UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No.___)
Filed by the Registrant [X]
Filed by a Party Other Than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Energy Exploration Technologies
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(Name of Registrant as Specified In Its Charter)
_______________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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1) Title of each class of securities to which transaction applies: _______
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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______________________________________________________
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[LETTERHEAD OF ENERGY EXPLORATION TECHNOLOGIES]
August 1, 2000
To Our Shareholders:
I am pleased to invite you to attend the 2000 Annual Meeting of Shareholders of
Energy Exploration Technologies (formerly Pinnacle Oil International, Inc.), to
be held on Thursday, September 14, 2000, at 11:00 a.m., Mountain Standard Time,
at the Sandman Hotel, located at 888 7th Avenue SW, Calgary, Alberta, Canada T2P
3J2.
In anticipation of the annual meeting, we enclose for your review a formal
Notice of Annual Meeting and Proxy Statement which describes the business to
come before the meeting, and a proxy card. We also enclose a copy of our Annual
Report on Form 10-K for our 1999 fiscal year, which provides additional current
information relating to NXT and our business.
If you hold either our common stock or series `A' preferred stock as of the
close of business on July 17, 2000, you will be entitled to vote at the annual
meeting. The principal purpose of the annual meeting, as more particularly
described in the enclosed Notice of Annual Meeting and Proxy Statement, is to
elect eight directors to our board of directors and to ratify the appointment of
our independent auditors. You should note that our board of directors
unanimously recommends a vote for each of the nominated directors, as well as
the other proposals. Please note that we plan to conduct a short meeting to
focus on these items, and related discussion. After that, we will provide time
for your questions and comments.
Whether or not you plan to attend the annual meeting, it is important that your
shares be represented and voted. For that reason we request that you submit your
proxy as soon as possible. If you decide to attend the annual meeting, and
desire to vote your shares personally, you will of course have that opportunity.
We would like to express our appreciation for your continued interest in the
affairs of NXT, and hope you can be with us at the annual meeting.
Sincerely,
/s/ Daniel C. Topolinsky
Daniel C. Topolinsky
President
[LETTERHEAD OF ENERGY EXPLORATION TECHNOLOGIES]
2000 Annual Meeting Of Stockholders
__ . __ . __
Notice Of Annual Meeting
And Proxy Statement
Date and Time September 14, 2000, at 11:00 a.m., Mountain Standard Time.
Items of Business . To elect eight directors to serve until the Annual Meeting
of Shareholders to be held in the year 2001;
. To ratify the appointment of Arthur Andersen LLP as our
independent auditors for the fiscal year ended December
31, 2000; and
. To transact such other business as may properly come
before the meeting or any postponements or adjournments
thereof.
Whom May Vote Depending upon the item of business, you may vote if you are
a holder of our common stock or series `A' preferred stock
as of the record date for our annual meeting.
Record Date July 17, 2000.
Annual Report Our 1999 Annual Report on Form 10-K, which is not a part of
our proxy soliciting materials, is enclosed.
Voting By Proxy Please submit a proxy as soon as possible so that your
shares can be voted at the annual meeting in accordance with
your instructions. Depending upon whether you are a
shareholder of record or a beneficial owner, you may submit
your proxy by the internet, by telephone, by facsimile or by
mail. For specific instructions, please refer to the
"Questions And Answers" section beginning on page 1 of this
proxy statement and the instructions on the proxy card.
By Order of the Board of Directors
/s/ John M. Woodbury, Jr.,
John M. Woodbury, Jr.,
Chief Financial Officer, General
Counsel and Secretary
This Notice of Annual Meeting and Proxy Statement and accompanying Proxy Card
and Annual Report on Form 10-K are being distributed on or about August 1,
2000.
Questions And Answers
Q: Why Am I Receiving These Materials?
A: The board of directors of Energy Exploration Technologies, a Nevada
corporation (sometimes referred to in these proxy materials as "we," "our
company" or "NXT"), is providing these proxy materials for you in
connection with our annual meeting of shareowners to be held on September
14, 2000. As a holder of record or beneficial owner of either our NXT
common stock or NXT series `A' preferred stock, you are invited to attend
the meeting and are entitled to and requested to vote on the proposals
described in this proxy statement reserved for your class of NXT stock.
Q: What Information Is Contained In These Materials?
A: The information included in this proxy statement relates to the proposals
to be voted on at the meeting and the voting process, as well as additional
information concerning NXT we are required to give you under Securities and
Exchange Commission regulations. We are also including with this proxy
statement our annual report on form 10-K, which includes an updated
description of our business and our full consolidated audited financial
statements for our most recent fiscal year ended December 31, 1999.
Q: What Proposals Are Our Common Shareholders Entitled To Vote Upon At Our
Annual Meeting?
A: There are two proposals scheduled to be voted on at the annual meeting by
our common shareholders:
. the election of six directors, whom we refer to in this proxy
statement as our "common directors;" and
. the ratification of Arthur Andersen LLP as our independent auditors
for fiscal 2000.
Q: What Is NXT's Voting Recommendation To The Holders Of Our Common Stock?
A: Our board of directors recommends to our common shareholders that you vote
your shares "FOR" each of the six common director nominees to our board of
directors, and "FOR" the ratification of Arthur Andersen LLP as our
independent auditors for fiscal 2000.
Q: What Proposals Are Our Series `A' Preferred Shareholders Entitled To Vote
Upon At Our Annual Meeting?
A: There is one proposal scheduled to be voted on at the annual meeting by our
series `A' preferred shareholders, namely, the election of two directors,
whom we refer to in this proxy statement as our "series `A' directors."
These are positions on our board of directors that we are obligated under
our Articles of Incorporation to provide to our series `A' preferred
shareholders so long as any series `A' preferred stock is outstanding.
Q: What Is Nxt's Voting Recommendation To The Holders Of Our Series `A'
Preferred Stock?
A: Our board of directors recommends to our series `A' preferred shareholders
that you vote your shares "FOR" each of the series `A' director nominees to
our board of directors.
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Q: What Shares Owned By Me Can Be Voted?
A: You may vote all shares which you own as of the close of business on July
17, 2000, the record date for this annual meeting. These shares include:
. shares held directly in your name as the shareowner of record, and
. shares held for you as the beneficial owner through a stockbroker or
bank.
Q: What Is The Difference Between Holding Shares As A Shareowner Of Record And
As A Beneficial Owner?
A: Most NXT shareowners hold their shares through a stockbroker, bank or other
nominee rather than directly in their own name. As summarized below, there
are some distinctions between shares held of record and those owned
beneficially.
. Shareowner Of Record: If your shares are registered directly in your
name with our transfer agent and registrar, Jersey Transfer & Trust
Co., you are considered to be the shareowner of record, with respect
to those shares, and these proxy materials are accordingly being sent
directly to you. As the shareowner of record for these shares, you
have the right to grant your voting proxy directly to NXT or to vote
in person at the meeting. We have enclosed a proxy card for you to
use.
. Beneficial Owner: If your shares are held in a stock brokerage account
or by a bank or other nominee, you are considered the beneficial owner
of shares held in street name, and these proxy materials are being
forwarded to you by your broker or nominee, which is considered the
shareowner of record with respect to those shares. As the beneficial
owner of these shares, you have the right to direct your broker how to
vote and are also invited to attend the meeting. However, since you
are not the shareowner of record, you may not vote these shares in
person at the meeting. Accordingly, your broker or nominee has
enclosed a voting instruction card for you to use in directing the
broker or nominee how to vote your shares.
Q: How Can I Vote My Shares In Person At The Meeting?
A: Shares held directly in your name as the shareowner of record may be voted
in person at the annual meeting. If you choose to do so, please bring the
enclosed proxy card and proof of identification.
Even if you currently plan to attend the annual meeting, we recommend that
you also submit your proxy as described below so that your vote will be
counted if you later decide not to attend the meeting. Shares held in
street name may be voted in person by you only if you obtain a signed proxy
from the record holder giving you the right to vote the shares.
Q: How Can I Vote My Shares Without Attending The Meeting?
A: Whether you hold shares directly as the shareowner of record or
beneficially in street name, you may direct your vote without attending the
meeting. You may vote by granting a proxy or, for shares held in street
name, by submitting voting instructions to your broker or nominee.
. Record Holder: In cases where you are the record holder of the shares,
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you should submit your proxy directly to NXT's stock transfer and
registrar, Jersey Transfer & Trust Company, either by mail or by
facsimile. Jersey Transfer & Trust Company's address is 201 Bloomfield
Avenue, Verona, New Jersey, USA 07044, and its facsimile number is
(973) 239-2361.
. Beneficial Owner: In cases where you are beneficial holder of shares
held in street name, you will be able to submit your proxy over the
internet, by telephone, or by mail. Please refer to the summary
instructions below and those included on your proxy card or, for
shares held in street name, the voting instruction card included by
your broker or nominee.
By Internet: If you have internet access, you may submit your proxy
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from any location in the world by following the "Internet Vote"
instructions on the proxy card.
By Telephone: If you live in the United States or Canada, you may
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submit your proxy by following the "Telephone Vote" instructions on
the proxy card.
By Mail: You may do this by signing your proxy card or, for shares
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held in street name, the voting instruction card included by your
broker or nominee and mailing it in the enclosed, postage prepaid and
addressed envelope.
If you provide specific voting instructions, your shares will be voted as
you instruct. If you sign but do not provide instructions, your shares will
be voted as described below in "How Are Votes Counted?"
Q: Can I Change My Vote?
A: You may change your proxy instructions at any time prior to the vote at the
annual meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy bearing a later date (which automatically
revokes the earlier proxy) or by attending the annual meeting and voting in
person. Attendance at the meeting will not cause your previously granted
proxy to be revoked unless you specifically so request. For shares held
beneficially by you, you may accomplish this by submitting new voting
instructions to your broker or nominee.
Q: How Are Votes Counted?
A: In the election of directors, you may vote "FOR" all of the nominees for
which your class of NXT securities entitle you to vote, or your vote may be
"WITHHELD" with respect to one or more of those nominees.
For the other proposals for which your class of NXT stock entitles you to
vote, including the ratification of the appointment of our independent
auditors in the case of our common shareholders, you may vote "FOR,"
"AGAINST" or "ABSTAIN." If you "ABSTAIN," it has the same effect as a vote
"AGAINST."
If you sign your proxy card or broker voting instruction card with no
further instructions, your shares will be voted in accordance with the
recommendations of our board of directors, i.e.:
. with respect to the election of nominees to our board of directors,
"FOR" all of NXT's nominees for which your class of NXT securities
entitle you to vote;
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. with respect to the ratification of independent auditors for fiscal
2000, "FOR" the ratification of Arthur Andersen LLP; and
. with respect to any other matters that properly come before the
meeting for which your class of NXT stock entitles you to vote,
including the ratification of the appointment of our independent
auditors in the case of our common shareholders, in the discretion of
the proxy holders as discussed below in "Q: What Happens If Additional
Proposals Are Presented At The Meeting?"
Each of our director nominees has consented to his nomination for election.
Should any director nominee no longer remain a candidate at the time of our
annual meeting, your proxy card will be voted for the election of a
replacement nominee to be designated by our board of directors to fill that
vacancy.
Q: What Is The Voting Requirement To Approve Each Of The Proposals?
A: In the election of the common director positions, the six persons receiving
the highest number of "FOR" votes by the holders of our common stock will
be elected. In the case of the election of the series `A' directors
positions, the two persons receiving the highest number of "FOR" votes for
each of these positions by the holders of our series `A' preferred stock
will be elected.
All other proposals, including the ratification of the appointment of our
independent auditors, require the affirmative "FOR" vote of a majority of
those shares present and entitled to vote. If you are a beneficial owner
and do not provide the shareowner of record with voting instructions, your
shares may constitute "broker non-votes" as that term is described in "Q:
What Is The Quorum Requirement For The Meeting?" below. In tabulating the
voting result for any particular proposal, shares that constitute broker
non-votes are not considered entitled to vote on that proposal.
Q: What Does It Mean If I Receive More Than One Proxy Or Voting Instruction
Card?
A: It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
Q: Do I Need An Admission Ticket To Attend The Meeting?
A: All NXT shareholders are welcomed to attend our annual meeting. You will,
however, be required to provide proof of identification if you are listed
as a shareowner of record as of the record date (July 17, 2000), and desire
to vote your shares at the annual meeting. If you hold your shares through
a stockbroker or other nominee, you will also need to provide proof of
ownership by bringing either a copy of the voting instruction card provided
by your broker or a copy of a brokerage statement showing your share
ownership as of the record date.
Q: Where Can I Find The Voting Results Of The Meeting?
A: We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on form 10-Q for the third quarter of
fiscal year 2000, which we expect to release in mid-November 2000. We will
also post an update on our website at www.nxtenergy.com.
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Q: What Happens If Additional Proposals Are Presented At The Meeting?
A: Other than the proposals described in this proxy statement, we do not
expect any other matters to be presented for a vote at the annual meeting.
If you grant a proxy, the persons named as proxy holders, namely, Messrs.
George Liszicasz (our Chairman and Chief Executive Officer) and Daniel C.
Topolinsky (our President and Chief Operating Officer), will have the
discretion to vote your shares on any additional matters properly presented
for a vote at the meeting. If for any unforeseen reason any of our nominees
is not available as a candidate for director, the persons named as proxy
holders will vote your proxy for such other candidate or candidates as may
be nominated by our board of directors.
Q: What Classes Of Shares Are Entitled To Vote At the Meeting?
A: Generally speaking, our common shareholders are entitled to vote on all
matters that affect our company, with the exception of selected matters
enumerated in our Articles of Incorporation that are reserved for our
series `A' preferred stock. These matters generally relate to any actions
that may adversely affect the rights and privileges reserved for that class
of securities.
Each share of common stock and series `A' preferred stock outstanding as of
the close of business on the record date (July 17, 2000) will be entitled
to one vote on all proposals being voted upon at the annual meeting by that
class of securities, including any additional proposals. As of the record
date, we had 13,087,516 shares of common stock and 800,000 shares of series
`A' preferred stock issued and outstanding.
Q: What Is The Quorum Requirement For The Meeting?
A: The quorum requirement for holding our annual meeting and transacting
business is a majority of the outstanding shares of the two classes of our
securities entitled to vote at that meeting (i.e., our common stock and
series `A' preferred stock) present in person or represented by proxy and
entitled to be voted. Both abstentions and broker non-votes are counted as
present for the purpose of determining the presence of a quorum.
Abstentions are also counted as shares present and entitled to be voted.
Broker non-votes, however, are not counted as shares present and entitled
to be voted with respect to the matter on which the broker has expressly
not voted. Thus, broker non-votes will not affect the outcome of any of the
matters being voted upon at the meeting. Generally, broker non-votes occur
when shares held by a broker for a beneficial owner are not voted with
respect to a particular proposal because the broker has not received voting
instructions from the beneficial owner, and the broker lacks discretionary
voting power to vote those shares.
Q: Is Cumulative Voting Permitted For The Election Of Directors?
A: Cumulative voting does not apply to our annual meeting as we are not
required under Nevada corporate law, and have not elected under our
Articles of Incorporation or Bylaws, to provide for cumulative voting.
Q: Who Will Count The Votes?
A: A representative of our company will tabulate the votes and act as the
inspector of election.
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Q: Who Will Bear The Cost Of Soliciting Votes For The Meeting?
A: NXT will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials. If you choose to access the proxy
materials or vote over the internet, however, you will be responsible for
any internet access charges you may incur. In addition to the mailing of
these proxy materials, the solicitation of proxies or votes may be made in
person, by telephone or by electronic communication by our directors,
officers and employees, who will not receive any additional compensation
for those solicitation activities. We will reimburse brokerage houses and
other custodians, nominees and fiduciaries for their reasonable out-of-
pocket expenses for forwarding proxy and solicitation materials to
shareowners.
Q: May I Propose Actions For Consideration At Next Year's Annual Meeting Of
Shareowners Or Nominate Individuals To Serve As Directors?
A: You may submit proposals for consideration at future shareowner meetings,
including director nominations.
Nomination Of Director Candidates: You may propose director candidates for
consideration by our board of directors. Any recommendations for director
candidates should be directed to the NXT Corporate Secretary at our
executive offices in Calgary, Alberta. In addition, our Bylaws permit
shareowners to nominate directors at a shareowner meeting. In order to make
a director nomination at a shareowner meeting, it is necessary that you
notify NXT not fewer than 120 days in advance of the day specified as the
mailing date in our proxy statement for the prior year's annual meeting of
shareowners. Thus, since August 1, 2000 is specified as the mailing date in
this year's proxy statement, in order for any such nomination notice to be
timely for next year's annual meeting, it must be received by NXT not later
than April 3, 2001 (i.e., 120 days prior to August 1st). In addition, the
notice must meet all other requirements contained in our Bylaws.
Any nomination for a director nominee must contain the following
information:
. the nominee's name, age, business address and, if known, residence
address;
. the nominee's principal occupation or employment; and
. the number of shares of each class of our stock which the nominee
beneficially owns.
No person may be elected:
. as a common director unless he or she has been nominated by a holder
of our common stock in the manner just described; and
. as a series `A' director unless he or she has been nominated by a
holder of our series `A' preferred stock in the manner just described,
and is also considered reasonably acceptable to our common directors.
Shareowner Proposals: In order for a shareowner proposal to be considered
for inclusion in NXT's proxy statement for next year's annual meeting, we
must also receive the written proposal by no later than April 3, 2001.
These proposals must also comply with Securities and Exchange Commission
regulations regarding the inclusion of shareowner proposals in company-
sponsored proxy materials.
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Similarly, in order for a shareowner proposal to be raised from the floor
during next year's annual meeting, we must receive written notice by no
later than April 3, 2001, and shall contain such information as required
under our Bylaws.
We suggest that any nominations or proposals be submitted by certified
mail-return receipt requested. NXT reserves the right to reject, rule out
of order, or take other appropriate action with respect to any nomination
or proposal that does not comply with these and other applicable
requirements.
Copy Of Bylaw Provisions: You may contact the NXT Corporate Secretary at
our headquarters for a copy of the relevant Bylaw provisions regarding the
requirements for making shareowner proposals and nominating director
candidates.
Q: How Are Transactions Denominated in Canadian Dollars Converted Into U.S.
Dollars For Purposes Of This Proxy Statement?
A: All references to "dollars" in this proxy statement refer to United States
or "U.S." dollars, unless specific reference is made to Canadian or "Cdn."
Dollars. Since compensation paid to NXT employees, as well as a number of
NXT transactions, are effected in transactions denominated in Canadian
dollars, certain information contained in this proxy statement, principally
salary amounts, have been converted into U.S. dollars in order to satisfy
reporting rules. As a general rule of thumb, information relating to
historical amounts paid over a period of time are converted at the average
exchange rate for that period, while information relating to amounts that
will be paid over a prospective period of time are converted at the
exchange rate as of the date of this proxy statement or other indicated
date.
Q: How Can I Get Further Information?
A: If you have questions or need more information about the annual meeting,
please write to NXT investor relations at 840 7th Avenue SW, Suite 700,
Calgary, Alberta, Canada T2P 3G2. You may also contact NXT investor
relations by telephone at (403) 264-7020 or via the internet at
info@NXTenergy.com.
Any questions you may have relating to title to your securities or your
address should be addressed to NXT's stock transfer and registrar, Jersey
Transfer & Trust Company, 201 Bloomfield Avenue, Verona, New Jersey, USA
07044. You may also contact Jersey Transfer & Trust Company by telephone at
(973) 239-2712.
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Proposal No. 1: Election Of Common directors
(Vote reserved for common shareholders)
There are six nominees for election to our board of directors as common
directors this year, namely, Messrs. George Liszicasz, Daniel C. Topolinsky, R.
Dirk Stinson, Lorne W. Carson, Dennis R. Hunter and John A. Thomson. Each of
the nominees has served as a common director since our last annual meeting,
except for Mr. Thomson, whom our board of directors appointed to serve as a
common director on February 15, 2000, and who will stand for election as a
director by our common shareholders for the first time at this year's annual
meeting. Information regarding the business experience of each of these
nominees is provided below. The common directors are elected annually to serve
until the next annual meeting of shareholders and until their respective
successors are elected and qualified. There are no family relationships among
our executive officers and common directors except as described below.
The designated proxy holders will vote each proxy received by them from our
common shareholders as directed on their proxy cards or, if no direction is
made, for the six nominees named below. If any of these nominees should be
unable or unwilling to serve, the discretionary authority granted to the proxy
holders as provided in the proxy card will be exercised to vote for a substitute
nominee designated by our board of directors. We have no reason to believe that
any substitute nominee will be required.
The six nominees receiving the highest number of votes cast by our common
shareholders will be elected to fill the six common director positions. The
proxies cannot be voted for more than six nominees.
Our board of directors recommends to our common shareholders that you vote "FOR"
the election of Messrs. Liszicasz, Topolinsky, Stinson, Carson, Hunter and
Thomson as our six common directors. Proxies solicited by our board of
directors will be so voted unless the common shareholder tendering the proxy
specifies otherwise.
George Liszicasz Mr. Liszicasz, who is also NXT's Chief
Age 46 Executive Officer, is the inventor of our SFD
Director since January 1996 technology and one of our founders. Mr.
Liszicasz's primary responsibilities with NXT
are further developing our SFD technology,
particularly the SFD sensor and data
acquisition and interpretation functions. Mr.
Liszicasz's interest in quantum-related
phenomenon lead to his initial discovery of
the existence of stress field energy patterns
in 1992, which subsequently lead to the
development of early prototypes models of
what has since evolved into a multiple
sensor-based SFD Survey System. Mr. Liszicasz
has since acquired a working knowledge of the
oil exploration business and geological and
geophysical sciences.
As a result of major advancements in the
early development of the SFD Survey System,
Mr. Liszicasz formed our wholly-owned
subsidiary, NXT Energy USA Inc., in September
1995 to exploit our SFD technology for
hydrocarbon purposes, and was appointed as
its Chief Executive Officer and as one of its
directors. NXT Energy USA Inc. then acquired
our parent
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company, Energy Exploration Technologies, in
a reverse acquisition in January 1996, at
which time Mr. Liszicasz became the Chief
Executive Officer and one of the directors of
NXT. Mr. Liszicasz has also served as the
Chief Executive Officer and one of the
directors of our Canadian subsidiary, NXT
Energy Canada Inc., since its formation in
April 1997.
Mr. Liszicasz studied electronics and general
sciences in Hungary and at the University of
British Columbia. Since 1983, he invented and
worked on several innovations including an
online computerized brokerage system, the
modification of high power laser systems,
electronic monitoring devices, geophysical
instruments, and novel pyroelectric
materials. From 1987 to 1995, Mr. Liszicasz
was President of Owl Industries Ltd., a
developer of electronic controlling devices,
where he had both engineering and business
responsibilities.
Daniel C. Topolinsky Mr. Topolinsky became the President and Chief
Age 44 Operating Officer and a director of NXT and
Director since May 1999 each of its subsidiaries in May, 1999. Mr.
Topolinsky's primary areas of responsibility
are managing our administrative affairs,
corporate strategies, strategic partner
relationships, project financing, and
investor relations.
Prior to joining NXT, Mr. Topolinsky was Vice
President of Exploration of Renaissance
Energy Ltd. Mr. Topolinsky joined Renaissance
in 1987 as a geological consultant, and
became Vice President of Exploration
overseeing the most active exploration effort
in North America.
Mr. Topolinsky is a professional geologist
with degrees in economics and geology from
Trent University and the University of
Calgary, respectively, and has over 20 years
of industry experience.
R. Dirk Stinson Mr. Stinson is one of NXT's founders, and was
Age 47 primarily responsible for implementing the
Director since January 1996 early corporate strategies and financings
which lead to our becoming a public company.
Mr. Stinson has been a director of Energy
Exploration Technologies since its
acquisition by NXT Energy USA Inc. in January
1996, and a director of our subsidiaries NXT
Energy USA Inc. and NXT Energy Canada Inc.,
from their respective formations in September
1995 and April 1997 until May 1999. Mr.
Stinson also served as President of the
various NXT companies from their respective
dates of acquisition or formation through
April 1999, when we determined that we had
achieved our initial objective of evolving
from a development stage company to an oil &
gas exploration company, and were finally in
a position where we could attract a high-
profile oil & gas
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executive with the requisite experience and
connections necessary to attain our next
level of growth. Following our hiring of Mr.
Topolinsky as our President and Chief
Operating Officer in May 1999, Mr. Stinson
became a consultant to NXT for strategic
planning and financing matters.
Prior to forming NXT, Mr. Stinson worked for
over 20 years as a business management
consultant and entrepreneur. From 1980
through 1989, Mr. Stinson managed a number of
businesses in Hawaii, including Commercial
Energy Systems, Inc., the Industrial and
Commercial division of PRI Energy Systems,
and Pacific Marine. Following his return to
Canada in 1990, Mr. Stinson worked in the
automobile industry primarily in the fleet
and lease sales, and as fleet and lease
manager for a Nissan dealership. From 1992 to
1994, Mr. Stinson worked as a sales executive
for Premier Plastics Ltd. and Century
Plastics Ltd. and, in 1995, became the
President of EIC-Energy Interface Corporation
in Vancouver, British Columbia, Canada, a
wholly-owned subsidiary of International
Parkside Products, Inc., a public company
trading on the Vancouver Stock Exchange.
Mr. Stinson studied Communication Arts at the
Southern Alberta Institute of Technology.
Lorne W. Carson Mr. Carson, who has acted as our Canadian
Age 46 counsel since November of 1995, is a partner
Director since March 1996 at Bennett Jones, a Calgary-based national
Canadian law firm, where he has been employed
since 1980. Mr. Carson's area of specialty is
natural resource and energy law, with
particular focus on oil and gas ventures and
energy financing. Mr. Carson is a member of
the Association of Professional Engineers of
British Columbia and the Law Society of
Alberta. In addition to NXT, Mr. Carson
serves as a director of Hunting Oilfield
Services Canada Holdings Ltd., a subsidiary
of Hunting Group, an international oilfield
service company.
Mr. Carson received a Bachelor of Science in
Mining and Engineering from Queens University
in 1975, and an LL.B. from the University of
Victoria in 1980.
Mr. Carson has served on NXT's compensation
committee since its inception in 1998, and
also served on NXT's audit committee since
its inception in 1998 until February 2000.
Dennis R. Hunter Mr. Hunter is an entrepreneur who splits his
Age 58 time equally between private investment
Director since September 1998 activities and real estate development and
management. Since 1973, Mr. Hunter has been
President and Chairman of the Board of
Investment Development Management
Corporation, which acquires, constructs,
manages, develops and sells properties in
California, Oregon and Nevada. Mr. Hunter has
also been Chairman of the
-11-
Board since 1992, and Vice Chairman of the
Board from 1984, of Northern Empire
Bancshares, a holding company of Sonoma
National Bank, of which Mr. Hunter was a
founder in 1982. Mr. Hunter has also been a
director since 1988 of Northbay Corporation,
a private holding company in the solid waste
industry with 35 companies in solid waste
hauling, transfer stations, portable toilets,
land fill operations and real property
ownership. Mr. Hunter is also the trustee and
an investment strategist for five charitable
remainder trusts collectively holding over
$30 million in net assets.
Mr. Hunter received his Bachelor of Arts
degree in Economics from California State
University Sacramento. Mr. Hunter has served
on NXT's compensation committee since
February 2000.
John A. Thomson Mr. Thomson, an oil & gas consultant, joined
Age 50 our board after serving from June 1983 to
Director since March 2000 November 1999 as Senior Vice President and
Chief Financial Officer of Renaissance Energy
Ltd., a major independent Canadian
exploration and production company listed on
the Toronto and Montreal Stock Exchanges. Mr.
Thomson is also a director of Avid Oil & Gas
Ltd., which is publicly traded on the
Canadian Venture Exchange.
Mr. Thomson received his Bachelor of Business
Administration degree from the University of
New Brunswick and is a Chartered Accountant.
Mr. Thomson has served on NXT's audit
committee since February 2000.
Proposal No. 2: Election Of Series `A' Directors
(Vote reserved for series `A' preferred shareholders)
There are two nominees for election to our board of directors as series `A'
directors this year, namely, Messrs. Jon E.M. Jacoby and K. Rick Turner. Each
of the nominees has served as a series `A' director since our last annual
meeting. Information regarding the business experience of each of these
nominees is provided below. The series `A' directors are elected annually to
serve until the next annual meeting of shareholders and until their respective
successors are elected and qualified. There are no family relationships among
our executive officers and series `A' directors except as described below.
The designated proxy holders will vote each proxy received by them from our
series `A' shareholders as directed on their proxy cards or, if no direction is
made, for the two nominees named below. If any of these nominees should be
unable or unwilling to serve, the discretionary authority granted to the proxy
holders as provided in the proxy card will be exercised to vote for a substitute
nominee designated by series `A' shareholders and found reasonably acceptable by
our common directors. We have no reason to believe that any substitute nominee
will be required.
-12-
The two nominees receiving the highest number of votes cast by our series `A'
shareholders will be elected to fill the two series `A' director positions. The
proxies cannot be voted for more than two nominees.
Our board of directors recommends to our series `A' shareholders that you vote
"FOR" the election of Messrs. Jacoby and Turner as our two series `A' directors.
Proxies solicited by our board of directors will be so voted unless the series
`A' shareholder tendering the proxy specifies otherwise.
Jon E. M. Jacoby Mr. Jacoby is a director and an Executive
Age 62 Vice President of Stephens Group, Inc., a
Director since April 1998 private company headquartered in Little Rock,
Arkansas, which invests primarily in media,
telecommunications, energy and investment
banking companies. (Stephens Group, Inc. is
an affiliate of CamWest Exploration, LLC, our
U.S.-based strategic partner, and SFD
Investment LLC, one of our principal
shareholders). Mr. Jacoby is a Senior
Executive Vice President of Stephens Inc., an
investment banking firm also located in
Little Rock, Arkansas, and an affiliate of
Stephens Group, Inc., where he has been
employed since 1963. He is also a director of
Delta & Pine Land Company, Medicus Systems,
Inc., Beverly Enterprises Inc., and Power One
Inc.
Mr. Jacoby received his Bachelor of Science
degree from the University of Notre Dame, and
his Master in Business Administration from
the Harvard Business School.
K. Rick Turner Mr. Turner has been Vice President since
Age 42 1993, and from 1990 to 1993, Assistant to the
Director since April 1998 Chairman, of Stephens Group, Inc., a private
company headquartered in Little Rock,
Arkansas, which invests primarily in media,
telecommunications, energy and investment
banking companies. (Stephens Group, Inc. is
an affiliate of CamWest Exploration, LLC, our
U.S.-based strategic partner, and SFD
Investment LLC, one of our principal
shareholders). Since his original employment
with Stephens Group, Inc. in 1983, Mr. Turner
has also been an officer of various
affiliates of Stephens Group, Inc.
Mr. Turner received his Bachelor of Science
degree from the University of Arkansas and is
a Certified Public Accountant.
Mr. Turner has served on NXT's audit
committee since its inception in 1998, and
also served on NXT's compensation committee
since its inception in 1998 until February
2000.
Proposal No. 3: Ratification of Appointment of Independent Auditors
(Vote reserved for common shareholders)
The audit committee of our board of directors has recommended, and our board has
approved, the appointment of Arthur Andersen LLP as our independent auditors for
our 2000 fiscal year. Since we
-13-
believe it is important for NXT to receive your input on our selection of
independent auditors for our company, that appointment is being presented to you
for ratification. Arthur Andersen LLP has served as our independent auditors
since June 28, 2000, having replaced Deloitte & Touche LLP which served as our
independent auditors for our 1999 fiscal year, and which was unable to continue
in that capacity for reasons discussed below. We expect a representative of
Arthur Andersen LLP will attend the annual meeting, and we will extend the
opportunity to the representative to make a statement if he or she desires to do
so. This representative will also be available to answer any questions you may
have.
On June 28, 2000, our board of directors accepted the resignation of Deloitte &
Touche LLP as our independent auditors. The resignation was tendered in
anticipation of a conflict of interest that would arise under the rules of the
Securities and Exchange Commission governing the independence of auditors as the
consequence of a pending marriage between a sibling of NXT's controller and a
partner in Deloitte & Touche's Calgary office. Deloitte & Touche audited our
consolidated financial statements for our two most recent fiscal years ended
December 31, 1999, and reviewed our consolidated financial statements for the
quarter ended March 31, 2000. The report of Deloitte & Touche accompanying the
audit for our two most recent fiscal years ended December 31, 1999 was not
qualified or modified as to audit scope or accounting principles and did not
contain an adverse opinion or disclaimer of opinion.
During our two most recent fiscal years ended December 31, 1999, and also during
the subsequent interim period through the date of resignation, there were (1) no
disagreements between NXT and Deloitte & Touche on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure; (2) no reportable events as such term is defined in Regulation
229.304(a)(1)(v); and (3) no matters identified by Deloitte & Touche involving
our internal control structure or operations which was considered to be material
weakness.
During our two most recent fiscal years ended December 31, 1999, and also during
the subsequent interim period through the date of resignation of Deloitte &
Touche LLP, NXT did not consult with Arthur Andersen LLP regarding the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of opinion that might be rendered regarding
our financial statements, nor did we consult with Arthur Andersen with respect
to any accounting disagreement or any reportable event at any time prior to the
appointment of that firm.
We included the above disclosures relating to Deloitte & Touche LLP and Arthur
Andersen LLP in a form 8-K filed with the Securities and Exchange Commission on
June 29, 2000, and each of these independent auditors were provided an
opportunity to furnish a letter confirming these matters. Those letters are
included as exhibits to that form 8-K.
You should note that your ratification of our selection of Arthur Andersen LLP
as our independent auditors for fiscal 1999 is advisory only and not binding
upon NXT, although our audit committee will seriously consider your objections
in not ratifying the appointment. Even if our audit committee were to seek
other independent auditors as a consequence of your objections, it is likely,
because of the difficulty and expense of making any change in independent
auditors so long after the beginning of the current year, that the appointment
of Arthur Andersen would stand for our 2000 fiscal year unless the audit
committee were to find other good reason to make a change. Our audit committee
also reserves the right to engage any other independent auditors at any time,
notwithstanding your ratification of Arthur Andersen as our independent auditors
for fiscal 1999, should it deem it to be in the best interests of NXT and its
shareholders.
-14-
Our board of directors recommends that you vote "FOR" the ratification of the
appointment of Arthur Andersen LLP as our independent auditors for our 2000
fiscal year. Proxies solicited by our board of directors will be so voted
unless the holder of common stock tendering the proxy specifies otherwise.
Proposal No. 4: Other Matters
The enclosed proxy card gives the proxy holder discretionary authority to vote
the shares held by the shareholder tendering the proxy in accordance with the
proxy holder's best judgment with respect to all additional matters which might
come before the annual meeting. In addition to the scheduled items of business,
the annual meeting may consider shareholder proposals omitted from this proxy
statement pursuant to the proxy rules of the Securities and Exchange Commission
and matters related to the conduct of the annual meeting. At the date of
printing of this proxy statement, we are not aware of any other matter which
would be presented for action before the annual meeting.
Board Of Directors
Our board of directors was comprised of seven directors in fiscal 1999, and held
four meetings during that fiscal year. No director attended less than 75% of
the total number of those meetings. Our board of directors also approved
numerous additional corporate matters during fiscal 1999 through unanimous
written consents. We increased the size of our board in February 2000 to eight
directors.
Our Bylaws permit our board of directors to fix the number of its authorized
members from three to eleven. At present, our board of directors consists of
eight members, of which six members are "common directors" appointed by our
common shareholders, and the remaining two members are "series `A' directors"
appointed by our series `A' preferred shareholders. This classification of our
board of directors was effectuated pursuant to an amendment to our Articles of
Incorporation made in connection with the private placement in April 1998 of
800,000 shares of our series `A' preferred stock.
Specifically, our Articles of Incorporation were amended to provide that our
common shareholders would retain the exclusive right to elect all members of our
board of directors, unless there are 400,000 or more shares of our series `A'
preferred stock outstanding, in which case our series `A' preferred shareholders
would have the right to appoint one or more additional directors. The number of
directors which our series `A' preferred shareholders may elect under such
circumstances would, when aggregated with the number of common directors, equal
one-sixth of such aggregated number of directors (or such minimum whole number
- ---------
in excess of one-sixth in the event such number of aggregated directors is not a
multiple of six). Since we currently have six common directors, we are
obligated under our Articles of Incorporation to appoint two series `A'
directors.
Our Articles of Incorporation specifically provide that our common shareholders
shall have no right to vote for the series `A' directors, and our series `A'
preferred shareholders shall have no right to vote for the common directors.
The removal of any series `A' directors shall require only the affirmative vote
of holders of a majority of the then outstanding shares of our series `A'
preferred stock. The vacancy of any series `A' director position, from whatever
cause, shall require only the affirmative vote of holders of a majority of the
then outstanding shares of our series `A' preferred stock.
-15-
The nominees of our series `A' preferred shareholders for the series `A'
director positions must be persons reasonably acceptable to our then serving
common directors. Any additional series `A' director position created is not
aggregated with the common directors for purposes of determining the number of
series `A' directors that our series `A' preferred shareholders may elect.
Standing Board Committees
Our board of directors has established two committees, a compensation committee
and an audit committee.
Our compensation committee, which was comprised of Messrs. Carson and Turner
through February 15, 2000, and is currently comprised of Messrs. Carson and
Hunter, reviews and makes recommendations with respect to compensation of NXT's
executive officers and directors, and also administers certain elements of NXT's
various stock plans as they relate to grants to executive officers and
directors. The compensation committee held one meeting during our 1999 fiscal
year.
Our audit committee, which was comprised of Messrs. Turner and Carson through
February 15, 2000, and is currently comprised of Messrs. Turner and Thomson,
held one meeting during our 1999 fiscal year. The audit committee's duties
include recommending to our board of directors the engagement of our independent
auditors, reviewing the results of the auditor's examination of our periodic
financial statements, and determining the independence of those accountants.
Our audit committee has not adopted a written charter to date, although it
anticipates it will do so by the end of fiscal 2000. With the exception of Mr.
Turner, each of the members of our audit committee to date (Mr. Carson through
February 2000 and Mr. Thomson thereafter) are considered "independent" within
the meaning of the rules of Nasdaq and the New York and American Stock
Exchanges. Although Mr. Turner is not considered independent by reason of his
being employed by Stephens Group Inc.--since it is deemed to be an "affiliate"
of NXT by reason of its shared voting and investment control over our series `A'
preferred stock--our board of directors nevertheless believes it to be in the
best interests of NXT and its shareholders for Mr. Turner to continue to serve
on the audit committee as a consequence of his professional accounting
background and experience and overall financial sophistication. Moreover, our
board of directors does not believe that Stephens Group Inc.'s shareholdings
influence Mr. Turner's independence since: (1) the series `A' preferred shares
indirectly held by Stephens Group Inc. do not contain any material rights that
gives this class of securities any control over NXT's business; (2) the series
`A' preferred shares, if converted into common stock, would constitute only 5.8%
of our common shares outstanding; and (3) control of NXT in any event is
effectively lodged in the hands of two other shareholders with interests that
differ from NXT, namely, Messrs. Liszicasz and Stinson, who collectively hold
approximately 65.3% of our common shares. The information contained in this
paragraph 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 or Securities Exchange Act of 1934, except to the extent
that NXT specifically incorporates this paragraph by reference, and shall not
otherwise be deemed filed under such acts.
-16-
Compensation Of Our Directors
NXT's practice to date in compensating directors has been to grant options to
selected directors in lieu of monetary compensation for serving on our board of
directors, although we do cover some expenses incurred for board services.
Summarized below are options granted to date to our current board members for
serving in that capacity:
. On May 20, 1997, NXT granted stock options to each of Messrs. Liszicasz and
Stinson entitling them to purchase 45,000 shares of common stock for the
period of service as directors beginning in May 1997 and ending in May
2000. On March 10, 1998, NXT granted stock options to purchase 45,000
shares of common stock to Mr. Carson for the period of service as a
director beginning in March 1998 and ending in March 2001. The exercise
price for the options were $5.25 per share with respect to the options
granted to Messrs. Liszicasz and Stinson, and $8.31 with respect to the
options granted to Mr. Carson, all of which prices corresponded with the
trading price of the common stock as of the respective dates of grant. All
of the options are subject to vesting conditions based upon continued
performance of services as a director, pursuant to which one-third of the
granted options vested on the date of grant, and one-third of the granted
options would prospectively vest on each of the first and second
anniversaries of the date of grant, respectively. Each of these options are
fully vested as of the date of this proxy statement. Each vested increment
of the noted options expires five years from date of vesting, except that
vested options expire, if earlier, one year after the date on which a
director's service is terminated.
. On February 15, 2000, NXT and a majority of its stockholders adopted the
2000 NXT Directors' Stock Plan, pursuant to which we reserved 400,000
shares of our common stock for issuance to selected directors in the form
of stock options. Also on February 15, 2000, we granted 15,000 options
under this plan to each of our five outside independent directors, namely,
Messrs. Carson, Hunter, Thomson, Jacoby and Turner, as compensation for
their prospective services as members of our board of directors for the
next three years commencing from the date of grant. The purchase price for
these options were fixed at $28.75 per share, reflecting the closing
trading price of our common stock as of the date of grant. On April 17,
2000, we granted an additional 30,000 options under this plan to each of
our five outside independent directors, as additional compensation for
their prospective services as members of our board of directors for the
next three years commencing from the date of grant. These options also vest
in equal increments on the first through third anniversary dates of the
date of grant, respectively, based upon continued provision of services as
a director, and lapse, if unexercised, five years after the vesting date,
unless the optionee's status as a director is terminated, in which case
they lapse two years from date of vesting.
Compensation Committee Interlocks And Insider Participation
During fiscal 1999, there were no actions taken by our board of directors
relating to the compensation of any of our executive officers who were also
serving as one of our directors (each of whom is referred to in this proxy
statement as an "executive officer-director").
-17-
Business Experience Of Our Executive Officers
Set forth below are NXT's executive officers and a summary of their business
experience:
George Liszicasz For a summary of Mr. Liszicasz's business
Age 46 experience, see "Proposal No. 1: Election of
Chief Executive Officer and Common Directors" above.
Chairman of the Board
Daniel C. Topolinsky For a summary of Mr. Topolinsky's business
Age 44 experience, see "Proposal No. 1: Election of
President and Common Directors" above.
Chief Operating Officer
James R. Ehrets Mr. Ehrets became the Executive Vice
Age 43 President of Operations of the various NXT
Executive Vice-President companies in May, 1999. Mr. Ehrets'
Of Operations responsibilities include planning and
managing survey and interpretation operations
and supervising our geological and
geophysical staff, as well as managing the
technical aspects of our joint venture
exploration programs.
Before joining NXT, Mr. Ehrets was employed
as Vice President of Exploration of CamWest
Limited Partnership, a Dallas-based
independent oil and gas exploration and
production company and an affiliate of our
American strategic partner CamWest
Exploration LLC. Mr. Ehrets' primary
responsibilities at CamWest, where he worked
as a consultant and employee since December
1993, included management of exploration
programs, planning and coordinating
horizontal development drilling programs, and
performing reservoir and economic evaluations
for producing property acquisitions.
Mr. Ehrets is a professional geologist with
bachelors and masters degrees in geology from
the University of Rochester, and has 19 years
of industry experience.
John M. Woodbury, Jr. Mr. Woodbury has served as NXT's Secretary,
Age 45 Chief Financial Officer and General Counsel
Chief Financial Officer, since July 1998. From September 1992 to May
General Counsel and 1998, Mr. Woodbury was a principal, and from
Secretary February 1986 until August 1992, an
associate, of Pollet & Woodbury and its
predecessor law firms located in
Los Angeles, California.
Mr. Woodbury holds a Juris Doctor degree
from Southwestern University School of Law,
a Masters of Law degree in Taxation from the
University of Florida, and a Bachelor of
Science degree in Accounting from California
State University at Northridge.
-18-
Ownership Of Our Stock
The following table sets forth certain selected information, computed as of July
17, 2000, about the amount and nature of our securities "beneficially owned" by
the following persons as of that date:
. each of our current directors and director-nominees;
. each of our executive officers (the term "executive officer" is defined as
our President, Secretary, Chief Financial Officer or Treasurer, any vice-
president in charge of a principal business function such as sales,
administration or finance, and any other person who performs similar policy
making functions for our company);
. each person who is a beneficial owner of more than 5% of any class of our
outstanding securities with voting rights; and
. the group comprised of our current directors, director-nominees and
executive officers.
This information contained in the following tables was given to us by the
individuals or entities named. We believe that each of these individuals or
entities has sole or shared investment and voting power with respect to the
securities indicated as beneficially owned by them, subject to community
property laws, where applicable, except where otherwise noted.
Class Of Stock
------------------------------------------------------------------------
Common/(2)/ Series `A' Preferred/(2)//(3)/
--------------------------------- ---------------------------------
Name/(1)/ Amount % Amount %
- --------------------------------------------- ---------------- -------------- -------------- -------------
George Liszicasz /(4)//(5)//(6)//(7)/........ 5,231,001/(8)/ 39.9% 0 --
Daniel C. Topolinsky /(4)//(5)//(6)/......... 85,000/(9)/ * 0 --
James R. Ehrets /(6)/........................ 74,500/(10)/ * 4,000/(11)/ *
John M. Woodbury, Jr. /(6)/.................. 28,409/(12)/ * 0 --
R. Dirk Stinson /(4)//(5)//(7)/.............. 3,396,730/(13)/ 25.9% 0 --
Lorne W. Carson /(4)//(5)/................... 45,500/(14)/ * 0 --
Dennis R. Hunter /(4)//(5)/.................. 361,266 2.8% 0 --
John A. Thomson /(4)//(5)/................... 0 * 0 --
Jon E.M. Jacoby /(4)//(5)//(7)/.............. 16,167/(15)/ * 64,666/(15)/ 8.1%
K. Rick Turner /(4)//(5)/.................... 3,580/(16)/ * 9,067/(17)/ 1.1%
SFD Investment LLC........................... 200,000 1.5% 800,000 100.0%
Stephens Group Inc. /(7)/.................... 266,667/(18)/ 2.0% 800,000 100.0%
Current directors, director-nominees
and executive officers, as a group........ 9,2655,653 69.1% 77,733 9.2%
- ------------------------
* Less than one-tenth of one percent.
(1) The business address of the persons comprising this table are: Messrs.
Liszicasz, Topolinsky, Ehrets, Woodbury and Thomson--c/o Energy Exploration
Technologies, 840--7th Avenue SW, Suite 750, Calgary, Alberta, Canada T2P
3G2; Mr. Stinson--14455 Ocean Blvd., Unit 1608, Miami Beach, Florida 33139;
Mr. Carson--855 2nd Street S.W., Suite 4500, Calgary, Alberta, Canada T2P
4K7; Mr. Hunter--4823 Bennett Valley Road, Santa Rosa, California 95405;
and Messrs. Jacoby and Turner and SFD Investment, LLC and Stephens Group,
Inc.--111 Center Street, Suite 2500, Little Rock, Arkansas 72201.
(2) The determination and calculation of beneficial ownership for purposes of
preparing this table is based upon the definition of beneficial ownership
in Rules 13d-3 and 13d-5 of the Exchange Act, pursuant to which a person is
deemed to beneficially own any securities over which he or she has either
investment or voting power. You should note that this method of
-19-
calculation differs from that used to calculate beneficial ownership for
other reports required under the Exchange Act, including section 16 of that
act which calculates beneficial ownership based upon pecuniary interests.
Pursuant to Rule 13d-3(d) of the Exchange Act, we have also included in
each person's share count any shares under any options, warrants, rights or
conversion privileges which are or may become exercisable by that person
within 60 days of the date of calculation for purposes of this proxy
statement. In computing each person's respective percentage ownership, the
shares attributable to his or her exercisable securities under the 60-day
inclusion rule are treated as being outstanding (i.e., are added to the
total outstanding shares of that class for computational purposes), while
exercisable securities attributable to the other executive officers,
directors or 5% shareholders under the 60-day inclusion rule are
disregarded. In computing the percentage ownership our company's officers
and directors as a group, all shares attributable to exercisable securities
held by the members of that group under the 60-day inclusion rule are
treated as being outstanding (i.e., are added to the total outstanding
shares of that class for computational purposes). The base number of
outstanding shares of common stock and series `A' preferred stock as of the
applicable date are 13,087,516 and 800,000 shares, respectively.
(3) Each share of series `A' preferred stock is convertible into one share of
common stock.
(4) Current director.
(5) Director-nominee.
(6) Executive officer.
(7) 5% shareholder.
(8) Includes 45,000 shares of common stock issuable upon exercise of free-
standing directors options granted to Mr. Liszicasz.
(9) Includes 85,000 shares of common stock issuable upon exercise of options
granted to Mr. Topolinsky under the 1999 Energy Exploration Technologies
Executive Option Plan.
(10) Includes 73,500 shares of common stock issuable upon exercise of options
granted to Mr. Ehrets under the 1999 Energy Exploration Technologies
Executive Option Plan, and 1,000 shares indirectly held by Mr. Ehrets
through membership in SFD Investment LLC.
(11) Reflects the pro rata portion of shares indirectly held by Mr. Ehrets
through membership in SFD Investment LLC.
(12) Includes 18,000 shares of common stock issuable upon exercise of options
granted to Mr. Woodbury under the 1998 Energy Exploration Technologies
Stock Plan.
(13) Includes 45,000 shares of common stock issuable upon exercise of free-
standing directors options granted to Mr. Stinson.
(14) Includes 45,000 shares of common stock issuable upon exercise of free-
standing options granted to Mr. Carson.
(15) Reflects the pro rata portion of shares indirectly held by Mr. Jacoby
through membership in SFD Investment LLC.
(16) Includes 2,267 shares, reflecting the pro rata portion of shares indirectly
held by Mr. Turner through membership in SFD Investment LLC, and 753
shares, reflecting the pro rata portion of shares indirectly held by Mr.
Turner through membership in SFD Investment II LLC.
(17) Reflects the pro rata portion of shares indirectly held by Mr. Turner
through membership in SFD Investment LLC.
(18) Includes 266,667 shares held by SFD Investment LLC, and 66,667 shares held
by SFD Investment II LLC. Stephens Group Inc. is the manager of each of
these limited liability companies, and in that capacity indirectly shares
holds or shares voting and investment control of the shares.
(19) Includes 800,000 shares held by SFD Investment LLC. The Stephens Group
Inc. is the manager of this limited liability company, and in that capacity
indirectly holds (or in certain circumstances shares with the members of
that company) voting and investment control of those shares.
-20-
Summary Of Compensation Paid To Our Named Executive Officers
The following table shows the compensation paid over the past three fiscal years
with respect to the following persons (each of whom is referred to in this proxy
statement as a "named executive officer"):
. NXT's Chief Executive Officer as of the end of our 1999 fiscal year;
. NXT's four other most highly compensated executive officers (if any), in
terms of salary and bonus, serving at the end of our 1999 fiscal year whose
annual salary and bonus exceeded $100,000 in the aggregate; and
. Up to two additional individuals (if any) who would be included amongst
NXT's four other most highly compensated executive officers but for the
fact that such individuals were not serving as an executive officer at the
end of our 1999 fiscal year.
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------- ------------------------------------
Securities Long
Named Executive Officer Underlying Term All
and Restricted Options Incentive Other
Principal Position Year Salary Bonus Other/(1)/ Stock & SARs/(2)/ Plan Compensation
- -------------------------- ---- -------- ----- ---------- ---------- ---------- -------- -------------
George Liszicasz 1999 147,693/(7)/ --- --- --- --- --- ---
Chief Executive 1998 120,000 --- --- --- --- --- ---
Officer 1997 76,250 --- --- --- 45,000/(11)/ --- ---
Daniel C. Topolinsky/(3)/ 1999 107,693/(8)/ --- --- --- 500,000/(11)/ --- ---
President & Chief 1998 --- --- --- --- --- --- ---
Operating Officer 1997 --- --- --- --- --- --- ---
James R. Ehrets/(4)/ 1999 80,770/(9)/ --- --- --- 500,000/(11)/ --- ---
Executive Vice President 1998 --- --- --- --- --- --- ---
Of Operations 1997 --- --- --- --- --- --- ---
John M. Woodbury, Jr./(5)/ 1999 133,843/(10)/ --- --- --- --- --- ---
Chief Financial Officer 1998 60,843/(10/ --- --- --- 70,000/(11)/ --- ---
& General Counsel 1997 --- --- --- --- --- --- ---
R. Dirk Stinson/(6)/ 1999 41,409 --- --- --- --- --- 92,000
Consultant & Prior 1998 120,000 --- --- --- --- --- ---
Executive Officer 1997 76,250 --- --- --- 45,000/(11)/ --- ---
- ---------------------------
(1) Includes, among other things, perquisites and other personal benefits,
securities or property which, in the aggregate, exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported for that
fiscal year.
(2) No stock appreciation rights were granted in fiscal 1997 through 1999.
(3) Mr. Topolinsky was appointed President and Chief Operating Officer on May
1, 1999. Table includes salary paid after that date.
(4) Mr. Ehrets was appointed Executive Vice President of Operations on May 1,
1999. Table includes salary and consulting fees paid after that date.
(5) Mr. Woodbury was appointed Chief Financial Officer and General Counsel on
July 8, 1998. Table includes salary paid after that date.
(6) Mr. Stinson resigned his position as President on May 1, 1999 and became a
consultant to NXT contemporaneously with the appointment of Mr. Topolinsky
as President on that date. Table includes salary paid through May 1, 1999
as compensation, and consulting fees paid after May 1, 1999 as other
compensation.
(7) U.S. $40,000 for January 1, 1999 through April 30, 1999, and Cdn. $160,000
from May 1, 1999 through December 31, 1999.
(8) Cdn. $160,000.
(9) Cdn. $120,000.
(10) Cdn. $198,852 in fiscal 1999, and Cdn. $90,128 in fiscal 1998.
(11) Options granted to the named executive officer in his capacity as an
executive officer or director of NXT.
-21-
Summary Of Stock Options & Stock Appreciation Rights Granted
To Our Named Executive Officers
The following table provides certain information with respect to individual
grants during the 1999 fiscal year to each of our named executive officers of
options to purchase our common stock and stock appreciation rights relating to
our common stock, and the present and future value of the common shares
underlying those grants:
Total Value of Common Shares
Individual Grants of Options or SARs Underlying Options or SARs
----------------------------------------------------------------- --------------------------------------
Potential Realizable
As FMV of Value at Assumed
Percen-tage Under- Annual Rates of
of Exercise or lying FMV Stock Price
Common Grants Base Price per Common at Appreciation
Named Shares Under- to All Under- Share Expira- Grant for
Executive lying Employ- lying Common at Grant tion Date/(1)/ Option Term/(2)/
--------- -----------------------
Officer Grant/(3)/ ees/(4)/ Share Date Date 0% 5% 10%
- ------------------------ ------------- ----------- --------------- ---------- ------- -------- --------- ---------
George Liszicasz........ --- --- --- --- --- --- --- ---
Daniel C. Topolinsky.... 500,000 (5) 39.2% $ 14(6) $15 2005-9 $300,000(8) 3,703,601(8) 5,456,708(8)
James R. Ehrets......... 500,000 (5) 39.2% $14-15(7) $15 2005-9 $273,336(8) 3,676,937(8) 5,430,044(8)
John M. Woodbury........ --- --- --- --- --- --- --- ---
R. Dirk Stinson......... --- --- --- --- --- --- --- ---
- ------------------------
(1) The fair market value of the options as of the date of grant reflect the
difference between (i) the aggregate fair market value of the common shares
underlying the option as of the date of grant based upon the trading price
for our common stock as of that date as quoted on the NASD Electronic
Bulletin Board, and (ii) the aggregate exercise prices for the options.
(2) The potential realizable dollar value of the options reflect the difference
between (i) the aggregate fair market value of the common shares underlying
the options as of the date of grant based upon the trading price for our
common stock as of that date as quoted on the NASD Electronic Bulletin
Board, as adjusted to reflect hypothetical 5% and 10% annual growth rates
{simple interest} from the date of grant until the expiration dates for the
options, and (ii) the aggregate exercise prices for the options. The 5%
and 10% are hypothetical growth rates prescribed by the Securities and
Exchange Commission for illustration purposes only, and are not a forecast
or prediction as to future stock prices. The actual amount that any named
executive officer may realize will depend on various factors on the date
the options are exercised, so there is no assurance that the value realized
by any named executive officer will be at or near the value set forth above
in the chart.
(3) No SARs were granted to any named executive officer in fiscal 1999.
(4) The numerator in calculating this percentage includes options granted to
each named executive officer in fiscal 1999 in his capacity as an officer
(employee) and, if applicable, as a director. The denominator in
calculating this percentage is 1,275,000, which represents options granted
to all of the employees of NXT during fiscal 1999, including the named
executive officers, including, if applicable, grants of options
attributable to their capacities as directors.
(5) Represents options to purchase common stock granted as an inducement for
employment with NXT. See "Employment Agreements With Executive Officers"
below.
(6) The exercise price for 300,000 of these options were fixed at $14 per
share, representing the fair market value of the common shares underlying
the options as of the date of NXT's employment proposal based upon the
trading price for our common stock as of that date as quoted on the NASD
Electronic Bulletin Board. The exercise price for the remaining 200,000
shares will be fixed at the closing price for our common stock on April 30,
2001.
(7) The exercise price for 268,336 of these options were fixed at $14 per
share, representing the fair market value of the common shares underlying
the options as of the date of NXT's employment proposal based upon the
trading price for our common stock as of that date as quoted on the NASD
Electronic Bulletin Board. The exercise price for 26,664 of these options
were fixed at $15 per share, representing the fair market value of the
common shares underlying the options as of the date of commencement of
employment, which represents the effective date of grant for purposes of
preparing this chart. The exercise price for the remaining 200,000 shares
will be fixed at the closing price for our common stock on April 30, 2001.
(8) For purposes of calculating the fair market value of the options as of the
date grant and their potential realizable dollar value, the 200,000 options
with an exercise price to be fixed as of April 30, 2001 are deemed to have
an exercise price of $15 per share.
-22-
Summary Of Stock Options & Stock Appreciation Rights Exercised By Our Named
Executive Officers And Year End Balances
The following table provides certain information with respect to each of our
named executive officers concerning any options to purchase common stock or
stock appreciation rights they may have exercised in fiscal 1999, and the number
and value of their unexercised options or stock appreciation rights as of
December 31, 1999:
Unexercised In-The-Money Options and SARs at
December 31, 1999
----------------------------------------------------
Shares Acquired On Number /(1)/ Value /(1)//(3)/
Exercise /(1)/ Value (Exercisable/ (Exercisable/
Named Executive Officer Realized /(2)/ Unexercisable) Unexercisable)
- ------------------------------- ------------------ -------------- ----------------------- --------------------------
George Liszicasz............... --- --- 45,000 / 0/(4)/ $866,250 / $ 0
Daniel C. Topolinsky........... --- --- 0 / 300,000/(5)/ $ 0 / $3,375,000
James R. Ehrets................ --- --- 0 / 300,000/(5)/ $ 0 / $3,348,336
John M. Woodbury, Jr........... --- --- 10,000 / 60,000/(5)/ 10,000 / $1,020,000
R. Dirk Stinson................ --- --- 45,000 / 0/(4)/ $866,250 / $ 0
- -------------------
(1) No stock appreciation rights were exercised by any of our named executive
officers in fiscal 1999, nor did any of our named executive officers hold
any unexercised stock appreciation rights at December 31, 1999.
(2) The dollar amount shown represents the difference between the fair market
value of our common stock underlying the options as of the date of exercise
and the option exercise price.
(3) The dollar value provided represents the cumulative difference in the fair
market value of our common stock underlying all in-the-money options as of
December 31, 1999 and the exercise prices for those options. Options are
considered "in-the-money" if the fair market value of the underlying common
shares as of the last trading day in fiscal 1999 exceeds the exercise price
of those options. The fair market value of NXT common stock for purposes
of this calculation is $25.25, based upon the closing price for our common
stock as quoted on the NASD Electronic Bulletin Board on December 31, 1999,
the last trading day in fiscal 1999.
(4) Stock options granted in connection with serving on our board of directors.
See "Compensation of Directors" above for a summary of the terms of these
options.
(5) Stock options granted as an inducement for employment with NXT. See
"Employment Agreements With Executive Officers" below for a summary of the
terms of these options
Employment Agreements With Our Executive Officers
Mr. Liszicasz is employed by NXT as our Chief Executive Officer under a five-
year employment agreement entered into on April 1, 1997 which contains the
following principal compensatory provisions:
. An initial base salary of $7,000 per month, with an automatic increase to
$10,000 per month effective January 1, 1998, and thereafter subject to
annual increases as determined by our board of directors, but at least 5%
on each anniversary date. Effective May 1, 1999, Mr. Liszicasz's monthly
base salary was increased to Cdn. $20,000 by our board of directors, in
order to be consistent with the monthly salaries to be paid to our newly
hired President and Vice President of Operations. Mr. Liszicasz's current
monthly base salary after taking into consideration his most recent 5%
automatic increase on May 1, 2000 is Cdn. $252,000 (U.S. $170,201).
. An annual bonus equal to 5% of NXT's "net income after taxes" in the event
NXT earns more than $5 million in net income after taxes in any fiscal
year.
-23-
. An annual performance bonus, as determined in the sole discretion of our
board of directors.
Mr. Topolinsky is employed by NXT as our President and Chief Operating Officer,
and Mr. Ehrets as our Executive Vice President of Operations, under virtually
identical five-year employment agreements entered into on May 1, 1999 which
contain the following principal compensatory provisions:
. An initial monthly base salary of Cdn. $20,000, subject to annual increases
as determined by our board of directors, but at least 5% on each
anniversary date. Messrs. Topolinsky's and Ehret's current monthly base
salaries after taking into consideration their most recent 5% automatic
increase on May 1, 2000 is Cdn. $252,000 (U.S. $170,201).
. An annual performance bonus, as determined in the sole discretion of our
board of directors.
. The grant of options to each of Messrs. Topolinsky and Ehrets entitling
them to purchase 500,000 unregistered shares of our common stock. The first
300,000 options granted to each of these executive officers vest
incrementally over a period of 4 years of continuous employment, with the
first increment of 85,000 shares vesting one year from the date of
employment, the second increment of 90,000 shares vesting two years from
the date of employment, the third increment of 95,000 shares vesting three
years from the date of employment, and the last increment of 30,000 shares
vesting four years from the date of employment. The purchase price per
share for these options is $14 per share, which reflects the trading price
for our common stock as of the date negotiations were entered into
(although Mr. Ehrets requested a $15 per share exercise price for 33,330 of
his options for U.S. income tax purposes). The remaining 200,000 options
granted to each of these executive officers vest incrementally over a
period of five years of continuous employment, with the first increment of
75,000 shares vesting four years from the date of employment, and the last
increment of 125,000 shares vesting five years from the date of employment.
The purchase price per share for these options will be the closing price
for our common stock on April 30, 2001. The noted options also fully vest
in the event of a "change in control" or in the event the executive
officer's employment is terminated by NXT for "cause" or by the executive
officer without "good reason." All of the options lapse five years
following the date of vesting, unless the executive officer's employment is
terminated by NXT for "good cause" or by the executive officer without
"good reason," in which case they lapse two years from date of termination.
These options were subsequently issued under our 1999 Energy Exploration
Technologies Executive Stock Plan.
Mr. Woodbury is employed by NXT as our Chief Financial Officer (Treasurer) and
Secretary under a two-year employment agreement entered into on July 8, 1998.
Mr. Woodbury is also our General Counsel. This employment agreement contains
the following principal compensatory provisions:
. A monthly base salary of Cdn. $16,667, subject to annual increases as
determined by our board of directors, but at least 5% on each anniversary
date. Mr. Woodbury's current monthly base salary after taking into
consideration his most recent 5% automatic increase on July 8, 2000 is Cdn.
$220,500 (U.S. $148,926).
. An annual performance bonus, as determined in the sole discretion of our
board of directors.
-24-
. A loan to facilitate the purchase of a residence in Calgary, to be repaid
in five years, and with interest thereon to be repaid periodically in the
interim at a fixed rate of interest to be determined based upon NXT's cost
of funds (6.44% per annum). Pursuant to this provision, NXT advanced Mr.
Woodbury the sum of Cdn. $54,756 (U.S. $35,760). Payment of the loan is
accelerated to ninety days should NXT terminate Mr. Woodbury for "cause"
(as that term is defined below) or should Mr. Woodbury terminate his
employment without "good reason" (as that term is defined below).
NXT also granted to Mr. Woodbury, in connection with his prospective employment,
options under our 1997 Energy Exploration Technologies Stock Plan to purchase
70,000 unregistered shares of our common stock. The exercise price for these
options was subsequently fixed at $8.25 per share, which price was equal to the
trading price of the common stock on the date of approval of the grant by the
compensation committee. These options vest 10,000 shares upon the first and
second anniversary dates, respectively, of the commencement of Mr. Woodbury's
employment (July 9, 1998), and 16,667, 16,666 and 16,667 shares upon the third
through fifth anniversary dates, respectively. These options also fully vest in
the event of a "change in control" or in the event Mr. Woodbury's employment is
terminated by NXT without "good cause" or by Mr. Woodbury without "good reason."
All of the options lapse five years following the date of vesting, unless Mr.
Woodbury's employment is terminated by NXT for "good cause" or by Mr. Woodbury
without "good reason," in which case they lapse two years from date of
termination.
At the conclusion of their respective initial terms, each of the employment
agreements for Messrs. Liszicasz, Topolinsky, Ehrets and Woodbury renew
automatically for successive one year terms, unless NXT or the executive officer
elects by a written, 60-day notice not to renew; or the agreement is terminated
earlier in accordance with its terms.
Each of the employment agreements for Messrs. Liszicasz, Topolinsky, Ehrets and
Woodbury provides for early termination in the case of any of the following
events as defined in their respective employment agreements:
. death or disability;
. a "change in control" of NXT;
. termination of employment by NXT for "cause;" or
. termination of employment by the executive officer for "good reason."
Under the employment agreements a "change in control" means any of the
following:
. an acquisition whereby immediately after such acquisition, a person holds
beneficial ownership of more than 50% of the total combined voting power of
NXT's then outstanding voting securities;
. if in any period of three consecutive years after the date of the
employment agreements, the then incumbent members of our board of directors
cease to constitute a majority of the board for reasons other than
voluntary resignation, refusal by one or more members of our board of
directors to stand for election, or removal of one or more board member for
good cause; or
-25-
. our board of directors or shareholders approve a merger, consolidation or
reorganization of NXT; the complete liquidation or dissolution of NXT; or
the agreement for the sale or other disposition of all or substantially all
of NXT's assets (a "sale").
In general, where a termination is for death, disability, "cause" or by the
executive officer without "good reason," the executive officer's compensation
allowances and benefits will accrue only through the effective date of the
termination. However, and again in general, where a termination is due to a
"change in control," without "cause," or by the executive officer for "good
reason," the employment agreements provide that NXT will pay compensation and
certain allowances and benefits to the executive officer through the end of the
then applicable term, but not to exceed 18 months in the case of Messrs.
Topolinsky and Ehrets.
As noted above, if termination is attributable to a change in control, the
employment agreements provide that NXT will pay compensation and certain
allowances and benefits through the end of the then applicable term. In
addition, in the case of Mr. Liszicasz, if the termination is directly or
indirectly attributable to a "sale," and the sale is approved by a
"disinterested majority" of our board of directors, then NXT will pay Mr.
Liszicasz an amount equal to 2% of the total consideration received by NXT in
connection with the Sale.
On April 1, 1997, NXT entered into a five-year employment agreement with Mr. R.
Dirk Stinson, our prior President through May 1, 1999, on terms identical to
those contained in Mr. Liszicasz's employment agreement with NXT. On May 1,
1999, in connection with our employment of Mr. Daniel C. Topolinsky as
President, Mr. Stinson became a consultant to NXT for strategic planning issues,
at which time the provisions of Mr. Stinson's employment agreement became fully
vested (except for the provision of an automobile and cellular telephone
allowance and any right to performance bonuses, which Mr. Stinson waived), and
NXT entered into a supplementary non-exclusive consulting agreement with Mr.
Stinson through December 31, 2002. The principal continuing compensatory
provisions under these agreements are as follows:
. Mr. Stinson will continue to receive an amount equal to his monthly base
salary during the remaining term of the employment agreement (currently
$11,025), subject to 5% annual increases as originally provided in the
agreement.
. Mr. Stinson will continue to be entitled to receive an annual bonus equal
to 5% of our "net income" (as defined in the employment agreement) in the
event NXT earns more than $5 million in net income through the remaining
term of the agreement, plus one additional year.
. Mr. Stinson will continue to be entitled to receive 2% of the total
consideration received by NXT in connection with any Sale during the
remaining term of the employment agreement.
. Mr. Stinson will be paid $1,000 per month for the provision of consulting
services through the term of his consulting agreement with NXT.
-26-
Report Of Our Compensation Committee On Executive Compensation
The following is the report from the compensation committee of our board of
directors, which is comprised of two of NXT's independent directors. The
compensation committee reviews and makes recommendations with respect to
compensation of NXT's executive officers and directors, and also administers
certain elements of our various stock plans. This report addresses:
. our compensation policy as it relates to NXT's executive officers and key
professionals; and
. the rationale for compensation paid and prospectively payable to NXT's
principal executive officer for fiscal 1999, Mr. George Liszicasz, our
Chief Executive Officer, under his employment agreement.
Compensation Committee Report
Compensation Policies
For NXT to progress beyond the development stage and to maximize the hydrocarbon
revenue-generation potential afforded by our SFD technology, it is necessary for
NXT to attract superior executives and key professionals from both the oil & gas
exploration and technology sections with the level of skill, knowledge, effort
and responsibility necessary to address the issues and strategies unique to NXT
and its business plan and technology. These personnel include:
. the electrical, mechanical and computer scientists, engineers and
programmers that are necessary to continue the development of our SFD
technology, including data acquisition and data processing functions, and
. the geologists, geophysicists, geotechnicians, pilots and other operational
support personnel that are necessary to collect and interpret SFD data and
evaluate oil & gas exploration opportunities identified using our SFD
technology.
In order to attract and retain qualified executives and key professionals, NXT's
executive and professional compensation program is designed to meet the
following objectives:
. to reward individual results and to induce loyalty in the short and
intermediate term by recognizing performance through base salary and, once
we have revenues, annual bonuses; and
. for the longer term, to reward individual results, induce long-term
loyalty, and link the interests of these executives and key professionals
with the interests of our shareholders by encouraging stock ownership in
NXT through the grant of options tied to continued employment.
The initial amount of monthly base salary paid to executive officers and key
professionals is the amount, as determined by the compensation committee as
necessary to attract and retain executives with the requisite superior abilities
to both perform their executive and professional functions and, given the
developing nature of our business and our desire to maintain a lean staffing
profile, to provide cross-support for our other executives and professionals.
The determination of which executive officers and key professionals should
receive a bonus and/or grant of stock options, and what the amount of the bonus
and/or terms of the grant of stock options should be, is based
-27-
upon a subjective analysis of the executive's or key professional's level of
responsibility, performance of duties, and contribution toward NXT's success,
and takes into consideration other types and amounts of performance based
compensation paid to them. All stock options granted to date are subject to
vesting conditions based on continued employment, which the compensation
committee believes creates a more productive workforce by meeting the following
objectives:
. acting as an inducement for long-term employment with NXT, thereby lending
stability to our employee base and preserving the confidentiality of our
proprietary information and systems; and
. encouraging longer-term productivity by our employees as they see their
efforts translate into greater share value.
Our practice in determining compensation for executive officers is for our
management and compensation committee to consult, and then for our compensation
committee to make a recommendation to the board of directors for approval. With
respect to employees other than executive officers, compensation is ordinarily
determined based upon the recommendation of management subject, where
appropriate, to consultation with our compensation committee and/or board of
directors.
Compensation for Chief Executive Officer
Mr. George Liszicasz, our Chief Executive Officer, is entitled to the following
compensation under his five-year employment agreement with NXT entered into on
April 1, 1997:
. a current annual base salary of Cdn. $252,000 (U.S. $170,201), subject to
additional annual increases as determined by our board of directors, but at
least 5% on each anniversary date of the agreement; and
. an annual bonus equal to 5% of NXT's "net income after taxes" in the event
NXT earns more than $5 million in net income after taxes in any fiscal
year; and
. an annual performance bonus, as determined in the sole discretion of our
board of directors.
This compensation arrangement, which was fixed during the early development
stage of our company, was predicated on Mr. Liszicasz's unique and critical role
in starting and developing NXT. Specifically, Mr. Liszicasz founded and
assisted in capitalizing NXT, and is also the inventor of our SFD technology as
well as the developer of the methodologies used to interpret SFD data. The
services of Mr. Liszicasz was critical to NXT's development during our
development stage, and the loss of his service during that stage would have been
critical for NXT at that time.
The annual base salary payable to Mr. Liszicasz at the time he entered into his
employment agreement ($84,000) was considerably lower than the amount our board
of directors believed at that time that he should receive based upon his
critical role in the development of our company, technology and business. This
amount was primarily fixed based upon NXT's financial condition at such time, as
well as Mr. Liszicasz's desire that a significant portion of their compensation
be tied to our future financial performance. For that reason Mr. Liszicasz
agreed to accept a significantly lower monthly base salary in combination with
an annual bonus equal to 5% of our net income after taxes should we earn more
than $5 million in net income after taxes in any fiscal year, which our board of
directors at that time believed to be reasonable and appropriate based upon the
considerations
-28-
noted above. Although Mr. Liszicasz's annual base salary has since been
increased to Cdn. $252,000 (U.S. $170,201), we still believe this amount to be
considerably lower than the amount Mr. Liszicasz should receive based upon his
current role in the development of our company, technology and business, and
believe the net income override remains a reasonable element of his compensation
package.
Section 162(m) of the Internal Revenue Code
The compensation committee has not formulated a policy in qualifying
compensation paid to executive officers for deductibility under Section 162(m)
of the Internal Revenue Code, and does not foresee the necessity of doing so in
for at least the upcoming year. Should limitations on the deductibility of
compensation become a material issue, the compensation committee will, at such
time, determine whether such a policy should be implemented, either in general
or with respect to specific executives.
The Compensation Committee
Lorne W. Carson Dennis R. Hunter
Transactions With Our Management And Principal Shareholders
On May 15,1999, NXT sold 190,066 and 66,667 unregistered shares of our common
stock to Mr. Dennis R. Hunter and SFD Investment II, LLC, respectively, for
gross proceeds of $2,850,990 and $1,000,005, respectively. These sales were
effectuated as part of a $6,000,000 private placement of 400,000 unregistered
shares of our common stock at a price of $15 per share. This offering price
represented a $3 discount from the public trading price of our common stock at
the time of the offering, which a disinterested majority of our board of
directors deemed fair to NXT based upon the restricted nature and overall amount
of the securities sold. Mr. Hunter is one of our directors, while SFD
Investment II, LLC, is an affiliate, through Stephens Group, Inc., of SFD
Investment LLC, which holds all our outstanding shares of series `A' preferred
stock. Mr. K. Rick Turner, one of our directors, holds a 1.13% membership
interest in SFD Investment II, LLC.
On May 1, 1999, NXT entered into employment agreements with Messrs. Topolinsky
and Ehrets and, in connection with these transactions, granted 500,000 options
to purchase our common stock to each of Messrs. Topolinsky and Ehrets. Also on
May 1, 1999, NXT entered into a consulting agreement with Mr. R. Dirk Stinson,
who is a director, director-nominee and principal shareholder of our company, in
connection with his relinquishment of his position as President in conjunction
with Mr. Topolinsky's appointment to that position. For a description of these
transactions see that section of this proxy statement captioned "Employment
Agreements With Executive Officers."
Mr. Lorne W. Carson, a current director and a director-nominee, is a partner of
Bennett Jones, a law firm located in Calgary, Alberta, Canada, which rendered
legal services to NXT during fiscal 1999 in the amount of Cdn. $50,896 (U.S.
$34,257).
On February 9, 2000, we loaned the sum of Cdn $250,000 (U.S. $173,491) to Mr.
George Liszicasz, who is our Chief Executive Officer and who is also a director,
director-nominee and principal shareholder of our company. This principal
amount of this loan, which was extended pursuant to an unsecured promissory note
providing for interest at the rate of 5 1/2% per annum, was repaid in full on
May 31, 2000.
-29-
Stock Performance Graph
Set forth below is a line graph which compares the percentage change in the
cumulative total shareholder return of our common stock against the cumulative
total shareholder return of the following indexes selected by NXT:
. The Standard & Poors SmallCap 600 Index, which covers a broad cross-section
of public companies with relatively smaller market capitalizations listed
on the New York Stock Exchange, American Stock Exchange and Nasdaq Market;
. The Standard & Poors SmallCap Oil & Gas Exploration And Producers Index,
which is comprised of public companies on the Standard & Poors SmallCap 600
Index who are principally engaged in oil & gas exploration and production.
These companies, whom we refer to as our "exploration" peer group, are
comprised of Barrett Resources Corporation, Cabot Oil & Gas Corporation,
Cross Timbers Oil Company, Louis Dreyfus Natural Gas Corp., Newfield
Exploration Company, Plains Resources Inc., Pogo Producing Company,
Remington Oil & Gas Corporation; St. Mary Land & Exploration Company, Stone
Energy Corporation and Vintage Petroleum, Inc.
. An industry peer group index comprised of public companies selected by NXT
who are principally engaged in the seismic data service business and who
are listed on the New York Stock Exchange, American Stock Exchange or
Nasdaq Market. These companies, whom we refer to as our "seismic" peer
group, are comprised of Petroleum Geo-Services A.S.A., Seitel, Inc.,
Veritas DGC Inc., Compagnie Generale de Geophysique, S.A., Dawson
Geophysical Company, Eagle Geophysical, Inc., 3DX Technologies Inc. and
Venture Seismic Ltd.
The graph assumes an initial investment of $100 in our common stock and each of
the indexes on January 24, 1996, the effective date of commencement of trading
following the reverse acquisition by which NXT acquired our current business,
and further assumes reinvestment of any dividends. You should note the
comparative indexes are comprised of companies with established operating
histories and, in most cases, significantly larger resources and market
capitalizations than NXT.
-30-
[TOTAL SHAREHOLDER RETURN GRAPH APPEARS HERE]
Index 1/20/96 12/31/96 12/31/97 12/31/98 12/31/99
- --------------------------------------------- ------- -------- -------- -------- --------
NXT.......................................... $100 $165 $395 $760 $1,010
S&P SmallCap 600............................. $100 $123 $155 $153 $ 172
Exploration Peer Group....................... $100 $178 $160 $ 97 $ 121
Seismic Peer Group........................... $100 $173 $264 $122 $ 125
The historical stock performance depicted on the graph is not necessarily
indicative of future performance. NXT will not make or endorse any predictions
as to future stock performance or dividends. The foregoing price performance
comparisons 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 or Securities Exchange Act of 1934, except to the
extent that NXT specifically incorporates this graph by reference, and shall not
otherwise be deemed filed under those acts.
Compliance With Section 16(a) Of The Securities And Exchange Act
Section 16(a) of the Securities and Exchange Act of 1934 requires any person who
is a director or executive officer of NXT, or who beneficially holds more than
10% of any class of our securities which have been registered with the
Securities and Exchange Commission, to file reports of initial ownership and
changes in ownership with the Securities and Exchange Commission. These persons
are also required under the regulations of the Securities and Exchange
Commission to furnish us with copies of all Section 16(a) reports they file.
-31-
To our knowledge, based solely on our review of the copies of the Section 16(a)
reports furnished to us and written representations to us that no other reports
were required, all Section 16(a) filing requirements applicable to our
directors, executive officers, and holders of more than 10% of any class of our
registered securities were timely complied except that Messrs. Topolinsky and
Ehrets did not timely file Form 3s relating to their initial holdings in NXT
upon becoming executive officers and, in Mr. Topolinsky's case, a director, of
NXT.
-- . -- . --
By Order of the Board of Directors
John M. Woodbury, Jr.,
Chief Financial Officer, General Counsel and
Secretary
Calgary, Alberta, Canada
August 1, 2000
-32-
Proxy For Holders Of Common Stock
Energy Exploration Technologies
Annual Meeting of Shareholders -- September 14, 2000
The undersigned hereby appoints GEORGE LISZICASZ and DANIEL C. TOPOLINSKY and
each of them (with full power to act without the other) the true and lawful
proxies of the undersigned, each having full power to substitute, to represent
the undersigned and to vote all shares of common stock, par value $0.001 (the
"Common Stock") of ENERGY EXPLORATION TECHNOLOGIES, a Nevada corporation
("NXT"), which the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of NXT (the "Annual Meeting") to be held
at the Sandman Hotel, 888 7/th/ Avenue SW, Calgary, Alberta, Canada T2P 3G2, on
Thursday, September 14, 2000, at the hour of 10:00 a.m., Mountain Standard Time,
or any postponed or adjourned meetings thereof.
1. Election Of Common Directors
The election of the following nominees in the Notice of Annual Meeting of
Shareholders and Proxy Statement as the six Common Directors of NXT, with
those directors to serve until the Annual Meeting of Shareholders of NXT to
be held in the year 2000:
George Liszicasz Daniel C. Topolinsky R. Dirk Stinson
Lorne W. Carson Dennis R. Hunter John A. Thomson
For [_] Withhold [_]
You may withhold authority to vote for the election of any of the director
nominees by lining through his name above.
NXT's Board of Directors recommends that you vote "FOR" the election of
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Messrs. Liszicasz, Topolinsky, Stinson, Carson, Hunter and Thomson to serve
as the six Common Directors on NXT's Board of Directors. Unless specific
direction is given to withhold authority for the election of all of the
aforesaid director nominees or any of them, the shares of Common Stock
represented by this proxy shall be voted "FOR" the election of each of the
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aforesaid director nominees (including where this proxy has been duly signed
but no specific voting instructions have been given).
2. Ratification Of Independent Auditors
Ratification of the appointment of Arthur Andersen LLP as NXT's independent
auditors for the fiscal year ended December 31, 2000.
For [_] Against [_] Abstain [_]
NXT's Board of Directors recommends that you vote "FOR" the ratification of
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Arthur Andersen LLP as NXT's independent auditors for the fiscal year ended
December 31, 2000. Unless specific direction is given to vote against or to
withhold authority for the ratification of this proposal, the shares of
Common Stock represented by this proxy will be voted "FOR" that proposal
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(including where this proxy has been duly signed but no specific voting
instructions have been given).
3. Other Matters
All other matters that may properly be brought before the Annual Meeting
for vote by the holders of Common Stock, or any postponements or
adjournments thereof, as to which the undersigned hereby confers
discretionary authority upon said proxies.
For [_] Withhold [_]
NXT's Board of Directors recommends that you vote "FOR" the proposal.
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Unless specific direction is given to withhold authority for the
aforesaid proposal, the shares of Common Stock represented by this proxy
will be voted by the proxy holders in their discretion.
All other proxies heretofore given by the undersigned to vote shares of Common
Stock which the undersigned would be entitled to vote if personally present at
the Annual Meeting or any postponement or adjournment thereof are hereby
expressly revoked. This proxy may be revoked at any time prior to the voting
hereof.
The undersigned acknowledges receipt of a copy of the Notice of Annual Meeting
of Shareholders and accompanying Proxy Statement dated August 1, 2000 relating
to the Annual Meeting.
NOTE: Please date this proxy and sign it exactly as your name or names appear
on your shares. If signing as an attorney, executor, administrator, guardian or
trustee, please give full title as such. If a corporation, please sign full
corporate name by duly authorized officer or officers, affix corporate seal and
attach a certified copy of resolution or bylaws evidencing authority.
________________________
(Date)
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(Signature)
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(Signature)
Proxy For Holders Of Series `A' Preferred Stock
Energy Exploration Technologies
Annual Meeting of Shareholders -- September 14, 2000
The undersigned hereby appoints GEORGE LISZICASZ and DANIEL C. TOPOLINSKY and
each of them (with full power to act without the other) the true and lawful
proxies of the undersigned, each having full power to substitute, to represent
the undersigned and to vote all shares of series `A' preferred stock, par value
$0.001 (the "Preferred Stock") of ENERGY EXPLORATION TECHNOLOGIES, a Nevada
corporation ("NXT"), which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of NXT (the "Annual
Meeting") to be held at the Sandman Hotel, 888 7/th/ Avenue SW, Calgary,
Alberta, Canada T2P 3G2, on Thursday, September 14, 2000, at the hour of 10:00
a.m., Mountain Standard Time, or any postponed or adjourned meetings thereof.
1. Election Of Series `A' Directors
The election of the following nominees in the Notice of Annual Meeting of
Shareholders and Proxy Statement as the two Series `A' Directors of NXT, with
those directors to serve until the Annual Meeting of Shareholders of NXT to
be held in the year 2000:
Jon E.M. Jacoby K. Rick Turner
For [_] Withhold [_]
You may withhold authority to vote for the election of any of the director
nominees by lining through his name above.
NXT's Board of Directors recommends that you vote "FOR" the election of
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Messrs. Jacoby and Turner to serve as the two Series `A' Directors on NXT's
Board of Directors. Unless specific direction is given to withhold authority
for the election of all of the aforesaid director nominees or any of them,
the shares of Preferred Stock represented by this proxy shall be voted "FOR"
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the election of each of the aforesaid director nominees (including where this
proxy has been duly signed but no specific voting instructions have been
given).
2. Other Matters
All other matters that may properly be brought before the Annual Meeting for
vote by the holders of Preferred Stock, or any postponements or adjournments
thereof, as to which the undersigned hereby confers discretionary authority
upon said proxies.
For [_] Withhold [_]
NXT's Board of Directors recommends that you vote "FOR" the proposal. Unless
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specific direction is given to withhold authority for the aforesaid proposal,
the shares of Preferred Stock represented by this proxy will be voted by the
proxy holders in their discretion.
All other proxies heretofore given by the undersigned to vote shares of
Preferred Stock which the undersigned would be entitled to vote if personally
present at the Annual Meeting or any postponement or adjournment thereof are
hereby expressly revoked. This proxy may be revoked at any time prior to the
voting hereof.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting of Shareholders and accompanying Proxy Statement dated August 1, 2000
relating to the Annual Meeting.
NOTE: Please date this proxy and sign it exactly as your name or names appear
on your shares. If signing as an attorney, executor, administrator, guardian
or trustee, please give full title as such. If a corporation, please sign
full corporate name by duly authorized officer or officers, affix corporate
seal and attach a certified copy of resolution or bylaws evidencing
authority.
________________________
(Date)
_________________________
(Signature)
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(Signature)