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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
AMERICAN ECOLOGY CORPORATION
(Name of Registrant as Specified In Its Charter)
______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party: L. Gary Davis
------------------------------------------------------------------------
4) Date Filed:
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AMERICAN ECOLOGY CORPORATION
805 W. IDAHO, SUITE 200
[LOGO] BOISE, IDAHO 83702-8916 [LOGO]
208-331-8400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME 10:00 a.m. Central Standard Time on
Thursday, May 24, 2001
PLACE The Standard Club
Chicago Room, 4th Floor
320 S. Plymouth Court
Chicago, Illinois 60604
(1) To elect seven directors of the Board of
Directors to serve a one year term.
(2) To amend the Company's 1992 Director's
Stock Option Plan to increase the shares
available for grant from 650,000 to
1,000,000.
(3) To approve a 100:1 reverse stock split
followed by a 1:100 forward stock split
of the Company's voting common stock.
(4) To ratify the selection of Balukoff,
Lindstrom & Co., P.A. as the Company's
independent auditors for the Company's
fiscal year ending December 31, 2001.
(5) To transact other business as may
properly come before the meeting or any
adjournments or postponements thereof.
RECORD DATE You are entitled to vote if you were a
stockholder at the close of business on March
30, 2001. A list of shareholders will be
available for inspection for a period of 10
days prior to the meeting at the Company's
principal office identified above and will
also be available for inspection at the
meeting.
VOTING BY PROXY Please submit a proxy as soon as possible so
that your shares can be voted at the meeting
in accordance with your instructions. For
specific instructions on voting, please refer
to the instructions on the proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
JACK K. LEMLEY
Chairman of the Board,
Chief Executive Officer and President
Boise, Idaho
April 12, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (POSTAGE IS PREPAID IF MAILED
IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING AND REVOKE YOUR
PROXY. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU WILL NOT BE
PERMITTED TO VOTE IN PERSON AT THE MEETING UNLESS YOU FIRST OBTAIN A PROXY
ISSUED IN YOUR NAME FROM THE RECORD HOLDER.
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AMERICAN ECOLOGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2001
PROXY STATEMENT
-------------------
This Proxy Statement relates to the Annual Meeting of Stockholders of American
Ecology Corporation, (the "Company"), a Delaware corporation, to be held on May
24, 2001, at 10:00 a.m., at the Standard Club in the Chicago Room 4th Floor, 320
S. Plymouth Court, Chicago, Illinois 60604, including any adjournments or
postponements thereof (the "Meeting"). This Proxy Statement, the accompanying
proxy card and the Company's Annual Report are first being mailed to
stockholders of the Company on or about April 16, 2001. THEY ARE FURNISHED IN
CONNECTION WITH THE SOLICITATION BY THE COMPANY OF PROXIES FROM THE HOLDERS OF
THE COMPANY'S COMMON STOCK, PAR VALUE $.01 PER SHARE ("COMMON STOCK"), FOR USE
AT THE MEETING. Holders of preferred stock of the Company do not have voting
rights with respect to the matters to be considered at the meeting.
The principal solicitation of proxies is being made by mail; however, additional
solicitation may be made by telephone, facsimile or personal visits by
directors, officers and regular employees of the Company and its subsidiaries,
who will not receive additional compensation. The Company has retained Mellon
Investment Services LLC, to aid in the solicitation of proxies. Estimated fees
expected to be incurred by the Company in this connection should not exceed
$10,000. The Company will reimburse brokerage firms and others for their
reasonable expenses in forwarding soliciting material.
All shares represented by duly executed proxies in the accompanying form
received prior to the Meeting will be voted in the manner specified therein. Any
stockholder granting a proxy may revoke it at any time before it is voted by
filing with the Secretary of the Company either an instrument revoking the proxy
or a duly executed proxy bearing a later date. Any stockholder present at the
Meeting who expresses a desire to vote his/her shares in person may also revoke
his/her proxy. As to any matter for which no choice has been specified in a duly
executed proxy, the shares represented thereby will be voted FOR each proposal
listed herein and in the discretion of the persons named in the proxy in any
other business that may properly come before the Meeting.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING, TO
COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
The Company's Annual Report to Stockholders for the fiscal year ended December
31, 2000 is being furnished with this Proxy Statement to stockholders of record
on March 30, 2001. The Annual Report to Stockholders does not constitute a part
of the proxy solicitation material except as otherwise provided by the rules of
the Securities and Exchange Commission, or as expressly provided for herein.
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OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company fixed March 30, 2001 as the record date
("Record Date") for the determination of stockholders entitled to notice of and
to vote at the Meeting. On the Record Date, there were 13,729,569 shares of
common stock issued, outstanding and entitled to vote. The Company has no other
voting securities outstanding. Each stockholder of record is entitled to one
vote per share held on all matters submitted to a vote of stockholders, except
that in electing directors, each stockholder is entitled to cumulate his or her
votes and give any one candidate an aggregate number of votes equal to the
number of directors to be elected (seven) multiplied by the number of his or her
shares, or to distribute such aggregate number of votes among as many candidates
as he or she chooses. For a stockholder to exercise cumulative voting rights,
the stockholder must give notice of his or her intention to cumulatively vote
prior to the Meeting, or at the Meeting in person, prior to voting. If any
stockholder has given such notice, all stockholders may cumulatively vote. The
holders of proxies will have authority to cumulatively vote and allocate such
votes in their discretion to one or more of the director nominees. The holders
of the proxies solicited hereby do not, at this time, intend to cumulatively
vote the shares they represent, unless a stockholder indicates his intent to do
so, in which instance the proxy holders intend to cumulatively vote all the
shares they hold by proxy in favor of some or all of the director nominees
identified herein.
The holders of a majority of the outstanding shares of common stock on the
Record Date present at the Meeting in person or by proxy will constitute a
quorum for the transaction of business at the meeting. An affirmative vote of a
majority of the shares present and voting at the Meeting is required for
approval of all matters except for Proposal No.3 which requires the approval of
a majority of the stockholders entitled to vote at the Meeting. Abstentions and
broker non-votes are each included in the determination of the number of shares
present. Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders, and thus, have the effect of voting against a
proposal, whereas broker non-votes are not counted for purposes of determining
whether a proposal has been approved, and thus have no effect except in regard
to Proposal No. 3.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS.
At the Meeting, seven directors are to be elected to hold office until the next
Annual Meeting of Stockholders or until the election and qualification of his or
her respective successor. It is the intention of the persons named in the proxy
to vote the proxies that are not marked to the contrary for the election as
directors of the persons named below as nominees. If any such nominee refuses or
is unable to serve as a director, the persons named as proxies may in their
discretion vote for any or all other persons who may be nominated. The seven
nominees receiving the greatest number of votes cast will be elected directors,
if each nominee receives at least a majority of the votes cast.
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Director nominees standing for election to serve until the 2001 Annual Meeting
are:
DIRECTOR
NAME AGE POSITION WITH COMPANY RESIDENCE SINCE
- ---- --- --------------------- --------- -----
Rotchford L. Barker 64 Director Cody, WY 1996
Paul C. Bergson 56 Director Washington, D.C. 1996
Keith D. Bronstein 51 Director Chicago, IL 1997
Edward F. Heil 56 Director Miami Beach, FL 1994
Jack K. Lemley 66 Director, Chairman,
Chief Executive Officer
and President Boise, ID 1992
Dan Rostenkowski 72 Director, Employee Chicago, IL 2000
Paul F. Schutt 68 Director Norcross, GA 1994
ROTCHFORD L. BARKER
Mr. Barker became a director in April 1996. Mr. Barker is an independent
businessperson and commodity trader. Mr. Barker has been a member of the
Chicago Board of Trade for more than thirty years and has served on the board
of directors of the exchange. Mr. Barker is also a director of Idacorp, an
energy services holding company that owns Idaho Power Company.
PAUL C. BERGSON
Mr. Bergson became a director of the Company in February 1996. Mr. Bergson
is a principal in Bergson & Company, a government relation-consulting firm
serving a range of clients in tax, environmental and chemical matters. Mr.
Bergson is also a General in the U.S. Army Reserves, a member of the Board of
Advisers of the Far East Studies Institute and serves on the boards of
several philanthropic organizations.
KEITH D. BRONSTEIN
Mr. Bronstein, a member of the Chicago Board of Trade and President of Tradelink
LLC, became a director in January 1997. Previously, he has served as a board
member of the American Cancer Society, as lay board member of the University of
Wisconsin Medical School, as a member of the Wisconsin Health Policy Board, and
is a trustee member of Highland Park Hospital & Lakeland Health Service. Mr.
Bronstein was a co-founder of S'Lil Pharmaceuticals, a bio-technology company
involved in early-stage discovery and development of pharmaceutical drugs.
PATRICIA M. ECKERT
Ms. Eckert has voluntarily chosen not to stand for re-election.
EDWARD F. HEIL
Mr. Heil has been the Chairman of the Board of American Environmental
Construction Company for more than seven years.
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JACK K. LEMLEY
Mr. Lemley is the Chairman of the Board, Chief Executive Officer and
President of the Company. Prior to February 1995, he was an independent
business consultant. From May 1989 through 1993, Mr. Lemley was Chief
Executive Officer of Transmanche-Link J.V. that designed and built the tunnel
and related transportation infrastructure to provide train service between
England and France. Prior to his position at Transmanche-Link, Mr. Lemley
founded Lemley and Associates, Inc. and was a management consultant to
various clients in the industry. Mr. Lemley is also a director of Idacorp;
an energy services holding company that owns Idaho Power Company.
DAN ROSTENKOWSKI
Mr. Rostenkowski was named to the board by the directors in July 2000. He
currently heads Danross Associates, a Chicago consulting firm, and is
employed by the Company as a special assistant to the President for
governmental affairs. He is also a college teacher, speaker and political
commentator for Fox television. Mr. Rostenkowski served in the United States
Congress from 1959-1994.
PAUL F. SCHUTT
Mr. Schutt has been the Chief Executive Officer and a director of Nuclear
Fuel Services, Inc. for more than 5 years. Mr. Schutt also led the formation
of Advanced Recovery Systems, Inc., and NFS Radiation Protection Systems,
Inc., and serves as a director on the boards of those companies. Mr. Schutt
was a founding director in 1968 and President of Nuclear Assurance
Corporation; Senior Planning Analyst for Union Carbide (AECOP), Oak Ridge,
Tennessee, and held management positions in Marketing, Planning and Research
and Development for Babcock & Wilcox Company.
JOHN J. SCOVILLE
Mr. Scoville has voluntarily chosen not to stand for re-election.
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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES.
During the year ended December 31, 2000, the Board of Directors held four
meetings. All directors attended 75% or more of the aggregate of the meetings of
the Board and Committees on which they served and held during the period for
which he or she was a Board or Committee member, respectively.
The Committees of the Board of Directors during 2000 were the Nominating,
Executive, Audit and Compensation Committees. The Executive Committee assumes
the responsibilities of the Finance Committee.
The members of the Nominating Committee are Messrs. Lemley, Heil and Bronstein.
Mr. Bronstein is chairman. The Nominating Committee searches for and recommends
to the Board of Directors, qualified and experienced individuals to fill
vacancies and new director seats, upon expansion of the board. The Nominating
Committee met once during 2000, nominating the eight directors to stand for
election at the annual shareholders meeting in 2000.
The members of the Executive Committee are Messrs. Lemley, Barker, Heil,
Schutt and Bronstein. Mr. Lemley is chairman. Except certain powers, which,
under Delaware law, may only be exercised by the full Board of Directors, the
Executive Committee may exercise all powers and authority of the Board of
Directors in the management of Company business. The Executive Committee met
three times in 2000.
In 2000, the members of the Audit Committee were Messrs. Bergson, Schutt,
Scoville and Ms. Eckert. Mr. Schutt is chairman. For 2001, Ms. Eckert and Mr.
Scoville will not continue as members of the Audit committee as they have chosen
to not stand for reelection. The Audit Committee reviews the proposed plan and
scope of the Company's annual audit as well as the result when it is completed.
The Committee reviews the services provided by the Company's independent
auditors and their fees. The Committee also meets with the Company's financial
personnel to assure the adequacy of the Company's accounting principles,
financial controls and policies. The Committee is also charged with reviewing
transactions that may present a conflict of interest on the part of management
or directors. The Audit Committee meets at least quarterly to review the
financial results, discuss the financial statements and make recommendations to
the Board. Other items of discussion will include the independent auditors'
recommendations for internal controls, adequacy of staff, and management's
performance concerning audit and financial controls. The Audit Committee met six
times in 2000.
The members of the Compensation Committee are Messrs. Barker, Bergson, Heil and
Schutt. Mr. Barker is chairman. The Compensation Committee makes recommendations
concerning salaries and incentive compensation, administers and approves stock
options under the 1992 Employee and 1992 Directors stock option plans,
determines compensation levels and performs other functions regarding
compensation as the Board may delegate. The Compensation Committee met twice in
2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
During 2000, no member of the Directors Compensation Committee was an officer or
employee of the Company or any of its subsidiaries, or had any other
relationship requiring disclosure by the Company under Item 404 of Securities
and Exchange Commission regulations.
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During 2000, no executive officer of the Company served as:
o a member of the compensation committee (or other board committee performing
equivalent functions) of an unrelated entity, one of whose executive officers
served on the Directors Compensation Committee of the Company,
o a director of an unrelated entity, one of whose executive officers served on
the Directors Compensation Committee of the Company, or
o a member of the Compensation Committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers
served as a director of the Company.
DIRECTORS' COMPENSATION.
Directors who are not employees of the Company or its subsidiaries receive an
annual fee of $16,000 payable quarterly, plus $1,333 for each special meeting
attended in person, which at the director's discretion is payable quarterly in
stock of the Company at its then market price. Directors who are employees of
the Company receive no additional compensation for their service as directors.
Mr. Lemley and Mr. Rostenkowski are the only directors employed by the Company.
All directors are reimbursed for their travel and other expenses involved in
attendance at Board and committee meetings.
In addition, each non-employee director is granted a stock option to purchase
7,500 shares of the Company's common stock at the time of his or her initial
election to the Board. Upon each re-election to the Board, he or she is granted
a stock option to purchase 10,000 shares of the Company's common stock. The
grants are made in accordance with the terms of the 1992 Outside Director Stock
Option Plan.
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PROPOSAL NO. 2
AMENDMENT OF 1992 OUTSIDE DIRECTOR STOCK OPTION PLAN
TO INCREASE COMMON STOCK AVAILABLE FOR GRANT
The Company currently maintains a 1992 Outside Director Stock Option Plan (the
"Plan"), which provides the outside Directors of the Company additional
incentive for their service as Directors. The Company is dependent for the
successful conduct of its business on the incentive, effort and judgment of its
Directors. There are currently only 107,500 options available for grant under
the Plan.
If approved by stockholders, the amendment to the Plan will make an additional
350,000 options available for issuance. The following is a summary of the
principal features of the current Plan and proposed amendments. A copy of the
Plan, as proposed to be amended, is attached and labeled as Exhibit A.
Shares Subject to the Plan. Currently, up to an aggregate of 650,000 shares of
the Company's Common Stock may be issued under the Plan. If amended, the Plan
will provide for an aggregate of 1,000,000 shares of Common Stock to be issued
(an increase of 350,000 shares). Shares, which are not issued prior to
expiration or termination of an option, will be available for future option
grants and do not increase the aggregate number of shares available under the
Plan.
The Plan provides for appropriate adjustment of shares available under the Plan
and of shares subject to outstanding options in the event of any changes in the
outstanding Common Stock of the Company by reason of:
o recapitalization,
o reclassification,
o stock dividend,
o stock split,
o reverse stock split, or some other similar transaction.
Type of Option. Options granted are not intended to qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended.
Eligibility and Participation. All Directors of the Company who are not officers
or employees of the Company are eligible to participate in the Plan. Under the
Plan, options to purchase 7,500 shares of Common Stock are granted upon each
eligible director's initial election to the Board, and options to purchase
10,000 shares of Common Stock are granted upon re-election. In addition, each
eligible director will be paid quarterly director's fees from the Plan if the
director so elects.
Rights as a Stockholder. Except as expressly provided in the Plan, the recipient
of an option has no rights as a stockholder (such as voting or dividends) with
respect to shares covered by the recipient's option until the date of issuance
of a stock certificate for such shares.
Transferability. During the life of the option holder, any stock option will be
exercisable only by the recipient, and will be transferable only by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order.
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Duration of the Plan. The Plan is effective until either all options have been
granted under the Plan or ten years from March 3, 1994, the date the Plan was
approved if earlier.
Purchase Price. The purchase price payable to exercise an option is set at the
fair market value of the Common Stock on the date the option is granted. Payment
in full for the number of shares purchased upon the exercise of options is
required. On March 12, 2001 the closing price for the Common Stock on the NASDAQ
National Market was $2.56 per share.
Basic Terms of Options. Each option is evidenced by a stock option agreement
containing terms and conditions not inconsistent with the provisions of the Plan
in substantially the form attached as Exhibit A to the Plan. The options are
exercisable in whole or in part upon grant until the option shall terminate or
expire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO INCREASE OF SHARES AVAILABLE FOR GRANT UNDER THE 1992 OUTSIDE
DIRECTOR STOCK OPTION PLAN. Proposal No. 2 will be adopted if a majority of the
outstanding common stock represented at the Meeting is voted in favor. If the
proposal is not adopted, the Company will be unable to fulfill its obligation to
appropriately compensate its directors with options.
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PROPOSAL NO. 3
DIRECTORS' PROPOSAL TO AMEND THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE
STOCK SPLIT FOLLOWED BY A FORWARD
STOCK SPLIT OF THE COMPANY'S COMMON STOCK
SUMMARY
The Board of Directors has authorized and recommends that the stockholders
approve a reverse 1 for 100 stock split followed immediately by a forward 100
for 1 stock split of the Company's common stock (together, the "Transaction").
As permitted under Delaware law, stockholders of the Company with shares
registered in their names rather than being held through an electronic
depository system or in the name of a nominee ("Registered Stockholders") whose
shares are converted into less than one share in the reverse split portion of
the Transaction will receive cash payments equal to the value of their
fractional interests determined in the manner described below.
If approved, the Transaction will take place on June 29, 2001. For the
Transaction to be approved, a majority of the stockholders entitled to vote at
the Meeting must approve the amendments to the Company's Amended and Restated
Certificate of Incorporation (the "Charter") attached hereto as Exhibit B.
The highlights of the Transaction are as follows:
Effect on Stockholders:
If approved at the meeting, the Transaction will effect only Registered
Stockholders holding less than 100 shares of common stock in a record account on
the close of business on June 29, 2001. Such shares will be cashed out by the
Company at a price based on their average trading price prior to the date of the
Transaction as described below under "Determination of Trading Price." No
commission or other fee will be charged on this cash-out. The purchase price
will be paid when the certificates for such shares are delivered to the transfer
agent. Such shares will have no continuing interest in the Company after the
Transaction date whether or not such shares are delivered to the transfer agent.
The Transaction will have no net effect on Registered Stockholders holding 100
or more shares of the Company's common stock or stock held in street name
through a nominee such as a bank or broker, unless the nominee holds fewer than
100 registered shares in the nominee's name.
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Reasons for Transaction:
The Board recommends approval of the Transaction for the following reasons,
which are described in more detail under "Background and Purpose of the
Transaction " below:
o Because the Company's predecessor became independent in a spinoff in
which its parent corporation distributed shares in the Company to
the parent's shareholders, the Company has a large number of
Registered Stockholders holding a small number of shares. As of
January 16, 2001, 3,999 of the 4,723 Registered Stockholders of the
Company held less than 100 shares. These shares constituted only
64,150 of the total of 13,729,589 shares outstanding at the time.
Continuing to maintain accounts for these Registered Stockholders
and mailing them notices and financial information costs the Company
a substantial amount each year. The Transaction will reduce such
costs.
o In many cases, it is prohibitively expensive for Registered
Stockholders with fewer than a round lot of 100 shares to sell their
shares in the public market. The Transaction provides such
Registered Stockholders with the opportunity to receive cash for
their shares without incurring brokerage fees. However, if these
Registered Stockholders do not want to cash out their shares, they
can purchase additional shares on the open market to increase their
record account to at least 100 shares or, if applicable, consolidate
or transfer record accounts held in different names into a single
record account with 100 or more shares or transfer shares held of
record into the hands of a nominee holding 100 or more shares. On
the other hand, while the Transaction generally will not affect
beneficial owners of less than 100 shares through a nominee, if such
beneficial owners want their shares cashed out in the Transaction,
they can accomplish this by instructing their nominee to transfer
their shares into a record account so that such shares are
registered in their names by June 29, 2001.
STRUCTURE OF THE TRANSACTION
The Transaction includes both a reverse stock split and a forward stock split of
the Company's common stock. If this Transaction is approved and occurs, the
reverse split will occur at 6:00 p.m. eastern time on June 29, 2001. All
Registered Stockholders on June 29, 2001 will receive 1 share of the Company's
common stock for every 100 shares of the Company's common stock held in their
record accounts at that time. Any Registered Stockholder who holds fewer than
100 shares of the Company's common stock in a record account at 6:00 p.m. on
June 29, 2001 (a "Cashed-Out Stockholder"), will receive a cash payment instead
of fractional shares. This cash payment will be based on the average trading
price of the cashed-out shares at that time. (See "Determination of Trading
Price" below for a description of how the trading price will be determined upon
completion of the Transaction.) Immediately following the reverse split, at 6:01
p.m. on June 29, 2001, all Registered Stockholders who are not Cashed-Out
Stockholders will receive 100 shares of the Company's common stock for every 1
share of stock they received after the reverse stock split. If a stockholder
holds 100 or more shares in a record account prior to the Transaction, any
fractional share in the account will not be cashed out after the reverse split
and the total number of shares held in that account will not change as a result
of the Transaction.
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In general, the Transaction can be illustrated by the following examples:
- --------------------------------------------------------------------------------
HYPOTHETICAL SCENARIO RESULT
- --------------------------------------------------------------------------------
A is a Registered Stockholder who Instead of receiving a fractional share
holds 99 shares of Company stock (.99 of a share) of Company stock after
in her record account as of 6 p.m. the reverse split, A's 99 shares will
on June 29, 2001. At that time, be converted into the right to receive
assume the trading value of 1 cash. Using the hypothetical trading
share of Company stock is $2 (see value of $2 per share, A will receive
"Determination of Trading Price" $198.00 ($2 x 99 shares).
below).
NOTE: If A wants to continue her
investment in the Company, she can buy
at least 1 more share of stock and hold
it in her record account. A would have
to act far enough in advance of June 29,
2001 so that the purchase is complete by
the close of business on that date. She
could also avoid being cashed out by
transferring her 99 shares into street
name prior to June 29, 2001.
- --------------------------------------------------------------------------------
B has 2 record accounts. As of B will receive cash payments equal to
June 29, 2001, she holds 50 shares the trading value of her shares of
of Company stock in one account Company stock in each record account
and 70 shares of stock in the instead of receiving fractional shares.
other. All of her shares are Assuming a hypothetical trading value
registered in her name only. of Company stock at $2 per share, B
would receive two checks totaling $240
(50 x $2 = $100; 70 x $2 = $140; $100 +
140 = $240).
NOTE: If B wants to continue her
investment in the Company, she can
consolidate/transfer her two record
accounts prior to June 29, 2001. In that
case, her holdings will not be cashed
out in connection with the Transaction
because she will hold at least 100
shares in one record account. She would
have to act far enough in advance so
that the consolidation is complete by
the close of business on June 29, 2001.
- --------------------------------------------------------------------------------
C holds 101 shares of Company After the Transaction, C will continue
stock in his record account as of to hold all 101 shares of Company stock.
June 29, 2001.
- --------------------------------------------------------------------------------
D holds 99 shares of Company The Company does not intend for the
stock in a brokerage account as Transaction to affect stockholders
of June 29, 2001. holding Company stock in street name
through a nominee (such as a bank or
broker). However, nominees may have
different procedures and Company
stockholders holding stock in street
name should contact their nominees to
determine whether they will be affected
by the Transaction.
NOTE: If D holds fewer than 100 shares
and desires to have his shares cashed
out in the Transaction, he should
contact his broker to transfer them to
his record name prior to June 29, 2001.
He would have to act far enough in
advance so that the transfer is complete
by the close of business on June 29,
2001.
- --------------------------------------------------------------------------------
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BACKGROUND AND PURPOSE OF THE TRANSACTION
The Company has an exceptionally large base of Registered Stockholders which is
principally the result of the spinoff of the Company's predecessor from its
corporate parent in May 1984. In the spinoff, each of the parent registered
stockholders received Company stock in proportion to their parent stock. Since
that time, the Company has been able to reduce its total number of Registered
Stockholders by offering several programs that have allowed the Registered
Stockholders with small accounts to sell their holdings cost-effectively.
However, the Company still has a large number of Registered Stockholders with
less than 100 shares.
As of January 16, 2001, 3,999 Registered Stockholders owned fewer than 100
shares of stock. At that time, these stockholders represented approximately 85%
of the total number of Registered Stockholders, but they owned less than .5% of
the total number of the outstanding shares of the Company's stock. The
Transaction will provide these Registered Stockholders with fewer than 100
shares with a cost-effective way to cash out their investments, because the
Company will pay all transaction costs in connection with the Transaction. In
most other cases, small stockholders would likely incur brokerage fees
disproportionately high relative to the market value of their shares if they
wanted to sell their stock. In addition, some small stockholders might even have
difficulty finding a broker willing to handle such small transactions. The
Transaction, however, eliminates these problems for most small stockholders.
Moreover, the Company will benefit from substantial cost savings as a result of
the Transaction. The costs of administering each Registered Stockholder's
account is the same regardless of the number of shares held in each account.
Therefore, the Company's costs to maintain thousands of small accounts are
disproportionately high when compared to the total number of shares involved.
In light of these disproportionate costs, the Board believes that it is in the
best interests of the Company and its stockholders as a whole to eliminate the
administrative burden and costs associated with small record accounts with fewer
than 100 shares of Company stock.
The Company may in the future pursue alternative methods of reducing its
stockholder base whether or not the Transaction is approved, including odd-lot
tender offers and programs to facilitate sales by stockholders of odd-lot
holdings. However, there can be no assurance that the Company will decide to
engage in any such transaction.
EFFECT OF THE TRANSACTION ON COMPANY STOCKHOLDERS
Stockholders With a Record Account of Fewer Than 100 Shares:
If the Company completes the Transaction, a Cashed-Out Stockholder (i.e., a
stockholder holding fewer than 100 shares of Company common stock in a record
account immediately prior to the reverse stock split):
o Will not receive a fractional share of Company stock as a result of
the reverse split.
o Instead of receiving a fractional share of Company stock, will
receive cash equal to the average trading price of the affected
shares. See "Determination of Trading Price" below.
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15
o After the reverse split, will have no further interest in the
Company with respect to cashed-out shares. These shares will no
longer be entitled to the right to vote as a stockholder or share in
the Company's assets, earnings, or profits.
o Will not have to pay any service charges or brokerage commissions in
connection with the Transaction.
o As soon as practicable after June 29, 2001, will receive cash for
the common stock held in his record account immediately prior to the
reverse split in accordance with the procedure described below.
o A Cashed-Out Stockholder with a stock certificate representing
cashed-out shares will receive a transmittal letter from the Company
as soon as practicable after June 29, 2001. The letter of
transmittal will contain instructions on how to surrender stock
certificate(s) to the Company's transfer agent, Mellon Investor
Services LLC, for cash payment. Cash payments will not be made until
outstanding certificate(s) are surrendered to Mellon Investor
Services LLC, together with a completed and executed copy of the
letter of transmittal. Registered Stockholders should not send
certificates until they receive a letter of transmittal. For further
information, see "Stock Certificates" below.
o All amounts owed to stockholders will be subject to applicable
federal income tax and state abandoned property laws.
o No interest will be paid on cash payments owed as a result of the
Transaction.
- --------------------------------------------------------------------------------
NOTE: Registered Stockholders who would be cashed out as part of the
Transaction but want to continue to hold Company stock after the
Transaction may do so by taking any of the following actions far enough in
advance so that it is complete by June 29, 2001:
(1) Purchase a sufficient number of shares of Company stock on the open
market and have them registered so that they hold at least 100 shares in
their record account immediately prior to the reverse split; or
(2) if applicable, consolidate record accounts so that they hold at least
100 shares of Company stock in one record account immediately prior to the
reverse split; or
(3) transfer their registered shares into street or nominee name.
- --------------------------------------------------------------------------------
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Registered Stockholders With 100 or More Shares:
Registered Stockholders with 100 or more shares of common stock in a record
account as of 6:00 p.m. on June 29, 2001 will first have their shares converted
into one hundredth of the number of shares held immediately prior to the reverse
split. One minute after the reverse split, at 6:01 p.m., such shares will be
reconverted in the forward stock split into 100 times the number of shares held
after the reverse split, which is the same number of shares held before the
reverse split. As a result, the Transaction will not affect the number of shares
held in record name of a Registered Stockholder who holds 100 or more shares in
a record account immediately prior to the reverse split.
Beneficial Owners of Company Stock:
The Company does not intend for the Transaction to affect stockholders holding
Company stock in street name through a nominee (such as a bank or broker).
However, nominees may have different procedures and stockholders holding Company
stock in street name should contact their nominees to determine whether they
will be affected by the Transaction.
- --------------------------------------------------------------------------------
NOTE: A beneficial owner of fewer than 100 shares of Company stock who
wants to have his shares exchanged for cash in the Transaction should
instruct his nominee to transfer his shares into a record account in his
name in a timely manner so that he will be considered a holder of record
immediately prior to the reverse split.
- --------------------------------------------------------------------------------
Current and Former Company Employees and Directors:
An employee or director of the Company (or a former employee or director) may
own Company restricted stock and/or hold options to purchase stock through the
Employee Stock Option Plan or the Outside Director Stock Option Plan. A holder
of Company restricted stock in street name will not be affected by the
Transaction. Similarly, the Transaction will not affect the number of options
held to acquire Company stock under either of the Company's stock plans. Holders
of fewer than 100 restricted shares of Company stock in a registered account
would have those shares converted into the right to receive cash under the
Transaction; however, the Company does not believe that there are any such
accounts.
DETERMINATION OF TRADING PRICE
In order to avoid the expense and inconvenience of issuing fractional shares to
Registered Stockholders who hold fewer than 1 share in a record account after
the reverse split, under Delaware state law the Company may either arrange for
the sale of these fractional shares or pay cash for their fair value. If
stockholders approve this proposal at the annual meeting and the Transaction is
completed, the Board of Directors will elect to pay cash for the fractional
shares based on the average trading price of the common stock that is cashed
out. The Cashed-Out Stockholders will receive cash equal to the trading price of
the shares they held immediately prior to the reverse split in record accounts
with fewer than 100 shares of Company stock based on the average daily closing
price per share of Company common stock on the NASDAQ National Market for the
ten trading days immediately before and including June 29, 2001, without
interest.
EFFECT OF THE TRANSACTION ON COMPANY
The Transaction will not affect the public registration of the Company's common
stock with the SEC under the Securities Exchange Act of 1934, as amended.
Similarly, the Transaction will not affect the Company's continued listing of
common stock on the NASDAQ National Market.
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The Company's Charter currently authorizes the issuance of 50 million shares of
common stock. The number of authorized shares of common stock will not change as
a result of the Transaction. On the other hand, the total number of outstanding
shares of Company common stock will be reduced by the number of shares held by
the Cashed-Out Stockholders immediately prior to the reverse split. Based on the
Company's best estimates if the Transaction had taken place as of January 16,
2001, the number of outstanding shares of common stock would have been reduced
by the Transaction by approximately 64,150 assuming no Registered Stockholders
who would become Cashed Out Stockholders took steps to retain their shares and
no beneficial stockholders took steps to cash out their shares. In addition, the
number of registered holders of Company common stock would have been reduced
from approximately 4,723 to 724 or by approximately 3,999 stockholders.
The Company has no current plans to issue common stock other than pursuant to
the Company's existing stock plans. However, if the number of additional
authorized but unissued shares was increased, the Board would have more
flexibility in the management of the Company's capitalization and its ability to
provide stock-based incentives to its officers and other employees. Unless
legally required to do so, the Board will not seek further stockholder
authorization before issuing stock. Stockholders will not have any preemptive or
other preferential rights to purchase any of the Company's stock that may be
issued by the Company in the future, unless such rights are specifically granted
to the stockholders.
The total number of fractional shares that will be purchased and the total cash
to be paid by the Company are unknown. However, if the Transaction had been
completed as of January 16, 2001, when the average daily closing price per share
of Company stock on the NASDAQ National Market for the ten trading days
immediately preceding and including such date was $2.27, then the cash payments
that would have been issued to Cashed-Out Stockholders instead of fractional
shares would have been approximately $145,755 with approximately 64,150 shares
purchased by the Company. The actual amounts will depend on the number of
Cashed-Out Stockholders on June 29, 2001, which may vary from the number of such
stockholders on January 16, 2001. In addition, the average daily closing price
per share of Company stock on the NASDAQ National Market for the ten trading
days prior to and including June 29, 2001 cannot be predicted.
The par value of the Company's common stock will remain at $.01 per share after
the Transaction.
STOCK CERTIFICATES
In connection with the Transaction, a new CUSIP number will identify the
Company's common stock. This new CUSIP number will appear on any stock
certificates representing shares of common stock issued after June 29, 2001. The
Transaction will not affect any certificates representing shares of common stock
held by Registered Stockholders owning 100 or more shares immediately prior to
the reverse split. Old certificates held by any of these stockholders will
continue to evidence ownership of the same number of shares as is set forth on
the face of the certificate. Any stockholder with 100 or more shares immediately
prior to the reverse split who wants to receive a certificate bearing the new
CUSIP number can do so at any time by contacting the Company's transfer agent at
800-777-3674 for instructions on how to surrender old certificates. After June
29, 2001, an old certificate presented to an exchange agent in settlement of a
trade will be exchanged for a new certificate bearing the new CUSIP number.
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As described above, any Cashed-Out Stockholder with share certificates will
receive a letter of transmittal after the Transaction is completed. These
stockholders must complete and sign the letter of transmittal and return it with
their stock certificate(s) to the Company's transfer agent before they can
receive cash payment for their shares.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Certain federal income tax consequences to the Company and stockholders
resulting from the Transaction are summarized below. This summary is based on
existing U.S. Federal income tax law, which may change, even retroactively. This
summary does not discuss all aspects of federal income taxation that may be
important to stockholders in light of their individual circumstances. Many
stockholders (such as financial institutions, insurance companies,
broker-dealers, tax-exempt organizations, and foreign persons) may be subject to
special tax rules, including but not limited to: stockholders who received
Company stock as compensation for services or pursuant to the exercise of an
employee stock option, or stockholders who have held, or will hold, stock as
part of a straddle, hedging, or conversion transaction for federal income tax
purposes. In addition, this summary does not discuss any state, local, foreign,
or other tax considerations. This summary assumes that stockholders have held,
and will hold, their shares as capital assets for investment purposes under the
Internal Revenue Code of 1986, as amended. Stockholders should consult their tax
advisors as to the particular federal, state, local, foreign, and other tax
consequences, in light of their specific circumstances.
The federal income tax consequences to stockholders will depend on their
individual situations as discussed below.
Federal Income Tax Consequences to Stockholders Who Are Not Cashed Out by the
Transaction:
Any stockholder who (1) continues to hold Company stock immediately after the
Transaction, and (2) receives no cash as a result of the Transaction, will not
recognize any gain or loss in the Transaction and will have the same adjusted
tax basis and holding period in his Company stock as he had in such stock
immediately prior to the Transaction.
Federal Income Tax Consequences to Cashed-Out Stockholders:
The tax consequences to any stockholder who receives cash as a result of the
Transaction will depend on whether, in addition to receiving cash, such
stockholder or a person or entity related to such stockholder continues to hold
stock immediately after the Transaction, as explained below.
a. Stockholders Who Exchange All of Their Company Stock for Cash as a
Result of the Transaction.
A stockholder who (1) receives cash in exchange for a fractional share as a
result of the Transaction, (2) does not continue to hold any Company stock
immediately after the Transaction, and (3) is not related to any person or
entity which holds Company stock immediately after the Transaction, will
recognize capital gain or loss. The amount of capital gain or loss recognized
will equal the difference between the cash received for cashed-out stock and the
stockholder's aggregate adjusted tax basis in such stock.
A stockholder related to a person or entity who continues to hold Company stock
immediately after the Transaction will recognize gain in the same manner as set
forth in the previous paragraph, provided that the receipt of cash either (1) is
"not essentially equivalent to a dividend," or (2) is a "substantially
disproportionate redemption of stock," as described below.
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o "Not Essentially Equivalent to a Dividend." A stockholder will
satisfy the "not essentially equivalent to a dividend" test if
the reduction in his proportionate interest in the Company
resulting from the Transaction is considered a "meaningful
reduction" given the stockholder's particular facts and
circumstances. The Internal Revenue Service has ruled that a
small reduction by a minority stockholder whose relative stock
interest is minimal and who exercises no control over the affairs
of the corporation may meet this test.
o "Substantially Disproportionate Redemption of Stock" The receipt
of cash in the Transaction will be a "substantially
disproportionate redemption of stock" for a stockholder if the
percentage of the outstanding shares of stock owned by the
stockholder immediately after the Transaction is less than 80% of
the percentage of shares of Company stock owned by him
immediately before the Transaction.
In applying these tests, a stockholder will be treated as owning shares actually
or constructively owned by certain individuals and entities related to the
stockholder. If the taxable amount is not treated as capital gain under any of
the tests, it will be treated first as ordinary dividend income to the extent of
the stockholder's ratable share of the Company's undistributed earnings and
profits either for 2001 or on a cumulative basis, then as a tax-free return of
capital to the extent of aggregate adjusted tax basis in shares, and any
remaining gain will be treated as capital gain. See "Maximum Tax Rates
Applicable to Capital Gain" below.
b. Stockholders Who Both Receive Cash and Continue to Hold Company
Stock Immediately After the Transaction.
A stockholder who both receives cash as a result of the Transaction and
continues to hold Company stock immediately after the Transaction, generally
will recognize gain, but not loss, in an amount equal to the lesser of (1) the
excess of the sum of aggregate fair market value of the stockholder's shares of
Company stock plus the cash received over the stockholder's adjusted tax basis
in the shares, or (2) the amount of cash received in the Transaction. In
determining whether a stockholder continues to hold stock immediately after the
Transaction, a stockholder will be treated as owning shares actually or
constructively owned by certain related individuals and entities. The aggregate
adjusted tax basis in shares of stock held immediately after the Transaction
will be equal to the aggregate adjusted tax basis in shares of Company stock
held immediately prior to the Transaction, increased by any gain recognized in
the Transaction, and decreased by the amount of cash received in the
Transaction.
Any gain recognized in the Transaction will be treated, for federal income tax
purposes, as capital gain, provided that receipt of cash either (1) is "not
essentially equivalent to a dividend" with respect to the stockholder, or (2) is
a "substantially disproportionate redemption of stock" with respect to the
stockholder. (Each of the terms in quotation marks in the previous sentence is
discussed above under the heading "Stockholders Who Exchange All of Their
Company Stock for Cash as a Result of the Transaction.") In applying these
tests, a stockholder may possibly take into account sales of shares of Company
stock that occur substantially contemporaneously with the Transaction. If gain
is not treated as capital gain under any of these tests, the gain will be
treated as ordinary dividend income to the extent of the stockholder's ratable
share of the Company's undistributed earnings and profits either for 2001 or on
a cumulative basis, then as a tax-free return of capital to the extent of the
stockholder's aggregate adjusted tax basis in the stockholder's shares, and any
remaining gain will be treated as a capital gain.
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Maximum Tax Rates Applicable to Capital Gain:
Net capital gain (defined generally as total capital gains in excess of capital
losses for the year) recognized upon the sale of capital assets that have been
held for more than 12 months generally will be subject to tax at a rate not to
exceed 20%. Net capital gain recognized from the sale of capital assets that
have been held for 12 months or less will continue to be subject to tax at
ordinary income tax rates. Capital gain recognized by a corporate taxpayer will
be subject to tax at the ordinary income tax rates applicable to corporations.
As explained above, amounts paid to stockholders as a result of the Transaction
may result in dividend income, capital gain income, or some combination of
dividend and capital gain income depending on the stockholder's individual
circumstances. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISOR AS TO THE
PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF THE
TRANSACTION, IN LIGHT OF THEIR SPECIFIC CIRCUMSTANCES.
APPRAISAL RIGHTS
Dissenting stockholders do not have appraisal rights under Delaware state law or
under the Company's Charter or Bylaws in connection with the Transaction.
RESERVATION OF RIGHTS
The Board of Directors reserves the right to abandon the Transaction without
further action by the stockholders at any time before the filing of the Charter
amendments with the Delaware Secretary of State, even if the Transaction has
been authorized by the stockholders at the annual meeting.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL. Proxies
solicited by the Board of Directors will be voted FOR this proposal, unless
specified otherwise in the proxy.
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PROPOSAL NO. 4
SELECTION OF AUDITORS
The Board of Directors has selected Balukoff, Lindstrom & Co., P.A. ("Balukoff,
Lindstrom"), as independent auditors for the Company's 2001 fiscal year.
Balukoff, Lindstrom has examined the financial statements of the Company for
each of its 1996-2000 fiscal years. Representatives of Balukoff, Lindstrom will
be present at the Annual Meeting, will have the opportunity to make a statement
if they so desire, and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Balukoff, Lindstrom & Co., P.A. as
the Company's independent accountants is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Balukoff, Lindstrom
to the stockholders for ratification as a matter of good corporate practice, and
recommends that the stockholders vote for approval. If the stockholders fail to
ratify the selection, the Board and the Audit Committee may reconsider whether
or not to retain that firm. Even if the selection is ratified, the Board and the
Audit Committee in their discretion may direct the appointment of a different
independent accounting firm at any time during the year if they determine that
such a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting is requested
to ratify the selection of Balukoff, Lindstrom & Co., P.A. Abstentions will be
counted toward the tabulation of votes cast on this Proposal No. 4 and will have
the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether this matter
has been ratified.
EXECUTIVE OFFICERS
NAME AND PRINCIPAL POSITION AGE CITY/STATE DIRECTOR/OFFICER
- --------------------------- --- ---------- ----------------
Jack K. Lemley
Chairman, Chief Executive Director-1992
Officer and President 66 Boise, Idaho Officer-1995
James R.. Baumgardner
Senior Vice President
Chief Financial Officer 38 Boise, Idaho 1999
L. Gary Davis
Vice President and Controller 47 Boise, Idaho 1996
Zaki K. Naser
Executive Vice President
Operations Manager 59 Boise, Idaho 1999
Stephen A. Romano
Vice President 46 Boise, Idaho 1998
Robert S. Thorn
Vice President 78 Boise, Idaho 1996
Barbara Trenary
Vice President 46 Boise, Idaho 2001
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JACK K. LEMLEY'S business biography is located in the section concerning
election of directors.
JAMES R. BAUMGARDNER, Senior Vice President and Chief Financial Officer. Mr.
Baumgardner joined the Company on November 1, 1999 as Senior Vice President
and Chief Financial Officer. From 1995 until joining the Company, Mr.
Baumgardner was the Corporate Treasurer of WaferTech and Symbios Logic, Inc.,
both large manufacturing companies. From 1988 to 1995, Mr. Baumgardner was a
Vice President with Silicon Valley Bank and Commercial Lender with First
Interstate Bank, where he focused on commercial loans to high technology
start-ups and turn-arounds. Mr. Baumgardner holds both a BS and MBA from
Oregon State University.
L. GARY DAVIS served as a consultant to the Company from December 1995 to May
1996 when he accepted the position of Assistant Controller and Director of
Audit. In July of 1999, he was appointed Vice-President and Corporate
Controller. Prior to joining the Company, he was Vice-President and Controller
of Micron Construction, a partially owned subsidiary of Micron Technology Inc.
Before this Mr. Davis served as Director of Finance and Administration for the
Environmental Services Group of Morrison-Knudsen Corporation from 1978 to 1993.
Mr. Davis holds a BA from Boise State University and is a Certified Public
Accountant.
ZAKI K. NASER, Executive Vice President and Operations Manager. Mr. Naser
was appointed Executive Vice President and Operations Manager in September
1999. Mr. Naser previously managed US Ecology's Beatty, Nevada hazardous
waste treatment and storage facility. Mr. Naser joined the Company in
1995. Prior to joining the Company, Mr. Naser held various senior positions
with Chemical Waste Management, Laidlaw Environmental Services, and Control
Systems. Mr. Naser holds an MS in Analytical Chemistry from California
Polytechnical University at Pomona.
STEPHEN A. ROMANO has served with the Company for 12 years in various positions
of increasing responsibility. He originally joined the Company to site and
license the Ward Valley, California disposal site. Prior to joining the Company,
Mr. Romano held various positions with the U.S. Nuclear Regulatory Commission,
the State of Wisconsin and EG&G. Mr. Romano holds both a BS and MBA from the
University of Wisconsin.
ROBERT S. THORN served as a consultant to the Company from November 1995 to May
1996 when he accepted the position of Vice President, Administration and Chief
Accounting Officer. Prior to that time, Mr. Thorn served as a consultant with
Lemley and Associates, Inc., a consulting engineering firm, from 1994 to
November 1995. Mr. Thorn also served as U.K. Controls Director for
Transmanche-Link, J.V. which designed and built the tunnels and related
transportation infrastructure to provide train service between England and
France.
BARBARA A. TRENARY served the Company as a consultant, positioning the Company
for Federal services, prior to being appointed Vice President in February, 2001.
Previous assignments include Chief Operating Officer for Frezant & Associates,
Seattle and Regional Manger positions for Morrison-Knudsen Corporation. Her
22-year career has also included project management, including the Denver Radium
Site at Fluor Daniel, and Health & Safety management for Hewlett Packard and
Morrison-Knudsen. Ms. Trenary holds an Industrial Hygiene/Chemistry degree from
Colorado State University.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16 of the Securities Exchange Act of 1934 ("Section 16") requires that
reports of beneficial ownership of common stock and preferred stock and changes
in such ownership be filed with the Securities and Exchange Commission by
Section 16 "reporting persons" including directors, certain officers, holders of
more than 10% of the outstanding common stock or preferred stock, and certain
trusts of which reporting persons are trustees. The Company is required to
disclose in this proxy statement each reporting person whom it knows has failed
to file any required reports under Section 16 on a timely basis. Based solely
upon a review of copies of Section 16 reports furnished to the Company for the
year ended December 31, 2000 and written statements confirming that no other
reports were required, to the Company's knowledge, all Section 16 reporting
requirements applicable to known reporting persons were made timely throughout
the year except for (i) the late filing by Stephen Romano of his Form 4
statement for the month of June 2000 filed July 11, 2000 rather than July 10,
2000 as required and (ii) the late filing by Dan Rostenkowski of his initial
report on Form 3 which was filed on February 21, 2001 rather than on July 23,
2000 as required.
AUDITOR FEES
The aggregate fees billed by Balukoff, Lindstrom & Co., P.A., for professional
services rendered for the audit of the Company's annual financial statements and
the reviews of the financial statements included in the Company's quarterly
reports on Form 10-Q, for the fiscal year ended December 31, 2000 were $137,000.
ALL OTHER FEES
The aggregate fees billed for services rendered by Balukoff, Lindstrom & Co.,
P.A., other than the fees disclosed above, during the fiscal year ended December
31, 2000 were $22,000.
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EXECUTIVE COMPENSATION
The following table shows, for each of the three years ended, compensation
awarded or paid to, or earned by the Company's Chief Executive Officer and its
other four most highly compensated executive officers at December 31, 2000 and
the prior two years in all capacities.
SUMMARY COMPENSATION TABLE
Long-Term All Other
Name and Principal Position Annual Compensation(1) Compensation Compensation(2)
- --------------------------- -------------------------------- --------------------- ---------------
Year Salary Bonus Grant Options
---- -------- -------- ------- --------
(shares)
--------
Jack K. Lemley 2000 $215,539 -0- -0- -0- $19,875
Chairman, Chief Executive 1999 $155,769 -0- -0- -0- $23,174
Officer and President 1998 $150,000 -0- -0- 424,922 $21.866
James R. Baumgardner 2000 $134,000 7,000 -0- -0- $32,205
Senior Vice President, 1999 $20,615 -0- -0- 50,000 -0-
Chief Financial Officer 1998 -0- -0- -0- -0- -0-
Zaki K. Naser 2000 $135,000 $10,200 -0- 50,000 $35,151
Executive Vice President 1999 $114,442 $21,662 -0- 4,500 $7,324
Operations Manager 1998 $84,020 $28,604 -0- -0- -0-
Stephen A. Romano 2000 $105,000 $10,000 -0- -0- -0-
Vice President 1999 $109,036 -0- -0- 1,500 -0-
1998 $34,065 -0- -0- -0- -0-
Barbara Trenary(3) 2000 $43,846 -0- $20,000 5,926 -0-
Vice President 1999 -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0-
- ---------------------
(1) Includes dollar value base salary earned by the named executive officer
during the fiscal year ending December 31, 2000 as permitted by rules
established by the SEC. The Company had 26 administrative pay periods and
52 union pay periods in 2000.
(2) Includes the amount of premium paid by the Company for group term life
insurance with benefits for each named executive officer, and the amount of
the Company's matching contribution under the Company's 401(k) Savings Plan
and the Company's Retirement Plan, and in the case of Mr. Lemley, the
premium paid on a split benefit whole life insurance policy and automobile
lease, while others have housing or miscellaneous compensation.
(3) Ms. Trenary joined the Company on July 21, 2000 with an annual salary of
$120,000.
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The Company, on a discretionary basis, may grant options to its executive
officers under the 1992 amended and restated employee stock option plan. As of
December 31, 2000, options to purchase 898,500 shares were outstanding with
330,400 shares remaining available for grant. Under the 1988 Employee Stock
Option Plan 260,000 shares were still outstanding at December 31, 2000 and all
other options expired. The following table provides information concerning 2000
stock option grants to the Company's executive officers.
2000 OPTION GRANTS
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
-------------------------------------------- ----------------------------------------------------------
Number of Percent of 0% 5% 10%
Securities all Options ----------------- ----------------- -----------------
Underlying Granted to Exercise Stock Stock Stock
Name Options(4) Employees Price Expires Price Value Price Value Price Value
- ---- ---------- ---------- -------- -------- ------ ------- ------ ------- ------ -------
J. Lemley -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
J. Baumgardner -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
L. Davis -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
Z. Naser 10,000 3.9 $1.25 04/10/05 $3.50 $22,500 $4.47 $32,000 $ 5.64 $43,900
Z. Naser 10,000 3.9 $3.00 04/10/05 $3.50 $5,000 $4.47 $14,700 $ 5.64 $26,400
Z. Naser 10,000 3.9 $3.50 04/10/05 $3.50 -0- $4.47 $9,700 $ 5.64 $21,400
Z. Naser 20,000 7.8 $5.00 04/10/05 $3.50 -0- $4.47 $0 $5.64 $12,800
S. Romano -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
R. Thorn -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
B. Trenary 5,926 2 $3.38 07/21/10 $3.38 -0- $6.12 $16,267 $8.75 $ 31,852
The following table provides information concerning executive officers' stock
options exercised in 2000 and those remaining outstanding at the end of 2000.
AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END VALUES
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options(5)
Shares Options at Fiscal Year-End
Acquired on Value ----------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Jack K. Lemley -0- N/A 695,422 100,000 $482,767 $ -0-
James R. Baumgardner -0- N/A 50,000 -0- $ 8,750 $ -0-
L. Gary Davis -0- N/A 4,200 300 $ 1,605 $ 263
Zaki K. Naser 10,000 $24,375 46,900 600 $ 2,933 $ 525
Stephen A. Romano -0- N/A 11,250 3,750 $ 4,894 $1,631
Robert S. Thorn -0- N/A 12,100 400 $ 2,893 $ 350
Barbara Trenary -0- N/A 5,926 -0- -0- $ -0-
COMPENSATION COMMITTEE REPORT.
The Compensation Committee of the Board of Directors is composed entirely of
outside directors and is responsible for developing and making recommendations
to the Board with respect to the Company's executive compensation policies. The
Committee also reviews and approves the Company's compensation and benefit plans
and administers the key employee and executive officer 1992 Stock Option Plan.
The following report describes the basis on which the Compensation Committee
with respect to the executive officers of the Company made the 2000 compensation
determinations.
- --------------------
(4) All options granted were exercisable as of the option grant date which was
May 17, 2000 as to Mr. Naser and July 21, 2000 as to Ms. Trenary.
(5) A stock option is considered to be "in-the-money" if the price of the
related stock is higher than the exercise price of the option. The closing
market price of the Company's common stock was $2.125 per share on the
NASDAQ National Market at the close of business on December 29, 2000.
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The Company believes that executive compensation should reflect value created
for stockholders in furtherance of the Company's strategic goals. The following
objectives are among those utilized by the Compensation Committee:
1. Executive compensation should be meaningfully related to long-term and
short-term value created for stockholders.
2. Executive compensation programs should support the long-term and
short-term strategic goals and objectives of the Company.
3. Executive compensation programs should reflect and promote the
Company's overall value, business standards and reward individuals for
outstanding contributions to the Company.
4. Short and long term executive compensation are critical factors in
attracting and retaining well-qualified executives.
Currently the Company has a compensation program based on three components: a
base salary, a related bonus program tied to Company performance, and a stock
option program. The Compensation Committee regularly reviews the various
components of the compensation program to ensure that they are consistent with
the Company's objectives. In February 2000, the Committee agreed that a new
incentive program was to be implemented that would reward all Company employees
with stock options if certain milestones were met compared to the financial
budget. This plan was never formally announced to the employees since the
Company did not achieve the target set by the plan for options to be granted.
BASE SALARY -- The Compensation Committee, in determining the appropriate base
salaries of its executive officers, generally considers the level of executive
compensation in similar companies in the industry. In addition, the Compensation
Committee takes into account (i) the performance of the Company and the roles of
the individual executive officers with respect to such performance, (ii) the
particular executive officer's specific experience and responsibilities, and
(iii) the performance of such executive officer in those areas of
responsibility. The base salaries for 2000 were established by the Committee at
levels believed to be at or somewhat below competitive amounts paid to
executives of companies in the environmental industry with comparable
qualifications, experience and responsibilities. During 2000, Jack K. Lemley,
the Chief Executive Officer of the Company, received a base salary of $229,000,
which the Committee believes to be average for the base salary of chief
executive officers with comparable qualifications, experience and
responsibilities of other companies in the environmental industry.
ANNUAL INCENTIVES -- The bonus program in effect during 2000 provided direct
financial incentives to select individuals in the form of a cash bonus for
exceeding the Company's goals or for outstanding performance. The Committee
awarded cash bonuses based on the performance of the Company relative to its
budgeted net income for the fiscal year end, and other pertinent absolute and
relative criteria.
LONG-TERM INCENTIVES -- Beginning with year 2000, the committee intends to
finalize the plan for stock option bonuses to replace the cash bonus plan and
provide all non-union employees an incentive better aligning the employees
interests with those of the shareholders. The details of this plan are still
under development. The stock option program is the Company's long-term incentive
plan for executive officers and key employees. The objectives of the stock
option program are to align executive officer compensation and shareholder
return, and to enable executive officers to develop and maintain a significant,
long-term stock ownership position in the Company's common stock. In addition,
grants of stock options to executive officers and others are intended to retain
and motivate executives to improve long-term corporate and stock market
performance. Stock options are generally granted at no less than the market
value on the grant date, and will only have value if the Company's stock price
increases above the grant price. During 2000, the Company granted no options to
Mr. Lemley, but three other employees were granted options to purchase 255,926
shares of the Company's common stock at prices ranging from $1.25 to $5.00 per
share.
AUDIT COMMITTEE REPORT, CHARTER, INDEPENDENCE
The Audit Committee has reviewed and discussed the Company's audited financial
statements with management. The Audit Committee has discussed with Balukoff,
Lindstrom & Co., P.A., the Company's independent auditors, the matters required
to be discussed by Statement on Auditing Standards 61, which includes, among
other items, matters related to the conduct of the audit of the Company's
financial statements.
The Audit Committee has received written disclosure and the letter from the
auditors required by Independence Standards Board Standard No. 1, which relates
to the auditor's independence from the Company and its related entities, and
has discussed with the auditors the auditor's independence from the Company.
The Audit Committee has considered whether the provision of services by the
auditors, other than audit services and review of Forms 10-Q and audit of the
401(k) and pension plans, is compatible with maintaining the auditor's
independence.
Based on the review and discussions of the Company's audited financial
statements with management and discussion with the independent auditors, the
Audit Committee recommended to the Board of Directors that the Company's
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.
This report is respectfully submitted by the Audit Committee of the Company's
Board of Directors:
Paul Schutt, Audit Committee Chairman
Paul Bergson
Patricia Eckert
John J. Scoville
AUDIT COMMITTEE CHARTER
The Board of Directors had adopted a written charter for the Audit Committee, a
copy of which is attached as Exhibit C.
AUDIT COMMITTEE INDEPENDENCE
The Board of Directors has determined that Mr. Paul Schutt, Mr. Paul Bergson,
Ms. Patricia Eckert, and Mr. John J. Scoville all meet the requirements for
independence set forth in the Listing Standards of the National Association of
Securities Dealers.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of March 10, 2001, the beneficial ownership
(as defined in the rules of the Securities and Exchange Commission) of the
Company's common stock by (a) beneficial owners of more than five percent; and
(b) beneficial ownership of management. Unless otherwise noted, each beneficial
owner identified has sole voting and investment power with respect to the shares
indicated.
(a) BENEFICIAL OWNERS
Name and Address Number of Shares Percent of
of Beneficial Owner Beneficially Owned Class
------------------- ------------------ -----
Edward F. Heil(6)........................... 5,031,987 32.87%
8052 Fisher Island Drive
Fisher Island, FL 33109
Rotchford L. Barker(7)...................... 3,210,026 20.76%
40 County Road 2AC
Cody, Wyoming 82414
Harry J. Phillips, Jr.(8)................... 2,734,158.5 18.94%
3 Riverway, Suite 170
Houston, Texas 77056
Jack K. Lemley(9)........................... 949,554 6.54%
805 West Idaho, Suite 200
Boise, Idaho 83702
Fayez Sarofim(10)........................... 872,080 6.35%
Fayez Sarofim & Co.
2907 Two Houston Center
Houston, Texas 77010
- -----------------
(6) Pursuant to a Schedule 13-D/A filing on February 18, 1999, Mr. Heil
reported that 2,808,874 shares of common stock were beneficially owned
individually by Mr. Heil and 629,460 shares were beneficially owned by Mr.
Heil in his capacity as trustee of a trust. In subsequent Form 4's, Mr.
Heil reported the acquisition of an additional 14,402 common shares. Also
included in the table are 67,500 shares subject to option, 511,751 shares
of common stock if 35,245.90 Series D Preferred stock is converted, and
1,000,000 shares of common stock if 100,000 Series E Warrants are
exercised.
(7) Pursuant to Form 4 filings in 2001, Mr. Barker reported beneficial shares
owned including 1,476,673 shares of common stock. The shares in the table
also include 45,851 common shares if 3,157.89 Series D preferred is
converted, 1,650,000 common shares if 165,000 Series E Warrants are
exercised, and 37,500 options.
(8) Pursuant to a Schedule 13-G filing on August 22, 2000, Mr. Phillips
reported that he may be deemed the beneficial owner of 1,028,802 shares of
common stock in his name, 1,010,206 shares of common stock owned of record
by ECOL Partners II, ltd. ("Ecol Partners II") and 2,352 shares owned of
record by Phillips Investments, Inc. Subsequently, on October 5, 2000, Mr.
Phillips filed Form 144 stating his intent to sell 86,564 shares. However,
the Company has no record of a filing showing he has sold such shares. In
addition, Mr. Phillips filed a Form 4 on May 20, 2000 showing only 50,536
shares owned directly by him. The shares reported on Schedule 13-G are used
above. As a sole shareholder of Phillips Investments, Inc., which is the
general partner of ECOL Partners II, Mr. Phillips shares voting and
investment power over the common stock owned by Phillips Investments, Inc.
and ECOL Partners II. In addition, Mr. Phillips owns 48,403.90 shares of
Series D Preferred stock, which may be converted into 702,798 shares of
common stock.
(9) Mr. Lemley's beneficial shares include 150,000 shares of common stock owned
by him and 16,250 owned by his wife, and 783,304 derivative shares. The
derivative shares include 87,882 common shares if 6,052.71 shares of Series
D preferred is converted, and 695,422 options exercisable within 60 days.
(10) Pursuant to a Schedule 13-G filing on February 15, 2001, Fayez Sarofim &
Co., a registered investment advisor, and Mr. Fayez Sarofim reported that
they may be deemed the beneficial owner of an aggregate 872,080 shares of
the Company, consisting of 826,656 shares held by Mr. Sarofim, 33,509
shares in investment advisory accounts of his firm of which he has
dispositive power, 11,784 shares held by Sarofim International Management
Company, which he controls, and 131 shares as trustee over which he has
shared voting power.
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(b) DIRECTORS AND EXECUTIVE OFFICERS
Amount And Nature Of
Name Of Beneficial Owner Beneficial Ownership Percent Of Class
- ------------------------ -------------------- ----------------
DIRECTORS
Rotchford L. Barker 3,210,026 20.76
Paul C. Bergson(11) 268,915 1.94
Keith D. Bronstein(12) 605,963 4.32
Patricia M. Eckert(13) 61,246 *
Edward F. Heil 5,031,987 32.87
Jack K. Lemley 949,554 6.54
Dan Rostenkowski -0- *
Paul F. Schutt(14) 289,824 2.09
John J. Scoville(15) 114,898 *
EXECUTIVE OFFICERS
Jim R. Baumgardner(16) 65,000 *
L. Gary Davis(17) 4,969 *
Zaki K. Naser(18) 46,900 *
Stephen A. Romano(19) 30,450 *
Robert S. Thorn(20) 18,700 *
Barbara Trenary(21) 5,926 *
All directors and
executive officers
as a group 10,704,358 52.68%
----------
*indicates less than 1%
- ----------------
(11) Mr. Bergson's beneficial ownership includes 111,415 shares of common stock,
57,500 options and 10,000 Series E Warrants exercisable for 100,000 shares
of common stock.
(12) Mr. Bronstein's beneficial ownership includes 308,463 shares of common
stock, 47,500 options and 25,000 Series E Warrants exercisable for 250,000
shares of common stock.
(13) Ms. Eckert's beneficial ownership includes 23,746 shares of common stock
and 37,500 options.
(14) Mr. Schutt's beneficial ownership includes 108,849 shares of common stock
and 47,500 options held by him and 69,264 shares held by Nuclear Fuel
Services, Inc., and 64,211 shares if 52,632 Series D warrants are
exercised. Mr. Schutt, as the chief executive officer of Nuclear Fuel
Services, Inc., shares voting and investment power over the securities held
by it.
(15) Mr. Scoville's beneficial ownership includes 22,171 shares of common stock,
80,500 options, and 12,227 shares if 842.11 shares of Series D preferred
are converted.
(16) Mr. Baumgardner's beneficial ownership includes 15,000 shares of common
stock purchased prior to employment and 50,000 options by grant.
(17) Mr. Davis' beneficial ownership includes 769 shares of common stock and
4,200 options.
(18) Mr. Naser's beneficial ownership includes 46,900 options.
(19) Mr. Romano's beneficial ownership includes 19,200 shares of common stock
and 11,250 options.
(20) Mr. Thorn's beneficial ownership includes 6,600 shares of common stock and
12,100 options.
(21) Ms. Trenary's beneficial ownership includes 5,926 options.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000 the Company had no relationships or related transactions with its
officers, directors or securities holders of more than five percent that would
require disclosure under Securities and Exchange Commission Regulation S-K, Item
404.
STOCK PERFORMANCE(22)
The following graph compares the most recent five-year market-value performance
of the Company's common stock to the NASDAQ's US and Foreign Stock Index, and a
hazardous waste industry peer group(23) which the Company believes accurately
reflects its competitors. The graph assumes that the value of the investment in
the common stock and each index was $100 at December 31, 1992.
[GRAPH]
1995 1996 1997 1998 1999 2000
----- ----- ---- ---- ---- ----
American Ecology Corporation -65.0 -88.0 -86 -86 -82 -78
NASDAQ & US Index 53.0 74.0 94 152 309 178
Peer Group -66.0 -79.0 -69 -75 -84 -90
- ------------------
(22) Notwithstanding filings by the Company with the SEC that have incorporated
or may incorporate by reference other SEC filings (including this proxy
statement) in their entirety, this performance graph shall not be
incorporated by reference into such filings and shall not be deemed to be
filed with the SEC except as specifically provided otherwise or to the
extent required by Item 402 of Regulation S-K.
(23) The companies which make up the Company's peer group are: 3CI Complete
Compliance Corp.; Allied Waste; Clean Harbors, Inc.; Metalclad Corp;
Perma-Fix Environmental Services, Inc; Safety Kleen Corp; and Waste
Masters, Inc.
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STOCKHOLDER PROPOSALS AT THE NEXT
ANNUAL MEETING OF STOCKHOLDERS
The Company must receive stockholder proposals submitted for inclusion in the
Company's 2002 proxy materials and consideration at the 2002 annual meeting of
stockholders no later than December 12, 2001. Stockholder proposals should be
submitted to the Secretary of American Ecology Corporation, 805 W. Idaho, Suite
200, Boise, Idaho 83702. Any such proposal should comply with the Securities and
Exchange Commission rules governing stockholder proposals submitted for
inclusion in proxy materials.
OTHER MATTERS
The management and Board of Directors of the Company know of no other matters
that may come before the Meeting. However, if any matters other than those
referred to above should properly come before the Meeting, it is the intention
of the persons named in the enclosed proxy to vote all proxies in accordance
with their best judgment.
A copy of the Company's Annual report on Form 10-K for the fiscal year ended
December 31, 2000, as filed with the SEC, excluding exhibits, may be obtained by
stockholders without charge by written request addressed to Investor Relations,
805 W. Idaho Street, Boise, Idaho 83702 or may be accessed on the Internet at:
http://www.americanecology.com.
AMERICAN ECOLOGY CORPORATION
JACK K. LEMLEY
Chairman of the Board,
Chief Executive Officer and President
[LOGO]
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EXHIBIT "A"
AMERICAN ECOLOGY CORPORATION
AMENDED AND RESTATED
1992 OUTSIDE DIRECTOR STOCK OPTION PLAN
ARTICLE I
PURPOSE
American Ecology Corporation, a Delaware corporation (the "Company"), is
dependent for the successful conduct of its business on the initiative, effort
and judgment of its directors. This Amended and Restated 1992 Outside Director
Stock Option Plan (the "Plan") is intended to provide the outside directors of
the Company additional compensation for their service as directors and an
incentive, through options to acquire stock in the Company, to increase the
value of the Company's Common Stock, par value $0.01 per share ("Common Stock").
ARTICLE II
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). Subject to the express provisions of the Plan and the policies of
each stock exchange on which any of the Company's stock at any time may be
traded, the Board shall have plenary authority (i) to construe and interpret the
Plan, (ii) to define the terms used therein, (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, and (iv) to make all other
determinations necessary or advisable for the administration of the Plan. All
determinations and interpretations made by the Board shall be binding and
conclusive on all participants in the Plan and their legal representatives and
beneficiaries. No member of the Board shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to the Plan
or any transaction under the Plan.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
Under the Plan each director who at the time of his initial election to
the Board is not an employee of the Company shall, effective as of the date of
his initial election to the Board, be granted a stock option to purchase from
the Company 7,500 shares of the Company's common stock, par value $0.01 per
share ("Common Stock") at a price determined as set forth in Article IV below.
Under the Plan each director who at the time of each re-election to the
Board is not an employee of the Company, shall, effective as of the date of his
reelection to the Board, be granted a stock option to purchase from the Company
10,000 shares of the Company's Common Stock at a price determined as set forth
in Article IV below.
Under the Plan, each director who is not an employee of the Company may
elect to receive annual directors' fees in common stock of the Company issued on
a quarterly basis from the Plan. The fair market value of the stock and
corresponding number of shares to be issued shall be determined as of the last
stock exchange trading day of the relevant calendar quarter for which the
directors' fees are to be paid, in accordance with Article IV (e) below.
Each director described in the preceding three paragraphs is referred to
herein as an "Eligible Outside Director".
ARTICLE IV
TERMS AND CONDITIONS OF STOCK OPTIONS;
STOCK OPTION PRICE; TRANSFERABILITY
(a) Each stock option granted under the Plan shall be evidenced by a
Director Stock Option Agreement (the "Agreement") in substantially the form
attached hereto as Exhibit A, or such other form as may be hereafter approved by
the Board on the advice of counsel to the Company. The Agreement shall be
executed by the Company and the optionee. The sale of the shares issued on the
exercise of a stock option by any person subject to Section 16 of the 1934 Act
shall not be allowed until at least six months after the later of (i) the
approval of this Plan by the shareholders of the Company in accordance with
Article VIII hereof or (ii) the grant of the stock option. Such determination
for each stock option is to be made prior to or at the time that stock option is
granted.
(b) The per share stock option price shall be an amount equal to the Fair
Market Value (as defined below) of the Common Stock on the date of grant of the
stock option. In no event shall the stock option price be less than the par
value of the Company's Common Stock.
(c) Stock options granted hereunder shall not be transferable otherwise
than by will or operation of the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined in the Internal Revenue Code of
1986, as amended (the "Code"), or Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA"), or the rules thereunder.
(d) No stock option granted hereunder shall be exercisable unless the Plan
and all shares issuable on the exercise thereof have been registered under the
Securities Act of 1933, as amended (the "1933 Act") and all other applicable
securities laws, and there is available for
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delivery a prospectus meeting the requirements of Section 10 of the 1933 Act, or
the Company shall have first received the opinion of its counsel that
registration under the 1933 Act and all other applicable securities laws is not
required in connection with such issuance. At the time of exercise, if the
shares with respect to which the stock option is being exercised have not been
registered under the 1933 Act and all other applicable securities laws, the
Company may require the optionee to provide the Company whatever written
assurance counsel for the Company may require that the shares are being acquired
for investment and not with a view to the distribution thereof, and that the
shares will not be disposed of without the written opinion of such counsel that
registration under the 1933 Act and all other applicable securities laws is not
required. Share certificates issued to the optionee upon exercise of the stock
option shall bear a legend to the foregoing effect to the extent counsel for the
Company deems it advisable.
(e) For purposes of the Plan, the term "Fair Market Value" on any date
shall mean (i) if the Common Stock is listed or admitted to trade on a national
securities exchange or national market system, the closing price of the Common
Stock, as published in the Wall Street Journal, so listed or admitted to trade
on such date or, if there is no trading of the Common Stock on such date, then
the closing price of the Common Stock on the next preceding date on which there
was trading in such shares; (ii) if the Common Stock is not listed or admitted
to trade on a national securities exchange or national market system, the mean
between the bid and asked price for the Common Stock on such date, as furnished
by the National Association of Securities Dealers, Inc. through NASDAQ or a
similar organization if NASDAQ is no longer reporting such information; or (iii)
if the Common Stock is not listed or admitted to trade on a national securities
exchange and if bid and asked prices for the Common Stock are not so furnished
through NASDAQ or a similar organization, the value established by the Board for
purposes of the Plan. In addition to the above rules, Fair Market Value shall be
determined without regard to any restriction other than a restriction which, by
its terms, will never lapse.
ARTICLE V
SHARES SUBJECT TO PLAN AND DURATION OF PLAN
The Plan shall expire and terminate on the earlier of (i) the date ten
years from the effective date of this Plan, or (ii) the date on which there have
been granted to Eligible Outside Directors pursuant to the Plan stock options to
purchase an aggregate of 1,000,000 shares of the Common Stock. Shares subject to
stock options under the Plan may be either authorized and unissued shares or
issued shares, which have been acquired by the Company and are being held in its
treasury, in the sole discretion of the Board.
ARTICLE VI
ADJUSTMENTS
Adjustments Upon Changes in Capitalization. Subject to any required action
by the Company's directors and shareholders, the number of shares provided for
in each outstanding stock option and the price per share thereof, and the number
of shares provided for in the Plan, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of the Company's Common
Stock resulting from a subdivision or consolidation of shares or the payment of
a stock dividend (but only on the Common Stock), a stock split, a reverse stock
split, or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company, and shall also be
proportionately adjusted in the event of a spin-off, spin-out, or other
distribution of assets to shareholders of the Company, to the extent necessary
to prevent dilution of the interests of grantees pursuant to the Plan or of the
other shareholders of the Company, as applicable. If the Company shall engage in
a merger, consolidation, reorganization or recapitalization, each outstanding
stock option (or if such transaction involves less than all of the shares of the
Company's Common Stock, then a number of stock options proportionate to the
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number of such involved shares), shall become exercisable for the securities and
other consideration to which a holder of the number of shares of the Company's
Common Stock subject to each such stock option would have been entitled to
receive in any such merger, consolidation, reorganization or recapitalization.
Acceleration. In the event of a potential merger or consolidation
involving the Company regardless of whether the Company is the surviving entity
of such merger or consolidation, a potential liquidation or dissolution of the
Company, a potential sale or other disposition by the Company of all or
substantially all of its assets, or a potential sale or other disposition by the
shareholders of the Company of all or substantially all of the outstanding
Common Stock to one purchaser (any such merger, consolidation, liquidation,
dissolution, or sale being referred to herein as a "Significant Event"), then
the Company shall have the option of terminating all outstanding stock options
upon the actual occurrence of the Significant Event, by notice to all optionees
at least 15 days before the occurrence of the Significant Event. Any exercise by
an optionee in these circumstances may be conditioned upon the occurrence of the
Significant Event. Upon the actual occurrence of the Significant Event, each
outstanding stock option shall terminate if the Company exercises its option
under this paragraph (b). If the potential Significant Event does not in fact
occur for any reason, then the Company's exercise of its option under this
paragraph (b) shall have no effect and his or her rights will be the same as if
the Company had never exercised its option under this paragraph (b). --
(c) Change of Par Value. In the event of a change in the Company's Common
Stock which is limited to a change of all of its authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be Common
Stock within the meaning of the Plan.
(d) Miscellaneous. The adjustments provided for in this Article shall be
made by the Board whose determination in that respect shall be final, binding
and conclusive. Except as hereinbefore expressly provided in this Article, the
holder of a stock option shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock or other stock not actually issued
and delivered to the holder. Any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect and no adjustment by reason thereof shall be made with respect to the
number or price of shares of the Company's Common Stock subject to any stock
option. The grant of a stock option pursuant to the Plan shall not affect in any
way the right or power of the Company to, among other things, make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve or liquidate or sell or
transfer all or any part of its business or assets.
ARTICLE VII
AMENDMENT OR DISCONTINUANCE
The Board may at any time and from time to time amend the Plan, as it
shall deem advisable, provided that the Plan may not be amended more than once
every six months, other than to comport with changes in the Code, ERISA, or the
rules thereunder. In addition to Board approval of any amendment to the Plan, if
the Board further determines on advice of counsel that it is necessary or
desirable to obtain shareholder approval of any amendment to the Plan in order
to comply with Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, or any successor rule, as it shall read as of
the time of amendment, or for any other reason, then the effectiveness of any
such amendment may be conditioned upon its approval by the holders of a majority
of the outstanding voting stock of the Company (voting as a single class), and
entitled to vote on, and voted for or against approval of, the amendment at a
meeting of such shareholders duly held in accordance with the applicable laws of
the state or other jurisdiction in which the Company is incorporated, or such
other shareholder approval as may be specified by the Board.
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No change may be made in, and no amendment, rescission, suspension or
termination of the Plan shall have an effect on, stock options previously
granted under the Plan which may impair or alter the rights or obligations of
the holders thereof, except that any change may be made in stock options
previously granted with the consent of the optionees.
ARTICLE VIII
EFFECTIVE DATE; SHAREHOLDER APPROVAL
The amendments to the Plan shall be effective as of February 22, 2001, the
date on which it received the approval of the Company's Board of Directors.
However, the Plan amendments and all stock options granted under the Plan after
February 22, 2001 (but not the previous 1992 Outside Director Stock Option Plan
of the Company) shall be void if the Plan is not approved by the shareholders,
in which case, the previous 1992 Outside Director Stock Option Plan of the
Company shall remain in full force and effect. The Plan shall be deemed approved
by the holders of the outstanding voting stock of the Company by the affirmative
votes of the holders of a majority of the outstanding voting stock of the
Company present, or represented, and entitled to vote at a meeting of such
shareholders duly held in accordance with the applicable laws of the state of
Delaware, in which the Company is incorporated. No stock option granted under
the Plan (but not the previous 1992 Outside Director Stock Option Plan of the
Company) shall be exercisable in whole or in part unless and until such
shareholder approval is obtained.
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EXHIBIT "A"
-------------------------------------------
AMERICAN ECOLOGY CORPORATION
DIRECTOR STOCK OPTION AGREEMENT
-------------------------------------------
10,000 SHARES
(DATE OF ELECTION)
As additional incentive for services to be rendered to American Ecology
Corporation (the "Company") as a member of the Board of Directors of the Company
(the "Board"), and in order to induce ____________________ ("Optionee") to
continue rendering such services to the Company, the Company hereby grants to
Optionee this Director Stock option (the "Option") to purchase from the Company
_________ shares of the Company's Common Stock, par value $0.01 per share
("Common Stock"), at a price of $______ per share, subject, however, to the
provisions of the Company's Amended and Restated 1992 Outside Director Stock
Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A, and
to the following terms and conditions:
1. Subject to the Plan. The terms and provisions of the Plan and any
amendments thereto, are incorporated herein and made a part hereof. If any
provision of this Option conflicts with any provision of the Plan, the
provisions of the Plan shall govern.
2. Term. This Option shall expire ten (10) years after the effective date
of this Agreement (the "Expiration Date"). This Option may be exercised at any
time after the Plan is approved by the Company's shareholders and on or before
the Expiration Date.
3. Limitation Upon Transfer. During the lifetime of Optionee, this Option
and all rights granted hereunder shall not be transferred, assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise) except by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act, or the rules
thereunder, and shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any of such rights contrary to the provisions hereof,
or upon the levy of any attachment or similar process upon this Option or such
rights, this Option and such rights shall immediately become null and void.
4. Method of Exercise. This Option may be exercised in whole or in part at
any time or from time to time during its term by tendering to the Company
written notice of exercise accompanied by the aggregate purchase price for the
shares with respect to which this Option is being exercised. The purchase price
of shares of Common Stock of the Company acquired upon the exercise of this
Option shall be paid by the Optionee by the delivery of cash or certified or
cashier's check payable to the order of the Company, or upon receipt of all
required regulatory approvals, if any, by the delivery to the Company of shares
of the Company's Common Stock theretofore owned by the Optionee having a fair
Market Value (as defined in the Plan) equal to such notice to the Optionee as
soon as practicable after receipt of such notice and payment. Upon exercise of
this Option in full, this Option shall be surrendered to the Company. Upon
exercise of this Option in part, the Company shall be entitled to make a
notation on the face of this Option reflecting such partial exercise and the
extent of which this Option remains exercisable, but the failure of the Company
to make any such notation shall not increase or otherwise affect the obligations
or rights of the Company thereunder.
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5. Successors of the Company. This Option shall inure to the benefit of
and be binding upon the Company, and its successors and assigns, as well as upon
the Optionee and his legal representatives, heirs, legatees and distributees.
IN WITNESS WHEREOF, this Option has been executed effective ______________
__________________.
COMPANY ADDRESS: AMERICAN ECOLOGY CORPORATION
805 W. Idaho, Suite 200
Boise ID 83702 __________________________________________
By: Jack K. Lemley
Its: Chairman of the board
OPTIONEE
__________________________________________
By: ____________________________________
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EXHIBIT B
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
OF AMERICAN ECOLOGY CORPORATION
American Ecology Corporation, a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. That the Corporation hereby effects a reverse stock split by changing
and reclassifying each 100 shares of the Corporation's common stock, par value
$.01 per share, which is issued and outstanding at 6:00 p.m., eastern time, on
June 29, 2001 into one share of such common stock. Fractional shares held by
record stockholders who as a result of the reverse stock split hold less than
one share will be converted into the right to receive the fair value of such
fractional interests as determined by the Board of Directors of the Corporation.
2. That said amendment has been duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law by approval by
the Board of Directors and by the affirmative vote of the holders of at least a
majority of the outstanding capital stock entitled to vote thereon effective as
of 6:00 p.m., eastern time, on June 29, 2001.
IN WITNESS WHEREOF, American Ecology Corporation has caused this
Certificate of Amendment to be signed by its Chairman of the Board of Directors
and attested by its Secretary this _________ day of _____________, 2001.
AMERICAN ECOLOGY CORPORATION
By: ________________________________
Jack Lemley,
Chairman of the Board
Attest:
_______________________________
Secretary
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CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
OF AMERICAN ECOLOGY CORPORATION
American Ecology Corporation, a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. That the Corporation hereby effects a forward stock split by changing
and reclassifying each one share of the Corporation's common stock, par value
$.01 per share, which is issued and outstanding at 6:01 p.m., eastern time, on
June 29, 2001 into 100 shares of such common stock.
2. That said amendment has been duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law by approval by
the Board of Directors and by the affirmative vote of the holders of at least a
majority of the outstanding capital stock entitled to vote thereon effective as
of 6:01 p.m., eastern time, on June 29, 2001.
IN WITNESS WHEREOF, American Ecology Corporation has caused this
Certificate of Amendment to be signed by its Chairman of the Board of Directors
and attested by its Secretary this _________ day of _____________, 2001.
AMERICAN ECOLOGY CORPORATION
By: ________________________________
Jack Lemley,
Chairman of the Board
Attest:
_______________________________
Secretary
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EXHIBIT C
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
governmental bodies, shareholders, or the public; the Corporation's systems of
internal controls regarding finance, accounting, legal and regulatory compliance
that management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with these
functions, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and practices
at all levels. The audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing function.
Review and appraise the Corporation's regulatory compliance and
employee health and safety policies.
Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
function, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter by
employing its combined experience and best judgment consistent with specific
circumstances. It is not the purpose of the Audit Committee to conduct or repeat
financial audits in the detail and extent expected of professional auditing
firms or to conduct or repeat legal investigations in the detail and extent of
professional attorneys.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
All members of the Committee shall have a working familiarity with good
management practices. At least one member of the Committee shall have management
experience related to relevant federal and state regulations
The members of the Committee shall be elected by the Board at the
annual organization meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet in person or by telephone at least four times
annually or more frequently as circumstances dictate. At least two meetings
shall be in person. As a part of its job to foster open communication, the
Committee shall meet at least annually with management, the director of the
internal auditing function and the independent accountants in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
In fulfilling its responsibilities and duties, the Audit Committee
shall communicate its findings and recommendations to the cognizant managers or
to the full Board as it deems appropriate.
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements or other
financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review
rendered by the independent accountants.
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3. Review the internal reports to management prepared by the internal
auditing function and management's response.
INDEPENDENT ACCOUNTANTS
4. In consultation with the CEO and CFO, recommend to the Board of
Directors the selection of the independent accountants, considering
independence and effectiveness and approve the fees and other
compensation to be paid to the independent accountants. On an annual
basis, the Committee should review and discuss with all significant
relationships the accountants have with the Corporation to determine
the accountants objectivity.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organizations financial statements.
FINANCIAL REPORTING PROCESSES
7. In consultation with the independent accountants and the internal
auditing function, consider the integrity of the organization's
financial reporting processes, both internal and external.
8. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
9. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
auditing function.
10. Following completion of the annual audit, review separately with each
of management, the independent accountants and the internal auditing
function any significant difficulties encountered during the course of
the audit, including any restrictions on the scope of work or access to
required information.
REGULATORY AND LEGAL COMPLIANCE
11. Review management's monitoring of the Corporation's legal compliance
with the organization's financial and regulatory statements, reports
and other information disseminated to governmental organizations, and
the public.
12. Review management's monitoring of the Corporation's legal compliance
with the organization's financial and regulatory statements, reports
and other information disseminated to governmental organizations, and
the public.
13. Review activities, organizational structure, and qualifications of the
internal audit function.
14. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies and other legal matters
that could have a significant impact on the organization's financial
statements.
15. Review with one or more selected site managers, at least annually in
executive session, their understanding of and compliance with Financial
Reporting Policy, Regulatory Policy, and such other matters as the
Committee deems appropriate.
16. Perform any other activities consistent with the Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
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Please mark
your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
MEMBERS, STRIKE A LINE THROUGH THE MEMBERS NAME IN THE LIST BELOW)
listed to the right WITHHOLD AUTHORITY ROTCHFORD L. BARKER, PAUL C. BERGSON,
(except as marked to the contrary) to vote for all nominees KEITH D. BRONSTEIN, EDWARD F. HEIL,
listed to the right JACK K. LEMLEY, PAUL F. SCHUTT, DAN ROSTENKOWSKI
2. TO AMEND THE 1992 DIRECTORS' STOCK OPTION PLAN TO INCREASE THE SHARES
AVAILABLE FOR GRANT.
FOR AGAINST ABSTAIN
3. TO APPROVE A 100:1 REVERSE STOCK SPLIT FOLLOWED BY A 1:100 FORWARD STOCK
SPLIT OF THE COMPANY'S VOTING COMMON STOCK.
FOR AGAINST ABSTAIN
4. TO RATIFY THE SELECTION OF BALUKOFF, LINDSTROM & CO., P.A. AS THE COMPANY'S
INDEPENDENT AUDITORS.
FOR AGAINST ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
The undersigned acknowledge(s) receipt of the Notice of the aforesaid Annual
Meeting, the Proxy Statement and Annual Report accompany the same, each
dated April 17, 2001.
Date_____________________________________________, 2001
_________________________________________________ SIGNATURE OF STOCKHOLDER
_________________________________________________ SIGNATURE IF HELD JOINTLY
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AMERICAN ECOLOGY CORPORATION
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, hereby revoking all prior proxies, hereby appoints Jack K.
Lemley, James R. Baumgardner, and Robert S. Thorn and each of them, proxies with
full and several power of substitution, to represent and to vote all the shares
of Common Stock of AMERICAN ECOLOGY CORPORATION that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
AMERICAN ECOLOGY CORPORATION to be held on May 24, 2001, and at any
adjournment(s) thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATIONS ON THE
REVERSE SIDE. IN THE ABSENCE OF SUCH INDICATIONS, A SIGNED PROXY WILL BE VOTED
FOR PROPOSALS 1- 4, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXY WITH
RESPECT TO ANY OTHER BUSINESS PROPERLY BEFORE THE MEETING.
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