UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant (X) Filed by a party other than the registrant ( )
Check the appropriate box:
(X) Preliminary Proxy Statement.
( ) Confidential, for use of the Commission only
(as permitted by Rule 14a-6(e)(2)).
( ) Definitive Proxy Statement.
( ) Definitive Additional Materials.
( ) Soliciting Material Pursuant to Rule 14a-12.
RSI Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(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 per Exchange Act Rules 14a-6(i)(1) and 0-11.
( ) 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.
RSI HOLDINGS, INC.
28 EAST COURT STREET
POST OFFICE BOX 6847
GREENVILLE, SOUTH CAROLINA 29606
TELEPHONE (864) 271-7171
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 2002
TO OUR SHAREHOLDERS:
A Special Meeting of Shareholders of RSI Holdings, Inc. (the "Company"),
will be held at 2:00 P.M., local time, on June 10, 2002, at RSI HOLDINGS, INC.,
28 EAST COURT STREET, GREENVILLE, SOUTH CAROLINA, for the purpose of considering
and acting upon the following:
1. To consider and act upon a proposed amendment to the Company's Articles of
Incorporation, as amended to date, to effect a reverse split of the
Company's outstanding shares of Common Stock (the "Reverse Split") with a
split ratio of three-to-one (the "Reverse Split");
2. To consider and approve the adoption of the RSI Holdings, Inc. 2002 Stock
Option Plan (the "Option Plan"); and
3. The transaction of such other matters as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 3, 2002
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
/s/ Joe F. Ogburn
Joe F. Ogburn, Secretary
Greenville, South Carolina
May 14, 2002
A FORM OF PROXY IS ENCLOSED. TO ENSURE THAT YOUR SHARES WILL BE VOTED AT THE
SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID, ADDRESSED ENVELOPE. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN THE EVENT YOU ATTEND THE MEETING.
RSI HOLDINGS, INC.
28 EAST COURT STREET
POST OFFICE BOX 6847
GREENVILLE, SOUTH CAROLINA 29606
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
JUNE 10, 2002
This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors (the "Board") of RSI
Holdings, Inc., a North Carolina corporation (the "Company"), to be voted at the
special meeting of shareholders of the Company (the "Special Meeting") to be
held at 2:00 P.M., local time, on June 10, 2002, at RSI HOLDINGS, INC., 28 EAST
COURT STREET, GREENVILLE, SOUTH CAROLINA. The approximate date of mailing this
Proxy Statement and the accompanying proxy is May 14, 2002.
Only shareholders of record at the close of business on May 3, 2002 are
entitled to notice of and to vote at the Special Meeting. As of such date, there
were outstanding approximately 23,464,820 shares of common stock, $.01 par value
per share ("Common Stock"), which constitute the only voting securities of the
Company. Each share is entitled to one vote.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by: (i)
delivery to the Secretary of the Company, at or before the Special Meeting, of a
written notice of revocation bearing a later date than the proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at or before the Special Meeting; or (iii)
attending the Special Meeting and giving notice of revocation to the Secretary
of the Company or in open meeting prior to the proxy being vote (although
attendance at the Special Meeting will not in and of itself constitute a
revocation of a proxy). Any written notice revoking a proxy should be sent to:
RSI Holdings, Inc., 28 East Court Street, Post Office Box 6847, Greenville,
South Carolina 29606, Attention: Investor Relations.
All shares represented by valid proxies received pursuant to the
solicitation and prior to voting at the Special Meeting and not revoked before
they are exercised will be voted, and, if a choice is specified with respect to
any matter to be acted upon, the shares will be voted in accordance with such
specification. If no contrary instructions are indicated, all shares represented
by a proxy will be voted FOR the Reverse Split, FOR the adoption of the Option
Plan, and in the discretion of the proxy holders as to all other matters that
may properly come before the Special Meeting or any adjournment thereof.
The presence, either in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock of the Company as of May 3, 2002, is
necessary to constitute a quorum at the Special Meeting. An automated system
administered by the Company's transfer agent tabulates votes cast in connection
with the Special Meeting. The proposal to approve the Reverse Split and the
proposal to adopt the Option Plan will be approved if a greater number of votes
is cast for the proposal than is cast against the proposal. Abstentions and
broker non-votes, which are separately tabulated, are included in the
determination of the number of shares present and voting for purposes of
determining the presence of a quorum. Abstentions and broker nonvotes have no
effect upon the votes with respect to the matters to be voted upon at the
meeting.
REVERSE SPLIT
(Item No. 1 on the Proxy)
GENERAL
The Company's Board of Directors has approved and adopted resolutions
proposing, declaring advisable and in the Company's best interests, and
recommending to the stockholders of the Company for approval an amendment to the
Company's Articles of Amendment, as previously amended to date (the "Articles of
1
Incorporation") to effect a reverse stock split of the Company's issued and
outstanding Common Stock. The text of the proposed amendment to the Articles of
Incorporation to effect the Reverse Split is attached hereto as APPENDIX A (the
"Amendment").
If the Amendment is adopted, there will be no change in the number of
the Company's authorized shares of Common Stock and no change in the par value
of the Common Stock.
Upon adoption of the Amendment by the stockholders, the Company will
effect the Reverse Split by filing the Amendment with the North Carolina
Secretary of State (the "Effective Time"). Pursuant to the Reverse Split, each
of the Company's presently outstanding shares of Common Stock (the "Old Shares")
would be exchanged for new shares of Common Stock (the "New Shares") in an
exchange ratio of three Old Shares to one New Share.
The Reverse Split will be effected simultaneously for all holders of
the Common Stock. Except for changes due to the Company's purchase of fractional
shares, the Reverse Split will affect all of the Company's stockholders
uniformly and will not change the proportionate equity interests of the
Company's stockholders, nor will the respective voting or other rights of
stockholders be altered. The Common Stock issued pursuant to the Reverse Split
will remain fully paid and non-assessable. The Company will continue to be
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended.
PURPOSES OF THE REVERSE SPLIT
The principal purpose of the Reverse Split proposal is generally to
make the Company's per-share financial information more meaningful and
understandable by reducing the number of outstanding shares. For example, if the
Company reported earnings of $0.01 per share with the Old Shares, the same
earnings would represent $0.03 per share with the New Shares. The Company
believes that larger per-share amounts that will follow as a consequence of the
Reverse Split will better facilitate meaningful comparisons of period-to-period
results.
CERTAIN EFFECTS AND RISKS OF THE REVERSE SPLIT
The following table illustrates the principal effects of the Reverse
Split on the Common Stock:
AFTER THE REVERSE SPLIT
BEFORE THE REVERSE SPLIT 3:1 RATIO
NUMBER OF SHARES
- -------------------------------------------------------------- -------------------------- ------------------------
Authorized 25,000,000 25,000,000
Outstanding (1) 23,464,820 7,821,606
Available for future issuance (2) 1,535,180 17,178,394
Shares reserved and remaining available for grants under the 4,500,000 1,500,000
2002 Stock Option Plan (2)
Shares reserved and remaining available for awards under the 555,000 185,000
Company's 1991 option plan (2)
Shares reserved under convertible instruments and otherwise 110,000 36,666
- ------------------------
(1) Assumes the Effective Time occurred on the date of this proxy
statement, and subject to adjustment resulting from cash payments by
the Company in lieu of fractional shares.
(2) After the Effective Time, each outstanding option or award will
entitle the holder to acquire a number of shares of Common Stock equal
to the number of shares of Common Stock which the holder was entitled
to acquire immediately prior to the Effective Time divided by the
number of Old Shares in the three-to-one reverse split ratio at an
exercise price equal to the price in effect immediately prior to the
Effective Time multiplied by the number of Old Shares in the
three-to-one reverse split ratio. (For example, if an option holder
had an option to acquire 90 shares with an exercise price of $1.00 per
share before the reverse split he would have an option to acquire 30
shares at $3.00 per share after the reverse split.) The number of
2
shares reserved for issuance and remaining available for grants and
awards under the Company's 2002 Stock Option Plan, its 1991 stock
option plan, and otherwise (including under certain convertible
instruments) will automatically be reduced, after the Effective Time,
by a factor equal to the number of Old Shares in the three-to-one
reverse split ratio.
Stockholders should recognize that if the Reverse Split is effectuated,
they will own a fewer number of shares than they presently own (a number equal
to the number of shares owned immediately prior to the Effective Time divided by
three, subject to adjustment for fractional shares, as described below).
While the Company expects that the reduction in the outstanding shares
of Common Stock as a result of the Reverse Split will result in an increase in
the market price of the Common Stock, there can be no assurance that the Reverse
Split will increase the market price of the Common Stock by a multiple equal to
the three (the reverse split ratio) or result in any permanent increase in the
market price (which is dependent upon many factors, including, but not limited
to, the Company's business and financial performance and prospects). Should the
market price of the Common Stock decline after the Reverse Split, the percentage
decline may be greater than would otherwise occur had the Reverse Split not been
effectuated.
The possibility exists that liquidity in the market price of the Common
Stock could be adversely affected by the reduced number of shares that would be
outstanding after the Reverse Split. In addition, the Reverse Split will
increase the number of stockholders of the Company who own odd-lots (less than
100 shares). Stockholders who hold odd-lots generally experience an increase in
the cost of selling their shares, as well as greater difficulty in effecting
such sales.
After the Effective Time, the number of authorized but unissued shares
of Common Stock would increase from 1,535,180 to 17,178,394, subject to the
assumptions and exclusions described in the table above. These shares may be
issued by the Board of Directors in its discretion. If the Company issues
additional shares subsequent to the Reverse Split, the dilution to the ownership
interest of the Company's existing stockholders may be greater than would
otherwise occur had the Reverse Split not been effectuated because the Board of
Directors would have more authorized shares available for issuance.
As described below, stockholders who would otherwise hold fractional
shares after the Reverse Split will be entitled to cash payments in lieu of such
fractional shares. Such cash payments will reduce the number of holders of New
Shares as compared to the number of holders of Old Shares to the extent that
there are stockholders presently holding fewer than the number of Old Shares in
the three-to-one reverse split ratio and each such person will cease to be a
Company stockholder after the Reverse Split. These, however, are not the
purposes for which the Company seeks to effect the Reverse Split, and the
Company does not expect the Reverse Split will result in any material reduction
in the number of stockholders.
Although the increased proportion of authorized but unissued shares to
issued shares could, under certain circumstances, have an anti-takeover effect
(for example, by permitting issuances that would dilute the stock ownership of a
person seeking to effect a change in the composition of the Company's Board of
Directors or contemplating a tender offer or other transaction for the
combination of the Company with another company), the Reverse Split is not being
proposed in response to any effort of which the Company is aware to accumulate
shares of Common Stock or obtain control of the Company, nor is it part of a
plan by management to recommend a series of similar amendments to the Company's
Board of Directors and stockholders. Other than the Reverse Split, the Board of
Directors does not currently contemplate recommending the adoption of any other
amendments to the Company's Articles of Incorporation that could be construed to
affect the ability of third parties to take over or change the control of the
Company.
The Reverse Split will not affect the par value of the Common Stock. As
a result, after the Effective Time, the stated capital on the Company's balance
sheet attributable to the Common Stock will be reduced to a fraction of its
present amount (the denominator of which fraction will be three and the
numerator of which will be one), and the additional paid-in capital account
3
shall be credited with the amount by which the stated capital is reduced. The
per share net income or loss and net book value of the Common Stock will be
increased after the Effective Time because there will be fewer shares of Common
Stock outstanding. However, prior earnings will be restated on the same basis in
future presentations.
PROCEDURE FOR EFFECTING REVERSE SPLIT AND EXCHANGE OF STOCK CERTIFICATES
If the Amendment is approved by the Company's stockholders, the
Company will file the Amendment with the North Carolina Secretary of State. The
Reverse Split will become effective at the Effective Time on the date of filing
the Amendment. After the Effective Time, each certificate representing Old
Shares will be deemed for all corporate purposes to evidence ownership of New
Shares.
Promptly after the Effective Time, stockholders will be notified that
the Reverse Split has been effected. The Company's stock transfer agent,
American Stock Transfer & Trust Company will act as exchange agent (the
"Exchange Agent") for purposes of implementing the exchange of stock
certificates. Holders of Old Shares will be asked to surrender to the Exchange
Agent certificates representing Old Shares in exchange for certificates
representing New Shares in accordance with the procedures to be set forth in a
letter of transmittal to be sent by the Company. No new certificates will be
issued to a stockholder until such stockholder has surrendered such
stockholder's outstanding certificate(s) together with the properly completed
and executed letter of transmittal to the Exchange Agent.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE AND SHOULD NOT
SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
FRACTIONAL SHARES
No scrip or fractional shares, or certificates for fractional shares,
will be issued in connection with the Reverse Split. Stockholders who otherwise
would be entitled to receive fractional shares because they hold a number of Old
Shares not evenly divisible by the number of Old Shares in the three-to-one
reverse split ratio, will be entitled, upon surrender to the Exchange Agent of
certificates representing such shares, to a cash payment (without interest) in
lieu thereof. The cash payment will be equal to the fraction to which the
stockholder would otherwise be entitled, multiplied by the share price as
determined by the Board of Directors. The ownership of a fractional interest
will not give the holder thereof any voting, dividend, or other rights except to
receive payment therefor as described herein.
Stockholders should be aware that, under the escheat laws of the
various jurisdictions where stockholders reside, where the Company is domiciled
and where the funds will be deposited, sums due for fractional interests that
are not timely claimed after the Effective Time may be required to be paid to
the designated agent for each such jurisdiction, unless correspondence has been
received by the Company or the Exchange Agent concerning ownership of such funds
within the time permitted in such jurisdiction. Thereafter, stockholders
otherwise entitled to receive such funds will have to seek to obtain them
directly from the state to which they were paid.
NO DISSENTER'S RIGHTS
No shareholder will have any dissenters' rights of appraisal or any
other type of dissenters' rights with respect to shareholder action with respect
to the Reverse Split.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following is a summary of certain material federal income tax
consequences of the Reverse Split, and does not purport to be a complete
discussion of all of the possible federal income tax consequences of the Reverse
Split. It does not discuss any state, local, foreign or minimum income or other
U.S. federal tax consequences. Also, it does not address the tax consequences to
shareholders who are subject to special tax rules, such as banks, insurance
companies, regulated investment companies, personal holding companies, foreign
entities, nonresident alien individuals, broker-dealers and tax-exempt entities.
The discussion is based on the provisions of the United States federal income
tax law as of the date hereof, which is subject to change retroactively as well
as prospectively. This summary also assumes that the Old Shares were, and the
4
New Shares will be, held as a "capital asset," as defined in the Internal
Revenue Code of 1986, as amended (generally, property held for investment). The
tax treatment of a stockholder may vary depending upon the particular facts and
circumstances of such stockholder.
EACH SHAREHOLDER SHOULD CONSULT WITH SUCH SHAREHOLDER'S OWN TAX ADVISOR
WITH RESPECT TO THE CONSEQUENCES OF THE REVERSE SPLIT.
No gain or loss should be recognized by a stockholder of the Company
upon such stockholder's exchange of Old Shares for New Shares pursuant to the
Reverse Split (except to the extent of any cash received in lieu of a fraction
of a New Share). Cash payments in lieu of a fractional New Share should be
treated as if the fractional share were issued to the stockholder and then
redeemed by the Company for cash. A Company stockholder receiving such payment
should recognize capital gain or loss equal to the difference, if any, between
the amount of cash received and the stockholder's basis in the fractional share.
The aggregate tax basis of the New Shares received in the Reverse Split
(including any fraction of a New Share deemed to have been received) will be the
same as the stockholder's aggregate tax basis in the Old Shares exchanged
therefor. The stockholder's holding period for the New Shares will include the
period during which the stockholder held the Old Shares surrendered in the
Reverse Split.
REQUIRED VOTE
This proposal will be approved by the shareholders if a quorum is
present at the Special Meeting and a greater number of votes is cast for the
proposal than is cast against the proposal. Abstentions and broker non-votes
will count as shares present for purposes of determining whether a quorum is
present and but will not count for or against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
THE REVERSE SPLIT.
ADOPTION OF OPTION PLAN
(Item No. 2 on the Proxy)
The Board of Directors recommends that the shareholders of the Company
approve adoption of the RSI Holdings, Inc. 2002 Stock Option Plan (the "Option
Plan"). Under the Option Plan, the Board or Compensation Committee would have
the discretion to grant options for up to an aggregate maximum of 4,500,000
shares (1,500,000 shares upon shareholder approval of the reverse stock split
described above) of the Company's Common Stock. This maximum number of shares
will be appropriately adjusted to reflect any change in capitalization of the
Company resulting from a stock dividend, recapitalization, merger,
reorganization, consolidation, stock split or similar event affecting the Common
Stock of the Company. The Board recommends approval of the Option Plan because
it will provide the Company's key personnel who participate in the Option Plan
with an incentive to maximize shareholder value by better aligning their
compensation with the interests of the Company's shareholders. Proceeds received
by the Company from the sale of shares pursuant to options granted under the
Option Plan will be used for general corporate purposes as determined by the
Board.
INFORMATION REGARDING THE OPTION PLAN
The purpose of the Option Plan is to promote the growth and
profitability of the Company and its subsidiaries ("Subsidiaries") by increasing
the personal participation of key and middle-level executives in the continued
growth and financial success of the Company, by enabling the Company to attract
and retain key and middle-level executives of outstanding competence and by
providing such key and middle-level executives with an equity opportunity in the
Company.
5
The Option Plan shall be administered by a committee (the "Committee")
consisting of the entire Board or, at the discretion of the Board, a committee
of the Board that consists entirely of two or more "non-employee directors" (as
defined in Rule 16b-3 promulgated under the Securities Exchange Act, as
amended). The Committee shall have complete authority to (i) interpret all terms
and provisions of the Option Plan consistent with law; (ii) select from the
group of key and middle level executives eligible to participate in the Option
Plan the key and middle level executives to whom options will be granted; (iii)
within the limits established herein, determine the number of shares subject to,
the term of and all other terms and conditions applicable to each option granted
to each of such key or middle level executives; (iv) prescribe the form of
instrument(s) evidencing options granted under this Option Plan; (v) determine
the time or times at which options shall be granted; (vi) make special grants of
options when determined to be appropriate; (vii) provide, if appropriate, for
the exercise of options in installments or subject to specified conditions;
(viii) determine the method of exercise of options granted under the Option
Plan; (ix) adopt, amend and rescind general and special rules and regulations
for the Option Plan's administration; and (x) make all other determinations
necessary or advisable for the administration of this Option Plan.
Participation in the Option Plan is determined by the Committee and is
limited to those key and middle-level executives, who may or may not be officers
or members of the Board, of the Company or the Subsidiaries who have or are
likely to have the greatest impact on the Company's long-term performance. In
making any determination as to the key and middle-level executives to whom
options will be granted, the Committee takes into account, in each case, the
level and responsibility of the individual's position, the level of the
individual's performance, the individual's level of compensation, the assessed
potential of the employee and such other factors as the Committee may deem
relevant. Directors of the Company or any Subsidiary who are not also key or
middle-level executives are not eligible to participate in this Option Plan.
Options may be granted under the Option Plan only for a reason connected with a
key or middle-level executive's employment. The Company believes that
approximately seven (7) employees of the Company and its Subsidiaries are
currently eligible to participate in the Option Plan.
An aggregate of 4,500,000 shares (1,500,000 shares upon shareholder
approval of the reverse stock split described above) are reserved for the grant
under the Option Plan of options. The maximum number of shares subject to the
Option Plan shall be appropriately adjusted to reflect any change in the
capitalization of the Company resulting from a stock dividend, stock split, or
other adjustment contemplated by the Option Plan and occurring after the
adoption of the Option Plan. If an option expires or terminates for any reason
without having been fully exercised, the unpurchased shares subject to the
option shall again be available for the purposes of the Option Plan.
The Committee establishes the term of each option, but the term shall
not exceed ten years (or five years for owners of more than 10% of the total
combined voting power of all classes of stock of the Company or of a Subsidiary)
from the date of grant.
The Committee determines the exercise price for options at the time of
grant based on such criteria as it may adopt in good faith; provided, however,
that in the case of an option intended to qualify as an ISO, the price per share
shall not be less than the fair market value of the stock at the date of grant
(or 110% of the fair market value in the case of an option granted to a person
owning 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 or subsidiary
corporation).
Subject to the provisions of the Option Plan, an option granted under the Option
Plan may be exercisable at such time or times after the date of grant, on such
schedule, and upon such conditions as may be determined by the Committee at the
time of grant. If a participant's employment with the Company or Subsidiary
terminates for any reason other than death or permanent and total disability
(within the meaning of Section 22(e)(3) of the Code), such option may be
exercised by the participant during a period not exceeding three months after
the date of such termination (but no later than the end of the fixed term of the
option) for the number of shares for which the option could have been exercised
at the time the participant ceased to be an employee. If a participant dies
while in the employ of the Company or a Subsidiary or within a period of three
months after the termination of his or her employment with the Company or
6
Subsidiary or if a participant terminates his or her employment with the Company
or Subsidiary by reason of having become permanently and totally disabled within
the meaning of Section 22(e)(3) of the Code, such option may be exercised by him
or her or his or her personal representative during a period not exceeding one
year after the date of termination of his or her employment for the number of
shares for which the option could have been exercised at the time the person
died or became permanently and totally disabled. In no event may an option be
exercised after the expiration of its fixed term.
An option granted to a participant under the Option Plan (a) during the
optionee's lifetime shall be exercisable only by the participant and (b) shall
not be transferable by the participant except by will or the laws of descent and
distribution or, with respect to options not intended to qualify as incentive
stock options under Section 422 of the Code, pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974.
The price per share at which each option granted under the Option Plan
may be exercised shall be the price as determined by the Committee at the time
of grant based on criteria adopted by the Committee at the time of grant in good
faith; provided, however, that in no event shall the exercise price per share of
an option be less than 100% of the fair market value of the Common Stock on the
date such option is granted (or 110% for owners of more than 10% of the total
combines voting power of all classes of stock of the Company or any Subsidiary).
The price of the Common Stock on April 26, 2002, as quoted on the
over-the-counter bulletin board of NASDAQ, was $0.03 per share.
The Committee may at any time or from time to time permit the voluntary
surrender by the holder of any outstanding option where such surrender is
conditioned upon the granting to such holder of new option for such number of
shares as the Committee may determine, or may require such a voluntary surrender
as a condition precedent to the grant of new Options to such holder. The
Committee shall determine the terms and conditions of such new options,
including the prices at and periods during which they may be exercised, in
accordance with the provisions of this Option Plan, all or any of which may
differ from the terms and conditions of the options surrendered. The granting of
new options in connection with the surrender of outstanding options under the
Option Plan shall be considered for the purposes of the Option Plan as the grant
of new options and not an alteration, amendment or modification of the Option
Plan or of the options being surrendered.
The Committee may at any time suspend, amend or terminate the Option
Plan. The Committee may make such modifications of the terms and conditions of a
participant's option as it may deem advisable. Notwithstanding the foregoing, no
amendment, suspension or termination of the Option Plan or modification of an
option may, without the consent of the holder of an option, alter or impair any
rights or obligations under any option previously granted under the Option Plan
except to the extent that adjustments are made due to a change in the
capitalization of the Company.
In addition to Committee approval of an amendment to the Option Plan,
if the amendment would (i) materially increase the benefits accruing to
participants; (ii) increase the number of securities issuable under this Option
Plan (other than an increase due to an adjustment made pursuant to a change in
capitalization such as a stock split, merger, etc.); (iii) change the class of
employees eligible to receive Options; or (iv) otherwise materially modify the
requirements for eligibility, then such amendment shall be approved by the
holders of a majority of the Company's outstanding capital stock, voting either
in person or by proxy, and entitled to vote at a meeting duly held of the
stockholders of the Company.
The Option Plan provides that it shall terminate on the close of
business on March 31, 2012, and no option shall be granted under the Option Plan
after that date, but the termination shall not affect any option previously
granted under the Option Plan.
Options granted under the Option Plan may, at the discretion of the
Committee, be: (i) options which are intended to qualify as incentive stock
options ("ISOs") under Section 422 of the Code; (ii) options which are not
intended to qualify under Section 422 of the Code ("NQOs"); or (iii) both of the
foregoing if granted separately, not in tandem. Options may be allotted to
participants in such amounts, subject to the limitations specified in the Option
Plan, as the Committee, in its sole discretion, may from time to time determine.
In the case of options intended to be ISOs, the aggregate fair market value
7
(determined at the time of the options' respective grants) of the shares with
respect to which such options are exercisable for the first time by a
participant during any calendar year (under all Option Plans taken into account
pursuant to Section 422 of the Code) shall not exceed $100,000.
Generally, a participant is not subject to Federal income tax upon
either the grant or exercise of an ISO. However, for purposes of determining an
individual's alternative minimum tax, the difference between the exercise price
of an ISO and the fair market value of the underlying security at the date of
exercise gives rise to an adjustment of alternative minimum tax income in the
year of exercise. To qualify for ISO tax treatment, a participant generally must
not dispose of the stock acquired pursuant to exercise of an ISO within 2 years
after the date of grant or within 1 year after the date of exercise. (These
holding periods do not apply where an ISO is exercised after the participant's
death by the participant's estate or beneficiary.) The Company does not receive
a tax deduction for the value of the option at date of grant or date of exercise
of the option or at any other time unless the participant disposes of the stock
before the one- and two-year holding periods expire. In the event of a
disposition of ISO stock prior to the end of the one- and two-year holding
periods, the participant recognizes ordinary income in the taxable year of the
disposition equal to the difference between the exercise price and the fair
market value of the ISO stock at the date of exercise, and the Company is
eligible to receive a tax deduction in an equal amount. If the participant holds
the stock for the period of time required for ISO qualification, then the
participant will be taxed only on the gain realized upon the disposition of the
stock. The gain will be capital gain, rather than ordinary income, for Federal
income tax purposes and will be equal to the difference between the amount
received by the participant upon sale of the stock and the exercise price paid
by the participant to acquire the stock.
An option intended to qualify for ISO tax treatment will cease to
qualify for such tax treatment if it is not exercised within 3 months after a
participant terminates employment with the Company and its Subsidiaries. This
three-month period is extended to one year if a participant terminates
employment on account of disability, and the three-month restriction does not
apply if the participant dies while employed or within 3 months after
termination of employment. In addition, to the extent that the fair market value
(determined as the date or dates of grant) of stock underlying options intended
to be ISOs that become exercisable by an individual for the first time in any
given year exceeds $100,000, the options relating to stock in excess of the
$100,000 limit will not receive ISO tax treatment.
If options granted under the Option Plan do not qualify, or cease to
qualify, for ISO tax treatment, they will be treated as "non-qualified stock
options" or "NQOs." Ordinarily NQOs do not result in tax liability for Federal
income tax purposes to the participant upon grant. Generally, upon exercise of
an NQO, the participant recognizes ordinary income for Federal income tax
purposes equal to the excess of the fair market value of the stock on the date
of exercise over the exercise price. The Company receives a tax deduction for
the amount the participant reports as ordinary income by reason of the exercise
if the amount of ordinary income the participant should recognize is included in
the participant's income reported on a timely Form W-2 or 1099. Upon a
subsequent sale or disposition of the stock received from exercise of an option,
the holder is subject to Federal income tax at capital gains rates on any excess
of the selling price over its fair market value at the date of exercise.
All of the Company's executive officers are currently eligible to
participate in the Option Plan.
Each of the directors of the Company employed by the Company and each
of the executive officers named in this Proxy Statement, as a potential
participant in the Option Plan, could be deemed to have an interest in approval
of the Option Plan. The Company expects to award options under the Option Plan
to Buck A. Mickel, President and Chief Executive Officer of the Company, Joe F.
Ogburn, Chief Financial Officer of the Company, and Matthew J. Marron, Jr.,
President of Employment Solutions, Inc., a wholly-owned subsidiary of the
Company. The Company expects that the exercise price will be the market value of
the stock as of the date of grant; the number of shares of Common Stock for
which such options will be exercisable remains subject to determination by the
Board.
8
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid by the Company during the last three fiscal years to the
Company's Chief Executive Officer (the "Named Executive Officer"). The salary
and bonuses of each executive officer of the Company was less than $100,000
during fiscal years 1999 through 2001.
Annual Compensation Long-Term Compensation
---------------------------------- ------------------------------------
Awards Payouts
------------------------- ----------
Other
Annual
Compen- Restricted Securities LTIP All Other
Name and Principal Fiscal sation ($) Stock Underlying Payouts Compen-
Position Year Salary ($) Bonus ($) (a) Awards ($) Options/ ($) sation ($)
- ------------------------ ---------- ----------- ----------- ----------- ------------ ------------ ---------- -----------
Buck A. Mickel, 2001 20,000 -- -- -- -- -- --
President and Chief 2000 23,500 -- -- -- -- -- --
Executive Officer 1999 48,000 -- 228 -- 40,000 -- --
(a) The amounts shown in this column were paid for the benefit of the Named
Executive Officer for travel accident insurance that the Company has
purchased for the benefit of its employees, executive officers and
directors. This policy was not renewed at August 1, 2000. The policy
provides coverage through July 31, 2000 to each executive officer and
director of up to $500,000 for accidental death or dismemberment and a
permanent total disability benefit, subject to certain conditions and
limitations set forth in the policy.
Most of the Company's employees, as well as its executive officers, are
eligible to participate in the Company's medical and health benefit plan.
During the year ended August 31, 2001, the Company did not pay any
other compensation to its directors except as set forth in "Retirement
Contracts" below.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number Of Unexercised Securities
Underlying Options/SARs at Fiscal
Year-End (#)
Exercisable/
Name Unexercisable
--------------------------------------- -------------------------------------
Buck A. Mickel, President and 86,667/13,333
Chief Executive Officer
RETIREMENT CONTRACTS
Messrs. C.C. Guy and Charles M. Bolt retired as officers of the Company
on January 17, 1995. The Company paid each of these two retired officers $100
per month during the year ended August 2001. The Board determined that these
payments were appropriate in light of these officers' long records of service to
the Company and value as consultants to the Company. The Company anticipates
that these individuals will continue to serve as consultants during fiscal year
2002.
9
REQUIRED VOTE
This proposal will be approved by the shareholders if a quorum is
present at the Special Meeting and the number of shares cast in favor of the
proposal exceed the number of shares cast against it. Abstentions and broker
non-votes will count as shares present for purposes of determining whether a
quorum is present and but will not count for or against the proposal. No
shareholder will have any dissenters' rights of appraisal or any other type of
dissenters' rights with respect to shareholder action with respect to the RSI
Holdings, Inc. 2002 Stock Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THE
ADOPTION OF THE RSI HOLDINGS, INC. 2002 STOCK OPTION PLAN.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of May 3, 2002,
regarding the beneficial ownership of the Common Stock by: (i) persons
beneficially owning more than five percent of the Common Stock; (ii) the
directors and executive officers of the Company; and (iii) all directors and
executive officers of the Company, as a group. Unless otherwise indicated in the
notes to the table, the Company believes that the persons named in the table
have sole voting and investment power with respect to all the shares of Common
Stock shown as beneficially owned by them.
Amount and
Nature of
Name and Address of Beneficial Percent
Beneficial Owner Ownership Of Class (6)
- ----------------------------------------------------------------------------------------------------------------
Buck A. Mickel 9,975,427(1) 42.5
28 East Court Street
P. O. Box 6847
Greenville, SC 29606
C.C. Guy 189,558(2) 0.8
918 Elizabeth Road
Shelby, NC 28150
Charles M. Bolt 321,223(3) 1.4
2720 N. E. 57th Street
Fort Lauderdale, FL 33308
Minor M. Shaw 4,161,020 17.8
28 East Court Street
P. O. Box 6847
Greenville, SC 29606
Charles C. Mickel 4,401,556 18.8
28 East Court Street
P. O. Box 6847
Greenville, SC 29606
369,309(4) 1.6
Joe F. Ogburn
208 Belvedere Avenue
Shelby, NC 28150
All Directors and Executive Officers 15,257,073(5) 65.0
of the Company as a Group (5 persons)
(1) Mr. Buck A. Mickel is the President, Chief Executive Officer and a
director of the Company. The number of shares shown as beneficially owned by Mr.
Buck A. Mickel includes 9,875,427 shares directly owned by him and 100,000
unissued shares subject to employee stock options held by Mr. Mickel which are
currently exercisable.
10
(2) Mr. C.C. Guy is a director of the Company. The number of shares shown
as beneficially owned by Mr. Guy includes 78,923 shares directly owned by him
and 56,667 unissued shares subject to stock options held by Mr. Guy which are
currently exercisable. The number of shares shown also includes 53,968 shares of
the Company's Common Stock held by Mr. Guy's wife, as to which shares Mr. Guy
disclaims beneficial ownership.
(3) Mr. Charles M. Bolt is a director of the Company. The number of shares
shown as beneficially owned by Mr. Bolt includes 264,556 shares directly owned
by him and 56,667 unissued shares subject to stock options held by Mr. Bolt
which are currently exercisable.
(4) Mr. Joe F. Ogburn is the Secretary, Treasurer and Chief Financial
Officer of the Company. The number of shares shown as beneficially owned by Mr.
Ogburn includes 135,426 shares directly owned by him and 233,333 unissued shares
subject to employee stock options held by Mr. Ogburn which are currently
exercisable. Such number also includes 550 shares held by Mr. Ogburn's wife, as
to which shares Mr. Ogburn disclaims beneficial ownership.
(5) This number includes all shares included in the table above with
respect to any director or executive officer.
(6) Pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended, (the "Exchange Act") percentages of total outstanding shares
have been computed on the assumption that shares of Common Stock that can be
acquired within 60 days upon the exercise of options by a given person are
outstanding, but no other shares similarly subject to acquisition by other
persons are outstanding.
SOLICITATION OF PROXIES
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by mail, proxies may be solicited by
directors, officers and other employees of the Company by telephone, telegram or
personal interview for no additional compensation. Arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation materials to beneficial owners of the stock held of record by such
persons, and the Company will reimburse such persons for reasonable
out-of-pocket expenses incurred by them in so doing. The Company has engaged
American Stock Transfer & Trust Company, its transfer agent, to assist in these
contacts with brokerage houses, custodians, nominees and fiduciaries in exchange
for reimbursement of reasonable out-of-pocket expenses.
PROPOSALS OF SHAREHOLDERS
Any shareholder of the Company who desires to present a proposal at the
Special Meeting of Shareholders to be held after the end of fiscal 2002 for
inclusion in the proxy statement and form of proxy relating to that meeting must
submit such proposal to the Company at its principal executive offices on or
before August 14, 2002.
With respect to shareholder proposals not to be included in the
Company's proxy statement in the form of proxy, a shareholder must give the
Company notice by October 28, 2002 for such notice to be considered timely for
purposes of Exchange Act Rule 14a-4(c) (which concerns the extent to which a
proxy may confer discretionary voting authority with respect to matters not
specifically set forth in the proxy).
INFORMATION INCORPORATED BY REFERENCE
The following sections of the Company's Annual Report on Form 10-KSB
for the fiscal year ended August 31, 2001, filed with the Securities and
Exchange Commission on November 28, 2001, are incorporated by reference into
this Proxy Statement: Financial Information, Management's Discussion and
11
Analysis of Financial Condition and Results of Operations, and Quantitative and
Qualitative Disclosures about Market Risk.
The following sections of the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended November 30, 2001, filed with the Securities and
Exchange Commission on January 14, 2002, are incorporated by reference into this
Proxy Statement: Financial Information, Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Quantitative and Qualitative
Disclosures about Market Risk.
The following section of the Company's Amendment to Quarterly Report on
Form 10-QSB/A for the fiscal quarter ended November 30, 2001, filed with the
Securities and Exchange Commission on January 14, 2002, is incorporated by
reference into this Proxy Statement: Financial Information.
The following sections of the Company's Quarterly Report on Form 10-QSB
for the fiscal quarter ended February 28, 2002, filed with the Securities and
Exchange Commission on January 14, 2002, are incorporated by reference into this
Proxy Statement: Financial Information, Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Quantitative and Qualitative
Disclosures about Market Risk.
Stockholders entitled to notice of the Special Meeting may obtain a
copy of these reports, without charge, by writing to RSI Holdings, Inc., 28 East
Court Street, Post Office Box 6847, Greenville, South Carolina 29606, Attention:
Investor Relations.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors was not
aware that any business not described above would be presented for consideration
at the Special Meeting. If any other business properly comes before the meeting
or any adjournment thereof, it is intended that the shares represented by
proxies will be voted with respect thereto in accordance with the best judgment
of the person voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
Joe F. Ogburn, Secretary
Greenville, South Carolina
May 14, 2002
12
APPENDIX A
TEXT OF AMENDMENT TO ARTICLES OF INCORPORATION OF
RSI HOLDINGS, INC.
EFFECTING REVERSE STOCK SPLIT
Effective on __________, 2002, upon the filing of the Articles of
Amendment of the Articles of Incorporation of the Corporation on such date (the
"Effective Date"), each three (3) shares of Common Stock of the Corporation then
issued and outstanding automatically shall be combined into one (1) share of
fully paid and nonassessable Common Stock of the Corporation. The number of
authorized shares of the Common Stock and the par value of the Common Stock
shall remain unchanged. There shall be no fractional shares of Common Stock
issued. Each holder of shares of Common Stock who would otherwise be entitled to
receive a fractional share shall be entitled to receive a cash payment in lieu
thereof equal to the fraction to which the stockholder would otherwise be
entitled multiplied by the price as determined by the Board of Directors of the
Corporation.
APPENDIX B
PROXY
RSI HOLDINGS, INC.
SPECIAL MEETING OF SHAREHOLDER'S
The undersigned shareholder of RSI Holdings, Inc., a North Carolina
corporation, hereby constitutes and appoints Buck A. Mickel and Joe F. Ogburn,
and each of them, attorneys and proxies on behalf of the undersigned to act and
vote at the Special Meeting of Shareholders', to be held at the offices of RSI
Holdings, Inc., 28 East Court Street, Greenville, South Carolina, on Monday,
June 10, 2002, at 2:00 p.m., and any adjournment or adjournments thereof, and
the undersigned instructs said attorneys to vote:
Please sign on reverse side and return in the enclosed postage-paid envelope.
|_| Please mark
your votes as
in this example.
FOR AGAINST ABSTAIN
1. Approval of a three-for-one reverse stock split of the common stock of RSI Holdings, Inc; |_| |_| |_|
2. Approval of the RSI Holdings, Inc. 2002 Stock Option Plan; and |_| |_| |_|
3. The transaction of such other matters as may properly come before the meeting or any |_| |_| |_|
adjournment thereof.
A majority of said attorneys and proxies who shall be present and acting as
such at the meeting or any adjournment or adjournments thereof (or, if only one
such attorney and proxy is present and acting, then that one) shall have and may
exercise all the powers hereby conferred.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RSI HOLDINGS,
INC. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NOT OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR APPROVAL OF PROPOSALS 1 AND 2, and proxy holders will vote, in
their discretion, upon such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of the Special
Meeting of Shareholders' dated May 14, 2002 and the Proxy Statement furnished
herewith.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE
--------------------------------------------------------------------------------------------------------------------------
DATED SIGNATURE IF JOINTLY OWNED DATED
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.