<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S)240.14a-11(c) or (S)240.14a-12
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
May 22, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of North American Technologies Group, Inc. (the "Company") which will
be held at The Houstonian Hotel, 111 Post Oak Lane, Houston, Texas, on Thursday,
June 27, 1996 at 10:00 A.M. Your Board of Directors and management look forward
to personally greeting those stockholders able to attend.
At the Meeting, stockholders will be asked to approve amendments to the
Company's Certificate of Incorporation to (1) classify the Board of Directors
into three different classes and (2) to require a supermajority vote of
stockholders to approve amendments to the Company's Certificate of Incorporation
in certain circumstances. Stockholders will also be asked to elect nine
directors, to provide for an increase in the number of shares of common stock
the Company is authorized to issue at the Board of Directors' discretion, to
ratify the appointment of BDO Seidman, LLP as the Company's independent auditors
and to consider such other matters as may properly come before the Meeting or at
any adjournment(s) thereof. These matters are discussed in greater detail in
the accompanying Proxy Statement.
Your Board of Directors recommends a vote FOR all of the amendments to the
Company's Certificate of Incorporation, FOR the election of directors, FOR the
increase in the number of shares of common stock the Company is authorized to
issue, and FOR the ratification of BDO Seidman, LLP as the Company's independent
auditors.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the Meeting. You
are requested to sign, date and mail the enclosed proxy promptly.
We wish to thank our stockholders for their participation and support.
Sincerely,
Tim B. Tarrillion
Chairman of the Board
and Chief Executive Officer
<PAGE>
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 27, 1996
May 22, 1996
To the Stockholders of NORTH AMERICAN TECHNOLOGIES GROUP, INC.
The Annual Meeting of Stockholders (the "Meeting") of North American
Technologies Group, Inc. (the "Company") will be held at The Houstonian Hotel,
111 Post Oak Lane, Houston, Texas, on Thursday, June 27, 1996, at 10:00 A.M. for
the following purposes:
(1) to consider and approve an amendment to the Company's Certificate of
Incorporation to provide for the classification of the Board of
Directors into three different classes to establish procedures for
filling vacancies on the Board, to provide that directors shall only
be removed for cause and by a supermajority vote of stockholders, and
requiring Board consent to amend these provisions;
(2) to consider and approve an amendment to the Company's Certificate of
Incorporation to require a supermajority vote of stockholders to
approve amendments to certain provisions of the Company's Certificate
of Incorporation in certain circumstances, as described in the
accompanying Proxy Statement;
(3) to elect nine directors;
(4) to consider and approve an amendment to the Company's Certificate of
Incorporation to increase the number of shares of Common Stock the
Company is authorized to issue;
(5) to ratify the appointment of BDO Seidman, LLP as independent auditors
for the Company; and
(6) to transact such other business as may properly come before the
Meeting and at any adjournment(s) thereof.
A copy of the Annual Report for the fiscal year ended December 31, 1995 is
enclosed for your information.
<PAGE>
Only stockholders of record as of the close of business on May 20, 1996
will be entitled to vote at the Meeting and any adjournment or adjournments
thereof.
Enclosed is a Proxy Statement, a form of proxy and an addressed return
envelope. All stockholders, whether or not they expect to be present at the
Meeting, are requested to date and sign the proxy and return it in the enclosed
envelope promptly. The return of the proxy will not affect your right to vote
if you attend the Meeting.
By Order of the Board of Directors,
David M. Daniels
Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of North American Technologies Group, Inc.
(the "Company") to be voted at the Annual Meeting of Stockholders of the Company
on June 27, 1996 and at any adjournment or adjournments of the meeting (the
"Meeting") for the purposes described in the foregoing notice of Meeting.
Proxies which are validly executed by stockholders and which are received by the
Company no later than the business day preceding the Meeting will be voted in
accordance with the instructions contained thereon. If no instructions are
given, a proxy will be voted FOR the amendments to the Company's Certificate of
Incorporation to provide for a classified Board of Directors as described herein
and to provide for a supermajority vote of stockholders to approve amendments to
certain provisions of the Company's Certificate of Incorporation in certain
circumstances as described herein, FOR the election of directors, FOR an
increase in the number of shares of common stock the Company is authorized to
issue, FOR the ratification of BDO Seidman, LLP as the Company's independent
auditors and in the discretion of the persons named in the proxy, if granted, on
all other matters presented to the Meeting.
The execution of a proxy will not affect a stockholder's right to attend
the Meeting and vote in person. A stockholder who has given a proxy may revoke
it at any time before it is exercised at the Meeting by filing with the
Secretary of the Company a written notice of revocation or a proxy bearing a
later date or by attendance at the Meeting and voting in person. Attendance at
the Meeting will not, by itself, revoke a proxy.
The securities entitled to vote at the Meeting consist of shares of Common
Stock and Series F Preferred Stock of the Company. The numbers of outstanding
shares of Common Stock and Series F Preferred Stock at the close of business on
May 20, 1996 were 24,900,632 and 92,500 respectively. Each share of Common
Stock is entitled to one vote, each share of Series F Preferred Stock is
entitled to 100 votes, and nominees receiving a plurality of the votes cast,
with the Common Stock and Series F Preferred Stock voting together as a single
class, will be elected as directors. Only holders of record at the close of
business on May 20, 1996 will be entitled to vote at the Meeting. The holders
of a majority of the shares entitled to vote at the meeting must be present in
person or represented by proxy at the Meeting in order to constitute a quorum
for the transaction of business. Abstentions and broker non-votes will be
counted for the purpose of determining a quorum but neither will be counted in
the election of directors, in the voting on the amendments to the Certificate of
Incorporation, in the voting on the increase in the number of shares of Common
Stock the Company is authorized to issue or in the voting on the ratification of
the Company's independent auditors, as described herein.
<PAGE>
A copy of the Company's Annual Report for the fiscal year ended December
31, 1995 accompanies this Proxy Statement. No material contained in the Annual
Report is to be considered a part of the proxy solicitation material. The
mailing address of the Company's executive office is 4710 Bellaire Boulevard,
Suite 301, Bellaire, Texas 77401. The approximate date on which this Proxy
Statement and the form of proxy was first mailed or given to stockholders was
May 22, 1996.
PROPOSAL 1 - CLASSIFICATION OF THE BOARD OF DIRECTORS
- ----------
The Board of Directors has approved a resolution amending the Company's
Certificate of Incorporation to provide for a classified Board of Directors, to
establish procedures for filling vacancies on the Board, to provide that
directors shall only be removed for cause and by a supermajority vote of the
stockholders and to require Board consent to amend these provisions. At the
Meeting, stockholders will consider and vote on this proposed amendment. The
text of the proposed amendment is attached to this Proxy Statement as Exhibit 1.
The statements made in this Proxy Statement with respect to this amendment to
the Certificate of Incorporation should be read in conjunction with and are
qualified in their entirety by reference to Exhibit 1. In the event that this
proposal is approved, the Board of Directors will consider conforming amendments
to the Company's By-Laws at the meeting of the Board of Directors which is
expected to follow shortly after the Meeting.
This Amendment may have the effect of making it more difficult for
stockholders to remove the existing management of the Company and may,
therefore, discourage potentially unfriendly bids for shares of the Company.
See "Possible Anti-Takeover Effects of the Proposal."
A. Description of Proposed Amendment.
----------------------------------
The Company's Certificate of Incorporation would be amended to provide for
a classified Board of Directors by adding a new Article X as provided in Exhibit
1. The Proposal would operate to divide the Board into three separate classes
of directors, as nearly equal in number as possible, to serve a three year term
and until their successors are duly elected and qualified with each class being
elected at different annual stockholder meetings. Following the effectiveness
of the Proposal, Class I will consist of three directors who will serve for an
initial term of three years, Class II will consist of three directors who will
serve for an initial term of two years, and Class III will consist of three
directors who will serve for an initial term of one year. See "Proposal 3 -
Election of Directors." At each annual meeting after 1996, directors will be
elected to succeed those whose terms then expire and each newly elected director
will serve for a three-year term. The proposed Amendment would replace the
prior system of electing all of the directors annually for one-year terms.
If the number of directors constituting the Board is increased or
decreased, the resulting number of directors will be apportioned among the three
classes so as to make all classes as nearly equal in number as possible, except
that the term of any incumbent director may not be
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<PAGE>
shortened. Under the Delaware General Corporation Law ("GCL"), if a Board is
classified by action of the stockholders, unless the Certificate of
Incorporation specifies otherwise, members of the Board of each class may be
removed by the stockholders before the expiration of their respective terms only
for cause. Accordingly, in the event that stockholders approve this proposal,
none of the directors elected to the Classified Board may be removed without
cause prior to the expiration of their respective terms.
The effect of a Classified Board of Directors may be circumvented by
increasing or decreasing the size of the Board. At present, vacancies in the
Board of Directors, including vacancies resulting from an increase in the number
of directors, are required to be filled by a majority of the remaining members
of the Board, although less than a quorum, and each person so elected serves as
a director until a successor is elected by the stockholders. Additionally, any
director or the entire Board may be removed with or without cause by majority
vote of the stockholders. The Proposal provides that the size of the Board may
be fixed solely by action of the Board itself, and that any vacancies in the
Board of Directors be filled by a majority vote of the remaining directors then
in office, even though less than a quorum, and each person so elected would
serve for the remainder of the full term of the class in which the new
directorship was created or the vacancy occurred. The Proposal would also
provide that directors may be removed only for cause and only by the affirmative
vote of two-thirds of the stockholders entitled to vote thereon. See "Proposal
2 - Supermajority Voting Provisions." The GCL provides that the Certificate of
Incorporation, including these provisions, may be amended by the stockholders
only with the consent of the Board.
B. Reasons for Proposal
---------------------
Since directors will be serving for longer terms which expire at different
times, and may only be removed for cause by a supermajority vote of
stockholders, the Board of Directors believes that a classified Board will
promote continuity of management and, thereby enhance the ability of the Company
to carry out long-range plans and goals for its benefit and the benefit of its
stockholders. Although the Company has not experienced difficulties in the past
in maintaining continuity of the Board and management, the Board of Directors
believes that a classified Board will assist the Company in maintaining this
continuity of management into the future. Additionally, the Proposal has
certain anti-takeover effects that the Board believes will deter unsolicited
takeover attempts and protect the value of each stockholder's investment in the
Company. See "Possible Anti-Takeover Effects of the Proposal."
A Classified Board would also extend the time it would take for a majority
stockholder to obtain control of the Company's Board of Directors, thereby
limiting such abusive takeover tactics as two tiered tender offers. Assuming
each class of directors is equal in size, a majority stockholder could not
obtain control of the Board until the second annual stockholder's meeting after
it acquired a majority of the voting stock. During this time, the Board of
Directors would have a better opportunity to negotiate with any such majority
stockholder to obtain more favorable price and terms in any merger or tender
offer.
-3-
<PAGE>
C. Possible Anti-Takeover Effects of the Proposal
----------------------------------------------
The Board of Directors believes that Proposal 1 may have anti-takeover
effects as described below. Also described below are the general anti-takeover
provisions of the Delaware GCL.
1. Anti-Takeover Provisions of the Delaware GCL
--------------------------------------------
As set forth above, the Delaware GCL prohibits stockholders from removing
members of a Classified Board without cause before the expiration of their
respective terms unless the Certificate of Incorporation specifies otherwise.
The Delaware GCL contains a number of other provisions which are designed to
strengthen the position of incumbent management in connection with a takeover
attempt. For example, Delaware law provides that a company has the general
power, exercisable by its board of directors, to accept, reject, respond to or
take no action in respect of an actual or proposed acquisition, divestiture,
tender offer, takeover or other fundamental change. The case law of Delaware
has developed special standards for deciding whether to uphold or advocate the
actions of incumbent management in the context of takeover proposals.
The Company is also subject to Section 203 of the Delaware GCL, which
provides that a person who acquires fifteen percent (15%) or more of the
outstanding voting stock of a Delaware corporation becomes an "interested
stockholder". Section 203 prohibits a corporation from engaging in mergers or
certain other "business combinations" with an interested stockholder for a
period of three (3) years, unless (i) prior to the date the stockholder becomes
an interested stockholder, the board of directors approves either the business
combination or the transaction which results in the stockholder becoming an
interested stockholder, or (ii) the interested stockholder is able to acquire
ownership of at least eight-five percent (85%) of the outstanding voting stock
of the corporation (excluding shares owned by directors of the corporation who
are also officers and shares owned by certain employee stock plans) in the same
transaction by which the stockholder became an interested stockholder, or (iii)
the interested stockholder obtains control of the board of directors, which then
approves a business combination which is authorized by a vote of the holders of
two-thirds of the outstanding voting stock not held by the interested
stockholder.
The definition of interested stockholder does not include persons
whose ownership of voting stock exceeds the fifteen percent (15%) threshold as a
result of action taken by the corporation unless that person thereafter acquires
additional shares.
A "business combination" is defined broadly in the GCL to include any
merger or consolidation with the interested stockholder, any merger or
consolidation caused by the interested stockholder in which the surviving
corporation will not be subject to Delaware law, or the sale, lease, exchange,
mortgage, pledge, transfer or other disposition to the interested stockholder of
any assets of the corporation having a market value equal to or greater than ten
percent (10%) of the aggregate market value of the assets of the corporation.
"Business combination" is also defined to include transfers of stock of the
corporation or a subsidiary to the
-4-
<PAGE>
interested stockholder (except for transfers in conversion, exchange or pro rata
distribution which do not increase the interested stockholder's proportionate
ownership of a class or series), or any receipt by the interested stockholder
(except proportionately as a stockholder) of any loans, advances, guaranties,
pledges or the financial benefits.
2. Possible Consequences of the Anti-Takeover
Effects of the Proposal
----------------------------------------------
The Board of Directors believes that this Proposal 1, to the extent that it
deters unsolicited takeover attempts, will promote conditions of stability in
the business, management and control of the Company, discourage in advance
certain takeover offers or other attempts to accumulate the Company's stock and
encourage anyone contemplating such actions to negotiate with the Company, and
will assist the Company in defending against any such action if the Board does
not believe it to be in the best interests of the Company and all of its
stockholders. Although the Board of Directors is not aware of any overt threat
of such a takeover attempt at this time, the Board believes that this Proposal 1
is in the best interest of the Company.
A takeover offer often places the target corporation in the position
of making a forced sale, sometimes when the market price of its stock may be
temporarily depressed. The Board believes that the consideration offered in
such a situation, even though it may be in excess of the then market price, is
less than the consideration which could be obtained in a freely negotiated
transaction. In a freely negotiated transaction, the Board of Directors would
have the opportunity to seek a suitable partner at a time of its choosing and to
negotiate the most favorable price and terms which reflect not only the current,
but also the future value of the Company. The Board may also believe that the
takeover offer is not in the best interests of the Company and its stockholders
for additional reasons, such as those exhibited in the large number of business
failures which result from overleveraged transactions. In the context of an
unsolicited offer, the Board may not have adequate time to consider fully the
takeover offer and to determine what actions are in the best interests of the
Company and its stockholders despite the provisions of applicable federal law
regarding the minimum duration of certain takeover offers. This Proposal 1
attempts to ameliorate the problems inherent in these situations.
Takeover offers or other non-market acquisitions of stock are usually
made at prices above the prevailing market price of the corporation's stock and
often have a corresponding effect on such market price. Accumulation of stock
through market purchases, whether or not for the purpose of acquiring control,
may also support the price of a corporation's stock at levels higher than
otherwise would be the case. This Proposal 1 may discourage such takeover
offers and purchases, even if holders of a majority of the Company's shares
desire to sell such shares.
This Proposal 1 may also make it more difficult to accomplish a
transaction requiring stockholder approval or to displace management quickly,
even if a majority of the stockholders of the Company desire to do so. Under
certain circumstances, this Proposal 1 may permit management of the Company to
perpetuate itself in control of the Company. In addition, the Proposal could
encourage a potential purchaser of the Company to negotiate with the Board
-5-
<PAGE>
of Directors and offer terms acceptable to it. Such terms might include
continuation of the existing management of the Company or a commitment by the
purchaser to provide benefits (such as employment contracts) not available to
stockholders generally.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of at least the majority of the shares
entitled to vote at the Meeting is required in order to approve this Proposal 1.
Therefore, failure to vote has the same effect as a negative vote. Accordingly,
if stockholders are in favor of this Proposal 1 and do not vote their shares for
this Proposal 1 either in person or by proxy, such stockholders will have
effectively voted against the Proposal. If approved, this Proposal 1 will become
effective upon the filing of a Certificate of Amendment to the Certificate of
Incorporation of the Company with the Secretary of State of Delaware, which is
expected to follow shortly after the approval, if at all, of this Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
CLASSIFICATION OF THE BOARD OF DIRECTORS
PROPOSAL 2 - SUPER MAJORITY VOTING PROVISION
- ----------
The Board of Directors has approved a resolution amending the Company's
Certificate of Incorporation to require the affirmative vote of two-thirds of
the outstanding voting stock to approve amendments to Articles VIII, IX, X and
XI of the Certificate of Incorporation unless the proposed amendment has been
approved by the affirmative vote of at least eighty percent (80%) of the Board
of Directors. At the Meeting, stockholders will consider and vote on this
proposed amendment. The text of the proposed amendment to the Certificate of
Incorporation is attached to this Proxy Statement as Exhibit 2. The statements
made in this Proxy Statement with respect to this amendment to the Certificate
should be read in conjunction with and are qualified in their entirety by
reference to Exhibit 2.
This Proposal may have the effect of making it more difficult for
stockholders to change the number of directors of the Company and to remove the
existing management of the Company. Consequently, it may discourage potentially
unfriendly bids for shares of the Company. This Proposal 2 will also make it
more difficult for a stockholder to defuse the Company's takeover defenses that
require amending the Certificate of Incorporation. For example, if this
Proposal 2 is adopted, and Proposal 1 is also adopted, a stockholder seeking to
eliminate the Classified Board would have to obtain a supermajority vote of the
stockholders in order to amend the Company's Certificate of Incorporation. For
these reasons, the Board of Directors believes that this Proposal may have an
anti-takeover effect. In considering Proposal 2, stockholders should consider
and review the section entitled "Possible Consequences of the Anti-Takeover
Effects of the Proposal" appearing under Proposal 1 in this Proxy Statement.
-6-
<PAGE>
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of at least the majority of the shares
entitled to vote at the Meeting is required in order to approve this Proposal 2.
Therefore, failure to vote has the same effect as a negative vote. Accordingly,
if stockholders are in favor of this Proposal 2 and do not vote their shares in
favor of this Proposal 2, either in person or by proxy, such stockholders will
have effectively voted against the Proposal. If approved, this Proposal 2 will
be effective upon the filing of a Certificate of Amendment to the Certificate of
Incorporation of the Company with the Secretary of State of Delaware which is
expected to follow shortly after the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SUPERMAJORITY VOTING PROVISION.
PROPOSAL 3 - ELECTION OF DIRECTORS
- ----------
The nine persons listed below have been nominated by the Board of Directors
to serve as directors of the Company.
If the amendment to the Certificate of Incorporation to provide for a
Classified Board of Directors (see "Proposal 1") is adopted, the Board of
Directors will be divided into three classes. This Meeting will be the first
election of directors after the amendment which created the Classified Board.
Accordingly, at the Meeting, three directors will be elected for terms expiring
at the Company's 1997 Annual Meeting, three directors for terms expiring at the
1998 Annual Meeting, and three directors for terms expiring at the 1999 Annual
Meeting and, in each case, until their successors are duly elected and
qualified. At each Annual Meeting after 1996, directors will be elected to
succeed those directors whose terms then expire, and each person so elected will
serve for a three-year term.
If the Amendment to the Certificate of Incorporation is not approved,
directors elected at the Meeting will serve one-year terms until the 1997
Annual Meeting and until their successors are duly elected and qualified.
It is the intention of the persons named in the accompanying form of proxy
to vote such proxy for the election as directors of the following nominees. In
the event that any nominee is unable to serve or will not serve as a director,
it is intended that the proxies solicited hereby will be voted for such other
person or persons as may be nominated by management. Vacancies in the Board of
Directors may be filled by the Board of Directors (except that vacancies caused
by the resignation or removal of nominees of the holders of the Series F
Preferred Stock shall be filled by persons selected by such holders) and,
assuming stockholder approval of Proposal 1, any director chosen to fill a
vacancy would hold office until the next election of the class for which such
director had been chosen. Assuming stockholders do not approve Proposal 1, any
director chosen to fill a vacancy would hold office until the next election of
Directors.
-7-
<PAGE>
<TABLE>
<CAPTION>
Directors Whose Terms Year in Which
Expire at the 1997 Service as a
Annual Meeting Principal Occupation Director Began
- --------------------------------------------------------------------------------
<S> <C> <C>
William T. Aldrich, 64 President, Thor Ventures, L.C. 1996
President, WTA Enterprises, Inc.
President, Tietek, Inc.
David M. Daniels, 39 Executive Vice President and 1994
Secretary of the Company;
President of Industrial Pipe
Fittings, Inc.
Edwin H. Knight, 43 General Manager, --
Harrison Interests, Ltd.
- --------------------------------------------------------------------------------
</TABLE>
WILLIAM T. ALDRICH
Mr. Aldrich was elected to the Board of Directors on May 14, 1996, and
currently holds the position of Executive Vice President of GAIA
Technologies, Inc., a subsidiary of the Company. Mr. Aldrich is also the
President of Thor Ventures, L.C., a research and development firm (1993 to
present), and the President of WTA Enterprises, Inc., a personal holding company
(1977 to present). In addition, Mr. Aldrich is the president of TieTek, Inc., a
privately-held company developing a railroad crossstie made from a recycled
rubber composite (October 1995 to present). Mr. Aldrich was the president of
Caravelle Petroleum, Inc. from April 1978 to December 1993. In April 1993,
Caravelle Petroleum, Inc. sought protection under Chapter 11 of the Bankruptcy
Code. A plan of reorganization was approved and fully implemented in August
1993.
DAVID M. DANIELS
Mr. Daniels joined the Company in July 1994, after working with the Company
as a consultant for several years. Mr. Daniels served as Vice President of
Corporate Development from 1993 to 1994, Vice President of Finance from 1994 to
1995, and Senior Vice President and Chief Operating Officer from January 1995 to
June 1995. He currently holds the positions of Executive Vice President and
Secretary. Mr. Daniels also serves as President of Industrial Pipe Fittings,
Inc. ("IPF") (1993 to present). From 1984 to 1992, Mr. Daniels was employed by
Dean Witter Reynolds, where he served as Vice President for 8 years. Mr.
Daniels holds a Bachelor's Degree in Finance from the University of Houston, as
well as an Associate Degree from Georgia Military Academy.
-8-
<PAGE>
EDWIN H. KNIGHT
Mr. Knight manages Harrison Interests, Ltd., a privately held Texas limited
partnership whose lines of business are oil and gas exploration and production,
real estate and cattle ranching. Mr. Knight has managed Harrison Interests,
Ltd. for 13 years and holds a Bachelor's Degree from Louisiana State University
and is a certified public accountant.
<TABLE>
<CAPTION>
Directors Whose Terms Year in Which
Expire at the 1998 Service as a
Annual Meeting Principal Occupation Director Began
- --------------------------------------------------------------------------------
<S> <C> <C>
Donovan W. Boyd, 43 Senior Vice President and Chief 1995
Operating Officer of the Company
Mark E. Leyerle, 31 Principal, CCG Venture Partners, --
LLC
Christopher W. Roser, 38 General Partner, the Roser --
Partnership, Ltd., and The Roser
Partnership II, Ltd.
- --------------------------------------------------------------------------------
</TABLE>
DONOVAN W. BOYD
Mr. Boyd joined the Company as Senior Vice President in April 1995, and was
appointed Chief Operating Officer in July 1995. Prior to his position with the
Company, Mr. Boyd was Vice President of Sales and Marketing (1994 to 1995) and
Regional Vice President (1993 to 1994) for the Industrial Services division of
Rust International. Before Rust, Mr. Boyd was a Regional Vice President with
EnClean, Inc. (1991 to 1993) He holds a Bachelor's Degree in Chemical
Engineering from Tulane University and an MBA from Harvard University.
MARK E. LEYERLE
Mark E. Leyerle is a principal of CCG Venture Partners, LLC, a private
investment firm. Prior to his current position, Mr. Leyerle was an investment
banker at Simmons & Co. International, where he advised oilfield service and
equipment companies and a commercial banker with Texas Commerce Bancshares. He
holds a BBA degree from Baylor University and an MBA from Harvard University.
CHRISTOPHER W. ROSER
Mr. Roser has been a general partner of the Roser Partnership, Ltd., and
The Roser Partnership II, Ltd., privately held venture capital funds, since
1987. Prior to that, Mr. Roser was a technology research analyst and corporate
finance associate for Ladenburg Thalmann & Co., Inc. and a staff public
accountant for Main Hurdman KMG. He currently serves on the Boards of Directors
of various privately held companies, as well as on the Board of Directors of
Hauser
-9-
<PAGE>
Chemical Research, Inc. (NASD:HAUS) Mr. Roser holds an MBA in Finance from New
York University Graduate School of Business Administration.
<TABLE>
<CAPTION>
Directors Whose Terms Year in Which
Expire at the 1999 Service as a
Annual Meeting Principal Occupation Director Began
- --------------------------------------------------------------------------------
<S> <C> <C>
Tim B. Tarrillion, 45 Chief Executive Officer and 1995
President of the Company
Douglas C. Williamson, 45 Senior Vice President --
NationsBanc Capital Corporation
Robert H. Chaney, 37 Chairman and Chief Executive --
Officer, R. Chaney & Co.
- --------------------------------------------------------------------------------
</TABLE>
TIM B. TARRILLION
Mr. Tarrillion became Chief Executive Officer and President of the Company
on March 7, 1995. Mr. Tarrillion was most recently the President and Founder of
EET, Inc. ("EET") (1993 to 1995). Prior to starting EET, Mr. Tarrillion was co-
founder, President and Chief Operating Officer of EnClean, Inc. (1984 to 1993),
a public company which was listed on NASDAQ. EnClean provided industrial and
environmental cleaning services to companies in the refining, petrochemical,
steel, paper and utility industries. After growing to over $100 million in
revenue with 40 locations nationwide, EnClean was bought by and merged into Rust
International in 1993.
Mr. Tarrillion holds an MBA from Harvard University and a Master's Degree
and Bachelor's Degree in Chemical Engineering from Rice University. Mr.
Tarrillion has significant experience in the environmental field. Mr.
Tarrillion received the 1991 Merrill Lynch, Inc. Magazine's Entrepreneurial
award for the Houston area in connection with his role in building EnClean.
DOUGLAS C. WILLIAMSON
Mr. Williamson is the Senior Vice President of NationsBanc Capital
Corporation ("NBCC"), a position he has held since 1989. In this position, Mr.
Williamson manages venture capital investments. Mr. Williamson earned his MBA
from Columbia University and his Bachelor's Degree from Denison University.
ROBERT H. CHANEY
Mr. Chaney currently holds the positions of Chairman and Chief Executive
Officer of R. Chaney and Co., an investment management firm, a position he has
held since 1993. Prior
-10-
<PAGE>
thereto, Mr. Chaney was the President and Chief Executive Officer of Paramount
Petroleum Company.
BOARD MEETINGS AND COMMITTEES
There are currently three members of the Board of Directors. During the
fiscal year ended December 31, 1995, there were seven meetings of the Board and
twenty-five actions by unanimous consent. All members of the Board attended at
least 75% of the meetings. There are no committees of the Board of Directors.
The directors of the Company receive no fees or other compensation in
connection with their services as directors.
AGREEMENTS WITH HOLDERS OF SERIES F PREFERRED STOCK
Pursuant to a Stock and Warrant Purchase Agreement (the "Purchase
Agreement") dated as of April 5, 1996 between the Company, NBCC and certain
other investors (collectively, with NBCC, the "Investors"), the Company has
agreed to nominate to the Board of Directors, for as long as the Preferred Stock
is owned by the Investors or permitted assignees or permitted transferees, (i)
four (4) members designated by the holders of a majority in interest of the
Preferred Series F Stock, at least one (1) of which shall be designated by NBCC
so long as NBCC owns at least fifty percent (50%) of the Preferred Stock, (ii)
four (4) members designated by the holders of Common Stock and (iii) one (1)
member designated jointly by the holders of the Common Stock and the holders of
a majority in interest of the Preferred Stock. If the Company shall breach any
of the covenants or obligations set forth in the Purchase Agreement and such
breach remains uncured, the holders of a majority in interest of the Preferred
Stock shall be entitled then and thereafter to nominate and elect a majority of
directors to the Company's Board of Directors, at least two (2) of which shall
be designees of NBCC. Pursuant to the Purchase Agreement, the Investors'
nominees are: Douglas C. Williamson, Robert H. Chaney, Mark E. Leyerle and
Christopher Roser.
CHANGES IN CONTROL
The Company issued 1,770,729 shares of Common Stock and 71,000 Common Stock
purchase warrants in connection with a merger with EET in 1995. EET was formed
in 1993 after purchasing patents and proprietary environmental decontamination
technologies and processes from EnClean, Inc. EET was owned by approximately
forty shareholders, including Tim Tarrillion, President and Chief Executive
Officer, and Judith Knight Shields, Chief Financial Officer. EET and the
Company were not affiliated prior to the merger.
If the Company were to breach any of its covenants or obligations set forth
in the Purchase Agreement and such breach were to remain uncured, the holders of
a majority in interest of the Series F Preferred Stock would be entitled then
and thereafter to nominate and elect a majority of directors to the Company's
Board of Directors, at least two (2) of which shall be designees of NBCC.
-11-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued for the years 1993 through 1995 by the Company to or for the benefit of
the named executive officers.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
All
Name Other Restricted Stock Other
and Annual Stock Options/ LTIP Compen-
Principal Position Year(s) Salary($) Bonus($) Compensation($) Award(s) ($) SARS (#) Payouts($) sation($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Parrott(2) 1995 101,205 - 75,000(3) - - - -
Former Chairman and 1994 150,000 - - - 300,000 - -
Director 1993 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Tim B. Tarrillion(4) 1995 146,537 - 25,000(5) - 500,000 - -
Chief Executive Officer, 1994 - - - - - - -
President and Director 1993 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
David M. Daniels(6) 1995 130,529 - - - 200,000 - -
Executive Vice President, 1994 125,000 - - - 300,000 - -
Secretary and Director 1993 60,000 - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Donovan W. Boyd 1995 98,655(7) - - - 300,000 - 26,417(8)
Senior Vice President, COO 1994 - - - - - - -
1993 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Judith K. Shields 1995 92,308(9) - - - 300,000 - -
Senior Vice 1994 - - - - - - -
President-Finance CFO and 1993 - - - - - - -
Treasurer
====================================================================================================================================
</TABLE>
(1) Based upon the fiscal years ended December 31, 1995, 1994 and 1993.
(2) Mr. Parrott resigned as Chairman and Director on July 28, 1995.
(3) Payment of $15,000 a month for consulting services in August through
December 1995.
(4) Mr. Tarrillion became Chief Executive Officer, President and a Director of
the Company on March 7, 1995.
(5) Payments received in January and February 1995 as a consultant to the
Company.
(6) Mr. Daniels became a Director during August 1994 and became an Executive
Vice President, and Secretary of the Company during January 1995.
(7) Mr. Boyd's employment began on April 1, 1995.
-12-
<PAGE>
(8) Payments made to relocate Mr. Boyd to Houston, Texas.
(9) Ms. Shield's employment began on March 20, 1995.
STOCK OPTIONS
-------------
The following table sets forth for each of the named executive officers
regarding the grant of stock options by the Company in the 1995 fiscal year and
their potential realizable values. No stock appreciation rights have been
granted to employees.
<TABLE>
<CAPTION>
Option Grants in the 1995 Fiscal Year
- --------------------------------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
- --------------------------------------------------------------------------------------------------
% of
No. of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration 5% (Price 10% (Price
Name (#) Year ($/Sh) Date = $.82 = $1.25
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All stockholders N/A N/A $ N/A $19,200,000(1) $29,300,000(1)
- --------------------------------------------------------------------------------------------------
John Parrott 0 0 0 0 0 0
Tim B. Tarrillion 400,000 16% 2.50 2004 1,550,000 2,360,000
100,000 4% 1.00 2001 134,000 177,000
Daniel D. Daniels 200,000 8% 2.50 2004 775,000 1,180,000
Donovan W. Boyd 200,000 8% 2.50 2004 775,000 1,180,000
100,000 4% 1.00 2001 134,000 177,000
Judith K. Shields 200,000 8% 2.50 2004 775,000 1,180,000
100,000 4% 1.00 2001 134,000 177,000
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) The aggregate value of the 23,477,285 outstanding shares of Common
Stock of the Company on December 31, 1995, assuming a share price of $.53 on
December 29, 1995, was approximately $12,400,000. If the Common Stock
appreciates at a compound rate of 5% per year over the option term, the
aggregate value of all such shares would be approximately $19,200,000, an
increase of $6,800,000 for all stockholders. Similarly, if the Common Stock
appreciates at a compound rate of 10% per year over the nine-year option term,
the aggregate value of all such shares would be approximately $29,300,000, an
increase of $16,900,000 for all stockholders. The purpose of providing this
information is to indicate the total potential stockholder gain over the term of
the options comparable to the potential gain shown for the options.
-13-
<PAGE>
The following table sets forth for each of the named executive officers
information regarding stock options exercised by such officers during the 1995
fiscal year, together with the number and value of stock options held at 1995
fiscal year-end, each on an aggregated basis.
<TABLE>
<CAPTION>
Aggregated Option Exercises in the 1995 Fiscal Year
and Fiscal Year-End Option Value
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End(1)
Number of --------------- ------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John Parrott -- -- 300,000/0 --
Tim B. Tarrillion -- -- 0/500,000 --
David M. Daniels -- -- 120,000/380,000 --
Donovan W. Boyd -- -- 0/300,000 --
Judith K. Shields -- -- 0/300,000 --
- --------------------------------------------------------------------------------
</TABLE>
(1) Market value of underlying securities at year-end ($.53), minus the
exercise price.
EMPLOYMENT AGREEMENTS
- ---------------------
In February 1995, the Company entered into employment agreements with Tim
B. Tarrillion as Chief Executive Officer and President, Donovan W. Boyd as
Senior Vice President, David M. Daniels as Executive Vice President and
Secretary, and Judith Knight Shields as Senior Vice President - Finance, Chief
Financial Officer and Treasurer.
Mr. Tarrillion's employment agreement provides for a base salary of
$180,000, plus bonuses and cost of living increases, and stock options to
purchase 500,000 shares of the Company's Common Stock which vest over four years
commencing on March 31, 1996. His agreement has a term of five years.
Mr. Boyd's employment agreement provides for a base salary of $135,000,
plus bonuses and cost of living increases, as well as options to purchase
300,000 shares of the Company's Common Stock which vest over a period of four
years commencing March 31, 1996. His agreement has a term of five years.
Mr. Daniels' employment agreement provides for a base salary of $135,000,
plus bonuses and cost of living increases, as well as options to purchase
200,000 shares of the Company's
-14-
<PAGE>
Common Stock which vest over a period of four years commencing March 31, 1996.
His agreement has a term of five years.
Ms. Shields' employment agreement provides for a base salary of $120,000,
plus bonuses and cost of living increases, as well as options to purchase
300,000 shares of the Company's Common Stock which vest over a period of four
years, commencing on March 31, 1996. Her agreement is for a term of five years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the securities
holdings of all persons which the Company, by virtue of filings with the
Securities and Exchange Commission, has reason to believe may be deemed the
beneficial owners of more than 5% of the Company's outstanding Common Stock and
Series F Preferred Stock as of May 20, 1996.
-15-
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
- -------------------------------------------------------------------------
Amount and Nature
of Beneficial Percentage
Name and Address of Beneficial Owner Ownership of Class(1)
- -------------------------------------------------------------------------
<S> <C> <C>
NationsBanc 10,000,000 28.7
Capital Corporation(2)
901 Main Street
66th Floor
Dallas, Texas 75202
- ----------------------------------------------------------------------
Robert H. Chaney(3) 2,500,000 9.1
R. Chaney & Partners, 1993 L.P.
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010-1006
- ----------------------------------------------------------------------
Gold Spinners International, Inc. (4) 2,750,000 11.1
5201 S. Mission Road
Mt. Pleasant, Michigan 48858
- ----------------------------------------------------------------------
The CCG Charitable 1,500,000 5.7
Remainder Unitrust #1
14450 T.C. Jester Boulevard
Suite 170
Houston, Texas 77014
- ----------------------------------------------------------------------
William T. Aldrich(5) 1,666,667 6.7
10406 Memorial Drive
Houston, Texas 77024
- ----------------------------------------------------------------------
</TABLE>
(1) Calculated in accordance with the General Rules and Regulations of the
Securities and Exchange Commission, and includes shares of Common Stock
which can be acquired upon exercise of conversion of outstanding options,
warrants or other convertible securities (such as the Series F Preferred
Stock) which are exercisable within sixty days of May 20, 1996.
-16-
<PAGE>
(2) Includes 5,000,000 shares of Common Stock issuable upon conversion of
Shares of Series F Preferred Stock and 5,000,000 shares of Common Stock
which may be acquired upon exercise of Common Stock purchase warrants.
(3) Includes 1,250,000 shares of Common Stock issuable upon conversion of
shares of Series F Preferred Stock and 1,250,000 shares of Common Stock
which may be acquired upon exercise of Common Stock purchase warrants.
(4) Of these shares, 1,625,000 are "contingent escrow shares" which may be
canceled if certain performance criteria are not met. Although these
shares have been treated as outstanding for purposes of this schedule, they
shall be released to the owner thereof, if, and only if, the Company shall
be acquired prior to December 31, 1996 (whether by merger, share exchange
involving more than 80% of its outstanding securities, or a sale of all or
substantially all of its assets) for a purchase price exceeding
$250,000,000.
(5) Includes 1,666,667 shares of Common Stock owned by Thor Ventures, L.C. and
GAIA Holdings, Inc. Of these shares, WTA Enterprises, a closely
held corporation controlled by Mr. Aldrich, owns 397,633 shares, of which
Mr. Aldrich owns of record 218,698 shares and his wife, Natalie B. Aldrich,
his son, Jeffrey B. Aldrich and his daughter, Amy A. Norman own the
remaining 178,935 shares. Mr. Aldrich disclaims any beneficial ownership
of 1,447,969 shares of the 1,666,667 shares owned by Thor Ventures, L.C.
and GAIA Holdings, Inc. Does not include stock options to purchase 200,000
shares of Common Stock which have not yet vested.
-17-
<PAGE>
<TABLE>
<CAPTION>
SERIES F PREFERRED STOCK
- ---------------------------------------------------------------------------
Amount and Nature
of Beneficial Percentage
Name and Address of Beneficial Owner Ownership of Class(1)
- ------------------------------------------------------------------------
<S> <C> <C>
NationsBanc Capital Corporation 50,000 54.1
901 Main Street
66th Floor
Dallas, Texas 75202
- ------------------------------------------------------------------------
Robert H. Chaney 12,500 13.5
R. Chaney & Partners, 1993 L.P.
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010-1006
- ------------------------------------------------------------------------
CCG Venture Partners, LLC 7,500(1) 8.1
14450 T.C. Jester Boulevard
Suite 170
Houston, Texas 77010-1006
- ------------------------------------------------------------------------
Harrison Interests, Ltd. 5,000 5.4
Texas Commerce Bank Bldg.
Suite 1900
Houston, Texas 77002
- ------------------------------------------------------------------------
</TABLE>
(1) Registered in the name of The CCG Charitable Remainder Unitrust No. 1 for
which CCG Venture Partners, LLC provides investment management services.
CCG Venture Partners, LLC disclaims beneficial ownership of these shares.
OWNERSHIP BY OFFICERS, DIRECTORS AND NOMINEES FOR DIRECTOR
The following table sets forth the beneficial ownership of all of the
Company's outstanding Common Stock as of May 20, 1996, by all officers and
directors and nominees for director, individually and as a group.
-18-
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percentage
Name and Address of Beneficial Owner Ownership of Class(1)
- -----------------------------------------------------------------------
<S> <C> <C>
Tim B. Tarrillion(2) 881,630 3.5
10102 Cedar Creek
Houston, Texas 77042
- -----------------------------------------------------------------------
Donovan W. Boyd(3) 150,000 Less
4014 N. Beechwood Court than
Houston, Texas 77059 1%
- -----------------------------------------------------------------------
David M. Daniels(4) 915,000 3.6
5717 Hogue Street
Houston, Texas 77087
- -----------------------------------------------------------------------
Robert H. Chaney(5) 2,500,000 9.1
R. Chaney & Partners, 1993 L.P.
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
- -----------------------------------------------------------------------
Mark E. Leyerle(6) 1,500,000 5.7
14450 T.C. Jester Boulevard
Suite 170
Houston, Texas 77014
- -----------------------------------------------------------------------
Douglas C. Williamson(7) 0 0
901 Main Street
66th Floor
Dallas, Texas 75202
- -----------------------------------------------------------------------
Edwin H. Knight(8) 0 0
707 Travis
Suite 1900
Houston, Texas 77002
- -----------------------------------------------------------------------
Christopher Roser(9)
1105 Spruce Street 1,000,000 3.8
Boulder, Colorado 80302
- -----------------------------------------------------------------------
William T. Aldrich(10) 1,666,667 6.7
10406 Memorial Drive
Houston, Texas 77024
- -----------------------------------------------------------------------
All officers, directors and nominees 8,780,797 28.6
for director, as a group (10 persons)
- -----------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
_____________________
(1) Based upon 24, 900,632 shares outstanding at May 20, 1996. Calculated in
accordance with the General Rules and Regulations of the Securities and
Exchange Commission, and includes shares of Common Stock which can be
acquired upon exercise or conversion of outstanding options, warrants and
shares of Series F Preferred Stock which are exercisable or convertible
within 60 days of May 20, 1996.
(2) Includes 530,500 shares and 50,000 Common Stock purchase warrants received
by Mr. Tarrillion in conjunction with a merger transaction between the
Company and EET in March 1995. Also includes 91,130 shares owned through a
profit sharing plan for the benefit of Mr. Tarrillion. Does not include
options to purchase 300,000 of the 500,000 shares of the Company's Common
Stock which have not yet vested and which were received in conjunction with
the EET merger. Also does not include 51,000 shares received by trusts on
behalf of Mr. Tarrillion's minor children in connection with the EET merger
which are held by an independent trustee as to which Mr. Tarrillion
disclaims any beneficial ownership.
(3) Includes options to purchase 150,000 shares of the Company's Common Stock
which have vested. Does not include options to purchase 150,000 shares of
the Company's Common Stock which have not vested.
(4) Includes 600,000 shares received by Mr. Daniels in conjunction with a
merger transaction between the Company and IPF in June 1995. Includes
options to purchase 230,000 shares of the Company's Common Stock.
(5) Includes 1,250,000 shares of Common Stock issuable upon conversion of
shares of Series F Preferred Stock and 1,250,000 shares of Common Stock
which may be acquired upon exercise of Common Stock purchase warrants.
(6) Includes 750,000 shares of Common Stock issuable to The CCG Charitable
Remainder Unitrust No. 1 upon conversion of shares of Series F Preferred
Stock and 750,000 shares of Common Stock which may be acquired by The CCG
Charitable Remainder Unitrust No. 1 upon exercise of Common Stock purchase
warrants. CCG Venture Partners, LLC provides investment management
services to CCG Charitable Remainder Unitrust No. 1. Mr. Leyerle, a
principal of CCG Venture Partners, LLC, disclaims any beneficial ownership
of these shares.
(7) Does not include 5,000,000 shares of Common Stock issuable to NBCC upon
conversion of shares of Series F Preferred Stock and 5,000,000 shares of
Common Stock which may be acquired by NBCC upon exercise of Common Stock
purchase warrants.
(8) Does not include 500,000 shares of Common Stock issuable to Harrison
Interests, Ltd. upon conversion of shares of Series F Preferred Stock and
500,000 shares of Common Stock which may be acquired by Harrison Interests,
Ltd. upon exercise of Common Stock purchase warrants.
-20-
<PAGE>
(9) Includes 500,000 shares of Common Stock issuable to The Roser Partnership
II Ltd. upon conversion of shares of Series F Preferred Stock and 500,000
shares of Common Stock which may be acquired by The Roser Partnership II
Ltd. upon exercise of Common Stock purchase warrants. Mr. Roser, a general
partner of The Roser Partnership II Ltd., disclaims beneficial ownership of
these shares.
(10) Includes 1,666,667 shares of Common Stock owned by Thor Ventures, L.C. and
GAIA Holdings, Inc. Of these shares, WTA Enterprises, a closely
held corporation controlled by Mr. Aldrich, owns 397,633 shares, of which
Mr. Aldrich owns of record 218,698 shares and his wife, Natalie B. Aldrich,
his son, Jeffrey B. Aldrich and his daughter, Amy A. Norman own the
remaining 178,935 shares. Mr. Aldrich disclaims any beneficial ownership
of 1,447,969 shares of the 1,666,667 shares owned by Thor Ventures, L.C.
and GAIA Holdings, Inc. Does not include stock options to purchase 200,000
shares of Common Stock which have not yet vested.
-21-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Advances From Directors, Officers and Certain Affiliates.
- ---------------------------------------------------------
Mr. John W. Parrott, former Chairman of the Company, and Mr. Thom Robinson,
former Chief Executive Officer and Director of the Company, each own 33 1/3% of
the issued and outstanding shares of Gold Spinners International, Inc. ("GSI").
From its inception through 1992, the Company was advanced an aggregate of
$42,800 from GSI. During 1993, the Company repaid $40,000 of the advances and
was advanced an additional $281,382, resulting in aggregate unpaid advances of
$284,182. During 1994, the Company repaid all of the advances to GSI.
Through a corporate affiliate, Mr. Robinson also advanced the Company
$670,000 during 1993, of which the Company repaid $493,500, leaving aggregate
unpaid advances of $176,500 at the end of 1993. During 1994, this affiliate
provided additional advances of $335,000 to the Company and was repaid $522,500
of the advances, thus, leaving a balance of $11,000 as of December 31, 1994.
Consulting Agreement with John W. Parrott
- -----------------------------------------
Effective as of July 28, 1995, John W. Parrott terminated his employment
agreement with the Company and entered into a consulting agreement (the
"Consulting Agreement"). The Consulting Agreement provides that Mr. Parrott
will provide advice to the Company with respect to the Company's transition in
management and certain litigation and financing matters through December 31,
1995. Pursuant to the Consulting Agreement, Mr. Parrott will receive $15,000 a
month through December 31, 1995 for his consulting services, and a payment in
settlement of his five-year employment contract of $250,000, payable in bi-
weekly payments of $11,538 beginning January 12, 1996. This amount was repaid
in April 1996, including accrued interest of $7,000.
Transactions with Directors, Officers and Certain Affiliates
- ------------------------------------------------------------
In January 1996, Mr. Tarrillion loaned $250,000 to IPF under the terms of a
promissory note. The note bears interest at 13% per annum, requires monthly
payments of $5,700 and matures in January 1999. Proceeds from the note were
used by IPF to purchase a machine for fabricating wyes, tees and els. The
equipment purchased serves as collateral for the note.
Certain corporate affiliates of James Impero, a former officer and director
of the Company, entered into a sublicense agreement with the Company during
March 1994 pursuant to which these affiliates assigned and conveyed to the
Company the exclusive marketing rights to the OleofilterTM System that such
affiliates had directly licensed from Exxon. Pursuant to that sublicense, the
Company paid those affiliates a license fee of $50,000 during 1994 and $50,000
in January 1995.
In December 1995, the Company purchased assets from GAIA Holdings, Inc.
and/or Thor Ventures, L.C., for $2.5 million cash plus 1,666,667 shares of
Common Stock of the
-22-
<PAGE>
Company (restricted) plus certain future royalties. Mr. Aldrich is a director of
GAIA Holdings, Inc. and the President of Thor Ventures, L.C.
In June 1995, the Company acquired by merger IPF, a company owned by Mr.
David Daniels, a director and officer of the Company and two other individuals
who were subsequently hired by the Company. The Company issued 1,300,000 shares
of the Company's Common Stock in conjunction with the merger, 600,000 of which
were issued to Mr. Daniels. Mr. Daniels was also released from a personal
guaranty of certain debts of IPF in the amount of $50,000. The Company also
agreed to repay certain outstanding loans made by Mr. Daniels to IPF on or
before December 31, 1995. The outstanding balance of such loans at December 31,
1995, was $120,000. Mr. Daniels was repaid the $120,000 by Mr. Tarrillion. IPF
then executed a note in the amount of $120,000 due to Mr. Tarrillion. The note
bears interest at twelve (12%) percent per annum, and is due January 31, 1997.
Further, Mr. Daniels entered into an amendment to his existing employment
agreement with the Company to serve as President of IPF.
In September 1995, R. Chaney & Partners, 1993 L.P., Harrison Interests,
Ltd. and The CCG Charitable Remainder Unitrust No. 1 with which Messrs. Chaney,
Knight and Leyerle, respectively, are affiliated, purchased from the Company
convertible subordinated notes (the "Notes") and warrants to acquire 2,500,000
shares of the Company's Common Stock for $2,500,000. The Notes were to bear
interest at 13-1/2% per annum, payable semi-annually. The principal amount of
the Note plus the deferred interest was convertible at the option of the holder
into shares of the Company's Common Stock at a conversion price of $1.00 per
share, subject to certain adjustments, at any time after September 22, 1996 and
prior to maturity on September 22, 2000. The indebtedness evidenced by the
Notes was subordinated to certain existing and future indebtedness of the
Company. The Notes were exchanged in April 1996 for shares of Series F
Preferred Stock and Common Stock purchase warrants.
The Company has employment agreements with Messrs. Tarrillion, Boyd and
Daniels, and Ms. Shields. Mr. Aldrich has an employment agreement with GAIA
Technologies, Inc. providing for an annual salary of $90,000 and an annual bonus
at the discretion of the Board of Directors.
The Company has granted certain options and warrants to directors and
officers of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
To the knowledge of the Company, each of the Company's directors,
executive officers and 10% beneficial owners has complied with the requirements
of Section 16(a) of the Securities and Exchange Act of 1934 except that Mr.
Tarrillion, Mr. Boyd and Ms. Shields each were one month late in filing their
Form 4 upon the amendment of their respective stock option agreements in
December 1995.
-23-
<PAGE>
VOTE REQUIRED
A plurality of votes cast by holders of shares eligible to vote at the
meeting is required to elect a nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NINE NOMINEES
TO THE BOARD OF DIRECTORS
PROPOSAL 4 - INCREASE IN THE NUMBER OF COMMON SHARES THE
- ----------
COMPANY IS AUTHORIZED TO ISSUE FROM 50,000,000 SHARES TO 100,000,000 SHARES
At the Meeting, stockholders will vote on a proposal to amend the
Company's Certificate of Incorporation to increase the number of shares of
Common Stock the Company is authorized to issue.
On May 14, 1996, the Board of Directors of the Company authorized, subject
to approval by the Company's stockholders, an amendment to the Company's
Certificate of Incorporation increasing the number of shares of Common Stock the
Company is authorized to issue from 50,000,000 to 100,000,000. The resolution
of the Board of Directors, subject to approval by the Company's stockholders,
amends Article IV of the Company's Certificate of Incorporation as provided in
Exhibit 3 to this Proxy Statement.
The Certificate of Incorporation of the Company presently authorizes the
issuance of up to 50,000,000 shares of Common Stock, par value $.001 per share.
At May 20, 1996, there were 24,900,632 shares of Common Stock issued and
outstanding. As a result, as of May 20, 1996 only approximately 25,099,368
shares of Common Stock remain authorized and available for issuance.
The Company has outstanding options, warrants, convertible debt and
preferred stock which are convertible or exchangeable for shares of Common Stock
which, in the unlikely event all such securities were converted, could require
the issuance of approximately 28,800,000 shares of Common Stock, which would be
more than presently authorized. The recently completed offering of Series F
Preferred Stock and the related Common Stock purchase warrants (the "Series F
Warrants") account for 18,500,000 of these shares which would be required to be
issued.
The Series F Preferred Stock is convertible at any time into Common Stock
of the Company prior to April 8, 2001 at the rate of 100 shares of Common Stock
for each one share of Series F Preferred Stock. Thereafter, the Series F
Preferred Stock can be converted at the holder's option at the lower of (a) the
then-current conversion price or (b) a calculated value utilizing a discount to
market value of the Common Stock. The Company may redeem the Series F Preferred
Stock at face value on or after April 8, 2004.
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<PAGE>
The Series F Warrants have an exercise price of $1.00 per share, subject
to certain adjustments, and expire on April 8, 2004. The Company has agreed
to request shareholder approval for an increase in the authorized Common Stock
so as to permit the exercise of the Series F Warrants. If insufficient
authorized Common Stock is available for the exercise of Series F Warrants, the
Company will be permitted to repurchase the Series F Warrants.
The Board of Directors also believes that in order to meet the Company's
continued capital needs, it is likely that offerings of Common Stock or other
securities convertible into or exchangeable for Common Stock will be desirable.
Furthermore, the Company intends to make acquisitions in the future which may
involve the issuance of Common Stock of the Company. While the Company has not
made definite arrangements to engage in an offering or acquisition of this type,
it is likely that the Company will seek to raise capital by offering and selling
securities during 1996 and thereafter. Increasing the authorized number of
shares of Common Stock the Company may issue will provide the Company with the
ability and flexibility to take prompt advantage of market conditions and avoid
the expense and delay, and possible loss of opportunity, that could result if a
need for additional authorized Common Stock arose but a special meeting of
stockholders had to be held prior to the issuance of the stock. The Board of
Directors further believes that if the proposed amendment to the Company's
Certificate of Incorporation is not approved by the stockholders, the Company's
ability to raise capital will be unduly restricted.
VOTE REQUIRED
The affirmative vote of holders of at least the majority of the shares
entitled to vote at the meeting is required in order to approve this proposal.
Therefore, failure to vote has the same effect as a negative vote. Accordingly,
if stockholders are in favor of this proposal and do not vote their shares
either in person or by proxy, such stockholders will have effectively voted
against the proposal.
If approved, this increase in the number of shares of Common Stock the
Company is authorized to issue will be effective upon filing of a Certificate of
Amendment to the Certificate of Incorporation of the Company with the Secretary
of State of Delaware which is expected to follow shortly after the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE FROM 50,000,000 TO 100,000,000
SHARES
PROPOSAL 5 - RATIFICATION OF THE COMPANY'S INDEPENDENT AUDITORS
- ----------
BDO Seidman, LLP has audited the Company's financial statements since
1992. BDO Seidman, LLP has been selected by the Board of Directors to serve as
the independent auditors for the Company for the fiscal year ending December 31,
1996. Representatives of BDO
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<PAGE>
Seidman, LLP are expected to be present at the Meeting to make a statement if
they so desire and will be available to respond to appropriate questions.
The Board of Directors shall consider the selection of another accounting
firm to serve as the Company's independent auditors in the event that the
stockholders do not approve the selection of BDO Seidman, LLP as the Company's
independent auditors.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares present in person or by
proxy is required for ratification of BDO Seidman, LLP as the Company's
independent auditors for the fiscal year ending December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF BDO SEIDMAN, LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR THE 1996 FISCAL YEAR
OTHER MATTERS
The Board of Directors does not know of any other matter which is intended
to be brought before the Meeting, but if such matter is presented, the persons
named in the enclosed proxy intend to vote the same according to their best
judgment.
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Company without additional compensation. The Company will
reimburse brokers and other persons holding stock in their names or in the names
of nominees for their expenses incurred in sending proxy material to principals
and obtaining their proxies.
1997 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1997 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's 1997 proxy statement,
they must be received by the Company at its principal office in Bellaire, Texas
on or before January 22, 1997.
By Order of the Board of Directors
Tim B. Tarrillion
Chairman of the Board and
Chief Executive Officer
Dated: May 22, 1996
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<PAGE>
EXHIBIT 1
The Board of Directors has adopted a resolution to add Article X of the
Company's Certificate of Incorporation, which provides in its entirety, as
follows:
ARTICLE X.
(a) NUMBERS, ELECTIONS AND TERMS. Except as otherwise fixed by or
pursuant to provisions hereof relating to the rights of the holders of
any class or series of stock having a preference over common stock as
to dividends or upon liquidation to elect additional Directors under
specified circumstances, the number of Directors of the Corporation
shall be fixed from time to time by affirmative vote of a majority of
the Directors then in office. The Directors, other than those who may
be elected by the holders of any classes or series of stock having a
preference over the common stock as to dividends or upon liquidation,
shall be classified, with respect to the time for which they severally
hold office, into three class, as nearly equal in number as possible,
as shall be provided in the manner specified in the By-Laws of the
corporation, one class to be originally elected for a term expiring at
the annual meeting of stockholders to be held in 1997, another class
to be originally elected for a term expiring as the annual meeting of
stockholders to be held in 1998, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to
be held in 1999, with each class to hold office until its successor is
elected and qualified. At each annual meeting of the stockholders of
the Corporation after fiscal year 1996, the successors of the class of
Directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held
in the third year following the year of their election. Election of
directors need not be by written ballot unless so provided in the By-
Laws of the corporation.
(b) NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise
fixed by or pursuant to provisions hereof relating to the rights of
the holders of any class or series of stock having a preference over
common stock as to dividends or upon liquidation to elect additional
Directors under specified circumstances, newly created directorships
<PAGE>
resulting from any increase in the number of directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining Directors then in
office, even though less then a quorum of the Board of Directors. Any
Director elected in accordance with the preceding sentence shall hold
office for the remainder of the full term of the class of Directors in
which the new directorship was created or the vacancy occurred and
until such Director's successor shall have been elected and qualified.
No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(c) REMOVAL. Except as otherwise fixed by or pursuant to provisions
hereof relating to the rights of the holders of any class or series of
stock having a preference over common stock as to dividends or upon
liquidation to elect additional Directors under specified
circumstances, any Director may be removed from office only for cause
and only by the affirmative vote of the holders of two-thirds of the
combined voting power of the then outstanding shares of stock entitled
to vote generally in the election of Directors, voting together as a
single class.
(d) AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the consent of the
Board of Directors shall be required to alter, amend, adopt any
provisions inconsistent with or repeal this Article X.
<PAGE>
EXHIBIT 2
The Board of Directors has adopted a resolution to amend the Company's
Certificate of Incorporation to include a Article XI, which provides in its
entirety, as follows:
ARTICLE XI. Amendments to Articles VIII, IX, X and this Article XI of the
Certificate of Incorporation of the Corporation shall require the affirmative
vote of two-thirds of the holders of a majority of the combined voting power of
the then outstanding shares of stock entitled to vote on any proposed amendment
to the Certificate of Incorporation. Notwithstanding the foregoing, in the event
that a resolution to amend any portion (including Articles VIII, IX, X and this
Article XI) of the Certificate of Incorporation of the Corporation is adopted by
the affirmative vote of at least eighty percent (80%) of the Board of Directors
approval of the amendment shall only require the affirmative vote of the holders
of a majority of the combined voting power of the then outstanding shares of
stock entitled to vote generally on such amendment, voting together as a single
class.
<PAGE>
EXHIBIT 3
The Board of Directors has adopted a resolution to amend Article IV of the
Company's Certificate of Incorporation to read, in its entirety, as follows:
ARTICLE IV. The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is one hundred million
(100,000,000) shares of common stock, par value $.001 per share, and ten million
(10,000,000) shares of preferred stock, par value $.001 shares of preferred
stock, par value $.001 (the "Preferred Stock"). The Board of Directors of the
Corporation is hereby authorized to issue by resolution, from time to time,
shares of Preferred Stock in any one or more series and to fix the number of
shares in each series and the designations, powers, preferences and relative,
participating, optional or other special rights thereof and the qualifications,
limitations, or restrictions thereon, including, without limitation, any of the
following: (i) provisions relating to voting rights of each share in such
series, including multiple or fractional votes per share; (ii) provisions
relating to the call or redemption thereof, including, without limitation, the
times and prices for such calls or redemptions and provisions relating to
sinking funds therefor and the retirement thereof, if any; (iii) provisions
relating to the right to receive dividends, including, without limitation,
participation in dividends with shares of any other class or series of capital
stock of the Corporation and/or preferential dividends, the rate of such
dividends, whether such dividends shall be cumulative or noncumulative and the
conditions upon which such dividends shall be accrued and paid, and any
preferential rights thereto or rights in relation to dividends payable on any
other classes or series of stock of the Corporation; (iv) the rights thereof
upon the dissolution of, or upon any distribution of the assets of the
Corporation; and (v) except as otherwise explicitly prohibited by this
Certificate of Incorporation, provisions relating to the conversion thereof
into, or the exchange thereof for shares of any class or any other series of
the same class of stock of the Corporation or exchange for any other security of
the Corporation or any other company.
<PAGE>
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Tim B. Tarrillion and Donovan W. Boyd, as
proxy with power to appoint a substitute and hereby authorizes either of them
to represent and to vote all shares of Common Stock of North American
Technologies Group, Inc. held of record by the undersigned on May 20, 1996 at
the Annual Meeting of Stockholders of North American Technologies Group, Inc.
to be held on June 27, 1996 and at any adjournments or postponements thereof,
and to vote as directed on the reverse side of this form and, in their
discretion, upon such other matters not specified as may come before said
meeting.
1. Proposal 1--Approval of Classified Board. FOR [_] AGAINST [_] ABSTAIN [_]
2. Proposal 2--Approval of an amendment to the Certificate of Incorporation to
require a supermajority vote to approve, in certain circumstances future
amendments to portions of the Certificate of Incorporation.
FOR [_] AGAINST [_] ABSTAIN [_]
3. Election of Directors FOR [_] WITHHELD [_]
Nominees: William T. Aldrich, David M. For, except vote withheld from
Daniels, Edwin H. Knight, the following nominee(s):
Donovan W. Boyd, Mark E. ---------------------------------
Leyerle, Christopher W. Roser, ---------------------------------
Tim B. Tarrillion, Douglas C.
Williamson, Robert H. Chaney
4. Proposal 4--Approval of an amendment to the Certificate of Incorporation to
increase the number of shares of common stock the Company is authorized to
issue.
FOR [_] AGAINST [_] ABSTAIN [_]
5. Proposal 5--Approval of the ratification of BDO Seidman LLP as auditors for
the Company.
FOR [_] AGAINST [_] ABSTAIN [_]
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD
SEE REVERSE SIDE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3, 4 AND 5.
PLEASE SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE UNITED
STATES.
SIGNATURE(S)_____________________
---------------------------------
DATE
NOTE: PLEASE SIGN NAME(S)
EXACTLY AS PRINTED HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH.
