SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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:
[ ] Preliminary Proxy Statement [ X ] Definitive Proxy
Statement
[ ] Definitive Additional Materials [ ] Soliciting Materials
Pursuant to
[ ] Confidential, for use of the Commission Only Section 240.14a
(as permitted by Rule 14a-6(3)(2))-11(c) or Section 240.14a-12
AMERICAN ECO CORPORATION
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(Name of Registrant as Specified in its Charter)
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(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:
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<PAGE>
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 (the "Amendment
Resolution");
(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.
A dissenting shareholder in respect of the Amendment Resolution is
entitled to be paid the fair value of his shares in accordance with the
provisions of the Business Corporation Act, Ontario. Reference is made
to the accompanying management information circular for further
disclosure regarding rights of dissent.
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 3rd day of April, 1997.
By Order of the Board of Directors
/s/ Michael E. McGinnis
------------------------------------
MICHAEL E. MCGINNIS
President and Chief Executive Officer
<PAGE>
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.
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.
<PAGE>
-2-
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
REGISTERED NUMBER OF TOTAL ISSUED
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$100,000. Specific aspects of the compensation of
the Named Executive Officers are dealt with in further detail in
subsequent tables.
ANNUAL COMPENSATION
----------------------
NAME
AND BONUS OTHER ANNUAL
POSITION YEAR SALARY (US$) (US$) COMPENSATION
------------ ---- -------------- ------- ------------
Michael
McGinnis 1996 251,138 (1) 0 6,439 (2)
President and 1995 101,043 (1) 0 6,440 (2)
Chief 1994 90,012 0 0
Executive
Officer
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. 1996 0 0 109,140 (4)
Pennie 1995 0 0 83,825 (4)
Vice-Chairman 1994 0 0 80,785 (4)
of the Board
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 US$1,138 and US$1,158 of deferred compensation
contributed by the Corporation to Mr. McGinnis' 401K Plan
in fiscal 1996 and fiscal 1995, respectively.
(2) Represents automobile lease payments paid by the
Corporation.
(3) Represents amounts paid as a retainer to Mr. White for
services rendered to the Corporation.
(4) Represents fees paid to Windrush Corporation, a company
50% of which is owned by Mr. Pennie, for executive
services, including rental and secretarial services, for
the Corporation's Toronto office.
<PAGE>
-3-
LONG-TERM COMPENSATION PLANS
----------------------------
OPTION GRANTS IN 1996
----------------------
The following table provides details on stock options granted
to the Named Executive Officers in the fiscal year ended November
30, 1996 under the terms of the Corporation's existing stock
option plan.
% OF TOTAL
OPTIONS
SECURITIES GRANTED TO
UNDER EMPLOYEES
OPTIONS IN EXERCISE
GRANTED FINANCIAL PRICE
NAME (#) YEAR (CDN$)
-------- --------- ----------- ---------
Michael E. 20,000 4% 4.60
McGinnis
Mark White 0 -- --
John C. Pennie 0 -- --
MARKET VALUE
OF SECURITIES
UNDERLYING
OPTIONS ON
THE DATE OF EXPIRATION
NAME GRANT (CDN$) DATE
----------------- --------------- -------------
Michael E. 4.60 12/1/2000
McGinnis
Mark White -- --
John C. Pennie -- --
OPTIONS EXERCISED AND AGGREGATES REMAINING
------------------------------------------
The following table provides detailed information regarding
options exercised by the Named Executive Officers during the
fiscal year ended November 30, 1996. In addition, details on
remaining options held are provided.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT STOCK OPTIONS
FISCAL AT FISCAL
YEAR-END YEAR-END
(#) (CDN$)(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
<PAGE>
-4-
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.
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.
<PAGE>
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COMPENSATION OF DIRECTORS
-------------------------
A. Standard Compensation Arrangements
The directors of the Corporation who are not otherwise consultants
or employees shall receive CDN$20,000 per year paid quarterly.
B. Other Arrangements
None of the directors of the Corporation was 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.
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.
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>
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-------------------------------------------------------------------
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
Hon. Donald President, Sunnybank Director
R. 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
Hon. 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.
HON. 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 Ressources, 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
<PAGE>
-7-
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 and 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.
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.
<PAGE>
-8-
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 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.
<PAGE>
-9-
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.
AMERICAN ECO CORPORATIPM
Comparison of 5 year Total Common Shareholders Return
---------- -----------------------------------------
1991 1992 1993 1994 1995 1996
---------- -----------------------------------------
TSE Index 100 98 129 129 151 199
ECX 100 123 164 92 137 264
---------- ----------------------------------------
Share $3.50 $4.30 $5.75 $3.25 $4.80 $9.25
Price
--------- ----------------------------------------
Note: The Corporation's common shares were consolidated on a 10:1
basis in August 1993. Pre-1993 figures are shown on a post-
consolidated basis.
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.
<PAGE>
-10-
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.
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."
<PAGE>
-11-
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 attaching to the
common shares and providing for the specific rights, privileges,
restrictions and conditions attaching thereto. The three portions of
the amendment must be voted upon as a single proposal.
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. The proposed preference shares could be
issued by the Board of Directors to render more difficult or discourage
an attempt to gain control of the Corporation by means of a tender
offer or other transaction directed to the Corporation or its
Shareholders and, as a result, could be characterized as an anti-
takeover proposal.
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 "B" attached hereto and forming a
part hereof. The proposed amendments will not affect the rights of the
holders of the common shares.
Upon receipt of a certificate of amendment pursuant to the Business
Corporations Act, Ontario (the "Act") 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.
Set forth below is the text of the special resolution to be
submitted to the Shareholders at the Meeting (the "Amendment
Resolution").
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
<PAGE>
-12-
class shall be as set forth in Schedule "B" 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.
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 preceeding 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 with
shares listed on the National Market (an "NNM issuer") 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.
In order to comply with the Nasdaq National Market rules the
Debentures were amended to 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 would 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 will 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.
<PAGE>
-13-
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, and without the
Floor Conversion Price.
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.
The Nasdaq rules requiring shareholder approval of certain private
placements by NNM issuers apply only on a transaction specific basis.
Therefore, approval of this proposal will not also constitute approval
of those future private placements by the Corporation which are subject
to Nasdaq shareholder approval.
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.
<PAGE>
-14-
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. 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.
DISSENTING SHAREHOLDER RIGHTS
-----------------------------
Section 185 of the Act provides that shareholders have a right to
dissent from the Amendment Resolution and be paid the fair market value
of all, but not less than all, of their common shares if the Amendment
Resolution is approved and implemented.
A shareholder of the Corporation who wishes to dissent must send to
the Corporation no later than the termination of the Meeting a written
objection (a "Dissent Notice") to the Amendment Resolution. The filing
of a Dissent Notice does not deprive a shareholder of the right to
vote. The Act provides that a shareholder who has submitted a Dissent
Notice and who votes in favor of the Amendment Resolution will no
longer be considered a dissenting shareholder of the Corporation with
respect to that class of shares voted in favor of the Amendment
Resolution. The Act does not provide that a vote against the Amendment
Resolution or an abstention constitutes a Dissent Notice. A
shareholder need not vote his common shares against the Amendment
Resolution in order to dissent. The execution or exercise of a proxy
does not constitute a Dissent Notice. Similarly the revocation of a
proxy conferring authority on the proxyholder to vote in favor of the
Amendment Resolution does not constitute a Dissent Notice. Any proxy
granted by a shareholder who intends to dissent other than a proxy that
instructs the proxyholder to vote against the Amendment Resolution
should be validly revoked to prevent the proxyholder from voting the
common shares in favor of the Amendment Resolution and thereby
disentitling the shareholder from his right to dissent. Under the Act,
there is no right of partial dissent and a dissenting shareholder may
only dissent with respect to all common shares held by him on behalf
of any one beneficial owner and which are registered in the name of
the dissenting shareholder.
The Corporation is required within 10 days after the shareholders
adopt the Amendment Resolution to notify each shareholder who has filed
a Dissent Notice that the Amendment Resolution has been adopted but
such notice is not required to be sent to any shareholder who voted for
the Amendment Resolution or who has withdrawn his Dissent Notice.
A dissenting shareholder who has not withdrawn his Dissent Notice
must within 20 days after receipt of the notice that the Amendment
Resolution has been adopted, or if he does not receive such notice,
within 20 days after he learns that the Amendment Resolution has been
adopted, send to the Corporation a written notice (a "Payment Demand")
containing his name and address, the number of common shares in respect
of which he dissents and a demand for payment of the fair value of such
common shares. Within 30 days after sending a Payment Demand the
dissenting shareholder must send to the Corporation or its transfer
agent the certificates representing the common shares in respect of
which he dissents. A dissenting shareholder who fails to send
certificates representing the common
<PAGE>
-15-
shares in respect of which he dissents forfeits his right to make a
claim under section 185 of the Act. The Corporation or its transfer
agent will endorse on share certificates received from a dissenting
shareholder a notice that the holder is a dissenting shareholder and
will forthwith return the share certificates to the dissenting
shareholder.
On sending a Payment Demand to the Corporation, a dissenting
shareholder ceases to have any rights as a shareholder other than the
right to be paid the fair value of his common shares as determined
under section 185 of the Act except where:
(a) the dissenting shareholder withdraws his Payment Demand
before the Corporation makes an Offer to Pay (defined below)
to him pursuant to the Act;
(b) the Corporation fails to make an offer as hereinafter
described and the dissenting shareholder of the Corporation
withdraws his Payment Demand; or
(c) the directors of the Corporation revoke the Amendment
Resolution and the Articles of Amendment are not filed;
in which case his rights as a shareholder are reinstated as of the date
he sent the Payment Demand and the dissenting shareholder is entitled,
upon presentation and surrender to the Corporation or its transfer
agent of any certificate representing the common shares that had been
endorsed, to be issued a new certificate representing the same number
of common shares as the certificate so presented, without payment of a
fee.
The Corporation is required not later than seven days after the
later of the effective date of the filing of the Articles of Amendment
or the date on which the Corporation receives the Payment Demand of a
dissenting shareholder to send to each dissenting shareholder who has
sent a Payment Demand a written offer to pay ("Offer to Pay") for his
common shares in an amount considered by the Corporation's Board of
Directors to be the fair value thereof accompanied by a statement
showing the manner in which the fair value was determined. Every Offer
to Pay must be on the same terms. The Corporation must pay for the
common shares of a dissenting shareholder within 10 days after an Offer
to Pay has been accepted by a dissenting shareholder but any such offer
lapses if the Corporation does not receive an acceptance thereof within
30 days after the Offer to Pay has been made.
If the Corporation fails to make an Offer to Pay for a dissenting
shareholder or if a dissenting shareholder fails to accept an Offer to
Pay, the Corporation may within 50 days after the effective date of the
filing of the Articles of Amendment or within which further period as a
court may allow, apply to a court to fix a fair value for the common
shares of dissenting shareholders. If the Corporation fails to apply
to a court, a dissenting shareholder may apply to a court for the same
purpose within a further period of 20 days or within such further
period as a court may allow. A dissenting shareholder is not required
to give security for costs in such an application. If the Corporation
fails to make an Offer to Pay, the costs of a shareholder will be
borne by the Corporation unless the court otherwise orders.
Before making application to the court under subsection 185 (18) of
the Act or not later than seven days after receiving notice of an
application to the court under subsection 185 (19) of the Act, as the
case may be, a corporation shall give notice to each dissenting
shareholder who, at the date upon which the notice is given, (a) has
sent to the Corporation the notice referred to in subsection 185 (10)
of the Act; and (b) has not accepted an offer made by the Corporation
under subsection 185 (15) of the Act, if such an offer was made, of the
date, place and consequences of the application and of the dissenting
shareholder's right to appear and be heard in person or by counsel, and
a similar notice shall be given to each dissenting shareholder who,
after the date of such first mentioned notice and before termination of
the proceedings commenced by the application, satisfies the conditions
set out in clauses (a) and (b) herein within three days after the
dissenting shareholder satisfies such conditions. Upon an application
to a court all dissenting shareholders whose common shares have not
been purchased by the Corporation will be joined as parties and will be
bound by the decision of the court and the Corporation will be required
to notify each affected dissenting shareholder of the date, place and
consequences of the application and of his right to appear and be heard
in person or by counsel. Upon any such application to a court the
court may determine whether any person is a dissenting shareholder who
should be joined as a party and the court will then fix a fair value
for the common shares of all dissenting shareholders. The final order
of a court will be rendered against the Corporation in favor of each
dissenting shareholder and for the amount of the fair value of his
common shares as fixed by the court. The court may in its discretion
allow a reasonable rate of interest on the amount payable to each
dissenting shareholder from the effective date of the filing of the
Articles of Amendment until the date of payment.
<PAGE>
-16-
THE ABOVE IS A SUMMARY ONLY OF THE DISSENTING SHAREHOLDER PROVISIONS OF
THE ACT WHICH ARE TECHNICAL AND COMPLEX. IT IS SUGGESTED THAT ANY
SHAREHOLDER WISHING TO AVAIL HIMSELF OF HIS RIGHTS UNDER THOSE
PROVISIONS SEEK HIS OWN LEGAL ADVICE AS FAILURE TO COMPLY STRICTLY WITH
THE PROVISIONS OF THE ACT MAY PREJUDICE HIS RIGHT TO DISSENT.
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
/s/ Michael E. McGinnis
-------------------------
Michael E. McGinnis
President and Chief Executive Officer
April 3, 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 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 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 as 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.
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>
CONFIRMATION
To: Securities Administrators
The undersigned, being the President and Chief Executive Officer
of American Eco Corporation, hereby confirms that the Notice of Change
of Auditors and the letters in reply thereto from the current auditor
and the successor auditor for American Eco Corporation have been
reviewed by the Board of Directors of American Eco Corporation.
Dated the 31st day of March, 1997
/s/ Michael E. McGinnis
---------------------------
Michael E. McGinnis
President and Chief Executive Officer
<PAGE>
AMERICAN
ECO CORPORATION
11011 Jones Road
Houston, Texas 77070
Tel: (281) 774-7000
Fax: (281) 774-7001
March 31, 1997
NOTICE OF CHANGE OF AUDITOR
American Eco Corporation (the "Corporation") advises that Coopers
& Lybrand L.L.P., Certified Public Accountants (the "Successor
Auditors") have been appointed auditors of the Corporation on
March 31, 1997, following the resignation at the request of the
Corporation (the "Termination"), of the previous auditors,
Karlins Fuller Arnold & Klodosky P.C., (the "Former Auditors").
There was no reservation in the Former Auditors' reports for the
two most recently completed fiscal years or for any period
subsequent to the most recently completed period for which an
auditor report was issued and preceding the date of the Former
Auditors' Termination.
There is no reportable event, as defined by National Policy No.
31 of the Canadian Securities Administrators.
The Termination of the Former Auditors has been approved by the
Corporation's audit committee and its Board of Directors.
The Notice of Change of Auditor, together with the letters from
the Former Auditors and the Successor Auditors, have been
reviewed by the Corporation's Audit Committee and the Board of
Directors.
AMERICAN ECO CORPORATION
/s/ Michael E. McGinnis
------------------------------------
Michael E. McGinnis
President and Chief Executive Officer
<PAGE>
COOPERS & LYBRAND L.L.P.
200 South Biscayne Boulevard
Suite 1900
Miami, Florida 33131
telephone (305) 375-7400
facsimile (305) 375-6221
March 31, 1997
Ontario Securities Commission
Suite 1800, Box 55
20 Queen Street West
Toronto, Ontario Canada M5H 3S8
Commission de valeurs
mobilieres du Quebec
C.P. 246, Tour de al Bourse
Montreal, Quebec H4Z 1G3
British Columbia Securities Commission
1200 865 Hornby Street
Vancouver, BC, Canada V6Z 2H4
To Whom It May Concern:
RE: AMERICAN ECO CORPORATION - NOTICE OF CHANGE OF AUDITOR
In accordance with the requirements of National Policy Statement
No. 31, we have read the Notice of Change of Auditors of the
above company dated March 31, 1997 and are in agreement with the
information contained in the Notice.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
<PAGE>
[LETTERHEAD OF KARLINS FULLER ARNOLD & KLODOSKY, P.C.]
March 31, 1997
Commission des Valeurs
Mobilieres du Quebec
C.P. 246, Tour de la Bourse
Montreal, Quebec, Canada
H4Z 1G3
British Columbia Securities Commission
1100-885 Hornby Street
Vancouver, British Columbia
V62 2H4
Ontario Securities Commission
8th Floor
Box 55
20 Queen Street West
Toronto, Ontario
M5H 3S8
TO WHOM IT MAY CONCERN:
RE: American Eco Corporation - Notice of Change of Auditor
In accordance with the requirements of National Policy Statement
No. 31, we have read the Notice of Change of Auditors of the
above company dated March 31, 1997 and are in agreement with the
information contained in the Notice.
Yours very truly,
KARLINS FULLER ARNOLD & KLODOSKY, P.C.
/s/ Michael Karlins
-------------------------------
/s/ Michael Karlins, CPA
<PAGE>
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;
(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)
<PAGE>
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.
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
<PAGE>
AMERICAN ECO CORPORATION
TO REGISTERED AND NON-REGISTERED SHAREHOLDERS
In accordance with National Policy Statement No. 41/Shareholder
Communication, beneficial shareholders may elect annually to have their
names added to an issuer's supplemental mailing list in order to
receive interim financial statements. If you are interested in
receiving such statements, please complete and return this form.
NAME: ______________________________________________________________
ADDRESS: ____________________________________________________________
___________________________________________________________
POSTAL CODE:____________________________________________________
(I certify that I am a
beneficial shareholder) SIGNATURE: ___________________________
DATE:____________________
