SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
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 [ ] Definitive Proxy
Statement
[ ] Definitive Additional Materials [ ] Soliciting Materials
Pursuant to Section
[ ] Confidential, for use of the Commission Section 240.14a- 11(c)
Only (as permitted by Rule 14a-6(3)(2)) or Section 240.14a-12
AMERICAN ECO CORPORATION
---------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
---------------------------
2) Aggregate number of securities to which transaction
applies:
---------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth 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 Number:
-----------------
3) Filing Party:
------------------------------------------
4) Date Filed:
--------------------------------------------
<PAGE>
PRELIMINARY COPIES
------------------
AMERICAN ECO CORPORATION
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting of Shareholders
(the "Meeting") of American ECO Corporation (the "Corporation") will be
held at The Sheraton Centre, 123 Queen Street West, Toronto, Ontario,
M5H 3M9, on Thursday, May 7, 1997 at 4:30 in the afternoon (Toronto time),
for the following purposes:
(a) To receive and consider the annual report of management to the
shareholders and the consolidated financial statements of the
Corporation for the year ended November 30, 1996 and the report of the
auditors thereon;
(b) To elect directors of the Corporation for the ensuing year;
(c) To appoint Coopers & Lybrand, L.L.P., Certified Public Accountants, as
auditors of the Corporation for the current year and to authorize the
directors to fix their remuneration;
(d) To consider and if deemed advisable, approve and confirm with or
without variation, a resolution of the directors of the Corporation
amending the Corporation's stock option plan;
(e) To consider and if deemed advisable, pass with or without variation, a
resolution ratifying, sanctioning, approving and confirming the
conversion price of US$18,000,000 principal amount of 9.5% convertible
debentures sold by the Corporation;
(f) To consider and if deemed advisable, pass with or without, variation,
a special resolution authorizing and approving an amendment to the
Articles of the Corporation; (i) deleting the Class A Preference
Shares and the Class A Preference Shares, Series 1 (none of which are
issued and outstanding); (ii) creating a new class of preference
shares and providing for the specific rights, privileges, restrictions
and conditions attaching thereto; and (iii) deleting the current
provisions attaching to the common shares and providing for the
specific rights, privileges, restrictions and conditions attaching
thereto;
(g) To consider and if deemed advisable, pass with or without variation, a
resolution authorizing the Corporation to enter into private placement
agreements with arm's length subscribers during the ensuing 12 month
period; and
(h) To transact such other business as may properly come before the
Meeting or any adjournments thereof.
This notice is accompanied by a form of proxy, a management information
circular, the consolidated financial statements of the Corporation for the
year ended November 30, 1996 and a reporting package pursuant to National
Policy No. 31.
Shareholders who are unable to attend the Meeting are requested to
complete, date, sign and return the enclosed form of proxy so that as large
a representation as possible may be had at the Meeting.
The board of directors has fixed the close of business on March 17, 1997 as
the record date for the determination of holders of common shares entitled
to notice of the Meeting and any adjournments thereof.
The board of directors has by resolution fixed the close of business on the
second business day preceding the day of the Meeting (excluding Saturdays,
Sundays and holidays) and any adjournments thereof as the time before which
proxies to be used or acted upon at the Meeting or any adjournments thereof
shall be deposited with the Corporation or its transfer agent.
DATED at Texas this __ th day of April, 1997.
By Order of the Board of Directors
----------------------------------
MICHAEL E. MCGINNIS
President and Chief
Executive Officer
<PAGE>
PRELIMINARY COPIES
------------------
AMERICAN ECO CORPORATION
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES
-----------------------
THIS MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH
THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF AMERICAN ECO CORPORATION
(THE "CORPORATION") FOR USE AT THE ANNUAL AND SPECIAL MEETING OF
SHAREHOLDERS (THE "MEETING") OF THE CORPORATION TO BE HELD AT THE TIME AND
PLACE AND FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF MEETING.
References in this management information circular to the Meeting include
any adjournment or adjournments thereof. It is expected that the
solicitation will be primarily by mail, but proxies may also be solicited
personally by regular employees of the Corporation. The cost of
solicitation will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
-------------------------------------
The persons named in the enclosed form of proxy are officers of the
Corporation. A SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON, WHO NEED
NOT BE A SHAREHOLDER, TO REPRESENT HIM AT THE MEETING, MAY DO SO BY
INSERTING SUCH PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE ENCLOSED
FORM OF PROXY OR BY COMPLETING ANOTHER PROPER FORM OF PROXY AND, IN EITHER
CASE, DEPOSITING THE COMPLETED PROXY AT THE REGISTERED OFFICE OF THE
CORPORATION OR THE CORPORATION'S TRANSFER AGENT INDICATED ON THE ENCLOSED
ENVELOPE NOT LATER THAN 48 HOURS (EXCLUSIVE OF SATURDAYS, SUNDAYS AND
HOLIDAYS) BEFORE THE TIME OF THE MEETING.
The board of directors of the Corporation has fixed March 17, 1997, as
the record date, being the date for the determination of the registered
holders of securities entitled to receive notice of the Meeting.
A Shareholder forwarding the enclosed proxy may indicate the manner in
which the appointee is to vote with respect to any specific item by
checking the appropriate space. If the Shareholder giving the proxy wishes
to confer a discretionary authority with respect to any item of business
then the space opposite the item is to be left blank. The shares
represented by the proxy submitted by a Shareholder will be voted in
accordance with the directions, if any, given in the proxy.
A proxy given pursuant to this solicitation may be revoked by
instrument in writing, including another proxy bearing a later date,
executed by the shareholder or by his attorney authorized in writing, and
deposited either at the registered office of the Corporation or its
transfer agent at any time up to and including the last business day
preceding the date of the Meeting or with the Chairman of the Meeting on
the day of the Meeting or in any other manner permitted by law.
EXERCISE OF DISCRETION BY PROXIES
---------------------------------
The persons named in the enclosed form of proxy will vote the shares in
respect of which they are appointed in accordance with the direction of the
shareholders appointing them. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES
WILL BE VOTED IN FAVOR OF THE PASSING OF ALL THE RESOLUTIONS DESCRIBED
BELOW. THE ENCLOSED FORM OF PROXY CONFERS DISCRETIONARY AUTHORITY UPON THE
PERSONS NAMED THEREIN WITH RESPECT TO AMENDMENTS OR VARIATIONS TO MATTERS
IDENTIFIED IN THE NOTICE OF MEETING AND WITH RESPECT TO OTHER MATTERS WHICH
MAY PROPERLY COME BEFORE THE MEETING. At the time of printing this
management information circular, management knows of no such amendments,
variations or other matters to come before the Meeting. However, if any
other matters which are not now known to management should properly come
before the Meeting, the proxy will be voted on such matters in accordance
with the best judgment of the named proxies.
<PAGE>
-2-
The affirmative vote of a majority of the common shares represented in
person or by proxy at the meeting is required for the election of directors
and the approval of the proposed resolutions, except for the proposal to
amend the Articles of the Corporation which requires the affirmative vote
of two-thirds of the votes cast in person or by proxy at the Meeting.
SECURITIES AND PRINCIPAL HOLDERS THEREOF
----------------------------------------
As at March 17, 1997, 14,783,646 common shares of the Corporation were
issued and outstanding. Each common share entitles the holder thereof to
one vote on all matters to be acted upon at the Meeting. All holders of
common shares of record as of the time of the Meeting are entitled either
to attend and vote thereat in person the respective common shares held by
them or, provided a completed and executed proxy shall have been delivered
to the registered office of the Corporation or its transfer agent within
the time specified in the attached Notice of Meeting, to attend and vote
thereat by proxy the respective common shares held by them.
To the knowledge of the directors and officers of the Corporation, the
only person, firm or corporation who beneficially owns, directly or
indirectly, or exercises control or direction over voting securities of the
Corporation carrying more than 5% of the voting rights attached to any
class of voting securities of the Corporation, is as follows:
PERCENTAGE OF
NUMBER OF TOTAL ISSUED
REGISTERED SHAREHOLDER COMMON SHARES COMMON SHARES
---------------------- ------------- --------------
Vision Holdings Inc. 3,052,611 21%
14 Parlaville Road
P.O. Box HM2257
Hamilton, Bermuda HMJX
STATEMENT OF EXECUTIVE COMPENSATION
-----------------------------------
The following table presented in accordance with Ontario Regulation
638/93 made under the Securities Act, Ontario sets forth all annual and
long term compensation for services in all capacities to the Corporation
and its subsidiaries for the fiscal year ended November 30, 1996 to the
extent required by the Regulation in respect of each of the individuals who
were, at November 30, 1996, Executive Officers of the Corporation, as that
term is defined therein (the "Named Executive Officers"). Disclosure of
compensation is provided for comparative purposes notwithstanding that such
disclosure is not required where such Named Executive Officer received
salary and bonuses totalling less than CDN$100,000. Specific aspects of the
compensation of the Named Executive Officers are dealt with in further
detail in subsequent tables.
<PAGE>
-3-
ANNUAL COMPENSATION
NAME --------------------------------------------
AND BONUS OTHER ANNUAL
POSITION YEAR SALARY (US$) (US$) COMPENSATION
---------------- ------ ---------- --------- ------------
Michael McGinnis
President and 1996 251,138 (1) 0 6,439 (2)
Chief Executive 1995 101,043 (1) 0 6,440 (2)
Officer 1994 90,012 0 0
Mark White 1996 0 0 120,000 (3)
Chairman of 1995 0 0 40,000 (3)
the Board 1994 0 0 87,500
John C. Pennie 1996 0 0 109,140 (4)
Vice-Chairman 1995 0 0 83,825 (4)
of the Board 1994 0 80,785 (4)
LONG-TERM ALL OTHER
COMPENSATION COMPENSATION
------------ ------------------
NAME SECURITIES
AND UNDERLYING
POSITION OPTIONS (#)
------------- -----------
Michael McGinnis
President and 20,000 0
Chief Executive 50,000 0
Officer 50,000 0
Mark White 0 0
Chairman of 65,000 0
the Board 10,000 0
John C. Pennie 0 0
Vice-Chairman 50,000 0
of the Board 0 0
(1) Includes $1,138 and $1,158 of deferred compensation contributed by
the Corporation to Mr. McGinnis' 401K Plan in fiscal 1996 and fiscal
1995, respectively.
(2) Represents automobile lease payments paid by the Corporation.
(3) Represents amounts paid as a retainer to Mr. White for services
rendered to the Corporation.
(4) Represents fees paid to Windrush Corporation, a company 50% of which
is owned by Mr. Pennie, for executive services, including rental and
secretarial services, for the Corporation's Toronto office.
LONG-TERM COMPENSATION PLANS
----------------------------
OPTION GRANTS IN 1996
---------------------
The following table provides details on stock options granted to the
Named Executive Officers in the fiscal year ended November 30, 1996 under
the terms of the Corporation's existing stock option plan.
% OF TOTAL
OPTIONS
SECURITIES GRANTED TO
UNDER EMPLOYEES EXERCISE
OPTIONS IN FINANCIAL PRICE
NAME GRANTED (#) YEAR (CDN$)
------------ ----------- ------------ ----------
Michael E. McGinnis 20,000 4% 4.60
Mark White 0 - -
John C. Pennie 0 - -
MARKET VALUE
OF SECURITIES
UNDERLYING
OPTIONS ON
THE DATE OF
NAME GRANT (CDN$) EXPIRATION DATE
------------ ------------- ---------------
Michael E. McGinnis 4.60 12/1/2000
Mark White - -
John C. Pennie - -
OPTIONS EXERCISED AND AGGREGATES REMAINING
------------------------------------------
The following table provides detailed information regarding options
exercised by the Named Executive Officers during the fiscal year ended
November 30, 1996. In addition, details on remaining options held are
provided.
<PAGE>
-4-
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT STOCK OPTIONS
FISCAL AT FISCAL
YEAR-END YEAR-END
(#) (CDN$)(1)
------------- --------------
SECURITIES
ACQUIRED
UPON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) (US$) UNEXERCISABLE UNEXERCISABLE
---- ----------- --------------- ------------- -------------
Michael E. 0 - 108,000/12,000 707,200/55,800
McGinnis
Mark White 0 - 75,000/0 502,500/0
John C. 50,000 214,925 0 -
Pennie
(1) Based on the closing price of the common shares on The Toronto Stock
Exchange (the "TSE") on November 30,1996 of CDN$9.25.
OTHER COMPENSATION MATTERS
--------------------------
There were no long-term incentive awards made to Named Executive
Officers of the Corporation during the fiscal year ended November 30,1996.
The Corporation has instituted for its U.S.A. branch employees a 401 K
Plan that enables its employees to save for retirement with tax exempt
contributions. The Plan may be summarized as follows:
Employees become eligible to participate upon attaining age
twenty-one (21) and completing one year of service. Upon meeting the
participation requirements they have the option of enrollment after
a "Year of Service". The total compensation that can be considered
for contribution purposes is limited to US$150,000. Employees may
elect to defer any percentage of their current compensation into the
Plan, subject to a maximum of 15% or US$9,500, whichever is lower.
The Corporation may make a contribution to the Plan, known as a 401
K matching Contribution, on behalf of those participants who have
made salary deferral contributions. The Corporation's contribution,
if any, will be in an amount not to exceed 25% of the first 4% and
if any matching 401 K contribution remain, it will be allocated to
each such Participant in an amount not to exceed 25% of the next 4%
of their Compensation contributed as salary deferral contributions.
The Corporation may make a profit sharing contribution to the Plan
for all participants. The amount of this contribution, if any, will
be determined by the Corporation. The employee's share of the
Corporation's profit sharing contribution will be allocated to their
account based on the ratio that their compensation bears to the
total compensation of all participants eligible for a share of such
contribution.
The Corporation's matching contribution for Mr. McGinnis during the
fiscal year was US$1138.
EMPLOYMENT CONTRACTS
--------------------
The Corporation has an employment agreement dated December 1, 1995, as
amended May 1, 1996, with Mr. McGinnis, its Chief Executive Officer,
through November 30, 2000 with annual base compensation of US$250,000. The
Chief Executive Officer is entitled to participate in an annual bonus pool
equal to 5% of net income. Stock options were granted to the Chief
Executive Officer in 1996 that allow for the purchase of up to 20,000
common shares of the Corporation at a price of CDN$4.60 per share pursuant
to the Employee Stock Option Plan. The contract provides for up to two
years compensation if the Chief Executive Officer is terminated without
cause. It also provides a non-competition clause for two years after
termination.
<PAGE>
-5-
Pursuant to an agreement between the Corporation and Windrush
Corporation ("Windrush") dated October 5, 1994 in consideration for
executive services for administration of the Toronto offices of the
Corporation provided to the Corporation, Windrush receives a monthly fee of
US$5,000 plus out of pocket expenses. In addition, Windrush is entitled to
receive a fee for all fundraising efforts initiated and coordinated by
Windrush for the benefit of the Corporation. The fee amount will be
negotiated on a transaction by transaction basis. The agreement may be
terminated by the Corporation on 30 days' prior written notice. Mr. Pennie,
the Vice-Chairman of the Board of the Corporation, is a 50% shareholder of
Windrush.
COMPOSITION OF THE COMPENSATION COMMITTEE AND AUDIT COMMITTEE
-------------------------------------------------------------
Messrs. Mann, Sinclair and Knowles comprised the Corporation's
Compensation Committee during the fiscal year ended November 30, 1996.
During the year Messrs. Mann, Sinclair and Knowles resigned as directors.
None of the members of the Compensation Committee performed similar
functions with other public companies during the fiscal year ended November
30, 1996 other than Mr. Sinclair who performed such function for the
following companies: Breakwater Resources Ltd. and Great Lakes Minerals
Inc.
The members of the Compensation Committee also serve as members of the
Corporation's Audit Committee.
REPORT ON EXECUTIVE COMPENSATION
--------------------------------
It is the responsibility of the Compensation Committee to determine the
level of compensation in respect of the Corporation's senior executives
with a view to providing such executives with a competitive compensation
package having regard to performance. Performance is defined to include
achievement of the Corporation's strategic objective of growth and the
enhancement of shareholder value through increases in the stock price
resulting from a stronger balance sheet and increased earnings.
Compensation for executive officers is composed primarily of three
components; namely, base salary, performance bonuses and the granting of
stock options. Performance bonuses are considered from time to time having
regard to the above referenced objectives.
In establishing the levels of base salary, the award of stock options
and performance bonuses the Compensation Committee takes into consideration
individual performance, responsibilities, length of service and levels of
compensation provided by industry competitors. In the case of Mr. McGinnis,
the Chief Executive Officer, he will be entitled to participate in an
annual bonus pool equal to 5% of the net income under his employment
contract entered into on December 1, 1995.
The Compensation Committee is also responsible for reviewing the
Corporation's manpower and succession plans to ensure that adequate plans
are in place.
COMPENSATION OF DIRECTORS
-------------------------
A. Standard Compensation Arrangements
The directors of the Corporation who are not otherwise consultants or
employees received CDN$20,000 per year paid quarterly.
B. Other Arrangements
None of the directors of the Corporation were compensated in his
capacity as a director by the Corporation and its subsidiaries during the
fiscal year ended November 30,1996 pursuant to any other arrangement or in
lieu of any standard arrangement.
<PAGE>
-6-
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
-----------------------------------------------------------------
During fiscal 1996, the Corporation loaned money to Michael E.
McGinnis for the purpose of purchasing common shares of the Corporation in
the open market. The outstanding balance (including interest) at November
30, 1996 was US$490,355, and no repayments were made in fiscal 1996. The
loan matures on May 7, 1997, bears interest at the rate of 10% per
annum and is secured by the purchased shares. The Corporation also
loaned $350,000 to Frank J. Fradella, Executive Vice President and
Chief Operating Officer, for the purpose of purchasing a home upon his
joining the Corporation, repayable, without interest, at the rate of
$70,000 per year while Mr. Fradella is employed by the Corporation.
The outstanding amount of this loan becomes due upon the termination of
Mr. Fradella's employment with the Corporation.
The Corporation loaned US$475,000 to Mark White, Chairman of the Board,
on September 5, 1996, the note for which bore no interest and was
unsecured. Mr. White repaid such loan in its entirety on
October 16, 1996.
ELECTION OF DIRECTORS
---------------------
Six directors will be elected at the Meeting. Management does not
contemplate that any of the nominees will be unable to serve as a director
but if that should occur for any reason prior to the Meeting, it is
intended that discretionary authority shall be exercised by the persons
named in the enclosed form of proxy to vote the proxy for the election of
any other person or persons in place of any nominee or nominees unable to
serve. The term of office of each of the following proposed nominees will
expire at the next meeting of shareholders of the Corporation when a
successor is duly elected or appointed unless his office is earlier vacated
in accordance with the Corporation's by-laws. The information as to the
shares of each nominee beneficially owned, or over which control is
exercised, has been furnished by the respective nominee.
The following table sets forth certain information pertaining to the
persons proposed to be nominated for election as directors.
<PAGE>
-7-
-------------------------------------------------------------------
POSITION
WITH THE
NAME PRINCIPAL OCCUPATION CORPORATION
----------- ------------------------- ---------------
Barry President, Pharmax Rexall Director
Cracower Drug Stores, Ltd.
William A. Chairman, Swiss re Canada Director
Dimma Group of Companies
Donald R. President, Sunnybank Director
Getty Investments Ltd.
Michael E. President and Chief President and
McGinnis Executive Officer of the Chief Executive
Corporation Officer
John C. President and Chief Vice-Chairman
Pennie Executive Officer, of the Board
Windrush Corporation
Francis J. Director, Separation & Director
Sorg Recovery Systems Inc.
-------------------------------------------------------------------
-------------------------------------------------------------------
NUMBER OF SHARES
BENEFICIALLY OWNED,
DIRECTLY OR
YEAR FIRST INDIRECTLY, OR OVER
BECAME A WHICH CONTROL OR
NAME DIRECTOR DIRECTION IS EXERCISED
------------------ ------------- --------------------------
Barry Cracower 1/92 to 3/93 Nil
and 1997
William A. Dimma 1997 Nil
Donald R. Getty 1997 Nil
Michael E. McGinnis 1993 305,300 (1)
John C. Pennie 1992 2,500
Francis J. Sorg - Nil
-------------------------------------------------------------------
(1) Includes 120,000 shares subject to options.
BARRY CRACOWER was elected as a director of the Corporation in December
1996 to fill a vacancy on the Board of Directors following the resignation
of a member. Mr. Cracower is the President of Pharmx Rexall Drug Stores
Ltd., a drug store chain based in Concord, Ontario, and he has served in
that capacity since 1990. Prior to 1990, he held senior executive
positions at several major Canadian corporations. Mr. Cracower served
on the Board of Directors of the predecessor corporation to the Corporation,
ECO Corp., in 1992 during its restructuring. He also serves as a director
of Algonquin Merchantile Corporation, a Canadian company. Mr. Cracower
holds an MBA degree from Columbia University School of Business.
WILLIAM A. DIMMA was elected as a director of the Corporation in January
1997 to fill a vacancy on the Board of Directors following the resignation
of a member. Mr. Dimma has served as the Chairman of the Board of Canadian
Business Media Ltd since 1992 and York University since 1991. Between 1984
and 1986, Mr. Dimma served as the President and Chief Executive Officer
of Royal Lepage, Canada's largest real estate services company. In
addition to the companies mentioned above, Mr. Dimma is a director
of several Canadian and United States companies, including the Greater
Toronto Airport Authority, Magellan Aerospace Corporation, IPL Energy
Inc., a pipeline and gas distribution company, London Life Insurance
Company, Sears Canada Inc. and Trilon Financial Corporation, a financial
services company.
<PAGE>
-8-
DONALD R. GETTY was elected as a director of the Corporation in January
1997 to fill a vacancy on the Board of Directors following the resignation
of a member. Mr. Getty is the President and Chief Executive Officer of
Sunnybank Investments Ltd., an investment and consulting company located in
Edmonton, Alberta, and has served in that capacity since December 1992.
Mr. Getty has held elected and appointive offices in Canadian government,
most recently as the Premier of the Province of Alberta from 1985 to 1992
and as the Minister of Energy and Natural Resources for the Province of
Alberta between 1971 and 1979. Mr. Getty currently serves on the boards
of directors of Mera Petroleum, an oil and gas company, Cen Pro
Technologies, an engineering company, Farm Energy Corporation, an ethanol
production company, and Guyanor Resources, a mining company.
MICHAEL E. MCGINNIS has served as the President and Chief Executive
Officer of the Corporation since 1993 and as a director since 1994. He was
the President and Chief Executive Officer of Eco Environmental, Inc., a
provider of environmental remediation services to industrial clients, when
it was acquired by the Corporation in 1993. Prior to joining Eco
Environmental, Inc. in 1992, Mr. McGinnis was employed with The Brand
Companies, Inc., one of the largest asbestos abatement contractors in the
United States. Mr. McGinnis joined The Brand Companies in 1965 and served
in various operational and administrative capacities for over 27 years.
Mr. McGinnis serves as the Chairman of the Board of EIF Holdings, Inc., an
asbestos abatement and lead removal contractor based in California in which
the Corporation holds a minority interest, and he has held that position
since February, 1996.
JOHN C. PENNIE became a director of the Corporation in February 1992
and was also appointed the Corporation's President and Chief Executive
Officer in that year in order to execute the downsizing and
reorganization of the Corporation. In October 1993, Mr. Pennie was
appointed Vice Chairman of the Board of Directors. Prior to joining
the Corporation, Mr. Pennie was a business consultant with over 25 years
of experience in assisting turnaround and start-up companies. Mr. Pennie
received a CIM certificate from the University if Western Ontario. He
also serves as a director of Innovadent Technologies, Inc., a
manufacturing company.
FRANCIS J. SORG is a nominee for director has not served previously as
a director of the Corporation. For the past five years, Mr. Sorg has served
as the Chairman of the Board of Separation and Recovery Systems, Inc., a
producer of proprietary Sarex filtration systems that the Corporation
acquired in July 1996.
<PAGE>
-9-
STATEMENT OF CORPORATE GOVERNANCE PRACTICE
------------------------------------------
In accordance with the disclosure requirements of the TSE and using the
corporate governance guidelines set out in Section 474 of the TSE Company
Manual as a reference, the Board of Directors of the Corporation has
adopted the following statement of corporate governance practices:
The Board implicitly and explicitly acknowledges its responsibility for
the stewardship of the Corporation:
(i) The Board participates in strategic planning as the acceptor and/or
adopter of the strategic plans proposed and developed by management.
The strategic planning process has been the responsibility of
management. The Board will undertake periodic reviews of the
strategic planning process.
(ii) The Board has considered and in its deliberations considers the
principal risks of the Corporation's business and receives periodic
reports from management of the Corporation's assessment and
management of those risks.
(iii) The Board has, from time to time, considered succession issues and
takes responsibility for appointing and monitoring officers of the
Corporation.
(iv) The Board has discussed and considered how the Corporation
communicates with its various shareholders and periodically reviews
and approves the Corporation's communications with the public but
has no formal communications policy.
(v) The Board, directly and through its Audit Committee, assesses the
integrity of the Corporation's internal control and management
information systems.
Given the extensive experience of senior management of the Corporation
in the Corporation's principal business, it has not been necessary for the
Board to encourage senior management to participate in appropriate
professional and personal development activities, courses and programs.
However, the Board does support management's commitment to the training and
development of all permanent employees.
The Board currently comprises seven members of whom four are unrelated
directors.
The Board has considered the relationship of each current director.
Three current directors, namely Mark White, John C. Pennie and Michael E.
McGinnis, are related by virtue of their holding senior management
positions. Messrs. Cracower, Dimma, Garth and Getty who are currently
directors of the Corporation are unrelated.
The Board has not constituted a formal nominating committee to be
responsible for proposing new nominees to the Board and for assessing
directors on an ongoing basis. Nominations for the Board have been the
result of recruitment efforts by several directors and have been discussed
informally with several directors before being brought to the Board as a
whole.
Board members who are not otherwise employees or consultants are
presently compensated on the basis of CDN$20,000 per year paid quarterly;
expenses are reimbursed at cost. In addition, board members have been
granted stock options under the Corporation's stock option plan.
The Board of Directors expressly assumes responsibility for developing
the Corporation's approach to governance issues and is responsible for the
responses to governance guidelines. The Corporation has not developed
position descriptions for the Board and the Chief Executive Officer. Any
responsibility which is not delegated to management or a Board committee
remains with the Board.
The Board has functioned, and is of the view that it can continue to
function, independently of management, as required. The Board has not
appointed a chair of the Board who is an unrelated director. However,
unrelated
<PAGE>
-10-
directors are free to add items to agendas or to request the calling
of Board meetings where deemed necessary and all members of the
Board are invited to raise issues not on the agenda at Board meetings.
The Board has not met without management present. If the Board believed
it was appropriate and meaningful it would formalize the process by which
the Board would meet without management and for handling the Board's
overall relationship with management.
During the 1996 fiscal year, the Board of Directors met in person or
telephonically four times, and each director attended at least 75% of the
meetings. The Board of Directors also authorized corporate actions
through written consents.
The Audit Committee is currently composed of three directors, all of
whom are unrelated. The Compensation Committee is currently composed of 3
directors, all of whom are unrelated.
The Audit Committee's mandate includes a review of the annual and
quarterly financial statements, material investments and transactions that
could materially affect the financial position of the Corporation. The
Audit Committee establishes and monitors procedures to resolve conflicts of
interest and reviews audit and financial matters. Through meetings with
external auditors and senior management, the Audit Committee discusses,
among other things, the effectiveness of internal control procedures
established for the Corporation.
The Board has not constituted a committee comprised exclusively of
outside directors, a majority of whom are unrelated directors, to assess
the effectiveness of the Board as a whole, the committees of the Board and
the contribution of individual directors. This task has been assigned to
the Audit Committee.
The Corporation does not have a formal process of orientation and
education for new members of the Board. This process is handled informally
by members of the Board.
PERFORMANCE GRAPH
-----------------
The following chart compares the total cumulative shareholder return
for $100 invested in common shares of the Corporation beginning on November
30,1990 with the cumulative total return of the TSE 300 Total Return Index
(the "TSE Index") for the Corporation's five most recently completed
financial years.
[insert graph]
<PAGE>
-11-
In view of the impact of the year November 30, 1991 to November 30,
1996 on the above referenced performance chart, set out below is the
performance graph for the four year period commencing November 30, 1992:
[insert graph]
APPOINTMENT OF AUDITORS
-----------------------
Unless such authority is withheld, the persons named in the
accompanying proxy intend to vote for the appointment of Coppers & Lybrand,
L.L.P., Certified Public Accountants, as auditors of the Corporation (the
"New Auditors") for the next year and to authorize the directors to fix
their remuneration.
The Board of Directors selected the New Auditors, subject to
ratification by shareholders. Karlins, Patrick & Co., P.C., Chartered
Accountants (the "Former Auditors") had audited the Corporation's financial
statements for the 1996 fiscal year and had been the Corporation's
accountants since 1993. Accordingly, the Former Auditors resigned at the
request of the Corporation on March 24,1997, effective May 7, 1997.
In accordance with National Policy No. 31, the Corporation issued a
notice of change of auditors (the "Notice"), has received letters in reply
to the Notice from the Former Auditors and the New Auditors (together, the
"Replies") and the Notice and the Replies have been reviewed by the
directors of the Corporation. A copy of each of the Notices and the Replies
are attached hereto as the reporting package pursuant to National Policy
No. 31.
A representative of the Former Auditors is expected to be present at
the Meeting and will be given the opportunity to make a statement if he
desires to do so and to respond to appropriate questions from Shareholders.
AMENDMENT TO STOCK OPTION PLAN
------------------------------
The Corporation has in place a share option plan for directors,
officers, employees and consultants (the "Plan"). The Plan as well as the
rules of the TSE provide that any amendment to a share option plan must be
pre-cleared with the TSE and provide that if there is a proposal to
increase the maximum number of shares issuable under the Plan, the same
must be approved by a majority of the votes cast at the shareholders'
meeting.
The Plan currently provides that 1,825,000 common shares are to be
reserved for issuance pursuant to the exercise of options granted under the
Plan. As of March 17, 1997, an aggregate of 1,700,613 options to purchase
common shares have been granted under the Plan. No options or other
entitlements under the Plan have been granted subject to shareholder
ratification.
The Corporation will not provide financial assistance to participants
under the Plan to facilitate the purchase of common shares.
<PAGE>
-12-
As the Corporation currently has 14,783,646 issued and outstanding
common shares and seeks to issue stock options from time to time as part of
executives' and employees' compensation based on merit and to assist in the
further growth of the Corporation, the directors of the Corporation are of
the view that it is appropriate to authorize an amendment to the Plan to
provide that the maximum number of common shares in the capital of the
Corporation that may be reserved for issuance for all purposes under the
Plan shall be increased from 1,825,000 common shares to 2,956,700 common
shares subject to adjustment or increase of such number pursuant to the
provisions of Article 8 of the Plan. The Plan, as amended, provides that
the maximum number of common shares which may be reserved for issuance to
any one insider pursuant to share options under the amended Plan or any
other share compensation arrangement may not exceed 5% of the common shares
outstanding at the time of grant (on a non-diluted basis). Any common
shares subject to a share option which for any reason is cancelled or
terminated without having been exercised shall again be available for grant
under the amended Plan.
The maximum number of common shares that may be reserved for issuance
to insiders of the Corporation under the amended Plan or any other share
compensation arrangement is limited to 10% of the common shares outstanding
at the time of the grant (on a non-diluted basis).
The Corporation has no other compensation plans or arrangements in
place and none are currently contemplated.
The resolution approving the amendment to the Plan requires
confirmation by a majority of the votes cast thereon at the Meeting.
Additionally, the amendment to the Plan is subject to the prior approval of
the TSE.
The text of the resolution to be submitted to the shareholders at the
Meeting is set forth below.
NOW THEREFORE BE IT RESOLVED THAT:
1. Subject to receipt of requisite regulatory approval, including
without limitation, the approval of The Toronto Stock Exchange, the
Plan be and the same is hereby amended to delete Article 4 therefrom
and substitute therefor the following:
"4. Shares Subject to the Plan
--------------------------
4.1 Options may be granted in respect of authorized and unissued
Shares provided that, subject to increase by the Board, the receipt of
the approval of the Exchange and the approval of shareholders of the
Corporation, the maximum aggregate number of Shares reserved by the
Corporation for issuance and which may be purchased upon the exercise
of all Options shall not exceed 2,956,700 being the sum of: (i)
1,256,087 Shares granted under this Plan, subject to adjustment or
increase of such number pursuant to the provisions of Article 8; plus
(ii) such number of Shares as are subject to outstanding Options under
Share Compensation Arrangements as of the date of adoption of this Plan
(as amended) which are cancelled or otherwise terminated without
exercise provided such number of Shares shall not exceed 1,700,613
Shares. Shares in respect of which Options are not exercised shall be
available for subsequent Options under the Plan. No fractional Shares
may be purchased or issued under the Plan."
2. Any one director or officer of the Corporation be and he is hereby
authorized and directed to do all such acts and things and to execute
and deliver under the corporate seal or otherwise all such deeds,
documents, instruments and assurances as in his opinion may be
necessary or desirable to give effect to this resolution.
ARTICLES OF AMENDMENT
---------------------
Shareholders are next being asked to pass a special resolution
authorizing and approving an amendment to the Articles of the Corporation;
(i) deleting the Class A Preference Shares and the Class A Preference
Shares, Series 1 (none of which are issued and outstanding); (ii) creating
a new class of preference shares and providing for the specific rights,
privileges, restrictions and conditions attaching thereto; and (iii)
deleting the current provisions
<PAGE>
-13-
attaching to the common shares and providing for the specific rights,
privileges, restrictions and conditions attaching thereto.
The directors of the Corporation are of the view that the proposed
amendments to the Articles of the Corporation are in the best interests of
the Corporation for a number of reasons. The proposed preference shares
which may be issued in series, as and when approved by the directors of the
Corporation, and without further shareholder action, will provide the
Corporation with greater flexibility with respect to future equity
financings.
As preference shares are equity securities which may be treated like a
category in between debt and equity, they are an attractive financing
vehicle in that their issue will not appear on the debt side of the balance
sheet of the Corporation but will appear in the Corporation's
capitalization. The Corporation has no present plans to issue any of the
new preference shares.
The rights, privileges, restrictions and conditions to be attached to
the new class of preference shares and to be attached to the common shares
are each set forth in Schedule "A" attached hereto and forming a part
hereof.
Upon receipt of a certificate of amendment pursuant to the Business
Corporations Act, Ontario the authorized capital of the Corporation shall
consist of an unlimited number of common shares and an unlimited number of
preference shares, having the rights, privileges, restrictions and
conditions set forth below.
The proposed amendments to the Articles of the Corporation must be
passed by the affirmative vote of two-thirds of the votes cast at the
Meeting.
Set forth below is the text of the resolution to be submitted to the
Shareholders at the Meeting.
NOW THEREFORE BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The Articles of the Corporation shall be amended as follows:
(a) by deleting the Class A Preference Shares and the Class A
Preference Shares, Series 1 (none of which are issued and
outstanding);
(b) by providing that the Corporation is authorized to issue:
(i) an unlimited number of preference shares, issuable in
series; and
(ii) an unlimited number of common shares;
(c) by deleting the current provisions attaching to the
common shares; and
(d) to reflect the changes in the authorized share capital,
specifically the creation of the preference shares and to
further set out the rights, privileges, restrictions and
conditions attaching to each of the common shares and the
preference shares of the Corporation by providing that
the rights, privileges, restrictions and conditions
attaching to the preference shares of the Corporation, as
a class and to the common shares of the Corporation as a
class shall be as set forth in Schedule "A" attached to
this management information circular;
so that upon receipt of a certificate of amendment pursuant to the
Business Corporations Act, Ontario the authorized capital of the
Corporation shall consist of an unlimited number of common shares
and an unlimited number of preference shares with each class of
shares possessing the rights, privileges, restrictions and
conditions set forth above.
<PAGE>
-14-
2. Any one director or officer of the Corporation be and he is
hereby authorized and directed, for and in the name of and on behalf
of the Corporation, to execute and deliver all such documents under
the corporate seal or otherwise and to do all such other acts and
things including without limitation, the execution of Articles of
Amendment in the prescribed form and the delivery thereof to the
Director appointed under the Business Corporations Act, Ontario as
he may determine in his sole and absolute discretion to be necessary
or advisable to give effect to the foregoing provisions of this
resolution, the execution of any such document or the doing of any
such act or thing being conclusive evidence of such determination,
provided that the directors of the Corporation may, in their sole
discretion revoke this special resolution without further approval
of the shareholders at any time prior to the endorsement by the
Director of a certificate of amendment of Articles in respect of
such amendment.
AMENDMENT TO DEBENTURES
-----------------------
On January 24, 1997 the Corporation sold by way of private placement to
arm's length subscribers an aggregate of US$15,000,000 principal amount of
9.5% cumulative convertible debentures due on January 24, 2007 and on March
3, 1997 the Corporation sold by way of private placement to arm's length
subscribers an additional aggregate of US$3,000,000 principal amount of
9.5% cumulative convertible debentures due on March 3, 2007. All of the
aforesaid debentures are collectively referred to herein as the
"Debentures". The proceeds of the sale of the Debentures were used by the
Corporation as part of the consideration for the acquisition of Chempower,
Inc. and general working capital.
Purchasers of the Debentures received warrants to purchase additional
common shares of the Corporation at a rate of 75 warrants for each US$1,000
principal amount of Debentures purchased. The Warrants have an exercise
price equal to 110% of the closing price of the Corporation's common shares
on NASDAQ on the day preceding closing (being US$9.56 for the first set of
Debentures and US$9.21 for the second set of Debentures) and have a term of
five years.
The Debentures are convertible into common shares in the capital of the
Corporation at a conversion price per common share equal to 85% of the five
day weighted average closing price of the common shares of the Corporation
on NASDAQ immediately prior to the conversion date (the "Conversion
Price").
The rules of the NASDAQ National Market provide that a company may not
issue by way of private placement more than 20% of its issued and
outstanding shares without having first obtained shareholder approval. As
the formula used to calculate the Conversion Price is open-ended, if the
closing price of the common shares of the Corporation on NASDAQ goes down,
it is conceivable that upon a conversion of Debentures, the Corporation
will be required to issue more than 20% of the issued and outstanding
shares as of the date of the initial issuances.
Given the foregoing, the Debentures also provide that the Conversion
Price may not be less than US$6.30 per common share (based upon a five day
weighted average closing price of the common shares, as constituted on
January 24, 1997 of US$7.50 per common share) (the "Floor Conversion
Price") provided that the Floor Conversion Price and the provision relating
thereto shall be deemed to be deleted from the Debentures upon the receipt
by the Corporation of shareholder ratification, sanction, approval and
confirmation of the issuance of the Debentures with a conversion feature at
the Conversion Price. If such shareholder ratification, sanction, approval
and confirmation is not received by the Corporation, the Conversion Price
shall remain subject to the Floor Conversion Price, and the
Debentureholders would have the right for a period of ten days commencing
183 days after issuance of their Debentures to redeem their Debentures at a
redemption price equal to 115% of the par amount of the Debentures plus
accrued interest. Conversely, if such shareholder ratification, sanction,
approval and confirmation is received by the Corporation, the Debentures
shall be deemed to provide (without any further act or formality on the
part of any party) that the Conversion Price shall not be subject to the
Floor Conversion Price.
Set forth below is the text of the resolution ratifying, sanctioning,
approving and confirming the issuance of the Debentures with a conversion
feature at the Conversion Price.
<PAGE>
-15-
NOW THEREFORE BE IT RESOLVED AS FOLLOWS:
1. The issuance by the Corporation of an aggregate of US$18,000,000
principal amount of 9.5% cumulative convertible debentures, which
debentures are convertible into common shares in the capital of the
Corporation at a conversion price per common share equal to 85% of the
five day weighted average closing price of the common shares of the
Corporation on NASDAQ immediately prior to the conversion date, be and
the same is hereby ratified, sanctioned, approved and confirmed.
2. Any one director or officer of the Corporation be and he is hereby
authorized and directed to do any and all acts and things and to
execute and deliver under the corporate seal or otherwise, all such
deeds, documents, instruments and assurances as such one director or
officer shall deem necessary to give full force and effect to these
resolutions.
APPROVAL OF PRIVATE PLACEMENTS
------------------------------
In order for the Corporation to raise funds to expand its business
services, the Corporation may require further funding which would be raised
pursuant to one or more private placements.
Shareholders are being asked to approve a resolution authorizing the
board of directors to enter into one or more private placements in the 12
month period following the Meeting to issue additional common shares to
subscribers who are at arm's length to the Corporation. Pursuant to the
rules adopted by the TSE, (and in particular, paragraph 620 of the TSE
Company Manual) shareholder approval is required for issuances of shares by
private placement of more than 25% of the number of shares which are
currently outstanding (on a non-diluted basis) in any six month period.
Accordingly, it is prudent to have authority for such private placements at
the present time to save the time and expense of seeking shareholder
approval at future special meetings of shareholders.
It is not the intention of management to issue the entire number of
shares authorized pursuant to the proposed resolution. The private
placements will be negotiated only if management believes the subscription
price is reasonable in the circumstances and if the funds are required by
the Corporation to expand its activities. The issuance of shares pursuant
to these private placements will not materially affect control of the
Corporation. Each such private placement will be made in accordance with
applicable laws and rules of the TSE, which require the approval of the TSE
prior to completion of each individual private placement. These rules
provide that private placements must be priced at the closing price of the
common shares on the day prior to the notice of private placement, subject
to prescribed discounts.
As well, warrants may accompany common shares issued under the private
placement, where such warrants are priced at or above market and do not
exceed the number of shares issued under the private placement.
Shareholders are being asked to pass a resolution authorizing
additional private placements which would take place within one year of the
date of this management information circular. Such future private
placements will be subject to the following terms:
1. All of the private placement financings will be carried out in
accordance with the guidelines-of the TSE and specifically in
accordance with paragraphs 619 and 622 of the Manual, copies of which
are annexed hereto as Schedule "A".
2. Such future private placements would not result in additional shares of
the Corporation being issued in an amount exceeding the current number
of issued and outstanding shares (in the aggregate) of the Corporation.
3. Any of the future private placements would be substantially at arm's
length and would not materially affect control of the Corporation.
The text of the resolution to be submitted to the shareholders at
the Meeting is set forth below.
<PAGE>
-16-
NOW THEREFORE BE IT RESOLVED THAT:
1. The directors of the Corporation be and they are hereby
authorized and directed to arrange from time to time, additional
private placements in the capital of the Corporation, subject to the
following terms:
(a) All private placement financings will be carried out by
the Corporation in accordance with the guidelines of The
Toronto Stock Exchange and specifically paragraphs 619
and 622 of The Toronto Stock Exchange Company Manual.
(b) The future private placements will not result in
additional shares of the Corporation being issued in an
amount exceeding the current number of issued and
outstanding shares in the aggregate of the Corporation.
(c) Any of the future private placements would be
substantially at arm's length and would not materially
affect control of the Corporation.
2. Any one director or officer of the Corporation be and he is
hereby authorized and directed to execute and deliver under the
corporate seal or otherwise all such deeds, documents, instruments
and assurances and to do all such acts and things as in his opinion
may be necessary or desirable to give effect to this resolution.
STOCKHOLDER PROPOSALS
---------------------
December 3, 1997 is the date by which proposals of shareholders
pursuant to the SEC proxy rules intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Corporation for inclusion
in the Corporation's proxy statement and form of proxy relating to that
meeting.
EXPENSES OF SOLICITATION
------------------------
The total cost of this solicitation will be borne by the Corporation.
In addition to use of the mails, proxies may be solicited by directors,
officers and employees of the Corporation personally and by telephone or
facsimile. The Corporation may reimburse persons holding shares in their
own names or in the names of the nominees for expenses they incur in
obtaining instructions from beneficial owners of such shares.
OTHER MATTERS
-------------
A copy of the Annual Report of the Corporation for the fiscal year
ended November 30, 1996, including financial statements, is enclosed
herewith. THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO ANY PERSON
SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED NOVEMBER 30,
1996 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS
SHOULD BE DIRECTED TO DAVID L. NORRIS, CHIEF FINANCIAL OFFICER OF THE
CORPORATION, AT 11011 JONES ROAD, HOUSTON, TEXAS 77070.
The Board of Directors knows of no other business to be presented at
the Meeting, but if other matters do properly come before the Meeting, it
is intended that the persons named in the proxy will vote on such matters
in accordance with their best judgment.
<PAGE>
-17-
DIRECTORS' APPROVAL
-------------------
The contents of this management information circular and the sending
thereof have been approved by the board of directors of the Corporation.
BY ORDER OF THE BOARD OF
DIRECTORS
-----------------------------------
Michael E. McGinnis
President and Chief Executive Officer
March 24,1997
<PAGE>
SCHEDULE "A"
PRICE
619. The Exchange will not accept an issuance of securities by way of
private placement unless all of the following conditions are met:
(For the purposes of this Section, a private placement of unlisted
convertible securities shall be deemed to be a private placement of
the underlying listed securities at a price equal to the lowest
possible conversion price.)
(a) The listed company must give the Exchange's Listings &
Distributions Division written notice of the proposed private
placement. The notice should be in the form of a Notice of a
Proposed Private Placement (APPENDIX D-29 TO D-31), accompanied
by a covering letter. The date on which notice shall be deemed
to be given (the "Date of Notice") shall be, in the case of a
notice that is mailed, the date on which the notice is deposited
in a post office or public letter box. During periods of postal
disruption, listed companies shall be expected to use
alternative means of effecting prompt delivery.
(b) The price per security must be lower than the closing market
price of the security on The Toronto Stock Exchange on the
trading day prior to the Date of Notice (the "Market Price"),
less the applicable discount as follows:
MARKET PRICE MAXIMUM DISCOUNT THEREFROM
$0.50 or less 25%
$0.51 to $2.00 20%
Above $2.00 15%
(c) Subject to paragraph (e), within 30 days from the Date of
Notice, the listed company must file with the Exchange's
Listings & Distributions Division a Private Placement
Questionnaire and Undertaking (Form P1 - APPENDIX D-2 AND D-3)
completed by each proposed purchaser, and all other
documentation requested by the Exchange.
(d) The transaction must not close and the securities must not be
issued prior to acceptance thereof by the Exchange and, subject
to paragraph (e), not later than 45 days from the Date of
Notice.
(e) An extension of the time period prescribed in paragraph (c) or
(d) may be granted in justifiable circumstances, provided that a
written request for an extension is filed with the Exchange's
Listings & Distributions Division in advance of the expiry of
the 30-day or 45-day period, as the case may be.
(f) The listed company must give the Exchange immediate notice in
writing of the closing of the transaction.
WARRANTS
622. Warrants to purchase listed securities may be issued to a private
placement purchaser if:
(a) the listed company satisfies the Exchange that the warrants and
the provisions attaching to them are essential to the proposed
financing; and
(b) all of the following conditions are met:
(i) If the securities purchased initially by the private placee
are listed securities, the warrants must not entitle the
holder to purchase a greater number of listed securities than
the number of securities purchased initially. If the
securities purchased initially are convertible into listed
<PAGE>
-2-
securities, the warrants must not entitle the holder to
purchase a greater number of listed securities than the
number of securities issuable upon conversion of the
securities purchased initially. If the securities purchased
initially are neither listed securities nor convertible into
listed securities, the warrants must not entitle the holder
to purchase a greater number of listed securities than the
number obtained by dividing the initial proceeds of the
private placement by the Market Price per security as defined
in SECTION 619.
(ii) The warrant exercise price must not be less than the Market
Price, as defined in SECTION 619 (i.e. with no discount). The
procedure set out in paragraphs (a), (c), (d), (e) and (f) of
SECTION 619 must be followed in this regard, the "price"
being the warrant exercise price for this purpose.
(iii) The warrants must be exercisable during a period not
extending beyond five years from the date of the closing of
the private placement transaction.
<PAGE>
SCHEDULE "B"
"A. PREFERENCE SHARES
-----------------
The preference shares, as a class, shall have attached thereto the
following rights, privileges, restrictions and conditions:
1. Directors' Authority to Issue in One or More Series
---------------------------------------------------
1.1 The directors of the Corporation may issue the preference shares at
any time and from time to time in one or more series. Before any shares of
a particular series are issued, the directors of the Corporation shall fix
the number of shares in such series and shall determine, subject to the
limitations set out in the articles, the designation, rights, privileges,
restrictions and conditions to be attached to the shares of such series,
including, but without in any way limiting or restricting the generality of
the foregoing, the rate or rates, amount or method or methods of
calculation of any dividends thereon and whether such rate(s), amount or
method(s) of calculation shall be subject to change or adjustment in the
future, the currency or currencies of payment, the date or dates and place
or places of payment thereof and the date or dates from which such
dividends shall accrue, the consideration and the terms and conditions of
any purchase for cancellation, retraction or redemption rights (if any),
the conversion or exchange rights attached thereto (if any) and the terms
and conditions of any purchase obligation or sinking fund or other
provisions attaching thereto. Before the issue of a series of preference
shares, the directors of the Corporation shall send to the Director
appointed under the Business Corporations Act, Ontario (as now enacted or
from time to time amended, re-enacted or replaced) (the "Act") articles of
amendment in prescribed form containing a description of such series
including the number of shares in such series and the designation, rights,
privileges, restrictions and conditions determined by the directors.
2. Ranking of Preference Shares
----------------------------
2.1 No rights, privileges, restrictions or conditions attaching to a
series of preference shares shall confer upon the shares of a series a
priority in respect of dividends or in respect of return of capital in the
event of the liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, over the shares of any other series of
preference shares.
2.2 The preference shares, as a class, shall be entitled to such
priority over the common shares of the Corporation and over any other
shares of any other class of the Corporation ranking junior to the
preference shares with respect to priority in the payment of dividends
and/or the return of capital and the distribution of assets in the event of
the liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding-up its
affairs as the directors of the Corporation shall determine at the time of
determining the number and designation of, and the rights, privileges,
restrictions and conditions attaching to, the series of preference shares.
The preference shares of any series may also be given such other
preferences not inconsistent with the preferences so determined to attach
to the preference shares as a class not inconsistent with the provisions
hereof over the common shares and over any other shares ranking junior to
the preference shares as the directors of the Corporation may determine at
the time of determining the number and designation of, and the rights,
privileges, restrictions and conditions attached to, the shares of such
series.
2.3 If any amount of cumulative dividends, whether or not declared, or
declared non-cumulative dividends or amounts payable on a return of capital
in the event of the liquidation, dissolution or winding-up of the
Corporation in respect of a series of preference shares is not paid in
full, the preference shares of all series shall participate rateably in
respect of all accumulated cumulative dividends, whether or not declared,
and all declared non-cumulative dividends, and in respect of amounts
payable on return of capital in the event of liquidation, dissolution or
winding-up of the Corporation; provided, however, that in the event of
there being insufficient assets to satisfy in full all such claims as
aforesaid, the claims of the holders of the preference shares with respect
<PAGE>
-2-
to amounts payable on return of capital shall first be paid and satisfied
and any assets remaining thereafter shall be applied toward the payment and
satisfaction of claims in respect of dividends.
3. Voting Rights
-------------
3.1 Except as herein specifically provided or as otherwise provided by
law, the holders of the preference shares shall not be entitled as such to
receive notice of, to attend or to vote at any meeting of the shareholders
of the Corporation. The holders of the preference shares shall be entitled
to receive notice of meetings of shareholders of the Corporation called for
the purpose of authorizing the dissolution of the Corporation or the sale,
lease or exchange of all or substantially all the property of the
Corporation other than in the ordinary course of business of the
Corporation under subsection 184(3) of the Act.
4. Modification
------------
4.1 The rights, privileges, restrictions and conditions attaching to the
preference shares, as a class, may not be deleted, amended, modified or
varied in whole or in part except with the prior approval of the holders of
the preference shares given as hereinafter specified in addition to any
other approval required by the Act.
4.2 The approval of the holders of the preference shares with respect to
any and all matters hereinbefore referred to may be given by not less than
two-thirds of the votes cast at a meeting of the holders of the preference
shares duly called for that purpose and held upon at least 21 days' notice
at which the holders of not less than 25 per cent of the outstanding
preference shares are present or represented by proxy. If at any such
meeting the holders of 25 per cent of the outstanding preference shares are
not present or represented by proxy within one-half hour after the time
appointed for such meeting, then the meeting shall be adjourned to such
date being not less than 30 days later and at such time and place as may be
determined by the person appointed as chairman by the persons present and
entitled to vote at such meeting (and, for such purpose, the presence of
one holder of preference shares or of a proxy therefor shall constitute a
quorum) and not less than 21 days' notice shall be given of such adjourned
meeting. At such adjourned meeting the holders of the preference shares
present or represented by proxy may transact the business for which the
meeting was originally called and a resolution passed thereat by not less
than two-thirds of the votes cast at such adjourned meeting shall
constitute the approval of the holders of the preference shares referred to
above. The formalities to be observed in respect of the giving of notice of
any such meeting or any adjourned meeting and the conduct thereof shall be
those from time to time prescribed by the Act and the by-laws of the
Corporation with respect to meetings of shareholders. On every poll taken
at a meeting of holders of preference shares as a class, each holder of
preference shares entitled to vote thereat shall have one vote in respect
of each $1.00 of stated capital attributable to each preference share held
by him.
B. COMMON SHARES
-------------
The common shares, as a class, shall have attached thereto the
following rights, privileges, restrictions and conditions:
1. Dividends
---------
1.1 Subject to the prior rights of the holders of any shares of the
Corporation ranking senior to the common shares with respect to priority in
the payment of dividends, the holders of the common shares shall be
entitled to receive dividends and the Corporation shall pay dividends
thereon, as and when declared by the Board of Directors of the Corporation
out of assets properly applicable to the payment of dividends, in such
amount and in such form as the Board of Directors may from time to time
determine and all dividends which the directors may declare on the common
shares shall be declared and paid in equal amounts per share on all common
shares at the time outstanding. Cheques of the Corporation payable at par
at any branch of the Corporation's bankers for the time being in Canada
shall be issued in respect of any such dividends payable in cash (less any
tax required to be withheld by the Corporation) and payment thereof shall
satisfy such dividends. Dividends which are represented by a cheque which
has not been presented to the Corporation's bankers for payment or that
otherwise remain unclaimed for a period of six years from the date on which
they were declared to be payable shall be forfeited to the Corporation.
<PAGE>
-3-
2. Dissolution
-----------
2.1 In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of
winding-up its affairs, subject to the prior rights of the holders of any
shares of the Corporation ranking senior to the common shares with respect
to priority in the distribution of assets upon liquidation, dissolution or
winding-up, the holders of the common shares shall be entitled to receive
the remaining property and assets of the Corporation and to participate
equally in any distribution thereof without preference or distinction.
3. Voting Rights
-------------
3.1 The holders of the common shares shall be entitled to receive notice
of and to attend all meetings of the shareholders of the Corporation. At
any such meeting other than a meeting at which only holders of another
specified class or series of shares of the Corporation are entitled to vote
separately as a class or series, each common share shall confer one vote.
4. Creation of other Voting Shares
-------------------------------
4.1 No other class or series of shares of the Corporation, other than
the common shares, carrying the right to vote at a meeting of the
Corporation (other than a meeting at which only the holders of a particular
class or series of shares of the Corporation are entitled to vote
separately as a class or series) either under all circumstances or under
certain circumstances that have occurred and are continuing shall be
authorized without the affirmative vote of a majority of the votes cast at
a meeting of the holders of common shares voting separately as a class.
<PAGE>
-4-
PRELIMINARY COPIES
------------------
FORM OF PROXY SOLICITED BY THE MANAGEMENT
OF AMERICAN ECO CORPORATION
FOR USE AT AN ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD ON
THURSDAY, MAY 7, 1997
The undersigned shareholder of AMERICAN ECO CORPORATION (the
"Corporation") hereby appoints John C. Pennie, the Vice-Chairman of the
Corporation, or failing him, Michael E. McGinnis, the President of the
Corporation, or in lieu of the foregoing, _______________________________
to attend and vote on behalf of the undersigned at the Annual and Special
Meeting of Shareholders of the Corporation to be held on the 7th day of
May, 1997 and at any adjournments thereof.
The undersigned specifies that all of the voting shares owned by him
and represented by this form of proxy shall be:
(a) VOTED FOR ( )
WITHHELD FROM VOTING ( )
all nominees, listed below (except as
indicated): Barry Cracower, William A.
Dimma, Donald R.Getty, Michael E. McGinnis,
John C. Pennie and Francis J. Sorg.
(Instruction: To withhold authority to vote
for any individual nominee or nominees,
write such nominee's or nominees' name
or names in the space provided below)
__________________________________________
__________________________________________
(b) VOTED FOR ( )
WITHHELD FROM VOTING ( )
in respect of the appointment of auditors
and authorizing the directors to fix their
remuneration;
(c) VOTED FOR ( )
AGAINST ( )
the approval of an amendment to the
Corporation's stock option plan;
(d) VOTED FOR ( )
AGAINST ( )
the ratification, sanction, approval and
confirmation of the conversion price of
US$18,000,000 principal amount of 9.5%
convertible debentures sold by the
Corporation;
(e) VOTED FOR ( )
AGAINST ( )
the approval of a special resolution
authorizing and approving an amendment to
the Articles of the Corporation; (i)
deleting the Class A Preference Shares and
the Class A Preference Shares, Series 1
(none of which are issued and outstanding);
(ii) creating a new class of preference
shares and providing for the specific
rights, privileges, restrictions and
conditions attaching thereto; and (iii)
deleting the current provisions attaching
to the common shares and providing for the
specific rights, privileges, restrictions
and conditions attaching thereto;
<PAGE>
-5-
(f) VOTED FOR ( )
AGAINST ( )
the approval of the issuance of additional
common shares in the capital of the
Corporation by way of private placements,
as may be deemed necessary by the
directors, from time to time; and
(g) VOTED on such other business as may
properly come before the Meeting or any
adjournments thereof;
hereby revoking any proxy previously given.
IF ANY AMENDMENTS OR VARIATIONS TO MATTERS
IDENTIFIED IN THE NOTICE OF MEETING ARE
PROPOSED AT THE MEETING OR ANY ADJOURNMENTS
THEREOF OR IF ANY OTHER MATTERS PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF,
THIS PROXY CONFERS DISCRETIONARY AUTHORITY TO
VOTE ON SUCH AMENDMENTS OR VARIATIONS ON SUCH
OTHER MATTERS ACCORDING TO THE BEST JUDGEMENT
OF THE PERSON VOTING THE PROXY AT THE MEETING
OR ANY ADJOURNMENTS THEREOF.
D A T E D this _____ day of ______, 1997.
--------------------------------------------
Signature of Shareholder
--------------------------------------------
Name of Shareholder (Please Print)
(See notes on reverse side)
Notes:
1. This form of proxy must be dated and signed by the appointor or his
attorney authorized in writing or, if the appointor is a body
corporate, this form of proxy must be executed by an officer or
attorney thereof duly authorized.
2. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING
OR ANY ADJOURNMENTS THEREOF OTHER THAN THE PERSONS DESIGNATED IN THE
ENCLOSED FORM OF PROXY. SUCH RIGHT MAY BE EXERCISED BY STRIKING OUT THE
NAMES OF THE PERSONS DESIGNATED THEREIN AND BY INSERTING IN THE BLANK
SPACE PROVIDED FOR THAT PURPOSE THE NAME OF THE DESIRED PERSON OR BY
COMPLETING ANOTHER FORM OF PROXY AND, IN EITHER CASE, DELIVERING THE
COMPLETED AND EXECUTED PROXY TO THE REGISTERED OFFICE OF THE
CORPORATION OR ITS TRANSFER AGENT PRIOR TO THE CLOSE OF BUSINESS ON THE
SECOND BUSINESS DAY PRECEDING THE DAY OF THE MEETING OR ANY
ADJOURNMENTS THEREOF.
3. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE INSTRUCTIONS OF THE SHAREHOLDER ON ANY BALLOT THAT MAY BE CALLED
FOR AND SUBJECT TO SECTION 114 OF THE BUSINESS CORPORATIONS ACT,
ONTARIO WHERE A CHOICE IS SPECIFIED, THE SHARES SHALL BE VOTED
ACCORDINGLY AND WHERE NO CHOICE IS SPECIFIED, THE SHARES SHALL BE VOTED
FOR THE MATTERS REFERRED TO IN ITEMS (C) THROUGH (F) INCLUSIVE. WHERE
NO SPECIFICATION IS MADE TO VOTE OR WITHHOLD FROM VOTING IN RESPECT OF
THE ELECTION OF DIRECTORS OR THE APPOINTMENT OF AUDITORS, THE SHARES
WILL BE VOTED.
<PAGE>
-6-
4. Proxies to be used at the Meeting or any adjournments thereof must be
received at the registered office of the Corporation or its transfer
agent prior to the close of business on the second business day
preceding the day of the Meeting or any adjournments thereof.
5. Please date the proxy. If not dated, the proxy shall be deemed to be
dated on the date on which it is mailed.
6. This proxy ceases to be valid one year from its date.
7. If your address as shown is incorrect, please give your correct address
when returning this proxy.
PLEASE RETURN THE FORM OF PROXY,
IN THE ENVELOPE PROVIDED FOR
THAT PURPOSE TO: THE R-M TRUST COMPANY
393 University Avenue
5th Floor
Toronto, Ontario
M5G 2E6
