U S PLASTIC LUMBER CORP, DEF 14A, 1999-03-30

U S PLASTIC LUMBER CORP
DEF 14A, 1999-03-30
MISCELLANEOUS PLASTICS PRODUCTS

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(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):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] 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:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

(US PLASTIC LUMBER LOGO)

U.S. PLASTIC LUMBER CORPORATION
2300 GLADES RD., SUITE 440W
BOCA RATON, FLORIDA 33431
(561) 394-3511

April 2, 1999

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, May 5, 1999, at 2:00 P.M. (Eastern Daylight
Savings Time).

At the Annual Meeting, stockholders will be asked to elect two directors
for a term of four years; consider and vote upon proposals to approve
non-qualified stock option grants to employees and non-employee directors since
June 25, 1998; ratify and adoption of the 1999 Employee Stock Option Plan and
the 1999 Non-Employee Director Stock Option Plan; and ratify the appointment of
Arthur Andersen LLP as the Company's auditors for fiscal 1999; 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,
DATE AND SIGN YOUR PROXY CARD AND RETURN IT TO THE COMPANY IN THE ENCLOSED
ENVELOPE AS SOON AS POSSIBLE.

Sincerely,

Mark S. Alsentzer
Chairman
<PAGE> 3

(US PLASTIC LUMBER LOGO)
U.S. PLASTIC LUMBER CORPORATION
2300 GLADES RD., SUITE 440W
BOCA RATON, FLORIDA 33431
(561) 394-3511

NOTICE OF THE 1999 ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD MAY 5, 1999

To the Stockholders of U.S. Plastic Lumber Corporation:

Notice is hereby given that the 1999 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, May 5, 1999 at 2:00 p.m. to consider and
take action with respect to the following matters:

1. To elect two directors for a term of fours years, or until their
successors have been duly elected and qualified;

2. To ratify the grant of non-qualified stock options of Common Stock made
to employees and non-employee directors of the Company since June 25,
1998; and

3. To ratify the adoption of the 1999 Employee Stock Option Plan; and

4. To ratify the adoption of the 1999 Non-Employee Director Stock Option
Plan; and

5. To ratify the appointment of Arthur Andersen LLP as the Company's
auditors for the fiscal year ending December 31, 1999; and

6. 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 March 22, 1999 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 2, 1999
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
1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1999

The Board of Directors of U.S. Plastic Lumber Corporation (hereinafter
called "USPL" or the Company") solicits your proxy for use at the 1999 Annual
Meeting of Stockholders (the "Annual Meeting") to be held on May 5, 1999 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 2, 1999.

At the Annual Meeting, stockholders will be asked to: (i) elect two
directors for a term of four years, or until their successors have been duly
elected and qualified; (ii) ratify the grant of non-qualified stock options of
Common Stock to employees and non-employee directors of the Company since June
25, 1998; (iii) ratify the adoption of the 1999 Employee Stock Option Plan ;
(iv) ratify the adoption of the 1999 Non-Employee Director Stock Option Plan ;
and (v) ratify the appointment of Arthur Andersen LLP as the Company's auditors
for fiscal year ending December 31, 1999, 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 March 22, 1999 ("Record
Date") are entitled to vote at the Annual Meeting.

As of the close of business on the Record Date, 21,348,677 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.

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, 3, 4 and 5 ratifying the

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adoption of a Non-Qualified Stock grants to directors/employees and third
parties of the Company, ratifying the adoption of a Non-Qualified Stock Option
Plan for employees and ratifying the appointment of Arthur Andersen LLP as the
independent auditors of the Company for fiscal 1999.

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
have notice on or prior to March 15, 1999; (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, 3, 4 and 5 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.

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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 each officer of the Company whose salary
and bonus totaled $100,000 or more during fiscal 1998; 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 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...................................... 6,918,036(1) 35.9%
Roger Zitrin........................................ 349,517(2) 1.9%
August C. Schultes, III............................. 5,850,184(3) 31.9%
Gary J. Ziegler..................................... 6,179,100(4) 33.1%
Bruce C. Rosetto.................................... 86,196(5) *
Michael D. Schmidt.................................. 100,004(6) *
All executive officers and directors as a group
(6 persons)...................................... 7,836,637 39.2%
5% HOLDERS
Stout Partnership(7)................................ 5,720,000 30.8%
101 Jessup Rd., Thorofare, NJ 08086
Lancer Partners, L.P.(8)............................ 500,000 2.7%
200 Park Ave., Ste 3900 New York, NY 10166
Michael Lauer(8).................................... 50,000 *
200 Park Ave., Ste 3900 New York, NY 10166
Lancer Voyager Fund(8).............................. 50,000 *
200 Park Ave., Ste 3900 New York, NY 10166
Lancer Offshore, Inc.(8)............................ 511,111 2.8%
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, 68,481 shares not
presently outstanding which he has the right to acquire through conversion
of outstanding preferred stock, 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 and 320,000 options
granted to Stout Partnership.

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(2) Includes 28,147 shares which Mr. Zitrin presently has the right to acquire
through conversion of outstanding preferred stock and 7,500 share he has the
right to acquire through the exercise of options.
(3) Includes 103,684 shares which Mr. Schultes presently has the right to
acquire through conversion of outstanding preferred stock, 7,500 shares he
has the right to acquire through the exercise of options 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 and 320,000 options granted to Stout Partnership.
(4) Includes 432,600 shares which Mr. Ziegler presently has the right to acquire
through the conversion of shares of outstanding preferred stock, 7,500
shares he has the right to acquire through the exercise of options 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 and 320,000 options granted to Stout Partnership.
(5) Includes 50,000 shares Mr. Rosetto has the right to acquire through the
exercise of options and 7,196 shares he has the right to acquire through the
conversion of preferred stock.
(6) Includes 50,000 shares Mr. Schmidt has the right to acquire through the
exercise of options and 25,004 shares he has the right to acquire through
the conversion of preferred stock.
(7) 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. As reported in Schedule 13D dated March 13, 1998 filed by Stout
Partnership ("Stout"), 5,400,000 shares beneficially owned by Stout plus
320,000 options beneficially owned by Stout provide 5,720,000 shares
reported as shared voting and 5,720,000 shares with respect to shared
dispositive power. All of the shares beneficially owned by Stout are owned
by the general partnership, whose ownership is described in the Schedule
13D. Each of the individual partners of Stout Partnership have voting power
and dispositve power equal to their pro rata interest.
(8) 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.

The Beneficial Ownership Table does not include convertible debentures
which may be converted into Common Stock of the Company as such securities are
not convertible within 60 days of the record date for the Annual Meeting.

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 a four year
term, 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.

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<PAGE> 8

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 EXPIRATION
NAME AGE(1) THE COMPANY SINCE OF TERM
- ---- ------ --------------------------- -------- ----------
<S> <C> <C> <C> <C>
Gary J. Ziegler............ 51 Director 1997 2003
Louis J. Paolino........... 43 Director 1999 2003

DIRECTORS WHOSE TERMS CONTINUE

Mark S. Alsentzer.......... 43 Chairman, President, CEO 1994 2000
and Director
August Schultes III........ 52 CEO and Director 1997 2000
Roger N. Zitrin............ 50 Director 1997 2002
</TABLE>

- -------------------------

(1) Age as of 12/31/98

The principal occupation of each director of the Company and each nominee
for director is set forth below unless otherwise indicated. Unless otherwise
noted, all directors have held their present employment 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.

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 and

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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.

LOUIS J. PAOLINO, JR. Director; Mr. Paolino has served as Chairman,
President, and CEO of Eastern Environmental Services, Inc. from June 1996
through December 1998. Mr. Paolino has 16 years of experience in the
environmental industry. He built Eastern Environmental over a 30 month period
from $8 million in sales to over $400 million in sales and sold the company to
Waste Management, Inc. for $1.3 billion on December 31, 1998. Prior to that,
from 1989 through June 1996, Mr. Paolino was President of Soil Remediation of
Philadelphia, Inc., a company engaged in treating contaminated soil. From
September 1993 to June 1996, Mr. Paolino served as Vice President of U.S. A.
Waste Services, Inc. From November 1995 to January 1996, Mr. Paolino served on
the Board of Directors of Metal Management, Inc., a publicly traded company. Mr.
Paolino received a B.S. degree in Civil Engineering from Drexel University.

Set forth below is biographical information for the Company's executive
officers who are not directors or nominees for Directors:

BRUCE C. ROSETTO. Age 41, 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. 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. CWSA
was eventually sold to USA Waste Services in December 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 D. SCHMIDT. Age 50, 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

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<PAGE> 10

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 DIRECTOR.

DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors held five meetings, one of which was held
telephonically, and took numerous actions by execution of unanimous written
consents during 1998. 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 1998. The following is a description of each such committee:

The Audit Committee consisted of Messrs. Moody and Ziegler. It held one
meeting during 1998. 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. Blosser and Schultes. It held
one meeting during 1998. Its function is to select candidates for election to
the position of director and make recommendations to the Board regarding
candidates. Any stockholder wishing to propose a nominee should submit a
recommendation in writing to the Company's Secretary, indicating the nominee's
qualifications and other relevant biographical information and providing
confirmation of the nominee's consent to serve as a director.

The Compensation Committee consisted of Messrs. Schultes and Ziegler. The
Compensation Committee held two meetings during 1998. 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, options
and benefits under any existing and future compensation plans. Neither Mr.
Ziegler nor Mr. Schultes is or has ever been an officer or employee of the
Company or otherwise received compensation from the Company other than as a
director.

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 un-registered Common Stock for each meeting attended and 60 shares of
un-registered Common Stock for each Committee meeting attended not held in
conjunction with a regular board meeting. On December 9, 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 5,000
shares of the common stock at an exercise price of $3.50 per share. 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

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<PAGE> 11

committees thereof. The Company is also seeking shareholder approval for a
non-employee director stock option plan for future awards. See Proposal 3.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consisted of August C. Schultes, III and Gary J.
Ziegler. Mark Alsentzer, the Company CEO, 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, other than Mr. Alsentzer. In 1997, 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"

COMPENSATION COMMITTEE REPORT

The Compensation Committee's function is to review and make recommendations
to the Board of Directors with respect to the 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 Compensation
Committee consists of a minimum of two disinterested directors.

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 seeks 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.

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

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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 Common Stock. The size of the option award
was directly linked to specific performance goals, set by the Board, 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

The Company continues to evaluate its compensation plans to determine
whether they comply with Section 162 (m) of the Internal Revenue Code of 1986,
as amended. It is the Company's intent to attempt to comply in that amounts paid
pursuant to the Company's compensation plans will generally be deductible
compensation expense if the Company is able to comply. 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

10
<PAGE> 13

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. It also
includes compensation to other members of management of the parent Company
during the past fiscal year.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION PAYOUTS
---------------------------------------- --------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTION/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) SARs(#) ($)
--------------------------- ---- -------- ----- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mark Alsentzer, 1998 $150,000 -0- -0- $36,000(3)
Chairman, CEO 1997 $150,000 -0- -0- 955,000(2) $36,000
and President 1996 $107,800 -0- -0- -0-
---

Bruce C. Rosetto 1998 $100,000 -0- -0- 75,000 -0-
Vice President and 1997 $ 89,000 -0- -0- -0- -0-
General Counsel 1996(4) -0-

Michael D. Schmidt, 1998 $100,000 -0- -0- 75,000 -0-
Chief Financial Officer 1997 $ 9,000 -0- -0- -0-
---
1996(4)
</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 options 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 options 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 which
options are exercisable 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. The
term of all options granted to Mr. Alsentzer is ten years.
(3) Represents annual living expenses for maintaining a second home.
(4) Not employed by the Company in 1996.

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

11
<PAGE> 14

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 options 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
payment equal to two years base salary as defined in the agreement and all
unissued options for which the conditions have not been otherwise met shall be
issued to Mr. Alsentzer without regard to performance of the conditions for
issuance. 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
which has commenced 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 option has a term of ten years unless Mr. Rosetto is
terminated in which event he must exercise the vested portion of the options
within 30 days of termination. 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's
contract also contains 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 which
commenced December 1, 1997. He was also granted an option to purchase 75,000
shares of common stock at $3.50 per share of which 25,000 vested immediately,
25,000 on June 1, 1999 and 25,000 on June 1, 2000. The option has a term of ten
years unless Mr. Schmidt is terminated in which event he must exercise such
vested portion of the option with 30 days of termination. Mr. Schmidt also
receives $5,400 per year as an auto allowance.

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 and other executive officers are
reported in the Summary Compensation Table. In addition, the Board of Directors
has awarded non-qualified options to acquire shares of the Common Stock to other
managers. The Board of

12
<PAGE> 15

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. The Company is seeking adoption of option plans
and approval of option grants pursuant to the proposals set forth in Sections 2,
3, and 4 of this Proxy Statement.

OPTIONS/WARRANTS AWARDED DURING 1998

The following table sets forth as to the executive officer of the Company
certain information with respect to option/warrant awards during 1998:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
# OF SECURITIES AWARDED TO EXERCISE
UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION
NAME OPTIONS AWARDED FISCAL YEAR SHARE DATE
- ---- --------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Michael D. Schmidt............... 25,000 3.9% $3.50 2008
</TABLE>

The following table sets forth information regarding the option values of
options held by the Company's Chief Executive Officer and other executive
officers at a fiscal year end.

AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARs AT OPTIONS/SARs AT
ACQUIRED VALUE FISCAL YEAR END FISCAL YEAR END
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- -------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mark S. Alsentzer.............. 0 0 905,000/50,000 $2,284,687.50/0
Mark S. Alsentzer.............. 0 0 320,000(2)/0 $1,100,000/0
Bruce C. Rosetto............... 0 0 25,000/0 $54,687/0
Michael D. Schmidt............. 0 0 25,000/0 $54,687/0
</TABLE>

- -------------------------

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 December 31, 1996,

13
<PAGE> 16

$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 has attempted to settle this matter with ECP, but to date it has not
been settled.

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 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 leases a manufacturing facility from entities controlled by
individuals who are stockholders. The Company 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, manager of the
Company's Wisconsin facility, is a partner in Plastic Properties, LLC.
Commencing on January 28, 1999, the Company began leasing approximately 260,000
sq. ft. in Chicago as part of the Eaglebrook acquisition for $39,181 per month.
Andrew Stephens, appointed as the President of U.S. Plastic Lumber Ltd., a
subsidiary of the Company immediately following the acquisition of the
Eaglebrook companies, is a principal of the partnership that owns the Chicago
facility.

Schultes, Inc., has provided a $2,500,000 credit line to the Company at
prime rate plus 1%. The Company as of December 31, 1998 owed no principal on the
unsecured line of credit from A. C. Schultes, Inc., but did owe interest equal
to $171,849. August C.

14
<PAGE> 17

Schultes III is a director of the Company and the Chairman and CEO of Schultes,
Inc. and a partner in the Stout Partnership.

On February 2, 1999, the Stout Partnership made a loan to the Company, on
an unsecured basis, in the amount of $5,000,000. The loan bears interest at a
rate of 10% and matures in 18 months. 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.

On February 25, 1999, Schultes, Inc. loaned $1,500,000 to the Company, on
an unsecured basis, and the loan bears interest at a rate of prime rate plus 1%
and matures in 12 months. August C. Schultes, III, a director of the Company, is
a principal of Schultes, Inc.

PROPOSAL 2 -- APPROVAL OF THE NON-QUALIFIED
STOCK OPTION GRANTS TO EMPLOYEES AND DIRECTORS
FROM JUNE 25, 1998 TO DECEMBER 31, 1998

GENERAL

The Board of Directors of the Company approved the grant of non-qualified
stock options to purchase shares of Common Stock to directors, executive
officers, and key employees of the Company, subject to approval by the
stockholders of the Company (individually, an "Award"). The purpose of each
Award is to provide additional incentive to key employees of the Company 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 believes that in
order to attract and maintain certain employees, it must offer option grants as
part of the compensation packages of certain employees.

The Company is seeking stockholder approval of these awards to directors,
executive officers and key management 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 an award of option
is ratified by the stockholders at the next annual meeting of stockholders. The
Company is only seeking stockholder approval on option awards granted subsequent
to the Company becoming a NASDAQ listed company, being June 25, 1998, as
required by NASD rules. Currently, there are 9 directors and employees who
received such awards during the time period involved.

Set forth below is a summary of the primary provisions of each 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.

EXERCISE PRICE OF OPTIONS/PAYMENT OF EXERCISE PRICE

The exercise price for options issued to employees and directors is equal
to the fair market value of the Common Stock on the date of grant.

15
<PAGE> 18

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, delivery of a promissory note, or a combination
thereof.

EXERCISABILITY AND EXPIRATION OF OPTIONS

Options granted pursuant to each Award are immediately exercisable
following stockholder approval, subject to the individual vesting schedules as
may have been negotiated with each Award. Options awarded under the Award will
generally expire ten years after the date they are awarded except as provided
therein. All unexercised vested options terminate thirty days after the optionee
ceases to be an employee of the Company or 90 days if the optionee ceases to be
a non-employee director (except by death, disability or specific contract
arrangement in which event 12 months to exercise is provided), but not later
than ten years after the date of option award.

NONTRANSFERABILITY OF OPTIONS

No option awarded to an employee 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/AMENDMENTS

Each 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 Committee in event of a declaration of stock dividend, stock
split, merger, consolidation, split up, combination, recapitalization,
conversion or similar circumstances. No award may be amended without the consent
of the optionee.

16
<PAGE> 19

AWARDS GRANTED TO EMPLOYEES

The following table sets for the information regarding the options awarded
to any employee of the Company since June 25, 1998 through December 31, 1998,
pursuant to an Award.

EMPLOYEE/DIRECTOR AWARDS(2)

<TABLE>
<CAPTION>
DOLLAR NUMBER OF
NAME AND POSITION VALUE($)(1) UNITS
- ----------------- ----------- ---------
<S> <C> <C>
Robb Davis, Vice President of Project Dev. Clean Earth,
Inc................................................... $ 11,875 10,000
Robert Fixter, Vice President of Operations S & W
Waste................................................. $ 1,718.75 2,500
James Blosser, former Director.......................... $ 10,937.50 5,000
F. John Long, Vice President Sales & Marketing U.S.
Plastic Lumber Ltd.................................... $ 87,500 40,000
Michael D. Schmidt, CFO................................. $ 54,687.50 25,000
Lester E. Moody, former Director........................ $ 10,937.50 5,000
August C. Schultes, III, Director....................... $ 10,837.50 5,000
Gary J. Ziegler, Director............................... $ 10,937.50 5,000
Roger N. Zitrin, Director............................... $ 10,937.50 5,000
Executive officers as a group(1)........................ $ 54,687.50 25,000
Directors, who are not employees, as a group(3)......... $ 32,812.50 15,000
Former officers and directors as a group(3)............. $ 76,562.50 35,000
All other employees as a group(3)....................... $101,093.75 52,500
</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 $5.6875 on December 31,1998.
(2) All of the above awards have a term of ten years. All of the above options
vested immediately with the exception of F. John Long, whose options vest in
full on February 10, 2000 in the event he meets certain performance
criteria, and Michael D. Schmidt, whose options fully vest on June 1, 2000.

The market value of a share of common stock on February 26, 1999 was $8.00
per share.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2.

SEE FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTION GRANTS TO EMPLOYEES AND
DIRECTORS AT THE END OF PROPOSAL 4 FOR A DISCUSSION OF THE TAX CONSEQUENCES AND
THE AWARDS.

17
<PAGE> 20

PROPOSAL 3 -- APPROVAL OF THE 1999
EMPLOYEE STOCK OPTION PLAN

The 1999 Employee Stock Option Plan (the "Plan") was adopted by the Board
of Directors of the Company effective as of March 10, 1999 (the "Effective
Date"), subject to stockholder approval at the Annual Meeting, to provide for
the grant of options to purchase shares of Common Stock to employees and
independent contractors of the Company and its subsidiaries.

The Board of Directors believes that stock options are important to attract
and retain officers, other key employees and key independent contractors, by
facilitating their acquisition of and equity interest in the Company. The
acquisition and holding of an equity interest by such persons in U.S. Plastic
Lumber Corp. aligns their interests with those of the stockholders of the
Company.

The adoption of the Plan is subject to stockholder approval at the Annual
Meeting. By adopting this Plan, it will allow the Company to (i) obtain a tax
deduction for the full amount allowable with respect to the exercise of options
granted under the Plan and will provide the Company with the flexibility to
grant options qualifying as incentive stock options for tax purposes ("incentive
options"), although the Company reserves the option to grant non-qualified or
incentive options, (ii) satisfy Section 162 (m) of the Internal Revenue Code of
1986, as amended regarding the deductibility of compensation as an expense, and
(iii) to satisfy the requirements of NASDAQ rules for stock option plans to
directors, officers, and key employees.

The principal provisions of the Plan are summarized below. Such summary
does not, however, purport to be complete and is qualified in its entirety by
the terms of the Plan. A copy the Plan is attached hereto as Appendix B and is
incorporated herein by reference.

DESCRIPTION OF THE PLAN

The Plan provides that options to purchase common stock of the Company may
be granted to employees and independent contractors of the Company and any of
its subsidiaries which is at least a majority owned. Non-employee directors of
The Company are not eligible to receive options under the Plan. A total of
1,800,000 shares of Common Stock will be reserved for issuance to employees and
contractors under the Plan, representing approximately 8.4 percent of the
outstanding shares of Common Stock on March 22, 1999. The Plan shall remain in
effect until all options awarded under the Plan have been awarded, provided that
no options may be granted under the Plan more than 10 years after the date the
Plan is adopted by the Company.

The Plan is administered by the Compensation Committee (the "Committee"),
which consists of not less than two non-employee directors appointed by the
Board of Directors. The Committee selects the employees and independent
contractors of the Company and its subsidiaries to whom options will be granted.
Under the Plan, the Company may grant options to any employee during any
calendar year equal to 95% of the shares of Common Stock reserved for issuance
under the Plan.

Options granted under the Plan may be incentive stock options as defined in
Section 422 of the Internal Revenue Code of 1996, as amended ("Incentive Stock
Options"), or options not intended to so qualify ("Non-Qualified Stock
Options"). Unless

18
<PAGE> 21

the context otherwise requires, the term "Option" includes both Incentive Stock
options and Non-Qualified Stock Options.

Options may be granted under the Plan to any employee of USPL, a Subsidiary
or any other entity of which on the relevant date at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions ("Voting Securities") are at the time owned directly or
indirectly by USPL or any Subsidiary (an "Affiliate"), including any such
employee who is an officer or director of USPL, a Subsidiary or in Affiliate, as
the Committee shall determine and designate from time to time prior to
expiration or termination of the Plan.

Generally, each Option shall become exercisable with respect to 33 1/3
percent of the total number of shares subject to the Option one year after the
date of its grant (the "Vesting Date") and with respect to an additional 33 1/3
percent of the number of such shares vesting on each of the next two succeeding
anniversaries of the Vesting Date; provided, however, that the Committee may in
its discretion provide that an Option may be exercised, in whole or in part, at
any time from time to time, over a period commencing on or after the date of
grant and ending upon the expiration or termination of the Option, as the
Committee shall determine and set forth in the Option Agreement relating to such
Option.

The exercise price of Options granted under the Plan may not be less than
100% of the fair market value of the Common Stock on the date of grant (or 110%
in the case of incentive stock option granted to an optionee beneficially owning
more than 10 percent of the outstanding Common Stock). The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the maximum number of
shares available for purchase under the Option the time of exercise. The maximum
option term is 10 years (or five years in the case of incentive stock option
granted to an optionee beneficially owning more than 10 percent of the
outstanding Common Stock) from the date the option is granted. Options vest as
determined by the Committee or as provided in the particular option agreement.

Except as otherwise provided in the agreement evidencing the grant, upon
the occurrence of a change in control of the Company (as defined in the Plan)
outstanding options will be, immediately exercisable in full. Under the Plan, a
change in control is deemed to occur (i) if any person, other than the Stout
Partnership, acquires beneficial ownership of more than 40 percent of the issued
and outstanding shares of Common Stock or (ii) has the power (whether as result
of ownership of capital stock, by contract or laws) or ability to elect
directors who, at the time of such election, constituting the majority of
directors of the Company.

The maximum aggregate fair market value of the shares of Common Stock
(determined when the Incentive Stock Option is granted) with respect to which
Incentive Stock Options are first exercisable by an employee in any calendar
year cannot exceed $100,000. In addition, Incentive Stock Option may be granted
to an employee owning directly or indirectly stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, unless the exercise price is set at not less than 110 percent of the
fair market value of the shares subject to such Incentive Stock Option on the
date of grant and such Incentive Stock Option expires not later than five years
from the date of grant. Awards of Non-Qualified Stock Options are not subject to
these special limitations.

19
<PAGE> 22

Incentive Stock Options granted under the Plan are not assignable or
transferable, otherwise than by will or by the laws of descent and distribution.
Except in the event of death or disability, all Incentive Stock Options granted
under the Plan are exercisable, during the lifetime of an optionee, and are
exercisable only by such optionee.

Non-Qualified Stock Options granted under the Plan may be transferred only
by gift or qualified domestic relations order to a family member (as defined
below) of the officer or employee of Company. The term "family member" includes
any child, stepchild, grandchild, parent, step parent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee's household (other than a tenant
or employee), a trust which these persons have more than 50 percent of the
beneficial interest, a foundation which these persons (or the employee) control
management of assets, and any other entity in which these persons (or the
employee) own more than 50 percent of the voting interest.

Payment for shares of Common Stock purchased under options granted pursuant
to the Plan may generally be made in cash or in shares of Common Stock or by
delivery of a promissory note, and such payments may be accomplished through
certain "cashless" exercise features involving a licensed stockbroker or a
combination of the foregoing.

No awards have been made under this Plan as of the date hereof.

If the outstanding shares of Common Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or securities
of the Company, by reason of merger in which it is not the surviving
corporation, consolidation, reorganization, recapitalization, reclassification,
stock split up, combination of shares, exchange of shares, stock dividend or
other distribution payable in capital stock, or other increase or decrease in
such shares without receipt of consideration by the Company, an appropriate and
proportionate adjustment will be made in the number and kinds of shares subject
to the Plan, and in the number, kinds and per-share exercise price of shares
subject to outstanding options granted under the Plan. Any such adjustment in
the outstanding option, however, will be made without a change in the total
price applicable to the unexercised portion of the option, but with a
corresponding adjustment in the per-share option price.

Upon any dissolution or liquidation of the Company, all outstanding options
will terminate and all outstanding options shall be exercisable in full during
such period immediately prior to the occurrence of such event and during such
reasonable period, before or after the dissolution or liquidation, as the Board
of Directors in its discretion shall determine.

20
<PAGE> 23

corporation (a "Spin-off Corporation") of USPL ("Spin-off Shares"), to the
extent consistent with Treasury Regulation Section 1.425-1(a)(6) or the
corresponding provision of any subsequent regulation, each outstanding Option
shall thereafter additionally pertain to the number of Spin-off Shares that
would have been received in such distribution by a shareholder of USPL who own a
number of shares of Common Stock equal to the number of shares that are subject
to the Option at the time of such distribution, the aggregate Option Price of
the Option shall be allocated between the Spin-off Shares and the Common Stock
in proportion to the relative fair market values of a Spin-off Share and a share
of Common Stock immediately after the distribution of Spin-off Shares, and the
Option shall be exercisable separately as to the shares of Common Stock and
Spin-off Shares covered thereby.

The Board of Directors may amend the Plan with respect to shares of Common
Stock as to which options have not been granted. However, the stockholders of
the Company must approve any amendment that would (i) change the requirements as
to eligibility to receive incentive stock options; (ii) increase the maximum
number of shares in the aggregate for which incentive stock options may be
granted (except for adjustments upon changes in Capitalization); or (iii)
otherwise cause the Plan to fail to satisfy the requirements of Section 162 (m)
of the Internal Revenue Code relating to limitations on the deduction of amounts
not constituting qualified performance related compensation.

The Board of Directors at any time may terminate or suspend the Plan.
Unless terminated or suspended by the Board, the Plan shall remain in effect
until all options awarded under the Plan have been awarded, provided that no
options may be granted under the Plan more than 10 years after the date the Plan
is adopted by the Company. No termination, suspension or amendment of the Plan
may, without the consent of the person to whom adoption has been granted,
adversely affect the rights of the holder of the option.

The market value of a share of common stock on March 22, 1999 was $8 per
share.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDER VOTE "FOR" APPROVAL
OF PROPOSAL 3.

SEE FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTION GRANT TO EMPLOYEES AT
THE END OF PROPOSAL 4 FOR INFORMATION ON TAX CONSEQUENCES OF GRANTS TO BE MADE
PURSUANT TO THIS PLAN.

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PROPOSAL 4 -- APPROVAL OF THE 1999 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN TO NON-EMPLOYEE DIRECTORS

The 1999 Non-Employee Director Stock Option Plan (the " Director Plan") was
adopted by the Board of Directors of the Company effective as of March 10, 1999
(the "Effective Date"), subject to stockholder approval at the Annual Meeting,
to provide for the grant of options to purchase shares of Common Stock to
non-employee directors of the Company.

The purpose of the Director Plan is to promote the long term success of the
Company by creating a long term mutuality of interests between the non-employee
directors and the stockholders, and to provide an incentive to attract highly
qualified individuals to serve on the Board of Directors. The Board of Directors
believes that the acquisition and holding of an equity interest by such persons
in the Company aligns their interests with those of the stockholders of the
Company.

The adoption of the Director Plan is subject to stockholder approval at the
Annual Meeting. The Company is seeking stockholder approval of the Director Plan
to satisfy a NASDAQ Stock Market requirement that requires companies whose
shares are reported on the Nasdaq Stock Market to obtain shareholder approval of
stock plans.

The principal provisions of the Director Plan are summarized below. Such
summary does not, however, purport to be complete and is qualified in its
entirety by the terms of the Plan. A copy the director plan is attached hereto
as Appendix C and is incorporated herein by reference.

DESCRIPTION OF THE DIRECTOR PLAN

The Director Plan provides that options may be granted to non-employee
directors of the Company. A total of 150,000 shares of Common Stock will be
reserved for issuance to non-employee directors under the Director Plan,
representing approximately .007 percent of the outstanding shares of Common
Stock on March 22, 1999. The Director Plan shall remain in effect until all
options awarded under the Director Plan have been exercised, provided that no
options may be granted under the Director Plan more than 10 years from the
earlier of the date the Director Plan is adopted by the Company or initially
approved by the shareholders of the Company.

The Director Plan is administered by the Compensation Committee (the
"Committee"), which consists of not less than two non-employee directors
appointed by the Board of Directors. Such Committee shall select the
participants in the Director Plan and determine the terms of grants made
pursuant to the Directors Plan.

Generally, options granted to the non-employee directors shall vest
immediately provided, however, that the Committee may in its discretion provide
that an Option may be exercised, in whole or in part, at any time from time to
time, over a period commencing on or after the date of grant and ending upon the
expiration or termination of the Option, as the Committee shall determine and
set forth in the Option Agreement relating to such Option. The exercise price of
options granted under the Director Plan may not be less than 100% of the fair
market value of the Common Stock on the date of grant. The maximum option term
is 10 years from the date the option is granted. Options vest as determined by
the Committee or as provided in the particular option agreement.

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<PAGE> 25

The minimum number of shares of Stock with respect to which an Option may
be exercised, in whole or in part, at any time shall be the lesser of 100 shares
or the maximum number of shares available for purchase under the Option at the
time of exercise. All non-employee directors are eligible to receive options
pursuant to this Director Plan.

Except as otherwise mentioned in the agreement evidencing the grant, upon
the occurrence of a change in control of the Company (as defined in the Director
Plan) outstanding options will be, immediately exercisable in full. Under the
Director Plan, a change in control is deemed to occur (i)) if any person, other
than the Stout Partnership, acquires beneficial ownership of more than 40
percent of the issued and outstanding shares of Common Stock or (ii) has the
power (whether as result of ownership of capital stock, by contract or laws) or
ability to elect directors who, at the time of such election, constituting the
majority of directors of the Company.

Non-Qualified Stock Options granted under the Director Plan may be
transferred only by gift or qualified domestic relations order to a family
member (as defined below) of a director of the Company. The term "family member"
includes any child, stepchild, grandchild, parent, step parent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the employee's household (other than
a tenant or employee), a trust which these persons have more than 50 percent of
the beneficial interest, a foundation which these persons (or the employee)
control management of assets, and any other entity in which these persons (or
the employee) own more than 50 percent of the voting interest.

No awards have been made pursuant to this Director Plan as of the date
hereof.

Payment for shares of Common Stock purchased under options granted pursuant
to the Director Plan may generally be made in cash or in shares of Common Stock
or by delivery of a promissory note, and such payments may be accomplished
through certain "cashless" exercise features involving a licensed stockbroker or
combination of the foregoing.

If a non-employee director's service with the Company terminates by reason
of death or permanent and total disability or change of ownership (as defined in
the Director Plan), options held by such non-employee director shall become
immediately exercisable and may be exercised for a period of one year after the
date of such termination (but not later than the date the option would otherwise
expire). If a non-employee director's service with the Company terminates for
any other reason, options held by such non-employee director shall terminate
within 90 days from the date of termination, except as otherwise may be
determined by the Committee or provided in the particular option agreement.

If the outstanding shares of Common Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or securities
of the Company, by reason of merger in which the Company is not the survivor,
consolidation, reorganization, recapitalization, reclassification, stock split
up, combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or decrease in such
shares without receipt of consideration by the Company, an appropriate and
proportionate adjustment will be made in the number and kinds of shares subject
to the Director Plan, and in the number, kinds and per-share exercise price of
shares subject to outstanding options granted under the Director Plan. Any such

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<PAGE> 26

adjustment in an outstanding option, however, will be made without a change in
the total price applicable to the unexercised portion of the option, but with a
corresponding adjustment in the per-share option price.

Upon any dissolution or liquidation of the Company, all outstanding options
will terminate and all outstanding options shall be exercisable in full during
such period immediately prior to the occurrence of such event and during such
reasonable period as the Board of Directors in its discretion shall determine.

Upon a reorganization, merger or consolidation in which the Company is not
the surviving corporation, or upon the sale of all or substantially all of the
assets of the Company to another corporation, or upon any transaction approved
by the Board of Directors which results in any person or entity owning more than
40 percent of the total combined voting power of all classes of stock of the
Company, outstanding options will become fully vested and provision will be made
in connection with such transaction for the continuation of the Director Plan
and the assumption of the options or for the substitution thereof of new options
covering the stock of a successor corporation or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of Shares and the per
share exercise price. If there is a distribution payable in the capital stock of
a subsidiary corporation (a "Spin-off Corporation") of USPL ("Spin-off Shares"),
to the extent consistent with Treasury Regulation Section 1.425-1(a)(6) or the
corresponding provision of any subsequent regulation, each outstanding Option
shall thereafter additionally pertain to the number of Spin-off Shares that
would have been received in such distribution by a shareholder of USPL who owns
a number of shares of Common Stock equal to the number of shares that are
subject to the Option at the time of such distribution, the aggregate Option
Price of the Option shall be allocated between the Spin-off Shares and the
Common Stock in proportion to the relative fair market values of a Spin-off
Share and a share of Common Stock immediately after the distribution of Spin-
off Shares, and the Option shall be exercisable separately as to the shares of
Common Stock and Spin-off Shares covered thereby.

The Board of Directors may amend the Director Plan with respect to shares
of Common Stock as to which options have not been granted. However, the
stockholders of the Company must approve any amendment that would (i) change the
requirements as to eligibility to receive options; (ii) increase the maximum
number of shares in the aggregate for which options may be granted (except for
adjustments upon changes in Capitalization); or (iii) otherwise cause the
Director Plan to fail to satisfy the requirements of Section 162 (m) of the
Internal Revenue Code relating to limitations on the deduction of amounts not
constituting qualified performance related compensation.

The Board of Directors at any time may terminate or suspend the Director
Plan. The Director Plan shall remain in effect until all options awarded under
the Plan have been exercised, provided that no options may be granted under the
Director Plan more than 10 years from the earlier of the date the Director Plan
is adopted by the Company or initially approved by the shareholders of the
Company. No termination, suspension or amendment of the Director Plan may,
without the consent of the person to whom adoption has been granted, adversely
affect the rights of the holder of the option.

The market value of a share of common stock on March 22, 1999 was $8.00 per
share.

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<PAGE> 27

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL
OF PROPOSAL 4.

FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK OPTION GRANTS TO EMPLOYEES, THE
PLAN AND THE NON-EMPLOYEE DIRECTOR PLAN

THE FOLLOWING INFORMATION IS NOT INTENDED TO BE A COMPLETE DISCUSSION OF
THE FEDERAL INCOME TAX CONSEQUENCES OF EMPLOYEE GRANTS, PARTICIPATION IN THE
PLAN AND THE NON-EMPLOYEE DIRECTOR PLAN AND IS 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.

INCENTIVE STOCK OPTIONS

Generally, under the Code, an optionee will not realize taxable income by
reason of the grant or the exercise of an Incentive Stock Option (see, however,
discussion of Alternative Minimum Tax below) granted pursuant to the Plan. If an
optionee exercises an Incentive Stock Option and does not dispose of the shares
until the later of (i) two years from the date the option was granted and (ii)
one year from the date of exercise, the entire gain, if any, realized upon
disposition of such shares will be taxable to the optionee as long-term capital
gain, and the Company will not be entitled to any deduction. If an optionee
disposes of the shares within the period of two years from the date of grant or
one year from the date of exercise (a "disqualifying disposition"), the optionee
generally will realize ordinary income in the year of disposition and the
Company will receive a corresponding deduction, in an amount equal to the excess
of (1) the lesser of (a) the amount, if any, realized on the disposition and (b)
the fair market value of the shares on the date the option was exercised over
(2) the option price. Any additional gain realized on the disposition will be
long-term or short-term capital gain and any loss will be long-term or
short-term capital loss. The optionee will be considered to have disposed of a
share if he sells, exchanges, makes a gift of or transfers legal title to the
share (except transfers, among others, by pledge, on death or to a spouse). If
the disposition is by sale or exchange, the optionee's tax basis will equal the
amount paid for the share plus any ordinary income realized as a result of the
disqualifying disposition.

The exercise of an Incentive Stock Option may subject the optionee to the
alternative minimum tax. The amount by which the fair market value of the shares
purchased at the time of the exercise exceeds the option exercise price is an
adjustment for purposes of computing the so-called alternative minimum tax. In
the event of a disqualifying disposition of the shares in the same taxable year
as exercise of the Incentive Stock Option, no adjustment is then required for
purposes of the alternative minimum tax, but regular income tax, as described
above, may result from such disqualifying disposition.

An optionee who surrenders shares as payment of the exercise price of his
Incentive Stock Option generally will not recognize gain or loss on his
surrender of such shares. The surrender of shares previously acquired upon
exercise of an Incentive Stock Option in payment of the exercise price of
another Incentive Stock Option, is, however, a "disposition" of such stock. If
the incentive stock option holding period requirements

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<PAGE> 28

described above have not been satisfied with respect to such stock, such
disposition will be a disqualifying disposition that may cause the optionee to
recognize ordinary income as discussed above.

Under the Code, all of the shares received by an optionee upon exercise of
an Incentive Stock Option by surrendering shares will be subject to the
incentive stock option holding period requirements. Of those shares, a number of
shares (the "Exchange Shares") equal to the number of shares surrendered by the
optionee will have the same tax basis for capital gains purposes (increased by
any ordinary income recognized as a result of a disqualifying disposition of the
surrendered shares if they were incentive stock option shares) and the same
capital gains holding period as the shares surrendered. For purposes of
determining ordinary income upon a subsequent disqualifying disposition of the
Exchange Shares, the amount paid for such shares will be deemed to be the fair
market value of the shares surrendered. The balance of the shares received by
the optionee will have a tax basis (and a deemed purchase price) of zero and a
capital gains holding period beginning on the date of exercise. The Incentive
Stock Option holding period for all shares will be the same as if the option had
been exercised for cash.

NON-QUALIFIED STOCK OPTIONS

Generally, there will be no federal income tax consequences to either the
optionee or the Company on the grant of Non-Qualified Stock Options pursuant to
the Employee Grants, the Plan or the Non-Employee Director Plan. 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)) in an amount equal to such excess,
provided that the Company complies with applicable reporting rules.

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. Capital losses are
deductible only to the extent of capital gains for the year plus $3,000 for
individuals.

In the event of a permitted transfer by gift of a Non-Qualified Stock
Option, the transferor will remain taxable on the ordinary income realized as
and when such Non-Qualified Stock Option is exercised by the transferee of the
Non-Qualified Stock Option. A permitted transfer by gift of a non-Qualified
Stock Option may result in federal transfer taxes to the transferor at such time
as the option is transferred, as well as such later time or times as the
Non-Qualified Stock Option vests, if not fully vested on the date of the initial
transfer.

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. See "Incentive Stock Options." 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.

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<PAGE> 29

LIMITATION ON THE COMPANY'S DEDUCTION

Section 162(m) of the Code will generally limit to $1,000,000 the Company's
federal income tax deduction for compensation paid in any year to its chief
executive officer and its four highest paid executive officers, to the extent
that such compensation is not "performance based." Under U.S. Department of
Treasury regulations, a stock option will, in general, qualify as "performance
based" compensation if it (i) has an exercise price of not less than the fair
market value of the underlying stock on the date of grant, (ii) is granted under
a plan that limits the number of shares for which options may be granted to an
employee during a specified period, which plan is approved by a majority of the
stockholders entitled to vote thereon, and (iii) is granted and administered by
a compensation committee consisting solely of at least two outside directors (as
defined in Section 162(m)). If a stock option granted to an executive referred
to above is not "performance based", the amount that would otherwise be
deductible by the Company with respect of such stock option will be disallowed
to the extent that the executive's aggregate non-performance based compensation
paid in the relevant year exceeds $1,000,000.

PROPOSAL 5 -- RATIFICATION OF APPOINTMENT OF AUDITORS, CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The engagement of the former independent accountant, Kuntz Lesher Siegrist
& Martini LLP was terminated by the Company on February 26, 1998 solely due to
the fact that the Board of Directors of the Company had made a determination
that based upon its current stage of development, the best interest of the
Company would be served by engaging a "Big Six" independent accounting firm. The
principal accountant's report on the financial statements for either of the past
two years did not contain an adverse opinion or a disclaimer of opinion, nor was
qualified nor modified as to uncertainty, audit scope, or accounting principles.
The decision to change accountants was approved by the Board of Directors of the
Company.

During the registrant's two most recent fiscal years preceding such
dismissal there were no matters of disagreements between the Company and its
former independent accountants. The former independent accountants have not
advised the registrant during the two most recent fiscal years preceding of any
of the following events:

(a) that the internal controls necessary for the registrant to develop
reliable financial statements do not exist;

(b) that it can no longer rely on management's representations or that
it is unwilling to be associated with the financial statements prepared by
management;

(c) that it needs to significantly expand the scope of its audit or
that information has come to its attention which may materially impact the
fairness or reliability of a previously issued audit report or financial
statements issued or to be issued covering the fiscal period subsequent to
the date of the most recent financial statements covered by an audit report
or that it can no longer rely on management's representations or that it is
unwilling to be associated with the financial statements prepared by
management; or that due to the accountant's dismissal, it did not expand
the scope of its audit or conduct such further investigation; or

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<PAGE> 30

(d) that there have been any issues that have not been resolved to the
satisfaction of the former independent accountant or that would otherwise
affect its ability to render an unqualified audit report.

The Company engaged the firm of Arthur Andersen LLP as its new independent
accountants to conduct the 1997 audit. Arthur Andersen was retained by the
Company once again to audit its 1998 financial condition. This action has been
approved by the Board of Directors of the Company. The newly engaged accountants
have not been consulted regarding the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the registrant's financial statements; or any
matter that was either the subject of a disagreement or a reportable event.

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 1999. Arthur Andersen has served as the
Company's auditors since fiscal 1997. Services provided by Arthur Andersen to
the Company in fiscal 1998 included the examination of the Company's
consolidated financial statements for 1997 and 1998, limited reviews of
quarterly reports, services related to filings with the Securities and Exchange
Commission and consultation on various financial and tax related matters.

The Board of Directors has invited a representative from Arthur Andersen
LLP to attend the Annual Meeting on May 5, 1999. This representative will be
available to make a statement if he or she so desires and will be available to
answer questions from stockholders.

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, 1999.

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 filed the requisite Initial
Statement of Beneficial Ownership on Form 3 several days late.

STOCKHOLDER PROPOSALS

Pursuant to the proxy rules promulgated under the Securities and Exchange
Act of 1934, as amended, (the "Exchange Act"), the deadline for providing the
Company timely notice of any stockholder proposal to be submitted outside of the
Rule 14a-8 process for

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consideration at the Company's Annual Meeting to be held in 2000 (the "2000
Annual Meeting") will be February 17, 2000. As to all such matters which the
Company does not have notice on or prior to February 17, 2000, discretionary
authority shall be granted to the persons designated in the Company's proxy
related to the Meeting to vote on such proposal. This change in procedure does
not affect the Rule 14a-8 requirements applicable to inclusion of stockholder
proposal in the Company's proxy materials related to the Meeting. A stockholder
proposal must be submitted to the Company at its offices located at 2300 Glades
Road, Suite 440W, Boca Raton, FL, 33431 by December 27, 1999 to receive
consideration for inclusion in the Company's 2000 proxy materials. Any such
proposal must also comply with the proxy rules under the Exchange Act, including
Rule 14a-8.

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 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, or electronic mail 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.

ANNUAL REPORT

This Proxy Statement is accompanied by the Annual Report to Stockholders on
Form 10-KSB filed with the SEC for the year ended December 31, 1998 (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 ANOTHER COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE,
EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST TO:

U.S. Plastic Lumber Corporation
Attn: Bruce C. Rosetto
2300 Glades Rd. Suite 440W
Boca Raton, FL. 33431

By Order of the Board of Directors,

Bruce C. Rosetto, Corporate Secretary

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APPENDIX A
NON-QUALIFIED STOCK OPTION GRANT

To:
- --------------------------------------------------------------------------------
Address

Date of Grant:

WHEREAS, (the "Optionee") is an employee[director or other] of U.S.
Plastic Lumber Corp., a Nevada Corporation, or any of it subsidiary companies
(the "Company");

WHEREAS, the execution of a Non-Qualified Stock Option Agreement in the
form hereof has been duly authorized by a resolution of the Board of Directors
(the "Board") of the Company duly adopted on March 10, 1999; and

WHEREAS, the Option granted hereunder is subject to shareholder approval;

NOW, THEREFORE, pursuant to the terms hereof, the Company hereby grants to
the Optionee an Option (the "Option") to purchase shares of the Company's
non-registered Common Stock, par value $0.0001 per share ("Common Shares"), at
the price of ($ ) per share (the "Exercise Price"), and agrees to
cause certificates for any Common Shares purchased hereunder to be delivered to
the Optionee upon full payment of the Exercise Price, subject to the applicable
terms and conditions hereinafter set forth.

1. VESTING OF OPTIONS.

(a) Unless and until terminated as hereinafter provided, the Option shall
vest immediately with the granting of this option. [or the Option shall vest
shares immediately and the remainder equally over years, provided
however, that in the event the Optionee dies or becomes permanently disabled
while in the employ of the Company, the Options shall automatically fully vest.
To the extent that the Option shall have so become exercisable, it may be
exercised in whole or in part from time to time ].

2. PAYMENT OF EXERCISE PRICE. 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
Exercise Price shall be payable (a) in cash in the form of currency or check or
other cash equivalent acceptable to the Company, (b) by actual or constructive
transfer to the Company of nonforfeitable shares of Common Stock that have been
owned by the Optionee for more than one year prior to the date of exercise and
for more than two years from the date on which the Option was granted, if they
were originally acquired by the Optionee pursuant to the exercise of the
non-qualified stock option; (c) by the transfer to the Company of other property
acceptable to the Company; or (d) by a combination of any of the forgoing
methods of payment.

Nonforfeitable, nonrestricted shares of Common Stock that are transferred
by the Optionee in payment of all or any part of the Exercise Price shall be
valued on the basis of their fair market value of Common Stock of the Company on
the date of delivery of such certificates to the Company, accompanied by an
assignment of stock to the Company. Any assignment of stock shall be in a form
and substance satisfactory to the Secretary of the

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<PAGE> 33

Company, including guarantees of signature(s) and payment of all transfer taxes
if he deems such necessary or desirable. The requirement of payment in cash
shall be deemed satisfied if the Optionee shall have made arrangements
satisfactory to the Company with a broker that is a member of the National
Association of Securities Dealers, Inc. to sell a sufficient number of the
Common Shares, which are being purchased pursuant to the exercise, so that the
net proceeds of the sale transaction will at least equal the aggregate Exercise
Price, plus interest at the Applicable Federal Rate (as that term is defined in
Section 1274 of the Code) for the period from the date of exercise to the date
of payment, and pursuant to which the broker undertakes to deliver the aggregate
Exercise Price, plus such interest, to the Company not later than the date on
which the sale transaction will settle in the ordinary course of business.

3. TERMINATION OF OPTION. The Option shall terminate on the earliest of
the following dates:

(a) Thirty (30) days after the Optionee ceases to be an employee of
the Company for any reason other than death or permanent disability;

(b) Twelve months after the death, or termination of Optionee's
employment by reason of his becoming permanently disabled within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, if the
Optionee dies or becomes permanently disabled while an employee of the
Company. Your executor, administrator, guardian or custodian must present
proof of his authority satisfactory to the Company prior to being allowed
to exercise this option; or

In the event that the Optionee commits an act that the Committee acting in
good faith determines to have been intentionally committed and materially
adverse to the interests of the Company, the Option shall terminate as of the
time of the commission of that act, notwithstanding any other provision of this
Agreement.

After the date your employment status terminates for any reason, this
option may be exercised only for the number of shares which you had a right to
purchase on the date your employment ceased.

4. COMPLIANCE WITH LAW. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws; provided, however,
notwithstanding any other provision of this Agreement, the Option shall not be
exercisable if the exercise thereof would result in a violation of any such law.

5. TRANSFERABILITY AND EXERCISABILITY. Neither the Option nor any interest
therein may be transferred by the Optionee except by will or the laws of descent
and distribution, and the Option may not be exercised during the lifetime of the
Optionee except by the Optionee or, in the event of his legal incapacity, by his
guardian or legal representative acting on behalf of the Optionee in a fiduciary
capacity under state law and court supervision. Until the option price has been
paid in full pursuant to due exercise of this option and the purchase shares are
delivered to you, you do not have any rights as a stockholder of the Company.
The Company reserves the right not to deliver to you the shares purchased by
virtue of 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.

6. ADJUSTMENTS. The Committee may make such adjustments in the Exercise
Price and the number and kind of shares of stock or other securities covered by
the Option as

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<PAGE> 34

the Committee may in good faith determine to be equitably required in order to
prevent any dilution or expansion of the Optionee's rights under this Agreement
that otherwise would result from any (a) stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) merger, consolidation, spin-off, reorganization or other
event similar to any of the foregoing.

7. WITHHOLDING TAXES. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with an exercise of the
Option, the Optionee shall pay the tax or make provisions that are satisfactory
to the Company for the payment thereof.

8. RIGHT TO TERMINATE EMPLOYMENT AND ADJUST COMPENSATION. No provision of
this Agreement shall limit in any way whatsoever any right that the Company may
otherwise have to terminate the employment or adjust compensation of the
Optionee at any time.

9. CONDITIONS PRECEDENT TO EXERCISABILITY OF OPTION. 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 option is approved by the stockholders of the Company in
the manner prescribed by the Code and the regulations thereunder; or

(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.

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 of 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 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 to the
effect that the proposed transaction will be exempt from such registration.
The Optionee shall execute such instruments, representations,
acknowledgements and agreements as the Company may, in its sole discretion,
deem advisable to avoid any violation of federal, state, local, or
securities exchange rule, regulation or law.

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(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 an 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.

10. ARBITRATION. 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 share equally 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 pursuant to the provisions of the award.

11. MISCELLANEOUS.

This option shall not be an "incentive stock option" as that term is used
in Section 422 of the Code and the regulations thereunder.

This option shall be subject to the terms set forth herein and in any
resolution approving the grant, which resolution is hereby incorporated herein
by referenced and made a part hereof.

This option constitutes the entire understanding between the Company and
you with respect to the subject matter hereof and no amendment, modification 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.

In the event that one or more provisions of this Agreement shall be
invalidated for any reason by a court of competent jurisdiction, any provision
so invalidated shall be deemed to be separable from the other provisions hereof,
and the remaining provisions hereof, continue to be valid and fully enforceable.

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<PAGE> 36

This option and the performance 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:
-----------------------------------
Bruce C. Rosetto
Vice President and General Counsel

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.

____________________ ______________________________
Date

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APPENDIX B
1999 EMPLOYEE STOCK OPTION PLAN

U.S. Plastic Lumber Corporation and ("USPL") hereby adopts this 1999
Employee Stock Option Plan (the "Plan") the terms of which shall be as follows:

1. PURPOSE

The Plan is intended to advance the interests of USPL by providing eligible
individuals (as designated pursuant to section 4 below) with an opportunity to
acquire or increase a proprietary interest in USPL, which thereby will create a
stronger incentive to expend maximum effort for the growth and success of USPL
and its subsidiaries, and will encourage such eligible individuals to remain in
the employ of USPL or one or more of its subsidiaries and to attract and retain
officers, key employees and key independent contractors. Each stock option
granted under the plan (an "Option") shall be an option that is not intended to
constitute an "incentive stock option" ("Incentive Stock Option") within the
meaning of section 422 of the Internal Revenue Code of 1986, or the
corresponding provision of any subsequently enacted tax statute, as amended from
time to time (the "Code") unless such Option is granted to an employee of USPL
or a "subsidiary corporation" (a "Subsidiary") thereof within the meaning of
Section 424 (f) of the Code and is specifically designated at the time of grant
as being an Incentive Stock Option. Any Option so designated shall constitute an
Incentive Stock Option only to the extent that it does not exceed the
limitations set forth in Section 7 below.

2. ADMINISTRATION

(a) The Plan shall be administered by the Compensation Committee of the
Board of Directors of USPL (the "Committee"), which shall have the full power
and authority to take all actions, and to make all determinations required or
provided for under the Plan or in the Option granted or Option Agreement (as
defined in section 8 below) entered into under the Plan and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Committee to be necessary or appropriate to
the administration of the Plan or any Option granted or Option Agreement entered
into hereunder. All such actions and determinations shall be by the affirmative
vote of a majority of the members of the Committee present at a meeting at which
any issue relating to the Plan is properly raised for consideration or without a
meeting by written consent of the Committee executed in accordance with USPL's
Certificate of Incorporation and Bylaws, and with applicable law. The
interpretation and construction by the Committee of any provision of the Plan or
of any Option granted or Option Agreement entered into hereunder shall be final
and conclusive.

(b) The Board may from time to time appoint a Compensation Committee (the
"Committee") consisting of not less than two members of the Board, none of whom
shall be an officer or other salaried employee of USPL or any Subsidiary. The
Board may remove members, add members, and fill vacancies on the Committee from
time to time, all in accordance with USPL's Certificate of Incorporation and
Bylaws, and Nevada applicable law. The majority vote of the Committee, or acts
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee.

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(c) No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.

3. STOCK

The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, $.0001 par value, of USPL (the "Stock"), which
shares may be treasury shares or authorized but unissued shares. The number of
shares of Stock that may be issued pursuant to Options granted under the Plan
shall not exceed in the aggregate 1,800,000 shares, subject to adjustment as
provided in Section 17 below. If any Option expires, terminates, or is
terminated or canceled for any reason prior to exercise in full, the shares of
Stock that were subject to the unexercised portion of such Option shall be
available for future Options granted under the Plan.

4. ELIGIBILITY

(a) Employees. Options may be granted under the Plan to any employee of
USPL, a Subsidiary or any other entity of which on the relevant date at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions ("Voting Securities") are at the time owned
directly or indirectly by USPL or any Subsidiary (an "Affiliate"), including any
such employee who is an officer or director of USPL, a Subsidiary or an
Affiliate, as the Board shall determine and designate from time to time prior to
expiration or termination of the Plan. The maximum number of shares of Stock
subject to Options that may be granted during any calendar year under the Plan
to any executive officer or other employee of USPL or any Subsidiary or
Affiliate whose compensation is or may be subject to Code Section 162 (m) is 95%
of the shares available for issuance under the Plan (subject to adjustment as
provided in section 17 hereof).

(b) Independent Contractors. Options may be granted to independent
contractors, who are individuals or companies, performing services for USPL or
any Subsidiary or Affiliate as determined by the Board from time to time on the
basis of their importance to the business of USPL or such Subsidiary or
Affiliate. Independent contractors shall not be eligible to receive options
intended to constitute Incentive Stock Options. Non-employee directors of USPL
shall not be eligible to receive options under the Plan.

5. EFFECTIVE DATE AND TERM OF THE PLAN

(a) Effective Date. The Plan shall be effective as of the date of adoption
by the Board, March 10, 1999, subject to approval of the Plan, within one year
of such effective date, by the stockholders of USPL by a majority of votes
present and entitled to vote at a duly held meeting of the stockholders at which
a quorum representing a majority of all outstanding voting stock is present,
either in person or by proxy or by written consent in accordance with USPL's
Certificate of Incorporation and Bylaws; provided, however, that upon approval
of the Plan by the stockholders of USPL set forth above, all Options granted
under the Plan on or after the effective date shall be fully effective as if the
stockholders of USPL approved the Plan on the effective date. If the
stockholders fail to

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<PAGE> 39

approve the Plan within one year of such effective date, any options granted
hereunder shall be null and void and of no effect.

(b) Term. The Plan shall terminate when all options awarded under the Plan
have been exercised, provided that no options may be granted under the Plan more
than 10 years from the earlier of the date the Plan is adopted by the Company or
initially approved by the shareholders of the Company.

6. GRANT OF OPTIONS

Subject to the terms and conditions of the Plan, the Committee may, at any
time and from time to time, prior to the date of termination of the Plan, grant
to such eligible individuals as the Committee may determine ("Optionees"),
Options to purchase such number of shares of the Stock on such terms and
conditions as the Committee may determine. The date on which the Committee
approved the grant of an Option (or such later date as specified by the
Committee) shall be considered the date on which such Option is granted.

7. LIMITATION ON INCENTIVE STOCK OPTIONS

An Option intended to constitute an Incentive Stock Option (and so
designated at the time of grant) shall qualify as an Incentive Stock Option only
to the extent that the aggregate fair market value (determined at the time the
option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other plans of the Optionee's employer corporation and
its parent and subsidiary corporation's within the meaning of Section 422 (d) of
the Code) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

8. OPTION AGREEMENTS

All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by USPL and by the Optionee, in
such form or forms as the Committee shall from time to time determine. Option
Agreements covering Options granted from time to time or at the same time need
not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.

9. OPTION PRICE

The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option Agreement,
and shall be not less than 100 percent of the closing price of a share of the
Stock, as reported on NASDAQ or other exchange on which the Company's stock
normally trades or if the Company's stock is not traded on the NASDAQ or other
exchange, as determined in good faith by the Board of Directors, on the date the
Option is granted; provided, however, then in the event the Optionee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422 (b) (6) and 424 (d) of the Code (relating to stock
ownership of more than 10 percent), the Option Price of an Option that is
intended to be an Incentive Stock Option shall be not less than 110 percent of
the fair market value of a share of Stock at the time such Option is granted.

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<PAGE> 40

10. TERM AND EXERCISE OF OPTIONS

(a) Option Period. Each Option granted under the Plan shall terminate and
all rights to purchase shares thereunder shall cease upon the expiration of ten
years from the date such Option is granted, or on such date prior thereto as may
be fixed by the Board and stated in the Option Agreement relating to such
Option; provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422 (b) (6) and 424 (d) of the Code (relating to stock ownership of
more than 10 percent), an Option granted to such Optionee that is intended to be
an Incentive Stock Option shall in no event be exercisable after the expiration
of five years from the date it is granted.

(b) Vesting and Limitation on Exercise. Except as otherwise provided
herein, each Option shall become exercisable with respect to 33 1/3 percent of
the total number of shares subject to the Option one year after the date of its
grant (the "Vesting Date") and with respect to an additional 33 1/3 percent of
the number of such shares on each of the next two succeeding anniversaries of
the Vesting Date; provided, however, that the Board may in its discretion
provide that an Option may be exercised, in whole or in part, at any time from
time to time, over a period commencing on or after the date of grant and ending
upon the expiration or termination of the Option, as the Board shall determine
and set forth in the Option Agreement relating to such Option. Without limiting
the foregoing, the Board, subject to the terms and conditions of the Plan, may
in its sole discretion provide that an Option may be exercised immediately upon
grant or that it may not be exercised in whole or in part for any period or
periods of time during which such Option is outstanding; provided, however, that
any vesting requirements or other such limitation on the exercise of an Option
may be rescinded, modified or waived by the Board, in its sole discretion, at
any time and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised.

(c) Method of Exercise. An Option that is exercisable hereunder may be
exercised by delivery to USPL on any business day, at its principal office,
addressed to the attention of the Vice President and General Counsel, of written
notice of exercise, which notice shall specify the number of shares with respect
to which the Option is being exercised, and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is being exercised,
except as provided below. The minimum number of shares of Stock with respect to
which an Option may be exercised, in whole or in part, at any time shall be the
lesser of 100 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents; (ii) through the tender to USPL of shares of
Stock, which shares shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their fair market value
(determined in the manner described in Section 9 above) on the date of exercise;
(iii) by delivering a written direction to USPL that the Option be exercised
pursuant to a "cashless" exercise/sale procedure (pursuant to which funds to pay
for exercise of the Option are delivered to USPL by a broker upon receipt of
stock certificates from USPL) or a cashless exercise/loan procedure (pursuant to
which the Optionees would obtain a margin loan from a broker to fund the
exercise) through a licensed broker acceptable to USPL whereby the stock
certificate or certificates for the shares of Stock for which the Option is
exercised will be delivered to such broker as the agent for the individual
exercising the Option and the broker will deliver to USPL cash (or cash
equivalent acceptable to USPL) equal to the Option Price for the shares of Stock

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<PAGE> 41

purchased pursuant to the exercise of the Option plus the amount (if any) of
federal and other taxes that USPL, may, in its sole judgment, be required to
withhold with respect to the exercise of the Option; (iv) to the extent
permitted by applicable law and under the terms of the Option Agreement with
respect to such Option, by the delivery of a promissory note of the Optionee to
USPL on such terms as shall be set out in such Option Agreement and acceptable
to the Company in its sole discretion; or (v) by combination of methods
described in (i), (ii), (iii) and (iv). Payment in full of the Option Price need
not accompany the written notice of exercise if the Option is exercised pursuant
to the cashless exercise/sale procedure described above. An attempt to exercise
any Option granted hereunder other than as set forth above shall be invalid and
of no force and effect. Promptly after the exercise of an Option, the individual
exercising the Option shall be entitled to the issuance of the Stock certificate
or certificates evidencing his ownership of such shares. A separate Stock
certificate or certificates shall be issued for any shares purchased pursuant to
the exercise of an Option that is intended to be an Incentive Stock Option,
which certificate or certificates shall not include any shares purchased
pursuant to the exercise of an Option that is not an Incentive Stock Option. An
individual holding or exercising an Option shall have none of the rights of a
shareholder until the shares of Stock covered thereby are fully paid and issued
to him and, except as provided in Section 18 below, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date of
such issuance.

(d) Change in Control. In the event of a Change in Control (as defined
below), except as the Board shall otherwise provide in an Option Agreement with
respect to an Option granted under the Plan, all outstanding Options shall
become immediately exercisable in full.For purposes of the Plan, a "Change in
Control" shall be deemed to occur (a)) if any person, other than the Stout
Partnership, shall acquire direct or indirect beneficial ownership of more than
40% of the total combined voting power with respect to the election of directors
of the issued and outstanding stock of USPL (except that no Change in Control
shall be deemed to have occurred if the persons who are stockholders of USPL
immediately before such acquisition own all or substantially all of the voting
stock or other interests of such person immediately after such transaction), or
(b) have the power (whether as result of stock ownership, revocable or
irrevocable proxies, contract or otherwise) or ability to elect or cause the
election of directors consisting at the time of such election of the majority of
the Board. A "person" for this purpose shall mean any person, corporation,
partnership, joint venture or other entity or any group (as such term is defined
for purposes of Section 13 (d) of the Exchange Act) and a person shall be deemed
to be a beneficial owner as that term is used in Rule 13d-3 under the Exchange
Act. The amount payable under this Section 10 (d) shall be remitted by USPL in
cash or by certified or bank check, reduced by applicable tax withholding.

(e) Notwithstanding any other provision of the Plan, no Option granted to
an Optionee under the Plan shall be exercisable in whole or in part prior to the
date the Plan is approved by the stockholders of USPL has provided in section 5
above.

11. TRANSFERABILITY OF OPTIONS

Non-Qualified Stock Options granted under the Plan may be transferred only
by gift or qualified domestic relations order to a family member (as defined
below) of a director of the Company. The term "family member" includes any
child, stepchild, grandchild, parent, step parent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including

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<PAGE> 42

adoptive relationships, any person sharing the employee's household (other than
a tenant or employee), a trust which these persons have more than 50 percent of
the beneficial interest, a foundation which these persons (or the employee)
control management of assets, and any other entity in which these persons (or
the employee) own more than 50 percent of the voting interest.

12. TERMINATION OF EMPLOYMENT OR SERVICE

(a) General. Except as otherwise provided herein, upon the termination of
employment or other service of an Optionee with USPL, a Subsidiary, or an
Affiliate, or the death or "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, any Option granted to an
Optionee pursuant to the Plan shall terminate upon the expiration of thirty days
from the date of such termination of employment or service and such Optionee
shall have no further right to purchase shares of Stock pursuant to such Option.
Notwithstanding the foregoing provisions of this Section 12, the Board may
provide, in its discretion, that following the termination of employment or
service of an Optionee with USPL, a Subsidiary, or Affiliate, an Optionee may
exercise an Option, in whole or in part, at any time subsequent to such
termination of employment or service and prior to termination of the Option
pursuant to Section 10 (a) above, either subject to or without regard to any
vesting or other limitations on exercise imposed pursuant to Section 10 (b)
above.

(b) Whether a leave of absence or lien on military or government service
shall constitute a termination of employment of service for purposes of the Plan
shall be determined by the Board, which determination shall be final and
conclusive. For purposes of the Plan, the termination of employment or service
with USPL, a Subsidiary, or Affiliate shall not be deemed to occur if the
Optionee is immediately thereafter employed by or otherwise providing services
to USPL, any Subsidiary or Affiliate.

13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

(a) Death. If an Optionee dies while in the employ or service of USPL, a
Subsidiary or Affiliate or within the period following termination of employment
or service for which the Option is exercisable under Section 12 above or Section
13(b) below, all Options held by such Optionee prior to death shall become
immediately exercisable in full and the executors or administrators or legatees
or distributees of such Optionee's estate shall have the right, at any time
within twelve months after the date of such Optionee's death and prior to
termination of the Option pursuant to Section 10(a) above, to exercise any
Option held by such Optionee at the date of such Optionee's death; provided,
however, that the Board may provide, in its discretion, that following the death
of an Optionee, the executors or administrators or legatees or distributees of
such Optionee's estate may exercise an Option, in whole or in part, at any time
subsequent to such Optionee's death and prior to termination of the Option
pursuant to Section 10 (a) above, either subject to or without regard to any
vesting or other limitation on exercise imposed pursuant to Section 10 (b)
above.

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<PAGE> 43

(b) Disability. If an Optionee terminates employment or service with USPL,
a Subsidiary or Affiliate by reason of the "permanent and total disability"
(within the meaning of Section 22 (e) (3) of the Code) of such Optionee, then
all Options held by such Optionee shall become immediately exercisable in full
and the Optionee shall have the right, at any time within twelve months after
such termination of employment or service and prior to termination of the Option
pursuant to Section 10 (a) above, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of employment or service;
provided, however, that the Board may provide, in its discretion, that an
Optionee may, in the event of the termination of employment or service of the
Optionee with USPL, the Subsidiary or Affiliate by reason of the "permanent and
total disability" (within the meaning of Section 22 (e) (3) of the Code) of such
Optionee, exercise an Option in whole or in part, at any time subsequent to such
termination of employment or service and prior to termination of the Option
pursuant to Section 10 (a) above, either subject to or without regard to any
vesting or other limitation on exercise imposed pursuant to Section 10 (b)
above. Whether a termination of employment or service is to be considered by
reason of "permanent and total disability" for purposes of this Plan shall be
determined by the Board, which termination shall be final and conclusive.

14. REQUIREMENTS OF LAW

(a) Violations of Law. USPL shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or USPL of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. Any
determination in this connection by the Board shall be final, binding, and
conclusive. USPL shall not be obligated to take any affirmative action in order
to cause the exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option shall not be
exercisable unless and until the shares of Stock covered by such Option are
registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.

(b) Compliance with Rule 16b-3. The intent of this Plan is to qualify for
the exemption provided by Rule 16b-3 under the Exchange Act. To the extent any
provision of the Plan does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board and shall not affect the validity of the Plan. In the event Rule
16b-3 is revised or replaced, the Board, or the Committee acting on behalf of
the Board, may exercise discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.

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amended, and under applicable state securities laws, and shall continue to be
applicable for so long as such registration has not occurred:

(i) 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 of 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 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 to the
effect that the proposed transaction will be exempt from such registration.
The Optionee shall execute such instruments, representations,
acknowledgments and agreements as the Company may, in its sole discretion,
deem advisable to avoid any violation of federal, state, local, or
securities exchange rule, regulation or law.

(ii) The certificates for Common Stock to be issued to the Optionee
hereunder shall bear the following legend:

15. AMENDMENT AND TERMINATION OF THE PLAN

The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the stockholders of USPL at which a quorum representing a majority of
all outstanding voting stock is, either in person or by proxy, present and
voting on the amendment, or by written consent in accordance with applicable
state law and the Certificate of Incorporation and Bylaws of USPL, change the
requirements as to eligibility to receive Options that are intended to qualify
as Incentive Stock Options, increased maximum number of shares of Stock in the
aggregate that may be sold pursuant to Options that are intended to qualify as
Incentive Stock Options granted under the Plan (except as permitted under
Section 17 hereof) or modify the Plan so that Options granted under the Plan
cannot satisfy the applicable requirements of Code Section 162 (m). Except as
permitted under Section 17 hereof, no amendment, suspension or termination of
the Plan shall, without the consent of the holder of the

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<PAGE> 45

Option, alter or impair rights or obligations under any Option theretofore
granted under the Plan.

17. EFFECT OF CHANGES IN CAPITALIZATION

(a) Recapitalization. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of USPL by reason of any recapitalization, reclassification,
stock split, reverse split, combination of shares, exchange of shares, stock
dividend or other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration by USPL,
occurring after the effective date of the Plan, the number and kinds of shares
for the purchase of which Options may be granted under the Plan shall be
adjusted proportionately and accordingly by USPL. In addition, the number and
kind of shares for which Options are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the holder
of the Option immediately following such event, to the extent practicable, be
the same as immediately prior to such event. Any such adjustment in outstanding
Options shall not change the aggregate Option Price payable with respect to
shares subject to the unexercised portion of the Option outstanding and shall
include a corresponding proportionate adjustment in the Option Price per share.
If there is a distribution payable in the capital stock of a subsidiary
corporation (a "Spin-off Corporation") of USPL ("Spin-off Shares"), to the
extent consistent with Treasury Regulation Section 1.425-1(a)(6) or the
corresponding provision of any subsequent regulation, each outstanding Option
shall thereafter additionally pertain to the number of Spin-off Shares that
would have been received in such distribution by a shareholder of USPL who owns
a number of shares of Common Stock equal to the number of shares that are
subject to the Option at the time of such distribution, the aggregate Option
Price of the Option shall be allocated between the Spin-off Shares and the
Common Stock in proportion to the relative fair market values of a Spin-off
Share and a share of Common Stock immediately after the distribution of Spin-off
Shares, and the Option shall be exercisable separately as to the shares of
Common Stock and Spin-off Shares covered thereby.

(b) Reorganization in Which USPL is the Surviving Corporation. Subject to
the discretion of the Compensation Committee of the Board of Directors, if USPL
shall be the surviving corporation in any reorganization, merger, or
consolidation of USPL with one or more other corporations, any Option
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to such
Option would have been entitled immediately following such reorganization,
merger or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger or consolidation.

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<PAGE> 46

limitation on exercise imposed pursuant to Section 10 (b) above. In connection
with a merger, consolidation, reorganization or other business combination of
USPL with one or more other entities in which USPL is not the surviving entity,
or upon a sale of all or substantially all of the assets of USPL to another
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which USPL is surviving corporation) that results in any
person or entity (or persons or entities acting as a group or otherwise in
concert) owning more than 40 percent of the combined voting power of all classes
of stock of USPL, USPL and the acquiring or surviving entity shall provide for
the continuation of the Plan and the assumption of the Options theretofore
granted, or for the substitution for such Options with new options covering the
stock of a successor entity, or a parent or subsidiaries thereof, with
appropriate adjustments as to the number and kinds of shares and exercise
prices. The Board shall send prior written notice of the occurrence of an event
described in this Section 17 (c) to all individuals who hold Options not later
than the time at which USPL gives notice to of stockholders left such event is
proposed.

(d) Adjustments. Adjustments under this Section 17 related to Stock or
securities of USPL shall be made by the Board, whose determination in that
respect shall be final, binding, and conclusive. No fractional shares of Stock
or units of other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share or unit.

(e) No Limitation on Corporation. The grant of an Option pursuant to the
Plan shall not affect or limit in anyway the right of or power of USPL to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve liquidate, were to sell or
transferable or any part of its business or assets.

18. DISCLAIMER OF RIGHTS

No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confirm upon any
individual the right to remain in the employ of USPL, any Subsidiary, any
Spin-off Corporation or Affiliate, or to interfere in any way with the right and
authority of USPL, any Subsidiary, any Spin-off Corporation or Affiliate either
to increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and USPL,
any Subsidiary, any Spin-off Corporation or Affiliate.

19. NON-EXCLUSIVITY OF THE PLAN

Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of USPL for approval shall be construed as creating any limitations
upon the right and authority of the Board to adopt such other incentive
compensation arrangements (which arrangements may be applicable either generally
to a class or classes of individuals or specifically to a particular individual
or individuals) as the Board in its discretion determines desirable, including,
without limitation, the granting of stock options or stock appreciation rights
otherwise than under the Plan.

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<PAGE> 47

This Plan was duly adopted and approved by be Board of Directors of USPL
effective as of the 10th day of March, 1999, subject to approval and adoption by
the stockholders of USPL.

--------------------------------------
Bruce C. Rosetto, Secretary

This Plan was duly approved and adopted by the stockholders of USPL at a
meeting held the 5th day of May, 1999.

--------------------------------------
Bruce C. Rosetto, Secretary

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<PAGE> 48

APPENDIX C
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

U.S. Plastic Lumber Corporation and ("USPL") hereby adopts this 1999 Non-
Employee Director Stock Option Plan (the "Plan") the terms of which shall be as
follows:

1. PURPOSE

2. ADMINISTRATION

(b) The Board may from time to time appoint a Compensation Committee (the
"Committee") consisting of not less than two members of the Board, none of whom
shall be an officer or other salaried employee of USPL or any Subsidiary.The
Board may remove members, add members, and fill vacancies on the Committee from
time to time, all in accordance with USPL's Certificate of Incorporation and
Bylaws, and Nevada applicable law. The majority vote of the Committee, or acts
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee.

3. STOCK

The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, $.0001 par value, of USPL (the "Stock"), which
shares may be

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<PAGE> 49

treasury shares or authorized but unissued shares. The number of shares of Stock
that may be issued pursuant to Options granted under the Plan shall not exceed
in the aggregate 150,000 shares, subject to adjustment as provided in Section 17
below. If any Option expires, terminates, or is terminated or canceled for any
reason prior to exercise in full, the shares of Stock that were subject to the
unexercised portion of such Option shall be available for future Options granted
under the Plan.

4. ELIGIBILITY

(a) Directors. Options may be granted under the Plan to any non-employee
director of USPL or any other entity of which on the relevant date at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions ("Voting Securities") are at the time owned
directly or indirectly by USPL, as the Board shall determine and designate from
time to time prior to expiration or termination of the Plan.

(b) Multiple Grants. And individual may hold more than one Option, subject
to such restrictions as are provided herein.

5. EFFECTIVE DATE AND TERM OF THE PLAN

(a) Effective Date. The Plan shall be effective as of the date of adoption
by the Board, which date is March 10, 1999, subject to approval of the Plan,
within one year of such effective date, by the stockholders of USPL by a
majority of votes present and entitled to vote at a duly held meeting of the
stockholders at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy or by written consent in
accordance with USPL's Certificate of Incorporation and Bylaws; provided,
however, that upon approval of the Plan by the stockholders of USPL set forth
above, all Options granted under the Plan on or after the effective date shall
be fully effective as if the stockholders of USPL approved the Plan on the
effective date. If the stockholders fail to approve the Plan within one year of
such effective date, any options granted hereunder shall be null and void and of
no effect.

6. GRANT OF OPTIONS

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<PAGE> 50

7. OPTION AGREEMENTS

8. OPTION PRICE

9. TERM AND EXERCISE OF OPTIONS

(b) Vesting and Limitation on Exercise. Except as otherwise provided
herein, each Option shall become exercisable with respect to 100 percent of the
total number of shares subject to the Option on the date of its grant (the
"Vesting Date"); provided, however, that the Board may in its discretion provide
that an Option may be exercised, in whole or in part, at any time from time to
time, over a period commencing on or after the date of grant and ending upon the
expiration or termination of the Option, as the Board shall determine and set
forth in the Option Agreement relating to such Option. Without limiting the
foregoing, the Board, subject to the terms and conditions of the Plan, may in
its sole discretion provide that an Option may be exercised immediately upon
grant or that it may not be exercised in whole or in part for any period or
periods of time during which such Option is outstanding; provided, however, that
any vesting requirements or other such limitation on the exercise of an Option
may be rescinded, modified or waived by the Board, in its sole discretion, at
any time and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised.

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<PAGE> 51

thereby, at their fair market value (determined in the manner described in
Section 9 above) on the date of exercise; (iii) by delivering a written
direction to USPL that the Option be exercised pursuant to a "cashless"
exercise/sale procedure (pursuant to which funds to pay for exercise of the
Option are delivered to USPL by a broker upon receipt of stock certificates from
USPL) or a cashless exercise/loan procedure (pursuant to which the Optionees
would obtain a margin loan from a broker to fund the exercise) through a
licensed broker acceptable to USPL whereby the stock certificate or certificates
for the shares of Stock for which the Option is exercised will be delivered to
such broker as the agent for the individual exercising the Option and the broker
will deliver to USPL cash (or cash equivalent acceptable to USPL) equal to the
Option Price for the shares of Stock purchased pursuant to the exercise of the
Option plus the amount (if any) of federal and other taxes that USPL, may, in
its sole judgment, be required to withhold with respect to the exercise of the
Option; (iv) to the extent permitted by applicable law and under the terms of
the Option Agreement with respect to such Option, by the delivery of a
promissory note of the Optionee to USPL on such terms as shall be set out in
such Option Agreement and as shall be acceptable to the Company in its sole
discretion; or (v) by combination of methods described in (i), (ii), (iii) and
(iv). Payment in full of the Option Price need not accompany the written notice
of exercise if the Option is exercised pursuant to the cashless exercise/sale
procedure described above. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option, the individual exercising the Option
shall be entitled to the issuance of the Stock certificate or certificates
evidencing his ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option that is intended to be an Incentive Stock Option, which certificate
or certificates shall not include any shares purchased pursuant to the exercise
of an Option that is not an Incentive Stock Option. An individual holding or
exercising an Option shall have none of the rights of a shareholder until the
shares of Stock covered thereby are fully paid and issued to him and, except as
provided in Section 18 below, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date of such issuance.

(d) Change in Control. In the event of a Change in Control (as defined
below), except as the Board shall otherwise provided in an Option Agreement with
respect to an Option granted under the Plan, all outstanding Options shall
become immediately exercisable in full, without regard to any limitation on
exercise imposed pursuant to Section 10 (b) above. For purposes of the Plan, a
"Change in Control" shall be deemed to occur (a) if any person, other than Stout
Partnership, shall acquire direct or indirect beneficial ownership of more than
40% of the total combined voting power with respect to the election of directors
of the issued and outstanding stock of USPL (except that no Change in Control
shall be deemed to have occurred if the persons who are stockholders of USPL
immediately before such acquisition own all or substantially all of the voting
stock or other interests of such person immediately after such transaction), or
(b) have the power (whether as result of stock ownership, revocable or
irrevocable proxies, contract or otherwise) or ability to elect or cause the
election of directors consisting at the time of such election of the majority of
the Board. A "person" for this purpose shall mean any person, corporation,
partnership, joint venture or other entity or any group (as such term is defined
for purposes of Section 13 (d) of the Exchange Act) and a person shall be deemed
to be a beneficial owner as that term is used in Rule 13d-3 under the Exchange
Act. The amount payable under this Section 10 (d) shall be remitted by USPL in
cash or by certified or bank check, reduced by applicable tax withholding.

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<PAGE> 52

9. TRANSFERABILITY OF OPTIONS

Non-Qualified Stock Options granted under the Non-Employee Director Plan
may be transferred only by gift or qualified domestic relations order to a
family member (as defined below) of a director of the Company. The term "family
member" includes any child, stepchild, grandchild, parent, step parent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the employee's household
(other than a tenant or employee), a trust which these persons have more than 50
percent of the beneficial interest, a foundation which these persons (or the
employee) control management of assets, and any other entity in which these
persons (or the employee) own more than 50 percent of the voting interest.

10. TERMINATION OF SERVICE

(a) General. Except as otherwise provided herein, upon the termination of
service of an Optionee with USPL or the death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, any Option granted to an Optionee pursuant to the Plan shall terminate
upon the expiration of ninety days from the date of such termination of service
and such Optionee shall have no further right to purchase shares of Stock
pursuant to such Option. Notwithstanding the foregoing provisions of this
Section 12, the Board may provide, in its discretion, that following the
termination of service of an Optionee with USPL, an Optionee may exercise an
Option, in whole or in part, at any time subsequent to such termination of
service and prior to termination of the Option pursuant to Section 10 (a) above,
either subject to or without regard to any vesting or other limitations on
exercise imposed pursuant to Section 10 (b) above.

11. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

(a) Death. If an Optionee dies while in the employ or service of USPL
within the period following termination of service for which the Option is
exercisable under Section 12 above or Section 13(b) below, all Options held by
such Optionee prior to death shall become immediately exercisable in full and
the executors or administrators or legatees or distributees of such Optionee's
estate shall have the right, at any time within twelve months after the date of
such Optionee's death and prior to termination of the Option pursuant to Section
10(a) above, to exercise any Option held by such Optionee at the date of such
Optionee's death; provided, however, that the Board may provide, in its
discretion, that following the death of an Optionee, the executors or
administrators or legatees or distributees of such Optionee's estate may
exercise an Option, in whole or in part, at any time subsequent to such
Optionee's death and prior to termination of the Option pursuant to Section 10
(a) above, either subject to or without regard to any vesting or other
limitation on exercise imposed pursuant to Section 10 (b) above.

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<PAGE> 53

(b) Disability. If an Optionee terminates service with USPL by reason of
the "permanent and total disability" (within the meaning of Section 22(e)(3) of
the Code) of such Optionee, then all Options held by such Optionee shall become
immediately exercisable in full and the Optionee shall have the right, at any
time within twelve months after such termination of service and prior to
termination of the Option pursuant to Section 10 (a) above, to exercise, in
whole or in part, any Option held by such Optionee at the date of such
termination of service; provided, however, that the Board may provide, in its
discretion, that an Optionee may, in the event of the termination of service of
the Optionee with USPL by reason of the "permanent and total disability" (within
the meaning of Section 22 (e) (3) of the Code) of such Optionee, exercise an
Option in whole or in part, at any time subsequent to such termination of
service and prior to termination of the Option pursuant to Section 10 (a) above,
either subject to or without regard to any vesting or other limitation on
exercise imposed pursuant to Section 10 (b) above. Whether a termination of
service is to be considered by reason of "permanent and total disability" for
purposes of this Plan shall be determined by the Board, which termination shall
be final and conclusive.

12. REQUIREMENTS OF LAW

(c) Compliance with Securities Act of 1933. 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:

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<PAGE> 54

any of 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 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 to the effect that the proposed
transaction will be exempt from such registration. The Optionee shall
execute such instruments, representations, acknowledgments and agreements
as the Company may, in its sole discretion, deem advisable to avoid any
violation of federal, state, local, or securities exchange rule, regulation
or law.

(ii) The certificates for Common Stock to be issued to the Optionee
hereunder shall bear the following legend:

13. AMENDMENT AND TERMINATION OF THE PLAN

The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the stockholders of USPL at which a quorum representing a majority of
all outstanding voting stock is, either in person or by proxy, present and
voting on the amendment, or by written consent in accordance with applicable
state law and the Certificate of Incorporation and Bylaws of USPL, change the
requirements as to eligibility to receive Options, increase the maximum number
of shares of Stock in the aggregate that may be sold pursuant to Options granted
under the Plan (except as permitted under Section 17 hereof). Except as
permitted under Section 17 hereof, no amendment, suspension or termination of
the Plan shall, without the consent of the holder of the Option, alter or impair
rights or obligations under any Option theretofore granted under the Plan.

14. EFFECT OF CHANGES IN CAPITALIZATION

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<PAGE> 55

capital stock, or other increase or decrease in such shares effected without
receipt of consideration by USPL, occurring after the effective date of the
Plan, the number and kinds of shares for the purchase of which Options may be
granted under the Plan shall be adjusted proportionately and accordingly by
USPL. In addition, the number and kind of shares for which Options are
outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the holder of the Option immediately following such
event, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares subject to the unexercised portion
of the Option outstanding and shall include a corresponding proportionate
adjustment in the Option Price per share. If there is a distribution payable in
the capital stock of a subsidiary corporation (a "Spin-off Corporation") of USPL
("Spin-off Shares"), to the extent consistent with Treasury Regulation Section
1.425-1(a)(6) or the corresponding provision of any subsequent regulation, each
outstanding Option shall thereafter additionally pertain to the number of
Spin-off Shares that would have been received in such distribution by a
shareholder of USPL who owns a number of shares of Common Stock equal to the
number of shares that are subject to the Option at the time of such
distribution, the aggregate Option Price of the Option shall be allocated
between the Spin-off Shares and the Common Stock in proportion to the relative
fair market values of a Spin-off Share and a share of Common Stock immediately
after the distribution of Spin-off Shares, and the Option shall be exercisable
separately as to the shares of Common Stock and Spin-off Shares covered thereby.

(c) Dissolution or Liquidation; Reorganization in Which USPL is Not the
Surviving Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of USPL, the Plan and all Options outstanding hereunder shall
terminate. In the event of any termination of the Plan under this Section 17(c),
each individual holding an Option shall have the right, immediately prior to the
occurrence of such termination and during such reasonable period as the Board in
its sole discretion shall determine and designate, to exercise such Option in
whole or in part, whether or not such Option was otherwise exercisable at the
time such termination occurs and without regard to any vesting or other
limitation on exercise imposed pursuant to Section 10(b) above. In connection
with a merger, consolidation, reorganization or other business combination of
USPL with one or more other entities in which USPL is not the surviving entity,
or upon a sale of all or substantially all of the assets of USPL to another
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which USPL is surviving corporation) that results in any
person or entity (or persons or entities acting as a group or otherwise in
concert) owning more than 40 percent of the combined voting power of all classes
of stock of USPL, USPL and the acquiring or surviving entity shall provide for
the continuation of the Plan and the assumption of the Options theretofore
granted, or for the

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<PAGE> 56

substitution for such Options with new options covering the stock of a successor
entity, or a parent or subsidiaries thereof, with appropriate adjustments as to
the number and kinds of shares and exercise prices. The Board shall send prior
written notice of the occurrence of an event described in this Section 17(c) to
all individuals who hold Options not later than the time at which USPL gives
notice to of stockholders left such event is proposed.

15. DISCLAIMER OF RIGHTS

No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confirm upon any
individual the right to remain in the employ of USPL or to interfere in any way
with the right and authority of USPL either to increase or decrease the
compensation of any individual at any time, or to terminate any relationship
between any individual and USPL.

16. NON-EXCLUSIVITY OF THE PLAN

This Plan was duly adopted and approved by be Board of Directors of USPL
effective as of the 10th day of March, 1999, subject to approval and adoption by
the stockholders of USPL.

--------------------------------------
Bruce C. Rosetto, Secretary

This Plan was duly approved and adopted by the stockholders of USPL at a
meeting held the 5th day of May, 1999.

--------------------------------------
Bruce C. Rosetto, Secretary

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<PAGE> 57

REVOCABLE PROXY
U.S. PLASTIC LUMBER CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1999

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 5th
day of May, 1999, 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. [X]

1. The election as director of the nominees listed below for terms of four years
(except as marked to the contrary):

Gary J. Ziegler Louis J. Paolino, Jr.

[ ] 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 non-qualified stock option grants for employees and non-employee
directors of the Company from June 25, 1998 through December 31, 1998.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. To ratify the adoption of a 1999 Employee Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. To ratify the adoption of a 1999 Non-Employee Director Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. To ratify the appointment of Arthur Andersen LLP as independent auditors for
fiscal year ending December 31, 1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(Continued and to be signed on following page)

6. 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, 3, 4 AND 5.

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 PROPOSAL 2,
3, 4 AND 5. 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 Stockholders, Notice of the Company's Annual Meeting and the Proxy Statement
relating thereto.

Date: , 1999
-----------------------
(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.