PERMA-FIX ENVIRONMENTAL SERVICES, INC.
1940 N.W. 67th Place, Suite A
Gainesville, Florida 32653
NOTICE OF ANNUAL MEETING
To Be Held December 15, 1999
To the Stockholders of Perma-Fix Environmental Services, Inc.:
Notice is hereby given that the 1999 Annual Meeting of Stockholders
(the "Meeting") of Perma-Fix Environmental Services, Inc. (the
"Company") will be held at the offices of Perma-Fix Environmental
Services, Inc., 1940 N.W. 67th Place, Gainesville, Florida 32653,
Wednesday, December 15, 1999, at 1:00 p.m. (EST), for the following
purposes:
1. To elect five (5) Directors to serve until the next
Annual Meeting of Stockholders or until their
respective successors are duly elected and
qualified;
2. To ratify the appointment of BDO Seidman, LLP as
the independent auditors of the Company for fiscal
1999;
3. To transact such other business as may properly come
before the meeting and at any adjournments thereof.
Only stockholders of record at the close of business on November 1,
1999, will be entitled to notice of, and to vote at, the Meeting
and at any adjournments thereof.
Perma-Fix Environmental Services, Inc.'s Annual Report for 1998 is
enclosed for your convenience.
By Order of the Board of Directors
Richard T. Kelecy
Secretary
Gainesville, Florida
November 10, 1999
Please complete, date, sign and return the accompanying Proxy
whether or not you plan to attend the meeting in person. The
enclosed return envelope requires no additional postage if mailed
in the United States. If a stockholder decides to attend the
meeting, he or she may, if so desired, revoke the Proxy and vote in
person.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
1940 N.W. 67th Place, Suite A
Gainesville, Florida 32653
PROXY STATEMENT
FOR THE
1999 ANNUAL MEETING OF STOCKHOLDERS
Solicitation
This Proxy Statement is furnished to the holders of the Common
Stock (the "Common Stock") of Perma-Fix Environmental Services,
Inc. (the "Company") in connection with the solicitation on behalf
of the Board of Directors of the Company (the "Board of Directors"
or the "Board") of proxies to be used in voting at the 1999 Annual
Meeting of Stockholders to be held at the Company's offices,
1940 N. W. 67th Place, Gainesville, Florida 32653, on Wednesday,
December 15, 1999, at 1:00 p.m. (EST), and any adjournments thereof
(the "Meeting"). The Company will pay the cost of preparing, printing,
assembling and mailing this Proxy Statement and the Proxy Card and all
of the costs of the solicitation of the proxies, if necessary. In
addition to solicitation by use of the mail, certain of the Company's
officers and employees may without receiving additional compensation
therefor, solicit the return of proxies by telephone, telegram or
personal interview. The Company has requested that brokerage houses
and custodians, nominees and fiduciaries forward soliciting materials
to their principals, the beneficial owners of Common Stock, and has
agreed to reimburse them for reasonable out-of-pocket expenses in
connection therewith.
Revocation of Proxy
The enclosed proxy is for use at the Meeting if the stockholder
will not be able to attend in person. Any stockholder who executes
a proxy may revoke it at any time before it is voted by delivering
to the Company's Secretary either an instrument revoking the proxy
or a duly executed proxy bearing a later date. A proxy may also be
revoked by any stockholder present at the Meeting who expresses a
desire to vote his shares in person.
Mailing of Proxy Statement and Proxy Card
The Notice of Annual Meeting of Stockholders, this Proxy Statement
and the accompanying Proxy Card were first mailed to stockholders
on or about November 10, 1999.
Record Date and Voting Securities
Only the holders of Common Stock of record at the close of business
on November 1, 1999 (the "Record Date"), will have the right to
receive notice of, and be entitled to vote at, the Meeting. At the
close of business on the Record Date, 20,486,219 shares (excluding
988,000 treasury shares) of Common Stock were issued and
outstanding. Each stockholder of record, as of the Record Date, is
entitled to one vote for each share of Common Stock that the
stockholder owned as of the Record Date on each matter to be voted
upon at the Meeting. A majority of all of the outstanding shares
of Common Stock entitled to notice of, and to vote at, the Meeting,
represented in person or by proxy will constitute a quorum for the
holding of the Meeting. The failure of a quorum to be represented
at the Meeting will necessitate adjournment and will subject the
Company to additional expense.
Pursuant to the General Corporation Law of the State of Delaware,
only votes cast "FOR" a matter constitute affirmative votes, except
proxies in which the stockholder fails to make a specification as
to whether he votes "FOR", "AGAINST", "ABSTAINS" or "WITHHOLDS" as
to a particular matter shall be considered as a vote "For" that
matter. Votes will be tabulated by an inspector of election
appointed by the Board of Directors. Votes in which the
stockholder specified that he is "WITHHOLDING" or "ABSTAINING" from
voting are counted for quorum purposes. Abstentions and broker
non-votes are not considered as votes "For" a particular matter.
1
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board
of Directors shall hold office until the next annual meeting of
stockholders and their successors have been elected and qualified
or until their earlier resignation or removal. Successors to those
Directors whose terms have expired are required to be elected by
stockholder vote. Vacancies for an unexpired term and any
additional positions created by Board of Directors' action are
filled by the existing Board of Directors.
The Company's Bylaws provide that the number of the Company's directors
(the "Directors") shall be at least three (3), and that the number of
Directors may be increased or decreased by action of the Board.
The Board of Directors currently has determined that the number of
Directors shall be five (5).
At the Meeting, five (5) Directors are to be elected to serve until
the next annual meeting of the stockholders and until their
respective successors are elected and qualified. Dr. Centofanti
and Messrs. Gorlin, Zwecker, Colin and Sullivan are presently
serving as Directors and have been nominated for reelection to
the Board of Directors. Shares represented by the enclosed proxy
will be voted "FOR" the election as Directors of the five (5)
nominees named below unless authority is withheld. The proxies
cannot be voted for a greater number of persons than the number of
nominees named herein.
Although there is no formal procedure for stockholders to recommend
nominees for the Board of Directors, the Nominating Committee will
consider such recommendations if received one hundred twenty (120)
days in advance of the Annual Meeting of Stockholders. Such
recommendations should be addressed to the Nominating Committee at
the Company's address and provide all information relating to such
person that the stockholder desires to nominate that is required to be
disclosed in solicitation of proxies pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended ("Exchange
Act").
Thomas P. Sullivan ("Mr. Sullivan") was appointed to the Board of
Directors in June 1999 pursuant to the terms of certain Stock
Purchase Agreements (as defined and described in "Certain
Relationships and Related Transactions") to fill a newly created
Board seat which was created in connection with the Stock Purchase
Agreements. Pursuant to the Stock Purchase Agreements, the Company
acquired Chemical Florida, Chemical Georgia and Chem-Met (as such
terms are defined in "Certain Relationships and Related
Transactions"). Under the terms of the Stock Purchase Agreements,
the Sullivan Trusts (as defined in "Certain Relationships and
Related Transactions"), who were the Sellers under the Stock
Purchase Agreements, are entitled to have one (1) nominee to the
Company's Board of Directors as long as the Sullivan Trusts own of
record, in the aggregate, not less than 1,500,000 shares of the
Common Stock that the Sullivan Trusts acquired under the Stock
Purchase Agreements. The Company agreed to recommend that its
shareholders elect the one nominee selected by the Sullivan Trusts
if such nominee is satisfactory to the Board of Directors of the
Company. At the closing of the Stock Purchase Agreements, the
Sullivan Trusts selected Mr. Sullivan as their nominee to the
Company's Board of Directors, and, as a result, Mr. Sullivan was
elected by the Board as a director to fill the newly created
directorship and to serve until the Company's next annual meeting of
stockholders. As of the Record Date, the Sullivan Trusts, in which
the trustees and primary beneficiaries are Mr. Sullivan and his
wife, are the beneficial owners of 1,500,000 shares of Common
Stock, which shares were acquired under the Stock Purchase
Agreements. See"Certain Beneficial Owners." Mr. Sullivan has been
selected by the Sullivan Trusts as their nominee for the 1999
election of Directors.
2
Nominees
The following sets forth information concerning the five (5)
nominees for election as our Directors:
Principal Occupation and
Director/Nominee Other Information
________________ _________________________
Dr. Louis F. Centofanti, Lou Centofanti has served as Chair-
Chairman of the Board man of the Board of the Company
and Director since 1991, since he joined the Company in
Age: 56 February 1991. Dr. Centofanti also
served as President and Chief
Executive Officer of the Company
from February 1991 until September
1995, and again in March 1996, was
elected to serve as President and
Chief Executive Officer of the
Company and continues as Chairman of
the Board. From 1985 until joining
the Company, Dr. Centofanti served
as Senior Vice President of USPCI,
Inc. ("USPCI"), a large hazardous
waste management company, where he
was responsible for managing the
treatment, reclamation and technical
groups within USPCI. In 1981, he
founded PPM, Inc., a hazardous waste
management company specializing in
the treatment of PCB contaminated
oils. From 1978 to 1981, Dr.
Centofanti served as Regional
Administrator of the Department of
Energy for the southeastern region
of the United States. Dr.
Centofanti has a Ph.D. and a M.S. in
Chemistry from the University of
Michigan, and a B.S. in Chemistry
from Youngstown State University.
Mark A. Zwecker, Mark Zwecker has served as a
Director since Director of the Company since its
1991, inception in January 19991. Mr.
Age: 48 Zwecker is currently President of
ACI Technology, LLC, a position he
has held since 1997. Previously, Mr.
Zwecker was Vice President of
Finance and Administration for
American Combustion, Inc., a
position he held from 1986 until
1998. In 1983, Mr. Zwecker
participated as a founder with
Dr. Centofanti in the start up of
PPM, Inc. He remained with PPM, Inc.
until its acquisition in 1985 by
USPCI. Mr. Zwecker has a B.S. in
Industrial and Systems Engineering
from the Georgia Institute of
Technology and an M.B.A. from
Harvard University.
Steve Gorlin, Steve Gorlin has served as a Director
Director since of the Company since its inception in
1991, January 1991. Mr. Gorlin is presently
Age: 62 Chairman and CEO of Global Medical
Productions, Inc. and Chairman of
SurgiVision, Inc. Over the past 25 years
he has founded several biotechnology and
pharmaceutical companies, including
Hycor Biomedical, Inc., Theregenics
Corporation, CytRx Corporation, Medicis
Corporation and Entremed, Inc., which
are public companies, and SeaLite
Sciences, Inc., which is a private
company. He is a member of the Board of
Directors of Advanced Aerodynamic &
Structures, Inc., a publicly traded
manufacturing firm. Mr. Gorlin also
established the Touch Foundation, a
non-profit organization for the blind,
and is a member of the Business Advisory
Council of Johns Hopkins Medicine.
Jon Colin, Jon Colin has served s a Director of
Director since the Company since December 1996. He
1996, is a financial consultant for a
Age: 43 variety of technology-based
companies. From 1990 to 1996, Mr.
Colin served as President and Chief
Executive Officer for Environmental
Services of America, Inc., a
publicly traded environmental
services company. Mr. Colin has a
B.S. degree in Accounting from the
University of Maryland.
3
Thomas P. Sullivan Thomas Sullivan has served as a
Director since Director of the Company since June 1,
June, 1999 1999, the date of his election
Age: 66 by the Board of Directors to fill a
newly created directorship pursuant
to the terms of the Stock Purchase
Agreements wherein the Company
purchased all of the outstanding
stock of Chemical Florida, Chemical
Georgia and Chem-Met. From 1976,
when Mr. Sullivan purchased Chem-
Met, until June 1, 1999, he served
as Director and President of Chem-
Met. Mr. Sullivan founded and
served as Director and President of
Chemical Florida from its inception
in 1983 until June 1, 1999. From
1988, when Mr. Sullivan purchased
Chemical Georgia, until June 1,
1999, he served as Director and
President of Chemical Georgia. From
1957 to 1973, Mr. Sullivan held
various positions with Crown
Zellerbach Corporation and since
1982 has served as a director of
Charter National Bank, located in
Detroit, Michigan. Mr. Sullivan has
a degree from John Carroll
University, located in Cleveland,
Ohio.
Approval of each nominee for election to the Board of Directors
will require the affirmative vote of a plurality of the votes cast
by the holders of the Company's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE FIVE (5) NOMINEES AS THE COMPANY'S DIRECTORS.
Committees and Meetings of the Board of Directors
During 1998, the Board of Directors held five (5) meetings. No
Director attended fewer than seventy-five percent (75%) of the
aggregate number of meetings held by the Board of Directors and the
committees on which he served during 1998. The Board of Directors
has an Audit Committee, a Compensation and Stock Option Committee
and a Nominating Committee.
The Audit Committee reviews proposals of the Company's independent
auditors regarding annual audits, recommends the engagement or
discharge of auditors, reviews recommendations of such auditors
concerning accounting principles, internal controls and accounting
procedures and practices, reviews the scope of the annual audit,
approves or disapproves each professional service or type of service
other than standard auditing services to be provided by the auditors,
and reviews and discusses the audited financial statements with the
auditors. During 1999, the Board of Directors adopted an "Audit
Committee Charter" which established the operating guidelines for
the Audit Committee. The members of the Audit Committee during
1998 were Mark Zwecker and Jon Colin. The Audit Committee held one
(1) meeting in 1998.
The Compensation and Stock Option Committee reviews and recommends
to the Board of Directors the compensation and benefits of all the
Company's officers and reviews general policy matters relating to
compensation and benefits of the Company's employees. The members of
the Compensation and Stock Option Committee during 1998 were Mark
Zwecker and Steve Gorlin. The Compensation and Stock Option
Committee held two (2) meetings in 1998. In conjunction with the
Company's acquisition in June, 1999 of Chemical Florida, Chemical
Georgia and Chem-Met, Thomas P. Sullivan, a principal of such
companies was elected to a newly-created directorship on the Board
of Directors of the Company and was thereafter assigned to the
Compensation and Stock Option Committee effective June 1, 1999. At
such time, Mr. Zwecker ceased to be a member of this committee.
The Nominating Committee recommends to the Board of Directors the
nominees for election as the Company's Directors. Members of the
Nominating Committee are Steve Gorlin and Mark Zwecker. The
Nominating Committee held one (1) meeting in 1998.
4
Compensation of Directors
In 1998, the Company paid its outside director's fees based on monthly
payments of $1,000 for each month of service, resulting in the three
outside directors earning annual director's fees in the aggregate amount
of $36,000 during 1998. Subject to the election of each director,
either sixty-five percent (65%) or one hundred percent (100%) of each
director's fee is payable, in shares of our Common Stock based on
seventy-five percent (75%) of the fair market value of the Common Stock
determined on the business day immediately preceding the date that the fee
is due. The balance of each director fee, if any, is payable in cash.
The aggregate amount of accrued director's fees paid for services rendered
during 1998 to the three outside directors (Messrs. Colin, Gorlin and
Zwecker) were as follows: $24,000 was paid by the issuance of
22,834 shares of Common Stock and approximately $12,000 was paid in
cash. Reimbursement of expenses for attending meetings of the
Board are paid in cash. The outside directors do not receive additional
compensation for committee participation or special assignments except for
reimbursement of expenses. The Company does not compensate the directors
who also serve as officers or employees of the Company or its subsidiaries
for their service as directors.
In September 1996, the Company issued a warrant ("Gorlin Warrant") to
Steve Gorlin, a Director, for services rendered, other than those
rendered as a Director. The Gorlin Warrant allowed the holder to
purchase 200,000 shares of Common Stock of the Company for $1.75
per share from January 1, 1997, until September 15, 1999. The
Gorlin Warrant expired in September 1999 without being exercised.
The Company believes that it is important for the Directors to have a
personal interest in the Company's success and growth and for their
interests to be aligned with those of the Company's stockholders.
Therefore, under the Company's 1992 Outside Directors Stock Option
and Incentive Plan ("Outside Directors Plan"), each outside director
is granted an option to purchase up to 15,000 shares of Common Stock
on the date such director is initially elected to the Board of Directors
and receives on an annual basis an option to purchase up to another
5,000 shares of Common Stock, with the exercise price being the
fair market value of the Common Stock on the date that the option
is granted. Each option granted under the Outside Directors Plan
is exercisable from six months after the date the option is granted
until ten (10) years from the date the option is granted. As of
December 31, 1998, options to purchase 175,000 shares of Common
Stock had been granted under the Outside Directors Plan.
The Outside Directors Plan also provides that each eligible
director shall receive, at such eligible director's option, either
sixty-five percent (65%) or one hundred percent (100%) of the fee
payable to such director for services rendered as a member of the
Board in Common Stock. In either case, the number of shares of
Common Stock issuable to the eligible director shall be determined
by valuing the Common Stock at seventy-five percent (75%) of its
fair market value as defined by the Outside Directors Plan. As of
the date of this proxy statement, the Company has issued 98,616
shares of the Company's Common Stock in payment of director
fees, covering the period January 1, 1995 through December 31,
1998. The number of shares of Common Stock which may be issued in
the aggregate under the Outside Directors Plan, either under
options or stock awards, is 500,000 shares, subject to adjustment.
Although Dr. Centofanti is not compensated for his services
provided as a director, Dr. Centofanti is compensated for his
services rendered as an officer of the Company. See "Employment
Contracts, Termination of Employment and Change in Control
Arrangements" and "EXECUTIVE COMPENSATION -- Summary Compensation
Table."
Compensation Committee Interlocks and Insider Participation
During 1998, the Compensation and Stock Option Committee for the
Company's Board of Directors was composed of Mark Zwecker and Steve
Gorlin. Mr. Zwecker was neither an officer nor an employee during
the year 1998, however, Mr. Zwecker did serve as the Company's
Secretary from June 1995 until June 30, 1996. Mr. Gorlin was neither
an officer nor an employee during 1998. Upon his election to the Board of
Directors in conjunction with the Company's acquisition of Chemical
Florida, Chemical Georgia and Chem-Met, Thomas Sullivan was
appointed to the Compensation and Stock Option Committee effective
June 1, 1999, at which time he was neither an officer nor an
employee of the Company.
5
Certain Relationships
There are no family relationships between any of the Company's existing
Directors, executive officers, or persons nominated or chosen to
become a Director or executive officer. Dr. Centofanti is the only
Director who is the Company's employee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and the regulations promulgated thereunder
require the Company's executive officers and directors and beneficial owners
of more than ten percent (10%) of any equity security of the Company
registered pursuant to Section 12 of the Exchange Act to file reports of
ownership and changes of ownership of the Company's equity securities with
the Securities and Exchange Commission, and to furnish the Company with
copies of all such reports. Based solely on a review of the copies of such
reports furnished to the Company and information provided to the Company,
the Company believes that during 1998 none of the executive officers and
directors of the Company failed to timely file reports under Section 16(a).
RBB Bank Aktiengesellschaft ("RBB Bank"), which may have become a
beneficial owner (as that term is defined under Rule 13d-3 as
promulgated under the Exchange Act) of more than ten percent (10%)
of the Company's Common Stock on February 9, 1996, as a result of
its acquisition of 1,100 shares of Series 1 Preferred (as defined
in "Certain Relationships and Related Transactions") that were
convertible into a maximum of 1,282,798 shares of Common Stock of
the Company commencing 45 days after issuance of the Series 1
Preferred, failed to file a Form 3 to report such transaction, if
required. RBB Bank has advised the Company that it acquired such
Preferred Stock on behalf of numerous clients and no one client is the
beneficial owner of more than 250 shares of such Preferred Stock,
and thus, RBB Bank believes it is not required to file reports
under Section 16(a).
If RBB Bank became a beneficial owner of more than ten percent
(10%) of the Company's Common Stock on February 9, 1996, the date
of RBB Bank's initial Preferred Stock Agreement, and thereby required to
file reports under Section 16(a) of the Exchange Act, then RBB Bank
also failed to file (i) a Form 4 for a transaction which occurred
in January 1998; (ii) a Form 4 for a transaction which occurred in
June 1998; (iii) a Form 4 for a transaction which occurred in July
1998; and (iv) a Form 5 which, if required to be filed by RBB Bank,
would have been required to be filed on or prior to February 14,
1999, as a result of RBB Bank's failure to file the above described
Form 4's for the three transactions listed previously and not
reported on Form 4. See "Certain Relationships and Related
Transactions".
6
Executive Compensation
Summary Compensation Table
The following table sets forth the aggregate cash compensation paid
to the Company's Chairman and Chief Executive Officer, the Vice President
of Nuclear Services, Chief Financial Officer and Vice President of
Industrial Services.
Annual Compensation
__________________________
Other
Annual
Compen-
Name and Principal Salary Bonus sation
Position Year ($) ($) ($)
_______________________ ______ ________ _______ _________
Dr. Louis F. Centofanti(1) 1998 $112,250 $ - $ -
Chairman of the Board, 1997 75,431 - 6,667(2)
President and 1996 65,000 - 66,666(3)
Chief Executive Officer
Bernhardt C. Warren(4) 1998 87,341 223,800 56,950
Vice President of 1997 87,341 88,629 -
Nuclear Services 1996 36,476 20,330 -
Richard T. Kelecy(5) 1998 102,553 15,000 -
Chief Financial Officer 1997 91,250 - -
1996 82,750 8,000 -
Roger Randall(6) 1998 101,268 12,710 -
Vice President of 1997 80,000 - -
Industrial Services 1996 80,000 21,254 -
Long Term
Compensation
______________________
Securities
Restricted Underlying All
Stock Options/ Other
Award(s) SARs Compensation
($) (#) ($)
_________ _________ _____________
$ - - $ -
- 300,000 -
- - -
- 25,000 -
- 30,000 -
- - -
- 30,000 -
- 40,000 -
- 60,000 -
- 30,000 9,039(6)
- 40,000 9,042
- 60,000 9,042
(1) Dr. Centofanti currently receives compensation pursuant to an
employment agreement dated October 1, 1997, which provides, among
other things, for an annual salary of $110,000 subject to annual
inflation factor increases and the issuance of Non-Qualified Stock
Options ("Non-Qualified Stock Options"). Pursuant to the terms of
the agreement, Dr. Centofanti's annual salary was increased to
$112,250 effective October 1, 1998, and was increased to $130,000
effective July 1, 1999. See "Employment Contracts, Termination of
Employment and Change in Control Arrangements." Dr. Centofanti was
also provided with a monthly automobile allowance of $750 effective
July 1, 1999. The Non-Qualified Stock Options provide Dr. Centofanti
with the right to purchase an aggregate of 300,000 shares of Common Stock
as follows: (i) after one year 100,000 shares of Common Stock at a
price of $2.25 per share, (ii) after two years 100,000 shares of
Common Stock at a price of $2.50 per share, and (iii) after three
years 100,000 shares of Common Stock at a price of $3.00 per share.
The Non-Qualified Stock Options expire ten years after the date of
the Employment Agreement. Dr. Centofanti also served as President
and Chief Executive Officer of the Company during 1994 and until
September 1995, when Robert W. Foster was elected as President and
Chief Executive Officer of the Company. At such time, Dr.
Centofanti continued to serve as Chairman of the Board of the
Company. Upon Mr. Foster's resignation, Dr. Centofanti resumed the
positions of President and Chief Executive Officer effective
March 15, 1996, and continued as Chairman of the Board.
7
(2) The Company entered into one Stock Purchase Agreement ("1997
Centofanti Agreement") with Dr. Centofanti on or about June 30,
1997, pursuant to which the Company agreed to sell, and Dr.
Centofanti agreed to buy, 24,381 shares of the Company's Common
Stock for 75% of the closing bid price of such Common Stock as
quoted on the NASDAQ on the date Dr. Centofanti notified the Company
of his desire to purchase such stock, as authorized by the Board of
Directors. The closing bid price as quoted by the NASDAQ for the
Common Stock on the date Dr. Centofanti notified the Company of his
desire to purchase the shares was $2.1875, leading to a purchase
price of $1.6406 and an aggregate purchase price of $40,000 for the
24,381 shares of Common Stock. The 1997 Centofanti Agreement was
amended in October to reduce the number of shares purchased
thereunder to 12,190 for an aggregate purchase price of $20,000,
upon consideration of certain recent accounting pronouncements
related to stock based compensation. The difference between the
price paid by Dr. Centofanti for such stock and the fair market
value thereof was approximately $6,667. The sale of shares
pursuant to the 1997 Centofanti Agreement and its subsequent
amendment were authorized by the Board of Directors.
(3) The Company entered into two Stock Purchase Agreements with
Dr. Centofanti during 1996 whereby the Company sold, and
Dr. Centofanti purchased, 133,333 shares and 76,190 shares, in
March 1996, and in June 1996, respectively, of the Company's Common
Stock for 75% of the closing bid price of such Common Stock as
quoted on the NASDAQ on the date that Dr. Centofanti notified the
Company of his desire to purchase such stock, as authorized by the
Board of Directors of the Company. The closing bid price as quoted
on the NASDAQ for the Company's Common Stock on the dates that Dr.
Centofanti notified the Company of his desire to purchase the
shares was $1.00 per share for the March sale and $1.75 per share
for the June sale. As a result, the difference between the price
paid by Dr. Centofanti for such stock and the fair market value
thereof was approximately $33,333 for each transaction. The sales
of shares pursuant to the Stock Purchase Agreements were authorized
by the Board of Directors.
(4) Mr. Warren was General Manager of Perma-Fix of Florida, Inc.
from July 16, 1996, until December 8, 1997. During this time,
Mr. Warren received compensation pursuant to an employment
agreement, which provided for annual compensation to Mr. Warren of
$87,000 beginning July 16, 1996, and expiring in July 1999. Mr.
Warren also received additional compensation pursuant to the
employment agreement paid on a variable rate in proportion to
certain revenue goals. Effective December 8, 1997, Mr. Warren also
became the Vice President of Nuclear Services for the Company. Mr.
Warren currently receives compensation pursuant to an employment
agreement dated April 7, 1998, which provides for annual
compensation of $87,000 plus additional compensation in the form of
Company Common Stock and cash payments for bonus based upon certain
performance goals. Upon execution of the agreement, Mr. Warren
received a bonus of approximately $168,000 which was paid in the
form of 94,697 shares of Common Stock, as determined by dividing
the bonus amount by the average of the closing bid price of the
Common Stock on the NASDAQ Small Cap for the five trading days
prior to the date of execution of this agreement. Mr. Warren also
received a bonus of approximately $57,000 in December 1998, which
was intended to pay for taxes on the stock bonus. Under the terms
of his employment agreement, Mr. Warren is also to receive a bonus
of approximately $168,000 which is to be paid in monthly
installments over the two years of the agreement, with
approximately $112,000 paid in 1998. Stock Options were granted
to Mr. Warren on April 8, 1997 and October 14, 1998, pursuant to
the 1993 Non-qualified Stock Option Plan.
(5) Mr. Kelecy, the Chief Financial Officer, received annual
compensation of $102,000 during 1998. Effective July 1, 1999, Mr.
Kelecy's annual salary was increased to $120,000, and he was
provided with a monthly automobile allowance in the amount of $750.
Mr. Kelecy may also receive at the discretion of the Board
additional compensation in the form of bonus. Stock Options were
granted to Mr. Kelecy on January 11, 1995, May 24, 1996, April 8,
1997 and October 14, 1998, pursuant to the 1993 Non-qualified Stock
Option Plan.
(6) Mr. Randall was General Manager of Perma-Fix of Dayton, Inc.
from its acquisition in 1994 until December 8, 1997. Effective
December 8, 1997, Mr. Randall became the Vice President of
Industrial Services for the Company. Mr. Randall received annual
compensation of $94,000 during 1998. Effective December 1998,
Mr. Randall has received a monthly car allowance in the amount of
$750 in lieu of a company car which had previously been provided to
him under the terms of his employment. Effective July 1, 1999,
Mr. Randall's annual salary was increased to $115,000. Mr. Randall
may also receive additional compensation paid on a variable rate
in proportion to certain performance goals. Stock Options were
8
granted to Mr. Randall on January 11, 1995, May 24, 1996, April 8,
1997 and October 14, 1998, pursuant to the 1993 Non-Qualified Stock
Option Plan.
Option Grants in 1998
The following table sets forth certain information relating to
individual grants of stock options made to each of the named
executive officers in the above Summary Compensation Table during
the last fiscal year and the potential realizable value of each
grant of options, assuming that the market price of the underlying
Common Stock appreciates in value during the ten-year option term
at annualized rates of 5% and 10%.
Individual Grants
_____________________________________________________
Number of % of
Shares of Total Options
Common Stock Granted to Exercise
Underlying Employees Price Expiration
Name Options Granted in 1998 ($/sh)(1) Date
______ ______________ ____________ __________ __________
Bernhardt C. Warren(3) 25,000 7.7% $1.25 10/14/08
Richard T. Kelecy(4) 30,000 9.2 1.25 10/14/08
Roger Randall(5) 30,000 9.2 1.25 10/14/08
Potential Realizable
Value at Assumed
Annual
Rates of Stock Price
Appreciation
for Option Term(2)
____________________
5%($) 10%($)
_____ _______
$19,656 $49,809
23,588 59,771
23,588 59,771
____________________
(1) All options were granted at or above market price (the closing
price of the Common Stock on the NASDAQ Small CapMarket on the date
of grant).
(2) The potential realizable value of each grant of options
assumes that the market price of the Company's Common Stock
appreciates in value from the date of grant to the end of the
option term at the annualized rates shown above each column. The
actual value that an executive may realize, if any, will depend on
the amount by which the market price of the Company's Common Stock
at the time of exercise exceeds the exercise price of the option.
As of December 31, 1998, the closing price of a share of the
Company's Common Stock as quoted on NASDAQ was $1.50. There is no
assurance that any executive will receive the amounts estimated in
this table.
(3) The Company has adopted a 1993 Non-Qualified Stock Option Plan
(the "1993 Plan"). Mr. Warren was granted options to purchase
25,000 shares of the Company's Common Stock pursuant to the 1993
Plan. The 1993 Plan provides that the options granted vest at the
end of years one through five in 20% increments.
(4) Mr. Kelecy was granted options to purchase 30,000 shares of
the Company's Common Stock pursuant to the 1993 Plan. The 1993
Plan provides that the options granted vest at the end of years one
through five in 20% increments.
(5) Mr. Randall was granted options to purchase 30,000 shares of
the Company's Common Stock pursuant to the 1993 Plan. The 1993
Plan provides that the options granted vest at the end of years one
through five in 20% increments.
9
Options/SAR Grants in Last Fiscal Year
During 1998, there were 85,000 stock options granted to Bernhardt
Warren, Richard Kelecy and Roger Randall on October 14, 1998, under
the 1993 Non-Qualified Stock Option Plan.
Aggregated Option Exercises in 1998 and Fiscal Year-End Option
Values
The following table sets forth information concerning each exercise
of stock options during the last completed fiscal year by each of
the executive officers named in the Summary Compensation Table and
the fiscal year-end value of unexercised options:
Number of
Unexercised
Shares Options at
Acquired Fiscal Year-End(#)
on Value ___________________
Exercise Realized Exer- Unexer-
Name (#)(1) ($)(1) cisable cisable
_____ _________ _______ ________ _______
Dr. Louis F. Centofanti - - 145,763 204,000
Bernhardt C. Warren - - 6,000 49,000
Richard Kelecy - - 56,000 104,000
Roger Randall - - 40,000 100,000
Value of Unexercised
in-the-Money Options
at Fiscal Year End($)(2)
_______________________
Exer- Unexer-
cisable cisable
________ __________
$ - $ -
8,250 64,250
35,000 117,500
35,000 117,500
_____________
(1) No options were exercised during 1998.
(2) Represents the difference between $1.50 (the closing bid price
of the Company's Common Stock reported on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") on
December 31, 1998), and the option exercise price. The actual
value realized by a named executive officer on the exercise of
these options depends on the market value of the Company's Common
Stock on the date of exercise.
401(k) Plan
The Company has adopted the Perma-Fix Environmental Services, Inc. 401(k)
Plan which is intended to comply under Section 401 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the provisions of the Employee
Retirement Security Act of 1974 (the "401(k) Plan"). All the full-time
employees of the Company and its subsidiaries who have attained the age of
twenty-one (21) are eligible to participate in the 401(k) Plan. Partici-
pating employees may make annual pre-tax contributions to their accounts
up to fifteen percent (15%) of their compensation, up to a maximum amount a
s limited by law. The Company, at its discretion, makes matching contribu-
tions based on full-time employees' elective contributions. The Company
contributions vest twenty percent (20%) after two (2) years, forty percent
(40%) after three (3) years, sixty percent (60%) after four (4) years, eighty
percent (80%) after five (5) years, and are one hundred percent (100%) vested
thereafter. As of December 31, 1998, the Company has elected not to provide
any matching contributions. Distributions generally are payable in lump
sums upon termination, retirement, death or disability. However, effective
January 1, 1999, the Company has agreed to match 25% of the employees'
contributions, not to exceed 3% of compensation.
Employee Stock Purchase Plan
The Company has adopted the Perma-Fix Environmental Services, Inc. 1996
Employee Stock Purchase Plan (the "1996 Plan") which is intended to
comply under Section 423 of the Code. All full-time employees of
the Company and its subsidiaries who have completed at least six
(6) months of continuous service, other than those that are deemed,
for the purpose of Section 423(b)(3) of the Code, to own stock
possessing five percent (5%) more the total combined voting power
or value of all classes of stock of the Company, are eligible to
participate in the 1996 Plan. Participating employees
("Participants") may authorize for payroll periods beginning on or
after January 1, 1997, payroll deductions from compensation for the
purpose of funding the Participant's stock purchase account ("Stock
Purchase Account"). This deduction shall be not less than one
percent (1%) nor more than five percent (5%) of the Participant's
gross amount of compensation. The purchase price per share of the
Common Stock to be sold to Participants pursuant to the 1996 Plan
10
is the sum of (a) eighty-five percent (85%) of the fair market
value of each share on the Offering Date on which such Offering
commences or on the Exercise Date (as defined in the 1996 Plan) on
which such Offering expires, whichever is the lower, and (b) any
transfer, excise or similar tax imposed on the transaction pursuant
to which shares of Common Stock are purchased. The "Offering Date"
means the first day of each January and July during which the 1996
Plan is in effect, commencing with January 1, 1997. There is no
holding period regarding Common Stock purchased under the 1996
Plan, however, in order for a participant to be entitled to the tax
treatment described in Section 423 of the Code with respect to the
Participant's sale of Common Stock purchased under the 1996 Plan,
such Stock must not be sold for at least one (1) year after
acquisition under the 1996 Plan, except in the case of death. Any
Participant may voluntarily withdraw from the 1996 Plan by filing
a notice of withdrawal with the Board of Directors prior to the
fifteenth (15th) day of the last month in a Purchase Period (as
defined in the 1996 Plan). Upon such withdrawal, there shall be
paid to the Participant the amount, if any, standing to the
Participant's credit in the Participant's Stock Purchase Account.
If a Participant ceases to be an eligible employee, the entire
amount standing to the Participant's credit in the Participant's
Stock Purchase Account on the effective date of such occurrence
shall be paid to the Participant. The total deductions made by
Participants pursuant to the offering period of the 1996 Plan,
January 1, 1998, through July 31, 1998, was $16,849 which was used
to purchase 10,732 shares of the Company's Common Stock in August
1998. The total deductions made by Participants pursuant to the
offering period of the 1996 Plan, July 1, 1998, through
December 31, 1998, was $22,334 which was used to purchase 17,517
shares of the Company's Common Stock in January 1999.
Employment Contracts, Termination of Employment and Change in
Control Arrangements
During October 1997, Dr. Centofanti entered into a three (3) year
Employment Agreement ("Employment Agreement") with the Company which
provided for, among other things, an annual salary of $110,000
(subject to annual inflation factor increases and adjustment by the
Board of Directors) and the issuance of Non-Qualified Stock Options
("Non-Qualified Stock Options"). Pursuant to the terms of the
Employment Agreement, Dr. Centofanti's annual salary was increased
to $112,250 effective October 1, 1998, and was increased to
$130,000 effective July 1, 1999. Dr. Centofanti was also provided
with a monthly automobile allowance of $750 effective July 1, 1999.
The Board of Directors increased Dr. Centofanti's salary in 1999
through application of an inflation factor, as specified in the
Employment Agreement, and to a greater extent, in response to the
review by the Compensation Committee (as defined below under
"Report of the Compensation and Stock Option Committee") of
executive officer salary levels at similarly sized and situated
companies within the Company's industry. The Non-Qualified Stock Options
provide Dr. Centofanti with the right to purchase an aggregate of
300,000 shares of Common Stock as follows: (i) after one year
100,000 shares of Common Stock at a price of $2.25 per share, (ii)
after two years 100,000 shares of Common Stock at a price of $2.50
per share, and (iii) after three years 100,000 shares of Common
Stock at a price of $3.00 per share. The Non-Qualified Stock
Options expire ten years after the date of the Employment
Agreement.
During April 1998, Mr. Warren entered into a two (2) year
employment agreement which provided for, among other things, an
annual salary of $87,000 plus additional compensation in the form
of Common Stock and cash payments for bonus. Upon execution of the
agreement, Mr. Warren received a bonus of approximately $168,000
which was paid in the form of 94,697 shares of Common Stock, as
determined by dividing the bonus amount by the average of the
closing bid price of the Common Stock on the NASDAQ Small Cap for
the five trading days prior to the date of execution of the
employment agreement. Under the terms of his employment agreement,
Mr. Warren is also to receive a bonus of approximately $168,000
which is to be paid in monthly installments over the two years of
the agreement, with approximately $112,000 paid in 1998.
The Company's 1991 Performance Equity Plan and the 1993 Non-
Qualified Stock Option Plan (collectively, the "Plans") provide
that in the event of a change in control (as defined in the Plans)
of the Company, each outstanding option and award granted under the
Plans shall immediately become exercisable in full notwithstanding
the vesting or exercise provisions contained in the stock option
agreement. As a result, all outstanding stock options and awards
granted under the Plans to the Companh's executive officers shall
immediately become exercisable upon such a change in control of the
Company.
11
Report of the Compensation and Stock Option Committee
The Compensation and Stock Option Committee of the Board of
Directors (the "Compensation Committee") is responsible for
reviewing and approving the Company's compensation policies and
the compensation paid to the Company's executive officers, including
the executive officers named in the Summary Compensation Table. The
Company's compensation program for its executive officers, including
the Chief Executive Officer, is generally not formalized but is
designed to provide levels of compensation required to assist us in
attracting and retaining qualified executive officers. The
Compensation Committee attempts to set an executive officer's
compensation at a level which is similar to such officer's peers in
the industry consistent with the size of the Company. Generally,
executive officer compensation, including that of the Chief
Executive Officer, is not directly related to the Company's
performance. Instead, the Compensation Committee has a philosophy
which recognizes individual initiative and achievement in arriving
at an officer's compensation. The executive compensation program
is comprised of salary, cash incentives and stock options. The
following is a discussion of each of the elements of the executive
compensation program.
(a) Salary
Generally, base salary for each executive officer is similar to
levels within the industry and comparable to the level which could
be attained for equal positions elsewhere, but consistent with the
Company's size. Also taken into account are benefits, years of
service, responsibilities, Company growth, future plans and the
Company's current ability to pay. The Compensation Committee and
the Board of Directors approved Employment Agreements with Dr. Centofanti
and Mr. Warren, believing that a multi-year Employment Agreement with
both individuals was in the Company's best interest due to their
importance to the Company. During 1996, and until October 1997,
Dr. Centofanti's annual salary was $65,000. During October, 1997,
Dr. Centofanti entered into a three (3) year Employment Agreement
("Employment Agreement") with the Company which provided for, among
other things, an annual salary of $110,000 (subject to annual
inflation factor increases and adjustment by the Board of
Directors) and the issuance of Non-Qualified Stock Options to
Dr. Centofanti. Pursuant to the terms of the Agreement, Dr.
Centofanti's annual salary was increased to $112,250 effective
October 1, 1998, and was increased to $130,000 effective July 1,
1999. The Board of Directors increased Dr. Centofanti's salary in
1999 through application of an inflation factor, as specified in
the Employment Agreement, and to a greater extent, in response to
the Compensation Committee's review of executive officer salary
levels at similarly sized and situated companies within the Company's
industry. Dr. Centofanti was also provided with a monthly
automobile allowance of $750 effective July 1, 1999. The Non-
Qualified Stock Options provide Dr. Centofanti with the right to
purchase an aggregate of 300,000 shares of Common Stock in the form
of (i) an option to purchase 100,000 shares of Common Stock after
one year at a price of $2.25 per share, (ii) an option to purchase
100,000 shares of Common Stock after two years at a price of $2.50
per share, and (iii) an option to purchase 100,000 shares of Common
Stock after three years at a price of $3.00 per share. The Non-
Qualified Stock Options expire ten years after the date of the
Employment Agreement. Mr. Kelecy's and Mr. Randall's salaries were
increased effective July 1, 1999 in response to the Compensation
Committee's review of executive officer salary levels at similarly
sized and situated companies within the Company's industry. Effective
January 1, 1998, Mr. Warren entered into a two (2) year employment
agreement with the Company which provided for, among other things, an
annual salary of $87,000 and the issuance of approximately $168,000
worth of the Company's Common Stock in payment for accrued bonus/commissions
and $168,000 in cash to be paid in 24 installments for accrued bonus/
commissions. See "--Employment Contracts, Termination of Employment and
Changes in Control Agreements."
(b) Cash Incentives
The cash incentive plan is a program through which cash bonuses may
be paid on an annual basis to reward significant corporate
accomplishments and individual initiative demonstrated by executive
officers during the prior fiscal year. The amount of cash bonus is
determined by the Compensation Committee.
(c) Stock Options
The Company's 1991 Performance Equity Plan and 1993 Non-Qualified
Stock Option Plan were adopted for the purpose of promoting the
interests of the Company and its stockholders by attracting and
retaining executive officers and other key employees of outstanding
ability. Options are granted to eligible participants based upon their
potential impact on corporate results and on their individual
performance. Generally, options are granted at market value, vest
12
over a number of years, and are generally dependent upon continued
employment. The Compensation Committee believes that the grant of
time-vested options provides an incentive that focuses the
executive officers' attention on managing the Company from the
perspective of owners with an equity stake in the Company. It
further motivates executive officers to maximize long-term growth
and profitability because value is created in the options only as
the Common Stock price increases after the option is granted. In
October of 1997, Dr. Centofanti entered into an Employment Agreement
with the Company, pursuant to which he was issued certain Non-Qualified
Stock Options.
Compensation and Stock Option Committee
Steve Gorlin and Thomas P. Sullivan
Common Stock Price Performance Graph
The following Common Stock price performance graph compares the
yearly change in the Company's cumulative total stockholders' returns
on the Common Stock during the years 1994 through 1998, with the
cumulative total return of the NASDAQ Market Index and the
published industry index prepared by Media General and known as
Media General Industry Group 095-Waste Management Index ("Industry
Index") assuming the investment of $100 on December 31, 1993.
FISCAL YEAR ENDING
1993 1994 1995 1996 1997 1998
____ _____ _____ _____ _____ _____
Company 100 64.10 24.36 32.05 48.08 30.77
Industry Index 100 90.34 113.28 140.51 143.61 124.71
Broad Market 100 104.99 136.10 169.23 207.00 291.96
Assumes $100 invested at year-end 1993 in the Company, the Industry
Index and the Broad Market. The above Five-Year Total Shareholder
Return Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement
into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (collectively, the "Acts"), except to the
extent that the Company specifically incorporates this information
by reference, and shall not be deemed to be soliciting material or
to be filed under such Acts.
CERTAIN BENEFICIAL OWNERS
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to the shares of voting
securities beneficially owned as of the Record Date by each person known
by the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities. Beneficial ownership
by the Company's stockholders has been determined in accordance
13
with the rules promulgated under Section 13(d) of the Securities
Exchange Act of 1934, as amended. A person is deemed to be a
beneficial owner of any securities of which that person has the
right to acquire beneficial ownership of such securities within 60
days from the Record Date.
Amount and Percent
Name of Title Nature of of
Beneficial Owner of Class Ownership Class(1)
________________ ________ ____________ _________
Thomas P. Sullivan and Common 1,525,000(3) 7.44%
the Ann L. Sullivan
Living Trust(2)
RBB Bank Aktiengesellschaft(3) Common 9,757,732(6) 41.54%
____________________
(1) In computing the number of shares and the percentage of
outstanding Common Stock "beneficially owned" by a person, the
calculations are based upon 20,486,219 shares of Common Stock
issued and outstanding on October 27, 1999 (excluding 988,000
Treasury Shares), plus the number of shares of Common Stock which
such person has the right to acquire beneficial ownership of within
(60) days.
(2) These shares include (i) 10,000 shares held of record by Mr.
Sullivan, (ii) options to purchase 15,000 shares granted pursuant
to the 1992 Outside Directors Stock Option and Incentive Plan,
which are immediately exercisable, and (iii) 1,500,000 shares held
by the Ann L. Sullivan Living Trust, dated September 6, 1998 ("ALS
Trust"), a trust established for the benefit of Ann L. Sullivan.
Ann L. Sullivan is the wife of Mr. Sullivan and is the trustee and
primary beneficiary of the ALS Trust. The business address for Mr.
Sullivan and the ALS Trust, for the purposes hereof, is c/o
Perma-Fix Environmental Services, Inc., 1940 N.W. 67th Place,
Gainesville, Florida 32653.
(3) Includes 6,751,482 shares that RBB Bank owns and 3,006,250
shares that RBB Bank has the right to acquire within 60 days from
the date of this proxy statement under certain warrants that are
exercisable. The warrants are exercisable at exercise prices
ranging from $1.875 to $3.50 per share of Common Stock. As of
October 27, 1999, the closing price per share of Common Stock was
$1.50. RBB Bank has advised the Company that it is holding these
shares on behalf of numerous clients. As a result, RBB Bank may share
voting and investment power over such shares. In addition, RBB Bank owns
three (3) series of the Company's outstanding preferred stock consisting
of 1,769 shares of Series 14 Class N Convertible Preferred Stock ("Series
14 Preferred"), 616 shares of Series 15 Class O Convertible Preferred
Stock ("Series 15 Preferred") and 1,802 shares of Series 16 Class P
Convertible Preferred Stock ("Series 16 Preferred") (collectively, the
RBB Preferred") that RBB Bank acquired from the Company. The RBB
Preferred are not convertible until on or after April 20, 2000, and have
no voting rights except as required by law. If the conversion of the
currently outstanding RBB Preferred occurs between April 20, 2000 and
April 20, 2001, then the (i) Series 14 Preferred, which during this period
has a set conversion price of $1.50 per share of Common Stock, is
convertible into 1,179,333 shares of Common Stock , (ii) Series 15
Preferred, which during this period has a minimum conversion price
of $1.50 per share of Common Stock, is convertible into 410,667
shares of Common Stock, assuming the conversion is at $1.50 per
share of Common Stock and (iii) Series 16 Preferred, which during
this period has a minimum conversion price of $1.50 per share of
Common Stock, is convertible into 1,201,333 shares of Common Stock,
assuming the conversion is at $1.50 per share of Common Stock. If
RBB Bank were to acquire an aggregate of 2,791,333 shares of Common
Stock upon conversion of the outstanding shares of the RBB
Preferred based on a conversion price of $1.50 per share of Common
Stock and were to exercise all of the outstanding warrants to
acquire Common Stock which are held by RBB Bank, RBB Bank would own
47.74% of the outstanding Common Stock assuming that the Company does
not issue any other shares of Common Stock or acquire any of the RBB
Preferred or the Common Stock and RBB Bank does not sell or
otherwise dispose of any shares of Common Stock. Does not include
14
the shares of Common Stock which may be issuable for payment of
dividends on the RBB Preferred. See "Potential Change in Control"
and "Certain Relationships and Related Transactions." RBB Bank's
address is Burgring 16, 8010 Graz, Austria.
Security Ownership of Management
The following table sets forth information as to the shares of
voting securities beneficially owned as of October 15, 1999, by
each Director and Named Executive Officers of the Company listed in
the Summary Compensation table and all Directors and executive
officers of the Company as a group. Beneficial ownership by the
Company's stockholders has been determined in accordance with the
rules promulgated under Section 13(d) of the Exchange Act. A
person is deemed to be a beneficial owner of any voting securities
for which that person has the right to acquire beneficial ownership
within sixty (60) days. All voting securities are owned both of
record and beneficially unless otherwise indicated.
Number of Shares
Name of of Common Stock Percentage of
Beneficial Owner Beneficially Owned Common Stock(1)
________________ __________________ _____________
Dr. Louis F. Centofanti(2)(3) 1,020,697(3) 4.92%
Steve Gorlin(2)(4) 452,607(4) 2.21%
Mark A. Zwecker(2)(5) 215,209(5) 1.05%
Jon Colin(2)(6) 38,582(6) *
Thomas P. Sullivan(2)(7) 1,525,000(2)(7) 7.44%
Richard T. Kelecy(2)(8) 60,140(8) *
Timothy Kimball(2)(9) 42,947(9) *
Roger Randall(2)(10) 40,000(10) *
Bernhardt Warren(2)(11) 106,765(11) *
Directors and Executive 3,501,947 16.68%
Officers as a Group
(9 persons)
*Indicates beneficial ownership of less than one percent (1%).
(1) See footnote (1) of the table under "Security Ownership of
Certain Beneficial Owners."
(2) The business address of such person, for the purposes hereof,
is c/o Perma-Fix Environmental Services, Inc., 1940 N.W. 67th
Place, Gainesville, Florida 32653.
(3) These shares include (i) 468,434 shares held of record by Dr.
Centofanti; (ii) 61,048 shares receivable upon exercise of warrants
to purchase Common Stock; (iii) options to purchase 45,763 shares
granted pursuant to the 1991 Performance Equity Plan and the 1993
Non-qualified Stock Option Plan, which are immediately exercisable;
(iv) 200,000 shares granted pursuant to Dr. Centofanti's Employment
Agreement, which are immediately exercisable; and (v) 304,000
shares held by the wife of Dr. Centofanti and 2,500 shares held by
the son of Dr. Centofanti's wife. This amount does not include
options to purchase 4,000 shares granted pursuant to the above
referenced plans or the options to purchase 100,000 shares granted
pursuant to Dr. Centofanti's Employment Agreement with the Company,
which are not exercisable within sixty (60) days. Dr. Centofanti
has sole voting and investment power of these shares, except for
the shares held by Dr. Centofanti's wife and his wife's son, for
which Dr. Centofanti shares voting and investment power.
15
(4) Mr. Gorlin has sole voting and investment power over these
shares which include: (i) 412,607 shares held of record by
Mr. Gorlin; and (ii) Options to purchase 40,000 shares granted
pursuant to the 1992 Outside Directors Stock Option and Incentive
Plan which are immediately exercisable. See "Certain Relationships
and Related Transactions."
(5) Mr. Zwecker has sole voting and investment power over these
shares which include: (i) 171,327 shares of Common Stock held of
record by Mr. Zwecker; (ii) 14,882 options to purchase Common Stock
granted pursuant to the 1991 Performance Equity Plan; (iii) 4,000
options to purchase Common Stock pursuant to the 1993 Non-Qualified
Stock Option Plan, which are immediately exercisable; and (iv)
options to purchase 25,000 shares granted pursuant to the 1992
Outside Directors Stock Option and Incentive Plan which are
immediately exercisable. Does not include options to purchase
1,000 shares of Common Stock granted pursuant to the 1993 Non-
Qualified Stock Option Plan which are not exercisable within sixty
(60) days.
(6) Mr. Colin has sole voting and investment power over these
shares which include: (i) 13,582 shares held of record by Mr.
Colin, and (ii) options to purchase 25,000 shares granted pursuant
to the 1992 Outside Directors Stock Option and Incentive Plan which
are immediately exercisable.
(7) See footnote (2) of the table under "Security Ownership of
Certain Beneficial Owners."
(8) Mr. Kelecy has sole voting and investment power over 4,140
shares of Common Stock held of record by Mr. Kelecy and 56,000
options to purchase Common Stock granted pursuant to the 1993 Non-
Qualified Stock Option Plan. Does not include options to purchase
104,000 shares of Common Stock granted pursuant to the 1993 Non-
Qualified Stock Option Plan which are not exercisable within sixty
(60) days.
(9) Mr. Kimball has sole voting and investment power over these
shares which include: (i) 4,064 shares held of record by Mr.
Kimball, (ii) 14,883 options to purchase Common Stock granted
pursuant to the 1991 Performance Equity Plan, and (iii) 24,000
options to purchase Common Stock pursuant to the 1993 Non-Qualified
Stock Option Plan, which are immediately exercisable. Does not
include options to purchase 61,000 shares of Common Stock granted
pursuant to the 1993 Non-Qualified Stock Option Plan which are not
exercisable within sixty (60) days.
(10) Mr. Randall has sole voting and investment power over these
shares which include: (i) 40,000 options to purchase Common Stock
pursuant to the 1993 Non-Qualified Stock Option Plan, which are
immediately exercisable. Does not include options to purchase
100,000 shares of Common Stock granted pursuant to the 1993 Non-
Qualified Stock Option Plan which are not exercisable within sixty
(60) days.
(11) Mr. Warren has sole voting and investment power over these
shares which include 100,765 shares held by record by Mr. Warren
and 6,000 options to purchase Common Stock granted pursuant to the
1993 Non-Qualified Stock Option Plan. Does not include options to
purchase 49,000 shares of Common Stock granted pursuant to the 1993
Non-Qualified Stock Option Plan which are not exercisable within
sixty (60) days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Louis F. Centofanti:
During 1994, the Company made a private offering to accredited
investors (the "Private Placement") of units ("Units"), each Unit
consisting of 10,000 shares of Common Stock and 20,000 Class B
Warrants to Purchase Common Stock (the "Class B Warrants"). The
Class B Warrants are for a term of five (5) years from June 17,
1994. Each Class B Warrant entitled the holder thereof to purchase
one (1) share of Common Stock for $5.00. The Class B Warrants were
subject to certain antidilution provisions, which have resulted in
an adjustment of such purchase price from $5.00 to $3.28. Under
certain conditions, the Class B Warrants were redeemable by the
Company at a redemption price of $0.05 per Class B Warrant,
provided that the market price of the Common Stock shall exceed an
average price of $8.00 per share. In connection with the Private
Placement, Dr. Louis F. Centofanti, Chairman of the Board and Chief
Executive Officer of the Company, purchased two Units from the
16
Company, which consisted of 20,000 shares of Common Stock and Class
B Warrants to purchase up to 40,000 shares of Common Stock. The
Class B Warrants expired during June 1999 without being exercised,
including the Class B Warrants held by Dr. Centofanti. The
purchase price paid by Dr. Centofanti for the two Units was
$60,000.
Chemical Conservation Corporation, Chemical Conservation of
Georgia, Inc. and Chem-Met Services, Inc.
Thomas P. Sullivan, Ann L. Sullivan, and the Sullivan Trust:
On May 27, 1999, (i) the Company, Chemical Conservation
Corporation; a Florida corporation ("Chemical Florida"); Chemical
Conservation of Georgia, Inc., a Georgia corporation ("Chemical
Georgia"); The Thomas P. Sullivan Living Trust, dated September 6,
1978 ("TPS Trust"); The Ann L. Sullivan Living Trust, dated
September 6, 1978 ("ALS Trust"); Thomas P. Sullivan, an individual
("Mr. Sullivan"); and Ann L. Sullivan, an individual ("ALS"),
entered into a Stock Purchase Agreement ("Chem-Con Stock Purchase
Agreement"), wherein the Company purchased all of the outstanding
capital stock of Chemical Florida and Chemical Georgia from the ALS
Trust pursuant to the terms of the Chem-Con Stock Purchase
Agreement, and (ii) the Company, Chem-Met Services, Inc., a
Michigan corporation ("Chem-Met"), the TPS Trust, the ALS Trust,
Mr. Sullivan and ALS entered into a Stock Purchase Agreement
("Chem-Met Stock Purchase Agreement"), whereby the Company
purchased all of the outstanding capital stock of Chem-Met from the
TPS Trust pursuant to the terms of the Chem-Met Stock Purchase
Agreement. The Chem-Con Stock Purchase Agreement and the Chem-Met
Stock Purchase Agreement are collectively referred to as the "Stock
Purchase Agreements." The TPS Trust and the ALS Trust are
collectively referred to as the "Sullivan Trusts." Mr. Sullivan
and ALS are husband and wife.
Under the terms of the Stock Purchase Agreements, the purchase
price paid by the Company in connection with the acquisition of
Chemical Florida, Chemical Georgia and Chem-Met was $8,700,000,
consisting of (i) $1,000,000 in cash paid at closing, (ii) three
promissory notes ("Promissory Notes"), in the aggregate amount of
$4,700,000, to be paid in equal monthly installments of principal
and interest of approximately $90,276.96 over five years and having
an interest rate of 5.5% for the first three years and 7% for the
remaining two years, with payment of such Promissory Notes being
guaranteed by Chem-Met under a non-recourse guaranty, which non-
recourse guaranty is secured by certain real estate owned by
Chem-Met, and (iii) $3,000,000 paid in the form of 1,500,000 shares
of Common Stock, paid to the ALS Trust at closing; however, if the
ALS Trust owns any of such shares of Common Stock at the end of
eighteen (18) months from the June 1, 1999, closing date (the
"Guarantee Period") and the market value (as determined below) per
share of Common Stock at the end of the Guarantee Period is less
than $2.00 per share, the Company shall pay the ALS Trust, within
ten (10) business days after the end of the Guarantee Period, an
amount equal to the sum determined by multiplying the number of
shares of Common Stock issued to the ALS Trust under the Stock
Purchase Agreements that are still owned by the ALS Trust at the
end of the Guarantee Period by $2.00 less the market value (as
determined below) of such shares of Common Stock owned by the ALS
Trust at the end of the Guarantee Period, with such amount, if any,
payable by the Company to the ALS Trust, at the Company's option,
in cash or in Common Stock or a combination thereof.
Notwithstanding anything to the contrary, the aggregate number of
shares of Common Stock issued or issuable under the Stock Purchase
Agreements for any reason whatsoever shall not exceed eighteen
percent (18%) of the number of issued and outstanding shares of
Common Stock on the date immediately preceding the June 1, 1999,
closing date. The market value of each share of Common Stock at
the end of the Guarantee Period shall be determined based on the
average of the closing sale price per share of Common Stock as
reported on the NASDAQ SmallCap Market ("NASDAQ") for the five (5)
consecutive trading days ending with the trading day immediately
prior to the end of the Guarantee Period. Under the Company's loan
agreement, the Company may only pay any such amount due the ALS
Trust at the end of the Guarantee Period in Common Stock unless the
lender agrees that the Company may satisfy all or part of such in
cash.
Pursuant to the terms of the Stock Purchase Agreements, for a
period of thirty (30) calendar days prior to the end of the
Guarantee Period, (i) the TPS Trust, ALS Trust, Mr. Sullivan and
ALS shall not, directly or indirectly, or in conjunction with or
through any other person, firm, corporation, entity, partnership,
17
company or association, sell or dispose of or otherwise transfer
any shares of Common Stock, or other securities of the Company, and
(ii) the Company shall not, and shall cause its directors to not,
buy or otherwise acquire any shares of Common Stock over the NASDAQ
(other than in connection with the exercise of any outstanding
warrants or the conversion of any outstanding options or
convertible securities of the Company, or in connection with an
underwritten public offering of Common Stock).
In connection with the Stock Purchase Agreements, the ALS Trust,
the TPS Trust, ALS and Mr. Sullivan agreed that for a period of two
(2) years from the date of Closing, none of them shall without the
prior consent of the Board of Directors of the Company (i) acquire
or permit any of their affiliates to acquire beneficial ownership
of any voting securities of the Company or any rights or option to
acquire voting securities of the Company or any securities
convertible into any voting securities of the Company, with the
exception that Michael F. Sullivan and Patrick Sullivan, sons of
Mr. Sullivan and ALS, may acquire shares of Common Stock; (ii)
solicit, or encourage any solicitation of, or permit any of their
affiliates to solicit, or encourage any solicitation of, (a)
proxies with respect to voting securities of the Company, or (b)
tender or exchange offers for voting securities of the Company or
(c) any election contest relating to the election of directors of
the Company; or (iii) take any action to acquire or affect the
control of the Company, except that under the Stock Purchase
Agreements, it is recognized that the Sullivan Trusts have the
right to select one nominee to the Board of Directors of the
Company under certain limited conditions. In connection with the
closing of the Stock Purchase Agreements, a new seat was created on
the Board of Directors of the Company and Mr. Sullivan was
appointed to fill such vacant seat. Mr. Sullivan was also
appointed at such time to the Stock Option and Compensation
Committee.
The cash portion of the purchase price for Chem-Con and Chem-Met
were obtained through borrowing from the Company's primary lender.
In connection with the closing, using funds borrowed from the
Company's primary lender, the Company paid an aggregate of
approximately $3,842,560 to satisfy certain obligations of
Chem-Met.
The principal businesses of Chem-Con and Chem-Met are the
collection, treatment, and recycling of industrial and hazardous
waste, including waste oils, water and miscellaneous solid waste.
Chemical Florida operates a permitted treatment and storage
facility and transfer station that also serves as the base for a
private trucking fleet; Chemical Georgia treats hazardous waste and
recycles solvents and Chem-Met treats and stabilizes inorganic
wastes and maintains a government services division that is focused
principally on the Defense Revitalization and Marketing Services
market. The Company intends to continue using the Chem-Con and
Chem-Met facilities for substantially the same purposes as such
were being used prior to the acquisition by the Company.
RBB Bank Aktiengesellschaft:
On July 17, 1996, we issued to RBB Bank 5,500 shares of newly-
created Series 3 Class C Convertible Preferred Stock ("Series 3
Preferred") at a price of $1,000 per share, for an aggregate sales
price of $5,500,000. As part of the sale of the Series 3
Preferred, the Company also issued to RBB Bank two (2) Common Stock
purchase warrants entitling RBB Bank to purchase, after December 31, 1996,
until July 18, 2001, an aggregate of up to 2,000,000 shares of
Common Stock, with 1,000,000 shares exercisable at an exercise
price equal to $2.00 per share and 1,000,000 shares exercisable at
an exercise price equal to $3.50 per share. The sale to RBB Bank
of the Series 3 Preferred was made in a private placement under
Sections 4(2) and/or 3(b) and/or Rule 506 of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"). The Series 3
Preferred accrues dividends on a cumulative basis at a rate of six percent
(6%) per annum, and is payable semi-annually when and as declared by the
Board of Directors. Dividends shall be paid, at the Company's option, in
the form of cash or Common Stock. The holder of the Series 3 Preferred
could convert the Series 3 Preferred into Common Stock of the Company
based on the product of (i) the average closing bid quotation for the five
(5) trading days immediately preceding the conversion date multiplied by
(ii) seventy-five percent (75%). The conversion price was a minimum of
$.75 per share or a maximum of $1.50 per share, with the minimum conversion
price to be reduced by $.25 per share each time, if any, after July 1, 1996,
the Company sustained a net loss, on a consolidated basis, in each of two
(2) consecutive quarters. At no time shall a quarter that has already
been considered in such determination be considered in any subsequent
determination. As a result of the net loss recorded for
18
each of the two consecutive quarters (first and second quarter of
1997) the minimum conversion price was reduced by $.25 per share to
$.50 per share, effective July 1, 1997. The Common Stock issuable
on the conversion of the Series 3 Preferred was subject to certain
registration rights pursuant to the subscription agreement. The
accrued dividends for the period July 1, 1997, through December 31,
1997, in the amount of approximately $121,000 were paid in January
1998, in the form of 54,528 shares of Common Stock of the Company.
The accrued dividends for the period January 1, 1998, through June
30, 1998, in the amount of approximately $119,000 were paid in July
1998, in the form of 62,027 shares of Common Stock of the Company.
The accrued dividends for the period July 1, 1998, through December
31, 1998, in the amount of approximately $121,000 were paid in
January 1999, in the form of cash.
On or about June 11, 1997, the Company issued to RBB Bank 2,500 shares of
newly-created Series 4 Class D Convertible Preferred Stock, par
value $.001 per share ("Series 4 Preferred"), at a price of $1,000
per share, for an aggregate sales price of $2,500,000. The sale to
RBB Bank was made in a private placement under Sections 4(2) and/or
3(b) and/or Rule 506 of Regulation D under the Securities Act, pursuant to
the terms of a Subscription and Purchase Agreement, dated June 9, 1997,
between the Company and RBB Bank ("Subscription Agreement"). The Series 4
Preferred had a liquidation preference over the Company's Common Stock,
par value $.001 per share ("Common Stock"), equal to $1,000 consideration
per outstanding share of Series 4 Preferred (the "Liquidation Value"),
plus an amount equal to all unpaid dividends accrued thereon. The Series 4
Preferred accrued dividends on a cumulative basis at a rate of four percent
(4%) per annum of the Liquidation Value ("Dividend Rate"), and was payable
semi-annually when and as declared by the Board of Directors. No dividends
or other distributions could be paid or declared or set aside for payment on
the Company's Common Stock until all accrued and unpaid dividends on all
outstanding shares of Series 4 Preferred were paid or set aside for payment.
Dividends were paid, at the Companyh's option, in the form of cash or Common
Stock. If the Company paid dividends in Common Stock, such were payable in
the number of shares of Common Stock equal to the product of (a) the quotient
of (i) four percent (4%) of $1,000 divided by (ii) the average of the closing
bid quotation of the Common Stock as reported on the NASDAQ for the five
trading days immediately prior to the applicable dividend declaration date,
times (b) a fraction, the numerator of which is the number of days elapsed
during the period for which the dividend was paid and the denominator
of which is 365.
The Series 4 Preferred was convertible into Common Stock at a
conversion price per share of the lesser of (a) the product of the
average closing bid quotation for the five (5) trading days
immediately preceding the conversion date multiplied by eighty
percent (80%) or (b) $1.6875. The Company had the option to redeem
the shares of Series 4 Preferred (a) between June 11, 1998, and
June 11, 2001, at a redemption price of $1,300 per share if at any
time the average closing bid price of the Common Stock for ten
consecutive trading days is in excess of $4.00, and (b) after June
11, 2001, at a redemption price of $1,000 per share. The holder of
the Series 4 Preferred had the option to convert the Series 4
Preferred prior to redemption by the Company.
As part of the sale of the Series 4 Preferred, the Company also issued
to RBB Bank two Common Stock purchase warrants (collectively, the
"Series 4 Warrants ") entitling RBB Bank to purchase, after
December 31, 1997, and until June 9, 2000, an aggregate of up to
375,000 shares of Common Stock, subject to certain anti-dilution
provisions, with 187,500 shares exercisable at a price equal to
$2.10 per share and 187,500 shares exercisable at a price equal to
$2.50 per share. A certain number of shares of Common Stock
issuable on the conversion of the Series 4 Preferred and on the
exercise of the Warrants are subject to certain registration rights
pursuant to the Subscription Agreement.
Effective September 16, 1997, the Company entered into an Exchange
Agreement with RBB Bank ("Series 4 Exchange Agreement") which provided
that the 2,500 shares of Series 4 Preferred and the Series 4 Warrants
were tendered to the Company in exchange for (i) 2,500 shares of a newly
created Series 6 Class F Preferred Stock, par value $.001 per share
("Series 6 Preferred"), (ii) two warrants each to purchase 187,500
shares of Common Stock exercisable at $1.8125 per share, and (iii)
one warrant to purchase 281,250 shares of Common Stock exercisable
at $2.125 per share (collectively, the "Series 6 Warrants"). The
Series 6 Warrants are for a term of three (3) years and may be
exercised at any time after December 31, 1997, and until June 9,
2000.
19
The conversion price of the Series 6 Preferred was $1.8125 per
share, unless the closing bid quotation of the Common Stock was
lower than $2.50 in twenty (20) out of any thirty (30) consecutive
trading days after March 1, 1998, in which case, the conversion
price per share was to be the lesser of (A) the product of the
average closing bid quotation for the five (5) trading days
immediately preceding the conversion date multiplied by eighty
percent (80%) or (B) $1.8125. The remaining terms of the Series 6
Preferred were substantially the same as the terms of the Series 4
Preferred. No shares of the Series 6 Preferred were converted.
Effective February 28, 1998, the Company entered into an Exchange
Agreement with RBB Bank (the "Series 6 Exchange Agreement"), which
provided that the 2,500 shares of Series 6 Preferred were tendered
to the Company in exchange for 2,500 of a newly-created Series 8
Class H Preferred Stock, par value $.001 per share ("Series 8
Preferred"). The exchange was made in an exchange offer exempt
from registration pursuant to Section 3(a)(9) of the Securities
Act, and/or Section 4(2) of the Securities Act and/or Regulation D
as promulgated under the Securities Act. The Series 8 Preferred
was issued to RBB Bank during July 1998.
The rights under the Series 8 Preferred were the same as the rights
under the Series 6 Preferred, except for the conversion price. The
Series 8 Preferred was convertible at $1.8125 per share, except
that, in the event the average closing bid price reported in the
over-the-counter market, or the closing sale price if listed on a
national securities exchange for the five (5) trading days prior to
a particular date of conversion, were less than $2.50, the
conversion price for only that particular conversion was to be the
average of the closing bid quotations of the Common Stock as
reported on the over-the-counter market, or the closing sale price
if listed on a national securities exchange, for the five (5)
trading days immediately proceeding the date of such particular
conversion notice provided by the holder to the Company multiplied
by 80%.
The terms of the Series 8 Preferred included a liquidation
preference over the Company's Common Stock equal to $1,000
consideration per outstanding share of Series 8 Preferred (the
"Series 8 Liquidation Value"), plus an amount equal to all accrued
and unpaid dividends. The Series 8 Preferred accrued dividends on
a cumulative basis at a rate of four percent (4%) per annum of the
Series 8 Liquidation Value ("Series 8 Dividend Rate"), and were
payable semi-annually when and as declared by the Board of
Directors. No dividends or other distributions could be paid or
declared or set aside for payment on the Company's Common Stock
until all accrued and unpaid dividends on all outstanding shares of
Series 8 Preferred were paid or set aside for payment. Dividends
could be paid, at the option of the Company, in the form of cash or
Common Stock of the Company. If the Company paid dividends in
Common Stock, such were payable in the number of shares of Common
Stock equal to the product of (a) the quotient of (i) the Series 8
Dividend Rate divided by (ii) the average of the closing bid
quotation of the Common Stock as reported on the NASDAQ for the
five trading days immediately prior to the date the dividend is
declared, times (b) a fraction, the numerator of which is the
number of days elapsed during the period for which the dividend is
to be paid and the denominator of which is 365.
Except for the exchange of the Series 6 Preferred for the Series 8
Preferred, the Series 6 Exchange Agreement did not terminate the
Series 4 Exchange Agreement. In addition, the Series 6 Warrants
were not affected by the Series 6 Exchange Agreement. The Company
paid to RBB Bank the dividends on the Series 6 Preferred which
accrued from the date of its issuance through February 28, 1998,
the effective date of the Series 6 Exchange Agreement by issuing to
RBB Bank 7,652 shares of Common Stock in payment of such accrued
dividends. By letter dated July 14, 1998, RBB Bank agreed to waive
certain penalties regarding the Series 4 Preferred and Series 6
Preferred. The accrued dividends for the period July 1, 1997,
through December 31, 1997, for the Series 4 and Series 6 Preferred,
total approximately $55,000, which were paid in January 1998, in
the form of 27,377 shares of Common Stock of the Company. The
accrued dividends for the Series 6 Preferred and 8 Preferred for
the period January 1, 1998, through June 30, 1998, in the amount of
approximately $49,000, were paid in July 1998, in the form of 25,
072 shares of Common Stock of the Company. The accrued dividends
for the Series 8 Preferred for the period July 1, 1998, through
December 31, 1998, in the amount of approximately $50,000, were
paid in February 1999, the form of 38,046 shares of Common Stock of
the Company.
20
On or about June 30, 1998, the Company issued to RBB Bank, 3,000
shares of newly-created Series 10 Class J Convertible Preferred
Stock, par value $.001 per share ("Series 10 Preferred"), at a
price of $1,000 per share, for an aggregate sales price of
$3,000,000. The sale to RBB Bank was made in a private placement
under Section 4(2) of the Securities Act and/or Rule 506 of Regulation D
under the Securities Act, pursuant to the terms of a Subscription and
Purchase Agreement, dated June 30, 1998 between the Company and RBB Bank
("Series 10 Subscription Agreement"). The net proceeds of $2,653,000 from
this private placement, after the deduction for certain fees and expenses,
was received by the Company on July 14, 1998. The Series 10 Preferred
had a liquidation preference over the Company's Common Stock, par value
$.001 per share ("Common Stock"), equal to $1,000 consideration per
outstanding share of Series 10 Preferred (the "Liquidation Value"), plus
an amount equal to all unpaid and accrued dividends thereon. The Series 10
Preferred accrued dividends on a cumulative basis at a rate of four
percent (4%) per annum of the Liquidation Value ("Dividend Rate"),
which were payable semi-annually within ten (10) business days
after each subsequent June 30 and December 31 (each a "Dividend
Declaration Date"), and were payable in cash or shares of the
Company's Common Stock at the Company's option. The first Dividend
Declaration Date was December 31, 1998. No dividends or other
distributions could be paid or declared or set aside for payment on
the Company's Common Stock until all accrued and unpaid dividends
on all outstanding shares of Series 10 Preferred were paid or set
aside for payment. Dividends could be paid, at the option of the
Company, in the form of cash or Common Stock of the Company. If the
Company paid dividends in Common Stock, such were payable in the
number of shares of Common Stock equal to the product of (a) the
quotient of (i) the Dividend Rate divided by (ii) the average of
the closing bid quotation of the Common Stock as reported on the
NASDAQ for the five trading days immediate prior to the date the
dividend was declared, times (b) a fraction, the numerator of which
is the number of days elapsed during the period for which the
dividend is to be paid and the denominator of which is 365.
The holder of the Series 10 Preferred could convert into Common
Stock any or all of the Series 10 Preferred on and after 180 days
after June 30, 1998 (December 28, 1998). The conversion price per
outstanding share of Preferred Stock ("Series 10 Conversion Price")
was $1.875; except that if the average of the closing bid price per
share of Common Stock quoted on the NASDAQ (or the closing bid
price of the Common Stock as quoted on the national securities
exchange if the Common Stock is not listed for trading on the
NASDAQ but was listed for trading on a national securities
exchange) for the five (5) trading days immediately prior to the
particular date on which the holder notified the Company of a
conversion ("Series 10 Conversion Date") was less than $2.34, then
the Series 10 Conversion Price for that particular conversion was
to be eighty percent (80%) of the average of the closing bid price
of the Common Stock on the NASDAQ (or if the Common Stock was not
listed for trading on the NASDAQ but is listed for trading on a
national securities exchange then eighty percent (80%) of the
average of the closing bid price of the Common Stock on the
national securities exchange) for the five (5) trading days
immediately prior to the particular Series 10 Conversion Date.
During 1999, 748 shares of the Series 10 Preferred were converted
into 971,429 shares of Common Stock.
As part of the sale of the Series 10 Preferred, the Company also
issued to RBB Bank (a) a warrant entitling the holder to purchase
up to an aggregate of 150,000 shares of Common Stock at an exercise
price of $2.50 per share of Common Stock expiring three (3) years
after June 30, 1998 and (b) a warrant entitling the holder to
purchase up to an aggregate of 200,000 shares of Common Stock at an
exercise price of $1.875 per share of Common Stock and expiring
three (3) years after June 30, 1998. Collectively, these warrants
are referred to herein as the "Series 10 RBB Warrants." The Common
Stock issuable upon the conversion of the Series 10 Preferred and
upon the exercise of the Series 10 RBB Warrants is subject to
certain registration rights pursuant to the Series 10 Subscription
Agreement.
In connection with the placement of Series 10 Preferred to RBB
Bank, the Company paid fees (excluding legal and accounting) of
$210,000 and issued to (a) Liviakis Financial Communications, Inc.
("Liviakis") for assistance with the placement of the Series 10
Preferred, warrants entitling the holder to purchase up to an
aggregate of 1,875,000 shares of Common Stock, subject to certain
anti-dilution provisions, at an exercise price of $1.875 per share
of Common Stock which warrants may be exercised after January 15,
1999, and which expire after four (4) years; (b) Robert B. Prag, an
executive officer of Liviakis for assistance with the placement of
the Series 10 Preferred, warrants entitling the holder to purchase
up to an aggregate of 625,000 shares of Common Stock, subject to
21
certain anti-dilution provisions, at an exercise price of $1.875
per share of Common Stock, which warrants may be exercised after
January 15, 1999, and which expire after four (4) years; (c) JW
Genesis Financial Corporation for assistance with the placement of
the Series 10 Preferred, warrants entitling the holder to purchase
up to an aggregate of 150,000 shares of Common Stock, subject to
certain anti-dilution provisions, at an exercise price of $1.875
per share of Common Stock, which warrants expire after three (3)
years; and (d) Fontenoy Investments for assistance with the
placement of the Series 10 Preferred, warrants entitling the holder
to purchase up to an aggregate of 350,000 shares of Common Stock,
subject to certain anti-dilution provisions, at an exercise price
of $1.875 per share of Common Stock, which warrants expire after
three (3) years. Under the terms of each warrant, the holder is
entitled to certain registration rights with respect to the shares
of Common Stock issuable on the exercise of each warrant.
In March, 1999, the Company entered into an Exchange Agreement
dated March 19, 1999, with Liviakis and Prag whereby the warrants
described in the preceding paragraph for the purchase of 2,500,000
shares of Common Stock (1,875,000 and 625,000 respectively) were
canceled and exchanged for 200,000 shares of Common Stock.
The accrued dividends for the Series 10 Preferred for the period
July 14, 1998, through December 31, 1998, in the amount of
approximately $56,000, were paid in February 1999, in the form of
42,430 shares of Common Stock of the Company. Regarding the Series
10 Preferred, the Company recognized a dividend in the total amount
of $750,000, with approximately $383,000 recorded in the third
quarter of 1998 and $367,000 recorded in the fourth quarter of
1998.
July 1999 Exchange Agreements:
On July 15, 1999, the Company and RBB Bank entered into (i) an
Exchange Agreement, dated July 15, 1999 ("Series 3 Exchange
Agreement"), pursuant to which the 1,769 outstanding shares of
Series 3 Preferred, all of which were held by RBB Bank, were
exchanged for an equal number of shares of newly created Series 11
Class K Convertible Preferred Stock par value $.001 per share
("Series 11 Preferred"); (ii) an Exchange Agreement, dated July 15,
1999 ("Series 8 Exchange Agreement"), pursuant to which the
outstanding shares of Series 8 Preferred, all of which were held by
RBB Bank, were exchanged for an equal number of shares of newly
created Series 12 Class L Convertible Preferred Stock, par value
$.001 per share ("Series 12 Preferred"); and (iii) an Exchange
Agreement, dated July 15, 1999 ("Series 10 Exchange Agreement"),
pursuant to which the outstanding shares of Series 10 Preferred
Stock, all of which were held by RBB Bank, were exchanged for an
equal number of shares of newly created Series 13 Class M
Convertible Preferred Stock, par value $.001 per share ("Series 13
Preferred").
The exchanges of the Series 11 Preferred, Series 12 Preferred, and
Series 13 Preferred to RBB Bank were made in private placements
under Section 4(2) and/or Section 3(a)(9) of the Securities Act.
The terms of the newly issued securities are substantially the same
as the series for which each was exchanged with the exception of
certain differences as described hereafter.
Redemption Terms of Series 8 Preferred and Series 12 Preferred:
The Series 8 Preferred was redeemable by the Company (a) within
four (4) years from June 9, 1997 at $1,300 per share when the
average of the closing bid price of the Common Stock for ten (10)
consecutive days is in excess of $4.00 per share as quoted on the
NASDAQ and (b) at $1,000 per share after four years from June 9,
1997. The Company had to provide thirty (30) days notice to the
Series 8 Preferred holder prior to any date stipulated by the
Company for redemption and at such time, the Series 8 Preferred
holder has the option of converting the shares which are to be
redeemed.
Under the terms of the Series 12 Preferred, the Company is
permitted to redeem up to 300 shares of Series 12 Preferred for
$1,000 per share, or an aggregate of $300,000, provided that any
such redemption must occur within 120 days of issuance of the
Series 12 Preferred. On July 15, 1999, the Company redeemed 300
shares of Series 12 Preferred leaving 616 shares of Series 12
Preferred issued and outstanding.
22
Redemption Terms of Series 10 Preferred and Series 13 Preferred:
The Series 10 was not redeemable by the Company. Under the terms
of the Series 13 Preferred, the Company is permitted to redeem up
to 450 shares of Series 13 Preferred for $1,000 per share, or an
aggregate of $450,000, provided that any such redemption must occur
within 120 days of issuance of the Series 13 Preferred. On July
15, 1999, the Company redeemed 450 shares of Series 13 Preferred
leaving 1,802 shares of Series 13 Preferred issued and outstanding.
Other Differences:
In addition to the different redemption terms for the Series 12
Preferred and the Series 13 Preferred described above, the Series
11 Preferred, Series 12 Preferred and Series 13 Preferred
(collectively, the "July 1999 Exchange Preferred") each contain
provisions, described hereafter, which are different from those
provisions in the Series 3 Preferred, Series 8 Preferred and Series
10 Preferred, as applicable.
* RBB Bank may make no conversions of the July 1999 Exchange
Preferred for 12 months from July 15, 1999.
* Each of the July 1999 Exchange Preferred has a minimum
conversion price of $1.50 per share for a 24 month period from
July 15, 1999.
* For 12 months from July 15, 1999, the Company may redeem at
any time and from time to time any of the July 1999 Exchange
Preferred held by RBB Bank at 110% of its "stated value" of
$1,000 per share. Thereafter, the Company may redeem at any
time and from time to time any of such July 1999 Exchange
Preferred at 120% of its "stated value" of $1,000 per share.
After 12 months from July 15, 1999, upon any notice of
redemption, RBB shall have only 5 business days to exercise
its conversion rights regarding the redeemed shares. For 12
months from July 15, 1999, RBB Bank cannot elect to convert
shares of July 1999 Exchange Preferred even if the Company
redeems such shares of July 1999 Exchange Preferred.
August 1999 Exchange Agreements:
On August 3, 1999, the Company and RBB Bank entered into (i) an
Exchange Agreement, dated August 3, 1999 ("Series 11 Exchange
Agreement"), pursuant to which the 1,769 outstanding shares of
Series 11 Preferred, all of which were held by RBB Bank, were
exchanged for an equal number of shares of newly created Series 14
Class N Convertible Preferred Stock par value $.001 per share
("Series 14 Preferred"); (ii) an Exchange Agreement, dated
August 3, 1999 ("Series 12 Exchange Agreement"), pursuant to which
the 616 outstanding shares of Series 12 Preferred, all of which
were held by RBB Bank, were exchanged for an equal number of shares
of newly created Series 15 Class O Convertible Preferred Stock, par
value $.001 per share ("Series 15 Preferred"); and (iii) an
Exchange Agreement, dated August 3, 1999 ("Series 13 Exchange
Agreement"), pursuant to which the 1,802 outstanding shares of
Series 13 Preferred Stock, all of which were held by RBB Bank, were
exchanged for an equal number of shares of newly created Series 16
Class P Convertible Preferred Stock, par value $.001 per share
("Series 16 Preferred").
The exchange of the Series 14 Preferred, Series 15 Preferred, and
Series 16 Preferred (collectively, the "August 1999 Exchange
Preferred") to RBB Bank were made in private placements under
Section 4(2) and/or Section 3(a)(9) of the Securities Act. The terms
of each of the August 1999 Exchange Preferred are substantially
identical to the particular July 1999 Exchange Preferred for which
each was exchanged except that the July 15 dates as described above
in connection with the July 1999 Exchange Preferred were changed to
April 20 and certain registration rights were granted regarding the
shares of Common Stock issuable under the August 1999 Exchange
Preferred. Therefore, (i) RBB Bank may make no conversions of the
August 1999 Exchange Preferred for 12 months from April 20, 1999;
(ii) each of the August 1999 Exchange Preferred has a minimum
conversion price of $1.50 per share for a 24 month period from
April 20, 1999; (iii) for 12 months from April 20, 1999, the
Company may redeem at any time and from time to time any of the
August 1999 Exchange Preferred held by RBB Bank at 110% of its
23
"stated value" of $1,000 per share; and (iv) if the Company does
not register with the Commission the Common Stock issuable upon
conversion of the August 1999 Exchange Preferred by January 31,
2000, the Company agrees to pay to RBB Bank a penalty in an amount
equal to two percent of the product of (a) the number of shares of
such August 1999 Exchange Preferred then outstanding times (b)
$1,000, payable in cash. The Company further agreed that for each
month thereafter which terminates without such registration
statement being declared effective by the Commission before the end
of the last day thereof, the Company shall pay to RBB Bank a
penalty in an amount equal to two percent of the product of (a) the
number of shares of August 1999 Exchange Preferred then outstanding
times (b) $1,000, payable in cash. After twelve months from April 20,
1999, the Company may redeem at any time and from time to time
any of such August 1999 Exchange Preferred at 120% of its "stated
value" of $1,000 per and, upon any notice of redemption, RBB Bank
shall have five business days to exercise its conversion rights
regarding the redeemed shares. During the 12 months after April 20,
1999, RBB Bank cannot elect to convert shares of August 1999
Exchange Preferred even if the Company redeems such shares of
August 1999 Exchange Preferred.
The Company believes that each of the transactions set forth above
involving affiliates, officers or Directors of the Company was or
is on terms at least as favorable to the Company as could have been
obtained from an unaffiliated third party. The Company has adopted
a policy that any transactions or loans between the Company and its
Directors, principal stockholders or affiliates must be approved by
a majority of the disinterested Directors of the Company and must
be on terms no less favorable to the Company than those obtainable
from unaffiliated third parties.
Potential Change in Control
RBB Bank has the right to acquire an aggregate of approximately
5,797,583 additional shares of Common Stock, consisting of (i)
1,179,333 shares upon conversion of the issued and outstanding
Series 14 Preferred (assuming conversion occurs between April 20,
2000 and April 20, 2001, during which period a set conversion price
of $1.50 is in effect) and (ii) 410,667 shares upon conversion of
the issued and outstanding Series 15 Preferred (assuming conversion
occurs at the conversion price of $1.50 per share, which is the
minimum conversion price between April 20, 2000 and April 20, 2001)
(iii) 1,201,333 shares upon conversion of the issued and outstanding
Series 16 Preferred (assuming conversion occurs at the conversion price
of $1.50 per share which is the minimum conversion price between April 20,
2000 and April 20, 2001) and (iv) 3,006,250 shares upon the exercise of
the RBB Series 3 Warrants, RBB Series 4 Warrants and RBB Series 10 Warrants.
Upon such conversion and exercise, RBB Bank would own approximately 47.74%
of the outstanding shares of Common Stock of the Company, which includes
the 6,751,482 shares of Common Stock directly held by RBB Bank as of
November 15, 1999, but does not include the shares of Common Stock which are
issuable for payment of dividends on the various series of preferred stock
held by RBB Bank. The foregoing estimate assumes that no other shares of
Common Stock are issued by the Company, no other warrants or options are
exercised, the Company does not acquire additional shares of Common Stock
as Treasury Stock, and RBB Bank does not dispose of any shares of Common
Stock.
If RBB Bank were to acquire the shares of Common Stock as described
in the previous paragraph, RBB Bank will be the largest single
shareholder of the Company, and the Company may not be able to
avoid an actual change in control of the Company if RBB Bank seeks
such a change in control. Moreover, if such conversion and exercise
results in RBB Bank acquiring more than 50% of the then outstanding
Common Stock of the Company, the Company would not be able to avoid
a change in control. The foregoing estimates assume that no other
shares of Common Stock are issued by the Company, no other warrants
or options are exercised, the Company does not acquire additional
shares of Common Stock as Treasury Stock, and RBB Bank does not
dispose of any shares of Common Stock. See "Certain Relationships
and Related Transactions."
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the Stockholders, the Board of Directors
has reappointed BDO Seidman, LLP ("BDO Seidman") as independent
accountants to audit the consolidated financial statements of the
Company for fiscal year 1999. It is expected that representatives
of BDO Seidman will be present at the annual meeting, will have an
opportunity to make a statement if they desire to do so, and will
be available to answer appropriate questions.
BDO Seidman has been the Company's independent accountant since December 18,
1996, when the Board of Directors approved the employment of BDO Seidman
as the Company's independent auditors.
24
During the Company's two most recent fiscal years, and any
subsequent interim period prior to engaging BDO Seidman, neither
the Company nor any one on its behalf consulted with BDO Seidman
regarding either the application of accounting principles to a
specified transaction, either contemplated or proposed, or the type
of audit opinion that might be rendered on the Company's financial
statements.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE REAPPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to present a proposal for consideration
at the annual meeting of stockholders to be held in 2000 must
submit such proposal in accordance with the rules promulgated by
the Securities and Exchange Commission. In order for a proposal to
be included in the Company's proxy materials relating to the 2000 Annual
Meeting of Stockholders, the stockholder must submit such proposal
in writing to the Company so that it is received no later than July 13,
2000. Any stockholder proposal submitted with respect to the
Company's 2000 Annual Meeting of Stockholders which proposal is
received by the Company after September 26, 2000 will be considered
untimely for purposes of Rule 14a-4 and 14a-5 under the Exchange
Act and the Company may vote against such proposal using its
discretionary voting authority as authorized by proxy. Such
proposals should be addressed to Richard T. Kelecy, Perma-Fix
Environmental Services, Inc., 1940 N.W. 67th Place, Gainesville,
Florida 32653.
OTHER MATTERS
Other Business
The Board of Directors has no knowledge of any business to be
presented for consideration at the Meeting other than as described
above. Should any such matters properly come before the Meeting or
any adjournment thereof, the persons named in the enclosed Proxy
Card will have discretionary authority to vote such proxy in
accordance with their best judgment on such matters and with
respect to matters incident to the conduct of the Meeting.
Additional copies of the Annual Report and the Notice of Annual
Meeting of Stockholders, Proxy Statement and accompanying Proxy
Card may be obtained from the Company.
In order to assure the presence of the necessary quorum at the
Meeting, please sign and mail the enclosed Proxy Card promptly in
the envelope provided. No postage is required if mailed within the
United States. The signing of the Proxy Card will not prevent your
attending the Meeting and voting in person, should you so desire.
Annual Report on Form 10-K
The Company will provide, without charge, to each stockholder solicited
to vote at the Meeting, on the written request of the stockholder, a
copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, including the financial statements and schedules,
as filed with the Securities and Exchange Commission. Each written
request must set forth a good faith representation that, as of the
record date, the person making the request was a beneficial owner of
the Company's Common Stock entitled to vote at the Meeting. Stockholders
should direct the written request to the Company's Chief Financial
Officer at 1940 N.W. 67th Place, Suite A, Gainesville, Florida 32653.
Order of the Board of Directors
Richard T. Kelecy
Secretary
Gainesville, Florida
November 10, 1999
25