<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Section 240.14a-12
RESOURCEPHOENIX.COM
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies.
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
RESOURCEPHOENIX.COM
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER , 2000
NOTICE IS HEREBY GIVEN that a special meeting of Stockholders of
ReSourcePhoenix.com, a Delaware corporation (the "Company"), will be held on
September , 2000 at 10:00 a.m., local time, at ReSourcePhoenix.com, 1301
Harbor Bay Parkway, Alameda, CA 94502 for the following purposes:
1. To approve an amendment to the Amended & Restated Certificate of
Incorporation that increases the authorized number of shares of Class A
Common Stock from 27,800,000 to 37,800,000.
2. To approve the issuance and sale of up to 7,000,000 shares of Class A
Common Stock to Torneaux Ltd. pursuant to a common stock purchase
agreement, and the issuance and sale of up to 1,800,000 shares of Class
A Common Stock pursuant to warrants.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on August 24, 2000 are
entitled to vote at the meeting and any postponement or adjournment thereof.
FOR THE BOARD OF DIRECTORS
Gus Constantin
Chairman of the Board of Directors and
Chief Executive Officer
San Rafael, California
September , 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
<PAGE> 3
RESOURCEPHOENIX.COM
2401 KERNER BOULEVARD
SAN RAFAEL, CA 94901
(415) 485-4600
------------------------
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
ReSourcePhoenix.com for use at the 2000 Special Meeting of Stockholders, which
will be held on September , 2000, at 10:00 a.m., local time, and at any
adjournment or postponement thereof. The Special Meeting will be held at
ReSourcePhoenix.com, 1301 Harbor Bay Parkway, Alameda, CA 94502.
The date on which this proxy statement and accompanying proxy are first
being mailed to stockholders of the Company is on or about September 6, 2000.
INFORMATION CONCERNING SOLICITATION AND VOTING
PURPOSES OF THE SPECIAL MEETING
The purposes of the Special Meeting are as follows:
- to approve an amendment to the Amended & Restated Certificate of
Incorporation that increases the authorized number of shares of Class A
Common Stock from 27,800,000 to 37,800,000;
- to approve the issuance and sale of up to 7,000,000 shares of Class A
Common Stock to Torneaux Ltd. pursuant to a common stock purchase
agreement, and the issuance and sale of up to 1,800,000 shares of Class A
Common Stock pursuant to warrants; and
- to transact such other business as may properly come before the meeting
or any adjournment thereof.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on August 24, 2000 (the
"Record Date") are entitled to vote at the Special Meeting. On the Record Date,
shares of the Company's Class A Common Stock were outstanding and
7,172,000 shares of Class B Common Stock were outstanding. For information
regarding security ownership by management and by beneficial owners of more than
5% of the Company's Common Stock, see "Security Ownership of Certain Beneficial
Owners and Management."
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked at any time
before its use by: (1) delivering to the Company's corporate secretary a written
notice of revocation, (2) delivering to the Company's corporate secretary a duly
executed proxy bearing a later date or (3) attending the Special Meeting and
voting in person. Attending the Special Meeting and not voting will not revoke a
proxy.
VOTING AND SOLICITATION
Shares of common stock represented by properly executed proxies will be
voted in accordance with the instructions given on such proxies. In the absence
of specific instructions to the contrary, properly executed proxies will be
voted:
- FOR the approval of the amendment to the Company's Amended & Restated
Certificate of Incorporation that increases the authorized number of
shares of Class A Common Stock from 27,800,000 to 37,800,000; and
<PAGE> 4
- FOR the approval of the issuance and sale of up to 7,000,000 shares of
Class A Common Stock to Torneaux Ltd. pursuant to a common stock purchase
agreement, and the issuance and sale of up to 1,800,000 shares of Class A
Common Stock pursuant to warrants.
No business other than that set forth in the accompanying Notice of Special
Meeting of Stockholders is expected to come before the Special Meeting. Should
any other matter requiring a vote of stockholders properly arise, the persons
named in the enclosed form of proxy will vote such proxy as recommended by the
Board of Directors. Stockholders are not entitled to cumulative voting.
The Company will pay the costs of soliciting proxies. The Company will
reimburse brokerage firms and other persons representing beneficial owners for
their expenses in forwarding solicitation material to such beneficial owners.
Proxies may also be solicited by the Company's directors, officers and
employees, without additional compensation, personally or by telephone, telegram
or letter.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The presence, in person or by proxy, of at least a majority of the voting
power of the shares outstanding on the record date, August 24, 2000, is
necessary to attain a quorum. All votes will be tabulated by the inspector of
elections appointed for the Special Meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes. Broker
non-votes occur when a nominee, such as a financial institution, returns a
proxy, but does not have the authorization from the beneficial owner to vote the
owner's shares on a particular proposal because the nominee did not receive
voting instructions (via proxy vote) from the beneficial owner. Broker non-votes
and abstentions are counted toward a quorum.
PROPOSAL NO. 1
APPROVAL OF THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES
OF AUTHORIZED CLASS A COMMON STOCK
Currently, the Company's Amended & Restated Certificate of Incorporation
authorizes the issuance of up to 35,000,000 shares of Common Stock, par value
$0.001 per share, consisting of 27,800,000 shares of Class A Common Stock and
7,200,000 shares of Class B Common Stock, and 5,000,000 shares of Preferred
Stock, par value $0.001 per share. The Company's Board of Directors has
approved, and recommended for adoption by the stockholders at the Special
Meeting, a proposed amendment to the Company's Amended & Restated Certificate of
Incorporation which would, if approved by the stockholders, effect an increase
in the number of authorized shares of Class A Common Stock of the Company from
27,800,000 to 37,800,000, $0.001 par value per share, resulting in the aggregate
number of authorized shares of capital stock of the Company to be increased from
40,000,000 to 50,000,000.
As of the close of business on July 31, 2000, 4,262,080 shares of Class A
Common Stock were issued and outstanding and 7,172,000 shares of Class B Common
Stock were issued and outstanding. Of the authorized but unissued shares of
Class A Common Stock, the Company has currently reserved for issuance 7,172,000
shares upon conversion of the Class B Common Stock, 3,170,880 shares under the
Company's 1999 Stock Option Plan, 215,040 shares under the Company's 1999
Employee Stock Purchase Plan, 75,000 shares pursuant to a warrant to Peter Benz
and 200,000 shares pursuant to a warrant to Continental Capital & Equity
Corporation. In addition, the Company has entered into the following equity
arrangements:
- STOCK PURCHASE AGREEMENT. The Company has reserved 8,800,000 shares of
Class A Common Stock to be issued to Torneaux Ltd. pursuant to a stock
purchase agreement. Pursuant to the stock purchase agreement, the Company
may sell, from time to time, up to 7,000,000 shares of Class A Common
Stock at approximately 94% of the daily volume weighted average closing
price of its Class A Common Stock on the Nasdaq National Market over a
20-day trading period. The price at which the Company issues shares to
Torneaux Ltd. may fluctuate. In connection with the stock purchase
agreement, the Company issued warrants to Torneaux to purchase up to
1,800,000 shares of Class A Common Stock at exercise prices ranging from
$2.50 to $7.00 per share. The Company's ability to sell shares to
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<PAGE> 5
Torneaux Ltd. through the stock purchase agreement is subject to the
satisfaction of certain conditions at the time of each sale of Class A
Common Stock.
- FINANCING ARRANGEMENTS. In connection with a line of credit with Pacific
Business Funding, a division of Cupertino National Bank, the Company
issued a warrant to Pacific Business Funding to purchase up to 85,715
shares of the Company's Class A Common Stock at $1.75 per share. In
addition, the Company issued a warrant to Lease Management Associates,
Inc., which is affiliated with Gus Constantin, the Company's Chairman,
Chief Executive Officer and majority stockholder, to purchase up to
150,000 shares of Class A Common Stock at $2.07 per share in connection
with a senior loan and security agreement between Lease Management
Associates, Inc. and ReSource/Phoenix, Inc., the Company's wholly-owned
subsidiary.
After accounting for shares of Class A Common Stock issued and outstanding,
reserved for future issuance, and shares to be issued in connection with the
common stock purchase agreement, warrants and the financing arrangements, only
3,669,285 shares of Class A Common Stock remain available for issuance. The
Board of Directors believes that the adoption of the proposed amendment to the
Amended & Restated Certificate of Incorporation, which increases the number of
authorized shares of Class A Common Stock by 10,000,000 shares, is in the best
interests of the Company and stockholders. The adoption of the proposed
amendment to the Amended & Restated Certificate of Incorporation would increase
the flexibility of the Company to issue Class A Common Stock and would ensure
that an adequate supply of authorized and unissued shares of Class A Common
Stock is available for general corporate purposes, the Company's 1999 Stock
Option Plan, the 1999 Employee Stock Purchase Plan, acquisitions and other
equity financings. If approved, the additional authorized shares of Class A
Common Stock will be available for issue for such purposes as the Board of
Directors may approve, without a further stockholder vote unless required under
Delaware law, the rules of the Nasdaq National Market, or the Company's Amended
& Restated Certificate of Incorporation.
The issuance of additional shares of Class A Common Stock will have a
dilutive effect on the equity and voting power of existing stockholders. Holders
of the Company's Class A Common Stock and Class B Common Stock do not have
preemptive rights to purchase shares of common stock of the Company. In
addition, the issuance of additional shares of Class A Common Stock could, in
certain instances, discourage a merger, tender offer or proxy contest and thus
potentially have an anti-takeover effect, particularly if Class A Common Stock
were issued in response to a potential takeover.
If the amendment is approved by the stockholders, Article FOURTH of the
Company's Amended & Restated Certificate of Incorporation will be amended in its
entirety to read as follows:
"FOURTH: This Corporation is authorized to issue two classes of stock to be
designated, respectively, "common stock" and "preferred stock." The total number
of shares which this Corporation is authorized to issue is fifty million
(50,000,000) shares. Forty-five million (45,000,000) shares shall be designated
common stock (the "Common Stock"), of which thirty-seven million eight hundred
thousand (37,800,000) shares shall be designated Class A common stock (the
"Class A Common Stock") and seven million two hundred thousand (7,200,000)
shares shall be designated Class B common stock (the "Class B Common Stock").
Five million (5,000,000) shares shall be undesignated preferred stock (the
"Preferred Stock"). Each share of Preferred Stock shall have a par value of
$0.001, and each share of Common Stock shall have a par value of $0.001.
Any Preferred Stock not previously designated as to series may be issued
from time to time in one or more series pursuant to a resolution or resolutions
providing for such issue duly adopted by the Board of Directors (authority to do
so being hereby expressly vested in the Board), and such resolution or
resolutions shall also set forth the voting powers, full or limited or none, of
each such series of Preferred Stock and shall fix the designations, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions of each such series of Preferred
Stock. The Board of Directors is authorized to alter the designation, rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock and, within the limits and restrictions
stated in any resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series of Preferred Stock, to
increase
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or decrease (but not below the number of shares of any such series then
outstanding) the number of shares of any such series subsequent to the issue of
shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired by
the Corporation (whether by redemption, repurchase, conversion to Common Stock
or other means), shall upon such reacquisition resume the status of authorized
and unissued shares of Preferred Stock, undesignated as to series and available
for designation and issuance by the Corporation in accordance with the
immediately preceding paragraph."
If approved by the stockholders, the amendment to the Company's Amended &
Restated Certificate of Incorporation will become effective upon the filing of
the amendment to the Amended and Restated Certificate with Delaware's Secretary
of State. If the amendment to the Amended & Restated Certificate of
Incorporation is not approved, the number of authorized shares of common stock
will remain at 35,000,000 shares.
REQUIRED VOTE
A majority of the votes cast at the meeting is required to approve this
proposal assuming a quorum is present. Each share of Class A Common Stock is
entitled to one vote and each share of Class B Common Stock is entitled to five
votes. Abstentions and broker non-votes will have no effect on the outcome of
the vote.
Gus Constantin controls all shares of Class B Common Stock and intends to
vote all such shares in favor of this proposal. Accordingly, the adoption of
this proposal is assured. See "Security Ownership of Certain Beneficial Owners
and Management."
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
NO. 1.
PROPOSAL NO. 2
APPROVAL OF THE ISSUANCE AND SALE OF UP TO 7,000,000 SHARES OF CLASS A COMMON
STOCK TO TORNEAUX LTD. PURSUANT TO A COMMON STOCK PURCHASE AGREEMENT, AND THE
ISSUANCE AND SALE OF UP TO 1,800,000 SHARES OF CLASS A COMMON STOCK PURSUANT TO
WARRANTS
To raise additional capital to fund the Company's operations, the Company
entered into a common stock purchase agreement and warrants with Torneaux Ltd.
that provide for the sale of up to 8,800,000 shares of the Company's Class A
Common Stock, which is in excess of 19.99% of the Company's outstanding common
stock. The Company is asking its stockholders to consider and approve the
issuance and sale of up to 7,000,000 shares of Class A Common Stock pursuant to
the common stock purchase agreement and the issuance and sale of up to 1,800,000
shares of Class A Common Stock pursuant to warrants, if exercised. See
"Transaction with Torneaux Ltd." for a more detailed description.
The Company is seeking stockholder approval to comply with Nasdaq
Marketplace Rule 4460(i). Nasdaq Marketplace Rule 4460(i) requires stockholder
approval in connection with a transaction involving:
- the issuance of common stock, or securities convertible into or
exercisable for common stock,
- equal to 20% or more of the common stock outstanding before the issuance,
- for less than the greater of book or market value of the stock.
If the Company sells 7,000,000 shares of Class A Common Stock pursuant to
the stock purchase agreement and Torneaux exercises the warrants for 1,800,000
shares of Class A Common Stock, the Company will issue 77.0% of its currently
outstanding common stock. Pursuant to the common stock purchase agreement, up to
7,000,000 shares may be sold at approximately 94% of the then current average
market price of our Class A Common Stock. The discount price may fluctuate. The
warrants have exercise prices ranging
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<PAGE> 7
from $2.50 to $7.00. The shares of Class A Common Stock sold to Torneaux will be
considered to be issued for less than the greater of book or market value of the
stock. Since the issuance of shares to Torneaux Ltd. may be an issuance of more
than 20% of the Company's outstanding common stock at a price less than the
greater of book or market value, the Company must obtain stockholder approval to
issue this number of shares to Torneaux Ltd. The Board of Directors believes
that the issuance to Torneaux Ltd. is in the best interests of the Company
because it will provide additional cash that the Company needs for general
corporate purposes.
TRANSACTION WITH TORNEAUX LTD.
On June 6, 2000, the Company entered into a common stock purchase agreement
with Torneaux Ltd. Pursuant to the agreement, the Company may issue and sell,
from time to time, up to 7,000,000 shares of its Class A Common Stock, subject
to the satisfaction of certain conditions. The major features of the common
stock purchase agreement are summarized below.
Beginning on the date a registration statement is declared effective by the
SEC, and continuing for 14 months thereafter, the Company may in its sole
discretion sell, or put, shares of its Class A Common Stock to Torneaux. The
14-month period is divided into pricing periods, each consisting of 20 trading
days on the Nasdaq National Market.
From time to time during the 14-month term, the Company may make 12 monthly
draw downs, by giving notice and requiring Torneaux to purchase shares of its
Class A Common Stock, for the draw down amount. Torneaux's purchase price may
fluctuate based upon the daily volume weighted average price over a 20 day
trading period. The minimum threshold price permitted under the common stock
purchase agreement is $1.00. The Company may issue a draw down notice for up to
$1,500,000 if the threshold price is equal to or exceeds $1.00, and an
additional $500,000 for every $1.00 increase of the threshold price above $1.00
up to $21.00 for a maximum draw down amount of $11,500,000. If the Company sets
the threshold price between $1.00 and $10.00, then the purchase price to be paid
by Torneaux is 94% of the daily volume weighted average price over the pricing
period. Thus, the minimum price at which the Company will issue shares is $0.94.
If the Company sets the threshold price between $10.00 and $21.00, then for each
$1.50 increase in the threshold price above $10.00, the purchase price to be
paid by Torneaux is increased by 0.10%. If the daily volume weighted average
price on a given trading day is less than the threshold price set by the
Company, then the amount that the Company can draw down will be reduced by 1/20
for that pricing period. In addition, if trading in the Company's Class A Common
Stock is suspended for more than three hours in any trading day, then the daily
volume weighted average price for that trading day is deemed to be below the
threshold price and, consequently, reduces the draw down amount by 1/20.
The following table sets forth the number of shares of Class A Common Stock
that we would issue to Torneaux, based on a range of stock prices, assuming that
the threshold price was equal to the daily volume weighted average price and
that the daily volume weighted average price remained the same throughout the
20-day pricing period. The table also shows the percentage that these shares
would constitute, immediately after issuance, of the total number of shares
which would then be outstanding, based on the 11,434,080 shares of common stock
outstanding on July 31, 2000.
<TABLE>
<CAPTION>
PER SHARE AVERAGE PER SHARE PRICE PAID BY NUMBER OF SHARES PERCENTAGE OF
MARKET PRICE TORNEAUX LTD. ISSUABLE OUTSTANDING
----------------- ----------------------- ---------------- -------------
<S> <C> <C> <C>
$ 1.00 $ 0.94 1,595,745 12.2%
$ 2.00 $ 1.88 1,063,830 8.5%
$ 3.00 $ 2.82 886,525 7.1%
$ 6.00 $ 5.64 709,220 5.8%
$10.00 $ 9.40 638,298 5.3%
$13.00 $12.25 612,445 5.1%
</TABLE>
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The Company's ability to cause Torneaux to purchase shares of its Class A
Common Stock under the common stock purchase agreement is subject to certain
conditions, including, but not limited to:
- The total number of shares that the Company may sell to Torneaux under
the agreement and warrants cannot exceed 19.9% of the Company's common
stock, unless it has obtained the approval sought in Proposal No. 2 of
this Proxy.
- The Company's Class A Common Stock continues to be traded on the Nasdaq
National Market.
- A registration statement must remain effective so that Torneaux may
publicly resell the shares that it acquires from the Company under the
agreement.
- There has not been an effect on the business, operations, properties,
assets or financial condition of the Company that is material and adverse
to the Company and its subsidiary or affiliates, taken as a whole and/or
any condition or situation that would prohibit or otherwise interfere, in
a material respect, with the Company's ability to perform its obligations
under the agreement.
The Company may not be able to satisfy all conditions required to put
shares to Torneaux at any given time. If this occurs, the Company would likely
need to raise money from other sources in order to continue to fund its
operations. Such alternative funding may not be available. Also, the Company
cannot put shares to Torneaux at a time when the Company has not publicly
disclosed material information.
The Company has filed a registration statement in order to permit Torneaux
to resell to the public any Class A Common Stock it purchases pursuant to the
common stock purchase agreement. Torneaux may be entitled to indemnification by
the Company for lawsuits based on language in the registration statement. The
Company will prepare and file such amendments and supplements to the
registration statement as may be necessary in accordance with the Securities Act
and the rules and regulations promulgated under it, in order to keep effective
the registration statement so that the Company may put shares to Torneaux during
the term of the agreement. In connection with the agreement, the Company agreed
to pay certain expenses of Torneaux, including legal fees, for the preparation
of the agreement up to a maximum of $50,000, and all reasonable fees incurred in
connection with any amendment, modification or waiver, to or enforcement of the
agreement.
If the Company suspends the effectiveness of a registration statement for
more than 20 days, or more than 45 days in the aggregate during a 12 month
period, then the Company must pay in cash to Torneaux, as liquidated damages, an
amount equal to 2% of the aggregate purchase price for all shares purchased and
then held by Torneaux for the initial 30 day period, and 3% of the aggregate
purchase price for each subsequent 30 day period, until the suspension is
lifted. In addition, if the Company fails to deliver the shares of Class A
Common Stock when due to Torneaux and the failure continues for 10 trading days,
then the Company will pay, in cash or restricted shares of its Class A Common
Stock, at Torneaux's option, an amount equal to 2% of the draw down amount for
the initial 30 day period and each 30 day period thereafter until the Company
has delivered the shares and warrants. During the 14-month period, the Company
may not enter into any agreement with a third party to secure equity financings
without Torneaux's prior consent, except that the Company may enter into a loan,
credit or lease facility with a bank, financing institution or with Gus
Constantin, its Chairman of the Board and Chief Executive Officer.
Torneaux may terminate the common stock purchase agreement upon:
- an effect on the business, operations, properties, assets or financial
condition of the Company that is material and adverse to the Company and
its subsidiaries or affiliates, taken as a whole and/or any condition or
situation that would prohibit or otherwise interfere, in a material
respect, with the Company's ability to enter into and perform its
obligations under the agreement;
- any stop order or suspension of the effectiveness of the registration
statement for an aggregate of five trading days, for any reason other
than deferrals or suspension during a blackout period as a result of
corporate developments that would require the registration statement to
be amended; or
- the Company fails to comply with specified provisions in the agreement.
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<PAGE> 9
In addition, the common stock purchase agreement automatically terminates
upon:
- officers and directors owning less than 51% of its outstanding common
stock, except as a result of the issuance of shares pursuant to the stock
purchase agreement and the warrants issued to Torneaux;
- the Company's issuance of convertible debentures or entering into an
equity financing, other than with Gus Constantin, without Torneaux's
prior consent; or
- Torneaux's beneficial ownership of more than 9.9% of the total common
stock the Company has outstanding on each settlement date.
In connection with the common stock purchase agreement, the Company issued
warrants on June 6, 2000 to Torneaux to purchase up to 1,800,000 shares of its
Class A common stock at exercise prices ranging from $2.50 to $7.00 per share.
Torneaux may exercise the warrants through June 5, 2003. The warrants are
exercisable for the number of securities and the exercise prices set forth
below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES EXERCISE PRICE
--------- --------------
<S> <C>
500,000............................................ $2.50
500,000............................................ $4.00
400,000............................................ $6.00
400,000............................................ $7.00
</TABLE>
The first warrant, Warrant A, is immediately exercisable for 125,000 shares
of Class A common stock. Thereafter, Warrant A is exercisable in increments of
125,000 shares upon the sale of the 125,000 shares previously issued. 500,000
shares of Class A common stock are issuable to Torneaux at $2.50 per share upon
the exercise of Warrant A. Once all of the shares issued upon exercise of
Warrant A have been sold, then Warrant B may be exercised in increments of
125,000 shares upon the sale of the 125,000 shares previously issued. 500,000
warrant shares are issuable to Torneaux at $4.00 per share upon the exercise of
Warrant B. After the Warrant B shares have been sold, then Torneaux may exercise
Warrant C for up to 400,000 warrant shares at $6.00 per share. Warrant C may be
exercised in increments of 100,000 shares upon the sale of the 100,000 shares
previously issued. Upon the sale of all shares issued under Warrant C, then
Torneaux may exercise Warrant D for up to 400,000 shares of Class A common stock
at $7.00 per share. Warrant D may be exercised in increments of 100,000 shares
upon the sale of the 100,000 shares previously issued. The warrants contain
provisions that protect Torneaux against dilution by adjustment of the exercise
price and the number of shares issuable thereunder upon the occurrence of
specified events, such as a merger, stock split, stock dividend,
recapitalization and additional issuances of common stock. The exercise price
for the warrant shares is payable in cash.
TORNEAUX AS UNDERWRITER
The Company has been advised by Torneaux that it may sell the Class A
common stock from time to time in transactions on the Nasdaq National Market (or
any exchange where the Class A common stock is then listed), in negotiated
transactions, or otherwise, or by a combination of these methods, at fixed
prices which may be changed, at market prices at the time of sale, at prices
related to market prices or at negotiated prices. Torneaux may effect these
transactions by selling the Class A common stock to or through broker-dealers,
who may receive compensation in the form of discounts, concessions or
commissions from Torneaux or the purchasers of the Class A common stock for whom
the broker-dealer may act as an agent or to whom it may sell the Class A common
stock as a principal, or both. Deirdre M. McCoy exercises investment power over
the shares that Torneaux will sell.
Torneaux is an "underwriter" within the meaning of the Securities Act in
connection with its resale of the Class A common stock that the Company sells to
Torneaux. Assuming that the Company is in compliance with the conditions of the
common stock purchase agreement, Torneaux must accept puts of up to 7,000,000
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<PAGE> 10
shares from the Company, subject to a maximum of $11,500,000 per drawdown,
during the term of the agreement. The price at which the common shares will be
issued by the Company to Torneaux will be approximately 94% of the daily volume
weighted average closing price over a 20-day trading period on the Nasdaq
National Market, and the price at which the Company issues the Class A common
stock to Torneaux may fluctuate.
The following table sets forth the amount of securities purchased and the
purchase price by Torneaux assuming that the purchase price has fallen 0% and
25% from $1.75, the closing price of the Company's Class A common stock on the
Nasdaq National Market on July 31, 2000. The table also shows the percentage
that these shares would constitute, immediately after issuance, of the total
number of shares which would then be outstanding, based on the 11,434,080 shares
of common stock outstanding on July 31, 2000. The minimum price at which the
Company will issue shares to Torneaux is $0.94. The table also shows the
purchase price, the amount of securities purchased, and Torneaux's ownership
percentage if the average market price per share was $1.00, assuming that the
daily volume weighted average price is the same throughout the 20-day pricing
period.
<TABLE>
<CAPTION>
PER SHARE AMOUNT OF PERCENTAGE OF
AVERAGE MARKET PRICE PURCHASE PRICE SECURITIES PURCHASED OUTSTANDING
-------------------- -------------- -------------------- -------------
<S> <C> <C> <C>
$1.75 $1.65 909,091 7.4%
$1.31 $1.23 1,219,512 9.6%
$1.00 $0.94 1,595,745 12.2%
</TABLE>
USE OF PROCEEDS
The Company intends to use the proceeds from the common stock purchase
agreement and the exercise of the warrants, if any, to support general corporate
purposes, including working capital and capital expenditures.
EFFECT ON STOCKHOLDERS
Stockholders may experience significant dilution from the Company's sale of
shares to Torneaux under the common stock purchase agreement and warrants. The
sale of the Company's Class A common stock to Torneaux under the common stock
purchase agreement and warrants will have a dilutive effect on its stockholders.
The number of shares that the Company issues to Torneaux upon a draw down is
based upon the daily weighted average market price of its stock over a 20-day
trading period. As the market price declines, the number of shares which may be
sold to Torneaux will increase. If the Company puts shares to Torneaux at a time
when its stock price is low, its stockholders would be significantly diluted. In
addition, the perceived risk of dilution by Torneaux and the Company's other
stockholders may cause them to sell their shares, which could further decrease
the market price of the Company's shares. Furthermore, the significant downward
pressure on the market price of its shares could encourage Torneaux and other
stockholders to engage in short sales of the Company's shares, which would cause
our stock price to decline even further. Torneaux's resale of the Company's
Class A common stock will increase the number of its publicly traded shares,
which could also lower the market price of its Class A common stock.
REQUIRED VOTE
A majority of the votes cast at the meeting is required to approve this
proposal assuming a quorum is present. Each share of Class A Common Stock is
entitled to one vote and each share of Class B Common Stock is entitled to five
votes. Abstentions and broker non-votes will have no effect on the outcome of
the vote.
Gus Constantin controls all shares of Class B Common Stock and intends to
vote all such shares in favor of this proposal. Accordingly, the passage of this
proposal is assured. See "Security Ownership of Certain Beneficial Owners and
Management."
8
<PAGE> 11
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
NO. 2.
OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of July 31, 2000 by:
- each person or entity known to the Company to own beneficially more than
5% of either class of its common stock;
- each of its directors;
- each of its named executive officers; and
- all directors and executive officers as a group.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------- -------------------------
SHARES SHARES PERCENT OF
BENEFICIALLY BENEFICIALLY TOTAL VOTING
NAME OWNED PERCENT(1) OWNED PERCENT(1) POWER(1)
---- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Gus Constantin(2)......................... 384,290 8.7% 7,172,000 100% 90.0%
W. Corey West(3).......................... 57,986 1.3% -- -- *
David Brunton(4).......................... 45,360 1.1% -- -- *
Michael D'Almada-Remedios(5).............. 31,680 * -- -- *
Gregory Thornton.......................... 500 * -- -- *
James Barrington(6)....................... 4,290 * -- -- *
Glen McLaughlin(6)........................ 4,290 * -- -- *
Roger Smith(6)............................ 4,290 * -- -- *
All directors and executive officers as a
group (8 persons)....................... 532,686 11.7% 7,172,000 100% 90.0%
</TABLE>
---------------
* Less than one percent
Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Class A common stock subject
to options held by that person that are currently exercisable or
exercisable within 60 days of July 31, 2000 are deemed outstanding. Such
shares, however, are not deemed outstanding for the purpose of computing
the percentage ownership of any other person. Except as indicated in the
footnotes to this table and pursuant to applicable community property laws,
each stockholder named in the table has sole voting and investment power
with respect to the shares set forth opposite such stockholder's name.
(1) The foregoing percentages are based on 11,434,080 shares of Class A and
Class B common stock outstanding.
(2) Includes 200,000 shares held by Gus Constantin and 4,290 shares issuable
upon the exercise of stock options that are exercisable within 60 days of
July 31, 2000. Also includes 150,000 shares of Class A Common Stock subject
to warrants held by Lease Management Associates, Inc. that are exercisable
within 60 days of July 31, 2000. All of the Class B securities are held by
the Gus and Mary Constantin 1978 Living Trust, of which Mr. Constantin and
his wife are trustees. The living trust can be amended or revoked at any
time at the option of Mr. Constantin and his wife. Mr. Constantin and his
wife, as trustees of the living trust, are authorized to exercise all rights
with respect to the Class B common stock held by the trust, including the
right to vote and dispose of such shares. The address of each of Mr.
Constantin and his wife is c/o ReSourcePhoenix.com, 2401 Kerner Boulevard,
San Rafael, CA 94901-55529.
(3) Includes 55,106 shares of Class A Common Stock subject to options that are
exercisable within 60 days of July 31, 2000.
(4) Includes 42,480 shares of Class A Common Stock subject to options that are
exercisable within 60 days of July 31, 2000.
9
<PAGE> 12
(5) Includes 28,800 shares of Class A Common Stock subject to options that are
exercisable within 60 days of July 31, 2000. Dr. D'Almada-Remedios has
resigned his positions with our company effective August 31, 2000.
(6) Consists of shares of Class A Common Stock subject to options that are
exercisable within 60 days of July 31, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Barrington, McLaughlin and
Smith, each of whom is an independent, non-employee director. None of the
Company's executive officers serves as a member of the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
OTHER MATTERS
The Company is not aware of any other matters to be submitted at the
Special Meeting. If any other matters properly come before the meeting, it is
the intention of the persons named in the enclosed proxy to vote the shares they
represent as the Board of Directors may recommend.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Any proposal intended to be presented at and included in the Company's
proxy materials for the 2001 Annual Meeting of Stockholders must be received at
the Company's principal offices no later than December 20, 2000.
FOR THE BOARD OF DIRECTORS
Gus Constantin
Chairman of the Board of Directors and
Chief Executive Officer
Dated: September , 2000
10
<PAGE> 13
PROXY
RESOURCEPHOENIX.COM
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2000 Special Meeting of Stockholders
To Be Held on September , 2000
The undersigned stockholder of ReSourcePhoenix.com, (the "Company"), hereby
appoints W. Corey West and Gregory Thornton and each of them, with power of
substitution to each, true and lawful attorneys, agents and proxies of the
undersigned, and hereby authorizes them to represent and vote, as specified
herein, all the shares of Common Stock of the Company held of record by the
undersigned on August 24, 2000, at the 2000 Special Meeting of Stockholders of
the Company to be held on September , 2000 at 10:00 a.m., local time, at
ReSourcePhoenix.com, 1301 Harbor Bay Parkway, Alameda, CA 94502, and any
adjournments or postponements thereof.
(Continued, and to be signed on the other side)
-- FOLD AND DETACH HERE --
<PAGE> 14
Please mark
your vote [X]
as this
FOR AGAINST ABSTAIN
1. Approval of the amendment to [ ] [ ] [ ]
the Company's Amended & Restated
Certificate of Incorporation
that increases the number of
authorized shares of Class A
Common Stock from 27,800,000
to 37,800,000
FOR AGAINST ABSTAIN
2. Approval of the issuance and [ ] [ ] [ ]
sale of up to 7,000,000 shares
of Class A Common Stock to
Torneaux Ltd. pursuant to a
common stock purchase agreement,
and the issuance and sale of up
to 1,800,000 shares of Class A
Common Stock pursuant to warrants.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournments or
postponements thereof.
The shares represented by this proxy will be voted in the manner directed. In
the absence of any direction, the shares will be voted FOR Proposals 1 and 2.
The undersigned acknowledges receipt of the Notice of Special Meeting of
Stockholders and the Proxy Statement dated September ___, 2000.
Please mark, sign and date this proxy and return it promptly whether you plan
to attend the meeting or not. If you do attend, you may vote in person if you
desire.
Signature(s) Dated , 2000
---------------------------------------------- ----------
Please sign exactly as name appears hereon. Joint owners should each sign.
Trustees and others acting in a representative capacity should indicate the
capacity in which they sign and use their full title. If a corporation, please
sign in full corporate name by an authorized officer. If a partnership please
sign in partnership name by an authorized person.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
