<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ENVIROSOURCE, 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>
Envirosource, Inc.
1155 Business Center Drive
Horsham, PA 19044-3454
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 10, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
ENVIROSOURCE, INC., a Delaware corporation (the "Company"), will be held at The
Homestead Restaurant, Three Village Road, Horsham, Pennsylvania 19044 on
Thursday, June 10, 1999 at 10:00 A.M. (local time), for the following purposes:
1. To elect three members of Class A of the Board of Directors.
2. To ratify and approve the adoption of the Envirosource, Inc. 1999
Stock Option Plan.
3. To transact such other and further business as may properly come
before the meeting or any adjournment or adjournments thereof.
Holders of record of shares of the Company's Common Stock at the close of
business on April 12, 1999 are entitled to notice of and to vote at the
meeting. A complete list of the Company's stockholders will be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours for ten days prior to the meeting at the Company's
offices located at 1155 Business Center Drive, Horsham, Pennsylvania. The list
will also be produced and kept at the time and place of the meeting and may be
inspected by any stockholder who is present.
A copy of the Company's 1998 Annual Report to Stockholders is enclosed
herewith.
By Order of the Board of Directors
/s/ LEON Z. HELLER
----------------------------------
LEON Z. HELLER
Secretary
Dated: April 30, 1999
<PAGE>
Envirosource, Inc.
1155 Business Center Drive
Horsham, PA 19044-3454
---------------------
PROXY STATEMENT
For Annual Meeting of Stockholders
to be held on June 10, 1999
---------------------
April 30, 1999
To the Stockholders:
This Proxy Statement is furnished to you in connection with the Annual
Meeting of the Stockholders (the "Annual Meeting") of Envirosource, Inc., a
Delaware corporation (the "Company"), and the related solicitation by the Board
of Directors of the Company of Proxies in the accompanying form, to be held at
The Homestead Restaurant, Three Village Road, Horsham, Pennsylvania 19044, on
Thursday, June 10, 1999 at 10:00 A.M. (local time) and at any subsequent time
that may be necessary by the adjournment thereof.
If you were a holder of record of shares of the Company's Common Stock at
the close of business on April 12, 1999, you are entitled to vote at the Annual
Meeting. If you cannot be present at the Annual Meeting in person, a form of
Proxy is enclosed, which the Board of Directors requests you to execute and
return as soon as possible. A Proxy can be revoked at any time before it is
voted, either in person at the Annual Meeting, by executing and submitting a
new Proxy that is dated a date after the Proxy to be revoked, or by delivery of
a duly executed written statement to that effect addressed to the Secretary of
the Company.
As of the close of business on April 12, 1999, there were outstanding and
entitled to vote at the Annual Meeting 5,813,394 shares of Common Stock, $.05
par value (the "Common Stock"). Each share of Common Stock is entitled to one
vote.
All stockholders are urged to fill in, sign, date and mail the enclosed
Proxy. If mailed in the United States in the enclosed envelope, no postage is
required. The prompt return of your Proxy to vote your shares of Common Stock
will save the Company the expense of further communication. If you attend the
Annual Meeting and vote in person, the Proxy will not be used.
The Proxy Statement and the Proxies in the accompanying form are first
being sent to stockholders on or about May 5, 1999.
PROXIES AND VOTE REQUIRED
THE PERSONS NAMED IN THE ACCOMPANYING PROXY INTEND TO VOTE PROXIES FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR DESCRIBED HEREIN, UNLESS AUTHORITY TO
VOTE FOR ANY OR ALL OF THE NOMINEES IS WITHHELD. In the event that any nominee
at the time of election shall be unable or for good reason unwilling to serve
(which contingencies are not now contemplated or foreseen) and other nominees
shall be nominated, the persons named in the Proxy shall have the discretion
and authority to vote or refrain from voting in accordance with their judgment
on such other nominations. IN ADDITION, UNLESS OTHERWISE SPECIFIED IN THE
PROXY, PROXIES WILL BE VOTED FOR THE RATIFICATION AND APPROVAL OF THE ADOPTION
OF THE ENVIROSOURCE, INC. 1999 STOCK OPTION PLAN. See "Other Matters" with
respect to additional discretion and authority conferred by the accompanying
Proxy.
The presence in person or by proxy of a majority of the shares of Common
Stock outstanding and entitled to vote at the Annual Meeting is required for a
quorum. If a quorum is present, those nominees receiving a plurality of the
votes cast will be elected. Accordingly, shares not voted in the election of
directors (including shares covered by a Proxy as to which authority is
withheld to vote for all nominees) and shares not voted for any particular
nominee (including shares covered by a Proxy as to which authority is withheld
to vote for only one or
<PAGE>
less than all of the nominees) will not prevent the election of any of the
nominees for director. For all other matters submitted to stockholders at the
Annual Meeting, if a quorum is present the affirmative vote of a majority of
the shares voted is required for approval. As a result, abstention votes with
respect to any of the foregoing matters (other than Proposal 1) will have the
effect of a vote against such matter.
Shares held by brokers and other stockholder nominees sometimes are voted
on certain matters but not others. This can occur, for example, when a broker
is instructed by the beneficial owner of shares of Common Stock, or otherwise
has the authority, to vote on a particular matter but is not instructed, and
does not have such authority, to vote on one or more others. These are known as
"non-voted" shares. Non-voted shares will be counted for purposes of
determining whether there is a quorum at the Annual Meeting, but with respect
to the matters as to which they are "non-voted" they will have no effect upon
the outcome of the vote thereon.
PROPOSAL 1
ELECTION OF CLASS A DIRECTORS
The Board of Directors of the Company consists of three classes: Class A,
Class B and Class C. Each Class consists of three directors. Directors in each
class serve for a three-year term and until their respective successors have
been elected and qualified (or as otherwise provided under the By-laws of the
Company). The term of the present Class A directors will end with this year's
Annual Meeting, the term of the present Class B directors will end with the
2000 Annual Meeting, and the term of the present Class C directors will end
with the 2001 Annual Meeting.
Three directors, to serve as Class A directors, will be elected at the
Annual Meeting, to hold office until the 2002 Annual Meeting and until their
respective successors have been elected and qualified (or as otherwise provided
under the By-laws of the Company). The names of the nominees for Class A
director and the names of the directors continuing in office whose terms do not
expire in 1999, together with certain information furnished to the Company by
each nominee and director, are set forth below (see also "Security Ownership of
Certain Beneficial Owners").
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR CLASS A DIRECTORS INDICATED BELOW.
NOMINEES FOR ELECTION AS CLASS A DIRECTORS
CLASS A DIRECTORS
John T. DiLacqua (age 46) has been a director and President and Chief
Executive Officer of the Company since January 1999. From October 1997 to
December 1998, Mr. DiLacqua served as President of the U.S. Ferrous Operations
of Philip Metals, Inc., which included, among others, the former Luria Brothers
Division of Connell Limited Partnership. Prior to that, he served as the
President of the Luria Brothers Division of Connell Limited Partnership from
May 1994 to October 1997, and, from December 1990 to May 1994, he served as its
Vice President of Finance and Administration.
Jeffrey G. Miller (age 58) was re-elected as a director of the Company in
August 1993. Mr. Miller has been a professor of environmental law at Pace
University School of Law since 1987. He was of counsel to the Seattle and
Washington D.C. law firm of Perkins Coie from 1987 to 1997 practicing
environmental law. Mr. Miller was a director of Envirosafe Services, Inc.
("Envirosafe") from 1987 until February 1992. He became a director of the
Company in February 1992 pursuant to the terms of a merger agreement between
Envirosafe and a wholly-owned subsidiary of the Company. Mr. Miller resigned as
a director on May 13, 1993 pursuant to the terms of the purchase agreement by
which an affiliate of Freeman Spogli & Co. ("FS&Co.") acquired its interest in
the Company.
Jon D. Ralph (age 34) has been a director of the Company since August
1993. Mr. Ralph joined FS&Co. in August 1989. Mr. Ralph is also a director of
Hudson Respiratory Care Inc. and The Pantry, Inc.
CLASS B DIRECTORS
Wallace B. Askins (age 68) has been a director of the Company since 1978.
Mr. Askins served as Executive Vice President and Chief Financial Officer of
Armco Inc. ("Armco") (a manufacturer of steel and other products) from June
1984, and as a director of Armco from December 1985, until his retirement in
November 1992. Mr. Askins is a director of Trump Hotel & Casino Resorts, Inc.
2
<PAGE>
John M. Roth (age 40) became a director of the Company in May 1993. Mr.
Roth joined FS&Co. in March 1988 and became a general partner in March 1993.
Mr. Roth is also a director of Advance Stores Company, Inc. and AFC
Enterprises, Inc.
J. Frederick Simmons (age 44) became a director of the the Company in May
1993. Mr. Simmons joined FS&Co. in 1986 and became a general partner in January
1991. He is also a director of Miller Publishing Group and Century Maintenance
Supply, Inc.
CLASS C DIRECTORS
Raymond P. Caldiero (age 59) has served as a director of the Company since
February 1992. Mr. Caldiero has served as Chairman of Caldiero International,
Inc. (a consultant in the areas of hotel development, lobbying, marketing and
sales) since 1989. He is a director of the Autry Museum and Technology
Solutions Corp. and served as a director of Envirosafe from 1987 until February
1992. Mr. Caldiero became a director of the Company in February 1992 pursuant
to the terms of a merger agreement between Envirosafe and a wholly-owned
subsidiary of the Company.
Robert N. Gurnitz (age 60) became a director of the Company in November
1997 and became Chairman of the Board in December 1998. Mr. Gurnitz served as
President and Chief Executive Officer of Northwestern Steel and Wire Co. from
1991 to 1993 and as its Chairman and Chief Executive Officer from 1993 to 1997.
Prior to that he served in various senior management capacities with Rockwell
International Corporation, Bethlehem Steel Corporation and Webcraft
Technologies.
Ronald P. Spogli (age 51) became a director and Chairman of the Board of
the Company in May 1993. In December 1998, Mr. Spogli stepped down from the
Chairman of the Board post, but retained his position as Chairman of the
Executive Committee of the Board of Directors. Mr. Spogli is a founding partner
of FS&Co. He is also a director of Advance Stores Company, Inc., AFC
Enterprises, Inc., Century Maintenance Supply, Inc., and Hudson Respiratory
Care Inc.
OTHER INFORMATION AS TO DIRECTORS
During the fiscal year ended December 31, 1998, the Board of Directors
held four meetings. With the exception of Mr. Spogli, during 1998 each director
attended at least 75% of the number of meetings of the Board and of the
committees of the Board on which he served.
The Board of Directors has an Executive Committee, consisting of Messrs.
DiLacqua, Simmons and Spogli; an Audit Committee, consisting of Messrs. Askins,
Gurnitz and Miller; and a Compensation and Stock Option Committee (the
"Compensation Committee"), consisting of Messrs. Askins, Caldiero, Roth and
Simmons.
The function of the Executive Committee is to exercise the powers and
authority of the full Board of Directors, to the extent permitted by law, when
it is not in session. During 1998, the Executive Committee held no meetings.
The primary function of the Audit Committee, which held two meetings
during 1998, is to review the scope and results of each year's annual audit as
well as the Company's internal accounting procedures.
The function of the Compensation Committee is to administer the Company's
stock option plans, to award stock options thereunder and to review and make
recommendations concerning other Company plans, executive compensation and such
other matters referred to it by the Board of Directors. The Compensation and
Stock Option Committee held one meeting during 1998.
The Company pays each director other than Messrs. DiLacqua and Gurnitz and
general partners or employees of FS&Co. an annual fee of $15,000 (payable in
four equal quarterly installments). In addition, the Company pays the
reasonable expenses of each director in connection with his attendance at each
meeting of the Board of Directors or any committee thereof. In connection with
their election in February 1992 as directors of the Company, each of Mr.
Caldiero and Mr. Miller was granted an option to purchase 2,857 shares of
Common Stock of the Company at an exercise price of $18.375 per share, which
became exercisable in September 1993 and expires in March 2002. (On June 22,
1998, the Company completed a 1-for-7 reverse split of the Common
3
<PAGE>
Stock; numbers of shares and per share amounts throughout this proxy statement
have been restated to reflect this reverse split.) Pursuant to its terms, Mr.
Miller's option would have expired 90 days after his resignation in May 1993.
In connection with his reelection to the Board of Directors in August 1993, the
Company amended Mr. Miller's option to provide that his option would remain in
effect, as if he had not resigned, during the period from May 13, 1993 until
such reelection. On August 5, 1993, Mr. Askins was granted an option to
purchase 2,857 shares of Common Stock of the Company at an exercise price of
$29.75 per share, which became exercisable in August 1995 and expires in August
2003.
In 1995, the Company also adopted a Stock Option Plan for Non-Affiliate
Directors, which was ratified and approved by the stockholders of the Company
at the 1995 Annual Meeting. Pursuant to this plan, each director of the Company
who is neither an employee of the Company nor an affiliate of FS&Co.: (i)
automatically is granted an option to purchase 714 shares of Common Stock as of
January 1 of each year, and (ii) is given the right, exercisable on or before
January 1 of each year, to make an irrevocable election to receive an option to
purchase shares of Common Stock in lieu of receiving his annual director's fee
for that particular year. Both Mr. Askins and Mr. Gurnitz elected to receive
options to purchase shares of Common Stock in lieu of their annual directors'
fees for 1998; no director has made such election for 1999.
During 1998, Mr. Gurnitz performed consulting services for the Company for
which he was paid fees of $98,750 plus reimbursement of expenses. As of January
20, 1999, Mr. Gurnitz became an employee of the Company at an annual salary of
$75,000. Because Mr. Gurnitz is now an employee of the Company, he is no longer
paid consulting fees or directors fees, and he is no longer eligible to receive
options under the Stock Option Plan for Non-Affiliate Directors. In February
1999, the Company granted Mr. Gurnitz an option under its 1993 Stock Option
Plan to purchase 50,000 shares of Common Stock at $4.00 per share, which option
will vest in equal annual increments over a three-year period.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company's records and other information obtained by the Company from
outside sources indicate that, as of April 1, 1999, the following persons were
the beneficial owners of more than 5% of the outstanding shares of the Common
Stock of the Company.
Number of
Shares
Name and Address Beneficially Percent
of Beneficial Owner(l) Owned of Class
- -------------------------------------------- -------------- ---------
FS Equity Partners II, L.P.
c/o Freeman Spogli & Co.(2) ............... 2,741,013 47.1%
11100 Santa Monica Blvd.
Suite 1900
Los Angeles, CA 90025
Gabelli Funds, Inc.(3) ..................... 1,029,681 17.7%
One Corporate Center
Rye, NY 10580-1434
The IBM Retirement Plan Trust Fund ......... 382,160 6.6%
262 Harbor Place
Stamford, CT 06904-2399
- ------------
(1) To the best of the Company's knowledge, except as otherwise indicated
herein, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them.
(2) FS&Co., as general partner of FS Equity Partners II, L.P. ("FSEP"), has the
sole power to vote and dispose of such shares. Messrs. Roth, Simmons and
Spogli, each of whom is a director of the Company, and Bradford M. Freeman
and William M. Wardlaw are general partners of FS&Co., and as such may be
deemed to be the beneficial owners of the shares of the Company's Common
Stock indicated as beneficially owned by FSEP.
(3) Gabelli Funds, Inc. and its Chairman, CEO and majority stockholder, Mario
J. Gabelli, Jr., may be deemed to have beneficial ownership of these
shares. The shares are held with sole voting and investment power by
Gabelli Funds, Inc. or its affiliates, except for 125,428 shares as to
which the voting power is contingent.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
As of April 1, 1999, the following directors, executive officers and all
directors and executive officers as a group, were the beneficial owners of
shares of Common Stock of the Company as follows:
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned as of
April 1, 1999(1)
------------------------------
Number of Percent
Name and Position with Company Shares of Class
- ---------------------------------------------------------------------- ------------------ ---------
<S> <C> <C>
Class A Directors
John T. DiLacqua, President and Chief Executive Officer ........... -- --
Jeffrey G. Miller ................................................. 5,713(2) *
Jon D. Ralph ...................................................... -- --
Class B Directors
Wallace B. Askins ................................................. 23,197(2) *
John M. Roth(4) ................................................... 2,741,013 47.1%
J. Frederick Simmons(4) ........................................... 2,741,013 47.1%
Class C Directors
Raymond P. Caldiero ............................................... 5,713(2) *
Robert N. Gurnitz, Chairman of the Board .......................... 5,126(2) *
Ronald P. Spogli(4) ............................................... 2,741,013 47.1%
Other Most Highly Compensated Executive Officers
Aarne Anderson ...................................................... 16,311(3) *
Leon Z. Heller ...................................................... 7,221(3) *
James C. Hull ....................................................... 23,997(3) *
All directors and executive officers as a group (15 persons) ......... 2,839,373(5) 48.8%
</TABLE>
- ------------
* Less than 1%
(1) Unless otherwise disclosed, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Includes shares for which options under Envirosource's Stock Option Plan
for Non-Affiliate Directors or otherwise are exercisable by directors
within 60 days, as follows: Mr. Askins, 20,860 shares; Mr. Caldiero, 5,713
shares; Mr. Gurnitz, 5,126 shares; and Mr. Miller, 5,713 shares.
(3) Includes (i) shares for which options under the Envirosource Incentive
Stock Option Plan and Envirosource 1993 Stock Option Plan are exercisable
by executive officers within 60 days, as follows: Mr. Anderson, 9,682
shares; Mr. Heller, 2,858 shares; and Mr. Hull, 12,191 shares; and (ii)
shares held through the Envirosource, Inc. Savings Plan and Envirosource,
Inc. Profit Sharing Plan as of December 31, 1998, as follows: Mr.
Anderson, 4,772 shares; Mr. Heller, 4,149 shares; and Mr. Hull, 11,592
shares.
(4) All shares shown as beneficially owned are held by FSEP. As general partner
of FSEP, FS&Co. has the sole power to vote and dispose of such shares.
Messrs. Roth, Simmons and Spogli, each of whom is a director of the
Company, are general partners of FS&Co., and as such may be deemed to be
the beneficial owners of the shares of the Company's Common Stock held by
FSEP.
(5) Includes (i) 66,482 shares for which options under Envirosource's Incentive
Stock Option Plan, Envirosource's 1993 Stock Option Plan, Envirosource's
Stock Option Plan for Non-Affiliate Directors or otherwise are exercisable
within 60 days; and (ii) 26,899 shares held through the Envirosource, Inc.
Savings Plan or the Envirosource, Inc. Profit Sharing Plan as of December
31, 1998.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Former Chief Executive Officer and the other four most highly
compensated executive officers of the Company for the last three completed
fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
--------------------------------------- ---------------
Number of All Other
Name and Principal Position Year Salary Bonus Stock Options Compensation
- --------------------------------------- ------ ----------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Louis A. Guzzetti, Jr.(1) ............. 1998 $410,315 $ 0 5,000 $ 30,116(3)
Former Chief Executive Officer 1997 410,459 0 0 30,023(4)
1996 409,161 0 10,000 34,763(5)
Aarne Anderson ........................ 1998 157,800 0 1,429 11,824(3)
Vice President, Taxes 1997 157,830 0 0 11,824(4)
1996 147,234 0 1,229 13,228(5)
George E. Fuehrer(2) .................. 1998 183,029 0 2,857 18,751(3)
Former Senior Vice President, Planning 1997 183,125 237,500(6) 0 18,656(4)
and Business Development 1996 182,694 0 3,840 21,454(5)
Leon Z. Heller ........................ 1998 124,000 0 2,143 13,640(3)
Vice President, General 1997 123,011 0 0 13,530(4)
Counsel and Secretary 1996 115,208 0 1,715 12,727(5)
James C. Hull ......................... 1998 198,048 0 1,714 19,502(3)
Vice President and Chief 1997 198,117 0 0 19,406(4)
Financial Officer 1996 197,716 0 2,000 21,136(5)
</TABLE>
- ------------
(1) Effective January 15,1999, Mr. Guzzetti resigned as an officer and director
of the Company. As of that date the Company entered into an agreement with
Mr. Guzzetti pursuant to which he is obligated to perform certain
consulting services for the Company for 30 months and the Company is
required to pay him $34,167 per month. The agreement contains certain
non-competition provisions applicable to Mr. Guzzetti for 30 months. If
Mr. Guzzetti accepts full time employment with a new employer prior to the
end of the 30 month term, or if he dies or becomes disabled in that
period, the remaining payments will be accelerated and paid as a lump sum
(the "Accelerated Payment"); provided however, that the Accelerated
Payment will be applied toward repayment of the "1986 Loan." (See "Certain
Transactions; Compensation Committee Interlocks and Insider Participation
-- Employee Loans" for the definition of, and information concerning, the
1986 Loan.) If the amount of the Accelerated Payment exceeds the
outstanding balance of the 1986 Loan, the excess will be paid to Mr.
Guzzetti.
(2) Effective February 12, 1999, Mr. Fuehrer resigned as an officer of the
Company. As of that date the Company entered into an agreement with Mr.
Fuehrer pursuant to which he is obligated to perform certain consulting
services for the Company for nine months and the Company is required to
pay him $15,250 per month. The agreement contains certain non-competition
provisions applicable to Mr. Fuehrer for nine months. As part of the
agreement, the Company forgave a loan with a balance of $43,325 that it
had made to Mr. Fuehrer to facilitate a relocation and deposited $34,018
into Mr. Fuehrer's tax withholding accounts in connection with that
forgiveness.
(3) Includes Company contributions to accounts in the Envirosource, Inc.
Savings Plan, as follows: Mr. Guzzetti, $9,600; Mr. Anderson, $4,434; Mr.
Fuehrer, $9,600; Mr. Heller, $7,440; and Mr. Hull $9,600; Company
contributions to accounts in the Envirosource, Inc. Profit Sharing Plan,
as follows: Mr. Guzzetti, $8,000; Mr. Anderson, $7,390; Mr. Fuehrer,
$8,000; Mr. Heller, $6,200; and Mr. Hull $8,000; and Company contributions
to accounts in the Envirosource, Inc. Supplemental Executive Retirement
Plan, as follows: Mr. Guzzetti, $12,516; Mr. Fuehrer, $1,151; and Mr. Hull
$1,902.
6
<PAGE>
(4) Includes Company contributions to accounts in the Envirosource, Inc.
Savings Plan, as follows: Mr. Guzzetti, $9,500; Mr. Anderson, $4,434; Mr.
Fuehrer, $9,500; Mr. Heller, $7,380; and Mr. Hull, $9,500; Company
contributions to accounts in the Envirosource, Inc. Profit Sharing Plan of
$8,000 each for Messrs. Guzzetti, Fuehrer, and Hull, $7,390 for Mr.
Anderson, and $6,150 for Mr. Heller; and Company contributions to accounts
in the Envirosource, Inc. Supplemental Executive Retirement Plan, as
follows: Mr. Guzzetti, $12,523; Mr. Fuehrer, $1,156; and Mr. Hull, $1,906.
(5) Includes Company contributions to accounts in the Envirosource, Inc.
Savings Plan, as follows: Mr. Guzzetti, $9,000; Mr. Anderson, $4,411; Mr.
Fuehrer, $9,000; Mr. Heller, $4,750; and Mr. Hull, $9,000; Company
contributions to accounts in the Envirosource, Inc. Profit Sharing Plan of
$7,500 each for Messrs. Guzzetti, Anderson, Fuehrer, Heller, and Hull; and
Company contributions to accounts in the Envirosource, Inc. Supplemental
Executive Retirement Plan, as follows: Mr. Guzzetti, $18,263; Mr.
Anderson, $1,317; Mr. Fuehrer, $4,954; Mr. Heller, $477; and Mr. Hull,
$4,636.
(6) Represents a special bonus paid to Mr. Fuehrer in connection with the sale
of the Company's former subsidiary, IMSAMET, Inc. Substantially all of the
bonus, after taxes, was applied toward principal and interest that had
accrued on the Company's 1989 loan to Mr. Fuehrer in connection with a
purchase of Common Stock. See "Certain Transactions; Compensation
Committee Interlocks and Insider Participation--Employee Loans" for a more
detailed description of the 1989 loan to Mr. Fuehrer.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Grant Date Present
Name Granted (#)(1) Fiscal Year ($/Sh)(2) Expiration Date Value ($)(3)
- ---------------------------- ---------------- -------------- ------------ ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Louis A. Guzzetti, Jr. ..... 5,000 7.0% $ 14.00 2/18/08(4) $49,750
Aarne Anderson ............. 1,429 2.0% 14.00 2/18/08 14,219
Leon Z. Heller ............. 2,143 3.0% 14.00 2/18/08 21,323
George E. Fuehrer .......... 2,857 4.0% 14.00 2/18/08(4) 28,427
James C. Hull .............. 1,714 2.4% 14.00 2/18/08 17,054
</TABLE>
- ------------
(1) These options vest at the annual rate of 331/3% beginning on the first
anniversary of the date of grant.
(2) The exercise price is equal to the closing market price of the Company's
Common Stock on the date of grant.
(3) The grant date present values were determined using the Black-Scholes
pricing model and the following assumptions: .58% expected stock price
volatility, 4.7% risk free rate of return, zero dividend yield and option
exercise at the end of the 8th year.
(4) These options expired when the individual's employment ended in 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number and value at December 31, 1998
of all exercisable and unexercisable options held by the Former Chief Executive
Officer and the other four most highly compensated executive officers of the
Company under the Company's Incentive Stock Option Plan and the 1993 Stock
Option Plan. In 1998, none of the named executive officers exercised any
options.
7
<PAGE>
Number of
Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
----------------- -----------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
- -------------------------------- ----------------- -----------------
Louis A. Guzzetti, Jr. ......... 56,614/8,333 $ --/$--
Aarne Anderson ................. 9,866/1,839 --/ --
George E. Fuehrer .............. 23,653/4,137 --/ --
Leon Z. Heller ................. 2,048/3,096 --/ --
James C. Hull .................. 10,952/2,381 --/ --
- ------------
(1) The value of unexercised in-the-money options represents the difference
between the fair market value of the underlying Common Stock as of
December 31, 1998 and the exercise price of such options. None of the
above-listed individuals held any in-the-money options as of December 31,
1998.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with John T. DiLacqua
dated January 20,1999 that provides that Mr. DiLacqua will serve as President
and Chief Executive Officer of the Company for an initial term of three years,
subject to renewal for successive three-year terms by mutual agreement of the
parties. The agreement provides for a base annual salary to Mr. DiLacqua of
$400,000 and an annual incentive bonus based on the achievement of certain
performance targets set by the Compensation Committee. Mr. DiLacqua's target
bonus is 50% of his base salary, with a minimum annual bonus for 1999 of
$100,000. (See "Compensation Committee Report on Executive Compensation --
Incentive Compensation.") The agreement also provides Mr. DiLacqua with an
option to purchase 100,000 shares of Common Stock; see "Proposal 2 --
Ratification and Approval of Adoption of Envirosource, Inc. 1999 Stock Option
Plan." In the event the Company terminates the agreement without cause, the
Company is obligated to pay Mr. DiLacqua a severance payment equal to one
year's salary plus the amount of his target bonus for the year in which the
termination occurs. Mr. DiLacqua is also entitled to receive this amount if he
terminates the agreement following a change in control of the Company if he is
not offered a similar position with similar responsibilities and equal or
greater compensation, or if he is asked to relocate his office more than 50
miles away following such change in control. If the Company does not renew the
agreement at the end of the initial three-year term, it will be obligated to
pay Mr. DiLacqua a severance payment equal to one year's salary.
John C. Heenan began employment as the Company's Senior Vice President,
Finance, Administration and Planning on February 22, 1999. The Company has
agreed to pay Mr. Heenan a base annual salary of $192,000 and to pay him a
minimum annual incentive bonus for 1999 equal to 22.5% of his base salary. Mr.
Heenan's target bonus for 1999 is 45% of his base salary; see "Compensation
Committee Report on Executive Compensation -- Incentive Compensation." The
Company has granted Mr. Heenan an option to purchase 15,000 shares of Common
Stock at $2.0625 per share, which option will vest over the next three years in
equal annual increments. The Company has also agreed to continue to pay Mr.
Heenan his base salary for nine months if it terminates his employment without
cause.
The Company has agreed with Mr. Anderson and Mr. Hull that if it
terminates their employment without cause before May 31, 1999 (in the case of
Mr. Anderson) or June 30, 1999 (in the case of Mr. Hull), or if they resign
before such dates for "good reason" (a material diminution in responsibility, a
reduction in salary, or a relocation of more than 50 miles), the Company will
continue their salary for 18 months or until they become reemployed in a
comparable position. Further, the Company has agreed with Mr. Hull that if he
elects to terminate his employment as of June 30, 1999, or if the Company
terminates his employment without cause after that date, the Company will
continue his salary for one year.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of two
independent directors and two directors who are general partners of FS&Co. The
Compensation Committee has responsibility for administering the policies that
govern employee compensation programs and executive compensation, and for
reviewing and making recommendations concerning the Company's employee benefit
plans, executive compensation and such other matters as are referred to it by
the Board of Directors. The Compensation Committee has furnished the following
report on executive compensation:
The Compensation Committee believes it is important to align the
financial interests of the Company's senior managers, including the Chief
Executive Officer, with those of its stockholders. In furtherance of this
objective, the Company relies to a significant degree on annual incentive
compensation and stock options in addition to base compensation.
BASE COMPENSATION. The Company attempts to offer new executive officers
base compensation competitive with companies of comparable size, complexity
and geographic location. Annual increases in base compensation have
generally been intended to approximate competitive wage escalation
including, where appropriate, adjustments based on merit. The Compensation
Committee has not historically reviewed initial decisions regarding base
compensation for new executive officers (other than the Chief Executive
Officer), but the Compensation Committee does approve annual increases for
executive officers.
INCENTIVE COMPENSATION. The remainder of executive compensation is tied
to corporate performance. The Company relies on annual incentive
compensation and stock options to provide incentives to executives to meet
the Company's business, financial and strategic objectives, and to reward
and retain executives who perform in furtherance of those objectives.
The Company's incentive compensation program for executive officers is
based on a combination of financial and non-financial goals. The annual
incentive compensation "pool" is the sum of the target bonuses of each of
the Company's executive officers. This pool may be increased or decreased,
depending on the extent to which the Company meets specified financial
targets, typically expressed in relation to budgeted annual cash flow,
operating income or net income. For 1998 the target bonus was set at 50% of
base compensation for the Company's former Chief Executive Officer and
40-45% of base compensation for the Company's other executive officers. The
extent to which an individual executive officer participates in bonuses, if
any, from the pool depends on that individual's achievement of nonfinancial
objectives negotiated annually between that individual and his or her
supervisor and that individual's overall performance. Non-financial
objectives involve projects or programs within each executive officer's
area of responsibility. Early each year the Compensation Committee reviews
management's proposed incentive compensation program financial targets, and
the non-financial objectives of each of the Company's executive officers,
for that fiscal year, as well as proposed awards, if any, in respect of the
preceding fiscal year.
No bonuses were awarded to executive officers for 1998 because the
Company did not achieve the required level of operating income. For 1999,
the target bonus has been set at 50% of base compensation for the Company's
Chief Executive Officer and 15-45% of base compensation for the Company's
other executive officers.
STOCK OPTIONS. The Compensation Committee believes that stock options
represent a desirable long-term compensation method because they reward
Company performance that increases the value of stockholders' ownership.
All options granted to executive officers under the Company's stock option
plans have an exercise price at least equal to the fair market value of the
Company's Common Stock on the date of grant, and all such options granted
to executive officers vest or have vested over periods of several years.
These features help ensure the long-term nature of compensation through
stock options.
Early each year the Compensation Committee reviews the Chief Executive
Officer's proposals for option awards, if any, to executive officers and
other key employees, taking into account the Company's recent performance
as well as the responsibilities, past performance, and anticipated
performance requirements of each of such individuals and previous option
awards. The Company has not established any particular target ownership
level for Company equity holdings by its executive officers. Options may
also be granted to newly-hired officers based on responsibilities and
anticipated performance requirements.
9
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The compensation of the Chief
Executive Officer is intended to reflect a combination of performance
indicators and long-term increase in stockholder value. The base salary of
Mr. DiLacqua, the Company's recently hired Chief Executive Officer, may be
somewhat above the average salary of peers at other comparable companies in
recognition of his experience and the complexity of the Company's
businesses.
Compensation and Stock Option
Committee
WALLACE B. ASKINS
RAYMOND R CALDIERO
JOHN M. ROTH
J. FREDERICK SIMMONS
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
total return on the Company's Common Stock, on an indexed basis, against the
cumulative total returns of the Russell 2000 Index and the Dow Jones
Industrial-Diversified Index assuming $100 was invested on December 31, 1993.
COMPARISON OF 5 YEAR CUMULATIVE RETURN*
AMONG ENVIROSOURCE, INC., THE RUSSELL 2000 INDEX
AND THE DOW JONES INDUSTRIAL - DIVERSIFIED INDEX
250 |----------------------------------------------------------------------|
| |
| @ |
| |
| @ |
200 |----------------------------------------------------------------------|
| |
| # # |
| |
D | @ |
O 150 |----------------------------------------------------------------------|
L | # |
L | # |
A | @ |
R | |
S 100 |-* # @----------------------------------------------------------------|
| * # |
| @ * * * |
| |
| |
50 |----------------------------------------------------------------------|
| |
| |
| |
| * |
0 |----------------------------------------------------------------------|
12/93 12/94 12/95 12/96 12/97 12/98
*$100 INVESTED ON 12/31/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDNG DECEMBER 31.
Research Data Group Peer Group Total Return Worksheet
Envirosource Inc. (ENSO)
CUMULATIVE TOTAL RETURN
----------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
ENVIROSOURCE, INC. * 100 98 89 80 89 22
RUSSELL 2000 # 100 98 126 147 180 179
DOW JONES INDUSTRIAL-DIVERSIFIED @ 100 92 120 155 204 234
11
<PAGE>
CERTAIN TRANSACTIONS; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
MANAGEMENT AGREEMENT
FS&Co. provides advice and assistance to the Company regarding corporate
and financial planning and the development of business strategies. The Company
does not pay FS&Co. a fee for such services but has agreed to reimburse FS&Co.
for all expenses incurred in connection with such advice and assistance.
EMPLOYEE LOANS
In 1986, the Company agreed to grant Mr. Guzzetti a loan of $500,000 (the
"1986 Loan"), which loan was issued in 1987 and which initially bore interest
at 7.5% per annum and was repayable in ten equal annual installments. On
several occasions the Company extended the maturity of the 1986 Loan and added
certain amounts of accrued interest to the principal amount thereof. Effective
March 31, 1993, the Company reduced the interest rate on the 1986 Loan to 6%
per annum. As of January 15, 1999, the 1986 Loan was amended to require a
$150,000 repayment installment to be made within 60 days, to provide for
quarterly payments of interest, and to extend the maturity date of the
remaining principal to the earlier of (i) July 15, 2001 or (ii) the date on
which the "Accelerated Payment" is due. (See Note 1 to the Summary Compensation
Table for the definition of "Accelerated Payment.") As of April 1, 1999, the
outstanding principal amount of the 1986 Loan (including financed interest
payments) was $375,432.
In connection with Common Stock purchases by certain executive officers of
the Company in January 1989 which were consummated at the Company's request,
the Company loaned $350,000 to Mr. Guzzetti, $90,000 to Mr. Anderson, and
$220,000 to Mr. Fuehrer. All of such indebtedness initially bore interest at 8%
per annum and had a maturity date in January 1994. On several occasions the
Company extended the maturity of these loans and added certain amounts of
accrued interest to the principal amounts thereof. Effective April 1, 1993, the
Company reduced the interest rate on these loans to 6% per annum. Effective
January 15, 1999, pursuant to a negotiated agreement related to such Common
Stock purchase, the Company adjusted the outstanding balance of Mr. Guzzetti's
loan from $535,400 (which amount included financed interest payments) to
$50,000, to reflect a decline in the value of the Common Stock purchased with
the loan proceeds. Mr. Guzzetti repaid this amount, with interest from the date
of adjustment to the date of repayment, in January 1999. Effective February 12,
1999, pursuant to a negotiated agreement related to such Common Stock purchase,
the Company adjusted the outstanding balance of Mr. Fuehrer's loan from
$211,208 (which amount included financed interest payments) to $9,500, to
reflect a decline in the value of the Common Stock purchased with the loan
proceeds. Mr. Fuehrer repaid this amount, with interest from the date of
adjustment to the date of repayment, in March 1999. Mr. Anderson's loan remains
outstanding and has a maturity date of March 31, 2000; as of April 1, 1999 the
outstanding principal amount of Mr. Anderson's loan (including financed
interest payments) was $135,374.
The loan terms described above are not normally obtainable from
unaffiliated third parties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Askins,
Caldiero, Roth and Simmons. Mr. Askins was an executive officer of the
Company's predecessor, White Motor Corporation, from December 1976 until June
1984.
12
<PAGE>
PROPOSAL 2
RATIFICATION AND APPROVAL OF ADOPTION OF THE
ENVIROSOURCE, INC. 1999 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN AND VOTE REQUIRED
Effective February 25, 1999, the Board of Directors adopted the
Envirosource, Inc. 1999 Stock Option Plan (the "1999 Plan"), subject to
approval by the Company's stockholders. The purpose of the 1999 Plan is to
provide the participants with the opportunity to receive grants of incentive
stock options, nonqualified stock options and stock appreciation rights,
thereby encouraging them to contribute materially to the growth of the Company
and aligning their economic interests with those of the stockholders. The 1999
Plan will be effective as of February 25, 1999, subject to the affirmative vote
of a majority of the shares of Common Stock voting at the Annual Meeting.
SUMMARY DESCRIPTION OF THE 1999 PLAN
The following summary of the 1999 Plan is qualified in its entirely by the
full text of the 1999 Plan, which is set forth as Appendix A hereto. The 1999
Plan will be administered by a committee of the Board of Directors of the
Company (the "Committee"), the composition of which satisfies the provisions of
Rule 16b-3 ("Rule 16b-3") under Section 16(b) of the Securities Exchange Act of
1934, as amended and Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
The major provisions of the 1999 Plan are as follows:
ELIGIBILITY. Employees and directors of the Company and its subsidiaries,
as well as consultants and advisors who perform services for the Company
and its subsidiaries ("key advisors"), are eligible to receive grants under
the 1999 Plan.
TYPE OF OPTIONS. Options granted under the 1999 Plan may be "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Code or
options not subject to Section 422 of the Code ("NQSOs"). Options granted
to non-employee directors and key advisors may only be NQSOs.
OPTION PRICE. The exercise price of all options under the 1999 Plan will
be determined by the Committee. The exercise price of an ISO will not be
less than the fair market value of a share of Common Stock on the date the
option is granted.
SARs. Stock appreciation rights ("SARs") may also be granted under the
1999 Plan. An SAR granted under the 1999 Plan, when it becomes exercisable,
entitles the holder thereof to receive in cash, shares of Common Stock or a
combination thereof (as determined by the Committee) in an amount equal in
value to the excess of the fair market value of a share of Common Stock on
the date of exercise over the base amount of the SAR. Unless the Committee
determines otherwise, the base amount of an SAR will be equal to the per
share exercise price of the option related to such SAR, or if there is no
related option, the fair market value of a share of Common Stock on the
date of the grant of the SAR.
EXERCISE PERIOD. The term of all options and SARs granted under the 1999
Plan is set by the Committee, but in no event can such term exceed ten
years. Unless otherwise determined by the Committee, in the event the
grantee ceases to be employed by, or provide services to, the Company
("termination event"), the grantee's options and SARs will expire as
follows: Termination resulting from death or disability, or death within 90
days of termination other than for cause -- options/SARs expire one year
after the termination event; termination for cause -- options/SARs expire
immediately upon the termination event; other terminations -- options/SARs
expire 90 days after the termination event.
VESTING. The Committee has the discretion to determine the vesting
schedule under which options and SARs issued under the 1999 Plan become
exercisable. The occurrence of a change of control of the Company will
result in the immediate vesting of all options and SARs issued under the
1999 Plan.
PAYMENT. Each option, whether an ISO or an NQSO, when it becomes
exercisable, entitles the holder thereof to purchase a specified number of
shares of Common Stock for an amount per share equal
13
<PAGE>
to the exercise price per share of the option, payable in cash, in shares
of Common Stock with an aggregate value equal to such amount, or in a
combination thereof, as determined by the Committee. The Committee may also
provide for a cashless exercise procedure pursuant to which options may be
exercised.
SHARES THAT MAY BE ISSUED UNDER THE 1999 PLAN. Upon approval of this
Proposal by the Company's stockholders, 500,000 shares of Common Stock will
be reserved for issuance upon the exercise of options or SARs. The maximum
aggregate number of shares of Common Stock subject to grants made under the
1999 Plan to any individual during any calendar year will be 100,000
shares.
OPTION GRANTS.
On February 25, 1999, the Committee, subject to stockholder approval of
the 1999 Plan, granted Mr. DiLacqua an option for 100,000 shares of Common
Stock with an exercise price of $4.5625 per share. Such option has a ten-year
term and will vest in equal annual increments over a three-year period. No
other options have been granted under the 1999 Plan. In 1998, the Company
awarded options for 7,286 shares to all current executive officers as a group
under the Company's 1993 Stock Option Plan. Directors, as a group, received
options for 11,680 shares under the Company's Stock Option Plan for
Non-Affiliate Directors in 1998, and the Company granted options for 46,782
shares to current employees, excluding the executive officers, under the
Company's 1993 Stock Option Plan in 1998.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND THE OPTIONEES
Generally, upon exercise of an NQSO, the excess of the fair market value
of the shares on the exercise date over the exercise price will be taxable as
ordinary income to the optionee. Thereafter, any appreciation or depreciation
realized upon a subsequent sale of the shares should qualify as long-term or
short-term capital gain or loss, depending upon the optionee's holding period
of the shares. The Company should be entitled to a tax deduction in an amount
equal to the ordinary income recognized by the optionee upon exercise.
Generally, an optionee should not realize taxable income at the time of
grant or exercise of an ISO, and the Company should not be entitled to a tax
deduction with respect to such grant or exercise. Although an optionee will not
realize ordinary income upon exercise of an ISO, the excess of the fair market
value of the Common Stock acquired at the time of exercise over the option
price may constitute an adjustment in computing alternative minimum taxable
income under section 56 of the Code and, thus, may result in the imposition of
the "alternative minimum tax" pursuant to Section 55 of the Code on the
optionee. Upon a sale of shares acquired by exercise of an ISO within one year
after such exercise or within two years after the date of grant, any excess of
(i) the lesser of (a) the fair market value of the shares at the time of
exercise and (b) the amount of sale proceeds over (ii) the exercise price of
such shares, should be ordinary income to the optionee and the Company should
be entitled to a deduction for the same amount. Any appreciation after the date
of exercise should qualify as capital gain. If the Optionee holds shares longer
than the aforementioned one year and two year periods, all gain (or loss) upon
a subsequent sale should be treated as long-term capital gain (or loss) to the
optionee, with no deduction being allowed to the Company.
Upon exercise of an SAR, the optionee should recognize ordinary income in
the amount of cash and the value of any property received pursuant to such
exercise and the Company should be entitled to a tax deduction for the same
amount.
Under Section 162(m) of the Code, the Company may be precluded from
claiming a federal income tax deduction for total remuneration in excess of
$1,000,000 paid to the chief executive officer or to any of the other four most
highly compensated officers in any one year. Total remuneration includes
amounts received upon the exercise of stock options or SARs granted under the
1999 Plan. An exception exists, however, for "qualified performance-based
compensation." The 1999 Plan is intended to allow grants of options and SARs to
meet the requirements of "qualified performance-based compensation." Options
should generally meet the requirements of "qualified performance-based
compensation," if the exercise price is at least equal to the fair market value
of the Common Stock on the date of grant.
The federal income tax consequences described in this section are based on
current laws and regulations, and there is no assurance that the laws and
regulations will not change in the future and affect the tax consequences of
the matters discussed in this section.
14
<PAGE>
TERMINATION OF AND AMENDMENTS TO THE 1999 PLAN
The 1999 Plan shall expire by its own terms on February 24, 2009. The
Board may from time to time amend or terminate the 1999 Plan; provided,
however, that the Board may not amend the 1999 Plan without the approval of the
Company's stockholders if such approval is required in order for ISOs granted
or to be granted under the 1999 Plan to meet the requirements of section 422 of
the Code or if such approval is required in order to exempt compensation under
the Plan from the deduction limit under section 162(m) of the Code.
MARKET PRICE OF THE COMPANY'S COMMON STOCK
The closing price of the Company's Common Stock as reported on The Nasdaq
National Market for April 1, 1999, was $2.375 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION AND APPROVAL OF THE ADOPTION OF THE ENVIROSOURCE, INC. 1999 STOCK
OPTION PLAN.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission initial reports of beneficial
ownership and reports of changes in beneficial ownership of the Company's
Common Stock and derivative securities. Based solely upon a review of the
copies of the forms furnished to the Company, or written representations from
reporting persons, the Company believes that during 1998 all filing
requirements applicable to officers and directors were met.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1998. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate questions. The
Board of Directors has not yet selected the Company's independent auditors for
the fiscal year ending December 31, 1999.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters that are
to be brought before the Annual Meeting. If any other matter should be
presented for proper action, the persons named in the Proxy shall have
discretion and authority to vote or to refrain from voting in accordance with
their judgment on such matter. In addition, the persons named in the Proxy
shall have discretion and authority to vote or to refrain from voting in
accordance with their judgment with respect to matters incidental to the
conduct of the Annual Meeting.
The cost of solicitation will be borne by the Company. Solicitation will
be by mail, except for any incidental personal solicitation made by directors,
officers and employees of the Company, none of whom will receive compensation
therefor. The Company will also request banks and brokers to solicit their
customers who have a beneficial interest in shares of Common Stock registered
in the names of nominees and will reimburse such banks and brokers for their
reasonable out-of-pocket expenses. In addition, the Company's transfer agent,
American Stock Transfer & Trust Company, Inc., will assist in the solicitation
of Proxies from brokers, bank nominees and other institutional holders.
15
<PAGE>
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received at the Company's principal executive
offices on or before January 3, 2000 for inclusion in the Company's Proxy
Statement with respect to such meeting. Additionally, stockholder proposals
submitted outside the processes of Rule 14a-8 of the Exchange Act for
consideration at the 2000 Annual Meeting of Stockholders must be received by
the Company on or by March 17, 2000 in order to be considered timely for
purposes of Rule 14a-4 of the Exchange Act.
By Order of the Board of Directors,
/s/ JOHN T. DILACQUA
-------------------------------------
JOHN T. DILACQUA,
President and Chief Executive Officer
It is important that the Proxies be returned promptly. Stockholders who do
not expect to attend in person are urged to fill in, sign, date and return the
enclosed Proxy.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1998 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY
BE OBTAINED WITHOUT CHARGE (EXCEPT FOR EXHIBITS TO SUCH ANNUAL REPORT, WHICH
WILL BE FURNISHED UPON PAYMENT OF THE COMPANY'S REASONABLE EXPENSES IN
FURNISHING SUCH EXHIBITS) BY ANY PERSON SOLICITED HEREUNDER BY WRITING TO:
CORPORATE SECRETARY, ENVIROSOURCE, INC., 1155 BUSINESS CENTER DRIVE, HORSHAM,
PA 19044-3454.
16
<PAGE>
APPENDIX A
ENVIROSOURCE, INC.
1999 STOCK OPTION PLAN
The purpose of the Envirosource, Inc. 1999 Stock Option Plan (the "Plan")
is to provide (i) designated key employees of Envirosource, Inc. (the
"Company") and its subsidiaries, (ii) non-employee members of the Board of
Directors of the Company (the "Board") and (iii) certain consultants and
advisors who perform services for the Company or its subsidiaries with the
opportunity to receive grants of incentive stock options, nonqualified stock
options and stock appreciation rights. The Company believes that the Plan will
encourage the participants to contribute materially to the growth of the
Company, thereby benefitting the Company's shareholders, and will align the
economic interests of the participants with those of the shareholders.
1. Administration
(a) Committee. The Plan shall be administered and interpreted by a
committee appointed by the Board (the "Committee"), which may consist of two or
more persons who are "outside directors" as defined under section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and related Treasury
regulations and "non-employee directors" as defined under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, the
Board may ratify or approve any grants as the Committee deems appropriate.
(b) Committee Authority. The Committee shall have the sole authority to
(i) determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued grant, and (v) deal with any other matters
arising under the Plan.
(c) Committee Determinations. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
2. Grants
Awards under the Plan may consist of grants of incentive stock options as
described in Section 5 ("Incentive Stock Options"), nonqualified stock options
as described in Section 5 ("Nonqualified Stock Options") (Incentive Stock
Options and Nonqualified Stock Options are collectively referred to as
"Options") and stock appreciation rights as described in Section 6 ("SARs")
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in a grant
instrument or an amendment to the grant instrument (the "Grant Instrument").
The Committee shall approve the form and provisions of each Grant Instrument.
Grants under a particular Section of the Plan need not be uniform as among the
grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to adjustment as described below, the
aggregate number of shares of common stock of the Company ("Company Stock")
that may be issued or transferred under the Plan is 500,000 shares, subject to
adjustment as described below. The maximum aggregate number of shares of
Company Stock that shall be subject to Grants made under the Plan to any
individual during any calendar year shall be 100,000 shares, subject to
adjustment as described below. The shares may be authorized but unissued shares
of Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan. If and to
the extent Options or SARs granted under the Plan terminate, expire, or are
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canceled, forfeited, exchanged or surrendered without having been exercised,
the shares subject to such Grants shall again be available for purposes of the
Plan. If shares of Company Stock are used to pay the Exercise Price (as defined
in Section 5(b)) of an Option, only the net number of shares received by the
Grantee (as defined in Section 4(b)) pursuant to such exercise shall be
considered to have been issued or transferred under the Plan with respect to
such Option, and the remaining number of shares subject to the Option shall
again be available for purposes of the Plan.
(b) Adjustments. If there is any change in the number or kind of shares of
Company Stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation or (iii) by reason of a reclassification or change in par
value, the maximum number of shares of Company Stock that any individual
participating in the Plan may be granted in any year, the number of shares
covered by outstanding Grants, the kind of shares issued under the Plan, and
the price per share or the applicable market value of such Grants shall be
appropriately adjusted by the Committee to reflect any increase or decrease in
the number of, or change in the kind or value of, issued shares of Company
Stock to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Grants; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated. Any adjustments
determined by the Committee shall be final, binding and conclusive.
4. Eligibility for Participation
(a) Eligible Persons. All key employees of the Company and its
subsidiaries ("Employees"), including Employees who are officers or members of
the Board shall be eligible to participate in the Plan. Members of the Board
who are not Employees ("Non-Employee Directors") and consultants and advisors
who perform bona fide services for the Company or any of its subsidiaries ("Key
Advisors") shall also be eligible to participate in the Plan.
(b) Selection of Grantees. The Committee shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants. Employees,
Non-Employee Directors and Key Advisors who receive Grants under this Plan
shall hereinafter be referred to as "Grantees".
5. Granting of Options
(a) Number of Shares. The Committee shall determine the number of shares
of Company Stock that will be subject to each Grant of Options to Employees,
Non-Employee Directors and Key Advisors.
(b) Type of Option and Price.
(i) The Committee may grant Incentive Stock Options that are intended to
qualify as "incentive stock options" within the meaning of section 422 of the
Code or Nonqualified Stock Options that are not intended so to qualify or any
combination of Incentive Stock Options and Nonqualified Stock Options, all in
accordance with the terms and conditions set forth herein. Incentive Stock
Options may be granted only to Employees. Nonqualified Stock Options may be
granted to Employees, Non-Employee Directors and Key Advisors.
(ii) The purchase price (the "Exercise Price") of Company Stock subject to
an Option shall be determined by the Committee and may be equal to, greater
than, or less than the Fair Market Value (as defined below) of a share of
Company Stock on the date the Option is granted; provided, however, that (x)
the Exercise Price of an Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted and (y) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.
(iii) The Fair Market Value of a share shall be determined as follows: (x)
if the principal trading market for the Company Stock is a national securities
exchange or the Nasdaq National Market, the last reported sale price thereof on
the relevant date or (if there were no trades on that date) the latest
preceding date upon which a sale was reported, or (y) if the Company Stock is
not principally traded on such exchange or market, the mean
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between the last reported "bid" and "asked" prices of Company Stock on the
relevant date, as reported on Nasdaq or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary financial
reporting service, as applicable and as the Committee determines. If the
Company Stock is not publicly traded or, if publicly traded, is not subject to
reported transactions or "bid" or "asked" quotations as set forth above, the
Fair Market Value per share shall be as determined by the Committee.
(c) Option Term. The Committee shall determine the term of each Option.
The term of any Option shall not exceed ten years from the date of grant.
However, an Incentive Stock Option that is granted to an Employee who, at the
time of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.
(d) Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Grant Instrument. The
Committee may accelerate the exercisability of any or all outstanding Options
at any time for any reason.
(e) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only be exercised while the
Grantee is employed by, or providing service to, the Company as an Employee or
member of the Board. In the event that a Grantee ceases to be employed by, or
provide service to, the Company for any reason other than Disability, death, or
termination for Cause (as defined below), any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within 90 days
after the date on which the Grantee ceases to be employed by, or provide
service to, the Company (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee,
any of the Grantee's Options that are not otherwise exercisable as of the date
on which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.
(ii) In the event the Grantee ceases to be employed by, or provide service
to, the Company on account of a termination for Cause by the Company, any
Option held by the Grantee shall terminate as of the date the Grantee ceases to
be employed by, or provide service to, the Company.
(iii) In the event the Grantee ceases to be employed by, or provide
service to, the Company because the Grantee is Disabled, any Option which is
otherwise exercisable by the Grantee shall terminate unless exercised within
one year after the date on which the Grantee ceases to be employed by, or
provide service to, the Company (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee,
any of the Grantee's Options which are not otherwise exercisable as of the date
on which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.
(iv) If the Grantee dies while employed by, or providing service to, the
Company or within 90 days after the date on which the Grantee ceases to be
employed or provide service on account of a termination specified in Section
5(e)(i) above (or within such other period of time as may be specified by the
Committee), any Option that is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Committee, any of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.
(v) For purposes of this Section 5(e) and Section 6:
(A) The term "Company" shall mean the Company and its parent and
subsidiary corporations.
(B) "Employed by, or provide service to, the Company" shall mean
employment or service as an Employee, Key Advisor or Non-Employee Director
(so that, for purposes of exercising Options and SARs, a Grantee shall not
be considered to have terminated employment or service until the Grantee
ceases to be an Employee, Key Advisor or Non-Employee Director), unless
the Committee determines otherwise.
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(C) "Disability" shall mean a Grantee's becoming disabled within the
meaning of section 22(e)(3) of the Code.
(D) "Cause" shall mean, except to the extent specified otherwise by the
Committee, a finding by the Committee that the Grantee (i) has breached
his or her employment or service contract with the Company, (ii) has
engaged in disloyalty to the Company, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in
the course of his or her employment or service, (iii) has disclosed trade
secrets or confidential information of the Company to persons not entitled
to receive such information or (iv) has engaged in such other behavior
detrimental to the interests of the Company as the Committee determines.
(f) Exercise of Options. A Grantee may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Company with payment of the Exercise Price. The Grantee shall pay the Exercise
Price for an Option as specified by the Committee (x) in cash, (y) with the
approval of the Committee, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price
or by attestation (on a form prescribed by the Committee) to ownership of
shares of Company Stock having a Fair Market Value on the date of exercise
equal to the Exercise Price, or (z) by such other method as the Committee may
approve, including payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board. The Committee may
authorize loans by the Company to Grantees in connection with the exercise of
an Option, upon such terms and conditions as the Committee, in its sole
discretion, deems appropriate. Shares of Company Stock used to exercise an
Option shall have been held by the Grantee for the requisite period of time to
avoid adverse accounting consequences to the Company with respect to the
Option. The Grantee shall pay the Exercise Price and the amount of any
withholding tax due (pursuant to Section 7) at the time of exercise.
(g) Limits on Incentive Stock Options. If the aggregate Fair Market Value
of the stock on the date of the grant with respect to which Incentive Stock
Options are exercisable for the first time by a Grantee during any calendar
year, under the Plan or any other stock option plan of the Company or a parent
or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be
treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be
granted to any person who is not an Employee of the Company or a parent or
subsidiary (within the meaning of section 424(f) of the Code).
6. Stock Appreciation Rights
(a) General Requirements. The Committee may grant stock appreciation
rights ("SARs") to an Employee, Key Advisor or Non-Employee Director separately
or in tandem with any Option (for all or a portion of the applicable Option).
Tandem SARs may be granted either at the time the Option is granted or at any
time thereafter while the Option remains outstanding; provided, however, that,
in the case of an Incentive Stock Option, SARs may be granted only at the time
of the Grant of the Incentive Stock Option. The Committee shall establish the
base amount of the SAR at the time the SAR is granted. Unless the Committee
determines otherwise, the base amount of each SAR shall be equal to the per
share Exercise Price of the related Option or, if there is no related Option,
the Fair Market Value of a share of Company Stock as of the date of Grant of
the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to
a Grantee that shall be exercisable during a specified period shall not exceed
the number of shares of Company Stock that the Grantee may purchase upon the
exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Company Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the
extent of an equal number of shares of Company Stock.
(c) Exercisability. An SAR shall be exercisable during the period
specified by the Committee in the Grant Instrument and shall be subject to such
vesting and other restrictions as may be specified in the Grant Instrument. The
Committee may accelerate the exercisability of any or all outstanding SARs at
any time for any reason. SARs may only be exercised while the Grantee is
employed by, or providing service to, the Company or during the applicable
period after termination of employment or service as described in Section 5(e).
A tandem SAR shall be exercisable only during the period when the Option to
which it is related is also exercisable.
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(d) Value of SARs. When a Grantee exercises SARs, the Grantee shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Company Stock
or a combination thereof. The stock appreciation for an SAR is the amount by
which the Fair Market Value of the underlying Company Stock on the date of
exercise of the SAR exceeds the base amount of the SAR as described in
Subsection (a).
(e) Form of Payment. The Committee shall determine whether the
appreciation in an SAR shall be paid in the form of cash, shares of Company
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate. For purposes of calculating the number of shares of Company Stock
to be received, shares of Company Stock shall be valued at their Fair Market
Value on the date of exercise of the SAR. If shares of Company Stock are to be
received upon exercise of an SAR, cash shall be delivered in lieu of any
fractional share.
7. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all Grants paid
in cash, or from other wages paid to the Grantee, any federal, state or local
taxes required by law to be withheld with respect to such Grants. In the case
of Options and other Grants paid in Company Stock, the Company may require that
the Grantee or other person receiving or exercising Grants pay to the Company
the amount of any federal, state or local taxes that the Company is required to
withhold with respect to such Grants, or the Company may deduct from other
wages paid by the Company the amount of any withholding taxes due with respect
to such Grants.
(b) Election to Withhold Shares. If the Committee so permits, a Grantee
may elect to satisfy the Company's income tax withholding obligation with
respect to an Option or SAR paid in Company Stock by having shares withheld up
to an amount that does not exceed the Grantee's minimum applicable withholding
tax rate for federal (including FICA), state and local tax liabilities. The
election must be in a form and manner prescribed by the Committee and may be
subject to the prior approval of the Committee.
8. Nontransferability of Grants
Except as provided below, only the Grantee may exercise rights under a
Grant during the Grantee's lifetime. A Grantee may not transfer those rights
except by will or by the laws of descent and distribution or, with respect to
Grants other than Incentive Stock Options, if permitted in any specific case by
the Committee, pursuant to a domestic relations order (as defined under the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the regulations thereunder). When a Grantee dies, the personal
representative or other person entitled to succeed to the rights of the Grantee
("Successor Grantee") may exercise such rights. A Successor Grantee must
furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Grantee's will or under the applicable laws of descent and
distribution.
9. Change of Control of the Company
As used herein, a "Change of Control" shall be deemed to have occurred if:
(a) the Company merges or consolidates with any other corporation (other
than a wholly-owned direct or indirect subsidiary of the Company) and is not
the surviving corporation (or survives as a subsidiary of another corporation)
and after such merger or consolidation the Company's shareholders immediately
prior to such merger or consolidation do not own a majority of the voting power
of the then outstanding securities of the surviving corporation or do not
otherwise have the right to elect a majority of the board of directors of the
surviving corporation, (b) the Company sells or agrees to sell all or
substantially all of its assets to any other person or entity and, after such
sale, the Company's shareholders immediately prior to such sale do not own a
majority of the voting power of the then outstanding securities of such person
or entity or do not otherwise have the right to elect a majority of the board
of directors of such person or entity, (c) any third person or entity (other
than Freeman Spogli & Co. or any affiliate thereof, or a trustee or committee
of any qualified employee benefit plan of the Company) together with its
affiliates shall become, directly or indirectly, the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act and the regulations promulgated
thereunder) of a majority of the voting power of the then outstanding
securities of the Company, or (d) the individuals who constitute the Board as
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of the Effective Date of this Plan (the "Incumbent Board") shall cease for any
reason to constitute at least a majority of the Board provided that any person
becoming a director whose election was approved by a majority of the members of
the Incumbent Board shall be considered, for purposes of this Plan, a member of
the Incumbent Board.
10. Consequences of a Change of Control
(a) Notice and Acceleration. Upon a Change of Control, (i) the Company
shall provide each Grantee with outstanding Grants written notice of such
Change of Control and (ii) all outstanding Options and SARs shall automatically
accelerate and become fully exercisable.
(b) Assumption of Grants. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding
Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation, and other
outstanding Grants shall be converted to similar grants of the surviving
corporation.
11. Requirements for Issuance or Transfer of Shares
Limitations on Issuance or Transfer of Shares. No Company Stock shall be
issued or transferred in connection with any Grant hereunder unless and until
all legal requirements applicable to the issuance or transfer of such Company
Stock have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any Grant made to any Grantee
hereunder on such Grantee's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.
12. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that the Board shall not amend the Plan without shareholder
approval if such approval is required in order for Incentive Stock Options
granted or to be granted under the Plan to meet the requirements of section 422
of the Code or such approval is required in order to exempt compensation under
the Plan from the deduction limit under section 162(m) of the Code.
(b) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval
of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 18(a). The termination of the Plan shall not
impair the power and authority of the Committee with respect to an outstanding
Grant. Whether or not the Plan has terminated, an outstanding Grant may be
terminated or amended under Section 18(a) or may be amended by agreement of the
Company and the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
13. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
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14. Rights of Participants
Nothing in this Plan shall entitle any Employee, Key Advisor or
Non-Employee Director or other person to any claim or right to be granted a
Grant under this Plan. Neither this Plan nor any action taken hereunder shall
be construed as giving any individual any rights to be retained by or in the
employ of the Company or any other employment rights.
15. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
16. Headings
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
17. Effective Date of the Plan.
Subject to approval by the Company's shareholders, the Plan shall be
effective on February 25, 1999.
18. Miscellaneous
(a) Compliance with Law. The Plan, the exercise of Options and SARs and
the obligations of the Company to issue or transfer shares of Company Stock
under Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. In addition,
it is the intent of the Company that the Plan and applicable Grants under the
Plan comply with the applicable provisions of section 162(m) of the Code, and
section 422 of the Code. To the extent that any legal requirement of section 16
of the Exchange Act or section 162(m) or 422 of the Code as set forth in the
Plan ceases to be required under section 16 of the Exchange Act or section
162(m) or 422 of the Code, that Plan provision shall cease to apply. The
Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation.
The Committee may also adopt rules regarding the withholding of taxes on
payments to Grantees. The Committee may, in its sole discretion, agree to limit
its authority under this Section.
(b) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Instruments issued under the Plan shall be governed and
construed by and determined in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflict of laws provisions thereof.
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ENVIROSOURCE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting ofStockholders to be held at
The Homestead Restaurant, Three Village Road,
Horsham, Pennsylvania on June 10, 1999 at 10:00 A.M.
The undersigned hereby constitutes and appoints John T. DiLacqua, John
C. Heenan and Leon Z. Heller, and each of them, proxies for the undersigned,
with full power of substitution, to vote all shares of Common Stock of
Envirosource, Inc. (the "Company") that the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held on June 10, 1999 or
any adjournment or adjournments thereof, on all matters that may come before the
Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS SPECIFIED,
THIS PROXY WILL BE VOTED "FOR" ALL OF THE PROPOSALS LISTED HEREIN. In their
discretion, the Proxies are authorized to vote upon such other and further
business as may properly come before the Annual Meeting or any adjournment or
adjournments thereof.
(To be completed and signed on reverse side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ENVIROSOURCE, INC.
June 10, 1999
Please Detach and Mail in the Envelope Provided
Please mark your
A [X] votes as in this DO NOT PRINT
example IN THIS AREA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
FOR WITHHOLD
1. Election of [ ] [ ] Nominees: John T. DiLacqua
Class A Jeffrey G. Miller
Directors Jon D. Ralph
(INSTRUCTION: To withold authority to vote for any
individual nominees, print that nominee's name on the
line provided below.)
____________________________________________________
FOR AGAINST ABSTAIN
(2) Ratification and Approval of the Adoption of the [ ] [ ] [ ]
Envirosource, Inc. 1999 Stock Option Plan.
Dated____________________________________ , 1999
________________________________________________
Signature
________________________________________________
Signature if held jointly
(Please sign exactly as name appears hereon. If stock is held in names of joint
owners, such should sign. Attorneys, executors, administrators, etc. should
DO NOT PRINT so indicate.)
IN THIS AREA
If this Proxy is properly executed, the shares represented by this Proxy will be
voted upon the proposals listed herein in accordance with the directions given
by the stockholder, but if no such directions are given, this Proxy will be
voted FOR all of such proposals.
</TABLE>
