<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-KSB/A
(MARK ONE)
[X] AMENDMENT NO. 1 TO ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 0-10238
U.S. ENERGY SYSTEMS, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT IN ITS CHARTER)
<TABLE>
<S> <C>
Delaware 52-1216347
(State of Incorporation) (I.R.S. Employer Identification Number)
515 N. Flagler Drive
Suite 702
West Palm Beach, FL 33401 (561)820-9779
(Address of registrant's principal executive offices) (Issuer's telephone number, including area code)
</TABLE>
Securities registered pursuant to Section 12(b) of the Act: None.
Securities Registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
-------------------------------------- -------------------------
<S> <C>
Common Stock, par value $.01 per share Nasdaq SmallCap Market
Warrants Nasdaq SmallCap Market
</TABLE>
Check whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for a shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [X].
Revenue for the Fiscal Year ended January 31, 1999: $4,195,000.
The aggregate market value of the Common Stock held by nonaffiliates
computed by reference to the average bid and asked price of the Common Stock of
the registrant as of May 28, 1999 was approximately $15,750,000.
Check whether issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act. [X]
As of May 28, 1999 the number of outstanding shares of the registrant's
Common Stock was 5,153,005.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE> 2
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Theodore Rosen 74 Chairman of the Board of Directors
Richard H. Nelson 59 President, Chief Executive Officer and Director
Howard A. Nevins 43 Executive Vice President and Director
Henry Schneider 34 Vice President and Director
Seymour J. Beder 72 Secretary, Treasurer and Chief Financial Officer
Terrence Page 52 Vice President
Evan Evans 73 Director
Asher E. Fogel 50 Director
Allen J. Rothman 42 Director
Lawrence I. Schneider 63 Director and Chairman of Executive Committee
</TABLE>
THEODORE ROSEN. Mr. Rosen has been a Director of the Company and
Chairman of the Board of Directors since November 1993. Since June 1993, Mr.
Rosen has been Managing Director of Burnham Securities. He was Senior Vice
President of Oppenheimer & Co. from January 1991 to June 1993, and was Vice
President of Smith Barney & Co. from 1989 to 1991. Mr. Rosen also currently
serves as a director of Waterhouse Investors Cash Management Co., an investment
management company engaged in management of money market mutual funds. Mr. Rosen
holds a BA degree from St. Lawrence University and did graduate work at both
Albany Law School and Columbia University School of Business.
RICHARD H. NELSON. Mr. Nelson has been President, Chief Executive
Officer and Director of the Company since November 1993. Mr. Nelson has been
engaged in the power plant industry for more than twenty years and has been
involved with over 200 power projects throughout the world, 125 of which have
been cogeneration projects. In 1973, Mr. Nelson formed Sartex Corp., which was
merged into the Company, then called Cogenic Energy Systems, Inc. ("Cogenic"),
in 1981. Mr. Nelson served as president of Cogenic until 1989. From January 1989
until January 1991, Mr. Nelson was president of Utility Systems Corp., a
subsidiary of Cogenic. In January 1991, Mr. Nelson formed Utility Systems
Florida, Inc. ("USF") where he served as president until November 1993, when USF
and Cogenic merged, with Cogenic being the surviving corporation and changing
its name to U.S. Envirosystems, Inc. U.S. Envirosystems changed its name to U.S.
Energy Systems, Inc. in November 1996. Mr. Nelson was Special Assistant to the
Director of the Peace Corps from 1961 to 1962; thereafter he served as Military
Aide to the Vice President of the United States from 1962 to 1963 and Assistant
to the President of the United States from 1963 to 1967. From 1967 to 1969, Mr.
Nelson was Vice President of American International Bank, and from 1969 to 1973
he was Vice President of Studebaker-Worthington Corp. Mr. Nelson received his BA
degree from Princeton University.
HOWARD A. NEVINS. Mr. Nevins has been Executive Vice President of the
Company's Environmental Division and Director of the Company since August 1997.
Mr. Nevins has wide ranging experience in the fields of mineral exploration,
chemical operations and environmental compliance. In 1985, he founded Trey
Explorations, Inc., a land exploration and development drilling company which
presently operates 80 oil and gas wells in the Illinois Basin. In 1990, he
co-founded Midwest Custom Chemicals, Inc., a manufacturer and international
distributor of specialty chemicals used for oil and water demulsification,
specializing in used oil recycling. In 1994, he co-founded both Quality
Environmental Laboratories, Inc. and America Enviro-Services, Inc., the latter
company which was acquired by the Company in August 1997. Mr. Nevins remains on
the boards of Midwest Custom Chemicals and Quality Environmental Laboratories.
Mr. Nevins is a Certified Professional Geologist, past President
2
<PAGE> 3
of the Indiana-Kentucky Geological Society, past Chairman of the Society of
Petroleum Engineers (Illinois Basin) and is currently on the boards of both the
Illinois Oil & Gas Association and the Independent Oil Producers. He is also on
the Advisory Council of the Indiana Department of Natural Resources. Mr. Nevins
received his BS degree in Geology from Western Michigan University in 1978.
HENRY SCHNEIDER. Mr. Schneider, a member of Energy Systems Investors,
LLC, was appointed Vice President for Development in March 1998 and was
appointed a Director of the Company in December 1998. From 1986 to 1988, Mr.
Schneider was an associate at Drexel Burnham Lambert specializing in taxable
institutional fixed income products and portfolio strategies. From 1989 to 1994,
Mr. Schneider was an associate with S & S Investments and Wood Gundy,
specializing in mergers, acquisitions and corporate restructuring. From 1994 to
1996, Mr. Schneider was a principal of Global Capital Resources, Inc., a private
merchant bank. Since 1996, Mr. Schneider has been a private investor. He has
been involved in arranging acquisitions and funding for the telecommunications,
energy, apparel, airline, financial and garage industries. Mr. Schneider holds
an Economics degree from Tufts University and a Master of Business
Administration from Boston University. Mr. Schneider is the son of Lawrence I.
Schneider.
SEYMOUR J. BEDER. Mr. Beder has been Secretary, Treasurer and Chief
Financial Officer of the Company since November 1993. From 1970 through 1980 he
was Chief Financial Officer for Lynnwear Corporation, a textile company, and
from 1980 to September 1993, Mr. Beder was president of Executive Timeshare,
Inc., a provider of executive consulting talent. Mr. Beder is a Certified Public
Accountant, and a member of the New York State Society of Certified Public
Accountants and the American Institute of Certified Public Accountants. Mr.
Beder received his BA degree from City College of New York.
TERRENCE PAGE. Mr. Page has been Vice President C Western Resources of
the Company since March 1997. Previously, Mr. Page served with the Nevada Public
Service Commission since 1982. From 1982 to 1989 he was Regulatory Operations
Supervisor and from 1989 until he resigned to join the Company, he served as
Director of Regulatory Operations. In this position, he had final responsibility
for developing all staff positions brought before the Commission and coordinated
with federal, state and local governments on matters of regulatory policy. He
has served on the Nevada Department of Information Services Advisory Committee,
the Ohio State University's National Regulatory Research Institute Advisory
Committee, the Las Vegas Regional Transportation Advisory Committee and the
Washoe Regional Water Planning Commission. Mr. Page holds his BS in Business
from the University of the State of New York and his MS in Management from the
American University.
EVAN EVANS. Mr. Evans has been a Director of the Company since August
1995. Since 1983 he has been chairman of Holvan Properties, Inc. ("Holvan"), a
real estate developer, and was managing director of Easco Marine, Ltd. from 1983
to 1988. Also, from 1985 to 1986 Mr. Evans was general manager of Belgian
Refining Corporation ("BRC"), pursuant to a contract between BRC and Holvan, and
from 1992 to 1996, Mr. Evans was a director of BRC. From 1981 to 1983 he was
vice president of Getty Trading and Transportation Company and president of its
subsidiary, Getty Trading International, Inc. From 1970 to 1981 Mr. Evans was
vice president and member of the board of directors of United Refining Corp
("URC"). Mr. Evans also currently serves as a director of Holvan, and since 1997
has been a director of URC. Mr. Evans received his BS degree in Mathematics from
St. Lawrence University and his BS in Civil Engineering from M.I.T.
ASHER E. FOGEL. Mr. Fogel was appointed to the Board of Directors of
the Company in October 1998. From 1985 to 1997 Mr. Fogel held senior positions
at Citicorp in London and New York specializing in corporate finance, capital
markets and investment advice and was a Managing Director of Citicorp
Securities, Inc. For twelve years prior to joining Citicorp Mr. Fogel held a
number of positions in Bank or America and Samuel Montagu & Co. In June 1997,
Mr. Fogel founded Dovertower Capital, a merchant banking boutique providing
corporate finance services in the United States and international markets. Mr.
Fogel holds a BA in Economics and an MBA from Hebrew University.
ALLEN J. ROTHMAN. Mr. Rothman has been a member of the Board of
Directors of the Company since January 1997. Mr. Rothman is a partner with the
law firm of Robinson, Brog, Leinwand, Greene, Genovese & Gluck P.C. in New York
with whom he has been associated since January 1996. Mr. Rothman specializes in
3
<PAGE> 4
corporate, finance and real estate law. Prior to joining Robinson Brog, he was
associated with several New York law firms. Mr. Rothman received his BA degree
from Columbia University and his JD degree from Harvard University.
LAWRENCE I. SCHNEIDER. Mr. Schneider, manager of Energy Systems
Investors, LLC, has been a member of Board of Directors since March 1998 and
serves as Chairman of its Executive Committee. Mr. Schneider has been associated
with numerous corporations through the years, including Newpark Resources, Inc.,
a company involved with oil field environmental remediation, where he was
Chairman of the Executive Committee. Mr. Schneider was also a partner in the New
York Stock Exchange firm Sassower, Jacobs and Schneider. He holds his BS degree
from New York University. Mr. Schneider is the father of Henry Schneider.
ELECTION OF EXECUTIVE OFFICERS
The Company's officers are elected annually by the Board of Directors
and serve at the discretion of the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires certain officers, directors, and beneficial owners of
more than ten percent (10%) of the Company's Common Stock to file reports of
ownership and changes in their ownership of the equity securities of the Company
with the Securities and Exchange Commission and Nasdaq. Based solely on a review
of the reports and representations furnished the Company during the last fiscal
year, the Company believes that each of these persons is in compliance with all
applicable filing requirements.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF
DIRECTORS
The Company's Board of Directors is comprised of three classes of
directors, each being elected every three years at the Company's Annual Meeting
of Stockholders. Class I directors currently serve until the Company's 2001
Annual Meeting of Stockholders, Class II directors currently serve until the
Company's 1999 Annual Meeting of Stockholders, and Class III directors currently
serve until the Company's 2000 Annual Meeting of Stockholders. Messrs. Howard
Nevins and Lawrence I. Schneider serve on Class I of the Company's Board of
Directors, Messrs. Allen J. Rothman and Evan Evans serve on Class II of the
Company's Board of Directors, and Messrs. Theodore Rosen and Richard H. Nelson
serve on Class III of the Company's Board of Directors. Messrs. Henry Schneider
and Asher Fogel, who were appointed to the Company's Board of Directors in 1998,
serve on Class I and II, respectively, of the Company's Board of Directors
and will both stand for election at the 1999 Annual Meeting of Stockholders.
During the year ended January 31, 1999, the Board of Directors of the
Company held a total of ten meetings and took approximately ten actions by
unanimous written consent. During 1998, no director attended fewer than 75% of
the aggregate of (i) the number of meetings of the Board of Directors held
during the period he served on the Board, and (ii) the number of meetings of
committees of the Board of Directors held during the period he served on such
committees.
The Board has two standing committees, an Audit Committee and an
Executive Committee. The Board does not have a Nominating Committee nor a
Compensation Committee.
The duties of the Audit Committee include recommending the engagement
of independent auditors, reviewing and considering actions of management in
matters relating to audit functions, reviewing with independent auditors the
scope and results of its audit engagement, reviewing reports from various
regulatory authorities, reviewing the system of internal controls and procedures
of the Company and reviewing the effectiveness of procedures intended to prevent
violations of law and
4
<PAGE> 5
regulations. The Company's Audit Committee is comprised of Messrs. Henry
Schneider, Evans and Fogel. The Audit Committee met twice in 1998.
The Executive Committee oversees all activities of the Company between
meetings of the Board of Directors and may exercise the power and authority of
the full Board of Directors to the extent permitted by Delaware law and the
Company's bylaws. The duties of the Executive Committee also include
recommending to the Board remuneration to be paid to executive officers of the
Company, administering and monitoring compensation and recommending the
establishment of incentive and bonus programs for executives of the Company,
including determining the number of options to be awarded pursuant to the
Company's stock option plans. Executive Committee members receive no additional
compensation for their participation. The Executive Committee is comprised of
Messrs. Lawrence Schneider (Chairman), Rothman, Nelson and Rosen. The Executive
Committee met 12 times in 1998.
ITEM 10 EXECUTIVE COMPENSATION
The following table shows the total compensation paid by the Company
during the fiscal years ended January 31, 1999, 1998 and 1997 to Mr. Nelson, the
Company's President and Chief Executive Officer, and during the fiscal year
ended January 31, 1999 and 1998 to Mr. Nevins, the Company's Executive Vice
President. There were no other executives of the Company who received total
compensation in excess of $100,000 during any of such years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- ---------------------------
NAME AND YEAR ENDED SECURITIES
PRINCIPAL POSITION JANUARY 31 SALARY BONUS UNDERLYING OPTIONS/SARs (#)
------------------ ---------- ------ ----- ---------------------------
<S> <C> <C> <C> <C>
RICHARD H. NELSON, 1999 $162,500 -- 40,000
President and Chief 1998 $150,000 -- 50,000
Executive Officer 1997 $150,000 -- 100,000
HOWARD NEVINS,
Executive Vice President 1999 $100,000 -- 40,000
1998 $ 49,457(1) -- 100,000
</TABLE>
- --------------
(1) Mr. Nevins' employment contract with the Company commenced as of August
23, 1997, and provides for an annual salary of $100,000.
5
<PAGE> 6
The following table sets forth certain information with respect to all
options to purchase shares of Common Stock of the Company granted to the named
executive officers during the fiscal year ended January 31, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARs GRANTED EMPLOYEES IN BASE PRICE
NAME (#) FISCAL YEAR ($/SH) EXPIRATION DATE
---- -------------------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C>
Richard H. Nelson 40,000 7% $2.50 August 26, 2008
Howard Nevins 40,000 7% $2.50 August 26, 2008
</TABLE>
TERMS OF OPTIONS
Stock options to Messrs. Nelson and Nevins were granted in 1998 under
the Company's 1998 Executive Incentive Compensation Plan (the "1998 Plan"). All
options granted in 1998 to Messrs. Nelson and Nevins, as well as to the other
executive officers and directors of the Company, under the 1998 Plan are
qualified, incentive stock options, expire 10 years from the date of grant, and
were immediately exercisable upon the date of grant.
REPRICING OF STOCK OPTIONS
On December 8, 1998, the Board of Directors unanimously approved a plan
to reprice a total of 639,000 stock options held by certain directors, executive
officers and employees of the Company to $2.50 per share, a price equal to
approximately 25% above the average high bid and ask price of the Company's
Common Stock as reported on the Nasdaq SmallCap Market on December 7, 1998. The
Board's decision to reprice these options was based on the Board's unanimous
belief that such an action would help retain and provide incentives for the
option holders whose compensation is largely dependent on their option grants. A
majority of these options were granted by the Company in 1997 and 1996, and
other options were granted in 1995.
The following table shows stock option exercises during the fiscal year
ended January 31, 1999 by the named executive officers. In addition, this table
describes the number of unexercised options and the value of unexercised
in-the-money options at January 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND JANUARY 31, 1999 OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARs AT IN-THE-MONEY OPTIONS/SARs
JANUARY 31, 1999(#) AT JANUARY 31, 1999 ($) (1)
SHARES ACQUIRED ---------------------------- -------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- ------------------ ---------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard H. Nelson 0 0 190,000/0 $21,950/0
Howard A. Nevins 0 0 140,000/0 0/0
</TABLE>
(1) Represents the difference between market price of the Company's Common Stock
and the exercise price of the options at January 31, 1999. Such amounts may not
necessarily be realized. Actual values which may be realized, if any, upon any
exercise of such options will be based on the market price of the Common Stock
at the time of any such exercise and thus are dependent upon future performance
of the Common Stock.
6
<PAGE> 7
COMPENSATION OF DIRECTORS
Outside directors are compensated at an annual rate of $10,000 plus
travel expenses, and must attend at least four meetings annually. Employee
directors are not compensated for attendance at meetings of the Board, although
certain travel expenses relating to attending meetings are reimbursed. No
additional compensation is given to committee members or participants in special
projects.
EMPLOYMENT AGREEMENTS
Mr. Nelson entered into an amended employment agreement with the
Company on March 31, 1998 to serve as its President and Chief Executive Officer
until March 31, 2001, which term automatically extends for additional one-year
periods beginning on the second anniversary of the agreement and on each
anniversary thereafter. Mr. Nelson's agreement provides for an annual salary of
$165,000, commencing on April 15, 1998, plus normal benefits. If Mr. Nelson is
terminated without cause during the term of the employment agreement, as defined
in the agreement, or if Mr. Nelson resigns from the Company because his salary
or benefits are decreased or he is demoted within three years after a change in
control of the Company, as defined in the employment agreement, he is entitled
to severance pay equal to approximately three times his base salary. Under the
terms of Mr. Nelson's employment agreement, he may not disclose any confidential
information pertaining to the Company nor compete with the Company during the
term of his employment with the Company and for an additional two years.
Mr. Rosen entered into an amended employment agreement with the Company
on March 31, 1998, to serve as its Chairman of the Board of Directors until
March 31, 2001, which term automatically extends for additional one-year periods
beginning on the second anniversary of the agreement and on each anniversary
thereafter. Mr. Rosen's agreement provides for an annual salary of $87,500,
commencing on May 15, 1998, plus normal benefits. If Mr. Rosen is terminated
without cause during the term of the employment, as defined in the agreement, or
if Mr. Rosen resigns from the Company because his salary or benefits are
decreased or he is demoted within three years after a change in control of the
Company, as defined in the employment agreement, he is entitled to severance pay
equal to approximately three times his base salary. Under the terms of Mr.
Rosen's employment agreement, he may not disclose any confidential information
pertaining to the Company nor compete with the Company during the term of his
employment with the Company and for an additional two years thereafter.
Mr. Nevins entered into an employment agreement with the Company on
August 4,1997, to serve as the Executive Vice President for a term of three
years ending August 4, 2000. Mr. Nevins' contract provides for an annual salary
of $100,000 plus normal benefits, and an initial grant of options to purchase
100,000 shares of the Company's Common Stock. Provision is also made for
incentive compensation in addition to the base salary and options. Under the
terms of Mr. Nevins' employment agreement, Mr. Nevins agrees that he will not
disclose any confidential information pertaining to the Company nor compete with
the Company during the term of his employment with the Company and for an
additional two years thereafter, but no earlier than August 4, 2002.
Mr. Page's contract with the Company to serve as Vice President was
amended effective March 1, 1998. His annual compensation is $47,400 for which he
will devote a minimum of 20 hours per week. Under the terms of the agreement,
Mr. Page agrees that he will not disclose any confidential information
pertaining to the Company without the prior express written consent of the
Company.
7
<PAGE> 8
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the number of shares of Common Stock
owned as of May 28, 1999 (i) by each director and nominee, (ii) by each
executive officer of the Company, (iii) by those persons known to the Company to
beneficially own 5% or more of the outstanding shares of Common Stock of the
Company, and (iv) by all directors and officers of the Company as a group. With
respect to any person who beneficially owns 5% or more of the outstanding shares
of Common Stock, the address of such person is also set forth.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
---------------- ----------------------- ----------------
<S> <C> <C>
Theodore Rosen................................................. 295,214 (2) 4.60%
Richard H. Nelson.............................................. 278,210 (3) 4.39%
Howard A. Nevins............................................... 381,000 (4) 6.05%
Seymour J. Beder............................................... 103,500 (5) 1.66%
Evan Evans..................................................... 92,500 (6) 1.48%
Allen J. Rothman............................................... 91,000 (7) 1.46%
Lawrence I. Schneider.......................................... 1,040,000 (8) 16.79%
Henry Schneider................................................ 1,040,000 (8) 16.79%
Asher Fogel.................................................... 40,000 (9) *
Energy Systems Investors, LLC.................................. 1,000,000 (8) 16.79%
450 Park Avenue
Suite 1000
New York, New York 10022
Cambridge Investments Limited.................................. 360,000 (10) 6.98%
600 Montgomery Street
27th Floor
San Francisco, CA 94111
All officers and directors as a group (9 persons).............. 2,361,424 33.05%
</TABLE>
- ----------------
* Indicates less than 1% of number of shares of Common Stock outstanding.
(1) The tabular information gives effect to the exercise of warrants or
options exercisable within 60 days of the date of this table owned in
each case by the person or group whose percentage ownership is set
forth opposite the respective percentage and is based on the assumption
that no other person or group exercises its option. The address of each
of the officers and directors is 515 North Flagler Drive, Suite 702,
West Palm Beach, Florida 33401.
(2) Includes 50,000 shares issuable upon exercise of options at an exercise
price of $2.031 per share, 11,357 shares issuable upon exercise of
warrants at an exercise price of $4.00 per share, and 200,250 shares
issuable upon exercise of presently exercisable options at an exercise
price of $2.50 per share.
8
<PAGE> 9
(3) Includes 50,000 shares issuable upon exercise of options at an exercise
price of $2.031 per share, and 140,000 shares issuable upon exercise of
presently exercisable options at an exercise price of $2.50 per share.
(4) Includes 140,000 shares issuable upon exercise of presently exercisable
options at an exercise price of $2.50 per share.
(5) Includes 85,000 shares issuable upon exercise of presently exercisable
options at an exercise price of $2.50 per share, and 15,000 shares
issuable upon exercise of presently exercisable options at an exercise
price of $2.031 per share.
(6) Includes 81,250 shares issuable upon exercise of presently exercisable
options at an exercise price of $2.50 per share, and 10,000 shares
issuable upon exercise of presently exercisable options at an exercise
price of $2.031 per share.
(7) Includes 80,000 shares issuable upon exercise of presently exercisable
options at an exercise price of $2.50 per share, and 10,000 shares
issuable upon exercise of presently exercisable options at an exercise
price of $2.031 per share.
(8) Includes 40,000 shares issuable upon exercise of presently exercisable
options at an exercise price of $2.50 per share and 250,000 shares of
Series A Preferred Stock, currently convertible into 1,000,000 shares
of Common Stock, which is owned by Energy Systems Investors, LLC.
Lawrence I. Schneider and Henry Schneider are members and managers of
Energy Systems Investors, LLC; Rita Schneider is a member of Energy
Systems Investors, LLC. Henry Schneider is the son of Lawrence and Rita
Schneider.
(9) Includes 40,000 shares issuable upon exercise of presently exercisable
options at an exercise price of $2.50 per share.
(10) Based on a Schedule 13-D sent to the Company on December 26, 1996.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lawrence I. Schneider is a manager and member of Energy Systems
Investors, LLC, the entity which was granted an option to purchase up to 888,888
shares of the Company's Series A Preferred Stock, at the Company's 1998 Annual
Meeting of Stockholders. Mr. Schneider is a member of the Board of Directors of
the Company and chairman of its Executive Committee. Appointment to these
positions was a condition of the Energy Systems Investors' initial purchase of
250,000 shares of the Company's Series A Preferred Stock (the "Initial
Financing"). Henry Schneider, the Vice President of the Company, is also a
manager and member of Energy Systems Investors. His appointment to the position
as Vice President and Director of the Company was made following, but not as a
condition to, the Initial Financing.
Howard Nevins, Executive Vice President and Director of the Company,
was the former President and Director of American Enviro-Services, Inc., an
Indiana corporation which the Company acquired pursuant to a merger in August
1997 (the "AES Merger"). As part of the AES Merger, Mr. Nevins received 240,000
shares of the Common Stock of the Company and options to purchase 100,000 shares
of the Company's Common Stock. Mr. Nevins was also appointed to the Company's
Board of Directors in connection with the AES Merger.
The law firm of Robinson, Brog, Leinwand, Green, Genovese & Gluck P.C.,
of which Allen J. Rothman, a director of the Company, is a partner, provides
certain legal services to the Company.
All transactions between the Company and its officers, directors,
principal stockholders or other affiliates have been on terms no less favorable
than those that are generally available from unaffiliated third parties. Any
such future transactions will be on terms no less favorable to the Company than
could be obtained from an unaffiliated third party on an arm's-length basis and
will be approved by a majority of the Company's independent and disinterested
directors.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act, the Issuer has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
U.S. ENERGY SYSTEMS, INC.
May 28, 1999 By: /s/ Seymour J. Beder
---------------------------------------
Seymour J. Beder
CHIEF FINANCIAL AND ACCOUNTING OFFICER
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Theodore Rosen Chairman of the Board of Directors May 28, 1999
-------------------------------------
Theodore Rosen
/s/ Richard H. Nelson President and Chief Executive May 28, 1999
------------------------------------- Officer (Principal Executive
Richard H. Nelson Officer)
/s/ Seymour J. Beder Chief Financial and Accounting May 28, 1999
------------------------------------- Officer (Principal Financial and
Seymour J. Beder Accounting Officer)
/s/ Henry Schneider Vice President and Director May 28, 1999
-------------------------------------
Henry Schneider
/s/ Howard Nevins Director and Executive Vice May 28, 1999
------------------------------------- President
Howard Nevins
/s/ Lawrence I. Schneider Director and Chairman of Executive May 28, 1999
------------------------------------- Committee
Lawrence I. Schneider
/s/ Evan Evans
-------------------------------------- Director May 28, 1999
Evan Evans
/s/ Allen Rothman
-------------------------------------- Director May 28, 1999
Allen Rothman
/s/ Asher E. Fogel
-------------------------------------- Director May 28, 1999
Asher E. Fogel
</TABLE>
