<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
<TABLE>
<S> <C>
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 / / Rule 240.14a-11(c) or
/ / Rule 240.14a-12
MBC HOLDING COMPANY
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or Item
22(a)(2) of Schedule 14A
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(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):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(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:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
MBC HOLDING COMPANY
882 WEST SEVENTH STREET
SAINT PAUL, MN 55102
(651) 228-9173
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 31, 2000
------------------------
To the Shareholders of MBC Holding Company:
Notice is hereby given that the Annual Meeting of Shareholders of MBC
Holding Company will be held on Wednesday, May 31, 2000, at 9:00 a.m. local
time, at the Company's offices at 882 West Seventh Street, Saint Paul,
Minnesota, for the following purposes:
1. To elect seven (7) directors to serve until the next annual meeting of
shareholders or until their successors are elected;
2. To amend the Company's 1993 Stock Option Plan by increasing the number
of shares authorized under the Plan; and
3. To act upon any other matters that may properly be presented at the
meeting.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form of
Proxy and the Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1999.
The Board of Directors has fixed the close of business on April 20, 2000, as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting.
By Order of the Board of Directors
John J. Lee
PRESIDENT
Saint Paul, Minnesota
May 5, 2000
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE VOTED
AT THE MEETING. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND
VOTE IN PERSON IF THEY DESIRE.
<PAGE>
MBC HOLDING COMPANY
----------------
PROXY STATEMENT
---------------------
TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished to the shareholders of MBC Holding Company
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to be
held on May 31, 2000, or any adjournment or adjournments thereof. The Annual
Meeting will be held at the Company's principal offices, 882 West Seventh
Street, Saint Paul, Minnesota at 9:00 a.m. local time on May 31, 2000. The
mailing of this proxy statement to shareholders of the Company commenced on or
about May 5, 2000.
INFORMATION CONCERNING THE PROXY
A proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to MARK, SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. Any proxy given to this solicitation and received in time for the
Annual Meeting will be voted in accordance with the instructions given in the
proxy. The giving of a proxy does not preclude the right to vote in person
should a shareholder giving the proxy so desire. Any shareholder giving a proxy
may revoke it any time prior to its use, either in person at the Annual Meeting
or by giving the Company's Secretary a written revocation or duly executed proxy
bearing a later date. No such revocation will be effective until written notice
of the revocation is received by the Company at or prior to the Annual Meeting.
The cost of this solicitation will be borne by the Company. In addition to
the solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. No additional compensation
will be paid to directors, officers or other regular employees for such
services. The Company may also request banks and brokers to solicit their
customers who have a beneficial interest in the Company's Common Stock
registered in the name of nominees. The Company will reimburse such banks and
brokers for their reasonable out-of-pocket expenses.
The total number of shares of capital stock of the Company outstanding and
entitled to vote at the meeting as of April 20, 2000 was 3,506,860 shares of
$.01 par value common stock (the "Common Stock") and 607,745 shares of Class A
Convertible Preferred Stock (the "Preferred Stock") (collectively referred to as
"Capital Stock"). Each share of Capital Stock is entitled to one vote and there
is no cumulative voting. Only shareholders of record at the close of business on
April 20, 2000 will be entitled to vote at the meeting. The presence in person
or by proxy of the holders of a majority of the shares entitled to vote at the
Annual Meeting of Shareholders constitutes a quorum for the transaction of
business.
Under Minnesota law, each item of business properly presented at a meeting
of shareholders generally must be approved by the affirmative vote of the
holders of a majority of the voting power of the shares present, in person or by
proxy, and entitled to vote on that item of business. However, if the shares
present and entitled to vote on that item of business would not constitute a
quorum for the transaction of business at the meeting, then the item must be
approved by a majority of the voting power of the minimum number of shares that
would constitute such a quorum. Votes cast by proxy or in person at the Annual
Meeting of Shareholders will be tabulated at the meeting to determine whether or
not a quorum is present. Abstentions will be treated as shares that are present
and entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of the matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
1
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
The only voting securities of the Company are shares of Common Stock and
shares of Preferred Stock, of which 3,506,860 shares and 607,745 shares,
respectively, were outstanding as of April 20, 2000. The following table
includes information, as of April 20, 2000, concerning the beneficial ownership
of the holdings of the voting stock of the Company by (i) all persons who are
known by the Company to hold five percent (5%) or more of the Company's voting
securities; (ii) each of the directors or nominees for director of the Company;
and (iii) all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY OWNED(1) PERCENT OWNERSHIP
- ---------------- ---------------------------- -----------------
<S> <C> <C>
Bruce E. Hendry ..................................... 2,148,829 52.2%
Minnesota Brewing Management
Company; Minnesota Brewing
Limited Partnership(2)
882 West Seventh Street
Saint Paul, MN 55102
John J. Lee(3) ...................................... 297,762 7.2%
882 West Seventh Street
Saint Paul, MN 55102
Perkins Oppertunity Fund(4) ......................... 250,000 6.1%
730 East Lake Street
Wayzata, MN 55391
Robert Awsumb........................................ 10,000 *
John T. Elliott...................................... 5,000 *
Richard A. Perrine................................... 10,000 *
James F. Freeman, III................................ -- --
Thomas L. Houts...................................... 500 *
All Officers and Directors as a Group (7 persons).... 2,472,091 60.1%
</TABLE>
- ------------------------
* Indicates ownership of less than one percent.
(1) Includes shares of Common Stock issuable upon the exercise of stock options
granted to the following persons and exercisable within 60 days:
Mr. Lee--33,334 shares; all officers and directors as a group--160,000
shares.
(2) Minnesota Brewing Limited Partnership (the "Partnership") is a Minnesota
limited partnership that was established in September 1991. Minnesota
Brewing Management Company is the General Partner of the Partnership and
owns 4.8% of the Partnership interest in the Company as General Partner.
Minnesota Brewing Management Company has the right to vote all shares held
by the Partnership. Bruce E. Hendry is the sole shareholder of Minnesota
Brewing Management Company and is a limited partner in the Partnership.
(3) Mr. Lee serves as the trustee for the Company's Employee Stock Ownership
Plan ("ESOP"). The share totals for Mr. Lee include all of the 264,428
shares held by the ESOP. Mr. Lee disclaims any beneficial ownership in the
shares held by the ESOP other than his respective interest.
(4) Based on a Schedule 13G dated February 2, 2000. Perkins Oppertunity Fund is
an investment company registered with the Securities and Exchange
Commission. Of the shares listed above, Perkins Oppertunity Fund has the
sole voting power with respect to 250,000 shares and the sole dispositive
power with respect to 250,000 shares.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The nominees named below have been nominated by the Board of Directors of
the Company. Each nominee is currently a director of the Company. Each of the
nominees named below upon election will serve until the next annual meeting or
until his successor has been elected and qualified. If, for any reason, any of
the nominees becomes unavailable for election, the proxies solicited by the
Board of Directors will be voted for such nominee as is selected by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees are not available or will not serve if elected. Unless otherwise
indicated, each nominee has held his present occupation as set forth below, or
has been an officer with the organization indicated, for more than the past five
years.
- --------------------------------------------------------------------------------
Bruce E. Hendry Chairman of the Board of Directors
Director since 1991 of the Company
Age--57
Mr. Hendry has been the Chairman of the Board of the Company since its
formation in 1991. Mr. Hendry has been employed as a registered representative
with the investment banking firm of Dougherty & Company LLC (formerly Summit
Investment Corporation) since October 1994. He has been involved in the
restructuring of a number of financially distressed companies that have gone
through reorganization, including Kaiser Steel Corporation, First Republic Bank
Corporation, Erie Lackawanna, ET Railcar and Wickes Cos., Inc. Mr. Hendry is
also the sole shareholder of Minnesota Brewing Management Company, the General
Partner of the Partnership. See "Certain Transactions."
- --------------------------------------------------------------------------------
John J. Lee President and Chief Executive
Director since 1997 Officer of the Company
Age--41
Mr. Lee has been the President and Chief Executive Officer and a director of
the Company since May 1997. From 1989 to 1995, he was the Chief Executive
Officer of Rex Distributing, a beer distributor.
- --------------------------------------------------------------------------------
Richard A. Perrine Senior Vice President
Director since 1996 The Hays Group, Inc.
Age--45
Mr. Perrine has served as a director since November 1996. Mr. Perrine is a
certified public accountant and since May 1996 has been employed by The Hays
Group, Inc., an insurance brokerage firm. From 1991 to 1996, Mr. Perrine was a
Tax Partner with the accounting firm of McGladrey & Pullen, LLP.
- --------------------------------------------------------------------------------
Robert A. Awsumb President and Founding Partner
Director since 1998 Rambow & Awsumb, P.A.
Age--40
Mr. Awsumb has been a director of the Company since November of 1998.
Mr. Awsumb is an attorney who has been employed by Rambow & Awsumb, P.A. since
1991.
- --------------------------------------------------------------------------------
3
<PAGE>
John T. Elliott President
Director since 1999 Elliott Contracting Corporation
Age--51
Mr. Elliott has been director of the Company since May 1999. Mr. Elliott is
a professional engineer and has served as the President of Elliott Contracting
Corporation, an electrical construction and maintenance company, since 1993.
- --------------------------------------------------------------------------------
James F. Freeman, III Vice President of Sales
Nominee WACO Associates
Age--45
Mr. Freeman has been nominated to serve as a director of the Company.
Mr. Freeman has spent his career in sales and general business management. Since
January 2000 he has been employed by WACO Associates as a Vice President of
Sales. From 1994 through 1999, Mr. Freeman served as a vice president of MG
Industries' CO(2) Division.
- --------------------------------------------------------------------------------
Thomas L. Houts President
Nominee Gryphics, Inc.
Age--51
Mr. Houts has been nominated to serve as a director of the Company.
Mr. Houts is currently the President of Gryphics, Inc., a producer of computer
interconnect devices. From 1996 through 1999, Mr. Houts served as President of
Dry Fibre, Inc., a textile manufacturer.
- --------------------------------------------------------------------------------
Vote Required
The affirmative vote of a majority of the voting shares represented at the
meeting of the Company's Capital Stock is required for election of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
MEETINGS. The Board of Directors met four times during 1999. Each current
director attended at least seventy-five percent of the meetings of the Board of
Directors and Board committees on which the director served.
BOARD COMMITTEE MEETINGS.
The Compensation Committee, which is currently comprised of Messrs. Lee and
Perrine, is responsible for management of compensation matters, including
recommendations to the Board of Directors on compensation arrangements for
officers and incentive compensation for employees of the Company. The
Compensation Committee met once in 1999.
The Audit Committee, which is currently comprised of Messrs. Perrine, Awsumb
and Elliott, supervises the financial affairs of the Company and reviews the
scope and results of the audit and other services provided by the Company's
independent accountants. The Audit Committee then reports the results of its
review to the full Board and to management. The Audit Committee met three times
in 1999.
The Nominating Committee, which is currently comprised of Messrs. Hendry and
Lee, considers and recommends nominees to the Board of Directors. The Nominating
Committee did not meet in 1999. However, the Nominating Committee met once in
2000 in order to nominate two additional candidates to
4
<PAGE>
sit on the Company's Board of Directors. The Nominating Committee will consider
nominees recommended by a shareholder, provided the shareholder submits a
proposal in writing to the Company's Secretary which includes: the nominee's
name, a list of the nominee's qualifications and a statement signed by the
nominee indicating a willingness to serve.
The Company's Directors are not paid any fees for service on the Board or
attendance at Board meetings. However, in 1998, Messrs. Perrine and Awsumb were
each issued an option to purchase 15,000 shares of the Company's Common Stock.
In 1999, Mr. Elliott was issued an option to purchase 15,000 shares of the
Company's Common Stock. Each option vests in equal parts over three years,
contingent upon the director's reelection.
PROPOSAL 2
AMENDMENT OF 1993 STOCK OPTION PLAN
The Board of Directors, recognizing that insufficient shares are available
to provide further grants of stock options under the 1993 Stock Option Plan (the
"1993 Plan"), determined that it is in the interest of the Company to amend the
1993 Plan in order to continue the Company's practice of making stock options
available to those employees responsible for significant contributions to the
Company's business. The Board believes that the equity stake in the growth and
success of the Company afforded by stock options provides key employees with an
incentive to continue to energetically apply their talents within the Company.
Accordingly, on March 10, 2000, the Board of Directors unanimously approved an
Amendment to the Company's 1993 Stock Option Plan (the "Plan") and directed that
it be submitted for consideration and action at the annual meeting. For adoption
of the Plan, the Company's shareholders must approve it by the affirmative vote
of a majority of the shares voted at the meeting.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE 1993 STOCK
OPTION PLAN.
The proposed amendment increases the number of shares of the Company's
Common Stock reserved and available for distribution under the Plan by 200,000
to 650,000. As of March 31, 2000, the Company had options outstanding under the
Plan for 317,000 shares, of which 255,333 were then exercisable.
The Plan is administered by the Company's Board of Directors or by a
Committee appointed by the Board of Directors. Individual awards under the Plan
may take the form of either Incentive Stock Options or Non-Qualified Stock
Options. The Board will select optionees under the Plan from the Company's
directors, officers, key employees and consultants and other persons having a
contractual relationship with the Company who are responsible for or contribute
to the Company's management, growth and profitability. No determination has been
made with respect to future recipients of options under the Plan. It is not
possible to specify the names or positions of the directors, officers or key
employees to whom options may be granted, or the number of shares, within the
limitations of the Plan, to be covered by such options.
The Board has sole discretion to determine the recipient, date and number of
shares of each grant under the Plan. No optionee may receive grants of stock
options under the Plan which exceed 100,000 shares in any fiscal year of the
Company. In addition, the aggregate fair market value (determined as of the time
the option is granted) of the Common Stock for which an employee may have
Incentive Stock Options vest in any calendar year may not exceed $100,000.
The Board will determine the option price per share of the Common Stock
purchasable under the Plan; if the Board does not set a price in the option
grant, it will be the fair market value of the Common Stock on the date the
option is granted. In addition, the option price per share of Common Stock
granted as an Incentive Stock Option will never be less than 100% of the fair
market value of the Common Stock on the date of the grant. The option price per
share of Common Stock granted as a Non-Qualified Stock Option will never be less
than 50% of the Common Stock's fair market value on the date of the grant.
5
<PAGE>
The Board has the discretion to set the term of each option granted under
the Plan. If the Board does not fix the term of an option, it will be ten years
from the date of the grant. No Incentive Stock Options granted under the Plan
will be exercisable more than ten years following the date of the grant. The
Board also has the discretion to determine the date on which options granted
under the Plan will be exercisable. If the Board does not state the date of
exercise in the option grant, the option will be exercisable one year after the
date of the grant.
The Board of Directors will appropriately adjust the number and option price
of shares subject to the Plan in the event of any recapitalization, stock
dividend, adjustment or other change in the Company's corporate structure or
shares. The Board may grant no Incentive Stock Options under the Plan after
September 1, 2003. There is no charge against the Company in connection with the
grant of an option or the exercise of an option by an employee of the Company.
The Company has been advised that under currently applicable provisions of
the Internal Revenue Code, an optionee will not be deemed to receive any income
for Federal tax purposes upon the grant of an option under the Plan, nor will
the Company be entitled to a tax deduction at that time. However, upon the
exercise of an option the tax consequences are as follows:
1. Upon the exercise of a Non-Qualified Stock Option, the optionee will
be deemed to have received ordinary income in an amount equal to the
difference between the option price and the market price of the shares on
the exercise date. The Company will be allowed an income tax deduction equal
to the excess of market value of the shares on the date of exercise over the
cost of such shares to the optionee.
2. Upon the exercise of an Incentive Stock Option, there is no income
recognized by the optionee at the time of exercise. If the stock is held at
least one year following the exercise date and at least two years from the
date of grant of the option, the optionee will realize a long-term capital
gain or loss upon sale, measured as the difference between the option
exercise price and the sale price. If either of these holding period
requirements are not satisfied, ordinary income tax treatment will apply to
the amount of gain at sale or exercise, whichever is less. No income tax
deduction will be allowed the Company with respect to shares purchased by an
otpionee upon the exercise of an Incentive Stock Option, provided such
shares are held for the required periods as described above.
Under the Internal Revenue Code, an option will generally be disqualified
from receiving Incentive Stock Option tax treatment if it is exercised more than
three months following termination of employment. However, if the optionee is
disabled, such statutory treatment is available for one year following
termination. If the optionee dies while employed by the Company or within three
months thereafter, the statutory time limit is waived altogether. In no event do
these terms extend the rights to exercise an option beyond those rights provided
by the terms of the option.
On April 18, 2000, the closing price of the Company's Common Stock was $3.44
per share.
------------------------
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ending December 31, 1999,
1998 and 1997, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to John J. Lee, the
Company's current President and Chief Executive Officer. No other executive
officer of the Company received total cash compensation exceeding $100,000
during 1999.
6
<PAGE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION AWARDS LONG TERM COMPENSATION
<TABLE>
<CAPTION>
STOCK OPTIONS OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (NUMBER) COMPENSATION
- --------------------------- -------- -------- ------------- ------------
<S> <C> <C> <C> <C>
John J. Lee(1)..................................... 1999 $122,972 -0- --
President and Chief 1998 128,527 -0- --
Executive Officer 1997 70,656 100,000 --
</TABLE>
- ------------------------
(1) Mr. Lee became President and Chief Executive Officer in May of 1997.
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to Mr. Lee in 1999.
YEAR-END OPTIONS VALUES
No options were exercised by Mr. Lee during 1999. The following table sets
forth, with respect to Mr. Lee, certain information relating to unexercised
stock options held as of the end of the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John J. Lee.................................... 66,666 33,334 -0- -0-
</TABLE>
- ------------------------
(1) The value of unexercised options is calculated by determining the fair
market value of the shares underlying the options at December 31, 1999 and
the exercise price of the options.
EMPLOYMENT AGREEMENTS
The Company has no written employment agreements with its executive
officers.
CERTAIN TRANSACTIONS
On August 29, 1991 Bruce E. Hendry, the Company's current Chairman of the
Board of Directors, entered into an Asset Purchase Agreement with G. Heileman
Brewing Company ("Heileman") to purchase the real property commonly known as the
Jacob Schmidt Brewery in Saint Paul, Minnesota, certain equipment and other
tangible assets in connection therewith, the trademark "Grain Belt," and certain
assets relating to the marketing and distribution of beer. Heileman was
operating as debtor-in-possession under the United States Bankruptcy Code in the
Southern District of New York.
Minnesota Brewing Limited Partnership (the "Partnership") was formed by
Mr. Hendry and other private investors in September 1991. Mr. Hendry assigned
the Asset Purchase Agreement to the Partnership, and the Partnership acquired
the brewery and equipment from Heileman for approximately $2.75 million. The
Company, however, acquired the Grain Belt trademark directly from Heileman. The
General Partner of the Partnership is Minnesota Brewing Management Company.
Mr. Hendry is the President and sole shareholder of Minnesota Brewing Management
Company. Mr. Lee and Mr. Perrine, each of whom is a director of the Company, are
limited partners in the Partnership.
On September 11, 1991 the Company was incorporated under Minnesota law. In
October 1991, the Partnership contributed $2,600,000 to the Company and received
1,541,084 shares of Common Stock. Concurrent with the closing of the Company's
initial public offering in 1993, the Partnership assumed
7
<PAGE>
approximately $825,140 in obligations of the Company owed to the Housing and
Redevelopment Authority of the City of Saint Paul as well as to the City of
Saint Paul.
In March and April 1998, the Company entered into two additional agreements
with the Partnership under which the Partnership loaned the Company an
additional $475,000 and agreed to provide the Company with a $2.5 million line
of credit. Advances under the line of credit accrue interest at the higher of
the prime rate of interest plus 1.0 percent or 9 percent. The line was secured
by substantially all the assets of the Company. This line of credit agreement
expired on January 1, 1999, the Company was unable to pay all amounts due under
the line and as a result the Company was in default under this agreement. On
April 15, 1999, the Partnership committed to amend the line of credit agreement
with the Company thereby curing the default that existed at that date. The
amended line of credit, which expires on April 15, 2002, will provide borrowings
up to $1.5 million.
Beginning in 1997, the Company investigated and began to develop a business
for the production of ethanol. Ethanol is principally produced from the
processing of corn, including its fermentation into fuel grade alcohol. Because
of the significant cost of an ethanol production facility, the Company has
obtained investors to satisfy lenders' request for equity. The Company has
contributed assets to and obtained a 28% minority interest in the ethanol
operation, Gopher State Ethanol, LLC ("Gopher State"). The Partnership owns 49%
of Gopher State. As the President and sole shareholder of the Partnership's
General Partner, Mr. Hendry has a significant interest in Gopher State.
In 1999, the Company formed MG-CO(2) St. Paul ("CO(2) Joint Venture") to
produce liquid carbon dioxide. CO(2) Joint Venture is a joint venture with MG
Industries, a third party unrelated to the Company. CO(2) Joint Venture has
agreed to purchase 100% of the liquid carbon dioxide byproduct of Gopher State's
ethanol production. One of the Company's nominees for its Board of Directors,
James F. Freeman, III, was a Vice President of the CO(2) Division of MG
Industries from January 1994 through December 1999.
The Company's production facilities for all of its subsidiaries are located
in Saint Paul, Minnesota. In the past the Company leased its production
facilities and certain of its equipment from the Partnership. On March 29, 1999,
the Company and the Partnership terminated their lease agreement. The
Partnership also contributed its interest in the real estate and equipment that
had been previously leased to the Company to Gopher State. On March 29, 1999,
the Company and Gopher State entered into a new lease agreement for the same
land, building and production equipment that the Company had previously leased
from the Partnership. The new lease agreement provides for rent of $25,000 per
month and has an initial term of 10 years which expires in 2009. The Company
shall have the option to extend this lease for three consecutive additional
terms of ten (10) years each. The lease gives the Company the right to purchase
the brewing facilities and equipment at any time during the term of the lease at
the fair market price of the assets at the time the option is exercised. There
are no provisions for production rent in the new agreement. The Company has also
entered into a shared facilities and services agreement, under which it has
agreed to share certain office space and services with Gopher State.
The Company issued 547,614 shares of Preferred Stock to the Partnership in
satisfaction of $1,369,036 owed for deferred rents and accrued interest at
December 31, 1998. The preferred shares have a 9% cumulative dividend rate,
voting rights and are convertible into common stock at the rate of one share of
common stock per share of preferred stock. The holders of Preferred Stock are
entitled to the number of votes equal to the number of shares of Common Stock
into which the Preferred Stock could be converted. On March 31, 1999, the
Partnership converted an additional $150,327 of debt into 60,131 additional
shares of Preferred Stock. The dividends can be deferred and if they are not
paid, they accumulate without interest. As of March 31, 2000, the amount of
Preferred Stock dividends in arrears was $167,543.
During 1999, the Company and Gopher State paid insurance premiums of
approximately $654,556 to their carriers through The Hays Group, Inc., an
insurance broker of which Mr. Perrine, a director of the Company, is Vice
President. The insurance policies covered both the Company's facilities and
employees and those of Gopher State. The Company believes that all insurance
purchased through the Hays Group,
8
<PAGE>
Inc. was on terms as favorable as would be obtained from disinterested third
parties. The Company also believes that the commissions received by the Hays
Group, Inc. were in line with industry standards. In addition, in 1999
PAR, Inc., a private company in which Mr. Perrine is a 60% shareholder, received
a $52,000 mortgage banking fee in connection with financing it obtained for
Gopher State and the construction of the ethanol production facility.
In 1999, Elliott Contracting Corporation ("Elliott Contracting") provided
electrical contracting and maintenance services to both the Company and Gopher
State. Elliott Contracting was chosen as the electrical contractor for Gopher
State and the Company in a competitive bidding process which occurred before
construction of the ethanol facility commenced. After the bid of Elliott
Contracting was accepted, John T. Elliott was elected to the Company's Board of
Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership of Common
Stock and other equity securities of the Company with the Securities and
Exchange Commission. Executive officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, all insiders of the Company filed in a timely
manner all such reports.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be included in the proxy statement
for the annual shareholder meeting in 2001 must be received by the Company at
882 West Seventh Street, Saint Paul, Minnesota 55102, no later than
December 28, 2000. Proposals received by that date will be included in the 2001
Proxy Statement if the proposals are proper for consideration at an annual
meeting and are required for inclusion by, and conform to, the rules of the SEC.
For a proposal not included in the proxy statement to be properly brought
before an annual meeting by a shareholder, the shareholder must notify the
Company no later than March 14, 2001. If a shareholder fails to provide notice
by this date, the proposal will be considered untimely for purposes of
Rule 14c-4(c) of the SEC's proxy rules and, accordingly, the Company will be
entitled to exercise its discretionary voting authority with respect to the
proposal.
ANNUAL REPORT AND INDEPENDENT ACCOUNTANTS
An Annual Report of the Company setting forth the Company's activities and
containing financial statements of the Company for the fiscal year ended
December 31, 1999 accompanies this Notice of Annual Meeting and proxy
solicitation material.
The accounting firm of McGladrey & Pullen, LLP has served as independent
public accountants for the Company since the Company's inception in
September 1991. The Company expects that a representative from McGladrey &
Pullen, LLP will attend the Annual Meeting and be available to respond to
appropriate shareholder questions.
From time to time, the Company's Audit Committee, as part of its charter,
examines the Company's needs with respect to its independent public accountants,
reviews the Company's relationship with its current independent public
accountants and makes recommendations regarding the accountants to the full
Board of Directors. The Audit Committee has not completed this analysis or made
a recommendation to the Company for the hiring of independent public accountants
to audit the Company's books and records for the fiscal year ending
December 31, 2000.
9
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FORM 10-K
A copy of the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission is available without charge to shareholders
of the Company. Shareholders may obtain a copy of the Form 10-K upon written
request to the Company at 882 West Seventh Street, Saint Paul, Minnesota 55102.
Copies also may be obtained without charge through the Securities and Exchange
Commission's web site at http://www.sec.gov/edgarhp.htm.
OTHER BUSINESS
The management of the Company does not know of any other business to be
presented at the Annual Meeting of Shareholders. If any matter properly comes
before the meeting, however, it is intended that the persons named in the
enclosed form of proxy will vote said proxy in accordance with their best
judgment.
ALL PROXIES PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
SHAREHOLDERS. IF NO DIRECTION IS MADE, PROXIES WILL BE VOTED IN FAVOR OF THE
PROPOSALS.
10
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MBC HOLDING COMPANY
ANNUAL MEETING OF SHAREHOLDERS
May 31, 2000
MBC Holding Company PROXY
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby constitutes and appoints
Bruce E. Hendry and John J. Lee and each of them, with full power of
substitution, as proxies to vote all shares of Capital Stock of MBC Holding
Company held by the undersigned at the Annual Meeting of Shareholders of the
Company to be held on May 31, 2000, and at any adjournments thereof, as
designated below on the matters referred to and in their discretion upon such
other business as may properly come before the Annual Meeting.
SEE REVERSE FOR VOTING INSTRUCTIONS.
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- Please detach here -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. ELECTION OF DIRECTORS: 01 Bruce E. Hendry 05 Robert A. Awsumb
02 John J. Lee 06 John T. Elliott
03 Richard A. Perrine 07 Thomas L. Houts
04 James F. Freeman, III
/ / FOR ALL / / WITHHOLD
nominees listed AUTHORITY
(except as marked to the contrary to vote
for ALL nominees listed below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR --------------------------
ANY INDIVIDUAL NOMINEE, WRITE THE NUMBER(S) OF THE
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) --------------------------
2. The proposal to amend the Company's 1993 Stock Option Plan by
increasing the number of shares authorized under the Plan.
/ / For / / Against / / Abstain
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN. IF NO INSTRUCTIONS ARE
INDICATED, PROXIES WILL BE VOTED FOR THE ELECTION OF NOMINEES NAMED HEREIN
AND FOR THE OTHER PROPOSALS.
Address Change? Mark Box / /
Indicate changes below:
Please sign exactly as your name appears to the left. When shares are held by
joint tenants, both must sign. Fiduciaries should indicate title and
authority.
Date: , 2000
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Signature(s)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE
PROVIDED.
