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As filed with the Securities and Exchange Commission on April 27, 2000
Registration No.333-32148
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
U.S. PLASTIC LUMBER CORP.
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(Exact name of Registrant as specified in its charter)
Nevada 87-0404343
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2300 W. Glades Road, Suite 440 W
Boca Raton, Florida 33431
Telephone (561)394-3511
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(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
Bruce C. Rosetto
Vice President, General Counsel and Secretary
U.S. Plastic Lumber Corp.
2300 W. Glades Road, Suite 440 W
Boca Raton, Florida 33431
Telephone (561)394-3511
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Jane K. Storero, Esq.
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5488
Facsimile (215) 569-5555
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share (1) Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.0001 per share,
issuable upon conversion of debentures................. 1,818,182(1) $ 9.6525(2) $17,500,002(2) $4,620(6)
Common Stock, par value $.0001 per share,
issuable upon exercise of warrants .................... 300,000(3) $ 10.09125(4) $ 3,027,375(4) $ 800(6)
Common Stock, par value $.0001 per share,
issuable upon exercise of warrants .................... 500,000(5) $ 6.00 $ 3,000,000 $ 792(7)
Total ................................................. 2,618,182 $23,527,377 $6,220
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</TABLE>
(1) This Registration Statement covers 1,818,182 shares of U.S. Plastic
Lumber common stock issuable upon the conversion of debentures owned by
Halifax Fund, L.P. of which shares may be offered from time to time.
(2) Based upon the maximum conversion price of $9.6525 as set forth in the
debentures, estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(g) under the Securities
Act of 1933, as amended.
(3) This Registration Statement covers 300,000 shares of U.S. Plastic
Lumber common stock issuable upon the exercise of warrants owned by
Halifax Fund, L.P. of which shares may be offered from time to time.
(5) Based upon the exercise price of $10.09125 as set forth in the
warrants, estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(g) under the Securities
Act of 1933, as amended. This Registration Statement covers 500,000
shares of U.S. Plastic Lumber common stock based upon an exercise price
of $6.00 per share.
(6) 2,118,182 shares were registered in connection with the initial filing
and the fee of $5,420 was paid therewith.
(7) 500,000 shares are being registered in connection with this Amendment
No. One and the $792 fee is paid herewith.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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The Information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED APRIL 27, 2000
PROSPECTUS
U.S. PLASTIC LUMBER CORP.
2,618,182
SHARES OF COMMON STOCK
Halifax Fund, L.P. and Louis D. Paolino, Jr. are using this prospectus
to offer and sell up to 2,618,182 shares of U.S. Plastic Lumber Corp. common
stock. 1,818,182 of the shares of common stock being sold by Halifax Fund, L.P.
are issuable upon the conversion of debentures which were issued to Halifax
Fund, L.P. on February 2, 2000. 300,000 of the shares of common stock being sold
by Halifax Fund, L.P. are issuable upon exercise of warrants which were granted
to Halifax Fund, L.P. on February 2, 2000. 500,000 of the shares of common stock
being sold by Louis D. Paolino, Jr. are issuable upon exercise of warrants which
were granted to Mr. Paolino in May 1999.U.S. Plastic Lumber may receive proceeds
upon exercise of the warrants by Mr. Paolino and the Halifax Fund, L.P.;
however, U.S. Plastic Lumber will not receive any proceeds from the sale of its
common stock by Halifax Fund, L.P.
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER "RISK FACTORS"
BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
Halifax Fund, L.P. and Louis D. Paolino, Jr. may sell their U.S.
Plastic Lumber common stock in one or more transactions on the Nasdaq Stock
Market at market prices prevailing at the time of sale or in private
transactions at negotiated prices or via any other method permitted under this
Prospectus or the "Plan of Distribution".
U.S. Plastic Lumber's common stock is traded on the Nasdaq National
Market under the symbol "USPL."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is April , 2000.
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TABLE OF CONTENTS
Page
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Prospectus Summary ......................................... 2
Risk Factors ............................................... 2
Forward Looking Statements ................................. 13
Where You Can Find More Information ........................ 13
Use of Proceeds ............................................ 14
Selling Shareholders ....................................... 14
Plan of Distribution ....................................... 16
Experts .................................................... 17
Legal Matters .............................................. 18
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. U.S. PLASTIC LUMBER HAS NOT AUTHORIZED ANYONE ELSE
TO PROVIDE YOU WITH DIFFERENT INFORMATION. HALIFAX FUND, L.P. AND LOUIS D.
PAOLINO, JR. WILL NOT MAKE AN OFFER OF THEIR SHARES IN ANY STATE WHERE THE OFFER
IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS
IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT PAGE OF THIS
PROSPECTUS.
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PROSPECTUS SUMMARY
This summary highlights information contained in other parts of this
prospectus. It is not complete and may not contain all of the information that
you should consider before investing in the shares. You should read the entire
prospectus carefully.
U.S. Plastic Lumber Corp. is a diversified holding company with
subsidiaries operating in the plastic lumber manufacturing, plastic sheet
manufacturing, plastic raw material processing, and environmental recycling
industries. We are the largest manufacturer of plastic lumber in the United
States and are aggressively building our existing lines of business through
internal growth and acquisitions. We are actively negotiating to acquire
additional companies in our existing and complementary lines of business.
As used in this prospectus, the terms "we," "us," "our" and "U.S.
Plastic Lumber" mean U.S. Plastic Lumber Corp. and its subsidiaries.
Our principal executive offices are located at 2300 Glades Road, Suite
440W, Boca Raton, Florida 33431 and our telephone number is (561) 394-3511.
RISK FACTORS
In considering whether to acquire U.S. Plastic Lumber common stock, you
should consider carefully the risks associated with the ownership of U.S.
Plastic Lumber common stock. These risks are described in detail below. You
should consider carefully these risk factors, together with all of the other
information in this prospectus and the documents we have incorporated by
reference in the section "Where You Can Find More Information," before you
decide to purchase shares of our common stock.
WE HAVE A HISTORY OF LOSSES AND IF WE ARE NOT ABLE TO MAINTAIN OUR
CURRENT PROFITABILITY, IT COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.
We incurred operating losses for the years ended December 31, 1996 and
1997. We reported operating income of $1,687,636 for the year ended December 31,
1998 and $10,238,421 for the year ended December 31, 1999, but we cannot assure
you that our profitability will continue. If we are not able to maintain our
current profitability, which will depend largely on our ability to substantially
increase sales revenues, limit the growth of overhead and direct expenses, and
develop greater efficiencies in our operations, it could adversely affect the
market price of our common stock.
OUR LIMITED ACCESS TO CAPITAL COULD RESULT IN OUR INABILITY TO OBTAIN
FINANCING IN ADEQUATE AMOUNTS AND ON ACCEPTABLE TERMS, WHICH COULD HAVE AN
ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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We have limited access to capital and there is no assurance that we
will be able to obtain the capital necessary and appropriate to operate our
business. We will require additional capital in order to:
X manufacture, market and sell our products;
X open new manufacturing facilities
X develop new products;
X manufacture, market and sell our new product line;
X consolidate our existing operations;
X implement our plan of operations;
X to fund other working capital needs; and
X capital expenditures.
While we do have existing lines of credit, we cannot be sure that this
debt financing will be available to us in the future or that it will be
available in the amounts we require or on terms acceptable to us. Our failure to
obtain financing in adequate amounts and on acceptable terms could have an
adverse effect on our business, financial condition and results of operations.
OUR PLASTIC LUMBER PRODUCTS CARRY LONG WARRANTIES, AS MUCH AS 50 YEARS
ON SOME PRODUCTS. AS THE PRODUCT IS FAIRLY NEW, WE DO NOT HAVE SUFFICIENT
HISTORICAL TRACK RECORD TO DETERMINE THE FUTURE LIABILITY THAT MAY RESULT FROM
OFFERING EXTENDED WARRANTIES OR FROM PRODUCT LIABILITY MATTERS, WHICH COULD HAVE
A MATERIAL ADVERSE AFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATION.
Our plastic lumber products are fairly new and have not been on the
market for long periods of time and may be used in applications that we may have
no knowledge of or limited experience in. Our plastic lumber products are used
in applications that we have little or no historical track record to measure our
potential liability as it relates to product warranty or product liability
issues. If our products fail to perform over the extended warranty periods,
which for some products is as long as 50 years, we may not have the ability to
adequately protect ourself against such potential liability which can cause a
material adverse affect on our business, financial condition and results of
operation.
IF WE ARE NOT ABLE TO ATTRACT AND KEEP EMPLOYEES WITH THE REQUISITE
LEVELS OF EXPERTISE, IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATION.
Our business requires a significant amount of expertise in a wide
variety of functions. We cannot assure you that we will be able to maintain
employees with the requisite levels of expertise or that we will be able to
attract and keep these employees in the future. Our failure to attract and keep
employees with the requisite levels of expertise could have a material adverse
effect on our business, financial condition and results of operation.
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SEVERAL OF OUR DIRECTORS, OFFICERS AND EMPLOYEES ARE AFFILIATED WITH
ENTITIES WHICH ARE SIGNIFICANT SHAREHOLDERS OF OURS, WHICH COULD RESULT IN A
CONFLICT OF INTEREST.
Several of our directors, officers and employees are affiliated,
through ownership or otherwise, with the Stout Partnership and Schultes, Inc.,
each of which is a significant shareholder. When our directors who are
affiliated with these entities are faced with decisions where we have interests
adverse to those entities, a conflict of interest could arise. Since a majority
of our directors are affiliated with those entities, agreements related to
monies provided by those entities were not the result of arm's-length
negotiations. We have attempted to have these agreements be as similar to those
negotiated by us with third parties, however, these agreements may include terms
and conditions that may be more or less favorable to us than terms contained in
similar agreements negotiated with third parties.
IF WE ARE UNABLE TO SUCCESSFULLY IMPLEMENT OUR GROWTH STRATEGY, IT
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The success of our growth strategy depends on our ability to continue
to increase profit margins through:
X integration of acquisitions;
X consolidation of plants and operations;
X increased consumer acceptance of alternative wood products;
X an increased distribution network;
X increased production capacity; and
X ability to finance growth.
Our ability to implement this strategy will depend in large part on
whether we are able to:
X expand through strategic acquisitions of companies in new and
complementary industries;
X obtain adequate financing on favorable terms to fund this
growth strategy;
X develop and expand its customer base;
X hire, train and retain skilled employees;
X strengthen brand identity and successfully implement its
marketing campaigns;
X continue to expand in the face of increasing competition;
X continue to negotiate our supply contacts and sales agreements
on terms that increase or maintain our current profit margins;
and
X create sufficient demand for plastic lumber and other
products.
Our inability to implement any or all of these strategies could have a
material adverse effect on our business, financial condition and results of
operations.
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OUR GROWTH STRATEGY INCLUDES ACQUISITIONS AND IF WE ARE UNABLE TO MAKE
ACQUISITIONS, OR IF THOSE ACQUISITIONS ARE NOT SUCCESSFUL, IT COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
As part of our growth strategy, we have made, and plan to continue to
make acquisitions of other companies. We may not be able to make acquisitions in
the future. In addition, any acquisition that we make could have a material
adverse effect on our business, financial condition and results of operations.
Future acquisitions are subject to many risks, including the risks that:
X we may not be able to identify suitable companies to buy;
X we may not be able to purchase companies at favorable prices,
or at all;
X we may not be able to obtain financing on favorable terms, or
at all, to pay for future acquisitions; and
X we may not be able to effectively integrate the acquired
businesses or technologies into our operations.
In addition, in order to consummate future acquisitions, we may be
required to borrow money or incur other liabilities, which could have a material
adverse effect on our liquidity and capital resources. We may also be required
to issue additional shares of stock, which could result in dilution to our
shareholders.
AS A RESULT OF OUR ACQUISITION OR LEASE OF REAL ESTATE, WE MAY BECOME
LIABLE FOR THE REMEDIATION AND/OR REMOVAL OF HAZARDOUS OR TOXIC SUBSTANCES FROM
THAT REAL ESTATE.
From time to time, we acquire or lease storage facilities or other
properties in connection with the operation of our business. Under various U.S.
federal, state or local environmental laws, ordinances and regulations, we could
be required to investigate and clean up hazardous or toxic substances or
chemical releases at property we acquire or lease. We could also be held liable
to a governmental entity or to third parties for property damage, personal
injury and investigation and cleanup costs incurred by those parties in
connection with any contamination. The costs of investigation, remediation or
removal of hazardous or toxic substances may be substantial, and the presence of
those substances, or the failure to properly remediate the property, may
adversely affect our ability to sell or rent the property or to borrow using the
property as collateral. In addition, we could be subject to common law claims by
third parties based on damages and costs resulting from environmental
contamination emanating from these properties.
THE SEASONAL NATURE OF OUR BUSINESS COULD HAVE AN ADVERSE AFFECT ON OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our business is seasonal in nature. Historically, we have generated a
substantial portion of our revenues and profits during the second and third
quarters of our fiscal year. If for any reason our revenues fall below those
normally expected during the second and third quarters of
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our fiscal year, our business, financial condition and results of operation
could be adversely affected.
SOME OF OUR BUSINESSES OPERATE IN RELATIVELY NEW INDUSTRIES WHICH
PROSPECTIVE CUSTOMERS MAY RESIST.
The reclamation and recycling of plastic and the manufacture of plastic
lumber for use in construction, and other composite materials containing
recycled plastics, are relatively new industries. There is a general reluctance
in the construction industry to use new materials before they have been
extensively tested, particularly in certain segments which have exacting
performance standards for component materials. In the case of our recycled
plastic lumber and composite materials in particular, this testing may be
extensive for each prospective customer and may require substantial additional
time and resources. In addition, we may experience resistance from prospective
customers who are accustomed to more conventional, non-artificial wood
materials. Moreover, we may not have sufficient financial and other resources to
undertake extensive marketing and advertising activities or to afford the cost
of the necessary marketing and sales personnel when it becomes appropriate to
broaden our marketing efforts.
IF WE ARE NOT ABLE TO OBTAIN OUR RAW MATERIALS AT COMMERCIALLY
REASONABLE TERMS, IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The availability of low-cost raw materials, namely post-consumer and
industrial plastic waste products, is a material factor in our costs of
operations. Historically, suppliers have provided adequate quantities of these
raw materials at favorable costs. We believe that our current sources of raw
materials will continue to be available on commercially reasonable terms.
However, unavailability, scarcity or increased cost of these raw materials could
have a material adverse effect upon our business. We purchase most of our raw
materials through generators of post-consumer and industrial recycled plastic
materials. We do not rely on contractual arrangements with our raw materials
suppliers and we have no long-term supply contracts. Disruption of our supply
sources could have a material adverse effect on our business, financial
condition and results of operations.
IF WE ARE UNABLE TO DEVELOP NEW TECHNOLOGIES, WE MAY NOT BE ABLE TO
COMPETE EFFECTIVELY WHICH COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our products and services involve newly developing technologies and we
cannot be sure that we will be able to compete effectively in developing and
marketing new products and services or in developing or maintaining the
know-how, technology, and patents to compete effectively. There is a general
lack of public awareness of these newly developing products and services
generally, or as alternatives to more traditional and well established products.
To compete effectively, we must increase public knowledge and acceptance of our
products and services and develop and maintain certain levels of know-how and
technical expertise. Our failure to compete effectively could have an adverse
effect on our business, financial condition and results of operations.
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THERE IS A LACK OF UNIFORM STANDARDS IN THE PLASTIC LUMBER INDUSTRY IN
WHICH WE OPERATE WHICH COULD RESTRICT THE GROWTH OF PLASTIC LUMBER PRODUCTS AND
LIMIT THE MARKET FOR THESE PRODUCTS.
The American Society for Testing and Materials and other industry trade
organizations have established general standards and methods for measuring the
characteristics of specific building materials. Users of building materials (and
frequently, issuers of building codes) generally specify that the building
materials comply with the standards relative to the proposed applications. Since
uniform, recognized standards or methods have only recently been established for
measuring the characteristics of plastic lumber, potential users may not be
aware of this method of judging whether or not plastic lumber may be suitable
for their particular requirements, without being informed of such standards by
the plastic lumber supplier or otherwise becoming aware of them. The fact that
these standards are not well known for plastic lumber may limit the market
potential for our building materials and make potential purchasers of such
building materials reluctant to use them. The Plastic Lumber Trade Association,
of which we are a member, is pursuing increased public awareness of such
standards, but we cannot be sure that public awareness will successfully be
increased or that increased awareness will increase the market for our products.
THE INDUSTRIES IN WHICH WE OPERATE ARE SUBJECT TO EXTENSIVE REGULATION
AND THE COST OF COMPLYING WITH THOSE REGULATIONS, OR THE LIABILITY FOR NOT
COMPLYING, COULD BECOME SUBSTANTIAL, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our businesses are subject to extensive laws and regulations designed
to protect the environment from toxic wastes and hazardous substances or
emissions and to provide a safe workplace for employees. Under current federal
regulations, the Resource Conservation & Recovery Act, and Comprehensive
Environmental Responsibility, Compensation and Liability Act, the generator of
toxic or hazardous waste is financially and legally responsible for that waste
forever, and strictly liable for the clean up and disposal costs. In particular,
the business of treating or otherwise handling toxic or hazardous waste
materials is fraught with potential liability to such handlers if the handling
and tracking of such wastes is not completed properly. We believe we are either
in material compliance with all currently applicable laws and regulations or
that we are operating in accordance with appropriate variances or similar
arrangements, but we cannot be sure that we will always be deemed in compliance,
nor can we be sure that compliance with current laws and regulations will not
require significant capital expenditures that could have a material adverse
effect on our operations. These laws and regulations are always subject to
change and could become more stringent in the future. Although state and federal
legislation currently provide for certain procurement preferences for recycled
materials, the preferences for materials containing waste plastics are dependent
upon the eventual promulgation of product or performance standard guidelines by
state or federal regulatory agencies. The guidelines for recycled plastic
building materials may not be released
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or, if released, the product performance standards required by those guidelines
may be incompatible with our manufacturing capabilities. It may be necessary to
expend considerable time, effort and money to keep our existing or acquired
facilities in compliance with applicable environmental, zoning, health and
safety regulations and as to which there may not be adequate insurance coverage.
In addition, due to the possibility of unanticipated factual or regulatory
developments, the amounts and timing of future environmental expenditures and
compliance could vary substantially from those currently anticipated.
IF WE ARE NOT ABLE TO MAINTAIN OUR PERMITS AND LICENSES, IT COULD HAVE
AN ADVERSE AFFECT ON OUR BUSINESS.
Our business, especially our environmental recycling operation, depends
on our maintaining permits and licenses from many different federal, state, and
local agencies. We cannot assure you that we will be able to maintain our
permits and licenses in the future or that we will be able to modify our permits
and licenses, if necessary, to be able to compete effectively.
WE RELY SIGNIFICANTLY ON OUR TRADE SECRETS AND OUR INABILITY TO PROTECT
THOSE TRADE SECRETS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our businesses involve many proprietary trade secrets, including
certain methods, processes and equipment designs for which we have not sought
patent protection. Although we have taken measures to safeguard our trade
secrets by limiting access to manufacturing and processing facilities and
requiring confidentiality and nondisclosure agreements with third parties, we
cannot assure you that our trade secrets will not be disclosed or that others
will not independently develop comparable or superior technology. Rather than
rely on patent protection, we have generally chosen to rely on the unique and
proprietary nature of our processes. We have obtained exclusive worldwide
licensing rights with respect to patent technology related to railroad crossties
and the process to manufacture them, but there is no assurance we will be able
to maintain those rights for any specific length of time. We also purchased
patents to manufacture structural lumber.
To the extent we do have patents on some of our technology there can be
no assurances that our patents will adequately protect us from similar
technology being developed with different formulations or from use in countries
in which we do not have patent protection. The Company will seek to protect
itself against known infringement cases against our patents, but there can be no
assurance that our efforts will be successful.
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IF WE ARE NOT ABLE TO SUCCESSFULLY OBTAIN BID WORK AT SUITABLE
PROFITABLE MARGINS, IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our environmental recycling operation consists of certain subsidiaries
which are highly reliant upon contract bidding as a significant source of
revenues. We cannot assure you that we will be successful in obtaining bid work
in the future or that if we do obtain bid work that it will be at suitable
profitable margins. Our failure to successfully obtain bid work at suitable
profitable margins could have a material adverse effect on our business,
financial condition and results of operations.
THE OCCURRENCE OF AN EVENT NOT FULLY COVERED BY INSURANCE COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Our business could be disrupted by a variety of occurrences, including:
X fires, explosions or blow outs;
X environmental hazards;
X hurricanes, floods, fires or other acts of God; or
X product liability occurrences.
Any of these occurrences could result in substantial losses due to:
X injury;
X loss of life;
X severe damage;
X clean-up responsibilities;
X regulatory investigation; or
X penalties and suspension of operations.
We maintain insurance coverage against some, but not all, potential
risks. However, we cannot assure you that our insurance will:
X be adequate to cover all losses or exposure for liability;
X continue to be available at premium levels that justify its
purchase; or
X continue to be available at all.
If an event occurs which is not fully covered by insurance, it could
have a material adverse effect on our business, financial condition and results
of operation.
A SUBSTANTIAL INCREASE IN INTEREST RATES COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATION, WHILE A
FAILURE TO COMPLY WITH OUR CREDIT AGREEMENTS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR LIQUIDITY AND CAPITAL RESOURCES.
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A substantial portion of our outstanding indebtedness is at floating
interest rates. Therefore, a substantial increase in interest rates could
adversely affect our cost of borrowed money, which could have an adverse effect
on our business, financial condition and results of operation. In addition, most
of our debt instruments contain covenants establishing certain financial and
operating restrictions. Our failure to comply with any covenant or obligation
contained in any credit agreement could result in an event of default which
could accelerate debt repayment terms under certain other credit agreements, all
of which could have a material adverse effect on our liquidity and capital
resources.
OUR PENDING OR FUTURE ADMINISTRATION AND LEGAL PROCEEDINGS COULD RESULT
IN A SIGNIFICANT JUDGMENT AGAINST US, THE LOSS OF A SIGNIFICANT PERMIT OR
LICENSE OR THE IMPOSITION OF A SIGNIFICANT FINE, ANY OF WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
On December 30, 1999, a lawsuit was filed against our former Chairman
in a matter entitled, WASTE MANAGEMENT, INC. VS. PAOLINO, ET AL, U.S. District
Court, District of Delaware. Although we are not a named party in the lawsuit,
it is not possible for us to predict the implications of this lawsuit against
Mr. Paolino and others at the current time. Mr. Paolino and others have filed a
lawsuit against Waste Management, Inc. We are also not a named party in that
litigation.
This dispute between Waste Management, Inc. and Mr. Paolino and others
may continue for a long period of time. The effects of this litigation may have
wide ranging implications on us which may result in material adverse effects
upon the business, financial condition and/or operating results of our Company
which cannot be reasonably foreseen by us at the current time.
We have not established any reserves on our Balance Sheet as a result
of any pending or threatened litigation.
We are generally involved in administrative and legal proceedings in
the ordinary course of our business. Citizen's groups have become increasingly
active in challenging the grant or renewal of permits and licenses for waste
facilities and responding to these challenges has further increased the costs
associated with establishing new facilities or expanding current facilities. A
significant judgment against us, the loss of a significant permit or license or
the imposition of a significant fine could have a material adverse effect on our
business, financial condition and results of operations.
10
<PAGE> 13
THE INDUSTRIES IN WHICH WE OPERATE ARE VERY COMPETITIVE AND OUR
INABILITY TO COMPETE EFFECTIVELY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
All of our businesses operate in highly competitive industries. Our
recycled plastic lumber business faces competition from other producers of
recycled plastic lumber as well as producers of vinyl and aluminum decking, and
traditional wood, especially pressured treated wood. We compete against other
makers of recycled plastic principally upon the basis of price and quality, as
well as the immediate availability of the product, and compete against other
products such as pressure treated lumber by emphasizing the superior suitability
characteristics of plastic lumber for certain applications, as well as appealing
to the environmental consciousness of consumers. Our environmental recycling
operations face competition from several large competitors that provide similar
services throughout the northeast and midatlantic states. The resources of these
competitors, financial or otherwise are such that it is very difficult for us to
effectively compete. In some instances, our competitors have more revenues,
market share, better name recognition and capital available which could make it
difficult for us to compete. In addition, the environmental industry is changing
as a result of rapid consolidation and our future success may be affected by
those changes. Our failure to compete successfully in either the plastic lumber
or the environmental industry could have a material adverse effect on our
business, financial condition and results of operations.
FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET COULD ADVERSELY
AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.
There were approximately 32.1 million shares of our common stock
outstanding as of December 31, 1999. In addition, we intend to continue to issue
common stock in connection with acquisitions, financings or in other
transactions. Future sales of substantial amounts of our common stock in the
public market, or the perception that these sales could occur, could adversely
affect prevailing market prices of our common stock and could impair our ability
to raise capital through future offerings of equity securities.
OUR SUCCESS DEPENDS ON OUR KEY PERSONNEL AND, IF WE ARE NOT ABLE TO
RETAIN THEM, IT COULD HAVE A MATERIAL ADVERSE EFFECT UPON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We believe that our success is dependent to a significant extent upon
the continued employment of certain key executive officers. The loss of services
of Mark S. Alsentzer, our Chief Executive Officer, John Poling, our Chief
Financial Officer, Bruce C. Rosetto, our Vice President and General Counsel, or
Michael D. Schmidt, our Vice President and Controller/Chief Accounting Officer,
for any reason could have a material adverse effect upon our business, financial
condition and results of operations.
11
<PAGE> 14
ANTI-TAKEOVER PROVISIONS MAY MAKE IT MORE DIFFICULT FOR A THIRD PARTY
TO ACQUIRE CONTROL OF US, COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK AND COULD REDUCE THE AMOUNT THAT SHAREHOLDERS MIGHT RECEIVE IF WE ARE
SOLD.
"Anti-takeover" provisions contained in Nevada law and in our articles
of incorporation, bylaws and contracts could make it more difficult for a third
party to acquire control of us, even if that change in control would be
beneficial to shareholders. These provisions could adversely affect the market
price of our common stock and could reduce the amount that shareholders might
receive if we are sold. These anti-takeover provisions include the following:
X Our articles of incorporation give our board of directors the
authority to issue shares of preferred stock without
shareholder approval. Any preferred stock could have rights,
preferences and privileges that could adversely affect the
voting power and the other rights of the holders of our common
stock.
X Our articles of incorporation and bylaws provide for staggered
terms for the members of the board of directors, with each
board member serving a staggered four year term.
X Options to purchase our common stock will immediately become
exercisable upon a change in control.
12
<PAGE> 15
FORWARD LOOKING STATEMENTS
Some of the information in this prospectus may contain "forward-looking
statements". Forward-looking statements can be identified by the use of
forward-looking language such as "will likely result," "may," "are expected to,"
"is anticipated," "estimate," "projected," "intends to" or other similar words.
Our actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements.
Forward-looking statements are subject to certain risks and uncertainties,
including but not limited to the risks which are described in detail under "Risk
Factors" and elsewhere in this prospectus. When considering these
forward-looking statements, you should keep in mind these risk factors and other
cautionary statements in this prospectus. You should not place undue reliance on
any forward-looking statement which speaks only as of the date made.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
and other information we file with the SEC at the SEC's public reference room at
450 Fifth Street, NW, Washington, D.C., 20549 and at the SEC's regional offices
in Illinois and New York. You may obtain information on the operation of the
public reference rooms by calling the SEC at 1-800-SEC-0330. Our SEC filings are
also available on the SEC's Internet site (http://www.sec.gov). You may also
inspect our SEC filings and other information concerning U.S. Plastic Lumber
Corp. at the offices the Nasdaq Stock Market, 1735 K Street, NW, Washington,
D.C. 20006-1500.
We have filed a registration statement on Form S-3 to register the
shares of common stock offered under this prospectus. This prospectus is a part
of the registration statement on Form S-3 and constitutes a prospectus of U.S.
Plastic Lumber. As allowed by SEC rules, this prospectus does not contain all
the information you can find in the registration statement on Form S-3 or the
exhibits to the registration statement on Form S-3.
The SEC also allows us to "incorporate by reference" the information we
file with the SEC, which means we can disclose information to you by referring
you to another document filed separately with the SEC. Information incorporated
by reference is deemed to be part of this prospectus. Later information filed by
us with the SEC updates and supersedes this prospectus.
THIS PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT U.S. PLASTIC LUMBER THAT IS NOT INCLUDED IN OR DELIVERED WITH
THIS PROSPECTUS. COPIES OF ANY OF THAT INFORMATION ARE AVAILABLE WITHOUT CHARGE
TO ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST. WRITTEN REQUESTS FOR THOSE DOCUMENTS SHOULD BE DIRECTED TO THE
SECRETARY, U.S. PLASTIC LUMBER CORP., 2300 GLADES ROAD, SUITE 440W, BOCA RATON,
FLORIDA 33431, AND TELEPHONE REQUESTS MAY BE DIRECTED TO THE SECRETARY AT (561)
394-3511.
13
<PAGE> 16
We incorporate by reference the documents listed below which we
previously filed with the SEC:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SEC Filings Period
<S> <C>
- -----------------------------------------------------------------------------------------------------------------
Annual Report on Form 10-KSB (including those portions of our Year ended December 31, 1999
proxy statement for our 1999 annual meeting of shareholders
incorporated by reference to the Annual Report on Form 10-KSB)
- -----------------------------------------------------------------------------------------------------------------
Current Reports on Form 8-K Filed on October 1, 1999, October 12,
1999, February 4, 2000 and April 7, 2000
- -----------------------------------------------------------------------------------------------------------------
Registration Statement on Form 8-A filed pursuant to Section Filed on March 2, 1998
12(g) of the Exchange Act
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
All documents we file with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act after the date of this prospectus until
this offering is completed will be deemed to be incorporated by reference in
this prospectus and to be a part of this prospectus from the date that document
is filed.
USE OF PROCEEDS
We may receive proceeds upon Louis D. Paolino, Jr.'s and/or Halifax
Fund, L.P.'s exercise of their warrants to purchase our common stock. The
proceeds received by us on the exercise of the warrants will be used for general
working capital purposes. All net proceeds from the sale of U.S. Plastic Lumber
common stock will go to Halifax Fund, L.P. or Louis D. Paolino, Jr. as
applicable. U.S. Plastic Lumber will not receive any proceeds from the sale of
the common stock sold by Halifax Fund, L.P. or Louis D. Paolino, Jr.
SELLING SHAREHOLDERS
The following table provides certain information as of the date of this
prospectus regarding the beneficial ownership of our common stock by each of the
Selling Shareholders prior to and after the sale of the shares offered under
this prospectus. Beneficial ownership is determined in accordance with the rules
of the SEC, and generally includes voting or investment power with respect to
securities. In accordance with SEC rules, shares which may be acquired upon
conversion of debentures or the exercise of warrants which are currently
exercisable or which become exercisable within sixty days of the date of this
prospectus are deemed to be beneficially owned by the debenture or warrant
holder.
1,818,182 of the shares being offered by Halifax Fund, L.P. are
issuable upon the conversion of $7,500,000 aggregate principal amount of
subordinated debentures which were issued to Halifax Fund, L.P. on February 2,
2000. According to the terms of the debentures, the debentures are convertible
into common stock at the lower of $9.6525 per share or the lowest trading price
during the four trading days preceding the conversion date, but not to be lower
than $8.25 per share except in certain circumstances. In connection with Halifax
Fund, L.P.'s purchase of our convertible debentures we entered into a
registration rights agreement which requires us to register two times the sum of
the number of shares of common stock which are
14
<PAGE> 17
then issuable upon conversion of the debentures. For purposes of this
calculation and for determining the amount of securities to be registered in
connection with the conversion of the debentures, we assumed a conversion price
of $8.25.
300,000 of the shares being offered by Halifax Fund, L.P. are issuable
upon exercise of warrants which were granted to Halifax Fund, L.P. in connection
with Halifax Fund, L.P.'s purchase of our convertible debentures. On February 2,
2000 Halifax Fund, L.P. was issued a warrant to purchase 200,000 shares of our
common stock, subject to adjustment, at an exercise price of $10.09125 per
share, subject to adjustment. In addition, the warrants provide Halifax Fund,
L.P. a cashless exercise option, as Halifax Fund, L.P. can authorize us to
withhold from issuance a number of shares of common stock issuable upon the
exercise of their warrant which when multiplied by the exercise price would
equal the aggregate exercise price for the shares to be delivered to Halifax
Fund, L.P. Unless Halifax Fund, L.P. utilizes the cashless exercise option, upon
exercise of each of the warrants, we will receive $10.09125 per share, as
adjusted, of common stock. The registration rights agreement requires us to
register one and one-half times the number of shares issuable upon the exercise
of the warrants.
There are certain limitations on the ability of Halifax Fund, L.P. to
convert the debentures or exercise the warrants. One such limitation provides
that Halifax Fund, L.P. cannot convert the debentures or exercise the warrants
to the extent that such conversion and/or exercise would cause the number of
shares of common stock beneficially owned by it and its affiliates (other than
shares deemed beneficially owned through ownership of unconverted debentures and
unexercised warrants) to exceed 9.9% (subject to adjustment) of the then issued
and outstanding shares of common stock following such conversion and/or
exercise. As a result of this limitation on conversion as well as the fact that
the number of shares listed opposite the name of Halifax Fund, L.P. represent
amounts in excess of the number of shares into which the convertible debentures
are currently convertible and the warrants are exercisable as described below,
the number of shares listed opposite the name of Halifax Fund, L.P. do not
represent the number of shares of common stock beneficially owned by such
person.
500,000 of the shares being offered by Louis D. Paolino, Jr. are
issuable upon exercise of warrants, at an exercise price of $6.00 per share,
which were granted to Louis D. Paolino, Jr. in May 1999.
<TABLE>
<CAPTION>
# of Shares Owned # of Shares Being # of Shares Owned
Selling Shareholder Prior to the Offering Offered for Sale After the Offering
- ------------------- --------------------- ---------------- ------------------
<S> <C> <C> <C>
Halifax Fund, L.P. 2,968,147(1) 2,118,182 849,965
Louis D. Paolino, Jr. 2,000,000(2) 500,000 1,500,000
</TABLE>
(1) Includes 849,965 shares owned by the Halifax Fund, L.P. prior to this
offering.
(2) Includes 1,500,000 shares owned directly by Louis D. Paolino, Jr. prior
to this offering.
15
<PAGE> 18
PLAN OF DISTRIBUTION
The Selling Shareholders, their pledges, donees, transferees or other
successors in interest may offer their shares of U.S. Plastic Lumber Corp.
common stock at various times through dealers or brokers or other agents or
directly to one or more purchasers in one or more of the following transactions:
X on the Nasdaq Stock Market or other exchange on which the
common stock may be listed for trading;
X in the over-the-counter market;
X through block trades in which the broker or dealer so engaged
will attempt to sell the shares as agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;
X through purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to
this prospectus;
X in ordinary brokerage transactions and transactions in which
the broker solicits purchasers;
X through options, swap or derivatives;
X in privately negotiated transactions;
X in connection with short sales of U.S. Plastic Lumber common
stock;
X in a combination of any of the above transactions;
X in accordance with Rule 144 under the Securities Act of 1933,
rather than pursuant to this Prospectus; or
X in any other manner permitted by law.
The Selling Shareholders, their pledges, donees, transferees or other
successors in interest may sell their shares:
X at market prices prevailing at the time of sale;
X at prices related to those prevailing market prices;
X at negotiated prices; or
X at fixed prices that may be changed.
The Selling Shareholders may use broker, dealers or other agents to
sell their shares. If this happens, the brokers, dealers or other agents may
receive discounts, concessions or commissions from the Selling Shareholders, or
they may receive commissions from purchasers of common stock for whom they acted
as agents. Neither U.S. Plastic Lumber Corp. nor the Selling Shareholders can
presently estimate the amount of this compensation. We know of no existing
arrangements between the Selling Shareholders and any broker, dealer or other
agent relating to the sale or distribution of the common stock. Under applicable
rules and regulations under the Securities Exchange Act, any person engaged in a
distribution of any of the common stock may not simultaneously engage in market
activities with respect to the common stock for the applicable period under
Regulation M prior to the commencement of that distribution.
The Selling Shareholders may be deemed to an "underwriter" within the
meaning of Section 2(11) of the Securities Act. The Selling Shareholders will be
subject to the prospectus
16
<PAGE> 19
delivery requirements of the Securities Act. We have informed the Selling
Shareholders that they may be subject to applicable provisions of the Securities
Exchange Act and its rules and regulations, including, without limitation, Rule
10b-5 and Regulation M, which may limit the timing of purchases and sales of any
of the common stock by the Selling Shareholders. All of this may affect the
marketability of the common stock.
We have agreed to pay all of the expenses incident to this offering
other than commissions, concessions and discounts of brokers, dealers or other
agents, certain fees and disbursements of counsel for Halifax Fund, L.P. and
certain selling expenses. We may agree to indemnify Halifax Fund, L.P. and any
statutory "underwriters" against certain liabilities, including certain
liabilities under the Securities Act. In order to comply with certain states'
security laws, if applicable, the common stock will be sold in those
jurisdictions only through registered or licensed brokers or dealers.
EXPERTS
The consolidated financial statements of U.S. Plastic Lumber Corp. and
subsidiaries as of December 31, 1999 and for the year then ended, have been
incorporated by reference herein and in this registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing. The consolidated financial statements of U.S.
Plastic Lumber Corp. and subsidiaries as of and for the year December 31, 1998,
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent certified public accountants, as indicated in their
report with respect thereto, and are incorporated by reference in this
prospectus in reliance upon the authority of that firm as experts in accounting
and auditing in giving that report.
The engagement of the former independent accountant, Arthur Andersen
LLP was terminated by the Company on January 31, 2000 because the Board of
Directors of the Company and Arthur Andersen LLP mutually agreed that based upon
a potential conflict of interest, the best interests of the Company would be
served by engaging a new independent accounting firm. The conflict of interest
arises due to the fact that Arthur Andersen LLP is the principal auditor for
Waste Management, Inc. and are also assisting Waste Management, Inc. in a matter
entitled Waste Management, Inc. v. Louis D. Paolino, Jr. et al. Mr. Paolino was
the Chairman of the Board of Directors and Chairman of the Audit Committee of
the Board of Directors from May 5, 1999 through January 7, 2000. The Company is
not a named party in the lawsuit.
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 the report qualified or 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 Company's two most recent
fiscal years preceding such dismissal there were no matters of disagreements
17
<PAGE> 20
between the Company and its former independent accountants. The former
independent accountants have not advised the Company during the two most recent
fiscal years preceding of any of the following events:
(a) that the internal controls necessary for the Company to develop
reliable financial statements do not exist;
(b) that it can no longer rely on management's representations
or that it is unwilling to be associated with the financial statements prepared
by management;
(c) that it needs to significantly expand the scope of its
audit or that information has come to its attention which may materially impact
the fairness or reliability of a previously issued audit report or financial
statements issued or to be issued covering the fiscal period subsequent to the
date of the most recent financial statements covered by an audit report or that
it can no longer rely on management's representations or that it is unwilling to
be associated with the financial statements prepared by management; or that due
to the accountant's dismissal, it did not expand the scope of its audit or
conduct such further investigation; or
(d) that there have been any issues that have not been
resolved to the satisfaction of the former independent accountants or that would
otherwise affect its ability to render an unqualified audit report.
The Company has provided a copy of the disclosures being made
herein to its former independent accountant in compliance with Item 304(a)(3)
of Regulation S-K.
The Company has engaged the firm of KPMG LLP as its new
independent accountants to conduct the 1999 audit. This action has been approved
by the Board of Directors of the Company. The newly engaged accountants were not
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 prior to their
engagement.
LEGAL MATTERS
An opinion has been rendered by Bruce C. Rosetto, our Vice President,
General Counsel and Secretary, to the effect that the shares of common stock
issuable upon conversion of the debentures when converted as contemplated by the
debentures and the shares of common stock issuable upon exercise of the
warrants, when exercised, issued and paid for as contemplated by the warrants,
will be legally issued, fully paid and non-assessable. Mr. Rosetto did not
receive any additional compensation in connection with rendering this opinion
other than his salary and benefits as an officer of U.S. Plastic Lumber Corp.
which include options to purchase 150,000 shares of which 40,000 shares were
granted at an exercise price of $3.50 per share, 75,000 shares were granted at
an exercise price of $4.00 per share and the remaining 35,000 shares were
granted at $7.281 per share. The Company has a professional services contract
with Rosetto & Associates, LLC, a private law firm that performs legal work for
the Company as well as unrelated third parties. Mr. Rosetto is the sole
principal of Rosetto & Associates, LLC. In 1999 Rosetto & Associates billed the
Company $355,377 for legal services and paid the Company $206,514 for use of
office space, office equipment and other shared services.
18
<PAGE> 21
================================================================================
2,618,182 SHARES
U.S. PLASTIC LUMBER CORP.
COMMON STOCK
--------------
PROSPECTUS
--------------
The date of this Prospectus is April , 2000
================================================================================
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being registered, all of
which are being borne by the Registrant.
Securities and Exchange Commission Registration Fee .... 6,212*
-------
Accounting Fees and Expenses ........................... 5,000**
-------
Legal Fees and Expenses ................................ 25,000**
-------
Printing and Engraving Expenses ........................ 2,000**
-------
Total ................................ $38,212
=======
* Actual
** Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
U.S. Plastic Lumber's articles of incorporation (a copy of which is
filed as Exhibit 3.5 to the Company's Registration Statement on Form SB-2 filed
with the SEC on March 7, 1997) limit liability of its officers and directors to
the fullest extent permitted by the Nevada Business Corporation Act.
Sections 18.7502 and 78.751 of the Nevada Business Corporation Act
provides that each corporation:
(1) may indemnify any person who was or is a party or is threatened to
be made party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
II-1
<PAGE> 23
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful;
and
(2) may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction, determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
To the extent that a director, officer, employee or agent of a Nevada
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2 above, or in defense
of any claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
Any indemnification under Sections 1 and 2, unless ordered by a court
or advanced as provided by the Nevada statute and the Company's articles of
incorporation, must be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The determination
must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent legal
counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
II-2
<PAGE> 24
The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this Section do not affect any rights to
advancement of expenses to which corporate personnel other than director of
officers may be entitled under any contract or otherwise by law.
The indemnification and advancement of expenses authorized in or
ordered by a court: (a) does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to the requirements of the Nevada statute
and the Company's articles of incorporation, may not be made to or on behalf of
any director or officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action, and (b) continues for a person who
has ceased to be a director, officer, employee or agent and inures to the
benefit of the heirs, executors and administrators of such a person."
The Company has obtained insurance to cover its directors and executive
officers for liabilities which may be incurred in connection with the offer,
sale and registration of the common stock.
ITEM 16. EXHIBITS.
4.1 5% Convertible Debenture due February 2, 2005 issued to
Halifax Fund, L.P.*
4.2 Common Stock Purchase Warrant issued to Halifax Fund, L.P.
dated February 2, 2000.*
5.1 Opinion of Bruce C. Rosetto.
23.1 Consent of Arthur Andersen LLP, independent certified public
accountants
23.2 Consent of Callahan & Company P.C, independent certified
public accountants
23.3 Consent of KPMG LLP, independent certified public accountants
23.4 Consent of Bruce C. Rosetto (included in Exhibit 5.1).
II-3
<PAGE> 25
24.1 Power of Attorney of certain signatories (included on the
Signature Page).*
99.1 Convertible Debenture Purchase Agreement dated February 2,
2000 between U.S. Plastic Lumber and Halifax Fund, L.P.*
99.2 Registration Rights Agreement dated February 2, 2000 between
U.S. Plastic Lumber and Halifax Fund, L.P.*
99.3 Amendment to Agreement and Plan of Reorganization dated April
22, 1999 between Clean Earth Inc. and the Louis D. Paolino,
Jr. family*
*PREVIOUSLY FILED.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in this
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
SEC by the Registrant pursuant to section 13 or
II-4
<PAGE> 26
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-5
<PAGE> 27
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Boca Raton, state of Florida on April , 2000.
U.S. PLASTIC LUMBER CORP.
Date: April 27, 2000 By: /s/ Mark S. Alsentzer
----------------- ---------------------------
Mark S. Alsentzer, Chairman,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on April
27, 2000 in the capacities indicated.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ Mark S. Alsentzer Chairman, Chief Executive Officer and 4/27/00
- -------------------------------------- President (Principal Executive Officer)
Mark S. Alsentzer
/s/ Michael D. Schmidt Vice President - Finance (Principal 4/27/00
- -------------------------------------- Accounting Officer)
Michael D. Schmidt
/s/ John W. Poling Chief Financial Officer (Principal 4/27/00
- -------------------------------------- Financial Officer)
John W. Poling
4/27/00
/s/ August C. Schultes III Director
- --------------------------------------
August C. Schultes III
/s/ Gary J. Ziegler Director 4/27/00
- --------------------------------------
Gary J. Ziegler
/s/ Roger N. Zitrin
- -------------------------------------- Director 4/27/00
Roger N. Zitrin
/s/ Kenneth Leung Director 4/27/00
- --------------------------------------
Kenneth Leung
</TABLE>
II-6
<PAGE> 28
EXHIBIT INDEX
4.1 5% Convertible Debenture due February 2, 2005 issued to
Halifax Fund, L.P.*
4.2 Common Stock Purchase Warrant issued to Halifax Fund, L.P.
dated February 2, 2000.*
5.1 Opinion of Bruce C. Rosetto.
23.1 Consent of Arthur Andersen LLP, independent certified public
accountants
23.2 Consent of Callahan & Company P.C, independent certified
public accountants
23.3 Consent of KPMG LLP, independent certified public accountants
23.4 Consent of Bruce C. Rosetto (included in Exhibit 5.1).
24.2 Power of Attorney of certain signatories (included on the
Signature Page).
99.1 Convertible Debenture Purchase Agreement dated February 2,
2000 between U.S. Plastic Lumber and Halifax Fund, L.P.*
99.2 Registration Rights Agreement dated February 2, 2000 between
U.S. Plastic Lumber and Halifax Fund, L.P.*
99.3 Amendment to Agreement and Plan of Reorganization dated April
22, 1999 between Clean Earth Inc. and the Louis D. Paolino,
Jr. family*
*Previously Filed
<PAGE> 1
EXHIBIT 5.1
OPINION OF BRUCE ROSETTO, ESQUIRE
April 27, 2000
U.S. Plastic Lumber Corp.
2300 Glades Road, Suite 440W
Boca Raton, Florida 33431
RE: U.S. PLASTIC LUMBER CORP. REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
I have acted as general counsel to U.S. Plastic Lumber Corp. (the
"Company") in connection with the Registration Statement on Form S-3 (the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, relating to the
offer and sale of up to 2,618,182 shares of common stock, par value $.0001 per
share (the "Common Stock"), by the certain Selling Shareholders ("Selling
Shareholders") set forth on the Registration Statement. The opinion is
furnished pursuant to the requirements of Item 601(b)(5) of Regulation S-K.
In rendering this opinion, I have examined only the following documents:
(i) the Company's articles of incorporation and bylaws, (ii) resolutions
adopted by the Board of Directors of the Company related to the issuance of
shares being registered hereby and (iii) the Registration Statement. I have not
performed any independent investigation other than the document examination
described above. My opinion is therefore qualified in all respects by the scope
of that document examination. I have assumed and relied, as to questions of
fact and mixed questions of law and fact, on the truth, completeness,
authenticity and due authorization of all certificates, documents, and records
examined and the genuineness of all signatures. This opinion is limited to the
laws of the State of Nevada.
Based upon and subject to the foregoing, I am of the opinion that the
outstanding shares of Common Stock offered by the Selling Shareholders are
legally issued, fully paid and non-assessable.
This opinion is given as of the date hereof. I assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to my attention or any changes in laws which may hereafter
occur.
This opinion is strictly limited to the matters stated herein and no
other or more extensive opinion is intended, implied or to be inferred beyond
the matters expressly stated herein.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Sincerely,
/s/ Bruce C. Rosetto
-------------------------------
Bruce C. Rosetto
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-3 of our
report dated March 28, 2000, included in U.S. Plastic Lumber Corp.'s Form 10-KSB
for the year ended December 31, 1999 and to all references to our Firm included
in this Registration Statement.
/s/ Arthur Andersen LLP
- --------------------------
Miami, Florida,
April 26, 2000.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
to the incorporation by reference therein of our report dated March 12, 1999, on
the financial statements of Barbella Environmental Technology, Inc. as of and
for the year ended December 31, 1998 included in the restated consolidated
financial statements of U.S. Plastic Lumber Corp. and subsidiaries in its Form
10KSB filed with the Securities and Exchange Commission on March 30,2000 and the
incorporation by reference of that report in this Registration Statement of U.S.
Plastic Lumber Corp. on Form S-3.
/s/ Callahan & Company P.C.
- -----------------------------
Neptune New Jersey
April 26, 2000
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
As independent certified public accountants, we hereby consent to the
reference to our firm under the caption "Experts" in the Registration Statement
on Form S-3 and related Prospectus of U.S. Plastic Lumber Corp. pertaining to
the resale, from time to time, of 2,618,182 shares of Common Stock and to the
incorporation by reference therein of our report dated March 28, 2000 1999, with
respect to the restated consolidated financial statements of U.S. Plastic Lumber
Corp. and subsidiaries as of and for the year ended December 31, 1999 included
in its Form 10KSB filed with the Securities and Exchange Commission on March 30,
2000.
/s/ KPMG LLP
- ---------------------
Miami, FL
April 26, 2000
