SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 240.14a-11(c) or 240.14a-12
INNOVATIVE VALVE 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)(4) 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>
[LOGO]
2 NORTHPOINT DRIVE, SUITE 300
HOUSTON, TEXAS 77060
(281) 925-0300
------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998
------------
April 30, 1998
Dear Stockholder:
Innovative Valve Technologies, Inc. (the "Company") will hold its 1998
Annual Meeting of Stockholders on Friday, May 22, 1998, at 10:30 a.m., Houston
time, at the Chase Bank Auditorium, 601 Travis, Houston, Texas 77002.
The enclosed Notice of Annual Meeting of Stockholders and Proxy Statement
provide information respecting the Annual Meeting. The Company's 1997 Annual
Report to Stockholders, which is not a part of the Proxy Statement, is also
enclosed and provides information regarding the financial results of the Company
in 1997.
On behalf of the Board of Directors, I invite you to attend the Annual
Meeting. Whether or not you plan to attend in person, please sign and promptly
return the enclosed proxy card in the enclosed prepaid return envelope. Your
shares will be voted at the Annual Meeting in accordance with your proxy. If you
sign and return your proxy card without specifying your choices, it will be
understood you wish to have your shares voted in accordance with the
recommendations of the Board of Directors.
Sincerely,
/s/ WILLIAM E. HAYNES
William E. Haynes
Chairman of the Board, President and Chief
Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
Innovative Valve Technologies, Inc., a Delaware corporation (the
"Company"), will hold its 1998 Annual Meeting of Stockholders at 10:30 a.m.,
Houston time, on May 22, 1998 at the Chase Bank Auditorium, 601 Travis, Houston,
Texas 77002, for the following purposes:
1. To elect two Class I directors of the Company to hold office
until the third succeeding annual meeting of stockholders after their
election (the 2001 Annual Meeting) or until their respective successors
have been duly elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the year 1998; and
3. To transact such other business as properly may be brought before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 7, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof. Only
stockholders of record at the close of business on that date will be entitled to
notice of and to vote at the meeting and any adjournment or postponement
thereof.
By Order of the Board of Directors,
/s/ CHARLES F. SCHUGART
Charles F. Schugart
Secretary
Houston, Texas
April 30, 1998
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY IN
THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING.
RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON OR TO ATTEND THE
ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU DO NOT ATTEND. IF YOU
HAVE SHARES IN MORE THAN ONE NAME, OR IF YOUR STOCK IS REGISTERED IN MORE THAN
ONE WAY, YOU MAY RECEIVE MORE THAN ONE COPY OF THE PROXY MATERIAL. IF SO, PLEASE
SIGN AND RETURN EACH OF THE PROXY CARDS YOU RECEIVE SO THAT ALL YOUR SHARES MAY
BE VOTED. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS USE.
<PAGE>
INNOVATIVE VALVE TECHNOLOGIES, INC.
2 NORTHPOINT DRIVE, SUITE 300
HOUSTON, TEXAS 77060
PROXY STATEMENT
Innovative Valve Technologies, Inc. (the "Company") is mailing this Proxy
Statement and the accompanying proxy card to holders of its Common Stock
("Common Stock") beginning on or about April 30, 1998 in connection with the
solicitation of proxies by its Board of Directors for its 1998 Annual Meeting of
Stockholders (the "Annual Meeting"). The Company will hold the Annual Meeting on
May 22, 1998 at the time and place and for the purposes the accompanying notice
sets forth. Shares can be voted at the meeting only if the owner is represented
by proxy or is present. The Board of Directors is soliciting proxies to give all
stockholders an opportunity to vote and to meet the legal requirements
respecting the number of shares that must be represented in order to hold the
meeting. The presence at the meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock of the Company is necessary
for this purpose.
When a proxy card is returned properly signed, the shares it represents
will be voted in accordance with the choices it specifies. If a proxy card is
signed and returned without specifying choices, the shares it represents will be
voted as recommended by the Board of Directors. Abstentions and broker
"non-votes" marked on a proxy card are voted neither "for" nor "against" any
proposal to be voted on at the Annual Meeting, but are counted as "present" in
the determination of a quorum. A stockholder giving a proxy may revoke it at any
time before it is voted at the meeting by executing a later-dated proxy, by
voting by ballot at the meeting or by filing a written revocation with the
Corporate Secretary of the Company, at the address shown above.
If the shares represented in person or by proxy at the meeting are not
sufficient to constitute a quorum, the Company may adjourn the meeting from time
to time, without notice other than by announcement at the meeting adjourned
(unless the adjournment is for more than 30 days or the Board of Directors fixes
a new record date), to permit the Company to continue soliciting proxies.
Proxies given pursuant to this solicitation and not revoked will be voted at any
postponement or adjournment of the Annual Meeting in the manner set forth above.
At the close of business on April 7, 1998, the record date for determining
stockholders eligible to vote at the Annual Meeting, the Company had outstanding
and entitled to vote 8,702,338 shares of Common Stock, each of which is entitled
to one vote.
The Company will pay the cost of soliciting proxies in the accompanying
form. Employees of the Company may solicit proxies by mail, in person or by
facsimile transmission or telephone. The Company will reimburse brokers, banks
and other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding proxies and proxy material to the beneficial owners of Common Stock.
The Company is mailing its 1997 Annual Report to Stockholders, including
consolidated financial statements, simultaneously with this Proxy Statement to
all stockholders of record as of the close of business on April 7, 1998. That
report does not constitute a part of this proxy solicitation material.
<PAGE>
ELECTION OF DIRECTORS
PROPOSAL 1: THE BOARD OF DIRECTORS OF THE COMPANY URGES YOU TO VOTE FOR
THE NOMINEES FOR CLASS I DIRECTOR DESCRIBED BELOW. PROXIES WILL BE SO VOTED
UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.
The Company's Certificate of Incorporation provides for the classification
of directors into three classes. The term of office of the Class I directors
expires at this Annual Meeting, the term of office of the Class II directors
expires at the Company's 1999 Annual Meeting of Stockholders and the term of
office of the Class III directors expires at the Company's 2000 Annual Meeting
of Stockholders. Two Class I nominees are proposed to be elected at this Annual
Meeting to serve for a three-year term to last until the 2001 Annual Meeting of
Stockholders or until their successors are duly elected and have been qualified.
Nominees for Class I director will be elected by a plurality of the votes cast.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
CLASS I - TERMS EXPIRING AT THE 2001 ANNUAL MEETING
WILLIAM E. HAYNES, age 54, has been Chairman of the Board since May 1997
and President and Chief Executive Officer and a director of the Company since
March 1997. He also served as President and Chief Executive Officer of The Safe
Seal, Inc. ("SSI"), which is now a subsidiary of the Company, from November 1996
until March 1997. From July 1992 through December 1995, Mr. Haynes served as
President and Chief Executive Officer of LYONDELL-CITGO Refining Company Ltd. He
served in various executive capacities for Lyondell Petrochemical Company from
1985 to 1993 and in various technical, management and executive positions with
Atlantic Richfield commencing in 1967. Mr. Haynes is a director of Philip
Services Corp. ("Philip"), an industrial and environmental services company.
ARTHUR L. FRENCH, age 57, has been a director of the Company since October
1997. He has served as Chairman of the Board, Chief Executive Officer and
President of Metals USA, Inc., a metals processor and manufacturer of metal
components, since December 1996. From 1989 through 1996, Mr. French served as
Executive Vice President and a director of Keystone International, Inc.
("Keystone"), a manufacturer of industrial valves and controls, with
responsibility for domestic and international operations. From 1966 to 1989, Mr.
French held various positions with Fisher Controls International, Inc., a
control valve and instrumentation manufacturer, and served as its President and
Chief Operating Officer and a director prior to joining Keystone.
DIRECTORS WITH TERMS EXPIRING IN 1999 AND 2000
CLASS II - TERMS EXPIRING AT THE 1999 ANNUAL MEETING
TOMMY E. KNIGHT, age 59, has been a director of the Company since October
1997. He was President and Chief Executive Officer of Brown & Root, Inc., a
subsidiary of Halliburton Company and one of the largest international
construction firms in the world, from June 1992 until his retirement in
September 1996. Prior to that time and since 1964, he served in a variety of
other capacities with Brown & Root, Inc. Mr. Knight is a director of Metals USA,
Inc.
PIERRE R. LATOUR, PH.D., age 58, has been a director of the Company since
October 1997. He is an independent consulting chemical engineer. Dr. Latour
co-founded Setpoint, Inc. and served as a director and a vice president of
consulting, oil refining, central marketing and business development until he
retired in January 1995. He then served as a vice president of business
development for Dynamic Matrix Control Corp. ("Dynamic") and then Aspen
Technology, Inc. after it acquired both Setpoint, Inc. and Dynamic in January
1996. He retired from Aspen Technology, Inc. in January 1997.
2
<PAGE>
CLASS III - TERMS EXPIRING AT THE 2000 ANNUAL MEETING
MICHAEL A. BAKER, age 52, has been a director of the Company since October
1997. He was a founder of American Medical Response, Inc., a Boston-based
company engaged in providing a national ambulance service network, and served on
its board of directors from February 1992 until it was acquired in February
1996.
ROBERT M. CHISTE, age 50, has been a director of the Company since
October 1997. He has been Executive Vice President of Philip since March 1998
and was President, Industrial Services Group, of Philip from July 1997 until
March 1998. He served as Vice Chairman of Allwaste, Inc. ("Allwaste"), a
provider of industrial and environmental services, from May 1997 through July
1997, President and Chief Executive Officer of Allwaste from October 1994
through July 1997 and a director of Allwaste from January 1995 through August
1997. See "Certain Relationships and Related Transactions." Philip acquired
Allwaste effective July 31, 1997. Mr. Chiste served as Chief Executive Officer
and President of American National Power, Inc., a successor company of Transco
Energy Ventures Company, from its creation in 1986 until October 1994. During
the same period, he served as Senior Vice President of Transco Energy Company.
Mr. Chiste is a director of Franklin Credit Management Corp., a New York-based
financial services company.
T. WAYNE WREN, JR., age 49, has been a director of the Company since
October 1997. He has served as Senior Vice President of PSC Enterprises, Inc., a
subsidiary of Philip, since July 1997 and served as Senior Vice President --
Chief Financial Officer and Treasurer of Allwaste from March 1996 through July
1997, having served as its Vice President -- Chief Financial Officer since
November 1995. See "Certain Relationships and Related Transactions." From
January 1994 to November 1995, Mr. Wren was an independent financial consultant.
He previously served as Allwaste's Vice President -- Chief Financial Officer
from August 1991 to December 1993. He also provided financial consulting
services to Allwaste pursuant to a consulting agreement from January 1994 to
June 1994.
BOARD ORGANIZATION AND MEETINGS
During 1997, the Board of Directors of the Company (the "Board") held one
meeting (which all members of the Board attended) and acted 14 times by
unanimous written consent. All the actions taken by written consent occurred
prior to the completion of the Company's initial public offering of its Common
Stock (the "IPO") in October 1997 and while Mr. Haynes was the Company's sole
director.
The Board has five standing committees. The Compensation Committee was
initially constituted on June 6, 1997, and the remaining four other committees
were initially constituted on October 28, 1997.
AUDIT COMMITTEE. The Audit Committee recommends the independent public
accountants to be selected by the Board for stockholder approval each year and
acts on behalf of the Board in reviewing with the independent public
accountants, the chief financial and chief accounting officer and other
corporate officers various matters relating to the adequacy of the Company's
accounting policies and procedures and financial controls and the scope of the
annual audits by the independent public accountants. The Audit Committee
consists of Messrs. Baker, French and Wren. Mr. Latour was a member of the Audit
Committee effective at the closing of the IPO, but Mr. Wren subsequently
replaced him as an Audit Committee member. During 1997, the Audit Committee held
one meeting (which all members of the Audit Committee attended).
COMPENSATION COMMITTEE. The Compensation Committee is authorized to
establish the general compensation policy for the officers and directors of the
Company and annually reviews and establishes officers' salaries and
participation in benefit plans, prepares reports required by the Securities and
Exchange Commission (the "SEC") and approves the directors' compensation. The
Compensation Committee consists of Messrs. Baker, Chiste and Knight. Mr. Haynes
was the sole member of the Compensation Committee from June 6, 1997 (the date
the Compensation Committee was first established) to the closing of the IPO on
October 28, 1997. During 1997, the Compensation Committee held no meetings, but
acted three times by unanimous written consent.
EXECUTIVE COMMITTEE. The Executive Committee may exercise all powers of
the Board and exists primarily to deal with issues and transactions that require
approval between regular meetings of the entire Board. The Executive
3
<PAGE>
Committee consists of Messrs. Haynes, Chiste, Knight and Wren. During 1997, the
Executive Committee held no meetings, but acted four times by unanimous written
consent.
NOMINATING COMMITTEE. The Nominating Committee reviews the size and
composition of the Board, designates new directors by classes and makes
recommendations with respect to nominations for the election of directors. The
Nominating Committee consists of Messrs. Haynes, Chiste and French. The
Nominating Committee did not meet in 1997. The Nominating Committee will
consider nominees proposed by stockholders, if the proposals are submitted in
writing in accordance with the Company's Bylaws to the Corporate Secretary at
the address of the Company's corporate offices reflected herein.
TECHNOLOGY COMMITTEE. The Technology Committee reviews and oversees the
technology being utilized and developed by the Company and consists of Messrs.
Haynes, French and Latour. It did not meet in 1997.
DIRECTORS' REMUNERATION
The Company pays each director who is not a Company employee (a
"Nonemployee Director") fees of $1,000 for each Board meeting attended and each
Board committee meeting attended (except for committee meetings held on the same
day as Board meetings) and periodically grants Nonemployee Directors options to
purchase shares of Common Stock pursuant to the Company's 1997 Incentive Plan
(the "Incentive Plan"). It will not pay any additional compensation to its
employees for serving as directors, but will reimburse all directors for
out-of-pocket expenses they incur in connection with attending Board or Board
committee meetings or otherwise in their capacity as directors.
When the IPO closed on October 28, 1997, each Nonemployee Director was
granted an option to purchase up to 10,000 shares of Common Stock under the
Incentive Plan. These options will become exercisable at $13 per share (the IPO
price to the public) in 33 1/3% annual increments beginning in October 1998 and
will expire in October 2004. On the first business day of the month following
the date on which each annual meeting of the Company's stockholders is held,
each Nonemployee Director also will automatically be granted an option to
purchase up to 5,000 shares of Common Stock. Such options will (i) have a
seven-year term, (ii) have an exercise price per share equal to the fair market
value of a share of Common Stock on the date of grant and (iii) become
exercisable in 33 1/3% annual increments beginning on the first anniversary of
the date of grant.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
PROPOSAL 2: THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND URGES YOU
TO VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS TO EXAMINE THE COMPANY'S FINANCIAL
STATEMENTS FOR THE YEAR 1998. PROXIES WILL BE SO VOTED UNLESS THE STOCKHOLDERS
SPECIFY OTHERWISE IN THEIR PROXIES.
On the recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP as independent public accountants to examine the
Company's financial statements for the year 1998. Arthur Andersen LLP has served
as the Company's independent public accountants since the Company's formation in
1997. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement, if they so
desire, and to respond to appropriate questions from those attending the
meeting.
In accordance with the Company's Bylaws, approval of the ratification of
the appointment of independent public accountants will require the affirmative
vote of a majority of the shares of Common Stock voted at the meeting.
Accordingly, abstentions and broker non-votes applicable to shares present at
the meeting will not be included in the tabulation of votes cast with respect to
Proposal 2.
4
<PAGE>
OTHER BUSINESS
The Company's management is not aware of any matters, other than as
indicated above, that will be presented for action at the meeting. If any other
matters properly come before the meeting, the persons appointed as proxies in
the accompanying proxy will vote on such matters according to their best
judgment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1998, the "beneficial
ownership" (as defined by the SEC) of the Common Stock of (i) each person known
to the Company to beneficially own more than 5% of its outstanding shares of
Common Stock, (ii) each of the Company's directors, (iii) the executive officers
of the Company named in the Summary Compensation Table below and (iv) all
executive officers and directors of the Company as a group. All persons listed
have sole voting and investment power with respect to their shares unless
otherwise indicated.
SHARES BENEFICIALLY
OWNED(1)
-------------------
NAME NUMBER PERCENT
---- -------------------
Philip Services Corp.(2).................................... 2,340,716 26.9%
100 King Street
P.O. Box 2440, LCD 1
Hamilton, Ontario Canada L8N 4J6
Roger L. Miller(3).......................................... 889,621 10.2
The Roger L. Miller Family Trust(3)......................... 694,000 8.0
The TCW Group, Inc.(4)...................................... 524,000 6.0
865 South Figueroa Street
Los Angeles, CA 90017
Robert Day(4)............................................... 524,000 6.0
William E. Haynes........................................... 307,131 3.5
Charles F. Schugart......................................... 121,408 1.4
Denny A. Rigas.............................................. 81,710 *
Pliny L. Olivier............................................ 10,000 *
Douglas R. Harrington, Jr................................... 40,856 *
John L. King................................................ 40,856 *
Timothy M. LeFevre.......................................... 11,000 *
Frank L. Lombard............................................ 88,388 1.0
Curry B. Walker(5).......................................... 189,171 2.2
T. Wayne Wren............................................... 15,000 *
Executive officers and directors as a group
(10 persons)............................................ 905,520 9.9
- ----------
* Less than 1%.
(1) Shares shown include shares subject to currently exercisable options, as
follows: Mr. Haynes -- 160,466; Mr. Schugart -- 63,608; Mr. Rigas -- 47,710;
Mr. Olivier -- 10,000; Mr. Harrington -- 23,856; Mr. King -- 23,856; Mr.
LeFevre -- 11,000; Mr. Lombard -- 57,593; Mr. Walker -- 10,000; Mr. Wren --
15,000; and all executive officers and directors as a group -- 423,089.
(2) Shares shown are directly owned by wholly owned subsidiaries of Philip, as
follows: Allwaste, Inc. -- 1,489,859 shares; and Allwaste Environmental
Services, Inc. -- 850,856 shares. The address of both Philip subsidiaries is
5151 San Felipe, Suite 1600, Houston, Texas 77056-3609. Allen Fracassi, the
president and chief executive officer of Philip, has sole voting and
investment power respecting the shares of which Philip is the "beneficial
owner,"
5
<PAGE>
subject to the direction of that corporation's board of directors. Mr.
Fracassi disclaims "beneficial ownership" of those shares.
(3) Mr. Miller is the direct beneficial owner of 51,000 shares and, as the
trustee of The Roger L. Miller Family Trust (the "Miller Trust") and the
owner of Computerized Accounting and Tax Services, Inc. ("CATS"), is the
"beneficial owner" of the shares they own. The address of Mr. Miller, the
Miller Trust and CATS (collectively, the "Miller Interests") is P.O. Box
572843, Houston, Texas 77257.
(4) According to a Schedule 13G dated February 12, 1998, (i) The TCW Group, Inc.
("TCW") is the direct beneficial owner of 524,000 shares, (ii) Robert Day,
as an individual deemed to control TCW, is the "beneficial owner" of the
shares it owns and (iii) the reporting persons have sole voting power and
sole dispositive power with respect to all 524,000 shares. Mr. Day and TCW
have the same address.
(5) Shares shown include 179,171 shares issuable on the conversion of a
convertible subordinated note at an initial conversion price of $16.90 per
share.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information regarding aggregate cash
compensation, restricted stock and stock option awards and other compensation
earned by the Company's Chief Executive Officer and its four other most highly
compensated executive officers for services rendered for the Company during
1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION-AWARDS
----------------------------------- -----------------------------------------
SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
- --------------------------- ------ ----- -------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William E. Haynes .............. $125,000(1) $127,750 $724,700(2) $-- 347,966(3) $ --
President and Chief Executive
Officer
Charles F. Schugart ............ 151,042(4) 122,500 150,000(5) -- 138,608(3) --
Senior Vice President and
Chief Financial Officer
Denny A. Rigas ................. 111,892(4) 25,000 -- -- 122,710 110,674(6)
Senior Vice President--
Technology and Marketing
Douglas R. Harrington, Jr ...... 72,958(4) 34,000 15,000(7) -- 61,356 --
Vice President and Corporate
Controller
Frank L. Lombard
Vice President-- Corporate .. 81,100 32,040 93,500(8) -- 19,593(3) --
Development
</TABLE>
(1) Represents salary from May 1997. Mr. Haynes did not receive any salary
prior thereto.
(2) Represents a one-time $300,000 bonus paid on the closing of the IPO in
October 1997 and a January 1997 award of SSI common stock valued at $424,700
for federal income tax purposes.
(3) Includes shares subject to options into which previously outstanding options
granted in 1997 to purchase shares of common stock of SSI were converted in
the October 1997 merger (the "SSI Merger") pursuant to which SSI became a
subsidiary of the Company, as follows; Mr. Haynes--250,000; and Mr.
Schugart--100,000. Excludes, in the case of Mr. Lombard, options to purchase
38,000 shares of Common Stock into which previously outstanding options
granted prior to 1997 to purchase SSI common stock were converted in the SSI
Merger.
(4) Represents salary from date of employment in 1997: Mr. Schugart--February;
Mr. Rigas--May; and Mr. Harrington--February.
(5) Represents a one-time $50,000 bonus and a January 1997 award of SSI common
stock valued at $100,000 for federal income tax purposes.
7
<PAGE>
(6) Represents a one-time reimbursement of moving expenses paid under Mr.
Rigas's employment agreement.
(7) Represents a one-time bonus paid on the closing of the IPO.
(8) Represents a January 1997 award of SSI common stock valued at this amount
for federal income tax purposes.
Although the Company's executive officers receive benefits in the form of
certain perquisites, no executive officer of the Company received perquisites in
1997 which exceeded in value the lesser of $50,000 or 10% of his salary and
bonus for 1997.
OPTION GRANTS
The following table sets forth information regarding the options granted
during 1997 to the executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(3)
OPTIONS EMPLOYEES EXERCISE EXPIRATION -------------
NAME GRANTED IN 1997 PRICE DATE 5% 10%
- ---- ------- ------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William E. Haynes ............... 250,000 27.9% (1) October 2004 $415,976 $1,634,613
97,966 $ 1.00(2) October 2004 39,882 92,942
Charles F. Schugart ............. 100,000 11.1% (1) October 2004 166,390 653,845
38,608 $ 1.00(2) October 2004 15,717 36,628
Denny A. Rigas .................. 100,000 9.8% (1) October 2004 166,390 653,846
22,710 $ 1.00(2) October 2004 9,245 21,545
Douglas R. Harrington, Jr. 50,000 4.9% (1) October 2004 83,196 326,922
11,356 $ 1.00(2) October 2004 4,623 10,774
Frank L. Lombard ................ 19,593 1.6% $ 1.00(2) October 2004 7,976 18,588
</TABLE>
- ----------
(1) The exercise price per share for 50% of the shares shown is $9.00, and the
exercise price per share for 50% of the shares shown is $13.00. All these
options were granted in tandem prior to the closing of the IPO, and the
Board determined that, as of the respective grant dates of these options,
their per-share exercise prices exceeded the then fair market value of a
share of Common Stock. This presentation assumes the $9.00 exercise price
was that fair market value on the date of grant of each of these options.
(2) The options having an exercise price per share of $1.00 were granted in
August 1997 (prior to the closing of the IPO), and the Board determined
that, as of the date of grant of these options, their per-share exercise
price exceeded the then fair market value of a share of Common Stock. This
presentation assumes the fair market value of the Common Stock on the date
of grant of these options was $1.00 per share.
(3) Calculated on the basis of the indicated rate of appreciation in the value
of the Common Stock, compounded annually from the assumed fair market value
on the date of grant, from the date of grant to the end of the option term.
AGGREGATE OPTION HOLDINGS AND YEAR-END VALUES
No options to purchase Common Stock were exercised during 1997. The
following table presents information regarding the value of options outstanding
at December 31, 1997 for each of the executive officers named in the Summary
Compensation Table:
8
<PAGE>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
----------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------- -------------------------
William E. Haynes .......... 160,466 187,500 $ 2,463,971 $ 1,734,375
Charles F. Schugart ........ 63,608 75,000 974,454 693,750
Denny A. Rigas ............. 47,710 75,000 668,418 693,750
Douglas R. Harrington, Jr .. 23,856 37,500 334,228 346,875
Frank L. Lombard ........... 57,593 -- 766,665 --
- ----------
(1) The closing price for the Common Stock on the Nasdaq National Market was
$20.25 per share on December 31, 1997. Value is calculated on the basis of
the difference between the option exercise price and $20.25.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Haynes, Schugart and
Rigas. Each of these agreements (i) provides for an annual minimum base salary,
(ii) entitles the employee to participate in all the Company's compensation
plans (as defined) in which executive officers of the Company participate and
(iii) has a continuous term of three (Mr. Haynes) or two (Messrs. Schugart and
Rigas) years, subject to the right of either party to terminate the employee's
employment at any time. If the employee's employment is terminated by reason of
the employee's death or disability (as defined), by the Company without cause
(as defined) or by the employee for good cause (as defined), the employee or his
estate will be entitled to a lump-sum payment equal to a multiple (three for Mr.
Haynes and two for Messrs. Schugart and Rigas) of his highest annual salary and
incentive bonuses. If a change of control (as defined) of the Company occurs,
the employee may terminate his employment at any time during the 460-day period
beginning 211 days following that event and receive the same lump-sum payment
together with such amount as may be necessary to hold him harmless from the
consequences of any resulting excise or other similar purpose tax relating to
"parachute payments" under the Internal Revenue Code of 1986, as amended. Each
agreement contains a covenant limiting competition with the Company for two
years following termination of employment. The Company also has employment
agreements with Mr. Harrington and certain other executive officers of the
Company.
LOANS TO EXECUTIVE OFFICERS
At April 1, 1998, the Company had outstanding interest-free loans it has
made to Messrs. Haynes, Schugart and Rigas pursuant to their respective
employment agreements in the principal amounts of $174,338, $41,050 and
$100,000, respectively. The loans to Messrs. Haynes and Schugart were made to
enable them to pay the federal income taxes attributable to the stock awards
made to them in 1997 and reflected in the Summary Compensation Table above under
"Other Annual Compensation." These loans may be repaid, at the borrower's
option, in cash or shares of Common Stock valued at its market value at the time
of payment.
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the market value of
the Company's Common Stock to the cumulative total stockholder return (change in
stock price plus reinvested dividends) of the Russell 2000 Index for the period
from October 23, 1997, the date the Common Stock began trading on a when-issued
basis in connection with the IPO, to December 31, 1997, assuming the investment
of $100 on October 23, 1997 and the reinvestment of all dividends since that
date to December 31, 1997. In addition, the graph includes a comparison for the
same period to a peer group index the Company has created (the "Peer Group
Index"). The five peer issuers comprising the Peer Group Index are Coach USA
Inc., Metals USA, Inc., American Residential Services, Inc., Palex Inc. and
Service Experts Inc. Each of the peer issuers comprising the Peer Group Index is
a recently organized, publicly traded company that is a consolidator within its
industry. The Peer Group Index was weighted for market capitalization. Although
none of the issuers comprising the Peer Group Index are engaged in the same or
similar business as the Company, the Company selected those issuers for
comparison purposes in this Proxy Statement because the Company believes the
strategy of industry consolidation shared by those issuers and the Company
provides a more representative basis for comparison to the Company's Common
Stock performance, given the lack of other publicly traded companies principally
engaged in the same or similar business as the Company.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
10/23/97 10/31/97 11/30/97 12/31/97
- ------------------------------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Innovative Valve Technologies,
Inc. 100.00 100.72 97.84 116.55
Russell 2000 Index 100.00 96.81 96.07 97.65
Peer Group Index 100.00 91.71 89.30 100.00
- ------------------------------- ------------ ------------ ----------- ----------
</TABLE>
The performance of the Company's Common Stock reflected above is not
necessarily indicative of the future performance of the Common Stock. The total
return on investment for the period shown for the Company, the Russell 2000
Index and the Peer Group Index is based on the stock price or composite index at
October 23, 1997.
The performance graph appearing above will not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and will
not be deemed filed under either of those Acts except to the extent that the
Company specifically incorporates this information by reference.
10
<PAGE>
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") is responsible for establishing a general compensation
policy for officers and employees of the Company, preparing any reports that may
be required relating to officer compensation and approving any increases in
director's fees. Since the closing of the Company's initial public offering (the
"IPO") on October 28, 1997, the Compensation Committee has consisted of Messrs.
Baker, Chiste and Knight.
The Company's executive compensation program has been designed to assist the
Company in attracting, motivating and retaining the executive talent necessary
for the Company to maximize its return to stockholders. To this end, this
program provides competitive compensation levels and incentive pay levels that
vary based on corporate, business unit (for business unit positions) and
individual performance.
The Company's compensation program for executives consists of three key
elements: a base salary; a performance-based annual bonus; and periodic grants
of stock options.
The Compensation Committee believes that this three-part approach best
serves the interests of the Company and its stockholders. It enables the Company
to meet the requirements of the highly competitive environment in which the
Company operates while ensuring that executive officers are compensated in a way
that advances both the short-term and long-term interests of its stockholders.
Under this approach, compensation for these officers involves a high proportion
of pay that is dependent on maximizing long-term returns to stockholders. The
annual bonus payable for 1998 will depend entirely on the Company's financial
performance in 1998.
BASE SALARY
The Company has employment agreements with its Chief Executive Officer,
three of its other executive officers named in the Summary Compensation Table
(the "Named Executive Officers") and certain of its other executive officers.
Either the Company or The Safe Seal Company, Inc. ("SSI") entered into these
agreements in connection with either its hiring of the executive officer or its
acquisition of the executive officer's prior employer. These agreements provide
for minimum base annual salaries the Company may increase, but cannot decrease.
Any increases in these base salaries, the base salaries of the Company's other
executive officers and any changes in those salaries will be based on
recommendations by the Company's Chief Executive Officer, taking into account
such factors as competitive industry salaries, a subjective assessment of the
nature of the position and the contribution and experience of the officer.
Performance for base salary purposes will be assessed on a qualitative, rather
than a quantitative, basis. No specific performance formula or weighting of
factors will be used in determining base salary levels.
STOCK AWARDS
In January 1997, SSI awarded shares of SSI common stock to Messrs.
Haynes and Schugart pursuant to the terms of their respective employment
agreements and to Frank L. Lombard at the direction of the SSI board of
directors. In a merger (the "SSI Merger") in which SSI became a subsidiary of
the Company immediately prior to the closing of the IPO, these and the other
outstanding shares of SSI common stock were converted into Common Stock. For
federal income tax purposes, these awards were valued at $424,700 (Mr. Haynes),
$100,000 (Mr. Schugart) and $93,500 (Mr. Lombard). For financial statement
presentation purposes, the Company has recorded these awards as special
compensation expense in the amounts of $844,728 (Mr. Haynes), $198,900 (Mr.
Schugart) and $186,053 (Mr. Lombard).
11
<PAGE>
ANNUAL BONUS
During 1997, the Company or SSI paid one-time bonuses to the Chief Executive
Officer and two of the other Named Executive Officers pursuant to their
respective employment agreements, as shown in the Summary Compensation Table
elsewhere in this Proxy Statement. For 1997, the Company also paid annual
bonuses to the Named Executive Officers, as shown in the Summary Compensation
Table. The Compensation Committee based these bonuses on the Company's financial
performance and the individual performance of the awardees. It used qualitative,
rather then quantitative, factors for this purpose.
For the year ending December 31, 1998, the Compensation Committee approved
an award program (the "1998 Award Program") under the Company's 1997 Incentive
Plan (the "Incentive Plan"). This program provides that a percentage (or, with
respect to certain Company employees whose responsibilities are more aligned to
the business as a whole as opposed to any particular subsidiary's business, all)
of an award will be based on a 1998 earnings per share target for the Company.
For those key employees whose responsibilities are more aligned to a particular
subsidiary of the Company, a percentage of an award will also be based on the
financial performance of that subsidiary during 1998. Under the 1998 Award
Program, target award opportunities vary by individual position and are
expressed as a percentage of 1998 base salary. Certain key employees of the
Company, including all the Company's executive officers, are eligible to
participate in the 1998 Award Program. The amount a particular executive may
earn will depend on the individual's position, responsibility and ability to
impact the Company's financial success.
INCENTIVE PLAN
Prior to the IPO, the stockholders and the Board of Directors of the Company
approved the Incentive Plan. The objectives of the Incentive Plan are to (i)
attract and retain the services of key employees, qualified independent
directors and qualified consultants and other independent contractors and (ii)
encourage the sense of proprietorship in and stimulate the active interest of
those persons in the development and financial success of the Company by making
awards designed to provide those participants in the Incentive Plan with a
proprietary interest in the growth and performance of the Company.
In January 1997, SSI granted to Messrs. Haynes and Schugart pursuant to
their employment agreements options to purchase 250,000 shares and 100,000
shares, respectively, at per-share exercise prices of $9.00 for 50% of the
optioned shares and $13.00 for the other 50% of the optioned shares. In the SSI
Merger, these options, as well as all other outstanding options and an
outstanding warrant to purchase SSI common stock, converted into Incentive Plan
options to purchase the same number of shares of Common Stock at the same
exercise prices.
Prior to the SSI Merger, both the Company and SSI effected reverse stock
splits of their outstanding common stock. In that connection, and with the
concurrence of the principal stockholders of SSI, the Company granted to the
Named Executive Officers and certain other executive officers options to
purchase shares of Common Stock at $1.00 per share, as shown in the table under
"Executive Compensation and Other Information--Option Grants" elsewhere in
this Proxy Statement.
Stock options align the interests of employees and stockholders by providing
value to option holders through stock price appreciation only. The Compensation
Committee expects that it will make future stock option awards periodically at
its discretion based on recommendations of the Chief Executive Officer. Stock
option grant sizes, in general, will be evaluated by regularly assessing
competitive market practices and the overall performance of the Company. This
posture with regard to stock options is intended to focus management's efforts
on maximizing stockholder returns. The number of options granted to a particular
participant will also be based on the Company's historical financial success,
its future business plans and the individual's position and level of
responsibility within the Company, but these factors will be assessed
subjectively and not weighted.
12
<PAGE>
1997 CHIEF EXECUTIVE OFFICER PAY
As described above, the Compensation Committee will consider several factors
in developing an executive compensation package. For the Chief Executive
Officer, these factors will include competitive market pay practices,
performance level, experience, contributions toward achievement of strategic
goals and the overall financial and operations success of the Company. Since the
IPO, the Compensation Committee awarded Mr. Haynes an annual bonus for 1997 (see
"--Annual Bonus" above), but otherwise took no action respecting his
compensation for 1997.
This report will not be deemed incorporated by reference by any general
statement incorporating this Proxy Statement by reference into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, and will not be deemed filed under either of such statutes
except to the extent that the Company specifically incorporates this information
by reference.
This report is furnished by the Compensation Committee of the Board of
Directors.
Michael A. Baker
Robert M. Chiste
Tommy E. Knight
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From June 6, 1997 until the closing of the IPO on October 28, 1997, Mr.
Haynes was the sole member of the Compensation Committee of the Board. Since the
closing of the IPO, the Compensation Committee has consisted of Messrs. Baker,
Chiste and Knight. Mr. Haynes has been Chairman of the Board of the Company
since May 1997 and President and Chief Executive Officer and a director of the
Company since March 1997. He also served as President and Chief Executive
Officer of SSI from November 1996 until January 1997. The Company has a
consulting agreement with an affiliate of Mr. Baker which it entered prior to
the time Mr. Baker became a director of the Company. See "Certain Relationships
and Related Transactions." Mr. Chiste was the chief executive officer of
Allwaste prior to its acquisition by Philip in July 1997. Allwaste and then
Philip engaged in the transactions described in "Certain Relationships and
Related Transactions" prior to the time Mr. Chiste became a director of the
Company. Mr. Haynes is a director of Philip.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FINANCING ARRANGEMENTS
The Company was initially capitalized in March 1997 with $216.12 provided by
Messrs. Haynes, Schugart and Lombard and CATS, a corporation owned by Roger L.
Miller, in exchange for 146,959 shares of Common Stock. In June 1997, Messrs.
Haynes, Schugart, Rigas, Lombard and Harrington, John L. King (a Vice President
- -- Corporate Development of the Company) and CATS purchased an additional 95,880
shares of Common Stock for a total purchase price of $141.00. A subsidiary of
Philip Services Corp. (for purposes of the following discussion, collectively
with its subsidiaries, referred to as "Philip") advanced funds to the Company to
enable the Company to pay various expenses incurred in connection with its
efforts to create the Company and effect the IPO. As part of its funding
arrangements with the Company, Philip also guaranteed the payment of convertible
notes included in the consideration paid for certain established businesses
acquired by the Company or SSI, then an affiliate of the Company, on or prior to
the closing of the IPO and provided cash to pay for acquisitions. Beginning in
October 1995 and continuing through October 31, 1997, Philip advanced funds to
SSI, in the form of equity investments ($10.4 million, including the
subordinated notes described below), loans and credit support for SSI's bank
borrowings, to pay costs related to the acquisition of businesses.
Philip entered into its funding arrangements with the Company pursuant to a
May 1997 agreement (as subsequently modified, the "1997 Agreement") among SSI,
Philip and the Miller Interests. Mr. Miller, who founded SSI in 1991 and was its
President until December 1996, was then Chairman of the Board of SSI and, as the
trustee of the Miller Trust and the owner of CATS, controlled approximately
47.3% of SSI's outstanding common stock. In the 1997 Agreement, (i) the parties
modified or superseded prior agreements pursuant to which Philip had been
providing financing and credit support for the expansion of SSI's business and
(ii) the Miller Interests agreed to (a) transfer the voting power of their SSI
common stock to a voting trustee pursuant to a voting trust agreement
(ultimately, Mr. Haynes), (b) cooperate with the Company and SSI in facilitating
the completion of the IPO and (c) sell to Philip when the IPO closed at least
25% of the shares of Common Stock they would own immediately following the SSI
Merger. As provided in the 1997 Agreement: (i) Mr. Miller remained a member of
the three-member SSI board of directors until the IPO closed, but resigned from
all other positions he held with SSI and ceased to participate in all SSI
compensation and other benefit arrangements; (ii) CATS terminated all its
arrangements with SSI, including a management services agreement under which it
would have been paid $225,000 during the three-year period ending December 31,
1999; and (iii) SSI paid $300,000 in cash to CATS in complete satisfaction of
all claims CATS or Mr. Miller had or otherwise might have for any services
rendered or to be rendered for SSI or the Company.
Immediately before the IPO, the Company owed Philip approximately $11.6
million, consisting of cash advances made and certain guarantee fees.
Contemporaneously with the IPO, the Company repaid approximately $8.6 million of
that amount with 1,036,013 shares of Common Stock (valued at the initial IPO
price ($13.00 per share) for this purpose) and $3.0 million in cash.
THE SSI MERGER
Immediately before the SSI Merger, the Miller Interests owned 2,289,881
shares of SSI common stock (47.3% of the total shares then outstanding),
including 235,097 shares awarded to CATS in January 1997 and 14,784 shares
purchased by CATS in connection with the June 1997 exercise of an option granted
in 1992 to a former SSI employee to purchase 68,001 shares of SSI common stock
at an exercise price of $3.68 per share, for which the Miller Interests received
a total of 1,144,941 shares of Common Stock as a result of the SSI Merger.
Also immediately before the SSI Merger, Philip owned all the outstanding SSI
preferred stock (20,000 shares), for which it paid $2.0 million ($100 per share)
in October 1995, and 1,701,713 shares of SSI common stock, which it acquired as
follows: (i) in October 1995 it purchased 286,960 shares from SSI for $500,000
(approximately $1.74 per share); (ii) in January 1997 it exercised warrants it
had received in October 1995 and July 1996 to purchase 1,361,536 shares; and
(iii) in June 1997 it purchased 53,217 shares in connection with the exercise of
the 1992 employee stock option referred to above. It had purchased the 1995
warrant for $100,000 and guaranteed the repayment of a $2.0
14
<PAGE>
million revolving line of credit to SSI in exchange for the 1996 warrant.
Together, the warrants entitled Philip to purchase at $3.68 per share such
number of shares as would be necessary to afford it ownership, on a fully
diluted basis, of 36.5% of the SSI common stock outstanding after their
exercise. To facilitate SSI's acquisition of Harley Industries, Inc. ("Harley"),
Philip and SSI agreed in September 1996 that Philip would exercise the warrants
at an exercise price of $3.16 per share. The total exercise price consisted of
(i) $3.3 million aggregate principal amount of subordinated 8% promissory notes
issued by Philip and paid as partial consideration in the Harley acquisition and
(ii) approximately $1.0 million in cash.
As a result of the SSI Merger, Philip received: (i) for the SSI preferred
stock it owned, 153,847 shares of Common Stock; and (ii) for the SSI common
stock it owned, 850,856 shares of Common Stock. See "Security Ownership of
Certain Beneficial Owners and Management" for information respecting Philip's
ownership of the Company's Common Stock.
Certain directors or executive officers of the Company received the
following number of shares of Common Stock in the SSI Merger for their shares of
SSI common stock: Mr. Haynes -- 72,199; Mr. Schugart -- 17,000; and Mr. Lombard
- -- 15,902. In addition, Messrs. Haynes and Schugart received the Incentive Plan
options shown for them in the table under "Executive Compensation and Other
Information -- Option Grants," Mr. Lombard received an Incentive Plan option to
purchase 38,000 shares of Common Stock at an exercise price of $10.00 per share
in exchange for SSI options granted prior to 1997 and T. Wayne Wren, Jr., a
director of the Company, received an Incentive Plan option to purchase 15,000
shares of Common Stock at an exercise price of $10.00 per share in exchange for
a warrant he acquired in 1995 to purchase SSI common stock.
CERTAIN MANAGEMENT FEES
The Company paid management fees of $120,000, $108,000 and $353,000 during
the years ended December 31, 1995, 1996 and 1997, respectively, to CATS.
CONSULTING AGREEMENT
In 1997, the Company entered into a consulting agreement with Wasatch
Capital Corporation, an affiliate of Michael A. Baker, who became a director of
the Company when the IPO closed. The consulting agreement, effective on
September 1, 1997, provides for an initial three-year term (which may be
extended for successive one-year periods), during which acquisition consulting
and related services are to be provided by or under the direction of Mr. Baker.
The consulting agreement provides for annual consulting fees (payable pro rata
on a monthly basis) of $100,000 for the first year of the term, $80,000 for the
second year of the term and $60,000 for the third year and any extension year.
The consulting agreement also provides for bonuses that may be granted at the
discretion of the Company's President (subject to the approval of the Executive
Committee of the Board) and reimbursement of ordinary and necessary expenses
incurred in the performance of the consulting services.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons holding more than 10% of a registered class of
the Company's equity securities to file with the SEC initial reports of
ownership, reports of changes in ownership and annual reports of ownership of
Common Stock and other equity securities of the Company. Such directors,
officers and stockholders are also required to furnish the Company with copies
of all such filed reports.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
1997, the Company believes that all Section 16(a) reporting requirements related
to the Company's directors and executive officers were timely fulfilled during
1997, except that Mr. Latour, a director of the Company, did not timely file his
initial report on Form 3.
15
<PAGE>
REPORT ON FORM 10-K
The Company filed its Annual Report on Form 10-K for the year ended December
31, 1997 with the SEC on March 26, 1998. A COPY OF THAT REPORT, AS AMENDED BY A
FORM 10-K/A FILED WITH THE SEC ON APRIL 9, 1998, INCLUDING A LIST DESCRIBING ANY
EXHIBITS NOT CONTAINED THEREIN, MAY BE OBTAINED WITHOUT CHARGE BY ANY
STOCKHOLDER OF THE COMPANY. WRITTEN REQUESTS FOR COPIES OF THE REPORT SHOULD BE
DIRECTED TO INVESTOR RELATIONS, INNOVATIVE VALVE TECHNOLOGIES, INC., 2
NORTHPOINT DRIVE, SUITE 300, HOUSTON, TEXAS 77060.
SUBMISSION OF STOCKHOLDER PROPOSALS AND ADVANCE NOTICE PROCEDURES
Under the Company's Bylaws, no business may be brought before an annual
meeting except as specified in the notice of the meeting (which includes
stockholder proposals that the Company is required to set forth in its proxy
statement under Exchange Act Rule 14a-8) or as otherwise brought before the
meeting by or at the direction of the Board of Directors or by a stockholder
entitled to vote who has delivered notice to the Company (containing certain
information specified in the Bylaws) generally not less than 90 days prior to
the first anniversary of the preceding year's annual meeting. These requirements
are separate and apart from and in addition to the SEC's requirements that a
stockholder must comply with in order to have a shareholder proposal included in
the Company's Proxy Statement under Rule 14a-8. A copy of the full text of the
Bylaw provisions discussed above may be obtained by writing to Innovative Valve
Technologies, Inc., Attn: Corporate Secretary, 2 Northpoint Drive, Suite 300,
Houston, Texas 77060.
Proposals stockholders intend to have included in the Company's proxy
statement for the 1999 Annual Meeting of Stockholders should be sent to
Innovative Valve Technologies, Inc., Attn: Corporate Secretary, 2 Northpoint
Drive, Suite 300, Houston, Texas 77060, and must be received by the Company at
that address by December 31, 1998.
16
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
INNOVATIVE VALVE TECHNOLOGIES, INC.
The undersigned hereby appoints Charles F. Schugart and Douglas R.
Harrington, Jr., and each of them, as proxies, with full power of substitution
and resubstitution in each, and hereby authorizes them to represent and vote, as
designated on the other side of this Proxy, all the shares of common stock of
Innovative Valve Technologies, Inc. standing in the name of the undersigned,
with all powers that the undersigned would possess if present in person at the
Annual Meeting of Stockholders of the Company to be held May 22, 1998 or any
adjournment or postponement thereof. In their discretion, the proxies may vote
upon such other business as may properly come before the meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BELOW BY THE Please mark
STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 your votes as
AND PROPOSAL 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2. indicated in
this example [X]
PROPOSAL 1-Election of Class I Directors Nominees: William E. Haynes, Arthur L. French
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any individual nominee,
listed to the right AUTHORITY write that nominee's name in the space provided below.
(except as marked to vote for all nominees
to the contrary) listed to the right WITHHELD FOR:
[ ] [ ] -----------------------------------------------------------------------
</TABLE>
PROPOSAL 2-Ratification of Appointment of Independent
Public Accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Date_____________________________, 1998
_______________________________________
(Signature)
_______________________________________
(Signature)
NOTE: Please sign name as it appears on
this Proxy, Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee,
guardian or in another similar capacity,
please give full title as such. If a
corporation, please print full
corporation name and have authorized
officer sign and indicate title. If a
partnership, please print partnership
name and have authorized person sign and
indicate title. The person or entity
signing above hereby revokes all proxies
heretofore given by such person or
entity to vote at such meeting or any
adjournment or postponement thereof.
FOLD AND DETACH HERE
