UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
ENVIRONMENTAL SAFEGUARDS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required. [ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials. [ ] Check box if any part
of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and
the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ENVIRONMENTAL SAFEGUARDS, INC.
2600 SOUTH LOOP WEST, SUITE 645
HOUSTON, TEXAS 77054
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2003
Our Annual Meeting of Stockholders (the "Annual Meeting") of Environmental
Safeguards, Inc. will be held at the Holiday Inn Astrodome, 8111 Kirby Drive,
Houston, Texas on May 22, 2003 at 10:00 AM (CST) for the following purposes:
(1A) To elect four (4) directors by the voting of Common Stock
(1B) To elect one (1) director by the voting of Series B Convertible Stock.
(2) To consider and act upon an amendment to the Company's 1998 Stock
Option Plan to increase the authorized shares from 800,000 to
1,600,000.
(3) To ratify the selection of Ham, Langston & Brezina, LLP as our
independent accountants for the fiscal year ending December 31, 2003.
(4) To act upon such other business as may properly come before the Annual
Meeting.
Only holders of our Common Stock and holders of our Series B Convertible
Preferred Stock of record at the close of business on April 22, 2003, will be
entitled to vote at our Annual Meeting or any adjournment thereof.
You are cordially invited to attend our Annual Meeting. Whether or not you plan
to attend, please sign, date and return your proxy to us promptly. Your
cooperation in signing and returning the proxy will help avoid further
solicitation expense.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James S. Percell
James S. Percell
Chairman of the Board and President
April 25, 2003
Houston, Texas
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ENVIRONMENTAL SAFEGUARDS, INC.
2600 SOUTH LOOP WEST, SUITE 645
HOUSTON, TEXAS 77054
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2003
This proxy statement is being furnished to our stockholders in connection
with the solicitation of proxies by and on behalf of the Board of Directors of
Environmental Safeguards, Inc., a Nevada corporation, for their use at the
Annual Meeting of stockholders to be held at the Holiday Inn Astrodome, 8111
Kirby Drive, Houston, Texas on May 22, 2003 at 10:00 AM (CST), and at any
adjournments thereof, for the purpose of considering and voting upon the matters
set forth in the accompanying Notice of Annual Meeting of Stockholders
("Notice"). This proxy statement and the accompanying form of proxy ("Proxy")
are first being mailed to our stockholders on or about April 25, 2003. The cost
of solicitation of proxies is being borne by us.
The close of business on April 22, 2003 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. As of the record date, there were
10,112,144 shares of Common Stock, par value $0.001 per share issued and
outstanding, and 2,733,686 shares of Series B Convertible Preferred Stock issued
and outstanding. Series B Convertible Preferred Stock may vote on all matters
except the election of Directors that are voted on by holders of Common Stock
only. Series B Convertible Preferred Stock holders, however, have the right to
vote separately, as a class, for the election of one Director.
The presence, in person or by proxy, of at least one-third of the total
outstanding shares of Common Stock and Series B Convertible Preferred Stock on
the record date is necessary to constitute a quorum at the Annual Meeting.
Each share is entitled to one vote on all issues requiring a stockholder
vote at the Annual Meeting, except for the election of Directors, upon which the
Series B Convertible Preferred stockholders are not entitled to vote. The Series
B Convertible Preferred stockholders, however, have the right to vote
separately, as a class, for the election of one Director. Each nominee for
Director named in Number 1A must receive a majority of the Common Stock votes
cast in person or by proxy in order to be elected. Stockholders may not cumulate
their votes for the election of Directors. Each nominee for Director named in
Number 1B must receive a majority of the Series B Convertible Preferred Stock
votes cast in person or by proxy in order to be elected.
The affirmative vote of a majority of the shares of Common Stock and Series
B Convertible Preferred Stock present or represented by proxy and entitled to
vote at the Annual Meeting is required for the approval of Numbers 2, 3 and 4
set forth in the accompanying Notice.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted (I) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN (II) FOR THE
AMENDMENT TO THE 1998 STOCK OPTION PLAN, AND (III) FOR THE RATIFICATION OF HAM,
LANGSTON & BREZINA, LLP AS INDEPENDENT ACCOUNTANT FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2003. The Board of Directors is not aware of any other matters to
be presented for action at the Annual Meeting. However, if any other matter is
properly presented at the Annual Meeting, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment on
such matters.
Different forms of proxies (collectively the "Proxy") are being sent to
holders of Common Stock and holders of Series B Convertible Preferred Stock to
facilitate class voting for directors.
The enclosed Proxy, even though executed and returned, may be revoked at
any time prior to the voting of the Proxy (a) by execution and submission of a
revised proxy, (b) by written notice to our Secretary, or (c) by voting in
person at the Annual Meeting.
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(1A) TO ELECT FOUR (4) DIRECTORS FOR THE ENSUING YEAR
BY THE VOTING OF COMMON STOCK
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NOMINEES FOR DIRECTORS BY THE VOTING OF COMMON STOCK
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as proxies (the "Proxies") and will vote the shares
represented by valid proxies at the Annual Meeting of Stockholders and
adjournments thereof. They have indicated that, unless otherwise specified in
the Proxy, they intend to elect as Directors by the voting of Common Stock the
nominees listed below. All the nominees are presently members of the Board of
Directors. Each duly elected Director will hold office until his successor shall
have been elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed Proxy for the election of the Common Stock Board representatives will
be voted for the election by the voting of Common Stock for the nominees listed
below. Although our Board of Directors does not contemplate that any of the
nominees will be unable to serve, if such a situation arises prior to the Annual
Meeting, the persons named in the enclosed Proxy will vote for the election of
such other person(s) as may be nominated by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE BY THE COMMON
STOCKHOLDERS FOR THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
JAMES S. PERCELL, age 59, serves as Director, Chairman, CEO and President
and also serves as President of our subsidiaries, National Fuel & Energy, Inc.
("NFE") and OnSite Technology LLC ("OnSite"). Mr. Percell became a director and
President, Chief Executive Officer and a director of NFE in November, 1995. Mr.
Percell became President and CEO of our consolidated company in January, 1996.
Mr. Percell also serves as President of Percell & Associates, a project
developer of facilities in the hydrocarbon industry. From 1985-1993, Mr. Percell
served as Vice-President of Belmont Constructors, Inc., a heavy industrial
contractor. From 1982-1984, he served as President of Capital Services
Unlimited, an international supply company for refining, petrochemical and oil
field compressor stations, modular refineries and modular oilfield components.
From 1977-1980, Mr. Percell served as President of Percell & Lowder, Inc., an
oilfield fabricator of onshore and offshore facilities, and from 1960-1977, he
served as project manager for various onshore and offshore projects. He attended
Amarillo College in Amarillo, Texas.
THOMAS R. BRAY, age 47, has served as Director since January 2002. Mr. Bray
is a member of our compensation and audit committees. Mr. Bray has been a
practicing attorney practicing in Stafford and Houston, Texas for the past nine
years, specializing in business and real estate transactions, and litigation and
general corporate representation, largely for businesses and individuals in the
oil and gas services, banking and investment industries. Prior to that, he was
vice president of New First City, Texas-Houston, N.A., having previously served
as special assistant to the president and an in-house counsel of Collecting
Bank, N.A., and vice-president of First City Asset Servicing Company and First
City, Texas-Houston, N.A. Mr. Bray has also served as president of Associated
Title Company, president of Arbor Oaks Utilities, Inc. a private water and sewer
utility company, and the owner and president of Rembrandt Homes, Inc., all in
Houston. Mr. Bray graduated from the University of Texas with a BBA in Finance,
and received his J.D. degree from South Texas College of Law in Houston.
BRYAN SHARP, age 59, has served as a Director since November, 1995. Mr.
Sharp previously served on our audit committee, and previously was a
self-employed environmental consultant. Mr. Sharp previously served as
Principal-in-Charge and Director of Espey, Huston & Associates, Inc. ("EH&A"),
an environmental consulting company. From 1990-1993, he served as President of
EH&A. Mr. Sharp has also been employed by North Texas State University, the
Department of the Interior, and the University of Texas. Mr. Sharp has a B.S.
degree in Education from North Texas State University, a M.S. degree in Biology
from North Texas State University and studied for his Ph.D. in Zoology from The
University of Texas at Austin.
ALBERT M. WOLFORD, age 81, has served as Director since August 5,1997. Mr.
Wolford is a member of our compensation and audit committees, and previously
served as our Secretary. Mr. Wolford has been an independent business consultant
since 1988. From 1970 to 1988, Mr. Wolford served with Texas United Corporation
as a director, a member of the executive committee, senior vice-president, and
as the chairman of the executive development and compensation committees. As a
senior vice-president of Texas United Corporation, Mr. Wolford served its
subsidiaries as president and CEO of Texas United Chemical Corporation, as the
chairman, president and CEO of United Salt Corporation, and as the president of
American Borate Corporation. He has also served the Texas Chemical Council, an
industry trade group, as a director, a member of its executive committee, and as
secretary-treasurer. Mr. Wolford served as a member of the executive committee
of the Salt Institute, an industry trade group. Mr. Wolford is a graduate of The
University of Texas.
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(1B) TO ELECT ONE (1) DIRECTOR FOR THE ENSUING YEAR
BY THE VOTING OF SERIES B CONVERTIBLE STOCK
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NOMINEES FOR DIRECTOR BY THE VOTING OF SERIES B CONVERTIBLE STOCK
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as proxies (the "Proxies") and will vote the shares
represented by valid proxies at the Annual Meeting of Stockholders and
adjournments thereof. They have indicated that, unless otherwise specified in
the Proxy, they intend to elect as Director by the voting of Series B
Convertible Stock the nominee listed below. The nominee is presently a member of
the Board of Directors. The duly elected Director will hold office until his
successor shall have been elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed Proxy for the election of the Series B Convertible Stock Board
representative will be voted for the election by the voting of Series B
Convertible Stock of the nominee listed below. Although the Board of Directors
do not contemplate that the nominee will be unable to serve, if such a situation
arises prior to the Annual Meeting, the persons named in the enclosed Proxy will
vote for the election of such other person as may be nominated by the Board of
Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION BY
THE VOTING OF SERIES B CONVERTIBLE STOCK OF THE NOMINEE LISTED BELOW.
DAVID L. WARNOCK, age 45, was appointed as Director in December, 1997 in
connection with the December, 1997 financing. Mr. Warnock is a member of our
audit and compensation committees. Mr. Warnock is a founding partner of Cahill,
Warnock & Company, L.L.C., an asset management firm established in 1995 to
invest in small public companies. From 1983 to 1995, Mr. Warnock was with T.
Rowe Price Associates in senior management positions including President of the
corporate general partner of T. Rowe Price Strategic Partners I and T. Rowe
Price Strategic Partners II, and as the Executive Vice-president of T. Rowe
Price New Horizons Fund. Mr. Warnock also serves on the Boards of Directors of
other public and private companies. Mr. Warnock received a Bachelor of Arts
Degree, History, from the University of Delaware and a Masters Degree, Finance,
from the University of Wisconsin.
EXECUTIVE OFFICERS
In addition to Mr. Percell, our Chief Executive Officer, the following
person serves as an executive officer:
MICHAEL D. THOMPSON, age 51, became our Chief Financial Officer in
September 2002. Beginning in 1997, Mr. Thompson served as Chief Operating
Officer of Outsourcing Services, Inc., an accounting and consulting firm where
he provided financial and accounting services to clients in a variety of
industries. From 1990 through 1996, Mr. Thompson was Chief Financial Officer of
The Hanover Company, a fully integrated national real estate development firm.
Mr. Thompson is a certified public accountant. Mr. Thompson has a B.B.A. degree
with honors from the University of Texas.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
James S. Percell is the only director who also serves as an officer. In
1997, our board established an independent compensation committee whose present
members are David L. Warnock, Thomas R. Bray, and Albert Wolford. Also in 1997,
our board established an independent audit committee whose present members are
David L. Warnock, Thomas R. Bray and Albert M. Wolford. We held six meetings of
the board during the period covered by the fiscal year ended December 31, 2002.
All Directors were present for at least 75% of the meetings. Our compensation
committee met four times during 2002 (all members were present for each
meeting); and our audit committee met four times during 2002 (all three members
were present for at least 75% of those meetings).
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AUDIT COMMITTEE REPORT
In May 2000, our audit committee established, and our board adopted, a
formal charter that conforms to the Securities and Exchange Commission ("SEC")
approved guidelines
Our audit committee is primarily responsible for assisting the board in
monitoring the quality and integrity of our accounting, auditing and financial
reporting practices and the independence of our independent accountants which
are hired to audit our financial statements. Our committee conducts an annual
review of its charter to assess its adequacy, such as in adopting the
SEC-approved guidelines in our May 2000 revision of our charter.
We are responsible for preparing our financial statements and our
independent accountants are responsible for auditing those financial statements
and issuing a report thereon. Accordingly, our audit committee's responsibility
is one of oversight Our independent accountant for the fiscal year ended
December 31, 2002 was Ham, Langston & Brezina, LLP ("HLB"). In this regard, our
committee discussed with HLB, our independent accountants for 2002, those
matters HLB communicated to and discussed with our committee under applicable
auditing standards, including information regarding the scope and results of the
audit and other matters required to be discussed by the Statement on Auditing
Standards No. 61, "Communication with Audit Committees." Those communications
and discussions were intended to assist the committee in overseeing the
financial reporting and disclosure process. Our committee also discussed with
HLB its independence from us, and received a written statement from HLB
concerning independence as required by Independence Standards Board Standard No.
1, "Independence Discussions with Audit Committees." This discussion and
disclosure informed our audit committee of the independence of HLB and assisted
our audit committee in evaluating such independence. Our audit committee also
considered whether the provision of services by HLB not related to the audit of
our financial statements and to the review of our interim financial statements
is compatible with maintaining the independence of HLB. Finally, our audit
committee reviewed and discussed with our management and HLB our audited
consolidated balance sheet as of December 31, 2002 and 2001, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the two years in the period ended December 31, 2002. HLB informed our
audit committee that our audited financial statements had been prepared in
accordance with accounting principles generally accepted in the United States.
Based on the review and discussions referred to above, and such other
matters deemed relevant and appropriate by our audit committee, our committee
recommended to our board, and our board approved, that those financial
statements be included in our Annual Report on Form 10-K for the year ended
December 31, 2002.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934:
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own beneficially more than ten percent
of our common stock, to file reports of ownership and changes of ownership with
the Securities and Exchange Commission. Based solely on the reports we have
received and on written representations from certain reporting persons, we
believe that the directors, executive officers, and greater than ten percent
beneficial owners have complied with all applicable filing requirements, except
Rineco Recycling, LLC, who is in the process of filing its appropriate forms.
DIRECTOR COMPENSATION
We do not currently pay any cash director's fees. However, we pay the
expenses, if any, of our directors in attending board meetings. In 1998, our
board adopted a stock option plan (as detailed below) which included
participation in the plan by directors.
EXECUTIVE COMPENSATION
Mr. James Percell became Chief Executive Officer in January, 1996. Our
employment contract with Mr. Percell (the "Employment Agreement"), which
commenced in April 1997, has a term of three years. The Employment Agreement
automatically extends, unless terminated by us or Mr. Percell (upon at least
thirty days written notice prior to the end of the initial term or any
additional one-year term), for additional successive one year periods after the
initial three year term. Mr. Percell's employment contract provides that he
receive annual compensation in the amount of $125,000. In November, 1997, the
Board of Directors increased Mr. Percell's annual compensation to $250,000,
however, during 1998 Mr. Percell agreed to reduce his annual compensation to
$180,000. During the year ended December 31, 2002, Mr. Percell agreed to defer
and accrue his compensation, beginning with the pay period ended June 15, 2002.
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SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION PAYOUTS
OTHER AWARDS SECURITIES ALL
NAME AND ANNUAL RESTRICTED UNDERLYING OTHER
PRINCIPAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS SARS PAYOUTS SATION
James S. Percell 2002 $180,000 -0- -0- -0- -0- -0- -0-
CHIEF 2001 $180,000 -0- -0- -0- -0- -0- -0-
EXECUTIVE 2000 $180,000 -0- -0- -0- ---0--- -0- -0-
OFFICER
OPTION/SAR GRANTS IN LAST FISCAL YEAR
NAME AND NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
PRINCIPAL SECURITIES TOTAL ASSUMED ANNUAL RATES OF
POSITION UNDERLYING OPTIONS/SARS STOCK PRICE APPRECIATION FOR
OPTIONS/SARS GRANTED TO OPTION TERM:
GRANTED EMPLOYEES
IN FISCAL EXERCISE OF EXPIRATION
YEAR BASE PRICE DATE 5% 10%
"No Options/SAR Grants made during 2002"
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NAME AND SHARES OPTIONS/SARS AT OPTIONS/SARS AT
PRINCIPAL ACQUIRED ON VALUE FISCAL YEAR-END FISCAL YEAR-END
POSITION EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
James S. Percell (*) (*) 1,303,042/0 -0-/-0-
CHIEF EXECUTIVE OFFICER
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(*) Did not exercise any options.
Other than the Company's 1998 Stock Option Plan (described below in Item
2), the Company does not have any long term incentive plans or defined benefit
or actuarial plans.
STOCK PRICE PERFORMANCE GRAPH
The performance graph as set forth below compares the cumulative total
stockholder return of our Common Stock from December 31, 1997 through December
31, 2002, with Standard & Poors 500 Index (our Broad Market Index) and with
Standard & Poors Oil Composite Index (changed in 2002 by Standard and Poors to
the GICS Sector "Integrated Oil & Gas" Index) (our Peer Group Index). The graph
assumes that the value of the investment in our Common Stock and each index was
$100 on December 31, 1997, and that all dividends, if any, were reinvested. The
comparisons in this table are not intended to forecast or be indicative of
possible future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN OF ENVIRONMENTAL SAFEGUARDS,
INC., THE S&P 500 INDEX (BROAD MARKET INDEX), AND THE S&P OIL COMPOSITE (GICS
Sector Integrated Oil & Gas for 2002) INDEX (PEER GROUP INDEX)
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Environmental Safeguards, Inc 100 40 26 6 10 1
Broad Market Index. . . . . . 100 127 151 136 118 91
Peer Group Index. . . . . . . 100 106 122 130 119 101
[STOCK PERFORMANCE GRAPH]
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ENVIRONMENTAL SAFEGUARDS,
INC. BROAD MARKET INDEX PEER GROUP INDEX
------------------------- ------------------ ----------------
1997 100 100 100
1998 40 127 106
1999 26 151 122
2000 6 136 130
2001 10 118 119
2002 1 91 101
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 22, 2003,
with respect to the beneficial ownership of shares of Common Stock by (i) each
person who is known by us to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) each of our directors, (iii) each of our executive
officers, and (iv) all executive officers and directors as a group. Unless
otherwise indicated, each stockholder has sole voting and investment power with
respect to the shares shown.
NUMBER OF PERCENT CLASS OF
NAME SHARES OWNED(1) OF CLASS SECURITIES
- --------------------------------- ---------------------- --------- ------------
James S. Percell 1,486,960(2) 13.0% Common Stock
2600 South Loop West, Ste #645
Houston, Texas 77054
Bryan Sharp 1,147,264(3)(9) 10.2% Common Stock
3200 Wilcrest, #200
Houston, Texas 77042
Albert M. Wolford 144,346(4)(9) 1.4% Common Stock
2600 South Loop West, Ste #645
Houston, Texas 77054
David L. Warnock 8,600,642(5)(6)(9)(10) 46.0% Common Stock
One South Street, Ste #2150
Baltimore, Maryland 21202
Edward L. Cahill 8,565,642(5)(6) 45.9% Common Stock
One South Street, Ste #2150
Baltimore, Maryland 21202
Cahill, Warnock Strategic
Partners Fund, L.P. 8,565,642(5)(6) 45.9% Common Stock
One South Street, Ste #2150
Baltimore, Maryland 21202
Strategic Associates, L.P. 8,565,642(5)(6) 45.9% Common Stock
One South Street, Ste #2150
Baltimore, Maryland 21202
Cahill, Warnock & Company, L.L.C. 8,565,642(5)(6) 45.9% Common Stock
One South Street, Ste #2150
Baltimore, Maryland 21202
Cahill, Warnock Strategic
Partners, L.P. 8,565,642(5)(6) 45.9% Common Stock
One South Street, Ste #2150
Baltimore, Maryland 21202
Thomas R. Bray 15,000(10) 0.1% Common Stock
2600 South Loop West, Ste 645
Houston, Texas 77054
Newpark Resources, Inc. 7,845,156(7)(8) 43.7% Common Stock
3850 N. Causeway, Ste #1770
Metairie, LA 70002-1756
Michael D. Thompson 10,000(11) 0.1% Common Stock
2600 South Loop West, Ste 645
Houston, Texas 77054
Rineco Recycling, LLC
629 Vulcan Road
Haskell, Arkansas 72015
1,500,000(12) 13.0% Common Stock
All officers and directors as a
Group (6 persons) 11,404,212 53.6% Common Stock
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(1) Under the rules of the Securities and Exchange Commission (the
"Commission"), a person who directly or indirectly has or shares voting
power or investment power with respect to a security is considered a
beneficial owner of the security. Voting power is the power to vote or
direct the voting of shares, and investment power is the power to dispose
of or direct the disposition of shares. Shares as to which voting power or
investment power may be acquired within 60 days are also considered as
beneficially owned under the Commission's rules and are, accordingly,
included as shares beneficially owned.
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(2) Includes an option to purchase 800,000 shares of our Common Stock at $0.60
per share, and options to purchase 378,042 shares of our Common Stock at
$1.44 per share. Also includes an option to purchase 125,000 shares of our
Common Stock at $1.69 per share. These options are fully vested and
immediately exercisable.
(3) Includes an option to purchase 800,000 shares of our Common Stock at $0.60
per share, an option to purchase 301,267 shares of our Common Stock at
$3.00 per share, an option to purchase 10,997 shares of our Common Stock at
$5.00 per share, and an option to purchase 15,000 shares of our Common
Stock at $0.21 per share. These options are fully vested and immediately
exercisable. Excludes an option to purchase 15,000 shares of our Common
Stock at $0.21 per share which vests March 6, 2004.
(4) Includes options to purchase 43,346 shares of our Common Stock at $1.44 per
share and an option to purchase 15,000 shares of our Common Stock at $0.21
per share. These options are fully vested and immediately exercisable.
Excludes an option to purchase 15,000 shares of our Common Stock at $0.21
per share which vests March 6, 2004.
(5) Includes 1,722,900 shares of Series B Convertible Preferred Stock and
warrants to purchase 599,717 shares of our Common Stock at $0.01 per share
issued to Cahill, Warnock Strategic Partners Fund, L.P. ("Cahill Warnock
Fund"), whose sole general partner is Cahill, Warnock Strategic Partners,
L.P. ("Cahill Warnock Partners"). In addition, includes 95,464 shares of
Series B Convertible Preferred Stock and warrants to purchase 33,230 shares
of our Common Stock at $0.01 per share issued to Strategic Associates, L.P.
("Strategic Associates"), whose sole general partner is Cahill, Warnock &
Company, L.L.C. ("Cahill Warnock"). Each share of Series B Convertible
Preferred Stock is immediately convertible into one share of our Common
Stock, subject to adjustment under certain conditions. The warrant is fully
vested and immediately exercisable. David L. Warnock and Edward L. Cahill
are the sole general partners of Cahill Warnock Partners and the sole
members of Cahill Warnock. David L. Warnock and Edward L. Cahill are
control persons of Cahill Warnock Fund, Cahill Warnock Partners, Strategic
Associates, and Cahill Warnock. David L. Warnock, Edward L. Cahill, Cahill
Warnock Fund, Cahill Warnock Partners, Strategic Associates and Cahill
Warnock have shared voting power and shared dispositive power of these
shares and each disclaim beneficial ownership of the shares and warrants,
except with respect to their pecuniary interest therein, if any.
(6) Includes 4,938,703 shares of our Common Stock which would arise upon the
conversion of 182,732 shares of our Series D Convertible Preferred Stock,
issued to the Cahill Warnock Fund, whose sole general partner is Cahill
Warnock Partners. Also includes 273,649 shares of our Common Stock which
would arise upon the conversion of 10,125 shares of our Series D
Convertible Preferred Stock, issued to Strategic Associates, whose sole
general partners is Cahill Warnock. Also includes 854,625 shares of Common
Stock issuable to Cahill Warnock Fund and 47,354 shares of Common Stock
issuable to Strategic Associates upon conversion of deferred dividends and
interest thereon related to the Series D Preferred Stock. These Preferred
shares, deferred dividends and interest are immediately convertible into
our Common Stock.
(7) Includes 5,405,405 shares of our Common Stock which would arise upon the
conversion of 200,000 shares of our Series D Convertible Preferred Stock,
issued to Newpark Resources, Inc. Also includes 935,386 shares of Common
Stock upon conversion of deferred dividends and interest thereon related to
the Series D Preferred Stock. These Preferred shares, deferred dividends
and interest are immediately convertible into our Common Stock.
(8) Includes 847,975 shares of Series B Convertible Preferred Stock which are
immediately convertible into shares of Common Stock. The number of shares
of Common Stock into which each share of Preferred Stock may be converted
is presently one share of Common Stock for each share of Series B
Convertible Preferred Stock, subject to adjustment under certain
conditions. Also includes warrants to purchase 656,390 shares of our Common
Stock at $0.01 per share. The warrant is fully vested and immediately
exercisable.
(9) Also includes an option to purchase 20,000 shares of our Common Stock at
$1.69 per share. These options are fully vested and immediately
exercisable.
(10) Includes an option to purchase 15,000 shares of our Common Stock at $0.21
per share. Excludes an option to purchase 15,000 shares of our Common Stock
at $0.21 per share which vests March 6, 2004.
9
(11) Includes an option to purchase 10,000 shares of our Common Stock at $0.21
per share. Excludes an option to purchase 10,000 shares of our Common Stock
at $0.21 per share which vests March 6, 2004.
(12) Includes common stock underlying 1,500,000 warrants that are immediately
exercisable.
We know of no arrangement or understanding which may at a subsequent date
result in a change of control.
RELATED TRANSACTIONS
Our Board of Directors has adopted a policy that our affairs will be
conducted in all respects by standards applicable to publicly-held corporations
and that we will not enter into any transactions and/or loans between us and our
officers, directors and 5% stockholders unless the terms are no less favorable
than could be obtained from independent, third parties and will be approved by a
majority of our independent, disinterested directors.
In January 2003, we signed a contract to process various waste streams for
Rineco Chemical Industries, Inc., an entity related to Rineco Recycling, LLC. In
March 2003, we obtained a loan of $1,500,000 from Rineco Recycling, LLC. The
loan is to be funded in three $500,000 fundings on March 20, 2003 (we have
already received this funding tranch); May 15, 2003; and August 15, 2003. The
loan is collateralized by three of our ITD units and bears interest at 12% per
year. Principal payments are due in 20 quarterly installments of $75,000
beginning in August 2003 with the final payment due in May 2003. We issued
1,500,000 warrants to purchase shares of our common stock at an exercise price
of $0.01 per share in connection with this loan. This transaction made Rineco
Recycling, LLC the beneficial owner of 13% of our common stock, although none of
the warrants have been exercised as of April 25, 2003.
In March 2003, we negotiated an extension of the maturity date of $250,000
of uncollateralized promissory notes that we owe to related parties who are
Cahill Warnock Strategic Partners, L.P. and Strategic Associates, L.P. David L.
Warnock is an affiliate of both of these lenders and he is one of our Directors.
The maturity date was extended to September 16, 2003.
In July 2002, we obtained uncollateralized loans totaling $250,000 from
Cahill Warnock Strategic Partners, L.P. and Strategic Associates, L.P. These
loans bear interest of 12% per year and were originally due in January 2003 but
have been extended to September 2003. David Warnock, a director of the Company,
is a general partner of Cahill Warnock Strategic Partners, L.P. and a managing
member of the general partner of Strategic Associates, L.P.
In March 2001 and September 2000, we entered into agreements with our
primary lenders and holders of our outstanding preferred stock to defer various
principal and interest payments on our senior debt. The senior debt was fully
repaid in December 2001.
During 1998, we entered into a marketing assistance agreement with the
minority owners of OnSite Colombia, Inc. Under the terms of the agreement, in
exchange for assisting us in our business expansion efforts, the minority owners
and we each received marketing assistance fees totaling $320,000 during each of
the years ended December 31, 2000 and 1999.
During December 1998, we formed a joint company, OnSite Arabia, Inc. with
an investor group for the purpose of providing environmental remediation in the
Arabian gulf region. We sold two ITD units to the newly formed joint company
(one in 1999 and one in 1998) and recognized gains to the extent proceeds
received exceeded our proportional basis in the assets.
- --------------------------------------------------------------------------------
(2) TO CONSIDER AND ACT UPON THE PROPOSED
AMENDMENT TO THE 1998 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
While we have been successful in attracting and retaining qualified
personnel, we believe that our future success will depend in part on its
continued ability to attract and retain highly qualified personnel. We pay wages
and salaries which we believe are competitive. We also believe that equity
ownership is an important factor in our ability to attract and retain skilled
personnel, and in December, 1998, the Board of Directors approved the 1998 Stock
Option Plan (the "Plan") which was approved by the Stockholders at our 1999
annual meeting of stockholders. The Plan will allow Incentive Stock Options as
10
determined by the Compensation Committee, or the Board of Directors if there is
no compensation committee (the "Committee"). The Board of Directors reserved
800,000 shares of Common Stock for issuance pursuant to the Plan. The purpose of
the Plan is to foster and promote our financial success and increase stockholder
value by enabling eligible key employees, directors and consultants to
participate in our long-term growth and financial success of the Company. The
Board of Directors has adopted a resolution to amend the Plan, subject to
Stockholder approval, to provide for the increase in the number of shares of
common stock reserved for issuance pursuant to the Plan from 800,000 to
1,600,000.
THE BOARD OF DIRECTORS HAS APPROVED THE AMENDMENT TO THE PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE PURSUANT TO THE PLAN
FROM 800,000 TO 1,600,000 AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE PROPOSED AMENDMENT WHICH REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS PRESENT OR
REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL MEETING.
A copy of the Plan, as amended, is attached hereto as Appendix "A".
1998 STOCK OPTION PLAN
ELIGIBILITY. The Plan is open to key employees (including officers and
directors) and our consultants and affiliates ("Eligible Persons").
TRANSFERABILITY. The grants are not transferrable.
CHANGES IN CAPITAL STRUCTURE. The Plan will not effect our right to
authorize adjustments, recapitalizations, reorganizations or other changes in
our capital structure. In the event of an adjustment, recapitalization or
reorganization the award shall be adjusted accordingly. In the event of a
merger, consolidation, or liquidation, the Eligible Person will be eligible to
receive a like number of shares of stock in the new entity. The board may waive
any limitations imposed under the Plan so that all options are immediately
exercisable.
OPTIONS. The Plan provides for both Incentive and Nonqualified Stock
Options.
Option price. Incentive options shall be not less than the greater of (i)
100% of fair market value on the date of grant, or (ii) the aggregate par value
of the shares of stock on the date of grant. The Compensation Committee, at its
option, may provide for a price greater than 100% of fair market value. The
price for Incentive Stock Options for Stockholders owning 10% or more of our
shares ("10% Stockholders") shall be not less than 110% of fair market value.
Amount exercisable-incentive options. In the event an Eligible Person
exercises incentive options during the calendar year whose aggregate fair market
value exceeds $100,000, the exercise of options over $100,000 will be considered
non qualified stock options.
Duration. No option may be exercisable after the expiration date as set
forth in the option agreement.
Exercise of Options. Options may be exercised by written notice to our
President with:
(i) cash, certified check, bank draft, or postal or express money order
payable to Environmental Safeguards, Inc. for an amount equal to the
option price of the shares;
(ii) stock at its fair market value on the date of exercise;
(iii) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance by the Compensation Committee);
(iv) an election to have shares of stock, which otherwise would be issued
on exercise, withheld in payment of the exercise price (if approved in
advance by the Compensation Committee); and/or
11
(v) any other form of payment which is acceptable to the Compensation
Committee, including without limitation, payment in the form of a
promissory note, and specifying the address to which the certificates
for the shares are to be mailed.
TERMINATION OF OPTIONS.
Termination of Employment. Any Option which has not vested at the time the
Optionee ceases continuous employment for any reason other than death,
disability or retirement shall terminate upon the last day that the Optionee is
employed by us. Incentive Stock Options must be exercised within three months of
cessation of Continuous Service for reasons other than death, disability or
retirement in order to qualify for Incentive Stock Option tax treatment.
Nonqualified Options may be exercised any time during the Option Period
regardless of employment status.
Death. Unless the Option expires sooner, the Option will expire one year
after the death of the Eligible Person.
Disability. Unless the Option expires sooner, the Option will expire one
year after the disability of the Eligible Person.
Retirement. Any Option which has not vested at the time the Optionee
ceases continuous employment due to retirement shall terminate upon the last day
that the Optionee is employed by us. Upon retirement Incentive Stock Options
must be exercised within three months of cessation of Continuous Service in
order to qualify for Incentive Stock Option tax treatment. Nonqualified Options
may be exercised any time during the Option Period regardless of employment
status.
AMENDMENT OR TERMINATION OF THE PLAN. The Committee may amend, terminate
or suspend the Plan at any time, in its sole and absolute discretion; provided,
however, that to the extent required to qualify the Plan under Rule 16b-3
promulgated under Section 16 of the Exchange Act, no amendment that would (a)
materially increase the number of shares of stock that may be issued under the
Plan, (b) materially modify the requirements as to eligibility for participation
in the Plan, or (c) otherwise materially increase the benefits accruing to
participants under the Plan, shall be made without the approval of our
Stockholders; provided further, however, that to the extent required to maintain
the status of any incentive option under the Code, no amendment that would (a)
change the aggregate number of shares of stock which may be issued under
incentive options, (b) change the class of employees eligible to receive
incentive options, or (c) decrease the option price for incentive options below
the fair market value of the stock at the time it is granted, shall be made
without the approval of the Stockholders. Subject to the preceding sentence, the
Board shall have the power to make any changes in the Plan and in the
regulations and administrative provisions under it or in any outstanding
incentive option as in the opinion of our counsel may be necessary or
appropriate from time to time to enable any incentive option granted under this
Plan to continue to qualify as an incentive stock option or such other stock
option as may be defined under the Code so as to receive preferential federal
income tax treatment. No amendment, suspension or termination of the Plan shall
act to impair or extinguish rights in Options already granted at the date of
such amendment, suspension or termination.
OPTIONS GRANTED UNDER
1998 STOCK OPTION PLAN
The following sets forth the options granted under our 1998 Stock Option
Plan:
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF OPTIONS
- ---------------------------- ---------------- -----------------
James S. Percell, CEO $ 210,937 125,000
Executive Group $ 215,137 145,000
Non-executive Director Group $ 126,450 180,000
Non-executive Officer
Employee Group $ 624,320 422,500
Total $ 965,907 747,500
- ---------------
(1) Dollar value was calculated based on the exercise price of $1.6875 for the
options granted in December 1998 and $0.21 for the options granted in March
2003. These exercise prices were the market value per share on the date of the
grants.
12
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
REMAINING AVAILABLE
NUMBER OF SECURITIES FOR FUTURE ISSUANCE
TO BE ISSUED UPON WEIGHTED-AVERAGE UNDER EQUITY
EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
PLAN CATEGORY (a) (b) (c)
- ------------------- --------------------- ---------------------- ------------------------
EQUITY COMPENSATION
PLANS APPROVED BY
SECURITY HOLDERS 747,500 $ 1.29 52,500
EQUITY COMPENSATION
PLANS NOT APPROVED
BY SECURITY HOLDERS 4,241,162* 1.34 -
--------------------- ---------------------- ------------------------
TOTAL 4,988,662 $ 1.33 52,500
===================== ====================== ========================
* These are stock options that we gave as individual compensation arrangements
to employees and third parties. The issuance of these options was approved by
the board of directors.
- --------------------------------------------------------------------------------
(3) TO RATIFY THE SELECTION OF HAM, LANGSTON & BREZINA, LLP
AS INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
- --------------------------------------------------------------------------------
The Board of Directors dismissed PricewaterhouseCoopers LLP ("PwC") as its
independent accountants on April 2, 2002, and appointed Ham, Langston & Brezina,
LLP ("HLB") as our independent accountants for the fiscal years ended December
31, 2002 and 2003. The Board of Directors wishes to obtain from the Stockholders
a ratification of their action in appointing HLB as independent accountants for
the fiscal year ending December 31, 2003. Such ratification requires the
affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
In the event the appointment of HLB as independent accountants is not
ratified by the Stockholders, the adverse vote will be considered as a direction
to the Board of Directors to select other independent accountants for the fiscal
year ending December 31, 2003.
A representative of HLB is expected to be present at the Annual Meeting,
will have an opportunity to make a statement, if they desire, and will be
available to respond to all appropriate questions
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF HAM, LANGSTON & BREZINA, LLP AS INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR
ENDING DECEMBER 31, 2003.
PwC audited our financial statements for the three years ended December 31,
2001, and were dismissed on April 2, 2002. We engaged HLB as our new independent
accountants on April 3, 2002. Our Audit Committee and Board of Directors
participated in and approved the decision to change independent accountants. We
timely advised the Securities and Exchange Commission of our change in
independent accountants on Form 8-K.
The reports of PwC on the financial statements noted above contained no
adverse opinion or disclaimer of opinion and were not qualified as to audit
scope or accounting principle, however such reports for each of the past two
fiscal years were modified to express substantial doubt with respect to our
ability to continue as a going concern.
13
In connection with the PwC audits noted above, and through April 2, 2002,
there were no disagreements with PwC on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PwC would have caused them
to make reference thereto in their report on the financial statements for such
years. During the fiscal years noted above, and through April 2, 2002, there
have been no reportable events requiring disclosure.
We have authorized PwC to respond fully to inquiries from HLB regarding the
disclosure of the change in independent accountants.
As noted above, we engaged HLB as our new independent accountants as of
April 3, 2002. Prior to their engagement as our independent accountants, and
through April 3, 2002, we had not consulted with HLB regarding either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
our financial statements or any other financial presentation whatsoever.
PwC has provided a letter addressed to the Securities and Exchange
Commission pursuant to Regulation S-K Item 304 as to whether PwC agrees with the
disclosure we made in our Form 8-K filing noted above, and such letter was
attached to our 8-K report.
FEES PAID TO HAM, LANGSTON, AND BREZINA
Audit Fees
The aggregate fees for professional services rendered by HLB for the audit
of our financial statements for the year ended December 31, 2002 and the reviews
of our financial statements included in our Forms 10-Q for such year were
approximately $60,000.
Financial Information Systems Design and Implementation Fees
HLB did not provide us any financial information systems design and
implementation services for the year ended December 31, 2002.
All Other Fees
The aggregate fees for all other services rendered by HLB for the year
ended December 31, 2002 were approximately $17,000.
- --------------------------------------------------------------------------------
(4) OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters to be presented
for action at the Annual Meeting. However, if any other matter is properly
presented at the Annual Meeting, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgement on such matters.
FUTURE PROPOSALS OF STOCKHOLDERS
The deadline for stockholders to submit proposals to be considered for
inclusion in the Proxy Statement for the year 2004 Annual Meeting of
Stockholders is September 27, 2003.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James S. Percell
Chairman of the Board and President
Houston, Texas
14
APPENDIX "A"
ENVIRONMENTAL SAFEGUARDS, INC.
AMENDED 1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Environmental Safeguards, Inc. 1998 Stock
-------
Option Plan, as amended ("the Plan") is to promote the financial interests
of the Company, its subsidiaries and its shareholders by providing
incentives in the form of stock options to key employees and directors who
contribute materially to the success and profitability of the Company. The
grants will recognize and reward outstanding individual performances and
contributions and will give such persons a proprietary interest in the
Company, thus enhancing their personal interest in the Company's continued
success and progress. This Plan will also assist the Company and its
subsidiaries in attracting, retaining and motivating key employees and
directors. The options granted under this Plan may be either Incentive
Stock Options, as that term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended, or Nonqualified options taxed under
Section 83 of the Internal Revenue Code of 1986, as amended.
RULE 16B-3 PLAN. The Company is subject to the reporting requirements
----------------
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and therefore the Plan is intended to comply with all applicable conditions
of Rule 16b-3 (and all subsequent revisions thereof) promulgated under the
Exchange Act. To the extent any provision of the Plan or action by the
Committee or the Board of Directors or Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. In addition, the Committee or the Board of
Directors may amend the Plan from time to time as it deems necessary in
order to meet the requirements of any amendments to Rule 16b-3 without the
consent of the shareholders of the Company.
EFFECTIVE DATE OF PLAN. The effective date of this Plan shall be
-------------------------
December 9, 1998 (the "Effective Date"). The Board of Directors shall,
within one year of the Effective Date, submit the Plan for approval to the
shareholders of the Company. The plan shall be approved by at least a
majority of shareholders voting in person or by proxy at a duly held
shareholders' meeting, or if the provisions of the corporate charter,
by-laws or applicable state law prescribes a greater degree of shareholder
approval for this action, the approval by the holders of that percentage,
at a duly held meeting of shareholders. No Incentive Option or Nonqualified
Stock Option shall be granted pursuant to the Plan ten years after the
Effective Date. In the event that the Plan is not approved by the
shareholder's of the Company, the Plan shall be deemed to be a
non-qualified stock option plan.
2. DEFINITIONS. The following definitions shall apply to this Plan:
-----------
(a) "Affiliate" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation
(other than the Company) in an unbroken chain of corporations ending
with the Company if, at the time of the action or transaction, each of
the corporations other than the Company owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one
of the other corporations in the chain. The term "subsidiary
corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the
time of the action or transaction, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in
one of the other corporations in the chain.
(b) "Agreement" means, individually or collectively, any agreement
entered into pursuant to the Plan pursuant to which Options are
granted to a participant.
(c) "Award" means each of the following granted under this Plan:
Incentive Stock Options or Nonqualified Stock Options.
(d) "Board" means the board of directors of the Company.
(e) "Cause" shall mean, for purposes of whether and when a
participant has incurred a Termination of Employment for Cause: (i)
any act or omission which permits the Company to terminate the written
agreement or arrangement between the participant and the Company or a
Subsidiary or Parent for Cause as defined in such agreement or
arrangement; or (ii) in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term
"cause," then Cause shall mean an act or acts of dishonesty by the
participant resulting or intending to result directly or indirectly in
gain to or personal enrichment of the participant at the Company's
expense and/or gross negligence or willful misconduct on the part of
the participant.
(f) "Change in Control" means, for purposes of this Plans
i. there shall be consummated (i) any consolidation or
merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of the
Company's common stock would be converted into cash, securities
or other property, other than a merger of the Company in which
the holders of the Company's common stock immediately prior to
the merger have substantially the same proportionate ownership of
common stock of the surviving corporation immediately after the
merger; or (ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or
ii. the shareholders of the Company shall approve any plan
or proposal for the liquidation or dissolution of the Company; or
(g) "Code" means the Internal Revenue Code of 1986, as amended, final
Treasury Regulations thereunder and any subsequent Internal Revenue
Code.
(h) "Committee" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of
Directors. The Committee shall be comprised solely of at least two
members who are both Disinterested Persons and Outside Directors.
(i) "Common Stock" means the Common Stock, par value per share of the
Company whether presently or hereafter issued, or such other class of
shares or securities as to which the Plan may be applicable, pursuant
to Section 11 herein.
(j) "Company" means Environmental Safeguards, Inc., a Nevada
Corporation and includes any successor or assignee company
corporations into which the Company may be merged, changed or
consolidated; any company for whose securities the securities of the
Company shall be exchanged; and any assignee of or successor to
substantially all of the assets of the Company.
(l) "Continuous Service" means the absence of any interruption or
termination of employment with or service to the Company or any Parent
or Subsidiary of the Company that now exists or hereafter is organized
or acquired by or acquires the Company. Continuous Service shall not
be considered interrupted in the case of sick leave, military leave,
or any other bona fide leave of absence of less than ninety (90) days
(unless the participants right to reemployment is guaranteed by
statute or by contract) or in the case of transfers between locations
of the Company or between the Company, its Parent, its Subsidiaries or
its successors
(m) "Date of Grant" means the date on which the Committee grants an
Option.
(n) "Director" means any member of the Board of Directors of the
Company or any Parent or subsidiary of the Company that now exists or
hereafter is organized or acquired by or acquires the Company.
(o) "Non Employee Director" means a "Non Employee Director" as that
term is defined in Rule 16b-3 under the Exchange Act.
(p) "Eligible Persons" shall mean, with respect to the Plan, those
persons who, at the time that an Award is granted, are (i)officers,
directors or employees of the Company or Affiliate or (ii) consultants
or subcontractors of the Company or affiliate.
(q) "Employee" means any person employed on an hourly or salaried
basis by the Company or any Parent or Subsidiary of the Company that
now exists or hereafter is organized or acquired by or acquires the
Company.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder.
(s) "Fair Market Value" means (i) if the Common Stock is not listed
or admitted to trade on a national securities exchange and if bid and
ask prices for the Common Stock are not furnished through NASDAQ or a
similar organization, the value established by the Committee, in its
sole discretion, for purposes of the Plan; (ii) if the Common Stock is
listed or admitted to trade on a national securities exchange or a
national market system, the closing price of the Common Stock, as
published in the Wall Street Journal, so listed or admitted to trade
-------------------
on such date or, if there is no trading of the Common Stock on such
date, then the closing price of the Common Stock on the next preceding
day on which there was trading in such shares; or (iii) if the Common
Stock is not listed or admitted to trade on a national securities
exchange or a national market system, the mean between the bid and ask
price for the Common Stock on such date, as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information. If
trading in the stock or a price quotation does not occur on the Date
of Grant, the next preceding date on which the stock was traded or a
price was quoted will determine the fair market value.
(t) "Incentive Stock Option" means a stock option, granted pursuant
to either this Plan or any other plan of the Company, that satisfies
the requirements of Section 422 of the Code and that entitles the
Optionee to purchase stock of the Company or in a corporation that at
the time of grant of the option was a Parent or subsidiary of the
Company or a predecessor company of any such company.
(u) "Nonqualified Stock Option" means an Option to purchase Common
Stock in the Company granted under the Plan other than an Incentive
Stock Option within the meaning of Section 422 of the Code.
(v) "Option" means a stock option granted pursuant to the Plan.
(w) "Option Period" means the period beginning on the Date of Grant
and ending on the day prior to the tenth anniversary of the Date of
Grant or such shorter termination date as set by the Committee.
(x) "Optionee" means an Employee (or Director or subcontractor) who
receives an Option.
(y) "Parent" means any corporation which owns 50% or more of the
voting securities of the Company.
(z) "Plan" means this Stock Option Plan as may be amended from time
to time.
(aa) "Share" means the Common Stock, as adjusted in accordance with
Paragraph 11 of the Plan.
(bb) "Ten Percent Shareholder" means an individual who, at the time
the Option is granted, owns Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or
of any Affiliate. An individual shall be considered as owning the
Stock owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors, and
lineal descendants; and Stock owned, directly or indirectly, by or for
a corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its shareholders, partners, or
beneficiaries.
(cc) "Termination" or "Termination of Employment" means the occurrence
of any act or event whether pursuant to an employment agreement or
otherwise that actually or effectively causes or results in the
person's ceasing, for whatever reason, to be an officer or employee of
the Company or of any Subsidiary or Parent including, without
limitation, death, disability, dismissal, severance at the election of
the participant, retirement, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its
Subsidiaries or Parent of all businesses owned or operated by the
Company or its Subsidiaries. A Termination of Employment shall occur
to an employee who is employed by an Subsidiary if the Subsidiary
shall cease to be a Subsidiary and the participant shall not
immediately thereafter become an employee of the Company or a
Subsidiary.
(dd) "Subsidiary" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the Company at
any time during the existence of this Plan.
In addition, certain other terms used in this Plan shall have the
definitions given to them in the first place in which they are used.
3. ADMINISTRATION.
--------------
a. This Plan will be administered by the Committee. A majority
of the full Committee constitutes a quorum for purposes of
administering the Plan, and all determinations of the Committee
shall be made by a majority of the members present at a meeting
at which a quorum is present or by the unanimous written consent
of the Committee.
b. If no Committee has been appointed, members of the Board may
vote on any matters affecting the administration of the Plan or
the grant of any Option pursuant to the Plan, except that no such
member shall act on the granting of an Option to himself, but
such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is taken
with respect to the granting of Options to him.
c. Subject to the terms of this Plan, the Committee has the
sole and exclusive power to:
i. select the participants in this Plan;
ii. establish the terms of the Options granted to each
participant which may not be the same in each case;
iii. determine the total number of options to grant to an
Optionee, which may not be the same in each case;
iv. fix the Option period for any Option granted which may
not be the same in each case; and
v. make all other determinations necessary or advisable
under the Plan.
vi. determine the minimum number of shares with respect to
which Options may be exercised in part at any time.
vii. The Committee has the sole and absolute discretion to
determine whether the performance of an eligible Employee
warrants an award under this Plan, and to determine the
amount of the award.
viii. The Committee has full and exclusive power to construe
and interpret this Plan, to prescribe and rescind rules and
regulations relating to this Plan, and take all actions
necessary or advisable for the Plan's administration. Any
such determination made by the Committee will be final and
binding on all persons.
d. A member of the Committee will not be liable for performing
any act or making any determination in good faith.
4. SHARES SUBJECT TO OPTION. Subject to the provisions of Paragraph 11 of
------------------------
the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan shall be 1,600,000. Such shares may be authorized but
unissued, or may be treasury shares. If an Option shall expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares that were subject to the Option shall, unless the Plan
has then terminated, be available for other Options under the Plan.
a. Eligible Persons . Every Eligible Person, as the Committee
-----------------
in its sole discretion designates, is eligible to participate in
this Plan. Directors who are not employees of the Company or any
subsidiary or Parent shall only be eligible to receive Incentive
Stock Options if and as permitted be applicable law and
regulations. The Committee's award of an Option to a participant
in any year does not require the Committee to award an Option to
that participant in any other year. Furthermore, the Committee
may award different Options to different participants. The
Committee may consider such factors as it deems pertinent in
selecting participants and in determining the amount of their
Option, including, without limitation;
(i) the financial condition of the Company or its Subsidiaries;
(ii) expected profits for the current or future years;
(iii) the contributions of a prospective participant to the
profitability and success of the Company or its Subsidiaries; and
(iv) the adequacy of the prospective participant's other compensation.
Participants may include persons to whom stock, stock options, or
other benefits previously were granted under this or another plan of
the Company or any Subsidiary, whether or not the previously granted
benefits have been fully exercised.
b. No Right of Employment. An Optionee's right, if any, to
-------------------------
continue to serve the Company and its Subsidiaries as an Employee
will not be enlarged or otherwise affected by his designation as
a participant under this Plan, and such designation will not in
any way restrict the right of the Company or any Subsidiary, as
the case may be, to terminate at any time the employment of any
5. REQUIREMENTS OF OPTION GRANTS. Each Option granted under this Plan
--------------------------------
shall satisfy the following requirements.
a. Written Option. An Option shall be evidenced by a written
---------------
Agreement, a sample of which is attached hereto as Exhibit A,
specifying (i) the number of Shares that may be purchased by its
exercise, (ii) the intent of the Committee as to whether the
Option is be an Incentive Stock Option or a Non-qualified Stock
Option, (iii) the Option period for any Option granted. and (iv)
such terms and conditions consistent with the Plan as the
Committee shall determine, all of which may differ between
various Optionees and various Agreements.
b. Duration of Option. Each Option may be exercised only during
------------------
the Option Period designated for the Option by the Committee. At
the end of the Option Period the Option shall expire.
c. Option Exercisability. The Committee, on the grant of an
----------------------
Option, each Option shall be exercisable only in accordance with
its terms.
d. Acceleration of Vesting. Subject to the provisions of
-------------------------
Section 5(b), the Committee may, it its sole discretion, provide
for the exercise of Options either as to an increased percentage
of shares per year or as to all remaining shares. Such
acceleration of vesting may be declared by the Committee at any
time before the end of the Option Period, including, if
applicable, after termination of the Optionee's Continuous
Service by reason of death, disability, retirement or termination
of employment.
e. Option Price. Except as provided in Section 6(a) the Option
-------------
price of each Share subject to the Option shall equal the Fair
Market Value of the Share on the Option's Date of Grant.
f. Termination of Employment Any Option which has not vested at
-------------------------
the time the Optionee ceases Continuous Service for any reason
other than death, disability or retirement shall terminate upon
the last day that the Optionee is employed by the Company.
Incentive Stock Options must be exercised within three months of
cessation of Continuous Service for reasons other death,
disability or retirement in order to qualify for Incentive Stock
Option tax treatment. Nonqualified Options may be exercised any
time during the Option Period regardless of employment status.
g. Death. In the case of death of the Optionee, the
-----
beneficiaries designated by the Optionee shall have one year from
the Optionee's demise or to the end of the Option Period,
whichever is earlier, to exercise the Option, provided, however,
the Option may be exercised only for the number of Shares for
which it could have been exercised at the time the Optionee died,
subject to any adjustment under Sections 5(d) and 11.
h. Retirement. Any Option which has not vested at the time the
----------
Optionee ceases Continuous Service due to retirement shall
terminate upon the last day that the Optionee is employed by the
Company. Upon retirement Incentive Stock Options must be
exercised within three months of cessation of Continuous Service
in order to qualify for Incentive Stock Option tax treatment.
Nonqualified Options may be exercised any time during the Option
Period regardless of employment status
i. Disability. In the event of termination of Continuous
----------
Service due to total and permanent disability (within the meaning
of Section 422 of the Code), the Option shall lapse at the
earlier of the end of the Option Period or twelve months after
the date of such termination, provided, however, the Option can
be exercised at the time the Optionee became disabled, subject to
any adjustment under Sections 5(d) and 11.
6. INCENTIVE STOCK OPTIONS. Any Options intended to qualify as an
-------------------------
Incentive Stock Option shall satisfy the following requirements in addition
to the other requirements of the Plan:
a. Ten Percent Shareholders. An Option intended to qualify as
--------------------------
an Incentive Stock Option granted to an individual who, on the
Date of Grant, owns stock possessing more than ten (10) percent
of the total combined voting power of all classes of stock of
either the Company or any Parent or Subsidiary, shall be granted
at a price of 110 percent of Fair Market Value on the Date of
Grant and shall be exercised only during the five-year period
immediately following the Date of Grant. In calculating stock
ownership of any person, the attribution rules of Section 425(d)
of the Code will apply. Furthermore, in calculating stock
ownership, any stock that the individual may purchase under
outstanding options will not be considered.
b. Limitation on Incentive Stock Options The aggregate Fair
-----------------------------------------
Market Value, determined on the date of Grant, of stock in the
Company exercisable for the first time by any Optionee during any
calendar year, under the Plan and all other plans of the Company
or its Parent or Subsidiaries (within the meaning of Subsection
(d) of Section 422 of the Code) in any calendar year shall not
exceed $100,000.00.
c. Exercise of Incentive Stock Options. No disposition of the
-------------------------------------
shares underlying an Incentive Stock Option may be made within
two years from the Date of Grant nor within one year after the
exercise of such incentive Stock Option.
d. Approval of Plan. No Option shall qualify as an Incentive
------------------
Stock Option unless this Plan is approved by the shareholders
within one year of the Plan's adoption by the Board.
7. NONQUALIFIED AND INCENTIVE STOCK OPTIONS. Any Option not intended to
------------------------------------------
qualify as an Incentive Stock Option shall be a Nonqualified Stock Option.
Nonqualified Stock Options shall satisfy each of the requirements of
Section 5 of the Plan. An Option intended to qualify as an Incentive Stock
Option, but which does not meet all the requirements of an Incentive Stock
Option shall be treated as a Nonqualified Stock Option.
8. METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
-------------------
exercised when the person entitled to exercise the Option (i) delivers
written notice to the President of the Company of the decision to exercise,
(ii) concurrently tenders to the Company full payment for the Shares to be
purchased pursuant to the exercise, and (iii) complies with such other
reasonable requirements as the Committee establishes pursuant to Section 3
of the Plan. During the lifetime of the Employee to whom an Option is
granted, such Option may be exercised only by him. Payment for Shares with
respect to which an Option is exercised may be in cash, or by certified
check, or wholly or partially in the form of Common Stock of the Company
having a fair market value equal to the Option Price. No person will have
the rights of a shareholder with respect to Shares subject to an Option
granted under this Plan until a certificate or certificates for the Shares
have been delivered to him.
An Option granted under this Plan may be exercised in increments of not
less than 10% of the full number of Shares as to which it can be exercised. A
partial exercise of an Option will not effect the holder's right to exercise the
Option from time to time in accordance with this Plan as to the remaining Shares
subject to the Option.
9. TAXES. COMPLIANCE WITH LAW: APPROVAL OF REGULATORY BODIES. The
-----
Company, if necessary or desirable, may pay or withhold the amount of any
tax attributable to any Shares deliverable or amounts payable under this
Plan, and the Company may defer making delivery or payment until it is
indemnified to its satisfaction for the tax. Options are exercisable, and
Shares can be delivered and payments made under this Plan, only in
compliance with all applicable federal and state laws and regulations,
including, without limitation, state and federal securities laws, and the
rules of all stock exchanges on which the Company's stock is listed at any
time. An Option is exercisable only if either (i) a registration statement
pertaining to the Shares to be issued upon exercise of the Option has been
flied with and declared effective by the Securities and Exchange Commission
and remains effective on the date of exercise, or (ii) an exemption from
the registration requirements of applicable securities laws is available.
This plan does not require the Company, however, to file such registration
statement or to assure the availability of such exemptions. Any certificate
issued to evidence Shares issued under the Plan may bear such legends and
statements, and shall be subject to such transfer restrictions, as the
Committee deems advisable to assure compliance with federal and state laws
and regulations and with the requirements of this Section 9 of the Plan. No
Option may be exercised, and no Shares may be issued under this Plan, until
the Company has obtained the consent or approval of every regulatory body,
federal or state, having jurisdiction over such matter as the Committee
deems advisable.
Each Person who acquires the right to exercise an Option by bequest or
inheritance may be required by the Committee to furnish reasonable evidence of
ownership of the Option as a condition to his exercise of the Option. In
addition, the Committee may require such consents and release of taxing
authorities as the Committee deems advisable.
10. ASSIGNABILITY. An Option granted under this Plan is not transferable
-------------
except by will or the laws of descent and distribution. The Option may be
exercised only by the Optionee during the life of the Optionee. More
particularly, but without limitation of the foregoing, the Option may be
not be assigned or transferred except as provided above and shall not be
assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer or
distribution contrary to the provisions hereof shall be null and void and
without effect.
11. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
------------------------------------
consolidation, reclassification, recapitalization, combination or exchange
of shares, stock split, stock dividend, rights offering, or other expansion
or contraction of the Common Stock of the Company occurs, the number and
class of Shares for which Options are authorized to be granted under this
Plan, the number and class of Shares then subject to Options previously
granted under this Plan, and the price per Share payable upon exercise of
each Option outstanding under this Plan shall be equitably adjusted by the
Committee to reflect such changes. To the extent deemed equitable and
appropriate by the Committee or the Board, subject to any required action
by shareholders, in any merger, consolidation, reorganization, liquidation
or dissolution, any Option granted under the Plan shall pertain to the
securities and other property to which a holder of the number of Shares of
stock covered by the Option would have been entitled to receive in
connection with such event.
12. ACCELERATIONS OF OPTIONS UPON CHANGE IN CONTROL. In the event that a
-------------------------------------------------
Change of Control has occurred with respect to the Company, any and all
Options will become fully vested and immediately exercisable with such
acceleration to occur without the requirement of any further act by either
the Company or the participant, subject to Section 9 hereof.
13. LIABILITY OF THE COMPANY. The Company, its Parent and any Subsidiary
--------------------------
that is in existence or hereafter comes into existence shall not be liable
to any person for any tax consequences expected but not realized by an
Optionee or other person due to the exercise of an Option.
14. EXPENSES OF PLAN. The Company shall bear the expenses of administering
----------------
the Plan.
15. DURATION OF PLAN. Options may be granted under his Plan only within 10
----------------
years from the effective date of the Plan.
16. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN. The Board of Directors
----------------------------------------------
of the Company may amend, terminate or suspend this Plan at any time, in
its sole and absolute discretion; provided, however, that to the extent
required to qualify this Plan under Rule 16b-3 promulgated under Section 16
of the Exchange Act, no amendment that would (a) materially increase the
number of shares of Stock that may be issued under this Plan, (b)
materially modify the requirements as to eligibility for participation in
this Plan, or (c) otherwise materially increase the benefits accruing to
participants under this Plan, shall be made without the approval of the
Company's shareholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock
which may be issued under Incentive Options, (b) change the class of
employees eligible to receive Incentive Options, or (c) decrease the Option
price for Incentive Options below the Fair Market Value of the Stock at the
time it is granted, shall be made without the approval of the Company's
shareholders. Subject to the preceding sentence, the Board of Directors
shall have the power to make any changes in the Plan and in the regulations
and administrative provisions under it or in any outstanding Incentive
Option as in the opinion of counsel for the Company may be necessary or
appropriate from time to time to enable any Incentive Option granted under
this Plan to continue to qualify as an incentive stock option or such other
stock option as may be defined under the Code so as to receive preferential
federal income tax treatment. Notwithstanding the foregoing, no amendment,
suspension or termination of the Plan shall act to impair or extinguish
rights in Options already granted at the date of such amendment, suspension
or termination.
17. FORFEITURE. Notwithstanding any other provisions of this Plan, if the
----------
Committee finds by a majority vote after full consideration of the facts that an
Eligible Person, before or after termination of his employment with the Company
or an Affiliate for any reason (a) committed or engaged in fraud, embezzlement,
theft, commission of a felony, or proven dishonesty in the course of his
employment by the Company or an Affiliate, which conduct damaged the Company or
Affiliate, or disclosed trade secrets of the Company or an Affiliate, or (b)
participated, engaged in or had a material, financial or other interest, whether
as an employee, officer, director, consultant, contractor, shareholder, owner,
or otherwise, in any commercial endeavor anywhere which is competitive with the
business of the Company or an Affiliate without the written consent of the
Company or Affiliate, the Eligible Person shall forfeit all outstanding Options,
including all exercised Options and other situations pursuant to which the
Company has not yet delivered a stock certificate. Clause (b) shall not be
deemed to have been violated solely by reason of the Eligible Person's ownership
of stock or securities of any publicly owned corporation, if that ownership does
not result in effective control of the corporation.
The decision of the Committee as to the cause of an Employee's discharge,
the damage done to the Company or an Affiliate, and the extent of an Eligible
Person's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
18. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
-------------------------------------------------------------------
respect to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses,
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors. However, this indemnity shall not include any expenses incurred by
any member of the Committee and/or the Board of Directors in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee and the Board of Directors. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Committee and the Board of Directors unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company the opportunity to handle and defend same at its own expense. The
failure to notify the Company within 60 days shall only affect a Director or
committee member's right to indemnification if said failure to notify results in
an impairment of the Company's rights or is detrimental to the Company. This
right of indemnification shall inure to the benefit of the heirs, executors or
administrators of each member of the Committee and the Board of Directors and
shall be in addition to all other rights to which a member of the Committee and
the Board of Directors may be entitled as a matter of law, contract, or
otherwise.
19. GENDER. If the context requires, words of one gender when used in this
------
Plan shall include the others and words used in the singular or plural shall
include the other.
20. HEADINGS. Headings of Articles and Sections are included for
--------
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
21. OTHER COMPENSATION PLANS. The adoption of this Plan shall not affect
--------------------------
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
22. OTHER OPTIONS OR AWARDS. The grant of an Option or Awards shall not
--------------------------
confer upon the Eligible Person the right to receive any future or other Options
or Awards under this Plan, whether or not Options or Awards may be granted to
similarly situated Eligible Persons, or the right to receive future Options or
Awards upon the same terms or conditions as previously granted.
23 GOVERNING LAW. The provisions of this Plan shall be construed,
--------------
administered, and governed under the laws of the State of Texas.
PROXY
FOR VOTING BY HOLDERS OF COMMON STOCK
ENVIRONMENTAL SAFEGUARDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2003
The undersigned hereby appoints James S. Percell and Michael D. Thompson,
and each of them as the true and lawful attorneys, agents and proxies of the
undersigned, with full power of substitution, to represent and to vote all
shares of Common Stock of Environmental Safeguards, Inc. held of record by the
undersigned on April 22, 2003 at the Annual Meeting of Stockholders to be held
on May 22, 2003 at 10:00 AM at the Holiday Inn Astrodome, 8111 Kirby Drive,
Houston, Texas, and at any adjournments thereof. Any and all proxies heretofore
given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR THE NOMINEES
LISTED IN NUMBER 1A, AND FOR THE RATIFICATION IN NUMBER 2.
1A. ELECTION OF OUR DIRECTORS. (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH, OR OTHERWISE STRIKE, THAT
NOMINEE'S NAME IN THE LIST BELOW.)
[ ] FOR all nominees listed below [ ] WITHHOLD authority to vote for
except as marked to the contrary all nominees below
James S. Percell Thomas R. Bray Bryan Sharp Albert M. Wolford
2. TO ACT UPON THE PROPOSED AMENDMENT TO THE 1998 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF HAM, LANGSTON & BREZINA, LLP AS
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as 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.
Number of Shares of Common Stock Owned
-----------------------------
Signature (Typed or Printed Name)
---------------------- -------------------
Signature if held jointly (Typed or Printed Name)
------------ -------------------
DATED:
----------------------
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
PROXY
FOR VOTING BY HOLDERS OF SERIES B CONVERTIBLE STOCK
ENVIRONMENTAL SAFEGUARDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2003
The undersigned hereby appoints James S. Percell and Michael D. Thompson,
and each of them as the true and lawful attorneys, agents and proxies of the
undersigned, with full power of substitution, to represent and to vote all
shares of Series B Convertible Stock of Environmental Safeguards, Inc. held of
record by the undersigned on April 22, 2003 at the Annual Meeting of
Stockholders to be held on May 22, 2003 at 10:00 AM at the Holiday Inn
Astrodome, 8111 Kirby Drive, Houston, Texas, and at any adjournments thereof.
Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR THE NOMINEE
LISTED IN NUMBER 1B AND FOR THE RATIFICATION IN NUMBER 2.
1B. ELECTION OF ONE DIRECTOR. (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH, OR OTHERWISE STRIKE, THAT
NOMINEE'S NAME IN THE LIST BELOW.)
[ ] FOR the nominee listed below [ ] WITHHOLD authority to vote for
except as marked to the contrary all nominees below
David L. Warnock
2. TO ACT UPON THE PROPOSED AMENDMENT TO THE 1998 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF HAM, LANGSTON & BREZINA, LLP AS
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as 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.
Number of Shares of Common Stock Owned
-----------------------------
Signature (Typed or Printed Name)
---------------------- -------------------
Signature if held jointly (Typed or Printed Name)
------------ -------------------
DATED:
----------------------
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED
AT THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY.
Supplemental Information
------------------------
Not to be Provided in the Proxy Statement to Stockholders
---------------------------------------------------------
The Plan described herein does not require that the Company register the
options or the shares underlying options.
The Company believes that each of the persons receiving these securities
has the knowledge and experience in financial and business matters which allows
them to evaluate the merits and risk of the receipt of these securities of the
Company. In such capacity they are knowledgeable about the Company's operations
and financial condition. These transactions are effected by the Company in
reliance upon exemptions from registration under the Securities Act of 1933 as
amended (the "Act") as provided in Section 4(2) thereof. Each certificate
issued for unregistered securities contains a legend stating that the securities
have not been registered under the Act and setting forth the restrictions on the
transferability and the sale of the securities. No underwriter participated in,
nor did the Company pay any commissions or fees to any underwriter in connection
with any of these transactions. None of the transactions involves a public
offering.