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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO _________
COMMISSION FILE NUMBER: 0-19615
TRANSAMERICAN WASTE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3487422
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10554 TANNER ROAD, HOUSTON, TEXAS 77041
(Address of principal executive office) (Zip Code)
314 NORTH POST OAK LANE
HOUSTON, TEXAS 77024
(Former address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 956-1212
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS
COMMON STOCK, PAR VALUE $.001 PER SHARE
REDEEMABLE CLASS A WARRANTS
REDEEMABLE CLASS B WARRANTS
UNITS (CONSISTING OF TWO SHARES OF COMMON STOCK, ONE REDEEMABLE
CLASS A WARRANT AND ONE REDEEMABLE CLASS B WARRANT)
10% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
UNITS (CONSISTING OF $1,000 PRINCIPAL AMOUNT OF 10%
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 AND 40
SHARES OF COMMON STOCK).
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO[ ].
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K/A OR ANY
AMENDMENT TO THIS FORM 10-K/A. [ ]
AS OF APRIL 15, 1997, 44,795,790 SHARES OF THE REGISTRANT'S COMMON
STOCK, PAR VALUE $.001 PER SHARE, WERE OUTSTANDING. NON-AFFILIATES OF THE
REGISTRANT OWNED 35,864,764 SHARES OF COMMON STOCK AS OF APRIL 15, 1997, WITH AN
AGGREGATE MARKET VALUE OF APPROXIMATELY $44,830,955 (BASED UPON THE APRIL 15,
1997 CLOSING SALES PRICE OF THE COMMON STOCK AS REPORTED BY THE NASDAQ SMALLCAP
MARKET.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
Set forth below is certain information with respect to each of the
Company's directors:
YEAR FIRST
BECAME A
NAME AGE POSITION WITH THE COMPANY DIRECTOR
Tom J. Fatjo, Jr....... 56 Chairman of the Board of Directors
and Chief Executive Officer 1991
Ed L. Romero........... 62 Director 1991
Preston Moore, Jr...... 65 Director 1993
Ben F. Barnes.......... 58 Director 1994
William B. Blount...... 43 Director 1994
Lance C. Ruud.......... 39 Director, Senior Vice President and
Chief Financial Officer 1995
John V. Singleton, Jr.. 77 Director 1995
Robert K. Moses, Jr.... 57 Director 1997
George L. Ball......... 58 Director 1997
Richard E. Bean........ 53 Director 1997
Philip Burguieres...... 53 Director 1997
TOM J. FATJO, JR. has served as Chairman of the Board of Directors and
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 20 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 is also
currently Vice Chairman of the Board of Directors of Commodore Applied
Technologies, 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.
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. From 1977 to
1996, Mr. Romero was the owner and Chief Executive Officer of Advanced Sciences,
Inc. ("ASI") a technical services firm that provided various services, including
waste management and environmental engineering services, to national and
international clients. In 1996, ASI was acquired by Commodore Applied
Technologies, Inc. Mr. Romero currently serves on the Board of Directors of
Commodore Applied Technologies, Inc. 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.
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
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<PAGE>
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 seven 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 twelve 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. Mr. Ruud will resign as
Senior Vice President and Chief Financial Officer effective May 1, 1997. Mr.
Ruud also is currently serving as Chief Financial Officer of a privately-held
company. 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.
ROBERT K. MOSES, JR. has served as a director since January, 1997. Mr.
Moses is a private investor, principally in the oil and gas exploration and
oilfield services business in Houston, Texas. He served as Chairman of the Board
of Weatherford Enterra, Inc. from May 1989 to December 1992 and since 1992 has
served as Chairman of the Executive Committee. Mr. Moses was elected to the
Board of Directors pursuant to the certain Agreement among the Company, Mr.
Fatjo and Mr. Moses pursuant to which Mr. Moses and Mr. Fatjo agreed to jointly
and severally guarantee the indebtedness evidenced by a Loan Agreement between
the Company and Southwest Bank of Texas, N.A. See "Certain Relationships and
Related Transactions" for further discussion of this transaction.
GEORGE L. BALL has served as a director since January 1997. Mr. Ball
currently serves as Chairman of Sanders Morris Mundy Inc. From September 1992 to
January 1994, Mr. Ball was a Senior Executive Vice President of Smith Barney
Shearson Inc. From September 1991 to September 1992, Mr. Ball was a consultant
to J. & W. Seligman & Co. Incorporated. In 1982, Mr. Ball was elected President
and Chief Executive Officer of Prudential-Bache Securities, Inc. and in 1986 was
elected Chairman of the Board, serving in such position until his resignation in
1991. He also served as a member of the Executive Office of Prudential Insurance
Company of America. Prior to joining Prudential, Mr. Ball served as President of
E.F. Hutton Group, Inc. Mr. Ball is also
3
<PAGE>
a director of American Ecology Corporation, Leviathan Gas Pipeline Company, L.P.
and BioMedical Waste Systems, Inc. Mr. Ball is a trustee emeritus of Brown
University, a director of the National Symphony Orchestra, a trustee of the
Joint Council on Economic Education and a director of the Jefferson Awards. Mr.
Ball has also served as a Governor of the American Stock Exchange, the Chicago
Board Options Exchange and served on The Executive Committee of the Securities
Industries Association. Mr. Ball was designated as a director by Sanders Morris
Mundy Inc. ("SMMI") pursuant to the terms of that certain Placement Agent
Agreement between SMMI and the Company. See "Certain Relationships and Related
Transactions" for further discussion of this transaction.
RICHARD E. BEAN has served as a director of the Company since February,
1997. Since 1976, Mr. Bean has been Executive Vice President and Chief Financial
Officer of Pearce Industries, Inc. Mr. Bean is currently on the Board of
Directors of First City Financial Corporation and First City Liquidating Trust.
Mr. Bean was designated to be a director by Mr. Moses pursuant to the terms of
that certain Agreement among the Company, Mr. Moses and Mr. Fatjo. See "Certain
Relationships and Related Transactions" for further discussion of this
transaction.
PHILIP BURGUIERES has served as a director of the Company since
February, 1997. Mr. Burguieres serves as Chairman of the Board of Weatherford
Enterra since December 1992 and was its President and Chief Executive Officer
and a Director of this company since April of 1991. From January 1990 to
November 1990, he was Chairman of the Board, President and Chief Executive
Officer of Panhandle Eastern Corporation, a Houston, Texasbased company that
operates an interstate natural gas transmission system. Mr. Burguieres held
various positions with Cameron Iron Works, a company engaged in the manufacture
of oil field equipment from 1971 through November 1989 including Chairman of the
Board, Chief Executive Officer and President and Chief Operating Officer. Mr.
Burguieres has also been a Director of McDermott International, Inc. since March
1990; and a director of Texas Commerce Bancshares since March 1987. Mr.
Burguieres was designated to be a director by Mr. Moses pursuant to the terms of
that certain Agreement among the Company, Mr. Moses and Mr. Fatjo. See "Certain
Relationships and Related Transactions" for further discussion of this
transaction.
All directors hold office until the next annual meeting of the
stockholders of the Company or until their successors have been duly elected and
qualified.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Set forth below is certain information concerning the executive officers
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. 56 Chairman of Board of Directors and Chief
Executive Officer
Jerome M. Kruszka 48 President and Chief Operating Officer
Lance C. Ruud 39 Director, Senior Vice President and Chief
Financial Officer
Tom J. Fatjo, III 32 Vice President-Treasurer
J. David Green 37 Vice President, Secretary and General Counsel
Michael L. Paxton 32 Vice President and Corporate Controller
Certain biographical information concerning Tom J. Fatjo, Jr. and Lance
C. Ruud is set forth above under "Directors."
JEROME M. KRUSZKA was elected Chief Operating Officer on November 1,
1996 and President on December 26, 1996. Mr. Kruszka began his career with Waste
Management, Inc. in 1971. Between 1971 and 1996, Mr. Kruszka held several
positions at Waste Management, Inc. and its affiliates, including District
Landfill Manager and Mid-West Region District Manager. In 1993 Mr. Kruszka was
named Division President and General Manager for Waste Management of Alameda
County after which thirteen divisions involved in solid waste collection and
transfer, recycling and landfill operations reported to him.
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
4
<PAGE>
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. Mr. Green was elected Secretary in June 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.
MICHAEL L. PAXTON joined the Company in May 1993 as Assistant Corporate
Controller and was promoted to Corporate Controller in August 1995. Mr. Paxton
was elected Vice President in February 1997. 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.
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.
CORPORATE GOVERNANCE
In connection with the closing of the offering of 11,250,000 shares of
the Company's Common Stock pursuant to a private placement, the Board of
Directors authorized the creation of a committee of officers (the "Management
Committee") to be responsible for the oversight of the day-to-day management of
the Company. The Board of Directors appointed the members of the Management
Committee and instructed the executive officers of the Company, including the
members of the Management Committee, to consult with the members of such
committee prior to making any decision or taking any action which the officer
believes, using his best judgment, would have a significant effect on the
business of the Company or a material effect on its profitability. The
Management Committee consists of four members, currently consisting of Tom J.
Fatjo, Jr., Lance C. Ruud, J. David Green and Jerome M. Kruszka. In addition, a
representative designated by the Placement Agent (which currently is George L.
Ball) is entitled to serve on the Board of Directors of the Company and on any
committee thereof to which the Management Committee may be designated to report.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than ten percent of the Company's Common Stock, par value of $.001 per
share (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 ten percent of the
Common Stock failed to file on a timely basis the reports required by Section
16(a) of the Exchange Act during fiscal 1996, except that John V. Singleton,
Jr., a director, failed to timely file a Form 3 report upon becoming a director
and a Form 5 report for stock options granted him in September, 1995; J. David
Green, an executive officer, failed to timely file a Form 3 report upon becoming
an officer of the Company; Ed L. Romero, a director, failed to timely file two
Form 5 reports related to the receipt of stock options; Tom J. Fatjo, III, an
executive officer, failed to timely file a Form 5 report related to the receipt
of stock options; Lance C. Ruud, a director and executive officer, failed to
timely file a Form 5 report related to the receipt of stock options; Ben F.
Barnes, a director, failed to timely file a Form 5 report related to the receipt
of stock options; William B. Blount, a director, failed to timely file a Form 5
report related to the receipt of stock options; Tom E. Noel, former executive
officer and director, failed to timely file a Form 3 report upon becoming an
officer and director of the Company and Preston Moore, Jr., a director, failed
to timely file a Form 5 report related to the receipt of stock options and a
Form 4 related to the indirect acquisition of certain shares of the Company's
Common Stock. These delinquencies were reported in Form 5 reports filed for
fiscal 1996.
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
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 year ended
December 31, 1996 exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ------------------------
OTHER RESTRICTED
NAME AND ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS WARRANTS COMPENSATION
- ------------------- ---- ------ ----- ------------ ------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tom F. Fatjo, Jr ....... 1996 $ -- $ -- $ -- $ -- $ -- $270,000(1)
(Chairman of the ..... 1995 -- -- -- -- -- 300,000(1)
Board and Chief ...... 1994 -- -- -- -- -- 265,000(1)
Executive Officer)
Lance C. Ruud .......... 1996 119,185 -- -- -- 0 --
(Director, Senior Vice 1995 113,000 7,500 -- -- 100,000 --
President and Chief .. 1994 107,800 -- -- -- ---(2) --
Financial Officer)
J. David Green ......... 1996 106,846 40,000 -- -- 100,000 --
(Vice President,
Secretary and
General Counsel)
Tom E. Noel(3) ......... 1996 125,978 39,375(4) -- -- 500,000(5) --
</TABLE>
(1) Represents consulting payments made to FFA, of which Mr. Fatjo is a
principal. See "Employment and Consulting Arrangements."
(2) The 250,000 options issued to Mr. Ruud in October 1993 originally
included in the 1994 fiscal year are not included in 1994 as a result of
the Company changing its fiscal year in December 1995.
(3) Effective November 1, 1996, Tom Noel resigned as an employee and as an
Executive Officer of the Company.
(4) Mr. Noel has agreed to accept his bonus in shares of Common Stock of the
Company.
(5) This grant was later reduced to 350,000 shares, all of which are vested
and immediately exercisable.
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<PAGE>
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 December
31, 1996:
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED ANNUAL
GRANTED TO RATES OF STOCK PRICE
EMPLOYEES EXERCISE APPRECIATION FOR
OPTIONS IN FISCAL PRICE PER EXPIRATION OPTION TERM(1)
NAME GRANTED 1996 SHARE DATE 5% 10%
---- ------- ---------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C>
Tom J. Fatjo, Jr. -0- 0% $-0- N/A $ --- $ ---
Lance C. Ruud -0- 0% $-0- N/A $ --- $ ---
Jerome M. Kruszka 150,000(2) 16.6% $1.50 11/01/2007 $141,000 $ 358,500
Tom J. Fatjo, III 0 0% $-0- N/A $ 0 $ 0
J. David Green 100,000(3) 11.0% $1.50 1/25/2006 $ 94,000 $ 239,000
Tom E. Noel 500,000(4) 55.0% $1.50 2/25/1997 $470,000 $1,195,000
</TABLE>
(1) The potential realizable value is based on assumed stock price increases
from the date of option grant, which was $1.50 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) These options are subject to vesting requirements over four years.
(3) These options are subject to vesting requirements over four years.
(4) This grant was later reduced to 350,000 shares, which vest over three
years.
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 December 31, 1996 (no options or warrants were exercised
by the Named Executive Officers during 1996):
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/WARRANTS AS OF OPTIONS/WARRANTS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Tom J. Fatjo, Jr. 112,250 --- 0 ---
Lance C. Ruud 268,750 81,250 $ 13,187 $ 13,187
Tom J. Fatjo, III 58,750 66,250 10,550 10,550
J. David Green 0 108,000 0 0
Jerome M. Kruszka 0 150,000 0 0
Tom E. Noel 125,000 375,000 0 0
(1) Value determined by subtracting the exercise price from the market value
of the Common Stock on December 31, 1996, which was $1.09 per share
based on closing price on December 31, 1996, multiplied by the
options/warrants.
DIRECTOR COMPENSATION
During fiscal 1996, directors who were not employees of or consultants
to the Company or any subsidiary receive $2,500 for each meeting of the Board of
Directors that they attended in person and $500 for each such meeting in which
they participated by telephone, plus reimbursement of out-of-pocket expenses.
During 1996 the Company paid an aggregate of $26,100 to the directors as fees.
During fiscal 1997, directors who are not employees of or consultants to the
Company or any subsidiary will receive $500 for each meeting of the Board of
Directors that they attend in person and $250 for each such meeting in which
they participate by telephone, plus reimbursement of out-of-pocket expenses.
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<PAGE>
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 four years and have a ten-year term.
The Board of Directors has approved the Company's 1997 Non-Employee
Director Stock Option Plan which provides that the Board of Directors is
authorized, in its discretion, to grant options to purchase up to 900,000 shares
of Common Stock to any director who is not an officer or employee of the Company
or any of its subsidiaries. On February 25, 1997, the Board of Directors granted
options with respect to all 900,000 shares to the current members of the Board
of Directors who were not officers or employees of the Company. The options have
an exercise price of $1.12 which was equal to the fair market value of the
Common Stock on the date the options were granted. The options vest in equal
amounts over four years and have terms of ten years. All such options vest upon
changes of control (as defined therein) and upon certain other events.
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. During
1996, FFA repaid $30,000 to the Company as a result of the Company failing to
achieve certain performance objectives. This agreement also contains certain
noncompete provisions.
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 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 Mr. Green to devote his full time to the Company, the failure of Mr. Green to
use his best efforts to advance the welfare of the Company or an intentional act
by Mr. Green 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.
JEROME M. KRUSZKA. The Company and Mr. Kruszka entered into a letter
agreement dated September 26, 1996 which provides that Mr. Kruszka shall be
employed by the Company to serve as Vice President of Operations for a term of
three years. He became Chief Operating Officer in November, 1996 and was elected
President of the Company in December 1996. The letter agreement sets forth the
number of shares, base salary, stock options and bonuses to be received by Mr.
Kruszka.
1997 STOCK PARTICIPATION PLAN. Effective January 1, 1997, the Company
has approved the TransAmerican Waste Industries, Inc. 1997 Stock Participation
Plan ("Participation Plan") pursuant to which the Company will issue restricted
shares of Common Stock to key employees of the Company who are selected in the
discretion of the Compensation Committee of the Board of Directors
("Committee"). Consultants who perform significant services for the Company are
also eligible to receive restricted stock grants under the Participation Plan in
the Committee's discretion.
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<PAGE>
The aggregate number of shares of Common Stock available for granting
awards under the Participation Plan is 833,334 shares. The Committee has awarded
seven key employees with restricted stock grants under the Participation Plan;
the executive officers listed below received grants as follows:
NO. OF
NAME TITLE RESTRICTED SHARES
- ---- ----- -----------------
(1) Tom J. Fatjo Chief Executive Officer 349,271
(2) Jerome R. Kruszka Chief Operating Officer 87,500
(3) Lance C. Ruud Chief Financial Officer 156,250
(4) J.David Green Vice President and General Counsel 75,000
(5) Tom J. Fatjo, III Vice President-Treasurer 95,000
(6) Michael L. Paxton Vice President and Corporate Controller 41,250
The awarded Restricted Shares are registered in the name of the grantee
but are held by the Chairman of the Board of Directors of the Company until such
time as the restrictions on their transfer have expired. The Restricted Shares
will vest in equal 20% increments on each anniversary of the grant date over a
five-year period. If the grantee should voluntarily terminate his employment or
retire, or if his employment is terminated by the Company for a reason other
than for cause, the grantee will forfeit his right to receive any shares that
are not vested at the time of termination. In the event that the grantee is
terminated for cause, he will forfeit all rights to receive any vested or
unvested shares. If the grantee's employment is terminated due to his death or
disability, or if a change of control of the Company should occur before the
grantee's employment has been terminated, then all unvested shares will
automatically become 100% vested. In March 1997, the Compensation Committee
approved the immediate vesting of all shares to be received by Lance C. Ruud
subject to certain restrictions on delivery and resale.
In the event that the grantee's employment is not terminated within the
five-year vesting period, as of the expiration of such period, the Company shall
issue and deliver to the grantee a certificate for all the shares free of
restrictions. In the event that grantee's employment is terminated for any
reason except cause before the end of the five-year vesting period, or in the
event of a change of control of the Company regardless of whether his employment
is terminated, at such time the Committee shall issue and deliver to grantee a
certificate for all vested shares free of restrictions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Moore, Romero, Barnes and Blount and former director R. Brian
Fifer served on the Compensation Committee of the Company's Board of Directors
during the fiscal year ended December 31, 1996. Mr. Fifer resigned from the
Board of Directors and the Compensation Committee in February 1997.
Tom J. Fatjo, Jr. serves as Vice Chairman of the Board of Directors of
Commodore Applied Technologies, Inc. Mr. Romero also serves on the Board of
Directors of Commodore Applied Technologies, Inc. In 1996, Commodore Applied
Technologies, Inc. acquired ASI, a company for which Mr. Romero was Chairman of
the Board and Chief Executive Officer and Mr. Fatjo served on the Board of
Directors.
During 1996, the Company was a party to a Professional Services
Agreement with BP&R, a company of which Mr. Blount is Chairman of the Board and
principal stockholder, whereby BP&R acted 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 was terminated in January 1997. Pursuant to this Agreement, 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 aggregate number of warrants earned by BP&R during the term
of this Agreement was 664,450 warrants to purchase shares of Common Stock of the
Company at various prices ranging from $1.34 to $2.88 per share.
The Company was also a party to a Development Services Agreement, dated
March 1, 1996, with E.C. Development, L.P. ("ECD"), a company controlled by Mr.
Barnes, whereby ECD provided the Company with certain development services
related to locating and analyzing existing solid waste landfill facilities. The
agreement was terminated on January 31, 1997. In consideration for services
rendered pursuant to this agreement, ECD will receive warrants to purchase
400,000 to 600,000 shares of Common Stock at $1.50 per share. The Company is in
the process of determining and finalizing the exact amount of the compensation
to be paid to ECD. The warrants will vest fully on March 1, 2001; however, the
vesting accelerates one warrant for every one dollar of direct costs incurred by
ECD in performing services under the agreement. In addition, ECD will receive
additional compensation in the event the Company acquires any company located
and introduced to the Company by ECD.
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on April 15, 1997, 44,795,790 shares of Common
Stock were outstanding. The following table sets forth, as of April 15, 1997,
certain information with respect to the shares of Common Stock beneficially
owned by (i) each person known by the Company to beneficially own more than five
percent of the outstanding Common Stock, (ii) each director of the Common Stock,
(iii) each Named Executive Officer, and (iv) all directors and current executive
officers of the Common Stock 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:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ ------------------------------ ----------------
<S> <C> <C>
Tom J. Fatjo, Jr. 3,856,001(1) 8.59%
10554 Tanner Road
Houston, Texas 77041
The Estate of Lawrence P. McGinnes 2,781,002 6.20%
5837 Northdale
Houston, Texas 77087
Tom J. Fatjo, III 2,722,268(2)(3) 6.07%
10554 Tanner Road
Houston, Texas 77041
Ben F. Barnes 343,165(2)(4) * %
98 San Jacinto, Suite 200
Austin, Texas 78701
Robert K. Moses, Jr. 5,000,000(5) 10.46%
P.O. Box 27888
Houston, Texas 77227
Richard E. Bean 200,000 *
5643 Lynbrook
Houston, Texas 77056
William B. Blount 843,650(6) 1.85%
10 Court Square
Montgomery, Alabama 36103
Ed L. Romero 56,666(7) *
2340 Menaul Boulevard, N.E. #400
Albuquerque, New Mexico 87107
Preston Moore, Jr. 417,500(8) *
10554 Tanner Road
Houston, Texas 77041
Lance C. Ruud 487,500(9) 1.08%
10554 Tanner Road
Houston, Texas 77041
John V. Singleton, Jr. 12,500(10) *
10554 Tanner Road
Houston, Texas 77041
George L. Ball 216,667(11) *
3100 Texas Commerce Tower
Houston, Texas 77002
Philip Burguieres 83,333 *
1360 Post Oak Boulevard, Suite 790
Houston, Texas 77056
Jerome M. Kruszka 299,500(12) *
10554 Tanner Road
Houston, Texas 77041
J. David Green 100,000(13) *
10554 Tanner Road
Houston, Texas 77041
Michael L. Paxton 92,975(14) *
10554 Tanner Road
Houston, Texas 77041
Directors and current executive officers 13,219,767 26.93%
as a group (15 persons)
</TABLE>
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<PAGE>
* means less than 1% of the total number of shares of Common Stock
outstanding.
(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 60 days after April
15, 1997. The shares owned by FFAP are also included in the shares
indicated as owned by Tom J. Fatjo, III and Ben F. Barnes. Also includes
349,271 shares of restricted stock received pursuant to the Participation
Plan and therefore subject to forfeiture and 400,000 shares held by 314
Building Partnership, a partnership owned by Mr. Fatjo and Mr. Moore.
(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 April 15, 1997. The shares owned by FFAP are also
included in the shares indicated as owned by Ben F. Barnes and Tom J.
Fatjo, Jr. Also includes 95,000 shares of restricted stock received
pursuant to the Participation Plan and therefore subject to forfeiture.
(4) Includes 2,146,480 shares owned of record of FFAP and 15,000 shares
purchasable upon the exercise of outstanding options that are exercisable
within 60 days after April 15, 1997. The shares owned by FFAP are also
included in the shares indicated as owned by Tom J. Fatjo, Jr. and Tom J.
Fatjo, III. Includes 138,500 shares held in the name of Entrecorp, a
corporation wholly-owned by Mr. Barnes. In addition, Mr. Barnes will
receive between 400,000 and 600,000 warrants to purchase shares of Common
Stock pursuant to the contract between the Company and ECD.
(5) Includes 3,000,000 shares purchasable upon the exercise of outstanding
warrants granted to Mr. Moses that are exercisable within 60 days after
April 15, 1997.
(6) Includes 679,450 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 April 15, 1997.
(7) Includes 56,666 shares purchasable upon the exercise of outstanding options
that are exercisable within 60 days after April 15, 1997.
(8) Includes 30,000 shares purchasable upon the exercise of outstanding options
that are exercisable within 60 days after April 15, 1997 and 200,000 shares
held by 314 Building Partnership, a partnership owned by Mr. Moore and Mr.
Fatjo (314 Building Partnership owns an aggregate of 400,000 shares of the
Company's Common Stock).
(9) Includes 281,250 shares purchasable upon the exercise of outstanding
options that are exercisable within 60 days after April 15, 1997 and
156,250 shares of restricted stock received pursuant to the Participation
Plan. The Compensation Committee approved the immediate vesting of these
shares.
(10) Includes 12,500 shares purchasable upon the exercise of outstanding options
and warrants granted to Mr. Singleton and exercisable within 60 days after
April 15, 1997.
(11) In addition, Sanders Morris Mundy Inc. received warrants to purchase
1,125,000 shares of Common Stock pursuant to its Placement Agent Agreement.
Mr. Ball is the Chairman of Sanders Morris Mundy Inc.
(12) Includes 87,500 shares of restricted stock received pursuant to the
Participation Plan and therefore subject to forfeiture.
(13) Includes 25,000 shares purchasable upon the exercise of outstanding options
that are exercisable within 60 days of April 15, 1997 and 75,000 shares of
restricted stock received pursuant to the Participation Plan and therefore
subject to forfeiture.
(14) Includes 39,125 shares purchasable upon the exercise of outstanding options
that are exercisable within 60 days of April 15, 1997 and 41,250 shares of
restricted stock received pursuant to the Participation Plan and therefore
subject to forfeiture.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a party to a Placement Agent Agreement dated January 23,
1997 with SMMI, a company of which Mr. Ball is Chairman, whereby SMMI acted as
placement agent for the private placement of 11,250,000 shares of the Company's
Common Stock. SMMI received a fee of $472,500 and warrants to purchase 1,125,000
shares of the Company's Common Stock at $.66 per share. The Company also agreed
to register the resale of the shares purchasable pursuant to such warrants
within four months of January 31, 1997. Pursuant to the Placement Agent
Agreement, SMMI has the right to designate one representative to serve on the
Board of Directors of the Company until
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<PAGE>
85% or more of the shares of Common Stock sold pursuant to the private placement
have been sold by the initial holders thereof or their permitted assignees.
Currently George L. Ball is serving on the Board of Directors by designation of
SMMI.
The Company is a party to an Agreement with Mr. Fatjo and Mr. Moses
pursuant to which Mr. Fatjo and Mr. Moses agreed to jointly and severally
guarantee the indebtedness evidenced by a Loan Agreement between the Company and
Southwest Bank of Texas, N.A. Pursuant to such Agreement, Mr. Moses received
warrants to purchase 1,000,000 shares of the Company's Common Stock at the
exercise price of $1.25 per share and warrants to purchase 2,000,000 shares of
the Company's Common Stock at the exercise price of $1.00 per share. The Company
agreed to register the resale of the shares purchasable pursuant to the warrants
within four months of the closing of the private placement of 11,250,000 shares
of the Company's Common Stock. In addition, Mr. Moses has the right to designate
three directors to serve on the Company's Board of Directors until the
indebtedness is repaid or Mr. Moses ceases to be a guarantor of such
indebtedness and two directors until Mr. Moses is no longer the beneficial owner
of Common Stock, warrants or other securities of the Company that constitute on
a fully diluted basis 5% or more of the outstanding securities of the Company.
Mr. Moses, Philip Burguieres and Richard E. Bean currently serve on the Board of
Directors pursuant to this Agreement.
During 1996, and until April 30, 1997, the Company leased 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 April 1997.
Certain information regarding other similar transactions is set forth in
"Compensation Committee Interlocks and Insider Participation" above.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Houston,
State of Texas, on April 30, 1997.
TransAmerican Waste Industries, Inc.
By:
Tom J. Fatjo, Jr., Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ TOM J. FATJO, JR. Chairman of the Board April 30, 1997
Tom J. Fatjo, Jr. of Directors and Chief
Executive Officer (Principal
Executive Officer:
/S/ LANCE C. RUUD Director, Senior Vice President April 30, 1997
and Chief Financial officer
(Principal Financial Officer)
/S/ GEORGE L. BALL Director April 30, 1997
George L. Ball
/S/ BEN F. BARNES Director April 30, 1997
Ben F. Barnes
/S/ RICHARD E. BEAN Director April 30, 1997
Richard E. Bean
/S/ WILLIAM B. BLOUNT Director April 30, 1997
William B. Blount
/S/ PHILIP BURGUIERES Director April 30, 1997
Philip Burguieres
/S/ PRESTON MOORE, JR. Director April 30, 1997
Preston Moore, Jr.
/S/ ROBERT K. MOSES, JR. Director April 30, 1997
Robert K. Moses, Jr.
/S/ ED L. ROMERO Director April 30, 1997
Ed L. Romero
/S/ JOHN V. SINGLETON, JR. Director April 30, 1997
John V. Singleton, Jr.
13
