[EVTC, INC. LETTERHEAD]
October 13, 1998
Dear Stockholders:
We cordially invite you to attend the Annual Meeting of the
Stockholders of EVTC, Inc., trading as Environmental Technologies Corp. (the
"Company") to be held at 11:00 A.M. on Friday, November 13, 1998, at the offices
of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP , 99 Wood Avenue South,
Iselin, New Jersey 08830.
The purpose of this meeting is to elect five (5) members to the Board
of Directors. This matter is described in the accompanying Notice of Meeting and
Proxy Statement.
The Board of Directors recommends that Stockholders vote in favor of
the proposal. We encourage all Stockholders to participate by voting their
shares by Proxy whether or not they plan to attend the meeting. Please sign,
date and mail the enclosed Proxy as soon as possible. If you do attend the
Annual Meeting, you may still vote in person.
Sincerely,
/s/ George Cannan
George Cannan
Chief Executive Officer
EVTC, INC.
(trading as Environmental Technologies Corp.)
550 James Street
Lakewood, New Jersey 08701
PRELIMINARY PROXY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on November 13, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of EVTC, Inc., trading as Environmental Technologies Corp. (the
"Company") will be held at the offices of Greenbaum, Rowe, Smith, Ravin, Davis &
Himmel LLP, 99 Wood Avenue South, Iselin, New Jersey 08830 for the following
purposes:
1. To elect five (5) members to the Board of Directors to serve
until the fiscal 1999 Annual Meeting of Stockholders or until
successors are duly elected and qualified.
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on September 28, 1998
will be entitled to notice of and to vote at the Meeting.
Whether or not you intend to attend the Meeting, please complete, date and
sign the enclosed Proxy. Your Proxy will be revokable, either in writing or by
voting in person at the Meeting, at any time prior to its exercise.
By Order of the Board of Directors
/s/Caroline P. Costante
----------------------------------
Caroline P. Costante, Secretary
Lakewood, New Jersey
October 13, 1998
EVTC, INC.
(trading as Environmental Technologies Corp.)
550 James Street
Lakewood, New Jersey 08701
PROXY STATEMENT
Accompanying this Proxy Statement is a Notice of Annual Meeting of
Stockholders and a form of Proxy for such meeting solicited by the Board of
Directors. The Board of Directors has fixed the close of business on September
28, 1998, as the record date for the determination of stockholders who are
entitled to notice of and to vote at the meeting or any adjournment thereof. The
holders of a majority of the outstanding shares of Common Stock present in
person, or represented by Proxy, shall constitute a quorum at the meeting.
As of the record date, the Company had 4,989,719 outstanding shares of
common stock, no par value (the "Common Stock"), the holders of which are
entitled to one vote per share.
A Proxy that is properly submitted to the Company may be revoked at any
time before it is exercised by written notice to the Secretary of the Company,
and any Stockholder attending the meeting may vote in person and by doing so
revokes any Proxy previously submitted by him. Where a Stockholder has specified
a choice on his Proxy with respect to the Proposal, it will be complied with. If
no direction is given, all the shares represented by the Proxy will be voted in
favor of such Proposal.
The cost of soliciting Proxies will be paid by the Company, which will
reimburse brokerage firms, custodians, nominees and fiduciaries for their
expenses in forwarding proxy material to the beneficial owners of the Company's
stock. Officers and regular employees of the Company may solicit Proxies
personally and by telephone. The Annual Report of the Company for the year ended
September 30, 1997, containing audited financial statements for such year, is
enclosed with this Proxy Statement. This Proxy Statement and the enclosed Proxy
are being sent to the stockholders of the Company on or about October 13, 1998.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THIS MEETING, YOU ARE REQUESTED
TO PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.
PROPOSAL
ELECTION OF DIRECTORS
The Board of Directors is currently composed of five (5) members. At
the Annual Meeting, all directors will be elected to serve for one year expiring
on the date of the Annual Meeting of Stockholders the following year. Each
director elected will continue in office until a successor has been elected or
until resignation or removal in the manner provided by the Company's By-Laws.
The names of the nominees for the Board of Directors are listed below. Shares
represented by a properly executed proxy in the accompanying form will be voted
for such nominees. However, discretionary authority is reserved to vote such
shares in the best judgment of the persons named in the event that any person or
persons other than the nominees listed below are to be voted on at the meeting
due to the unavailability of any nominee so listed.
All persons named below are directors of the Company at the present
time. There are no family relationships between any nominee, director or
executive officer of the Company.
NOMINEES
George Cannan, Sr. founded Environmental Materials Corp. ("EMC") a
wholly-owned subsidiary of the Company in 1975 and has been President, Chief
Executive Officer and a director of EMC since that time. Mr. Cannan founded the
Company in 1989 and was President and Chief Executive Officer until December 31,
1995 and has been Chairman of the Board and a director of the Company since
1989. In July 1992, EMC became a wholly-owned subsidiary of the Company. Mr.
Cannan has been responsible for all phases of the Company's operations since its
inception. Prior to founding EMC, Mr. Cannan was a manufacturer's representative
in the automotive industry.
Jim Burns has been President of EMC since April 1996 and President and a
Director of the Company since February 1997. Prior to that he owned and operated
a manufacturers' representative firm.
John Stefiuk is the President of Federal Bronze Products, Inc. a metal
servicing center and representative agency based in Newark, New Jersey. Mr.
Stefiuk joined Federal Bronze in 1972 and became President in 1978. During his
tenure at Federal Bronze, he has held various managerial and operating
positions.
James C. Hellauer, since 1997, has been the Executive Director of Colmen
Capital Advisors, Inc. providing investment banking services. From 1989 to1997,
Mr. Hellauer has had the primary responsibilities for the activities of James C.
Hellauer & Associates providing management services to emerging and trouble
companies in the middle markets. Mr. Hellauer holds a B.S. degree from the U.S.
Naval Academy and an M.B.A. from Harvard University.
Peter C. Colella, Jr. is the founder and the Managing Director of Colmen
Capital Advisors, Inc., concentrating on restructuring, recapitalization and
assisting clients in profit improvement programs. Prior to forming Colmen
Capital Advisors, Inc. in 1993, Mr. Colella was managing
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director and co-founder of Colmen Management Company which was founded in
1991. Mr. Colella holds a M.B.A. from St. John's University and a B.S. in
business administration from LaSalle College.
INFORMATION CONCERNING BOARD
The Board of Directors did not meet in fiscal 1997, nor did it act by
unanimous consent.
The Board of Directors has an Audit Committee, a Compensation Committee
and an Executive Committee. The Audit Committee is responsible for reviewing the
Company's audited financial statements, meeting with the Company's independent
accountants to review the Company's internal controls and financial management
practices and examining all agreements or other transactions between the Company
and its directors and officers (other than those compensation functions assigned
to the Compensation Committee) to determine whether such agreements or
transactions are fair to the Company's stockholders. Messrs.
Colella and Stefiuk serve on the Audit Committee.
The Compensation Committee is responsible for reviewing the
compensation and benefits of the Company's executive officers, making
recommendations to the Board of Directors concerning compensation and benefits
for such executive officers and administering the Company's stock option plans.
Messrs. Cannan and Hellauer serve on the Compensation Committee.
The Company's Executive Committee has the authority to act, between
meetings of the full Board of Directors, on any matter than might properly be
brought before the Board of Directors, subject to exceptions for certain major
matters. Messrs. Hellauer, Cannan and Burns serve on the Executive Committee.
Directors of the Company receive no cash compensation for serving on
the Board of Directors, other than reimbursement of reasonable expenses incurred
in attending meetings.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of August 31, 1998, the name and
number of shares of Common Stock held by each person known to the Company to own
beneficially more than five percent (5%) of the Company's Common Stock and the
number of shares owned by each director of the Company, the Company's Chief
Executive Officer and its other four most highly compensated executive officers,
and all directors and executive officers as a group. Each of the following has
an address c/o EVTC, Inc., 550 James Street, Lakewood, New Jersey 08701.
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============================================== =================================
Name of Beneficial Owner (A) Common Stock
=================================
Number of Shares Percentage of
Outstanding
George Cannan, Sr. (B) 1,809,793 36.3%
Caroline P. Costante (C) 93,261 1.8%
David Keener (D) 42,500 0.9%
Jim Burns 100,000 2.0%
John Stefiuk (E) 10,000 0.2%
Hartland Advisors 773,788 15.5%
All Directors and executive officers as a
group (5 persons) 2,055,554 41.2%
A) All information with respect to beneficial ownership of the shares is based
upon filings made by the respective beneficial owners with the Securities
and Exchange Commission or information provided by such beneficial owners
to the Company.
B) Includes 90,000 shares of Common Stock issuable upon the exercise of stock
options which are presently exercisable.
C) Includes 20,000 shares of Common Stock issuable upon the exercise of stock
options which are presently exercisable.
D) Includes 37,500 shares of Common Stock issuable upon the exercise of stock
options which are presently exercisable.
E) Consists of 10,000 shares of Common Stock issuable upon the exercise of
stock options which are presently exercisable.
CERTAIN TRANSACTIONS
The Company's executive offices and refrigerant packaging and distribution
operations are located in a 21,000 square foot building situated at 550 James
Street, Lakewood, New Jersey 08701. The building is leased at a rental of
$10,000 per month from George Cannan, Sr., the Company's founder, Chairman and
principal stockholder, pursuant to a month-to-month lease. The Company believes
that the terms of such lease are at least as favorable as those which it could
obtain from a non-affiliated third party.
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EXECUTIVE COMPENSATION
The following table sets forth, for each of the last three fiscal years,
cash and certain other compensation paid or accrued by the Company for the Chief
Executive Officer and for each of the four other most highly compensated
executive officers (the "Named Officers") of the Company in all capacities in
which they served:
==========================================================================================================================
SUMMARY COMPENSATION TABLE
========================= -------- ================================== ====================================== =============
All Other
Name and Principal Year Annual Compensation Long-Term Compensation Compensation
Position ($)
----------- ----------- ---------- ------------ ------------ ------------
Salary ($) Bonus ($) Other Restricted Securities Long-Term
Annual Stock Under-Lying Incentive
Compensatio Award(s) Options Plan
($) ($) (#) Payouts
- ------------------------- -------- ----------- ----------- ---------- ------------ ------------ ------------ =============
George Cannan, Sr.
Chairman, CEO 1997 $200,000 0 (1) 0 0 0 0
Chairman 1996 $200,000 0 (1) 0 0 0 0
Chairman, CEO 1995 $200,000 0 (1) 0 0 0 0
========================= -------- ----------- ----------- ---------- ------------ ------------ ------------ =============
B.Brinkerhoff McCagg
CEO 1996 $125,000 0 (1) 0 0 0 0
- ------------------------- -------- ----------- ----------- ---------- ------------ ------------ ------------ =============
Jim Burns
President 1997 $110,000 0 (1) 0 0 0 0
- ------------------------- -------- ----------- ----------- ---------- ------------ ------------ ------------ =============
========================= ======== =========== =========== ========== ============ ============ ============ =============
Stock Option Grants in Last Fiscal Year
The following table sets forth certain information concerning the grant of
stock options during the year ended September 30, 1997 to the Named Officers. No
stock appreciation rights were awarded, either alone or in tandem with the stock
options, during the year ended September 30, 1997.
Option Grants in Last Fiscal Year
Name Number of Shares Percent of Total Exercise Price Expiration Date Realizable Potential
Underlying Options Granted Per Value at Assumed
Options Granted to Employees in Share Annual Rate of Stock
Fiscal Price Appreciation
Year for Option Term (1)
5% 10%
Jim Burns 26,000 34% $7.63 3/31/03 $67,000 $153,000
25,000 33 7.63 3/31/04 181,000
25,000 33 7.63 3/31/05 78,000 218,000
91,000
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Option Exercises During, and Stock Options Held at End of Fiscal 1997
The following table indicates the total number and value of exercisable
stock options held by the Named Officers as of September 30, 1997. No options
were exercised by the Named Officers in the fiscal year ended September 30,
1997.
======================================================================================================================
AGGREGATED OPTION EXERCISES IN 1997 AND
SEPTEMBER 30, 1997 OPTION VALUES
====================== ------------ ------------- ================================= ==================================
Name Shares Value Number of Securities Underlying Value of Unexercised
Acquired Realized ($) Unexercised Options at Fiscal In-the-Money Options at FY-End
on Year-End (#) ($)(A)
Exercise
(#)
---------------- ---------------- ---------------- =================
Exercisable Unexercisable Exercisable Unexercisable
====================== ------------ ------------- ---------------- ---------------- ---------------- =================
George Cannan 0 0 90,000 0 $171,000 0
Jim Burns 0 0 8,000 92,000 6,960 $80,040
Caroline P. Costante 0 0 20,000 0 50,000 0
John Stefiuk 0 0 10,000 0 4,150 0
(A) Options are "in-the-money" if, on September 30, 1997, the market price
of the Common Stock ($8.50) exceeded the exercise price of such
options. The value of such options is calculated by determining the
difference between the aggregate market price of the Common Stock
covered by such options on September 30, 1997, and the aggregate
exercise price of such options.
Employment Agreements
The Company has no employment agreements with any of its employees.
Stock Option Plans
The Company maintains stock option plans designated as the 1992 Stock
Option Plan (the "1992 Plan") and the 1996 Stock Option Plan (the "1996 Plan")
collectively the "Option Plans" pursuant to each of which 500,000 shares of
Common Stock have been reserved for issuance upon the exercise of options
designated as either (i) incentive stock options ("ISOs") under the Internal
Revenue Code of 1986, amended (the "Code") or (ii) non-qualified options. ISOs
may be granted to consultants, directors (whether or not they are employees),
employees or officers of the Company. In certain circumstances, the exercise of
stock options may have an adverse effect on the market price of the Company's
Common Stock.
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The purpose of the Option Plans is to encourage stock ownership by certain
directors, officers and employees of the Company and certain other persons
instrumental to the success of the Company and give them a greater personal
interest in the success of the Company. The Option Plans are administered by the
Board of Directors. The Board, within the limitations of the Option Plans,
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 option purchase price per
share and the manner of exercise, the time, manner and form of payment upon
exercise of an option, and whether restrictions such as repurchase rights in the
Company are to be imposed on shares subject to options. ISOs granted under the
Option Plans 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 and any related corporation) may not
exceed $100,000. Non-qualified options granted under the Option Plans may not be
granted at a price less than the fair market value of the Common Stock on the
date of grant. Options granted under the Option Plans 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). Any options
granted under the Option Plans are not transferable during the optionee's
lifetime but are transferable at death by will or by the laws of descent and
distribution.
As of the date of this Proxy Statement, options to purchase an aggregate
of 270,000 shares of Common Stock are outstanding under the 1992 and 1996 Plans.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised of Messrs. Cannan and Stefiuk.
The Compensation Committee reviews, recommends and approves changes to the
Company's compensation policies and programs and is responsible for reviewing
and approving the compensation of the Chief Executive Officer and other senior
officers of the Company.
The following report shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
Compensation Philosophy
The Company believes that executive compensation should be based upon
value returned to stockholders. The Company has developed and is developing
compensation programs designed to reflect Company performance and to be
competitive in the marketplace. In designing compensation programs, the Company
attempts to reflect both value created for stockholders while supporting the
Company's strategic goals. The Company's compensation programs reflect the
following themes:
. Compensation should be meaningfully related to the value created for
stockholders.
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. Compensation programs should support the Company's short-term and
long-term strategic goals and objectives.
. Compensation programs should promote the Company's value and reward
individuals for outstanding contributions to the Company's success.
. Short-term and long-term compensation should be designed to attract and
retain superior executives.
The Company's executive compensation is based upon three components,
base salary, annual incentive bonuses and long-term incentives, which are
intended to serve the overall compensation
philosophy.
Base Salary
The base salary of each executive officer is determined as a function
of three principal factors: the individual's performance, the relationship of
the individual's salary to similar executives in comparable companies, and
increases in the individual's responsibilities, whether through promotions or
otherwise. The base salaries of the Named Officers remained constant in Fiscal
1997.
Annual Incentive Bonus
The Company's annual incentive bonuses are designed to reflect the
individual officer's contribution to the profitability of the Company and any
special achievements by the respective officers. Each officer's bonus is based
upon the Company's performance in various areas, such as sales, profit margins,
operating expenses and earnings before interest and taxes as compared to a
pre-determined plan for each officer for each year.
The Compensation Committee
George Cannan
James C. Hellauer
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected KPMG Peat Marwick as
the independent auditors to examine the financial statements of the Company for
the year ending September 30, 1998 . No member of KPMG Peat Marwick will be
present at the Annual Meeting but will be present and available to respond to
appropriate questions make a statement via conference speaker telephone.
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PERFORMANCE GRAPH
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from
October 31, 1993 through October 31, 1998 with the cumulative total return (i)
on the Total Return Index for the Nasdaq Stock market (U.S. Companies) (the
"Nasdaq Composite Index"), and (ii) of a peer group of speciality chemical
industry companies (assuming the investment of $10,000 in the Company's Common
Stock, the Nasdaq Composite Index and the Peer Group on October 31, 1998 and
reinvestment of all dividends).
This graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporate this graph by reference,
and shall not otherwise be deemed filed under such Acts.
COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY, NASDAQ AND INDUSTRY INDEX
For Fiscal Year Ended September 30
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
Company $10,000 $15,500 $10,200 $11,000 $ 2,000
NASDAQ 10,000 13,500 16,000 22,000 22,000
Industry Index 10,000 10,000 10,200 12,200 9,400
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE TO ELECT THE
AFOREMENTIONED NOMINEES TO SERVE ON THE BOARD OF DIRECTORS.
GENERAL
The expense of this solicitation is to be borne by the Company. The Company
may also reimburse persons holding shares in their names or in the names of
their nominees for their expenses in sending proxies and proxy material to their
principals.
Unless otherwise directed, the persons named in the accompanying form of
proxy intend to vote all proxies received by them in favor of the election of
nominees to the Board herein, and the ratification of selected independent
auditors. All proxies will be voted as specified.
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Management does not intend to present any business at the meeting other
than that set forth in the accompanying Notice of Annual Meeting, and it has no
information that others will do so.
If other matters requiring the vote of the stockholders properly come
before the meeting and any adjournments thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies held by them
in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Stockholder proposals for inclusion in the proxy materials related to the
1999 Annual Meeting of Stockholders must be received by the Company no later
than June 1, 1999. A Stockholder must have been a record or beneficial owner of
the Company's common stock for at least one year prior to June 1, 1999, and the
stockholder must continue to own such shares, worth at least $1,000, through the
date on which the Meeting is held.
FORM 10-K ANNUAL REPORT
Upon written request by any stockholder entitled to vote at the 1998
Annual Meeting, the Company will furnish that person without charge a copy of
the Form 10-K Annual Report which it filed with the Securities and Exchange
Commission for 1996, including financial statements and schedules. If the person
requesting the report was not a stockholder of record on September 28, 1998, the
request must contain a good faith representation that the person making the
request was a beneficial owner of the Company's common stock at the close of
business on that date. Requests should be addressed to George Cannan, Chief
Executive Officer, EVTC, Inc., 550 James Street, Lakewood, New Jersey 08701.
By Order of the Board of Directors
EVTC, INC.
/s/George Cannan
__________________________
GEORGE CANNAN,
Chief Executive Officer
Lakewood, New Jersey
October 13, 1998
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