<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14(A) INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
<TABLE>
<CAPTION>
<S> <C>
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Enviro-Clean of America, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing party:
- -------------------------------------------------------------------------------
(4) Date filed:
- -------------------------------------------------------------------------------
<PAGE>
Enviro-Clean of America, Inc.
211 Park Avenue
Hicksville, New York 11801
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 14, 2000
April 27, 2000
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Enviro-Clean of America, Inc. The meeting will be held on Wednesday, June 14,
2000, at 10:30 a.m. at 300 Convent Street, Suite 1500, San Antonio, Texas 78205.
Only shareholders of record at the close of business on April 18, 2000 are
entitled to notice of and to vote at the meeting.
At the meeting, stockholders are being asked to:
. To elect five directors to serve for the coming year.
. To approve the 2000 Stock Incentive Plan.
. To ratify the selection of Goldstein, Golub, & Kessler L.L.P. as
independent auditors for the year ending December 31, 2000.
. To transact any other business which may properly come before the
meeting or any adjournment thereof.
It is very important that your shares are represented and voted at the
meeting. Accordingly, please sign, date and return the enclosed proxy card. If
you attend the meeting, you may vote in person even if you have previously
mailed a proxy card. We would appreciate your informing us on the proxy card if
you expect to attend the meeting so that we can provide adequate seating.
The continuing interest of our stockholders in the business of Enviro-Clean
of America, Inc. is appreciated and we hope that many of you will be able to
attend the Annual Meeting.
By order of the Board of Directors
/s/ Randall K. Davis
----------------------------------------------------
RANDALL K. DAVIS
President
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ENVIRO-CLEAN OF AMERICA, INC.
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 14, 2000
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy card is furnished in
connection with the solicitation by the Board of Directors (the "Board") of
Enviro-Clean of America, Inc. of proxies for use at the Annual Meeting of
Shareholders (the "Meeting") to be held on June 14, 2000, or at any adjournment
thereof, as set forth in the accompanying Notice of Annual Meeting of
Shareholders. Proxies are solicited to give all shareholders of record at the
close of business on April 18, 2000, an opportunity to vote on matters that come
before the Meeting. Shares can be voted only if the shareholder is present in
person or is represented by proxy.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the enclosed proxy card. If your proxy card
is signed and returned without specifying choices, the shares will be voted as
recommended by the Board. You may revoke your proxy at any time before it is
exercised by so notifying the Secretary of Enviro-Clean in writing or in person.
Any properly executed proxy that is not timely revoked in accordance with the
instructions below, will be voted at the Meeting. This Proxy Statement and the
accompanying proxy card are being sent to the shareholders of Enviro-Clean on or
about May 8, 2000.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Enviro-Clean's Common Stock is necessary to constitute a
quorum at the Meeting. Only votes cast "for" a matter constitute affirmative
votes. Votes "withheld" or abstaining from voting are counted for quorum
purposes, but since they are not cast "for" a particular matter, they will have
the same effect as negative votes or votes "against" a particular matter. The
votes required with respect to the Items set forth in the accompanying Notice of
Annual Meeting of Shareholders are set forth in the discussion of each Item in
this Proxy Statement. In deciding all questions, a holder of Common Stock is
entitled to one vote, in person or by proxy, for each share held in his name on
the record date. Proxies in the form enclosed will be voted at the Meeting, if
properly signed, returned to Enviro-Clean prior to the Meeting and not revoked.
A proxy may be revoked at any time before it is voted by giving written notice
to the Secretary of Enviro-Clean prior to the convening of the Meeting, or by
presenting another proxy card with a later date. If you attend the Meeting and
desire to vote in person, you may request that your previously submitted proxy
card not be used. Your vote is important. Accordingly, you are urged to
complete, date, sign, and return the accompanying proxy card whether or not you
plan to attend the Meeting.
On April 18, 2000, the record date for determination of shareholders
entitled to notice of and to vote at the Meeting, there were 5,922,195 shares of
Common Stock issued and outstanding and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS
The Board is responsible for the management and direction of Enviro-Clean and
for establishing broad corporate policies. However, in accordance with
corporate legal principles, the majority of the Board is not involved in day-to-
day operating details. Members of the Board are kept informed of Enviro-Clean's
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business through discussions with the Chairman and other officers, by reviewing
analyses and reports sent to them, and by participating in Board and committee
meetings.
Compensation of Directors
Outside directors are compensated $500.00 for each Board meetings attended.
In March of 2000, the following directors were granted options for their roles
as members of the Board: Steven Etra (options for 75,000 shares of common
stock), Gary C. Granoff (options for 75,000 shares of Common Stock), and Mark A.
Rice (options for 75,000 shares of Common Stock). In addition, Randall K. Davis
was granted options for 150,000 shares of Common Stock for his roles as a member
of the Board and as President of Enviro-Clean. These options vest after a one
year period, commencing from the date of grant, in which the director is
required to remain in his capacity as director and have an exercise price of
$5.00. If the director does not remain in his capacity as a director for at
least one year from the date of grant, his options terminate without vesting.
Board Meetings
During 1999, the Board held one meeting and took action by unanimous
consent on ten occasions. Each of the nominees named below attended at least 75%
of the aggregate of the total number of meetings of the Board, with the
exception of Mark A. Rice, who was elected as a member of the Board at a meeting
of the Board held March 9, 2000 to fill a vacancy caused by the resignation of
Barry Gordon, effective March 6, 2000.
Committees of the Board
During fiscal year 1999, Enviro-Clean had no established functioning
committees of the Board. During the September 9, 1999 meeting of the Board,
Enviro-Clean authorized the formation of an audit committee and elected Gary C.
Granoff as the Chairman of the audit committee. On March 9, 2000, the Board, by
way of unanimous consent, appointed Mark A. Rice, to join Gary C. Granoff on the
committee. Both Messrs. Granoff and Rice are "independent" as defined by the
NASD listing requirements. The audit committee will be responsible for reviewing
Enviro-Clean's accounting practices and audit procedures. The audit committee
has not held a meeting or taken any action as of the date of this Proxy
Statement, but expects to hold at least one meeting in fiscal year 2000. In
addition, the Board has not adopted a written charter for the audit committee,
but expects to do so by June 14, 2000.
On March 9, 2000, Enviro-Clean approved formation of a compensation
committee, currently composed of Messrs. Rice and Granoff, which will administer
Enviro-Clean's stock incentive plans and make recommendations to the Board
concerning compensation arrangements for all officers and directors of Enviro-
Clean and its subsidiaries. The compensation committee will annually evaluate
Enviro-Clean's performance and the actual compensation and share ownership of
the executive officers compared with Enviro-Clean's own industry. The
compensation committee has not held a meeting or taken any action as of the date
of this Proxy Statement, but expects to hold at least one meeting in fiscal year
2000.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, the Board intends to nominate the five persons listed below
as nominees to be elected as members of the Board. Each of the directors
elected at the Meeting will serve until the next annual meeting of shareholders
or until his successor shall have been elected and qualified, subject to earlier
resignation and removal. The directors are to be elected by a plurality of the
votes cast by the holders of the shares of Common Stock represented and entitled
to be voted at the Meeting. Unless authority to vote for directors is
"withheld" in the proxy, the proxy holders will vote "for" the election of the
five nominees listed. Each nominee has indicated a willingness to serve as
director if elected. Should any nominee become unavailable for election,
discretionary authority is conferred to vote for a substitute.
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Management of Enviro-Clean has no reason to believe that any of the nominees
will be unable or unwilling to serve if elected.
Nominees for Director
The nominees for director are Richard Kandel, Randall K. Davis, Gary C.
Granoff, Steven Etra and Mark A. Rice.
Richard Kandel, 47, has served as the Chairman and Chief Executive Officer
of Enviro-Clean from September 1999 to the present. Mr. Kandel served as Enviro-
Clean's Treasurer from September of 1999 to March 9, 2000. Since July of 1999,
Mr. Kandel has served as Chairman of the Board of b2bstores.com, Inc., a
business to business full service eCommerce site on the Internet. From 1974
until 1998, Mr. Kandel was the owner and president of Kandel & Son, a sanitary
supply distributor in the New York metropolitan region. In January of 1999, Mr.
Kandel sold Kandel & Son to Enviro-Clean. Mr. Kandel is also an owner/director
of Camp Pontiac LLC, an eight-week summer sports camp for over 400 boys and
girls. In addition, Mr. Kandel is the founder and chairman of No Small Affair, a
New York/Florida-based all volunteer organization. This foundation provides
events, parties, and outings for thousands of homeless, physically or
emotionally challenged individuals. Mr. Kandel graduated from Michigan State
University with a Bachelor of Science Degree.
Randall K. Davis, 36, has served as the President and Director of Enviro-
Clean from September 1999 to the present. From March 1999 to August 1999, Mr.
Davis served as Vice President of Enviro-Clean. From May of 1985 until 1999, Mr.
Davis was the co-owner and President and Chief Executive Officer of Cleaning
Ideas, Inc., whose holdings included Sanivac, Inc. and Davis Manufacturing
Company. Davis Manufacturing Company was one of the largest manufacturers of
commercial cleaning products in South Texas and had been in operation since
1929. In August of 1999, Mr. Davis, along with family members, sold the Davis
family of companies to Enviro-Clean. Mr. Davis is also currently the managing
partner of Colnic Investment Partnership, a private investment company that
invests in private and publicly traded companies. Mr. Davis graduated from the
University of Texas in Austin with a Bachelor of Arts Degree.
Gary C. Granoff, 52, has served as a director of Enviro-Clean from
September 1999 to the present. Mr. Granoff is a Chairman of the Board and
President of Ameritrans, a Business Development Company as defined under the
Investment Company Act of 1940 (in formation) since 1998, as well as Elk
Associates Funding Corporation, a Small Business Investment Company, licensed by
the U.S. Small Business Administration since July 1979, where he has served as
President since its incorporation in 1979, as its chairman of the board since
December 1995. Elk is also a Business Development Corporation and is registered
as an Investment Company under the Investment Company Act of 1940. Mr. Granoff
has been a practicing attorney for the past twenty-seven years and is presently
an officer and shareholder in the law firm of Granoff, Walker & Forlenza, P.C.
Mr. Granoff is a member of the bar of the State of New York and the State of
Florida and is admitted to the United States District Court of the Southern
District of New York. Since 1983, Mr. Granoff is also the sole shareholder and
President of GCG Associates, Inc., an investment consulting firm. He has served
as the President and is the sole shareholder of Seacrest Associates, Inc., a
hotel operator, since August 1994. Mr. Granoff has also been a director and
President since June 1996 of Gemini Capital Corporation, a company primarily
engaged in the business of making consumer loans. In February 1998, Mr. Granoff
was elected to and is presently serving as a trustee of the Board of Trustees of
The George Washington University. Mr. Granoff holds a Bachelor of Business
Administration degree in Accounting and a Juris Doctor degree (with honors) from
The George Washington University.
Steven Etra, 51, has served as a Director of Enviro-Clean from March 1999
to the present. Mr. Etra has served as Enviro-Clean Secretary from September
1999 to the present and as Treasurer from March 9, 2000 to the present. Mr. Etra
has been the Sales Manager of Manufacturers Corrugated Box Company since
September of 1970, a company owned by Mr. Etra's family for more than 75 years.
Mr. Etra has been a director of Elk Associates Funding Corporation, a Small
Business Investment Company,
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licensed by the U.S. Small Business Administration, since November of 1995, and
also currently serves as a Vice President of Elk. Elk is a publicly traded
NASDAQ company under the symbol of "EKFG", with an investment portfolio of
approximately $45 million as of April 20, 2000. Additionally, Mr. Etra is
currently a director and Vice President of Ameritrans, a Business Development
Company as defined under the Investment Company Act of 1940 (in formation) since
1998. Since June 1996, Mr. Etra has also been a director of Gemini Capital, an
automobile finance company.
Mark A. Rice, 36, has served as a director of Enviro-Clean from March 2000
to the present. Mr. Rice is responsible for investment ventures including Namax
Corp, Rice Asset Management, L.P, The dotCOM Fund LLC, Bevo Capital Corp, and
others focusing on private equity, venture capital and public equity investing
in technology companies. From 1985 to 1987, Mr. Rice directed the development of
commercial real estate with the Norhill Group, Inc. in Houston, Texas, where he
formed Ronmar Partners, a private real estate partnership. From 1987 to 1989,
Mr. Rice worked with the Brachman Companies, where he was responsible for
venture capital investments and portfolio management. During this time he also
managed an offshore manufacturing business in Port Au Prince, Haiti. From 1989-
1995, he was a member of the Chicago Mercantile Exchange and had also managed
money with Bear Stearns and Company in Chicago, Illinois. Mr. Rice serves on
boards of directors and advisory boards of several private and publicly traded
companies including Telcom.net and Mind Arrow Systems, Inc. Mr. Rice graduated
from the University of Texas at Austin Bachelor of Arts Degree.
Management of Enviro-Clean recommends that the Enviro-Clean shareholders
vote "FOR" the director nominees named above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below sets forth information concerning the beneficial ownership
of the outstanding Enviro-Clean Common Stock as of April 25, 2000, for (1) each
director serving on the Board in 1999 and each of the nominees for director; (2)
each of the named executive officers not listed as a director; (3) the directors
and executive officers as a group; and (4) each person known to Enviro-Clean to
own beneficially more than 5% of the outstanding Enviro-Clean Common Stock.
Except as otherwise noted, each shareholder has sole voting and investment power
with respect to the shares beneficially owned.
NAME AND AMOUNT AND
ADDRESS OF NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNER % OF CLASS
- ---------------- ---------------- ----------
Richard Kandel
c/o Enviro-Clean of America, Inc. 2,350,400/1/ 39.4%
211 Park Avenue
Hicksville, NY 11801
Thomas B. Haines
c/o Nissco/Sunline, Inc. 1,000,000 16.9%
14848 Old US 41
#13 Sunburst Center, Naples, FL 34110
Steven Etra
- -------------------------
/1/Includes 24,000 shares of Common Stock issuable upon exercise of warrants
held by Kara Kandel, daughter of Richard Kandel and 26,400 shares of Common
Stock issuable upon exercise of warrants held by Ross Kandel, son of Richard
Kandel.
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c/o Manufacturers Corrugated Box Co., Inc. 738,679/2/ 11.7%
5830 57/th/ Street
Maspeth, NY 11378
Randall K. Davis 250,000/3/ 4.1%
c/o Enviro-Clean of America, Inc.
1023 Morales Street
San Antonio, TX 78207
Gary C. Granoff 142,375/4/ 2.4%
c/o Ameritrans Capital Corp.
747 Third Avenue, Suite 4C
New York, NY 10017
Mark A. Rice 75,000/5/ 1.3%
666 Dundee Road, Suite 1901
Northbrook, Illinois 60062
All officers and directors 3,556,454 53.1%
As a group
- -------------------------
/2/Includes 114,254 shares of Common Stock held directly by Mr. Etra; 70,000
shares of Common Stock issuable pursuant to conversion rights of Series E Stock;
200,000 shares of Common Stock issuable upon exercise of options granted to Mr.
Etra; 25,000 shares of Common Stock issuable upon exercise of warrants; 28,200
shares of Common Stock held by, and 11,200 shares of Common Stock issuable upon
exercise of warrants held by, Lances Property Development Pension Plan, a
company 50% owned by Mr. Etra; 6,000 shares of Common Stock held by, and 15,400
shares of Common Stock issuable upon exercise of warrants held by, Blaire Etra,
wife of Mr. Etra; 35,250 shares of Common Stock held by, and 24,700 shares of
Common Stock issuable upon exercise of warrants held by, Irving Etra Family
Trust, in which Mr. Etra is a beneficiary; 143,300 shares of Common Stock held
by, 12,250 shares of Common Stock issuable upon exercise of warrants held by,
and 25,000 shares of Common Stock issuable upon exercise of options granted to
SRK Associates, a company controlled by Mr. Etra; 18,750 shares of Common Stock
held by, and 9,375 shares of Common Stock issuable upon exercise of warrants
held by, Gemini Capital Corporation, a company in which Mr. Etra is a minority
shareholder and director. Mr. Etra disclaims beneficial ownership of the Gemini
Capital Corporation, SRK Associates, LLP, Irving Etra Family Trust, Lances
Property Development Pension Plan, and Blair Etra securities, except to the
extent of his pecuniary interest therein.
/3/Includes 100,000 shares of Common Stock held by Colnic Investment
Partnership, which is controlled by Randall K. Davis; and 150,000 shares of
Common Stock issuable upon exercise of options granted to Mr. Davis.
/4/Includes 10,250 shares of Common Stock held directly by Mr. Granoff; 9,375
shares of Common Stock issuable upon exercise of warrants held by Mr. Granoff;
6,000 shares of Common Stock to be issued upon exercise of warrants held by
Leslie Granoff, wife of Gary C. Granoff, 6,000 shares of Common Stock issuable
upon exercise of warrants held by Dapary Management Corp., a company controlled
by Mr. Granoff; 18,750 shares of Common Stock held by , and 9,375 shares of
Common Stock issuable upon exercise of warrants held by Gemini Capital, a
company in which Mr. Granoff is a minority shareholder and director; and 12,000
shares of Common Stock issuable upon exercise of warrants held by JR Realty
Corporation, a company in which Mr. Granoff is an officer and Mr. Granoff's wife
is a shareholder. Mr. Granoff disclaims beneficial ownership of the JR Realty
Corporation securities and this disclosure shall not be deemed an admission that
Mr. Granoff is the beneficial owner of such securities. Mr. Granoff disclaims
beneficial ownership of the Gemini Capital Corporation, Dapary Management Corp.,
and Leslie Granoff securities, except to the extent of his pecuniary interest
therein.
/5/Includes 75,000 shares of Common Stock issuable upon exercise of options held
by Mr. Rice.
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EXECUTIVE COMPENSATION
Enviro-Clean believes that compensation of its executive officers and
others should be directly and materially linked to operating performance and
occurrences of certain events attributable to performance. For fiscal year 1999,
the executive compensation program consisted of the base salary and a bonus plan
based on the profitability of Enviro-Clean and individual performance.
Employment Agreements
In October of 1999, Enviro-Clean entered into an employment agreement with
Richard Kandel for a term of three years, whereby Mr. Kandel's salary for the
year ending December 31, 1999, was $100,000 per annum, and increased by $100,000
per annum on January 1, 2000 and shall increase by $100,000 per annum on January
1, 2001. The employment period shall automatically renew annually for a new
three-year term unless, no later than 30 days prior to the end of the first year
of each three-year term, either Enviro-Clean or Mr. Kandel provides notice to
the other party of its intention not to extend the employment period beyond the
then current three-year term.
In addition to the base compensation, Mr. Kandel's employment agreement
provides for an annual bonus payment for each of the fiscal years during the
time of employment equal to $15,000 upon the occurrence of each of the following
events:
(a) listing of Enviro-Clean's shares on NASDAQ, a comparable inter-dealer
automated quotation system, or recognized exchange;
(b) Enviro-Clean achieves revenues, as defined in Mr. Kandel's employment
agreement, for any monthly period that would, if annualized, equal $50
million or more in revenues;
(c) Enviro-Clean achieves revenues for any monthly period that would, if
annualized, equal $75 million or more in revenues; or
(d) Enviro-Clean achieves revenues for any monthly period that would, if
annualized, equal $100 million or more in revenues.
Mr. Kandel's employment agreement specifies various circumstances that may
trigger a termination of Mr. Kandel's employment. If Enviro-Clean terminates Mr.
Kandel's employment without cause or for any reason not specified in the
agreement, or if such employment is terminated by Mr. Kandel for "Good Reason"
as defined in the agreement, then Enviro-Clean shall pay Mr. Kandel his full
salary, bonus and benefits through the date of the termination of the agreement,
or, in lieu of salary payments, Enviro-Clean must pay as severance pay an amount
equal to the remainder of the salary, bonus and value of fringe benefits which
Mr. Kandel would be entitled to receive for the remaining employment period.
"Good Reason" is defined as when there is a change in control of Enviro-Clean,
as defined in Mr. Kandel's employment agreement, and one or more of the
following events occurs:
(a) the assignment to Mr. Kandel of any duties inconsistent with his status as
Chief Executive Officer of the Company, his removal from the position of
Chief Executive Officer of Enviro-Clean, or a substantial alteration in
the nature or status of his responsibilities from those in effect
immediately prior to the change in control;
(b) a reduction by Enviro-Clean of Mr. Kandel's annual base salary in effect on
the date immediately prior to the change in control;
(c) the relocation by Enviro-Clean's principal executive offices to a location
more than twenty-five miles from its present location or a requirement that
Mr. Kandel shall be based anywhere other than Enviro-Clean's principal
executive offices except for required travel on Enviro-Clean's business to
an extent substantially consistent with his business travel obligations
prior to the change in control;
(d) the failure by Enviro-Clean to continue in effect any bonus plan in which
Mr. Kandel was participating immediately prior to the change in control; or
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(e) the failure by Enviro-Clean to continue to provide Mr. Kandel with benefits
at least as favorable as those enjoyed by him under any of Enviro-Clean's
pension, life insurance, medical, health and accident, disability, deferred
compensation or savings plans in which he was participating at the time of
the change in control, the taking of any action by Enviro-Clean which would
directly or indirectly materially reduce any of such benefits or deprive
him of any material fringe benefit enjoyed by him at the time of the change
in control, or the failure by Enviro-Clean to provide Mr. Kandel with the
number of paid vacation days to which he was entitled at the time of the
change in control.
In October of 1999, Enviro-Clean entered into an employment agreement with
Randall K. Davis for a term of three years whereby Mr. Davis' salary for the
year ending December 31, 1999 was $50,000, increased by $100,000 per annum on
January 1, 2000, and shall increase by $100,000 per annum on January 1, 2001.
The employment period shall automatically renew for successive one-year terms
unless, not later than 90 days prior to the end of the three-year term, or any
renewal periods, either Enviro-Clean or Mr. Davis provides notice to the other
party of its intention not to extend the employment period beyond the three-year
term or the then current renewal term.
In addition to the base compensation, Enviro-Clean agrees to pay Mr. Davis
an annual bonus payment for each of the fiscal years during his employment
period equal to $10,000 upon the occurrence of each of the same events as
described in the bonus description of Mr. Kandel's employment agreement.
If Mr. Davis is terminated without cause, or outside the termination
provisions of the agreement, Mr. Davis shall be entitled to the full salary,
bonus, and benefits through the date of termination of the agreement.
In October of 1999, Mr. Davis also entered into an employment agreement
with Cleaning Ideas Corporation or "CIC," a subsidiary of Enviro-Clean, for a
term of five years at an annual salary of $50,000. Under the terms of his
employment agreement with CIC, Mr. Davis is eligible for annual bonuses to be
determined by the board of directors of CIC, such board currently consisting of
Messrs. Kandel and Davis. If Mr. Davis' employment is terminated without cause,
Mr. Davis is entitled to severance pay equal to the amount of salary and bonuses
for a period of six weeks to twelve months, depending on Mr. Davis' length of
employment at the termination.
Steven Etra, the Secretary and Treasurer and a Director of Enviro-Clean,
entered into a consulting agreement with Enviro-Clean dated March 1, 1999, for a
term of one year. The agreement shall automatically be renewed for successive
periods of one year unless either party gives written notice to the other of
its intention not to renew the agreement. Such notice shall be given at least
sixty days prior to the end of the initial term or any renewal term, as the case
may be. Under the original terms of the consulting agreement, Mr. Etra was to
receive a monthly fee of $2,000 for financial public relations services. At a
meeting of the Board held on March 9, 2000, the Board increased the compensation
under the contract to $4,000 per month.
Summary Compensation Table
The Summary Compensation Table shows certain compensation information for the
year ended December 31, 1999, for the Chief Executive Officer and each of the
other four most highly compensated executive officers whose total cash
compensation exceeded $100,000 for services rendered in all capacities for the
year ended December 31, 1999. Neither the Chief Executive Officer nor other
executive officers received compensation from Enviro-Clean prior to January 1,
1999. The annual base compensation for each of Messrs. Kandel and Davis for 1999
are:
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<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
Awards Payouts
---------------------------------------
Other Restricted
Bonus Annual Stock LTIP All Other
Name And Principal Salary ----- Compen- Awards Options Payout Compen-
Position Year ($) ($) sation($) ($) (#) ($) sation ($)
-------- ---- --- --- --------- --- --- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard Kandel 1999 100,000 - - - - - -
Chairman of the Board and
Chief Executive Officer
Randall K. Davis 1999 100,000 (1) - - - - - -
President
</TABLE>
(1) Includes $50,000 paid to Mr. Davis as President of CIC, a subsidiary of
Enviro-Clean.
___________________
There were no additional bonuses or other compensation paid to these
officers in 1999.
None of the executives received any compensation from Enviro-Clean during
the year ended December 31, 1998. For the year ended December 31, 1998, Mr.
Kandel received an annual salary of $100,000 from Kandel & Son in his prior
capacity as the President.
Enviro-Clean implemented a stock incentive plan for its executive
management and employees as of January 3, 2000. However, as of the date of this
Proxy Statement, no grants have been made under the stock incentive plan.
However, on April 15, 1999, Steven Etra, a shareholder, director and
officer of Enviro-Clean was granted options to purchase 125,000 shares of
Common Stock at an exercise price of $3.50 per share for a six year period, SRK
Associates, Inc., a company controlled by Steven Etra, was granted options to
purchase 25,000 shares of Common Stock at an exercise price of $3.50 per share
for a six year period, and Robert Moehler, a former director of Enviro-Clean,
was granted options to purchase 25,000 shares of Common Stock at an exercise
price of $4.25 for a three year period. These issuances were not issued pursuant
to any option plan.
Stock Option Grant Table
The following table sets forth certain information concerning options
granted to the named executive officers during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of Securities Percent of Total Options Exercise or
Underlying Options Granted to Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/share) Date
---- ---------- ----------- --------- ----
<S> <C> <C> <C> <C>
Steven Etra 150,000 (1) 100% $3.50 4/15/05
</TABLE>
(1) Includes 25,000 options issued to SRK Associates L.L.C., a company
controlled by Mr. Etra
10
<PAGE>
Stock Option Exercises
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Shares Acquired Value Options at Fiscal Year End Options at Fiscal Year-End
on Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --- --- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Steven Etra 0 0 150,000 / 0 $506,250 / 0
</TABLE>
No options to acquire securities of Enviro-Clean were exercised by any of
the named executive officers during the year ended December 31, 1999.
COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Enviro-Clean's directors, executive officers and beneficial owners of more than
10% of any class of securities of Enviro-Clean to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Directors,
executive officers and greater than 10% shareholders are required to furnish
Enviro-Clean with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no such forms were
required to be filed by those persons, Enviro-Clean believes that, during the
year ended December 31, 1999, all of its directors and executive officers were
in compliance with the applicable filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 22, 1998, Steven Etra, the Secretary and Treasurer and a
director of Enviro-Clean purchased 70,000 shares of Enviro-Clean's Series E
Convertible Redeemable Preferred Stock (the "Series E Stock") for $175,000. The
Series E Stock was created specifically for the purposes of Mr. Etra's
investment and (i) has a stated value of $2.50 per share, (ii) pays an annual
dividend equal to 3% of the stated value, (iii) is convertible into shares of
Common Stock, par value $.001 per share, of Enviro-Clean at a conversion price
of $2.50 per share and (iv) may be redeemed by Enviro-Clean at any time after
December, 2000, at a redemption price of $3.50 per Series E Stock so redeemed.
These conversion and redemption prices are subject to adjustment in the event of
recapitalization, stock splits and other enumerated extraordinary corporate
events.
Mr. Kandel, Chairman, Chief Executive Officer and Treasurer of Enviro-
Clean, was formerly President and the principal shareholder of Kandel & Son, a
company which is currently a principal subsidiary of Enviro-Clean. Thomas B.
Haines, a former director of Enviro-Clean, was formerly Chairman of NISSCO which
is also currently a principal subsidiary of Enviro-Clean, and its NIPPCO
division. The terms of the Kandel & Son and NISSCO acquisitions were negotiated
between Messrs. Kandel and Haines and the Board, which at the time was comprised
of Robert W. Moehler and Mary Magourik.
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<PAGE>
Enviro-Clean signed preliminary agreements to acquire all the issued and
outstanding capital stock of Kandel & Son in September of 1998 and of NISSCO in
October of 1998. Additional negotiations for both companies were finalized on
January 15, 1999. Pursuant to the agreements, Enviro-Clean assumed $665,596 of
debt of Kandel & Son, consisting of amounts due and owing in respect of
principal and interest to (i) Citibank, N.A. of $99,914, (ii) miscellaneous
other debt of $183,329, and (iii) shareholder loans from Mr. Kandel totaling
$382,353 which Enviro-Clean has paid. Mr. Kandel, as sole shareholder of Kandel
& Son, received consideration equal to (1) $684,404 (including prior deposits)
in the form of cash and a promissory note, and (2) 500,000 shares of Series A
Convertible Preferred Stock (the "Series A Stock"), a class of securities
created specifically for the Kandel & Son transaction. Enviro-Clean paid the
full amount due under that promissory note to Mr. Kandel and the note no longer
remains outstanding. The shares of Series A Stock (a) bear an annual dividend
of 4%, and (b) are convertible into shares of Common Stock of Enviro-Clean at a
conversion price of $5.00 per share. Originally, the Series A Stock was
redeemable by Enviro-Clean at Mr. Kandel's option at a redemption price of $5.00
per share at any time after January 15, 2001 and the conversion price was $2.50
per share. However, Mr. Kandel, as the sole holder of the Series A Stock, and
Enviro-Clean entered into an agreement effective on September 30, 1999, in which
the certificate of designation for the Series A Stock would be amended to remove
Mr. Kandel's ability to put the Series A Stock to Enviro-Clean and increased the
conversion price from $2.50 to $5.00 per share.
Thomas B. Haines, as sole shareholder of NISSCO, received $500,000 in
cash, and 250,000 shares of Common Stock in connection with the sale of NISSCO
to Enviro-Clean. In addition, Mr. Haines was to receive an aggregate of an
additional 750,000 shares of Common Stock in installments of 250,000 shares,
which were issued on January 15 of 2000, and 500,000 shares of Common Stock were
to be issued on January 15, 2001, subject to adjustment as described in the
acquisition agreement. On April 6, 2000, Enviro-Clean's Board of Directors
unanimously consented to issue the remaining 500,000 shares to Mr. Haines in
April 2000 as consideration to accommodate a settlement agreement in which Mr.
Haines and NISSCO/Sunline Inc., a subsidiary of Enviro-Clean, will eventually
terminate Mr. Haines employment relationship.
Steven Etra, director, Secretary and Treasurer of Enviro-Clean, has
entered into a consulting agreement with Enviro-Clean dated March 1, 1999 for a
period of one year pursuant to which Mr. Etra receives a monthly fee of $4,000
for financial public relations services which includes assisting Enviro-Clean in
communicating with investment bankers, financial analysts and potential
investors.
In April and June of 1999, Colnic Investment Corp., a private investment
company controlled by Mr. Davis, President of Enviro-Clean and President of CIC,
purchased an aggregate of 100,000 shares of Enviro-Clean's Common Stock at a
purchase price of $2.50 per share for an aggregate investment of $250,000. The
investments were made in two purchases of $125,000 each.
In June of 1999, Enviro-Clean offered units of securities in a private
placement in which some of the directors' and officers' affiliates participated.
The units consisted of one 12.75% Subordinated Promissory Note in the principal
amount of $10,000 and 2,400 common stock warrants at an exercise price of $4.25
per share, exercisable for a four-year from the date that is 180 days from the
date of issuance, and were offered at a price of $10,000 per unit. On June 1,
1999, Blair Etra, the wife of Mr. Etra, director, Secretary and Treasurer of
Enviro-Clean, purchased one unit for $10,000. In addition, several affiliates of
Mr. Granoff, who was subsequently elected to Enviro-Clean's Board, participated
in this offering. On June 1, 1999, Leslie Granoff, wife of Mr. Granoff,
purchased 2.5 units for $25,000; Dapary Management Corporation, a company
controlled by Mr. Granoff, purchased 2.5 units for $25,000; JR Realty
Corporation, a company in which the wife of Mr. Granoff, is a principal
shareholder, purchased five units for $50,000;
On July 13, 1999, Enviro-Clean issued 25,000 shares of Common Stock to
Harrington, Ocko & Monk, LLP, an outside counsel to Enviro-Clean, at a price of
$5.00 per share in consideration for legal services rendered.
Effective August 1, 1999, Enviro-Clean acquired CIC. Prior to its
acquisition by Enviro-Clean, CIC was owned by Mr. Davis, President of Enviro-
Clean, and his parents, Charles H. Davis and Carolyn
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<PAGE>
Davis. According to the purchase agreement, the consideration for the merger
included: (a) $500,000 in cash; (b) a secured promissory note in the original
principal amount of $900,000 (the "Davis Note") payable to Charles H. Davis; and
(c) 320,000 shares of the Series D Cumulative Convertible Preferred Stock (the
"Series D Stock"), a class of securities created specifically for the
transaction of which 250,000 shares are held by Mr. Davis and 70,000 shares are
held by Charles H. Davis. In connection with the merger, Enviro-Clean entered
into a Pledge and Security Agreement to secure the payment of the Davis Note.
Furthermore, Enviro-Clean granted piggyback registration rights for the shares
of Common Stock into which the Series D Stock is convertible.
In connection with the acquisition of CIC, CIC subsequently entered into
employment agreements for a period of five years beginning August 1, 1999 with
Mr. Davis, President of Enviro-Clean, with an annual salary of $50,000 per year,
and with Charles H. Davis, father of Mr. Davis, with an annual salary of $15,000
per year.
In connection with the purchase of CIC in August of 1999, CIC entered into
four leases to rent parcels of real estate. These leases include:
(a) a five-year triple net lease for 1023 Morales Street in San Antonio, Texas,
for the administrative offices and manufacturing facilities at an annual
rental of $70,872, by and between CIC and Charles H. Davis;
(b) a five-year triple net lease for 724 Perez Street in San Antonio, Texas,
for a warehouse and distribution facility at an annual rental of $21,060,
by and between CIC and Charles H. Davis;
(c) a five-year triple net lease for 723 Perez Street in San Antonio, Texas,
for a warehouse at an annual rental of $29,592, by and between CIC and
Charles H. Davis; and
(d) a five-year triple net lease for 401 Main Street in Kerrville, Texas, for a
Cleaning Ideas store at an annual rental of $60,000, by and among CIC, Mr.
Davis and his father, Charles H. Davis.
Effective on September 30, 1999, Enviro-Clean entered into an agreement
with Mr. Kandel, Chairman, Chief Executive Officer and Treasurer of Enviro-
Clean, pursuant to which Mr. Kandel, as sole holder of the Series A Stock,
consented to the amendment of the Certificate of Designation for the Series A
Stock to remove the ability of the holder of the Series A Stock to put the
Series A Stock to Enviro-Clean at any date after January 15, 2001 and to
increase the conversion price of the Series A Stock from $2.50 to $5.00.
In December of 1999, Enviro-Clean offered units of securities in a private
placement in which several directors and officers, and their affiliates
participated. The units consisted of 100 shares of Series B Preferred Stock and
1000 common stock warrants at an exercise price of $5.00 per share, exercisable
for a five year period upon issuance, and were offered at a price of $10,000 per
unit. On December 15, 1999, Blair Etra, the wife of Steven Etra, director,
Secretary and Treasurer of Enviro-Clean, purchased thirteen units, for $130,000;
SRK Associates, LLC, a company controlled by Mr. Etra, purchased six units for
$60,000; Lances Property Development Pension Plan, a company 50% owned by Steven
Etra, purchased four units for $40,000; Irving Etra Family Trust, in which Mr.
Etra is a beneficiary, purchased five units for $50,000; and Gary Granoff, a
director of Enviro-Clean, purchased five units for $50,000. On December 30 1999,
as a part of the same private placement, Barry Gordon, a former director of
Enviro-Clean, purchased two and a half units for $25,000.
In February 2000, Enviro-Clean offered units of securities in a private
placement in which several directors and officers, and their affiliates
participated. The units consisted of two shares of Common Stock and one Common
Stock purchase warrant at an exercise price of $4.25 per share, exercisable for
a three-year period upon issuance, and were offered at a price of $8.00 per
unit. On February 28, 2000, Steven Etra, director, Secretary and Treasurer of
Enviro-Clean, purchased 25,000 units for $200,000; Irving Etra Family Trust, in
which Mr. Etra is a beneficiary, purchased 12,500 units for $100,000; SRK
Associates, LLC, a company controlled by Mr. Etra, purchased 6,250 units for
$50,000; Leslie Granoff, wife of Gary Granoff, a director of Enviro-Clean,
purchased 3,125 units for $25,000; and Gemini Capital Corporation, a company in
which Mr. Granoff is a director and the President and in which Mr. Etra is a
director, purchased 9,375 units for $75,000.
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<PAGE>
Prior to the initial public offering of b2bstores.com, Inc., ("b2bstores")
a California-based designer and producer of Internet-based electronic commerce
programs and on-line "stores, " on February 15, 2000, Enviro-Clean, Messrs.
Kandel, Davis and Etra were the principal shareholders of b2bstores. Since its
inception in June 1999 until the initial public offering, b2bstores' working
capital requirements had been satisfied through capital contributions made by
Enviro-Clean, Messrs. Kandel, Davis and Etra and loans made to it by Enviro-
Clean. In June 1999, Enviro-Clean, Messrs. Kandel, Davis, Etra, and others
purchased an aggregate of 3,410,000 shares of b2bstores common stock for $27,500
in the form of $11,000 in cash and the transfer to b2bstores of all of rights
and interest in www.b2bstores.com and all related assets, including intellectual
property.
Pursuant to the agreement dated October 1, 1999 (the "b2b Agreement")
between Enviro-Clean and b2bstores, b2bstores has implemented Enviro-Clean's
initial eCommerce web site (http://www.b2bgoods.com). Enviro-Clean's
"b2bgoods.com" web site currently offers about 25,000 janitorial and sanitary
products and other office supply products for electronic purchases. B2bstores
also provides Enviro-Clean with web site transaction processing and e-commerce
services for its b2bgoods.com web site through b2bstores' e-commerce backbone.
For these services, b2bstores is to receive from Enviro-Clean a fee equal to the
greater of (a) 10% of Enviro-Clean's revenues generated through e-commerce
activities conducted through www.b2bgoods.com or (b) 50% of Enviro-Clean's gross
profits generated through e-commerce activities conducted at www.b2bgoods.com.
The b2b Agreement also provides that b2bstores will host on-line stores at
its web site (http://www.b2bstores.com), through which Enviro-Clean's products
will be offered for electronic purchases. All of Enviro-Clean's products
purchased through b2bstores' web site are to be distributed directly to
b2bstores' customers by Enviro-Clean through its distributor network. Enviro-
Clean will charge b2bstores a price for each product equal to its cost for the
product and will receive 2-5% of the gross payment that the end-users will make
for each product sold at such on-line stores hosted on the b2bstores web site.
Enviro-Clean has also agreed that, in connection with its eCommerce program,
Enviro-Clean will sell its products on the Internet only through the
b2bgoods.com or the b2bstores.com site until it owns less than 10% of b2bstores'
outstanding common stock.
In June, July, November, December 1999 and January 2000, Enviro-Clean made
loans to b2bstores in the aggregate principal amount of approximately
$1,199,836. These loans carried an interest rate of 8% per annum and were paid
in full on February 18, 2000. In August 1999 in a private offering by b2bstores,
Mr. Kandel purchased 66,666 shares at $1.88 per share, Mr. Kandel and Son Profit
Sharing Plan, of which Mr. Kandel is the trustee, purchased 100,000 shares at
$1.88 per share, Steven Etra purchased 92,000 shares at $1.88 per share, and SRK
Associates, Inc., a company controlled by Mr. Etra, purchased 10,667 shares at
$1.88 per share.
B2bstores completed its initial public offering on February 15, 2000 in
which it issued 4,000,000 shares of its common stock. Immediately before the
b2bstores' initial public offering of February 15, 2000, Enviro-Clean owned
2,000,000 shares of the b2bstores common stock, constituting approximately 49.7
% of the total outstanding b2bstores common stock while Messrs. Kandel, Davis
and Etra each owned additional 1,233,333 shares (30.7%), 333,333 shares (8.3%)
and 169,334 shares (4.2%) of b2bstores common stock, respectively.
On February 15, 2000, Steven Etra purchased 30,000 shares and Gemini
Capital LLC, a company in which Mr. Etra is an officer, director, and minority
shareholder, purchased 3,500 shares of b2bstores' common stock at $8.00 per
share as part of the initial public offering. Also on February 15, 2000, after
trading of b2bstores' registered shares commenced, Mr. Etra purchased 2,000
shares at $7.625 per share. On February 25, 2000, Lances Property Development
Pension Plan, a company 50% owned by Mr. Etra, purchased 1,000 shares of
b2bstore common stock at $12.625.
On March 13, 2000, after the public offering of b2bstores common stock, and
the additional purchases of b2bstores' common stock by Steven Etra and his
affiliates, Enviro-Clean, Messrs. Kandel,
14
<PAGE>
Davis, and Etra each owned approximately 24.9%, 15.4%, 4.1% and 2.5% of the
outstanding b2bstores common stock, respectively.
Enviro-Clean, Messrs. Kandel, Davis, and Etra entered into lock-up
agreements (the "Lock-Up Agreements") in favor of Gaines Berland, Inc. and Nolan
Securities, Inc. (the "Underwriters") in connection with the b2bstores' initial
public offering, which restricted certain dispositions of the shares which were
beneficially held by Enviro-Clean, Messrs. Kandel, Davis, and Etra immediately
prior to the initial public offering for a one year period commencing February
15, 2000. On March 14, 2000, the Underwriters granted a waiver under the Lock-Up
Agreement to permit Enviro-Clean to sell 1,000,000 of its 2,000,000 shares. Upon
receiving the waiver, Enviro-Clean sold 1,000,000 shares of the Common Stock in
a private placement to ZERO.NET, Inc., a Delaware corporation, at $7.00 per
share for an aggregate of $7,000,000. The shares purchased by ZERO.NET, Inc.
will also be subject to a twelve month lock-up agreement. After Enviro-Clean's
sale to ZERO.NET, Inc., Enviro-Clean owned 1,000,000 shares of the b2bstores'
common stock, constituting 12.5% of the total outstanding b2bstore common stock
as of March 20, 2000. The sale of the 1,000,000 shares of b2bstores common
stock is described in Enviro-Clean's Current Report on Form 8-K filed with the
SEC on March 20, 2000.
Enviro-Clean has also furnished some of b2bstores' vendors with guarantees
with respect to b2bstores' obligations to them. As of January 1, 2000,
b2bstores owes in aggregate less than $10,000 to such vendors to whom Enviro-
Clean provided guarantees. Enviro-Clean has also provided a guaranty for
b2bstores' lease and signed such lease as the guarantor. The b2bstores' lease
expires on August 31, 2001 with yearly rent payment totaling $75,000. Enviro-
Clean received no compensation or other consideration for acting as b2bstores'
guarantor.
Mr. Kandel, the Chairman and Chief Executive Officer of Enviro-Clean,
serves as the Chairman of the Board of b2bstores, Inc. He has entered into a
three-year employment agreement with b2bstores effective November 1999. Pursuant
to the terms of such agreement, Mr. Kandel will be required to devote 50% of his
business time to the operations of b2bstores. Mr. Kandel's position as a
director, officer and shareholder of each of Enviro-Clean and b2bstores may
create or appear to create potential conflicts of interest when he is faced with
decisions that could have different implications for Enviro-Clean and b2bstores.
These decisions may relate to:
. potential acquisitions of businesses;
. intercompany agreements;
. the establishment of e-commerce marketing arrangements and other areas
of competition;
. the issuance or disposition of securities; and
. the election of directors.
Given Mr. Kandel's roles with both Enviro-Clean and b2bstores and the
potentially competitive position of each business, he may not always be able to
align his interest with the interests of both businesses. Mr. Kandel will
refrain from participating in any decisions or other action as a director or
officer of either company if it presents such a conflict of interest.
In addition, Randall Davis, the President and a director of Enviro-Clean,
and Steven Etra, director, Secretary and Treasurer of Enviro-Clean, hold 4.1%
and 2.1% respectively of the b2bstores.com common stock as of February 16, 2000.
Messrs. Davis' and Etra's positions as directors, officers, and shareholders of
Enviro-Clean and as shareholders of b2bstores may create or appear to create
potential conflicts of interest when they are faced with decisions that could
have different implications for Enviro-Clean and b2bstores. Both Mr. Davis and
Mr. Etra will refrain from participating in any decisions or other actions as
directors or officers of Enviro-Clean if it presents such a conflict of
interest.
15
<PAGE>
On March 14, 2000, Enviro-Clean's Board of Directors approved a resolution
allowing Enviro-Clean to redeem 320,000 shares of the outstanding Series D
Cumulative Convertible Preferred Stock (the "Series D Stock") at a redemption
price of $5.00 per share, plus accrued and unpaid dividends. Upon the redemption
of the Series D Stock, Randall K. Davis, President and Director of Enviro-Clean,
who held 250,000 shares of the Series D Stock, received $1,272,711.75, while the
remaining amount of $356,359.29 went to Charles Davis, father of Randall K.
Davis and the holder of the remaining 70,000 outstanding shares of Series D
Stock.
On April 1, 2000, 20,790 outstanding shares of the Series B Cumulative
Convertible Preferred Stock (the "Series B Stock") plus accrued and unpaid
dividends, were converted to Enviro-Clean's Common Stock at a conversion price
of $5.00 per share of Common Stock. This resulted in an issuance of 426,195
shares of the Common Stock. There were several directors and officers and their
affiliates who participated in the conversion of the Series B Shares. On April
1, 2000, SRK Associates, LLC, a company controlled by Steven Etra, director,
Secretary and Treasurer of Enviro-Clean, converted 600 shares of Series B Stock,
plus accrued and unpaid dividends, into 12,300 shares of Common Stock; Lances
Property Development Pension Plan, a company 50% owned by Mr. Etra, converted
400 shares of Series B Stock, plus accrued and unpaid dividends, into 8,200
shares of Common Stock; Irving Etra Family Trust, in which Mr. Etra is a
beneficiary, converted 500 shares of Series B Stock, plus accrued and unpaid
dividends, into 10,250 shares of Common Stock; Gary Granoff, a director of
Enviro-Clean, converted 500 shares of Series B Stock, plus accrued and unpaid
dividends, into 10,250 shares of Common Stock; and Barry Gordon, a former
Director of Enviro-Clean, converted 250 shares of Series B Stock, plus accrued
and unpaid dividends, into 5,125 shares of Common Stock. In addition, the
remaining 4,800 outstanding shares of Series B Stock were redeemed at the
conversion price of $100.00 per share of Series B Stock plus accrued and unpaid
dividends. Blair Etra, the wife of Mr. Etra, redeemed 1,300 shares of Series B
Stock, plus accrued and unpaid dividends, at a price of $100.00 per share for a
total of $133,250.
On April 1, 2000, subsequent to the conversion and redemption of all Series
B Stock, Enviro-Clean redeemed 500,000 shares of the outstanding Series A
Convertible Preferred Stock (the "Series A Stock") at a redemption price of
$5.00 per share, plus accrued and unpaid dividends. Upon the redemption of the
Series A Stock, Richard Kandel, Chairman of the Board and Chief Operating
Officer of Enviro-Clean, received $2,500,000.00, plus accumulated and unpaid
dividends.
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PROPOSAL 2: APPROVAL OF THE 2000 STOCK
INCENTIVE PLAN
On January 3, 2000, the Board adopted the Enviro-Clean of America, Inc.
2000 Stock Incentive Plan (the "Plan") for the purpose of providing Enviro-Clean
an effective means to attract, retain and encourage qualified individuals to
serve Enviro-Clean with a high degree of commitment. A brief description of the
major provisions of the Plan is set forth below to facilitate an informed
decision by the shareholders entitled to vote on the approval of the Plan.
However, the summary description is qualified in its entirety by the full text
of the Plan, a copy of which is attached hereto as Appendix A.
Overview of Awards
The following types of awards may be granted under the Plan: (i) incentive
stock options ("Incentive Options"), (ii) nonqualified stock options
("Nonqualified Options"), (iii) rights to receive all or some portion of the
increase in value of the Common Stock ("Stock Appreciation Rights"), (iv) the
right to receive all or some portion of cash dividends with respect to the
Common Stock ("Dividend Equivalent Rights"), (v) rights to receive cash and/or
Common Stock contingent upon the attainment of defined performance goals
("Performance Awards"), and (vi) shares of Common Stock subject to temporary
restrictions on transfer ("Restricted Stock") (collectively, "Awards"). Eligible
individuals under the Plan include employees, officers and directors of Enviro-
Clean or a subsidiary of Enviro-Clean or consultants or advisors receiving cash
compensation from Enviro-Clean or a subsidiary of Enviro-Clean.
Administration
The Plan will be administered by a committee which shall consist of at
least two directors and may consist of the entire Board (the "Plan Committee").
The Plan Committee will have broad discretion, subject to the terms of the Plan,
to designate the recipients of Awards, prescribe the terms and conditions of
Awards and establish rules and regulations for administration of the Plan.
Under the Plan, members of the Plan Committee are not liable for their
actions taken in a good faith attempt to administer the Plan and are entitled to
indemnification from Enviro-Clean to the extent permitted by law in connection
with claims asserted in regard to administration of the Plan.
Stock Subject to the Plan
The maximum number of shares of Common Stock that may be the subject of
Awards under the Plan is 1,500,000. Upon the expiration, cancellation or
termination of an Award (other than by reason of exercise), the shares
previously subject to such Award may again be the subject of Awards granted
under the Plan.
Summary of Incentive Options and Nonqualified Options
The exercise price for Incentive Options and Nonqualified Options will be
determined by the Plan Committee; provided, however, the exercise price for each
Incentive Option may not be less than 100% of the fair market value of the
Common Stock on the date the option is granted (110% in the case of an Incentive
Option granted to an individual owning more than 10% of the voting stock of
Enviro-Clean (a "10% Shareholder"). Incentive Stock Options may not be granted
under the Plan subsequent to January 3, 2010.
Each Option granted under the Plan other than Director Options will be
exercisable according to the terms established by the Plan Committee. In the
case of Directors Options, the Board will grant the
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<PAGE>
options and such Director Options will be exercised according to the terms
established by the Board. In no event, however, will an Option, including a
Directors Option, be exercisable after the expiration of ten years from the date
of grant (five years for a 10% Shareholder).
Options are not transferable except by will or the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 under the Exchange Act), and are exercisable only by the optionee or
his or her legal guardian or legal representative.
The purchase price payable upon the exercise of an Option is payable in
cash, by delivery of an equivalent fair market value of Common Stock, by
cashless exercise procedures or by a combination of the foregoing, as determined
by the Plan Committee. No fractional shares will be issuable upon exercise of an
Option, and the number of shares issuable will be rounded to the nearest whole
number.
Summary of Stock Appreciation Rights
A Stock Appreciation Right is the right to receive an amount equal to the
excess of the fair market value of a share of Enviro-Clean's Common Stock on the
date of exercise over the fair market value of a share of Common Stock on the
date of grant (in the case of Stock Appreciation Rights granted independent of a
Stock Option) or the exercise price of the related Stock Option (in the case of
a Stock Appreciation Right granted in tandem with a Stock Option). Stock
Appreciation Rights may be granted in connection with Stock Options or as a
separate award unrelated to Stock Options. The exercisability of Stock
Appreciation Rights granted in connection with Stock Options will be governed by
the exercisability of the related Options. The amount payable to the holder upon
the exercise of a Stock Appreciation Right is based on the difference between
the fair market value of Enviro-Clean's Common Stock on the date preceding
exercise and the exercise price of the Option in connection with which the Stock
Appreciation Right was granted (or the fair market value of Common Stock on the
date the Stock Appreciation Right was granted if it was not granted in
connection with an Option). However, the Plan Committee may establish a maximum
amount payable upon the exercise of a Stock Appreciation Right. The amount
payable to a holder upon the exercise of a Stock Appreciation Right may be paid
in the form of Common Stock or cash or a combination thereof, as determined by
the Plan Committee.
Summary of Dividend Equivalent Rights
Dividend Equivalent Rights may be granted in conjunction with other Awards
or as a separate Award. The Plan Committee will determine the terms and
conditions of the Dividend Equivalent Rights and, specifically, will determine
whether amounts payable will be paid on a current or deferred basis and whether
they will be settled in cash or stock in single or multiple installments.
Summary of Restricted Stock
Restricted Stock is the grant of shares of Common Stock or the right to
purchase Common Stock at a price determined by the Plan Committee, which is
nontransferable and subject to substantial risk of forfeiture until specific
conditions are met. Restricted Stock granted under the Plan will be subject to
restrictions on transfer and such other restrictions imposed by the Plan
Committee. No stock certificate representing Restricted Stock may be issued in
the name of the grantee until the grantee executes a written agreement, if any,
blank stock powers, if any, and an escrow agreement, if any, or other documents
required by the Plan Committee. Restricted Stock may not be sold, transferred
or pledged until the restrictions imposed by the Plan Committee have lapsed
according to the terms established by the Plan Committee. The Plan Committee
will determine whether dividend payments in respect of Restricted Stock will be
made currently or deferred until the lapsing of restrictions. The Plan
Committee may, at its discretion, deliver the restricted shares to the grantee
at the time of the award or hold the certificates itself, or through an escrow
agent. If the certificates are held, upon lapse of the restrictions, the
certificates representing the Restricted Stock will be delivered to the grantee,
in addition to any deferred dividends with interest accrued thereon. All
restrictions lapse upon a change in control of Enviro-Clean unless the Plan
Committee specifies otherwise in the written agreement.
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Summary of Performance Awards
Awards contingent upon the attainment of certain financial or other
objectives within a designated period of time may be granted by the Plan
Committee in the form of shares of Common Stock ("Performance Shares") or other
Awards ("Performance Units"). The performance objectives to be established in
writing by the Plan Committee may be expressed in terms of earnings per share,
share price, pre-tax profits, net earnings, return on equity or assets,
revenues, EBITDA, market share or market penetration, or a combination of the
foregoing with regard to Enviro-Clean or a subsidiary. The Plan Committee may
establish a ceiling on the amount payable under a Performance Award.
A grantee becomes vested in Performance Awards to the extent that the
established objectives are achieved during the designated measurement period,
and as soon as practicable following the end of such period, Enviro-Clean must
pay any amounts due in cash or Common Stock or a combination thereof.
Issuance of certificates representing Performance Shares may not occur
until the grantee executes a written agreement, blank stock powers and an escrow
agreement, if any, or such other documents required by the Plan Committee.
Certificates representing Performance Shares may not be delivered to the grantee
or sold, transferred or pledged prior to the attainment of the designated
objectives and fulfillment of other conditions established by the Plan
Committee. The Plan Committee may determine whether dividends in respect of
issued but undelivered Performance Shares will be paid currently or deferred and
paid with interest upon lapsing of the restrictions.
Adjustments
Upon the termination or change in status of employment of a grantee,
adjustments to the terms and conditions of Awards held by such grantee will be
made according to the terms established by the Plan Committee in the written
agreement respecting such Award.
Each Award granted by the Plan Committee must be evidenced by a written
agreement. Although the Plan Committee has the discretion to amend the terms of
an Award subsequent to the date of grant, it may not do so in a way that
adversely affects rights previously granted under the Plan.
The Plan Committee will also determine the appropriate adjustments to be
made to the terms of the Plan and Awards previously granted thereunder upon the
occurrence of certain events affecting the capitalization of Enviro-Clean
including, but not limited to, an increase or decrease in the number of issued
and outstanding shares of Common Stock or other changes in capitalization
resulting from a reclassification, recapitalization, merger, consolidation,
stock dividend, stock split or otherwise. Appropriate adjustments may be made to
the maximum number of shares and the class of shares or other securities with
respect to which Awards may be made, the maximum number of shares with respect
to which an individual may be granted Awards, the number and class of shares
subject to outstanding Awards, the exercise price of such outstanding Awards,
and the performance objectives upon which Performance Awards are based.
Upon a Change of Control (as defined in the Plan), (i) with respect to all
Stock Option Awards and Stock Appreciation Rights Awards, all of such Awards
shall become immediately exercisable, (ii) with respect to Restricted Stock
Awards, all restrictions upon such shares shall lapse, unless the Plan Committee
shall determine otherwise, and (iii) with respect to Performance Awards, such
Awards will be treated in the manner determined by the Plan Committee at the
time such Performance Awards were granted. In addition, to the extent set forth
in the applicable agreement relating to a Stock Option Award or Stock
Appreciation Right Award, upon a Change of Control, (i) the holder of a Stock
Option Award will have the right to a cash payment within sixty (60) days after
such Change of Control equal to the excess of fair market value of the shares
subject to such Stock Option on the date preceding the date of surrender over
the aggregate purchase price of the shares subject to such Stock Option, and
(ii) the holder of a Stock Appreciation Right Award will be entitled to receive
a cash or stock payment from Enviro-Clean with a value equal to the fair
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market value on the date preceding the date of exercise over the fair market
value of the shares subject to such Stock Appreciation Award on the date
granted.
Following any liquidation, dissolution, merger or consolidation of Enviro-
Clean, each holder of an Award is entitled to receive the same consideration
received in such transaction by each holder of Common Stock, subject to the
restrictions and other terms and conditions applicable to the Award.
Termination and Amendment of the Plan
The Plan will automatically terminate on January 3, 2010. In addition, the
Plan Committee may terminate, amend or suspend the Plan at any time provided
that such action does not adversely affect rights previously granted under the
Plan.
Federal Income Tax Consequences
An individual receiving Nonqualified Stock Options or Stock Appreciation
Rights will not recognize taxable income at the time the Nonqualified Stock
Options or Stock Appreciation Rights are granted. At the time the Nonqualified
Stock Options or Stock Appreciation Rights are exercised, the individual will
recognize ordinary taxable income in an amount equal to the difference between
the exercise price (or in the case of Stock Appreciation Rights granted
independent of Stock Options, the fair market value of the Common Stock at the
time of grant) and the fair market value of Common Stock on the date of
exercise. Enviro-Clean will be entitled to a concurrent deduction equal to the
ordinary income recognized by the individual, provided that Enviro-Clean
withholds taxes.
An individual granted an Incentive Stock Option will not recognize taxable
income at the time of grant or, subject to certain conditions, at the time of
exercise. The excess of the fair market value of the Common Stock received over
the exercise price is an item of tax preference income potentially subject to
the alternative minimum tax. If stock acquired upon exercise of an Incentive
Stock Option is held for a minimum of two years from the date of grant and one
year from the date of exercise, the gain or loss (in an amount equal to the
difference between the sales price and the exercise price) upon disposition of
the stock will be treated as long-term capital gain or loss, and Enviro-Clean
will not be entitled to any deduction.
If the holding period requirement is not met, the Incentive Stock Option
will be treated as one which does not meet the requirements of the Code for
Incentive Stock Options and the individual will recognize ordinary income in an
amount equal to the lesser of (i) the excess of the fair market value of Common
Stock on the date of exercise over the exercise price or (ii) the amount
realized on the sale of such stock over the exercise price.
An individual receiving Restricted Stock will not recognize taxable income
at the time of grant unless the individual elects otherwise as described in the
next paragraph. At the time the restrictions lapse, the individual will
recognize ordinary taxable income equal to the difference between the fair
market value of the Common Stock at the time the restrictions lapse and the
price, if any, paid for such Common Stock. Enviro-Clean will be entitled to a
deduction equal to the ordinary income reported by the individual, provided
Enviro-Clean withholds taxes. Any dividends received before the termination of
restrictions will be taxed as ordinary income. Upon the disposition of the
Common Stock, the individual will recognize capital gain or loss equal to the
difference between the fair market value of the Common Stock at the time the
restrictions lapse and the amount realized upon the disposition of the Common
Stock.
An individual may elect to report and recognize income at the time of grant
or purchase of Restricted Stock by filing an election under Section 83(b) of the
Code (a "Section 83(b) election"). If the individual makes a Section 83(b)
election, Enviro-Clean will be entitled to a deduction equal to the ordinary
income reported by the individual in the year of the election, provided Enviro-
Clean withholds taxes. However, dividends received before the restrictions lapse
will not be deductible by Enviro-Clean. Upon the disposition of the Common
Stock, the individual will recognize gain or loss equal to the
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difference between the amount realized and the sum of the income recognized by
the individual as a result of the Section 83(b) election and any amounts paid by
the individual for the Restricted Stock.
Special rules may apply with respect to individuals subject to Section
16(b) of the Securities Exchange Act of 1934. Other than in the case of an
Incentive Stock Option held in accordance with the specified holding period
requirements, the amount and timing of the recognition of income by an
individual subject to Section 16(b) (and the concurrent deduction by Enviro-
Clean) on the exercise of a Stock Option or Stock Appreciation Right generally
will be based on the fair market value of the shares received when the
restrictions of Section 16(b) lapse, unless the individual elects otherwise by
making a Section 83(b) election.
Vote Required
The affirmative vote of a majority of the shares of Common Stock present in
person or by proxy and entitled to vote at the Meeting is required in order to
approve the 2000 Stock Incentive Plan. If a shareholder executes and returns a
Proxy, but does not specify how the shares represented by such shareholder's
Proxy are to be voted, such shares will be voted FOR the approval of the 2000
Stock Incentive Plan. In determining whether this Item has received the
requisite number of affirmative votes, abstentions will be counted and will have
the same effect as a vote against this proposal. Broker non-votes will not be
counted and will have no effect.
The Board of Enviro-Clean recommends that the Enviro-Clean shareholders
vote "FOR" approval of the 2000 Stock Incentive Plan.
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PROPOSAL 3: SELECTION OF
INDEPENDENT AUDITORS
Enviro-Clean's financial statements for the year ended December 31, 1999
have been audited by Goldstein, Golub, & Kessler L.L.P., independent certified
public accountants. Representatives of Goldstein, Golub, & Kessler L.L.P. are
expected to be available telephonically at the Meeting to make a statement if
they desire to do so and to respond to appropriate questions.
The Board has appointed Goldstein, Golub, & Kessler L.L.P. as independent
auditors to audit the financial statements of Enviro-Clean for the year ending
December 31, 2000. Unless otherwise directed, the persons named in the
accompanying proxy will vote in favor of the ratification of the appointment of
Goldstein, Golub, & Kessler L.L.P.
The Board of Enviro-Clean recommends that the Enviro-Clean shareholders
vote "FOR" the ratification of Goldstein, Golub, & Kessler L.L.P. as independent
auditors for the year ending December 31, 2000.
SHAREHOLDER PROPOSALS
A proper proposal submitted by an Enviro-Clean shareholder for
consideration at Enviro-Clean's 2001 Annual Meeting of Shareholders and received
at Enviro-Clean's executive offices no later than January 8, 2001, will be
included in Enviro-Clean's Proxy Statement and form of proxy relating to such
Annual Meeting. If the proposal is adopted, it will be included in the
information statements distributed to shareholders.
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GENERAL
Neither management nor the Board knows of any matter to be acted upon at
the meeting other than the matters described above. If any other matter properly
comes before the Meeting, however, the proxy holders will vote thereon in
accordance with their best judgment.
The cost of soliciting proxies will be borne by Enviro-Clean. Following
the original mailing of the proxy soliciting material, regular employees of
Enviro-Clean may solicit proxies by mail, telephone, telegraph and personal
interview. Proxy cards and materials will also be distributed to beneficial
owners of stock, through brokers, custodians, nominees and other like parties,
and Enviro-Clean expects to reimburse such parties for their charges and
expenses connected therewith.
A copy of Enviro-Clean's Annual Report on Form 10-KSB filed with the
Securities and Exchange Commission has been mailed to all shareholders along
with this Proxy Statement. Additional copies will be available without charge
to shareholders upon written request to Enviro-Clean of America, 1023 Morales
Street, San Antonio, Texas 78207.
/s/ Randall K. Davis
------------------------------
Randall K. Davis
President
<PAGE>
Appendix A
ENVIRO-CLEAN OF AMERICA, INC
----------------------------
2000 STOCK INCENTIVE PLAN
-------------------------
As Adopted on January 3, 2000
<PAGE>
ENVIRO-CLEAN OF AMERICA, INC.
2000 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of the 2000 Stock Incentive Plan (the "Plan") of Enviro-
Clean of America, Inc., a Nevada corporation (the "Company") is to advance the
interests of the Company and its stockholders by providing an incentive to its
employees, officers, consultants, advisors and directors and thereby encouraging
them to devote their abilities and industry to the success of the Company's
business enterprise. It is intended that this purpose be achieved by extending
to employees, officers, consultants and directors of the Company and its
Subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Dividend Equivalent Rights, Performance
Awards and Restricted Stock (as each term is herein defined). In the event that
any Options (as defined herein) or Awards (as defined herein) are granted to
consultants or advisors, such consultants or advisors must be natural persons
providing bona fide services to the Company and such Options or Awards may not
be issued for services in connection with the offer and sale of securities in a
capital-raising transaction, or for directly or indirectly promoting or
maintaining a market in the Company's securities.
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Affiliate" means any entity, directly or indirectly, controlled
by, controlling or under common control with the Company or any corporation or
other entity acquiring, directly or indirectly, all or substantially all the
assets and business of the Company, whether by operation of law or otherwise.
2.3 "Agreement" means the written agreement between the Company and
an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
2.4 "Award" means a grant of Restricted Stock, a Stock Appreciation
Right, a Performance Award, a Dividend Equivalent Right or any or all of them.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Cause" means:
(i) intentional failure to perform reasonably assigned duties,
(ii) dishonesty or willful misconduct in the performance of duties, (iii)
involvement in a transaction in connection with the performance of duties to the
Company or any of its Subsidiaries which transaction is adverse to the interests
of the Company or any of its Subsidiaries and which is engaged in for personal
profit or (iv) willful violation of any law, rule or regulation in connection
with the performance of duties (other than traffic violations or similar
offenses).
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2.7 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization, spin-
off, split-up, issuance of warrants or rights or debentures, stock dividend,
stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.
2.8 A "Change in Control" shall mean the occurrence during the term
of the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which
such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30 %) or more of the then
outstanding Shares or the combined voting power of the Company's then
outstanding Voting Securities; provided, however, in determining whether a
Change in Control has occurred, Shares or Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Subsidiary"), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction"
(as hereinafter defined);
(b) The individuals who, as of January 1, 2000, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the members of the Board; provided, however, that if the election,
or nomination for election by the Company's common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into
the Company or in which securities of the Company are issued,
unless such merger, consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization with or into the Company
or in which securities of the Company are issued where:
(A) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own directly
or indirectly immediately following such merger,
consolidation or reorganization, at least fifty percent
(50%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-
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thirds of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially
directly or indirectly owning a majority of the Voting
Securities of the Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained by
the Company or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of thirty percent
(30%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of thirty percent (30%) or
more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its
common stock.
(ii) A complete liquidation or dissolution of the Company;
or
(iii) The sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
If an Eligible Individual's employment is terminated by the Company
without Cause prior to the date of a Change in Control but the Eligible
Individual reasonably demonstrates that the termination (A) was at the request
of a third party who has indicated the intention or taken steps reasonably
calculated to effect a change in control or (B) otherwise arose in connection
with, or in anticipation of, a Change in Control which has been threatened or
proposed, such termination shall be deemed to have occurred after a Change in
Control for purposes of this Plan provided a Change in Control shall actually
have occurred.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Committee" means a committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to perform
the functions set forth herein.
2.11 "Company" means Enviro-Clean of America, Inc.
2.12 "Director" means a director of the Company.
2.13 "Director Option" means an Option granted pursuant to Section 6.
2.14 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment with
the Company or a Subsidiary is subject to the terms of an employment agreement
between such Optionee or Grantee and the Company or Subsidiary, which employment
agreement includes a definition of "Disability", the term "Disability" as used
in this Plan or any Agreement shall have the meaning set forth in such
employment agreement during the period that such employment agreement remains in
effect; and
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(b) in all other cases, the term "Disability" as used in this
Plan or any Agreement shall mean a physical or mental infirmity which impairs
the Optionee's or Grantee's ability to perform substantially his or her duties
for a period of one hundred eighty (180) consecutive days.
2.15 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.16 "Dividend Equivalent Right" means a right to receive all or some
portion of the cash dividends that are or would be payable with respect to
Shares.
2.17 "Eligible Director" means a director of the Company who is not
an employee of the Company or any Subsidiaries.
2.18 "Eligible Individual" means any director, officer or employee of
the Company or a Subsidiary, or any consultant or advisor who is receiving cash
compensation from the Company or a Subsidiary, designated by the Committee as
eligible to receive Options or Awards subject to the conditions set forth
herein.
2.19 "Employee Option" means an Option granted pursuant to Section 5.
2.20 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.21 "Fair Market Value" on any date means the closing sales prices
of the Shares on such date on the principal national securities exchange on
which such Shares are listed or admitted to trading, or, if such Shares are not
so listed or admitted to trading, the average of the per Share closing bid price
and per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System or such other
market in which such prices are regularly quoted, or, if there have been no
published bid or asked quotations with respect to Shares on such date, the Fair
Market Value shall be the value established by the Board in good faith and, in
the case of an Incentive Stock Option, in accordance with Section 422 of the
Code.
2.22 "Grantee" means a person to whom an Award has been granted under
the Plan.
2.23 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.24 "Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.26 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.27 "Option" means a Nonqualified Stock Option, an Incentive Stock
Option, a Director Option, or any or all of them.
2.28 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.29 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.30 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.31 "Performance Awards" means Performance Units, Performance Shares
or either of both of them.
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2.32 "Performance Cycle" means the time period specified by the
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.33 "Performance Objectives" has the meaning set forth in Section
11.
2.34 "Performance Shares" means Shares issued or transferred to an
Eligible Individual under Section 10.
2.35 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 10.
2.36 "Plan" means the Enviro-Clean of America, Inc. 2000 Stock
Incentive Plan, as amended and restated from time to time.
2.37 "Pooling Transaction" means an acquisition of Enviro-Clean in a
transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles.
2.38 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 9.
2.39 "Shares" means the common stock, par value $.001 per share, of
Enviro-Clean.
2.40 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 7
hereof.
2.41 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
Enviro-Clean.
2.42 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.43 "Ten-Percent Shareholder" means an Eligible Individual, who, at
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
Enviro-Clean, or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee consisting of at
least two outside "non-employee directors," as defined in Rule 16b-3 ("Rule 16b-
3") under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
A quorum of such Committee shall consist of a majority of the members of such
Committee, or as may be otherwise provided in the Company's bylaws. The
Committee shall hold meetings at such times and places and conduct its business
at such meetings as it may determine, subject to any express provisions of the
Company's bylaws. Acts of a majority of the Committee members attending at a
meeting at which a quorum is present, or such acts as are reduced to or approved
in writing by the majority of the members of the Committee, shall be the valid
acts of the Committee. No member of the Committee shall be liable for any
action, failure to act, determination or interpretation made in good faith with
respect to this Plan or any transaction hereunder, except for liability arising
from his or her own willful misfeasance, gross negligence or reckless disregard
of his or her duties. the Company hereby agrees to indemnify each member of the
Committee for all costs and expenses and, to the extent permitted by applicable
law, any liability incurred in connection with defending against, responding to,
negotiating for the settlement of or otherwise dealing with any claim, cause of
action or
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dispute of any kind arising in connection with any actions in administering this
Plan or in authorizing or denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of such Employee Options
to be granted and to prescribe the terms and conditions (which need not be
identical) of each such Employee Option, including the purchase price per Share
subject to each Employee Option, and make any amendment or modification to any
Option Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall be
granted under the Plan and to determine the number of Stock Appreciation Rights,
Performance Awards, Shares of Restricted Stock and/or Dividend Equivalent Rights
to be granted pursuant to each Award, the terms and conditions of each Award,
including the restrictions or Performance Objectives relating to Shares, the
maximum value of each Performance Share and make any amendment or modification
to any Award Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable so that the Plan complies with applicable
law including Rule 16b-3 under the Exchange Act and the Code to the extent
applicable, and otherwise to make the Plan fully effective. All decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Optionees and
Grantees, and all other persons having any interest therein;
(d) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(e) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is 1,500,000. the Company shall
reserve for the purposes of the Plan, out of its authorized but unissued Shares
or out of Shares held in the Company's treasury, or partly out of each, such
number of Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced as follows:
(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount
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in which the Performance Unit is denominated, divided by (ii) the Fair Market
Value of a Share on the date the Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof
expires, is canceled or is otherwise terminated for any reason without having
been exercised or payment having been made in respect of the entire Option or
Award, the Shares allocable to the expired, canceled or otherwise terminated
portion of the Option or Award may again be the subject of Options or Awards
granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, and the terms and conditions of
the grant to such Eligible Individuals shall be set forth in an Agreement.
5.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Option shall not be less
than 100% of the Fair Market Value of a Share on the date the Employee Option is
granted (110% in the case of an Incentive Stock Option granted to a Ten-Percent
Shareholder).
5.3 Maximum Duration. Employee Options granted hereunder shall be
for such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Shareholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof, but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 6.4, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Employee Option or portion thereof at any time.
5.5 Modification. No modification of an Employee Option shall
adversely alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
6. Terms and Conditions Applicable to All Options.
6.1 Non-Transferability. Unless set forth in the Agreement
evidencing the Option (other than an Incentive Stock Option) at the time of
grant or at any time thereafter, an Option granted hereunder shall not be
transferable by the Optionee to whom granted except by will or the laws of
descent and distribution or pursuant to a domestic relations order (within the
meaning of Rule 16a-12 promulgated under the Exchange Act), and an Option may be
exercised during the lifetime of such Optionee only by the Optionee or his or
her guardian or legal representative. The terms of such Option shall be final,
binding and conclusive upon the beneficiaries, executors, administrators, heirs
and successors of the Optionee.
6.2 Method of Exercise. The exercise of an Option shall be made only
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid, as determined by the Committee in its discretion, in either of
the following forms (or any combination thereof): (i) cash or (ii) the transfer
of Shares to the Company upon such terms and conditions as determined by the
Committee. In
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addition, both Employee Options and Director Options may be exercised through a
registered broker-dealer pursuant to such cashless exercise procedures (other
than Share withholding)which are, from time to time, deemed acceptable by the
Committee, and the Committee may authorize that the purchase price payable upon
exercise of an Employee Option may be paid by having Shares withheld that
otherwise would be acquired upon such exercise. Any Shares transferred to the
Company (or withheld upon exercise) as payment of the purchase price under an
Option shall be valued at their Fair Market Value on the day preceding the date
of exercise of such Option. The Optionee shall deliver the Agreement evidencing
the Option to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
6.3 Rights of Optionees. Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered Shares to the Optionee, and (iii) the Optionee's name
shall have been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such Shares, subject to such terms and conditions as may
be set forth in the applicable Agreement.
6.4 Effect of Change in Control. In the event of a Change in
Control, all Options outstanding on the date of such Change in Control shall
become immediately and fully exercisable. In addition, to the extent set forth
in an Agreement evidencing the grant of an Employee Option, an Optionee will be
permitted to surrender to the Company for cancellation within sixty (60) days
after such Change in Control any Employee Option or portion of an Employee
Option to the extent not yet exercised and the Optionee will be entitled to
receive a cash payment in an amount equal to the excess, if any, of (x) (A) in
the case of a Nonqualified Stock Option, the greater of (1) the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Employee Option or portion thereof
surrendered or (B) in the case of an Incentive Stock Option, the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered, over (y) the aggregate purchase
price for such Shares under the Employee Option or portion thereof surrendered.
In the event an Optionee's employment with, or service as a Director of, the
Company terminates following a Change in Control, each Option held by the
Optionee that was exercisable as of the date of termination of the Optionee's
employment or service shall remain exercisable for a period ending not before
the earlier of (A) the first anniversary of the termination of the Optionee's
employment or service or (B) the expiration of the stated term of the Option.
7. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in connection
with the grant of an Employee Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set forth
in an Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same Shares covered by the Option (or such lesser number
of Shares as the Committee may determine) and shall, except as provided in this
Section 7, be subject to the same terms and conditions as the related Option.
7.1 Time of Grant. A Stock Appreciation Right may be granted (i) at
any time if unrelated to an Option, or (ii) if related to an Option, either at
the time of grant, or at any time thereafter during the term of the Option.
7.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in connection
with an Option shall be exercisable at such time or times and only to the extent
that the related Options are exercisable, and will not be transferable except to
the extent the related Option may be transferable. A Stock Appreciation Right
granted in connection with an Incentive Stock Option shall be exercisable only
if
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the Fair Market Value of a Share on the date of exercise exceeds the purchase
price specified in the related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
7.3 Stock Appreciation Right Unrelated to an Option. The Committee
may grant to Eligible Individuals Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall contain such terms
and conditions as to exercisability (subject to Section 7.7), vesting and
duration as the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (B) number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation Right
at the time it is granted.
7.4 Method of Exercise. Stock Appreciation Rights shall be exercised
by a Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Grantee.
7.5 Form of Payment. Payment of the amount determined under Sections
7.2(b) or 7.3 may be made in the discretion of the Committee solely in whole
Shares in a number determined at their Fair Market Value on the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.
7.6 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Awards of Stock Appreciation Rights or
accept the surrender of outstanding Awards of Stock Appreciation Rights (to the
extent not exercised) and grant new Awards in substitution for them.
Notwithstanding the foregoing, no modification of an Award shall adversely alter
or impair any rights or obligations under the Agreement without the Grantee's
consent.
7.7 Effect of Change in Control. In the event of a Change in
Control, all Stock Appreciation Rights shall become immediately and fully
exercisable. In addition, to the extent set forth in an Agreement evidencing the
grant of a Stock Appreciation Right unrelated to an Option, a Grantee will be
entitled to receive a payment from the Company in cash or stock, in either case,
with a value equal to the excess, if any, of (A) the greater of (x) the Fair
Market Value, on the date preceding the date of exercise, of the underlying
Shares subject to the Stock Appreciation Right or portion thereof exercised and
(y) the
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Adjusted Fair Market Value, on the date preceding the date of exercise, of the
Shares over (B) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised. In the event a Grantee's employment with the
Company terminates following a Change in Control, each Stock Appreciation Right
held by the Grantee that was exercisable as of the date of termination of the
Grantee's employment shall remain exercisable for a period ending not before the
earlier of the first anniversary of (A) the termination of the Grantee's
employment or (B) the expiration of the stated term of the Stock Appreciation
Right.
8. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible Individuals and
Eligible Directors in tandem with an Option or Award or as a separate award. The
terms and conditions applicable to each Dividend Equivalent Right shall be
specified in the Agreement under which the Dividend Equivalent Right is granted.
Amounts payable in respect of Dividend Equivalent Rights may be payable
currently or deferred until the lapsing of restrictions on such Dividend
Equivalent Rights or until the vesting, exercise, payment, settlement or other
lapse of restrictions on the Option or Award to which the Dividend Equivalent
Rights relate. In the event that the amount payable in respect of Dividend
Equivalent Rights are to be deferred, the Committee shall determine whether such
amounts are to be held in cash or reinvested in Shares or deemed (notionally) to
be reinvested in Shares. If amounts payable in respect of Dividend Equivalent
Rights are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Dividend Equivalent Rights may be settled in cash or Shares or a combination
thereof, in a single installment or multiple installments.
9. Restricted Stock.
9.1 Grant. The Committee may grant Awards to Eligible Individuals of
Restricted Stock, which may, at the discretion of the Committee, be evidenced by
an Agreement between the Company and the Grantee. Each Agreement shall contain
such restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant
to an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted; provided that the Grantee has
executed an Agreement, if any, evidencing the Award, the appropriate blank stock
powers, if any, and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute such Agreement, if
any, evidencing a Restricted Stock Award, the appropriate blank stock powers, if
any, and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the Award shall be null and
void. At the discretion of the Committee, Shares issued in connection with a
Restricted Stock Award may be deposited together with the stock powers with an
escrow agent (which may be the Company) designated by the Committee. Unless the
Committee determines otherwise and as set forth in the Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.
9.3 Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 9.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee, if such Shares are held by the escrow agent.
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9.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement evidencing the Award
shall set forth any such restrictions.
(b) Effect of Change in Control. Unless the Committee shall
determine otherwise at the time of the grant of an Award of Restricted Stock,
the restrictions upon Shares of Restricted Stock shall lapse upon a Change in
Control. The Agreement evidencing the Award shall set forth any such provisions.
9.5 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
9.6 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which the deferred dividends were paid, and
any dividends deferred (together with any interest accrued thereon) in respect
of any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
9.7 Delivery of Shares. Upon the lapse of the restrictions on Shares
of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, if such Shares are held by
the escrow agent.
10. Performance Awards.
10.1 (a) Performance Objectives. Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) revenues, (vii) EBITDA, (viii) market share or market penetration
or (ix) any combination of the foregoing. Performance Objectives may be in
respect of the performance of the Company and its Subsidiaries (which may be on
a consolidated basis), a Subsidiary or a Division. Performance Objectives may be
absolute or relative and may be expressed in terms of a progression within a
specified range. The Performance Objectives with respect to a Performance Cycle
shall be established in writing by the Committee by the earlier of (i) the date
on which a quarter of the Performance Cycle has elapsed or (ii) the date which
is ninety (90) days after the commencement of the Performance Cycle, and in any
event while the performance relating to the Performance Objectives remain
substantially uncertain. At the time of the granting of a Performance Award and
to the extent permitted under Section 162(m) of the Code and the regulations
thereunder, the Committee may provide for the manner in which the Performance
Objectives will be measured to reflect the impact of specified corporate
transactions, extraordinary events, accounting changes and other similar events.
(b) Determination of Performance. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Performance Award
made to a Grantee who is
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subject to Section 162(m) of the Code, the Committee shall certify in writing
that the applicable Performance Objectives have been satisfied.
10.2 Performance Units. The Committee, in its discretion, may grant
Awards of Performance Units to Eligible Individuals, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
10.2(b) of (i) in the case of Share-denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee,
(ii) in the case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the level of Performance Objective
attainment; provided, however, that, the Committee may at the time a Performance
Unit is granted specify a maximum amount payable in respect of a vested
Performance Unit. Each Agreement shall specify the number of Performance Units
to which it relates, the Performance Objectives which must be satisfied in order
for the Performance Units to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 10.1(b) and
10.4, a Grantee shall become vested with respect to the Performance Units to the
extent that the Performance Objectives set forth in the Agreement are satisfied
for the Performance Cycle.
(b) Payment of Awards. Subject to Section 10.1(b), payment to
Grantees in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Subject to Section 10.4, such payments may be made
entirely in Shares valued at their Fair Market Value as of the day preceding the
date of payment or such other date specified by the Committee, entirely in cash,
or in such combination of Shares and cash as the Committee in its discretion
shall determine at any time prior to such payment; provided, however, that if
the Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the extent
to which such payment will be in Shares of Restricted Stock and the terms of
such Restricted Stock at the time the Award is granted.
10.3 Performance Shares. The Committee, in its discretion, may grant
Awards of Performance Shares to Eligible Individuals, the terms and conditions
of which shall be set forth in an Agreement between the Company and the Grantee.
Each Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time
an Award of Performance Shares is made the time or times at which the actual
Shares represented by such Award shall be issued in the name of the Grantee;
provided, however, that no Performance Shares shall be issued until the Grantee
has executed an Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Performance Shares. If a Grantee shall fail to execute the Agreement
evidencing an Award of Performance Shares, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the Award shall be null and
void. At the discretion of the Committee, Shares issued in connection with an
Award of Performance Shares shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the Committee.
Except as restricted by the terms of the Agreement, upon delivery of the Shares
to the escrow agent, the Grantee shall have, in the discretion of the Committee,
all of the rights of a stockholder with respect to such Shares, including the
right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
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(b) Non-transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 10.3(c) or 10.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.
(c) Lapse of Restrictions. Subject to Sections 10.1(b) and 10.4,
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its discretion, determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of Performance
Shares is granted, the Committee may, in its discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on actual Shares represented by such Award which have been issued by the
Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.
10.4 Effect of Change in Control. In the event of a Change in
Control:
(a) With respect to Performance Units, the Grantee shall (i)
become vested in a percentage of Performance Units as determined by the
Committee at the time of the Award of such Performance Units and as set forth in
the Agreement and (ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in Control a cash payment
within ten (10) days after such Change in Control in an amount as determined by
the Committee at the time of the Award of such Performance Unit and as set forth
in the Agreement.
(b) With respect to Performance Shares, restrictions shall lapse
immediately on all or a portion of the Performance Shares as determined by the
Committee at the time of the Award of such Performance Shares and as set forth
in the Agreement.
(c) The Agreements evidencing Performance Shares and Performance
Units shall provide for the treatment of such Awards (or portions thereof) which
do not become vested as the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable Performance Objectives.
10.5 Modification or Substitution. Subject to the terms of the Plan,
the Committee may modify outstanding Performance Awards or accept the surrender
of outstanding Performance Awards and grant new Performance Awards in
substitution for them. Notwithstanding the foregoing, no modification of a
Performance Award shall adversely alter or impair any rights or obligations
under the Agreement without the Grantee's consent.
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11. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each Award shall
set forth the terms and conditions applicable to such Option or Award upon a
termination or change in the status of the employment of the Optionee or Grantee
by the Company, a Subsidiary or a Division (including a termination or change by
reason of the sale of a Subsidiary or a Division), which, except for Director
Options, shall be as the Committee may, in its discretion, determine at the time
the Option or Award is granted or thereafter.
12. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted under the Plan, (ii) the maximum number
and class of Shares or other stock or securities with respect to which Options
or Awards may be granted to any Eligible Individual during the term of the Plan,
(iii) the number and class of Shares or other stock or securities which are
subject to outstanding Options or Awards granted under the Plan and the purchase
price therefor, if applicable, (iv) the number and class of Shares or other
securities in respect of which Director Options are to be granted under Section
6 and (v) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an
Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new, additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
13. Effect of Certain Transactions.
Subject to Sections 6.4, 7.7, 9.4(b) and 10.4 or as otherwise provided
in an Agreement, in the event of (i) the liquidation or dissolution of the
Company or (ii) a merger or consolidation of the Company (a "Transaction"), the
Plan and the Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a Transaction each
Optionee and Grantee shall be entitled to receive in respect of each Share
subject to any outstanding Options or Awards, as the case may be, upon exercise
of any Option or payment or transfer in respect of any Award, the same number
and kind of stock, securities, cash, property or other consideration that each
holder of a Share was entitled to receive in the Transaction in respect of a
Share; provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Options and Awards prior to
such Transaction.
14. Interpretation.
Following the required registration of any equity security of the
Company pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant Agreement,
each Option, Stock Appreciation Right and Performance Award granted under the
Plan is intended to be
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performance-based compensation within the meaning of Section 162(m)(4)(C) of the
Code. The Committee shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options or Awards if the ability to
exercise such discretion or the exercise of such discretion itself would cause
the compensation attributable to such Options or Awards to fail to qualify as
performance-based compensation.
15. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if any,
as are specifically recommended by an independent accounting firm retained by
the Company to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including but not limited to (i)
deferring the vesting, exercise, payment, settlement or lapsing of restrictions
with respect to any Option or Award, (ii) providing that the payment or
settlement in respect of any Option or Award be made in the form of cash, Shares
or securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (iii) providing for the extension of the term of any Option or
Award to the extent necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option or Award.
16. Termination and Amendment of the Plan.
The Plan shall terminate on the day preceding the tenth anniversary of
the date of its adoption by the Board and no Option or Award may be granted
thereafter. Subject to Section 5.5, the Board may sooner terminate the Plan and
the Board may at any time and from time to time amend, modify or suspend the
Plan; provided, however, that:
(a) no such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan; and
(b) to the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law.
17. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement
or as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
18. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but
not intended to be exhaustive thereof, nothing in the Plan shall be construed
to:
(i) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time;
or
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(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period
of time.
19. Regulations and Other Approvals; Governing Law.
19.1 Except as to matters of federal law, the Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Nevada without giving effect to conflicts of laws
principles thereof.
19.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
19.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
19.4 Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
19.5 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Committee may require any individual receiving Shares pursuant
to an Option or Award granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act or the rules and regulations promulgated
thereunder. The certificates evidencing any of such Shares shall be
appropriately amended to reflect their status as restricted securities as
aforesaid.
20. Miscellaneous.
20.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same time, or
at some other time. The Committee may also grant more than one Option or Award
to a given Eligible Individual during the term of the Plan, either in addition
to, or in substitution for, one or more Options or Awards previously granted to
that Eligible Individual.
20.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or Grantee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the Taxable Event (the
"Withholding Taxes") prior to the issuance, or release from escrow, of such
Shares or the payment of such cash.
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The Company shall have the right to deduct from any payment of cash to an
Optionee or Grantee an amount equal to the Withholding Taxes in satisfaction of
the obligation to pay Withholding Taxes. In satisfaction of the obligation to
pay Withholding Taxes to the Company, the Optionee or Grantee may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value equal to the
Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
20.3. Effective Date. The effective date of this Plan shall be as
determined by the Board, subject only to the approval by the affirmative vote of
the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of Nevada within twelve (12)
months of the adoption of the Plan by the Board.
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ENVIRO-CLEAN OF AMERICA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR AN ANNUAL MEETING OF STOCKHOLDERS ON JUNE 14, 2000
The undersigned hereby appoints Randall K. Davis and Charles Brandt, and each of
them, proxies, with the powers the undersigned would possess if personally
present, and with full power of substitution, to vote at the Annual Meeting and
at any adjournment thereof, all shares of Common Stock of Enviro-Clean of
America, Inc. held of record by the undersigned on the record date, upon all
subjects that may properly come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on this proxy ballot. If no directions are given and the signed proxy
ballot is returned, the proxies will vote FOR Proposals 1 through 3, and, at
their discretion, on any other mater that may properly come before the meeting
or any adjournment thereof.
MARK THE BOX AT THE RIGHT IF YOU PLAN TO ATTEND THE MEETING. [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING ITEMS, AS
MORE FULLY DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT:
1. Election of directors.
NOMINEES
Richard Kandel Randall K. Davis Gary c. Granoff
Steven Etra Mark A. Rice
[_] FOR all nominees listed above [_] WITHHOLD all nominees listed above
[_] Place an "X" in this box to withhold authority to vote for any individual
nominee and write that name from the list above on the line below.
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2. Approval of the Enviro-Clean of America, Inc. 2000 Stock Incentive Plan.
FOR: [_] AGAINST: [_] ABSTAIN:[_]
3. Ratification of selection of Goldstein, Golub & Kessler LLP as independent
auditors for the fiscal year ending December 31, 2000.
FOR: [_] AGAINST: [_] ABSTAIN:[_]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment(s)
thereof.
The undersigned acknowledges receipt of the formal notice of such meeting and
the accompanying Proxy Statement.
Please sign exactly as name appears on the certificate. When shares are held by
joint tenants, both should sign. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. When signing as attorney, executor,
administrator, trustee, guardian, officer or partner, please give full title as
such.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY BALLOT PROMPTLY USING THE ENCLOSED
ENVELOPE.
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SIGNATURE(S)
DATE:
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