<PAGE>
USA BIOMASS CORPORATION
52300 ENTERPRISE WAY
COACHELLA, CALIFORNIA 92236
May ___, 1999
To Our Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of USA Biomass Corporation (the "Company") which will be held at 10:00 a.m.,
Pacific Daylight Time, on Friday, June 11, 1999, at the Miramonte Resort, 76-477
Highway 111, Indian Wells, California 92210 (the "Annual Meeting"). All holders
of the Company's outstanding stock as of April 21, 1999 are entitled to vote at
the Annual Meeting.
Enclosed is a copy of the Notice of Annual Meeting of Stockholders, Proxy
Statement and Proxy Card. A current report on the business operations of the
Company will be presented at the meeting, and the stockholders will have an
opportunity to ask questions.
We hope you will be able to attend the Annual Meeting. Whether or not you
expect to attend, it is important that you complete, sign, date and return the
Proxy Card in the enclosed envelope in order to make certain that your shares
will be represented at the Annual Meeting.
Sincerely,
Robin Swanson
Secretary
<PAGE>
USA BIOMASS CORPORATION
52300 ENTERPRISE WAY
COACHELLA, CALIFORNIA 92236
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JUNE 11, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of USA
Biomass Corporation, a Delaware corporation (the "Company"), will be held at
10:00 a.m., Pacific Daylight Time, on Friday, June 11, 1999, at the Miramonte
Resort, 76-477 Highway 111, Indian Wells, California 92210 (the "Annual
Meeting") for the following purposes:
1. To elect a Board of Directors of nine members;
2. To approve a Restated Certificate of Incorporation that temporarily
alters the terms upon which shares of the Company's Series A 9%
Convertible Preferred Stock are voluntarily convertible, effects
certain non-substantive grammatical changes and consolidates and
restates the Company's Certificate of Incorporation and amendments to
the Certificate of Incorporation;
3. To ratify the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year beginning January 1,
1999; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 21, 1999,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and all adjourned meetings thereof.
By Order of the Board of Directors
Robin Swanson
Secretary
Dated: May ___, 1999
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY
REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
<PAGE>
USA BIOMASS CORPORATION
52300 ENTERPRISE WAY
COACHELLA, CALIFORNIA 92236
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JUNE 11, 1999
VOTING AND PROXY
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of USA Biomass Corporation, formerly AMCOR
Capital Corporation (the "Company"), for use at the 1999 Annual Meeting of
Stockholders to be held at 10:00 a.m., Pacific Daylight Time, on Friday, June
11, 1999, at the Miramonte Resort, 76-477 Highway 111, Indian Wells, California
92210 (the "Annual Meeting"), and at any adjournments thereof. When such proxy
is properly executed and returned, the shares it represents will be voted in
accordance with any directions noted thereon. If no specification is indicated,
shares of the Company's Common Stock will be voted "for" the election as
directors of the nine nominees listed thereon. Any stockholder giving a proxy
has the power to revoke it at any time before it is voted by written notice to
the Secretary of the Company, by issuance of a subsequent proxy or by voting at
the Annual Meeting in person.
At the close of business on April 21, 1999, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had issued and outstanding 7,783,988 shares of Common Stock, 747,500
shares of Series A 9% Convertible Preferred Stock ("Series A Preferred Stock"),
and 404,414 shares of Series B Preferred Stock ("Series B Preferred Stock").
Each share of Common Stock entitles the holder of record thereof to one vote on
any matter coming before the Annual Meeting. The holders of Series A Preferred
Stock and the holders of Series B Preferred Stock are entitled to vote as
separate classes at the Annual Meeting on Proposal 2, the approval of the
Restated Certificate of Incorporation. Each share of Series A Preferred Stock
and each share of Series B Preferred Stock entitles the holder of record thereof
to one vote on Proposal 2. Only stockholders of record at the close of business
on April 21, 1999 are entitled to notice of and to vote at the Annual Meeting or
at any adjournments thereof.
Under Delaware law and the Company's Bylaws, a majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum at
a meeting of stockholders. The election of each of the nine nominees identified
in this Proxy Statement will require the affirmative vote of a plurality of the
shares of Common Stock present in person or represented by proxy at the Annual
Meeting and entitled to vote on the election of directors.
Approval of amendments to the Certificate of Incorporation will require the
affirmative vote of the holders of a majority of the issued and outstanding
shares of Common Stock (3,891,995 shares of the 7,783,988 shares outstanding),
66-2/3% of the issued and outstanding shares of Series A Preferred Stock
(498,334 shares of the 747,500 shares outstanding) and 66-2/3% of the issued and
outstanding shares of Series B Preferred Stock (269,609 shares of the 404,414
shares outstanding), voting separately as classes.
1
<PAGE>
Generally, if a quorum is present, the affirmative vote of a majority of
the shares represented and voting on any other matter will constitute the act of
the stockholders provided the number of shares voting in favor of any proposal
equals at least a majority of the quorum. Although abstentions and "broker
non-votes" are not counted either "for" or "against" any proposals, if the
number of abstentions or "broker non-votes" results in the votes "for" a
proposal not equaling at least a majority of the quorum required for the
meeting, the proposal will not be approved. This will be the case even though
the number of votes "for" the proposal exceeds the votes "against" the proposal.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling and mailing the proxy
solicitation materials. Proxies may be solicited personally, or by mail or by
telephone, by directors, officers and regular employees of the Company who will
not be additionally compensated therefor. It is anticipated that this proxy
statement and accompanying proxy card will be mailed on or about May 7, 1999 to
all stockholders entitled to vote at the Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are more fully discussed below.
2
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
Directors are elected annually and hold office until the next annual
meeting of stockholders or until their respective successors are elected and
qualify. It is intended that the proxies solicited by the Board of Directors
will be voted for election of the nine nominees listed below unless a contrary
instruction is made on the proxy. If for any reason one or more of these
nominees should be unavailable as a candidate for director, an event which is
not anticipated, the person named in the accompanying proxy will vote for
another candidate or candidates nominated by the Board of Directors. All of the
nominees for director are, at present, directors of the Company.
Each nominee's and other executive officers' name, age, office with the
Company, if any, the year first elected as a director, if applicable, and
certain biographical information regarding the nominees and other executive
officers are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
---- --- -------- --------------
<S> <C> <C> <C>
Fred H. Behrens 57 Chairman of the Board, Chief 1988
Executive Officer and Director
Robert A. Wright 62 President, Chief Operating Officer 1988
and Director
Eugene W. Tidgewell 49 Chief Financial Officer, Treasurer, 1999
Vice President and Director
Robin Swanson 43 Secretary ----
Marlene A. Tapie 43 Director 1988
Dale P. Paisley 57 Director 1997
Marlin T. McKeever 58 Director 1997
Richard Mora 58 Director 1998
Mike McDonald 58 Director 1998
H. Glen Leason 74 Director 1999
</TABLE>
NOMINEES FOR DIRECTORS
FRED H. BEHRENS has served as the Chairman, the Chief Executive Officer,
and a director of the Company since 1988 and previously served as Treasurer and
Chief Financial Officer of the Company from 1990 to January 1998. Mr. Behrens
has been actively involved with the Company and its affiliates since August
1979. From 1966 to 1971, Mr. Behrens was on the audit staff of Arthur Andersen
& Co.; between 1971 and 1973, he was a principal in a real estate development
company; and from 1973 to August 1979, he was employed as a Vice President of an
agricultural management company. Mr. Behrens holds a Bachelor of Science degree
3
<PAGE>
from the University of Minnesota School of Business Administration. Mr. Behrens
is a general partner of Rancho California Partners II, a California limited
partnership (the "Partnership"), which filed a voluntary Chapter 11
Reorganization Petition under the federal Bankruptcy Act to resolve certain
issues with the Riverside County Tax Assessor's Office on or about March 20,
1996. The decision to file for reorganization was made to protect certain real
property owned by the Partnership from foreclosure while the property was being
reappraised. The issues raised in the Petition have been favorably resolved and
the Partnership has dismissed the Petition.
ROBERT A. WRIGHT has served as the President, the Chief Operating Officer,
and a director of the Company since 1988. During the past 25 years Mr. Wright
has been, and continues to be, a principal in and the President of a farm
equipment and pre-fabricated metal building manufacturing company located in
central Illinois. Mr. Wright also served as general partner or co-general
partner for several agricultural real estate partnerships which were not
organized by the Company or its affiliates. Mr. Wright holds a Bachelor of
Science degree in Business (Management and Finance) from the University of
Colorado. Mr. Wright is a general partner of the Partnership which filed a
voluntary Chapter 11 Reorganization Petition under the federal Bankruptcy Act to
resolve certain issues with the Riverside County Tax Assessor's Office on or
about March 20, 1996. The decision to file for reorganization was made to
protect certain real property owned by the Partnership from foreclosure while
the property was being reappraised. The issues raised in the Petition have been
favorably resolved and the Partnership has dismissed the Petition.
MARLENE A. TAPIE has served as a director of the Company since 1988.
Between 1979 and 1994, she served in various capacities including Vice
President, Executive Secretary to the Chairman and Office Administrator. From
1992 through 1995, Ms. Tapie owned and operated a clothing company, Marlene &
Company. In October 1994, she and her husband, Alan Tapie, a PGA golf
professional, purchased a controlling interest in Buena Park Golf Center, a golf
course and driving range located in Buena Park, California. Ms. Tapie also acts
as Director of Operations for Morgan Rae, Inc., a publishing company located in
Mission Viejo, California, which specializes in greeting cards and other paper
gift items that are marketed and distributed worldwide.
DALE P. PAISLEY has served as a director of the Company since February
1997. From December 1995 to April 1997, he was Chief Financial Officer and from
September 1996 to April 1997, a director of TravelMax International, Inc. From
May 1993 to December 1995, Mr. Paisley provided accounting and financial
consulting services to Pacific Snax Corporation. From mid-1991 through mid-1993,
Mr. Paisley was Chief Operating Officer of CMS Capital Ventures, a Newport
Beach, California firm specializing in providing financial and asset-management
services to the Resolution Trust Corporation and the Federal Deposit Insurance
Corporation. During the past 5 years, Mr. Paisley has also provided financial
consulting services to companies such as Telluride Management Solutions,
Directors Mortgage Loan Company and Admor Memory Corporation. From 1977 to 1991,
Mr. Paisley was a partner in the accounting firm of Coopers & Lybrand. Mr.
Paisley directed that firm's mergers and acquisitions practice and was
responsible for services provided to Shearson Lehman Brothers. Mr. Paisley holds
a Bachelor of Arts degree in Accounting from San Diego State University and is a
CPA. On August 15, 1997, a complaint for damages was filed by TravelMax
International, Inc. in the Superior Court of Orange County, California which
alleges that certain conduct by the therein specified defendants, including Mr.
Paisley, purportedly resulted in damages to TravelMax International, Inc. in an
unascertained amount, but believed to be in excess of $13,000,000. The causes of
action alleged in that complaint against Mr. Paisley are (i) fraud, (ii) breach
of fiduciary duty, (iii) negligence, (iv) conversion, (v) misappropriation of
funds, (vi) money had and received, (vii) unjust enrichment, and (viii)
determination of a constructive trust. Mr. Paisley denies the allegations
specified in that complaint.
4
<PAGE>
MARLIN T. MCKEEVER has served as a director of the Company since February
1997. Mr. McKeever has been the Vice President of Sales at Andreini & Company,
an insurance brokerage firm located in Orange County, California, since 1989.
Prior to that Mr. McKeever was Vice President of another insurance brokerage
firm, Johnson & Higgins, also located in Orange County, California. Mr. McKeever
was also a professional football player with several teams, including the Los
Angeles Rams, Minnesota Vikings and Washington Redskins, from 1961 through 1973.
Mr. McKeever holds a Bachelors Degree in Finance from the University of Southern
California, a Masters Degree in Business from the University of Southern
California and has been licensed as an insurance broker in California since
1974.
RICHARD MORA has served as a director of the Company since April 1998.
Prior to that, Mr. Mora served as President and Chief Operating Officer of
Coastcast Corporation from 1995 to 1998 and served as President and Chief
Executive Officer of Coastcast Corporation during 1998. From 1992 to 1995, Mr.
Mora was Chief Operating Officer of Pharmavite Corporation, a manufacturer and
distributor of nutritional supplements. Prior to that, Mr. Mora had held various
sales and management positions with Bergen Brunswig from 1969 to 1992.
Mr. Mora holds a Bachelor of Arts Degree from Occidental College.
MIKE MCDONALD has served as a director of the Company since June 1998. Mr.
McDonald was employed by Baxter International of Deerfield, Illinois from 1967
to 1993, advancing from Sales Representative to Vice President, Sales and Sales
Operations of that company's I.V. Systems Division. From 1991 to 1994, Mr.
McDonald was President of CareMark Therapeutic Services, a division of Baxter
International of Redlands, California. Mr. McDonald served as Vice President for
Disease Management from 1994 when CareMark Therapeutic Services was spun off
from Baxter International until 1997 when CareMark Therapeutic Services was
acquired by MedPartners. Mr. McDonald is on the Advisory Board of the University
of Southern California School of Pharmacy and the Boards of Directors of
InfoCare, Inc. and Millenium Health, Inc. Mr. McDonald holds a Bachelors Degree
in Public Administration from the University of Southern California.
EUGENE W. TIDGEWELL has served as the Chief Financial Officer and Treasurer
and as a Vice President of the Company since January 1998 and has served as a
Director of the Company since February 1999. Mr. Tidgewell was an audit manager
at Kelly & Company, the Company's independent auditors, from 1989 to 1998. Mr.
Tidgewell holds a Bachelor of Science Degree in Business Administration
(Accounting) from the University of Notre Dame and is a Certified Public
Accountant in the State of California.
H. GLEN LEASON has served as a director of the Company since February 1999.
>From 1984 to the present, Mr. Leason has served as a Senior Vice President with
Torrey Pines Securities. Prior to that, Mr. Leason served in the United States
Navy Submarine Service from 1943 to 1946, was a securities broker with Leason &
Company in Chicago, Illinois from 1946 through 1960, eventually becoming Vice
President for its initial public offering department in Newport Beach,
California, was a Vice President in the initial public offering department at
R.J. Henderson & Co. in Newport Beach, California from 1960 to 1966, was an
Emerging Growth Stock Vice President with Jefferies & Co. in Newport Beach,
California from 1966 until Jefferies & Co. was purchased in 1969, and rejoined
Leason & Company as President until 1973. From 1973 to 1978, Mr. Leason retired
and worked as a private consultant. From 1978 to 1984, Mr. Leason worked with
Wedbush Securities and then with McDonald, Krieger & Bowyer in Beverly Hills,
California. Mr. Leason completed various courses at Northwestern University and
Loyola Marymount University, is a registered representative with the NASD and
holds a principal's license.
5
<PAGE>
OTHER EXECUTIVE OFFICERS
ROBIN SWANSON has served as Corporate Secretary of the Company since May
1996. Ms. Swanson is also the Company's Office Administrator. From 1993 to 1996,
Ms. Swanson served as the Office Manager for Swanson Financial Group, LLP in
Palm Desert, California. From 1982 to 1993, Ms. Swanson worked in the capacity
of Executive Secretary and Office Manager in Houston, Texas for The Horne
Company Realtors, Real Vest Corporation, Eastdil Realty, Inc. and Nevins, Inc.
>From 1979 to 1982, Ms. Swanson served as Purchasing Agent for Phi-Technologies
located in Oklahoma City, Oklahoma.
BOARD OF DIRECTORS MEETINGS
The Board of Directors of the Company held 13 meetings during the fiscal
year ended August 31, 1998 and took action by unanimous written consent on 47
occasions. Each incumbent director attended at least 75% of the aggregate of (a)
the total number of meetings of the Board of Directors held during the fiscal
year ended August 31, 1998 (held during the period for which he has been a
director) and (b) the total number of meetings held by all committees of the
Board of Directors on which he served during the fiscal year ended August 31,
1998 (held during the period that he served).
All directors hold office until the next annual meeting of stockholders of
the Company and the election and qualification of their successors. Officers are
appointed by, and serve at the discretion of, the Board of Directors.
COMMITTEES
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Stock Option Committee. The Board of Directors has no nominating
committee. Selection of nominees for the Board of Directors is made by the
entire Board of Directors.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the results and scope
of the audit and other services provided by the Company's independent auditors,
reviews the Company's financial statements for each interim period, and reviews
and evaluates the Company's internal audit and control functions. The Audit
Committee currently consists of Messrs Paisley, Mora and McDonald. The Audit
Committee held 3 meetings during the fiscal year ended August 31, 1998.
The Compensation Committee makes recommendations to the Board of Directors
concerning salaries and incentive compensation for employees and consultants of
the Company. The Compensation Committee currently consists of Mr. McKeever, Ms.
Tapie and Mr. Mora. The Compensation Committee held 2 meetings during the
fiscal year ended August 31, 1998.
The Stock Option Committee selects the persons entitled to receive options
under the Company's Stock Option Plan and establishes the number of shares,
exercise price, vesting period and other terms of the options granted under the
1994 Stock Option Plan and the 1997 Stock Option Plan. The Stock Option
Committee consists of Messrs. McKeever and Wright. The Stock Option Committee
did not meet during the fiscal year ended August 31, 1998.
6
<PAGE>
DIRECTORS' COMPENSATION
The Company's outside directors receive $500 per meeting of the Board of
Directors and $250 per meeting of any committee of the Board of Directors. In
addition, each member of the Board of Directors received options on August 28,
1998 to purchase up to 15,000 shares of the Company's Common Stock at $3.00 per
share, the then closing price of the Company's Common Stock. Effective August
28, 1998, options to purchase up to an aggregate of 50,000 shares of the
Company's Common Stock that were granted to the Company's outside directors at
various times between March 1997 and June 1998 pursuant to the Company's 1994
and 1997 Stock Option Plans were canceled without consideration.
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's executive officers and directors and persons who
beneficially own more than 10% of a registered class of the Company's Common
Stock ("reporting persons") to file initial reports of ownership and reports of
changes in ownership with the SEC. Such reporting persons are required by SEC
regulations to furnish the Company with copies of all such reports that they
file.
Based solely upon a review of copies of such reports furnished to the
Company during its fiscal year ended August 31, 1998 and thereafter, or any
written representations received by the Company from reporting persons that no
other reports were required, the Company believes that, during the Company's
1998 fiscal year, all Section 16(a) filing requirements applicable to the
Company's reporting persons were complied with except that Mr. Behrens, the
Company's Chairman and Chief Executive Officer, inadvertently failed to file on
a timely basis a Form 4 with respect to purchases of an aggregate of 3,800
shares in October 1998; Gene Tidgewell, the Chief Financial Officer and
Treasurer and a Vice President of the Company, failed to file on a timely basis
a Form 4 with respect to the repricing of a stock option; Mike McDonald, a
director of the Company, failed to file on a timely basis a Form 4 with respect
to his purchase of 3,000 shares in September 1998; Marlin McKeever, a director
of the Company, failed to file on a timely basis a Form 4 with respect to his
wife's purchase of 1,000 shares in December 1997; and each member of the Board
of Directors inadvertently failed to file on a timely basis Form 4s with respect
to a grant to each member on August 28, 1998 of options to purchase up to 15,000
shares of the Company's Common Stock. In December 1998, each of these persons
filed late Form 4s reflecting these transactions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 21, 1999, certain information
with respect to (i) each director of the Company, (ii) the Named Executives (as
defined under the heading "Executive Compensation" below) and (iii) all
directors and executive officers of the Company as a group. Other than as
described below, no other person is known to the Company to be the beneficial
owner of more than 5% of the Company's Common Stock. The information with
respect to each person specified is as supplied or confirmed by such person or
based upon statements filed with the Commission. Each person set forth below is
a director of the Company.
7
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP (1) OF CLASS
------------------- -------- ------------------------ --------
<S> <C> <C> <C>
Fred H. Behrens(2) Common Stock 1,051,291 13.09%
52300 Enterprise Way
Coachella, California 92236
Robert A. Wright(3) Common Stock 864,507 10.86%
52300 Enterprise Way
Coachella, California 92236
H. Glen Leason(4) Common Stock 103,670 1.32%
77-955 Calle Arroba Series A Preferred Stock 18,900 2.53%
La Quinta, California 92253
Marlene Tapie(5) Common Stock 89,167 *
52300 Enterprise Way
Coachella, California 92236
Eugene W. Tidgewell(6) Common Stock 20,000 *
52300 Enterprise Way
Coachella, California 92236
Mike McDonald Common Stock 3,000 *
52300 Enterprise Way
Coachella, California 92236
Marlin McKeever(7) Common Stock 1,000 *
52300 Enterprise Way
Coachella, California 92236
Dale Paisley __ __ __
52300 Enterprise Way
Coachella, California 92236
Richard Mora __ __ __
52300 Enterprise Way
Coachella, California 92236
All Directors and Executive Common Stock 2,135,135 25.74%
Officers as a group Series A Preferred Stock 18,900 2.53%
(10 persons)(8)
</TABLE>
- ---------------
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all shares shown as
beneficially owned by them. Shares of Common Stock subject to options
currently exercisable, or exercisable within 60 days after April 15, 1999,
are deemed to be outstanding in calculating the percentage ownership of a
person or group but are not deemed to be outstanding as to any other person
or group.
8
<PAGE>
(2) Includes 583,681 shares of Common Stock held by Behrens Partners, Ltd., a
family limited partnership controlled by Mr. Behrens. Also includes (i)
207,355 shares of Common Stock held in escrow on behalf of Mr. Behrens,
(ii) 13,300 shares held in an IRA account, and (iii) 246,955 shares of
Common Stock underlying options.
(3) Includes (i) 110,654 shares of Common Stock held by Wright Family Partners,
Ltd., a family limited partnership controlled by Mr. Wright, (ii) 447,533
shares of Common Stock held in escrow on behalf of Mr. Wright, (iii)
130,392 shares held in an IRA account, and (iv) 175,928 shares of Common
Stock underlying options.
(4) Includes 34,020 shares of Common Stock underlying 18,900 shares of Series A
Preferred Stock and 69,650 shares of Common Stock held in an IRA account.
(5) Includes 31,250 shares of Common Stock underlying options.
(6) Represents 20,000 shares of Common Stock underlying options.
(7) Represents 1,000 shares held by Mr. McKeever's wife, over which Mr.
McKeever disclaims beneficial ownership.
(8) Includes 476,633 shares of Common Stock underlying options and 34,020
shares of Common Stock underlying 18,900 shares of Series A Preferred
Stock.
9
<PAGE>
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company of the Company's
Chief Executive Officer and the only other executive officer of the Company
whose aggregate cash compensation exceeded $100,000 (collectively, the "Named
Executives") during the fiscal years ended August 31, 1996, 1997 and 1998.
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------------------------
Other Annual
Name and Salary Compensation
Principal Position Year ($) ($)
------------------ ---- ------ -------------
Fred H. Behrens 1998 152,500 15,864
Chairman and Chief 1997 120,000 5,724
Executive Officer 1996 120,000 8,994
Robert A. Wright 1998 133,081 15,080
President and Chief 1997 120,000 11,519
Operating Officer 1996 120,000 23,038
- ----------
(1) Effective September 1, 1998, Messrs. Behrens and Wright agreed to reduce
their annual salaries to $75,000.
(2) Includes premiums paid by the Company pursuant to $2.0 million key person
insurance policies on each of the lives of Messrs. Behrens and Wright.
According to the provisions of those policies, $2.0 million would be paid
upon the death of either Messrs. Behrens or Wright, of which $1.0 million
would be paid to the Company and $1.0 million would be paid to each
insured's beneficiaries.
10
<PAGE>
STOCK OPTION GRANTS IN 1998
The following table sets forth information concerning individual grants of
stock options made pursuant to the Company's 1997 Stock Option Plan during
fiscal 1998 to each of the Named Executives. The Company has never granted any
stock appreciation rights.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date
---- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Fred H. Behrens 15,000 4.5% $3.00 8/28/08
Robert A. Wright 15,000 4.5% $3.00 8/28/08
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the number of shares of the
Company's Common Stock acquired upon exercise of options, the value realized
therefor, the number of unexercised options at August 31, 1998 and the value of
unexercised in-the-money options at August 31, 1998 for the Named Executives in
the Summary Compensation Table above. The Named Executives did not hold any
stock appreciation rights during fiscal 1998.
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options at Fiscal Options at Fiscal
Year-End(#) Year-End($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
---- ---------------------- --------------------
Fred H. Behrens 246,955/15,000 $345,737/$0
Robert A. Wright 175,928/15,000 $246,299/$0
- ----------
(1) Based upon the closing price of the Company's Common Stock on August 28,
1998.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between 1981 and 1986, the Company, in its capacity as general partner
and/or placement agent, raised approximately $200 million in private placement
syndications. This syndication activity resulted in the formation of
approximately 137 limited partnerships, which acquired real estate for
agribusiness or development and resale purposes. Partnership liquidations have
reduced this total to 14 limited partnerships as of August 31, 1998. The Company
expects that all but five of the limited partnerships will file final tax
returns for calender 1998 pursuant to liquidation plans that are now in process,
and that the remaining five partnerships will be terminated in fiscal 1999.
As a result of the liquidation of various partnerships, the Company
acquired much of the acreage of those liquidated partnerships for (i) payment of
promissory notes payable to the Company from those liquidated partnerships, (ii)
Common Stock of the Company, (iii) preferred stock of the Company, or (iv)
purchase money promissory notes from the Company. Much of the Company's business
during fiscal 1998 consisted of managing the (a) operating vineyard properties
acquired from those liquidated partnerships and (b) remaining affiliated limited
partnerships. Therefore, much of the Company's revenues during fiscal 1998 were
derived from agribusiness land management and management of land acquired for
development or resale, activities which are planned to be discontinued pursuant
to the Plan. The Company also was eligible to participate in any appreciation,
subject to certain provisions relating to limited partners' returns, realized in
the sale of land acquired for development or resale.
Pursuant to the Company's management relationship with the remaining
affiliated limited partnerships, those partnerships were indebted to the Company
during fiscal 1998 in the form of promissory notes, accounts receivable and
other advances. Accounts receivable by the Company from limited partnerships
consisted primarily of costs incurred by the Company on behalf of those limited
partnerships and advances to those limited partnerships. Those costs and
advances totaled $9,091,834 at August 31, 1998, are due on demand, and are
without interest. The Company has promissory notes and advances payable to the
limited partnerships occurring from farming activities. On August 31, 1998, the
advances and notes payable to related parties were $1,614,558 and $2,409,469,
respectively, compared with $620,000 of advances and $2,196,027 of notes payable
at August 31, 1997. The August 31, 1998 balance sheet includes an unsecured
promissory note payable in November 1998 to an employee in the amount of
$370,189, with interest at 8% during fiscal 1998.
On November 30, 1995, the Company acquired a 50% interest in PS III Farms,
L.L.C., which leases 6,490 acres to one of the limited liability company members
which is not affiliated with the Company. The lease expires September 30, 1999
and has a renewal option with terms subject to mutual agreement. The primary
crop grown on the farm is potatoes. Consistent with the Plan, the Company
intends to sell its 50% interest to its partner during fiscal 1999, and
negotiations are in process.
The Company holds a 99% ownership interest in Las Palomas Country Club
Estates LLC, a California limited liability company, which acts as the
development entity for the golf course owned by Lake Valley Realty Partners, an
affiliated partnership ("Lake Valley"), and a residential building lot
development in Texas which is owned by Lake Valley. Fred H. Behrens, Chairman,
Chief Executive Officer, director, and principal shareholder of the Company
holds a 1% ownership interest in Las Palomas Club Estates LLC. The Company also
holds a 99% ownership interest in AMCOR Builders LLC, which manages the
construction operations of the Company in Texas. Robert A. Wright, President,
Chief Operating Officer, director and principal shareholder of the Company holds
a 1% ownership interest in AMCOR Builders LLC. The Company holds a 99% ownership
interest in AMCOR Biomass Farms LLC. Enterprise Packing Company ("EPC") owns 442
limited partnership interests issued by Lake Valley. Mr. Behrens and Mr. Wright
are the only general partners of Lake Valley and EPC. There are 2,600 limited
partnership interests of Lake Valley presently issued and outstanding.
Therefore, by attribution of their ownership interests in EPC, Messrs. Behrens
and Wright jointly own 17% of the issued and outstanding limited partnership
interests of Lake Valley.
12
<PAGE>
In December 1997, Messrs. Behrens and Wright agreed, at the lenders'
request, to personally guarantee $4,250,000 of debt financing obtained by the
Company from GMAC Credit Corporation and TexStar Bank in connection with the Las
Palomas golf course/subdivision project. In consideration for the guarantee, the
Company agreed to pay to Messrs. Behrens and Wright a loan guarantee fee in the
aggregate amount of $212,500. Messrs. Behrens and Wright assigned to the Company
their rights to this guarantee fee effective August 31, 1998 as described below.
As of August 31, 1998, Messrs. Behrens and Wright had loaned the Company a
total of $1,445,342, summarized as follow. Mr. Wright loaned the Company
$140,158.50 as evidenced by an unsecured promissory note dated August 26, 1998,
payable on December 31, 1999 with interest at 10% per annum. Wright Family
Partners, Ltd., a family limited partnership controlled by Mr. Wright ("WFPL"),
loaned the Company $400,000 as evidenced by an unsecured promissory note dated
August 1, 1998, payable July 31, 1999 with interest at 12% per annum and an
origination fee of $20,000. Mr. Behrens loaned the Company $815,184 as evidenced
by an unsecured promissory note dated June 1, 1998, payable on December 31, 2001
with interest at 10% per annum. Mr. Behrens advanced the Company $90,000 as
evidenced by an unsecured promissory note dated June 1, 1998 payable on December
31, 2001 with interest at 10% per annum accruing on (i) $40,000 from January 12,
1998, (ii) $25,000 from May 21, 1998 and (iii) $25,000 from May 22, 1998. The
interest rate on each of these notes was reduced to 8% per annum effective
August 31, 1998 as described below.
The Company made advances to EPC during fiscal 1998 in the amount of
$651,029. At August 31, 1998, $913,632 remained unpaid and outstanding. This
debt was memorialized in an unsecured promissory note dated September 1, 1998
made by EPC in favor of the Company, payable on January 1, 2000 with interest at
8% per annum as described in the following paragraph.
The Company entered into an agreement effective as of August 31, 1998 among
the Company, EPC, Messrs. Behrens and Wright and WFPL. Pursuant to the
agreement: (i) EPC assigned to the Company all right, title and interest in and
to amounts due to EPC from Lake Valley in connection with the financing of the
Las Palomas project; (ii) Messrs. Behrens and Wright assigned to the Company all
right, title and interest in and to the $212,500 loan guarantee fee relating to
the Las Palomas financing and in and to a $336,000 loan guarantee fee promised
to Messrs. Behrens and Wright in April 1996 in connection with their agreement
to guarantee certain restructured indebtedness relating to the 600-acre parcel
of land located in Rancho California that was sold by the Company in August
1998; (iii) the amount due from EPC to the Company in connection with advances
described in the preceding paragraph was reduced by the value of the rights
assigned by EPC, Messrs. Behrens and Wright and WFPL as described in clauses (i)
and (ii) above (the "Reduced EPC Debt"); (iv) the interest rates payable by the
Company in connection with notes payable by the Company to each of Messrs.
Behrens and Wright and WFPL as described above in this Item 12 were reduced to
8% per annum from rates of 10% and 12%; (v) the Reduced EPC Debt was
memorialized in an unsecured promissory note dated September 1, 1998, payable on
January 1, 2000 with interest at the rate of 8% per annum; (vi) Messrs. Behrens
and Wright and WFPL agreed not to require repayment prior to January 1, 2000 of
any amounts due under or in connection with the notes and advances referred to
in clause (iii) above in excess of the Reduced EPC Debt; and (vii) the Company
agreed not to require repayment prior to January 1, 2000 of amounts due under or
in connection with the Reduced EPC Debt.
Effective February 28, 1998, the Company retired an aggregate of 404,414
shares of Series B Preferred Stock that were issued to three affiliated limited
partnerships as part of a transaction arranged by the Company pursuant to which
the Company agreed to reduce the amount of debt owed to the Company by Lake
Valley by $4,044,140 in exchange for the issuance by Lake Valley to the
partnerships of promissory notes collateralized by a first priority security
interest in certain real property owned by Lake Valley and the payment by Lake
Valley to the Company of a financing fee of approximately $417,000.
Subsequently, Lake Valley inadvertently failed to record the partnerships'
security interest in the real property prior to the recordation by a third party
of a security interest in the real property. In light of the inability of Lake
13
<PAGE>
Valley to provide to the partnerships a first priority security interest in the
real property, the Company rescinded the foregoing transactions and reissued the
404,414 shares of Series B Preferred Stock effective as of February 28, 1998.
Each share of Series B Preferred Stock is convertible at any time at the option
of the holder into one fully paid nonassessable share of the Company's Common
Stock. In addition, each share of Series B Preferred Stock is automatically
converted into one fully paid nonassessable share of Common Stock upon a change
in control during any twelve month period or upon sale of all or substantially
all of the assets of the Company.
The Company rents its corporate headquarters and table grape processing
cold storage facility from EPC, a general partnership controlled by Messrs.
Behrens and Wright, at an annual rental of $156,000, which is the same rate paid
by EPC to the third party owner of the building. An agreement has been reached
with the third party owner of the building whereby effective after June 30,
1999, the Company will rent the executive office space only directly from the
third party owner of the building at a monthly rental of $3,000 for a two-year
term, which agreement may be terminated by the Company with 90 days' advance
written notice.
H. Glen Leason has been a director of the Company since February 1999 and a
Senior Vice President of Torrey Pines Securities since 1984. As a Senior Vice
President at Torrey Pines Securities, prior to becoming a director of the
Company Mr. Leason received from Torrey Pines Securities approximately $75,000
in gross commissions for assisting the Company in its September 1997 offering of
shares of Series A 9% Convertible Preferred Stock.
On October 22, 1998, the Company confirmed in writing to Mr. Leason the
arrangement between the Company and Mr. Leason concerning the proposed sale or
hypothecation of the Company's $10 million note receivable secured by the
600-acre parcel of land in Rancho California sold by the Company in August 1998.
The arrangement allows for a 2% placement fee to be paid to Mr. Leason from the
proceeds of the sale or hypothecation of the note if Mr. Leason's efforts to
locate a suitable financing party are successful.
14
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
(Proposal 2)
The Company's Certificate of Incorporation authorizes the issuance of up to
812,500 shares of Series A Preferred Stock. At the close of business on April
21, 1999, the record date for determining stockholders entitled to notice of and
to vote at the Annual Meeting, the Company had issued and outstanding 747,500
shares of Series A Preferred Stock and 7,783,988 shares of Common Stock. As of
April 21, 1999, the closing price of a share of Series A Preferred Stock was
$5.00 and the closing price of a share of Common Stock was $2.125.
The only feature of the Series A Preferred Stock proposed to be changed
substantively pursuant to the adoption of the Restated Certificate of
Incorporation is the terms upon which shares of Series A Preferred Stock are
voluntarily convertible into shares of Common Stock. As discussed in further
detail below, the proposed adjustment in the voluntary conversion rights of
holders of Series A Preferred Stock pursuant to the Restated Certificate of
Incorporation would temporarily allow holders of Series A Preferred Stock to
convert their shares of Series A Preferred Stock into more shares of Common
Stock than they would otherwise be entitled to convert such shares under the
Certificate of Incorporation and temporarily allow the Company to pay
accumulated, accrued or unpaid dividends upon conversion in shares of Common
Stock rather than in cash. In addition, to the extent that the proposed
adjustment resulted in holders of Series A Preferred Stock converting their
shares of Series A Preferred Stock into shares of Common Stock, the Company
would be relieved of its obligations to pay any dividends that would otherwise
accrue in the future if such shares of Series A Preferred Stock were not
converted.
Under both the Certificate of Incorporation as presently in effect and the
Restated Certificate of Incorporation, shares of Series A Preferred Stock are
entitled to cumulative (but not compounded) dividends on such shares at an
annual rate of 9% for each quarterly period, which quarterly periods commence on
October 1, January 1, April 1 and July 1. Dividends are cumulative and accrue
quarterly from the date of original issue of shares of Series A Preferred Stock
and are payable if, when, and as declared by the Company's Board of Directors.
As of April 21, 1999, the Company was in arrears as to quarterly dividends for
each quarterly dividend period commencing July 1, 1998 and ending March 31,
1999.
Presently, each share of Series A Preferred Stock is convertible into
shares of Common Stock at any time at the option of the holder at a conversion
price of $5.55 per share of Common Stock. The Certificate of Incorporation
provides that upon conversion of any shares of Series A Preferred Stock, the
holder shall be entitled to receive in cash any accumulated, accrued or unpaid
dividends on such shares of Series A Preferred Stock and the value of any
fractional shares of Common Stock resulting from the conversion. Therefore, the
holder of 1 share of Series A Preferred Stock is entitled to voluntarily convert
such share into 1 share of Common Stock and cash equal to the value of 0.801018
shares ($10.00/$5.55 - 1) of Common Stock plus all accumulated, accrued or
unpaid dividends on such share of Series A Preferred Stock.
If adopted, the Restated Certificate of Incorporation would temporarily
adjust the terms upon which shares of Series A Preferred Stock are voluntarily
convertible. The Restated Certificate of Incorporation provides that during the
period from the filing of the Restated Certificate of Incorporation with the
Delaware Secretary of State's office through 5:00 p.m. on December 31, 1999,
each share of Series A Preferred Stock would be convertible at the option of the
holder into shares of Common Stock at a conversion price of $2.50 per share of
Common Stock, and payment of any accumulated, accrued or unpaid dividends with
respect to such share would be made in additional shares of Common Stock at the
same rate. Therefore, under the Restated Certificate of Incorporation, the
holder of 1 share of Series A Preferred Stock would be entitled on or before
5:00 p.m. on December 31, 1999 to voluntarily convert such share into 4 shares
($10.00/$2.50) of Common Stock and to receive such number of additional shares
of Common Stock as is determined by dividing the amount of any accumulated,
accrued or unpaid dividends with respect to such share of Series A Preferred
Stock by $2.50. After 5:00 p.m. on December 31, 1999, shares of Series A
Preferred Stock would again be voluntarily convertible at a conversion price of
$5.55 per share, with the value of any fractional shares of Common Stock and all
accumulated, accrued or unpaid dividends on such shares of Series A Preferred
Stock being paid in cash by the Company to the holder upon conversion.
15
<PAGE>
As stated above, the proposed adjustment in the voluntary conversion rights
of holders of Series A Preferred Stock pursuant to the Restated Certificate of
Incorporation would temporarily allow holders of Series A Preferred Stock to
convert their shares of Series A Preferred Stock into more shares of Common
Stock than they would otherwise be entitled to convert such shares under the
Certificate of Incorporation and temporarily allow the Company to pay
accumulated, accrued or unpaid dividends upon conversion in shares of Common
Stock rather than in cash. In addition, to the extent that the proposed
adjustment resulted in holders of Series A Preferred Stock converting their
shares of Series A Preferred Stock into shares of Common Stock, the Company
would be relieved of its obligations to pay any dividends that would otherwise
accrue in the future if such shares of Series A Preferred Stock were not
converted. A copy of the Restated Certificate of Incorporation is attached as
EXHIBIT A to this Proxy Statement and incorporated herein by reference.
The Company's stockholders will not recognize gain or loss upon the
effectiveness of the adoption of the Restated Certificate of Incorporation for
federal income tax purposes. Stockholders should consult their own tax advisors
concerning any state, local or foreign tax consequences of the adoption of the
Restated Certificate of Incorporation, and holders of shares of Series A
Preferred Stock should consult their own tax advisors concerning any federal,
state, local or foreign tax consequences that may occur in connection with their
conversion of shares of Series A Preferred Stock on the terms set forth in the
Restated Certificate of Incorporation.
The Board of Directors of the Company recommends a vote "for" the adoption
of the Restated Certificate of Incorporation.
16
<PAGE>
INDEPENDENT AUDITORS
(Proposal 3)
The Board of Directors has selected the certified public accounting firm of
Kelly & Company to audit and comment on the Company's financial statements for
the fiscal year ending December 31, 1999, and conduct whatever audit functions
are deemed necessary pursuant thereto. Kelly & Company audited the Company's
1998 financial statements included in the 1999 Annual Report to Stockholders.
It is anticipated that a representative of Kelly & Company will be present
at the Annual Meeting and will be given the opportunity to make a statement, if
desired, and to respond to appropriate questions, if any, concerning their
engagement.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should come before the Annual Meeting,
it is the intention of the person named in the proxy to vote such proxy in
accordance with his judgment on such matters.
STOCKHOLDER PROPOSALS
Any proposals of security holders which are intended to be presented at
next year's Annual Meeting must be received by the Company at its principal
executive offices on or before January 4, 2000, in order to be considered for
inclusion in the Company's proxy materials relating to that meeting.
17
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
USA BIOMASS CORPORATION
-------
Pursuant to Sections 211, 242 and 245 of the
Delaware General Corporation Law
-------
USA Biomass Corporation, a corporation organized and existing under and
by virtue of the Delaware General Corporation Law (the "Corporation"), does
hereby certify as follows:
FIRST: The present name of the Corporation is USA Biomass Corporation,
and the Corporation was originally incorporated under the Delaware General
Corporation Law on March 10, 1988 under the name North America Search Corp.
SECOND: This Restated Certificate of Incorporation restates and
integrates and further amends the Corporation's Certificate of Incorporation, as
follows:
ARTICLE I
The name of the Corporation is USA Biomass Corporation.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, Wilmington, Delaware 19805-1297. The name of its
registered agent at such address is Corporation Service Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
ARTICLE IV
A. The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 27,000,000 shares, of which
25,000,000 shares shall be Common Stock, $.002 par value per share, and
2,000,000 shares shall be Preferred Stock, $.01 par value per share. Of the
2,000,000 shares designated as Preferred Stock, 812,500 shares shall be
designated as "Series A 9% Convertible Preferred Stock" and shall have the
rights, preferences, privileges and restrictions specified in Section E of this
Article IV, 750,000 shares shall be designated as "Series B Preferred Stock" and
shall have the rights, preferences, privileges and restrictions specified in
Section F of this Article IV, and 437,500 shares shall be undesignated Preferred
Stock.
<PAGE>
B. All or any part of the shares of the Preferred Stock or Common Stock
of the Corporation may be issued by the Corporation from time to time and for
such consideration as may be determined and fixed by the Board of Directors of
the Corporation, as provided by law, with due regard to the interests of the
existing stockholders of the Corporation; and when such consideration has been
received by the Corporation, those shares shall be deemed fully paid and
non-assessable.
C. The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article IV, to provide
for the issuance of the 437,500 shares of undesignated Preferred Stock of the
Corporation in series, and by filing a certificate pursuant to the Delaware
General Corporation Law, to establish from time to time the number of shares of
such Preferred Stock to be included in each such series, and to determine the
designations, powers, preferences, and rights of the shares of each such series
and the qualifications, limitations, or restrictions thereof. The authority of
the Board of Directors with respect to each such series shall include, but not
be limited to, determination of the following:
1. The number of shares constituting that series and the
distinctive designation of that series;
2. The dividend rate, if any, for the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends for shares of
that series;
3. Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of those voting
rights;
4. Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in those events as the Board of Directors
shall determine;
5. Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which those shares shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary in
different conditions and at different redemption dates;
6. Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of that sinking fund;
7. The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up the Corporation,
and the relative rights of priority, if any, for payment of shares of that
series; and
8. Any other relative rights, preferences and limitations of
that series.
E. The rights, preferences, privileges and restrictions of the Series A
9% Convertible Preferred Stock shall be as follows:
2
<PAGE>
1. PRIORITY. Shares of Series A 9% Convertible Preferred Stock
shall rank prior to the Corporation's Common Stock with respect to the payment
of dividends and upon liquidation. The Series B Preferred Stock and other
classes of Preferred Stock shall be subordinated to and shall rank junior to the
Series A 9% Convertible Preferred Stock with respect thereto; provided, however,
that holders of Series A 9% Convertible Preferred Stock, by vote or written
consent of the holders of 66-2/3% or more of the then outstanding Series A 9%
Convertible Preferred Stock, may elect from time to time to allow other series
or classes of Preferred Stock to rank senior to the Series A 9% Convertible
Preferred Stock with respect to dividends, assets or liquidation. The
Corporation may create additional classes of stock, increase the authorized
number of shares of Preferred Stock or issue series of Preferred Stock which
rank on a parity with the Series A 9% Convertible Preferred Stock with respect,
in each case, to the payment of dividends and amounts upon liquidation,
dissolution or winding up of the Company ("Parity Stock") without the consent of
any holder of Series A 9% Convertible Preferred Stock.
2. DIVIDENDS.
(a) Dividend rates on the shares of Series A 9%
Convertible Preferred Stock shall be at an annual rate of 9% for each quarterly
dividend period ("Quarterly Dividend Period"), which Quarterly Dividend Periods
shall commence on October 1, January 1, April 1 and July 1 in each year and
shall end on and include the day immediately preceding the first day of the next
Quarterly Dividend Period. Dividends shall be cumulative (but not compounded)
and accrue quarterly from the date of original issue of the Series A 9%
Convertible Preferred Stock and shall be payable, if, when, and as declared by
the Board of Directors of the Corporation, on October 1 (in respect of the
Quarterly Dividend Period beginning the preceding July 1); January 1 (in respect
of the Quarterly Dividend Period beginning the preceding October 1); April 1 (in
respect of the Quarterly Dividend Period beginning the preceding January 1); and
July 1 (in respect of the Quarterly Dividend Period beginning the preceding
April 1) of each year. Each dividend shall be paid to the holders of record of
the Series A 9% Convertible Preferred Stock as they shall appear on the stock
register of the Corporation on such record date, not exceeding 60 days nor less
than 10 days preceding the payment date thereof, as shall be fixed by the Board
of Directors of the Corporation or a duly authorized committee thereof. If
declared, dividends shall be payable in cash.
(b) No dividends shall be payable on any shares of any
class of the Corporation's capital stock ranking junior and subordinate to the
Series A 9% Convertible Preferred Stock as to the payment of dividends, unless
all accrued dividends on the Series A 9% Convertible Preferred Stock to the
record date of the proposed dividends on the junior class and subordinate shall
have been paid or have been declared and an amount sufficient for the payment of
those dividends reserved.
(c) Upon any conversion of any shares of Series A 9%
Convertible Preferred Stock, as described in Paragraph 5 of this Section E, the
holders thereof shall be entitled to receive in cash or in additional shares of
Common Stock, as the case may be, any accumulated, accrued or unpaid dividends
in respect of such shares of the Series A 9% Convertible Preferred Stock.
3
<PAGE>
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and other liabilities of the
Corporation, the holders of shares of the Series A 9% Convertible Preferred
Stock shall be entitled to receive, out of the assets of the Corporation,
whether such assets are capital or surplus and whether or not any dividends as
such are declared, $10.00 per share plus an amount equal to all accrued and
unpaid dividends thereon to the date fixed for distribution, and no more, before
any distribution shall be made to the holders of the Series B Preferred Stock,
the Common Stock or any other class of shares or series thereof ranking junior
and subordinate to the Series A 9% Convertible Preferred Stock with respect to
the distribution of assets.
(b) For purposes of this Paragraph 3, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations with or
into the Corporation, or the sale of all or substantially all of the assets of
the Corporation, or any other corporate reorganization in which consolidation,
merger, sale of assets or reorganization the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation, merger, sale of assets or
reorganization, shall be treated as a liquidation, dissolution or winding up of
the Corporation, unless the stockholders of the Corporation hold more than 50%
of the voting equity securities of the successor or surviving corporation
immediately following such consolidation, merger, sale of assets or
reorganization, in which case such consolidation, merger, sale of assets or
reorganization shall not be treated as a liquidation, dissolution, or winding up
within the meaning of this Paragraph 3.
(c) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation,
specifying a payment date and the place where the distributive amounts shall be
payable, shall be given by mail, postage prepaid, not less than 30 days prior to
the payment date elected therein, to the holders of record of the Series A 9%
Convertible Preferred Stock at their respective addresses as the same shall
appear on the books of the Corporation.
(d) No payment on account of such liquidation,
dissolution or winding up of the affairs of the Corporation shall be made to the
holders of any class or series of stock ranking on a parity with the Series A 9%
Convertible Preferred Stock in respect of the distribution of assets, unless
there shall also be paid at the same time to the holders of the Series A 9%
Convertible Preferred Stock similar proportionate distributive amounts, ratably,
in proportion to the fully distributive amounts to which they and the holders of
such Parity Stock are respectively entitled with respect to such preferential
distribution.
4. VOTING RIGHTS. Except as specified in Paragraphs 1 and 6 of
this Section E, the holders of Series A 9% Convertible Preferred Stock shall not
have any voting powers, either general or special.
4
<PAGE>
5. CONVERSION.
(a) VOLUNTARY CONVERSION. Each share of Series A 9%
Convertible Preferred Stock shall be convertible, at the option of the holder
thereof, at the office of the Corporation or, if the Corporation shall have
appointed a transfer agent for the Series A 9% Convertible Preferred Stock, at
the office of such transfer agent, into such number of authorized but previously
unissued shares of Common Stock as is determined by dividing $10.00 by the then
applicable conversion price, which shall be as follows:
(i) At any time on or before 5:00 p.m. Pacific
Standard Time on December 31, 1999, (the "Expiration Time"), the conversion
price shall be $2.50. Upon conversion of any shares of Series A 9% Convertible
Preferred Stock at any time before the Expiration Time, the holders shall be
entitled to receive such additional number of authorized but previously unissued
shares of Common Stock as is determined by dividing the amount of such
accumulated, accrued or unpaid dividends in respect of such shares of Series A
9% Convertible Preferred Stock by $2.50.
(ii) At any time after the Expiration Time, the
conversion price shall be $5.55. Upon conversion of any shares of Series A 9%
Convertible Preferred Stock at any time after the Expiration Time, the holders
shall be entitled to receive in cash any accumulated, accrued or unpaid
dividends in respect of such shares of Series A 9% Convertible Preferred Stock.
(b) MANDATORY CONVERSION. At such time as the closing
price of the Common Stock (as determined below), for a period of 20 consecutive
business days, is an amount equal to or greater than $6.66, the Company shall
have the right to require and compel each holder of Series A 9% Convertible
Preferred Stock to convert the Series A 9% Convertible Preferred Stock to Common
Stock on those terms specified by the provisions of Paragraph 5(a) of this
Section E. For purposes of this Paragraph 5(b), the closing price of the Common
Stock on any business day shall be the last sale price, regular way, or, in the
case no such sale takes place, the average of the high bid and low bid asked
prices in the over-the-counter market, or such other system then in use, or, if
the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock, which market maker shall be selected by the Board
of Directors of the Corporation. If no such market maker is making a market in
the Common Stock, the closing price of the Common Stock as determined in good
faith by the Board of Directors of the Corporation shall be utilized.
(c) MECHANICS OF CONVERSION. No fractional shares of
Common Stock shall be issued upon any conversion of Series A 9% Convertible
Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction.
Before any holder of Series A 9% Convertible Preferred Stock shall be entitled
to convert the same into full shares of Common Stock and to receive certificates
therefor, the holder shall surrender the certificate or certificates
representing and evidencing the Series A 9% Convertible Preferred Stock, duly
endorsed, at the office of the Corporation, or if the Corporation shall have
appointed a transfer agent for the Series A 9% Convertible Preferred Stock, at
the office of such transfer agent, and shall give written notice to the
Corporation at either such office that the holder elects to convert the same;
provided, however, that in the event of any mandatory conversion pursuant to
Paragraph 5(b) of this Section E, the outstanding shares of Series A 9%
Convertible Preferred Stock shall be converted automatically without any further
action by the holders of such shares, whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent, if any; and provided further, however, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such mandatory conversion unless the certificates evidencing such shares of
Series A 9% Convertible Preferred Stock are either delivered to the Corporation
or its transfer agent, if any, as provided above, or the holder notifies the
5
<PAGE>
Corporation or its transfer agent, if any, that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. The Corporation shall, as soon as practicable
after such delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series A 9%
Convertible Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid and a
check payable to the holder in the amount of any cash amounts payable as a
result of the conversion into fractional shares of Common Stock. In the case of
any mandatory conversion pursuant to Paragraph 5(b) of this Section E, such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of the event causing the required conversion. The person or
persons entitled to receive the shares of Common Stock issuable upon any such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(d) ADJUSTMENTS FOR SUBDIVISIONS, COMBINATIONS OR
CONSOLIDATIONS OF COMMON STOCK. If the outstanding shares of Common Stock are
subdivided (by stock split, stock dividend or otherwise), into a greater number
of shares of Common Stock, the number of shares of Common Stock into which each
share of Series A 9% Convertible Preferred Stock may be converted shall,
concurrently with the effectiveness of such subdivision, be proportionately
increased. In the event the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Common Stock, the number of shares of Common Stock which each share of
Series A 9% Convertible Preferred Stock may be converted into shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately decreased.
(e) ADJUSTMENTS FOR STOCK DIVIDENDS AND OTHER
DISTRIBUTIONS. If the Corporation at any time or from time to time makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive any distribution (excluding any repurchases of securities by the
Corporation not made on a pro rata basis from all holders of any class of the
Corporation's securities) payable in property or in securities of the
Corporation other than shares of Common Stock, and other than as otherwise
adjusted in this Paragraph 5 or as provided in Paragraph 2(a) of this Section E,
then and in each such event the holders of Series A 9% Convertible Preferred
Stock shall receive at the time of such distribution, the amount of property or
the number of securities of the Corporation that they would have received had
their Series A 9% Convertible Preferred Stock been converted into Common Stock
on the date of such event.
6
<PAGE>
(f) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. Except as provided in Paragraph 3 of this Section E, upon any
liquidation, dissolution or winding up of the Corporation, if the Common Stock
issuable upon conversion of the Series A 9% Convertible Preferred Stock is
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for
above), the number of shares of Common Stock into which each share of Series A
9% Convertible Preferred Stock may be converted shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted such that the Series A 9% Convertible Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of the Series A 9% Convertible Preferred Stock immediately before the
change.
(g) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time there is a capital reorganization of
the Common Stock (other than a subdivision, combination, consolidation,
reclassification, substitution or exchange of shares provided for elsewhere in
this Paragraph 5), or a merger or consolidation of the Corporation with or into
another corporation, or the sale of all or substantially all of the
Corporation's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision shall be made so that
the holders of the Series A 9% Convertible Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A 9% Convertible Preferred
Stock, the number of shares of stock or other securities or property of the
Corporation, or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Paragraph 5 with respect to the
rights of the holders of the Series A 9% Convertible Preferred Stock after the
reorganization, merger, consolidation, or sale to the end that the provisions of
this Paragraph 5 shall be applicable after that event as nearly equivalent as
may be practicable.
(h) NO IMPAIRMENT. Except as provided in Paragraph 9 of
this Section E, the Corporation will not, by amendment of its Restated
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Paragraph 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A 9% Convertible Preferred Stock against impairment.
(i) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the number of shares of Common Stock which
each share of Series A 9% Convertible Preferred Stock may be converted into
pursuant to this Paragraph 5, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Series A 9% Convertible Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.
7
<PAGE>
(j) REDEMPTION.
(i) Shares of Series A 9% Convertible Preferred
Stock will be redeemable, at the option of the Corporation, in its sole and
absolute discretion, on or after 5 years from the date of issuance, for cash at
a redemption price of $10.00 per share, plus any accumulated, accrued and unpaid
dividends. If redemption of the Series A 9% Convertible Preferred Stock occurs
in part, such redemption shall occur on a pro rata basis. The conditions
precedent to the Corporation's right to compel conversion of the Series A 9%
Convertible Preferred Stock will not apply to the redemption by the Corporation
of the Series A 9% Convertible Preferred Stock.
(ii) Notice of redemption will be given by mail or
by publication (with subsequent prompt notice by mail) to the holders of record
of the Series A 9% Convertible Preferred Stock not less than 30 nor more than 60
days prior to the date of redemption, in the case of a redemption for cash. The
redemption date will be a date selected by the Corporation not less than 10 nor
more than 60 days after the date on which the Corporation gives the notice of
redemption.
(iii) On the redemption date, the Corporation must
pay in cash on each share of Series A 9% Convertible Preferred Stock to be
redeemed any accumulated, accrued and unpaid dividends, if any, on the
redemption date. In the case of a redemption date falling after a dividend
record date and prior to the related dividend payment date, the holders of the
Series A 9% Convertible Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend record date. Except as provided for in the
preceding sentences, no payment or allowance will be made for accumulated or
accrued dividends on any shares of Series A 9% Convertible Preferred Stock
called for redemption.
(iv) In the event that full cumulative dividends on
the Series A 9% Convertible Preferred Stock and any Parity Stock have not been
paid or declared and set apart for payment, the Series A 9% Convertible
Preferred Stock may not be redeemed in part and the Corporation may not purchase
or acquire shares of Series A 9% Convertible Preferred Stock otherwise than
pursuant to a purchase or exchange offer made on the same terms to all holders
of shares of Series A 9% Convertible Preferred Stock.
(v) On and after the date fixed for redemption,
provided that the Corporation has made available at the office of the registrar
and transfer agent a sufficient amount of cash to effect the redemption,
dividends will cease to accumulate or accrue on the Series A 9% Convertible
Preferred Stock called for redemption (except that, in the case of a redemption
date after a dividend record date and prior to the related dividend payment
date, holders of Series A 9% Convertible Preferred Stock on the dividend record
date will be entitled on such dividend payment date to receive the dividend
payable on such shares), such shares shall no longer be deemed to be outstanding
and all rights of the holders of such shares of Series A 9% Convertible
Preferred Stock shall cease except the right to receive cash payable upon such
redemption, without interest from the date of such redemption.
8
<PAGE>
(vi) If the Corporation elects to redeem the Series
A 9% Convertible Preferred Stock, the Corporation will provide to holders of the
Series A 9% Convertible Preferred Stock written notice of that election, and
during the 30-day period immediately following the date of that notice those
holders will have the option to convert the Series A 9% Convertible Preferred
Stock to Common Stock at a price equal to $5.55. If the Series A 9% Convertible
Preferred Stock is redeemed in part, such redemption will be on a pro rata
basis.
(k) NOTICES OF RECORD DATE. If the Corporation proposes
at any time to:
(i) declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) offer for subscription pro rata to the holders
of any class or series of its capital stock any additional shares of capital
stock of any class or series or other rights;
(iii) effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock;
(iv) merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
(v) cause the mandatory conversion of the Series A
9% Convertible Preferred Stock; or
(vi) redeem the Series A 9% Convertible Preferred
Stock,
then, in connection with each such event, this Corporation shall send to the
holders of the Series A 9% Convertible Preferred Stock:
(A) at least 20 days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (i) and (ii) above; and
(B) in the case of the matters referred
to in (iii), (iv), (v) and (vi) above, at least 20 days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Preferred Stock or Common Stock shall be entitled or compelled to
exchange their Preferred Stock or Common Stock for securities or other property
deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first class
mail, postage prepaid, addressed to the holders of the Series A 9% Convertible
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.
9
<PAGE>
6. VOTING RIGHTS UPON DEFAULT REGARDING PAYMENT OF DIVIDENDS.
Holders of the Series A 9% Convertible Preferred Stock will have the right to
elect a majority of the members of the Board of Directors of the Corporation
upon a cumulative default, whether consecutive or not, of 8 quarterly dividends,
and that right shall continue until full and complete payment of all dividends
in arrears on the Series A 9% Convertible Preferred Stock.
7. STATUS OF CONVERTED STOCK. If any shares of Series A 9%
Convertible Preferred Stock are repurchased or converted pursuant to Paragraph 5
of this Section E, the shares so repurchased or converted shall be retired and
shall thereafter have the status of authorized and unissued shares of Preferred
Stock which may be reissued by the Corporation at any time as shares of any
series of Preferred Stock.
8. RESTRICTIONS AND LIMITATIONS.
(a) At such time as any shares of Series A 9% Convertible
Preferred Stock remain outstanding, the Corporation shall not, without the vote
or written consent of the holders of at least 66-2/3% of the then outstanding
shares of Series A 9% Convertible Preferred Stock:
(i) Redeem, purchase or otherwise acquire for
value, any share or shares of Series A 9% Convertible Preferred Stock, otherwise
than by conversion in accordance with Paragraph 5 of this Section E;
(ii) Redeem, purchase or otherwise acquire any of
the Common Stock; provided, however, that this restriction shall not apply to
the repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Corporation or any
subsidiary of the Corporation pursuant to agreements pursuant to which the
Corporation has the option to repurchase such shares at cost upon the occurrence
of certain events, such as the termination of employment;
(iii) Authorize or issue, or obligate itself to
issue, any other equity security (including any security convertible into or
exercisable for any equity security) senior to or on a parity with the Series A
9% Convertible Preferred Stock as to dividend or redemption rights and
liquidation preferences;
(iv) Effect any sale, lease, assignment, transfer,
or other conveyance of all or substantially all of the assets of the Corporation
or any of its subsidiaries, or any consolidation or merger involving the
Corporation or any of its subsidiaries, or any reclassification or other change
of any stock, or any recapitalization of the Corporation; or
(v) Increase or decrease (other than by conversion)
the total number of authorized shares of Series A 9% Convertible Preferred
Stock.
(b) The Corporation shall not amend its Restated
Certificate of Incorporation without the approval, by vote or written consent,
by the holders of 66-2/3% of the Series A 9% Convertible Preferred Stock, if
such amendment would amend, modify, annul, supersede, or otherwise change any of
the rights, preferences, privileges of, or limitations provided for herein for
the benefit of any shares of the Series A 9% Convertible Preferred Stock.
Without limiting the generality of the preceding sentence, the Corporation will
not amend its Restated Certificate of Incorporation without the approval by the
holders of 66-2/3% of the Series A 9% Convertible Preferred Stock, if such
amendment would:
10
<PAGE>
(i) Reduce the dividend rate on the Series A 9%
Convertible Preferred Stock provided for herein, or make such dividends
noncumulative, or defer the date from which dividends will accrue, or cancel
accrued and unpaid dividends, or change the relative seniority rights of the
holders of the Series A 9% Convertible Preferred Stock as to the payment of
dividends in relation to the holders of any other capital stock of the
Corporation;
(ii) Reduce the amount payable to the holders of
the Series A 9% Convertible Preferred Stock upon the voluntary or involuntary
liquidation, dissolution, or winding up the Corporation, or change the relative
seniority of the liquidation preferences of the holders of the Series A 9%
Convertible Preferred Stock to the rights upon liquidation of the holders of any
other capital stock of the Corporation; or
(iii) Cancel or modify the conversion rights of the
Series A 9% Convertible Preferred Stock provided for in Paragraph 5 of this
Section E.
F. The rights, preferences, privileges and restrictions of the Series B
Preferred Stock shall be as follows:
1. PRIORITY. Shares of Series B Preferred Stock shall rank
prior to the Corporation's Common Stock and junior to the Corporation's Series A
9% Convertible Preferred Stock with respect to the payment of dividends and upon
liquidation. All other series of Preferred Stock and other classes of Preferred
Stock of the Corporation shall rank junior to the Series B Preferred Stock with
respect thereto; provided, however, that holders of Series B Preferred Stock
may, by vote or written consent of the holders of 66-2/3% or more of the then
outstanding Series B Preferred Stock, elect from time to time to allow other
series or classes of Preferred Stock to rank senior to the Series B Preferred
Stock with respect to dividends, assets or liquidation.
2. DIVIDENDS.
(a) Dividend rates on the shares of Series B Preferred
Stock shall be at a rate per annum of 6% (i) for the period (the "Initial
Dividend Period") pro rated on a daily basis from April 15, 1994 to and
including May 31, 1994, and (ii) for each quarterly dividend period (the
"Quarterly Dividend Period"), which Quarterly Dividend Periods shall commence on
June 1, September 1, December 1, and March 1, in each year and shall end on and
include the day immediately preceding the first day of the next Quarterly
Dividend Period. Such dividends shall be cumulative (but not compounded) and
accrue quarterly from the date of original issue of such shares and shall be
payable, if, when, and as declared by the Board of Directors, on June 30, 1994
(in respect of the Initial Dividend Period), on September 30 (in respect of the
Quarterly Dividend Period beginning the preceding June 1), on December 31 (in
respect of the Quarterly Dividend Period beginning the preceding September 1)
and on March 31 (in respect of the Quarterly Dividend Period beginning the
preceding December 1) of each year thereafter. Each such dividend shall be paid
to the holders of record of the Series B Preferred Stock as they shall appear on
the stock register of the Corporation on such record date, not exceeding 30 days
nor less than 10 days preceding the payment date thereof, as shall be fixed by
the Board of Directors of the Corporation or a duly authorized committee
thereof. If declared, dividends shall be payable in cash or by the issuance and
delivery of additional shares of the Corporation's Series B Preferred Stock as
provided in this Paragraph 2(a) and in Paragraph 2(b) below. Fractional shares
of Series B Preferred Stock may be issued to the extent necessary to make such
dividend payments. Any additional shares of Series B Preferred Stock issued
pursuant to this Paragraph 2(a) shall be governed by this Section F and shall be
subject in all respects, except the issuance date, to the same terms as the
shares of Series B Preferred Stock originally issued hereunder.
11
<PAGE>
(b) If the Corporation is to pay all or any portion of
dividends through the issuance of additional shares of Series B Preferred Stock,
it shall give written notice to the holders of the Series B Preferred Stock and,
if the Corporation shall have appointed a transfer agent for the Series B
Preferred Stock, to such transfer agent, of such fact not less than 5 or more
than 45 days prior to the record date for such dividend and require the
Corporation or transfer agent, as the case may be, to issue certificates for
additional shares of Series B Preferred Stock representing the number of such
shares of Series B Preferred Stock to be issued in accordance with Paragraph
2(a) of this Section F.
(c) No dividends shall be payable on any shares of any
class of the Corporation's capital stock ranking junior to the Series B
Preferred Stock as to the payment of dividends unless all accrued dividends on
the Series B Preferred Stock to the record date of the proposed
dividends on the junior class shall have been paid or have been declared and a
sum sufficient for the payment of those dividends reserved.
(d) Upon any conversion of any shares of Series B
Preferred Stock as described in Paragraph 6 of this Section F, the holders
thereof shall be entitled to receive in cash or in additional shares of Series B
Preferred Stock pursuant to Paragraphs 2(a) and 2(b) of this Section F any
accumulated, accrued or unpaid dividends in respect of such shares of the Series
B Preferred Stock.
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and other liabilities of the
Corporation, the holders of shares of the Series B Preferred Stock shall be
entitled to receive, out of the assets of the Corporation, whether such assets
are capital or surplus and whether or not any dividends as such are declared,
$10.00 per share plus an amount equal to all accrued and unpaid dividends
thereon to the date fixed for distribution, and no more, before any distribution
shall be made to the holders of the Common Stock or any other class of shares or
series thereof ranking junior to the Series B Preferred Stock with respect to
the distribution of assets.
(b) For purposes of this Paragraph 3, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations with or
into the Corporation, or the sale of all or substantially all of the assets of
the Corporation, or any other corporate reorganization in which consolidation,
merger, sale of assets or reorganization the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation, merger, sale of assets or
reorganization, shall be treated as a liquidation, dissolution or winding up of
the Corporation, unless the stockholders of this Corporation hold more than 50%
of the voting equity securities of the successor or surviving corporation
immediately following such consolidation, merger, sale of assets or
reorganization, in which case such consolidation, merger, sale of assets or
reorganization shall not be treated as a liquidation, dissolution, or winding up
within the meaning of this Paragraph 3.
12
<PAGE>
(c) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation,
stating a payment date and the place where the distributive amounts shall be
payable, shall be given by mail, postage prepaid, not less than 30 days prior to
the payment date stated therein, to the holders of record of the Series B
Preferred Stock at their respective addresses as the same shall appear on the
books of the Corporation.
(d) No payment on account of such liquidation,
dissolution or winding up of the affairs of the Corporation shall be made to the
holders of any class or series of stock ranking on a parity with the Series B
Preferred Stock in respect of the distribution of assets, unless there shall
likewise be paid at the same time to the holders of the Series B Preferred Stock
like proportionate distributive amounts, ratably, in proportion to the fully
distributive amounts to which they and the holders of such parity stock are
respectively entitled with respect to such preferential distribution.
4. VOTING RIGHTS. Except as set forth in Paragraphs 1 and 7 of
this Section F, the holders of Series B Preferred Stock shall not have any
voting powers, either general or special.
5. CONVERSION.
(a) VOLUNTARY CONVERSION. Each share of Series B
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or, if the Corporation shall have appointed a transfer agent for the
Series B Preferred Stock, at the office of such transfer agent, into one (1)
fully paid and nonassessable share of Common Stock.
(b) AUTOMATIC CONVERSION.
(i) Each share of Series A Convertible Preferred
Stock shall automatically be converted into one (1) fully paid and nonassessable
share of the Corporation's Common Stock (i) upon a Change in Control (as
hereinafter defined) of the aggregate number of shares of Series B Preferred
Stock and Common Stock outstanding as of the date on which the first share of
Series B Preferred Stock was first issued, during any 12-month period, and (ii)
upon the sale of all or substantially all of the assets of the Corporation.
(ii) For purposes of this Paragraph 5(b), the term
"Change in Control" shall mean the direct or indirect acquisition by any
"person" (as that term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended) of the direct or indirect beneficial ownership of more
than 40% of the aggregate number of shares of Series B Preferred Stock and
Common Stock outstanding as of the date on which the first share of Series B
Preferred Stock was first issued.
13
<PAGE>
(c) MECHANICS OF CONVERSION. No fractional shares of
Common Stock shall be issued upon any conversion of Series B Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay cash equal to such fraction. Before any holder of
Series B Preferred Stock shall be entitled to convert the same into full shares
of Common Stock and to receive certificates therefor, the holder shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the
Corporation or, if the Corporation shall have appointed a transfer agent for the
Series B Preferred Stock, at the office of such transfer agent, and shall give
written notice to the Corporation at either such office that the holder elects
to convert the same; provided, however, that in the event of any automatic
conversion pursuant to Paragraph 5(b) of this Section F, the outstanding shares
of Series B Preferred Stock shall be converted automatically without any further
action by the holders of such shares, whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent, if any; and provided further, that the Corporation shall not be obligated
to issue certificates evidencing the shares of Common Stock issuable upon such
automatic conversion unless the certificates evidencing such shares of Series B
Preferred Stock are either delivered to the Corporation or its transfer agent,
if any, as provided above, or the holder notifies the Corporation or its
transfer agent, if any, that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after such delivery,
or such agreement and indemnification in the case of a lost certificate, issue
and deliver at such office to such holder of Series B Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which
the holder shall be entitled as aforesaid and a check payable to the holder in
the amount of any cash amounts payable as the result of a conversion into
fractional shares of Common Stock. In the case of any automatic conversion
pursuant to Paragraph 5(b) of this Section F, such conversion shall be deemed to
have been made immediately prior to the close of business on the date of the
event causing the required conversion. The person or persons entitled to receive
the shares of Common Stock issuable upon any such conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date.
(d) ADJUSTMENTS FOR SUBDIVISIONS, COMBINATIONS OR
CONSOLIDATIONS OF COMMON STOCK. If the outstanding shares of Common Stock are
subdivided (by stock split, stock dividend or otherwise), into a greater number
of shares of Common Stock, the number of shares of Common Stock into which each
share of Series B Preferred Stock may be converted shall, concurrently with the
effectiveness of such subdivision, be proportionately increased. In the event
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the number of shares of Common Stock which each share of Series B Preferred
Stock may be converted into shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately decreased.
(e) ADJUSTMENT FOR STOCK DIVIDENDS AND OTHER
DISTRIBUTIONS. If the Corporation at any time or from time to time makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive any distribution (excluding any repurchases of securities by the
Corporation not made on a pro rata basis from all holders of any class of the
Corporation's securities) payable in property or in securities of the
Corporation other than shares of Common Stock, and other than as otherwise
adjusted in this Paragraph 5 or as provided in Paragraph 2(a) of this Section F,
then and in each such event the holders of Series B Preferred Stock shall
receive at the time of such distribution, the amount of property or the number
of securities of the Corporation that they would have received had their Series
B Preferred Stock been converted into Common Stock on the date of such event.
14
<PAGE>
(f) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. Except as provided in Paragraph 3 of this Section F, upon any
liquidation, dissolution or winding up of the Corporation, if the Common Stock
issuable upon conversion of the Series B Preferred Stock is changed into the
same or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for above), the number of shares
of Common Stock into which each share of Series B Preferred Stock may be
converted shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted such that the Series B Preferred
Stock shall be convertible into, in lieu of the number of shares of Common Stock
which the holders would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the holders
upon conversion of the Series B Preferred Stock immediately before the change.
(g) REORGANIZATION, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time there is a capital reorganization of
the Common Stock (other than a subdivision, combination, consolidation,
reclassification, substitution or exchange of shares provided for elsewhere in
this Paragraph 5), or a merger or consolidation of the Corporation with or into
another corporation, or the sale of all or substantially all of the
Corporation's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision shall be made so that
the holders of the Series B Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series B Preferred Stock, the number of shares of
stock or other securities or property of the Corporation, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Paragraph 6 with respect to the rights of the holders of the Series B
Preferred Stock after the reorganization, merger, consolidation, or sale to the
end that the provisions of this Paragraph 6 shall be applicable after that event
as nearly equivalent as may be practicable.
(h) NO IMPAIRMENT. Except as provided in Paragraph 7 of
this Section F, the Corporation will not, by amendment of its Restated
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Paragraph 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series B Preferred Stock against impairment.
15
<PAGE>
(i) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the number of shares of Common Stock which
each share of Series B Preferred Stock may be converted into pursuant to this
Paragraph 5, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series B Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based.
(j) NOTICES OF RECORD DATE. If the Corporation proposes
at any time to:
(i) declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) offer for subscription pro rata to the holders
of any class or series of its capital stock any additional shares of capital
stock of any class or series or other rights;
(iii) effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iv) merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up,
then, in connection with each such event, this Corporation shall send to the
holders of the Series B Preferred Stock:
(A) at least 20 days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (i) and (ii) above; and
(B) in the case of the matters referred
to in (iii) and (iv) above, at least 20 days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first class
mail, postage prepaid, addressed to the holders of the Series B Preferred Stock
at the address for each such holder as shown on the books of the Corporation.
6. STATUS OF CONVERTED STOCK. If any shares of Series B
Preferred Stock are repurchased or converted pursuant to Paragraph 5 of this
Section F, the shares so repurchased or converted shall not be reissued, shall
be retired and shall thereafter have the status of authorized and unissued
shares of Preferred Stock which may be reissued by the Corporation at any time
as shares of any series of Preferred Stock, including shares of Series B
Preferred Stock.
16
<PAGE>
7. RESTRICTIONS AND LIMITATIONS.
(a) So long as any shares of Series B Preferred Stock
remain outstanding, the Corporation shall not, without the vote or written
consent of the holders of at least 66-2/3% of the then outstanding shares of
Series B Preferred Stock:
(i) Redeem, purchase or otherwise acquire for
value, any share or shares of Series B Preferred Stock otherwise than by
conversion in accordance with Paragraph 5 of this Section F;
(ii) Redeem, purchase or otherwise acquire any of
the Common Stock; provided, however, that this restriction shall not apply to
the repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Corporation or any
subsidiary of the Corporation pursuant to agreements under which the Corporation
has the option to repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment; provided further, however, that
the total amount applied to the repurchase of shares of Common Stock shall not
exceed $100,000 during any 12-month period;
(iii) Authorize or issue, or obligate itself to
issue, any other equity security (including any security convertible into or
exercisable for any equity security) senior to or on a parity with the Series B
Preferred Stock as to dividend or redemption rights and liquidation preferences;
(iv) Effect any sale, lease, assignment, transfer,
or other conveyance of all or substantially all of the assets of the Corporation
or any of its subsidiaries, or any consolidation or merger involving the
Corporation or any of its subsidiaries, or any reclassification or other change
of any stock, or any recapitalization of the Corporation; or
(v) Increase or decrease (other than by conversion)
the total number of authorized shares of Series B Preferred Stock.
(b) The Corporation shall not amend its Restated
Certificate of Incorporation without the approval, by vote or written consent,
by the holders of 66-2/3% of the Series B Preferred Stock if such amendment
would change any of the rights, preferences, privileges of, or limitations
provided for herein for the benefit of any shares of the Series B Preferred
Stock. Without limiting the generality of the preceding sentence, the
Corporation will not amend its Restated Certificate of Incorporation without the
approval by the holders of 66-2/3% of the Series B Preferred Stock if such
amendment would:
(i) Reduce the dividend rate on the Series B
Preferred Stock provided for herein, or make such dividends noncumulative, or
defer the date from which dividends will accrue, or cancel accrued and unpaid
dividends, or change the relative seniority rights of the holders of the Series
B Preferred Stock as to the payment of dividends in relation to the holders of
any other capital stock of the Corporation;
17
<PAGE>
(ii) Reduce the amount payable to the holders of
the Series B Preferred Stock upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, or change the relative seniority
of the liquidation preferences of the holders of the Series B Preferred Stock to
the rights upon liquidation of the holders of any other capital stock of the
Corporation;
(iii) Make the Series B Preferred Stock redeemable
at the option of the Corporation; or
(iv) Cancel or modify the conversion rights of the
Series B Preferred Stock provided for in Paragraph 5 of this Section F.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the Bylaws of the Corporation.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide. Meetings of stockholders may be held within
or without the State of Delaware, as the Bylaws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE IX
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article IX to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated to the fullest
extent permitted by the Delaware General Corporation Law, as so amended. Any
repeal or modification of this Article IX by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
18
<PAGE>
ARTICLE X
A. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director, officer or employee of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section B of this Article X with respect to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article X shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such indemnitee is not entitled to be indemnified for such expenses
under this Article X or otherwise (hereinafter an "undertaking").
B. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section A of
this Article X is not paid in full by the Corporation within 60 days after a
written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be 20 days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) any suit by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the Corporation shall be entitled to recover
such expenses upon a final adjudication that the indemnitee has not met the
applicable standard of conduct set forth in the Delaware General Corporation
Law. Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee is
proper in the circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
19
<PAGE>
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right hereunder, or by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
burden of proving that the indemnitee is not entitled to be indemnified or to
such advancement of expenses under this Article X or otherwise shall be on the
Corporation.
C. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to the
advancement of expenses conferred in this Article X shall not be exclusive of
any other rights which any person may have or hereafter acquire under any
statute, this Restated Certificate of Incorporation, Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
D. INSURANCE. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
E. INDEMNIFICATION OF AGENTS OF THE CORPORATION. The Corporation may,
to the extent authorized from time to time by the Board of Directors, grant
rights to indemnification and to the advancement of expenses, to any agent of
the Corporation to the fullest extent of the provisions of this Article X with
respect to the indemnification and advancement of expenses of directors,
officers and employees of the Corporation.
ARTICLE XI
No contract or other transaction between the Corporation and any other
corporation shall be affected by the fact that a director or officer of the
Corporation is interested in or is a director or officer of such other
corporation; and any director, individually or jointly, may be a party to or may
be interested in any corporation or transaction of the Corporation or in which
the Corporation is interested; and no contract or other transaction of the
Corporation with any person, firm or corporation shall be affected by the fact
that any director of the Corporation is a party to or is interested in such
contract, act or transaction or is in any way connected with such person, firm
or corporation, and every person who may become a director of the Corporation is
hereby relieved from liability that might otherwise exist from contracting with
the Corporation for the benefit of himself or any firm, association or
corporation in which he may be in any way interested, provided said director
acts in good faith.
THIRD: The foregoing amendments were approved by the holders of the
requisite number of shares of the Corporation in accordance with Section 211 of
the Delaware General Corporation Law.
FOURTH: The foregoing amendments were duly adopted in accordance
with the provisions of Sections 242 and 245 of the Delaware General Corporation
Law.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by its duly authorized officers this
____ day of June, 1999.
----------------------------------------
Fred H. Behrens, Chairman of the Board
----------------------------------------
Robin E. Swanson, Secretary
21
<PAGE>
USA BIOMASS CORPORATION COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of USA Biomass Corporation ("Company") hereby
constitutes and appoints Fred H. Behrens, with the power to appoint his
substitution, as attorney and proxy, to appear, attend and vote all of the
shares of Common Stock of the Company standing in the name of the undersigned on
the record date at the 1999 Annual Meeting of Stockholders of the Company to be
held at the Miramonte Resort, 76-477 Highway 111, Indian Wells, California
92210, June 11, 1999, at 10:00 a.m. local time, and at any adjournment thereof,
upon the following:
1. To elect nine directors as follows:
[ ] FOR all nominees listed below,
except as marked to the contrary below
[ ] WITHHOLD AUTHORITY to vote for
all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list provided below.)
Fred H. Behrens Robert A. Wright Eugene W. Tidgewell Marlene A. Tapie
Dale P. Paisley Marlin T. McKeever Richard Mora Mike McDonald
H. Glen Leason
2. To consider and vote upon a proposal to approve a Restated Certificate
of Incorporation that temporarily alters the terms upon which shares of
the Company's Series A 9% Convertible Preferred Stock are voluntarily
convertible, effects certain non-substantive grammatical changes and
consolidates and restates the Company's Certificate of Incorporation
and amendments to the Certificate of Incorporation.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
3. To consider and vote upon a proposal to ratify the appointment of Kelly
& Company as independent auditors of the Company for the fiscal year
beginning January 1, 1999.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
4. To vote in his discretion on such other business as may properly come
before the meeting, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED ON THE REVERSE ARE HEREBY
EXPRESSLY REVOKED. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY, BY ISSUANCE OF A SUBSEQUENT
PROXY OR BY VOTING AT THE ANNUAL MEETING IN PERSON.
Please mark, date, sign and return this proxy promptly in the enclosed
envelope. When shares are held by joint tenants, both should sign. When signing
as attorney, as 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.
DATED:____________________________
__________________________________
(Signature of Stockholder(s))
__________________________________
(Print Name(s) Here)
[ ] PLEASE CHECK IF YOU ARE PLANNING TO
ATTEND THE ANNUAL MEETING.
<PAGE>
USA BIOMASS CORPORATION SERIES A 9% CONVERTIBLE PREFERRED STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Series A 9% Convertible Preferred Stock of USA
Biomass Corporation ("Company") hereby constitutes and appoints Fred H. Behrens,
with the power to appoint his substitution, as attorney and proxy, to appear,
attend and vote all of the shares of Series A 9% Convertible Preferred Stock of
the Company standing in the name of the undersigned on the record date at the
1999 Annual Meeting of Stockholders of the Company to be held at the Miramonte
Resort, 76-477 Highway 111, Indian Wells, California 92210, June 11, 1999, at
10:00 a.m. local time, and at any adjournment thereof, upon the following:
1. To consider and vote upon a proposal to approve a Restated Certificate
of Incorporation that temporarily alters the terms upon which shares of
the Company's Series A 9% Convertible Preferred Stock are voluntarily
convertible, effects certain non-substantive grammatical changes and
consolidates and restates the Company's Certificate of Incorporation
and amendments to the Certificate of Incorporation.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
2. To vote in his discretion on such other business as may properly come
before the meeting, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED ON THE REVERSE ARE HEREBY
EXPRESSLY REVOKED. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY, BY ISSUANCE OF A SUBSEQUENT
PROXY OR BY VOTING AT THE ANNUAL MEETING IN PERSON.
Please mark, date, sign and return this proxy promptly in the enclosed
envelope. When shares are held by joint tenants, both should sign. When signing
as attorney, as 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.
DATED:____________________________
__________________________________
(Signature of Stockholder(s))
__________________________________
(Print Name(s) Here)
[ ] PLEASE CHECK IF YOU ARE PLANNING TO
ATTEND THE ANNUAL MEETING.
<PAGE>
USA BIOMASS CORPORATION SERIES B PREFERRED STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Series B Preferred Stock of USA Biomass
Corporation ("Company") hereby constitutes and appoints Fred H. Behrens, with
the power to appoint his substitution, as attorney and proxy, to appear, attend
and vote all of the shares of Series B Preferred Stock of the Company standing
in the name of the undersigned on the record date at the 1999 Annual Meeting of
Stockholders of the Company to be held at the Miramonte Resort, 76-477 Highway
111, Indian Wells, California 92210, June 11, 1999, at 10:00 a.m. local time,
and at any adjournment thereof, upon the following:
1. To consider and vote upon a proposal to approve a Restated Certificate
of Incorporation that temporarily alters the terms upon which shares of
the Company's Series A 9% Convertible Preferred Stock are voluntarily
convertible, effects certain non-substantive grammatical changes and
consolidates and restates the Company's Certificate of Incorporation
and amendments to the Certificate of Incorporation.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
2. To vote in his discretion on such other business as may properly come
before the meeting, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED ON THE REVERSE ARE HEREBY
EXPRESSLY REVOKED. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY, BY ISSUANCE OF A SUBSEQUENT
PROXY OR BY VOTING AT THE ANNUAL MEETING IN PERSON.
Please mark, date, sign and return this proxy promptly in the enclosed
envelope. When shares are held by joint tenants, both should sign. When signing
as attorney, as 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.
DATED:____________________________
__________________________________
(Signature of Stockholder(s))
__________________________________
(Print Name(s) Here)
[ ] PLEASE CHECK IF YOU ARE PLANNING TO
ATTEND THE ANNUAL MEETING.
