Bioquell Regulatory News (BQE)

19 Jul 2006 12:27

Bioquell PLC19 July 2006 TO: CITY EDITORSFOR IMMEDIATE RELEASE 19 July, 2006 BIOQUELL PLC Incentivisation of BIOQUELL Group Senior Management: proposed award of Special Options Notice of Extraordinary General Meeting BIOQUELL PLC, the UK leader in specialist bio-decontamination technology andtesting/compliance services, announces that it is seeking shareholders' approvalfor the establishment of a Special Option-based incentive scheme for the Group'ssenior management. A summary of the key points include: * the Board of BIOQUELL PLC ("BIOQUELL") believes that the BIOQUELL group (the "Group") is at an important stage in its development and is well positioned for significant growth; * the Board recognises that exceptional application and execution will be required by the Group's senior management ("Senior Management") to capture the full commercial potential of the technologies, products and services developed by the Group; * the Remuneration Committee of BIOQUELL believes that now is an appropriate time, and is in shareholders' best interests, to provide further option-based financial incentives for the Senior Management; * shareholders' approval is being sought to grant Special Options with an exercise price of 101.5p (the closing mid-market price on 17 July) over a maximum of 800,000 BIOQUELL ordinary shares ("Shares"), equivalent to approximately 2% of the current issued ordinary share capital; * the Share price has to increase by 25% compound for three years for the Special Options to vest in three years time - equivalent to the nearly doubling of the Share price to 198p; and * if the Special Options do not vest after three years then there are two further opportunities for the Special Options to vest - in year four or year five - but only if the Share price reaches 218p or 238p, respectively. Commenting on the proposed Special Options for BIOQUELL senior management, JohnSalkeld, Chairman of BIOQUELL PLC, said: "The Board believes that the BIOQUELL Group has a number of exciting andsubstantial international growth opportunities at a critical stage in theirdevelopment - but high quality execution and hard work is needed by the Group'ssenior management team to ensure that the financial benefits of theseopportunities can be captured for shareholders. We believe that the proposedSpecial Options represent a powerful and appropriate financial incentive for theSenior Management. The vesting conditions on the proposed Special Options aredemanding and, we believe, attractive to shareholders: in summary, for theSpecial Options to vest in three years time then the BIOQUELL share price wouldneed to nearly double - and which would result in some 2% dilution to the issuedordinary share capital." Enquiries John Salkeld BIOQUELL PLC 01264 835 900Nick AdamsMark Bodeker Emma Kane Redleaf Communications 020 7955 1410Duncan McCormick Set out below is the text of the circular sent to BIOQUELL shareholders todayseeking their approval at an EGM to be held on 21 August 2006 of the award ofSpecial Options: "Dear Shareholder, Incentivisation of BIOQUELL Group senior management The Board of BIOQUELL PLC ("BIOQUELL" or the "Company") believes that theBIOQUELL group (the "Group") is at an important stage in its development and iswell positioned for significant growth. However, the Board also recognises thatexceptional application and execution will be required by the Group's seniormanagement ("Senior Management") to capture the full commercial potential of thetechnologies, products and services developed by the Group. The Remuneration Committee of the Board of BIOQUELL (the "RemunerationCommittee") believes that now is an appropriate time, and is in shareholders'best interests, to provide further option-based financial incentives for theSenior Management. Accordingly, I am writing to you to seek your approval forthe grant of Special Options, further information on which is set out below, tothe Senior Management of the Group. By way of summary, for the Special Options to vest in three years time then theBIOQUELL share price will need to nearly double - and the Special Options canonly be awarded over a maximum of 800,000 BIOQUELL ordinary shares ("Shares"),equivalent to approximately two per cent of the BIOQUELL current issued ordinaryshare capital. Background to and reasons for the proposal Your Board believes that the Group has a number of exciting and substantialinternational growth opportunities at a critical stage in their development,including the eradication of "superbugs" from hospitals, new wound healingtechnology, unique bio-decontamination equipment as well as opportunities in theTRAC (Testing, Regulatory and Compliance) division including electromagneticcompatibility and specialist telecoms testing services. High quality executionand hard work is needed by the Group's senior management team to ensure that thefinancial benefits of these opportunities can be captured for BIOQUELLshareholders ("Shareholders"). However, there is currently little headroomavailable in the existing BIOQUELL share option schemes and accordingly littlescope for the Remuneration Committee to make meaningful awards of options to theSenior Management. Your Board is now seeking Shareholders' approval to grant Special Options over amaximum of 800,000 Shares, equivalent to approximately two per cent of theCompany's current issued ordinary share capital. The Special Options will beavailable only to Senior Management, currently some 20 individuals, at thediscretion of the Remuneration Committee who would take into account, amongother things, the number of options already awarded and the performance of theindividual. Details of the Special Options The proposed Special Options will be granted at the discretion of theRemuneration Committee under the rules of the BIOQUELL PLC Executive ShareOption Scheme (No.2) ("the Scheme") with the following modifications: (a) options may be granted over up to 800,000 Shares with thefirst occasion being within one month of the passing of the resolution approvingthe Special Options ("the First Grant Period") and any Shares not put underoption within that period will be available for grant in the periods set out inthe Scheme following announcements of results; (b) the exercise price (the "Exercise Price") per Share forSpecial Options granted during the First Grant Period will be 101.5p, being themid-market price per Ordinary Share as shown by the Daily Official List of theLondon Stock Exchange on 17th July 2006, the latest practical date prior to theprinting and posting of this circular to Shareholders, and thereafter theExercise Price will be as laid down in the Scheme; (c) the exercise of any Special Option (whether granted within theFirst Grant Period or otherwise) will require the attainment of a specifiedShare price performance as follows: (i) before the date of exercise there must be attained a target price being a price per Share at least equal to the Exercise Price as increased by 25% compounded annually over the period of 3 years from the date of grant ("the target price period"), after adjusting for any dividends or share buy-backs; or (ii) if the specified target price is not attained by the expiration of the target price period then if the option is to be exercisable from the 4th or 5th anniversary of the date of grant the exercise will be subject to attainment of alternative target prices, similarly adjusted, if appropriate, for any dividends or share buy-backs. These target prices will be a sum equal to the actual exercise price plus 10 per cent thereof as increased by 25 per cent compounded annually for 3 years over the target price period (for an option to be exercisable from the 4th anniversary of date of grant) or a sum equal to the actual exercise price plus 20 per cent thereof as increased by 25 per cent compounded annually for 3 years over the target price period (for an option to be exercisable from the 5th anniversary of date of grant). The Special Options will otherwise remain subject to the other provisions of the Scheme in regard to times of exercise and eligibility. There will be consequential amendments to the Rules of the Scheme to reflect the provision for these Special Options (including those relevant to Individual Scheme Limits) and also the BIOQUELL PLC Executive Share Option Scheme (No 1) will be amended so that the Special Options are disregarded for the purposes of applying the scheme limits under that scheme; and (d) the authority to grant Special Options will cease from a datebeing 45 days from the announcement of the interim results in 2009. How the Scheme works in summary The exercise price for grants of Special Options during the First Grant Periodwould be 101.5p per share and subsequent grants would be at the market price asper the Scheme rules (the "Base Price"). If the three year target Share pricefor the Special Options to vest is not met then there would be two furtheropportunities to achieve a target Share price in years four and five, but ineach case the Base Price would be increased, by 10 per cent and 20 per cent,respectively, although there is no change in the exercise price. This would meanthat, while in the case of the initial grant the Base Price would be 101.5p, itwould be 112p for year four and 122p for year five. Having ascertained the BasePrice, the price of the Shares would have to increase by 25 per cent per annumcompound for 3 years to fix the price at which the options would vest (if atall) at the end of the relevant three, four or five year periods, equivalent toShare prices of 198p, 218p and 238p, respectively. Hence, for the SpecialOptions to vest then existing BIOQUELL shareholders would have seen asignificant increase in the Share price. Extraordinary General Meeting You will find on page 4 of this document a notice convening an ExtraordinaryGeneral Meeting for 1pm on Monday 21st August 2006 at which a Resolution will beproposed which creates the Special Options, authorises the RemunerationCommittee to grant the same and modifies as necessary the terms of the BIOQUELLShare Option Schemes No's 1 and 2. Action A form of Proxy is enclosed and whether or not you intend to be present at theEGM, you are requested to complete and return it as soon as possible inaccordance with the relevant instructions. To be valid, properly completed formsof Proxy must be received by the Company's Registrars, Capita IRG plc, BourneHouse, 34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 1pm on Friday19th August 2006. Completion and return of the Proxy will not prevent you fromattending the Meeting and voting in person if you so wish. Recommendation The Remuneration Committee and the Board of BIOQUELL PLC consider that theproposals described in this document are in the best interests of the Companyand its shareholders, and strongly recommends that you vote in favour of theresolutions approving the Special Options. The Directors intend to do so inrespect of their own beneficial holdings amounting to approximately 8.1% of thecurrent issued ordinary share capital of BIOQUELL PLC. John SalkeldChairman NOTICE OF EXTRAORDINARY GENERAL MEETING Notice is hereby given that an Extraordinary General Meeting of BIOQUELL PLCwill be held at the offices of the Company, 34a Walworth Road, Andover,Hampshire, SP10 5PY on 21 August at 1.00pm to consider and if thought fit passthe following resolution which will be proposed as an ordinary resolution.Ordinary Resolution (1) That the Board is hereby authorised to grant to Executives (as definedin the Scheme) by resolution (the date of such resolution being the Date ofGrant) options (each a "Special Option") over a maximum of 800,000 ordinaryshares in the Company under the Rules of the BIOQUELL PLC Executive Share OptionScheme (No 2) (formerly the G&G Kynoch Executive Share Option Scheme (No 2))("the Scheme") subject to the following provisions: (a) if the relevant Date of Grant shall be within one month of thepassing of this Resolution, the exercise price per ordinary share will be themid market price per ordinary share as shown by the Daily Official List of theLondon Stock Exchange on 17th July 2006 at 101.5p the latest practical dateprior to the printing and posting of this circular to shareholders and in anyother case shall be determined under the Scheme (in each case "the base exerciseprice"); (b) each Special Option will be exercisable if but only if the midmarket price per ordinary share (as shown by the said Daily Official List) on athreshold date (being an anniversary of the Date of Grant or at the discretionof the Board a date within 7 days of such anniversary or if in either case thesame be not a day on which the London Stock Exchange is open for business, thefirst day following on which it is so open), is not less than a sum equal to thebase exercise price as increased by 25% per annum compounded annually over ashare price performance period ("the Target Price") provided that in determiningif the Target Price shall have been achieved in a period there shall be added tothe mid market price per share at the relevant Threshold Date a sum representingthe aggregate of any cash dividends (and capital returned to shareholders notfalling within the said Rules relating to variation of capital) paid in thatperiod: (i) the first share price performance period will commence on the Date of Grant and end on the third anniversary of that date; if the Target Price shall not then be attained; (ii) the second share price performance period will commence on the first anniversary of the Date of Grant and end on the third anniversary of that date provided that in such case in determining if the Target Price is attained the base exercise price shall be increased by 10%; if the Target Price shall not then be attained; and (iii) the third share price performance period will commence on the second anniversary of the Date of Grant and end on the third anniversary of that date provided that in such case in determining if the Target Price is # attained the base exercise price shall be increased by 20%; (c) the Special Options will otherwise be granted in accordance with the Rules of the Scheme subject to and with the following modifications: (i) the provisions of clauses 3.2 and 3.3 of the said Rules (limits on number of shares which can be placed under option under the said Rules) shall be disapplied such that each Special Option will be disregarded in applying such limits in respect of future grants under the said Scheme; (ii) the provisions of clause 3.4 of the said Rules (limits on individual grants not to exceed 4 times remuneration) is disapplied such that each Special Option will be disregarded in applying such limits in respect of future grants under the said Scheme; (iii) the provisions of clause 2.2 of the said Rules (options to be granted only in a period after announcement of results) is disapplied; and (iv) the provisions of clause 2.4 of the said Rules (options to be granted at not less than the greater of middle market valuation or nominal value per share) is disapplied, provided always that: (v) if the provisions of clause 6 of the said Rules shall apply to the Company each Special Option may be exercised at the base exercise price notwithstanding that a threshold date has not been reached or, if reached, the Executive shall have not qualified to exercise the Special Option; (vi) the provisions of clauses 4.3, 4.4. 4.4A (subject in that case to such modification as the Board may decide) and 4.5 of the said Rules shall apply only if the performance criteria specified in the Resolution are satisfied; and (vii) the authority to grant Special Options shall cease from a date 45 days from the announcement of the interim results of the Company in 2009. (2) That subject to the approval of the Inland Revenue being obtained the Rules of the BIOQUELL PLC Executive Share Option Scheme (No 1) (formerly the G&G Kynoch Executive Share Option Scheme (No 1)) shall be modified as follows: (i) the provisions of clauses 3.2 and 3.3 of the said Rules (limits on number of shares which can be placed under option under the said Rules) shall be disapplied such that each Special Option referred to in Resolution (1) above will be disregarded in applying such limits in respect of future grants under the said Scheme; and (ii) the provisions of clause 3.4 of the said Rules (limits on individual grants not to exceed 4 times remuneration) is disapplied such that each Special Option will be disregarded in applying such limits in respect of future grants under the said Scheme." - Ends - This information is provided by RNS The company news service from the London Stock Exchange