SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for
use of the
[x] Definitive Proxy Statement Commission only
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
LEAK-X ENVIRONMENTAL CORPORATION
(Name of Registrant as Specified In Its Charter)
LEAK-X ENVIRONMENTAL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c) (1)(ii), or 14a-6(i)(1),14a-6 (i) (2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6 (i) (3).
[ ] Fee computed on table below per Exchange Act Rules 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:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount Previously Paid: $
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
* Set forth the amount on which the filing fee is calculated
and state how it was determined.
PROXY STATEMENT
LEAK-X ENVIRONMENTAL CORPORATION
790 East Market Street, Suite 270
West Chester, Pennsylvania 19382
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 20, 1996
To the Stockholders of LEAK-X ENVIRONMENTAL CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders
of Leak-X Environmental Corporation (the "Company") will be held at
the offices of the Company at 790 East Market Street, Suite 270,
West Chester, Pennsylvania 19382 on September 20, 1996 at 11:00
a.m. to consider and vote on the following matters:
1. To elect five Directors of the Company to serve for the
ensuing year and until their successors are elected and
qualified.
2. To approve the Company's 1996 Stock Option Plan.
3. To ratify the appointment of Mazars and Company LLP as
independent auditors of the Company's 1996 financial
statements.
4. To transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
August 20, 1996 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
/s/ Robert D. Goldman
Robert D. Goldman, Secretary
West Chester, Pennsylvania
August 23, 1996
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
PROMPTLY COMPLETE, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS
SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, AND RETURN IT
TO THE COMPANY. THE PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS
VOTED, AND STOCKHOLDERS EXECUTING PROXIES MAY ATTEND THE MEETING
AND VOTE THERE IN PERSON SHOULD THEY SO DESIRE.
LEAK-X ENVIRONMENTAL CORPORATION
790 East Market Street, Suite 270
West Chester, Pennsylvania 19382
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished in connection with the
solicitation of proxies by Leak-X Environmental Corporation (the
"Company") to be voted at the Annual Meeting of Stockholders to be
held at the offices of the Company, 790 East Market Street, Suite
270, West Chester, Pennsylvania 19382 on September 20, 1996, at
11:00 a.m., and at any and all adjournments thereof. This Proxy
Statement and accompanying Notice of Meeting and form of proxy are
to be first mailed on or about August 23, 1996 to the holders of
record of the Company's Common Stock ("Common Stock") as of the
close of business on August 20, 1996. At the close of business on
August 20, 1996, there were issued and outstanding and entitled to
vote 15,855,388 shares of Common Stock of the Company. Each share
of Common Stock of the Company is entitled to one vote per share on
any matter which may properly come before the Meeting.
The affirmative vote by holders of a majority of the shares of
Common Stock represented at the Meeting is required for the
election of Directors and for the ratification of Mazars and
Company LLP as the Company's independent auditors. The affirmative
vote by holders of a majority of the shares of Common Stock
outstanding is required for the approval of the 1996 Stock Option
Plan.
Common Stock represented by a valid unrevoked proxy will be
voted at the Meeting and any adjournment thereof as specified
therein by the person giving the proxy. If no specification is
made, the Common Stock represented by such proxy will be voted in
favor of Proposals 1, 2 and 3, and at the discretion of such proxy
agents, upon any other matters which may properly come before the
Meeting. Shares of Common Stock represented by proxies which are
marked "abstain" for Items 2 and 3 on the proxy card and proxies
which are marked to deny discretionary authority on all other
matters will not be included in the vote totals, and, therefore,
will have no effect on the vote. In addition, where brokers are
prohibited from exercising discretionary authority for beneficial
owners who have not provided voting instructions (commonly referred
to as "broker non-votes"), those shares will not be included in the
vote totals. A proxy may be revoked by the person executing the
same, at any time before the authority thereby granted is
exercised, upon written notice of revocation received by the
Company's Secretary, by executing and delivering a later dated
proxy, or by attending the meeting and voting in person.
A list of stockholders entitled to vote at the meeting will be
open to examination by any stockholder, for any purpose germane to
the meeting, at the offices of the Company, 790 East Market Street,
Suite 270, West Chester, Pennsylvania 19382 during ordinary
business hours for ten (10) days prior to the meeting. Such list
shall also be available during the meeting.<PAGE>
PROPOSAL I
At the Meeting, five Directors are to be elected for the
ensuing year and until their successors are duly elected and
qualified. If, at the time of election, any of the nominees should
be unavailable for election, a circumstance which is not expected
by the Company, it is intended that the proxies will be voted for
such substitute nominee as may be selected by the Company. Proxies
not marked to the contrary will be voted for the election of the
following five persons, all of whom are standing for re-election:
<TABLE>
<CAPTION>
Name Age Position with the Company
<S> <C> <S>
John S. Gelles 60 Chairman of the Board of Directors
Joyce A. Rizzo 47 Chief Executive Officer and Director
William H. Gelles, Jr. 54 President, Treasurer and Director
George A. Nolan 48 Director
James G. Warburton 38 Director
</TABLE>
John S. Gelles. Mr. Gelles co-founded and has been Chairman
of the Board of Directors since its inception. From inception
until May 1992, he was also Chief Executive Officer and until
December 1995, the Secretary. For the past 28 years, Mr. Gelles
was President of Gaservice Maintenance Corporation ("Gaservice"),
a wholly-owned subsidiary of the Company which was discontinued in
March 1995. Presently, Mr. Gelles is employed by the Company in a
sales and marketing capacity.
Joyce Rizzo. Ms. Rizzo has been a Director of the Company
since September 1989, President and an employee of the Company's
wholly-owned subsidiary, Lexicon Environmental Associates, Inc.
("Lexicon") since October 1989, and Chief Executive Officer of the
Company since May 1992. Prior thereto, Ms. Rizzo held executive
positions with environmental engineering companies for six years
after having spent twelve years as a chemical engineer and
environmental manager in the petroleum refining industry with Sun
Company.
William H. Gelles, Jr. Mr. Gelles co-founded and has been
President, Treasurer and a Director of the Company since its
inception. For the past 28 years, Mr. Gelles was
Secretary-Treasurer of Gaservice which was discontinued in March
1995. Presently, Mr. Gelles is employed by the Company in a sales
and marketing capacity.
George A. Nolan. Mr. Nolan has been a Director of the
Company since September 1995. Mr. Nolan co-founded and has been
President of Groundwater Recovery Systems, Inc. ("GRS") since its
inception in 1986. GRS became a wholly-owned subsidiary of the
Company in September 1995. Mr. Nolan directs the administration of
GRS, as well as its sales and marketing efforts.
James G. Warburton. Mr. Warburton has been a Director of the
Company since September 1995. Mr. Warburton co-founded and has
been Vice President of GRS since its inception in 1986. Mr.
Warburton has 18 years of experience in the design and manufacture
of remediation equipment and he is one of the inventors of the
Company's registered patents.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 20, 1996,
certain information with respect to those persons who owned, to the
Company's knowledge, beneficially (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934) more than 5% of
the Company's Common Stock, each Director, and all Directors and
Officers as a group:
<TABLE>
<CAPTION>
Percentage of
Name and Number of Outstanding
Address of Common Stock Common Stock
Beneficial Owner Owned (1) Owned (2)
<S> <C> <C>
John S. Gelles (3) 2,938,105 (4) 18.3%
William H. Gelles, Jr. (5) 2,959,049 (6) 18.4%
Joyce A. Rizzo 200,833 (7) 1.3%
790 E. Market Street,
Suite 270
West Chester, PA 19382
George A. Nolan (8) 1,500,000 9.1%
James G. Warburton (8) 1,500,000 9.1%
All Officers and 9,379,487 (9) 56.6%
Directors as a Group
(consisting of
seven persons)
</TABLE>
(1) Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with
respect to all Common Stock beneficially owned by them. A
person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60 days from the date
hereof upon the exercise of options. Each beneficial owner's
percentage ownership is determined by assuming that options
and warrants held by such person (but not those held by any
other person) and which are exercisable within 60 days from
the date hereof have been exercised.
(2) Based on 15,855,388 common shares of common stock outstanding.
(3) The address of this person is 75 Birchall Dr., Scarsdale, NY
10583.
(4) Includes 1,000 shares and 1,000 warrants held of record by Mr.
Gelles' wife but excludes 2,000 shares held of record by Mr.
Gelles's adult children as to which Mr. Gelles disclaims
beneficial ownership. Includes 200,000 incentive stock
options granted to Mr. Gelles on July 1, 1996 pursuant to the
Company's 1995 Stock Option Plan at an exercise price of
$0.265.
(5) The address of this person is 15 Stornoway, Chappaqua, NY
10514.
(6) Excludes 2,000 shares owned of record by Mr. Gelles's adult
children as to which Mr. Gelles disclaims beneficial
ownership. Includes 200,000 incentive stock options granted
to Mr. Gelles on July 1, 1996 pursuant to the Company's 1995
Stock Option Plan at an exercise price of $0.265.
(7) Includes 183,000 incentive stock options granted to Ms. Rizzo
pursuant to the Company's 1988 and 1992 Stock Option Plans at
an exercise price of $0.30. Excludes 232,000 incentive stock
options which are not currently exercisable.
(8) The address of this person is 299B National Road, Exton, PA
19341.
(9) Includes an aggregate of 584,000 options and warrants described in
Notes 4, 5 and 6 above, and 162,000 shares of common stock, 50,000
warrants and 69,500 options owned by Robert D. Goldman, Secretary.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth all compensation awarded to,
earned by, or paid for all services rendered to the Company, during
the fiscal year ended December 31, 1995, by all executive officers
whose total compensation exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------- -----------------------------
Awards Payouts
------------- --------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Long-
term
Other Restrict- incent
Name Annual ed ive All
and Compen- Stock Options/ Plan Other
Principal sation Award(s) SARs Payouts Compensation
Position Year Salary($) Bonus($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joyce Rizzo, 1995 $136,000 -0- -0- -0- 415,000(1) -0- -0-
Chief Executive 1994 $129,435 -0- -0- -0 313,000 -0- -0-
Officer 1993 $125,665 -0- -0- -0- 77,000(2) -0- -0-
Robert D. 1995 $102,000 -0- -0- -0- 151,000(4) -0- -0-
Goldman,
Secretary (3)
</TABLE>
(1) Represents 415,000 options exercisable at a range from $2.75
to $1.4375 which were originally granted in prior years, but
were subsequently canceled and regranted in 1995. Such
options were canceled by the Board of Directors because the
Board believed that the options as previously priced did not
provide an adequate incentive for Ms. Rizzo.
(2) Does not include 88,000 options exercisable at $3.72 per share
which were canceled in 1994. Such options were canceled by the
Board of Directors because the Board believed that the options
as previously priced did not provide an adequate incentive for
Ms. Rizzo.
(3) Mr. Goldman became Secretary in December 1995.
(4) Represents 151,000 options exercisable at a range from $2.75 to $1.4375
which were originally granted in prior years, but were subsequently
canceled and regranted in 1995. Such options were canceled by the
Board of Directors because the Board believed that the options as
previously priced did not provide an adequate incentive for Mr. Goldman.
<TABLE>
Individualized Option/SAR Grants in Last Fiscal Year
====================================================
<CAPTION>
Individual Grants
-----------------------------
(a) (b) (c) (d) (e)
% of Total
Options/SARs Exercise
Options/ Granted to or Sale
SARs Employees in Price Expiration
Name Granted (#) Fiscal Year ($/SH) Date
<C> <S> <S> <S> <S>
Joyce Rizzo 415,000 42.4% $0.30 12-28-98
Robert D. Goldman 151,000 15.4% $0.30 12-28-98
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY End Option/SAR Values
================================================================================
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-The-Money
Shares Options/SARs at Options/SARs
Acquired FY-End (#) at FY-End ($)
on Exer- Value Exercisable/ Exercisable/
Name cise (#) Realized Unexercisable Unexercisable (1)
<S> <C> <C> <C> <C>
Joyce Rizzo -0- $ 0.00 183,000/232,000 $0.00/$0.00
Robert D. Goldman -0- $ 0.00 69,500/81,500 $0.00/$0.00
</TABLE>
(1) The closing price for the Company's Common Stock on December
29, 1995 was $0.28125 per share.
The Company has no long-term incentive plan awards.
Directors currently receive no cash compensation for serving
on the Board of Directors other than reimbursement of reasonable
expenses incurred in attending meetings.
Employment Agreements
- ---------------------
The Company entered into a five-year employment contract with
Joyce A. Rizzo on March 31, 1995 to serve as Chief Executive
Officer of the Company and President of Lexicon. Under the
agreement, Ms. Rizzo's current annual salary is $150,000 until
December 31, 1996 and she is entitled to receive minimum annual
increases in base salary of three percent (3%) over the preceding
year's salary and maximum increases of ten percent (10%) depending
on whether the Company attains certain pre-tax income levels.
Under the agreement, Ms. Rizzo is entitled to receive incentive
stock options if the Company attains pre-tax income goals, as
established by the Board of Directors. The Company has agreed to
provide Ms. Rizzo with an automobile allowance or in lieu thereof,
will pay her an equal monthly cash stipend. If Ms. Rizzo's
employment is terminated without cause, the agreement provides that
she will be entitled to receive her then current compensation for
the lesser of two years or the remainder of the term. The
agreement provides that Ms. Rizzo will not compete with the Company
during the term of the agreement, nor for a period of two years
thereafter. The agreement also provides that if Ms. Rizzo, as both
a director and shareholder of the Company, opposes a "change of
control" (as defined below) of the Company and such change of
control shall occur at any time during full-time employment, Ms.
Rizzo shall within six months of such change of control be entitled
to terminate her employment agreement and the Company shall
promptly pay either 2.9 times her then current compensation, if a
majority of the Company's Board opposed the change of control, or
2.5 times the then current compensation if a majority of the Board
voted in favor of the change of control. The agreement defines a
"change of control" to occur when any person, corporation,
partnership, association or entity, directly or indirectly (through
a subsidiary or otherwise), (i) acquires or is granted the right to
acquire, directly through a merger or similar transaction, a
majority of the Company's outstanding voting securities, or (ii)
acquires all or substantially all of the Company's assets.
On September 29, 1995, the Company entered into five year
employment agreements with George A. Nolan to serve as President
and James G. Warburton to serve as Vice President of GRS, each at
an annual salary of $148,000. Such salary is subject to automatic
annual increases commencing January 1, 1997 of between three
percent (3%) and ten (10%) dependent upon achievement of net income
targets to be established. Under the agreements, each is entitled
to receive incentive stock options if the Company attains pretax
income goals, as established by the Board of Directors. The
Company has agreed to provide an automobile allowance or in lieu
thereof, will pay an equal monthly cash stipend and will provide
other fringe benefits that the Company makes available to its
executives. If employment is terminated without cause, the
agreements provide that the then current compensation will be paid
for the lessor of two years or the remainder of the term. The
agreements provide for no competition with the Company during the
term of the agreements nor for a period of two years thereafter.
On July 1, 1996, the Company entered into thirty month
employment agreements with John S. Gelles and William H. Gelles,
Jr. to serve as employees of the Company, each at an monthly salary
of $6,250 through December 31, 1996 and $4,167 thereafter. Under
the agreements, each is entitled to share in any discretionary
bonuses paid to the Company's senior executives on a pro rata
basis, receive a three percent (3%) commission for any net sales
introduced to the Company and eligible to receive incentive stock
options as determined by the Company's Board of Directors.
MEETING OF THE BOARD OF DIRECTORS
AND INFORMATION REGARDING COMMITTEES
The Board of Directors held 3 meetings in 1995 which were
attended by all Directors.
The Board of Directors does not currently maintain any
committees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1994, William H. Gelles, Jr., a principal stockholder
and President of the Company, loaned $42,000 to the Company. In
September 1994, John S. Gelles, a principal stockholder and
Chairman of the Company, loaned $50,000 to the Company. Such
loans were payable on demand and accrued interest at the rate of
10% per year. Both loans were paid in full with interest to both
parties in October 1994.
Until December 31, 1995, the Company was a party to a lease
with JWB Associates, a partnership controlled by John S. Gelles and
William H. Gelles, Jr. for three separate premises located in the
Bronx, New York. With the discontinuation of Gaservice's
operations as of March 31, 1995, the Company required the use of
the properties until December 31, 1995. The premises were used to
house the inventory and property, plant and equipment of Gaservice
until the liquidation process was completed. The rent was $5,833
per month, net of all expenses, through December 31, 1995 under an
agreement with JWB Associates entered into in March 1995.
In connection with the acquisition of GRS, the Company signed
two one year promissory notes for $125,000 each bearing an interest
rate of ten percent (10%) per annum with Messrs. George A. Nolan
and James G. Warburton. The notes have subsequently been adjusted
in accordance with their terms to a total of $161,770.
For the years ended December 31, 1995 and 1994, John S.
Gelles and William H. Gelles, Jr. waived all rights to dividends to
which they were entitled from the Company's Series A Preferred
Stock owned by them.
In March 1995, the Company entered into an agreement with
Messrs. John S. Gelles and William H. Gelles, Jr. which provided
for each to receive the following through December 31, 1995 for
their services to the Company: base salary of $6,500 per month;
reimbursement of reasonable business-related expenses including
operation of company automobiles; the option to purchase a Company
vehicle at fair market value at December 31, 1995; and medical
insurance equivalent to preexisting coverage.
On July 1, 1996, the Company entered into an agreement with
John S. Gelles and William H. Gelles, Jr., to convert their
1,688,888 shares of Preferred Stock into 1,501,234 shares of Common
Stock. The Agreement irrevocably waived any and all rights to
dividends to which Messrs. Gelles may have been entitled in
accordance with the terms of the Preferred Stock.
On July 1, 1996, the Company granted a total of 400,000
incentive stock options to John S. Gelles and William H. Gelles,
Jr., pursuant to the Company's 1995 Stock Option Plan at an
exercise price of $0.265.
See "Executive Compensation" for certain options granted to
Joyce A. Rizzo and Robert D. Goldman, executive officers of the
Company. In addition, see "Executive Compensation" for employment
contracts for Joyce A. Rizzo, Chief Executive Officer and a
Director, George A. Nolan, a Director, James G. Warburton, a
Director, John S. Gelles, Chairman of the Board of Directors and
William H. Gelles, Jr., President, Treasurer and a Director.
Proposal II
APPROVAL OF LEAK-X ENVIRONMENTAL CORPORATION
1996 STOCK OPTION PLAN
The Board of Directors of the Company, subject to the approval
of shareholders, adopted the Leak-X Environmental Corporation 1996
Stock Option Plan (the "Plan"), which authorizes the grant of
options to purchase an aggregate of 750,000 shares of Common Stock.
The Board of Directors has deemed it in the best interest of
the Company to establish the Plan so as to provide employees and
other persons involved in the continuing development and successes
of the Company and its subsidiaries an opportunity to acquire a
proprietary interest in the Company by means of grants of options
to purchase Common Stock. The Plan is in addition to the 1988
Stock Option Plan, which presently has no shares remaining of the
687,500 authorized thereunder for issuance, the 1992 Stock Option
Plan which has 97,242 shares of the 750,000 authorized thereunder
remaining for issuance and the 1995 Stock Option Plan which has
350,000 shares of the 750,000 authorized thereunder remaining for
issuance. It is the opinion of the Board of Directors that by
providing the Company's employees and other individuals
contributing to the Company and its subsidiaries the opportunity to
acquire an equity investment in the Company, the Plan will maintain
and strengthen their desire to remain with the Company, stimulate
their efforts on the Company's behalf, and also attract other
qualified personnel to the Company's employ. The affirmative vote
by holders of a majority of the shares of Common Stock outstanding
is required for approval of the Plan.
The following statements summarize certain provisions of the
Plan. All statements are qualified in their entirety by reference
to the text of the Plan, copies of which are available for
examination at the Securities and Exchange Commission and at the
principal office of the Company, 790 East Market Street, Suite 270,
West Chester, Pennsylvania 19382.
The Plan allows the Company to grant incentive stock options
("ISOs"), as defined in Section 422(b) of the Internal Revenue Code
of 1986, as amended (the "Code"), Non-Qualified Stock Options
("NQSOs") not intended to qualify under Section 422(b) of the Code
and Stock Appreciation Rights ("SARs"), together with ISOs and
NQSOs, collectively referred to herein as "Options". The Plan is
intended to provide the employees, directors, independent
contractors and consultants of the Company with an added incentive
to continue their services to the Company and to induce them to
exert their maximum efforts toward the Company's success. The
Board has deemed it in the best interest of the Company to
establish the Plan so as to provide employees and the other persons
listed above the opportunity to acquire a proprietary interest in
the Company by means of grants of options to purchase Common Stock.
Eligibility for Participation
Under the Plan, ISOs or ISOs in tandem with SARs, subject to
the requirements set forth in Temp. Reg. Section 14a.422A-1, A-39
(a)-(e), may be granted, from time to time, to employees of the
Company, including officers. NQSOs and NQSOs in tandem with SARs,
other than ISOs, may be granted from time to time, under the Plan,
to employees of the Company, officers, Directors, independent
contractors, consultants and other individuals who are not
employees of, but are involved in the continuing development and
success of the Company (persons entitled to receive ISOs, NQSOs, or
SARs are hereinafter referred to as "Participants"). To date, the
Company has fourteen employees (including five directors), who are
eligible for grants of one or more types of options under the Plan.
The Company cannot presently compute the number of non-employees
who may be entitled to NQSOs.
Administration
The Plan is to be administered by the Board of Directors of
the Company or by a Stock Option or Compensation Committee
comprised of at least two disinterested persons (the term
"disinterested" having the meaning ascribed to it by Rule 16b-3 of
the Securities Exchange Act of 1934). The Company currently does
not have any independent directors. The Board of Directors or the
Committee will have the authority, in its discretion, to determine
the persons to whom, Options shall be granted, the character of
such Options and the number of shares of Common Stock to be subject
to each Option. Presently, the Plan will be administered by the
entire Board of Directors.
Terms of Options
The terms of Options granted under the Plan are to be
determined by the Board or its committee. Each Option is to be
evidenced by a stock option agreement between the Company and the
employee to whom such Option is granted, and is subject to the
following additional terms and conditions:
(a) Exercise of the Option: The Board of Directors or its
committee will determine the time periods during which Options
granted under the Plan may be exercised. An Option must be granted
within ten (10) years from the date the Plan was adopted or the
date the Plan is approved by the stockholders of the Company,
whichever is earlier. Options will be exercisable in whole or in
part at any time during the period but will not have an expiration
date later than ten (10) years from the date of grant. Unless
otherwise provided in any option agreement issued under the Plan,
any Option granted under the Plan may be exercisable in whole or in
part at any time during the exercise period and must become fully
exercisable within five years from the date of its grant, and no
less than 20% of the Option shall become exercisable on an
aggregate basis in any of the first five years of the Option.
Notwithstanding the above, ISOs or SARs granted in tandem with
ISOs, granted to holders of more than 10% of the Company's Common
Stock are subject to the additional restriction that the expiration
date shall not be later than five (5) years from the date of grant.
An Option is exercised by giving written notice of exercise to the
Company specifying the number of full shares of Common Stock to be
purchased and tendering payment of the purchase price to the
Company in cash or certified check, or at the discretion of the
Board or the Committee, by delivery of Common Stock having a fair
market value equal to the option price.
(b) Option Price: The option price of an NQSO or an SAR
granted in tandem with an NQSO granted pursuant to the Plan, is
determined by the Board of Directors or its committee at their sole
discretion.
In no event may the option price of an ISO or an SAR granted
in tandem with an ISO be less than the fair market value on the
date of grant. Such fair market value of an ISO shall be
determined by the Board of Directors and, if the Common Stock is
listed on a national securities exchange or traded on the
over-the-counter market, the fair market value shall be the closing
price on such exchange, or the mean of the reported bid and asked
prices of the Common Stock on the over-the-counter market as
reported by NASDAQ, the NASD OTC Bulletin Board or the National
Quotation Bureau, Inc., as the case may be, on such date. ISOs or
SARs granted in tandem with ISOs, granted to holders of more than
10% of the Company's Common Stock are subject to the additional
restriction that the option price must be at least 110% of the fair
market value of the Company's Common Stock on the date of grant.
(c) Termination of Employment; Consulting Relationships;
Death: Except as provided in the Plan, or otherwise determined by
the Board of Directors or the Committee in its sole discretion,
upon termination of employment or consulting relationship with the
Company for any reason, a holder of an Option under the Plan may
exercise such Option to the extent such Option was exercisable as
of the date of termination or at any time within three (3) months
after the date of such termination. However, unless otherwise
determined by the Board of Directors or the Committee in its sole
discretion, any Options granted under the Plan shall immediately
terminate in the event the optionee is terminated for cause.
If the holder of an Option granted under the Plan dies (i)
while employed by or providing consulting services for the Company
or a subsidiary or parent corporation or (ii) within three (3)
months after the termination of such holder's employment or
consulting relationship, such Option may be exercised within twelve
months of death by a legatee or legatees of such Option under such
individual's last will or by such individual's estate, to the
extent such Option was exercisable as of the date of death or date
of termination of employment or consulting relationship, whichever
date is earlier.
If the holder of an Option under the Plan becomes disabled
within the definition of section 22(e)(3) of the Code while
employed by or providing consulting services for the Company or a
subsidiary or parent corporation, such Option may be exercised at
any time within six months after such holder's termination of
employment or consulting relationship due to the disability.
Except as otherwise determined by the Board of Directors or
the Committee in its sole discretion, an Option may not be
exercised except to the extent that the holder was entitled to
exercise the Option at the time of termination of employment or
death, and in any event it may not be exercised after the original
expiration date of the Option.
(d) Nontransferability of Options; No Liens: An Option is
nontransferable and non-assignable by the optionee, other than by
will or the laws of descent and distribution, and any ISO or SAR in
tandem with an ISO is exercisable during the lifetime of the
optionee and only by the optionee, or in the event of his or her
death, by a person who acquires the right to exercise the Option by
bequest or inheritance or by reason of the death of the optionee.
The option agreement may contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined
by the Board of Directors or its committee.
Termination; Modification and Amendment
The Plan (but not Options previously granted under the Plan)
shall terminate ten years from the earlier of the date of its
adoption by the Board of Directors or the date the Plan is approved
by the Stockholders of the Company. No Option will be granted
after termination of the Plan.
The Board of Directors of the Company may terminate the Plan
at any time prior to its expiration date, or from time to time make
such modifications or amendments of the Plan as it deems advisable.
However, the Board may not, without the approval of a majority of
the then outstanding shares of the Company entitled to vote
thereon, except under conditions described under "Adjustments Upon
Changes in Capitalization," increase the maximum number of shares
as to which Options may be granted under the Plan or materially
change the standards of eligibility under the Plan.
No termination, modification or amendment of the Plan may
adversely affect the terms of any outstanding Options without the
consent of the holders of such Options.
Adjustments Upon Changes in Capitalization
In the event that the number of outstanding shares of Common
Stock of the Company is changed by reason of recapitalization,
reclassification, stock split, stock dividend, combination,
exchange of shares, or the like, the Board of Directors of the
Company will make an appropriate adjustment in the aggregate number
of shares of Common Stock available under the Plan, in the number
of shares of Common Stock reserved for issuance upon the exercise
of then outstanding Options and in the exercise prices of such
Options. Any adjustment in the number of shares will apply
proportionately only to the unexercised portion of Options granted
under the Plan. Fractions of shares resulting from any such
adjustment shall be revised to the next higher whole number of
shares.
In the event of the proposed dissolution or liquidation of
substantially all of the assets of the Company, all outstanding
Options will automatically terminate, unless otherwise provided by
the Board.
Federal Income Tax Consequences
The following discussion is only a summary of the principal
Federal income tax consequences of the Options granted under the
Plan and is based on existing Federal law, which is subject to
change, in some cases retroactively. This discussion is also
qualified by the particular circumstances of individual optionees,
which may substantially alter or modify the Federal income tax
consequences herein discussed.
Generally, under present law, when an option qualifies as an
ISO under Section 422 of the Code (i) an employee will not realize
taxable income either upon the grant or the exercise of the option,
(ii) the amount by which the fair market value of the shares
acquired by the exercise of the option at the time of exercise
exceeds the option price is included in alternative minimum taxable
income for purposes of determining the employee's alternative
minimum tax, (iii) any gain or loss (the difference between the net
proceeds received upon the disposition of the shares and the option
price paid therefor) upon a qualifying disposition of the shares
acquired by the exercise of the option will be treated as capital
gain or loss if the stock qualifies as a capital asset in the hands
of the employee, and (iv) no deduction will be allowed to the
Company for Federal income tax purposes in connection with the
grant or exercise of an incentive stock option or a qualifying
disposition of the shares. A disposition by an employee of shares
acquired upon exercise of an ISO will constitute a qualifying
disposition if it occurs more than two years after the grant of the
option and one year after the issuance of the shares to the
employee. If such shares are disposed of by the employee before
the expiration of those time limits, the transfer would be a
"disqualifying disposition" and the employee, in general, will
recognize ordinary income (and the Company will receive an
equivalent deduction) equal to the lesser of (i) the aggregate fair
market value of the shares as of the date of exercise less the
option price, or (ii) the amount realized on the disqualifying
disposition less the option price. Ordinary income from a
disqualifying disposition will constitute compensation for which
withholding may be required under Federal and state law. Currently
under the Code, the maximum rate of tax on ordinary income is
greater than the rate of tax on long-term capital gains.
Legislation has passed the House of Representatives to decrease the
marginal rate of tax on capital gains. It is unknown whether the
legislation enacted by the House of Representatives will eventually
be enacted into law. Furthermore, in the future, the rate of tax
on such gains may be increased. No assurance can be given of when,
if ever, new tax legislation will be enacted into law, and the
effective date of any such legislation.
In the case of a non-qualified stock option granted under the
Plan, no income generally is recognized by the optionee at the time
of the grant of the option assuming such non-qualified stock option
does not have a readily ascertainable fair market value. The
optionee generally will recognize ordinary income when the
non-qualified stock option is exercised equal to the aggregate fair
market value of the shares acquired less the option price.
However, if the sale of any shares received would be subject to
Section 16(b) of the Securities Exchange Act of 1934, ordinary
income attributable to such shares received will be recognized on
the date such sale would not give rise to a Section 16(b) action,
valued at the fair market value at such later time, unless the
optionee has made a Section 83(b) election within 30 days after the
date of exercise to recognize ordinary income as of the date of
exercise based on the fair market value at the date of exercise.
Ordinary income from non-qualified stock options will constitute
compensation for which withholding may be required under Federal
and state law, and the Company will receive an equivalent
deduction, subject to the limitations of Section 162(m) of the Code
which limits the amount a publicly held corporation may deduct with
respect to remuneration generally paid to an executive officer of
the Corporation to $1,000,000. Income recognized by such executive
officer on the exercise of a NQSO or SAR would be deemed
remuneration. There are certain exceptions excluding income from
the exercise of a NQSO or SAR which the Company may avail itself if
the Plan is administered by two directors who are directly or
indirectly employed by the Company. The Company does not currently
have any such directors.
Shares acquired upon exercise of non-qualified stock options
will have a tax basis equal to their fair market value on the
exercise date or other relevant date on which ordinary income is
recognized and the holding period for the shares generally will
begin on the date of the exercise or such other relevant date.
Upon subsequent disposition of the shares, the optionee will
recognize capital gain or loss if the stock is a capital asset in
his hands. Provided the shares are held by the optionee for more
than one year prior to disposition, such gain or loss will be
long-term capital gain or loss. As set forth above, the maximum
rate of tax on ordinary income is currently greater than the rate
of tax on long-term capital gains. To the extent an optionee
recognizes a capital loss, such loss may currently generally offset
capital gains and $3,000 of ordinary income. Any excess capital
loss is carried forward indefinitely.
The grant of an SAR is generally not a taxable event for the
optionee. Upon the exercise of an SAR the optionee will recognize
ordinary income in an amount equal to the amount of cash received
upon such exercise, and the Company will be entitled to a deduction
equal to the same amount.
The foregoing discussion is only a brief summary of the
applicable Federal income tax laws as in effect on this date and
should not be relied upon as being a complete statement. The
Federal tax laws are complex, and they are subject to legislative
changes and new or revised judicial or administrative
interpretations at any time. In addition to the Federal income tax
consequences described herein, an optionee may also be subject to
state and/or local income tax consequences in the jurisdiction in
which the grantee works and/or resides.
New Plan Benefits
As of June 30, 1996, no Options have been granted or allocated
under the Plan. Accordingly, any benefits or amounts that will be
received by management of the Company under the Plan are not
presently determinable.
Management recommends voting "FOR" the proposal to approve the
Leak-X Environmental Corporation 1996 Stock Option Plan.
Proposal III
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
Mazars & Company LLP have been the independent auditors of the
Company's accounts since January 1996. They have no financial
interest, either direct or indirect, in the Company. Selection of
auditors is made by the Company's Board of Directors, subject to
stockholder ratification. A representative of Mazars & Company LLP
is expected to attend the Annual Meeting and to have an opportunity
to make a statement or respond to appropriate questions from
stockholders.
Management recommends voting "FOR" the ratification of the
appointment of the auditors.
OTHER MATTERS
The Board of Directors is not aware of any business to be
presented at the Annual Meeting except the matters set forth in the
Notice and described in this Proxy Statement. Unless otherwise
directed, all shares represented by Board of Directors' proxies
will be voted in favor of the proposals of the Board of Directors
described in this Proxy Statement. If any other matters come
before the Annual Meeting, the person named in the accompanying
proxy will vote on those matters according to their best judgment.
EXPENSES
The entire cost of preparing, assembling, printing and mailing
this Proxy Statement, the enclosed proxy and other materials, and
the cost of soliciting proxies with respect to the Annual Meeting
will be borne by the Company. The Company will request banks and
brokers to solicit their customers who beneficially own shares
listed of record in names of nominees, and will reimburse those
banks and brokers for the reasonable out-of-pocket expenses of such
solicitations. The original solicitation of proxies by mail may be
supplemented by telephone and telegram by Officers and other
regular employees of the Company, but no additional compensation
will be paid to such individuals.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors
and greater than ten-percent shareholders are required by
regulations to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on its review of the copies of such
forms received by it, or written representations from certain
reporting persons that no Forms 5 were required for those persons,
the Company believes that, during the period from January 1, 1995
through December 31, 1995, all filing requirements applicable to
its officers, directors, and greater than ten-percent beneficial
owners were complied with.
STOCKHOLDER PROPOSALS
No person who intends to present a proposal for action at a
forthcoming stockholders' meeting of the Company may seek to have
the proposal included in the Proxy Statement or form of proxy for
such meeting unless that person (a) is a record or beneficial owner
of at least 1% or $1,000 in market value of Common Stock, has held
such Common Stock for at least one year at the time the proposal is
submitted, and such person shall continue to own such Common Stock
through the date on which the meeting is held, (b) provides the
Company in writing with his name, address, the number of shares
held by him and the dates upon which he acquired such shares with
documentary support for a claim of beneficial ownership, (c)
notifies the Company of his intention to appear personally at the
meeting or by a qualified representative under Delaware law to
present his proposal for action, and (d) submits his proposal
timely. A proposal, to be included in the Proxy Statement or proxy
for the Company's next annual meeting of stockholders, will be
submitted timely only if the proposal has been received at the
Company's principal executive office no later than May 23, 1997.
If the date of such meeting is changed by more than 30 calendar
days from the date such meeting is scheduled to be held this year,
or if the proposal is to be presented at any meeting other than the
next annual meeting of stockholders, the proposal must be received
at the Company's principal executive office at a reasonable time
before the solicitation of proxies for such meeting is made.
Even if the foregoing requirements are satisfied, a person may
submit only one proposal of not more than 500 words with a
supporting statement if the latter is requested by the proponent
for inclusion in the proxy materials, and under certain
circumstances enumerated in the Securities and Exchange
Commission's rules relating to the solicitation of proxies, the
Company may be entitled to omit the proposal and any statement in
support thereof from its proxy statement and form of proxy.
By order of the Board of Directors
/s/ Robert D. Goldman
Robert D. Goldman, Secretary
West Chester, Pennsylvania
August 23, 1996
Copies of the Company's 1995 Annual Report on Form 10-KSB for
the year ended December 31, 1995 as filed with the Securities and
Exchange Commission, including the financial statements, can be
obtained without charge by shareholders (including beneficial
owners of the Company's Common Shares) upon written request to
Joyce A. Rizzo, the Company's Chief Executive Officer, Leak-X
Environmental Corporation, 790 East Market Street, Suite 270, West
Chester, Pennsylvania 19382.
EXHIBIT A
LEAK-X ENVIRONMENTAL CORPORATION
1996 STOCK OPTION PLAN
1. Purposes.
The LEAK-X ENVIRONMENTAL CORPORATION 1996 STOCK OPTION PLAN
(the "Plan") is intended to provide the employees, directors,
independent contractors and consultants of Leak-X Environmental
Corporation (the "Company") with an added incentive to continue
their services to the Company and to induce them to exert their
maximum efforts toward the Company's success. By thus encouraging
employees, directors, independent contractors and consultants and
promoting their continued association with the Company, the Plan
may be expected to benefit the Company and its stockholders. The
Plan allows the Company to grant Incentive Stock Options ("ISOs")
(as defined in Section 422(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), Non-Qualified Stock Options ("NQSOs") not
intended to qualify under Section 422(b) of the Code and Stock
Appreciation Rights ("SARs")(collectively the "Options").
2. Shares Subject to the Plan.
The total number of shares of Common Stock of the Company,
$.01 par value per share, that may be subject to Options granted
under the Plan shall be 750,000 in the aggregate, subject to
adjustment as provided in Paragraph 8 of the Plan; however, the
grant of an ISO to an employee together with a tandem SAR or any
NQSO together with a tandem SAR shall only require one share of
Common Stock available subject to the Plan to satisfy such joint
Option. The Company shall at all times while the Plan is in force
reserve such number of shares of Common Stock as will be sufficient
to satisfy the requirement of outstanding Options granted under the
Plan. In the event any Option granted under the Plan shall expire
or terminate for any reason without having been exercised in full
or shall cease for any reason to be exercisable in whole or in
part, the unpurchased shares subject thereto shall again be
available for granting of Options under the Plan.
3. Eligibility.
ISOs or ISOs in tandem with SARs (provided the SAR meets the
requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a)
through (e) inclusive) may be granted from time to time under the
Plan to one or more employees of the Company or of a "subsidiary"
or "parent" of the Company, as the quoted terms are defined within
Section 424 of the Code. An Officer is an employee for the above
purposes. However, a director of the Company who is not otherwise
an employee is not deemed an employee for such purposes. NQSOs or
NQSOs in tandem with SARs may be granted from time to time under
the Plan to one or more employees of the Company, Officers, members
of the Board of Directors, independent contractors, consultants and
other individuals who are not employees of, but are involved in the
continuing development and success of the Company and/or of a
subsidiary of the Company, including persons who have previously
been granted Options under the Plan.
4. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors
of the Company as such Board of Directors may be composed from time
to time and/or by a Stock Option Committee (the "Committee") which
shall be comprised of at least two disinterested persons (the term
"disinterested" having the meaning ascribed to it by Rule 16b-3 of
the Securities Exchange Act of 1934 (the "1934 Act)) appointed by
such Board of Directors of the Company. As and to the extent
authorized by the Board of Directors of the Company, the Committee
may exercise the power and authority vested in the Board of
Directors under the Plan. Within the limits of the express
provisions of the Plan, the Board of Directors or Committee shall
have the authority, in its discretion, to determine the individuals
to whom, and the time or times at which, Options shall be granted,
the character of such Options (whether ISO, NQSO and/or SARs in
tandem with NQSOs, and/or SARs in tandem with ISOs) and the number
of shares of Common Stock to be subject to each Option, the manner
and form in which the optionee can tender payment upon the exercise
of his Option, and to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine
the terms and provisions of Option agreements that may be entered
into in connection with Options (which need not be identical),
subject to the limitation that agreements granting ISOs must be
consistent with the requirements for the ISOs being qualified as
"incentive stock options" as provided in Section 422 of the Code,
and to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan. In
making such determinations, the Board of Directors and/or the
Committee may take into account the nature of the services rendered
by such individuals, their present and potential contributions to
the Company's success, and such other factors as the Board of
Directors and/or the Committee, in its discretion, shall deem
relevant. The Board of Directors' and/or the Committee's
determinations on the matters referred to in this Paragraph shall
be conclusive.
(b) Notwithstanding anything contained herein to the
contrary, at anytime during the period the Company's Common Stock
is registered pursuant to Section 12(g) of the 1934 Act, the
Committee, if one has been appointed to administer the Plan with
respect to grants to all persons or solely with respect to persons
subject to Section 16 of the 1934 Act, shall have the exclusive
right to grant Options to persons subject to Section 16 of the 1934
Act and set forth the terms and conditions thereof. With respect
to persons subject to Section 16 of the 1934 Act, transactions
under the Plan are intended, to the extent possible, comply with
all applicable conditions of Rule 16b-3, as amended from time to
time, (and its successor provisions, if any) under the 1934 Act.
To the extent any provision of the Plan or action by the Board of
Directors or Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by
the Board of Directors and/or such Committee.
5. Terms of Options.
Within the limits of the express provisions of the Plan, the
Board of Directors or the Committee may grant either ISOs or NQSOs
or SARs in tandem with NQSOs or SARs in tandem with ISOs. An ISO
or an NQSO enables the optionee to purchase from the Company, at
any time during a specified exercise period, a specified number of
shares of Common Stock at a specified price (the "Option Price").
The optionee, if granted a SAR in tandem with a NQSO or ISO, may
receive from the Company, in lieu of exercising his option to
purchase shares pursuant to his NQSO or ISO, at one of the certain
specified times during the exercise period of the NQSO or ISO as
set by the Board of Directors or the Committee, the excess of the
fair market value upon such exercise (as determined in accordance
with subparagraph (b) of this Paragraph 5) of one share of Common
Stock over the Option Price per share specified upon grant of the
NQSO or ISO/SAR multiplied by the number of shares of Common Stock
covered by the SAR so exercised. The character and terms of each
Option granted under the Plan shall be determined by the Board of
Directors and/or the Committee consistent with the provisions of
the Plan, including the following:
(a) An Option granted under the Plan must be granted within
10 years from the date the Plan is adopted, or the date the Plan is
approved by the stockholders of the Company, whichever is earlier.
(b) The Option Price of the shares of Common Stock subject
to each ISO and each SAR issued in tandem with an ISO shall not be
less than the fair market value of such shares of Common Stock at
the time such ISO is granted. Such fair market value shall be
determined by the Board of Directors and, if the shares of Common
Stock are listed on a national securities exchange or traded on the
over-the-counter market, the fair market value shall be the closing
price on such exchange, or the mean of the closing bid and asked
prices of the shares of Common Stock on the over-the-counter
market, as reported by the National Association of Securities
Dealers Automated Quotation System (NASDAQ), the National
Association of Securities Dealers OTC Bulletin Board or the
National Quotation Bureau, Inc., as the case may be, on the day on
which the Option is granted or, if there is no closing price or bid
or asked price on that day, the closing price or mean of the
closing bid and asked prices on the most recent day preceding the
day on which the Option is granted for which such prices are
available. If an ISO or SAR in tandem with an ISO is granted to
any individual who, immediately before the ISO is to be granted,
owns (directly or through attribution) more than 10% of the total
combined voting power of all classes of capital stock of the
Company or a subsidiary or parent of the Company, the Option Price
of the shares of Common Stock subject to such ISO shall not be less
than 110% of the fair market value per share of the shares of
Common Stock at the time such ISO is granted.
(c) The Option Price of the shares of Common Stock subject
to an NQSO or a SAR in tandem with a NQSO granted pursuant to the
Plan shall be determined by the Board of Directors or the
Committee, in its sole discretion.
(d) In no event shall any Option granted under the Plan have
an expiration date later than 10 years from the date of its grant,
and all Options granted under the Plan shall be subject to earlier
termination as expressly provided in Paragraph 6 hereof. If an ISO
or a SAR in tandem with an ISO is granted to any individual who,
immediately before the ISO is granted, owns (directly or through
attribution) more that 10% of the total combined voting power of
all classes of capital stock of the Company or of a subsidiary or
parent of the Company, such ISO shall by its terms expire and shall
not be exercisable after the expiration of five (5) years from the
date of its grant.
(e) With respect to the grant of SARs to Officers and
Directors of the Company, an SAR may be exercised at any time after
six months of the date of the grant thereof during the exercise
period of the ISO or NQSO with which it is granted in tandem and
prior to the exercise of such ISO or NQSO, but only within the
specified 10 business day period referred to in subsection (e)(3)
of Rule 16b-3 of the 1934 Act (generally, the 10 business days
immediately following the publication of the Company's quarterly
financial information) if the Company's Common Stock is registered
pursuant to Section 12(g) of the 1934 Act. Notwithstanding the
foregoing, the Board of Directors and/or the Committee shall in
their discretion determine from time to time the terms and
conditions of SARs to be granted, which terms may vary from the
afore-described conditions, and which terms shall be set forth in
a written stock option agreement evidencing the SAR granted in
tandem with the ISO or NQSO. The exercise of an SAR granted in
tandem with an ISO or NQSO shall be deemed to cancel such number of
shares subject to the unexercised Option as were subject to the
exercised SAR. The Board of Directors or the Committee also has
the discretion to alter the terms of the SARS if necessary to
comply with Federal or state securities law. Amounts to be paid by
the Company in connection with an SAR may, in the Board of
Director's or the Committee's discretion, be made in cash, Common
Stock or a combination thereof.
(f) Unless otherwise provided in any Option agreement
under the Plan, an Option granted under the Plan shall become
exercisable, in whole at any time or in part from time to time, but
in no case may an Option (i) be exercised as to less than one
hundred (100) shares of Common Stock at any one time, or the
remaining shares of Common Stock covered by the Option if less than
one hundred (100), and (ii) become fully exercisable more than five
years from the date of its grant nor shall less than 20% of the
Option become exercisable in any of the first five years of the
Option.
(g) An Option granted under the Plan shall be exercised
by the delivery by the holder thereof to the Company at its
principal office (to the attention of the Secretary) of written
notice of the number of full shares of Common Stock with respect to
which the Option is being exercised, accompanied by payment in
full, which payment at the option of the optionee shall be (i) in
the form of cash or certified or bank check payable to the order of
the Company, of the Option Price of such shares of Common Stock,
or, (ii) if permitted by the Committee or the Board of Directors,
as determined by the Committee or the Board of Directors in its
sole discretion at the time of the grant of the Option with respect
to an ISO and at or prior to the time of exercise with respect to
a NQSO, by the delivery of shares of Common Stock having a fair
market value equal to the Option Price (provided, in order to
qualify as an ISO, more than one year shall have passed since the
date of grant and one year from the date of exercise), or (iii) at
the option of the Committee or the Board of Directors, determined
by the Committee or the Board of Directors in its sole discretion
at the time of the grant of the Option with respect to an ISO and
at or prior to the time of exercise with respect to a NQSO, by a
combination of cash and/or such shares of Common Stock (subject to
the restriction above) held by the employee that have a fair market
value together with such cash that shall equal the Option Price,
and, in the case of a NQSO, at the discretion of the Committee or
Board of Directors by having the Company withhold from the shares
of Common Stock to be issued upon exercise of the Option that
number of shares having a fair market value equal to the exercise
price and/or the tax withholding amount due, or otherwise provide
for withholding as set forth in Paragraph 9(c) hereof, or in the
event an employee is granted an ISO or NQSO in tandem with an SAR
and desires to exercise such SAR, such written notice shall so
state such intention. The Option Price may also be paid in full by
a broker-dealer to whom the optionee has submitted an exercise
notice consisting of a fully endorsed Option, or through any other
medium of payment as the Board of Directors and/or the Committee,
in its discretion, shall authorize.
(h) The holder of an Option shall have none of the rights
of a stockholder with respect to the shares of Common Stock covered
by such holder's Option until such shares of Common Stock shall be
issued to such holder upon the exercise of the Option.
(i) All Options granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and
distribution, and any ISO or SAR in tandem with an ISO granted
under the Plan may be exercised during the lifetime of the holder
thereof only by the holder. No Option granted under the Plan shall
be subject to execution, attachment or other process.
(j) The aggregate fair market value, determined as of the
time any ISO or SAR in tandem with an ISO is granted and in the
manner provided for by Subparagraph (b) of this Paragraph 5, of the
shares of Common Stock with respect to which ISOs granted under the
Plan are exercisable for the first time during any calendar year
and under incentive stock options qualifying as such in accordance
with Section 422 of the Code granted under any other incentive
stock option plan maintained by the Company or its parent or
subsidiary corporations, shall not exceed $100,000. Any grant of
Options in excess of such amount shall be deemed a grant of a NQSO.
(k) Notwithstanding anything contained herein to the
contrary, a SAR which was granted in tandem with an ISO shall (i)
expire no later than the expiration of the underlying ISO; (ii) be
for no more than 100% of the spread at the time the SAR is
exercised; (iii) shall only be transferable when the underlying ISO
is transferable; (iv) only be exercised when the underlying ISO is
eligible to be exercised; and (v) only be exercisable when there is
a positive spread.
6. Death or Termination of Employment.
(a) Except as provided herein, or otherwise determined by
the Board of Directors or the Committee in its sole discretion,
upon termination of an optionee's employment or consulting
relationship with the Company for any reason other than cause, a
holder of an Option under the Plan may exercise such Options to the
extent such Options were exercisable as of the date of termination
at any time within three (3) months after the date of such
termination, subject to the provisions of Subparagraph (d) of this
Paragraph 6. Notwithstanding anything contained herein to the
contrary, unless otherwise determined by the Board of Directors or
the Committee in its sole discretion, any options granted hereunder
to an optionee and then outstanding shall immediately terminate in
the event the optionee is terminated for cause. For purposes
hereof, cause means (i) acts and/or omissions, or a course of
conduct, of optionee, that are, in the opinion of the President of
the Company, materially adverse to the interests of the Company,
(ii) drug or alcohol abuse, (iii) conviction of a felony committed
against the Company, or (iv) any act of dishonesty by the optionee
with respect to the Company.
(b) If the holder of an Option granted under the Plan
dies (i) while employed by or acting as a consultant to the Company
or a subsidiary or parent corporation or (ii) within three (3)
months after the termination of such holder's employment, such
Options may, subject to the provisions of subparagraph (d) of this
Paragraph 6, be exercised by a legatee or legatees of such Option
under such individual's last will or by such individual's personal
representatives or distributees at any time within such time as
determined by the Board of Directors or the Committee in its sole
discretion, but in no event less than twelve months after the
individual's death, to the extent such Options were exercisable as
of the date of death or date of termination of employment or
consulting relationship, whichever date is earlier.
(c) If the holder of an Option under the Plan becomes
disabled within the definition of section 22(e)(3) of the Code
while employed by or providing consulting services for the Company
or a subsidiary or parent corporation, such Option may, subject to
the provisions of subparagraph (d) of this Paragraph 6, be
exercised at any time within six months after such holder's
termination of employment or consulting relationship due to the
disability.
(d) Except as otherwise determined by the Board of
Directors or the Committee in its sole discretion, an Option may
not be exercised pursuant to this Paragraph 6 except to the extent
that the holder was entitled to exercise the Option at the time of
termination of employment/consulting relationship or death, and in
any event may not be exercised after the original expiration date
of the Option.
(e) The Board of Directors or the Committee, in its sole
discretion, may at such time or times as it deems appropriate, if
ever, accelerate all or part of the vesting provisions with respect
to one or more outstanding options. The acceleration of one option
shall not infer that any option is or to be accelerated.
7. Leave of Absence.
For the purposes of the Plan, an individual who is on
military or sick leave or other bona fide leave of absence (such as
temporary employment by the Government) shall be considered as
remaining in the employ of the Company or of a subsidiary or parent
corporation for ninety (90) days or such longer period as such
individual's right to reemployment is guaranteed either by statute
or by contract.
8. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common
Stock are hereafter changed by reason of recapitalization,
reclassification, stock split-up, combination or exchange of shares
of Common Stock or the like, or by the issuance of dividends
payable in shares of Common Stock, an appropriate adjustment shall
be made by the Board of Directors, as determined by the Board of
Directors and/or the Committee, in the aggregate number of shares
of Common Stock available under the Plan, in the number of shares
of Common Stock issuable upon exercise of outstanding Options, and
the Option Price per share. In the event of any consolidation or
merger of the Company with or into another company, or the
conveyance of all or substantially all of the assets of the Company
to another company, each then outstanding Option shall upon
exercise thereafter entitle the holder thereof to such number of
shares of Common Stock or other securities or property to which a
holder of shares of Common Stock of the Company would have been
entitled to upon such consolidation, merger or conveyance; and in
any such case appropriate adjustment, as determined by the Board
of Directors of the Company (or successor entity) shall be made as
set forth above with respect to any future changes in the
capitalization of the Company or its successor entity. In the
event of the proposed dissolution or liquidation of the Company,
all outstanding Options under the Plan will automatically
terminate, unless otherwise provided by the Board of Directors of
the Company or any authorized committee thereof.
(b) Any Option granted under the Plan, unless waived by
the Board of Directors or the Committee, may, at the discretion of
the Board of Directors of the Company and said other corporation,
be exchanged for options to purchase shares of capital stock of
another corporation which the Company, and/or a subsidiary thereof
is merged into, consolidated with, or all or a substantial portion
of the property or stock of which is acquired by said other
corporation or separated or reorganized into. The terms,
provisions and benefits to the optionee of such substitute
option(s) shall in all respects be identical to the terms,
provisions and benefits of optionee under his Option(s) prior to
said substitution. To the extent the above may be inconsistent
with Sections 424(a)(1) and (2) of the Code, the above shall be
deemed interpreted so as to comply therewith.
(c) Any adjustment in the number of shares of Common
Stock shall apply proportionately to only the unexercised portion
of the Options granted hereunder. If fractions of shares of Common
Stock would result from any such adjustment, the adjustment shall
be revised to the next higher whole number of shares of Common
Stock.
9. Further Conditions of Exercise.
(a) Unless the shares of Common Stock issuable upon the
exercise of an Option have been registered with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as
amended, prior to the exercise of the Option, an optionee must
represent in writing to the Company that such shares of Common
Stock are being acquired for investment purposes only and not with
a view towards the further resale or distribution thereof, and must
supply to the Company such other documentation as may be required
by the Company, unless in the opinion of counsel to the Company
such representation, agreement or documentation is not necessary to
comply with said Act.
(b) The Company shall not be obligated to deliver any
shares of Common Stock until they have been listed on each
securities exchange on which the shares of Common Stock may then be
listed or until there has been qualification under or compliance
with such state or federal laws, rules or regulations as the
Company may deem applicable.
(c) The Board of Directors or Committee may make such
provisions and take such steps as it may deem necessary or
appropriate for the withholding of any taxes that the Company is
required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold
in connection with the exercise of any Option, including, but not
limited to, (i) the withholding of payment of all or any portion of
such Option and/or SAR until the holder reimburses the Company for
the amount the Company is required to withhold with respect to such
taxes, or (ii) the cancelling of any number of shares of Common
Stock issuable upon exercise of such Option and/or SAR in an amount
sufficient to reimburse the Company for the amount it is required
to so withhold, (iii) the selling of any property contingently
credited by the Company for the purpose of exercising such Option,
in order to withhold or reimburse the Company for the amount it is
required to so withhold, or (iv) withholding the amount due from
such employee's wages if the employee is employed by the Company or
any subsidiary thereof.
10. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under
the Plan) shall terminate ten (10) years from the earliest of the
date of its adoption by the Board of Directors, or the date the
Plan is approved by the stockholders of the Company, or such date
of termination, as hereinafter provided, and no Option shall be
granted after termination of the Plan.
(b) The Plan may from time to time be terminated,
modified or amended by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Company
entitled to vote thereon.
(c) The Board of Directors of the Company may at any
time, prior to ten (10) years from the earlier of the date of the
adoption of the Plan by such Board of Directors or the date the
Plan is approved by the stockholders, terminate the Plan or from
time to time make such modifications or amendments of the Plan as
it may deem advisable; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of
the holders of a majority of the outstanding shares of capital
stock of the Company entitled to vote thereon, increase (except as
provided by Paragraph 8) the maximum number of shares of Common
Stock as to which Options or shares may be granted under the Plan,
or materially change the standards of eligibility under the Plan.
Any amendment to the Plan which, in the opinion of counsel to the
Company, will be deemed to result in the adoption of a new Plan,
will not be effective until approved by the affirmative vote of the
holders of a majority of the outstanding shares of capital stock of
the Company entitled to vote thereon.
(d) No termination, modification or amendment of the Plan
may adversely affect the rights under any outstanding Option
without the consent of the individual to whom such Option shall
have been previously granted.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board
of Directors of the Company. Notwithstanding the above, the Plan
requires the approval by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Company
entitled to vote thereon within one year before or after adoption
of the Plan by the Board of Directors. Any options granted
hereunder after the adoption by the Board of Directors and prior to
approval of stockholders shall become void ab initio if not
approved by stockholders in the time set forth above.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any option agreement
executed pursuant hereto shall be deemed to confer upon any
individual to whom an Option is or may be granted hereunder any
right to remain in the employ of the Company or of a subsidiary or
parent of the Company or in any way limit the right of the Company,
or of any parent or subsidiary thereof, to terminate the employment
of any employee.
13. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock
option plan, incentive plan or any other compensation plan in
effect for the Company, nor shall the Plan preclude the Company
from establishing any other form of stock option plan, incentive
plan or any other compensation plan.
LEAK-X ENVIRONMENTAL CORPORATION
790 East Market Street
Suite 270
West Chester, Pennsylvania 19382
PROXY
The undersigned, a holder of Common Stock of Leak-X
Environmental Corporation, a Delaware corporation (the "Company"),
hereby appoints JOHN S. GELLES and JOYCE A. RIZZO, and each of
them, the proxies of the undersigned, each with full power of
substitution, to attend, represent and vote for the undersigned,
all of the shares of the Company which the undersigned would be
entitled to vote, at the Annual Meeting of Stockholders of the
Company to be held on September 20, 1996 and any adjournments
thereof, as said forth on the other side hereof:
The undersigned hereby revokes any other proxy to vote at
such Annual Meeting, and hereby ratifies and confirms all that said
attorneys and proxies, and each of them, may lawfully do by virtue
hereof. With respect to matters not known at the time of the
solicitations hereof, said proxies are authorized to vote in
accordance with their best judgement.
This Proxy, when properly executed, will be voted in
accordance with the instructions on the other side hereof. If no
direction is made, this Proxy will be voted FOR the election of the
five directors named, FOR the Company's 1996 Stock Option Plan, FOR
the ratification of the appointment of the Company's independent
auditors and as said Proxies shall deem advisable on such other
business as may come before the meeting.
The undersigned acknowledges receipt of a copy of the
Notice of Annual Meeting and accompanying Proxy Statement dated
August 23, 1996 relating to the Annual Meeting and the 1995 Annual
Report to Stockholders.
(Continued and to be signed on other side)
Please mark your votes as in this
example. [ X ]
FOR ALL WITHHOLD AUTHORITY
1. Election of Directors [ ] [ ]
Nominees: John S. Gelles
Joyce A. Rizzo
William H. Gelles, Jr.
George A. Nolan
James A. Warburton
as provided in the Company's Proxy Statement: (Instructions:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH OR OTHERWISE STRIKE OUT HIS OR HER NAME
ABOVE.)
FOR AGAINST ABSTAIN
2. To approve the Company's
1996 Stock Option Plan. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. To ratify the appointment of
Mazars and Company LLP as
independent auditors of the
Company's 1996 financial
statements. [ ] [ ] [ ]
4. Upon such other matters as
may properly come before the
meeting or any adjournments
thereof.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY.
SIGNATURE(S) ___________________________________________________
DATE ___________________________________
SIGNATURE(S) ___________________________________________________
DATE ___________________________________
NOTE: The signature(s) hereon should correspond exactly with the name(s) of
the Stockholder(s) appearing on the Stock Certificate. If stock is jointly
held, all joint owners should sign. When signing, as attorney, executor,
administrator, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign the full corporate name and give title
of signing officer.
