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
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 Section 240.14a-11(c) or Section
240.14a-12
Eastco Industrial Safety Corp.
(Name of Registrant as Specified in Its Charter)
Eastco Industrial Safety Corp.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or Item
22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: _____________
(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:____________________________________
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(3) Filing party:______________________________________________
(4) Date filed:____________________________________________
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EASTCO INDUSTRIAL SAFETY CORP.
130 West 10th Street
Huntington Station, New York 11746
________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
________________________________________
The annual meeting of the stockholders of Eastco Industrial Safety Corp.
will be held on December 12, 1995 at 3:30 p.m. at the Company's office
located at 130 West 10th Street, Huntington Station, New York 11746. The
meeting is called for the following purposes:
ELECTION OF DIRECTORS
The election of three directors to hold office for the term continuing
through the 1997 annual meeting and until the election and qualification
of their respective successors.
APPROVAL OF 1995 NON-QUALIFIED STOCK OPTION PLAN
To approve the adoption of the 1995 Non-Qualified Stock Option Plan for
the issuance of up to 350,000 shares of the Company's common stock, par
value $0.12 per share in the form attached hereto as Exhibit "1".
APPROVAL OF AN AMENDMENT TO 1994 INCENTIVE STOCK OPTION PLAN
To approve an amendment to the 1994 Incentive Stock Option Plan in the
form attached hereto as Exhibit "2".
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
To ratify the appointment of Cornick, Garber & Sandler, LLP Certified
Public Accountants, as independent auditors.
TRANSACTION OF OTHER BUSINESS
To transact such other business as may properly come before the meeting
or any adjournments thereof.
Stockholders of record at the close of business on October 30, 1995 are
entitled to receive notice of, and to vote at, this meeting. Sending in
your proxy will not prevent your attending and voting at the meeting in
person should you later decide to do so.
The accompanying form of proxy is solicited by the board of directors of
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the Company. Reference is made to the enclosed proxy statement for
further information with respect to the business to be transacted at the
meeting.
If you do not expect to attend the meeting in person, please sign and
date the enclosed proxy and mail it promptly in the enclosed envelope.
By order of the board of directors.
ALAN E. DENSEN
President
DATED: November 6, 1995
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EASTCO INDUSTRIAL SAFETY CORP.
130 West 10th Street
Huntington Station, New York 11746
__________________________________
PROXY STATEMENT
__________________________________
The proxy statement mailed to stockholders commencing approximately
November 8, 1995 is furnished in connection with the solicitation of
proxies by the board of directors of Eastco Industrial Safety Corp. (the
"Company") in connection with the annual meeting of stockholders (the
"Annual Meeting") of the Company to be held December 12, 1995 at 3:30
p.m. at the offices of the Company located at 130 West 10th Street,
Huntington Station, New York 11746. Proxies will be voted in accordance
with directions specified thereon and otherwise in accordance with the
judgment of the persons designated as proxies. Any proxy on which no
direction is specified will be voted in favor of the action described in
the proxy statement.
A proxy in the enclosed form may be revoked at any time, prior to it
being voted at the Annual Meeting, by sending a subsequently dated proxy
or by giving written notice to the Company, in each case to the attention
of Anthony P. Towell, Secretary, at the address set forth above.
Stockholders who attend the meeting may withdraw their proxies at any
time before their shares are voted by voting their shares in person.
The expense of the solicitation of proxies for the meeting, including the
cost of preparing, assembling and mailing the notice, proxy card and
proxy statement, the handling and tabulation of proxies received and the
charges of brokerage houses and other institutions, nominees or
fiduciaries in forwarding such documents of the proxy material to
beneficial owners, will be paid by the Company. In addition to the
mailing of the proxy material, such solicitation may be made in person or
by telephone and telegraph by directors, officers or regular employees of
the Company. It is estimated that the total cost of proxy solicitations
by the Company will not exceed $5,000.
The matters to be considered at this Annual Meeting will be the election
of three directors to hold office for the term continuing through the
1997 annual meeting and until the election and qualification of their
respective successors; the approval of the 1995 Non-Qualified Stock
Option Plan (the "1995 Non-Qualified Plan") for the issuance of options
to acquire up to 350,000 shares of the Company's common stock, par value
$.12 per share (the "Common Stock") in the form attached hereto; the
approval of an amendment to the 1994 Incentive Stock Option Plan (the
"1994 Plan") in the form attached hereto; and the ratification of the
appointment of Cornick, Garber & Sandler, LLP, Certified Public
Accountants, as independent auditors. The Company is aware of no other
matters to be presented for action at the meeting.
Under SEC rules, boxes and a designated blank space are provided on the
proxy card for stockholders to mark if they wish either to abstain on one
or more of the proposals or to withhold authority to vote for one or more
nominees for director.
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OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Company's voting securities consist solely of Common Stock. Holders
of Common Stock at the close of business on October 30, 1995 will be
entitled to vote. Each share of Common Stock entitles the holder to one
(1) vote on each matter to be voted upon. On the record date there were
outstanding 3,614,883 shares of Common Stock.
STOCK OWNERSHIP OF DIRECTORS
The following table sets forth as of October 30, 1995 the number of
shares of Common Stock owned by each of the present directors of the
Company, together with certain information with respect to each:
Number of
Shares
Director Beneficially Percent
Name(Age) Since Owned (1) (1)
Alan E. Densen (60) 1958 309,688(2)(5) 8.0%
Anthony P. Towell (62) 1989 676,667(3)(5) 15.9%
Lawrence Densen (36) 1986 251,813(4)(5) 6.5%
Dr. Martin Fleisher (57) 1989 10,833(6) *
James Favia (61) 1995 20,000(7) *
Herbert Schneiderman (64) 1995 38,333(8) 1.1%
___________________
* Less than 1%
(1) Beneficial ownership is determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934.
(2) Includes warrants, held by Mr. Densen's wife, to acquire 16,667
shares of Common Stock granted June 30, 1992, exercisable at $1.30
per share which expire April 11, 1999. Also includes incentive
stock options granted under the 1994 Plan to acquire 20,000 shares
of Common Stock granted on January 20, 1995, exercisable at $1.0625
which expire January 19, 2005. Amount indicated does not include
shares beneficially owned by Lawrence Densen, son of Alan E. Densen.
(3) Includes 15,000 Class A Warrants; warrants, held by Mr. Towell's
wife, to acquire 16,667 shares of Common Stock granted June 30,
1992, exercisable at $1.30 per share which expire April 11, 1999;
and incentive stock options granted under the 1994 Plan to acquire
20,000 shares of Common Stock granted on January 20, 1995,
exercisable at $1.0625 which expire January 19, 2005. Also includes
warrants to acquire 400,000 shares of Common Stock exercisable at
$1.30 per share which expire April 11, 1999.
(4) Does not include shares beneficially owned by Alan E. Densen, father
of Lawrence Densen. Includes 7,000 Class A Warrants; incentive
stock options granted under the 1983 Incentive Stock Option Plan
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(the "1983 Plan") to acquire 6,250 granted December 18, 1986 which
expires December 17, 1996 and is exercisable at $2.6664 per share;
incentive stock options granted under the 1983 Plan to acquire 563
shares of Common Stock granted June 1, 1988 which expires May 31,
1998 and is exercisable at $3.00 per share; and inventive stock
options granted under the 1994 Plan to acquire 20,000 shares of
Common Stock granted on January 20, 1995, which expire January 19,
2005 and is exercisable at $1.0625.
(5) On January 20, 1995, there was granted to Messrs. A. Densen, A.
Towell and L. Densen a non-qualified option to acquire 400,000
shares each exercisable until January 19, 2005 at an exercise price
of $1.0625, the closing market price of the Common Stock on the date
of grant. These options were granted in consideration of previous
sacrifices including reduction in salaries, cancellation of options
and other surrendered benefits by such executive officers as well as
the turnaround performance achieved by the Company. The turnaround
achieved by the Company in its performance can be directly related
to the efforts of Messrs. A. Densen, A. Towell and L. Densen. These
options can not be exercised during the first five years unless (a)
the audited pre-tax profit for fiscal 1995 is greater than $50,000,
then options to acquire 200,000 shares of Common Stock may be
exercised and (b) the audited pre-tax profit for fiscal 1996 is
greater than $250,000, then options to purchase the remaining
200,000 shares of Common Stock may be exercised. It was determined
in September 1995 that these options can now be exercised for
200,000 shares of Common Stock and such 200,000 shares are included
in the above table for each individual.
(6) Includes stock options to acquire 833 shares of Common Stock and
options to acquire 10,000 shares of Common Stock at an exercise
price of $1.6876 per share until July 26, 2000.
(7) Includes stock options to acquire 10,000 shares of Common Stock at
an exercise price of $1.6876 per share until July 26, 2000.
(8) Includes warrants to acquire 8,333 shares of Common Stock
exercisable at $1.30 per share until April 11, 1999 and options to
acquire 10,000 shares of Common Stock at an exercise price of
$1.6876 per share until July 26, 2000.
As of October 30, 1995 the directors and executive officers of the
Company, six persons, owned of record and beneficially a total of
1,307,334 shares representing 27.4% of the issued and outstanding Common
Stock of the Company. The foregoing assumes the exercise of all of the
outstanding options and warrants held by each of such persons.
Alan E. Densen has been President, Chief Executive Officer and a director
of the Company since 1958 (except for the period September 1993 to
January 1994, when he served as its Senior Vice President). He was also
Treasurer and Chief Financial Officer of the Company through 1992.
Lawrence Densen, Senior Vice President and director of the Company, has
been a Vice President and a director of the Company since 1986.
Anthony P. Towell has been the Company's Vice President of Finance,
Treasurer, and Chief Financial Officer since 1992, its Secretary since
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1993, and from 1989 to 1992 its Vice President. He has been a director
of the Company since 1989. He was a director of New York Testing
Laboratories, Inc. ("NYT"), a laboratory testing company and manufacturer
of automotive accessories, from 1988 to 1995. In addition, he has been
a director since 1988 of Nytest Environmental Inc. ("Nytest"), a
hazardous waste testing company. Mr. Towell has also been a director,
since 1991, of Ameridata Technologies, Inc. ("Ameridata"), a provider of
computer products and services. The common stock of Nytest and Ameridata
are registered under Section 12(g) and (b), respectively, of the
Securities Exchange Act of 1934.
Dr. Martin Fleisher, who holds a Ph.D. in biochemistry from New York
University, has been attending clinical chemist at Memorial
Sloan-Kettering Cancer Center since 1967. He has been a director of the
Company since 1989. He devotes only a limited portion of his time to the
business of the Company.
James Favia is a consultant to Donald & Co. ("Donald") who acts as the
Company's investment advisor. He is a chartered financial analyst and
has an MBA in finance which he obtained from New York University in 1959.
He became a director of the Company on July 26, 1995. He was a director
of T.J. Systems until November, 1994. The common stock of T.J. Systems
is registered under Section 12(g) of the Securities Exchange Act of 1934.
He devotes only a limited portion of his time to the business of the
Company.
Herbert Schneiderman is President of the Casablanca Group, L.P., a
manufacturer of diversified women's sportswear. He became a director of
the Company on July 26, 1995. He devotes only a limited portion of his
time to the business of the Company.
ELECTION OF DIRECTORS
Present Composition of Board
The bylaws of the Company provide that there will be not less than three
nor more than seven directors. The present size of the board is fixed at
six (6) directors. The board of directors is divided into two (2)
classes. The term of office of Alan E. Densen, Lawrence Densen and
Anthony P. Towell does not expire until the Company's 1996 annual meeting
and when their successors are elected.
Nominees for Director
On July 10, 1995, the Company terminated its relationship with Lew
Lieberbaum & Co., Inc. ("Lieberbaum"), the Company's underwriter for its
1994 public offering. Pursuant to such termination, Lieberbaum gave up
their right to representation on the Company's board of directors.
Therefore, on July 10, 1995, Leonard A. Neuhaus and Sheldon Lieberbaum,
who are affiliated with Lieberbaum, resigned as directors. On July 26,
1995, Herbert Schneiderman and James Favia were appointed directors to
fill the vacant seats on the board.
The board of directors has unanimously nominated and designated the
following individuals for election as directors for a two-year term
continuing through the Company's 1997 annual meeting and until their
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successors are elected and take their places:
Dr. Martin Fleisher
Mr. James Favia
Mr. Herbert Schneiderman
Reference should be made to "Stock Ownership of Directors", above, for
disclosure of their business experience and stock ownership, and to
"Certain Relationships and Related Transactions," below, for additional
information about them.
Proxies in the enclosed form will be voted for the nominees named above.
Authority may be withheld for any nominee. In addition, stockholders may
nominate additional nominees as candidates for the position as director.
Although the board of directors does not anticipate that any nominee will
be unavailable for election, in the event of such occurrence, the proxy
will be voted for such substitute, if any, as the board of directors may
designate. Proxies will not vote for a greater number of persons than
the number of nominees named. Directors will be elected by the vote of a
majority of stockholders present or by proxy at the Annual Meeting.
Abstentions are not counted in determining the number of votes required
to attain a majority of the outstanding shares in connection with this
proposal. "Broker Non-Votes" (which represent shares of Common Stock
held by stockbrokers and not voted by the brokers) will not be considered
as votes cast in determining the outcome of this proposal.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN
COMMITTEES THEREOF
Two meetings of the board of directors were held during the fiscal year
ending June 30, 1995. The board of directors has established a
Compensation Committee, an Audit Committee, and a Stock Option Committee.
The Company does not have a standing nominating committee.
The Compensation Committee presently consists of Messrs. Fleisher, Favia
and Schneiderman. The purpose of the Compensation Committee is to review
the Company's compensation of its executives, to make determinations
relative thereto, and to submit recommendations to the board of directors
with respect thereto. No meetings of this committee took place during the
fiscal year ending June 30, 1995.
The Company has an Audit Committee which presently consists of Messrs.
Towell, Favia and Schneiderman. The purpose of the Audit Committee is to
provide general oversight of audit, legal compliance, and potential
conflict of interest matters. One meeting of the Audit Committee took
place during the fiscal year ending June 30, 1995.
The Stock Option Committee presently consists of Messrs. Fleisher, Favia
and Schneiderman. The purpose of the Stock Option Committee is to select
recipients of grants of options under the 1994 Incentive Stock Option
Plan and other stock option plans and to make determinations with regard
to those plans. One meeting of this committee took place during the
fiscal year ending June 30, 1995.
Members of the board of directors who are not employees of the Company
receive a fee of $500 per meeting attended in person.
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PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth, as of October 30, 1995, the ownership
with respect to each person known to own beneficially more than 5% of the
Company's common stock:
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Owner(1) of Class
- -------------- ------------------- ------------------- -----------
Common Stock Alan E. Densen 309,688(2)(5) 8.0%
$0.12 par value 130 W. 10th Street
Huntington Station, NY
Common Stock Anthony P. Towell 676,667(3)(5) 15.9%
$0.12 par value 130 W. 10th Street
Huntington Station, NY
Common Stock Lawrence Densen 251,813(4)(5) 6.5%
$0.12 par value 130 W. 10th Street
Huntington Station, NY
(1) See footnote (1) under "Stock Ownership of Directors," above.
(2) See footnote (2) under "Stock Ownership of Directors," above.
(3) See footnote (3) under "Stock Ownership of Directors," above.
(4) See footnote (4) under "Stock Ownership of Directors," above.
(5) See footnote (5) under "Stock Ownership of Directors," above.
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EXECUTIVE COMPENSATION
Summary
The following describes the components of the total compensation of the
CEO of the Company. No executive, other than the CEO had a total annual
salary and bonus for the three years ended June 30, 1995 which exceeded
$100,000.
Summary Compensation Table
Annual Compensation Long term compensation
------------------------ --------------------------------------
Awards Payouts
------------------ -----------------
Other Securities All
Name and annual Restricted underlying LTIP other
principal Salary Bonus compen- stock options / payouts compen
position Year ($) ($) sation($) award(s)($) SARs (#) ($) sation($)
- -------- ---- ------ ----- ---------- --------- ---------- ------ --------
Alan E. 1995 107,930 -0- 30,0783(3) -0- 420,000(2) -0- -0-
Densen, 1994(1) 117,154 -0- 30,0783(3) -0- -0- -0- -0-
CEO 1995 169,920 -0- 30,0783(3) -0- -0- -0- -0-
(1) From September, 1993 to January, 1994, Mr. Densen was not CEO; he served as
Senior Vice President.
(2) Includes incentive stock options granted January 20, 1995 to acquire 20,000
shares at $1.0625 as well as non-qualified stock options to acquire 400,000
shares exercisable at $1.0625 per share, the closing market price on such
date, each exercisable until January 19, 2005. The non-qualified options
can not be exercised during the first five years unless (a) the audited
pre-tax profit for fiscal 1995 is greater than $50,000, then options to
acquire 200,000 shares of Common Stock may be exercised and (b) the audited
pre-tax profit for fiscal 1996 is greater than $250,000, then options to
purchase the remaining 200,000 shares of Common Stock may be exercised.
It was determined in September 1995 that options can now be exercised for
200,000 shares of Common Stock.
(3) Primarily includes life insurance premiums on the life of Alan E. Densen
owned by Mr. Densen's wife and paid for by the Company.
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Stock Options
OPTION/SAR GRANTS IN LAST FISCAL YEAR
[Individual Grants]
Number of Percent of
securities total options /
underlying SARs granted Exercise
Options/SARs in fiscal or base Expiration
Name granted (#)(1) year (1) price ($/Sh) Date
- ----- -------------- -------------- ------------- -----------
Alan E. 20,000 23.5% 1.0625 1/19/05
Densen,
CEO 400,000 33.3% 1.0625 1/19/05
(1) See note (2) above in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number
of securities Value
underlying unexercised in-
unexercised the-money options
Shares SARs at FY-end (#) SARs at FY-end($)
acquired on Value exercisable / exercisable /
Name exercise (#) realized ($) unexersisable unexercisable(1)
- ----- -------------- -------------- ------------- ----------------
Alan E. -0- -0- -0-/20,000 -0-/13,750
Densen,
CEO -0- -0- 200,000/200,000 137,500/137,500
(1) See footnote (2) above in the Summary Compensation Table.
Employment Agreements
As of July 1, 1995, Alan E. Densen entered into a new employment
agreement replacing an earlier employment agreement which commenced as of
the effective date of the Company's 1994 public offering. The employment
agreement with Alan E. Densen provides for him to serve as the Company's
President for a term of five years. At the end of each fiscal year
during the term of the agreement, the agreement is automatically extended
for one additional year to be added at the end of the then current term
of the agreement, unless the Board of Directors determines not to extend
the agreement. The base annual salary is $125,000 for fiscal 1996 which
shall be increased at the beginning of each fiscal year commencing July
1, 1996, at the discretion of the Board of Directors. Each increase is
not to be less than 10% of the minimum compensation paid to the employee
in the prior fiscal year. Mr. Densen is also eligible to receive an
annual bonus equal to 3 1/3% of the Company's earnings before interest
and taxes for the fiscal year ended June 30, 1996 and each fiscal year
thereafter during the term of the agreement. The bonus is to be paid
within 30 days after the completion of the Company's audited financial
statements for each fiscal year and is to be paid in cash or registered
shares of common stock of the Company. In addition, Mr. Densen is
entitled to receive reimbursement of ordinary and necessary business
expenses, a monthly automobile allowance of $700 and disability, medical,
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hospitalization, and life insurance.
The employment agreement entered into by Alan E. Densen includes
provisions that provide for his right to terminate the agreement and
thereby receive additional compensation, as provided below, in the event
that he is not elected or retained as President and a director of the
Company; the Company acts to materially reduce his duties and
responsibilities under the agreement; the Company changes the geographic
location of his duties to a location from the New York metropolitan area;
his base compensation is reduced by 10% or more; any successor to the
Company fails to assume the agreement; any other material breach of the
agreement which is not cured by the Company within 30 days; and a "Change
of Control" by which a person, other than a person who is an officer
and/or director of the Company as of the effective date of the
agreements, or a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of 20% or more of the
combined voting power of the then outstanding securities of the Company.
In the event that Alan E. Densen terminates his position because of any
of the aforesaid reasons other than a "Change of Control", or if the
Company terminates his employment in any way that is a breach of the
agreement by the employer, Mr. Densen shall be entitled to receive, in
addition to his salary continuation, as a bonus, a cash payment equal to
his total base salary plus projected expenses and bonuses for the
remainder of the term thereof, payable within 30 days of termination and
all stock options, warrants and other stock appreciation rights granted
by the Company to him shall become immediately exercisable at an exercise
price of $0.10 per share. In the event that he owns or is entitled to
receive any unregistered securities of the Company, than the Company
shall register such securities within 120 days of the his termination.
In the event that there is a "Change of Control", Mr. Densen shall be
paid within 30 days thereof a one-time bonus equal to his total minimum
base salary for the next three years and he shall be immediately
reimbursed for all amounts not yet received for his participation in the
$250,000 junior participation in the loans made to the Company from
Congress Financial Corporation made during September 1993, without regard
to whether such amount is currently due pursuant to the terms thereof.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No members of the Compensation Committee served as officers or employees
of the Company.
See "Certain Relationships and Related Transactions" regarding Mr.
Schneiderman's ownership of certain warrants issued in connection with a
reduction of indebtedness regarding the Company's premises. On January
31, 1995, the exercise price of such warrants were reduced to $1.30 per
share and extended until April 11, 1999.
Reference should also be made to "Certain Relationships and Related
Transactions" with regard to warrants granted to Donald & Co. Securities
Inc. ("Donald"). James Favia, a director of the Company, serves as a
consultant to Donald.
On July 26, 1995, the board of directors granted non-qualified options to
acquire 10,000 shares of Common Stock to each of Martin Fleisher, James
Favia and Herbert Schneiderman. The options are exercisable at a price
of $1.6876 per share and expire on the earlier of July 26, 2000 or within
thirty days of the termination of their position as a director.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially
own more than ten percent of the Company's Common Stock, to file initial
reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission. Executive officers, directors and
greater than ten percent beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers
and directors, the Company believes that during the fiscal year ended
June 30, 1995 all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than ten percent beneficial
owners were complied with.
STATEMENT PURSUANT TO SECTION 726(d) BUSINESS CORPORATION LAW
The Company has obtained from National Union Insurance Company a
Directors and Officers Liability and Company Reimbursement Policy for the
period September 16, 1995 to September 16, 1996. The policy provides
annual coverage of $1,000,000 per loss with an aggregate of $1,000,000
for all claims for directors and officers liability. Coverage is in
accordance with the terms of the policy and is subject to various
exceptions contained therein. The insurance is on a claims made basis.
The premium paid for this insurance by the Company was $27,000. This
statement is delivered pursuant to Section 726(d) of the Business
Corporation Law of the State of New York.
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1983 INCENTIVE STOCK OPTION PLAN
On June 23, 1983 the board of directors approved a 1983 Incentive Stock
Option Plan under then Section 422A of the Internal Revenue Code which
was approved by the stockholders on February 28, 1984. Options to
acquire a total of 56,250 shares of Common Stock were authorized to be
issued under the 1983 Plan. As of October 30, 1995, options to acquire
8,654 shares of Common Stock remain outstanding at exercise prices
between $2.6664 and $3.00 per share, including options granted to
Lawrence Densen to acquire 6,250 shares exercisable at $2.6664 per share
until December 17, 1996 and options to acquire 563 shares exercisable at
$3.00 per share until May 31, 1998. The 1983 Plan expired on June 22,
1993 and no additional options may be issued thereunder.
1992 INCENTIVE STOCK OPTION PLAN
In December 1992, the Board of Directors and the shareholders of the
Company adopted the Company's 1992 stock option plan (the "1992 Plan").
The 1992 Plan provides incentives in the form of incentive stock options
("ISO's") and reserved 200,000 shares for issuance. As of the October 30,
1995, 3,000 ISO's exercisable at $3.00 per share are outstanding under
the 1992 Plan. The Company has agreed not to issue any further options
under the 1992 Plan.
1994 INCENTIVE STOCK OPTION PLAN
On January 28, 1994, the board of directors adopted the 1994 Incentive
Stock Option Plan under Section 422 of the Internal Revenue Code which
was approved by the stockholders on December 15, 1994. A total of
100,000 shares were authorized to be issued under the 1994 Plan. The 1994
Plan expires on January 27, 2004 and no additional options may be issued
after such date.
The following summary provides a description of the significant
provisions of the 1994 Plan. However, such summary is qualified in its
entirety by reference to the full text of the 1994 Plan.
Eligibility to participate in the 1994 Plan is limited to employees of
the Company and its subsidiaries. The term of an option will not exceed
10 years. Options will not be transferable except upon death and, in
such event, transferability will be effected by will or by the laws of
descent and distribution.
Options which are granted by the board of directors under the 1994 Plan
are subject to the following limitations: (i) options may not be granted
at less than 100% of fair market value at the time of grant, (ii) options
granted to employees who own more than 10% of the Company's outstanding
Common Stock will be granted at not less than 110% of the fair market
value for a term of five years, and (iii) the aggregate market value of
the Common Stock for which options are exercisable during any calendar
year by an individual is limited to $100,000, but the value may exceed
$100,000 for which options may be granted to an individual.
For purposes of the 1994 Plan, fair market value is the last price for
the Company's Common Stock as quoted by NASDAQ.
<PAGE>
No disposition of Common Stock received upon exercise of Options shall be
made within two (2) years from the date of grant of the Option nor within
one (1) year after the exercise.
The 1994 Plan provides that the payment of the exercise price of options
shall be in cash or in shares of the Company's Common Stock of equivalent
value.
An option granted under the 1994 Plan may not be exercised unless, at the
time of exercise, the optionee is then in the Company's employ and has
completed at least twelve (12) months of continuous employment with the
Company from the date of grant of the option.
In the event of any future recapitalization, reorganization, split-up or
consolidation of shares, the number of shares and exercise price shall be
proportionately adjusted.
Schedule of Options Under 1994 Plan
Unexercised Options
The table set forth below provides to October 30, 1995 a schedule of
unexercised options heretofore granted by the Company pursuant to the
1994 Plan. All options herein may not be exercised unless, at the time
of exercise, the option is then in the Company's employ and has completed
at least twelve (12) months of continuous employment with the Company
from the date of grant of the option.
Aggregate
Number
of Shares Exercise
Date of Subject Price Date
Grant Option To Option Per Share(1) of Expiration
- ------------ --------- ------------ ----------------
January 20, 1995 85,000 $1.0625 January 19, 2005
________
(1) The exercise price of the options equals the fair market value of
the Company's Common Stock on the date of grant.
Exercised Options
As of October 30, 1995, no options under the 1994 Plan have been
exercised.
Remaining Options
15,000 additional options may be granted under the 1994 Plan. The board
of directors has authorized an amendment to the 1994 Plan which would
increase the number of shares authorized thereunder by 550,000 shares.
The amendment to the 1994 Plan must be approved by the Company's
stockholders.
<PAGE>
Options Granted and Exercised
During the
Three Fiscal Years Ended June 30, 1995
Options Granted
No options were granted to employees under the 1983 Plan and 8,654 remain
outstanding, 3,000 options were granted and remain outstanding under the
1992 Plan and 85,000 options were granted and remain outstanding under
the 1994 Plan to employees, including 20,000 options granted on January
20, 1995 at an exercise price of $1.0625 to each of Messrs. A. Densen,
Towell and L. Densen which options expire on January 19, 2005, during the
three fiscal years ended June 30, 1995.
Options Exercised
No options were exercised during the three fiscal years ended June 30,
1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During September, 1993 the Company's lender, Congress, agreed to provide
an overadvance to the Company of $500,000. In connection therewith,
Messrs. A. Densen, L. Densen and A. Towell obtained a junior
participation interest from Congress by advancing $250,000 of their funds
to Congress. $250,000 of this overadvance was repaid to Congress during
fiscal 1994. The balance of $250,000 will be repaid by Congress, at its
option, to Messrs. A. Densen, L. Densen and A. Towell, subject to the
availability of funds.
A group of investors (the "Associates") holds a first mortgage on the
Company's executive offices and warehouse facility in the principal
amount of $538,544 as of June 30, 1995. The wives of Alan E. Densen and
Anthony P. Towell, executive officers and directors of the Company, and
Herbert Schneiderman, a director of the Company, are members of
Associates. During the year ended June 30, 1995, the Company paid
Associates $121,108 in principal and interest on the mortgage.
See note (5) in "Stock Ownership of Directors" with reference to
non-qualified options granted to Messrs. A. Densen, L. Densen and A.
Towell.
On January 31, 1995, the Company's board of directors reduced the
exercise price of the 2.3 million outstanding Class A Warrants issued in
connection with the 1994 Public Offering to $1.30 per share. At the same
time, the board of directors also reduced the exercise price to $1.30
per share with regard to the 108,333 warrants ("Associate Warrants")
issued to a group of investors, including the spouses of Alan Densen
(16,667 Associate Warrants owned by her) and Anthony P. Towell (16,667
Associate Warrants owned by her), and Herbert Schneiderman (8,333
Associate Warrants owned by him), in connection with a reduction of
indebtedness regarding the Company's premises, 400,000 warrants purchased
<PAGE>
by Anthony P. Towell, the Company's Chief Financial Officer, from Scorpio
Partners, L.P., 40,782 Royce warrants issued in connection with a 1991
public offering and 8,333 warrants in connection with a 1991 bridge loan.
All these warrants have also been extended to April 11, 1999. These
warrants were all adjusted as indicated so as to treat them on an equal
basis and to provide incentives for them to be exercised.
The Company had employment agreements with Messrs. A. Densen, A. Towell
and L. Densen, which commenced as of the effective date of the Company's
1994 public offering in April, 1994. As of July 1, 1995, these executive
officers entered into new agreements. See "Executive Compensation -
Employment Agreements" with regards to provisions contained in the
employment agreement of Alan E. Densen, the Company's President and CEO.
Similar provisions are contained in each of the employment agreements
with Anthony P. Towell and Lawrence Densen.
On July 10, 1995 the Company terminated its relationship with Lew
Lieberbaum & Co., Inc. ("Lew Lieberbaum"), the Company's underwriter in
its 1994 public offering. Pursuant to an agreement dated July 10, 1995,
the Company canceled all of Lew Lieberbaum's rights under the
Underwriting Agreement (the "Underwriting Agreement"), including, but
not limited to, the right of first refusal to act on behalf of the
Company in future transactions, the cancellation of all Underwriter's
Warrants held by Lew Lieberbaum or its affiliates, their right to
representation on the Company's board of directors and the termination of
any obligation by holders of securities subject to a "lock-up" to obtain
the permission of Lew Lieberbaum prior to sale or other disposition of
said securities. At the same time, Leonard A. Neuhaus and Sheldon
Lieberbaum, who are affiliated with Lew Lieberbaum, resigned as directors
of the Company. In exchange, the Company issued 100,000 shares of common
stock to Lew Lieberbaum and has agreed to file a registration statement
for these shares with the Securities & Exchange Commission by October 31,
1995. Such registration statement was filed by the Company on October
30, 1995.
On April 18, 1995, the Company entered into an agreement with Donald to
act as its investment adviser for a term of three years at a retainer of
$3,000 per month. The agreement may be terminated for cause at any time
and after eighteen (18) months by either party upon forty-five days
notice. Donald was also granted a five year warrant to purchase 125,000
shares exercisable at $1.25 per share, the closing market price on the
date of grant. James Favia, a director of the Company, serves as a
consultant to Donald.
<PAGE>
<PAGE>
PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1995
NON-QUALIFIED OPTION PLAN
Introduction
The board of directors unanimously recommends that the stockholders
approve the 1995 Non-Qualified Stock Option Plan. A copy of the 1995
Non-Qualified Plan is annexed hereto as Exhibit "1" and will become
effective immediately upon stockholder approval.
Description of the 1995 Non-Qualified Stock Option Plan
On November 1, 1995, the board of directors authorized the adoption of
the 1995 Non Qualified Option Plan. The adoption of the 1995 Non-Qualified
Plan is subject to the approval of the Company's stockholders
at the Annual Meeting on December 12, 1995. The purpose of the 1995 Non-
Qualified Plan is to encourage and reward key employees by giving them an
opportunity to share in any future success of the Company without
burdening the Company's cash resources. The 1995 Non-Qualified Plan
authorizes stock options to the key employees of the Company to acquire
shares of the Company's Common Stock.
The 1995 Non-Qualified Plan authorizes the grant of 350,000 shares
subject to adjustment as provided therein. No options have been granted
under the 1995 Non-Qualified Plan to date. The 1995 Non-Qualified Plan
terminates ten (10) years after stockholder approval. Options granted
shall specify the exercise price, the duration of the option, the number
of shares to which the option applies and such other terms and conditions
not inconsistent with the 1995 Non-Qualified Plan as the committee
administering the 1995 Non-Qualified Plan shall determine provided that
the option price shall not be less than 100% of the fair market value at
the time the option is grant and no option may be exercisable for more
than ten (10) years after the date on which it is granted. Payment of
the exercise price for options under the 1995 Non-Qualified Plan is to be
made in cash, by the exchange of Common Stock having equivalent value or
through a "Cashless Exchange". If a Participant elects to utilize a
Cashless Exercise, he shall be entitled to a credit equal to the amount
of that equity by which the current Fair Market Value exceeds the option
price on that number of options surrendered and to utilize that credit to
exercise additional options held by him that such equity could purchase.
There shall be canceled that number of options utilized for the credit
and for the options exercised for such credit. In the event of any change
of the outstanding Common Stock by reason of a stock split, stock
dividend, combination, reclassification or exchange of shares,
recapitalization, merger, consolidation or other similar event, the
number of shares available for options and the price thereof shall be
proportionately adjusted.
The description of certain features of the 1995 Non-Qualified Plan set
forth herein is subject to and qualified in its entirety by the full text
of the 1995 Non-Qualified Plan, which is attached as Exhibit "1" to this
Proxy Statement.
<PAGE>
Reasons for the 1995 Non-Qualified Plan
The 1995 Non-Qualified Plan, unlike the 1994 Plan, does not qualify for
treatment as an incentive stock option plan under the Internal Revenue
Code. There are various tax benefits which could accrue to the Company
upon the exercise of non-qualified stock options that may not be
available to the Company upon the exercise of qualified incentive stock
options.
The purpose of the 1995 Non-Qualified Plan is to provide greater
flexibility and increased effectiveness in motivating the Company's
employees to provide for the Company's long term growth and business
success.
Administration by Committee
The 1995 Non-Qualified Plan provides for its administration by a stock
option committee. This committee is to be appointed by the board of
directors and is to be composed of no less than two (2) directors who are
of employees of the Company, and as such, are not eligible to participate
in the 1994 Plan. The existing stockholder, which consists of James A.
Favia, Martin Fleisher and Herbert Schneiderman, shall administer the
1995 Non-Qualified Plan.
Federal Income Tax Consequences
The Company believes that under existing federal income tax laws, the
grant of non-qualified stock options generally will create no tax
consequences for a participant or the Company. A participant must
generally recognize ordinary income equal to the difference between the
exercise price and the fair market value of the shares received on the
date of exercise of the options. The Company will be entitled to
deductions to the extent that participants recognize ordinary income upon
the exercise of the options. Special tax rules and elections apply under
certain circumstances which may affect the timing and measurement of
income recognized in connection with awards under the 1995 Non-Qualified
Plan, particularly in the case of directors and officers subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended.
Vote Required for Approval
A copy of the 1995 Non-Qualified Plan is annexed hereto as Exhibit "1".
The 1995 Non-Qualified Plan must be approved by the Company's
stockholders. The affirmative vote of the holders of a majority of the
shares of Common Stock represented at the Annual Meeting in person or by
proxy is required for approval of this proposal. Abstentions are not
counted in determining the number of votes required to attain a majority
of the outstanding shares in connection with this proposal. "Broker Non-
Votes" (which represent shares of Common Stock held by stockbrokers and
not voted by the brokers) will not be considered as votes cast in
determining the outcome of this proposal.
The board of directors unanimously recommends a vote FOR approval of the
adoption of the 1995 Non-Qualified Stock Option Plan.
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S 1994 INCENTIVE STOCK OPTION PLAN
Introduction
The board of directors unanimously recommends that the stockholders amend
the 1994 Plan. A copy of the Amendment to the 1994 Plan is annexed
hereto as Exhibit "2" and will become effective immediately upon
stockholder approval.
Description
On January 28, 1994, the board of directors adopted the 1994 Plan which
was approved by the stockholders on December 15, 1994. The purpose of
the 1994 Plan is to encourage and reward employees by giving them an
opportunity to share in any future success of the Company without
burdening the Company's cash resources. The 1994 Plan currently
authorizes the grant of 100,000 shares, subject to adjustment as provided
in the plan. As of October 30, 1995, options to acquire 15,000 shares of
Common Stock remain outstanding.
On November 1, 1995, the board of directors authorized an amendment to
the 1994 Plan which is annexed hereto as Exhibit "2". The amendment to
the 1994 Plan will increase the number of shares authorized for issuance
under the 1994 Plan from 100,000 shares to 650,000 shares. Also, the
amendment provides for an immediate vesting of options in the event of a
Change of Control. All other provisions of the 1994 Plan will not
change. Refer to the description of the 1994 Plan above for a more
detailed description of such plan.
Vote Required
A copy of the amendment to the 1994 Plan is annexed hereto as Exhibit
"2". The amendment to the 1994 Plan must be approved by the Company's
stockholders. The affirmative vote of the holders of a majority of the
shares of Common Stock represented at the Annual Meeting in person or by
proxy is required for approval of this proposal. Abstentions are not
counted in determining the number of votes required to attain a majority
of the outstanding shares in connection with this proposal. "Broker Non-
Votes" (which represent shares of Common Stock held by stockbrokers and
not voted by the brokers) will not be considered as votes cast in
determining the outcome of this proposal.
The board of directors unanimously recommends a vote FOR approval of the
adoption of the amendment to the 1994 Incentive Stock Option Plan.
<PAGE>
<PAGE>
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Cornick,
Garber & Sandler, LLP as the Company's independent auditors for the
fiscal year ending June 30, 1996. The Board of Directors proposes
ratification of the appointment of Cornick, Garber & Sandler, LLP as
independent auditors. Cornick, Garber & Sandler, LLP has advised the
Company that it has no financial interest of any kind in the Company and
has had no connection with the Company at any time in the past except for
the professional relationship between auditor and client.
The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the Annual Meeting will be required for approval of
the auditors. In accordance with New York State law, abstentions are not
counted in determining the votes cast in connection with the selection of
auditors. If such approval is not obtained, selection of independent
auditors will be reconsidered by the board of directors.
Representatives of Cornick, Garber & Sandler, LLP are expected to be
present at the Annual Meeting with the opportunity to make a statement if
they desire to do so, and shall be available to respond to appropriate
questions.
The board of directors unanimously recommends a vote FOR ratification of
the appointment of Cornick, Garber & Sandler, LLP as independent
auditors.
PROCEDURE FOR SUBMISSION OF 1996 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the 1996 annual meeting proxy
statement must be received by Eastco Industrial Safety Corp. at 130 West
10th Street, Huntington Station, New York 11746, Attention Anthony P.
Towell, prior to August 14, 1996. All such proposals are subject to the
applicable rules and requirements of the Securities and Exchange
Commission.
OTHER MATTERS
So far as the board of directors is aware, only the aforementioned
matters will be acted upon at the meeting. If any other matters properly
come before the meeting, it is intended that the accompanying proxy may
be voted on such other matters in accordance with the best judgment of
the person or persons voting said proxy.
By order of the board of directors.
Dated: November 6, 1995
ALAN E. DENSEN
President
<PAGE>
<PAGE>
EXHIBIT AND APPENDIX INDEX
Non Qualified Stock Option Plan Exhibit "1"
Amendment to 1994 Incentive
Stock Option Plan Exhibit "2"
Form of Proxy Card Appendix "1"
<PAGE>
<PAGE>
EXHIBIT "1"
EASTCO INDUSTRIAL SAFETY CORP.
NON-QUALIFIED STOCK OPTION PLAN
SECTION 1 - OBJECTIVE
The objective of the Eastco Industrial Safety Corp. Non-Qualified
Stock Option Plan (the "Plan") is to attract and retain the best
available executive personnel and other key employees to be responsible
for the management, growth and success of the business, and to provide an
incentive for such employees to exert their best efforts on behalf of the
Company and it shareholders.
SECTION 2 - DEFINITIONS
2.1 General Definitions. The following words and phrases, when used
herein, shall have the following meanings:
(a) "Act" - The Securities Exchange Act of 1934, as amended.
(b) "Agreement" - The document which evidences the grant of
any Award under the Plan and which sets forth the terms,
conditions, and limitations relating to such Award.
(c) "Award" - The grant of any stock option.
(d) "Board" - The Board of Directors of Eastco Industrial
Safety Corp.
(e) "Code" - The Internal Revenue Code of 1986, as amended,
and including the regulations promulgated pursuant
thereto.
(f) "Committee" - The Stock Option Committee of the Board of
Directors of the Company, which shall consist of two or
more members. The members of the Committee shall be
"disinterested" persons within the meaning of Rule 16b-3,
<PAGE>
as the same may be amended or supplemented from time to
time, as promulgated under the Act. No member of the
Committee shall be eligible to receive Awards under the
Plan unless permitted by such Rule 16b-3.
(g) "Common Stock" - The present shares of Common Stock of the
Company, and any shares into which such shares are
converted, changed or reclassified.
(h) "Company" - Eastco Industrial Safety Corp., a New York
corporation, and its groups, divisions and subsidiaries.
(i) "Employee" - Any person employed by the Company as an
employee.
(j) "Fair Market Value" or "FMV" - The fair market value of
Common Stock on a particular day shall be the closing
price of the Common Stock on NASDAQ, or if not applicable,
by the National Quotations Bureau or any other national
stock exchange on which the Common Stock is traded, on
such date.
(k) "Option" - The right to purchase Common Stock of the
Company at a stated price for a specified period of time.
For purposes of the Plan, the option is a Non-Qualified
Stock Option.
(l) "Participant" - Any Employee designated by the Committee
to participate in the Plan.
(m) "Shares" - Shares of Common Stock.
2.2 - Other Definitions. In addition to the above definitions,
certain words and phrases used in the Plan and any Agreement may be
defined elsewhere in the Plan or in such Agreement.
<PAGE>
SECTION 3 - COMMON STOCK
3.1 - Number of Shares. Subject to the provisions of Section 3.3,
the number of Shares which may be issued for Options granted under the
Plan may not exceed 350,000 Shares.
3.2 - Re-Usage. If an Option expires or is terminated, surrendered,
or canceled without having been fully exercised, or if any other grant
results in any Shares not being issued, the Shares covered by such Option
shall again be immediately available for Awards under the Plan.
3.3 - Adjustments. In the event of any change in the outstanding
Common Stock by reason of a stock split, stock dividend, combination,
reclassification or exchange of Shares, recapitalization, merger,
consolidation or other similar event, the number of Shares available for
Options, and the number of Shares subject to outstanding Options, and the
price thereof, and the Fair Market Value, as applicable, shall be
proportionately adjusted by the Committee in its sole discretion and any
such adjustment shall be binding and conclusive on all parties. Any
fractional Shares resulting from any such adjustment shall be
disregarded.
SECTION 4 - ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those key employees selected by
the Committee to participate in the Plan who hold positions of
responsibility and whose participation in the Plan the Committee or
management of the Company determines to be in the best interests of the
Company.
<PAGE>
SECTION 5 - ADMINISTRATION
5.1 - Committee. The Plan shall be administered by the Committee,
which shall consist of two or more members of the Board of Directors and
who shall not be eligible to participate in the Plan. The members of the
Committee shall be appointed by and shall serve at the pleasure of the
Board, which may from time to time change the Committee's membership.
5.2 - Authority. The Committee shall have the sole and complete
authority to:
(a) determine the individuals to whom awards are granted, the
amounts of the awards to be granted and the time of all
such grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Award granted;
(c) interpret and construe the Plan and all Agreements;
(d) prescribe, amend and rescind rules and regulations
relating to the Plan;
(e) determine the content and form of all Agreements;
(f) determine all questions relating to Awards under the Plan;
(g) maintain accounts, records and ledgers relating to Awards;
(h) maintain records concerning its decisions and proceedings;
(i) employ agents, attorneys, accountants or other persons for
such purposes as the Committee considers necessary or
desirable;
(j) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and to
carry out the objectives of the Plan.
<PAGE>
<PAGE>
5.3 - Determinations. All determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the
Plan shall be final, binding and conclusive for all purposes and upon all
persons.
5.4 - Delegation. Except as required by Rule 16b-3 promulgated
under the Act (and any successor to such rule) with respect to the grant
of Awards to Participants who are subject to Section 16 of the Act, the
Committee may delegate to appropriate senior officers of the Company its
duties under the Plan pursuant to such conditions and limitations as the
Committee may establish.
SECTION 6 - STOCK OPTIONS
6.1 - Type of Option. It is intended that only non-qualified stock
options may be granted by the Committee under the Plan.
6.2 - Grant of Option. An Option may be granted to Participants at
such time or times as shall be determined by the Committee. Each Option
shall be evidenced by an Option Agreement that shall specify the exercise
price, the duration of the Option, the number of Shares to which the
Option applies, and such other terms and conditions not inconsistent with
the Plan as the Committee shall determine.
6.3 - Option Price. The per share option price shall be not less
than 100% of the Fair Market Value at the time the Option is granted.
6.4 - Exercise of Options. Options awarded under the Plan shall be
exercisable at such times and shall be subject to such restrictions and
conditions, including the performance of a minimum period of service
after the grant, as the Committee may impose, which need not be uniform
for all participants; provided, however, that no Option shall be
exercisable for more than 10 years after the date on which it is granted.
<PAGE>
6.5 - Payment. The Committee shall determine the procedures
governing the exercise of Options, and shall require that the per share
option price be paid in full at the time of the exercise. The Committee
may, in its discretion, permit a Participant to make payment in cash, in
Shares already owned by the Participant, valued at the Fair Market Value
thereof, as partial or full payment of the exercise price or through a
"Cashless Exercise".
If a Participant elects to utilize a Cashless Exercise, he shall be
entitled to a credit equal to the amount of that equity by which the
current Fair Market Value exceeds the option price on that number of
options surrendered and to utilize that credit to exercise additional
options held by him that such equity could purchase. There shall be
canceled that number of options utilized for the credit and for the
options exercised for such credit. For example, if the Participant has
options to acquire 20,000 shares which are exercisable, the Fair Market
Value is $2.00 per share, the exercise price is $1.25 per share, and the
participant elects to utilize for a credit 10,000 options ($7,500), then
upon a Cashless Exercise in connection therewith he shall be entitled to
acquire 6,000 shares of Common Stock in exchange for the options for
10,000 shares for which a credit has been received and option for 6,000
shares have been exercised. The Participant will still have exercisable
options to acquire 4,000 shares of Common Stock.
As soon as practical after full payment of the exercise price, the
Company shall deliver to the Participant a certificate or certificates
representing the acquired shares.
6.6 - Rights of a Shareholder. Until the exercise of an Option and
the issuance of the Shares in respect thereof, a Participant shall have
<PAGE>
no rights as a Shareholder with respect to the Shares covered by such
Option.
SECTION 7 - AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
The Board of Directors at any time may terminate or suspend the
Plan, and from time to time may amend or modify the Plan. No amendment,
modification, or termination of the Plan shall in any manner adversely
affect any Award theretofore granted under the Plan without the consent
of the Participant.
SECTION 8 - TERMINATION OF EMPLOYMENT
8.1 - Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of retirement, any Option
granted to such Participant which is then outstanding may be exercised by
the Participant at any time prior to the expiration of the term of the
Option or within one (1) year following the Participant's termination of
employment, whichever period is shorter.
8.2 - Termination of Employment Due to Death or Disability. Unless
otherwise determined by the Committee at the time of grant, in the event
a Participant's employment is terminated by reason of death or
disability, any Option granted to such Participant which is then
outstanding may be exercised by the Participant or the Participant's
legal representative at any time prior to the expiration date of the term
of the Option or within six (6) months following Participant's
termination of employment, whichever period is shorter.
8.3 - Termination of Employment for Any Other Reason. Unless
otherwise determined by the Committee at the time of grant, in the event
<PAGE>
the employment of the Participant shall terminate for any reason other
than misconduct or one described in Section 8.1 or 8.2, any Option
granted to such Participant which is then outstanding may be exercised by
the Participant at any time prior to the expiration date of the term of
the Option or within three (3) months following the Participant's
termination of employment, whichever period is shorter. If the
employment of a Participant is terminated by the Company by reason of the
Participant's misconduct, any outstanding Option shall cease to be
exercisable on the date of the Participant's termination of employment.
As used herein, "misconduct" means that the Participant has engaged, or
intends to engage, in competition with the Company, has induced any
customer of the Company to breach any contract with the Company, has made
any unauthorized disclosure of any of the secrets or confidential
information of the Company, has committed an act of embezzlement, fraud,
or theft with respect to the property of the Company, or has deliberately
disregarded the rules of the Company in such manner as to cause any loss,
damage, or injury to, or otherwise endanger the property, reputation, or
employees of the Company or has otherwise failed to act in a faithful or
diligent manner on behalf of the Company. The Committee shall determine
whether a Participant's employment is terminated by reason of misconduct.
8.4 - Accrual of Right at Date of Termination. The Participant
shall have the right to exercise an Option as indicated in Sections 8.1,
8.2 and 8.3 only to the extent the Participant's right to exercise such
Option had accrued at the date of termination of employment pursuant to
the terms of the Option Agreement and had not previously been exercised.
<PAGE>
<PAGE>
SECTION 9 - MISCELLANEOUS PROVISIONS
9.1 - Non-Transferability of Awards. Unless otherwise determined by
the Committee at the time of grant, and except as provided in Section 8,
no Awards granted under the Plan shall be assignable, transferable, or
payable to or exercisable by anyone other than the Participant to whom it
was granted.
9.2 - No Guarantee of Employment by Participation. Nothing in the
Plan shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employment of the Company. No
employee shall have a right to be selected as a Participant, or, having
been so selected, to receive any future Awards.
9.3 - Tax Withholding. The Company shall have the authority to
withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local withholding tax
requirements on any Award under the Plan, and the Company may defer
payment of cash or issuance of Shares until such requirements are
satisfied. The Committee may, in its discretion, permit a Participant to
elect, subject to such conditions are the Committee shall require, to
have Shares otherwise issuable under the Plan withheld by the Company and
having a Fair Market Value sufficient to satisfy all or part of the
Participant's estimated total federal, state and local tax obligation
associated with the transaction.
9.4 - Governing Law. The Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by
the Code or Act, shall be governed by the laws of the State of New York
and construed in accordance therewith.
<PAGE>
9.5 - Effective Date. The Plan shall be submitted to the
Shareholders of the Company for approval at the Annual Meeting of
Shareholders of the Company scheduled to be held on December 12, 1995 and
shall be effective immediately upon such approval by the Shareholders of
the Company, provided, however, that no Award requiring the issuance of
shares shall be exercised or paid out unless at the time of such exercise
or payout (i) such Shares are covered by a currently effective
registration statement filed under the Securities Act of 1933, as
amended, if one is then required, or in the sole opinion of the Company
and its counsel such issuance of Shares is otherwise exempt from the
registration requirements of such Act, and (ii) such Shares are quoted on
NASDAQ or on any other securities exchange upon which the Common Stock of
the Company is listed. The Plan shall terminate ten (10) years after the
date of Shareholder approval.
9.6 - Provisions Relating to Section 16 Persons. Notwithstanding
any other provision herein, any Award granted hereunder to an Employee
who is then subject to Section 16 of the Act shall not be transferrable
other than by will or the laws of descent and distribution and shall be
exercisable during the Employee's lifetime only by him or by his guardian
or legal representative.
<PAGE>
<PAGE>
EXHIBIT "2"
AMENDMENT TO EASTCO INDUSTRIAL SAFETY CORP.
1994 INCENTIVE STOCK OPTION PLAN
This Amendment made as of the 12th day of December, 1995, shall
amend Eastco Industrial Safety Corp.'s (the "Company") 1994 Incentive
Stock Option Plan (the "1994 Plan").
WHEREAS, on January 28, 1994, the board of directors of the Company
authorized the adoption of the 1994 Plan under Section 422 of the
Internal Revenue Code which was approved by the stockholders on December
15, 1994; and
WHEREAS, on November 1, 1995, the board of directors of the Company
authorized an amendment to the 1994 Plan; and
WHEREAS, the Company desires to amend the 1994 Plan in certain
respects.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. Unless otherwise defined herein, the definitions and terms used
in this Agreement shall be the same as those in the 1994 Plan.
2. Section 5, paragraph (a) is hereby amended to read as follows:
(a) Subject to the provisions of paragraph (c) of
this Section 5 and of Section 7, the aggregate number of
shares of Common Stock which may be issued or transferred
pursuant to Incentive Stock Options granted under the
Plan shall not exceed 650,000.
3. Section 6, paragraph (a)(2) of the 1994 Plan is hereby amended
read as follows:
(a)(2) Subject to the provisions of paragraphs
(a)(5) and (a)(7) of this Section 6, an Option granted
under the Plan may not be exercised unless, at the time
of such exercise, the optionee shall be in the employ of
<PAGE>
the Company and shall have completed at least twelve (12)
months of continuous employment with the Company from the
date of the grant of his Option. However, in the event
there is a Change of Control, an Option granted under the
Plan shall become immediately vested and exercisable.
4. Except as amended hereby, the terms and provisions of the 1994
Plan shall remain in full force and effect.
5. This amendment to the 1994 Plan is subject to the approval of
the stockholders.
<PAGE>
<PAGE>
APPENDIX "1" - FORM OF PROXY CARD
EASTCO INDUSTRIAL SAFETY CORP.
130 West 10th Street
Huntington Station, New York 11746
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
DECEMBER 12, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ALAN E. DENSEN and LAWRENCE DENSEN and
each or either of them (with power of substitution) and proxies for the
undersigned, to vote all shares of Common Stock of record on October 30,
1995 of EASTCO INDUSTRIAL SAFETY CORP. which the undersigned would be
entitled to vote if personally present at the Annual Meeting of
Stockholders to be held on December 12, 1995 at 3:30 p.m. local time, or
at any adjournment thereof, upon the matters set forth in the Notice of
and Proxy Statement for said Meeting, copies of which have been received
by the undersigned, and, in their discretion, upon all other matters
which may properly come before said meeting. Without otherwise limiting
the generality of the foregoing said proxies are directed to vote as
follows:
No. 1: ELECTION OF DIRECTORS
To serve for the term continuing through the 1997 annual meeting and
until the election and qualification of their respective successors.
Dr. Martin Fleisher, Mr. James Favia and Mr. Herbert Schneiderman.
[ ] FOR all nominees listed above (except as withheld in the space
below.)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
(Instruction: To withhold authority to vote for any individual
nominee write that nominee's name in the space provided below.)
____________________________________________________________________
No. 2: PROPOSAL TO APPROVE THE ADOPTION OF THE 1995 NON-QUALIFIED
STOCK OPTION PLAN IN THE FORM ATTACHED TO THE PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
No. 3: PROPOSAL TO AMEND THE 1994 INCENTIVE STOCK OPTION PLAN IN THE
FORM ATTACHED TO THE PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
No. 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Proposal to ratify the appointment of Cornick, Garber & Sandler,
LLP, Certified Public Accountants, as the independent auditors to
examine the financial statements of the Company for fiscal year
1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO CONTRARY DIRECTION IS GIVEN ABOVE, AND THIS PROXY IS
PROPERLY SIGNED, THE SHARES WILL BE VOTED FOR THE PROPOSALS LISTED ABOVE.
Your proxy is important to assure a quorum at the meeting whether or not
you plan to attend the meeting in person. You may revoke this proxy at
any time, and the giving of it will not affect your right to attend the
meeting and vote in person.
Dated _________________________, 1995
_____________________________________________
Signature
_____________________________________________
Signature if held jointly
_____________________________________________
Number of Shares as of October 30, 1995
This proxy must be signed exactly as name
appears. When shares are held by joint
tenants, both should sign. When signing as
attorney or as trustee, executor or guardian,
please give full title as such. 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.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
