SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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)
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
U.S. HOME & GARDEN INC.
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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(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:
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- --------------------------------------------------------------------------------
Filing party:
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Date filed:
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(1) Set forth the amount on which the filing fee is calculated and stte how it
was determined.
<PAGE>
U.S. HOME & GARDEN INC.
655 Montgomery Street
San Francisco, CA 94111
May 16, 2000
Dear Fellow Stockholders:
You are cordially invited to attend our Annual Meeting of Stockholders
which will be held on June 14, 2000 at 9:30 A.M., local time, at the offices of
U.S. Home & Garden Inc., 655 Montgomery Street, Suite 500, San Francisco,
California 94111.
The Notice of Annual Meeting and Proxy Statement which follow describe the
business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, may I urge you to complete, sign, date and
return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please advise our Transfer Agent,
Continental Stock Transfer & Trust Company, in writing, at 2 Broadway, New York,
New York 10004.
Your vote is very important, and we will appreciate a prompt return of your
signed proxy card. We hope to see you at the meeting.
Cordially,
Robert Kassel
Chairman of the Board,
Chief Executive Officer
and President
<PAGE>
U.S. HOME & GARDEN INC.
655 Montgomery Street
San Francisco, CA 94111
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 2000
--------------------
To the Stockholders of U.S. HOME & GARDEN INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of U.S. Home
& Garden Inc. (the "Company") will be held on Wednesday, June 14, 2000, at 9:30
A.M., local time, at the offices of the Company, 655 Montgomery Street, Suite
500, San Francisco, California 94111, for the following purposes:
1. To elect five (5) directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors have been duly elected and
qualified; and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 3, 2000 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
- --------------------------------------------------------------------------------
IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
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By Order of the Board of
Directors,
Robert Kassel
Chairman of the Board,
Chief Executive Officer
and President
May 16, 2000
<PAGE>
PROXY STATEMENT
U.S. HOME & GARDEN INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 2000
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of U.S. HOME & GARDEN INC. (the "Company") for
use at the Annual Meeting of Stockholders to be held on June 14, 2000, including
any adjournment or adjournments thereof (the "Annual Meeting"), for the purposes
set forth in the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the accompanying form
of proxy to stockholders on or about May 18, 2000.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
The address and telephone number of the principal executive offices of the
Company are:
655 Montgomery Street
San Francisco, California 94111
Telephone No.: (415) 616-8111
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on May 3, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were 18,935,083 shares issued and outstanding of the
Company's common stock, $.001 par value per share (the "Common Stock"), the
Company's only class of voting securities. Each share entitles the holder to one
vote on each matter submitted to a vote at the Annual Meeting.
<PAGE>
VOTING PROCEDURES
The directors will be elected by the affirmative vote of a plurality of the
shares of Common Stock, present in person or represented by proxy at the Annual
Meeting, provided a quorum exists. A quorum is present if, as of the Record
Date, at least a majority of the outstanding shares of Common Stock are present
in person or by proxy at the Annual Meeting. All other matters at the meeting
will be decided by the affirmative vote of the holders of a majority of the
shares of Common Stock cast with respect thereto, provided a quorum exists.
Votes will be counted and certified by one or more Inspectors of Election who
are expected to be employees of the Company. In accordance with Delaware law,
abstentions and "broker non-votes" (i.e. proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares as to a matter with respect to
which the brokers or nominees do not have discretionary power to vote) will be
treated as present for purposes of determining the presence of a quorum. For
purposes of determining approval of a matter presented at the meeting,
abstentions will be deemed present and entitled to vote and will, therefore,
have the same legal effect as a vote "against" a matter presented at the
meeting. Broker non-votes will be deemed not entitled to vote on the subject
matter as to which the non-vote is indicated and will, therefore, have no legal
effect on the vote on that particular matter.
The enclosed proxies will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as instructed. Proxies may be revoked as noted above.
ELECTION OF DIRECTORS
At this year's Annual Meeting of Stockholders, five (5) directors will be
elected to hold office for a term expiring at the next Annual Meeting of
Stockholders. Each director will be elected to serve until a successor is
elected and qualified or until the director's earlier resignation or removal.
At this year's Annual Meeting of Stockholders, the proxies granted by
stockholders will be voted individually for the election, as directors of the
Company, of the persons listed below, unless a Proxy specifies that it is not to
be voted in favor of a nominee for director. In the event any of the nominees
listed below shall be unable to serve, it is intended that the Proxy will be
voted for such other nominees as are designated by the Board of Directors. Each
of the persons named below has
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indicated to the Board of Directors of the Company that he or she will be
available to serve.
Name Age Position
---- --- --------
Robert Kassel(1) 60 Chairman of the Board, Chief
Executive Officer, President and
Treasurer
Richard Raleigh(2) 46 Chief Operating Officer and
Director
Maureen Kassel 52 Vice President of Public Relations
and Advertising, Secretary and
Director
Fred Heiden(1)(2) 58 Director
Jon Schulberg(1)(2) 41 Director
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(1) Member, Compensation Committee
(2) Member, Audit Committee
Robert Kassel co-founded the Company and has been Chairman of the Board,
Chief Executive Officer, President and Treasurer of the Company since October
1990. From 1985 to August 1991 he was a consultant to Comtel Communications,
Inc. ("Comtel"), a company specializing in the installation and operation of
telephone systems in hotels. From 1985 to 1990, Mr. Kassel was also a real
estate developer in Long Island, New York and Santa Barbara, California. From
1965 to 1985, he was a practicing attorney in New York City, specializing in
corporate and securities laws.
Richard Raleigh has been a Director of the Company since March 1993, Chief
Operating Officer of the Company since June 1992 and served as the Company's
Executive Vice President-Operations from December 1991 to June 1992. Prior to
joining the Company, Mr. Raleigh was a free-lance marketing consultant to the
lawn and garden industry from January 1991 to December 1991. From April 1988 to
January 1991 he was employed by Monsanto Agricultural Co. as its Director of
Marketing, Lawn and Garden. From December 1986 to April 1988 he was Vice
President of Sales and Marketing of The Andersons, a company engaged in the sale
of consumer and professional lawn and garden products. From November 1978 to
December 1986 he held a variety of positions at The Andersons, including
Operations Manager and New Products Development Manager.
Maureen Kassel, the wife of Robert Kassel, co-founded the Company and has
been Vice President and a director of the Company since
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November 1990 and Secretary of the Company since February 1992. Prior to this,
she had assisted in the general administration and operation of real estate and
other businesses.
Fred Heiden, a director of the Company since March 1993, has been a private
investor since November 1989. From April 1984 to November 1989 Mr. Heiden was
the president and principal owner of Bonair Construction, a Florida based home
improvement construction company.
Jon Schulberg, a director of the Company since March 1993, has been
employed as president of Schulberg MediaWorks, a company engaged in the
independent production of television programs and television advertising, since
January 1992. From January 1989 to January 1992 he was a producer for
Guthy-Renker Corporation, a television production company. From September 1987
to January 1989 he was the director of development for Eric Jones Productions.
During the fiscal year ended June 30, 1999, the Board of Directors held one
meeting. The Board also took various action by unanimous written consent in lieu
of a meeting. The Company did not have a standing nominating committee of the
Board of Directors or other committee performing similar functions during the
fiscal year ended June 30, 1999. During the fiscal year ended June 30, 1999 the
Board had an Audit Committee consisting of Messrs. Heiden, Raleigh and Schulberg
and a Compensation Committee consisting of Messrs. Kassel, Heiden and Schulberg.
The Audit Committee held one meeting during the fiscal year ended June 30, 1999.
The Compensation Committee did not meet during the fiscal year ended June 30,
1999.
All directors of the Company hold office until the next annual meeting of
the stockholders and the election and qualification of their successors.
Officers of the Company are elected annually by the Board of Directors and serve
at the discretion of the Board.
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<PAGE>
EXECUTIVE OFFICERS
In addition to Mr. Kassel, Mr. Raleigh and Ms. Kassel, the Company's
executive officers include Donald Rutishauser.
Donald Rutishauser, 43, has been Chief Financial Officer since his
employment with the Company in November 1999. From 1997 to 1999, he was Vice
President, Corporate Development of Miller Energy, Inc., a private oil and gas
exploration and production company. From 1992 to 1997, Mr. Rutishauser was Vice
President and Treasurer of Belden and Blake Corporation, a public oil and gas
exploration and production company. From 1980 to 1992, he held a variety of
financial management positions at Belden and Blake, W.R. Grace and Company, and
Texas Instruments, Inc.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Officers, directors, and greater than 10 percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on the Company's review of the copies of such forms received
by the Company, or representations obtained from certain reporting persons, the
Company believes that during the year ended June 30, 1999 all filing
requirements applicable to its officers, directors, and greater than 10 percent
beneficial stockholders were complied with except that Robert and Maureen Kassel
did not timely file a Form 4 or 5 with respect to the gifts of certain shares of
the Company's common stock from Maureen to Robert Kassel in December 1998, the
extension of the expiration date of certain options previously granted to Mr.
Kassel that occurred in either March or June 1999 and the extension of the
expiration date of an option previously granted to Maureen Kassel that occurred
in March 1999. In addition, Mr. Raleigh did not timely file a Form 4 or 5 to
report the extension of the expiration dates of certain options that occurred in
March 1999.
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<PAGE>
EXECUTIVE COMPENSATION
The following table discloses the compensation awarded by the Company, for
the three fiscal years ended June 30, 1999, 1998 and 1997, to Mr. Robert Kassel,
its Chief Executive Officer, President and Treasurer, Mr. Richard J. Raleigh,
its Chief Operating Officer and Ms. Lynda Gustafson, the Company's Vice
President of Finance (together, the "Named Officers"). During the fiscal year
ended June 30, 1999, no other officer of U.S. Home & Garden Inc. received a
total salary and bonus that exceeded $100,000 during such fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Long-Term
Compensation
Name and Principal Position Securities
- --------------------------- Underlying All Other
Year Salary ($) Bonus ($) Options (#) Compensation(1)
---- ---------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert Kassel, 1999 450,000 114,000 641,333(2) $ 6,169
Chairman, Chief Executive Officer, 1998 450,000 281,667 468,000(3) $ 7,523
President and Treasurer 1997 350,000 250,000 1,200,000(4) $ 5,995
Richard Raleigh, Chief Operating Officer 1999 250,000 96,000 137,500(5)(6) $ 12,169
1998 225,000 115,000 132,500(5) $ 9,203
1997 195,000 111,275 600,000(4)(7) $ 8,390
Lynda Gustafson, Vice President of Finance 1999 148,000 60,000 -- $ 12,169
1998 125,000 45,000 50,000 $ 11,273
1997 101,040 20,000 30,000 $ 7,451
</TABLE>
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(1) Represents Company contributions to the Named Officers 401(k) account.
Excludes certain perquisites that did not exceed the lesser of $50,000 or
10% of their combined bonus and salary.
(2) Includes 341,333 options that were originally granted to Mr. Kassel in
prior fiscal years, the expiration dates of which were extended in fiscal
1999. Also includes options to purchase 300,000 shares that were granted to
Mr. Kassel in December 1998, and voluntarily forfeited by him during the
fiscal year ended June 30, 1999.
(3) Includes 80,000 options that were originally granted to Mr. Kassel in 1993,
the expiration dates of which were extended during fiscal 1998.
(4) Includes as to Mr. Kassel 200,000 options previously granted to Mr. Kassel
and as to Mr. Raleigh 100,000 options previously granted to Mr. Raleigh
whose exercise prices were repriced to reflect a
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<PAGE>
reduction in the market price of the Common Stock at the time of repricing.
(5) Includes 12,500 options that were originally granted to Mr. Raleigh in
1992, the expiration date of which was extended during fiscal 1998 and
further extended during fiscal 1999.
(6) Includes options to purchase 125,000 shares granted to Mr. Raleigh in
December 1998 and voluntarily forfeited by him during the fiscal year ended
June 30, 1999.
(7) Includes 50,000 options previously granted to Mr. Raleigh the expiration
date of which was extended during fiscal 1997.
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<PAGE>
The following table discloses information concerning options granted in
fiscal 1999 to the Named Officers.
<TABLE>
<CAPTION>
Option Grants in Fiscal Year Ended June 30, 1999
Individual Grants
Number of Percent of
Securities Total Options
Underlying Granted to Potential Realizable Value at Assumed
Options Employees in Exercise Annual Rates of Stock Price
Granted Fiscal Year Price Expiration Appreciation for Option Term ($)(2)
Name (#)(1) (%) ($/Sh) Date -------------------------------------
- ---- ---------- ------------- -------- ----------
5% 10%
------- -------
<S> <C> <C> <C> <C> <C> <C>
Robert Kassel 100,000(3) 9.4 1.69 9/8/08 106,300 269,400
80,000(4) 7.5 1.69 12/31/08 82,480 207,520
161,333(5) 15.2 1.69 7/1/09 171,497 434,631
300,000 28.2 4.25 (6) (6) (6)
Richard Raleigh 12,500(4) 1.2 1.69 12/31/08 12,867 32,373
125,000 11.9 4.25 (6) (6) (6)
Lynda Gustafson -- -- -- -- -- --
</TABLE>
- ----------
(1) Unless otherwise noted, all of such options were initially exercisable in
full from the date of grant.
(2) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers do
not take into account provisions of options providing for termination of
the option following termination of employment or nontransferability of the
options and do not make any provision for taxes associated with exercise.
Because actual gains will depend upon, among other things, future
performance of the Common Stock, there can be no
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assurance that the amounts reflected in this table will be achieved.
(3) Reflects extension of expiration date of options that were originally
granted on September 8, 1993. All of such options vest in ten equal annual
installments commencing July 1, 1999.
(4) Reflects extension of expiration date of options that were originally
granted on September 15, 1992. All of such options vest in ten equal annual
installments commencing July 1, 1998.
(5) Reflects extension of expiration date of options that were originally
granted on July 1, 1994. All of such options vest in ten equal installments
commencing June 30, 2000 and each June 30 thereafter with the last 16,133
shares vesting on December 31, 2008.
(6) These options were granted by the Board of Directors in December 1998 and
were subsequently voluntarily forfeited by the Named Officers in the fiscal
year ended June 30, 1999.
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The following table sets forth information concerning options exercised by the
Named Officers during the fiscal year ended June 30, 1999, and the number of
options owned by the Named Officers and the value of any in-the-money
unexercised options as of June 30, 1999:
Aggregated Option Exercises
And Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-the-Money
Acquired on Value Options at Options at
Exercise(#) Realized ($) June 30, 1999 June 30, 1999(1)
----------- ------------ ------------- ---------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Kassel -- -- 2,155,320 300,333 $3,455,382 $ 332,346
Richard Raleigh 16,000 60,960 626,911 10,000 $ 918,237 $ 20,600
Lynda Gustafson -- -- 36,000 30,000 $ 60,768 $-0-
</TABLE>
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(1) Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the fiscal year end market
value of the common stock. An Option is "in-the-money" if the fiscal year end
fair market value of the Common Stock exceeds the option exercise price. The
last sale price (the fair market value) of the Common Stock on June 30, 1999 was
$3.75 per share.
Employment Agreements of Executive Officers
The Company has entered into employment agreements with Messrs. Kassel and
Raleigh, each dated as of April 1, 1996. Mr. Kassel currently serves as the
Company's Chief Executive Officer and President for a term expiring on March 31,
2001, subject to automatic renewal unless terminated. His current annual salary
is $450,000, and is subject to such bonuses and increases as are approved at the
discretion of the Board of Directors. Mr. Raleigh currently serves as the
Company's Chief Operating Officer for a term expiring on March 31, 2001 subject
to automatic renewal unless terminated. Mr. Raleigh's current annual salary is
$250,000, and is subject to such bonuses and increases as are approved at the
discretion of the Board of Directors. Each of the employment agreements requires
that substantially all of the employee's business time be devoted to
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the Company and that the employee not compete, or engage in a business
competitive with, the Company's current or anticipated business for the term of
the agreement and for two years thereafter (although they each may own not more
than 5% of the securities of any publicly traded competitive company). Each of
Mr. Kassel and Mr. Raleigh is, in addition to salary, entitled to certain fringe
benefits, including the use of an automobile and payment of related expenses.
Mr. Kassel's agreement also provides that if his employment is terminated
under certain circumstances, including termination of Mr. Kassel's employment
upon a change of control of the Company, (as defined in the agreement) a failure
by the Company to comply with its obligations under the agreement, the failure
of the Company to obtain the assumption of the agreement by any successor
corporation, or a change in Mr. Kassel's duties and obligations from those
contemplated by the agreement, and termination by the Company of Mr. Kassel's
employment other than for disability or cause, he will be entitled to receive
severance pay equal to the greater of (i) $350,000 ($3,500,000 in the event of a
change of control) or (ii) the total compensation earned by Mr. Kassel from the
Company during the one-year period (multiplied by ten in the event of a change
of control) prior to the date of his termination.
Mr. Raleigh's employment agreement also provides that if his employment is
terminated under certain circumstances, including termination of Mr. Raleigh's
employment upon a change of control of the Company, (as defined in the
agreement) a failure by the Company to comply with its obligations under the
agreement, the failure of the Company to obtain the assumption of the agreement
by any successor corporation, or a change in Mr. Raleigh's duties and
obligations from those contemplated by the agreement, and termination by the
Company of Mr. Raleigh's employment other than for disability or cause, he will
be entitled to receive severance pay equal to the greater of (i) $162,500
($812,500 in the event of a change of control) or (ii) the total compensation
earned by Mr. Raleigh from the Company during the one-year period (multiplied by
five in the event of a change of control) prior to the date of his termination.
Committees of the Board of Directors
The Company has established an Audit Committee which is comprised of
Messrs. Raleigh, Heiden and Schulberg. The Audit Committee, among other things,
makes recommendations to the Board of Directors with respect to the engagement
of the
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Company's independent certified public accountants and the review of the scope
and effect of the audit engagement. The Company has also established a
Compensation Committee which is comprised of Messrs. Kassel, Heiden and
Schulberg. The Compensation Committee, among other things, makes recommendations
to the Board of Directors with respect to the compensation of the executive
officers of the Company. The Company maintains a Stock Option Committee
comprised of Messrs. Schulberg and Heiden, which determines the persons to whom
options should be granted under the Company's 1995 and 1997 Stock Option Plans
and the number and other terms of options to be granted to each person under
such plans.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The Company's Compensation Committee of its Board of Directors consists of
Messrs. Kassel, Heiden and Schulberg. During the fiscal year ended June 30,
1999, none of the executive officers of the Company served on the Board of
Directors or the compensation committee of any other entity, any of whose
officers served on the Board of Directors or Compensation Committee of the
Company.
Stock Option Plans
In September 1991, the Company adopted a stock option plan (the "1991
Plan") pursuant to which 700,000 shares of Common Stock have been reserved for
issuance upon the exercise of options designated as either (i) options intended
to constitute incentive stock options ("ISOs") under the Internal Revenue Code
of 1986, as amended (the "Code") or (ii) non-qualified options ("NQO's"). ISOs
may be granted under the 1991 Plan to employees and officers of the Company.
NQO's may be granted to consultants, directors (whether or not they are
employees), employees or officers of the Company.
The purpose of the 1991 Plan is to encourage stock ownership by certain
directors, officers and employees of the Company and certain other persons
instrumental to the success of the Company and give them a greater personal
interest in the success of the Company. The 1991 Plan is administered by the
Board of Directors. The Board, within the limitations of the 1991 Plan,
determines the persons to whom options will be granted, the number of shares to
be covered by each option, whether the
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<PAGE>
options granted are intended to be ISOs, the duration and rate of exercise of
each option, the option purchase price per share and the manner of exercise, the
time, manner and form of payment upon exercise of an option, and whether
restrictions such as repurchase rights in the Company are to be imposed on
shares subject to options.
ISOs granted under the 1991 Plan may not be granted at a price less than
the fair market value of the Common Stock on the date of grant (or 110% of fair
market value in the case of persons holding 10% or more of the voting stock of
the Company). The aggregate fair market value of shares for which ISOs granted
to any employee are exercisable for the first time by such employee during any
calendar year (under all stock option plans of the Company and any related
corporation) may not exceed $100,000. NQO's granted under the 1991 Plan may not
be granted at a price less than the fair market value of the Common Stock on the
date of grant. Options granted under the 1991 Plan will expire not more than ten
years from the date of grant (five years in the case of ISOs granted to persons
holding 10% or more of the voting stock of the Company).
The Company has adopted, a Non-Employee Director Stock Option Plan (the
"Director Plan"). Only non-employee directors of the Company are eligible to
receive grants under the Director Plan. The Director Plan provides that eligible
directors automatically receive a grant of options to purchase 5,000 shares of
Common stock at fair market value upon first becoming a director and,
thereafter, an annual grant, in January of each year, of 5,000 options at fair
market value. Options to purchase an aggregate of up to 100,000 shares of Common
Stock are available for automatic grants under the Director Plan.
The Company has adopted a 1995 Stock Option Plan ("1995 Plan") which
provides for grants of options to purchase up to 1,500,000 shares of Common
Stock. The Board of Directors or the Stock Option Committee (the "Committee"),
as the case may be, will have discretion to determine the number of shares
subject to each NQO (subject to the number of shares available for grant under
the 1995 Plan and other limitations on grant set forth in the 1995 Plan), the
exercise price thereof (provided such price is not less than the par value of
the underlying shares of Common Stock), the term thereof (but not in excess of
10 years from the date of grant, subject to earlier termination in certain
circumstances), and the manner in which the option becomes exercisable (amounts,
intervals and other conditions). Directors who are employees of the Company will
be eligible to
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<PAGE>
be granted ISOs or NQOs under such plan. The Board or Committee, as the case may
be, also has discretion to determine the number of shares subject to each ISO,
the exercise price and other terms and conditions thereof, but their discretion
as to the exercise price, the term of each ISO and the number of ISOs that may
vest in any calendar year is limited by the same Code provisions applicable to
ISOs granted under the 1991 Plan.
The Company has adopted a 1997 Stock Option Plan ("1997 Plan") which
provides for grants of options to purchase up to 1,500,000 shares of Common
Stock. The Board of Directors or the Committee of the 1997 Plan, as the case may
be, will have discretion to determine the number of shares subject to each NQO
(subject to the number of shares available for grant under the 1997 Plan and
other limitations on grant set forth in the 1997 Plan), the exercise price
thereof (provided such price is not less than the par value of the underlying
shares of Common Stock), the term thereof (but not in excess of 10 years from
the date of grant, subject to earlier termination in certain circumstances), and
the manner in which the option becomes exercisable (amounts, intervals and other
conditions). Directors who are employees of the Company will be eligible to be
granted ISOs or NQOs under such plan. The Board or Committee, as the case may
be, also has discretion to determine the number of shares subject to each ISO,
the exercise price and other terms and conditions thereof, but their discretion
as to the exercise price, the term of each ISO and the number of ISOs that may
vest in any calendar year is limited by the same Code provisions applicable to
ISOs granted under the 1991 Plan.
The Company has also adopted a 1999 Stock Option Plan ("1999 Plan") which
provides for grants of options to purchase up to 900,000 shares of Common Stock.
The Board of Directors or the Committee of the 1999 Plan, as the case may be,
will have discretion to determine the number of shares subject to each NQO
(subject to the number of shares available for grant under the 1999 Plan and
other limitations on grant set forth in the 1999 Plan), the exercise price
thereof (provided such price is not less than the par value of the underlying
shares of Common Stock), the term thereof (but not in excess of 10 years from
the date of grant, subject to earlier termination in certain circumstances), and
the manner in which the option becomes exercisable (amounts, intervals and other
conditions). Directors who are employees of the Company will be eligible to be
granted ISOs or NQOs under such plan. The Board or Committee, as the case may
be, also has discretion to determine the number of shares subject to each ISO,
the exercise price and
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other terms and conditions thereof, but their discretion as to the exercise
price, the term of each ISO and the number of ISOs that may vest in any calendar
year is limited by the same Code provisions applicable to ISOs granted under the
1991 Plan.
The Company has adopted the Non-Qualified Deferred Compensation Plan for
Select Employees of U.S. Home & Garden Inc. ("Deferred Plan") and has amended
its stock option plans, as well as certain option agreements which it has had
with Robert Kassel. Under the Deferred Plan and such amended stock option plans
and agreements, the Board of Directors or its committee which administers the
relevant stock option may grant permission to optionees to exercise their
options with shares of the Company's common stock in which they have a holding
period, for income tax purposes, of a least six months and defer the receipt of
a portion of the shares subject to the option so exercised. The optionee has the
right to designate the time or times of receipt of those shares pursuant to the
Deferred Plan. The Deferred Plan does contain provisions for earlier issuance of
those deferred shares on death, disability and other termination of employment
(e.g., on a change of control of the Company).
The Company from time to time has also granted non-plan options to certain
officers, employees and consultants.
15
<PAGE>
Director Compensation
During the fiscal year ended June 30, 1999 each of the Company's two
non-employee directors, Messrs. Heiden and Schulberg, received $5,000 for
serving as directors of the Company.
Report on Executive Compensation
Although the Company has established a Compensation Committee of the Board
of Directors, the compensation of the Company's executive officers for the
fiscal year ended June 30, 1999 was determined by the Board of Directors. There
is no formal compensation policy for the Company's executive officers.
The Board of Directors has appointed a Stock Option Committee, currently
comprised of Messrs. Heiden and Schulberg, for each of the 1995 Plan and the
1997 Plan, which has made grants under, and has administered, such plans.
Total compensation for executive officers consists of a combination of
salaries and stock option awards. The salaries of Robert Kassel and Richard
Raleigh, are fixed annually by the Board of Directors pursuant to the terms of
their respective employment agreements with the Company. Base salary of other
executive officers is based on the Company's financial performance and the
executive's individual performance and level of responsibility. Bonus
compensation, if any, to executive officers is based generally upon the
Company's financial performance and the availability of resources as well as the
executive officer's individual performance and level of responsibility. Stock
option awards under the Company's Stock Option Plans are intended to attract,
motivate and retain senior management personnel by affording them an opportunity
to receive additional compensation based upon the performance of the Company's
Common Stock. No new stock options were granted to executive or other officers
of the Company during the fiscal year ended June 30, 1999 except for
non-qualified options to purchase 300,000, and 125,000 shares, respectively, of
the Company's Common Stock granted to Messrs. Kassel and Raleigh. During the
fiscal year ended June 30, 1999 the Board also extended the expiration date of
certain options previously granted to certain of its executive officers,
including Messrs. Kassel and Raleigh.
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<PAGE>
For the fiscal year ended June 30, 1999, the Company earned approximately
$2,049,000 on net sales of approximately $89,346,000, compared to earnings of
approximately $5,526,000 on net sales of approximately $67,149,000 in the fiscal
year ended June 30, 1998.
Robert Kassel Fred Heiden
Richard Raleigh Jon Schulberg
Maureen Kassel
Stock Performance Graph
The following line graph compares, from July 1, 1994 through June 30, 1999,
the cumulative total return among the Company, companies comprising the NASDAQ
Market Index and a Peer Group Index, based on an investment of $100 on June 30,
1994, in the Company's Common Stock and each index, and assuming reinvestment of
all dividends, if any, paid on such securities. The Company has not paid any
cash dividends and, therefore, the cumulative total return calculation for the
Company is based solely upon stock price appreciation and not upon reinvestment
of cash dividends. The Peer Group Index consists of the following companies:
Lesco, Inc., the Scotts Company, the Toro Company and Verdant Brands Inc.
Historic stock price is not necessarily indicative of future stock price
performance.
17
<PAGE>
VOTING SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information at the Record Date, based on
information obtained from the persons named below, with respect to the
beneficial ownership of shares of Common Stock by (i) each person known by the
Company to be the owner of more than 5% of the outstanding shares of Common
Stock, (ii) each director, (iii) each Named Officer, and (iv) all executive
officers and directors of the Company as a group.
Amount and
Nature of
Beneficial Percentage
Name of Beneficial Owner Ownership(1)(2) of Class
- ------------------------ --------------- --------
Maureen Kassel 426,550(3) 2.2
Robert Kassel 4,539,024(4)(5) 21.2
Richard Raleigh 751,911(6) 3.8
Lynda Gustafson 66,000(7) *
Fred Heiden 10,258(8) *
Jon Schulberg 10,258(8) *
Richard Grandy 1,089,396(9) 5.7
All executive officers
and directors as a
group (six persons) 5,590,451(3)(4)(5) 25.0
- ----------
*less than 1%
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the Record Date upon the
exercise of warrants or options. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the Record Date have been exercised.
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<PAGE>
(3) Includes exercisable options and warrants issued to Ms. Kassel to purchase
an aggregate of 203,000 shares of the Company's Common Stock.
(4) Of such shares, (i) 223,550 are owned of record by Maureen Kassel; however,
because Ms. Kassel has appointed her husband as her proxy and
attorney-in-fact to vote all 223,550 of the shares owned of record by her,
Robert Kassel may also be deemed to have beneficial ownership of such
shares; (ii) an aggregate of 914,396 shares are owned of record by each of
Messrs. Joseph Owens and Richard Grandy, who have entered into a voting
trust agreement providing Mr. Kassel with the right to vote the shares
until September 1, 2001. The address of Mr. Kassel is c/o the Company.
(5) Includes 2,203,294 shares of Common Stock issuable to Mr. Kassel upon
exercise of options and warrants and 208,388 shares whose issuance to Mr.
Kassel has been deferred pursuant to the terms of the Company's
Non-Qualified Deferred Compensation Plan.
(6) Represents shares of Common Stock issuable to Mr. Raleigh upon exercise of
options.
(7) Represents shares of Common Stock issuable upon exercise of options granted
to Ms. Gustafson who is a Named Officer but not an executive officer of the
Company.
(8) Includes 10,000 shares issuable upon exercise of options.
(9) Includes 150,000 shares of Common Stock issuable upon exercise of options.
The address of Mr. Grandy is c/o the Company.
(10) Excludes shares beneficially owned by Lynda Gustafson, the Company's Vice
President of Finance.
19
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time Messrs. Kassel and Raleigh have borrowed monies from the
Company. During fiscal 1999, the highest amount owed to the Company by Messrs.
Kassel and Raleigh were $595,995 and $231,199, respectively. The principal
balance of such loans on September 30, 1999 were approximately $523,376 and
$201,384, respectively. The loans bear interest at 7% per annum and mature on
June 30, 2002. Messrs. Kassel and Raleigh will make annual payments of interest
on the outstanding principal balance of their loans through the maturity date.
In addition, payments of principal will be made during each of the first three
years and on maturity of the loans as follows: As to Mr. Kassel -- $50,000,
$100,000, $150,000 and the balance of approximately $223,376, respectively. As
to Mr. Raleigh, $25,000, $50,000, $50,000 and the balance of approximately
$76,384, respectively.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP has audited and reported upon the financial statements of
the Company for the fiscal year ended June 30, 1999 and the Board of Directors
currently anticipates that it will select BDO Seidman, LLP to examine and report
upon the financial statements of the Company for the fiscal year ending June 30,
2000. A representative of BDO Seidman, LLP is expected to be present at the
Annual Meeting with the opportunity to make a statement if he or she desires to
do so and is expected to be available to respond to appropriate questions.
20
<PAGE>
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
FOR FISCAL YEAR ENDING JUNE 30, 2000
The Company currently anticipates that its Annual Meeting of Stockholders
with respect to the Company's fiscal year ended June 30, 2000 will be held
between the months of March 2001 and May 2001. Therefore, stockholders who wish
to present proposals appropriate for consideration at the Company's Annual
Meeting of Stockholders with respect to the Company's fiscal year ended June 30,
2000 must submit the proposal in proper form and in satisfaction of the
conditions established by the Securities and Exchange Commission, to the Company
at its address set forth on the first page of this Proxy Statement not later
than January 1, 2001 in order for the proposition to be considered for inclusion
in the Company's proxy statement and form of proxy relating to such annual
meeting. Any such proposals, as well as any questions related thereto, should be
directed to the Secretary of the Company.
After the January 1, 2001 deadline, a stockholder may present a proposal at
the Company's next Annual Meeting if it is submitted to the Company's Secretary
at the address set forth above no later than February 15, 2001. If timely
submitted, the stockholder may present the proposal at the next Annual Meeting
but the Company is not obligated to present the matter in its proxy statement.
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
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<PAGE>
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30,
1999 IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF THE CLOSE
OF BUSINESS ON MAY 3, 2000. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
WILL BE PROVIDED TO EACH SUCH STOCKHOLDER WITHOUT CHARGE UPON WRITTEN REQUEST
TO:
U.S. HOME & GARDEN INC.
655 MONTGOMERY STREET, SUITE 500
SAN FRANCISCO, CALIFORNIA 94111
ATTENTION: CORPORATE SECRETARY
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
Robert Kassel
Chairman of the Board,
Chief Executive Officer
and President
May 16, 2000
22
<PAGE>
U.S. HOME & GARDEN INC.
655 Montgomery Street
San Francisco, California 94111
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 14, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT KASSEL and RICHARD RALEIGH, and each
of them, Proxies, with full power of substitution in each of them, in the name,
place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of U.S. Home & Garden Inc. on Wednesday, June 14, 2000, at 655
Montgomery Street, Suite 500, San Francisco, California 94111, or at any
adjournment or adjournments thereof, according to the number of votes that the
undersigned would be entitled to vote if personally present, upon the following
matters:
1. Election of Directors:
|_| FOR all nominees listed below
(except as marked to the contrary below).
|_| WITHHOLD AUTHORITY
to vote for all nominees listed below.
Robert Kassel, Richard Raleigh, Maureen Kassel,
Fred Heiden and Jon Schulberg
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued and to be signed on reverse side)
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES LISTED
ABOVE.
DATED: ____________________________, 2000
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
------------------------------------
Signature
------------------------------------
Signature if held jointly
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope.
