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 toss.240.14a-11(c) orss.240.14a-12
DRYCLEAN USA, 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):
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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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4) Date Filed:
<PAGE>
DRYCLEAN USA, Inc.
290 N.E. 68TH STREET
MIAMI, FLORIDA 33138
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 10, 2000
--------------
Miami, Florida
October 16, 2000
To the Stockholders of DRYCLEAN USA, Inc.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
DRYCLEAN USA, Inc., a Delaware corporation (the "Company"), will be held on
Friday, November 10, 2000, at 11:00 A.M., Eastern standard time, at the Sheraton
Fort Lauderdale Airport Hotel, Palm Room III, 1825 Griffin Road, Dania, Florida,
for the purpose of considering and acting upon the following matters:
(1) The election of seven (7) directors to serve until the next annual
meeting of stockholders and until the election and qualification of their
respective successors;
(2) A proposal to approve the Company's 2000 Stock Option Plan; and
(3) The transaction of such other business as may properly be brought
before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on September 29,
2000 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the meeting.
By Order of the Board of Directors,
Lloyd Frank,
Secretary
THE RETURN OF YOUR SIGNED PROXY AS PROMPTLY AS POSSIBLE WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE MEETING. NO POSTAGE IS REQUIRED IF THE PROXY IS RETURNED IN
THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES.
<PAGE>
DRYCLEAN USA, Inc.
290 N.E. 68TH STREET
MIAMI, FLORIDA 33138
----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 10, 2000
----------------
INTRODUCTION
This Proxy Statement, to be mailed to stockholders on or about October
16, 2000, is furnished in connection with the solicitation by the Board of
Directors of DRYCLEAN USA, Inc., a Delaware corporation (the "Company"), of
proxies in the accompanying form (the "Proxy" or "Proxies") for use at the 2000
Annual Meeting of Stockholders of the Company (the "Meeting") to be held on
Friday, November 10, 2000, and at any adjournments or postponements thereof. The
Meeting will be held at the place and time stated in the notice attached hereto.
All Proxies received will be voted in accordance with the
specifications made thereon or, in the absence of any specification, for the
election of all of the nominees named herein to serve as directors and in favor
of the proposal to approve the Company's 2000 Stock Option Plan. Any Proxy given
pursuant to this solicitation may be revoked by the person giving it at any time
prior to the exercise of the powers conferred thereby by (i) notice in writing
or by submitting a later dated proxy to the Company at 290 N.E. 68 Street,
Miami, Florida 33138, Attention: President, or (ii) by voting in person at the
Meeting.
Only holders of record of the Company's Common Stock (the "Common
Stock") as of the close of business on September 29, 2000 are entitled to notice
of, and to vote at, the Meeting or any adjournments or postponements thereof for
which a new record date is not fixed. As of the close of business on such date,
there were issued and outstanding 6,990,000 shares of Common Stock, the holders
of which are entitled, for each share held, to one vote upon each matter to be
acted upon at the Meeting.
The presence, in person or by proxy, of a majority of the shares
entitled to vote at the Meeting will constitute a quorum for the transaction of
business at the Meeting. A plurality (that is, the seven persons receiving the
most votes) of the votes of the shares present in person or represented by proxy
at the Meeting and entitled to vote thereon will be required for the election of
directors and the affirmative vote of a majority of the votes of the shares
present in person or represented by proxy at the Meeting and entitled to vote
thereon will be required to approve the Company's 2000 Stock Option Plan.
Abstentions are considered as shares present and entitled to vote and,
therefore, to the extent a vote requires approval by a majority of shares
present in person or by proxy and entitled to vote, abstentions will have the
effect of a negative vote thereon. Brokers who are members of the New York Stock
Exchange have discretion to vote the shares of their clients that the broker
holds of record (in "street name") for its customers with respect to
non-contested elections of directors and certain other matters. Brokers are,
therefore, expected to vote such shares on the election of director. However,
under the rules of the New York Stock Exchange, brokers are not entitled to vote
such shares with respect to the proposal to approve the amendment to the
Company's 2000 Stock Option Plan. Under Delaware law, shares not voted by
brokers (called "broker non-votes") are considered not entitled to vote.
Accordingly, broker non-votes will have no effect on the outcome of the vote on
this proposal. Proxies submitted which contain abstentions or broker non-votes
will be deemed present at the Meeting for determining the presence of a quorum.
<PAGE>
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information, as at September 30, 2000,
with respect to the shares of Common Stock which are beneficially owned by (i)
any person (including any "group," as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934) who is known to the Company to be the
beneficial owner of more than five percent of the Company's outstanding Common
Stock, (ii) the executive officers of the Company named in the Summary
Compensation Table under the caption "Executive Compensation," below, (iii) each
director and nominee to serve as a director of the Company and (iv) all
executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1) OF CLASS (2)
---------------- ------------- ------------
<S> <C> <C>
William K. Steiner 2,290,977 32.8%
290 N.E. 68 Street
Miami, FL 33138
Michael S. Steiner 2,260,577 32.3%
290 N.E. 68 Street
Miami, FL 33138
Venerando J. Indelicato 304,937 (3) 4.4%
12307 Marblehead Drive
Tampa, FL 33626
David Blyer 5,000 (4) *
Lloyd Frank 54,119 (5) *
Alan M. Grunspan 13,750 (6) *
Stuart Wagner 10,000 (7) *
Executive officers and 4,939,360 (8) 70.2%
directors as a group
(7 persons)
------------------------
</TABLE>
(1) Except as noted in the following footnotes, all beneficially owned
shares are owned with sole voting and investment power.
(2) Asterisk indicates less than one percent.
(footnotes continued on following page)
-2-
<PAGE>
(3) Includes 163,718 shares (3.0% of the Company's outstanding Common
Stock) owned by Mr. Indelicato and his wife as co-trustees under his
living trust under which the sole lifetime beneficiary is Mr.
Indelicato and 141,219 shares (2.0% of the Company's outstanding Common
Stock) owned by Mr. Indelicato and his wife as co-trustees under the
living trust of Mr. Indelicato's wife under which the sole lifetime
beneficiary is Mr. Indelicato's wife.
(4) Represents shares which are not outstanding but which are subject to
issuance upon the exercise of the portion of a stock option that
becomes exercisable within 60 days after September 30, 2000.
(5) Includes (a) 21,494 shares owned by Mr. Frank's wife, as to which Mr.
Frank disclaims beneficial ownership, and (b) 30,000 shares which are
not outstanding but which are subject to issuance upon the exercise of
presently exercisable stock options.
(6) Includes 2,500 shares which are not outstanding but which are subject
to issuance upon the exercise of the portion of a stock option that
becomes exercisable within 60 days after September 30, 2000.
(7) Represents (a) 5,000 shares owned by Mr. Wagner's wife, as to which Mr.
Wagner disclaims beneficial ownership, and (b) 5,000 shares which are
not outstanding but which are subject to issuance upon the exercise of
the portion of a stock option that becomes exercisable within 60 days
after September 30, 2000.
(8) Includes (a) 26,494 shares owned by spouses of directors, as to which
such directors disclaim beneficial ownership, and (b) 42,500 shares
which are not outstanding but which are subject to issuance upon the
exercise of the portion of stock options that are presently exercisable
or become exercisable within 60 days after September 30, 2000.
ELECTION OF DIRECTORS
Unless otherwise directed, the persons named in the enclosed Proxy
intend to cast all votes pursuant to Proxies received for the election of
Messrs. Michael S. Steiner, William K. Steiner, Venerando J. Indelicato, David
Blyer, Lloyd Frank, Alan M. Grunspan and Stuart Wagner (said persons being
hereinafter referred to as the "nominees") as directors upon their nomination at
the Meeting. Directors elected at the Meeting will serve until the next Annual
Meeting of Stockholders and until their respective successors are elected and
qualified. All nominees were elected by stockholders at the Company's 1999
Annual Meeting of Stockholders.
In the event that any of the nominees should become unavailable to
serve as a director for any reason, the holders of the Proxies have
discretionary authority to vote for one or more alternate nominees who may be
designated by the Board of Directors. The Company believes that all of the
nominees are available to serve as directors.
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<PAGE>
BACKGROUND OF NOMINEES
----------------------
Michael S. Steiner, 44, has been President and Chief Executive Officer
of the Company since the effectiveness of the merger of Steiner-Atlantic Corp.
("Steiner") with and into a subsidiary of the Company on November 1, 1998 (the
"Merger") and of Steiner since 1988. Mr. Steiner has been a director of the
Company since the effectiveness of the Merger on November 1, 1998.
William K. Steiner, 70, has been Chairman of the Board of the Company
since the effectiveness of the Merger on November 1, 1998 and of Steiner since
he founded Steiner in 1960. Mr. Steiner has been a director of the Company since
the effectiveness of the Merger on November 1, 1998.
Venerando J. Indelicato, 67, was President of the Company from December
1967 until the effectiveness of the Merger on November 1, 1998 and since that
time has been Treasurer and Chief Financial Officer of the Company. Mr.
Indelicato has been a director of the Company since 1966.
David Blyer, 40, has served as a director of the Company since the
effectiveness of the Merger on November 1, 1998. Mr. Blyer has been Chief
Executive Officer and President of Vento Software since he co-founded that
company in 1994. Vento Software develops software for specialized business
application. Before founding Vento Software, Mr. Blyer served as Senior Account
Manager of the South Florida and Caribbean regions for Tandem Computers.
Lloyd Frank, 75, has been a member of the law firm of Parker Chapin LLP
since 1977. Mr. Frank has been a director of the Company since 1977. The Company
retained Parker Chapin LLP during the Company's last fiscal year and is
retaining that firm during the Company's current fiscal year. Mr. Frank is also
a director of Park Electrochemical Corp. and Volt Information Sciences, Inc.
Alan M. Grunspan, 40, has served as a director of the Company since May
1999. Mr. Grunspan has been a member of the law firm of Kaufman Dickstein &
Grunspan P.A. since 1991. The Company has retained Kaufman Dickstein & Grunspan
P.A. during the Company's last fiscal year and is retaining that firm during the
Company's current fiscal year.
Stuart Wagner, 68, has served as a director of the Company since the
effectiveness of the Merger on November 1, 1998. Mr. Wagner has served as a
consultant for Diversitech Corp., a manufacturer and distributor of HVAC
products, since 1997. From 1975 to 1997, Mr. Wagner was President of Wagner
Products Corp., a manufacturer and distributor of HVAC products which he
founded.
Michael S. Steiner is the son of Mr. William K. Steiner. There are no
other family relationships among any of the directors and executive officers of
the Company. All directors serve until the next annual meeting of stockholders
and until the election and qualification of their respective successors. All
officers serve at the pleasure of the Board of Directors.
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<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
During the Company's fiscal year ended June 30, 2000, its Board of
Directors held four meetings. Each director attended each of the meetings of the
Board of Directors and the committees on which he served that were held during
that fiscal year.
The Board of Directors has standing Audit and Compensation Committees.
The Board does not have a standing Nominating Committee.
The Board's Audit Committee, whose members are David Blyer, Alan M.
Grunspan (who replaced Lloyd Frank on the Audit Committee on May 3, 2000) and
Stuart Wagner, is authorized to examine and consider matters related to the
audit of the Company's accounts, the financial affairs and accounts of the
Company, the scope of the independent auditors' engagement and their
compensation, the effect on the Company's financial statements of any proposed
changes in generally accepted accounting principles, disagreements, if any,
between the Company's independent auditors and management, matters of concern to
the independent auditors resulting from the audit, and the results of the
independent auditors' review of internal accounting controls. This Committee is
also authorized to nominate independent auditors, subject to approval by the
Board of Directors. The Audit Committee held one meeting during the year ended
June 30, 2000.
The members of the Compensation Committee are David Blyer, Lloyd Frank
and Stuart Wagner. This Committee approves salaries of all executive officers,
administers (including granting options under) the Company's employee stock
option plans, approves changes in retirement plans and reviews the Company's
other employee benefit arrangements. The Compensation Committee did not meet
during the year ended June 30, 2000.
-5-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
of Michael S. Steiner, the Company's only executive officer whose cash
compensation exceeded $100,000 during the Company's fiscal year ended June 30,
2000 for services in all capacities to the Company during the Company's 2000 and
1999 fiscal years (Mr. Steiner was not employed by the Company in fiscal 1998):
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and All Other
Principal Position Year Salary Options Compensation(1)
------------------- ---- ------ ----------------- ---------------
<S> <C> <C> <C> <C>
Michael S. Steiner 2000 $175,000 -- $ 976 (1)
President and Chief 1999 166,667(2) -- 1,100
Executive Officer
</TABLE>
----------------------
(1) "All Other Compensation" for fiscal 2000 represents the Company's
matching contribution in fiscal 2000 for Michael S. Steiner under the
Company's Profit Sharing Plan pursuant to Section 401(k) of the
Internal Revenue Code of 1986, as amended.
(2) Michael S. Steiner joined the Company at the time of the Merger on
November 1, 1998. Mr. Steiner's compensation in fiscal 1999 includes
compensation earned from Steiner prior to the Merger.
OPTION GRANTS AND EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
No options were granted to, or exercised by, Michael S. Steiner during
the Company's fiscal year ended June 30, 2000 nor were any options held by Mr.
Steiner at June 30, 2000.
-6-
<PAGE>
STANDARD REMUNERATION OF DIRECTORS
Each non-employee director receives a fee of $5,000 per annum.
Directors are also reimbursed for out-of-pocket expenses incurred in connection
with performing their duties. In the event that the Board of Directors holds
more than four meetings during a fiscal year in addition to its annual meeting
held on the date of the Annual Meeting of Stockholders, each director receives
$750 for each such additional meeting such director attends.
Pursuant to the Company's 1994 Non-Employee Director Stock Option Plan,
each non-employee director of the Company serving on August 24, 1994 was granted
an option to purchase 10,000 shares of the Company's Common Stock and each
person who subsequently became or becomes a non-employee director is also
granted at the time of election to the Board an option to purchase 10,000 shares
of the Company's Common Stock at an exercise price equal to 100% of the fair
market value of the Company's Common Stock on the date of grant. Each option is
for a term of ten years and vests over a four-year period commencing one year
after the date of grant (with vesting credit given for any service on the Board
of Directors prior to the date of grant).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended June 30, 2000, the Company charged management
fees of $118,391 to an entity controlled by Michael S. Steiner, a principal
stockholder, President and Chief Executive Officer and a director of the
Company. The Company believes that the fees for the services provided by the
Company are comparable to fees that would be charged by an unaffiliated third
party for similar services. At June 30, 2000, $86,391 was due from that company.
This amount is non-interest bearing and is due on demand. The Company leases
warehouse and office space from William K. Steiner, a principal stockholder,
Chairman of the Board of Directors and a director of the Company, under a lease
which expires in October 2004. Annual rental under this lease is approximately
$83,200. The Company believes that the terms of the lease are comparable to
terms that would be obtained from an unaffiliated third party for similar
property.
-7-
<PAGE>
PROPOSAL TO APPROVE
THE COMPANY'S 2000 STOCK OPTION PLAN
The Company's Board of Directors (the "Board") considers stock options
as a useful means of attracting and retaining employees, directors and
consultants while providing long-term incentive for those individuals to foster
the growth of the Company and tying their interests to the interests of the
Company's stockholders through stock ownership and potential stock ownership.
The Company has had in effect a 1991 Stock Option Plan (the "1991
Plan") which, as amended, has enabled the Company to grant options to key
employees (including directors and officers who are employees) to purchase up to
an aggregate of 850,000 shares of the Company's Common Stock. Options to
purchase 115,000 shares of the Company's Common Stock granted under the 1991
Plan have been exercised to date and, as of September 30, 2000, options to
purchase an aggregate of 550,000 shares of the Company's Common Stock are
outstanding, leaving only 185,000 shares available for the grant of future
options. Furthermore, no options may be granted under the 1991 Plan after
September 25, 2001.
Accordingly, on May 17, 2000, the Board adopted, subject to stockholder
approval at the Meeting, the Company's 2000 Stock Option Plan (the "2000 Plan").
The following discussion of the 2000 Plan is qualified in its entirety
by reference to the copy of the 2000 Plan which is attached to this Proxy
Statement as Exhibit "A."
PURPOSE OF THE PLAN
The purpose of the 2000 Plan is to enable the Company to provide an
incentive to employees (including directors and officers who are employees) and
consultants of the Company, its present and future subsidiaries and any future
parent company, and to offer an additional inducement in obtaining the services
of such individuals.
SHARES SUBJECT TO THE OPTION PLAN AND ELIGIBILITY
The 2000 Plan, if approved by stockholders, would authorize the grant
of options to purchase a maximum of 500,000 shares of the Company's Common Stock
(subject to adjustment as described below) to employees and directors of, and
consultants to, the Company, any of its present or future subsidiaries and any
future parent. Upon expiration, cancellation or termination of unexercised
options, the shares of the Company's Common Stock subject to such options will
again be available for the grant of options under the 2000 Plan.
TYPE OF OPTIONS
Options granted under the 2000 Plan may either be incentive stock
options ("ISOs"), within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), or nonqualified stock options, which do not
qualify as ISOs ("NQSOs"). ISOs, however, may only be granted to employees.
-8-
<PAGE>
ADMINISTRATION
The 2000 Plan is to be administered by the Board or a committee of the
Company's Board consisting of two or more members of the Board. To the extent
required, each member of the committee is to be a "non-employee director,"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, to the extent required to
preserve tax deductions, "outside directors," within the meaning of Section
162(m) of the Code. Those administering the 2000 Plan are referred to as the
"Administrators."
Among other things, the Administrators are empowered to determine,
within the express limits contained in the 2000 Plan, among other things, the
employees, consultants and directors to be granted options, whether an option
granted to an employee is to be an ISO or a NQSO, the number of shares of Common
Stock to be subject to each option, the exercise price of each option, the term
of each option, the date each option shall become exercisable, as well as any
terms and conditions relating to the exercisability of each option, whether to
accelerate the date of exercise of any option or installment and the form of
payment of the exercise price. The Administrators are also empowered to construe
each stock option contract between the Company and an optionee and, with the
consent of the optionee, to cancel or modify an option. The Administrators are
further authorized to prescribe, amend and rescind rules and regulations
relating to the 2000 Plan and make all other determinations necessary or
advisable for administering the 2000 Plan.
TERMS AND CONDITIONS OF OPTIONS
Options granted under the 2000 Plan are subject to, among other things,
the following terms and conditions:
(a) The exercise price of each option is determined by the
Administrators; provided, however, that the exercise price of an ISO may not be
less than the fair market value of the Company's Common Stock on the date of
grant (110% of such fair market value if the optionee owns, or is deemed to own,
more than 10% of the voting power of the Company).
(b) Options may be granted for terms established by the Administrators;
provided, however, that the term of an option may not exceed ten years (five
years in the case of an ISO granted to an optionee who owns, or is deemed to
own, more than 10% of the voting power of the Company).
(c) The maximum number of shares of the Company's Common Stock for
which options may be granted to an employee in any calendar year is 200,000. In
addition, the aggregate fair market value of shares with respect to which ISOs
may be granted to an employee which are exercisable for the first time during
any calendar year may not exceed $100,000 (based on the fair market value of the
Company's Common Stock on the date of grant).
(d) The exercise price of each option is payable in full upon the
option's exercise or, if the Administrators permit, in installments. Payment of
the exercise price of an option may be made (i) in cash, or (ii) if the
Administrators permit and such exercise would not require the Company to incur a
charge against its earnings for financial accounting purposes, with previously
acquired shares of Common Stock, or by the Company withholding from purchased
shares shares of Common Stock having an aggregate fair market value on the date
of exercise equal to the aggregate fair market value of the options being
exercised or (iii) any combination of the foregoing.
-9-
<PAGE>
The Administrators may also permit payment of the exercise price of an
option through the optionee's irrevocable instructions to a broker acceptable to
the Administrators to deliver promptly to the Company the amount of sale or loan
proceeds sufficient to pay such exercise price. In connection therewith, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.
(e) Options may not be transferred other than by will or by the laws of
descent and distribution, and may be exercised during the optionee's lifetime
only by the optionee.
(f) Except as may otherwise be provided in the option contract related
to the option, if the optionee's relationship with the Company as an employee,
director or consultant is terminated for any reason other than death or
disability, the option may be exercised, to the extent exercisable on the date
of termination of such relationship, at any time within three months thereafter,
but in no event after the expiration of the term of the option; provided,
however, that if the relationship is terminated either for cause (as defined) or
without the consent of the Company, the option will terminate immediately.
(g) Except as otherwise provided in the optionee's option contract, an
optionee whose relationship with the Company is terminated by reason of
disability may exercise the option, to the extent exercisable at the effective
date of such termination, at any time within one year thereafter, but not after
the expiration of the term of the option.
(h) Except as otherwise provided in the optionee's option contract, in
the case of the death of an optionee while an employee, director or consultant
(or, generally, within three months after termination of such relationship, or
within one year after termination of such relationship by reason of disability),
the optionee's legal representative or beneficiary may exercise the option, to
the extent exercisable on the date of death, at any time within one year after
such death, but in no event after the expiration of the term of the option.
(i) The Company may withhold cash and/or, with the consent of the
Administrators, shares of the Company's Common Stock having an aggregate value
on the date of exercise of the option equal to the amount which the
Administrators determine is necessary to satisfy the Company's obligations to
withhold any federal, state and/or local taxes or other amounts incurred by
reason of the grant, vesting or exercise of an option or the disposition of
shares acquired upon the exercise of the option. Alternatively, the Company may
require the optionee to pay the Company such amount in cash promptly upon
demand.
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments are to be made in the number and kind of shares
subject to the 2000 Plan and each outstanding option and in the exercise prices
of outstanding options, as well as the limitation on the number of shares that
may be granted to any employee in any calendar year, in the event of any change
in the Company's Common Stock by reason of any stock dividend, split-up,
reclassification, spin-off, reverse split or other combination, exchange of
shares or other transaction that results in a change in the number or kind of
shares of Common Stock outstanding immediately prior to such event. In the event
of (a) the liquidation or dissolution of the Company, (b) sale of all or
substantially all of the assets of the Company, or (c) the merger or
consolidation of the Company with or into one or more other corporations or
entities in which the Company is not the surviving
-10-
<PAGE>
corporation or in which the holders of securities of the Company immediately
prior to such merger or consolidation cease to own securities of the surviving
corporation or other entity representing at least 50% of the combined voting
power entitled to vote in the election of directors of the surviving corporation
or entity, the Board of Directors of the Company shall, as to outstanding
options, either (a) make appropriate provision for any such outstanding options
by the substitution, on an equitable basis, of appropriate stock of the Company
or of the merged, consolidated or otherwise reorganized corporation, or (b) upon
written notice to an optionee, provide that all unexercised options must be
exercised within a specified number of days of the date of such notice or they
will be terminated.
DURATION AND AMENDMENT OF THE 2000 PLAN
No option may be granted under the 2000 Plan after May 16, 2010. The
Board of Directors may at any time terminate, suspend or amend the 2000 Plan;
provided, however, that, without the approval of the Company's stockholders, no
amendment may be made which would (a) except as a result of the anti-dilution
adjustments described above, increase the maximum number of shares for which
options may be granted under the 2000 Plan or change the maximum number of
shares covered by options that may be granted to an employee in any calendar
year, (b) change the eligibility requirements for persons who may receive
options under the 2000 Plan or (c) make any change for which applicable law
requires stockholder approval. No termination, suspension or amendment may
adversely affect the rights of an optionee with respect to an outstanding option
without the optionee's consent.
FEDERAL INCOME TAX TREATMENT
The following is a general summary of the federal income tax
consequences under current tax law of NQSOs and ISOs. It does not purport to
cover all of the special rules, including the exercise of an option with
previously-acquired shares, or the state or local income or other tax
consequences inherent in the ownership and exercise of stock options and the
ownership and disposition of the underlying shares.
An optionee does not recognize taxable income for federal income tax
purposes upon the grant of a NQSO or an ISO.
Upon the exercise of a NQSO, the optionee recognizes ordinary income in
an amount equal to the excess, if any, of the fair market value of the shares
acquired on the date of exercise over the exercise price thereof, the optionee's
basis in the shares is increased by that amount for determining future gain or
loss and the Company generally is entitled to a deduction for such amount at
that time. If the optionee later sells shares acquired pursuant to the exercise
of a NQSO, the optionee recognizes long-term or short-term capital gain or loss,
depending on the period for which the shares were held. Long-term capital gain
is generally subject to more favorable tax treatment than ordinary income or
short-term capital gain.
Upon the exercise of an ISO, the optionee does not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to the optionee, the optionee recognizes
long-term capital gain or loss and the Company is not be entitled to a
deduction. However, if the optionee disposes of such shares within the required
holding period, all or a portion of the gain is treated as ordinary income and
the Company generally is entitled to deduct such amount.
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In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an ISO, the excess of the fair market value of the shares over the
exercise price therefor is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative minimum tax purposes. If an optionee is required to pay
an alternative minimum tax, the amount of such tax which is attributable to
deferral preferences (including the ISO adjustment) is allowed as a credit
against the optionee's regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.
PLAN BENEFITS
The grant of options under the 2000 Plan is within the discretion of
the Administrators. Accordingly, the Company is unable to determine future
options, if any, that may be granted to any person or group of persons. No
options have been granted to date under the 2000 Plan. During the Company's
fiscal year ended June 30, 2000, the only option granted by the Company was an
option to purchase 10,000 shares of Common Stock granted under the 1991 Plan as
an inducement to one individual to join the Company as an employee.
The closing market price per share of the Company's Common Stock on the
American Stock Exchange on October 6, 2000 was $1.50.
REQUIRED VOTE
Approval of the 2000 Plan requires the affirmative vote of the holders
of a majority of the shares of Common Stock present, in person or represented by
proxy, at the Meeting and entitled to vote on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL.
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MISCELLANEOUS
AUDITORS
On January 4, 1999, the Company selected BDO Seidman, LLP ("BDO
Seidman") to replace Grant Thornton LLP ("Grant Thornton") as the Company's
independent public accountants. BDO Seidman has acted as independent accountants
for Steiner, which became a wholly-owned subsidiary of the Company pursuant to
the Merger, since 1989. The Company made the change to BDO Seidman as the
Company's independent accountants in order to facilitate the audit of the
Company's consolidated financial statements since, for financial reporting
purposes, the Merger was treated as the acquisition of the Company by Steiner as
a result of which Steiner's historical financial statements are now those of the
Company. The decision to change auditors was approved by the Audit Committee of
the Board of Directors.
Grant Thornton's report on the financial statements of the Company for
each of the two fiscal years prior to the change in auditors did not contain any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Company's two most recent fiscal years prior to the change
in auditors, and the subsequent interim period through January 4, 1999, there
were no disagreements with Grant Thornton on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Grant Thornton,
would have caused Grant Thornton to make reference to the subject matter of the
disagreements in connection with their audit report with respect to financial
statements of the Company either individually or consolidated with Steiner.
During such periods, there were no "reportable events" within the meaning of the
disclosure regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934 with respect to changes in independent
public accountants.
The 2000 Annual Report to Stockholders of the Company, including
financial statements and report thereon of BDO Seidman, accompanies this Proxy
Statement but is not incorporated in and is not to be deemed a part of this
Proxy Statement. It is anticipated that BDO Seidman will act as auditors for the
Company during the year ending June 30, 2001. Representatives of BDO Seidman are
expected to be present at the Meeting with the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions addressed by stockholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Common Stock, to file initial reports of ownership, and reports
of changes of ownership, of the Company's equity securities with the Securities
and Exchange Commission and furnish copies of those reports to the Company.
Based solely on a review of the copies of the reports furnished to the Company
to date and written representations that no reports were required, the Company
believes that all reports required to be filed by such persons with respect to
the Company's fiscal year ended June 30, 2000 were timely filed, except that
William K. Steiner filed one report four days late reporting six purchases of
Company common stock (five of which transactions had previously been eligible
for deferred reporting).
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STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals for consideration
at a meeting of stockholders which may be proper subjects for inclusion in the
Company's proxy statement and form of proxy relating to that meeting.
Stockholder proposals intended to be included in the Company's proxy statement
and form of proxy relating to the Company's Annual Meeting of Stockholders
presently scheduled to be held in November 2001 must be received by the Company
at its principal executive offices, 290 N.E. 68 Street, Miami, Florida 33138, by
June 18, 2001. Any such proposals, as well as any questions relating thereto,
should be directed to the President of the Company. As to any proposals intended
to be presented by a stockholder without inclusion in the Company's proxy
statement and form of proxy for the Company's next Annual Meeting of
Stockholders, the proxies named in the Company's form of proxy for that meeting
will be entitled to exercise discretionary authority on that proposal unless the
Company receives notice of the matter on or before September 2, 2001. However,
even if such notice is timely received, such proxies may nevertheless be
entitled to exercise discretionary authority on that matter to the extent
permitted by Securities and Exchange Commission regulations.
ADDITIONAL INFORMATION
The cost of solicitation of Proxies, including the cost of reimbursing
banks and brokers for forwarding proxy soliciting material to their principals,
will be borne by the Company. Proxies may be solicited without extra
compensation by certain officers and regular employees of the Company by mail
and, if determined to be necessary, by telephone, telecopy, telegraph or
personal interviews.
OTHER MATTERS
The Board of Directors does not intend to bring before the Meeting any
matters other than those specifically described above and knows of no matters
other than the foregoing to come before the Meeting. If any other matters or
motions properly come before the Meeting, it is the intention of the persons
named in the accompanying form of Proxy to vote such Proxy in accordance with
their judgment on such matters or motions, including any matters dealing with
the conduct of the Meeting.
By Order of the Board of Directors,
Lloyd Frank,
Secretary
Dated: October 16, 2000
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EXHIBIT "A"
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2000 STOCK OPTION PLAN
OF
DRYCLEAN USA, INC.
1. Purposes of the Plan. This stock option plan (the "Plan") is
intended to provide an incentive to employees (including directors and officers
who are employees), and to directors ("Non-Employee Directors") and consultants
who are not common law employees, of DRYCLEAN USA, Inc., a Delaware corporation
(the "Company"), or any of its Subsidiaries or any Parent (as such terms are
defined in Paragraph 19), and to offer an additional inducement in obtaining the
services of such individuals. The Plan provides for the grant of "incentive
stock options" ("ISOs"), within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
which do not qualify as ISOs ("NQSOs"). The Company makes no representation or
warranty, express or implied, as to the qualification of any option as an
"incentive stock option" under the Code.
2. Stock Subject to the Plan. Subject to the provisions of Paragraph
12, the aggregate number of shares of the Company's Common Stock, par value
$.025 per share ("Common Stock"), for which options may be granted under the
Plan shall not exceed 500,000 shares. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of Directors"),
consist either in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock held in the treasury of the Company. Subject to
the provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable shall again become available for the
granting of options under the Plan. The Company shall at all times during the
term of the Plan reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of the Plan.
3. Administration of the Plan. The Plan will be administered by the
Board of Directors or by a committee (the "Committee") consisting of two or more
directors appointed by the Board of Directors. Those administering the Plan
shall be referred to herein as the "Administrators." Notwithstanding the
foregoing, as long as any class of common stock of the Company is registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to the extent necessary to preserve any deduction under Section
162(m) of the Code or to comply with Rule 16b-3 promulgated under the Exchange
Act, or any successor rule ("Rule 16b-3"), any Committee appointed by the Board
of Directors to administer the Plan shall be comprised of two or more directors
each of whom shall be an "outside director," within the meaning of Treasury
Regulation Section 1.162-27(e)(3), and a "non-employee director," within the
meaning of Rule 16b-3, and the delegation of powers to the Committee shall be
consistent with applicable laws and regulations (including, without limitation,
applicable state law and Rule 16b-3). Unless otherwise provided in the By-Laws
of the Company, by resolution of the Board of Directors or applicable law, a
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, and any acts approved in writing by all members without a meeting,
shall be the acts of the Committee. Notwithstanding anything in the Plan to the
contrary, all references in the Plan to actions by the Administrators with
respect to grants
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of options to, and determinations with respect to options granted to,
Non-Employee Directors shall be made only by the Board of Directors.
Subject to the express provisions of the Plan, the Administrators shall
have the authority, in their sole discretion, to determine the persons who shall
be granted options; the times when they shall receive options; whether an option
granted to an employee shall be an ISO or a NQSO; the number of shares of Common
Stock to be subject to each option; the term of each option; the date each
option shall become exercisable; whether an option shall be exercisable in whole
or in installments, and, if in installments, the number of shares of Common
Stock to be subject to each installment; whether the installments shall be
cumulative; the date each installment shall become exercisable and the term of
each installment; whether to accelerate the date of exercise of any option or
installment; whether shares of Common Stock may be issued upon the exercise of
an option as partly paid, and, if so, the dates when future installments of the
exercise price shall become due and the amounts of such installments; the
exercise price of each option; the form of payment of the exercise price; the
fair market value of a share of Common Stock; whether and under what conditions
to restrict the sale or other disposition of the shares of Common Stock acquired
upon the exercise of an option and, if so, whether and under what conditions to
waive any such restriction; whether and under what conditions to subject the
exercise of all or any portion of an option to the fulfillment of certain
restrictions or contingencies as specified in the contract referred to in
Paragraph 11 (the "Contract"), including without limitation restrictions or
contingencies relating to (a) entering into one or more covenants (i) not to
compete with, (ii) to protect the trade secrets of and/or (iii) not to solicit
employees of, the Company or any of its Subsidiaries or any Parent, which
Contract may require, among other things, for the payment by the optionee to the
Company of the difference between the fair market value (at the time of option
exercise or sale of the underlying shares) of the shares acquired upon the
exercise of an option and the option exercise price thereof if such covenant is
breached, (b) financial objectives for the Company, any of its Subsidiaries or
any Parent, a division, a product line or other category and/or (c) the period
of continued employment of the optionee with the Company or any of its
Subsidiaries or any Parent, and to determine whether such restrictions or
contingencies have been met; the amount, if any, necessary to satisfy the
obligation of the Company, any of its Subsidiaries or any Parent to withhold
taxes or other amounts; whether an optionee has a Disability (as such term is
defined in Paragraph 19); with the consent of the optionee, to cancel or modify
an option, provided, however, that, the modified provision is permitted to be
included in an option granted under the Plan on the date of the modification;
provided, further, however, that in the case of a modification (within the
meaning of Section 424(h) of the Code) of an ISO, such option as modified would
be permitted to be granted on the date of such modification under the terms of
the Plan; to construe the respective Contracts and the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; to approve any provision
of the Plan or any option granted under the Plan or any amendment to either
which, under Section 162(m) of the Code or Rule 16b-3 requires the approval of
the Board of Directors, a committee of "outside directors" or "non-employee
directors," respectively, or the stockholders, in order to preserve any
deduction under Section 162(m) of the Code or to be exempt under Section 16(b)
of the Exchange Act, respectively; and to make all other determinations
necessary or advisable for administering the Plan. Any controversy or claim
arising out of or relating to the Plan, any option granted under the Plan or any
Contract shall be determined unilaterally by the Administrators in their sole
discretion. The determinations of the Administrators on matters referred to in
this Paragraph 3 shall be conclusive and binding on all parties. No
Administrator or former Administrator shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
hereunder.
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4. Eligibility. The Administrators may from time to time, consistent
with the purposes of the Plan, grant options to such employees (including
officers and directors who are employees) of, or consultants to the Company or
any of its Subsidiaries or any Parent who, at the time of grant, are not common
law employees of the Company or of any of its Subsidiaries or any Parent, and to
Non-Employee Directors, as the Administrators may determine in their sole
discretion. Such options granted shall cover such number of shares of Common
Stock as the Administrators may determine in their sole discretion; provided,
however, that if on the date of grant of an option, any class of common stock of
the Company (including without limitation the Common Stock) is registered under
Section 12 of the Exchange Act, the maximum number of shares subject to options
that may be granted to any employee during any calendar year under the Plan
shall be 200,000 shares; provided, further, however, that the aggregate market
value (determined at the time the option is granted) of the shares of Common
Stock for which any eligible employee may be granted ISOs under the Plan or any
other plan of the Company or of a Parent or a Subsidiary of the Company, which
are exercisable for the first time by such optionee during any calendar year,
shall not exceed $100,000 (or such other limitation as shall, at the time of
grant, be applicable under the Code). The $100,000 ISO limitation amount shall
be applied by taking ISOs into account in the order in which they were granted.
Any option (or portion thereof) granted in excess of such ISO limitation amount
shall be treated as a NQSO to the extent of such excess.
5. Exercise Price. The exercise price of the shares of Common Stock
under each option shall be determined by the Administrators in their sole
discretion; provided, however, that the exercise price of an ISO shall not be
less than the fair market value of the Common Stock subject to such option on
the date of grant; and provided, further, however, that if, at the time an ISO
is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or any Parent, the
exercise price of such ISO shall not be less than 110% of the fair market value
of the Common Stock subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of the
Common Stock on such day as reported by such exchange or on a consolidated tape
reflecting transactions on such exchange, (b) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is
quoted on The Nasdaq National Market or Nasdaq SmallCap Market (collectively,
"Nasdaq"), and (i) if actual sales price information is available with respect
to the Common Stock, the average of the highest and lowest sales prices per
share of the Common Stock on such day on Nasdaq, or (ii) if such information is
not available, the average of the highest bid and the lowest asked prices per
share for the Common Stock on such day on Nasdaq, or (c) if the principal market
for the Common Stock is not a national securities exchange and the Common Stock
is not quoted on Nasdaq, the average of the highest bid and lowest asked prices
per share for the Common Stock on such day as reported on the OTC Bulletin Board
or by National Quotation Bureau, Incorporated or a comparable service; provided,
however, that if clauses (a), (b) and (c) of this Paragraph 5 are all
inapplicable because the Company's Common Stock is not publicly traded, or if no
trades have been made and no quotes are available for such day, the fair market
value of a share of Common Stock shall be determined by the Administrators by
any method consistent with any applicable regulations adopted by the Treasury
Department relating to stock options.
6. Term. Each option granted pursuant to the Plan shall be for such
term as is established by the Administrators, in their sole discretion, at or
before the time such option is
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granted; provided, however, that the term of each option granted pursuant to the
Plan shall be for a period not exceeding 10 years from the date of grant
thereof, and provided further, that if, at the time an ISO is granted, the
optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or any Parent, the term of the
ISO shall be for a period not exceeding five years from the date of grant.
Options shall be subject to earlier termination as hereinafter provided.
7. Exercise. An option (or any installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the Company at its
principal office stating which option is being exercised and specifying the
number of shares of Common Stock as to which such option is being exercised,
which notice shall be accompanied by payment in full of the aggregate exercise
price therefor (or the amount due on exercise if the applicable Contract permits
installment payments) (a) in cash and/or by certified check, (b) with the
authorization of the Administrators, with previously acquired shares of Common
Stock having an aggregate fair market value (determined in accordance with the
methods set forth in Paragraph 5) on the date of exercise equal to the aggregate
exercise price of all options being exercised, (c) with the authorization of the
Administrators, by the Company withholding from the purchased shares an amount
having an aggregate fair market value (determined in accordance with Paragraph
5) on the date of exercise, equal to the aggregate exercise price of all options
being exercised, or (d) some combination thereof; provided, however, that in no
case may shares be tendered or withheld if such tender or withholding would
require the Company to incur a charge against its earnings for financial
accounting purposes. The Company shall not be required to issue any shares of
Common Stock pursuant to the exercise of any option until all required payments
with respect thereto, including payments for any required withholding amounts,
have been made.
The Administrators may, in their sole discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of the optionee's irrevocable instructions to a
broker acceptable to the Administrators to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
An optionee shall not have the rights of a stockholder with respect to
such shares of Common Stock to be received upon the exercise of an option until
the date of issuance of a stock certificate to the optionee for such shares or,
in the case of uncertificated shares, until the date an entry is made on the
books of the Company's transfer agent representing such shares; provided,
however, that until such stock certificate is issued or until such book entry is
made, any optionee using previously acquired shares of Common Stock in payment
of an option exercise price shall continue to have the rights of a stockholder
with respect to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. Termination of Relationship. Except as may otherwise be expressly
provided in the applicable Contract, any optionee who ceases to be an employee
of, consultant to, or director of, the Company or any of its Subsidiaries or any
Parent (regardless of which of such relationships existed at the time of grant
of the option), other than by reason of death or Disability, may exercise an
option granted to the optionee, to the extent exercisable on the date of
termination of the existence of the last of such relationships, at any time
within three months after the date of termination of the
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existence of the last of such relationships, but not thereafter and in no event
after the date the option would otherwise have expired; provided, however, that
if any of such relationships is terminated either (a) for Cause (as defined in
Paragraph 19), or (b) without the consent of the Company, such option shall
terminate immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military leave,
sick leave or other bona fide leave of absence shall continue to be considered
an employee for purposes of the Plan during such leave if the period of the
leave does not exceed 90 days, or, if longer, so long as the individual's right
to re-employment with the Company, any of its Subsidiaries or any Parent is
guaranteed either by statute or by contract. If the period of leave exceeds 90
days and the individual's right to re-employment is not guaranteed by statute or
by contract, the employment relationship shall be deemed to have terminated on
the 91st day of such leave.
Nothing in the Plan or in any option granted under the Plan shall
confer on any person any right to continue in the employ or as a consultant of
the Company, any of its Subsidiaries or any Parent, or as a director of the
Company, or interfere in any way with any right of the Company, any of its
Subsidiaries or any Parent to terminate such relationship at any time for any
reason whatsoever without liability to the Company, any of its Subsidiaries or
any Parent.
9. Death or Disability of an Optionee. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is employed by, or serving as a consultant to, or a director of the Company or
any of its Subsidiaries or any Parent, (b) within three months after the latest
to terminate of the optionee's employment, consulting or directorship
relationship with the Company, its Subsidiaries and Parents (unless any such
termination was for Cause or without the consent of the Company) or (c) within
one year following the latest to terminate by reason of the optionee's
Disability of the optionee's employment, consulting and/or directorship
relationship with the Company, its Subsidiaries or Parents, the options granted
to the optionee may be exercised, to the extent exercisable on the date of the
optionee's death, by the optionee's Legal Representative (as such term is
defined in Paragraph 19), at any time within one year after death, but not
thereafter and in no event after the date the option would otherwise have
expired. Except as may otherwise be expressly provided in the applicable
Contract, any optionee whose employment, consulting and directorship
relationship with the Company, its Subsidiaries or Parents, whichever
relationship is the latest to terminate, has terminated by reason of the
optionee's Disability may exercise the options granted to the optionee, to the
extent exercisable upon the effective date of such termination, at any time
within one year after such date, but not thereafter and in no event after the
date the option would otherwise have expired.
10. Compliance with Securities Laws. It is a condition to the exercise
of any option that either (a) a Registration Statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.
The Administrators may require, in their sole discretion, as a
condition to the grant or exercise of an option, that the optionee execute and
deliver to the Company such representations and
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warranties, in form, substance and scope satisfactory to the Administrators,
which the Administrators determine is necessary or convenient to facilitate the
perfection of an exemption from the registration requirements of the Securities
Act, applicable state securities laws or other legal requirements, including
without limitation, that (a) the shares of Common Stock to be issued upon
exercise of the option are being acquired by the optionee for the optionee's own
account, for investment only and not with a view to the resale or distribution
thereof, and (b) any subsequent resale or distribution of shares of Common Stock
by such optionee will be made only pursuant to (i) a Registration Statement
under the Securities Act which is effective and current with respect to the
shares of Common Stock being sold, or (ii) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption,
the optionee, prior to any offer of sale or sale of such shares of Common Stock,
shall provide the Company with a favorable written opinion of counsel
satisfactory to the Company, in form, substance and scope satisfactory to the
Company, as to the applicability of such exemption to the proposed sale or
distribution.
In addition, if at any time the Administrators shall determine that the
listing or qualification of the shares of Common Stock subject to such option on
any securities exchange, Nasdaq or under any applicable law, or that the consent
or approval of any governmental agency or regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option or
the issuance of shares of Common Stock thereunder, such option may not be
granted or exercised in whole or in part, as the case may be, unless such
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Administrators.
11. Stock Option Contracts. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee. Such Contract shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Administrators in their sole
discretion. The terms of each option and Contract need not be identical.
12. Adjustments upon Changes in Common Stock. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, split-up, recapitalization, spin-off,
reverse split or other combination or exchange of shares or other transaction
which results in a change in the number or kind of shares of Common Stock that
were outstanding immediately prior to such event, the aggregate number and kind
of shares subject to the Plan, the aggregate number and kind of shares subject
to each outstanding option and the exercise price thereof, and the maximum
number of shares subject to options that may be granted to any employee in any
calendar year, shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive and binding on all parties. Such adjustment
may provide for the elimination of fractional shares that might otherwise be
subject to options with or without payment therefor. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Paragraph 12 if such
adjustment (a) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 of the Exchange Act (if applicable to such option), or
(b) would be considered as the adoption of a new plan requiring stockholder
approval for any reason.
In the event of a dissolution or liquidation of the Company, or sale of
all or substantially all of the assets of the Company, or the merger or
consolidation of the Company with or into one or more other corporations or
entities in which the Company is not the surviving corporation or in which the
holders of securities of the Company immediately prior to such merger or
consolidation cease to own securities of the surviving corporation or other
entity representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors of the surviving corporation or
entity, the Board of Directors of the Company shall, as to outstanding options,
either
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(a) make appropriate provision for any such outstanding options by the
substitution, on an equitable basis, of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation; provided that, in
the case of ISOs, the excess of the aggregate fair market value of the shares
subject to the options immediately after such substitution over the aggregate
purchase price thereof is not more than the excess of the aggregate fair market
value of the shares subject to such options immediately before such substitution
over the aggregate purchase price thereof, or (b) upon written notice to an
optionee, provide that all unexercised options must be exercised within a
specified number of days of the date of such notice or they will be terminated.
13. Amendments and Termination of the Plan. The Plan was adopted by the
Board of Directors on May 16, 2000. No option may be granted under the Plan
after May 15, 2010. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, or to comply
with the provisions of Rule 16b-3 or Section 162(m) of the Code or any change in
applicable laws or regulations, ruling or interpretation of any governmental
agency or regulatory body; provided, however, that no amendment shall be
effective, without the requisite prior or subsequent stockholder approval, which
would (a) except as contemplated in Paragraph 12, increase the maximum number of
shares of Common Stock for which options may be granted under the Plan or change
the maximum number of shares for which options may be granted to employees in
any calendar year, (b) change the eligibility requirements for individuals
entitled to receive options hereunder, or (c) make any change for which
applicable law or any governmental agency or regulatory body requires
stockholder approval. No termination, suspension or amendment of the Plan shall
adversely affect the rights of an optionee under any option granted under the
Plan without such optionee's consent. The power of the Administrators to
construe and administer any option granted under the Plan prior to the
termination or suspension of the Plan shall continue after such termination or
during such suspension.
14. Non-Transferability. No option granted under the Plan shall be
transferable other than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the optionee, only by the
optionee or the optionee's Legal Representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process, and any such attempted
assignment, transfer, pledge, hypothecation or disposition shall be null and
void ab initio and of no force or effect.
15. Withholding Taxes. The Company, or its Subsidiary or Parent, as
applicable, may withhold (a) cash or (b) with the consent of the Administrators
(in the Contract or otherwise), shares of Common Stock to be issued upon
exercise of an option or a combination of cash and shares, having an aggregate
fair market value (determined in accordance with Paragraph 5) on the date of
exercise equal to the amount which the Administrators determine is necessary to
satisfy the obligation of the Company, or such Subsidiary or Parent, to withhold
Federal, state and local income taxes or other amounts incurred by reason of the
grant, vesting, exercise or disposition of an option or the disposition of the
underlying shares of Common Stock. Alternatively, the Company may require the
optionee to pay to the Company such amount, in cash, promptly upon demand.
16. Legends; Payment of Expenses. The Company may endorse such legend
or legends upon the certificates for shares of Common Stock issued upon exercise
of an option under the Plan and may issue such "stop transfer" instructions to
its transfer agent in respect of such shares
A-7
<PAGE>
as it determines, in its sole discretion, to be necessary or appropriate to (a)
prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, applicable state securities laws or other
legal requirements, (b) implement the provisions of the Plan or any agreement
between the Company and the optionee with respect to such shares of Common
Stock, or (c) permit the Company to determine the occurrence of a "disqualifying
disposition," as described in Section 421(b) of the Code, of the shares of
Common Stock transferred upon the exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.
17. Use of Proceeds. The cash proceeds to be received upon the exercise
of an option under the Plan shall be added to the general funds of the Company
and used for such corporate purposes as the Board of Directors may determine, in
its sole discretion.
18. Substitutions and Assumptions of Options of Certain Constituent
Corporations. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as such term is defined
in Paragraph 19) or assume the prior options of such Constituent Corporation.
19. Definitions.
(a) "Cause", in connection with the termination of an
optionee, shall mean (i) "cause," as such term (or any similar term, such as
"with cause") is defined in any employment, consulting or other applicable
agreement for services between the Company and such optionee, or (ii) in the
absence of such an agreement, "cause," as such term is defined in the Contract
executed by the Company and such optionee pursuant to Paragraph 11, or (iii) in
the absence of both of the foregoing, (A) indictment of such optionee for any
illegal conduct, (B) failure of such optionee to adequately perform any of the
optionee's duties and responsibilities in any capacity held with the Company,
any of its Subsidiaries or any Parent (other than any such failure resulting
solely from such optionee's physical or mental incapacity), (C) the commission
of any act or failure to act by such optionee that involves moral turpitude,
dishonesty, theft, destruction of property, fraud, embezzlement or unethical
business conduct, or that is otherwise injurious to the Company, any of its
Subsidiaries or any Parent or any other affiliate of the Company (or its or
their respective employees), whether financially or otherwise, (D) any violation
by such optionee of any Company rule or policy, or (E) any violation by such
optionee of the requirements of such Contract, any other contract or agreement
between the Company and such optionee or the Plan (as in effect from time to
time); in each case, with respect to subsections (A) through (E), as determined
by the Board of Directors.
(b) "Constituent Corporation" shall mean any corporation which
engages with the Company, its Parent or any Subsidiary in a transaction to which
Section 424(a) of the Code applies (or would apply if the option assumed or
substituted were an ISO), or any Parent or any Subsidiary of such corporation.
(c) "Disability" shall mean a permanent and total disability
within the meaning of Section 22(e)(3) of the Code.
A-8
<PAGE>
(d) "Legal Representative" shall mean the executor,
administrator or other person who at the time is entitled by law to exercise the
rights of a deceased or incapacitated optionee with respect to an option granted
under the Plan.
(e) "Parent" shall mean a "parent corporation" within the
meaning of Section 424(e) of the Code.
(f) "Subsidiary" shall mean a "subsidiary corporation" within
the meaning of Section 424(f) of the Code.
20. Governing Law; Interpretations. The Plan, such options as may be
granted hereunder, the Contracts and all related matters shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
regard to conflict or choice of law provisions.
Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
21. Partial Invalidity. The invalidity, illegality or unenforceability
of any provision in the Plan, any option or Contract shall not affect the
validity, legality or enforceability of any other provision, all of which shall
be valid, legal and enforceable to the fullest extent permitted by applicable
law.
22. Stockholder Approval. The Plan shall be subject to approval by a
majority of the votes present in person and by proxy entitled to vote hereon at
a duly held meeting of the Company's stockholders at which a quorum is present.
No options granted hereunder may be exercised prior to such approval, provided,
however, that the date of grant of any option shall be determined as if the Plan
had not been subject to such approval. Notwithstanding the foregoing, if the
Plan is not approved by a vote of the stockholders of the Company on or before
May 15, 2001, the Plan and any options granted hereunder shall terminate.
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<PAGE>
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<PAGE>
DRYCLEAN USA. INC.
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 10, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Venerando J. Indelicato and Lloyd
Frank, and each of them, proxies, with full power of substitution, to vote at
the Annual Meeting of Stockholders of DRYCLEAN USA, Inc. to be held on Friday,
November 10, 2000 (including any adjournments or postponements thereof),
according to the number of votes the undersigned might cast and with all powers
the undersigned would possess if personally present, upon the matters specified
hereon, as more fully described in the accompanying Notice of such meeting and
Proxy Statement, receipt of which is hereby acknowledged, and with discretionary
power upon such other business as may come before the meeting, hereby revoking
any proxies heretofore given.
<TABLE>
<CAPTION>
1) Election of Directors:
<S> <C>
MICHAEL S. STEINER, WILLIAM K. STEINER, FOR WITH- FOR ALL
VENERANDO J. INDELICATO, DAVID BLYER, HOLD EXCEPT
LLOYD FRANK, ALAN M. GRUNSPAN AND
STUART WAGNER |_| |_| |_|
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY FOR WITH- FOR ALL
INDIVIDUAL NOMINEE(S), MARK "FOR ALL EXCEPT" AND WRITE THAT HOLD EXCEPT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
|_| |_| |_|
_____________________________________________
2) Approval of the Company's 2000 FOR AGAINST ABSTAIN
Stock Option Plan. |_| |_| |_|
Please be sure to sign and date Date EACH PROPERLY EXECUTED PROXY WILL BE VOTED
this Proxy in the box below IN ACCORDANCE WITH THE SPECIFICATIONS MADE
__________________________________________________________________ ABOVE. IF NO SPECIFICATIONS ARE MADE, THE
SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED "FOR" ALL LISTED NOMINEES IN PROPOSAL
1 AND "FOR" PROPOSAL 2.
Stockholder sign above Co-holder (if any) sign above
___________________________________________________________________
</TABLE>
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Detach above card, sign, date and mail in postage paid envelope provided.
DRYCLEAN USA, INC.
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Please sign your name or names exactly as set forth hereon. When stock is
in the name of more than one person, each such person should sign the proxy.
When signing as attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which you are acting. Proxies executed by corporations
should be signed by a duly authorized officer.
STOCKHOLDERS WHO DESIRE TO HAVE STOCK VOTED AT THE MEETING ARE REQUESTED TO
FILL IN, DATE, SIGN AND RETURN THIS PROXY. NO POSTAGE IS REQUIRED IF RETURNED IN
THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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