-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C6c41xbvwOanUE07vp7dvubaWK66eVitpSKjgHuHcvG0OdFtEGi4IXJoRZknLm1m 1HT6k/n+Z6gr2wv6VHkOUg== 0000914553-98-000004.txt : 19980522 0000914553-98-000004.hdr.sgml : 19980522 ACCESSION NUMBER: 0000914553-98-000004 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980603 FILED AS OF DATE: 19980521 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ABSORBENTS NATURAL PRODUCTS INC CENTRAL INDEX KEY: 0000914553 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 870421089 STATE OF INCORPORATION: UT FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-23356 FILM NUMBER: 98629539 BUSINESS ADDRESS: STREET 1: 3800 HUDSON BEND ROAD STREET 2: STE 300 CITY: AUSTIN STATE: TX ZIP: 78734 BUSINESS PHONE: 5122662481 MAIL ADDRESS: STREET 1: 3800 HUDSON BEND RD STREET 2: SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78734 FORMER COMPANY: FORMER CONFORMED NAME: GEO ENVIRONMENTAL RESOURCES INC DATE OF NAME CHANGE: 19940203 DEF 14A 1 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. N/A) Filed by the registrant XX Filed by a party other than the registrant Check the appropriate box: Preliminary proxy statement XX Definitive proxy statement Definitive additional materials Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 AMERICAN ABSORBENTS NATURAL PRODUCTS, INC. (Name of Registrant as Specified in Its Charter) TERRY L. YOUNG ON BEHALF OF THE BOARD OF DIRECTORS (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). Fee computed on table below per Exchange Act Rules 14-a6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies:____________________________ (2) Aggregate number of securities to which transactions applies:__________________________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0- 11:__________________________________________ (4) Proposed maximum aggregate value of transaction:____________ XX Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the off setting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: $125.00 (2) Form, schedule or registration statement no: 14A (3) Filing party: American Absorbents Natural Products, Inc. (4) Date filed: May 19, 1998 AMERICAN ABSORBENTS NATURAL PRODUCTS, INC. ________________ NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ________________ The annual meeting of the shareholders of American Absorbents Natural Products, Inc., a Utah Corporation, will be held, in accordance with the bylaws of the Company, at its offices at 3800 Hudson Bend Road, Suite #300, Austin, Texas, on Wednesday, July 8, 1998, at 10:00 A.M. Central Standard Time for the following purposes: 1. To elect four directors; 2. To receive the reports of officers (without taking any action thereon); 3. To ratify and approve the appointment of Orton & Company as independent certified public accountants for the Company for the fiscal year ending January 31, 1999; 4. To ratify and approve transactions with Austin Young, Inc. including the borrowing of working capital funds, use of assets as collateral, and office/equipment leases; and, 5. To transact such other business as may properly come before the meeting. Only holders of common stock of record on the books of the company at the close of business on April 30, 1998, will be entitled to notice of and to vote at the annual meeting ofshareholders and any adjournment or adjournments or postponement or postponements thereof. A list of shareholders entitled to vote at the annual meeting of shareholders will be kept on file at the offices of the Company at least ten days prior to the annual meeting of shareholders and may be reviewed by any shareholder during regular business hours. The enclosed proxy, which is being solicited on behalf of the Board of Directors of the Company, should be completed, dated, signed and returned promptly to assure that your vote will be included. YOU MAY, OF COURSE, CHOOSE TO REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THIS PROXY AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING OF SHAREHOLDERS, AND PERSONALLY CAST YOUR VOTES. David W. Redding, President Austin, Texas June 3, 1998 AMERICAN ABSORBENTS NATURAL PRODUCTS, INC. 3800 HUDSON BEND ROAD, SUITE #300 AUSTIN, TEXAS 78734 ____________ PROXY STATEMENT ____________ SOLICITATION AND REVOCATION OF PROXY The accompanying proxy is being furnished to holders of Common Stock ($0.001 par value), of American Absorbents Natural Products, Inc., a Utah corporation, and is solicited by the Board of Directors of the Company for use at the annual meeting of the shareholders to be held at 3800 Hudson Bend Road, Suite #300, Austin, Texas on July 8, 1998, at 10:00 A.M. (local time), and any postponements or adjournments thereof. The expenses of preparing, assembling, printing and mailing the proxy statement and material used in the solicitation of proxies will be borne by the Company. It is contemplated that proxies will be solicited principally through the use of the mails, but officers, directors and regular employees of the Company may solicit proxies personally or by telephone or mail. Any shareholder executing a proxy retains the right to revoke it by giving written notice dated after the date of the proxy and before the proxy is counted at the annual meeting ofshareholders, to the Secretary of the Company, by duly executing a subsequent proxy relating to the same shares and delivering it to the Secretary of the Company, or by attending the annual meeting of shareholders and voting in person. Any written notice revoking a proxy should be sent to the offices of the Company at the address listed above. All shares represented at the annual meeting of shareholders by properly executed proxies received prior to or at the annual meeting of shareholders, unless such proxies previously have been revoked, will be voted at the annual meeting of shareholders in accordance with the instructions on the proxies. If no instructions are indicated, proxies will be voted for each nominee and for each item set forth in the Proxy. If any other matters are properly presented to the annual meeting of shareholders for action, the persons named on the enclosed form or forms of proxy and acting thereunder will have discretion to vote on such matters in accordance with their best judgment. The Board of Directors has fixed the close of business on April 30, 1998, as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting of shareholders. As of the record date, there were 6,863,350 shares of common stock ($0.001 par value) of the Company outstanding. Holders of record of common stock on the record date are entitled to cast one vote per share, exercisable in person or by properly executed proxy, with respect to each matter to be considered by them at the annual meeting of shareholders. The presence, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of common stock entitled to vote is necessary to constitute a quorum at the annual meeting of shareholders. The approval of at least a majority of those shares of common stock voted at the annual meeting of shareholders for each nominee and for each item set forth in the notice of annual meeting of shareholders will be required to elect the nominees and to approve such matters. Copies of this proxy statement and enclosed proxy card were filed with the Washington, D.C. office of the Securities & Exchange Commission a minimum of ten days prior to them being sent to shareholders on approximately June 3, 1998. THE BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF COMMON STOCK VOTE FOR THE NOMINEES AND MATTERS TO BE VOTED UPON AT THE ANNUAL MEETING OF SHAREHOLDERS. ELECTION OF DIRECTORS The Board of Directors has nominated four persons to be elected at the annual meeting of shareholders, each to serve until the next annual meeting of shareholders and until their successor is elected and qualified. To be elected, a director must receive the votes of a majority of the shares present at the meeting by proxy or in person, provided that a majority of all shares are present at the meeting by proxy or in person. Shares represented by the proxies solicited by the Board of Directors will be voted (unless otherwise directed) in favor of the election as directors of the persons named below. The bylaws of the Company provide for a maximum of nine directors to be elected by the holders of the common stock. During the past several fiscal years, Board operations have operated smoothly with fewer directors. The enclosed proxy cannot be voted for a greater number of persons than the number of nominees named. All of the nominees for election as directors are presently directors. Each nominee has agreed to serve as a director of the Company if elected. However, in the unexpected event of the refusal or inability of any nominee for director to serve, proxies may be voted for a substitute nominee designated by the Board of Directors, or the Board may be reduced accordingly. The following information concerning the principal occupation of each nominee during the past five years and certain other information have been furnished to the Company by each nominee for director: SERVED AS NAME AGE DIRECTOR SINCE Terry L. Young 51 1990 David W. Redding 49 1993 William C. Branch 45 1995 Nicholas N. Wentworth63 1998
Terry L. Young became a director of the Company in 1990. He has served as Chairman of the Board of Directors of the Company from 1991 to present. Mr. Young has also served as President of the Company from August 1990 until May 1991, and from June 1992 to December 1993. Mr. Young has been the Chief Executive Officer of the Company since 1990. He is also President and a director of Austin Young, Inc., the major stockholder of the Company, and is Chairman and Chief Executive Officer of American Absorbents, Inc., the wholly owned subsidiary of the Company. He served in the United States Military from 1968 to 1971 when he received an honorable discharge. Beginning in the early 1970's he became involved in real estate development and continues to be involved now. Mr. Young has also been involvedin corporate development and has worked in the development of several companies. Mr. Young received an associate degree in business from San Antonio College in 1967 and attended the University of Texas at Austin for two years. Age 51. David W. Redding became a director of the Company in 1993. He has served as President of the Company since February 1997. He has served as Chief Financial Officer, Executive Vice President and Treasurer of the Company since November 1993. He has also served as Assistant Secretary of the Company since December 1994. Mr. Redding is also Chief Financial fficer, Treasurer, Secretary and a Director of American Absorbents, Inc., the wholly owned subsidiary of the Company. From May 1988 until November 1993, he was self-employed providing tax, management and financial services. From November 1978 until May 1988 he was Chief Financial Officer, Executive Vice President, Secretary, Director and a member of the Executive Committee of ASK Corporation, a publicly held, NASDAQ National Market listed company engaged in manufacturing and marketing of alternative energy equipment in the emerging solar energy industry. He was nominated for and accepted for inclusion in Who's Who Worldwide in Business in 1993 and International Who's Who of Professionals in 1997. He received a bachelors degree in business and accounting from the University of Texas at Austin in 1974. Age 49. William C. Branch became a director of the Company in June 1995. He was President and Chief Executive Officer of Charles P. Davis Hardware, Inc. from 1978 until 1982 when the business was sold to Handyman, Inc. in San Diego, California. Following a period of retirement, he became the Chairman of the Board and President of Branch International, Inc., operating Branch Travel and has served in that capacity from 1985 until present. Mr. Branch attended and received an AA degree from Marion Military Institute, Marion, Alabama, in 1973. He received a BS degree in International Business from The American College, Leysin, Switzerland, in 1977. After that, he pursued graduate studies in International Business at the International Business Institute in Switzerland. Mr. Branch spends less than 10% of his time involved with Company business. Age 45. Nicholas N. Wentworth has served as a director of the Company since January 1998. Mr. Wentworth was president of Investment Advisors Incorporated, a Houston, Texas based investment counseling firm with individual and institutional clients before retiring in 1996 after 28 years with the firm. He held various management positions with the firm including president of a no-load mutual fund specializing in small to medium sized capitalization companies, economist and chief investment officer of fixed income. He is a Chartered Financial Analyst and a Chartered Investment Counselor and is a past president of the Houston Society of Financial Analysts. Prior to joining Investment AdvisorsIncorporated he work for Underwood, Neuhaus and Company providing institutional research and portfolio management for non- discretionary accounts managed by the firm. Early in his career, Mr. Wentworth worked in the corporate offices of Gulf Oil Corporation as a member of the crude oil and product supply department,for Texas Eastern Transmission Corporation as a member of the treasurer's staff working with investment bankers in long and short term borrowings and for Funds Incorporated as their analyst in energy and regulatedindustries. He served in the United States Army Finance Corps and holds a Bachelor's and Master's degree in Business Administration from Babson College in Wellesley, Massachusetts. Mr. Wentworth spends less than 10% of his time involved with Company business. Age 63. There are no known arrangements or understandings between any of the foregoing individuals and any other person pursuant to which they were elected as a director or as a nominee. The Company has no audit, nominating, or compensation committees. The present Board of Directors met nine times during the fiscal year ended January 31, 1998. All incumbent directors attended at least 75% or more of the total number of meetings of the Board of Directors during the last fiscal year or for such shorter period that they served as a director. EXECUTIVE COMPENSATION The following table sets forth the aggregate remuneration paid or accrued for the fiscal years ended January 31, 1996, 1997 and 1998, as to each officer of the Company whose aggregate remuneration exceeds $100,000, and as to the aggregate remuneration of all officers as a group: ANNUAL COMPENSATION (1)LONG-TERM COMPENSATION AWARDS PAYOUTS
RESTRICTED STOCKAWARDS NAME AND OTHER ANNUALCOMPENSATION ($) ($)OPTIONS/ SAR'S LTIPALL OTHER PRINCIPAL SALARY($)BONUS($) (#) PAYOUTS ($)COMPENSATION ($) POSITIONS YEAR Terry L. Young,CEO 1996 -0- -0- -0- -0- -0- -0- -0- 1997 -0- 7,000 -0- 56,500 -0- -0- -0- 1998 60,000 -0- -0- 7,188 100,000 -0- -0- All Officers 1996 44,7141,000 -0- -0- -0- -0- -0- as a Group (3 persons) 1997 64,8007,000 -0- 106,592 -0- -0- -0- (3 persons) 1998143,400 -0- -0- 46,325 225,000 -0- -0- (3 persons)
1) Excludes the value of personal use of Company office facilities and certain other personal benefits. The value of such personal benefits cannot be specifically or precisely ascertained without unreasonable effort. After reasonable inquiry, however, the Company believes that the aggregate annual amount of such personal benefits does not exceed $50,000 per person or 10% of the total annual salary and bonus for the named executive officer or officers as a group. 2) In 1993, 1,000,000 options were issued to Austin Young, Inc., a company controlled by Mr. Young, and were exercisable at $3.00 per share at any time prior to February 1, 1998. The exercise price represented the market price of the common stock on February 1, 1993, the date of grant. On June 16, 1993, Austin Young, Inc. exercised its option to acquire 12,000 shares. The market price of the common stock on such date was $4.00 per share. On June 17, 1997, Austin Young, Inc. returned to the Company for cancellation, the option it held to purchase the remaining 988,000 shares that were subject to the option. (See "Certain Relationships and Related Transactions.") Neither the Company nor its wholly owned subsidiary has a written employment contract with any of its officers. All of the officers are currently paid a regular monthly salary by the Company. Under Utah law the Company is entitled to pay compensation to its directors, unless the articles or bylaws provide otherwise. The Company has not adopted a policy of cash compensation for its directors, and neither the Articles of Incorporation, as amended, nor the current bylaws prohibit such payments. The Company may implement a cash compensation plan to compensate its directors at some point in the future. Directors are eligible to receive stock options under the 1995 Stock Option Plan. 1995 STOCK OPTION PLAN The Company does not have any pension, retirement, deferred compensation, or similar plan for its officers or employees. The Company does have an incentive stock option plan for its officers, directors, employees and persons who perform substantial services for or on behalf of the Company. The Company's 1995 Stock Option Plan which replaced the 1993 Stock Option Plan (under which no options were granted) authorizes the grant of stock options with respect to up to 1,000,000 shares of the common stock (which number is subject to adjustments in the event of stock dividends, stock splits and other similar events) and, accordingly, 1,000,000 shares of authorized but unissued stock have been set aside by the Board of Directors for issuance subject to options that may be granted under the 1995 Stock Option Plan. The Plan is administered by the Board of Directors, or, at its option, a duly authorized committee of the Board. All employees (including executive officers and directors) of the Company, and its subsidiary, together with other persons who perform substantial services for or on behalf of the Company, are eligible to receive options under the 1995 Stock Option Plan. The term of the 1995 Stock Option Plan is for a period of five years from the date of the plan. Options granted under the Plan are granted at the market "bid" price of the common stock at the time of grant and may be exercised by the optionee by the payment of cash, surrender ofshares of common stock of the Company equivalent to the option exercise price or through a reduction in the number of shares received pursuant to the option exercise equivalent to the amount of the option exercise price for a period of seven years from the date of grant. On June 17, 1997 the following options were granted pursuant to the 1995 Stock Option Plan to officers and directors at the closing bid price of the common stock: OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS) PERCENT OF TOTALOPTIONS/SARS GRANTED TO OPTIONS/SARS GRANTEDEMPLOYEES INEXERCISE ORBASE PRICE (#) FISCAL YEAR ($/SH) NAME EXPIRATION DATE Terry L. 100,000 40 0.375 June 17, 2004 Young, CEO David W. Redding 100,000 40 0.375 June 17, 2004 William C. Branch 25,000 10 0.375 June 17, 2004 Kimberly A. Love 25,000 10 0.375 June 17, 2004
Currently, directors do not receive any cash compensation for serving in their roles as directors of the Company. The following table sets forth the aggregated option/SAR exercises in the last fical year and the fiscal year- end option/SAR values: AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES NUMBER OF VALUE OF SHARES UNEXERCISEDOPTIONS/SARSAT FY-END (#)EXERCISABLE/UNEXERCISABLE UNEXERCISED ACQUIRED IN-THE-MONEY ON VALUE OPTIONS/SARS EXERCISE REALIZED AT FY-END ($) NAME (#) ($) EXERCISABLE/ UNEXERCISABLE Terry L. 100,000 75,000 -0- -0- Young, CEO David W. Redding -0- -0- 100,000 E 112,500 William C. Branch 25,000 21,875 -0- -0- Kimberly A. Love -0- -0- 25,000 E 28,125
On June 17, 1997, Austin Young, Inc. returned to the Company for cancellation, an option it held to purchase 988,000 shares of common stock. On January 21, 1998, when the bid price on the common stock in the public market was $1.125, Terry L. Young exercised the option he held to purchase 100,000 shares of common stock by reducing the amount of the note payable from the Company to Austin Young,Inc. by $37,500 and on January 23, 1998, when the bid price on the common stock in the public market was $1.25, William C. Branch exercised the option he held to purchase 25,000 shares of common stock by issuing a check to the Company for $9,375. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Austin Young, Inc. is the major stockholder of the Company, beneficially owning 3,182,403 shares, or approximately 47.03% of the common stock at March 31, 1998, which amount includes the shares beneficially owned by Austin Young, Inc. as described above. Austin Young, Inc. is controlled by Terry L. Young, the Chief Executive Officer, Chairman and controlling shareholder of the Company. Austin Young, Inc. is a publicly held Texas corporation which operates as a real estate developer principally in the Austin, Texas, area. It also owns a publishing company, American Crisis Publishing, Inc., which publishes drug and alcohol abuse literature, educational books and magazines for ages 5 through adult, and coloring books for children ages one through four. Mr. Young owns approximately 90% and the public shareholders own approximately 10% of the outstanding common stock of Austin Young, Inc. Mr. Young beneficially owns 3,182,403 shares or approximately 47.03% of the outstanding stock of the Company at March 31, 1998, which amount includes the shares owned by Austin Young, Inc. as described above. On October 8, 1993, the Company entered into a Commercial Earnest Money Contract with Cassidy Consolidated Properties, Inc., a corporation controlled by the former spouse of Terry L. Young. The purchase price of the building purchased pursuant to the contract was $180,000, paid by the issuance of 6,000 shares of common stock and a note payable of $150,000 payable at the rate of $1,500 per month. The building was acquired by the seller in 1992 for $150,000. In August, 1996, this mortgage was paid off and refinanced at a bank using collateral of Austin Young, Inc. as security and granting Austin Young, Inc. a security interest in the warehouse facility. In February, 1992, the Company issued stock to the shareholders of American Absorbents, Inc. in return for all of the outstanding shares of such company. Terry L. Young received 290,000 shares, or approximately 41% of the shares of common stock issued in such transaction. Mr. Young received 200,000 of the 290,000 shares for services rendered in founding the subsidiary of the Company; the remaining shares were also issued for services rendered to the Company. On May 13, 1991, 3,380,000 (pre-split) shares were purchased by the Company from Austin Young, Inc. for $65,000 and canceled. The Company agreed that Austin Young, Inc. would have the right to repurchase these shares for the same price at any time up to June 1, 1993. On July 15, 1992, the Company issued 3,380,000 (post-split) shares to Austin Young, Inc. for debt relief of $65,000. In February, 1993, the Company issued to Austin Young, Inc. a five-year option to purchase up to 1,000,000 shares of common stock at an exercise price of $3.00 per share. On June 16, 1993, Austin Young, Inc. exercised its option to purchase 12,000 shares. On June 17, 1997, Austin Young, Inc. returned the remaining 988,000 options to the Company for cancellation. Austin Young, Inc. furnishes to the Company the office space and some equipment currently used by the Company pursuant to a 5-year lease dated July, 1996, for a monthly lease rate of $1,900. Austin Young, Inc. has advanced funds to the Company from time to time for operating expenses. At January 31, 1998, the Company owed approximately $179,052 in principal to Austin Young, Inc., which amount was evidenced by a promissory note bearing interest at 7% per annum and due on demand. The note payable to Austin Young, Inc. was reduced by $37,500 on January 21, 1998, when Mr. Young exercised an option he held to acquire 100,000 shares of common stock at $0.375 per share. In addition, Austin Young, Inc. has pledged $125,000 in CD's against a $125,000 note payable to a bank relative to the Austin warehouse facility. Austin Young, Inc. receives no compensation for the use of its CD's as collateral on the note. CHANGE IN CONTROL There are no arrangements known to management the effect of which would result in a change of control of the Company, nor has such a change of control occurred during the fiscal year ended January 31, 1998. RATIFICATION AND APPROVAL OF THE APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors has selected Orton & Company, Salt Lake City, Utah, to serve as independent auditors of the Company for the year ending January 31, 1999, subject to approval by the shareholders. Such firm is familiar with the books and records of the Company having audited such books and records for the years ended January 31, 1998, 1997, 1996 and 1995. The Company has been advised by Orton & Company that neither that firm nor any of its partners or associates has any relationship or connection, financial or otherwise, with the Company or any affiliate of the Company other than the usual relationship that exists between independent certified public accountants and clients. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information furnished by the following persons concerning the common stock ($0.001 par value) ownership as of March 31, 1998, of (i) each person who is known to the Company to be the beneficial owner of more than 5 percent of the common stock; (ii) all directors and nominees for director; and, (iii) all directors, nominees for director and officers of the Company as a group: NAME AND ADDRESS NUMBER OF SHARESOF COMMON STOCKCOMMON STOCK SUBJECT TO OPTIONS OR OF BENEFICIAL OWNER WARRANTS PERCENT OF CLASS Austin Young, Inc. 3,182,403 -0- 47.03 3800 Hudson Bend Rd. Austin, TX 78734 Terry L. Young 3,182,403 -0- 47.03 3800 Hudson Bend Rd. Austin, TX 78734 David W. Redding 272,620 100,000 5.43 3800 Hudson Bend Rd. Austin, TX 78734 William C. Branch 232,662 -0- 3.44 3800 Hudson Bend Rd. Austin, TX 78734 Nicholas N. Wentworth 5,000 -0- 0.07 3800 Hudson Bend Rd. Austin, TX 78734 James R. Toney 6,500 -0- 0.10 3800 Hudson Bend Rd. Austin, TX 78734 Kimberly A. Love 15,026 25,000 0.59 3800 Hudson Bend Rd. Austin, TX 78734 Officers and Directors 3,714,211 125,000 55.71 as a Group (6 Persons)
1) Unless otherwise indicated, the second column reflects amounts as to which the beneficial listed in the first column has sole voting power and sole investment power. 2) The total number of shares of common stock outstanding as of March 31, 1998, was 6,766,512. Option shares to each named director or officer, which are not currently outstanding but which are subject to option exercise, are deemed to be outstanding for the purpose of computing that director's or officer's percentage of ownership of outstanding shares of common stock, but are not deemed to be outstanding for computing the percentage of common stock owned by any other person. 3) Austin Young, Inc. is approximately 90% controlled by Terry L. Young, its Chairman and CEO. Mr. Young is a director, officer and 47.03% controlling shareholder of the Company through his control position in Austin Young, Inc. Of the shares set forth above, 47,000 are held in brokerage accounts in the name of Austin Young, Inc. 4) Of the shares set forth above for Terry L. Young, 2,922,091 are owned of record by Austin Young, Inc., a corporation controlled by Mr. Young; 47,000 are held in brokerage accounts in the name of Austin Young, Inc.; 85,598 are held in the name of Mr. Young; 100,000 are held in the name of Terry L. Young and Austin Young, Inc.; 3,500 are owned of record by the spouse of Mr. Young; 4,214 are held in the name of Kim E.Coleman as custodian for Gretchen Coleman, and, 20,000 are owned of record by the children of Mr. Young. 5) Of the shares set forth above for David W. Redding, 235,313 are held in the name of David W. Redding; 27,000 are held in the name of David W. Redding for the benefit of family members, and, 500 are owned of record by the spouse of Mr. Redding. 6) Of the shares set forth above for William C. Branch, 177,189 are owned of record by Mr. Branch, 29,000 are owned of record by Mr. Branch as custodian for the Charles P. Davis Trust and 26,473 are held of record by Mr. Branch as custodian for family members. RATIFICATION AND APPROVAL OF THE BORROWING OF WORKING CAPITAL FUNDS, USE OF COLLATERAL AND OFFICE/EQUIPMENT LEASES FROM AUSTIN, YOUNG, INC. From time to time, since inception, the Company has been advanced working capital funds from Austin Young, Inc. No working capital funds were advanced to the Company during the fiscal year ended January 31, 1998. During fiscal 1998 the note to Austin Young, Inc. was reduced by $23,333 in principal and $14,167in accrued interest when Mr. Young exercised an option to purchase common stock for a total price of $37,500. At January 31, 1998, the total amount owing to Austin Young, Inc.was $179,052. Such amountis evidenced by a demand promissory note bearing interest at 7% per annum. Management of the Company believes that the terms of the note are fair to the Company. In addition, the Company has used collateral of Austin Young, Inc. to secure bank financing on the warehouse facility in Austin, Texas and has in turn given Austin Young, Inc. a security interest in the warehouse facility for the use of Austin Young, Inc.'s assets as collateral. The Company also leases office space and equipment from Austin Young, Inc. at a rate of $1,900 per month. However, because none of the directors at such time that these transactions were made was a disinterested party , the transactions may be subject to challenge by the shareholders. Section 16-10a-851 of the Utah Revised Business Corporation Act provides that no such conflicting interest transactions may be enjoined, be set aside, or give rise to an award ofdamages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, if the shareholders holding qualified shares approve the transactions at any time, provided that the shareholders holding a majority of such qualified shares are present at a duly held meeting and a majority of such qualified shares present at the meeting vote in favor of the transactions. For purposes of this section, the term "qualified shares" means those shares otherwise entitled to vote on the transactions, except shares owned or controlled by a director who has a conflicting interest respecting the transactions, or by a related person of that director (see "Security Ownership of Certain Beneficial Owners and Management"). There are approximately 3,149,139 common shares qualified to vote on this proposal. In addition, the transactions may not be enjoined, be set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, if the transactions, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation. Therefore, the Board of Directors is seeking ratification and approval of the above described transactions at the annual meeting of shareholders by persons holding qualified shares. If fewer than a majority of the persons holding qualified shares are present at the annual meeting of shareholders, or if fewer than a majority of such qualified shares are voted for ratification and approval of such transactions, the transactions may be challenged under the section set forth above. Notwithstanding a failure by the shareholders to ratify and approve the transactions, the Board of Directors believes that under the circumstances at the time of such transactions with Austin Young, Inc., such transactions were fair to the Company and does not intend to seek rescission of the granting of loans, use of collateral or lease agreements by Austin Young, Inc. to the Company. LEGAL PROCEEDINGS Neither the Company, any of its properties, nor its subsidiary is a party to any material pending legal proceeding or government actions, including any material bankruptcy, receivership, or similar proceedings. Management of the Company does not believe that there are any material proceedings to which any director, officer or affiliate of the Company or its subsidiary, any owner of record, beneficially, of more than 5 percent of the common stock of the Company, or any associate of any such director, officer, or affiliate of the Company, or security holder is a party adverse to the Company or its subsidiary or has a material interest adverse to the Company or its Subsidiary. FINANCIAL STATEMENT The audited financial statements of the Company for the years ended January 31, 1998 and 1997 are included with this proxy statement. SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS The next annual meeting of shareholders of the Company is presently and tentatively scheduled for July 7, 1999. Proposals of shareholders intended to be presented at such meeting must be received by the Secretary of the Company at the offices of the Company at the address listed above no later than January 31, 1999. OTHER BUSINESS As of the date of this Proxy Statement, The Board of Directors knows of no other matters to be presented for action at the annual meeting of shareholders. If other matters are properly presented, the person named in the proxy intends to vote in accordance with their best judgment on such matters. By Order of the Board of Directors s/Terry L. Young__________________ Terry L. Young, Chairman of the Board Austin, Texas June 3, 1998 AMERICAN ABSORBENTS NATURAL PRODUCTS, inc. 3800 Hudson Bend Road, Ste. #300 AUSTIN, TX. 78734 proxy this proxy is solicited on behalf of the board of directors The undersigned hereby appoints Terry L. Young as Proxy, with the power to appoint his substitute, and hereby authorizes him to represent and to vote, as designated below, all the shares of common stock of American Absorbents Natural Products. Inc. held on record by the undersigned on April 30, 1998, at the annual meeting of shareholders to be held on July 8, 1998, or any postponements or adjournments thereof. -------------------------------------------------------------------- 1. ELECTION OF DIRECTORS FOR all nominees listed below (except as marked to the contrary below) WITHHOLD AUTHORITY to vote for all nominees listed below. (Instruction: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.) TERRY L. YOUNG DAVID W. REDDING WILLIAM C. BRANCH NICHOLAS N. WENTWORTH 2. Proposal to ratify and approve the appointment of Orton & Company as independent certified public accountants for the Company for the year ending January 31, 1999. (Circle One) FOR AGAINST ABSTAIN 3. Proposal to ratify and approve the transactions with Austin Young, Inc. (Circle One) FOR AGAINST ABSTAIN 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS1, 2 AND 3. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by authorized officer. If a partnership, please sign in partnership name by authorized person. ____________________________________ ________________________________ Signature if individually held Corporation or Partnership Name ____________________________________ By:_______________________ Signature if jointly held Authorized officer or person Date:____________________________,1998 NUMBER OF SHARES________________ PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPLTLY. -----END PRIVACY-ENHANCED MESSAGE-----