Systemone DEF 14A Definitive proxy

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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SYSTEMONE TECHNOLOGIES INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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SYSTEMONE TECHNOLOGIES INC.

8305 N.W. 27th Street
Suite 107
Miami, Florida 33122

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 14, 2002

To our Shareholders:

Our 2002 annual meeting of shareholders will be held at our corporate headquarters at 8305 N.W. 27th Street, Suite 107, Miami, Florida, on Friday, June 14 beginning at 10:00 a.m. local time. At the meeting, shareholders will act on the following matters:


1.		Election of four directors, each for a term of one year; and




2.		Any other matters that properly come before the meeting.

Shareholders of record at the close of business on May 13, 2002 are entitled to vote at the meeting or any postponement or adjournment.


		By Order of the Board of Directors






		/s/ Pierre G. Mansur

		Pierre G. Mansur Chairman of the Board and President




Miami, Florida May 24, 2002

Whether or not you expect to be present at the annual meeting, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed return envelope. No postage is required if mailed in the United States. Shareholders who execute a proxy card may nevertheless attend the meeting, revoke their proxy and vote their shares in person.

TABLE OF CONTENTS


		Page

About the Meeting			1




	What is the purpose of the Annual Meeting?		1




	Who is entitled to vote?		1




	Who can attend the meeting?		1




	What constitutes a quorum?		1




	How do I vote?		2




	Can I change my vote after I return my proxy card?		2




	What are the Board’s recommendations?		2




	What vote is required to approve each item?		2




	Who pays for the preparation of the proxy?		3




Stock Ownership			4




	Who are the largest owners of our stock and how much stock do our directors and executive officers own?		4




Proposal 1 — Election of Directors			6




Directors			6




	How are directors compensated?		7




	How often did the Board meet during 2001?		7




	What committees has the Board established?		7




Report of the Audit and Review Committee			8




Management			9




Executive Compensation			10




Employment Contracts and Termination of Employment Arrangements			10




Certain Relationships and Related Transactions			12




Independent Public Accountants			13




Fees paid to our Independent Auditors			13




Other Business			14




Shareholder Proposals			14

2002 ANNUAL MEETING OF SHAREHOLDERS
OF
SYSTEMONE TECHNOLOGIES INC.

PROXY STATEMENT

This proxy statement contains information related to our annual meeting of shareholders to be held on Friday, June 14, 2002 beginning at 10:00 a.m. local time, at our corporate headquarters at 8305 N.W. 27th Street, Suite 107, Miami, Florida, and at any adjournments or postponements thereof.

ABOUT THE MEETING

What is the purpose of the Annual Meeting?

At the annual meeting, shareholders will vote on the election of directors and vote on any other matters that properly come before the meeting. In addition, our management will report on our performance during 2001 and respond to questions from our shareholders.

Who is entitled to vote?

Only shareholders of record at the close of business on the record date, May 13, 2002, are entitled to receive notice of the annual meeting and to vote the shares of common stock and Series B, Series C and Series D convertible preferred stock that they held on that date at the meeting, or any postponement or adjournment of the meeting. Each outstanding share of common stock entitles its holder to cast one vote on each matter to be voted upon. Each outstanding share of Series B, Series C and Series D convertible preferred stock entitles its holder to cast 21.37, 28.57 and 28.57 votes, respectively, on each matter to be voted upon.

Who can attend the meeting?

All shareholders as of the record date, or their duly appointed proxies, may attend. Please note that if you hold shares in “street name” (that is, through a broker or other nominee), you will need to bring evidence of your share ownership, such as a copy of your most recent brokerage statement, reflecting your stock ownership as of the record date and a valid picture identification.

What constitutes a quorum?

The presence at the meeting, in person or by proxy, of the holders of a majority of the votes entitled to be cast at the meeting will constitute a quorum, permitting the meeting to conduct its business. As of the record date, May 13, 2002, 4,742,923 shares of our common stock held by 40 shareholders of record, 62,439 shares of Series B convertible preferred stock held by three holders of record, 82,997 shares of Series C convertible preferred stock held by one holder of record and 22,876 shares of Series D convertible preferred stock held by three holders of record were issued and outstanding. The shares of convertible preferred stock represent a total of 4,359,091 votes. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting but will not be counted as votes cast “for” or “against” any given matter.

If less than a majority of outstanding shares entitled to vote are represented at the meeting, a majority of the shares present at the meeting may adjourn the meeting to another date, time or place, and notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before an adjournment is taken.

How do I vote?

If you complete and properly sign the accompanying proxy card and return it to us, it will be voted as you direct. If you are a registered shareholder and you attend the meeting, you may deliver your completed proxy card in person. “Street name” shareholders who wish to vote at the meeting will need to obtain a proxy from the institution that holds their shares.

Can I change my vote after I return my proxy card?

Yes. Even after you have submitted your proxy, you may change your vote at any time before the proxy is exercised by filing with our Secretary either a notice of revocation or a duly executed proxy bearing a later date. The powers of the proxy holders will be suspended if you attend the meeting in person and so request, although attendance at the meeting will not by itself revoke a previously granted proxy.

What are the Board’s recommendations?

Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. The Board recommends a vote for the election of the nominated slate of directors (see page 6).

The Board does not know of any other matters that may be brought before the meeting nor does it foresee or have reason to believe that the proxy holders will have to vote for substitute or alternate board nominees. In the event that any other matter should properly come before the meeting or any nominee is not available for election, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in accordance with their best judgment.

What vote is required to approve each item?

Election of Directors. The affirmative vote of a plurality of the votes cast, either in person or by proxy, at the meeting by the holders of common stock (one vote per share) and Series B (21.37 votes per share), Series C (28.57 votes per share) and Series D (28.57 votes per share) convertible preferred stock, voting together as a single class, is required for the election of directors. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Shareholders do not have the right to cumulate their votes for directors.

Other Items. For each other item, the affirmative vote of a majority of the votes cast, either in person or by proxy, at the meeting by the holders of common stock (one vote per share) and Series B (21.37 votes per share), Series C (28.57 votes per share) and Series D (28.57 votes per share) convertible preferred stock, voting together as a single class, is required for approval. A properly executed proxy marked “ABSTAIN” with respect to any such matter will not be voted, although it will be counted for purposes of determining whether there is a quorum. Accordingly, an abstention will have the effect of a negative vote.

If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such “broker non-votes” will, however, be counted in determining whether there is a quorum.

Who pays for the preparation of the proxy?

We will pay the cost of preparing, assembling and mailing the proxy statement, notice of meeting and enclosed proxy card. In addition to the use of mail, our employees may solicit proxies personally and by telephone. Our employees will receive no compensation for soliciting proxies other than their regular salaries. We may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the proxy material to their principals and to request authority for the execution of proxies and we may reimburse such persons for their expenses incurred in connection with these activities.

The approximate date that this Proxy Statement and the enclosed form of proxy are first being sent to shareholders is May 24, 2002. You should review this information in conjunction with our Annual Report to Shareholders for the year ended December 31, 2001, which accompanies this proxy statement. Our principal executive offices are located at 8305 N.W. 27th Street, Suite 107, Miami, Florida 33122, and our telephone number is (305) 593-8015. A list of shareholders entitled to vote at the Annual Meeting will be available at our offices for a period of ten days prior to the meeting and at the meeting itself for examination by any shareholder.

STOCK OWNERSHIP

Who are the largest owners of our stock and how much stock do our directors and executive officers own?

Our voting securities outstanding on May 13, 2002 consisted of 4,742,923 shares of common stock, 62,439 shares of Series B Preferred Stock, 82,997 shares of Series C Preferred Stock and 22,876 shares of Series D Preferred Stock. The following table shows as of May 13, 2002, the amount of voting securities beneficially owned by (a) each of our directors, (b) each of our executive officers named in the Summary Compensation Table below, (c) all of our directors and executive officers as a group and (d) each person known by us to beneficially own more than 5% of any class of our outstanding voting securities. Unless otherwise provided, the address of each holder listed under the heading “Common Stock” is c/o SystemOne Technologies Inc., 8305 N.W. 27th Street, Suite 107, Miami, Florida 33122.


	Aggregate Number		Acquirable				Total Number		Percentage
	of Shares		Within			of Shares of Class			of Shares of
	Beneficially Owned		60 Days			Beneficially Owned			Class
Name	(a)		(b)			(columns (a)+(b))			Outstanding

Common Stock




Pierre G. Mansur		1,961,750		100,938	(1)			2,062,688		42.6	%




Paul I. Mansur		—		89,916	(1)			89,916		*




Steven M. Healy		5,000		4,136				9,136		*




Paul A. Biddelman(2)		—		4,666				4,666		*




Kenneth C. Leung(3)		13,250		4,666				17,916		*




All directors and executive officers as a group (5 persons)		1,980,000		211,322				2,191,322		44.2	%




Environmental Opportunities Fund II (Institutional), L.P.(4)		—		1,389,123	(5)			1,389,123		22.7	%




Environmental Opportunities Fund II, L.P(4)		—		377,532	(6)			377,532		7.4	%




Environmental Opportunities Fund, L.P.(4)		—		533,729	(7)			533,729		10.1	%




Hanseatic Americas LDC(8)		—		3,337,293	(9)			3,337,293		41.3	%




Oppenheimer Funds, Inc.(10)		—		325,126	(11)			325,126		6.3	%




Safety-Kleen Systems, Inc.(12)		—		1,134,615	(13)			1,134,615		18.7	%




The Commingled Pension Trust Fund (Multi-Market Special Investment Fund II) of Morgan Guaranty Trust Company of New York(14)		—		341,382	(11)			341,382		6.7	%

Series B Convertible Preferred Stock




Environmental Opportunities Fund II (Institutional), L.P.(4)		29,471		—				29,471		47.2	%




Environmental Opportunities Fund II, L.P.(4)		7,992		—				7,992		12.8	%




Environmental Opportunities Fund, L.P.(4)		24,976		—				24,976		40.0	%





Series C Convertible Preferred Stock




Hanseatic Americas LDC(8)		82,997		—				82,997		100.0	%





Series D Convertible Preferred Stock




Environmental Opportunities Fund II (Institutional), L.P.(4)		8,990		—				8,990		39.3	%




Environmental Opportunities Fund II, L.P.(4)		2,448		—				2,448		10.7	%




Hanseatic Americas LDC(8)		11,438		—				11,438		50.0	%



*		Represents less than 1% of the outstanding stock of the class.

(1)		Reflects the number of shares that could be purchased by the holder by exercise of options granted under our incentive compensation plan on May 13, 2001 or within 60 days thereafter.

(2)		Mr. Biddelman is the President of Hanseatic Corporation (“Corporation”) and he disclaims beneficial ownership as to any securities held by Hanseatic Americas LDC (“Americas”), Hansabel Partners LLC (“Partners”) or Corporation.

(3)		Mr. Leung is the Chief Investment Officer of Environmental Opportunities Fund, L.P. (“Fund I”), Environmental Opportunities Fund II, L.P. (“Fund II”), Environmental Opportunities Fund II (Institutional), L.P. (“Institutional” and collectively, the “Environmental Funds”) and he disclaims beneficial ownership as to any securities held by the Environmental Funds.

(4)		The address for each of the Environmental Funds is c/o Sanders Morris Harris, 3100 Chase Tower, Houston, Texas 77002.

(5)		Reflects 29,471 shares of Series B Convertible Preferred Stock that are immediately convertible into 629,800 shares of Common Stock at a conversion price of $4.68 per share; 8,990 shares of Series D Convertible Preferred Stock that are immediately convertible into 256,852 shares of Common Stock at a conversion price of $3.50 per share; a Warrant to purchase 224,571 shares of Common Stock that is immediately exercisable at an exercise price of $3.50 per share; and a Warrant to purchase 370,543 shares of Common Stock that is immediately exercisable or exercisable within 60 days from the date hereof for 277,900 shares of Common Stock at an exercise price of $3.50 per share.

(6)		Reflects 7,992 shares of Series B Convertible Preferred Stock that are immediately convertible into 170,793 shares of Common Stock at a conversion price of $4.68 per share; 2,448 shares of Series D Convertible Preferred Stock that are immediately convertible into 69,932 shares of Common Stock at a conversion price of $3.50 per share; a Warrant to purchase 61,143 shares of Common Stock that is immediately exercisable at an exercise price of $3.50 per share; and a Warrant to purchase 100,886 shares of Common Stock that is immediately exercisable or exercisable within 60 days from the date hereof for 75,664 shares of Common Stock at an exercise price of $3.50 per share.

(7)		Reflects 24,976 shares of Series B Convertible Preferred Stock that are immediately convertible into 533,279 shares of Common Stock at a conversion price of $4.68 per share.

(8)		Per a Schedule 13D filed thereby, Americas, Partners, Corporation and Mr. Wolfgang Traber claim shared voting and dispositive power of the securities held by Americas. The address for each of Americas, Partners, Corporation and Mr. Traber is c/o Howard Kailes, Esq., Krugman & Kailes LLP, Park 80 West-Plaza Two, Saddle Brook, New Jersey 07663.

(9)		Reflects 82,997 shares of Series C Convertible Preferred Stock that are immediately convertible into 2,371,224 shares of Common Stock at a conversion price of $3.50 per share; 11,438 shares of Series D Convertible Preferred Stock that are immediately convertible into 326,784 shares of Common Stock at a conversion price of $3.50 per share; a Warrant to purchase 285,714 shares of Common Stock that is immediately exercisable at an exercise price of $3.50 per share; and a Warrant to purchase 471,429 shares of Common Stock, that is immediately exercisable or exercisable within 60 days from the date hereof for 353,571 shares of Common Stock at an exercise price of $3.50 per share.

(10)		The address of the Oppenheimer Funds, Inc. is 498 Seventh Avenue, New York, New York 10018.

(11)		Shares issuable upon conversion of 81/4% Subordinated Convertible Notes due 2003.

(12)		Per a Schedule 13D filed thereby, Safety-Kleen Systems, Inc. (“Systems”), Safety-Kleen Services, Inc. (“Services”) and Safety-Kleen Corp. (“Corp.”) claim shared voting and dispositive power of the securities held by Systems. The address of Systems, Services and Corp. is 1301 Gervais Street, Suite 300, Columbia, South Carolina 29201.

(13)		Reflects a Warrant to purchase 1,134,615 shares of Common Stock that is immediately exercisable at $3.50 per share.

(14)		The address of the Commingled Pension Trust Fund (Multi-Market Special Investment Fund II) of Morgan Guaranty Trust Company of New York is 522 Fifth Avenue, New York, New York 10036.

PROPOSAL 1 — ELECTION OF DIRECTORS

Our Articles of Incorporation provide that the number of directors constituting the Board of Directors shall be at least one, with the exact number of directors to be fixed from time to time in the manner provided in our Bylaws. Our Bylaws provide that the number of directors shall be fixed from time to time by a majority vote of our shareholders. Each director elected at the annual meeting will serve a one-year term.

The Board has nominated each of Pierre G. Mansur, Paul I. Mansur, Paul A. Biddelman, and Kenneth C. Leung to be elected as a director at the annual meeting. Our director nominees are currently serving as our directors and their terms expire at the Annual Meeting. We expect that our director nominees will be available for election, but if any of them shall become unavailable to stand for election at any time before the Annual Meeting, the proxies may be voted for a substitute nominee selected by the Board of Directors.

DIRECTORS

Our directors and executive officers and their ages as of May 13, 2002 are as follows:


Name	Age		Position

Pierre G. Mansur		50	Chairman of the Board, President and Director




Paul I. Mansur		51	Chief Executive Officer and Director




Paul A. Biddelman		56	Director




Kenneth C. Leung		57	Director

Pierre G. Mansur founded SystemOne Technologies Inc. and has served as our Chairman and President since our inception in November 1990. From June 1973 to August 1990, Mr. Mansur served as President of Mansur Industries Inc., a privately held New York corporation, that operated a professional race engine machine shop. Mr. Mansur has over twenty years of advanced automotive and machinery operations experience including developing innovative automotive machine shop applications; designing, manufacturing, customizing, modifying and retooling high performance engines and component parts; developing state of the art automotive and powerboat race engines which have consistently achieved world championship status; and providing consulting services and publishing articles with respect to automotive technical research data. Mr. Mansur has conducted extensive research and development projects for several companies, including testing and evaluating engine parts and equipment for Direct Connection, a high performance racing division of the Chrysler Corporation; researching and developing specialized engine piston rings and coatings for Seal Power Corporation; researching high-tech plastic polymers for internal combustion engines for ICI Americas; and designing and developing specialized high performance engine oil pan applications. Pierre Mansur is the brother of Paul I. Mansur. Pierre Mansur is a graduate of the City University of New York.

Paul I. Mansur has been our Chief Executive Officer and a Director of ours since September 1993. From September 1986 to July 1993, Mr. Mansur served as Chief Executive Officer of Atlantic Entertainment Inc., a privately held regional retail chain of video superstores. From March 1981 to September 1986, Mr. Mansur served as the Chief Executive Officer and President of Ameritrade Corporation, a privately held international distributor of factory direct duty free products. From June 1972 to March 1981, Mr. Mansur held various finance and operation positions, including Assistant Vice President Finance and Operations for Mott’s USA, Inc., a division of American Brands. Paul Mansur is the brother of Pierre G. Mansur. Paul Mansur is a graduate of the City University of New York.

Paul A. Biddelman has been a Director of ours since May 2000. Mr. Biddelman is President of Hanseatic Corporation, a private investment company and a significant shareholder of ours. Mr. Biddelman joined Hanseatic early in 1992 from a merchant banking firm, which he co-founded in 1991. Prior to that he was a Managing Director in Corporate Finance at Drexel Burnham Lambert Incorporated where he was active primarily in financing middle-market industrial companies. He holds an MBA from Harvard Business School, a JD from Columbia Law School, and a BS from Lehigh University. Mr. Biddelman serves on the Board of Directors of Celadon Group, Inc., Instituform Technologies, Inc., Six Flags, Inc., and Star Gas LLC (the general partner of Star Gas L.P.).

Kenneth C. Leung has been a Director of ours since May 2000. Mr. Leung is a Managing Director and heads the Corporate Finance Department of Sanders Morris Harris in New York City and is the Chief Investment Officer of Environmental Opportunities Funds I and II, each a significant shareholder of ours. Prior to joining Sanders Morris Harris in 1995, Mr. Leung was a Managing Director at Salomon Smith Barney Inc., an investment banking firm. Mr. Leung holds an MBA in Finance from Columbia University and a BA in History from Fordham College. He serves on the Board of Directors of Zahren Alternative Power Corp., Avista Resources, Inc., Synagro Technologies, Inc., Northstar Passenger Services Ltd., Waterlilly, Inc. and U.S. Plastic Lumber Corporation.

The Board unanimously recommends a vote for the election as directors of the nominees named in this Proxy Statement.

How are directors compensated?

Compensation. No director receives any fee for attendance at meetings of the Board of Directors or committees thereof, although members of the Board of Directors do receive reimbursement for actual travel-related expenses incurred in connection with their attendance at meetings of the Board of Directors. Directors who are also employed by us do not receive additional compensation for their services as directors.

Options. Directors are eligible to receive options under our 1996 Executive Incentive Compensation Plan. This plan provides for an automatic grant of an option to purchase 3,500 shares of our common stock, par value $.001 per share, upon a person’s election as a non-employee director, as well as an automatic annual grant of an option to purchase 3,500 shares of common stock on the day we issue our earnings release for the prior fiscal year.

How often did the Board meet during 2001?

During 2001, the Board of Directors held four meetings. During 2001, each director attended more than 75% of the aggregate of (i) the number of meetings of the Board of Directors held during the period he served on the Board, and (ii) the number of meetings of committees of the Board of Directors held during the period he served on such committees.

What committees has the Board established?

The Board of Directors has a standing Audit Committee and Compensation Committee. We do not have a nominating committee. Our Board of Directors performs the functions of a nominating committee.

Audit Committee

During 2001, the Audit Committee consisted of Messrs. Biddelman and Leung, who are both independent. The Audit Committee held four meetings during 2001. The duties and responsibilities of the Audit Committee include (a) recommending to the Board the appointment of our auditors and any termination of engagement, (b) reviewing the plan and scope of audits, (c) reviewing our significant accounting policies and internal controls and (d) having general responsibility for all related auditing matters. The Board of Directors adopted a written charter for the Audit Committee effective June 13, 2000. A copy of the charter was included as Appendix A to our Proxy Statement in connection with our 2001 Annual Meeting.

Compensation Committee

During 2001, the Compensation Committee consisted of Messrs. Biddelman and Leung. The Compensation Committee held three meetings during 2001. The Compensation Committee reviews and approves the compensation of our executive officers and administers our stock option plan.

REPORT OF THE AUDIT COMMITTEE

The following report of the audit committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.

In accordance with its written charter adopted by our board of directors, the audit committee’s role is to act on behalf of the board of directors in the oversight of our accounting, auditing and financial reporting practices. The audit committee consists of two members, each of whom is “independent” as that term is defined in Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange’s listing standards. Although our common stock is not listed on the New York Stock Exchange, we have chosen the independence standard set forth Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange’s listing standards in accordance with Section 7(d)(3)(iv) of Rule 14A-101 of the Securities Exchange Act of 1934, as amended. A copy of the audit committee’s written charter appeared as Appendix A to last year’s Proxy Statement for our 2001 annual meeting.

Management is responsible for our financial reporting process including our system of internal controls, and for the preparation of our consolidated financial statements in accordance with generally accepted accounting principles. Our independent auditors are responsible for auditing those financial statements. It is the audit committee’s responsibility to monitor and review these processes. It is not the audit committee’s duty or responsibility to conduct auditing or accounting reviews or procedures. The audit committee does not consist of our employees and it may not be, and may not represent itself to be or to serve as, accountants or auditors by profession or experts in the fields of accounting or auditing. Therefore, the audit committee has relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States and on the representations of the independent auditors included in their report on our financial statements. The audit committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit committee’s considerations and discussions with management and the independent auditors do not assure that our financial statements are presented in accordance with generally accepted accounting principles, that the audit of our financial statements has been carried out in accordance with generally accepted auditing standards or that our independent accountants are in fact “independent.”

In fulfilling its oversight responsibilities, the audit committee reviewed the audited financial statements for fiscal 2001 with management including a discussion of the quality of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The audit committee reviewed the financial statements for fiscal 2001 with the independent auditors and discussed with them all of the matters required to be discussed by Statement of Auditing Standards No. 61 (Communications with Audit Committees), as amended, including the auditors’ judgments as to the quality, not just the acceptability, of our accounting principles. In addition, the audit committee has received the written disclosures and the letter from the independent auditors required by Independence Standard No. 1 (Independent Discussions with Audit Committees) and has discussed with the independent auditors their independence from our management and us. Finally, the audit committee has considered whether the provision by the independent auditors of non-audit services to us is compatible with maintaining the auditors’ independence. The audit committee discussed with the independent accountants any relationships that may have an impact on their objectivity and independence and satisfied itself as to the accountant’s independence.

Based on the review and discussions with management and the independent accountants, and subject to the limitations on its role and responsibilities described above, the audit committee recommended to our board of directors, and the board of directors has approved, that the audited financial statements be included in our Annual Report on Form 10-KSB for the year ended December 31, 2001. The undersigned members of the audit committee have submitted this report to us.

The Audit Committee

Paul A. Biddelman and Kenneth C. Leung

MANAGEMENT

Executive Officers

Our executive officers are elected annually by the Board of Directors and serve at the discretion of the Board of Directors. The following sets forth certain information with respect to our executive officers (other than such information regarding Pierre G. Mansur and Paul I. Mansur which was disclosed under “Proposal 1- Election of Directors” above


Name	Age		Position

Steven M. Healy		39	Director of Finance and Controller

Steven M. Healy has been our Director of Finance and Controller since July 2000. Prior to that and since March 1997, Mr. Healy served as Director of Finance for Radiant Oil Company, Inc., a privately held fuel distributor, convenience store operator and real estate company. From January 1993 to March 1997, he served as Controller of United Leisure Industries, Inc. a privately held vertically integrated manufacturer, distributor and retailer for sport and recreational equipment. From January 1987 to December 1992 Mr. Healy served as an auditor for Deloitte & Touche LLP. Mr. Healy is a CPA and a graduate of the University of Florida.

EXECUTIVE COMPENSATION

The following table sets forth, for the years ended December 31, 2001, 2000 and 1999, the aggregate compensation awarded to, earned by or paid to Pierre G. Mansur, our Chairman and President, Paul I. Mansur, our Chief Executive Officer and Steven M. Healy, our Director of Finance and Controller (collectively, the “named executive officers”). None of our other officers earned compensation in excess of $100,000 during 2001. We did not grant any restricted stock awards or stock appreciation rights or make any long-term incentive plan payouts during these three fiscal years.


													Long Term
					Annual Compensation								Compensation

Name and									Other Annual				Securities
Principal Position			Year		Salary		Bonus		Compensation			Underlying Options

Pierre G. Mansur				2001	$	160,000		—	$	10,440	(1)			33,333




	Chairman and President			2000	$	150,000	$	150,000	$	8,040	(1)			25,532




				1999	$	150,000		—	$	8,040	(1)			22,115




Paul I. Mansur				2001	$	160,000		—	$	8,570	(1)			33,333




		Chief Executive Officer		2000	$	150,000		—	$	8,570	(1)			25,532




				1999	$	150,000		—	$	5,099	(1)			22,115




Steven M. Healy				2001	$	100,000		—		—				5,908




		Director of Finance and		2000	$	42,500		—		—				6,500




		Controller		1999		—		—		—				—




_______________________

(1)

Automobile allowance.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS

On July 1, 2000 we entered into an 18 month employment agreement with Pierre G. Mansur, our Chairman of the Board and President, which employment agreement renewed in accordance with its terms for an additional one year term expiring December 31, 2002. The employment agreement provides that Mr. Mansur’s base salary is $175,000 per annum during 2002. During the term of the employment agreement and for three years following the termination of his employment, Mr. Mansur is prohibited from disclosing any confidential information, including without limitation, information regarding our patents, research and development, manufacturing processes or knowledge or information with respect to our confidential trade secrets. In addition, Mr. Mansur is prohibited from, directly or indirectly, engaging in any business in substantial competition with us or any of our affiliates and from becoming an officer, director or employee of any corporation, partnership or any other business in substantial competition with us or any of our affiliates for three years following such termination.

We also entered into an 18 month employment agreement with Paul I. Mansur, our Chief Executive Officer, which employment agreement was renewed in accordance with its terms for an additional one year term expiring December 31, 2002. The employment agreement provides that Mr. Mansur’s base salary is $175,000 per annum during 2002. During the term of the employment agreement and for three years following his termination of employment, Mr. Mansur is prohibited from disclosing any confidential information, including without limitation, information regarding our patents, research and development, manufacturing process or knowledge or information with respect to our confidential trade secrets. The employment agreement also provides that Mr. Mansur is prohibited from, directly or indirectly, engaging in any business in substantial competition with us or any of our affiliates and from becoming an officer, director or employee of any corporation, partnership or any other business in substantial competition with us or any of our affiliates during the three years following such termination.

Option/SAR Grants in Last Fiscal Year

The table below sets forth the following information with respect to options granted to the named executive officers during 2001 and the potential realizable value of such option grants:

•		the number of shares of common stock underlying options granted during the year;

•		the percentage that such options represent of all options granted to employees during the year;

•		the exercise price; and

•		the expiration date.

Individual Grants

Percent of

Total

Number of

Options/

Securities

SARs

Underlying

Granted to

Options/SARs

Employees in

Exercise

Expiration

Name

Granted

Fiscal Year

Price ($/Sh)

Date

Pierre G. Mansur

33,333

19.8

3.50

4/1/08

Chairman of the Board and President

Paul I. Mansur

33,333

19.8

3.50

4/1/08

Chief Executive Officer

Steven M. Healy

9,408

5.6

3.50

4/1/08

Director of Finance and Controller

Aggregated Fiscal Year-End Option Value Table

The following table sets forth certain information concerning unexercised stock options held by our named executive officers as of December 31, 2001. No stock options were exercised by the named executive officers during 2001. No stock appreciation rights have been granted or are outstanding.


					Number of Securities Underlying
					Unexercised Options at FY-End				Value of Unexercised in-the-
	Shares				December 31, 2001(#)				Money Options at FY-End(1)
	Acquired on		Value
Name	Exercise(#)		Realized		Exercisable		Unexercisable		Exercisable			Unexercisable

Pierre G. Mansur		0	$	0		73,945		57,726		(2	)		(2	)




Paul I. Mansur		0	$	0		62,923		57,726		(2	)		(2	)




Steven M. Healy		0	$	0		2,167		10,241		(2	)		(2	)



(1)		The closing price of the common stock as reported on the Nasdaq SmallCap Market on December 31, 2001, the last trading day for such year, was $2.21.

(2)		The option exercise price exceeds $2.21 and accordingly, such options are not “in-the-money.”

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In May 1999, we issued an aggregate of 50,500 shares of Series B Convertible Preferred Stock, $1.00 par value per share, to Environmental Opportunities Fund, L.P., Environmental Opportunities Fund (Cayman), L.P., Environmental Opportunities Fund II, L.P., and Environmental Opportunities Fund II (Institutional), L.P. for an aggregate purchase price of $5,050,000. Subsequent to such date we issued an additional 11,939 shares of Series B Convertible Preferred Stock as paid in kind dividends. Also subsequent to such date, all shares held by Environmental Opportunities Fund (Cayman), L.P. were transferred to Environmental Opportunities Fund, L.P. Mr. Kenneth C. Leung, one of our directors, is the Chief Investment Officer of each of the aforementioned funds.

In August 1999, we issued 69,000 shares of Series C Convertible Preferred Stock, $1.00 par value per share, to Hanseatic Americas LDC for an aggregate purchase price of $6,900,000. Subsequent to such date we issued an additional 13,997 shares of Series C Convertible Preferred Stock as paid in kind dividends. Mr. Paul A. Biddelman, one of our directors, is the President of Hanseatic Corporation, which controls Hanseatic Americas LDC.

In May 2000, we issued an aggregate of 20,000 shares of Series D convertible preferred stock, par value $1.00 per share, and warrants (the “May Warrants”) to purchase an aggregate of 363,636 shares of common stock, to Hanseatic Americas LDC, Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund (Institutional), L.P. for an aggregate purchase price of $2.0 million. Subsequent to such date we issued an additional 2,876 shares of Series D Convertible Preferred Stock as paid in kind dividends. In connection with the execution of the Subordinated Loan Agreement and the issuance of the Lender Warrants (each as described below), the May Warrants were adjusted to be exercisable for an aggregate of 571,428 shares of Common Stock.

We are also party to a Shareholders Agreement dated May 2, 2000 with the holders of our preferred stock and Pierre Mansur, pursuant to which, Messrs. Paul A. Biddelman and Kenneth C. Leung were appointed to the Company’s Board of Directors on May 29, 2000. The holders of our preferred stock are also entitled to nominate one or more additional individuals to establish a controlling majority on the board. In addition, among other things, the Shareholders Agreement provides that certain decisions to be made by the board, including authorization of any merger or similar transaction or material acquisition, the issuance of certain securities or the employment of senior management, require concurrence of the directors designated by the holders of our preferred stock.

On August 7, 2000 (the “Issuance Date”), we entered into a Loan Agreement with Environmental Opportunities Fund II, L.P., Environmental Opportunities Fund II (Institutional), L.P. and Hanseatic Americas LDC (collectively, the “Lenders”), as amended on November 10, 2000 and November 30, 2000 (collectively the “Subordinated Loan Agreement”), under which we borrowed an aggregate principal amount of $3,300,000. These borrowings are evidenced by promissory notes (the “Subordinated Promissory Notes”), maturing September 30, 2002, subject to prepayment at any time at our option and mandatory prepayment to the extent of any proceeds received by us from the sale of any new securities or the borrowing of any additional money (other than purchase money debt and borrowings under the Senior Revolver). The Subordinated Promissory Notes initially bear interest at the rate of 12% per annum until the six month anniversary of the Issuance Date, 14% from the six month anniversary until the nine month anniversary of the Issuance Date and 16% thereafter until repaid in full. Our obligations under the Loan Agreement are secured by a lien on substantially all of its assets other than its intellectual property although such obligations have been subordinated to the Senior Revolver. Pursuant to the Loan Agreement we issued warrants to purchase an aggregate of up to 942,858 shares of our common stock at $3.50 per share.

On November 30, 2000, we entered into a revolving credit loan agreement (the “Senior Revolver”) with Hansa Finance Limited Liability Company (“Hansa”) that provides us with a revolving line of credit for up to $5 million with a scheduled maturity of May 30, 2003. In connection with the Senior Revolver, we granted Hansa a security interest in substantially all of our assets including our intellectual properties. Pursuant to the Senior Revolver, we may borrow twice a month up to the Advance Limit. The Advance Limit is the lesser of $5,000,000 or the sum of the Advance Supplement plus an amount based on our receivables and inventory. The Advance Supplement is $2,500,000 until maturity. Amounts advanced under the Senior Revolver accrue interest at the rate of 14% per annum payable monthly in arrears commencing December 31, 2000. As of December 31, 2001, amounts advanced under the Senior Revolver totaled $4,750,000. Hansa is controlled indirectly by Hanseatic Corporation and Paul Biddelman, one of our directors, who is the President of Hanseatic Corporation.

On February 27, 2002, we entered into a Third Amendment (the “Amendment”) to the Subordinated Loan Agreement extending the maturity date of the Subordinated Promissory Notes until September 30, 2002 and changing the terms upon which the Additional Warrants would be issued.

In connection with the Amendment, on February 27, 2002 we and the Lenders, Hanseatic Americas LDC, Environmental Fund II, L.P. and Environmental Opportunities Fund II (Institutional), L.P. (collectively, with the Lenders, the “Investors”), entered into a Letter Agreement suspending our registration obligations for shares of common stock issuable upon conversion of shares of Series B, C and D Preferred Stock which we issued to the Investors until we receive notice from the Investors holding shares with a current market value of at least $1,000,000 requesting that we register such shares.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than ten percent of our outstanding common stock, to file with the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of equity securities of the Company. Such persons are required by SEC regulation to furnish us with copies of all such reports they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written or oral representations that no other reports were required for such persons, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent (10%) beneficial owners have been complied with except that (i) on December 31, 2000, options to purchase 3,500 shares of our common stock were issued to Steven M. Healy and such options were inadvertently not disclosed in the Form 5, Annual Statement of Changes in Beneficial Ownership filed by Mr. Healy in February 2001; such options were included on the Form 5, Annual Statement of Changes in Beneficial Ownership for the year ended December 31, 2001 filed by Mr. Healy on April 30, 2002 (ii) on each of June 29, 2000 and December 31, 2000 options to purchase 3,500 shares of our common stock were issued to Paul A. Biddelman who inadvertently did not file a Form 5, Annual Statement of Changes in Beneficial Ownership for the fiscal year ending December 31, 2000; such options were included on the Form 5, Annual Statement of Changes in Beneficial Ownership for the year ended December 31, 2001 filed by Mr. Biddelman on April 30, 2002, (iii) on December 31, 2000, options to purchase 3,500 shares of our common stock were issued to Kenneth C. Leung and such options were inadvertently not disclosed in the Form 5, Annual Statement of Changes in Beneficial Ownership filed by Mr. Leung in February 2001, such options were included on the Form 5, Annual Statement of Changes in Beneficial Ownership for the year ended December 31, 2001 filed by Mr. Leung on April 30, 2002, and (iv) the Forms 5, Annual Statements of Changes in Beneficial Ownership for the year ended December 31, 2001 for Paul I. Mansur, Pierre G. Mansur and Messrs. Healy, Biddelman and Leung were inadvertently filed late on April 30, 2002.

INDEPENDENT PUBLIC ACCOUNTANTS

The firms of KPMG LLP and BDO Seidman, LLP served as our independent public accountants during 2001. Our Board of Directors has selected BDO Seidman, LLP as our independent public accountants beginning with our 2001 second quarter review. One or more representatives of BDO Seidman, LLP are expected to be present at the Annual Meeting and will be afforded the opportunity to make a statement if they so desire and to respond to appropriate shareholder questions.

FEES PAID TO OUR INDEPENDENT AUDITORS

The rules of the Securities and Exchange Commission require us to disclose fees billed by our independent auditors for services rendered to us for the fiscal year ended December 31, 2001.

Audit Fees

The aggregate fees billed by KPMG LLP and BDO Seidman, LLP for professional services rendered for the audit of our annual financial statements for the fiscal year ended December 31, 2001 and for the reviews of the financial statements included in our Quarterly Reports on Form 10-QSB for the fiscal year were approximately $15,000 and $75,000, respectively.

Financial Information Systems Design and Implementation Fees

Neither KPMG LLP nor BDO Seidman, LLP billed us for or rendered any information technology services relating to financial information systems design and implementation for the fiscal year ended December 31, 2001.

All Other Fees

The aggregate fees billed by KPMG LLP and BDO Seidman, LLP for services rendered to us, other than the services described above under “Audit Fees” and “Financial Information Systems Design and Implementation Fees,” for the fiscal year ended December 31, 2001 were approximately $66,000 and 29,000, respectively.

OTHER BUSINESS

We know of no other business to be brought before the Annual Meeting. If, however, any other business should properly come before the Annual Meeting, the persons named in the accompanying proxy will vote proxies as in their discretion they may deem appropriate, unless they are directed by a proxy to do otherwise.

SHAREHOLDER PROPOSALS

Shareholders interested in presenting a proposal for consideration at our 2003 annual meeting of shareholders may do so by following the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934. To be eligible for inclusion in our proxy statement and form of proxy relating to the meeting, shareholder proposals must be received by our Corporate Secretary no later than January 24, 2003.

After the January 24, 2003 deadline, a shareholder may present a proposal at our 2003 annual meeting of shareholders if it is submitted to our Secretary at the address below, but we are not obligated to present the matter in our proxy materials. If the proposal is submitted after May 9, 2003, the Company’s proxies will have discretionary authority to vote on such proposal.

Our 2003 annual meeting of shareholders is expected to be held no later than June 12, 2003. If the date of next year’s annual meeting is changed by more than 30 days from June 12, 2003, then any proposal must be received not later than 10 days after disclosure of the meeting date is made if such proposal is to be included in our proxy materials.

Any shareholder proposals should be addressed to Paul I. Mansur, Chief Executive Officer of SystemOne Technologies Inc. at 8305 NW 27th Street, Suite 107, Miami, Florida 33122.


		Pierre G. Mansur






		/s/ Pierre G. Mansur

		Chairman of the Board and President




Miami, Florida May 24, 2002

SYSTEMONE TECHNOLOGIES INC.

8305 N.W. 27TH STREET, SUITE 107
MIAMI, FLORIDA 33122

THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY’S BOARD OF DIRECTORS

The undersigned holder of capital stock of SystemOne Technologies Inc., a Florida corporation (the “Company”), hereby appoints Paul I. Mansur and Pierre G. Mansur, and each of them, as proxies for the undersigned, each with full power of substitution, for and in the name of the undersigned to act for the undersigned and to vote, as designated below, all of the shares of (i) common stock, par value $.001 per share (the “Common Stock”), Series B Convertible Preferred Stock, par value $1.00 per share, (ii) Series C Convertible Preferred Stock, par value $1.00 per share and/or (iii) Series D Convertible Preferred Stock, par value $1.00 per share of the Company that the undersigned is entitled to vote at the 2002 Annual Meeting of Shareholders of the Company, to be held on Friday, June 14, 2002 at 10:00 a.m., local time, at the Company’s corporate headquarters at 8305 N.W. 27th Street, Suite 107, Miami, Florida, and at any adjournment(s) or postponement(s) thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL THE DIRECTOR NOMINEES LISTED IN PROPOSAL (1) BELOW.


PROPOSAL 1.		ELECTION OF PIERRE G. MANSUR, PAUL I. MANSUR, PAUL A. BIDDELMAN AND KENNETH C. LEUNG, AS DIRECTORS OF THE COMPANY.


	o	VOTE FOR all nominees listed above, except vote withheld from the following nominee(s) (if any)



	o	VOTE WITHHELD from all nominees.

In their discretion, the proxies are authorized to vote upon such other business as may properly come before the 2002 Annual Meeting of Shareholders, and any adjournments or postponements thereof.

Continued and to be signed on other side

Continued from other side

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” PROPOSAL (1).

The undersigned hereby acknowledges receipt of (i) the Notice of 2002 Annual Meeting of Shareholders and (ii) the Proxy Statement and (iii) the Company’s Annual Report to Shareholders for the year ended December 31, 2001.


		Dated: , 2002


		(Signature)


		(Signature if held jointly)





		IMPORTANT: Please sign exactly as your name appears hereon and mail it promptly even though you may plan to attend the meeting. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.

PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.

Systemone Inactive DEF 14ADefinitive proxy