<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------------
Notes:
<PAGE>
ADVANCED ENVIRONMENTAL RECYCLING
TECHNOLOGIES, INC.
Notice of Annual Meeting of Stockholders
----------------------------------------
To the Stockholders of
Advanced Environmental Recycling Technologies, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of A.E.R.T., Inc.
will be held at the Northwest Arkansas Holiday Inn located at Springdale,
Arkansas on the 2nd day August, 1996 at 10:00 a.m. for the following purposes:
1. The election of five directors of the Company.
2. To act on such other matters as may properly come before the meeting.
Only stockholders of record on the books of the Company at the close of business
on June 17, 1996 will be entitled to notice of, and to vote at the meeting.
Stockholders are cordially invited to attend the meeting in person. Every
stockholder (whether he owns one or more shares and whether or not he intends to
attend the meeting in person) who wishes to vote with respect to matters to come
before the meeting is urged to sign, date and return promptly the enclosed
Proxy. Your compliance with this request will enable the Company to avoid
unnecessary expenses and delay. A return envelope requiring no postage if mailed
in the United States is enclosed for your convenience in replying.
By Order of the Board of Directors
/s/ David C. Chapman
David C. Chapman
Secretary, Treasurer and
Chief Financial Officer
Date June 17, 1996
----------------------
PLEASE MAIL YOUR PROXY....NOW!
IMPORTANT
WE HOPE THAT YOU CAN ATTEND THIS MEETING
IN PERSON, BUT IF YOU CANNOT DO SO PLEASE
MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY.
<PAGE>
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.
602 1/2 East Emma Avenue
Springdale, Arkansas 72764
PROXY STATEMENT
---------------
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is solicited on behalf of the Board of Directors of Advanced
Environmental Recycling Technologies, Inc., a Delaware Corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held at the
Northwest Arkansas Holiday Inn, Springdale, Arkansas, at 10:00 a.m. local time,
Friday, August 2, 1996 and at any adjournments thereof. The notice of meeting,
proxy statement and form of proxy are being mailed to stockholders on or about
June 21, 1996.
A proxy may be revoked by delivering a written notice of revocation to the
principal office of the Company or in person at the meeting at any time prior to
the voting thereof.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At May 31, 1996, the Company had outstanding 16,192,866 shares of Class A Common
Stock and 1,465,530 shares of Class B Common Stock. The holders of record of
the Class A Common Stock and Class B Common Stock outstanding on June 17, 1996,
will vote together as a single class on all matters submitted to stockholders
and such other matters as may properly come before the Annual Meeting and any
adjournments. Each outstanding share of Class A Common Stock entitles the
holder thereof to one vote on matters submitted to the stockholders and each
share of Class B Common Stock entitles the holder thereof to five votes on
matters submitted to the stockholders.
The enclosed form of proxy provides a method for stockholders to withhold
authority to vote for any one or more nominees (See "Proposal for Election of
Directors" for the method of withholding authority to vote for directors). By
withholding authority, shares will not be voted either for or against a
particular matter but will be counted for quorum purposes. Broker "non-votes,"
are not relevant to the determination of a quorum or whether the proposal to
elect directors has been approved.
The Company's officers and directors own approximately 26.8% of the currently
outstanding shares of Class A Common Stock (disregarding 13,367,104 shares
subject to warrants and options which have not been exercised) and 92.7% of the
shares of Class B Common Stock, and collectively own shares representing
approximately 47.3% of the votes entitled to be cast upon matters submitted at
the Annual Meeting. Marjorie S. Brooks and corporations controlled by her own
shares representing approximately 31.3% of the votes entitled to be cast and may
be in a position to control the Company.
1
<PAGE>
The following table sets forth, as of May 31, 1996, certain information with
regard to the beneficial ownership of the Company's capital stock by each holder
of 5% or more of the outstanding stock, by each director of the Company, and by
all officers and directors as a group.
<TABLE>
<CAPTION>
Number of
Shares of Percentage Percentage
Name and Address of Title of Common of Class of Voting
Beneficial Owner Class(1) Stock(2)(9) Outstanding(2)(9) Power(2)(9)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jim G. and Marjorie S. Brooks Class A 9,690,331(3) 32.8% 37.6%
P.O. Box 1237 Class B 837,588(4) 57.2%
Springdale, AR 72764
Joe G. Brooks Class A 520,601(5) 1.8% 5.0%
950 North 2nd St. Class B 266,896 18.2%
Rogers, AR 72756
J. Douglas Brooks Class A 429,666(6) 1.5% 2.9%
950 North 2nd St. Class B 131,051 8.9%
Rogers, AR 72756
Jerry B. Burkett Class A 109,000(7) * *
1908 Oak Class B 33,311 2.3%
Stuttgart, AR 72160
Sal Miwa Class A 78,000(8) * *
One Blue Hill Plaza, Suite 815
Pearl River, NY 10965-8667
Steve Brooks Class A 326,616 1.1% 2.1%
P.O. Box 291 Class B 89,311 6.1%
Springdale, AR 72765
All officers and directors Class A 11,170,880 38.0% 48.9%
as a group (eight persons) Class B 1,358,157 92.7%
* Less than 1%
</TABLE>
1) The Class B Common Stock is substantially identical to the Class A Common
Stock, except that each share of Class B Common Stock has five votes per share
and each share of Class A Common Stock has one vote per share.
(2) Beneficial ownership of shares determined in accordance with Rule 13d-
3(d)(1) of the Exchange Act and includes shares underlying outstanding warrants
and options which the named individual has the right to acquire within sixty
days of December 31, 1995.
(3) Includes 3,163,251 shares owned directly, 225,000 shares issuable upon
exercise of stock options, 3,000 shares issuable upon exercise of Class B
Warrants, 325,000 shares issuable upon exercise of Class C Warrants issued in
connection with a $225,000 Bridge Note purchased in 1993, 3,974,080 shares
issuable upon exercise of Class F and Class G Warrants issued in connection with
a private placement of Class A Common Stock in May of 1994 and 2,000,000 shares
issuable upon exercise of Class H Warrants.
(4) Includes 403,946 shares owned directly by Mrs. Brooks and 433,642 shares
owned by two corporations controlled by Mr. and Mrs. Brooks. (Razorback Farms,
Inc. is the record owner of 312,320 shares and SMF is the record owner of
2
<PAGE>
121,322 shares, representing approximately 21.3% and 8.3%, respectively, of the
Class B Common Stock). Excludes additional shares owned by adult children of
Mr. and Mrs. Brooks, including Joe G. Brooks, Steve Brooks and J. Douglas
Brooks, as to which she disclaims a beneficial interest.
(5) Includes 440,768 shares owned directly, 3,000 shares owned as custodian for
Mr. Brook's minor child, 43,500 shares issuable upon exercise of Class B
Warrants owned directly and as custodian for Mr. Brook's minor child and 33,333
shares issuable upon exercise of stock options.
(6) Includes 388,713 shares owned directly, 7,620 shares issuable upon exercise
of Class B Warrants and 33,333 shares issuable upon exercise of stock options.
(7) Includes 3,000 shares owned directly, 2,000 shares owned by Mr. Burkett as
custodian for his minor child, 10,000 shares owned by a partnership controlled
by Mr. Burkett, 19,000 shares issuable upon exercise of Class B Warrants
directly and indirectly owned by Mr. Burkett and 75,000 shares issuable upon
exercise of stock options.
(8) Includes 3,000 shares owned directly and 75,000 shares issuable upon
exercise of stock options.
(9) Calculated based on 29,559,970 shares outstanding as of May 31, 1995, which
includes 13,367,104 shares which any person has the right to acquire through the
exercise of options and warrants within 60 days of May 31, 1995.
At May 31, 1996, there were 16,192,866 shares of Class A Common Stock and
1,465,530 shares of Class B Common Stock issued and outstanding. At that date,
the directors and officers as a group directly owned shares representing
approximately 47.3% of the votes entitled to be cast upon matters submitted to a
vote of the Company's stockholders, and Marjorie S. Brooks and corporations
controlled by her owned shares representing approximately 31.3% of the votes
entitled to be cast and may be in a position to control the Company.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sal Miwa 38 Chairman of the Board
Joe G. Brooks 40 President and Director
David C. Chapman 52 Secretary, Treasurer and Chief Financial Officer
Robert D. Gorsche 44 Chief Operating Officer
J. Douglas Brooks 36 Vice President
Marjorie S. Brooks 60 Director
Jerry B. Burkett 40 Director
Steve Brooks 39 Director
</TABLE>
Chairman of the Board and Chief Executive Officer Jim G. Brooks passed away
unexpectedly on January 16, 1996.
On January 30, 1996, Sal Miwa was elected as its Chairman by the Company's Board
of Directors to serve the remaining term of the late Jim Brooks. Mr. Miwa has
been an outside director of the Company for the past two years. Sal Miwa is
President of Optro-Mechanics (USA) Corporation, an import-export firm located in
Pearl River, New York. For the past 15 years he has been engaged in various
international businesses and serves as a director and an officer of various
other family owned businesses located in U.S., Japan, and Europe. He received
his Science Master degree in Aerospace Engineering from the Massachusetts
Institute of Technology.
Joe G. Brooks has served as President, Chief Executive Officer (until September
28, 1993) and a director since the Company's inception in December 1988. From
July 1985 to December 1988, Mr. Brooks also served as President and a director
of Juniper Products, Inc. (July 1985 - February 1987) and served as an
independent consultant to Juniper
3
<PAGE>
Industries, Inc. (February 1987 -December 1988), artificial firelog
manufacturing entities in Junction, Texas. From October 1984 to July 1985, Mr.
Brooks served as President of Southern Minerals and Fibers, Inc. ("SMF"), a
producer of drilling mud and fluid additives.
David C. Chapman joined the Company on October 18, 1993 as Chief Financial
Officer, and on June 17, 1994, was also elected as the Company's Secretary and
Treasurer. A Certified Public Accountant since 1973, Mr. Chapman has extensive
public accounting experience and has served as controller or chief financial
officer in both privately held and publicly owned companies in the
transportation and financial industries.
Robert D. Gorsche joined the Company on February 13, 1995. As Chief Operating
Officer, he assumes day-to-day control and operating responsibilities over the
Company's composite manufacturing facility in Junction, Texas, and the plastics
reclamation facility in Rogers, Arkansas. Mr. Gorsche has extensive technical
and manufacturing experience, including a Bachelor of Science degree from MIT in
Cambridge, Massachusetts. His educational background also includes graduate
studies at Northeastern University. Mr. Gorsche was previously employed at
Therma-Tru Corporation of Maumee, Ohio, where he served as General Manager of
the Indiana manufacturing operations and later as Vice President of
Manufacturing.
J. Douglas Brooks has served as Vice President and a director of the Company
from inception in December 1988 until June 17, 1994, and continues to serve as
Vice President of Recycled Plastics. Mr. Brooks also served as an independent
consultant to Juniper Industries, Inc. from April 1987 to December 1988 and as
Vice President of SMF from September 1984 to April 1987.
Marjorie S. Brooks served as Secretary and Treasurer and a director since the
Company's inception in December 1988. On March 9, 1993, Mrs. Brooks submitted
her resignation as a director for personal health reasons. Mrs. Brooks also
serves as a director of Juniper Industries, Inc. and Razorback Farms, Inc., has
served as Secretary and Treasurer of the Brooks Investment Co., a holding
company for the Brooks' family investments, for more than the past thirty years,
and has served as President of Haskell Foods, Inc. from 1981 to the present.
Jerry B. Burkett was appointed to the Board of Directors of the Company on
May 17, 1993. Mr. Burkett has been a rice and grain farmer since 1979 and has
been a principal in other closely held businesses. He is currently the President
of the Arkansas County Farm Bureau.
Steve Brooks was appointed to the Board of Directors of the Company on
January 30, 1996. Mr. Brooks is President of Razorback Farms, Inc., a
Springdale, Arkansas based firm that specializes in vegetables for processing.
Mr. Brooks also serves on the Boards of Razorback Farms, Inc. and The Ozark Food
Processors Association.
Joe G. Brooks, Steve W. Brooks, and J. Douglas Brooks are brothers and are sons
of Jim G. and Marjorie S. Brooks. There are no other familial relationships
between the current directors and executive officers.
Each of the Company's directors have been elected to serve until the next annual
meeting of stockholders or until their successors are elected and qualified.
Officers serve at the discretion of the Board of Directors.
The Board of Directors conducted six meetings during 1995. All incumbent
directors attended at least 75% of the meetings of the Board of Directors
conducted during their respective terms of appointment in 1995.
The Board of Directors does not have standing Nominating or Compensation
Committees.
The Audit Committee of the Board of Directors consists of Joe G. Brooks, Jerry
B. Burkett and Sal Miwa. The Audit Committee recommends engagement of the
Company's independent accountants and is primarily responsible for approving the
services performed by the Company's independent accountants and for reviewing
and evaluating the Company's accounting principles and its system of internal
accounting controls. The Committee conducted one meeting in 1995.
The Stock Option Committee, consisted of the late Jim G. Brooks, Jerry B.
Burkett and Sal Miwa. The Stock Option Committee administers the Company's stock
option plans on behalf of the Board of Directors and approves stock options
granted thereunder. The Committee conducted one meeting in 1995.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by the
Company during the three years ended December 31, 1995 to each executive officer
of the Company whose aggregate cash compensation exceeded $100,000, and to the
chief executive officer.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other Restricted Stock Long-Term
Name and Annual Stock Options/ Incentive All Other
Principal Position Year Salary Bonus Compensation Awards SARs Payouts Compensation
- ------------------ ---- ------ ----- ------------ ---------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jim G. Brooks, 1995 $0 $0 $0 $0 0 $0 $0
Chief Executive 1994 0 0 0 0 500,000 0 0
Officer (9-28-93) 1993 0 0 0 0 25,000 0 0
and Chairman of
the Board of
Directors
Joe G. Brooks, 1993 $70,919 $0 $1,200 $0 0 $0 $0
Chief Executive
Officer (to 9-28-
93) and President
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Year Ended December 31, 1995
-----------------------------------------------------------
and Option Values at December 31, 1995
--------------------------------------
Number of Value of Unexercised
Number of Unexercised Options In-the-Money Options
Shares at December 31, 1995 at December 31, 1995
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jim G. Brooks 0 $0 125,000/400,000 $0/$0
</TABLE>
DIRECTOR COMPENSATION
Non-employee directors do not receive cash compensation for serving on the
Company's Board of Directors, however, such persons are reimbursed for out-of-
pocket expenses in connection with their attendance at meetings. Directors are
paid long-term compensation in the form of stock option grants under the
Company's Non-Employee Director Stock Option Plan. Such plan provides for
annual grants of options to purchase 25,000 shares of Class A Common Stock at
the fair market value of said stock on the date of such grant.
5
<PAGE>
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires the Company's executive officers and
directors, and persons who own more than ten percent of a registered Class of
the Company's securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission, National Association of Securities
Dealers and the Boston Stock Exchange. Officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish the Company
with copies of all forms filed pursuant to Section 16(a). Based on a review of
the copies of such forms received by it and written representations from certain
reporting persons that no Forms 4 or Forms 5 were required for those persons,
the Company believes that during the year ended December 31, 1995, its executive
officers, directors and greater than ten-percent beneficial owners were in
compliance with applicable requirements of Section 16(a).
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Although the Company's Bylaws allow for a Compensation Committee of the Board,
such a committee has not been appointed. Accordingly, all decisions regarding
executive compensation are reviewed and approved by the full Board, except for
those relating to grants under the Company's employee stock option plan which
are approved by a special stock option committee of outside directors.
The overall compensation policy of the Company is to maximize shareholder return
by combining annual and long-term compensation to executives based upon
corporate and individual performance. Annual compensation is paid in the form of
base salary which is subjectively determined by the Board based upon senior
management's recommendation. Additionally, although no cash bonuses have been
paid to executives, the Board reserves the right to grant such bonuses if the
Company's performance so warrants. Long-term compensation to executives is
built around the Company's stock option programs.
Base salaries are reviewed and approved by the full Board at the time an officer
is hired and thereafter on a periodic basis as determined appropriate by the
Board and senior management. Base salaries are subjectively determined based
upon a number of factors, including level and scope of responsibility, salaries
paid for comparable positions at similarly situated companies and individual and
corporate performance. No base salary increases were effected for executives
during 1995, primarily as a result of the Company's performance and cash-flow
position.
The Company effects stock option grants from time-to-time as a mechanism for
providing long-term, non-cash compensation to executives. The Board believes
that stock options are (especially in the context of an emerging growth company)
an effective incentive for executives and managers to create value for the
Company and its shareholders since the value of an option bears a direct
relationship to appreciation in the Company's stock price. By utilizing stock-
based compensation, the Company can focus much needed cash-flow, which would
otherwise be paid out as compensation, back into the daily operations of the
business. Individual stock option grants are subjectively determined based upon
a number of factors, including individual performance and prior year's grants.
Based upon these factors, during 1995, options to purchase an aggregate of
406,000 shares of Class A stock were granted to employees of the Company as a
whole with 400,000 options being granted specifically to executive officers.
All option grants were made at an exercise price equal to the fair market value
of the underlying stock on the date of grant.
During 1995, the late Jim G. Brooks, the Company's Chief Executive Officer, did
not receive any base salary or long-term compensation awards. Mr. Brooks, who
took over the position of Chief Executive Officer in 1993, did so based upon the
understanding that he would be compensated solely in the form of stock-based
compensation. This was initially effected through a grant under the Company's
Chairman Stock Option Plan which was adopted by the Company's shareholders in
June 1994. Under this plan, Mr. Brooks received a one-time option grant,
effective May 1, 1994, to purchase 500,000 shares of the Company's Class A
Common Stock. As a result of the 1994 grant, no additional options were granted
to Mr. Brooks in 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted, the Board of Directors does not currently maintain a standing
compensation committee. All decisions regarding executive compensation are
reviewed and approved by the full Board. During 1995, two members of the Board
of Directors, the late Jim G. Brooks and Joe G. Brooks also served as executive
officers of the Company. Neither of said
6
<PAGE>
persons participated in any deliberations or decisions concerning compensation
issues in which they had a personal interest, nor did they vote on any such
matter.
Sal Miwa Joe G. Brooks
Marjorie S. Brooks Jerry B. Burkett
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return to the
Company's shareholders during the period from December 31, 1990 to December 31,
1995, as well as an overall stock market index (NASDAQ Composite Market Index)
and a published industry index (NASDAQ Industrial Index).
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG A.E.R.T., NASDAQ Market Index, AND NASDAQ Industrial Index
-------- ------------------- -----------------------
<CAPTION> NASDAQ NASDAQ
Measurement period Market Industrial
(Fiscal Year Covered) A.E.R.T. Index Index
- --------------------- -------- ------- ----------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $100.00 $100.00 $100.00
12/31/91 $139.13 $156.84 $164.75
12/31/92 $ 86.96 $181.08 $178.53
12/31/93 $ 82.61 $207.79 $198.43
12/31/94 $ 21.74 $201.14 $185.64
12/31/95 $ 77.17 $281.44 $237.58
</TABLE>
The stock performance graph assumes $100 was invested on December 31, 1990 and
that all dividends were reinvested. There can be no assurance that the
Company's stock performance will continue into the future with the same or
similar trends depicted in the graph above. The Company will not make nor
endorse any predictions as to future stock performance.
CERTAIN TRANSACTIONS
In June and September, 1993 the Company secured short-term financing from Jim G.
and Marjorie Brooks resulting in notes payable totaling $136,000. The notes
accrued interest at a rate of 8.0% per annum and were repaid in October, 1993.
On October 13, 1993, Jim G. and Marjorie S. Brooks placed a $1,000,000 non-
refundable stock subscription prepayment with the Company in relation to a
private placement offering of Class A Common Stock. The prepayment accrued
interest at the rate of 8% per annum.
On June 29, 1993 the Company circulated a private placement offering of up to
$1,200,000 in Bridge Notes and Class C Warrants. The Notes were secured by
certain equipment of the Company's composite production division, accrued
interest at the rate of 8% per annum, and matured June 29, 1994. The face
amount of each Bridge Note was accompanied with an equal number of Class C
Warrants which are exercisable ratably into one share of Class A Common Stock at
an exercise price of $3.00 per share. The Warrants expire on June 29, 1998.
Jim G. and Marjorie Brooks participated in the Bridge Offering in the amount of
$225,000.
In April 1994, the Company renewed an agreement with an affiliate whereby the
Company agreed to sell certain of its trade receivables which the affiliate
deems acceptable, up to $650,000 at any one time. Upon acceptance of a sale of
a receivable, the affiliate will remit to the Company 100% of the receivable, as
defined in the agreement, and the Company shall remit to the affiliate .88% as a
factoring charge. The Company will indemnify the affiliate for any loss arising
out of
7
<PAGE>
rejections or returns of any merchandise, or any claims asserted by the
Company's customers. During 1995, the Company sold an aggregate of approximately
$5,852,000 in receivables under this agreement, of which $241,723 remains to be
collected. During 1994 and 1993, the Company sold an aggregate of approximately
$3,726,000 and $1,018,000, respectively, in receivables under this agreement,
none of which remains to be collected. Costs of approximately $51,000, $32,800
and $9,000 associated with the factoring agreement are included in selling,
production, general and administrative expenses at December 31, 1995, 1994 and
1993, respectively.
In July 1994, the Company obtained a $1,000,000 secured line of credit bearing
interest at the rate of 8.5% per annum from Jim G. and Marjorie S. Brooks. At
December 31, 1994 the Brooks had advanced the $1,000,000 plus an additional
$411,903. In February 1995, the line of credit was increased to $2,000,000 of
which $1,566,903 is a term-note to be amortized at 9.75% over five years
beginning April 1, 1995 and the balance of $433,097 is a revolving credit line
expiring in February 2000 available as needed by the Company.
PROPOSAL FOR
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors constituting the
Board of Directors shall be determined from time to time by resolution of the
Board of Directors. The Board of Directors has set the number of directors at
five. Following the January 16, 1996 death of the Company's Chairman, Jim G.
Brooks, the Board appointed Steve Brooks to the Board, accordingly the Company
currently has five directors and at the meeting five directors are to be elected
by the holders of shares of outstanding Class A and Class B Common Stock voting
together as a single class. To be elected, each director must receive a
plurality of the votes cast at the Annual Meeting. All directors serve for a
term of one year and until their successors are duly elected and qualified. Each
outstanding share of Class A Common Stock entitles the holder thereof to one
vote with respect to the election of each of the five director positions to be
filled and each outstanding share of Class B Common Stock entitles the holder
thereof to five votes with respect to the election of each of the five director
positions to be filled.
The enclosed form of proxy provides a method for stockholders to withhold
authority to vote for any one or more of the nominees for director while
granting authority to vote for the remaining nominees. If you wish to grant
authority to vote for all nominees, check the box marked "FOR." If you wish to
withhold authority to vote for all nominees, check the box marked "WITHHOLD."
If you wish your shares to be voted for some nominees and not for one or more of
the others, check the box marked "FOR" and indicate the names(s) of the
nominee(s) for whom you are withholding the authority to vote by drawing a line
through the name(s) of such nominee(s). If you withhold authority to vote your
shares, such vote will be treated as an abstention and accordingly your shares
will neither be voted for or against a director but will be counted for quorum
purposes.
The five nominees for director are: Sal Miwa, Joe G. Brooks, Jerry B. Burkett,
Steve Brooks and Marjorie S. Brooks. All of the nominees are presently
directors of the Company. Joe G. Brooks is currently President of the Company
and Sal Miwa is currently Chairman of the Board.
The enclosed proxy, if properly signed and returned, will be voted for the
election of the five nominees named above, unless authority to vote is withheld.
Management recommends that the stockholders vote in favor of the five nominees
named above. In the event one or more nominees become unavailable for election,
votes will be cast, pursuant to authority granted by the enclosed proxy, for
such substitute nominees as may be designated by the Board of Directors. The
Board of Directors has no reason to believe that any nominee will be unable to
serve, if elected.
8
<PAGE>
ADDITIONAL INFORMATION AVAILABLE
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, THE COMPANY WILL FURNISH, WITHOUT
CHARGE, A COPY OF THE COMPANY'S 1995 ANNUAL REPORT ON FORM 10-K, AS FILED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. THE WRITTEN REQUEST SHOULD BE SENT TO THE
SECRETARY, AT THE COMPANY'S EXECUTIVE OFFICE. THE WRITTEN REQUEST MUST STATE
THAT AS OF JUNE 17, 1996, THE PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER
OF CAPITAL STOCK OF THE COMPANY.
AUDITORS TO BE PRESENT
A representative of Arthur Andersen LLP, the Company's auditors for 1995 and the
current year, is expected to be in attendance at the Annual Meeting and will be
afforded the opportunity to make a statement. The representative will also be
available to respond to questions.
OTHER MATTERS
The Board of Directors has no knowledge of any other matters which may come
before the meeting and does not intend to present any other matters. However,
if any other matters should properly come before the meeting, or any
adjournments thereof, the persons named as proxies will have discretionary
authority to vote the shares represented by the accompanying proxy in accordance
with their best judgment.
COST AND METHOD OF PROXY SOLICITATION
The cost of proxy solicitation will be paid by the Company. In addition to
solicitation by mail, arrangements will be made with brokers and other
custodians, nominees and fiduciaries to send proxies and proxy material to their
principals, and the Company will, upon request, reimburse them for their
reasonable expenses in so doing. Officers and other regular employees of the
Company may, if necessary, request the return of proxies by telephone, telegram,
or in person.
STOCKHOLDER PROPOSALS
Stockholder proposals for the next Annual Meeting of Stockholders anticipated to
be held in July, 1997, must be received at the Company's corporate offices, 602
1/2 East Emma Avenue, P.O. Box 1237, Springdale, Arkansas 72765, on or before
December 31, 1996.
The foregoing Notice and Proxy Statement are sent by order of the Board of
Directors.
DAVID C. CHAPMAN
Secretary, Treasurer and
Chief Financial Officer
Dated: June 17, 1996
9
<PAGE>
<TABLE>
<CAPTION>
A [X] Please mark your votes as in this example.
<S> <C> <C> <C>
FOR all nominees list WITHHOLD authorization Nominees: Sal Miwa
at right (except as to vote for all nominees Joe G. Brooks
marked to the contrary listed at right Marjorie S. Brooks
below) Jerry B. Burkett
1. Election Steve Brooks
of [__] [__]
Directors
</TABLE>
To withhold authority to vote for any individual nominee, strike a line through
the nominee's name in the list at right.
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON AUGUST 2, 1996.
The undersigned hereby appoints Sal Miwa as Proxy, with full power to
appoint his substitute, and hereby authorizes to represent and vote, as
designated on this proxy, all shares of common stock of Advanced
Environmental Recycling Technologies, Inc. held of record by the
undersigned on the record date, June 17, 1996 at the Annual Meeting of
Stockholders of the Company to be held at the Northwest Arkansas Holiday
Inn, Sprindale, Arkansas on Friday, August 2, 1996 at 10:00 AM, and at any
adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR Item 1.
The undersigned acknowledges receipt of the formal notice of such meeting and
the 1995 Annual Report of the Company.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S)_____________________________________ DATE______________ 1996
Note: Please sign above exactly as name appears on the certificate. When shares
are held by joint tenants both should sign. If a corporation or partnership,
sign in corporate or partnership name by authorized person or partner.
