiary thereof shall
not constitute termination of employment. The aggregate Fair
Market Value (determined as of the time an option is granted) of
the stock with respect
4
<PAGE> 23
to which an Incentive Stock Option is exercisable for the first
time during any calendar year (under all option plans of the
Company and its subsidiary corporations) shall not exceed $100,000.
SECTION 9. NONQUALIFIED STOCK OPTIONS.
Nonqualified Stock Options shall consist of nonqualified stock
options to purchase shares of Stock at purchase prices not less
than 85% of the fair market value of the shares on the date the
option is granted. Said purchase price may be paid by check or, in
the discretion of the Committee, by the delivery of shares of Stock
then owned by the Participant, provided such shares have been held
by such Participant for longer than six months. Nonqualified Stock
Options will be exercisable not earlier than six months and not
later than ten years after the date they are granted and will
terminate not later than three months after termination of
employment for any reason other than death, Retirement or
Disability. In the event termination of employment occurs as a
result of death, Retirement or Disability, such an option will be
exercisable for 12 months after such termination. If the optionee
dies within 12 months after termination of employment by Retirement
or Disability, then the period of exercise following death shall be
three months. However, in no event shall any option be exercised
more than ten years after its grant. Leaves of absence granted by
the Company for military service, illness, and transfers of
employment between the Company and any subsidiary thereof shall not
constitute termination of employment. The Committee shall have the
right to determine at the time the option is granted whether shares
issued upon exercise of a Nonqualified Stock Option shall be
subject to restrictions, and if so, the nature of the restrictions.
SECTION 10. STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights may be granted which, at the
discretion of the Committee, may be surrendered (1) in lieu of
exercise of an Option, (2) in conjunction with the exercise of an
Option, (3) upon lapse of an Option, (4) independent of an Option,
or (5) each of the above in connection with a previously awarded
Option under the Plan. If the Option referred to in (1), (2), or
(3) above qualified as an Incentive Stock Option pursuant to
Section 422 of the Code, the related SAR shall comply with the
applicable provisions of the Code and the regulations issued
thereunder. At the time of grant, the Committee may establish, in
its sole discretion, a maximum amount per share which will be
payable upon surrender of a SAR, and may impose such conditions on
surrender of a SAR (including, without limitation, the right of the
Committee to limit the time of surrender to specified periods) as
may be required to satisfy the requirements of Rule 16b-3 (or any
successor rule), under the Exchange Act. At the discretion of the
Committee, payment for SARs may be made in cash or Stock, or in a
combination thereof. If SARs are exercised for cash, shares of
Stock equal to the number of SARs exercised shall be restored to
the number of shares available for issuance under the Plan. The
following will apply upon surrender of a SAR:
(a) Surrender of SARs in Lieu of Exercise of Options.
------------------------------------------------
SARs surrenderable in lieu of Options may be surrendered
for all or part of the shares of Stock subject to the
related Option upon the surrender of the right to
exercise an equivalent number of Options. A SAR may be
surrendered only with respect to the shares of Stock for
which its related Option is then exercisable.
(b) Surrender of SARs in Conjunction with Exercise of
-------------------------------------------------
Options. SARs surrenderable in conjunction with the
-------
exercise of Options shall be deemed to be surrendered
upon the exercise of the related Options.
5
<PAGE> 24
(c) Surrender of SARs Upon Lapse of Options. SARs
---------------------------------------
surrenderable upon lapse of Options shall be deemed to
have been surrendered upon the lapse of the related
Options as to the number of shares of Stock subject to
the Options.
(d) Surrender of SARs Independent of Options. SARs
----------------------------------------
surrenderable independent of Options may be surrendered
upon whatever terms and conditions the Committee, in its
sole discretion, imposes upon the SARs.
SECTION 11. RESTRICTED STOCK.
Restricted Stock shall consist of Stock issued or transferred
under the Plan (other than upon exercise of Stock Options or as
Performance Awards) at any purchase price less than the Fair Market
Value thereof on the date of issuance or transfer, or as a bonus.
In the case of any Restricted Stock:
(a) The purchase price, if any, will be determined by the
Committee.
(b) Restricted Stock may be subject to (i) restrictions on
the sale or other disposition thereof; (ii) rights of the
Company to reacquire such Restricted Stock at the purchase
price, if any, originally paid therefor upon termination of
the employee's employment within specified periods, (iii)
representation by the employee that he or she intends to
acquire Restricted Stock for investment and not for resale,
and (iv) such other restrictions, conditions and terms as the
Committee deems appropriate.
(c) The Participant shall be entitled to all dividends
paid with respect to Restricted Stock during the Period of
Restriction and shall not be required to return any such
dividends to the Company in the event of the forfeiture of the
Restricted Stock.
(d) The Participant shall be entitled to vote the
Restricted Stock during the Period of Restriction.
(e) The Committee shall determine whether Restricted Stock
is to be delivered to the Participant with an appropriate
legend imprinted on the certificate or if the shares are to be
deposited in escrow pending removal of the restrictions.
SECTION 12. PERFORMANCE AWARDS.
Performance Awards shall consist of Stock, monetary units or
some combination thereof, to be issued without any payment
therefor, in the event that certain performance goals established
by the Committee are achieved during the Performance Period. The
goals established by the Committee may include return on average
total capital employed, earnings per share, return on stockholders'
equity and such other goals as may be established by the Committee.
In the event the minimum Corporate goal is not achieved at the
conclusion of the Performance Period, no payment shall be made to
the Participant. Actual payment of the award earned shall be in
cash or in Stock or in a combination of both, in a single sum or in
periodic installments, all as the Committee in its sole discretion
determines. If Stock is used, the Participant shall not have the
right to vote and receive dividends until the goals are achieved
and the actual shares are issued. If an Award is paid in cash but
the number of shares available for issuance under the Plan had
previously been reduced to account for such Award, a number of
shares equal to the amount of the reduction shall be restored to
the number of shares remaining available for issuance.
6
<PAGE> 25
SECTION 13. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of
issued shares of Stock without new consideration to the
Company (such as by stock dividends or stock splits), the
total number of shares reserved for issuance under this Plan,
the number of shares which may be granted in the form of
Restricted Stock or Performance Awards, the maximum number of
shares available to a particular Participant, and the number
of shares covered by each outstanding Award, shall be adjusted
so that the aggregate consideration payable to the Company, if
any, and the value of each such Award shall not be changed.
Awards may also contain provisions for their continuation or
for other equitable adjustments after changes in the Stock
resulting from reorganization, sale, merger, consolidation,
issuance of stock rights or warrants, or similar occurrence.
(b) Notwithstanding any other provision of this Plan, and
without affecting the number of shares reserved or available
hereunder, the Board of Directors may authorize the issuance
or assumption of benefits in connection with any merger,
consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem
appropriate.
SECTION 14. NONTRANSFERABILITY.
Each Award granted under the Plan to a Participant shall not
be transferable otherwise than by will or the laws of descent and
distribution; provided, however, a Participant may, in his or her
sole discretion, transfer all or a portion of a nonqualified stock
option granted to such Participant to a Permitted Transferee,
provided that (i) there may be no consideration paid for any such
transfer, (ii) the stock option agreement pursuant to which such
options are granted must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with
this Section 14 or such proposed transfer must be approved by the
Committee, (iii) subsequent transfers of transferred nonqualified
stock options shall be prohibited except those (x) by will or the
laws of descent and distribution or (y) to any other Permitted
Transferee of the Participant, and (iv) the Participant shall
remain subject to withholding taxes upon exercise of the
nonqualified stock option by a Permitted Transferee. Following
transfer, any such nonqualified stock option shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer. The Company shall have no
obligation to provide a Permitted Transferee with notice of the
early termination of a nonqualified stock option. Awards granted
under this Plan to a Participant shall be exercisable, during the
Participant's lifetime, only by the Participant or a Permitted
Transferee, as the case may be. In the event of the death of a
Participant, exercise or payment shall be made only:
(a) By or to the Permitted Transferee, the executor or
administrator of the estate of the deceased Participant or the
person or persons to whom the deceased Participant's rights
under the Award shall pass by will or the laws of descent and
distribution; and
(b) To the extent that the deceased Participant or a
Permitted Transferee, as the case may be, was entitled thereto
at the date of the Participant's death.
SECTION 15. TAXES.
The Company shall be entitled to withhold the amount of any
tax attributable to any amounts payable or shares deliverable under
the Plan after giving the person entitled to receive such payment or
7
<PAGE> 26
delivery notice as far in advance of the Taxable Event as
practicable, and the Company may defer making payment or delivery
as to any Award, if any such tax is payable, until indemnified to
its satisfaction. The person entitled to any such delivery may, by
notice to the Company at the time the requirement for such
delivery is first established, elect to have such withholding
satisfied by a reduction of the number of shares otherwise so
deliverable (a "Stock Withholding Election"), such reduction to be
calculated based on a closing market price on the date of such
Taxable Event. Reporting Persons may make a Stock Withholding
Election only in accordance with the least restrictive methods then
permitted under Rule 16b-3.
SECTION 16. NO RIGHT TO EMPLOYMENT.
A Participant's right, if any, to continue to serve the
Company and its subsidiaries as an officer, employee, or otherwise,
shall not be enlarged or otherwise affected by his or her
designation as a Participant under the Plan.
SECTION 17. DURATION, AMENDMENT AND TERMINATION.
No Award shall be granted more than ten years after the date
of adoption of this Plan; provided, however, that the terms and
conditions applicable to any Award granted within such period may
thereafter be amended or modified by mutual agreement between the
Company and the Participant or such other person as may then have
an interest therein. Also, by mutual agreement between the Company
and a Participant hereunder, Stock Options or other Awards may be
granted to such Participant in substitution and exchange for, and
in cancellation of, any Awards previously granted such Participant
under this Plan, provided that any such substitution shall be
deemed a new award for purposes of calculating any applicable six-
month holding periods. To the extent that any Stock Options or
other Awards which may be granted within the terms of the Plan
would qualify under present or future laws for tax treatment that
is beneficial to a recipient, then any such beneficial treatment
shall be considered within the intent, purpose and operational
purview of the Plan and the discretion of the Committee, and to the
extent that any such Stock Options or other Awards would so qualify
within the terms of the Plan, the Committee shall have full and
complete authority to grant Stock Options or other Awards that so
qualify (including the authority to grant, simultaneously or
otherwise, Stock Options or other Awards which do not so qualify)
and to prescribe the terms and conditions (which need not be
identical as among recipients) in respect to the grant or exercise
of any such Stock Option or other Awards under the Plan. The Board
of Directors may amend the Plan from time to time or terminate the
Plan at any time. However, no action authorized by this paragraph
shall reduce the amount of any existing Award or change the terms
and conditions thereof without the Participant's consent. No
amendment of the Plan shall, without approval of the stockholders
of the Company increase the total number of shares which may be
issued under the Plan. No amendments requiring shareholder
approval in order to meet the requirements of Rule 16b-3 shall be
effective unless such shareowner approval is obtained.
SECTION 18. CHANGE OF CONTROL.
Notwithstanding any other provision of this Plan, if the terms
of an agreement under which the Committee has granted an Award
under this Plan shall so provide, upon a Change of Control
outstanding Awards shall become immediately and fully exercisable
or payable according to the following terms:
8
<PAGE> 27
(a) Any outstanding and unexercised Option shall become
immediately and fully exercisable, and shall remain
exercisable until it would otherwise expire by reason of lapse
of time.
(b) Any outstanding and unexercised Stock Appreciation
Rights shall become exercisable as follows:
(i) Any SAR described in subsections 10(a) or (b)
shall continue to be treated as provided in
those subsections, except that SARs exercised
by Reporting Persons for cash shall have been
either (i) approved by the Board or the
Committee or (ii) held for six months prior to
exercise.
(ii) Any SAR described in subsection 10(c) shall be
deemed to have been exercised if and when the
Participant advises the Committee in writing
that he or she elects to have Options with
respect to which the SAR was granted treated as
having lapsed, except that SARs exercised by
Reporting Persons for cash shall have been
either (i) approved by the Board or the
Committee or (ii) held for six months prior to
exercise.
(iii) Any SAR described in subsection 10(d) shall be
exercisable immediately, without regard to
limitations imposed upon such exercise which
are related to the passage of time, except that
SARs exercised by Reporting Persons for cash
shall have been either (i) approved by the
Board or the Committee or (ii) held for six
months prior to exercise.
(c) Any Restricted Stock awarded pursuant to Section 11
shall become immediately and fully transferable, and the
Committee shall be deemed to have exercised its discretion to
waive any automatic forfeitures provided with respect to such
Restricted Stock. Any shares held in escrow shall be
delivered to the Participant, and the share certificates shall
not contain the legend specified by subsection 11(e). Unless
such award of Restricted Stock shall have been approved by
either the Board or the Committee, Reporting Persons shall not
dispose of any Restricted Stock until six (6) months following
the date of grant of such Restricted Stock.
(d) Any Performance Award granted pursuant to Section 12
which has not expired or been forfeited shall be deemed to
have been earned on the assumption that all performance goals
have been achieved to the fullest extent scheduled in the
Award. All payments shall be made promptly in a lump sum,
notwithstanding any other provision for installment or
deferred payment prescribed in the Award.
(e) For purposes of this Plan, Change of Control shall mean
a change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Act; provided
that, for purposes of this Plan, a Change in Control shall be
deemed to have occurred if (i) any Person (other than the
Company or Zsolt Rumy is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly,
of securities of the Company which represent 20% or more of
the combined voting power of the Company's then outstanding
securities; (ii) during any period of two (2) consecutive
years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the
nomination for election, by the Company's shareholders, of
each new director is approved by a vote of at least two-thirds
(2/3) of the directors then still in office who were directors
at the beginning of the
9
<PAGE> 28
period but excluding any individual whose initial assumption
of office occurs as a result of either an actual or threatened
election contest (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a person other than the Board; (iii) there is consummated
any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock are converted into
cash, securities or other property, other than a merger of the
Company in which the holders of Common Stock immediately prior
to the merger have substantially the same proportionate
ownership of common stock of the surviving corporation
immediately after the merger; (iv) there is consummated any
consolidation or merger of the Company in which the Company is
the continuing or surviving corporation in which the holders
of Common Stock immediately prior to the merger do not own
seventy percent (70%) or more of the stock of the surviving
corporation immediately after the merger; (v) there is
consummated any sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company; or (vi)
the shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company.
SECTION 19. MISCELLANEOUS PROVISIONS
(a) Naming of Beneficiaries. In connection with an
-----------------------
Award, a Participant may name one or more beneficiaries to receive
the Participant's benefits, to the extent permissible pursuant to
the various provisions of the Plan, in the event of the death of
the Participant.
(b) Successors. All obligations of the Company under
----------
the Plan with respect to Awards issued hereunder shall be binding
on any successor to the Company.
(c) Governing Law. The Plan, and all agreements under
-------------
the Plan, shall be construed in accordance with, and governed by,
the internal laws of the State of Missouri, without reference to
applicable conflict of laws provisions.
SECTION 20. SHAREHOLDER APPROVAL.
The Plan was originally approved by the sole shareholder of
the Company as of July 31, 1992. The Plan shall be effective as of
such date. The first amendment to the Plan was adopted by the
Board of Directors in November 1996 effective and was submitted for
approval by the shareholders of the Company at the 1997 Annual
Meeting of Shareholders held February 7, 1996.
10
<PAGE> 29
ZOLTEK COMPANIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Zsolt Rumy and Daniel D. Greenwell,
and each of them, with or without the other, proxies, with full power of
substitution to vote, as designated below, all shares of stock that the
signatory hereof is entitled to vote at the Annual Meeting of Shareholders of
Zoltek Companies, Inc. to be held at the St. Louis Marriott West Hotel, 660
Maryville Centre Drive, St. Louis, Missouri, on Friday, February 7, 1997, at
10:00 A.M., local time, and all adjournments thereof, all in accordance with
and as more fully described in the Notice and accompanying Proxy Statement
for such meeting, receipt of which is hereby acknowledged.
1. ELECTION OF CLASS I DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as written to the to vote for nominees as
contrary below) listed below
JOHN L. KARDOS and LINN BEALKE
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO AMEND THE ZOLTEK COMPANIES, INC. RESTATED ARTICLES OF
INCORPORATION
Proposal to amend Article IV of the Zoltek Companies, Inc. Restated
Articles of Incorporation to increase the authorized number of shares of
Common Stock, $.01 par value, from 20,000,000 to 50,000,000.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
3. PROPOSAL TO AMEND THE ZOLTEK COMPANIES, INC. 1992 LONG TERM INCENTIVE
PLAN.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
4. In their discretion upon any business which may properly come before the
meeting.
/ / FOR / / AGAINST / / ABSTAIN
[Reverse]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" EACH OF THE NOMINEES LISTED, "FOR" THE ADOPTION OF THE PROPOSAL TO
AMEND ARTICLE IV OF THE ZOLTEK COMPANIES, INC. RESTATED ARTICLES OF
INCORPORATION AND "FOR" THE PROPOSAL TO AMEND THE ZOLTEK COMPANIES, INC. 1992
LONG TERM INCENTIVE PLAN.
Dated this ----- day of ----------------------------, 1997.
PLEASE DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
-----------------------------------------------
-----------------------------------------------
Signature
Please date and sign in the exact name in which
you own the Company's Common Stock. Executors,
administrators, trustees and others acting in a
representative or fiduciary capacity should so
indicate when signing.
<PAGE> 30
APPENDIX
Page 13 of the printed proxy contains a stock performance graph.
The information contained in the graph is depicted in the table that
immediately follows the graph.
