SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
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14A-6(E)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
NORTH AMERICAN GALVANIZING & COATINGS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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|X| No fee required
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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NORTH AMERICAN GALVANIZING & COATINGS, INC.
APRIL , 2005
ANNUAL MEETING - MAY 26, 2005
Dear Stockholder:
You are cordially invited to attend North American Galvanizing & Coatings,
Inc.'s Annual Meeting of Stockholders on Thursday, May 26, 2005 at 10:00 a.m.
The Annual Meeting will be held 815 Connecticut Avenue NW, Suite 1200, in
Washington, D.C.
The business expected to be conducted at the Annual Meeting is presented in
the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
Members of management will report on our operations and our outlook for the
future. After the business presentation, the directors and management will be
available for your questions.
Regardless of whether you plan to attend the Annual Meeting in person,
please vote your shares by proxy. The enclosed proxy card contains directions
for voting your shares by mail, by using the Internet or by telephone. Please
ensure that your shares will be represented at the Annual Meeting by voting now.
Your vote is important, either in person or by proxy.
On behalf of the Board of Directors, thank you for your continued interest
in North American Galvanizing & Coatings, Inc. We look forward to seeing you at
our Annual Meeting.
Sincerely,
/s/ Ronald J. Evans
Ronald J. Evans
President and Chief Executive Officer
NORTH AMERICAN GALVANIZING & COATINGS, INC. 2250 E. 73RD STREET, STE. 300 TULSA,
OKLAHOMA 74136-6832 USA
918-494-0964 FAX 918-494-3999 WWW.NAGALV.COM
NORTH AMERICAN GALVANIZING & COATINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of North
American Galvanizing & Coatings, Inc., a Delaware corporation, will be held at
815 Connecticut Avenue NW, Suite 1200, Washington, D.C., on Thursday March 26,
2005 at 10:00 a.m., local time, for the purpose of:
1. Electing five directors to one year terms.
2. Approving amendments to the Restated Certificate of Incorporation to
effect a reverse stock split followed by a forward stock split of the
common stock at the discretion of the board of directors.
3. Ratifying the appointment of Deloitte & Touche LLP as independent
accountants for 2005.
4. Transacting such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The Board of Directors fixed April 4, 2005 as the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting. A list of those stockholders will be open for examination at our
offices for a period of ten days prior to the Annual Meeting and also will be
available for inspection at the Annual Meeting.
We have provided you the choice of voting your shares by Internet,
telephone or mail, as outlined on the enclosed proxy card. It is important that
your shares are represented at the Annual Meeting regardless of the number you
may hold. We encourage you to vote by Internet, telephone or mail even if you
plan to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul R. Chastain
Paul R. Chastain,
Vice President & Corporate Secretary
April , 2005
PROXY STATEMENT
NORTH AMERICAN GALVANIZING & COATINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 2005
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of North American Galvanizing &
Coatings, Inc. ("North American Galvanizing", the "Company", "we", "us" or
"our") for use at the Annual Meeting of Stockholders to be held May 26, 2005, at
10:00 a.m., local time, at 815 Connecticut Avenue NW, in Washington, D.C., or at
any adjournments thereof (the "Annual Meeting").
At the close of business on April 4, 2005, the record date for stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
6,796,948 shares of our common stock (the "Common Stock"). Each share of Common
Stock is entitled to one vote on all matters.
The holders of a majority of the Common Stock present in person or
represented by proxy will constitute a quorum for transaction of business at the
Annual Meeting. Abstentions and "broker non-votes" are counted to determine the
presence or absence of a quorum at the Annual Meeting. No cumulative voting
rights are authorized and dissenters' rights are not applicable to the matters
being proposed.
This proxy statement and accompanying proxy card are being mailed to our
stockholders on or about April , 2005.
Our principal executive office is located at 2250 East 73rd Street, Suite
300, Tulsa, Oklahoma 74136-6832.
The five nominees receiving the highest number of affirmative votes will be
elected as directors at the Annual Meeting. This is called a plurality. A vote
withheld from a nominee for director will have no effect on the results of the
vote.
The affirmative vote of a majority of the shares outstanding and entitled
to vote at the Annual Meeting is required to amend our Restated Certificate of
Incorporation to effect a reverse stock split followed by a forward stock split
of the common stock at the discretion of the board of directors. Under the
reverse stock split, 150 shares of Common Stock (the "Minimum Number")
registered in the name of a stockholder at the effective time of the reverse
stock split will be converted into one share of Common Stock, followed
immediately by the forward stock split pursuant to which each share of Common
Stock outstanding upon consummation of the reverse stock split will be converted
into 150 shares of Common Stock. If a registered stockholder holds fewer than
the Minimum Number of shares of Common Stock in his or
account at the effective time of the reverse stock split, any fractional shares
resulting from the reverse stock split will instead be converted into the right
to receive a cash payment. If you abstain from voting on the proposal, it will
have the same effect as a vote against the proposal.
The affirmative vote of the shares represented at the Annual Meeting and
entitled to vote is required to ratify the appointment of Deloitte & Touche LLP
as the independent accountants. If you abstain from voting on this proposal, it
will have the same effect as a vote against that proposal.
Brokers who hold shares of Common Stock in "street name" for customers have
authority to vote on certain "routine" items on behalf of their clients if they
do not receive voting instructions within ten days of the Annual Meeting
pursuant to the rules of the New York Stock Exchange that govern brokers,
including brokers that trade shares on the American Stock Exchange. Brokers will
have discretionary authority to vote on the election of directors and the
ratification of the independent auditors. For matters that are not routine, if a
broker has not received voting instructions from its client, the broker cannot
vote the shares on that proposal. This is called a "broker non-vote." Broker
non-votes will be counted for purposes of establishing a quorum to conduct
business at the Annual Meeting but not for determining the number of shares
voted for or against a non-routine matter or as an abstention on that matter.
The approval of amendments to our Restated Certificate of Incorporation to
effect a reverse stock split followed by a forward stock split of the Common
Stock at the discretion of the board of directors being considered at the Annual
Meeting is a non-routine matter.
You may revoke your proxy at any time before the Annual Meeting by:
o giving written notice to North American Galvanizing & Coatings, Inc.,
Attention: Corporate Secretary, 2250 East 73rd Street, Suite 300,
Tulsa, Oklahoma 74136,
o executing and delivering to the Corporate Secretary a proxy card
bearing a later date, or
o by voting in person at the Annual Meeting.
Shares represented by properly executed proxies will be voted at the Annual
Meeting as specified, unless such proxies are subsequently revoked as provided
above.
If no choice is specified on a valid, unrevoked proxy, the shares will be
voted as follows:
o FOR the election of the directors,
o FOR the approval of amendments to the Restated Certificate of
Incorporation to effect a reverse stock split followed by a forward
stock split of the Common Stock at the discretion of the board of
directors, and
o FOR the ratification of the appointment of the independent
accountants.
Proxies will also authorize the shares represented thereby to be voted on any
matters not known as of the date of this proxy statement that may properly be
presented for action at the Annual Meeting.
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SPECIAL CONSIDERATIONS OF THE PROPOSED REVERSE/FORWARD SPLIT
If you are a stockholder holding fewer than the Minimum Number of Shares of
Common Stock and do not elect to purchase a sufficient number of shares to hold
at least the Minimum Number, or (if applicable) do not consolidate your accounts
into an account containing at least the Minimum Number prior to the effective
date of the Reverse/Forward Split (as defined below), your shares will be
converted into the right to receive a cash payment. On the effective date of the
reverse stock split, the shareholders who are cashed out in the Reverse/Forward
Split will no longer be stockholders of the Company. The Board will determine
the effective date of the Reverse/Forward at its sole discretion, and the
stockholders have no control over the timing or price of the sale of their
shares. If the Average Trading Value (as defined below) of the Common Stock is
depressed during the ten days before the effective date of the Reverse/Forward
Split, the amount paid to the stockholders who will be cashed out will reflect
that depressed Average Trading Value. The United States economy may be entering
into a period of sustained recovery; we may benefit from such recovery, which
may result in our price increasing over time. Stockholders that are not cashed
out will be able to hold their shares over a longer period of time and may be
able to sell their shares at a higher price than if they cashed out in the
Reverse/Forward Split. For more information about the proposed Reverse/Forward
Split, see "Proposal 2 - Amendments to the Company's Restated Certificate of
Incorporation to Effect a Reverse Stock Split Followed by a Forward Stock
Split."
ANNUAL REPORT
Our Annual Report to Stockholders and Form 10-K for the fiscal year ended
December 31, 2004, including audited financial statements, are enclosed with
this Proxy Statement. Certain portions of the Annual Report are incorporated in
this Proxy Statement by reference as described on page 36 of this Proxy
Statement.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board currently consists of six members, each of whom is elected to
serve for a term of one year.
Five directors, each of whom currently serves on the Board, are to be
elected at the Annual Meeting, in accordance with our Amended and Restated
Bylaws (the "Bylaws"), to serve until the 2006 annual meeting or until their
respective successors have been elected. The remaining board seat will not be
filled at the Annual Meeting, but will remain vacant as described below.
Current directors, Linwood J. Bundy, Ronald J. Evans, Gilbert L. Klemann,
II, Patrick J. Lynch, Joseph J. Morrow and John H. Sununu have been nominated
for re-election at the Annual Meeting for a term expiring at the 2006 Annual
Meeting of Stockholders, and each of these nominees has agreed to serve if
elected; however, if any nominee is unable or declines to serve
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as a director at the date of the Annual Meeting, such proxies will be voted for
a substitute nominee selected by the Board. The Board has no reason to believe
that any of the nominees will be unavailable to serve.
Current director Paul R. Chastain will retire as a director of the Company
effective at this Annual Meeting, in accordance with the Board's retirement
policy upon attaining age 70. The Board is currently looking for qualified
candidates to fill the board seat that will become vacant when Mr. Chastain
retires.
NOMINEES FOR ELECTION AS DIRECTORS
The experience and background of each of the nominees are set forth below.
LINWOOD J. BUNDY, age 62, President, Chief Executive Officer and member of
the Board of Directors of Bundy, Inc., a privately-owned development,
entertainment and investment company located in Iowa, since 1993. From 1978 to
1998, President and Chief Executive Officer of Iowa State Ready Mix Concrete,
Inc., a privately-owned concrete company located in Ames, Iowa. Past owner of
Hallet Materials, a sand and gravel business in Iowa and Texas (1986-1998). Mr.
Bundy serves on the Board of Directors of US Bank in Ames, Iowa. He is a past
member of the Board of Trustees of Mary Greeley Medical Center, a member of the
Order of the Knoll, an Iowa State University Foundation, and past member of a
number of civic and professional organizations in Iowa. Served as director of
the Company continuously since 2000.
RONALD J. EVANS, age 56, appointed President of the Company in February
1996 and Chief Executive Officer in November 1999. Private investor from May
1995 to February 1996. From July 1989 to May 1995, Vice President and General
Manager of Deltech Corporation, a privately-owned specialty chemicals producer.
From January 1989 to July 1989, Vice President of Sales and Marketing for
Deltech Corporation. Manager from 1976 to 1989 for Hoechst Celanese Corporation.
Served as director of the Company continuously since 1995.
GILBERT L. KLEMANN, II, age 54, Senior Vice President and General Counsel
of Avon Products Inc. since January 2001. During 2000, Mr. Klemann was Of
Counsel for the international law firm of Chadbourne & Parke LLP, New York City.
From 1991 to 1999, Mr. Klemann was an Executive Officer and General Counsel of
Fortune Brands, Inc. (formerly American Brands, Inc.), a publicly-owned consumer
products holding company, where he also was a member of the Board of Directors.
Prior to 1990 he was a partner in the law firm of Chadbourne & Parke LLP. Served
as director of the Company continuously since 2000.
PATRICK J. LYNCH, age 67, Private investor and formerly Senior Vice
President and Chief Financial Officer of Texaco Inc., a publicly-owned oil and
petrochemicals company, from 1997 to 2001. For more than five years, Mr. Lynch
was actively engaged in the business of Texaco Inc. or one of its subsidiaries
or affiliated companies. He is a member of the Trustees of The American
Petroleum Institute, The Conference Board Financial Executives and CFO Advisory
Council, and serves as a Trustee for Iona College in New Rochelle, New York.
Served as director of the Company continuously since 2001.
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JOSEPH J. MORROW, age 65, appointed Non-Executive Chairman of the Board in
November 1999. Currently a director of U.S. Agents Holding Corp. Chairman of
Proxy Services Corporation from 1992 to present. Chief Executive Officer of
Proxy Services Corporation from 1972 to 1992. Chief Executive Officer of Morrow
& Co., Inc., a privately-owned proxy solicitation firm, since 1972. Served as
director of the Company continuously since 1996.
JOHN H. SUNUNU, age 65, President of JHS Associates, Ltd. since June 1992
and a former partner in Trinity International Partners, both private financial
firms, and served as co-host of CNN's "Crossfire", a news/public affairs
discussion program, from March 1992 until February 1998. A member of the
National Academy of Engineering and the Board of Trustees for the George Bush
Presidential Library Foundation. From January 1989 until March 1992, Chief of
Staff to the President of the United States. Served on the Advisory Board of the
Technology and Policy Program at MIT from 1984 until 1989. From January 1983 to
January 1989, Governor of the State of New Hampshire. From 1968 until 1973,
Governor Sununu was Associate Dean of the College of Engineering at Tufts
University and Associate Professor of Mechanical Engineering. From 1963 until
his election as Governor, President of JHS Engineering Company and Thermal
Research Inc. Helped establish and served as chief engineer for Astro Dynamics
Inc. from 1960 until 1965. Served as director of the Company continuously since
1996.
With the exception of Mr. Evans, none of the nominees for director are, or
have been, employed by us or any of our subsidiaries or other affiliates.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE NOMINEES LISTED ABOVE.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board.
The Board presently consists of six directors. As discussed above, one board
seat will be vacated when Mr. Chastain retires from the Board in May 2005, and
it is the intention of the Board to fill that vacancy as soon as a qualified
candidate is recommended by the Board's Governance and Nominating Committee. The
Board meets regularly during our fiscal year to review significant developments
affecting us and to act on matters requiring Board approval. It also holds
special meetings when necessary between scheduled meetings. The Board has
determined that Messrs. Lynch, Bundy, Morrow, Klemann and Sununu are
"independent directors," as the term is defined under the listing standards of
AMEX.
The Board met six times in 2004 (including regularly scheduled and special
telephonic meetings). All of the directors attended at least 83% of the total
meetings of the Board and the committees on which they were members. The
non-management directors meet in executive session, as needed, without the
management directors or other members of management. The Board does not have a
policy regarding director attendance at annual meetings. For the 2004 Annual
Meeting of Stockholders, all of the directors, expect Mr. Sununu, attended the
meeting.
We have a non-executive Chairman in lieu of a "lead" director who presides
at all executive sessions of the Board. An interested person who wishes to
contact either the Chairman
5
or the non-management directors as a group may do so by writing to either the
Chairman or the Non-Management Directors, c/o Corporate Secretary, North
American Galvanizing & Coatings, Inc., 2250 East 73rd Street, Suite 300, Tulsa,
Oklahoma 74136, which will be forwarded, unopened, to the addressee.
Stockholders may also contact any other member of the Board by writing to the
same address, c/o Board of Directors.
DIRECTOR'S COMPENSATION
Non-management directors that are not our employees receive an annual fee
of $20,000, payable in quarterly installments, and receive no additional
compensation for committee services beyond their annual fee. Director's receive
no perquisites, other than reimbursement for their out-of-pocket expenses for
attending Board meetings which, from time-to-time may include the Director's
spouse.
In 2004, a director could elect to receive the annual fee in cash, shares
of Common Stock, or a combination thereof. Directors electing to receive shares
of stock received in the aggregate 40,651 shares in lieu of cash fees of $75,000
in 2004. In addition, each non-management director who is serving as such on
July 1 of each year receives a grant of options to purchase 5,000 shares of
Common Stock (the "Non-Employee Director Options") under the 2004 Incentive
Stock Plan. The exercise price for each share of stock subject to an option
grant shall be no less than the fair market value of the Common Stock on the
date of the grant. For 2004, options were granted to non-employee directors on
September 21, 2004 at price of $1.98 per share. Options granted to non-employee
directors become exercisable six months following the date of the grant and have
a ten year term.
At the Company's Annual Meeting held July 21, 2004, stockholders approved a
Director Stock Unit Program ("Program"). Under the Program, effective January 1,
2005, each outside director is required to defer at least 50% of his or her
annual fee, and may elect to defer 75% or 100% of his or her annual fee. Amounts
deferred under the Program will be converted into a Stock Unit Grant under the
Company's 2004 Incentive Stock Plan at the average of the closing prices for a
share of the Company's Common Stock for the 10 trading days before the date the
director fees for outside directors otherwise would have been payable in cash.
To encourage deferral of fees by outside directors, matching Stock Units will be
granted to each outside director based on the percentage of his or her annual
fee such outside director defers. With respect to the grant of stock options to
purchase 5,000 shares of Common Stock, as discussed above, non-management
directors will continue to receive such grants if they are serving as such on
July 1 of each year.
Under the Program, for each inside director the Company automatically
defers from such director's salary a dollar amount equal to 50% of the director
fees for outside directors. An inside director may elect to defer an amount
equal to 75% or 100% of the director fees for outside directors from his or her
compensation. Deferrals for inside directors will be matched with Stock Units at
the same rate as deferrals for outside directors.
All deferrals made in any calendar year will be deferred for five calendar
years following the calendar year for which the deferral is made.
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Directors who are also our employees receive no compensation beyond their
normal salary and receipt of matching Stock Units for their Board and committee
services. We reimburse all directors for travel expenses incurred by them in
connection with their attendance at Board or committee meetings or other
business of the Company.
CORPORATE GOVERNANCE
The corporate governance guidelines adopted by the Board in 2004 address
the qualification and selection of Board members, independence of Board members,
Board leadership, structure of Board committees and Board processes. In
addition, the guidelines include a requirement for executive sessions of
non-management directors, an annual self-assessment of the performance of the
Board and its committees, an annual performance evaluation of the Chief
Executive Officer, and a charter for each Board committee. We have also adopted
a Code of Conduct and Ethics that applies to the Board, our corporate officers,
including our Chief Executive Officer and Chief Financial Officer, and all of
our other employees. Our corporate governance guidelines, the charters for our
committees and our Code of Conduct and Ethics are available on our website at
www.nagalv.com/locations/Nagc.asp.
COMMITTEES OF THE BOARD
The Board maintains the following four standing committees, the membership
of which is determined from time to time by the Board:
EXECUTIVE COMMITTEE. Messrs. Sununu (chairman), Klemann and Evans are
members of the Executive Committee, which met six times in 2004. The Executive
Committee is delegated authority to act on behalf of the Board in certain
operational and personnel matters, and to approve capital expenditures within
limits authorized by the Board.
AUDIT COMMITTEE. Messrs. Lynch (chairman), Bundy and Klemann are members of
the Audit Committee, which met seven times in 2004. Each member of the Audit
Committee is an "independent director" as defined in the AMEX rules. The Board
has determined that Mr. Lynch qualifies as an audit committee "financial expert"
within the meaning of the rules and regulations of the Securities and Exchange
Commission (the "SEC").
The Audit Committee is responsible for, among other things,
o appointing our independent accountants, subject to stockholder
ratification,
o reviewing the scope of the annual audit and recommendations of the
independent audit firm,
o reviewing and discussing with management and the independent auditors
our audited financial statements and other financial information,
o monitoring the independence and performance of our independent
auditors, and
o evaluating overall risk exposures and the adequacy of the overall
internal control functions of the Company.
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COMPENSATION COMMITTEE. Messrs. Bundy (chairman), Lynch and Morrow are
members of the Compensation Committee, which met four times in 2004. Each member
of the Compensation Committee is an "independent director" as defined in the
AMEX rules.
The Compensation Committee considers remuneration of our corporate and
subsidiary officers, administers our incentive compensation and stock option
plans and approves the adoption of employee benefit plans. The Compensation
Committee evaluates the performance of the Chief Executive Officer and
recommends to the Board compensation of the Chief Executive Officer.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. The Corporate Governance and
Nominating Committee was formed in 2003, and is composed of Messrs. Morrow
(chairman), Bundy, Klemann, Lynch and Sununu. Each member of the Corporate
Governance and Nominating Committee is an "independent director" as defined in
the AMEX rules. The Corporate Governance and Nominating Committee met two times
in 2004.
The Corporate Governance and Nominating Committee conducts an annual
self-assessment to determine whether the Board and its committees are
functioning effectively. The Corporate Governance and Nominating Committee is
responsible for, among other things, identifying and evaluating the
qualifications of candidates for Board membership and making recommendations of
candidates for consideration of nomination by the Board.
The Corporate Governance and Nominating Committee reviews and recommends to
the Board the slate of director nominees to be proposed for election at annual
meetings of stockholders and candidates to fill vacancies on the Board that
occur between annual meetings of the stockholders. In identifying and evaluating
candidates for Board membership, the Corporate Governance and Nominating
Committee takes into account all factors it considers appropriate, which may
include professional experience, knowledge, integrity, independence, diversity
of backgrounds and the extent to which the candidate would fill a present need
on the Board.
The Corporate Governance and Nominating Committee will consider candidates
for director recommended by stockholders. Any stockholder who wishes to
recommend a person to be considered for nomination as a director by the
Corporate Governance and Nominating Committee may do so by submitting the
candidate's name and qualifications in writing to Corporate Governance and
Nominating Committee, c/o Corporate Secretary, 2250 E. 73rd Street, Suite 300,
Tulsa, Oklahoma 74136-6832. Stockholders may directly nominate persons for
director in accordance with the provisions of our Bylaws, a copy of which is on
file with the SEC.
COMPANY INFORMATION AVAILABLE ON WEBSITE
In addition to our corporate governance guidelines, our Code of Conduct and
Ethics and the charters of our Audit Committee, Compensation Committee and our
Corporate Governance and Nominating Committee, we make available certain filings
with the SEC, including our Proxy Statements, Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Statements of
Beneficial Ownership of Securities on Forms 3, 4 and 5 for our directors and
officers, through our website at www.nagalv.com/locations/Nagc.asp.
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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of April 4, 2005,
regarding the beneficial ownership of Common Stock by (a) all persons who are
beneficial owners of five percent or more of Common Stock, (b) each of our
directors, (c) our Chief Executive Officer and our only other executive officer
(the "named executive officers"), and (d) all of our directors and executive
officers as a group. Unless otherwise noted, the persons named below have sole
voting and investment power with respect to such shares.
OPTIONS AND
NUMBER OF SHARES WARRANTS PERCENTAGE
OF COMMON STOCK EXERCISABLE OF COMMON
NAME BENEFICIALLY OWNED WITHIN 60 DAYS(1) STOCK(2)
--------------------------------------------------------------------------------
Linwood J. Bundy 40,693 92,292 1.9%
Paul R. Chastain 36,365 5,000 0.6%
Ronald J. Evans 55,306 309,683 5.1%
Gilbert L. Klemann, II 42,783 91,250 1.9%
Patrick J. Lynch 42,783 56,458 1.4%
Joseph J. Morrow 1,987,583 178,332 31.1%
John H. Sununu 181,389 106,667 4.2%
All Directors and Executive 2,386,902 839,682 42.3%
Officers as Group (7 persons)
Robert G. and Pauline B. Walker 345,724(3) - 5.1%
Revocable Trust
Edmund A. Schwesinger, Jr. 397,900(4) - 5.9%
(1) Represents shares which the directors and executive officers have, or
within 60 days of April 4, 2005 will have, the right to acquire through the
exercise of stock options and warrants.
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(2) Based on 6,796,948 shares of the Common Stock outstanding as of April 4,
2005. Assumes that all options or warrants exercisable within 60 days of
April 4, 2005 owned by the named individual are exercised. The total number
of shares outstanding also assumes that none of the options or warrants
owned by other named individuals are exercised. The address for each of our
directors is as follows: c/o North American Galvanizing & Coatings, Inc.,
2250 East 73rd Street, Suite 300, Tulsa, Oklahoma 74136-6832.
(3) Information based on Schedule 13D of the Robert G. and Pauline B. Walker
Revocable Trust, the Pauline B. Walker Revocable Trust A and the Robert G.
Walker Irrevocable Trust B filed with the SEC dated December 14, 1996. The
Robert G. and Pauline B. Walker Revocable Trust, together with two
affiliated trusts, the Pauline B. Walker Revocable Trust A and the Robert
G. Walker Irrevocable Trust B, beneficially own 345,724 shares. Pauline B.
Walker, 3505 Claymore Drive, Plano, Texas 75075, is the sole trustee of all
three trusts.
(4) Information based on Schedule 13G of Mr. Edmund A. Schwesinger, Jr., 94
Cutler Road, Greenwich, Connecticut 06831, filed with the SEC on January
24, 2003.
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EXECUTIVE COMPENSATION
The following Summary Compensation Table provides information on the annual
and long-term compensation for services paid to the named executive officers for
the three fiscal years ended December 31, 2004.
Annual Long-Term
Compensation Compensation
------------ ------------
Name and Securities
Principal Underlying All Other
Position Year Salary Bonus Options Compensation(1)
-------- ---- ------ ----- ------- ---------------
Ronald J. Evans 2004 $160,000 $50,000 -- $9,922
President and 2003 $160,000 $50,000 15,000 $9,922
CEO 2002 $150,000 $33,020 25,000 $8,662
Paul R. Chastain 2004 $146,600 $ 7,500 -- $9,157
Vice President, 2003 $146,600 $ 7,500 10,000 $9,157
CFO and Secretary 2002 $141,600 -- -- $8,921
(1) Represents the Company's matching contributions to its 401(k) defined
contribution retirement plan on behalf of the named executive officer. The
executive officers of the Company receive no perquisites.
STOCK OPTION GRANTS IN FISCAL YEAR 2004
For the fiscal year ended December 31, 2004, there were no stock options
granted to the executive officers of the Company.
11
OPTIONS EXERCISED IN FISCAL YEAR 2004
AND FISCAL YEAR-END VALUES
The following table provides information on the value of options held at
2004 fiscal year-end. No options were exercised by the named executive officers
during fiscal year 2004.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
# OF SHARES VALUE UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT FISCAL
ACQUIRED ON REALIZED YEAR-END EXERCISABLE/ YEAR-END ($) EXERCISABLE/
NAME EXERCISE ($) UNEXERCISABLE UNEXERCISABLE(1)
-------------------------------------------------------------------------------------------------------
Ronald J. Evans -- $ -- 266,250 / 23,750 $15,675 / $20,025
Paul R. Chastain -- -- 2,500 / 7,500 $1,450 / $4,350
-------------------------------------------------------------------------------------------------------
(1) Value is the difference between the closing price of the Common Stock on the
last trading day of fiscal 2004 and the option exercise price of the
in-the-money options multiplied by the number of in-the-money options.
12
COMPENSATION COMMITTEE REPORT
The Compensation Committee reviews our general compensation policies and
the compensation plans and specific compensation levels for executive officers.
The 2004 Incentive Stock Plan, Rule 16b-3 of the Securities Exchange Act of
1934, as amended, and paragraph 162(m) of the Internal Revenue Code of 1986, as
amended, require that at least two of the Compensation Committee members be
non-employee directors. The Compensation Committee consists of three directors
who are not employees of the Company. Each of the Compensation Committee members
also is an "independent director" as defined in the AMEX rules. Linwood J. Bundy
is the current Chairman of the Compensation Committee. Former Board member Mark
E. Walker served as Chairman of the Compensation Committee and presided at one
meeting of the committee in January 2004, prior to his retirement from the Board
in February 2004. All decisions by the Compensation Committee relating to the
compensation of our executive officers are reviewed by the full Board.
In accordance with SEC rules designed to enhance disclosure of companies'
policies toward executive compensation, the following is a report submitted by
the Compensation Committee members addressing our compensation policy as it
related to our executive officers and key subsidiary officers and managers for
the fiscal year 2004.
Our objective is to ensure that executive compensation is directly linked
to ongoing improvement in corporate performance and increasing stockholder
value. The following objectives are guidelines for compensation decisions:
CLASSIFICATION. The Compensation Committee has approved a compensation
program for our salaried employees which is based on annual national salary
surveys for industrial manufacturing companies. Approved salary ranges are
reviewed annually to determine parity with national compensation trends and to
ensure that we maintain a reasonably competitive compensation structure.
COMPETITIVE SALARY BASE. Actual salaries are based on individual
performance contributions within a competitive salary range for each position
established through job evaluation and market comparisons. The salary of each
subsidiary key officer and senior manager and corporate officer is reviewed
annually by the President and Chief Executive Officer who may recommend an
increase for approval by the Compensation Committee. The President and Chief
Executive Officer's salary is approved by the Board based on a review and
recommendation by the Compensation Committee, taking into consideration similar
competitive compensation, assessment of his past performance, his leadership
characteristics and its expectations of his future contributions to our
long-term success. In February, 2005, the Compensation Committee recommended and
the Board approved a base salary of $180,000 for the Chief Executive Officer,
effective April 1, 2005, reflecting our improved earnings performance in 2004.
ANNUAL INCENTIVE COMPENSATION. Our executive officers and key subsidiary
personnel are eligible to participate in an annual incentive compensation plan
with awards based primarily on achievement of profit performance targets. Awards
are subject to decrease or increase on the
13
basis of our performance and at the discretion of the Compensation Committee.
The Compensation Committee took into consideration the contributions and
earnings performance by the key managers and officers of our galvanizing
subsidiary for the year ended December 31, 2004 and selectively approved an
aggregate of $142,650 in incentive awards for 25 persons, including our Chief
Executive Officer. Compensation for the Company's executive officers consists
solely of an annual base salary and, subject to the Compensation Committee's
evaluation and recommendation, a discretionary bonus, as reported in this proxy
statement. With the exception of their participation in the Company's 401(k)
defined contribution plan offered to all eligible employees, the executive
officers receive no other benefits or perks, direct or indirect.
STOCK OPTION PROGRAM. The purpose of this program is to provide additional
incentives to employees to work to maximize our growth and stockholder value.
The stock option program may utilize vesting periods to encourage key employees
to continue in our employ. The number of options granted is determined by the
subjective evaluation of the executive's ability to influence our long-term
growth and profitability. Options are granted at the current market price at the
time of the grant. In 2004, the Compensation Committee approved stock option
grants totaling 25,000 shares of Common Stock to our key galvanizing subsidiary
officers. The Compensation Committee did not approve any stock option grants for
the executive officer, in 2004.
The Compensation Committee believes that its objectives of linking
executive compensation to corporate performance result in alignment of
compensation with corporate goals and stockholder interest. The Compensation
Committee believes that compensation levels during 2004 adequately reflect our
compensation goals and policies. The Compensation Committee will continue to
evaluate the relationship between its executive and key managerial compensation
and our performance and stockholder value.
THE COMPENSATION COMMITTEE:
Linwood J. Bundy, Chairman
Patrick J. Lynch
Joseph J. Morrow
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is presently comprised of the following
directors: Messrs. Bundy, Lynch and Morrow, none of whom are current or former
officers or employees of the Company or any of its subsidiaries. Former Board
member Mark E. Walker served as Chairman of the Compensation Committee until his
retirement from the Board in February 2004. None of our named executive officers
or directors was an executive officer or served as a member of the board of
directors or compensation committee of any entity that has one or more of its
executive officers serving as a member of our Board or Compensation Committee.
14
AUDIT COMMITTEE REPORT
The Audit Committee consists of three directors, all of whom must be
independent in accordance with and meet the other requirements of the AMEX
rules.
The Audit Committee reviews our financial reporting process on behalf of
the Board. Management has the primary responsibility for the financial
statements and the reporting process, including the system of internal controls.
In this context, the Audit Committee has met and held discussions with
management and the independent auditor regarding the fair and complete
presentation of the Company's results. The Audit Committee has discussed
significant accounting policies applied by the Company in its financial
statements, as well as alternative treatments. Management represented to the
Audit Committee that our consolidated financial statements were prepared in
accordance with accounting principals generally accepted in the United States of
America.
The Audit Committee is responsible for, among other things, reviewing with
our independent auditors the scope and results of their audit engagement. In
connection with the fiscal 2004 audit, the Audit Committee has:
o reviewed and discussed with Deloitte & Touche, LLP, our independent
auditors ("Deloitte & Touche"), and with management our audited
financial statements to be included in our Annual Report on Form 10-K
for the year ended December 31, 2004,
o discussed with Deloitte & Touche the matters required by Statement on
Auditing Standards No. 61, as amended, relating to communications
between the Audit Committee and the independent accountants, and
o received from and discussed with Deloitte & Touche the written
disclosures and letter from Deloitte & Touche required by Independence
Standards Board Standard No. 1 as modified or supplemented, regarding
their independence from the Company.
Based on the review and the discussions described in the preceding bullet
points, the Audit Committee has recommended to the Board that the audited
financial statements be included in our Annual Report on Form 10-K for the year
ended December 31, 2004 for filing with the SEC.
THE AUDIT COMMITTEE:
Patrick J. Lynch, Chairman
Linwood J. Bundy
Gilbert L. Klemann, II
15
PROPOSAL 2
AMENDMENTS TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT FOLLOWED
BY A FORWARD STOCK SPLIT
BACKGROUND
At the Company's Annual Meeting of Stockholders held July 21, 2004,
stockholders approved management's proposal to amend the Restated Certificate of
Incorporation to effect the Reverse/Forward Split at the discretion of the board
of directors. The approved proposal provided that if the Board did not effect
the Reverse/Forward Split prior to the 2005 annual meeting stockholders, then
the Board may elect to put the proposal in the 2005 proxy statement for
consideration by the stockholders.
Subsequent to receiving approval for the Reverse/Forward Split, in the
second half of 2004 the Company undertook the evaluation of a potential
acquisition of a galvanizing business, representing a strategic opportunity to
expand its galvanizing business into new markets and geographic location. As a
result of the necessary commitment of the Company's resources, both managerial
and financial, the Board of Directors elected not to implement the proposed
Reverse/Forward Split during 2004.
The Board has determined to again seek stockholder approval to amend the
Restated Certificate of Incorporation to effect the Reverse/Forward Split.
SUMMARY
The Board has authorized, and recommends for your approval a 1-for-150
reverse stock split of the Common Stock (the "Reverse Split") followed
immediately by a 150-for-1 forward stock split of the Common Stock (the "Forward
Split"). We refer to the Reverse Split, the Forward Split and any cash payments
due for fractional shares, collectively, as the "Reverse/Forward Split."
Under the Reverse Split, 150 shares of Common Stock (the "Minimum Number")
registered in the name of a stockholder at the effective time of the Reverse
Split will be converted into one share of Common Stock, followed immediately by
the Forward Split pursuant to which each share of Common Stock outstanding upon
consummation of the Reverse Split will be converted into 150 shares of Common
Stock. If a registered stockholder holds fewer than the Minimum Number of shares
of Common Stock in his or her account at the effective time of the Reverse
Split, any fractional shares resulting from the Reverse Split will instead be
converted into the right to receive a cash payment as described below.
16
If a registered stockholder holds the Minimum Number or more shares of
Common Stock in his or her account at the effective time of the Reverse Split,
any fractional share in the holder's account resulting from the Reverse Split
will not be cashed out. The Reverse Split will be followed immediately by the
Forward Split and the total number of shares held by the holder will not change
as a result of the Reverse/Forward Split.
We are submitting a proposal to approve (and the Board recommends that the
stockholders approve) the Reverse/Forward Split, and the Board in its discretion
may determine if and when to effect the Reverse/Forward Split after it is
approved by the stockholders. The Board reserves the right to abandon the
Reverse/Forward Split even if approved by the stockholders (see "Reservation of
Rights"). We expect that, if the Board elects to implement the Reverse/Forward
Split, the Reverse/Forward Split would be consummated within one year of the
date of the Annual Meeting. If the Board does not effect the Reverse/Forward
Split prior to the 2006 annual meeting of stockholders, the Board may put the
proposal in the 2006 proxy for consideration by the stockholders. If the Board
determines to implement the Reverse/Forward Split, we will publicly announce the
Board's decision in a press release and post the information on our website at
www.nagalv.com prior to the effective date of the Reverse/Forward Split.
We have a large number of stockholders that own relatively few shares. We
believe that the Reverse/Forward Split will significantly reduce stockholder
record keeping and mailing expenses. Additionally, the Reverse/Forward Split
will provide holders of fewer than the Minimum Number of shares with an
efficient way to cash-out their investments without incurring transaction costs.
In many cases, holders of fewer than the Minimum Number would incur brokerage
commissions or other transaction costs in amount equal to a large percentage of
the proceeds of the sale of their shares. In the Reverse/Forward Split, these
holders will receive cash for their shares without incurring any transaction
costs.
In determining whether to implement the Reverse/Forward Split, the Board
will consider factors such as:
o the prevailing trading price and trading volume for the Common Stock
at the time the decision is made;
o the anticipated impact of the Reverse/Forward Split on the trading
market for the Common Stock;
o the availability and cost of funds required to make the cash payments
to stockholders with fewer than the Minimum Number of shares whose
shares are to be converted into the right to receive cash pursuant to
the Reverse/Forward Split, and the terms of any arrangements that we
may enter into to raise those funds;
o other transactions that we might be considering; and
o prevailing general market and economic conditions.
If approved by stockholders and implemented by the Board, the
Reverse/Forward Split
17
will become effective on a date to be determined by the Board upon the filing of
the necessary amendments to our Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware (the "Effective Date"). The forms of
proposed amendments to our Restated Certificate of Incorporation necessary to
effect the Reverse/Forward Split are attached to this Proxy Statement as Annex
A.
EFFECT ON STOCKHOLDERS
If approved by stockholders at the Annual Meeting and implemented by the
Board, the Reverse/Forward Split will affect our stockholders as follows:
Stockholder Before Completion of Net Effect After Completion of
the Reverse/Forward Split the Reverse/Forward Split
======================================= ==================================
Registered stockholders holding the None.
Minimum Number or more shares of
Common Stock in an account.
--------------------------------------- ----------------------------------
Registered stockholders holding fewer Shares will be converted into the
than the Minimum Number of shares of right to receive cash (see
Common Stock in an account. "Determination of Cash-Out Price"
below).
--------------------------------------- ----------------------------------
Stockholders holding Common Stock in We intend for the Reverse/Forward
"street name" holding through a nominee Split to treat stockholders Common
(such as a bank or broker). Stock in "street name" through a
nominee (such as a bank or broker)
in the same manner as stockholders
of record. Nominees will be
instructed to effect the
Reverse/Forward Split for their
beneficial holders. However,
nominees may have different
procedures and stockholders
holding shares in "street name"
should contact their nominees.
--------------------------------------------------------------------------------
If stockholders holding fewer than the Minimum Number do not want to be
cashed out in the Reverse/Forward Split, they may avoid being cashed out by
purchasing a sufficient number of shares before the Effective Date on the open
market, or, if applicable, by consolidating their accounts into an account with
at least the Minimum Number. Consolidation of accounts could take a substantial
amount of time, particularly if accounts are held at different financial
institutions. Even if a stockholder initiates the consolidation of his or her
accounts substantially in advance of the Effective Date, there is no assurance
that the accounts will be consolidated by the Effective Date or, even if they
are consolidated, that the financial institution holding the consolidated
account will provide notice to the transfer agent by the Effective Date. If the
transfer agent does not receive notice of the consolidation of accounts holding
fewer than the Minimum Number by the Effective Date, whether or not the accounts
are consolidated by the Effective Date, a stockholder will receive a cash
payment with respect to the shares in any account that held fewer than the
Minimum Number before the consolidation.
STRUCTURE OF THE REVERSE/FORWARD SPLIT
18
If the Reverse/Forward Split is approved by stockholders and implemented by
the Board, the Reverse Split is expected to occur at 5:00 p.m. (central time) on
the Effective Date and the Forward Split is expected to occur at 5:01 p.m.
(central time) on the Effective Date.
Upon consummation of the Reverse Split, each registered stockholder on the
Effective Date will receive one share of Common Stock for each Minimum Number of
shares of Common Stock held in his or her account at that time. If a registered
stockholder holds the Minimum Number or more shares of Common Stock on the
Effective Date, any fractional share resulting from the Reverse Split will not
be cashed out after the Reverse Split. After the Forward Split, the total number
of shares held by such holder will not change as a result of the Reverse/Forward
Split. Each registered stockholder who holds fewer than the Minimum Number of
shares of Common Stock in his or her account at the time of the Reverse Split
(also referred to as a "Cashed-Out Stockholder") will receive a cash payment
instead of a fractional share, as permitted under Delaware law. This cash
payment will be determined and paid as described below under "Determination of
Cash-Out Price." Immediately following the Reverse Split, all stockholders who
are not Cashed-Out Stockholders will receive 150 shares of Common Stock for
every one share of Common Stock they held following the Reverse Split.
We intend for the Reverse/Forward Split to treat stockholders holding
Common Stock in "street name" through a nominee (such as a bank or broker) in
the same manner as holders of record. Nominees will be instructed to effect the
Reverse/Forward Split for their beneficial holders. Accordingly, we also refer
to those beneficial or "street name" holders who receive a cash payment instead
of fractional shares as "Cashed-Out Stockholders." However, nominees may have
different procedures, and stockholders holding shares in "street name" should
contact their nominees.
The following examples illustrate the Reverse/Forward Split for
hypothetical stockholders, assuming a hypothetical cash-out price of $1.00 per
share:
Hypothetical Scenario Result
------------------------------------- ----------------------------------------
Mr. Taylor is a registered holder of Mr. Taylor holds fewer than the Minimum
100 shares of Common Stock in one Number of shares. Instead of receiving a
account immediately prior to the fractional share of Common Stock
Reverse/Forward Split. immediately after the Reverse Split, Mr.
Taylor's shares will be converted into
the right to receive $100 in cash (100
shares x $1.00).
If Mr. Taylor wants to continue his
investment in the Company, he can, prior
to the Effective Date, buy at least 50
more shares of Common Stock so that he
will have the Minimum Number of shares.
Mr. Taylor would have to act far enough
in advance of the Reverse/Forward Split
so that the purchase is completed and
the additional shares are credited in
his account prior to 5:00 p.m. (central
time) on the Effective Date.
------------------------------------- ----------------------------------------
Ms. Eastwood has two separate record Each account will be treated
accounts. Immediately prior to the individually. Because neither account
19
Reverse/Forward Split, she holds 100 holds the Minimum Number of shares, Ms.
shares of Common Stock in one account Eastwood will receive cash payments
and 50 shares of Common Stock in the equal to the cash-out price of her
other. All of her shares are Common Stock in each record account
registered in her name only. instead of receiving fractional shares.
Ms. Eastwood would receive two checks
totaling $150 (100 shares x $1.00 plus
50 shares x $1.00).
If Ms. Eastwood wants to continue her
investment in the Company, she can
consolidate or transfer her two record
accounts prior to the Effective Date
into one account with at least the
Minimum Number of shares of Common
Stock. Alternatively, she can buy at
least 50 more shares for the first
account and 100 more shares for the
second account so that she will have the
Minimum Number of shares in each
account. She would have to act far
enough in advance of the Reverse/Forward
Split so that the consolidation or the
purchase is completed prior to 5:00 p.m.
(central time) on the Effective Date.
Even if she does consolidate these
accounts, there is no assurance that the
accounts will be consolidated by the
Effective Date or, even if they are
consolidated, that the financial
institution holding the consolidated
account will provide timely notice to
the transfer agent. If the transfer
agent does not receive timely notice,
Ms. Eastwood will receive the cash
payment and will not retain her shares.
------------------------------------- ----------------------------------------
Ms. Baker holds 200 shares of Common After the Reverse/Forward Split, Ms.
Stock in one account immediately Baker will continue to hold all 200
prior to the Reverse/Forward Split. shares of Common Stock.
------------------------------------- ----------------------------------------
Mr. Phillips holds 100 shares of We intend for the Reverse/Forward Split
Common Stock in a brokerage account to treat stockholders holding Common
immediately prior to the Reverse/ Stock in "street name" through a nominee
Forward Split. (such as a bank or broker) in the same
manner as stockholders whose shares are
registered in their names. Nominees will
be instructed to effect the
Reverse/Forward Split for their
beneficial holders. However, nominees
may have different procedures and
stockholders holding Common Stock in
"street name" should contact their
nominees.
------------------------------------- ----------------------------------------
BACKGROUND AND PURPOSE OF THE REVERSE/FORWARD SPLIT
As of April 4, 2005, we had approximately 2,854 stockholders, including
1,806 holders of record and 1,048 beneficial owners holding shares in "street
name." As of April 4, 2005, approximately 1,430 registered holders of Common
Stock owned fewer than the Minimum Number, representing approximately 79.2% of
the total number of registered holders of Common Stock, but only approximately
0.13% of the total number of outstanding shares of Common Stock. In addition, as
of April 4, 2005, approximately 233 stockholders holding Common Stock
20
in "street name" through a nominee owned fewer than the Minimum Number,
representing approximately 22.2% of the total number of "street name"
stockholders, but only approximately 0.41% of the total number of outstanding
shares of Common Stock.
We expect to benefit from cost savings as a result of the Reverse/Forward
Split. The cost of administering each account, whether registered or in "street
name," is the same regardless of the number of shares held in that account. We
expect that these costs will increase over time. Therefore, our cost to maintain
such small accounts is disproportionately high when compared to the total number
of shares involved. We estimate that if we complete the Reverse/Forward Split,
we will reduce the total cost of administering stockholder accounts by at least
30% of our total costs, or approximately $55,000 per year.
The Reverse/Forward Split will provide stockholders with fewer than the
Minimum Number of shares of Common Stock with a cost-effective way to cash out
their investments, because we will pay all transaction costs such as brokerage
or service fees in connection with the Reverse/Forward Split. Otherwise,
stockholders with small holdings would likely incur brokerage fees which are
disproportionately high relative to the market value of their shares if they
wanted to sell their stock. The Reverse/Forward Split will eliminate these
problems for most stockholders with small holdings.
In light of these disproportionate costs, the Board believes that it is in
our best interests and the best interests of our stockholders as a whole to
eliminate the administrative burden and costs associated with such small
accounts.
In determining whether the Reverse/Forward Split will be fair to our
stockholders being cashed out, the Board considered the fact that stockholders
who will receive cash will have no control over the timing or the price of the
sale of their shares. However, the Board determined that the Reverse/Forward
Split will be fair to our stockholders for the following reasons:
o The Reverse/Forward Split provides liquidity that is generally not
available to the holders of fewer than the Minimum Number of shares by
providing them an efficient way to cash out their odd-lot holdings
without incurring any brokerage fees or other transaction costs (which
would otherwise represent a large percentage of the proceeds from the
sale of their shares);
o The cash-out price will be calculated by averaging the closing price
per share on the AMEX for the previous ten consecutive AMEX trading
days;
o The stockholders holding fewer than the Minimum Number each have the
ability to remain stockholders and avoid being cashed-out by
purchasing a sufficient number of shares, or, if applicable, by
consolidating their accounts into an account with at least the Minimum
Number prior to the Reverse/Forward split;
o Stockholders holding fewer than the Minimum Number each own less than
$390 worth of our Common Stock (based on the April 4, 2005 closing
price of $2.60 per share), and the cost to increase their holdings to
the Minimum Number (based
21
on the April 4, 2005 closing price of $2.60 per share), would not be
overly burdensome as illustrated below:
Holders of 50 shares - $260
Holders of 100 shares - $130
o The cashed-out stockholders will have the ability to purchase shares
on the open market after the Reverse/Forward Split;
o The stockholders have the right to vote against the Reverse/Forward
Split, and the transaction cannot go forward without the necessary
affirmative vote of the stockholders;
o The directors must exercise their fiduciary duty in deciding whether
to effectuate the Reverse/Forward Split and when (and at what price)
to effectuate the Reverse/Forward Split;
o The Board considered other alternative methods to reduce our
stockholder base (e.g., odd-lot tender offers and programs to
facilitate sales by stockholders of odd-lot holdings) and determined
that the Reverse/Forward Split would be the most cost effective method
to reduce the stockholder base at the present time; and
o The Company and the remaining stockholders will receive the financial
benefits of reducing the administrative burden and costs associated
with these small accounts.
We have in the past and may in the future pursue alternative methods of
reducing our stockholder base, whether or not the Reverse/Forward Split is
approved and implemented, including odd-lot tender offers and programs to
facilitate sales by stockholders of odd-lot holdings. However, there can be no
assurance that we will decide to pursue any such transaction.
For a discussion of the special considerations relating to the
Reverse/Forward Split, see "Special Considerations of the Proposed
Reverse/Forward Split" on page 2 of this proxy statement.
EFFECT OF THE REVERSE/FORWARD SPLIT ON THE COMPANY'S STOCKHOLDERS
REGISTERED STOCKHOLDERS WITH FEWER THAN THE MINIMUM NUMBER OF SHARES OF
COMMON STOCK. If we complete the Reverse/Forward Split and you are a stockholder
holding fewer than the Minimum Number of shares of Common Stock immediately
prior to the Reverse Split:
o You will not receive a fractional share of stock as a result of the
Reverse Split in respect of your shares being cashed out.
o Instead of receiving a fractional share, you will receive a cash
payment for your shares. See "Determination of Cash-Out Price" below.
22
o After the Reverse Split, you will have no further interest in the
Company with respect to your cashed-out shares. These shares will no
longer entitle you to the right to vote as a stockholder or share in
our assets, earnings, or profits or in any dividends paid after the
Reverse Split. In other words, you will no longer hold your cashed-out
shares and you will have only the right to receive cash for these
shares. In addition, you will not be entitled to receive interest with
respect to the period of time between the Effective Date and the date
you receive your payment for the cashed-out shares.
o You will not have to pay any service charges or brokerage commissions
in connection with the Reverse/Forward Split.
o As soon as practicable after the time we effect the Reverse/Forward
Split, you will receive a payment for the cashed-out shares you held
immediately prior to the Reverse Split in accordance with the
procedures described below.
o HOLDERS OF BOOK-ENTRY SHARES. Most of our registered stockholders
hold their shares in book-entry form and do not have stock
certificates evidencing their ownership of Common Stock. They
are, however, provided with a statement reflecting the number of
shares registered in their accounts. If you are a Cashed-Out
Stockholder who holds registered shares in a book-entry account,
you do not need to take any action to receive your cash payment.
A check will be mailed to you at your registered address as soon
as practicable after the Effective Date. By signing and cashing
this check, you will warrant that you owned the shares for which
you received a cash payment.
o HOLDERS OF CERTIFICATED SHARES. If you are a Cashed-Out
Stockholder with a stock certificate representing your cashed-out
shares, you will receive a transmittal letter as soon as
practicable after the Effective Date. The letter of transmittal
will contain instructions on how to surrender your certificate(s)
to our transfer agent for your cash payment. You will not receive
your cash payment until you surrender your outstanding
certificate(s) to the transfer agent, together with a completed
and executed copy of the letter of transmittal. Please do not
send your certificates until you receive your letter of
transmittal. For further information, see "Stock Certificates"
below.
o All amounts owed to you will be subject to applicable federal income
tax and state abandoned property laws.
If you want to continue to hold Common Stock after the Reverse/Forward
Split, you may do so by taking one of the following actions far enough in
advance so that it is completed by the Effective Date:
o purchase a sufficient number of shares of Common Stock on the open
market so that you hold at least the Minimum Number of shares of
Common Stock in your account prior to the Effective Date; or
o if applicable, consolidate your accounts so that you hold at least the
Minimum Number of shares of Common Stock in one account prior to the
Effective Date.
23
If you attempt to consolidate your accounts by the Effective Date, there is
no assurance that the consolidation will be completed by the Effective Date or,
even if it is completed, that the financial institution holding the consolidated
account will provide notice of the consolidation to the transfer agent by the
Effective Date. If the transfer agent does not receive notice that your accounts
have been consolidated by the Effective Date, whether or not your accounts are
consolidated by the Effective Date, you will receive a cash payment and will not
retain your shares.
REGISTERED STOCKHOLDERS WITH THE MINIMUM NUMBER OR MORE SHARES OF COMMON
STOCK. If you are a registered stockholder with the Minimum Number or more
shares of Common Stock in your account as of 5:00 p.m. (central time) on the
Effective Date, we will first reclassify your shares into one-one hundred
fiftieth (1/150) of the number of shares you held immediately prior to the
Reverse Split. One minute after the Reverse Split, at 5:01 p.m. (central time),
we will reclassify your shares in the Forward Split into one hundred and fifty
times the number of shares you held after the Reverse Split, which will result
in the same number of shares you held before the Reverse Split. The
Reverse/Forward Split therefore will not affect the number of shares that you
own if you hold the Minimum Number or more shares of Common Stock in your
account immediately prior to the Reverse Split. To illustrate, if you held 300
shares of Common Stock in your account immediately prior to the Reverse Split,
your shares would be converted into 2 shares in the Reverse Split and then back
to 300 shares in the Forward Split.
STREET NAME HOLDERS OF COMMON STOCK. We intend for the Reverse/Forward
Split to treat stockholders holding Common Stock in "street name" through a
nominee (such as a bank or broker) in the same manner as stockholders whose
shares are registered in their names. Nominees will be instructed to effect the
Reverse/Forward Split for their beneficial holders. However, nominees may have
different procedures and stockholders holding Common Stock in "street name"
should contact their nominees.
CURRENT AND FORMER COMPANY EMPLOYEES AND DIRECTORS. If you are a current or
former employee or a director of the Company, you may own restricted shares of
Common Stock and/or hold options to purchase the Common Stock through our stock
plans. With respect to the restricted shares of Common Stock, you will be
treated in the same manner as the other stockholders. If you hold options to
purchase fewer than the Minimum Number, you will not receive a cash payment for
these options. The Reverse/Forward Split will not affect the number of shares
issuable upon the exercise of these options.
DETERMINATION OF CASH-OUT PRICE; PAYMENT OF CASH-OUT PRICE AND SOURCE OF FUNDS
In order to avoid the expense and inconvenience of issuing fractional
shares to stockholders who hold less than one share of Common Stock after the
Reverse Split, under Delaware state law we will pay cash for the fair value of
the fractional shares. If stockholders approve the Reverse/Forward Split at the
Annual Meeting and the Reverse/Forward Split is completed, we will pay cash for
the fair value of the fractional shares. The cash-out price will be calculated
by averaging the closing price per share of Common Stock on the AMEX for the ten
consecutive AMEX trading days ending on (and including) the Effective Date (the
"Average
24
Trading Value"). No interest will be payable to stockholders on the cash-out
price.
We may use our available cash to pay the Cashed-Out Stockholders.
Alternatively, we may seek to obtain the funds for the cash-out payments through
a public or private offering of debt or equity securities or through another
financing transaction and, in such event, the completion of the Reverse/Forward
Split will be contingent upon obtaining financing on terms acceptable to the
Board in its discretion. We cannot assure you that any financings will be
available to us on acceptable terms or at all. If we are unable to obtain
financing on terms acceptable to the Board, the Board may determine to abandon
the Reverse/Forward Split.
If the Board determines to abandon the Reverse/Forward Split, it will
publicly announce its decision in a press release which we will file with the
SEC and post on our website at www.nagalv.com immediately following the Board's
decision.
EFFECT OF THE REVERSE/FORWARD SPLIT ON THE COMPANY
We do not intend the Reverse/Forward Split to affect the public
registration of the Common Stock with the SEC under the Securities Exchange Act
of 1934, as amended. Similarly, we do not expect that the Reverse/Forward Split
will affect the continued listing of the Common Stock on the AMEX. The par value
of the Common Stock will remain at $0.10 per share after the Reverse/Forward
Split.
Assuming that the Reverse/Forward Split were consummated as of April 4,
2005 and that all stockholders holding fewer than the Minimum Number were cashed
out, we would have had 373 record holders and 815 beneficial holders holding in
"street name" continuing to own our stock. Under the rules of the Securities
Exchange Act of 1934, as amended, a company may deregister its common stock from
the Exchange Act and no longer be subject to the reporting requirements of the
Exchange Act if the number of record holders of the common stock drops below
300. It is not our intention for the proposed Reverse/Forward Split to be the
first step in such a "going private" transaction, however, we cannot assure you
that over time the number of record holders of our common stock will remain at
or above 300.
The number of authorized shares of Common Stock will not change as a result
of the Reverse/Forward Split. On April 4, 2005, there were 6,796,948 shares of
Common Stock issued and outstanding. The total number of outstanding shares of
Common Stock after the Reverse/Forward Split will be reduced by the number of
shares held by the Cashed-Out Stockholders immediately prior to the Reverse
Split. In the event the Board elects to finance such payment with proceeds of an
offering of Common Stock, any reduction in the total number of outstanding
shares of Common Stock attributable to the Reverse/Forward Split would be offset
by the issuance of Common Stock in connection with such offering.
The total number of shares that will be cashed-out and the total cash to be
paid by us are unknown at this point in time. Also, we do not know what the
average trading value will be. However, by way of example, if the
Reverse/Forward Split had been completed as of April 4, 2005, when the average
daily closing price per share of the Common Stock on the AMEX for the ten
consecutive AMEX trading days then ended was $2.89, then the cash payments that
would
25
have been issued to Cashed-Out Stockholders, including both registered and
"street name" holders, would have been approximately $338,495. The actual
amounts will depend on the number of Cashed-Out Stockholders on the Effective
Date, which will vary from the number of such stockholders on April 4, 2005.
STOCK CERTIFICATES
The Reverse/Forward Split will not affect any certificates representing
shares of Common Stock held by registered stockholders owning the Minimum Number
or more shares of Common Stock in an account immediately prior to the Reverse
Split. Existing certificates held by any of these stockholders will continue to
evidence ownership of the same number of shares as is set forth on the face of
the certificate.
Any Cashed-Out Stockholder with share certificates will receive a letter of
transmittal after the Reverse/Forward Split is completed. These stockholders
must complete and sign the letter of transmittal and return it with their stock
certificate(s) to our transfer agent before they can receive cash payment for
those shares.
POTENTIAL ANTI-TAKEOVER EFFECT
The Reverse/Forward Split is not being proposed in response to any third
party effort to accumulate shares of the Common Stock or obtain control of the
Company, nor is it part of a plan by management to recommend to the Board and
stockholders a series of amendments to our Restated Certificate of Incorporation
that could be construed to affect the ability of third parties to take over or
gain control of the Company.
REGULATORY REQUIREMENTS
We do not believe that the Reverse/Forward Split will require the approval
of any governmental agency. It is not our intention for the Reverse/Forward
Split to be the first step in a "going-private" transaction.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL INFORMATION. We have summarized below certain federal income tax
consequences to us and our stockholders resulting from the Reverse/Forward
Split. This summary is based on U.S. federal income tax law existing as of the
date of this proxy statement, and such tax laws may change, potentially with
retroactive effect. This summary does not discuss all aspects of federal income
taxation that may be important to you in light of your individual circumstances,
nor does it discuss any state, local, or foreign tax consequences that apply to
you. Many stockholders (such as financial institutions, insurance companies,
broker-dealers, tax-exempt organizations, and foreign persons) may be subject to
special federal income tax rules. Other stockholders may also be subject to
special federal income tax rules, including (but not limited to): stockholders
who received Common Stock as compensation for services (such as restricted
stock) or pursuant to the exercise of an employee stock option, or stockholders
who have held, or will hold, stock as part of a straddle, hedging, or conversion
transaction for federal
26
income tax purposes. In addition, this summary assumes that you are an
individual U.S. citizen and have held, and will hold, your shares as capital
assets under the Internal Revenue Code. You should consult your tax advisor as
to the particular federal, state, local, foreign, and other tax consequences of
the Reverse/Forward Split to you, in light of your specific circumstances.
CONSEQUENCES TO THE COMPANY. The Reverse/Forward Split will not be a
taxable transaction to us. Accordingly, the Reverse/Forward Split will not
result in any material federal income tax consequences to us.
CONSEQUENCES TO STOCKHOLDERS WHO ARE NOT CASHED OUT. If you (1) continue to
hold Common Stock immediately after the Reverse/Forward Split and (2) receive no
cash as a result of the Reverse/Forward Split, you will not recognize any gain
or loss in the Reverse/Forward Split, and you will have the same adjusted tax
basis and holding period in your Common Stock as you had in such stock
immediately prior to the Reverse/Forward Split.
CONSEQUENCES TO CASHED-OUT STOCKHOLDERS. If you receive cash as a result of
the Reverse/Forward Split, your tax consequences will depend on whether, in
addition to receiving cash, you or a person or entity related to you continues
to hold Common Stock immediately after the Reverse/Forward Split, as explained
below.
a. Stockholders Who Exchange All of Their Common Stock for Cash and Do
Not Actually or Constructively Own Common Stock After the
Reverse/Forward Split
If you (1) receive cash in exchange for your shares as a result of the
Reverse/Forward Split and (2) do not continue to own, either actually or
constructively under Section 318 of the Internal Revenue Code, any Common Stock
immediately after the Reverse/Forward Split, you generally will recognize
capital gain or loss in an amount equal to the difference between the cash you
receive for your cashed-out stock and your aggregate adjusted tax basis in such
stock.
b. Stockholders Who Both Receive Cash and Continue to Own, Actually or
Constructively, Common Stock After the Reverse/Forward Split
If you both receive cash as a result of the Reverse/Forward Split and
continue to own, either actually or constructively under Section 318 of the
Internal Revenue Code, Common Stock immediately after the Reverse/Forward Split,
you generally will recognize capital gain or loss in the same manner as set
forth in the previous paragraph, provided that your receipt of cash either (1)
is "not essentially equivalent to a dividend," or (2) is a "substantially
disproportionate redemption of stock," as described below.
o "Not Essentially Equivalent To A Dividend." You will satisfy the "not
essentially equivalent to a dividend" test if the reduction in your
proportionate stock ownership interest in the Company resulting from
the Reverse/Forward Split, including both actual and constructive
ownership, is considered a "meaningful reduction" given your
particular facts and circumstances. The Internal Revenue Service has
ruled that a small reduction by a minority stockholder whose relative
stock interest is minimal and who exercises no control over the
affairs of the corporation will meet this test.
27
o "Substantially Disproportionate Redemption Of Stock." The receipt of
cash in the Reverse/Forward Split will be a "substantially
disproportionate redemption of stock" for you if the percentage of the
outstanding shares of Common Stock actually or constructively owned by
you immediately after the Reverse/Forward Split is less than 80% of
the percentage of shares of Common Stock actually or constructively
owned by you immediately before the Reverse/Forward Split.
In applying these tests, you will be treated as owning shares actually or
constructively owned by certain individuals and entities related to you, as
determined under Section 318 of the Internal Revenue Code. In addition, you may
possibly be allowed or required to take into account sales and purchases of
shares of Common Stock by you and by related parties that occur substantially
contemporaneously with the Reverse/Forward Split. If the taxable amount is not
treated as a capital gain under any of the tests, it will be treated first as
ordinary dividend income to the extent of your ratable share of our
undistributed earnings and profits, then as a tax-free return of capital to the
extent of your aggregate adjusted tax basis in your shares, and any remaining
gain will be treated as capital gain. See "Capital Gain and Loss" and "Special
Rate for Certain Dividends" below. If, after applying the rules described in the
preceding sentence, you have not fully recovered the tax basis of your
cashed-out stock, then any such remaining tax basis will be added to the tax
basis of any shares of Common Stock that you continue to own after the
Reverse/Forward Split (or, if you do not actually own any more Common Stock,
possibly to shares of outstanding Common Stock that are owned by parties related
to you).
CAPITAL GAIN AND LOSS. For individuals, net capital gain recognized upon
the sale or exchange of capital assets that have been held for more than one
year generally will be subject to federal income tax at a rate not to exceed
15%. Net capital gain recognized from the sale of capital assets that have been
held for one year or less will continue to be subject to tax at ordinary income
tax rates. There are limitations on the deductibility of capital losses.
SPECIAL RATE FOR CERTAIN DIVIDENDS. In general, dividends are taxed at
ordinary income tax rates. However, you may qualify for a 15% rate of federal
income tax on any cash received in the Reverse/Forward Split that is treated as
a dividend as described above, if (i) you are an individual or other
non-corporate stockholder, (ii) you have held the share of stock with respect to
which the dividend was received for more than 60-days during the 120-days period
beginning 60-days before the ex-dividend date, as determined under the Internal
Revenue Code, and (iii) you were not obligated during such period (pursuant to a
short sale or otherwise) to make related payments with respect to positions in
substantially similar or related property. You are urged to consult with your
tax advisor concerning the federal income tax rate applicable to amounts treated
as dividends.
BACKUP WITHHOLDING. Stockholders who receive cash in connection with the
Reverse/Forward Split may be required to provide their social security or other
taxpayer identification numbers (or, in some instances, additional information)
to the exchange agent in connection with the Reverse/Forward Split to avoid
backup withholding on cash proceeds. Failure to provide such information when
requested may result in backup withholding on cash payments to you.
28
OUR UNDERSTANDING OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REVERSE/FORWARD SPLIT IS NOT BINDING ON THE INTERNAL REVENUE SERVICE OR ANY
COURT. YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE REVERSE/FORWARD SPLIT TO YOU,
IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.
APPRAISAL RIGHTS
Stockholders do not have appraisal rights under Delaware state law or under
the our Restated Certificate of Incorporation or Bylaws in connection with the
Reverse/Forward Split.
RESERVATION OF RIGHTS
We reserve the right to abandon the Reverse/Forward Split without further
action by our stockholders at any time before the filing of the necessary
amendments to our Restated Certificate of Incorporation with the Delaware
Secretary of State, even if the Reverse/Forward Split has been authorized by our
stockholders at the Annual Meeting. By voting for the Reverse/Forward Split you
are expressly also authorizing us to determine not to proceed with the
Reverse/Forward Split if we should so decide.
The completion of the Reverse/Forward Split may be contingent upon our
ability to obtain financing on terms acceptable to us to complete the purchase
of the fractional shares as described under "Determination of Cash-Out Price;
Payment of Cash-Out Price and Source of Funds."
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND THE RESTATED
CERTIFICATE OF INCORPORATION TO EFFECT, AT THE DISCRETION OF THE BOARD, THE
REVERSE/FORWARD SPLIT.
29
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has appointed Deloitte & Touche LLP ("Deloitte") as
independent accountants to conduct the 2005 audit of our financial statements.
The Board has directed that such appointment be submitted for ratification by
the stockholders at the Annual Meeting.
Deloitte has served as our independent accountants since 1990. A
representative of Deloitte is expected to be present at the Annual Meeting and
will have the opportunity to make a statement if he or she desires to do so and
will be available to respond to appropriate questions.
Total fees for professional services provided by Deloitte for the years
ended December 31, 2004 and 2003 were $217,325 and $197,494, respectively, for
the following services:
AUDIT FEES
The aggregate fees for professional services rendered by Deloitte for the
audit of our annual financial statements and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q in 2004 and 2003 were
$136,247 and $134,095, respectively.
AUDIT-RELATED FEES
The aggregate fees paid for audit-related services in 2004 and 2003 were
$10,030 and $9,933, respectively, and relate to attestation fees paid for audits
of the Company's employee benefit plan.
TAX FEES
The aggregate fees paid for preparation of tax returns were $39,817 and
$26,714 for 2004 and 2003, respectively. The aggregate fees for tax planning and
consultation on tax compliance in 2004 and 2003 were $17,095 and $26,752,
respectively.
ALL OTHER FEES
Total Other Fees of $14,136 paid during 2004 consisted of $7,726 for review
of a proposed Director Stock Unit Program and $6,410 for due diligence of a
proposed business acquisition. There were no other fees paid during 2003.
The Audit Committee charter provides for the pre-approval of all audit
services and all non-audit services to be provided by our independent
accountants that are permitted under applicable law and regulation, and all
corresponding fees and terms, by the Audit Committee. Pursuant to procedures
established by the Audit Committee, the Chief Financial Officer and/or Chief
Executive Officer are required to review and recommend for approval such
services to the Audit Committee, subject to the de minimus exception for
non-audit services permitted by SEC
30
rules and regulations. For fiscal years 2004 and 2003, none of the fees listed
above were covered by the de minimus exception.
The Audit Committee has considered whether the provision of non-audit
services by Deloitte for the year ended December 31, 2004 is compatible with
maintaining the principal auditor's independence.
THE BOARD RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP.
31
COMPANY PERFORMANCE
The following performance graph compares cumulative total stockholder
returns on the Common Stock compared to the Dow Jones US Industrial Diversified
Index and the Dow Jones US Total Market Index calculated at the end of each
fiscal year, December 31, 2000 through December 31, 2004. The Dow Jones US
Industrial Diversified Index is comprised of 30 companies in 1 industry. The Dow
Jones US Total Market Index is comprised of 2,000 companies in 52 industries.
The graph assumes $100 was invested December 31, 1999 in the Common Stock and in
each of the referenced indices and assumes the reinvestment of dividends.
Cumulative Total Return($)
------------------------------------------------
12/99 12/00 12/01 12/02 12/03 12/04
North American Galvanizing &
Coatings 100.00 58.33 64.67 98.00 93.33 138.67
Dow Jones US Equity Market 100.00 90.73 79.92 62.27 81.42 91.20
Dow Jones US Industrial
Diversified 100.00 100.72 90.55 58.80 79.54 94.79
32
EQUITY COMENSATION PLAN INFORMATION
This table provides certain information as of December 31, 2004 with respect to
our equity compensation plans:
(a) (b) (c)
Plan Category Number of securities to Weighted-average exercise Number of securities
be issued upon exercise price of outstanding options, remaining available for
of outstanding options, warrants and rights future issuance under
warrants and rights equity compensation
plans (excluding
securities reflected in
column (a))
Equity compensation
Plans approved by
security holders 1,241,499(1) $1.41 765,333(2)
Equity compensation
Plans not approved by
security holders 0 N/A 0
Total 1,241,499 $1.41 765,333
(1) This amount includes the following:
o 574,833 shares issuable upon the exercise of outstanding stock
options.
o 666,666 shares issuable upon the exercise of outstanding warrants.
(2) This amount represents the number of shares available (765,333) for issuance
pursuant to stock options, stock units and grants that could be granted in the
future under the North American Galvanizing & Coatings, Inc. 2004 Incentive
Stock Plan.
33
RELATED PARTY TRANSACTIONS
PRIVATE PLACEMENT OF SECURITIES. In February 2001, we offered a private
placement of subordinated promissory notes and warrants to certain of our
directors and to accredited stockholders that held, prior to the private
placement, at least 100,000 shares of Common Stock. The following directors and
nominees for re-election participated in the offering as indicated:
o Linwood J. Bundy - 10% Subordinated Promissory Note for $100,000 and
Warrant to purchase 66,666 shares of Common Stock.
o Ronald J. Evans (President) - 10% Subordinated Promissory Note for
$50,000 and Warrant to purchase 33,333 shares of Common Stock.
o Gilbert L. Klemann, II - 10% Subordinated Promissory Note for $100,000
and Warrant to purchase 66,666 shares of Common Stock.
o Patrick J. Lynch - 10% Subordinated Promissory Note for $50,000 and
Warrant to purchase 33,333 shares of Common Stock.
o Joseph J. Morrow - 10% Subordinated Promissory Note for $100,000 and
Warrant to purchase 66,666 shares of Common Stock.
o John H. Sununu - 10% Subordinated Promissory Note for $100,000 and
Warrant to purchase 66,666 shares of Common Stock.
o The Morrow Foundation - 10% Subordinated Promissory Note for $100,000
and Warrant to purchase 66,666 shares of Common Stock. Mrs. Claire
Morrow, wife of Joseph J. Morrow, is the Managing Trustee of The
Morrow Foundation.
The principal amount of each of the subordinated promissory notes and any
accrued interest thereon are due upon demand beginning on the earlier of (i)
February 17, 2006, (ii) the occurrence of a merger or consolidation of the
Company with any other person in which the Company is not the surviving entity,
or (iii) the sale, assignment, lease or other disposition of all or
substantially all of the assets of the Company. The interest rate of each of the
subordinated promissory notes is 10%, and accrued interest on each of the
subordinated promissory notes is paid annually on February 17.
The exercise price of $.856 per share for the warrants was determined based
on the average closing market price for the Common Stock on AMEX for the 20
business day period beginning three business days after February 17, 2001. A
special committee of the Board approved the private placement and the special
committee received an opinion from The Robinson-Humphrey Company, LLC that the
consideration to be paid was fair to us from a financial point of view.
MORROW & CO. Mr. Joseph J. Morrow, a director of the Company and a nominee
for reelection, is the Chief Executive Officer of Morrow & Co., Inc., which
provides proxy solicitation and other stockholder related services to us as
described in the section titled "Other Matters" in this Proxy Statement. During
the year ended December 31, 2004, the Company paid Morrow & Co., Inc. $17,531,
in connection with the Company's 2004 Annual Meeting of Stockholders, consisting
of a $7,500 fee for solicitation of proxies and $10,031 for related mailing and
distribution costs.
34
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors to file reports of changes in ownership of
the Common Stock with the SEC. Executive officers and directors are required by
SEC regulations to furnish us with copies of all Section 16(a) forms so filed.
Based solely on a review of the copies of such reports furnished to us, we
believe that all persons subject to these reporting requirements filed the
required reports on a timely basis during fiscal year 2004.
STOCKHOLDER PROPOSALS
If any stockholder wishes to submit a proposal, including nominations for
the Board, for inclusion in the proxy statement for our next annual meeting in
2006, such proposal must be received at our principal executive office by
January , 2006. Such proposal should be directed to North American Galvanizing &
Coatings, Inc., Attention: Corporate Secretary, 2250 East 73rd Street, Suite
300, Tulsa, Oklahoma 74136.
For business to be properly brought before an annual meeting (including
nominations for the Board), but not included in the proxy statement, a
stockholder must follow certain procedures set forth in the Bylaws. Generally, a
stockholder must give timely notice to our Corporate Secretary. To be timely, a
stockholder's notice must be received at our principal executive offices not
less than 90 days prior to the meeting. The Bylaws specify the information which
must accompany such stockholder notice. Details of the relevant section of the
Bylaws may be obtained by any stockholder from our Corporate Secretary.
35
OTHER MATTERS
All expenses in connection with solicitation of proxies will be borne by
us. In addition to solicitation by mail, proxies may be solicited personally by
telephone, telecopy or telegraph by our officers and employees, who will receive
no compensation for their services. We have also retained Morrow & Co., Inc.,
445 Park Avenue, New York, New York 10022, to assist in such solicitation. We
expect to pay Morrow & Co. a fee of $5,500 for its services and will reimburse
Morrow for certain out-of-pocket expenses estimated to be $6,000. Brokers,
banks, nominees, fiduciaries and other custodians will be requested to solicit
beneficial owners of shares and will be reimbursed for their expenses.
Mellon Investor Services LLC has been retained to receive and tabulate
proxies and to provide a representative to act as inspector of election for the
Annual Meeting.
The Board is not aware of any other matter, other than those described
above, that may be presented for action at the Annual Meeting. If any other
matter or proposal should be presented and should properly come before the
Annual Meeting for action, the persons named in the accompanying proxy will vote
upon such matter and upon such proposal in accordance with their best judgment.
The enclosed proxy confers discretionary authority to take action with respect
to any additional matters which may come before the Annual Meeting.
INCORPORATION BY REFERENCE
The following information is incorporated in this proxy statement by reference:
o the financial statements, the notes thereto and the independent
auditor's report thereon contained on pages FS-16 through FS-34 of our
Annual Report.
o the supplemental financial information contained on pages FS-35
through FS-36 of our Annual Report.
o management's discussion and analysis (including qualitative disclosure
about market risks) contained on pages FS-1 through FS-14 of our
Annual Report.
36
ANNEX A
PROPOSED FORM OF CERTIFICATE OF AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT THE REVERSE SPLIT
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTH AMERICAN GALVANIZING & COATINGS, INC.
North American Galvanizing & Coatings, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. The amendment set forth below to the Corporation's Restated Certificate
of Incorporation, as amended (the "Certificate"), was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
2. The following amendment (the "Reverse Split Amendment") shall take
effect at 5:00 P.M., Central Time, on the date of the filing of this Certificate
of Amendment:
The following new subsection (a) is added to Article Fourth of the
Certificate:
(a) Reverse Stock Split of Common Stock.
Immediately upon the effectiveness of this amendment to this
Certificate of Incorporation (the "Reverse Split Effective Time"), each one
hundred and fifty (150) shares of the Common Stock of the Corporation that
are issued and outstanding immediately prior to the Reverse Split Effective
Time shall automatically, without further action on the part of the
Corporation or any holder of Common Stock and without requiring the
surrender of certificates representing Common Stock, be combined,
converted, reclassified and changed into (the "Reverse Split") one (1)
fully paid and non-assessable share of Common Stock, except that holders of
Common Stock who otherwise would be entitled to receive only a fractional
interest in less than one share of Common Stock (an "Unattached Fractional
Interest") as a result of the Reverse Split shall be entitled to receive,
in lieu of such Unattached Fractional Interest, a cash payment in an amount
equal to the product calculated by multiplying one hundred and fifty (150)
times the fair value of one (1) share of Common Stock immediately prior to
the Reverse Split Effective Time by the decimal equivalent of such
Unattached Fractional Interest. As of the Reverse Split Effective Time, no
such Unattached Fractional Interest held by such a holder shall be issued
or outstanding.
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Corporation has executed this Certificate of Amendment on the ___ day of
_____________, 200_.
By: ________________________________
Name: __________________________
Title: _________________________
37
PROPOSED FORM OF CERTIFICATE OF AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT THE FORWARD SPLIT
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
NORTH AMERICAN GALVANIZING & COATINGS, INC.
North American Galvanizing & Coatings, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. The amendment set forth below to the Corporation's Restated Certificate
of Incorporation, as amended (the "Certificate"), was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
2. The following amendment (the "Forward Split Amendment") shall take
effect at 5:01 P.M., Central Time, on the date of the filing of this Certificate
of Amendment:
The following new subsection (b) is added to Article Fourth of the
Certificate immediately following subsection (a) thereof entitled "Reverse Stock
Split of Common Stock" (which subsection (a) provided for the "Reverse Split
Amendment" to the Certificate):
(b) Forward Stock Split of Common Stock.
Immediately upon the effectiveness of this amendment to this
Certificate of Incorporation (the "Forward Split Effective Time"), each
share of the Common Stock of the Corporation that is issued and outstanding
immediately prior to the Forward Split Effective Time (which shall not
include any fractional interest in less than one share of Common Stock (an
"Unattached Fractional Interest") held by a holder of Common Stock who is
entitled to receive a cash payment in lieu of such Unattached Fractional
Interest pursuant to the terms of the Reverse Split Amendment) shall
automatically, without further action on the part of the Corporation or any
holder of Common Stock and without requiring the surrender of certificates
representing Common Stock, be subdivided into (the "Forward Stock Split")
one hundred and fifty (150) fully paid and non-assessable shares of Common
Stock.
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Corporation has executed this Certificate of Amendment on the ___ day of
_____________, 200_.
By: ________________________________
Name: __________________________
Title: _________________________
38
NORTH AMERICAN GALVANIZING & COATINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For the Annual Meeting of Stockholders on May 26, 2005
The undersigned, a stockholder of record of North American Galvanizing &
Coatings, Inc. on April 4, 2005 (the "Record Date"), hereby appoints Linwood J.
Bundy and Ronald J. Evans, or either of them with full power of substitution, as
proxies for the undersigned, to vote all shares of common stock, $.10 par value
per share (the "Common Stock"), of the Company, which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on May 26,
2005, and at any adjournments or postponements thereof, on the matters listed on
the reverse side.
(Continued, and to be marked, dated and signed, on the reserve side)
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Annual Meeting
of
North American Galvanizing & Coatings, Inc.
Thursday, May 26, 2005
10:00 a.m.
815 Connecticut Avenue NW
Suite 1200
Washington, D.C. 20006
(If you plan to attend the meeting in person, you will be required to
present photo identification)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES Please
LISTED BELOW AND FOR PROPOSALS 2 and 3. IF NO CHOICE IS Mark Here
SELECTED, THE PROXY WILL VOTE YOUR SHARES IN ACCORDANCE for Address |_|
WITH SUCH RECOMMENDATIONS. Change or
Comments
SEE REVERSE SIDE
1. Election of the following nominees as Directors:
01 Linwood J. Bundy, 02 Ronald J. Evans, 03 Gilbert L. Klemann, II,
04 Patrick J. Lynch, 05 Joseph J. Morrow, 06 John H. Sununu
FOR all nominees listed (except WITHHOLD AUTHORITY to
as marked to the contrary) vote for nominees listed
|_| |_|
INSTRUCTIONS: To vote FOR or WITHHOLD AUTHORITY to vote for the election of all
Nominees, check the appropriate box hereon. To withhold authority to the
election of any Nominee(s), write the name(s) of such Nominee(s) in the
following space:
________________________________________________________________________________
If no box is marked above with respect to Proposal 1, the undersigned will be
deemed to vote FOR each nominee, except for any Nominee whose name is written in
the space provided above.
2. Amend the Company's Restated Certificate of Incorporation to effect a
reverse stock split followed by a forward stock split at the discretion of
the Board
FOR AGAINST ABSTAIN
|_| |_| |_|
3. Ratify the appointment of Deloitte & Touche LLP as independent accountants
for fiscal 2005
FOR AGAINST ABSTAIN
|_| |_| |_|
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
Please sign, date and return this proxy promptly, using the enclosed envelope.
If no box is marked above with respect to proposals 2 and 3 the undersigned will
be deemed to have voted FOR each proposals.
Signature _____________________ Signature _____________________ Date ___________
Please sign above exactly as name appears on the Proxy. If shares are registered
in more than one name, all such persons should sign. A corporation should sign
in its full corporate name by a duly authorized officer, stating his/her title.
Trustees, guardians, executors and administrators should sign in their official
capacity, giving their full title as such. If a partnership, please sign in the
partnership name by authorized persons. Make sure that name on your stock
certificate(s) is exactly as you indicate above.
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Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting are available until 11:59 p.m. Eastern Time
May 25, 2005
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
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Internet Telephone Mail
http://www.proxyvoting.com/nga 1-866-540-5760 Mark, sign and date
Use the Internet to vote your proxy. Use any touch-tone telephone to your proxy card
Have your proxy card in hand when you OR vote your proxy. Have your proxy OR and
access the web site. card in hand when you call. return it in the
enclosed postage-paid
envelope.
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If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.