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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Soliciting Material Pursuant to
[ ] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
WASTE TECHNOLOGY CORP.
- --------------------------------------------------------------------------------
(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.
[ ] $125 Per Exchange Act Rules-O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] 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.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
WASTE TECHNOLOGY CORP.
5400 RIO GRANDE AVENUE
JACKSONVILLE, FLORIDA 32254
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 17, 2004
TO THE STOCKHOLDERS:
Notice is hereby given that the annual meeting of stockholders (the "Annual
Meeting") of Waste Technology Corp. (the "Company") has been called for and will
be held at 10:00 A.M., local time, on Monday, May 17, 2004, at the offices of
the Company, 5400 Rio Grande Avenue, Jacksonville, Florida 32254 for the
following purposes:
1. To elect one (1) Class I Director, Robert Roth, two (2) Class II
Directors, Ted C. Flood and Morton S. Robson, and one (1) Class III Director,
William E. Nielsen, respectively to the Board of Directors;
2. To ratify the appointment by the Board of Directors of KPMG LLP, to
serve as the independent certified public accountants for the current fiscal
year; and
3. To consider and transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 11, 2004 as
the record date for the determination of the stockholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournments thereof. The list of
stockholders entitled to vote at the Annual Meeting will be available for
examination by any stockholder at the Company's offices at 5400 Rio Grande
Avenue, Jacksonville, Florida 32254, for ten (10) days prior to May 17, 2004.
By Order of the Board of Directors
William E. Nielsen, President
Dated: April 16, 2004
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE FILL IN, SIGN, AND
DATE THE PROXY SUBMITTED HEREWITH AND RETURN IT IN THE ENCLOSED STAMPED
ENVELOPE. THE GRANTING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH
PROXY IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING. THE ENCLOSED
PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS.
WASTE TECHNOLOGY CORP.
PROXY STATEMENT
GENERAL
This proxy statement is furnished by the Board of Directors of Waste
Technology Corp., a Delaware corporation (sometimes the "Company" or "Waste
Tech"), with offices located at 5400 Rio Grande Avenue, Jacksonville, Florida
32254, in connection with the solicitation of proxies to be used at the annual
meeting of stockholders of the Company to be held on May 17, 2004 and at any
adjournments thereof (the "Annual Meeting"). This proxy statement will be mailed
to stockholders beginning approximately April 15, 2004. If a proxy in the
accompanying form is properly executed and returned, the shares represented
thereby will be voted as instructed on the proxy. Any proxy may be revoked by a
stockholder prior to its exercise upon written notice to the President of the
Company, or by a stockholder voting in person at the Annual Meeting.
All properly executed proxies received prior to the Annual Meeting will be
voted at the Annual Meeting in accordance with the instructions marked thereon
or otherwise as provided therein. Unless instructions to the contrary are
indicated, proxies will be voted FOR the election of the Directors named therein
and FOR the ratification of the selection by the Board of Directors of KPMG LLP,
as the independent certified public accountants of the Company.
A copy of the annual report of the Company for the fiscal year ended
October 31, 2003 ("Fiscal 2003"), which contains financial statements audited by
the Company's independent certified public accountants, accompanies this proxy
statement.
The cost of preparing, assembling and mailing this notice of meeting, proxy
statement, the enclosed annual report and proxy will be borne by the Company. In
addition to solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra remuneration, may
solicit proxies personally or by telephone, telegraph, or cable. The Company may
also request brokerage houses, nominees, custodians and fiduciaries to forward
soliciting material to the beneficial owners of the Common Stock. The Company
will reimburse such persons for their expenses in forwarding soliciting
material.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on March 11, 2004 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice
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of, and to vote at the Annual Meeting. Only stockholders on the Record Date will
be able to vote at the Annual Meeting.
As of the Record Date, 5,516, 349 shares of the Company's common stock,
$.01 par value per share ("Common Stock") are outstanding, and each share will
be entitled to one (1) vote, with no shares having cumulative voting rights.
Holders of shares of Common Stock are entitled to vote on all matters. Unless
otherwise indicated herein, a majority of the votes represented by shares
present or represented at the Annual Meeting is required for approval of each
matter which will be submitted to stockholders. The Company also has 10,000,000
shares of Preferred Stock, $.0001 par value per share authorized, none of which
are outstanding.
Management knows of no business other than that specified in Items 1 and 2
of the Notice of Annual Meeting which will be presented for consideration at the
Annual Meeting. If any other matter is properly presented, it is the intention
of the persons named in the enclosed proxy to vote in accordance with their best
judgment.
The following table sets forth the share holdings of those persons who own
more than 5% of the Company's common stock as of the record date, March 11,
2004, with these computations being based upon 5,516,349 shares of the Company's
common stock being outstanding as of that date and as any shareholder, as it may
pertain, assumes the exercise of options held by such shareholder as of March
11, 2004.
FIVE PERCENT STOCKHOLDERS
-------------------------
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL APPROXIMATE
BENEFICIAL OWNER OWNERSHIP(1) Percent of Class
- ---------------- --------- ----------------
Ted C. Flood 711,732 12.9%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
William E. Nielsen 577,676(2) 10.5%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
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1 Unless otherwise stated, all shares of Common Stock are directly held
with sole voting and dispositive power.
2 Consists of 327,676 shares held directly and options to purchase 250,000
shares.
3
Morton S. Robson 586,854(3) 10.6%
530 Fifth Avenue
New York, New York 10036
Robert Roth 318,638(4) 5.8%
Georgetown Electric, Ltd
Unit 17, 2501 W. Third Street
Wilmington, Delaware 19805
Cosimo Tacopino 698,540(5) 12.7%
145 Connecticut Street
Staten Island, New York 10207
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PROPOSAL NO. 1:
ELECTION OF DIRECTORS
GENERAL
The Board of Directors is divided into three (3) classes of
directors ("Class I", "Class II", and "Class III"), with each class having as
nearly the same number of directors as practicable. Stockholders elect such
class of directors, Class I, Class II, or Class III, as the case may be, to
succeed such class directors whose terms are expiring, for a three (3) year
term, and such class of directors shall serve until the successors are elected
and qualify. Under this configuration, it was intended that one class of
directors' terms would expire each year resulting in staggered elections of the
Company's directors. Since the Company has not held an annual meeting since
July, 2001, the terms of the directors of all three classes of directors will
expire by the date of this year's annual meeting. Thus, in order to comply with
- -----------------------
3 Consists of 78,454 shares held directly; 2,400 shares held as custodian
for his minor son; 505,000 shares held by Robson & Miller, of which Mr. Robson
is the senior partner; and 1,000 shares held by the Robson & Miller pension
plan. Excludes 89,728 shares held by Kenneth N. Miller, a partner of Mr. Robson
who is the beneficial and record owner of such shares.
4 Includes shares owned by family members of Robert Roth as follows: his
wife, Patricia B. Roth (114,182), his son, Steven F. Roth (83,968), his
daughter, Kathie Cecile Roth (10,000), and his son Charles B. Roth and his wife
Marta Roth (107,188).
5 Consists of 211,880 shares held directly; 475,660 shares owned jointly
with his wife, Erma Tacopino, and 11,000 shares held directly by Erma Tacopino.
4
the intent to have staggered elections of the Company's directors, the term of
each Class I director elected shall expire at the next annual meeting of
stockholders of the Company to be held in 2005; the term of each Class II
director elected shall expire in two (2) years at the annual meeting of the
stockholders of the Company to be held in 2006; and, the term of each Class III
director elected shall expire in three (3) years at the annual meeting of the
stockholders of the Company to be held in 2007.
The following is the apportionment of the nominee-directors into classes:
NO. OF CLASS TERM EXPIRES NOMINEES
- ------------ ------------ --------
Class I 2005 Annual Robert Roth
Stockholder's Meeting
Class II 2006 Annual Ted C. Flood
Stockholder's Meeting Morton S. Robson
Class III 2007 Annual William E. Nielsen
Stockholder's Meeting
During Fiscal 2003 the Board of Directors of the Company consisted of four
(4) persons, William E. Nielsen, Ted C. Flood, Robert Roth and Morton S. Robson.
The present nominees for directors are Robert Roth for Class I director, Ted C.
Flood and Morton S. Robson for Class II directors and William E. Nielsen for
Class III director. Unless authority is withheld, the proxies in the
accompanying form will be voted in favor of the election of the nominees named
above as directors. If any nominee should subsequently become unavailable for
election, the persons voting the accompanying proxy may in their discretion vote
for a substitute.
BOARD OF DIRECTORS
- ------------------
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. Although only
one (1) member of the Board is involved in day-to-day operating details, the
other members of the Board are kept informed of the Company's business by
various reports and documents sent to them as well as by operating and financial
reports made at Board meetings. The Board of Directors held one (1) meeting in
Fiscal 2003. All directors attended all of the meetings
5
of the Board of Directors and of the committees on which such directors served
during Fiscal 2003. Although it has no formal policy requiring attendance, the
Company encourages all Directors to attend the annual meeting of stockholders.
The Company anticipates that all of its Directors will attend this year's Annual
Meeting.
During Fiscal 2003, Messrs, Nielsen, Robson and Roth were members of the
Company's audit committee. During Fiscal 2003, Messrs, Robson and Roth were
members of the Company's compensation committee. The Company does not, at the
present time, have an independent "financial expert", as that term is defined in
the Sarbanes-Oxley Act of 2002, on the Board of Directors and the Audit
Committee of the Company. As of the present time, Mr. Nielsen serves as the
Company's financial expert. The Company has sought and continues to seek an
appropriate individual to serve on the Board of Directors and the Audit
Committee who will meet the requirements necessary to be an independent
financial expert as well as to find other independent directors to serve on the
Company's Board of Directors. The Company has been unable to find an independent
financial expert and other independent directors because it does not have
sufficient funds to purchase directors and officers insurance or compensate such
independent directors for their services.
The Company does not have a nominating committee and the full Board of
Directors performs this function. In its role as nominating committee, the Board
identifies the candidates for Board membership. In identifying Board candidates,
the Board will seek recommendations from existing Board members, executive
officers of the Company and all persons who own more than five percent (5%) of
the Company's outstanding stock. The Board has no stated specific minimum
qualifications that must be met by a candidate for a position on the Board of
Directors. The Board will consider a variety of factors in evaluating the
qualifications of a candidate including the candidate's professional experience,
educational background, knowledge of the Company's business and personal
qualities. The Board may, when appropriate, retain an executive search firm and
other advisors to assist it in identifying candidates for the Board. In
addition, the Board will consider any candidates that may have been recommended
by any of the Company's stockholders who have made those recommendations in
accordance with the procedures described below under the heading "Stockholders'
Proposals." In addition, such stockholder recommendation must be accompanied by
(1) such information about each prospective director nominee as would have been
required to be included in a proxy statement filed pursuant to the rules of the
Securities and Exchange Commission had the prospective director nominee been
nominated by the Board of Directors and (2) that the prospective director
nominee has consented to be named, if nominated, as a nominee and, if elected,
to serve as a director.
6
CODE OF ETHICS
--------------
The Company has adopted a code of business conduct and ethics for directors
and officers (including the Company's principal executive officer, principal
financial officer and controller), known as the Standards of Business Conduct.
The Standards of Business Conduct are available on the Company's website at
http://www.intl-baler.com. Stockholders may also obtain a free copy of the
Standards of Business Conduct from the Company by writing and requesting a copy
from: Waste Technology Corporation Attention: William E. Nielsen, 5400 Rio
Grande Avenue, Jacksonville, Florida 32254, (904)358-3812
STOCKHOLDER COMMUNICATION WITH THE BOARD OF DIRECTORS
-----------------------------------------------------
Stockholders may communicate with the Board of Directors of the Company by
writing to: William E. Nielsen, President, Waste Technology Corporation, 5400
Rio Grande Avenue, Jacksonville, FL 32254 or by E-Mail: to: Ibc@intl-baler.com
Subject: Communication to Board of Directors. All letters and e-mails will be
answered, if possible, and will be distributed to board members as appropriate.
Notwithstanding the foregoing, the Company has the authority to discard or
disregard any communication which is unduly hostile, threatening, illegal or
otherwise inappropriate or to take any other appropriate actions with respect to
such communications.
BENEFICIAL OWNERSHIP
--------------------
The following table sets forth certain information with respect to the
ownership of the Company's Common Stock as of the Record Date, March 11, 2004,
of the executive officers and directors of the Company and the directors and
officers of the Company as a group. The computations set forth in the table are
based upon 5,516,349 shares of the Company's common stock being outstanding as
of March 11, 2004 and as to any shareholder, as it may pertain, assumes the
exercise of options held by such shareholder as of March 11, 2004.
7
DIRECTORS AND OFFICERS
NUMBER OF SHARES PERCENT
NAME AND ADDRESS TITLE BENEFICIALLY OWNED OF CLASS
- ---------------- ----- ------------------ --------
William E. Nielsen Director; 577,676(6) 10.5%
5400 Rio Grande Avenue President;
Jacksonville, Florida 32254 CEO; CFO
Ted C. Flood Director 711,732(7) 12.9%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
Morton S. Robson Director; 586,854(8) 10.6%
530 Fifth Avenue Executive
New York, New York 10036 Vice-President;
Secretary
Robert Roth Director 318,638(9) 5.8%
Georgetown Electric, Ltd.
Unit 17, 2501 W. Third Street
Wilmington, Delaware 19805
David B. Wilhelmy Vice-President 160,000 2.9%
5400 Rio Grande Ave.
Jacksonville, FL 32254
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6 Consists of 327,676 shares held directly and options to purchase 250,000
shares.
7 Consists of 711,732 shares held directly.
8 Consists of 78,454 shares held directly; 2,400 shares held as custodian
for his minor son; 505,000 shares held by Robson & Miller, of which Mr. Robson
is the senior partner; and 1,000 shares held by the Robson & Miller pension
plan. Excludes 89,728 shares held by Kenneth N. Miller, a partner of Mr. Robson
who is the beneficial and record owner of such shares.
9 Includes shares owned by family members of Robert Roth as follows: his
wife, Patricia B. Roth (114,182), his son, Steven F. Roth (83,968), his
daughter, Kathie Cecile Roth (10,000), and his son Charles B. Roth and his wife
Marta Roth (107,188).
8
Waste Technology Corporation 256,339(10) 4.6%
Profit Sharing Trust
All Officers and Directors 2,611,239 47.3%
as a Group (5 persons)
CHANGE IN CONTROL
-----------------
To the knowledge of the Company's management, there are no present
arrangements or pledges of the Company's securities which may result in a change
in control of the Company.
BACKGROUND OF DIRECTORS
-----------------------
The following is a brief account of the experience, for at least the past
five (5) years, of each nominee for director.
William E. Nielsen, age 56, joined the Company in June 1994 as its Chief
Financial Officer and was elected a Director on November 20, 1997. He was
elected President and Chief Executive Officer on May 8, 2001. Prior to joining
the Company, Mr. Nielsen acted as a financial consultant to Fletcher Barnum
Inc., a privately held manufacturing concern, from October 1993 through June
1994. From 1980 through July 1993, he was the Vice President, Administration and
Finance at Unison Industries, Inc. Mr. Nielsen received a BBA in Finance and an
M.B.A. at Western Illinois University in 1969 and 1970, respectively.
Ted C. Flood, age 73, was elected as a Director of the Company in May,
1989. From February 27, 1993, until May 8, 2001, he served as President and
Chief Executive Officer of the Company and President and Chief Executive Officer
of the Company's subsidiaries, International Baler Corporation ("IBC") and
Consolidated Baling Machine Co., Inc. ("CBM"). From 1960 to 1972, he was
President of Peabody Solid Waste Management Company (EZ Pack). From 1972 to
1975, Mr. Flood was a corporate Vice-President of marketing for Browning Ferris
Industries. During the period from 1977 to 1988,he was the principal shareholder
and President of Solid Waste Recovery Systems.
Morton S. Robson, age 81, was elected a Director and the Secretary of the
Company in 1989. On February 23, 1993, he was elected Executive Vice-President
of the Company. Mr. Robson is the senior partner of the law firm of Robson
Ferber Frost Chan & Essner, LLP, which acts as general counsel to the Company.
Mr. Robson obtained an LLB degree from St. John's University School of Law.
- -----------------------
10 Employees' Profit Sharing Trust of which Messrs. Robson and Nielsen are
Trustees.
9
Robert Roth, age 78, was elected as a Director of the Company on October
12, 1993. He is the Chairman of the Board and Treasurer of Georgetown Electric,
Ltd., and a Director of Keystone Insurance Company, both publicly held
companies. For more than the past five (5) years, in addition to being the
Chairman of the Board and Treasurer of Georgetown Electric, Ltd., he has been
the President and Chief Executive Officer of Browning Weldon Corporation, a
privately held financial company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
In fiscal 2003, the Company, its officers and directors, were not
delinquent in filing of any of its Form 3, 4, and 5 reports.
FAMILY RELATIONSHIPS
--------------------
There are no family relationships between executive officers or directors
of the Company. However, Robert Roth is the husband of Patricia B. Roth, and
father of Steven F. Roth, major shareholders of the Company. See, "Certain
Relationships and Related Transactions"below. For so long as Patricia Roth and
Steven Roth are the owners of more than one percent (1%) of the number of
outstanding shares of Common Stock, the Company has agreed to use its best
efforts to cause the election of Robert Roth as a member of the Board of
Directors.
Except as noted above, there is no understanding or arrangement between any
director or any other persons pursuant to which such individual was or is to be
selected as a director or nominee of the Company.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGs
----------------------------------------
To the knowledge of management, during the past five years, no present or
former director, executive officer, affiliate or person nominated to become a
director or an executive officer of the Company:
(1) Filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed by
a court for the business or property of such person, or any partnership in which
he or she was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he or she was an
executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
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(3) Was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him or her from or otherwise limiting his
or her involvement in any type of business, commodities, securities or banking
activities;
(4) Was found by a court of competent jurisdiction in a civil action or by
the SEC or the Commodity Futures Trading Commission ("CFTC") to have violated
any federal or state securities law or Federal commodities law, and the judgment
in such civil action or finding by the SEC or CFTC has not been subsequently
reversed, suspended, or vacated.
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth a summary of all compensation awarded to,
earned by or paid to, the Company's Chief Executive Officer and each of the
Company's executive officers whose compensation exceeded $100,000 per annum for
services rendered in all capacities to the Company and its subsidiaries during
fiscal years ended October 31, 2003, October 31, 2002, and October 31, 2001(11):
- -----------------------
11 The law firm of Robson Ferber Frost Chan & Essner, LLP and its
predecessor, Robson & Miller, LLP, have provided legal services for the Company.
Morton S. Robson, the Executive Vice President and Secretary and a Director of
the Company, is the senior partner of Robson Ferber Frost Chan & Essner, LLP.
During Fiscal 2003, Robson Ferber Frost Chan & Essner, LLP received $20,395 from
the Company for legal services rendered. As of the end of Fiscal 2003 accrued
but unpaid legal fees and accrued interest due to Robson Ferber Frost Chan &
Essner, LLP from the Company amounted to $570,706.
11
SUMMARY COMPENSATION TABLE
--------------------------
ANNUAL COMPENSATION LONG TERM AWARDS
- --------------------------------------------------------------------------------------------------------------------------------
NAME AND YEAR SALARY BONUS OTHER ANNUAL NUMBER ALL OTHER
PRINCIPAL POSITION ($) ($) COMPENSATION OF
($) OPTIONS COMPENSATION
- --------------------------------------------------------------------------------------------------------------------------------
William E. Nielsen 2003 92,854 -0- -0- -0- -0-
President & CEO 2002 80,021 -0- -0- 250,000 -0-
2001 80,730 -0- -0- -0- -0-
Ted C. Flood, 2003 -0- -0- 52,322(13) -0- -0-
CEO and President 2002 -0- -0- -0- -0- -0-
of Company 2001 169,911(12) -0- -0- -0- -0-
- --------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS AND OPTION EXERCISES FOR FISCAL 2003
--------------------------------------------------
No options were granted or exercised during fiscal 2003 by the Company's
Chief Executive Officer or any of the Company's most highly compensated
executive officers whose compensation exceeded $100,000 for Fiscal 2003.
COMPENSATION OF DIRECTORS
-------------------------
No Director of the Company received remuneration for services as a Director
during fiscal 2003.
- -----------------------
12 Ted C. Flood, former President of the Company and President of the
Company's subsidiaries, received $147,657 in compensation from IBC during the
fiscal year ended October 31, 2001, and $22,254 from CBM during that period.
13 Ted C. Flood, former president of the Company and former president of
the Company's subsidiaries, received $52,322 in deferred compensation payments
during the fiscal year ended October 31, 2003.
12
EMPLOYMENT CONTRACTS
--------------------
The Company does not have any employment contracts with its Chief Executive
Officer or any other member of management.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ----------------------------------------------
RELATED PARTY TRANSACTIONS
--------------------------
LOANS TO OFFICERS AND DIRECTORS
-------------------------------
On December 29, 1995, the Company transferred a life insurance policy,
covering the life of its then President, Ted C. Flood, to Mr. Flood, in exchange
for a note receivable. The amount of the note receivable from Mr. Flood was
equal to the amount of the cash surrender value of the policy at the time of the
transfer. Mr. Flood also executed promissary notes to the Company for the
subsequent premium payments on the policy which were made by the Company.
Interest on these notes accrued at 6% per annum. No principal or interest was
due until proceeds from the policy were realized.
In March 2003, the Company reached an agreement with Mr. Flood for deferred
compensation payments. Pursuant to this agreement, the Company will make
deferred compensation payments to Mr. Flood with an initial present value of
$463,000 payable over a ten year period. As part of this agreement, Mr. Flood
agreed to exchange the life insurance policy to settle the notes due from him to
the Company. In June 2003, the life insurance policy was transferred to the
Company and the Company surrendered the policy for the cash value of $306,000.
This amount was applied to the notes receivable due to the Company from Mr.
Flood.
As of this date, Morton S. Robson, the Company's Executive Vice President
and Secretary and a Director and Corporate Counsel, was indebted to the Company.
The transaction giving rise to the obligations owed to the Company by Mr. Robson
is described below.
On April 12, 1990, four individuals, including Leslie N. Erber, then
Chairman of the Board and President of the Company, and Morton S. Robson entered
into an agreement with a group of dissident shareholders to purchase an
aggregate of 294,182 shares at a purchase price of $4.00 per share. Mr. Erber
and Mr. Robson each purchased 134,951 shares of stock. The dissidents had
previously filed Forms 14B with the Commission indicating their intention of
seeking control of the Company through the solicitation of consents from
shareholders to a reduction in the number of directors and the replacement of
the present directors with directors nominated by the dissident group. As part
of the agreement to purchase the shares, the dissident shareholders who were
selling their shares agreed that, for a period of ten years, they would not seek
to obtain
13
control of the Company or solicit proxies in opposition to the Board of
Directors on any matter.
Messrs. Erber and Robson and the two other persons borrowed the aggregate
amount of $1,244,328 from the Company in 1990 and 1991 to purchase these shares.
Most of the loan (91.5%) was made in equal amounts to Mr. Erber and Mr. Robson.
Those advances were secured by a lien on the 294,182 shares of Common Stock. In
addition, Mr. Erber agreed to transfer to the Company as additional collateral,
156,000 shares of his stock of the Company. Approximately one-half of this sum
was advanced on April 12, 1990 and the balance during 1991. In April 1990,
promissory notes evidencing the first half of the funds were executed bearing
interest at the rate of 9% per annum and payable in three annual installments
commencing on April 12, 1991. Thereafter, independent members of Waste Tech's
Board of Directors unanimously extended the payment due date of each payment for
one (1) year. New promissory notes to Waste Tech were thereafter executed for
the full amount of the advance, payable in three annual installments commencing
April 12, 1992. The notes were secured by a lien on all of these shares which
were acquired. In June 1992, $200,000 of the principal amount of these loans was
repaid to the Company through a sale of 100,000 of the acquired shares at $2.00
per share. Payment of the remainder of the principal due in 1993 and 1994,
together with the accrued interest, was subsequently deferred for two years by
the Company's Board of Directors, and deferred again until 2001.
Thereafter, Mr. Erber, in connection with his termination as President of
the Company, turned in all of his stock in to the Company and its subsidiary,
IBC, in full satisfaction of his obligation of $698,527.
As of the end of fiscal 2003, the Company owed Mr. Robson's law firm the
sum of $570,706 for legal fees and accrued interest. The Company has acquired a
security interest in the shares acquired by Robson & Miller, by its exercise of
an option as collateral security for repayment of the outstanding loan of Mr.
Robson. As of October 31, 2003, Mr. Robson still owed the Company $427,364
together with accrued interest. The largest aggregate outstanding loan balance
of Mr. Robson's during the past two (2) fiscal years was $950,498.
LEGAL SERVICES
--------------
The law firm in which Morton S. Robson, the Secretary and a Director of the
Company, is a partner provided services to the Company in fiscal 2003. During
fiscal 2003, Mr. Robson's law firm received $20,395 from Waste Tech as payment
for legal services rendered. As of the end of fiscal 2003, accrued but unpaid
legal fees and accrued interest due to Mr. Robson's law firm from the Company
amounted to $570,706.
14
CONFLICTS OF INTEREST
---------------------
Messrs. Nielsen and Robson are Directors of both Waste Tech and its wholly
owned subsidiary, IBC. Conflicts of interest may arise for Messrs. Nielsen and
Robson in transactions between Waste Tech and IBC. Additionally, Mr. Robson is
the senior partner of the law firm which is counsel to the Company. Conflicts of
interest may arise as the result of such relationships.
Members of the immediate family of Robert Roth, one of the Directors of the
Company, own an aggregate of 6.2% of the Company's outstanding and issued stock.
The shares of stock are owned by his wife, Patricia B. Roth (114,182), his son,
Steven F. Roth (83,968), his daughter, Kathie Cecile Roth (10,000) and his son
Charles B. Roth and his wife, Marta Roth (107,188). Pursuant to the terms of an
agreement dated May 11, 1993 between the Company, Patricia Roth, Steven Roth and
Robert Roth, so long as Patricia Roth and Steven Roth are the owners of more
than one percent (1%) of the number of outstanding shares of Common Stock, the
Company has agreed to use its best efforts to cause the election of Robert Roth
as a member of the Board of Directors.
PARENT OF ISSUER
----------------
The Company has no parent.
BOARD RECOMMENDATION AND VOTE REQUIRED
- --------------------------------------
For Proposal No. 1 regarding the election of directors, votes may be cast
in favor of all nominees, may be withheld with regard to all nominees or may be
withheld only with regard to nominees specified by the stockholder. Directors
will be elected by a plurality of the votes of the shares of the Company's
common stock present in person or represented by proxy, and entitled to vote on
the election of directors at a meeting at which a quorum is present. Abstentions
are tabulated in determining the votes present at a meeting. Consequently, an
abstention has the same effect as a vote against a director nominee, as each
abstention would be one less vote in favor of a director nominee. The Board of
Directors recommends that stockholders vote "FOR" the Nominees set forth above.
Unless marked to the contrary, proxies received will be voted FOR the Nominees
set forth above.
15
PROPOSAL NO. 2:
RATIFICATION OF SELECTION OF
KPMG LLP AS INDEPENDENT AUDITORS
The Board of Directors has selected the firm of KPMG LLP, independent
certified public accountants, to audit the accounts for the Company for fiscal
year ending October 31, 2004 ("Fiscal 2004"). The firm of KPMG LLP has audited
the Company's financial statements for the past seven (7) fiscal years. The
Company is advised that neither that KPMG LLP nor any of its partners has any
material direct or indirect relationship with the Company. The Board of
Directors considers KPMG LLP to be well qualified for the function of serving as
the Company's auditors. The Delaware General Corporation Law does not require
the approval of the selection of auditors by the Company's stockholders, but in
view of the importance of the financial statement to stockholders, the Board of
Directors deems it desirable that they pass upon its selection of auditors. In
the event the stockholders disapprove of the selection, the Board of Directors
will consider the selection of other auditors. The Board of Directors recommends
that you vote in favor of the above proposal in view of the quality of the
services provided by KPMG LLP, its outstanding reputation as a leading audit
firm and its familiarity with the Company's financial and other affairs.
AUDIT AND NON-AUDIT FEES
------------------------
The following table presents the fees for professional audit services
rendered by KPMG LLP for the audit of the Company's annual consolidated
financial statements for the fiscal years ended October 31, 2003 and October 31,
2002, and fees for other services rendered by KPMG LLP during those periods:
Fee Category Fiscal 2003 Fiscal 2002
Audit Fees $58,000 $58,000
Audit-Related Fees $0 $0
Tax Fees $11,000 $11,000
All Other Fees $0 $0
Total Fees $69,000 $69,000
16
Audit fees include fees related to the services rendered in connection with
the annual audit of the Company's consolidated financial statements, the
quarterly reviews of the Company's quarterly reports on Form 10-Q and the
reviews of and other services related to registration statements and other
offering memoranda, if any.
Audit-related fees are for assurance and related services by the principal
accountants that are reasonably related to the performance of the audit or
review of the Company's financial statements.
Tax Fees include (i) tax compliance, (ii) tax advice, (iii) tax planning
and (iv) tax reporting.
All Other Fees includes fees for all other services provided by the
principal accountants not covered in the other categories such as litigation
support, etc.
All of the services for 2002 and 2003 were performed by the full-time,
permanent employees of KPMG, LLP
All of the 2003 services described above were approved by the Audit
Committee pursuant to the SEC rule that requires audit committee pre-approval of
audit and non-audit services provided by the Company's independent auditors to
the extent that rule was applicable during fiscal year 2003. The Audit Committee
has considered whether the provisions of such services, including non-audit
services, by KPMG LLP is compatible with maintaining KPMG LLP's independence and
has concluded that it is.
BOARD RECOMMENDATION AND VOTE REQUIRED
- --------------------------------------
The Board of Directors recommends that you vote in favor of the above
proposal in view of the quality of the services provided by KPMG LLP, its
outstanding reputation as a leading audit firm and its familiarity with the
Company's financial and other affairs due to its previous service as auditors
for the Company.
17
A representative of KPMG LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he desires to do so, and is
expected to be available to respond to appropriate questions.
Ratification will require the affirmative vote of a majority of the shares
present and voting at the meeting in person or by proxy. In the event
ratification is not provided, the Board of Directors will review its future
selection of the Company's independent auditors.
Unless otherwise directed by the stockholder giving the proxy, the proxy
will be voted for the ratification of the selection by the Board of Directors of
KPMG LLP as the Company's independent certified public accountants for Fiscal
2004. Shares voted as abstaining will count as votes cast. Accordingly, an
abstention from voting by a stockholder present in person or by proxy at the
meeting has the same legal effect as a vote "against" Proposal No. 2 because it
represents a share present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to approve this
proposal.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the 2005 annual
meeting must be received in writing, by the President of the Company at its
offices by January 13, 2005 in order to be considered for inclusion in the
Company's proxy statement relating to that meeting.
SEC rules and regulations provide that if the date of the Company's 2005
Annual Meeting is advanced or delayed more than 30 days from the date of the
2004 Annual Meeting, stockholder proposals intended to be included in the proxy
materials for the 2005 Annual Meeting must be received by the Company within a
reasonable time before the Company begins to print and mail the proxy materials
for the 2005 Annual Meeting. Upon determination by the Company that the date of
the 2005 Annual Meeting will be advanced or delayed by more than 30 days from
the date of the 2004 Annual Meeting, the Company will disclose such change in
the earliest possible Quarterly Report on Form 10-QSB.
By Order of the Board of Directors
Morton S. Robson, Secretary
18
WASTE TECHNOLOGY CORP.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William E. Nielsen and Robert Roth as
proxies (the "Proxies"), each with power of substitution and resubstitution, to
vote all shares of Common Stock, $.01 par value per share, of Waste Technology
Corp. (the "Company") held of record by the undersigned on March 11, 2004 at the
Annual Meeting of stockholders to be held at the offices of the Company, 5400
Rio Grande Avenue, Jacksonville, Florida 32254, on Monday, May 17, 2004 at 10:00
A.M. local time, or at any adjournments thereof, as directed below, and in their
discretion on all other matters coming before the meeting or any adjournments
thereof.
PLEASE MARK BOXES / / IN BLUE OR BLACK INK.
1. Election of one Class I Director: Robert Roth; two Class II Directors: Ted
C. Flood and Morton S. Robson; and, one Class III Director: William E.
Nielsen
(MARK ONLY ONE OF THE TWO BOXES FOR THIS ITEM)
/ / VOTE FOR all nominees named above except those who may be named on
this line:
-----------------------------------------------------------------
(OR)
/ / VOTE WITHHELD as to all nominees named above.
2. Proposal to ratify appointment of KPMG LLP as the Company's independent
certified public accountants:
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
When properly executed, this Proxy will be voted as directed. If no
direction is made, this Proxy will be voted "FOR" Proposals 1 and 2.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated: _______________________ , 2004
X ____________________________
Signature
X _____________________________
Print Name(s)
X ____________________________
Signature, if held jointly