SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
TRANSAMERICAN WASTE INDUSTRIES, INC.
_____________________________________________________________________
(Name of Registrant as Specified in its Charter)
J. David Green, Vice President, Secretary and General Counsel
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
TRANSAMERICAN WASTE INDUSTRIES, INC.
10554 TANNER ROAD
HOUSTON, TEXAS 77041
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1997
The 1997 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, 1997 at 9:00 a.m., Central Daylight Time, for the following purposes:
1. To elect eleven directors to serve until the 1998 annual meeting of
stockholders or until their successors have been elected and
qualified;
2. To approve the adoption of the Company's 1997 Non-Employee Director
Stock Option Plan;
3. To approve the appointment of Arthur Andersen LLP as the Company's
independent auditors for the 1997 fiscal year; and
4. 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 23, 1997 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/ J. DAVID GREEN
J. David Green
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
June 9, 1997
Houston, Texas
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE.
<PAGE>
TRANSAMERICAN WASTE INDUSTRIES, INC.
10554 TANNER ROAD
HOUSTON, TEXAS 77041
---------------------
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 1997 Annual Meeting of Stockholders (the "Meeting") to be held on
June 25, 1997 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 9, 1997.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
At the close of business on May 23, 1997, 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, 43,541,127 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, an abstention or not voting such shares for a
particular nominee for director (including by withholding authority on the
proxy) or an abstention on any other proposal will operate to prevent the
election of such director or approval of such proposal to the same extent as a
vote against such director or 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 23, 1997, 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.
<PAGE>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
Tom J. Fatjo, Jr. 3,856,001(1) 8.9%
10554 Tanner Road
Houston, Texas 77041
The Estate of Lawrence P. McGinnes 2,781,002 6.4%
5837 Northdale
Houston, Texas 77087
Tom J. Fatjo, III 2,722,268(2)(3) 6.2%
10554 Tanner Road
Houston, Texas 77041
Ben F. Barnes 2,489,645(2)(4) 5.7%
98 San Jacinto, Suite 200
Austin, Texas 78701
Robert K. Moses, Jr. 5,000,000(5) 10.7%
P.O. Box 27888
Houston, Texas 77227
Richard E. Bean 200,000 *
5643 Lynbrook
Houston, Texas 77056
William B. Blount 847,950(6) 1.9%
10 Court Square
Montgomery, Alabama 36103
Ed L. Romero 61,666(7) *
2340 Menaul Boulevard, N.E. #400
Albuquerque, New Mexico 87107
Preston Moore, Jr. 422,500(8) *
10554 Tanner Road
Houston, Texas 77041
John V. Singleton, Jr. 12,500(9) *
10554 Tanner Road
Houston, Texas 77041
George L. Ball 216,667(10) *
3100 Texas Commerce Tower
Houston, Texas 77002
J. Philip Burguieres 83,333(11) *
1360 Post Oak Boulevard, Suite 780
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
Lance C. Ruud 437,500(15) 1.0%
10554 Tanner Road
Houston, Texas 77041
Directors and current
executive officers 12,549,545 26.2%
as a group (15 persons)
2
<PAGE>
* means less than 1% of the total number of shares of Common Stock
outstanding.
(1) Tom J. Fatjo, Jr. is a director and executive officer of First Financial
Alliance, Inc. ("FFA") and owns approximately 60% of the shares of Fatjo &
Co. ("Fatjo & Co."), the company that owns all of the shares of FFA. Also,
Mr. Fatjo is 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. Trusts, which trusts own 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 trusts. 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 May 23, 1997. FFAP has
an option to acquire all of the shares of Fatjo & Co. 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. Does not include any other
shares issued pursuant to the Participation Plan. Mr. Fatjo disclaims
beneficial ownership of the shares included in the Participation Plan and
held by him except for the 349,271 shares included herein as set forth
above.
(2) Tom J. Fatjo, III and Ben F. Barnes are the co-trustees of the trusts
created pursuant to Fatjo Family Trust agreements, which trusts own 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 trusts; both such persons disclaim beneficial ownership
of the shares subject to the trusts, except for Tom J. Fatjo, III to the
extent of his actual beneficial interest in the trusts.
(3) Includes 2,146,480 shares owned of record of FFAP and 68,750 shares
purchasable upon the exercise of outstanding options that are exercisable
within 60 days after May 23, 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.
Does not include additional options that are not exercisable within sixty
(60) days after May 23, 1997. Tom J. Fatjo, III also owns approximately 8%
of the shares of Fatjo & Co. that owns all the outstanding stock of FFA.
(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 May 23, 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 approximately 325,000 warrants to purchase shares of Common Stock
pursuant to the contract between the Company and ECD, such shares are not
included herein. Does not include additional options that are not
exercisable within sixty (60) days after May 23, 1997.
(5) Includes 3,000,000 shares purchasable upon the exercise of outstanding
warrants granted to Mr. Moses that are currently exercisable. Does not
include additional options that are not exercisable within sixty (60) days
after May 23, 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 May 23, 1997. Does not
include additional options that are not exercisable within sixty (60) days
after May 23, 1997.
(7) Includes 61,666 shares purchasable upon the exercise of outstanding
options that are exercisable within 60 days after May 23, 1997. Does not
include additional options that are not exercisable within the next sixty
(60) days after May 23, 1997.
(8) Includes 35,000 shares purchasable upon the exercise of outstanding
options that are exercisable within 60 days after May 23, 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). Does not include additional options
that are not exercisable within sixty (60) days after May 23, 1997.
(9) Includes 12,500 shares purchasable upon the exercise of outstanding
options and warrants granted to Mr. Singleton and exercisable within 60
days after May 23, 1997. Does not include additional options that are not
exercisable within sixty (60) days after May 23, 1997.
(10) Does not include additional options that are not exercisable within sixty
(60) days after May 23, 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. Mr. Ball
disclaims beneficial ownership of such shares. Does not include additional
options that are not exercisable within sixty (60) days after May 23,
1997.
(12) Includes 87,500 shares of restricted stock received pursuant to the
Participation Plan and therefore subject to forfeiture. Does not include
additional options that are not exercisable within sixty (60) days after
May 23, 1997.
(13) Includes 25,000 shares purchasable upon the exercise of outstanding
options that are exercisable within 60 days of May 23, 1997 and 75,000
shares of restricted stock received pursuant to the Participation Plan and
therefore subject to forfeiture. Does not include additional options that
are not exercisable within sixty (60) days after May 23, 1997.
(14) Includes 39,125 shares purchasable upon the exercise of outstanding
options that are exercisable within 60 days of May 23, 1997 and 41,250
shares of restricted stock received pursuant to the Participation Plan and
therefore subject to forfeiture. Does not include additional options that
are not exercisable within sixty (60) days after May 23, 1997.
(15) Includes 281,250 shares purchasable upon the exercise of outstanding
options that are exercisable within 60 days after May 23, 1997 and 156,250
shares of restricted stock received pursuant to the Participation Plan and
purchasable pursuant to certain rights granted by the Compensation
Committee upon his resignation as Senior Vice President and Chief
Financial Officer of the Company. Does not include additional options that
are not exercisable within sixty (60) days after May 23, 1997. Mr. Ruud's
term as a director expires as of the date of the Meeting.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
The Board of Directors has nominated and urges you to vote for the
election of the eleven 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 except Jerome M. Kruszka,
the President and Chief Operating Officer of the Company, who was nominated this
year. Proxies solicited hereby will be voted for all eleven 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.
The eleven nominees for election as directors and certain additional
information with respect to each of them are as follows:
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------- --------
Tom J. Fatjo, Jr. 56 Chairman of the Board of Directors 1991
and Chief Executive Officer
Jerome M. Kruszka 48 President, Chief Operating Officer *
and Nominee for Director
Ed L. Romero 62 Director 1991
Preston Moore, Jr. 65 Director 1993
Ben F. Barnes 58 Director 1994
William B. Blount 43 Director 1994
John V. Singleton, Jr. 77 Director 1995
Robert K. Moses, Jr. 57 Director 1997
George Ball 58 Director 1997
J. Philip Burguieres 53 Director 1997
Richard E. Bean 53 Director 1997
*Nominee for Director in 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. Mr. Fatjo has over 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 currently serves as Vice Chairman of the Board of
Directors of Commodore Applied Technologies, Inc. ("Commodore"). Mr. Fatjo
4
<PAGE>
received a Bachelor of Science degree from Rice University. Mr. Fatjo is the
father of Tom J. Fatjo, III, Vice President-Treasurer of the Company.
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 1994, 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.
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., a technical services firm that provides various services, including waste
management and environmental engineering services, to national and international
clients. In 1996, ASI was acquired by Commodore. Mr. Romero currently serves on
the Board of Directors of Commodore. 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 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 eight 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 thirteen 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.
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
5
<PAGE>
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 ("SMM"), an investment
banking firm. 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 a director of SpectraCell Laboratories,
Inc., Investors Financial Group and Leviathan Gas Pipeline Company, L.P. 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
nominated to be a director by SMM pursuant to the terms of that certain
Placement Agent Agreement between SMM and the Company. See "Certain
Relationships and Related Transactions" for further discussion of this
transaction.
J. PHILIP BURGUIERES has served as a director since February, 1997. Mr.
Burguieres has served as a director of Weatherford Enterra since April 1991 and
has served as Chairman of the Board since December of 1992. Mr. Burguieres was
Weatherford Enterra's President and Chief Executive Officer from April 1991
until October 1996. From January 1990 to November 1990, he was Chairman of the
Board, President and Chief Executive Officer of Panhandle Eastern Corporation.
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 also serves as a director of McDermott
International, Inc., a company engaged in the fabrication of oil field
equipment; a director of Drilex International, Inc., a company engaged in
providing products and services used in the precision drilling of oil and gas
wells; and a director of Texas Commerce Bank, a banking organization. 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.
RICHARD E. BEAN has served as a director 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 nominated
to be a director by Mr. Moses pursuant to the terms of that certain Agreement
among Mr. Moses, Mr. Fatjo and the Company. See "Certain Relationships and
Related Transactions" for further discussion of this transaction.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE ABOVENAMED 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.
6
<PAGE>
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
eleven 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 Executive Committee,
Audit Committee, a Nominating Committee, and a Compensation Committee.
The Executive Committee is authorized and empowered to take such actions
and exercise such powers in the business and affairs of the Company as the Board
of Directors may take or exercise except as limited by law or the Certificate of
Incorporation of the Company. The current members of the Executive Committee are
Messrs. Moses, Ball, Burguieres, Fatjo and Moore.
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. Bean, Blount, Barnes and
Romero.
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 10554 Tanner Road, Houston,
Texas 77041, giving each nominee's name, appropriate biographical 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 1997 Stock
Participation Plan and the 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, Ball, Moses and Singleton. Mr. Fatjo is an advisory member of
this committee.
During the year ended December 31, 1996, the Board of Directors held
thirteen (13) meetings, the Audit Committee held one (1) meeting, the sole
member of the Nominating Committee took action on two occasions and the
Compensation Committee held one (1) meeting. The Executive Committee was
established in February 1997 and therefore did not exist during the year ended
December 31, 1996. Each member of the Board of Directors attended 76% or more of
the meetings of the Board of Directors and committees on which such director
served during such fiscal year.
7
<PAGE>
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 effective in January 1997.
In 1996, Commodore 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. As a result of this transaction, Tom J. Fatjo, Jr. serves as
Vice Chairman of the Board of Directors of Commodore and Mr. Romero serves on
the Board of Directors of Commodore.
In July 1994, the Company entered into 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
approximately 325,000 shares of Common Stock at $1.50 per share. In addition,
ECD will receive additional compensation in the event the Company acquires any
company located and introduced to the Company by ECD.
DIRECTOR COMPENSATION
During fiscal 1996, directors who were not employees of or consultants to
the Company or any subsidiary received $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.
Effective as of January 1, 1997, the Board of Directors reduced the compensation
for directors. 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, $250 for each such meeting in which they participate
by telephone and $250 per each meeting of any committee of the Board of
Directors that they attended in person or by telephone plus reimbursement of
out-of-pocket expenses. Subject to the approval of the plan by the stockholders,
the Board of Directors also approved grants of nonqualified options to the
non-employee directors pursuant to the 1997 Non-Employee Director Stock Option
Plan described below.
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.
Subject to approval by the stockholders, the Company's 1997 Non-Employee
Director Stock Option Plan 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. Subject to stockholder approval of the plan, 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 then
8
<PAGE>
officers or employees of the Company. The options have an exercise price of
$1.22 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 (25%
each year beginning February 28, 1998) and have terms of ten years. All such
options vest upon a change of control (as defined therein) and upon certain
other events. For a further discussion, see Proposal 2 -Approval of Non-Employee
Director Stock Option Plan.
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 the Board of Directors and
Chief Executive Officer
Jerome M. Kruszka 48 President, Chief Operating Officer and
nominee for Director
Tom J. Fatjo, III 32 Vice President-Treasurer
J. David Green 37 Senior Vice President, General Counsel
and Secretary
Michael L. Paxton 32 Vice President and Corporate Controller
Certain biographical information concerning Tom J. Fatjo, Jr. and Jerome
M. Kruszka 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. 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. 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 in January 1997 of an offering of
11,250,000 shares of the Company's Common Stock through 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
9
<PAGE>
Management Committee consists of three members, currently consisting of Tom J.
Fatjo, Jr., J. David Green and Jerome M. Kruszka.
In addition, in connection with this private placement, the Company agreed
that a representative (which currently is George L. Ball) designated by Sanders
Morris Mundy Inc., the placement agent, for the offering 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. See "Certain Transactions."
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, stock option and stock participation plans. Under the
stock option and stock participation programs, 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 1996 consisted of base salary or consulting fees, and in certain cases,
the award of stock options and cash bonuses. Although not covered by this
report, we note that effective January 2, 1997, certain executive officers
received restricted shares rewarded pursuant to the 1997 Stock Participation
Plan.
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. During 1996, FFA repaid
$30,000 to the Company as a result of the Company failing to achieve certain
performance objectives. In addition, the options granted pursuant to this
arrangement in November 1995 were canceled. This agreement is described in more
detail in "Employment and Consulting Arrangements" below.
COMPENSATION COMMITTEE
----------------------
Preston Moore, Jr.
George L. Ball
Robert K. Moses, Jr.
John V. Singleton, Jr.
10
<PAGE>
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(2) 1996 119,185 --- --- --- --- ---
(Director, Senior Vice 1995 113,000 7,500 --- --- 100,000 ---
President and Chief 1994 107,800 --- --- --- --- (3) ---
Financial Officer)
J. David Green 1996 106,846 40,000 --- --- 100,000 ---
(Vice President,
Secretary and
General Counsel)
Tom E. Noel(4) 1996 125,978 39,375(5) --- --- 500,000(6) ---
</TABLE>
(1) Represents consulting payments made to FFA, of which Mr. Fatjo is a
principal. See "Employment and Consulting Arrangements."
(2) Effective May 1, 1997, Lance C. Ruud resigned as an employee and as an
executive officer of the Company.
(3) 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.
(4) Effective November 1, 1996, Tom Noel resigned as an employee and as an
Executive Officer of the Company.
(5) Mr. Noel agreed to accept his bonus in shares of Common Stock of the
Company.
(6) This grant was later reduced to 350,000 options of which 125,000 options
vested upon joining the Company and the remaining 225,000 options vest
over three years.
11
<PAGE>
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, unless terminated by either party upon sixty days' written
notice. 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. In addition, the options that were granted in November
1995 were canceled. 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 (i) 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 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.
JEROME M. KRUSZKA. The Company and Jerome M. 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
base salary, stock options and bonuses to be received by Mr. Kruszka.
1997 STOCK PARTICIPATION PLAN
Pursuant to the TransAmerican Waste Industries, Inc. 1997 Stock
Participation Plan ("Participation Plan"), which became effective January 2,
1997, the Company issued restricted shares of Common Stock ("Restricted Shares")
to key employees of the Company who were 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.
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 President and Chief Operating Officer 87,500
(3) Lance C. Ruud Former Senior Vice President and
Chief Financial Officer 156,250
(4) J.David Green Senior 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.
The grantee is the owner of the Restricted Shares for all purposes, subject to
the restriction set forth in the Participation Plan, but such shares 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
12
<PAGE>
a five-year period. Subject to the terms of the Participation Plan, 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. The Committee may, in its sole discretion, allow grantee to purchase
shares that would otherwise be subject to forfeiture on such terms as the
Committee may establish. Any shares that are forfeited (and are not purchased by
grantee) are reallocated to the other participants in the Participation Plan.
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.
In March 1997, Lance Ruud, the Company's Senior Vice President and Chief
Financial Officer, resigned effective May 1, 1997. The Committee granted Mr.
Ruud the right to purchase his 156,250 unvested restricted shares of Common
Stock under the Participation Plan for $.60 per share. Mr. Ruud must acquire the
shares on or before September 28, 1997. The Company will use the proceeds, if
any, from the purchase of these shares to retire the pro rata portion of the
debt incurred by the Company to fund the acquisition of the Common Stock
distributed pursuant to the Participation Plan described below.
The Company has received a bank loan in the amount of $500,000 ("Bank
Loan") to acquire the 833,334 shares of Common Stock from the Company at $.60
per share pursuant to the Participation Plan. The terms of the Bank Loan
required the Company to execute a $500,000 note bearing interest at 9% per annum
to be repaid based upon a five-year amortization schedule. The Bank Loan is
secured by the shares of the Company's Common Stock to be granted pursuant to
the Participation Plan and is guaranteed personally by Tom J. Fatjo, Jr., the
Chief Executive Officer and Chairman of the Board of the Company.
13
<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>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO APPRECIATION FOR
EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED 1996 SHARE DATE 5% 10%
---- ------- ---- ----- ---- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Tom J. Fatjo, Jr. --- N/A N/A N/A $ --- $ ---
Lance C. Ruud --- N/A N/A N/A $ --- $ ---
Jerome M. Kruszka 150,000(2) 16.6% $1.50 11/01/2007 $ 358,500 $141,000
Tom J. Fatjo, III --- N/A N/A N/A $ --- $ ---
J. David Green 100,000(3) N/A $1.50 1/25/2006 $ 239,000 $ 94,000
Tom E. Noel 500,000(4) 55.0% $1.50 2/25/1999 $1,195,000 $470,000
</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 options of which 125,000 options
vested upon joining the Company and the remaining 225,000 options vest
over three years.
14
<PAGE>
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 --- $ --- $ ---
Lance C. Ruud 268,750 81,250(2) 13,187 13,187
Tom J. Fatjo, III 58,750 66,250 10,550 10,550
J. David Green --- 108,000 --- ---
Jerome M. Kruszka --- 150,000 --- ---
Tom E. Noel 125,000 375,000 --- ---
(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.
(2) Of this, 68,750 were unvested on May 1, 1997 when Mr. Ruud resigned and
these options were canceled.
15
<PAGE>
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 December 31, 1996:
PERFORMANCE GRAPH APPEARS HERE PLOTTED
BASED UPON THE NUMBERS SET FORTH BELOW.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Base 08/31/92 08/31/93 08/31/94 08/31/95 12/31/95 12/31/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TransAmerican Waste $100.00 $142.86 $142.86 $50.00 $46.43 $42.86 $31.25
- --------------------------------------------------------------------------------------------------------
Nasdaq Market Index 100.00 95.16 123.88 135.35 161.05 161.08 200.16
- --------------------------------------------------------------------------------------------------------
MG Group Index 100.00 89.16 83.41 81.98 71.21 74.65 92.58
- --------------------------------------------------------------------------------------------------------
</TABLE>
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.
16
<PAGE>
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 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 regarding the receipt of stock options;
Tom J. Fatjo, III, an executive officer, failed to timely file a Form 5 report
regarding the receipt of stock options; Lance C. Ruud, a director (Mr. Ruud's
term as a director will expire at the Meeting) and former executive officer,
failed to timely file a Form 5 report regarding the receipt of stock options;
Ben F. Barnes, a director, failed to timely file a Form 5 report regarding the
receipt of stock options; William B. Blount, a director, failed to timely file a
Form 5 report regarding the receipt of stock options; Tom E. Noel, a former
director and former executive officer failed to timely file a Form 3 upon
becoming a director of the Company; and Preston Moore, Jr., a director, failed
to timely file a Form 5 report regarding the receipt of stock options and a Form
4 regarding the indirect acquisition of certain shares. These delinquencies were
reported in Form 5 reports filed for fiscal 1996.
CERTAIN TRANSACTIONS
The Company is a party to a Placement Agent Agreement dated January 23,
1997 with Sanders Morris Mundy Inc. ("SMMI"), a company of which George L. 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 file within four months of the closing of
the private placement a registration statement registering the resale of the
shares sold in the private placement and use its best efforts to cause the
registration statement to become effective. Pursuant to the Placement Agent
Agreement, SMMI has the right to designate one representative to serve on the
Board of Directors of the Company and on all committees of the Board of
Directors to which the Management Committee reports until 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, Mr. 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. The Company agreed to
include the resale of the underlying shares in the registration statement
described above. 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.
17
<PAGE>
PROPOSAL 2
PROPOSAL TO ADOPTION OF THE
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On February 25, 1997, the Board of Directors of the Company adopted,
subject to stockholder approval, the 1997 Non-Employee Director Stock Option
Plan (the "Director Plan"). The Compensation Committee recommended, and the
Board of Directors adopted the recommendation, that the Company adopt a plan
expressly and exclusively for the benefit of non-employee directors in order to
(i) provide additional incentive for securing and retaining qualified
non-employee persons to serve on the Board of Directors of the Company and (ii)
enhance the future growth of the Company by furthering the non-employee
directors' identification with the interests of the Company and its
stockholders. The Director Plan was adopted by the Board of Directors in
connection with the reduction of the fees paid to the directors per meeting.
SUMMARY OF THE DIRECTOR PLAN. The Director Plan authorized the grant of
options to purchase shares of Common Stock ("Options") for up to 900,000 shares
of Common Stock of the Company subject to adjustment as described below. The
shares available for Options will be made available from either authorized and
unissued shares, treasury shares, if any, or shares to be purchased or acquired
by the Company. The Director Plan provides for the grant of Options to
individuals who, as of the applicable date, are a member of the Board of
Directors of the Company, are not an officer of the Company or any subsidiary of
the Company, and are not an employee of the Company or any of its subsidiaries.
There are currently ten (10) directors who would qualify for grants of Options
under the Director Plan; however, all options were granted to the nine
non-employee directors serving as of February 25, 1997, as described below.
The Options are granted by the Board of Directors in its discretion and in
accordance with the terms and conditions of the Director Plan. However, Options
may not have terms greater than 10 years and no options will be granted after
February 25, 2007. Any options that lapse may be re-granted. The exercise price
of each Option is determined by the Board of Directors although its exercise
price may not be less than 85% of the fair market value of the shares on the
date of such grant. Subject to approval of the Director Plan by the
stockholders, the Board of Directors has granted Options for all 900,000 shares
at an exercise price of $1.22 per share. Options for 100,000 shares were granted
to each of Messrs. Ball, Barnes, Bean, Blount, Burguieres, Moses, Moore, Romero
and Singleton. On May 23, 1997, the last sales price for the Common Stock as
reported by the NASDAQ SmallCap Market was $1.12 per share.
The Director Plan shall be administered by the Board of Directors or by a
duly appointed committee of the Board of Directors having such powers as shall
be specified by the Board of Directors. Unless the powers of the committee have
been specifically limited, the committee shall have all of the powers of the
Board of Directors granted herein, subject to the terms of the Director Plan and
any applicable limitations imposed by law.
EXERCISE OF OPTIONS. Each Option may specify the required period of
continuous service on the Board and/or the performance objectives to be achieved
before the Option or portion thereof will become exercisable. Each Option, the
exercise, or timing of exercise, of which is dependent, in whole or in part, on
the achievement of performance objectives may (i) specify a minimum level of
achievement in respect of the specified performance objectives below which no
Options will be exercisable, and (ii) set forth a method for determining the
number of Options that will be exercisable if performance is at or above such
minimum but short of full achievement of the performance objectives.
ADJUSTMENTS. The existence of outstanding Options shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of, or affecting, the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
18
<PAGE>
If the Company shall effect a subdivision or consolidation of shares or an
increase or reduction of the number of shares of Common Stock outstanding,
without receiving compensation therefor in money, services or property, then the
number and per share price of Common Stock subject to outstanding Options
thereunder shall be appropriately adjusted as set forth in the Director Plan.
After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
is the surviving corporation, each holder of an outstanding Option, upon
exercise of such Option, shall be entitled to receive the number and class of
shares of stock or other securities or consideration to which such holder would
have been entitled to receive pursuant to the terms of the agreement of merger
or consolidation if such holder had exercised his Option immediately prior to
such merger or consolidation.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated, or sells or otherwise disposes of substantially all
its assets to another corporation while unexercised Options remain outstanding
under the Director Plan, (i) after the effective date of such merger,
consolidation, liquidation, or sale, each holder of an outstanding Option shall
be entitled to receive, at no additional cost, shares of such stock (or other
securities or consideration) as the holders of shares of Common Stock received
pursuant to the terms of the merger, consolidation, liquidation, or sale; (ii)
any limitations set forth in or imposed pursuant to the Director Plan shall
automatically lapse so that all Options, from and after a thirty (30) day period
preceding the effective date of such merger, consolidation, liquidation or sale,
shall be exercisable in full; and (iii) all outstanding Options may be canceled
by the Board as of the effective date of any such merger, consolidation,
liquidation or sale provided that (a) notice of such cancellation shall be given
to each holder of an Option, and (b) each holder of an Option shall have the
right to exercise such Option in full during a thirty (30) day period preceding
the effective date of such merger, consolidation, liquidation, or sale.
TRANSFERABILITY. During the participant's life, the Option is exercisable
only by the participant or by his or her guardian or legal representative. The
Option is not assignable or transferable, except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order,
and is not subject, in whole or in part, to attachment, execution or levy of any
kind.
CASHLESS EXERCISE. To the extent permitted by applicable law, the Board in
its discretion may selectively approve "cashless exercise" arrangements with a
brokerage firm under which such brokerage firm, on behalf of the participant,
shall pay to the Company the exercise price of the Options being exercised, and
the Company, pursuant to an irrevocable notice from the participant, shall
deliver the shares being purchased to such firm.
TERMINATION. A Stock Option shall lapse and expire in the following
situations: (i) if a directorship is terminated with respect to any participant
for any reason other than death or disability, any and all unexercised and
vested Options held by such participant shall expire (A) as of 12:01 a.m. on the
date which is three (3) months after the date of such termination or (B) on the
expiration date of the term of the Option, whichever date is earlier; (ii) if
the directorship is terminated by reason of the death or disability of such
participant, any and all unexercised and vested Options shall expire (A) as of
12:01 a.m. on the date which is one (1) year from the date of termination of
directorship due to such death or disability or (B) on the expiration date of
the term of the Option, whichever date is earlier; (iii) in the event of a
participant's directorship is terminated for any reason other than not being
re-elected by stockholders, including death or disability, any portion of
previously granted Options that was not exercisable on the date of such
termination shall automatically expire as of 12:01 a.m. on the date of such
termination, and no further vesting of such Options shall occur, and in the
event of the termination of a directorship occasioned by not being re-elected by
stockholders, any previously granted Options shall continue to vest until the
conclusion of such annual meeting and any portion of such Options that is not
then exercisable shall automatically expire at the conclusion of such meeting.
CHANGE OF CONTROL. Notwithstanding any contrary provisions in the Director
Plan, in the event of a Change of Control (as defined below), any vesting
requirements contemplated in the Director Plan or in any Option shall
automatically expire without the requirement of any further action, and the
shares subject to the Options shall be 100% vested on and after such Change in
Control date. In the case of a Change of Control the participants under the
Director Plan shall have the ability to exercise their Options as provided
pursuant to the other terms of the Director Plan and the Option. A "Change in
Control" shall mean a change in control of a nature that would be required to be
reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated
under the
19
<PAGE>
Securities Exchange Act (and any successor Schedule or Regulation). Examples of
Changes of Control are set forth in the Director Plan.
POWER TO AMEND. The Board may modify, revise, amend or terminate the
Director Plan at any time and from time to time and the terms of any Option
granted thereunder; provided, however, (i) the Director Plan shall not be
amended more than once every six (6) months, other than to comport with changes
in the Internal Revenue Code of 1986, as amended, or other applicable law; (ii)
without the approval of the holders of at least a majority of the outstanding
shares of the Company's voting stock, the Board may not increase the number of
shares subject to the Director Plan (other than in connection with adjustments
pursuant to the terms thereof), permit the granting of Options with exercise or
grant prices lower than those specified in the Director Plan, or change the
class of persons eligible to receive Options; (iii) without such stockholder
approval as may be affirmatively required by regulations promulgated by the
Securities Exchange Commission in order for the grants of the Options or the
issuance of the Common Stock upon exercise thereof to qualify for an exemption
to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or by the exchange, listing or qualification requirements of any
national stock exchange or market (including, without limitation, the NASDAQ
National Stock Market) on which the Common Stock is then traded; and (iv) no
modification, revision, amendment or termination of the Director Plan or any
Options may adversely affect the rights of a holder under an Option then
outstanding, without the consent of such holder.
EXERCISE OF OPTIONS; REGISTRATION. The Company shall not be required to
sell or issue any shares of Common Stock under any Option if the issuance of
such shares shall constitute a violation by the participant or the Company of
any provision of any law, statute, or regulation of any governmental authority
whether it be federal or state. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act of 1933. The Company shall not be obligated to take any affirmative action
in order to cause the exercise of an Option, or the issuance of shares pursuant
thereto, to comply with any law or regulation of any governmental authority.
WITHHOLDING. If the Company determines that tax withholding is required,
the Company shall require the participant to remit to the Company an amount
sufficient to satisfy any applicable federal, state, and local withholding tax
requirements prior to the delivery of any certificate or certificates for
shares. The Company shall also have the right to withhold from any fees or other
compensation payable by the Company to the participant an amount sufficient to
satisfy any applicable federal, state and local withholding tax requirements.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary of the
principal United States federal income tax consequences under current federal
income tax laws related to the Director Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state or local tax
consequences.
The grantee of an Option does not recognize income at the time the option
is granted. When the Option is exercised, the grantee recognizes ordinary income
equal to the difference between the fair market value of Common Stock on the
exercise date and the exercise price. The Company generally receives a deduction
equal to the amount of ordinary income recognized by the grantee. However, in
certain circumstances, upon an acceleration of vesting in connection with a
change of control, the Company's deduction may be limited. The grantee's basis
in the shares acquired is equal to the option price plus the ordinary income
recognized upon exercise. Upon subsequent disposition of the shares, the grantee
will recognize capital gain or loss, which will be short-term or long-term,
depending upon the length of time the shares were held since the date the Option
was exercised.
A copy of the Director Plan is attached to this Proxy Statement as
Appendix A, and the foregoing discussion is qualified in its entirety by
reference to Appendix A. The affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy and entitled to vote at
the annual meeting is required to approve the adoption of the Director Plan. An
adverse vote will cause the Director Plan and all previously granted options to
terminate. Unless otherwise specified, all properly executed proxies received by
the Company will be voted in favor of the Director Plan.
20
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE ADOPTION OF THE 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
PROPOSAL 3
PROPOSAL TO APPROVE 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, 1997, 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 February 8, 1998, 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 DECEMBER 31, 1996, 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.,
10554 TANNER ROAD, HOUSTON, TEXAS 77041. 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.
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
21
<PAGE>
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
May 27, 1997
Houston, Texas
22
<PAGE>
APPENDIX A
TRANSAMERICAN WASTE INDUSTRIES, INC.
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSES
The purposes of this 1997 Non-Employee Director Stock Option Plan (the
"Plan") are (i) to provide additional incentive for securing and retaining
qualified outside directors for the Board of Directors of the Company and (ii)
to enhance the future growth of the Company by furthering the Non-Employee
Directors' identification with the interests of the Company and its
stockholders. It is intended that Options granted under this Plan will be
Non-Qualified Stock Options.
2. DEFINITIONS
(a) In this Plan, except where the context otherwise indicates, the
following definitions apply:
(1) "BOARD" means the Board of Directors of the Company.
(2) "CODE" means the Internal Revenue Code of 1986, as amended.
References herein to any section of the Code shall include any successor
section of the Code or its successor.
(3) "COMPANY" means Transamerican Waste Industries, Inc., a Delaware
corporation.
(4) "DISABILITY" means the Participant so affected is unable to
engage in substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months. A determination by a majority of the
Board, other than the Participant, as to whether the Participant has
incurred a Disability shall be final and conclusive as to all interested
parties.
(5) "DESIGNATED BENEFICIARY" means the person designated to be
entitled, on the death of a Participant, to any remaining rights arising
out of a Stock Option. If no such designation has been made by the
Participant, or if the Designated Beneficiary should pre-decease the
Participant, any remaining rights arising out of a Stock Option shall
inure to the executor or administrator of the Participant's estate or to
his heirs at law if no administration is had on the Participant's estate.
(6) "EFFECTIVE DATE" means the date on which the Plan is approved by
the Board as set forth below, which approval has been made subject to the
approval of the stockholders of the Company as set forth in SECTION 19.
<PAGE>
(7) "FAIR MARKET VALUE" means, if the Common Stock is not publicly
traded at the time a determination of its value is required to be made
hereunder, the determination of its Fair Market Value shall be made in
good faith by the Board in its sole discretion. Otherwise, Fair Market
Value means, as of any specified date, the closing price of the Common
Stock on the national securities exchange on which the Common Stock is
then listed on that date, or if no prices are reported on that date, on
the last preceding date on which such prices of the Common Stock are so
reported. If the Common Stock is not then listed on any national
securities exchange but is traded over the counter at the time a
determination of its Fair Market Value is required to be made hereunder,
its Fair Market Value shall be deemed to be equal to the average between
the reported high and low sales prices of Common Stock on the most recent
date on which Common Stock was publicly traded. In no event shall the
"Fair Market Value" be lower than the par value per share of the Common
Stock.
(8) "STOCK OPTION AGREEMENT" means the written agreement entered
into between the Company and the Non-Employee Director pursuant to which a
Stock Option is granted under the Plan.
(9) "NON-EMPLOYEE DIRECTOR" means a person who as of the date of the
grant of a Stock Option is a member of the Board, is not an officer of the
Company or any subsidiary of the Company, and is not an employee of the
Company or any of its subsidiaries.
(10) "NON-QUALIFIED STOCK OPTION" means an option which does not
meet the requirements of Section 422 of the Code.
(11) "PARTICIPANT" means a Non-Employee Director who is granted a
Stock Option hereunder.
(12) "SECURITIES ACT" and "SECURITIES EXCHANGE ACT" means the
Securities Act of 1933 and the Securities Exchange Act of 1934,
respectively, as each such statutes are now in effect or may be hereafter
amended.
(13) "SHARE" means a share of Stock that has been previously (i)
authorized but unissued, or (ii) issued and reacquired by the Company.
(14) "STOCK" or "COMMON STOCK" means the common stock, $.001 par
value per share, of the Company.
(15) "STOCK OPTION" or "OPTION" means an option to purchase Shares.
(16) "TERMINATE" means cease to be a Director of the Company.
2
<PAGE>
(17) "TERMINATION OF DIRECTORSHIP" means the cessation by any
Participant to be a Director for any reason whatsoever, voluntary or
involuntary. A Termination of Directorship shall be deemed to occur on the
actual date of such termination (by death, Disability, retirement,
resignation, non-election or otherwise).
3. GRANTS OF STOCK OPTIONS AND OPTION PRICE
(a) The Board is authorized, in its discretion, to grant Stock Options
hereunder only to individuals who are, at the time of such grant, Non-Employee
Directors of the Company. As more fully set forth in SECTION 5, If the Board so
chooses, it may delegate its authority to grant Stock Options and set the terms
of such grants to the Compensation Committee or such other Committee of the
Board as the Board may designate.
(b) Stock Options shall be granted in accordance with the terms and
conditions of the Plan, and with such additional terms and conditions not
inconsistent with the Plan as the Board shall determine. Successive grants may
be made to the same Non-Employee Director whether or not any Stock Option
previously granted to such person remains unexercised.
4. STOCK OPTION TERMS
(a) WRITTEN AGREEMENT. Each grant of an Stock Option shall be evidenced by
a Stock Option Agreement.
(b) NUMBER OF SHARES. Each Stock Option shall specify the number of shares
of Common Stock to which it pertains.
(c) EXERCISE PRICE. The exercise price per share of Common Stock under
each Stock Option shall be determined by the Board; provided, however, such
purchase price shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of such stock on the date the Stock Option is granted.
(d) TERM. The Board shall fix the term of each Stock Option which shall be
not more than ten (10) years from the date of grant. In the event no term is
fixed, such term shall be ten (10) years from the date of grant.
(e) EXERCISE. The Board shall determine the time or times at which a Stock
Option may be exercised in whole or in part. Each Stock Option may specify the
required period of continuous service on the Board and/or the performance
objectives to be achieved before the Stock Option or portion thereof will become
exercisable. Each Stock Option, the exercise, or timing of exercise, of which is
dependent, in whole or in part, on the achievement of performance objectives may
(i) specify a minimum level of achievement in respect of the specified
performance objectives below which no Stock Options will be exercisable, and
(ii) set
3
<PAGE>
forth a method for determining the number of Stock Options that will be
exercisable if performance is at or above such minimum but short of full
achievement of the performance objectives.
5. ADMINISTRATION
(a) The Plan shall be administered by the Board or, if the Board so
elects, by a duly appointed committee of the Board (including the Compensation
Committee) having such powers as shall be specified by the Board. Any subsequent
references herein to the Board shall also mean the committee if such committee
has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to revise, modify,
amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law. All questions of interpretation of
the Plan or of any Stock Options shall be determined by the Board, and such
determinations shall be final and binding upon all persons having an interest in
the Plan or any Stock Option.
(b) The Board may, in its discretion, delegate duties to an officer or
employee or a committee composed of officers or employees of the Company, but it
may not delegate its authority to apply and interpret the Plan.
(c) Notwithstanding the foregoing, if under regulations of the Securities
Exchange Commission then in effect require, in order to qualify the grant or the
exercise of any Stock Option hereunder for an exemption from the provisions of
Section 16(b) (including without limitation Rule 16b-3), or if the rules of any
national stock exchange or other market on which the Company's Common Stock is
then traded require, that the grant or administration of the Plan must be
conducted only by a committee comprised of directors that meet certain
qualifications, the Board may delegate its powers under this Plan to a committee
of the Board only if such committee is composed of directors with such
qualifications.
6. TERM
The term of the Plan commences on the Effective Date and will terminate at
11:59 p.m. on the tenth annual anniversary of the Effective Date. On and after
such date, no further Stock Options may be granted hereunder; provided, however,
the Plan shall remain in effect for the purposes of administration of any Stock
Option granted pursuant to its provisions, and no such Stock Option granted
during the term of this Plan shall be adversely affected by the termination of
the Plan.
7. SHARES RESERVED; OPTIONS GRANTABLE AND EXERCISABLE
(a) Subject to adjustment as provided in SECTION 8 hereof, a total of
900,000 Shares shall be subject to the Plan. The Shares subject to the Plan
shall be and are hereby reserved for issuance pursuant to the Plan. Any of the
Shares that are not subject to outstanding Options at
4
<PAGE>
the termination of the Plan shall cease to be reserved for the purposes of the
Plan. Should any Option expire or be canceled prior to its exercise in full, the
Shares theretofore subject to such Option may again be subjected to an Option
under the Plan.
(b) As to a Participant, an Option ceases to be exercisable, as to any
Share, when the Participant purchases the Share or when the Option lapses.
8. ADJUSTMENTS
(a) The existence of outstanding Stock Options shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of, or affecting, the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) If the Company shall effect a subdivision or consolidation of shares
or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of Common Stock outstanding,
without receiving compensation therefor in money, services or property, then (a)
the number and per share price of shares of Common Stock subject to outstanding
Stock Options hereunder shall be appropriately adjusted in such a manner as to
entitle a Participant to receive upon exercise of a Stock Option, for the same
aggregate cash consideration, the same total number and class of shares as the
Participant would have received had he or she exercised his or her Stock Option
in full immediately prior to the event requiring the adjustment; and (b) the
number and class of shares then reserved for issuance under the Plan shall be
adjusted by substituting for the total number of shares of Common Stock then
reserved that number and class of shares of Common Stock that would have been
received by the owner of an equal number of outstanding shares of Common Stock
as the result of the event requiring the adjustment.
(c) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
is the surviving corporation, each holder of an outstanding Stock Option, upon
exercise of such Stock Option, shall be entitled to receive (at no additional
cost but subject to any required action by stockholders) in lieu of the number
of shares of Common Stock with respect to which such Stock Option is
exercisable, the number and class of shares of stock (or other securities or
consideration) to which such holder would have been entitled pursuant to the
terms of the agreement of merger or consolidation if, immediately prior to such
merger or consolidation, such holder had been the holder of record of the same
number of shares of Common Stock which he or she would have otherwise received
upon exercise of such Stock Option.
5
<PAGE>
(d) If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated, or sells or otherwise disposes of substantially all
its assets to another corporation while unexercised Stock Options remain
outstanding under the Plan, (i) subject to the provisions of clause (iii) below,
after the effective date of such merger, consolidation, liquidation, or sale, as
the case may be, each holder of an outstanding Stock Option shall be entitled,
upon exercise of such Stock Option, to receive at no additional cost, in lieu of
shares of Common Stock, shares of such stock (or other securities or
consideration) as the holders of shares of Common Stock received pursuant to the
terms of the merger, consolidation, liquidation, or sale; (ii) any limitations
set forth in or imposed pursuant to SECTION 9 hereof shall automatically lapse
so that all Stock Options, from and after a thirty (30) day period preceding the
effective date of such merger, consolidation, liquidation or sale, as the case
may be, shall be exercisable in full; and (iii) all outstanding Stock Options
may be canceled by the Board as of the effective date of any such merger,
consolidation, liquidation or sale provided that (a) notice of such cancellation
shall be given to each holder of a Stock Option, and (b) each holder of a Stock
Option shall have the right to exercise such Stock Option in full (without
regard to any limitations set forth in or imposed pursuant to SECTION 9 hereof)
during a thirty (30) day period preceding the effective date of such merger,
consolidation, liquidation, or sale. In the event any acceleration of vesting
provided by clause (ii) or (iii) above, or by virtue of SECTION 9(I) below,
would result in imposition of the excise tax imposed by Section 4999 of the
Code, a Participant may elect to waive such acceleration with respect to such
number of shares subject to invested Stock Options as the Participant shall
designate, and the Participant shall be entitled to designate from among his or
her invested Stock Options those Stock Options which shall not be subject to
accelerated vesting.
(e) Except as expressly provided herein, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash, property, labor, or services, either upon direct sale,
exercise of rights or warrants to subscribe therefor, or conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number, class or price of shares of Common Stock then subject to
outstanding Stock Options.
(f) The foregoing provisions are in addition to provisions concerning
acceleration of vesting and other events relating to adjustments set forth in
SECTION 9 and any applicable Stock Option Agreement.
9. TERMS AND CONDITIONS OF STOCK OPTIONS
(a) During the Participant's life, the Stock Option is exercisable only by
the Participant or by his or her guardian or legal representative.
6
<PAGE>
(b) The Stock Option is not assignable or transferable, except by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order (as defined in the Code), and is not subject, in whole or in
part, to attachment, execution or levy of any kind.
(c) Any Stock Option that is currently vested and exercisable shall be
exercisable for the full exercisable amount or for any part thereof.
(d) Stock Options shall be exercised by the delivery of written notice to
the Company setting forth the number of shares of Common Stock with respect to
which the Stock Option is to be exercised. In order to be effective, such
written notice shall be accompanied at the time of its delivery to the Company
by payment of the exercise price of such shares of Common Stock, which payment
shall be made in cash or by check, bank draft, or postal or express money order
payable to the order of the Company in an amount (in United States dollars)
equal to the exercise price of such shares of Common Stock. Such notice shall be
delivered in person to the Secretary of the Company, or shall be sent by
registered mail, return receipt requested, to the Secretary of the Company, in
which case, delivery shall be deemed made on the date such notice is deposited
in the mail. When shares of Common Stock are to be issued or delivered pursuant
to the Plan, but only to the extent that the Company determines that tax
withholding is required pursuant to applicable law or regulation, the Company
shall require the Participant to remit to the Company an amount sufficient to
satisfy federal, state, and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares, which payment may
be made in the manner set forth above or in the manner permitted by clause (e)
below.
(e) At the discretion of the Board, and provided that payment can be
effected without causing the Grantee to increase liability under Section 16(b)
of the Securities Exchange Act of 1934, payment of the exercise price may be
made, in whole or in part, by delivery of shares of Common Stock previously
issued to the Participant. Unless otherwise permitted by the Board, payment of
the exercise price with shares of Common Stock shall be made only with shares
owned by the Participant for at least six (6) months. If payment is made in
whole or in part in shares of Common Stock owned by the Participant, then the
Participant shall deliver to the Company, in payment of the option price of the
shares of Common Stock with respect to which such Stock Option is exercised, (i)
certificates registered in the name of such Participant representing a number of
shares of Common Stock legally and beneficially owned by such Participant, free
of all liens, claims and encumbrances of every kind and having a Fair Market
Value as of the date of delivery of such notice that is not greater than the
exercise price of the shares of Common Stock with respect to which such Stock
Option is to be exercised plus any applicable tax required to be withheld by the
Company, such certificates to be accompanied by stock powers duly endorsed in
blank by the record holder of the shares represented by such certificates; and
(ii), if the exercise price of the shares of Common Stock with respect to which
such Stock Option is to be exercised exceeds the Fair Market Value of such
Shares used to pay the exercise price, additional cash or a check, bank draft,
or postal or express money order payable to the order of the Company in an
amount (in United States dollars) equal to the amount of such excess.
7
<PAGE>
(f) In addition, at the request of the Participant and to the extent
permitted by applicable law, the Board in its discretion may selectively approve
"cashless exercise" arrangements with a brokerage firm under which such
brokerage firm, on behalf of the Participant, shall pay to the Company the
exercise price of the Stock Options being exercised, and the Company, pursuant
to an irrevocable notice from the Participant, shall deliver the shares being
purchased to such firm.
(g) Stock Options granted to any Participant under this Plan shall be
subject to the conditions prescribed by the Board in the Stock Option Agreement
to the extent not inconsistent with the terms of the Plan.
(h) Subject to SECTION 9(I) below, a Stock Option shall lapse and expire
in the following situations:
(i) If a Termination of Directorship shall occur with respect
to any Participant for any reason other than death or Disability,
any and all unexercised and vested Stock Options held by such
Participant shall expire (A) as of 12:01 a.m. on the date which is
three (3) months after the date of such Termination of Directorship
or (B) on the expiration date of the term of the Stock Option,
whichever date is earlier.
(ii) If a Termination of Directorship shall occur with respect
to any Participant by reason of the death or Disability of such
Participant, any and all unexercised and vested Stock Options shall
expire (A) as of 12:01 a.m. on the date which is one (1) year from
the date of Termination of Directorship due to such death or
Disability or (B) on the expiration date of the term of the Stock
Option, whichever date is earlier. Any such vested and unexercised
Stock Option may be exercised by the Designated Beneficiary of a
deceased Participant, or the legal guardian of a Disabled
Participant, subject to all applicable provisions of the Plan.
(iii) In the event of a Participant's Termination of
Directorship for any reason other than not being re-elected at an
annual meeting of stockholders, including death or Disability, any
portion of a previously granted Option that was not exercisable on
the date of such Termination of Directorship shall automatically
expire as of 12:01 a.m. on the date of Termination of Directorship,
and no further vesting of such Option shall occur. In the event of a
Participant's Termination of Directorship occasioned by not being
re-elected at an annual meeting of stockholders, any previously
granted Option shall continue to vest until the conclusion of such
annual meeting and any portion of such Option that is not then
exercisable shall automatically expire at the conclusion of such
meeting.
8
<PAGE>
(i) Notwithstanding the provisions of SECTION 9(H) or any other contrary
provisions herein, in the event of a Change in Control (as defined below), any
vesting requirements in contemplated hereby or in any Stock Option Agreement
shall automatically expire without the requirement of any further action, and
the Shares subject to the Stock Options shall be 100% vested on and after such
Change in Control date. In the case of a Change of Control the Participants
under this Plan shall have the ability to exercise their Stock Options as
provided pursuant to the other terms of this Plan and the Stock Option
Agreements. A "Change in Control" shall mean a change in control of a nature
that would be required to be reported in response to item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act (and any
successor Schedule or Regulation), provided that such a Change in Control shall
be deemed to have occurred at such time as:
(i) any "person" (as that term is used in Section 13(d) and
14(d)(2) of the Exchange Act and any successor provisions) is or
becomes, directly or indirectly, the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act and any successor rule) of
securities representing more than fifty percent (50%) of any class
of stock of the Company entitled to elect a majority of the Board of
the Company or any successor of the Company;
(ii) during any period of two (2) consecutive years or less,
individuals who at the beginning of such period constituted the
Board of the Company cease, for any reason, to constitute at least a
majority of the Board, unless the election or nomination for
election of each new director was approved by a vote of more than
one-half (50%) of the directors then still in office who were
directors at the beginning of the period (all such directors who
were in office at the beginning of such period and all directors
elected or nominated for election as described above, being referred
to a "Continuing Directors");
(iii) the stockholders of the Company approve any merger or
consolidation to which the Company is a party and, as a result of
such merger or consolidation, the persons who held any class of
stock entitled to elect a majority of the directors of the Company
immediately prior to the effective date of the merger or
consolidation (excluding, however, any shares held by any party to
such merger or consolidation and their affiliates) shall have
beneficial ownership of less than fifty percent (50%) of such class
of stock of the surviving corporation following the effective date
of such merger or consolidation;
(iv) the stockholders of the Company approve any merger or
consolidation and, as a result, the Common Stock is changed,
converted or exchanged (other than a merger with a wholly-owned
subsidiary of the Company), or any liquidation of the Company or any
sale or other disposition of fifty percent (50%) or more of the
assets or earnings power of the Company; or
9
<PAGE>
(v) the occurrence of a "Change in Management", which is
defined as the termination of employment (other than reassignments
to other officer positions), voluntary or otherwise, during any
period of two (2) consecutive years or less, of one-half or more of
the "Corporate Officers" of the Company who were, at the beginning
of such period, serving in such capacities, unless the termination
of employment or the filling of a vacancy created by such
termination was approved by the Continuing Directors. For purposes
of this paragraph, the "Corporate Officers" of the Company are only
those individuals serving as Chairman of the Board, President,
Executive or Senior Vice Presidents, Secretary, and Treasurer of the
Company;
provided, however, that no Change in Control shall be deemed to have
occurred if, prior to such time as a Change in Control would otherwise be
deemed to have occurred, the Board (including a majority of the Continuing
Directors) determines otherwise. Notwithstanding any of the foregoing
provisions of this Section, a Change in Control shall not be deemed to
have occurred solely as the result of a public offering of the Common
Stock of the Company or any parent or subsidiary thereof.
10. POWER TO AMEND
The Board may modify, revise, amend or terminate this Plan at any time and
from time to time and the terms of any Option granted hereunder; provided,
however, (i) the Plan shall not be amended more than once every six (6) months,
other than to comport with changes in the Code or other applicable law; (ii)
without the approval of the holders of at least a majority of the outstanding
shares of the Company's voting stock then outstanding, the Board may not
increase the number of Shares subject to this Plan (other than in connection
with adjustments pursuant to the terms hereof), permit the granting of Stock
Options with exercise or grant prices lower than those specified in SECTION 4,
or change the class of persons eligible to receive Options; (iii) without such
stockholder approval as may be affirmatively required by regulations promulgated
by the Securities Exchange Commission in order for the grants of the Stock
Options or the issuance of the Common Stock upon exercise thereof to qualify for
an exemption to the provisions of Section 16(b) of the Securities Exchange Act
of 1934, as amended, or by the exchange, listing or qualification requirements
of any national stock exchange or market (including, without limitation, the
NASDAQ National Stock Market) on which the Common Stock is then traded; and (iv)
no modification, revision, amendment or termination of this Plan or any Stock
Options may adversely affect the rights of a holder under a Stock Option then
outstanding, without the consent of such holder.
11. EXERCISE OF OPTIONS; REGISTRATION
The Company shall not be required to sell or issue any shares of Common
Stock under any Stock Option if the issuance of such shares shall constitute a
violation by the Participant or the Company of any provision of any law,
statute, or regulation of any governmental authority whether it be Federal or
State. Specifically, in connection with the Securities Act, upon exercise
10
<PAGE>
of any Stock Option, unless a registration statement under the Securities Act is
in effect with respect to the shares of Common Stock covered by such Stock
Option, the Company shall not be required to issue such shares unless the Board
has received evidence satisfactory to it to the effect that the holder of such
Stock Option is acquiring such shares of Common Stock for investment and not
with a view to the distribution thereof, and that such shares of Common Stock
may otherwise be issued without registration under the Securities Act or State
securities laws. Any determination in this connection by the Board shall be
final, binding and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act. The Company shall not be obligated to take any affirmative action in order
to cause the exercise of a Stock Option, or the issuance of shares pursuant
thereto, to comply with any law or regulation of any governmental authority.
12. WITHHOLDING
The provisions of this section shall apply only to the extent that the
Company determines that tax withholding is required, pursuant to applicable law
or regulation, at the time that Shares are to be issued or delivered pursuant to
the Plan. If the Company determines that tax withholding is required, the
Company shall require the Participant to remit to the Company an amount
sufficient to satisfy any applicable federal, state, and local withholding tax
requirements prior to the delivery of any certificate or certificates for
Shares. The Company shall also have the right to withhold from any fees or other
compensation payable by the Company to the Participant an amount sufficient to
satisfy any applicable federal, state and local withholding tax requirements.
13. STOCK OPTION AGREEMENT
The Stock Options awarded to a Participant shall be evidenced by a Stock
Option Agreement which shall be subject to the terms and provisions of the Plan,
and which shall be signed by the Participant and by a duly authorized officer,
other than the Participant, in the name of and on behalf of the Company. In the
event of any inconsistency or conflict between the terms of the Plan and a Stock
Option Agreement, the terms of the Plan shall govern.
14. NO RIGHTS AS STOCKHOLDER
A holder of a Stock Option shall have no rights as a stockholder with
respect to any Shares of Common Stock until the issuance of a certificate for
such Shares. Except as otherwise provided in SECTION 8, no adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities, or
other property) or distributions or other rights for which the record date is
prior to the date such certificate is issued.
15. NO ASSIGNMENT OR ALIENATION OF BENEFITS
No right or benefit under this Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign,
11
<PAGE>
pledge, encumber, or charge the same shall be void, except for any transfer
pursuant to the Participant's will or under the laws of descent and
distribution. No right or benefit hereunder shall in any manner be liable for or
subject to any debts, contracts, liabilities, or torts of the person entitled to
such right or benefit.
16. GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the construction of this
Plan. The words "hereunder", "herein", "hereof" and similar compounds of the
word "here" shall refer to the entire Plan and not to any particular section or
provision.
17. NO GUARANTEE OF TAX CONSEQUENCES
The Company makes no commitment or guarantee that any federal, state or
local tax treatment will apply or be available to any Non-Employee Director
participating or eligible to participate herein.
18. SEVERABILITY
In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable, such provision shall be fully severable, but shall not
affect the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if the illegal, invalid, or unenforceable provision had not been
included herein.
19. SHAREHOLDER APPROVAL
Grants of Stock Options under this Plan may be made at any time on or
after the effective date of this Plan as set forth below; however, any Options
granted hereby shall be subject to, and the continuing effectiveness of this
Plan shall be subject to, approval of the Plan by the holders of at least a
majority of the shares of Stock present or represented, and entitled to vote
thereon, at a duly held stockholders' meeting on or before the date that occurs
twelve (12) months after the date the Plan is adopted by the Board, and no
shares of Common Stock shall be issued under the Plan until such approval has
been secured. If the Plan is not so approved within such twelve month period,
all Stock Options shall automatically terminate. Notwithstanding the foregoing,
however, revisions, modifications, and amendments to, and terminations of, this
Plan may be made at any time or from time to time by the Board, subject to the
provisions of SECTION 10 hereof.
12
<PAGE>
20. INTERPRETATIONS
The provisions of the Plan shall be construed, administered, and governed
by the laws of the State of Texas without giving effect to principles of
conflicts of laws, and, to the extent applicable, the laws of the United States.
21. GOVERNMENT REGULATIONS
The Plan, the granting and exercise of Stock Options thereunder, and the
obligation of the Company to sell and deliver Shares under such Stock Options,
shall be subject to all applicable laws and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
IN WITNESS WHEREOF, this Plan is executed in multiple counterparts, each
of which shall be deemed an original, effective as of February 25, 1997, the
"Effective Date" of this Plan.
TRANSAMERICAN WASTE INDUSTRIES, INC.
By:
Name:
Title:
13
<PAGE>
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 TOM J. FATJO, III and J. DAVID GREEN, 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, 1997 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 AND 3 BELOW.
PROPOSAL 1: ELECTION OF DIRECTORS [ ] FOR the nominees listed below (except
as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the
nominees listed 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. Robert K. Moses, Jr. George L. Ball Richard E. Bean
Ben F. Barnes Preston Moore, Jr. Ed L. Romero John V. Singleton
William B. Blount Jerome M. Kruszka Philip Burguieres
PROPOSAL 2: TO APPROVE THE COMPANY'S 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 3: TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, on such other matters as may properly come before the
1997 Annual Meeting of Stockholders or any adjournment(s) thereof, all as
more particularly described in the Proxy Statement, receipt of which is
hereby acknowledged.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" EACH OF PROPOSALS 2 AND 3 AND THE BOARD OF DIRECTORS'
DIRECTOR NOMINEES. ALL PRIOR PROXIES ARE HEREBY REVOKED.
___________________________________________
___________________________________________
Signature(s)
Dated _______________________________, 1997
(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
PROMPTLY USING THE ENCLOSED ENVELOPE.
