SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 10549
--------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
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|_| 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 SS 240.14a-11(c)
or SS 240.14a-12
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AG-BAG INTERNATIONAL LIMITED
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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<PAGE>
AG-BAG INTERNATIONAL LIMITED
2320 SE Ag-Bag Lane
Warrenton, OR 97146
April 27, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders (the
"Annual Meeting") of Ag-Bag International Limited (the "Company").
Place: Company Headquarters
2320 SE Ag-Bag Lane
Warrenton, OR 97146
Date: Monday, June 5, 2000
Time: 9:00 a.m. local time
The Notice of the Annual Meeting and Proxy Statement accompany this
letter. The Proxy Statement describes the business to be transacted at the
meeting and provides other information concerning the Company.
The principal business to be transacted at the Annual Meeting will be
election of directors and the ratification of the appointment of the Company's
independent public accountants. The Board of Directors recommends that
stockholders vote for election of the nominated directors and for ratification
of the appointment of the Company's independent public accountants.
We know that many of our stockholders will be unable to attend the
Annual Meeting. Proxies are therefore solicited so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
meeting. Whether or not you plan to attend the Annual Meeting, we hope that you
will have your stock represented by marking, signing, dating and returning your
proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy card. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously returned your proxy card.
Sincerely,
Lou Ann Tucker, Secretary
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IMPORTANT
A proxy card is enclosed herewith. All stockholders are urged to complete and
mail the proxy card promptly. The enclosed envelope for return of the proxy card
requires no postage. Any stockholder attending the Annual Meeting may personally
vote on all matters that are considered, in which event the signed proxy will be
revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
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<PAGE>
AG-BAG INTERNATIONAL LIMITED
ANNUAL MEETING -- JUNE 5, 2000
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry Inman and Lou Ann Tucker, and each of
them, proxies, with power of substitution to vote on behalf of the undersigned
all shares which the undersigned may be entitled to vote at the annual meeting
of stockholders of Ag-Bag International Limited to be held at 2320 SE Ag-Bag
Lane, Warrenton, Oregon, on June 5, 2000, at 9:00 A.M. Pacific Daylight Time, or
at any adjournment or adjournments thereof, with all powers that the undersigned
would possess if personally present, with respect to the following:
PROPOSAL 1 - ELECTION OF CLASS II DIRECTORS - Proposed by Board of Directors
|_| FOR all nominees listed below (except as marked to the
contrary below) or, if any named nominee is unable to serve,
for a substitute nominee.
|_| WITHHOLD AUTHORITY to vote for all nominees listed below.
Michael B. Leahy, Arthur P. Schuette, and Rolf E. Soderstrom
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
- ------------------------ ------------------------- ----------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting, subject to certain exceptions.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS - Proposed by Board
of Directors
Ratify the selection of Moss Adams LLP as the Company's independent public
accountants for the fiscal year ending December 31, 2000.
|_| FOR |_| AGAINST |_| ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1
AND PROPOSAL 2. THE PROXIES MAY VOTE IN THEIR DISCRETION AS TO OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING, SUBJECT TO CERTAIN EXCEPTIONS.
Date: _______________________, 2000.
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Stockholder's Signature
-------------------------------------------
Stockholder's Signature
(if shares are held jointly)
Please date and sign exactly as your name
appears hereon, including designation as
executor, trustee, etc., if applicable.
When shares are held jointly, each joint
owner should sign. If a corporation, please
sign in full corporate name by the
president or other authorized officer. If a
partnership or other entity, please sign in
such entity's name by an authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
AG-BAG INTERNATIONAL LIMITED
2320 SE Ag-Bag Lane
Warrenton, Oregon 97146
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 5, 2000
TO THE STOCKHOLDERS OF AG-BAG INTERNATIONAL LIMITED:
The Annual Meeting of Stockholders (the "Annual Meeting") of
Ag-Bag International Limited, a Delaware corporation (the "Company") will be
held at the offices of the Company, 2320 SE Ag-Bag Lane, Warrenton, Oregon, on
Monday, June 5, 2000, at 9:00 A.M. Pacific Daylight Time, for the following
purposes:
1. Electing three directors to serve for a three-year
term and until their successors are elected and qualified;
2. Ratifying the appointment of Moss Adams LLP as
independent public accountants for the fiscal year ended December 31, 2000; and
3. Transacting such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
April 17, 2000 as the record date. Only stockholders of record as of such date
are entitled to notice of, and to vote at, the annual meeting and any
adjournments or postponements thereof. A list of stockholders entitled to vote
at the annual meeting will be available for inspection at the offices of the
Company.
BY ORDER OF THE BOARD OF DIRECTORS
LouAnn Tucker, Secretary
Warrenton, Oregon
April 27, 2000
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All stockholders are cordially invited to attend the Annual Meeting. Whether or
not you plan to attend the Annual Meeting, please mark and sign the enclosed
proxy card and return it promptly in the enclosed envelope. The giving of such
proxy does not affect your right to revoke it later or vote your shares in
person in the event that you choose to attend the Annual Meeting.
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<PAGE>
AG-BAG INTERNATIONAL LIMITED
2320 SE Ag-Bag Lane
Warrenton, Oregon 97146
(503) 861-1644
--------------------------------------
PROXY STATEMENT
For Annual Meeting of Stockholders
To Be Held on June 5, 2000
--------------------------------------
PERSONS MAKING THIS SOLICITATION
The accompanying proxy is solicited by the Board of Directors
of Ag-Bag International Limited, a Delaware corporation, (the "Company"), in
connection with the Company's Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 2320 SE Ag-Bag Lane, Warrenton, Oregon 97146 on June 5,
2000, at 9:00 a.m. local time. Copies of this proxy statement and the
accompanying proxy are being mailed to the stockholders on or about April 27,
2000.
The expense of this solicitation will be paid by the Company.
Solicitations will be made by the Company primarily by the use of the mails. If
necessary to obtain reasonable representation of stockholders at the annual
meeting, solicitations made by the Company may also be made by telephone,
telegraph or personal interview. Such further solicitation, if any, will be made
by regular employees of the Company who will not be additionally compensated
therefor. The Company will request brokers, banks or other persons holding stock
in their names, or in the names of their nominees, to forward proxy materials to
the beneficial owners of such stock or request authority for the execution of
the proxies and will reimburse brokers or other persons for their expenses in so
doing. Your cooperation in promptly completing, signing, dating and returning
the enclosed proxy card will help avoid additional expense.
Page 2
<PAGE>
VOTING
Only stockholders of record at the close of business on April
17, 2000 are entitled to notice of, and to vote at, the Annual Meeting. At the
close of business on that date, 12,061,991 shares of Common Stock, $0.01 par
value per share were outstanding (the "Outstanding Shares").
Each Outstanding Share entitles the holder thereof to one vote
upon each matter to be presented at the Annual Meeting. A quorum, consisting of
a majority of the Outstanding Shares, must be present in person, or by proxy,
for the transaction of business. If a quorum is present, each nominee for
election to the Board of Directors will be elected by a plurality of the votes
cast by holders of the Outstanding Shares. The appointment of Moss Adams, LLP
will be ratified if Proposal 2 receives the affirmative vote of a majority of
the Outstanding Shares represented at the Annual Meeting. Abstentions and other
non-votes will be counted for purposes of determining whether a quorum exists at
the Annual Meeting, but will not be counted in calculating a plurality as to a
particular nominee. An abstention or non-vote has the effect of a vote against a
proposal.
When a proxy in the form accompanying this proxy statement is
properly executed and returned, the shares represented will be voted at the
meeting in accordance with the instructions specified in the proxy. If no
instructions are specified, the shares will be voted FOR the election of each
nominee and FOR the ratification of the independent accountants and such votes
will be counted toward determining a quorum.
REVOCABILITY OF PROXY
Any person giving a proxy in the form accompanying this proxy statement
has the power to revoke it at any time before its exercise. The stockholder may
revoke a proxy given in response to this solicitation by (i) delivering a
written notice of revocation, or later-dated proxy, to the Secretary of the
Company, or (ii) attending the meeting and voting in person. Attendance at the
Annual Meeting will not by itself revoke a proxy. Each proxy returned to the
Company will be voted in accordance with the instructions indicated thereon. If
no instructions are indicated, the shares will be voted "FOR" election of each
of the nominees to the Board of Directors named in this Proxy Statement.
PROPOSAL 1 - ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the
direction of its Board of Directors. The Company's Bylaws provide that the Board
of Directors shall consist of not less than 6 nor more than 9 members. Members
of the Board of Directors are elected for a term of three years or until their
successors are elected.
The Company has a classified Board of Directors consisting of
two Class I directors, Messrs. Foster and Vinson, three Class II directors,
Messrs. Leahy, Schuette and Soderstrom, and three Class III directors, Messrs.
Inman, Cunningham and Thurston. At each Annual Meeting, the members of one class
of directors are elected for a term of three years to succeed those directors
whose terms expire at that Annual Meeting.
The Board of Directors has nominated, as Class II directors,
Michael B. Leahy, Arthur P. Schuette and Rolf E. Soderstrom (the "Nominees").
The Nominees are members of the present
Page 3
<PAGE>
Board of Directors, and have consented to continue to serve as directors, if
elected. The Class II directors to be elected at the 2000 Annual Meeting will
serve until the Annual Meeting in 2003 and until their successors are elected
and qualified.
If any Nominee becomes unable to serve prior to the Annual
Meeting, the proxy holders will have the discretion to vote for a replacement
nominee.
The following table sets forth information with respect to the
Nominees, and each other director, including their names and ages as of April
27, 2000, business experience during the past five years and directorships in
other public corporations.
Director Business
Name Age Since Experience
- ---- --- -------- ----------
CLASS II (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 2003):
- --------
Michael B. Leahy 65 1994 Director of the Company (since 1994);
Managing Director of Leahy Timber (Tree
Farm) (since 1962); Director and
Secretary of Ladd Estate Company (Real
Estate Investment Company) (since 1997).
Arthur P. Schuette 60 1990 Director of the Company (since 1990) and
Vice President of Sales of the Company
(since 1991); Treasurer of the Company
(1990-1991) and Ag- Bag Corporation
(1983-1991), a former subsidiary.
Rolf E. Soderstrom 67 1996 Director of the Company (since 1996);
President of the TCS Group (consulting
company) (since 1991); Managing Director
of the Nassau Group (investment banking
company) (since 1992); General Partner of
Green Field Capital Management
(investment company) (since 1993).
CLASS III (DIRECTORS WHOSE TERMS OF OFFICE WILL EXPIRE IN 2001):
- ---------
Larry R. Inman 49 1990 Director, Chairman of the Board and Chief
Executive Officer of the Company (since
1990); President of the Company since
1993; President of Ag-Bag Corporation
(1984-1989) and Chairman (1989-1994) of
Ag-Bag Corporation (former subsidiary).
Lemuel E. ("Book") 78 1990 Director of the Company (since 1990);
Cunningham Vice President of the Company(1990-1996);
Owner/operator of Post Oaks Ranch and
Page 4
<PAGE>
Cunningham Cattle and Feed Company (since
1958).
Robert N. Thurston 67 1996 Director of the Company (since 1996);
Director of McDonald's Corporation (food
service company) (since 1974); Director
of ACNielsen (market research company)
(since 1996).
CLASS I (NOMINEES FOR TERMS OF OFFICE TO EXPIRE IN 2002):
- -------
Stan Vinson 46 1998 Director of the Company (since 1998),
Vice-President/Treasurer, CH2M-Hill
(Manufacturing Company) (1998 to
present); Vice President, Wells Fargo
Bank (formerly First Interstate
Bank)(1984-1998).
Michael W. Foster 59 1990 Director of the Company (since 1990);
President of Oregon Pacific Industries of
LaPine, Oregon (pallet mill operation)
(1988 to 1995); President of Astoria
Pacific Industries, Inc. (investment
company) (since 1989); President of
Airporter Marketing Company, Inc.
(marketing company) (since 1995);
Educator (1976-1996); Executive Director
Clatsop Community College Foundation
(foundation) (since 1999).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES.
Directors' Meetings, Committees and Compensation
- ------------------------------------------------
Meetings. During the year ended December 31, 1999, the Board
of Directors met seven times. Each director attended more than 75% of the
aggregate number of meetings of the Board and committees during the period of
which such director was a member of the Board and any such Committee.
Committees. The Company has a standing Audit Committee which
reviews the Company's annual audit and any comments or management reports issued
in connection therewith and reports to the Board of Directors on any matters it
believes should be brought to the Board's attention. It is also responsible for
reviewing the Company's conflicts of interest, if any, and reviews matters
relating to disclosure, corporate practices, regulatory and financial reporting,
accounting procedures and policies, and financial and accounting controls. The
current members of the Audit Committee are directors Foster, Vinson and Leahy.
All directors serving on the committee are "independent" as defined in the
NASD's listing standards. The Audit Committee held two meetings in 1999. The
committee has discussed with the Company's independent auditors the matters
required to be
Page 5
<PAGE>
discussed pursuant to Statement on Auditing Standards No. 61, and has received
notice from the auditors that they are independent as required by Independence
Standards Board Standard No. 1. In addition, the committee has reviewed and
discussed the audited financial statements with management and recommended to
the Company's Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the last fiscal year
for filing with the Commission. The Company's Board of Directors has also
adopted a written charter for its audit committee which is included as an
appendix to this filing.
The Company also has a Stock Plan Committee of two nonemployee
directors who administer and make awards under the Company's Incentive Stock
Option Plan and its 1991 Employee Stock Plan. The current members of the
committee are directors Foster and Leahy. The Stock Plan Committee held no
meetings in 1999. The Board of Directors does not have a standing compensation
committee. Larry Inman, Michael Wallis, Walter Jay and Terri Opsahl participated
in the deliberations of the Board of Directors concerning executive officer
compensation.
The Board of Directors will consider nominees for the Board
recommended by stockholders. The stockholder should specify the name of each
proposed nominee and should set forth information as to the nominee's
qualifications for membership on the Board.
Compensation. No fees were paid to any director serving on the
Board of Directors during 1999. Directors who are officers or employees of the
Company receive no compensation for service as members of the Board or its
committees. Beginning January 1, 2000, non-employee directors will receive an
annual retainer fee of $10,000, plus a fee of $500 for each Board and committee
meeting attended.
Pursuant to the Company's Non-Employee Director Stock Option
Plan, adopted in 1996, each non-employee director receives an initial option to
purchase 50,000 shares of the Company's Common Stock, ("Common Stock"), which
vest over a three year period at the rate of 40% after six months, 40% after two
years and 20% after three years. The non-employee director options are
exercisable at the fair market value of the stock on the date of grant. A total
of 350,000 options have been granted under the Non-Employee Director Stock
Option Plan, 300,000 of which are fully vested. Beginning with the June 5, 2000
Annual Meeting, directors who have served a three year term will receive an
annual grant of 10,000 options which become exercisable six months after the
grant date. The exercise price for the options granted to nonemployee directors
is equal to the fair market value of the Common Stock on the date of grant.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires that the Company's officers, directors or
persons who own more than 10% of the Common Stock of the Company file with the
Securities and Exchange Commission (the "SEC") initial reports of beneficial
ownership on Form 3 and reports of changes in beneficial ownership of Common
Page 6
<PAGE>
Stock and other equity securities of the Company on Form 4 and Form 5. Officers,
directors and holders of more than 10% of the Common Stock are required by SEC
regulations to furnish to the Company copies of all Section 16(a) reports that
they file. To the Company's knowledge, based solely on a review of copies of
such reports furnished to the Company and written representations that no other
reports are required, during the 1999 fiscal year all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with by such persons.
The following table sets forth certain information regarding
the beneficial ownership of the Common Stock as of April 7, 2000, by (i) each
director, director nominee and named executive officer; (ii) each person known
to the Company to be a beneficial owner of more than 5% of the outstanding
Common Stock; and (iii) all directors and executive officers as a group. Except
as otherwise indicated in the notes below, each person whose ownership is
reported has sole voting power and sole dispositive power as to the number of
shares shown.
Page 7
<PAGE>
Amount and
Nature of Percent of
Name and Address of Beneficial Class
Beneficial Owner Ownership Outstanding
- ------------------- ---------- -----------
Steven G. Ross 1,800,000 14.54%
2000 West Marshall Dr.
Grand Prairie, TX 75051
Lemuel E. Cunningham 1,362,579 1 2 11.00%
7000 W. Seven Rivers Dr.
Crystal River, FL 32629
Larry R. Inman 1,016,881 3 8.21%
2320 SE Ag-Bag Lane
Warrenton, OR 97146
Arthur P. Schuette 267,959 4 2.16%
513 Porter's Neck Road
Wilmington, NC 28411
Michael W. Foster 274,260 5 2 2.21%
1636 Irving Street
Astoria, OR 97103
Michael B. Leahy 120,000 6 2 .97%
2944 S.W. Montgomery Dr.
Portland, OR 97201
- ----------
1 Held in trust by the Lemuel E. Cunningham Living Trust, of which Lemuel E.
Cunningham and Naomi Ruth Cunningham are the trustees.
2 Includes options to purchase 50,000 shares of Common Stock which were granted
under the Non-Employee Director Stock Option Plan.
3 Includes options to purchase 20,000 shares of Common Stock held by Larry
Inman.
4 Held jointly with Mr. Schuette's wife, except for 980 shares held by Mr.
Schuette directly.
5 Mr. Foster is the beneficial owner of 224,260 shares, consisting of (i)
219,142 shares owned directly, and (ii) 5,118 shares owned by Astoria Pacific
Industries, Inc., of which Mr. Foster is the President.
6 Includes 35,000 shares owned by Mr. Leahy as Trustee for the benefit of his
wife Ann Leahy and 35,000 shares owned by Ann Leahy as Trustee for the benefit
of Mr. Leahy.
Page 8
<PAGE>
Amount and
Nature of Percent of
Name and Address of Beneficial Class
Beneficial Owner Ownership Outstanding
- ------------------- ---------- -----------
Robert N. Thurston 155,000 2 7 1.25%
991 Aster Ct.
Marco Island, FL 34145
Rolf E. Soderstrom 250,000 2 2.02%
111 Freeman Lane
Orleans, MA 02653
Stan Vinson 20,000 8 .16%
6060 S. Willow Dr.
Greenwood Village, CO 80111
Chelverton Fund Limited 665,000 5.37%
Craigmuir Chambers
P.O. Box 71, Road Town
Tortola, British Virgin Islands
All directors and the named executive
officer as a group (8 persons) 3,466,679 2 3 8 28.00%
- ----------
7 Includes 5,000 shares held directly by Mr. Thurston's wife.
8 Includes options to purchase 20,000 shares of Common Stock which were granted
under the Non-Employee Director Stock Option Plan.
Page 9
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EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Larry R. Inman, its
President and Chief Executive Officer, which automatically renews on a yearly
basis, unless terminated by the death or disability of the employee, or upon at
least six months written notification by either party. The employment agreement
provides for base compensation, bonus compensation and participation in the
employee benefit plans offered by the Company.
As of April 11, 2000, the Company entered into a Change of Control
Agreement with Larry R. Inman. This agreement provides for compensation to Mr.
Inman of one year's annual base salary as well as a bonus of $5,000 for each
year of Company service in excess of five years in the event that he is
terminated without cause within the period governed by the agreement.
EXECUTIVE COMPENSATION
The following table sets forth certain information for each of the
years ended December 31, 1999, 1998 and 1997, regarding compensation accrued or
paid by the Company to (1) the Company's Chief Executive Officer, and (2) each
executive officer of the Company who accrued or was paid compensation in excess
of $100,000 in the year ended December 31, 1999:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------- --------------------------------------- --------------
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Pay-outs
- ---------------- -------- ----------- ---------- ------------ ------------- -------------- ---------- --------------
Other Restricted Securities LTIP Pay- All Other
Name and Annual Stock Underlying Pay- Compen-
Principal Salary Bonus Compen- Award(s) Options/ outs sation
Position Year ($) ($) sation($) ($) SARs (#) ($) ($)
- ---------------- -------- ----------- ---------- ------------ ------------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Larry R. 1999 108,000 20,000 14,400(1) 20,000 3,840(2)
Inman, 1998 108,000 14,400(1) 3,240(2)
President & CEO 1997 108,000 9,085 14,400(1) 3,513(2)
- ---------------- -------- ----------- ---------- ------------ ------------- -------------- ---------- --------------
</TABLE>
(1) Includes a $4,800 automobile expense allowance and a $9,600
farm-related expense allowance.
(2) Constitutes matching cash contributions by the Company
under the Company's 401(k) plan.
No options or stock appreciation rights were granted to, or exercised
by the Company's executive officers during the last fiscal year.
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AG-BAG INTERNATIONAL, THE S&P 500 INDEX
AND THE S&P DIVERSIFIED MACHINERY GROUP INDEX
The following performance graph compares cumulative total
return for Company stockholders over the past five years against the cumulative
total return of the Standard & Poor's 500 Stock Index, and against the Standard
& Poor's Diversified Machinery Group Index. The graph assumes $100 is invested
in Company stock and each of the other two indices at the closing market
quotation on December 31, 1994 and dividends are reinvested. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Ag-Bag $100.00 $109.52 $ 80.95 $ 40.48 $ 33.37 $ 30.95
S&P 500 $100.00 $134.11 $161.29 $211.30 $266.38 $323.97
S&P Mach. $100.00 $120.74 $147.55 $191.94 $165.65 $210.12
Although the companies included in the S&P Diversified
Machinery Group Index generally have a larger market capitalization than the
Company, such companies are believed to provide the closest peer group
representation with respect to the industry served by the Company.
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify
the appointment of Moss Adams LLP as independent public accountants to examine
the financial statements of the Company for the fiscal year ending December 31,
2000. In September 1999, the Company's former accountants, Yerger and Meyer LLP,
merged with Moss Adams LLP. A representative of Moss Adams LLP will be present
at the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF MOSS ADAMS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Currently, there are 174,000 outstanding shares of Preferred
Stock, Series A, owned by the Lemuel E. Cunningham Trust and by members of Mr.
Cunningham's family. The Company maintains life insurance on the life of Mr.
Cunningham in the amount of $1,000,000 for the purpose of redeeming the
Preferred Stock at a price of $4 per share in the event of his death.
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The Company purchases its Tri-Dura(R) rolls from a company
(the "Supplier") owned by Steven G. Ross, a 14.54% stockholder of the Company.
The Company purchased all of its Tri-Dura(R) rolls from the Supplier during
1999.
STOCKHOLDER PROPOSALS
Any stockholder proposals to be considered for inclusion in
the proxy materials for the Company's 2001 Annual Meeting must be received at
the principal executive offices of the Company not later than December 29, 2000.
The proxy holders will have discretionary authority to vote on
any proposal which is presented at the 2001 Annual Meeting and not contained in
the Company's proxy materials unless the Company receives notice of such
proposal at its principal office no later than March 15, 2001.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Company is not aware of any
other business to be presented at the Annual Meeting. However, if other matters
properly come before the meeting, the proxy holders will vote the proxies
received in accordance with their best judgment on such matters.
INCORPORATION BY REFERENCE
The Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 1999, transmitted
with the Proxy Statement, are hereby incorporated by reference. No other
portions of the Annual Report shall be deemed incorporated herein.
FINANCIAL INFORMATION
THE COMPANY'S 1999 ANNUAL REPORT TO STOCKHOLDERS ACCOMPANIES THESE
MATERIALS. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1999 MAY BE OBTAINED FROM THE COMPANY WITHOUT CHARGE
UPON WRITTEN REQUEST TO THE COMPANY. REQUESTS SHOULD BE DIRECTED TO THE CHIEF
FINANCIAL OFFICER, AG-BAG INTERNATIONAL LIMITED, 2320 SE AG-BAG LANE, WARRENTON,
OREGON 97146.
BY ORDER OF THE BOARD OF DIRECTORS
LouAnn Tucker, Secretary
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Appendix I
Audit Committee Charter
Audit Committee's Role and Independence
- ---------------------------------------
The audit committee of the board of directors assists the board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and reporting practices of the corporation and such other duties as
directed by the board. The membership of the committee shall consist of at least
three directors who are generally knowledgeable in financial and management
expertise. Each member shall be free of any relationship that, in the opinion of
the board, would interfere with his or her individual exercise of independent
judgement. The committee is expected to maintain free and open communication
(including private executive sessions at least annually) with the independent
accountants, the internal auditors and the management of the corporation. In
discharging this oversight role, the committee is empowered to investigate any
matter brought to its attention, with full power to retain outside counsel or
other experts for this purpose. This charter shall be reviewed annually and
updated as needed.
Responsibilities
- ----------------
The audit committee's primary responsibilities include:
o Primary input into the recommendation to the board for the selection
and retention of the independent accountant that audits the financial
statements of the corporation. In the process, the committee will
discuss and consider the auditor's written affirmation that the auditor
is in fact independent, will discuss the nature and rigor of the audit
process, receive and review all reports, and will provide to the
independent accountant full access to the committee (and the board) to
report on any and all appropriate matters.
o Provision of guidance and oversight to the internal audit function of
the corporation, including review of the organization plans and results
of such activity.
o Review of financial statements (including quarterly reports) with
management and the independent auditor.
o Discussion with management and the auditors of the quality and adequacy
of the company's internal controls.
o Discussion with management of the status of pending litigation,
taxation matters, and other areas of oversight to the legal and
compliance areas as may be appropriate
o Reporting on audit committee activities to the full board and issuance
annually of a summary report (including appropriate oversight
conclusions) suitable for submission to the shareholders.
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