Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Hudson Technologies, Inc.
(Name of Registrant as Specified in Its Charter)
Board of Directors of Hudson Technologies, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined).
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
HUDSON TECHNOLOGIES, INC.
25 Torne Valley Road
Hillburn, New York 10931
June 25, 1997
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
which will be held on Thursday, July 24, 1997, at 10:00 A.M. at the Empire Ball
Room, Holiday Inn and Conference Center, Three Executive Boulevard, Suffern, New
York 10901.
The Notice of Annual Meeting and Proxy Statement which follow describe the
business to be conducted at the meeting.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
Notice of Annual Meeting and Proxy Statement, I urge you to complete, sign, date
and return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please inform our Transfer Agent,
Continental Stock Transfer & Trust Company, at 2 Broadway, New York, New York
10004, in writing, of the correct address.
Your vote is very important, and we will appreciate a prompt return of your
signed proxy card. We hope to see you at the meeting.
Cordially,
Kevin J. Zugibe, P.E.
Chairman of the Board
<PAGE>
HUDSON TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 24, 1997
To the Shareholders of HUDSON TECHNOLOGIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Hudson
Technologies, Inc. (the "Company") will be held on July 24, 1997 at 10:00 A.M.,
at the Empire Ball Room, Holiday Inn and Conference Center, Three Executive
Boulevard, Suffern, New York 10901, for the following purposes:
1. To elect a class of four directors to serve until the Annual Meeting of
Shareholders to be held in 2000;
2. To approve the Company's 1997 Stock Option Plan; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on June 13, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors
Stephen P. Mandracchia
Secretary
June 25, 1997
- --------------------------------------------------------------------------------
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
HUDSON TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 24, 1997
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hudson Technologies, Inc. (the "Company")
for use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held
on Thursday, July 24, 1997, and including any adjournment or adjournments
thereof, for the purposes set forth in the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the accompanying form
of proxy to shareholders on or about June 26, 1997.
Proxies in the accompanying form, duly executed, returned to the management
of the Company and not revoked, will be voted at the Annual Meeting. Any proxy
given pursuant to such solicitation may be revoked by the shareholder at any
time prior to the voting of the proxy by a subsequently dated proxy, by written
notification to the Secretary of the Company, or by personally withdrawing the
proxy at the Annual Meeting and voting in person.
The address and telephone number of the principal executive offices of the
Company are:
25 Torne Valley Road
Hillburn, New York 10931
Telephone No.: (914) 368-4990
OUTSTANDING STOCK AND VOTING RIGHTS
Only shareholders of record at the close of business on June 13, 1997 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were issued and outstanding 5,086,820 shares of the
Company's common stock, par value $.01 per share ("Common Stock"), the only
class of voting securities of the Company. Each share of Common Stock entitles
the holder thereof to one vote on each matter submitted to a vote at the Annual
Meeting.
VOTING PROCEDURES
Directors will be elected by a plurality of the votes cast by the holders
of Common Stock in person or represented by proxy at the Annual Meeting,
provided a quorum is present at the meeting. All other matters to be acted upon
at the meeting will be decided by the majority of the votes cast by the holders
of
<PAGE>
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting, provided a quorum is present. A quorum will be present at the
Annual Meeting if the holders of a majority of the outstanding shares of Common
Stock as of the Record Date are present in person or represented by proxy. Votes
will be counted and certified by one or more Inspectors of Election who are
expected to be employees of Continental Stock Transfer & Trust Company, the
Company's transfer agent.
In accordance with applicable law, abstentions and "broker non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. Based upon the Company's understanding of
the requirements of the law of the State of New York and the Certificate of
Incorporation and Bylaws, as amended (the "By-laws"), of the Company, "votes
cast" at a meeting of shareholders by the holders of shares entitled to vote are
determinative of the outcome of the matter to be voted on. Failures to vote,
broker non-votes and abstentions will not be considered "votes cast."
Proxies will be voted in accordance with the instructions thereon. Unless
otherwise stated, all shares represented by such proxy will be voted as
instructed. Proxies may be revoked as noted above.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors (the "Board") is
divided into two classes. Each class is to have a term of two years (the term of
each class expiring in successive years) and is to consist, as nearly as
possible, of one-half of the number of directors constituting the entire Board.
Accordingly, one class consists of three directors and the second class consists
of four directors.
At the Annual Meeting, a class of four directors will be elected for a
two-year term expiring at the Annual Meeting of Shareholders to be held in 1999.
Messrs. Thomas P. Zugibe, Vincent P. Abbatecola, Otto C. Morch and Stephen Spain
are the nominees for election to such positions. Mr. Spain is a nominee for
election to the directorship currently held by Robert Johnson. Mr. Johnson has
determined not to stand for reelection. The other class of directors, consisting
of Messrs. Kevin J. Zugibe, Stephen J. Cole-Hatchard and Dominic J. Monetta,
will not stand for election at the Annual Meeting because their respective terms
expire at the Annual Meeting of Shareholders to be held in 1998.
- 2 -
<PAGE>
Proxies will be voted for the nominees named below, unless authority is
withheld. Should any nominee not be available for election, proxies will be
voted for such substitute nominee as may be designated by the Board of
Directors. Each of the nominees has indicated to the Board that he will be
available.
The following is information with respect to the nominees for election as
directors at the Annual Meeting:
Name Age Position
---- --- --------
Thomas P. Zugibe 44 Executive Vice President and
Director
Vincent P. Abbatecola 49 Director
Otto C. Morch 63 Director
Stephen Spain 46 Vice President, Strategic
Affairs
Thomas P. Zugibe has been a director since April 1995 and an Executive Vice
President of the Company since January 1997. He served as a Vice President of
the Company from its inception in 1991 until his appointment as Executive Vice
President in January 1997. Prior to May 1995, Mr. Zugibe devoted only a portion
of his business time to the affairs of the Company. Since May 1995, he has been
employed by the Company on a full time basis. Mr. Zugibe has been engaged in the
practice of law in the State of New York since 1980 and is a member of the
Garnerville, New York law firm of Ferraro & Zugibe. He is also a Justice for the
Village of West Haverstraw, New York. Mr. Zugibe is the brother of Kevin J.
Zugibe, Chairman of the Board, President and Chief Executive Officer of the
Company.
Vincent P. Abbatecola has been a director of the Company since June 1994.
Mr. Abbatecola is the owner of Abbey Ice & Spring Water Company, Spring Valley,
New York, where he has been employed since 1971. Mr. Abbatecola serves as
Chairman of the Board of Mid Atlantic Ice Association, an industry trade
association.
Otto C. Morch has been a director of the Company since March 1996. For more
than the past five years, Mr. Morch has been Senior Vice President, Commercial
Banking, at Provident Savings Bank, F.A.
Stephen Spain has been a Vice President of the Company since April 1996 and
the President of Environmental Support Solutions, Inc. ("ESS"), a developer and
provider of environmental software and environmental training and consulting
services since August 1993. ESS, a wholly-owned subsidiary of the
- 3 -
<PAGE>
Company, was acquired by the Company in April 1996. Mr. Spain co-founded the
predecessor of ESS in 1991. He was employed by Salt River Project, an electric
generation utility, from 1986 to August 1993, as a facility design engineer.
The following is information with respect to the directors whose terms of
office expire at the 1998 Annual Meeting of Shareholders:
Name Age Position
---- --- --------
Kevin J. Zugibe 34 Chairman of the Board,
President and Chief
Executive Officer
Stephen J. Cole-Hatchard 39 Vice President, Treasurer
and Director
Dominic J. Monetta 54 Director
Kevin J. Zugibe, P.E., a founder of the Company, has been Chairman of the
Board, President and Chief Executive Officer of the Company since its inception
in 1991. Since May 1994, Mr. Zugibe has devoted his full business time to the
Company's affairs. From May 1987 to May 1994, Mr. Zugibe was employed as a power
engineer with Orange and Rockland Utilities, Inc. Mr. Zugibe is a licensed
professional engineer, and from December 1990 to May 1994, he was a member of
Kevin J. Zugibe & Associates, a professional engineering firm.
Stephen J. Cole-Hatchard has been a director and a Vice President of the
Company since January 1993 and Treasurer of the Company since February 1995. Mr.
Cole-Hatchard, a member of the bar of the State of New York, was employed as a
detective with the Clarkstown, New York Police Department, Asset
Forfeiture/Legal Division from May 1984 to May 1995. From May 1995 to January
1996, Mr. Cole-Hatchard was on leave of absence from the Clarkstown Police
Department and employed on a full time basis by the Company. In January 1996,
Mr. Cole-Hatchard returned to the Clarkstown Police Department as a detective
and currently devotes approximately 30 hours per week of his business time to
the affairs of the Company.
Dominic J. Monetta has been a director of the Company since April 1996.
Since August 1993, he has been the President of Resource Alternatives, Inc., a
firm providing management and technological solutions to executive managers.
From December 1991 to May 1993, Mr. Monetta served as Director of Defense
Research and Engineering for the Research and Advanced Technology Office of the
United States Department of Defense. From June 1989 to December 1991, he served
as the Director of the Office of
- 4 -
<PAGE>
New Production Reactors of the United States Department of Energy.
During the fiscal year ended December 31, 1996 ("Fiscal 1996"), the Board
held 13 meetings. Each of the directors attended at least 75% of the total
number of meetings of the Board held during the period he served as a director
during such year, except for Dominic Monetta who attended seven of the 12 Board
meetings that were held after he became a director of the Company. The Company
does not have standing nominating or compensation committees of the Board or
committees performing similar functions, other than a Stock Option Committee,
which administers the Stock Option Plan of the Company that became effective in
1994 (the "1994 Plan"). The Stock Option Committee consists of Messrs.
Abbatecola and Morch. The Stock Option Committee held one meeting during the
fiscal year ended December 31, 1996 ("Fiscal 1996") and, in addition, took
various actions by written consent. The Company also has an Audit Committee of
the Board which supervises the audit and financial procedures of the Company.
The Audit Committee is currently comprised of Messrs. Abbatecola, Cole-Hatchard
and Morch. The Audit Committee held one meeting during Fiscal 1996. In May 1997
the Board appointed an Executive Committee consisting of Messrs. Kevin J.
Zugibe, Thomas P. Zugibe and Dominic J. Monetta.
In January 1997, the Company entered into an agreement with E.I. DuPont de
Nemours & Company ("DuPont") and DuPont Chemical and Energy Operations, Inc.
("DCEO") providing that, upon request by DuPont, the Company will cause two
persons designated by DuPont to be elected to the Company's Board of Directors.
DuPont has advised the Company that it does not intend to exercise its right to
designate such persons during 1997.
Compensation of Directors
Non-employee directors receive an annual fee of $3,000 and are reimbursed
for out-of-pocket expenses incurred in attending meetings of the Board of
Directors. Under the 1994 Plan, non-employee directors (other than members of
the Stock Option Committee) are eligible to receive non-qualified stock options
and stock appreciation rights. Under the Company's 1997 Stock Option Plan (the
"1997 Plan"), subject to approval of the 1997 Plan by the shareholders at the
Annual Meeting, non-employee directors are eligible to be granted non-qualified
stock options. See "Summary of the 1997 Plan" under Proposal 2 below.
The Stock Option Committee appointed to administer the 1994 Plan and either
the Board of Directors or a committee appointed by the Board to administer the
1997 Plan has discretion to determine the number of shares subject to each
non-qualified stock option (subject to the number of shares available for grant
under the 1994 Plan or the 1997 Plan, as applicable), the
- 5 -
<PAGE>
exercise price thereof, the term thereof (but not in excess of 10 years from the
date of grant, subject to earlier termination in certain circumstances) and the
terms of exercise thereof (amounts, intervals and other conditions). No
non-qualified stock options were granted to non-employee directors under the
1994 Plan in Fiscal 1996 and no stock appreciation rights have been granted
under the 1994 Plan.
Executive Officers
In addition to Messrs. Kevin J. Zugibe, Thomas P. Zugibe and Stephen J.
Cole-Hatchard, Messrs. Stephen P. Mandracchia, Walter A. Phillips and Brian
Coleman serve as executive officers of the Company. Executive officers are
elected annually and serve at the pleasure of the Board. The following is
information with respect to such executive officers:
Name Age Position
---- --- --------
Stephen P. Mandracchia 37 Executive Vice President and
Secretary
Walter A. Phillips 44 Vice President of Sales and
Marketing
Brian Coleman 35 Vice President and Chief
Financial Officer
Stephen P. Mandracchia has been an Executive Vice President of the Company
since January 1997 and Secretary of the Company since April 1995. He served as a
Vice President of the Company from January 1993 to January 1997 and as a
director of the Company from June 1994 to August 1996. Prior to September 1995,
Mr. Mandracchia devoted only a portion of his business time to the Company's
affairs. Mr. Mandracchia, a member of the bar of the State of New York, was a
member of Martin, Vandewalle, Donohue, Mandracchia & McGahan, a Great Neck, New
York law firm from 1983 to December 1995.
Walter A. Phillips has been Vice President of Sales and Marketing of the
Company since October 1996. From January 1990 to October 1996, he was employed
by York International, a manufacturer of air conditioners ("York"), in various
sales and marketing positions, most recently as National Service Sales and
Marketing Manager for York's United States service business.
Brian Coleman has been Vice President and Chief Financial Officer of the
Company since May 1997. Prior thereto, he was employed, for more than 10 years,
by BDO Seidman, LLP, the Company's independent auditors, in various positions,
including as a partner from 1995 to May 1997. Mr. Coleman is a licensed
certified public accountant in the State of New York.
- 6 -
<PAGE>
Other Officers
In addition to Stephen Spain, a nominee for election as a director of the
Company (see biographical information above), Robert Johnson, age 40, currently
a director of the Company, is a Vice President of the Company and ESS.
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than 10% of a registered class of the Company's equity securities to
file reports of ownership and changes in ownership ("Reporting Persons") with
the Securities and Exchange Commission (the "SEC"). Reporting Persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the Company's review of Section 16(a) forms received by it
and written representations received from such persons, the Company believes
that during Fiscal 1996, all reporting requirements applicable to the Company's
Reporting Persons were complied with.
PROPOSAL 2
APPROVAL OF 1997 STOCK OPTION PLAN
At the Annual Meeting, the Company's shareholders will be asked to approve
the adoption of the Company's 1997 Stock Option Plan (the "1997 Plan").
On June 12, 1997, the Board of Directors adopted, subject to shareholder
approval, the 1997 Plan. The Board believes that, to enable the Company to
continue to attract and retain personnel of the highest caliber, provide
incentive for officers, directors, key employees and other key persons and to
promote the well-being of the Company, it is in the best interest of the Company
and its shareholders to provide to officers, directors, key employees,
consultants and other independent contractors who perform services for the
Company, through the granting of stock options, the opportunity to participate
in the value and/or appreciation in value of the Company's Common Stock. The
Board has found that the grant of options under the 1994 Plan has proven to be a
valuable tool in attracting and retaining key employees. Accordingly, the Board
believes that the 1997 Plan (a) will provide the Company with significant means
to attract and retain talented personnel, (b) will result in saving cash, which
otherwise would be required to maintain current key employees and adequately
attract and reward key personnel, and (c) consequently, will prove beneficial to
the Company's ability to be competitive.
- 7 -
<PAGE>
To date, no options have been granted under the 1997 Plan. If the 1997 Plan
is approved by the shareholders, options may be granted under the 1997 Plan, the
timing, amounts and specific terms of which cannot be determined at this time.
The following summary of the 1997 Plan does not purport to be complete, and
is subject to and qualified in its entirety by reference to the full text of the
1997 Plan, set forth as Exhibit "A" hereto.
Summary of the 1997 Plan
The 1997 Plan authorizes the granting of options to purchase up to
1,000,000 shares of Common Stock, subject to adjustment as described below. All
employees, directors, independent agents, consultants and attorneys of the
Company, any parent corporation of the Company or any of the Company's
subsidiaries, are eligible to be granted Non-Qualified Stock Options (as defined
below) under the 1997 Plan. Incentive Stock Options (as defined below) may be
granted only to employees of the Company, any parent corporation of the Company
or any of the Company's subsidiaries.
The 1997 Plan will be administered by the Board of Directors (the "Board")
or, at the discretion of the Board, by a committee (the "Committee") consisting
of two or more non-employee members of the Board of Directors appointed by the
Board. The Board or the Committee will determine, among other things, the
persons to whom options will be granted, the type of options to be granted, the
number of shares subject to each option and the share price. The Board or the
Committee will also determine the term of each option, the restrictions or
limitations thereon, and the manner in which each such option may be exercised.
Unless sooner terminated, the 1997 Plan will expire at the close of business on
June 11, 2007.
Stock Options. The 1997 Plan provides for the grant of "incentive stock options"
("Incentive Stock Options"), as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and for options not qualifying as
Incentive Stock Options ("Non-Qualified Stock Options"). The Board or the
Committee, as the case may be, shall determine those persons to whom stock
options may be granted.
Incentive Stock Options granted under the 1997 Plan are nontransferable by
the optionee during his lifetime. Non- Qualified Stock Options are transferable
to the extent determined by the Board or the Committee and set forth in related
option agreements. Options granted under the 1997 Plan will expire if not
exercised within 10 years of the grant (five years in the case of Incentive
Stock Options granted to an eligible employee owning stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
a parent
- 8 -
<PAGE>
or subsidiary of the Company immediately before the grant (a "10% Shareholder"))
or such earlier term as provided by the Board or the Committee, as the case may
be, and under certain circumstances set forth in the 1997 Plan, may be exercised
within three months following termination of employment (one year in the event
of death of the optionee). Options may be granted to optionees in such amounts
and at such prices as may be determined, from time to time, by the Board or the
Committee, provided that the exercise price of an Incentive Stock Option may not
be less than the fair market value of the shares underlying the option on the
date the option is granted (not be less than 110% of fair market value in the
case of an Incentive Stock Option granted to a 10% Shareholder). The exercise
price of Non- Qualified Stock Options is within the discretion of the Board or
the Committee and may be any price not less than the par value of the shares
underlying the option.
Under the 1997 Plan, the maximum aggregate number of shares as to which
options may be granted during the term of the 1997 Plan to any optionee who is
an employee of the Company is 500,000. Moreover, the Company may not, in the
aggregate, grant Incentive Stock Options that are first exercisable by any
optionee during any calendar year (under all such plans of the optionee's
employer corporation and its "parent" and "subsidiary" corporations, as those
terms are defined in Section 424 of the Code) to the extent that the aggregate
fair market value of the underlying stock (determined at the time the option is
granted) exceeds $100,000.
The 1997 Plan contains anti-dilution provisions authorizing appropriate
adjustments in certain circumstances. Shares of Common Stock subject to options
which expire without being exercised or which are cancelled as a result of the
cessation of employment are available for further grants. No shares of Common
Stock of the Company may be issued to any optionee until the full option price
has been paid. The Board of Directors or the Committee may grant individual
options under the 1997 Plan with more stringent provisions than those specified
in the 1997 Plan.
Options become exercisable in such amounts, at such intervals and upon such
terms and conditions as the Board or the Committee determines. Options are
exercisable until the earlier of (i) a date set by the Board of Directors or
Committee at the time of grant or (ii) the close of business on the day before
the tenth anniversary of the option's date of grant (the day before the fifth
anniversary of the option's date of grant in the case of an Incentive Stock
Option granted to a 10% Shareholder). The 1997 Plan will remain in effect until
all options granted thereunder are exercised or terminated. Notwithstanding the
foregoing, no options may be granted after June 11, 2007.
- 9 -
<PAGE>
On June 24, 1997, the closing sale price of the Company's Common Stock as
reported by NASDAQ was $9.50.
Certain Federal Income Tax Consequences of the 1997 Plan
The following is a brief summary of the Federal income tax aspects of
grants made under the 1997 Plan based upon statutes, regulations and
interpretations in effect on the date hereof. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
1. Incentive Stock Options. The optionee will recognize no taxable income
upon the grant or exercise of an Incentive Stock Option. Upon a disposition of
the shares after the later of two years from the date of grant and one year
after the transfer of the shares to the optionee, (a) the optionee will
recognize the difference, if any, between the amount realized and the exercise
price as long-term capital gain or long-term capital loss (as the case may be)
if the shares are capital assets in his or her hands; and (b) the Company will
not qualify for any deduction in connection with the grant or exercise of the
options. The excess, if any, of the fair market value of the shares on the date
of exercise of an Incentive Stock Option over the exercise price will be treated
as an item of adjustment for his or her taxable year in which the exercise
occurs and may result in an alternative minimum tax liability for the optionee.
In the case of a disposition of shares in the same taxable year as the exercise
where the amount realized on the disposition is less than the fair market value
of the shares on the date of exercise, there will be no adjustment since the
amount treated as an item of adjustment, for alternative minimum tax purposes,
is limited to the excess of the amount realized on such disposition over the
exercise price which is the same amount included in regular taxable income.
If Common Stock acquired upon the exercise of an Incentive Stock Option is
disposed of prior to the expiration of the holding periods described above, (a)
the optionee will recognize ordinary compensation income in the taxable year of
disposition in an amount equal to the excess, if any, of the lesser of the fair
market value of the shares on the date of exercise or the amount realized on the
disposition of the shares, over the exercise price paid for such shares; and (b)
the Company will qualify for a deduction equal to any such amount recognized,
subject to the requirements that the compensation be reasonable and not limited
under Section 162(m) of the Code. The optionee will recognize the excess, if
any, of the amount realized over the fair market value of the shares on the date
of exercise, if the shares are capital assets in his or her hands, as short-term
or long-term capital gain, depending on the length of time that the optionee
held the shares, and the Company will not qualify for a deduction with respect
to such excess.
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<PAGE>
Subject to certain exceptions for disability or death, if an Incentive
Stock Option is exercised more than three months following the termination of
the optionee's employment, the option will generally be taxed as a Non-Qualified
Stock Option. See "Non-Qualified Stock Options."
2. Non-Qualified Stock Options. With respect to Non- Qualified Stock
Options, (i) upon grant of the option, the optionee will recognize no income;
(ii) upon exercise of the option (if the shares are not subject to a substantial
risk of forfeiture), the optionee will recognize ordinary compensation income in
an amount equal to the excess, if any, of the fair market value of the shares on
the date of exercise over the exercise price, and the Company will qualify for a
deduction in the same amount, subject to the requirements that the compensation
be reasonable and not limited under Section 162(m) of the Code; (iii) the
Company will be required to comply with applicable Federal income tax
withholding requirements with respect to the amount of ordinary compensation
income recognized by the optionee; and (iv) on a sale of the shares, the
optionee will recognize gain or loss equal to the difference, if any, between
the amount realized and the sum of the exercise price and the ordinary
compensation income recognized. Such gain or loss will be treated as short-term
or long-term capital gain or loss if the shares are capital assets in the
optionee's hands depending upon the length of time that the optionee held the
shares.
Recommendation
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 2.
EXECUTIVE COMPENSATION
The following table discloses the compensation earned for each of the last
three fiscal years by Kevin J. Zugibe, the Company's Chief Executive Officer,
and Stephen P. Mandracchia, an Executive Vice President of the Company (and
together with the Chief Executive Officer, the "Named Executives"), the only
other executive officer whose salary for Fiscal 1996 was in excess of $100,000.
Summary Compensation Table
Annual Long Term
Compensation Compensation Awards
------------ ---------------------
Securities Underlying
Name and Principal Position Year Salary($) Options(#)
- --------------------------- ---- --------- ----------
Kevin J. Zugibe, 1996 145,462* -0-
Chairman of the Board, 1995 113,076* -0-
President and Chief 1994 43,462* 75,000
Executive Officer
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<PAGE>
Stephen P. Mandracchia, 1996 104,885* -0-
Executive Vice President 1995 47,574* -0-
and Secretary 1994 3,554* 75,000
- ----------
* The value of non-cash personal benefits furnished to each of the Named
Executives during fiscal 1994, 1995 and 1996 did not exceed 10% of such annual
compensation.
The following table sets forth information concerning the value of
unexercised stock options held by the Named Executives at December 31, 1996. No
options were granted to or exercised by the Named Executives during Fiscal 1996.
Aggregated Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of
Unexercised Options In-the-Money Options
at December 31, 1996 at December 31, 1996*
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kevin J. Zugibe 54,000 21,000 $6,750 $2,625
Stephen P. Mandracchia 54,000 21,000 $6,750 $2,625
</TABLE>
- ----------
* Year-end values of unexercised in-the-money options represent the positive
spread between the exercise price of such options and the year-end market value
of the Common Stock.
Employment Agreements
The Company has entered into a five-year employment agreement with Kevin J.
Zugibe which expires in May 1999 and upon expiration is automatically renewable
for successive one-year terms. The agreement provides for an annual base salary
of $130,000 with such increases and bonuses as the Board may determine.
Effective January 1, 1997, Mr. Zugibe's base salary increased to $175,000. The
Company is the beneficiary of a "key- man" insurance policy on the life of Mr.
Zugibe in the amount of $1,000,000.
The Company has entered into a three-year employment agreement with Walter
A. Phillips, which expires in October 1999 and upon expiration is automatically
renewable for successive one-year terms. The agreement provides for an annual
base salary of $150,000 and for an annual bonus not to exceed $25,000 based on
the Company's achievement of certain levels of profitability.
The Company has entered into a one-year employment agreement, renewable
upon expiration for successive one-year terms, with each of Thomas P. Zugibe,
Stephen P. Mandracchia and Stephen J. Cole-Hatchard. The agreements provide for
an annual base salary, effective January 1, 1997, in the case of Messrs. Zugibe
and Mandracchia, of $130,000, and, in the case of Mr. Cole-Hatchard, of $75,000.
- 12 -
<PAGE>
In May 1997, the Company entered into an employment agreement with Brian
Coleman for a term which expires in May 2000 and upon expiration is
automatically renewable for successive one-year terms. The agreement provides
for Mr. Coleman to receive an annual base salary of $130,000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date based on
information obtained from the persons named below, with respect to the
beneficial ownership of Common Stock by (i) each person known by the Company to
be the beneficial owner of more than 5% of the Company's outstanding Common
Stock, (ii) each of the Named Executives, (iii) each current director and
Stephen Spain, a nominee for election as director at the Annual Meeting, and
(iv) all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount and
Name and Nature of Percentage of
Address of Beneficial Outstanding
Beneficial Owner(1) Ownership(2) Shares Owned
------------------- ------------ ------------
<S> <C> <C>
DuPont Chemical and Energy 500,000 (3) 9.8
Operations, Inc. and
E.I. DuPont de Nemours and Company
DuPont Building, Room 8045
1007 Market Street
Wilmington, Delaware 19898............................
Fredrick T. Zugibe.................................... 262,400 (4) 5.1
Kevin J. Zugibe ...................................... 283,900 (4) 5.5
Thomas P. Zugibe ..................................... 283,900 (4) 5.5
Stephen P. Mandracchia ............................... 271,900 (4) 5.3
Stephen J. Cole-Hatchard ............................ 282,900 (4) 5.5
Vincent P. Abbatecola ................................ 1,500 *
Robert Johnson ....................................... 19,000 (5) *
Otto C. Morch......................................... 600 *
Dominic J. Monetta ................................... 3,000 *
Stephen Spain......................................... 19,000 (5) *
All directors and executive
officers as a
group (10 persons).................................... 1,154,400(6) 21.8
</TABLE>
- ----------
* Less than one percent
(1) Unless otherwise indicated, the address of each of the persons listed is the
address of the Company, 25 Torne Valley Road, Hillburn, New York 10931.
- 13 -
<PAGE>
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the Record Date. Each beneficial
owner's percentage ownership is determined by assuming that options and warrants
that are held by such person (but not held by any other person) and which are
exercisable within 60 days from the Record Date have been exercised. Unless
otherwise noted, the Company believes that all persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them.
(3) Based on information set forth in a Schedule 13D filed with the SEC, DCEO
and DuPont have shared voting and dispositive power as to these shares.
(4) Includes 46,272 shares purchasable by the named person under an immediately
exercisable option.
(5) Represents shares purchasable by the named person under an immediately
exercisable option. Mr. Johnson's term as a director expires at this Annual
Meeting.
(6) Includes 211,788 shares issuable upon exercise of immediately exercisable
options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between February 1991 and April 1994, the Company borrowed an aggregate of
$445,419 from the following persons: Thomas P. Zugibe ($92,828), Kevin J. Zugibe
($37,669), Stephen P. Mandracchia ($126,837), Frederick T. Zugibe ($185,085) and
Stephen J. Cole-Hatchard ($3,000). Such indebtedness was evidenced by demand
promissory notes of the Company bearing interest at the annual rate of 8%. The
holders of such indebtedness agreed to extend such indebtedness through August
1, 1996 and to forgive accrued interest (which was contributed to capital)
through January 1, 1995. The loans were repaid in December 1995.
In April 1996, the Company acquired the outstanding capital stock of ESS
from Robert Johnson and Stephen Spain for an aggregate of $2,375,000, of which
$700,000 consisted of cash paid to Messrs. Johnson and Spain and $1,675,000
consisted of notes issued to such persons maturing in October 1996 bearing
interest at the annual rate of 7%. The indebtedness evidenced by such notes was
fully paid by the Company in October 1996.
In November 1996, certain officers and shareholders of the Company loaned
an aggregate of $678,000 to the Company. To evidence the resulting indebtedness,
the Company issued (a) $100,000 principal amount notes, bearing interest at the
annual rate of 8.85%, to Messrs. Kevin J. Zugibe, Thomas P. Zugibe, Stephen P.
Mandracchia and Stephen Cole-Hatchard, executive officers of the Company; (b) a
note in the principal amount of $50,000, bearing interest at the annual rate of
6%, to Mr. William A. Barron, a former executive officer of the Company; and (c)
a note in the principal amount of $450,000 to Deerfield Partnership, a New York
general partnership consisting of Mr.
- 14 -
<PAGE>
Cole-Hatchard and his mother. The notes were payable upon the Company's receipt
of the proceeds of a mortgage loan by a specified date or on demand if not paid
by such date. The Company retired such indebtedness in January 1997.
In January 1997, the Company entered into certain agreements with DuPont
and DCEO pursuant to which (a) the Company issued and sold 500,000 shares of
Common Stock to DCEO in consideration for a $3.5 million cash payment, (b)
subject to certain exceptions, DuPont and DCEO agreed that neither DuPont nor
any of its affiliates will, directly or indirectly, acquire voting securities of
the Company representing more than 20% of the total voting power for the
election of directors; (c) the Company granted certain demand and "piggy-bank"
registration rights to DCEO with respect to such 500,000 shares; and (e) the
Company agreed to cause two persons designated by DuPont to be elected to the
Board. The Company's principal shareholders (other than DCEO and DuPont) granted
to DuPont, subject to certain exceptions, rights of first refusal to purchase
shares of Common Stock proposed to be sold by such shareholders. In addition,
the Company has entered into certain agreements with DuPont pursuant to which
the Company agreed (a) to provide certain services to DuPont to be marketed
through DuPont's authorized distributor network and (b) to market DuPont
refrigerant products to selected market segments together with the Company's
refrigerant reclamation and management services.
In May 1997, the Company borrowed an aggregate of $385,000 from Kevin J.
Zugibe and $200,000 from Stephen P. Mandracchia, executive officers of the
Company, and issued demand notes to such persons in the respective principal
amounts borrowed from such persons. The notes issued to Mr. Zugibe bear interest
at 8% per annum and the note issued to Mr. Mandracchia requires the Company to
pay the interest (at 8.25% per annum) and fees incurred by Mr. Mandracchia in
connection with money he borrowed to fund his $200,00 loan to the Company.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP has audited and reported upon the consolidated financial
statements of the Company for Fiscal 1996 and has been selected by the Board of
Directors to examine and report upon the financial statements of the Company for
the fiscal year ending December 31, 1997. A representative of BDO Seidman, LLP
is expected to be present at the Annual Meeting with the opportunity to make a
statement if he or she desires to do so and is expected to be available to
respond to appropriate questions.
- 15 -
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders who wish to present proposals appropriate for consideration at
the next Annual Meeting of Shareholders must submit the proposal in proper form
to the Company at its address set forth on the first page of this proxy
statement not later than February 25, 1998 to be considered for inclusion in the
Company's proxy statement and form of proxy relating to such annual meeting. Any
such proposals, as well as any questions related thereto, should be directed to
the Secretary of the Company.
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1996 IS BEING FURNISHED HEREWITH TO EACH SHAREHOLDER OF RECORD AS
OF THE CLOSE OF BUSINESS ON THE RECORD DATE.
COPIES OF EXHIBITS TO SUCH ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED
FOR A NOMINAL CHARGE TO SHAREHOLDERS WHO MAKE A WRITTEN REQUEST TO THE COMPANY
AT THE FOLLOWING ADDRESS:
HUDSON TECHNOLOGIES, INC.
25 TORNE VALLEY ROAD
HILLBURN, NEW YORK 10931
ATTENTION: Stephen P. Mandracchia, Secretary
The Board is not aware of any other matters, except for those incident to
the conduct of the Annual Meeting, that are to be presented to shareholders for
formal action at the Annual Meeting. If, however, any other matters properly
come before the Annual Meeting or any adjournments thereof, it is the intention
of the persons named in the proxy included herewith to vote such proxy in
accordance with their judgment.
By order of the Board
of Directors
Stephen P. Mandracchia
Secretary
June 25, 1997
- 16 -
<PAGE>
Exhibit A
1997 STOCK OPTION PLAN
OF
HUDSON TECHNOLOGIES, INC.
1. Purpose
Hudson Technologies, Inc. (the "Company") desires to attract and retain the
best available talent and encourage the highest level of performance in order to
continue to serve the best interests of the Company, and its shareholder(s). By
affording key personnel the opportunity to acquire proprietary interests in the
Company and by providing them incentives to put forth maximum efforts for the
success of the business, the 1997 Stock Option Plan of Hudson Technologies, Inc.
(the "1997 Plan") is expected to contribute to the attainment of those
objectives.
The word "Parent" as used herein, shall mean any corporation that owns
fifty percent or more of the voting stock of the Company.
The word "Subsidiary" or "Subsidiaries" as used herein, shall mean any
corporation, fifty percent or more of the voting stock of which is owned by the
Company.
2. Scope and Duration
Options under the 1997 Plan may be granted in the form of incentive stock
options ("Incentive Options") as provided in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or in the form of nonqualified stock
options ("Non- Qualified Options"). (Unless otherwise indicated, references in
the 1997 Plan to "options" include Incentive Options and Non- Qualified
Options.) The maximum aggregate number of shares as to which options may be
granted from time to time under the 1997 Plan is 1,000,000 shares of the Common
Stock of the Company ("Common Stock"), which shares may be, in whole or in part,
authorized but unissued shares or shares reacquired by the Company. The maximum
number of shares with respect to which options may be granted to any employee
during the term of the 1997 Plan is 500,000. Except as otherwise provided in
Paragraph 7(b) hereof, if an option shall expire, terminate or be surrendered
for cancellation for any reason without having been exercised in full, the
shares represented by the option or portion thereof not so exercised shall
(unless the 1997 Plan shall have been terminated) become available for
subsequent option grants under the 1997 Plan. As provided in Paragraph 13, the
1997 Plan shall become effective on June 12, 1997, and unless terminated sooner
pursuant to Paragraph 14, the 1997 Plan shall terminate on June
<PAGE>
11, 2007, and no option shall be granted hereunder after that date.
3. Administration
The 1997 Plan shall be administered by the Board of Directors of the
Company, or, at their discretion, by a committee which is appointed by the Board
of Directors to perform such function (the "Committee"). The Committee shall
consist of not less than two members of the Board of Directors, each of whom
shall serve at the pleasure of the Board of Directors and shall be a
"Non-Employee Director" as defined in Rule l6b-3 under the Securities Exchange
Act of 1934 (the "Act"). Vacancies occurring in the membership of the Committee
shall be filled by appointment by the Board of Directors.
The Board of Directors or the Committee, as the case may be, shall have
plenary authority in its discretion, subject to and not inconsistent with the
express provisions of the 1997 Plan, to grant options, to determine the purchase
price of the Common Stock covered by each option, the term of each option, the
persons to whom, and the time or times at which, options shall be granted and
the number of shares to be covered by each option; to designate options as
Incentive Options or Non-Qualified Options; to interpret the 1997 Plan; to
prescribe, amend and rescind rules and regulations relating to the 1997 Plan; to
determine the terms and provisions of the option agreements (which need not be
identical) entered into in connection with options under the 1997 Plan; and to
make all other determinations deemed necessary or advisable for the
administration of the 1997 Plan. The Board of Directors or the Committee, as the
case may be, may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Board of Directors
or the Committee, as the case may be, or any person to whom it has delegated
duties as aforesaid may employ one or more persons to render advice with respect
to any responsibility the Board of Directors or the Committee, as the case may
be, or such person may have under the 1997 Plan.
4. Eligibility; Factors to be Considered in Granting Options
Incentive Options shall be limited to persons who are employees of the
Company or, if applicable, its Parent, or the Company's present and future
Subsidiaries and at the date of grant of any option are in the employ of the
Company or its Parent or the Company's present and future Subsidiaries. In
determining the employees to whom Incentive Options shall be granted and the
number of shares to be covered by each Incentive Option, the Board of Directors
or the Committee, as the case may
2
<PAGE>
be, shall take into account the nature of employees' duties, their present and
potential contributions to the success of the Company and such other factors as
it shall deem relevant in connection with accomplishing the purposes of the 1997
Plan. An employee who has been granted an option or options under the 1997 Plan
may be granted an additional option or options, subject, in the case of
Incentive Options, to such limitations as may be imposed by the Code on such
options. Except as provided below, a Non-Qualified Option may be granted to any
person, including, but not limited to, employees, independent agents,
consultants and attorneys, who the Board of Directors or the Committee, as the
case may be, believes has contributed, or will contribute, to the success of the
Company.
5. Option Price
The purchase price of the Common Stock covered by each option shall be
determined by the Board of Directors or the Committee, as the case may be. In
the case of Incentive Options, the purchase price shall not be less than 100%
(110% if granted to an employee referred to in Paragraph 8(b) hereof) of the
Fair Market Value (as defined in Paragraph 15 below) of a share of the Common
Stock on the date on which the option is granted. In the case of Non-Qualified
Options the purchase price per share of Common Stock covered by each option
shall be such price, not less than the par value a share of Common Stock, as
shall be determined by the Board of Directors or the Committee, as the case may
be. Such purchase prices shall be subject to adjustment as provided in Paragraph
12 below. The Board of Directors or the Committee, as the case may be, shall
determine the date on which an option is granted; in the absence of such a
determination, the date on which the Board of Directors or the Committee, as the
case may be, adopts a resolution granting an option shall be considered the date
on which such option is granted.
6. Term of Options
The term of each option shall be determined by the Board of Directors or
the Committee, as the case may be, provided, however, that the term of any
option cannot be more than 10 years from the date of grant (five years in the
case of an Incentive Option granted to an employee referred to in Paragraph 8(b)
hereof). All options granted pursuant to the 1997 Plan are subject to earlier
termination as provided in Paragraphs 10 and 11 below.
7. Exercise of Options
(a) Subject to the provisions of the 1997 Plan and unless otherwise
provided in the option agreement, options
3
<PAGE>
granted under the 1997 Plan shall become exercisable as determined by the Board
of Directors or Committee. In its discretion, the Board of Directors or the
Committee, as the case may be, may, in any case or cases, prescribe that options
granted under the 1997 Plan become exercisable in installments or provide that
an option may be exercisable in full immediately upon the date of its grant. The
Board of Directors or the Committee, as the case may be, may, in its sole
discretion, also provide that an option granted pursuant to the 1997 Plan shall
immediately become exercisable in full upon the happening of any of the
following events; (i) the first purchase of shares of Common Stock pursuant to a
tender offer or exchange offer (other than an offer by the Company) for all, or
any part of, the Common Stock, (ii) the approval by the shareholder(s) of the
Company of an agreement for a merger in which the Company will not survive as an
independent, publicly owned corporation, a consolidation, or a sale, exchange or
other disposition of all or substantially all of the Company's assets, (iii)
with respect to an employee, on his 65th birthday, or (iv) with respect to an
employee, on the employee's involuntary termination from employment, except as
provided in Section 10 herein. In the event of a question or controversy as to
whether or not any of the events hereinabove described has taken place, a
determination by the Board of Directors or the Committee, as the case may be,
that such event has or has not occurred shall be conclusive and binding upon the
Company and participants in the 1997 Plan.
(b) Any option at any time granted under the 1997 Plan may contain a
provision to the effect that the optionee (or any persons entitled to act under
Paragraph 11 hereof) may, at any time at which Fair Market Value is in excess of
the exercise price and prior to exercising the option, in whole or in part,
request that the Company purchase all or any portion of the option as shall then
be exercisable at a price (the "Purchase Price") equal to the difference between
(i) an amount equal to the option price multiplied by the number of shares
subject to that portion of the option in respect of which such request shall be
made and (ii) an amount equal to such number of shares multiplied by the fair
market value of the Company's Common Stock (within the meaning of Section 422 of
the Code and the treasury regulations promulgated thereunder) on the date of
purchase. The Company shall have no obligation to make any purchase pursuant to
such request, but if it elects to do so, such portion of the option as to which
the request is made shall be surrendered to the Company. The Purchase Price for
the portion of the option to be so surrendered shall be paid by the Company,
less any applicable withholding tax obligations imposed upon the Company by
reason of the purchase, at the election of the Board of Directors or the
Committee, as the case may be, either in cash or in shares of Common Stock
(valued as of the date and in the
4
<PAGE>
manner provided in clause (ii) above), or in any combination of cash and Common
Stock, which may consist, in whole or in part, of shares of authorized but
unissued Common Stock or shares of Common Stock held in the Company's treasury.
No fractional share of Common Stock shall be issued or transferred and any
fractional share shall be disregarded. Shares covered by that portion of any
option purchased by the Company pursuant hereto and surrendered to the Company
shall not be available for the granting of further options under the Plan. All
determinations to be made by the Company hereunder shall be made by the Board of
Directors or the Committee, as the case may be.
(c) An option may be exercised, at any time or from time to time (subject,
in the case of Incentive Options, to such restrictions as may be imposed by the
Code), as to any or all full shares as to which the option has become
exercisable until the expiration of the period set forth in Paragraph 6 hereof,
by the delivery to the Company, at its principal place of business, of (i)
written notice of exercise in the form specified by the Board of Directors or
the Committee, as the case may be, specifying the number of shares of Common
Stock with respect to which the option is being exercised and signed by the
person exercising the option as provided herein, (ii) payment of the purchase
price; and (iii) in the case of Non-Qualified Options, payment in cash of all
withholding tax obligations imposed on the Company by reason of the exercise of
the option. Upon acceptance of such notice, receipt of payment in full, and
receipt of payment of all withholding tax obligations, the Company shall cause
to be issued a certificate representing the shares of Common Stock purchased. In
the event the person exercising the option delivers the items specified in (i)
and (ii) of this Subsection (c), but not the item specified in (iii) hereof, if
applicable, the option shall still be considered exercised upon acceptance by
the Company for the full number of shares of Common Stock specified in the
notice of exercise but the actual number of shares issued shall be reduced by
the smallest number of whole shares of Common Stock which, when multiplied by
the Fair Market Value of the Common Stock as of the date the option is
exercised, is sufficient to satisfy the required amount of withholding tax.
(d) Except as otherwise provided in subsection (b) of this Paragraph 7, the
purchase price of the shares as to which an option is exercised shall be paid in
full at the time of exercise. Payment shall be made in cash, which may be paid
by check or other instrument acceptable to the Company; in addition, subject to
compliance with applicable laws and regulations and such conditions as the Board
of Directors or the Committee, as the case may be, may impose, the Board of
Directors or the Committee, as the case may be, in its sole discretion, may on a
case-by-case basis elect to accept payment in shares of Common Stock of the
5
<PAGE>
Company which are already owned by the option holder, valued at the Fair Market
Value thereof (as defined in Paragraph 15 below) on the date of exercise;
provided, however, that with respect to Incentive Options, no such discretion
may be exercised unless the option agreement permits the payment of the purchase
price in that manner.
(e) Except as provided in Paragraphs 10 and 11 below, no option granted to
an employee may be exercised at any time by such employee unless such employee
is then an employee of the Company or a Subsidiary or Parent.
8. Incentive Options
(a) With respect to Incentive Options granted, the aggregate Fair Market
Value (determined in accordance with the provisions of paragraph 15 at the time
the Incentive Option is granted) of the Common Stock or any other stock of the
Company or its current or future Subsidiaries with respect to which incentive
stock options, as defined in Section 422 of the Code, are exercisable for the
first time by any employee during any calendar year (under all incentive stock
option plans of the Company and its parent and subsidiary corporation's, as
those terms are defined in Section 424 of the Code) shall not exceed $100,000.
(b) No Incentive Option may be awarded to any employee who immediately
prior to the date of the granting of such Incentive Option owns more than 10% of
the combined voting power of all classes of stock of the Company or any of its
Subsidiaries unless the exercise price under the Incentive Option is at least
110% of the Fair Market Value and the option expires within 5 years from the
date of grant.
(c) In the event of amendments to the Code or applicable regulations
relating to Incentive Options subsequent to the date hereof, the provisions of
the 1997 Plan and the provisions of outstanding option agreements between the
Company and any optionee with respect to options issued pursuant to the 1997
Plan shall automatically, and without any action on the part of any person, be
modified to conform to such amendments, provided, however, that no such
amendment shall occur without the express approval of the Company and the
optionee if the effect of such amendment were to result in the granting of a new
option pursuant to Section 424(h) of the Code or any successor provision.
9. Transferability of Options
Incentive Options granted under the 1997 Plan shall not be transferable
otherwise than by will or the laws of descent and distribution, and Incentive
Options may be exercised during the
6
<PAGE>
lifetime of the optionee only by the optionee. Non-Qualified Options are only
transferable if such right is granted by the Board of Directors, or the
Committee, as the case may be, and such provision is contained in the option
agreement with respect to the Non-Qualified Options. No transfer of an option by
the optionee by will or by the laws of descent and distribution or otherwise
shall be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and a copy of the will and/or such other
evidence as the Company may deem necessary to establish the validity of the
transfer and the acceptance by the transferor or transferees of the terms and
conditions of such option.
10. Termination of Employment
In the event that the employment of an employee to whom an option has been
granted under the 1997 Plan shall be terminated (except as set forth in
Paragraph 11 below), such option may be, subject to the provisions of the 1997
Plan, exercised (to the extent that the employee was entitled to do so at the
termination of his employment) at any time within three (3) months after such
termination, but not later than the date on which the option terminates;
provided, however, that any option which is held by an employee whose employment
is terminated for cause or voluntarily without the consent of the Company shall,
to the extent not theretofore exercised, automatically terminate as of the date
of termination of employment. As used herein, "cause" shall mean conduct
amounting to fraud, dishonesty, or engaging in competition or solicitations in
competition with the Company and breaches of any applicable employment agreement
between the Company and the optionee. Options granted to employees under the
1997 Plan shall not be affected by any change of duties or position so long as
the holder continues to be a regular employee of the Company or any of its
current or future Subsidiaries or Parent. Any option agreement or any rules and
regulations relating to the 1997 Plan may contain such provisions as the Board
of Directors or the Committee, as the case may be, shall approve with reference
to the determination of the date employment terminates and the effect of leaves
of absence. Nothing in the 1997 Plan or in any option granted pursuant to the
1997 Plan shall confer upon any employee any right to continue in the employ of
the Company or any of the Subsidiaries or Parent or affiliated companies or
interfere in any way with the right of the Company or any such Subsidiary or
Parent or affiliated companies to terminate such employment at any time.
11. Death or Disability of Employee
If an employee to whom an option has been granted under the 1997 Plan shall
die while employed by the Company or a Parent
7
<PAGE>
or a Subsidiary or within three (3) months after the termination of such
employment (other than termination for cause or voluntary termination without
the consent of the Company or the consent of the Parent for an employee of the
Parent, as the case may be), such option may be exercised, to the extent
exercisable by the employee on the date of death, by a legatee or legatees of
the employee under the employee's last will, or by the employee's personal
representative or distributees, at any time within one year after the date of
the employee's death, but not later than the date on which the option
terminates. In the event that the employment of an employee to whom an option
has been granted under the 1997 Plan shall be terminated as the result of a
disability, such option may be exercised, to the extent exercisable by the
employee on the date of such termination, at any time within one year after the
date of such termination, but not later than the date on which the option
terminates.
12. Adjustments Upon Changes in Capitalization, Etc.
Notwithstanding any other provision of the 1997 Plan, the Board of
Directors or the Committee, as the case may be, may, at any time, make or
provide for such adjustments to the 1997 Plan, to the number and class of shares
issuable thereunder or to any outstanding options as it shall deem appropriate
to prevent dilution or enlargement of rights, including adjustments in the event
of changes in the outstanding Common Stock by reason of stock dividends,
split-ups, recapitalizations, mergers, consolidations, combinations or exchanges
of shares, separations, reorganizations, liquidations and the like. In the event
of any offer to holders of Common Stock generally relating to the acquisition of
their shares, the Board of Directors or the Committee, as the case may be, may
make such adjustment as it deems equitable in respect of outstanding options and
rights, including in its discretion revision of outstanding options and rights
so that they may be exercisable for the consideration payable in the acquisition
transaction. Any such determination by the Board of Directors or the Committee,
as the case may be, shall be conclusive. Any fractional shares resulting from
such adjustments shall be eliminated.
13. Effective Date
The 1997 Plan shall become effective on June 12, 1997, the date of adoption
by the Board of Directors, subject to approval of the 1997 Plan by the
shareholders of the Company on or before June 11, 1998.
8
<PAGE>
14. Termination and Amendment
The Board of Directors of the Company may, without the approval of its
shareholders, suspend, terminate, modify or amend the 1997 Plan, provided,
however, that any amendment that would increase the aggregate number of shares
which may be issued under the 1997 Plan, materially increase the benefits
accruing to participants under the 1997 Plan, or materially modify the
requirements as to eligibility for participation in the 1997 Plan, shall be
subject to the approval of the Company's shareholder(s), except that any such
increase or modification that may result from adjustments authorized by
Paragraph 12 does not require such approval. Except as provided below and in
Paragraph 8(c) hereof, no suspension, termination, modification or amendment of
the 1997 Plan shall require the approval of any optionee. Notwithstanding the
foregoing, no suspension, termination, modification or amendment of the 1997
Plan shall be made without the consent of the person to whom an option shall
theretofore have been granted if it adversely effects the rights of such
optionee under such option.
15. Miscellaneous
As said term is used in the 1997 Plan, the "Fair Market Value" of a share
of Common Stock on any day means: (a) if the principal market for the Common
Stock is a national securities exchange or the National Association of
Securities Dealers Automated Quotations System ("NASDAQ), the closing sales
price of the Common Stock on such day as reported by such exchange or market
system, or on a consolidated tape reflecting transactions on such exchange or
market system, or (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is not quoted on NASDAQ, the
mean between the highest bid and lowest asked prices for the Common Stock on
such day as reported by the National Quotation Bureau, Inc.; provided that if
clauses (a) and (b) of this paragraph are both inapplicable, or if no trades
have been made or no quotes are available for such day, the Fair Market Value of
the Common Stock shall be determined by the Board of Directors or the Committee,
as the case may be, shall be conclusive as to the Fair Market Value of the
Common Stock.
No shares of Common Stock shall be issued and delivered upon exercise of an
option granted under the 1997 Plan unless and until (i) such shares of Common
Stock have been duly listed, upon official notice of issuance, upon any stock
exchange(s) on which the Common Stock is listed, (ii) a Registration Statement
under the Securities Act of 1933, as amended, with respect to such shares shall
be effective and any applicable state registration
9
<PAGE>
or qualification has been complied with, or, in the opinion of either counsel to
the Company or counsel to the optionholder reasonably acceptable to the Company,
exemptions from such federal and state registration requirements are available
and/or (iii) the person exercising such option delivers to the Company such
documents, agreements and investment and other representations as the Board of
Directors or the Committee, as the case may be, shall determine to be in the
best interests of the Company.
During the term of the 1997 Plan, the Board of Directors or the Committee,
as the case may be, in its discretion, may offer one or more option holders the
opportunity to surrender any or all unexpired options for cancellation or
replacement. If any options are so surrendered, the Board of Directors or the
Committee, as the case may be, may then grant new Non-Qualified or Incentive
Options to such holders for the same or different numbers of shares at higher or
lower exercise prices than the surrendered options. Such new options may have a
different term and shall be subject to the provisions of the 1997 Plan the same
as any other option.
Anything herein to the contrary notwithstanding, the Board of Directors or
the Committee, as the case may be, may, in their sole discretion, impose more
restrictive conditions on the exercise of an option granted pursuant to the 1997
Plan; however, any and all such conditions shall be specified in the option
agreement limiting and defining such option.
16. Privileges of Stock Ownership
No person entitled to exercise any option granted under the 1997 Plan shall
have any of the rights or privileges of a shareholder of the Company in respect
of any shares of stock issuable upon exercise of such option until certificates
representing such shares shall have been issued.
17. Compliance with SEC Regulations.
It is the Company's intent that the 1997 Plan comply in all respects with
Rule 16b-3 of the Act and any regulations promulgated thereunder. If any
provision of the 1997 Plan is later found not to be in compliance with said
Rule, the provisions shall be deemed null and void.
10
<PAGE>
HUDSON TECHNOLOGIES, INC.
25 Torne Valley Road
Hillburn, New York 10931
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints KEVIN J. ZUGIBE and STEPHEN P. MANDRACCHIA,
and each of them, Proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Hudson Technologies, Inc. (the "Company") on Thursday, July 24,
1997, at the Empire Ball Room, Holiday Inn and Conference Center, Three
Executive Boulevard, Suffern, New York [10901 or at any adjournment or
adjournments thereof, according to the number of votes that the undersigned
would be entitled to vote if personally present, upon the following matters:
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below). listed below.
Thomas P. Zugibe, Vincent P. Abbatecola, Otto C. Morch and Stephen Spain
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
2. Approval of the 1997 Stock Option Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on reverse side)
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES AND THE
PROPOSALS LISTED ABOVE.
DATED: ________________________, 1997 Please sign exactly as name appears
hereon. When shares are held by
joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
Please mark, sign, date and return this proxy card promptly using the
enclosed envelope.
