<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Aquapro Corporation
- --------------------------------------------------------------------------------
(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.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
AQUAPRO CORPORATION
105 BONNABROOK DRIVE, SUITE 202
HERMITAGE, TENNESSEE 37076
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 16, 1998
----------------------
TO THE SHAREHOLDERS OF AQUAPRO CORPORATION:
The annual meeting of the shareholders of AquaPro Corporation (the
"Company") will be held at 147 Highway 82 East, Indianola, Mississippi, on
November 16, 1998 at 10:30 A.M. for the following purposes:
1. To elect a Board of Directors for the Company.
2. To approve and ratify the selection of Ernst & Young LLP as
independent public accountants ("auditors") for the Company for
the fiscal years ending June 30, 1998 and 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF EACH ITEM
LISTED ON THIS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS.
Shareholders of record at the close of business on October 9, 1998, are
the only persons entitled to notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. WHETHER OR
NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN, DATE AND MAIL
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO SAVE THE COMPANY FURTHER
SOLICITATION EXPENSE. If you are present at the meeting, you may then revoke
your proxy and vote in person, as explained in the Proxy Statement in the
section entitled "ANNUAL MEETING OF SHAREHOLDERS - November 16, 1998." A return
envelope is enclosed for your convenience.
Hermitage, Tennessee
October 9, 1998
/s/ George S. Hastings, Jr.
-------------------------------
George S. Hastings, Jr.
President
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU
MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
----------------------------------------
PROXY STATEMENT
----------------------------------------
AQUAPRO CORPORATION
105 BONNABROOK DRIVE, SUITE 202
HERMITAGE, TENNESSEE 37076
ANNUAL MEETING OF SHAREHOLDERS - NOVEMBER 16, 1998
The enclosed Proxy is solicited by the Board of Directors of AQUAPRO
CORPORATION (the "Company") in connection with the annual meeting of
shareholders of the Company to be held on November 16, 1998, and at any
adjournments thereof. The cost of solicitation, including the cost of preparing
and mailing the Notice of Annual Meeting of Shareholders and this Proxy
Statement, will be paid by the Company. Such mailing took place on approximately
October 16, 1998. Representatives of the Company, without cost to the Company,
will solicit Proxies for the management of the Company by means of mail,
telephone and/or personal calls.
A Proxy with respect to the Company may be revoked before the meeting
by giving written notice of revocation to the Secretary of the Company, or may
be revoked at the annual meeting, prior to voting. Unless revoked, properly
executed Proxies with respect to the Company will be voted as indicated in this
Proxy Statement. In instances where choices are specified by the shareholders in
the Proxy, those Proxies will be voted or the vote will be withheld in
accordance with each shareholder's choice. An "abstention" on any proposal will
be counted as present for purposes of determining whether a quorum of shares is
present at the annual meeting with respect to the proposal on which the
abstention is noted. Abstentions will be counted as a vote "against" such
proposal, except in the case of the election of directors where an abstention
will not be counted as a vote and will not affect the outcome of the election.
Should any other matters come before the annual meeting, it is the intention of
the persons named as proxies in the enclosed Proxy to act upon them according to
their best judgment.
Only shareholders of record at the close of business on October 9, 1998
may vote at the annual meeting or any adjournments thereof. As of that date the
Company had issued and outstanding 4,818,354 shares of its no par value common
stock held by approximately 1,700 shareholders of record. Each shareholder of
the Company is entitled to one vote for each share of the Company held. Voting
for the election of directors is not cumulative, which means that the holders of
a majority of the Company's outstanding shares have the power to elect the
entire Board of Directors of the Company. None of the matters to be presented at
the annual meeting will entitle any shareholder of the Company to appraisal
rights. The presence, in person or by proxy, of the holders of a majority of the
Common Stock of the
<PAGE> 4
Company is necessary to constitute a quorum to transact business. If a quorum is
not present or represented at the Annual meeting, a majority of the votes
represented at the meeting may adjourn the Annual meeting from time to time
without notice other than announcement until a quorum is present or represented.
In the event that Proxies sufficient to constitute a quorum at the Annual
Meeting of Shareholders are not received by the close of business on November
15, 1998, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of Proxies. The persons named as
proxies will vote in favor of such adjournment if they are instructed to vote
for Proposal 1 or Proposal 2 of the Notice of Annual Meeting of Shareholders.
VOTING SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 9,
1998, by each person or entity who is known to the Company to be the beneficial
owner of more than 5% of the Company's Common Stock, the beneficial ownership by
each Officer, Director, and the beneficial ownership of all Directors and
Officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Name & Position Beneficial Ownership
Officers and Directors Number of Common Shares(%)(1)
---------------------- -----------------------------
<S> <C> <C>
George S. Hastings, Jr. 596,822(2)(3) (11.43%)
President, Chief Executive Officer and
Chairman of the Board
Kenneth Ostebo None --
Director
Roger Daley 64,373(3) (1.23%)
Director
Joseph F. Duncan, Sr. 35,933(4) (0.69%)
Director
All officers and directors as a group 697,128 (13.35%)
(four persons)
</TABLE>
- ----------------
(1) In accordance with Rule 13d-3 promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), Common Shares which are not
outstanding but which are subject to vested options, warrants, rights
or conversion privileges have been deemed to be outstanding for the
purpose of computing the percentage of outstanding Common Shares owned
by the individual having such right, but have not been deemed
outstanding for the purpose of computing the percentage for any other
person.
The number of Common Shares owned by each person equals the Common
Shares outstanding beneficially owned plus Common Shares issuable to
the beneficial holder upon the exercise of the rights, warrants and/or
options deemed to be outstanding.
The total number of Common Shares outstanding is 4,818,354 as of June
9, 1998. The total number of options outstanding is 403,000 as of such
date. Accordingly, the total number of outstanding Common Shares
considered outstanding for purposes of computing the above percentages
is 5,221,354.
-2-
<PAGE> 5
(2) Includes the following Common Shares, warrants and options held of
record by Mr. Hastings: 220,822 Common Shares and 376,000 Common Shares
issuable upon the exercise of 364,000 Compensatory Options and 12,000
Director Options.
(3) Includes 55,373 Common Shares held of record and 9,000 Common Shares
issuable upon the exercise of Director Options.
(4) Includes 23,993 Common Shares held of record and 12,000 Common Shares
issuable upon the exercise of Director Options.
- -------------------
EXECUTIVE COMPENSATION
The following table sets forth remuneration to be paid by the Company
and/or its subsidiaries to its Chief Executive Officer and to its other highly
compensated executive officers of which there are none whose annual salary and
bonus exceeds $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation
------------------- ----------------------
Name and Value of Securities
Principal Position Year Salary Bonus Restricted Stock(2) Underlying Options(3)
------------------ ---- ------ ----- ------------------- ---------------------
<S> <C> <C> <C> <C> <C>
George S. Hastings, Jr. 1998 $70,558 $15,616 $19,500 223,000
Chief Executive Officer 1997(1) 59,250 7,798 46,875 51,000
1996 118,500 28,000 46,875 51,000
</TABLE>
- ----------------------
(1) A transitional six-month fiscal year.
(2) Shares issuable on April 1, but subject to 2-year vesting whereby
shares will be lost if employee voluntarily terminates employment or is
terminated for cause before the vesting period ends. Shares were valued
at $3.13 per Share, which is 50% of the value of $6.25 for 1997 and
1996; shares valued at $1.63 which is 50% of the April 1, 1998 value of
$3.25.
(3) Options are exercisable for a 7-year period commencing on the date of
issuance of April 1 in 1997 and 1996 at a price of $6.25 per Common
Share. Effective August 18, 1998, all options issued prior to 1998 were
repriced by the Compensation Committee of the Board of Directors at
$2.00 per Common Share, of which Mr. Hastings holds for a total of
153,000 shares. The options issued in 1998 are exercisable for 7-year
periods commencing on April 1, 1998 at $3.25 per Common Share (39,000
shares), May 15, 1998 at $3.13 per Common Share (84,000 shares), and
May 27, 1998 at $2.84 per Common Share (100,000 shares).
See discussion below.
- ----------------------
The following table sets forth certain information regarding stock
options and warrants granted to each named Executive Officer by reason of their
employment during the Company's 1998 fiscal year.
-3-
<PAGE> 6
Option/Warrant Grants in 1998(a)
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------
Number of Securities % of Total
Underlying Options/Warrants Exercise or Base Expiration
Name Options/Warrants Granted Grants to Employees Price ($/Share) Date
---- ------------------------ in Fiscal Year --------------- ----
--------------
<S> <C> <C> <C> <C>
George S. Hastings, Jr. 223,000 89.2% $2.84 to $3.25 5/26/2005
</TABLE>
The following table sets forth the value of all unexercised employee
stock options and Director Options held by the Named Executive Officers as of
June 30, 1998.
Aggregated Option and Warrant Value Table
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
------------------------------ --------------------
Name Exercisable/Unexercisable(1) Exercisable/Unexercisable
---- ---------------------------- -------------------------
<S> <C> <C>
George S. Hastings, Jr. 376,000/None None/None(1)
</TABLE>
- ------------------
(1) No Options are in-the-money based on the value of the Company's Common
Stock which, as of September 9, 1998, is $1.00 per Common Share based
on the closing price reported on the NASD Bulletin Board.
- ------------------
EMPLOYMENT CONTRACTS. The Company has a written employment agreement
with Mr. George Hastings. Pursuant to this agreement, he receives a base salary
of $150,000 per annum. In addition, Mr. Hastings is entitled to awards of
restricted stock, stock options, medical insurance coverage and to such annual
bonus compensation as determined by the Board of Directors. The award of any
bonus compensation, however, is dependent on the achievement of certain
performance levels by the Company, including growth in funds from operations
and/or water acres under management. The stock options awarded pursuant to such
employment contract is exercisable for a term of seven years at an exercise
price equal to the fair market value on such date and are exercisable upon
issuance. The employment agreement has an initial three-year term and is
automatically extended for an additional year at the end of each year of the
agreement, subject to the right of the Company to terminate the contract for
cause upon notice or voluntarily by giving at least three months' prior written
notice and the payment of severance payment equal to three years of
compensation.
ADJUSTMENT OF EXECUTIVE COMPENSATION. At July 1997, Mr. and Ms.
Hastings were being paid a combined annual salary on a biweekly basis of
$237,000 per annum, which, under their respective employment contracts, they
agreed to divide equally between themselves. Mr. Hastings, in addition, received
$12,000 annually as a "car allowance." Sometime prior to July 1, 1997, Mr.
Hastings agreed to reduce his salary to $1 annually until the Company's
performance improved. During the months of August 1997 through January 1998 (a
period of six months), Mr. and Ms. Hastings were paid biweekly on an annual
basis of $87,000 which they split 50/50.
-4-
<PAGE> 7
It was also agreed to by the Board's compensation committee that Mr.
Hastings would be issued options to buy the Company's stock not to exceed
200,000 shares annually. These options would be issued quarterly at the rate of
50,000 options and would be priced at the same price the preferred stock of the
Company converts to common stock in 1998. On May 27, 1998, the Company's
Preferred Stock converted to common stock at the price of $2.837 per share.
Accordingly, Mr. Hastings was issued 7-year options to purchase 100,000 shares
at $2.837 for his six month period of reduced salary.
At the end of January 1998, in connection with their divorce, Ms.
Hastings resigned as an Officer and Director of the Company. Also, Mr. Hastings
received all of the stock grants and options previously issued to Ms. Hastings.
The Board agreed to continue to pay $87,000 in salary to Mr. Hastings.
Additionally, Mr. Hastings was granted by the compensation committee additional
options to be issued quarterly. The first quarter ended on May 15, 1998 and Mr.
Hastings was issued 7-year options to buy 84,000 shares at the closing market
price of $3.125 on that date. This arrangement superceded the 50,000 shares per
quarter that was in effect August 1997 through January 1998.
The Company has outstanding 7-year options to purchase stock at $6.25
per share that were issued 1995 to 1997 (174,000 shares). On August 18, 1998,
the compensation committee recommended and the Board approved that all of the
options previously issued at $6.25 per share be repriced at $2.00 per share.
EXPLANATION OF LONG-TERM COMPENSATION. Under Mr. Hastings employment
contract, he is entitled to receive issuances of Restricted Stock in the amounts
stated. Thus, total stock of up to approximately 3% of the total outstanding may
be issued each year. Also, under his employment contract, Mr. Hastings is
awarded stock options in the amount stated entitling the holder to purchase
shares at a price of $6.25 per share. These options are for a term of seven
years.
COMPENSATION OF DIRECTORS. The Company pays its outside Directors an
annual retainer of $1,000 each September; $500 for each meeting attended in
person and $250 for each telephonic meeting. The Company also reimburses each
outside Director for his or her out-of-pocket expenses incurred in connection
with attending meetings. In addition, the Company annually awards each Director
(including Directors who are officers of the Company) options for the purchase
of 3,000 Common Shares (the "Director Options"). The Director Options have a
term of seven years and are exercisable at a price equal to the fair market
value of the Common Shares on the date of issuance. These options have a term of
seven years.
STOCK OPTION PLAN. The shareholders have approved and authorized a
stock option plan for officers, directors, employees and consultants to the
Company. The Plan is designed to comply with Rule 16b-3 under the 1934 Act. The
purpose of the stock option plan is to encourage stock ownership by current and
future officers, directors, employees and consultants to the Company, and
certain other persons judged by the committee who would administer the plan to
be instrumental to the success of the Company, and to give such persons a
greater personal interest in the Company achieving continued growth and success.
The stock option plan would be administered by persons who are "disinterested
persons" within the meaning of paragraph (c)(2) of Rule 16b-3. The Plan has not
yet been approved by the Board and has not yet been implemented.
-5-
<PAGE> 8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1995, the Company became sole owner of American Fisheries
and Circle Creek AquaCulture, Inc. ("Circle Creek"). Mr. Hastings and Ms.
Patricia G. Hastings, the former spouse of Mr. Hastings, were the sole owners of
American Fisheries and the Company's other wholly owned subsidiary corporation,
Circle Creek at the time of their acquisition. Mr. Hastings and Ms. Hastings
owned a total of 112,834 Common Shares of the Company following the Company's
acquisition of American Fisheries and Circle Creek. In connection with the
Company's acquisition of American Fisheries and Circle Creek, Mr. Hastings and
Ms. Hastings, assigned all of their right and title to the economic interest of
the general partner in each of the Circle Creek Partnerships to the Company.
Pursuant to certain consolidation transactions on December 31, 1995
(the "Prior Consolidation"), the Company acquired all of the assets and
liabilities of Circle Creek AquaCulture I, L.P. ("CCA I"), Circle Creek
AquaCulture II, L.P. ("CCA II"), Circle Creek AquaCulture III, L.P. ("CCA
III"), and Circle Creek AquaCulture IV, L.P. ("CCA IV"). Pursuant to such
transaction, Mr. Hastings and Ms. Hastings received 4,275 units of Common Stock
and Common Stock purchase rights from the Company in exchange for their limited
partnership interest in these partnerships on the same basis as the other
limited partners. In addition, Mr. Hastings and Ms. Hastings received 8,638 such
units in cancellation of $86,380 of debt owing to them by these partnerships.
FINANCIAL STATEMENTS OF THE COMPANY
The Financial Statements of the Company for the years ended June 30,
1998 and 1997 are included with this Proxy Statement.
RECENT DEVELOPMENTS
CHANGE OF FISCAL YEAR. The Company has determined to change its fiscal
year to June 30. The Company will institute this change prior to June 30, 1997
and, accordingly, the Company will have a transition period (short year) of six
(6) months ending June 30, 1997. Thereafter, the Company's fiscal year will
commence each July 1st and end each June 30. Management believes the change in
fiscal year will allow its accounting period to better reflect operations during
the normal catfish aquaculture business cycle and thus more accurately reflect
the Company's performance in its business segment.
PERSONNEL. Mr. Eric P. Braschwitz resigned as an officer and Director
of the Company effective September 19, 1998. On January 19, 1998, Ms. Patricia
G. Hastings resigned as an officer and Director of the Company. On May 4, 1998,
the Board appointed Kenneth Ostebo to serve as a Director of the Company to fill
the vacancy created by Ms. Hastings' resignation.
ELECTION OF DIRECTORS, APPROVAL OF STOCK OPTION
PLAN AND APPROVAL OF INDEPENDENT ACCOUNTANTS
At the annual meeting, the shareholders of the Company will, pursuant
to the following proposals, be asked to elect a board of directors (Proposal 1),
and to approve the Company's Independent Accountants (Proposal 2).
-6-
<PAGE> 9
PROPOSAL 1
ELECTION OF DIRECTORS
It is intended that the enclosed Proxy will be voted for the election
of the four (4) persons named below as directors for the Company unless such
authority has been withheld in the respective Proxy. The term of office of each
person elected to be a director of the Company will be until the next regular or
special meeting of the shareholders at which election of directors is an agenda
item and until his successor is duly elected and qualified.
There are four (4) nominees to the Board of Directors, George S.
Hastings, Jr., Roger Daley, Joseph Duncan, Sr., and Kenneth Ostebo. The
management of the Company ("Management") has no current intention of nominating
an additional candidate at the annual meeting, but may later determine to do so.
Each of the nominees has stated that if elected, he or she will serve as a
director of the Company.
Set forth below is a description of the business and employment
background of each of the nominees to the Company's Board of Directors.
George S. Hastings, Jr. has been involved in the catfish
aquaculture industry since 1986. Mr. Hastings has sponsored eight previous
catfish farming programs, including the Partnerships. Mr. Hastings has
substantial experience in all levels of catfish farm management. Mr. Hastings
serves as an officer and director of the Company's wholly-owned subsidiaries,
American Fisheries and Circle Creek, the predecessor of which he co-founded in
1983. From 1976 through 1983, Mr. Hastings worked in various capacities for
Advanced Financial Planning Corporation in Nashville, Tennessee, a financial
planning firm emphasizing the formation and sale of real estate investment
programs. Mr. Hastings received his B.S. Degree in Finance with a minor in
accounting from the University of Tennessee and holds a J.D. Degree from the
University of Tennessee College of Law. Mr. Hastings has been a member of the
State Bar of Tennessee and the U.S. Tax Court since 1976.
Roger A. Daley, age 74, has agreed to serve as a Director of
the Company effective September 16, 1996. Prior to his retirement in 1986, Mr.
Daley served as General Manager and President of the Knoxville News Sentinel,
which he first joined as an advertising sales representative in 1946. During his
service with the News Sentinel, the newspaper expanded five times and became
agent for the Knoxville Journal. Daley has also served as a guest consultant on
business and marketing for Taiwan and West Germany.
Mr. Daley served as a charter member of and is past president of the
Knoxville Sales Executives Club and the Greater Knoxville Advertising Club. He
received the Printer Ink "Man of the Year" award. He was a charter member and
served on the Board of the Better Business Bureau. Mr. Daley has also served as
a member of the American Newspaper Publishers Association and of the Southern
Newspaper Publishers Association, for which he served on several committees and
for three years on that Board. In addition Mr. Daley has served in various
capacities for numerous charitable and civic organizations, including service on
the Executive Council of the United Fund, as a past president of the Tourist
Bureau and as vice president of the Chamber of Commerce.
-7-
<PAGE> 10
Joseph Duncan, Sr. has been elected and has served as a
Director since December 30, 1995. Mr. Duncan previously served as chairman of
the board of Security Alarms & Services Inc. ("SAS") until it was acquired by
National Guardian Services Corporation. Prior to that time, SAS was the largest
independently-owned, full-line security company in the Central South United
States, specializing in burglar and fire alarm systems, access control and
security guard services. Mr. Duncan is past president of the National Burglar &
Fire Alarm Association, and served as a member of the board of directors of that
trade association for fourteen years. In addition, Mr. Duncan served as a board
member or advisor to a number of national and regional trade associations
including the National Council of Investigation & Security Services, the Central
Station Alarm Association, and the Tennessee Burglar & First Alarm Association.
Mr. Duncan became a shareholder of the Company pursuant to the Prior
Consolidation and is also an investor in Circle Creek V.
Kenneth Ostebo was appointed a Director of the Company
effective May 4, 1998. From 1994 to the present, Mr. Ostebo has been Chief
Executive Officer for Ocean Edge, Inc., a commercial fishing and marketing
company. Mr. Ostebo has 21 years experience in the seafood industry and has
developed expertise in introducing lesser known products into the marketplace.
In 1982, he established new markets for secondary seafood items and brought them
to a national level. Mr. Ostebo then started a company using the same processing
principles and product development and spent two years on research and
development of a new seafood product which ultimately gained national
acceptance. Mr. Ostebo has expertise in taking a new product from its inception
to target markets to consumer awareness and selling these products on both
domestic and international levels.
Assuming a quorum is present at the Annual Meeting, the four (4)
nominees receiving the greater number of votes cast by the Common Stock of the
Company will be elected as directors. In voting for directors, you must vote all
of your shares noncumulatively. This means that the owners of a majority of the
Company's outstanding shares have the power to elect the Company's entire Board
of Directors. The vote of a majority of shares of the Company represented at the
meeting, provided at least a quorum is represented in person or by proxy, is
sufficient for the election of the above nominees to the Company's Board of
Directors. By completing the proxy, you give the proxy the right to vote for the
persons named in the table above. If you elect to withhold authority for any
individual nominee or nominees, you may do so by making an "X" in the box marked
"FOR", and by striking a line through the nominees' name or names on the proxy,
as further explained on the proxy itself.
Each of the nominees has agreed to serve as a director of the Company
until his replacement is elected and qualified. If any unforeseen event prevents
one or more of the nominees from serving as a director, your votes will be cast
for the election of a substitute or substitutes selected by the Board. In no
event, however, can the proxies be voted for a greater number of persons than
the number of nominees named. Unless otherwise instructed, the proxies will vote
for the election of each nominee to serve as a director of the Company.
CURRENT DIRECTORS
Pertinent information regarding each of the Company's current directors
is set forth above and in the following table:
-8-
<PAGE> 11
<TABLE>
<CAPTION>
Director of the Company
Name and Age Position (or Predecessor) Since
------------ -------- ----------------------
<S> <C> <C>
George S. Hastings, Jr. Chairman of the 1983
Age 50 Board, Chief
Executive Officer,
President
Roger Daley* Director 1996
Age 75
Joseph Duncan, Sr.* Director 1995
Age 69
Kenneth Ostebo Director 1998
Age 41
</TABLE>
- ----------------
* Independent (outside) director.
None of the persons named are directors of any Reporting Companies
("Reporting Companies"), including companies with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or subject to the requirements of Section 15(d) of the
1934 Act, or any company registered as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
- ----------------
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS
BOARD MEETINGS. The majority of the present or former Directors
attended all of the meetings of the Board during the year ended June 30, 1998,
to the extent they served on the Board of Directors at the time of such
meetings. There were a total of three Board meetings held during such period.
The Board of Directors has the responsibility for establishing broad corporate
policies and for the overall performance of the Company. All functions of the
Board of Directors were attended to by the Board as a whole during 1996.
COMMITTEES OF DIRECTORS. The Directors have established an Audit
Committee, an Executive Committee and an Executive Compensation Committee. Each
Committee would consist of at least two Directors. Messrs. Daley and Duncan
serve on the Audit Committee which must consist of Directors who are not
executive officers of the Company ("Non-Officer Directors"). Among its other
duties, the Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with independent public accountants the
plans and results of the audit engagement, approves professional services
provided by the independent accountants, reviews the independence of the
independent accountants, considers the range of audit and non-audit fees, and
reviews the adequacy of the Company's internal accounting controls.
Mr. Hastings and Mr. Duncan serve on the Executive Committee which must
consist of at least two directors. Subject to the Company's conflict of interest
policies, the Executive Committee has been granted the authority to acquire and
dispose of real property and to borrow or loan funds on behalf of the Company
provided, however, that any such transaction involving amounts equal to ten
percent or more of the Company's gross assets would require the approval of at
least a majority of the Directors, subject
-9-
<PAGE> 12
to certain further restrictions set forth in the Company's Bylaws. The Executive
Committee also has the power to authorize on behalf of the full Board of
Directors the execution of certain contracts and agreements, including those
related to the borrowing of money by the Company.
Messrs. Daley and Duncan serve on the Executive Compensation Committee
which must be comprised of at least two directors, a majority of which must be
Non-Officer Directors. The Executive Compensation Committee determines
compensation for the Company's executive officers, subject to full Board
approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO ELECT
EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY.
PROPOSAL 2
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
At the annual meeting, the shareholders of the Company will be asked to
ratify the selection of the accounting firm of Ernst & Young LLP as the
Company's independent public accountants.
At the annual meeting, the shareholders of the Company will be asked to
ratify the selection of Ernst & Young LLP to be the Company's independent public
accountants for the fiscal years ended June 30, 1998 and 1999. Ernst & Young LLP
has served as the Company's independent public accountants since 1994. Ernst &
Young LLP has no direct or indirect material financial interest in the Company,
other than the receipt of fees for services to the Company. Management does not
expect representatives of Ernst & Young LLP to be present at the annual
shareholders meeting. The selection of Ernst & Young LLP to be the Company's
independent public accountants for the fiscal years ended June 30, 1998 and
1999, has been approved by a majority of the Company's Board of Directors.
SHAREHOLDER APPROVAL. The vote of a majority of the shares of the
Company represented at the meeting, provided at least a quorum (a majority of
the outstanding shares) is represented in person or by proxy, is sufficient for
the ratification of the selection of the independent public accountants.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS
OF THE COMPANY VOTE IN FAVOR OF THE PROPOSAL. UNLESS OTHERWISE INSTRUCTED, THE
PROXIES WILL VOTE IN FAVOR OF THE PROPOSAL TO RATIFY THE SELECTION OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
Management does not intend to present any business at the annual
meeting not mentioned in this Proxy Statement, and currently knows of no other
business to be presented. If any other matters are brought before the annual
meeting, the appointed proxies will vote all Proxies on such matters in
accordance with their judgment of the best interests of the Company.
-10-
<PAGE> 13
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be
presented by such shareholders at the Company's next Annual Meeting of
Shareholders must be received by the Company no later than June 5, 1999 in order
to be considered for inclusion in the Company's proxy statement and form of
proxy relating to that meeting.
Dated: October 9, 1998 /s/ George S. Hastings, Jr.
----------------------------------------
George S. Hastings, Jr.
Chairman and Chief Executive Officer
-11-
<PAGE> 14
================================================================================
PROXY
================================================================================
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AQUAPRO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - NOVEMBER 16, 1998
The undersigned shareholder of AQUAPRO CORPORATION, a Tennessee
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement for the Annual Meeting of Shareholders to be
held on November 16, 1998, at 10:30 A.M., Central Standard Time, at 147 Highway
82 East, Indianola, Mississippi, and hereby appoints George S. Hastings, Jr. and
Joseph Duncan, Sr., and each of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at said Annual Meeting and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side.
EITHER OF SUCH ATTORNEYS OR THEIR SUBSTITUTES HAS AND MAY EXERCISE ALL
OF THE POWERS OF SAID ATTORNEYS-IN-FACT HEREUNDER.
[SEE REVERSE SIDE]
----------------------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 15
[X] Please mark votes as in this example.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR PROPOSALS 1 THROUGH 3, INCLUSIVE, BELOW, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS NOMINEES: G.S. Hastings, Jr., R. Daley,
J. Duncan, Jr., K. Ostebo
[ ] VOTE FOR ALL [ ] VOTE IS WITHHELD [ ] VOTE FOR EACH NOMINEE WHOSE
NOMINEES FROM ALL NOMINEES NAME IS NOT LINED OUT
(INSTRUCTION: YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, BY
STRIKING A LINE THROUGH THE NOMINEE'S NAME ABOVE.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP, AS THE INDEPENDENT
AUDITORS FOR THE COMPANY FOR THE YEARS ENDED JUNE 30, 1998, AND 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Note: This Proposal has been approved and is proposed by the Board of Directors
of the Corporation.
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INSTRUCTIONS ABOVE. IN
THE ABSENCE OF SUCH INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR
DIRECTORS NAMED IN THE PROXY STATEMENT AND IN ACCORDANCE WITH THE BEST JUDGMENT
OF THE PERSON(S) VOTING THE PROXY WITH RESPECT TO ANY OTHER BUSINESS MATTER
PROPERLY BEFORE THE MEETING, INCLUDING APPROVAL OF THE MINUTES OF THE PRIOR
MEETING NOT AMOUNTING TO A RATIFICATION OF ACTIONS TAKEN AT THAT MEETING,
ELECTION OF ANY PERSON TO AN OFFICE FOR WHICH A BONA FIDE NOMINEE IS NAMED IN
THE EVENT THE NAMED NOMINEE IS UNABLE TO SERVE, AND APPROVAL OF PROPOSALS
PROPERLY OMITTED FROM THIS PROXY OR MATTERS INCIDENT TO THE CONDUCT OF THE
MEETING.
The undersigned acknowledges receipt of the Notice of the aforesaid Annual
Meeting and the Proxy Statement accompanying the same, each dated October ___,
1998.
Print Name
--------------- --------------------------------
Number of Shares
Signature
--------------------------------
Street Address
--------------------------------
City and State
--------------------------------
Dated
--------------------------------
IMPORTANT: Please date this proxy and sign your name exactly as it appears
hereon. If there is more than one owner, each should sign. When signing as an
agent, administrator, executor, guardian or trustee, please indicate your title
as such. If executed by a corporation, this proxy should be signed in the
corporate name by a duly authorized officer who should indicate his title.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
