PERMA-FIX ENVIRONMENTAL SERVICES, INC.
1940 N.W. 67th Place, Suite A
Gainesville, Florida 32653
NOTICE OF ANNUAL MEETING
To Be Held May 20, 1998
To the Stockholders of Perma-Fix Environmental Services, Inc.:
Notice is hereby given that the 1998 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, May 20, 1998, 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
1998;
3. To approve the Fourth Amendment to the Company's
1992 Outside Directors Stock Option and Incentive
Plan; and
4. 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 April 6,
1998, 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 1997 is
enclosed for your convenience.
By Order of the Board of Directors
Richard T. Kelecy
Secretary
Gainesville, Florida
April 20, 1998
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>
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
1940 N.W. 67th Place, Suite A
Gainesville, Florida 32653
PROXY STATEMENT
FOR THE
1998 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 1998 Annual
Meeting of Stockholders to be held at the offices of the Company,
1940 N. W. 67th Place, Gainesville, Florida 32653, on Wednesday,
May 20, 1998, 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 without receiving additional
compensation therefor, 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 April 20, 1998.
Record Date and Voting Securities
Only the holders of Common Stock of record at the close of business
on April 6, 1998 (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, 11,867,898 shares (excluding
920,000 treasury shares) of Common Stock were issued and
outstanding. Each stockholder of record, as of the Record Date, is
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 specified 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.
1
<PAGE>
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 for an unexpired term 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. Gorlin, Zwecker, and Colin are presently serving as
Directors of the Company and have been 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
such person that the stockholder desires to nominate that is
required to be disclosed in solicitation of proxies pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended ("Exchange Act").
Nominees
<TABLE>
<CAPTION>
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
________________ ________________________
<S> <C>
Dr. Louis F. Centofanti, Lou Centofanti has served as Chair-
Chairman of the Board man of the Board of the Company
and Director since 1991, since he joined the Company in
Age: 54 February 1991. Dr. Centofanti also
served as President and Chief
Executive Officer of the Company
from February 1991 until September
1995, and again in March 1996, was
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 hazardous
waste management company, where he
was responsible 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. 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.
2
<PAGE>
Mark A. Zwecker, Mark Zwecker has served as a
Director since Director of the Company since its
1991, Inception in January 1991. Mr.
Age: 47 Zwecker is currently Vice President
of Finance and Administration for
American Combustion, Inc., a
position he has held since 1986.
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, Steve Gorlin has served as a
Director since Director of the Company since its
1991, inception in January 1991. Over
Age: 60 The past 25 years he has founded
several biotechnology and
pharmaceutical companies, including
Hycor Biomedical, Inc., Theregenics
Corporation, CytRx Corporation, and
Medicis Corporation, which are
public companies, and SeaLite
Sciences, Inc., which is a private
company. Mr. Gorlin founded and
served as Chairman of the Board of
EntreMed, Inc., a public company,
from its inception in 1991 until
December 1995. He is a member of
the Board of Directors of Advanced
Aerodynamic & Structures, Inc., a
publicly traded manufacturing firm.
Mr. Gorlin also established the
Touch Foundation, a non-profit
organization for the blind.
Jon Colin, Jon Colin has served as a Director
Director since Of the Company since December 1996.
1996, He is a financial consultant for a
Age: 42 variety of technology-based
companies. From 1990 to 1996,
Mr. Colin served as President and
Chief Executive Officer for
Environmental Services of America,
Inc., a publicly traded
environmental services company.
Mr. Colin has a B.S. degree in
Accounting from the University of
Maryland.
</TABLE>
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 1997, the Board of Directors held five (5) meetings. No
Director attended fewer than seventy-five percent (75%) of the
aggregate number of meetings held by the Board of Directors and the
committees on which he served during 1997. 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. The members of the Audit
Committee during 1997 were Mark Zwecker and Jon Colin. The Audit
Committee held one (1) meeting in 1997.
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 1997
were Mark Zwecker and Steve Gorlin. The Compensation and Stock
Option Committee held two (2) meetings in 1997.
3
<PAGE>
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 Zwecker. The
Nominating Committee held one (1) meeting in 1997.
Compensation of Directors
In 1997, the Company paid its outside director's fees based on
monthly payments of $1,000 for each month of service, resulting in
the three outside directors of the Company earning annual
director's fees in the total amount of $36,000. Subject to the
election of each director, either sixty-five percent (65%) or one
hundred percent (100%) of each director's fee is payable, in shares
of Common Stock of the Company based on seventy-five percent (75%)
of the fair market value of the Common Stock determined on the
business day immediately preceding the date that the fee is due.
The balance of each director fee, if any, is payable in cash. The
aggregate amount of accrued director's fees paid during 1997 to the
three outside directors (Messrs. Colin, Gorlin and Zwecker) were as
follows: $79,150 was paid by the issuance of 61,854 shares of
Common Stock and approximately $11,000 was paid in cash, which
included all balance forward amounts from 1996. The Company also
paid $23,000 of accrued directors fees to certain previous
directors during 1997, through the issuance of 8,639 shares of
Common Stock and approximately $2,000 in cash. Reimbursement of
expenses for attending meetings of the Board are paid in cash at
the time of the applicable Board meeting. The 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 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 is 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, 1996, options to
purchase 145,000 shares of Common Stock had been granted under the
Outside Directors Plan. During 1997, the Company granted options
to purchase 15,000 shares of Common Stock under the Outside
Directors Plan, excluding the above referenced shares issued in
payment of directors fees.
The Outside Directors Plan also 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 70,493 shares of the
Company's Common Stock in payment of director fees, covering the
period January 1, 1995 through December 31, 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, however, if the
Stockholders of the Company approve the Fourth Amendment to the
Outside Directors Plan at the May 1998 Annual Meeting, up to
500,000 shares of Common Stock will be issuable under the Outside
Directors Plan. See "Proposal Three - Approval of the Fourth
Amendment to the Company's 1992 Outside Directors Stock Option and
Incentive Plan."
4
<PAGE>
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 1997, the Compensation and Stock Option Committee for the
Company's Board of Directors was composed of Mark Zwecker and
Steve Gorlin. Mr. Zwecker was neither an officer nor an employee
of the Company during the year 1997, however, Mr. Zwecker did serve
as Secretary of the Company from June 1995 until June 30, 1996.
Mr. Gorlin was neither an officer nor an employee of the Company
during 1997. In July 1997, Mr. Gorlin entered into a Stock
Purchase Agreement ("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 was to be issued a three ( 3) year warrant for
the purchase of 100,000 shares of Common Stock at $2.40 per share.
This agreement was subsequently terminated during the fourth
quarter of 1997 with no purchase of shares or warrants issued. 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.
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 1997 none of the executive
officers and directors of the Company failed to timely file reports
under Section 16(a), except that (i) a Form 4 for September 1996
for Steve Gorlin was amended as of August 1997 to include one
transaction regarding the issuance of a Warrant allowing the holder
to purchase shares of the Company's Common Stock; and (ii) three
Form 4's for one November 1997 transaction each for Jon Colin,
Steve Gorlin and Mark Zwecker were not filed and were each
subsequently included in a Form 5 for December 1997.
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, the date
of RBB's initial Preferred Stock Agreement, 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 a transaction which
occurred in January 1997; (ii) a Form 4 for a transaction which
occurred in May 1997; (iii) a Form 4 for a transaction which
occurred in June 1997; (iv) a Form 4 for a transaction with
occurred in July 1997; and (v) a Form 4 for a transaction which
occurred in August 1997.
5
<PAGE>
<PAGE>
Executive Compensation
<TABLE>
<CAPTION>
Summary Compensation Table
The following table sets forth the aggregate cash compensation paid
to the Chairman and Chief Executive Officer of the Company, and the
Vice President of Nuclear Services.
Annual Compensation
__________________________
Other
Annual
Compen-
Name and Principal Salary Bonus sation
Position Year ($) ($) ($)
_______________________ ______ ________ _______ _________
<S> <C> <C> <C> <C>
Dr. Louis F. Centofanti(1) 1997 $ 75,431 $ - $ 6,667(3)
Chairman of the Board, 1996 65,000 - 66,666(4)
President and 1995 120,000 - -
Chief Executive Officer
Bernhardt C. Warren(2) 1997 87,341 88,629 -
Vice President of 1996 36,476 20,330 -
Nuclear Services 1995 - - -
Long Term
Compensation
______________________
Securities
Restricted Underlying All
Stock Options/ Other
Award(s) SARs Compensation
($) (#) ($)
_________ _________ _____________
<S> <C> <C> <C>
$ - 300,000 $ -
- - -
- 20,000 -
- 30,000 -
- - -
- - -
<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
1995, when Dr. Centofanti's salary was voluntarily reduced to
$65,000. Dr. Centofanti currently receives compensation pursuant
to an employment agreement dated October 1, 1997, which provides,
among other things, for 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. 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. Warren was General Manager of Perma-Fix of Florida, Inc.
from July 16, 1996, until December 8, 1997. During this time, Mr.
Warren received compensation pursuant to an employment agreement,
which provided for annual compensation to Mr. Warren of $87,000
beginning July 16, 1996, and expiring in July 1999. Mr. Warren
also received additional compensation pursuant to the employment
agreement paid on a variable rate in proportion to certain revenue
goals. Effective December 8, 1997, Mr. Warren also became the Vice
President of Nuclear Services for the Company. Mr. Warren
currently receives compensation pursuant to an employment agreement
dated April 7, 1998, which provides for annual compensation of
$87,000 plus additional compensation in the form of Company Common
Stock and cash payments for bonus' based upon certain performance
goals. Stock Options were granted to Mr. Warren on April 8, 1997,
pursuant to the 1993 Non-qualified Stock Option Plan.
6
<PAGE>
(3) The Company entered into one Stock Purchase Agreement ("1997
Centofanti Agreement") with Dr. Centofanti on or about June 30,
1997, pursuant to which the Company agreed to sell, and Dr.
Centofanti agreed to buy, 24,381 shares of the Company's Common
Stock for 75% of the closing bid price of such Common Stock as
quoted on he NASDAQ on the date Dr. Centofanti notified the Company
of his desire to purchase such stock, as authorized by the Board of
Directors. The closing bid price as quoted by the NASDAQ for the
Common Stock on the date Dr. Centofanti notified the Company of his
desire to purchase the shares was $2.1875, leading to a purchase
price of $1.6406 and an aggregate purchase price of $40,000 for the
24,381 shares of Common Stock. The 1997 Centofanti Agreement was
amended in October to reduce the number of shares purchased
thereunder to 12,190 for an aggregate purchase price of $20,000,
upon consideration of certain recent accounting pronouncements
related to stock based compensation. The difference between the
price paid by Dr. Centofanti for such stock and the fair market
value thereof was approximately $6,667. See "Certain Relationships
and Related Transactions."
(4) The Company entered into two Stock Purchase Agreements with
Dr. Centofanti during 1996 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 $33,333 for each transaction. See
"Certain Relationships and Related Transactions."
</FN>
</TABLE>
<TABLE>
<CAPTION>
Option Grants in 1997
The following table sets forth certain information relating to
individual grants of stock options made to each of the named
executive officers in the above Summary Compensation Table during
the last fiscal year and the potential realizable value of each
grant of options, assuming that the market price of the underlying
Common Stock appreciates in value during the ten-year option term
at annualized rates of 5% and 10%.
Individual Grants
_____________________________________________________
Number of % of
Shares of Total Options
Common Stock Granted to Exercise
Underlying Employees Price Expiration
Name Options Granted in 1997 ($/sh)(1) Date
______ ______________ ____________ __________ __________
<S> <C> <C> <C> <C>
Dr. Louis F. Centofanti(3) 100,000 16.9% $2.25 10/1/07
100,000 16.9 2.50 10/1/07
100,000 16.9 3.00 10/1/07
Bernhardt C. Warren(4) 30,000 5.1 1.375 4/8/07
Potential Realizable
Value at Assumed
Annual
Rates of Stock Price
Appreciation
for Option Term(2)
____________________
5%($) 10%($)
_____ _______
<S> <C> <C>
$ 142,000 $359,000
157,000 398,000
189,000 478,000
25,950 65,850
____________________
<FN>
(1) All options were granted at or above market price (the closing
price of the Common Stock on the NASDAQ SmallCap Market on the date
of grant.
(2) The potential realizable value of each grant of options assumes
that the market price of the Company's Common Stock appreciates in
value from the date of grant to the end of the option term at the
annualized rates shown above each column. The actual value that an
7
<PAGE>
executive may realize, if any, will depend on the amount by which
the market price of the Company's Common Stock at the time of
exercise exceeds the exercise price of the option. As of April 6,
1998, the closing price of a share of the Company's Common Stock as
quoted on NASDAQ was $1.75. There is no assurance that any
executive will receive the amounts estimated in this table.
(3) The Company entered into an Employment Agreement on October 1,
1997, with Dr. Centofanti which provided for the issuance of non-
qualified stock options allowing the purchase of 100,000 shares of
the Company's Common Stock, par value $.001 ("Common Stock"), at an
option price of $2.25 per share after one year of service, 100,000
shares of Common Stock at an option price of $2.50 per share after
two years of service and 100,000 shares of Common Stock at an
option price of $3.00 per share after three years of service. The
expiration date of the options is ten years after the date of the
Employment Agreement.
(4) The Company has adopted a 1993 Non-qualified Stock Option Plan
(the "1993 Plan"). Mr. Warren was granted options to purchase
30,000 shares of the Company's Common Stock pursuant to the 1993
Plan. The 1993 Plan provides that the options granted vest at the
end of years one through five in 20% increments.
</FN>
</TABLE>
Options/SAR Grants in Last Fiscal Year
During 1997, there were 30,000 stock options or SAR's granted to
Bernhardt Warren on April 8, 1997, under the 1993 Non-qualified
Stock Option Plan, prior to Mr. Warren becoming an Officer of the
Company on December 8, 1997.
Aggregated Option Exercises in 1997 and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
The following table sets forth information concerning each exercise
of stock options during the last completed fiscal year by each of
the executive officers named in the Summary Compensation Table and
the fiscal year-end value of unexercised options:
Number of
Unexercised
Shares Options at
Acquired Fiscal Year-End(#)
on Value ___________________
Exercise Realized Exer- Unexer-
Name (#)(1) ($)(1) cisable cisable
_____ _________ _______ ________ _______
<S> <C> <C> <C> <C>
Dr. Louis F. Centofanti - $- 49,763 300,000
Bernhardt C. Warren - $- - 30,000
Value of Unexercised
in-the-Money Options
at Fiscal YearEnd($)(2)
_______________________
Exer- Unexer-
cisable cisable
________ __________
<S> <C> <C>
$- $ -
- 41,250
_____________
<FN>
(1) No options were exercised during 1997.
(2) Values have been calculated based on the closing bid price of
the Company's Common Stock reported on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") on
December 31, 1997, which was $2.25 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, 1997, the unexercised
options for Mr. Warren were in the money since the fair market
value of the underlying securities was less than the exercise price
of such options of $1.375 per share, and all other options were at
or above market value.
</FN>
</TABLE>
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
8
<PAGE>
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, 1997, 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
purpose 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 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 least 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. The total deductions made by
Participants pursuant to the first offering period of the 1996
Plan, July 1, 1997, through December 31, 1997, was $16,672 which
was used to purchase 8,276 shares of the Company's Common Stock in
January 1998.
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.
The Company's 1991 Performance Equity Plan and the 1993 Non-
qualified 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.
9
<PAGE>
Report of 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 in the Summary Compensation Table. 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.
(a) 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. The Compensation Committee and
the Board of Directors approved Employment Agreements with Dr.
Centofanti and Mr. Warren, believing that a multi-year Employment
Agreement with both individuals was in the best interest of the
Company due to their importance to the Company. 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 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. Effective January 1, 1998, Mr. Warren
entered into a two (2) year employment agreement with the Company
which provided for, among other things, an annual salary of $87,000
and the issuance of $167,500 worth of the Company's Common Stock in
payment for accrued bonus/commissions and $167,500 cash to be paid
in 24 installments for accrued bonus/commissions. See --
"Employment Contracts, Termination of Employment and Changes in
Control Agreements."
(b) 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.
(c) Stock Options
The Company's 1991 Performance Equity Plan and 1993 Non-qualified
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
10
<PAGE>
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.
Compensation and Stock Option Committee
Steve Gorlin and Mark Zwecker
Common Stock Price Performance Graph
<TABLE>
<CAPTION>
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 1993 through 1997,
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-Waste Management Index ("Industry
Index") assuming the investment of $100 on December 31, 1992.
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 Industry Index, and (iii) the NASDAQ Market
Index ("Broad Market"). The table set forth covers the period from
year-end 1992 through year-end 1997.
FISCAL YEAR ENDING
1992 1993 1994 1995 1996 1997
____ _____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C> <C>
Company 100 65.00 41.67 15.83 20.83 31.25
Industry Index 100 75.08 67.83 85.05 105.49 107.82
Broad Market 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
Assumes $100 invested at year-end 1992 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
<TABLE>
<CAPTION>
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.
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.
11
<PAGE>
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 723,245(2) 6.04%
Steve Gorlin(3) Common 613,101(3) 5.07%
D.H. Blair Investment Common 434,476(4) 3.60%
Banking Corp.(4)
J. Morton Davis(5) Common 626,251(5) 5.17%
RBB Bank Aktiengellschaft(6) Common 8,025,435(6) 42.47%
____________________
<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 11,867,898 shares of Common Stock
issued and outstanding on April 6, 1998 (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) 61,048 shares receivable upon exercise of
warrants to purchase Common Stock; (iii) options to purchase 41,763
shares granted pursuant to the 1991 Performance Equity Plan and the
1993 Non-qualified Stock Option Plan, which are immediately
exercisable; and (iv) 4,000 shares held by the wife of Dr.
Centofanti and 2,500 shares held by the son of Dr. Centofanti's
wife. This amount does not include options to purchase 8,000
shares granted pursuant to the above referenced plans or the
options to purchase 300,000 shares granted pursuant to Dr.
Centofanti's Employment Agreement with the Company, which are not
exercisable within sixty (60) days. Dr. Centofanti has sole voting
and investment power of these shares, except for the shares held by
Dr. Centofanti's wife and his wife's son, for which Dr. Centofanti
shares voting and investment power. 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) 383,101 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 to the 1992
Outside Directors Stock Option and Incentive Plan which are
immediately exercisable. This amount does not include options to
purchase 5,000 shares granted pursuant to the above referenced plan
which are not exercisable within sixty (60) days. The business
address of Mr. Gorlin, for the purposes hereof, is c/o Perma-Fix
Environmental Services, Inc., 1940 N.W. 67th Place, Gainesville,
Florida 32653. See "Certain Relationships and Related
Transactions."
(4) Includes (i) 217,701 shares held by D.H. Blair Investment
Banking Corp. ("Blair"); (ii) 200,000 shares issuable upon exercise
of one warrant; (iii) 9,775 shares issuable upon exercise of one
warrant; and (iv) 7,000 shares issuable upon exercise of one
warrant. All of the Common Stock held by Blair may be considered
to be beneficially owned by J. Morton Davis, the sole shareholder
of Blair. See note 5 to this Table. The address of Blair is
44 Wall Street, New York, New York 10005.
(5) Mr. Davis is an investment banker and sole shareholder of
Blair. Includes (i) 28,000 shares issuable upon exercise of one
warrant; (ii) 9,775 shares issuable upon exercise of one warrant;
(iii) 154,000 shares owned by Davis' spouse; and (iv) 434,476
shares held by Blair and described in note 4 to this table.
Mr. Davis disclaims beneficial ownership over the shares held by
his spouse. The number of shares indicated does not include
563,793 shares which are beneficially owned by Steve Gorlin, a
director of the Company, and which are pledged to Davis and Blair
pursuant to a Pledge Agreement dated June 1992. The business
address of Mr. Davis for purposed hereof is c/o D.H. Blair
Investment Banking Corp., 44 Wall Street, New York, New York 10005.
12
<PAGE>
(6) The outstanding shares of Preferred Stock consist of the Series
3 Preferred and Series 6 Preferred (collectively, the "RBB
Preferred") that RBB Bank acquired from the Company pursuant to the
Subscription Agreements and the RBB Exchange 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: (i) 998,534 shares of Common Stock directly
held by RBB Bank; (ii) 2,672,024 shares that RBB Bank is entitled
to receive upon conversion of the 4,000 shares of Series 3
Preferred held by RBB Bank (assuming the average closing bid
quotation for the Common Stock for the five trading days
immediately preceding each conversion date equals or exceeds $2.00
per share); (iii) 1,379,311 shares that RBB Bank is entitled to
receive upon conversion of the 2,500 shares of Series 6 Preferred
(assuming the Conversion Price Adjustment (as defined in "Certain
Relationships and Related Party Transactions") is not in effect, or
if in effect, assuming the average closing bid quotation for the
Common Stock for the five trading days immediately preceding each
conversion date equals or exceeds $2.27 per share); (iv) 96,693
shares of Common Stock that RBB Bank may receive in payment of the
accrued dividends on the Series 3 Preferred; and (v) 222,623 shares
that RBB Bank may receive in payment of the accrued dividends on
the Series 6 Preferred. The above calculation also includes
2,656,250 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 656,250 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 $1.8125
per share for 375,000 shares and $2.125 per share for 281,250
shares. RBB Bank has advised the Company that it is holding the
RBB Preferred on behalf of various 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 "Potential Change in
Control" and "Certain Relationships and Related Transactions." RBB
Bank's address is Burgring 16, 8010 Graz, Austria.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Security Ownership of Management
The following table sets forth information as to the shares of
voting securities beneficially owned as of April 6, 1998, 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. 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) 723,245(3) 6.04%
Steve Gorlin(2)(4) 613,101(4) 5.07%
Mark A. Zwecker(2)(5) 194,703(5) 1.64%
Jon Colin(2)(6) 21,471(6) *
Richard T. Kelecy(2)(7) 50,533(7) *
Timothy Kimball(2)(8) 39,874(8) *
Roger Randall(2)(9) 38,000(9) *
Bernhardt Warren(2)(10) 7,268(10) *
Directors and Executive 1,688,195 13.63%
Officers as a Group
(8 persons)
13
<PAGE>
<FN>
*Indicates beneficial ownership of less than one percent (1%).
(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) See footnote (3) of the table under "Security Ownership of
Certain Beneficial Owners."
(5) Mr. Zwecker has sole voting and investment power over these
shares which include: (i) 161,821 shares of Common Stock held
of record by Mr. Zwecker; (ii) 14,882 options to purchase
Common Stock granted pursuant to the 1991 Performance Equity
Plan; (iii) 3,000 options to purchase Common Stock pursuant to
the 1993 Non-qualified 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 2,000 shares of Common
Stock granted pursuant to the 1993 Non-qualified Stock Option
Plan or 5,000 shares of Common Stock granted pursuant to the
1992 Outside Directors Stock Option and Incentive Plan which
are not exercisable within sixty (60) days.
(6) Mr. Colin has sole voting and investment power over these
shares which include: (i) 6,471 shares 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. Does not
include the 5,000 options to purchase Common Stock pursuant to
the terms of the 1992 Outside Directors Stock Option and
Incentive Plan, which are not exercisable within sixty (60)
days.
(7) Mr. Kelecy has sole voting and investment power over 533
shares of Common Stock held of record by Mr. Kelecy and 50,000
options to purchase Common Stock granted pursuant to the 1993
Non-qualified Stock Option Plan. Does not include options to
purchase 80,000 shares of Common Stock granted pursuant to
the 1993 Non-qualified Stock Option Plan which are not
exercisable within sixty (60) days.
(8) Mr. Kimball has sole voting and investment power over these
shares which include: (i) 991 shares held of record by Mr.
Kimball, (ii) 14,883 options to purchase Common Stock granted
pursuant to the 1991 Performance Equity Plan, and (iii)
24,000 options to purchase Common Stock pursuant to the 1993
Non-qualified Stock Option Plan, which are immediately
exercisable. Does not include options to purchase 46,000
shares of Common Stock granted pursuant to the 1993 Non-
qualified Stock Option Plan which are not exercisable within
sixty (60) days.
(9) Mr. Randall has sole voting and investment power over these
shares which include: (i) 38,000 options to purchase Common
Stock pursuant to the 1993 Non-qualified Stock Option Plan,
which are immediately exercisable. Does not include options
to purchase 72,000 shares of Common Stock granted pursuant to
the 1993 Non-qualified Stock Option Plan which are not
exercisable within sixty (60) days.
(10) Mr. Warren has sole voting and investment power over these
shares which include 1,268 shares held by record by Mr. Warren
and 6,000 options to purchase Common Stock granted pursuant to
the 1993 Non-qualified Stock Option Plan.. Does not include
options to purchase 24,000 shares of Common Stock granted
pursuant to the 1993 Non-qualified Stock Option Plan which are
not exercisable within sixty (60) days.
</FN>
</TABLE>
14
<PAGE>
<PAGE>
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, which have resulted in
an adjustment of such purchase price from $5.00 to $3.28. 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.
On June 30, 1997, the Company entered into the 1997 Centofanti
Agreement with Dr. Louis F. Centofanti, whereby the Company agreed
to sell, 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 1997 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 to reduce the number of shares
of Common Stock that Dr. Centofanti is to acquire under the 1997
Centofanti Agreement to the 12,190 shares already acquired by Dr.
Centofanti under the 1997 Centofanti Agreement, upon consideration
of the certain recent accounting pronouncements related to stock
based compensation. The sale of the shares pursuant to the
Centofanti Agreement, and its subsequent amendment for the sale of
12,190 shares were authorized by the Company's Board 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. During the
fourth quarter of 1997, the Company and Mr. Gorlin agreed to
terminate the Gorlin Agreement, with no shares purchased or
warrants issued, pursuant thereto.
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
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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 16,000 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 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, 78,394 shares during 1997 in payment
of accrued dividends for 1997, and 54,528 shares during January
1998 in payment of accrued dividends for the period July through
December 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
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.
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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
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.
The Company negotiated an Exchange Agreement with RBB Bank ("RBB
Exchange Agreement") which provided that the 2,500 shares of
Series 4 Preferred and the RBB Series 4 Warrants were 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 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 shares of Series 6 Preferred may be converted into shares of
Common Stock at a conversion price ("Conversion Price") equal to
$1.8125 per share of Common Stock, except that, in the event the
average closing bid price of the Common Stock as reported in the
over-the-counter market, or the closing sale price if listed on a
national securities exchange, for 20 of any 30 consecutive trading
days after March 1, 1998, shall be less than $2.50 per share, the
Conversion Price shall be adjusted thereafter ("Conversion Price
Adjustment") to be the lesser of (i) 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 trading days immediately
preceding the date of the conversion notice provided to the
Company, multiplied by eighty percent (80%) or (ii) $1.8125. If
the Conversion Price Adjustment becomes effective, then the minimum
conversion price shall be $0.75 per share of Common Stock. which
minimum will be eliminated from and after September 6. 1998. If the
Conversion Price Adjustment does not become effective, the
conversion of all of the Series 6 Preferred could result in the
issuance of up to approximately 1,379,311 shares of Common Stock.
If the Conversion Price Adjustment is in effect and the conversion
occurs prior to September 6, 1998, the number of shares of Common
Stock issuable upon the conversion of the Series 6 Preferred could
result in the issuance of between approximately 1,379,311 to
3,333,333 shares of Common Stock with the actual number depending
upon the closing bid price of the Common Stock over the five
trading days immediately preceding the conversion date or dates.
The number of shares of Common Stock issuable upon conversion of
the Series 6 Preferred could exceed the foregoing estimates if
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<PAGE>
converted after the minimum conversion price is eliminated on
September 6, 1998, or under certain other limited circumstances.
However, the Company is required to use reasonable efforts to
register only 1,379,311 shares to be issued upon the conversion of
the Series 6 Preferred under the terms of the RBB Exchange
Agreement. The 1,379,311 shares required to be registered under
the terms of the RBB Exchange Agreement approximates the number of
shares of Common Stock issuable by the Company upon such conversion
at a conversion price of $1.8125 per share. As of the date of this
Proxy Statement, no shares of the Series 6 Preferred have been
converted. The accrued dividends through December 31, 1997, total
approximately $55,000 and were paid in January 1998, in the form of
27,377 shares of Common Stock of the Company.
A transaction has been proposed between the Company and RBB Bank
("Second RBB Exchange Agreement") which, as proposed, provides that
the 2,500 shares of Series 6 Preferred will be tendered to the
Company in exchange for 2,500 shares of a newly created Series 8
Class H Preferred Stock, par value $.001 per share ("Series 8
Preferred"). As proposed, the terms of the Series 8 Preferred will
be substantially identical to the terms of the Series 6 Preferred,
except that the Conversion Price of the Series 8 Preferred will be
equal to $1.8125 per share of Common Stock, except that, in the
event the average closing bid price of the Common Stock as
reported in the over-the-counter market, or the closing sale price
if listed on a national securities exchange, for the five trading
days immediately preceding the date of the conversion notice
provided to the Company, shall be less than $2.265, the Conversion
Price for such conversion shall be the product of 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 trading days immediately
preceding the date of the conversion notice provided to the Company
multiplied by eighty percent (80%).
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.
Potential Change in Control
RBB Bank has the right to acquire an aggregate of approximately
6,707,585 shares of Common Stock, consisting of (i) 2,672,024
shares upon conversion of the issued and outstanding Series 3
Preferred assuming the average closing bid quotation for the Common
Stock for five trading days immediately preceding each of the
conversion date or dates equals or exceeds $2.00 per share and (ii)
1,379,311 shares upon conversion of the issued and outstanding
Series 6 Preferred assuming the Conversion Price Adjustment (as
defined in "Certain Relationships and Related Transactions") is not
in effect, or, if in effect, assuming the average closing bid
quotation for the Common Stock for five trading days immediately
preceding each of the conversion date or dates equals or exceeds
$2.27 per share and (iii) 2,656,250 shares upon the exercise of the
RBB Series 3 Warrants and RBB Series 4 Warrants. Upon such
conversion and exercise, RBB Bank will own approximately 41.5 % of
the outstanding shares of Common Stock of the Company, which
includes the 998,534 shares of Common Stock directly held by RBB
Bank as of April 6, 1998, but does not include the 319,316 shares
of Common Stock which have previously been or will be registered,
to be issuable for payment of dividends on the Series 3 Preferred,
Series 4 Preferred (prior to its exchange) and Series 6 Preferred.
If RBB Bank acquires 8,000,000 shares of Common Stock upon
conversion of the Series 3 Preferred and 3,333,333 shares upon
conversion of the Series 6 Preferred at their respective minimum
conversion prices as of the date of this Proxy Statement and
exercises all of the 1996 RBB Warrants and Series 6 Warrants, RBB
Bank will own 14,988,117 shares of Common Stock, representing
approximately 58.0% of the then outstanding shares of Common Stock
of the Company. In either case, RBB Bank will be the largest single
shareholder of the Company, and the Company may not be able to
avoid an actual change in control of the Company if RBB Bank seeks
such a change in control. Moreover, if such conversion and exercise
results in RBB Bank acquiring more than 50% of the then outstanding
Common Stock of the Company, the Company would not be able to avoid
a change in control. The foregoing estimates assume that no other
shares of Common Stock are issued by the Company, no other warrants
or options are exercised, the Company does not acquire additional
18
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shares of Common Stock as Treasury Stock, and RBB Bank does not
dispose of any shares of Common Stock. See "Certain Relationships
and Related Transactions."
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 fiscal year 1998. 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.
BDO Seidman has been the independent accountant to the Company
since December 18, 1996, when the Board of Directors approved the
employment of BDO Seidman as the Company's independent auditors, to
replace Arthur Andersen, LLP ("Andersen"), the Company's previous
independent auditors, which had resigned from being the Company's
outside independent auditors on November 15, 1996. Andersen
examined and reported on the Company's financial statements for the
years ended December 31, 1994 and 1995. 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 Anderson 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 most recent fiscal years
and any subsequent interim periods preceding such resignation by
Andersen.
The reports on the Company's financial statements for either of the
two most recent fiscal years prior to Andersen's resignation
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 quantified or modified
as to uncertainty, audit scope or accounting principles. The going
concern modification contained in the Andersen 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.
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 Company's request, BDO Seidman performed re-audits of the
Company for the fiscal years ended December 31, 1995 and 1994, and
on October 16, 1997, the Company filed Amendment No. 1 on Form 10-
K/A to the Company's Report on Form 10-K for the year ended
December 31, 1996 (" 10-K/A"), which 10-K/A contained reaudited
financial reports on the Company for the fiscal years ended
December 31, 1995 and 1994. BDO Seidman removed the going concern
modification from the auditor's report for the year ended
December 31, 1995.
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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PROPOSAL 3 - APPROVAL OF THE FOURTH AMENDMENT TO THE COMPANY'S
1992 OUTSIDE DIRECTORS STOCK OPTION AND INCENTIVE PLAN
General. The 1992 Outside Directors Stock Option and Incentive
Plan (the "Outside Directors Plan"), as adopted and first amended
by the Board of Directors of the Company, was approved by the
Company's stockholders on November 12, 1993. As originally
adopted, the Outside Directors Plan authorized the grant of Non-
qualified stock options to each Director of the Company who is not
an employee of the Company ("Eligible Director"), with each
Eligible Director automatically receiving an initial option to
purchase 15,000 shares of Common Stock, and thereafter, on each
anniversary of the granting of the initial option, receiving an
option to purchase 5,000 shares of Common Stock. The exercise
price for each such option was, and will be, the fair market value
of the Common Stock on the date of issuance of the option and each
such option will expire ten (10) years after issuance. The first
amendment to the Outside Directors Plan added a provision requiring
that no Options granted under the Outside Directors Plan may be
exercised for a period of six (6) months following the date the
Option is granted. The second amendment to the Outside Directors
Plan ("Second Amendment") amended a number of aspects of the
Outside Directors Plan, including (i) changing its name to the
"Outside Directors Stock Option and Incentive Plan"; (ii)
increasing from 100,000 to 250,000 the number of shares reserved
for issuance under the Outside Directors Plan, and (iii) providing
for, in addition to the granting of Options, automatic issuance to
each Eligible Director of a certain number of shares of Common
Stock (determined as discussed below under "Grant of Stock Awards")
in lieu of sixty-five percent (65%) of the cash payment of the fee
payable to each Eligible Director for services rendered as a
Director of the Company ("Director Fees"). The Second Amendment
was approved by the Board of Directors on October 6, 1994, and the
stockholders on December 12, 1994. The third amendment to the
Outside Directors Plan ("Third Amendment") amended a number of
aspects of the Outside Directors Plan, including, (i) providing
that each Eligible Director has the option of receiving one hundred
percent (100%), instead of sixty-five percent (65%), of his
Director Fees in the form of Common Stock of the Company; (ii)
providing that the number of shares of Common Stock to be issued to
each Eligible Director under the Outside Directors Plan ("Stock
Award") in lieu of a cash payment of director fees to an Eligible
Director shall be determined by valuing the Common Stock at
seventy-five percent (75%) of the Fair Market Value ( determined as
discussed below under "Fair Market Value") of the Common Stock; and
(iii) eliminating the restriction that the Outside Directors Plan
may only be changed every six (6) months. The Third Amendment was
approved by the Board of Directors on September 19, 1996, and the
stockholders on December 12, 1996. On March 12, 1998, the
Company's Board of Directors approved, subject to stockholder
approval, the fourth Amendment to the Outside Directors Plan
("Fourth Amendment") to increase from 250,000 to 500,000 the number
of shares of Common Stock reserved for issuance under the Outside
Directors Plan.
Principal features of the Outside Directors Plan, as amended by the
Fourth Amendment to the Outside Directors Plan are summarized
below, but such summary is qualified in its entirety by reference
to the terms of the Fourth Amendment, as set forth in Exhibit "A"
to this Proxy Statement. If the Fourth Amendment is adopted, the
Outside Directors Plan will provide that the maximum number of
shares of Common Stock of the Company that may be issued under the
Outside Directors Plan is 500,000 shares (subject to adjustment as
provided in the Outside Directors Plan). Shares of Common Stock
subject to options that are canceled or expired without the
delivery of shares of Common Stock will again be available for
awards under the Outside Directors Plan. The shares of Common
Stock to be delivered under the Outside Directors Plan will be made
available from the authorized and unissued shares of the Company or
from treasury shares.
Eligibility. Each Eligible Director is entitled to receive awards
under the Outside Directors Plan. As of the date of this Proxy
Statement, three (3) persons are eligible to participate in the
Outside Directors Plan. If additional Eligible Directors are added
to the Company's Board of Directors, they will be eligible to
participate in the Outside Directors Plan.
Grant of Options. The Outside Directors Plan provides for the
automatic grant by the Company to each Eligible Director an option
to purchase 15,000 shares of Common Stock on the date the Eligible
Director is initially elected to the Board of Directors. Further,
the Company shall grant to each Eligible Director an option to
acquire an additional 5,000 shares of Common Stock on an annual
basis thereafter. As of the date of this Proxy Statement, options
covering 160,000 shares of Common Stock have been granted under
the Outside Directors Plan. The options granted, and to be
granted, under the Outside Directors Plan are Non-qualified stock
options, i.e., they do not satisfy the requirements to be
"incentive stock options" under Section 422 of the Internal Revenue
Code, as amended (the "Code"). The Outside Directors Plan provides
that each option granted shall be granted as follows:
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<PAGE>
a. Exercise Price. The exercise price of options granted
under the Outside Directors Plan will be the "Fair Market Value"
of the shares of Common Stock subject to the option on the date
the option is granted. Common Stock purchased upon the exercise
of an option granted under the Outside Directors Plan must be
paid in cash in full at the time of exercise and must be
exercised for not less than one thousand (1,000) shares of
Common Stock unless the remaining shares that are exercisable
are less than one thousand (1,000) shares.
b. Terms of Options. No option shall be exercisable until
after the expiration of six (6) 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.
Grant of Stock Awards. The Outside Directors Plan, as amended,
presently provides that an Eligible Director may elect to receive
either sixty-five percent (65%) of the Director Fee in Common Stock
with the balance paid in cash, or one hundred percent (100%) of the
Director Fee in Common Stock. The number of shares of Common
Stock issuable to the Eligible Directors shall be determined by
valuing the Common Stock at seventy-five percent (75%) of its Fair
Market Value on the business day immediately preceding the date
that the Director Fee is due. No shares of Common Stock received
in lieu of Director Fees may be transferred by an Eligible Director
until after the expiration of six (6) months from the date the
shares are issued. To date, 70,493 shares of Common Stock have
been issued under the Outside Directors Plan in payment of
Directors Fees, and the aggregate cash amount of Directors Fees
paid in 1997 was $13,353, as further discussed in "Compensation of
Directors".
Amount or Termination. The Board of Directors may amend or modify
the Outside Directors Plan at any time (except as otherwise
provided in the Outside Directors Plan). No options may be granted
and no Stock Awards may be issued under the Outside Directors Plan
more than ten (10) years after the Outside Directors Plan was
adopted.
Adjustments. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock for which options
may be granted or Stock Awards may be issued and the number of
shares of Common Stock subject to options previously granted shall
be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock of the Company resulting
from a merger, consolidation, reorganization, recapitalization,
reclassification, combination of shares, stock split or stock
dividend. Such adjustments shall be made solely by the Board of
Directors.
Fair Market Value. As provided in the Outside Directors Plan, the
"Fair Market Value" generally means the closing sales price, or the
mean between the closing high "bid" or low "asked" prices, of the
Common Stock on the day on which such value is to be determined, as
reported by the National Association of Securities Dealers
Automated Quotation System or successor national quotation service.
Federal Tax Consequences. An Eligible Director will realize no
taxable income at the time an option is granted under the Outside
Directors Plan. Ordinary income will generally be realized by the
Eligible Director at the time of his exercise of an option. The
amount of income will be equal to the amount by which the fair
market value of the shares on the date of exercise exceeds the
exercise price for such shares. When an Eligible Director disposes
of shares of Common Stock acquired upon the exercise of the option,
any amount received in excess of the fair market value of the
shares on the date of exercise will be treated as long or short-
term capital gain, depending upon the holding period of the shares,
and if the amount received is less than the fair market value of
the shares on the date of exercise, the loss will be treated as
long or short-term capital loss depending upon the holding period
of the shares.
The Company will be entitled to a deduction for federal income tax
purposes at the same time and in the same amount as the Eligible
Director is considered to have realized ordinary income on the
exercise of an option.
The Fair Market Value of the shares of Common Stock issued to an
Eligible Director pursuant to a Stock Award will generally be
includible as ordinary income in the Eligible Director's gross
income for the Eligible Director's taxable year in which the shares
of Common Stock are issued. In addition, the value of a Stock
Award will constitute earnings from self-employment in respect of
which an Eligible Director will be required to make FICA and/or
21
Medicare contributions. The Company will be entitled to a
deduction for federal income tax purposes at the same time and in
the same amount as the Eligible Director is considered to have
realized ordinary income. When an Eligible Director disposes of
shares of Common Stock acquired pursuant to a Stock Award,
generally any amount received in excess of the Fair Market Value of
such shares on the date of the Stock Award will be treated as long
or short-term capital gain, depending on the holding period of the
shares, and if the amount received is less than the Fair Market
Value of the shares on the date of the Stock Award, the loss will
be treated as long or short-term loss depending on the holding
period of the shares.
The above-described tax consequences are based upon present federal
income tax laws, and thus, are subject to change when such laws
change.
Although the affirmative vote of the Common Stock present in person
or represented by proxy at the Meeting is not required for the
adoption of the Fourth Amendment to the 1992 Outside Directors
Stock Option and Incentive Plan, the Board of Directors of the
Company has determined that, as a result of there being three of
the four Directors as outside, interested parties, the Fourth
Amendment will not be adopted unless such is approved by a majority
of the shares of Common Stock present, or represented by proxy, and
entitled to vote at the Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE FOURTH AMENDMENT TO THE 1992 OUTSIDE
DIRECTORS STOCK OPTION AND INCENTIVE PLAN.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to present a proposal for consideration
at the annual meeting of stockholders to be held in 1999 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 1999
Annual Meeting of Stockholders, the stockholder must submit such
proposal in writing to the Company so that it is received not later
than December 21, 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.
22
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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, 1997, 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.
Order of the Board of Directors
Richard T. Kelecy
Secretary
Gainesville, Florida
April 20, 1998
23
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EXHIBIT "A"
FOURTH AMENDMENT TO
1992 OUTSIDE DIRECTORS STOCK OPTION AND INCENTIVE PLAN
THIS FOURTH AMENDMENT TO THE PERMA-FIX ENVIRONMENTAL SERVICES,
INC. OUTSIDE DIRECTORS STOCK OPTION AND INCENTIVE PLAN (the "Fourth
Amendment") was approved by the Board of Directors (the "Board") of
Perma-Fix Environmental Services, Inc. (the "Company") on March 12,
1998.
WHEREAS, Article VII of the 1992 Outside Directors Stock Option
and Incentive Plan, as amended (the "Plan"), provides that the
Board may at any time, and from time to time and, in any respect
amend or modify the Plan;
WHEREAS, as of December 31, 1997, options to purchase up to one
hundred sixty thousand (160,000) shares of Common Stock of the two
hundred fifty thousand (250,000) shares of Common Stock which may
be issued under the Plan have been granted to eligible Directors,
and 70,493 shares of Common Stock have been issued in payment of
Directors Fees, pursuant to the terms of the plan;
WHEREAS, in order to continue to attract and retain qualified
members of the Board who are not employees of the Company, the
Board is of the opinion that it is necessary that the maximum
number of shares of Common Stock that may be issued under the Plan
be increased from two hundred fifty thousand (250,000) shares to
five hundred thousand (500,000) shares (subject to adjustment as
provided in the Plan); and,
NOW, THEREFORE, the following amendments to the plan are
unanimously adopted by the Board, subject to the approval of the
stockholders of the Company:
(a) Section 4.1 of the Plan is hereby amended by (i) deleting
the number "250,000" from the first full sentence
contained therein and substituting in lieu thereof the
number "500,000."
The Plan, as previously amended, is amended and modified only
to the extent specifically amended or modified by this Fourth
Amendment to the 1992 Outside Directors Stock Option and Incentive
Plan, and none of the other terms, conditions or provisions of the
Plan, as previously amended, is amended or modified by this Fourth
Amendment to the 1992 Outside Directors Stock Option and Incentive
Plan.
