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. __)
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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)
--------------------------------------------------------------------------------
(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.
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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).
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(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.
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(4) Date filed:
HUDSON TECHNOLOGIES, INC.
275 North Middletown Road
Pearl River, New York 10965
November 26, 2003
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders which will be held on Friday, December 19, 2003 at 10:00 A.M.,
local time at the Pearl River Hilton, 500 Veterans Memorial Highway, Pearl
River, New York 10965.
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 17 Battery Place, 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, President
and Chief Executive Officer
HUDSON TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 2003
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 Friday, December 19,
2003 at 10:00 A.M., local time , at the Pearl River Hilton, 500 Veterans
Memorial Highway, Pearl River, New York 10965 for the following purposes:
1. To elect a class of three directors who shall serve until the Annual
Meeting of Shareholders to be held in 2005 or until their successors have been
elected and qualified; and
2. 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 November 21, 2003
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
November 26, 2003
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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.
--------------------------------------------------------------------------------
PROXY STATEMENT
HUDSON TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 2003
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 Friday, December 19, 2003, 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 November 26, 2003.
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 November 21,
2003 (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 5,239,920
shares of the Company's common stock, par value $.01 per share ("Common Stock")
and 125,085 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 except
that only holders of the Preferred Stock are entitled to vote on the election of
the two directors appointed by them pursuant to the terms of the Company's
Certificate of Designation relating to the Preferred Stock (the "Series A
Directors"). Messrs. Robert L. Burr and Robert M. Zech are the two Series A
Directors who have previously been elected by the holders of the Preferred
Stock. Mr. Robert Zech's affiliation with the holders of the Preferred Stock
ended in October 2001. Mr. Zech's term as a director expired in 2002 and,
although he was then no longer affiliated with the holders of the Preferred
Stock, Mr. Zech was elected by the shareholders to a two year term on the
Company's board of directors at the Company's December 2002 annual meeting. In
July, 2003,
Mr. Zech again became affiliated with the holders of the Preferred Stock and,
effective July 25, 2003 Mr. Zech vacated his position as an outside director of
the board and has been designated by the holders of the Preferred Stock to fill
the second board position reserved for the Preferred shareholders until the
expiration of that term in 2004. 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 provided, however, that, in
determining the number of votes per share of Series A Preferred Stock, the
Conversion Price shall be the higher of (a) the Conversion Price then in effect
(which is currently approximately 90.909 shares of Common Stock for each share
of Preferred Stock), or (b) $1.78. Accordingly, based upon the $1.78 Conversion
Price established for voting purposes only, each share of Preferred Stock
entitles the holder to vote 56.180 shares of Common Stock, or an aggregate of
7,027,275 votes.
VOTING PROCEDURES
At the Annual Meeting, Mr. Burr will be elected by a plurality of
the votes cast by holders of the Preferred Stock in person or, provided a quorum
of the Preferred Stock is present, at the Annual Meeting. All other 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 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 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. For purposes of the
election of Mr. Burr by holders of the Preferred Stock, a quorum will be present
at the Annual Meeting if holders of a majority of the votes represented by
holders of the Preferred Stock are present in person or represented by proxy at
the Annual Meeting. With respect to all other matters, 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 the 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.
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The holders of the Preferred Stock represent approximately 57% of
the Common Stock and the Preferred Stock, voting together as a single class,
outstanding as of the Record Date and eligible to vote at the Annual Meeting,
have indicated their intention to vote in favor of the nominees for directors
indicated below.
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. The By-laws provide that the number of directors shall be fixed by
the Board of Directors but in any event, shall be no less than seven (7)
(subject to decrease by a resolution adopted by the shareholders).
At the Annual Meeting, a class of three directors will be elected
for a two-year term expiring at the Annual Meeting of Shareholders to be held in
2005. Messrs. Vincent P. Abbatecola, Robert L. Burr and Otto C. Morch are the
nominees for election to such positions, except that only the holders of the
Preferred Stock are entitled to vote for reelection of Mr. Burr. Messrs. Kevin
J. Zugibe, Harry C. Schell, Dominic J. Monetta and Robert M. Zech will not stand
for election at the Annual Meeting because their respective terms expire at the
Annual Meeting of Shareholders to be held in 2004.
The holders of the Preferred Stock are entitled to nominate and vote
exclusively for up to two directors to the Company's Board. To date, the holders
of the Preferred Stock have nominated Robert L. Burr for election at the 2003
Annual meeting of the Shareholders and have appointed Robert M. Zech as a second
director who is part of the class of directors whose term expires at the
Company's annual meeting in 2004.
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
---- --- --------
Vincent P. Abbatecola 56 Director
Otto C. Morch 69 Director
Robert L. Burr 52 Director
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,
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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.
Robert L. Burr has been a Director of Hudson since August 1999. Mr.
Burr is a Partner of Windcrest Discovery Investments LLC, an investment
management firm, and has a consulting agreement with J.P. Morgan Partners under
which he is the lead partner of Fleming US Discovery Partners, L.P., a private
equity sponsor affiliated with J.P. Morgan Chase & Co. Fleming US Discovery
Partners, L.P. is the general partner of Fleming US Discovery Fund III, L.P. and
Fleming US Discovery Offshore Fund III, L.P. Mr. Burr was employed by J. P.
Morgan Chase & Co. from July 1995 to October 2001. From 1992 to 1995, Mr. Burr
was head of Private Equity at Kidder, Peabody & Co., Inc. Previously, 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 serves on the Board of Directors of
Displaytech, Inc. and Impax Laboratories, Inc. .
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 2004:
Name Age Position
---- --- --------
Kevin J. Zugibe 40 Chairman of the Board, Chief Executive
Officer and President
Harry C. Schell 68 Director
Dominic J. Monetta 61 Director
Robert M. Zech 37 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 and President since July 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
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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.
Robert M. Zech has been a Director of Hudson since June 1999. Mr.
Zech has been a Partner of Windcrest Discovery Investments LLC, an investment
management firm, from its inception in February 2002 and since July 2003 has a
consulting agreement with J.P. Morgan Partners with respect to Fleming US
Discovery Partners, L.P. From April 1996 to October 2001, Mr. Zech was employed
by J.P. Morgan Chase & Co., where he was a Partner of Fleming US Discovery
Partners, L.P., the general partner of Fleming US Discovery Fund III, L.P. and
Fleming US Discovery Offshore Fund III, L.P. From 1994 to 1996, Mr. Zech was an
Associate with Cramer Rosenthal McGlynn, Inc., an investment management firm.
Previously 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 serves on the Board of Directors of
Displaytech, Inc.
During the fiscal year ended December 31, 2002 ("Fiscal 2002"), the
Board held seven (7) meetings. Each of the current directors attended at least
75% of the total number of meetings of the Board and any Committee of the Board
on which he served which was held during the period he served as a director
during such year.
Committees of the Board of Directors
The Company has established a Compensation /Stock Option Committee
of the Board of Directors, which is responsible for recommending the
compensation of the Company's executive officers and for the administration of
the Company's Stock Option Plans. The members of such Committee are Messrs.
Abbatecola, Burr, Morch and Zech. The Compensation/Stock Option Committee held 4
meetings during Fiscal 2002. The Company also has an Audit Committee of the
Board of Directors, which supervises the audit and financial procedures of the
Company. The members of the Audit Committee are Messrs. Abbatecola, Morch and
Monetta. Each member of the Audit Committee is an "independent director" within
the meaning of Nasdaq Marketplace Rule 4200. The Audit Committee held 3 meetings
during Fiscal 2002. The Audit Committee has adopted a written charter, a copy of
which was attached as Appendix A to the Company's Definitive Proxy Statement
filed with the Securities and Exchange Commission on July 27, 2001. The Company
also has an Executive Committee of the Board of Directors, which is authorized
to exercise the powers of the Board of Directors in the general supervision and
control of the business affairs of the Company during the intervals between
meetings of the board. The members of the Executive Committee are Messrs. Burr,
Schell and Zugibe. The
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Company's Occupational, Safety and Environmental Protection Committee, which is
responsible for satisfying the Board that the Company's Environmental, Health
and Safety policies, plans and procedures are adequate. The members of the
Occupational, Safety and Environmental Protection Committee are Messrs. Monetta
and Zugibe. The Company does not have a nominating committee of the Board or
other Board committee forming similar functions.
Audit Committee Report
In January 2003, the Audit Committee met with management to review
and discuss the audit and the procedures and timing of the audit. In March 2003,
the Audit Committee met with management to review and discuss the audited
financial statements. The Audit Committee also conducted discussions with the
Company's independent auditors, BDO Seidman, LLP, regarding the matters required
by the Statement on Auditing Standards No. 61. As required by Independence
Standards Board Standard No. 1, "Independence Discussion with Audit Committees,"
the Audit Committee has discussed with and received the required written
disclosures and confirming letter from BDO Seidman, LLP regarding its
independence and has discussed with BDO Seidman, LLP its independence. Based
upon the review and discussions referred to above, the Audit Committee ratified
its prior recommendation to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2002.
The Audit Committee-
Vincent Abbatecola, Otto Morch and Dominic Monetta.
Executive Officers
In addition to Kevin J. Zugibe, Messrs., Stephen P. Mandracchia,
Brian Coleman, Charles F. Harkins, Jr. and James R. Buscemi 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:
James R. Buscemi, 50, has been Chief Financial Officer since
December 2002, and served Corporate Controller since coming to the Company in
June 1998. Prior to joining the Company, Mr. Buscemi held various financial
positions with Avnet, Inc., including Chief Financial Officer of Avnet's
electric motors and component part subsidiary, Brownell Electro, Inc.
Brian F. Coleman, 42, has been President and Chief Operating Officer
of the Company since August 21, 2001 and served as Chief Financial Officer of
the Company from May 1997 to December 2002. From June 1987 to May 1997, Mr.
Coleman was employed by, and since July 1995, was a partner of, BDO Seidman,
LLP, the Company's independent auditors.
Charles F. Harkins, Jr., 41, has been Vice President of Refrigerant
Product Services ("RPS") since October 2000, and has served in a variety of
capacities since joining the Company in 1992. Prior to joining the Company, Mr.
Harkins served in the U.S. Army for 13 years attaining the rank of Staff
Sergeant; he is a graduate of the U.S. Army Engineer School and the U.S. Army
Chemical School.
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Stephen P. Mandracchia, 44, has been Vice President for the Company
since August 2003, and has been Secretary of the Company since April 1995. He
served as Vice President of the Company since 1993, as Executive Vice President
from 1997 to March 2002, and Vice President of Operation from November 2000 to
August 2003. Mr. Mandracchia is responsible for legal and regulatory affairs and
human resources for the Company. Mr. Mandracchia was a member of the law firm of
Martin, Vandewalle, Donohue, Mandracchia & McGahan, a Great Neck, New York law
firm until December 31, 1995 (having been affiliated with such firm since August
1983). Mr. Mandracchia is the brother-in-law of Kevin J. Zugibe.
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 the copies of such forms
received by the Company, the Company believes that during the year ended
December 31, 2002 all filing requirements applicable to its officers, directors,
and greater than 10 percent beneficial shareholders were complied with.
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EXECUTIVE COMPENSATION
The following table discloses for the years indicated, the
compensation for the Company's Chief Executive Officer, and each other executive
officers that earned over $100,000 during the fiscal year ended December 31,
2002 (the "Named Executives").
Summary Compensation Table
Long Term
Compensation
Annual Compensation(1) Awards
---------------------- ------------
Securities
Underlying
Options
------------
Name Position Year Salary Bonus
---- -------- ---- ------ -----
Kevin J. Zugibe Chairman of the Board, 2002 $97,371 -- 45,000 shares
President, Chief Executive 2001 $76,366 -- 170,000 shares
Officer 2000 $80,981 -- 140,000 shares
Brian F. Coleman President, Chief Operating 2002 $138,799 -- --
Officer and Chief Financial 2001 $138,799 -- 100,000 shares
Officer 2000 $138,799 $12,248 37,500 shares
Neil B. Gafarian(2) Vice President Sales and 2002 $120,000 $37,917 40,000 shares
Marketing
Stephen P. Mandracchia Vice President Operations and 2002 $123,800 -- - - - -
Secretary 2001 $123,800 -- 15,000 shares
2000 $113,415 -- 77,500 shares
Charles F. Harkins, Jr. Vice President RPS 2002 $110,079 $29,976 ----
2001 $108,852 $68,492 27,500 shares
2000 $103,289 $10,126 77,500 shares
----------
(1) The value of personal benefits furnished to the Named Executives during
2000, 2001 and 2002 did not exceed 10% of their respective annual
compensation.
(2) Mr. Gafarian's employment with the Company terminated in August 2003.
The Company granted options, which except as otherwise set forth below, vest
upon the date of grant to the Named Executives during the fiscal year ended
December 31, 2002, as shown in the following table:
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Summary of Stock Options Granted to Executive Officers
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Position Granted Fiscal Year Price ($/sh) Date
---- -------- ------- ----------- ------------ ----
Kevin J. Zugibe Chairman and Chief 15,000 9.2% $2.50 04/18/2007
Executive Officer 15,000 9.2% $1.90 07/01/2007
15,000 9.2% $1.40 10/01/2007
Brian F. Coleman President, Chief --- --- --- ---
Operating Officer
Neil B. Gafarian(1) Vice President Sales 40,000 24.5% $2.65 02/13/2007
and Marketing
Charles F. Harkins Vice President RPS --- --- --- ---
Stephen P. Mandracchia Executive Vice --- --- --- ---
President and
Secretary
----------
(1) Mr. Gafarian's employment with the Company terminated in August 2003.
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The following table sets forth information concerning the value of
unexercised stock options held by the Named Executives at December 31, 2002. No
options were exercised by the Named Executives during the fiscal year ended
December 31, 2002.
Aggregated Fiscal Year End Option Values
Number of Securities
Underlying Value of
Unexercised Options In-the-money Options
At December 31, 2002 At December 31, 2002(1)
-------------------- -----------------------
Shares
------
Name Acquired on Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ----------- ------------- ----------- -------------
Exercise
--------
Kevin J. Zugibe
Chairman and -- -- 362,668 33,332 -- --
Chief Executive Officer
Brian F. Coleman
President and Chief -- -- 150,168 13,332 -- --
Operating Officer
Neil B. Gafarian (2)
Vice President Sales and
Marketing -- -- 40,000 -- -- --
Charles F. Harkins, Jr.
Vice President RPS -- -- 94,332 6,668 -- --
Stephen P. Mandracchia
Vice President Operations -- -- 108,500 10,000 -- --
And Secretary
----------
(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 $.85.
(2) Mr. Gafarian's employment with the Company terminated in August 2003.
Employment Agreement
Hudson has entered into a two-year employment agreement with Kevin J.
Zugibe, which expires in May 2005 and is automatically renewable for two
successive terms. Pursuant to the agreement, effective February 1, 2000, Mr.
Zugibe is receiving an annual base salary of $141,000 with such increases and
bonuses as the Board may determine. During 2002, the Board of Directors and Mr.
Zugibe agreed, at Mr. Zugibe's option, to reduce the cash compensation and
issued 45,000 additional stock options to Mr. Zugibe in satisfaction of his
annual base salary. Hudson is the beneficiary of a "key-man" insurance policy on
the life of Mr. Zugibe in the amount of $1,000,000.
Stock Option Plans
Hudson has adopted each of an Employee Stock Option Plan (the "1994 Plan")
and the 1997 Stock Option Plan (the "1997 Plan") pursuant to which an aggregate
of 2,750,000 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
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Revenue Code of 1986, as amended (the "Code"), or (ii) nonqualified options.
ISOs may be granted under either of the 1994 Plan or 1997 Plan to employees and
officers of Hudson. Non-qualified options may be granted to consultants,
directors (whether or not they are employees), employees or officers of Hudson.
Stock appreciation rights may also be issued in tandem with stock options.
Each of the 1994 Plan and 1997 Plan is intended to qualify under Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and is administered by the Compensation/Stock Option Committee of the Board of
Directors. The Committee, within the limitations of each of the 1994 Plan and
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 1994 Plan will expire
on December 31, 2004 and the 1997 Plan will expire on June 11, 2007.
ISOs granted under either of the 1994 Plan or 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 Hudson). 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 Hudson) may
not exceed $100,000. Non-qualified options granted under the 1994 Plan may not
be granted at a price less than 85% of the market value of the common stock on
the date of grant and new qualified options granted under the 1997 Plan may not
be granted at a price less than the par value of our common stock. Options
granted under the 1994 Plan and 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 Hudson). Except as otherwise provided
by the committee with respect to non-qualified options, all options granted
under the 1994 Plan and 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 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, 2002, Hudson had options outstanding to purchase
610,000 shares of common stock under the 1994 Plan. During 2000, Hudson granted
options to purchase 40,000 shares each to Kevin J. Zugibe, Stephen P.
Mandracchia and Thomas P. Zugibe exercisable at $2.375 per share. Such options
vest and are fully exercisable as of August 3, 2000. During 2001, Hudson granted
options to purchase shares to Kevin J. Zugibe, 50,000 shares; Brian F. Coleman,
20,000 shares; Stephen P. Mandracchia, 15,000 shares; and Thomas P. Zugibe,
20,000 shares, all of which are exercisable at $2.55 per share. Such options
vest quarterly in equal amounts over three years, commencing with the first
quarter of 2002. In addition, during 2001, in lieu of salary, Hudson also
granted options to purchase 15,000 shares to Kevin J. Zugibe exercisable at
$2.55 per share, all of which vested and are fully exercisable as of December
13, 2001. During 2001, Hudson also granted options to purchase 80,000 shares to
Brian F. Coleman exercisable at $2.55 per share, all of which vested as of
December 13, 2001, and which became exercisable as follows: 39,215 on 12/13/01,
39,215 on 12/13/02 and 1,570 on 12/13/03. In
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addition, during 2001, Hudson also granted options to certain employees to
purchase 20,000 shares exercisable at $2.55 per share. Such options vest
quarterly in equal amounts over three years, commencing with the first quarter
of 2002. During 2002, Hudson granted options to purchase 40,000 shares to Neil
B. Gafarian exercisable at $2.65 per share. In addition, during 2002, in lieu of
salary, Hudson granted options to purchase 45,000 shares to Kevin J. Zugibe
exercisable at prices ranging from $1.40 to $2.50 per share. All such options
vest immediately and become exercisable at various dates through June 2003.
As of December 31, 2002, Hudson had options outstanding to purchase
1,152,716 shares of common stock under the 1997 Plan. During 1998, Hudson
granted non-qualified options to purchase 40,000, 25,000 and 25,000 shares at an
exercise price of $3.00 per share to Kevin J. Zugibe, Stephen P. Mandracchia and
Thomas P. Zugibe, respectively. Such options vested on August 31, 1998. In
addition, during 1998, Hudson also granted options to purchase 430,666 shares to
certain officers, directors and employees, exercisable at prices ranging from
$2.50 to $4.375 per share. During 1999, Hudson granted options to purchase 1,000
shares each at an exercise price of $2.00 per share to Kevin J. Zugibe, Stephen
P. Mandracchia and Thomas P. Zugibe, respectively. Such options vested and are
fully exercisable as of November 3, 2000; November 3, 1999 and November 3, 1999,
respectively. In addition, during 1999, Hudson also granted options to purchase
156,000 shares to certain officers, directors and employees, exercisable at
prices ranging from $1.781 to $2.63 per share. During 2000, Hudson granted
options to purchase 100,000 shares at an exercise price of $2.375 per share to
Kevin J. Zugibe, which options vest at a rate of 50% upon issuance and 50% on
the first anniversary date, and which become exercisable as follows: 14,500 on
8/4/00, 27,500 on 11/3/00, 14,500 on 8/4/01, 27,000 on 11/3/01, 14,500 on 8/4/02
and 2,000 on 11/2/02. During 2000, Hudson granted options to purchase 37,500 and
62,500 shares at an exercise price of $2.375 per share to Stephen P. Mandracchia
and Thomas P. Zugibe, respectively. Such options vest at a rate of 50% upon
issuance and 50% on the first anniversary date. In addition, during 2000, Hudson
also granted options to purchase 274,500 shares to certain officers, directors
and employees, exercisable at prices ranging from $2.375 to $2.78 per share.
During 2001, Hudson granted options to purchase 105,000 shares at an exercise
price of $2.375 per share to Kevin J. Zugibe, which options vested and were
fully exercisable as of February 7, 2001, as to 60,000 shares, and as of October
23, 2001 as to 45,000 shares. In addition, during 2001, Hudson granted options
to purchase 131,000 shares to certain directors and employees ranging from
$2.375 to $3.08 per share. Such options vested and were fully exercisable as of
the date of issuance. During 2002, Hudson granted options to purchase 10,000
shares to James R. Buscemi exercisable at $1.30 per share. In addition, during
2002, Hudson granted options to purchase 68,400 shares to certain employees at
prices ranging from $1.30 to $1.60 per share. All such 2002 option issuances
vested and were fully exercisable as of the date of issuance.
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 nonqualified stock options per year of service under
Hudson's Stock Option Plans.
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In addition to the standard annual director's remuneration, Mr. Schell
receives $20,000 and 5,000 stock options for serving as a director and a
consultant to Hudson. The additional stock options are issued with an exercise
price equal to that of the other directors' option grants.
As of December 31, 2002, Hudson has granted to Harry C. Schell
nonqualified options to purchase 40,000 shares of common stock at exercise
prices ranging from $2.38 to $3.00 per share. Such options vested and are fully
exercisable as of December 31, 2002. Hudson has also granted to each of Dominic
J. Monetta, Otto Morch and Vincent Abbatecola, nonqualified options to purchase
20,000 shares of common stock at exercise prices ranging from $2.38 to $3.00 per
share. Such options vested and are fully exercisable as of December 31, 2002. In
addition, in connection with the appointment of two of their nominees as members
of the Board of Directors, Hudson has granted to Fleming US Discovery Fund III,
L.P. and Fleming US Discovery Offshore Fund III, L.P. nonqualified options to
purchase 25,854 and 4,146 shares of common stock, respectively, at an exercise
price of $2.38 per share. All such options issued to the directors are vested
and fully exercisable at December 31, 2002.
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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 Hudson's common stock by (i) each person known by Hudson
to be the beneficial owner of more than 5% of Hudson's outstanding common stock,
(ii) the Named Executives, (iii) each director of Hudson, and (iv) all directors
and executive officers of Hudson as a group:
Amount and
Nature of Percentage of
Beneficial Common Shares
Name and Address of Beneficial Owner (1) Ownership (2) Owned
---------------------------------------- ------------- -----
Kevin J. Zugibe 658,397 (3) 11.6%
Brian F. Coleman 184,878 (4) 3.4%
Neil B. Gafarian 41,875 (5) *
Charles F. Harkins 135,831 (6) 2.5%
Stephen P. Mandracchia 368,878 (7) 6.8%
Vincent P. Abbatecola 30,000 (8) *
Robert L. Burr -- (9) *
Dominic J. Monetta 35,000 (8) *
Otto C. Morch 25,600 (8) *
Harry C. Schell 79,000 (10) 1.5%
Robert M. Zech 5,000 (11) *
DuPont Chemical and Energy 500,000 (12) 8.7%
Operations, Inc.
Flemings Funds 11,406,352 (13) 68.4%
All directors and executive officers as a group 1,654,126 (14) 24.5%
(12 persons)
* = Less than 1%
----------
(1) Unless otherwise indicated, the address of each of the persons listed above
is the address of Hudson, 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, Hudson 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 (i) 1,000 shares which may be purchased at $2.00 per share; (ii)
245,000 shares which may be purchased at $2.375 per share; (iii) 40,002 shares
which may be purchased at $2.551 per share; (iv) 15,000 shares which may be
purchased at $2.50 per share; (v) 15,000 shares which may be purchased at $1.90
per share; (vi) 15,000 shares which may be purchased at $1.40 per share; (vii)
15,000 shares which may be purchased at $.77 per share; and (vii) 70,500 shares
which may be purchased at $1.14 per share under immediately exercisable options.
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(4) Includes (i) 1,000 shares which may be purchased at $1.78 per share; (ii)
37,500 shares which may be purchased at $2.375 per share; (iii) 90,002 shares
which may be purchased at $2.551 per share; and (iv) 41,376 shares which may be
purchased at $1.14 per share under immediately exercisable options.
(5) Represents (i) 40,000 shares which may be purchased at $2.65 per share; and
(ii) 1,875 shares which may be purchased at $1.14 per share under immediately
exercisable options.
(6) Represents (i) 55,000 shares which may be purchased at $2.375 per share;
(ii) 5,000 shares which may be purchased at $2.53 per share; (iii) 4,998 shares
which may be purchased at $2.55 per share; (v) 20,000 shares which may be
purchased at $1.14 per share under immediately exercisable options; and (vi)
50,000 shares which may be purchased at $1.10 per share under immediately
exercisable options.
(7) Includes (i) 76,300 shares which may be purchased at $2.375 per share; (ii)
7,500 shares which may be purchased at $2.551 per share; and (iii) 45,000 shares
which may be purchased at $1.14 per share under immediately exercisable options.
(8) Includes (i) 5,000 shares which may be purchased at $2.375 per share; (ii)
5,000 shares which may be purchased at $2.785 per share; (iii) 5,000 shares
which may be purchased $3.08 per share; and (iii) 5,000 shares which may be
purchased at $.85 per share under immediately exercisable options.
(9) Mr. Burr has been appointed a director by the Flemings Funds. Mr. Burr's
share ownership excludes all shares of common stock beneficially owned by the
Flemings Funds.
(10) Includes (i) 10,000 shares which may be purchased at $2.375 per share; (ii)
10,000 shares which may be purchased at $2.785 per share; (iii) 10,000 shares
which may be purchased at $3.08 per share; and (iv) 10,000 shares which may be
purchased at $.85 per share under immediately exercisable options.
(11) Mr. Zech has been appointed a director by the Flemings Funds. Mr. Zech's
share ownership excludes all shares of common stock beneficially owned by the
Fleming Funds, but includes 5,000 shares which may be purchased at $.85 per
share under immediately exercisable options that were awarded to him during the
period when he was an independent director.
(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 US Discovery Fund III, L.P. and Fleming US Discovery Offshore Fund
III, L.P., and their general partner, Fleming US Discovery Partners, L.P. and
its general partner, Fleming US Discovery Partners LLC, collectively referred to
as ("Flemings Funds") are affiliates. The beneficial ownership of the Flemings
Funds assumes the conversion of the Preferred Stock owned by the Flemings Funds
(which constitutes all of the outstanding Preferred Stock) to common stock at a
conversion rate of $1.10 per share. The holders of shares of the Preferred Stock
vote together with the holders of the common stock based upon the number of
shares of
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common stock into which the Preferred Stock is then convertible. Also includes
(i) 10,000 shares which may be purchased at $2.375 per share; (ii) 10,000 shares
which may be purchased at $2.785 per share; (iii) 10,000 shares which may be
purchased at $3.08 per share; and (iv) 5,000 shares which may be purchased at
$.85 per share under immediately exercisable options. Flemings Funds address is
c/o JP Morgan Chase & Co., 1221 Avenue of the Americas, 40th Floor, New York,
New York 10020, except for Fleming US Discovery Offshore Fund III, L.P. whose
address is c/o Bank of Bermuda LTD., 6 Front Street, Hamilton HM11 Bermuda.
(14) Includes exercisable options to purchase 1,014,970 shares of common stock
owned by the directors and officers as a group. Excludes 11,406,352 shares
beneficially owned by the Flemings Funds.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the regular course of its business, the Company purchases
refrigerants from and sells refrigerants to DuPont and performs recovery,
reclamation, RefrigerantSide(R) Services and other services.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP has audited and reported upon the consolidated
financial statements of the Company for Fiscal 2002 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, 2003. 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.
AUDIT FEES
The aggregate fees billed by BDO Seidman, LLP for professional
services rendered for the audit of the Company's annual financial statements for
Fiscal 2002 and the reviews of the financial statements included in the
Company's Form 10-QSB's for Fiscal 2002 totaled $102,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed to the Company by BDO Seidman, LLP for
professional services related to financial information systems design and
implementation by BDO Seidman, LLP for Fiscal 2002.
ALL OTHER FEES
There were no fees billed for services rendered by BDO Seidman, LLP,
other than for audit services, described in the preceding two paragraphs.
The Audit Committee has considered whether the provision of services
covered in the preceding two paragraphs is compatible with maintaining BDO
Seidman, LLP's independence.
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, and in satisfaction of the conditions established by
the Securities and Exchange Commission, to the Company at its address set forth
on the first page of this proxy statement not later than July 27, 2004 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.
After the July 27, 2004 deadline, a shareholder may present a
proposal at the Company's next Annual Meeting if it is submitted to the
Company's Secretary at the address set
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forth above no later than October 11, 2004. If timely submitted, the shareholder
may present the proposal at the next Annual Meeting but the Company is not
obligated to include the proposal in its proxy statement.
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, 2002 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
November 26, 2003
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HUDSON TECHNOLOGIES, INC.
275 North Middletown Road
Pearl River, New York 10965
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 19, 2003
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 Friday,
December 19, 2003, at the Pearl River Hilton, 500 Veterans Memorial Highway,
Pearl River, New York 10965 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 below). to vote for all nominees listed below.
Vincent P. Abbatacola, Robert L. Burr 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)
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2. 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: ________________________________, 2003
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.
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