<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 ss. 240.14a-11(C) or ss. 240.14a-12
U.S. PLASTIC LUMBER CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials.
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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<PAGE> 2
U.S. PLASTIC LUMBER CORPORATION
2300 GLADES RD., SUITE 440W
BOCA RATON, FLORIDA 33431
(561) 394-3511
April 28, 1998
Dear Stockholder:
The directors and officers of your company cordially invite you to attend the
Annual Meeting of U.S. Plastic Lumber Corporation's stockholders, which will be
held in the Sheraton Hotel located at 2000 N.W. 19th Street and Sheraton Way,
Boca Raton, FL 33431 on Wednesday, June 3, 1998, at 2:00 P.M. (Eastern Daylight
Savings Time).
At the Annual Meeting, stockholders will be asked to elect two directors for
terms of four years; ratify the appointment of Arthur Andersen LLP as the
Company's auditors for fiscal 1998; and consider and vote upon a proposal to
approve a non-qualified stock option grant to the non-employee directors for
their service in 1997; all more fully described in the proxy statement enclosed
herewith.
We will also report on the progress of your company and comment on matters of
current interest. There will be a period of informal discussion in which
shareholders will have an opportunity to comment or ask questions.
IT IS IMPORTANT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, WHETHER OR
NOT YOU ATTEND THE ANNUAL MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF
SHARES YOU OWN. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU TO VOTE AS
SOON AS POSSIBLE BY MAILING YOUR PROXY CARD TO THE COMPANY AT YOUR EARLIEST
CONVENIENCE. PLEASE DATE AND SIGN YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE AS SOON AS POSSIBLE.
Sincerely,
Mark S. Alsentzer
Chairman
<PAGE> 3
U.S. PLASTIC LUMBER CORPORATION
2300 GLADES RD., SUITE 440W
BOCA RATON, FLORIDA 33431
NOTICE OF THE 1998 ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD JUNE 3, 1998
TO THE STOCKHOLDERS OF U.S. PLASTIC LUMBER CORPORATION:
Notice is hereby given that the 1998 Annual Meeting of the Stockholders
("Annual Meeting") of U. S. Plastic Lumber Corporation (the "Company") will be
held at the Sheraton Hotel located at 2000 N.W. 19th Street and Sheraton Way,
Boca Raton, Florida 33431 on Wednesday, June 3, 1998 at 2:00 p.m. to consider
and take action with respect to the following matters:
1. To elect two directors for terms of fours years, or until their
successors have been duly elected and qualified;
2. To ratify the grant of a non-qualified stock option to purchase
2,500 shares of Common Stock granted to each current non-employee director of
the Company; and
3. To ratify the appointment of Arthur Andersen LLP as the Company's
auditors for the fiscal year ending December 31, 1998;
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof. The Board of Directors is not aware
of any other business to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which the Annual
Meeting may be adjourned. Holders of record of the Company's Common Stock as of
the close of business on April 22, 1998 are entitled to notice of, and to vote
at, the Annual Meeting or any adjournment thereof.
Even if you plan to attend the Annual Meeting in person, you are
requested to date, sign and return the enclosed form of proxy card, which is
solicited on behalf of the Board of Directors, at your earliest convenience. You
may revoke your proxy at any time prior to exercise.
By Order of the Board of Directors,
Bruce C. Rosetto
Secretary
April 28, 1998
Boca Raton, Florida
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE. IT WILL
SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES
AND ENSURE A QUORUM AT THE ANNUAL MEETING. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4
U.S. PLASTIC LUMBER CORPORATION
2300 GLADES RD., SUITE 440W
BOCA RATON, FLORIDA 33431
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1998
The Board of Directors of U.S. Plastic Lumber Corporation (hereinafter
called "USPL" or the Company") solicits your proxy for use at the 1998 Annual
Meeting of Stockholders (the "Annual Meeting") to be held on June 3, 1998 at the
Sheraton Hotel located at 2000 N.W. 19th Street and Sheraton Way, Boca Raton,
Florida 33431 at 2:00 p.m. E.D.T. or any postponement or adjustment thereof for
the purposes set forth in the foregoing Notice of the Annual Meeting. The Notice
of Annual Meeting, this proxy statement and the enclosed proxy are being first
mailed to Stockholders on or about April 28, 1998.
At the Annual Meeting, stockholders will be asked to elect two
directors for terms of four years, ratify a grant of a non-qualified stock
option for each non-employee director to purchase 2,500 shares of common stock
and ratify the appointment of Arthur Andersen LLP as the Company's auditors for
fiscal 1998, as well as, transact any other business which may properly come
before the Annual Meeting.
Stockholders of record can mail their signed proxy to the Company in
the self addressed stamped envelope provided herewith. A proxy may be revoked at
any time prior to the voting at the Annual Meeting by submitting a later dated
proxy or by giving written notice of such revocation to the Secretary of the
Company or by attending the Annual Meeting and voting in person.
VOTE REQUIRED AND PROXY INFORMATION
Only stockholders of USPL common stock, par value $.0001 per share,
(the "Common Stock") of record at the close of business on April 22, 1998
("Record Date") are entitled to vote at the Annual Meeting.
As of the close of business on the Record Date, 16,719,154 shares of
USPL Common Stock were issued and outstanding. Each share of Common Stock
entitles the holder to one vote on each matter presented at the Annual Meeting.
In order for a quorum to be present at the Annual Meeting, a majority of the
outstanding shares of the Company's Common Stock as of the close of business on
the Record Date must be present in person or represented by proxy at the Annual
Meeting. All such shares that are present in person or represented by proxy at
the Annual Meeting will be counted in determining whether a quorum is present,
including abstentions and broker non-votes.
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<PAGE> 5
A form of proxy is enclosed. If properly executed and received in time
for voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Common Stock for election of all nominees for director hereinafter named and for
approval of Proposals 2 and 3 ratifying the grant of options to non-employee
directors and the appointment of Arthur Andersen LLP as the independent auditors
of the Company for 1998.
The enclosed proxy confers discretionary authority to vote with respect
to any and all of the following matters that may come before the Annual Meeting:
(i) matters to be presented at the Annual Meeting which the Company does not
know a reasonable time before the Proxy solicitation; (ii) approval of the
minutes of a prior meeting of stockholders, if such approval does not amount to
ratification of the action taken at the Annual Meeting; (iii) the election of
any person to any office for which a bona fide nominee is unable to serve or for
good cause will not serve; (iv) any proposal omitted from this proxy statement
and form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); and (v) matters incident to the
conduct of the Annual Meeting. In connection with such matters, the persons
named in the enclosed form of proxy will vote in accordance with their best
judgment.
The Company is not currently aware of any matters which will be brought
before the Annual Meeting (other than procedural matters) which are not referred
to in the enclosed notice of the Annual Meeting. However, if any additional
matters are properly brought before the Annual Meeting, the persons named in the
enclosed proxy shall vote the proxies in their discretion in the manner they
believe to be in the best interest of USPL. The accompanying form of proxy has
been prepared at the direction of the Board of Directors and is sent to you at
the request of the Board of Directors. The proxies named therein have been
designated by your Board of Directors.
The election of directors will be determined by a plurality vote. The
approval of Proposals 2 and 3 and any other business matters properly brought
before the Annual Meeting requires the number of votes cast in favor of the
proposal to exceed the number of votes cast in opposition to the proposal. Under
the Nevada law, an abstention, withholding of authority to vote or a broker
non-vote on any proposal, other than the election of directors, will not be
counted as votes cast for or against such proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by: (i) each person who is
known to the Company to be the beneficial owner of five percent (5%) or more of
the outstanding Common Stock , (ii) each director of the Company, (iii) the
Company's chief executive officer; and (iv) all directors and executive officers
of the Company as a group.
The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and
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<PAGE> 6
Exchange Commission. Accordingly they may include securities owned by or for,
among others, the wife and/or minor children or the individual and any other
relative who has the same home as such individual, as well as other securities
as to which the individual has or shares voting or investment power or has the
right to acquire under outstanding stock options within 60 days after the date
of this table. Beneficial ownership may be disclaimed as to certain of the
securities. All shares listed in the table below are Common Shares.
<TABLE>
<CAPTION>
Amount of Shares Percent
Name And Address** Beneficially Owned of Class
- ------------------ ------------------ --------
<S> <C> <C>
Directors and
Executive Officers
- ------------------
Mark Alsentzer 6,851,991(1) 43.5%
Lester E. Moody 197,616(2) 1.2%
James J. Blosser 101,258(3) *
Roger Zitrin 338,850(4) 2.1%
August C. Schultes III 5,814,636(5) 36.9%
Gary J. Ziegler 6,095,852(6) 38.7%
Bruce C. Rosetto 104,000(7) *
Michael D. Schmidt 75,000(8) *
All executive officers
and directors as a group
(8 persons) 8,069,203 51.2%
5% HOLDERS
- ----------
Stout Partnership(9) 5,400,000 34.3%
101 Jessup Rd., Thorofare, NJ 08086
Lancer Partners, L.P.(10) 500,000 3.2%
200 Park Ave., Ste 3900 New York, NY 10166
Michael Lauer(10) 50,000 *
200 Park Ave., Ste 3900 New York, NY 10166
Lancer Voyager Fund(10) 50,000 *
200 Park Ave., Ste 3900 New York, NY 10166
Lancer Offshore, Inc.(10) 511,111 3.2%
200 Park Ave., Ste 3900 New York, NY 10166
</TABLE>
* Less than 1%.
** All addresses of the executive officers and directors is that of the
Company
1 Includes 955,000 shares which Mr. Alsentzer presently has the right to
acquire through the exercise of outstanding options, 42,000 shares not
presently outstanding which he has the right to acquire through conversion
of outstanding preferred stock, and 5,400,000 shares as to which Mr.
Alsentzer has shared voting power, which are held of record by Stout
Partnership, a partnership in which Mr. Alsentzer is a general partner.
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2 Includes 96,278 shares which Mr. Moody presently has the right to acquire
through conversion of outstanding preferred stock.
3 Includes 5,000 shares which Mr. Blosser presently has the right to acquire
through the exercise of outstanding options and 94,500 shares not presently
outstanding which he has the right to acquire through conversion of
outstanding preferred stock.
4 Includes 23,170 shares which Mr. Zitrin presently has the right to acquire
through conversion of outstanding preferred stock.
5 Includes 70,322 shares which Mr. Schultes presently has the right to
acquire through conversion of outstanding preferred stock and 5,400,000
shares as to which Mr. Schultes has shared voting owner, which are held of
record by Stout Partnership, a partnership in which Mr. Schultes is a
general partner.
6 Includes 350,000 shares which Mr. Ziegler presently has the right to
acquire through the conversion of 50,000 shares of outstanding preferred
stock and 5,400,000 shares as to which Mr. Ziegler has shared voting power,
which are held of record by Stout Partnership, a partnership in which Mr.
Ziegler is a general partner.
7 Includes 75,000 shares Mr. Rosetto has the right to acquire through the
exercise of options.
8 Includes 50,000 shares Mr. Schmidt has the right to acquire through the
exercise of options.
9 Certain officers and directors of the Company are general partners of Stout
Partnership, including Mark S. Alsentzer, August C. Schultes III, and Gary
J. Ziegler.
10 Lancer Partners, L.P., Michael Lauer, Lancer Voyager Fund and Lancer
Offshore, Inc. are affiliated with one another and are controlled by the
same general partner.
PROPOSAL 1 ELECTION OF DIRECTORS
The Board of Directors is currently composed of seven seats. At the
Annual Meeting, Stockholders will vote on the election of two directors for four
year terms, whose terms expire at the Annual Meeting. The By-Laws provide for
three classes of directors, each class serving staggered four year terms. If for
any reason any of the nominees for election at the Annual Meeting becomes unable
or is unwilling to serve at the time of the Annual Meeting, the persons named in
the enclosed proxy will have discretionary authority to vote for substitute
nominee or nominees. The Board knows of no reason why any nominee will be unable
to serve.
The following table sets forth information regarding nominees for election to
the Company's Board of Directors and directors remaining in office and each
director's term of office.
DIRECTORS STANDING FOR ELECTION
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NAME AGE(1) THE COMPANY SINCE EXPIRATION OF TERM
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lester E. Moody 68 Director 1996 2002
Roger N. Zitrin 58 Director 1996 2002
DIRECTORS WHOSE TERMS CONTINUE
Mark S. Alsentzer 42 Chairman, President, 1994 2000
CEO and Director
August Schultes III 51 Director 1997 2000
Gary J. Ziegler 50 Director 1997 2000
James Blosser 60 Director 1996 1999
</TABLE>
(1) Age as of 12/31/97
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<PAGE> 8
The principal occupation of each director of the Company and each
nominee for director is set forth below unless otherwise indicated. All
directors have held their present position for at least five years.
MARK S. ALSENTZER. CHAIRMAN, DIRECTOR, PRESIDENT & CEO; Mr. Alsentzer has been
the President and CEO since December 1996, and the Chairman since November 1997.
As former President of Stout Environmental, Inc. Mr. Alsentzer developed that
company from $2 million to $90 million in revenues and 46 to 700 employees. In
1992, Stout Environmental merged with Republic Industries, where Mr. Alsentzer
remained as Vice President of Republic Environmental Systems, Inc. In addition,
Mr. Alsentzer was Director of Cemtech, a company which grew from $3 to $21
million and was sold to Waste Management in 1991. Mr. Alsentzer founded Clean
Earth, which is currently a wholly owned subsidiary of the Company and a leading
recycler of contaminated soil and debris located in the northeast. Mr. Alsentzer
has a B.S. in Chemical Engineering from Lehigh University and an MBA from
Farleigh Dickenson University.
LESTER E. MOODY. DIRECTOR; Mr. Moody is presently a partner in George B. Jones &
Co. Dealership Sales LLC., representing automobile dealers, in sales and
purchases of dealerships. He was a member of General Motors Automobile and
Dealer Advisory Council, and is on the Board of Directors of Miami Heart
Institute, the Board of Directors of C&S Bank, and the Board of Directors of 100
Club of Fort Lauderdale. Mr. Moody was an automobile dealer for approximately
forty years, owning nine different dealerships, including Pontiac, Toyota,
Cadillac, Buick, Honda and Acura. Mr. Moody attended Christian Brothers College.
JAMES J. BLOSSER. DIRECTOR; Mr. Blosser was the former Executive Vice President
and General Counsel of Huizenga Holdings, Inc. In addition, Mr. Blosser served
as special counsel to the Miami Dolphins, Florida Panthers and the Florida
Marlins. He was formerly a partner in Ruden, McClosky, Smith, Schuster &
Russell, P.A., is currently a member of the Florida Bar, New York Bar and the
American Bar Association, and is extremely active in community affairs. Mr.
Blosser received his J.D. from the University of Miami.
ROGER N. ZITRIN. DIRECTOR; Dr. Zitrin was the founder and President of the Heart
Association of Palm Beach County where he was a practicing physician
specializing in cardiology until he retired in 1992. He is presently acting as
an independent investor and investment advisor. Dr. Zitrin is the founder of
Florida Medical Laser Corp. and Gold Coast Specialty Lab and co-founder of
Physicians Cardiac Imaging. He is presently acting as financial advisor to Gold
Coast Ventures, Inc. and serving as a Board member of Associated Home Health.
Dr. Zitrin is a graduate of Rutgers College of Medicine and Dentistry.
AUGUST C. SCHULTES III. DIRECTOR; Mr. Schultes is Chairman of the Board and CEO
of A.C. Schultes, Inc., a contracting and service organization specializing in
water well drilling, water and waste water treatment, and pump and motor repair
services with offices in Maryland, Delaware and two (2) locations in New Jersey
for over seventy - five years. He is also the Chairman of the Board and CEO of
Life Care Institute, a medical diagnostic center with facilities to perform
stress tests, CAT scans, MRI scans
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<PAGE> 9
and physical therapy located in New Jersey. He was also the founder, Chairman of
the Board and CEO of Stout Environmental, Inc., a full service hazardous waste
environmental company. Mr. Schultes is a graduate of Penn State University and
has a BS in Civil Engineering.
GARY J. ZIEGLER. DIRECTOR; Mr. Ziegler is President of Consultants and Planners,
Inc., which provides operating services to several water utility companies in
New Jersey. Mr. Ziegler is a Professional Engineer and Professional Planner in
New Jersey, a Professional Engineer in Maryland, Pennsylvania, Ohio and New York
and a member of the American Society of Civil Engineers and the National Society
of Professional Engineers. He was President of W.C. Services, Inc. and Vice
President of Stout Environmental, Inc. Mr. Ziegler is a graduate of Clemson
University with a BS degree in Civil Engineering.
Set forth below is biographical information for the Company's executive officers
who are not directors or nominees for Directors:
BRUCE C. ROSETTO. Age 39, VICE PRESIDENT AND GENERAL COUNSEL/SECRETARY; Mr.
Rosetto joined the Company in January, 1997 and his primary responsibilities are
acting as General Counsel to the Company, mergers and acquisitions, SEC
reporting, investor relations and performing the functions as corporate
secretary. Previously, his role included sales management. Mr. Rosetto was a
partner in a New Jersey law firm; Paschon, Feurey, and Rosetto from 1982-86. In
1986, Mr. Rosetto became Chairman and CEO of Consolidated Waste Services of
America, Inc., a fully integrated environmental company, building that company
primarily through mergers and acquisitions into one of the largest privately
owned environmental companies in New Jersey until its acquisition by USA Waste
Services in October 1997. In 1994, he became Chairman and CEO of Hemo Biologics
International, Inc., a biologic products company. He graduated from LaSalle
University in 1979 with a BA Degree in Political Science, and from Villanova
University School of Law in 1982, with a JD Degree. He is currently a member of
the Florida and New Jersey Bar.
MICHAEL SCHMIDT. Age 49, TREASURER AND CHIEF FINANCIAL OFFICER; Mr. Schmidt
joined the Company in December 1997 and is responsible for the Company's overall
financial direction and SEC reporting, accounting operations and accounting
controls. Mr. Schmidt has over 20 years of public and private accounting
experience including 10 years in the environmental industry. Prior to joining
the Company, Mr. Schmidt served as Chief Financial Officer of Republic
Environmental Systems, Inc., a publicly traded company and a leading
environmental service provider, headquartered in Blue Bell, Pennsylvania, a
position he held for approximately ten years. Mr. Schmidt has a Bachelor of
Science in Business Administration from Rowan University and is a Certified
Public Accountant in the State of New Jersey.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NOMINEES FOR DIRECTORS.
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<PAGE> 10
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held eight meetings, two of which were held
telephonically, and took numerous actions by execution of unanimous written
consents during 1997. Each incumbent director attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
committees on which such director served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company had an Audit Committee, Nominating Committee and a
Compensation Committee during 1997. The following is a description of each such
committee:
The Audit Committee consisted of Messrs. Moody, Groth, and Ziegler. It
held one meeting during 1997. The Audit Committee recommends the independent
accountants appointed by the Board of Directors of the Company and reviews
issues raised by such accountants as to the scope of their audit and their
report thereon including any questions or recommendations which may arise
relating to the Company's internal accounting and auditing control procedures.
The Nominating Committee consisted of Messrs. Alsentzer, Schultes, and
Gebert. It held one meeting during 1997. Its function is to select candidates
for election to the position of director. After the resignation of Harold Gebert
as Chairman, director and officer of the Company, Mr. Schultes recommended the
appointment of Mr. Alsentzer as Chairman. The Board unanimously approved the
recommendation of the Nominating Committee. The Board also unanimously approved
the appointment of Messr. Blosser to fill the vacancy of Messr. Gebert.
The Compensation Committee consisted of Messrs. Alsentzer and Kiernan.
At the end of 1997, Messr. Alsentzer resigned from the Committee and Messrs.
Ziegler and Schultes were appointed to serve on this committee. The Compensation
Committee held no meetings during 1997, but its function is to review and make
recommendations to the Board of Directors with respect to the Company's
compensation of the officers of the Company, including salary, bonus and
benefits under any existing and future compensation plans. None of Messrs.
Kiernan, Ziegler and Schultes are employees of the Company.
DIRECTOR COMPENSATION
Beginning on May 15, 1996, the Board adopted a compensation package for
non-employee directors which provides for the award of 100 shares of the
Company's non-registered Common Stock for each meeting attended and 60 shares of
non-registered Common Stock for each Committee meeting attended not held in
conjunction with a regular board meeting. On March 18, 1998, the Board of
Directors unanimously approved, subject to the approval of the Company's
stockholders, a grant to each non-employee director of options to purchase 2,500
shares of the common stock at an exercise price of $3.50 per share, an amount in
excess of the fair market value on the date of grant.
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Directors who are employees of the Company are not paid any fees or additional
compensation for service as members of the Board of Directors or any committees
thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January 1, 1997 until November, 1997, the Compensation Committee
consisted of Mark Alsentzer and Raymond Kiernan. Beginning with November 1997,
Mr. Alsentzer resigned and the Committee was reappointed with three individuals,
August C. Schultes, III, Gary J. Ziegler, and Raymond Kiernan. Alsentzer,
Schultes and Ziegler are also general partners of Stout Partnership, a
beneficial owner of more than 5% of the outstanding Common Stock of the Company.
None of these individuals serve as an officer of the Company. Stout Partnership
was awarded 320,000 options to purchase common stock of the Company pursuant to
an independent appraisal as to the value of the collateral and personal
guarantees provided by each of the general partners of Stout Partnership on
behalf of the Company with PNC Bank of Delaware. See "Certain Transactions".
The Company regrets to inform Stockholders that Mr. Kiernan passed away
during March 1998. The Company owes a debt of gratitude to Mr. Kiernan for his
many years of service to the Company and its Stockholders. The Company will miss
his advice and counsel.
COMPENSATION COMMITTEE REPORT
The Compensation Committee's function is to review and make
recommendations to the Board of Directors with respect to the Company's
compensation of the officers of the Company, including salary, bonus and
benefits under any existing and future compensation plans, including stock
options for all employees.
The philosophy of the Compensation Committee is to establish
appropriate compensation goals for the executive officers of the Company and
make recommendations to the Board of Directors with regard to executive
compensation and employee stock options. The Compensation Committee shall seek
to ensure that executive compensation is directly linked to continuous
improvements in corporate performance, achievement of specific operational,
financial and strategic objectives and increases in shareholder value. There are
a wide variety of factors which the Compensation Committee may take into
account, such as business conditions within and outside the industry, the
Company's financial performance, the market compensation for executives of
similar background and experience, the individual performance of the executive
under consideration, the length of time the executive has been in the position,
and other factors which the Compensation Committee may deem relevant. The goals
of the Compensation Committee in establishing an executive compensation program
are: (i) to fairly compensate executive officers of the Company and its
subsidiaries for their contributions to the Company's short-term and long-term
performance, and (ii) to allow the Company to attract, motivate and retain the
management personnel necessary to the Company's success by providing an
executive compensation program comparable to that offered by other companies
seeking quality management personnel.
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<PAGE> 12
Individual base salaries for the named officers are determined by the
Compensation Committee based upon the scope of the executive's responsibilities,
comparisons to fair market value of similar positions in the marketplace, a
subjective evaluation of the executive's performance, and the length of time the
executive has been in the position.
The compensation of the Chairman and Chief Executive Officer, Mark S.
Alsentzer, has been determined utilizing similar criteria as described for other
executive officers with emphasis placed upon stock options in order that the
compensation of the CEO is aligned with the goals of the Compensation Committee
in establishing a strong link between the performance of the Company and return
on investment for stockholder with the compensation of the CEO. Mr. Alsentzer is
provided with a base salary of $150,000 per annum plus $36,000 per year to
reimburse Mr. Alsentzer for living expenses associated with his need to maintain
a residential unit in the State of Florida near the corporate offices.
Additionally, in 1996, Mr. Alsentzer was awarded 955,000 options to purchase
non-registered Common Stock. The size of the option award was directly linked to
specific performance goals in achieving growth for the Company. Mr. Alsentzer
has met all the required performance goals, and has, therefore earned the
maximum number of options under his compensation program.
EXECUTIVE COMPENSATION DEDUCTIBILITY
It is the Company's intent that amounts paid pursuant to the Company's
compensation plans will generally be deductible compensation expense. The
Compensation Committee does not currently anticipate that the amount of
compensation paid to executive officers will exceed the amounts specified as
deductible pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
August C. Schultes, III
Gary J. Ziegler
EXECUTIVE COMPENSATION
The following table summarizes compensation paid or accrued during the
past two fiscal years for the Company's Chief Executive Officer, as the Chief
Executive Officer was not employed by the Company prior to such time. No other
officer made in excess of $100,000 (salary plus bonuses) during the past fiscal
year.
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<PAGE> 13
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ------------------------------ -------
Name and Securities
Principal Other Annual Restricted Underlying LTIP All Other
Position Year(3) Salary($) Bonus($) Compensation($)(1) Stock Awards Options/SARs (#) Payouts($) Compensation($)
- -------- ------- --------- -------- ------------------ ------------ ---------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark Alsentzer, CEO 1997 $150,000 -0- -0- $36,000
1996(3) $107,800 955,000(2)
</TABLE>
(1) Excludes perquisites and other personal benefits that do not exceed the
lesser of $50,000 or 10% of each officer's total salary and bonus.
(2) In 1996 Mr. Alsentzer received 400,000 common stock warrants at the lower
of $2.25 per share or the market price per share based on gross sales
exceeding $7,500,000 over any consecutive 12 month period or gross sales of
$700,000 per month for three consecutive months whichever occurs first. The
exercise price is the lower of (i) $2.25 per share or (ii) the market price
on the last day of each quarter. Mr. Alsentzer also receives an additional
50,000 common stock warrants per year for three years at the lower of $3.50
or market price at date of exercise. Mr. Alsentzer also received an
additional 400,000 common stock warrants as an incentive to induce Mr.
Alsentzer to enter into an employment agreement with the Company at the
lower of (i) $4.00 or (ii) the market price on any employment anniversary
date over the next ten years. Mr. Alsentzer also received 5,000 shares of
options to purchase Common Stock at $2.50 per share for converting a
personal loan owed by the Company into preferred stock. (3) Mark Alsentzer
was not employed by the Company in 1995.
EMPLOYMENT AGREEMENTS
Mark S. Alsentzer - Chairman, Chief Executive Officer and President. Mr.
Alsentzer's employment agreement is for a five year term beginning December 24,
1996. In addition to the compensation listed above, Mr. Alsentzer receives a
$3,000 per month reimbursement for living expenses and reimbursement for
expenses related to a residential unit and options to purchase common stock
described in footnote 2 above. Mr. Alsentzer may be terminated for cause under
the employment agreement defined as (i) the conviction of a felony crime
involving moral turpitude, (ii) the intentional and knowing violation of the
employment agreement which results in substantial and material injury to the
Company; or (iii) conduct with respect to the Company or its business which is
intended to injure the Company and does injure the Company in a material and
substantial way or constitutes a course of grossly negligent conduct, done in
bad faith and not intended to benefit the Company, and which injures the Company
in a material and substantial way. In the event, Mr. Alsentzer is terminated for
cause or he elects to leave the employ of the Company for any reason, then Mr.
Alsentzer shall be entitled to receive all unissued warrants for which the
conditions of issuance have otherwise been met and all accrued but unpaid
salary. If the employment period ceases due to the death of Mr. Alsentzer, the
election of the Company to terminate without cause, or his permanent disability
as defined in the agreement, then Mr. Alsentzer shall receive a lump sum cash
10
<PAGE> 14
payment equal to two years base salary as defined in the agreement and all
unissued warrants for which the conditions have not been otherwise met shall be
issued to Mr. Alsentzer without regard to performance of the conditions for
issuance, provided, however, that if the employment ceases hereunder prior to
the expiration of two years from the commencement of the employment agreement
then Mr. Alsentzer shall not receive the lump sum cash payment equal to two
years base salary. If employment ceases for any reason, within twelve months
thereafter the Company shall cause all warrants held by employee to be
registered. This agreement requires Mr. Alsentzer to spend a minimum of 75 % of
his time and effort devoted to performing the functions of his employment
agreement.
Bruce C. Rosetto - Vice President and General Counsel/Secretary. Mr. Rosetto has
an employment agreement with the Company with a three year term commencing on
March 1, 1997 with a base salary of $100,000 per year. He was also awarded an
option to purchase 75,000 shares of Common Stock at $3.50 per share which vested
25,000 immediately, 25,000 on June 1, 1999 and 25,000 on June 1, 2000. The
options are for a term of ten years unless terminated in which event the options
must be exercised within 30 days. Mr. Rosetto may be terminated for cause under
the employment agreement defined as (i) the failure to substantially perform his
duties, (ii) the engaging in gross negligence or willful misconduct which causes
injury to the Company; (iii) a violation of the restrictive covenants and
confidentiality provisions of the employment agreement; or (iv) the conviction
of a felony involving moral turpitude. In the event, Mr. Rosetto is terminated
for cause or he elects to leave the employ of the Company for any reason, then
Mr. Rosetto shall be entitled to receive accrued salary and expenses through
date of termination. In the event the Company terminates Mr. Rosetto, he shall
be entitled to receive his then current Base salary for twelve months plus all
Company benefits to be paid on his behalf for twelve months. Mr. Rosetto also
has provisions concerning a covenant not to compete and violate corporate
confidences for two years beginning on the date of termination.
Michael D. Schmidt - Chief Financial Officer/Treasurer. Pursuant to a letter
agreement, Mr. Schmidt is paid a Base salary of $100,000 per year commencing
December 1, 1997. He also has an Option to purchase 50,000 shares of common
stock at $3.50 per share which vest immediately and are for a term of ten years
unless terminated in which event they must be exercised with 30 days. Mr.
Schmidt also receives $5,400 per year as an auto allowance.
Michael A. Lupo - President of U.S. Plastic Lumber Ltd. Pursuant to a letter
agreement commencing January 1, 1998, Mr. Lupo has a Base salary of $75,000 per
year. He also has an Option to purchase 25,000 shares of common stock at $3.50
per share which vested immediately. An additional option to purchase up to
100,000 shares of common stock at $3.50 per share based upon meeting certain
performance criteria relative to Operating Income which vest immediately upon
the occurrence of meeting the performance criteria. Up to an additional $100,000
in incentive compensation, payable in either stock or cash, for year ended
December 31, 1998 also based upon meeting certain Operating Income targets.
11
<PAGE> 15
Michael Goebner - President of Carteret Biocycle Corp. and Clean Earth of New
Castle, Inc. Pursuant to an letter agreement commencing August 1997, Mr. Goebner
has a Base salary of $100,000 per annum. He is also provided with a company car.
He also has an option to purchase 15,000 shares of common stock at $4.50 per
share with another option at the end of his first year of employment to purchase
an additional 15,000 shares at the market price of the common stock at the end
of the first year of employment. He was also provided an earn out for 5,000
shares of stock based upon meeting certain EBIT criteria.
Steven C. Sands - President of Waste Concepts, Inc. Pursuant to a written
employment agreement with a term for five years commencing November 18, 1997,
Mr. Sands has a Base salary of $125,000 per annum. He receives $7,200 per year
as an auto allowance. He has an option to purchase 10,000 shares of common stock
at $6.00 per share. He also has an earn out of 25,000 shares based upon Waste
Concepts meeting certain financial performance goals at the rate of 5,000 shares
per year for each of the next five years. The Employment Agreement contains no
change of control provisions. Mr. Sands may be terminated for cause under the
employment agreement defined as (i) the failure to substantially perform his
duties, (ii) the engaging in gross negligence or willful misconduct which causes
injury to the Company; (iii) a violation of the restrictive covenants and
confidentiality provisions of the employment agreement; or (iv) the conviction
of a felony involving moral turpitude. In the event, Mr. Sands is terminated for
cause or he elects to leave the employ of the Company, then Mr. Sands shall be
entitled to receive accrued salary and expenses. In the event the Company
terminates Mr. Sands, he shall be entitled to receive his then current Base
salary for twelve months plus all Company benefits to be paid on his behalf for
twelve months. Mr. Sands also has provisions concerning a covenant not to
compete and violate corporate confidences for two years beginning on the date of
termination.
STOCK OPTIONS
The Board of Directors of the Company has granted options to acquire
shares of Common Stock to the Company's key employees and officers. Awards of
options to the Company's Chief Executive Officer are reported in the Summary
Compensation Table. Awards to executive officers and other key management
personnel are listed above in the employment agreement section. In addition, the
Board of Directors has awarded non-qualified options to acquire 70,000 shares of
the Common Stock to other managers. The Board of Directors has determined the
persons to whom awards are granted, the number of awards granted and the
specific terms of each award, including the vesting thereof and the exercise
price.
OPTIONS/WARRANTS AWARDED DURING 1997
The following table sets forth as to the Chief Executive Officer of the
Company certain information with respect to option/warrant awards during 1997 as
follows: (i) the number of shares of Common Stock underlying options awarded,
(ii) the percentage that such options represent of all options awarded to
officers and employees during the year, (iii) the exercise price, (iv) the
expiration date and (v) the potential realizable value of such options. It
should be noted that actual value of the options may be significantly different
from the value shown in the assumptions, and the value actually realized, if
any,
12
<PAGE> 16
will depend upon the excess of the market value of the Common Stock over the
option exercise price at the time of exercise.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of stock price appreciation
for Warrant Term
- ------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/
Underlying Warrants
Warrants/ Awarded To Exercise At 5% At 10%
Options Employees in Price Per Expiration Annual Annual
Name Awarded fiscal year Share Date Growth Growth
- ------------------- ------------- ---------------- ----------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Alsentzer 320,000 57.1% 2.25 12/19/2007 $511,444 $1,334,244
- ------------------- ------------- ---------------- ----------- -------------- --------------- --------------
</TABLE>
The following table sets forth information regarding the option values of
options held by the Company's Chief Executive Officer at a fiscal year end.
No options awarded to the Chief Executive Officer have been exercised during
1997.
AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISE
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARs AT
OPTIONS/SARs AT FISCAL YEAR END
SHARES ACQUIRED VALUE FISCAL YEAR END EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE UNEXERCISABLE(1)
- ---- --------------- ------------ ------------------------- ----------------
<S> <C> <C> <C> <C>
Mark S. Alsentzer 0 0 855,000/100,000 $2,113,500/0
Mark S. Alsentzer 0 0 320,000(2)/0 $819,200/0
</TABLE>
- ----------
(1) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options awarded based upon the closing
sales price per share of $4.81 on December 31, 1997.
(2) Beneficial ownership through Stout Partnership. See Certain Transactions.
CERTAIN TRANSACTIONS
During the past two fiscal years, the Company has entered into several
significant acquisitions and other transactions with affiliates. The terms of
these transactions were, in some instances, determined without the benefit of
arms length bargaining or negotiation and necessarily involve conflicts between
the interests of the related parties and the Company. These are as follows:
On February 1, 1996 the Earth Care Global Holdings, a predecessor of
the Company, acquired certain assets of Earth Care Partners (ECP), a partnership
controlled by certain former officers/stockholders (including the former
Chairman of the Company) of the Company for a total purchase price of $200,000.
In exchange therefore, the partners of ECP received 112,926 shares of the
Company's common stock. At
13
<PAGE> 17
December 31, 1996, $113,535 of receivables due from certain partners of ECP was
included in accounts and notes receivable. Certain partners of ECP have agreed
to pledge 70,579 shares of their holdings in the Company's common stock as
collateral for the repayment of such receivables, although such pledge has not
been formally perfected. At such time as those shares are registered, such
partners have agreed to repay the Company. In August 1997, one of the former
partners of ECP alleged that the Company wrongfully issued shares to certain of
the other partners of ECP. The Company responded by appointing an independent
board committee to examine the facts surrounding the ECP acquisition.
Independent counsel was retained to thoroughly review the ECP transaction to
insure that this related party transaction was in fact properly authorized and
executed. Independent counsel has reported its findings and made certain
recommendations to the independent board committee. Based upon these
recommendations, the Company is reviewing its legal remedies and simultaneously
therewith, ECP and the Company are currently involved in negotiations to resolve
all issues arising out of the ECP acquisition.
On or about November 5, 1997, Eugene Arnold, Jr. (a former director of
the Company), Vernon C. Walker, and R. Wayne Raffety (collectively "Arnold")
filed suit in the United States District Court for the Eastern District of
Pennsylvania against the Company and former directors David Farrow and Harold
Gebert. Arnold's claims arise out of a venture capital loan made by Arnold to
the Company on January 12, 1995 (the "Loan"), the principal and interest which
was paid by the Company. Arnold contends that at the time of the Loan, Gebert
and Farrow agreed to a award of warrants of their stock in the Company, and that
Gebert and Farrow, on behalf of either the Company or themselves, also made
assurances that Arnold would be protected against any anti-dilution of the
shares of stock. The litigation was settled and dismissed on or about February
20, 1998. The Company agreed to pay Arnold 15,000 shares of common stock on or
before June 30, 1999.
On December 31, 1996 and simultaneous to the closing of the Clean Earth
merger, the Stout Partnership (owners of Clean Earth, Inc.) extended a note to
the Company in the amount of $500,824 at Federal prime rate plus 1%. The
proceeds were used to pay off the note payable to Magellan Finance Co which
matured on December 31, 1996.
Clean Earth, Inc. incurred administration and service fees to its
stockholders of $500,000 in the year ended December 31, 1996.
On January 23, 1997 A. C. Schultes, Inc., loaned the Company an
additional $700,000 at Federal Reserve prime rate plus 1%, the proceeds of which
some were used to partially fund the RPI acquisition. The Company has since
borrowed additional cash from A. C. Schultes, Inc. and as of September 30, 1997
owed $1,200,000 on an unsecured line of credit from A. C. Schultes, Inc. at
Federal Reserve prime rate plus 1%. The total available facility from A. C.
Schultes, Inc is $2,300,000 and is renewable on an annual basis. August C.
Schultes III is a director of the Company and the Chairman and CEO of A. C.
Schultes, Inc.
14
<PAGE> 18
On or about December 12, 1997, the Board of Directors awarded warrants
to Stout Partnership providing it the right to purchase 320,000 shares at an
exercise price of $2.25 per share. This award was in consideration of Stout
Partnership and each of the individual members of the partnership personally
guaranteeing a revolving discretionary line of credit in the amount of
$4,000,000 on behalf of the Company with PNC Bank of Delaware. In addition to
the personal guarantees, the individual members of the partnership pledged
$2,000,000 in cash or securities to PNC Bank on behalf of the Company. August C.
Schultes III and Gary J. Ziegler, both directors of the Company, are individual
partners in Stout Partnership. Mark S. Alsentzer, Chairman and President of the
Company is also an individual partner in Stout Partnership.
The Company has lease a manufacturing facility from entities controlled
by individuals who are stockholders. Until October 20,1997, at the rate of
$7,000 per month, the Company leased a manufacturing facility located in
Tennessee from the entity from which the Company acquired the assets used in
such manufacturing operation, and the owners of which became stockholders of the
Company in such acquisition. The Company has terminated this lease and relocated
its facility into a larger rented facility in a nearby Tennessee location. The
Company's RPI subsidiary leases approximately 38,000 square feet of office and
manufacturing space from Plastic Properties, LLC. The lease provides for minimum
rentals of $11,875 per month through December 31, 2008 with an option to renew
for an additional 5-year terms. Lee Anderson, President of RPI and Vice
President of U.S. Plastic Lumber Ltd., is a partner in Plastic Properties, LLC.
CONFLICTS OF INTEREST
The Company does not have any formal policy concerning the direct or
indirect pecuniary interest of any of its officers, directors, security holders
or affiliates in any investment to be acquired or disposed of by the Company or
in any transaction to which the Company is a party or has an interest. The
Company will not enter into any such transactions unless approved by a majority
of the entire Board of Directors, not including any interested director.
15
<PAGE> 19
STOCK RETURN PERFORMANCE PRESENTATION
Set forth below is a performance graph comparing the cumulative total
shareholder return on the Company's Common Stock based on its market price, with
the cumulative total return of companies in NASDAQ Composite (US), and a Peer
Group Industry Index. The graph assumes that the value of the investment in the
Company's Common Stock and each Index was $100 on April 1, 1996. The Peer Group
Index is heavily weighted toward environmental companies due to the lack of
plastic lumber industry stocks which are public tradable.
[PERFORMANCE GRAPH]
- --------------------------------------------------------------------------------
TOTAL
RETURN
ANALYSIS
4/1/96 12/31/96 12/31/97
- --------------------------------------------------------------------------------
U.S. PLASTIC LUMBER CORPORATION $100.00 $117.46 $ 122.22
- --------------------------------------------------------------------------------
PEER GROUP $100.00 $ 80.62 $ 186.90
- --------------------------------------------------------------------------------
NASDAQ COMPOSITE (US) $100.00 $116.87 $ 142.75
- --------------------------------------------------------------------------------
PROPOSAL 2 - APPROVAL OF THE NON-EMPLOYEE DIRECTOR OPTION AWARD
GENERAL
The Board of Directors of the Company approved the grant of options to
purchase 2,500 shares of Common Stock to each current non-employee director of
the Company, subject to approval by the stockholders of the Company
(individually, a "Non-Employee Director Award"). All non-employee directors of
the Company are eligible to receive options pursuant to the terms of this grant.
The purpose of each Non-Employee Director Award is to provide additional
incentive to members of the Board of Directors of the Company who are not also
employees by encouraging them to invest in the Company's Common Stock and
thereby acquire a further proprietary interest in the Company and an increased
personal interest in the Company's continued success and progress.
The Company is seeking stockholder approval of these awards to satisfy
a condition of Rule 16b-3 under the Exchange Act which provides an exemption
from the provisions of Section 16(b) of the Exchange Act regarding "short-swing"
profits if,
16
<PAGE> 20
among reasons, an award of option is ratified by the stockholders at the next
annual meeting of stockholders.
Set forth below is a summary of the provisions of each Non-Employee
Director Award. This summary is qualified in its entirety by the detailed
provisions of the text of the form of option agreement evidencing these awards
set forth as Appendix "A" to this Proxy Statement and is incorporated herein by
reference.
ELIGIBILITY
Under the Non-Employee Director Awards, only directors of the Company
who are not full-time employees of the Company or its subsidiaries were granted
options to purchase shares of Common Stock.
AWARDS UNDER THE NON-EMPLOYEE DIRECTOR AWARD
All options awarded to non-employee directors were non-qualified stock
options subject to the approval of stockholders. Each non-employee director of
the Company was granted an option to purchase 2,500 shares of the Company's
Common Stock.
EXERCISE PRICE OF OPTIONS/PAYMENT OF EXERCISE PRICE
The exercise price for options issued to non-employee directors is
$3.50 per share which price was in excess of the fair market value of the
non-registered shares of Common Stock on the date of Board approval of the
awards as established by an independent appraisal report.
The exercise price of an option may be paid in cash, the delivery of
already owned shares of Common Stock of the Company having a fair market value
equal to the exercise price, or a combination thereof.
The Board has determined to allow the payment of the exercise price in
Common Stock of the Company to permit the "pyramiding" of shares in successive
exercises. Thus, an optionee could initially exercise an option in part,
acquiring a small number of shares of Common Stock, and immediately thereafter
effect further exercises of the option, using the Common Stock acquired upon
earlier exercises to pay for an increasingly greater number of shares received
on each successive exercise. This procedure could permit an optionee to pay the
option price by using a single share of Common Stock having an aggregate fair
market value equal to the excess of (a) the fair market value of all shares to
which the option relates over (b) the aggregate exercise price under the option.
A vote in favor of Proposal 2 is also a vote in favor of this interpretation.
17
<PAGE> 21
EXERCISABILITY AND EXPIRATION OF OPTIONS
Options granted pursuant to each Non-Employee Director Award are
immediately exercisable following stockholder approval. Options awarded under
the Non-Employee Director Award will generally expire ten years after the date
they are awarded except as provided therein. All unexercised options terminate
three months after the optionee ceases to be a director of the Company (whether
by death, disability, resignation, removal, failure to be reelected or
otherwise, and regardless of whether the failure to continue as a director was
cause or otherwise), but not later than ten years after the date of option
award.
NONTRANSFERABILITY OF OPTIONS
No option awarded to non-employee directors is assignable or
transferable, otherwise than by will or by the laws of descent and distribution.
Except in the event of death or disability, all options awarded are exercisable
only by such optionee.
ADJUSTMENTS
Each Non-Employee Director Award provides for adjustments to the number
of shares subject to outstanding options and to the exercise price of such
outstanding options in the discretion of the Board in event of a declaration of
stock dividend, stock split, merger, consolidation, split up, combination,
recapitalization, conversion or similar circumstances.
AMENDMENTS
Except as provided in the agreements evidencing the awards, the Board of
Directors may amend or supplement the Non-Employee Director Award without the
approval of the award recipients; provided, however, that such action shall not
affect options awarded prior to the actual date on which such action occurred.
AWARDS GRANTED TO NON-EMPLOYEE DIRECTORS
The following table sets for the information regarding the options
awarded to each non-employee director of the Company pursuant to the
Non-Employee Director Award.
18
<PAGE> 22
NON-EMPLOYEE DIRECTOR AWARD
DOLLAR NUMBER
NAME AND POSITION VALUE ($)(1) OF UNITS
----------------- ------------- ---------
James J. Blosser, Director ........... $ 8,125 2,500(2)
Lester E. Moody, Director............. $ 8,125 2,500(2)
August C. Schultes, III, Director..... $ 8,125 2,500(2)
Gary J. Ziegler, Director............. $ 8,125 2,500(2)
Roger N. Zitrin, Director............. $ 8,125 2,500(2)
-------- ---------
Non-Employee Director Group
(5 persons)........................ $ 40,625 12,500
(1) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options awarded based upon the closing
sales price per share of $6.75 on April 22, 1998.
(2) Represents a non-qualified stock option to purchase 2,500 shares of
Common Stock at an exercise price of $3.50 per share.
For additional information regarding option awards made to the
Company's directors, see "Compensation of Directors." Approval of Proposal 2
will constitute the ratification of the award of options to the directors named
in the table above.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDER VOTE "FOR" APPROVAL OF
PROPOSAL 2.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTION GRANT TO NON-EMPLOYEE DIRECTORS
THE FOLLOWING INFORMATION IS NOT INTENDED TO BE A COMPLETE DISCUSSION
OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE NON-EMPLOYEE DIRECTOR GRANTS,
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, AND THE REGULATIONS ADOPTED PURSUANT THERETO. THE PROVISIONS OF THE
CODE DESCRIBED IN THIS SECTION INCLUDE CURRENT TAX LAW ONLY AND DO NOT REFLECT
ANY PROPOSALS TO REVISE CURRENT TAX LAW.
NON-QUALIFIED STOCK OPTIONS
Generally, there will be no federal income tax consequences to either
the optionee or the Company on the award of non-qualified stock options pursuant
to each Non-Employee Director Award. On the exercise of a Non-Qualified Stock
Option, the optionee (except as described below) has taxable ordinary income
equal to the excess of the fair market value of the shares acquired on the
exercise date over the option price of the shares. The Company will be entitled
to a federal income tax deduction (subject to the limitations contained in
Section 162(m)) of the Code in an amount equal to such excess, provided that the
Company complies with applicable withholding or reporting rules.
19
<PAGE> 23
Upon the sale of stock acquired by exercise of a non-qualified stock
option, optionees will realize long-term or short-term capital gain or loss
depending upon their holding period for such stock. Under current law, net
capital gains (net long term capital gain less net short term capital loss) is
subject to a maximum rate of 28%. The reduced rate (20%) of tax on certain net
capital gains added to the Code by the Taxpayer Relief Act of 1997 requires a
holding period of more than 18 months. Capital losses are deductible only to the
extent of capital gains for the year plus $3,000 for individuals.
An optionee who surrenders shares in payment of the exercise price of a
non-qualified stock option will not recognize gain or loss with respect to the
shares so delivered unless such shares were acquired pursuant to the exercise of
an Incentive Stock Option and the delivery of such shares is a disqualifying
disposition. The optionee will recognize ordinary income on the exercise of the
non-qualified stock option as described above. Of the shares received in such an
exchange, that number of shares equal to the number of shares surrendered have
the same tax basis and capital gains holding period as the shares surrendered.
The balance of shares received will have a tax basis equal to their fair market
value on the date of exercise and the capital gains holding period will begin on
the date of exercise.
PROPOSAL 3 RATIFICATION OF APPOINTMENT OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of
Directors has selected Arthur Andersen LLP to be the Company's independent
certified public accountants for fiscal 1998. On February 27, 1998, the Company
engaged the firm of Arthur Andersen LLP independent certified public accountants
replacing the firm of Kuntz Lesher Siegrist & Martini LLP. This change in
independent certified public accountants was recommended by the Audit Committee
and subsequently approved by the Board of Directors. Kuntz Lesher Siegrist &
Martini LLP had served as the Company's independent accountants and audited the
Company's financial statements for the years ended December 31, 1996.
Kuntz Lesher Siegrist & Martini LLP reports on the financial statements
for the two years ended December 31, 1996 contained no adverse opinion or
disclaimers of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principals.
There were no disagreements between the Company or its subsidiaries and
Kuntz Lesher Siegrist & Martini LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure in
connection with the audit of the consolidated financial statements for the two
years ended December 31, 1996 and subsequent period through February 27, 1998
which, if not resolved to the satisfaction of Kuntz Lesher Siegrist & Martini
LLP, would have caused them to make reference to the subject matter of the
disagreement(s) in connection with the reports of Kuntz Lesher Siegrist &
Martini LLP on the consolidated financial statements of the Company for the two
years ended December 31, 1996. Such reports did not contain an adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. During the conduct of the audits of the
Company for the two fiscal years ended December 31, 1996, and all subsequent
interim
20
<PAGE> 24
periods preceding the engagement of Arthur Andersen LLP, Kuntz Lesher Siegrist &
Martini LLP has not advised the Company (i) that the internal controls necessary
for the Company to develop reliable financial statements do not exist; (ii) that
information has come to the attention of Kuntz Lesher Siegrist & Martini LLP
that has led it to no longer be able to rely on management's representations, or
that has made it unwilling to be associated with the financial statements
prepared by management; (iii) of the need to expand significantly the scope of
its audit, or that information has come to the attention of Kuntz Lesher
Siegrist & Martini LLP during such time period that if further investigated may
(A) materially impact the fairness or reliability of either a previously issued
audit report or the underlying financial statements, or the financial statements
issued or to be issued covering the fiscal period(s) subsequent to the date of
the most recent financial statements covered by an audit report, or (B) cause it
to be unwilling to rely on management's representations or be associated with
the registrant's financial statements; or (iv) that information has come to
their attention that materially impacts the fairness or reliability of either
(A) a previously issued audit report or the underlying financial statements, or
(B) the financial statements issued or to be issued covering the fiscal
period(s) subsequent to the date of the most recent financial statements covered
by an audit report.
A representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting to have the opportunity to make a statement if he or she desires to do
so and to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of equity
securities of the Company, to file reports of ownership and changes in ownership
to the Securities and Exchange Commission ("SEC"). Officers, directors and
greater than 10% stockholders are required by the SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
When the Company became a public reporting company upon filing of a
Registration Statement on Form 8A with the SEC, on March 2, 1998, the directors
and officers of the Company were required to file an Initial Statement of
Beneficial Ownership on Form 3 with the SEC on such date. All of the Company's
directors and executive officers of the Company including Mark S. Alsentzer,
Bruce C. Rosetto, Michael D. Schmidt, Michael A. Lupo, Michael Goebner and
Steven C. Sands furnished the requisite Initial Statement of Beneficial
Ownership on Form 3 a few days late.
21
<PAGE> 25
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 1999
Annual Meeting must be received by the Company for inclusion in the proxy
statement and form of proxy relating to such meeting not later than December 30,
1998. It is suggested that proponents submit their proposals by certified mail,
return receipt requested. Any proposal shall be subject to the requirements of
the proxy rules under the Exchange. Detailed information for submitting
resolutions will be provided upon written request to the Secretary of USPL (U.S.
Plastic Lumber Corporation, 2300 Glades Road, Suite 440W, Boca Raton, FL 33431,
Attention: Bruce C. Rosetto). No stockholder proposals were received for
inclusion in this Proxy Statement based upon an April 28, 1998 mail date.
EXPENSES OF SOLICITATION
The expense of the proxy solicitation will be borne by the Company.
InterWest Transfer Company has been retained by the Company to assist in the
solicitation of proxies and will be paid a fee of $4,500.00 for such services
plus reimbursement of out-of-pocket expenses. In addition to solicitation by
mail, proxies may be solicited in person or by telephone, telegraph or teletype
by directors, officers or employees of the Company and its subsidiaries without
additional compensation. Upon request by brokers, dealers, banks or voting
trustees, or their nominees who are record holders of the Company's Common
Stock, the Company is required to pay the reasonable expenses incurred by such
record holders for mailing proxy materials and annual stockholder reports to any
beneficial owners of the Common Stock.
OTHER MATTERS
You are again invited to attend the Annual Meeting at which management of USPL
will present a review of the Company's progress and operations.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to
Stockholders for the year ended December 31, 1997 (the "Annual Report"). The
Annual Report contains the Company's audited financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE,
EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST THEREFOR TO:
U.S. Plastic Lumber Corporation
Attn: Bruce C. Rosetto
2300 Glades Rd. Suite 440W
Boca Raton, FL. 33431
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<PAGE> 26
APPENDIX A
NON-QUALIFIED STOCK OPTION FOR NON-EMPLOYEE DIRECTORS
To:
-------------------------------
Name
-------------------------------
Address
Date of Award: MARCH 18, 1998
Your are hereby awarded an option, effective as of the date hereof, to
purchase 2,500 shares of common stock, $0.001 par value per share ("Common
Stock"), of U.S. Plastic Lumber Corporation, a Nevada corporation (the
"Company"), at a price of $3.50 per share.
Your option shall be exercisable in full on the date of grant and shall
remain exercisable for a period of three years, except if terminated earlier as
provided herein. This option shall not be exercisable after three years from the
date of its award (the "Scheduled Termination Date"). During the period during
which this option is exercisable, the number of shares subject to such option
and the exercise price per share shall be adjusted for any change in the
outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the Board
of Directors deems in its sole discretion to be similar circumstances.
You may exercise your option by giving written notice to the Secretary
of the Company on forms supplied by the Company at its then principal executive
office, accompanied by payment of the option price for the total number of
shares you specify that you wish to purchase. The payment may be in any of the
following forms: (a) cash, which may be evidenced by a check and includes cash
received from a stock brokerage firm in a so-call "cashless exercise"; (b)
(unless prohibited by the Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the resolutions approving such award) on the date of delivery of
such certificates to the Company, accompanied by an assignment of the stock to
the Company; or (c) (unless prohibited by the Board of Directors) any
combination of cash and Common Stock of the Company valued as provided in clause
(b). Any assignment of stock shall be in a form and substance satisfactory to
the Secretary of the Company, including guarantees of signature(s) and payment
of all transfer taxes if the Secretary deems such guarantees necessary or
desirable.
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<PAGE> 27
Your option will, to the extent not previously exercised by you,
terminate three months after the date on which you cease for any reason to be a
director of the Company (whether by death, disability, resignation, removal,
failure to be reappointed, reelected or otherwise and regardless of whether the
failure to continue as a director was for cause or without cause or otherwise),
but in no event later than three years from the date this option is awarded.
After the date you cease to be a director, you may exercise this option only for
the number of shares which you had a right to purchase and did not purchase on
the date you ceased to be a director. Your directorship shall not be deemed to
have terminated if you cease being a director of the Company but are or
concurrently therewith become a director of the Company or another subsidiary
corporation.
In the event of any change in the outstanding shares of the Common
Stock of the Company by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Board of Directors deems in its sole
discretion to be similar circumstances, the number and kind of shares subject to
this option and the option price of such shares shall be appropriately adjusted
in a manner to be determined in the sole discretion of the Board of Directors.
This option is not transferable otherwise than by will or the law of
descent and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
disability. Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company. The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.
Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:
(a) Until the options granted hereby are approved by the
stockholders of the Company;
(b) Until this option and the optioned shares are approved
and/or registered with such federal, state and local regulatory bodies or
agencies and securities exchanges as the Company may deem necessary or
desirable; or
(c) During any period of time in which the Company deems that
the exercisability of this option, the offer to sell the shares optioned
hereunder, or the sale thereof, may violate a federal, state, local or
securities exchange rule, regulation or law, or may cause the Company to be
legally obligated to issue or sell more shares than the Company is legally
entitled to issue or sell.
24
<PAGE> 28
(d) Until you have paid or made suitable arrangements to pay
(which may include payment through the surrender of Common Stock, unless
prohibited by the Board of Directors) (i) all federal, state and local income
tax withholding required to be withheld by the Company in connection with the
option exercise and (ii) the employee's portion of other federal, state and
local payroll and other taxes due in connection with the option exercise.
The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:
(a) The optionee hereby agrees, warrants and represents that
he will acquire the Common Stock to be issued hereunder for his own account for
investment purposes only, and not with a view to, or in connection with, any
resale or other distribution of any such shares, except as hereafter permitted.
The optionee further agrees that he will not at any time make any offer, sale,
transfer, pledge or other disposition of such Common Stock to be issued
hereunder without aneffective registration statement under the Securities Act of
1933, as amended, and under any applicable state securities laws or an option of
counsel acceptable to the Company to the effect that the proposed transaction
will be exempt from such registration. The optionee shall execute such
instruments or representations, as counsel to the Company deems advisable to
avoid any violation of federal, state, local or securities exchange rule,
regulation or law.
(b) The certificates for Common Stock to be issued to the
optionee hereunder shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. The shares have been acquired for
investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under
the Securities Act of 1933, as amended, and under any applicable state
securities laws or an opinion of counsel acceptable to the Company that
the proposed transaction will be exempt from such registration."
The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.
The sole purpose of the agreements, warranties, representations and
legend set forth in the two immediately preceding paragraphs is to prevent
violations of the Securities Act of 1933, as amended, and any applicable state
securities laws.
25
<PAGE> 29
It is the intention of the Company and you that this option shall not
be an "Incentive Stock Option" as that term is used in Section 422 of the
Internal Revenue Code of 1986, as amended and the regulations thereunder.
Any dispute or disagreement between you and the Company with respect to
any portion of this option or its validity, construction, meaning, performance
or your rights hereunder shall be settled by arbitration you will attempt to
resolve any disputes or disagreements with the Company over this option amicably
and informally, in good faith, for a period not to exceed two weeks. Thereafter,
the dispute or disagreement will be submitted to arbitration. At any time prior
to a decision from the arbitrator(s) being rendered, you and the Company may
resolve the dispute by settlement. You and the Company shall equally share the
costs charged by the American Arbitration Association or its successor, but you
and the Company shall otherwise be solely responsible for your own respective
counsel fees and expenses. The decision of the arbitrator(s) shall be made in
writing, setting forth the award, the reasons for the decision and award and
shall be binding and conclusive on you and the Company. Further, neither you nor
the Company shall appeal any such award. Judgment of a court of competent
jurisdiction may be entered upon the award and may be enforced as such in
accordance with the provisions of the award.
This option shall be subject to the terms of set forth herein and in
the resolution approving the grant. This option constitutes the entire
understanding between the Company and you with respect to the subject matter
hereof and no amendment, supplement or waiver of this option, in whole or in
part, shall be binding upon the Company unless in writing and signed by the
President of the Company. This option and the performances of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of Nevada.
Please sign the copy of this option and return it to the Company's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.
U.S. PLASTIC LUMBER CORPORATION
By:
--------------------------------
I hereby acknowledge receipt of a copy of the foregoing stock option
and, having read it, hereby signify my understanding of, and my agreement with,
its terms and conditions.
- --------------------------------- ------------------------------
(Signature) (Date)
26
<PAGE> 30
Appendix A
REVOCABLE PROXY
U.S. PLASTIC LUMBER CORPORATION
Annual Meeting of Stockholders
June 3, 1998
The undersigned hereby constitutes and appoints Mark S. Alsentzer and Bruce C.
Rosetto and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution for and in the name, place and stead of the
undersigned to appear at the Annual Meeting of Stockholders (the "Annual
Meeting") of U.S. Plastic Lumber Corporation. ("USPL"), to be held on the 3rd
day of June, 1998, and at any postponement or adjournment thereof, and to vote
all of the shares of Common Stock of USPL which the undersigned is entitle to
vote, with all the powers and authority the undersigned would possess if
personally present. The undersigned directs this proxy to vote as follows:
Please mark your votes as in this example. [ ]
1. The election as directors of all nominees listed below for the term set
forth below each nominee's name (except as marked to the contrary):
Lester E. Moody Roger N. Zitrin
(four year term) (four year term)
[ ] FOR [ ] VOTE WITHHELD
To withhold authority to vote for an individual nominee, write that
nominee's name on the space provided below.
-------------------
2. To ratify the grant of a non-qualified stock option to purchase 2,500
shares of Common Stock to each current non-employee director.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Arthur Andersen LLP as independent auditors
for fiscal year end December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote on any other
business as may properly come before the Annual Meeting or any postponement
or adjournment thereof.
The Board of Directors recommends a VOTE "FOR" the election of the nominees
listed and for the approval of Proposals 2 and 3.
(Continued and to be signed on following page)
<PAGE> 31
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF USPL
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
INSTRUCTIONS TO THE CONTRARY ARE INDICATED, THE PERSONS NAME HEREIN INTENDS TO
VOTE FOR THE ELECTION OF THE NOMINEES LISTED AND FOR THE APPROVAL OF PROPOSALS 2
AND 3. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE
VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR, IF
ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS
CONFERRED BY THIS PROXY. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY AS
TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
Should the undersigned be present and choose to vote at the Annual Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of USPL at the Annual Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
terminated and shall have no force and effect. This proxy may also be revoked by
filing a written notice of revocation with the Secretary or by duly executing a
proxy bearing a later date.
The undersigned hereby acknowledges receipt of the Company's 1998 Annual Report
to Shareholders, Notice of the Company's Annual Meeting and the Proxy Statement
relating thereto.
DATE: _______________________________, 1998
(Please date this Proxy)
-------------------------------------------
-------------------------------------------
Signature(s)
It would be helpful if you signed your name
exactly as it appears on your stock
certificate(s), indicating any official
position or representative capacity. If
shares are registered in more than one name,
all owners should sign.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
