<PAGE>
USA BIOMASS CORPORATION
52300 ENTERPRISE WAY
COACHELLA, CALIFORNIA 92236
May 17, 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 18, 1999, at the Miramonte Resort, 76-477
Highway 111, Indian Wells, California 92210 (the "Annual Meeting"). All holders
of the Company's outstanding Common 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,
/s/ Robin Swanson
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 18, 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 18, 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 ratify the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year beginning January 1,
1999; and
3. 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
/s/ Robin Swanson
Robin Swanson
Secretary
Dated: May 17, 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 18, 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
18, 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. Each share
of Common Stock entitles the holder of record thereof to one vote on any matter
coming before the Annual Meeting. 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.
1
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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 24, 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
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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
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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. From
1998 to the present, Mr. Mora has been an independent business consultant. 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. Since that time, Mr. McDonald has been an independent
business consultant. 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-Chicago, 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 outside director 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 outside member of the
Board of Directors inadvertently failed to file on a timely basis Form 4s with
respect to a grant to each outside 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
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<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 $1.0 million would be paid to each
insured's beneficiaries.
10
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the number of shares of the
Company's Common Stock acquired upon exercise of options, the value realized
therefor, the number of unexercised options at August 31, 1998 and the value of
unexercised in-the-money options at August 31, 1998 for the Named Executives in
the Summary Compensation Table above. The Named Executives did not hold any
stock appreciation rights during fiscal 1998.
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options at Fiscal Options at Fiscal
Year-End(#) Year-End($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
---- ---------------------- --------------------
Fred H. Behrens 246,955/0 $345,737/$0
Robert A. Wright 175,928/0 $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
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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 previously rented its corporate headquarters and a 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 was the same
rate paid by EPC to the third party owner of the building. An agreement was
reached with the third party owner of the building whereby effective as of
November 1, 1998, 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
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INDEPENDENT AUDITORS
(Proposal 2)
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 25, 2000, in order to be considered for
inclusion in the Company's proxy materials relating to that meeting.
FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB, as filed with the
Securities and Exchange Commission, is available without charge to the Company's
stockholders upon written request to USA Biomass Corporation, 52300 Enterprise
Way, Coachella, California 92236, Attention: Secretary.
15
<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 18, 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 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
3. 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.
