SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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: |_| Confidential-For Use of the
|_| Preliminary proxy statement Commission Only (as
|X| Definitive proxy statement permitted by Rule 14a-6(e)(2))
|_| 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)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total Fee Paid:
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|_| Fee paid previously with preliminary materials.
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|_| 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
HUDSON TECHNOLOGIES, INC.
275 North Middletown Road
Pearl River, New York 10965
July 16, 1999
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
which will be held on Thursday, August 19, 1999, 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 AUGUST 19, 1999
----------
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 August 19, 1999 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;
2. To consider and vote on a proposal to approve an amendment to the
Company's 1997 Stock Option Plan to increase the number of shares of Common
Stock reserved for issuance thereunder from 1,000,000 to 2,000,000; 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 July 9, 1999 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
July 16, 1999
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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.
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<PAGE>
PROXY STATEMENT
HUDSON TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 19, 1999
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, August 19, 1999, 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 July 22, 1999.
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:
275 North Middletown Road
Pearl River, New York 10965
Telephone No.: (914) 735-6000
OUTSTANDING STOCK AND VOTING RIGHTS
Only shareholders of record at the close of business on July 9, 1999 (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 5,085,820 shares of the
Company's common stock, par value $.01 per share ("Common Stock") and 65,000
shares of the Company's Series A Preferred Stock, par value $.01 per share
("Preferred Stock"), the only classes 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. The holders of the shares of
Preferred Stock vote together with holders of Common Stock as one class. Each
share of Preferred Stock entitles the holder to such number of votes per share
on each such action as shall equal the number of shares of Common Stock
(including fractions of a share) into which each share of Preferred Stock is
then convertible (which is currently approximately 42.105 shares of Common Stock
for each share of Preferred Stock, or an aggregate of 2,736,842 votes);
provided, however, that each holder of Preferred Stock has irrevocably
constituted Kevin J. Zugibe and Stephen P. Mandracchia, and each of them, as
such holder's proxy, with full power of substitution in each of them, in the
name, place and stead of such holder, to vote at all meetings of the
stockholders of the Company (other than with respect to matters requiring a
separate class vote of holders of the Preferred Stock) that number of voting
shares of the Company of all classes held by such holder and its affiliates, in
the aggregate, as shall exceed twenty-nine percent (29%) of the votes entitled
to be cast by all shareholders of the Company.
VOTING PROCEDURES
Directors will be elected by a plurality of the votes cast by the holders
of Common Stock and Preferred Stock, voting together as one class, in person or
represented by proxy at the Annual
<PAGE>
Meeting, provided a quorum is present at the meeting. All other matters to be
acted upon at the meeting, including, but not limited to, adoption of the
proposed amendment to the Company's 1997 Stock Option Plan will be decided by
the majority of the votes cast by the holders of the shares of Common Stock and
Preferred Stock, voting together as one class, 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
aggregate votes represented by holders of the Common Stock and Preferred 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 By-laws, 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 2001.
Messrs. Thomas P. Zugibe, Stephen P. Mandracchia, Vincent P. Abbatecola and Otto
C. Morch are the nominees for election to such positions. The other class of
directors, consisting of Messrs. Kevin J. Zugibe, Dominic J. Monetta and Harry
C. Schell, will not stand for election at the Annual Meeting because their
respective terms expire at the Annual Meeting of Shareholders to be held in
2000.
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:
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<PAGE>
Name Age Position
---- --- --------
Thomas P. Zugibe 46 Executive Vice President and Director
Stephen P. Mandracchia 39 Executive Vice President and Secretary
Vincent P. Abbatecola 51 Director
Otto C. Morch 65 Director
Thomas P. Zugibe, a founder of the Company, 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 was engaged in the practice of law in the State of New York
from 1980 and since 1995 has been on an extended leave from the Garnerville, New
York law firm of Ferraro, Zugibe & Albrecht. 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.
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. Mr. Mandracchia is the brother-in law
of Messrs. Kevin J. Zugibe and Thomas P. Zugibe.
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. Mr.
Morch was Senior Vice President, Commercial Banking, at Provident Savings Bank,
F.A., for more than five years until his retirement in December 1997.
The following is information with respect to the directors whose terms of
office expire at the Annual Meeting of Shareholders to be held in the year 2000:
Name Age Position
---- --- --------
Kevin J. Zugibe 36 Chairman of the Board, Chief
Executive Officer and President
Harry C. Schell 65 Director
Dominic J. Monetta 56 Director
- 3 -
<PAGE>
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 and President since June 1999. 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.
Harry C. Schell has been a director of the Company since August 1998. Mr.
Schell has been a private investor since 1994. Mr. Schell served as Chairman,
President and Chief Executive Officer of BICC Cables Corporation, a company
engaged in the manufacture of wire and cable products, from 1990 to January
1994, and was President and Chief Executive Officer of BICC's predecessor
company, Cablec Corporation, from 1984 to 1990. Mr. Schell was President and
Chief Executive Officer of Phelps Dodge Cable and Wire Company, a company
engaged in the production of wire and cable products, from 1974 to 1984. Mr.
Schell serves on the board of directors of the BICC Group and BICC Cables
Corporation, Phillips Cables Limited, National Electrical Manufacturers
Association, and the United Way of Rockland County.
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 New Production Reactors of the United States
Department of Energy.
During the fiscal year ended December 31, 1998 ("Fiscal 1998"), the Board
held 12 meetings. Each of the current 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. The Company has a Stock Option Committee, which
consists of Messrs. Abbatecola and Morch. The Stock Option Committee held one
meeting during Fiscal 1998 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 and Morch. The Audit Committee held
three meetings during Fiscal 1998. The Company also has established an Executive
Committee consisting of Messrs. Kevin J. Zugibe, Thomas P. Zugibe and Dominic J.
Monetta, which is responsible for, among other things, making recommendations to
the Board concerning compensation of executive officers. The Executive Committee
held one meeting during Fiscal 1998.
In January 1998, 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 1999.
In connection with its sale of 65,000 shares of Preferred Stock in March
1999, the Company granted to holders of the Preferred Stock the right to elect
up to two members of the Company's Board of Directors. The holders of Preferred
Stock have indicated their intent to elect Messrs. Robert L. Burr and Robert M.
Zech as directors of the Company immediately following the Annual Meeting. To
accommodate this election, the Company intends to increase the number of members
constituting its entire Board of Directors to nine members and to add Messrs.
Burr and Zech as directors to fill the vacancies created by the increase in the
size of the Board. In such event, the initial term of office of one of the new
directors will expire at the Annual Meeting of Stockholders to be held in the
year 2000. The initial term
- 4 -
<PAGE>
of the other new director will expire in the year 2001. Set forth below is
information with respect to Messrs. Burr and Zech:
Robert L. Burr, age 48, has been a Director of Fleming Capital Management,
a subsidiary of Robert Fleming, Inc., a merchant bank, since 1995. From 1992 to
1995, Mr. Burr was head of Private Equity at Kidder, Peabody & Co., Inc. Prior
to that time, Mr. Burr served as the Managing General Partner of Morgan Stanley
Ventures and General Partner of Morgan Stanley Venture Capital Fund I, L.P. and
was a corporate lending officer with Citibank, N.A. Mr. Burr received an MBA
from Columbia University and a BA from Stanford University. Mr. Burr serves on
the board of directors of Global Pharmaceutical Corporation.
Robert M. Zech, age 33, has been a Vice President of Fleming Capital
Management, a subsidiary of Robert Fleming Inc., a merchant bank, since 1996.
From 1994 to 1996, Mr. Zech was an Investment Analyst with Cramer Rosenthal
McGlynn Inc., an investment management firm. Prior to that time, Mr. Zech served
as an Associate with Wolfensohn & Co., a mergers & acquisitions advisory firm,
and was a Financial Analyst at leveraged buyout sponsor Merrill Lynch Capital
Partners, Inc. and in the investment banking division of Merrill Lynch & Co. Mr.
Zech received an MBA from Harvard Business School and a BS from Georgetown
University's School of Foreign Service.
Compensation of Directors
Non-employee directors receive an annual fee of $3,000 and receive
reimbursement for out-of-pocket expenses incurred, and an attendance fee of $500
and $250, respectively, for attendance at meetings of the Board of Directors and
Board committee meetings. In addition, commencing in August 1998, non-employee
directors receive 5,000 non-qualified stock options per year of service under
the Company's Stock Option Plans. During the fiscal year ended December 31, 1998
the Company granted nonqualified options to purchase 10,000 shares of common
stock to Harry C. Schell and nonqualified options to purchase 5,000 shares of
common stock to each of Dominic J. Monetta, Otto Morch and Vincent Abbatecola.
All of these options have an exercise price of $3.00 per share and became fully
exerciseable on August 31, 1998. In, addition, Harry C. Schell serves as a
consultant to the Company at an annual rate of $20,000.
Executive Officers
In addition to Messrs. Kevin J. Zugibe, Thomas P. Zugibe, and Stephen P.
Mandracchia. Messrs. 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
---- --- --------
Walter A. Phillips 46 Vice President of Sales and Marketing
Brian Coleman 37 Vice President and Chief Financial Officer
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.
- 5 -
<PAGE>
Brian Coleman has been Vice President and Chief Financial Officer of the
Company since May 1997. Prior thereto, he was employed, for 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.
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 1998, all reporting requirements applicable to the Company's
Reporting Persons were complied with.
- 6 -
<PAGE>
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 the other executive officers whose salary was in excess of $100,000 during
Fiscal 1998 (the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Awards
----------------------
Annual Compensation(1)
----------------------------------
Name Position Year Salary Bonus
---- -------- ---- ------ -----
<S> <C> <C> <C> <C> <C>
Kevin J. Zugibe Chairman of the Board, 1998 $134,800 -- 40,000 shares
Chief Executive Officer 1997 $158,631 -- 58,000 shares
1996 $145,462 -- --
Eugene J. Tonkovich(2) President and Chief 1998 $ 91,238 -- 250,000 shares
Operating Officer 1997 -- -- --
1996 -- -- --
Stephen P. Mandracchia Executive Vice President 1998 $104,800 -- 25,000 shares
and Secretary 1997 $120,554 -- 40,000 shares
1996 $104,885 -- --
Thomas Zugibe Executive Vice President 1998 $104,800 -- 25,000 shares
1997 $120,169 -- 40,000 shares
1996 $ 98,461 -- --
Walter A. Phillips Vice President Marketing 1998 $148,312 -- 10,000 shares
& Strategic Planning 1997 $213,145 -- 22,000 shares
1996 $ 30,046 -- 25,000 shares
Brian F. Coleman Vice President and Chief 1998 $124,900 -- 25,000 shares
Financial Officer 1997 $ 79,950 -- 42,000 shares
1996 -- -- --
</TABLE>
- ----------
(1) The value of personal benefits furnished to the Named Executives during
1996, 1997 and 1998 did not exceed 10% of their respective annual
compensation.
(2) In July 1999, Mr. Tonkovich resigned all officership positions with the
Company. Since such time he has continued to provide consulting services to
the Company. Mr. Kevin J. Zugibe has succeeded to the position of
President.
- 7 -
<PAGE>
The Company granted options to the Named Executives during the fiscal year ended
December 31, 1998, as shown in the following table:
Summary of Stock Options Granted to Executive Officers
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in
Granted Fiscal Year
---------- ------------
Exercise or Base Expiration
Name Position Shares Percent price ($/sh) Date
- ---- -------- ------ ------- ------------ ----
<S> <C> <C> <C> <C> <C>
Kevin J. Zugibe Chairman and 40,000 7.7% $3.00 08/2003
Chief Executive
Officer
Eugene J. Tonkovich(1) President and Chief 250,000 48.0% $3.91 04/2003
Operating Officer
Thomas P. Zugibe Executive Vice 25,000 4.8% $3.00 08/2003
President
Stephen P. Executive Vice 25,000 4.8% $3.00 08/2003
Mandracchia President
Walter A. Phillips Vice President of 10,000 1.9% $3.06 10/2002
Marketing and
Strategic
Operations
Brian F. Coleman Vice President and 25,000 4.8% $2.50 08/2003
Chief Financial
Officer
</TABLE>
(1) In July 1999, Mr. Tonkovich resigned all officership positions with the
Company. Since such time he has continued to provide consulting services to
the Company. Mr. Kevin J. Zugibe has succeeded to the position of
President.
- 8 -
<PAGE>
The following table sets forth information concerning the value of
unexercised stock options held by Named Executives at December 31, 1998.
Aggregated Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options At December Value of In-the-money Options
31, 1998 At December 31, 1998(1)
---------------------------------- -----------------------------
Shares
Acquired
Name on Value
and Position Exercise Received Exercisable Unexercisable Exercisable Unexercisable
- ------------ -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kevin J. Zugibe -- -- 125,872 38,400 0 0
Chairman & Chief
Executive Officer
Eugene J. Tonkovich, -- -- 100,000 150,000 0 0
President and Chief
Operating Officer(2)
Thomas P. Zugibe, -- -- 110,872 21,400 0 0
Executive Vice President
Stephen P. Mandracchia, -- -- 110,872 21,400 0 0
Executive Vice President
and Secretary
Walter A. Phillips, Vice -- -- 47,000 21,400 0 0
President of Marketing
and Strategic Planning
Brian F. Coleman, Vice -- -- 56,250 10,750 0 0
President and Chief
Financial Officer
</TABLE>
- ----------
(1) 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 of $1.50.
(2) In July 1999, Mr. Tonkovich resigned all officership positions with the
Company. Since such time he has continued to provide consulting services to
the Company. Mr. Kevin J. Zugibe has succeeded to the position of
President.
Employment Agreements
The Company has entered into a two-year employment agreement with Kevin J.
Zugibe, which expires in May 2001 and is automatically renewable for successive
two-year terms. Pursuant to the agreement, effective January 1, 1998 Mr. Zugibe
is receiving an annual base salary of $130,000 with such increases and bonuses
as the Board may determine. The Company is the beneficiary of a "key-man"
insurance policy on the life of Mr. Zugibe in the amount of $1,000,000.
- 9 -
<PAGE>
The Company has also entered into one-year employment agreements with
Messrs. Thomas Zugibe and Stephen Mandracchia. Pursuant to these agreements
these officers are receiving annual base salaries of $100,000. The agreements
are automatically renewable for successive one-year terms.
The Company has entered into three-year employment contracts with Messrs.
Phillips and Coleman which provide for annual base salaries of $150,000 and
$130,000, respectively, and are automatically renewable for successive one-year
terms. Mr. Phillip's contract also provides for annual bonuses not to exceed
$25,000, based on the Company's achievement of certain levels of profitability.
Stock Option Plan
1994 Stock Option Plan
The Company has adopted an Employee Stock Option Plan (the "Plan")
effective October 31, 1994 pursuant to which 725,000 shares of Common Stock are
currently reserved for issuance upon the exercise of options designated as
either (i) options intended to constitute incentive stock options ("ISOs") under
the Internal Revenue Code of 1986, as amended (the "Code"), or (ii) nonqualified
options. ISOs may be granted under the Plan to employees and officers of the
Company. Non-qualified options may be granted to consultants, directors (whether
or not they are employees), employees or officers of the Company. Stock
appreciation rights may also be issued in tandem with stock options.
The Plan is intended to qualify under Rule 16b-3 under the Exchange Act and
is administered by a committee of the Board of Directors, which currently
consists of Messrs. Abbatecola and Morch. The committee, within the limitations
of the Plan, determines the persons to whom options will be granted, the number
of shares to be covered by each option, whether the options granted are intended
to be ISOs, the duration and rate of exercise of each option, the exercise price
per share and the manner of exercise and the time, manner and form of payment
upon exercise of an option. Unless sooner terminated, the Plan will expire on
December 31, 2004.
ISOs granted under the Plan may not be granted at a price less than the
fair market value of the Common Stock on the date of grant (or 110% of fair
market value in the case of persons holding 10% or more of the voting stock of
the Company). The aggregate fair market value of shares for which ISOs granted
to any employee are exercisable for the first time by such employee during any
calendar year (under all stock option plans of the Company) may not exceed
$100,000. Non-qualified options granted under the Plan may not be granted at a
price less than 85% of the market value of the Common Stock on the date of
grant. Options granted under the Plan will expire not more than ten years from
the date of grant (five years in the case of ISOs granted to persons holding 10%
or more of the voting stock of the Company). All options granted under the Plan
are not transferable during an optionee's lifetime but are transferable at death
by will or by the laws of descent and distribution. In general, upon termination
by of employment of an optionee, all options granted to such person which are
not exercisable on the date of such termination immediately terminate, and any
options that are exercisable terminate 90 days following termination of
employment.
As of December 31, 1998, options to purchase 626,876 shares of Common Stock
were issued under the Plan and were unexercised.
1997 Stock Option Plan
See "Proposal 2" for a description of the Company's 1997 Stock Option Plan.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date based on
the 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) the Named Executives, (iii) each director of the Company, and (iv)
all current directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Percentage of Outstanding
Name and Address of Beneficial Owner(1) Ownership(2) Shares Owned
- --------------------------------------- ------------ ------------
<S> <C> <C>
Kevin J. Zugibe 363,500(3)(4) 7.0
Eugene P. Tonkovich 181,400(5) 3.5
Thomas P. Zugibe 350,540(3)(6) 6.8
Stephen P. Mandracchia 346,500(3)(6) 6.8
Walters A. Phillips 48,000(7)
Brian F. Coleman 57,250(8) 1.1
Robert Johnson 38,000(9) *
Vincent P. Abbatecola 8,500(10) *
Otto C. Morch 5,600(10) *
Dominic J. Monetta 11,000(10) *
Harry C. Schell 29,000(11) *
Frederick T. Zugibe 298,406(3) 5.6
DuPont Chemical and Energy
Operations, Inc. 500,000(12) 9.8
Fleming Funds 2,736,842(13) 35.0
All directors and executive officers as a group (9
persons) 1,219,890(14) 21.9
</TABLE>
- ----------
* Less than one percent
(1) Unless otherwise indicated, the address of each of the persons listed is
the address of the Company, 275 North Middletown Road, Pearl River, New
York 10965.
(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) Includes 67,272 shares which may be purchased by the named person at $5.50
per share under an immediately exercisable option.
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<PAGE>
(4) Includes (i) 18,600 shares which may be purchased at $4.47 per share and
(ii) 40,000 shares which may be purchased at $3.00 per share under
immediately exercisable options.
(5) Includes 150,000 shares which may be purchased at $3.91 per share and 1,000
shares which may be purchased at $1.78 per share under immediately
exercisable options.
(6) Includes (i) 18,600 shares which may be purchased at $4.47 per share and
(ii) 25,000 shares which may be purchased at $3.00 per share under
immediately exercisable options.
(7) Represents (i) 15,000 shares which may be purchased at $5.625 per share,
(ii) 10,000 shares which may be purchased at $4.06 per share, (iii) 12,000
shares which may be purchased at $3.50 per share, (iv) 10,000 shares which
may be purchased at $3.06 per share, and (v) 1,000 shares which may be
purchased at $1.78 per share under immediately exercisable options.
(8) Represents (i) 30,000 shares which may be purchased at $4.06 per share,
(ii) 12,000 shares which may be purchased at $3.50 per share, (iii) 14,250
shares which may be purchased at $2.50 per share, and (iv) 1,000 shares
which may be purchased at $1.78 per share under immediately exercisable
options.
(9) Represents shares which may be purchased at $10.50 per share under
immediately exercisable options.
(10) Includes 5,000 shares which may be purchased at $3.00 per share under
immediately exercisable options.
(11) Includes 10,000 shares which may be purchased at $3.00 per share under
immediately exercisable options.
(12) According to a Schedule 13D filed with the Securities and Exchange
Commission, DuPont Chemical and Energy Operations, Inc. ('DCEO') and E.I.
DuPont de Nemours and Company claim shared voting and dispositive power
over the shares. DCEO's address is DuPont Building, Room 8045, 1007 Market
Street, Wilmington, DE 19898.
(13) Fleming U.S. Discovery Fund III, LP and Fleming U.S. Discovery Offshore
Fund III, LP collectively referred to as ("Flemings Funds") are affiliates
who beneficially own all of the Preferred Stock. The beneficial ownership
assumes the conversion of all of the Preferred Stock to Common Stock at a
conversion rate of $2.375 per share. Flemings Funds has provided to the
Chief Executive Officer and Secretary of the Company a proxy to vote any
shares held by Flemings Funds which exceed 29% of the outstanding voting
shares of the Company.
(14) Includes exercisable options to purchase 477,866 shares of Common Stock
held by the current directors and officers as a group. Does not include
181,400 shares beneficially owned by Mr. Tonkovich who ceased all
officerships with the Company in July 1999. Does not include 38,000 shares
beneficially owned by Robert Johnson who ceased all officerships and
resigned as an advisor to the Company in March 1999.
Kevin J. Zugibe, Thomas P. Zugibe, Frederick T. Zugibe, and Stephen Mandracchia
may be deemed to be "parents" of the Company as such term is used under the
Securities Act of 1933.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1997 certain officers of the Company made unsecured loans of
$585,000 to the company which were repayable on demand. The notes bore interest
at rates from 8.00% to 8.88%. On August 12, 1997, the Company repaid the officer
loans together with accrued interest outstanding.
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<PAGE>
In May 1998, an officer and a former director of the Company made unsecured
loans of $300,000 to the Company which were payable on demand. Interest on the
notes bore interest at 10%. On June 30, 1998, the Company repaid the officer
loans together with outstanding accrued interest.
In February 1999, a former director of the Company made an unsecured loan
of $365,000 to the Company which is payable on demand. The note bore interest at
12%. On April 16, 1999, the Company repaid the loan together with outstanding
accrued interest.
In the regular course of its business, the Company purchases refrigerants
from and sells refrigerants to DuPont and performs recovery, reclamation,
RefrigerantSide(TM) Services and other services.
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<PAGE>
PROPOSAL 2
AMENDMENT OF 1997 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER FROM 1,000,000 TO 2,000,000
At the Annual Meeting, the Company's shareholders will be asked to approve
an amendment to the Company's 1997 Stock Option Plan (the "1997 Plan") to
increase the number of shares of Common Stock reserved for issuance under the
Plan from 1,000,000 to 2,000,000.
The Board believes that in order 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 continue 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 1997 Plan has proven to be a valuable tool in
attracting and retaining key employees. It believes that such authority, in view
of the substantial growth of the Company and need to continue to grow, should be
expanded to increase the number of options which may be granted under the 1997
Plan. The Board believes that such authority will provide the Company with
significant means to attract and retain talented personnel and maintain current
key employees without utilizing its cash resources.
Summary of the 1997 Stock Option Plan
At the Company's 1996 Annual Meeting of the Shareholders, held July 25,
1997, the shareholders approved the adoption of the 1997 Plan pursuant to which
1,000,000 shares of Common Stock are currently reserved for issuance upon the
exercise of options designated as either (i) options intended to constitute
incentive stock options ("ISOs" or "Incentive Stock Options") under the Internal
Revenue Code of 1986, as amended (the "Code"), or (ii) non-qualified stock
options. ISOs may be granted under the 1997 Plan to employees and officers of
the Company. Non-qualified stock options may be granted to consultants,
directors (whether or not they are employees), employees or officers of the
Company. Stock appreciation rights may also be issued in tandem with stock
options.
The 1997 Plan is intended to qualify under Rule 16b-3 under the Exchange
Act and is administered by a committee of the Board of Directors, which
currently consists of Messrs. Abbatecola and Morch. The committee, within the
limitations of the 1997 Plan, determines the persons to whom options will be
granted, the number of shares to be covered by each option, whether the options
granted are intended to be ISOs, the duration and rate of exercise of each
option, the exercise price per share and the manner of exercise and the time,
manner and form of payment upon exercise of an option. Unless sooner terminated,
the 1997 Plan will expire on June 11, 2007.
ISOs granted under the 1997 Plan may not be granted at a price less than
the fair market value of the Common Stock on the date of grant (or 110% of fair
market value in the case of persons holding 10% or more of the voting stock of
the Company). The aggregate fair market value of shares for which ISOs granted
to any employee are exercisable for the first time by such employee during any
calendar year (under all stock option plans of the Company) may not exceed
$100,000. Non-qualified stock options granted under the 1997 Plan may not be
granted at a price less than the par value of the Common Stock on the date of
grant. Options granted under the 1997 Plan will expire not more than ten years
from the date of grant (five years in the case of ISOs granted to persons
holding 10% or more of the voting stock of the Company). All options granted
under the 1997 Plan are not transferable during an optionee's lifetime but are
transferable at death by will or by the laws of descent and distribution. In
general, upon termination of employment of an optionee, all options granted to
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<PAGE>
such person which are not exercisable on the date of such termination
immediately terminate, and any options that are exercisable terminate three
months following termination of employment.
As of the Record Date, the Company has granted options to purchase 853,366
shares of Common Stock under the 1997 Plan and has 146,634 shares available for
future grants.
The closing sale price of the Common Stock on July 16, 1999 was $1.938.
The following table sets forth certain information regarding options to
purchase Common Stock issued (net of cancelled options) since the inception of
the 1997 Plan to each of the Named Executives who participated in the 1997 Plan,
all current executive officers as a group, all current directors who are not
executive officers as a group and all employees, including employees who are not
executive officers, who participated in the 1997 Plan as a group. No associate
of any director or officer has received options under the 1997 Plan.
NUMBER OF SECURITIES
UNDERLYING OPTIONS
------------------
Kevin J. Zugibe 99,000
Eugene J. Tonkovich 251,000
Stephen P. Mandracchia 66,000
Thomas Zugibe 66,000
Bran F. Coleman 68,000
Walter A. Phillips 33,000
Robert Johnson 0
All current executive officers as a group (5 persons) 573,000
Non-employee directors as a group (4 persons) 25,000
All non-executive officer employees as a group (55 persons) 255,366
Certain Federal Income Tax Consequences of the 1997 Stock Option 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 participant 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 participant, (i) the
participant 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 (ii)
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 participant. 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, (i)
the participant 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 (ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the requirements of Section 162(m) of the Code and that
the compensation be reasonable. The participant will recognize the excess, if
any, of the amount realized over the fair market value
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<PAGE>
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 participant held the shares, and the Company will not qualify
for a deduction with respect to such excess.
Subject to certain exceptions for disability or death, if an Incentive
Stock Option is exercised more than three months following the termination of
the participant'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 participant will recognize no income; (ii)
upon exercise of the option (if the shares are not subject to a substantial risk
of forfeiture), the participant 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 of Section 162(m) of
the Code and that the compensation be reasonable; (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
participant; and (iv) on a sale of the shares, the participant 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 participant's hands depending upon
the length of time that the participant held the shares.
The Board believes that the proposed amendment to the 1997 Stock Option
Plan will help the Company attract and retain qualified officers, directors and
key employees. Accordingly, the Board believes that the amendment to the 1997
Stock Option Plan is in the best interest of the Company and unanimously
recommends a vote FOR its approval.
Recommendation
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 2.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP has audited and reported upon the consolidated financial
statements of the Company for Fiscal 1998 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, 1999. 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.
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 March 17, 2000 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.
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<PAGE>
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1998 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.
275 NORTH MIDDLETOWN ROAD
PEARL RIVER, NEW YORK 10965
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
Kevin J. Zugibe, P.E.
Chairman of the Board
July 16, 1999
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<PAGE>
HUDSON TECHNOLOGIES, INC.
275 North Middletown Road
Pearl River, New York 10965
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 19, 1999
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
Shareholders of Hudson Technologies, Inc. (the "Company") on Thursday, August
19, 1999, 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 to vote for all nominees
contrary below). listed below.
Thomas P. Zugibe, Stephen P. Mandracchia, Vincent P. Abbatecola and Otto C.
Morch
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
<PAGE>
2. Approval of Amendment to the Company's 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.
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: ________________________________, 1999
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.
