<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or ss. 240.14a-12
U.S. PLASTIC LUMBER CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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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> 4
U.S. PLASTIC LUMBER CORPORATION
2300 GLADES RD., SUITE 440W
BOCA RATON, FLORIDA 33431
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> 5
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, _______ shares of USPL
Common Stock were issued and outstanding. Each share of Common Stock entitles
the holder to one vote on each matter presented at the Annual Meeting. In order
for a quorum to be present at the Annual Meeting, a majority of the outstanding
shares of the Company's Common Stock as of the close of business on the Record
Date must be present in person or represented by proxy at the Annual Meeting.
All such shares that are present in person or represented by proxy at the Annual
Meeting will be counted in determining whether a quorum is present, including
abstentions and broker non-votes.
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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 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.
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.
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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
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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>
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* 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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The following table sets forth information regarding nominees for
election to the Company's Board of Directors and directors remaining in office
and each director's term of office.
DIRECTORS STANDING FOR ELECTION
<TABLE>
<CAPTION>
Position with Director
Name Age(1) the Company Since Expiration of Term
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gary J. Ziegler 51 Director 1997 2003
Louis J. Paolino 43 Director 1999 2003
DIRECTORS WHOSE TERMS CONTINUE
Mark S. Alsentzer 43 Chairman, President, 1994 2000
CEO and Director
August Schultes III 52 Director 1997 2000
Roger N. Zitrin 50 Director 1997 2002
</TABLE>
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(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
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medical diagnostic center with facilities to perform stress tests, CAT scans,
MRI scans and physical therapy located in New Jersey. He was also the founder,
Chairman of the Board and CEO of Stout Environmental, Inc., a full service
hazardous waste environmental company. Mr. Schultes is a graduate of Penn State
University and has a BS in Civil Engineering.
GARY J. ZIEGLER. DIRECTOR; Mr. Ziegler is President of Consultants and Planners,
Inc., which provides operating services to several water utility companies in
New Jersey. Mr. Ziegler is a Professional Engineer and Professional Planner in
New Jersey, a Professional Engineer in Maryland, Pennsylvania, Ohio and New York
and a member of the American Society of Civil Engineers and the National Society
of Professional Engineers. He was President of W.C. Services, Inc. and Vice
President of Stout Environmental, Inc. Mr. Ziegler is a graduate of Clemson
University with a BS degree in Civil Engineering.
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 $40 million in sales to
over $450 million in sales and sold the company to Waste Management, Inc. for
$1.1 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. Previously, his role included sales management. Mr. Rosetto was a
partner in a New Jersey law firm; Paschon, Feurey, and Rosetto from 1982-86. In
1986, Mr. Rosetto became Chairman and CEO of Consolidated Waste Services of
America, Inc., a fully integrated environmental company, building that company
primarily through mergers and acquisitions into one of the largest privately
owned environmental companies in New Jersey. 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
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controls. Mr. Schmidt has over 20 years of public and private accounting
experience including 10 years in the environmental industry. Prior to joining
the Company, Mr. Schmidt served as Chief Financial Officer of Republic
Environmental Systems, Inc., a publicly traded company and a leading
environmental service provider, headquartered in Blue Bell, Pennsylvania, a
position he held for approximately ten years. Mr. Schmidt has a Bachelor of
Science in Business Administration from Rowan University and is a Certified
Public Accountant in the State of New Jersey.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NOMINEES FOR 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.
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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 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
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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 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 it complies 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
11
<PAGE> 14
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
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Name and Principal Year Salary($) Bonus($) Other Annual Securities All Other
Position Compensation Underlying Compensation
($) (1) Options/ ($)
SARs (#)
- --------------------------------------------------------------------------------------------------------------------
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-
- --------------------------------------------------------------------------------------------------------------------
Bruce C. Rosetto Vice 1998 $100,000 -0- -0- 75,000 -0-
President and General 1997 $89,000 -0- -0- -0-
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 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
12
<PAGE> 15
reimbursement for living expenses and reimbursement for expenses related to a
residential unit and options to purchase Common Stock described in footnote 2
above. Mr. Alsentzer may be terminated for cause under the employment agreement
defined as (i) the conviction of a felony crime involving moral turpitude, (ii)
the intentional and knowing violation of the employment agreement which results
in substantial and material injury to the Company; or (iii) conduct with respect
to the Company or its business which is intended to injure the Company and does
injure the Company in a material and substantial way or constitutes a course of
grossly negligent conduct, done in bad faith and not intended to benefit the
Company, and which injures the Company in a material and substantial way. In the
event, Mr. Alsentzer is terminated for cause or he elects to leave the employ of
the Company for any reason, then Mr. Alsentzer shall be entitled to receive all
unissued 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.
13
<PAGE> 16
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 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>
- --------------------------------------------------------------------------------------------------------------------
Name # of Securities % of Total Exercise Expiration Date
Underlying Options Price Per
Options Awarded Awarded To Share
Employees
in Fiscal Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael D. Schmidt 25,000 3.9% $3.50 2008
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth information regarding the option values
of options held by the Company's Chief Executive Officer and other executive
officers at a fiscal year end.
AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value Of Unexercised
Number Of Securities In-The-Money
Underlying Unexercised Options/Sars At
Options/Sars At Fiscal Year End
Name Shares Acquired Value Fiscal Year End Exercisable/
On Exercise (#) Realized ($) Exercisable/Unexercisable 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>
- -----------------------------
(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) Beneficial ownership through Stout Partnership. See Certain
Transactions.
14
<PAGE> 17
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, $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
15
<PAGE> 18
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. 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 10% 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.
16
<PAGE> 19
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 10 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.
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,
17
<PAGE> 20
consolidation, split up, combination, recapitalization, conversion or similar
circumstances. No award may be amended without the consent of the optionee.
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>
Name and Position Dollar Value ($)(1) Number of Units
- -------------------------------- ------------------- ---------------
<S> <C> <C>
Robb Davis, Vice President of Project Dev. $11,875 10,000
Clean Earth, Inc.
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 Lupo, former President
U.S. Plastic Lumber Ltd. $54,687.50 25,000
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.
18
<PAGE> 21
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 Company is seeking
stockholder approval to satisfy requirements of the Code which require
shareholder approval of the Plan in order for options granted for the additional
shares issuable under the Plan to qualify as Incentive Stock Options to the
extent so designated and for the Plan to satisfy one of the conditions of
Section 162 (m) of the Code application to the performance based compensation.
The Company is also seeking approval of the Plan to satisfy a NASDAQ Stock
Market requirement that requires companies who shares are reported on the NASDAQ
Stock Market to obtain stockholder approval of amendments to stock plans which
increase the number of shares available for issuance to officers and 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
1,000,000 shares of Common Stock will be reserved for issuance to employees and
contractors under the Plan, representing approximately 4.5 percent of the
outstanding shares of Common Stock on March 22, 1999. The Plan shall remain in
effect until all options awarded under the
19
<PAGE> 22
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 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 on 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 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.
Generally, the option vesting is either three years or immediate as determined
by the Committee in its discretion.
20
<PAGE> 23
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. Following a
change in control, unless waived in advance of such change in control by the
optionee, an optionee may require the Company or its successor to pay a cash
amount in cancellation of the option equal to the fair market of the shares of
Common Stock covered by the option reduced by the aggregate exercise price.
Under the Plan, a change in control is deemed to occur (i) in the event the
Stout Partnership, in aggregate, beneficially owns 20% or less of the issued and
outstanding shares of Common Stock or (ii) if any person acquires beneficial
ownership of more than 50 percent of the issued and outstanding shares of Common
Stock or (iii) has the power (whether as result of ownership of capital stock,
by contract or laws) or ability to elect directors who, 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.
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.
21
<PAGE> 24
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.
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 50 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 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 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
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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. to 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 February 26, 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.
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.
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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.
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.
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. 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.
Following a change in control, unless waived in advance of such change in
control by the optionee, an optionee may require the Company or its successor to
pay a cash amount in cancellation of the option equal to the fair market of the
shares of Common Stock covered by the option reduced by the aggregate exercise
price. Under the Director Plan, a change in control is deemed to occur (i) in
the event the Stout Partnership, in aggregate, beneficially owns 20% or less of
the issued and outstanding shares of Common Stock or (ii) if any person acquires
beneficial ownership of more than 50 percent of the issued and outstanding
shares of Common Stock or (iii) has the power (whether as result of ownership of
capital stock, by contract or laws) or ability to elect directors who, the time
of such election, constituting the majority of directors of the Company.
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,
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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
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.
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<PAGE> 28
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 50 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 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 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 February 26, 1999 was $8.00 per
share.
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
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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 described above have not
been satisfied with respect to such stock, such disposition will
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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
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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.
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;
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(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
(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
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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 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 in the Company's 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."
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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
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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 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 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 permanent 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.
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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 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 partial or effect 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.
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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.
(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
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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.
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 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 in 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.
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(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.
(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 1,000,000 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 in
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, 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.
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(c) MULTIPLE GRANTS. An 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, 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.
(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.
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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 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.
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, 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), 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 on 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.
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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 going 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 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
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; 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
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<PAGE> 45
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, without regard to any limitation on
exercise imposed pursuant to Section 10 (b) above, and, the optionee at the time
of such change in control shall have the right to require USPL or its successor
to pay, in cancellation of such Option, an amount equal to the product of (i)
the excess of (x) the fair market value per share of the Stock over (y) the
Option Price times (ii) the number of shares of Stock specified by the Optionee
in a written notice to USPL (up to the full number of shares of Stock then
subject to such Option). For purposes of the Plan, a "Change in Control" shall
be deemed to occur (a) in the event the Stout Partnership, in aggregate,
beneficially owns 20% or less of the issued and outstanding shares of Common
Stock; or (b) if any person shall acquire direct or indirect beneficial
ownership of more than 50% 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 (c) 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 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.
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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.
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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(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.
(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
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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:
"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.
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
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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 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 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 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.
(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
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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.
(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 investing 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 50 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 and 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 limiting 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.
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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.
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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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
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 will encourage such eligible individuals to remain in the
service of USPL. 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").
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.
(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.
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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 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.
(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
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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. 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 Plan.
8. 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.
9. 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.
(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 on 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 going 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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(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 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
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; 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
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immediately exercisable in full, without regard to any limitation on exercise
imposed pursuant to Section 10 (b) above, and, optionee, at the time of such
change in control shall have the right to require USPL or its successor to pay,
in cancellation of such Option, an amount equal to the product of (i) the excess
of (x) the fair market value per share of the Stock over (y) the Option Price
times (ii) the number of shares of Stock specified by the Optionee in a written
notice to USPL (up to the full number of shares of Stock then subject to such
Option). For purposes of the Plan, a "Change in Control" shall be deemed to
occur (a) in the event the Stout Partnership, in aggregate, beneficially owns
20% or less of the issued and outstanding shares of Common Stock; or (b) if any
person shall acquire direct or indirect beneficial ownership of more than 50% 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 (c) 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.
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
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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.
(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.
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.
(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.
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12. 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.
(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:
(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:
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<PAGE> 59
"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.
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
(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
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<PAGE> 60
Option Price payable with respect to shares subject to the unexercised portion
of the Option outstanding 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 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.
(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.
(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 investing 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 50 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
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<PAGE> 61
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 and 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 limiting 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.
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
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.
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> 62
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
[ ] 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)
<PAGE> 63
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.
