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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
PURETEC CORPORATION
- - - - --------------------------------------------------------------------------------
(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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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[ ] 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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4) Date Filed:
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<PAGE>
PURETEC CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of
PureTec Corporation (the "Company") will be held at the Saddle Brook Marriott
Hotel, which is located on the Garden State Parkway at the intersection with
Interstate Highway 80, Saddle Brook, New Jersey 07663 on February 26, 1997 at
9:00 A.M. for the following purposes as set forth in the accompanying Proxy
Statement:
1. To elect nine directors to serve for a term of one year or until their
successors are duly elected and qualified;
2. To ratify the selection and appointment by the Company's Board of
Directors of Deloitte & Touche, independent certified public
accountants, as auditors for the Company for the fiscal year ending
July 31, 1997; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Holders of record of the Company's Common Stock at the close of
business on January 3, 1997 will be entitled to vote at the meeting.
By Order of the Board of Directors
Paul Litwinczuk, Secretary
Dated: January 22, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. ANY PERSON GIVING A PROXY
HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND IF PRESENT AT
THE MEETING MAY WITHDRAW IT AND VOTE IN PERSON. ATTENDANCE AT THE MEETING IS
LIMITED TO STOCKHOLDERS, THEIR PROXIES AND INVITED GUESTS OF THE COMPANY.
<PAGE>
PURETEC CORPORATION
65 Railroad Avenue
Ridgefield, New Jersey 07657
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 1997
-----------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by Management of proxies to be voted at the Annual Meeting of Stockholders of
the Company to be held at the Saddle Brook Marriott Hotel, which is located on
the Garden State Parkway at the intersection with Interstate Highway 80, Saddle
Brook, New Jersey 07663 on February 26, 1997 at 9:00 A.M. and at any
adjournments thereof.
The shares represented by proxies that are received in the enclosed
form and properly filled out will be voted in accordance with the specifications
made thereon. In the absence of specific instructions, proxies will be voted in
accordance with the recommendations made herein with respect to the proposals
described in this Proxy Statement. Proxies may be revoked by stockholders by
written notice received by the Secretary of the Company at the address set forth
above, at any time prior to the exercise thereof.
Stockholders of record at the close of business on January 3, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. As of January 3, 1997, the Company's voting securities outstanding
totaled 29,339,172 shares of Common Stock. Each share of Common Stock is
entitled to one vote.
ITEM I. ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form of proxy,
unless such form of proxy specifies otherwise, to nominate and to vote the
shares represented by such proxy for the election of the nominees listed below
to hold office until the next Annual Meeting of Stockholders or until their
respective successors shall have been duly elected and qualified. All of the
nominees are presently directors of the Company. The Company has no reason to
believe that any of the nominees will become unavailable to serve as directors
for any reason before the Annual Meeting. However, in the event that any of them
shall become unavailable, the person designated as proxy reserves the right to
substitute another person of his choice when voting at the Annual Meeting.
Certain information regarding each nominee is set forth below.
Information regarding the number of shares beneficially owned by each person can
be found below under "Voting Securities and Principal Holders Thereof." Other
than that Peter and John Harvey are brothers, there are no current family
relationships among directors or executive officers nor is there any arrangement
or understanding between any of the named directors, nominees or potential
directors and any other person pursuant to which any director or nominee was
selected as such other than as provided in the Agreement and Plan of Merger,
(the "Agreement") between Pure Tech Newco, Inc., Pure Tech International, Inc.
(subsequently renamed
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<PAGE>
PTI Plastics, Inc., hereinafter "PTI"), Ozite Corporation ("Ozite"), and others
for the combination of PTI and Ozite (the "Merger"). Pursuant to the Agreement,
Messrs. Katz, Fox and Yitz Grossman were designated by the PTI Board of
Directors, the Messrs. Harvey were designated by the Ozite Board of Directors,
Messrs. Broling, Brennan and Gans were designated by Mr. Broling as management
designees, Mr. Haase was nominated by the PTI Board of Directors as an
independent director and Mr. Calabrese was nominated by the Ozite Board of
Directors as an independent director. Mr. Grossman resigned as a director on
September 1, 1995. The directors serve for a term of one year and until their
successors are duly elected and qualified. Officers serve at the pleasure of the
Board of Directors.
During the fiscal year ended July 31, 1996, there were four meetings of
the Board. All of the directors were in attendance at at least three of the four
meetings except for Mr. Robert Calabrese, who attended one meeting. Directors
who are officers of the Company receive no compensation for serving as
directors. Independent directors are paid a $10,000 annual fee and those who
serve on the Compensation Committee participate in the 1995 Disinterested
Director Stock Option Plan. There is no standing nominating committee of the
Board of Directors. The Compensation Committee consists of Messrs. Broling,
Haase and Peter Harvey. The Audit Committee consists of Messrs. Haase and
Hamway. There were two meetings of the Compensation Committee and two meetings
of the Audit Committee during the fiscal year ended July 31, 1996.
The following sets forth the name and age, present position(s) with the
Company and principal business occupations for the last five years of each
nominee for election as director:
Name Age Position
---- --- --------
Fred W. Broling 61 Chairman of the Board and Chief Executive Officer
David C. Katz 56 President, Chief Operating Officer and Director
Murray Fox 73 Vice President and Director
Leo Gans 70 Vice President and Director
Robert L. Guyett 60 Director
Werner Haase 58 Director
Edward P. Hamway 48 Director
Peter R. Harvey 61 Director
John J. Harvey 65 Director
MR. BROLING has served as the Chairman and Chief Executive Officer of
the Company since July 26, 1995. Prior to that, Mr. Broling was a Vice President
of PTI. Mr. Broling has served as Chairman and President of Plastic Specialties
and Technologies, Inc. ("PST") since 1984 and as Chairman and Chief Executive
Officer of Ozite since 1990. Prior to 1984, Mr. Broling served as President of
the plastic specialty sector of Dart & Kraft.
MR. KATZ has served as President of the Company since its inception and
as President of PTI since August 1988 and as a Director since September 1991. He
was appointed Chief Operating Officer in February 1994. From 1987 until August
1988 he was an independent consultant to contract and food and beverage packers.
From 1982 until 1987, he was Vice President and operations director for Taylor
Wine Company, and was responsible for operation, distribution, purchasing and
maintenance of the plant owned by Taylor Wine Company in Hammondsport, New York.
From 1977 until 1982, he was U.S. manager of packaging for the Coca-Cola Company
in Atlanta, Georgia and in 1978 and 1979 he coordinated the introduction of PET
bottles to U.S. bottlers.
2
<PAGE>
MR. FOX has been a Director of PTI since September 1991 and of the
Company since July 26, 1995. Mr. Fox also served as Secretary/Treasurer of PTI
from September 1991 until July 1995. Mr. Fox was also Secretary/Treasurer of REI
Distributors, Inc. from 1981 until July 1995 and was a co-founder of that
company. Mr. Fox is also President of Recycling Enterprises, Inc., a company
engaged in glass recycling and fabrication of reprocessing equipment.
MR. GANS has been a Vice President and director of the Company since
July 1995. Mr. Gans has served as Vice President since 1984 and was a director
of PST from 1989 to June 1993. He has also served as President of PST's Action
Technology Division since 1983.
MR. GUYETT has been a director of the Company since November 1996.
Since 1995 he has been President and Chief Executive Officer of Crescent
Management Enterprises, which provides financial management and investment
advisory services. From 1991 to 1995, he was Senior Vice President and Chief
Financial Officer of Engelhard Corporation and served in a number of other
management and financial positions for 30 years before then. He also serves as a
director of Newport Corporation, a producer of scientific instruments, and Smith
Technologies Corporation, an environmental consulting and remediation company.
MR. HAASE has been a director of the Company since July 1995. Since
July 1996, Mr. Haase has been the Chairman and Chief Executive Officer of
Water-Jel Technologies, Inc., which provides corporate incentive, travel, and
communications services as well as a line of emergency first aid products for
burns. Prior to that he was Chief Executive Officer of Journeycraft, Inc., a
travel and sales promotion company which was acquired by Water-Jel Technologies,
Inc. in 1996. Mr. Haase served as a Director of PTI from 1987 to 1991. Mr. Haase
is also a director of Water-Jel Technologies, Inc., Multimedia Tutorial
Services, Inc., which develops and markets personal educational materials on
videotape and CD-ROM formats, and Datatrend Services, Inc., which refurbishes
and resells used and returned computer equipment.
MR. HAMWAY has served as a director of the Company since November 1995.
He has been Chairman of Round Hill Group, Ltd., a financial consulting firm,
since March 1995. Prior to that he held various executive positions with IBJ
Schroeder Bank & Trust Company.
MR. JOHN HARVEY has served as Director of the Company since July 1995.
Mr. Harvey has served as a Director of Ozite since August 1990 and as a Director
of PST since October 1993. He has also served as the Chairman of the Board and
Chief Executive Officer of ARTRA Group Incorporated ("Artra"), which
manufactures and markets fashion jewelry and flexible packaging and engages in
other investments, and as a director of The Lori Corporation (fashion jewelry)
since 1985.
MR. PETER HARVEY has served as Director of the Company since July 1995.
Mr. Harvey has served as a Vice President of PST since 1987 and as a Director
since 1993. He has been a director of Ozite since 1984. He also has served as
President, Chief Operating Officer and a director of ARTRA Group Incorporated
since 1986, a director of The Lori Corporation since 1984, and a director of
SoftNet Systems, Inc. since 1988. He was also Chief Executive Officer and
Chairman of SoftNet from 1985 to 1993.
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<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
NAME AND FISCAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- - - - ------------------ ------ ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
Fred W. Broling .................... 1996 $259,216 $250,000 100,000 $5,010
Chairman and Chief 1995 263,446 -- -- 11,232
Executive Officer 1994 293,672 250,000 -- 11,190
David C. Katz ...................... 1996 152,385 150,000 -- 4,854
President, Chief 1995 130,000 -- 50,000 --
Operating Officer, 1994 130,000 -- 96,000 --
Director
Leo Gans ........................... 1996 187,042 236,000 100,000 5,132
Vice President, Director, 1995 186,582 221,760 -- 9,987
President of Action 1994 175,749 149,310 -- 8,322
Technologies
Joseph T. Bruno .................... 1996 108,582 21,000 25,000 3,024
Vice President 1995 105,665 -- -- 3,214
1994 103,582 42,000 -- 3,073
Terence K. Brennan ................. 1996 161,762 175,000 100,000 6,205
Former Vice President, 1995 159,067 -- -- 8,395
Chief Financial Officer, 1994 149,013 175,000 -- 8,227
Director
Robert E. Brookman, Ph.D. .......... 1996 191,582 49,454 50,000 4,992
President - Colorite 1995 190,703 99,000 -- 4,992
Polymers Division 1994 187,083 99,782 -- 4,992
- - - - ----------
(1) The amounts in this column are contributions made by PST to one of the
Savings Plan for Employees of the Company or its affiliates and the
amount of premiums paid by PST for life insurance policies for the
benefit of the named executive officers.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL POTENTIAL
REALIZABLE REALIZABLE
VALUE AT VALUE AT
ASSUMED ASSUMED
PERCENT OF ANNUAL ANNUAL
NUMBER TOTAL RATES OF RATES OF
OF OPTIONS/ STOCK STOCK
SECURITIES SARS PRICE PRICE
UNDER- GRANTED APPRECIA- APPRECIA-
LYING TO EXER- TION FOR TION FOR
OPTIONS/ EMPLOYEES CISE OR EXPI- OPTION OPTION
SARS IN FISCAL BASE RATION TERM TERM
NAME GRANTED YEAR PRICE DATE 5% 10%
- - - - ---- ------- ---- ----- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Fred W. Broling .............. 100,000 6.5% $4.25 8/01/2005 -- $142,142
Leo Gans ..................... 100,000 6.5% $4.25 8/01/2005 -- 142,142
Joseph T. Bruno .............. 25,000 1.6% $3.00 8/01/2005 15,294 66,785
Terence K. Brennan ........... 100,000 6.5% $4.25 8/01/2005 -- 142,142
Robert E. Brookman ........... 50,000 3.3% $3.00 8/01/2005 30,588 133,571
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END FY-END
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- - - - ---- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Fred W. Broling ................ -- -- -- / 100,000 -- / --
David C. Katz .................. -- -- 91,633 / 16,667 $22,908 / $ 4,167
Leo Gans ....................... -- -- -- / 100,000 -- / --
Joseph Bruno ................... -- -- -- / 25,000 -- / $ 6,250
Terence K. Brennan ............. -- -- -- / 100,000 -- / --
Robert E. Brookman ............. -- -- -- / 50,000 -- / $12,500
</TABLE>
5
<PAGE>
COMPENSATION PURSUANT TO PST PENSION PLAN
Pensions for salaried personnel of the Company are provided through the
Plastic Specialties and Technologies, Inc. And Affiliates Pension Plan,
effective as of May 10, 1984 and amended January 1, 1988 (the "PST Pension
Plan"). The following table illustrates the amount of the annual pension benefit
payable under the PST Pension Plan to a person in the specified average salary
and year-of-service classifications:
PENSION PLAN TABLE
YEARS OF SERVICE
---------------------------------------------------------
REMUNERATION 15 20 25 30 35
- - - - ------------ ------- ------- ------- ------- -------
$100,000 ........... $15,000 $20,000 $25,000 $30,000 $35,000
125,000 ........... 18,740 25,000 31,250 37,500 43,750
150,000 ........... 22,500 30,000 37,500 45,000 52,500
For purposes of the PST Pension Plan, compensation is defined as the
total wages, salaries, commissions, bonuses, overtime and special awards paid
during the year. All cash compensation reported in the Summary Compensation
Table under the columns "Salary" and "Bonus" is included in compensation under
the Pension Plan (subject to the dollar limitation shown in the Pension Plan
Table), for each officer listed.
The estimated number of credited years of service of each of the
executive officers listed in the Summary Compensation Table is as follows: Fred
W. Broling, 20 years; Terence K. Brennan, 14 years; Leo Gans, 14 years; Joseph
T. Bruno; 17 years and Robert Brookman, 7 years. Mr. Katz is not presently
covered by the PST Pension Plan.
The PST Pension Plan provides a monthly benefit payable for life,
beginning at age 65, equal to one-twelfth of one percent of the total
compensation received during the period the employee participated in the PST
Pension Plan. None of the PST Pension benefits are subject to any deduction for
Social Security or other offset amounts.
6
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding the
beneficial ownership of the Company's voting securities as of December 31, 1996
by (i) each person who is known by the Company to own beneficially more than 5%
of the Company's outstanding Common Stock; (ii) each of the Company's directors
and named executive officers; and (iii) all officers and directors of the
Company as a group (unless otherwise indicated, all addresses are c/o the
Company, 65 Railroad Avenue, Ridgefield, New Jersey 07657):
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
NAME AND ADDRESS AMOUNT PERCENTAGE
- - - - ---------------- --------- ----------
Fred W. Broling .......................... 1,386,753 4.7%
David C. Katz (1) ........................ 118,200 *
Murray J. Fox (2) ........................ 1,042,538 3.5%
Leo Gans ................................. 427,394 1.5%
Robert Calabrese ......................... -0- 0
5601 North Kiborn Avenue
Chicago, IL
Robert L. Guyett ......................... 30,000 *
20 Parsonage Hill Road
Short Hills, NJ
Werner Haase ............................. 60,000 *
488 Madison Avenue
New York, NY
Edward P. Hamway ......................... 3,000 *
174 Springfield Avenue
Summit, NJ
John J. Harvey ........................... 1,859,302 6.3%
1755 Butterfield Road
Libertyville, IL
Peter R. Harvey .......................... 1,248,612 4.3%
1755 Butterfield Road
Libertyville, IL
Joseph T. Bruno (3) ...................... 25,500 *
Robert E. Brookman (4) ................... 60,000 *
All Officers and Directors
as a Group (5) ......................... 6,261,299 21.2%
- - - - ----------
* = Less than 1%
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<PAGE>
(1) Includes shares issuable upon exercise of vested options to acquire 108,300
shares of Common Stock.
(2) Includes 25,649 shares owned directly by Recycling Enterprises, Inc. Mr.
Fox is a director, officer and principal shareholder of Recycling
Enterprises, Inc. Also includes shares issuable upon exercise of vested
options to acquire 34,000 shares of Common Stock. Mr. Fox has agreed to
transfer 333,000 shares to the Company in satisfaction of certain
indebtedness. See "Certain Relationships and Related Transactions --
Transactions with Fox Engineering, Inc."
(3) Includes shares issuable upon exercise of vested options to acquire 25,000
shares of Common Stock.
(4) Includes shares issuable upon exercise of vested options to acquire 50,000
shares of Common Stock.
(5) Includes shares issuable upon exercise of vested options to acquire an
aggregate of 217,300 shares of Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DIVIDENDS
On December 29, 1993, PST declared a dividend of $1.32 per common share
to stockholders of record as of March 15, 1994. On March 29, 1994, PST declared
a second dividend of $.05 per common share to all stockholders of record as of
April 15, 1994. Based on these declarations, dividends totaling $9,363,000 and
$1,628,000 were paid to Ozite and the minority stockholders, respectively.
As permitted by PST's Indenture for the Senior Secured Notes and the
Restated Agreement, the dividend was paid with $6,000,000 of proceeds from the
issuance of the Senior Secured Notes and $5,000,000 from the recovery of the
investment in the Bagcraft subordinated note (discussed below).
In connection with the Merger, on July 13, 1995 PST declared a dividend
of the 772,000 Artra Common Shares and 3,675 shares of preferred stock of
Bagcraft Corporation of America ("BCA") to all stockholders of record as of July
31, 1995. Based on this declaration, 638,444 shares of Artra common stock and
3,039.23 shares of BCA Class A preferred stock have been transferred to Ozite.
The Company is in the process of transferring 133,556 shares of Artra common
stock and 635.77 shares of BCA preferred stock to minority stockholders.
TRANSACTION WITH RELATED COMPANIES
Ozite held 772,000 shares of common stock of Artra (the "Artra Common
Shares"), which was accounted for on the equity method. Through Ozite's
recording of its share of the net losses of Artra and other related items, the
carrying value of the investment in the Artra Common Shares had been reduced to
zero. Peter R. Harvey and John Harvey are the controlling stockholders of Artra.
In addition, Peter R. Harvey is a director and the President and Chief Operating
Officer of Artra, and John Harvey is a director and the Chairman of the Board
and Chief Executive Officer of Artra.
8
<PAGE>
Ozite acquired from Bagcraft a $5,000,000 subordinated note bearing
interest at a rate of 13-1/2% per annum and 50,000 shares of 13-1/2% cumulative
redeemable preferred stock with a liquidation preference of $5,000,000 in
Bagcraft for $10,000,000 in 1987. Bagcraft is a wholly-owned subsidiary of BCA
and BCA is wholly-owned subsidiary of Artra. In March 1993, Ozite received 675
shares of BCA Preferred Stock having a liquidation preference equal to the
amount of interest due for the period from December 1, 1991 to November 30, 1992
($675 in the aggregate) in lieu of receipt of payment of interest from Bagcraft
for such period.
In July 1993, Ozite recorded an impairment of its investment in
Bagcraft by establishing a valuation reserve to write-off the $10,000,000
carrying value of such investment as Ozite was unable to determine, with
reasonable certainty, whether or when it would realize its investment in
Bagcraft. On December 28, 1993, PST received from Bagcraft $5,000,000 in cash
and 3,000 shares of BCA preferred stock as payment in full for the $5,000,000
subordinated note and unpaid interest due from Bagcraft totaling $3,094,000
respectively. In 1994, Ozite recorded a $5,000,000 gain for the recovery of its
investment in the Bagcraft subordinated note. The interest due from Bagcraft had
been fully reserved and interest income was not recorded for the receipt of the
BCA preferred stock as such stock is not freely transferable. The cash received
was used to pay a portion of the PST dividend declared.
Peter R. Harvey is a director of Bagcraft, is the President and a
director of BCA.
INDEBTEDNESS OF MANAGEMENT TO THE COMPANY
During fiscal 1996, Mr. Broling was indebted to the Company in an
amount not in excess of $241,000 consisting of principal and interest
outstanding on a demand note dated June 15, 1988, bearing interest at 75% of the
prime rate, not to exceed 10%. Such indebtedness was incurred by Mr. Broling to
finance the purchase of common and preferred stock of the predecessor of Ozite.
At September 30, 1996, the outstanding indebtedness was $243,000.
During fiscal 1996, Mr. Brennan, the former Vice President, Chief
Financial Officer and a Director, was indebted to the Company in an amount not
in excess of $146,500 consisting of principal and interest outstanding on; (i) a
demand note dated June 15, 1988, bearing interest at 75% of the prime rate, not
to exceed 10%; and (ii) a non-interest bearing demand note dated August 20,
1990. Such indebtedness was incurred by Mr. Brennan to finance the purchase of
common and preferred stock of the predecessor of Ozite and to finance
unreimbursed moving expenses incurred moving to Illinois at the Company's
request, respectively. Under a Separation Agreement entered into between Mr.
Brennan and the Company, such amounts are due to be repaid by May 31, 1997. At
September 30, 1996, the outstanding indebtedness was $147,000.
During fiscal 1996, Mr. Peter R. Harvey was indebted to the Company in
an amount not in excess of $717,000 consisting of principal and interest
outstanding on a demand note dated May 20, 1988, bearing interest at the prime
rate on the last day of each fiscal year. Such indebtedness was a personal loan
to Mr. Harvey. At September 30, 1996, the outstanding indebtedness was $717,000.
The Company has ceased recognizing interest income on the notes receivable from
Mr. Harvey since 1994.
TRANSACTIONS WITH FOX ENGINEERING, INC.
In June 1994 PTI entered into an agreement to sell 40% of the capital
stock of the subsidiary which operates the reverse vending machine project, MCR,
to Fox Engineering Inc. ("FEI"). The sale
9
<PAGE>
price was $1,000,000. The sale price was payable by a note which was secured by
the acquired shares of MCR and 175,000 shares of the Company's Common Stock
owned by Murray Fox. The Company has entered into an agreement effective as of
September 1, 1996 whereby the note will be satisfied by the transfer by Mr. Fox
of 333,000 shares of Common Stock and all of FEI's equity interest in MCR to the
Company. In turn, the Company will transfer all of the assets of MCR to Fox
Engineering Corporation of Michigan ("FECM") and FECM will provide to the
Company whatever recycled post-consumer bottles become available to FECM through
any of its activities. Mr. Fox and his son are stockholders of FEI and FECM.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; BOARD OF DIRECTORS
REPORT ON EXECUTIVE COMPENSATION
Mr. Broling, the Company's chief executive officer is a member of the
Compensation Committee. No member of the Company's Board of Directors is an
executive officer of a company whose compensation committee or board of
directors includes an executive officer of the Company.
Compensation of executive officers is determined by the Company's Board
of Directors. Messrs. Broling, Katz, and Peter and John Harvey currently serve
on PST's Board of Directors and have served as directors and officers of PST and
continue to serve the Company in such capacities. See "Certain Relationships and
Related Transactions." Messrs. Broling, Haase and Peter Harvey recommend to the
Board of Directors compensation payable to executive officers of the Company.
Mr. Broling's compensation is based on the actual performance of the Company
compared to the operating plan. The compensation of Messrs. Gans and Brookman is
determined in accordance with the performance of their operating divisions based
on such plan. Messrs. Broling, Haase, and Harvey consider the performance of the
Company, among other factors, in determining the compensation of other executive
officers; however, neither they nor the Board of Directors have adopted
compensation policies applicable to such other executive officers.
10
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total return on a hypothetical
investment made on August 1, 1991 (assuming reinvestment of dividends) in: (a)
the Company's Common Stock; (b) the CRSP Total Return Index for the NASDAQ Stock
Market, and (c) the Non-financial Group Return Index for the NASDAQ Stock
Market. The graph shows how a $100 investment would increase or decrease in
value over time, based on dividends (stock or cash) and increases or decreases
in the market price of the stock and the two indices.
-- GRAPHICAL REPRESENTATION OF DATA TABLE BELOW --
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
PTI .................... 100 229.33 400.00 157.33 118.00 60.00
NASDAQ NON FIN ......... 100 112.02 134.21 135.48 195.22 206.92
NASDAQ Broad Market .... 100 117.44 142.80 146.95 206.33 224.79
11
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to approval by the stockholders, the Board of Directors has
appointed Deloitte & Touche as the independent public accountants to audit the
financial statements of the Company for the fiscal year ending July 31, 1997.
Deloitte & Touche also served as the Company's auditors for the fiscal years
ended July 31, 1995 and 1996. It is expected that a representative of Deloitte &
Touche will be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the Annual
Meeting is required to elect directors and to approve the selection of auditors.
Abstentions will not be counted as affirmative votes. The current members of the
Board of Directors and other executive officers presently hold voting authority
for Common Stock representing an aggregate of approximately 6,044,000 votes, or
approximately 20.6% of the total number of votes eligible to be cast at the
Annual Meeting. The members of the Board of Directors have indicated their
intention to vote affirmatively on all of the proposals.
EXPENSE OF SOLICITATION
The cost of soliciting proxies, which also includes the preparation,
printing and mailing of this Proxy Statement, will be borne by the Company.
Solicitation will be made by the Company primarily through the mail, but regular
employees of the Company may solicit proxies personally, by telephone or
telegram. The Company will request brokers and nominees to obtain voting
instructions of beneficial owners of stock registered in their names and will
reimburse them for any expenses incurred in connection therewith.
PROPOSALS OF STOCKHOLDERS
Stockholders of the Company who intend to present a proposal for action
at the 1998 Annual Meeting of Stockholders of the Company must notify the
Company's management of such intention by notice received at the Company's
principal executive offices not later than September 26, 1997, for such proposal
to be included in the Company's proxy statement and form of proxy relating to
such Meeting.
FINANCIAL STATEMENTS
The Company's summary annual report to stockholders and full annual
report for the year ended July 31, 1996 along with a copy of the Company's
Quarterly Report on Form 10-Q containing financial information for the three
months ended October 31, 1996 are being delivered with this Proxy Statement to
the Company's stockholders. The financial statements and management's discussion
and analysis thereof contained in those documents are incorporated herein by
reference.
12
<PAGE>
OTHER MATTERS
The Company knows of no items of business that are expected to be
presented for consideration at the Annual Meeting which are not enumerated
herein. However, if other matters properly come before the Meeting, it is
intended that the person named in the accompanying proxy will vote thereon in
accordance with his best judgment.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE
THE EXPENSE OF FURTHER MAILINGS.
Dated: Ridgefield, New Jersey
January 22, 1997
By Order of the Board of Directors
Paul Litwinczuk, Secretary
13
<PAGE>
PURETEC CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
February 26, 1997 9:00 a.m.
The undersigned hereby appoints Fred W. Broling and David C. Katz severally
proxy, with full power of substitution and revocation, to vote on behalf of the
undersigned all shares of Common Stock of PureTec Corporation which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
February 26, 1997 or any adjournments thereof.
1. ELECTION OF DIRECTORS
____
FOR all the nominees listed below /___/
WITHHOLD AUTHORITY ____
To vote for all nominees listed below /___/
(INSTRUCTION: To withhold authority to vote for any individual
nominee, cross out the nominee's name below.)
Fred W. Broling
David C. Katz
Murray Fox
Leo Gans
Robert L. Guyett
Werner Haase
Edward P. Hamway
John J. Harvey
Peter R. Harvey
2. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP, AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE 1997 FISCAL YEAR
____ ____ ____
FOR /___/ AGAINST /___/ ABSTAIN /___/
In his discretion, the proxy is authorized to vote upon such other business
as may properly come before the meeting or any adjournment(s) thereof.
(Continued and to be signed on reverse side.)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED TO ELECT MESSRS. BROLING, KATZ, FOX, GANS, GUYETT, HAASE, HAMWAY, JOHN
HARVEY, AND PETER HARVEY AS DIRECTORS, AND TO APPROVE THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING JULY 31, 1997.
Dated: ________________________
_______________________________
Signature
_______________________________
Signature if held jointly
(Please sign exactly as
ownership appears on this
proxy. Where stock is 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.)
PLEASE MARK, DATE, SIGN AND
RETURN PROXY IN THE ENCLOSED ENVELOPE.
