SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant x
Filed by a party other than the registrant
Check the appropriate box:
Preliminary proxy statement
x Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Integrated Waste Services, Inc.
(Name of Registrant as Specified in Its Charter)
Board of Directors of Integrated Waste Services, Inc.
(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), 14a-6(i)(1), or
14a-6(j)(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: (1)
(4) Proposed maximum aggregate value of transaction:
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:
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
INTEGRATED WASTE SERVICES, INC.
201 Ganson Street
Buffalo, New York 14203
August 14, 1996
Dear Fellow Stockholders:
You are cordially invited to attend our Annual Meeting of
Stockholders which will be held on Thursday, September 19, 1996 at
10:00 A.M. local time at the Radisson Hotel, 4243 Genesee Street,
Buffalo, New York 14225.
The Notice of Annual Meeting and Proxy Statement which
follow describe the business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person,
it is important that your shares be represented and voted. After
reading the enclosed Notice of Annual Meeting and Proxy Statement,
may I urge you to complete, sign, date and return your proxy card
in the envelope provided. If the address on the accompanying
materials is incorrect, please advise our Transfer Agent,
Continental Stock Transfer & Trust Company, in writing, at 2
Broadway, New York, New York 10004.
Your vote is important. We will appreciate a prompt
return of your signed proxy card and hope to see you at the
meeting.
Cordially,
s/James F. Williams
James F. Williams
Chief Executive Officer
INTEGRATED WASTE SERVICES, INC.
201 Ganson Street
Buffalo, New York 14203
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 19, 1996
_____________________
To the Stockholders of INTEGRATED WASTE SERVICES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Integrated Waste Services, Inc. (the "Company")
will be held on Thursday, September 19, 1996 at 10:00 A.M. local
time, at the Radisson Hotel, 4243 Genesee Street, Buffalo, New
York, for the following purposes:
1. To elect four (4) directors to hold office until the next
Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified; and
2. To consider and vote upon a proposal to approve an
amendment to the Company's 1990 Stock Option Plan to increase the
number of shares of common stock reserved for issuance thereunder
from 700,000 to 1,400,000 shares and to provide that the options to
be granted from the additional 700,000 shares be granted on or
before March 20, 2006; and
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Only stockholders of record at the close of business on
August 1, 1996 are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
By Order of the Board of Directors,
James F. Williams
Chief Executive Officer
August 14, 1996
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE
PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT
THAT TIME AND EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
PROXY STATEMENT
INTEGRATED WASTE SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 19, 1996
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of INTEGRATED
WASTE SERVICES, INC. (the "Company") for use at the Annual Meeting
of Stockholders to be held on September 19 , 1996, including any
adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the
accompanying form of proxy to stockholders on or about August 5,
1996.
The costs of soliciting proxies will be borne by the Company.
It is estimated that such costs will be nominal.
Proxies in the accompanying form, duly executed and returned
to the management of the Company and not revoked, will be voted at
the Annual Meeting. Any proxy given pursuant to such solicitation
may be revoked by the stockholder at any time prior to the voting
of the proxy by a subsequently dated proxy, by written notification
to the Secretary of the Company, or by personally withdrawing the
proxy at the meeting and voting in person.
The address of the principal executive offices of the Company
is:
201 Ganson Street
Buffalo, New York 14203
Telephone No.: (716) 852-2345
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on August
1, 1996 (the "Record Date") are entitled to notice of and to vote
at the Annual Meeting. As of the Record Date, there were issued
and outstanding 9,269,899 shares of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), the Company's only class
of voting securities. Each share entitles the holder to one vote
on each matter submitted to a vote at the Annual Meeting.
VOTING PROCEDURES
The directors will be elected by the plurality of the votes
cast by the holders of shares of Common Stock present in person or
represented by proxy at the Annual Meeting, provided a quorum
exists. All other matters at the meeting will be decided by a
majority of the votes cast by the holders of shares of Common Stock
present in person or represented by proxy at the Annual Meeting,
provided a quorum exists. A quorum will exist at the Annual
Meeting if at least the holders of a majority of the outstanding
shares of Common Stock as of the Record Dated are present in person
or by proxy. Votes will be counted and certified by one or more
Inspectors of Election who are expected to be employee(s) of the
Company. Based upon the Company's understanding of requirements of
the laws of the State of New York and the Company's Certificate of
Incorporation and By-laws, "votes cast" at a meeting of
stockholders by the holders of shares entitled to vote are
determinative of the outcome of the matter to be voted on; failures
to vote, broker non-votes and abstentions will not be considered
"votes cast."
The enclosed proxies will be voted in accordance with the
instructions thereon. Unless otherwise stated, all shares
represented by such proxy will be voted as instructed. Proxies may
be revoked as noted above.
ELECTION OF DIRECTORS
Directors are elected annually by the stockholders. At this
year's Annual Meeting of Stockholders, four (4) directors will be
elected to hold office for a term expiring at the 1997 Annual
Meeting of Stockholders. Each director will be elected to serve
until a successor is elected and qualified or until the director's
earlier resignation or removal.
At this year's Annual Meeting of Stockholders, the proxies
granted by stockholders will be voted individually for the
election, as directors of the Company, of the persons listed below,
unless a Proxy specifies that it is not to be voted in favor of a
nominee for director. In the event any of the nominees listed
below shall be unable to serve, it is intended that the Proxy will
be voted for such other nominees as are designated by the Board of
Directors of the Company. Each of the persons named below has
indicated to the Board of Directors that he will be available to
serve.
Year First
Elected
Name Director Age Position
James F. Williams* 1991 38 Chairman of the Board,
Chief Executive Officer,
Chief Financial Officer
and Treasurer
Jon M. Williams 1995 34 President, Chief
Operating Officer and
Director
Edward J. Rutkowski* 1993 55 Director
Donald G. McGrath* 1993 63 Director
*Member of the Audit Committee.
James F. Williams has been Chairman of the Board and Chief
Executive Officer of the Company since April 1996. He has been a
director since August 1991 and Treasurer and Chief Financial
Officer of the Company since May 1994. He had been a Vice
President of the Company from June 1990 to April 1996. Mr.
Williams is also a director of Blonder-Tongue Laboratories, Inc.,
which is a designer, manufacturer and supplier of electronics and
systems equipment for the cable television industry.
Jon M. Williams has been President and Chief Operating Officer of
the Company since April 1996 and a director since September 1995.
Mr. Williams has been an employee of the Company since October 1992
and became President of Integrated Waste Special Services, Inc., a
subsidiary of the Company, in January 1995. From April 1991 until
September 1992, Mr. Williams was a project manager for Kimmins
Corporation. Mr. Williams was a partner in Southwestern
Environmental from January 1985 until March 1991.
Edward J. Rutkowski has been a director of the Company since
November 1993. He has been the District Director of the Western
District of the New York State Office of Parks, Recreation and
Preservation since June 1995. He was President of Phoenix Energy
Corporation, a privately held company involved in the manufacture
of batteries, from November 1993 to June 1995. He served as a Vice
President of the Company from June 1990 until his resignation in
October 1993. From 1988 to 1990, Mr. Rutkowski was Vice President
of Envirogas, Inc., a natural gas drilling company. From 1979 to
1988, Mr. Rutkowski was the elected County Executive of Erie
County, New York where he directed/managed all operations of the
15th largest county in the United States.
Donald G. McGrath has been a director of the Company since May
1993. Mr. McGrath has been a partner in the Buffalo, new York law
firm of Falk & Siemer for more than the past five years.
During the fiscal year ended December 31, 1995, the Board of
Directors held two meetings, which were attended by all of the
directors, either in person or by telephone, and acted on certain
matters by unanimous written consent in lieu of a meeting. The
Company does not have standing nominating or compensating
committees of the Board of Directors or committees performing
similar functions. The Company does have an Audit Committee of the
Board of Directors which supervises the audit and financial
procedures of the Company. The Audit Committee is comprised of
James F. Williams, Donald McGrath and Edward Rutkowski. The Audit
Committee did not meet during the fiscal year ended December 31,
1995.
Based solely on the Company's review of copies of such forms
received by the Company or written representations from certain
Reporting Persons that no Form 5's were required to be filed by
such Reporting Persons, the Company believes that, during the year
ended December 31, 1995, all filing requirements applicable to the
Company's Reporting Persons were complied with.
EXECUTIVE COMPENSATION
The following tables discloses the compensation awarded by the
Company to the chief executive officer and other executive officers
of the Company (collectively the "Named Executives") whose total
salary and bonus exceeded $100,000 during the Company's fiscal year
ended December 31, 1995.
Summary Compensation Table
Annual
Compensation
Long Term
Compensation
Awards
Securities
Name and Principal Underlying
Position Year Salary ($) Bonus ($) Options (#)
James H. Williams (2) 1995 149,421 0 250,000
Former Chairman of 1994 150,000 0 0 (1)
the Board and Chief 1993 154,084 0 0
Executive Officer
Roger C. Bennett (2) 1995 127,846 0 100,000
Former President and 1994 119,155 0 0 (1)
Chief Operating Officer 1993 121,164 60,000 0
Daniel A. Hoffman III 1995 129,202 0 0
Former Chief Executive 1994 103,793 (3) 0 250,000
Officer and President
of U.S.Dismantlement Corporation
(1) Excludes non-qualified stock options granted in 1994, to Mr. Williams
and Mr. Bennett which were not granted as part of their Executive Compensation
(See Item 13, "Certain Relationships and Related Party Transactions").
(2) Mr. James H. Williams and Mr. Bennett resigned their positions with the
Company in April 1996.
(3) Mr. Hoffman's employment with the Company commenced in 1994 and he was
the Chief Executive Officer of U.S.Dismantlement Corporation from June 1994
to July 1996.
Aggregated Option Exercises in Fiscal 1995
and December 31, 1995 Option Value
Number of Options Value of
at 12/31/95 In-the-Money Options
Unexercised at 12/31/95 (1)
Unexercised
Shares Acquired Exercis- Unexercis- Exercis- Unexercis-
On Exercise Value able able able able
Name ($) Realized
James H. Williams -0- -0- 900,000 250,000 (2) -0- $125,000
Roger C. Bennett -0- -0- 50,000 100,000 (2) -0- $ 50,000
Daniel A. Hoffman III -0- -0- 50,000 200,000 $25,000 $100,000
James F. Williams -0- -0- 100,000 -0- $25,000 -0-
Jon M. Williams -0- -0- 70,000 10,000 $20,000 -0-
(1) Calculated based on the excess of the fair market value of the Common
Stock on December 31, 1995 over the option exercise price. The fair market
value was based upon the last sale price of the Common Stock on December 31,
1995 which was $2.00. There can be no assurance that the values of unexercised
in-the-money stock options reflected in the table will be realized.
(2) Excludes non-qualified stock options granted in 1994, to Mr. Williams and
Mr. Bennett which were not granted as part of their Executive Compensation
("Certain Relationships and Related Transactions").
The following table provides information with respect to
individual stock options granted during fiscal 1995 to each of the
Named Executives.
Option Grants in Last Fiscal Year
Individual Grants
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term (1)
% 0f
Total
Options
Shares Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration
Name Granted # Year (2) ($/sh) Date 5% ($) 10% ($)
James H. Williams 250,000 70.4% 1.50 11/26/2005 236,000 598,000
Roger C. Bennett 100,000 28.0% 1.50 11/26/2005 94,000 239,000
(1) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the compounded
rates specified over the terms of the options. These numbers do not take into
account provisions of certain options providing for termination of the option
following termination of employment or nontransferability of the options and
do not make any provisions for taxes associated with exercise. Because actual
gains will depend upon, among other things, future performance of the Common
Stock, there can be no assurance that the amounts reflected in this table will
be achieved.
Compensation of Directors
Non-employee directors receive compensation in the amount of
$500 per meeting for serving on the Board of Directors. Directors
are reimbursed for all out-of-pocket expenses incurred in attending
Board and any committee meetings of which they are members.
In addition, under the Company's 1990 Stock Option Plan ("the
Plan"), non-employee directors (other than directors who become
members of a Stock Option Committee appointed by the Board of
Directors pursuant to the Plan) are eligible to be granted
nonqualified stock options ("NSOs"). The Board of Directors, or
the Stock Option Committee (the "Committee"), if one is appointed
by the Board, has discretion to determine the number of shares
subject to each NSO (subject to the number of shares available for
grant under the Plan), the exercise price thereof (provided such
price is not less that 100% of the fair market value of the
underlying shares on the date of grant), the term thereof (but not
in excess of 10 years from the date of grant) and the manner in
which the option becomes exercisable (amounts, intervals and other
conditions). Directors who are employees (and are not members of
the Committee) are eligible to be granted incentive stock options
("ISOs") and NSOs under the Plan. The Board or the Committee has
the discretion to determine the number of shares subject to each
ISO, the exercise price and other terms and conditions thereof, but
their discretion as to the exercise price, the term of each ISO and
the number of ISOs that may vest in any year, is limited by the
terms of the Plan and the Internal Revenue Code of 1986, as
amended. As of the Record Date, 13,500 shares of Common Stock were
available for grant under the Plan.
The Company has granted options to purchase an additional
50,000 shares of Common Stock to James F. Williams, Chairman and
Chief Executive Officer, and Jon M. Williams, President and Chief
Operating Officer, subject to stockholder approval of the increase
of the number of shares of Common Stock issuable upon exercise of
options granted under the Plan from 700,000 to 1,400,000 shares.
Compensation Committee Interlocks and Insider Participation
There is no compensation committee of the Company's Board of
Directors or other committee of the Board performing equivalent
functions. Decisions as to executive compensation are made by the
Board of Directors, primarily upon the recommendation of James F.
Williams, Chairman of the Board and Chief Executive Officer of the
Company and Jon M. Williams, President and Chief Operating Officer
of the Company. During the fiscal year ended December 31, 1995,
none of the executive officers of the Company served on the board
of directors or the compensation committee of any other entity, any
of whose officers served on the Board of Directors of the Company.
Employment Arrangements
James H. Williams and Roger C. Bennett were employed by the
Company pursuant to five year employment agreements which expired
on April 1, 1995 at annual base salaries of $150,000 and $125,000
respectively. The agreements also included certain benefits and
obligations. Mr. Williams and Mr. Bennett were employed by the
Company under the same compensation terms as per the expired
employment agreements until they resigned their positions with the
Company in April 1996.
Daniel A. Hoffman III has a five year employment agreement
with USDC Corporation ("USDC"), a subsidiary of the Company, which
commenced August 1, 1994. Pursuant to the agreement Mr. Hoffman
receives an annual salary of $125,000 and was granted stock options
to acquire 250,000 shares of common stock at $1.50 per share.
These options vest in equal annual increments of 20% per year. The
agreement also provides for bonus payments to Mr. Hoffman based on
the subsidiary achieving certain levels of net income.
Report on Executive Compensation
There is no compensation committee of the Board of Directors
or other committee of the Board performing equivalent functions.
Compensation of the Company's executive officers is determined by
the Board of Directors pursuant to recommendations made by James F.
Williams, Chairman of the Board, and Chief Executive Officer and
Jon M. Williams, President of the Company. There is no formal
compensation policy for the Company's current executive officers.
Total compensation for executive officers consists of base
salary, bonus and stock option awards. During the fiscal year
ended December 31, 1995, the base salary of James H. Williams, the
Company's Chief Executive Officer and Roger C. Bennett, the
Company's President were based on the terms of their respective
employment agreements which terminated on April 1, 1995. Although
the employment agreements were not renewed, the Company continued
to compensate these officers at the rates provided in their
agreements until they resigned their position with the Company in
April 1996. Base salary of executive officers, not subject to any
employment agreement, are based on the Company's financial
performance and the executive's individual performance and level of
responsibility. Annual bonuses to executive officers are based,
generally, on the Company's performance and available resources.
No executive officer of the Company received a bonus payment for
1995. Stock options awards under the Plan are intended to attract,
retain and motivate senior management personnel by affording them
an opportunity to receive additional compensation based upon the
performance of the Company's Common Stock.
No stock options were awarded to executive officers in 1995 as
part of their executive compensation except for options to purchase
250,000 shares of Common Stock at $1.50 per share to James H.
Williams and options to purchase 100,000 shares of Common Stock at
$1.50 per share to Roger C. Bennett. In 1995, the Company had
revenues of approximately $50,347,000 and achieved net income of
approximately $1,046,000.
James F. Williams
Jon M. Williams
Donald G. McGrath
Edward J. Rutkowski
Stock Performance Graph
The line graph on the following page compares, for the five year
period ending December 31, 1995, the cumulative total return among
the Company, companies comprising the Russell 2000 index and two
Peer Group indexes based on an investment of $100, on December 31,
1990, in the Company's Common Stock and each index and assuming
reinvestment of all dividends, if any, paid on such securities.
The Company has not paid any dividends and, therefore, the
cumulative total return calculation for the Company is not based
upon reinvestment of dividends. The first Peer Group Index
consists of the following companies in Value Line Inc.'s
environmental industry group that comprised the index used in the
Company's 1995 proxy statement: Allied Waste Industries Inc.,
Allwaste Inc., American Ecology Corp., American Waste Services,
Inc. - Class A, Appliance Recycling Center of America, Inc.,
BioMedical Waste Systems, Inc., Clean Harbors Inc., Envirosource
Inc., GNI Group Inc. Groundwater Technology Corp., Horesehead
Resource Development Co., Inc., ICF Kaiser International Inc.,
Integrated Waste Services Inc., International Technology Corp.,
Kaiser Resources Inc., Kimmins Environmental Service Corp., OHM
Corp., Pacific Nuclear System, Republic Waste Industries, Inc.,
Sevenson Environmental Services, Inc., Tanknology Environmental,
Inc., Tetra Technologies Inc. Del., USA Waste Services, Inc. and
Western Waste Industries. The second Peer Group Index is comprised
of the following companies in the Frank Russell Company's specialty
contracting group that comprise the index used in this proxy
statement: Canisco Resources Inc., Heist (CH) Corp., Metaclad
Corp., Omega Environmental Inc., Ryan Murphy Inc. and Tankology
Environmental Inc. The Company believes that as a result of
changes in its business occurring in 1995 including the disposition
of substantially all of the assets used in connection with its
Buffalo transfer station, waste collection operations and material
recovery operations that the current peer group more accurately
reflects the industry in which the Company now operates.
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
INTEGRATED WASTE SERVICES, INC.,
RUSSELL 2000 INDEX, PEER GROUPS
(Performance results through 12/31/95)
1990 1991 1992 1993 1994 1995
IWSI $100.00 $141.67 $108.33 $102.08 $ 70.83 $ 33.33
Russell
2000 $100.00 $146.05 $172.94 $205.64 $201.90 $259.31
Current
Peer
Group $100.00 $125.16 $ 94.47 $126.90 $ 68.96 $ 51.18
Previous
Peer
Group $100.00 $ 98.64 $ 78.03 $ 66.61 $ 58.60 $ 96.63
Assumes $100 invested at the close of trading on the last trading
day preceding the first day of the fifth preceding fiscal year in
IWSI common stock, Russell 2000 Index, Current Peer Group, and
Previous Peer Group.
*Cumulative total return assumes reinvestment of dividends.
Source: Frank Russell Company
Factual material is obtained from sources believed to be reliable,
but the publisher is not responsible for any errors or omissions
contained herein.
Voting Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information at August 1, 1996,
based on information obtained from the persons named below, with
respect to the beneficial ownership of shares of Common Stock by
(i) each person known by the Company to be the owner of more than
five percent of the outstanding shares of Common Stock, (ii) each
of the Company's directors, (iii) each of the Named Executives and
(iv) all current directors and executive officers as a group:
Amount and nature
Name and Addresses of of Beneficial Percentage
Beneficial Owner (1) Ownership (2) of Class
Joseph N. Williams, as
Trustee of Trust for
the benefit of Teresa
E. Williams, dated
May 24, 1984 2,181,500 (3) 23.1%
James H. Williams 924,385 (4) 9.1%
Roger C. Bennett 216,095 (5) 2.3%
James F. Williams 256.479 (6) 2.7%
Daniel A. Hoffman, III 50,000 (7) *
Donald G. McGrath 11,000 *
Jon M. Williams 70,000 (8) *
Edward J. Rutkowski 6,000 (9) *
All Directors and
Current Executive Officers
as a group (4 persons) 343,479 (6) (8) (9) 3.6%
- - * Less than 1%
(1) The addresses of each of the directors, executive officers and
the 1984 Trust are in care of the Company, 201 Ganson Street,
Buffalo, New York 14203.
(2) Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by
them.
(3) Represents 1,981,500 shares owned by the 1984 Trust for the
benefit of Teresa E. Williams of which Joseph N. Williams is
the sole trustee ("1984 Trust") and options to purchase
200,000 shares which are now exercisable and may be purchased
by the 1984 Trust at $1.50 per share at any time until August
2004. Teresa E. Williams, the sole beneficiary of the 1984
Trust, is the daughter of James H. Williams, the former
Chairman and Chief Executive Officer of the Company. James H.
Williams has no voting or investment power with respect to the
shares owned by the 1984 Trust. Does not include shares
beneficially owned by Joseph N. Williams' adult children.
(4) Includes 900,000 shares which may be purchased by James H.
Williams at $5.00 per share under an immediately exercisable
option expiring in March 2000 and options for 18,000 shares
which are now exercisable and may be purchased by James H.
Williams at $1.50 per share expiring in August 2004. Does not
include options to purchase 250,000 shares which are not
currently exercisable. The number of shares shown does not
include (i) any shares owned by the 1984 Trust over which
James H. Williams has neither voting or investment power and
to which he disclaims beneficial ownership; or (ii) shares
owned by James H. Williams' adult stepson.
(5) Includes 50,000 shares which may be purchased by Mr. Bennett
at $5.00 per share under an immediately exercisable option
expiring in March 2000; (ii) 5,095 shares purchased under the
Company's 401K Plan; (iii) 2,000 shares owned by Martha
Bennett, Mr. Bennett's wife and (iv) options for 7,000 shares
which are now exercisable and may be purchased at $1.50 per
share at any time until August 2004. Does not include options
to purchase 100,000 shares which are not currently
exercisable. An aggregate of 150,000 shares are held jointly
with Mr. Bennett's wife with whom Mr. Bennett shares voting
and investment power. Does not include shares owned by Mr.
Bennett's adult children.
(6) Includes (i) 50,000 shares which may be purchased by James F.
Williams at $5.00 per share under an immediately exercisable
option expiring March 2000; (ii) 1,479 shares which were
purchased under the Company's 401K Plan; (iii) 5,000 shares
held of record by Colleen Williams, Mr. Williams' wife and
(iv) options for 50,000 shares which are now exercisable and
may be purchased at $1.50 per share at any time until August
2004. Does not include options to purchase 50,000 shares
which are not currently exercisable.
(7) Represents options to purchase 50,000 shares at $1.50 at any
time until August 2004. Does not include options to purchase
200,000 shares which are not currently exercisable.
(8) Includes options to purchase 30,000 shares which may be
purchased by Jon M. Williams at $5.62 per share at any time
until November 2002 and options to purchase 40,000 shares at
$1.50 per share at any time until September 2004. Does not
include options to purchase 60,000 shares which are not
currently exercisable.
(9) Represent options to purchase 6,000 shares at $6.87 per share
expiring in June 2000 which are currently exercisable.
James H. Williams is a brother of Joseph N. Williams, the
father of Teresa E. Williams, uncle of James F. Williams and
of Jon M. Williams and a brother-in-law of Roger C. Bennett.
Joseph N. Williams is the father of James F. Williams and Jon
M. Williams, an uncle of Teresa E. Williams, and a brother-in-law of
Roger C. Bennett. Roger C. Bennett is an uncle of
Teresa E. Williams, Jon M. Williams and James F. Williams.
Teresa E. Williams is the cousin of James F. Williams and Jon
M. Williams. Jon M. Williams and James F. Williams are
brothers.
Certain Relationships and Related Transactions
In 1995 James H. Williams, the former Chairman of the Company
loaned the Company $250,305 under an unsecured note, interest
payable monthly at prime plus 1%. The note matures in January 1997.
Interest paid in 1995 to the former Chairman totalled approximately
$7,000.
In 1994 James H. Williams was granted an option to purchase
500,000 shares of the Company's common stock at $1.50 per share
expiring in August 2004. This option was amended in 1995 to reduce
the number of shares issuable upon the exercise of the option to
18,000 shares from 500,000 shares. The options were granted as
consideration for: Mr. Williams' personally guaranteeing the
Company's financing with Marine, CIT and HCFS; Mr. Williams'
personal guarantee on the Schultz Landfill closure bond; and
additional consideration for Mr. Williams' loaning the Company
$350,000 in 1994.
In 1994 Roger C. Bennett was granted an option to purchase
200,000 shares of the Company's common stock at $1.50 per share
expiring in August 2004. This option grant was amended in 1995 to
reduce the shares issuable upon the exercise of the option from
200,000 shares to 7,000 shares. The options were granted as
consideration for Mr. Bennett's personal guarantee on the Schultz
Landfill closure bond and certain bank obligations.
Donald G. McGrath, a Director of the Company, is a partner in
a law firm to which the Company incurred legal fees of
approximately $137,000 in 1995.
During 1995, the Company recorded a loss of approximately
$159,000 related primarily to a receivables due from a former
officer of the Company who is a nephew of the former Chairman James
H. Williams and the brother of the current Chairman James F.
Williams.
PROPOSAL I
AMENDMENT OF 1990 STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES RESERVED FOR ISSUANCE THEREUNDER FROM 700,000 TO 1,400,000
AND TO PROVIDE THAT THE OPTIONS GRANTED FROM THE ADDITIONAL 700,000
SHARES BE GRANTED ON OR BEFORE MARCH 6, 2006.
At the Annual Meeting the Company's stockholders will be asked
to approve an amendment to the Company's 1990 Stock Option Plan
(the "Plan") to increase the number of shares of Common Stock
authorized for issuance under the Plan from 700,000 to 1,400,000,
and to provide that the options to be granted from the additional
700,000 shares be granted on or before March 20, 2006.
The Board believes that in order to enable the Company to
continue to attract and retain personnel of the highest caliber,
provide incentive for officers, directors, key employees and other
key persons and continue to promote the well-being of the Company,
it is in the best interest of the Company and its stockholders to
provide to officers, directors, key employees, consultants and
other independent contractors who perform services for the Company,
through the granting of stock options, the opportunity to
participate in the value and/or appreciation in value of the
Company's Common Stock. The Board has found that the grant of
options under the Plan has proven to be a valuable tool in
attracting and retaining key employees. It believes that such
authority should be expanded to increase the number of options
which may be granted and to extend the date which options may be
granted under the Plan from April 1, 2000 to March 6, 2006. The
Board believes that such authority (i) will provide the Company
with significant means to attract and retain talented personnel,
(ii) will result in saving cash, which otherwise would be required
to maintain current key employees, and adequately attract and
reward key personnel, and (iii) consequently will prove beneficial
to the Company's ability to be competitive.
To date options to purchase 686,500 shares of Common Stock
have been granted under the Plan including the grants described
below. In March 1996, the Company granted options to purchase
50,000 shares of Common Stock to both James F. Williams, Chairman,
and Jon M. Williams, President, subject to stockholder approval of
the increase of the number of shares of Common Stock eligible for
grant under the Plan from 700,000 to 1,400,000.
The Company under the original plan has issued options to
purchase shares of the Company's Common Stock to the following
Directors and Executive Officers:
James H. Williams 250,000
Roger C. Bennett 100,000
James F. Williams 50,000
Jon M. Williams 80,000
Kevin M. McDonald 13,500
Mr. McDonald has exercised options to purchase 7,500 shares of
the Company's Common Stock.
If the above-described amendment to the Plan is approved by
the stockholders, additional options may be granted under the Plan,
the timing and amounts and specific terms of which cannot be
determined at this time.
The following summary of the Plan does not purport to be
complete, and is subject to and qualified in its entirety by
reference to the full text of the Plan, as proposed to be amended,
set forth as Exhibit "A" attached hereto and made a part hereof.
Summary of the 1990 Stock Option Plan
The Plan currently authorizes the granting of options to
purchase up to 700,000 share of Common Stock subject to adjustment
as described below. All employees, directors, independent agents,
consultants and attorneys of the Company, including those of the
Company's subsidiaries, are eligible to be granted Non-Qualified
Stock Options (as defined below). Incentive Stock Options (as
defined below) may be granted only to employees of the Company or
any subsidiary of the Company.
The Plan can be administered by the Board of Directors or a
Stock Option Committee (the "Committee") consisting of three or
more members of the Board of Directors, the members of which shall
be determined by the Board of Directors. The Board of Directors or
the Committee will determine, among other things, the persons to
whom options will be granted, the type of options to be granted,
the number of shares subject to each option and the share price.
The Board of Directors or the Committee will also determine the
term of each option, the restrictions or limitation thereon, and
the manner in which each such option may be exercised. Unless
sooner terminated, the Plan will expire at the close of business on
April 1, 2000.
Stock Options
The Plan provides for the grant of "incentive stock options"
as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") ("Incentive Stock Options"), and for options
not qualifying as Incentive Stock Options ("Non-Qualified Stock
Options"). The Board of Directors or the Committee, as the case
may be, shall determine those persons to whom stock options may be
granted.
Under the Plan, there is no maximum or minimum number of
shares that may be covered by stock options granted to a single
person; however, during a single calendar year, no one participant
in the Plan may have Incentive Stock Options vesting for the first
time which are exercisable for shares whose aggregate fair market
value (determined on the date of the option is granted) exceeds
$100,000.
Any options granted pursuant to the Plan are nontransferable
by the optionee during his lifetime, will expire if not exercised
within ten years of the grant (five years in the case of Incentive
Stock Options granted to an eligible employee owning stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or a parent or subsidiary of the
Company immediately before the grant ("10% Stockholder")), and
under certain circumstances set forth in the Plan, may be exercised
within 30 days following termination of employment (one year in the
event of death of the optionee). Options may be granted to
optionees in such amounts and at such prices as may be determined,
from time to time, by the Board of Directors or the Committee. The
exercise price of an Incentive Stock Option will not be less than
the fair market value of the shares underlying the option on the
date the option is granted, provided, however, that the exercise
price of an Incentive Stock Option granted to a 10% Stockholder may
not be less that 110% of such fair market value. The exercise
price of Non-Qualified Stock Options is within the discretion of
the Board of Directors or the Committee and may be any price not
less that the fair market value of the shares underlying the
option. The Company may not, in the aggregate, grant Incentive
Stock Options that are first exercisable by any optionee during any
calendar year (under all such plans of the optionee's employer
corporation and its "parent" and "subsidiary" corporations, as
those terms are defined in Section 424 of the Code) to the extent
that the aggregate fair market value of the underlying stock
(determined at the time the option is granted exceeds $100,000).
The Plan contains anti-dilution provisions authorizing
appropriate adjustments in certain circumstances. Shares of Common
Stock subject to options which expire without being exercised or
which are cancelled as a result of the cessation of employment are
available for further grants. No shares of Common Stock of the
Company may be issued to any optionee until the full option price
has been paid. The Board of Directors or the Committee may grant
individual options under the Plan with more stringent provisions
than those specified in the Plan.
Any stock options granted shall become exercisable in such
amounts, at such intervals and upon such terms and conditions as
the Board of Directors or Committee shall provide. Stock Options
granted under the Plan are exercisable until the earlier of (i) a
date set by the Board of Directors or Committee at the time of
grant or (ii) the close of business on the day before the tenth
anniversary of the stock option's date of grant (the day before the
fifth anniversary in the case of an Incentive Stock Option granted
to a 10% Stockholder). The Plan shall remain in effect until all
stock options are exercised or terminated. Notwithstanding the
foregoing, if the proposed amendment to the Plan as adopted by the
Board is approved by shareholders no options may be granted after
March 20, 2006.
Certain Federal Income Tax Consequences of the Plan
The following is a brief summary of the Federal income tax
aspects of grants made under the Plan based upon statutes,
regulations and interpretations in effect on the date hereof. This
summary is not intended to be exhaustive, and does not describe
state or local tax consequences.
1. Incentive Stock Options. The participant will recognize
no taxable income upon the grant or exercise of an Incentive Stock
Option. Upon a disposition of the shares after the later of two
years from the date of grant and one year after the transfer of the
shares to the participant, (i) the participant will recognize the
difference, if any, between the amount realized and the exercise
price as long-term capital gain or long-term capital loss (as the
case may be) if the shares are capital assets in his or her hands;
and (ii) the Company will not qualify for any deduction in
connection with the grant or exercise of the options. The excess,
if any, of the fair market value of the shares on the date of
exercise of an Incentive Stock Option over the exercise price will
be treated as an item of adjustment for his or her taxable year in
which the exercise occurs and may result in an alternative minimum
tax liability for the participant. In the case of a disposition of
shares in the same taxable year as the exercise where the amount
realized on the disposition is less than the fair market value of
the shares on the date of exercise, there will be no adjustment
since the amount treated as an item of adjustment, for alternative
minimum tax purposes, is limited to the excess of the amount
realized on such disposition over the exercise price which is the
same amount included in regular taxable income.
If Common Stock acquired upon the exercise of an Incentive
Stock Option is disposed of prior to the expiration of the holding
periods described above, (i) the participant will recognize
ordinary compensation income in the taxable year of disposition in
an amount equal to the excess, if any, of the lesser of the fair
market value of the shares on the date of exercise or the amount
realized on the disposition of the shares, over the exercise price
paid for such shares; and (ii) the Company will qualify for a
deduction equal to any such amount recognized, subject to the
limitation that the compensation be reasonable. The participant
will recognize the excess, if any, of the amount realized over the
fair market value of the shares on the date of exercise as long-term
or short-term capital gain if the shares are held by the
participant as capital assets, depending on the length of time that
the participant held the shares, and the Company will not qualify
for a deduction with respect to such excess.
Subject to certain exceptions for disability or death, if an
Incentive Stock Option is exercised more than three months
following the termination of the participant's employment, the
option will generally be taxed as a Non-Qualified Stock Option.
See "Non-Qualified Stock Options".
2. Non-Qualified Stock Options. With respect to Non-Qualified
Stock Options (i) upon grant of the option, the participant will
recognize no income; (ii) upon exercise of the
option (if the shares are not subject to a substantial risk of
forfeiture), the participant will recognize ordinary compensation
income in an amount equal to the excess, if any, of the fair market
value of the shares on the date of exercise over the exercise
price, and the Company will qualify for a deduction in the same
amount, subject to the requirement that the compensation be
reasonable; (iii) the Company will be required to comply with
applicable Federal income tax withholding requirements with respect
to the amount of ordinary compensation income recognized by the
participant; and (iv) on a sale of the shares, the participant will
recognize gain or loss equal to the difference, if any, between the
amount realized and the sum of the exercise price and the ordinary
compensation income recognized. Such gain or loss will be treated
as short-term or long-term capital gain or loss if the shares are
capital assets in the participant's hands depending upon the length
of time that the participant held the shares.
Section 162(m) of the Internal Revenue Code of 1986
("Code"), enacted in 1993 and effective for taxable years beginning
in 1994, generally disallows a tax deduction to public companies
for compensation over $1,000,000 paid to any of the Company's Chief
Executive Officer and four other highest compensated executive
officers. The Code and regulations issued under the Code contain
certain exclusions from this limitation and provide transition
rules and relief, as applicable, for stockholder approval and other
requirements with respect to awards under the Plan. Any
compensation recognized with respect to options granted under the
Plan after January 1, 1994 will not qualify for exemption under
Section 162(m) of the Code and any compensation recognized with
respect to options granted under the Plan in the future will
similarly not qualify unless certain changes are made in the Plan
in accordance with such provision and the regulations promulgated
thereunder.
The Board of Directors recognizes that part of the 1996
annual compensation paid to one or more of the covered executive
officers may not qualify for exemption, but the amount of such 1996
compensation is expected to be significantly less than $1,000,000.
The Board of Directors is reluctant to make changes at this time to
the executive compensation programs solely for tax purposes.
However, the Board of Directors may in the future assess the
practical impact on the Company of Section 162(m) of the Code on
executive compensation and determine what action, if any, is
appropriate.
Recommendation and Vote Required
The vote of the holders of a majority of the shares of the
Company's Common Stock present in person or represented by proxy at
the Annual Meeting is required to adopt the foregoing proposal to
approve the amendment to the Plan to increase the number of shares
of Common Stock authorized for issuance thereunder.
BECAUSE THE BOARD BELIEVES THAT THE PROPOSED AMENDMENT TO THE
COMPANY'S 1990 STOCK OPTION PLAN WILL HELP THE COMPANY ATTRACT AND
RETAIN QUALIFIED OFFICERS, DIRECTORS, AND EMPLOYEES, THE BOARD OF
DIRECTORS BELIEVES THAT THE AMENDMENT OF THE 1990 STOCK OPTION PLAN
IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS A VOTE FOR ITS APPROVAL.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman LLP has audited and reported upon the financial
statements of the Company for the fiscal year ended December 31,
1995. The Board of Directors has selected J. D. Elliott & Co.,
P.C. to examine and report upon the financial statements of the
Company for the fiscal year ending December 31, 1996. No
representative of the Company's current or former certified public
accountants is expected to be present at the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholders who wish to present proposals appropriate for
consideration at the Company's 1997 Annual Meeting of Stockholders
must submit the proposals in proper form to the Company at its
address set forth on the first page of this proxy statement not
later than April 4, 1997 in order for the proposals to be
considered for inclusion in the Company's proxy statement and form
of proxy relating to such Annual Meeting.
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and
through brokerage institutions and all expenses involved, including
printing and postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED
DECEMBER 31, 1995 IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER
OF RECORD AS OF THE CLOSE OF BUSINESS ON AUGUST 1, 1996.
ADDITIONAL COPIES OF THE ANNUAL REPORT WILL BE PROVIDED FREE OF
CHARGE UPON WRITTEN REQUEST TO:
INTEGRATED WASTE SERVICES, INC.
201 GANSON STREET
BUFFALO, NEW YORK 14203
ATTENTION: Investor Relations
IN ADDITION, COPIES OF EXHIBITS TO THE ANNUAL REPORT ON FORM
10-K WILL BE PROVIDED TO STOCKHOLDERS WHO MAKE A WRITTEN REQUEST TO
THE COMPANY AT THE ABOVE ADDRESS.
The Board of Directors is aware of no other matters, except
for those incident to the conduct of the Annual Meeting, that are
to be presented to stockholders for formal action at the Annual
Meeting. If, however, any other matters properly come before the
Annual Meeting or any adjournments thereof, it is the intention of
the persons named in the proxy to vote the proxy in accordance with
their judgement.
By order of the Board of Directors,
James F. Williams
Chief Executive Officer
August 5, 1996
EXHIBIT "A"
(Amended provision of the Plan have been deleted by line-striking same
and the new provisions are underlined.)
INTEGRATED WASTE SERVICES, INC.
1990 STOCK OPTION PLAN
1. Name and Purpose. The purpose of this Plan, which
shall be known as the "Integrated Waste Services 1990 Stock Option
Plan" ("Plan"), is to advance the interests of Integrated Waste
Services, Inc. ("Company") by providing a material incentive for
the continued services of those key employees, independent agents,
consultants, attorneys and directors of the Company or its
Subsidiaries who make significant contributions toward the
Company's success and development, by encouraging those key
employees, independent agents, consultants, attorneys and directors
to increase their proprietary interest in the Company and by
attracting new, able executive to employment with the Company or
its Subsidiaries.
2. Definitions. For purposes of this Plan, the
following terms, when capitalized, shall have the meanings
designated herein unless a different meaning is plainly required by
the context. Where applicable, the masculine pronoun shall mean or
include the feminine and the singular shall include the plural.
a. "Board" shall mean the Board of Directors of
the Company.
b. "Committee" shall mean a Stock Option Committee
of not less than three directors of the Company who shall be
appointed by and serve at the pleasure of the Board, none of whom
shall (i) be eligible to participate in the Plan while a member of
the Committee, not (ii) have been eligible to participate in the
Plan for a period of one year prior to appointment.
c. "Consultant" shall mean any independent agent,
consultant or attorney to or for the Company or a Subsidiary who,
in the opinion of the Board, has demonstrated a capacity for
contributing in a substantial measure to the success of the Company
and its Subsidiaries.
d. "Effective Date" shall mean the date on which
this Plan shall have been approved by the directors and
shareholders of the Company; provided, however, that with respect
to the additional 700,000 shares authorized for issuance under the
Plan by the Board on March 21, 1996, "Effective Date" shall be
defined as March 21, 1996.
e. "Fair Market Value" of the Company's common
shares on a certain date shall mean, if the Company's common shares
are listed on NASDAQ, the average of the closing bid and asked
prices as quoted by the NASDAQ System on the date specified, or if
the Company's common shares are not quoted on NASDAQ on such date,
on the next preceding date on which the common shares are traded.
If the Company's common shares are not listed on NASDAQ, the "Fair
Market Value" of the commons hares on a certain date shall be that
value which the Board or the Committee determines, in good faith,
to be the fair market value of the common shares on such date.
f. "Key Employee" shall mean any employee of the
Company or a Subsidiary who, in the opinion of the Board, has
demonstrated a capacity for contributing in a substantial measure
to the success of the Company and its Subsidiaries.
g. "Non-Qualified Stock Options" shall mean those
options, granted by the Company pursuant to this Plan which do not
qualify for favorable tax treatment under Section 422A of the
Internal Revenue Code of 1986 (the "Code").
h. "Participant" shall mean a Key Employee,
Participating Director or Consultant selected by the Board to
receive options, whether Qualified Incentive Stock Options or
Non-Qualified Stock Options, granted under this Plan.
i. "Participating Director" shall mean any
director of the Company or any Subsidiary who, in the opinion of
the Board, has demonstrated a capacity for contributing in a
substantial measure to the success of the Company and its
Subsidiaries.
j. "Qualified Incentive Stock Options" shall mean
those options granted by the Company pursuant to the Plan which
qualify for favorable tax treatment under Section 422A of the Code.
k. "Subsidiary" shall mean an entity in which 50%
or more of the common stock or, in the case of a partnership, 50%
or more of the capital interest thereof, is owned directly or
indirectly by the Company, or that is a member with the Company in
a controlled group of corporations, or is otherwise under common
control with the Company within the meaning of Section 414(b) and
(c) of the Code.
3. Administration; Selection of Participants.
a. The Plan shall be administered by the Board or,
at their discretion, by the Committee, which shall select the
Participants and shall grant to the Participants stock options
under, and in accordance with, the provisions of the Plan. To the
extent the Committee administers the Plan, all references herein to
the "Board" shall mean the "Committee." The stock options granted
under this Plan may be either Qualified Incentive Stock Options or
Non-Qualified Stock Options, within the discretion of the Board.
Non-Qualified Stock Options may be granted to any Participant,
including Key Employees, Consultants and Participating Directors.
Qualified Incentive Stock Options may be awarded only to Key
Employees (including directors who are Key Employees).
b. Subject to the express provisions of this Plan,
the Board shall have authority to adopt regulations and procedures
which are consistent with the terms of this Plan; to adopt and
amend stock option agreements between the Company and a Participant
as they deem advisable and to determine the terms and provisions of
such stock option agreements, including the number of shares with
respect to which options are granted to a Participant, the option
price for such shares, and the date or dates when the option or
parts of it may be exercised, which terms shall comply with any
applicable requirements of Paragraph 5 below; to construe and
interpret such stock option agreements and to impose therein such
limitation and restrictions as are deemed necessary or advisable by
counsel for the Company so that compliance with the federal
securities laws and with the securities laws of the various states
may be assured; and to make all other determinations necessary or
advisable for administering this Plan. All decisions and
interpretations made by the Board shall be binding and conclusive
on all Participants, their legal representatives and beneficiaries.
4. Shares Subject to the Plan.
a. The shares to be issued and delivered by the
Company upon exercise of options granted under this Plan (whether
Qualified Incentive Stock Options or Non-Qualified Stock Options)
are the Company's Common Shares, par value $.01 per share, which
may be either authorized but unissued shares, or treasury shares,
in the discretion of the Board.
b. The aggregate number of the Company's common
shares which may be issued under this Plan shall not exceed 700,000
1,400,000; subject, however, to the adjustment provided in
Paragraph 11 in the event of stock splits, certain stock dividends,
exchanges of shares, or the like, occurring after the Effective
Date. No stock option may be granted under this Plan which could
cause such maximum limit to be exceeded.
c. Shares covered by an option which is no longer
exercisable with respect to such shares shall again be available
for issuance in connection with other options granted under this
Plan.
5. Terms of Options. Options granted under the Plan
shall be evidenced by stock option agreements authorized by the
Board and executed by a duly authorized officer of the Company.
Such stock option agreements shall contain such terms as the Board
shall determine, subject to the following limitations and
requirements:
a. Option price: The option price per common
share shall be not less than 100% of the Fair Market Value of the
common shares on the date of grant of such option; provided,
however, that the option price of any Qualified Incentive Stock
Options granted to any stockholder of the Company who owns at least
10% of the Company's common shares shall not be less than 110% of
such Fair Market Value.
b. Period within which option may be exercised:
In general, options granted under the Plan will become exercisable
in four equal, annual installments commencing one year after the
date the option is granted, although the Board, in its discretion,
may provide for different vesting schedules. Each option granted
under this Plan shall terminate (become non-exercisable) after the
expiration of ten years from the date of grant of such option;
provided, however, that Qualified Incentive Stock Options granted
to any stockholder of the Company who owns, at the time of grant,
at least 10% of the Company's common shares, shall terminate after
the expiration of five years from the date of grant of such option.
c. Termination of option by reason of termination
of employment, consultancy or directorship: Upon termination of a
Key Employee's employment with the Company or a Subsidiary, all
options granted under this Plan to such Participant which are not
exercisable on the date of such termination shall immediately
terminate, and any remaining exercisable options shall terminate if
not exercised before the expiration of the applicable period
specified below, or at such earlier time as may be applicable under
subparagraph 5(b) above:
(1) No later than thirty (30) days following
such termination of employment if such termination
was not a result of death or retirement of the Participant.
(2) No later than six months following such
termination of employment if such termination was because of
death, or because of retirement under the provision of any
retirement plan of the Company or any Subsidiary, or with the
consent of the Company.
Whether time spent on leave of absence granted by the
Company or any Subsidiary shall constitute continued employment for
purposes of this Plan, shall be determined by the Board in its sole
discretion.
Notwithstanding the foregoing, the Board may, in its sole
discretion, impose more restrictive conditions on the exercise of
an option granted under the Plan, including, without limitation,
providing for no exercise of any option after termination of a Key
Employee's employment; however, any and all such conditions shall
be specified in the stock option agreement limiting and defining
such option.
The Board may, in its sole discretion, impose similar
conditions upon the exercise of any options granted to Consultants
or to Participating Directors (who are not Key Employees), but is
not required to do so.
d. Non-transferability: No option under this Plan
shall be assignable or transferable except, in the event of the
death of a Participant, by his will or by the laws of descent and
distribution. In the event of the death of a Participant, the
representative or representatives of his estate, or the person or
persons who acquired (be bequest or inheritance) the rights to
exercise his stock options granted under the Plan, may exercise any
of the unexercised options or part thereof prior to the expiration
of the applicable exercise period, as specified in subparagraphs
5(b) and 5(c) above, or in the stock option agreement relating to
such options. No transfer of an option by a participant by will or
by laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written
notice thereof and a copy of the will and such other evidence as
the Company may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the
terms and conditions of such option.
e. More than one option granted to a Participant:
More than one option, and more than one form of option, may be
granted to a Participant under this Plan.
f. Partial exercise: Unless otherwise provided in
the stock option agreement, any exercise of an option granted under
this Plan may be made in whole or in part.
g. Limitation on Amount of Qualified Incentive
Stock Options: The aggregate fair market value (determined at the
time the option is granted) with respect to which Qualified
Incentive Stock Options become exercisable by a Participant for the
first time during any calendar year (including all such plans of
the Company and its Subsidiaries) shall not exceed $100,000.
6. Period of Granting Options. No option shall be
granted under this Plan subsequent to ten years after the Effective
Date.
7. No Effect Upon Employment Status. The fact that an
employee, independent agent, consultant, attorney or director has
been selected as a Participant shall not limit or otherwise qualify
the right of his employer to terminate his employment, engagement
or directorship at any time.
8. Method of Exercise. Any option granted under this
Plan may be exercised by written notice to the Board, signed by the
Participant, or by such other person as is entitled to exercise
such option. The notice of exercise shall state the number of
shares in respect of which the option is being exercised, and shall
be accompanied by the payment, in cash, and/or, as provided below,
in the common shares of the Company, of the full option price for
such shares. At the written request of the Participant and upon
approval by the Board, shares acquired pursuant to the exercise of
any option may be paid for at the time of exercise by the surrender
of common shares of the Company held by or for the account of the
Participant at the time of exercise (for Qualified Incentive Stock
Options only to the extent permitted by subsection (c)(4) of
Section 422A of the Code, without liability to the Company). In
such case, the fair market value of the surrendered shares shall be
determined by the Board as of the date of exercise in the same
manner as such value is determined upon the grant of an option. A
certificate or certificates for the common shares of the Company
purchased through the exercise of an option shall be issued in the
regular course after the exercise of the option and payment
therefor. The Company shall be afforded reasonable opportunity
after exercise of any option to comply with any requirements for
stock exchange listing, for registration under applicable
securities or other laws and for compliance with other laws and
regulations, if any, before issuance of the shares being purchased
on such exercise. During the option period, no person entitled to
exercise any option granted under this Plan shall have any of the
rights or privileges of a shareholder with respect to any shares
issuable upon exercise of such option until certificates
representing such shares shall have been issued and delivered. The
exercise of any option shall be contingent upon receipt from the
Participant of a representation that, at the time of such exercise,
it is his or her then present intention to acquire the shares being
purchased for investment and not for distribution (unless the Plan
has been duly registered under the Securities Act of 1933 and the
Company has waived the requirement that such representation be
made).
9. Restrictions on Shares; Securities Registration.
(1) The certificates for Common Stock to be
delivered upon proper exercise of the option ("Option Stock") shall
contain legends substantially as set forth below:
The shares represented by this certificated have been
registered under the Securities Act of 1933, as amended
("1933 Act"). Such shares may not be offered for sale,
sold, delivered after sale, transferred, pledged or
hypothecated in the absence of an effective registration
statement covering such shares under the 1933 Act which,
in the opinion of counsel satisfactory to the Company,
makes such registration unnecessary.
The shares of stock represented by this certificate
are subject to and are not transferable on the books of
the Company except in accordance with the Company's 1990
Stock Option Plan and the agreement between the Company
and the shareholder relating to the granting of options,
copies of which are on file at the office of the Company.
(2) If the Company shall nevertheless deem it
necessary or desirable to register any Option Stock to be issued
pursuant to the Plan under the 1933 Act or other applicable
statutes or to qualify any such shares for exemption from the 1933
Act under any rule or regulation of the Securities and Exchange
Commission or under the 1933 Act, then the Company shall take such
action at its own expense before delivery of such shares, but
nothing contained herein shall be deemed, in any manner, to require
the Company to register the Option Stock under the 1933 Act or to
qualify the shares for any exemption under the 1933 Act.
10. Implied Consent of Participants. Every Participant,
by his acceptance of any option under this Plan, shall be deemed to
have consented to be bound, on his own behalf and on behalf of his
heirs, assigns, and legal representatives, by all of the terms and
conditions of this Plan.
11. Share Adjustments. In the event there is any change
in the Company's common shares resulting from stock splits, stock
dividends of more than 5% in any hear, combinations or exchanges of
shares, or other similar capital adjustment, equitable
proportionate adjustments shall be made by the Board in (1) the
number of shares available for option under this Plan, (2) the
number of shares subject to options granted under this Plant, and
(3) the option price of optioned shares.
12. Merger, Consolidation, or Sale of Assets. In the
event the Company shall consolidate with, merge into, or transfer
all or substantially all of its assets to another corporation or
corporation (herein referred to as "successor employer
corporation"), such successor employer corporation may obligate
itself to continue this Plan and to assume all obligations under
the Plan (for Qualified Incentive Stock Options, in a manner
consistent with the provisions of Section 425(a) of the Code, or
the provisions of that Section as it may be hereafter amended or as
it may be replaced by any other section or sections of the Code of
like intent or purpose). In the event that such successor employer
corporation does not obligate itself to continue this Plan as above
provided, this Plan shall terminate upon such consolidation, merger
or transfer, and any option previously granted hereunder shall
terminate. If practical, the Company shall give each Participant
twenty (20) days prior notice of any possible transaction which
might terminate this Plan and the options previously granted
hereunder.
13. Company Responsibility. All expenses of this Plan,
including the cost of maintaining records, shall be borne by the
Company. The Company shall have no responsibility or liability for
any act or thing done or left undone with respect to the price,
time, quality, or other conditions and circumstances of the
purchase of shares under the terms of the Plan, so long as the
Company acts in good faith.
14. Use of Proceeds. The proceeds received by the
Company from the sale of stock under the Plan shall be added to the
general funds of the Company and shall be used for such corporate
purposes as the Board shall direct.
15. Tax Treatment. With respect to Qualified Incentive
Stock Options, the Plan is intended to comply with the provisions
of Section 422 of the Code. Any provisions of the Plan which
conflict with the provisions of Section 422 shall be deemed to be
hereby amended so as to comply therewith.
16. Law Governing. This Plan and the rights of all
persons hereunder shall be governed by, and construed and enforced
in accordance with, the law of the State of New York.
17. Securities Laws. The Board shall take all necessary
or appropriate actions to ensure that all option grants and all
exercised thereof under this Plan are in full compliance with all
federal and state securities laws.
18. Withholding and Deductions. Notwithstanding
anything to the contrary contained herein, if at any time specified
herein for the making of any payment of cash or any delivery of
Option Stock to any person, by reason of the grant of an option,
the exercise thereof, or otherwise, any law or regulation of any
governmental authority having jurisdiction in the premises shall
require the Company to withhold, or to make any deduction for any
taxes or take any other action in connection with the payment or
delivery then to be made, such payment or delivery, as the case may
be, shall be deferred until such withholding or deduction shall
have been adequately provided for, in the opinion of the Board.
19. Amendment and Termination. The Board may terminate
this Plan at any time, and may amend the Plan at any time of from
time to time, without obtaining any approval of the Company's
shareholders; except that the Plan may not be amended (1) to
increase the aggregate number of shares issuable under the Plan
(excepting proportionate adjustments made under paragraph 11 to
give effect to stock splits, etc.); (2) to change the option price
of optioned shares (excepting proportionate adjustments made under
Paragraph 11); (3) to change the requirement that the option price
per common share not be less than 100% of the Fair Market Value of
the common shares on the date the option is granted (or less than
110% in the case of 10% stockholders being issued Qualified
Incentive Stock Options); (4) to extend the time within which
options may be granted or the time within which a granted option
may be exercised; (5) to change, without the consent of the
Participant, any option previously granted to him under the Plan,
except as provided herein; or (6) if such amendment would result in
a material increase in the cost of the Plan to the Company. If the
Plan is terminated, any unexercised option shall continue to be
exercisable in accordance with its terms, except as provided in
paragraph 12 above.
20. Variations in Pronouns. Whenever used in this Plan,
unless the context otherwise requires, words used in the singular
shall also include the plural, and words used in the masculine
gender shall also include the feminine or neuter gender.
21. Captions and Headings. The section and subsection
headings and captions are for reference purposes only and shall not
in any way affect the meaning or interpretation of any such section
or subsection of this Plan.
