-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QuaQ4qEdCvEM+81pyZKzU5pBzs3/lFrXuBwK0Ag7/8KTq35siU5/cqS+Oeriyc5D 3vthOu/8kqu/IAGKUSe6Jw== 0000892569-96-001449.txt : 19960809 0000892569-96-001449.hdr.sgml : 19960809 ACCESSION NUMBER: 0000892569-96-001449 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960822 FILED AS OF DATE: 19960808 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERPLEX GROUP INC CENTRAL INDEX KEY: 0000915870 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 330411354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23602 FILM NUMBER: 96605820 BUSINESS ADDRESS: STREET 1: 1382 BELL AVE CITY: TUSTIN STATE: CA ZIP: 92680 BUSINESS PHONE: 7142585600 MAIL ADDRESS: STREET 1: 1382 BELL AVENUE CITY: TUSTIN STATE: CA ZIP: 92680 DEF 14A 1 DEFINITIVE PROXY STATEMENT 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 / / 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 - ------------------------------------------------------------------------------- THE CERPLEX GROUP, INC. (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------- Board of Directors of Registrant -------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): / / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: N/A - ------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: N/A - ------------------------------------------------------------------------------- (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: N/A - ------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: N/A - ------------------------------------------------------------------------------- (5) Total fee paid: N/A - ------------------------------------------------------------------------------- /X/ 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 filling. (1) Amount previously paid: N/A - ------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: N/A - ------------------------------------------------------------------------------- (3) Filing Party: N/A - ------------------------------------------------------------------------------- (4) Date Filed: N/A - ------------------------------------------------------------------------------- 2 TO THE STOCKHOLDERS OF THE CERPLEX GROUP, INC. You are cordially invited to attend the Annual Meeting of Stockholders of The Cerplex Group, Inc. ("Cerplex" or the "Company") on Thursday, August 22, 1996 at 9:00 a.m., Pacific Daylight Savings time. The Annual Meeting will be held at the Hyatt Regency Irvine, 17900 Jamboree Road, Irvine, California. At the meeting, you will be asked to consider and vote upon the following proposals: (i) the approval of a proposal to authorize the issuance of Common Stock equal to 20% or more of the outstanding Common Stock upon conversion of the Company's Series B Convertible Preferred Stock; (ii) the approval of certain amendments to the Company's Restated 1993 Stock Option Plan, as amended (the "1993 Plan"), which will increase the number of shares of the Company's Common Stock available for issuance from 1,000,000 to 2,000,000 shares, and increase the total number of shares of Common Stock for which any one individual may be granted stock options or separately exercisable stock appreciation rights in any calendar year from 300,000 to 500,000; (iii) the election of seven (7) individuals to serve as the Company's Board of Directors; and (iv) the ratification of KPMG Peat Marwick LLP as the Company's independent auditors for the current fiscal year. Whether or not you plan to attend the Annual Meeting, please mark, sign, date and return the enclosed proxy card promptly in the accompanying post-paid reply envelope. By returning the proxy, you can help Cerplex avoid the expense of duplicate proxy solicitations and possibly having to reschedule the Annual Meeting if a quorum of the outstanding shares is not present or represented by proxy. If you decide to attend the Annual Meeting and wish to change your proxy vote, you may do so simply by voting in person at the Annual Meeting. August 7, 1996 WILLIAM A. KLEIN Chairman of the Board 3 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF THE CERPLEX GROUP, INC. _____________ NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The Cerplex Group, Inc., a Delaware corporation ("Cerplex" or the "Company"), will be held on Thursday, August 22, 1996 at 9:00 a.m. Pacific Daylight Savings time at the Hyatt Regency Irvine, 17900 Jamboree Road, Irvine, California, for the following purposes: 1. The approval of a proposal to authorize the issuance of Common Stock equal to 20% or more of the outstanding Common Stock upon conversion of the Company's Series B Convertible Preferred Stock; 2. To approve certain amendments to Cerplex's Restated 1993 Stock Option Plan as amended (the "1993 Plan") to (i) increase the number of shares of the Company's Common Stock available for issuance from 1,000,000 to 2,000,000 shares and (ii) increase the total number of shares of Common Stock for which any one individual may be granted stock options or separately exercisable stock appreciation rights in any calendar year from 300,000 to 500,000; 3. To elect a seven (7) member Board of Directors for Cerplex from the following nominees: Richard C. Davis, Robert Finzi, Jerome Jacobson, Patrick S. Jones, William A. Klein, Myron Kunin and James T. Schraith; 4. To ratify the selection of KPMG Peat Marwick LLP as Cerplex's independent auditors for the current fiscal year ending December 29, 1996; and 5. To transact such other business as may properly come before the meeting. The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. The Board of Directors has fixed the close of business on July 23, 1996 as the record date for the determination of stockholders entitled to notice of and to vote at this Annual Meeting and at any continuation or adjournment thereof. By Order of the Board of Directors FREDERIC A. RANDALL, JR. Secretary Tustin, California August 7, 1996 ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY OR PROXIES AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. A POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. 4 PROXY STATEMENT __________ THE CERPLEX GROUP, INC. __________ INFORMATION CONCERNING SOLICITATION AND VOTING GENERAL The enclosed proxy is solicited on behalf of the Board of Directors (the "Board") of The Cerplex Group, Inc. ("Cerplex" or the "Company") for use at the Annual Meeting of Stockholders to be held on Thursday, August 22, 1996 at 9:00 a.m. Pacific Daylight Savings time, at which time stockholders of record on July 23, 1996 will be entitled to vote. On July 23, 1996, Cerplex had outstanding 13,402,467 shares of Common Stock and 8,000 shares of Series B Convertible Preferred Stock ("Series B Stock"). Stockholders of record on such date are entitled to one vote for each share of Common Stock held on such date and 197.2 votes for each share of Series B Stock held on such date, on all matters to be voted upon at the meeting. Cerplex intends to mail this proxy statement and the accompanying proxy card on or about August 7, 1996 to all stockholders entitled to vote at the Annual Meeting. Cerplex's principal executive offices are located at 1382 Bell Avenue, Tustin, California 92780. The telephone number at that address is (714) 258-5600. VOTING On each matter to be considered at the meeting, each holder of Common Stock will be entitled to cast one vote for each share of the Company's Common Stock held of record by such stockholder on July 23, 1996 and each holder of Series B Stock shall be entitled to cast 197.2 votes for each share of Series B Stock held of record by such stockholder as of July 23, 1996. The holders of Common and Series B Stock vote together as a single class. Pursuant to Delaware law, directors are elected by a plurality vote. The other matters submitted for stockholder approval at this Annual Meeting will be decided by the affirmative vote of a majority of shares present in person or represented by proxy at the 1996 Annual Meeting and entitled to vote on each matter. With regard to the election of directors, votes may be cast in favor of or withheld from each nominee. Votes that are withheld will be excluded entirely from the vote and will have no effect. Abstentions may be specified on all proposals except the election of directors and will be counted as present for purposes of determining the existence of a quorum regarding the item on which the abstention is noted. If shares are not voted by the broker who is the record holder of the shares, or if shares are not voted in other circumstances in which proxy authority is defective or has been withheld with respect to any matter, these non-voted shares are not deemed to be present or represented for purposes of determining whether stockholder approval of that matter has been obtained. REVOCABILITY OF PROXIES Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time before it is voted. It may be revoked by the holder of record by filing with the Secretary of Cerplex at Cerplex's principal executive office, a written notice of revocation or a new duly executed proxy bearing a date later than the date indicated on the previous proxy, or it may be revoked by the holder of record attending the meeting and voting in person. Attendance at the meeting will not, by itself, revoke a proxy. SOLICITATION Cerplex will bear the entire cost of proxy solicitation, including costs of preparing, assembling, printing and mailing this proxy statement, the proxy card and any additional material furnished to stockholders. Copies of 2. 5 the solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding in their names shares of Common Stock beneficially owned by others, to forward to such beneficial owners. Cerplex may reimburse persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, telegram or personal solicitation by directors, officers or other regular employees of Cerplex. No additional compensation will be paid to directors, officers or other regular employees for such services. GENERAL SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information known to Cerplex regarding the beneficial ownership as of July 23, 1996 of Cerplex's Common Stock by (i) each Named Executive Officer of Cerplex (as such term is defined under the caption "Compensation of Directors and Executive Officers -- Summary of Cash and Certain Other Compensation"), (ii) each director and nominee for director of Cerplex, (iii) all current directors and executive officers of Cerplex as a group, and (iv) each stockholder known to Cerplex to be a beneficial owner of more than five percent (5%) of Cerplex's Common Stock.
Amount and Nature of Beneficial Percent of Name of Beneficial Owner Ownership (#) Class ------------------------ ------------------- ----------- William A. Klein . . . . . . . . . . . . . . . . . . . 4,990,383 (1) 37.2% Myron Kunin . . . . . . . . . . . . . . . . . . . . . . 972,642 (2) 7.2 Theodore J. Wisniewski . . . . . . . . . . . . . . . . 753,603 5.6 Richard C. Davis . . . . . . . . . . . . . . . . . . . 703,204 5.2 James T. Schraith . . . . . . . . . . . . . . . . . . . 440,744 (3) 3.2 Alan L. Weaver . . . . . . . . . . . . . . . . . . . . 144,536 1.1 Bruce D. Nye . . . . . . . . . . . . . . . . . . . . . 52,381 (4) * Jerome Jacobson . . . . . . . . . . . . . . . . . . . . 47,605 (5) * Robert Finzi . . . . . . . . . . . . . . . . . . . . . 33,500 (6) * Patrick S. Jones . . . . . . . . . . . . . . . . . . . 20,000 (7) * All current directors and executive officers as a 7,208,078 (8) 51.8 group (10 persons) DLJ Capital Corporation . . . . . . . . . . . . . . . . 1,510,255 (9) 10.8 140 Broadway New York, NY 10005 Sprout Growth II, L.P. . . . . . . . . . . . . . . . . 1,294,599(10) 9.3 140 Broadway New York, NY 10005 The Northwestern Mutual Life Insurance Company . . . . 1,358,261(11) 9.2 720 East Wisconsin Avenue Milwaukee, WI 53202 John Hancock Mutual Life Insurance Company . . . . . . 893,261(12) 6.2 John Hancock Place 200 Clarendon Street Boston, MA 02117
- --------------------- * Less than 1% 3. 6 (#) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the "Commission") and generally includes voting or investment power with respect to securities. Shares of Common Stock subject to options, warrants and shares of Series B Stock which are currently exercisable or convertible or which will become exercisable or convertible within sixty (60) days after July 23, 1996 are deemed outstanding for computing the beneficial ownership of the person holding such option, warrant or share of Series B Stock, but are not outstanding for computing the beneficial ownership of any other person or entity. The shares of Series B Stock are convertible into shares of Common Stock within sixty (60) days after July 23, 1996. The conversion rate fluctuates based on the trading price of the Company's Common Stock. For the purpose of the foregoing table and the footnotes below, each share of Series B Stock is assumed to be convertible into 197.2 shares of Common Stock. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. (1) Includes 50,000 shares of Common Stock held by the Klein 1994 Charitable Remainder UniTrust (the "Trust") and 180,000 shares of Common Stock held by The Klein Foundation. Mr. Klein disclaims beneficial ownership of these shares except to the extent of his indirect interest in shares held by the Trust. (2) Includes 20,000 shares of Common Stock issuable upon the exercise of immediately exercisable options. (3) These 440,744 shares of Common Stock are issuable upon the exercise of immediately exercisable options. (4) Includes 9,921 shares of Common Stock issuable upon the exercise of immediately exercisable options. (5) Includes 10,000 shares of Common Stock issuable upon the exercise of immediately exercisable options. (6) Includes 30,000 shares issuable upon the exercise of immediately exercisable options held by Mr. Finzi for the beneficial ownership of DLJ Capital Corporation. Mr. Finzi disclaims beneficial ownership of these shares. Mr. Finzi serves as a Vice President of the Sprout Group, a division of DLJ Capital Corporation, and is a general partner of one of the general partners of Sprout Growth II, L.P. As such, Mr. Finzi may be deemed the beneficial owner of the shares of Common Stock held by Sprout Growth II, L.P. Mr. Finzi disclaims such beneficial ownership except to the extent of his indirect partnership interest in Sprout Growth II, L.P. (7) These 20,000 shares of Common Stock are issuable upon the exercise of immediately exercisable options. (8) This number reflects the stock ownership of those individuals who are executive officers and directors of the Company as of July 23, 1996 (such individuals are named in "Executive Officers" and "Information With Respect to Nominees" herein) and incorporates the shares and options referenced in footnotes (1) through (7) above. (9) Includes 1,294,599 shares beneficially owned by Sprout Growth II, L.P. (see footnote 10 below). DLJ Capital Corporation, as the managing general partner of Sprout Growth II, L.P., may be deemed to share voting and dispositive power with respect to these shares. DLJ Capital Corporation disclaims beneficial ownership of these shares except to the extent of its direct and indirect partnership interests in Sprout Growth II, L.P. Also includes 231 shares of Series B Stock which are convertible into 45,562 shares of Common Stock. Also includes 53,826 shares issuable upon exercise of an immediately exercisable warrant beneficially owned by DLJ Capital Corporation and 30,000 shares issuable upon the exercise of options held by Mr. Finzi for the beneficial interest of DLJ Capital Corporation. See footnote (6) above. (10) Includes 447,534 shares of Common Stock issuable upon conversion of 2,269 shares of Series B Stock. (11) These shares of Common Stock are issuable upon the exercise of immediately exercisable warrants. (12) These shares of Common Stock are issuable upon the exercise of immediately exercisable warrants. 4. 7 EXECUTIVE OFFICERS The following table sets forth certain information concerning the executive officers of the Company as of July 23, 1996:
NAME AGE POSITION - ---- --- -------- William A. Klein 55 Chairman of the Board James T. Schraith 38 President and Chief Executive Officer Richard C. Davis 46 President of International Operations James R. Eckstaedt 42 Senior Vice President and Chief Financial Officer Philip E. Pietrowski 51 Senior Vice President, North American Operations Robert N. McFarland 51 Senior Vice President, North American Sales
William A. Klein has been the Chairman of the Board of Directors of Cerplex since its inception in May 1990. Mr. Klein also served as the Company's Chief Executive Officer from August 1993 until October 1995. Mr. Klein was Chairman of InCirT Technology Incorporated from 1990 until September 1993 at which time such entities were consolidated with the Company. Mr. Klein was previously President and Chief Executive Officer of Century Data, Inc. from 1986 until 1990. Mr. Klein was the founder and Chief Executive Officer of Cybernex from October 1981 until its merger with Read-Rite in 1986. Prior to October 1981, Mr. Klein held various positions over a 19-year period with IBM in engineering, manufacturing and management. James T. Schraith has served as President and Chief Executive Officer and a member of the Board of Directors of Cerplex since October 1995. Before joining Cerplex, Mr. Schraith was employed from 1987 to September 1995 by AST Research, Inc., where he served as a director and the President and Chief Operating Officer of the company. From 1978 to 1987 Mr. Schraith held various positions with Schlumberger Ltd. He currently serves on the Board of Directors of Semtech Corporation. Richard C. Davis has served as a member of the Board of Directors of Cerplex since May 1990 and as the President of International Operations of Cerplex since October 1995. Prior to October 1995, Mr. Davis served as the President of Cerplex and in various executive positions since May 1990. Mr. Davis was the Chief Financial Officer of each of EMServe, Inc., Diversified Manufacturing Services, Inc. and InCirT Technology Incorporated from July 1991, June 1991 and February 1990, respectively, until September 1993 at which time such entities were consolidated with the Company. Mr. Davis was Vice President and Chief Financial Officer of Century Data, Inc. from 1986 until 1990. Prior to 1986, Mr. Davis held various financial, accounting and managerial positions within Xerox Corporation. James R. Eckstaedt joined the Company as Senior Vice President and Chief Financial Officer in July 1996. From 1987 to 1996, Mr. Eckstaedt held various finance-related positions with Western Digital Corporation, including Vice President and Treasurer in 1996; Vice President, Finance from 1994 to 1996; Vice President and Treasurer from 1993 to 1994; and Assistant Treasurer from 1991 to 1993. Philip E. Pietrowski has served as Senior Vice President, North American Operations of Cerplex since January 1996. He joined the Company in October 1995 as Vice President of Logistics. Prior to that time, Mr. Pietrowski spent twenty-four years at Digital Equipment Corporation in Massachusetts, holding various senior level positions. The last position he held with Digital Equipment was Corporate Multivendor Services Business Manager, where Mr. Pietrowski was responsible for worldwide service logistics, repair of information systems and administration. Robert N. McFarland has served as the Senior Vice President, North American Sales for Cerplex since joining the Company in January 1996. From 1992 to 1996, he held a number of positions with AST Research, Inc., most recently as Vice President and General Manager of Asian and Middle East Operations. Mr. McFarland spent nine years in vice president and director level sales management positions with The Mastercare 5. 8 Corporation, Computer Language Research, Inc. and LEGENT Corporation and eleven years with Auto-Trol Technology Corporation, finishing as Vice President of International Operations. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS COMPENSATION COMMITTEE REPORT It is the responsibility of the Compensation Committee (the "Committee" or "Compensation Committee") of the Cerplex Board of Directors to make recommendations to the Board with respect to the base salary and bonuses to be paid to the Company's executive officers each fiscal year. The Committee also administers the Company's Restated 1993 Stock Option Plan, as amended (the "1993 Plan"). The following is a summary of the policies of the Committee which affected the compensation paid to executive officers for the last fiscal year, as reflected in the tables and text set forth elsewhere in this Proxy Statement. GENERAL COMPENSATION POLICY. Under the supervision of the Committee, Cerplex has developed a compensation policy which is designed to attract and retain qualified key executives critical to the Company's success and to provide such executives with performance-based incentives tied to the financial performance of Cerplex. One of the Committee's primary objectives is to have a substantial portion of each officer's compensation contingent upon the Company's performance as well as upon the individual's contribution to the success of Cerplex as measured by his personal performance. Accordingly, each executive officer's compensation package is fundamentally comprised of three elements: (i) base salary which reflects individual experience, expertise and responsibility and is designed to be competitive with salary levels in the industry; (ii) annual incentive compensation which reflects individual and Company performance for the year; and (iii) long-term stock-based incentive awards which strengthen the mutuality of interests between the executive officers and the Cerplex stockholders. FACTORS. Several of the more important factors which were considered in establishing the components of each executive officer's compensation package for the 1995 fiscal year are summarized below. Additional factors were also taken into account, and the Committee may in its discretion apply entirely different factors, particularly different measures of financial performance, in setting executive compensation for future fiscal years. - BASE SALARY. The base salary for each officer is set on the basis of experience, expertise, responsibility, the salary levels in effect for comparable positions in the industry and internal comparability considerations. As a general matter, year-to-year adjustments to each executive officer's base salary are based upon personal performance for the year and changes in the general level of base salaries of persons in positions comparable to that of the executive officer within the industry. - ANNUAL INCENTIVE COMPENSATION. The Board of Directors has discretionary authority to award cash bonuses to executive officers and employees in accordance with recommendations made by the Committee based upon the extent to which certain financial and performance targets established annually by the Committee are met and the contribution of each such officer and employee to the attainment of such targets. For fiscal year 1995, the performance targets for each of the Named Executive Officers included net sales and pre-tax profit. The weight given to each factor varied from individual to individual. No bonuses were awarded in fiscal year 1995 to the Named Executive Officers due to the Company's failure to meet the performance targets established by the Committee. - LONG-TERM INCENTIVE COMPENSATION. Cerplex has also adopted the 1993 Plan and, subject to stockholder approval, certain amendments thereto. Each grant under the 1993 Plan is designed to align the interests of the executive officers with those of the stockholders and provide each individual with a significant incentive to manage Cerplex from the perspective of an owner with an equity stake in the business and to remain in the service of the Company. The Company has established certain general guidelines in making option grants to the executive officers in an attempt to target a fixed number of vested option shares based upon the individual's position with the Company and his or her existing holdings of vested options. The number of shares subject to each option grant is based upon the officer's tenure, level of responsibility and relative position in Cerplex. However, the Company does not adhere strictly to these guidelines and will vary the size of the option grant made to each executive officer as it feels the circumstances warrant. Each grant allows the officer to acquire shares of Cerplex Common Stock at a fixed price per share (the market price on the grant date) over a specified period of time (up to 10 years). The option vests over time subject to the executive officer's 6. 9 continued employment with the Company. Accordingly, the option will provide a return to the executive officer only if he or she remains in the Company's employ and the market price of the Company's Common Stock appreciates over the option term. - CEO COMPENSATION. The base salary established for the 1995 fiscal year for Mr. William A. Klein, the Company's Chief Executive Officer until October 1995 and for Mr. James T. Schraith, the Company's Chief Executive Officer as of October 1995, reflected the Committee's policy to maintain a level of stability and certainty with respect to the Chief Executive Officer's base salary from year to year, and there was no intent to have this particular component of compensation affected to any significant degree by the Company's performance factors. In setting the Chief Executive Officer's base salary, the Committee sought to provide a level of base salary competitive to that paid to other chief executive officers in the industry and to maintain internal comparability. No bonuses were paid to either Chief Executive Officer during 1995. Mr. Schraith was granted an option to purchase 500,000 shares in connection with his commencement of employment with the Company in order to strengthen the mutuality of interests between the Chief Executive Officer and the Cerplex stockholders and encourage Mr. Schraith to remain in the employ of the Company. TAX LIMITATION. As a result of federal tax legislation enacted in 1993, a publicly-held company such as Cerplex will not be allowed a federal income tax deduction for compensation paid to certain executive officers, to the extent that compensation exceeds $1 million per officer in any year. This limitation was in effect for the 1995 fiscal year, but the compensation paid to the Company's executive officers for the 1995 fiscal year did not exceed the $1 million limit per officer. This limitation will apply to all compensation paid to the covered executive officers which is not considered to be performance based. Compensation which does qualify as performance-based compensation will not have to be taken into account for purposes of this limitation. At the Annual Meeting, the stockholders are being asked to approve certain amendments to the 1993 Plan which are intended to assure that any compensation deemed paid in connection with the exercise of stock options granted under that plan with an exercise price equal to the market price of the option shares on the grant date will qualify as performance- based compensation. Because it is very unlikely that the cash compensation payable to any of the Company's executive officers in the foreseeable future will approach the $1 million limit, the Committee has decided at this time not to take any other action to limit or restructure the elements of cash compensation payable to the Company's executive officers. The Committee will reconsider this decision should the individual compensation of any executive officer ever approach the $1 million level. Dated: August 7, 1996 Compensation Committee Robert Finzi Myron Kunin 7. 10 STOCK PERFORMANCE GRAPH The graph depicted below shows Cerplex's stock price as an index for the period commencing April, 1994 to December 29, 1995 assuming $100 invested on April 8, 1994 (the date of Cerplex's initial public offering) and reinvestment of dividends, along with the composite prices of companies listed on the University of Chicago's Center for Research on Security Prices ("CRSP") Total Return Index for National Association of Securities Dealers Automated Quotation ("Nasdaq") Stock Market. PERFORMANCE GRAPH FOR THE CERPLEX GROUP, INC. INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN CRSP TOTAL RETURN INDEX FOR NASDAQ STOCK MARKET STOCKHOLDER RETURN ON PERFORMANCE GRAPH [GRAPH]
Apr-94 Dec-94 Dec-95 CERPLEX 100 98 70 CRSP 100 103 146 NASDAQ 100 120 183
Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, which might incorporate future filings, including this Proxy Statement, the preceding Compensation Committee Report on Executive Compensation and the Company's Stock Performance Graph will not be incorporated by reference into any of those prior filings, nor will such report or graph be incorporated by reference into any future filings made by the Company under those statutes. 8. 11 SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table sets forth the compensation awarded to, earned by or paid for services rendered to the Company in all capacities during the 1993, 1994 and 1995 fiscal years by (i) the Company's Chief Executive Officers during fiscal 1995 and (ii) the Company's four other most highly compensated executive officers who were serving as executive officers at the end of that year (together, the "Named Executive Officers"). No executive officer who would have otherwise been includable in such table on the basis of salary and bonus earned for the 1995 fiscal year resigned or terminated employment during the fiscal year. SUMMARY COMPENSATION TABLE
Annual Compensation ------------------- Long-Term Compensation ------------- Securities Underlying All Other Name and Principal Position Year Salary($) Options (#) Compensation($)(1) --------------------------- ---- --------- ----------- ------------------ William A. Klein(2) 1995 $415,422 -- $791 Chairman of the Board 1994 392,343 -- 660 1993 398,115 -- 900 James T. Schraith(3) 1995 84,612 500,000 195 President and Chief 1994 -- -- -- Executive Officer 1993 -- -- -- Richard C. Davis 1995 202,356 -- 791 President of International 1994 196,197 -- 660 Operations 1993 199,083 -- 900 Bruce D. Nye(4) 1995 150,020 -- 791 Vice President and 1994 131,552 -- 660 Chief Financial Officer 1993 44,769 52,381 57 Theodore J. Wisniewski(5) 1995 152,332 -- 791 Sr. Vice President 1994 156,735 -- 660 Corporate Quality & Engineering 1993 149,539 -- 900 Alan L. Weaver(6) 1995 152,332 -- 791 President of the 1994 156,735 -- 660 InCirT Technology Division 1993 149,059 -- 315
__________________________________ (1) Reflects payments of term life insurance premiums for each Named Executive Officer. (2) Mr. Klein served as the Company's Chief Executive Officer until October 1995. (3) Mr. Schraith joined the Company as its Chief Executive Officer in October 1995. Had Mr. Schraith been employed by the Company for all of 1995, his base salary would have been $400,000 and the amount of life insurance premiums paid by the Company would have been $791. (4) Mr. Nye joined the Company in August 1993. Had Mr. Nye been employed by the Company for all of 1993, his salary would have been $120,000 and the amount of life insurance premiums paid by the Company would have been $153. Mr. Nye served as an executive officer of the Company until July 1996. (5) Mr. Wisniewski served as an executive officer of the Company until January 1996. (6) Mr. Weaver served as an executive officer of the Company until January 1996. 9. 12 STOCK OPTIONS The following table sets forth, for the year ended December 31, 1995, information concerning the grant of options to purchase shares of Common Stock under the Company's 1993 Plan to the Named Executive Officers. No stock appreciation rights have been granted to any of the Named Executive Officers. OPTION GRANTS IN LAST FISCAL YEAR
Percent of Number of Total Options Potential Realizable Value Securities Granted to at Assumed Annualized Rates Underlying Employees in Exercise of of Stock Price Appreciation Options Fiscal Year Base Price Expiration For Option Name Granted (%) ($/Sh) Date Term(4) ---- ------------- --------------- ------------ ----------- --------------------------- 5% 10% -- --- James T. Schraith 500,000(1) 69.9(2) 6.75(3) 10/02/05 $2,122,519 $5,378,881
(1) The option was granted on October 3, 1995 and has a maximum term of ten years, subject to earlier termination in the event of the optionee's cessation of service with the Company. 440,744 of such option shares are immediately exercisable, but subject to repurchase by the Company which repurchase right lapses with respect to twenty-five percent (25%) of the option shares on October 3, 1996 and the balance of the option shares in thirty-six (36) equal successive monthly installments thereafter. Of the 59,256 remaining option shares, twenty-five percent (25%) become exercisable on October 3, 1996 and the balance become exercisable thereafter in a series of thirty-six (36) equal successive monthly installments. (2) Based on option grants for an aggregate of 715,000 shares granted to employees in 1995, including the options granted to the Named Executive Officers. (3) The exercise price per share of the options granted represents the fair market value of the underlying shares of Common Stock on the date the options were granted, as determined by the Company's Compensation Committee. The exercise price may be paid in cash, in shares of the Company's Common Stock valued at fair market value on the exercise date or through a cashless exercise procedure involving a same-day sale of the purchased shares. The Company may also finance the option exercise by loaning the optionee sufficient funds to pay the exercise price for the purchased shares and the federal and state income or employment tax liability incurred by the optionee in connection with such exercise. The optionee may be permitted, subject to the approval of the Compensation Committee, to apply a portion of the shares purchased under the option (or to deliver existing shares of Common Stock) in satisfaction of such tax liability. (4) Potential realizable value is based on the assumption that the price per share of Common Stock appreciates at the assumed annual rate of stock appreciation for the option term. There is no assurance that the assumed 5% and 10% annual rates of appreciation (compounded annually) will actually be realized over the term of the option. The assumed 5% and 10% annual rates are set forth in accordance with the rules and regulations adopted by the Securities and Exchange Commission and do not represent the Company's estimate of stock price appreciation. 10. 13 OPTION EXERCISES AND HOLDINGS The table below sets forth information concerning unexercised options held as of the end of fiscal 1995 by the Named Executive Officers. No stock options or stock appreciation rights were exercised during such year and no stock appreciation rights were outstanding at the end of such fiscal year. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised In-the- Underlying Unexercised Money Options at FY-End Name Options at FY-End (#) ($)(1) ---- --------------------- --------------------------------- Exercisable Unexercisable Exercisable Unexercisable ----------- ------------- ----------- ------------- William A. Klein -- -- -- -- James T. Schraith 440,744(2) 59,256(3) $440,744 $59,256 Richard C. Davis -- -- -- -- Bruce D. Nye 34,921(4) -- 245,495 -- Theodore J. Wisniewski -- -- -- -- Alan L. Weaver -- -- -- --
______________________________ (1) Based upon the market price of $7.75 per share, which was the closing selling price per share of Common Stock on the Nasdaq National Market on December 29, 1995, the last business day of the 1995 fiscal year, less the option exercise price payable per share. (2) Such option shares are immediately exercisable, but subject to repurchase by the Company which repurchase right lapses with respect to twenty-five percent (25%) of the option shares on October 3, 1996 and the balance of the option shares in thirty-six (36) equal successive monthly installments thereafter. (3) Such option shares are exercisable for twenty-five percent (25%) on October 3, 1996 and for the balance in a series of thirty-six (36) equal successive monthly installments thereafter. (4) Such options are immediately exercisable and fully vested. EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS None of the Company's executive officers have employment agreements with Cerplex, and their employment may be terminated at any time at the discretion of the Board of Directors. The Compensation Committee has the discretionary authority as administrator of the Company's 1993 Plan to provide for the accelerated vesting of the shares of Common Stock subject to outstanding options upon the happening of certain events, including, without limitation, a change in control of the Company whether by successful tender offer for more than 50% of the outstanding voting stock or by proxy contest for the election of Board members. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Robert Finzi, Carmelo Santoro and Gregorio Reyes were members of the Compensation Committee until May 1995, when Mr. Reyes declined to stand for reelection to the Company's Board of Directors. From May 1995 to September 1995, the Compensation Committee consisted of Messrs. Finzi and Santoro. Mr. Kunin was appointed to the Compensation Committee in September 1995 and Mr. Santoro resigned from the Company's Board of Directors and its Compensation Committee in October 1995. None of 11. 14 these individuals was at any time an officer or employee of the Company. A loan was made to Mr. Santoro which is further described herein under the heading "Certain Relationships and Related Transactions." During the 1995 fiscal year, William A. Klein, the Chief Executive Officer of the Company for a portion of 1995 and the Chairman of the Board, served as a director of Sunward Technologies, Inc. and Sunward Technologies, Inc.'s Chief Executive Officer, Gregorio Reyes, served on the Company's Compensation Committee. PROPOSAL NO. 1 APPROVAL OF ISSUANCE OF COMMON STOCK UPON CONVERSION OF SERIES B CONVERTIBLE PREFERRED STOCK On June 11, 1996 the Company consummated a private placement (the "Private Placement") of Series B Convertible Preferred Stock (the "Series B Stock") to accredited investors. Eight thousand shares of Series B Stock were offered and sold at the price of $1,000 per share for gross proceeds to the Company of $8,000,000. THE SERIES B STOCK Holders of the Series B Stock are entitled to receive dividends as may be declared from time to time by the Board. The Board may not pay dividends to the holders of the Company's Common Stock unless and until the Board has paid an equivalent dividend, based upon the number of shares of Common Stock into which each share of series B Stock is convertible as of the record date for the payment of the dividend, to the holders of Series B Stock. In addition, the Company has agreed to file a registration statement on Form S-3 with the Securities and Exchange Commission covering the resale of the Common Stock issuable upon conversion of the Series B Stock, and shall cause such registration to become effective by the 150th day following the closing of the Private Placement. In the event the Company should fail to effect such registration by such deadline, the holders of Series B Stock shall be entitled to receive a dividend at the rate of $0.83 1/3 per share per day for each day after such deadline until the shares are so registered, up to $500 per share. In the event of any liquidation, dissolution or winding up of the Company, the holders of Series B Stock are entitled to receive, prior and in preference to any distribution of any assets of the Company to the holders of Common Stock, the amount of $2,000 per share plus all accrued or declared but unpaid dividends (the "Liquidation Preference"). At any time after September 9, 1996, each share of Series B Stock may be converted, at the option of the holder thereof, into the number of shares of Common Stock equal to $1,000 (the "Original Issue Price") divided by the lower of (i) 80% of the average closing bid price of the Common Stock for the 10 trading days ending three days prior to the date of the notice of conversion or (ii) $5.07 (the "Conversion Price"). Each share of Series B Stock shall automatically be converted into the number of shares of Common Stock determined as provided above, either (i) June 11, 2001, or (ii) five days after written notice to the holders of Series B Stock by the Company that the price of the Common Stock for 30 consecutive trading days has exceeded $19.13 per share, whichever occurs first. The conversion provisions are also subject to adjustment in certain circumstances. The Series B Stock is not redeemable, with one exception which is described below. Except as otherwise provided by law, each holder of shares of Series B Stock shall be entitled to vote with the holders of Common Stock on an as-converted basis as a single class on all matters presented for stockholder vote. STOCKHOLDER APPROVAL REQUIRED FOR ISSUANCE OF COMMON STOCK UPON CONVERSION OF SERIES B STOCK Under applicable Delaware law and the Company's Certificate of Incorporation, as amended, the Company's Board has the authority, without further action by the stockholders, (i) to issue Preferred Stock in one or more series and to fix the rights, preferences, privileges and restrictions granted to or imposed upon any series of unissued Preferred Stock and (ii) to fix the number of shares constituting any series and the designation of such series. However, the rules of the Nasdaq National Market on which the Company's Common Stock is traded require that the Company obtain stockholder approval prior to the issuance of Common Stock (or securities convertible into or exercisable for Common Stock) equal to 20% or more of the Common Stock (or voting power) outstanding before the issuance for less than the greater of book or market value of the stock. 12. 15 The actual number of shares of Common Stock which the Company will ultimately issue upon conversion of the Series B Stock presently cannot be determined as the conversion price is based on the then current market price. Assuming a Conversion Price of $5.07, the Company would be obligated to issue 197 shares of Common Stock for each share of Series B Stock, for a total of 1,576,000 shares of Common Stock or approximately 11.8% of the Common Stock outstanding immediately prior to the issuance of the Series B Stock. The application of the conversion formula set forth above will cause the number of shares of Common Stock to be issued to vary inversely with the market price of the Common Stock. Accordingly, the number of shares of Common Stock to be issued upon conversion of the Series B Stock potentially could equal or exceed 20% of the number of shares of the Company's Common Stock outstanding prior to such Private Placement. Therefore, in order to assure compliance with the above-referenced Nasdaq rules, the Company is requesting that its stockholders approve the issuance of Common Stock upon conversion of the Series B Stock presently outstanding, which number of shares of Common Stock could equal 20% or more of the number of shares of Common Stock outstanding prior to the Private Placement. No further authorization or vote of the holders of Common Stock will be sought or required with respect to the issuance of Common Stock upon conversion of the Series B Stock. The issuance of the Common Stock may be dilutive of the interests of holders of the currently outstanding Common Stock. Holders of the Company's Common Stock have no preemptive rights with respect to the issuance and sale of any securities of the Company. The Company is not obligated to issue, in the aggregate, more than 2,679,484 shares of Common Stock (less than 20% of the amount outstanding as of the close of the Private Placement) upon conversion of the Series B Stock if issuance of a larger amount would violate the above-referenced Nasdaq rules. In the event that stockholder approval of this proposal is not obtained and conversion of all such Series B Stock would otherwise violate such Nasdaq rules, then those shares of Series B Stock which, upon conversion to Common Stock, would bring the Company's aggregate issuance to or above that 20% threshold shall not convert and the holders shall, instead, receive an amount of cash equal to the Liquidation Preference ($2,000 per share) for such shares, subject to certain qualifications. For example, assuming a Conversion Price of $3.00, the 8,000 shares of Series B Stock outstanding would convert into 3,333,333 shares of Common Stock, which represents 25% of the total number of shares outstanding as of the closing of the Private Placement. Accordingly, the Company would be required to pay the holders of Series B Stock approximately $3,135,966 in cash if all such shares were presented for conversion. In addition, the conversion formula dictates that the number of shares of Common Stock issuable upon conversion of the Series B Stock will increase if the market price of the Common Stock decreases and, as such, the amount of cash the Company would be required to pay to the holders of the Series B Stock also increases. There can be no assurance that the Company would have the cash required to satisfy such obligation if it were required to pay such amount, or that such payment would not adversely affect the Company by reducing the amount of cash otherwise available for its operations and general corporate purposes. The minimum vote which will constitute stockholder approval of this Proposal No. 1 is a majority of the total votes cast on the proposal in person or by proxy. The holders of a majority of the shares of Common Stock and Series B Stock (voting together with the holders of Common Stock on an as-converted basis) have previously voted to approve this proposal. THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL. 13. 16 PROPOSAL NO. 2 APPROVAL OF AMENDMENTS TO THE RESTATED 1993 STOCK OPTION PLAN PLAN BACKGROUND The Company's stockholders are being asked to approve amendments to the Restated 1993 Stock Option Plan (the "1993 Plan") to (i) increase the number of shares of Common Stock authorized for issuance under the 1993 Plan from 1,000,000 shares to 2,000,000 shares, and (ii) increase the total number of shares of Common Stock for which any one individual may be granted stock options or separately exercisable stock appreciation rights in any one calendar year from 300,000 to 500,000. The 1993 Plan was originally adopted by the Board and approved by the stockholders in 1993. A restatement of the 1993 Plan was approved by the Board and stockholders on February 2, 1994 and February 4, 1994, respectively. The following is a summary of the principal features of the 1993 Plan as most recently amended. The summary, however, does not purport to be a complete description of all the provisions of the 1993 Plan. Any stockholder of the Company who wishes to obtain a copy of the actual plan documents may do so upon written request to the Corporate Secretary at the Company's principal executive offices in Tustin, California. STRUCTURE OF EQUITY PROGRAM The 1993 Plan contains two separate equity incentive programs: (i) a Discretionary Option Grant Program and (ii) an Automatic Option Grant Program. The Discretionary Option Grant Program is administered by the Compensation Committee of the Board. This Committee has complete discretion (subject to the provisions of the 1993 Plan) to authorize discretionary option grants under the 1993 Plan. However, all grants under the Automatic Option Grant Program are made in strict compliance with the provisions of that program, and no administrative discretion will be exercised by the Committee with respect to the grants made thereunder. ELIGIBILITY Officers and other employees of the Company and its parent or subsidiaries (whether now existing or subsequently established), non- employee members of the Board (other than those serving as members of the Compensation Committee) and consultants and independent contractors of the Company and its parent and subsidiaries will be eligible to participate in the Discretionary Option Grant Program. Non-employee members of the Board (including members of the Compensation Committee) will also be eligible to participate in the Automatic Option Grant Program. As of July 23, 1996, six executive officers, approximately 1,500 other employees and three employee Board members were eligible to participate in the Discretionary Option Grant, and four non-employee Board members were eligible to participate in the Automatic Option Grant Program. SHARE RESERVE A total of 2,000,000 shares of Common Stock (including the 1,000,000 share increase subject to stockholder approval under this Proposal No. 2) have been reserved for issuance over the ten year term of the 1993 Plan. In no event may any one participant in the 1993 Plan be granted options or separately exercisable stock appreciation rights for more than 500,000 shares (including the 200,000 share increase subject to stockholder approval under this Proposal No. 2) in the aggregate over the term of the 1993 Plan. In the event any change is made to the outstanding shares of Common Stock by reason of any recapitalization, stock dividend, stock split, combination of shares, exchange of shares or other change in corporate structure effected without the Company's receipt of consideration, appropriate adjustments will be made to the securities issuable (in the aggregate and to each participant) under the 1993 Plan and to each outstanding option. 14. 17 As of July 23, 1996, 1,248,949 shares were subject to outstanding options and 668,667 shares were available for grant under the 1993 Plan, after giving effect to the proposed 1,000,000 share increase in authorized shares. VALUATION The fair market value per share of Common Stock on any relevant date under the 1993 Plan will be the closing selling price per share on that date on the Nasdaq National Market. On July 23, 1996, the closing selling price per share was $6.38. DISCRETIONARY OPTION GRANT PROGRAM. Options may be granted under the Discretionary Option Grant Program at an exercise price per share not less than eighty-five percent (85%) of the fair market value per share of Common Stock on the option grant date. No granted option will have a term in excess of ten years. Upon cessation of service, the optionee will have a limited period of time in which to exercise any outstanding option to the extent such option is exercisable for vested shares. The Committee will have complete discretion to extend the period following the optionee's cessation of service during which his or her outstanding options may be exercised and/or to accelerate the exercisability or vesting of such options in whole or in part. Such discretion may be exercised at any time while the options remain outstanding, whether before or after the optionee's actual cessation of service. The Committee is authorized to issue two types of stock appreciation rights in connection with option grants made under the Discretionary Option Grant Program: - - TANDEM STOCK APPRECIATION RIGHTS provide the holders with the right to surrender their options for an appreciation distribution from the Company in an amount equal to the excess of (a) the fair market value of the vested shares of Common Stock subject to the surrendered option over (b) the aggregate exercise price payable for such shares. Such appreciation distribution may, at the discretion of the Compensation Committee, be made in cash or in shares of Common Stock. - - LIMITED STOCK APPRECIATION RIGHTS may be granted to officers of the Company as part of their option grants. Any option with such a limited stock appreciation right in effect for at least six (6) months will automatically be cancelled upon the successful completion of a hostile take-over of the Company. In return for the cancelled option, the officer will be entitled to a cash distribution from the Company in an amount per cancelled option share equal to the excess of (a) the take-over price per share over (b) the exercise price payable for such share. The Committee will have the authority to effect the cancellation of outstanding options under the Discretionary Option Grant Program which have exercise prices in excess of the then current market price of Common Stock and to issue replacement options with an exercise price based on the market price of Common Stock at the time of the new grant. AUTOMATIC OPTION GRANT PROGRAM. Under the Automatic Option Grant Program, each individual who first becomes a non-employee Board member at or after the 1995 Annual Stockholders Meeting will automatically be granted at that time an option grant for 20,000 shares of Common Stock, provided such individual has not previously been in the Company's employ. In addition, on the date of each Annual Stockholders Meeting, beginning with the 1995 Annual Meeting, each individual who is reelected as a non-employee Board member at such meeting will automatically be granted an option to purchase 10,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six months. There will be no limit on the number of such 10,000 share options which any one non-employee Board member may receive over the period of Board service, and non-employee Board members who have previously served in the Company's employ will be eligible for one or more 10,000 share option grants. Each option will have an exercise price per share equal to 100% of the fair market value per share of Common Stock on the option grant date and a maximum term of ten years measured from the option grant date. Each option will be immediately exercisable for all the option shares, but any purchased shares will be subject to repurchase by the Company, at the exercise price paid per share, upon the optionee's cessation of 15. 18 Board service. Each initial option grant will vest (and the Company's repurchase rights will lapse) in forty-eight equal monthly installments over the optionee's period of Board service measured from the option grant date. The shares subject to each automatic option grant will immediately vest upon the happening of certain events, including the acquisition of the Company by merger or asset sale or a hostile change in control of the Company. In addition, upon the successful completion of a hostile take-over, each automatic option grant which has been outstanding for at least six months may be surrendered to the Company for a cash distribution per surrendered option share in an amount equal to the excess of (a) the take-over price per share over (b) the exercise price payable for such share. ACCELERATION In the event that the Company is acquired by merger or asset sale, each outstanding option under the Discretionary Option Grant Program which is not to be assumed by the successor corporation or replaced with a comparable option to purchase shares of the capital stock of the successor corporation will automatically accelerate in full. The Committee has the discretionary authority to accelerate any options assumed or replaced in connection with such acquisition or to condition such acceleration on the subsequent termination of the optionee's service within a designated period following the acquisition. In connection with a hostile change in control of the Company (whether by successful tender offer for more than 50% of the outstanding voting stock or by proxy contest for the election of Board members), the Committee will have the discretionary authority to provide for automatic acceleration of outstanding options under the Discretionary Grant Program either at the time of such change in control or upon the subsequent termination of the optionee's service. The acceleration of vesting in the event of a change in the ownership or control of the Company may be seen as an anti-takeover provision and may have the effect of discouraging a merger proposal, a takeover attempt or other efforts to gain control of the Company. FINANCIAL ASSISTANCE The Committee may permit one or more optionees to pay the exercise price of outstanding options under the Discretionary Option Grant Program by delivering a promissory note. The Committee will determine the terms of any such promissory note. However, the maximum amount of financing provided any optionee may not exceed the cash consideration payable for the purchased shares plus all applicable taxes incurred in connection with the acquisition of the shares. SPECIAL TAX ELECTION The Committee may provide one or more holders of options under the Discretionary Option Grant Program with the right to have the Company withhold a portion of the shares otherwise issuable to such individuals in satisfaction of the tax liability incurred by such individuals in connection with the exercise of those options or the vesting of those shares. Alternatively, the Committee may allow such individuals to deliver previously acquired shares of Common Stock in payment of such tax liability. AMENDMENT AND TERMINATION The Board may amend or modify the 1993 Plan in any or all respects whatsoever subject to any required stockholder approval. The Board may terminate the 1993 Plan at any time, and the 1993 Plan will in all events terminate on December 16, 2003. 16. 19 RECENT STOCK AWARDS UNDER THE 1993 PLAN The table below shows, as to each of the Company's Named Executive Officers, each nominee for director and the various indicated groups, the number of shares of Common Stock subject to options granted between January 1, 1995 and July 23, 1996 under the 1993 Plan with the weighted average exercise price payable per share.
NUMBER OF NAME AND POSITION OPTION SHARES EXERCISE PRICE ----------------- ------------- -------------- William A. Klein Chairman of the Board . . . . . . . . . . . . . . . 0 0 James T. Schraith Chief Executive Officer, Director . . . . . . . . . 500,000 $6.75 Richard C. Davis President of International Operations, Director . . 0 0 Bruce D. Nye Chief Financial Officer . . . . . . . . . . . . . . 0 0 Theodore J. Wisniewski Senior Vice President Corporate Quality & Engineering 0 0 Alan L. Weaver President of the InCirt Technology Division . . . . 0 0 All current executive officers, as a group (6 persons) . . . . . . . . . . . . . . . . . . . . . . . . . 630,000(1) 6.72(2) Robert Finzi Director . . . . . . . . . . . . . . . . . . . . . . 10,000 7.50 Myron Kunin Director . . . . . . . . . . . . . . . . . . . . . . 20,000 7.50 Jerome Jacobson Director . . . . . . . . . . . . . . . . . . . . . . 10,000 7.50 Patrick S. Jones Director . . . . . . . . . . . . . . . . . . . . . . 20,000 6.58 All current directors who are not executive officers, as a group (4 persons) . . . . . . . . . . . . . . . . . . . . . . 60,000 7.19(2) All employees, including current officers who are not executive officers, as a group (22 persons) . . . . . . . . . 342,000 6.71(2) - ----------------------------------------
(1) Includes grant of (i) 500,000 option shares to James Schraith (as set forth above), (ii) 30,000 option shares to Robert McFarland, the Company's Senior Vice President, North American Sales, on January 23, 1996 with an exercise price of $6.63 per share; (iii) 20,000 option shares to Philip Pietrowski, the Company's Senior Vice President, North American Operations, on October 3, 1995 with an exercise price of $6.75 per share, (iv) an additional 20,000 option shares to Mr. Pietrowski on January 23, 1996 with an exercise price of $6.63 per share and (v) 60,000 option shares to James Eckstaedt, the Company's Senior Vice President and Chief Financial Officer, on July 16, 1996 with an exercise price of $6.58 per share. (2) Exercise price per share is equal to the weighted average exercise price per share. 17. 20 FEDERAL INCOME TAX CONSEQUENCES OPTION GRANTS. Options granted under the 1993 Plan may be either incentive stock options which satisfy the requirements of Section 422 of the Internal Revenue Code or non-statutory options which are not intended to meet such requirements. The federal income tax treatment for the two types of options differs as follows: - INCENTIVE STOCK OPTIONS. No taxable income is recognized by the optionee at the time of the option grant, and no taxable income is generally recognized at the time the option is exercised. The optionee will, however, recognize taxable income in the year in which the purchased shares are sold or otherwise disposed of. For federal tax purposes, dispositions are divided into two categories: (i) qualifying and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made after the optionee has held the shares for more than two years after the option grant date and more than one year after the exercise date. If either of these two holding periods is not satisfied, then a disqualifying disposition will result. If the optionee makes a disqualifying disposition of the purchased shares, then the Company will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal to the excess of (i) the fair market value of such shares on the option exercise date over (ii) the exercise price paid for the shares. In no other instance will the Company be allowed a deduction with respect to the optionee's disposition of the purchased shares. - NON-STATUTORY OPTIONS. No taxable income is recognized by an optionee upon the grant of a non-statutory option. The optionee will in general recognize ordinary income, in the year in which the option is exercised, equal to the excess of the fair market value of the purchased shares on the exercise date over the exercise price paid for the shares, and the optionee will be required to satisfy the tax withholding requirements applicable to such income. If the shares acquired upon exercise of the non-statutory option are unvested and subject to repurchase by the Company in the event of the optionee's termination of service prior to vesting in those shares, then the optionee will not recognize any taxable income at the time of exercise but will have to report as ordinary income, as and when the Company's repurchase right lapses, an amount equal to the excess of (i) the fair market value of the shares on the date the repurchase right lapses over (ii) the exercise price paid for the shares. The optionee may, however, elect under Section 83(b) of the Internal Revenue Code to include as ordinary income in the year of exercise of the option an amount equal to the excess of (i) the fair market value of the purchased shares on the exercise date over (ii) the exercise price paid for such shares. If the Section 83(b) election is made, the optionee will not recognize any additional income as and when the repurchase right lapses. The Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the optionee with respect to the exercised non-statutory option. The deduction will in general be allowed for the taxable year of the Company in which such ordinary income is recognized by the optionee. STOCK APPRECIATION RIGHTS. An optionee who is granted a stock appreciation right will recognize ordinary income in the year of exercise equal to the amount of the appreciation distribution. The Company will be entitled to an income tax deduction equal to the appreciation distribution for the taxable year in which such ordinary income is recognized by the optionee. ACCOUNTING TREATMENT Option grants with exercise prices less than the fair market value of the shares on the grant date will result in a compensation expense to the Company's earnings equal to the difference between the exercise price and the fair market value of the shares on the grant date. Such expense will be accruable by the Company over the period that the option shares are to vest. Option grants at 100% of fair market value will not result in any charge to the Company's earnings, but the Company must disclose, in pro-forma statements to its financial statements, the impact those options would have upon the Company's reported earnings were the value of those options at the time of grant treated as compensation expense. Whether or not granted at a discount, the number of outstanding options may be a factor in determining the Company's earnings per share on a fully-diluted basis. 18. 21 Should one or more optionees be granted stock appreciation rights which have no conditions upon exercisability other than a service or employment requirement, then such rights will result in a compensation expense to the Company's earnings. NEW PLAN BENEFITS AND STOCK AWARDS The table below shows, as to each of the Company's Named Executive Officers, each nominee for director and the various indicated groups, the number of shares of Common Stock underlying options received by or allocated to each of the following (subject to stockholder approval of this Proposal No. 2), as well as the options which will be granted under the Automatic Option Grant Program on the date of the 1996 Annual Meeting to each individual who is to continue to serve as a non-employee Board member.
NUMBER OF DOLLAR NAME AND POSITION OPTION SHARES VALUE ----------------- ------------- ------- William A. Klein Chairman of the Board . . . . . . . . . . . . . . . . . . . 0 0 James T. Schraith Chief Executive Officer, President, Director . . . . . . . . 200,000 $6.75 Richard C. Davis President of International Operations, Director . . . . . . 0 0 Bruce D. Nye Chief Financial Officer . . . . . . . . . . . . . . . . . . 0 0 Alan L. Weaver President of the InCirt Technology Division . . . . . . . . 0 0 Theodore J. Wisniewski Senior Vice President Corporate Quality and Engineering . . 0 0 All current executive officers as a group (6 persons) . . . . . . . . 310,000(1) $6.70(2) Robert Finzi Director . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 (3) Myron Kunin Director . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 (3) Jerome Jacobson Director . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 (3) Patrick S. Jones Director . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 $6.58 All current non-employee directors as a group (4 persons) . . . . . . 50,000 (4) All employees, including current officers who are not executive officers, as a group (14 persons) . . . . . . . . . . . . . . . . . . 197,000 6.61(2)
- ------------------------ (1) This number reflects the Committee's grant of 30,000 option shares to Robert N. McFarland on January 23, 1996, the grant of 20,000 option shares to Philip E. Pietrowski on the same date and the grant of 60,000 option shares to James R. Eckstaedt on July 16, 1996. (2) Exercise price per share is equal to the weighted average exercise price per share. (3) Exercise price per share for each such option will be equal to the closing selling price per share of Common Stock on the Nasdaq National Market on the date of the Annual Meeting. 19. 22 (4) Exercise price per share for Messrs. Finzi, Kunin and Jacobson will be equal to the closing selling price per share of Common Stock on the Nasdaq National Market on the date of the Annual Meeting. Exercise price per share for option held by Mr. Jones is $6.58. STOCKHOLDER APPROVAL The affirmative vote of a majority of the outstanding voting shares of the Company present or represented and entitled to vote at the Annual Meeting is required for approval of the amendments to the 1993 Plan. Should such stockholder approval not be obtained, then the 1,000,000 share increase in the number of shares available for issuance under the 1993 Plan and the 200,000 share increase in the number of options and stock appreciation rights which may be granted to any one individual in any calendar year will not become effective, and the grants made on the basis of such increases will terminate, and the 1993 Plan will terminate once the balance of the share reserve as last approved by the stockholders has been issued. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE AMENDMENTS TO THE 1993 PLAN. THE BOARD BELIEVES THAT IT IS IN THE BEST INTERESTS OF THE COMPANY TO CONTINUE TO HAVE A COMPREHENSIVE EQUITY INCENTIVE PROGRAM FOR THE COMPANY WHICH WILL PROVIDE A MEANINGFUL OPPORTUNITY FOR OFFICERS, EMPLOYEES AND BOARD MEMBERS TO ACQUIRE A SUBSTANTIAL PROPRIETARY INTEREST IN THE ENTERPRISE AND THEREBY ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN THE COMPANY'S SERVICE AND MORE CLOSELY ALIGN THEIR INTERESTS WITH THOSE OF THE STOCKHOLDERS. PROPOSAL NO. 3 ELECTION OF DIRECTORS - NOMINEES Seven (7) directors will be elected at the Annual Meeting by the holders of Cerplex Common Stock and Series B Stock to serve until the next Annual Meeting and until their successors are elected and qualified, or until their earlier death, resignation or removal. Proxyholders will vote all proxies received by them FOR the nominees listed below unless otherwise instructed in writing on such proxy. The seven (7) candidates receiving the highest number of affirmative votes of shares entitled to vote at the Annual Meeting will be elected directors of Cerplex. Stockholders of Cerplex are not entitled to cumulative voting rights. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for an additional nominee who shall be designated by the current Board of Directors to fill the vacancy. As of the date of this Proxy Statement, the Board of Directors is not aware of any nominee who is unable or will decline to serve as director. INFORMATION WITH RESPECT TO NOMINEES Set forth below, as of July 23, 1996, for each nominee for director of Cerplex is information regarding his age, position(s) with Cerplex, the period he has served as a director, any family relationship with any other director or executive officer of Cerplex and the directorships currently held by him in corporations whose shares are publicly traded. 20. 23 NAME, AGE AND PRINCIPAL OCCUPATION AND FIRST YEAR AS DIRECTOR BUSINESS EXPERIENCE ---------------------- ------------------- Richard C. Davis, 46, 1990 . . . For a description of the background of Mr. Davis, see "Executive Officers" herein. Robert Finzi, 42, 1993(1)(2) . . Mr. Finzi has been a Vice President of the Sprout Group, a division of DLJ Capital Corporation, which is the managing general partner of Sprout Growth II, L.P. and an affiliate of Donaldson, Lufkin & Jenrette Securities Corporation since May 1991. Mr. Finzi is also a general partner of the general partner of a series of investment funds managed by the Sprout Group and a limited partner of the general partner of ML Ventures II, L.P. From 1984 to 1991, Mr. Finzi was a Vice President of Merrill Lynch Venture Capital. Mr. Finzi also serves as a director of Platinum Software Corporation and a number of private companies. Jerome Jacobson, 74, 1993(1) . . Mr. Jacobson serves as a director of Datawatch Corporation. Mr. Jacobson has served as an individual general partner of ML Ventures II, L.P. since 1987. Mr. Jacobson is President of Economic Studies, Inc. and an independent financial advisor and economic consultant. Mr. Jacobson was Executive Vice President of Bendix Corporation from 1974 to 1980 and was Vice Chairman of Burroughs Corporation from 1981 to 1984. Patrick S. Jones, 51, 1996(2) . . Mr. Jones has served as Vice President - Corporate Controller for Intel Corporation since 1992. As such, he is responsible for worldwide accounting, international finance and administration at Intel's overseas locations, accounting services, external reporting, and all financial systems applications. Prior to 1992, Mr. Jones served as Vice President and Chief Financial Officer of LSI Logic Corporation. William A. Klein, 55, 1990 . . . For a description of the background of Mr. Klein, see "Executive Officers" herein. Myron Kunin, 67, 1995(1)(2) . . . Mr. Kunin has served as Chairman of the Board of Regis Corporation since 1983. Mr. Kunin also served as the Chief Executive Officer until July 1995. From 1967 to 1987 he was President of Regis Corporation, and from 1954 to 1965 he served as its Vice President. Mr. Kunin has been a director of Regis Corporation since 1954. Mr. Kunin has been a director and major stockholder of Nortech Systems, Inc. since 1990. James T. Schraith, 38, 1995 . . . For a description of the background of Mr. Schraith, see "Executive Officers" herein. - -------------------- (1) Member of the Audit Committee. (2) Member of the Compensation Committee. 21. 24 THE BOARD OF DIRECTORS AND ITS COMMITTEES The Board of Directors met seven times during the year ended December 1995. Each Director attended at least 75% of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all Committees of the Board on which such Director served. Cerplex has a standing Audit Committee composed of Messrs. Robert Finzi, Jerome Jacobson, Patrick Jones and Myron Kunin. The Audit Committee is primarily responsible for approving the services performed by the Company's independent public accountants and for reviewing and evaluating the Company's accounting principles and reporting practices and its system of internal accounting controls. The Audit Committee had three formal meetings and several additional informal meetings during the 1995 fiscal year. Cerplex has a standing Compensation Committee which met twice during the 1995 fiscal year. This Committee consisted of Messrs. Robert Finzi, Carmelo Santoro and Gregorio Reyes from the beginning of the 1995 fiscal year until May 1995, when Mr. Reyes declined to stand for reelection to the Company's Board of Directors. From May 1995 to September 1995, the Compensation Committee consisted of Messrs. Finzi and Santoro. Mr. Kunin was appointed to the Compensation Committee in September 1995 and Mr. Santoro resigned from the Company's Board of Directors and its Compensation Committee in October 1995. The Compensation Committee reviews and acts on matters relating to compensation levels and benefit plans for key executives of Cerplex. COMPENSATION OF DIRECTORS Each director has received $6,000 per quarter as a retainer fee, $1,000 per Board meeting attended and $1,000 per committee meeting attended since January 1, 1994. In addition, each non-employee board member is eligible to receive automatic option grants under the Company's 1993 Plan as follows: (i) each individual who is first elected or appointed a non-employee Board member at or after the 1995 Annual Stockholders Meeting will automatically be granted, on the date of such initial election or appointment, an option to purchase 20,000 shares of Common Stock and (ii) on the date of each Annual Stockholders Meeting beginning with the 1995 Meeting, each individual who is reelected to serve as a non-employee Board member will automatically be granted an option to purchase 10,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six months prior to the date of the Annual Meeting. The following individuals were granted an option to purchase 10,000 shares of Common Stock at the 1995 Annual Meeting at an exercise price of $7.50 per share: Robert Finzi, Jerome Jacobson and Carmelo J. Santoro. Myron Kunin was granted an option to purchase 20,000 shares of Common Stock at the 1995 Annual Meeting at an exercise price of $7.50 per share as he was first elected to the Board at such meeting. See Proposal No. 2 for a detailed description of the automatic option grant program under the 1993 Plan. All directors hold office until the next Annual Meeting of Stockholders and until their successors have been elected. Officers are appointed to serve, at the discretion of the Board of Directors, until their successors are appointed. There are no family relationships among executive officers or directors of Cerplex. There are no arrangements or understandings involving any director or any nominee regarding such person's status as a director or nominee. Mr. Jacobson, a director of the Company since August, 1993, performed consulting services for the Company during the 1995 fiscal year. Mr. Jacobson was paid a consulting fee of $2,500 per month for such services and was reimbursed by the Company for expenses incurred by him in connection with performing such services. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 The following summarizes all known filing delinquencies or failure to file with respect to reports on Forms 3, 4 and 5, which were required to be filed pursuant to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 by members of the Board of Directors, the executive officers of Cerplex and beneficial owners of more than ten percent of the outstanding shares of the Company's Common Stock: Richard Davis, a director and executive officer of the Company, filed a required report on a Form 4 on July 10, 1996 disclosing the disposition of 25,000 shares of Common Stock on May 29, 1996, which disposition should have been reported on the Form 4 filed on June 10, 1996 for Mr. Davis. 22. 25 CERTAIN TRANSACTIONS CERTAIN RELATIONSHIPS AND RESTATED TRANSACTIONS The Company subleases certain real property for its operations in Irvine, California and in Newburgh, New York from WC Cartwright Corporation, a California corporation ("WC Cartwright"). Messrs. Klein and Davis and Ms. Carolyn J. Klein (the spouse of Mr. Klein) are officers, directors and principal shareholders of WC Cartwright. In 1995, the Company paid to WC Cartwright an aggregate of $540,000 in rent for use of the real property located in Irvine, California and $245,000 in rent for use of the real property located in Newburgh, New York. Under its subleases with WC Cartwright, the Company is obligated to remit monthly lease payments to WC Cartwright in the amount of $44,982 through October 31, 1996 with respect to the Irvine, California property, and from $16,713 and $22,204 per month (on a graduated rent basis) through July 31, 1997 with respect to the Newburgh, New York real property. On January 5, 1994, the Company made loans, each in the amount of $80,000 at a 6% interest rate compounded annually, to Jerome Jacobson and Carmelo Santoro, directors of the Company in connection with the exercise of stock options. The principal amount of such loans and accrued interest of $179,062 remains outstanding and are due and payable on January 5, 1999. In addition, on December 31, 1995, the Company made a loan in the amount of $55,000 at a 6.8% interest rate compounded annually to Bruce D. Nye, an officer of the Company, in connection with the exercise of stock options. Such loan and accrued interest remains outstanding and are due and payable on December 31, 2000. In connection with the Private Placement of Series B Stock in June 1996, the following entities, which are related to Robert Finzi, a director of Cerplex (as more fully described in footnotes (6) and (9) to the table set forth under the caption "Security Ownership of Certain Beneficial Owners and Management"), made the following purchases of Series B Stock at a price of $1,000 per share:
Number of Shares Affiliated Entities of Series B Stock ------------------- ----------------- DLJ Capital Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Sprout Growth II, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,269
INDEMNITY AGREEMENTS The Company has entered into an Indemnity Agreement with each of its directors (the "Indemnity Agreements") which provides that, with certain exceptions, the Company will hold harmless and indemnify its directors to the fullest extent permitted under Delaware Law. Under the Indemnity Agreements, the Company is obligated to indemnify each of its directors against all expenses (including attorneys' fees), fines, judgments and settlement amounts that such director may incur in connection with any action or proceeding (including actions brought by or on behalf of the Company such as stockholder derivative actions) to which the director is or may be made a party to by reason of such director's position as a director, officer, employee or agent of the Company or any other company or enterprise to which the person provides services at the request of the Company. This additional indemnity goes beyond the rights expressly provided under the Delaware Law primarily in the availability of indemnification in connection with actions brought by or on behalf of the Company, such as stockholder derivative actions, and in the provisions for advancement of litigation expenses prior to settlement or judgment. THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL SEVEN NOMINEES NAMED ABOVE. 23. 26 PROPOSAL NO. 4 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS The firm of KPMG Peat Marwick LLP served as independent auditors for Cerplex for the fiscal year ended December 31, 1995. The Board of Directors, on the recommendation of Cerplex's management, has selected that firm to continue in this capacity for the current fiscal year. Cerplex is asking the stockholders to ratify the selection by the Board of Directors of KPMG Peat Marwick LLP as independent auditors to audit the consolidated financial statements of Cerplex for the current fiscal year ending December 29, 1996 and to perform other appropriate services. KPMG Peat Marwick LLP's report on the Company's financial statements for each of the past two years neither contained an adverse opinion or disclaimer of opinion, nor was modified as to uncertainty, audit scope or accounting principles. In addition, there were not any disagreements with KPMG Peat Marwick LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. A representative of KPMG Peat Marwick LLP is expected to be present at the Annual Meeting to respond to stockholders' questions, and that representative will be given an opportunity to make a brief presentation to the stockholders and will be available to respond to appropriate questions. Cerplex has been advised by KPMG Peat Marwick LLP that neither that firm nor any of its associates has any material relationship with Cerplex nor any affiliate of Cerplex. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION. In the event that a majority of the shares voted at the Annual Meeting do not vote for ratification of the selection of KPMG Peat Marwick LLP, the Board of Directors will reconsider such selection. Under all circumstances, the Board retains the corporate authority to change the auditors at a later date. DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS Under the present rules of the Commission, the deadline for stockholders to submit proposals to be considered for inclusion in Cerplex's Proxy Statement for next year's Annual Meeting of Stockholders is January 15, 1997. Such proposals may be included in next year's Proxy Statement if they comply with certain rules and regulations promulgated by the Commission. OTHER BUSINESS The Board of Directors is not aware of any other matter which may be presented for action at the Annual Meeting. Should any other matter requiring a vote of the stockholders arise, it is intended that the proxy holders will vote on such matters in accordance with their best judgment. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission are hereby incorporated by reference in this Proxy Statement: (i) the Annual Report of the Company for the fiscal year ended December 31, 1995, (ii) the Quarterly Report of the Company on Form 10-Q for the quarter ended March 31, 1996, and (iii) the Current Report of the Company on Form 8-K dated April 8, 1996. All reports and other documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement and prior to the Annual Meeting shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such reports and documents. Any statement incorporated herein shall be deemed to be modified or superseded for purposes of this Proxy Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Proxy Statement. 24. 27 The Company will provide without charge to each person to whom this Proxy Statement is delivered, upon written or oral request of such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such document). Requests for such documents should be submitted in writing to James T. Schraith, President and Chief Executive Officer, at The Cerplex Group, Inc., 1382 Bell Avenue, Tustin, CA 92780 or by telephone at (714) 258-5600. 25. 28 THE CERPLEX GROUP, INC. PROXY FOR HOLDERS OF COMMON STOCK ANNUAL MEETING OF STOCKHOLDERS, AUGUST 22, 1996 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned revokes all previous proxies, acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held on August 22, 1996 and the proxy statement and appoints William A. Klein and James T. Schraith, or either of them, the proxy of the undersigned, with full power of substitution, to vote all shares of Common Stock of The Cerplex Group, Inc. which the undersigned is entitled to vote, either on his or her own behalf or on behalf of an entity or entities, at the Annual Meeting of Stockholders of Cerplex to be held at the Hyatt Recency Irvine, 17900 Jamboree Road, Irvine, California, on Thursday, August 22, 1996 at 9:00 a.m., and at any adjournment or postponement thereof, and to vote in their discretion on such other business as may properly come before the Annual Meeting and any postponement or adjournment thereof. 1. PROPOSAL TO AUTHORIZE THE ISSUANCE OF COMMON STOCK EQUAL TO 20% OR MORE OF THE OUTSTANDING COMMON STOCK (OR VOTING POWER) UPON CONVERSION OF THE COMPANY'S SERIES B CONVERTIBLE PREFERRED STOCK. FOR AGAINST ABSTAIN / / / / / / 2. AMENDMENT TO CERPLEX'S 1993 PLAN TO INCREASE THE POOL OF SHARES AVAILABLE UNDER THE 1993 PLAN FROM 1,000,000 TO 2,000,000 OF COMMON STOCK AND TO INCREASE THE TOTAL NUMBER OF OPTION SHARES WHICH MAY BE GRANTED TO ANY ONE INDIVIDUAL IN ANY CALENDAR YEAR FROM 300,000 TO 500,000. FOR AGAINST ABSTAIN / / / / / / 3. ELECTION OF DIRECTORS / / FOR all nominees / / WITHHOLD AUTHORITY / / EXCEPTIONS listed below to vote for all nominees
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE "EXCEPTIONS" BOX, AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW: RICHARD C. DAVIS PATRICK S. JONES MYRON KUNIN ROBERT FINZI WILLIAM A. KLEIN JAMES T. SCHRAITH JEROME JACOBSON 4. RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR 1996. FOR AGAINST ABSTAIN / / / / / / The Board of Directors recommends a vote FOR each of the director nominees listed above and for the other proposals set forth above. This Proxy, when properly executed will be voted as specified above. This Proxy will be voted FOR Proposals No. 1, 2 and 4 and FOR each of the nominees listed under Proposal No. 3 if no specification is made. This Proxy will also be voted at the discretion of the proxy holders on such matters other than the three specific items as may come before the meeting. Please print the name(s) appearing on each Common Stock certificate(s) over which you have voting authority: Dated: (Print name(s) as it (they) appear on certificate) Please sign exactly as your name(s) is (are) shown on the share certificate to which the Proxy applies. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give full title, as such. If a corporation, please sign in full corporate name by the President or another authorized officer. If a partnership, please sign in the partnership name by an authorized person. (Authorized Signature(s)) 29 PLEASE RETURN YOUR EXECUTED PROXY TO CERPLEX'S TRANSFER AGENT IN THE ENCLOSED ENVELOPE, OR, IF NECESSARY, DELIVER IT TO CERPLEX ATTENTION: CHIEF FINANCIAL OFFICER. 2. 30 THE CERPLEX GROUP, INC. PROXY FOR HOLDERS OF SERIES B CONVERTIBLE PREFERRED STOCK ANNUAL MEETING OF STOCKHOLDERS, AUGUST 22, 1996 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned revokes all previous proxies, acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held on August 22, 1996 and the proxy statement and appoints William A. Klein and James T. Schraith, or either of them, the proxy of the undersigned, with full power of substitution, to vote all shares of Series B Convertible Preferred Stock of The Cerplex Group, Inc. which the undersigned is entitled to vote, either on his or her own behalf or on behalf of an entity or entities, at the Annual Meeting of Stockholders of Cerplex to be held at the Hyatt Recency Irvine, 17900 Jamboree Road, Irvine, California, on Thursday, August 22, 1996 at 9:00 a.m., and at any adjournment or postponement thereof, and to vote in their discretion on such other business as may properly come before the Annual Meeting and any postponement or adjournment thereof. 1. PROPOSAL TO AUTHORIZE THE ISSUANCE OF COMMON STOCK EQUAL TO 20% OR MORE OF THE OUTSTANDING COMMON STOCK (OR VOTING POWER) UPON CONVERSION OF THE COMPANY'S SERIES B CONVERTIBLE PREFERRED STOCK. FOR AGAINST ABSTAIN / / / / / / 2. AMENDMENT TO CERPLEX'S 1993 PLAN TO INCREASE THE POOL OF SHARES AVAILABLE UNDER THE 1993 PLAN FROM 1,000,000 TO 2,000,000 OF COMMON STOCK AND TO INCREASE THE TOTAL NUMBER OF OPTION SHARES WHICH MAY BE GRANTED TO ANY ONE INDIVIDUAL IN ANY CALENDAR YEAR FROM 300,000 TO 500,000. FOR AGAINST ABSTAIN / / / / / / 3. ELECTION OF DIRECTORS / / FOR all nominees / / WITHHOLD AUTHORITY / / EXCEPTIONS listed below to vote for all nominees
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE "EXCEPTIONS" BOX, AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW: RICHARD C. DAVIS PATRICK S. JONES MYRON KUNIN ROBERT FINZI WILLIAM A. KLEIN JAMES T. SCHRAITH JEROME JACOBSON 4. RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR 1996. FOR AGAINST ABSTAIN / / / / / / The Board of Directors recommends a vote FOR each of the director nominees listed above and for the other proposals set forth above. This Proxy, when properly executed will be voted as specified above. This Proxy will be voted FOR Proposals No. 1, 2 and 4 and FOR each of the nominees listed under Proposal No. 3 if no specification is made. This Proxy will also be voted at the discretion of the proxy holders on such matters other than the three specific items as may come before the meeting. Please print the name(s) appearing on each Series B Convertible Preferred Stock certificate(s) over which you have voting authority: Dated: (Print name(s) as it (they) appear on certificate) Please sign exactly as your name(s) is (are) shown on the share certificate to which the Proxy applies. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give full title, as such. If a corporation, please sign in full corporate name by the President or another authorized officer. If a partnership, please sign in the partnership name by an authorized person. (Authorized Signature(s)) 31 PLEASE RETURN YOUR EXECUTED PROXY TO CERPLEX'S TRANSFER AGENT IN THE ENCLOSED ENVELOPE, OR, IF NECESSARY, DELIVER IT TO CERPLEX ATTENTION: CHIEF FINANCIAL OFFICER. 2. -----END PRIVACY-ENHANCED MESSAGE-----