PERMA-FIX ENVIRONMENTAL SERVICES, INC.
1940 N.W. 67th Place, Suite A
Gainesville, Florida 32653
NOTICE OF ANNUAL MEETING
To Be Held November 12, 1997
To the Stockholders of Perma-Fix Environmental Services, Inc.:
Notice is hereby given that the 1997 Annual Meeting of Stockholders
(the "Meeting") of Perma-Fix Environmental Services, Inc. (the
"Company") will be held at the offices of Perma-Fix Environmental
Services, Inc., 1940 N.W. 67th Place, Gainesville, Florida 32653,
Wednesday, November 12, 1997, at 2:00 p.m. (EST), for the following
purposes:
1. To elect four (4) Directors to serve until the next
Annual Meeting of Stockholders or until their
respective successors are duly elected and
qualified;
2. To ratify the appointment of BDO Seidman, LLP as
the independent auditors of the Company for fiscal
1997; and
3. To transact such other business as may properly
come before the meeting and at any adjournments
thereof.
Only stockholders of record at the close of business on October 8,
1997 will be entitled to notice of, and to vote at, the Meeting and
at any adjournments thereof.
Perma-Fix Environmental Services, Inc.'s Annual Report for 1996 is
enclosed for your convenience.
By Order of the Board of Directors
Richard T. Kelecy
Secretary
Gainesville, Florida
October 15, 1997
Please complete, date, sign and return the accompanying Proxy
whether or not you plan to attend the meeting in person. The
enclosed return envelope requires no additional postage if mailed
in the United States. If a stockholder decides to attend the
meeting, he or she may, if so desired, revoke the Proxy and vote in
person.
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
1940 N.W. 67th Place, Suite A
Gainesville, Florida 32653
PROXY STATEMENT
FOR THE
1997 ANNUAL MEETING OF STOCKHOLDERS
Solicitation
This Proxy Statement is furnished to the holders of the Common
Stock (the "Common Stock") of Perma-Fix Environmental Services,
Inc. (the "Company") in connection with the solicitation on behalf
of the Board of Directors of the Company (the "Board of Directors"
or the "Board") of proxies to be used in voting at the 1997 Annual
Meeting of Stockholders to be held at the offices of the Company,
1940 N. W. 67th Place, Gainesville, Florida 32653, on Wednesday,
November 12, 1997, at 2:00 p.m. (EST), and any adjournments thereof
(the "Meeting"). The Company will pay the cost of preparing,
printing, assembling and mailing this Proxy Statement and the Proxy
Card and all of the costs of the solicitation of the proxies, if
necessary. In addition to solicitation by use of the mail, certain
officers and employees of the Company may solicit the return of
proxies by telephone, telegram or personal interview. The Company
has requested that brokerage houses and custodians, nominees and
fiduciaries forward soliciting materials to their principals, the
beneficial owners of Common Stock and has agreed to reimburse them
for reasonable out-of-pocket expenses in connection therewith.
Revocation of Proxy
The enclosed proxy is for use at the Meeting if the stockholder
will not be able to attend in person. Any stockholder who executes
a proxy may revoke it at any time before it is voted by delivering
to the Secretary of the Company either an instrument revoking the
proxy or a duly executed proxy bearing a later date. A proxy may
also be revoked by any stockholder present at the Meeting who
expresses a desire to vote his shares in person.
Mailing of Proxy Statement and Proxy Card
The Notice of Annual Meeting of Stockholders, this Proxy Statement
and the accompanying Proxy Card were first mailed to stockholders
on or about October 15, 1997.
Record Date and Voting Securities
Only the holders of Common Stock of record at the close of business
on October 8, 1997 (the "Record Date"), will have the right to
receive notice of, and be entitled to vote at, the Meeting. At the
close of business on the Record Date, 11,450,905 shares (excluding
920,000 treasury shares) of Common Stock were issued and
outstanding. Each stockholder of record, as of the Record Date, is
<PAGE>
entitled to one vote for each share of Common Stock that the
stockholder owned as of the Record Date on each matter to be voted
upon at the Meeting. A majority of all of the outstanding shares
of Common Stock entitled to notice of, and to vote at, the Meeting,
represented in person or by proxy will constitute a quorum for the
holding of the Meeting. The failure of a quorum to be represented
at the Meeting will necessitate adjournment and will subject the
Company to additional expense.
Pursuant to the General Corporation Law of the State of Delaware,
only votes cast "FOR" a matter constitute affirmative votes, except
proxies in which the stockholder fails to make a specification as
to whether he votes "FOR", "AGAINST", "ABSTAINS" or "WITHHOLDS" as
to a particular matter shall be considered as a vote "For" that
matter. Votes will be tabulated by an inspector of election
appointed by the Board of Directors. Votes in which the
stockholder specifies that he is "WITHHOLDING" or "ABSTAINING" from
voting are counted for quorum purposes. Abstentions and broker
non-votes are not considered as votes "For" a particular matter.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board
of Directors shall hold office until the next annual meeting of
stockholders and their successors have been elected and qualified
or until their earlier resignation or removal. Successors to those
Directors whose terms have expired are required to be elected by
stockholder vote; vacancies in unexpired terms and any additional
positions created by Board of Directors' action are filled by the
existing Board of Directors.
The Company's Bylaws provide that the number of directors of the
Company (the "Directors") shall be at least three (3), and that the
number of Directors may be increased or decreased by action of the
Board. The Board of Directors currently has determined that the
number of Directors shall be four (4).
At the Meeting, four (4) Directors are to be elected to serve until
the next annual meeting of the stockholders and until their
respective successors are elected and qualified. Dr. Centofanti
and Messrs. Zwecker, Gorlin, and Colin are presently serving as
Directors of the Company and are being nominated for reelection to
the Board of Directors. Shares represented by the enclosed proxy
will be voted "FOR" the election as Directors of the four (4)
nominees named below unless authority is withheld. The proxies
cannot be voted for a greater number of persons than the number of
nominees named herein.
Although there is no formal procedure for stockholders to recommend
nominees for the Board of Directors, the Nominating Committee will
consider such recommendations if received one hundred twenty (120)
days in advance of the Annual Meeting of Stockholders. Such
recommendations should be addressed to the Nominating Committee at
the address of the Company and provide all information relating to
2
<PAGE>
such person that the stockholder desires to nominate that is
required to be disclosed in solicitation of proxies pursuant to
Regulation 14A under the Exchange Act.
Nominees
The following sets forth, as of the date hereof, information
concerning the four (4) nominees for election as Directors of the
Company:
Principal Occupation and
Director/Nominee Other Information
_________________ __________________________
Dr. Louis F. Centofanti, Dr. Centofanti has served as Chairman of
Chairman of the Board the Board of the Company since he joined
and Director since 1991, the Company in February, 1991. Dr.
Age: 54 Centofanti also served as President and
Chief Executive Officer of the Company
from February, 1991 until September,
1995, at which time Mr. Robert W. Foster,
Jr. was elected as Chief Executive
Officer. Upon the resignation of
Mr. Foster in March, 1996, Dr. Centofanti
was again elected to serve as President
and Chief Executive Officer of the
Company and continues as Chairman of the
Board. From 1985 until joining the
Company, Dr. Centofanti served as Senior
Vice President of USPCI, Inc. ("USPCI"),
a large integrated hazardous waste
management company, where he was respon-
sible for managing the treatment,
reclamation and technical groups within
USPCI. In 1981, he founded PPM, Inc., a
hazardous waste management company
specializing in the treatment of PCB
contaminated oils, which was sold to
USPCI in 1985. From 1978 to 1981,
Dr. Centofanti served as Regional
Administrator of the Department of Energy
for the southeastern region of the United
States. Dr. Centofanti has a Ph.D. and a
M.S. in Chemistry from the University of
Michigan, and a B.S. in Chemistry from
Youngstown State University.
Mark A. Zwecker, Mr. Zwecker has served as a Director of
Director since the Company since its inception in
1990, December, 1990. Mr. Zwecker resigned his
Age: 46 position as Secretary of the Company in
June, 1996. Mr. Zwecker resigned his
3
<PAGE>
position as Treasurer and Chief Financial
Officer of the Company in July, 1994 and
is currently Vice President of Finance
and Administration for American
Combustion, Inc., a position he
previously held from 1986 to 1990. In
1983, Mr. Zwecker participated as a
founder with Dr. Centofanti in the start
up of PPM, Inc. He remained with PPM,
Inc. until its acquisition in 1985 by
USPCI. Mr. Zwecker has a B.S. in
Industrial and Systems Engineering from
the Georgia Institute of Technology and
an M.B.A. from Harvard University.
Steve Gorlin, Mr. Gorlin has served as a Director of the
Director since Company since October, 1992. Mr. Gorlin
1992, is a private investor working with several
Age: 60 technology-based companies. He was
formerly Chairman of the Board of
Directors of EntreMed, Inc. and currently
is a member of the Board of Directors of
Advanced Aerodynamics & Structures, Inc.
Mr. Gorlin is a co-founder and served as
President and Chairman of the Board of
Directors of CytRx Corporation until
1990.
Jon Colin, Mr. Colin has served as a Director of the
Director since Company since December, 1996. He is a
1996, financial consultant for a variety of
Age: 41 technology-based companies. From 1990 to
1996, Mr. Colin served as President and
Chief Executive Officer for Environmental
Services of America, Inc., an environ-
mental services company traded on the
NASDAQ. Mr. Colin has a B.S. degree in
Accounting from the University of
Maryland.
Approval of each nominee for election to the Board of Directors
will require the affirmative vote of a plurality of the votes cast
by the holders of the Common Stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE FOUR (4) NOMINEES AS DIRECTORS OF THE COMPANY.
Committees and Meetings of the Board of Directors
During 1996, the Board of Directors held three (3) meetings. No
Director attended fewer than seventy-five percent (75%) of the
aggregate number of meetings held by the Board of Directors and the
4
<PAGE>
committees on which he served during 1996. The Board of Directors
has an Audit Committee, a Compensation and Stock Option Committee
and a Nominating Committee.
The Audit Committee reviews proposals of the Company's independent
auditors regarding annual audits, recommends the engagement or
discharge of auditors, reviews recommendations of such auditors
concerning accounting principles and the adequacy of internal
controls and accounting procedures and practices, reviews the scope
of the annual audit, approves or disapproves each professional
service or type of service other than standard auditing services to
be provided by the auditors, and reviews and discusses the audited
financial statements with the auditors. From December 1995 until
December 1996, Steve Gorlin was a member of the Audit Committee.
Effective with the annual meeting in December, 1996, Steve Gorlin
resigned from the Audit Committee and Mark A. Zwecker and Jon Colin
were appointed to such. From December 1996, to the date of this
proxy statement, Messrs. Zwecker and Colin have served as members
of the Audit Committee. The Audit Committee held one (1) meeting
in 1996.
The Compensation and Stock Option Committee reviews and recommends
to the Board of Directors the compensation and benefits of all
officers of the Company and reviews general policy matters relating
to compensation and benefits of employees of the Company. The
members of the Compensation and Stock Option Committee during 1996
were Mark A. Zwecker and Steve Gorlin. The Compensation and Stock
Option Committee held one (1) meeting in 1996.
The Nominating Committee recommends to the Board of Directors the
nominees for election as Directors of the Company. Members of the
Nominating Committee are Steve Gorlin and Mark A. Zwecker. The
Nominating Committee held one (1) meeting in 1996.
Compensation of Directors
In 1996, the two outside directors of the Company, which number was
subsequently increased to three at the Annual Meeting in December
of 1996, earned annual director's fees, which were actually paid in
1997, in the aggregate amount of $19,000, with sixty-five percent
(65%) or one hundred percent (100%) of each director's fee payable,
subject to the election of each director, in shares of Common Stock
of the Company based on seventy-five percent (75%) of the fair
market value of such stock determined on the business day
immediately preceding the date that the fee is due and the balance
payable in cash, if applicable. The aggregate amount of 1996
director's fees paid to the three outside directors (Messrs. Colin,
Gorlin and Zwecker) were as follows: $14,450 was paid by the
issuance of 15,406 shares of Common Stock and $4,550 was paid in
cash. Reimbursement of expenses for attending meetings of the
Board are paid in cash at the time of the applicable Board meeting.
The director fees in 1996 were based on monthly payments of $1,000
5
<PAGE>
for each month of service. These outside directors do not receive
additional compensation for committee participation or special
assignments except for reimbursement of expenses. The Company does
not compensate the directors that also serve as officers or
employees of the Company or its subsidiaries for their service as
directors.
In June 1995, the Company entered into a consulting agreement with
Mark A. Zwecker ("Zwecker Consulting Agreement"), a Director, to
provide certain financial consulting services to the Company.
Under this arrangement, the Company paid to Mr. Zwecker a
consulting fee of $1,500 per month. Mr. Zwecker agreed to accept,
in lieu of 65% of the consulting fee due at any time, to be issued
a number of shares of Common Stock having a value equal to 65% of
the fee based on the fair market value of such stock determined on
the business day immediately preceding that date such fee is due.
The Zwecker Consulting Agreement was terminated effective June 30,
1996, pursuant to Mr. Zwecker's resignation as Secretary and the
corresponding appointment of Richard T. Kelecy as the Company's
Secretary. Subsequent to the termination of the Zwecker Consulting
Agreement, Mr. Zwecker has received compensation consistent with
all other outside Directors. For services rendered during 1996
under the Zwecker Consulting Agreement, Mr. Zwecker received from
the Company approximately $9,000.
In September 1996, the Company issued a warrant ("Gorlin Warrant")
to Steve Gorlin, a Director of the Company, for services rendered,
other than those rendered as a Director, to the Company. The
Gorlin Warrant allows the holder to purchase 200,000 shares of
Common Stock of the Company for $1.75 per share from January 1,
1997, until September 15, 1999. The Gorlin Warrant is subject to
certain antidilution provisions.
The Company believes that it is important for directors to have a
personal interest in the success and growth of the Company and for
their interests to be aligned with those of its stockholders.
Therefore, under the Company's 1992 Outside Directors Stock Option
and Incentive Plan ("Outside Directors Plan"), each outside
director is granted an option to purchase up to 15,000 shares of
Common Stock on the date such director is initially elected to the
Board of Directors and receives on an annual basis an option to
purchase up to another 5,000 shares of Common Stock, with the
exercise price being the fair market value of the Common Stock on
the date that the option is granted. No option granted under the
Outside Directors Plan is exercisable until after the expiration of
six months from the date the option was granted and no option shall
be exercisable after the expiration of ten (10) years from the date
the option is granted. As of December 31, 1995, options to
purchase 110,000 shares of Common Stock had been granted under the
Outside Directors Plan. During 1996, the Company granted options
to purchase 35,000 shares of Common Stock under the Outside
Directors Plan. The Third Amendment to the Outside Directors Plan,
6
<PAGE>
as approved at the December 1996 Annual Meeting, provides that
each eligible director shall receive, at such eligible director's
option, either sixty-five percent (65%) or one hundred percent
(100%) of the fee payable to such director for services rendered to
the Company as a member of the Board in Common Stock. In either
case, the number of shares of Common Stock of the Company issuable
to the eligible director shall be determined by valuing the Common
Stock of the Company at seventy-five percent (75%) of its fair
market value as defined by the Outside Directors Plan. As of the
date of this proxy statement, the Company has issued 60,399 shares
of the Company s Common Stock in payment of director fees, covering
the period January 1, 1995 through June 30, 1997. The number of
shares of Common Stock which may be issued in the aggregate under
the Outside Directors Plan, either under options or stock awards,
is 250,000 shares, subject to adjustment.
Although Dr. Centofanti is not compensated for his services
provided as a director of the Company, Dr. Centofanti is
compensated for his services rendered to the Company as an officer
of the Company. See "Employment Contracts, Termination of
Employment and Change in Control Arrangements" and EXECUTIVE
COMPENSATION -- Summary Compensation Table.
Compensation Committee Interlocks and Insider Participation
During 1996, the Compensation and Stock Option Committee for the
Company's Board of Directors was composed of Mark A. Zwecker and
Steve Gorlin. Mr. Zwecker has not been an employee of the Company
during the year 1996, however, Mr. Zwecker did serve as Secretary
of the Company from June 1995 until June 30, 1996. From June 1995
until June 30, 1996, Mr. Zwecker was a party to the Zwecker
Consulting Agreement with the Company. See "--Compensation of
Directors." Mr. Gorlin was neither an officer nor an employee of
the Company during 1996. In September 1996, the Company issued the
Gorlin Warrant to Mr. Gorlin for services rendered, other than as
a director, for the Company. See "--Compensation of Directors."
In July 1997, Mr. Gorlin entered into a Stock Purchase Agreement,
which was subsequently amended in October 1997, pursuant to which
Mr. Gorlin agreed to purchase 200,000 shares of Common Stock for
$2.125 per share and in connection therewith is to be issued a
three (3) year warrant for the purchase of 100,000 shares of Common
Stock at $2.40 per share. See "Certain Relationships and Related
Transactions."
Certain Relationships
There are no family relationships between any existing Director,
executive officer, or person nominated or chosen by the Company to
become a Director or executive officer. Dr. Centofanti is the only
Director who is an employee of the Company.
7
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the regulations promulgated thereunder
require the Company's executive officers and directors and
beneficial owners of more than ten percent (10%) of any equity
security of the Company registered pursuant to Section 12 of the
Exchange Act to file reports of ownership and changes of ownership
of the Company's equity securities with the Securities and Exchange
Commission, and to furnish the Company with copies of all such
reports. Based solely on a review of the copies of such reports
furnished to the Company and information provided to the Company,
the Company believes that during 1996 none of the executive
officers and directors of the Company failed to timely file reports
under Section 16(a), except that a Form 4 for September 1996 for
Steve Gorlin was amended as of August 1997 to include the issuance
of a Warrant for the right to purchase 200,000 shares of the
Company s Common Stock.
RBB Bank Aktiengesellschaft ("RBB Bank"), which may have become a
beneficial owner (as that term is defined under Rule 13d-3 as
promulgated under the Exchange Act) of more than ten percent (10%)
of the Company's Common Stock on February 9, 1996, as a result of
its acquisition of 1,100 shares of Series 1 Preferred (as defined
in "Certain Relationships and Related Transactions") that were
convertible into a maximum of 1,282,798 shares of Common Stock of
the Company commencing 45 days after issuance of the Series 1
Preferred, failed to file a Form 3 to report such transaction, if
required. RBB Bank has advised the Company that it acquired such
preferred stock on behalf of numerous clients and no one client is
the beneficial owner of more than 250 shares of such preferred
stock, and thus, RBB Bank believes it is not required to file
reports under Section 16(a).
If RBB Bank became a beneficial owner of more than ten percent
(10%) of the Company's Common Stock on February 9, 1996 and thereby
required to file reports under Section 16(a) of the Exchange Act,
then RBB Bank also failed to file (i) a Form 4 for single
transaction which occurred on February 22, 1996; and (ii) a Form 4
for three transactions which occurred in July 1996.
8
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Summary Compensation Table
The following table sets forth all compensation paid to persons who
served as Chairman and Chief Executive Officer of the Company
during the three fiscal years ended December 31, 1996, 1995, and
1994.
Annual Compensation
__________________________
Other
Annual
Compen-
Name and Salary Bonus sation
Principal Position Year ($) ($) ($)
_______________________ ______ ______ _____ _______
<S> <C> <C> <C> <C>
Dr. Louis F. Centofanti(1) 1996 65,000 - 66,666(3)
Chairman of the Board, 1995 120,000 - -
President and Chief 1994 86,000 - -
Executive Officer
Robert W. Foster, Jr.(2) 1996 34,000 5,000 30,000
President and Chief 1995 130,000 - -
Executive Officer 1994 - - -
Long-term
Compensation
______________________
Restricted
Stock Options/ All Other
Awards SARs Compensation
($) (#) ($)
_________ ________ _____________
<C> <C> <C>
- - -
- 20,000 -
- - -
- - 171,000
- 78,000(4) -
______________________
<FN>
(1) Dr. Centofanti, the Company's Chairman of the Board, received
compensation pursuant to an employment agreement, which provided
for annual compensation to Dr. Centofanti of $75,000 beginning June
1992 and expiring in June 1995. Under the expired contract,
Dr. Centofanti received an annual salary of $75,000, which was
increased to $125,000 in October 1994 and continued until December
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<PAGE>
1995, when Dr. Centofanti's salary was voluntarily reduced to
$65,000. Dr. Centofanti entered into a three (3) year Employment
Agreement during October, 1997, which increased Dr. Centofanti s
annual salary from $65,000 to $110,000. Dr. Centofanti also served
as President and Chief Executive Officer of the Company during 1994
and until September 1995, when Robert W. Foster was elected as
President and Chief Executive Officer of the Company. At such
time, Dr. Centofanti continued to serve as Chairman of the Board of
the Company. Upon Mr. Foster's resignation, Dr. Centofanti resumed
the positions of President and Chief Executive Officer effective
March 15, 1996, and continued as Chairman of the Board.
(2) Mr. Foster was elected President and Chief Executive Officer
of the Company in September, 1995, and he resigned his positions as
President and Chief Executive Officer effective March 15, 1996.
The Company and Mr. Foster agreed to terminate his employment
agreement effective as of the date of such termination. The
Company agreed to severance benefits of $30,000 in cash plus
continuation of certain employee benefits. In addition,
concurrently with Mr. Foster's termination, the Company and
Mr. Foster entered into a consulting agreement which provided for a
term of three (3) months and compensation of $171,000, which was
paid in the form of Common Stock. See "--Employment Contracts,
Termination of Employment, and Change in Control Arrangements" and
"Certain Relationships and Related Transactions."
(3) The Company entered into two Stock Purchase Agreements with
Dr. Centofanti whereby the Company sold, and Dr. Centofanti
purchased, 133,333 shares and 76,190 shares, in March 1996, and in
June 1996, respectively, of the Company's Common Stock for 75% of
the closing bid price of such Common Stock as quoted on the NASDAQ
on the date that Dr. Centofanti notified the Company of his desire
to purchase such stock, as authorized by the Board of Directors of
the company. The closing bid price as quoted on the NASDAQ for the
Company's Common Stock on the dates that Dr. Centofanti notified
the Company of his desire to purchase the shares was $1.00 per
share for the March sale and $1.75 per share for the June sale. As
a result, the difference between the price paid by Dr. Centofanti
for such stock and the fair market value thereof was approximately
$33,333 for each transaction. See "Certain Relationships and
Related Transactions."
(4) These options terminated upon Mr. Foster's resignation and are
no longer outstanding.
</FN>
</TABLE>
Options/SAR Grants in Last Fiscal Year
During 1996, there were no individual grants of stock options or
SAR's made to any of the executive officers named in the summary
compensation table.
10
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1996 and Fiscal Year-End Option
Values
The following table sets forth information concerning each exercise
of stock options during the last completed fiscal year by each of
the executive officers named in the Summary Compensation Table and
the fiscal year-end value of unexercised options:
Number of
Shares Unexercised
Acquired Options at
on Value Year-End($)
Exercise Realized ___________________
(#)(1) ($)(1) Exer- Unexer-
cisable cisable
_________ _______ ________ _______
<S> <C> <C> <C> <C>
Dr. Louis F.
Centofanti 0 $0 33,763 16,000
Robert W.
Foster, Jr.(3) 0 $0 0 0(3)
Value of Unexercised
in-the-Money Options
at Fiscal Year-End($)(2)
_______________________
Exer- Unexer-
cisable cisable
________ __________
<C> <C>
$0 $0
$0 $0
_____________
<FN>
(1) No options were exercised during 1996.
(2) Values have been calculated based on the closing bid price of
the Company's Common Stock reported on the NASDAQ on
December 31, 1996, which was $1.375 per share. The actual
value realized by a named executive officer on the exercise of
these options depends on the market value of the Company's
Common Stock on the date of exercise. As of December 31,
1996, the unexercised options were not in the money since the
fair market value of the underlying securities was less than
the exercise price of such options.
(3) Mr. Foster resigned his position of President and Chief
Executive Officer effective March 15, 1996 and, simultaneous
with such resignation, all unexercised options totaling
155,000 were forfeited.
</FN>
</TABLE>
11
<PAGE>
401(k) Plan
The Company has adopted the Perma-Fix Environmental Services, Inc.
401(k) Plan which is intended to comply under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the
provisions of the Employee Retirement Security Act of 1974 (the
"401(k) Plan"). All full-time employees of the Company and its
subsidiaries who have attained the age of twenty-one (21) are
eligible to participate in the 401(k) Plan. Participating
employees may make annual pre-tax contributions to their accounts
up to fifteen percent (15%) of their compensation, up to a maximum
amount as limited by law. The Company, at its discretion, may make
matching contributions based on full-time employees' elective
contributions. Company contributions vest twenty percent (20%)
after two (2) years, forty percent (40%) after three (3) years,
sixty percent (60%) after four (4) years, eighty percent (80%)
after five (5) years, and are one hundred percent (100%) vested
thereafter. As of December 31, 1996, the Company has elected not
to provide any matching contributions. Distributions generally are
payable in lump sums upon termination, retirement, death or
disability.
Employee Stock Purchase Plan
The Company has adopted the Perma-Fix Environmental Services, Inc.
1996 Employee Stock Purchase Plan (the "1996 Plan") which is
intended to comply under Section 423 of the Code. All full-time
employees of the Company and its subsidiaries who have completed at
least six (6) months of continuous service, other than those that
are deemed, for the purpose of Section 423(b)(3) of the Code to own
stock possessing five percent (5%) or more the total combined
voting power or value of all classes of stock of the Company, are
eligible to participate in the 1996 Plan. Participating employees
("Participants") may authorize for payroll periods beginning on or
after January 1, 1997, payroll deductions from compensation for the
purposes of funding the Participant s stock purchase account
("Stock Purchase Account"). This deduction shall be not less than
one percent (1%) nor more than five percent (5%) of the
Participant's gross amount of compensation. The purchase price per
share of the Common Stock to be sold to Participants pursuant to
the 1996 Plan is the sum of (a) eighty-five percent (85%) of the
fair market value of each share on the Offering Date on which such
Offering commences or on the Exercise Date (as defined in the 1996
Plan) on which such Offering expires, whichever is the lower, and
(b) any transfer, excise or similar tax imposed on the transaction
pursuant to which shares of Common Stock are purchased. The
"Offering Date" means the first day of each January and July during
which the 1996 Plan is in effect, commencing with January 1, 1997.
There is no holding period regarding Common Stock purchased under
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<PAGE>
the 1996 Plan, however, in order for a participant to be entitled
to the tax treatment described in Section 423 of the Code with
respect to the Participant s sale of Common Stock purchased under
the 1996 Plan, such Stock must not be sold for at lease one (1)
year after acquisition under the 1996 Plan, except in the case of
death. Any Participant may voluntarily withdraw from the 1996 Plan
by filing a notice of withdrawal with the Board of Directors prior
to the fifteenth (15th) day of the last month in a Purchase Period
(as defined in the 1996 Plan). Upon such withdrawal, there shall
be paid to the Participant the amount, if any, standing to the
Participant s credit in the Participant s Stock Purchase Account.
If a Participant ceases to be an eligible employee, the entire
amount standing to the Participant s credit in the Participant s
Stock Purchase Account on the effective date of such occurrence
shall be paid to the Participant.
Employment Contracts, Termination of Employment and Change in
Control Arrangements
During October, 1997, Dr. Centofanti entered into a three (3) year
Employment Agreement with the Company which provided for, among
other things, an annual salary of $110,000 and the issuance of Non-
Qualified Stock Options ("Non-Qualified Stock Options"). The Non-
Qualified Stock Options provide Dr. Centofanti with the right to
purchase an aggregate of 300,000 shares of Common Stock as follows:
(i) after one year 100,000 shares of Common Stock at a price of
$2.25 per share, (ii) after two years 100,000 shares of Common
Stock at a price of $2.50 per share, and (iii) after three years
100,000 shares of Common Stock at a price of $3.00 per share. The
Non-Qualified Stock Options expire ten years after the date of the
Employment Agreement.
In June 1994, the Company entered into a three (3) year employment
agreement with Robert W. Foster, Jr. ("Foster"). Under the
Agreement, Mr. Foster was to receive an annual salary of $110,000,
which was subsequently increased to $135,000 during 1995. However,
in conjunction with the Company's restructuring program, the
Company and Foster agreed to Foster's resignation as President,
Chief Executive Officer and Director of the Company, thereby
terminating his employment agreement with the Company effective
March 15, 1996. The Company agreed to severance benefits of
$30,000 in cash plus continuation of certain employee benefits. In
addition, the Company and Foster entered into a consulting
agreement with a term of three (3) months and compensation of
approximately $171,000 payable in the form of Common Stock. Based
upon a stock price at the close of business on April 1, 1996, the
Company issued approximately 152,000 shares of Common Stock to
Foster relative to this consulting agreement. The fair market
value of the 152,000 shares exceeded $171,000 and, pursuant to the
terms of Foster's consulting agreement, Foster reimbursed to the
Company approximately $41,000 of such excess proceeds. Foster
13
<PAGE>
agreed to certain non-competition conditions for a period of one
(1) year following the date of the consulting agreement.
The Company's 1991 Performance Equity Plan and the 1993
Nonqualified Stock Option Plan (collectively, the "Plans") provide
that in the event of a change in control (as defined in the Plans)
of the Company, each outstanding option and award granted under the
Plans shall immediately become exercisable in full notwithstanding
the vesting or exercise provisions contained in the stock option
agreement. As a result, all outstanding stock options and awards
granted under the Plans to the executive officers of the Company
shall immediately become exercisable upon such a change in control
of the Company.
Report for the Compensation and Stock Option Committee
The Compensation and Stock Option Committee of the Board of
Directors (the "Compensation Committee") is responsible for
reviewing and approving the Company's compensation policies and the
compensation paid to its executive officers, including the
executive officers named below. The Company's compensation program
for its executive officers, including the Chief Executive Officer,
is generally not formalized but is designed to provide levels of
compensation required to assist the Company in attracting and
retaining qualified executive officers. The Compensation Committee
attempts to set an executive officer's compensation at a level
which is similar to such officer's peers in the Company's industry
consistent with the size of the Company. Generally, executive
officer compensation, including that of the Chief Executive
Officer, is not directly related to the Company's performance.
Instead, the Compensation Committee has a philosophy which
recognizes individual initiative and achievement in arriving at an
officer's compensation. The executive compensation program is
comprised of salary, cash incentives and stock options. The
following is a discussion of each of the elements of the executive
compensation program.
Salary
Generally, base salary for each executive officer is similar to
levels within the industry and comparable to the level which could
be attained for equal positions elsewhere, but consistent with the
size of the Company. Also taken into account are benefits, years
of service, responsibilities, Company growth, future plans and the
Company's current ability to pay. During 1996, and until October
1997, Dr. Centofanti's annual salary was $65,000. During October,
1997, Dr. Centofanti entered into a three (3) year Employment
Agreement ("Employment Agreement") with the Company which provided
for, among other things, an annual salary of $110,000 and the
issuance of Non-Qualified Stock Options ("Non-Qualified Stock
Options") to Dr. Centofanti. The Non-Qualified Stock Options
provide Dr. Centofanti with the right to purchase an aggregate of
14
<PAGE>
300,000 shares of Common Stock in the form of (i) an option to
purchase 100,000 shares of Common Stock after one year at a price
of $2.25 per share, (ii) an option to purchase 100,000 shares of
Common Stock after two years at a price of $2.50 per share, and
(iii) an option to purchase 100,000 shares of Common Stock after
three years at a price of $3.00 per share. The Non-Qualified Stock
Options expire ten years after the date of the Employment
Agreement. See "--Employment Contracts, Termination of Employment
and Change in Control Arrangements." Robert W. Foster, Jr. was
compensated pursuant to the terms of an employment agreement prior
to his March 1996 resignation as officer and director from the
Company. Under Mr. Foster's employment agreement, his compensation
had been subsequently increased from $110,000 to $135,000 upon his
being elected as Chief Executive Officer and President of the
Company. See "--Employment Contracts, Termination of Employment and
Change in Control Arrangements."
Cash Incentives
The cash incentive plan is a program through which cash bonuses may
be paid on an annual basis, to reward significant corporate
accomplishments and individual initiative demonstrated by executive
officers during the prior fiscal year. The amount of cash bonus is
determined by the Compensation Committee.
Stock Options
The Company's 1991 Performance Equity Plan and 1993 Nonqualified
Stock Option Plan were adopted for the purpose of promoting the
interests of the Company and its stockholders by attracting and
retaining executive officers and other key employees of outstanding
ability. Options are granted to eligible participants based upon
their potential impact on corporate results and on their individual
performance. Generally, options are granted at market value, vest
over a number of years, and are generally dependent upon continued
employment. The Compensation Committee believes that the grant of
time-vested options provides an incentive that focuses the
executive officers' attention on managing the Company from the
perspective of owners with an equity stake in the Company. It
further motivates executive officers to maximize long-term growth
and profitability because value is created in the options only as
the Company's stock price increases after the option is granted.
In October of 1997, Dr. Centofanti entered into an employment
agreement with the Company, pursuant to which he was issued certain
Non-Qualified Stock Options. See "--Salary" and "--Employment
Contracts, Termination of Employment and Change in Control
Arrangements."
The Compensation and Stock Option Committee
Mark A Zwecker and Steve Gorlin
15
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK PRICE PERFORMANCE GRAPH
The following Common Stock price performance graph compares the
yearly change in the Company's cumulative total stockholders'
returns on its Common Stock during the years 1992 through 1996,
with the cumulative total return of the NASDAQ Market Index and the
published industry index prepared by Media General and known as
Media General Industry Group 095 Index ("Industry Index") assuming
the investment of $100 on December 31, 1991.
Due to the constraints of the EDGAR system, the performance graph
in a line graph format has been omitted. The following table has
been provided to take its place in the EDGAR filing. The following
table compares the yearly percentage change in the cumulative total
stockholder return assuming reinvestment of dividends, if any, of
(i) the Company, (ii) the published industry index of Media General
Industry Group 095 ("Industry Index"), and (iii) the NASDAQ Market
Index ("Broad Market"). The table set forth covers the period from
year-end 1991 through year-end 1996.
FISCAL YEAR ENDING
1991 1992 1993 1994 1995 1996
____ _____ _____ ______ ______ _____
<S> <C> <C> <C> <C> <C> <C>
Company 100 115.38 75.00 48.08 18.27 24.04
Industry 100 99.18 74.46 67.27 84.35 104.62
Ind.
Broad Mkt. 100 102.56 123.02 129.17 167.54 208.19
</TABLE>
Assumes $100 invested at year-end 1991 in the Company, the Industry
Index and the Broad Market. The above Five-Year Total Shareholder
Return Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement
into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (collectively, the "Acts"), except to the
extent that the Company specifically incorporates this information
by reference, and shall not be deemed to be soliciting material or
to be filed under such Acts.
CERTAIN BENEFICIAL OWNERS
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to the shares of
voting securities beneficially owned as of the Record Date by each
person known by the Company to be the beneficial owner of more than
five percent (5%) of any class of the Company's voting securities.
16
<PAGE>
Beneficial ownership by the Company's stockholders has been
determined in accordance with the rules promulgated under Section
13(d) of the Securities Exchange Act of 1934, as amended. A person
is deemed to be a beneficial owner of any securities of which that
person has the right to acquire beneficial ownership of such
securities within 60 days from the Record Date.
<TABLE>
<CAPTION>
Amount and Percent
Name of Title Nature of of
Beneficial Owner of Class Ownership Class(1)
________________ ________ ____________ _________
<S> <C> <C> <C>
Dr. Louis F. Centofanti(2) Common 714,815(2) 6.18%
Steve Gorlin(3) Common 809,292(3) 6.80%
RBB Bank Aktiengellschaft(4) Common 7,861,293(4) 42.74%
Preferred 6,500(4) 94.89%
____________________
<FN>
(1) In computing the number of shares and the percentage of
outstanding Common Stock "beneficially owned" by a person, the
calculations are based upon 11,450,905 shares of Common Stock
issued and outstanding on October 8, 1997 (excluding 920,000
Treasury Shares), plus the number of shares of Common Stock
which such person has the right to acquire beneficial
ownership of within (60) days.
(2) These shares include (i) 613,934 shares held of record by Dr.
Centofanti; (ii) 56,618 shares receivable upon exercise of
warrants to purchase Common Stock; and (iii) options to
purchase 37,763 shares granted pursuant to the 1991
Performance Equity Plan and the 1993 Nonqualified Stock Option
Plan, which are immediately exercisable. This amount does not
include options to purchase 12,000 shares granted pursuant to
the above referenced plans which are not exercisable within
sixty (60) days. Dr. Centofanti has sole voting and
investment power of these shares, except the following shares
for which Dr. Centofanti shares voting and investment power:
4,000 shares held by the wife of Dr. Centofanti and 2,500
shares held by the son of Dr. Centofanti's wife. The business
address of Dr. Centofanti, for the purposes hereof, is c/o
Perma-Fix Environmental Services, Inc., 1940 N.W. 67th Place,
Gainesville, Florida 32653.
(3) Mr. Gorlin has sole voting and investment power over these
shares which include: (i) 379,292 shares held of record by
Mr. Gorlin; (ii) 200,000 shares which Mr. Gorlin has the right
to acquire, until September 15, 1999, under the terms of a
Warrant granted by the Company to Mr. Gorlin in September
1996; (iii) Options to purchase 30,000 shares granted pursuant
17
<PAGE>
to the 1992 Outside Directors Stock Option and Incentive Plan
which are immediately exercisable; and 200,000 shares pursuant
to the Stock Purchase Agreement dated July 30, 1997. See
"Certain Relationships and Related Transactions."
(4) The outstanding shares of Preferred Stock consist of the
Series 3 Preferred and Series 4 Preferred (collectively, the
"RBB Preferred") that RBB Bank acquired from the Company
pursuant to the Subscription Agreements. The RBB Preferred
have no voting rights, except as required by law. The shares
of Common Stock included as beneficially owned by RBB Bank in
this table include 931,567 shares of Common Stock directly
held by RBB Bank and shares that RBB Bank would be entitled to
receive upon conversion of all of the remaining Preferred
Stock held by RBB Bank (assuming that conversion of the Series
3 Preferred occurs at the maximum conversion price of $1.50,
based upon eighty percent (80%) of the average of the closing
bid prices of the Common Stock for the five (5) trading days
prior to conversion, and assuming that conversion of the
Series 4 Preferred occurs at the maximum conversion price of
$1.6875, based upon eighty percent (80%) of the average of the
closing bid prices of the Common Stock for the five (5)
trading days prior to conversion), and the number of shares of
Common Stock noted is based on the assumption that RBB Bank
converted such shares of RBB Preferred at the maximum price
and resulting minimum number of shares possible. The above
calculation also includes 2,375,000 shares of Common Stock
that RBB Bank has the right to acquire upon exercise of
various warrants, (i) to purchase up to 2,000,000 shares of
Common Stock after December 31, 1996, which were granted to
RBB Bank in connection with the sale to RBB Bank of the Series
3 Preferred at an exercise price of $2.00 per share for
1,000,000 shares, and $3.50 per share for 1,000,000 shares;
(ii) to purchase up to 375,000 shares of Common Stock after
December 31, 1997, which were granted to RBB Bank in
connection with the sale to RBB Bank of the Series 4 Preferred
at an exercise price of $2.10 per share for 187,500 shares,
and $2.50 per share for 187,500 shares. The above calculation
also includes approximately 400,000 shares of Common Stock
that RBB Bank may receive in payment of the accrued dividends
on the RBB Preferred. RBB Bank has advised the Company that
it is holding the RBB Preferred on behalf of 43 clients of RBB
Bank and that no client is the beneficial owner of more than
250 shares of such RBB Preferred. RBB Bank may be considered
to be the beneficial owner of these shares with its clients.
See "Certain Relationships and Related Transactions." RBB
Bank's address is Burgring 16, 8010 Graz, Austria.
</FN>
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Security Ownership of Management
The following table sets forth information as to the shares of
voting securities beneficially owned as of the Record Date by each
Director and Named Executive Officers of the Company listed in the
Summary Compensation table and all Directors and executive officers
of the Company as a group. Beneficial ownership by the Company's
stockholders has been determined in accordance with the rules
promulgated under Section 13(d) of the Exchange Act. A person is
deemed to be a beneficial owner of any voting securities for which
that person has the right to acquire beneficial ownership within
sixty (60) days from the Record Date. All voting securities are
owned both of record and beneficially unless otherwise indicated.
Number of Shares
Name of of Common Stock Percentage of
Beneficial Owner Beneficially Owned Common Stock(1)
________________ __________________ _____________
<S> <C> <C>
Dr. Louis F. Centofanti(2)(3) 714,815(3) 6.19%
Richard T. Kelecy(2)(4) 24,000(4) *
Mark A. Zwecker(2)(5) 189,894(5) 1.65%
Steve Gorlin(2)(6) 809,292(6) 6.81%
Jon Colin(7) 18,995(7) *
Directors and Executive 1,756,996(8) 14.59%
Officers as a Group
(5 persons)
*Indicates beneficial ownership of less than one percent (1%).
____________________
<FN>
(1) See footnote (1) of the table under "Security Ownership of
Certain Beneficial Owners."
(2) The business address of such person, for the purposes hereof,
is c/o Perma-Fix Environmental Services, Inc., 1940 N.W. 67th
Place, Gainesville, Florida 32653.
(3) See footnote (2) of the table under "Security Ownership of
Certain Beneficial Owners."
(4) Does not include options to purchase 106,000 shares of Common
Stock granted pursuant to the 1993 Nonqualified Stock Option
Plan which are not exercisable within sixty (60) days.
(5) Mr. Zwecker has sole voting and investment power over these
shares which include (i) 158,012 shares of Common Stock held
19
<PAGE>
of record by Mr. Zwecker; (ii) 14,882 options to purchase
Common Stock granted pursuant to the 1991 Performance Equity
Plan; (iii) 2,000 options to purchase Common Stock pursuant to
the 1993 Nonqualified Stock Option Plan, which are immediately
exercisable; and (iv) options to purchase 15,000 shares
granted pursuant to the 1992 Outside Directors Stock Option
and Incentive Plan which are immediately exercisable. Does
not include options to purchase 3,000 shares of Common Stock
granted pursuant to the 1993 Nonqualified Stock Option Plan
which are not exercisable within sixty (60) days.
(6) See Footnote 3 of the table under Security Ownership of
Certain Beneficial Owners.
(7) Mr. Colin has sole voting and investment power over these
shares which include (i) 3,995 shares of Common Stock held of
record by Mr. Colin and (ii) options to purchase 15,000 shares
granted pursuant to the 1992 Outside Directors Stock Option
and Incentive Plan which are immediately exercisable. His
address is 13 Meadow Lane, Old Bridge, New Jersey 08857.
(8) Includes 138,645 shares receivable upon exercise of options
and warrants to purchase 256,618 shares of Common Stock which
are immediately exercisable. Does not include 121,000 shares
of Common Stock covered by options and warrants which are not
exercisable within sixty (60) days from the Record Date.
</FN>
</TABLE>
Potential Change in Control
If RBB Bank were to acquire approximately 8,000,000 shares of
Common Stock upon conversion of the remaining Series 3 Preferred,
which is the maximum number of shares of Common Stock that RBB Bank
could acquire upon conversion of the Series 3 Preferred assuming
the conversion price is based on the adjusted minimum conversion
price of $.50 a share as a result of the average of fair market
value of the Common Stock being $.667 or less within five (5)
trading days immediately preceding the conversion date and assuming
such minimum conversion price is not further reduced pursuant to
the terms of the Series 3 Preferred, and RBB Bank were to acquire
approximately 1,481,482 shares of Common Stock upon the conversion
of the Series 4 Preferred (assuming that the average of the closing
bid prices of the Common Stock for the five (5) trading days prior
to conversion equals or exceeds the maximum conversion price of
$1.6875 per share, based upon eighty percent (80%) of the average
of the closing bid prices of the Common Stock for the five (5)
trading days prior to conversion) and the Company issued to RBB
Bank approximately 400,000 additional shares in payment of
dividends, and it exercised all of the warrants held by RBB Bank
for Common Stock of the Company, RBB Bank would own approximately
13,189,269 shares of Common Stock, or approximately fifty-six
percent (56%) of the outstanding shares of Common Stock of the
Company, assuming no other shares of Common Stock are issued by the
20
<PAGE>
Company, no other warrants or options issued by the Company are
exercised, the Company does not acquire additional shares of Common
Stock as treasury shares and RBB Bank does not dispose of any such
shares. In such event, RBB Bank would have a sufficient number of
voting shares of the Company to result in a change in control of
the Company. See "--Security Ownership of Certain Beneficial
Owners" and "Certain Relationships and Related Transactions."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1994, the Company made a private offering to accredited
investors (the "Private Placement") of units ("Units"), each Unit
consisting of 10,000 shares of Common Stock and 20,000 Class B
Warrants to Purchase Common Stock (the "Class B Warrants"). The
Class B Warrants are for a term of five (5) years from June 17,
1994. Each Class B Warrant entitles the holder thereof to purchase
one (1) share of Common Stock for $5.00. The Class B Warrants are
subject to certain antidilution provisions. Under certain
conditions, the Class B Warrants are redeemable by the Company at
a redemption price of $0.05 per Class B Warrant, provided that the
market price of the Common Stock shall exceed an average price of
$8.00 per share. In connection with the Private Placement, Dr.
Louis F. Centofanti, Chairman of the Board and Chief Executive
Officer of the Company, purchased two Units from the Company, which
consisted of 20,000 shares of Common Stock and Class B Warrants to
purchase up to 40,000 shares of Common Stock. The purchase price
paid for the two Units was $60,000.
In March 1996, the Company entered into a Stock Purchase Agreement
with Dr. Centofanti, the President, Chief Executive Officer, and
Chairman of the Board of the Company, whereby the Company sold, and
Dr. Centofanti purchased, 133,333 shares of the Company's Common
Stock for 75% of the closing bid price of such Common Stock as
quoted on the NASDAQ on the date that Dr. Centofanti notified the
Company of his desire to purchase such stock, as authorized by the
Board of Directors of the Company. During February 1996, Dr.
Centofanti tendered to the Company $100,000 for such 133,333 shares
by delivering to the Company $86,028.51 and forgiving $13,971.49
that was owing to Dr. Centofanti by the Company for expenses
incurred by Dr. Centofanti on behalf of the Company. On the date
that Dr. Centofanti notified the Company of his desire to purchase
such shares, the closing bid price as quoted on the NASDAQ for the
Company's Common Stock was $1.00 per share.
In June 1996, the Company entered into a second Stock Purchase
Agreement with Dr. Centofanti, whereby the Company sold, and
Dr. Centofanti purchased, 76,190 shares of the Company's Common
Stock for 75% of the closing bid price of such Common Stock as
quoted on the NASDAQ on the date that Dr. Centofanti notified the
Company of his desire to purchase such stock (closing bid of $1.75
on June 11, 1996), as previously authorized by the Board of
21
<PAGE>
Directors of the Company. Dr. Centofanti tendered to the Company
$100,000 for such 76,190 shares of Common Stock.
On June 30, 1997, the Company entered into a third Stock Purchase
Agreement ("Centofanti Agreement") with Dr. Louis F. Centofanti,
whereby the Company sold, and Dr. Centofanti agreed to purchase,
24,381 shares of the Company's Common Stock. The purchase price
was $1.6406 per share representing 75% of the $2.1875 closing bid
price of the Common Stock as quoted on the NASDAQ on the date that
Dr. Centofanti notified the Company of his desire to purchase such
shares. Pursuant to the terms of the Centofanti Agreement, Dr.
Centofanti was to pay the Company the aggregate purchase price of
$40,000 for the 24,381 shares of Common Stock. Dr. Centofanti
purchased 12,190 shares during July for $20,000, and during
October, the Agreement was amended, upon consideration of recent
accounting pronouncements related to stock-based compensation, to
reduce the number of shares of Common Stock that Dr. Centofanti is
to acquire under the Centofanti Agreement to the 12,190 shares
already acquired by Dr. Centofanti under the Centofanti Agreement.
The sale of the shares pursuant to the Centofanti Agreement, and
its subsequent amendment, were authorized by the Company s Board of
Directors.
From June 1995 to June 30, 1996, Mr. Zwecker was a party to the
Zwecker Consulting Agreement with the Company. See "Compensation
of Directors."
In September, 1996, the Company issued the Gorlin Warrant to Steve
Gorlin, a Director of the Company, for services rendered, other
than those as a Director to the Company. See "Compensation of
Directors."
On July 30, 1997, the Company entered into a Stock Purchase
Agreement ("Gorlin Agreement") with Mr. Steve Gorlin, a Director of
the Company, whereby the Company would sell, and Mr. Gorlin agreed
to purchase, 200,000 shares of the Company s Common Stock. The
purchase price was $2.125 per share representing the closing bid
price of the Common Stock as quoted on the NASDAQ on July 30, 1997.
Pursuant to the terms of the Gorlin Agreement, Mr. Gorlin agreed to
pay the Company the aggregate purchase price of $425,000 for the
200,000 shares of Common Stock. Mr. Gorlin agreed to tender
$425,000 during August, 1997, however, pursuant to an amendment to
the Gorlin Agreement, which was entered into on October 7, 1997,
the payment schedule was modified such that Mr. Gorlin agreed to
tender the $425,000 on or before November 30, 1997. In order to
induce Mr. Gorlin to enter into the amendment to the Gorlin
Agreement, and to purchase the Common Stock on the terms and
subject to the conditions thereof, PESI agreed to issue a 3 year
warrant to Mr. Gorlin for the purchase of 100,000 shares of Common
Stock at $2.40 per share.
22
<PAGE>
In March 1996, Robert W. Foster, Jr. resigned as President, Chief
Executive Officer and a Director of the Company, and as an officer
and Director of the Company's subsidiaries and terminated his
employment agreement with the Company pursuant to the terms of a
Termination and Severance Agreement (the "Termination Agreement")
between the Company and Mr. Foster, and effective as of the date of
such termination, the Company and Mr. Foster entered into a
consulting agreement dated March 15, 1996. See "Executive
Compensation--Employment Contracts, Termination of Employment and
Change in Control Arrangements" for further discussion.
During February 1996, the Company entered into two (2) different
offshore transactions with RBB Bank Aktiengesellschaft, located in
Graz, Austria ("RBB Bank"). In the first transaction, the Company
sold to RBB Bank 1,100 shares of a newly created Series 1 Class A
Preferred Stock, par value $.001 ("Series 1 Preferred"), for $1,000
per share, for an aggregate purchase price of $1,100,000, pursuant
to an Offshore Securities Subscription Agreement, dated February 9,
1996. In the second transaction, the Company sold to RBB Bank 330
shares of a newly created Series 2 Class B Preferred Stock, par
value $.001 ("Series 2 Preferred"), for $1,000 per share for an
aggregate sales price of $330,000, pursuant to an Offshore
Securities Subscription Agreement, dated February 22, 1996. The
Series 1 Preferred and the Series 2 Preferred are collectively
referred to herein as "Series 1 and 2 Preferred." In connection
with both transactions, the Company paid placement fees totaling
$209,000. The Series 1 and 2 Preferred were convertible at any
time, commencing forty-five (45) days after issuance, into shares
of the Company's Common Stock at a conversion price equal to the
aggregate value of the shares of the Series 1 and 2 Preferred being
converted, together with all accrued but unpaid dividends thereon,
divided by the "Average Stock Price" per share (the "Conversion
Price"). The Average Stock Price was defined as the lesser of (i)
seventy percent (70%) of the average daily closing bid prices of
the Common Stock for the period of five (5) consecutive trading
days immediately preceding the date of subscription by the holder
or (ii) seventy percent (70%) of the average daily closing bid
prices of the Common Stock for a period of five (5) consecutive
trading days immediately preceding the date of conversion of the
Series 1 and 2 Preferred. The Series 1 and 2 Preferred entitled
the holder thereof to receive dividends accruing at the rate per
share of five percent (5%) per annum of consideration paid for each
share of the Series 1 and 2 Preferred, or $50.00 per annum, payable
in arrears at the rate of $12.50 for each full calendar quarter.
Dividends on the Series 1 and 2 Preferred were paid at the election
of the Company by the issuance of shares of Common Stock. During
1996, all outstanding shares of the Series 1 and 2 Preferred were
converted into approximately 1,970,000 shares of Common Stock of
the Company, which includes approximately 17,000 shares issued by
the Company in satisfaction of accrued dividends. Pursuant to the
Subscription Agreement for the issuance of Series 3 Class C
Convertible Preferred Stock, as discussed below, 920,000 of these
23
<PAGE>
shares of converted Common Stock were purchased by the Company at
a purchase price of $1,770,000. As a result of such conversions,
the Series 1 and 2 Preferred are no longer outstanding.
During July 1996, the Company issued and sold to RBB Bank 5,500
shares of newly-created Series 3 Class C Convertible Preferred
Stock, par value $.001 per share ("Series 3 Preferred") at a price
of $1,000 per share, for an aggregate sales price of $5,500,000,
and paid placement and closing fees as a result of such transaction
of approximately $586,000. The transaction was pursuant to a
Subscription and Purchase Agreement ("Series 3 Subscription
Agreement") between the Company and RBB Bank and included the
Company granting to RBB Bank two Warrants to purchase up to
2,000,000 shares of the Company's Common Stock, with 1,000,000
shares of Common Stock exercisable at $2.00 per share and 1,000,000
shares of Common Stock exercisable at $3.50 per share
(collectively, the "RBB Series 3 Warrants"). The RBB Series 3
Warrants are for a term of five (5) years and may be exercised at
any time after December 31, 1996, and until the end of the term of
such Series 3 Warrants. The Series 3 Preferred is not entitled to
any voting rights, except as required by law. Dividends on the
Series 3 Preferred accrue at a rate of six percent (6%) per annum,
payable semi-annually as and when declared by the Board of
Directors, and such dividends are cumulative. Dividends shall be
paid, at the option of the Company, in the form of cash or Common
Stock of the Company. Dividends that are paid in Common Stock on
each share of outstanding Series 3 Preferred shall receive shares
of Common Stock equal to the quotient of (i) six percent (6%) of
$1,000 divided by (ii) the average closing bid quotation of the
Common Stock as reported on the over-the-counter market, or the
closing sale price if listed on a national securities exchange, for
the five (5) trading days immediately prior to the applicable
dividend declaration date. The Company issued 100,387 shares
during January 1997 in payment of accrued dividends for the period
July through December 1996, and 66,336 shares during July 1997 in
payment of accrued dividends for the period January through June
1997.
RBB Bank may convert the Series 3 Preferred into Common Stock of
the Company as follows: the conversion price shall be the product
of (i) the average closing bid quotation for the five (5) trading
days immediately preceding the conversion date multiplied by (ii)
seventy-five percent (75%). The conversion price shall be a
minimum of $.75 per share or a maximum of $1.50 per share, with the
minimum conversion price to be reduced by $.25 per share each time,
if any, after July 1, 1996, the Company sustains a net loss, on a
consolidated basis, in each of two (2) consecutive quarters
("Minimum Conversion Price Reduction"). For the purpose of
determining whether the Company has had a net loss in each of two
(2) consecutive quarters, at no time shall a quarter that has
already been considered in such determination be considered in any
subsequent determination. As a result of the net loss recorded for
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each of the two consecutive quarters (first and second quarter of
1997), the Minimum Conversion Price was reduced by $.25 per share
to $.50 per share, effective July 1, 1997. During the period of
May 1997 through August 1997, RBB Bank executed three conversions
of 25 shares, 375 shares, and 1,100 shares of the Series 3
Preferred resulting in 4,000 shares of Series 3 Preferred remaining
outstanding as of the Record Date. The conversion price was $1.33,
$1.35, and $1.50 (Maximum Conversion Price), respectively, and
resulted in the issuance of 1,027,974 shares of Common Stock. In
addition, the accrued interest on the Series 3 Preferred was also
paid through the issuance of 12,056 shares of Common Stock.
Subject to the closing bid price of the Company's Common Stock at
the time of conversion and the other conditions which could
increase the number of shares to be issued upon conversion, the
Series 3 Preferred, if all of the remaining shares of Series 3
Preferred were converted, such could be converted into between
approximately 2,666,667 and approximately 8,000,000 shares of
Common Stock, utilizing the above-discussed Minimum Conversion
Price Reduction. Up to 3,700,000 shares of Common Stock issuable
upon conversion of the Series 3 Preferred, up to 330,000 shares of
Common Stock issuable as dividends on the Series 3 Preferred and up
to 2,000,000 shares issuable upon exercise of the RBB Series 3
Warrants have been registered with the Securities and Exchange
Commission pursuant to a Form S-3 Registration Statement, which was
filed by the Company with the Securities and Exchange Commission on
October 21, 1996 and which became effective on November 13, 1996.
Under the terms of the Subscription Agreement, from the net
proceeds of the sale of the Series 3 Preferred (approximately
$4,900,000) received by the Company after payment of placement fees
to brokers, legal fees and other expenses, the Company purchased
from RBB Bank 920,000 shares of Common Stock of the Company
acquired by RBB Bank upon conversion of the Company's Series 1
Preferred and Series 2 Preferred for $1,770,000.
During June 1997, the Company issued 2,500 shares of newly-created
Series 4 Class D Convertible Preferred Stock, par value $.001 per
share ("Series 4 Preferred") at a price of $1,000 per share, for an
aggregate sales price of $2,500,000 and paid placement and closing
fees as a result of such transaction of approximately $200,000.
The transaction was pursuant to a Subscription and Purchase
Agreement between the Company and RBB Bank and included the Company
granting to RBB Bank two Warrants to purchase up to 375,000 shares
of the Company s Common Stock, with 187,500 shares of Common Stock
exercisable at $2.10 per share and 187,500 shares of Common Stock
exercisable at $2.50 per shares (collectively, the "RBB Series 4
Warrants"). The RBB Series 4 Warrants are for a term of three (3)
years and may be exercised at any time after December 31, 1997, and
until June 9, 2000. The Series 4 Preferred is not entitled to any
voting rights, except as required by law. Dividends on the Series
4 Preferred accrue at a rate of four percent (4%) per annum,
payable semi-annually as and when declared by the Board of
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Directors, and such dividends are cumulative. Dividends shall be
paid, at the option of the Company, in the form of cash or Common
Stock of the Company. If the Dividends are paid in Common Stock,
such is payable in the number of shares of Common Stock equal to
the product of (A) the quotient of (i) four percent (4%) of $1,000
divided by (ii) the average of the closing bid quotation of the
Common Stock as reported on the NASDAQ for the five (5) trading
days immediately prior to the applicable dividend declaration date,
times (B) a fraction, the numerator of which is the number of days
elapsed during the period for which the Dividend is to be paid and
the denominator of which is 365.
RBB Bank may convert the Series 4 Preferred into Common Stock of
the Company as follows: (i) up to 1,250 shares on or after October 5,
1997; (ii) the balance on or after November 5, 1997. The
conversion price per share is the lesser of (A) the product of the
average closing bid quotation for the five (5) trading days
immediately preceding the conversion date multiplied by eighty
percent (80%) or (B) $1.6875. The minimum conversion price is
$.75, which minimum will be eliminated from and after September 6,
1998.
As of the date of this proxy statement, the Company is negotiating
an Exchange Agreement with RBB Bank ("RBB Exchange Agreement")
which is anticipated to provide that the 2,500 shares of Series 4
Preferred and the RBB Series 4 Warrants will be tendered to the
Company in exchange for (i) 2,500 shares of a newly created Series
6 Class F Preferred Stock, par value $.001 per share ("Series 6
Preferred"), (ii) two warrants each to purchase 187,500 shares of Common
Stock exercisable at $1.8125 per share, and (iii) one warrant to
purchase 281,250 shares of Common Stock exercisable at $2.125 per
share (collectively, the "RBB Series 6 Warrants"). The RBB Series
6 Warrants will be for a term of three (3) years and may be
exercised at any time after December 31, 1997, and until June 9,
2000.
As contemplated, the conversion price of the Series 6 Preferred
shall be $1.8125 per share, unless the closing bid quotation of the
Common Stock is lower than $2.50 in twenty (20) out of any thirty
(30) consecutive trading days after March 1, 1998, in which case,
the conversion price per share shall be the lesser of (A) the
product of the average closing bid quotation for the five (5)
trading days immediately preceding the conversion date multiplied
by eighty percent (80%) or (B) $1.8125, with the minimum conversion
price being $.75, which minimum will be eliminated from and after
September 6, 1998. It is contemplated that the remaining terms of
the Series 6 Preferred will be substantially the same as the terms
of the Series 4 Preferred.
The RBB Exchange Agreement has not been entered into by the parties
and it is subject to change pending the approval by the Company and
RBB Bank of definitive documents. No assurance can be made that
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the RBB Exchange Agreement will be consummated in its contemplated
form as of the date of this proxy statement or at all.
The Company acquired Perma-Fix of Memphis, Inc., a subsidiary of
the Company (f/k/a American Resource Recovery Corporation ["ARR"]),
located in Memphis, Tennessee ("PFM"), in December 1993, from
Billie Kay Dowdy ("Dowdy"), who was the sole stockholder of PFM
immediately prior to such acquisition, and, in connection
therewith, issued to Dowdy 601,500 shares of Common Stock, which
represented more than five percent (5%) of the Company's
outstanding shares of Common Stock. During 1996, Dowdy ceased
being the beneficial owner of more than five percent (5%) of the
Company's outstanding shares of Common Stock. In connection with
such acquisition, Ms. Dowdy agreed to defend, indemnify and hold
harmless the Company and PFM under certain conditions. During
September 1994, PFM was sued by Community First Bank ("Community
First") to collect a note in the principal sum of $341,000 that was
allegedly made by ARR to CTC Industrial Services, Inc. ("CTC") in
February 1987 (the "Note"), and which was allegedly pledged by CTC
to Community First in December 1988, to secure certain loans to
CTC. This lawsuit, styled Community First Bank v. American
Resource Recovery Corporation, was instituted on September 14,
1994, and is pending in the Circuit Court, Shelby County,
Tennessee. The Company was not aware of the Note nor its pledge to
Community First at the time of the Company's acquisition of PFM in
December 1993. The Company has filed a third party complaint
against Dowdy in the lawsuit to defend and indemnify the Company
and PFM from and against this action under the terms of the
agreement relating to the Company's acquisition of PFM. This matter
was settled on August 29, 1997. PFM and Dowdy each agreed to pay
the plaintiff $45,000 in exchange for a full and complete release
and a dismissal of the above matter.
In May 1995, PFM became aware that the U.S. District Attorney for
the Western District of Tennessee and the Department of Justice
were investigating certain prior activities of W. R. Drum Company,
its successor, First Southern Container Company, and any other
facility owned or operated, in whole or in part, by Johnnie
Williams, which activities were generally prior to the time the
Company acquired PFM. PFM used W. R. Drum Company to dispose of
certain of its used drums. In May 1995, PFM received a Grand Jury
Subpoena which demanded the production of any documents in the
possession of PFM pertaining to W. R. Drum Company, First Southern
Container Company, or any other facility owned or operated, or held
in part, by Johnnie Williams. PFM complied with the Grand Jury
Subpoena. Thereafter, in September of 1995, PFM received another
Grand Jury Subpoena for documents from the Grand Jury investigating
W. R. Drum Company, First Southern Container Company and/or Johnnie
Williams. PFM complied with the Grand Jury Subpoena. In December
1995, representatives of the Department of Justice advised PFM that
it was also currently a subject of the investigation involving W.
R. Drum Company, First Southern Container Company, and/or Johnnie
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<PAGE>
Williams. Since that time, however, PFM has had no contact with
representatives of either the United States District Attorney's
office for the Western District of Tennessee or the Department of
Justice, and is not aware of why it is also a subject of such
investigation. In accordance with certain provisions of the
Agreement and the Plan of Merger relating to the prior acquisition
of PFM, on or about January 2, 1996, PFM notified Ms. Billie K.
Dowdy of the foregoing, and advised Ms. Dowdy that the Company and
PFM would look to Ms. Dowdy to indemnify, defend and hold the
Company and PFM harmless from any liability, loss, damage or
expense incurred or suffered as a result of, or in connection with,
this matter.
The Company believes that each of the transactions set forth above
involving affiliates, officers or Directors of the Company was or
is on terms at least as favorable to the Company as could have been
obtained from an unaffiliated third party. The Company has adopted
a policy that any transactions or loans between the Company and its
Directors, principal stockholders or affiliates must be approved by
a majority of the disinterested Directors of the Company and must
be on terms no less favorable to the Company than those obtainable
from unaffiliated third parties.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the Stockholders, the Board of Directors
has reappointed BDO Seidman, LLP ("BDO Seidman") as independent
accountants to audit the consolidated financial statements of the
Company for the year 1997. BDO Seidman has been the independent
accountant to the Company since December 18, 1996. It is expected
that representatives of BDO Seidman will be present at the annual
meeting, will have an opportunity to make a statement if they
desire to do so, and will be available to answer appropriate
questions.
On November 15, 1996, Arthur Andersen, LLP ("Andersen"), the
outside independent auditors of the Company, notified the Company
that it was resigning, effective immediately, as the Company's
independent auditors. Andersen had been appointed effective
January 5, 1995, when the Company dismissed its prior independent
accountants, Coopers & Lybrand, L.L.P. ("Coopers"). Andersen
examined and reported on the Company's financial statements for the
years ended December 31, 1994, and 1995.
The reports on the Company's financial statements for either of the
two most recent fiscal years contained no adverse opinion (other
than a going concern modification relating to the report for the
year ended December 31, 1995) or disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or
accounting principles.
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The going concern modification contained in the auditor's report
for the year ended December 31, 1995, was due to the Company having
suffered recurring losses from operations, having a net working
capital deficiency and being in violation of financial covenants
under its loan agreements with two major lenders as of the date of
the report.
The change in auditors from Coopers to Andersen was approved and
recommended by the Company's Board of Directors. Andersen's
resignation was not approved or recommended by the Company's Board
of Directors, audit committee or similar committee of the Board of
Directors.
During the Company's two most recent fiscal years and any
subsequent interim period preceding the resignation of Andersen
there were no disagreements between the Company and Andersen on any
matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Andersen, would have caused
Andersen to make a reference to the subject matter of the
disagreement(s) in connection with its reports. Furthermore, there
were no "reportable events," as defined in Item 304(a)(1)(v) of
Regulation S-K, during the Company's two must recent fiscal years
and any subsequent interim periods preceding such resignation by
Andersen. Further, there were no such disagreements or "reportable
events" between the Company and Coopers during the last two fiscal
years and any subsequent interim period preceding the change in
auditors from Coopers to Andersen in January, 1995.
On December 18, 1996, the Company's Board of Directors approved the
employment of BDO Seidman, as the Company's new independent
auditors to replace Andersen. During the Company's two most recent
fiscal years, and any subsequent interim period prior to engaging
BDO Seidman, neither the Company nor any one on its behalf
consulted with BDO Seidman regarding either the application of
accounting principles to a specified transaction, either
contemplated or proposed, or the type of audit opinion that might
be rendered on the Company's financial statements.
At the request of the Company, BDO Seidman, has reaudited the
Company's financial statements for the fiscal years ended
December 31, 1994 and 1995, and the reports and opinions regarding
such reaudits have been included in an amendment to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE REAPPOINTMENT OF BDO SEIDMAN, LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
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STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to present a proposal for consideration
at the annual meeting of stockholders to be held in 1998 must
submit such proposal in accordance with the rules promulgated by
the Securities and Exchange Commission. In order for a proposal to
be included in the Company's proxy materials relating to the 1998
Annual Meeting of Stockholders, the stockholder must submit such
proposal in writing to the Company so that it is received not later
than June 17, 1998. Such proposals should be addressed to Richard
T. Kelecy, Perma-Fix Environmental Services, Inc., 1940 N.W. 67th
Place, Gainesville, Florida 32653.
OTHER MATTERS
Other Business
The Board of Directors has no knowledge of any business to be
presented for consideration at the Meeting other than as described
above. Should any such matters properly come before the Meeting or
any adjournment thereof, the persons named in the enclosed Proxy
Card will have discretionary authority to vote such proxy in
accordance with their best judgement on such matters and with
respect to matters incident to the conduct of the Meeting.
Additional copies of the Annual Report and the Notice of Annual
Meeting of Stockholders, Proxy Statement and accompanying Proxy
Card may be obtained from the Company.
In order to assure the presence of the necessary quorum at the
Meeting, please sign and mail the enclosed Proxy Card promptly in
the envelope provided. No postage is required if mailed within the
United States. The signing of the Proxy Card will not prevent your
attending the Meeting and voting in person, should you so desire.
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Annual Report on Form 10-K
The Company will provide, without charge, to each stockholder
solicited to vote at the Meeting, on the written request of the
stockholder, a copy of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996, including the financial
statements and schedules, as filed with the Securities and Exchange
Commission. Each written request must set forth a good faith
representation that, as of the record date, the person making the
request was a beneficial owner of the Company's Common Stock
entitled to vote at the Meeting. Stockholders should direct the
written request to the Company to the Chief Financial Officer, 1940
N.W. 67th Place, Suite A, Gainesville, Florida 32653.
By Order of the Board of Directors
/s/ Richard T. Kelecy
Richard T. Kelecy
Gainesville, Florida Secretary
October 15, 1997
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BALL:\N-P\PESI\PROXY\1997\PROXY.4
