SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
Of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary information statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d)(2)
[X] Definitive information statement
AQUAGENIX, INC.
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(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
COMMON STOCK
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(2) Aggregate number of securities to which transaction applies:
4,163,391 SHARES
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
$.01 PER SHARE
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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[ ] Fee paid previously with preliminary materials.
N/A
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-1(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
N/A
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AQUAGENIX, INC.
6500 N.W. 15th Avenue
Fort Lauderdale, Florida 33309
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This Information Statement is being furnished to the stockholders of
Aquagenix, Inc. (the "Company"), a Delaware corporation, in connection with
proposals to (i) increase the number of shares reserved for issuance pursuant to
the Company's 1994 Stock Option Plan (the "Employee Stock Option Plan"), and;
(ii) adopt an Amended and Restated Directors Stock Option Plan (the "Directors
Stock Option Plan"), which Directors Stock Option Plan, among other things
increases the number of shares reserved for issuance pursuant thereto, by the
written consent of the holders of a majority in interest of the Company's
outstanding Common Stock ("Common Stock"). The Company's Board of Directors on
May 3, 1996, approved and recommended a resolution to increase to 1,000,000
shares the number of shares of the Company's Common Stock in the Company's
Employee Stock Option Plan that are reserved for issuance and to amend the
Company's Directors Stock Option Plan which plan, among other things increases
to 250,000 shares the number of shares of Common Stock reserved for issuance
pursuant thereto. Each of the proposals have been approved by written consent of
the holders of a majority of the Company's outstanding Common Stock. The Company
anticipates that the filing of the written consents with the Secretary of the
Company will occur on or about April 17, 1997 (the "Effective Date"). If the
proposals were not adopted by written consent, it would have been required to be
considered by the Company's stockholders at a special stockholders' meeting
convened for the specific purpose of approving the proposals.
The elimination of the need for a special meeting of stockholders to
approve the proposals is made possible by Section 228 of the Delaware General
Corporation Law (the "Delaware Law") which provides that the written consent of
the holders of outstanding shares of common stock, having not less than the
minimum number of votes which would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted, may be substituted for such a special meeting. In order to eliminate
the costs and management time involved in holding a special meeting and in order
to effect the proposals as early as possible in order to accomplish the purposes
of the Company, as hereafter described, the Board of Directors of the Company
voted to utilize the written consent of the holders of a majority
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in interest of the Company's Common Stock of the Company. As discussed
hereafter, the Board of Directors has recommended the proposals in order to
increase the number of shares available for issuance pursuant to the Company's
Employee Stock Option Plan and Directors Stock Option Plan to provide additional
incentives to attract and retain qualified and competent employees and
non-employee directors, and with respect to the Directors Stock Option Plan to
restructure the former plan to provide the Director Stock Option Committee the
authority to issue any number of options as it deems appropriate at any time,
which option will vest over a two year period in order to entice long term
commitments from the Company's directors.
The date on which this Information Statement was first sent to the
stockholders is on or about March 25, 1997. The record date established by the
Company for purposes of determining the number of outstanding shares of Common
Stock of the Company is December 31, 1996 (the "Record Date").
Pursuant to Section 228 of the Delaware Law, the Company is required to
provide prompt notice of the taking of the corporate action without a meeting to
stockholders who have not consented in writing to such action. Inasmuch as the
Company will have provided to its stockholders of record this Information
Statement, the Company will notify its stockholders at the time of distribution
of its next Quarterly Report on Form 10-QSB of the effective date of the
proposals. No additional action will be undertaken pursuant to such written
consents, and no dissenters' rights under the Delaware Law are afforded to the
Company's stockholders as a result of the adoption of the proposals.
EXECUTIVE OFFICES
The Company's principal executive offices are located at 6500 N.W. 15th
Avenue, Fort Lauderdale, Florida 33309. Its telephone number is (954) 975-7771.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were 4,163,391 shares of Common Stock
outstanding, representing all of the voting capital stock of the Company
outstanding and entitled to vote on matters submitted to the stockholders of the
Company. Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as of
March 12, 1997 with respect to (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock; (ii) each
director of the Company; and (iii) all directors, executive officers and
designated stockholders of
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the Company as a group. This information as to beneficial ownership was
furnished to the Company by or on behalf of the persons named. Information with
respect to the percent of class is based on 4,227,091 issued and outstanding
shares of Common Stock as of March 12, 1997.
NO. OF SHARES PERCENT OF
NAME AND ADDRESS OR OF COMMON STOCK OUTSTANDING
IDENTITY OF GROUP BENEFICIALLY OWNED(2) SHARES OWNED(2)
- ------------------- ------------------ ------------
Andrew P. Chesler 752,283 (3) 17.8%
Abraham S. Fischler 20,000 (4) 0.5
Fred S. Katz 7,500 (5) 0.2
Jeffrey T. Katz 143,000 (6) 3.4
Allen H. Stern - (7) -
Helen Chia 5,000 (8) 0.1
Ray and Shirley Spirnock 270,000 (9) 6.4
The Equitable Life Insurance
Society of the United States 351,197 (10) 8.3
Dabney Resnick, Inc. 336,349 (11) 8.0
Shulman & Associates 399,782 9.5
All directors and executive officers
as a group (six persons) 927,783 (3)(4)(5)(6)(8) 21.9%
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(1) Unless otherwise indicated, the address of each beneficial owner is
Aquagenix, Inc., 6500 N.W. 15th Avenue, Fort Lauderdale, Florida 33309.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon exercise
of options and warrants. Each beneficial owner's percentage ownership is
determined by assuming that options and warrants that are held by such
person (but not those held by any other person) and that are exercisable
within 60 days from the date hereof have been exercised.
(3) Andrew P. Chesler is Chairman of the Board, Chief Executive Officer,
President and Treasurer of the Company. Includes (i) 1,600 shares of
Common Stock held by Mr. Chesler's wife, (ii) 12,195 shares of Common
Stock subject to an option granted to Robert A. Radler, and (iii) 12,000
shares of Common Stock held pursuant to the grant of stock options. Does
not include (i) 60,000 shares of Common Stock issuable upon the exercise
of options granted to Mr. Chesler under the Company's 1994 Employee Stock
Option Plan, which options are not presently exercisable; and (ii) 150,000
shares of Common Stock issuable upon the exercise of options granted to
Mr. Chesler in November 1996 under the same Plan, subject to the approval
by the shareholders to increase the amount of shares available for
issuance pursuant to said plan, which options are not presently
exercisable.
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(4) Abraham S. Fischler is a director of the Company. Includes 7,500 shares of
Common Stock issuable upon the exercise of options granted to Mr. Fischler
under the Company's Directors Stock Option Plan. Does not include 12,500
shares of Common Stock issuable upon exercise of options granted under the
Company's Amended and Restated Directors Stock Option Plan, subject to the
approval by the Company's stockholders of such Amended and Restated Plan,
which options are not presently exercisable.
(5) Fred S. Katz is a director of the Company. Includes 7,500 shares of Common
Stock issuable upon the exercise of options granted to Mr. Katz under the
Company's Directors Stock Option Plan. Does not include 40,000 shares of
Common Stock issuable upon exercise of options granted under the Company's
Amended and Restated Directors Stock Option Plan, subject to the approval
by the Company's stockholders of such Amended and Restated Plan, which
options are not presently exercisable.
(6) Jeffrey T. Katz is a director of the Company. Includes 2,000 shares
issuable upon exercise of Warrants of the Company. Does not include 10,000
shares of Common Stock issuable upon the exercise of options granted under
the Company's Amended and Restated Directors Stock Option Plan, subject to
the approval by the Company's stockholders of such Amended and Restated
Plan, which options are not presently exercisable.
(7) Allen H. Stern is a director of the Company. Does not include 10,000
shares of Common Stock issuable upon the exercise of options granted under
the Company's Amended and Restated Directors Stock Option Plan, subject to
the approval by the Company's stockholders of such Amended and Restated
Plan, which options are not presently exercisable.
(8) Helen Chia is Chief Financial Officer and Secretary of the Company.
Includes 5,000 shares issuable upon exercise of options granted pursuant
to the 1994 Employee Stock Option Plan. Does not include (i) 20,000 shares
of Common Stock issuable upon the exercise of options granted pursuant to
the same Plan, which options are not presently exercisable; and (ii)
20,000 shares of Common Stock issuable upon the exercise of options
granted to Ms. Chia in November 1996 under the same Plan, subject to the
approval by the shareholders to increase the amount of shares available
for issuance pursuant to said plan, which options are not presently
exercisable.
(9) Represents shares of Common Stock issued pursuant to the terms of a Stock
Purchase Agreement dated June 7, 1996 for the acquisition of Aquatic and
Right of Way Control, Inc.
(10) Represents shares of Common Stock issuable upon exercise of Warrants
pursuant to an Amended and Restated Senior Secured Note and Warrant
Purchase Agreement dated December 15, 1995 in relation to the funding of
the acquisition of AmerAquatic, Inc.
(11) Represents shares of Common Stock issuable upon exercise of Warrants
pursuant to warrant agreements in relation to the rendering of certain
financial consulting services.
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PROPOSAL TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE PURSUANT TO THE COMPANY'S 1994 EMPLOYEE STOCK OPTION PLAN
GENERALLY
It is proposed to increase to 1,000,000 shares the number of shares of
Common Stock in the Company's Employee Stock Option Plan that are reserved for
issuance. The Employee Stock Option Plan presently authorizes 500,000 shares for
issuance upon exercise of stock options. The current text of the Employee Stock
Option Plan, as modified pursuant to this amendment, is attached hereto as
Exhibit A. The material features of the Employee Stock Option Plan are discussed
below, but the description is subject to, and is qualified in its entirety by,
the full text of the Employee Stock Option Plan, as amended.
The purpose of the Employee Stock Option Plan is to provide additional
incentives to attract and retain qualified and competent employees, upon whose
efforts and judgment the success of the Company is largely dependent, through
the encouragement of stock ownership in the Company by such persons. In
furtherance of this purpose, the Employee Stock Option Plan authorizes (a) the
granting of incentive or non-statutory stock options to purchase Common Stock to
employees of the Company satisfying the description above, (b) the provision of
loans for the purpose of financing the exercise of options and the amount of
taxes payable in connection therewith, and (c) the use of already owned Common
Stock as payment of the exercise price for options granted under the Employee
Stock Option Plan (such provisions being at times referred to herein as the
"Stock Swap").
Approval of the increase in the number of shares reserved for issuance
under the Employee Stock Option Plan by the Company's stockholders pursuant to
the Employee Stock Option Plan is one of the conditions of Rule 16b-3, a rule
promulgated by the Securities and Exchange Commission (the "SEC") that provides
an exemption from the operation of the "short-swing profit" recovery provisions
of Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to the acquisition of options, the use of the
Stock Swap and certain transactions by officers and directors of the Company.
The Employee Stock Option Plan provides that it shall be administered by a
committee consisting of two or more directors designated by the Board of
Directors, or in the absence of such a committee the full Board of Directors (in
either case, the "Committee"). The Committee in its sole discretion, determines
the persons to be awarded options, the number of shares subject thereto and the
exercise price and other terms thereof. In addition, the Committee has full
power and authority to construe and interpret the Employee Stock Option Plan,
and the acts of the Committee are final, conclusive and binding upon all
interested parties, including the Company, its stockholders, its officers and
employees, recipients of grants under the Employee Stock
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Option Plan and all persons or entities claiming by or through such persons. The
Board of Directors has established the Employee Stock Option Committee to
administer the Employee Stock Option Plan. The Employee Stock Option Committee
is currently comprised of Jeffrey T. Katz and Allen H. Stern.
Options are intended to be granted primarily to those persons who possess
a capacity to contribute significantly to the successful performance of the
Company. Because persons to whom grants of options are to be made are to be
determined from time to time by the Committee, in its discretion, it is
impossible at this time to indicate the precise number, name or positions of
persons who will receive options or the number of shares for which options will
be granted to any such employee, except to the extent already granted or
conditionally granted.
Assuming approval of the proposed amendment, an aggregate of 1,000,000
shares of Common Stock (subject to adjustment as discussed below) will be
reserved for sale upon exercise of options granted under the Employee Stock
Option Plan. As of November 1996, options to purchase 381,730 shares of Common
Stock were issued and outstanding under the Employee Stock Option Plan. In
November, 1996, the Company issued options to purchase an aggregate of 240,000
shares of Common Stock under the Employee Stock Option Plan, subject to the
approval by the stockholders to increase the amount of shares available for
issuance pursuant to said plan. The shares acquired upon exercise of options
granted under the Employee Stock Option Plan will be authorized and unissued
shares of Common Stock. The Company's stockholders will not have any preemptive
rights to purchase or subscribe for the shares reserved for issuance under the
Employee Stock Option Plan. If any option granted under the Employee Stock
Option Plan should expire or terminate for any reason other than having been
exercised in full, the unpurchased shares subject to that option will again be
available for purposes of the Employee Stock Option Plan.
The following table sets forth, as of December 31, 1996, certain
information regarding options granted under the Employee Stock Option Plan to
the persons and groups indicated. None of such options are currently exercisable
except as indicated.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SHARES EXERCISE PRICE OPTIONS AT
NAME AND POSITION SUBJECT TO OPTIONS PER SHARE DECEMBER 31, 1996(1)
----------------- ------------------ -------------- --------------------
<S> <C> <C> <C>
Andrew P. Chesler 230,000(2) $3.88-$7.50 $ 299,700
Chairman of the Board, Chief
Executive Officer and
Treasurer
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Helen Chia 45,000 $3.88 $ 84,250
Chief Financial Officer and
Secretary
All current executive officers 275,000 $3.88-$7.50 $ 383,950
as a group (two persons)
All employees as a group 621,730(3) $3.88-$7.50 $1,026,667
<FN>
- ---------------------
(1) The closing sale price of the Common Stock on December 31, 1996 was $6.25
per share as reported by NASDAQ. Value is calculated by multiplying (a)
the difference between $6.25 and the option exercise price by (b) the
number of shares of Common Stock underlying the option.
(2) Includes 8,000 shares of Common Stock subject to Options presently
exercisable.
(3) Includes 38,820 shares of Common Stock subject to Options presently
exercisable.
</FN>
</TABLE>
TERMS AND CONDITIONS
All options granted under the Employee Stock Option Plan are, and shall
be, evidenced by a written agreement between the Company and the grantee. Such
agreements do or shall contain such terms and conditions, consistent with the
Employee Stock Option Plan, relating to the grant, the time or times of exercise
and other terms of the options as the Committee prescribes.
Under the Employee Stock Option Plan, the option price per share for
incentive stock options may not be less than the fair market value of the
underlying shares on the date of grant. For purposes of the Employee Stock
Option Plan and subject to the Committee's sole discretion to determine
otherwise in a fair and uniform manner, the term "fair market value" means (i)
the closing price of the Common Stock as reported on a national securities
exchange or by the National Association of Securities Dealers Automated
Quotation National Market System or (ii) the mean between the closing high
bid and low quotation for the Common Stock on the National Association of
Securities Dealers Automated Quotation System (the "NASDAQ"), on the business
day immediately preceding the date of grant. The exercise price of an option may
be paid in cash, or at the sole discretion of the Committee, by delivery of
already owned shares of Common Stock having a fair market value equal to the
exercise price, or by a combination of the foregoing. The Employee Stock Option
Plan also authorizes the Company to make loans to optionees to enable them to
exercise their options. Such loans must (i) provide for recourse to the
optionee, (ii) bear interest at a rate no less than the prime rate of interest
of the Company's principal lender, and (iii) be secured by the shares of Common
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Stock purchased. Cash payments will be used by the Company for general corporate
purposes.
The use of already owned shares of Common Stock applies to payment for the
exercise of an option in a single transaction and to the "pyramiding" of already
owned shares in successive, simultaneous option exercises. In general,
pyramiding permits an option holder to start with as little as one share of
Common Stock and exercise an entire option to the extent then exercisable (no
matter what the number of shares subject thereto). By utilizing already owned
shares of Common Stock, no cash (except for fractional share adjustments) is
needed to exercise an option. Consequently, the optionee would receive Common
Stock equal in value to the spread between the fair market value of the shares
subject to the option and the exercise price of the option.
No option granted under the Employee Stock Option Plan is assignable or
transferable, other than by will or by the laws of descent and distribution.
During the lifetime of an optionee, an option is exercisable only by such
optionee. The expiration date of an option will be determined by the Committee
at the time of the grant, but in no event will an option be exercisable after
the expiration of ten years from the date of grant. An option may be exercised
at any time or from time to time or only after a period of time or in
installments, as the Committee determines. The Committee may in its sole
discretion accelerate the date on which any option may be exercised.
The unexercised portion of any option granted to an employee under the
Employee Stock Option Plan shall automatically be terminated (a) three months
after the date on which the optionee's employment is terminated for any reason
other than (i) Cause (as defined in the Employee Stock Option Plan); (ii) mental
or physical disability; or (iii) death; (b) immediately upon the termination of
the optionee's employment for Cause; (c) one year after the date on which the
optionee's employment is terminated by reason of mental or physical
disabilities; or (d) one year after the date on which the optionee's employment
is terminated by reason of the death of the employee; or one year after the date
on which the optionee shall die if such death shall occur during the one year
period following the termination of the optionee's employment by reason of
mental or physical disability.
To prevent dilution of the rights of a holder of an option, the Employee
Stock Option Plan provides for adjustment of the number of shares for which
options may be granted, the number of shares subject to outstanding options and
the exercise price of outstanding options in the event of any increase or
decrease in the number of issued and outstanding shares through the declaration
of a stock dividend or through any recapitalization resulting in a stock
split-up, combination or exchange of shares. Provisions governing the effect
upon options of a merger, consolidation or other reorganization of the Company
are also included in the Employee Stock Option Plan.
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AMENDMENTS
No option may be granted under the Employee Stock Option Plan after May
11, 2004. The Board of Directors may amend, suspend or terminate the Employee
Stock Option Plan at any time, provided that such amendment may not adversely
affect the rights of an optionee under an outstanding option without the
affected optionee's written consent. In addition, the Board of Directors may not
amend the Employee Stock Option Plan to (a) without first obtaining stockholder
approval, increase the number of shares of Common Stock reserved for issuance or
change the class of persons eligible to receive options, (b) permit the granting
of options that expire beyond the maximum 10-year period, or (c) extend the
termination date of the Employee Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE EMPLOYEE STOCK OPTION PLAN
The Employee Stock Option Plan is not qualified under the provisions of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
nor is it subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
The following discussion is based on federal income tax laws and
regulations in effect on December 31, 1996. It does not purport to be a complete
description of the federal income tax consequences of the Employee Stock Option
Plan, nor does it describe the consequences of state, local or foreign tax laws
which may be applicable. Accordingly, any person receiving a grant under the
Plan should consult with his own tax adviser.
NON-STATUTORY STOCK OPTIONS. An optionee granted a non-statutory stock
option under the Stock Option Plan will generally recognize, at the date of
exercise of such non-statutory stock option, ordinary income equal to the
difference between the exercise price and the fair market value of the shares of
Common Stock subject to the non-statutory stock option. This taxable ordinary
income will be subject to federal income tax withholding. A federal income tax
deduction will be allowed to the Company in an amount equal to the ordinary
income to be recognized by the optionee, provided that such amount constitutes
an ordinary and necessary business expense to the Company and is reasonable, and
the Company satisfies its withholding obligation with respect to such income.
The federal income tax treatment is somewhat different for officers and
directors of the Company ("Reporting Persons") as a result of the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act. If a Reporting
Person exercises an option prior to the expiration of the holding period
required by Rule 16b-3 (which holding period lasts for six months following the
acquisition of the option), unless the Reporting Person makes an 83(b) Election,
as described below, the Reporting Person will recognize ordinary income upon the
expiration of the holding period or such earlier date
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on which the person ceases to be a Reporting Person. The amount of ordinary
income will be equal to the difference between the exercise price of the option
and the fair market value of the shares at the time that the income is
recognized. A Reporting Person, however, is entitled to elect under Section
83(b) of the Code (the "83(b) Election"), within 30 days after exercising an
option, to treat as ordinary income the excess of the fair market value of the
shares covered by the option on the date of exercise over the exercise price and
no further ordinary income will be recognized, irrespective of whether the fair
market value of the shares has increased or decreased at the expiration of the
applicable period under Section 16(b). The Company's deduction is dependent upon
when a Reporting Person recognizes ordinary income.
If an optionee exercises a non-statutory stock option by delivering other
shares, the optionee will not recognize gain or loss with respect to the
exchange of such shares, even if the then fair market value of the shares is
different from the optionee's tax basis. The optionee, however, will be taxed as
described above with respect to the exercise of the non-statutory stock option
as if he had paid the exercise price in cash, and the Company likewise generally
will be entitled to an equivalent tax deduction. Provided a separate
identifiable stock certificate is issued therefor, the optionee's tax basis in
that number of shares received on such exercise which is equal to the number of
shares surrendered on such exercise will be equal to his tax basis in the shares
surrendered, and his holding period for such number of shares received will
include his holding period for the shares surrendered. The optionee's tax basis
and holding period for the additional shares received on exercise of a
non-statutory stock option paid for, in whole or in part, with shares will be
the same as if the optionee had exercised the non-statutory stock option solely
for cash.
INCENTIVE STOCK OPTIONS. Incentive stock options are "incentive stock
options" as defined in Section 422 of the Code. Under the Code, an optionee
generally is not subject to ordinary income tax upon the grant or exercise of an
incentive stock option. However, an employee who exercises an incentive stock
option by delivering shares of Common Stock previously acquired pursuant to the
exercise of an incentive stock option is treated as making a Disqualifying
Disposition (defined below) of such shares if the employee delivers such shares
before the expiration of the holding period applicable to such shares. The
applicable holding period is the longer of two years from the date of grant or
one year from the date of exercise. The effect of this provision is to prevent
"pyramiding" the exercise of an incentive stock option (i.e., the exercise of
the incentive stock option for one share and the use of that share to make
successive exercises of the incentive stock option until it is completely
exercised) without the imposition of current income tax.
If, subsequent to the exercise of an incentive stock option (whether paid
for in cash or in shares), the optionee holds the shares received upon exercise
for a period that exceeds (a) two years from the date such incentive stock
option was granted or, if later (b) one year from the date of exercise (the
"Required Holding Period"), the
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difference (if any) between the amount realized from the sale of such shares and
the tax basis to the holder will be taxed as long-term capital gain or loss.
In general, if, after exercising an incentive stock option, an employee
disposes of the shares so acquired before the end of the Required Holding Period
(a "Disqualifying Disposition"), such optionee would be deemed in receipt of
ordinary income in the year of the Disqualifying Disposition in an amount equal
to the excess of the fair market value of the shares at the date the incentive
stock option was exercised over the exercise price. If the Disqualifying
Disposition is a sale or exchange which would permit a loss to be recognized
under the Code (were a loss in fact to be sustained), and the sales proceeds are
less than the fair market value of the shares on the date of exercise, the
optionee's ordinary income would be limited to the gain, (if any) from the sale.
If the amount realized upon disposition exceeds the fair market value of the
shares on the date of exercise, the excess would be treated as short-term or
long-term capital gain, depending on whether the holding period for such shares
exceeded one year.
An income tax deduction is not allowed to the Company with respect to the
grant or exercise of an incentive stock option or the disposition, after the
Required Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, a federal income tax deduction will be allowed to the
Company in an amount equal to the ordinary income to be recognized by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and the Company satisfies any
applicable withholding obligation with respect to such income.
REASONS FOR THE PROPOSED INCREASE OF THE NUMBER OF SHARES RESERVED FOR ISSUANCE
PURSUANT TO THE COMPANY'S EMPLOYEE STOCK OPTION PLAN
The Board of Directors of the Company believes that the increase in the
number of shares reserved for issuance pursuant to the Company's Employee Stock
Option Plan is necessary to provide the Company with additional incentives to
attract and retain qualified and competent employees and non-employee directors.
NO DISSENTER'S RIGHTS.
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to the Company's proposed increase of shares reserved for
issuance pursuant to the Company's Employee Stock Option Plan.
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PROPOSAL TO ADOPT AN AMENDED AND RESTATED DIRECTORS
STOCK OPTION PLAN AND TO INCREASE THE NUMBER OF
SHARES RESERVED FOR ISSUANCE PURSUANT THERETO
GENERALLY
It is proposed to adopt an amendment to the Company's Directors Stock
Option Plan and to adopt a resolution to increase to 250,000 shares the number
of shares of Common Stock reserved for issuance pursuant thereto. A copy of the
proposed Directors Stock Option Plan is attached hereto as Exhibit B. The
material features of the Directors Stock Option Plan are discussed below, but
the description is subject to, and is qualified in its entirety by the full text
of the Directors Stock Option Plan, as amended.
The purpose of the Directors Stock Option Plan is to advance the interests
of the Company by providing additional incentives to attract and retain
qualified and competent non-employee directors, upon whose efforts and judgment
the success of the Company is largely dependent, through the encouragement of
stock ownership in the Company by such persons.
DESCRIPTION OF CURRENT DIRECTOR STOCK OPTION PLAN
GENERAL. Currently, the Board of Directors administers the Directors Stock
Option Plan and may grant options (the "Director Options") to any non-employee
director of the Company pursuant to the terms of the Directors Stock Option
Plan. The total number of shares of Common Stock issuable under the Directors
Stock Option Plan currently may not exceed 50,000 shares. In the event any
change is made to the Common Stock issuable under the Directors Stock Option
Plan (by reason of any stock split, stock dividend, combination of shares,
merger, consolidation, reorganization or other change in the capitalization of
the Company), an appropriate adjustment would be made as necessary to
reflect/adjust (i) the aggregate number of shares of Common Stock and/or the
kind of securities available for issuance under the Directors Stock Option Plan,
(ii) the number of shares of Common Stock and/or the kind of securities to be
made the subject of each subsequent grant, (iii) the exercise price, and (iv)
the number of shares of Common Stock and/or the kind of securities available for
purchase under each outstanding Director Options and the exercise price payable
per share so that no dilution or enlargement of benefits will occur under such
Director Options.
PRICE AND EXERCISABILITY OF DIRECTORS OPTIONS. The exercise price of
Director Options is the fair market value of the Company's Common Stock on the
day preceding the date the Director Option is granted. For purposes of the
Directors Stock Option Plan and subject to, currently, the Board of Directors
sole discretion to determine otherwise in a fair and uniform manner, the term
"fair market value" means (i) the closing price of the Common Stock as reported
on the National Securities Exchange or by the National Association of Securities
Dealers Automated Quotation National Market System or (ii)
12
<PAGE>
the mean between the closing high bid and low quotation for the Common Stock on
NASDAQ, on the business day immediately preceding the date of grant. The
exercise price of an option may be paid in cash, or at the sole discretion of
the Board of Directors, by delivery of already owned shares of Common Stock
having a fair market value equal to the exercise price, or by a combination of
the foregoing. See "Proposal to Increase the Number of Shares Reserved for
Issuance Pursuant to the Company's 1994 Employee Stock Option Plan" for further
description of payment by delivery of already owned shares of Common Stock.
Currently under the terms of the Directors Stock Option Plan, each non-employee
director is granted an initial option to purchase 5,000 shares of Common Stock
and thereafter each non-employee director is granted an additional option to
purchase 2,500 shares of Common Stock upon each re-election to the Board of
Directors. Any options granted pursuant to the Directors Stock Option Plan have
a term of five (5) years and may be exercised only after the expiration of one
(1) year from the date of grant.
ASSIGNABILITY. Director Options are nonassignable or transferable other
than by will or the laws of descendant and distribution and, during the
optionees lifetime, the Director Option may be exercised only by such optionee.
AMENDMENTS. Currently the Board of Directors may amend or discontinue the
Director Stock Option Plan at anytime, provided that no such amendment may be
made without the requisite approval of the stockholders of the Company if
stockholder approval is required as a condition to the Directors Stock Option
Plan continuing to comply with the provisions of Rule 16b-3 under the Exchange
Act or Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").
TERMINATION. The unexercised portion of any Director Option granted under
the Director Stock Option Plan currently shall automatically be terminated (a)
three (3) months after the date on which the optionee ceases to be a director
for the Company for any reason other than (i) Cause (as defined in the Directors
Stock Option Plan); (ii) mental or physical disability; or (iii) death; (b)
immediately upon the date the optionee ceases to be a director of the Company
for Cause; (c) one (1) year after the date on which the optionee ceases to be a
director of the Company by reason of mental or physical disabilities; (d) one
(1) year after the date on which the optionee ceases to be a director of the
Company by reason of the death of the director; or (e) or one (1) year after the
date on which the optionee shall die if such death shall occur during the one
(1) year period following the termination of the date that the optionee ceases
to be a director of the Company by reason of mental or physical disability.
The following table sets forth, as of December 31, 1996, certain
information regarding options granted under the Directors Stock Option Plan to
the persons and groups indicated. None of such options are currently exercisable
unless otherwise indicated. As of March 1996, options to purchase 5,000 shares
of Common Stock were issued and outstanding under the Directors Stock Option
Plan. In March 1996, the
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<PAGE>
Company issued options to purchase an aggregate of 85,000 shares of Common Stock
under the Directors Stock Option Plan, subject to the approval by the
shareholders to increase the amount of shares available for issuance pursuant to
said plan.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SHARES EXERCISE PRICE OPTIONS AT
NAME OF DIRECTOR SUBJECT TO OPTIONS PER SHARE DECEMBER 31, 1996(1)
---------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
Abraham S. Fischler(2) 32,500 $3.88-5.75 $66,750
Fred S. Katz(3) 47,500 $3.88-5.75 $102,300
Allen H. Stern(4) 10,000 $3.88 $23,700
Jeffrey T. Katz(5) 10,000 $3.88 $23,700
All current eligible Directors as
a group (Four persons) 100,000 $3.88-5.75 $216,450
<FN>
- -------------------
(1) The closing sale price of the Common Stock on December 31, 1996 was $6.25
per share as reported by NASDAQ. Value is calculated by multiplying (a)
the difference between $6.25 and the option exercise price by (b) the
number of shares of Common Stock underlying the option.
(2) Includes 25,000 shares of Common Stock issuable upon exercise of options
granted under the Company's Amended and Restated Directors Stock Option
Plan, subject to the approval by the Company's stockholders of such
Amended and Restated Plan, which options are not presently exercisable.
(3) Includes 40,000 shares of Common Stock issuable upon exercise of options
granted under the Company's Amended and Restated Directors Stock Option
Plan, subject to the approval by the Company's stockholders of such
Amended and Restated Plan, which options are not presently exercisable.
(4) Includes 10,000 shares of Common Stock issuable upon exercise of options
granted under the Company's Amended and Restated Directors Stock Option
Plan, subject to the approval by the Company's stockholders of such
Amended and Restated Plan, which options are not presently exercisable.
(5) Includes 10,000 shares of Common Stock issuable upon exercise of options
granted under the Company's Amended and Restated Directors Stock Option
Plan, subject to the approval by the Company's stockholders of such
Amended and Restated Plan, which options are not presently exercisable.
</FN>
</TABLE>
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<PAGE>
FEDERAL INCOME TAX ASPECTS
The Director Options do not constitute incentive stock options, within the
meaning of Section 422(b) of the Code. See "Proposal to Increase the Number of
Shares Reserved for Issuance Pursuant to the Company's 1994 Employee Stock
Option Plan - Federal Income Tax Consequences of the Stock Option Plan -
Non-Statutory Stock Options" for a description of the federal income tax
consequences of the Director Options.
PROPOSED AMENDMENTS TO THE DIRECTORS OPTION PLAN
The Directors and the Directors Stock Option Committee has adopted an
Amended and Restated Directors Stock Option Plan to effect the following
amendments to the Directors Stock Option Plan:
(a) To increase the number of shares of Common Stock eligible for issuance
thereunder from the current limit of 50,000 shares to 250,000 shares;
(b) To provide the Directors Stock Option Committee with the authority to
administer the Directors Stock Option Plan;
(c) The annual amount of Director Options granted to a non-employee
director under the Directors Stock Option Plan shall be determined by the
Directors Stock Option Committee and shall be exercisable in two (2) equal
installments each on the first and second anniversary date following the date of
the grant; and
(d) Any unexercised portion of any Director Option shall automatically and
without notice terminate and become null and void on the date on which the
optionee ceases to be a director of the Company for any reason except upon death
of a director whereupon the exercise portion of any option shall automatically
and without notice terminate and become null and void sixty (60) days after the
date on which such Director ceases to be a director by reason of death.
REASONS FOR THE PROPOSED ADOPTION OF THE AMENDED AND RESTATED DIRECTORS STOCK
OPTION PLAN AND THE INCREASE OF THE NUMBER OF SHARES RESERVED FOR ISSUANCE
PURSUANT THERETO.
The Board of Directors of the Company believes that an Amended and
Restated Directors Stock Option Plan and the increase of the number of shares
reserved for issuance pursuant thereto is necessary to provide additional
incentives to attract and retain qualified and competent non-employee directors
and to restructure the former plan to provide the Director Stock Option
Committee the authority to issue any number of options as it deems appropriate
at any time, which option will vest over a two year period in order to entice
long term commitments from the Company's directors.
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<PAGE>
NO DISSENTER'S RIGHTS.
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to the Company's proposed increase of shares reserved for
issuance pursuant to the Company's Employee Stock Option Plan.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ ANDREW P. CHESLER
----------------------------------------
Andrew P. Chesler, Chairman of the Board
16
<PAGE>
EXHIBIT A
AQUAGENIX, INC.
--------------------------
1994 STOCK OPTION PLAN
--------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
AQUAGENIX INC., a Delaware corporation (the "Company"), by providing an
additional incentive to attract and retain qualified and competent persons who
are key employees of the Company, and upon whose efforts and judgment the
success of the Company is largely dependent, through the encouragement of stock
ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the stock option committee appointed by
the Board pursuant to Section 13 hereof or, if not appointed, the Board.
(c) "Common Stock" shall mean the Company's Common Stock, par value
$0.01 per share.
(d) "Director" shall mean a member of the Board.
(e) "Disinterested Person" shall mean a Director who is not, during
the one year prior to his or her service as an administrator of this Plan, or
during such service, granted or awarded equity securities pursuant to this Plan
or any other plan of the Company or any of its affiliates, except that:
(i) participation in a formula plan meeting the conditions in
paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the Securities Exchange Act
shall not disqualify a Director from being a Disinterested Person;
(ii) participation in an ongoing securities acquisition plan
meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3 promulgated under
the Securities Exchange Act shall not disqualify a Director from being a
Disinterested Person; and
(iii) an election to receive an annual retainer fee in either
cash or an equivalent amount of securities, or partly in cash and partly in
securities, shall not disqualify a Director from being a Disinterested Person.
<PAGE>
(f) "Fair Market Value" of a Share on any date of reference shall be
the "Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair and uniform manner. For the purpose of
determining Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be (i) if the Common Stock listed or admitted for trading on
any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of Common Stock on such system, or
(iii) if neither clause (i) or (ii) is applicable, the mean between the high bid
and low asked quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have inserted
both bid and asked quotations for Common Stock on at least five of the ten
preceding days.
(g) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(h) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(i) "Non-Statutory Stock Option" shall mean an Option which is not
an Incentive Stock Option.
(j) "Officer" shall mean the Company's president, principal
financial officer, principal accounting officer and any other person who the
Company identifies as an "executive officer" for purposes of reports or proxy
materials filed by the Company pursuant to the Securities Exchange Act.
(k) "Option" (when capitalized) shall mean any option granted under
this Plan.
(l) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(m) "Plan" shall mean this Stock Option Plan for the Company.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(o) "Share(s)" shall mean a share or shares of the Common Stock.
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<PAGE>
3. SHARES AND OPTIONS. The Company may grant to Optionees from time to
time Options to purchase an aggregate of up to One Million (1,000,000) Shares
from Shares held in the Company's treasury or from authorized and unissued
Shares. If any Option granted under the Plan shall terminate, expire, or be
canceled or surrendered as to any Shares, new Options may thereafter be granted
covering such Shares. An Option granted hereunder shall be either an Incentive
Stock Option or a Non-Statutory Stock Option as determined by the Committee at
the time of grant of such Option and shall clearly state whether it is an
Incentive Stock Option or Non-Statutory Stock Option. All Incentive Stock
Options shall be granted within ten years from the effective date of this Plan.
4. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options only to the
extent that the I aggregate fair market value (determined at the time the Option
is granted) of the Shares, with respect to which Options meeting the
requirements of Internal Revenue Code Section 422(b) are exercisable for the
first time by any individual during any calendar year (under all plans of the
Company), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons selected by the Committee from the class of all regular
employees of the Company, including employees who are also Directors or
Officers. Any person who files with the Committee, in a form satisfactory to the
Committee, a written waiver of eligibility to receive any Option under this Plan
shall not be eligible to receive any Option under this Plan for the duration of
such waiver.
(b) In granting Options, the Committee may take into consideration
the contribution the person has made to the success of the Company and such
other factors as the Committee shall determine. The Committee shall also have
the authority to consult with and receive recommendations from officers and
other personnel of the Company with regard to these matters. The Committee may
from time to time in granting Options under the Plan prescribe such other terms
and conditions concerning such Options as it deems appropriate, including,
without limitation, (i) prescribing the date or dates on which the Option
becomes exercisable, (ii) providing that the Option rights accrue or become
exercisable in installments over a period of years, or upon the attainment of
stated goals or both, or (iii) relating an Option to the continued employment of
the Optionee for a specified period of time, provided that such terms and
conditions are not more favorable to an Optionee than those expressly permitted
herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company. Neither the Plan nor any Option granted
under the Plan shall confer upon any person any right to employment or
continuance of employment by the Company.
3
<PAGE>
(d) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, Options may not be granted to a
Director or Officer unless the grant of such Options is authorized by, and all
of the terms of such Options are determined by, a Committee that is appointed in
accordance with Section 13 of this Plan and all of whose members are
Disinterested Persons.
6. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; provided, however, that in no event shall the option price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such option is granted.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i) the
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company employing the Optionee to withhold in accordance with applicable Federal
or state tax withholding requirements. Unless further limited by the Committee
in any Option, the option price of any Shares purchased shall be paid in cash,
by certified or official bank check, by money order, with Shares or by a
combination of the above; provided further, however, that the Committee in its
sole discretion may accept a personal check in full or partial payment of any
Shares. If the exercise price is paid in whole or in part with Shares, the value
of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole discretion may, on an individual
basis or pursuant to a general program established by the Committee in
connection with this Plan, lend money to an Optionee to exercise all or a
portion of an Option granted hereunder. If the exercise price is paid in whole
or part with an Optionee's promissory note, such note shall (i) provide for full
recourse to the maker, (ii) be collateralized by the pledge of the Shares that
the Optionee purchases upon exercise of such Option, (iii) bear interest at a
rate no less than the rate of interest payable by the company to its principal
lender, and (iv) contain such other terms as the Committee in its sole
discretion shall require. No Optionee shall be deemed to be a holder of any
Shares subject to an Option unless and until a stock certificate or certificates
for such Shares are issued to such person(s) under the terms of this Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof.
8. EXERCISEABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such option, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of ten years from the date of grant of the Option.
4
<PAGE>
(b) Unless otherwise provided in any Option, each outstanding Option
shall become immediately fully exercisable:
(i) if there occurs any transaction (which shall include a
series of transactions occurring within 60 days or occurring pursuant to a
plan), that has the result that shareholders of the Company immediately before
such transaction cease to own at least 51 percent of the voting stock of the
Company or of any entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(ii) if the shareholders of the Company shall approve a plan
of merger, consolidation, reorganization, liquidation or dissolution in which
the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the shareholders of the Company shall approve a plan
for the sale, lease, exchange or other disposition of all or substantially all
the property and assets of the Company (unless such plan is subsequently
abandoned).
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any option or previously acquired by the exercise of any Option or
previously acquired by the exercise of any Option.
(d) Options granted to Officers and Directors shall not be
exercisable until the expiration of a period of at least six months following
the date of grant.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise determined by the Committee in its sole
discretion upon the grant of any Non-Statutory Stock Option, the unexercised
portion of any Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated or, in the case of a Non-Statutory Stock Option, and
unless the Committee shall otherwise determine in writing in its sole
discretion, the date on which the Optionee's employment is terminated, in either
case for any reason other than by reason of (A) Cause, which, solely for
purposes of this Plan, shall mean the termination of the Optionee's employment
by reason of the Optionee's wilful misconduct or gross negligence, (B) a mental
or physical disability as determined by a medical doctor satisfactory to the
Committee, or (c) death;
(ii) immediately upon the termination of the Optionee's
employment for Cause;
5
<PAGE>
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Internal Revenue Code Section 22(e)) as determined by a medical
doctor satisfactory to the Committee; or
(iv) (A) twelve months after the date of termination of the
Optionee's employment by reason of death of the employee, or (B) three months
after the date on which the Optionee shall die if such death shall occur during
the one year period specified in Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections 8(b)(ii) or
(iii) hereof, any Option that remains unexercised on such date. Such
cancellation notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
approval of such corporate transaction.
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsections 8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
direct sale or upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no
6
<PAGE>
adjustment by reason thereof shall be made with respect to the number of or
exercise price of Shares then subject to outstanding Options granted under the
Plan.
(d) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall be transferable by the Optionee otherwise than by will or the laws
of descent and distribution, and each Option shall be exercisable during the
Optionee's lifetime only by the Optionee.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares to
be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound
by any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law deemed by the
Committee to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall
consist of not less than two Directors, each of whom shall be Disinterested
Persons to the extent required by Section 5(d) hereof. The Committee shall have
all of the powers of the Board with respect to the Plan. Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board and any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision of the
Plan shall be final and conclusive.
7
<PAGE>
(c) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Internal Revenue Code) at the date of grant, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or of its subsidiary [as defined in Section 424 of the
Internal Revenue Code] at the date of grant) unless the option price of each
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.
15. INTERPRETATION.
(a) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the Plan will qualify as Incentive Stock
Options under Section 422 of the Internal Revenue Code. If any provision of the
Plan should be held invalid for the granting of Incentive Stock Options or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan.
(b) This Plan shall be governed by the laws of the State of
Delaware.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. Either the Board or the
Committee may from time to time amend the Plan or any Option; provided, however,
that, except to the extent provided in Section 10, no such amendment may,
without approval by the shareholders of the Company, (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan; and
provided further, that, except to the extent provided in Section 9,1 no
amendment or suspension of the Plan or any Option issued hereunder shall
substantially impair any Option previously granted to any Optionee without the
consent of such Optionee.
17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is the date on which the Board adopts this Plan, and the Plan shall terminate on
the 10th anniversary of the effective date.
8
<PAGE>
EXHIBIT B
AQUAGENIX, INC.
-------------------------------
AMENDED AND RESTATED
DIRECTORS STOCK OPTION PLAN
-------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
AQUAGENIX, INC., a Delaware corporation (the "Company"), by providing an
additional incentive to attract and retain nonemployee directors through the
encouragement of stock ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Annual Meeting Date" shall mean the date of the annual meeting
of the Company's shareholders at which the Directors are elected.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the directors stock option committee
appointed by the Board pursuant to Section 12 hereof or, if not appointed, the
Board.
(e) "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company.
(f) "Company" shall refer to AQUAGENIX, INC., a Delaware corporation.
(g) "Director" shall mean a member of the Board.
(h) "Disinterested Person" shall mean a Director who is not, during
the one year prior to his or her service as an administrator of this Plan, or
during such service, granted or awarded equity securities pursuant to this Plan,
except that:
a. participation in a formula plan meeting the conditions in
paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the Securities Exchange Act
shall not disqualify a Director from being a Disinterested Person;
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b. participation in an ongoing securities acquisition plan
meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3 promulgated under
the Securities Exchange Act shall not disqualify a Director from being a
Disinterested Person; and
c. an election to receive an annual retainer fee in either cash
or an equivalent amount of securities, or partly in cash and partly in
securities, shall not disqualify a Director from being a Disinterested Person.
(i) "Eligible Director" means any person who is a member of the
Board and who is not an employee, full time or part time, of the Company. For
purposes of this Plan, a director who does not receive regular compensation from
the Company or its subsidiaries, other than directors' fees and reimbursement
for expenses, shall not be considered to be an employee of the Company, even if
such director is an officer of a subsidiary of the Company.
(j) "Fair Market Value" of the Common Stock on any date of reference
shall be the Closing Price on the business day immediately preceding such date
of the Common Stock; provided, that for purposes of grants made on the Initial
Grant Date to persons who are Eligible Directors on the Effective Date, the term
"Fair Market Value" shall mean the initial public offering price per share of
Common Stock. For this purpose, the Closing Price of the Common on any business
day shall be (i) if such Common Stock is listed or admitted for trading on any
United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and low
asked quotations for such day of the Common Stock on such system, or (iii) if
neither clause (i) or (ii) is applicable, the man between the high bid and low
asked quotations for the Common Stock as reported by the National Quotation
Bureau, Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Common Stock on at least five of the ten preceding
days.
(k) "Option" (when capitalized) shall mean any option granted under
this Plan.
(l) "Option Agreement" means the agreement between the Company
and the Optionee for the grant of an option.
(m) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
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(n) "Parent" means a "parent corporation" as defined in Section
425(e) and (g) of the Code.
(o) "Plan" shall mean this Directors Stock Option Plan for the
Company.
(p) "Share(s)" shall mean a share or shares of the Common Stock.
(q) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. Subject to Section 9 of this Plan, the Company
may grant to Optionees from time to time Options to purchase an aggregate of up
to Two Hundred and Fifty Thousand (250,000) Shares from authorized and unissued
Shares. If any Option granted under the Plan shall terminate, expire, or be
canceled or surrendered as to any Shares, new Options may thereafter be granted
covering such Shares.
4. CONDITIONS FOR GRANT OF OPTIONS. Upon the grant of each Option, the
Company and the Eligible Director shall enter into an Option Agreement, which
shall specify the grant date and the exercise price and shall include or
incorporate by reference the substance of this Plan and such other provisions
consistent with this Plan as the Committee may determine.
5. EXERCISE PRICE. The exercise price per Share of any Option shall be
the Fair Market Value of the Shares underlying such Option at the close of
business on the date such Option is granted.
6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i) the
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee or Board in its sole discretion have been
made for the Optionee's payment to the Company of the amount that is necessary
for the Company or Subsidiary employing the Optionee to withhold in accordance
with applicable Federal or state tax withholding requirements. The exercise
price of any Shares purchased shall be paid in cash, by certified or official
bank check or personal check, by money order, with Shares or by a combination of
the above. If the exercise price is paid in whole or in part with Shares, the
value of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. No Optionee shall be deemed to be a holder of any Shares
subject to an Option unless and until a stock certificate or certificates for
such Shares are issued to such person(s) under the terms of the Plan. No
adjustment shall be made
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for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 9 hereof.
7. EXERCISE SCHEDULE FOR OPTIONS. Subject to Section 8 of this Plan,
each Option granted hereunder shall be exercisable in two equal installments
each on the first and second anniversary date following the date of grant to an
Eligible Director. Thereafter, such option shall be exercisable in full. The
expiration date of an Option shall be five years from the date of grant of the
Option.
8. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void on the date on which the
Optionee ceases to be a Director for any reason, except as provided in Section
8(b) of this Plan, including, but not limited to, by reason of (A) "Cause"
(which, for purposes of this Plan, shall mean the removal of the Optionee as a
Director by reason of any act of (a) fraud or intentional misrepresentation, or
(b) embezzlement, misappropriation, or conversion of assets or opportunities of
the Company or any Subsidiary) or (B) resignation.
(b) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void sixty (60) days after the date
on which the Optionee ceases to be a Director by reason of death of the
Director.
(c) The Committee in its sole discretion may, by giving written
notice ("Cancellation Notice"), cancel any Option that remains unexercised on
the date of the consummation of any corporate transaction;
(i) if the shareholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(ii) if the shareholders of the Company shall approve a plan
for the sale, lease, exchange or other disposition of all or substantially all
the property and assets of the Company (unless such plan is subsequently
abandoned).
Any Cancellation Notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
shareholder approval of such corporate transaction.
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9. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event;
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
exercise price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsections 8(b)(i) or (ii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
a direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversation of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or exercise price of the
Shares then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
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10. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares to
be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound
by any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law deemed by the
Committee to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.
12. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee, which shall consist
of one or more Directors as determined by the Board, each of whom shall be
Disinterested Persons. The Committee shall have all of the powers of the Board
with respect to the Plan. Any member of the Committee may be removed at any
time, with or without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by appointment by the
Board.
The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan. The Committee's determinations and
its interpretation and construction of any provision of the Plan shall be final
and conclusive.
Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee at a meeting
or (ii) without a meeting by the unanimous written approval of the members of
the Committee.
13. INTERPRETATION. If any provision of the plan should be held invalid
or illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the Committee
shall be final and conclusive. This Plan shall be governed by the laws of the
State of Delaware. Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan. Any
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reference to the masculine, feminine, or neuter gender shall be a reference to
such other gender as is appropriate.
14. TERM OF PLAN; AMENDMENT AND TERMINATION OF THE PLAN.
(a) This Plan shall become effective upon its adoption by the Board,
and shall continue in effect until all Options granted hereunder have expired or
been exercised, unless sooner terminated under the provisions relating thereto.
No Option shall be granted after ten years from the date of the Board's adoption
of this Plan.
(b) The Committee may from time to time amend the Plan or any
Option; PROVIDED, HOWEVER, that, without approval by the Company's shareholders,
no such amendment shall (i) materially increase the benefits accruing to
participants under the Plan, (ii) materially increase the number of Shares or
other securities reserved for issuance upon the exercise of Options, (iii)
materially modify the requirements as to eligibility for participation under the
Plan or (iv) otherwise involve any other change or modification requiring
shareholder approval under Rule 16b-3 of the Securities Act of 1933, as amended;
AND, PROVIDED, FURTHER, that, except to the extent otherwise specifically
provided in Section 8, no amendment or suspension of the Plan or any Option
issued hereunder shall substantially impair any Option previously granted to any
Optionee without the consent of such Optionee.
(c) Notwithstanding anything else contained herein, the provisions
of this Plan which govern the number of Options to be awarded to nonemployee
directors, the exercise price per share under each such Option, when and under
what circumstances an Option will be granted and the period within which each
Option may be exercised, shall not be amended more than once every six months
(even with shareholder approval), other than to conform to changes to the Code,
or the rules promulgated thereunder, and under the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder, or with
rules promulgated by the Securities and Exchange Commission.
(d) The Committee, without further approval of the Company's
shareholders, may at any time terminate or suspend this Plan. Any such
termination or suspension of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been terminated or suspended. No Option may be granted while the Plan is
suspended or after it is terminated. The rights and obligations under any Option
granted to any Optionee while this Plan is in effect shall not be altered or
impaired by the suspension or termination of this Plan without the consent of
such Optionee.
15. RESERVATION OF SHARES. The Company, during the term of the Plan,
will at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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