<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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 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:
Release Date: The registrant began mailing definitive copies of the proxy
statement, form of proxy, and other solicitation materials to shareholders on
December 8, 1998.
Registration of Shares: Assuming shareholder approval, the registrant will file
a Form S-8 as soon as practicable with respect to the additional shares to be
subject to the RSI Holdings, Inc. Stock Option Plan.
Annual Report: Copies of registrant's annual report are being mailed to the
Commission under separate cover.
<PAGE> 2
RSI HOLDINGS, INC.
28 EAST COURT STREET
POST OFFICE BOX 6847
GREENVILLE, SOUTH CAROLINA 29606
TELEPHONE (864) 271-7171
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 21, 1999
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of RSI Holdings, Inc. (the "Company"), will
be held at 10:00 a.m., local time, on January 21, 1999, at RSI Holdings, Inc.,
28 East Court Street, Greenville, South Carolina, for the purpose of considering
and acting upon the following:
1. The election of three directors to serve until the next annual meeting of
shareholders or until their successors have been duly elected and
qualified;
2. To vote on approval of the proposed amendment to the RSI Holdings, Inc.
Stock Option Plan to increase from 750,000 to 1,250,000 the aggregate
number of shares issuable thereunder;
3. The ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company for fiscal year 1999; and
4. 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 November 30, 1998 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
C. Thomas Wyche, Secretary
Greenville, South Carolina
December 7, 1998
A form of proxy is enclosed. To ensure that your shares will be voted at the
Annual 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.
<PAGE> 3
RSI HOLDINGS, INC.
28 EAST COURT STREET
POST OFFICE BOX 6847
GREENVILLE, SOUTH CAROLINA 29606
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 21, 1999
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
annual meeting of shareholders of the Company (the "Annual Meeting") to be held
at 10:00 a.m., local time, on January 21, 1999, at RSI Holdings, Inc., 28 East
Court Street, Greenville, South Carolina. The approximate date of mailing this
Proxy Statement and the accompanying proxy is December 7, 1998.
Only shareholders of record at the close of business on November 30, 1998
are entitled to notice of and to vote at the Annual Meeting. As of such date,
there were outstanding approximately 7,903,322 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 Annual 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 Annual Meeting; or (iii) attending
the Annual 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 Annual 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 Annual 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 election to the Board of Directors of the nominees
described herein, FOR the approval of the proposed amendment to the Company's
Stock Option Plan, FOR ratification of the appointment of Ernst & Young LLP as
the independent auditors for the Company for fiscal year 1999, and in the
discretion of the proxy holders as to all other matters that may properly come
before the Annual 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 November 30,
1998, is necessary to constitute a quorum at the Annual Meeting. An automated
system administered by the Company's transfer agent tabulates votes cast in
connection with the Annual Meeting. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock at November 30, 1998 is
required to approve the amendment to the Stock Option Plan. Directors are
elected by a plurality of votes cast at the Annual Meeting. The proposal to
ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the Company's 1999 fiscal year 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 each count
as a vote
<PAGE> 4
against the proposal to amend the Company's Stock Option Plan, but have no
effect upon the votes with respect to the other matters to be voted upon at the
meeting.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors to be
elected at any meeting of shareholders shall not be less than three (3) nor more
than ten (10), the exact number to be determined by the Board of Directors. The
Board has determined that three directors shall be elected at the Annual
Meeting. The Common Stock may not be voted cumulatively in the election of
directors.
The following three persons are nominees for election as directors at the
Annual Meeting, to serve until the next annual meeting of shareholders of the
Company or until their successors are duly elected and qualified. Unless
authority to vote at the election of directors is withheld, it is the intention
of the persons named in the enclosed form of proxy to vote for the persons named
below, all of whom are currently directors of the Company. Each such person is a
citizen of the United States. There are no family relationships among the
directors and the executive officers of the Company.
Management of the Company believes that all of the nominees will be
available and able to serve as directors, but in the event any nominee(s) is not
available or able to serve, the shares represented by the proxies will be voted
for such substitute(s) as shall be designated by the Board of Directors.
<PAGE> 5
The table below sets forth certain information regarding the Company's
nominees for election as directors.
NOMINEES FOR ELECTION AS
DIRECTORS OF THE COMPANY
<TABLE>
<CAPTION>
Name, Age and Tenure as
Director Principal Occupation and Background
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
C.C. Guy (66) Director of the Company. Mr. Guy served as President of the Company from July
Director since 1978(1)(2) 1989 until his retirement in January 1995. Since his retirement, he has served as
a consultant to the Company on an as-needed basis. Mr. Guy was Vice
President-Administration of the Company from 1978 to July 1989. Mr. Guy
served from October 1979 to November 1989 as President, Treasurer and a
director of RSI Corporation. Mr. Guy currently serves as a director of Delta
Woodside Industries, Inc.
Charles M. Bolt (68) Director of the Company. Charles M. Bolt was President and Chief Executive
Director since 1982(1)(2) Officer of the Company from 1984 to July 1989, when he was elected President of
Distribution, a position that he held until his retirement in January 1995. Since his
retirement, he has served as a consultant to the Company on an as-needed
basis. Mr. Bolt was Vice President-Marketing of the Company from 1978 to 1984.
Buck A. Mickel (42) (1)(2) Director of the Company. Buck A. Mickel was elected President and Chief
Executive Officer of the Company on July 28, 1998 following the death of his
father, Mr. Buck Mickel. Mr. Mickel was reelected Vice President of the Company
effective September 1, 1996. Mr. Mickel served as a consultant to the Company
from January 17, 1995, the date that he resigned as Vice President, until his
reelection as Vice President. Mr. Mickel was originally elected Vice President of
the Company in July 1989. Mr. Mickel served as a director on the Company or
RSI Corporation from 1987 until December 1992. Mr. Mickel has served as
President of Wiegmann & Rose International Corp. ("Wiegmann & Rose"), the
Company's wholly-owned subsidiary, since August 1988. Mr. Mickel also
currently serves as a director of Delta Woodside Industries, Inc.
</TABLE>
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
The Board of Directors of the Company met in person four times and by
telephone conference two times during the fiscal year ended August 31, 1998. The
Compensation Committee of the Company met once during the fiscal year. The Audit
Committee of the Company did not meet separately during the fiscal year but the
Board considered Audit Committee matters in the course of meetings of the Board
of Directors. Each Director attended at least 75% of the meetings of the Board
and of any committee of which he was a member. The Board does not have a
standing nominating committee.
The Compensation Committee reviews and submits to the Board of Directors
suggested salaries and other compensation for officers of the Company and its
subsidiaries for the ensuing year.
The Audit Committee generally makes recommendations to the Board
regarding the selection of the independent public accountants, reviews the
independence of such accountants, approves the scope of the annual audit,
approves the rendering of any material non-audit services by the independent
accountants, approves the fee payable to the independent accountants, and
reviews the audit results.
<PAGE> 6
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of November 30,
1998, 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 (12)
- --------------------------------------------------------------------------------
Buck A. Mickel 1,206,696 (1) 15.3
28 East Court Street
P. O. Box 6847
Greenville, SC 29606
C.C. Guy 157,891 (2) 2.0
918 Elizabeth Road
Shelby, NC 28150
Charles M. Bolt 289,556 (3) 3.7
2720 N. E. 57th Street
Fort Lauderdale, FL 33308
C. Thomas Wyche 332,583 (4) 4.2
Post Office Box 728
Greenville, SC 29602
Minor H. Mickel 475,160 (5) 6.0
415 Crescent Avenue
Greenville, SC 29605
Charles C. Mickel 907,181 (6) 11.5
28 East Court Street
P. O. Box 6847
Greenville, SC 29606
Minor Mickel Shaw 822,122 (7) 10.4
P. O. Box 795
Greenville, SC 29602
Mr. William R. Kimball 746,853 (8) 9.5
12 Eucalyptus Road
Belvedere, CA 94920
Joe F. Ogburn 163,476 (9) 2.1
208 Belvedere Avenue
Shelby, NC 28150
Matthew J. Marron, Jr. 100,100 (10) 1.3
63 Woodvale Avenue
Greenville, SC 29605
All Directors and Executive Officers of the 2,250,302 (11) 28.5
Company as a Group (7 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 1,179,196 shares directly owned by him and
27,500 unissued shares subject to employee stock options held by Mr.
Mickel which are currently exercisable.
<PAGE> 7
(2) Mr. C.C. Guy is a director and former President of the Company. The
number of shares shown as beneficially owned by Mr. Guy includes 78,923
shares directly owned by him and 25,000 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 and former President of Distribution of
the Company. The number of shares shown as beneficially owned by Mr. Bolt
includes 264,556 shares directly owned by him and 25,000 unissued shares
subject to stock options held by Mr. Bolt which are currently
exercisable.
(4) Mr. C. Thomas Wyche is Secretary of the Company. The number of shares
shown as beneficially owned by Mr. Wyche includes 204,292 shares directly
owned by him, 44,523 shares owned of record by Center, Inc., of which Mr.
Wyche owns all of the outstanding common stock and is an officer and
director, and 61,209 shares owned by the Profit Sharing Plan of Wyche,
Burgess, Freeman & Parham, P.A. (the "WBFP Plan"), of which Mr. Wyche is
a trustee and participant and which firm serves as general counsel to the
Company. Of the shares owned by the WBFP Plan, the number of shares
allocated to Mr. Wyche's account varies from year to year, depending on
Mr. Wyche's respective interest in the WBFP Plan. Mr. Wyche disclaims
beneficial ownership of the shares that are not allocated to his account.
The figure shown also includes 22,559 shares owned by Mr. Wyche's wife.
Mr. Wyche disclaims beneficial ownership of all of the shares owned by
Mrs. Wyche.
(5) The number of shares shown as beneficially owned by Mrs. Minor H. Mickel
includes 465,160 shares directly owned by her and 10,000 shares directly
owned by the Estate of her late husband, Mr. Buck Mickel. Mrs. Mickel
disclaims beneficial ownership of the shares of stock owned by the Estate
of Mr. Mickel.
(6) The number of shares shown as beneficially owned by Mr. Charles C. Mickel
includes 862,658 shares directly owned by him, and all of the 44,523
shares beneficially owned by Center, Inc. of which Mr. Mickel is an
officer and director. Mr. Mickel disclaims beneficial ownership of the
shares owned by Center, Inc.
(7) The number of shares shown as beneficially owned by Mrs. Minor Mickel
Shaw includes 802,188 shares directly owned by her, 2,748 shares owned by
her as custodian for her children, and 17,186 shares owned by her husband
as custodian for their children. Mrs. Shaw disclaims beneficial ownership
of all shares beneficially owned by her husband and children.
(8) The number of shares shown for Mr. Kimball are owned directly by him.
(9) Mr. Joe F. Ogburn is the Treasurer and Vice President of the Company. The
number of shares shown as beneficially owned by Mr. Ogburn includes
135,426 shares directly owned by him and 27,500 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.
(10) Mr. Matthew J. Marron, Jr. is President of the Company's subsidiary,
HomeAdd Financial Corporation. The number of shares shown for Mr. Marron
includes 90,100 shares owned directly by him and 10,000 unissued shares
subject to employee stock options held by Mr. Marron which are currently
exercisable.
(11) This number includes all shares included in the table above with respect
to any director or executive officer and excludes the shares described in
the notes above as being excluded from the table.
<PAGE> 8
(12) 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.
EXECUTIVE OFFICERS
The following provides certain information regarding the executive
officers of the Company:
Name and Age Position
-------------------------------------------------------------------------
Buck A. Mickel (43) President and Chief Executive Officer (1)
C. Thomas Wyche (71) Secretary (2)
Joe F. Ogburn (60) Treasurer and Vice President (3)
Matthew J. Marron, Jr. (30) President, HomeAdd Financial Corporation (4)
- ----------
(1) See information under "Election of Directors".
(2) C. Thomas Wyche is a senior member of the law firm of Wyche, Burgess,
Freeman & Parham, P.A., with which firm he has practiced for the last
four decades. From 1979 to November 1989, Mr. Wyche was the Secretary and
a director of RSI Corporation. Wyche, Burgess, Freeman & Parham, P.A.
serves as general counsel to the Company. Mr. Wyche served as a director
of the Company or RSI Corporation from 1978 until January 1993.
(3) Joe F. Ogburn has served as Treasurer of the Company since September 1988
and Vice President of the Company since May 1995. Mr. Ogburn served as
Controller of the Company from 1981 to September 1988. Mr. Ogburn served
as a director of the Company from September 1987 to July 1989.
(4) Matthew J. Marron, Jr. has served as President of HomeAdd Financial
Corporation (formerly CambridgeBanc Inc.), a wholly-owned subsidiary of
the Company through which the Company originates and sells home
improvement loans secured by liens on improved property since November
1996. Before joining the Company, Mr. Marron had served as Executive Vice
President of CambridgeBanc, Inc. (at that time a wholly owned subsidiary
of Emergent Group, Inc.) from 1995 to 1996. Prior to that time, from 1994
to 1995, he served as President of The CPE Institute, Inc., a financial
education company for Certified Public Accountants, financial executives
and tax preparers. From 1992 to 1994 he served as Financial Analyst for
BI-LO, Inc., a supermarket chain. Prior to that time, he served as a
Senior Auditor of Ernst & Young LLP from 1990 to 1992.
The Company's executive officers are appointed by the Board of Directors
and serve at the pleasure of the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on review of Forms 3, 4, and 5 furnished to the Company
during fiscal year 1998, no director, officer, or beneficial owner of more than
10% of the Common Stock of the Company failed to file on a timely basis reports
required by Section 16(a) of the Securities Exchange Act of 1934 during the most
recent fiscal year.
<PAGE> 9
MANAGEMENT COMPENSATION
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 $100,000 during fiscal 1998.
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------------
Other Annual All Other
Fiscal Compensation Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($)(a) ($)
- --------------------------- ---- ---------- --------- ------ ---
<S> <C> <C> <C> <C> <C>
Buck Mickel, Deceased (formerly 1998 2,000 0 -- --
Chairman of the Board and Chief 1997 2,400 0 -- --
Executive Officer) 1996 2,400 0 -- --
Buck A. Mickel, President and Chief 1998 48,000 0 228 --
Executive Officer 1997 48,000 5,000 -- --
1996 30,000 0 -- --
</TABLE>
(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. The policy provides coverage 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.
The Company currently pays medical and health insurance premiums for its
directors and their families and reimburses directors for expenses related to
their duties as board members. The Company does not pay any other compensation
to its directors except as set forth in "Retirement Contracts" below.
On July 2, 1997, the Company granted C. C. Guy and Charles M. Bolt
options to purchase 10,000 shares each of the Company's Common Stock at $.375,
the market value of the Company's Common Stock on the date of the grant. Fifty
percent of the shares of Common Stock covered by the options become exercisable
on each of the first two anniversaries of the date of the grant. These options
are scheduled to expire on July 2, 2007.
On April 22, 1998, the Company granted C. C. Guy and Charles M. Bolt
options to purchase 10,000 shares each of the Company's Common Stock at $.19,
the market value of the Company's Common Stock on the date of the grant.
One-third of the shares of Common Stock covered by the options become
exercisable on each of the first three anniversaries of the date of the grant.
These options are scheduled to expire on April 22, 2008.
<PAGE> 10
Options Grants in Last Fiscal Year
(Individual Grants)
<TABLE>
<CAPTION>
======================================================================================================================
Name Number of Securities Percent of Total Options Exercise or Expiration Date
Underlying Options Granted to Employees Base Price ($
Granted in Fiscal Year per share)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Buck Mickel, Deceased (formerly
Chairman of the Board and Chief
Executive Officer) 10,000 1.7% $.19 April 22, 1998
- ----------------------------------------------------------------------------------------------------------------------
Buck A. Mickel, President and
Chief Executive Officer 25,000 4.3% $.19 April 22, 1998
======================================================================================================================
</TABLE>
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
=================================================================================================
Number Of Unexercised Securities
Underlying Options/SARs at Fiscal
Year-End (#)
Exercisable/
Name Unexercisable
- -------------------------------------------------------------------------------------------------
<S> <C>
Buck Mickel, Deceased (formerly
Chairman of the Board and Chief 0/10,000
Executive Officer)
- -------------------------------------------------------------------------------------------------
Buck A. Mickel, President and Chief
Executive Officer 27,500/32,500
=================================================================================================
</TABLE>
Retirement Contracts
Messrs. C.C. Guy and Charles M. Bolt retired as officers of the Company
on January 17, 1995. In connection with Mr. Bolt's retirement, the Board of
Directors of the Company originally agreed to continue Mr. Bolt's salary (in the
annual amount of $100,000) for a period of one year following his retirement,
during which time he would serve as a consultant to the Company on an as-needed
basis. In November 1995 the Company recognized that it would continue to need
Mr. Bolt's services and agreed to pay Mr. Bolt $1,000 per month for consulting
services after January 1996, which payments continued through January of 1998.
This amount was decreased to $200 per month in February of 1998 and the Company
continued to pay Mr. Bolt $200 per month through the remainder of fiscal 1998.
In connection with Mr. Guy's retirement, the Company continued to need Mr. Guy's
consulting services and paid him $100 per month for such services during
September and October of 1995. This amount was increased to $200 per month in
November 1995 and the Company continued to pay Mr. Guy $200 per month through
the remainder of fiscal 1996, 1997 and 1998. 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
1999. In addition, Mr. Buck A. Mickel resigned as Vice President of the Company
on January 17, 1995. The Board had originally agreed to continue Mr. Buck A.
Mickel's salary following his resignation as Vice President of the Company at
$2,500 per month through June 30, 1995, during which time he would serve as a
consultant to the Company on an as-needed basis. Because of the continuing need
to oversee the management of the legal contingencies of Wiegmann & Rose,
however, Mr. Mickel continued to serve as President of Wiegmann & Rose at a
salary of $2,500 per month in lieu of consulting pay. Effective September 1,
1996, Mr. Buck A. Mickel was elected Vice President of the Company at a salary
of $4,000 per month.
<PAGE> 11
RELATED PARTY TRANSACTIONS
Certain information concerning related party transactions respecting the
members of the Compensation Committee, members of their families, and other
executive officers, directors and owners of 5% or more of the outstanding Common
Stock of the Company (a "5% or More Owner") is set forth below.
Purchase of HomeAdd Financial Corporation
On November 4, 1996, the Company purchased for cash all of the
outstanding common stock of HomeAdd Financial Corporation ("HomeAdd"), formerly
CambridgeBanc, Inc. from Emergent Group, Inc. for a total purchase price of
$15,000. This sum represents the Company's estimate of the fair value of the
furniture and equipment owned by CambridgeBanc, Inc. CambridgeBanc, Inc. was
formed by Emergent Group, Inc. in 1995. Through HomeAdd, the Company originates
and sells loans secured by liens on improved property.
In addition to the purchase agreement to acquire the common stock of
HomeAdd, the Company executed a lease agreement with Emergent Group, Inc. in
which the Company paid $18,000 for the use of additional furniture and equipment
for one year. HomeAdd executed a sublease agreement to rent through November 4,
1997, from Emergent Group, Inc. the office space that it occupied at that time
at $1,757 per month.
Mr. Buck Mickel, the former Chairman of the Board and Chief Executive
Officer of the Company and a 5% or More Owner, also served on the board of
directors of Emergent Group, Inc. and beneficially owned less than 5% of its
outstanding common stock. C. Thomas Wyche, Secretary of the Company, serves as
Secretary of Emergent Group, Inc. and is a shareholder of Emergent Group, Inc.,
owning less than 5% of its outstanding common stock. In addition, each of Buck
A. Mickel, Charles C. Mickel and Minor Mickel Shaw are 5% or More Owners of the
Company as well as shareholders of Emergent Group, Inc., each owning less than
5% of its outstanding common stock. Buck A. Mickel is the President and a
director of the Company, and the President of Wiegmann & Rose.
Salary and Other Compensation Arrangements
As described herein under the subheading "Election of
Directors"--"Management Compensation"- -"Retirement Contracts", the Company pays
consulting fees to Messrs. C.C. Guy, Charles M. Bolt and Buck A. Mickel.
Guarantees by Directors and Officers
During August 1998 the Company executed a $75,000 working capital line of
credit with a bank. This line of credit bears interest at the bank's prime rate
and matures twelve months from the date of the note. The bank requires that the
principal balance outstanding be reduced to zero for a period of at least 30
consecutive days during the year. The President and Chief Executive Officer of
the Company and his two adult siblings guarantee this line of credit.
During October 1994 the Company executed a $500,000 unsecured line of
credit with a bank. This credit facility was guaranteed by Mr. Buck Mickel and
expired on December 31, 1995. This credit facility was not used during fiscal
1996 or 1997.
Loan Arrangement
The Company believes that the Estate of Buck Mickel, the former Chairman
of the Board and Chief Executive Officer of the Company, intends to loan the
Company up to $250,000 bearing interest at 8.5% per year payable quarterly. The
loan is to be used for working capital and the principal is payable in ten
years.
<PAGE> 12
Corporate Office Arrangement
During September 1997, the Company moved its executive offices to a
facility consisting of approximately 3,000 square feet of floor space located at
28 East Court Street, Greenville, South Carolina. The monthly rental expense to
be incurred by the Company beginning in September 1997 is $2,250 under a
month-to-month lease arrangement. The lease at 28 East Court Street, Greenville,
South Carolina includes office furniture and equipment. The office space at 28
East Court Street, Greenville, South Carolina is leased from CTST, LLC. CTST,
LLC is owned by three shareholders: Buck A. Mickel, Charles C. Mickel and Minor
Mickel Shaw. As described above, each of these individuals is a beneficial owner
of more than 5% of the outstanding Common Stock of the Company. Buck A. Mickel
is a Vice President and a director of the Company, and President of Wiegmann &
Rose, and the other two shareholders are his adult siblings. The Company
believes that this lease contains provisions as favorable to the Company as
could be obtained from a third-party landlord. Micco Corporation also moved its
offices to the office facility at 28 East Court Street, Greenville, South
Carolina. Micco Corporation pays rent to CTST, LLC for the space it occupies.
Micco Corporation and the Company share common areas of this office space.
During the 1997 fiscal year the Company leased approximately 1,545 square
feet of floor space at 245 East Broad Street, Greenville, South Carolina, for
its principal executive offices under a month-to-month lease arrangement with
Micco Corporation at a monthly rental of $885 per month. Micco Corporation is
owned by, and its directors, principal officers and shareholders are, Buck A.
Mickel (President of Wiegmann & Rose, President, Chief Executive Officer and a
director of the Company and a 5% or More Owner), Minor H. Mickel (a former
director and 5% or More Owner), Minor Mickel Shaw (a 5% or More Owner) and
Charles C. Mickel (a 5% or More Owner). Buck A. Mickel, Charles C. Mickel and
Minor Mickel Shaw are the adult children of Minor H. Mickel.
The Company shared common areas of its office space with Micco
Corporation. During fiscal 1997 and 1998, Micco Corporation reimbursed the
Company for 25% of the office expenses relating to this office space, including
a portion of the salary and benefits of the Company's administrative assistant.
Such reimbursements amounted to $8,430 and $17,122 during fiscal 1997 and 1998,
respectively, after offset by the amount of rent ($3,540) owed to Micco
Corporation (1997). The Company believes that this approximates Micco
Corporation's usage of office services and that the terms of this arrangement
are at least as favorable as could be obtained from a third party.
Legal Fees
The law firm of Wyche, Burgess, Freeman & Parham, P.A. serves as general
counsel to the Company. C. Thomas Wyche, the Secretary of the Company, is a
senior member of such law firm. Fees paid to such law firm by the Company were
less than one percent of the law firm's gross revenues during the firm's last
fiscal year. The Company believes that the terms of its relationship with the
law firm are at least as favorable as could be obtained from a third party.
<PAGE> 13
PROPOSED AMENDMENT TO STOCK OPTION PLAN
(Item No. 2 on the Proxy)
The Board of Directors and the Compensation Committee recommend that the
shareholders approve adoption by the Company of Amendment No. 4 to the RSI
Holdings, Inc. Stock Option Plan (the "Option Plan", and as proposed to be
amended the "Amended Option Plan"). The proposed amendment increases the number
of shares of the Company's Common Stock that may be issued pursuant to options
granted under the plan from an aggregate of 750,000 to an aggregate of
1,250,000. The Board and the Compensation Committee recommend approval of the
proposed amendment because they believe that the Option Plan is an effective
component of management compensation and, if all currently outstanding options
were exercised in full, additional options covering only 105,000 shares could
currently be granted pursuant to the plan, which was originally adopted in 1991.
Except as set forth above, the Option Plan would remain unaltered in all
material respects.
Under the Amended Option Plan, the Board or (Committee) would have the
discretion to grant options for up to an aggregate maximum of 1,250,000 shares
of the Company's Common Stock (including shares previously issued under the
plan). As of November 30, 1998, an aggregate of 645,000 shares of the Company's
Common Stock had previously been issued or are covered by outstanding options
under the plan.
The purpose of the Amended Option Plan is to promote the growth and
profitability of the Company and its subsidiaries by increasing the personal
participation of key and middle level executives in the continued growth and
financial success of the Company and its subsidiaries, by enabling the Company
and its subsidiaries 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. The Board or a committee of the Board
administers the Amended Option Plan.
Participation in the Amended Option Plan is determined by the Board or a
committee of the Board 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 its
subsidiaries who 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 shall be granted and as to the number of shares to be
subject thereto, the Board (or committee) shall take into account, in each case,
the level of responsibility of the key or middle level executive's position, the
level of the key or middle level executive's performance, the key or middle
level executive's level of compensation, the assessed potential of the key or
middle level executive and such other factors as the Board (or committee) shall
deem relevant to the accomplishment of the purposes of the plan. Directors who
are not also key or middle level executives will not be eligible to participate
in the Amended Option Plan. At this time, the Company believes that
approximately seven employees of the Company are currently eligible to
participate in the plan.
The term of each option shall be established by the Board (or committee),
but shall not exceed ten years, and the option will be exercisable according to
such schedule as the Board of Directors (or committee) may determine. The
recipient of an option will not pay the Company any amount at the time of
receipt of the option. If an option shall expire or terminate for any reason
without having been fully exercised, the unpurchased shares subject to the
option shall again be available for the purposes of the Amended Option Plan.
In the discretion of the Board of Directors (or committee), options
granted under the Amended Option Plan may be "incentive stock options" for
federal income tax purposes. The Company is not allowed a deduction at any time
in connection with, and the participant is not taxed upon either the grant or
the exercise of, an "incentive stock option." The difference between the
exercise price of such option and the market value of the shares of Common Stock
at the date of exercise, however, constitutes a tax preference item for the
participant in the year of exercise for alternative minimum tax purposes. To
qualify as an incentive stock option, among other things, the stock acquired by
the participant must be held for at least two years after the option is granted
and one year after it is exercised. If the participant holds the stock for the
period of time required for incentive stock option qualification, then he or she
will
<PAGE> 14
be taxed only upon any gain realized upon disposition of the stock. The
participant's gain at that time will be equal to the difference between the
sales price of the stock and the exercise price. If an incentive stock option is
exercised after the death of the employee by the estate of the decedent, or by a
person who acquired the right to exercise such option by bequest or inheritance
or by reason of death of the decedent, none of the time requirements described
in this paragraph shall apply.
If the participant fails to satisfy these time requirements, the option
will be treated in a manner similar to options that are not incentive stock
options. The participant is generally not taxed upon the grant of an option that
is not an incentive stock option. Upon exercise of any such option, the
participant recognizes ordinary income equal to the difference between the fair
market value of the shares of Common Stock acquired on the date of exercise and
the exercise price. Generally, the Company receives a deduction for the amount
the participant reports as ordinary income arising from the exercise of the
option. Upon a subsequent sale or disposition of the stock, the holder would be
taxable on any excess of the selling price over the fair market value at the
date of the exercise. If the participant fails to satisfy the time requirements
described above with respect to an option intended to be an incentive stock
option, the income to the participant and the deduction for the Company shall
arise at the time of the early disposition and shall equal the excess of (a) the
lower of the fair market value of the shares at the time of exercise or such
value at the time of disposition over (b) the exercise price. The Amended Option
Plan does not satisfy all the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended ("Section 162(m)"). Nonetheless, the Company
anticipates that none of the compensation payable pursuant to the plan will lose
its deductibility by reason of Section 162(m), because no Covered Employee as
(as defined in Section 162(m)) who can participate in the plan is expected to
receive in any fiscal year aggregate compensation that exceeds $1 million and
does not qualify as performance-based compensation under Section 162(m).
The Amended Option Plan provides that no option may be exercised more
than three months after a participant's termination of employment with the
Company, unless the participant dies while in the employ of the Company or
within such three-month period or the participant's employment is terminated by
reason of having become permanently and totally disabled, in which event the
option may be exercised during the one-year period after the date of termination
of the participant's employment. In no event may an option be exercised after
the expiration of its fixed term.
Options granted pursuant to the Amended Option Plan are not transferable
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act, or
the rules thereunder.
The price per share at which each option granted under the Amended Option
Plan may be exercised shall be such price as shall be determined by the Board
(or committee) at the time of grant based on such criteria as may be adopted by
the Board (or committee) in good faith; provided, however, in the case of an
option intended to qualify as an incentive stock option, the price per share
shall not be less than the fair market value of the stock at such time such
option is granted.
A participant may exercise an option by completing each of the following
steps: (i) indicating in writing the decision to exercise the option and
delivering such notice to the Company; (ii) tendering to the Company payment in
full in cash (or, if the Board (or committee) so determines at the time of
grant, in shares of the Company's Common Stock) of the exercise price for the
shares for which the option is exercised; (iii) tendering to the Company payment
in full in cash of the amount of all federal and state withholding or other
employment taxes applicable to taxable income; and (iv) complying with such
other requirements as the Board (or committee) shall establish.
The Amended Option Plan provides that it may be terminated or amended by
the Board of Directors (or committee), except that shareholder approval would be
required in the event an amendment were to: (i) materially increase the benefits
accruing to the participants; (ii) increase the number of securities issuable
under the plan (other than an increase pursuant to the antidilution provision of
the
<PAGE> 15
plan); (iii) change the class of employees eligible to receive options; or (iv)
otherwise materially modify the requirements for eligibility.
The Amended Option Plan provides that no person, estate or entity shall
have any of the rights of a shareholder with respect to shares subject to an
option until a certificate(s) for such shares has been delivered.
No certificate(s) for shares shall be executed and delivered upon
exercise of an option until the Company shall have taken such action, if any, as
is then required to comply with the provisions of the Securities Act of 1933, as
amended, the Exchange Act, the South Carolina Uniform Securities Act, as
amended, any other applicable state blue sky law(s) and the requirements of any
exchange on which the Common Stock of the Company may, at the time, be listed.
The following table provides certain information with respect to the
Option Plan:
<TABLE>
<CAPTION>
===========================================================================================
Shares Aggregate Market
Covered by Shares Covered Value in Excess of
Options by Options Exercise Price of
Granted Since Exercised Since Exercised
Name and Position Inception Inception Options(1)($)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Buck A. Mickel, President and Chief
Executive of the Company 60,000 0 0
- -------------------------------------------------------------------------------------------
Joe F. Ogburn, Treasurer and Vice
President of the Company 85,000 0 0
- -------------------------------------------------------------------------------------------
Matthew J. Marron, Jr., President,
HomeAdd Financial Corporation 320,000 0 0
- -------------------------------------------------------------------------------------------
All current executive officers, as a
group 465,000 0 0
- -------------------------------------------------------------------------------------------
C. C. Guy, Director 20,000 0 0
- -------------------------------------------------------------------------------------------
Charles M. Bolt, Director 20,000 0 0
- -------------------------------------------------------------------------------------------
All non-executive officer employees,
as a group 240,000 7,500 0
===========================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================================
Shares Covered Dollar Value of In-
Shares Covered by Options The-Money Options
by Options Outstanding at Outstanding at
Terminated November 20, November 20, 1998
Name and Position Since Inception 1998 (2)($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Buck A. Mickel, President and Chief
Executive of the Company 0 60,000 --
- ------------------------------------------------------------------------------------------------
Joe F. Ogburn, Treasurer and Vice
President of the Company 0 115,000 --
- ------------------------------------------------------------------------------------------------
Matthew J. Marron, Jr., President,
HomeAdd Financial Corporation 0 355,000 --
- ------------------------------------------------------------------------------------------------
All current executive officers, as a
group 0 530,000 --
- ------------------------------------------------------------------------------------------------
C. C. Guy, Director 0 20,000 --
- ------------------------------------------------------------------------------------------------
Charles M. Bolt, Director 0 20,000 --
- ------------------------------------------------------------------------------------------------
All non-executive officer employees,
as a group 100,000 172,500 --
================================================================================================
</TABLE>
(1) Based on the bid per share price of the Common Stock on July 2, 1997.
(2) Based on the bid per share price of the Common Stock on November 20,
1998.
The Amended Option Plan provides that it shall terminate on the close of
business of June 27, 2000, and no option shall be granted under the plan
thereafter, but such termination shall not affect any option theretofore granted
under the plan.
As of November 20, 1998, the bid price for a share of Common Stock of the
Company was $.0625.
Each of Buck A. Mickel, Joe F. Ogburn and Matthew J. Marron, Jr.
currently participates in the plan and could be deemed to have an interest in
approval of the proposed amendment to such plan.
The Amended Option Plan is being submitted to the shareholders of the
Company for approval because the Plan requires approval of the proposed
amendment and in order to continue to qualify the plan under the "incentive
stock option" rules of the Internal Revenue Code of 1986, as amended. The
proposed amendment to the Option Plan will not become effective if the requisite
shareholder vote on approval is not obtained.
<PAGE> 16
RATIFICATION OF ELECTION OF ACCOUNTANTS
(Item No. 3 on the Proxy)
The Board of Directors recommends the ratification of the appointment of
Ernst & Young LLP, independent certified public accountants, as auditors for the
Company and its subsidiaries for fiscal year 1999 and to audit and report to the
shareholders upon the financial statements as of and for the period ending
August 31, 1999. Based upon the recommendation of the Company's Audit Committee,
the Board has appointed the accounting firm of Ernst & Young LLP as the
Company's independent auditors for the Company's 1999 fiscal year.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, and such representatives will have the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions which shareholders may have. Neither Ernst & Young LLP nor any of its
members has any relationship with the Company except in the firm's capacity as
such auditors and as the Company's tax advisor.
The appointment of auditors is approved annually by the Board of
Directors and subsequently submitted to the shareholders for ratification.
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
Annual Meeting of Shareholders to be held after the end of fiscal 1999 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 9, 1999.
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 23, 1999 for such notice to be considered timely for purposes of 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).
OTHER INFORMATION
The Company's annual report is mailed with this Proxy Statement. The
Company will provide without charge to any shareholder of record as of November
30, 1998, and to each person to whom this Proxy Statement is delivered in
connection with the Annual Meeting of Shareholders, upon written or oral request
of such person, a copy of the Company's fiscal 1998 annual report on Form
10-KSB, including financial statements and financial statement schedules, but
excluding exhibits, filed with the Securities and Exchange Commission. Upon
payment of the reasonable copying cost thereof, the Company will make available
the exhibits to the Company's fiscal 1998 annual report on Form 10-KSB. Any such
request should be directed to RSI Holdings, Inc., 28 East Court Street, Post
Office Box 6847, Greenville, South Carolina 29606, Attention:
Investor Relations.
<PAGE> 17
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 Annual 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.
C. Thomas Wyche, Secretary
Greenville, South Carolina
December 7, 1998
<PAGE> 18
EXHIBIT A
AMENDMENT NO. 4 TO RSI HOLDINGS, INC.
STOCK OPTION PLAN
This Amendment is made as of the ______ day of ____________, 1997 to the
RSI Holdings, Inc. Stock Option Plan, as amended to date (the "Plan").
1. The second sentence of Section 4 entitled "Stock Subject to Plan"
shall be deleted and replaced with the following:
An aggregate of 1,250,000 shares are reserved for the grant under this Plan of
Options, any or all of which, at the Board's (or Committee's, as applicable)
discretion, may be intended to qualify as incentive stock options under Section
422 of the Code.
In all other respects the Plan shall remain unchanged.
<PAGE> 19
APPENDIX A
PROXY
RSI HOLDINGS, INC.
ANNUAL MEETING, JANUARY 21, 1999
The undersigned shareholder of RSI Holdings, Inc., a North Carolina
corporation, hereby constitutes and appoints Buck A. Mickel and C. Thomas Wyche,
and each of them, attorneys and proxies on behalf of the undersigned to act and
vote at the Annual Meeting of Shareholders, to be held at the offices of RSI
Holdings, Inc., 28 East Court Street, Greenville, South Carolina, on Thursday,
January 21, 1999, at 10:00 a.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.
<PAGE> 20
[ ] Please mark your votes as in this example.
1. ELECTION OF DIRECTORS
Nominee(s): Buck A. Mickel C. C. Guy Charles M. Bolt
[ ] FOR all nominees listed at right (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees
(Instructions: To withhold authority to vote for an individual nominee
write that nominee's name in the space provided below.)
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
2. To vote on approval of the proposed amendment to the RSI Holdings, Inc.
Stock Option Plan to increase from 750,000 to 1,250,000 the aggregate
number of shares of the Company's common stock issuable thereunder.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. The ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company for fiscal year 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. The transaction of such other matters as may properly come before the
meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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, 2 AND 3, 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 Annual
Meeting of Shareholders dated December 7, 1998 and the Proxy Statement furnished
herewith.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
- ---------------------------------------
SIGNATURE
- ---------------------------------------
DATED
- ---------------------------------------
DATED
- ---------------------------------------
SIGNATURE IF JOINTLY OWNED
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.
