Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(X) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Section 240.14a-11(c) or Section
240.14a-12
ETS International, Inc.
(Name of Registrant as Specified in its Charter)
Warren E. Beam, Jr., Secretary
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
N/A
Payment of Filing Fee (Check the appropriate box):
(x) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
( ) Fee paid previously with preliminary materials
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY COPY
June 19, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of ETS International, Inc. (the
"Company") will be held at 10:00 a.m, local time, on Monday, August 17, 1998,
at Company headquarters, 7400 Beaufont Springs Drive, Suite 415, Richmond,
Virginia 23225. Enclosed you will find a formal Notice of Annual Meeting,
Proxy and Proxy Statement detailing the matters which will be acted upon.
Directors and officers of the Company will be present to help host the
Meeting and to respond to any questions from shareholders. I hope you will
be able to attend.
Please sign, date and return the enclosed Proxy without delay. If you
attend the Meeting, you may, if you desire, withdraw your Proxy and vote in
person.
The Company's Board of Directors believes that a favorable vote for
each matter described in the attached Notice of Annual Meeting and Proxy
Statement is in the best interest of the Company and its shareholders and
recommends a vote "FOR" each such matter. Accordingly, we urge you to review
the accompanying material carefully and to return the enclosed Proxy
promptly.
Thank you for your investment and continued interest in ETS
International, Inc.
Sincerely,
James B. Quarles
Chairman and President
<PAGE>
PRELIMINARY COPY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF ETS INTERNATIONAL, INC.:
NOTICE is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of ETS International, Inc. (the "Company") will be held at Company
headquarters, 7400 Beaufont Springs Drive, Suite 415, Richmond, Virginia
23225, on Monday, August 17, 1998, at 10:00 a.m., local time, for the
following purposes:
1. Election of directors for fiscal 1999;
2. Approval of an Amendment and Restatement of the Company's Articles of
Incorporation changing the name of the Company to InfraCorps Inc.;
3. Approval of the appointment of independent auditors for fiscal year
1999; and
4. Transaction of such other business as may properly come before the
Meeting, or any adjournments thereof.
Only shareholders of record at the close of business on June 12, 1998,
are entitled to notice of and to vote at the Meeting or any adjournments
thereof.
Your attention is directed to the Proxy Statement accompanying this
notice for a more complete statement regarding matters proposed to be acted
upon at the Meeting.
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY, FOR WHICH A RETURN
ENVELOPE IS PROVIDED. YOUR PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
EXERCISE.
BY ORDER OF THE BOARD OF DIRECTORS
Warren E. Beam, Jr.
Secretary
June 19, 1998
<PAGE>
PRELIMINARY COPY
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
ETS INTERNATIONAL, INC.
7400 Beaufont Springs Drive, Suite 415
Richmond, Virginia 23225
Solicitation of the enclosed proxy is made by and on behalf of the
Board of Directors (the "Board of Directors") of ETS International, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders to be held at
Company headquarters, 7400 Beaufont Springs Drive, Suite 415, Richmond,
Virginia 23225 on Monday, August 17, 1998, at 10:00 a.m., local time, and at
any adjournments thereof. The date on which this Proxy Statement and the
accompanying Proxy are first being mailed is June 19, 1998.
The cost of the solicitation of proxies will be borne by the Company.
Solicitations will be made only by use of the mails, except that, if
necessary, officers, directors and regular employees of the Company or its
subsidiaries may solicit proxies by telephone, telegram, facsimile or
personal contact. It is contemplated that brokerage houses and nominees will
be requested to forward proxy solicitation materials to the beneficial owners
of the stock held of record by such persons, and the Company will reimburse
them for their reasonable charges and expenses in this connection.
All properly executed proxies delivered pursuant to this solicitation
will be voted at the Annual Meeting in accordance with the instructions
thereupon, or, in the absence of such instructions, in accordance with the
Board of Director's recommendations. Any person signing and mailing the
enclosed proxy may, nevertheless, revoke the proxy at any time prior to the
actual voting thereof by attending the Annual Meeting and voting in person,
by providing written notice of revocation of the proxy, or by submitting a
signed proxy bearing a later date. Any written notice of revocation should
be sent to the attention of the Secretary of the Board at the address above.
A copy of the Company's 1998 Annual Report to Shareholders is being
mailed concurrently with this Proxy Statement, but should not be considered
proxy solicitation material.
The Company has only one class of stock outstanding. The Company has
fixed the close of business on June 12, 1998, as the record date for
determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof. As of June 12, 1998, there were
outstanding 16,492,043 shares of Company common stock, no par value ("Common
Stock"). Each share entitled to one vote on each matter to be voted on at
the Annual Meeting.
<PAGE>
The holders of shares of Common Stock entitled to cast a majority of
the votes at the Annual Meeting constitute a quorum. If a share is
represented for any purpose at the Annual Meeting, it is deemed to be present
for purposes of establishing a quorum. Abstentions and shares held of record
by a broker or its nominee ("Broker Shares") which are voted on any matter
are included in determining the number of shares present or represented at
the Annual Meeting. Conversely, Broker Shares that are not voted on any
matter will not be included in determining whether a quorum is present. If a
quorum is established, directors will be elected by a plurality of votes cast
in person or by proxy at the Annual Meeting (Proposal No. 1). Approval of
the amendment and restatement of the Company's Articles of Incorporation to
effect the corporate name change (the "Corporate Name Change") (Proposal No.
2), requires the affirmative vote, at a meeting at which a quorum is present,
of more than two-thirds of the outstanding shares of the Company's Common
Stock entitled to be cast at the Annual Meeting. Votes that are withheld and
Broker Shares that are not voted in the election of directors or in
connection with the Corporate Name Change will not be included in determining
the number of votes cast for that matter.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of June 12, 1998, the beneficial
ownership of each shareholder known to management of the Company to own
beneficially more than 5% of the outstanding Common Stock. Unless otherwise
indicated, the Company believes that the named persons have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership Class
- ---------------------- ----------------------- -----
<S> <C> <C>
Roberta Greiner 1,077,900 6.5%
5515 Village Drive
Roanoke, VA 24014
Dr. Allen Kahn 1,940,668 (1) 11.5%
2125 Evans Road
Flossmore, IL 60422
Coleman S. Lyttle 1,176,334 (2)(3) 7.1%
2210 Belt Boulevard
Richmond, VA 23224
Thomas W. Marmon 1,958,417 (4)(5) 11.8%
4390 Airwest Drive, SE
Grand Rapids, MI 49512
</TABLE>
- ---------------------
(1) Includes 343,667 shares issuable upon the exercise of warrants.
(2) Includes 120,000 shares issuable upon the exercise of options as
follows: 20,000 shares pursuant to the 1994 Nonstatutory Option Plan
and 100,000 shares pursuant to the 1995 Nonstatutory Option Plan.
<PAGE>
(3) Does not include shares in the name of the Estate of Stamie E. Lyttle,
of which Coleman Lyttle is executor, and certain trust created thereby
of which he is trustee. Mr. Lyttle is not a beneficiary of the estate
or the beneficial owner of shares of Common Stock owned by the Estate
or by any such trust.
(4) Includes 153,350 shares issuable upon the exercise of options and
warrants as follows: 20,000 shares pursuant to the 1994 Nonstatutory
Option Plan, 100,000 shares pursuant to the 1995 Nonstatutory Option
Plan and 33,350 shares pursuant to warrants.
(5) Includes shares registered in the name of Thomas W. Marmon Trust.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth, as of June 12, 1998, certain
information regarding the beneficial ownership of Company Common Stock by
each director and director nominee of the Company, by each executive officer
of the Company, and by all directors and executive officers as a group.
Unless otherwise indicated, the Company believes that the named persons have
sole voting and investment power with respect to all outstanding shares of
Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership Class
- ---------------------- ----------------------- -----
<S> <C> <C>
Terance R. Dellecker (1) 0 0%
75 Rue De Courcelles
75008 Paris, France
Coleman S. Lyttle (2)(3) 1,176,334 (4)(5) 7.1%
2210 Belt Boulevard
Richmond, VA 23224
John R. Potter (1) 0 0%
2408 E. Roy Street
Seattle, WA 98112
James B. Quarles (2)(3) 810,000 (6) 4.7%
7400 Beaufont Springs Dr., Suite 415
Richmond, VA 23225
Lee A. Raver (2) 773,800 (7) 4.6%
1788 Hungary Road
Richmond, VA 23228
Navin D. Sheth (2)(3) 652,208 (8) 3.9%
2210 Belt Boulevard
Richmond, VA 23224
Warren E. Beam, Jr. (3) 0 0%
7400 Beaufont Springs Dr., Suite 415
Richmond, VA 23225
Directors and Executives
Officers as a group (5 persons) 3,412,342 (9) 18.9%
/TABLE
<PAGE>
- ---------------------
(1) A director nominee.
(2) Currently serves as a director of the Company.
(3) An executive officer of the Company.
(4) Includes 120,000 shares issuable upon the exercise of options as
follows: 20,000 shares pursuant to the 1994 Nonstatutory Option Plan
and 100,000 shares pursuant to the 1995 Nonstatutory Option Plan.
(5) Does not include shares in the name of the Estate of Stamie E. Lyttle,
of which Coleman Lyttle is executor, and certain trust created thereby
of which he is trustee. Mr. Lyttle is not a beneficiary of the Estate
or the beneficial owner of Shares of Common Stock owned by the Estate
or by any such trust.
(6) Comprised of 810,000 shares issuable upon the exercise of options as
follows: 750,000 shares pursuant to options issued in February 1998
pursuant to the 1995 Nonstatutory Stock Option Plan and 60,000 shares
pursuant to options issued in November 1997 pursuant to the 1995
Nonstatutory Stock Option Plan.
(7) Includes 470,000 shares issuable upon the exercise of options as
follows: 350,000 shares pursuant to options issued in July 1993, 20,000
shares pursuant to the 1994 Nonstatutory Option Plan and 100,000 shares
pursuant to the 1995 Nonstatutory Option Plan. Mr. Raver is not
standing for reelection to the Board of Directors at the Annual
Meeting.
(8) Includes 120,000 shares issuable upon the exercise of options as
follows: 20,000 shares pursuant to the 1994 Nonstatutory Option Plan
and 100,000 shares pursuant to the 1995 Nonstatutory Option Plan.
(9) Includes 1,520,000 shares issuable upon the exercise of options and
warrants.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information as to annual and other
compensation paid by the Company to all individuals who served as the
Company's Chief Executive Officer during fiscal 1998 and to each of the other
executive officers of the Company whose total annual salary exceeded $100,000
in fiscal 1998.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual
Compensation Awards
------------ ----------------------
Name and
Principal Position Year(2) Salary ($) Options/SARs
- ----------------------- ------- ------------ ----------------------
<S> <C> <C> <C>
James B. Quarles 1998 44,585 830,000
Chairman, President and 1997 - -
Chief Executive Officer 1996 - -
of the Company (1) 1995 - -
John D. McKenna, 1998 81,873 0
Former President and 1997 79,333 140,000
Chief Executive Officer 1996 93,783 0
of the Company (1) 1995 100,301 20,000
Coleman S. Lyttle, 1998 119,785 0
President of ETSW and a 1997 115,337 100,000
Director of the Company 1996 150,943 0
1995 127,603 20,000
</TABLE>
- ---------------------
(1) Mr. Quarles was appointed President and Chief Executive Officer of the
Company on January 20, 1998, and Mr. McKenna resigned as President and
Chief Executive Officer of the Company on that date. Mr. McKenna
resigned as a director of the Company on February 2, 1998. Mr. Quarles
became Chairman of the Board on that date. The amounts shown for Mr.
Quarles and Mr. McKenna, respectively, reflect all compensation
received from the Company for services rendered in all capacities in
fiscal 1998.
(2) On April 6, 1998, the Board of Directors approved a resolution changing
the fiscal year-end of the Company from May 31 to March 31.
Compensation reported for 1995, 1996 and 1997 is based on a May 31
fiscal year-end. Compensation shown with respect to 1998 is based on
the twelve months ended March 31, 1998. Accordingly, there is a two-
month overlap between the reported compensation for 1998 (covering the
twelve months ended March 31, 1998) and 1997 (covering the twelve
months ended May 31, 1997).
<PAGE>
Option Grants in Last Fiscal Year
The following table provides information as to options granted in the
fiscal year ended March 31, 1998 to the individuals named in the Summary
Compensation Table above.
<TABLE>
<CAPTION>
Individual Grants Potential Realized
------------------------------------------------- Value(1) at Assumed
% of Total Annual Rates of
Number of Options Market Stock Price
Securities Granted to Exercise Price on Appreciation for
Underlying Employees or Base Date of Option Term
Options in Fiscal Price Grant Expiration -------------------
Name Granted(#) Year ($/Share)(2) ($/Share)(2) Date 5%($) 10%($)
- ------------------ ---------- ----------- ------------ ---------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
James B. Quarles 20,000 .50 .44 6/15/02 11,231 14,172
60,000 .50 .50 11/03/02 38,288 48,315
400,000 .27 .38 2/11/03 193,995 244,798
350,000 100% .50 .50 2/01/03 223,349 281,839
John D. McKenna 0 0 0 0 - 0 0
Coleman S. Lyttle 0 0 0 0 - 0 0
</TABLE>
- ---------------------
(1) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price. Additionally,
these values do not take into consideration the provisions of the
options providing for nontransferability or termination of the options
following termination of employment. The Company did not use an
alternative formula for a grant date valuation, as it is not aware of
any formula which will determine with reasonable accuracy a present
value based on future unknown or volatile factors.
(2) The market price of the options is calculated based on the closing
sales price of the Company's common stock on the American Stock
Exchange Emerging Company Marketplace ("AMEX-ECM") on the date of
grant. The Company's Common Stock was removed from trading on the
AMEX-ECM on March 6, 1998. No options have been issued since that
date. Options generally expire five years from the date of grant.
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table shows the number and value of stock options
exercised by each of the named executive officers during fiscal 1998. It
also shows the number and value of unexercised options held by each named
executive on March 31, 1998. The value of unexercised options is calculated
as the difference between the exercise price and the average of the high and
low bid prices on the OTC Bulletin Board on March 31, 1998 ($0.1675).
<PAGE>
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARS at In-the-Money Options/SARS at
Shares March 31, 1998 (#) March 31, 1998 (#)(1)
Acquired ----------------------------- -----------------------------
on Exercise Value
Name (# shares) Realized ($) Exercisable Unexerciseable Exercisable Unexerciseable
- ------------------- ---------- ------------ ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
James B. Quarles 20,000 100,000 60,000 0 0 0
400,000
350,000
John D. McKenna 0 0 100,000 0 0 0
Coleman S. Lyttle 0 0 120,000 0 0 0
</TABLE>
- ---------------------
(1) Options are in-the-money if the fair market value of the underlying
common stock exceeds the exercise price of the option. The exercise
price of all outstanding options held by the named executive officers
currently exceeds the fair market value of the underlying Common Stock
of the Company. Likewise, the named executive officers held no in-the-
money options at March 31, 1998.
Board of Directors Report on Executive Compensation
The compensation of the Company's executive officers is reviewed and
approved annually by the Board of Directors. In addition to reviewing and
approving executive officers' salary and bonus arrangements, the Board of
Directors establishes policies and guidelines for other benefits and
administers the awards of stock options pursuant to the Company's stock
option plans.
General. Compensation of the Company's executives is intended to
attract, retain and award persons who are essential to the corporate
enterprise. The fundamental policy of the Company's executive compensation
program is to offer competitive compensation to executives that appropriately
rewards the individual executive's contribution to corporate performance.
The Board of Directors utilizes subjective criteria for evaluation of
individual performance and relies substantially on its key managers in doing
so. The Board focuses on two primary components of the Company's executive
compensation program, each of which is intended to reflect individual and
corporate performance: base salary compensation and long-term incentive
compensation.
<PAGE>
Base Salary Compensation. Executives' base salaries are determined
primarily by reference to compensation packages for similarly situated
executives of companies of similar size or in comparable lines of business
with whom the Company expects to compete for executive talent. The Board
also assesses subjective qualitative factors to discern a particular
executive's relative value to the corporate enterprise in establishing base
salaries. Each year base salaries of executives are increased by the
increases in an average of local and national cost of living indexes. The
Board may award year-end bonuses to executives, but only in the event the
Company is profitable. The total of all bonuses generally is based on the
Company's overall economic performance. Bonuses may be awarded pursuant to
the Board's subjective analysis of each executive's performance. No bonuses
were awarded or paid in fiscal 1998.
Long Term Incentive Compensation. It is the Board's philosophy that
significant stock ownership by management creates a powerful incentive for
executives to build long-term shareholder value. Accordingly, the Board
believes that an integral component of executive compensation is the award of
equity-based compensation, which is intended to align executives' long-term
interests with those of the Company's shareholders. Awards of stock options
to executives have historically been at then-current market prices and, in
keeping with the Company's objective to link pay with corporate loyalty,
generally vest over a period of one to five years. The Board believes that
option grants should be considered on an annual basis. In general, a fixed
minimum option grant is awarded to all executives and additional grants may
be awarded from time to time consistent with the relative pay levels of the
executives. Except for the stock options granted to Mr. Quarles in
connection with his appointment as President and Chief Executive Officer of
the Company as described below, no executive options were granted in fiscal
1998.
Compensation of Chief Executive Officer. Mr. McKenna resigned as Chief
Executive Officer of the Company on January 20, 1998. In reviewing and
approving Mr. McKenna's fiscal 1998 compensation the Board of Directors
considered the same criteria detailed above with respect to executives in
general. Mr. McKenna's base salary for fiscal 1998 was established at
$91,500, which is below the midpoint of the base compensation for chief
executive officers of comparable companies. This amount represented a 3.5%
increase over the base salary that was awarded to Mr. McKenna in fiscal 1997.
Mr. Quarles became Chief Executive Officer of the Company on January
20, 1998. At that time, the Board of Directors determined that Mr. Quarles
would receive a base salary of $11,000 per month for a minimum of six months,
a five-year option to purchase 400,000 shares of Company common stock at $.27
per share and a five-year option to purchase 350,000 shares of Company common
stock at $.50 per share. Mr. Quarles' compensation was established through
negotiation with Mr. Quarles and is based on subjective criteria. The Board
deemed it in the best interests of the Company to offer a competitive
compensation package, which through stock options, would be tied to the
performance of the Company. The Board felt that this was especially
important to attract qualified, aggressive leadership to refocus the
Company's business on the infrastructure markets at a time when the Company's
financial situation was declining.
Submitted by the Board of Directors of the Company:
Coleman S. Lyttle, Navin D. Sheth,
James B. Quarles and Lee A. Raver
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Board of Directors makes decisions regarding compensation of
executive officers. Messrs. John D. McKenna, John C. Mycock and David F.
Tompkins, each of whom resigned as a director and officer of the Company
during fiscal 1998, as well as Coleman S. Lyttle and Navin D. Sheth, who
currently continue as directors and executive officers of the Company,
participated during fiscal 1998 in deliberations of the Company's Board of
Directors concerning executive officer compensation. During fiscal 1998, the
Company had notes payable to each of directors Sheth and Lyttle and to Thomas
W. Marmon, who resigned as a director effective April 13, 1998. Each of
these individuals also participated in deliberations of the Board concerning
compensation of executive officers in fiscal 1998. See discussion under
"Transactions with Management" below.
Board of Directors And Committees
Audit Committee. The Audit Committee makes recommendations to the
Board of Directors with respect to the Company's financial statements and the
appointment of independent auditors, reviews significant audit and accounting
policies and practices, meets with the Company's independent public
accountants concerning, among other things, the scope of audits and reports,
and reviews the performance of the overall accounting and financial controls
of the Company. Members of the Audit Committee are Messrs. Quarles, Sheth
and Raver.
The Board of Directors does not have a standing compensation committee.
The Board of Directors is responsible for approving the salaries, bonuses and
other compensation and benefits of executive officers, reviewing and advising
management regarding benefits and other terms and conditions of compensation
of management and administering the Company's stock option plans.
The Board of Directors does not have a standing nominating committee.
Nominations for election to the Board of Directors may be made by the Board
of Directors, or by any shareholder entitled to vote for the election of
directors. Nominations made by shareholders must be made by written notice
received by the Secretary of the Company by July 31 of the year preceding the
annual meeting or within ten days of the date on which notice of a special
meeting for the election of directors is first given to shareholders.
The Board of Directors meets on a quarterly basis. Special meetings
are held from time to time to consider matters for which approval of the
Board of Directors is desirable or required by law. Four meetings of the
Board of Directors were held during fiscal 1998. The Audit Committee meet
two times in fiscal 1998. Each incumbent director had an attendance record
of 75% or greater at meetings, including meetings of the Audit Committee.
Remuneration of Directors
Outside directors do not received any fees for attending meetings of
the Board, but are reimbursed for their out-of-pocket expenses in connection
therewith. Directors are entitled to receive the base level of stock options
awarded to executives.
<PAGE>
Performance Graph
The following graph compares the yearly percentage change and the
cumulative total of shareholder return on the Company's common stock with the
cumulative return on the AMEX Market Value Index, the Russell 2000 Index and
the Dow Jones Heavy Construction Index for the five-year period commencing
March 31, 1994 and ending on March 31, 1998. These comparisons assume the
investment of $100 in the Company's Common Stock and in each of the indices
on March 31, 1993 and the reinvestment of dividends.
[Performance graph will be inserted here]
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------
3/93 3/94 3/95 3/96 3/97 3/98
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
ETS International, Inc. ETSI $ 100 83 117 83 50 8
EX Market Value ISAS $ 100 105 110 135 137 182
Russell 2000 IR20 $ 100 111 117 151 159 226
D J Heavy Construction ICON $ 100 125 108 145 122 127
</TABLE>
TRANSACTIONS WITH MANAGEMENT
During a portion of fiscal 1998, the Company occupied approximately
45,000 square feet of office and laboratory space in a modern commercial
building in Roanoke, Virginia, under lease agreements with its former
subsidiaries, ETS, Inc. ("ETS") and ETS Analytical Services, Inc. ("ETSAS"),
effective as of February 1, 1991, which expire on December 31, 2000, from PDJ
Associates, a partnership in which John D. McKenna, former President and
Chairman of the Board of the Company, and Roberta Greiner, widow of Gary P.
Greiner, a former officer and director of the Company, are partners. In
connection with the Company's sale of ETS, as described below, the ETS lease
was assigned, effective February 1, 1998, to ETS Acquisition, Inc, a Virginia
corporation owned by John D. McKenna, Arthur B. Nunn III and John C. Mycock,
former executive officers and directors of the Company. The Company believes
that the leases with PDJ Associates were on terms as favorable as those which
would have been available from a non-affiliated parties. In connection with
the sale of ETSAS described below, the ETSAS lease was assigned, effective
October 31, 1997, to Q Enterprises, Inc., a Virginia corporation which was
owned by James B. Quarles. Mr. Quarles , who subsequently became President
and a director of the Company in January 1998, sold his interest in Q
Enterprises, Inc. on February 16, 1998. Lease payments made by the Company
to PDJ Associates in fiscal 1998 totaled $164,000.
Effective in 1994, ETS Water and Waste Management, Inc. ("ETSW")
entered into a lease of its premises which are owned by the Estate of Stamie
E. Lyttle, of which Coleman S. Lyttle, a director of the Company is executor,
at $10,500 per month for two years. On June 1, 1997, the lease was renewed
for a one-year term with three one-year renewal options. Rent expense under
this lease was approximately $105,000 for fiscal 1998. The Company believes
that the lease is on terms as favorable as those which would be available
from non-affiliated third parties.
<PAGE>
The Company had notes receivable from officers of $344,152, including
$51,233 of accrued interest, as of March 31, 1998, which includes notes
payable to Coleman S. Lyttle, President of ETSW and a director of the
Company, in the principal aggregate amount of $170,000, and to Navin D.
Sheth, Chief Financial Officer of the Company, Executive Vice President of
ETSW and a director of the Company, in the principal aggregate amount of
$90,000. At March 31, 1998, the outstanding balances on the Lyttle and Sheth
notes were $74,919 and $90,000, respectively. The notes, which are
unsecured, bear annual interest at six percent and are due July, 1998.
The Company has notes payable to affiliates of $966,159 as of March 31,
1998. These affiliates include Mr. Sheth, family members of Mr. Lyttle and
the Estate of Stamie S. Lyttle. The balance is classified as current and due
in 1998. The notes, which are unsecured, bear interest at rates between
eleven and twenty percent. Interest is payable monthly.
During fiscal 1998, the Company was indebted to Thomas W. Marmon, a
former director and a large shareholder of the Company, under a secured
credit facility established March 1997 to provide capital to the Company.
The original note creating the credit facility called for fixed monthly
interest of $25,000 over a two-year term, subject to call by the holder at
any time upon sixty days notice, and was secured by the assets of the Company
and its subsidiaries. The Company's total indebtedness under the original
note was $2.5 million at February 28, 1998. The $25,000 fixed monthly
interest payment was equivalent to a 15% annual interest rate. As of March
31, 1998, the Company had failed to make eight interest payments ($200,000
total) under the note. On March 31, 1998, the Company and Mr. Marmon
restructured the note to increase the amount of the secured credit facility
and to cure the default. The new note, which in part is a renewal of the
previous note, permits total aggregate borrowing by the Company of up to $3.1
million. The new note provides for a 10% annual interest rate and is subject
to call by the holder upon sixty days written notice. At March 31, 1998, the
principal amount outstanding on the secured credit facility was approximately
$3.1 million (which included unpaid interest of $210,000 as part of
principal). The new note is secured by the assets of the Company and its
subsidiaries. Mr. Marmon resigned as a director of the Company effective
April 13, 1998. Mr. Marmon's son, Thomas R. Marmon, was named Vice
President of ETS Liner, Inc., a subsidiary of ETSW located in Florida, on
March 19, 1998.
On October 31, 1997, ETSAS, a wholly owned subsidiary of the Company,
sold to Q Enterprises, Inc. substantially all of its assets in return for a
ten-year 8.5% promissory note in the amount of $1,380,000, which exceeded the
net book vale of the assets and liabilities sold. The purchase price was
subject to final post-closing adjustments relative to the net book value of
certain assets. In January 1998, in accordance with the final post closure
adjustments relative to net book value of the assets sold, the purchase price
was adjusted from $1,380,000 to $1,000,000. James B. Quarles was the sole
shareholder of Q Enterprises, Inc. at the time of its purchase of ETSAS
assets. Mr. Quarles, who was subsequently elected President and a director
of the Company on January 20, 1998, sold his interest in Q Enterprises, Inc.
on February 16, 1998.
<PAGE>
On March 12, 1998, substantially all of the assets and certain
liabilities of ETS, Inc., a wholly owned subsidiary of the Company, were sold
to ETS Acquisition, Inc., a newly formed firm based in Roanoke, Virginia. In
connection with the sale, the Company sold a portion of its assets and
business relating to the Limestone Emission Control ("LEC") technology,
including patents and licenses, to Christel Clear Technologies, Inc.
("CCTI"), a newly formed firm based in Roanoke, Virginia. The total purchase
price was $1,896,124 for all of the aforementioned. The purchase price was
paid in cash, stock of the Company and by assumption of certain liabilities
of ETS, delivery of a $200,000 thirty-day note bearing 8 1/2% interest and
delivery of a ten-year $100,000 note bearing 8 1/2% interest. Also, the
Company will receive 50% of all royalties received by CCTI in connection with
the license of the LEC technology. While there is no indication that the LEC
technology will be resold by CCTI, the agreement of sale further provides
that the Company will receive 50% of the net sales price from a resale of the
LEC technology on or before March 12, 1999, and 25% of the net sales price
from a resale after March 12, 1999 but on or before March 12, 2000.
In connection with the foregoing transaction, the Company entered into
a management agreement with Air Technologies, Inc. ("ATI"), a newly formed
firm based in Roanoke, Virginia, to provide management services with respect
to the Company's contract with the China Steel Corporation ("China Steel").
ATI and CCTI have agreed to accept responsibility for any potential
liabilities associated with the China Steel contract and to provide its best
efforts to have the contract transferred from the Company to ATI. ETS
Acquisition, Inc., CCTI and ATI are owned by John D. McKenna, Arthur B. Nunn,
III and John C. Mycock, three former executive officers of the Company and
former members of the Company's Board of Directors. Messrs. McKenna, Nunn
and Mycock resigned as executive officers and directors of the Company during
the third quarter of fiscal 1998.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Directors elected at the Annual Meeting will serve until the next
Annual Meeting of Shareholders or until their successors are elected and
qualified. The Board of Directors of the Company has nominated Terance R.
Dellecker, Coleman S. Lyttle, Navin D. Sheth, John R. Potter and James B.
Quarles to serve as directors of the Company for fiscal 1999. All nominees,
except Mr. Potter and Mr. Dellecker, currently are members of the Board of
Directors. Lee A. Raver is not standing for reelection to the Board.
TERANCE R. DELLECKER (age 51) is a partner with the law firm of
Chriqui, Mercey and Dellecker based in Paris, France. He has practiced law
since 1970 and specializes in mergers, acquisitions and capital
restructurings. Mr. Dellecker served as Regional Counsel with the Department
of Housing and Urban Development in Boston, Massachusetts from 1972 through
1975. He received his B. S. in Electrical Engineering from Princeton
University and his J.D. from Harvard Law School.
COLEMAN S. LYTTLE (age 44) has served as President of ETSW since June
1994. From 1982 to 1994, he was President of Stamie E. Lyttle Company, Inc.
and Lyttle Utilities, Inc. From 1975 to 1982, he was Senior Estimator and
Project Manager of Stamie E. Lyttle Company, Inc. Mr. Lyttle received his
B.S. in Business Administration from Virginia Polytechnic and State
University in 1975.
<PAGE>
JOHN R. POTTER (age 52) founded Stratagem Inc., a business consulting
firm based in Seattle, Washington, in 1993 and is a principal in that
company. He was a Director with Enviros Inc., a biotechnology firm, from
1993 through 1996 and from 1983 until 1993 was President and Chief Executive
Officer of Utilx Corporation, a NASDAQ-listed utility construction technology
company. Mr. Potter received his B. A. from Harvard University and his B. S.
and M. S. in Mechanical Engineering from Massachusetts Institute of Technology.
JAMES B. QUARLES (age 45) has served as President and Chief Executive
Officer of the Company since January 20, 1998. He became Chairman of the
Company's Board of Directors on February 2, 1998. From October 1997 to
February 1998, Mr. Quarles was the sole officer, director and shareholder of
Q Enterprises, Inc., a Virginia corporation, which purchased substantially
all of the assets of ETSAS, a wholly-owned subsidiary of the Company, and
provided consulting services to the Company. Prior thereto, he was employed
as the Senior Vice President for mergers and acquisitions with the Company
from May 1997 through October 1997, and from January 1987 to December 1996
was Chairman and President of Enviros Inc., a biotechnology company based in
Seattle, Washington. Mr. Quarles began his career in the U.S. Navy, where he
served under Admiral Elmo R. Zumwalt, Jr., former Chief of Naval Operations
and the current Chairman of the Company's Management Advisory Committee.
NAVIN D. SHETH (age 51) has served as Executive Vice-President of ETSW
since June 1994 and, since May 1996, also served as Chief Operating Officer.
He was appointed Chief Financial Officer of the Company on January 21, 1998.
From 1972 to May 1994, he was associated with Stamie E. Lyttle Company, Inc.
in the following capacities: from 1982 to 1994 - Vice President-Finance;
from 1979 to 1982 - Controller; from 1972 to 1979 - Operations Analyst. Mr.
Sheth was Assistant Professor, Virginia College, Lynchburg, Virginia, from
1971 to 1972. He received his B.S. in Chemistry in 1967 from Bombay
University and his MBA in 1971 from Atlanta University, Atlanta, Georgia.
It is the intention of the persons named as proxies in the accompanying
proxy, unless instructed otherwise, to vote for the persons nominated by the
Board. If any nominee should become unavailable to serve, the proxy may be
voted for the election of such substitute nominee as may be designated by the
Board. The Board has no reason to believe that any of the nominees will be
unable to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE ABOVE-NAMED
NOMINEES.
PROPOSAL NO. 2 - AMENDMENT AND RESTATEMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION TO CHANGE THE COMPANY'S NAME TO INFRACORPS
INC.
General
The Board of Directors of the Company has adopted resolutions proposing
an amendment and restatement of the Company's Articles of Incorporation
("Articles") to change the name of the Company from ETS International, Inc.
to InfraCorps Inc.
The Board of Directors believes that the amendment and restatement is
in the best interests of the Company and its shareholders. If approved, the
amendment and restatement will be effective upon the filing of Articles of
Amendment with the State Corporation Commission of Virginia, which filing
will be made promptly after the Annual Meeting.
<PAGE>
The full text of the proposed amendment and restatement is set out in
Exhibit A attached to this Proxy Statement.
Background
On January 20, 1998, the Board initiated changes in the Company's
executive management. On that date, James B. Quarles was elected President
and Chief Executive Officer of the Company and was appointed to its Board of
Directors. Navin D. Sheth, Chief Operating Officer of ETSW, a wholly owned
subsidiary of the Company, was appointed Chief Financial Officer of the
Company. Further, in connection with ongoing negotiations to purchase
substantially all of the assets of the Company's wholly owned environmental
subsidiary, ETS, John D. McKenna, Arthur B. Nunn, III and John C. Mycock
resigned from the Company's Board of Directors on February 2, 1998. Mr.
Quarles was elected Chairman of the Board on that date.
The management restructuring is part of an overall plan to refocus the
Company's business on the infrastructure markets, particularly with respect
to expanding utilization of trenchless technologies for the rehabilitation of
underground utilities. The Company intends to focus on its infrastructure
lines of business and de-emphasize its environmental products and services.
New management believes that the environmental services aspect of the Company
historically has been a break-even business, providing little value to
outside shareholders, while attempts to commercialize the environmental
technologies aspect of the Company have been a drain on the Company's limited
capital resources. New management believes that the Company should focus on
one line of business -- the installation and rehabilitation of subsurface
pipelines for the transmission of water, waste and gas -- and seeks to
position the Company to take advantage of perceived growth opportunities
within that industry. The Company derived approximately 80% of its revenues
from that industry segment in fiscal 1997. However, there can be no
assurance that the Company's refocusing efforts will be successful.
The Board of Directors feels that the name InfraCorps Inc. reflects the
Company's new emphasis on the infrastructure trenchless technologies. The
Board anticipates that the name change also will help the Company avoid being
confused with the environmental services operations that were sold as part of
the Company's refocusing effort.
The adoption of the amendment and restatement requires the affirmative
vote of more than two-thirds of the outstanding shares of the Company's
Common Stock entitled to vote at the Annual Meeting. A failure to vote,
either by not returning the enclosed proxy or checking the "abstain" box,
will have the same effect as a vote against Proposal No. 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
PROPOSAL NO. 3 - APPROVING THE APPOINTMENT OF KPMG PEAT MARWICK LLP
INDEPENDENT AUDITORS FOR FISCAL 1999
The Board of Directors appointed KPMG Peat Marwick LLP as independent
certified public accountants to audit the financial statements for fiscal
1999 and has determined that it would be desirable to request that the
shareholders approve such appointment. Shareholder approval is not required
for the appointment of KPMG Peat Marwick LLP since the Board of Directors has
the responsibility for selecting auditors. However, the appointment is being
submitted for the approval at the Annual Meeting. No determination has been
made as to what action the Board would take if shareholders do not approve
the appointment.
<PAGE>
A representative of KPMG Peat Marwick LLP is expected to attend the
Annual Meeting with the opportunity to make a statement and/or respond to
appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF KPMG PEAT
MARWICK LLP AS INDEPENDENT AUDITORS.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act required the Company officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors
and greater than ten percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that during fiscal 1998, each of Mr. Quarles
and Mr. Beam was late in filing his initial statement of beneficial ownership
on Form 3. In addition, in fiscal 1998, Mr. McKenna failed to file two
reports relating to an aggregate of three transactions, Mr. Mycock failed to
file two reports relating to an aggregate of two transactions, and Mr. Nunn
failed to file one report relating to one transaction.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's
fiscal 1999 Annual Meeting must be received by the President of the Company,
at the Company's headquarters, 7400 Beaufont Springs Drive, Suite 415,
Richmond, Virginia 23225, no later than February 19, 1999, in order to be
considered for inclusion in the Company's Proxy Statement relating to that
meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any
other matters requiring a vote of shareholders arise, the proxies in the
enclosed form confer upon the person or persons entitled to vote the shares
represented by such proxies discretionary authority to vote the same in
accordance with their best judgement in the interest of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
Warren E. Beam, Jr.
Secretary
June 19, 1998
The Company's Annual Report on Form 10-K for the transition period from
June 1, 1997 to March 31, 1998 is available without charge to any shareholder
requesting the same. Written requests should be addressed to the attention
of Mr. Warren E. Beam, Jr., Secretary, ETS International, Inc. 7400 Beaufont
Springs Drive, Suite 415, Richmond, Virginia 23225.
<PAGE>
Exhibit A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
----------------------------------------------
OF
--
ETS INTERNATIONAL, INC.
-----------------------
ARTICLE I - NAME
----------------
The name of the Corporation is InfraCorps Inc.
ARTICLE II - PURPOSE
--------------------
The purpose of this Corporation is to transact any or all lawful
business not required to be specifically stated in these Articles of
Incorporation for which corporations may be incorporated under the Virginia
Stock Corporation Act.
ARTICLE III - AUTHORIZED STOCK
------------------------------
(a) The aggregate number of shares which the Corporation is
authorized to issue is as follows:
Class Number of Shares Par Value
----- ---------------- ---------
Common 30,000,000 No Par Value
Preferred 5,000,000 No Par Value
(b) The Board of Directors of the Corporation (the "Board of
Directors") may, by amending these Articles of Incorporation (the "Articles")
by filing Articles of Amendment with the Virginia State Corporation
Commission, fix in whole or in part the preferences, limitations and rights,
within the limits set by law, of (i) any class of shares, before the issuance
of any shares of that class, or (ii) one or more series within a class,
before the issuance of any shares within that series.
(c) The preferred stock (including any shares of preferred
stock restored to the status of authorized but unissued preferred stock
undesignated as to series pursuant to this Article III(c)) may be divided
into one or more series and issued from time to time with such preferences,
privileges, limitations, and relative rights as shall be fixed and determined
by the Board of Directors. Without limiting the generality of the foregoing,
the Board of Directors is expressly authorized to the fullest extent
permitted from time to time by law to fix:
(i) the distinctive serial designations and the division
of shares of preferred stock into one or more series and the number of shares
of a particular series, which may be increased or decreased (but not below
the number of shares thereof then outstanding);
<PAGE>
(ii) the rate or amount (or the method of determining the
rate or amount) and times at which, the form in which, and the preferences
and conditions under which, dividends shall be payable on shares of a
particular series, the status of such dividends as cumulative, partially
cumulative, or noncumulative, the date or dates from which dividends, if
cumulative, shall accumulate, and the status of such series as participating
or nonparticipating with shares of other classes or series;
(iii) the price or prices at which, the consideration for
which, the period or periods within which and the terms and conditions, if
any, upon which the shares of a particular series may be redeemed, in whole
or in part, at the option of the Corporation or otherwise;
(iv) the amount or amounts and rights and preferences, if
any, to which the holders of shares of a particular series are entitled or
shall have upon any involuntary or voluntary liquidation, dissolution or
winding up of the Corporation;
(v) the rights and preferences over or otherwise in
relation to any other class or series (including other series of preferred
stock), as to the right to receive dividends and/or the right to receive
payments out of the net assets of the Corporation upon any involuntary or
voluntary liquidation, dissolution or winding up of the Corporation;
(vi) the right, if any, of the holders of a particular
series, the Corporation or another person to convert or cause conversion of
shares of such series into shares of other classes or series or into other
securities, cash, indebtedness or other property, or to exchange or cause
exchange of such shares for shares of other classes or series or other
securities, cash, indebtedness or other property, and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion and exchange, and the terms and conditions or adjustments, if any,
at which such conversion or exchange may be made or caused;
(vii) the obligation, if any, of the Corporation to redeem,
purchase or otherwise acquire, in whole or in part, shares of a particular
series for a sinking fund or otherwise, the terms and conditions thereof, if
any, including the price or prices and the nature of the consideration
payable for such shares so redeemed, purchased or otherwise acquired;
(viii) the voting rights, if any, including special,
conditional or limited voting rights, of the shares of a particular series in
addition to those required by law, including the number of votes per share
and any requirement for the approval by the holders of shares of all series
of preferred stock, or of the shares of one or more series thereof, or of
both, in an amount greater than a majority up to such amount as is in
accordance with applicable law or these Articles, as a condition to specified
corporate action or amendments to the Articles; and
(ix) any other preferences, limitations and relative
rights which may be so determined by resolution or resolutions of the Board
of Directors. Shares of preferred stock shall rank prior or superior to the
common stock in respect of the right to receive dividends and/or the right to
receive payments out of the net assets of the Corporation upon any
involuntary or voluntary liquidation, dissolution or winding up of the
Corporation. All shares of preferred stock redeemed, purchased or otherwise
acquired by the Corporation (including shares surrendered for conversion or
exchange) shall be canceled and thereupon restored to the status of
authorized but unissued shares of preferred stock undesignated as to series.
<PAGE>
(d) The holders of common stock, to the exclusion of any other
class of stock of the Corporation, have sole power to vote for the election
of directors except as (i) otherwise expressly provided in the serial
designation of any series of preferred stock, (ii) otherwise expressly
provided in these Articles and (iii) otherwise expressly provided by the then
existing laws of the Commonwealth of Virginia. The holders of common stock
will have one vote for each share of common stock held by them.
(e) No holder of shares of stock of any class of the
Corporation will have any preemptive or preferential right of subscription to
any shares of any class of stock of the Corporation, whether now or hereafter
authorized, or to any obligations of the Corporation convertible into stock
of the Corporation, issued or sold, nor any right of subscription to any
thereof.
ARTICLE IV - INDEMNIFICATION OF DIRECTORS AND OFFICERS
------------------------------------------------------
A. Each Director and Officer who is or was a party to any proceeding
(including a proceeding by or in the right of the Corporation) shall be
indemnified by the Corporation against any liability imposed upon or asserted
against him (including amounts paid in settlement) arising out of conduct in
his official capacity with the Corporation or otherwise by reason of the fact
that he is or was such a Director or Officer or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, except there shall be no indemnification in relation to
matters as to which he shall have been finally adjudged to be liable by
reason of having been guilty of (i) willful misconduct or (ii) a knowing
violation of criminal law in the performance of his duty as such Director or
Officer.
B. In addition to the indemnification provided under Section A, to
the full extent permitted by the Virginia Stock Corporation Act and any other
applicable law, as they exist on the date hereof or may hereafter be amended,
the Corporation shall indemnify a Director or Officer of the Corporation who
is or was a party to any proceeding (including a proceeding by or in the
right of the Corporation) by reason of the fact that he is or was such a
Director or Officer or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise.
C. The Corporation is empowered to contract in advance to indemnify
any Director or Officer to the extent indemnification is granted under
Sections A and B. The Board of Directors is also empowered to cause the
Corporation to indemnify or contract in advance to indemnify any other person
not covered by Sections A and B who was or is a party to any proceeding, by
reason of the fact that he is or was an employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise to the same extent
as if such person were specified as one to whom indemnification is granted
under Sections A and B.
<PAGE>
D. The Corporation may advance, pay for and/or reimburse the
reasonable expenses incurred by an Officer or Director who is a party to any
proceeding in advance of the final disposition thereof if (i) the Officer or
Director furnishes the Corporation a written statement of his good faith
belief that he has met the standard of conduct described in Sections A and/or
B above, (ii) the Officer or Director furnishes the corporation a written
undertaking, executed personally or on his behalf, to repay the advance if it
is ultimately determined that he did not meet the standard of conduct, and
(iii) a determination is made that the facts then known to those making the
determination would not preclude indemnification under this Article. The
undertaking required by clause (ii) above shall be an unlimited general
obligation of the Officer or Director but need not be secured and may be
accepted without reference to financial ability to make repayment.
E. All determinations as to indemnification and advances of expenses
(including contracts with respect thereto) shall be made by a majority vote
of a quorum of disinterested Directors. In the event a quorum of
disinterested Directors cannot be obtained to make any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to this Article, such determinations shall be
made by special legal counsel agreed upon by the Board of Directors and the
proposed indemnitee. If the Board of Directors and the proposed indemnitee
are unable to agree upon such special legal counsel, the Board of Directors
and the proposed indemnitee each shall select a nominee, and the nominees
shall select such special legal counsel.
F. The foregoing provisions are intended to provide indemnification
with respect to those monetary damages for which the Virginia Stock
Corporation Act permits the limitation or elimination of liability. In
addition, to the full extent that the Virginia Stock Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation
or elimination of the liability of directors, a Director of the Corporation
shall not be liable to the Corporation or its stockholders for monetary
damages arising out of a single transaction, occurrence or course of conduct
in excess of the amount of cash consideration received by the Directors from
the Corporation for services as a Director during the twelve months
immediately preceding the act or omission for which liability was imposed.
G. The Corporation may purchase and maintain insurance to indemnify
it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts
as the Board of Directors may determine, on behalf of any person who is or
was a Director, Officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against any liability asserted against or
incurred by such person in any such capacity or arising from his status as
such, whether or not the Corporation would have power to indemnify him
against such liability under the provision of this Article.
H. The provisions of this Article shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall
diminish the rights provided hereby or diminish the right to indemnification
with respect to any claim, issue or matter in any then pending or subsequent
proceeding that is based in any material respect on any alleged action or
failure to act prior to such amendment, modification or repeal.
I. Except to the extent inconsistent with this Article, terms used
herein shall have the same meanings assigned them in the Indemnification
Article of the Virginia Stock Corporation Act as now in effect or hereafter
amended. Without limitation, it is expressly understood that reference
herein to Directors, Officers, employees or agents shall include former
Directors, Officers, employees and agents and their respective heirs,
executors and administrators.
<PAGE>
[PROXY CARD APPEARS HERE]
PRELIMINARY COPY
PROXY
ANNUAL MEETING OF SHAREHOLDERS
ETS INTERNATIONAL, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE CORPORATION
The undersigned Shareholder of ETS International, Inc., Richmond,
Virginia, having received the Notice dated June 19, 1998, of the Annual
Meeting of Shareholders, hereby nominates, constitutes, appoints and
authorizes James B. Quarles and Warren E. Beam, Jr., and each of them with
full power to act alone, as proxies with full power of substitution, for me
and in my name, place and stead, to vote all the common stock of said
corporation standing in my name on its books on June 12, 1998, at the Annual
Meeting of Shareholders to be held at the Company's headquarters, 7400
Beaufont Springs Drive, Suite 415, Richmond, Virginia 23225, at 10:00 a.m.,
Monday, August 17, 1998, or at any adjournments thereof, with all the power
the undersigned would possess if personally present, as follows:
1. The election of the five nominees for director listed in the
Proxy Statement dated June 19, 1998, for terms of one year each and until
their successors are elected and qualify.
IF YOU WISH YOUR VOTES TO BE CAST FOR ALL OF THE FIVE PERSONS LISTED
BELOW, PLACE AN "X" IN THIS BOX [ ].
IF YOU DO NOT WISH TO VOTE FOR ALL OF THE CANDIDATES, LINE OUT THE
NAMES OF PERSONS FOR WHOM YOU DO NOT CHOOSE TO VOTE:
DIRECTORS:
Terance R. Dellecker
Coleman S. Lyttle
John R. Potter
James B. Quarles
Navin D. Sheth
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of the appointment of KPMG Peat Marwick LLP as
independent auditors for fiscal year 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the Proxies are authorized to vote upon such
other business as may be brought before the Annual Meeting or any
adjournments thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE FOR ALL OF THE PERSONS LISTED EVEN
THOUGH THE BLOCK IN ITEM 1 IS NOT MARKED UNLESS THE NAMES OF ONE OR MORE
CANDIDATES ARE LINED OUT. THIS PROXY WILL BE VOTED "FOR" ITEMS 2 AND 3 ABOVE
UNLESS "AGAINST" OR "ABSTAIN" IS INDICATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
<PAGE>
The undersigned hereby acknowledges receipt of the Proxy Statement
dated June 19, 1998.
Dated , 1998
----------------
--------------------------------
--------------------------------
Signature of Shareholder
Please sign your name(s) exactly
as shown imprinted hereon.
(This proxy is revocable at any time prior to the exercise hereof.)
<PAGE>
