SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. ....)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TRANSAMERICAN WASTE INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
LANCE C. RUUD, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------------
TRANSAMERICAN WASTE INDUSTRIES, INC.
314 NORTH POST OAK LANE
HOUSTON, TEXAS 77024
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996
The 1996 Annual Meeting of Stockholders of TransAmerican Waste Industries,
Inc., a Delaware corporation (the "Company"), will be held at the Houstonian
Hotel and Conference Center, 111 North Post Oak Lane, Houston, Texas, on June
25, 1996 at 9:00 a.m., Central Daylight Time, for the following purposes:
1. To elect nine directors to serve until the 1997 annual meeting of
stockholders or until their successors have been elected and qualified;
2. To increase the aggregate shares which the Company shall have authority
to issue;
3. To approve an Amendment to the Company's Amended and Restated 1990
Stock Incentive Plan to increase by 1,000,000 shares the number of
shares available for issuance thereunder;
4. To approve the appointment of Arthur Andersen LLP as the Company's
independent auditors for the 1996 fiscal year; and
5. To act upon such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on May 3, 1996 are
entitled to notice of and to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE MEETING, AND WISH
TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors,
/s/ LANCE C. RUUD
Lance C. Ruud
SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
June 4, 1996
Houston, Texas
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE.
TRANSAMERICAN WASTE INDUSTRIES, INC.
314 NORTH POST OAK LANE
HOUSTON, TEXAS 77024
------------------------------------
PROXY STATEMENT
------------------------------------
The accompanying proxy is solicited by the Board of Directors of
TransAmerican Waste Industries, Inc., a Delaware corporation (the "Company"),
for use at the 1996 Annual Meeting of Stockholders (the "Meeting") to be held on
June 25, 1996 and at any adjournments thereof. The Meeting will be held at the
Houstonian Hotel and Conference Center, 111 North Post Oak Lane, Houston, Texas,
at 9:00 a.m., Central Daylight Time. If the accompanying proxy is properly
executed and returned, the shares it represents will be voted at the Meeting in
accordance with the directions noted thereon or, if no direction is indicated,
it will be voted in favor of the proposals described in this Proxy Statement. In
addition, the proxy confers discretionary authority in the persons named in the
proxy authorizing those persons to vote, in their discretion, on any other
matters properly presented at the Meeting. The Board of Directors is not
currently aware of any such other matters. Any stockholder giving a proxy has
the power to revoke it by oral or written notice to the Secretary of the Company
at any time before it is voted.
The approximate date on which this Proxy Statement and the accompanying
proxy will first be sent to the stockholders is June 4, 1996.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
At the close of business on May 3, 1996, the record date for the
determination of stockholders of the Company entitled to receive notice of and
to vote at the Meeting or any adjournments thereof, 30,445,791 shares of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), were
outstanding. Each share of Common Stock outstanding as of the record date is
entitled to one vote upon each of the matters to be voted on at the Meeting.
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock is required for a quorum. The election of
directors will be determined by plurality of the votes cast by the holders of
shares of Common Stock present in person or by proxy at the Meeting, and the
approval of any other matters will require the affirmative vote of the holders
of a majority of the shares of Common Stock entitled to vote and present in
person or by proxy at the Meeting. In the case of shares that are present at the
Meeting for quorum purposes, not voting such shares for a particular nominee for
director (including by withholding authority on the proxy) will have no effect
on the election of such nominee; an abstention on any other proposal will
operate to prevent approval of such proposal to the same extent as a vote
against such proposal; and a broker non-vote will have no effect on the outcome
of any proposals. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
The following table sets forth, as of May 3, 1996, certain information with
respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to beneficially own 5% or more of the outstanding Common
Stock, (ii) each director and director nominee of the Company, (iii) each
executive officer named in the Summary Compensation Table below (the "Named
Executive Officers"), and (iv) all directors, director nominees and current
executive officers of the Company as a group. Except as described below, each of
the persons listed in the table has sole voting and investment power with
respect to the shares listed.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------- ---------- --------
Tom J. Fatjo, Jr. ................... 3,506,730 (1) 11.48%
314 North Post Oak Lane
Houston, Texas 77024
The Estate of Lawrence P. 2,781,002 9.13%
McGinnes .......................
5837 Northdale
Houston, Texas 77087
Tom J. Fatjo, III ................... 2,596,018 (2)(3) 8.52%
314 North Post Oak Lane
Houston, Texas 77024
Ben F. Barnes ....................... 2,596,480 (2)(4) 8.53%
98 San Jacinto, Suite 200
Austin, Texas 78701
Meridian Fund, Ltd. ................. 2,075,000 6.82%
601 Jefferson
Houston, Texas 77002
William B. Blount ................... 791,950 (5) 2.54%
10 Court Square
Montgomery, Alabama 36103
Ed L. Romero ........................ 103,332 (6) *
6739 Academy Road NE
Albuquerque, New Mexico 87109
R. Brian Fifer ...................... 84,166 (7) *
419 SW 31 Road
Miami, Florida 33129
Preston Moore, Jr. .................. 106,666 (8) *
314 North Post Oak Lane
Houston, Texas 77024
Lance C. Ruud ....................... 287,500 (9) *
314 North Post Oak Lane
Houston, Texas 77024
John V. Singleton, Jr. .............. -- *
314 North Post Oak Lane
Houston, Texas 77024
Thomas E. Noel ...................... 125,000 (10) *
314 North Post Oak Lane
Houston, Texas 77024
J. David Green ...................... -- *
314 North Post Oak Lane
Houston, Texas 77024
Directors and current executive
officers
as a group (10 persons)......... 5,904,882 18.58%
- ------------------
(1) Tom J. Fatjo, Jr. is the majority shareholder and a director and executive
officer of FFA; the sole director and an executive officer of First
Financial Alliance Partners, Inc. ("FFAP"); and the sole trustee and
beneficiary of the Tom J. Fatjo, Jr. Trust, which trust owns 20% of the
outstanding common stock of FFAP. In his capacity as trustee, Tom J. Fatjo,
Jr. has sole voting and investment power over the assets of such trust.
Includes 848,000 shares owned of record by FFA, 2,146,480 shares owned of
record by FFAP and 112,250 shares purchasable upon the exercise of
outstanding stock options that are exercisable within
2
60 days after May 3, 1996. The shares owned by FFAP are also included in
the shares indicated as owned by Tom J. Fatjo, III and Ben F. Barnes.
(2) Tom J. Fatjo, III and Ben F. Barnes are the co-trustees of the Fatjo Family
Trust, which trust owns 80% of the outstanding common stock of FFAP. In
their capacity as co-trustees, Tom J. Fatjo, III and Ben F. Barnes share
voting and investment power over the assets of such trust.
(3) Includes 2,146,480 shares owned of record of FFAP and 37,500 shares
purchasable upon the exercise of outstanding options that are exercisable
within 60 days after May 3, 1996. The shares owned by FFAP are also
included in the shares indicated as owned by Ben F. Barnes and Tom J.
Fatjo, Jr.
(4) Includes 2,146,480 shares owned of record of FFAP and 10,000 shares
purchasable upon the exercise of outstanding options that are exercisable
within 60 days after May 3, 1996. The shares owned by FFAP are also
included in the shares indicated as owned by Tom J. Fatjo, Jr. and Tom J.
Fatjo, III.
(5) Includes 674,450 shares purchasable upon the exercise of outstanding
options and warrants granted to Mr. Blount or a firm affiliated with Mr.
Blount that are exercisable within 60 days after May 3, 1996.
(6) Includes 43,332 shares purchasable upon the exercise of outstanding options
that are exercisable within 60 days after May 3, 1996 and 60,000 shares
currently owned of record by ASI. Mr. Romero is the principal stockholder,
Chairman of the Board and Chief Executive Officer of ASI.
(7) Represents shares purchasable upon the exercise of outstanding stock
options that are exercisable within 60 days after May 3, 1996.
(8) Includes 16,666 shares purchasable upon the exercise of outstanding stock
options that are exercisable within 60 days after May 3, 1996.
(9) Includes 237,000 shares purchasable upon the exercise of outstanding stock
options that are exercisable within 60 days after May 3, 1996.
(10) Includes 125,000 shares purchasable upon the exercise of outstanding stock
options that are exercisable within 60 days after May 3, 1996.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
The Board of Directors has nominated and urges you to vote for the election
of the nine nominees identified below who have been nominated to serve as
directors until the next annual meeting of stockholders or until their
successors are duly elected and qualified. Each of the nominees listed below is
a member of the Company's present Board of Directors. Proxies solicited hereby
will be voted for all nine nominees unless stockholders specify otherwise in
their proxy. The affirmative vote of holders of a majority of the Common Stock
present in person or by proxy at the meeting and entitled to vote is required
for election of each of the nominees.
If, at the time of or prior to the Meeting, any of the nominees should be
unable or decline to serve, the discretionary authority provided in the proxy
may be used to vote for a substitute or substitutes designated by the Board of
Directors. The Board of Directors has no reason to believe that any substitute
nominee or nominees will be required.
3
The nine nominees for election as directors and certain additional
information with respect to each of them are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ------------------------------------- --- ------------------------------------------------- --------
<S> <C> <C> <C>
Tom J. Fatjo, Jr..................... 55 Chairman of the Board of Directors and Chief 1991
Executive Officer
R. Brian Fifer....................... 49 Director 1990
Ed L. Romero......................... 61 Director 1991
Preston Moore, Jr.................... 64 Director 1993
Ben F. Barnes........................ 57 Director 1994
William B. Blount.................... 42 Director 1994
Lance C. Ruud........................ 38 Director, Senior Vice President, Chief Financial 1995
Officer and Secretary
John V. Singleton, Jr................ 78 Director 1995
Thomas E. Noel....................... 58 Director and President 1996
</TABLE>
TOM J. FATJO, JR. has served as Chief Executive Officer of the Company
since April 1992 and served as President from April 1994 to January 1996. He was
the founder and served as Chairman of the Board and Chief Executive Officer of
Republic Waste Industries, Inc., a publicly-held company in the waste management
business, from January 1990 to August 1991. Since 1989, Mr. Fatjo has been
Chairman of First Financial Alliance, Inc. ("FFA"), an investment banking firm
specializing in the environmental industry. From such time until January 1990,
directly and through FFA, he was an independent consultant to a number of
companies in the environmental industry, including Allwaste, Inc., Envirotech
Systems, Inc., Western Waste Industries, Inc., and Allied Waste, Inc. Mr. Fatjo
has 19 years experience in the solid waste industry. He founded Browning-Ferris
Industries, Inc. ("BFI"), one of the nation's largest solid waste companies,
in 1966, and served as the Co-Chief Executive Officer responsible for BFI's
mergers and acquisitions and corporate development activities. He left BFI in
1976 and thereafter founded, or was a member of the organizing group of
investors for a number of businesses, including Fannin Bank, Mortgage Banque,
Criterion Group, The Houstonian, Houston Partners and LivingWell, Inc. Mr. Fatjo
received a Bachelor of Science degree from Rice University. Mr. Fatjo is the
father of Tom J. Fatjo, III and the father-in-law of Lance C. Ruud.
R. BRIAN FIFER has served as a director since August 1990. Mr. Fifer served
as Vice President-Finance, Chief Financial Officer and Treasurer of the Company
from May 1991 to April 1992. He is presently the founder, Chairman, President
and Chief Executive Officer of Global Tire Recycling, Inc., which is a Florida-
based company that collects and processes waste tires into crumb rubber for
re-use primarily in the asphalt industry. Formerly, he was President and Chief
Executive Officer of AquaCare Systems, Inc., a public company that manufactures
equipment for the water purification and wastewater treatment industry. From
1988 through 1990, he served as President and Chief Operating Officer of Silk,
Silk, Silk, International, Inc., a publicly-held company engaged in the assembly
and retail sale of silk trees and plants in Florida. Prior to 1988, Mr. Fifer
was Executive Vice President, Chief Operating and Chief Financial Officer and a
principal of Network International, Inc., a venture that developed and
distributed a proprietary line of air conditioning equipment. Mr. Fifer received
a Master of Science degree from Massachusetts Institute of Technology's Sloan
School of Management and a Bachelor of Science degree in Civil
Engineering/Engineering Management from Drexel Institute of Technology.
ED L. ROMERO served as a director of the Company from November 1991 to
April 1992 and was reappointed as a director in December 1992. Since 1977, Mr.
Romero has been the owner and Chief Executive Officer of Advanced Sciences,
Inc., a technical services firm that provides various services, including waste
management and environmental engineering services, to national and international
clients. From 1974 to 1977, Mr. Romero served as President of a consulting firm
specializing in marketing, public relations and organizational development. He
is the owner of the Professional Developers, a New Mexico-based real estate and
development company.
4
PRESTON MOORE, JR. has served as director of the Company since September
1993. He has worked as an independent consultant since January 1993, providing
business advisory services to a wide range of businesses. Mr. Moore served as
Chief Financial Officer and Assistant Secretary for Administration, U.S.
Department of Commerce, from June 1991 through January 1993 during the Bush
Administration. He served as President of Wilson Industries, Inc. from February
1984 through May 1991. Mr. Moore also currently serves on the Board of Directors
of Wilson Industries, Inc., Tanglewood Bank and McCoy, Inc. He is a member of
the College of Business Administration Foundation Advisory Council at the
University of Texas at Austin and the Jones Graduate School of Administration
Council of Overseers at Rice University. Mr. Moore received a Bachelor of Arts
degree in Economics and Business from the University of Texas and completed the
Owners, Presidents, Managers Program at the Harvard Business School.
BEN F. BARNES has served as a director of the Company since April 1994. For
the last six years, he has been an independent consultant providing business
advisory and lobbying services to a wide range of businesses and governmental
units. Mr. Barnes is Chairman of the People's Community Clinic Campaign. He is a
member of the Governor's Leadership Council, Friends of the Governor's Central
Texas Citizens Education Project, Laguna Gloria Museum Foundation, Producers
Circle for KLRU Public Radio Station and the Chancellor's Council and the
Longhorn Foundation at the University of Texas. Mr. Barnes received a Bachelor
of Arts degree from the University of Texas at Austin. Mr. Barnes was a former
Lieutenant Governor of the State of Texas and Speaker of the House of
Representatives of the State of Texas. Mr. Barnes was recognized as a
distinguished alumni of the University of Texas in 1995.
WILLIAM B. BLOUNT has served as a director of the Company since April 1994.
For the last eleven years, Mr. Blount has been the Chairman of the Board of
Blount Parrish & Roton, Inc. ("BP&R"), an investment banking firm principally
involved in underwriting municipal and corporate debt issues. Mr. Blount was
Chairman of the Alabama Democratic Party from 1991 through 1995. Mr. Blount
received a Bachelor of Arts degree in History from the University of Alabama and
a Juris Doctor from the University of Alabama School of Law. Mr. Blount is a
member of both the Alabama Bar Association and the American Bar Association.
LANCE C. RUUD has served as a director of the Company since 1995. Mr. Ruud
joined the Company as a consultant in June 1993 and was elected Senior Vice
President and Chief Financial Officer in September 1993. From May 1990 until May
1993, Mr. Ruud was employed by Republic Waste Industries, Inc., most recently as
Vice President of Finance and Secretary. From January 1989 to May 1990, Mr. Ruud
served as Vice President for Blackwell Industries, Inc., a private investment
holding company. Mr. Ruud was also previously employed by Arthur Andersen LLP.
Mr. Ruud is a Certified Public Accountant and is a graduate of the University of
Utah with a Bachelor of Science degree.
JOHN V. SINGLETON, JR., Senior United States District Judge, retired, has
served as a director of the Company since June 1995. Prior to his retirement in
1992, Judge Singleton served as U.S. District Judge for the Southern District of
Texas after being appointed to the federal bench by President Lyndon B. Johnson
in 1966. In 1978, Judge Singleton became Chief Judge of the Court and served as
such until 1988, when he was required by law to relinquish that role. Prior to
his appointment to the bench, Judge Singleton worked in the private sector as a
partner in several law firms. He has served actively in many areas of both the
state and federal bar associations. He was elected by all the judges of the
Fifth Judicial Circuit as District Judge Representative to the Judicial
Conference of the United States. He has served in many civic positions at the
city, state and federal levels. Judge Singleton graduated with a Bachelor of
Arts degree and a L.L.B. from the University of Texas in 1952 and is a member of
the Texas and Federal Bar Associations, as well as the bar of the United States
Supreme Court.
THOMAS E. NOEL was elected President of the Company in January 1996. From
1993 to 1995, he was President of Ecova Corporation, a subsidiary of Amoco,
which provided consulting and engineering services primarily for refineries and
chemical plants. From 1984 to 1986, he served in increasingly responsible
positions as an officer of Waste Management, Inc. (now WMX Technologies) and at
Chemical Waste Management, Inc., both publicly held corporations. As Senior Vice
President of Operations for Chemical Waste Management, he was responsible for
treatment, disposal and remediation operations at more than 20 facilities. He
also previously served as President of Pakhoed, USA and DSI Terminals, Inc. From
1974 to 1978, Mr. Noel served as Assistant Secretary for the U.S. Department of
Energy. Mr. Noel received a Bachelor of Science degree in Civil Engineering from
the U.S. Military Academy at West Point and served 14 years as a
5
commissioned officer with the U.S. Army, attaining the rank of Lt. Colonel. Mr.
Noel also received a Master of Arts degree in English from Duke University.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE ABOVE-NAMED NOMINEES, AND PROXIES EXECUTED AND RETURNED WILL BE
SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
All directors hold office until the next annual meeting of stockholders of
the Company or until their successors have been duly elected and qualified. The
Company's officers are elected annually by, and serve at the pleasure of, the
Board of Directors, subject to the terms of any employment agreements.
The Company's Bylaws provide that the number of directors on the Board
shall be fixed from time-to-time by the Board of Directors. The Board at its
discretion and in accordance with such authority has currently fixed its size at
nine members. No proxy will be voted for a greater number of persons than the
number of nominees named herein. If deemed in the best interests of the Company,
the Board of Directors may, subsequent to the Meeting, increase its size and
elect one or more additional qualified persons to fill the vacancies which then
exist pending the next annual meeting of stockholders.
BOARD COMMITTEES
The Company's Board of Directors has established an Audit Committee, a
Nominating Committee and a Compensation Committee.
The Audit Committee meets with the Company's auditors and principal
financial personnel to review the results of the annual audit. The Audit
Committee may also review the scope of the annual audit and other services
before such services are undertaken by the Company's auditors, and reviews the
adequacy and effectiveness of the Company's internal accounting controls. The
current members of the Audit Committee are Messrs. Blount, Singleton and Barnes.
The Nominating Committee evaluates candidates for the Board of Directors
and is responsible for recommending nominees for election to the Board. Tom J.
Fatjo, Jr. is currently the sole member of the Nominating Committee. The
Nominating Committee considers recommendations for nominees for directorships
submitted by stockholders. Recommendations of a person for consideration as
nominee for election to the Company's Board of Directors must be made by timely
written notice to the Secretary of the Company at 314 North Post Oak Lane,
Houston, Texas 77024, giving each nominee's name, appropriate bioical
information and any other information that would be required in a proxy
statement. Any such recommendation must be accompanied by a written statement
from the person recommended, giving his or her consent to be named as a nominee
and, if nominated and elected, to serve as a director. A notice must be
delivered to the Secretary not later than the close of business on the 60th day
nor earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting; provided however, that in
the event that the date of the annual meeting is more than thirty days before or
more than sixty days after such anniversary date, notice by the stockholder must
be so delivered not earlier than the close of business on the 90th day prior to
such annual meeting and not later than the close of business on the later of the
60th day prior to such annual meeting or the close of business on the 10th day
following the day on which public announcement of the date of such meeting is
first made by the Company. Such notice to the Secretary must set forth the
number of shares that are owned beneficially by the stockholder that is giving
the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made.
The Compensation Committee administers the Company's 1990 Stock Incentive
Plan, as amended, and makes recommendations concerning compensation, including
incentive arrangements, for the Company's officers. The current members of the
Compensation Committee are Messrs. Moore, Fifer and Romero.
During the fiscal year ended August 31, 1995, the Board of Directors held
eight meetings, the Audit Committee held two meetings, the sole member of the
Nominating Committee took action on two occasions and the Compensation Committee
held two meetings. Each member of the Board of Directors attended 75% or more of
the meetings of the Board of Directors and committees on which such director
served during such fiscal year.
6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Moore, Fifer, Romero, Barnes and Blount served on the Compensation
Committee of the Company's Board of Directors at various times during the fiscal
year ended August 31, 1995, as did Mr. Lawrence P. McGinnes, a former director.
Tom J. Fatjo, Jr. serves on the Board of Directors of Advanced Sciences,
Inc. ("ASI"). Mr. Romero is the Chairman of the Board of Directors and Chief
Executive Officer of ASI.
During the year ended August 31, 1995, the Company incurred fees
aggregating $1,200,000 in connection with construction services provided by
McGinnes Bros, Inc. ("MBI") and other companies owned or controlled by the
Estate of Mr. McGinnes.
Effective April 2, 1994, the Company and Mr. McGinnes entered into a
consulting agreement under which Mr. McGinnes was to provide consulting services
concerning the waste disposal business to the Company for $100,000 per year,
payable monthly, together with such other compensation as the Board of Directors
of the Company authorized. The agreement terminated upon Mr. McGinnes' death as
of March 17, 1995 and the Company made payments in the aggregate amount of
$58,331 pursuant to this agreement.
The Company has entered into a Professional Services Agreement, dated July
12, 1994, as amended, with BP&R, a company of which Mr. Blount is Chairman of
the Board and principal stockholder, whereby BP&R will act as the Company's
exclusive agent to secure and place tax-exempt debt financing required by the
Company to finance landfill acquisitions, management contracts and expansion
projects. The agreement has a five-year term ending on April 21, 1999 and may be
terminated by either party upon 120 days' prior notice. The agreement has been
approved by the Board of Directors (with Mr. Blount abstaining). For its
services under the agreement, BP&R is entitled to a fee equal to 5% of the gross
proceeds of each financing consummated by BP&R, or 2% of the gross proceeds of
each financing consummated by others if another placement agent is selected by
the issuer of the debt securities. Under the agreement, BP&R is also entitled to
(a) warrants to purchase 400,000 unregistered shares of Common Stock and (b)
warrants to purchase an additional 150,000 unregistered shares of Common Stock
for each $15,000,000 of financing completed during the term of the agreement (or
a pro rata portion of 150,000 shares if less than $15,000,000 of financing is
completed). The initial 400,000 warrants granted to BP&R were immediately
exercisable at an exercise price of $2.875 per share (which was the current
market price of the Common Stock as of April 22, 1994) and will expire on July
12, 1999. Warrants granted with respect to future financings will have an
exercise price equal to the fair market value of the Company's Common Stock on
the closing date of each financing and will be immediately exercisable for five
years from the date of grant. None of the warrants will be freely assignable.
The number of warrants purchasable upon exercise and the exercise price are
subject to adjustment to prevent dilution upon the occurrence of certain events.
If the agreement is terminated by BP&R prior to the scheduled term, all
unexercised warrants shall immediately terminate. If the agreement is terminated
by the Company prior to the scheduled term, all unexercised warrants shall
remain exercisable for the remainder of the scheduled exercise period. The
Company also agreed to grant limited piggyback registration rights as to 15% of
the shares purchased upon the exercise of these warrants during each of the
first two years of the agreement.
In July 1995, BP&R acted as underwriter of the public offering of Solid
Waste Revenue Bonds totaling $2,500,000 for which it received underwriting
commissions of $125,000 and warrants to purchase 125,000 shares of the Company's
Common Stock at $1.66 per share, 25,000 of which were issued pursuant to the
provisions of the agreement discussed above and 100,000 of which were issued for
additional services provided by BP&R. In December 1995, BP&R acted as
underwriter of the public offering of solid waste revenue bonds totaling
$5,000,000 for which it received an underwriting commission of $250,000 and
warrants to purchase 50,000 shares of the Company's Common Stock at $1.34 per
share. In April 1996, BP&R acted as underwriter of the public offering of solid
waste revenue bonds totaling $8,945,000 for which it received underwriting
commissions of $447,250 and warrants to purchase 89,450 shares of the Company's
Common Stock at $1.44 per share.
The Company entered into a Consulting Agreement, dated April 6, 1994, with
Mr. Barnes whereby Mr. Barnes provided various corporate development services.
The agreement was approved by the Board of Directors (with Mr. Barnes
abstaining). Under the agreement, Mr. Barnes received (a) a consulting fee of
$120,000 (paid in Common Stock) and (b) warrants to purchase 300,000
unregistered shares of Common
7
Stock. The warrants were to vest and become exercisable from time to time if the
Company realized revenue as a result of business transactions introduced to the
Company by Mr. Barnes which are ultimately consummated by the Company. The
agreement terminated on September 1, 1995 and the warrants expired.
The Company entered into a Development Services Agreement, dated March 1,
1996, with E.C. Development, L.P. ("ECD"), a company controlled by Mr. Barnes,
whereby ECD will provide the Company with certain development services related
to locating and analyzing existing solid waste landfill facilities. The
agreement has a five-year term and may be terminated by either party upon 90
days' prior notice. In consideration for these services, ECD received a warrant
to purchase 2,000,000 shares of common stock at $1.50 per share. The warrants
vest fully on March 1, 2001 as long as ECD is providing services to the Company
on that date; however, the vesting accelerates one warrant for every one dollar
of direct costs incurred by ECD in performing services under the agreement. ECD
is also entitled to additional compensation upon the closing of transactions
related to landfill facilities identified for the Company by ECD. This
additional compensation consists of (a) 50,000 shares of common stock of the
Company subject to adjustment under certain conditions, (b) a warrant to
purchase 100,000 shares of common stock of the Company at the market price on
the trading day immediately preceding the transaction date, and (c) $250,000
cash upon the earlier to occur of the closing of the financing for the facility
or twelve months following the closing of the transaction.
DIRECTOR COMPENSATION
Directors who are not employees of or consultants to the Company or any
subsidiary receive $2,500 for each meeting of the Board of Directors that they
attend in person and $500 for each such meeting in which they participate by
telephone, plus reimbursement of out-of-pocket expenses.
The Company's Amended and Restated 1990 Stock Incentive Plan provides that
a director who is not in the regular employ of, or a consultant to, the Company
or any of its subsidiaries will automatically be granted a non-qualified stock
option to purchase 20,000 shares of Common Stock as of the date of any annual
meeting of stockholders after which such director will continue to serve on the
Board of Directors. Such options shall have an exercise price equal to the fair
market value of the Common Stock at the time the option is granted, vest pro
rata over three years and have a five-year term.
8
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Set forth below is certain information concerning the executive officers
and certain key employees of the Company, including the business experience of
each during the past five years:
NAME AGE POSITION WITH THE COMPANY
- ----------------------------- --- ------------------------------------------
EXECUTIVE OFFICERS
Tom J. Fatjo, Jr........ 55 Chairman of the Board of Directors and
Chief Executive Officer
Thomas E. Noel.......... 58 Director, President and Chief Operating
Officer
Lance C. Ruud........... 38 Director, Senior Vice President and Chief
Financial Officer; Secretary
Tom J. Fatjo, III....... 31 Vice President - Treasurer
J. David Green.......... 36 Vice President and General Counsel
KEY EMPLOYEES
Jeffrey L. Claunch...... 34 President, TransAmerican Waste Industries
of Alabama
Jeffrey A. Courtney..... 36 Director of Corporate Development
(Louisiana)
F. Edward Fox, Jr....... 35 Director of Landfill Operations
Michael D. Harrelson.... 41 Director of Corporate Development
(Tennessee)
Carol D. Howes.......... 37 Director of Financial Reporting
Lynwood T. Moore........ 55 Development - Inland Products, Inc.
Michael L. Paxton....... 31 Corporate Controller
John C. Sesera.......... 38 Director of Technical Services
Michael W. Windsor...... 34 President - Inland Products, Inc.
Certain biographical information concerning Tom J. Fatjo, Jr., Thomas E.
Noel and Lance C. Ruud is set forth above under "Directors."
TOM J. FATJO, III was elected Vice President - Treasurer in April 1992.
From March 1990 to December 1991, Mr. Fatjo was employed by Republic Waste
Industries, Inc., where his responsibilities included investor relations and
treasury functions. From 1988 to 1990, Mr. Fatjo served as Vice President of
First Financial Alliance, Inc. Mr. Fatjo received a Bachelor of Business
Administration degree in Finance from the University of Texas in Austin.
J. DAVID GREEN was elected Vice President and General Counsel in February
1996. From 1991 to 1996, Mr. Green was employed by Waste Management, Inc., most
recently as group counsel for the Southwest Group. From 1984 to 1991, Mr. Green
was in private practice in Florida, specializing in real estate, corporate
transactions, environmental and administrative law. Mr. Green received a
Bachelor of Science in Government and Social Studies from Florida State
University and a Juris Doctor from the Florida State University College of Law.
JEFFREY L. CLAUNCH joined the Company in February 1995 and serves as
President of TransAmerican Waste Industries of Alabama. Mr. Claunch started in
the waste collection and disposal industry in 1986 with Waste Management, Inc.,
where he served as operations manager, district manager and subsequently general
manager. Mr. Claunch also was an owner and general manager of Service
Contractors, Inc. (which was sold to Waste Away in 1990) and Public Waste
Control (a consulting firm to municipalities and subcontractor to environmental
firms). Mr. Claunch received a Bachelor of Science degree in Business
Administration from the University of North Alabama.
JEFFREY A. COURTNEY was the founder of TransWaste, Inc., a transfer station
and recycling facility located in Alexandria, Louisiana which was acquired by
the Company in June 1995. Mr. Courtney currently serves in corporate development
primarily in the Louisiana market.
9
F. EDWARD FOX, JR. is Director of Landfill Operations and has been with the
Company since May 1994. Over the past 10 years, Mr. Fox held various managerial
positions in the environmental industry with such companies as Chemical Waste
Management, Waste Management, Chambers Development and Diamond Waste.
MICHAEL D. HARRELSON joined the Company in October 1994 and became a
Director of Corporate Development in August 1995. Mr. Harrelson previously was a
private owner-operator in the oil and gas industry from 1989 to 1994. Mr.
Harrelson also served as the marketing manager for Endevco, a Dallas-based oil
and gas concern. Mr. Harrelson has a Chemical Engineering degree from Georgia
Tech and is a member of the Association of Energy Engineers.
CAROL D. HOWES joined the Company in March 1996 as Director of Financial
Reporting. From 1991 to 1996, Ms. Howes was employed by CRSS Inc., most recently
as Corporate Controller. Ms. Howes was employed by KPMG Peat Marwick from 1988
to 1991. Ms. Howes is a Certified Public Accountant and received a Bachelor of
Business Administration degree in Accounting from the University of Houston.
LYNWOOD T. MOORE joined the Company's oil field waste and crude oil sludge
recovery company, Inland Products, Inc., in May 1992 and serves as Business
Development Manager. Previously, Mr. Moore was Vice President of Marketing for
Wiggens Land Company/Oakridge Water Company from 1988 to 1992. Mr. Moore
graduated from Rice University.
MICHAEL L. PAXTON joined the Company in May 1993 as Assistant Corporate
Controller and was promoted to Corporate Controller in August 1995. From October
1989 until May 1993, Mr. Paxton was employed by NL Industries, Inc. From January
1987 until October 1989, Mr. Paxton was employed by Ernst & Young, L.L.P. Mr.
Paxton is a Certified Public Accountant and received a Bachelor of Business
Administration degree in Accounting from the University of Houston.
JOHN C. SESERA joined the Company in October 1994 and serves as Director of
Technical Services. Prior to joining the Company, Mr. Sesera worked for a solid
waste consulting firm and several solid waste associated businesses and has 16
years experience in the solid waste industry. Mr. Sesera received a Bachelor of
Science degree from Clarkson College of Technology.
MICHAEL W. WINDSOR is the founder and President of Inland Products, Inc.
Since joining the Company in October 1992, he has managed the oil field division
of the Company which consists of Inland Products, Inc. and Controlled Recovery,
Inc. Mr. Windsor also serves as a Director of Midwest Centrifuge Systems, a
company involved in the processing of hazardous and non-hazardous refinery
waste. He also serves as a Director for Southern Supply, Inc., a First Aid and
Safety Company and is the owner of Windco, Inc., primarily a Real Estate
Development Company. Mr. Windsor received a Bachelor of Science degree from
Texas A&M University.
10
The Company's officers are elected annually by, and serve at the pleasure
of, the Board of Directors, subject to the terms of any employment agreements.
See "Employment and Consulting Arrangements" below.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report with respect to executive compensation:
The Compensation Committee takes into account all factors which it
considers relevant in determining the compensation of the Company's executive
officers, including business conditions in the Company's industry during the
year, the Company's performance during the year in light of such conditions, the
market compensation for executives of similar background and experience, the
performance of the specific executive officer under consideration and the
business area of the Company for which such executive officer is responsible.
The structure of the executive's compensation package generally includes both a
base salary and incentive forms of compensation, including participation in the
Company's cash bonus and stock option plans. Under the stock option program, the
executive may benefit, along with other stockholders of the Company, from an
increase in the market value of the Company's Common Stock. The Compensation
Committee believes that stock options provide an additional incentive to
executive officers to continue in the service of the Company and gives them a
greater interest, as stockholders, in the success of the Company. The
compensation program for executive officers for fiscal 1995 consisted of base
salary or consulting fees, and in certain cases, the award of stock options and
cash bonuses.
The Company was a party to an employment arrangement with Lowell L.
Harrelson, a former executive officer and director of the Company, and a company
controlled by Mr. Harrelson whereby Mr. Harrelson received a base salary during
fiscal 1995, as well as incentive compensation based on the number of completed
landfill management contracts or acquisitions introduced to the Company by Mr.
Harrelson. In August 1995, Mr. Harrelson resigned his positions as an officer
and director of the Company, and became a consultant under an arrangement
whereby he received a fixed monthly payment and incentive compensation for
landfill contracts that he introduced and were completed by the Company. This
Agreement was terminated effective November 30, 1995, as described in more
detail in "Employment and Consulting Arrangements" below.
The Chief Executive Officer does not receive any direct compensation from
the Company. The Company and FFA, a company controlled by the Chief Executive
Officer, are parties to a consulting agreement pursuant to which the Company
pays to FFA monthly cash payments. The Chief Executive Officer has a substantial
beneficial stock ownership interest in the Company and benefits realized by the
Chief Executive Officer, other than through the consulting agreement, will be
principally derived from increases in the value of the Company's Common Stock.
At the November 1995 Board meeting, the Board of Directors approved the award of
stock options and a possible adjustment to the consulting arrangement by
conditioning the receipt of such options and a portion of the consulting
payments on the achievement of certain earnings targets. This agreement is
described in more detail in "Employment and Consulting Arrangements" below.
Compensation Committee
Preston Moore, Jr.
R. Brian Fifer
Ed L. Romero
11
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
Chief Executive Officer and the other most highly compensated executive officers
of the Company as to whom the total annual salary and bonus for the fiscal year
ended August 31, 1995 exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------- ------------------------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS WARRANTS COMPENSATION
- ------------------------------------- --------- --------- --------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tom F. Fatjo, Jr..................... 1995 $ -- $ -- $ -- $ -- $ -- $300,000(1)
(Chairman of the Board and 1994 -- -- -- -- -- 265,000(1)
Chief Executive Officer) 1993 -- -- -- -- -- 205,000(1)
Lowell L. Harrelson(2)............... 1995 120,000 450,000(3) -- -- 700,000 --
(Former Director, President - 1994 50,000 450,000(3) -- 327,000(4) 1,000,000(5) 486,000(6)
TransAmerican Waste Systems) 1993 -- -- -- -- -- --
Lance C. Ruud........................ 1995 113,000 7,500 -- -- 50,000 --
(Director, Senior Vice President
and 1994 107,800 -- -- -- 250,000 --
Chief Financial Officer) 1993 -- -- -- -- -- 22,500(7)
</TABLE>
- ------------------
(1) Represents consulting payments made to FFA, of which Mr. Fatjo is a
principal. See "Employment and Consulting Arrangements."
(2) Mr. Harrelson resigned as a director and officer in August 1995. See
"Employment and Consulting Arrangements."
(3) Represents Incentive compensation paid to a company controlled by Mr.
Harrelson pursuant to his previous employment arrangement with the Company.
See "Employment and Consulting Arrangements."
(4) Represents the market value as of the date of issuance of 145,000 restricted
shares of Common Stock issued to Mr. Harrelson.
(5) 700,000 warrants were canceled in February 1995.
(6) Represents consulting payments made to a company controlled by Mr. Harrelson
prior to his employment with the Company.
(7) Represents consulting payments made to Mr. Ruud prior to his employment with
the Company.
EMPLOYMENT AND CONSULTING ARRANGEMENTS
FIRST FINANCIAL ALLIANCE AND TOM FATJO, JR. The Company and FFA, of which
Tom J. Fatjo, Jr., Chairman of the Board and Chief Executive Officer of the
Company, is a principal, are parties to a consulting agreement, effective as of
April 2, 1992, which provides that, unless terminated by either party upon sixty
days' written notice, FFA will provide certain consulting services to the
Company for a period of five years. Pursuant to such consulting agreement, FFA
will seek out, analyze and attempt to negotiate strategic acquisitions for and
by the Company. Pursuant to such agreement, FFA has employed the services of Mr.
Fatjo. For its services pursuant to this agreement, as amended, the Company pays
to FFA a fee equal to $25,000 per month, plus expenses. The compensation
arrangement under the consulting agreement is reviewable once per year. This
agreement also contains certain noncompete provisions.
In November 1995, the Board of Directors granted Mr. Fatjo 250,000 stock
options at $1.31 per share (the market price at the date of grant), subject to
the Company achieving certain income targets for year ended August 31, 1996. If
the Company achieves pretax income of $5.7 million or more, Mr. Fatjo retains
all 250,000 options. If the Company achieves pretax income of $2.8 million or
less, then Mr. Fatjo will retain none of the options. For pretax income between
$2.8 million and $5.7 million, the number of options retained will be adjusted
on a pro rata basis. All options retained will be subject to a four-year vesting
schedule. The Board and Mr. Fatjo agreed that FFA would return 10% of its annual
consulting fee if the Company's pretax income is less than $5.7 million for year
ended August 31, 1996, and 20% of the annual consulting fee if the Company's
pretax income for year ended August 31, 1996 is less than $2.8 million.
J. DAVID GREEN. The Company and J. David Green entered into an Employment
Agreement effective February 26, 1996 which provides that Mr. Green shall be
employed by the Company to serve as legal counsel and in certain other
management positions for a three-year term. During the initial three-year term,
the agreement may be terminated by the Company (1) upon the executive's death,
(ii) if the executive remains
12
incapacitated for six months or more or (iii) for cause. If the agreement is
terminated as a result of an illegal act, the failure of the executive to devote
his full time to the Company, the failure of the executive to use his best
efforts to advance the welfare of the Company or an intentional act by the
executive against the best interest of the Company, the executive's salary
ceases as of the date of termination. If the Company terminates Mr. Green's
employment for any other reason, the Company will be obligated to continue to
pay the salary then being paid to Mr. Green for the full three-year period. This
agreement also contains certain noncompete provisions.
LOWELL L. HARRELSON. In March 1994, the Company, Lowell L. Harrelson and
United Waste Services, Inc., a company controlled by Mr. Harrelson, entered into
an employment arrangement which included a salary of $120,000 per year, a
$150,000 finder's fee for the completion of each landfill acquisition or
management contract introduced by Mr. Harrelson and 1,000,000 warrants to
purchase the Company's restricted Common Stock at $3.65 per share. Through
February 1995, 300,000 warrants were exercisable. In February 1995, Mr.
Harrelson's employment arrangement was revised to be effective for five years
and to replace 700,000 of unvested warrants with 700,000 stock options with an
exercise price of $.5625 per share. In August 1995, Mr. Harrelson resigned as a
director and an executive officer of the Company and entered into a consulting
agreement with the Company to provide solid waste acquisition and development
opportunities. In December 1995, the Company filed a lawsuit against Mr.
Harrelson for, among other things, failing to fully and faithfully execute his
duties as an officer and director of the Company and discontinued making
payments under the consulting agreement. Mr. Harrelson filed counterclaims
against the Company for breach of contract and fraud. In February 1996, a
settlement was reached among the Company, Mr. Harrelson and a company controlled
by Mr. Harrelson pursuant to which the parties released all claims and the
consulting agreement was deemed terminated effective as of November 30, 1995.
Under the terms of the agreement, the Company received $275,000. Additionally,
all of Mr. Harrelson's vested options were exercised and all the outstanding
warrants and unvested stock option were cancelled.
OPTION/WARRANT GRANTS IN LAST FISCAL YEAR TABLE
The following table sets forth certain information regarding options and
warrants granted to the Named Executive Officers during the year ended August
31, 1995:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
GRANTED TO APPRECIATION FOR
EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL PRICE PER EXPIRATION --------------------
NAME GRANTED 1995 SHARE DATE 5% 10%
- ---------------------------------------- ------- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tom J. Fatjo, Jr........................ -- --% $ -- -- $ -- $ --
Lowell L. Harrelson(2).................. 700,000 53.0% $ .5625 2/24/2005 $ 247,660 $ 627,550
Lance C. Ruud........................... 50,000 3.8% $ .5625 2/24/2000 $ 7,770 $ 17,170
</TABLE>
- ------------------
(1) The potential realizable value is based on assumed stock price increases
from the date of option grant, which was $.5625 per share. The actual value
realized will depend on the excess of the stock price on the date the option
is exercised over the exercise price, and there is no assurance that the
actual value realized, if any, will be at or near the value estimated.
(2) All outstanding options held by Mr. Harrelson were either exercised or
cancelled pursuant to the settlement discussed above.
13
AGGREGATED OPTION/WARRANT EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/WARRANT VALUES
The following table sets forth certain information regarding the number of
unexercised options and warrants and value of unexercised options and warrants
outstanding at August 31, 1995 (no options or warrants were exercised by the
Named Executive Officers during fiscal 1995):
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/WARRANTS AS OF OPTIONS/WARRANTS AT
AUGUST 31, 1995 AUGUST 31, 1995(1)
-------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Tom J. Fatjo, Jr..................... 112,250 -- -- --
Lowell L. Harrelson.................. 500,000(2) 500,000 $219,500 $548,750
Lance C. Ruud........................ 206,250 93,750 $ 13,719 $ 41,156
</TABLE>
- ------------------
(1) Value determined by subtracting the exercise price from the market value of
the Common Stock on August 31, 1995, which was $1.66 per share based on the
average of the high and low prices on August 31, 1995, multiplied by the
options/warrants.
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
In February 1995, the Compensation Committee elected to revise the terms of
Lowell L. Harrelson's employment arrangement to extend the term for five years
and to replace the previously issued but unvested warrant to purchase 700,000
shares of the Company's Common Stock at $3.65 per share with a stock option to
purchase 700,000 shares of the Company's Common Stock at $.5625 per share
(subject to the provisions of the Stock Incentive Plan), the market price of the
Company's Stock at February 24, 1995. The vesting of the option continued to be
performance-based provided, however, that if Mr. Harrelson were employed by the
Company on February 24, 2000, then all previously unvested options would vest on
that date. The Compensation Committee believed that the replacement stock option
would provide an additional incentive to Mr. Harrelson to further the Company's
growth for an extended period of time. In August 1995, Mr. Harrelson resigned
his position as an officer and director of the Company, and became a consultant.
In February 1996, the Company, Mr. Harrelson and a company controlled by Mr.
Harrelson reached a settlement pursuant to which, among other things, all of the
vested options were exercised and all the outstanding warrants and unvested
stock options were cancelled.
Compensation Committee
Preston Moore, Jr.
R. Brian Fifer
Ed L. Romero
14
TEN-YEAR OPTION/WARRANT REPRICINGS
The following table sets forth certain information concerning the repricing
of stock options held by the Named Executive Officers and any other key
employees since the Company became a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"):
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION/
SECURITIES WARRANT
UNDERLYING TERM
NUMBER OF MARKET PRICE EXERCISE REMAINING
OPTION/ OF STOCK AT PRICE AT NEW AT DATE OF
WARRANTS TIME OF TIME OF EXERCISE REPRICING
NAME DATE REPORTED REPRICING REPRICING PRICE (IN YEARS)
- ------------------------------------- --------- ---------- ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lowell L. Harrelson.................. 02/24/95 700,000 $ 0.5625 $ 3.65 $0.5625 14.0
Former President - TransAmerican
Waste Systems
Lance C. Ruud........................ 07/12/94 250,000 $ 2.06 $ 4.38 $ 2.06 4.3
Senior Vice President and Chief
Financial Officer
Michael W. Windsor................... 07/12/94 25,000 $ 2.06 $ 5.87 $ 2.06 3.3
President - Inland Products, Inc.
Michael L. Paxton.................... 07/12/94 7,500 $ 2.06 $ 4.38 $ 2.06 4.3
Corporate Controller
</TABLE>
15
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return (change in year-end stock price plus
reinvested dividends) on the Company's Common Stock against the cumulative total
return of the Nasdaq Market Index and the Media General Financial Services Waste
Management Group Index for the period commencing November 12, 1991 (the date
trading in the Company's Common Stock commenced) and ending August 31, 1995:
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
TransAmerican Waste ...... $100.00 $142.86 $142.86 $ 50.00 $ 46.43
Nasdaq Market Index ...... 100.00 95.16 123.88 135.35 161.05
MG Group Index ........... 100.00 89.61 83.41 81.98 71.21
The Stock Price Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Exchange Act except to the extent that the Company specifically incorporates
this graph by reference, and shall not otherwise be deemed filed under such
Acts.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future stock
performance.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of the Common Stock, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and The Nasdaq Stock Market. Based on the Company's review of the
copies of such reports received by the Company and on written representations
received by the Company, the Company believes that no director, officer or
holder of more than 10% of the Common Stock failed to file on a timely basis the
reports required by Section 16(a) of the Exchange Act during fiscal 1995, except
that Preston Moore, Jr. failed to timely file three Form 4 reports.
16
CERTAIN TRANSACTIONS
The Company leases its corporate office space from an entity in which Tom
J. Fatjo, Jr. and Preston Moore, Jr. control the beneficial ownership interests.
The terms of the lease agreement provide for annual lease payments of $95,000
per year through February 1997. Certain information regarding other similar
transactions is set forth in "Compensation Committee Interlocks and Insider
Participation" above.
PROPOSAL 2
PROPOSAL TO INCREASE THE AGGREGATE
NUMBER OF SHARES WHICH THE COMPANY
SHALL HAVE AUTHORITY TO ISSUE
The Company's Restated Certificate of Incorporation provides for the
issuance of up to 5,000,000 shares of Preferred Stock and up to 50,000,000
shares of Common Stock. As a result of the sale of securities and acquisitions,
the number of outstanding shares of Common Stock has increased to a total of
30,445,791 as of May 3, 1996 plus 11,343,125 shares reserved for issuance. In
order to provide additional shares for future acquisitions and sufficient shares
for issuance for other corporate purposes, the Board of Directors believes that
it is in the best interest of the Company to increase the number of shares the
Company is authorized to issue. Consequently, the Board of Directors has
adopted, subject to approval by the stockholders of the Company, an amendment to
the Articles of Incorporation to increase the aggregate number of shares of
Common Stock that can be issued from 50,000,000 to 100,000,000 shares of Common
Stock.
At present, the Board of Directors has no plans or agreements, written or
oral, with respect to the issuance of any of the additional shares proposed to
be authorized, but it considers it desirable to have these additional shares
available for future issuance for such corporate purposes as the Board may deem
advisable, without the necessity of further stockholder action. Stockholders
should be aware that additional authorized, but unissued, Common Stock could be
issued by the Board as a defensive measure in the event of an unsolicited or
hostile takeover attempt.
Stockholders do not have any preemptive right to subscribe for additional
shares of Common Stock which the Company may subsequently issue. Although the
issuance of additional shares of stock would dilute the equity interests of
existing stockholders, the Board of Directors intends to issue additional shares
only for what it believes to be adequate and appropriate consideration.
The affirmative vote of the holder of a majority of the outstanding shares
of Common Stock is required to approve the amendment to the Articles of
Incorporation. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR
APPROVAL AND ADOPTION OF THE AMENDMENT.
PROPOSAL 3
PROPOSAL TO AMEND THE AMENDED AND RESTATED 1990 STOCK INCENTIVE PLAN
GENERAL
SUMMARY OF THE INVENTIVE PLAN. The purpose of the 1990 Stock Incentive Plan
(the "Incentive Plan") is to enable the Company to offer to officers and key
employees of the Company and independent contractors who perform services for
the Company (the "Eligible Persons") long-term performance-based stock or other
equity interests in the Company or both, thereby enhancing its ability to
attract, retain and reward such individuals, and to increase the mutuality of
interests between those individuals and the stockholders of the Company. The
Incentive Plan authorizes the grant of incentive awards for up to 3,500,000
shares (4,500,000 shares if Proposal 3 is approved) of Common Stock, subject to
adjustment in certain events. Incentive awards may consist of stock options,
restricted stock awards, deferred stock awards, stock appreciation rights and
other stock based awards. Unless sooner terminated, the Incentive Plan will
expire on the close of business on July 18, 2000. The Incentive Plan is
currently administered by the Compensation Committee of the Board of Directors
(the "Committee"), which has the authority to select the Eligible Persons to
whom awards may be granted under the Incentive Plan. The Incentive Plan also
provides for the automatic granting of stock options to each member of the Board
of Directors who is not in the regular employ of, or a consultant to, the
Company (the "Eligible Directors").
17
INCENTIVE AND NONQUALIFIED OPTIONS. The Incentive Plan provides for both
"incentive stock options" ("Incentive Options") as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and for options not
qualifying as Incentive Options ("Nonqualified Options"), both of which may be
granted alone or with other awards granted to an Eligible Person. The exercise
price of an option shall in all cases not be less than 100% of the fair market
value of the Common Stock on the date that the option is granted or, in the case
of an Incentive Option granted to an Eligible Person owning more than 10% of the
outstanding Common Stock, not less than 110% of such fair market value. The
exercise price must be paid in full at the time of exercise either in cash or,
subject to any limitations as the Board of Directors or the Committee may
impose, in securities of the Company or, unless otherwise provided by the terms
of the award agreement, a combination thereof.
DIRECTOR OPTIONS. Eligible Directors automatically and without action by
the Compensation Committee are currently granted a nonqualified stock option
entitling them to purchase 20,000 shares of Common Stock (the "Eligible Director
Shares") as of the date of any annual meeting of stockholders after which such
Eligible Directors will continue to serve on the Board of Directors. Eligible
Directors who begin their tenure during the course of a year shall receive an
option to purchase Eligible Director Shares at the next succeeding annual
meeting of stockholders. As of April 1, 1996, there were four Eligible
Directors.
The exercise price of an option granted to an Eligible Director pursuant to
the Incentive Plan shall equal the fair market value of the Common Stock at the
time the option is granted. Further, each option granted to Eligible Directors
shall vest pro rata over a three-year period from the date of grant and shall
have a five-year term. Any Eligible Director leaving his position as director
shall be permitted to exercise his options during the remainder of the term of
the options, but only to the extent such options were exercisable on the
effective date of such director's termination as a director of the Company.
RESTRICTED STOCK AWARDS. The Board of Directors or the Committee may award
shares of restricted stock ("Restricted Stock"), which may be issued either
alone or in addition to other awards granted to an Eligible Person. The Board of
Directors or the Committee shall determine the terms and conditions of the
awards, including the terms of any payment, transferability and the time within
which any such award may be subject to forfeiture (the "Restriction Period").
When issued, Restricted Stock constitutes issued and outstanding shares of
Common Stock. A holder of Restricted Stock generally has the rights and
privileges of a holder of Common Stock except that, during the Restriction
Period, the Company retains custody of the certificates evidencing the
Restricted Stock and any dividends declared with respect to such Restricted
Stock.
OTHER TERMS AND CONDITIONS. Awards granted under the Incentive Plan will be
evidenced by Agreements consistent with the Incentive Plan in such form as the
Board of Directors or the Committee may prescribe. All such agreements will
provide that the right to exercise options or SARs or receive shares of Common
Stock may not be transferred except by will or the laws of descent and
distribution.
In the event of a "change of control" of the Company, as defined in the
Incentive Plan, unless the applicable award agreement provides otherwise or
unless the holder waives any right thereto, (i) each outstanding stock option
becomes immediately exercisable in full, and such right shall remain in effect
until the expiration date of the option and (ii) all restrictions and deferral
limitations on Restricted Stock awards, Deferred Stock awards, other Stock-Based
Awards and SARs shall lapse.
FEDERAL INCOME TAX EFFECTS
NONQUALIFIED OPTIONS. In general, an Eligible Person will not recognize any
taxable income at the time he or she is granted a Nonqualified Option, but upon
the exercise of such an option the Eligible Person will recognize ordinary
income measured by the excess of the then fair market value of the shares over
the option price, and the Company generally will be entitled to a deduction for
a corresponding amount.
INCENTIVE OPTIONS. An Eligible Person who receives an Incentive Option will
not be taxed upon the grant or exercise of such an Incentive Option, but the
excess of the fair market value of the stock on the date of exercise over the
option exercise price is a "tax preference item" that may require the payment of
an alternative minimum tax. Upon the sale of the stock received upon exercise of
any Incentive Option, any gain will be treated as a long-term capital gain,
provided the sale does not occur within two years after the date the option is
granted or within one year after the date of such exercise. The Company will not
be entitled to a deduction with respect to the grant or exercise of such an
Incentive Option.
18
In the event an Eligible Person makes a "disqualifying disposition" of the
stock received upon exercise of an Incentive Option prior to meeting the
two-year and one-year holding period requirement, the Company may be entitled to
a deduction.
AMENDMENT SUBMITTED FOR STOCKHOLDER APPROVAL
Currently, there are a limited number of shares of Common Stock available
for issuance under the Incentive Plan. The Board of Directors believes it is
appropriate to amend the Incentive Plan to increase such number of shares
available for issuance. This will enable the Board of Directors to continue to
more closely align the interests of its key employees, consultants and directors
with those of the Company's stockholders. Accordingly, on May 10, 1996, the
Board of Directors approved, subject to stockholder approval, an amendment to
the Incentive Plan to make an additional 1,000,000 shares of Common Stock
available for issuance pursuant thereto.
Approval of Proposal 3 will require the affirmative vote of the holders of
a majority of the shares of Common Stock entitled to vote and present in person
or by proxy at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL
TO AMEND THE INCENTIVE PLAN, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSAL 4
APPROVAL OF AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending December 31,
1996, subject to ratification by the Company's stockholders. Representatives of
Arthur Andersen LLP are expected to be present at the Meeting and will have an
opportunity to make a statement, if they so desire, and to respond to
appropriate questions from those attending the meeting.
Approval of the Board of Directors' selection of Arthur Andersen LLP will
require the affirmative vote of the holders of a majority of the shares of
Common Stock entitled to vote and present in person or by proxy at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF ARTHUR ANDERSEN LLP'S APPOINTMENT, AND PROXIES EXECUTED AND RETURNED WILL BE
SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSALS OF STOCKHOLDERS
Any proposal of stockholders intended to be presented at the next annual
meeting must be received at the Company's principal executive offices no later
than March 18, 1997, and must otherwise comply with the requirements of Rule
14a-8 under the Exchange Act, if the proposal is to be considered for inclusion
in the Company's proxy statement relating to such meeting.
ANNUAL REPORT AND INFORMATION FOR STOCKHOLDERS
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED AUGUST 31, 1995 AND THE COMPANY'S TRANSITIONAL REPORT ON FORM 10-K FOR THE
PERIOD ENDING DECEMBER 31, 1995, INCLUDING ANY FINANCIAL STATEMENTS AND
SCHEDULES AND EXHIBITS THERETO, MAY BE OBTAINED WITHOUT CHARGE BY WRITTEN
REQUEST TO TOM J. FATJO, III, VICE PRESIDENT-TREASURER, TRANSAMERICAN WASTE
INDUSTRIES, INC., 314 NORTH POST OAK LANE, HOUSTON, TEXAS 77024. Upon payment of
the Company's reasonable expense of furnishing the exhibits requested, the
Company will furnish any exhibit to the Form 10-K to any person whose vote is
solicited by this Proxy Statement.
19
OTHER MATTERS
Management of the Company knows of no matters expected to be presented at
the Meeting other than those described above; however, if other matters are
properly presented at the Meeting for action, it is intended that the persons
named in the accompanying form of proxy, and acting thereunder, will vote in
accordance with their best judgment on such matters.
The Company will bear the cost of preparing and mailing proxy materials as
well as the cost of solicitation of proxies. The Company will reimburse banks,
brokerage firms, custodians, nominees and fiduciaries for their expenses in
sending proxy materials to the beneficial owners of Common Stock. The Company
has retained Continental Stock Transfer & Trust Company ("Continental") to
assist in the solicitation of proxies. No additional fee beyond the $550 monthly
fee paid to Continental to act as the Company's transfer agent, together with
Continental's out-of-pocket expenses, will be paid to Continental. In addition
to solicitation by mail, certain directors, officers and regular employees of
the Company and Continental may solicit proxies by telegraph, telephone and
personal interview.
By Order of the Board of Directors,
/s/ TOM J. FATJO, JR.
Tom J. Fatjo, Jr.
CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER
June 4, 1996
Houston, Texas
20
PROXY TRANSAMERICAN WASTE INDUSTRIES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of TransAmerican Waste Industries, Inc. (the
"Company") hereby appoint THOMAS E. NOEL and LANCE C. RUUD, and each of them,
attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to vote in respect of the undersigned's shares of the Company's
Common Stock at the Annual Meeting of Stockholders of the Company to be held at
the Houstonian Hotel and Conference Center, 111 North Post Oak Lane, Houston,
Texas, on June 25, 1996 at 9:00 a.m., Central Daylight Time and at any
adjournment(s) thereof, the number of shares that the undersigned would be
entitled to vote if personally present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES SET FORTH BELOW
AND "FOR" EACH OF PROPOSALS 2, 3 AND 4 BELOW.
PROPOSAL 1: ELECTION OF DIRECTORS
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary for the nominees listed below
below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Tom J. Fatjo, Jr. R. Brian Fifer Thomas E. Noel Lance C. Ruud
Ben F. Barnes Preston Moore, Jr. Ed L. Romero John V. Singleton
William B. Blount
PROPOSAL 2: TO AMEND THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AGGREGATE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 50,000,000 SHARES TO 100,000,000
SHARES
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 3: TO AMEND THE COMPANY'S AMENDED AND RESTATED 1990 STOCK
INCENTIVE PLAN TO INCREASE THE NUMBER OF OPTIONS AVAILABLE FOR
ISSUANCE THEREUNDER.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 4: TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1996.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, on such other matters as may properly come before the
1996 Annual Meeting of Stockholders or any adjournment(s) thereof, all as
more particularly described in the Proxy Statement, receipt of which is
hereby acknowledge.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholde(s). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" EACH OF PROPOSALS 2, 3 AND 4 AND THE BOARD OF DIRECTOR'S
DIECTOR NOMINEES. All prio proxies are hereby revoked.
___________________________
___________________________
Signature(s)
Dated _______________, 1996
(PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS HEREON. WHEN
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC., GIVE FULL
TITLE AS SUCH. FOR JOINT
ACCOUNTS, EACH JOINT OWNER
SHOULD SIGN.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPLY USING THE ENCLOSED ENVELOPE.
