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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 20, 1999
U.S. PLASTIC LUMBER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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Nevada 3080 87-0404343
(State of incorporation (Primary Standard Industrial (I.R.S. Employer
/organization) Classification Code Number) Identification No.)
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2300 W. Glades Road, Suite 440 W, Boca Raton, Florida 33431
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 561-394-3511
Former Name or Former Address if Changed Since Last Report: Not Applicable.
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable
ITEM 5. OTHER EVENTS
As of August 31, 1999, the Company had outstanding 30,538,086 shares of
common stock. Additionally, the Company has shares reserved for future
issuance. Of the shares which we have reserved for issuance pursuant to
earnout agreements, 4,609,386 shares were related to an earnout provision
contained in the Agreement and Plan of Reorganization entered into by the
Company on March 29, 1996. In connection with this transaction, the
parties to the Agreement and Plan of Reorganization agreed that the
earnout shares would be paid to certain shareholders who held the common
stock as of the date of the Agreement and Plan of Reorganization in the
event Earth Care Global Holdings and its subsidiaries achieved net sales
or production of 2.0 million pounds of plastic lumber per month for three
consecutive months, subject to certain limitations contained in the
Agreement. In the event we reach these sales or production levels, the
shareholders of Earth Care Global Holdings as of March 29, 1996 and Clean
Earth, Inc., which shareholders are referred to as the "Historical
Shareholders", would receive approximately 4.6 million earnout shares. No
additional assets or cash would be received by us in the event such sales
or production goals were achieved which would result in the dilution from
the issuance of additional shares which would directly impact all
shareholders who purchased our common stock subsequent to March 29, 1996
and who still owned our common stock on the date the earnout shares are
issued, assuming the sales or production goal is met. As of June 30, 1999,
our net tangible book value was $34,887,796, or $1.26 per share of common
stock. Net tangible book value per share represents total assets less
total liabilities, divided by the number of shares of common stock
outstanding. After making the accounting adjustments necessary to give
effect to the issuance of the 4,609,386 earnout shares, the adjusted net
book value as of June 30, 1999 would have been $1.08 per share which
represents an immediate dilution of $0.18 per share to all of our
shareholders who are not Historical Shareholders.
The Company has proposed a settlement to all Historical Shareholders to
take 15% of what they might have otherwise been entitled to have received
under the Agreement and
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Plan of Reorganization had the earnout shares been earned. As of the date
of the filing of this 8K, Historical Shareholders representing 4,410,794
shares of the 4,609,386 earn out shares have executed the Earn Out Rights
Settlement Agreement ("Settlement Agreement") with the Company. The
Company anticipates that it may receive executed copies of the Settlement
Agreement in the near future from the Historical Shareholders who have not
yet executed the Settlement Agreement, primarily from some historical
Shareholders who the Company has had difficulty locating. However, there
may be some Historical Shareholders who the Company is unable to locate
due to change of addresses or others who decline to sign the Settlement
Agreement for whatever reason.
To the extent any Settlement Agreement is not executed, the Company will
have continued exposure to issue 100% of the earnout shares relative to
any such Historical Shareholder who has not executed a Settlement
Agreement. The Company has reserved for this exposure as follows: It has
placed a contingent liability on its books for the remaining Historical
Shareholders who have not replied to the Settlement Agreement.
As a result of the execution of the Settlement Agreements, the Company's
potential obligation to issue 4,609,386 shares to Historical Shares has
dissipated. The Company will issue approximately 691,408 shares in lieu of
4,609,386 shares to Historical Shareholders if 100% of the Historical
Shareholders execute the Settlement Agreement. Of this amount, the
Company's current obligation based upon the Settlement Agreements signed
to date is to issue approximately 661,732 shares to Historical
Shareholders. These shares will be issued on or about January 5, 2000.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
Not Applicable.
ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not Applicable.
EXHIBITS
1. Form of Settlement Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned hereunto duly authorized.
U.S. Plastic Lumber Corporation
(Registrant)
Date: September 3, 1999 By: /s/ Bruce C. Rosetto
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Bruce C. Rosetto, Vice President and
General Counsel/Secretary
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EARN OUT RIGHTS SETTLEMENT AGREEMENT
This Agreement ("Settlement Agreement") made as of the ___ day of
August, 1999, by and between U.S. Plastic Lumber Corporation, a Nevada
corporation with offices at 2300 Glades Road, Suite 440 W., Boca Raton, FL 33341
which as used in this Settlement Agreement shall include all of its
subsidiaries, affiliates and related organizations, and its and their officers,
directors, employees, trustees, agents, representatives, predecessors,
successors and assigns (hereinafter collectively referred to as "USPL") and
____________ with an address of ___________________ (the "Shareholder").
RECITALS
An Agreement and Plan of Reorganization was entered into in December 1995 as
part of a reverse merger of Earth Care Global Holdings, Inc. into Educational
Storybooks, International, Inc. ("Agreement and Plan of Reorganization"). The
Agreement and Plan of Reorganization was to provide an earn out bonus ("Earn Out
Shares") to shareholders of record of Earth Care Global Holdings, Inc. as of
March 29, 1996 ("Historical Shareholders") contingent upon certain performance
events. On or about October 1997 USPL separated the earn out rights appended to
the stock certificates of the Historical Shareholders and placed those rights in
an Earn Out Shares Agreement. Issues have arisen as to the meaning of the
language in the Earn Out Shares Agreement and the Agreement and Plan of
Reorganization relative to the circumstances under which the Earn Out Shares are
to be issued, and each of the parties desire to avoid protracted and expensive
litigation and desires to come to an amicable agreement concerning the issuance
of the Earn Out Shares.
AGREEMENT
1. RECITALS. The foregoing Recitals are true and are made a part of
this Agreement.
2. TERMINATION OF RIGHTS AND COMPENSATION. In exchange for USPL issuing
to Shareholder on or about January 5, 2000, _________ shares of Common Stock,
par value $.0001, the parties hereby terminate all rights, interests,
obligations or claims that either party may have against the other arising out
of the Earn Out Shares Agreement, the Agreement and Plan of Reorganization, or
any other documents relating to any obligation of USPL to issue Earn Out Shares
to Historical Shareholders. Neither party shall have any continuing
responsibility or liability to the other under the Earn Out Shares Agreement,
the Agreement and Plan of Reorganization, and any other documents relating to
any obligation of USPL to issue Earn Out Shares to Historical Shareholders.
3. FAIRNESS OF SETTLEMENT. Shareholder acknowledges and recognizes that
the number of shares being issued pursuant to Section 2 hereof constitutes
approximately fifteen percent (15%) of the maximum number of Earn Out Shares
that Shareholder may claim to have been entitled to receive based upon the
language within the Agreement and Plan of Reorganization and in the Earn Out
Shares Agreement as applied in a light most favorable to the Shareholder.
Shareholder believes the settlement described herein, and the consideration
being issued by USPL as part of the Settlement Agreement, to be fair and just
and Shareholder desires to settle rather than to risk litigation or risk that
the Earn Out Shares may never be earned within the time frame specified in the
Earn Out Shares Agreement and/or the Agreement and Plan of Reorganization.
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4. EXPIRATION OF OFFER. This offer to receive Common Stock of USPL in
exchange for the termination of the Earn Out Shares Agreement and any rights the
Shareholder may have had under the Agreement and Plan of Reorganization shall
expire at 5 p.m. Eastern Daylight Savings Time, September 15, 1999. This
Settlement Agreement shall have no legal effect and shall not be binding upon
USPL unless (i) the Board of Directors approves this Settlement Agreement.
5. ACCEPTANCE. Shareholder may accept this offer by delivering to USPL
a signed copy of this document on or before September 15, 1999.
6. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. By executing this
Settlement Agreement, the Shareholder is agreeing to all of the terms and
conditions of this Settlement Agreement and he/she/it shall make various
representations and warranties to USPL that will be relied upon by USPL. The
Shareholder has read this entire agreement before deciding to accept the offer
contained herein. The Shareholder represents and warrants to USPL as follows:
a. LEGAL REPRESENTATION. The Shareholder acknowledges and agrees that
he/she/it has had the opportunity to retain independent legal counsel in
connection with this Settlement Agreement. The Shareholder is relying solely on
such Shareholder's legal counsel for legal advice with respect to the settlement
contemplated by this Settlement Agreement or if he/she/it chooses not to retain
an attorney on his own investment and business experience, and in no event is
the Shareholder relying on USPL's legal counsel with respect to his/her/its
decision to execute this Settlement Agreement.
b. KNOWLEDGE AND EXPERIENCE. Shareholder has such knowledge and
experience in financial and business matters that Shareholder, together with his
representatives and advisers, if any, is capable of evaluating the merits and
risks of accepting the offer herein.
c. SECURITIES RESTRICTIONS ON TRANSFER. Shareholder acknowledges and
understands that the Common Stock being issued hereunder will not be registered
under the Securities Act of 1933, as amended, or under any state securities laws
and agrees that the Common Stock cannot be resold unless they are subsequently
registered or an exemption from such registration is available. The Shareholder
agrees not to resell or otherwise dispose of all or any part of the Common Stock
being issued hereunder except as permitted by law.
d. RELIANCE. In entering into this Settlement Agreement, the
Shareholder acknowledges that he/she/it has not relied on any representations or
statements made by USPL, whether oral or written, other than as set forth in
this Settlement Agreement.
7. RELEASE. Shareholder hereby knowingly and voluntarily remises,
releases and forever discharges USPL from any and all claims, causes of action,
suits, charges, complaints, contracts (whether written or oral, express or
implied from any source), and promises, whatsoever, in law or in equity, known
or unknown, which Shareholder has, had or may have against USPL as of the date
of this Settlement Agreement, arising out of any matter whatsoever.
8. INDEMNITY OF USPL. USPL agrees to defend, indemnify and hold
harmless Shareholder from any damages against Shareholder arising out of the
issuance of shares pursuant to this Settlement Agreement.
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9. GOVERNING LAW. This Settlement Agreement shall be construed and
governed in accordance with the laws of the State of Delaware without
application of conflict of law principles. Any action or proceeding relating to
this Settlement Agreement shall be brought in the courts of Delaware, or in the
United States courts located in Delaware and each of the parties irrevocably
consents to the jurisdiction and venue of such courts in any such action or
proceeding.
10. ENTIRE AGREEMENT. This Settlement Agreement contains the sole and
entire agreement, and supersedes all other prior written or oral agreements,
between the parties with respect to the subject matter of this Settlement
Agreement.
11. BINDING EFFECT. The terms and conditions of this Settlement
Agreement shall bind and inure to the benefit of the parties and their
respective successors, heirs or personal representatives and assigns.
12. AMENDMENTS. This Settlement Agreement shall not be amended, waived,
released, discharged or modified in any respect except in writing signed by the
parties against enforcement thereof shall be sought.
In WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement on the date set forth the first paragraph.
U.S. Plastic Lumber Corporation
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Bruce C. Rosetto
Vice President and General Counsel
Shareholder
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# of Shares To Be Issued:
