<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:
( ) Preliminary Proxy Statement.
(X) Definitive Proxy Statement.
( ) Definitive Additional Materials.
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
( ) Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
RSI Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the appropriate box):
(X) No fee required.
( ) Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
Release Date: The registrant began mailing definitive copies of the proxy
statement, form of proxy, and other solicitation materials to shareholders on
January 4, 2000.
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.
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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 27, 2000
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 27, 2000, 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 five 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 1,250,000 to 1,750,000 the aggregate
number of shares issuable thereunder;
3. The ratification of the appointment of Elliott, Davis & Company, L.L.P.
as independent auditors of the Company for fiscal year 2000; 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 December 6, 1999 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
January 4, 2000
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 27, 2000
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 27, 2000, at RSI HOLDINGS, INC., 28 EAST
COURT STREET, GREENVILLE, SOUTH CAROLINA. The approximate date of mailing this
Proxy Statement and the accompanying proxy is January 4, 2000.
Only shareholders of record at the close of business on December 6,
1999 are entitled to notice of and to vote at the Annual Meeting. As of such
date, there were outstanding approximately 7,907,488 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 Elliott, Davis &
Company, L.L.P. as the independent auditors for the Company for fiscal year
2000, 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 December
6, 1999, 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 December 6, 1999 is
required to approve the amendment to
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the Stock Option Plan. Directors are elected by a plurality of votes cast at the
Annual Meeting. The proposal to ratify the appointment of Elliott, Davis &
Company, L.L.P. as the Company's independent auditors for the Company's 2000
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 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 five directors shall be elected at the Annual Meeting.
The Common Stock may not be voted cumulatively in the election of directors.
The following five 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, three 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, except that Charles C.
Mickel is the brother of Buck A. Mickel.
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.
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The table below sets forth certain information regarding the Company's
nominees for election as directors.
NOMINEES FOR ELECTION AS
DIRECTORS OF THE COMPANY
Name, Age and Tenure as
Director Principal Occupation and Background
- ------------------------------- --------------------------------------------
C.C. Guy (67)
Director since 1978 (1)(2) Director of the Company. Mr. Guy served as
President of the Company from July 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 (69) Director of the Company. Mr. Bolt was
Director since 1982 (1)(2) President and Chief Executive 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 (44) Director of the Company. Mr. Mickel was
Director since 1988 (1)(2) 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.
Charles C. Mickel (42) Director of the Company. Mr. Mickel served
as a vice president of U. S. Shelter
Corporation from 1981 to 1990 and vice
president of asset management of Insignia
Financial Group, Inc., the successor to U.S.
Shelter Corporation, from 1990 to 1992.
Since July 1992 Mr. Mickel has been a
private investor.
Joe F. Ogburn (61) Director of the Company. Mr. Ogburn was
elected Treasurer of the Company in
September 1988 and Vice President of the
Company in 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.
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
The Board of Directors of the Company met in person four times during
the fiscal year ended August 31, 1999. 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.
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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.
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STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of December 6,
1999, 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 1,222,529 (1) 15.5
28 East Court Street
P.O. Box 6847
Greenville, SC 29606
C.C. Guy 166,224 (2) 2.1
918 Elizabeth Road
Shelby, NC 28150
Charles M. Bolt 297,889 (3) 3.8
2720 N. E. 57th Street
Fort Lauderdale, FL 33308
C. Thomas Wyche 335,916 (4) 4.3
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) 9.4
12 Eucalyptus Road
Belvedere, CA 94920
Joe F. Ogburn 197,642 (9) 2.5
208 Belvedere Avenue
Shelby, NC 28150
Matthew J. Marron, Jr. 221,650 (10) 2.8
63 Woodvale Avenue
Greenville, SC 29605
All Directors and Executive Officers 3,304,508 (11) 41.8
of the Company as a Group (6 persons)
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(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 43,333 unissued
shares subject to employee stock options held by Mr. Mickel which are currently
exercisable.
(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 33,333 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 33,333 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, 3,333 unissued shares subject to stock options held by Mr. Wyche which are
currently exercisable, 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 26,866 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 owned by the
estate of Buck 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 61,666 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
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by him and 131,550 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.
(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 (44) President and Chief Executive Officer (1)
C. Thomas Wyche (72) Secretary (2)
Joe F. Ogburn (61) Treasurer and Vice President (3)
Matthew J. Marron, Jr. (31) 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
five 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.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on review of Forms 3, 4, and 5 furnished to the Company
during fiscal year 1999, 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.
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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 $100,000 during fiscal 1998.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------- -----------------------------------
Other Restricted
Annual Stock Securities LTIP All Other
Name and Fiscal Compen- Awards Underlying Payouts Compen-
Principal Position Year Salary ($) Bonus ($) sation($) ($) Options/ ($) sation ($)
- --------------------- ----------- ----------- ----------- ----------- ----------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Buck Mickel, 1998 2,000 -- -- -- 10,000 -- --
Deceased (formerly 1997 2,400 -- -- -- -- --
Chairman of the
Board and Chief
Executive Officer)
- --------------------- ----------- ----------- ----------- ----------- ----------- ------------- --------- -----------
Buck A. Mickel, 1999 48,000 -- 228 -- 40,000 -- --
President and Chief 1998 48,000 -- 228 -- 25,000 -- --
Executive Officer 1997 48,000 5,000 -- -- 15,000 -- --
</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 January 21, 1999, the Company granted C. C. Guy, Charles M. Bolt and
C. Thomas Wyche options to purchase 10,000 shares each of the Company's Common
Stock at $.05, 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 January 21, 2004.
On August 18, 1999, the Company granted C. C. Guy, Charles M. Bolt and
C. Thomas Wyche options to purchase 10,000 shares each of the Company's Common
Stock at $.11, the market value of the Company's Common Stock on the date of the
grant. One-third of the shares of Common Stock covered by the options become
exercisable on each of the first three anniversaries of the date of the grant.
These options are scheduled to expire on August 18, 2004.
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OPTIONS GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Granted Employees in Base Price
Name (#) Fiscal Year ($/Sh) Expiration Date
- -------------------------- --------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C>
Buck A. Mickel, President 40,000 6.6% 0.05 January 21, 2009
and Chief Executive
Officer
- -------------------------- --------------- --------------- ----------- ----------------
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
---------------------------------------- ------------------------------------
Number Of Unexercised Securities
Underlying Options/SARs at Fiscal
Year-End (#)
Exercisable/
Name Unexercisable
---------------------------------------- ------------------------------------
Buck A. Mickel, President and Chief
Executive Officer 43,333/56,667
---------------------------------------- ------------------------------------
RETIREMENT CONTRACTS
Messrs. C.C. Guy and Charles M. Bolt retired as officers of the Company
on January 17, 1995. The Company paid each of these two retired officers $200
per month during fiscal 1999. 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 2000.
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.
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 December 1998 the Company entered into a working capital line of
credit arrangement with a bank in the amount of $150,000 and during August 1998
the Company renewed a $75,000 working capital line of credit with a bank. These
lines of credit bear interest at the bank's prime rate. The $150,000 credit
facility matures in January 2000 and the $75,000 credit facility matures in
August 2000. The bank requires that the principal balance outstanding on the
$75,000 be reduced to zero for a period of at least 30 consecutive days during
the year. The
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<PAGE> 13
President and Chief Executive Officer of the Company and his two adult siblings
guarantee this line of credit.
LOAN ARRANGEMENT
The Estate of Buck Mickel, the former Chairman of the Board and Chief
Executive Officer of the Company, loaned the Company $250,000 bearing interest
at 8.5% per year payable quarterly. The loan was used for working capital and
the principal is payable in ten years.
CORPORATE OFFICE ARRANGEMENT
During the fiscal year 1999, the Company's executive offices were
located in 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 incurred by the Company during the fiscal year 1999 was $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 was 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 the President and Chief Executive Officer and a director of
the Company 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.
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.
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<PAGE> 14
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 1,250,000 to an aggregate of
1,750,000. 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 27,500 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 1,750,000 shares
of the Company's Common Stock (including shares previously issued under the
plan). As of December 6, 1999, an aggregate of 1,222,500 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
12
<PAGE> 15
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 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;
13
<PAGE> 16
(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 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 North 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>
Aggregate Dollar Value
Shares Shares Market Value Shares of
Covered by Covered by in Excess of Covered by Shares Covered In-The-Money
Options Options Exercise Options by Options Options
Granted Exercised Price of Terminated Outstanding at Outstanding at
Since Since Exercised Since December 6, December 6,
Name and Position Inception Inception Options(1)($) Inception 1999 1999 (2)($)
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Buck A. Mickel, President
and Chief Executive of the 100,000 0 0 0 100,000 -
Company
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
Joe F. Ogburn, Treasurer and
Vice President of the Company 250,000 0 0 0 250,000 -
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
Matthew J. Marron, Jr.,
President, HomeAdd Financial 425,000 0 0 0 425,000 -
Corporation
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
All current executive
officers, as a group 775,000 0 0 0 775,000 -
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
C. C. Guy, Director 20,000 0 0 0 20,000 -
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
Charles M. Bolt, Director 20,000 0 0 0 20,000 -
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
All non-executive officer
employees, as a group 500,000 11,666 0 130,000 375,834 -
- ------------------------------ ------------ --------------- --------------- ------------- -------------- ----------------
</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
December 6, 1999.
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 December 6, 1999, the bid price for a share of Common Stock of
the Company was $.05.
14
<PAGE> 17
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.
RATIFICATION OF ELECTION OF ACCOUNTANTS
(Item No. 3 on the Proxy)
The Board of Directors recommends the ratification of the appointment
of Elliott, Davis & Company, L.L.P. ("Elliott Davis"), independent certified
public accountants, as auditors for the Company and its subsidiaries for fiscal
year 2000 and to audit and report to the shareholders upon the financial
statements as of and for the period ending August 31, 2000. Based upon the
recommendation of the Company's Audit Committee, the Board has appointed the
accounting firm of Elliott Davis as the Company's independent auditors for the
Company's 2000 fiscal year. Representatives of Elliott Davis 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 Elliott
Davis 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.
On September 7, 1999, the Company dismissed Ernst & Young, LLP ("Ernst
& Young") as its independent auditors. On the same date, the Company retained
Elliott Davis as its independent auditors for the year ended August 31, 1999.
The decision to change the Company's independent auditors was made by the
Company's board of directors. Each of the members of the Company's board of
directors serve on the Company's audit committee.
The reports of Ernst & Young on the Company's financial statements for
the past two fiscal years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles, except that Ernst & Young's report on the Company's
financial statements for the year ended August 31, 1998 included an explanatory
paragraph describing an uncertainty regarding the Company's ability to continue
as a going concern.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended August 31, 1998, and in the subsequent
interim period, there were no disagreements with Ernst & Young on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures which, if not resolved to the satisfaction of Ernst & Young,
would have caused Ernst & Young to make reference to the matter in their report.
The Company has not consulted Elliott Davis during the two most recent
fiscal years or any subsequent period prior to engaging Elliott Davis regarding
any application of accounting principles, the type of audit opinion that Elliott
Davis might render on the Company's financial statements or any advice the
Company received from Ernst & Young.
The appointment of auditors is approved annually by the Board of
Directors and subsequently submitted to the shareholders for ratification.
15
<PAGE> 18
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 2000 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 17, 2000.
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 Exchange Act Rule 14a-4(c) (which concerns the extent to which a
proxy may confer discretionary voting authority with respect to matters not
specifically set forth in the proxy).
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 DECEMBER
6, 1999, 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 1999 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 1999 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.
16
<PAGE> 19
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
January 4, 2000
17
<PAGE> 20
APPENDIX A
PROXY
RSI HOLDINGS, INC.
ANNUAL MEETING, JANUARY 27, 2000
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 27, 2000, 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> 21
[X] Please mark
your votes as
in this example.
FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the to vote for
contrary below) all nominees Nominee(s): Buck A. Mickel
C. C. Guy
1. ELECTION [ ] [ ] Charles M. Bolt
OF Joe F. Ogburn
DIRECTORS Charles C. Mickel
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To vote on approval of the proposed [ ] [ ] [ ]
amendment to the RSI Holdings, Inc. Stock
Option Plan to increase from 1,250,000 to
1,750,000 the aggregate number of shares of
the Company's common stock issuable
thereunder.
3. The ratification of the appointment [ ] [ ] [ ]
of Elliott, Davis & Company, L.L.P.
as independent auditors of the
Company for fiscal year 2000.
4. The transaction of such other [ ] [ ] [ ]
matters as may properly come before
the meeting or any adjournment
thereof.
A majority of said attorneys and proxies who shall be present and
acting as such at the meeting or any adjournment or adjournments thereof (or, if
only one such attorney and proxy is present and acting, then that one) shall
have and may exercise all the powers hereby conferred.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RSI HOLDINGS,
INC. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NOT OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR APPROVAL OF PROPOSALS 1, 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 January 4, 2000 and the Proxy Statement furnished
herewith.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE
----------------------------------- -----------------------------------
DATED SIGNATURE IF JOINTLY OWNED DATED
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
<PAGE> 22
EXHIBIT A
AMENDMENT NO. 4 TO RSI HOLDINGS, INC.
STOCK OPTION PLAN
This Amendment is made as of the ______ day of _______, 2000 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 1,750,000 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.
