METALCLAD CORPORATION
2 Corporate Plaza, SUITE 125
NEWPORT BEACH, CA 92660
August 6, 2001
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we
are transmitting herewith the attached Notice of Annual Meeting of
Shareholders and Proxy Statement for the Company's Annual Meeting to be
held on September 25, 2001.
Sincerely,
METALCLAD CORPORATION
/s/Anthony C. Dabbene
----------------------------
Anthony C. Dabbene
Chief Financial Officer
METALCLAD CORPORATION
2 Corporate Plaza Drive, Suite 125
Newport Beach, California 92660
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 25, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
(the "Meeting") of METALCLAD CORPORATION, a Delaware corporation (the
"Company"), will be held at the Company's offices at 2 Corporate Plaza
Drive, Suite 125, Newport Beach, California 92660, on September 25, 2001,
at 10:00 A.M. local time, for the following purposes:
1. To elect five members of the Board of Directors to serve until
the next Annual Meeting of Stockholders;
2. To consider and act upon the ratification of the appointment of
Moss Adams LLP as the independent public accountants of the Company for
the year ending December 31, 2001.
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
August 6, 2001 as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting. Only holders of the
Company's Common Stock at the close of business on the record date are
entitled to vote at the Meeting.
You are cordially invited to attend the Meeting in person.
However, whether you plan to attend or not, we urge you to complete, date,
sign, and return the enclosed proxy promptly in the envelope provided, to
which no postage need be affixed if mailed in the United States, in order
that as many shares as possible may be represented at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bruce H. Haglund
---------------------------
Bruce H. Haglund, Secretary
Newport Beach, California
August 6, 2001
YOUR VOTE IS IMPORTANT.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD
AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THANK YOU FOR ACTING PROMPTLY.
METALCLAD CORPORATION
2 Corporate Plaza, Suite 125
Newport Beach, California 92660
PROXY STATEMENT
August 24, 2001
SOLICITATION OF PROXY, REVOCABILITY, AND VOTING
General
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Metalclad Corporation, a Delaware
corporation (the "Company"), to be used at the Annual Meeting of
Stockholders (the "Meeting") of the Company to be held at the Company's
offices at 2 Corporate Plaza Drive, Suite 125, Newport Beach, California
92660, on September 25, 2001 at 10:00 A.M. local time, or any adjournment
thereof. This Proxy Statement and accompanying form of proxy are first
being mailed to stockholders on or about the date shown above.
Revocability
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its exercise by notice in writing to
the Secretary of the Company prior to the Meeting or by attending the
Meeting and voting in person. Unless the proxy is revoked, the shares
represented thereby will be voted as specified at the Meeting or any
adjournment thereof.
Solicitation
This Proxy Statement is being mailed on or about August 24, 2001 in
connection with the solicitation of proxies by the Board of Directors of
the Company. The entire cost of soliciting proxies will be borne by the
Company. Proxies may be solicited by mail or telegraph, or by the
directors, officers or regular employees of the Company in person or by
telephone without additional compensation for such services.
Vote of Proxies
Subject to revocation, all shares represented by duly executed
proxies will be voted for the election of the nominees named herein as
directors unless authority to vote for the proposed slate of directors or
any individual director has been withheld. With respect to the proposal
to approve the appointment of Moss Adams, LLP as the Company's independent
accountants, all such shares will be voted for or against, or not voted,
as specified on each proxy. If no choice is indicated, a proxy will be
voted for the proposal to ratify the appointment of the accountants. If
no choice is indicated, a proxy will not be voted on such proposal. If
any other matters are properly presented at the Meeting, the Proxy will be
voted in accordance with the best judgment and in the discretion of the
Proxy Holders.
Voting and Record Date
Only stockholders of record of the Company's $.10 par value common
stock ("Common Stock") at the close of business on August 6, 2001 will be
entitled to notice of and to vote at the Meeting. As of that date, the
total number of shares issued and outstanding of Common Stock
was 7,448,015.
In voting on matters other than the election of directors, each share
of Common Stock entitles the holder thereof on the record date to one vote
at the Meeting. The appointment of the accountants requires the
affirmative vote of a majority of the shares present at the Meeting
in order to be valid and binding.
With respect to the election of directors of the Company, the
stockholders have cumulative voting rights, whereby any stockholder may
multiply the number of shares he is entitled to vote by the number of
directors to be elected and allocate his votes among the candidates in any
manner he chooses. The five nominees receiving the highest number of
votes shall be duly elected. There are no conditions precedent to the
exercise of the right to cumulate votes in the election of directors of
the Company; stockholders may exercise such cumulative voting rights,
either in person or by proxy, with or without advance notice to the
Company.
QUORUM AND PRINCIPAL SHAREHOLDERS
The presence in person or by proxy of the holders of a majority of
the total outstanding voting shares is necessary to constitute a quorum at
the Meeting. Approval of the proposals to be presented at the Meeting,
except for the election of directors (as discussed above), will require
the affirmative vote of the holders of a majority of the shares present at
the Meeting.
The following table sets forth certain information as of August 6,
2001 relating to the beneficial ownership of the Company's Common Stock by
(i) all persons known by the Company to beneficially own more than 5% of
the outstanding shares of the Company's Common Stock, (ii) each director,
director nominee, and officer of the Company, and (iii) all officers and
directors of the Company as a group.
Name and Address of Amount and Nature of Percent
Beneficial Owner (1) Beneficial Ownership of Class (2)
-------------------- -------------------- ------------
Grant S. Kesler (3) 392,500 5.03%
2 Corporate Plaza, Suite 125
Newport Beach, California 92660
Anthony C. Dabbene (4) 162,600 2.14%
2 Corporate Plaza, Suite 125
Newport Beach, California 92660
Bruce H. Haglund (5) 67,116 *
2 Park Plaza, Suite 450
Irvine, California 92614
J. Thomas Talbot (6) 46,666 *
24 Corporate Plaza
Newport Beach, California 92660
Raymond J. Pacini (7) 27,066 *
6 Executive Circle
Suite 250
Irvine, California 92614
Wayne & Tamara Mills(8) 1,500,000 20.14%
5020 Blake Road South
Edina, Minnesota 55436
All Officers and Directors
As a Group (5) 666,948 8.62%
-----------------------------
*Less than one percent.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission (the "SEC"). In computing the
number of shares beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock subject to options,
warrants or convertible debt held by that person that are exercisable
within 60 days of August 6, 2001 are deemed outstanding. Such shares,
however, are not deemed outstanding for purposes of computing the
ownership of any other person. Except as indicated in the footnotes to
this table and pursuant to applicable community property laws, the
stockholder named in the table has sole voting and investment power with
respect to the shares set forth opposite such stockholders' name.
(2) Based on 7,448,015 shares outstanding as of August 6, 2001.
(3) Includes 359,500 shares issuable upon exercise of stock options
exercisable within 60 days at prices ranging from $3.00 to $22.50 per
share.
(4) Includes 150,000 shares issuable upon exercise of stock options
exercisable within 60 days at prices ranging from $3.00 to $36.25 per
share.
(5) Includes 66,466 shares issuable upon exercise of stock options
exercisable within 60 days at prices ranging from $2.50 to $22.50 per
share.
(6) Includes 26,666 shares issuable upon exercise of stock options
exercisable within 60 days at prices ranging from $2.50 to $3.00 per
share.
(7) Includes 26,666 shares issuable upon exercise of stock options
exercisable within 60 days at prices ranging from $2.50 to $3.00 per
share.
(8) Per latest 13D filing with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the directors or the
stockholders shall determine the number of directors. The directors have
set the number of directors for the ensuing year at seven. Five members
of the Board of Directors are to be elected at the Meeting. Vacancies on
the Board during the year may be filled by the majority vote of the
directors in office at the time of the vacancy without further action by
the stockholders.
The Board of Directors has nominated Anthony C. Dabbene, Grant S.
Kesler, Bruce H. Haglund, J. Thomas Talbot and Raymond J. Pacini for
election as directors for the ensuing year.
It is the intention of the persons named in the enclosed form of
proxy to vote such proxies for the election of the nominees listed herein.
The proposed nominees are willing to serve for the ensuing year, but in
the event any nominee at the time of election is unable to serve or is
otherwise unavailable for election, it is intended that votes will be cast
pursuant to the accompanying proxy for substitute nominees designed by the
Board of Directors.
Cumulative voting applies to the election of directors. The five
nominees receiving the highest number of votes shall be duly elected.
Information about Nominees and Directors
The following sets forth certain information for each person who is a
director or nominated for election to the Board of Directors:
Director
or Officer Current Position
Name Age Since with the Company
------------------------------------------------------------------
Grant S. Kesler 58 1991 President, Chief Executive Officer,
Director
Anthony C. Dabbene 49 1996 Chief Financial Officer, Director
Bruce H. Haglund Esq. 50 1993 Secretary, Director
J. Thomas Talbot 64 1999 Director
Raymond J. Pacini 44 1999 Director
Grant S. Kesler has served as a Director of the Company since
February 1991 and has been Chief Executive Officer since May 1991. From
1982 to May 1991, he was employed by Paradigm Securities, Inc., a company
he formed in 1982. In 1975, he was General Counsel to Development
Associates, a real estate development firm. Earlier, he was engaged in
the private practice of law, served as an assistant attorney general for
the State of Utah, and served as an intern to the chief justice of the
Utah Supreme Court.
Anthony C. Dabbene has been the Chief Financial Officer for the
Company since January 1996 and a Director since May 1997. Prior to his
employment with the Company, Mr. Dabbene was employed by LG & E Energy
Corp. for 10 years, including service as Vice President and Controller to
the Energy Services Group. From 1973 to 1985, he was employed by EBASCO
Services Incorporated, where he was Manager - Finance and Administration
for the Western region from 1981 to 1985.
Bruce H. Haglund has served as Secretary-General Counsel of the
Company since 1983 and served as a Director of the Company from 1983 to
July 1991 and again since March 1999. Mr. Haglund is a principal in the law
firm of Gibson, Haglund & Paulsen in Orange County, California where he has
been engaged in the private practice of law since 1980. He is also a
member of the Boards of Directors of Aviation Distributors, Inc.,and
HydroMaid International, Inc., and is the Secretary of Liquitek
Enterprises, Inc.
J. Thomas Talbot has been a Director since March 1999. Mr. Talbot is the
owner of The Talbot Company, an investment and asset management company
and has been the Chief Executive Officer of HAL, Inc., the parent company
of Hawaiian Airlines. He currently serves on the boards of directors of
The Hallwood Group, Inc., Fidelity National Financial, Inc., California
Coastal Communities, Inc., Competisys LLC and The Pacific Club.
Raymond J. Pacini has been a Director since March 1999 and is the
President, Chief Executive Officer, and a Director of California Coastal
Communities, Inc. (formerly Koll Real Estate Group, Inc.), where he has
been since 1990. Prior to 1998, he was the Executive Vice President and
Chief Financial Officer of Koll Real Estate Group, Inc.
Committees and Compensation of the Board of Directors
The Board of Directors held three meetings during the period January
1, 2000 to December 31, 2000. Each director attended at least 75% of the
total number of Board Meetings held during the year ended December 31,
2000. Board members who are not employees or consultants to the Company
are presently entitled to receive $1,000 for their attendance at Board
meetings and committee meetings, with a minimum annual fee of $10,000, and
members of the Board of Directors have received non-statutory stock
options pursuant to the Company's Non-Qualified Stock Option Plan,
non-statutory stock options granted other than pursuant to a plan, the
Company's 1992, 1993, 1997 and/or 2000 Omnibus Stock Option and Incentive
Plans.
In November 1992, the Board approved the creation of an Executive
Committee authorized to be comprised of up to five members of the Board.
The Executive Committee has all the powers and authority of the Board in
the management of the business and affairs of the Company, including,
without limitation, the power and authority to authorize the issuance of
stock, except with respect to (i) approval of any action which also
requires stockholders' approval or approval of the outstanding shares;
(ii) filling of vacancies on the Board or in any committee; (iii) fixing
compensation of the directors for serving on the Board or on any
committee; (iv) amendment or repeal of Bylaws of the adoption of new
Bylaws; (v) amendment or repeal of any resolution of the Board which by
its express terms is not so amendable or repealable; (vi) declaring
distributions to the stockholders of the Company except at a rate or in a
periodic amount or within a price range determined by the Board; (vii)
appointment of members of other committees of the Board. Messrs. Kesler
and Dabbene are members of the Executive Committee and will continue as
members conditioned upon their re-election to the Board for the ensuing
year.
Messrs. Pacini, Talbot and Haglund are members of the Audit Committee
conditioned upon their re-election to the Board. The duties of the Audit
Committee are to review with the Company's independent auditors the
results of the audit engagement, review the adequacy of the Company's
system of accounting controls, approve the services rendered by the
independent auditors, and examine the range of audit and non-audit fees.
The Audit Committee met three times during the twelve months ended
December 31, 2000.
Messrs. Pacini, Talbot and Haglund are members of the Compensation
Committee conditioned upon their re-election to the Board. The duties of
the Compensation Committee are to evaluate and recommend to the Board of
Directors compensation structures for key executive personnel. The
Compensation Committee met three times during the year ended December 31,
2000.
Executive Officers
The following lists the names, ages, and position of the Company's
current executive officers:
Officer Current Position
Name Age Since with the Company
---------------------------------------------------------------------
Grant S. Kesler 58 1991 President, Chief Executive Officer,
Director
Anthony C. Dabbene 49 1996 Chief Financial Officer, Director
Bruce H. Haglund Esq. 50 1993 Secretary, Director
Robert D. Rizzo 54 1999 President, Metalclad Insulation
Corp.
Grant S. Kesler. See "Information about Nominees and Directors."
Anthony C. Dabbene. See "Information about Nominees and Directors."
Bruce H. Haglund. See "Information about Nominees and Directors."
Robert D. Rizzo joined the Company as President of Metalclad
Insulation in November 1999. Prior to joining Metalclad, Mr. Rizzo was
project manager for major projects at PDG Environmental, Inc. He has over
25 years experience in finance, engineering and construction. Mr. Rizzo
has a B.S. in Civil Engineering and an M.B.A.
Executive Compensation for the Year Ended December 31, 2000
The following table sets forth for the year ended December 31, 2000,
the year ended December 31, 1999, and the year ended December 31, 1998,
information with respect to compensation paid by the Company to the Chief
Executive Officer and each of the other highly compensated executive
officers of the Company.
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------------------- ------------------------------ --------
Other Awards
------ --------------------
Name and Year Salary Bonus Annual Restricted Options/ LTIP All
Principal (1) ($) ($) Compen- Stock SARS Payouts Other
Position sation ($) (#) ($) (1)
------------------ ------------------------------- ------------------------------ --------
Grant S. Kesler, 2000 250,000 50,000 25,920
C.E.O. 1999 250,000 50,000 25,920
1998 250,000 50,000 25,920
Anthony C. Dabbene 2000 180,000 36,000 6,000
C.F.O. 1999 180,000 36,000 6,000
1998 160,000 36,000 6,000
Robert D. Rizzo 2000 120,024 -- --
President, M.I.C. 1999 14,375 -- --
(1) The remuneration described in the table does not include the cost to
the Company of benefits furnished to the named executive officers,
including premiums for health insurance and other personal benefits
provided to such individual that are extended to all employees of the
Company in connection with their employment.
Employment Agreements
In January 1998, the Compensation Committee of the Company approved
employment agreements for Messrs. Kesler and Dabbene. The contracts are
for a three-year period, effective January 1, 1998 and call for annual
salaries of $250,000 and $180,000, respectively. The contracts also
include minimum bonus amounts of $50,000 and $36,000, respectively. The
contracts are automatically renewed on January 1 unless terminated by the
Company and contain incentive provisions as determined by the Compensation
Committee. Additionally, the contracts contain a "special bonus"
provision tied to the Company's success in its arbitration with the United
Mexican States under the NAFTA. This provision provides Messrs. Kesler
and Dabbene a special bonus of 2-1/2% and 1%, respectively, of any award
of damages to the Company under this proceeding.
In September 2000, the Company approved an employment agreement with
Mr. Robert Rizzo. The contract is for a period of 15 months to December
31, 2001. The agreement automatically renews for subsequent calendar year
periods unless cancelled by either party by written notice at least 60
days before the expiration of any given calendar year period before the
expiration of any given calendar year period. The agreement calls for an
annual base salary of $130,000 plus a target bonus of 15% of annual salary
based on predetermined incentive provisions.
Options Granted in 2000
In September 2000, the Board of Directors adopted a resolution to
grant options to purchase 520,000 shares of common stock exercisable at
$3.00 per share, vesting over a three-year period, as follows: Mr.
Kesler, 250,000 shares; Mr. Dabbene, 200,00 shares; Mr. Rizzo, 10,000
shares; and Messrs. Haglund, Talbot and Pacini, 20,000 each. Granting of
these options was subject to the approval of the Metalclad Corporation
2000 Omnibus Stock Option and Incentive Plan at the annual shareholders
meeting on November 20, 2000, which approval was received.
Options Granted in 2001
In June 2001, the Board of Diretors approved the granting of options
to purchase 425,000 shares of common stock exercisable at $2.00 per share,
vesting over a three-year period as follows: Mr. Kesler, 200,000 shares;
Mr. Dabbene, 150,000 shares; Mr. Pacini, 25,000 shares; Mr. Talbot, 25,000
shares; and Mr. Haglund, 25,000 shares. Additionally, under the Company's
Formula Award Rider to the 2000 Omnibus Stock Option and Incentive Plan,
the members of the Compensation Committee each received option awards, as
of June 1, 2000, for 20,000 shares of common stock, exercisable at $2.00
per share and vesting over a three-year period. On June 1 and June 6,
2001 the price of the Company's common stock was $1.60 and $1.50,
respectively.
Aggregated Option/SAR Exercises in the year ended December 31, 2000, and
Option Values at December 31, 2000
The following table sets forth the number of options, both
exercisable and unexercisable, held by each of the named executive
officers of the Company and the value of any in-the-money options at
December 31, 2000 (assuming a market value of $5.6875 on December 31,
2000):
Number of Value of
Unexercised in-the-Money
Options at Options at
December 31, December 31,
Shares 2000 2000
Acquired Value ----------------------------
on Exercise Realized Exercisable/ Exercisable/
(#) ($) Unexercisable Unexercisable
----------- -------- --------------- -----------
Grant S. Kesler -0- $-0- 359,500/250,000 $-0- / $-0-
Anthony C. Dabbene -0- $-0- 150,000/200,000 $-0- / $-0-
Robert Rizzo -0- $-0- 0/ 10,000 $-0- / $-0-
Stock Option Plans
1992, 1993, 1997 and 2000 Omnibus Stock Option and Incentive Plans.
On August 18, 1992, the Board of Directors of the Company adopted the 1992
Omnibus Stock Option Plan (the "1992 Plan") which was approved by the
stockholders on November 13, 1992. On March 24, 1993, the Board of
Directors of the Company adopted the 1993 Omnibus Stock Option Plan (the
"1993 Plan"). On May 15, 1997, the stockholders adopted the 1997 Omnibus
Stock Option and Incentive Plan (the "1997 Plan"). On November 20, 2000,
the stockholders adopted the 2000 Omnibus Stock Option and Incentive Plan
(the "2000 Plan"). The 1992 Plan, the 1993 Plan, the 1997 Plan and the
2000 Plan (together hereinafter referred to the "Plans") are intended to
provide incentive to key employees and directors of, and key consultants,
vendors, customers, and others expected to provide significant services
to, the Company, to encourage proprietary interest in the Company, to
encourage such key employees to remain in the employ of the Company and
its subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants,
vendors, customers, and others to increase their efforts in providing
significant services to the Company. Pursuant to the terms of the Plans,
the following types of incentives may from time to time be granted on a
discretionary basis by the Board or the Committee: incentive stock options
("Incentive Stock Options"), non-statutory stock options ("Nonstatutory
Stock Options"), purchase rights ("Purchase Rights"), stock appreciation
rights ("Stock Appreciation Rights"), performance awards ("Performance
Awards"), dividend rights ("Dividend Rights"), and stock payments ("Stock
Payments"), referred to hereinafter singly as "Award" and collectively as
"Awards", as the context may require. The Plans also provide for the
grant of Incentive Stock Options and Nonstatutory Stock Options to members
of the Board of Directors on a "formula award" basis as provided in Rule
16b-3 of the Securities Exchange Act of 1934 ("Rule 16b-3").
As of the date of this Proxy Statement, stock options for the
purchase of 39,500, 33,100, 400,000 and 940,000 shares, exercisable at a
range of $2.00-$22.50 per share, are outstanding pursuant to the 1992
Plan, the 1993 Plan, the 1997 Plan and the 2000 Plan, respectively.
As of the date of this Proxy Statement, options granted pursuant to
the 1992 Plan, the 1993 Plan, the 1997 Plan and the 2000 Plan for the
purchase of 36,350, 27,640, 381,000 and 0 shares, respectively, were
vested.
In addition, the Company has granted non-qualified options from time
to time not pursuant to any plan including non-qualified stock options
granted to the following officers and directors: Grant S. Kesler, 50,000
options exercisable at $16.50 per share granted in January 1997 and 80,000
options exercisable at $15.00 per share granted in February 1998; Anthony
C. Dabbene, 5,000 options exercisable at $36.25 per share granted in
January 1996 and 35,000 options exercisable at $15.00 per share granted in
February 1998; Bruce H. Haglund, 15,000 options exercisable at $22.50 per
share granted in March 1995, 2,500 options exercisable at $15.00 per share
granted in February 1998 and 25,000 options exercisable at $2.00 per share
granted in June 2001; Mr. Talbot 25,000 options exercisable at $2.00 per
share granted in June 2001; and Mr. Pacini 25,000 options exercisable at
$2.00 per share granted in June 2001. As of the date of this Proxy, total
options granted not pursuant to any plan were 525,200 exercisable at a
range of $2.00-$45.00 per share with 440,200 being vested.
The Plans provide for administration by the Board in compliance with
Rule 16b-3, or by a Committee (the "Committee") appointed by the Board,
which Committee must be constituted to permit the Plans to comply with
Rule 16b-3, and which must consist of not less than two members, each of
whom has not participated in the Plans by way of receipt of any
discretionary grant of an Award, and who will not so participate while
serving as a member of the Committee, and each of whom has not
participated under any other plan or have received options of the Company
during the year preceding adoption of the 1992 Plan, the 1993 Plan or the
1997 Plan by the stockholders at the Meeting. A member of the Board or a
Committee member may in no event participate in any determination relation
to Awards held by or to be granted on a discretionary basis to such Board
or Committee member.
All employees of the Company or of a subsidiary of the Company, who
may be officers or directors of the Company, and consultants, vendors,
customers, and others expected to provide significant services to the
Company or any of its subsidiaries, are eligible to participate in the
Plans. No Incentive Stock Option may be granted to a non-employee
director or non-employee consultant, vendor, customer, or other provider
of significant services to the Company or a subsidiary, and except that no
Nonstatutory Stock Option may be granted to a non-employee director or
non-employee consultant, vendor, customer, or other provider of
significant services to the Company or a subsidiary other than upon a vote
of a majority of disinterested directors finding that the value of the
services rendered or to be rendered to the Company or a subsidiary by such
non-employee director or non-employee consultant, vendor, customer, or
other provider of services is at least equal to the value of the options
granted.
The aggregate number of shares of the Company's authorized but
unissued Common Stock which may be issued as an Award or which may be
issued upon exercise of an Incentive Stock Option or Nonstatutory Stock
Option under the 1992 Plan may not exceed 160,000 shares. The number of
shares subject to unexercised options, Stock Appreciation Rights or
Purchase Rights granted under the 1992 Plan (plus the number of shares
previously issued under the 1992 Plan) may not at any time exceed the
number of shares available for issuance under the 1992 Plan. The
aggregate number of shares of the Company's authorized but unissued Common
Stock which may be issued as an Award or which may be issued upon exercise
of an Incentive Stock Option or non-statutory stock option under the 1993
Plan may not exceed 100,000 shares. The number of shares subject to
unexercised options, Stock Appreciation Rights or Purchase Rights granted
under the 1993 Plan (plus the number of shares previously issued under the
1993 Plan) may not at any time exceed the number of shares available for
issuance under the 1993 Plan. The aggregate number of shares of the
Company's authorized but unissued Common Stock which may be issued as an
Award or which may be issued upon exercise of an Incentive Stock Option or
non-statutory stock option under the 1997 Plan may not exceed 600,000
shares. The number of shares subject to unexercised options, Stock
Appreciation Rights or Purchase Rights granted under the 1997 Plan (plus
the number of shares previously issued under the 1997 Plan) may not at any
time exceed the number of shares available for issuance under the 1997
Plan.
In the event that any unexercised option, Stock Appreciation Right or
Purchase Right, or any portion thereof, for any reason expires or is
terminated, or if any shares subject to a restricted stock Award do not
vest or are not delivered, the unexercised or unvested shares allocable to
such Award may again be made subject to any Award.
Options. Incentive Stock Options and Nonstatutory Stock Options
(together hereinafter referred to as "Option" or "Options", unless the
context otherwise requires) must be evidenced by written stock option
agreements in such form as the Committee may from time to time determine.
Each Option must state the number of Shares to which it pertains and must
provide for the adjustment thereof if the outstanding shares of Common
Stock are changed into or exchanged for cash or a different number or kind
of shares or securities of the Corporation, or if the outstanding shares
of the Common Stock are increased, decreased, exchanged for, or otherwise
changed, or if additional shares or new or different shares or securities
are distributed with respect to the outstanding shares of the Common
Stock, through a reorganization or merger in which the Corporation is the
surviving entity or through a combination, consolidation,
recapitalization, reclassification, stock split, stock dividend, reverse
stock split, stock consolidation or other capital change or adjustment.
In addition, the Board or the Committee may grant such additional rights
in the foregoing circumstances as the Board or the Committee deems to be
in the best interest of any Participant and the Corporation in order to
preserve for the Participant the benefits of the Award.
The exercise price in the case of any Incentive Stock Option may not
be less than the fair market value on the date of grant and, in the case
of any Option granted to an optionee who owns more than ten percent (10%)
of the total combined voting power of all classes of outstanding stock of
the Company, may not be less than 110% of the fair market value on the
date of grant. The exercise price in the case of any Nonstatutory Stock
Option may not be less than 85% of the fair market value on the date of
grant.
The purchase price is be payable in full in United States dollars
upon the exercise of the Option; provided, however, that if the applicable
Option agreement so provides, the purchase price may be paid (i) by the
surrender of Shares in good form for transfer, owned by the participant
and having a fair market value on the date of exercise equal to the
purchase price, or in any combination of cash and Shares, as long as the
sum of the cash so paid and the fair market value of the Shares so
surrendered equals the purchase price, (ii) by cancellation of
indebtedness owed by the Company to the participant, (iii) with a full
recourse promissory note executed by the participant, or (iv) any
combination of the foregoing. The interest rate and other terms and
conditions of such note may be determined by the Board or the Committee.
The Board or Committee may require that the participant pledge his or her
Shares to the Company for the purpose of securing the payment of such
note. In no event may the stock certificate(s) representing such Shares
by released to the participant until such note shall be been paid in full.
Each Option must state the time or times which all or part thereof
becomes exercisable. No Option shall be exercisable after the expiration
of 10 years from the date it was granted, and no Option granted to an
optionee who owns more than 10% of the total combined voting power of all
classes of outstanding stock of the Company may be exercisable after the
expiration of five years from the date it was granted. During the
lifetime of a participant in the Plans, the Option may be exercisable only
by that participant and may not be assignable or transferable. In the
event of the participant's death, the Option may not be transferable by
the participant other than by will or the laws of descent and
distribution.
Within the limitations of the Plans, the Board or Committee may
modify, extend or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the
granting of new Options in substitution therefor. No modification of an
Option may, without the consent of the participant, alter or impair any
rights or obligations under any Option previously granted.
In the case of Incentive Stock Options granted under the Plans, the
aggregate fair market value (determined as of the date of the grant
thereof) of the Shares with respect to which Incentive Stock Options
become exercisable by any participant for the first time during any
calendar year (under the Plans and all other plans maintained by the
Company may not exceed $100,000. The Board or Committee may, however,
with the participant's consent, authorize an amendment to the Incentive
Stock Option which renders it a Nonstatutory Stock Option.
The stock option agreements authorized under the Plans may contain
such other provisions not inconsistent with the terms of the Plans
(including, without limitation, restrictions upon the exercise of the
Option) as the Board or the Committee shall deem advisable.
Restricted Stock Purchase Agreements. Restricted stock purchase
rights (hereinabove defined as "Purchase Rights") must be evidenced by
written stock purchase agreements in such form as the Committee must from
time to time determine. Each Purchase Right must state the number of
Shares to which it pertains and may provide for the adjustment thereof in
the event that the outstanding shares of Common Stock are changed into or
exchanged for cash or a different number or kind of shares or securities
of the Corporation, or if the outstanding shares of the Common Stock are
increased, decreased, exchanged for, or otherwise changed, or if
additional shares or new or different shares or securities are distributed
with respect to the outstanding shares of the Common Stock, through a
reorganization or merger in which the Corporation is the surviving entity
or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation or other capital change or adjustment. In addition, the
Board or the Committee may grant such additional rights in the foregoing
circumstances as the Board or the Committee deems to be in the best
interest of any Participant and the Corporation in order to preserve for
the Participant the benefits of the Award.
Each agreement must state the purchase price per Share at which the
Purchase Right may be exercised, which may not be less than the fair
market value of a Share on the date on which the Purchase Rights are
granted. Unless the Board or Committee otherwise determines, the purchase
price per Share at which any Purchase Right granted under the Plans may be
exercised may not be less than the fair market value of a Share as of the
date on which the Purchase Right is granted, less a discount equal to not
more than 75% of such value.
Purchase Rights must be exercised within 60 days after the later to
occur of (i) Board approval of the grant of the Purchase Right or (ii)
delivery of notice of such grant. Purchase Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner
and must expire immediately upon the death of the participant or the
termination of such participant's employment with the Company.
The purchase price must be payable in full in United States dollars
upon exercise of the Purchase Right; provided, however, that if the
applicable agreement so provides, the purchase price may be paid (i) by
the surrender of Shares in good form for transfer, owned by the person
exercising the Purchase Right and having a fair market value on the date
of exercise equal to the purchase price, or in any combination of cash and
Shares, as long as the sum of the cash so paid and the fair market value
of the Shares so surrendered equal the Purchase Price, or (ii) with a full
recourse promissory note executed by the participant. The interest rate
and other terms and conditions of such note must be determined by the
Board or the Committee. The Board or Committee may require that the
participant pledge his or her Shares to the Company for the purpose of
securing the payment of such note. In no event may the stock
certificate(s) representing such Shares be released to the participant
until such note has been paid in full. In the event the Company
determines that it is required to withhold state or Federal income tax as
a result of the exercise of a Purchase Right, as a condition to the
exercise thereof, a participant may be required to make arrangements
satisfactory to the Company to enable it to satisfy such withholding
requirements. In addition, the participant must agree to immediately
notify the Company if he or she files an election pursuant to Section
83(b) of the Internal Revenue Code with respect to receipt of the Shares.
Within the limitations of the Plans, the Board or the Committee may
modify, extend or renew outstanding Purchase Rights or accept the
cancellation of outstanding Purchase Rights (to the extent not previously
exercised) for the granting of new Purchase Rights in substitution
therefor. The foregoing notwithstanding, no modification of a Purchase
Right may, without the consent of the participant, alter or impair any
rights or obligations under any Purchase Right previously granted.
In the event of the voluntary or involuntary termination or cessation
of employment or association of a participant with the Company or any
Subsidiary for any reason whatsoever, with or without cause (including
death or disability), the Company may, upon the date of such termination,
have an irrevocable, exclusive option to repurchase (the "Repurchase
Option") all or any portion of the Shares held by the Employee that are
subject to the Repurchase Option as of such date at the original purchase
price.
Initially, all of the Shares must be subject to the Repurchase
Option. Thereafter, the Repurchase Option must lapse and expire, or
"vest," as to a specified number of the Shares in accordance with a
schedule to be determined by the Board or the Committee, as the case may
be, which must be attached to the stock purchase agreement to be entered
into between the participant and the Company. All Shares which continue
to be subject to the Repurchase Option are sometimes hereinafter referred
to as "Unvested Shares." Within 90 days following the date of the
Participant's termination of employment by the Corporation, the
Corporation shall notify the Employee as to whether it wishes to
repurchase the Unvested Shares pursuant to the exercise of the Repurchase
Option. If the Corporation elects to repurchase said Unvested Shares, it
must set a date for the closing of the transaction at the Executive
Offices of the Corporation, not later than 30 days from the date such
notice.
Except for transfers to participant's descendants and spouses, the
participant may not transfer by sale, assignment, hypothecation, donation,
or otherwise any of the Shares or any interest therein prior to the
release of such Shares from the Repurchase Option. The Company's
Repurchase Option may be assigned in whole or in part to any stockholder
or stockholders of the Company or other persons or organizations. Each
stock purchase agreement entered into as provided herein must provide for
a right of first refusal and option on the part of the Company to purchase
all or any part of any Shares which are no longer subject to the
Repurchase Option which the participant purposes to sell, transfer or
otherwise dispose of (except for transfers to participant's descendants
and spouses) on the condition that: (a) the participant must notify the
Company in writing of any proposed sale, transfer or other disposition of
any of the Shares, specifying the proposed transferee, the number of
Shares proposed to be transferred, and the price at which such Shares are
to be sold, transferred or otherwise disposed; (b) the Company must have a
period of 30 days from receipt of such notice to notify the participant in
writing as to whether or not the Company elects to purchase all or a
specified portion of such Shares at the lower of (i) price per share set
forth in the notice given by the participant, or (ii) the fair market
value for a share of the Company's Common Stock, without restrictions, on
the date on which the notice is given by participant to the Company, less
in either case an amount equal to the discount, if any; (c) if the Company
elects not to purchase all of the Shares specified in the notice, the
participant may sell, transfer or otherwise dispose of the remaining
Shares in strict accordance with the terms specified in the notice within
90 days following the date of the notice. Any transferee of any of such
Shares (other than the Company) will take and acquire all of such Shares
subject to the continuing right ofirst refusal and option on the part of
the Company to purchase all or any portion of such Shares from the
transferee on all of the same terms and conditions as are set forth in the
stock purchase agreement, unless the participant shall have paid to the
Company, out of the proceeds from the sale of such Shares or otherwise, an
amount equal to the lesser of (i) the discount or (ii) the amount by which
the fair market value for a share of the Company Common Stock, without
restrictions, on the date on which the notice is given by participant to
the Company exceeds the price per Share paid by the participant for such
Shares.
Stock Appreciation Rights. Stock Appreciation Rights related or
unrelated to Options or other Awards may be granted to eligible employees:
(i) at any time if unrelated to an Award or if related to an Award other
than an Incentive Stock Option; or (ii) only at the time of grant of an
Incentive Stock Option if related thereto. A Stock Appreciation Right may
extend to all or a portion of the shares covered by a related Award.
A Stock Appreciation Right granted in connection with an Award may be
exercisable only at such time or times, and to the extent, that a related
Award is exercisable. A Stock Appreciation Right granted in connection
with an Incentive Stock Option may be exercisable only when the fair
market value of the stock subject to the Incentive Stock Option exceeds
the exercise price of the Incentive Stock Option. Upon the exercise of a
Stock Appreciation Right, and if such Stock Appreciation Right is related
to an Award surrender of an exercisable portion of the related Award, the
participant shall be entitled to receive payment of a amount determined by
multiplying the difference obtained by subtracting the purchase price of a
share of Common Stock specified in the related Award, or if such Stock
Appreciation Right is unrelated to an Award, from the fair market value,
book value or other measure specified in the Award of such Stock
Appreciation Right of a share of Common Stock on the date of exercise of
such Stock Appreciation Right, by the number of shares as to which such
Stock Appreciation Right has been exercised.
The Board or the Committee, as the case may be, in its sole
discretion, may require settlement of the amount determined under
paragraph (i) above solely in cash, solely in shares of Common Stock
valued at fair market value, or partly in such shares and partly in cash.
Each Stock Appreciation Right and all rights and obligations thereunder
must expire on such date as shall be determined by the Board or the
Committee, but not later than 10 years after the date of the Award
thereof, and must be subject to earlier termination as provided in the
Plans.
Performance Awards. One or more Performance Awards may be granted to
any eligible employee. The value of such Awards may be linked to the
market value, book value or other measure of the value of the Common stock
or other specific performance criteria determined appropriate by the Board
or the Committee, in each case on a specified date or over any period
determined by the Board or the Committee, or may be based upon the
appreciation in the market value, book value or other measure of the value
of a specified number of shares of Common stock over a fixed period
determined by the Board or the Committee. In making such determinations,
the Board or the Committee may consider (among such other factors, as it
deems relevant in light of the specific type of award) the contributions,
responsibilities, and other compensation of the participant.
Dividend Equivalents. A participant may also be granted Dividend
Rights based on the dividends declared on the Common Stock, to be credited
as of dividend payment dates, during the period between the date of grant
of the Award and the date such Award is exercised, vests or expires, as
determined by the Board or the Committee. Such Dividend Rights may be
converted to cash or additional shares of Common Stock by such formula and
at such time and subject to such limitations as may be determined by the
Board or the Committee.
Stock Payments. The Board or the Committee may approve Stock
Payments to eligible employees who elect to receive such payments in the
manner determined from time to time by the Board or the Committee. The
number of shares must be determined by the Board or the Committee and may
be based upon the fair market value, book value or other measure of the
value of such shares on the date the Award is granted or on any date
thereafter.
Loans. The Company may, with the Board's or the Committee's approval,
extend one or more loans to participants in connection with the exercise
or receipt of outstanding Awards granted under the Plans. Such loans are
subject to the following conditions: (i) the principal of the loan may
not exceed the amount required to be paid to the Corporation upon the
exercise or receipt of one or more Awards under the Plans less the
aggregate par value of any Common Stock deliverable on such event, and the
loan proceeds must be paid directly to the Corporation in consideration of
such exercise or receipt; (ii) the initial term of the loan must be
determined by the Board or the Committee; provided that the term of the
loan, including extensions, may not exceed a period of ten years; (iii)
the loan must be with full recourse to the participant, must be evidenced
by the participant's promissory note and must bear interest at a rate
determined by the Board or the Committee but not less than the Company's
average cost of funds as of a date within 31 days of the date of such
loan, as determined by the Board or the Committee; and iv) in the event a
participant terminates his or her employment at the request of the
Company, the unpaid principal balance of the note must become due and
payable on the tenth business day after such termination; provided,
however, that if a sale of such shares would cause such participant to
incur liability under Section 16(b) of the Exchange Act, the unpaid
balance may become due and payable on the 10th business day after the
first day on which a sale of such shares could have been made without
incurring such liability assuming for these purposes that there are no
other transactions by the participant subsequent to such termination. In
the event a participant terminates employment other than at the request of
the Company, the unpaid principal balance of the note becomes due and
payable six months after the date of such termination.
Termination, Suspension and Amendment. The Board of Directors or the
Committee may, at any time, suspend, amend, modify of terminate the Plans
(or any part thereof) and may, with the consent of the recipient of an
Award, authorize such modifications of the terms and conditions of such
participant's Award as it shall deem advisable. However, no amendment or
modification of the Plans may be adopted without approval by a majority of
the shares of the Common Stock represented (in person or by proxy) at a
meeting of stockholders at which a quorum is present and entitled to vote
thereat, if such amendment or modification would materially increase the
benefits accruing to participants under the Plans within the meaning of
Rule 16b-3 under the Exchange Act or any successor provision; materially
increase the aggregate number of shares which may be delivered pursuant to
Awards granted under the Plans; or materially modify the requirements of
eligibility for participation in the Plans.
Compliance With Section 16 (a) of the Exchange Act
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors, and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors, and greater than 10%
beneficial owners are required by SEC regulation to furnish the Company
with copies of all Section 16 (a) forms they file. The Company believes
that all filing requirements applicable to its officers, directors, and
greater than 10% beneficial owners were complied with.
Section 401 (k) Plan
In December 1989, the Company adopted a tax-qualified cash or
deferred profit sharing plan (the "401 (k) Plan") covering all employees
who have completed six months of continuous service prior to a plan entry
date. Pursuant to the 401 (k) Plan, eligible employees may make salary
deferral (before tax) contributions of up to 15% of their total
compensation per plan year up to a specified maximum contribution as
determined by the Internal Revenue Service. The 401 (k) Plan also
includes provisions which authorize the Company to make discretionary
contributions. Such contributions, if made, are allocated among all
eligible employees as determined under the 401(k) Plan. The trustees
under the 401 (k) Plan invest the assets of each participant's account
attributable to the Company's contribution in an equity fund or guaranteed
income fund until the participant is fully vested. The trustees invest
the assets at the direction of such participant for the portion
attributable to the participant's contribution and the portion
attributable to the Company's contribution if the participant is fully
vested. No contributions were made to the 401 (k) Plan during the year
ended December 31, 2000.
Certain Relationships and Related Transactions
In October 1994, in consideration of extraordinary contributions to
the Company, including but not limited to the pledge of 75,500 shares of
common stock of the Company owned by them to facilitate necessary
financings for the Company, the board of Directors approved a loan of
$370,000 to each of Mr. Kesler and Mr. Neveau. Such borrowings are due 30
days after demand and bear annual interest at the prime rate of interest
plus 7%. In February 1996 Messrs. Kesler and Neveau each repaid $150,000
to the Company. In March 1996, the notes were amended to modify the loan
principal between Messrs. Kesler and Neveau as well as to adjust the
interest rates, effective March 1, 1996 to a variable rate based upon the
Company's quarterly investment rate. Repayment of these notes has been
extended until completion of the NAFTA arbitration. Mr. Kesler's note is
secured by his employment agreement.
During the twelve months ended December 31, 2000, the Company
incurred legal fees of $28,000 from the law firm of Gibson, Haglund &
Paulsen, of which Bruce H. Haglund, general counsel, Director, and
Secretary of the Company, is a principal; however, none of such fees have
yet been paid.
Report of Compensation Committee
April 27, 2001
Board of Directors
Metalclad Corporation
2 Corporate Plaza 125
Newport Beach, California 92660
As the Compensation Committee of Metalclad Corporation (the
"Company"), it is our duty to review and recommend the compensation levels
for members of the Company's management, evaluate the performance of
management and the administration of the Company's various incentive
plans.
The policies and underlying philosophy governing the Company's
compensation program are to: maintain a comprehensive program that is
competitive in the marketplace, provide opportunities integrating salary
and stock rights to compensate short and long-term performance of
management, recognize and reward individual accomplishments and allow the
Company to retain seasoned executives who are essential to the Company's
success.
In determining management's compensation, this Committee evaluates
the compensation paid to management based on their performance, their
experience, and the stage of development of the Company. The Committee
also takes into account such relevant external factors as general economic
conditions, stock price performance, and stock market prices generally.
Management compensation is composed of salary, bonuses, and options to
purchase shares of Common Stock at the fair market value on the date of
grant. The Company entered into employment agreements with Messrs. Kesler
and Dabbene in January 1998, which established base salaries and minimum
bonus amounts. The number of options granted is scaled to the salary of
each individual officer.
The base salaries for executive officers are determined by evaluating
the responsibilities of the positions held, the individual's experience,
the competitive marketplace, the individual's performance of
responsibilities and the individual's overall contribution to the Company.
Mr. Kesler's last salary increase was in 1997 and Mr. Dabbene's last
salary increase was also in 1997.
The Committee considers and recommends stock option grants under the
Company's stock option plans for key employees and others who make
substantial contributions to the long-term financial success of the
Company. The Company and the Committee believe that stock options provide
strong incentive to increase the value of stockholders' interests. Stock
options grants are believed by the Committee to help focus management on
the long-term success of the Company. The amount of any stock option
grant is based primarily on an individual's responsibilities and position
with the Company. Individual awards of options are affected by the
Committee's subjective evaluation of factors it deems appropriate such as
the assumption of responsibilities, competitive factors and achievements.
During 2000, options were granted to Messrs. Kesler, Dabbene and Rizzo for
the purchase of 250,000, 200,000 and 10,000 shares, respectively, at an
exercise price of $3.00 per share.
Significant to the Committee's recommendations concerning executive
compensation and option grants are significant events which have occurred
over time as well as objectives set for the coming year. With regard to
the year ended December 31, 2000, the Company a) increased revenues in its
insulation business; b) continued pursuit of the NAFTA claim, including a
defense to Mexico's challenge to the award; and c) obtained the additional
capital necessary to support the Company's operations.
The executive officers devoted substantial time and effort in
achieving the aforementioned objectives while at the same time devoting
significant time to the daily affairs of the Company. Based on the
performance of management in achieving these objectives in 2000 and the
financial condition of the Company, Messrs. Kesler and Dabbene were
granted stock options as described above and awarded the minimum bonus
amounts of $50,000 and $36,000, respectively, as provided under their
respective employment agreements.
Compensation Committee
/s/ J. Thomas Talbot
------------------------------
J. Thomas Talbot, Chairman
Compensation Committee
/s/ Raymond J. Pacini
------------------------------
Raymond J. Pacini, Member
Compensation Committee
Comparison of Five-Year Cumulative Total Returns
Performance Report for Metalclad Corporation
Date Company Market Market Peer Peer Company
Index Index Count Index Count Index: CUSIP Ticker Sic Exchange
---------- ------- ------- ------ ------- ----- ----- ------ --- --------
12/29/1995 139.130 141.335 4820 119.233 5 59114220 MTLC 1790 NASDAQ
01/31/1996 173.913 142.042 4810 139.452 6 Fiscal Year-end is 12/31/2000
02/29/1996 193.478 147.457 4840 155.425 6
03/29/1996 163.043 147.952 4879 142.519 6 Market Index: Nasdaq Stock Market
(US Companies)
04/30/1996 123.913 160.210 4924 129.185 5
05/31/1996 110.869 167.557 4981 124.697 5 Peer Index: NASDAQ Stocks
06/28/1996 106.522 160.004 5035 120.962 5 (SIC 1790-1799 US)
07/31/1996 93.478 145.764 5067 103.734 5
08/30/1996 113.043 153.954 5091 112.881 5 Misc. Special Trade Contractors
09/30/1996 80.435 165.725 5097 100.174 5
10/31/1996 63.043 163.882 5139 80.487 5
11/29/1996 53.261 174.044 5181 63.659 5
12/31/1996 63.043 173.898 5177 71.816 5
01/31/1997 65.217 186.240 5162 74.092 5
02/28/1997 45.652 175.937 5171 65.905 5
03/31/1997 43.478 164.466 5170 58.716 5
04/30/1997 35.870 169.591 5155 54.524 5
05/30/1997 41.304 188.793 5148 64.687 5
06/30/1997 53.261 194.600 5132 73.765 5
07/31/1997 45.652 215.102 5127 91.820 6
08/29/1997 50.000 214.784 5116 99.455 6
09/30/1997 47.826 227.516 5106 126.235 6
10/31/1997 45.652 215.662 5115 126.065 6
11/28/1997 41.304 216.799 5131 119.384 6
12/31/1997 38.043 213.068 5082 120.523 6
01/30/1998 54.348 219.812 5053 114.267 6
02/27/1998 60.869 240.480 5032 109.973 6
03/31/1998 38.043 249.367 4994 110.336 6
04/30/1998 34.783 253.569 4973 103.134 6
05/29/1998 34.783 239.480 4966 90.767 7
06/30/1998 35.870 256.207 4944 87.026 7
07/31/1998 44.565 253.220 4921 73.390 7
08/31/1998 30.435 203.026 4883 44.811 7
09/30/1998 33.696 231.195 4822 44.212 7
10/30/1998 23.913 241.359 4738 48.126 7
11/30/1998 13.043 265.895 4703 41.925 7
12/31/1998 14.130 300.440 4653 39.888 7
01/29/1999 11.956 344.027 4602 45.959 7
02/26/1999 9.783 313.222 4574 42.052 7
03/31/1999 7.609 336.872 4518 37.260 7
04/30/1999 10.870 347.549 4497 36.202 7
05/28/1999 8.696 338.151 4487 44.930 7
06/30/1999 6.522 368.620 4469 51.890 7
07/30/1999 8.696 362.005 4464 52.956 5
08/31/1999 9.891 377.257 4452 61.237 6
09/30/1999 13.696 377.473 4424 56.043 6
10/29/1999 16.522 407.442 4423 60.688 6
11/30/1999 23.043 456.758 4417 79.816 6
12/31/1999 19.783 556.913 4405 84.932 6
01/31/2000 12.188 380.208 4362 69.885 6
02/29/2000 9.688 452.483 4371 76.953 6
03/31/2000 9.688 443.166 4372 60.711 6
04/28/2000 8.906 372.760 4394 55.605 5
05/31/2000 7.656 327.793 4387 50.442 5
06/30/2000 7.813 385.309 4378 51.873 5
07/31/2000 8.906 364.433 4375 51.995 5
08/31/2000 7.891 407.492 4398 55.685 4
09/29/2000 6.797 354.535 4367 54.334 4
10/31/2000 6.250 325.330 4314 53.243 4
11/30/2000 3.125 250.817 4281 52.500 4
12/29/2000 3.750 237.368 4216 47.623 4
*The index level for all series was set to 100.0 on 12/29/1995.
-----------------
Prepared by the Center for Research in Security Prices
Produced on 04/9/2001 including data to 12/29/2000
Copyright 2001
RATIFICATION OF APPOINTMENT OF AUDITORS
General
Moss Adams, LLP has been the Company's independent auditors since
1998. There were no disagreements with the former accountants, and there
are no disagreements with the current accountants on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. At a meeting on March 21, 2001, the Board of
Directors unanimously approved the recommendation of the Audit Committee
for the appointment of Moss Adams to audit the financial statements of the
Company for 2001. This selection is subject to ratification or rejection
by the Stockholders.
Moss Adams has no financial interest in the Company. A representative
of Moss Adams is expected to be present at the Annual Meeting, will have
an opportunity to make a statement if he or she so desires, and is
expected to be available to respond to appropriate questions.
Moss Adams performed various audit and other services for the Company
during 2000. Such services included an audit of annual financial
statements, interim reviews of quarterly financial statements, review and
consultation connected with certain filings with the SEC, internal control
reviews required by certain contractual agreements or requested by the
Company's management, consultation on tax, financial accounting and
reporting matters, and meetings with the Audit Committee of the Board of
Directors.
Audit Fees
Following is a summary of the 2000 fees paid to Moss Adams for the
audit of the Company's December 31, 1999 financial statements and reviews
of quarterly reports filed with the SEC in 2000:
All Other
--------------------
Payments in Annual Audit- Non-Audit- Total
Year Ended Audit Tax Related Related All Other Total
----------------- ------ --------- ------- ---------- --------- -------
December 31, 2000 $43,500 $13,500 $22,000 $14,000 $36,000 $93,000
The Company has accrued approximately $17,200 through March 31, 2001
for the audit of the December 31, 2000 consolidated financial statements
by Moss Adams, and the Company is current in the payment of fees due Moss
Adams.
All Other Fees
The Company paid fees of approximately $36,000 to Moss Adams for all
other services provided by it during 2000, including audit-related
services of $22,000 and non-audit services of $14,000. Non-audit-related
services generally include fees for services relating to tax advice and
research associated with the Company's NAFTA award. The Audit Committee
has considered the compatibility of non-audit services with the auditors'
independence.
Report of the Audit Committee
The Board of Directors of the Company has appointed an Audit
Committee currently composed of three directors, Raymond J. Pacini,
Chairman, J. Thomas Talbot, and Bruce H. Haglund, the Company's Secretary
and general counsel. All three members of the Audit Committee are
"independent" as defined in the Nasdaq-listing standards.
The Board of Directors has adopted a written charter for the Audit
Committee. A copy of that Charter is included as Exhibit "A" to this Proxy
Statement. The Audit Committee's job is one of oversight as set forth in
its Charter. It is not the duty of the Audit Committee to prepare the
Company's financial statements, to plan or conduct audits, or to determine
that the Company's financial statements are complete and accurate and are
in accordance with generally accepted accounting principles. The Company's
management is responsible for preparing the Company's financial statements
and for maintaining internal control. The independent auditors are
responsible for auditing the financial statements and for expressing an
opinion as to whether those audited financial statements fairly present
the financial position, results of operations, and cash flows of the
Company in conformity with generally accepted accounting principles. The
Audit Committee met three times in 2000.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management and with Moss Adams, the Company's
independent auditors for 2000.
The Audit Committee has discussed with Moss Adams the matters
required to be discussed by Statement on Auditing Standards No. 61.
The Audit Committee has received from Moss Adams the written
statements required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed Moss
Adams' independence with them, and has considered the compatibility of
non-audit services with the auditors' independence.
Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the audited
consolidated financial statements be included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2000 for filing with
the Securities and Exchange Commission.
The Audit Committee
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Raymond J. Pacini, Chairman
J. Thomas Talbot
Bruce H. Haglund
Use of the Report of the Audit Committee and Audit Committee Charter
In accordance with and to the extent permitted by applicable law or
regulation, the information contained in the Report of the Audit Committee
and the Audit Committee Charter shall not be incorporated by reference
into any future filing under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, and shall not be deemed
to be soliciting material or to be filed with the SEC under the Securities
Act of 1933 or the Securities Exchange Act of 1934.
Vote Required
Ratification of the appointment of auditors requires a majority of
the votes cast thereon. Any Shares not voted, whether by abstention,
broker non-vote, or otherwise, have no impact on the vote. If the
Stockholders do not ratify this appointment, other independent auditors
will be considered by the Board of Directors upon recommendation of the
Audit Committee. The affirmative vote of a majority of the outstanding
Shares is required to approve this proposal. Management intends to vote
"FOR" the proposal to ratify the auditors.
The Board of Directors unanimously recommends that the Company's
Stockholders vote "FOR" the ratification of the auditors, and your proxy
will be so voted unless you specify otherwise.
SUBMISSION OF SHAREHOLDER PROPOSALS
Stockholders are advised that any stockholder proposal intended for
consideration at the 2002 Annual Meeting must be received by the Company
on or before February 1, 2002 to be included in any proxy materials
prepared for the 2002 Annual Meeting of Stockholders. It is recommended
that stockholders submitting proposals direct them to the Secretary of the
Company and utilize certified mail-return receipt requested to insure
timely delivery of the proposal.
MISCELLANEOUS AND OTHER MATTERS
Financial Statements
The Company's financial statements for the year ended December 31,
2000, and the year ended December 31, 1999 appear on the pages following
page 20 of its 2000 Annual Report on Form 10-K which is being mailed to
all stockholders along with this Proxy Statement. Said pages are
incorporated herein by reference.
Matters Not Determined at the Time of the Solicitation
Management knows of no matters to come before the Meeting other than
as specified herein. If any other matter should come before the Meeting,
then the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in
accordance with their judgment.
A COPY OF THE COMPANY'S CURRENT ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, IS BEING MAILED TO EACH SHAREHOLDER
TOGETHER WITH THIS PROXY STATEMENT. ADDITIONAL COPIES OF THE ANNUAL
REPORT MAY BE OBTAINED BY SHAREHOLDERS WITHOUT CHARGE BY WRITING TO:
METALCLAD CORPORATION, 2 CORPORATE PLAZA, SUITE 125, NEWPORT BEACH,
CALIFORNIA 92660.
EXHIBIT A
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
There shall be a committee of the Board of Directors ("Board") for
METALCLAD CORPORATION, a Delaware corporation ("Corporation"), to be known
as the Audit Committee ("Committee"). The Committee shall be composed of
directors who are independent of the management of the Corporation and are
free of any relationship that, in the opinion of the board, would
interfere with their exercise of independent judgment as a Committee
member.
The Committee shall be comprised of three (3) or more directors as
determined by the board. All members of the Committee shall have a
working familiarity with basic finance and accounting practices, and at
least one member of the Committee shall have accounting or related
financial management expertise. Committee members may enhance their
familiarity with finance and accounting by participating in educational
programs conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the board at the annual
organizational meeting of the board or until their succesors 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
II. PURPOSE
The Committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices
of the Corporation, and the quality and integrity of the financial reports
of the Corporation. It shall be the responsiblity of the Committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the Corporation.
Consistent with this function, the Committee should encourage continuous
improvement of, and should foster adherence to, the Corporation's
policies, procedures and practices at all levels.
While the committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Corporation's financial statements are complete and
accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent
auditor or to assure compliance with laws and regulations and the
Corporation's business conduct guidelines.
In carrying out its responsiblities, the Committee believes its policies
and procedures should remain flexible in order to best react to changing
conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the Corporation are in
accordance with all requirements and are of the highest quality.
The 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 financial management of the corporation.
*Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board.
The Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
III. MEETINGS
The Committee shall meet at least four (4) times annualy, or more
frequently as circumstances dictate. As part of its responsibility to
foster open communication, the Committee should meet at least annually
with management, and the independent accountants in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed primately. In addition, the Committee or its
chair should meet with the independent accountants and management annually
to review the Corporation's financials in accordance with Section IV(3)
below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsiblities and duties the Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically (at least annually) as
conditions dictate.
2. Review the Corporation's annual financial statements and any reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered
by the independent accountants.
3. Review with financial management and the independent accountants, the
Annual Report on Form 10-K prior to its filing or prior to the release of
earnings. the chairman of the Committee may represent the entire
Committee for purposes of this review.
4. Issue annually a report to be included in the Corporation's proxy
statement as required by the rules of the Securities and Exchange
Commission.
5. Discuss with management and/or the Corporation's general counsel any
legal matters (including the status of pending litigation) that may have a
material impact on the Corporation's financial statements, and any
material reports or inquiries from regulatory or governmental agencies.
Independent Accountants
6. Recommend to the board 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 the accountants all
significant relationships the accountants have with the Corporation to
determine the accountants independence. The Committee shall be
responsible for obtaining a formal written statement from the independent
accountants delineating all relationships between the accountants and the
Corporation consistent with Independence Standards Board Standard 1.
7. Review the performance of the independent accountants and approve
any proposed discharge of the independent accountants when circumstances
warrant.
8. Periodically consult with the independent accountants out of the
presence of financial management aobut internal controls and the fullness
and accuracy of the Corporation's financial statements.
Financial Reporting Processes
9. In consultation with the independent accountants and the financial
management, review the integrity of theCorporation's financial reporting
processes, both internal and external.
10. Consider the independent accountants judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
11. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, or financial management.
Process Improvement
12. Establish regular and separate systems of reporting to the Committee
by each of financial management, and the independent accountants regarding
any significant judgments made in financial management's preparation of
the financial statements and the view of each as to appropriateness of
such judgements.
13. Following completion of the annual audit, review separately with each
of financial management, and the independent accountants, any significant
difficultieis encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
14. Review any significant disagreement among financial management and
the independent accountants in connection with the preparation of the
financial statements.
15. Review with the independent accountants and financial management
the extent to which changes or improvements in financial or accounting
practices, as approved by the Committee, have been implemented, provided
such review shall be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the Committee.
Compliance
16. Review activities, organizational structure, and qualifications of
financial management of the Corporation.
17. Perform any other activities consistent with this Charter, the
Corporation's by-laws and governing law, as the Committee or the Board
deem necessary or apropriate.