SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Section 240.14a-11(c)
or Section 240.14a-12
TSET, INC.
(Name of Registrant as Specified in Its Charter)
Commission File Number: 000-30191
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>
TSET, Inc.
Two Centerpointe Drive, Suite 580
Lake Oswego, OR 97035
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 2000
The Annual Meeting of Stockholders (the "Annual Meeting") of TSET,Inc., a
Nevada corporation (the"Company"), will be held at the Harbor Club, 777 108th
Avenue N.E., Suite 2500, Bellevue, Washington 98004, at 9:00 a.m., local time,
on Friday, December 15, 2000, for the following purposes:
(1) To elect four (4) directors.
(2) To ratify the selection of Grant Thornton LLP as independent
accountants for the fiscal year ended June 30, 2000.
(3) To act upon such other business as may properly come before the
Annual Meeting.
Only holders of record of shares of the Company's common stock at the
close of business on November 22, 2000 will be entitled to vote at the Annual
Meeting or any adjournment or postponement thereof.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, please sign, date, and promptly return your
Proxy to the Company. Your cooperation in signing and returning the Proxy will
help avoid further solicitation expense.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jeffrey D. Wilson
Chairman and Chief Executive Officer
November 27, 2000
Lake Oswego, Oregon
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<PAGE>
TSET, INC.
Two Centerpointe Drive, Suite 580
Lake Oswego, OR 97035
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 2000
This Proxy Statement is being furnished to Stockholders
in connection with the solicitation of proxies by and in
behalf of the Board of Directors of TSET, Inc., a Nevada
corporation (the "Company"), for their use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at
Harbor Club, 777 108th Avenue N.E., Suite 2500, Bellevue,
Washington 98004, on Friday, December 15, 2000, at 9:00 a.m.
local time, and at any adjournments thereof, for the purpose
of considering and voting upon the matters set forth in the
accompanying Notice of Annual Meeting of Stockholders. This
Proxy Statement and the accompanying form of Proxy, together
with a copy of the Company's annual report on Form 10-K for
the fiscal year ended June 30, 2000, filed with the
Securities and Exchange Commission on October 24, 2000, are
first being mailed to Stockholders on or about November 27,
2000. The cost of soliciting proxies for the Annual Meeting
is being borne by the Company.
The close of business on November 22, 2000 has been
fixed as the record date (the "Record Date") for the
determination of Stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournment thereof. As
of the Record Date, there were 29,097,801 shares of the
Company's common stock, par value $0.001 per share, issued
and outstanding and entitled to vote at the Annual Meeting.
The presence, in person or by proxy, of a majority of
the total outstanding shares of common stock on the Record
Date is necessary to constitute a quorum at the Annual
Meeting.
Each share is entitled to one vote on all issues
requiring a Stockholder vote at the Annual Meeting. Each
nominee for Director named in item 1 of the accompanying
Notice must receive a majority of the common stock votes
cast in person or by proxy in order to be elected.
Stockholders may not cumulate their votes for the election
of Directors.
The affirmative vote of a majority of shares of common
stock present or represented by proxy and entitled to vote
at the Annual Meeting is required for the approval of item 2
set forth in the accompanying Notice.
All shares represented by properly executed proxies,
unless such proxies previously have been revoked, will be
voted at the Annual Meeting in accordance with the
directions on the proxies. If no direction is indicated,
the shares represented by such proxies will be voted (A) FOR
THE ELECTION OF THE DIRECTOR NOMINEES
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NAMED HEREIN AND (B) FOR THE RATIFICATION OF GRANTTHORNTON LLP AS
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
The Board of Directors is unaware of any other matters
to be presented for action at the Annual Meeting; however,
if any other matter is properly presented at the Annual
Meeting, the persons named in the enclosed Proxy intend to
vote in accordance with their best judgment on such matters.
The enclosed Proxy, even though executed and returned
to the Company, may be revoked at any time prior to the
voting thereof by (a) execution and submission of a revised
proxy, (b) written notice to the Company's Secretary, or (c)
voting in person at the Annual Meeting.
Item 1 - ELECTION OF FOUR DIRECTORS FOR THE ENSUING YEAR
Nominees for Directors
The persons named in the enclosed Proxy have been
selected by the Board of Directors to serve as Proxies and
will vote the shares represented by valid proxies at the
Annual Meeting and any adjournments thereof. They have
indicated that, unless otherwise specified in the Proxy,
they intend to elect as Directors the nominees listed below.
All the nominees are presently members of the Board of
Directors. Each duly elected Director will hold office
until his successor shall have been elected and qualified.
Unless otherwise instructed or authority to vote is
withheld, the enclosed Proxy for the election of the Board
of Directors will be voted FOR election of the nominees
listed below. Although the Board of Directors does not
contemplate that any of the nominees will be unable to
serve, if such a situation arises prior to the Annual
Meeting, the persons named in the enclosed Proxy will vote
FOR the election of such other person(s) as may be nominated
by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
Jeffrey D. Wilson, 45, was appointed Chairman and Chief
Executive Officer of the Company on April 20, 1999. Mr.
Wilson has had extensive international transactions
experience in Asia, Europe, Latin America, Africa, and the
U.S., having represented clients in a wide range of joint
venture, corporate finance, public and private securities,
regulatory, asset acquisition, licensing, investment,
technology, mergers and acquisitions, leveraged buy-out, and
other transactions, and has assisted clients in gaining
access to foreign markets and in government lobbying
activities. Mr. Wilson speaks Japanese fluently. From 1992-
1999, Mr. Wilson maintained a private international
consulting practice for select clients and engaged in
entrepreneurial ventures. From 1990-1992, he served as
international legal advisor for GGS Co., Ltd., a Tokyo-based
Japanese investment company (and including its Hong Kong,
Australian, Canadian, and U.S.
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<PAGE>
affiliates), having primary responsibility for its
international projects. From 1982-1990, he engaged in the
private practice of law. Mr. Wilson received a B.A. from
Brigham Young University in 1979 and a J.D. from the
University of Kansas in 1982, where he was also associate
editor of the Kansas Law Review and president of the
International Law Society.
Charles D. Strang, 79, has served as a director of the
Company since September 2000. Mr. Strang was named national
commissioner of NASCAR (National Association for Stock Car
Racing) in 1998 and continues to serve in that capacity. In
1989 Mr. Strang received President Bush's American Vocation
Success Award; in 1992 was elected to the Hall of Fame of
the National Marine Manufacturers Association; in 1990 was
awarded the Medal of Honor of the Union for International
Motorboating; and is a life member of the Society of
Automotive Engineers. He also currently serves as a
director of the American Power Boat Association (the U.S.
governing body for powerboat racing) and senior vice
president of the Union for International Motorboating (the
world governing body for powerboat racing, with
approximately 60 member nations). He joined Outboard Marine
Corporation ("Outboard Marine") as director of marine
engineering in 1966, and retired as chief executive office
in 1990 and as chairman in 1993 after a more than 40-year
career in the marine industry. Mr. Strang's accomplishments
during this period include the invention of the modern-day
stern-drive (inboard/outboard) power system, the evolution
of high horsepower outboard motors, dozens of patents in the
field of engine design, marine propulsion devices, and
powerboats, and the movement of the marine industry to
vertically integrate engine manufacturers with boat
builders; these efforts have accelerated the consolidation
of the marine industry and the trend to "packaged" boat and
motor marketing. Under his leadership, Outboard Marine was
transformed into a vertically-integrated producer of
complete, factory-rigged and -powered boats; his engineering
and management leadership has had a lasting, substantial
influence on the marine industry. Mr. Strang graduated with
a degree in mechanical engineering from Polytechnic
University in 1943 and worked for several years in the
aerospace industry (including research and testing projects
on aircraft engines) and served on the mechanical
engineering staff of Massachusetts Institute of Technology.
He spent 13 years with Kiekhaefer Corporation (manufacturer
of Mercury outboard motors), rising from director of
research to executive vice president, and was also
proprietor of U.S. Executives, Inc., a management consulting
firm, and Hydro-Mechanical Development, an engineering firm.
Richard F. Tusing, 43, has served as a director of the
Company since October 2000, having been appointed to fill
the vacancy resulting from the resignation of Weijing Li.
Mr. Tusing has had extensive experience in developing new
enterprises, negotiating the licensing of intellectual
property rights, and managing technical and financial
organizations, and has more than 20 years of business
development, operations, and consulting experience in the
technology and telecommunications industries. He has spent
four years in executive management with several emerging
technology companies, 14 years in various managerial and
executive positions with MCI Communications Corporation
("MCI"), and three additional years in managerial
consulting. While acting as an independent management
consultant from 1996 to the present, Mr. Tusing's
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<PAGE>
experience with emerging technology companies includes
serving as chief executive officer and chief technology
officer for Avalon Media Group (a turnkey advertising
services company); primary responsibility for technology
planning, licensing, and strategic technology architecture
relationships for ICU, Inc. (a mobile video conferencing
company); and executive vice president, chief technology
officer, and director of Entertainment Made Convenient
(Emc3) International, Inc. (a video and data downloading
services company). Through his private consultancy, Mr.
Tusing provides, among other things, managerial, financial
planning, technical, and strategic planning services. From
1982-1996, Mr. Tusing held multiple managerial and executive
positions with MCI. From 1994-1996, he served as MCI's
director of strategy and technology, managing MCI's emerging
technologies division (having primary responsibility for
evaluating, licensing, investing in, and acquiring third-
party technologies deemed of strategic importance to MCI),
and also oversaw the development of several early-stage and
venture-backed software and hardware companies; in this
capacity, Mr. Tusing managed more than 100 scientists and
engineers developing state-of-the-art technologies. From
1992-1994, Mr. Tusing founded MCI Metro, MCI's entree into
the local telephone services business and, as MCI Metro's
managing director, managed telecommunications operations,
developed financial and ordering systems, and led all
efforts in designing its marketing campaigns. From 1990-
1992, he served as director of finance and business
development for MCI's western region, overseeing
$1,000,000,000 in annual revenue and a $90,000,000 operating
budget. From 1982-1990, Mr. Tusing held other management
and leadership positions within MCI, including service as
MCI's Pacific division's regional financial controller,
manager of MCI's western region's information technology
division, and led MCI's national corporate financial systems
development organization. Mr. Tusing received B.S. degrees
in business management and psychology from the University of
Maryland in 1979.
Daniel R. Dwight, 40, has extensive experience in
private equity and operations in a wide variety of high
growth and core industrial businesses. Mr. Dwight is
currently an independent management consultant who provides
business development, strategic consulting, financial
planning, merchant banking, and operational execution
services to a wide range of clients. Prior to starting his
consulting practice, Mr. Dwight spent 17 years with General
Electric including 10 years of operations, manufacturing,
and business development experience with GE's industrial
businesses, and seven years of international investment and
private equity experience with GE Capital. He has had
responsibility for over a $1 billion in merger and
acquisition and private equity transactions at GE. Most
recently, Mr. Dwight initiated GE Capital's entry in the
Asia private equity market. Between 1995 and 1999, the
Asian equity portfolio grew to include consolidations,
leveraged buyouts, growth capital and minority investments
in diverse industries, including information technology,
telecommunications services, consumer products, services and
distribution, and contract manufacturing. Mr. Dwight led
deal teams with responsibility for the execution of
transactions, monitoring of portfolio companies and
realization of investments. Since 1982, Mr. Dwight has held
other leadership positions domestically and internationally
with GE Capital, as well as senior positions with GE
Corporate Business Development (1989-1992) and GE Corporate
Audit Staff (1984-1987). His responsibilities included
identifying, analyzing and implementing
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<PAGE>
reorganizations, restructurings, consolidating acquisitions,
and divestitures of GE businesses. He also had responsibility
for the development of new business ventures and commercialization
of new technologies strategic to GE's industrial businesses.
Mr. Dwight holds an MBA in Finance and Marketing with Honors from
The University of Chicago in 1989 and a B.S. in Accounting with
Honors from the University of Vermont in 1982.
Executive Officers
In addition to Mr. Wilson, who is an executive officer
of the Company, Richard A. Papworth serves as Chief
Financial Officer, Erik W. Black serves as Executive Vice
President - Business Development, of the Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Jeffrey D. Wilson is the only director who is also an
executive officer of the Company. There is no family
relationship between or among any of the Company's directors
and executive officers.
The Board of Directors held no meetings during the
fiscal year ended June 30, 2000, but took action by
unanimous written consent during that period.
As of the date of this Proxy Statement, the Company has
not constituted any nominating or other committees of the
Board of Directors. All director nominees were selected by
the entire Board of Directors.
The officers or directors of the Company inadvertently
failed to file in a timely manner Forms 3, 4, or 5 as
required by Section 16(a) of the Securities Exchange Act of
1934, as amended, for the fiscal year ended June 30, 2000.
Jeffrey D. Wilson, the Company's chairman and chief
executive officer, and Richard A. Papworth, the Company's
chief financial officer, have each since filed Form 3 with
the Securities and Exchange Commission.
EXECUTIVE COMPENSATION
The following summarizes compensation paid to each of
the named executive officers of the Company for the fiscal
year ended June 30, 2000:
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE> <S> <S>
Annual Compensation Long-term Compensation
<C> <C>
<C> Restricted All
<S> <C> <C> <C> Other Stock Other
Name and Principal Fiscal Salary Bonus Compensation Awards Compensation
Position Year $ $ $ $ $
(a) (b) (c) (d) (e) (f) (i)
Jeffrey D. Wilson,
Chairman of the
Board of Directors
and Chief
Executive Officer 2000 155,000 30,000 2,670 700,000 528,497
Richard A. Papworth,
Chief Financial Officer 2000 10,000 0 0 47,230 1,027,732
Erik W. Black,
Executive Vice
President - Business
Development 2000 4,167 0 4,500 0 0
</TABLE>
_________________________________
(c) Salary
1. Mr. Wilson's $155,000 salary consisted of ten months at $12,500
and two months at $15,000. Mr. Wilson deferred all salary during
fiscal year 2000 and is entitled to receive 12% annual interest on
all deferred amounts.
2. Mr. Papworth joined the Company in May 2000. He is compensated
$120,000 annually, of which $10,000 was received in fiscal year 2000.
3. Mr. Black joined the Company in May 2000. He is compensated
$100,000 annually, of which $4,167 was received in fiscal year 2000.
(d) Bonus
1. Under the terms of his employment agreement, Mr. Wilson was to
receive a cash bonus of $30,000 on or before May 1, 2000; however,
Mr. Wilson deferred his cash bonus during fiscal year 2000 and is
entitled to receive 12% annual interest on all deferred compensation.
(e) Other Compensation
1. Mr. Wilson is entitled to an automobile allowance of $1,000 per
month, of which $2,670 was received in fiscal year 2000.
2. Mr. Black is entitled to an automobile allowance of $500 per
month, and a one-time relocation allowance of $5,000, of which $0
and $4,500 was received, respectively, in fiscal year 2000.
(f) Restricted Stock Awards
1. As a signing bonus to his employment agreement, Mr. Wilson's
nominee, The Pangaea Group LLC, received 1,000,000 restricted shares
of the Company's common stock. Such stock
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vested at a rate of 100,000 shares per month over a 10-month
period; 700,000 shares vested during fiscal year 2000. The
$700,000 value is obtained by multiplying the vested shares
with the closing market price of the Company's unrestricted
common stock ($1.00 per share) on the date such shares were
granted (April 20, 1999). Notwithstanding the above calcula
tion,the Company expensed such stock transaction at a value
of $300,000, or $0.30 per share.
At June 30, 2000, Mr. Wilson owns or has the right to own
1,301,332 restricted shares of the Company's common stock
(1,000,000 issued and outstanding as of such date, 201,322
restricted shares authorized (but not yet issued) to prevent
dilution of Mr. Wilson's 3.98% ownership interest in the
Company, and 100,000 restricted shares authorized (but not
yet issued) as compensation for his service as the chairman
of the Company's board of directors) with an aggregate
market value of $3,415,997 (calculated by multiplying the
closing market price of the Company's unrestricted common
stock on June 30, 2000 ($2.625 per share) by 1,301,332).
2. As a signing bonus to his employment agreement, Mr.
Papworth received 14,815 restricted shares of the
Company's common stock. The $47,230 value is deter
mined by multiplying the number of such shares with
the closing market price of the Company's unrestric
ted common stock ($3.188 per share) on the date such
shares were granted(May 19,2000). The Company expensed
the transaction at a value of $50,000, or $3.374 per
share.
At June 30, 2000, Mr. Papworth owns or has the right to
own 406,332 restricted shares of the Company's common
stock (14,815 shares issued and outstanding, and 391,517
shares authorized (but not yet issued) to prevent dilution
of Mr. Papworth's 1.25% ownership interest in the Company
with an aggregate market value of $1,066622 (calculated by
multiplying the closing market price of the Company's unre
stricted common stock on June 30, 2000 ($2.625) by 406,332).
(i) All Other Compensation
1. The $528,497 value is obtained by multiplying the closing
market price of the Company's common stock on June 30, 2000
($2.625) by the 201,332 shares that accrued (but are not yet
issued) in accordance with Mr. Wilson's employment agreement,
whereby he maintains ownership of 3.98% of the Company's issued
and outstanding common stock.
2. The $1,027,732 value is obtained by multiplying the closing
market price of the Company's common stock on June 30, 2000
($2.625) by the 391,517 shares that accrued (but are not yet
issued) in accordance with Mr. Papworth's employment agreement,
whereby he maintains ownership of 1.25% of the Company's issued
and outstanding common stock.
Employment Agreements
The employment agreement of Jeffrey D. Wilson, the Company's
chairman and chief executive officer, is effective as of April
20, 1999 and continues for an "evergreen" term of five years
unless Mr. Wilson provides at least 60 days' prior written notice
of his resignation. Such agreement provides for base cash compen
sation during the first 12-month period in the amount of $12,500
per month, plus a cash bonus in the amount of $30,000 to be paid
in one lump sum on or before May 1, 2000. During the second 12-
month period, Mr. Wilson's base cash compensation increases to
$15,000 per month, and during the third 12-month period such
base cash compensation increases to $20,000 per month. Mr. Wilson
has deferred all cash and bonus compensation from April 1999
through August 2000; however, commencing in September 2000, Mr.
Wilson began receiving cash compensation in the amount of $17,500
per month, approved by the Board
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of Directors, in consideration of his previous deferral of such
compensation. The Company is obligated to pay interest at the
rate of 12% annually on all compensation deferred by Mr. Wilson
until all such amounts have been paid in full. Mr. Wilson's nominee,
The Pangaea Group, LLC ("Pangaea"), received a signing bonus of
100,000 fully vested and non-forfeitable restricted shares of the
Company's common stock; Pangaea received an additional 900,000
restricted shares of the Company's common stock, which vested at
the rate of 100,000 shares per month over the 9-month period
following Mr. Wilson's acceptance of the terms of his employment
agreement. As of the date of this Proxy Statement, all such
shares are fully vested and have been accounted for in the
Company's financial books. Mr. Wilson's then-existing percentage
share ownership in the Company (approximately 3.98% of the Company's
issued and outstanding shares as of the date of his employment
agreement) is not subject to dilution during any period of his
employment. Accordingly, the Company shall, from time to time,
issue such additional shares of common stock as may be necessary
to prevent such dilution from occurring. As of the date of this
Proxy Statement, no such additional shares have yet been issued,
but the Company remains obligated to do so. Mr. Wilson will
be entitled to fully participate in any and all 401(k), stock
option, stock bonus, savings, profit-sharing, insurance, and
other similar plans and benefits of employment; however, as of
the date of this Proxy Statement, the Company has not adopted
or implemented any such plans. Mr. Wilson has "piggyback"
registration rights with respect to all restricted shares owned
by him, as well as "demand" registration rights with respect
thereto exercisable two times during each 5-year term of his
employment. The cost of exercising such piggyback and demand
registration rights shall be borne by the Company. As of the
date of this Proxy Statement, Mr. Wilson has not exercised such
registration rights. Mr. Wilson is entitled to be indemnified,
defended, and held harmless by the Company from and against any
and all costs, losses, damages, penalties, fines, or expenses
(including, without limitation, reasonable attorneys' fees,
court costs, and associated expenses) suffered, imposed
upon, or incurred by him in any manner in connection with his
service as the Company's chairman and chief executive officer.
Richard A. Papworth, the Company's chief financial
officer, has an employment agreement effective as of May 19,
2000, which continues for an "evergreen" term of two years,
unless Mr. Papworth provides at least 90 days' prior written
notice of his resignation. Mr. Papworth's employment
agreement provides for base cash compensation in the amount
of $10,000 per month, a signing bonus of $50,000 worth of
fully vested and non-forfeitable restricted shares of the
Company's common stock, plus a year-end bonus payable in
cash and additional shares, in a "blended" amount to be
determined. Mr. Papworth will be entitled to fully
participate in any and all 401(k), stock option, stock
bonus, savings, profit-sharing, insurance, and other similar
plans and benefits of employment; however, as of the date of
this Proxy Statement, the Company has not adopted or
implemented any such plans. Mr. Papworth is entitled to be
indemnified, defended, and held harmless by the Company from
and against any and all costs, losses, damages, penalties,
fines, or expenses (including, without limitation,
reasonable attorneys' fees, court costs, and associated
expenses) suffered, imposed upon, or incurred by him in any
manner in connection with his service as the Company's chief
financial officer.
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<PAGE>
As of the date of this Proxy Statement, the Company has
not entered into a written employment agreement with Erik W.
Black, executive vice president - business development.
Information regarding Mr. Black's compensation is set forth
elsewhere in this Proxy Statement.
Executive Severance Agreements
The employment agreement of Jeffrey D. Wilson, the
Company's chairman and chief executive officer, provides
that upon the occurrence of any "change of control
transaction" (as defined therein), any shares of the
Company's common stock to which Mr. Wilson is entitled
through any directors' compensation, stock option, or other
stock ownership plan shall immediately vest and, if such
transaction results in termination of his employment, Mr.
Wilson will be entitled to receive all the compensation and
benefits of employment that he would have received for the
full term of his employment but for such termination (i.e.,
given the 5-year "evergreen" term of his employment, Mr.
Wilson would therefore receive five years' worth of such
compensation), the immediate vesting of shares in any stock
option or other stock ownership plan, and the immediate
vesting of all matching contributions made by the Company in
any 401(k), savings, profit-sharing, or other similar plan
or benefit program (such entitlement also applies in the
event of any termination of Mr. Wilson's employment for
reasons other than certain "termination events" described in
his employment agreement). For purposes of Mr. Wilson's
employment agreement, a change in control transaction is
defined as a merger, sale, share exchange, consolidation,
change of control, or other acquisition of the Company.
The employment agreement of Richard A. Papworth, the
Company's chief financial officer, provides that upon the
occurrence of any transaction involving a change of control
of the Company pursuant to which his employment is
terminated, any shares of the Company's common stock to
which Mr. Papworth is entitled through any stock option or
other stock ownership plan shall immediately vest and Mr.
Papworth will be entitled to receive all the compensation
and benefits of employment that he would have received for
the full term of his employment but for such termination
(i.e., given the 2-year "evergreen" term of his employment,
Mr. Papworth would therefore receive two years' worth of
such compensation), the immediate vesting of shares in any
stock option or other stock ownership plan, and the
immediate vesting of all matching contributions made by the
Company in any 401(k), savings, profit-sharing, or other
similar plan or benefit program.
As of the date of this Proxy Statement, the Company has
not adopted any separate executive severance agreements.
Director Compensation
The Company's bylaws provide that, by resolution of the board
of directors, each director may be reimbursed their expenses of
attendance at meetings of the Board of Directors; likewise, each
director may be paid a fixed sum or receive a stated salary as a
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<PAGE>
director. As of the date of this Proxy Statement, no
director receives any salary or other form of cash
compensation for such service; however, Messrs. Wilson,
Strang, Tusing, and Dwight are entitled to receive
restricted shares of the Company's common stock, either
granted or in the form of options (to be determined), as
compensation for their services as members of the Board of
Directors. As of the date of this Proxy Statement, Mr.
Wilson is entitled to receive 100,000 shares and Messrs.
Strang, Tusing, and Dwight are each entitled to receive
50,000 shares, of the Company's common stock as such
compensation. No director is precluded from serving the
Company in any other capacity and receiving compensation
from the Company in connection therewith.
Stock Option Plans
As of the date of this Proxy Statement, the Company has
not adopted or implemented any stock option plan, but
intends to do so in the near future.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information
regarding the beneficial ownership of all shares of common
stock at November 22, 2000 for each executive officer and
director of the Company and for each person known to the
Company who owns beneficially more than 5% of the
outstanding shares of the Company's common stock. The
percentage ownership shown in such table is based upon the
29,097,801 common shares issued and outstanding at November
22, 2000 and ownership by these persons of options or
warrants exercisable within 60 days of such date. Also
included is beneficial ownership on a fully diluted basis
showing all authorized (equaling 32,898,107) but unissued
(equaling 3,800,306) shares of the Company's common stock at
November 22, 2000 as issued and outstanding. Unless
otherwise indicated, each person has sole voting and
investment power over such shares.
<TABLE>
Name and Number of Percent Percent of
Address of Shares of of Class
Directors and Common Class Fully after
Officers Stock Diluted Dilution
<C> <C> <C> <C> <C>
Jeffrey D. Wilson 1,000,000 (1) 3.44% 1,301,332 (1) 3.95%
Two Centerpointe
DriveSuite 580
Lake Oswego, Oregon
97035
Charles D. Strang 0 0 50,000 (2) 0.15%
Two Centerpointe
Drive, Suite 580
Lake Oswego, Oregon
97035
Richard F. Tusing 0 0 50,000 (2) 0.15%
Two Centerpointe
Drive, Suite 580
Lake Oswego, Oregon
97035
12
<PAGE>
Daniel R. Dwight 50,000 (2) 0.15%
Two Centerpointe
Drive, Suite 580
Lake Oswego, Oregon
97035
Richard A. Papworth 14,815 0.05% 406,332 (3) 1.24%
Two Centerpointe
Drive, Suite 580
Lake Oswego, Oregon
97035
Erik W. Black 0 0 122,699 0.37%
Two Centerpointe
Drive, Suite 580
Lake Oswego, Oregon
97035
DIRECTORS AND 1,014,815 3.49% 1,980,363 6.02%
OFFICERS AS A
GROUP: SIX PERSONS
</TABLE>
(1) The 1,000,000 shares are owned of record by The
Pangaea Group, LLC; of which, Mr. Wilson is the principal
owner. The fully diluted 1,301,332 shares represent Mr.
Wilson's right to receive an additional 100,000 restricted
shares (annually) in consideration for his service as
chairman of the Board of Directors and 201,000 restricted
shares to maintain his 3.98% nondilutible stock ownership in
the Company.
(2) Mr. Strang, Mr. Tusing and Mr. Dwight are each
entitled to receive 50,000 restricted shares (annually) in
consideration for their services as a members of the Board
of Directors.
(3) The fully diluted 391,517 shares represent Mr.
Papworth's right to receive an additional 376,702 restricted
shares to maintain his 1.25% nondilutible stock ownership in
the Company.
Management of the Company is unaware of any arrangement or
understanding that may, at a subsequent date, result in a
change of control of the Company.
Certain Relationships and Related Transactions
Management believes that all prior related party
transactions have been entered into upon terms no less
favorable to the Company than those that could be obtained
from unaffiliated third parties. Management's reasonable
belief of fair value is based upon proximate similar
transactions with third parties or attempts to obtain the
consideration from third parties. All ongoing and future
transactions with such persons, including any loans or
compensation to such persons, will be approved by a majority
of disinterested members of the Board of Directors.
In connection with his employment agreement, Jeffrey D.
Wilson's nominee, Pangaea, received a signing bonus of
100,000 restricted shares of the Company's common stock;
such shares were fully vested and non-forfeitable upon
issuance. In addition, Pangaea received an additional
900,000 restricted shares of the Company's common stock,
vesting at the rate of 100,000 shares per month over the 9-
month period ended January 2000. As of the date of this
Proxy Statement, all such shares are fully vested and have
been accounted for in the Company's financial books.
13
<PAGE>
On August 11, 2000, the Company entered into a Finders
Agreement with Richard F. Tusing and Daniel R. Dwight,
pursuant to which Messrs. Tusing and Dwight will introduce
the Company to prospective investors and brokers that would
thereafter make similar introductions, and otherwise assist
the Company in corporate finance matters. The Company
approved the list of prospective investors and brokers
provided by Messrs. Tusing and Dwight contemporaneously with
the execution and delivery of the Finders Agreement. The
Company will pay to Messrs. Tusing and Dwight a finders fee
equal to 1% of the total investment value realized from
investors introduced by them that provide equity or debt
capital to the Company. In the case of provision of equity
or debt capital by investors introduced by brokers
introduced by Messrs. Tusing and Dwight, the finders fee
will be equal to 0.25% of the total investment value
realized from such investors. The Company retains the right
to negotiate the specific terms of any financing transaction
arising out of any such introductions and is not obligated
to accept any financing offered by any such investors or
through any such brokers. Out-of-pocket expenses incurred
by Messrs. Tusing and Dwight in connection with provision of
their services under the Finders Agreement will be
reimbursed by the Company up to $15,000, unless expenses in
excess of this limit are approved in writing by the Company.
The Finders Agreement was entered into prior to Messrs.
Tusing's and Dwight's appointment as directors of the
Company in October 2000 and was negotiated at arm's length.
The Company intends that the Finders Agreement remain in
place. Management believes that the compensation and other
provisions of the Finders Agreement are fair, reasonable,
customary, and favorable to the Company.
On August 11, 2000, the Company entered into a
Consulting Agreement with Richard F. Tusing and Daniel R.
Dwight, pursuant to which Messrs. Tusing and Dwight will
provide management, financial, strategic, and other
consulting services to the Company in exchange for
consulting fees payable in cash and shares of the Company's
common stock. Out-of-pocket expenses incurred by Messrs.
Tusing and Dwight in connection with provision of their
services under the Finders Agreement will also be reimbursed
by the Company. The Consulting Agreement was entered into
prior to Messrs. Tusing's and Dwight's appointment as
directors of the Company in October 2000 and was negotiated
at arm's length. Management believes that the compensation
and other provisions of the Consulting Agreement are fair,
reasonable, customary, and favorable to the Company.
Item 2 - RATIFICATION OF SELECTION OF GRANT THORNTON LLP AS
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDED JUNE 30,
2000
The Board of Directors has selected Grant Thornton LLP
("Grant Thornton") as the Company's independent accountants
for the fiscal year ended June 30, 2000, and now seeks
ratification from Stockholders of such appointment. Such
ratification requires the affirmative vote of a majority of
the shares of the Company's common stock present or
represented by proxy and entitled to vote at the Annual
Meeting. In the event this appointment is not ratified by
tockholders, such adverse vote will be considered as a
14
<PAGE>
directive to the Board of Directors to select other
independent accountants for the fiscal year ended June 30,
2000.
A representative of Grant Thornton is expected to be
present and will be given an opportunity to make a statement
at the Annual Meeting. Such representative is expected to
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF GRANT THORNTON LLP AS INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2000.
Grant Thornton, certified public accountants, of
Portland, Oregon, audited the Company's consolidated financial
statements for the fiscal year ended June 30, 2000. The report
of Grant Thornton on such financial statements, dated October 18,
2000 did not contain any adverse opinion or disclaimer of opinion,
and with the exception of "going concern" qualification because
of the Company's dependence upon outside sources of financing for
continuation of operations, was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
During the preceding two years, there have been no
changes in or disagreements with accountants on accounting
or financial disclosure matters. In order to work with
accountants more conveniently situated to the Company, the
relationship with the Company's principal auditor, Randy
Simpson CPA, P.C., was discontinued as of September 6, 2000
and on that same day the Company engaged Grant Thornton as
independent accountants, all as reported on Form 8-K filed
by the Company with the Securities and Exchange Commission
on September 15, 2000.
Item 3 - OTHER MATTERS
The Board of Directors is unaware of any other matters
to be presented for action at the Annual Meeting; however,
if any other matter is properly presented at the Annual
Meeting, the persons named in the enclosed Proxy intend to
vote in accordance with their best judgment on such matters.
FUTURE PROPOSALS BY STOCKHOLDERS
The deadline for Stockholders to submit proposals to be
considered for inclusion in the Proxy Statement for the Year
2001 Annual Meeting of Stockholders is January 15, 2001.
The Company has tentatively scheduled the Year 2001 Annual
Meeting of Stockholders for May 25, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jeffrey D. Wilson
Chairman and Chief Executive Officer
Lake Oswego, Oregon
15
<PAGE>
PROXY
TSET, INC.
Two Centerpointe Drive, Suite 580
Lake Oswego, OR 97035
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeffrey D. Wilson, Charles
D. Strang, Richard F. Tusing, and Daniel R. Dwight as Proxies, each
with the power to appoint his substitute, and hereby authorizes each
of them to represent and to vote, as designated below, all the shares
of Common Stock of TSET, Inc., a Nevada corporation (the "Company")
held of record by the undersigned on November 22, 2000, at the Annual
Meeting of Stockholders to be held on Friday, December 15, 2000, and
at any adjournment or postponement thereof.
Proposal No. 1 To elect the following directors to serve for a term
of one year or until their successors are duly elected and qualified:
(1) Jeffrey D.Wilson (3) Richard F. Tusing
(2) Charles D.Strang (4) Daniel R. Dwight
o For all nominees
o Withhold all nominees
Withhold authority to vote for any individual nominee.
Write number(s) of nominee(s) _______
Proposal No. 2 Ratification of the appointment of Grant Thornton LLP
as the Company's independent accountants for the fiscal year
June 30, 2000.
o For o Against o Abstain
Note The proxies are authorized to vote in accordance with
their judgment on any matters other than those referred
to herein that are properly presented for consideration
and action at the Special Meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is given, this proxy will be voted for Proposal No.'s 1, and 2.
All other proxies heretofore given by the undersigned to
vote shares of stock of the Company, which the undersigned
would be entitled to vote if personally present at the
Special Meeting or any adjournment or postponement thereof,
are hereby expressly revoked.
Dated: ___________________________________________, 2000
Signature: _____________________________________________
Printed Name: __________________________________________
Please sign it exactly as name appears hereon. When shares
are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation or
partnership, please sign in full corporate or partnership
name by an authorized officer or person.
Please mark, sign, date and promptly return the proxy card
using the enclosed envelope. If your address is incorrectly
shown, please print changes.
