SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[_] Definitive Proxy Statement Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Aquagenix, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed:
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Aquagenix, Inc.
6500 Northwest 15 Avenue
Fort Lauderdale, Florida 33309
Telephone 954-975-7771 Facsimile 954-969-7739
May _______, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the
Stockholders of Aquagenix, Inc. to be held on Friday, June 25, 1999 at 1:00 p.m.
at the Sheraton Ft. Lauderdale Airport Hotel, 1825 Griffin Road, Dania, Florida
33004. The formal Notice of Annual Meeting of Stockholders and Proxy Statement
are attached. I hope that you will attend the meeting in person, at which time I
will have the opportunity to review the business and operations of Aquagenix,
Inc.
The matters to be acted upon by our Stockholders are set forth in the
Notice of Annual Meeting of Stockholders. It is important that your shares be
represented and voted at the meeting. Accordingly, after reading the attached
Proxy Statement, please sign, date and return the enclosed proxy card. Your vote
is important regardless of the number of shares you own.
Sincerely,
/s/ Russell M. Thompson
Russell M. Thompson
Chief Executive Officer
<PAGE>
AQUAGENIX, INC.
6500 N.W. 15TH AVENUE
FORT LAUDERDALE, FLORIDA 33309
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1999
TO THE STOCKHOLDERS OF AQUAGENIX, INC:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders
(the "Annual Meeting") of Aquagenix, Inc., a Delaware corporation (the
"Company"), will be held at 1:00 p.m., local time, on Friday, June 25, 1999, at
Sheraton Ft. Lauderdale Airport Hotel, 1825 Griffin Road, Dania, Florida 33004,
for the following purposes:
1. To elect five members to the Company's Board of Directors to hold
office until the Company's 2000 Annual Meeting of Stockholders or until their
successors are duly elected and qualified;
2. To amend the Company's Certificate of Incorporation to increase
the number of authorized shares of common stock of the Company, par value $.01
per share, from 10,000,000 shares to 20,000,000 shares;
3. To ratify the appointment of Durland & Company, CPA, independent
certified public accountants, as the Company's auditors; and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
All stockholders are cordially invited to attend; however, only
stockholders of record at the close of business on April 30, 1999 are entitled
to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
ABRAHAM S. FISCHLER
ACTING CHAIRMAN OF THE BOARD
Fort Lauderdale, Florida
May _______ , 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. STOCKHOLDERS
WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY
AND VOTE THEIR SHARES IN PERSON.
1
<PAGE>
1999 ANNUAL MEETING OF STOCKHOLDERS
OF
AQUAGENIX, INC.
-----------------------------------
PROXY STATEMENT
-----------------------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Aquagenix, Inc., a Delaware corporation
(the"Company"), of proxies from the holders of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), for use at the 1999 Annual Meeting of
Stockholders of the Company to be held at 1:00 p.m., local time, on Friday, June
25, 1999, or at any adjournment(s) or postponement(s) thereof (the "Annual
Meeting"), pursuant to the foregoing Notice of Annual Meeting of Stockholders.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is May ______, 1999. Stockholders
should review the information provided herein in conjunction with the Company's
1998 Annual Report, which accompanies this Proxy Statement. The Company's
principal executive offices are located at 6500 N.W. 15th Avenue, Fort
Lauderdale, Florida 33309, and its telephone number is (954) 969-8000.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
1. To elect five members to the Company's Board of Directors to hold
office until the Company's 2000 Annual Meeting of Stockholders or until their
successors are duly elected and qualified;
2
<PAGE>
2. To amend the Company's Certificate of Incorporation to increase the
number of authorized shares of common stock of the Company, par value $.01 per
share, from 10,000,000 shares to 20,000,000 shares;
3. To ratify the appointment of Durland & Company, CPA, independent
certified public accountants, as the Company's auditors; and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked in accordance with the procedures set forth above)will be
voted (a) FOR the election of the five nominees for director named below, (b)
FOR the proposal to ratify the appointment of Durland & Company, CPA,
independent public accountants, as the Company's auditors, and (c) FOR the
approval of a Certificate of Amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock. In the
event a stockholder specifies a different choice by means of the enclosed proxy,
his or her shares will be voted in accordance with the specification so made.
The Board of Directors does not know of any other matters that may be brought
before the Annual Meeting nor does it foresee or have reason to believe that
proxy holders will have to vote for substitute or alternate nominees. In the
event that any other matter should come before the Annual Meeting or any nominee
is not available for election, the persons named in the enclosed Proxy will have
discretionary authority to vote all proxies not marked to the contrary with
respect to such matters in accordance with their best judgment.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 30,
1999 as the record date (the "Record Date") for determining stockholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 5,532,725 shares of Common Stock issued and outstanding,
all of which are entitled to be voted at the Annual Meeting. Each share of
Common Stock is entitled to one vote on each matter submitted to stockholders
For approval at the Annual Meeting. Stockholders do not have the right to
cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The approval of the Amendment to the Company's
Certificate of Incorporation will require approval of the holders of a majority
of the Common Stock of the Company outstanding on the Record Date. If less than
a majority of outstanding shares entitled to vote are represented at the Annual
Meeting, a majority of the shares so represented may adjourn the Annual Meeting
to another date, time or place, and notice need not be given of the new date,
time or place if the new date, time or place is announced at the meeting before
an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof.
3
<PAGE>
Pursuant to Delaware law, abstentions and broker non-votes are counted
as present for purposes of determining the presence of a quorum. However,
abstentions are treated as present and entitled to vote and will be counted as
votes cast at the Annual Meeting, but will not be counted as votes cast for or
against any given matter. A broker non-vote on a matter is considered not
entitled to vote on that matter and thus is not counted in determining whether a
matter requiring approval of a majority of the shares present and entitled to
vote has been approved or whether a plurality of the shares present and entitled
to vote has been voted.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's offices, 6500 N.W. 15th Avenue, Fort Lauderdale,
Florida 33309, for a period of ten days prior to the Annual Meeting and at the
Annual Meeting itself for examination by any stockholder.
SECURITY OWNERSHIP OF CERTAIN
BENEFECIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 18, 1999, the number of
shares of Common Stock which were owned beneficially by (i) each person who is
known by the Company to own beneficially more than 5% of its Common Stock, (ii)
each director, (iii) each executive officer, and (iv) all directors and
executive officers as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percentage
of Beneficial Owner(1) of Beneficial Ownership (2) Owned (2)
- ----------------------------------------------------------------------------------------
<S> <C>
Directors and Executive Officers
Abraham S. Fischler....................... 52,500(3) 1.0%
Russell M. Thompson....................... 6,667 .01%
5% or Greater Beneficial Stockholders
Steel Partners II, L.P.................... 790,650(4) 14.3%
Nicolas Berggruen......................... 515,041(5) 9.3%
Jane and Pasquale Guadagno................ 354,000(6) 6.4%
The Equitable Life Assurance Society
of the United States .................. 351,197(7) 6.3%
Imperial Capital, L.L.C................... 336,349(8) 6.1%
</TABLE>
(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) Includes 25,000 options currently exercisable under the Company's
Amended and Restated Directors Stock Option Plan, and does not include
25,000 options which are not currently exercisable.
4
<PAGE>
(4) Steel Partners II, L.P. address is 150 E. 52nd Street, 21st Floor, New
York, NY 10022
(5) Includes 382,541 shares of Common Stock and 132,500 shares of Common
Stock held by Alexander Enterprise Holdings, Inc. and Alpha Atlas
Holdings, LDC, respectively, both companies of which are beneficially
owned by Mr. Berggruen, and warrants to purchase 110,000 shares of the
Company's Common Stock pursuant to certain warrant agreements issued to
Alexander Enterprise Holdings, Inc. Alexander Enterprise Holdings,
Inc.'s address is: c/o Alpha Asset Management, Paseo de la Habana 140,
28036 Madrid, Spain. Alpha Atlas Holdings, LDC's address is: c/o Alpha
Investment Management, Inc., 499 Park Avenue, 24th Floor, New York, NY
10022, Attn: Doug Siekierski.
(6) The address for these shareholders is: 16 Muncy Drive, W. Long Branch,
NJ 07746-1148.
(7) Represents warrants to purchase an aggregate of 351,197 shares of the
Company's Common Stock pursuant to an Amended and Restated Senior
Secured Note and Warrant Purchase Agreement, dated as of December 15,
1995 in relation to the funding of the acquisition of AmerAquatic, Inc.
in October 1995. The address for this shareholder is: Alliance
Corporate Financial Group, Inc., 1290 Avenue of the Americas, New York,
NY 10104.
(8) Represents warrants to purchase an aggregate of 336,349 shares of the
Company's Common Stock pursuant to certain warrant agreements in
relation to the provision of financial consulting services. The address
for this shareholder is: 150 S. Rodeo Drive, Suite 100, Beverly Hills,
CA 90212.
(9) Mr. Guadagno has entered into an Agreement dated May 12, 1998 with the
Company in connection with certain consulting services wherein Mr.
Guadagno agreed that he will not directly or indirectly (1) acquire or
agree, offer, seek or propose to acquire ownership of any securities
issued by the Company, or any rights or options to acquire such
ownership; (2) seek or propose to influence or control by proxy or
otherwise the management or policies of the Company; (3) contact or
otherwise communicate with the officers, directors or counsel to the
Company with respect to the business or affairs of the Company; and (4)
enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing. In connection with this Agreement, Mr. Guadagno also entered
into a separate Agreement dated May 12, 1998 wherein he irrevocably
granted to the Company's President his Proxy, with full power of
substitution, to attend all meetings of shareholders of the Company and
to vote all shares of Common Stock, including shares of Common Stock
owned directly or indirectly and all shares of Common Stock
subsequently acquired by Mr. Guadagno.
Proposal 1
----------
ELECTION OF DIRECTORS; NOMINEES
The Company's Bylaws provide that the number of directors shall be
fixed from time to time by resolution of the Board of Directors as specified by
the Company's Certificate of Incorporation. The Board of Directors has fixed at
five the number of directors that will constitute the Board of Directors for the
ensuing year. Each director elected at the Annual Meeting will serve for a term
expiring at the Company's 2000 Annual Meeting of Stockholders or when his
successor has been duly elected and qualified.
The Company has nominated each of Abraham S. Fischler, Russell M.
Thompson, Michael J, Baratta, Rodney K. Longman and Raymond Monteleone to be
elected as a director at the Annual Meeting. The Board of Directors has no
reason to believe that any nominee will refuse or be unable to accept election;
however, in the event that one or more nominees are unable to accept election or
if any other unforeseen contingencies should arise, each Proxy that does not
direct otherwise will be voted for the remaining nominees, if any, and for such
other persons as may be designated by the Board of Directors.
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND SIGNIFICANT EMPLOYEES
5
<PAGE>
The following persons are the directors and executive officers of the Company:
Name Age Position
---- --- --------
Abraham S. Fischler 70 Acting Chairman and Secretary
Russell M. Thompson 44 President, Chief Executive Officer
and Director
Peter S. LeMay 58 Chief Financial Officer
Michael J. Baratta 40 Director
Rodeny K. Longman 64 Director
Raymond Monteleone 51 Director
Abraham S. Fischler. Dr. Fischler was elected Acting Chairman of the Board and
Secretary in June 1998 and has been a director of the Company since September
1994. Since July 1992, Dr.Fischler has been President Emeritus of Nova
University, Fort Lauderdale, Florida. From July 1970 to July 1992, Dr. Fischler
served as President of Nova University.
Russell M. Thompson. Mr. Thompson was appointed President and Chief Executive
Officer of the Company on February 1, 1999 and a director in March 1999. He was
previously President of Pylon Manufacturing Corporation of Deerfield Beach
Florida. From December 1971 to August 1998, he held numerous management
positions in operations with Pylon. Pylon is a division of MascoTech, Inc.,
which specializes in engineering, design and professional services to the
automotive industry. Mr. Thompson is also an attorney, licensed to practice law
in the State of Florida.
Michael J. Baratta. Mr. Baratta is a partner with Vector Consulting, L.L.C. and
was a consultant to the Company from September of 1998 to April of 1999. He was
appointed as a director of the Company in February 1999. Mr. Baratta formed
Vector Consulting, L.L.C. approximately two years ago; three years prior to that
he was an independent consultant. Five years ago he left his position as a
principal at Heller Investments, Inc. in Chicago, a subsidiary of Fuji Bank.
Rodney K. Longman. Mr Longman was appointed as a director of the Company in
April 1999. In 1970 he joined Pylon Manufacturing Corporation, a manufacture of
automotive parts, located in Deerfield Beach Florida. Mr. Longman was with Pylon
until May of 1999 when he retired as its Chairman. Currently he manages a
portfolio of real estate in the South Florida area for his private investment.
Pert S. LaMay. Mr. LeMay was appointed to the position of Chief Financial
Officer in March 1999. From 1979 to 1993 Mr. LeMay was a principal in Felton,
Reynolds, Fordon & Co., Inc., a firm engaged in general construction and real
estate development. In 1993 Mr. LeMay founded and was Managing Director of
Global Processing Ltd., a business management company providing services to the
telemarketing industry. From February 1997 to March of this year he was with
Pylon Manufacturing Corporation, Deerfield Beach Florida, responsible for all
accounting and financial activities related to its Bracket Division.
Raymond Monteleone. Mr. Monteleone was appointed as a director of the Company in
April of 1999. In 1994 he joined Loren Industries, Inc., Hollywood Florida, and
is currently its Chairman of the Board and Co-Chief Executive Officer. From 1988
to 1996 Mr. Monteleone was with Sensormatic Electronics Corporation, Boca Raton,
Florida as Vice President of Corporate Development, responsible for strategic
planning, mergers and acquisitions. From 1973 to 1988 he was a partner at Arthur
Young & Company specializing in taxation.
6
<PAGE>
ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company's officers are elected annually by the Board of Directors
and serve at the discretion of the Board of Directors. The Company's directors
hold office until the next annual meeting of stockholders or until their
successors have been duly elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors held three (14) regularly scheduled
and special meetings during the fiscal year ended December 31, 1998.
The Board of Directors will have three committees consisting of the
Finance and Audit Committee, Compensation Committee and Executive Committee.
The principal functions of the Finance and Audit Committee, which is
composed solely of outside directors, are to recommend the annual appointment of
the Company's independent auditors, to consult with and review with the
Company's auditors the scope of the audit and the results of their examination,
to review and approve any material accounting policy changes affecting the
Company's operating results and to review the Company's internal control
procedures.
The Compensation Committee, reviews and recommends compensation and
benefits for the executives of the Company and has the function of administering
the grant of stock options to employees, including officers and directors who
are also employees of the Company, under the Company's Employee Stock Option
Plan. The Committee also has the function of administering the grant of stock
options to non-employee directors under the Company's Directors Stock Option
Plan.
The Executive Committee, which presently consists of all members of the
Board, is intended upon expansion of the Board to discharge certain functions of
the Board of Directors of a nature requiring Board approval but not necessarily
of the magnitude requiring approval of the entire Board of Directors.
COMPENSATION OF DIRECTORS
The Company pays directors who are not employees of the Company a fee
of $500 per meeting of the Board, and reimburses all directors for their
expenses in connection with their activities as directors of the Company.
Directors of the Company who are not employees of the Company may also receive
options under the Company's Directors Stock Option Plan (the "Directors Plan").
The Directors Plan was amended in May 1996 ("the Amended and Restated Directors
Stock Option Plan") and currently provides: (i) the number of shares available
for issuance under said plan is 250,000 shares; (ii) the Directors Stock Option
Committee will have the authority to determine the annual amount of options to
be granted to a non-employee directors; (iii) all options granted shall be
exercisable in two equal installments each on the first and second anniversary
dates following the date of the grants; and (iv) any unexercised portion of the
options shall automatically terminate on the date the optionee ceases to be a
director of the Company except upon death whereupon the options will expire
within sixty days. Any options granted pursuant to the Directors Plan have a
term of five years and have an option price equal to the fair market value of
the Company's Common Stock on the date of grant.
7
<PAGE>
During 1997, no options were issued under the Directors Plan and
options to purchase a total of 100,000 shares of the Company's Common Stock at
an exercise price of $5.31 was granted to an employee director under the
Company's Employee Stock Option Plan. During 1998, in accordance with the
Directors Plan, options to purchase a total of 75,000 shares of the Company's
Common Stock at an exercise price of $1.50 were granted to two non-employee
directors of the Company and options to purchase a total of 167,500 shares of
the Company's Common Stock at an exercise price of $7.56 were granted to two
employee directors under the Company's Employee Stock Option Plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than 10% of the outstanding Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership on Form 3 and
reports of changes in ownership of Common Stock on Forms 4 or 5. Such persons
are required by SEC regulation to furnish the Company with copies of all such
reports they file.
Based solely on its review of the copies of such reports furnished
to the Company or written representations that no other reports were required,
the Company believes that all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners were complied
with during the year ended December 31, 1998.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following compensation table sets forth, for the three fiscal years
ended December 31, 1996, 1997 and 1998, the cash and certain other compensation
paid by the Company to Andrew P. Chesler, the Company's former Chief Executive
Officer, John P. Hart, the Company's former Chief Executive Officer who also
formerly served as Executive Vice President (collectively, the "Named Executive
Officers"). No other executive officer had an annual salary and bonus in excess
of $100,000 during such years.
<TABLE>
<CAPTION>
Annual Compensation Long-Term
------------------- Comp. Awards
Other Annual ------------
Compensation Option/SARs
Name and Principal Position Year Salary ($) ($) (#)(8)
- --------------------------- ---- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Andrew P. Chesler
Chairman of the Board,
Chief Executive Officer,
President and Treasurer
1996 $176,000 (1) 60,000(2)
100,000(3)
50,000(4)
1997 $174,080 (1) 100,000(5)
1998 $162,960 $632,550(7) 77,500(6)
John P. Hart
Executive Vice President 1997 $103,846 (1) 100,000(5)
1998 $189,423 $418,700(7) 90,000(6)
</TABLE>
(1) Represents certain perquisites, the value of which did not exceed the
lesser of $50,000 or 10% of the Named Executive Officer's cash
compensation.
8
<PAGE>
(2) Represents options granted in 1996 under the Company's Employee Stock
Option Plan at an exercise price of $3.88 per share, the closing market
price of the Company's common stock on the date of the grant.
(3) Represents options granted in 1996 under the Company's Employee Stock
Option Plan at an exercise price of $4.75 per share, the closing market
price of the Company's common stock on the date of the grant.
(4) Represents options granted in 1996 under the Company's Employee Stock
Option Plan at an exercise price of $5.00 per share, the closing market
price of the Company's common stock on the date of the grant.
(5) Represents options granted in 1997 under the Company's Employee Stock
Option Plan at an exercise price of $5.31 per share, the closing market
price of the Company's common stock on the date of the grant.
(6) Represents options granted in 1998 under the Company's Employee Stock
Option Plan at an exercise price of $7.56 per share, the closing market
price of the Company's common stock on the date of the grant.
(7) The Company entered into a Stock Purchase Agreement (the "Agreement")
with the owner of Lewis Tree Service, Inc. ("Lewis"), a New York
Corporation, to acquire all of the issued and outstanding stock of
Lewis. In order to raise the deposit required by the Amended Stock
Purchase and Escrow Agreement, the Company restructured stock options
previously granted to certain officers, directors, employees and former
employees of the Company. Such restructuring involved the resetting of
option exercise prices to amounts below the current market at that time
and the acceleration of the date on which certain options could be
exercised. Accordingly, the Company recognized compensation expense for
options restructured based on the difference between the quoted market
price of the Company's stock at the date of grant and the amount the
grantees paid to acquire the stock.
(8) Any unexercised options of the above two former executives
have terminated.
EMPLOYMENT AGREEMENTS
In February 1996, the annual base salary for Robert A. Radler was
reduced to $158,000. In the same month, Robert A. Radler resigned as executive
officer of the Company. However, in order to maintain the base compensation for
Mr. Radler at the current level, the Company entered into a settlement agreement
with him to continue his compensation until June 1998 subject to certain
conditions and obligations by Mr. Radler.
OPTIONS GRANTS TABLE
The following table sets forth information concerning the grant of
stock options to the Named Executive Officers during the year ended December 31,
1998. No stock appreciation rights were granted.
Options Granted in the Year Ended December 31, 1998
----------------------------------------------------
% of Total Options Exercise
Number of Granted to Employees Price Per Expiration
Options In Year Ended Share(2) Date
December 31, 1998 (1)
--------- ------------------- -------- -----------
Andrew P. Chesler 67,500 19.1 $7.50 1/27/08
10,000 2.8 $6.38 1/27/08
John P. Hart 15,000 4.2 $6.38 1/27/08
75,000 21.2 $7.38 6/24/08
9
<PAGE>
(1) Total number of options granted during the year ended December 31, 1998
was 354,000.
(2) Options granted in 1998 are pursuant to the Company's Employee Stock
Option Plan. Options granted under the Employee Stock Option Plan have
a term of ten years and vest over a five-year period at the rate of 20%
each year. However, the Employee Stock Option Committee may in its sole
discretion, accelerate the exercise of any employee options.
Aggregated Fiscal Year-End Option Value Table
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of December
31, 1998. During the year ended December 31, 1998, Andrew P. Chesler exercised
77,500 of his stock options at $1.00 per share and 40,000 of his stock options
at $4.00 per share. John P. Hart exercised 15,000 of his stock options at $1.00
per share and 100,000 of his stock options at $4.00 per share.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Number of Value of
Shares Unexercised Options Unexercised In-the Money
Acquired Value Held at December 31, 1997 Options at December 31, 1997(1)
Name on exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Andrew P. Chesler(2) 77,500 ($ 39,959) 0 0 0 0
40,000 ($140,624) 0 0 0 0
John P. Hart(3) 15,000 ($ 7,734) 0 0 0 0
100,000 ($351,560) 0 0 0 0
</TABLE>
(1) The closing sale price of the Common Stock on December 31, 1998 as
reported by OTC Bulletin Board was $.4844 per share. Value is
calculated by multiplying (a) the difference between $.4844 and the
option exercise price by (b) the number of shares of Common Stock
underlying the option.
(2) In June 1998, the Company cancelled the remaining stock options of Mr.
Chesler.
(3) In January 1999 the Company cancelled the remaining stock options of
Mr. Hart.
Employee Stock-Based Compensation
The Company's Employee Stock Option Plan was amended in May 1996
(the "Amended and Restated Employee Stock Option Plan")and currently provides:
(i) the number of shares available under said plan is 1,000,000 shares; (ii) the
Board of Directors, or a committee thereof, administers and interprets said plan
and is authorized, in its discretion, to grant options thereunder to all
eligible employees of the Company; (iii) said plan provides for the granting of
both "incentive stock options" and "nonstatutory stock options"; (iv) options
can be granted under said plan on such terms and at such prices as determined by
the Board of Directors, except that, in the case of incentive stock options, the
per share exercise price of options will not be less than the fair market value
of the common stock on the date of grant; (v) options granted under said plan
will be exercisable after the period or periods specified in the option
agreement; and (vi) any option granted under said plan is not exercisable after
the expiration of ten years from the date of grant.
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Long-Term Incentive and Pension Plans
The Company does not have any long-term incentive or pension plans
CERTAIN TRANSACTIONS
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of
its executive officers and directors pursuant to which the Company has agreed to
indemnify each such person for all expenses and liabilities, including criminal
monetary judgments, penalties and fines, incurred by such person in connection
with any criminal or civil action brought or threatened against such person by
reason of such person being or having been an officer, director or employee of
the Company or its subsidiaries. In order to be entitled to indemnification by
the Company, such person must have acted in good faith and in a manner such
person believed to be in the best interests of the Company and, with respect to
criminal actions, such person must have had no reasonable cause to believe his
conduct was unlawful.
TRANSACTIONS WITH AFFILIATES
The Company loaned its former Chief Executive Officer, John P. Hart,
$155,000 on an unsecured basis. The notes were to mature in June of 2000 and
bear interest at seven (7%) percent. Mr. Hart resigned on October 23, 1998. In
connection with his resignation, the Company entered into a Severance, General
Release and Separation Agreement, which provides for the future dissolution of
the notes, provided the former officer complies with the terms of the agreement.
On June 2, 1998 (the "Removal Date"), the Board of Directors removed
Mr. Andrew Chesler from his executive management capacity and from his capacity
as Chairman of the Board of Directors. In a series of transactions commencing in
the fourth quarter of 1997, the Company disbursed cash either directly to or for
the benefit of Mr. Chesler totaling $682,000. Of this amount, $282,000 was
disbursed at the unilateral direction of Mr. Chesler without approval of the
Board of Directors. Prior to the Removal Date, the Board did authorize $400,000
of these disbursements with the understanding that Mr. Chesler would deliver a
two-year promissory note bearing interest at seven (7%) percent; however, no
such promissory note has been executed by Mr. Chesler. Subsequent to June 30,
1998, the Board demanded immediate repayment of the $282,000 portion of the
advances and delivery of a signed note with acceptable collateral for the
authorized portion of the advances. These demands have not been met. Based upon
the facts and circumstances available to management at this time, the ultimate
recovery of these advances remains uncertain and, accordingly, the Company has
recorded a loss allowance of $682,000 relative to these claims. This accounting
treatment does not constitute foregiveness of the claims against Mr. Chesler,
and the Company intends to pursue collection through available legal channels.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE
DIRECTORS NOMINEES.
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Proposal 2
----------
APPROVAL OF AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED
COMMON STOCK
On April 21, 1999, the Board of Directors approved a proposal to amend
the Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 10,000,000 shares to 20,000,000 shares and further
decreed that the proposal be submitted to the shareholders with the
recommendation that the amendment be approved. The text of the proposed
amendment is set forth in the Appendix to this Proxy Statement. If the Amendment
is approved by the Stockholders, the Amendment will become effective upon the
filing with the Secretary of State of the State of Delaware.
At this time, the Company has no present plans, understandings, or
agreements for the issuance or use of the proposed additional shares of Common
Stock. Nevertheless, the Board of Directors believes that the proposal is
desirable so that, as the need may arise, the Company will have more financial
flexibility and be able to issue shares of Common or Preferred Stock, without
the expense and delay of a special shareholders' meeting, in connection with
future opportunities for expanding the business through investments or
acquisitions, possible stock splits or stock dividends, equity financing,
management incentive and employee benefit plans, and for other purposes.
Authorized but unissued shares of the Company's Common and Preferred
Stock may be issued at such times, for such purposes and for such consideration
as the Board of Directors may determine to be appropriate without further
authority from the Company's stockholders, except as otherwise required by
applicable corporate law or stock exchange policies.
The Company's authorized but unissued Preferred Stock may be issued in
such series and with such rights, preferences, and limitations as the Board of
Directors may determine subject to applicable corporate law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE CERTIFICATE
OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
Proposal 3
----------
RATIFICATION OF APPOINTMENT OF THE COMPANY'S AUDITORS
The appointment of Durland & Company, CPA as independent auditors of
the Company for the fiscal year ended December 31, 1999, will be ratified.
Although the Board of Directors of the Company is submitting the appointment of
Durland & Company, CPA for stockholder approval, it reserves the right to change
the selection of Durland & Company, CPA as auditors, at any time during the
fiscal year, if it deems such change to be in the best interest of
the Company, even after stockholder approval. Representatives of Durland &
Company, CPA are not expected to be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF DURLAND & COMPANY, CPA AS INDEPENDENT AUDITORS FOR THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
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<PAGE>
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than elections to offices.
OTHER MATTERS
Management is not aware of any other business which may come before the
meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy holders.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the Company's 2000
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission promulgated under the Securities Exchange Act
of 1934, as amended, must be received by the Company at its executive offices by
January 30, 2000, for inclusion in the Company's proxy statement and form of
proxy relating to such meeting.
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, including related exhibits as filed with the Securities and
Exchange Commission, is available without charge to stockholders upon request to
Russell M. Thompson, Chief Executive Officer, 6500 Northwest 15th Avenue, Fort
Lauderdale, Florida 33309.
By Order Of The Board of Directors
Fort Lauderdale, Florida ABRAHAM S. FISCHLER
May _______, 1999 CHAIRMAN OF THE BOARD
APPENDIX
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AQUAGENIX, INC.
Pursuant to the Business Corporation Laws of the State of Delaware, the
undersigned President of Aquagenix, Inc. (the "Corporation"), a corporation
13
<PAGE>
organized and existing under and by virtue of the Business Corporation Laws of
the State of Delaware, bearing document number 94000002805, does hereby certify:
First: That in accordance with the Unanimous Written Consent of the
Board of Directors, dated April 21, 1999, pursuant to Section 141 of the
Delaware Business Corporation Laws, and the Consent of Majority Shareholders of
the outstanding common stock of the Corporation at a meeting of June 25, 1999,
all of the directors and a majority of the shareholders of said Corporation
approved the amendment to the Corporation's Certificate of Incorporation as
follows:
Paragraphs 1(a) of ARTICLE IV of the Corporation's Amended and Restated
Certificate of Incorporation shall be deleted and substituted by the following:
ARTICLE IV
CAPITAL STOCK
(1) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 21,000,000 shares, of which:
(a) 20,000,000 shares shall be designated as Common
Stock, having a par value of $.01 per share; and
Second: The foregoing amendment was adopted by the Board of Directors
and majority Shareholders of the Corporation pursuant to the Delaware Business
Corporation Laws and, accordingly, the number of votes cast by the Shareholders
of the Corporation for the amendment to the Corporation's Amended and Restated
Certificate of Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned being the President of this
Corporation has executed these Articles of Amendment to the Amended and Restated
Certificate of Incorporation as of the ____ day of June, 1999.
AQUAGENIX, INC.
-----------------------
Russell M. Thompson
President
ROXANNE K. BEILLY, ESQ., Florida Bar No. 851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Boulevard, Suite 1900
Ft. Lauderdale, FL 33301
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF
DIRECTORS AQUAGENIX, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -June 25, 1999
The undersigned, revoking all previous proxies, hereby appoint(s)
Russell M. Thompson as Proxy, with full power of substitution, to represent and
to vote all Common Stock of Aquagenix, Inc. owned by the undersigned at the
Annual Meeting of Stockholders to be held in Fort Lauderdale, Florida at 1:00
p.m. on Friday, June 25, 1999, including any original or subsequent adjournment
thereof, with respect to the proposals set forth in the Notice of Annual Meeting
and Proxy Statement. No business other than matters described below is expected
to come before the meeting, but should any other matter requiring a vote of
14
<PAGE>
stockholders arise, the person named herein will vote thereon in accordance with
his best judgment. All powers may be exercised by said Proxy. Receipt of the
Notice of Annual Meeting and Proxy Statement is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING.
1. Election of Directors. Nominees are Abraham S. Fischler, Russell
M. Thompson, Michael J. Baratta, Rodeny K. Longman and Raymond
Monteleone.
[ ] FOR ALL NOMINEES LISTED (Except as specified here:___________)
OR
[ ] WITHHOLDING AUTHORITY to vote for all nominees listed above
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2 Proposal to amend the Certificate of Incorporation increasing the
number of authorized shares of Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to Ratify the Appointment of Durland & Company, CPA as
independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The shares represented by this proxy will be voted as directed. IF NO SPECIFIC
DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
DATED:
-------------------------
-----------------------------------
(Signature)
-----------------------------------
(Signature if jointly held)
-----------------------------------
(Printed name(s))
Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your full
title as such. If executed by a corporation or partnership, the proxy should be
signed in the corporate or partnership name by a duly authorized officer or
other duly authorized person, indicating such officer's or other person's title.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
15
