REORGANIZED CONSUMAT SYSTEMS, INC.
POST OFFICE BOX 9379 RICHMOND, VIRGINIA 23227
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held December 12, 1996
TO THE HOLDERS OF COMMON STOCK:
A Special Meeting of Shareholders of Reorganized Consumat Systems,
Inc. (the "Company") will be held at the offices of the Company, 8407 Erle Road,
Mechanicsville, Virginia, on December 12, 1996, at 8:30 a.m., for the following
purposes:
1. To act upon a proposal to amend the Amended and Restated
Articles of Incorporation (the "Restated Articles") to
change the name of the Company to Consumat Environmental
Systems, Inc. (see Exhibit A to the Company's Proxy
Statement);
2. To act upon a proposal to amend the Restated Articles to
increase the authorized capital stock of the Company to
25,000,000 shares of Common Stock and 5,000,000 shares
of Preferred Stock (see Exhibit B to the Company's Proxy
Statement);
3. To act upon a proposal to amend the Restated Articles to
remove the prohibition against the issuance of nonvoting
equity securities and the related provision giving
voting rights to shares of Preferred Stock and to add a
provision confirming that holders of Common Stock are
entitled to one vote per share on all matters to which a
shareholder vote is taken (see Exhibit B to the
Company's Proxy Statement);
4. To act upon a proposal to amend the Restated Articles to
add a provision to lower the voting requirement
necessary for shareholder approval of certain actions
(see Exhibit C to the Company's Proxy Statement);
5. To ratify the selection of KPMG Peat Marwick LLP,
certified public accountants, as auditors of the
Company for the current fiscal year; and
6. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October
31, 1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting and any adjournments thereof.
Please complete, sign, date, and return promptly the enclosed Proxy
regardless of whether you expect to attend the meeting. A self-addressed,
stamped envelope is enclosed for your convenience. If you are present at the
meeting, you may vote in person even if you have already sent in your proxy.
By Order of the Board of Directors
PATRICIA B. BRADLEY
Corporate Secretary
November 8, 1996
<PAGE>
REORGANIZED CONSUMAT SYSTEMS, INC.
Post Office Box 9379
Richmond, Virginia 23227
PROXY STATEMENT
Special Meeting of Shareholders To Be Held December 12, 1996
General
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Reorganized Consumat Systems, Inc. (the "Company"), for use at a
Special Meeting of Shareholders of the Company to be held December 12, 1996, or
any adjournments thereof, for the purposes set forth in this Proxy Statement and
the attached Notice of Special Meeting of Shareholders. If sufficient proxies
are not returned in response to this solicitation, supplementary solicitations
also may be made by mail or by telephone, telegraph or personal interview by
directors, officers and regular employees of the Company, none of whom will
receive additional compensation for these services. The Company reserves the
right to retain an outside proxy solicitation firm to assist in the solicitation
of proxies, but at this time does not have plans to do so. Costs of solicitation
of proxies will be borne by the Company, which will reimburse banks, brokerage
firms, and other custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred by them in forwarding proxy materials to the
beneficial owners of shares held by them. This Proxy Statement is first being
mailed to shareholders on or about November 8, 1996.
The shares represented by all properly executed proxies received by
the Corporate Secretary of the Company and not revoked as herein provided will
be voted as set forth herein unless the shareholder directs otherwise in the
proxy, in which event such shares will be voted in accordance with such
directions. Any proxy may be revoked at any time before the shares to which it
relates are voted either by written notice (which may be in the form of a
substitute proxy delivered to the Secretary of the meeting) or by attending the
meeting and voting in person.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed the close of business on October
31, 1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting and any adjournments thereof. Each holder
of record of the Company's common stock, $1.00 par value (the "Common Stock"),
on the record date will be entitled to one vote for each share then registered
in his name with respect to all matters to be considered at the meeting. As of
the close of business on the record date, 1,010,000 shares of Common Stock were
outstanding and entitled to vote at the meeting.
Presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum. Shares for which the holder has elected to abstain or to
withhold the proxies' authority to vote (including broker non-votes) on a matter
will count towards a quorum, and will have the effect of a vote against each of
four proposed amendments to the Restated Articles because the approval of each
proposal requires the affirmative vote of the holders of more than two-thirds of
the outstanding shares of Common Stock.
<PAGE>
OWNERSHIP OF COMPANY COMMON STOCK
Security Ownership Of Certain Beneficial Owners. The following
table lists the only persons known by the Company to be the beneficial owners of
more than five percent of the Common Stock of the Company as of October 31,
1996. Mr. Alexander Y. Hoff serves as a director of the Company.
<TABLE>
<CAPTION>
Name and Address of Amount of
Beneficial Owner Beneficial Ownership Percent of Class
<S> <C>
Alexander Y. Hoff 118,532 11.7%
6443 Cloister Gate Drive
Baltimore, Maryland 21212
New England Waste Services, Inc. 107,318 10.6%
P.O. Box 866
Rutland, Vermont 05702
Peter T. Socha 100,000 9.9%
1318 Jamestown Road
Suite 201
Williamsburg, Virginia 23185
Carter Kaplan Holdings, L.L.C. 100,000 9.9%
P.O. Box 344
629 East Main Street
Richmond, Virginia 23202
</TABLE>
To the Company's knowledge, each of the above shareholders owns all
such shares directly, except for Mr. Hoff who directly owns 10,360 shares of the
Common Stock of the Company and whose company, Yankee Engineering Company, owns
108,172 shares of the Common Stock of the Company. Mr. Socha and his spouse,
Annabelle K. Socha, are the joint owners of all 100,000 shares of the Common
Stock of the Company listed above. Mr. Socha is the Vice President of Sirrom
Capital Corporation, which holds a warrant to purchase at a price of $0.01 per
share up to 250,000 shares of the Common Stock (which may be increased up to
475,000 shares if any of the indebtedness of the Company to Sirrom remains
outstanding on March 31, 2001 and which number of shares is also subject to
adjustment in the event of any stock dividend or split or other similar capital
change).
Security Ownership Of Management. The following table sets forth the
ownership, if any, as of October 31, 1996, of the shares of Common Stock of the
Company held by each director (except for Mr. Hoff who, because of his
beneficial ownership of more than five percent of the Common Stock of the
Company, is listed in the table immediately above) and the executive officers of
the Company.
<PAGE>
<TABLE>
<CAPTION>
Name of Amount of
Beneficial Owner Beneficial Ownership Percent of Class
<S> <C>
Robert L. Massey 45,870 4.5%
Chairman of the Board, President
and Chief Executive Officer
James W. Bohlig (1) 0 *
Director
D. Randolph Graham 27,000(2) 2.6%
Director
Charles E. Horner 26,000(2)(3) 2.5%
Director
Mark E. Hills 32,560 3.2%
Chief Financial Officer
Robert S. Lee 35,829 3.6%
Vice President
Patricia B. Bradley 2,860 *
Corporate Secretary
All executive officers and 288,651 27.2%
directors as a group (8 persons)
</TABLE>
* Indicates less than 1% beneficial ownership.
(1) Mr. James W. Bohlig is the Senior Vice President and Chief Operating
Officer of New England Waste Services, Inc., which owns 107,318
shares (approximately 10.6%) of the Common Stock of the Company.
(2) Includes an option to acquire up to 25,000 shares of Common Stock at
$3.50 per share granted under the Company's 1996 Non-Employee
Directors Stock Option Plan.
(3) These shares are held by Reed, L.P., a Virginia limited partnership, of
which Charles E. Horner and his spouse, Carolyn R. Horner, are
partners.
Changes In Control. In connection with loans in the aggregate amount of
$1,500,000 provided by Sirrom Capital Corporation ("Sirrom") and pursuant to the
terms of a Stock Purchase Warrant dated March 12, 1996, the Company granted a
warrant entitling Sirrom to purchase at a price of $0.01 per share up to 250,000
shares of the Common Stock (which may be increased up to 475,000 shares if any
of the indebtedness of the Company to Sirrom remains outstanding on March 31,
2001 and which number of shares is also subject to adjustment in the event of
any stock dividend or split or other similar capital change). The warrant is
exerciseable beginning on and after March 31, 1998, until April 30, 2001.
In addition, a change in control of the Company occurred on March 12,
1996, when the Company consummated its Second Amended Plan of Reorganization
(the "Reorganization Plan"). All equity interests in the Company were canceled,
including, without limitation, the 1,564,699 issued and outstanding shares of
the old common stock of the Company and the debts of the Company were
discharged; however, under the Reorganization Plan, a total of 510,000 shares of
the new Common Stock of the Company were distributed to or on account of the
holders of the old common stock of the Company and the holders of certain claims
against the Company.
PROPOSAL ONE --AMENDMENT TO RESTATED ARTICLES
TO CHANGE COMPANY NAME
On October 18, 1996, the Board of Directors of the Company approved
for submission to a vote of the shareholders a proposal to amend Article I of
the Amended and Restated Articles of Incorporation (the "Restated Articles") to
change the name of the Company to Consumat Environmental Systems, Inc.
A copy of the proposed amendment is attached to this Proxy Statement as Exhibit
A.
The Board believes that the change of the Company name to Consumat
Environmental Systems, Inc., will enhance the identity of the Company in the
marketplace and reflect the Company's successful emergence from its Chapter 11
reorganization proceeding. The name of the Company was Consumat Systems, Inc.,
until March 12, 1996, when it was changed to Reorganized Consumat Systems, Inc.
Vote Required
Adoption of the proposed amendment to Article I of the Restated
Articles requires the affirmative vote of the holders of more than two-thirds of
the issued and outstanding shares of Common Stock of the Company.
The Board of Directors unanimously recommends a vote "FOR" the
proposed amendment to change the Company's name.
PROPOSAL TWO -- AMENDMENT TO RESTATED ARTICLES TO INCREASE
THE AUTHORIZED SHARES OF CAPITAL STOCK
On October 18, 1996, the Board of Directors of the Company approved
for submission to a vote of the shareholders a proposal to amend Article III.A.
of the Restated Articles to increase the number of authorized shares of Common
Stock to 25,000,000 shares, par value $1.00, from 5,000,000 shares, and to
increase the number of authorized shares of Preferred Stock to 5,000,000 shares,
par value $1.00, from 1,000,000 shares. A copy of the proposed amendment is
attached to this Proxy Statement as Exhibit B.
The Company had outstanding at October 31, 1996, 1,010,000 shares of
its Common Stock. No shares of Preferred Stock have been issued. An additional
200,000 shares of Common Stock are reserved for issuance pursuant to the
Company's 1996 Stock Option Plan, 100,000 shares are reserved for issuance
pursuant to the Company's 1996 Non-Employee Directors Stock Option Plan, and
475,000 shares are reserved for issuance pursuant to a Stock Purchase Warrant,
dated March 12, 1996, held by Sirrom Capital Corporation that is exercisable at
a price of $0.01 per share beginning on March 31, 1998 and ending on April 30,
2001. Accordingly, the Company now has approximately 3,215,000 shares of Common
Stock available for stock dividends, stock splits, future acquisitions and for
the raising of additional capital. If the amendment is approved, the Company
will have approximately 23,215,000 shares of Common Stock available for issuance
for these purposes and 5,000,000 shares of Preferred Stock.
The Board of Directors unanimously recommends the adoption of this
amendment to the Restated Articles so that the Company will have available
authorized but unissued shares of Common Stock and Preferred Stock, particularly
for future acquisitions as well as for stock dividends, stock splits, and the
raising of additional capital as needed. The increase in the authorized shares
of capital stock is not being proposed because of any specific contemplated
acquisition, nor does the Company have any present plans to raise additional
capital or to split its Common Stock or declare a stock dividend. The Board of
Directors believes that having the authority to issue additional shares of
Common and Preferred Stock will avoid the possible delay and expense of calling
a special meeting of shareholders for this purpose at or near the time the
Company may have a use for such shares.
This amendment is not being proposed as a means of preventing a
change in control or takeover of the Company. However, the Board of Directors
could issue the additional shares of Common or Preferred Stock to dilute the
stock ownership and voting power of persons seeking to obtain control of the
Company, and the additional authorized shares could be issued to purchasers who
would support the Board of Directors in opposing a takeover proposal. The
existence of the additional authorized shares could have the effect of defeating
or discouraging proposals for the acquisition of the Company which some or a
majority of shareholders might deem advantageous. In addition, the Preferred
Shares could be issued with relative rights and preferences that would make an
acquisition or takeover of the Company undesirable to persons who might
otherwise have an interest in making offers for the Company or its stock.
The Board of Directors believes that the flexibility to issue
additional shares of Common Stock and Preferred Stock authorized by this
proposed amendment will, among other things, position the Company to take
advantage of opportunities to acquire additional capital investment and thereby
enhance its long-term prospects.
Vote Required
Adoption of this proposed amendment to the Restated Articles
requires the affirmative vote of the holders of more than two-thirds of the
issued and outstanding shares of Common Stock of the Company.
The Board of Directors unanimously recommends a vote "FOR" the
proposed amendment to Article III.A. of the Restated Articles.
PROPOSAL THREE -- AMENDMENT TO THE RESTATED ARTICLES TO REMOVE PROHIBITION
AGAINST THE ISSUANCE OF NONVOTING EQUITY SECURITIES
On October 18, 1996, the Board of Directors of the Company approved
for submission to a vote of the shareholders a proposal to amend further Article
III of the Restated Articles that would: (i) remove the prohibition against the
issuance by the Company of nonvoting equity securities; (ii) remove the
provision giving voting rights to Preferred Stock; and (iii) add a provision
confirming that the holders of the Common Stock are entitled to one vote per
share on all matters as to which a shareholder vote is taken. A copy of the
proposed amendments is attached to this Proxy Statement as Exhibit B.
The Board believes that the elimination of the prohibition against
the Company's issuance of nonvoting equity securities is necessary to provide
the flexibility to permit the Company to issue shares of authorized Preferred
Stock on such terms as it determines are appropriate. Article III.B., which
prohibits the Company's issuance of nonvoting equity securities, and Article
III.F., which provides that each outstanding share of Common Stock and each
outstanding share of Preferred Stock is entitled to one vote on each matter
voted at a shareholder meeting, were included in the Company's charter pursuant
to 11 U.S.C. ss. 1123(a)(6) in connection with the Company's reorganization
under Chapter 11 of the United States Bankruptcy Code (11 U.S.C. ss. 1101 et
seq.). The Board believes that this prohibition and the related provision are no
longer required as of March 28, 1996, which was the date of the Bankruptcy
Court's Final Decree closing the Company's Chapter 11 bankruptcy proceeding.
The proposed amendment to Article III.E(2) confirms that the holders
of the Common Stock have one vote for each share of Common Stock they hold.
If the proposed amendments to Article III are adopted, the Company
would be permitted to issue shares of nonvoting Preferred Stock without further
stockholder approval, upon such other terms and for such consideration as deemed
appropriate by the Board of Directors in its discretion, except to the extent
otherwise required by law.
Vote Required
Adoption of the proposed amendments to Article III of the Restated
Articles requires the affirmative vote of the holders of more than two-thirds of
the issued and outstanding shares of Common Stock of the Company.
The Board of Directors unanimously recommends a vote "FOR" the
proposed amendments to Article III of the Restated Articles.
PROPOSAL FOUR --AMENDMENT TO THE RESTATED ARTICLES GOVERNING THE SHAREHOLDER
VOTE REQUIRED FOR CERTAIN ACTIONS
On October 18, 1996, the Board of Directors of the Company approved
for submission to a vote of the shareholders a proposal to add a new Article VII
to the Restated Articles governing the shareholder vote required for certain
actions. A copy of the proposed amendment is attached to this Proxy Statement as
Exhibit C.
The Virginia Stock Corporation Act provides that, unless a
corporation's articles of incorporation provide for a higher or lower vote,
certain significant corporate actions must be approved by a vote of more than
two-thirds of the votes entitled to be cast on the matter. These actions include
amendments to its articles of incorporation, plans of merger or exchange, sales
of substantially all its assets other than in the ordinary course of business or
plans of dissolution ("Fundamental Actions"). Virginia law provides that a
corporation's articles of incorporation may either increase the vote required to
approve Fundamental Actions or may decrease the required vote to not less than a
majority of the votes entitled to be cast.
The proposed Article VII to the Restated Articles decreases the
shareholder vote required to approve Fundamental Actions to a majority of the
shares entitled to be cast, provided that two-thirds of the members of the Board
of Directors then in office have approved and recommended the Fundamental
Action. In the absence of such approval and recommendation by the Board, the
vote required for approval of Fundamental Actions is increased to 80% or more of
the shares entitled to vote on the matter. In contrast, the Restated Articles
currently provide that a greater than two-thirds vote is required in all matters
involving Fundamental Actions.
The effect of this provision is to make shareholder approval of
Fundamental Actions less difficult to obtain in the case of Fundamental Actions
favored by the Board of Directors. A lower required shareholder vote will
benefit the Company in terms of cost savings related to the solicitation efforts
necessary to obtain a more than two-thirds vote. If, however, the incumbent
Board does not approve a Fundamental Action by at least a two-thirds vote, this
provision will make approval of the Fundamental Action subject to the 80%
affirmative vote requirement and therefore more difficult to obtain. For this
reason, the provisions of Article VII have anti-takeover implications in that it
makes a Fundamental Action not approved by a two-thirds vote of the Board of
Directors more difficult to adopt.
Vote Required
Adoption of the proposed Article VII to the Restated Articles
requires the affirmative vote of the holders of more than two-thirds of the
issued and outstanding shares of Common Stock of the Company.
The Board of Directors unanimously recommends a vote "FOR" the
proposed Article VII to the Restated Articles.
PROPOSAL FIVE -- RATIFICATION OF SELECTION OF AUDITORS
KPMG Peat Marwick LLP, independent certified public accountants, has
been selected by the Board of Directors as accountants and auditors for the
Company for the current fiscal year, subject to ratification by the
shareholders. The firm has no relationship with the Company. Representatives of
KPMG Peat Marwick LLP are expected to be present at the special meeting of
shareholders and will have an opportunity to make a statement if they so desire
and are expected to be available to respond to appropriate questions from
shareholders. In the event the shareholders do not ratify the selection of KPMG
Peat Marwick LLP, the selection of other accountants and auditors will be
considered by the Board of Directors.
The Board of Directors dismissed Parham, P.C., as the Company's
auditors effective October 18, 1996. Parham, P.C., served as independent
auditors of the Company for the years ended December 31, 1995, and December 31,
1994. At the annual meeting of the shareholders of the Company on June 14, 1996,
the shareholders of the Company ratified the Company's engagement of Parham,
P.C.
The report of Parham, P.C., on the financial statements of the
Company for the years ended December 31, 1995, and December 31, 1994, did not
contain an adverse opinion, disclaimer of opinion or a qualification or
modification as to certainty, audit scope or accounting principles, except that
the report contained an explanatory paragraph which questioned the ability of
the Company to continue as a going concern.
There were no disagreements between the Company and Parham, P.C., on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Parham, P.C., would have caused Parham, P.C., to make reference
to the subject matter of the disagreement(s) in connection with its reports, and
there have been no "reportable events" during such period as such term is
defined in Item 304(a) of Regulation S-B promulgated by the Securities and
Exchange Commission.
The Company furnished Parham, P.C., with a copy of the disclosure
contained in this Proxy Statement, and advised Parham, P.C., that if it believed
that the statements made by the Company herein were incomplete or incorrect, the
firm could present its views in a brief statement to be included in this Proxy
Statement. Parham, P.C., did not submit such statement of views to the Company.
Action by shareholders is not required by law in the selection of
independent auditors, but their selection is submitted by the Board of Directors
in order to give shareholders the final choice in the designation of independent
auditors.
The Board of Directors unanimously recommends a vote "FOR" the
selection of KPMG Peat Marwick LLP. Ratification of the selection requires a
greater number of affirmative votes than negative votes.
OTHER MATTERS
The Board of Directors knows of no other matters which will be
brought before the special meeting. However, if any other matters are properly
presented, or if any question arises as to whether any matter has been properly
presented and is a proper subject for shareholder action, the persons named as
proxies in the accompanying proxy intend to vote the shares represented by such
proxy in accordance with their best judgment.
FURTHER INFORMATION
The Company will provide without charge to each person from whom a
proxy is solicited by the Board of Directors, upon the written request of any
such person, a copy of the Company's Annual Report on Form 10-KSB, including the
financial statements thereto, as filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, for the
Company's fiscal year ended December 31, 1995. Such written requests should be
sent to the Corporate Secretary, Reorganized Consumat Systems, Inc., Post Office
Box 9379, Richmond, Virginia 23227.
By Order of the Board of Directors
PATRICIA B. BRADLEY
Corporate Secretary
November 8, 1996
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF YOU
ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR OWN
SHARES.
<PAGE>
EXHIBIT A
Set forth below is the text of Article I of the Company's Amended
and Restated Articles of Incorporation, showing the proposed amendment:
ARTICLE I
NAME
The name of the Corporation is Consumat Environmental Systems, Inc.
<PAGE>
EXHIBIT B
Set forth below is the text of Sections A, B, E and F of Article III
of the Company's Amended and Restated Articles of Incorporation. The underlined
sections show the proposed amendments to (i) Section A to increase the number of
authorized shares of Common Stock from 5,000,000 to 25,000,000 and the number of
authorized shares of Preferred Stock from 1,000,000 to 5,000,000, and (ii) to
Section E to confirm that each holder of Common Stock is entitled to one vote
for each share held as to all matter submitted to a vote of shareholders. The
text in Sections B and F that is struck through is proposed to be deleted. The
remaining provisions of Article III dealing with the denial of preemptive rights
and the issuance of Preferred Stock will not be amended.
ARTICLE III
CAPITAL STOCK
A. Authorized Shares. The number and designation of
shares that the Corporation shall have authority to issue and the par value
per share are as follow:
Class No. of Shares Par Value
Common 25,000,000 $1.00
----------
Preferred 5,000,000 $1.00
---------
B. (BEGIN STRIKE-THROUGH TEXT) Nonvoting Equity Securities.
Pursuant to Section 1123(a)(6) of Title 11 of the United States Code, the
Corporation shall not issue any nonvoting equity securities. (END STRIKE-
THROUGH TEXT)
E. Common Stock. (1) Subject to the provisions
contained in the articles of amendment for any series of the Preferred
Stock, the holders of outstanding shares of the Common Stock shall be
entitled to receive dividends if, when and as declared by the Board of
Directors out of funds legally available therefor
(BEGIN UNDERLINED TEXT) (2) The holders of outstanding
shares of the Common Stock shall, to the exclusion of the holders of any
other class of stock of the Corporation, have the sole and full power to vote
for the election of directors and for all other purposes without limitation,
except (i) as otherwise provided with respect to the articles of amendment
applicable to any series of the Preferred Stock, or (ii) as may be required by
law. The holders of outstanding shares of Common Stock shall be entitled to one
vote on each matter to be voted upon by the stockholders for each share of the
Common Stock which they hold. (END UNDERLINED TEXT)
F. (BEGIN STRIKE-THROUGH TEXT) Voting Rights. Each outstanding
share of Common Stock and each outstanding share of Preferred Stock is
entitled to one vote on each matter voted at a shareholders' meeting.
(END STRIKE-THROUGH TEXT)
<PAGE>
EXHIBIT C
Set forth below is the text of proposed Article VII of the Amended
and Restated Articles of Incorporation, showing the proposed amendment:
ARTICLE VII
SHAREHOLDER APPROVAL OF CERTAIN TRANSACTIONS
Any amendment of the Corporation's Articles of
Incorporation, a plan of merger or exchange, a transaction involving the sale
of all or substantially all the Corporation's assets other than in the regular
course of business and a plan of dissolution shall be approved by the vote of a
majority of all the votes entitled to be cast on such transactions by each
voting group entitled to vote on the transaction at a meeting at which a quorum
of the voting group is present, provided that the transaction has been approved
and recommended by at least two-thirds of the directors in office at the time of
such approval and recommendation. If the transaction is not so approved and
recommended, then the transaction shall be approved by the vote of eighty
percent (80%) or more of all votes entitled to be cast on such transactions by
each voting group, entitled to vote on the transaction.
<PAGE>
REORGANIZED CONSUMAT SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints James K.
Fishback, George P. Fultz, and Florence M. Hurt as proxies, and each or any of
them with full power of substitution, to represent the undersigned and vote, as
designated below, all the shares of Common Stock of Reorganized Consumat
Systems, Inc. (the "Company"), held by the undersigned on October 31, 1996, at
the Special Meeting of Shareholders to be held December 12, 1996, or any
adjournment thereof, on each of the following matters:
1. To amend the Amended and Restated Articles of Incorporation to change the
name of the Company to Consumat Environmental Systems, Inc. (as described
in Proposal One of the Proxy Statement):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To amend the Amended and Restated Articles of Incorporation to increase
the authorized capital stock of the Company (as described in Proposal Two
of the Proxy Statement):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To amend the Amended and Restated Articles of Incorporation to remove the
prohibition against the issuance of nonvoting equity securities, to
remove the provision giving voting rights to Preferred Stock, and to add
a provision confirming that the holders of Common Stock are entitled to
one vote per share on all matters as to which a shareholder vote is taken
(as described in Proposal Three of the Proxy Statement):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To amend the Amended and Restated Articles of Incorporation to add a new
provision decreasing the shareholder vote required to approve certain
significant corporate actions to a majority of the shares entitled to be
cast, provided that two-thirds of the members of the Board of Directors
then in office have approved and recommended the corporate action (as
described in Proposal Four of the Proxy Statement):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(PLEASE COMPLETE, SIGN AND DATE ON THE REVERSE SIDE)
<PAGE>
5. To ratify the selection by the Board of Directors of KPMG Peat Marwick
LLP, independent certified public accountants, as auditors of the Company
for 1996 (Proposal Five of the Proxy Statement):
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Board of Directors
has not been notified of any such matters.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned shareholder. If no direction is made, this proxy will be voted
"FOR" each proposal. All joint owners MUST sign.
<TABLE>
<S> <C>
DATED:
---------------------------------------
---------------------------------------
Signature
---------------------------------------
Signature (if jointly owned)
</TABLE>
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY CARD. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
