<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
USA BIOMASS CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
USA BIOMASS CORPORATION
7314 SCOUT AVENUE
BELL GARDENS, CA 90201
September 5, 2000
To Our Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of USA Biomass Corporation (the "Company") which will be held at 10:00 a.m.,
Pacific Daylight Time, on Friday, October 6, 2000, at the Radisson Hotel, 4545
MacArthur Blvd., Newport Beach, CA 92660 (the "Annual Meeting"). All holders of
the Company's outstanding common stock as of August 15, 2000 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/ Fred H. Behrens
Fred H. Behrens
Chairman
<PAGE>
USA BIOMASS CORPORATION
7314 SCOUT AVENUE
BELL GARDENS, CA 90201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, OCTOBER 6, 2000
NOTICE IS HEREBY GIVEN that the 2000 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, October 6, 2000, at the Radisson
Hotel, 4545 MacArthur Blvd., Newport Beach, CA 92660 (the "Annual Meeting") for
the following purposes:
1. To elect a Board of Directors of six members;
2. To approve adoption of the Company's 2000 Stock Option Plan;
3. To ratify the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year beginning
January 1, 2000; 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 August 15, 2000,
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/ Fred H. Behrens
Fred H. Behrens
Chairman
Dated: September 5, 2000
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
7314 SCOUT AVENUE
BELL GARDENS, CA 90201
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, OCTOBER 6, 2000
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 2000 Annual Meeting of
Stockholders to be held at 10.00 a.m., Pacific Daylight Time, on Friday, October
6, 2000, at the Radisson Hotel, 4545 MacArthur Blvd., Newport Beach, CA 92660
(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 six 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 August 15, 2000, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had issued and outstanding 11,288,666 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 August 15, 2000 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 five 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.
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. Directors, officers and regular employees of the Company
who will not be additionally compensated therefore may solicit proxies
personally, or by mail or by telephone. It is anticipated that this proxy
statement and accompanying proxy card will be mailed on or about September 8,
2000 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 preceeding notice and are more fully discussed below.
1
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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 six 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.
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:
NAME AGE POSITION DIRECTOR SINCE
---- --- -------- --------------
Fred H. Behrens 58 Chief Executive Officer 1988
Eugene W. Tidgewell 50 Chief Financial Officer, 1999
Treasurer, Vice President, Director
and Acting Secretary
Marlene A. Tapie 44 Director 1988
A. James Nikas, III 43 Director nominee 2000
Lance B. Jones 57 Director nominee 2000
Arvid L. Lokensgard 58 Director nominee 2000
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
also serves as the Chairman and a director of Sun Goddess Farms, Inc. and AMCOR
Properties, both a wholly owned subsidiaries of the Company. 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
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.
MARLENE A. TAPIE has served as a director of the Company since 1988. Between
1979 and 1994, she served in various capacities for the Company 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. She currently
manages her husband, who is a touring professional in the European PGA Senior
Tour.
EUGENE W. TIDGEWELL has served as the Chief Financial Officer and Treasurer
and as a Vice President of the Company since January 1998 and assumed the lead
management role in the Company's transition to the biomass business. Mr.
Tidgewell also serves as Vice President and Director of AMCOR Properties, Inc.
He has been acting Secretary of the Company since April, 2000. Mr. Tidgewell
began his career as an audit senior for Ernst & Ernst, from 1971 to 1974.
Thereafter, he was employed in various accounting and financial positions,
before joining Kelly & Company, the Company's independent accountants, as audit
manager in 1989 where he remained prior to joining
2
<PAGE>
the Company in 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.
LANCE B. JONES is President of Lance B. Jones & Associates, Environmental
Consultants. From 1992 to 1996, he served as assistant general counsel for
Western Waste Industries, then the fifth largest solid waste collection company
in the United States, and also as assistant to the President for green waste
diversion programs. From 1982 to 1992, Jones was Chairman and Chief Executive
Officer of United Pacific Corporation, a pioneer biomass/green waste recycling
firm later acquired by Western Waste in 1992. Jones served four terms as the
elected District Attorney of Sheboygan County, Wisconsin from 1969 to 1977, and
President of the Wisconsin DA's Association in 1977. Prior to founding United
Pacific Corporation, Jones served as staff legal counsel to the Wisconsin State
Senate. He is a 1968 graduate of the University of Wisconsin (Madison) Law
School.
A. JAMES NIKAS, III is a private investor and, since 1993, has been
president of GeoVerde Corporation, which provides venture capital and services
to start-up companies and turn-around situations. He also serves as a director
and treasurer of AMUR Pharmaceuticals, Inc. From 1984 to 1993 he was a principal
of GeoMarketing, which provides consulting services to start-up businesses. From
1979 to 1984 he was an exploration geologist for Standard Oil Company of Ohio.
Mr. Nikas graduated in 1980 with a Bachelor of Arts Degree in Geology from San
Francisco State University.
ARVID L. LOKENSGARD began his career as a grain merchant with Cargill, Inc.
in Minneapolis, Chattanooga, and Los Angeles. Primary responsibilities were
origination and disposition of grain in domestic markets. In 1966 he joined E.
F. Hutton & Co. as a retail commodity broker and became Western Regional Manager
in 1967. In 1975 he joined Energy Resources of Minnesota as president of an
independent oil and gas exploration and production company. He returned to E. F.
Hutton in 1979 until 1982 when he joined an independent brokerage firm
originating venture capital for real estate and agricultural projects. He joined
Paine Webber in 1989 and finished his career at Piper Jaffray, Inc. in 1998. Mr.
Lokensgard graduated in 1963 with a Bachelor of Arts Degree in Economics and
English from St. Olaf College.
BOARD OF DIRECTORS MEETINGS
The Board of Directors of the Company held eight (8) meetings during the
fiscal year ended December 31, 1999 and took action, where appropriate, by
unanimous written consent. 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 December 31, 1999 (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 or she served during the fiscal
year ended December 31, 1999 (held during the period that he or she 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, a Stock Option Committee and Nominating Committee.
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. Behrens and Tidgewell and Ms. Tapie. The
Audit Committee held three meetings during the fiscal year ended December 31,
1999.
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 Ms. Tapie and Mr.
Leason. The Compensation Committee held two meetings during the fiscal year
ended December 31, 1999.
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
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<PAGE>
granted under the 1994 Stock Option Plan and the 1997 Stock Option Plan. The
Stock Option Committee did not meet during the fiscal year ended December 31,
1999.
The Nominating Committee reviews and recommends prospective director
Nominees and currently consists of Mr. Behrens. The Nominating Committee held
two meetings during the fiscal year ended December 31, 1999.
DIRECTORS' COMPENSATION
During the second half of 1999, 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. Effective July 1, 1999, all compensation to outside
directors was temporarily suspended. It is expected that the previous
compensation schedule will be reinstated during the second half of 2000.
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 December 31, 1999 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
1999 fiscal year, all Section 16(a) filing requirements applicable to the
Company's reporting persons were complied with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 1, 2000, 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 SEC. Each person set forth below was a
director of the Company at June 1, 2000.
4
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<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER CLASS BENEFICIALOWNERSHIP (1) OF CLASS
------------------- -------- ------------------------ --------
<S> <C> <C> <C>
Fred H. Behrens(2) Common Stock 1,003,153 9.05%
7314 Scout Avenue
Bell Gardens, CA 90201
Robert A. Wright(3) Common Stock 815,018 7.35%
86025 Avenue 52
Coachella, CA 92286
H. Glen Leason(4) Common Stock 16,370 *
77-955 Calle Arroba
La Quinta, California 92253
Marlene Tapie(5) Common Stock 89,167 *
7314 Scout Avenue
Bell Gardens, California 90201
Eugene W. Tidgewell(6) Common Stock 29,000 *
7314 Scout Avenue
Bell Gardens, California 90201
Fred Alexander (7) Common Stock 1,000,000 9.02%
1835 "A" S. Center City Pky #418
Escondido, CA 92025
All Directors and Executive Common Stock 2,952,708 26.63%
Officers as a group Series A Preferred Stock 18,900 2.53%
(6 persons)(8)
</TABLE>
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* 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 March 1, 2000,
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.
(2) Includes 782,498 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.
(3) Includes (i) 237,093 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. On August 16, 2000, Mr. Wright resigned as a
Director of the Company.
(4) Includes 16,200 shares of Common Stock underlying 9,000 shares of Series A
9% Convertible Preferred Stock that are convertible and into Common Stock
held in an IRA account.
(5) Includes 31,250 shares of Common Stock underlying options.
(6) Represents 39,500 shares of Common Stock underlying options.
(7) Up to 1,000,000 shares to be issued for purchase of American Waste
Transport; currently shares held in escrow pending completion of audit. On
July 7, 2000, Mr. Alexander resigned as an officer of the Company, effective
July 31, 2000.
(8) Includes 476,633 shares of Common Stock underlying options and 33,120
shares of Common Stock underlying 18,400 shares of Series A 9% Convertible
Preferred Stock that are convertible into Common Stock.
5
<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 $100,000 (collectively, the "Named
Executives") during the fiscal years ended August 31, 1997, and 1998, and
December 31, 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
--------------------------------------------
Other Annual
Name and Salary Compensation
Principal Position Year ($) ($)
------------------ ---- -------- --------------
Fred H. Behrens 1999 136,200 15,650
Chairman and Chief 1998 152,000 15,864
Executive Officer 1997 120,000 5,724
Robert A. Wright 1999 109,375 15,180
President(1) and Chief 1998 133,081 15,080
Operating Officer 1997 120,000 11,519
Eugene W. Tidgewell 1999 112,000 -
Vice President and 1998 102,666 -
Chief Financial Officer
--------------------
(1) In April 2000, Mr. Wright agreed to resign as President and Chief Operating
Officer, and resigned as a Director on August 16, 2000.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the number of shares of the
Company's Common Stock acquired upon exercise of options, the value realized
therefor, the number of unexercised options at December 31, 1999 and the value
of unexercised in-the-money options at December 31, 1999 for the Named
Executives in the Summary Compensation Table above. The Named Executives did not
hold any stock appreciation rights during fiscal 1999.
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options at Fiscal Options at Fiscal
Year-End(#) Year-End($)
Exercisable/ Exercisable/
NAME Unexercisable Unexercisable(1)
---- ---------------- ----------------
Eugene W. Tidgewell 19,500/100,000 $47,970/$90,600
(1) Based upon the closing price of the Company's Common Stock on
December 31, 1999.
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 December 31, 1999. It is
planned that all partnerships will file final tax returns during the next 12
months and virtually all on-going business activities have ceased.
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 been renewed for an additional five years pending negotiations
to sell the Company's 50% interest to its partner during 2000. The primary crop
grown on the farm is potatoes.
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In December 1997, Messrs. Behrens and Wright agreed, at the lenders'
request, to personally guarantee $4,525,000 of debt financing obtained by the
Company from GMAC Credit Corporation and TexStar Bank. In consideration for the
guarantee, the Company agreed to pay to Messrs. Behrens and Wright loan a
guarantee fee of $212,500.00. Messrs. Behrens and Wright assigned to the Company
their rights to this guarantee fee effective August 31, 1998.
On December 20, 1999, the Company agreed to reduce the conversion price of
its Series B Convertible Preferred Stock to $6.67 per share from $10 per share
(on December 20, 1999, the market price for the Company's Common Stock was
$4.188 per share). At that time, all of the Series B Convertible Preferred Stock
issued to three affiliated limited partnerships were converted into 591,621
shares of the Company's common stock.
7
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APPROVAL OF 2000 STOCK OPTION PLAN
(PROPOSAL 2)
THE STOCK OPTION PLANS
On May 3, 1994, the Board of Directors adopted the Company's 1994 Stock
Option Plan (the "1994 Plan") and on February 17, 1995, the 1994 Plan was
approved by the stockholders of the Company which authorized the issuance of
250,000 shares. On November 14, 1997, the Board of Directors adopted the 1997
Stock Option Plan (the "1997 Plan") and on January 29, 1998 the 1997 Plan was
approved by the stockholders of the Company which authorized the issuance of
500,000 shares. On August 17, 2000, the Board of Directors adopted the 2000
Stock Option Plan (the "2000 Plan") at a meeting of the Board of Directors
authorizing the issuance of 2,000,000 shares. The 1994 Plan, the 1997 Plan, and
the 2000 Plan are sometimes referred to collectively as the "Plans." The Plans
are designed to enable the Company to offer an incentive based compensation
system to employees, officers and directors of the Company and to employees of
companies who do business with the Company. The Plans provide for the grant of
incentive stock options ("ISOs") and nonqualified stock options ("NQOs"),
collectively called "Options"). As of July 31, 2000, the Company had a total of
approximately 270 employees, officers and directors, eligible to receive Options
under the Plans.
As of July 31, 2000, a total of 98,750 NQOs granted under the 1994 Plan
were outstanding. An aggregate of 111,250 shares of the Company's Common Stock
have been issued pursuant to the exercise of NQOs granted under the 1994 Plan.
As of July 31, 2000, a total of 87,500 NQOs granted under the 1997 Plan were
outstanding. An aggregate of 412,500 shares of the Company's Common Stock have
been issued pursuant to the exercise of NQOs granted under the 1997 Plan.
The Company plans to register, when appropriate, at the Company's expense,
with the SEC on a Form S-8 Registration Statement, the shares of Common Stock
issuable under the 2000 Plan.
The following summary description of the 2000 Plan is qualified in its
entirety by reference to the full text of the 2000 Plan. A copy of the 2000 Plan
is attached to this proxy statement as EXHIBIT A.
SHARES SUBJECT TO THE PLANS
A total of 2,000,000 shares of the Company's Common Stock are authorized
for issuance under the 2000 Plan. Any shares of Common Stock which are subject
to an Option but are not used because the Option is terminated due to
termination of the optionee's employment with the Company or is otherwise not
exercised or in the case of an ISO, because the terms and conditions of the ISO
are not met, may again be used for Options under the 2000 Plan.
ADMINISTRATION
The Plans are administered by a Committee ("Committee") of not less than
two nor more than five persons appointed by the Board of Directors, each of who
must be a director of the Company. It is the intent that the 2000 Plan be
administered in a manner such that option grants and exercises would be "exempt"
under Rule 16b-3 of the Exchange Act.
The Committee is empowered to select those eligible persons to whom
Options shall be granted under the 2000 Plan; to determine the time or times at
which each Option shall be granted, whether Options will be ISOs or NQOs, and
the number of shares subject to each Option; and to fix the time and manner in
which each such Option may be exercised, including the exercise price and option
period, and other terms and conditions of such Options, all subject to the terms
and conditions of the 2000 Plan. The Committee has sole discretion to interpret
and administer the 2000 Plan, and its decisions regarding the 2000 Plan are
final.
OPTION TERMS
ISOs granted under the 2000 Plan must have an exercise price of not less
that 100% of the fair market value of the Common Stock on the date the ISO is
granted and must be exercised within ten years from the date of grant. In the
case of an ISO granted to an optionee who owns more than 10% of the total voting
securities of the Company on the date of grant, such exercise price shall be not
less that 110% of fair market value on the date of grant, and the
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option period may not exceed five years. NQOs granted under the 2000 Plan must
have an exercise price of not less than 85% of the fair market value of the
Common Stock on the date the NQO is granted.
Options may be exercised during a period of time fixed by the Committee
except that no Option (other than an ISO granted to a stockholder owning more
than 10% of the voting securities of the Company) may be exercised more than ten
years after the date of grant. In the discretion of the Committee, payment of
the purchase price for the shares of stock acquired through the exercise of an
Option may be made in cash, shares of the Company's Common Stock or a
combination of cash and shares of the Company's Common Stock.
AMENDMENT AND TERMINATION
The Plans may be wholly or partially amended or otherwise modified,
suspended or terminated at any time and from time to time by the Board of
Directors. The Board of Directors may not (i) materially impair any outstanding
Options without the express consent of the optionee or (ii) materially increase
the number of shares subject to the 2000 Plan, materially increase the benefits
acquiring to optionees under the Plans, materially modify the requirements as to
eligibility to participate in the 2000 Plan or alter the method of determining
the Option exercise price without stockholder approval. No Option may be granted
under the 2000 Plan after 2009.
FEDERAL INCOME TAX CONSEQUENCES
NQOS.
Holders of NQOs do not realize income as a result of a grant of the
Option, but normally realize compensation income upon exercise of an NQO to the
extent that the fair market value of the shares of Common Stock on the date of
exercise of the NQO exceeds the exercise price paid. The Company will be
required to withhold taxes on ordinary income realized by an optionee upon the
exercise of a NQO.
In the case of an optionee subject to the "short-swing" profit recapture
provisions of Section 16(b) of the Exchange Act, the optionee realizes income
only upon the lapse of the six-month period under Section 16(b), unless the
optionee elects to recognize income immediately upon exercise of his Option.
ISOS.
Holders of ISO's will not be considered to have received taxable income
upon either the grant of the Option or its exercise. Upon the sale or other
taxable disposition of the shares, long-term capital gain will normally be
recognized on the full amount of the difference between the amount realized and
the Option exercise price paid if no disposition of the shares has taken place
within either (a) two years from the date of grant of the Option or (b) one year
from the date of transfer of the shares to the optionee upon exercise. If the
shares are sold or otherwise disposed of before the end of the one-year or
two-year periods, the holder of the ISO must include the gain realized as
ordinary income to the extent of the lesser of (1) the fair market value of the
Option stock minus the Option price, or (2) the amount realized minus the Option
price. Any gain in excess of these amounts, presumably, will be treated as
capital gain. The Company will be entitled to a tax deduction in regard to an
ISO only to the extent the optionee has ordinary income upon the sale or other
disposition of the Option shares.
Upon the exercise of an ISO, the amount by which the fair market value
of the purchased shares at the time of exercise exceeds the Option price will be
an "item of tax preference" for purposes of computing the optionee's alternative
minimum tax for the year of exercise. If the shares so acquired are disposed of
prior to the expiration of the one-year or two-year periods described above,
there should be no "item of tax preference" arising from the Option exercise.
POSSIBLE ANTI-TAKEOVER EFFECTS
Although not intended as an anti-takeover measure by the Board of
Directors, one of the possible effects of the 2000 Plan could be to place
additional shares, and to increase the percentage of the total number of shares
outstanding, in the hands of the directors and officers of the Company. Such
persons may be viewed as part of, or friendly to, incumbent management and may,
therefore, under certain circumstances be expected to make investment and voting
decisions in response to a hostile takeover attempt that may serve to discourage
or render more difficult the accomplishment of such attempt.
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In addition, Options may, in the discretion of the Committee, contain a
provision providing for the acceleration of the exercisability of outstanding,
but unexercisable, options upon the first public announcement of a tender offer,
merger, consolidation, sale of all or substantially all of the assets of the
Company, or other attempted changes in the control of the Company. In the
opinion of the Board of Directors, such an acceleration provision merely ensures
that optionees under the Plans will be able to exercise their Options as
intended by the Board of Directors and stockholders of the Company prior to an
extraordinary corporate transaction which might serve to limit or restrict such
right. The Board of Directors is, however, presently unaware of the possibility
of any hostile takeovers involving the Company.
REQUIRED VOTE OF STOCKHOLDERS
The favorable vote a majority of the shares of Common Stock voting in
person or by proxy at the Annual Meeting is required to approve the 2000 Plan.
As noted, the Board of Directors has approved the 2000 Plan. Stockholders should
be aware, however, that the Board of Directors may be viewed as having a
conflict of interest in approving, and recommending that stockholders approve,
the 2000 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE 2000 PLAN.
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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, 2000, and conduct whatever audit functions
are deemed necessary pursuant thereto. Kelly & Company audited the Company's
1999 financial statements included in the 2000 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, 2001, 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, 7314 Scout Avenue,
Bell Gardens, California 90201, Attention: Secretary.
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EXHIBIT A
USA BIOMASS CORPORATION
2000 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of this 2000 Stock Option
Plan ("Plan") of USA Biomass Corporation, a Delaware corporation ("Company"), is
to provide the Company with a means of attracting and retaining the services of
highly motivated and qualified directors and key personnel. The Plan is intended
to advance the interests of the Company by affording to directors and key
employees, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity for
investment in the Company and the incentives inherent in stock ownership in the
Company. In addition, the Plan contemplates the opportunity for investment in
the Company by employees of companies that do business with the Company. For
purposes of this Plan, the term Company shall include subsidiaries, if any, of
the Company.
2. LEGAL COMPLIANCE. It is the intent of the Plan that all
options granted under it ("Options") shall be either "Incentive Stock Options"
("ISOs"), as such term is defined in Section 422 of the Internal Revenue Code of
1986, as amended ("Code"), or non-qualified stock options ("NQOs"); provided,
however, ISOs shall be granted only to employees of the Company. An Option shall
be identified as an ISO or an NQO in writing in the document or documents
evidencing the grant of the Option. All Options that are not so identified as
ISOs are intended to be NQOs. In addition, the Plan provides for the grant of
NQOs to employees of companies that do business with the Company. It is further
intent of the Plan that it conform in all respects with the requirements of Rule
16b-3 of the Securities Exchange Commission under the Securities Exchange Act of
1934, as amended ("Rule 16b-3"). To the extent that any aspect of the Plan or
its administration shall at any time be viewed as inconsistent with the
requirements of Rule 16b-3 or, in connection with ISOs, the Code, such aspect
shall be deemed to be modified, deleted or otherwise changed as necessary to
ensure continued compliance with such provisions.
3. ADMINISTRATION OF THE PLAN
3.1 PLAN COMMITTEE. The Plan shall be administered by a
committee ("Committee"). The members of the Committee shall be appointed from
time to time by the Board of Directors of the Company ("Board") and shall
consist of not less than two (2) nor more than five (5) persons. Such person
shall be directors of the Company.
3.2 GRANTS OF OPTIONS BY THE COMMITTEE. In accordance with the
provisions of the Plan, the Committee, by resolution, shall select those
eligible persons to whom Options shall be granted ("Optionees"); shall determine
the time or times at which each Option shall be granted, whether an Option is an
ISO or an NQO and the number of shares to be subject to each Option; and shall
fix the time and manner in which the Option may be exercised, the Option
exercise price, and the Option period. The Committee shall determine the form of
option agreements to evidence the foregoing terms and conditions of each Option,
which need not be identical, in the form provided for in Section 7. Such option
agreements may include such other provisions as the Committee may deem necessary
or desirable consistent with the Plan, the Code and Rule 16b-3.
3.3 COMMITTEE PROCEDURES. The Committee from time to time may adopt
such rules and regulations for carrying out the purposes of the Plan, as it may
deem proper and in the best interests of the Company. The Committee shall keep
minutes of its meetings and records of its actions. A majority of the members of
the Committee shall constitute a quorum for the transaction of any business by
the Committee. The Committee may act as any time by an affirmative vote of a
majority of those members voting. Such vote may be taken at a meeting (which may
be conducted in person or by any telecommunications medium) or by written
consent of Committee members without a meeting.
3.4 FINALITY OF COMMITTEE ACTION. The Committee shall resolve all
questions arising under the Plan and option agreements entered into pursuant to
the Plan. Each determination, interpretation, or other action made or taken by
the Committee shall be final and conclusive and binding on all persons,
including, without limitation, the Company, its shareholders, the Committee and
each of the members of the Committee, and the directors, officers and employees
of the Company, including Optionees and their respective successors in interest.
3.5 NON-LIABILITY OF COMMITTEE MEMBERS. No Committee member shall
be liable for any action or determination made by him or her in good faith with
respect to the Plan or any Option granted under it.
4. BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN. The Board
may, from time to time, make such changes in or additions to the Plan as it may
deem proper and in the best interests of the Company and its
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shareholders. The Board may also suspend or terminate the Plan at any time,
without notice, and in its sole discretion. Notwithstanding the foregoing, no
such change, addition, suspension, or termination by the Board shall (i)
materially impair any option previously granted under the Plan without the
express written consent of the optionee; (ii) materially increase the number of
shares subject to the Plan; (iii) materially increase the benefits accruing to
optionees under the Plan; (iv) materially modify the requirements as to
eligibility to participate in the Plan; or (v) alter the method of determining
the option exercise price described in Section 8, without shareholder approval.
5. SHARES SUBJECT TO THE PLAN. For purposes of the Plan, the
Committee is authorized to grant Options for up to 2,000,000 shares of the
Company's common stock ("Common Stock"), or the number and kind of shares of
stock or other securities, which, in accordance with Section 13, shall be
substituted for such shares of Common Stock or to which such shares shall be
adjusted. The Committee is authorized to grant Options under the Plan with
respect to such shares. Any or all unsold shares subject to an Option, which for
any reason expires or otherwise terminates (excluding shares returned to the
Company in payment of the exercise price for additional shares) may again be
made subject to grant under the Plan.
6. OPTIONEES. Options shall be granted only to officers, directors
or key employees of the Company or employees of companies that do business with
the Company designated by the Committee from time to time as Optionees. Any
Optionee may hold more than one option to purchase Common Stock, whether such
option is an Option held pursuant to the Plan or otherwise. An Optionee who is
an employee of the Company ("Employee Optionee") and who holds an Option must
remain a continuous full or part-time employee of the Company from the time of
grant of the Option to him until the time of its exercise, except as provided in
SECTION 10.3.
7. GRANTS OF OPTIONS. The Committee shall have the sole discretion
to grant Options under the Plan and to determine whether any Option shall be an
ISO or an NQO. The terms and conditions of Options granted under the Plan may
differ from one another, as the Committee, in its absolute discretion, shall
determine as long as all Options granted under the Plan satisfy the requirements
of the Plan. Upon determination by the Committee that an Option is to be granted
to an Optionee, a written option agreement evidencing such Option shall be given
to the Optionee, specifying the number of share subject to the Option, the
Option exercise price, whether the Option is an ISO or an NQO, and the other
individual terms and conditions of such Option. Such option agreement may
incorporate generally applicable provisions from the Plan, a copy of which shall
be provided to all Optionees at the time of their initial grants under the Plan.
The Option shall be deemed granted as the date specified in the grant resolution
of the Committee, and the option agreement shall be dated as the date of such
resolution. Notwithstanding the foregoing, unless the Committee consists solely
of non-employee directors, any Option granted to an executive officer, director
or 10% beneficial owner for purposes of Section 16 of the Securities Exchange
Act of 1934, as amended ("Section 16 of the 1934 Act"), shall either be (a)
conditioned upon the Optionee's agreement not to sell the shares of Common Stock
underlying the Option for at least six (6) months after the date of grant or (b)
approved by the entire Board of by the shareholders of the Company.
8. OPTION EXERCISE PRICE. The price per share to be paid by the
Optionee at the time an ISO is exercised shall not be less than one hundred
percent (100%) of the Fair Market Value (as hereinafter defined) of one share of
the optioned Common Stock on the date on which the Option is granted. No ISO may
be granted under the Plan to any person who, at the time of such grant, owns
(within the meaning of Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any parent thereof, unless the exercise price of such ISO is
at least equal to one hundred and ten percent (110%) of Fair Market Value on the
date of grant. The price per share to be paid by the Optionee at the time an NQO
is exercised shall not be less than eighty-five percent (85%) of the Fair Market
Value on the date on which the NQO is granted, as determined by the Committee.
For purposes of the Plan, the "Fair Market Value" of a share of the Company's
Common Stock as of a given date shall be: (i) the closing price of a share of
the Company's Common Stock on the principal exchange on which shares of the
Company's Common Stock are then trading, if any, on the day immediately
preceding such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; or (ii) if the
Company's Common Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, (1) the last sales price (if the Common Stock is
then listed as a National Market Issue under the Nasdaq National Market System)
or (2) the closing representative bid price (in all other cases) for the Common
Stock on the day immediately preceding such date as reported by Nasdaq or such
successor quotation system, or (iii) if the Company's Common Stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation
system, the closing bid price for the Common Stock on such date as determined in
good faith by the Committee; or (iv) if the Company's Common Stock is not
publicly traded, the fair market value established by the Committee acting in
good faith. In addition, with respect to any ISO,
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the Fair Market Value on any given date shall be determined in a manner
consistent with any regulations issued by the Secretary of the Treasury for the
purpose of determining fair market value of securities subject to an ISO plan
under the Code.
9. CEILING OF ISO GRANTS. The aggregate Fair Market Value
(determined at the time any ISO is granted) of the Common Stock with respect to
which an Optionee's ISOs, together with incentive stock options granted under
any other plan of the Company and any parent, are exercisable for the first time
by such Optionee during any calendar year shall not exceed $250,000. If an
Optionee holds such incentive stock options that become first exercisable
(including as a result of acceleration of exercisability under the Plan) in any
one year for shares having a Fair Market Value at the date of grant in excess of
$250,000, then the most recently granted of such ISOs, to the extent that they
are exercisable for shares having an aggregate Fair Market Value in excess of
such limit, shall be deemed to be NQOs.
10. DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS.
10.1 OPTION PERIOD. The option period shall be determined by the
Committee with respect to each Option granted. In no event, however, may the
option period exceed ten (10) years from the date on which the Option is
granted, or five (5) years in the case of a grant of an ISO to an Optionee who
is ten percent (10%) shareholder at the date on which the Option is granted as
described in Section 8.
10.2 EXERCISABILITY OF OPTIONS. Each Option shall be exercisable in
whole or in consecutive installments, cumulative or otherwise, during its term
as determined in the discretion of the Committee.
10.3 TERMINATION OF OPTIONS DUE TO TERMINATION OF EMPLOYMENT,
DISABILITY, OR DEATH OF OPTIONEE; TERMINATION FOR "CAUSE", OR RESIGNATION IN
VIOLATION OF AN EMPLOYMENT AGREEMENT. All Options granted under the Plan of any
Employee Optionee shall terminate and may no longer be exercised if the Employee
Optionee ceases, at any time during the period between the rant of the Option
and its exercise, to be an employee of the Company; provided, however, that the
Committee may alter the termination date of the Option if the Optionee transfers
to an affiliate of the Company. Notwithstanding the foregoing, (i) if the
Employee Optionee's employment with the Company shall have terminated for any
reason (other than involuntary dismissal for "cause" or voluntary resignation in
violation of any agreement to remain in the employ of the Company, including,
without limitation, any such agreement pursuant to Section 5), he may, at any
time before the expiration of three (3) months after such termination or before
expiration of the Option, whichever shall first occur, exercise the Option (to
the extent that the Option was exercisable by him on the date of the termination
of his employment); (ii) if the Employee Optionee's employment shall have
terminated due to disability (as defined in Section 22(e)(3) of the Code and
subject to such proof of disability as the Committee may require), such Option
may be exercised by the Employee Optionee (or by his guardian(s), or
conservator(s), or other legal representative(s), before the expiration of
twelve (12) months after such termination or before expiration of the Option,
whichever shall first occur (to the extend that the Option was exercisable by
him on the date of the termination of his employment; (iii) in the event of the
death of the Employee Optionee, an Option exercisable by him at the date of his
death shall be exercisable by his legal representative(s), legatee(s), or
heir(s), or by his beneficiary or beneficiaries so designated by him, as the
case may be, within twelve (12) months after his death or before the expiration
of the Option, whichever shall first occur (to the extent that the Option was
exercisable by him on the date of his death); and (iv) if the Employee
Optionee's employment is terminated for "cause" or in violation of any agreement
to remain in the employ of the Company, including, without limitation, any such
agreement pursuant to Section 14, his Option shall terminate immediately upon
termination of employment, and such Option shall be deemed to have been
forfeited by the Optionee. For purposes of the Plan, "cause" may include,
without limitation, any illegal or improper conduct (1) which injures or impairs
the reputation, goodwill, or business of the Company; (2) which involves the
misappropriation of funds of the Company, or the misuse of data, information, or
documents acquired in connection with employment to by the Company; or (3) which
violates any other directive or policy promulgated by the Company. A termination
for "cause" may also include any resignation in anticipation of discharge for
"cause" or resignation accepted by the Company in lieu of a formal discharge for
"cause."
11. MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES
11.1 WRITTEN NOTICE OF EXERCISE. An Optionee may elect to exercise
a Option in whole or part, from time to time, Subject to the terms and
conditions contained in the Plan and in the agreement evidencing such Option, by
giving written notice of exercise to the Company at its principal executive
office.
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11.2 CASH PAYMENT FOR OPTIONED SHARES. If an Option is exercised
for cash, such notice shall be accompanied by a cashier's or personal check, or
money order, made payable to the Company for the full exercise price of the
shares purchased.
11.3 STOCK SWAP FEATURE. At the time of the Option exercise, and
subject to the discretion of the Committee to accept payment in cash only, the
Optionee may determine whether the total purchase price of the shares to be
purchased shall be paid solely in cash or by transfer from the Optionee to the
Company of previously acquired shares of Common Stock, or by a combination
thereof. If the Optionee elects to pay the total purchase price in whole or in
part with previously acquired share of Common Stock, the value of such shares
shall be equal to their Fair Market Value on the date of exercise, determined by
the Committee in the same manner used for determining Fair Market Value at the
time of grant for purposes of SECTION 8.
11.4 INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND
LEGALITY OF ISSUANCE. The receipt of shares of Common Stock upon the exercise of
an Option shall be conditioned upon the Optionee (or any other person who
exercises the Option on his or her behalf as permitted by SECTION 10.3)
providing to the Committee a written representation that, at the time of such
exercise, it is the intent of such person(s) to acquire the shares of or
investment only and not with a view toward distribution. The certificate for
unregistered shares issued for investment shall be restricted by the Company as
to transfer unless the Company receives an opinion of counsel satisfactory to
the Company to the effect that such restriction is not necessary under then
pertaining law. The providing of such representation and such restrictions on
transfer shall not, however, be required upon any person's receipt of share of
Common Stock under the Plan in the event that, at the time of grant of the
Option relating to such receipt or upon such receipt, whichever is the
appropriate measure under applicable federal or state securities laws, the
shares subject to the Option shall be (i) covered by an effective and current
registration statement under the Securities Act of 1933, as amended, and (ii)
either qualified or exempt from qualification under applicable state securities
laws. The Company shall, however, under no circumstances be required to sell or
issue any shares under the Plan if, in the opinion of the Committee, (i) the
issuance of such shares would constitute a violation by the Optionee or the
Company of any applicable law or regulation of any governmental authority, or
(ii) the consent or approval of any governmental body is necessary or desirable
as a condition of, or in connection with, the issuance of such shares.
11.5 SHAREHOLDER RIGHTS OF OPTIONEE. Upon exercise, the Optionee
(or any other person who exercises the Option on his behalf as permitted by
SECTION 10.3) shall be recorded on the books of the Company as the owner of the
shares, and the Company shall deliver to such record owner one or more duly
issued stock certificates evidencing such ownership. No person shall have any
rights as a shareholder with respect to any shares of Common Stock covered by an
Option granted pursuant to the Plan until such person shall have become the
holder of record of such shares. Except as provided in SECTION 13, no
adjustments shall be made for cash dividends or other distributions or other
rights as to which there is a record date preceding the date such person becomes
the holder of record of such shares.
11.6 HOLDING PERIODS FOR TAX PURPOSES. The Plan does not provide
that an Optionee must hold shares of Common Stock acquired under the Plan for
any minimum period of time. Optionees are urged to consult with their own tax
advisors with respect to the tax consequences to them of their individual
participation in the Plan.
12. SUCCESSIVE GRANTS. Successive grants of Options may be made to any
Optionee under the Plan.
13. ADJUSTMENT.
(a) If the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by reason of a
recapitalization, reclassification, reorganization, merger, consolidation, share
exchange, or other business combination in which the Company is the surviving
parent corporation, acquire capital stock, appropriate adjustment shall be made
by the Committee in the number and kind of shares for which options may be
granted under the Plan. In addition, the Committee shall make appropriate
exercisable, to the end that the proportionate interest of the holder of the
option shall, to the extent practicable, be maintained as before the occurrence
of such event. Such adjustment in outstanding options shall be made without
change in the total price applicable to the unexercised portion of the option
but with a corresponding adjustment in the exercise price per share.
(b) In the event of the dissolution or liquidation of the Company, any
outstanding and unexercised options shall terminate as of a future date to be
fixed by the Committee.
(c) In the event of a Reorganization (as hereinafter defined), then,
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(i) If there is no plan or agreement with respect to the
Reorganization ("Reorganization Agreement"), or if the Reorganization Agreement
does not specifically provide for the adjustment, change, conversion, or
exchange of the outstanding and unexercised options for cash or other property
or securities of another corporation, then any outstanding and unexercised
options shall terminate as of a future date to be fixed by the Committee; or
(ii) If there is a Reorganization Agreement, and the Reorganization
Agreement specifically provides for the adjustment, change, conversions, or
exchange of the outstanding and unexercised options for cash or other property
or securities of another corporation, then the Committee shall adjust the shares
under such outstanding and unexercised options, and shall adjust the shares
remaining under the Plan which are then available for the issuance of options
under the Plan if the Reorganization Agreement makes specific provisions
therefore, in a manner not inconsistent with the provisions of the
Reorganization Agreement for the adjustment, change, conversion, or exchange of
such options and shares.
(d) The term "Reorganization" as used in this SECTION 13 shall mean any
reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company. Nothing herein shall
require the Company to adopt a Reorganization Agreement, or to make provision
for the adjustment, change, conversion, or exchange of any options, or the
shares subject thereto, in any Reorganization Agreement, which it does adopt.
(e) The Committee shall provide to each optionee then holding an
outstanding and unexercised option not less than thirty (30) calendar days'
advanced written notice of any date fixed by the Committee pursuant to this
SECTION 13 and of the terms of any Reorganization Agreement providing for the
adjustment, change, conversion, or exchange of outstanding and unexercised
options. Except as the Committee may otherwise provide, each optionee shall have
the right during such period to exercise his option only to the extent that the
option was exercisable on the date such notice was provided to the optionee.
Any adjustment to any outstanding ISO pursuant to this SECTION 13, if
made by reason of a transaction described in Section 424(a) of the Code, shall
be made so as to conform to the requirements of that Section and the regulations
thereunder. If any other transaction described in Section 424(a) of the Code
affects the Common Stock subject to any unexercised ISO theretofore granted
under the Plan (hereinafter for purposes of this SECTION 13 referred to as the
"old option"), the Board of Directors of the Company or of any surviving or
acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or to
assume the old option.
(f) No modification, extension, renewal, or other change in any option
granted under the Plan may be made, after the grant of such option, without the
optionee's consent, unless the same is permitted by the provisions of the Plan
and the option agreement. In the case of an ISO, optionees are hereby advised
that certain changes may disqualify the ISO from being considered as such under
Section 422 of the Code, or constitute a modification, extension, or renewal of
the ISO under Section 424(h) of the Code.
(g) All adjustments and determinations under this SECTION 13 shall be
made by the Committee in good faith in its sole discretion.
14. CONTINUED EMPLOYMENT. As determined in the sole discretion of the
Committee at the time of grant and if so stated in a writing signed by the
Company, each Option may have as a condition the requirement of an Employee
Optionee to remain in the employ of the Company, or of its affiliates, and to
render to it his or her exclusive service, at such compensation as may be
determined from time to time by it, for a period not to exceed the term of the
Option, except for earlier termination of employment by or with the express
written consent of the Company or on account of disability or death. The failure
of any Employee Optionee to abide by such agreement as to any Option under the
Plan may result in the termination of all of his or her then outstanding Options
granted pursuant to the Plan. Neither the creation of the Plan nor the granting
of Option(s) under it shall be deemed to create a right in an Employee Optionee
to continued employment with the Company, and each such Employee Optionee shall
be and shall remain subject to by the Committee in any particular case, the loss
of existing or potential profit in options granted under this Plan shall not
constitute an element of damages in the event of termination of the employment
of an employee even if the terminations is in violation of an obligation of the
Company to the employee by contract or otherwise.
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15. TAX WITHHOLDING. The exercise of any Option granted under the Plan is
subject to the condition that if at any time the Company shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such exercise or a later lapsing of time or
restrictions on or disposition of the shares of Common Stock received upon such
exercise, then in such event, the exercise of the Option shall not be effective
unless such withholding shall have been effected or obtained in a manner
acceptable to the Company. When an Optionee is required to pay to the Company
and amount required to be withheld under applicable income tax laws in
connection with the exercise of any Option, the Optionee may, subject to the
approval of the Committee, which approval shall not have been disapproved at any
time after the election is made, satisfy the obligation, in whole or in part, by
electing to have the Company withhold shares of Common Stock having a value
equal to the amount required to be withheld. The value of the Common Stock
withheld pursuant to the election shall be determined by the Committee, in
accordance with the criteria set forth in SECTION 8, with reference to the date
the amount of tax to be withheld is determined. The Optionee shall pay to the
Company in cash any amount required to be withheld that would otherwise result
in the withholding of fractional share. The election by an Optionee who is an
officer of the Company within the meaning of Section 167 of the 1934 Act, to be
effective, must meet all of the requirements of Section 16 of the 1934 Act.
16. TERM OF PLAN.
16.1 EFFECTIVE DATE. Subject to shareholder approval, the Plan
shall become effective as of August 17, 2000.
16.2 TERMINATION DATE. Except as to options granted and
outstanding under the Plan prior to such time, the Plan shall terminate at
midnight on August 17, 2009 and no Option shall be granted after that time.
Options then outstanding may continue to be exercised in accordance with their
terms. The Plan may be suspended or terminated at any earlier time by the Board
within the limitations set forth in SECTION 4.
17. NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to amend, modify, or rescind any previously approved compensation
plans, programs or options entered into by the Company. This Plan shall be
construed to be in addition to and independent of any and all such other
arrangements. Neither the adoption of the Plan by the Board nor the submission
of the Plan to the shareholders of the Company for approval shall be construed
as creating any limitations on the power or authority of the Board to adopt,
with or without shareholder approval, such additional or other compensation
arrangements as the Board may from time to time deem desirable.
18. GOVERNING LAW. The Plan and all rights and obligations under it
shall be construed and enforced in accordance with the laws of the State of
California.
19. INFORMATION TO OPTIONEES. Optionees under the Plan who do not
otherwise have access to financial statements of the Company will receive the
Company's financial statements at least annually.
17
<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 2000 Annual Meeting of Stockholders of the Company to be
held at the Radisson Hotel, 4545 MacArthur Blvd., Newport Beach, CA 92660,
October 6, 2000 at 10:00 a.m. local time, and at any adjournment thereof, upon
the following:
1. To elect six 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 Eugene W. Tidgewell Marlene A. Tapie
A. James, Nikas, III Lance B. Jones Arvid B. Lokensgard
2. To approve of the Company's 2000 Stock Option Plan.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
<PAGE>
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, 2000.
[ ] 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.
