<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SOLV-EX CORPORATION
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
[ ] 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>
JOHN S. RENDALL
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
November 15, 1996
TO OUR SHAREHOLDERS:
On behalf of the Board of Directors and management of Solv-Ex Corporation, I
cordially invite you to attend the Annual Meeting of Shareholders to be held on
Friday, December 13, 1996, at 2:00 p.m. at the Hyatt Regency Hotel, 330 Tijeras
Avenue N.W., Albuquerque, New Mexico.
The accompanying Notice of Annual Meeting and Proxy Statement includes all
pertinent information with respect to the election of directors and the adoption
of an amendment to the Company's Incentive Stock Option Plan. It is important
that you be represented at the meeting regardless of the number of shares you
hold. You are encouraged to specify your voting preferences by so marking,
dating and signing the enclosed proxy card.
Please complete and return the proxy card in the enclosed envelope whether or
not you plan to attend the Meeting. If you do attend and wish to vote in person,
you may revoke your proxy at that time or at any other time prior to the
Meeting.
We have also enclosed a copy of the Company's Annual Report on Form 10-K for
the Fiscal Year ended June 30, 1996 as filed with the Securities and Exchange
Commission, and we welcome any questions you may have. At or before the Meeting,
we will up date you as to any recent developments, which we know will be of
interest to all shareholders. We would also invite you to visit our home on the
World Wide Web, at http://www.solvex.com.
I hope to see you at the meeting,
Sincerely,
John S. Rendall, Chairman
<PAGE>
SOLV-EX CORPORATION
500 Marquette N.W., Suite 300
Albuquerque, New Mexico 87102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 13, 1996
NOTICE IS HEREBY GIVEN to the shareholders of Solv-Ex Corporation, a New
Mexico corporation (the "Company"), that the Annual Meeting of Shareholders will
be held at the Hyatt Regency Hotel, 330 Tijeras Avenue N.W., Albuquerque, New
Mexico, at 2:00 p.m., MST, on December 13, 1996, for the following purposes:
1. To elect a board of eight directors to serve until the 1997 Annual
Meeting of Shareholders and until their respective successors are
elected and qualified.
2. To consider and act upon a proposal to amend the Company's Incentive
Stock Option Plan, as described in the accompanying Proxy Statement
and set forth in Exhibit A thereto.
3. To transact such other and further business as may properly come
before the meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on November 8, 1996 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
<PAGE>
HERBERT M. CAMPBELL II
SECRETARY
Albuquerque, New Mexico
November 8, 1995
----------------------------------------------------------------------
RETURN OF PROXIES
A proxy and business reply envelope are enclosed for your use if you
do not plan to attend the Annual Meeting in person. We urge each
shareholder who is unable to attend the meeting to vote by promptly
signing and returning his or her proxy, regardless of the number of
shares held.
----------------------------------------------------------------------
SOLV-EX CORPORATION
PROXY STATEMENT
For the Annual Meeting of Shareholders To Be Held December 13, 1996
The accompanying proxy is being solicited by the Board of Directors of
Solv-Ex Corporation, a New Mexico corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Meeting") to be held on December 13, 1996,
and at any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Company's principal
executive offices are located at 500 Marquette N.W., Suite 300, Albuquerque, New
Mexico 87102, and its telephone number is (505) 243-7701 (FAX 505-243-7705).
The Company intends to mail this Proxy Statement and proxy card, together
with the Annual Report on Form 10-K as filed with the Securities and Exchange
Commission for the fiscal year ended June 30, 1996, on or about November 15,
1996 to holders of record of shares of Common Stock ($.01 par value) of the
Company (the "Common Stock"). Only holders of record at the close of business on
November 8, 1996 will be entitled to vote at the Meeting. The outstanding voting
stock of the Company on November 8, 1996 consisted of 22,886,202 shares of
Common Stock, each of which is entitled to one vote.
<PAGE>
The cost of this solicitation of proxies will be borne by the Company. The
Company will also reimburse brokerage firms and other persons representing
beneficial owners of Common Stock for their reasonable expenses in forwarding
solicitation materials to such beneficial owners in accordance with the rules
and regulations of the Securities and Exchange Commission. In addition to use of
the mails, proxies may be solicited personally or by telephone, telegram, or
otherwise by certain of the Company's directors, officers, and regular
employees, without additional compensation.
VOTING PROCEDURES
With respect to election of directors, voting is non-cumulative and proxies
cannot be voted for a greater number of persons than the nominees named. Broker
non-votes (voting authority withheld) and abstentions will be counted for
purposes of determining whether a quorum exists at the meeting. However, broker
non-votes have no effect on the actual vote for election of directors, which
requires a plurality of the votes present in person or represented by proxy and
entitled to vote thereon.
All shares represented by properly executed proxies received in time for
the meeting will be voted as instructed. If no instructions are received,
proxies will be voted FOR the election of directors. Any proxy given pursuant to
this solicitation may be revoked by the person giving it at any time before its
use by delivering to the Secretary of the Company written notice of revocation
or a duly executed proxy bearing a later date or by attending the Meeting and
voting in person.
PRINCIPAL SHAREHOLDERS
The following table sets forth the only persons known by the Board of
Directors to be the beneficial owner of more than 5% of the outstanding shares
of the Company as of November 8, 1996:
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- ------------------------------------ ------------------ ----------------
John S. Rendall 3,701,860(1) 16.04%
500 Marquette N.W., Suite 300
Albuquerque, New Mexico 87102
Deutsche Bank AG 2,963,214(2) 12.4%
Taunusanlage 12
60325 Frankfurt
The Federal Republic of Germany
- -----------------------------------
2
<PAGE>
(1) Includes 39,000 shares held of record by Mr. Rendall's wife and 300,000
shares held in trust for Mr. Rendall's children, together with currently
exercisable options to purchase a total of 200,000 shares of Common Stock
under the Company's Incentive Stock Option Plan. Of these, 3,000,000
shares are currently pledged to secure Mr. Rendall's margin account at
Smith Barney & Co.
(2) As reported by Deutsche Bank AG in a schedule 13D filed on or about October
16, 1996. This includes 605,427 shares owned by Alulux Mining S.A.
("Alulux") and 551,687 shares owned by Sandvest Petroleum S.A.
("Sandvest"), both Luxembourg corporations which are wholly-owned by
Deutsche Bank AG; 1,016,000 shares which are issuable to PheMex
Establishment, a Liechtenstein legal entity ("PheMex"), pursuant to a
convertible loan agreement with Solv-Ex; 750,000 shares owned by Silva
Investment Limited, a corporation formed under the laws of Cayman Islands
("Silva"); and 40,100 shares that were purchased from time-to-time in the
open market by Deutsche Morgan Grenfell, Inc. for customer accounts. Due
to uncertainties surrounding the ownership and control of PheMex and Silva
as described in the Schedule 13D, Deutsche Bank disclaimed beneficial
ownership of the shares beneficially owned by them. This amount does not
include 1,055,927 shares which the Schedule 13D states are owned by Russ
Oil & Technology S.A. ("Russ Oil"), a Luxembourg company, as to which
Deutsche Bank AG disclaims beneficial ownership. According to Solv-Ex's
transfer records, Alulux owns 432,787 shares, Sandvest owns 649,180 shares,
and Russ Oil owns 489,474 shares. The Company's transfer agent has no
record of any ownership by Silva.
Proposal Number ONE
ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board of Directors may consist
of not more than ten nor less than six members as may be established from time
to time by the Board of Directors. Under these bylaws, the Board of Directors
may at any time increase the number of Directors, to a maximum of ten members,
and appoint persons to fill these positions to serve until the next annual
meeting of shareholders after such appointment. The Board of Directors has
determined that eight persons will be nominated for election as directors at the
Meeting, all of whom are currently directors of the Company as described below.
The proxies cannot be voted for a greater number of persons than the
nominees named. The persons named in the accompanying proxy intend to vote
(unless authority to vote for directors is withheld in such proxy) all duly
executed proxies unrevoked at the time of the exercise thereof for the election
to the Board of Directors of all the nominees named below. If any nominee is
unable to serve (which management has no reason to expect), such persons intend
to vote for as many of such nominees as it is possible to elect and, if they
deem it advisable, for a substitute nominee.
-3-
<PAGE>
-NOMINEES FOR ELECTION AS DIRECTORS
The table below sets forth the name, age and all positions held with the
Company (including length of service) by each nominee for election as a director
and each executive officer of the Company, and is followed by a description of
the business experience of each such person. If elected, the term of office of
each director shall be until the next meeting of shareholders at which directors
are elected, which is expected to be approximately one year after the 1995
meeting. Executive officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME Age Offices Held Length of
Service
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John S. Rendall 62 Chairman, Chief Executive Since 1980
Officer, and Director (1)
- --------------------------------------------------------------------------------------------
W. Jack Butler 77 President and Director Since 1991
(2)
- --------------------------------------------------------------------------------------------
Herbert M. Campbell II 52 Senior Vice President, Since 1992
General Counsel, and (3)
Director
- --------------------------------------------------------------------------------------------
J.E. Czaja 65 Vice President - Canada Since 1993
and Director
- --------------------------------------------------------------------------------------------
Julius D. Heldman 77 Director Since 1980
(4)
- --------------------------------------------------------------------------------------------
M. Norman Anderson 65 Director Since 1986
(5)
- --------------------------------------------------------------------------------------------
Thompson MacDonald 49 Director Since 1993
(6)
- --------------------------------------------------------------------------------------------
M.E. (Pat) Davey 70 Director Since 1995
(7)
- --------------------------------------------------------------------------------------------
Annette L. Cottrell 36 Secretary Since 1995
- --------------------------------------------------------------------------------------------
Stephen Lane 50 Vice President Since 1995
- --------------------------------------------------------------------------------------------
Aldo Corti 50 Vice President Since 1995
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Rendall was President of the Company from July 2, 1980 to October 1,
1983, and from January 1, 1989 until July 1, 1992. Since November 1989, he
has also served as President and a director of Can-Amera Oil Sands, Inc., a
subsidiary of the Company.
-4-
<PAGE>
(2) Mr. Butler became Executive Vice President of the Company on February 22,
1991 and became President on July 1, 1992.
(3) Mr. Campbell became Vice President, Secretary and General Counsel of the
Company on June 1, 1992. He was appointed as a Director on October 15,
1992, became Senior Vice President in September, 1994. Mr. Campbell also
serves as Corporate Secretary for Can-Amera Oil Sands, Inc., a subsidiary
of the Company.
(4) Dr. Heldman served as Senior Vice President of the Company from September
15, 1988 until October 9, 1992 and is Chairman of the Company's Audit and
Compensation Committee.
(5) Mr. Anderson is a member of the Company's Audit and Compensation Committee.
(6) Mr. MacDonald has also served since March, 1994 as a director of Can-Amera
Oil Sands, Inc., a subsidiary of the Company, and also serves as a paid
consultant to the Company.
(7) Mr. Davey serves as a paid consultant to the Company.
No arrangement exists between any of the above officers and directors
pursuant to which any of those persons was elected to such office or position.
There are no family relationships among persons who are directors or executive
officers of the Company.
The following sets forth the business experience of the directors and
executive officers of the Company named above. No director of the Company is a
director of any other company which is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, except as described below.
JOHN S. RENDALL was associated with RTL Contractor Holdings, S.A. from 1977
through 1979 as plant manager of RTR Oil Sands (Alberta) Ltd. (a subsidiary of
Rio-Tinto, Inc.), an oil sands extraction pilot plant at Fort McMurray in
Canada. From June 1979 through December 1979, he was also a part-time sales
representative for RTL and RTR in the United States, responsible for the
licensing of certain patents which he had sold to these companies.
W. JACK BUTLER was associated with Mobil Oil Corporation and its affiliated
companies in Europe, Africa and the Middle East since 1951 until his retirement
in 1985. Mr. Butler retired as the Middle East Regional Director - London for
Mobil Oil Corporation and as Chairman and Director of several of Mobil Oil
Corporation's Middle East and African companies, including Mobil Saudi Arabia,
Inc..
HERBERT M. CAMPBELL II was previously employed from 1967 through 1984 by
Ranchers Exploration and Development Corporation, a diversified mining company
which merged into Hecla Mining Company in 1984. He was Senior Vice President and
Chief Counsel at the
-5-
<PAGE>
time of the merger, and, from 1985 until 1989, served as President and a
Director of Olympic Mining Corporation, which controls a silica sand mining and
processing operation in Southern California. From 1989 until he was employed by
the Company, Mr. Campbell was associated with Mains & McConnell, Inc., a
commercial insurance brokerage firm. He is a member of the New Mexico State Bar.
J.E. CZAJA served as Executive Vice President and a Director of Shell
Canada Limited from 1983 until his retirement in 1991. At the time of his
retirement, he was responsible for its oil (including oil sands), gas and coal
exploration and production activities.
JULIUS D. HELDMAN served as Vice President of Shell Development Company and
as Vice President of Shell Oil Company from April 1969 to his retirement in
October 1980, and was extensively involved in its patenting and licensing
activities and research and development programs. Since his retirement, Dr.
Heldman has been president of Heldman Associates, petroleum consultants.
M. NORMAN ANDERSON is president of his own consulting firm, Anderson &
Associates in Vancouver, a natural resources management consulting firm with
major international clients. From January, 1987 until December, 1992, he was a
principal and managing director of Anderson Genssler & Schwab, Inc., management
consultants. From February, 1991 until August, 1992 he was also Chairman of
International Corona Corporation, a mining and exploration company. From 1980
until 1986, Mr. Anderson was Chairman and Chief Executive Officer of Cominco
Ltd., a mining, refining and manufacturing company. Mr. Anderson is also a
director of Homestake Mining Company, the Toronto Dominion Bank, Finning Ltd.,
Western Star Trucking and Prime Resources.
THOMPSON MACDONALD is the president of his own communications consulting
firm in Calgary, Alberta (Canada), which provides strategies for media and
government relations to a wide variety of public and private sector clients,
including the Company. Prior to forming his consulting firm in January, 1988,
Mr. MacDonald was Vice President, News and Public Affairs, for CFCN Television
Calgary for more than 10 years. Mr. MacDonald is also a director of the Canadian
Broadcasting Corporation and Multi-corp Inc., which is engaged in
telecommunications and language translation technologies.
M.E. ("PAT") DAVEY holds B.S. degree in Mechanical Engineering from the
Washington State University and is currently acting as a consultant to manage
the Solv-Ex program for production of aluminum from alumina in a new
electrolytic cell. Mr. Davey has more than 40 years of experience in the
aluminum smelting industry in both management and consulting positions. He
worked on a wide variety of plant development and management assignments for
Kaiser Aluminum & Chemical Corporation in the U.S. and several foreign
countries. Mr. Davey retired from Kaiser as International Engineering and
Maintenance Manager in 1982 and has been active as a consultant to the aluminum
smelting industry since his retirement.
-6-
<PAGE>
ANNETTE L. COTTRELL has been Secretary of the Company since 1995. She has
been employed by the Company as its Controller since July 1995. Prior to then,
she was Chief Financial Officer and Corporate Secretary with Vivigen, Inc., a
publicly-traded medical laboratory, from 1987 to 1993, and was controller for a
law firm during 1994. Ms. Cottrell received a Bachelor of Science degree from
Colorado State University in 1982 and is a Certified Public Accountant in New
Mexico and Colorado.
STEPHEN LANE has been Vice President of the Company since 1995 and manages
construction activities for the Bitumount oil sands project. He and has been
employed by the Company since 1994. He holds a Bachelor of Science degree from
Carleton University (Ottawa), a Master of Chemical Engineering degree from
McMaster University (Hamilton) and an MBA degree in finance from the University
of Alberta. From 1981, he was involved with his own natural resource companies
(including oil sands-related work) and has previous experience with Dome
Petroleum Ltd. and Syncrude Canada Limited.
ALDO CORTI has been Vice President of the Company since 1995 and manages
the offices of the Company in Calgary, Alberta. He has been employed by the
Company since 1993. Until 1993 Dr. Corti was vice president of RTR Oil Sands
(Alberta) Ltd. and RTR Oil Sands (Canada) Ltd. He has also participated in
several minable and IN SITU oil sands projects with Gulf Canada, Petro Canada,
and Suncor, and has been involved in the oil sands industry since 1977. Dr.
Corti holds a PhD. in Chemical Engineering from Polytechnic University, Milano.
-CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
In 1991, the Company retained the consulting services of Mr. Thompson
MacDonald to assist the Company in establishing and maintaining communications
with various governmental departments and ministries of the Province of Alberta
(Canada), and to advise the Company concerning Canadian public relations and its
relationships with various Canadian business entities. Mr. MacDonald was elected
as a director of the Company in December 1995 and is a nominee for election as a
director at the Annual Meeting of Shareholders to be held on December 13, 1996.
During the fiscal year ended June 30, 1996, a total of $36,900 in fees was paid
to Mr. MacDonald for such services. Management believes that the cost of
services rendered by Mr. MacDonald during the year was reasonable compared with
the cost of obtaining similar services from an unaffiliated third party, and
expects to retain the services of Mr. MacDonald in the future. In this regard,
most of the Company's business dealings are within the Province of Alberta,
where its efforts are currently being directed towards establishing commercial
projects.
During the fiscal year ended June 30, 1996, the Company retained Mr. M.E.
Davey to assist the Company in its efforts to develop a new type of electrolytic
cell for production of aluminum metal. Initial work under this program was very
encouraging and, in March 1995, Mr. Davey became a director of the Company and
agreed, as a consultant, to direct the continuing program to produce aluminum
metal using the new electrolytic cell. Mr. Davey is a nominee for election as a
director at the Annual Meeting of Shareholders to be
-7-
<PAGE>
held on December 13, 1996. During the fiscal year ended June 30, 1996, fees
aggregating $95,650 was paid to Mr. Davey for such services through the
issuance to him of 19,453 shares. Management believes that the cost of services
rendered by Mr. Davey during the year was reasonable compared with the cost of
obtaining similar services from an unaffiliated third party, and expects to
retain the services of Mr. Davey in the future.
During the period between December 8 and December 31, 1995, John S. Rendall
the Company's Chairman and Chief Executive Officer, advanced the Company
$1,000,000 in the form of a loan in order to provide working capital. Mr.
Rendall obtained the funds through a margin loan at an unaffiliated
broker-dealer against 3,000,000 shares of his personal holdings of common stock
in the Company. At the same time, Mr. Rendall borrowed an additional $1.5
million for use by the Company in connection with the Company's planned debt
financing for the balance of its capital requirements (which transaction was not
completed). The loan from Mr. Rendall to the Company was interest bearing at
10% per annum and was to be repaid as of March 31, 1996.
On March 25, 1996, the price of Solv-Ex Common Stock dropped from $22 to
$7.375 following media reports concerning alleged government investigations into
manipulation of trading in such stock. Although the value of Mr. Rendall's
personal stock held by the broker-dealer was sufficient to negate the likelihood
that a margin call would have been made against Mr. Rendall, Solv-Ex stock had
been removed from the list of stock eligible for margining on March 25, 1996 by
at least one other broker-dealer. Because of the precipitous decline in the
price of the Company's stock and the risk that the broker-dealer holding Mr.
Rendall's stock could have made a margin call or sell the underlying shares
(which would likely have exacerbated the market situation for the Company's
common stock at that time), the General Counsel for the Company caused the
Company to repay the entire margin balance on Mr. Rendall's behalf. By reason
of this action, and after netting the amounts owed by the Company to Mr.
Rendall, Mr. Rendall owed the Company $1,534,950 at March 31, 1996. Based on
his agreement with the Company, this amount is payable on demand and accrues
interest at 5.87% per annum. The loan was ratified by the disinterested
directors of the Company.
At June 30, 1996, the amount due to the Company from Mr. Rendall was
$1,557,414, including the principal and accrued interest of $22,464. Mr.
Rendall has provided the Company with sufficient documentation to assure the
disinterested directors of the Company that he has sufficient cash readily
available to repay the loan at any time. The Company has not demanded payment
because: (i) the rate of interest being earned by the Company is in excess of
that which could be obtained by the Company through short-term investments; and
(ii) the Company believes that repayment of the loan will be made promptly upon
demand as determined by its cash requirements in connection with construction of
the plant for co-production of oil and minerals from the Bitumount Lease.
In addition, a Vice President in charge of the Company's Calgary
operations, is the owner of Alcoss Enterprises, Ltd., an engineering firm which
provides services to the Company in connection with the plant being constructed
on the Bitumount Lease. Alcoss
-8-
<PAGE>
retained contractors and subcontractors on behalf of the Company and has passed
these costs through to the Company with a small allowance to cover general and
administrative expenses. Payments made to Alcoss for the years ended 1996, 1995
and 1994 were $2,249,522, $295,585 and $54,127 respectively.
~INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held five formal meetings during the fiscal year
ended June 30, 1996, although regular communications were maintained throughout
the year among all of the officers and directors of the Company. Each director
attended each of the formal meetings.
The Company has only one committee, a dual purpose Audit and Compensation
Committee composed of Dr. Julius D. Heldman (Chairman) and Mr. M. Norman
Anderson, which held two meeting during the year. The nature and scope of the
Committee's responsibilities are set forth below under the caption "Board
Compensation Committee Report on Executive Compensation." The Company does not
have a standing nominating committee or other committee performing similar
functions.
~SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon the Company's review of copies of forms it receives from
officers and directors and upon representations it receives from certain of such
persons, the Company believes that during the fiscal year ended June 30, 1996,
all filing requirements under Section 16(a) of the Securities Exchange Act of
1934 were made by such persons on a timely basis except Mr. Rendall filed a Form
4 for the month of September 1995 late because of a delay in receiving
information from his broker. This report has been filed. The only person
other than an officer or director known to Solv-Ex to be subject to the Section
16(a) beneficial ownership reporting requirements is Deutsche Bank AG, an entity
which filed a Schedule 13D reporting beneficial ownership of more than 10% of
the outstanding securities of the Company on October 17, 1996. Based on
information reported in the Schedule 13D, it appears that Deutsche Bank AG was
delinquent in filing a Form 3 Initial Statement of Beneficial Ownership, which
report was filed on or about October 17, 1996.
~DIRECTORS' COMPENSATION
At present, the Company does not provide any cash compensation to directors
who are not employees, but does reimburse such directors for necessary travel
expenses incurred in attending meetings or otherwise acting on the Company's
behalf. Such directors have in the past been given the opportunity to purchase
restricted shares of Common Stock at prices below market value, primarily for
the purpose of raising funds for the Company, and have also been granted options
to purchase shares of Common Stock pursuant to the Company's Stock Option Plan
for Directors ratified by the shareholders of the Company on October 7, 1993.
Under the Plan, a director is granted an option to purchase 25,000 shares of the
Company's Common Stock on the date such person is first elected or appointed as
a
-9-
<PAGE>
director at a purchase price equal to the fair market value of such stock on the
date of grant. On each annual meeting date thereafter at which such person is
elected as a director, he shall be granted an additional option to purchase
10,000 shares of Common Stock at a price equal to the fair market value on the
date of grant. Each option granted under the Plan becomes fully exercisable
after six months of continuous service as a director following the date of
grant.
As of June 30, 1996, options to purchase a total of 155,000 shares at
option prices ranging between $1.50 and $13.81 were outstanding under the Stock
Option Plan for Directors.
~INDEMNIFICATION
Under the By-laws of the Company, a director may be indemnified against
expenses, fines, settlements or judgements arising in connection with a legal
proceeding to which such person is a party as a result of such relationship, if
that person's actions were in good faith, were believed to be in the Company's
best interest, and were believed not to be unlawful. Unless such person is
successful upon the merits in such an action, indemnification may be awarded
only after a determination by independent decision of the Board of Directors, by
legal counsel, or by a vote of the shareholders that the applicable standard of
conduct was met by the person to be indemnified. The Company does not have any
insurance coverage for directors' liability, including coverage for legal
defense costs.
~INTERLOCKING ARRANGEMENTS
The Compensation Committee of the Board of Directors is composed of Dr.
Julius D. Heldman (Chairman) and Mr. M. Norman Anderson. Neither Dr. Heldman
nor Mr. Anderson were, during the fiscal year ended June 30, 1996, previously or
subsequently, an officer or employee of the Company or any of its subsidiaries,
or has had any relationship with the Company (other than as a director) which
requires disclosure herein. From September 1988 until October 1992 Dr. Heldman
was Senior Vice President of the Company.
No executive officer of the Company served as a director of, or member of
the compensation committee (or other board committee performing an equivalent
function) in, any other entity of which Dr. Heldman or Mr. Anderson, or any
other director of the Company, was an executive officer.
~EXECUTIVE COMPENSATION
The table which follows sets forth information concerning the compensation
to the Chief Executive Officer and the Senior Vice President of the Company for
the 1994, 1995 and 1996 fiscal years. During the periods, the Company had no
other executive officer whose annual salary and bonus exceeded $100,000.
-10-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation (continued) Long Term Compensation (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Awards Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
Name Year Salary ($) Bonus ($) Other Annual Restricted Options/SARs LTIP Payouts All Other
Compensation Stock Awards (#) (1) ($) (1) Compensation
($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John S. Rendall, 1996 120,000 -0- 6,000 -0- -0- -0- -0-
Chairman and CEO 1995 120,000 -0- 6,000 -0- 100,000 -0- -0-
1994 89,372 -0- -0- -0- -0- -0- 33,000 (2)
Herbert M. 1996 90,000 200,000 -0- -0- -0- -0- -0-
Campbell, II
Sr. VP and 1995 90,000 -0- -0- -0- 60,000 -0- -0-
General Counsel 1994 72,000 -0- -0- -0- 75,000 -0- -0-
</TABLE>
(1) The Company does not have in effect either a plan of Stock Appreciation
Rights ("SAR's") or a Long-Term Incentive Plan.
(2) Effective January 1, 1989, Mr. Rendall agreed to a salary deferment of
approximately 50% (including automobile allowance) until such time as the
operations and financial condition of the Company permit resumption of full
salary payments. As of June 30, 1996, the aggregate of such deferred
compensation was $99,000 (for years 1993 and 1994), which Mr. Rendall
exchanged for 33,243 shares of Common Stock valued at the fair market value
of such shares at the time the services were performed (average value was
$2.98 per share). There were no salary deferrals during the fiscal years
ended June 30, 1995 or 1996.
No stock options were granted to either of the executive officers named in
the Summary Compensation Table during the fiscal year ended June 30, 1996 under
the Incentive Stock Option Plan approved by the shareholders of the Company on
October 7, 1993, and no options held by any director or executive officer were
repriced during the fiscal year ended June 30, 1996. In addition, the Company
does not have a long-term incentive awards plan or a defined benefit or
actuarial plan.
The following table sets forth information concerning exercises of stock
options during the fiscal year ended June 30, 1996 by the executive officers
named in the Summary Compensation Table, and the value of their unexercised
stock options as of June 30, 1996, based upon a price of $19.50 per share, which
was the price of the closing trade for the Company's Common Stock as reported by
the Nasdaq Small Cap Market on such date.
<TABLE>
<CAPTION>
Name Shares Value Number of Options Value of Unexercised
Acquired on Realized Unexercised at June 30, In-the-Money Options
Exercise (#) ($) 1996 at June 30, 1996
Exercisable/ Exercisable/
Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John S. Rendall -0- -0- 200,000/-0- $3,900,000/-0-
- ----------------------------------------------------------------------------------------------
Herbert M. 135,000/-0- $2,366,400/-0-
Campbell II
</TABLE>
-11-
<PAGE>
Employees of the Company, including officers, are also eligible to receive
options to purchase Common Stock of the Company pursuant to the Incentive Stock
Option Plan approved by the shareholders of the Company on October 7, 1993.
During the fiscal year ended June 30, 1996, options were granted to employees
(including officers) to purchase a total of 120,000 shares of Common Stock at
option prices ranging between $7.09 and $21.50 per share. No options were
granted to the executive officers named in the Summary Compensation Table during
the fiscal year ended June 30, 1996.
Options to purchase Common Stock under the Incentive Stock Option Plan are
granted at an option price equal to the fair market value of such stock on the
date of grant except in the case of the holder of 10% of more of the Company's
outstanding Common Stock, in which the option price must be at least 110% of the
fair market value on the date of grant. Option grants for executive officers of
the Company are determined by the Compensation Committee of the Board of
Directors and option grants for employees who are not executive officers are
determined by the Chairman and Chief Executive Officer of the Company in
accordance with the terms of the Plan.
~BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee consists of Dr. Julius D. Heldman, who serves as
its Chairman, and Mr. M. Norman Anderson, neither of whom are presently officers
of the Company. With respect to executive compensation, the function of the
Committee and the Board of Directors has been somewhat limited in recent years
because the Company did not have the funds to employ executive officers at
levels of compensation comparable to operating companies in the natural
resources industry. In this regard, Mr. Butler, President of the Company,
currently receives no cash compensation for his services, nor did Dr. Heldman
during his four year tenure as Senior Vice President.
The Company is actively engaged in efforts to become an operating company
during the current fiscal year. This also includes efforts to obtain project
financing and adequate funding for the Company's general and administrative
expenses, which has increased significantly since the Company has begun
construction of its first commercial project. As a result, the responsibilities
of the Compensation Committee can be expected to be expanded to (i) align the
Company's compensation policies with its long-term business strategy; (ii)
reward executives for performance and enhancement of shareholder value; and
(iii) attract and retain executives whose abilities and dedication are
considered essential to optimum operating efficiency and the long-term growth
and success of the Company. The Committee also has exclusive authority to
administer the Company's Incentive Stock Option Plan as applied to executive
officers.
The Committee does not believe that the compensation (including deferred
compensation as hereinafter described) to Mr. Rendall, as Chief Executive
Officer, adequately reflects the contribution of Mr. Rendall in developing the
Company's technology and maintaining the Company's existence during recent
years. In this regard, however, the Committee believes that the primary measure
of success for the Company will be its ability
-12-
<PAGE>
to establish profitable, commercial operations through implementation of its
technology, and will determine Mr. Rendall's future compensation based upon the
Company's performance in achieving this objective, as well as consultation with
one or more independent consultants having expertise in the field of executive
compensation.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
-Julius D. Heldman, Chairman
-M. Norman Anderson
~PERFORMANCE GRAPH
The following graph compares the total annual return on the Company's
Common Stock with the annual return of the CRSP Total Return Index for the
NASDAQ Stock Market (U.S. and Foreign Companies) for the period July 1, 1991 to
June 30, 1996, and with the CRSP Index for NASDAQ stock with SIC codes 1000-1099
(metal mining companies). Although the Company has not previously engaged in
mining operations and has been classified as a development stage company for
accounting purposes, its research and development activities during the period
have primarily related to metals extraction from crude ores or residues created
by mining and processing oil sands crude ores. Accordingly, the stock price
performance shown on the graph is not necessarily indicative of future price
performance.
<TABLE>
<CAPTION>
CRSP Total Returns Index for: 06/28/91 06/30/92 06/30/93 06/30/94 06/30/95 06/30/96
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Solv-Ex Corporation 100.0 84.4 373.3 151.1 577.8 1386.7
Nasdaq Stock Market (US & Foreign) 100.0 119.9 151.3 152.1 201.7 257.3
NASDAQ Stocks (SIC 1000-1099 US + 100.0 82.1 122.0 140.3 140.6 170.3
Foreign) Metal Mining
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of November 8, 1996 regarding
the number of shares of the Common Stock of the Company beneficially owned by
each of the directors and by all directors and executive officers as a group.
Except as otherwise noted, the directors and the executive officers each have
sole voting and investment power with respect to the shares listed. The
ownership and percentage information is computed for each named individual (and
the group) by including all shares which are subject to stock options held by
the individual (and members of the group for purposes of that computation) which
are exercisable within 60 days.
-13-
<PAGE>
NAME OF INDIVIDUAL OR Amount of Beneficial Percent of Class
IDENTITY OF GROUP Ownership
- --------------------------------------------------------------------------------
M. Norman Anderson 176,934 (1) *
- --------------------------------------------------------------------------------
W. Jack Butler 872,500 (2) 3.8%
- --------------------------------------------------------------------------------
Herbert M. Campbell II 173,000 (3) *
- --------------------------------------------------------------------------------
J.E. Czaja 110,000 (4) *
- --------------------------------------------------------------------------------
M.E. (Pat) Davey 54,453 (5) *
- --------------------------------------------------------------------------------
Julius D. Heldman 290,000 (6) 1.3%
- --------------------------------------------------------------------------------
Thompson MacDonald 59,730 (7) *
- --------------------------------------------------------------------------------
John S. Rendall 3,701,860 (8) 16.2%
- --------------------------------------------------------------------------------
All directors and executive 4,804,477 (9) 21.0%
officers as a group (11
persons)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Less than one percent.
(1) Total includes fully exercisable options to purchase 55,000 shares.
(2) Total includes a fully exercisable option to purchase 90,000 shares.
(3) Total includes fully exercisable options to purchase 115,000 shares.
(4) Total includes a fully exercisable option to purchase 85,000 shares.
(5) Total includes fully exercisable option to purchase 35,000 shares.
(6) Total includes a fully exercisable option to purchase 10,000 shares.
(7) Total includes 39,000 shares held of record by Mr. Rendall's wife,
300,000 shares held in trust for Mr. Rendall's children and fully
exercisable options to purchase 200,000 shares. Of these, 3,000,000
shares are currently pledged to secure Mr. Rendall's margin account at
Smith Barney & Co.
(8) Total includes fully exercisable options to purchase 45,000 shares.
(9) Total includes fully exercisable options to purchase 717,500 shares,
including those options described in notes 1-8, above.
PROPOSAL NUMBER TWO
AMENDMENT TO INCENTIVE STOCK OPTION PLAN
On October 7, 1993, the shareholders of the Company approved an Incentive
Stock Option Plan (the "Employees Plan") adopted pursuant to Section 422 of the
Internal Revenue Code which provided for the issuance of options to acquire a
maximum of 1,000,000 shares of Common Stock. On June 11, 1996, the Board of
Directors adopted an amendment to the Plan to increase the number of options
issuable to 1,500,000, subject to shareholder approval. Since the Employee's
Plan was adopted (including the proposed amendment), options to acquire
1,160,000 shares have been issued by the Company to employees including 590,000
shares to persons who were executive officers at the time of the grant. The
Company believes that the Employees' Plan is a valuable incentive to encourage
key employees of the Company and its subsidiaries to acquire or increase their
ownership of
-14-
<PAGE>
shares of Common Stock on reasonable terms. The Board of Directors also
believes that the Employees' Plan fosters a strong incentive to put forth
maximum effort for the success and growth of the Company for the benefit of the
shareholders. The Board of Directors further believes that the Employees' Plan
aids in retaining individuals who put forth such efforts and will assist in
attracting the best individuals in the future.
ADMINISTRATION. The Employees' Plan is administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"), which
consists of directors who are not eligible to participate in the Employees'
Plan. The Committee has exclusive authority to determine grants of options
under the Employees' Plan. The Committee accepts recommendations from
management of the Company. If, in the future, there is no Compensation
Committee, determinations under the Employees' Plan will be made by the entire
Board of Directors.
The Employees' Plan also provides that the Board may appoint a committee of
one or more directors who may grant options to employees who are not executive
officers. The members of this committee need not be "disinterested."
ELIGIBILITY. Any person who is an employee, either full or part-time, of the
Company is eligible to participate in the Employees' Plan. As of November 1,
1996, there were approximately 41 employees of the Company eligible to receive
options under the Employees' Plan, including five employees who are executive
officers of the Company (two of whom are also directors).
SHARES SUBJECT TO THE EMPLOYEES' PLAN. A maximum of 1,500,000 shares of
Common Stock may be subject to stock options awarded under the Employees' Plan.
The number of shares is subject to adjustments for changes in capitalization or
in connection with certain corporate transactions. Any shares subject to
options which lapse without being exercised may again be used for a stock option
under the Employees' Plan. Since grants of options under the Employees' Plan
are subject to determination by the Compensation Committee, it is not
determinable how many options may be granted to executive officers of the
Company as compared to other employees. See, however, "BOARD COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION", above, for a description of factors
which enter into the Committee's determination.
EXERCISE SCHEDULE. A stock option granted under the Employees' Plan shall
become exercisable at such times and for such amount of Common Stock as may be
determined by the Committee granting such Option. The Committee shall retain
authority, however, to accelerate exercisability of options granted.
PURCHASE PRICE AND PAYMENT. The purchase price of the Shares subject to each
stock option shall be not less than the Fair Market Value thereof on the date
the stock option is granted, except that in the case of an option granted to an
Eligible Employee who is a person owning more than 10% of the total combined
voting power of the Company, Initial Grant Price shall be 110% of such Fair
Market Value. The purchase price for shares of
-15-
<PAGE>
Common Stock being purchased pursuant to exercise of an option may be paid in
cash or property other than cash (including shares of Common Stock of the
Company). However, the purchase price may not be paid by delivery of shares of
Common Stock more frequently than once every six months, and the Committee may
at any time require that payment be made in cash.
TERM OF PLAN AND OPTIONS. The Employees' Plan will terminate on October 8,
2002 except as to the rights of option holders to exercise outstanding options
granted prior to such date. If approved by the shareholders at the Meeting, the
amendments to the Employees' Plan being proposed herein will also expire with
the Employees' Plan on such date. The term of each option granted under the
Employees' Plan shall be five years from the date of grant.
TRANSFERABILITY. Stock options granted under the Employees' Plan are not
transferable by the optionee otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order and are
exercisable during the lifetime of the optionee only by him or her.
STOCKHOLDER STATUS. Recipients of stock options under the Employees' Plan do
not have any rights as stockholders by virtue of the grant of a stock option
except with respect to shares of Common Stock actually issued or delivered to
such recipient upon exercise of their option.
TERMINATION, SUSPENSION OR MODIFICATION OF THE EMPLOYEES' PLAN. The Board of
Directors, without further approval of the shareholders, may at any time
terminate or suspend the Employees' Plan. Any such termination or suspension of
the Employees' Plan shall not affect stock options already granted, and such
stock options shall remain in full force and effect as if the Employees' Plan
had not been terminated or suspended. The Board of Directors, without further
approval of the shareholders, may amend the Employees' Plan at any time in any
respect as the Board of Directors deems advisable, subject to any required
stockholder or regulatory approval and to any conditions established by the
terms of such amendment, provided that in no event shall the Employees Plan be
amended more than once every six (6) months other than to comport with changes
in the Internal Revenue Code of 1986, the Employee Retirement Income Security
Act, or the rules promulgated by the Securities and Exchange Commission.
FEDERAL INCOME TAX CONSEQUENCES. An option granted under the Employees' Plan
will satisfy the formal prerequisites for an "incentive stock option," as
defined in the Internal Revenue Code of 1986 (the "Code"). Accordingly, an
employee will generally realize no taxable income when an option is granted, or
when it is exercised and Common Stock is transferred to that employee. Moreover,
an employee will generally realize only capital gain or loss upon a subsequent
disposition of Common Stock acquired by exercise of an Employees' Plan option,
as measured by the difference between the exercise price and the fair market
value of such stock when disposition is made.
-16-
<PAGE>
For its part, the Company will generally not be entitled to take a business
expense deduction in connection with either a grant or an exercise of an
Employees' Plan option. Moreover, the Company will be considered to have
received only the option price upon a transfer of Common Stock to an employee
under the Employees' Plan, irrespective of the value of such stock at that time.
The foregoing tax consequences pertain only if: (a) the holder of an
Employees' Plan option is deemed (under the Code) to be an employee of the
Company or its subsidiary when that option is exercised; and (b) Common Stock
acquired by exercise of an option is held for at least one year after that
exercise. To the extent that one or the other of these conditions is not
satisfied, then the employee must recognize ordinary income as of the date of
exercise, measured by the difference between the exercise price and the fair
market value of the purchased Common Stock at that time. To the extent of the
employee's recognition of ordinary income, the Company may then take a business
deduction in that amount.
The tax consequences of a compensatory transfer of property, are determined
under complex rules that are subject to change. Moreover, a taxpayer's
particular situation may render some variation of the general rules to be
applicable in a given case.
The adoption of this proposal requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS AND THE MANAGEMENT RECOMMEND A VOTE "FOR" APPROVAL OF
PROPOSAL NUMBER TWO.
INDEPENDENT AUDITORS
The independent accounting firm of KPMG Peat Marwick LLP was selected by the
Board of Directors with respect to audit of the consolidated financial
statements of the Company and its subsidiaries for the fiscal year ended June
30, 1996, as well as for many prior fiscal years. A representative of KPMG Peat
Marwick is expected to be present at the Meeting and will have an opportunity to
make a statement if desired, and will be available to respond to appropriate
questions.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders should be addressed to the Company at 500 Marquette
N.W., Albuquerque, New Mexico 87102, Attention: Corporate Secretary, and must be
received by the Company by July 5, 1997. Upon receipt of any such proposal, the
Company will determine whether or not to include any such proposal in the Proxy
Statement and proxy in accordance with applicable law. It is suggested that such
proposals be forwarded by Certified Mail-Return Receipt Requested.
-17-
<PAGE>
OTHER MATTERS
The management of the Company knows of no other matters to be presented at
the Meeting. Should any other matter requiring a vote of shareholders arise at
the meeting, the persons named in the proxy will vote the proxies in accordance
with their best judgment.
By order of the Board of Directors
Herbert M. Campbell II
Secretary
-18-
<PAGE>
SOLV-EX CORPORATION
Amendment Number 1 to
INCENTIVE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
1.1 The purpose of this Incentive Stock Option Plan is to promote the
success of Solv-Ex Corporation, and its Subsidiaries by attracting and retaining
employees by supplementing their cash compensation and providing a means for
them to increase their holdings of Common Stock of the Company. The opportunity
so provided and the receipt of Shares as compensation are intended to foster in
participants a strong incentive to put forth maximum effort for the continued
success and growth of the Company for the benefit of customers and shareholders,
to aid in retaining individuals who put forth such efforts, and to assist in
attracting the best available individuals in the future.
1.2 This Plan was approved by Board of Directors on October 9, 1992 (the
effective date of the Plan) and by the shareholders of the Company on October 7,
1993. This amendment adopts certain changes to the Plan and increases the
number of shares underlying options issuable pursuant to the Plan to 1,500,000
shares, as approved by the Board of Directors of the Company on June 11, 1996,
subject to shareholder approval.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
2.1 "ACT" means the Securities Exchange Act of 1934, as amended.
2.2 "BOARD" means the Board of Directors of the Company.
2.3 "BUSINESS DAY" means a day other than a Saturday or Sunday and other
than a legal holiday or a day on which banking institutions are
authorized to close under the laws of New Mexico.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COMMITTEE" means the Compensation Committee of the Board of Directors
whose members are "disinterested persons" as defined in Rule 16b-3
adopted pursuant to the Act or (in the absence of such a committee)
the entire Board of Directors. The term "Committee" also includes a
committee of at least one director (who need not be "disinterested")
with respect to any grant of options to employees who are not
executive officers of the Company.
2.6 "COMMON STOCK" means the Common Stock, par value $.01 per share, of
the Company.
2.7 "COMPANY" shall refer to Solv-Ex Corporation, a New Mexico
corporation.
2.8 "CORPORATE TRANSACTION" means a transaction in which the Company is
wholly or partially liquidated, or participates in a merger,
consolidation, or reorganization.
<PAGE>
2.9 "ELIGIBLE EMPLOYEE" means any person who is a full-time employee of
the Company or of a Subsidiary and any part-time employee of the
Company or of a Subsidiary approved by the Operating Committee to be
an Eligible Employee.
2.10 "EXECUTIVE OFFICERS" means the Company's chairman of the board,
president, principal financial officer, principal accounting officer
or controller, as the case may be, any vice-president of the Company
in charge of a principal business unit, division, or function, and any
member of the Company's executive committee, as constituted from time
to time.
2.11 "FAIR MARKET VALUE" means with respect to the Company's Shares the
mean between the high and low prices of Shares on the Nasdaq Small-Cap
Market (or on such other national securities exchange on which the
Shares may be traded hereafter) on the day on which an Option is
granted or, if there is no sale on that date, on the next preceding
day on which there was a sale.
2.12 "INITIAL GRANT DATE" means October 9, 1992.
2.13 "INITIAL GRANT PRICE" means the Fair Market Value of a Share on the
Initial Grant Date.
2.14 "OPTION" means a stock option granted pursuant to the Plan.
2.15 "OPTION AGREEMENT" means the agreement between the Company and an
Optionee for the grant of an Option.
2.16 "OPTION STOCK" means stock subject to an Option granted pursuant to
the Plan.
2.17 "OPTIONEE" means a person who receives an Option.
2.18 "PLAN" means the Company's Incentive Stock Option Plan.
2.19 "SHARES" means shares of the Common Stock.
2.20 "SUBSIDIARY" means any corporation in which the Company, at the time
an Option is granted to an employee thereof, or in other cases, at the
time of reference, owns directly or indirectly not less than 51
percent of the voting equity interest.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 9 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan, excluding those
Shares constituting the unexercised portion of any canceled, terminated, or
expired Options, is One Million Five Hundred Thousand (1,500,000) Shares. The
Shares shall be authorized, but unissued, Common Stock or Shares held in the
Treasury of the Company.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan has been terminated, become available for the grant of
other Options under the Plan.
-2-
<PAGE>
4. ADMINISTRATION OF THE PLAN.
4.1 GENERAL ADMINISTRATION. The Plan shall be administered by the
Committee which shall have authority to adopt such rules and regulations and to
make such determinations as are consistent with the Plan and are necessary or
desirable for its implementation and administration.
4.2 AUTHORITY. Subject to the provisions of the Plan, the Committee shall
have exclusive authority to determine grants of Options with respect to Options
granted to Eligible Employees.
4.3 IMMUNITY. No member of the Committee shall be liable, in the absence
of bad faith, for any act or omission with respect to his or her service on the
Committee as respects the Plan. Service on the Committee is declared to
constitute service as a Director of the Company, to the end that the members of
the Committee shall, in respect of their acts and omissions as such, be entitled
to the benefits of the Company's Articles of Incorporation, as amended, and to
indemnification and reimbursement as Directors of the Company pursuant to its
Bylaws or any contract and to the benefits of any letter of credit, insurance
policy, or other arrangement maintained by the Company providing coverage with
respect to acts or omissions of Directors of the Company or benefits with
respect to the payment by or on behalf of the Company of such indemnification
and reimbursement.
5. TERM OF PLAN.
The Plan, as amended, shall become effective on June 11, 1996, the date of
its adoption by the Board, and shall continue in effect until all Options
granted hereunder have expired or been exercised, unless sooner terminated under
the provisions relating thereto. No Option shall be granted after October 8,
2002.
6. TERMS OF OPTION AGREEMENT.
Upon the grant of each Option, the Company and the Eligible Employee shall
enter into an Option Agreement which shall specify the date of grant and the
purchase price, and shall include or incorporate by reference the substance of
all of the following provisions and any other provisions consistent with the
Plan as the Committee determines.
6.1 TERM. The term of each Option granted under the Plan shall be five
(5) years from the date of its grant, subject to earlier termination in
accordance with the Plan.
6.2 EXERCISE SCHEDULE. Any Option granted hereunder shall become
exercisable with respect to the Shares covered thereby at such time or times and
for the number of Shares as may be determined at the time of grant by the
Committee. The Committee shall have the authority to amend the provisions
thereof at any time for the purpose of accelerating the date or dates on which
such Option may be exercised.
6.3 PURCHASE PRICE. The purchase price of the Shares subject to each
Option shall be the Initial Grant Price or the Fair Market Value thereof on the
date the Option is granted, whichever is applicable; provided, however, no
Option may be granted under the Plan to any person who, immediately after such
Option is granted, owns (as defined in Section 422 of the Code) more than ten
(10%) percent of the total voting power of the Shares of the Company or stock of
any Subsidiary, unless the purchase price is at least 110% of the Initial Grant
Price or Fair Market Value at the time the Option is granted, whichever is
applicable.
6.4 PAYMENT OF PURCHASE PRICE. The purchase price of Shares acquired
pursuant to an Option shall be paid in full when the Option is exercised in cash
or by delivery of any property other than cash (including Shares or other
securities of the Company, so long as such property constitutes valid
consideration for the Shares purchased under applicable law and is surrendered
in good form for transfer, or by some combination of cash and such other
property); provided, however, that the purchase price may not be paid by the
delivery of Shares more frequently than once every six (6) months. Provided
further, that the Committee shall specifically have the authority to require (at
any time) that payment in full for Shares being purchased pursuant to exercise
of an Option be made in cash.
-3-
<PAGE>
6.5 TRANSFERABILITY. No Option is transferable by an Eligible Employee
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. The
designation of a beneficiary by an Eligible Employee does not constitute a
transfer.
6.6 TERMINATION OF EMPLOYMENT WITH THE COMPANY. If an Eligible Employee's
employment with the Company or a Subsidiary terminates for any reason, including
disability (as determined by the Board in its sole determination), except by
reason of death or for cause, an Option held at the date of termination (but
only to the extent exercisable at the time of termination in accordance with
Section 6.2 hereof) may be exercised in whole or in part at any time within
ninety (90) days after the date of termination (but in no event after the term
of the Option expires) and shall thereafter automatically terminate.
(a) In the case of an Eligible Employee's death, an Option held at
the date of termination (to the extent exercisable in accordance with Section
6.2 hereof) may be exercised in whole or in part at any time within one year
after the date of termination (but in no event after the term of the Option
expires) and shall thereafter automatically terminate.
(b) In the case of an Eligible Employee's termination for Cause (as
such may be defined by the Board of Directors), any Options held by such
Employee will terminate immediately.
6.7 SIX-MONTH HOLDING PERIOD. In the case of Executive Officers of the
Company, at least six months must elapse from the date of acquisition of the
Option by the Eligible Employee to the date of disposition of the Option (other
than upon exercise or conversion) or its underlying Shares.
7. USE OF PROCEEDS.
Proceeds from the sale of Shares pursuant to the Plan shall be used by the
Company for general corporate purposes.
8. EXERCISE OF OPTIONS.
8.1 PROCEDURE FOR EXERCISE. Any Option granted hereunder shall be
exercisable, in whole or in part, at any time after becoming exercisable in
accordance with Section 6.2 hereof, but not later than the date the Option
expires.
The minimum number of Shares with respect to which an Option may be
exercised at any one time shall be one hundred (100) Shares, unless the number
purchased is the total number at the time available for purchase under the
Option. An Option may not be exercised for a fractional Share. No Option may
be exercised after the expiration of its term as specified in Section 6.1.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option, and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Until the issuance of the stock certificates (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a shareholder shall exist with respect to Option Shares, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other
rights for which the record date is prior to the date the stock certificates are
issued, except as provided in Section 9 of the Plan.
8.2 EXERCISE FOLLOWING DEATH. In the case of the Optionee's death,
exercise shall be in accordance with Section 6.6 hereof by the person or persons
(including his estate) to whom his rights under the Option have passed by will
or by laws of descent and distribution.
-4-
<PAGE>
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Any change in the number of outstanding Shares of the Company occurring
through stock splits, combination of Shares, recapitalization, or dividends
consisting of Shares after the adoption of the Plan shall be appropriately
reflected in an increase or decrease in the aggregate number of Shares then
available for the grant of Options under the Plan, or to become available
through the termination, surrender, or lapse of Options previously granted; and
appropriate adjustments shall be made in the per Share Option price or number of
Shares subject to the Option as to any outstanding Options. No fractional
Shares shall become available for Options as a result of such adjustments.
Similar adjustments shall be made in the event of distribution of other
securities or other consideration in respect of outstanding Shares or in the
event of a Corporate Transaction or any other change in the corporate structure,
if and to the extent that the Committee deems such adjustments appropriate to
maintain the interest of the Optionee (or the Optionee's successor) as it
existed before the occurrence of the event.
10. TIME OF GRANTING OPTIONS.
The date of grant for any Option under this Plan shall be the date upon
which the Committee determines that an Option has been granted to an Eligible
Employee as provided in Section 4.2. No Option shall be granted after
expiration of the term of this Plan.
11. APPROVAL, AMENDMENT, AND TERMINATION OF THE PLAN.
11.1 APPROVAL. This Plan has been adopted by the Board, and shall be
presented to the shareholders of the Company for their approval by vote of a
majority of the shareholders present or represented at a meeting duly held, such
approval to be given within twelve (12) months following the date of adoption
hereof. Options may be granted prior to such approval, but they shall be
contingent upon such approval being obtained and may not be exercised prior to
such approval.
11.2 AMENDMENT. The Board, without further approval of the shareholders,
may amend this Plan at any time in any respect as the Board deems advisable,
subject to any required stockholder or regulatory approval and to any conditions
established by the terms of such amendment, provided that in no event shall the
Plan be amended more than once every six (6) months other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
promulgated by the Securities and Exchange Commission.
11.3 TERMINATION AND SUSPENSION. The Board, without further approval of
the shareholders, may at any time terminate or suspend this Plan. Any such
termination or suspension of the Plan shall not affect Options already granted,
and such Options shall remain in full force and effect as if this Plan had not
been terminated or suspended. No Option may be granted while the Plan is
suspended or after it is terminated.
Rights and obligations under any Option granted while this Plan is in
effect shall not be altered or impaired by suspension or termination of this
Plan, except with the consent of the person to whom the Option was granted.
12. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued with respect to any Option granted under this
Plan unless the exercise of the Option and the issuance and delivery of such
Shares pursuant thereto comply with all relevant provisions of law and the
requirements of any stock exchange upon which the Shares may then be listed.
The issuance of Shares is also subject to the approval of counsel of the Company
with respect to such compliance.
13. SHAREHOLDER STATUS.
No person shall have any rights as a shareholder by virtue of the grant of
an Option under the Plan except with respect to Shares actually issued or
delivered to that person.
-5-
<PAGE>
14. NONUNIFORM DETERMINATION PERMISSIBLE.
The Committee's determinations under the Plan, including, without
limitation, determinations as to the terms and provisions of Options, and the
written instruments evidencing Options, need not be uniform as among persons
similarly situated and may be made selectively among Eligible Employees.
15. TAXES.
The Company shall be entitled to withhold the amount of any withholding tax
payable with respect to any Options and Shares deliverable upon exercise thereof
and to sell such number of Shares as may be necessary to produce the amount so
required to be withheld, unless the recipient supplies to the Company cash in
the amount requested by the Company for the purpose. The person entitled to
receive Shares pursuant to an Option will be given notice as far in advance as
practicable to permit such cash payment to be made to the Company. The Company
may, in lieu of sale of Shares, defer making delivery of Shares until
indemnified to its satisfaction with respect to any such withholding tax.
16. TENURE.
An Eligible Employee's right, if any, to continue in the employ of the
Company or a Subsidiary shall not be affected by the fact that the Eligible
Employee is a participant under the Plan; and the Company or Subsidiary shall
retain the right to terminate his or her employment without regard to the effect
such termination may have on any rights he or she may have under the Plan.
17. OTHER ACTIONS.
Nothing in the Plan shall be construed to limit the authority of the
Company to exercise all of its corporate rights and powers, including, by way of
illustration and not by way of limitation, the right to grant options for proper
corporate purposes otherwise than under the Plan to any employee or any other
person, firm, corporation, association, or other entity, or to grant options to,
or assume options of, any person in connection with the acquisition by purchase,
lease, merger, consolidation, or otherwise of all or any part of the business or
assets of any person, firm, corporation, association, or other entity.
18. MISCELLANEOUS.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 ("1934 Act"), transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provision of the Plan or action by the Plan
Administrators fails to so comply, such provision or action shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Plan
Administrators.
-6-
<PAGE>
<TABLE>
<S><C>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John S. Rendall, W. Jack Butler or Herbert M. Campbell II as Proxies, each with SOLV-EX
CORPORATION 500 MARQUETTE N.W., SUITE 300, ALBUQUERQUE, NEW MEXICO 87102 the power to appoint his substitute, and hereby authorizes
them to vote, as designated below, all of the shares Common Stock of Solv-Ex Corporation held of record by the undersigned on
November 8, 1996, at the Annual Meeting of Shareholders to be held on December 13, 1996 or at any adjournment thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) / / to vote for all nominees listed below / /
(INSTRUCTION) TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE BOX NEXT TO THE NOMINEE'S NAME BELOW.)
----------------------------------------------------------------------------------------------------------------------
/ / J.S. Rendall / / W.J. Butler / / H.M. Campbell II / / J.E. Czaja
/ / M.N. Anderson / / T. Macdonald / / J.D. Heldman / / M.E. Davey
2. FOR approval of the amendments to the Company's Incentive Stock Option Plan.
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(OVER)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
AS EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
---------------------------------------------------------
Signature
- ---------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE ---------------------------------------------------------
PROXY Signature if held jointly
- ---------------------------------------------------------
Dated ,1996
-----------------------------------------------
</TABLE>
-19-
