237 Via Vera Cruz
San Marcos, California 92069
PROXY STATEMENT
MARCH 25, 2004
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Amistar Corporation, a California corporation (the
"Company"), for use at the Annual Meeting of Shareholders of the Company to be
held Wednesday, May 5, 2004 at 10:00 A.M., local time, at the Company
headquarters in San Marcos, California, and at any adjournments or adjournments
thereof.
At the Annual Meeting, the shareholders of the Company (the "Shareholders") will
be asked to elect six Directors. All proxies which are properly completed,
signed and returned to the Company prior to the Annual Meeting will be voted.
Any proxy given by a Shareholder may be revoked at any time before it is
exercised by filing with the Secretary of the Company an instrument revoking it,
by a duly executed proxy bearing a later date, or by the Shareholder attending
the Annual Meeting and expressing a desire to vote his or her shares in person.
It is anticipated that this Proxy Statement and the accompanying form of proxy
will be mailed to the Shareholders on or about April 5, 2004.
The Board of Directors has fixed the close of business on March 15, 2004 as the
record date for the determination of Shareholders entitled to vote at the Annual
Meeting and any adjournment thereof. At the close of business on the record date
there were outstanding 3,080,544 shares of common stock of the Company (the
"Common Stock"). The shares of Common Stock vote as a single class. Holders of
shares of Common Stock on the record date are entitled to one vote for each
share held (unless there is cumulative voting, as described below). The presence
at the Annual Meeting, either in person or by proxy, of the holders of a
majority of the shares of Common Stock issued, outstanding and entitled to vote
is necessary to constitute a quorum for the transaction of business. Abstentions
and broker non-votes are counted for purposes of determining the presence of a
quorum.
In the event that, prior to the election of Directors, a Shareholder has given
notice at the Annual Meeting of such Shareholder's intention to cumulate votes
(i.e. to cast for any one or more candidates a number of votes for each share
equal to the number of Directors to be elected) and the names of such candidate
or candidates have been placed in nomination, then in electing Directors all
Shareholders may cumulate their votes for candidates in nomination. Otherwise,
no Shareholder shall be entitled to cumulate votes. The Company has not been
advised that any Shareholder intends to give notice of intention to nominate a
Director or to cumulate votes for Directors. In the event the Directors are to
be elected by cumulative voting, the persons named in the accompanying form of
proxy will have the discretion to cumulate votes and to distribute such votes
among all nominees (or if authority to vote for any nominee or nominees has been
withheld, among the remaining nominees, if any) in whatever manner they deem
appropriate. Whether or not there is cumulative voting, the six candidates
receiving the highest number of affirmative votes will be elected. Votes against
a candidate and votes withheld have no legal effect.
1
If a choice is specified in the proxy as to the manner in which it is to be
voted, the persons acting under the proxy will vote the shares of Common Stock
represented thereby in accordance with such choice. If no choice is specified,
the shares of Common Stock will be voted "FOR" the Directors nominated. In
matters other than the election of Directors, under California law abstentions
and broker non-votes are not counted for purposes of determining whether a
proposal has been approved. For purposes of SEC Rule 16b-3, however, abstentions
are treated as votes against the proposal while broker non-votes are not
counted.
In the event that sufficient votes in favor of the proposal are not received by
the date of the Annual Meeting, the persons named as proxies may propose one or
more adjournments of the Annual Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the shares of Common Stock present in person or by proxy at the
Annual Meeting. The persons named in the proxies will vote in favor of such
adjournment or adjournments.
The cost of preparing, assembling, printing and mailing the Proxy Statement, the
Notice and the enclosed proxy form and the cost of soliciting proxies relating
to the Annual Meeting will be borne by the Company. The Company will request
banks, brokers, dealers and voting trustees or other nominees to solicit their
customers who are beneficial owners of shares listed of record in names of
nominees, and will reimburse them for the reasonable out-of-pocket expenses of
such solicitations. The original solicitation of proxies by mail may be
supplemented by telephone, telegram and personal solicitation by officers and
other regular employees of the Company, but no additional compensation will be
paid to such individuals on account of such activities.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
- --------
The Bylaws of the Company presently provide that the authorized number of
Directors shall be no less than five and no more than nine and that the exact
number of Directors shall be fixed from time to time by the Board of Directors.
At present, the Board has fixed the number of Directors at six.
At the Annual Meeting, six Directors will be elected to serve until the next
Annual Meeting and until their successors are elected and qualified. The Board
of Directors intends to nominate the six persons named below for election as
Directors. Each nominee is a member of the Company's Board of Directors, has
consented to being named in this proxy statement and has agreed to serve as a
director if elected. Unless otherwise instructed, the proxy holders intend to
vote the shares of Common Stock represented by the proxies to cause the election
of these nominees.
No arrangement or understanding exists between any nominee and any other person
or persons pursuant to which any nominee was or is to be selected as a director.
No nominee has any family relationship with any other nominee or with any of our
executive officers.
2
INFORMATION CONCERNING NOMINEES
The nominees are listed below, together with their ages, positions and offices
with the Company.
Name Age Title
------------------------- --------- ------------------------------------------
Stuart C. Baker 72 Chairman of the Board and President
Dr. Sanford B. Ehrlich 52 Director*
William W. Holl 73 Secretary, Treasurer and Director
Gordon S. Marshall 84 Director*, Compensation Committee Chair
Carl C. Roecks 70 Director
Howard C. White 63 Director*, Audit Committee Chair
(*) Member of the audit and compensation committees
MR. BAKER, a founder of the Company, has served the Company as a Director and
President since its inception in 1971 and as its Chairman of the Board since
1993.
DR. EHRLICH, appointed Director in 2000, has held the position of Associate
Professor of Management at the College of Business Administration at San Diego
State University, and as the Executive Director of the school's Entrepreneurial
Management Center since 1997. Dr. Ehrlich holds a Directorship at Deep Sky
Software, Inc. In addition, Dr. Ehrlich also provides management consulting
services.
MR. HOLL, a founder of the Company, has served the Company as Director,
Secretary and Treasurer since its inception in 1971 and as Chief Financial
Officer from 1978 through 2001. In 2001, Mr. Holl retired and serves the Company
on a part-time basis.
MR. MARSHALL a director of the Company since 1974, has served the Company as the
Chairman of the Board from 1974 to 1993. Mr. Marshall was the founder and former
Chairman of the Board of Marshall Industries, an electronics distribution
company that was acquired by Avnet Electronics Marketing in 1999.
MR. ROECKS, a director and a founder of the Company, has served the Company in
various engineering and management capacities since its inception in 1971. Since
1989, Mr. Roecks has been retired and serves the Company on a part-time basis.
MR. WHITE, appointed Director in 2000, was employed at Arthur Andersen from 1964
until 1991. Mr. White was formerly a partner in charge of the Metropolitan
Southern California Region Accounting and Audit Practice and worldwide managing
director of finance with Andersen Worldwide. Mr. White has held the position of
President of White & White LLC, a financial and business consulting services
company, since 1997. Mr. White serves as an independent director and is the
designated "financial expert" on the Company's audit committee.
3
Director Attendance At Board and Shareholder Meetings and Other Matters
- -----------------------------------------------------------------------
The Board of Directors held four meetings during the fiscal year ended December
31, 2003. During the year, all directors attended 75% or more of the total
number of Board of Directors' meetings and the total number of meetings held by
all committees of the Board of Directors on which each director served.
At the annual meeting of shareholders held May 7, 2003, two Directors attended.
The Company's policy is to encourage Directors to attend.
The Company will be in compliance with the independence standards for the Board
of Directors, as set forth in the SEC and NASDAQ rules by the deadline of July
31, 2005 for small business issuers. The Company plans to meet the requirements
of Regulation S-B to file as a small business issuer and will file its annual
and quarterly reports for the 2004 fiscal year on Form 10-KSB and Form 10-QSB.
Audit Committee
- ---------------
In fiscal 2003, the Audit Committee consisted of Howard C. White, Sanford B.
Ehrlich and Gordon S. Marshall. The Audit Committee met five times in fiscal
2003. The Audit Committee oversees the Company's auditing procedures, receives
and accepts the reports of our independent certified accountants, oversees the
Company's internal systems of accounting and management controls and makes
recommendations to the Board of Directors concerning the appointment of its
auditors. The Audit Committee adopted a written charter in 2000 and it was
included as an appendix to the Company's Proxy Statement for the 2001 Annual
Stockholders Meeting and is once again included in Apendix A of this report as
required . The Board of Directors has determined that Mr. White is an "audit
committee financial expert" as defined in Item 401(h) of Regulation S-K.
Compensation Committee
- ----------------------
In fiscal 2003, the Compensation committee consisted of Gordon S. Marshall,
Sanford B. Ehrlich and Howard C. White. The Compensation Committee met one time
in fiscal 2003. The Compensation committee (i) makes recommendations to the
board of directors regarding executive compensation policies, (ii) evaluates the
performance of the chief executive officer and other senior officers and (iii)
makes recommendations concerning salary, bonus and stock options to be awarded
to these officers. No member of the compensation committee has a relationship
that would constitute an interlocking relationship with the executive officers
or directors of another entity.
Board Nomination
- ----------------
The Board does not have a formal policy for selection of nominees. The Audit
Committee members make recommendations based on the best interests of the
Company. The Board has not utilized any third parties in the selection of
nominees. No candidates have been nomimated during 2003 by a stockholder holding
5% or more the Company's stock.
Recommendation
- --------------
The Company's Board of Directors believes that the election of each of the
nominees is in the Company's best interests and the best interests of the
Company's shareholders and unanimously recommends a vote "FOR" the election of
each of the nominees Proxies will be voted for the slate of nominees, unless
specifically indicated otherwise.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
Common Stock owned on March 19, 2004 by each person who is known by the Company
to own beneficially more than 5% of the Company's Common Stock, by each of the
Company's directors, executive officers, and by all directors and executive
officers as a group.
Directors, Officers Shares Directly and
and 5% Shareholders Beneficially Owned (1) Percent
------------------- ---------------------- -------
Gordon S. Marshall (A) 649,900 20.7%
237 Via Vera Cruz
San Marcos, CA 92069
Stuart C. Baker (A) 409,800 (2) 13.0%
237 Via Vera Cruz
San Marcos, CA 92069
Carl C. Roecks (A) 202,700 (3) 6.4%
237 Via Vera Cruz
San Marcos, CA 92069
William W. Holl (A) 150,000 (4) 4.8%
237 Via Vera Cruz
San Marcos, CA 92069
Daniel C. Finn (A) 33,750 1.1%
237 Via Vera Cruz
San Marcos, CA 92069
Harry A. Munn (A) 16,250 *
237 Via Vera Cruz
San Marcos, CA 92069
Gregory D. Leiser (A) 15,050 *
237 Via Vera Cruz
San Marcos, CA 92069
Tod N. Kilgore (A) 11,250 *
237 Via Vera Cruz
San Marcos, CA 92069
Howard C. White (A) 3,000 *
237 Via Vera Cruz
San Marcos, CA 92069
Dr. Sanford B. Ehrlich (A) 1,000 *
237 Via Vera Cruz
San Marcos, CA 92069
(A) All directors and officers as a group 1,492,700 47.5%
*-Less than 1% of the outstanding common stock.
Mr. Finn, Mr. Kilgore, Mr. Leiser and Mr. Munn had incentive stock options for
23,750, 11,250, 13,750 and 13,750 shares of the Company's stock, exercisable as
of March 19, 2004, respectively.
5
The numbers and percentages shown include the shares of Common Stock actually
and beneficially owned as of March 19, 2004 and the shares of Common Stock that
the person or group had the right to acquire within 60 days of such date. In
calculating the percentage of ownership, all shares of Common Stock that the
identified person or group had the right to acquire within 60 days of March 19,
2004, upon the exercise of options are deemed to be outstanding for the purpose
of computing the percentage of the shares of Common Stock owned by such person
or group, but are not deemed to be outstanding for the purpose of computing the
percentage of the shares of Common Stock owned by any other person.
1) Except as indicated in other notes to this table, each shareholder
listed has sole voting and dispositive power with respect to the shares
beneficially owned, subject to applicable community property laws.
2) Represents shares held by the Baker Family Trust dated January 16, 1985
for which Mr. Baker and his wife are co-trustees.
3) Represents shares held by the Roecks Family Trust dated June 7, 1984
for which Mr. Roecks and his wife are co-trustees.
4) Represents shares held by the Holl Trust dated September 24, 1998 for
which Mr. Holl and his wife are co-trustees.
6
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning cash compensation paid or
accrued for services rendered during the year ended December 31, 2003 to each of
the directors and executive officers of the Company.
Remuneration of Directors
- -------------------------
Each non-employee director of the Company receives compensation of $2,500 per
quarter and reimbursement of expenses incurred in serving as a director.
I. SUMMARY COMPENSATION TABLE
THE PURPOSE OF THIS TABLE IS TO SET FORTH IN SPECIFIC COLUMNAR FORM THE TOTAL
ANNUAL COMPENSATION OF THE CEO/PRESIDENT AND THE OTHER FOUR MOST HIGHLY
COMPENSATED EXECUTIVE OFFICERS WHOSE SALARY AND BONUSES EXCEEDED $100,000 FOR
FISCAL 2003. THE COMPANY HAS NOT GRANTED RESTRICTED STOCK OR STOCK APPRECIATION
RIGHTS TO ANY OF THE PERSONS LISTED BELOW DURING THE PAST THREE FISCAL YEARS.
- -------------------------------------------------------------------------------------------------------------------
Annual Long-Term
Compensation Compensation
- -------------------------------------------------------------------------------------------------------------------
Underlying
Other Annual Options/ SAR's
Name and Principal Position Year Salary ($) Bonus ($)(1) Compensation (2) Securities #
- -------------------------------------------------------------------------------------------------------------------
Stuart C. Baker 2003 143,320 0 7,200 0
President 2002 146,423 0 7,200 0
2001 147,290 0 7,200 0
Daniel C. Finn 2003 128,988 0 11,070 15,000
VP & GM AIA Division 2002 131,781 0 11,153 0
2001 129,190 0 11,080 0
Tod N. Kilgore 2003 128,988 0 9,270 5,000
VP Marketing / Sales-AMS division 2002 131,780 0 9,353 0
2001 129,185 0 9,280 0
Harry A. Munn 2003 129,943 0 11,003 15,000
VP & GM AMS Division 2002 132,757 0 10,945 0
2001 131,900 0 11,160 0
Gregory D. Leiser 2003 105,101 0 3,153 15,000
VP Finance/CFO 2002 107,377 0 3,221 0
2001 105,260 0 3,040 0
- -------------------------------------------------------------------------------------------------------------------
(1) Bonuses are shown in the year paid and are based on the prior year's
performance.
(2) Includes a car allowance for each named individual (except Gregory Leiser),
plus the Company's matching contributions to the Company's 401-K Plan.
INFORMATION ON EXECUTIVE OFFICERS NOT LISTED IN INFORMATION ON DIRECTORS
- ------------------------------------------------------------------------
Mr. Finn, aged 47, has served the Company since 1979, as Vice-President
Operations from 1999 to 2001 and as Vice-President and General Manager - AIA
Division since 2002.
Mr. Kilgore, aged 46, has served the Company as Vice-President Sales and
Marketing-AMS Division since 1999. Prior to joining the Company, Mr. Kilgore
held the position of Branch Manager with Marshall Industries since 1992.
Mr. Munn, aged 53, has served the Company since 1985, as Vice-President
Marketing and Sales from 1997 to 2001 and as Vice-President and General Manager
- - AMS Division since 2002.
Mr. Leiser, aged 47, has served the Company since 1995, as Vice-President
Finance since 1999 and as Chief Financial Officer since 2001.
7
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Report of the Audit Committee
- -----------------------------
The following is the report of the Audit Committee with respect to the Company's
audited financial statements for the year ended December 31, 2003.
The Audit Committee has reviewed and discussed the Company's audited financial
statements with management. The Audit Committee has discussed with BDO Seidman,
LLP, the Company's independent accountants, the matters required to be discussed
by Statement of Auditing Standards No. 61, COMMUNICATION WITH AUDIT COMMITTEES
which includes, among other items, matters related to the conduct of the audit
of the Company's financial statements. The Audit Committee has also received
written disclosures and the letter from BDO Seidman, LLP required by
Independence Standards Board Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEE, which relates to the accountant's independence from the Company, and
has discussed with BDO Seidman, LLP their independence from the Company. Based
upon the Committee's review and discussions concerning the Company's audited
financial statements, the Committee recommends that the audited financial
statements for the year ended December 31, 2003, be included in the Company's
annual report.
Audit Committee
Howard C. White, Chairman, "Audit Committee
financial expert"
Sanford B. Ehrlich
Gordon S. Marshall
Report of the Compensation Committee
- ------------------------------------
The Committee, which determines and administers the compensation of the
Company's executive officers, endeavors to ensure that the compensation program
for executive officers is effective in attracting and retaining the key
executives responsible for the success of the corporation.
The Committee takes into account various indicators of corporate and individual
performance in determining the level of the CEO's and executive's compensation.
Corporate indicators considered by the Committee include net income, earnings
per share and return on equity. The Committee also must establish base salaries
of the President and other executive officers at levels considered appropriate
in light of the duties and scope of responsibilities of each officer's position.
The Committee may also grant stock options to executive officers and key
employees. The Committee did not recommend a change in the President/CEO's
compensation during 2003.
Compensation Committee
Gordon S. Marshall, Chairman
Sanford B. Ehrlich
Howard C. White
8
INDEPENDENT AUDITORS
- --------------------
Auditor Attendance At Annual Meeting
- ------------------------------------
Representatives of BDO Seidman LLP are expected to be present at the meeting and
will be given an opportunity to make a statement and respond to questions
regarding BDO Seidman's audit of the Company's financial statements and records
for the fiscal year ended December 31, 2003.
Audit Fees
- ----------
The aggregate fees incurred to BDO Seidman, LLP (2003) and KPMG LLP (2002) for
professional services rendered in connection with the audit of the Company's
financial statements for the years ended December 31, 2003 and December 31, 2002
and reviews of the Company's condensed financial statements included in its
Quarterly Reports on Form 10-Q during fiscal year 2003 and fiscal 2002, were
$61,250 and $89,300, respectively.
Audit Related Fees
- ------------------
There were no fees incurred to BDO Seidman, LLP or KPMG LLP for audit related
services during fiscal 2003 and fiscal 2002.
Tax Fees
- --------
The aggregate fees incurred to KPMG LLP for tax compliance services during
fiscal 2002 were $33,049.
All Other Fees
- --------------
There were no other fees paid to BDO Seidman, LLP or KPMG LLP during fiscal 2003
and fiscal 2002.
The Audit Committee has determined that the rendering of non-audit services by
BDO Seidman ,LLP or KPMG LLP is compatible with maintaining the auditor's
independence.
Audit Committee Approval Process
- --------------------------------
All audit and non-audit services provided to the Company are approved by the
Audit Committee in advance of the services being rendered. The Audit Committee
evaluates whether the services are in compliance with auditor independence
requirements.
100% of the services described above were approved by the Audit Committee.
9
II. OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
- ------------------------------------------------------------------------------------------------------------------------------------
Name Number of % of Total Exercise Expiration (5%)($) 10%($) Grant Date
Securities Option/ or Base Date Present
Underlying SAR's Price ($/Sh) Value $
Options/ Granted to
SAR's Employees
Granted (#) in Fiscal Year
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart C. Baker President - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel C. Finn VP & GM
AIA Division 15,000 17% 0.81 2/27/2008 $ 3,357 $ 7,418 $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Tod N. Kilgore VP
Marketing & Sales-AMS 5,000 6% 0.81 2/27/2008 $ 1,119 $ 2,473 $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Gregory D. Leiser VP
Finance/CFO 15,000 17% 0.81 2/27/2008 $ 3,357 $ 7,418 $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Harry A. Munn VP & GM
AMS Division 15,000 17% 0.81 2/27/2008 $ 3,357 $ 7,418 $ -
- ------------------------------------------------------------------------------------------------------------------------------------
III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
THIS TABLE SETS FORTH INFORMATION ON THOSE INDIVIDUALS NAMED IN TABLE I AS TO
THE OPTIONS EXERCISED DURING THE YEAR AND THE STATUS OF OUTSTANDING OPTIONS AT
YEAR-END.
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
- -------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Acquired Value At FY-End at FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------------
Stuart C. Baker 0 0 0 $0
President
- -------------------------------------------------------------------------------------------------------------------------------
Daniel C. Finn 0 0 30,000/15,000 $20,950/$21,450
VP & GM AIA Division
- -------------------------------------------------------------------------------------------------------------------------------
Tod N. Kilgore 0 0 30,000/ 5,000 $12,200/ $7,150
VP Marketing & Sales-AMS
Division
- -------------------------------------------------------------------------------------------------------------------------------
Harry A. Munn 0 0 20,000/15,000 $11,050/$21,450
VP & GM AMS Division
- -------------------------------------------------------------------------------------------------------------------------------
Gregory D. Leiser 0 0 20,000/15,000 $11,050/$21,450
VP Finance/CFO
- -------------------------------------------------------------------------------------------------------------------------------
10
IV. CORPORATE COMPARISON
THE PURPOSE OF THIS TABLE IS TO COMPARE THE PERFORMANCE OF THE COMPANY'S STOCK
AGAINST THE NASDAQ STOCK MARKET TOTAL RETURN INDEX (TRI). TOTAL RETURN INCLUDES
STOCK APPRECIATION/DEPRECIATION PLUS DIVIDENDS. THE CHART ASSUMES $100 WAS
INVESTED 5 YEARS AGO. THE TRI IS THE AVERAGE TOTAL RETURN OF ALL U.S. COMPANIES
TRADED OVER THE NASDAQ STOCK MARKET.
[PERFORMANCE GRAPH HERE]
NASDAQ
NASDAQ U.S. NON-FINANCIAL
AMISTAR ALL SECTORS SECTORS
------------- ------------- -------------
1998 $ 100.00 $ 100.00 $ 100.00
1999 $ 84.50 $ 185.46 $ 196.12
2000 $ 131.50 $ 111.65 $ 114.31
2001 $ 62.50 $ 88.58 $ 87.35
2002 $ 36.00 $ 61.23 $ 57.14
2003 $ 112.00 $ 91.75 $ 87.74
11
SAVINGS AND RETIREMENT PLAN
- ---------------------------
The Company maintains the Amistar Corporation Saving and Retirement Plan (the
"Retirement Plan"), which is a tax-qualified plan under the Internal Revenue
Code (the "Code"). All employees (including officers of the Company) are
eligible to participate in the Retirement Plan following the completion of
ninety days of service. The Retirement Plan has been amended, effective February
14, 2002, so that participants may make contributions up to the limits allowable
by the Internal Revenue Code. The maximum amount of contributions made by
certain highly compensated employees may be limited to a lower percentage of
their compensation, depending upon the amount of contributions by other
employees under the Section 401(k) provisions of the Retirement Plan. The
Company is obligated to make a matching contribution to the Retirement Plan
equal to 50% of the first 6% of compensation contributed by each participant.
The Company will be entitled to a deduction for federal income tax purposes
equal to the amount of the Company's matching contributions. Participants are
always fully vested in all of their contributions to the Retirement Plan (and in
the earnings on such contributions), and participants attain a vested right to
the Company's matching contributions made on their behalf to the Retirement Plan
(and the earnings thereon) at the rate of 20% for each full year of service
after one year until such participants are fully vested after six full years of
service.
STOCK OPTION PLAN
- -----------------
In 1994, the Company's Board of Directors and common shareholders approved the
1994 Employee Stock Option Plan. The Plan allows for grants of options to
purchase up to 310,000 shares of authorized but un-issued common stock. As of
December 31, 2003, options to purchase 70,500 shares were available to be
granted in the plan. Stock options are granted with an exercise price equal to
the stock's fair market value, generally vest over four years from the date of
grant, and expire five years after the date of grant.
The following table reflects the exercise prices of options outstanding, of
which 145,250 were exercisable as of December 31, 2003:
EXERCISE
SHARES PRICE
----------------------------
6,000 $2.69
8,000 $2.31
67,000 $2.13
65,750 $1.25
3,000 $0.98
83,000 $0.81
--------------
232,750
==============
12
EQUITY COMPENSATION PLAN INFORMATION
- ------------------------------------
The following table provides information as of December 31, 2003 with respect to
shares of Common Stock that may be issued under the Company's existing equity
compensation plan. The existing equity compensation plan has been approved by
the Company's shareholders.
- -------------------------------- ------------------------------ ------------------------------ ------------------------------
(a) (b) (c)
- -------------------------------- ------------------------------ ------------------------------ ------------------------------
Number of securities
remaining available for
Number of securities to be future issuance under equity
issued upon exercise of Weighted-average exercise compensation plans
outstanding options, price of outstanding (excluding securities
Plan Category warrants and rights options, warrants and rights reflected in column (a))
- -------------------------------- ------------------------------ ------------------------------ ------------------------------
Equity compensation plans
approved by security holders(1) 232,750 $1.42 70,500
- -------------------------------- ------------------------------ ------------------------------ ------------------------------
(1) Consists of the 1994 Employee Stock Option Plan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
During fiscal 2003, the Compensation Committee consisted of Gordon S. Marshall,
Sanford B. Ehrlich and Howard C. White and those directors currently serve as
the members of the Compensation Committee. None of the members of the
Compensation Committee serves as an officer or employee of the Company during
the past fiscal year and there were no compensation committee interlocks with
other companies within the meaning of the Securities and Exchange Commission's
rules during the past fiscal year.
BONUS PLAN
- ----------
On August 7, 1997, the Compensation Committee of the Board of Directors adopted
a bonus plan for executives of the Company effective with years beginning
January 1, 1997. The plan provides that bonuses will be paid to certain
executives of the Company based on a formula of after tax profits which exceed
an 8% return on equity, weighted 70% on the current year and 30% on the prior
year. The bonus is calculated as a percentage of salary which equals 3, 4, or 5
times the percentage of after tax profits which exceeds an 8% return on equity,
weighted 70% on the current year's performance and 30% on the prior year's
performance. All executive officers participate in the plan. No bonuses were
accrued or paid for each of the years ended December 31, 2003 and 2002.
13
CHANGE IN INDEPENDENT ACCOUNTANTS
- ---------------------------------
On April 1, 2003, the Company's audit committee, as affirmed by the board of
directors, dismissed KPMG, LLP ("KPMG") as the Company's independent auditors
for the year ending December 31, 2003, and appointed BDO Seidman, LLP as the
Company's independent auditors.
The decision to change auditors was the result of the Company's ongoing efforts
to reduce expenses.
KPMG's reports on the Company's financial statements for the fiscal years ended
December 31, 2002 and 2001 did not contain an adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty, audit
scope or accounting principles.
During the fiscal years ended December 31, 2002 and 2001, and through the
subsequent period ended March 26, 2003, there were no disagreements with KPMG on
any matter of accounting principle or practice, financial statement disclosure,
or auditing scope or procedure which, if not resolved to KPMG's satisfaction,
would have caused them to make reference to the subject matter of the
disagreement in connection with the audit reports on the Company's financial
statements for such years.
During the fiscal years ended December 31, 2002 and 2001, and through the
subsequent period ended March 31, 2003, there were no reportable events as
defined in Item 304(a)(1)(v) of Regulation S-K.
The Company has provided KPMG with a copy of the foregoing disclosure and KPMG
has indicated that it agreed with the statements in the disclosure.
Neither the Company nor anyone engaged on its behalf has consulted with BDO
Seidman, LLP during the Company's two most recently completed fiscal years or
during its current fiscal year with regard to either: (i) the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's financial
statements; or (ii) any other matters or reportable events as set forth in Items
304(a)(2)(i) and (ii) or Regulation S-K.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- -------------------------------------------------------
Section 16(a) of the Exchange Act requires "insiders," including the Company's
executive officers, directors and beneficial owners of more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership of
our Common Stock with the Securities and Exchange Commission and NASDAQ, and to
furnish the Company with copies of all Section 16(a) forms they file. To the
best of our knowledge, based solely on our review of the copies of such forms
received by the Company, or written representations from reporting persons that
no Form 4s or Form 5s were required for those persons, the Company believes that
the insiders have complied with all applicable Section 16(a) filing requirements
during fiscal 2003.
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SHAREHOLDER COMMUNICATIONS WITH THE BOARD
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Any communications from shareholders to the Board must be addressed in writing
and mailed to the attention of Chairman, Amistar Corporation 237 Via Vera Cruz,
San Marcos, CA 92069. Written communications from shareholders will be provided
to the Board as according to the judgement of the Chairman.
CORPORATE GOVERNANCE
- --------------------
The Company has adopted a code of ethics for senior financial managers, which
can be found in a section titled "corporate governance" located in the "investor
relations" section of the Company's website at www.amistar.com.
SHAREHOLDER PROPOSALS
- ---------------------
Shareholder proposals complying with the applicable rules under the Securities
and Exchange Act of 1934 intended to be presented at the Annual Meeting of
Shareholders of the Company to be held on the first Wednesday in May 2005 must
be received by the Company by February 2, 2005 to be eligible for inclusion in
the Company's proxy materials for such meeting. Such proposals should be
directed to the attention of the Secretary, Amistar Corporation, 237 Via Vera
Cruz, San Marcos, CA 92069. If a shareholder notifies the Company in writing
prior to February 2, 2005, that he or she intends to present a proposal at the
Company's 2005 Annual Meeting of Shareholders, the proxy holders designated by
the Board of Directors may exercise their discretionary voting authority with
regard to the shareholder's proposal and the proxy holder's intentions with
respect to the proposal. If the shareholder does not notify the Company by such
date, the proxy holders may exercise their discretionary voting authority with
respect to the proposal without inclusion of such discussion in the proxy
statement.
ANNUAL REPORT AND FORM 10-K
- ---------------------------
A copy of the Company's 2003 annual report is being mailed to each shareholder
of record together with this proxy statement. The 2003 annual report includes
the Company's audited financial statements for the fiscal year ended December
31, 2003. The Company's annual report on Form 10-K includes these financial
statements as well as more detailed information about the Company and its
operations.
COPIES OF THE ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS, CAN BE OBTAINED
WITHOUT CHARGE BY CONTACTING US AT: 760 471-1700. THE ANNUAL REPORT ON FORM 10-K
IS ALSO AVAILABLE THRU A LINK TO EDGAR ONLINE AT WWW.AMISTAR.COM.
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OTHER BUSINESS
- --------------
The Company is not aware of any other business to be presented at the Annual
Meeting. All shares of Common Stock represented by proxies will be voted in
favor of the proposals of the Company unless otherwise indicated on the form of
proxy. If any other matters come before the meeting, proxy holders will vote
thereon according to their best judgment.
By Order of the Board of Directors
By /s/ William W. Holl
-----------------------
William W. Holl
Secretary
San Marcos, California
March 26, 2004
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APPENDIX 1
AUDIT COMMITTEE CHARTER ADOPTED IN 2000
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1. MEMBERS. The Board of Directors shall appoint an Audit Committee of at least
three members, consisting entirely of "independent" directors of the Board, and
shall designate one member as chairperson. For purposes hereof, "independent"
shall mean a director who meets the National Association of Securities Dealers,
Inc. ("NASD") definition of "independence."
Each member of Amistar Corporation's audit committee must be financially
literate and one member of the audit committee shall have accounting or related
financial management expertise, both as provided in the NASD rules.
2. PURPOSES, DUTIES, AND RESPONSIBILITIES. The Audit Committee shall represent
the Board of Directors in discharging its responsibility relating to the
accounting, reporting, and financial practices of Amistar Corporation and its
subsidiaries, and shall have general responsibility for surveillance of internal
controls and accounting and audit activities of Amistar Corporation and its
subsidiaries. Specifically, the Audit Committee shall:
2.1 Recommend to the Board of Directors, and evaluate, the firm of
independent certified public accounts to be appointed as auditors of
Amistar Corporation, which firm shall be accountable ultimately to the
Board of Directors through the Audit Committee.
2.2 Review with the independent auditors their audit procedures,
including the scope, fees and timing of the audit, and the results of
the annual audit examination and any accompanying management letters,
and any reports of the independent auditors with respect to interim
periods.
2.3 Review the written statement from the outside auditor of Amistar
Corporation concerning any relationships between the auditor and
Amistar Corporation or any other relationships that may affect
adversely the independence of the auditor and assess the independence
of the outside auditor as required under Independent Standard Boards
Standard No. 1.
2.4 Review and discuss with management and the independent auditors the
financial statements of Amistar Corporation, including an analysis of
the auditors' judgment as to the quality of Amistar Corporation's
accounting principles.
2.5 Review the adequacy of Amistar Corporation's internal controls.
2.6 Review significant changes in the accounting policies of Amistar
Corporation and accounting and financial reporting proposals that may
have a significant impact on Amistar Corporation's financial reports.
2.7 Review material pending legal proceedings involving Amistar
Corporation and other contingent liabilities.
2.8 Review the adequacy of the Audit Committee Charter on an annual
basis.
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AUDIT COMMITTEE CHARTER, CONTINUED
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3. MEETINGS. The Audit committee shall meet as often as may be deemed necessary
or appropriate in its judgment, either in person or telephonically. The Audit
Committee shall meet in executive session with the independent auditors at least
annually. The Audit Committee may create subcommittees who shall report to the
Audit Committee. The Audit Committee shall report to the full Board of Directors
with respect to its meetings. The majority of the members of the Audit Committee
shall constitute a quorum.
18