HAWKS INDUSTRIES, INC.
913 FOSTER ROAD
CASPER, WYOMING 82601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 8, 1998
To the Shareholders of
HAWKS INDUSTRIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of HAWKS
INDUSTRIES, INC., a Delaware Corporation (the "Company"), will be held at the
office of the Company at 913 Foster Road, Casper, Wyoming 82601 on January 8,
1998, at 2:00 P.M. or at any postponement or adjournment thereof for the
following purposes:
1. To elect two directors to serve until the Annual Meeting of the
Shareholders to be held in 2000 or until their successors have been elected
and qualified.
2. To consider and vote upon a proposal to affect a 20 for 1 reverse stock
split.
3. To transfer the Company's State of Domicile to the State of Wyoming from
the State of Delaware.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only shareholders of record at the close of business on November 17, 1997,
will be entitled notice of and to vote at the meeting. All shareholders are
cordially invited to attend and to meet the management and Board of Directors of
the Company.
By Order of the Board of Directors
Bob Despain
Secretary
Casper, Wyoming
November 17, 1997
IMPORTANT
IF YOU DO NOT PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES
PROXY STATEMENT
HAWKS INDUSTRIES, INC.
913 FOSTER ROAD
CASPER, WYOMING 82601
SHAREHOLDERS ENTITLED TO VOTE
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF HAWKS INDUSTRIES,
INC. (the "Company") for use at the Annual Meeting of the Shareholders of the
Company. It is anticipated that these proxy materials will be mailed to
Shareholders on or about November 17, 1997.
Holders of shares of the Common Stock of the Company of record at the close of
business November 17, 1997, will be entitled to vote at the Annual Meeting of
Shareholders to be held on January 8, 1998 at 2:00 P.M. at the offices of the
Company at 913 Foster Road, Casper, Wyoming 82601 or at any postponement or
adjournment thereof.
Shareholders who execute proxies retain the right to revoke them at any time
before they are voted by filing with the Secretary of the Company either an
instrument revoking the proxy or a duly executed proxy bearing a later date.
Proxies may be revoked by any Shareholder present at the meeting who expresses a
desire to vote his or her shares in person. A proxy, when executed and not so
revoked, will be voted in accordance therewith.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The voting securities entitled to vote at the meeting consist of shares of
Common Stock of the Company with each share entitling its owner to one vote upon
each matter submitted to a vote. The shares have cumulative voting rights,
which means that for the election of directors, every Shareholder entitled to
vote shall have the right to vote the number of shares owned by him or her for
as many persons as there are directors to be elected, or to cumulate his or her
votes by giving one candidate as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates. Discretionary
authority to cumulate votes will be granted by Shareholders who execute proxies.
A majority of the shares of Common Stock outstanding shall constitute a quorum
at the meeting.
The close of business on November 17, 1997, has been fixed by the Board of
Directors as the record date for determination of Shareholders entitled to vote
at the meeting, and the number of outstanding shares on this date was
27,028,194.
The following table shows the beneficial ownership of the shares of the
Company as of the close of business on November 17, 1997, of each person known
to the Company to be the beneficial owner of more than 5% of the Company's
issued and outstanding Common Stock and of all officers and directors as a
group. Unless noted to the contrary, each person or entity has direct ownership
and sole voting dispositive power.
PERCENT
NAME AND ADDRESS SHARES OWNED OF CLASS
Joseph J. McQuade 3,018,718 (a) 11.2
913 Foster Road
Casper, Wyoming 82601
Bruce A. Hinchey 2,289,604 (b) 8.5
913 Foster Road
Casper, Wyoming 82601
James E. Meador, Jr. 2,322,513 (c) 8.6
913 Foster Road
Casper, Wyoming 82601
All Officer and Directors 7,738,975 28.5
as a Group (five in number)
(a) Included are 950,748 shares allocated in the Company's Employee Stock
Ownership Plan-Trust, and 71,400 shares held by spouse and 260,000 shares
held by minor children.
(b) Included are 239,604 shares allocated in the Company's Employee Stock
Ownership Plan-Trust.
(c) Included are 241,125 and 46,388 shares allocated to Mr. Meador and his
spouse respectively in the Company's Employee Stock Ownership Plan-Trust.
ELECTION OF DIRECTORS
Pursuant to the Company's Certificate of Incorporation and By-laws, Directors
are divided into three classes that contain one or more Directors and hold a
term of office of three years.
As of the date of this Proxy Statement, the Class III Directors will be
elected to serve until 2000 or until their successors are duly elected and
qualified.
At the meeting it is proposed that Bruce A. Hinchey and Dwight B. Despain, who
are presently the Class III Directors of the Company and whose terms expires in
1997, be elected for a three year term. Upon election they shall serve in such
capacity until the 2000 Annual Meeting of the Shareholders or until their
successors are duly elected and qualified.
If the enclosed Proxy is duly executed and received in time for the meeting,
and if no contrary specification is made as provided therein, it is the
intention of the persons named therein to vote the shares represented thereby
for the persons nominated for election as Directors of the Company. There will
be cumulative voting for the election of Directors. If a nominee should refuse
or be unable to serve, the proxy will be voted for such person as shall be
designated by the Board of Directors to replace such nominee. The management
presently has no knowledge that any nominee will refuse or be made unable to
serve.
The following information is furnished as of November 17, 1997, with respect
to the nominees and the other Directors whose terms in office will continue
after the meeting.
PRINCIPLE OCCUPATION
DURING THE LAST FIVE
YEARS AND POSITION WITH YEAR SINCE SHARE OF COMMON
COMPANY WHICH STOCK
(IN ADDITION TO CONTINUOUSLY A BENEFICIALLY PERCENT OF
NAME/AGE DIRECTOR) DIRECTOR OWNED CLASS
Joseph J. McQuade/45 President since August 1983 3,018,718(a) 11.2
24, 1992; Vice President
and Class I Director
from April 14, 1983
Dwight B. Despain/43 Appointed as a Class III 1992 40,990 .2
Director August 24,
1992. Attorney with
Dixon & Despain, Casper,
WY since 1990; Warnick &
Blood Law Offices from
1985-1990.
Bruce A. Hinchey/48 Appointed as a Class III 1993 2,289,604(b) 8.5
Director May 12, 1993;
President of Western
Environmental Services
and Testing since 1981.
James E. Meador, Appointed as a Class I 1993 2,322,513(c) 8.6
Jr./44 Director May 12, 1993;
Vice President of
Western Environmental
Services and Testing
Inc. since 1981.
Gerald M. Moyle/42 Appointed as a Class II 1994 150 -0-
Director June 30, 1994;
Land Manager of Brown
Operating, Inc. since
1984.
<FN>
(a) Included are 950,748 shares allocated in the Company's Stock Ownership
Plan-Trust and 71,400 shares held by spouse and 260,000 share held by minor
children.
(b) Included are 239,604 shares allocated in the Company's Employee Stock
Ownership Plan-Trust.
(c) Included are 287,513 shares allocated to Mr. Meador and his spouse in the
Company's Employee Stock Ownership Plan-Trust.
RESUMES OF NOMINEES BRUCE A. HINCHEY AND DWIGHT B. DESPAIN
BRUCE A. HINCHEY, Director
Mr. Hinchey attended the University of Missouri at Rolla where he majored in
Petroleum Engineering. From 1972 to 1978 he was Manager of Air Quality Studies
for Ecology Audits, Inc.; from 1978 to 1981 he was Vice President of the Air
Quality Department of Kumpe and Associates, P.C., Casper, WY; in 1981 he helped
form Western Environmental Services and Testing, Inc. and has served as
President since inception of the company, as he does currently. In May 1989,
Mr. Hinchey became a Wyoming State Legislator, in which capacity he still serves
at this time. In 1996, Mr. Hinchey was elected Speaker of the House for the
State of Wyoming. He will serve in that capacity for two years.
DWIGHT B. (BOB) DESPAIN, Director
Mr. Despain received his degree in Business Finance from Brigham Young
University in 1975 and his J.D. degree in law at the University of Wyoming in
1978. From 1978 to 1980, he was counsel for the land department at Marathon Oil
in Casper; was a founder and President of Cowboy Resources, Inc., an oil and gas
exploration company, from 1980 to 1985; an attorney with Warnick and Blood Law
Offices in Casper, Wyoming from 1985 to 1990. Since that time he has been
practicing in the law firm of Dixon and Despain.
The Board of Directors met formally three times during the fiscal year. All
incumbent directors were present for these meetings of the Board of Directors in
fiscal 1996. In addition, discussions were held frequently on an informal
basis, and all action specifically required to be approved by the Board of
Directors, pursuant to the Delaware Corporation Law, was taken by written
consent setting forth the action so taken and signed by all the directors as
provided by Section 141(t) of the Law.
The Board of Directors has no audit, nominating or compensation committee.
REMUNERATION AND OTHER TRANSACTIONS WITH MANAGEMENT
The following table sets forth all cash compensation paid by the Company
during the fiscal year to executive officers whose cash compensation exceeded
$60,000 and to all executive officers as a group.
NAME OF INDIVIDUAL OR NUMBER CAPACITIES IN WHICH SERVED CASH COMPENSATION
IN GROUP
Joseph J. McQuade President and Director $105,000(a)(b)(c)
Bruce A. Hinchey Vice President and Director of $105,000(a)(b)(c)
Hawks Industries, Inc.; President
of Western Environmental Services
and Testing, Inc.
James E. Meador, Jr. Director of Hawks Industries, Inc.; $105,000(a)(b)(c)
Vice President of Western
Environmental Services and Testing,
Inc.
All Executive Officers as a $315,000(a)
Group (three in number)
<FN>
(a) Messrs. McQuade, Hinchey and Meador received other compensation valued at
less than 10% of the compensation reported in this table.
(b) Not included is the amount which was accrued under the Company's Employee
Stock Ownership Plan-Trust discussed below.
(c) Pursuant to employment agreements expiring April 2001, Messrs. McQuade,
Hinchey and Meador would receive a lump sum payment of approximately two
and one-half years' salary if employment should be terminated by the
Company without cause.
Directors who are not employees are paid $300 per meeting for their attendance
at Board meetings. All directors are reimbursed for reasonable out-of-pocket
expenses incurred in connection with attending Board and Shareholder's meetings.
PROPOSAL TO AFFECT A 20 FOR 1 REVERSE STOCK SPLIT
The National Association of Stock Dealers (NASDAQ) has approved a proposal
which would, in effect, "de-list" any public company from NASDAQ status if the
stock price goes below $1 per share for a thirty day continuous period. The
Company's shares have fluctuated between $.09 and $.28 for the last several
years. It is highly unlikely that the Company's stock price will appreciate to
any amount in excess of $1 within the timetable provided by the NASDAQ proposal.
If the Company makes no change in its' capital structure, it will not be listed
on NASDAQ. In effect, this would mean that there would be no national
quotations for the Company's stock and that the only reference to value would be
from the "Pink Sheets".
Alternatively, the Company can effect a reverse stock split by changing the
number of shares outstanding and hence the price per share. Management has
talked to many shareholders over the past several months. Some strongly support
a reverse stock split. They point out that without the reverse split the
Company would be removed from NASDAQ and that this may severely hamper their
ability to trade the stock or to get timely information about the Company's
stock price and trading volume.
THERE ARE RISKS ASSOCIATED WITH AFFECTING A REVERSE STOCK SPLIT. Others
maintain that they have in their portfolio non-NASDAQ stocks and that these
stocks are not difficult to trade. They also point out that it is not uncommon
that after a reverse stock split in a company whose shares have traded
infrequently and sporadically, such as the Company's, that there is an
additional decline in stock price. Some brokers see this as an opportunity to
short the stock and further drive the price down. Management specifically
acknowledges that this possibility may occur. Management has no way of knowing
if it will, or if it does, to what extent such devaluation will take place.
In addition, when final rules were issued regarding NASDAQ Listing
regulations, other requirements were also mandated. Of particular note is a
requirement that NASDAQ listed Companies must meet any one of three financial
criteria: 1) $2 million in net tangible assets, 2) $35 million in market
capitalization or 3) $500,000 net income in the most recent year or alternately
two of the last three years. The Company presently does not meet criteria 2 or
3. The company does, as of June 30, 1997, meet the first criteria. However,
should unanticipated events create a decrease in assets below $2 million, the
Company could be delisted by failing to meet these financial criteria even if
------
the price of the shares remains above $1.00 per share.
A chart summarizing these criteria is presented below which shows the newly
mandated regulations (on the left) and, a comment about the Company's status
with respect to each criteria (on the right).
THE NASDAQ SMALL CAP MARKET REQUIREMENTS
NASDAQ CONTINUED HAWK'S
REQUIREMENTS LISTING REQUIREMENTS STATUS
Net Tangible Assets $2 million $2.1 million
Market Capitalization $35 million $4 million
Net Income (in latest fiscal year or 2 of $500,000 Loss
last 3 fiscal years)
Public Float (shares) 500,000 19,289,000 (Now)
964,000 (After
split)
Market Value of Public Float $1 million $2.9 million
Minimum Bid Price $1 $.15 (Now)
$3.00 (After
split)
Market Makers 2 12
Shareholders (round lot holders) 300 950
Corporate Governance Yes Necessary changes
can be made
As management does not believe it proper in this instance to influence the
outcome of this important matter, and because management does not believe either
approval or disapproval is compelling, management presently plans to vote their
shares on this proposal with the majority of the other shareholders.
If the reverse split is approved, shareholders need not send their
---
certificates to the Company although a new certificate will be issued
subsequent to the approval of this proposal. Therefore, when a shareholder
decides to transfer shares, if an old certificate is tendered, it will be
divided by 20 to determine the number of shares at the post-split price. New
certificates will be issued which will look different than the old certificates
and which will have the post-split number of shares on them. If a shareholder
desires to obtain a new certificate, they may send the certificate to the
Company's address, attention Judy Thomas, Transfer Agent.
PROPOSAL TO CHANGE DOMICILE
Management strongly recommends that the shareholders approve a Change of
Domicile from the State of Delaware to the State of Wyoming. The Company
adopted the State of Delaware in 1988 because of its pro-active business
policies. The State of Wyoming has adopted a corporate code, originally
proposed in 1989, which mirrors the Delaware corporate statutes. There will be
an immediate small savings of approximately $3,000 a year in state corporate
franchise fees by making the switch. The Company however sees the greater
benefit in reducing legal fees. As it now is, the corporation may be required
to hire both local counsel and Delaware counsel on any legal matter that should
come before the Company. With the Company being domiciled in Wyoming, such a
duplication of expensive legal fees would be eliminated. No such legal
entanglements are known at the present time nor are any anticipated. We urge
the shareholders to vote for this change.
EMPLOYEE STOCK OWNERSHIP PLAN-TRUST
The Plan was adopted in December, 1975. Annual contributions by the Company
are not mandatory, but the Plan provides for annual contributions by the company
to the profit-sharing trust for the account of eligible employees in an amount
up to 25% of their salaries subject to the limitation imposed by ERISA. The
Plan provides that the Trustee shall invest the funds in shares of Common Stock
of the Company purchased either in the open market, directly from the Company,
or from existing shareholders. All of the shares will remain with the Trustee
until paid to employees upon leaving the Company's service. In the event of
retirement, disability or death, the entire amount of the employee's credit will
be directly distributed to the employee or his named beneficiary. Upon
termination, other than by reason of death, disability or retirement, the amount
at termination will be a percentage of the amount of his account as follows:
YEARS PERCENTAGE
2 20%
3 40%
4 60%
5 80%
6 100%
The Company has the right to amend or terminate the Plan at any time. The
purpose of the Plan is to provide employees with additional incentive and
opportunity, through the Company contribution, to acquire an Ownership in the
Company by becoming shareholders.
During the Fiscal year, the amounts accrued by Mr. McQuade, Mr. Hinchey, and
Mr. Meador and his spouse were, respectively, $5,250, $5,250 and $6,006.
INCENTIVE STOCK OPTION PLAN
The Plan approved by the Shareholders of the Company on June 15, 1982,
authorized the stock incentives for key executives to further the identity of
their interest with the interests of the shareholders and to increase their
stake in the future growth and prosperity of the Company. This Plan expired
June 15, 1992. The Plan was intended to induce continued employment of key
executives and, by offering comparable incentives, to enable the Company to
compete for, attract, and retain competent executives.
As of the date of this Proxy Statement there are options outstanding for
50,000 shares under the Plan. They were issued in September 1990 and will, if
not exercised previously, expire in September of 2000.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. Officers, Directors, and
greater than 10% stockholders are also required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it and written
representations form certain reporting persons, the Company believes that,
during the period January 1, 1996 to December 31, 1996, all filing requirements
applicable to its officers, Directors, and greater than 10% beneficial owners
were complied with.
FINANCIAL STATEMENTS
Financial statements are not included in the Proxy Statement as they are not
deemed necessary for the exercise of prudent judgment by the shareholders with
respect to any proposal to be submitted at this Annual Meeting. The Annual
Report of the Company for the year ended December 31, 1996, including audited
financial statements, has been mailed to the shareholders, but such report is
not incorporated in this Proxy Statement and is not deemed to be a part of the
proxy soliciting material.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the proxy
form and the form of materials used in the solicitation of proxies will be paid
by the Company. The Company will request banks and brokers to solicit their
customers who beneficially own common stock of the Company listed in the names
of the nominees and will reimburse said banks and brokers for the reasonable
out-of-pocket expenses of such solicitation. In addition to the use of the
mails, solicitation may be made by employees of the Company by telephone,
telegraph, cable and personal interview. The Company does not expect to pay any
compensation for the solicitation of proxies.
DATE OF RECEIPT OF SHAREHOLDER'S PROPOSALS
Shareholder proposals must be received by the Company by February 10, 1998 to
be included in the proxy materials for the next Annual Meeting of Shareholders.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before this
Annual Meeting. However, if other matters should come before the meeting, it is
the intention of each person named in the proxy to vote in accordance with his
judgment on such matters.
AVAILABILITY OF ANNUAL REPORT
ON FORM 10-K
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
(INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO) FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION, TO EACH SHAREHOLDER OF RECORD OR EACH
SHAREHOLDER WHO OWNED COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS
NOMINEE, AT THE CLOSE OF BUSINESS ON NOVEMBER 17, 1997. REQUESTS SHOULD BE
ADDRESSED TO THE COMPANY, TO THE ATTENTION OF BOB DESPAIN, SECRETARY, BOB
DESPAIN, SECRETARY, 913 FOSTER ROAD, CASPER, WYOMING 82601.
By Order of the Board of Directors
Dwight B. "Bob" Despain
Secretary